<PAGE>
File No. 811-5017
File No. 33-11466
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. ____
Post-Effective Amendment No. 12
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 X
Amendment No. 12
TMK/UNITED FUNDS, INC.
(Exact Name as Specified in Charter)
6300 Lamar Avenue, Shawnee Mission, Kansas 66202-4200
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code (913) 236-2000
Sharon K. Pappas, P. O. Box 29217, Shawnee Mission, Kansas 66201-9217
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
_____ immediately upon filing pursuant to paragraph (b)
__X__ on November 1, 1995 pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)(1)
_____ on (date) pursuant to paragraph (a)(1)
_____ 75 days after filing pursuant to paragraph (a)(2)
_____ on (date) pursuant to paragraph (a)(2) of Rule 485
_____ this post-effective amendment designates a new
effective date for a previously filed post-effective
amendment
==================================================================
DECLARATION REQUIRED BY RULE 24f-2 (a) (1)
The issuer has registered an indefinite amount of its securities
under the Securities Act of 1933 pursuant to Rule 24f-2(a)(1). Notice
for the Registrant's fiscal year ended December 31, 1994 was filed on
February 21, 1995.
<PAGE>
TMK/UNITED FUNDS, INC.
======================
Cross Reference Sheet
=====================
Part A of
Form N-1A
Item No. Prospectus Caption
--------- ------------------
1 ........................ Cover Page
2(a) ..................... *
(b) ..................... Prospectus Summary
(c) ..................... *
3(a) ..................... Financial Highlights
(b) ..................... *
(c) ..................... Performance Information
(d)........... ........... Financial Highlights
4(a) ..................... The Fund; Other Information; Goals and
Investment Policies of the Portfolios
(b) ..................... Goals and Investment Policies of the
Portfolios
(c) ..................... Goals and Investment Policies of the
Portfolios
5(a) ..................... Other Information
(b) ...................... Management; Back Cover
(c) ..................... Management
(d) ..................... Management; Back Cover
(e) ..................... *
(f) ..................... Management
(g)(i) .................. *
(g)(ii) ................. *
5A ......................... *
6(a) ..................... The Fund; Other Information
(b) ..................... *
(c) ..................... *
(d) ..................... *
(e) ..................... Other Information
(f) ...................... Dividends and Distributions
(g) ..................... Taxes
(h) ..................... *
7(a) ..................... Management; Back Cover
(b) ..................... Net Asset Value; Purchases and Redemptions
(c) ..................... *
(d) ..................... *
(e) ..................... *
(f) ..................... *
8(a) ..................... Purchases and Redemptions
(b) ..................... *
(c) ..................... *
(d) ..................... Purchases and Redemptions
9 ........................ *
Part B of
Form N-1A
Item No. SAI Caption
--------- -----------
10(a) ..................... Cover Page
(b) ..................... *
11 ........................ Cover Page
12 ........................ *
13(a) ..................... Goals and Investment Policies
(b) ..................... Goals and Investment Policies
(c) ..................... Goals and Investment Policies
(d) ..................... Goals and Investment Policies
14(a) ..................... Directors and Officers
(b) ..................... Directors and Officers
(c) ..................... Directors and Officers
15(a) ..................... *
(b) ..................... *
(c) ..................... *
16(a)(i) .................. Investment Management and Other Services
(a)(ii) ................. Directors and Officers
(a)(iii) ................ Investment Management and Other Services
(b) ..................... Investment Management and Other Services
(c) ..................... *
(d) ..................... Investment Management and Other Services
(e) ..................... *
(f) ..................... *
(g) ..................... *
(h) ..................... Investment Management and Other Services
(i) ..................... *
17(a) ..................... Portfolio Transactions and Brokerage
(b) ..................... *
(c) ..................... Portfolio Transactions and Brokerage
(d) ..................... *
(e) ..................... *
18(a) ..................... Other Information
(b) ..................... *
19(a) ..................... Purchases and Redemptions
(b) ..................... Net Asset Value; Purchases and Redemptions
(c) ..................... Purchases and Redemptions
20 ........................ Taxes
21(a) ..................... Investment Management and Other Services
(b) ..................... *
(c) ..................... *
22(a) ...................... Performance Information
(b) ...................... Performance Information
23 ........................ Financial Statements
------------------------------------------------------------------------
*Not Applicable or Negative Answer
<PAGE>
TMK/UNITED FUNDS, INC.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
(913) 236-2000
-----------------------------------------------------------------
November 1, 1995
PROSPECTUS
-----------------------------------------------------------------
TMK/United Funds, Inc. (the "Fund") is a diversified, open-end
management investment company commonly known as a mutual fund, with ten
separate Portfolios each with separate goals and investment policies.
The investment goals and policies of the Portfolios, which may be
changed by the Directors of the Fund without a vote of the shareholders,
are generally as follows:
Money Market Portfolio
Maximum current income consistent with stability of principal by
investing in money market securities.
Bond Portfolio
Current income with an emphasis on preservation of capital by
investing primarily in debt securities of varying yields, quality and
maturities.
High Income Portfolio
Primary goal of high current income with a secondary goal of
capital growth by investing primarily in high-yield, high-risk fixed
income securities but with the ability to invest not more than 20% of
assets in common stocks.
Growth Portfolio
Primary goal of capital growth with a secondary goal of current
income by investing in common stocks or securities convertible into
common stocks.
Income Portfolio
Maintenance of current income, subject to market conditions, by
investing primarily in common stocks or securities convertible into
common stocks.
International Portfolio
Primary goal of long-term appreciation of capital with a secondary
goal of current income by investing primarily in securities issued by
companies or governments of any nation.
Small Cap Portfolio
Capital growth through a diversified holding of securities,
primarily in the common stocks of, or securities convertible into the
common stocks of, relatively new or unseasoned companies, companies that
are in their early stages of development or smaller companies positioned
in new and emerging industries where the opportunity for rapid growth is
anticipated to be above average.
Balanced Portfolio
Primary goal of current income with a secondary goal of long-term
appreciation of capital by investing in a variety of securities,
including debt securities, common stocks and preferred stocks.
Limited-Term Bond Portfolio
High level of current income consistent with preservation of
capital by investing primarily in debt securities of investment grade,
including debt securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities ("U.S. Government Securities"). The
Portfolio will maintain a dollar-weighted average maturity of two to
five years.
Asset Strategy Portfolio
High total return with reduced risk over the long term through
investments in stocks, bonds and short-term instruments.
This Prospectus contains concise information about the Fund of
which you should be aware before applying for certain variable life
insurance policies and variable annuity policies offered by
Participating Insurance Companies. Additional information about the
Fund has been filed with the Securities and Exchange Commission and is
contained in the Statement of Additional Information (the "SAI") dated
November 1, 1995. You may obtain a copy of the SAI free of charge by
request to the Fund or its Distributor, Waddell & Reed, Inc., at the
address or telephone number shown above or from United Investors Life
Insurance Company, Variable Products Division, P.O. Box 156, Birmingham,
Alabama 35201-0156. The SAI is incorporated by reference into this
Prospectus and you will not be aware of all facts unless you read both
this Prospectus and the SAI.
An investment in the Money Market Portfolio is neither insured nor
guaranteed by the U.S. Government. There can be no assurance that the
Money Market Portfolio will be able to maintain a stable net asset value
of $1.00 per share.
THE HIGH INCOME PORTFOLIO MAY INVEST UP TO ALL OF ITS ASSETS IN
BONDS ISSUED BY DOMESTIC OR FOREIGN ISSUERS RATED BELOW INVESTMENT
GRADE, COMMONLY KNOWN AS "JUNK BONDS," WHICH ENTAIL GREATER RISKS,
INCLUDING DEFAULT RISKS, THAN THOSE FOUND IN HIGHER RATED SECURITIES.
INVESTORS SHOULD CAREFULLY CONSIDER THESE RISKS BEFORE INVESTING. SEE
"GOALS AND INVESTMENT POLICIES OF THE PORTFOLIOS" INCLUDED IN THIS
PROSPECTUS FOR A DISCUSSION OF THE RISKS ASSOCIATED WITH NON-INVESTMENT
GRADE DEBT SECURITIES. SEE APPENDIX A FOR A DISCUSSION OF BOND
RATINGS.
Retain This Prospectus For Future Reference.
SHARES OF THE FUND ARE AVAILABLE AND ARE BEING MARKETED EXCLUSIVELY AS A
FUNDING OR INVESTMENT VEHICLE FOR LIFE INSURANCE COMPANIES WRITING ALL
TYPES OF VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY POLICIES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information appearing in the body of the Prospectus. Cross-
references in this summary are to headings in the body of the
Prospectus.
The Portfolios: This Prospectus describes ten separate portfolios
(each a "Portfolio" and collectively, the
"Portfolios") of an open-end, management investment
company with different goals and investment
policies. Each of the Portfolios is a diversified
portfolio. Shares of the Fund are being marketed
exclusively as a funding or investment vehicle for
life insurance companies writing various types of
variable life insurance policies and variable
annuity policies.
Investment Goals and Policies:
Money Market Portfolio: Maximum current income consistent with
stability of principal by investing in money market securities.
Bond Portfolio: Current income with an emphasis on preservation of
capital by investing primarily in debt securities of varying yields,
quality and maturities.
High Income Portfolio: Primary goal of high current income with a
secondary goal of capital growth by investing primarily in high-yield,
high-risk fixed income securities but with the ability to invest not
more than 20% of its assets in common stocks.
Growth Portfolio: Primary goal of capital growth with a secondary
goal of current income by investing in common stocks or securities
convertible into common stocks.
Income Portfolio: Maintenance of current income, subject to market
conditions, by investing primarily in common stocks or securities
convertible into common stocks.
International Portfolio: Primary goal of long-term appreciation of
capital with a secondary goal of current income by investing primarily
in securities issued by companies or governments of any nation.
Small Cap Portfolio: Capital growth through a diversified holding
of securities, primarily in the common stocks of, or securities
convertible into the common stocks of, relatively new or unseasoned
companies, companies that are in their early stages of development or
smaller companies positioned in new and emerging industries where the
opportunity for rapid growth is anticipated to be above average.
Balanced Portfolio: Primary goal of current income with a
secondary goal of long-term appreciation of capital by investing in a
variety of securities, including debt securities, common stocks and
preferred stocks.
Limited-Term Bond Portfolio: High level of current income
consistent with preservation of capital by investing primarily in debt
securities of investment grade, including U.S. Government Securities.
The Portfolio will maintain a dollar-weighted average maturity of its
portfolio of two to five years.
Asset Strategy Portfolio: High total return with reduced risk over
the long term by allocating its assets among stocks, bonds and short-
term instruments.
There can be no assurance that a Portfolio will be successful in
meeting its investment goal. For a further description of the ten
Portfolios, their investment techniques and certain risks which may be
associated with investments in repurchase agreements, the securities of
foreign issuers, non-investment grade debt securities, options and
futures contracts, and with other investment techniques, see "Investment
Policies Common to the Ten Portfolios."
Investment Manager: Waddell & Reed Investment Management Company, a
wholly-owned subsidiary of Waddell & Reed, Inc.,
acts as investment manager for each Portfolio. See
"Management."
Distributor: Waddell & Reed, Inc. acts as principal distributor
and underwriter for the Fund. See "Management."
Purchases: The Fund is the funding or investment vehicle for
variable life insurance policies and variable
annuity policies offered by the separate accounts of
certain life insurance companies. As of the date of
this Prospectus, the only participating insurance
company is United Investors Life Insurance Company.
Individual policyowners are not direct shareholders
of the Fund. The participating insurance companies
and their separate accounts are the actual
shareholders. The separate accounts of the
participating insurance companies place orders to
purchase shares of each Portfolio. Shares of a
Portfolio are sold at their net asset value and a
sales charge is not incurred upon the purchase of
shares of a Portfolio. See "Purchases and
Redemptions" and "The Fund."
Redemptions: The separate accounts of the participating insurance
companies place orders to redeem shares of each
Portfolio. Redemptions are made at net asset value.
See "Purchases and Redemptions."
Dividends: Dividends are ordinarily declared and paid annually,
except by the Money Market Portfolio which is
declared and paid daily.
Dividends and other distributions are paid in
additional full and fractional shares of the paying
Portfolio. See "Dividends and Distributions."
<PAGE>
TMK/United Funds, Inc.
Financial Highlights
The following information, with the exception of June 30, 1995, has
been audited by Price Waterhouse LLP, independent accountants, and
should be read in conjunction with the financial statements and notes
thereto, together with the report of Price Waterhouse LLP included in
the SAI.
(For a share outstanding throughout each period)
THE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
For the six
months ended For the fiscal year ended December 31,
June 30, -----------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987*
---- ---- ---- ---- ---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period ........... $5.8986 $6.1962 $6.1505 $5.5973 $4.9479 $5.4025 $4.9837 $4.7846 $5.0000
------- ------- ------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income ......... 0.0466 0.1211 0.0537 0.1013 0.1229 0.1661 0.1611 0.1539 0.0523
Net realized and
unrealized gain
(loss) on
investments .... 0.9882 0.0268 0.8087 1.0653 1.6636 (0.4546) 1.2150 0.4944 (0.2154)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations ....... 1.0348 0.1479 0.8624 1.1666 1.7865 (0.2885) 1.3761 0.6483 (0.1631)
------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment
income ......... (0.0000) (0.1211) (0.0537) (0.1013) (0.1229) (0.1661) (0.1611) (0.1539) (0.0523)
Distribution from
capital gains .. (0.0000) (0.3244) (0.7569) (0.5121) (1.0142) (0.0000) (0.7962) (0.2953) (0.0000)
Distribution in
excess of capital
gains .......... (0.0000) (0.0000) (0.0061) (0.0000) (0.0000) (0.0000) (0.0000) (0.0000) (0.0000)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions (0.0000) (0.4455) (0.8167) (0.6134) (1.1371) (0.1661) (0.9573) (0.4492) (0.0523)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $6.9334 $5.8986 $6.1962 $6.1505 $5.5973 $4.9479 $5.4025 $4.9837 $4.7846
======= ======= ======= ======= ======= ======= ======= ======= =======
Total return ....... 17.54% 2.39% 14.02% 20.84% 36.10% -5.34% 27.61% 13.55% -6.86%
Net assets, end of
period (000
omitted) ......... $339,634 $276,737 $220,590 $122,363 $69,044 $37,440 $28,510 $14,521 $5,636
Ratio of expenses
to average net
assets ........... 0.77%** 0.77% 0.78% 0.80% 0.86% 0.86% 0.85% 0.96% 0.91%
Ratio of net investment
income to average
net assets ....... 1.52%** 2.07% 1.01% 2.00% 2.43% 3.58% 3.40% 3.79% 4.92%
Portfolio turnover
rate ............. 234.38%** 277.36% 297.81% 225.87% 316.72% 331.15% 344.71% 278.57% 127.80%
*The Money Market Portfolio, Bond Portfolio, High Income Portfolio and Growth Portfolio's inception date is December 2, 1986;
however, since these Portfolios did not have any investment activity or incur expenses prior to the date of initial offering,
the per share information is for a capital share outstanding for the period from July 13, 1987 (initial offering) through
December 31, 1987. The Income Portfolio's inception date is May 16, 1991; however, since this Portfolio did not have any
investment activity or incur expenses prior to the date of initial offering, the per share information is for a capital share
outstanding for the period from July 16, 1991 (initial offering) through December 31, 1991. The International Portfolio, Small
Cap Portfolio, Balanced Portfolio and Limited-Term Bond Portfolio's inception date is April 28, 1994; however, since these
Portfolios did not have any investment activity or incur expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from May 3, 1994 (initial offering) through December 31, 1994.
The Asset Strategy Portfolio's inception date is February 14, 1995; however, since this Portfolio did not have any investment
activity or incur expenses prior to the date of initial offering, the per share information is for a capital share outstanding
for the period from May 1, 1995 (initial offering) through September 30, 1995. Ratios and portfolio turnover rates have been
annualized.
**Annualized.
</TABLE>
<PAGE>
TMK/United Funds, Inc.
Financial Highlights
The following information, with the exception of June 30, 1995, has
been audited by Price Waterhouse LLP, independent accountants, and
should be read in conjunction with the financial statements and notes
thereto, together with the report of Price Waterhouse LLP included in
the SAI.
(For a share outstanding throughout each period)
THE INCOME PORTFOLIO
For the six For the fiscal year
months ended ended December 31,
June 30, -------------------------------------------
1995 1994 1993 1992 1991*
---- ---- ---- ---- ----
(Unaudited)
Net asset value,
beginning of
period ............ $6.7689 $6.9180 $5.9530 $5.3158 $5.0000
------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0426 0.0702 0.0651 0.0803 0.0633
Net realized and
unrealized gain
(loss) on
investments ..... 1.4241 (0.1490) 0.9650 0.6496 0.3158
------- ------- ------- ------- -------
Total from investment
operations ........ 1.4667 (0.0788) 1.0301 0.7299 0.3791
------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment
income .......... (0.0000) (0.0703) (0.0651) (0.0803) (0.0633)
Distribution from
capital gains ... (0.0000) (0.0000) (0.0000) (0.0124) (0.0000)
------- ------- ------- ------- -------
Total distributions (0.0000) (0.0703) (0.0651) (0.0927) (0.0633)
------- ------- ------- ------- -------
Net asset value,
end of period ..... $8.2356 $6.7689 $6.9180 $5.9530 $5.3158
======= ======= ======= ======= =======
Total return ........ 21.67% -1.14% 17.30% 13.78% 17.43%
Net assets, end of
period (000
omitted) .......... $284,711 $218,774 $155,092 $65,027 $15,640
Ratio of expenses
to average net
assets ............ 0.78%** 0.77% 0.79% 0.85% 0.89%
Ratio of net investment
income to average
net assets ........ 1.21%** 1.16% 1.36% 1.78% 2.47%
Portfolio turnover
rate .............. 13.78%** 23.32% 18.38% 15.74% 4.41%
*The Money Market Portfolio, Bond Portfolio, High Income Portfolio and Growth
Portfolio's inception date is December 2, 1986; however, since these
Portfolios did not have any investment activity or incur expenses prior to the
date of initial offering, the per share information is for a capital share
outstanding for the period from July 13, 1987 (initial offering) through
December 31, 1987. The Income Portfolio's inception date is May 16, 1991;
however, since this Portfolio did not have any investment activity or incur
expenses prior to the date of initial offering, the per share information is
for a capital share outstanding for the period from July 16, 1991 (initial
offering) through December 31, 1991. The International Portfolio, Small Cap
Portfolio, Balanced Portfolio and Limited-Term Bond Portfolio's inception date
is April 28, 1994; however, since these Portfolios did not have any investment
activity or incur expenses prior to the date of initial offering, the per
share information is for a capital share outstanding for the period from May
3, 1994 (initial offering) through December 31, 1994. The Asset Strategy
Portfolio's inception date is February 14, 1995; however, since this Portfolio
did not have any investment activity or incur expenses prior to the date of
initial offering, the per share information is for a capital share outstanding
for the period from May 1, 1995 (initial offering) through September 30, 1995.
Ratios and portfolio turnover rates have been annualized.
**Annualized.
<PAGE>
TMK/United Funds, Inc.
Financial Highlights
The following information, with the exception of June 30, 1995, has
been audited by Price Waterhouse LLP, independent accountants, and
should be read in conjunction with the financial statements and notes
thereto, together with the report of Price Waterhouse LLP included in
the SAI.
(For a share outstanding throughout each period)
THE INTERNATIONAL PORTFOLIO
For the six For the
months ended period
June 30, ended
1995 12/31/94*
----------- ----------
(Unaudited)
Net asset value,
beginning of
period ..... $4.9926 $5.0000
------ -------
Income from investment
operations:
Net investment
income ... 0.0740 0.0207
Net realized and
unrealized gain (loss)
on investments 0.2927 (0.0074)
------ -------
Total from investment
operations 0.3667 0.0133
Less dividends from net
investment
income (0.0000) (0.0207)
------ -------
Net asset value,
end of period $5.3593 $4.9926
======= =======
Total return ... 7.34% 0.26%
Net assets, end of
period (000
omitted) ..... $40,396 $26,020
Ratio of expenses
to average net
assets ....... 1.05%** 1.26%
Ratio of net investment
income to average
net assets ... 3.44%** 1.37%
Portfolio turnover
rate ......... 27.66%** 23.23%
*The Money Market Portfolio, Bond Portfolio, High Income Portfolio and Growth
Portfolio's inception date is December 2, 1986; however, since these
Portfolios did not have any investment activity or incur expenses prior to the
date of initial offering, the per share information is for a capital share
outstanding for the period from July 13, 1987 (initial offering) through
December 31, 1987. The Income Portfolio's inception date is May 16, 1991;
however, since this Portfolio did not have any investment activity or incur
expenses prior to the date of initial offering, the per share information is
for a capital share outstanding for the period from July 16, 1991 (initial
offering) through December 31, 1991. The International Portfolio, Small Cap
Portfolio, Balanced Portfolio and Limited-Term Bond Portfolio's inception date
is April 28, 1994; however, since these Portfolios did not have any investment
activity or incur expenses prior to the date of initial offering, the per
share information is for a capital share outstanding for the period from May
3, 1994 (initial offering) through December 31, 1994. The Asset Strategy
Portfolio's inception date is February 14, 1995; however, since this Portfolio
did not have any investment activity or incur expenses prior to the date of
initial offering, the per share information is for a capital share outstanding
for the period from May 1, 1995 (initial offering) through September 30, 1995.
Ratios and portfolio turnover rates have been annualized.
**Annualized.
<PAGE>
TMK/United Funds, Inc.
Financial Highlights
The following information, with the exception of June 30, 1995, has
been audited by Price Waterhouse LLP, independent accountants, and
should be read in conjunction with the financial statements and notes
thereto, together with the report of Price Waterhouse LLP included in
the SAI.
(For a share outstanding throughout each period)
THE SMALL CAP PORTFOLIO
For the six For the
months ended period
June 30, ended
1995 12/31/94*
----------- ----------
(Unaudited)
Net asset value,
beginning of
period ..... $5.9918 $5.0000
------- -------
Income from investment
operations:
Net investment
income ... 0.0600 0.0376
Net realized and
unrealized gain
on investments 0.8812 1.0086
------- -------
Total from investment
operations . 0.9412 1.0462
------- -------
Less distributions:
Dividends from net
investment income(0.0000) (0.0376)
Distribution from
capital gains (0.0000) (0.0168)
------- -------
Total distributions (0.0000) (0.0544)
------- -------
Net asset value,
end of period $6.9330 $5.9918
======= =======
Total return ... 15.71% 20.92%
Net assets, end of
period (000
omitted) ..... $34,207 $16,080
Ratio of expenses
to average net
assets ....... 1.01%** 1.08%
Ratio of net investment
income to average
net assets ... 2.36%** 2.35%
Portfolio turnover
rate ......... 56.10%** 21.61%
*The Money Market Portfolio, Bond Portfolio, High Income Portfolio and Growth
Portfolio's inception date is December 2, 1986; however, since these
Portfolios did not have any investment activity or incur expenses prior to the
date of initial offering, the per share information is for a capital share
outstanding for the period from July 13, 1987 (initial offering) through
December 31, 1987. The Income Portfolio's inception date is May 16, 1991;
however, since this Portfolio did not have any investment activity or incur
expenses prior to the date of initial offering, the per share information is
for a capital share outstanding for the period from July 16, 1991 (initial
offering) through December 31, 1991. The International Portfolio, Small Cap
Portfolio, Balanced Portfolio and Limited-Term Bond Portfolio's inception date
is April 28, 1994; however, since these Portfolios did not have any investment
activity or incur expenses prior to the date of initial offering, the per
share information is for a capital share outstanding for the period from May
3, 1994 (initial offering) through December 31, 1994. The Asset Strategy
Portfolio's inception date is February 14, 1995; however, since this Portfolio
did not have any investment activity or incur expenses prior to the date of
initial offering, the per share information is for a capital share outstanding
for the period from May 1, 1995 (initial offering) through September 30, 1995.
Ratios and portfolio turnover rates have been annualized.
**Annualized.
<PAGE>
TMK/United Funds, Inc.
Financial Highlights
The following information, with the exception of June 30, 1995, has
been audited by Price Waterhouse LLP, independent accountants, and
should be read in conjunction with the financial statements and notes
thereto, together with the report of Price Waterhouse LLP included in
the SAI.
(For a share outstanding throughout each period)
THE BALANCED PORTFOLIO
For the six For the
months ended period
June 30, ended
1995 12/31/94*
----------- ----------
(Unaudited)
Net asset value,
beginning of
period ........ $4.9359 $5.0000
------- -------
Income from investment
operations:
Net investment
income ...... 0.0732 0.0460
Net realized and
unrealized gain (loss)
on investments 0.5080 (0.0641)
------- -------
Total from investment
operations .... 0.5812 (0.0181)
Less dividends from net
investment
income ....... (0.0000) (0.0460)
------- -------
Net asset value,
end of period $5.5171 $4.9359
======= =======
Total return 11.78% -0.37%
Net assets, end of
period (000
omitted) ..... $15,766 $8,671
Ratio of expenses
to average net
assets ....... 0.79%** 0.95%
Ratio of net investment
income to average
net assets ... 3.54%** 3.14%
Portfolio turnover
rate ......... 78.58%** 19.74%
*The Money Market Portfolio, Bond Portfolio, High Income Portfolio and Growth
Portfolio's inception date is December 2, 1986; however, since these
Portfolios did not have any investment activity or incur expenses prior to the
date of initial offering, the per share information is for a capital share
outstanding for the period from July 13, 1987 (initial offering) through
December 31, 1987. The Income Portfolio's inception date is May 16, 1991;
however, since this Portfolio did not have any investment activity or incur
expenses prior to the date of initial offering, the per share information is
for a capital share outstanding for the period from July 16, 1991 (initial
offering) through December 31, 1991. The International Portfolio, Small Cap
Portfolio, Balanced Portfolio and Limited-Term Bond Portfolio's inception date
is April 28, 1994; however, since these Portfolios did not have any investment
activity or incur expenses prior to the date of initial offering, the per
share information is for a capital share outstanding for the period from May
3, 1994 (initial offering) through December 31, 1994. The Asset Strategy
Portfolio's inception date is February 14, 1995; however, since this Portfolio
did not have any investment activity or incur expenses prior to the date of
initial offering, the per share information is for a capital share outstanding
for the period from May 1, 1995 (initial offering) through September 30, 1995.
Ratios and portfolio turnover rates have been annualized.
**Annualized.
<PAGE>
TMK/United Funds, Inc.
Financial Highlights
(For a share outstanding throughout the period)
THE ASSET STRATEGY PORTFOLIO
For the
period ended
September 30,
1995*
-----------
(Unaudited)
Net asset value,
beginning of
period ...... $5.0000
-------
Income from investment
operations:
Net investment
income .... 0.0416
Net realized and
unrealized gain
on investments 0.0512
-------
Total from investment
operations .... 0.0928
-------
Net asset value,
end of period $5.0928
=======
Total return 4.49%
Net assets, end of
period (000
omitted) ...... $2,537
Ratio of expenses
to average net
assets ........ 0.99%
Ratio of net investment
income to average
net assets .... 4.50%
Portfolio turnover
rate .......... 0.00%
*The Money Market Portfolio, Bond Portfolio, High Income Portfolio and Growth
Portfolio's inception date is December 2, 1986; however, since these
Portfolios did not have any investment activity or incur expenses prior to the
date of initial offering, the per share information is for a capital share
outstanding for the period from July 13, 1987 (initial offering) through
December 31, 1987. The Income Portfolio's inception date is May 16, 1991;
however, since this Portfolio did not have any investment activity or incur
expenses prior to the date of initial offering, the per share information is
for a capital share outstanding for the period from July 16, 1991 (initial
offering) through December 31, 1991. The International Portfolio, Small Cap
Portfolio, Balanced Portfolio and Limited-Term Bond Portfolio's inception date
is April 28, 1994; however, since these Portfolios did not have any investment
activity or incur expenses prior to the date of initial offering, the per
share information is for a capital share outstanding for the period from May
3, 1994 (initial offering) through December 31, 1994. The Asset Strategy
Portfolio's inception date is February 14, 1995; however, since this Portfolio
did not have any investment activity or incur expenses prior to the date of
initial offering, the per share information is for a capital share outstanding
for the period from May 1, 1995 (initial offering) through September 30, 1995.
Ratios and portfolio turnover rates have been annualized.
<PAGE>
TMK/United Funds, Inc.
Financial Highlights
The following information, with the exception of June 30, 1995, has
been audited by Price Waterhouse LLP, independent accountants, and
should be read in conjunction with the financial statements and notes
thereto, together with the report of Price Waterhouse LLP included in
the SAI.
(For a share outstanding throughout each period)
THE MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
For the six
months ended For the fiscal year ended December 31,
June 30, --------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987*
-------- ---- ---- ---- ---- ---- ---- ---- -----
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period .......... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- ------- ------- ------- -------
Net investment
income .......... 0.0273 0.0368 0.0260 0.0324 0.0536 0.0753 0.0852 0.0677 0.0297
Less dividends
declared ........ (0.0273) (0.0368) (0.0260) (0.0324) (0.0536) (0.0753) (0.0852) (0.0677) (0.0297)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value,
end of period ... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= ======= ======= ======= =======
Total return ...... 2.76% 3.72% 2.63% 3.29% 5.49% 7.82% 8.91% 7.37% 6.57%
Net assets, end of
period (000
omitted) ........ $31,035 $30,812 $26,000 $23,995 $19,797 $16,870 $11,753 $8,711 $5,868
Ratio of expenses
to average net
assets .......... 0.65%** 0.65% 0.65% 0.65% 0.76% 0.79% 0.78% 0.94% 0.89%
Ratio of net investment
income to average
net assets ...... 5.51%** 3.72% 2.61% 3.17% 5.33% 7.52% 8.49% 6.84% 6.81%
*The Money Market Portfolio, Bond Portfolio, High Income Portfolio and Growth Portfolio's inception date is December 2, 1986;
however, since these Portfolios did not have any investment activity or incur expenses prior to the date of initial offering,
the per share information is for a capital share outstanding for the period from July 13, 1987 (initial offering) through
December 31, 1987. The Income Portfolio's inception date is May 16, 1991; however, since this Portfolio did not have any
investment activity or incur expenses prior to the date of initial offering, the per share information is for a capital share
outstanding for the period from July 16, 1991 (initial offering) through December 31, 1991. The International Portfolio, Small
Cap Portfolio, Balanced Portfolio and Limited-Term Bond Portfolio's inception date is April 28, 1994; however, since these
Portfolios did not have any investment activity or incur expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from May 3, 1994 (initial offering) through December 31, 1994.
The Asset Strategy Portfolio's inception date is February 14, 1995; however, since this Portfolio did not have any investment
activity or incur expenses prior to the date of initial offering, the per share information is for a capital share outstanding
for the period from May 1, 1995 (initial offering) through September 30, 1995. Ratios and portfolio turnover rates have been
annualized.
**Annualized.
</TABLE>
<PAGE>
TMK/United Funds, Inc.
Financial Highlights
The following information, with the exception of June 30, 1995, has
been audited by Price Waterhouse LLP, independent accountants, and
should be read in conjunction with the financial statements and notes
thereto, together with the report of Price Waterhouse LLP included in
the SAI.
(For a share outstanding throughout each period)
THE LIMITED-TERM BOND PORTFOLIO
For the six For the
months ended period
June 30, ended
1995 12/31/94*
----------- ----------
(Unaudited)
Net asset value,
beginning of
period ... $4.8611 $5.0000
------- -------
Income from investment
operations:
Net investment
income 0.1450 0.1507
Net realized and
unrealized gain (loss)
on investments 0.2886 (0.1375)
------- -------
Total from investment
operations 0.4336 0.0132
------- -------
Less distributions:
Dividends from net
investment
income (0.0000) (0.1507)
Distribution from
capital gains (0.0000) (0.0014)
-------- -------
Total distributions (0.0000) (0.1521)
-------- -------
Net asset value,
end of period $5.2947 $4.8611
======= =======
Total return 8.92% 0.26%
Net assets, end of
period (000
omitted) . $2,219 $1,645
Ratio of expenses
to average net
assets.... 0.83%** 0.93%
Ratio of net investment
income to average
net assets 6.37%** 5.89%
Portfolio turnover
rate ..... 0.00%** 93.83%
*The Money Market Portfolio, Bond Portfolio, High Income Portfolio and
Growth Portfolio's inception date is December 2, 1986; however, since
these Portfolios did not have any investment activity or incur expenses
prior to the date of initial offering, the per share information is for
a capital share outstanding for the period from July 13, 1987 (initial
offering) through December 31, 1987. The Income Portfolio's inception
date is May 16, 1991; however, since this Portfolio did not have any
investment activity or incur expenses prior to the date of initial
offering, the per share information is for a capital share outstanding
for the period from July 16, 1991 (initial offering) through December
31, 1991. The International Portfolio, Small Cap Portfolio, Balanced
Portfolio and Limited-Term Bond Portfolio's inception date is April 28,
1994; however, since these Portfolios did not have any investment
activity or incur expenses prior to the date of initial offering, the
per share information is for a capital share outstanding for the period
from May 3, 1994 (initial offering) through December 31, 1994. The
Asset Strategy Portfolio's inception date is February 14, 1995;
however, since this Portfolio did not have any investment activity or
incur expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from May
1, 1995 (initial offering) through September 30, 1995. Ratios and
portfolio turnover rates have been annualized.
**Annualized.
<PAGE>
TMK/United Funds, Inc.
Financial Highlights
The following information, with the exception of June 30, 1995, has
been audited by Price Waterhouse LLP, independent accountants, and
should be read in conjunction with the financial statements and notes
thereto, together with the report of Price Waterhouse LLP included in
the SAI.
(For a share outstanding throughout each period)
THE BOND PORTFOLIO
<TABLE>
<CAPTION>
For the six
months ended For the fiscal year ended December 31,
June 30, --------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987*
-------- ---- ---- ---- ---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period .......... $4.7393 $5.4045 $5.2626 $5.2661 $4.9534 $5.0249 $4.8852 $4.9246 $5.0000
------- ------- ------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income ........ 0.1727 0.3507 0.3334 0.3643 0.3867 0.4025 0.4155 0.4088 0.1861
Net realized and
unrealized gain
(loss) on
investments ... 0.4143 (0.6652) 0.3046 0.0216 0.3771 (0.0715) 0.1397 (0.0394) (0.0249)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations ...... 0.5870 (0.3145) 0.6380 0.3859 0.7638 0.3310 0.5552 0.3694 0.1612
------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment
income ........ (0.0000) (0.3507) (0.3334) (0.3643) (0.3867) (0.4025) (0.4155) (0.4088) (0.1861)
Distribution from
capital gains . (0.0000) (0.0000) (0.1627) (0.0251) (0.0644) (0.0000) (0.0000) (0.0000) (0.0505)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions (0.0000) (0.3507) (0.4961) (0.3894) (0.4511) (0.4025) (0.4155) (0.4088) (0.2366)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value,
end of period ... $5.3263 $4.7393 $5.4045 $5.2626 $5.2661 $4.9534 $5.0249 $4.8852 $4.9246
======= ======= ======= ======= ======= ======= ======= ======= =======
Total return ...... 12.39% -5.90% 12.37% 7.67% 16.19% 7.03% 11.82% 7.74% 7.20%
Net assets, end of
period (000
omitted) ........ $83,689 $74,017 $81,727 $49,428 $29,112 $16,464 $11,530 $6,465 $2,923
Ratio of expenses
to average net
assets .......... 0.62%** 0.62% 0.62% 0.64% 0.72% 0.78% 0.81% 0.96% 0.79%
Ratio of net investment
income to average
net assets ...... 6.95%** 6.73% 6.01% 6.91% 7.65% 8.05% 8.34% 8.17% 8.96%
Portfolio turnover
rate ............ 64.96%** 135.82% 68.75% 44.32% 52.50% 51.50% 42.83% 29.18% 187.93%
*The Money Market Portfolio, Bond Portfolio, High Income Portfolio and Growth Portfolio's inception date is December 2, 1986;
however, since these Portfolios did not have any investment activity or incur expenses prior to the date of initial offering,
the per share information is for a capital share outstanding for the period from July 13, 1987 (initial offering) through
December 31, 1987. The Income Portfolio's inception date is May 16, 1991; however, since this Portfolio did not have any
investment activity or incur expenses prior to the date of initial offering, the per share information is for a capital share
outstanding for the period from July 16, 1991 (initial offering) through December 31, 1991. The International Portfolio, Small
Cap Portfolio, Balanced Portfolio and Limited-Term Bond Portfolio's inception date is April 28, 1994; however, since these
Portfolios did not have any investment activity or incur expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from May 3, 1994 (initial offering) through December 31, 1994.
The Asset Strategy Portfolio's inception date is February 14, 1995; however, since this Portfolio did not have any investment
activity or incur expenses prior to the date of initial offering, the per share information is for a capital share outstanding
for the period from May 1, 1995 (initial offering) through September 30, 1995. Ratios and portfolio turnover rates have been
annualized.
**Annualized.
</TABLE>
<PAGE>
TMK/United Funds, Inc.
Financial Highlights
The following information, with the exception of June 30, 1995, has
been audited by Price Waterhouse LLP, independent accountants, and
should be read in conjunction with the financial statements and notes
thereto, together with the report of Price Waterhouse LLP included in
the SAI.
(For a share outstanding throughout each period)
THE HIGH INCOME PORTFOLIO
<TABLE>
<CAPTION>
For the six
months ended For the fiscal year ended December 31,
June 30, --------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987*
-------- ---- ---- ---- ---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period ........... $4.1118 $4.6373 $4.2886 $4.0770 $3.4067 $4.1288 $4.8837 $4.7333 $5.0000
------- ------- ------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income ......... 0.1967 0.4106 0.3899 0.4050 0.4368 0.4346 0.5810 0.5263 0.2425
Net realized and
unrealized gain
(loss) on
investments .... 0.2225 (0.5255) 0.3487 0.2116 0.6703 (0.7221) (0.7549) 0.1595 (0.2667)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations ....... 0.4192 (0.1149) 0.7386 0.6166 1.1071 (0.2875) (0.1739) 0.6858 (0.0242)
------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from
net investment
income ......... (0.0000) (0.4106) (0.3899) (0.4050) (0.4368) (0.4346) (0.5810) (0.5263) (0.2425)
Distribution from
capital gains .. (0.0000) (0.0000) (0.0000) (0.0000) (0.0000) (0.0000) (0.0000) (0.0091) (0.0000)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions (0.0000) (0.4106) (0.3899) (0.4050) (0.4368) (0.4346) (0.5810) (0.5354) (0.2425)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $4.5310 $4.1118 $4.6373 $4.2886 $4.0770 $3.4067 $4.1288 $4.8837 $4.7333
======= ======= ======= ======= ======= ======= ======= ======= =======
Total return ....... 10.20% -2.55% 17.90% 15.70% 34.19% -7.44% -4.19% 15.14% -0.99%
Net assets, end of
period (000
omitted) ......... $80,964 $72,644 $71,265 $41,456 $24,394 $13,868 $15,717 $12,779 $4,521
Ratio of expenses
to average net
assets ........... 0.73%** 0.74% 0.75% 0.77% 0.87% 0.90% 0.82% 0.91% 0.79%
Ratio of net investment
income to average
net assets ....... 9.22%** 9.03% 8.66% 9.48% 11.32% 11.55% 12.54% 10.85% 10.70%
Portfolio turnover
rate ............. 33.82%** 37.86% 54.22% 60.79% 34.00% 12.21% 74.97% 46.75% 7.09%
*The Money Market Portfolio, Bond Portfolio, High Income Portfolio and Growth Portfolio's inception date is December 2, 1986;
however, since these Portfolios did not have any investment activity or incur expenses prior to the date of initial offering,
the per share information is for a capital share outstanding for the period from July 13, 1987 (initial offering) through
December 31, 1987. The Income Portfolio's inception date is May 16, 1991; however, since this Portfolio did not have any
investment activity or incur expenses prior to the date of initial offering, the per share information is for a capital share
outstanding for the period from July 16, 1991 (initial offering) through December 31, 1991. The International Portfolio, Small
Cap Portfolio, Balanced Portfolio and Limited-Term Bond Portfolio's inception date is April 28, 1994; however, since these
Portfolios did not have any investment activity or incur expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from May 3, 1994 (initial offering) through December 31, 1994.
The Asset Strategy Portfolio's inception date is February 14, 1995; however, since this Portfolio did not have any investment
activity or incur expenses prior to the date of initial offering, the per share information is for a capital share outstanding
for the period from May 1, 1995 (initial offering) through September 30, 1995. Ratios and portfolio turnover rates have been
annualized.
**Annualized.
Information regarding the performance of the Portfolios is contained in
the Fund's annual report to shareholders which may be obtained without
charge by request to the Fund at the address or phone number shown on
the cover of this Prospectus.
<PAGE>
THE FUND
The Fund is a series fund consisting of ten Portfolios: the Money
Market Portfolio, the Bond Portfolio, the High Income Portfolio, the Growth
Portfolio, the Income Portfolio, the International Portfolio, the Small Cap
Portfolio, the Balanced Portfolio, the Limited-Term Bond Portfolio and the Asset
Strategy Portfolio. The Fund is the funding or investment vehicle for variable
life insurance policies and variable annuity policies (hereinafter collectively
referred to as the "Policies") offered by the separate accounts of certain life
insurance companies ("Participating Insurance Companies"). As of the date of
this Prospectus, the only Participating Insurance Company is United Investors
Life Insurance Company. The Policies are described in the accompanying
prospectus issued by the Participating Insurance Company. The Fund assumes no
responsibility for such prospectus.
The Fund does not perceive any risks to the Policyowners resulting
from the use of the same funding vehicle for both annuity and life
insurance policies nor any disadvantages to Policyowners arising from
the fact that the interests of annuity and life insurance Policyowners
may differ. Nevertheless, the Board of Directors will monitor events in
order to identify any material, irreconcilable conflict in the interests
of such Policyowners which may arise.
The individual Policyowners are not direct shareholders of the
Fund. Rather, the Participating Insurance Companies and their separate
accounts are the actual shareholders. To the extent required by law,
Policyowners are entitled to give voting instructions with respect to
Fund shares held in the separate accounts of the Participating Insurance
Companies.
Performance Information
From time to time advertisements or information furnished may
include performance data. Performance may be shown by presenting one or
more performance measurements, including yield, total return and
performance rankings. Performance data will be accompanied by or used
in calculating performance data for the respective separate accounts
that invest in the Portfolio.
Bond Portfolio, High Income Portfolio, Growth Portfolio, Income
Portfolio, International Portfolio, Small Cap Portfolio, Balanced
Portfolio, Limited-Term Bond Portfolio, Asset Strategy Portfolio
A Portfolio's total return is its overall change in value for the
period shown including the effect of reinvesting dividends and capital
gains distributions and any change in the net asset value per share. A
cumulative total return reflects the Portfolio's change in value over a
stated period of time. An average annual total return reflects the
hypothetical annually compounded return that would have produced the
cumulative total return for a stated period if the Portfolio's
performance had been constant during each year of that period. Average
annual total returns are not actual year-by-year results and investors
should realize that total returns will fluctuate. No sales charge is
required to be paid by the Participating Insurance Companies for
purchase of Portfolio shares. The Fund may also provide non-
standardized performance information.
Money Market Portfolio
The "current yield" of the Money Market Portfolio refers to the
income generated by an investment in the Portfolio over a stated seven-
day period. This income is then "annualized." That is, the amount of
income generated by the investment during that period is assumed to be
generated each week over a 52-week period and is shown as a percentage
of the investment. The "effective yield" is calculated similarly but,
when annualized, the income earned by an investment in the Portfolio is
assumed to be reinvested. The "effective yield" will be slightly higher
than the "current yield" because of the compounding effect of the
assumed reinvestment.
General
From time to time, advertisements and information furnished to
present or prospective Policyholders may include performance rankings as
published by recognized independent mutual fund statistical services
such as Lipper Analytical Services, Inc., or by publications of general
interest such as Forbes, Money, The Wall Street Journal, Business Week,
Barron's, Fortune or Morningstar Mutual Fund Values. A Portfolio's
performance may also be compared to that of other selected mutual funds
or selected recognized market indicators. Performance information may
be quoted numerically or presented in a table, graph or other
illustration.
All performance information included in advertisements or
information provided to present or prospective Policyholders is
historical in nature and is not intended to represent or guarantee
future results. Yield information cannot necessarily be used to compare
Portfolio shares with investment alternatives which provide fixed
yields, such as bank accounts (which accounts may be insured), or with
yields of similar investment companies which may be computed in a
different manner. An investment in Portfolio shares is not insured.
The value of any Portfolio's shares when redeemed may be more or less
than their original cost. See the SAI for total return and yield and
methods of computation.
GOALS AND INVESTMENT POLICIES OF THE PORTFOLIOS
Each of the ten Portfolios has a different goal that it pursues
through separate investment policies that are described below. The
different goals of the Portfolios and the different investment policies
utilized by each Portfolio in attempting to achieve its goal can be
expected to affect the degree of market and financial risk to which each
Portfolio is subject as well as the return of each Portfolio. There can
be no assurance that a Portfolio will achieve its goals; some market
risks are inherent in all securities to varying degrees.
The goals, investment policies and restrictions of each Portfolio
may, unless otherwise specifically stated, be changed by the Directors
of the Fund without a vote of the shareholders. In addition to the
investment policies for each Portfolio discussed below, each Portfolio
may engage in certain other investment strategies described under
"Investment Policies Common to the Ten Portfolios." Additional
information concerning investment policies may be found in the SAI.
The Money Market Portfolio
The goal of the Money Market Portfolio is maximum current income
consistent with stability of principal. The Portfolio seeks to achieve
this goal by investing in money market securities such as commercial
paper, including variable amount master demand notes, corporate debt
obligations, bank obligations of domestic and foreign banks and foreign
branches of domestic banks and instruments secured by bank obligations,
obligations of the U.S. and Canadian governments or their respective
agencies and instrumentalities and repurchase agreements.
Investments are limited to those that are dollar denominated and
that are rated in one of the two highest rating categories by the
requisite nationally recognized statistical rating organization(s) or
are comparable unrated securities. See Appendix A to this Prospectus
for a description of some of these ratings. Investments in the
securities of any one issuer (except securities issued or guaranteed by
the U.S. Government or its agencies or instrumentalities ("U.S.
Government Securities")) are limited to no more than 5% of the
Portfolio's assets. Investments in securities rated in the second
highest rating category by the requisite rating organization(s) or
comparable unrated securities are limited to no more than 5% of the
Portfolio's assets, with investments in such securities of any one
issuer (except U.S. Government Securities) being limited to the greater
of one percent of the Portfolio's assets or $1,000,000. The Portfolio
may only invest in securities with a remaining maturity of not more than
thirteen months.
The Portfolio seeks to maintain a constant net asset value of $1.00
per share, although this may not always be possible. It uses the
amortized cost method of securities valuation. The Portfolio's income
fluctuates with changes in prevailing interest rates and there is no
assurance that its goal will be achieved. See the SAI for a discussion
of the valuation method.
The Bond Portfolio
The goal of the Bond Portfolio is to provide current income with
an emphasis on preservation of capital. It ordinarily invests at least
65% of its assets in debt securities of varying yields, quality and
maturities.
In selecting debt securities for this Portfolio, the Fund's
Manager, Waddell & Reed Investment Management Company (the "Manager"),
considers yield and relative safety and, in the case of convertible
securities, the possibility of capital growth. The Portfolio may not
purchase any securities other than debt securities if after such
purchase more than 10% of its total assets would be invested in non-debt
securities. However, this 10% limit does not include any non-debt
securities held as a result of conversion of a debt security or exercise
of a warrant. The Portfolio may invest in debt securities rated in any
rating category of the established rating services and unrated
securities judged by the Manager to be of equivalent quality. See "Risk
Factors of High-Yield Investing" for a discussion of the risks
associated with non-investment grade debt securities.
The Portfolio may invest a significant, but varying, percentage of
its assets in U.S. Government Securities. See "Investment Policies
Common to the Ten Portfolios" for a further discussion of the
Portfolio's ability to invest in U.S. Government Securities. Under
unusual market or economic conditions, for temporary defensive purposes,
the Portfolio may invest up to all of its assets in cash or cash
equivalents. Taking a defensive position might result in a lower yield.
The Portfolio is actively managed and may have a turnover rate in
excess of 200%, which will result in correspondingly high commission
expenses and transaction costs and may result in certain tax
consequences. In determining what proportion of the Portfolio will be
invested in what type and quality of securities the Manager considers
what investments will be most effective in achieving the Portfolio's
goal. The proportions may vary depending upon the outlook for the
economy and the securities markets, the quality of available
investments, the level of interest rates, the ability to preserve
capital and other factors.
The Portfolio's income will vary and the net asset value of its
shares will increase or decrease with changes in the market prices of
its investments. Market prices of debt securities will increase or
decrease depending in large part on changes in prevailing interest
rates. If interest rates increase, the value of debt securities is
likely to go down; if rates decrease the value may go up. There is no
assurance that the goal of the Bond Portfolio will be achieved.
The High Income Portfolio
The primary goal of the High Income Portfolio is high current
income; as a secondary goal it seeks capital growth when consistent with
the primary goal. The Portfolio attempts to achieve these goals by
investing primarily in a diversified portfolio of high-yield, high-risk
fixed income securities. These include corporate bonds and notes,
convertible securities and preferred stocks that are rated in the lower
rating categories of the established rating services (Baa or lower by
Moody's Investors Service, Inc. ("MIS") or BBB or lower by Standard and
Poor's Ratings Services ("S&P")), or are unrated securities that are, in
the opinion of the Manager, of similar quality to rated bonds in these
categories. The Portfolio may invest in debt securities rated in any
rating category of the established rating services and unrated
securities judged by the Manager to be of equivalent quality. See
Appendix A to this Prospectus for a description of bond ratings. See
"Risk Factors of High-Yield Investing" for a discussion of the risks
associated with non-investment grade debt securities.
Under normal market conditions at least 65% of the value of the
Portfolio's total assets will be invested to seek a high level of
current income, which securities may include high-yield, high-risk
securities. A portion of the Portfolio's assets may be invested in
common stocks; however, the Portfolio will not purchase any common
stocks if after such purchase more than 20% of the value of its total
assets would be invested in common stocks. This 20% limit includes
common stocks acquired on conversion of convertible securities, on
exercise of warrants or call options or in any other voluntary manner.
The Portfolio will invest in common stocks in order to attempt to
achieve either a combination of its primary and secondary goals, in
which case the common stocks will be dividend-paying, or to achieve its
secondary goal, in which case the common stocks may not pay dividends.
The Portfolio does not anticipate investing more than 4% of its total
assets in non-dividend-paying common stocks.
Under unusual market or economic conditions, for temporary
defensive purposes, the Portfolio may invest up to all of its assets in
(i) higher-rated securities if the Manager believes that the risk of
loss of income and principal may be reduced with a relatively small
reduction in yield; or (ii) cash or cash equivalents. Taking a defensive
position might result in a lower yield.
The Portfolio may invest in zero coupon securities. Although
the Manager does not believe that investing in such securities results
in material risks, such investing may jeopardize the Portfolio's ability
to meet its goals or meet the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code").
The Portfolio's income will vary and the net asset value of its
shares will increase or decrease with changes in the market prices of
its investments. There is no assurance that the goals of the High
Income Portfolio will be achieved. The Portfolio is actively managed
and may have a turnover rate in excess of 100%, which will result in
correspondingly higher commission expenses and transaction costs and may
result in certain tax consequences.
The Growth Portfolio
The goal of the Growth Portfolio is capital growth with current
income as a secondary goal. It seeks to achieve these goals by
investing in common stocks or securities convertible into common stocks.
The Portfolio is free to invest in a wide range of marketable securities
offering the potential for growth. This enables it to pursue investment
values in various sectors of the market.
Under unusual market or economic conditions, for temporary
defensive purposes, the Portfolio may invest up to all of its assets in
cash or fixed income securities or in common stocks chosen for their
relative stability rather than for growth potential. Taking a defensive
position might result in a lower yield.
As an operating (i.e., nonfundamental) policy, the Portfolio does
not intend to invest in non-investment grade debt securities if, as a
result of such investment, more than 5% of its assets would consist of
such investments. Subject to this limitation, the Portfolio may invest
in debt securities rated in any rating category of the established
rating services and unrated securities judged by the Manager to be of
equivalent quality.
The net asset value of the shares of the Portfolio will increase or
decrease with changes in the market price of the investments held by the
Portfolio. There is no assurance that the goals of the Portfolio will
be achieved. The Portfolio is actively managed and may have a turnover
rate in excess of 200% which will result in correspondingly higher
commission expenses and transaction costs and may result in certain tax
consequences.
The Income Portfolio
The goal of the Income Portfolio is the maintenance of current
income, subject to market conditions. It seeks to achieve this goal by
investing primarily in common stocks, or securities convertible into
common stocks, of companies that have the potential for capital growth
or that may be expected to resist market decline. When investment
conditions are such that stocks with high yields are less attractive
than other common stocks, lower yielding common stocks may be held
because of their prospects for appreciation. At other times, the
Portfolio may seek to achieve this goal by holding cash or investing in
debt securities and preferred stocks when the return on these securities
is attractive relative to the return on common stocks. As an operating
(i.e., nonfundamental) policy, this Portfolio does not intend to invest
in non-investment grade debt securities if, as a result of such
investment, more than 5% of its assets would consist of such
investments. Subject to this limitation, the Portfolio may invest in
debt securities rated in any rating category of the established ratings
services and unrated securities judged by the Manager to be of
equivalent quality.
The net asset value of the shares of the Portfolio will increase or
decrease with changes in the market price of the investments held by the
Portfolio. There is no assurance that the goal of the Portfolio will be
achieved. The Portfolio may have a portfolio turnover rate in excess of
100%, which will result in correspondingly greater commission expenses
and transaction costs and may result in certain tax consequences.
The International Portfolio
The primary goal of the International Portfolio is the long-term
appreciation of capital. Current income is a secondary goal. The
Portfolio seeks to achieve these goals by investing primarily in
securities issued by companies or governments of any nation. The
securities selected to attempt to achieve the Portfolio's primary goal
are those issued by companies that the Manager believes have the
potential for long-term growth. There are three main kinds of
securities that the Portfolio may own: common stocks, preferred stocks
and debt securities. Securities purchased because they may increase in
value over the long term will usually be common stocks, securities that
may be converted into common stocks or rights for the purchase of common
stocks.
Under unusual market or economic conditions, for temporary
defensive purposes, up to all of the Portfolio's assets may be invested
in either debt securities (including commercial paper or short-term U.S.
Government Securities) or preferred stocks or both. Taking a defensive
position may result in a lower yield.
As an operating (i.e., nonfundamental) policy, the Portfolio does
not intend to invest in non-investment grade debt securities if, as a
result of such investment, more than 5% of its assets would consist of
such investments. Subject to this limitation, the Portfolio may invest
in debt securities rated in any rating category of the established
ratings services and unrated securities judged by the Manager to be of
equivalent quality. The Portfolio will not invest more than 5% of its
assets, taken at market value at the time of investment, in companies,
including predecessors, with less than three years continuous operation.
This restriction does not apply to any obligation issued or guaranteed
by the U.S. Government, its agencies or instrumentalities, or to
collateralized mortgage obligations ("CMOs"), other mortgage related
securities or indexed securities. The Portfolio may buy shares of other
investment companies that do not redeem their shares, subject to the
conditions stated in the SAI.
All or a substantial portion of the Portfolio's assets may be
invested in foreign securities if, in the opinion of the Manager, doing
so might assist in achieving the Portfolio's goal. The Portfolio may
purchase restricted foreign securities provided that, after such
purchase, not more than 5% of its assets consist of such securities.
See "Investment Policies Common to the Ten Portfolios" for a further
discussion of the Portfolio's ability to invest in foreign securities.
The Portfolio's income will vary and the net asset value of its
shares will increase or decrease with changes in the market prices of
its investments. There is no assurance that the goals of the Portfolio
will be achieved. The Portfolio may have a turnover rate in excess of
100%, which will result in correspondingly higher commission expenses
and transaction costs and may result in certain tax consequences. The
ability to invest all or a substantial amount of the Portfolio's assets
in foreign securities may result in a higher turnover rate and higher
costs.
The Small Cap Portfolio
The goal of the Small Cap Portfolio is to seek the growth of
capital. The Portfolio seeks to achieve this goal through a diversified
holding of securities, primarily in the common stocks of, or securities
convertible into the common stocks of, companies that are relatively new
or unseasoned, in their early stages of development or smaller and
positioned in new and emerging industries where the opportunity for
rapid growth is above average. Under normal market conditions, at least
65% of the Portfolio's total assets will be invested in those companies
that have market capitalization of up to $500,000,000 as of the
company's latest annual report. Subject to such limitations, the
Portfolio may occasionally invest in securities of larger companies that
are being fundamentally changed and revitalized or have a position that
is considered strong relative to the market as a whole or that otherwise
offer unusual opportunities for above-average growth. There are three
main kinds of securities that the Portfolio may own: common stocks,
preferred stocks and debt securities.
Under unusual market or economic conditions, for temporary
defensive purposes, up to all of the assets of the Portfolio may be
invested in either debt securities (including commercial paper or short-
term U.S. Government Securities) or preferred stocks or both. Taking a
defensive position may result in a lower yield.
The Portfolio may buy shares of other investment companies that do
not redeem their shares, subject to the conditions stated in the SAI.
The Portfolio may purchase foreign securities as described in this
Prospectus and the SAI. The Portfolio will not invest more than 5% of
its assets, taken at market value at the time of investment, in
companies, including predecessors, with less than three years continuous
operation. This restriction does not apply to any obligation issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, or
to CMOs, other mortgage-related securities or indexed securities.
As an operating (i.e., nonfundamental) policy, the Portfolio
does not intend to invest in non-investment grade debt securities if, as
a result of such investment, more than 5% of its assets would consist of
such investments. Subject to this limitation, the Portfolio may invest
in debt securities rated in any rating category of the established
ratings services. The Portfolio may borrow money on an unsecured basis
in order to purchase securities. Borrowing for investment increases
both investment opportunity and risk. Since substantially all of the
Portfolio's assets fluctuate in value, but borrowing obligations are
fixed, net asset value per share will tend to correspondingly increase
or decrease more when the portfolio assets increase or decrease in
value, a factor known as leveraging. The Portfolio may borrow money
only from banks and only to the extent that the value of its assets,
less its liabilities other than borrowings, is equal to at least 300% of
all borrowings including the proposed borrowing.
The Portfolio is designed for investors who are willing to accept
greater risks than are present with many other mutual funds. It is not
intended for those investors who desire assured income and conservation
of capital. The Portfolio ordinarily invests in securities whose market
price often is subject to rapid and wide fluctuation. In selecting
companies, the Manager may look for such characteristics as aggressive
or creative management, technological or specialized expertise, new or
unique products or services, entry into new or emerging industries and
special situations arising out of governmental priorities and programs.
Certain risks are associated with securities of companies that are
relatively new or unseasoned, in their early stages of development or
smaller companies positioned in new or emerging industries where the
opportunity for growth is above average, including potential greater
volatility in share price due to the less established nature of the
companies.
The Portfolio's income will vary and the net asset value of its
shares will increase or decrease with changes in the market prices of
its investments. There is no assurance that the goal of the Portfolio
will be achieved. The Portfolio may have a turnover rate in excess of
100%, which will result in correspondingly higher commission expenses
and transaction costs and may result in certain tax consequences.
The Balanced Portfolio
The primary goal of the Balanced Portfolio is to provide current
income to the extent that, in the opinion of the Manager, market and
economic conditions permit. Secondarily, the Portfolio seeks long-term
appreciation of capital. The Portfolio usually will purchase securities
because of the dividends and interest paid on them and may also purchase
securities because they may increase in value. There are three main
kinds of securities that the Portfolio may own: debt securities, common
stocks and preferred stocks. The Portfolio will ordinarily have at
least 25% of its total assets invested in fixed-income senior
securities. Under unusual market or economic conditions, for temporary
defensive purposes, the Portfolio may have up to all of its assets
invested in common stock or other securities that are not fixed-income
senior securities or both. Taking a defensive position may result in a
lower yield.
As an operating (i.e., nonfundamental) policy, the Portfolio does
not intend to invest in non-investment grade debt securities if, as a
result of such investment, more than 5% of its assets would consist of
such investments. Subject to this limitation, the Portfolio may invest
in debt securities rated in any rating category of the established
ratings services and unrated securities judged by the Manager to be of
equivalent quality. The Portfolio may buy shares of other investment
companies which do not redeem their shares, subject to the conditions
stated in the SAI.
The Portfolio's income will vary and the net asset value of its
shares will increase or decrease with changes in the market prices of
its investments. There is no assurance that the goals of the Portfolio
will be achieved. The Portfolio may have a turnover rate in excess of
100%, which will result in correspondingly higher commission expenses
and transaction costs and may result in certain tax consequences.
The Limited-Term Bond Portfolio
The goal of the Limited-Term Bond Portfolio is to provide a high
level of current income consistent with preservation of capital by
investing primarily in debt securities of investment grade (subject to
the policy regarding non-investment grade securities described below),
including U.S. Government Securities. "Limited-Term" means that the
Portfolio will maintain a dollar-weighted average maturity of its
portfolio of not less than two years and not more than five years. The
maturity of CMOs and other asset-backed securities will be deemed to be
the estimated average life of such securities, as determined in
accordance with certain prescribed models or formulas, such as those
provided by the Public Securities Association. The maturity of other
debt securities will be deemed to be the earlier of the call date or the
maturity date, whichever is appropriate. The debt securities, other
than U.S. Government Securities, in which the Portfolio may invest
include, without limitation, corporate bonds, medium-term notes, asset-
backed securities (such as mortgage-backed securities) and other
financial obligations which are commonly considered debt, all of which
securities will be denominated in U.S. dollars. At least 65% of the
Portfolio's total assets during normal market conditions will be
invested in debt securities. The Portfolio intends to invest a
significant percentage of its net assets in CMOs. Subject to the
Portfolio's other policies, the two main kinds of securities that the
Portfolio may own are common stocks and debt securities. It may also
own convertible securities, including convertible preferred stock in
certain circumstances.
Under unusual market or economic conditions, for temporary
defensive purposes, the Portfolio may, with respect to up to all of its
assets: (i) shorten the average maturity of the Portfolio's portfolio;
(ii) hold cash or cash equivalents; (iii) emphasize debt securities of a
higher quality than those the Portfolio would ordinarily hold; or (iv)
invest in convertible preferred stock. Taking a defensive position may
result in a lower yield.
As an operating (i.e., nonfundamental) policy, the Portfolio does
not intend to invest in non-investment grade debt securities if, as a
result of such investment, more than 5% of its assets would consist of
such investments. Subject to this limitation, the Portfolio may invest
in debt securities rated in any rating category of the established
ratings services and unrated securities judged by the Manager to be of
equivalent quality. The Portfolio will not invest more than 5% of its
assets, taken at market value at the time of investment, in companies,
including predecessors, with less than three years continuous operation.
This restriction does not apply to any obligation issued or guaranteed
by the U.S. Government, its agencies or instrumentalities, or to CMOs,
other mortgage-related securities or indexed securities.
The Portfolio's income will vary and the net asset value of its
shares will increase or decrease with changes in the market prices of
its investments. There is no assurance that the goal of the Portfolio
will be achieved. The Portfolio may have a turnover rate in excess of
300%, which will result in correspondingly higher commission expenses
and transaction costs and may result in certain tax consequences.
The Asset Strategy Portfolio
The goal of the Asset Strategy Portfolio is high total return
with reduced risk over the long term. The Portfolio seeks to achieve
this goal by allocating its assets among stocks, bonds, and short-term
instruments.
Allocating assets among different types of investments allows the
Portfolio to take advantage of opportunities wherever they may occur,
but also subjects the Portfolio to the risks of a given investment type.
Stock values generally fluctuate in response to the activities of
individual companies and general market and economic conditions. The
value of bonds and short-term instruments generally fluctuates based on
changes in interest rates and in the credit quality of the issuer.
The Manager regularly reviews Asset Strategy Portfolio's allocation
of assets and makes changes to favor investments that it believes
provide the most favorable outlook for achieving the Portfolio's goal.
Although the Manager uses its expertise and resources in choosing
investments and allocating assets, the Manager's decisions may not
always be advantageous to the Portfolio.
The Portfolio allocates its assets among the following classes, or
types, of investments. The stock class includes equity securities of
all types. The bond class includes all varieties of fixed-income
instruments with maturities of more than three years (including
adjustable rate preferred stocks). The short-term class includes all
types of short-term instruments with remaining maturities of three years
or less. Within each of these classes, the Portfolio may invest in both
domestic and foreign securities.
The Manager has the ability to allocate the Portfolio's assets
within specified ranges. The Portfolio's mix indicates the benchmark
for its combination of investments in each class over time. The Manager
may change the mix within the specified ranges from time to time. The
range and approximate percentage of the mix for each asset class are
shown below. Some types of investments, such as indexed securities, can
fall into more than one asset class.
Mix Range
------------- ------
Stock class 10-60%
40%
Bond class 20-60%
40%
Short-term class 0-70%
20%
The Portfolio's approach spreads the Portfolio's assets among all
three classes, attempting to moderate the risk potential of stocks,
bonds, and short-term instruments. In pursuit of the Portfolio's goal,
the Manager will not try to pinpoint the precise moment when a major
reallocation should be made. Asset shifts among classes may be made
gradually over time. Under normal circumstances, a single reallocation
will not involve more than 10% of the Portfolio's total assets.
The Portfolio may not invest more than 35% of its assets in lower-
quality debt securities (those rated below BBB by S&P or Baa by MIS and
unrated securities judged by the Manager to be of equivalent quality).
However, the Portfolio does not currently intend to invest more than 20%
of its total assets in securities rated below investment-grade or judged
by the Manager to be of equivalent quality. Subject to these
limitations, the Portfolio may invest in debt securities rated in any
rating category of the established rating services and unrated
securities judged by the Manager to be of equivalent quality. See "Risk
Factors of High-Yield Investing" for a discussion of the risks
associated with non-investment grade debt securities. The Portfolio
does not currently intend to invest in money-market instruments rated
below A-1 by S&P or Prime 1 by MIS, or judged by the Manager to be of
equivalent quality. The Portfolio may invest in preferred stock rated
in any rating category by an established rating service and unrated
preferred stock judged by the Manager to be of equivalent quality.
The Portfolio may invest in zero coupon bonds. Although the
Manager does not believe that investing in such securities results in
material risks, such investing may jeopardize the Portfolio's ability to
meet its investment goals or meet the requirements of Subchapter M of
the Code.
The Portfolio may borrow from banks. As a fundamental policy, the
Portfolio may borrow only for emergency or extraordinary purposes, but
not in an amount exceeding 33 1/3% of its total assets. The Portfolio
may not invest more than 5% of its assets taken at market value at the
time of investment in companies, including predecessors, with less than
three years continuous operation. This restriction does not apply to
any obligation issued or guaranteed by the U.S. Government, its agencies
or instrumentalities, or to CMOs, other mortgage-related securities or
indexed securities. The Portfolio may buy shares of other investment
companies that do not redeem their shares, subject to certain conditions
explained in the SAI.
The Manager normally invests the Portfolio's assets according to
its investment strategy; however, as a temporary defensive measure at
times when the Manager believes that stocks, bonds and certain short-
term instruments do not offer a good investment opportunity, it may
temporarily invest up to all of the Portfolio's assets in money market
instruments rated A-1 by S&P or Prime 1 by MIS, or unrated securities
judged by the Manager to be of equivalent quality.
The net asset value of the shares of the Portfolio will increase or
decrease with changes in the market price of the investments held by the
Portfolio. There is no assurance that the goals of the Portfolio will
be achieved. The Asset Strategy Portfolio cannot precisely predict what
its portfolio turnover rates will be; however, it is anticipated that
the annual turnover rate for the common stock portion of its portfolio
will not exceed 200% and the annual turnover rate for the other portion
of its portfolio will not exceed 200%. Higher turnover rates result in
correspondingly higher commission expenses and transaction costs and may
result in certain tax consequences.
The Asset Strategy Portfolio diversifies across investment types
more than most mutual funds. No one mutual fund, however, can provide
an appropriate balanced investment plan for all investors.
Investment Policies Common to the Ten Portfolios
Except as otherwise noted, the investment policies described below
are applicable to each of the ten Portfolios.
Repurchase Agreements
A repurchase agreement is an instrument under which a Portfolio
purchases a security and the seller of that security agrees, at the time
of purchase, that it will repurchase the security at a specified time
and price. The amount by which the resale price is greater than the
purchase price reflects an agreed-upon market interest rate for the
period of the agreement. A Portfolio may enter into repurchase
agreements as a means of increasing income. The primary risk is that
the Portfolio may suffer a loss if the seller fails to pay the agreed-
upon amount on the delivery date and that amount is greater than the
resale price of the underlying securities and other collateral held by
the Portfolio. Repurchase agreements are entered into only with those
issuers approved on the basis of criteria established by the Board of
Directors. Each of the Portfolios may purchase securities subject to
repurchase agreements subject to its limitation on investment in
illiquid securities, which include repurchase agreements not terminable
within seven days.
Options, Futures and Other Strategies
As described below, certain of the Portfolios may use certain
swaps, options, futures contracts, forward currency contracts and
indexed securities to attempt to enhance income or yield or may attempt
to reduce the overall risk of their investments by using certain
options, futures contracts, forward currency contracts, swaps, caps,
collars and floors and certain other strategies described herein. The
strategies described below may be used in an attempt to manage the risks
of a Portfolio's investments that can affect fluctuation in its net
asset value.
The Asset Strategy Portfolio may also use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into forward currency contracts or swap agreements, and
purchasing indexed securities.
A Portfolio's ability to use these strategies may be limited by
market conditions, regulatory limits and tax considerations. A
Portfolio might not use any of these strategies, and there can be no
assurance that any strategy that is used will succeed. The risks
associated with such strategies are described below. Also see the SAI
for more information on these strategies and risk considerations
relating thereto.
Options. A call option gives the purchaser the right to buy,
and obligates the writer to sell, the underlying investment at the
agreed upon exercise price during the option period. A put option gives
the purchaser the right to sell, and obligates the writer to buy, the
underlying investment at the agreed upon exercise price during the
option period. Purchasers of options pay an amount, known as a premium,
to the option writer in exchange for the right under the option
contract.
The Bond Portfolio, High Income Portfolio, Growth Portfolio and
Income Portfolio may each write (sell) covered call options on
securities on up to 25% of its assets. The International Portfolio may
write (sell) covered call options on securities on no more than 10% of
its total assets. "Covered" means that the Portfolio owns the
securities subject to the call or has the right to acquire them without
additional payment. Each of these Portfolios may purchase a call option
on a security only to close its position in a call it has written.
Calls written by these Portfolios must be listed on a domestic
securities exchange; however, the Bond Portfolio, High Income Portfolio,
Growth Portfolio and Income Portfolio may write over-the-counter ("OTC")
calls on U.S. Government Securities. Writing calls may increase each of
these Portfolio's turnover rates and result in higher brokerage
commissions.
The Small Cap Portfolio and Balanced Portfolio may each write
(sell) covered call options on securities on not more than 25% of its
total assets and may each purchase calls and write and purchase puts on
securities in which the Portfolio may invest. Calls written by these
Portfolios must be listed on a domestic securities exchange. Each of
these Portfolios may only purchase or sell options on securities issued
by the Options Clearing Corporation (the "OCC"), except that each may
write OTC put options and purchase OTC put and call options on U.S.
Government Securities and may purchase optional delivery standby
commitments.
The Limited-Term Bond Portfolio may write (sell) and purchase
listed and OTC options on domestic debt securities, which securities
include, without limitation, U.S. Government Securities ("Domestic Debt
Securities"). The Limited-Term Bond Portfolio may not write call
options having aggregate exercise prices greater than 25% of its net
assets.
Each Portfolio (other than the Money Market Portfolio) may write
options on securities for the purpose of increasing income in the form
of premiums paid by the purchaser of the options. While writing covered
calls may result in the realization of income, the Portfolio will lose
the opportunity to profit from an increase in the price of the security
subject to the call over the exercise price. When one of these
Portfolios (other than the Asset Strategy Portfolio) writes a put, it
will maintain designated cash or readily marketable assets adequate to
purchase the related investments should the put be exercised. In
writing puts, the Portfolio assumes the risk of loss should the market
value of the underlying security decline below the exercise price at
which the Portfolio is obligated to purchase the security.
The Small Cap Portfolio, Balanced Portfolio and Limited-Term Bond
Portfolio may each purchase calls to take advantage of an expected rise
in the market value of securities and to close positions in calls it has
written. Each may purchase puts on related investments it owns
("protective puts") or on related investments it does not own
("nonprotective puts"). Buying a protective put permits the Portfolio to
protect itself during the put period against a decline in the value of
the related investments below the exercise price by selling them through
the exercise of the put. Buying a nonprotective put permits the
Portfolio, if the market price of the related investments is below the
put price during the put period, either to resell the put or to buy the
related investments and sell them at the exercise price. Each of these
Portfolios may also purchase puts to close positions in puts it has
written. If an option purchased by a Portfolio is not exercised or
sold, it will become worthless at its expiration date and the Portfolio
will lose the amount of the premium it paid.
Each of the Small Cap Portfolio and Balanced Portfolio may also
write (sell) and purchase listed options on stock indices that are not
limited to stocks of any industry or group of industries ("broadly-based
stock indices"). Each may write options on broadly-based stock indices
to generate income. Each may purchase calls on broadly-based stock
indices to hedge against an anticipated increase in the price of
securities it wishes to acquire and may purchase puts on broadly-based
stock indices to hedge against an anticipated decline in the market
value of its portfolio securities. Because stock index options are
settled in cash, a Portfolio cannot provide in advance for its potential
settlement obligations on a call it has written on a stock index by
holding the underlying securities. Each Portfolio bears the risk that
the value of the securities it holds will vary from the value of the
index.
There is no limitation on the types of options that the Asset
Strategy Portfolio may purchase and sell. See the SAI for the
limitations on the Asset Strategy Portfolio's use of options.
Options offer large amounts of leverage, which will result in a
Portfolio's net asset value being more sensitive to changes in the value
of the related investment. There is no assurance that a liquid
secondary market will exist for exchange-listed options. The market for
options that are not listed on an exchange may be less active than the
market for exchange-listed options. A Portfolio will be able to close a
position in an option it has written only if there is a market for the
put or call. If a Portfolio is not able to enter into a closing
transaction on an option it has written, it will be required to maintain
the securities, or cash in the case of an option on an index, subject to
the call or the collateral underlying the put until a closing
transaction can be entered into or the option expires. Because index
options are settled in cash, a Portfolio cannot provide in advance for
its potential settlement obligations on a call it has written on an
index by holding the underlying securities. The Portfolio bears the
risk that the value of the securities it holds will vary from the value
of the index. Option transactions may increase the portfolio turnover
rate creating greater commission expenses, transaction costs and tax
consequences.
Futures Contracts and Options on Futures Contracts. When a
Portfolio purchases a futures contract, it incurs an obligation to take
delivery of a specified amount of the obligation underlying the contract
at a specified time in the future for a specified price. When a
Portfolio sells a futures contract it incurs an obligation to deliver
the specified amount of the underlying obligation at a specified time in
return for an agreed upon price.
When a Portfolio writes an option on a futures contract it becomes
obligated, in return for the premium paid, to assume a position in a
futures contract at a specified exercise price at any time during the
term of the option. If a Portfolio has written a call, it assumes a
short futures position. If it has written a put, it assumes a long
futures position. When a Portfolio purchases an option on a futures
contract, it acquires a right in return for the premium it pays to
assume a position in a futures contract (a long position if the option
is a call and a short position if the option is a put).
Each of the Small Cap Portfolio and Balanced Portfolio may buy and
sell futures contracts on debt securities ("Debt Futures"), futures
contracts on broadly-based stock indices ("Stock Index Futures"), and
options on Debt Futures and Stock Index Futures. The Limited-Term Bond
Portfolio may buy and sell futures on Domestic Debt Securities
("Domestic Debt Futures") and options on Domestic Debt Futures. Each of
these Portfolios may purchase or sell futures contracts and options
thereon for the purpose of hedging against changes in the market value
of its portfolio securities or changes in the market value of securities
that the Manager anticipates it may wish to include in the Portfolio's
portfolio. Each of these Portfolios may write options on futures
contracts to increase income.
The Limited-Term Bond Portfolio may not purchase or sell options on
securities, futures contracts or options on futures contracts if the
aggregate value of such options and futures held by that Portfolio would
exceed 25% of its assets.
Neither the Small Cap Portfolio nor the Balanced Portfolio may
purchase options on securities or futures contracts if the aggregate
value of the premiums paid (adjusted for the portion of any premium
attributable to the difference between the "strike price" of the option
and the market price of the underlying security or futures contract at
the time of purchase) exceeds 20% of the Portfolio's total assets. The
aggregate amount of the obligations underlying put options on securities
or futures contracts written by each of the Small Cap Portfolio and
Balanced Portfolio may not exceed 25% of its net assets computed at the
time of sale.
See the SAI for the limitations on the Asset Strategy Portfolio's
use of futures contracts and options on futures contracts.
Forward Currency Exchange Contracts. A forward currency contract
is an obligation to purchase or sell a specific currency at a future
date at a fixed price. The International Portfolio may enter into
forward currency contracts, provided that it does not thereafter have
more than 15% of the value of its assets committed to the consummation
of all such contracts; however, it will not enter into forward currency
contracts or maintain a net exposure to such forward currency contracts
where the consummation of the forward currency contracts would obligate
the International Portfolio to deliver an amount of foreign currency in
excess of the value of its portfolio securities or other assets
denominated in that currency. The International Portfolio enters into
forward currency contracts to attempt to protect against losses that may
result from changes in the value of currencies but at the same time
forward currency contracts tend to limit any potential gain that might
result from currency changes.
The Asset Strategy Portfolio may enter into forward currency
contracts for the purchase or sale of a specified currency at a
specified future date either with respect to specific transactions or
with respect to portfolio positions in order to minimize the risk to the
Portfolio from adverse changes in the relationship between the U.S.
dollar and foreign currencies. For example, when the Manager
anticipates purchasing or selling a security, the Portfolio may enter
into a forward currency contract in order to set the exchange rate at
which the transaction will be made. The Asset Strategy Portfolio also
may enter into a forward currency contract to sell an amount of a
foreign currency approximating the value of some or all of the
Portfolio's securities positions denominated in such currency. The
Asset Strategy Portfolio may also use forward currency contracts in one
currency or a basket of currencies to attempt to hedge against
fluctuations in the value of securities denominated in a different
currency if the Manager anticipates that there will be a correlation
between the two currencies.
The Asset Strategy Portfolio may also use forward currency
contracts to shift the Portfolio's exposure to foreign currency exchange
rate changes from one foreign currency to another. For example, if the
Portfolio owns securities denominated in a foreign currency and the
Manager believes that currency will decline relative to another
currency, it might enter into a forward contract to sell the appropriate
amount of the first foreign currency with payment to be made in the
second foreign currency. Transactions that use two foreign currencies
are sometimes referred to as "cross hedging." Use of a different
foreign currency magnifies the Portfolio's exposure to foreign currency
exchange rate fluctuations. The Asset Strategy Portfolio may also
purchase forward currency contracts to enhance income when the Manager
anticipates that the foreign currency will appreciate in value, but
securities denominated in that currency do not present attractive
investment opportunities.
The Asset Strategy Portfolio does not currently intend to invest
more than 5% of its total assets in forward currency contracts.
The Asset Strategy Portfolio may purchase and sell foreign
currency and invest in foreign currency deposits. The other Portfolios
(other than the Money Market Portfolio and the Limited-Term Bond
Portfolio) may briefly hold foreign currencies in connection with the
purchase or sale of foreign securities. Currency conversion involves
dealer spreads and other costs, although commissions usually are not
charged.
Successful use of forward currency contracts will depend on the
Manager's skill in analyzing and predicting currency values. Forward
currency contracts may substantially change a Portfolio's investment
exposure to changes in currency exchange rates, and could result in
losses to the Portfolio if currencies do not perform as the Manager
anticipates. There is no assurance that the Manager's use of forward
currency contracts will be advantageous to a Portfolio or that it will
hedge at an appropriate time.
See the SAI for further information about these instruments and
their risks.
Swaps, Caps and Floors. The Limited-Term Bond Portfolio may enter
into interest rate swap transactions, and purchase or sell interest rate
caps and floors, with respect to domestic interest rates. These
transactions may only be entered into for hedging purposes. The
Limited-Term Bond Portfolio expects to enter into these transactions
primarily to preserve a return or spread on a particular investment or
portion of its portfolio or to protect against any increase in the price
of securities the Limited-Term Bond Portfolio anticipates purchasing at
a later date.
The Asset Strategy Portfolio is not limited in the type of swap,
cap, collar or floor it may enter into as long as the Manager determines
it is consistent with the Portfolio's goal and investment policies.
Depending on how they are used, the swap, cap, collar and floor
agreements used by the Asset Strategy Portfolio may increase or decrease
the overall volatility of its investments and its share price and yield.
The most significant factor in the performance of these agreements is
the change in the specific interest rate, currency, or other factors
that determine the amounts of payments due to and from the
Portfolio.
Swaps involve the exchange by a Portfolio with another party of
their respective commitments to pay or receive cash flows, e.g., an
exchange of floating rate payments for fixed rate payments. The
purchase of a cap entitles the purchaser, to the extent that a specified
index exceeds a predetermined value, to receive payments on a notional
principal amount from the party selling such cap. The purchase of a
floor entitles the purchaser, to the extent that a specified index falls
below a predetermined value, to receive payments on a notional principal
amount from the party selling such floor. An interest rate collar
combines elements of buying a cap and selling a floor.
A Portfolio usually will enter into swaps on a net basis, i.e., the
two payment streams are netted out, with the Portfolio receiving or
paying, as the case may be, only the net amount of the two payments.
If, however, an agreement calls for payments by a Portfolio, the
Portfolio must be prepared to make such payments when due. The
creditworthiness of firms with which a Portfolio enters into swaps,
caps, collars or floors will be monitored by the Manager in accordance
with procedures adopted by the Board of Directors. If a firm's
creditworthiness declines, the value of an agreement would be likely to
decline, potentially resulting in losses. If a default occurs by the
other party to such transaction, the Portfolio will have contractual
remedies pursuant to the agreements related to the transaction. The
swap market has grown substantially in recent years with a large number
of banks and investment banking firms acting both as principals and as
agents utilizing standardized swap documentation.
The Portfolios understand that the position of the staff of the
Securities and Exchange Commission is that assets involved in such
transactions are illiquid securities and are, therefore, subject to the
limitations on investment in illiquid securities as described in the
SAI.
See the SAI for further information about these instruments and
their risks.
Indexed Securities. Each Portfolio (other than the Growth
Portfolio) may purchase and sell indexed securities, which are
securities whose prices are indexed to the prices of other securities,
securities indices, currencies, precious metals or other commodities, or
other financial indicators, as long as the Manager determines that it is
consistent with the Portfolio's investment goal and policies. Indexed
securities typically, but not always, are debt securities or deposits
whose value at maturity or coupon rate is determined by reference to a
specific instrument or statistic. The Money Market Portfolio may,
however, only invest in bank obligations if they are obligations of a
bank subject to regulation by the U.S. Government (including foreign
branches of these banks) or obligations of a foreign bank having total
assets equal to at least U.S. $500,000,000, and instruments secured by
any such obligation. The Limited-Term Bond Portfolio may, however, only
invest in deposits in banks (represented by certificates of deposit or
other evidence of deposit issued by such banks of varying maturities) to
the extent that the principal of such deposits is insured by the Federal
Deposit Insurance Corporation ("Insured Deposits"). The performance of
indexed securities depends to a great extent on the performance of the
security, currency, or other instrument to which they are indexed, and
may also be influenced by interest rate changes in the U.S. and abroad.
At the same time, indexed securities are subject to the credit risks
associated with the issuer of the security, and their values may decline
substantially if the issuer's creditworthiness deteriorates. Indexed
securities may be more volatile than the underlying instruments.
Mortgage-Backed and Asset-Backed Securities
Mortgage-backed and asset-backed securities may include pools of
consumer loans or mortgages, such as CMOs and stripped mortgage-backed
securities. The value of these securities may be significantly affected
by changes in interest rates, the market's perception of the issuers,
and the creditworthiness of the parties involved. The Portfolios (other
than the Money Market Portfolio and the Growth Portfolio) may invest in
mortgage-backed securities as long as the Manager determines that it is
consistent with the Portfolio's goal and investment policies. The
Limited-Term Bond Portfolio and the Asset Strategy Portfolio may invest
in asset-backed securities. The Asset Strategy Portfolio does not
currently intend to invest more than 40% of its total assets in
mortgage-backed securities and does not currently intend to invest in
any non-mortgage asset-backed securities.
The yield characteristics of mortgage-backed and asset-backed
securities differ from those of traditional debt securities. Among the
major differences are that interest and principal payments are made more
frequently on mortgage-backed and asset-backed securities and that
principal may be prepaid at any time because the underlying mortgage
loans or other assets generally may be prepaid at any time. As a
result, if a Portfolio purchases these securities at a premium, a
prepayment rate that is faster than expected will reduce yield to
maturity while a prepayment rate that is slower than expected will have
the opposite effect of increasing yield to maturity. Conversely, if a
Portfolio purchases these securities at a discount, faster than expected
prepayments will increase, while slower than expected prepayments will
reduce, yield to maturity. Accelerated prepayments on securities
purchased by a Portfolio at a premium also impose a risk of loss of
principal because the premium may not have been fully amortized at the
time the principal is repaid in full.
Timely payment of principal and interest on pass-through securities
of the Government National Mortgage Association (but not the Federal
Home Loan Mortgage Corporation or the Federal National Mortgage
Association) is guaranteed by the full faith and credit of the United
States Government. This is not a guarantee against market decline of
the value of these securities or shares of a Portfolio. It is possible
that the availability (i.e., liquidity) of these securities could be
adversely affected by actions of the U.S. Government to tighten the
availability of its credit.
Stripped Securities
Stripped securities are the separate income or principal components
of a debt instrument. These involve risks that are similar to those of
other debt securities, although they may be more volatile. The prices
of stripped mortgage-backed securities may be particularly affected by
changes in interest rates. The Portfolios may invest in stripped
securities as long as the Manager determines that it is consistent with
the Portfolio's investment goal and policies. The Asset Strategy
Portfolio does not currently intend to invest more than 5% of its total
assets in stripped securities.
Risks of Derivatives Instruments
The use of options, futures contracts, options on futures
contracts, forward contracts, swaps, caps, collars, floors and the
investment in mortgage-backed securities, stripped securities and
indexed securities involve special risks, including (i) possible
imperfect or no correlation between price movements of the portfolio
investments (held or intended to be purchased) involved in the
transaction and price movements of the instruments involved in the
transaction; (ii) possible lack of a liquid secondary market for any
particular instrument at a particular time; (iii) the need for
additional portfolio management skills and techniques; (iv) losses due
to unanticipated market price movements; (v) the fact that, while such
strategies can reduce the risk of loss, they can also reduce the
opportunity for gain, or even result in losses, by offsetting favorable
price movements in investments involved in the transaction; (vi)
incorrect forecasts by the Manager concerning interest or currency
exchange rates or direction of price fluctuations of the investment
involved in the transaction, which may result in the strategy being
ineffective; (vii) loss of premiums paid by a Portfolio on options it
purchases; and (viii) the possible inability of a Portfolio to purchase
or sell a portfolio security at a time when it would otherwise be
favorable for it to do so, or the possible need for a Portfolio to sell
a portfolio security at a disadvantageous time, due to the need for the
Portfolio to maintain "cover" or to segregate securities in connection
with such transactions and the possible inability of a Portfolio to
close out or liquidate its position.
For a hedging strategy to be completely effective, the price change
of the hedging instrument must equal the price change of the investment
being hedged. The risk of imperfect correlation of these price changes
increases as the composition of the Portfolios' respective portfolios
diverges from instruments underlying a hedging instrument. Such equal
price changes are not always possible because the investment underlying
the hedging instruments may not be the same investment that is being
hedged. The Manager will attempt to create a closely correlated hedge
but hedging activity may not be completely successful in eliminating
market value fluctuation.
The Manager may use derivative instruments, including securities
with embedded derivatives, for hedging purposes to adjust the risk
characteristics of a Portfolio's portfolio of investments and may use
some of these instruments to adjust the return characteristics of a
Portfolio's portfolio of investments. The use of derivative techniques
for speculative purposes can increase investment risk. If the Manager
judges market conditions incorrectly or employs a strategy that does not
correlate well with a Portfolio's investments, these techniques could
result in a loss, regardless of whether the intent was to reduce risk or
increase return. These techniques may increase the volatility of a
Portfolio and may involve a small investment of cash relative to the
magnitude of the risk assumed. In addition, these techniques could
result in a loss if the counterparty to the transaction does not perform
as promised or if there is not a liquid secondary market to close out a
position that a Portfolio has entered into.
The ordinary spreads between prices in the cash and futures
markets, due to the differences in the natures of those markets, are
subject to distortion. Due to the possibility of distortion, a correct
forecast of general interest, foreign currency or stock market trends by
the Manager may still not result in a successful transaction. The
Manager may be incorrect in its expectations as to the extent of various
interest or foreign exchange rate movements or stock market movements or
the time span within which the movements take place.
Options and futures transactions may increase portfolio turnover
rates, which results in correspondingly greater commission expenses and
transactions costs and may result in certain tax consequences. See the
SAI for further information regarding these and other risks.
The Portfolios may also invest in derivative mortgage-backed
securities. These securities are subject to significant market risks.
See "Mortgage-Backed and Asset-Backed Securities."
New financial products and risk management techniques continue to
be developed. Each Portfolio may use these instruments and techniques
to the extent consistent with its investment goal and regulatory
requirements applicable to investment companies.
Foreign Securities
The Money Market Portfolio may invest up to 10% of its total assets
in Canadian Government obligations and may also invest in foreign bank
obligations and obligations of foreign branches of domestic banks,
subject to the diversification requirements applicable to the Money
Market Portfolio. The Money Market Portfolio will not invest more than
25% of its assets in a combination of Canadian Government obligations
and foreign bank obligations, both of which must be denominated in U.S.
dollars.
The International Portfolio normally invests at least 80% of its
assets in foreign securities. It may not purchase a particular foreign
security if as a result more than 75% of its assets would be invested in
issuers of that foreign country. For defensive purposes, the Portfolio
may at times temporarily invest completely or substantially in U.S.
securities. Under normal market conditions, the International Portfolio
intends to have at least 65% of its assets invested in issuers of at
least three different countries outside of the U.S. The International
Portfolio will not invest more than 25% of its assets in securities
issued by the government of any one foreign country.
The Balanced Portfolio may purchase an unlimited amount of foreign
securities. Normally, however, less than 10% of this Portfolio's total
assets will consist of foreign securities. This percentage might
increase in the event the Manager believed that, in light of U.S.
economic conditions, there were increased investment opportunities in
foreign securities.
Under normal conditions, the Asset Strategy Portfolio intends to
limit its investments in foreign securities to no more than 50% of its
total assets. The Asset Strategy Portfolio currently intends to limit
its investments in obligations of any single foreign government to less
than 25% of its total assets.
The other Portfolios, except the Limited-Term Bond Portfolio, may
invest up to 20% of their respective total assets in securities of
foreign issuers. The Limited-Term Bond Portfolio may not invest in
foreign securities.
Investments in foreign securities may involve a higher degree of
risk than U.S. securities because of the absence of uniform accounting,
auditing and financial standards, less government regulation, changes in
currency rates and in exchange regulations, political instability,
limited publicly available information, less liquidity and the
difficulty of obtaining and enforcing a judgment against a foreign
issuer. These considerations generally are intensified for investments
in developing countries. Developing countries may have relatively
unstable governments, economies based on only a few industries, and
securities markets that trade a small number of securities. See the SAI
for further information regarding the types of and risks associated with
foreign securities in which the Portfolios may invest.
U.S. Government Securities
Securities issued or guaranteed by the U.S. Government include a
variety of Treasury securities and other securities that differ as to
interest rates, maturities and dates of issuance. Except for U.S.
Treasury securities, obligations of U.S. Government agencies and
instrumentalities may or may not be supported by the full faith and
credit of the United States. Some are backed by the right of the issuer
to borrow from the Treasury; others by discretionary authority of the
U.S. Government to purchase the agencies' obligations; while still
others are supported only by the credit of the instrumentality. In the
case of securities not backed by the full faith and credit of the United
States, the investor must look principally to the agency issuing or
guaranteeing the obligation for ultimate repayment. A Portfolio (other
than the Asset Strategy Portfolio) will invest in securities of such
agencies and instrumentalities only when the Manager is satisfied that
the credit risk is acceptable. Mortgage-backed securities include pass-
through securities, participation certificates and CMOs. See "Mortgage-
Backed and Asset-Backed Securities."
Zero Coupon Bonds
Zero coupon bonds do not make interest payments; instead, they are
sold at a deep discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be very volatile when interest rates change.
In calculating its dividends, a Portfolio takes into account as income a
portion of the difference between a zero coupon bond's purchase price
and its face value.
Direct Debt
The Asset Strategy Portfolio may invest in direct debt instruments.
Loans and other direct debt instruments are interests in amounts owed to
another party by a company, government, or other borrower. They have
additional risks beyond conventional debt securities.
Investments in direct debt instruments may entail less legal
protection for the Asset Strategy Portfolio. Certain types of direct
indebtedness purchased by the Portfolio, such as letters of credit,
revolving credit facilities, or other standby financing commitments,
obligate the Portfolio to pay additional cash on demand. These
commitments may have the effect of requiring the Portfolio to increase
its investment in a borrower at a time when it would not otherwise have
done so, even if the borrower's condition makes it unlikely that the
amount will ever be repaid. Other types of direct debt instruments,
such as loans through direct assignment of a financial institution's
interest with respect to a loan, may involve additional risks to the
Portfolio. For example, if a loan is foreclosed, the Portfolio could
become part owner of any collateral, and would bear the costs and
liabilities associated with owning and disposing of the collateral.
Convertible Securities
A convertible security is a bond, debenture, note, preferred stock
or other security that may be converted into or exchanged for a
prescribed amount of common stock of the same or a different issuer
within a particular period of time at a specified price or formula. A
convertible security entitles the holder to receive interest paid or
accrued on debt or the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted or exchanged.
Convertible securities have unique investment characteristics in that
they generally (1) have higher yields than those of common stocks of the
same or similar issuers, but lower yields than comparable nonconvertible
securities, (2) are less subject to fluctuation in value than the
underlying stock because they have fixed income characteristics, and (3)
provide the potential for capital appreciation if the market price of
the underlying common stock increases. Convertible securities are
usually subordinated to comparable-tier non-convertible securities but
rank senior to common stock in the corporation's capital structure. The
value of a convertible security is a function of (1) its yield in
comparison with the yields of other securities of comparable maturity
and quality that do not have a conversion privilege, and (2) its worth,
at market value, if converted into the underlying common stock.
The value of a convertible security is a function of its
"investment value" (determined by its yield in comparison with the
yields of other securities of comparable maturity and quality that do
not have a conversion privilege) and its "conversion value" (the
security's worth, at market value, if converted into the underlying
common stock). The investment value of a convertible security is
influenced by changes in interest rates, with investment value declining
as interest rates increase and increasing as interest rates decline.
The credit standing of the issuer and other factors also may have an
effect on the convertible security's investment value. The conversion
value of a convertible security is determined by the market price of the
underlying common stock. If the conversion value is low relative to the
investment value, the price of the convertible security is governed
principally by its investment value and generally the conversion value
decreases as the convertible security approaches maturity. To the
extent the market price of the underlying common stock approaches or
exceeds the conversion price, the price of the convertible security will
be increasingly influenced by its conversion value. In addition, a
convertible security generally will sell at a premium over its
conversion value determined by the extent to which investors place value
on the right to acquire the underlying common stock while holding a
fixed-income security.
Convertible securities are typically issued by smaller capitalized
companies whose stock prices may be volatile. A convertible security
may be subject to redemption at the option of the issuer at a price
established in the security's governing instrument. If a convertible
security held by a Portfolio is called for redemption, a Portfolio will
be required to convert it into the underlying common stock, sell it to a
third party or permit the issuer to redeem the security. Any of these
actions could have an adverse effect on a Portfolio's ability to achieve
its investment objective.
Preferred Stock
Preferred stock is also rated by S&P and MIS, as described in
Appendix A to this Prospectus. Preferred stock rated AAA, AA, A or BBB
by S&P or aaa, aa, a or baa by MIS is considered to be of investment
grade. Preferred stock rated BB or lower by S&P or ba or lower by MIS
is considered to have speculative characteristics. The Portfolios
(other than the Money Market Portfolio) may invest in preferred stock
rated in any rating category by an established rating service and
unrated preferred stock judged by the Manager to be of equivalent
quality.
Certain Other Securities
The debt securities in which the Portfolios (other than the Money
Market Portfolio) may invest may include certain instruments whose
performance is linked to a specified equity security or securities
index. The preferred stock in which the Portfolios (other than the
Money Market Portfolio) may invest may include certain preferred stock
that converts to common stock either automatically after a specified
period of time or at the option of the issuer.
When-Issued and Delayed-Delivery Transactions
Each Portfolio may without limitation purchase securities on a
"when-issued" or delayed-delivery basis or without limitation sell them
on a delayed-delivery basis in order to secure what is considered to be,
at the time of entering into the transaction, an advantageous price and
yield. From the time of entering into the transaction until delivery
and payment is made at a later date, the securities which are the
subject of the transaction are subject to market fluctuations.
Lending Securities
A Portfolio may lend its securities on a short-term or long-term
basis for the purpose of increasing income. As a fundamental policy,
not more than 30% of the total assets of the Limited-Term Bond Portfolio
and no more than 10% of the total assets of any other Portfolio, will be
loaned at any one time, and loans must be fully collateralized. There
are risks associated with loans of securities including possible loss
of, or delay in, recovering the collateral. If a material event is to
be voted upon affecting a Portfolio's investment which are on loan, the
Portfolio will take such action as may be appropriate in order to vote
its shares.
Restricted Securities and Illiquid Investments
Restricted securities are securities that are subject to legal
or contractual restrictions on resale. Restricted securities may be
illiquid due to restrictions on their resale. Subject to their
respective limitations on investment in illiquid investments described
in the SAI, each Portfolio may invest in restricted securities.
Restricted securities may be determined to be liquid pursuant to
guidelines established by or under the direction of the Fund's Board of
Directors.
Illiquid investments may be difficult to sell promptly at an
acceptable price. Difficulty in selling securities may result in a loss
or may be costly to a Portfolio.
Warrants and Rights
The Bond Portfolio, the High Income Portfolio, the Growth
Portfolio, the Income Portfolio and the Small Cap Portfolio may invest
up to 5% of their respective net assets, valued at the lower of cost or
market, in warrants. The Asset Strategy Portfolio may invest in
warrants and rights to purchase securities. This Portfolio does not
currently intend to purchase warrants, valued at the lower of cost or
market, in excess of 5% of its net assets. Included in that amount, but
not to exceed 2% of its net assets, may be warrants that are not listed
on the New York Stock Exchange or the American Stock Exchange. Warrants
acquired by the Asset Strategy Portfolio in units or attached to
securities are not subject to these restrictions. The International
Portfolio may invest in warrants and rights to purchase securities,
provided that as a result of such investment not more than 5% of its net
assets consist of warrants, rights or a combination thereof.
Risk Factors of High-Yield, High-Risk Investing
The market for high-yield, high-risk debt securities is relatively
new and much of its growth paralleled a long economic expansion, during
which this market involved a significant increase in the use of high-
yield debt securities to fund highly leveraged corporate acquisitions
and restructurings. Thereafter, this market was affected by a
relatively high percentage of defaults with respect to high-yield
securities as compared with higher rated securities. An economic
downturn or increase in interest rates is likely to have a greater
negative effect on this market, the value of high-yield debt securities
in a portfolio, a Portfolio's net asset value and the ability of the
bonds' issuers to repay principal and interest, meet projected business
goals and obtain additional financing than on higher rated securities.
An investment in a Portfolio that invests primarily in high-yield debt
securities may be considered more speculative than investment in shares
of a fund that invests primarily in higher rated debt securities.
Prices of high-yield debt securities may be more sensitive to
adverse economic changes or corporate developments than higher rated
investments. Debt securities with longer maturities, which may have
higher yields, may increase or decrease in value more than debt
securities with shorter maturities. Market prices of high-yield debt
securities structured as zero coupon or pay-in-kind securities are
affected to a greater extent by interest rate changes and may be more
volatile than securities that pay interest periodically and in cash.
Where it deems it appropriate and in the best interests of Portfolio
shareholders, a Portfolio may incur additional expenses to seek recovery
on a debt security on which the issuer has defaulted and to pursue
litigation to protect the interests of security holders of its portfolio
companies.
Because the market for lower-rated securities may be thinner and
less active than for higher-rated securities, there may be market price
volatility for these securities and limited liquidity in the resale
market. Unrated securities are usually not as attractive to as many
buyers as rated securities are, a factor that may make unrated
securities less marketable. These factors may have the effect of
limiting the availability of the securities for purchase by a Portfolio
and may also limit the ability of a Portfolio to sell such securities at
their fair value either to meet redemption requests or in response to
changes in the economy or the financial markets. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may
decrease the values and liquidity of high-yield debt securities,
especially in a thinly traded market. To the extent a Portfolio owns or
may acquire illiquid or restricted high-yield securities, these
securities may involve special registration responsibilities,
liabilities and costs, and liquidity and valuation difficulties.
Changes in values of debt securities that a Portfolio owns will affect
its net asset value per share. If market quotations are not readily
available for a Portfolio's lower-rated or unrated securities, these
securities will be valued by a method that the Fund's Board of Directors
believes accurately reflects fair value. Valuation becomes more
difficult and judgment plays a greater role in valuing high-yield debt
securities than with respect to securities for which more external
sources of quotations and last sale information are available.
While credit ratings are only one factor the Manager relies on in
evaluating high-yield debt securities, certain risks are associated with
using credit ratings. Credit ratings evaluate the safety of principal
and interest payments, not market value risk. Credit rating agencies
may fail to timely change the credit ratings to reflect subsequent
events; however, the Manager continuously monitors the issuers of high-
yield debt securities in its portfolios in an attempt to determine if
the issuers will have sufficient cash flow and profits to meet required
principal and interest payments. Achievement of a Portfolio's
investment goal may be more dependent upon the Manager's credit analysis
than is the case for higher quality debt securities. Credit ratings for
individual securities may change from time to time and a Portfolio may
retain a portfolio security whose rating has been changed.
During the fiscal year ended December 31, 1994, the percentage of
the assets of the Bond Portfolio and High Income Portfolio invested in
debt securities in each of the rating categories of S&P, and the debt
securities not rated by an established rating service, determined on a
dollar-weighted average, were as follows:
Rated by Percentage of
S&P Fund Assets
-------- -------------
Bond Portfolio High Income Portfolio
-------------- ---------------------
AAA 25.2% 0.0%
AA 7.6 0.0
A 15.3 0.0
BBB 28.7 0.0
BB 12.2 6.3
B 3.5 77.6
CCC 0.0 3.1
CC 0.0 0.0
C 0.0 0.0
D 0.0 0.0
Unrated 3.2 2.0
The percentage of assets in each category was calculated on the
basis of a monthly dollar-weighted average. The monthly dollar
weighted-average was calculated using the market value of the securities
in the Portfolio's portfolio at the end of each month in the thirteen-
month period ended with the Portfolio's last fiscal year, averaged over
the Portfolio's last fiscal year. The rating used for each security is
that security's rating as of the end of each month and, as ratings may
change over time, does not necessarily indicate past or future ratings
of any particular security or the ratings of securities in the portfolio
in general. Asset composition of a Portfolio by rating categories at
any particular time does not necessarily indicate future asset
composition by rating categories.
MANAGEMENT
Waddell & Reed, Inc. and its predecessors served as investment
manager to the Fund since its inception and to each of the registered
investment companies in the United Group of Mutual Funds, except United
Asset Strategy Fund, Inc., since 1940 or the inception of the investment
company, whichever was later. On January 8, 1992, subject to the
authority of the Fund's Board of Directors, Waddell & Reed, Inc.
assigned its investment management duties (and assigned its professional
staff for investment management services) to Waddell & Reed Investment
Management Company, a wholly-owned subsidiary of Waddell & Reed, Inc.
The Manager has also served as investment manager for Waddell & Reed
Funds, Inc. since its inception in September 1992, Torchmark Government
Securities Fund, Inc. and Torchmark Insured Tax-Free Fund, Inc. since
each commenced operations in February 1993 and United Asset Strategy
Fund, Inc. since it commenced operations in March 1995. Waddell & Reed,
Inc. serves as distributor for the Fund and as underwriter for each of
the investment companies in the United Group of Mutual Funds and Waddell
& Reed Funds, Inc. Waddell & Reed, Inc. is an indirect subsidiary of
Torchmark Corporation, a holding company, and United Investors
Management Company, a holding company, and a direct subsidiary of
Waddell & Reed Financial Services, Inc., a holding company.
Subject to the authority of the Fund's Board of Directors, the
Manager provides investment advice and supervises investments for which
it is paid a fee consisting of two elements: (i) a specific fee
computed on each Portfolio's net asset value as of the close of business
each day at the following annual rates: Money Market Portfolio - none;
Bond Portfolio - .03 of 1% of net assets; High Income Portfolio - .15 of
1% of net assets; Growth Portfolio - .20 of 1% of net assets; Income
Portfolio - .20 of 1% of net assets; International Portfolio - .30 of 1%
of net assets; Small Cap Portfolio - .35 of 1% of net assets; Balanced
Portfolio - .10 of 1% of net assets; Limited-Term Bond Portfolio - .05
of 1% of net assets; Asset Strategy Portfolio - .30 of 1% of net assets;
and (ii) a base fee computed each day on the combined net asset values
of all of the Portfolios and allocated among the Portfolios based on
their relative net asset size at the annual rates shown in the following
table.
Base Fee Rate
Group Net Asset Level Annual Base Fee
(all dollars in millions) Rate for Each Level
------------------------- -------------------
From $ 0 to $ 750 .51 of 1%
From $ 750 to $1,500 .49 of 1%
From $1,500 to $2,250 .47 of 1%
Over $2,250 .45 of 1%
Prior to September 1, 1994, the annual base fee was .51 of 1%.
Prior to the above-described assignment to the Manager on January 8,
1992, the fees were paid to Waddell & Reed, Inc.
As of December 31, 1994, the combined net assets of all of the
Portfolios then in existence were $725,399,035.
For the fiscal year ended December 31, 1994, management fees for
each Portfolio then in existence as a percent of each such Portfolio's
average net assets and total expenses for each such Portfolio as a
percent of the Portfolio's average net assets for that year are as
follows:
Management Fees Total Expenses
Money Market Portfolio 0.51% 0.65%
Bond Portfolio 0.54% 0.62%
High Income Portfolio 0.66% 0.74%
Growth Portfolio 0.71% 0.77%
Income Portfolio 0.71% 0.77%
International Portfolio* 0.81% 1.26%
Small Cap Portfolio* 0.86% 1.08%
Balanced Portfolio* 0.61% 0.95%
Limited-Term Bond Portfolio* 0.56% 0.93%
*The International Portfolio, Small Cap Portfolio, Balanced
Portfolio and Limited-Term Bond Portfolio commenced operations April 29,
1994.
The Asset Strategy Portfolio commenced operations in 1995.
Waddell & Reed Services Company, a subsidiary of Waddell & Reed,
Inc., acts as Agent ("Accounting Services Agent") in providing
bookkeeping and accounting services and assistance to the Fund and
pricing daily the value of shares of each Portfolio. For these
services, each Portfolio pays the Accounting Services Agent a monthly
fee of one-twelfth of the annual fee shown in the following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Portfolio
------------------------- -----------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $1,000 $ 85,000
$1,000 and Over $100,000
The Fund is responsible for the payment of certain expenses,
including the management fees and accounting services fees described
above, fees and expenses of certain directors, costs of materials sent
to shareholders, audit and outside legal fees, taxes, brokerage
commissions, interest, insurance premiums, fees payable under securities
laws and to the Investment Company Institute, costs of shareholder
records, costs of systems or services used to price Portfolio securities
and extraordinary expenses, including litigation and indemnification
relating to litigation.
Richard K. Poettgen is primarily responsible for the day-to-day
management of the portfolio of the Money Market Portfolio. Mr. Poettgen
has held his responsibilities for the Money Market Portfolio since
January 1989. He is Vice President of the Manager. He is Vice
President and Assistant Treasurer of the Fund and Vice President and
Assistant Treasurer of other investment companies for which the Manager
serves as investment manager. Mr. Poettgen has served as the portfolio
manager for investment companies managed by Waddell & Reed, Inc. and its
successor, the Manager, since January 1989 and has been an employee of
Waddell & Reed, Inc. and its successor, the Manager, since April 1968.
James C. Cusser is primarily responsible for the day-to-day
management of the portfolio of the Bond Portfolio. Mr. Cusser has held
his responsibilities for the Bond Portfolio since August 1992. He is
Vice President of the Manager, Vice President of the Fund and Vice
President of other investment companies for which the Manager serves as
investment manager. Mr. Cusser has served as the portfolio manager for
investment companies managed by the Manager since August 1992 and has
been an employee of the Manager since August 1992. Prior to that date,
Mr. Cusser was a fixed income strategist for a major brokerage firm.
Louise D. Rieke is primarily responsible for the day-to-day
management of the portfolio of the High Income Portfolio. Ms. Rieke has
held her responsibilities for the High Income Portfolio since July 1987.
She is Vice President of the Manager and Vice President of Waddell &
Reed Asset Management Company, an affiliate of the Manager. She is Vice
President of the Fund and Vice President of other investment companies
for which the Manager serves as investment manager. Ms. Rieke has
served as the portfolio manager for investment companies managed by
Waddell & Reed, Inc. and its successor, the Manager, since January 1990
and has been an employee of Waddell & Reed, Inc. and its successor, the
Manager, since May 1971.
Antonio Intagliata is primarily responsible for the day-to-day
management of the portfolio of the Growth Portfolio. Mr. Intagliata has
held his responsibilities for the Growth Portfolio since July 1987. He
is Senior Vice President of the Manager. He is Vice President of the
Fund and Vice President of other investment companies for which the
Manager serves as investment manager. Mr. Intagliata has served as the
portfolio manager for investment companies managed by Waddell & Reed,
Inc. and its successor, the Manager, since February 1979 and has been an
employee of Waddell & Reed, Inc. and its successor, the Manager, since
June 1973.
Russell E. Thompson is primarily responsible for the day-to-day
management of the portfolio of the Income Portfolio. Mr. Thompson has
held his responsibilities for the Income Portfolio since July 1991, the
Portfolio's inception. He is Senior Vice President of the Manager and
Senior Vice President of Waddell & Reed Asset Management Company, an
affiliate of the Manager. He is Vice President of the Fund and Vice
President of other investment companies for which the Manager serves as
investment manager. Mr. Thompson has served as the portfolio manager
for investment companies managed by Waddell & Reed, Inc. and its
successor, the Manager, since January 1976 and has been an employee of
Waddell & Reed, Inc. and its successor, the Manager, since March 1971.
Mark L. Yockey is primarily responsible for the day-to-day
management of the portfolio of the International Portfolio. Mr. Yockey
has held his responsibilities for the International Portfolio since July
1994, the Portfolio's inception. He is Vice President of the Manager,
Vice President of the Fund and Vice President of other investment
companies for which the Manager serves as investment manager. Mr.
Yockey has served as the portfolio manager for investment companies
managed by Waddell & Reed, Inc. and its successor, the Manager, since
January 1990 and has been an employee of Waddell & Reed, Inc. and its
successor, the Manager, since November 1986.
Mark G. Seferovich is primarily responsible for the day-to-day
management of the portfolio of the Small Cap Portfolio. Mr. Seferovich
has held his responsibilities for the Small Cap Portfolio since July
1994, the Portfolio's inception. He is Vice President of the Manager,
Vice President of the Fund and Vice President of other investment
companies for which the Manager serves as investment manager. Mr.
Seferovich has served as the portfolio manager for investment companies
managed by Waddell & Reed, Inc. and its successor, the Manager, since
February 1989 and has been an employee of Waddell & Reed, Inc. and its
successor, the Manager, since February 1989. He previously served as
portfolio manager for a brokerage firm.
Cynthia P. Prince-Fox is primarily responsible for the day-to-
day management of the portfolio of the Balanced Portfolio. Ms. Prince-
Fox has held her responsibilities for the Balanced Portfolio since July
1994, the Portfolio's inception. She is Vice President of the Manager,
Vice President of the Fund and Vice President of other investment
companies for which the Manager serves as investment manager. Ms.
Prince-Fox has served as the portfolio manager for investment companies
managed by the Manager since January 1993 and has been an investment
analyst with Waddell & Reed, Inc. and its successor, the Manager, since
February 1983.
Patrick W. Sterner is primarily responsible for the day-to-day
management of the portfolio of the Limited-Term Bond Portfolio. Mr.
Sterner has held his responsibilities for the Limited-Term Bond
Portfolio since July 1994, the Portfolio's inception. He is Vice
President of the Manager, Vice President of the Fund and Vice President
of investment companies for which the Manager serves as investment
manager. Mr. Sterner has served as the portfolio manager for investment
companies managed by the Manager since September 1992 and has been an
employee of the Manager since August 1992. Prior to that date, Mr.
Sterner was Chief Investment Officer of a bank.
James D. Wineland is primarily responsible for the day-to-day
management of the portfolio of the Asset Strategy Portfolio. Mr.
Wineland has held his responsibilities for the Asset Strategy Portfolio
since the inception of the Portfolio. He is Vice President of the
Manager, Vice President of the Fund and Vice President of other
investment companies for which the Manager serves as investment manager.
Mr. Wineland has served as the portfolio manager for investment
companies managed by Waddell & Reed, Inc. and its successor, the
Manager, since January 1988 and has been an employee of Waddell & Reed,
Inc. and its successor, the Manager, since November 1984.
Other members of the Manager's investment management department
provide input on market outlook, economic conditions, investment
research and other considerations relating to the investments of the
Portfolios.
NET ASSET VALUE
The net asset value of a share of a Portfolio is the value of its
assets, less liabilities, divided by the total number of shares.
The net asset value per share of each Portfolio is computed
daily as of the later of the close of the regular session of the New
York Stock Exchange (the "NYSE") or the close of the regular session of
any other securities or commodities exchange on which an option or
future held by a Portfolio is traded on each day that the NYSE is open
for trading. The NYSE's regular session ordinarily closes at 4:00 P.M.
eastern time.
The Money Market Portfolio uses the amortized cost method for
valuing its portfolio securities. See the SAI for discussion of this
method. Net asset value of the Money Market Portfolio is normally fixed
at $1.00 per share. See the SAI for a discussion of extraordinary
circumstances which could result in a change in this fixed share value.
The securities of the other Portfolios that are listed or traded
on a U.S. or foreign stock exchange are valued at the last sales price
on that day. OTC securities traded on Nasdaq are valued at a price
which is the mean between the closing bid and asked prices. Bonds,
other than convertible bonds, are valued using a pricing system provided
by a major dealer in bonds. Convertible bonds are valued using this
pricing system only on days when there is no sale reported. Short-term
debt securities with a maturity of 60 days or less are valued at
amortized cost. When market quotations for options and futures
positions or non-exchange traded foreign securities held by a Portfolio
are readily available, those positions and securities will be valued
based upon such quotations. Market quotations generally will not be
available for options traded in the OTC market. When market quotations
are not readily available, securities, options, futures and other assets
are valued at fair value in a manner determined in good faith under
procedures established by and under the general supervision and
responsibility of the Board of Directors.
Certain of the Portfolios may invest in securities listed on
foreign exchanges which may trade on Saturdays and on customary U.S.
national business holidays when the NYSE is closed. Consequently, the
net asset value of a Portfolio could be significantly affected on days
when the Portfolio does not price its shares.
PURCHASES AND REDEMPTIONS
The separate accounts of the Participating Insurance Companies
place orders to purchase and redeem shares of each Portfolio based on,
among other things, the amount of premium payments to be invested and
the number of surrender and transfer requests to be effected on any day
according to the terms of the Policies. Shares of a Portfolio are sold
at their net asset value per share next determined after receipt of the
order to purchase from the Participating Insurance Company. No sales
charge is required to be paid by the Participating Insurance Company for
purchase of shares.
Redemptions will be made at the net asset value per share of the
Portfolio next determined after receipt of the request to redeem from
the Participating Insurance Company. Payment is generally made within
seven days after receipt of a proper request to redeem. No fee is
charged to shareholders upon redemption of Portfolio shares. The Fund
may suspend the right of redemption of shares of any Portfolio and may
postpone payment for any period if any of the following conditions
exist: (i) the Exchange is closed other than customary weekend and
holiday closings or trading on the Exchange is restricted; (ii) the
Securities and Exchange Commission has determined that a state of
emergency exists which may make payment or transfer not reasonably
practicable; (iii) the Securities and Exchange Commission has permitted
suspension of the right of redemption of shares for the protection of
the security holders of the Fund; or (iv) applicable laws and
regulations otherwise permit the Fund to suspend payment on the
redemption of shares. Redemptions are ordinarily made in cash.
Should any conflict between Policyowners arise which would require
that a substantial amount of net assets be withdrawn from the Fund,
orderly management of portfolio securities could be disrupted to the
potential detriment of Policyowners.
DIVIDENDS AND DISTRIBUTIONS
It is the Fund's intention to distribute substantially all the net
investment income, if any, of each Portfolio. For dividend purposes,
net investment income of each Portfolio, other than the Money Market
Portfolio, consists of dividends and interest received by such Portfolio
less the estimated expenses of such Portfolio. The Money Market
Portfolio's net investment income for dividend purposes consists of all
interest income accrued on the Portfolio's securities, plus or minus
realized gains or losses on those securities, less the Portfolio's
expenses.
Dividends from the Money Market Portfolio are declared and
reinvested daily in additional full and fractional shares. Dividends
from the Growth Portfolio, Bond Portfolio, High Income Portfolio, Income
Portfolio, International Portfolio, Small Cap Portfolio, Balanced
Portfolio, Limited-Term Bond Portfolio and the Asset Strategy Portfolio
usually are declared, paid and reinvested annually in December in
additional full and fractional shares of the respective Portfolio.
Ordinarily, dividends are paid on shares starting on the day after they
are issued and through the day they are redeemed.
All net realized long-term or short-term capital gains of each
Portfolio, if any, other than the Money Market Portfolio, are declared
and reinvested annually in December in additional full and fractional
shares of the respective Portfolio. Short-term capital gains of the
Money Market Portfolio--it does not anticipate realizing any long-term
capital gains--are declared and reinvested daily in additional full and
fractional shares of that Portfolio.
TAXES
Each of the Portfolios has qualified or, if a new Portfolio,
intends to qualify for treatment as a "regulated investment company"
("RIC") under Subchapter M of the Code. So long as a Portfolio
qualifies as such, the Portfolio will be relieved of Federal income tax
on the income and gains distributed to its shareholders.
Each Portfolio intends to comply with the diversification
requirements imposed by section 817(h) of the Code and the regulations
thereunder. These requirements, which are in addition to the
diversification requirements imposed on the Portfolios by the 1940 Act
and Subchapter M of the Code, place certain limitations on the assets of
each separate account -- and, because section 817(h) and those
regulations treat the assets of each Portfolio as assets of the related
separate account, of each Portfolio -- that may be invested in
securities of a single issuer. Specifically, the regulations provide
that, except as permitted by the "safe harbor" described below, as of
the end of each calendar quarter or within 30 days thereafter, no more
than 55% of a Portfolio's total assets may be represented by any one
investment, no more than 70% by any two investments, no more than 80% by
any three investments and no more than 90% by any four investments. For
this purpose, all securities of the same issuer are considered a single
investment, and while each U.S. Government agency and instrumentality is
considered a separate issuer, a particular foreign government and its
agencies, instrumentalities and political subdivisions all will be
considered the same issuer. Section 817(h) provides, as a safe harbor,
that a separate account will be treated as being adequately diversified
if the diversification requirements under Subchapter M are satisfied and
no more than 55% of the value of the account's total assets are cash and
cash items, government securities and securities of other RICs. Failure
of a Portfolio to satisfy the section 817(h) requirements would result
in taxation of the Participating Insurance Companies and treatment of
the Policyowners other than as described in the prospectuses for the
Policies.
The foregoing is only a summary of some of the important Federal
income tax considerations generally affecting the Portfolios; see the
SAI for a more detailed discussion.
Because the only shareholders of the Portfolios will be the
Participating Insurance Companies and their separate accounts, no
discussion is included herein as to the Federal income tax consequences
to the Portfolios' shareholders. For information concerning the Federal
tax consequences to Policyowners, see the prospectuses for the Policies.
Prospective investors are urged to consult with their tax advisers.
OTHER INFORMATION
The Fund was incorporated in Maryland on December 2, 1986. It has a
Board of Directors which has overall responsibility for the management
of its affairs. Capital stock is currently divided into the ten classes
that are designated the Money Market Portfolio, the Bond Portfolio, the
High Income Portfolio, the Growth Portfolio, the Income Portfolio, the
International Portfolio, the Small Cap Portfolio, the Balanced
Portfolio, the Limited-Term Bond Portfolio and the Asset Strategy
Portfolio. The Fund may establish additional portfolios in the future.
Shares of each class are fully paid and nonassessable when issued. The
Fund does not hold annual meetings of shareholders; however, certain
significant corporate matters, such as the approval of a new investment
advisory agreement or a change in a fundamental investment policy, which
require shareholder approval, will be presented to shareholders at an
annual meeting or special meeting called by the Board of Directors for
such purpose.
All shares of the Fund have equal voting rights (regardless of the
net asset value per share) except that on matters affecting only one
Portfolio, only shares of the respective Portfolio are entitled to vote.
Matters in which the interests of all the Portfolios are substantially
identical are voted on by all shareholders without regard to the
separate Portfolios. Matters that affect all the Portfolios but where
the interests of the Portfolios are not substantially identical are
voted on separately by each Portfolio. Matters affecting only one
Portfolio, such as a change in its fundamental policies, are voted on
separately by the Portfolio.
Shareholder inquiries may be addressed to the Fund or Waddell &
Reed, Inc. at the address that appears on the front cover of this
Prospectus.
<PAGE>
APPENDIX A
The following are descriptions of some of the ratings of
securities which the Fund may use. The Fund may also use ratings
provided by other nationally recognized statistical rating organizations
in determining the eligibility of securities for the Portfolios.
DESCRIPTION OF BOND RATINGS
Standard & Poor's Ratings Services. A Standard & Poor's
("S&P")corporate or municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.
This assessment of creditworthiness may take into consideration obligors
such as guarantors, insurers or lessees.
The debt rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or
suitability for a particular investor.
The ratings are based on current information furnished to S&P by
the issuer or obtained by S&P from other sources it considers reliable.
S&P does not perform any audit in connection with any ratings and may,
on occasion, rely on unaudited financial information. The ratings may
be changed, suspended or withdrawn as a result of changes in, or
unavailability of, such information, or based on other
circumstances.
The ratings are based, in varying degrees, on the following
considerations:
1. Likelihood of default -- capacity and willingness of the obligor as
to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation.;.
2. Nature of and provisions of the obligation;
3. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangement under
the laws of bankruptcy and other laws affecting creditors' rights.
A brief description of the applicable S&P rating symbols and
their meanings follow:
AAA -- Debt rated AAA has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA -- Debt rated AA also qualifies as high-quality debt. Capacity
to pay interest and repay principal is very strong, and debt rated AA
differs from AAA issues only in small degree.
A -- Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt in
higher rated categories.
BBB -- Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
BB, B, CCC, CC, C - Debt rated BB, B, CCC, CC and C is regarded as
having predominantly speculative characteristics with respect to
capacity to pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree of speculation
and C the highest degree of speculation. While such debt will likely
have some quality and protective characteristics, these are outweighed
by large uncertainties or major exposures to adverse conditions.
BB -- Debt rated BB has less near-term vulnerability to default
than other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
B -- Debt rated B has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions will
likely impair capacity or willingness to pay interest and repay
principal. The B rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BB or BB- rating.
CCC -- Debt rated CCC has a currently indefinable vulnerability to
default, and is dependent upon favorable business, financial and
economic conditions to meet timely payment of interest and repayment of
principal. In the event of adverse business, financial or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or
B- rating.
CC -- The rating CC is typically applied to debt subordinated to
senior debt that is assigned an actual or implied CCC rating.
C -- The rating C is typically applied to debt subordinated to
senior debt which is assigned an actual or implied CCC- debt rating.
The C rating may be used to cover a situation where a bankruptcy
petition has been filed, but debt service payments are continued.
CI -- The rating CI is reserved for income bonds on which no
interest is being paid.
D -- Debt rated D is in payment default. It is used when
interest payments or principal payments are not made on a due date even
if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace periods. The D rating will
also be used upon a filing of a bankruptcy petition if debt service
payments are jeopardized.
Plus (+) or Minus (-) -- To provide more detailed indications of
credit quality, the ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the
major rating categories.
NR -- Indicates that no public rating has been requested, that
there is insufficient information on which to base a rating, or that S&P
does not rate a particular type of obligation as a matter of policy.
Debt Obligations of issuers outside the United States and its
territories are rated on the same basis as domestic corporate and
municipal issues. The ratings measure the creditworthiness of the
obligor but do not take into account currency exchange and related
uncertainties.
Bond Investment Quality Standards: Under present commercial bank
regulations issued by the Comptroller of the Currency, bonds rated in
the top four categories (AAA, AA, A, BBB, commonly known as "Investment
Grade" ratings) are generally regarded as eligible for bank investment.
In addition, the Legal Investment Laws of various states governing legal
investments may impose certain rating or other standards for obligations
eligible for investment by savings banks, trust companies, insurance
companies and fiduciaries generally.
Moody's Investors Service, Inc. A brief description of the
applicable Moody's Investors Service rating symbols and their meanings
follows:
Aaa -- Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge". Interest payments are protected
by a large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change such changes
as can be visualized are most unlikely to impair the fundamentally
strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa
securities or fluctuations of protective elements may be of greater
amplitude or there may be other elements present which make the long-
term risks appear somewhat larger than in Aaa securities.
A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered
adequate, but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Some bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
NOTE: Bonds within the above categories which possess the strongest
investment attributes are designated by the symbol "1" following the
rating.
Ba -- Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with
respect to principal or interest.
Ca -- Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds
and issues so rated can be regarded as having extremely poor prospects
of ever attaining any real investment standing.
DESCRIPTION OF PREFERRED STOCK RATINGS
Standard & Poor's Ratings Services. A S&P preferred stock
rating is an assessment of the capacity and willingness of an issuer to
pay preferred stock dividends and any applicable sinking fund
obligations. A preferred stock rating differs from a bond rating
inasmuch as it is assigned to an equity issue, which issue is
intrinsically different from, and subordinated to, a debt issue.
Therefore, to reflect this difference, the preferred stock rating symbol
will normally not be higher than the debt rating symbol assigned to, or
that would be assigned to, the senior debt of the same issuer.
The preferred stock ratings are based on the following
considerations:
1. Likelihood of payment - capacity and willingness of the issuer to
meet the timely payment of preferred stock dividends and any
applicable sinking fund requirements in accordance with the terms
of the obligation;
2. Nature of, and provisions of, the issue;
3. Relative position of the issue in the event of bankruptcy,
reorganization, or other arrangement under the laws of bankruptcy
and other laws affecting creditors' rights.
AAA -- This is the highest rating that may be assigned by Standard
& Poor's to a preferred stock issue and indicates an extremely strong
capacity to pay the preferred stock obligations.
AA -- A preferred stock issue rated AA also qualifies as a high-
quality fixed income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for issues
rated AAA.
A -- An issue rated A is backed by a sound capacity to pay the
preferred stock obligations, although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions.
BBB -- An issue rated BBB is regarded as backed by an adequate
capacity to pay the preferred stock obligations. Whereas it normally
exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to
make payments for a preferred stock in this category than for issues in
the 'A' category.
BB, B, CCC -- Preferred stock rated BB, B, and CCC are regarded, on
balance, as predominantly speculative with respect to the issuer's
capacity to pay preferred stock obligations. BB indicates the lowest
degree of speculation and CCC the highest degree of speculation. While
such issues will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.
CC -- The rating CC is reserved for a preferred stock issue in
arrears on dividends or sinking fund payments but that is currently
paying.
C -- A preferred stock rated C is a non-paying issue.
D -- A preferred stock rated D is a non-paying issue with the
issuer in default on debt instruments.
NR -- This indicates that no rating has been requested, that there
is insufficient information on which to base a rating, or that S&P does
not rate a particular type of obligation as a matter of policy.
Plus (+) or minus (-) -- To provide more detailed indications of
preferred stock quality, the rating from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within
the major rating categories.
A preferred stock rating is not a recommendation to purchase, sell,
or hold a security inasmuch as it does not comment as to market price or
suitability for a particular investor. The ratings are based on current
information furnished to S&P by the issuer or obtained by S&P from other
sources it considers reliable. S&P does not perform an audit in
connection with any rating and may, on occasion, rely on unaudited
financial information. The ratings may be changed, suspended, or
withdrawn as a result of changes in, or unavailability of, such
information, or based on other circumstances.
Moody's Investors Service, Inc. Note: Moody's applies numerical
modifiers 1, 2 and 3 in each rating classification; the modifier 1
indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking and the
modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
Preferred stock rating symbols and their definitions are as
follows:
aaa -- An issue which is rated aaa is considered to be a top-
quality preferred stock. This rating indicates good asset protection
and the least risk of dividend impairment within the universe of
preferred stocks.
aa -- An issue which is rated aa is considered a high-grade
preferred stock. This rating indicates that there is a reasonable
assurance the earnings and asset protection will remain relatively well-
maintained in the foreseeable future.
a -- An issue which is rated a is considered to be an upper-medium
grade preferred stock. While risks are judged to be somewhat greater
than in the aaa and aa classification, earnings and asset protection
are, nevertheless, expected to be maintained at adequate levels.
baa -- An issue which is rated baa is considered to be a medium-
grade preferred stock, neither highly protected nor poorly secured.
Earnings and asset protection appear adequate at present but may be
questionable over any great length of time.
ba -- An issue which is rated ba is considered to have speculative
elements and its future cannot be considered well assured. Earnings and
asset protection may be very moderate and not well safeguarded during
adverse periods. Uncertainty of position characterizes preferred stocks
in this class.
b -- An issue which is rated b generally lacks the characteristics
of a desirable investment. Assurance of dividend payments and
maintenance of other terms of the issue over any long period of time may
be small.
caa -- An issue which is rated caa is likely to be in arrears on
dividend payments. This rating designation does not purport to indicate
the future status of payments.
ca -- An issue which is rated ca is speculative in a high degree
and is likely to be in arrears on dividends with little likelihood of
eventual payments.
c -- This is the lowest rated class of preferred or preference
stock. Issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt considered short-term in the
relevant market. Ratings are graded into several categories, ranging
from A-1 for the highest quality obligations to D for the lowest.
Issuers rated A are further referred to by use of numbers 1, 2 and 3 to
indicate the relative degree of safety. Issues assigned an A rating
(the highest rating) are regarded as having the greatest capacity for
timely payment. An A-1 designation indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation. An A-2 rating indicates that capacity for timely payment
is satisfactory; however, the relative degree of safety is not as high
as for issues designated A-1. Issues rated A-3 have adequate capacity
for timely payment; however, they are more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations. Issues rated B are regarded as having only speculative
capacity for timely payment. A C rating is assigned to short-term debt
obligations with a doubtful capacity for payment. Debt rated D is in
payment default, which occurs when interest payments or principal
payments are not made on the date due, even if the applicable grace
period has not expired, unless Standard & Poor's believes that such
payments will be made during such grace period.
Moody's Investors Service, Inc. commercial paper ratings are
opinions of the ability of issuers to repay punctually promissory
obligations not having an original maturity in excess of nine months.
Moody's employs the designations of Prime 1, Prime 2 and Prime 3, all
judged to be investment grade, to indicate the relative repayment
capacity of rated issuers. Issuers rated Prime 1 have a superior
capacity for repayment of short-term promissory obligations and
repayment capacity will normally be evidenced by (1) leading market
positions in well established industries; (2) high rates of return on
funds employed; (3) conservative capitalization structures with moderate
reliance on debt and ample asset protection; (4) broad margins in
earnings coverage of fixed financial charges and high internal cash
generation; and (5) well established access to a range of financial
markets and assured sources of alternate liquidity. Issuers rated Prime
2 also have a strong capacity for repayment of short-term promissory
obligations as will normally be evidenced by many of the characteristics
described above for Prime 1 issuers, but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to
variation; capitalization characteristics, while still appropriate, may
be more affected by external conditions; and ample alternate liquidity
is maintained. Issuers rated Prime 3 have an acceptable capacity for
repayment of short-term promissory obligations, as will normally be
evidenced by many of the characteristics above for Prime 1 issuers, but
to a lesser degree. The effect of industry characteristics and market
composition may be more pronounced; variability in earnings and
profitability may result in changes in the level of debt protection
measurements and requirement for relatively high financial leverage; and
adequate alternate liquidity is maintained.
DESCRIPTION OF NOTE RATINGS
Standard & Poor's Ratings Services. A S&P note rating reflects
the liquidity factors and market access risks unique to notes. Notes
maturing in 3 years or less will likely receive a note rating. Notes
maturing beyond 3 years will most likely receive a long-term debt
rating. The following criteria will be used in making that
assessment.
--Amortization schedule (the larger the final maturity relative to
other maturities, the more likely the issue is to be treated as a
note).
--Source of Payment (the more the issue depends on the market for its
refinancing, the more likely it is to be treated as a note.)
The note rating symbols and definitions are as follows:
SP-1 Strong capacity to pay principal and interest. Issues
determined to possess very strong characteristics are given a
plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over
the term of the notes.
SP-3 Speculative capacity to pay principal and interest.
Moody's Investors Service, Inc. Moody's Short-Term Loan Ratings --
Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade (MIG). This distinction is in
recognition of the differences between short-term credit risk and long-
term risk. Factors affecting the liquidity of the borrower are
uppermost in importance in short-term borrowing, while various factors
of major importance in bond risk are of lesser importance over the short
run. Rating symbols and their meanings follow:
MIG 1 -- This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support
or demonstrated broad-based access to the market for refinancing.
MIG 2 -- This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
MIG 3 -- This designation denotes favorable quality. All security
elements are accounted for but this is lacking the undeniable strength
of the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well
established.
MIG 4 -- This designation denotes adequate quality. Protection
commonly regarded as required of an investment security is present and
although not distinctly or predominantly speculative, there is specific
risk.
<PAGE>
TMK/UNITED FUNDS, INC.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
PROSPECTUS
November 1, 1995
Custodian
UMB Bank, n. a.
Kansas City, Missouri
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 M Street NW
Washington, D. C.
Independent Accountants
Price Waterhouse LLP
Kansas City, Missouri
Investment Manager
Waddell & Reed Investment Management Company
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
(913) 236-2000
Distributor and Underwriter
Waddell & Reed, Inc.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
(913) 236-2000
Accounting Services Agent
Waddell & Reed Services Company
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
(913) 236-2000
TABLE OF CONTENTS
Prospectus Summary ................. 2
Financial Highlights .................. 4
The Fund .............................. 14
Goals and Investment Policies
of the Portfolios ................... 15
Management ............................ 35
Net Asset Value ....................... 38
Purchases and Redemptions ............. 39
Dividends and Distributions ........... 39
Taxes ................................. 40
Other Information ..................... 40
Appendix A ............................42
<PAGE>
TMK/UNITED FUNDS, INC.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
913/236-2000
November 1, 1995
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information (the "SAI") is not a
prospectus. This SAI should be read in conjunction with the prospectus
(the "Prospectus") of TMK/United Funds, Inc. (the "Fund") dated November
1, 1995, which may be obtained by request to the Fund or its Distributor
and Underwriter, Waddell & Reed, Inc., at the address or telephone
number shown above.
TABLE OF CONTENTS
Performance Information ......................... 2
Goals and Investment Policies ................5
Investment Management and Other Services ........ 48
Net Asset Value ................................. 50
Purchases and Redemptions ....................... 54
Shareholder Communications ...................... 55
Taxes ........................................... 55
Dividends and Distributions ..................... 59
Portfolio Transactions and Brokerage ............ 59
Directors and Officers .......................... 62
Other Information ............................... 67
Financial Statements ............................ 69
<PAGE>
PERFORMANCE INFORMATION
From time to time, advertisements and sales materials for one or
more of the Portfolios may include total return information, yield
information and/or performance rankings. Performance data will be
accompanied by or used in calculating performance data for the
respective separate accounts that invest in the Portfolio.
Total Return
The following relates to Bond Portfolio, High Income Portfolio,
Growth Portfolio, Income Portfolio, International Portfolio, Small Cap
Portfolio, Balanced Portfolio, Limited-Term Bond Portfolio and Asset
Strategy Portfolio. An average annual total return quotation is
computed by finding the average annual compounded rates of return over
the one-, five-, and ten-year periods that would equate the initial
amount invested to the ending redeemable value. Total return is
calculated by assuming an initial $1,000 investment. No sales charge is
required to be paid by the Participating Insurance Companies for
purchase of shares. All dividends and distributions are assumed to be
reinvested at net asset value as of the day the dividend or distribution
is paid. The formula used to calculate the total return is:
n
P(1 + T) = ERV
Where : P = $1,000 initial payment
T = Average annual total return
n = Number of years
ERV = Ending redeemable value of the $1,000 investment for
the periods shown.
The average annual total return quotations as of June 30, 1995,
which is the most recent balance sheet included in this Statement of
Additional Information, for the periods shown were as follows:
One-year Five-year
period from period from Period from
7-1-94 to 7-1-89 to 7-13-872 to
6-30-951 6-30-95 6-30-95
----------- ----------- -----------
Bond Portfolio 12.40% 9.37% 8.95%
High Income Portfolio 9.43% 12.77% 9.07%
Growth Portfolio 21.91% 15.99% 14.76%
Income Portfolio 23.76% 14.83%3
International Portfolio 10.22% 6.54%4
Small Cap Portfolio 39.44% 33.61%4
Balanced Portfolio 11.13% 9.73%4
Limited-Term Bond Portfolio 9.43% 7.89%4
Asset Strategy Portfolio 4.45%5
1Asset Strategy Portfolio began operations in 1995.
2Date of initial public offering.
3Period from July 16, 1991, date of initial offering, to June 30, 1995.
4Period from May 3, 1994, date of initial offering, to June 30, 1995.
5Period from May 1, 1995, date of initial offering, to September 30, 1995.
Unaveraged or cumulative total return may also be quoted. Such
total return data reflects the change in value of an investment over a
stated period of time. Cumulative total returns will be calculated
according to the formula indicated above but without averaging the rate
for the number of years in the period. The Fund may also provide non-
standardized performance information.
Yield
The following relates to the Money Market Portfolio. There are two
methods by which Money Market Portfolio's yield for a specified time is
calculated. The first method, which results in an amount referred to as
the "current yield," assumes an account containing exactly one share at
the beginning of the period. The net asset value of this share will be
$1.00 except under extraordinary circumstances. The net change in the
value of the account during the period is then determined by subtracting
this beginning value from the value of the account at the end of the
period which will include all dividends accrued; however, capital
changes are excluded from the calculation, i.e., realized gains and
losses from the sale of securities and unrealized appreciation and
depreciation. However, so that the change will not reflect the capital
changes to be excluded, the dividends used in the yield computation may
not be the same as the dividends actually declared, as certain realized
gains and losses and, under unusual circumstances, unrealized gains and
losses (see "Purchases and Redemptions"), will be taken into account in
the calculation of dividends actually declared. Instead, the dividends
used in the yield calculation will be those which would have been
declared if the capital changes had not affected the dividends.
This net change in the account value is then divided by the value
of the account at the beginning of the period (i.e., normally $1.00 as
discussed above) and the resulting figure (referred to as the "base
period return") is then annualized by multiplying it by 365 and dividing
it by the number of days in the period with the resulting current yield
figure carried to at least the nearest hundredth of one percent.
The second method results in a figure referred to as the "effective
yield." This represents an annualization of the current yield with
dividends reinvested daily. Effective yield is calculated by
compounding the base period return by adding 1, raising the sum to a
power equal to 365 divided by 7, and subtracting 1 from the result and
rounding the result to the nearest hundredth of one percent according to
the following formula:
365/7
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)] -1
The Money Market Portfolio's current yield as calculated above
for the seven days ended June 30, 1995, the date of the most recent
balance sheet included in this SAI, was 5.00% and its effective yield
calculated for the same period was 5.12%.
Performance Rankings
The following relates to each of the Portfolios. From time to
time, advertisements and information furnished to present or prospective
Policyholders may include performance rankings as published by
recognized independent mutual fund statistical services such as Lipper
Analytical Services, Inc., or by publications of general interest such
as Forbes, Money, The Wall Street Journal, Business Week, Barron's,
Fortune or Morningstar Mutual Fund Values. A Portfolio's performance
may also be compared to that of other selected mutual funds or
recognized market indicators such as the Standard & Poor's 500 Stock
Index and the Dow Jones Industrial Average. Performance information may
be quoted numerically or presented in a table, graph or other
illustration.
General
Change in yields primarily reflect different interest rates
received by a Portfolio as its portfolio securities change. Yield is
also affected by portfolio quality, portfolio maturity, type of
securities held and operating expense ratio.
All performance information included in advertisements or sales
material is historical in nature and is not intended to represent or
guarantee future results. The value of a Portfolio's shares when
redeemed may be more or less than their original cost.
GOALS AND INVESTMENT POLICIES
The following information supplements the disclosure in the
Prospectus concerning the goals and investment policies of each
Portfolio. Unless otherwise specified, this information pertains to
each of the Portfolios. The investment policies described may be
changed by the Directors of the Fund without a vote of shareholders,
unless otherwise stated.
The Money Market Portfolio
The Money Market Portfolio may invest in the money market
obligations and instruments listed below. Under Rule 2a-7 ("Rule 2a-7")
of the Investment Company Act of 1940, as amended (the "1940 Act"),
investments are limited to those that are denominated in U.S. dollars
and that are rated in one of the two highest rating categories by the
requisite nationally recognized statistical rating organization(s)
("NRSRO(s)"), as defined in Rule 2a-7, or are comparable unrated
securities. See the Prospectus Appendix for a description of some of
these ratings. In addition, Rule 2a-7 limits investments in securities
of any one issuer (except securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities ("U.S. Government
Securities")) to no more than 5% of the Portfolio's assets. Investments
in securities rated in the second highest rating category by the
requisite NRSRO(s) or comparable unrated securities are limited to no
more than 5% of the Portfolio's assets, with investments in such
securities of any one issuer (except U.S. Government Securities) being
limited to the greater of one percent of the Portfolio's assets or
$1,000,000. Under the Rule, the Portfolio may only invest in securities
with a remaining maturity of not more than thirteen months, as further
described in the Rule.
(1) U.S. Government Securities: See "U.S. Government Securities."
(2) Bank obligations and instruments secured thereby: Subject to
the limitations described above, time deposits, certificates of deposit,
bankers' acceptances and other bank obligations if they are obligations
of a bank subject to regulation by the U.S. Government (including
obligations issued by foreign branches of these banks) or obligations
issued by a foreign bank having total assets equal to at least U.S.
$500,000,000, and instruments secured by any such obligation. A "bank"
includes commercial banks and savings and loan associations. Time
deposits are monies kept on deposit with U.S. banks or other U.S.
financial institutions for a stated period of time at a fixed rate of
interest. At present, bank time deposits are not considered by the
Board of Directors or Waddell & Reed Investment Management Company (the
"Manager"), to be readily marketable. There may be penalties for the
early withdrawal of such time deposits, in which case, the yield of
these investments will be reduced.
(3) Commercial Paper Obligations Including Variable Amount Master
Demand Notes: Commercial paper rated as described above. See Appendix
A to the Prospectus for a description of some of these ratings. A
variable amount master demand note represents a borrowing arrangement
under a letter agreement between a commercial paper issuer and an
institutional lender.
(4) Corporate Debt Obligations: Corporate debt obligations if
they are rated as described above. See Appendix A to the Prospectus for
a description of some of these bond ratings.
(5) Canadian Government Obligations: Obligations of, or
obligations guaranteed by, the Government of Canada, a Province of
Canada or any agency, instrumentality or political subdivision of that
Government or any Province. The Portfolio will not invest in Canadian
Government obligations if more than 10% of the value of its total assets
would then be so invested, subject to the diversification requirements
applicable to the Money Market Portfolio.
(6) Certain Other Obligations: Obligations other than those
listed in (1) through (5) above only if such other obligation is
guaranteed as to principal and interest by either a bank or a
corporation whose securities the Portfolio is eligible to hold under the
Rule.
The value of the obligations and instruments in which the Portfolio
invests will fluctuate depending in large part on changes in prevailing
interest rates. If these rates go up after the Portfolio buys an
obligation or instrument, its value may go down; if these rates go down,
its value may go up. Changes in interest rates will be more quickly
reflected in the yield of a portfolio of short-term obligations than in
the yield of a portfolio of long-term obligations.
The High Income Portfolio
The High Income Portfolio may invest in certain high-yield, high-
risk non-investment grade debt securities. As discussed in the
Prospectus, the market for such securities may differ from that for
investment grade debt securities. See the Prospectus for a discussion
of the risks associated with non-investment grade debt securities.
The Asset Strategy Portfolio
The Asset Strategy Portfolio allocates its assets among the
following classes, or types, of investments:
The short-term class includes all types of domestic and foreign
securities and money market instruments with remaining maturities of
three years or less. The Manager will seek to maximize total return
within the short-term asset class by taking advantage of yield
differentials between different instruments, issuers, and currencies.
Short-term instruments may include corporate debt securities, such as
commercial paper and notes; government securities issued by U.S. or
foreign governments or their agencies or instrumentalities; bank
deposits and other financial institution obligations; repurchase
agreements involving any type of security; and other similar short-term
instruments. These instruments may be denominated in U.S. dollars or
foreign currency.
The bond class includes all varieties of domestic and foreign
fixed-income securities with maturities greater than three years. The
Manager seeks to maximize total return within the bond class by
adjusting the Portfolio's investments in securities with different
credit qualities, maturities, and coupon or dividend rates, and by
seeking to take advantage of yield differentials between securities.
Securities in this class may include bonds, notes, adjustable-rate
preferred stocks, convertible bonds, mortgage-related and asset-backed
securities, domestic and foreign government and government agency
securities, zero coupon bonds, and other intermediate and long-term
securities. As with the short-term class, these securities may be
denominated in U.S. dollars or foreign currency. The Portfolio may also
invest in lower quality, high-yielding debt securities (commonly
referred to as "junk bonds"). The Portfolio currently intends to limit
its investments in these securities to 20% of its assets.
The stock class includes domestic and foreign equity securities of
all types (other than adjustable rate preferred stocks which are
included in the bond class). The Manager seeks to maximize total return
within this asset class by actively allocating assets to industry
sectors expected to benefit from major trends, and to individual stocks
that the Manager believes to have superior growth potential. Securities
in the stock class may include common stocks, fixed-rate preferred
stocks (including convertible preferred stocks), warrants, rights,
depositary receipts, securities of closed-end investment companies, and
other equity securities issued by companies of any size, located
anywhere in the world.
The Manager intends to take advantage of yield differentials by
considering the purchase or sale of instruments when differentials on
spreads between various grades and maturities of such instruments
approach extreme levels relative to long-term norms.
In making asset allocation decisions, the Manager typically
evaluates projections of risk, market conditions, economic conditions,
volatility, yields, and returns.
Foreign Securities
The International Portfolio and Small Cap Portfolio may each
purchase foreign securities only if they are (i) listed or admitted to
trading on a domestic or foreign securities exchange, with the exception
of warrants, rights or restricted securities, which need not be so
listed or admitted; or (ii) represented by American Depositary Receipts
(receipts issued against securities of foreign issuers deposited or to
be deposited with an American depository) so listed or admitted on a
domestic securities exchange or traded in the United States over-the-
counter market ("OTC"); or (iii) issued or guaranteed by any foreign
government or any subdivision, agency or instrumentality thereof. The
Asset Strategy Portfolio, the Money Market Portfolio, the Bond
Portfolio, the High Income Portfolio, the Growth Portfolio, the Income
Portfolio and the Balanced Portfolio may invest in foreign securities,
subject to the limitations described in the Prospectus.
In general, depositary receipts are securities convertible into and
evidencing ownership of securities of foreign corporate issuers,
although depositary receipts may not necessarily be denominated in the
same currency as the securities into which they may be converted.
American Depositary Receipts, in registered form, are dollar-denominated
receipts typically issued by a U.S. bank or trust company evidencing
ownership of the underlying securities. International depositary
receipts and European depositary receipts, in bearer form, are foreign
receipts evidencing a similar arrangement and are designed for use by
non-U.S. investors and traders in non-U.S. markets. Global depositary
receipts are more recently developed receipts designed to facilitate the
trading of foreign issuers by U.S. and non-U.S. investors and traders.
The Manager believes that there are investment opportunities as
well as risks in investing in foreign securities. Individual foreign
economies may differ favorably or unfavorably from the U.S. economy or
each other in such matters as gross national product, rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payments
position. Individual foreign companies may also differ favorably or
unfavorably from domestic companies in the same industry. Foreign
currencies may be stronger or weaker than the U.S. dollar or than each
other. An investment in foreign securities may be affected by changes
in currency rates and in exchange control regulations (i.e., currency
blockage). A Portfolio may bear a transaction charge in connection with
the exchange of currency. There may be less publicly available
information about a foreign company than about a domestic company.
Foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards comparable to those
applicable to domestic companies. Most foreign stock markets have
substantially less volume than the New York Stock Exchange (the "NYSE")
and securities of some foreign companies are less liquid and more
volatile than securities of comparable domestic companies. There is
generally less government regulation of stock exchanges, brokers and
listed companies than in the United States. In addition, with respect
to certain foreign countries, there is a possibility of expropriation or
confiscatory taxation, political or social instability or diplomatic
developments that could adversely affect investments in securities of
issuers located in those countries. If it should become necessary, a
Portfolio would normally encounter greater difficulties in commencing a
lawsuit against the issuer of a foreign security than it would against a
U.S. issuer.
A Portfolio (other than the Asset Strategy Portfolio) will not
speculate in foreign currencies, but each Portfolio, except the Money
Market Portfolio and the Limited-Term Bond Portfolio, may briefly hold
foreign currencies in connection with the purchase or sale of foreign
securities. The Asset Strategy Portfolio may purchase and sell foreign
currency and invest in foreign currency deposits as described in the
Prospectus and this SAI, and the Asset Strategy Portfolio and the
International Portfolio may enter into forward currency contracts as
described in the Prospectus and this SAI. A Portfolio may incur a
transaction charge in connection with the exchange of currency.
Borrowing
From time to time the Small Cap Portfolio may increase its
ownership of securities by borrowing on an unsecured basis at fixed
rates of interest and investing the borrowed funds. Any such borrowing
will be made only from banks and only to the extent that the value of
its assets, less its liabilities other than borrowings, is equal to at
least 300% of all borrowings including the proposed borrowing.
As a fundamental policy, the Asset Strategy Portfolio may borrow
money for emergency or extraordinary purposes (not for leveraging or
investment) in an amount not exceeding 33 1/3% of the value of its total
assets (less liabilities other than borrowings). This Portfolio may
borrow money only from a bank and this Portfolio will not purchase any
security while borrowings representing more than 5% of its total assets
are outstanding.
The 300% asset coverage requirement is contained in the 1940
Act. If the value of a Portfolio's assets so computed should fail to
meet the 300% asset coverage requirement, it is required within three
days to reduce its borrowings to the extent necessary to meet that
requirement and may have to sell a portion of its investments at a time
when independent investment judgment would not dictate such sale. For
purposes of this limitation, "three days" means three days, exclusive of
Sundays and holidays.
Interest on money borrowed is an expense the Portfolio would not
otherwise incur, so that it may have little or no net investment income
during periods of substantial borrowings. Borrowing for investment
increases both investment opportunity and risk.
U.S. Government Securities
U.S. Government Securities include Treasury Bills (which mature
within one year of the date they are issued), Treasury Notes (which have
maturities of one to ten years) and Treasury Bonds (which generally have
maturities of more than 10 years). All such Treasury securities are
backed by the full faith and credit of the United States.
U.S. Government agencies and instrumentalities that issue or
guarantee securities include, but are not limited to, the Federal
Housing Administration, Federal National Mortgage Association, Farmers
Home Administration, Export-Import Bank of the United States, Small
Business Administration, Government National Mortgage Association,
General Services Administration, Central Bank for Cooperatives, Federal
Home Loan Banks, Federal Home Loan Mortgage Corporation, Farm Credit
Banks, Maritime Administration, the Tennessee Valley Authority, the
Resolution Funding Corporation, and the Student Loan Marketing
Association.
Securities issued or guaranteed by U.S. Government agencies and
instrumentalities are not always supported by the full faith and credit
of the United States. Some, such as securities issued by the Federal
Home Loan Banks, are backed by the right of the agency or
instrumentality to borrow from the Treasury. Others, such as securities
issued by the Federal National Mortgage Association, are supported only
by the credit of the instrumentality and not by the Treasury. If the
securities are not backed by the full faith and credit of the United
States, the owner of the securities must look principally to the agency
issuing the obligation for repayment and may not be able to assert a
claim against the United States in the event that the agency or
instrumentality does not meet its commitment. A Portfolio (other than
Asset Strategy Portfolio) will invest in securities of such agencies and
instrumentalities only if the Manager is satisfied that the credit risk
involved is acceptable.
U.S. Government Securities may include "mortgage-backed securities"
of the Government National Mortgage Association ("Ginnie Mae"), the
Federal Home Loan Mortgage Corporation ("Freddie Mac") and the Federal
National Mortgage Association ("Fannie Mae"). These mortgage-backed
securities include "pass-through" securities and "participation
certificates." Another type of mortgage-backed security is a
collateralized mortgage obligation ("CMO"). See "Mortgage-Backed
Securities." Timely payment of principal and interest on Ginnie Mae
pass-throughs is guaranteed by the full faith and credit of the United
States. Freddie Mac and Fannie Mae are both instrumentalities of the
U.S. Government, but their obligations are not backed by the full faith
and credit of the United States. It is possible that the availability
and the marketability (i.e., liquidity) of the securities discussed in
this section could be adversely affected by actions of the U.S.
Government to tighten the availability of its credit.
The Limited-Term Bond Portfolio may also invest in deposits in
banks (represented by certificates of deposit or other evidence of
deposit issued by such banks of varying maturities) to the extent that
the principal of such deposits is insured by the Federal Deposit
Insurance Corporation; such deposits are referred to as "Insured
Deposits." Such insurance (and, accordingly, the Portfolio's aggregated
investments) is currently limited to $100,000 per bank; any interest
above that amount is not insured. Insured Deposits are not marketable,
and this Portfolio may invest in them only within the 10% limit
mentioned below under "Illiquid Investments" unless such obligations are
payable at principal amount plus accrued interest on demand or within
seven days after demand.
Zero Coupon Bonds
A broker-dealer creates a derivative zero by separating the
interest and principal components of a U.S. Treasury security and
selling them as two individual securities. CATS (Certificates of
Accrual on Treasury Securities), TIGRs (Treasury Investment Growth
Receipts), and TRs (Treasury Receipts) are examples of derivative zeros.
A Federal Reserve Bank creates STRIPS (Separate Trading of
Registered Interest and Principal of Securities) by separating the
interest and principal components of an outstanding U.S. Treasury bond
and selling them as individual securities. Bonds issued by the
Resolution Funding Corporation (REFCORP) and the Financing Corporation
(FICO) can also be separated in this fashion. Original issue zeros are
zero coupon securities originally issued by the U.S. Government, a
government agency, or a corporation in zero coupon form.
Mortgage-Backed Securities
A mortgage-backed security may be an obligation of the issuer
backed by a mortgage or pool of mortgages or a direct interest in an
underlying pool of mortgages. Mortgage-backed securities are based on
different types of mortgages including those on commercial real estate
or residential properties. Some mortgage-backed securities, such as
CMOs, make payments of both principal and interest at a variety of
intervals; others make semiannual interest payments at a predetermined
rate and repay principal at maturity (like a typical bond). Pass-
through securities and participation certificates represent pools of
mortgages that are assembled, with interests sold in the pool; the
assembly is made by an "issuer," such as a mortgage banker, commercial
bank or savings and loan association, which assembles the mortgages in
the pool and passes through payments of principal and interest for a fee
payable to it. Payments of principal and interest by individual
mortgagors are passed through to the holders of the interest in the
pool. Monthly or other regular payments on pass-through securities and
participation certificates include payments of principal (including
prepayments on mortgages in the pool) rather than only interest
payments.
Each Portfolio may purchase mortgage-backed securities issued by
both governmental and non-governmental entities, such as banks, mortgage
lenders, or other financial institutions. Other types of mortgage-
backed securities will likely be developed in the future, and a
Portfolio may invest in them if the Manager determines they are
consistent with its investment objective and policies.
The value of mortgage-backed securities may change due to shifts in
the market's perception of issuers. In addition, regulatory or tax
changes may adversely affect the mortgage securities market as a whole.
Non-government mortgage-backed securities may offer higher yields than
those issued by government entities, but also may be subject to greater
price changes than government issues. Mortgage-backed securities are
subject to prepayment risk. Prepayment, which occurs when unscheduled
or early payments are made on the underlying mortgages, may shorten the
effective maturities of these securities and may lower their total
returns.
Stripped Mortgage-Backed Securities
Stripped mortgage-backed securities are created when a U.S.
Government agency or a financial institution separates the interest and
principal components of a mortgage-backed security and sells them as
individual securities. The holder of the "principal-only" security
("PO") receives the principal payments made by the underlying mortgage-
backed security, while the holder of the "interest-only" security ("IO")
receives interest payments from the same underlying security.
The prices of stripped mortgage-backed securities may be
particularly affected by changes in interest rates. As interest rates
fall, prepayment rates tend to increase, which tends to reduce prices of
IOs and increase prices of POs. Rising interest rates can have the
opposite effect.
Asset-Backed Securities
Asset-backed securities represent interests in pools of consumer
loans (generally unrelated to mortgage loans) and most often are
structured as pass-through securities. Interest and principal payments
ultimately depend upon payment of the underlying loans by individuals,
although the securities may be supported by letters of credit or other
credit enhancements. The value of asset-backed securities may also
depend on the creditworthiness of the servicing agent for the loan pool,
the originator of the loans, or the financial institution providing the
credit enhancement.
Variable or Floating Rate Instruments
Variable or floating rate instruments (including notes purchased
directly from issuers) bear variable or floating interest rates and
carry rights that permit holders to demand payment of the unpaid
principal balance plus accrued interest from the issuers or certain
financial intermediaries. Floating rate securities have interest rates
that change whenever there is a change in a designated base rate, while
variable rate instruments provide for a specified periodic adjustment in
the interest rate. These formulas are designed to result in a market
value for the instrument that approximates its par value. Each
Portfolio may invest in variable or floating rate instruments as long as
the Manager determines that it is consistent with the Portfolio's
investment goal and policies.
Loans and Other Direct Debt Instruments
Direct debt instruments are interests in amounts owed by a
corporate, governmental, or other borrower to lenders or lending
syndicates (loans and loan participations), to suppliers of goods or
services (trade claims or other receivables), or to other parties. The
Asset Strategy Portfolio's investments in direct debt instruments are
subject to its policies regarding the quality of debt securities.
Purchasers of loans and other forms of direct indebtedness depend
primarily upon the creditworthiness of the borrower for payment of
principal and interest. Direct debt instruments may not be rated by any
nationally recognized rating service. If the Asset Strategy Portfolio
does not receive scheduled interest or principal payments on such
indebtedness, the Portfolio's share price and yield could be adversely
affected. Loans that are fully secured offer the Portfolio more
protections than an unsecured loan in the event of non-payment of
scheduled interest or principal. However, there is no assurance that
the liquidation of collateral from a secured loan would satisfy the
borrower's obligation, or that the collateral could be liquidated.
Indebtedness of borrowers whose creditworthiness is poor involves
substantially greater risks, and may be highly speculative. Borrowers
that are in bankruptcy or restructuring may never pay off their
indebtedness, or may pay only a small fraction of the amount owed.
Direct indebtedness of developing countries also involves a risk that
the governmental entities responsible for the repayment of the debt may
be unable, or unwilling, to pay interest and principal when due.
Investments in loans through direct assignment of a financial
institution's interests with respect to a loan may involve additional
risks to the Portfolio. For example, if a loan is foreclosed, the
Portfolio could become part owner of any collateral, and would bear the
costs and liabilities associated with owning and disposing of the
collateral. Direct debt instruments may also involve a risk of
insolvency of the lending bank or other intermediary. Direct debt
instruments that are not in the form of securities may offer less legal
protection to the Portfolio in the event of fraud or misrepresentation.
In the absence of definitive regulatory guidance, the Portfolio relies
on the Manager's research in an attempt to avoid situations where fraud
or misrepresentation could adversely affect the Portfolio.
A loan is often administered by a bank or other financial
institution that acts as agent for all holders. The agent administers
the terms of the loan, as specified in the loan agreement. Unless,
under the terms of the loan or other indebtedness, the Portfolio has
direct recourse against the borrower, it may have to rely on the agent
to apply appropriate credit remedies against a borrower. If assets held
by the agent for the benefit of the Portfolio were determined to be
subject to the claims of the agent's general creditors, the Portfolio
might incur certain costs and delays in realizing payment on the loan or
loan participation and could suffer a loss of principal or interest.
Direct indebtedness purchased by the Portfolio may include letters
of credit, revolving credit facilities, or other standby financing
commitments obligating the Portfolio to pay additional cash on demand.
These commitments may have the effect of requiring the Portfolio to
increase its investment in a borrower at a time when it would not
otherwise have done so, even if the borrower's condition makes it
unlikely that the amount will ever be repaid. A Portfolio will set
aside appropriate liquid assets in a segregated custodial account to
cover its potential obligations under standby financing commitments.
For purposes of the limitations on the amount of total assets that
the Asset Strategy Portfolio will invest in any one issuer or in issuers
within the same industry, the Portfolio generally will treat the
borrower as the "issuer" of indebtedness held by the Portfolio. In the
case of loan participations where a bank or other lending institution
serves as financial intermediary between the Portfolio and the borrower,
if the participation does not shift to the Portfolio the direct debtor-
creditor relationship with the borrower, Securities and Exchange
Commission ("SEC") interpretations require the Portfolio, in appropriate
circumstances, to treat both the lending bank or other lending
institution and the borrower as "issuers" for these purposes. Treating
a financial intermediary as an issuer of indebtedness may restrict the
Portfolio's ability to invest in indebtedness related to a single
financial intermediary, or a group of intermediaries engaged in the same
industry, even if the underlying borrowers represent many different
companies and industries.
Lending Securities
One of the ways in which a Portfolio may try to increase income
is by lending its securities. If a Portfolio does this, the borrower
pays the Portfolio an amount equal to the dividends or interest on the
securities that the Portfolio would have received if it had not loaned
the securities. The Portfolio also receives additional
compensation.
Any securities loans that a Portfolio makes must be collateralized
in accordance with applicable regulatory requirements (the
"Guidelines"). Under the present Guidelines, the collateral must
consist of cash or U.S. Government Securities or bank letters of credit,
at least equal in value to the market value of the securities loaned on
each day that the loan is outstanding. If the market value of the
loaned securities exceeds the value of the collateral, the borrower must
add more collateral so that it at least equals the market value of the
securities loaned. If the market value of the securities decreases, the
borrower is entitled to return of the excess collateral.
There are two methods of receiving compensation for making loans.
The first is to receive a negotiated loan fee from the borrower. This
method is available for all three types of collateral. The second
method, which is not available when letters of credit are used as
collateral, is for a Portfolio to receive interest on the investment of
the cash collateral or to receive interest on the U.S. Government
Securities used as collateral. Part of the interest received in either
case may be shared with the borrower.
The letters of credit that a Portfolio may accept as collateral are
agreements by banks (other than the borrowers of the Portfolio's
securities), entered into at the request of the borrower and for its
account and risk, under which the banks are obligated to pay to the
Portfolio, while the letter is in effect, amounts demanded by the
Portfolio if the demand meets the terms of the letter. The Portfolio's
right to make this demand secures the borrower's obligations to it. The
terms of any such letters and the creditworthiness of the banks
providing them (which might include the Portfolio's custodian bank) must
be satisfactory to the Portfolio.
A Portfolio may lend securities only to broker-dealers and
financial institutions deemed creditworthy by the Manager. The
Portfolios will make loans only under rules of the NYSE, which presently
require the borrower to return the securities to the Portfolio within
five business days after the Portfolio instructs it to do so. The
Manager will evaluate the creditworthiness of the borrower. If a
Portfolio loses its voting rights on securities loaned, it will have the
securities returned to it in time to vote them if a material event
affecting the investment is to be voted on. A Portfolio may pay
reasonable finder's, administrative and custodian fees in connection
with loans of securities.
There may be risks of delay in receiving additional collateral from
the borrower if the market value of the securities loaned increases,
risks of delay in recovering the securities loaned or even loss of
rights in the collateral should the borrower fail financially.
Repurchase Agreements
Each of the Portfolios may purchase securities subject to
repurchase agreements, subject to its limitation on investment in
illiquid investments. See "Illiquid Investments." A repurchase
agreement is an instrument under which a Portfolio purchases a security
and the seller (normally a commercial bank or broker-dealer) agrees, at
the time of purchase, that it will repurchase the security at a
specified time and price. The amount by which the resale price is
greater than the purchase price reflects an agreed-upon market interest
rate effective for the period of the agreement. The return on the
securities subject to the repurchase agreement may be more or less than
the return on the repurchase agreement.
The majority of repurchase agreements in which a Portfolio would
engage are overnight transactions, and the delivery pursuant to the
resale typically will occur within one to five days of the purchase.
The primary risk is that a Portfolio may suffer a loss if the seller
fails to pay the agreed-upon amount on the delivery date and that amount
is greater than the resale price of the underlying securities and other
collateral held by the Portfolio. In the event of bankruptcy or other
default by the seller, there may be possible delays and expenses in
liquidating the underlying securities or other collateral, decline in
their value or loss of interest. A Portfolio's repurchase agreements
can be considered as collateralized loans (such agreements being defined
as loans under and for the purpose of the 1940 Act) and will be
structured so as to fully collateralize the loans. The value of the
securities subject to the agreement, which will be held by the
Portfolio's custodian bank or by a third party that qualifies as a
custodian under section 17(f) of the 1940 Act, is and, during the entire
term of the agreement, remains at least equal to the value of the loan,
including the accrued interest earned thereon. A Portfolio's repurchase
agreements are entered into only with those entities approved on the
basis of criteria established by the Fund's Board of Directors.
Options, Futures Contracts and Other Strategies
As discussed in the Prospectus, the Manager may use a variety of
financial instruments ("Financial Instruments"), including certain
options, futures contracts (sometimes referred to as "futures"), options
on futures contracts, forward currency contracts, swaps and indexed
securities to attempt to enhance the Portfolios' income or yield or to
attempt to hedge the Portfolios' portfolios.
Hedging strategies can be broadly categorized as "short hedges" and
"long hedges." A short hedge is a purchase or sale of a Financial
Instrument intended partially or fully to offset potential declines in
the value of one or more investments held in a Portfolio's portfolio.
Thus, in a short hedge a Portfolio takes a position in a Financial
Instrument whose price is expected to move in the opposite direction of
the price of the investment being hedged.
Conversely, a long hedge is a purchase or sale of a Financial
Instrument intended partially or fully to offset potential increases in
the acquisition cost of one or more investments that a Portfolio intends
to acquire. Thus, in a long hedge a Portfolio takes a position in a
Financial Instrument whose price is expected to move in the same
direction as the price of the prospective investment being hedged. A
long hedge is sometimes referred to as an anticipatory hedge. In an
anticipatory hedge transaction, a Portfolio does not own a corresponding
security and, therefore, the transaction does not relate to a security
the Portfolio owns. Rather, it relates to a security that the Portfolio
intends to acquire. If a Portfolio does not complete the hedge by
purchasing the security it anticipated purchasing, the effect on the
Portfolio's portfolio is the same as if the transaction were entered
into for speculative purposes.
Financial Instruments on securities generally are used to attempt
to hedge against price movements in one or more particular securities
positions that a Portfolio owns or intends to acquire. Financial
Instruments on indices, in contrast, generally are used to attempt to
hedge against price movements in market sectors in which a Portfolio has
invested or expects to invest. Financial Instruments on debt securities
may be used to hedge either individual securities or broad debt market
sectors.
The use of Financial Instruments is subject to applicable
regulations of the SEC, the several exchanges on which they are traded,
the Commodity Futures Trading Commission (the "CFTC") and various state
regulatory authorities. In addition, the Portfolios' ability to use
these instruments will be limited by tax considerations. See
"Taxes."
In addition to the instruments, strategies and risks described
below and in the Prospectus, the Manager expects to discover additional
opportunities in connection with options, futures contracts, options on
futures contracts, forward currency contracts and other similar or
related techniques. These opportunities may become available as the
Manager develops new techniques, as regulatory authorities broaden the
range of permitted transactions and as new options, futures contracts,
options on futures contracts, forward currency contracts and other
techniques are developed. The Manager may utilize these opportunities
to the extent that they are consistent with a Portfolio's investment
goals and are permitted by the Portfolio's investment limitations and
applicable regulatory authorities. The Portfolios' Prospectus or SAI
will be supplemented to the extent that new products or techniques
involve materially different risks than those described below or in the
Prospectus.
Special Risks. The use of Financial Instruments involves special
considerations and risks, certain of which are described below. Risks
pertaining to particular Financial Instruments are described in the
sections that follow.
(1) Successful use of most Financial Instruments depends upon the
Manager's ability to predict movements of the overall securities,
currency and interest rate markets, which requires different skills than
predicting changes in the prices of individual securities. There can be
no assurance that any particular strategy will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of a Financial Instrument and price movements of
the investments being hedged. For example, if the value of a Financial
Instrument used in a short hedge increased by less than the decline in
value of the hedged investment, the hedge would not be fully successful.
Such a lack of correlation might occur due to factors unrelated to the
value of the investments being hedged, such as speculative or other
pressures on the markets in which Financial Instruments are traded. The
effectiveness of hedges using Financial Instruments on indices will
depend on the degree of correlation between price movements in the index
and price movements in the securities being hedged.
Because there are a limited number of types of exchange-traded
options and futures contracts, it is likely that the standardized
contracts available will not match a Portfolio's current or anticipated
investments exactly. A Portfolio may invest in options and futures
contracts based on securities with different issuers, maturities, or
other characteristics from the securities in which it typically invests,
which involves a risk that the options or futures position will not
track the performance of the Portfolio's other investments.
Options and futures prices can also diverge from the prices of
their underlying instruments, even if the underlying instruments match a
Portfolio's investments well. Options and futures prices are affected
by such factors as current and anticipated short-term interests rates,
changes in volatility of the underlying instrument, and the time
remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result
from differing levels of demand in the options and futures markets and
the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price
fluctuation limits or trading halts. A Portfolio may purchase or sell
options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt
to compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in a Portfolio's options or futures positions are poorly
correlated with its other investments, the positions may fail to produce
anticipated gains or result in losses that are not offset by gains in
other investments.
(3) If successful, the above-discussed strategies can reduce risk
of loss by wholly or partially offsetting the negative effect of
unfavorable price movements. However, such strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable
price movements. For example, if a Portfolio entered into a short hedge
because the Manager projected a decline in the price of a security in
the Portfolio's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset
by a decline in the price of the Financial Instrument. Moreover, if the
price of the Financial Instrument declined by more than the increase in
the price of the security, the Portfolio could suffer a loss. In either
such case, the Portfolio would have been in a better position had it not
attempted to hedge at all.
(4) As described below, a Portfolio might be required to
maintain assets as "cover," maintain segregated accounts or make margin
payments when it takes positions in Financial Instruments involving
obligations to third parties (i.e., Financial Instruments other than
purchased options). If a Portfolio were unable to close out its
positions in such Financial Instruments, it might be required to
continue to maintain such assets or accounts or make such payments until
the position expired or matured. These requirements might impair a
Portfolio's ability to sell a portfolio security or make an investment
at a time when it would otherwise be favorable to do so, or require that
a Portfolio sell a portfolio security at a disadvantageous time. A
Portfolio's ability to close out a position in a Financial Instrument
prior to expiration or maturity depends on the existence of a liquid
secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("counterparty") to
enter into a transaction closing out the position. Therefore, there is
no assurance that any position can be closed out at a time and price
that is favorable to the Portfolio.
Cover for Financial Instruments. Transactions using Financial
Instruments, other than purchased options, expose the Portfolio to an
obligation to another party. A Portfolio will not enter into any such
transactions unless it owns either (1) an offsetting ("covered")
position in securities, currencies, or other options, futures contracts
or forward contracts, or (2) cash, receivables and short-term debt
securities with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. Each Portfolio will
comply with SEC guidelines regarding cover for these instruments and, if
the guidelines so require, set aside cash, U.S. Government Securities or
other liquid, high-grade debt securities in a segregated account with
its custodian in the prescribed amount as determined daily on a mark-to-
market basis.
Assets used as cover or held in a segregated account cannot be sold
while the position in the corresponding Financial Instrument is open,
unless they are replaced with other appropriate assets. As a result,
the commitment of a large portion of a Portfolio's assets to cover or
segregated accounts could impede portfolio management or the Portfolio's
ability to meet redemption requests or other current obligations.
Certain Limitations. The Limited-Term Bond Portfolio may not
purchase or sell options, futures contracts or options on futures
contracts if the aggregate value of such options and futures held by
that Portfolio would exceed 25% of its assets.
Neither the Small Cap Portfolio nor the Balanced Portfolio may
purchase options on securities or futures contracts if the aggregate
value of the premiums paid (adjusted for the portion of any premium
attributable to the difference between the "strike price" of the option
and the market price of the underlying security or futures contract at
the time of purchase) exceeds 20% of the Portfolio's total assets. The
aggregate amount of the obligations underlying put options on securities
or futures contracts written by each of the Small Cap Portfolio and
Balanced Portfolio may not exceed 25% of its net assets computed at the
time of sale.
The Asset Strategy Portfolio will not: (a) sell futures contracts,
purchase put options, or write call options if, as a result, more than
50% of the Portfolio's total assets would be hedged with futures and
options under normal conditions; or (b) purchase futures contracts or
write put options if, as a result, the Portfolio's total obligations
upon settlement or exercise of purchased futures contracts and written
put options would exceed 25% of its total assets. These limitations do
not apply to options attached to or acquired or traded together with
their underlying securities, and do not apply to securities that
incorporate features similar to options.
For as long as required by applicable state securities regulation,
(1) the aggregate value of securities underlying put options
written by the Asset Strategy Portfolio, determined as of the date the
put options are written, will not exceed 50% of the Portfolio's net
assets,
(2) the Asset Strategy Portfolio will only buy or sell (a) options
on securities, indices or futures contracts, or (b) futures contracts,
in each case that are offered through the facilities of a national
securities association or that are listed on a national securities or
commodities exchange, other than the permitted OTC options described
under "Limitations on the Use of Options" below,
(3) the aggregate premiums paid on all options on securities,
indices or futures contracts purchased by the Asset Strategy Portfolio
that are held at any time will not exceed 20% of the Portfolio's total
net assets, and
(4) the aggregate margin deposits on all futures and options
thereon held at any time by the Asset Strategy Portfolio will not exceed
5% of the Portfolio's total assets.
Options. As discussed in the Prospectus and below, certain of the
Portfolios may purchase and/or write (sell) call and put options on
equity and debt securities, foreign currencies, stock indices and bond
indices. The purchase of call options serves as a long hedge, and the
purchase of put options serves as a short hedge. Writing put or call
options can enable a Portfolio to enhance income or yield by reason of
the premiums paid by the purchasers of such options. However, if the
market price of the security underlying a put option declines to less
than the exercise price on the option, minus the premium received, the
Portfolio would expect to suffer a loss.
Writing call options can serve as a limited short hedge, because
declines in the value of the hedged instrument would be offset to the
extent of the premium received for writing the option. However, if the
security appreciates to a price higher than the exercise price of the
call option, it can be expected that the option will be exercised and
the Portfolio will be obligated to sell the security at less than its
market value. If the call option is an OTC option, the securities or
other assets used as cover would be considered illiquid to the extent
described under "Illiquid Investments."
Writing put options can serve as a limited long hedge because
increases in the value of the hedged investment would be offset to the
extent of the premium received for writing the option. However, if the
security or currency depreciates to a price lower than the exercise
price of the put option, it can be expected that the put option will be
exercised and a Portfolio will be obligated to purchase the security or
currency at more than its market value.
The value of an option position will reflect, among other things, a
current market value of the underlying investment, the time remaining
until expiration, the relationship of the exercise price to the market
price of the underlying investment, the historical price volatility of
the underlying investment and general market conditions. Options that
expire unexercised have no value.
A Portfolio may purchase calls to close its position in a call that
it has written. To do this, it will make a "closing transaction." As
discussed below, some Portfolios may also purchase calls other than as
part of a closing transaction. This involves buying a call on the same
security with the same exercise price and expiration date as the call it
has written. When a Portfolio sells a security on which it has written a
call, it may effect a closing transaction. (If a Portfolio may only
write covered call options, it will effect a closing transaction when it
sells the security on which it has written the call.) A Portfolio may
also effect a closing transaction to avoid having to sell a security on
which it has written a call if the call is exercised. A Portfolio will
have a profit or loss from a closing transaction, depending on the
amount of option transaction costs and on whether the amount it pays to
purchase the call is less or more than the premium it received on the
call that is closed out. A profit will also be realized if the call
lapses unexercised because the Portfolio retains the premium received.
There is no assurance that a Portfolio will be able to effect a closing
transaction; if a Portfolio cannot do so, it may be required to hold the
security on which the call was written until the call expires or is
exercised even though it might otherwise be desirable to sell the
security. If a call that a Portfolio wrote is exercised, it could
deliver the securities that it owns (or the securities that it has the
right to get). It could also deliver other securities that it
purchases.
A Portfolio's securities will be bought and sold in order to
attempt to achieve the goals of that Portfolio. However, the fact that
calls can be written on a particular security may be a factor in buying
or keeping it if it is otherwise considered suitable for the Portfolio.
A Portfolio's custodian bank, or a securities depository acting
for it, will act as the Portfolio's escrow agent as to the related
investments on which the Portfolio (other than the Asset Strategy
Portfolio) has written calls, or as to other assets held for escrow, so
that, pursuant to the rules of the Options Clearing Corporation (the
"OCC") and certain exchanges, no margin deposit will be required of the
Portfolio on such calls. Until the related investments are released
from escrow, they cannot be sold by the Portfolio; this release will
take place on the expiration of the call or when the Portfolio enters
into a closing transaction.
When a Portfolio writes a put, it receives a premium and agrees to
purchase the related investments from the purchaser of the put during
the put period at a fixed exercise price (which may differ from the
market price of the related investments) regardless of market price
changes during the put period. If the put is exercised, the Portfolio
must purchase the related investments at the exercise price. Puts are
ordinarily sold when a Portfolio anticipates that, during the option
period, the market price of the underlying security will decline by less
than the amount of the premium. In writing puts, a Portfolio assumes
the risk of loss should the market value of the underlying security
decline below the exercise price of the option. A Portfolio's cost of
purchasing the investments will be adjusted by the amount of the premium
it has received.
To terminate its obligation on a put that it has written, a
Portfolio may purchase a put in a "closing transaction." As discussed
below, some Portfolios may also purchase puts other than as part of a
closing transaction. A profit or loss will be realized depending on the
amount of option transaction costs and whether the premium previously
received is more or less than the cost of the put purchased. A profit
will also be realized if the put lapses unexercised because the
Portfolio retains the premium received.
When a Portfolio buys a call, it pays a premium and has the right
to buy the related investments from the seller of the call during the
call period at a fixed exercise price. The Portfolio benefits only if
the market price of the related investments is above the call price
prior to the expiration date and the call is either exercised or sold at
a profit. If the call is not exercised or sold (whether or not at a
profit), it will become worthless at its expiration date and the
Portfolio will lose the premium paid and the right to purchase the
related investments.
A Portfolio may purchase a put on a security it owns ("protective
put") or on a security it does not own ("nonprotective put"). When a
Portfolio buys a put, it pays a premium and has the right to sell the
related investments to the seller of the put during the put period at a
fixed exercise price. Buying a protective put permits a Portfolio to
protect itself prior to the time the put expires against a decline in
the value of the related investments below the exercise price by selling
them through the exercise of the put. Buying a nonprotective put
permits a Portfolio, if the market price of the related investments is
below the put price during the put period, either to resell the put or
to buy the related investments and sell them at the exercise price. If
the market price of the related investments is above the exercise price
and as a result the put is not exercised or resold (whether or not at a
profit), the put will become worthless at its expiration date.
A type of put that the Small Cap Portfolio, the Balanced Portfolio
and the Asset Strategy Portfolio may each purchase is an "optional
delivery standby commitment," which is entered into by parties selling
debt securities to a Portfolio. An optional delivery standby commitment
gives a Portfolio the right to sell the security back to the seller on
specified terms. This right is provided as an inducement to purchase
the security.
Risks of Options on Securities. Certain of the Portfolios may
purchase or write both exchange-traded and OTC options. Exchange
markets for options on debt securities and foreign currencies exist, but
these instruments are primarily traded on the OTC market. Exchange-
traded options in the United States are issued by a clearing
organization affiliated with the exchange on which the option is listed
that, in effect, guarantees completion of every exchange-traded option
transaction. In contrast, OTC options are contracts between a Portfolio
and its counterparty (usually a securities dealer or a bank) with no
clearing organization guarantee. Thus, when a Portfolio purchases an
OTC option, it relies on the counterparty from whom it purchased the
option to make or take delivery of the underlying investment upon
exercise of the option. Failure by the counterparty to do so would
result in the loss of any premium paid by the Portfolio as well as the
loss of any expected benefit of the transaction. If a Portfolio were
unable to effect a closing transaction for an option it had purchased,
it would have to exercise the option to realize any profit. The
inability to enter into a closing purchase transaction for a covered
call option written by a Portfolio could cause material losses because
the Portfolio would be unable to sell the investment used as cover for
the written option until the option expires or is exercised. The
Manager evaluates the creditworthiness of all such parties and intends
to enter into OTC option transactions for a Portfolio (other than the
Asset Strategy Portfolio) only with major dealers in OTC options. The
market for these options may be less active than the market for
exchange-listed options. The Manager evaluates the ability to enter
into closing transactions on OTC options prior to investing in them.
Generally, the OTC foreign currency options used by a Portfolio are
European-style options. This means that the option is only exercisable
immediately prior to its expiration. This is in contrast to American-
style options, which are exercisable at any time prior to the expiration
date of the option.
A Portfolio's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market.
However, there can be no assurance that such a market will exist at any
particular time. Closing transactions can be made for OTC options only
by negotiating directly with the counterparty, or by a transaction in
the secondary market if any such market exists. Although a Portfolio
will enter into OTC options only with counterparties that are expected
to be capable of entering into closing transactions with the Portfolio,
there is no assurance that the Portfolio will in fact be able to close
out an OTC option position at a favorable price prior to expiration. In
the event of insolvency of the counterparty, the Portfolio might be
unable to close out an OTC option position at any time prior to its
expiration.
Option premiums paid to control an amount of related investments
are small in relation to the market value of related investments and,
consequently, put and call options offer large amounts of leverage. The
leverage offered by trading in options will result in a Portfolio's net
asset value being more sensitive to changes in the value of the related
investment.
Options on Indices. Puts and calls on indices are similar to puts
and calls on securities or futures contracts except that all settlements
are in cash and gain or loss depends on changes in the index in question
rather than on price movements in individual securities or futures
contracts. When a Portfolio writes a call on an index, it receives a
premium and agrees that, prior to the expiration date, the purchaser of
the call, upon exercise of the call, will receive from the Portfolio an
amount of cash if the closing level of the index upon which the call is
based is greater than the exercise price of the call. The amount of
cash is equal to the difference between the closing price of the index
and the exercise price of the call times a specified multiple
("multiplier"), which determines the total dollar value for each point
of such difference. When a Portfolio buys a call on an index, it pays a
premium and has the same rights as to such call as are indicated above.
When a Portfolio buys a put on an index, it pays a premium and has the
right, prior to the expiration date, to require the seller of the put,
upon the Portfolio's exercise of the put, to deliver to the Portfolio an
amount of cash if the closing level of the index upon which the put is
based is less than the exercise price of the put, which amount of cash
is determined by the multiplier, as described above for calls. When a
Portfolio writes a put on an index, it receives a premium and the
purchaser has the right, prior to the expiration date, to require the
Portfolio to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier if the closing level is less than the exercise price.
Risks of Options on Indices. The risks of investment in options on
indices may be greater than options on securities. Because index
options are settled in cash, when a Portfolio writes a call on an index
it cannot provide in advance for its potential settlement obligations by
acquiring and holding the underlying securities. A Portfolio can offset
some of the risk of writing a call index option by holding a diversified
portfolio of securities similar to those on which the underlying index
is based. However, a Portfolio cannot, as a practical matter, acquire
and hold a portfolio containing exactly the same securities as underlie
the index and, as a result, bears a risk that the value of the
securities held will vary from the value of the index.
Even if a Portfolio could assemble a portfolio that exactly
reproduced the composition of the underlying index, it still would not
be fully covered from a risk standpoint because of the "timing risk"
inherent in writing index options. When an index option is exercised,
the amount of cash that the holder is entitled to receive is determined
by the difference between the exercise price and the closing index level
on the date when the option is exercised. As with other kinds of
options, a Portfolio as the call writer will not learn that it has been
assigned until the next business day at the earliest. The time lag
between exercise and notice of assignment poses no risk for the writer
of a covered call on a specific underlying security, such as common
stock, because there the writer's obligation is to deliver the
underlying security, not to pay its value as of a fixed time in the
past. So long as the writer already owns the underlying security, it
can satisfy its settlement obligations by simply delivering it, and the
risk that its value may have declined since the exercise date is borne
by the exercising holder. In contrast, even if the writer of an index
call holds securities that exactly match the composition of the
underlying index, it will not be able to satisfy its assignment
obligations by delivering those securities against payment of the
exercise price. Instead, it will be required to pay cash in an amount
based on the closing index value on the exercise date. By the time it
learns that it has been assigned, the index may have declined, with a
corresponding decline in the value of its portfolio. This "timing risk"
is an inherent limitation on the ability of index call writers to cover
their risk exposure by holding securities positions.
If a Portfolio has purchased an index option and exercises it
before the closing index value for that day is available, it runs the
risk that the level of the underlying index may subsequently change. If
such a change causes the exercised option to fall out-of-the-money, the
Portfolio will be required to pay the difference between the closing
index value and the exercise price of the option (times the applicable
multiplier) to the assigned writer.
Limitations on the Use of Options. The Portfolios' use of options
is governed by the following guidelines, which can be changed by the
Fund's Board of Directors without a shareholder vote:
The Bond Portfolio, High Income Portfolio, Growth Portfolio and
Income Portfolio may each write (sell) covered call options on
securities on up to 25% of its assets. The International Portfolio may
write (sell) covered call options on securities on no more than 10% of
its total assets. "Covered" means that the Portfolio owns the
securities subject to the call or has the right to acquire them without
additional payment. Each of these Portfolios may purchase a call option
on a security only to close its position in a call it has written.
Calls written by these Portfolios must be listed on a domestic
securities exchange; however, the Bond Portfolio, High Income Portfolio,
Growth Portfolio and Income Portfolio may write OTC calls on U.S.
Government Securities.
The Money Market Portfolio may not write call options on
securities.
The Small Cap Portfolio and Balanced Portfolio may each write
(sell) covered call options on securities on not more than 25% of its
total assets. These calls must be issued by the OCC and listed on a
domestic securities exchange.
The Small Cap Portfolio and Balanced Portfolio may each write
(sell) put options and purchase calls and puts on securities in which
the Portfolio may invest. Each of these Portfolios may only sell put
options on securities issued by the OCC, except that each may write OTC
put options on U.S. Government Securities. Each of these Portfolios may
only purchase options on securities issued by the OCC, except that each
may purchase OTC put and call options on U.S. Government Securities and
may purchase optional delivery standby commitments.
Each of the Small Cap Portfolio and Balanced Portfolio may write
(sell) and purchase listed options on stock indices that are not limited
to stocks of any industry or group of industries ("broadly-based stock
indices"). Each may write options on broadly-based stock indices to
generate income when the Manager anticipates that the index price will
not increase or decrease by more than the premium received by the
Portfolio. Each may purchase calls on broadly-based stock indices to
hedge against an anticipated increase in the price of securities it
wishes to acquire and may purchase puts on broadly-based stock indices
to hedge against an anticipated decline in the market value of its
portfolio securities.
The Limited-Term Bond Portfolio may write (sell) and purchase
listed and OTC options on domestic debt securities, which securities
include, without limitation, U.S. Government Securities ("Domestic Debt
Securities"). The Limited-Term Bond Portfolio may not write call
options having aggregate exercise prices greater than 25% of its net
assets.
The Asset Strategy Portfolio may purchase a put or call option
(including any straddles or spreads) only if the value of its premium,
when aggregated with the premiums on all other options held by the
Portfolio, does not exceed 5% of the Portfolio's total assets. For so
long as required by applicable state securities regulation, the Asset
Strategy Portfolio will only trade OTC options (a) if exchange-traded
options are not available, (b) there is an active OTC market in such
options, and (c) transactions are all through a broker-dealer with a
minimum net worth of $20 million.
For further limitations on certain Portfolios' use of options, see
"Limitations on the Use of Futures Contracts and Options Thereon" below.
Futures Contracts and Options on Futures Contracts. When a
Portfolio purchases a futures contract, it incurs an obligation to take
delivery of a specified amount of the obligation underlying the contract
at a specified time in the future for a specified price. When a
Portfolio sells a futures contract, it incurs an obligation to deliver
the specified amount of the underlying obligation at a specified time in
return for an agreed upon price. In the case of a futures contract on
an index, the obligation underlying the futures contract is an amount of
cash equal to a specified dollar amount times the difference between the
index value at the close of the last trading day of the futures contract
and the price at which the futures contract is originally struck. In
the case of a futures contract on a security or currency, the underlying
obligation is the related security or currency.
When a Portfolio writes an option on a futures contract, it becomes
obligated, in return for the premium paid, to assume a position in the
futures contract at a specified exercise price at any time during the
term of the option. If a Portfolio has written a call, it becomes
obligated to assume a "short" position in the futures contract, which
means that it is required to deliver the underlying securities. If it
has written a put, it becomes obligated to assume a "long" position in
the futures contract, which means that it is required to take delivery
of the underlying securities. When a Portfolio purchases an option on a
futures contract, it acquires the right, in return for the premium it
paid, to assume a position in the futures contract, a "long" position if
the option is a call and a "short" position if the option is a put.
Each of the Small Cap Portfolio and the Balanced Portfolio may sell
futures contracts on broadly-based stock indices ("Stock Index
Futures"), or write a call or purchase a put on a Stock Index Future, if
the Manager anticipates that a general market or market sector decline
may adversely affect the market value of any or all of the Portfolio's
common stock holdings. Each of the Small Cap Portfolio and the Balanced
Portfolio may buy a Stock Index Future, or purchase a call or sell a put
on a Stock Index Future, if the Manager anticipates a significant market
sector advance in the common stock it intends to purchase for the
Portfolio's portfolio. Each of the Small Cap Portfolio and the Balanced
Portfolio may purchase a Stock Index Future, or purchase a call or sell
a put thereon, as a temporary substitute for the purchase of individual
stocks that may then be purchased in an orderly fashion.
In the case of debt securities, each of the Small Cap Portfolio and
the Balanced Portfolio may sell futures contracts on debt securities
("Debt Futures"), or write a call or purchase a put on a Debt Future, to
attempt to protect against the risk that the value of the debt
securities held by the Portfolio might decline. The Limited-Term Bond
Portfolio may sell futures contracts on domestic debt securities
("Domestic Debt Futures"), or write a call or purchase a put on a
Domestic Debt Future, in the same way. Each of the Small Cap Portfolio
and the Balanced Portfolio could purchase a Debt Future, or purchase a
call or write a put on a Debt Future, to protect against the risk of an
increase in the value of debt securities at a time when the Portfolio is
not invested in debt securities to the extent permitted by its
investment policies. The Limited-Term Bond Portfolio may purchase a
Domestic Debt Future, or purchase a call or write a put on a Domestic
Debt Future, in the same way. As securities are purchased,
corresponding futures or options positions would be terminated.
Futures strategies also can be used to manage the average duration
of a Portfolio's portfolio. If the Manager wishes to shorten the
average duration of a Portfolio, the Portfolio may sell a debt futures
contract or a call option thereon, or purchase a put option thereon. If
the Manager wishes to lengthen the average duration of a Portfolio, the
Portfolio may purchase a debt futures contract or a call option thereon,
or sell a put option thereon.
No price is paid upon entering into a futures contract. Instead,
at the inception of a futures contract a Portfolio is required to
deposit "initial margin" consisting of cash, U.S. Government Securities
or other liquid, high-grade debt securities, in an amount generally
equal to 10% or less of the contract value. Margin must also be
deposited when writing a call or put option on a futures contract, in
accordance with applicable exchange rules. Unlike margin in securities
transactions, initial margin on futures contracts does not represent a
borrowing, but rather is in the nature of a performance bond or good-
faith deposit that is returned to the Portfolio at the termination of
the transaction if all contractual obligations have been satisfied.
Under certain circumstances, such as periods of high volatility, the
Portfolio may be required by an exchange to increase the level of its
initial margin payment, and initial margin requirements might be
increased generally in the future by regulatory action.
Subsequent "variation margin" payments are made to and from the
futures broker daily as the value of the futures position varies, a
process known as "marking-to-market." Variation margin does not involve
borrowing, but rather represents a daily settlement of the Portfolio's
obligations to or from a futures broker. When a Portfolio purchases an
option on a future, the premium paid plus transaction costs is all that
is at risk. In contrast, when a Portfolio purchases or sells a futures
contract or writes a call or put option thereon, it is subject to daily
variation margin calls that could be substantial in the event of adverse
price movements. If the Portfolio has insufficient cash to meet daily
variation margin requirements, it might need to sell securities at a
time when such sales are disadvantageous.
Purchasers and sellers of futures contracts and options on futures
can enter into offsetting closing transactions, similar to closing
transactions on options, by selling or purchasing, respectively, an
instrument identical to the instrument purchased or sold. Positions in
futures and options on futures may be closed only on an exchange or
board of trade that provides a secondary market. Although futures
contracts by their terms call for the actual delivery or acquisition of
the underlying obligation, in most cases the contractual obligation is
fulfilled without having to make or take delivery. The Portfolios do
not generally intend to make or take delivery of the underlying
obligation. All transactions in futures contracts and options thereon
are made, offset or fulfilled through a clearing house associated with
the exchange on which the contracts are traded. Although the Portfolios
(other than the Asset Strategy Portfolio) intend to buy and sell futures
contracts and options thereon only on exchanges where there appears to
be an active secondary market, there is no assurance that a liquid
secondary market will exist for any particular futures contract or
option thereon at any particular time. In such event, it may not be
possible to close a futures contract or options position.
Under certain circumstances, futures exchanges may establish daily
limits on the amount that the price of a futures contract or option
thereon can vary from the previous day's settlement price; once that
limit is reached, no trades may be made that day at a price beyond the
limit. Daily price limits do not limit potential losses because prices
could move to the daily limit for several consecutive days with little
or no trading, thereby preventing the liquidation of unfavorable
positions.
If a Portfolio were unable to liquidate a futures contract or
option thereon due to the absence of a liquid secondary market or the
imposition of price limits, it could incur substantial losses. The
Portfolio would continue to be subject to market risk with respect to
the position. In addition, except in the case of purchased options, the
Portfolio would be required to make daily variation margin payments and
might be required to maintain the position being hedged by the futures
contract or option or to maintain cash or securities in a segregated
account.
Risks of Futures Contracts and Options Thereon. Since futures
contracts and options thereon can replicate movements in the cash
markets for the securities in which a Portfolio invests without the
large cash investments required for dealing in such markets, they may
subject a Portfolio to greater and more volatile risks than might
otherwise be the case. The principal risks associated with the use of
such instruments are (i) imperfect correlation between movements in the
market price of the portfolio investments (held or intended to be
purchased) being hedged and in the price of the futures contract or
option; (ii) possible lack of a liquid secondary market for closing out
futures contracts or options positions; (iii) the need for additional
portfolio management skills and techniques; and (iv) losses due to
unanticipated market price movements.
For a hedge to be completely effective, the price change of the
hedging instrument should equal the price change of the security being
hedged. Such equal price changes are not always possible because the
investment underlying the hedging instrument may not be the same
investment that is being hedged. The Manager will attempt to create a
closely correlated hedge, but hedging activity may not be completely
successful in eliminating market value fluctuation. See below for
additional discussion of correlation as it relates to index futures.
The ordinary spreads between prices in the cash and futures markets
(including the options on futures market), due to differences in the
natures of those markets, are subject to the following factors, which
may create distortions. First, all participants in the futures market
are subject to margin deposit and maintenance requirements. Rather than
meeting additional margin deposit requirements, investors may close
futures contracts through offsetting transactions, which could distort
the normal relationship between the cash and futures markets. Second,
the liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking delivery. To
the extent participants decide to make or take delivery, liquidity in
the futures market could be reduced, thus producing distortion. Third,
from the point of view of speculators, the deposit requirements in the
futures market are less onerous than margin requirements in the
securities market. Therefore, increased participation by speculators in
the futures market may cause temporary price distortions. Due to the
possibility of distortion, a correct forecast of general interest rate,
currency exchange rate or stock market trends by the Manager may still
not result in a successful transaction. The Manager may be incorrect in
its expectations as to the extent of various interest rate, currency
exchange rate or stock market movements or the time span within which
the movements take place.
Index Futures. The risk of imperfect correlation between movements
in the price of an index future and movements in the price of the
securities that are the subject of the hedge increases as the
composition of a Portfolio's portfolio diverges from the securities
included in the applicable index. The price of the index futures may
move more than or less than the price of the securities being hedged.
If the price of the index future moves less than the price of the
securities that are the subject of the hedge, the hedge will not be
fully effective but, if the price of the securities being hedged has
moved in an unfavorable direction, the Portfolio would be in a better
position than if it had not hedged at all. If the price of the
securities being hedged has moved in a favorable direction, this
advantage will be partially offset by the futures contract. If the
price of the futures contract moves more than the price of the
securities, a Portfolio will experience either a loss or a gain on the
futures contract that will not be completely offset by movements in the
price of the securities that are the subject of the hedge. To
compensate for the imperfect correlation of movements in the price of
the securities being hedged and movements in the price of the index
futures, a Portfolio may buy or sell index futures in a greater dollar
amount than the dollar amount of the securities being hedged if the
historical volatility of the prices of such securities being hedged is
more than the historical volatility of the prices of the securities
included in the index. It is also possible that, where a Portfolio has
sold futures contracts to hedge its portfolio against decline in the
market, the market may advance and the value of the securities held in
the portfolio may decline. If this occurred, a Portfolio would lose
money on the futures contract and also experience a decline in value of
its portfolio securities. However, while this could occur for a very
brief period or to a very small degree, over time the value of a
diversified portfolio of securities will tend to move in the same
direction as the market indices on which the futures contracts are
based.
Where index futures are purchased to hedge against a possible
increase in the price of securities before a Portfolio is able to invest
in them in an orderly fashion, it is possible that the market may
decline instead. If the Portfolio then concludes not to invest in them
at that time because of concern as to possible further market decline or
for other reasons, it will realize a loss on the futures contract that
is not offset by a reduction in the price of the securities it had
anticipated purchasing.
Limitations on the Use of Futures Contracts and Options Thereon.
The Portfolios' use of futures is governed by the following guidelines,
which can be changed by the Fund's Board of Directors without a
shareholder vote.
Each of the Small Cap Portfolio and Balanced Portfolio may buy and
sell Debt Futures, Stock Index Futures, and options on Debt Futures and
Stock Index Futures. The Limited-Term Bond Portfolio may buy and sell
Domestic Debt Futures and options on Domestic Debt Futures. Each of
these Portfolios may purchase or sell futures contracts and options
thereon for the purpose of hedging against changes in the market value
of its portfolio securities or changes in the market value of securities
that the Manager anticipates it may wish to include in the Portfolio's
portfolio. Each of these Portfolios may write options on futures
contracts to increase income.
The Limited-Term Bond Portfolio may purchase futures contracts and
options thereon only if no more than 30% of its total assets would be so
invested. The value of all futures contracts sold by the Limited-Term
Bond Portfolio may not exceed the total market value of its portfolio.
To the extent that a Portfolio enters into futures contracts,
options on futures contracts or options on foreign currencies traded on
a CFTC-regulated exchange, in each case other than for bona fide hedging
purposes (as defined by the CFTC), the aggregate initial margin and
premiums required to establish those positions (excluding the amount by
which options are "in-the-money") will not exceed 5% of the liquidation
value of the Portfolio's portfolio, after taking into account unrealized
profits and unrealized losses on any contracts the Portfolio has entered
into. (In general, a call option on a futures contract is "in-the-
money" if the value of the underlying futures contract exceeds the
strike, i.e., exercise, price of the call; a put option on a futures
contract is "in-the-money" if the value of the underlying futures
contract is exceeded by the strike price of the put.) This guideline
does not limit to 5% the percentage of the Portfolio's assets that are
at risk in futures contracts and related options transactions.
Foreign Currency Hedging Strategies--Special Considerations.
Certain of the Portfolios may use options and futures contracts on
foreign currencies, as described above, and foreign currency forward
contracts, as described below, to attempt to hedge against movements in
the values of the foreign currencies in which the Portfolios' securities
are denominated. Such currency hedges can protect against price
movements in a security that a Portfolio owns or intends to acquire that
are attributable to changes in the value of the currency in which it is
denominated. Such hedges do not, however, protect against price
movements in the securities that are attributable to other causes.
The Portfolios might seek to hedge against changes in the value of
a particular currency when no Financial Instruments on that currency are
available or such Financial Instruments are more expensive than certain
other Financial Instruments. In such cases, a Portfolio may seek to
hedge against price movements in that currency by entering into
transactions using Financial Instruments on another currency or a basket
of currencies, the values of which the Manager believes will have a high
degree of positive correlation to the value of the currency being
hedged. The risk that movements in the price of the Financial
Instrument will not correlate perfectly with movements in the price of
the currency subject to the hedging transaction is magnified when this
strategy is used.
The value of Financial Instruments on foreign currencies depends on
the value of the underlying currency relative to the U.S. dollar.
Because foreign currency transactions occurring in the interbank market
might involve substantially larger amounts than those involved in the
use of such Financial Instruments, the Portfolios could be disadvantaged
by having to deal in the odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign
currencies at prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for
foreign currencies or any regulatory requirement that quotations
available through dealers or other market sources be firm or revised on
a timely basis. Quotation information generally is representative of
very large transactions in the interbank market and thus might not
reflect odd-lot transactions where rates might be less favorable. The
interbank market in foreign currencies is a global, round-the-clock
market. To the extent the U.S. options or futures markets are closed
while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that
cannot be reflected in the markets for the Financial Instruments until
they reopen.
Settlement of hedging transactions involving foreign currencies
might be required to take place within the country issuing the
underlying currency. Thus, a Portfolio might be required to accept or
make delivery of the underlying foreign currency in accordance with any
U.S. or foreign regulations regarding the maintenance of foreign banking
arrangements by U.S. residents and might be required to pay any fees,
taxes and charges associated with such delivery assessed in the issuing
country.
Forward Currency Contracts. The Asset Strategy Portfolio and the
International Portfolio may enter into forward currency contracts to
purchase or sell foreign currencies for a fixed amount of U.S. dollars
or another foreign currency. A forward currency contract involves an
obligation to purchase or sell a specific currency at a future date,
which may be any fixed number of days (term) from the date of the
forward currency contract agreed upon by the parties, at a price set at
the time of the forward currency contract. These forward currency
contracts are traded directly between currency traders (usually large
commercial banks) and their customers.
Such transactions may serve as long hedges; for example, a
Portfolio may purchase a forward currency contract to lock in the U.S.
dollar price of a security denominated in a foreign currency that the
Portfolio intends to acquire. Forward currency contract transactions
may also serve as short hedges; for example, a Portfolio may sell a
forward currency contract to lock in the U.S. dollar equivalent of the
proceeds from the anticipated sale of a security, dividend or interest
payment denominated in a foreign currency.
Each of these Portfolios may also use forward contracts to hedge
against a decline in the value of existing investments denominated in
foreign currency. For example, if a Portfolio owned securities
denominated in pounds sterling, it could enter into a forward contract
to sell pounds sterling in return for U.S. dollars to hedge against
possible declines in the pound's value. Such a hedge, sometimes
referred to as a "position hedge," would tend to offset both positive
and negative currency fluctuations, but would not offset changes in
security values caused by other factors. Each of these Portfolios could
also hedge the position by selling another currency expected to perform
similarly to the pound sterling, for example, by entering into a forward
contract to sell Deutsche Marks or European Currency Units in return for
U.S. dollars. This type of hedge, sometimes referred to as a "proxy
hedge," could offer advantages in terms of cost, yield, or efficiency,
but generally would not hedge currency exposure as effectively as a
simple hedge into U.S. dollars. Proxy hedges may result in losses if
the currency used to hedge does not perform similarly to the currency in
which the hedged securities are denominated.
The Asset Strategy Portfolio also may use forward currency
contracts for "cross-hedging." Under this strategy, the Portfolio would
increase its exposure to foreign currencies that the Manager believes
might rise in value relative to the U.S. dollar, or shift its exposure
to foreign currency fluctuations from one country to another. For
example, if a Portfolio owned securities denominated in a foreign
currency and the Manager believed that currency would decline relative
to another currency, it might enter into a forward contract to sell an
appropriate amount of the first foreign currency, with payment to be
made in the second foreign currency.
The cost to a Portfolio of engaging in forward currency
contracts varies with factors such as the currency involved, the length
of the contract period and the market conditions then prevailing.
Because forward currency contracts are usually entered into on a
principal basis, no fees or commissions are involved. When a Portfolio
enters into a forward currency contract, it relies on the contra party
to make or take delivery of the underlying currency at the maturity of
the contract. Failure by the counterparty to do so would result in the
loss of any expected benefit of the transaction.
As is the case with futures contracts, purchasers and sellers of
forward currency contracts can enter into offsetting closing
transactions, similar to closing transactions on futures contracts, by
selling or purchasing, respectively, an instrument identical to the
instrument purchased or sold. Secondary markets generally do not exist
for forward currency contracts, with the result that closing
transactions generally can be made for forward currency contracts only
by negotiating directly with the counterparty. Thus, there can be no
assurance that a Portfolio will in fact be able to close out a forward
currency contract at a favorable price prior to maturity. In addition,
in the event of insolvency of the counterparty, a Portfolio might be
unable to close out a forward currency contract at any time prior to
maturity. In either event, the Portfolio would continue to be subject
to market risk with respect to the position, and would continue to be
required to maintain a position in securities denominated in the foreign
currency or to maintain cash or securities in a segregated account.
The precise matching of forward currency contract amounts and the
value of the securities involved generally will not be possible because
the value of such securities, measured in the foreign currency, will
change after the foreign currency contract has been established. Thus,
a Portfolio might need to purchase or sell foreign currencies in the
spot (cash) market to the extent such foreign currencies are not covered
by forward contracts. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a
short-term hedging strategy is highly uncertain.
The International Portfolio does not intend to enter into forward
currency contracts on a regular basis.
Normally, consideration of the prospect for currency parities will
be incorporated into the longer term investment decisions made with
respect to overall diversification strategies. However, the Manager
believes that it is important to have flexibility to enter into forward
currency contracts when it determines that the best interests of a
Portfolio may be served.
Limitations on the Use of Forward Currency Contracts. The
International Portfolio may enter into forward currency contracts,
provided that it does not thereafter have more than 15% of the value of
its assets committed to the consummation of all such forward currency
contracts; however, it will not enter into forward currency contracts or
maintain a net exposure to such forward currency contracts where the
consummation of the forward currency contracts would obligate the
International Portfolio to deliver an amount of foreign currency in
excess of the value of its portfolio securities or other assets
denominated in that currency. The International Portfolio may hold
foreign currency only in connection with forward currency contracts,
only up to four business days, as well as in connection with the
purchase or sale of foreign securities, but not otherwise. Generally,
the International Portfolio will not enter into a Forward Contract with
a term greater than one year.
The Asset Strategy Portfolio does not currently intend to invest
more than 5% of its total assets in forward currency contracts.
Combined Positions. A Portfolio may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of its overall
position. For a example, a Portfolio may purchase a put option and
write a call option on the same underlying instrument, in order to
construct a combined position whose risk and return characteristics are
similar to selling a futures contract. Another possible combined
position would involve writing a call option at one strike price and
buying a call option at a lower price, in order to reduce the risk of
the written call option in the event of a substantial price increase.
Because combined options positions involve multiple trades, they result
in higher transaction costs and may be more difficult to open and close
out.
Turnover. A Portfolio's options and futures activities may affect
its turnover rate and brokerage commission payments. The exercise of
calls or puts written by a Portfolio, and the sale or purchase of
futures contracts, may cause it to sell or purchase related investments,
thus increasing its turnover rate in a manner beyond its control. Once
a Portfolio has received an exercise notice on an option it has written,
it cannot effect a closing transaction in order to terminate its
obligation under the option and must deliver or receive the underlying
securities at the exercise price. The exercise of puts purchased by a
Portfolio may also cause the sale of related investments, also
increasing turnover; although such exercise is within a Portfolio's
control, holding a protective put might cause it to sell the related
investments for reasons that would not exist in the absence of the put.
A Portfolio will pay a brokerage commission each time it buys or sells a
put or call or purchases or sells a futures contract. Such commissions
may be higher than those that would apply to direct purchases or sales.
Swaps, Caps, Collars and Floors. Swap agreements, including caps,
collars and floors, can be individually negotiated and structured to
include exposure to a variety of different types of investments or
market factors. Depending on their structure, swap agreements may
increase or decrease a Portfolio's exposure to long- or short-term
interest rates (in the U.S. or abroad), foreign currency values,
mortgage-backed security values, corporate borrowing rates, or other
factors such as security prices or inflation rates.
Swap agreements will tend to shift a Portfolio's investment
exposure from one type of investment to another. For example, if a
Portfolio agrees to exchange payments in dollars for payments in foreign
currency, the swap agreement would tend to decrease the Portfolio's
exposure to U.S. interest rates and increase its exposure to foreign
currency and interest rates. Caps and floors have an effect similar to
buying or writing options.
The net amount of the excess, if any, of a Portfolio's obligations
over its entitlements with respect to each swap will be accrued on a
daily basis and an amount of cash, U.S. Government Securities or other
liquid high-grade debt obligations having an aggregate net asset value
at least equal to the accrued excess will be maintained in an account by
the Portfolio's custodian that satisfies the requirements of the 1940
Act. Each Portfolio will also establish and maintain such segregated
accounts with respect to its total obligations under any swaps that are
not entered into on a net basis and with respect to any caps or floors
that are written by the Portfolio. The Manager and the Portfolio
believe that such obligations do not constitute senior securities under
the 1940 Act and, accordingly, will not treat them as being subject to a
Portfolio's borrowing restrictions.
Indexed Securities. Each Portfolio (other than Growth Portfolio)
may purchase securities whose prices are indexed to the prices of other
securities, securities indices, currencies, precious metals or other
commodities, or other financial indicators, as long as the Manager
determines that it is consistent with the Portfolio's investment goal
and policies. Indexed securities typically, but not always, are debt
securities or deposits whose value at maturity or coupon rate is
determined by reference to a specific instrument or statistic. Gold-
indexed securities, for example, typically provide for a maturity value
that depends on the price of gold, resulting in a security whose price
tends to rise and fall together with gold prices. Currency-indexed
securities typically are short-term to intermediate-term debt securities
whose maturity values or interest rates are determined by reference to
the values of one or more specified foreign currencies, and may offer
higher yields than U.S. dollar-denominated securities of equivalent
issuers. Currency-indexed securities may be positively or negatively
indexed; that is, their maturity value may increase when the specified
currency value increases, resulting in a security that performs
similarly to a foreign-denominated instrument, or their maturity value
may decline when foreign currencies increase, resulting in a security
whose price characteristics are similar to a put on the underlying
currency. Currency-indexed securities may also have prices that depend
on the values of a number of different foreign currencies relative to
each other.
Recent issuers of indexed securities have included banks,
corporations, and certain U.S. government agencies. The Manager will
use its judgment in determining whether indexed securities should be
treated as short-term instruments, bonds, stocks, or as a separate asset
class for purposes of Asset Strategy Portfolio's investment allocations,
depending on the individual characteristics of the securities. Certain
indexed securities that are not traded on an established market may be
deemed illiquid.
Warrants and Rights
Each Portfolio except the Money Market Portfolio, the Limited-Term
Bond Portfolio, and the Balanced Portfolio may purchase warrants. The
Bond Portfolio, the High Income Portfolio, the Growth Portfolio, the
Income Portfolio and the Small Cap Portfolio may purchase warrants
provided that such purchase will not cause more than 5% of their
respective net assets, valued at the lower of cost or market, to be
invested in warrants. The Asset Strategy Portfolio does not currently
intend to purchase warrants, valued at the lower of cost or market, in
excess of 5% of the Portfolio's net assets. Included in that amount,
but not to exceed 2% of the Asset Strategy Portfolio's net assets, may
be warrants that are not listed on the NYSE or the American Stock
Exchange. Warrants acquired by the Asset Strategy Portfolio in units or
attached to securities are not subject to these restrictions. The
International Portfolio may purchase warrants and rights to purchase
securities, provided that as a result of such purchase not more than 5%
of its net assets will consist of warrants, rights or a combination
thereof. Warrants are options to purchase equity securities at specific
prices valid for a specific period of time. Their prices do not
necessarily move parallel to the prices of the underlying securities.
Rights are similar to warrants but normally have a shorter duration and
are distributed directly by the issuer to its shareholders. Warrants
and rights have no voting rights, receive no dividends and have no
rights with respect to the assets of the issuer. Warrants and rights
acquired in units or attached to other securities are not considered for
purposes of computing the 5% limitation. Certain states may impose a
lower percentage limit on investments in warrants and rights.
When-Issued and Delayed-Delivery Transactions
Each Portfolio may purchase securities on a when-issued or delayed-
delivery basis or sell them on a delayed-delivery basis. Delivery may
take place a month or more after the date of the transaction. The
purchase or sale price is fixed on the transaction date. A Portfolio
will enter into when-issued or delayed-delivery transactions in order to
secure what is considered to be an advantageous price and yield at the
time of entering into the transaction. The securities so purchased by a
Portfolio are subject to market fluctuation. The value of when-issued
or delayed-delivery securities may be less or more when delivered than
the purchase price paid or received. Typically, no interest accrues to
a Portfolio until delivery and payment are completed. When a Portfolio
makes a commitment to purchase securities on a when-issued or delayed-
delivery basis, it will record the transaction and thereafter reflect
the value of the securities in determining its net asset value per
share. The securities sold by a Portfolio on a delayed-delivery basis
are also subject to market fluctuation. Therefore, their value when a
Portfolio delivers them may be more than the purchase price the
Portfolio receives. When a Portfolio makes a commitment to sell
securities on a delayed basis, it will record the transaction and
thereafter value the securities at the sales price in determining the
Portfolio's net asset value per share.
Ordinarily, a Portfolio purchases securities on a when-issued or
delayed-delivery basis with the intention of actually taking delivery of
the securities. However, before the securities are delivered and before
it has paid for them (the "settlement date"), a Portfolio may sell the
securities for investment reasons. The Portfolio will segregate cash or
high-quality debt obligations at least equal in value to the amount it
will have to pay on the settlement date; these segregated securities
may, however, be sold at or before the settlement date to pay the
purchase price of the when-issued or delayed-delivery securities.
Restricted Securities
The Portfolios may purchase commercial paper that is issued in
reliance on the exemption from registration that is afforded by Section
4(2) of the Securities Act of 1933, as amended ("Section 4(2) paper").
Section 4(2) paper is subject to legal or contractual restrictions on
resale under the federal securities laws. It is generally sold to
institutional investors who agree that they are purchasing the paper for
investment and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Section 4(2) paper is
normally resold to other institutional investors through or with the
assistance of investment dealers who make a market in the Section 4(2)
paper, thus providing liquidity. Section 4(2) paper may be determined
to be liquid in accordance with procedures adopted by the Fund's Board
of Directors. Although there is no assurance that a market will exist
for Section 4(2) paper that a Portfolio may own, purchased Section 4(2)
paper must meet the credit, maturity and other criteria that apply to
other securities in which the Portfolios invest. These restricted
securities will be valued in the same manner as other commercial paper
held by the Portfolios is valued. See "Net Asset Value."
The High Income Portfolio, the Growth Portfolio, the Income
Portfolio and the Asset Strategy Portfolio may also invest in other
securities that are subject to restrictions on resale because they have
not been registered under the Securities Act of 1933, as amended (the
"1933 Act") or are otherwise subject to contractual restrictions on
resale. These securities are generally referred to as private
placements or restricted securities. Restricted securities generally
can be sold in privately negotiated transactions, pursuant to an
exemption from registration under the 1933 Act, or in a registered
public offering. Where registration is required, a Portfolio may be
obligated to pay all or part of the registration expense and a
considerable period may elapse between the time it decides to seek
registration and the time the Portfolio may be permitted to sell a
security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, a Portfolio might
obtain a less favorable price than prevailed when it decided to seek
registration of the security.
The International Portfolio and the Asset Strategy Portfolio may
also purchase foreign restricted securities; provided that the
International Portfolio will not purchase restricted securities if as a
result of such purchase more than 5% of its total assets would consist
of restricted securities. Restricted securities in which the
International Portfolio seeks to invest need not be listed or admitted
to trading on a foreign or domestic exchange and may be less liquid than
listed securities.
The Bond Portfolio, the Small Cap Portfolio, the Balanced Portfolio
and the Limited-Term Bond Portfolio do not intend to invest in
restricted securities.
Limitations on the resale of such securities may have an adverse
effect on their marketability and may prevent a Portfolio from disposing
of them promptly at reasonable prices. Restricted securities may be
determined to be liquid in accordance with guidelines established by or
under the direction of the Fund's Board of Directors. A Portfolio may
have to bear the expense of registering such securities for resale and
the risk of substantial delays in effecting such registration.
The Portfolios do not anticipate adjusting for any diminution in
value of these securities on account of their restrictive feature if
there is an active market which creates liquidity and if actual market
quotations for these restricted securities are available. In the event
that there should cease to be an active market for these securities or
actual market quotations become unavailable, the securities will be
valued at fair value as determined in good faith under procedures
established by and under the general supervision and responsibility of
the Board of Directors.
Certain Other Securities
The Portfolios (other than the Money Market Portfolio) may purchase
debt securities whose principal amount at maturity is dependent upon the
performance of a specified equity security. The issuer of such debt
securities, typically an investment banking firm, is unaffiliated with
the issuer of the equity security to whose performance the debt security
is linked. Equity-linked debt securities differ from ordinary debt
securities in that the principal amount received at maturity is not
fixed, but is based on the price of the linked equity security at the
time the debt security matures. The performance of equity-linked debt
securities depends primarily on the performance of the linked equity
security and may also be influenced by interest rate changes. In
addition, although the debt securities are typically adjusted for
diluting events such as stock splits, stock dividends and certain other
events affecting the market value of the linked equity security, the
debt securities are not adjusted for subsequent issuances of the linked
equity security for cash. Such an issuance could adversely affect the
price of the debt security. In addition to the equity risk relating to
the linked equity security, such debt securities are also subject to
credit risk with regard to the issuer of the debt security. In general,
however, such debt securities are less volatile than the equity
securities to which they are linked.
The Portfolios (other than the Money Market Portfolio) may also
invest in a type of convertible preferred stock that pays a cumulative,
fixed dividend that is senior to, and expected to be in excess of, the
dividends paid on the common stock of the issuer. At the mandatory
conversion date, the preferred stock is converted into not more than one
share of the issuer's common stock at the "call price" that was
established at the time the preferred stock was issued. If the price
per share of the related common stock on the mandatory conversion date
is less than the call price, the holder of the preferred stock will
nonetheless receive only one share of common stock for each share of
preferred stock (plus cash in the amount of any accrued but unpaid
dividends). At any time prior to the mandatory conversion date, the
issuer may redeem the preferred stock upon issuing to the holder a
number of shares of common stock equal to the call price of the
preferred stock in effect on the date of redemption divided by the
market value of the common stock, with such market value typically
determined one or two trading days prior to the date notice of
redemption is given. The issuer must also pay the holder of the
preferred stock cash in an amount equal to any accrued but unpaid
dividends on the preferred stock. This convertible preferred stock is
subject to the same market risk as the common stock of the issuer,
except to the extent that such risk is mitigated by the higher dividend
paid on the preferred stock. The opportunity for equity appreciation
afforded by an investment in such convertible preferred stock, however,
is limited, because in the event the market value of the issuer's common
stock increases to or above the call price of the preferred stock, the
issuer may (and would be expected to) call the preferred stock for
redemption at the call price. This convertible preferred stock is also
subject to credit risk with regard to the ability of the issuer to pay
the dividend established upon issuance of the preferred stock.
Generally, convertible preferred stock is less volatile than the related
common stock of the issuer.
Illiquid Investments
A Portfolio (other than the Asset Strategy Portfolio) may not make
illiquid investments if thereafter more than 10% of its net assets would
consist of such investments. The Asset Strategy Portfolio does not
currently intend to purchase any security if, as a result, more than 15%
of its net assets would be invested in illiquid investments. The
investments currently considered by the Portfolios to be illiquid
include: (i) repurchase agreements not terminable within seven days;
(ii) fixed time deposits subject to withdrawal penalties other than
overnight deposits; (iii) securities for which market quotations are not
readily available; (iv) restricted securities not determined to be
liquid pursuant to guidelines established by or under the direction of
the Fund's Board of Directors; (v) unlisted purchased options and
collateral relating to options written by a Portfolio (see discussion
below); (vi) securities involved in swap, cap, collar and floor
transactions; (vii) non-government stripped fixed-rate mortgage-backed
securities; and (viii) direct debt instruments. Illiquid investments do
not include any obligations payable at principal amount plus accrued
interest on demand or within seven days after demand. Certain
Portfolios may sell OTC options and, in connection therewith, segregate
assets or cover its obligations with respect to OTC options written by
the Portfolio. The assets used as cover for OTC options written by a
Portfolio will be considered illiquid unless the OTC options are sold to
qualified dealers who agree that the Portfolio may repurchase any OTC
option it writes at a maximum price to be calculated by a formula set
forth in the option agreement. The cover for an OTC option written
subject to this procedure would be considered illiquid only to the
extent that the maximum repurchase price under the formula exceeds the
intrinsic value of the option.
Shares of Investment Companies
The International Portfolio, Small Cap Portfolio and Balanced
Portfolio may buy shares of investment companies that do not redeem
their shares if it does it in a regular transaction in the open market
and then does not have more than 10% of its total assets in these
shares; however, these Portfolios do not have any current intent to
invest more than 5% of their respective assets in such securities in the
foreseeable future. These Portfolios may also buy these shares as part
of a merger or consolidation.
The Asset Strategy Portfolio does not currently intend to (i)
purchase securities of other investment companies, except in the open
market where no commission except the ordinary broker's commission is
paid and if, as a result of such purchase, the Portfolio does not have
more than 10% of its total assets invested in such securities, or (ii)
purchase or retain securities issued by other open-end investment
companies. Limitations (i) and (ii) do not apply to securities received
as dividends, through offers of exchange, or as a result of a
reorganization, consolidation, or merger.
As a shareholder in an investment company, a Portfolio would bear
its pro rata share of that investment company's expenses, which could
result in duplication of certain fees, including management and
administrative fees.
Investment Restrictions
The following investment restrictions are fundamental policies of
each Portfolio other than the Asset Strategy Portfolio and may not be
changed without shareholder approval. A Portfolio (other than the Asset
Strategy Portfolio) may not:
(i) Issue senior securities (except that each Portfolio may borrow
money as described below);
(ii) Buy or sell commodities or commodity contracts except that each
Portfolio may use options, futures contracts, forward currency
contracts and interest rate swaps, caps and floors, and
purchase and sell foreign currencies, in the manner described
in the Prospectus and SAI;
(iii) Buy real estate or any nonliquid interests in real estate
investment trusts;
(iv) Make loans, except loans of portfolio securities and except to
the extent that investment in debt securities may be deemed to
be a loan;
(v) Invest for the purpose of exercising control or management of
other companies;
(vi) Sell securities short, buy securities on margin or engage in
arbitrage transactions;
(vii) Engage in the underwriting of securities, except insofar as it
may be deemed an underwriter in selling shares of a Portfolio
and except as it may be deemed such in the sale of restricted
securities;
(viii) Except for the Small Cap Portfolio (see "Borrowing"), borrow
money except from banks as a temporary measure or for
extraordinary or emergency purposes and not for investment
purposes, and only up to 5% of the value of a Portfolio's total
assets;
(ix) Pledge, mortgage or hypothecate assets as security for
indebtedness except to secure permitted borrowings;
(x) Buy a security if, as a result, a Portfolio would own more
than 10% of the issuer's voting securities, or if more than
five percent of its total assets would be invested in
securities of that issuer, or if more than twenty-five percent
of its assets would then be invested in securities of companies
in any one industry (U.S. Government securities are not
included in these restrictions.
The following are fundamental policies of the Asset Strategy
Portfolio and may not be changed without shareholder approval. The
Asset Strategy Portfolio may not:
(i) with respect to 75% of the Portfolio's total assets, purchase
the securities of any issuer (other than obligations issued or
guaranteed by the United States government, or any of its
agencies or instrumentalities) if, as a result thereof, (a)
more than 5% of the Portfolio's total assets would be invested
in the securities of such issuer, or (b) the Portfolio would
hold more than 10% of the outstanding voting securities of
such issuer;
(ii) issue bonds or any other class of securities preferred over
shares of the Portfolio in respect of the Portfolio's assets
or earnings, provided that the Portfolio may issue additional
classes of shares in accordance with the Fund's Articles of
Incorporation;
(iii) sell securities short, provided that transactions in futures
contracts, options and other financial instruments are not
deemed to constitute short sales;
(iv) purchase securities on margin, except that the Portfolio may
obtain such short-term credits as are necessary for the
clearance of transactions, and provided that the Portfolio may
make initial and variation margin payments in connection with
transactions in futures contracts, options and other financial
instruments;
(v) borrow money, except that the Portfolio may borrow money for
emergency or extraordinary purposes (not for leveraging or
investment) in an amount not exceeding 33 1/3% of the value of
its total assets (less liabilities other than borrowings).
Any borrowings that come to exceed 33 1/3% of the value of the
Portfolio's total assets by reason of a decline in net assets
will be reduced within three days to the extent necessary to
comply with the 33 1/3% limitation. For purposes of this
limitation, "three days" means three days, exclusive of
Sundays and holidays;
(vi) underwrite securities issued by others, except to the extent
that the Portfolio may be deemed to be an underwriter within
the meaning of the Securities Act of 1933 in the disposition
of restricted securities;
(vii) purchase the securities of any issuer (other than obligations
issued or guaranteed by the United States government or any of
its agencies or instrumentalities) if, as a result, more than
25% of the Portfolio's total assets (taken at current value)
would be invested in the securities of issuers having their
principal business activities in the same industry;
(viii) invest in real estate limited partnerships or purchase or sell
real estate unless acquired as a result of ownership of
securities (but this shall not prevent the Portfolio from
purchasing and selling securities issued by companies or other
entities or investment vehicles that deal in real estate or
interests therein, nor shall this prevent the Portfolio from
purchasing interests in pools of real estate mortgage loans);
(ix) purchase or sell physical commodities unless acquired as a
result of ownership of securities (but this shall not prevent
the Portfolio from purchasing and selling currencies, futures
contracts, options, forward currency contracts or other
financial instruments);
(x) make loans, except (a) by lending portfolio securities
provided that no securities loan will be made if, as a result
thereof, more than 10% of the Portfolio's total assets (taken
at current value) would be lent to another party; (b) through
the purchase of a portion of an issue of debt securities in
accordance with its investment objective, policies, and
limitations; and (c) by engaging in repurchase agreements with
respect to portfolio securities; or
(xi) purchase or retain the securities of an issuer if the officers
and directors of the Portfolio and of the Manager owning
beneficially more than .5 of 1% of the securities of an issuer
together own beneficially more than 5% of the securities of
that issuer.
In addition to the fundamental policies described above, the
Portfolios indicated below have adopted the following investment
policies which, unlike the fundamental policies, may be changed without
shareholder approval.
(i) A Portfolio (other than the Asset Strategy Portfolio) may not
buy shares of other investment companies which redeem their
shares. Certain Portfolios may buy shares of other investment
companies which do not redeem their shares as described in the
Prospectus and the SAI.
(ii) A Portfolio may not participate on a joint, or a joint and
several, basis in any trading account in any securities; (but
this does not prohibit the "bunching" of orders for the sale
or purchase of Portfolio securities with any other Portfolio
or with other advisory accounts of the Manager or any of its
affiliates to reduce brokerage commissions or otherwise to
achieve best execution).
(iii) The Asset Strategy Portfolio does not currently intend to lend
assets other than securities to other parties, except by
acquiring loans, loan participations, or other forms of direct
debt instruments. (This limitation does not apply to
purchases of debt securities or to repurchase agreements.)
(iv) The Asset Strategy Portfolio does not currently intend to
purchase the securities of any issuer (other than securities
issued or guaranteed by domestic or foreign governments or
political subdivision thereof) if, as a result, more than 5%
of its total assets would be invested in the securities of
business enterprises that, including predecessors, have a
record of less than three years of continuous operation. This
restriction does not apply to any obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities, or to CMO's, other mortgage-related
securities, asset-backed securities or indexed securities.
(v) The Asset Strategy Portfolio does not currently intend to
invest in oil, gas, or other mineral exploration or
development programs or leases.
Portfolio Turnover
A Portfolio turnover rate is, in general, the percentage computed
by taking the lesser of purchases or sales of portfolio securities for a
year and dividing it by the monthly average of the market value of such
securities during the year, excluding certain short-term securities. A
Portfolio's turnover rate may vary greatly from year to year as well as
within a particular year.
The portfolio turnover rates for the fiscal years ended December
31, 1994 and December 31, 1993 for each of the Portfolios then in
existence were as follows:
1994 1993
---- ----
Money Market Portfolio 0.00% 0.00%
Bond Portfolio 135.82 68.75
High Income Portfolio 37.86 54.22
Growth Portfolio 277.36 297.81
Income Portfolio 23.32 18.38
The International Portfolio, Small Cap Portfolio, Balanced
Portfolio and Limited-Term Bond Portfolio began operations April 29,
1994. These Portfolios cannot accurately predict what their respective
portfolio turnover rates will be, but it is anticipated that the annual
turnover rate will not exceed 200% for any of these Portfolios, except
that Limited-Term Bond Portfolio may have an annual turnover rate in
excess of 300%. The Asset Strategy Portfolio began operations in 1995.
The Asset Strategy Portfolio cannot precisely predict what its portfolio
turnover rate will be, but it is anticipated that the annual turnover
rate for the common stock portion of its portfolio will not exceed 200%
and that the annual turnover rate for the other portion of its portfolio
will not exceed 200%.
The high portfolio turnover rate for the Growth Portfolio was due
to the active management of the portfolio and the volatility of the
stock market during this period. A high turnover rate will increase
transaction costs and commission costs that will be borne by the Fund
and may generate taxable income or loss. Because short-term securities
are generally excluded from computation of the turnover rate, a rate
will not be computed for the Money Market Portfolio.
INVESTMENT MANAGEMENT AND OTHER SERVICES
The Management Agreement
The Fund has an Investment Management Agreement (the "Management
Agreement") with Waddell & Reed, Inc. On January 8, 1992, subject to
the authority of the Fund's Board of Directors, Waddell & Reed, Inc.
assigned the Management Agreement and all related investment management
duties (and related professional staff) to Waddell & Reed Investment
Management Company, a wholly-owned subsidiary of Waddell & Reed, Inc.
Under the Management Agreement, the Manager is employed to supervise the
investments of each Portfolio and provide investment advice to each
Portfolio. The address of the Manager and Waddell & Reed, Inc. is 6300
Lamar Avenue, P. O. Box 29217, Shawnee Mission, Kansas 66201-9217.
Waddell & Reed, Inc. is the Fund's distributor and underwriter.
The Management Agreement permits Waddell & Reed, Inc. or an
affiliate of Waddell & Reed, Inc. to enter into a separate agreement for
accounting services ("Accounting Services Agreement") with the Fund.
The Management Agreement contains detailed provisions as to the matters
to be considered by the Fund's Directors prior to approving any
Accounting Services Agreement.
Accounting Services
Under the Accounting Services Agreement entered into between the
Fund and Waddell & Reed Services Company (the "Agent"), a subsidiary of
Waddell & Reed, Inc., the Agent provides the Fund with bookkeeping and
accounting services and assistance including maintenance of the Fund's
records, pricing of the Portfolios' shares, and preparation of
prospectuses, proxy statements and certain reports. A new Accounting
Services Agreement, or amendments to an existing one, may be approved by
the Fund's Board of Directors without shareholder approval.
Torchmark Corporation and United Investors Management Company
The Manager is a wholly-owned subsidiary of Waddell & Reed, Inc.
Waddell & Reed, Inc. is a wholly-owned subsidiary of Waddell & Reed
Financial Services, Inc., a holding company. Waddell & Reed Financial
Services, Inc. is a wholly-owned subsidiary of United Investors
Management Company which in turn is a wholly-owned subsidiary of
Torchmark Corporation. Torchmark Corporation is a publicly held
company. The address of Torchmark Corporation and United Investors
Management Company is 2001 Third Avenue South, Birmingham, Alabama
35233.
Waddell & Reed, Inc. and its predecessors served as investment
manager to the Fund and to each of the registered investment companies
in the United Group of Mutual Funds, except United Asset Strategy Fund,
Inc., since 1940 or the company's inception date, whichever was later,
until January 8, 1992, when it assigned its duties as investment manager
for these funds (and the related professional staff) to the Manager.
The Manager has also served as investment manager for Waddell & Reed
Funds, Inc. since its inception in September 1992, Torchmark Government
Securities Fund, Inc. and Torchmark Insured Tax-Free Fund, Inc. since
they each commenced operations in February 1993 and United Asset
Strategy Fund, Inc. since it began operations in March 1995. Waddell &
Reed, Inc. serves as distributor for the Fund and as underwriter for the
investment companies in the United Group of Mutual Funds and Waddell &
Reed Funds, Inc.
Payments by the Fund for Management and Accounting Services
Under the Management Agreement, for the Manager's management
services, the Fund pays the Manager a fee as described in the
Prospectus. Prior to the above-described assignment from Waddell &
Reed, Inc. to Waddell & Reed Investment Management Company, all fees
were paid to Waddell & Reed, Inc. The management fees paid to the
investment manager, during the fiscal years ended December 31, 1994,
1993 and 1992, for each Portfolio then in existence were as follows:
Periods ended December 31,**
----------------------------
1994 1993 1992
---- ---- ----
Bond Portfolio $424,370 $357,307 $208,351
High Income Portfolio $494,237 367,396 221,169
Growth Portfolio $1,813,171 1,179,870 650,038
Money Market Portfolio $116,644 122,205 108,092
Income Portfolio $1,374,533 747,849 268,089
International Portfolio* $63,291
Small Cap Portfolio* $36,355
Balanced Portfolio* $15,489
Limited-Term Bond Portfolio* $4,712
*Began operations April 29, 1994.
**The Asset Strategy Portfolio began operations in 1995.
The Fund accrues and pays this fee daily.
Under the Accounting Services Agreement, the Fund pays Waddell &
Reed Services Company a fee for accounting services as described in the
Prospectus. Fees paid to the Agent for the fiscal years ended December
31, 1994, 1993 and 1992 for each Portfolio then in existence were as
follows:
Periods ended December 31,**
----------------------------
1994 1993 1992
---- ---- ----
Bond Portfolio $30,000 $30,000 $20,000
High Income Portfolio 30,000 26,667 20,000
Growth Portfolio 50,000 40,833 32,500
Money Market Portfolio 10,833 12,500 10,000
Income Portfolio 44,167 35,833 19,167
International Portfolio* 3,333
Small Cap Portfolio* 1,667
Balanced Portfolio* ---
Limited-Term Bond Portfolio* ---
*Began operations April 29, 1994.
**The Asset Strategy Portfolio began operations in 1995.
Since the Fund pays a management fee for investment supervision and
an accounting services fee for accounting services as discussed above,
the Manager and Waddell & Reed Services Company, respectively, pay all
of their own expenses in providing these services. Waddell & Reed, Inc.
and affiliates pay the Fund's Directors and officers who are affiliated
with the Manager and Waddell & Reed, Inc. The Fund pays the fees and
expenses of the Fund's other Directors. The Fund pays all of its other
expenses. These include the costs of printing and mailing materials
sent to shareholders, audit and outside legal fees, taxes, brokerage
commissions, interest, insurance premiums, fees payable under securities
laws and to the Investment Company Institute, cost of processing and
maintaining shareholder records, cost of systems or services used to
price Portfolio securities and nonrecurring and extraordinary expenses,
including litigation and indemnification relating to litigation.
Custodial and Auditing Services
The Custodian for each Portfolio is UMB Bank, n.a., Kansas City,
Missouri. In general, the Custodian is responsible for holding the
Portfolios' cash and securities. If a Portfolio's assets are held in
foreign countries, the Portfolio will comply with Rule 17f-5 of the 1940
Act. Price Waterhouse LLP, Kansas City, Missouri, the Fund's
independent accountants, audits the Fund's financial statements.
NET ASSET VALUE
The net asset value of one of the shares of a Portfolio is the
value of the Portfolio's assets, less liabilities, divided by the total
number of shares outstanding. For example, if on a particular day a
Portfolio owned securities worth $100 and held cash of $15, the total
value of the assets would be $115. If it had a liability of $5, the net
asset value would be $110 ($115 minus $5). If it had 11 shares
outstanding, the net asset value of one share would be $10 ($110 divided
by 11).
The net asset value per share of each Portfolio is computed on each
day that the NYSE is open for trading as of the later of the close of
the regular session of the NYSE or the close of the regular session of
any other securities or commodities exchange on which an option or
future held by a Portfolio is traded. The NYSE ordinarily closes at
4:00 P.M. Eastern time. The NYSE annually announces the days on which
it will not be open for trading. The most recent announcement indicates
that it will not be open on the following days: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. However, it is possible that the
NYSE may close on other days.
Under Rule 2a-7, the Money Market Portfolio uses the "amortized
cost method" for valuing its portfolio securities provided it meets
certain conditions. The conditions imposed under Rule 2a-7 relating to
the Portfolio's investments include the following: (i) the Portfolio
must not maintain a dollar-weighted average portfolio maturity in excess
of 90 days; (ii) it must limit its investments, including repurchase
agreements, to those instruments which are denominated in U.S. dollars
and which the Fund's Board of Directors determines present minimal
credit risks and which are rated in one of the two highest rating
categories by the requisite NRSRO(s), as defined in Rule 2a-7; or, in
the case of any instrument that is not rated, of comparable quality as
determined under procedures established by and under the general
supervision and responsibility of the Fund's Board of Directors; (iii)
it must limit its investments in the securities of any one issuer
(except U.S. Government Securities) to no more than 5% of its assets;
(iv) it must limit its investments in securities rated in the second
highest rating category by the requisite NRSRO(s) or comparable unrated
securities to no more than 5% of its assets; (v) it must limit its
investments in the securities of any one issuer which are rated in the
second highest rating category by the requisite NRSRO(s) or comparable
unrated securities to the greater of 1% of its assets or $1,000,000; and
(vi) it must limit its investments to securities with a remaining
maturity of not more than thirteen months. Rule 2a-7 sets forth the
method by which the maturity of a security is determined. The amortized
cost method involves valuing an instrument at its cost and thereafter
assuming a constant amortization rate to maturity of any discount or
premium, and does not reflect the impact of fluctuating interest rates
on the market value of the security. This method does not take into
account unrealized gains or losses.
While the amortized cost method provides some degree of certainty
in valuation, there may be periods during which value, as determined by
amortized cost, is higher or lower than the price the Portfolio would
receive if it sold the instrument. During periods of declining interest
rates, the daily yield on the Portfolio's shares may tend to be higher
than a like computation made by a fund with identical investments
utilizing a method of valuation based upon market prices and estimates
of market prices for all of its portfolio instruments and changing its
dividends based on these changing prices. Thus, if the use of amortized
cost by the Portfolio resulted in a lower aggregate portfolio value on a
particular day, a prospective investor in the Portfolio's shares would
be able to obtain a somewhat higher yield than would result from
investment in such a fund, and existing investors in the Portfolio's
shares would receive less investment income. The converse would apply
in a period of rising interest rates.
Under Rule 2a-7, the Fund's Board of Directors must establish
procedures designed to stabilize, to the extent reasonably possible, the
Portfolio's price per share as computed for the purpose of sales and
redemptions at $1.00. Such procedures must include review of the
portfolio holdings by the Board at such intervals as it may deem
appropriate and at such intervals as are reasonable in light of current
market conditions to determine whether the Portfolio's net asset value
calculated by using available market quotations (see below) deviates
from the per share value based on amortized cost.
For the purpose of determining whether there is any deviation
between the value of the Portfolio based on amortized cost and that
determined on the basis of available market quotations, if there are
readily available market quotations, investments are valued at the mean
between the bid and asked prices. If such market quotations are not
available, the investments will be valued at their fair value as
determined in good faith under procedures established by and under the
general supervision and responsibility of the Fund's Board of Directors,
including being valued at prices based on market quotations for
investments of similar type, yield and duration.
Under Rule 2a-7, if the extent of any deviation between the net
asset value per share based upon available market quotations and the net
asset value per share based on amortized cost exceeds one-half of 1%,
the Board must promptly consider what action, if any, will be initiated.
When the Board believes that the extent of any deviation may result in
material dilution or other unfair results, it is required to take such
action as it deems appropriate to eliminate or reduce to the extent
reasonably practicable such dilution or unfair results. Such actions
could include the sale of portfolio securities prior to maturity to
realize capital gains or losses or to shorten average portfolio
maturity, withholding dividends or payment of distributions from capital
or capital gains, redemptions of shares in kind, or establishing a net
asset value per share using available market quotations.
The portfolio securities of the Portfolios (other than the Money
Market Portfolio) that are listed or traded on U.S. or foreign stock
exchanges are valued at the last sales price on that day or, lacking any
sales on such day, at the mean of the last bid and asked prices
available. In cases where securities or other instruments are traded on
more than one exchange, such securities or other instruments generally
are valued on the exchange designated by the Manager (under procedures
established by and under the general supervision and responsibility of
the Board of Directors) as the primary market. Securities traded in the
OTC market and included in the National Association of Securities
Dealers Automated Quotation System ("Nasdaq") are valued at the last
available sale price on Nasdaq prior to the time of valuation; other OTC
securities and instruments are valued at the mean of the closing bid and
asked prices.
Bonds, other than convertible bonds, are valued using a pricing
system provided by a major dealer in bonds. Convertible bonds are
valued using this pricing system only on days when there is no sale
reported. Short-term debt securities held by the Portfolios (other than
the Money Market Portfolio) are valued at amortized cost. When market
quotations for options and futures positions and non-exchange traded
foreign securities held by a Portfolio are readily available, those
positions and securities will be valued based upon such quotations.
Market quotations generally will not be available for options traded in
the OTC market. Warrants and rights to purchase securities are valued
at market value. When market quotations are not readily available,
securities, options, futures and other assets are valued at fair value
as determined in good faith under procedures established by and under
the general supervision and responsibility of the Board of Directors.
When a Portfolio writes a call or a put option, an amount equal to
the premium received is included in that Portfolio's Statement of Assets
and Liabilities as an asset, and an equivalent deferred credit is
included in the liability section. The deferred credit is "marked-to-
market" to reflect the current market value of the option. If an option
a Portfolio wrote is exercised, the proceeds received on the sale of the
related investment are increased by the amount of the premium that the
Portfolio received. If an option written by a Portfolio expires, it has
a gain in the amount of the premium; if it enters into a closing
transaction, it will have a gain or loss depending on whether the
premium was more or less than the cost of the closing transaction.
All securities and other assets quoted in foreign currency and
forward currency contracts are valued weekly in U.S. dollars on the
basis of the foreign currency exchange rate prevailing at the time such
valuation is determined by the Portfolio's Custodian. Foreign currency
exchange rates are generally determined prior to the close of the NYSE.
Occasionally, events affecting the value of foreign securities and such
exchange rates occur between the time at which they are determined and
the close of the NYSE, which events will not be reflected in a
computation of the Portfolio's net asset value. If events materially
affecting the value of such securities or assets or currency exchange
rates occurred during such time period, the securities or assets would
be valued at their fair value as determined in good faith under
procedures established by and under the general supervision and
responsibility of the Board of Directors. The foreign currency exchange
transactions of a Portfolio conducted on a spot basis are valued at the
spot rate for purchasing or selling currency prevailing on the foreign
exchange market. Under normal market conditions this rate differs from
the prevailing exchange rate by an amount generally less than one-tenth
of one percent due to the costs of converting from one currency to
another.
Optional delivery standby commitments are valued at fair value
under the general supervision and responsibility of the Fund's Board of
Directors. They are accounted for in the same manner as exchange-listed
puts.
PURCHASES AND REDEMPTIONS
The separate accounts of the Participating Insurance Companies
place orders to purchase and redeem shares of each Portfolio based on,
among other things, the amount of premium payments to be invested and
the number of surrender and transfer requests to be effected on any day
according to the terms of the Policies. Shares of a Portfolio are sold
at their net asset value per share. No sales charge is paid by the
Participating Insurance Company for purchase of shares. Redemptions
will be made at the net asset value per share of the Portfolio. Payment
is generally made within seven days after receipt of a proper request to
redeem. The Fund may suspend the right of redemption of shares of any
Portfolio and may postpone payment for any period if any of the
following conditions exist: (i) the NYSE is closed other than customary
weekend and holiday closings or trading on the NYSE is restricted; (ii)
the SEC has determined that a state of emergency exists which may make
payment or transfer not reasonably practicable; (iii) the SEC has
permitted suspension of the right of redemption of shares for the
protection of the shareholders of the Fund; or (iv) applicable laws and
regulations otherwise permit the Fund to suspend payment on the
redemption of shares. Redemptions are ordinarily made in cash but under
extraordinary conditions the Fund's Board may determine that the making
of cash payments is undesirable. In such case, redemption payments may
be made in Portfolio securities. The redeeming shareholders would incur
brokerage costs in selling such securities. The Fund has elected to be
governed by Rule 18f-1 under the 1940 Act, pursuant to which it is
obligated to redeem shares solely in cash up to the lesser of $250,000
or 1% of its net asset value during any 90-day period for any one
shareholder.
Should any conflict between Policyowners arise which would require
that a substantial amount of net assets be withdrawn from a Portfolio,
orderly portfolio management could be disrupted to the potential
detriment of Policyowners. The Fund need not accept any purchase order
and it may discontinue offering the shares of any Portfolio.
SHAREHOLDER COMMUNICATIONS
Policyowners will receive from the Participating Insurance
Companies financial statements of the Fund as required under the 1940
Act. Each report shows the investments owned by the Portfolio and the
market values thereof and provides other information about the Fund and
its operations.
TAXES
General
Shares of the Portfolios are offered only to insurance company
separate accounts that fund variable annuity contracts ("Contracts").
See the applicable Contract prospectus for a discussion of the special
taxation of insurance companies with respect to such accounts and of the
Contract holders.
Each Portfolio is treated as a separate corporation for Federal
income tax purposes. In order to qualify or continue to qualify for
treatment as a regulated investment company ("RIC") under the Internal
Revenue Code of 1986, as amended (the "Code"), each Portfolio must
distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net
investment income, net short-term capital gain and, for each Portfolio
other than the Money Market Portfolio, net gains from certain foreign
currency transactions) and must meet several additional requirements.
With respect to each Portfolio, these requirements include the
following: (1) the Portfolio must derive at least 90% of its gross
income each taxable year from dividends, interest, payments with respect
to securities loans and gains from the sale or other disposition of
securities or foreign currencies, or other income (including gains from
options, futures or forward currency contracts) derived with respect to
its business of investing in securities or those currencies ("Income
Requirement"); (2) the Portfolio must derive less than 30% of its gross
income each taxable year from the sale or other disposition of
securities, or any of the following, that were held for less than three
months -- options or futures, foreign currencies or forward currency
contracts that are not directly related to the Fund's principal business
of investing in securities (or options and futures with respect to
securities) ("Short-Short Limitation"); (3) at the close of each quarter
of the Portfolio's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. Government
Securities, securities of other RICs and other securities that are
limited, in respect of any one issuer, to an amount that does not exceed
5% of the value of the Fund's total assets and that does not represent
more than 10% of the issuer's outstanding voting securities; and (4) at
the close of each quarter of the Portfolio's taxable year, not more than
25% of the value of its total assets may be invested in securities
(other than U.S. Government Securities or the securities of other RICs)
of any one issuer.
As noted in the Prospectus, each Portfolio must, and intends to,
comply or continue to comply with the diversification requirements
imposed by section 817(h) of the Code and the regulations thereunder.
These requirements, which are in addition to the diversification
requirements mentioned in (3) and (4) above, place certain limitations
on the proportion of each Portfolio's assets that may be represented by
any single investment (which includes all securities of the same
issuer). For these purposes, each U.S. Government agency or
instrumentality is treated as a separate issuer, while a particular
foreign government and its agencies, instrumentalities and political
subdivisions all are considered the same issuer.
Income from Foreign Securities
Dividends and interest received by a Portfolio (other than the
Limited-Term Bond Portfolio) may be subject to income, withholding or
other taxes imposed by foreign countries and U.S. possessions that would
reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign
taxes, however, and many foreign countries do not impose taxes on
capital gains in respect of investments by foreign investors.
Foreign Currency Gains and Losses
For each Portfolio (other than the Money Market Portfolio and
Limited-Term Bond Portfolio), gains or losses (1) from the disposition
of foreign currencies, (2) from the disposition of debt securities
denominated in foreign currency that are attributable to fluctuations in
the value of the foreign currency between the date of acquisition of
each security and the date of disposition, and (3) that are attributable
to fluctuations in exchange rates that occur between the time a
Portfolio accrues interest, dividends or other receivables or accrues
expenses or other liabilities denominated in a foreign currency and the
time the Portfolio actually collects the receivables or pays the
liabilities, generally are treated as ordinary income or loss. Gains or
losses from these transactions, referred to in the Code as "section 988
transactions," may increase or decrease the amount of a Portfolio's
investment company taxable income to be distributed to its shareholders.
Income from Options, Futures Contracts and Currencies
The use of hedging strategies, such as writing (selling) and
purchasing options and futures in a designated hedging transaction and
entering into forward currency contracts, involves complex rules that
will determine for income tax purposes the character and timing of
recognition of the gains and losses a Portfolio realizes in connection
therewith. Income from foreign currencies (except certain gains
therefrom that may be excluded by future regulations), and income from
transactions in options, futures and forward currency contracts derived
by a Portfolio with respect to its business of investing in securities,
will qualify as permissible income under the Income Requirement.
However, income from the disposition of options and futures, and income
from the disposition of foreign currencies and forward currency
contracts that are not directly related to a Portfolio's principal
business of investing in securities (or options and futures with respect
to securities), will be subject to the Short-Short Limitation if they
are held for less than three months.
If a Portfolio satisfies certain requirements, any increase in
value of a position that is part of a "designated hedge" will be offset
by any decrease in value (whether realized or not) of the offsetting
hedging position during the period of the hedge for purposes of
determining whether the Portfolio satisfies the Short-Short Limitation.
Thus, only the net gain (if any) from the designated hedge will be
included in gross income for purposes of that limitation. Each
Portfolio authorized to engage in hedging transactions intends that,
when it does so engage, the hedging transactions will qualify for this
treatment, but at the present time it is not clear whether this
treatment will be available for all of each such Portfolio's hedging
transactions. To the extent this treatment is not available, such a
Portfolio may be forced to defer the closing out of certain options,
futures and forward currency contracts beyond the time when it otherwise
would be advantageous to do so, in order for the Portfolio to qualify or
continue to qualify as a RIC.
Any income a Portfolio earns from writing options is taxed as
short-term capital gains. If a Portfolio enters into a closing purchase
transaction, it will have a short-term capital gain or loss based on the
difference between the premium it receives for the option it wrote and
the premium it pays for the option it buys. If an option written by a
Portfolio expires without being exercised, the premium it receives also
will be a short-term gain. If such an option is exercised and thus the
Portfolio sells the securities subject to the option, the premium the
Portfolio receives will be added to the exercise price to determine the
gains or losses on the sale. A Portfolio will not write so many options
that it could fail to continue to qualify as a RIC.
Certain options and futures in which a Portfolio may invest will be
"section 1256 contracts." Section 1256 contracts held by a Portfolio at
the end of each taxable year, other than section 1256 contracts that are
part of a "mixed straddle" with respect to which the Portfolio has made
an election not to have the following rules apply, are "marked-to-
market" (that is, treated as sold for their fair market value) for
Federal income tax purposes, with the result that unrealized gains or
losses are treated as though they were realized. Sixty percent of any
net gains or losses recognized on these deemed sales, and 60% of any net
realized gains or losses from any actual sales of section 1256
contracts, are treated as long-term capital gains or losses, and the
balance is treated as short-term capital gains or losses. Section 1256
contracts also may be marked-to-market for purposes of the Excise Tax
and for other purposes.
Code section 1092 (dealing with straddles) may also affect the
taxation of options and futures contracts in which a Portfolio may
invest. Section 1092 defines a "straddle" as offsetting positions with
respect to personal property; for these purposes, options and futures
contracts are personal property. Section 1092 generally provides that
any loss from the disposition of a position in a straddle may be
deducted only to the extent the loss exceeds the unrealized gain on the
offsetting position(s) of the straddle. Section 1092 also provides
certain "wash sale" rules, which apply to transactions where a position
is sold at a loss and a new offsetting position is acquired within a
prescribed period, and "short sale" rules applicable to straddles. If a
Portfolio makes certain elections, the amount, character and timing of
the recognition of gains and losses from the affected straddle positions
will be determined under rules that vary according to the elections
made. Because only a few of the regulations implementing the straddle
rules have been promulgated, the tax consequences of straddle
transactions to a Portfolio are not entirely clear.
Zero Coupon and Payment-in-Kind Securities
As the holder of zero coupon or other securities issued with
original issue discount, a Portfolio must include in its income the
original issue discount that accrues on the securities during the
taxable year, even if the Portfolio receives no corresponding payment on
the securities during the year. Similarly, a Portfolio must include in
its gross income securities it receives as "interest" on payment-in-kind
securities. Because a Portfolio annually must distribute substantially
all of its investment company taxable income, including any original
issue discount and other non-cash income, in order to satisfy the
distribution requirement described above and to avoid imposition of the
Excise Tax, it may be required in a particular year to distribute as a
dividend an amount that is greater than the total amount of cash it
actually receives. Those distributions will be made from a Portfolio's
cash assets or from the proceeds of sales of portfolio securities, if
necessary. A Portfolio may realize capital gains or losses from those
sales, which would increase or decrease its investment company taxable
income and/or net capital gains. In addition, any such gains may be
realized on the disposition of securities held for less than three
months. Because of the Short-Short Limitation, any such gains would
reduce a Portfolio's ability to sell other securities, or options or
futures, held for less than three months that it might wish to sell in
the ordinary course of its portfolio management.
The foregoing is only a general summary of some of the important
Federal income tax considerations generally affecting the Portfolios.
No attempt is made to present a complete explanation of the Federal tax
treatment of their activities, and this discussion is not intended as a
substitute for careful tax planning. Accordingly, potential investors
are urged to consult with their own tax advisers for more detailed
information and for information regarding any state, local or foreign
taxes applicable to the Portfolios and to dividends and other
distributions therefrom.
DIVIDENDS AND DISTRIBUTIONS
It is the Fund's intention to distribute substantially all the net
investment income, if any, of each Portfolio. For dividend purposes,
net investment income of each Portfolio, other than the Money Market
Portfolio, will consist of all payments of dividends or interest
received by such Portfolio less the estimated expenses of such
Portfolio. The Money Market Portfolio's net investment income for
dividend purposes consists of all interest income accrued on the
Portfolio, plus or minus realized gains or losses on portfolio
securities, less the Portfolio's expenses.
Dividends on the Money Market Portfolio are declared and reinvested
daily in additional full and fractional shares. Dividends from
investment income of the Growth Portfolio, the Bond Portfolio, the High
Income Portfolio, the Income Portfolio, the International Portfolio, the
Small Cap Portfolio, the Balanced Portfolio, the Limited-Term Bond
Portfolio and the Asset Strategy Portfolio will usually be declared,
paid and reinvested annually in December in additional full and
fractional shares of the respective Portfolio. Ordinarily, dividends
are paid on shares starting on the day after they are issued and on
shares the day they are redeemed. Under the amortized cost procedures
which pertain to the Money Market Portfolio in certain circumstances
dividends of the Money Market Portfolio might be eliminated or reduced.
All net realized long-term or short-term capital gains of the
Portfolios, if any, other than short-term capital gains of the Money
Market Portfolio, are declared and distributed annually in December to
the shareholders of the Portfolios to which such gains are attributable.
PORTFOLIO TRANSACTIONS AND BROKERAGE
One of the duties undertaken by the Manager in the Management
Agreement is the purchase and sale of securities for the Portfolios.
Purchases and sales of securities for the Money Market Portfolio and of
securities for the other Portfolios, other than those for which an
exchange is the primary market, are generally done with underwriters,
dealers acting as principals ("dealers") or directly with issuers.
Purchases from underwriters include a commission or concession paid by
the issuer to the underwriter and purchases from dealers will include
the spread between the bid and the asked prices. If the execution and
price offered by more than one dealer are equal, the order may be
allocated to a dealer which has provided research advice, quotations on
portfolio securities or other services. Brokerage commissions are paid
on such transactions only if it appears likely that a better price or
execution can be obtained.
To effect the portfolio transactions of each Portfolio in
securities traded on an exchange, the Manager is authorized to engage
broker-dealers ("brokers") which, in its best judgment based on all
relevant factors, will implement the policy of the Portfolio to achieve
"best execution" (prompt and reliable execution at the best price
obtainable) for reasonable and competitive commissions. The Manager
need not seek competitive commission bidding but is expected to minimize
the commissions paid to the extent consistent with the interests and
policies of the Portfolio. Subject to review by the Board of Directors,
such policies include the selection of brokers which provide execution
and/or research services and other services, including pricing or
quotation services directly or through others ("brokerage services")
considered by the Manager to be useful or desirable for its investment
management of the Portfolio and/or the other funds and accounts over
which the Manager or its affiliates has investment discretion.
Brokerage services are, in general, defined by reference to Section
28(e) of the Securities Exchange Act of 1934 as including (i) advice,
either directly or through publications or writings, as to the value of
securities, the advisability of investing in, purchasing or selling
securities and the availability of securities and purchasers or sellers,
(ii) furnishing analyses and reports, or (iii) effecting securities
transactions and performing functions incidental thereto (such as
clearance, settlement and custody). "Investment discretion" is, in
general, defined as having authorization to determine what securities
shall be purchased or sold for an account, or making those decisions
even though someone else has responsibility.
The commissions paid to brokers that provide such brokerage
services may be higher than another qualified broker would charge if a
good faith determination is made by the Manager that the commission is
reasonable in relation to the services provided. No allocation of
brokerage or principal business is made to provide any other benefits to
the Manager or its affiliates.
The investment research provided by a particular broker may be
useful only to one or more of the other advisory accounts of the Manager
or its affiliates and investment research received for the commissions
of those other accounts may be useful both to a Portfolio and one or
more of such other accounts. To the extent that electronic or other
products provided by such brokers to assist the Manager in making
investment management decisions are used for administration or other
non-research purposes, a reasonable allocation of the cost of the
product attributable to its non-research use is made by the Manager.
Such investment research, which may be supplied by a third party at
the instance of a broker, includes information on particular companies
and industries as well as market, economic or institutional activity
areas. It serves to broaden the scope and supplement the research
activities of the Manager; serves to make available additional views for
consideration and comparisons; and enables the Manager to obtain market
information on the price of securities held in a Portfolio or being
considered for purchase.
The individual who manages a Portfolio may manage other advisory
accounts with similar investment objectives. It can be anticipated that
the Manager will frequently place concurrent orders for all or most
accounts for which the Manager has responsibility. Combining purchases
and sales in that manner may result in a lower negotiated commission
being paid for the transaction. However, large transactions could
affect the price of the securities by driving the price up in the case
of a purchase by the accounts or driving the price down in the case of a
sale.
The table below sets forth the brokerage commissions paid during
the fiscal years ended December 31, 1994, 1993 and 1992:
Periods ended December 31,**
-------------------------------
1994 1993 1992
---- ---- ----
Bond Portfolio $ --- $ --- $ ---
High Income Portfolio 1,268 1,580 ---
Growth Portfolio 1,567,746 1,163,320 433,732
Money Market Portfolio --- --- ---
Income Portfolio 199,012 150,525 70,663
International Portfolio* 49,880
Small Cap Portfolio* 3,450
Balanced Portfolio* 6,437
Limited-Term Bond Portfolio* ---
---------- -------- --------
$1,827,793 $1,315,425 $504,395
========== ========== ========
*Began operations April 29, 1994.
**The Asset Strategy Portfolio began operations in 1995.
The next table shows the transactions, other than principal
transactions, which were directed to broker-dealers who provided
research as well as execution and the brokerage commissions paid for the
fiscal year ended December 31, 1994. These transactions were allocated
to these broker-dealers by the internal allocation procedures described
above.
Amount of Brokerage
Transactions** Commissions
------------ -----------
Bond Portfolio $ --- $ ---
High Income Portfolio 378,965 1,220
Growth Portfolio 795,585,108 1,210,170
Money Market Portfolio --- ---
Income Portfolio 101,528,224 162,569
International Portfolio* 9,766,844 31,002
Small Cap Portfolio* 386,396 660
Balanced Portfolio* 676,809 1,401
Limited-Term Bond Portfolio* --- ---
------------ ----------
$908,322,346 $1,407,022
============ ==========
*Began operations April 29, 1994.
**The Asset Strategy Portfolio began operations in 1995.
DIRECTORS AND OFFICERS
The day-to-day affairs of the Fund are handled by outside
organizations selected by the Board of Directors. The Board of
Directors has responsibility for establishing broad corporate policies
for the Fund and for overseeing overall performance of the selected
experts. It has the benefit of advice and reports from independent
counsel and independent auditors.
The principal occupation of each Director and officer during at
least the past five years is given below. Each of the persons listed
through and including Mr. Wright is a member of the Fund's Board of
Directors. The other persons are officers but not Board members. For
purposes of this section, the term "Fund Complex" includes the Fund,
each of the funds in the United Group of Mutual Funds, Waddell & Reed
Funds, Inc., Torchmark Government Securities Fund, Inc. and Torchmark
Insured Tax-Free Fund, Inc.
Each of the Fund's Directors is also a Director of each of the
funds in the Fund Complex and each of the Fund's officers is also an
officer of one or more of the funds in the Fund Complex.
RONALD K. RICHEY*
2001 Third Avenue South
Birmingham, Alabama 35233
Chairman of the Board of Directors of the Fund and each of the
other funds in the Fund Complex; Chairman of the Board of Directors of
Waddell & Reed Financial Services, Inc., United Investors Management
Company and United Investors Life Insurance Company; Chairman of the
Board of Directors and Chief Executive Officer of Torchmark Corporation;
Chairman of the Board of Directors of Vesta Insurance Group, Inc.,
formerly, Chairman of the Board of Directors of Waddell & Reed, Inc.
Father of Linda Graves, Director of the Fund and each of the other funds
in the Fund Complex.
KEITH A. TUCKER*
President of the Fund and each of the other funds in the Fund
Complex; President, Chief Executive Officer and Director of Waddell &
Reed Financial Services, Inc.; Chairman of the Board of Directors of
WRIMCO, Waddell & Reed, Inc., Waddell & Reed Services Company, Waddell &
Reed Asset Management Company and Torchmark Distributors, Inc., an
affiliate of Waddell & Reed, Inc.; Vice Chairman of the Board of
Directors, Chief Executive Officer and President of United Investors
Management Company; Vice Chairman of the Board of Directors of Torchmark
Corporation; Director of Southwestern Life Corporation; formerly,
partner in Trivest, a private investment concern; formerly, Director of
Atlantis Group, Inc., a diversified company.
HENRY L. BELLMON
Route 1
P. O. Box 26
Red Rock, Oklahoma 74651
Rancher; Professor, Oklahoma State University; formerly, Governor
of Oklahoma; prior to his current service as Director of the funds in
the United Group, TMK/United Funds, Inc., Waddell & Reed Funds, Inc.,
Torchmark Government Securities Fund, Inc. and Torchmark Insured Tax-
Free Fund, Inc., he served in such capacity for the funds in the United
Group and TMK/United Funds, Inc.
DODDS I. BUCHANAN
905 13th Street
Boulder, Colorado 80302
Advisory Director, The Hand Companies; President, Buchanan Ranch
Corp.; formerly, Senior Vice President and Director of Marketing
Services, The Meyer Group of Management Consultants; formerly, Chairman,
Department of Marketing, Transportation and Tourism, University of
Colorado; formerly, Professor of Marketing, College of Business,
University of Colorado.
JAY B. DILLINGHAM
926 Livestock Exchange Building
Kansas City, Missouri 64102
Formerly, President and Director of Kansas City Stock Yards
Company; formerly, Partner in Dillingham Farms, a farming operation.
LINDA GRAVES*
1 South West Cedar Crest Road
Topeka, Kansas 66606
First Lady of Kansas; formerly, partner, Levy and Craig, P.C., a
law firm. Daughter of Ronald K. Richey, Chairman of the Board of the
Fund and each of the other funds in the Fund Complex.
JOHN F. HAYES*
335 N. Washington
Suite 260
Hutchinson, Kansas 67504-2977
Director of Central Bank and Trust; formerly, President of
Gilliland & Hayes, P.A., a law firm.
GLENDON E. JOHNSON
7300 Corporate Center Drive
P. O. Box 020270
Miami, Florida 33126-1208
Director and Chief Executive Officer of John Alden Financial
Corporation and subsidiaries.
JAMES B. JUDD
No. 1 Ward Parkway
Suite 138
Kansas City, Missouri 64112
Retired; formerly, partner, KPMG Peat Marwick. A petition relating
to Mr. Judd's property was filed under the Federal bankruptcy laws and
is now final.
WILLIAM T. MORGAN*
1799 Westridge Road
Los Angeles, California 90049
Retired; formerly, Chairman of the Board of Directors and President
of the Fund and each fund in the Fund Complex then in existence (Mr.
Morgan retired as Chairman of the Board of Directors and President of
the funds in the Fund Complex then in existence on April 30, 1993);
formerly, President, Director and Chief Executive Officer of WRIMCO and
Waddell & Reed, Inc.; formerly, Chairman of the Board of Directors of
Waddell & Reed Services Company; formerly, Director of Waddell & Reed
Asset Management Company, United Investors Management Company and United
Investors Life Insurance Company, affiliates of Waddell & Reed, Inc.
DOYLE PATTERSON
1030 West 56th Street
Kansas City, Missouri 64113
Associated with Republic Real Estate, engaged in real estate
management and investment; formerly, Director of The Vendo Company, a
manufacturer and distributor of vending machines.
ELEANOR B. SCHWARTZ
5100 Rockhill Road
Kansas City, Missouri 64110
Chancellor, University of Missouri-Kansas City; formerly, Interim
Chancellor, University of Missouri-Kansas City; formerly, Vice
Chancellor for Academic Affairs, University of Missouri-Kansas City.
FREDERICK VOGEL III
1805 West Bradley Road
Milwaukee, Wisconsin 53217
Retired.
PAUL S. WISE
P. O. Box 5248
8648 Silver Saddle Drive
Carefree, Arizona 85377
Director of Potash Corporation of Saskatchewan.
LESLIE S. WRIGHT
2302 Brookshire Place
Birmingham, Alabama 35213
Chancellor of Samford University; formerly, Director of City
Federal Savings and Loan Association; formerly, President of Samford
University.
Robert L. Hechler
Vice President and Principal Financial Officer of the Fund and each
of the other funds in the Fund Complex; Vice President, Chief
Operations Officer, Director and Treasurer of Waddell & Reed Financial
Services, Inc.; Executive Vice President, Principal Financial Officer,
Director and Treasurer of WRIMCO; President, Chief Executive Officer,
Principal Financial Officer, Director and Treasurer of Waddell & Reed,
Inc.; Director and Treasurer of Waddell & Reed Asset Management Company;
President, Director and Treasurer of Waddell & Reed Services Company;
Vice President, Treasurer and Director of Torchmark Distributors, Inc.
Henry J. Herrmann
Vice President of the Fund and each of the other funds in the Fund
Complex; Vice President, Chief Investment Officer and Director of
Waddell & Reed Financial Services, Inc.; Director of Waddell & Reed,
Inc.; President, Chief Executive Officer, Chief Investment Officer and
Director of WRIMCO and Waddell & Reed Asset Management Company; Senior
Vice President and Chief Investment Officer of United Investors
Management Company.
Theodore W. Howard
Vice President, Treasurer and Principal Accounting Officer of the
Fund and each of the other funds in the Fund Complex; Vice President of
Waddell & Reed Services Company.
Sharon K. Pappas
Vice President, Secretary and General Counsel of the Fund and each
of the other funds in the Fund Complex; Vice President, Secretary and
General Counsel of Waddell & Reed Financial Services, Inc.; Senior Vice
President, Secretary and General Counsel of WRIMCO and Waddell & Reed,
Inc.; Director, Senior Vice President, Secretary and General Counsel of
Waddell & Reed Services Company; Director, Secretary and General Counsel
of Waddell & Reed Asset Management Company; Vice President, Secretary
and General Counsel of Torchmark Distributors, Inc.; formerly, Assistant
General Counsel of WRIMCO, Waddell & Reed Financial Services, Inc.,
Waddell & Reed, Inc., Waddell & Reed Asset Management Company and
Waddell & Reed Services Company.
James C. Cusser
Vice President of the Fund and two other funds in the Fund Complex;
Vice President of the Manager; formerly, Vice President of Kidder
Peabody & Company.
Antonio Intagliata
Vice President of the Fund and one other fund in the Fund Complex;
Senior Vice President of the Manager; formerly, Senior Vice President of
Waddell & Reed, Inc.
Richard K. Poettgen
Vice President of the Fund and one other fund in the Fund Complex;
Vice President of the Manager; formerly, Vice President of Waddell &
Reed, Inc.
Cynthia P. Prince-Fox
Vice President of the Fund and one other fund in the Fund Complex;
Vice President of the Manager; Vice President of Waddell & Reed Asset
Management Company; employee of Waddell & Reed, Inc.
Louise D. Rieke
Vice President of the Fund and two other funds in the Fund Complex;
Vice President of the Manager; Vice President of Waddell & Reed Asset
Management Company; formerly, Vice President of Waddell & Reed, Inc.
Mark G. Seferovich
Vice President of the Fund and two other funds in the Fund Complex;
Vice President of the Manager; formerly, a fund manager with Securities
Management Company, a brokerage firm; formerly, Vice President of
Waddell & Reed, Inc.
W. Patrick Sterner
Vice President of the Fund and one other fund in the Fund Complex;
Vice President of the Manager; Vice President of Waddell & Reed Asset
Management Company; formerly, Chief Investment Officer of the Merchants
Bank.
Carl E. Sturgeon
Vice President of the Fund and eleven other funds in the Fund
Complex; Vice President of the Manager; formerly, Vice President of
Waddell & Reed, Inc.
Russell E. Thompson
Vice President of the Fund and two other funds in the Fund Complex;
Senior Vice President of the Manager; Vice President of Waddell and Reed
Asset Management Company; formerly, Senior Vice President of Waddell &
Reed, Inc.
James D. Wineland
Vice President of the Fund and three other funds in the Fund
Complex; Vice President of the Manager; formerly, Vice President of
Waddell & Reed, Inc.
Mark L. Yockey
Vice President of the Fund and one other fund in the Fund Complex;
Vice President of the Manager.
The address of each person is 6300 Lamar Avenue, P. O. Box 29217,
Shawnee Mission, Kansas 66201-9217 unless a different address is given.
As of the date of this SAI, five of the Funds' Directors may be
deemed to be "interested persons" as defined in the 1940 Act of the
Manager and Waddell & Reed, Inc. The Directors who may be deemed to be
"interested persons" are indicated as such by an asterisk.
The Board has created an honorary position of Director Emeritus,
which position a Director may elect after resignation from the Board
provided the Director has attained the age of 75 and has served as a
Director of the Funds for a total of at least five years. A Director
Emeritus receives fees in recognition of his past services whether or
not services are rendered in his capacity as Director Emeritus, but has
no authority or responsibility with respect to management of the Fund.
Currently, no person serves as Director Emeritus.
The Fund, the Funds in the United Group of Mutual Funds and
Waddell & Reed Funds, Inc. pay to each Director $40,000 per year, plus
$1,000 for each meeting of the Board of Directors attended (prior to
January 1, 1995 each Director received $500 for each meeting of the
Board of Directors attended) and $500 for each committee meeting
attended which is not in conjunction with a Board of Directors meeting,
other than Directors who are affiliates of Waddell & Reed, Inc. The
fees are divided among the Portfolios, the funds in the United Group and
the series of Waddell & Reed Funds, Inc. based on their relative net
asset size. During the Fund's fiscal year ended December 31, 1994, the
Fund's Directors received the following fees for service as a director:
COMPENSATION TABLE
Pension
or Retirement Total
Aggregate Benefits Compensation
Compensation Accrued As From Fund
From Part of Fund and Fund
Director Fund Expenses Complex
-------- ------------ -------------- ------------
Ronald K. Richey $ 0 $0 $ 0
Keith A Tucker 0 0 0
Henry L. Bellmon 2,140 0 43,000
Dodds I. Buchanan 2,140 0 43,000
Jay B. Dillingham 2,140 0 43,000
John F. Hayes 2,140 0 43,000
Glendon E. Johnson 2,140 0 43,000
William T. Morgan 1,653 0 32,000
Doyle Patterson 2,140 0 43,000
Frederick Vogel III 2,140 0 43,000
Paul S. Wise 2,118 0 42,500
Leslie S. Wright 2,063 0 41,500
Ms. Graves, Ms. Schwartz and Mr. Judd were elected as Directors on
July 12, 1995. The officers are paid by the Manager or its
affiliates.
OTHER INFORMATION
Capital Stock
The Fund was incorporated in Maryland on December 2, 1986. Capital
stock is currently divided into the following classes which are a type
of class designated a "series" as that term is defined in the Articles
of Incorporation of the Fund: the Money Market Portfolio, the Bond
Portfolio, the High Income Portfolio, the Growth Portfolio, the Income
Portfolio, the International Portfolio, the Small Cap Portfolio, the
Balanced Portfolio, and the Limited-Term Bond Portfolio and the Asset
Strategy Portfolio.
The balance of shares authorized but not divided into classes may
be issued to an existing Portfolio, or to new series having the number
of shares and descriptions, powers, and rights, and the qualifications,
limitations, and restrictions as the Board of Directors may determine.
The Board of Directors may also change the designation of any Portfolio
and may increase or decrease the numbers of shares of any Portfolio but
may not decrease the number of shares of any Portfolio below the number
of shares then outstanding.
Each issued and outstanding share in a Portfolio is entitled to
participate equally in dividends and distributions declared by the
respective Portfolio and, upon liquidation or dissolution, in net assets
of such Portfolio remaining after satisfaction of outstanding
liabilities. The shares of each Portfolio when issued are fully paid
and nonassessable.
Voting Rights
All shares of the Fund have equal voting rights (regardless of the
net asset value per share) except that on matters affecting only one
Portfolio, only shares of the respective Portfolio are entitled to vote.
The shares do not have cumulative voting rights. Accordingly, the
holders of more than 50% of the shares of the Fund voting for the
election of directors can elect all of the directors of the Fund if they
choose to do so, and in such event the holders of the remaining shares
would not be able to elect any directors.
Matters in which the interests of all the Portfolios are
substantially identical (such as the election of Directors or the
approval of independent public accountants) will be voted on by all
shareholders without regard to the separate Portfolios. Matters that
affect all the Portfolios but where the interests of the Portfolios are
not substantially identical (such as approval of the Investment
Management Agreement) will be voted on separately by each Portfolio.
Matters affecting only one Portfolio, such as a change in its
fundamental policies, will be voted on separately by the Portfolio.
Matters requiring separate shareholder voting by a Portfolio shall
have been effectively acted upon with respect to any Portfolio if a
majority of the outstanding voting securities of that Portfolio votes
for approval of the matter, notwithstanding that: (1) the matter has
not been approved by a majority of the outstanding voting securities of
any other Series; or (2) the matter has not been approved by a majority
of the outstanding voting securities of the Fund.
The phrase "a majority of the outstanding voting securities" of a
series (or of a Fund) means the vote of the lesser of: (1) 67% of the
shares of a series (or the Fund) present at a meeting if the holders of
more than 50% of the outstanding shares are present in person or by
proxy; or (2) more than 50% of the outstanding shares of a series (or a
Fund).
To the extent required by law, Policyholders are entitled to give
voting instructions with respect to Fund shares held in the separate
accounts of Participating Insurance Companies. Participating Insurance
Companies will vote the shares in accordance with such instructions
unless otherwise legally required or permitted to act with respect to
such instructions.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
DECEMBER 31, 1994
Shares Value
COMMON STOCKS
Banks and Savings and Loans - 3.54%
Bank of Boston Corporation .............. 100,000$ 2,587,500
City National Corporation ............... 100,000 1,062,500
First Chicago Corporation ............... 60,000 2,865,000
Grupo Financiero Bancomer, S.A. de
C.V., C (A) ............................ 1,000,000 550,000
Midlantic Corporation ................... 75,000 1,992,150
Roosevelt Financial Group, Inc. ......... 50,000 746,850
Total ................................. 9,804,000
Biotechnology and Medical Services - 0.59%
Centocor, Inc.* ......................... 100,000 1,631,200
Building - 0.52%
United Dominion Realty Trust, Inc. ...... 100,000 1,437,500
Chemicals Major - 3.24%
Air Products & Chemicals, Inc. .......... 75,000 3,346,875
du Pont (E.I.) de Nemours and Company ... 100,000 5,625,000
Total ................................. 8,971,875
Computers and Office Equipment - 5.99%
Cerner Corporation* ..................... 18,200 805,350
Compuware Corporation* .................. 100,000 3,587,500
General Motors Corporation, Class E ..... 90,000 3,465,000
HBO & Company ........................... 50,000 1,718,750
Informix Corporation* ................... 100,000 3,206,200
International Business Machines
Corporation ........................... 40,000 2,940,000
Parametric Technology Corporation*....... 25,000 859,375
Total ................................. 16,582,175
Domestic Oil - 0.28%
Seagull Energy Corporation* ............. 40,000 765,000
Drugs and Hospital Supply - 4.96%
Abbott Laboratories ..................... 150,000 4,893,750
Baxter International Inc. ............... 100,000 2,825,000
Schering-Plough Corporation ............. 50,000 3,700,000
Warner-Lambert Company .................. 30,000 2,310,000
Total ................................. 13,728,750
Electrical Equipment - 5.30%
Emerson Electric Co. .................... 100,000 6,250,000
General Electric Company ................ 165,000 8,415,000
Total ................................. 14,665,000
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
DECEMBER 31, 1994
Shares Value
COMMON STOCKS (Continued)
Electronics - 5.31%
cisco Systems, Inc.* .................... 85,000$ 2,980,270
Hewlett-Packard Company ................. 50,000 4,993,750
Level One Communications, Incorporated* . 50,000 762,500
Micron Technology, Inc. ................. 50,000 2,206,250
Texas Instruments Incorporated .......... 50,000 3,743,750
Total ................................. 14,686,520
Financial - 1.01%
American Express Company ................ 75,000 2,212,500
Grupo Financiero Banamex Accival, S.A.
de C.V., C (A) ........................ 200,000 576,000
Total ................................. 2,788,500
Food and Related - 2.96%
CPC International Inc. .................. 60,000 3,195,000
Pet Incorporated ........................ 125,000 2,468,750
Sara Lee Corporation .................... 100,000 2,525,000
Total ................................. 8,188,750
Hospital Management - 6.20%
American Medical Holdings, Inc.* ....... 100,000 2,412,500
Columbia/HCA Healthcare Corporation ..... 150,000 5,475,000
National Medical Enterprises, Inc.* ..... 300,000 4,237,500
Sierra Health Services, Inc.* ........... 73,600 2,327,600
United HealthCare Corporation ........... 60,000 2,707,500
Total ................................. 17,160,100
Insurance - 6.40%
American General Corporation ............ 150,000 4,237,500
American Re Corporation* ................ 75,000 2,418,750
First Colony Corporation ................ 100,000 2,237,500
NWNL Companies, Inc. (The) .............. 50,000 1,450,000
National Re Corporation ................. 45,900 1,204,875
PartnerRe Holding, Ltd. ................. 100,000 2,075,000
Presidential Life Corporation ........... 100,000 518,700
TIG Holdings, Inc. ...................... 125,000 2,343,750
USLIFE Corporation ...................... 35,000 1,220,625
Total ................................. 17,706,700
Leisure Time - 3.42%
Comcast Corporation, Class A ............ 150,000 2,353,050
Tele-Communications, Inc., Class A* ..... 125,000 2,726,500
Time Warner Incorporated ................ 125,000 4,390,625
Total ................................. 9,470,175
Machinery - 0.40%
Ingersoll-Rand Company .................. 35,000 1,102,500
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
DECEMBER 31, 1994
Shares Value
COMMON STOCKS (Continued)
Metals and Mining - 1.12%
Phelps Dodge Corporation ................ 50,000$ 3,093,750
Multi-Industry - 2.40%
ITT Corporation ......................... 75,000 6,646,875
Public Utilities - Electric - 3.49%
Peco Energy Company ..................... 100,000 2,450,000
Unicom Corporation ...................... 300,000 7,200,000
Total ................................. 9,650,000
Railroads - 4.99%
Chicago and North Western Transportation
Company* .............................. 100,000 1,925,000
Kansas City Southern Industries, Inc. ... 76,000 2,346,500
Norfolk Southern Corporation ............ 75,000 4,546,875
Southern Pacific Rail Corporation* ...... 125,000 2,265,625
Union Pacific Corporation ............... 60,000 2,737,500
Total ................................. 13,821,500
Retailing - 0.85%
Charming Shoppes Inc. ................... 100,000 656,200
Family Dollar Stores, Inc. .............. 135,000 1,687,500
Total ................................. 2,343,700
Steel - 1.16%
National Steel Corporation, Class B* .... 100,000 1,450,000
USX Corporation - U.S. Steel Group ...... 50,000 1,775,000
Total ................................. 3,225,000
Telecommunications - 8.49%
AT&T Corporation ........................ 150,000 7,537,500
LDDS Communications, Inc.* .............. 40,000 780,000
MCI Communications Corporation .......... 200,000 3,687,400
Motorola, Inc. .......................... 50,000 2,893,750
Ortel Corporation* ...................... 117,000 3,071,250
Sprint Corporation ...................... 50,000 1,381,250
Telefonaktiebolaget LM Ericsson,
ADR, Class B .......................... 75,000 4,143,750
Total ................................. 23,494,900
TOTAL COMMON STOCKS - 72.62% $200,964,470
(Cost: $210,483,893)
PREFERRED STOCKS
Hospital Management - 0.76%
National Health Investors,
Convertible ........................... 90,000 2,103,750
Telecommunications - 0.81%
Nokia Corporation* ...................... 30,000 2,250,000
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
TOTAL PREFERRED STOCKS - 1.57% $ 4,353,750
(Cost: $4,451,929)
SHORT-TERM SECURITIES
Banks and Savings and Loans - 2.86%
ANZ (Delaware) Inc.,
6.02%, 1-4-95 ......................... $ 7,000 6,996,488
U.S. Bancorp,
Master Note ........................... 918 918,000
Total ................................. 7,914,488
Chemicals Specialty and Miscellaneous
Technology - 3.65%
Minnesota Mining and Manufacturing
Company,
5.8%, 1-6-95 .......................... 10,105 10,096,860
Computers and Office Equipment - 1.80%
Honeywell Inc.,
6.05%, 1-19-95 ........................ 5,000 4,984,875
Consumer Electronics and Appliances - 1.74%
TDK (USA) Corp.,
6.03%, 1-20-95 ........................ 4,835 4,819,612
Drugs and Hospital Supply - 1.65%
Baxter International Inc.,
6.2%, 1-31-95 ......................... 4,600 4,576,233
Financial - 1.99%
Textron Financial Corp.,
6.25%, 1-12-95 ........................ 2,800 2,794,653
USAA Capital Corp.,
5.95%, 1-19-95 ........................ 2,715 2,706,923
Total ................................. 5,501,576
Food and Related - 2.91%
ConAgra, Inc.,
6.0%, 1-11-95 ......................... 2,495 2,490,842
General Mills, Inc.,
Master Note ........................... 855 855,000
Heinz (H.J.) Company,
5.9%, 1-23-95 ......................... 4,200 4,184,857
Sara Lee Corporation,
Master Note ............................ 531 531,392
Total ................................. 8,062,091
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Paper - 1.14%
Champion International Corporation,
6.15%, 1-9-95 ......................... $ 3,145$ 3,140,702
Public Utilities - Electric - 5.29%
PS Colorado Credit Corp.,
6.18%, 1-13-95 ........................ 3,250 3,243,305
Pacificorp,
6.05%, 1-13-95 ........................ 2,000 1,995,967
Potomac Electric Power Co.,
6.03%, 1-13-95 ........................ 3,395 3,388,176
Western Resources Inc.,
6.18%, 1-6-95 ......................... 6,000 5,994,850
Total ................................. 14,622,298
Public Utilities - Gas - 1.39%
Bay State Gas Co.,
5.98%, 1-13-95 ........................ 3,850 3,842,326
Public Utilities - Pipeline - 1.42%
Enron Corp.,
6.0%, 1-31-95 ......................... 3,950 3,930,250
TOTAL SHORT-TERM SECURITIES - 25.84% $ 71,491,311
(Cost: $71,491,311)
TOTAL INVESTMENT SECURITIES - 100.03% $276,809,531
(Cost: $286,427,133)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.03%) (72,896)
NET ASSETS - 100.00% $276,736,635
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
DECEMBER 31, 1994
Shares Value
COMMON STOCKS
Aerospace - 0.96%
Boeing Company (The) .................... 24,500$ 1,145,375
Sundstrand Corporation .................. 21,000 955,500
Total ................................. 2,100,875
Airlines - 1.51%
AMR Corporation* ........................ 28,000 1,491,000
Southwest Airlines Co. .................. 108,000 1,809,000
Total ................................. 3,300,000
Automotive - 6.73%
Chrysler Corporation .................... 75,500 3,699,500
Daimler-Benz AG, ADS .................... 10,460 515,155
Dana Corporation ........................ 53,000 1,238,875
Eaton Corporation ....................... 35,000 1,732,500
Ford Motor Company ...................... 130,500 3,654,000
General Motors Corporation .............. 69,500 2,936,375
Magna Group, Inc., Class A .............. 24,500 940,188
Total ................................. 14,716,593
Banks and Savings and Loans - 2.50%
Citicorp ................................ 52,000 2,151,500
First Bank Systems, Inc. ................ 35,000 1,163,750
First Interstate Bancorp ................ 21,000 1,420,125
Midlantic Corporation ................... 28,000 743,736
Total ................................. 5,479,111
Beverages - 1.12%
PepsiCo, Inc. ........................... 67,500 2,446,875
Biotechnology and Medical Services - 1.81%
Medtronic, Inc. ......................... 28,000 1,557,500
Ventritex, Inc.* ........................ 89,000 2,397,393
Total ................................. 3,954,893
Building - 5.84%
Armstrong World Industries, Inc. ........ 62,500 2,406,250
Centex Corporation ...................... 82,000 1,865,500
Georgia-Pacific Corporation ............. 29,500 2,109,250
Louisiana-Pacific Corporation ........... 47,000 1,280,750
Pulte Corporation ....................... 89,200 2,051,600
Temple-Inland Inc. ...................... 24,500 1,105,563
Weyerhaeuser Company .................... 52,000 1,950,000
Total ................................. 12,768,913
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
DECEMBER 31, 1994
Shares Value
COMMON STOCKS (Continued)
Chemicals Major - 6.60%
Air Products & Chemicals, Inc. .......... 70,000$ 3,123,750
Albemarle Corporation ................... 72,800 1,010,100
du Pont (E.I.) de Nemours and Company ... 68,500 3,853,125
PPG Industries, Inc. .................... 87,000 3,229,875
Praxair, Inc. ........................... 69,500 1,424,750
Union Carbide Corporation ............... 61,000 1,791,875
Total ................................. 14,433,475
Chemicals Specialty and Miscellaneous Technology - 5.15%
Betz Laboratories, Inc. ................. 35,000 1,548,750
Geon Company (The) ...................... 100,600 2,753,925
Minnesota Mining and Manufacturing
Company ............................... 35,000 1,868,125
Polaroid Corporation .................... 97,500 3,168,750
Xerox Corporation ....................... 19,500 1,930,500
Total ................................. 11,270,050
Computers and Office Equipment - 3.55%
General Motors Corporation, Class E ..... 69,500 2,675,750
International Business Machines
Corporation ........................... 35,000 2,572,500
Microsoft Corporation* .................. 21,000 1,286,250
Oracle Systems Corporation* ............. 28,000 1,239,000
Total ................................. 7,773,500
Consumer Electronics and Appliances - 1.62%
Harman International Industries,
Incorporated .......................... 23,000 851,000
Whirlpool Corporation ................... 53,500 2,688,375
Total ................................. 3,539,375
Electrical Equipment - 2.72%
Emerson Electric Co. .................... 28,000 1,750,000
General Electric Company ................ 82,500 4,207,500
Total ................................. 5,957,500
Electronics - 8.38%
AMP Incorporated ........................ 38,500 2,800,875
Analog Devices, Inc.* ................... 101,000 3,547,625
Applied Materials, Inc.* ................ 60,000 2,520,000
cisco Systems, Inc.* .................... 69,500 2,436,809
Intel Corporation ....................... 52,500 3,346,875
LSI Logic Corporation* .................. 67,200 2,713,200
Molex Inc., Class A ..................... 31,250 976,563
Total ................................. 18,341,947
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
DECEMBER 31, 1994
Shares Value
COMMON STOCKS (Continued)
Engineering and Construction - 0.93%
Fluor Corporation ....................... 28,000$ 1,207,500
Foster Wheeler Corporation .............. 28,000 833,000
Total ................................. 2,040,500
Financial - 2.20%
Federal Home Loan Mortgage Corporation .. 35,000 1,767,500
Federal National Mortgage Association ... 20,500 1,493,938
Household International, Inc. ........... 42,000 1,559,250
Total ................................. 4,820,688
Food and Related - 1.33%
CPC International Inc. .................. 35,000 1,863,750
Pet Incorporated ........................ 53,500 1,056,625
Total ................................. 2,920,375
Hospital Management - 0.93%
United Healthcare Corp. ................. 45,000 2,030,625
Household Products - 3.60%
Colgate-Palmolive Company ............... 42,000 2,661,750
Gillette Company (The) .................. 35,000 2,616,250
Procter & Gamble Company (The) .......... 42,000 2,604,000
Total .................................. 7,882,000
Leisure Time - 2.34%
Walt Disney Company (The) ............... 49,000 2,260,125
McDonald's Corporation .................. 97,500 2,851,875
Total ................................. 5,112,000
Machinery - 6.61%
Caterpillar Inc. ........................ 109,500 6,036,188
Clark Equipment Company ................. 35,000 1,898,750
Deere & Company ......................... 47,500 3,146,875
Ingersoll-Rand Company .................. 28,000 882,000
Parker Hannifin Corporation ............. 28,000 1,274,000
Trinova Corporation ..................... 42,000 1,233,750
Total ................................. 14,471,563
Metals and Mining - 0.55%
Phelps Dodge Corporation ................ 19,500 1,206,563
Multi-Industry - 2.05%
ITT Corporation ......................... 50,500 4,475,563
Paper - 2.15%
International Paper Company ............. 40,500 3,052,688
Union Camp Corporation .................. 35,000 1,649,375
Total ................................. 4,702,063
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
DECEMBER 31, 1994
Shares Value
COMMON STOCKS (Continued)
Railroads - 3.33%
CSX Corporation ......................... 24,500$ 1,705,813
Conrail, Inc. ........................... 42,000 2,121,000
Norfolk Southern Corporation ............ 21,000 1,273,125
Southern Pacific Rail Corporation* ...... 32,000 580,000
Union Pacific Corporation ............... 35,000 1,596,875
Total ................................. 7,276,813
Retailing - 10.68%
Circuit City Stores, Inc. ............... 111,500 2,480,875
Dayton Hudson Corporation ............... 32,500 2,299,375
Dillard Department Stores, Inc.,
Class A ............................... 66,000 1,765,500
Gap, Inc. (The) ......................... 49,000 1,494,500
Home Depot, Inc. (The) .................. 53,500 2,461,000
Limited, Inc. (The) ..................... 52,000 942,500
May Department Stores Company (The) ..... 67,500 2,278,125
Nordstrom, Inc. ......................... 26,000 1,095,250
OfficeMax, Inc.* ........................ 46,500 1,232,250
Penney (J.C.) Company, Inc. ............. 47,000 2,097,375
Sears, Roebuck and Co. .................. 14,000 644,000
Tommy Hilfiger Corporation* ............. 54,400 2,454,800
Toys "R" Us Inc.* ....................... 21,000 640,500
Wal-Mart Stores, Inc. ................... 69,500 1,476,875
Total ................................. 23,362,925
Telecommunications - 9.02%
AT&T Corporation ........................ 35,000 1,758,750
BellSouth Corporation ................... 22,000 1,190,750
General Instrument Corporation* ......... 69,500 2,085,000
MCI Communications Corporation .......... 130,000 2,396,810
MFS Communications Company, Inc.* ....... 29,900 986,700
Motorola, Inc. .......................... 115,500 6,684,563
Telefonaktiebolaget LM Ericsson,
Class B, ADR ......................... 35,000 1,933,750
Vanguard Cellular Systems, Inc.,
Class A* .............................. 105,000 2,690,625
Total ................................. 19,726,948
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
DECEMBER 31, 1994
Shares Value
COMMON STOCKS (Continued)
Tire and Rubber - 1.07%
Goodyear Tire & Rubber Company (The) .... 69,500$ 2,336,938
TOTAL COMMON STOCKS - 95.28% $208,448,671
(Cost: $192,074,625)
TOTAL SHORT-TERM SECURITIES - 4.75% $ 10,395,856
(Cost: $10,395,856)
TOTAL INVESTMENT SECURITIES - 100.03% $218,844,527
(Cost: $202,470,481)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.03%) (70,925)
NET ASSETS - 100.00% $218,773,602
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
DECEMBER 31, 1994
Shares Value
COMMON STOCKS
Australia - 2.14%
Westpac Banking Corp. (A) ............... 165,500 $ 556,742
Finland - 8.88%
Enso-Gutzeit Oy (A) ..................... 40,400 347,036
Kymmene (A) ............................. 13,000 353,964
Metsa Serla Oy, Class B (A) ............. 20,000 878,080
Nokia Corporation (A) ................... 2,950 435,874
Tampella Oy (A)* ........................ 100,000 295,500
Total ................................. 2,310,454
France - 5.52%
Credit Lyonnais SA (A)* ................. 4,700 389,245
Lapeyre (A) ............................. 6,625 333,913
Societe Industrielle de Transports
Automobiles S.A. (A) .................. 2,700 351,095
Television Francaise 1-TF1 (A) .......... 4,000 362,900
Total ................................. 1,437,153
Germany - 7.37%
Dorries Scharmann AG (A)* ............... 1,000 122,620
Mannesman AG (A) ........................ 2,000 544,690
TRAUB AG (A)* ........................... 4,000 552,436
VEBA AG (A) ............................. 2,000 696,998
Total ................................. 1,916,744
Japan - 3.82%
Hitachi (A) ............................. 30,000 297,420
NEC (A) ................................. 16,000 182,848
NKK (A)* ................................ 120,000 331,920
Sharp (A) ............................... 10,000 180,450
Total ................................. 992,638
Mexico - 3.65%
Cemex, S.A., CPO Shares (A) ............. 41,500 204,180
Desc-Sociedad de Fomento Industrial,
S.A. de C.V., B (A) ................... 43,000 215,000
Grupo Carso, S.A. de C.V., Class 1 (A)* . 29,000 213,150
Grupo Financiero Bancomer, S.A. de
C.V., C (A) ........................... 286,000 157,300
Grupo Iusacell S.A. de C.V., D, ADS* .... 1,400 22,400
Grupo Iusacell S.A. de C.V., L, ADS* .... 1,400 26,075
Telefonos de Mexico S.A. de C.V., ADR ... 2,700 110,700
Total ................................. 948,805
Norway - 2.29%
Den Norske Luftfartselskap A/S,
Class B (A)* .......................... 18,900 594,972
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
DECEMBER 31, 1994
Shares Value
COMMON STOCKS (Continued)
Sweden - 10.77%
ASTRA AB A (A) .......................... 14,000 $ 361,592
Avesta Sheffield AB (A)* ................ 20,000 197,740
Kinnevik (A) ............................ 21,500 711,478
Skandia Enskilda Banken, Class A (A)* ... 91,000 520,247
Trelleburg AB, Series B (A)* ............ 30,000 437,850
AB Volvo (A) ............................ 30,500 574,407
Total ................................. 2,803,314
United Kingdom - 6.79%
AMEC (A) ................................ 210,000 226,800
BTR PLC (A) ............................. 40,000 183,880
House of Fraser PLC (A) ................. 111,000 303,363
Next plc (A) ............................ 131,000 527,275
Pilkington PLC (A) ...................... 104,000 270,400
United Biscuits (Holdings) Public
Limited Co. (A) ....................... 50,000 256,100
Total ................................. 1,767,818
TOTAL COMMON STOCKS - 51.23% $ 13,328,640
(Cost: $13,979,307)
PREFERRED STOCK - 1.15%
Germany
Hornbach-Baumarkt-AG (A) ................ 300 $ 300,097
(Cost: $313,526)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Banks and Savings and Loans - 3.57%
U.S. Bancorp,
Master Note ........................... $ 930 930,000
Consumer Electronics and Appliances - 2.68%
TDK (USA) Corp.,
6.03%, 1-20-95 ........................ 700 697,772
Financial - 20.69%
BHP Finance (USA) Inc.,
6.02%, 1-31-95 ........................ 1,000 994,983
International Business Machines Credit
Corporation,
7.25%, 1-3-95 ......................... 600 599,758
Kerr-McGee Credit Corp.,
6.2%, 1-11-95 ......................... 600 598,967
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Financial (Continued)
Nestle Capital Corp.,
5.9%, 1-31-95 ......................... $ 700 $ 696,558
PHH Corp.,
6.02%, 1-27-95 ........................ 700 696,957
Textron Financial Corp.,
6.25%, 1-12-95 ........................ 700 698,663
USAA Capital Corp.,
5.95%, 1-19-95 ........................ 600 598,215
USL Capital Corp.,
6.0%, 1-17-95 ......................... 500 498,667
Total ................................. 5,382,768
Food and Related - 9.80%
ConAgra, Inc.,
6.0%, 1-11-95 ......................... 700 698,833
General Mills, Inc.,
Master Note ........................... 950 950,000
Sara Lee Corporation,
Master Note ............................ 900 900,402
Total ................................. 2,549,235
Paper - 3.07%
Champion International Corporation,
6.0%, 1-19-95 ......................... 800 797,600
Public Utilities - Electric - 4.22%
Potomac Electric Power Co.,
6.0%, 1-13-95 ......................... 600 598,794
Public Service Co. of Colorado,
6.18%, 1-13-95 ........................ 500 498,970
Total ................................. 1,097,764
Public Utilities - Gas - 2.68%
Questar Corp.,
6.05%, 1-20-95 ........................ 700 697,765
TOTAL SHORT-TERM SECURITIES - 46.71% $12,152,904
(Cost: $12,152,904)
TOTAL INVESTMENT SECURITIES - 99.09% $25,781,641
(Cost: $26,445,737)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.91% 237,993
NET ASSETS - 100.00% $26,019,634
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
DECEMBER 31, 1994
Shares Value
COMMON STOCKS
Biotechnology and Medical Services - 5.05%
EP Technologies, Inc.* .................. 50,000 $ 453,100
Protocol Systems, Inc.* ................. 16,000 144,000
Pyxis Corp.* ............................ 5,000 95,310
St. Jude Medical, Inc. .................. 1,000 39,500
Ventritex, Inc.* ........................ 3,000 80,811
Total ................................. 812,721
Computers and Office Equipment - 15.65%
Affiliated Computer Services, Inc.,
Class A* .............................. 10,000 217,500
America Online, Inc.*. .................. 2,000 112,000
Broderbund Software, Inc.* .............. 2,000 94,000
Cerner Corporation* ..................... 1,000 44,250
Learning Company (The)* ................. 3,000 74,250
Macromedia, Inc.* ....................... 7,500 193,125
MapInfo Corporation* .................... 5,000 126,875
Minnesota Educational Computing
Corporation* .......................... 10,000 160,000
Parametric Technology Corporation* ...... 12,000 412,500
Shiva Corporation* ...................... 10,000 398,750
Synopsys, Inc.* ......................... 5,000 217,500
Wall Data Incorporated* ................. 10,000 398,750
Wonderware Corporation* ................. 2,000 67,000
Total ................................. 2,516,500
Drugs and Hospital Supply - 4.22%
LUNAR CORPORATION* ...................... 25,000 459,375
OmniCare, Inc. .......................... 5,000 219,375
Total ................................. 678,750
Electronics - 0.52%
Micro Linear Corporation* ............... 10,000 83,750
Hospital Management - 1.28%
Inphynet Medical Management Inc.* ....... 8,000 98,000
Quorum Health Group, Inc.* .............. 1,000 19,125
Sierra Health Services, Inc.* ........... 2,800 88,550
Total ................................. 205,675
Leisure Time - 2.18%
Cannondale Corporation* ................. 25,000 262,500
Longhorn Steaks, Inc.* .................. 10,000 87,500
Total ................................. 350,000
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
DECEMBER 31, 1994
Shares Value
COMMON STOCKS (Continued)
Retailing - 5.95%
BABY SUPERSTORE, INC.* .................. 7,500 $ 344,063
Central Tractor Farm & Ctry* ............ 10,000 147,500
Hollywood Entertainment Corporation* .... 6,000 180,000
Just for Feet, Inc.* .................... 9,000 155,250
Movie Gallery, Inc.* .................... 5,000 129,375
Total ................................. 956,188
Services, Consumer and Business - 0.19%
Stewart Enterprises, Inc., Class A ...... 1,300 31,525
Telecommunications - 5.05%
Mobile Telecommunication Technologies
Corp.* ................................ 3,000 58,686
Ortel Corporation* ...................... 16,400 430,500
TESSCO Technologies Incorporated ........ 20,000 322,500
Total ................................. 811,686
Textiles and Apparel - 1.98%
Department 56, Inc.* .................... 8,000 318,000
Trucking - 0.89%
Knight Transportation, Inc.* ............ 10,000 143,750
TOTAL COMMON STOCKS - 42.96% $ 6,908,545
(Cost: $5,600,266)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Banks and Savings and Loans - 2.84%
U.S. Bancorp,
Master Note ........................... $ 457 457,000
Chemicals Specialty and Miscellaneous
Technology - 1.86%
Minnesota Mining and Manufacturing
Company,
5.8%, 1-6-95 .......................... 300 299,758
Consumer Electronics and Appliances - 3.10%
TDK (USA) Corp.,
6.03%, 1-20-95 ........................ 500 498,409
Drugs and Hospital Supply - 3.56%
Baxter International Inc.,
6.2%, 1-31-95 ......................... 575 572,029
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Financial - 23.54%
BHP Finance (USA) Inc.,
6.02%, 1-31-95 ........................ $ 400 $ 397,993
Block Financial Corp.,
5.97%, 1-23-95 ........................ 450 448,358
Kerr-McGee Credit Corp.,
6.2%, 1-11-95 ......................... 350 349,397
Merrill Lynch & Co., Inc.,
6.1%, 2-1-95 .......................... 500 497,374
Nestle Capital Corp.,
5.9%, 1-31-95 ......................... 600 597,050
PHH Corp.,
6.02%, 1-27-95 ........................ 500 497,826
Textron Financial Corp.,
6.25%, 1-12-95 ........................ 500 499,045
USAA Capital Corp.,
5.95%, 1-19-95 ........................ 500 498,513
Total ................................. 3,785,556
Food and Related - 6.94%
ConAgra, Inc.,
6.0%, 1-11-95 ......................... 300 299,500
General Mills, Inc.,
Master Note ........................... 492 492,000
Sara Lee Corporation,
Master Note ............................ 324 323,678
Total ................................. 1,115,178
Paper - 3.10%
Champion International Corporation,
6.0%, 1-19-95 ......................... 500 498,500
Public Utilities - Electric - 6.21%
PS Colorado Credit Corp.,
6.18%, 1-13-95 ........................ 500 498,970
Potomac Electric Power Co.,
6.03%, 1-13-95 ........................ 500 498,995
Total ................................. 997,965
Public Utilities - Gas - 2.48%
Questar Corp.,
6.05%, 1-20-95 ........................ 400 398,723
Public Utilities - Pipelines - 3.09%
Enron Corp.,
6.0%, 1-31-95 ......................... 500 497,500
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
DECEMBER 31, 1994
Value
TOTAL SHORT-TERM SECURITIES - 56.72% $ 9,120,618
(Cost: $9,120,618)
TOTAL INVESTMENT SECURITIES - 99.68% $16,029,163
(Cost: $14,720,884)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.32% 50,999
NET ASSETS - 100.00% $16,080,162
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
DECEMBER 31, 1994
Shares Value
COMMON STOCKS
Aerospace - 1.83%
TRW Inc. ................................ 2,400 $ 158,400
Automotive - 3.45%
Eaton Corporation ....................... 1,800 89,100
General Motors Corporation .............. 2,700 114,075
AB Volvo, ADR, Series B ................. 5,100 96,263
Total ................................. 299,438
Banks and Savings and Loans - 0.59%
Norwest Corporation ..................... 2,200 51,425
Biotechnology and Medical Services - 1.00%
St. Jude Medical, Inc. .................. 2,200 86,900
Building - 2.95%
Simon Property Group, Inc. .............. 3,900 94,575
Temple-Inland Inc. ...................... 800 36,100
York International Corporation .......... 3,400 125,375
Total ................................. 256,050
Chemicals Major - 2.72%
Air Products and Chemicals, Inc. ........ 1,900 84,788
du Pont (E.I.) de Nemours and Company ... 1,200 67,500
Praxair, Inc. ........................... 1,200 24,600
Union Carbide Corporation ............... 2,000 58,750
Total ................................. 235,638
Chemicals Specialty and Miscellaneous
Technology - 1.28%
Betz Laboratories, Inc. ................. 2,500 110,625
Domestic Oil - 2.24%
Amoco Corporation........................ 1,600 94,600
Apache Corporation ...................... 4,000 100,000
Total ................................. 194,600
Electronics - 0.67%
AMP Incorporated ........................ 800 58,200
Engineering and Construction - 0.86%
Foster Wheeler Corporation .............. 2,500 74,375
Financial - 1.34%
Federal National Mortgage Association ... 1,600 116,600
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
DECEMBER 31, 1994
Shares Value
COMMON STOCKS (Continued)
Food and Related - 4.13%
CPC International Inc. .................. 1,200 $ 63,900
Deans Foods Company ..................... 3,600 104,400
Hormel Foods Corporation ................ 4,200 103,950
Sara Lee Corporation .................... 3,400 85,850
Total ................................. 358,100
Hospital Management - 4.06%
LTC Properties Inc. ..................... 9,000 119,250
National Medical Enterprises, Inc.* ..... 8,600 121,475
Sierra Health Services, Inc.* ........... 1,800 56,925
United HealthCare Corporation ........... 1,200 54,150
Total ................................. 351,800
Insurance - 2.95%
SAFECO Corporation ...................... 1,500 78,188
St. Paul Companies, Inc. (The) .......... 2,200 98,450
UNUM Corporation ........................ 2,100 79,275
Total ................................. 255,913
Machinery - 4.00%
Caterpillar Inc. ........................ 1,200 66,150
Cleveland-Cliffs Inc. ................... 500 18,500
Deere & Company ......................... 2,000 132,500
Timken Company (The) .................... 1,000 35,250
Trinova Corporation ..................... 3,200 94,000
Total ................................. 346,400
Multi-Industry - 1.12%
ITT Corporation ......................... 1,100 97,488
Paper - 2.11%
Union Camp Corporation .................. 1,800 84,825
Westvaco Corporation .................... 2,500 98,125
Total ................................. 182,950
Publishing and Advertising - 1.00%
McGraw-Hill, Inc. ....................... 1,300 86,938
Railroads - 3.52%
Burlington Northern Inc. ................ 400 19,250
CSX Corp. ............................... 1,900 132,288
ConRail, Inc. ........................... 1,600 80,800
Norfolk Southern Corporation ............ 1,200 72,750
Total ................................. 305,088
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
DECEMBER 31, 1994
Shares Value
COMMON STOCKS (Continued)
Retailing - 5.33%
Kohl's Corporation*...................... 2,000 $ 79,500
Limited, Inc. (The) ..................... 4,000 72,500
May Department Stores Company (The) ..... 1,900 64,125
Mercantile Stores Company, Inc. ......... 1,000 39,500
Penney (J.C.) Company, Inc. ............. 2,000 89,250
Tommy Hilfiger Corporation* ............. 2,600 117,325
Total ................................. 462,200
Steel - 0.94%
Bethlehem Steel Corporation* ............ 4,500 81,000
Telecommunications - 3.02%
BellSouth Corporation ................... 1,200 64,950
MCI Communications Corporation .......... 6,000 110,622
Telefonos de Mexico S.A. de C.V., ADR ... 2,100 86,100
Total ................................. 261,672
Textiles and Apparel - 0.93%
Cygne Designs, Inc.* .................... 6,000 81,000
TOTAL COMMON STOCKS - 52.04% $ 4,512,800
(Cost: $4,737,268)
PREFERRED STOCKS
Airlines - 0.30%
Delta Air Lines, Inc., Depository Shares,
Convertible, Series C ................. 600 26,250
Computers and Office Equipment - 0.73%
General Motors Corporation, Class E,
Depository Shares, Convertible ........ 1,100 63,113
Telecommunications - 0.35%
Nokia Corporation, ADS* ................. 400 30,000
TOTAL PREFERRED STOCKS - 1.38% $ 119,363
(Cost: $106,718)
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES - 6.18%
United States Treasury:
6.875%, 8-31-99 ....................... $250 $ 240,625
6.375%, 8-15-2002 ..................... 100 91,562
6.25%, 8-15-2023 ...................... 250 203,243
Total ................................. $ 535,430
(Cost: $559,041)
SHORT-TERM SECURITIES
Banks and Savings and Loans - 4.31%
U.S. Bancorp,
Master Note ........................... 374 374,000
Consumer Electronics and Appliances - 3.45%
TDK (USA) Corp.,
6.03%, 1-20-95 ........................ 300 299,045
Financial - 10.69%
BHP Finance (USA) Inc.,
6.02%, 1-31-95 ........................ 250 248,746
Kerr-McGee Credit Corp.,
6.2%, 1-11-95 ......................... 230 229,604
PHH Corp.,
6.02%, 1-27-95 ........................ 250 248,913
USAA Capital Corp.,
5.95%, 1-19-95 ........................ 200 199,405
Total ................................. 926,668
Food and Related - 10.68%
ConAgra, Inc.,
6.0%, 1-11-95 ......................... 300 299,500
General Mills, Inc.,
Master Note ........................... 375 375,000
Sara Lee Corporation,
Master Note ............................ 252 251,592
Total ................................. 926,092
Paper - 3.45%
Champion International Corporation,
6.0%, 1-19-95 ......................... 300 299,100
Public Utilities - Electric - 6.90%
Potomac Electric Power Co.,
6.03%, 1-13-95 ........................ 300 299,397
Public Service Co. of Colorado,
6.18%, 1-13-95 ........................ 300 299,382
Total ................................. 598,779
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
DECEMBER 31, 1994
Value
TOTAL SHORT-TERM SECURITIES - 39.48% $3,423,684
(Cost: $3,423,684)
TOTAL INVESTMENT SECURITIES - 99.08% $8,591,277
(Cost: $8,826,711)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.92% 79,791
NET ASSETS - 100.00% $8,671,068
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
BANK OBLIGATIONS
Certificates of Deposit
Domestic - 1.62%
PNC Bank, N.A.,
5.7%, 4-20-95 ......................... $ 500 $ 499,401
Eurodollar - 1.62%
NationsBank Corp. Europe,
5.4%, 5-19-95 ......................... 500 499,999
Total Certificates of Deposit - 3.24% 999,400
Notes - 3.25%
Abbey National Treasury Services plc,
7.4%, 12-15-95 ........................ 500 500,000
Comerica Bank,
5.83%, 1-3-95 ......................... 500 500,000
Total ................................. 1,000,000
TOTAL BANK OBLIGATIONS - 6.49% $ 1,999,400
(Cost: $1,999,400)
CORPORATE OBLIGATIONS
Commercial Paper
Building - 2.59%
Weyerhaeuser Company,
5.9%, 1-23-95 ......................... 800 797,116
Financial - 19.49%
AT&T Capital Corp.,
5.88%, 1-3-95 ......................... 800 799,739
B.A.T. Capital Corp.,
5.9%, 1-25-95 ......................... 500 498,033
BHP Finance (USA) Inc.,
6.02%, 1-31-95 ........................ 700 696,488
Block Financial Corp.,
5.97%, 1-23-95 ........................ 600 597,811
General Electric Capital Corp.,
6.0%, 2-17-95 ......................... 800 793,733
Merrill Lynch & Co., Inc.,
5.72%, 1-17-95 ........................ 600 598,475
Nestle Capital Corp.,
5.9%, 1-31-95 ......................... 630 626,902
PHH Corp.,
6.02%, 1-27-95 ........................ 800 796,522
Philip Morris Capital Corp.,
5.9%, 1-25-95 ......................... 600 597,640
Total ................................. 6,005,343
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (Continued)
Food and Related - 12.17%
General Mills, Inc.,
Master Note ........................... $1,060 $ 1,060,000
Heinz (H.J.) Company,
5.9%, 1-23-95 ......................... 800 797,115
Quaker Oats Co.,
5.95%, 1-17-95 ........................ 800 797,884
Sara Lee Corporation,
Master Note ........................... 1,094 1,093,781
Total ................................. 3,748,780
Paper - 2.59%
Kimberly-Clark Corp.,
5.9%, 1-23-95 ......................... 800 797,115
Public Utilities - Electric - 9.39%
Pacific Gas and Electric Co.,
6.0%, 1-13-95 ......................... 800 798,400
Pacificorp,
5.72%, 1-11-95 ........................ 500 499,206
Potomac Electric Power Co.,
6.03%, 1-13-95 ........................ 800 798,392
Southern California Edison Company,
6.05%, 1-20-95 ........................ 800 797,446
Total ................................. 2,893,444
Public Utilities - Gas - 4.85%
Bay State Gas Co.,
5.9%, 1-25-95 ......................... 800 796,853
Questar Corp.,
5.75%, 1-13-95 ........................ 700 698,658
Total ................................. 1,495,511
Publishing and Advertising - 2.59%
Times Mirror Company (The),
6.05%, 1-11-95 ........................ 800 798,656
Telecommunications - 1.61%
Southwestern Bell Capital Corp.,
6.04%, 2-2-95 ......................... 500 497,316
Total Commercial Paper - 55.28% 17,033,281
Commercial Paper (backed by irrevocable
bank letter of credit)
Financial - 1.62%
Spiegel Funding Corp. (Dresdner
Bank A.G.),
5.75%, 1-17-95 ........................ 500 498,722
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (backed by irrevocable
bank letter of credit) (Continued)
Public Utilities - Electric - 2.59%
AES Barbers Point Inc. (Bank of
America N.T. & S.A.),
6.03%, 1-19-95 ........................ $ 800 $ 797,588
Total Commercial Paper (backed by
irrevocable bank letter of credit) - 4.21% 1,296,310
Notes
Beverages - 1.62%
PepsiCo, Inc.,
5.845%, 1-3-95 ........................ 500 500,000
Financial - 1.62%
AVCO Financial Services Inc.,
5.87%, 1-3-95 ......................... 500 500,000
Public Utilities - Electric - 1.62%
Georgia Power Co.,
5.125%, 9-1-95 ........................ 500 497,889
Total Notes - 4.86% 1,497,889
TOTAL CORPORATE OBLIGATIONS - 64.35% $19,827,480
(Cost: $19,827,480)
MUNICIPAL OBLIGATIONS
California - 2.60%
City of Anaheim, California, Certificates
of Participation (1993 Arena Financing
Project), Municipal Adjustable Rate
Taxable Securities (Credit Suisse),
5.78%, 2-1-95 ......................... 800 800,000
Georgia - 2.60%
Development Authority of Richmond
County (Georgia), Taxable Industrial
Revenue Bonds (NutraSweet Project),
Series 1990 (Union Bank of Switzerland),
5.71, 6-2-95 .......................... 800 800,000
Michigan - 2.27%
Michigan Underground Storage Tank Financial
Assurance Authority, State of Michigan,
Series 1 (Canadian Imperial Bank of Commerce),
6.4%, 1-11-95 ......................... 700 698,756
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
New Hampshire - 1.62%
The Industrial Development Authority
of the State of New Hampshire,
Pollution Control Revenue Bonds
(Public Service Company of New
Hampshire Project-1991 Taxable
Series D and E) (Barklays Bank),
6.45%, 2-14-95 ........................ $ 500 $ 500,000
Texas - 1.61%
Metrocrest Hospital Authority, Series 1989A
(The Bank of New York),
6.118%, 1-20-95 ....................... 500 498,385
TOTAL MUNICIPAL OBLIGATIONS - 10.70% $ 3,297,141
(Cost: $3,297,141)
UNITED STATES GOVERNMENT
OBLIGATIONS
Federal Home Loan Banks,
5.9%, 1-9-95 .......................... 1,000 1,000,000
Federal Home Loan Mortgage Corporation,
5.95%, 3-7-95 ......................... 1,000 1,000,000
Federal National Mortgage Association,
5.9%, 3-20-95 ......................... 500 500,000
TOTAL UNITED STATES GOVERNMENT
OBLIGATIONS - 8.11% $ 2,500,000
(Cost: $2,500,000)
TOTAL INVESTMENT SECURITIES - 89.65% $27,624,021
(Cost: $27,624,021)
CASH AND OTHER ASSETS,
NET OF LIABILITIES - 10.35% 3,188,242
NET ASSETS - 100.00% $30,812,263
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Airlines - 3.10%
Federal Express Corporation,
9.75%, 5-15-96 ........................ $ 50 $ 51,010
Automotive - 2.98%
General Motors Corporation,
7.625%, 2-15-97 ....................... 50 49,011
Banks and Savings and Loans - 12.38%
BankAmerica Corporation,
9.7%, 8-1-2000 ........................ 50 52,361
Boatmen's Bancshares, Inc.,
9.25%, 11-1-2001 ...................... 50 51,396
NCNB Corporation,
10.5%, 3-15-99 ........................ 50 51,375
Norwest Financial, Inc.,
7.75%, 8-15-2001 ...................... 50 48,476
Total ................................. 203,608
Chemicals Major - 8.33%
Dow Chemical Company, Inc. (The),
4.625%, 10-15-95 ...................... 60 58,650
ICI Welmington, Inc.,
9.5%, 11-15-2000 ...................... 75 78,438
Total ................................. 137,088
Chemicals Specialty and Miscellaneous
Technology - 5.98%
Waste Management, Inc.,
6.25%, 12-15-96 ....................... 50 49,247
Xerox Credit Corporation,
6.25%, 1-15-96 ........................ 50 49,138
Total ................................. 98,385
Domestic Oil - 3.13%
BP America Inc.,
9.5%, 1-1-98 .......................... 50 51,490
Drugs and Hospital Supply - 3.09%
Baxter International Inc.,
9.25%, 9-15-96 ........................ 50 50,802
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Financial - 11.76%
Associates Corporation of North America,
8.8%, 8-1-98 .......................... $ 50 $ 50,452
Avco Financial Services, Inc.,
5.5%, 4-1-2000 ........................ 50 44,137
Ford Motor Credit Company,
8.0%, 1-15-99 ......................... 50 49,390
Household Finance Corporation,
7.75%, 6-15-97 ........................ 50 49,447
Total ................................. 193,426
Insurance - 6.06%
ITT Hartford,
7.25%, 12-1-96 ........................ 50 49,099
Transamerica Finance Corporation,
8.75%, 10-1-99 ........................ 50 50,583
Total ................................. 99,682
International Oil - 6.09%
Chevron Corporation,
8.11%, 12-1-2004 ...................... 50 48,734
Texaco Capital Inc.,
9.0%, 12-15-99 ........................ 50 51,433
Total ................................. 100,167
Multi-Industry - 3.12%
ITT Financial Corporation,
8.875%, 6-15-2003 ..................... 50 51,336
Public Utilities - Pipelines - 6.14%
Consolidated Natural Gas Company,
8.75%, 6-1-99 ......................... 50 50,642
Tenneco Credit Corporation,
9.0%, 7-15-95 ......................... 50 50,345
Total ................................. 100,987
Retailing - 6.28%
Penney (J.C.) Company, Inc.,
10.0%, 10-15-97 ....................... 50 52,140
Sears, Roebuck and Co.,
9.25%, 4-15-98 ........................ 50 51,273
Total ................................. 103,413
TOTAL CORPORATE DEBT SECURITIES - 78.44% $1,290,405
(Cost: $1,324,967)
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES
United States Treasury:
5.125%, 11-30-98 ...................... $100 $ 90,969
6.375%, 8-15-2002 ...................... 100 91,562
6.25%, 2-15-2003 ...................... 100 90,437
TOTAL UNITED STATES GOVERNMENT SECURITIES - 16.59% $ 272,968
(Cost: $286,093)
TOTAL SHORT-TERM SECURITIES - 2.86% $ 47,000
(Cost: $47,000)
TOTAL INVESTMENT SECURITIES - 97.89% $1,610,373
(Cost: $1,658,060)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 2.11% 34,773
NET ASSETS - 100.00% $1,645,146
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Aerospace - 1.39%
McDonnell Douglas Corporation,
9.25%, 4-1-2002 ....................... $1,000 $ 1,026,960
Airlines - 1.26%
Federal Express Corporation,
7.89%, 9-23-2008 ...................... 1,000 935,770
Automotive - 5.70%
General Motors Corporation,
8.8%, 3-1-2021 ........................ 2,600 2,661,958
Toyota Motor Credit Corporation, Medium Term,
Three Year Basket Inverse Floating Rate,
3.02%, 8-5-96 (B) ..................... 1,750 1,557,500
Total ................................. 4,219,458
Banks and Savings and Loans - 13.77%
BankAmerica Corporation,
8.125%, 8-15-2004 ..................... 1,000 950,710
BarclaysAmericanCorporation,
9.125%, 12-1-97 ....................... 225 229,478
Bayerische Landesbank Girozentale, NY
Branch, CD, Currency Protected Deutschemark
Swap Rate Inverse Floating Rate,
3.06%, 3-28-97 (C) .................... 1,000 890,000
Central Fidelity Banks,
8.15%, 11-15-2002 ..................... 500 483,140
Chevy Chase Savings Bank, F.S.B.,
9.25%, 12-1-2005 ...................... 500 420,000
Citicorp,
7.75%, 6-15-2006 ...................... 1,000 929,430
First Union Corporation,
8.0%, 11-15-2002 ...................... 1,000 958,460
Great Western Financial Corporation,
8.6%, 2-1-2002 ........................ 1,500 1,489,380
Kansallis-Osake-Pankki,
10.0%, 5-1-2002 ....................... 1,000 1,073,220
Riggs National Corporation,
8.5%, 2-1-2006 ........................ 1,000 925,000
Skandia Enskilda Banken, NY Branch
Certificate of Deposit Dollarized
Australian Dollar Reset,
6.125%, 4-5-99 (D) .................... 1,000 840,000
Wells Fargo & Company,
8.75%, 5-1-2002 ....................... 1,000 1,005,950
Total ................................. 10,194,768
Building - 7.93%
Canadian Pacific Forest Products Ltd.,
9.25%, 6-15-2002 ...................... 1,000 932,840
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Building (Continued)
Cemex, S.A.,
8.875%, 6-10-98 ....................... $1,000$ 870,000
Doman Industries Limited,
8.75%, 3-15-2004 ...................... 500 441,250
Noranda Forest Inc.,
7.5%, 7-15-2003 ....................... 1,000 921,820
Noranda Inc.,
8.625%, 7-15-2002 ..................... 950 942,524
Owens-Corning Fiberglas Corporation,
8.875%, 6-1-2002 ...................... 1,000 999,330
Del Webb Corporation,
10.875%, 3-31-2000 .................... 800 760,000
Total ................................. 5,867,764
Chemicals Major - 1.37%
Dow Capital BV,
9.0%, 5-15-2010 ....................... 1,000 1,014,920
Domestic Oil - 4.96%
Apache Corporation,
9.25%, 6-1-2002 ....................... 500 509,670
LASMO (USA) INC.,
7.125%, 6-1-2003 ...................... 1,000 889,720
Seagull Energy Corporation,
7.875%, 8-1-2003 ...................... 1,500 1,297,500
Union Texas Petroleum Holdings, Inc.,
8.25%, 11-15-99 ....................... 1,000 971,680
Total ................................. 3,668,570
Electrical Equipment - 3.29%
General Electric Capital Corporation:
8.3%, 9-20-2009 ....................... 1,500 1,528,515
8.65%, 5-1-2018 ....................... 895 902,769
Total ................................. 2,431,284
Financial - 10.48%
Banc One Credit Card Master Trust,
7.55%, 12-15-99 ....................... 1,000 985,930
Chrysler Financial Corporation,
12.75%, 11-1-99 ....................... 1,000 1,161,360
Countrywide Mortgage Backed Securities,
Inc.,
6.5%, 4-25-2024 ....................... 2,000 1,839,720
DLJ Mortgage Acceptance Corp., 1994-3 A13,
6.5%, 4-25-2024 ....................... 980 849,216
General Motors Acceptance Corporation,
8.875%, 6-1-2010 ...................... 1,000 1,038,310
Greyhound Financial Corporation,
8.79%, 11-15-2001 ..................... 1,000 1,002,150
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Financial (Continued)
JCP Master Credit Card Trust,
9.625%, 6-15-2000 ..................... $ 500 $ 524,685
National Credit Card Trust 1989-4,
9.45%, 12-31-97 ....................... 350 355,796
Total ................................. 7,757,167
Hospital Management - 1.36%
HealthTrust Inc.:
10.75%, 5-1-2002 ...................... 500 531,250
8.75%, 3-15-2005 ...................... 500 477,500
Total ................................. 1,008,750
Household Products - 2.68%
Proctor & Gamble Company (The),
8.0%, 9-1-2024 ........................ 2,000 1,983,760
International Oil - 0.49%
YPF Sociedad Anoima,
8.0%, 2-15-2004 ....................... 500 360,000
Leisure Time - 4.91%
Marriott International, Inc.,
6.75%, 12-15-2003 ..................... 1,000 881,960
Tele-Communications, Inc.,
9.8%, 2-1-2012 ........................ 1,000 1,000,210
Time Warner Incorporated,
7.95%, 2-1-2000 ....................... 1,000 937,460
Turner Broadcasting System, Inc.,
8.375%, 7-1-2013 ...................... 1,000 813,080
Total ................................. 3,632,710
Machinery - 0.72%
Caterpillar, Inc.,
9.375%, 8-15-2011 ..................... 500 534,840
Multi-Industry - 1.22%
Mark IV Industries, Inc.,
8.75%, 4-1-2003 ....................... 1,000 905,000
Public Utilities - Electric - 1.28%
Kansas Gas & Electric Company,
7.6%, 12-15-2003 ...................... 1,000 943,500
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Public Utilities - Pipelines - 2.76%
Arkla, Inc.,
8.875%, 7-15-99 ....................... $1,000 $ 975,000
Coastal Corporation (The),
10.375%, 10-1-2000 .................... 500 531,595
Tenneco Inc.,
10.375%, 11-15-2000 ................... 500 536,825
Total ................................. 2,043,420
Publishing and Advertising - 1.86%
News America Holdings Incorporated:
9.125%, 10-15-99 ...................... 500 503,975
8.25%, 8-10-2018 ...................... 1,000 875,610
Total ................................. 1,379,585
Railroad Equipment - 0.01%
Union Tank Car Co.,
9.5%, 12-15-95 ........................ 9 9,131
Railroads - 1.42%
Louisville & Nashville Railroad
Equipment Trust Certificates, Series 10,
12.3%, 2-1-95 ......................... 8 8,008
Penn Central Corporation (The),
10.625%, 4-15-2000 .................... 1,000 1,045,170
Total ................................. 1,053,178
Steel - 1.33%
USX Corporation,
8.21%, 1-21-2000 ...................... 1,000 980,750
Telecommunications - 4.74%
New England Telephone & Telegraph Company,
7.875%, 11-15-2029 .................... 2,000 2,081,560
Southwestern Bell Telephone Company,
7.0%, 8-26-2002 ....................... 1,000 930,980
US WEST Financial Services, Inc.,
8.4%, 9-15-99 ......................... 500 498,625
Total ................................. 3,511,165
TOTAL CORPORATE DEBT SECURITIES - 74.93% $55,462,450
(Cost: $59,389,451)
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
OTHER GOVERNMENT SECURITIES
Argentina - 0.48%
Republic of Argentina,
8.375%, 12-20-2003 .................... $ 500 $ 356,250
Canada - 4.24%
Hydro Quebec,
8.05%, 7-7-2024 ....................... 1,000 961,420
Province of Manitoba,
9.125%, 1-15-2018 ..................... 2,000 2,179,440
Total ................................. 3,140,860
Supernationals - 1.41%
Inter-American Development Bank,
8.4%, 9-1-2009 ........................ 1,000 1,039,730
TOTAL OTHER GOVERNMENT SECURITIES - 6.13% $ 4,536,840
(Cost: $4,789,818)
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation:
7.5%, 11-15-2017 ...................... 1,538 1,439,953
7.5%, 4-15-2019 ....................... 1,190 1,019,068
7.0%, 1-15-2021 ....................... 500 440,000
Federal National Mortgage Association,
7.5%, 9-1-2009 ........................ 1,000 956,926
United States Treasury:
6.5%, 5-15-97 ......................... 1,000 972,340
5.75%, 10-31-97 ....................... 2,500 2,369,925
11.25%, 2-15-2015 ..................... 1,000 1,321,250
8.875%, 8-15-2017 ..................... 2,000 2,178,740
7.5%, 11-15-2024 ...................... 1,000 956,560
TOTAL UNITED STATES GOVERNMENT
SECURITIES - 15.75% $11,654,762
(Cost: $12,071,117)
TOTAL SHORT-TERM SECURITIES - 1.24% $ 922,000
(Cost: $922,000)
TOTAL INVESTMENT SECURITIES - 98.05% $72,576,052
(Cost: $77,172,386)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.95% 1,440,798
NET ASSETS - 100.00% $74,016,850
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
DECEMBER 31, 1994
Shares Value
COMMON STOCKS AND WARRANTS
Leisure Time - 0.98%
Infinity Broadcasting Corporation,
Class A* .............................. 22,500 $ 711,563
Miscellaneous - 0.91%
Dial Page Inc., Warrants ................ 1,000 1,250
LTC Properties, Inc. .................... 50,000 662,500
Total ................................. 663,750
TOTAL COMMON STOCKS AND WARRANTS - 1.89% $1,375,313
(Cost: $967,468)
PREFERRED STOCKS - 0.69%
Banks and Savings and Loans
California Federal Bank, F.S.B. ......... 5,000 $ 501,250
(Cost: $500,000)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Automotive - 2.53%
Aftermarket Technology Corp.,
12.0%, 8-1-2004 (E) .................... $ 500 516,250
Lear Seating Corporation,
8.25%, 2-1-2002 ....................... 1,500 1,320,000
Total ................................. 1,836,250
Beverages - 1.69%
Dr Pepper Bottling Holdings, Inc.,
0.0%, 2-15-2003 (F) .................... 500 345,000
ROYAL CROWN CORPORATION,
9.75%, 8-1-2000 ....................... 1,000 880,000
Total ................................. 1,225,000
Biotechnology and Medical Services - 2.08%
Abbey Healthcare Group, Incorporated,
9.5%, 11-1-2022 ....................... 500 450,000
Quorum Health Group, Inc.,
11.875%, 12-15-2002 ................... 1,000 1,060,000
Total ................................. 1,510,000
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Building - 7.66%
American Standard Inc.:
9.875%, 6-1-2001 ...................... $1,000 $ 970,000
9.25%, 12-1-2016 ...................... 500 457,500
Beazer Homes USA, Inc.,
9.0%, 3-1-2004 ........................ 750 615,000
Eagle Industries, Inc.,
0.0%, 7-15-2003 (F) ................... 1,500 975,000
Hillsborough Company,
17.0%, 1-1-96 (G) ..................... 500 305,000
NVR L.P.,
11.0%, 4-15-2003 ...................... 1,000 840,000
Nortek, Inc.,
9.875%, 3-1-2004 ...................... 500 445,000
Triangle Pacific Corp.,
10.5%, 8-1-2003 ....................... 1,000 957,500
Total ................................. 5,565,000
Chemicals Specialty and Miscellaneous Technology - 5.34%
Buckeye Cellulose Corporation,
10.25%, 5-15-2001 ..................... 1,250 1,168,750
Carlisle Plastics Inc.,
10.25%, 6-15-97 ....................... 500 492,500
Envirotest Systems Corp.,
9.125%, 3-15-2001 ..................... 1,000 840,000
LaRoche Industries Inc.,
13.0%, 8-15-2004 ...................... 1,000 920,000
OSi Specialties, Inc.,
9.25%, 10-1-2003 ...................... 500 457,500
Total ................................. 3,878,750
Computers and Office Equipment - 0.60%
Mail-Well Corporation,
10.5%, 2-15-2004 ...................... 500 435,000
Consumer Electronics and Appliances - 1.07%
Sealy Corporation,
9.5%, 5-1-2003 ........................ 825 779,625
Domestic Oil - 1.57%
Clark R&M Holdings, Inc.,
0.0%, 2-15-2000 ....................... 2,000 1,140,000
Drugs and Hospital Supply - 2.79%
Amerisource Distribution Corporation,
11.25%, 7-15-2005 ..................... 1,112 1,059,788
General Medical Corporation,
12.125%, 8-15-2005 .................... 1,000 969,202
Total ................................. 2,028,990
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Electronics - 1.29%
Essex Group, Inc.,
10.0%, 5-1-2003 ....................... $1,000 $ 940,000
Food and Related - 2.21%
General Nutrition, Incorporated,
11.375%, 3-1-2000 ..................... 393 433,774
Pilgrim's Pride Corporation,
10.875%, 8-1-2003 ..................... 300 282,750
Specialty Foods Corporation,
10.25%, 8-15-2001 ..................... 1,000 890,000
Total ................................. 1,606,524
Hospital Management - 3.30%
LTC Properties, Inc.,
8.5%, 1-1-2000 ........................ 1,000 1,005,000
Pathmark Stores, Inc.,
9.625%, 5-1-2003 ...................... 1,000 890,000
Surgical Health Corporation,
11.5%, 7-15-2004 ...................... 500 500,000
Total ................................. 2,395,000
Household Products - 1.66%
Exide Corporation:
10.75%, 12-15-2002 .................... 750 750,000
0.0%, 12-15-2004 (F) .................. 500 352,500
MacAndrews & Forbes Group Incorporated,
13.0%, 3-1-99 ......................... 100 100,250
Total ................................. 1,202,750
Leisure Time - 16.50%
Argosy Gaming Company,
12.0%, 6-1-2001 ....................... 908 860,330
Cablevision Industries Corporation,
10.75%, 1-30-2002 ..................... 500 497,500
California Hotel Finance Corporation,
11.0%, 12-1-2002 ...................... 1,000 920,000
Comcast Corporation,
0.0%, 3-5-2000 ........................ 1,000 670,000
Continental Cablevision, Inc.:
10.625%, 6-15-2002 .................... 500 503,750
8.875%, 9-15-2005 ..................... 500 452,500
11.0%, 6-1-2007 ....................... 500 507,500
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Leisure Time (Continued)
Family Restaurants, Inc.,
9.75%, 2-1-2002 ....................... $ 500 $ 392,500
FLAGSTAR COMPANIES, INC.:
10.75%, 9-15-2001 ..................... 1,000 937,500
11.25%, 11-1-2004 ..................... 1,000 825,000
GNS Finance Corp.,
9.25%, 3-15-2003 ...................... 1,500 1,440,000
Infinity Broadcasting Corporation,
10.375%, 3-15-2002 .................... 1,000 1,010,000
Plitt Theatres, Inc.,
10.875%, 6-15-2004 .................... 1,000 930,000
Showboat, Inc.,
9.25%, 5-1-2008 ....................... 1,000 835,000
Sinclair Broadcast Group Inc.,
10.0%, 12-15-2003 ..................... 375 348,750
Viacom International, Inc.,
8.0%, 7-7-2006 ........................ 1,000 857,500
Total ................................. 11,987,830
Multi-Industry - 3.74%
Federal Industries Ltd.,
10.25%, 6-15-2000 ..................... 500 468,750
Jordan Industries, Inc.,
10.375%, 8-1-2003 ..................... 1,000 890,000
Mark IV Industries, Inc.,
8.75%, 4-1-2003 ....................... 1,500 1,357,500
Total ................................. 2,716,250
Oil Services - 1.40%
Wainoco Oil Corporation,
12.0%, 8-1-2002 ....................... 1,000 1,020,000
Packaging and Containers - 7.02%
Anchor Glass Container Corporation,
9.875%, 12-15-2008 .................... 500 430,000
Container Corporation of America,
11.25%, 5-1-2004 ...................... 1,500 1,537,500
Gaylord Container Corporation,
11.5%, 5-15-2001 ...................... 1,000 1,030,000
Owens-Illinois, Inc.,
10.25%, 4-1-99 ........................ 1,000 990,000
Silgan Corporation,
0.0%, 12-15-2002 (F) ................... 500 420,000
Sweetheart Cup Company, Inc.,
10.5%, 9-1-2003 ....................... 750 690,000
Total ................................. 5,097,500
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Paper - 3.73%
Fort Howard Corporation:
11.0%, 1-2-2002 ....................... $ 475 $ 474,484
14.125%, 11-1-2004 .................... 500 503,750
Stone Container Corporation,
10.75%, 10-1-2002 ..................... 1,000 995,000
Williamhouse-Regency of Delaware, Inc.,
11.5%, 6-15-2005 ..................... 800 736,000
Total ................................. 2,709,234
Publishing and Advertising - 3.94%
American Media Operations, Inc.,
11.625%, 11-15-2004 ................... 1,000 1,025,000
Big Flower Press, Inc.,
10.75%, 8-1-2003 ...................... 1,000 935,000
Outdoor Systems, Inc.,
10.75%, 8-15-2003 ..................... 1,000 900,000
Total ................................. 2,860,000
Retailing - 9.97%
Barnes & Noble, Inc.,
11.875%, 1-15-2003 ................... 500 535,000
Big V Supermarkets, Inc.,
11.0%, 2-15-2004 ...................... 500 395,000
Bradlees, Inc.,
9.25%, 3-1-2003 ...................... 1,000 825,000
Color Tile, Inc.,
10.75%, 12-15-2001 .................... 1,000 880,000
Kroger Co. (The),
9.75%, 2-15-2004 ...................... 1,000 1,011,250
Musicland Stores, Inc.,
9.0%, 6-15-2003 ....................... 1,500 1,245,000
Penn Traffic Company,
10.375%, 10-1-2004 .................... 1,500 1,447,500
WestPoint Stevens Inc.,
9.375%, 12-15-2005 .................... 1,000 905,000
Total ................................. 7,243,750
Services, Consumer and Business - 0.98%
Bell & Howell Company,
10.75%, 10-1-2002 ..................... 750 712,500
See Notes to Schedules of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
DECEMBER 31, 1994
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Steel - 2.10%
AK Steel,
10.75%, 4-1-2004 ...................... $1,000 $ 990,000
Inland Steel,
12.75%, 12-15-2002 .................... 500 538,125
Total ................................. 1,528,125
Telecommunications - 3.60%
Dial Call Communications, Inc.,
0.0%, 4-15-2004 (F) ................... 1,000 345,000
MFS Communications Company, Inc.,
0.0%, 1-15-2004 (F) ................... 500 295,000
PanAmSat, L.P.:
9.75%, 8-1-2000 ....................... 1,000 942,500
0.0%, 8-1-2003 (F) .................... 1,000 625,000
USA Mobile Communications, Inc.,
9.5%, 2-1-2004 ........................ 500 405,000
Total ................................. 2,612,500
Textiles and Apparel - 1.27%
CONSOLTEX GROUP INC.,
11.0%, 10-1-2003 ...................... 1,000 925,000
TOTAL CORPORATE DEBT SECURITIES - 88.04% $63,955,578
(Cost: $68,357,699)
SHORT-TERM SECURITIES
Banks and Savings and Loans - 1.96%
U.S. Bancorp,
Master Note ........................... 1,423 1,423,000
Food and Related - 4.95%
General Mills, Inc.,
Master Note ........................... 2,267 2,267,000
Sara Lee Corporation,
Master Note ........................... 1,326 1,326,000
Total ................................. 3,593,000
TOTAL SHORT-TERM SECURITIES - 6.91% $ 5,016,000
(Cost: $5,016,000)
TOTAL INVESTMENT SECURITIES - 97.53% $70,848,141
(Cost: $74,841,167)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 2.47% 1,795,534
NET ASSETS - 100.00% $72,643,675
See Notes to Schedules of Investments on page 109.
<PAGE>
Notes to Schedules of Investments
*No income dividends were paid during the preceding 12 months.
(A) Listed on an exchange outside of the United States.
(B) Coupon resets semiannually based on the arithmetic mean of two year
swap rates in four nations: Italy, France, Spain and the United
Kingdom, determined by the following formula (minimum coupon of
0%):
19.65% - 2 x (average two year swap rate in the aforementioned
nations).
(C) Coupon resets semiannually based on 14.13% - 1.5 x (5 year
Deutschemark swap rate). Coupon guaranteed at 3%.
(D) Coupon resets on 4-5-95 based on the greater of 4% and 4% + 5 x
(6.65% - 3 year Australian Dollar swap rate). After 4-5-95 the
coupon becomes fixed. Minimum coupon is 4% and the maximum coupon
is 7.5%.
(E) As of December 31, 1994, the following restricted security was
owned in the High Income Portfolio:
Principal
Acquisition AmountAcquisition Market
Security Date (in 000's) Cost Value
---------------- --------------------------------------------
Aftermarket Technology
Corp.,
12.0%, 8-1-2004 7/21/94 $500 $500,000 $516,250
======== ========
The total market value of restricted securities represents
approximately 0.71% of the total net assets in the High Income
Portfolio at December 31, 1994.
(F) The security does not bear interest for an initial period of time
and subsequently becomes interest bearing.
(G) Non-income producing as the issuer has either missed its most
recent interest payment or declared bankruptcy:
See Note 1 to financial statements for security valuation and other
significant accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation
and depreciation of investments owned for Federal income tax
purposes.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
Growth IncomeInternational
Portfolio Portfolio Portfolio
Assets ----------- ---------- -----------
Investment securities--at
value (Notes 1 and 3) $276,809,531$218,844,527 $25,781,641
Cash .............. 6,687 4,431 1,384
Receivables:
Dividends and interest 567,231 332,243 42,859
Fund shares sold . 113,778 177,059 210,565
Investment securities
sold ............ --- 203,448 ---
Prepaid insurance
premium .......... 3,991 2,819 182
------------------------ -----------
Total assets .... 277,501,218 219,564,527 26,036,631
Liabilities ------------------------ -----------
Payable for investment
securities purchased 548,125 610,437 ---
Payable for Fund shares
redeemed ......... 199,058 169,428 5,151
Accrued accounting
services fee ..... 4,167 4,167 833
Other .............. 13,233 6,893 11,013
------------------------ -----------
Total liabilities 764,583 790,925 16,997
------------------------ -----------
Total net assets $276,736,635$218,773,602 $26,019,634
Net Assets ======================== ===========
$0.01 par value capital stock
Capital stock .... $ 469,159$ 323,206 $ 52,116
Additional paid-in
capital ......... 285,885,078 202,539,201 26,652,623
Accumulated undistributed
gain (loss):
Accumulated undistributed
net investment income --- --- ---
Accumulated undistributed
net realized loss on
investment transactions
and foreign currency
transactions..... --- (462,851) (21,009)
Net unrealized appreciation
(depreciation) of investments
at end of period. (9,617,602) 16,374,046 (664,096)
------------------------ -----------
Net assets applicable to
outstanding units
of capital .... $276,736,635$218,773,602 $26,019,634
======================== ===========
Net asset value, redemption
and offering price per share $5.8986 $6.7689 $4.9926
======= ======= =======
Capital shares outstanding 46,915,868 32,320,625 5,211,592
Capital shares authorized 100,000,000 100,000,000 100,000,000
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
Small Cap BalancedMoney Market
Portfolio Portfolio Portfolio
Assets ---------- ---------- -----------
Investment securities--at
value (Notes 1 and 3) $16,029,163 $8,591,277 $27,624,021
Cash .............. 7,362 6,057 18,970
Receivables:
Dividends and interest 6,098 29,433 64,604
Fund shares sold . 110,867 69,600 3,480,604
Investment securities
sold ............ --- --- ---
Prepaid insurance
premium .......... 182 182 1,506
----------- ---------- -----------
Total assets .... 16,153,672 8,696,549 31,189,705
Liabilities ----------- ---------- -----------
Payable for investment
securities purchased 66,102 --- ---
Payable for Fund shares
redeemed ......... 4,142 23,625 373,894
Accrued accounting
services fee ..... 833 --- 1,667
Other .............. 2,433 1,856 1,881
----------- ---------- -----------
Total liabilities 73,510 25,481 377,442
----------- ---------- -----------
Total net assets $16,080,162 $8,671,068 $30,812,263
Net Assets =========== ========== ===========
$0.01 par value capital stock
Capital stock .... $ 26,837 $ 17,567 $ 308,123
Additional paid-in
capital ......... 14,745,046 8,892,153 30,504,140
Accumulated undistributed
gain (loss):
Accumulated undistributed
net investment income --- --- ---
Accumulated undistributed
net realized loss on
investment transactions
and foreign currency
transactions..... --- (3,218) ---
Net unrealized appreciation
(depreciation) of investments
at end of period. 1,308,279 (235,434) ---
----------- ---------- -----------
Net assets applicable to
outstanding units
of capital .... $16,080,162 $8,671,068 $30,812,263
=========== ========== ===========
Net asset value, redemption
and offering price per share $5.9918 $4.9359 $1.0000
======= ======= =======
Capital shares outstanding 2,683,680 1,756,720 30,812,263
Capital shares authorized 100,000,000 100,000,000 200,000,000
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
Limited-Term Bond High Income
Bond Portfolio Portfolio Portfolio
Assets ------------------------- -----------
Investment securities--at
value (Notes 1 and 3) $1,610,373 $72,576,052 $70,848,141
Cash .............. 4,791 7,680 5,708
Receivables:
Dividends and interest 32,608 1,432,762 1,553,672
Fund shares sold . --- 21,190 69,923
Investment securities
sold ............ --- --- 261,345
Prepaid insurance
premium .......... 182 2,062 2,200
---------- ----------- -----------
Total assets .... 1,647,954 74,039,746 72,740,989
Liabilities ---------- ----------- -----------
Payable for investment
securities purchased --- --- ---
Payable for Fund shares
redeemed ......... 2,439 17,625 92,213
Accrued accounting
services fee ..... --- 2,500 2,500
Other .............. 369 2,771 2,601
---------- ----------- -----------
Total liabilities 2,808 22,896 97,314
---------- ----------- -----------
Total net assets $1,645,146 $74,016,850 $72,643,675
Net Assets ========== =========== ===========
$0.01 par value capital stock
Capital stock .... $ 3,384 $ 156,178 $ 176,670
Additional paid-in
capital ......... 1,689,449 81,936,702 78,205,135
Accumulated undistributed
gain (loss):
Accumulated undistributed
net investment income --- --- ---
Accumulated undistributed
net realized loss on
investment transactions
and foreign currency
transactions..... --- (3,479,696) (1,745,104)
Net unrealized appreciation
(depreciation) of investments
at end of period. (47,687) (4,596,334) (3,993,026)
---------- ----------- -----------
Net assets applicable to
outstanding units
of capital .... $1,645,146 $74,016,850 $72,643,675
========== =========== ===========
Net asset value, redemption
and offering price per share $4.8611 $4.7393 $4.1118
======= ======= =======
Capital shares outstanding 338,428 15,617,757 17,667,001
Capital shares authorized 100,000,000 100,000,000 100,000,000
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Period Ended DECEMBER 31, 1994
Growth IncomeInternational
Portfolio Portfolio Portfolio
---------- ---------- ----------
Investment Income
Income:
Interest ......... $ 1,893,626 $ 382,961 $158,020
Dividends ........ 5,347,449 3,354,791 47,329
----------- ---------- --------
Total income .... 7,241,075 3,737,752 205,349
----------- ---------- --------
Expenses (Note 2):
Investment management
fee ............. 1,813,171 1,374,533 63,291
Accounting services
fee ............. 50,000 44,167 3,333
Custodian fees ... 38,479 21,378 30,318
Audit fees ....... 7,101 5,540 ---
Legal fees ....... 5,105 8,638 1,502
Other ............ 40,985 35,239 288
----------- ---------- --------
Total expenses .. 1,954,841 1,489,495 98,732
----------- ---------- --------
Net investment income 5,286,234 2,248,257 106,617
----------- ---------- --------
Realized and Unrealized Gain (Loss)
on Investments
Realized net gain (loss)
on investments ... 14,371,377 684,147 (21,009)
Unrealized appreciation
(depreciation)in value
of investments during
the period ....... (13,761,465) (6,030,073) (664,096)
----------- ---------- --------
Net gain (loss) on
investments .... 609,912 (5,345,926) (685,105)
----------- ---------- --------
Net increase (decrease)
in net assets
resulting from
operations ... $ 5,896,146 $(3,097,669) $(578,488)
=========== ========== ========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Period Ended DECEMBER 31, 1994
Small Cap BalancedMoney Market
Portfolio Portfolio Portfolio
---------- ---------- ----------
Investment Income
Income:
Interest ......... $ 144,765 $ 64,909 $999,857
Dividends ........ 292 38,828 ---
---------- -------- --------
Total income .... 145,057 103,737 999,857
---------- -------- --------
Expenses (Note 2):
Investment management
fee ............. 36,355 15,489 116,644
Accounting services
fee ............. 1,667 --- 10,833
Custodian fees ... 5,953 7,174 11,635
Audit fees ....... --- --- 4,635
Legal fees ....... 1,452 1,421 696
Other ............ 283 43 3,980
---------- -------- --------
Total expenses .. 45,710 24,127 148,423
---------- -------- --------
Net investment income 99,347 79,610 851,434
---------- -------- --------
Realized and Unrealized Gain (Loss)
on Investments
Realized net gain (loss)
on investments ... 44,381 (3,218) ---
Unrealized appreciation
(depreciation) in value
of investments during
the period ....... 1,308,279 (235,434) ---
---------- -------- --------
Net gain (loss) on
investments .... 1,352,660 (238,652) ---
---------- -------- --------
Net increase (decrease)
in net assets
resulting from
operations ... $1,452,007 $(159,042) $851,434
========== ======== ========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Period Ended DECEMBER 31, 1994
Limited-Term Bond High Income
Bond Portfolio Portfolio Portfolio
--------------- ---------- ----------
Investment Income
Income:
Interest ......... $57,386 $ 5,773,265 $7,220,542
Dividends ........ --- --- 92,656
------- ----------- ----------
Total income .... 57,386 5,773,265 7,313,198
------- ----------- ----------
Expenses (Note 2):
Investment management
fee ............. 4,712 424,370 494,237
Accounting services
fee ............. --- 30,000 30,000
Custodian fees ... 1,531 10,046 7,962
Audit fees ....... --- 4,977 4,766
Legal fees ....... 1,404 1,595 1,511
Other ............ 207 15,304 13,039
------- ----------- ----------
Total expenses .. 7,854 486,292 551,515
------- ----------- ----------
Net investment income 49,532 5,286,973 6,761,683
------- ----------- ----------
Realized and Unrealized Gain (Loss)
on Investments
Realized net gain (loss)
on investments ... 455 (3,479,696) (1,428,391)
Unrealized appreciation
(depreciation) in value
of investments during
the period ....... (47,687) (6,740,515) (7,299,167)
------- ----------- ----------
Net gain (loss) on
investments .... (47,232)(10,220,211) (8,727,558)
------- ----------- ----------
Net increase (decrease)
in net assets
resulting from
operations ... $ 2,300$( 4,933,238)$(1,965,875)
======= =========== ==========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended DECEMBER 31, 1994
Growth IncomeInternational
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 5,286,234$ 2,248,257 $ 106,617
Realized net gain (loss)
on investments .. 14,371,377 684,147 (21,009)
Unrealized appreciation
(depreciation) .. (13,761,465) (6,030,073) (664,096)
------------------------ -----------
Net increase (decrease)
in net assets resulting
from operations 5,896,146 (3,097,669) (578,488)
------------------------ -----------
Dividends to shareholders from:*
Net investment income (5,286,234) (2,248,257) (106,617)
Realized gains on securities
transactions .... (14,154,374) --- ---
------------------------ -----------
(19,440,608) (2,248,257) (106,617)
------------------------ -----------
Capital share
transactions** ... 69,690,925 69,027,272 26,704,739
------------------------ -----------
Total increase
(decrease) ..... 56,146,463 63,681,346 26,019,634
Net Assets
Beginning of period 220,590,172 155,092,256 ---
------------------------ -----------
End of period ...... $276,736,635$218,773,602 $26,019,634
======================== ===========
Undistributed net
investment income $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages 121-129.
**Shares issued from sale
of shares .......... 11,752,596 11,914,285 5,355,035
Shares issued from reinvest-
ment of dividends and/or
distributions ...... 3,295,800 332,145 21,355
Shares redeemed ..... (3,733,563) (2,344,370) (164,798)
---------- ---------- ---------
Increase in outstanding
capital shares...... 11,314,833 9,902,060 5,211,592
========== ========== =========
Value issued from sale
of shares .......... $73,683,884 $83,060,254 $27,436,654
Value issued from reinvest-
ment of dividends and/or
distributions ...... 19,440,608 2,248,256 106,617
Value redeemed ...... (23,433,567)(16,281,238) (838,532)
----------- ----------- -----------
Increase in
outstanding capital $69,690,925 $69,027,272 $26,704,739
=========== =========== ===========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended DECEMBER 31, 1994
Small Cap BalancedMoney Market
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 99,347 $ 79,610 $ 851,434
Realized net gain (loss)
on investments .. 44,381 (3,218) ---
Unrealized appreciation
(depreciation) .. 1,308,279 (235,434) ---
----------- ---------- -----------
Net increase (decrease)
in net assets resulting
from operations 1,452,007 (159,042) 851,434
----------- ---------- -----------
Dividends to shareholders from:*
Net investment income (99,347) (79,610) (851,434)
Realized gains on securities
transactions .... (44,381) --- ---
----------- ---------- -----------
(143,728) (79,610) (851,434)
----------- ---------- -----------
Capital share
transactions** ... 14,771,883 8,909,720 4,812,395
----------- ---------- -----------
Total increase
(decrease) ... 16,080,162 8,671,068 4,812,395
Net Assets
Beginning of period --- --- 25,999,868
----------- ---------- -----------
End of period ...... $16,080,162 $8,671,068 $30,812,263
=========== ========== ===========
Undistributed net
investment income $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages 121-129.
**Shares issued from sale
of shares .......... 2,722,519 1,795,318 183,043,231
Shares issued from reinvest-
ment of dividends and/or
distributions ...... 23,987 16,128 851,433
Shares redeemed ..... (62,826) (54,726)(179,082,269)
--------- --------- -----------
Increase in outstanding
capital shares .... 2,683,680 1,756,720 4,812,395
========= ========= ==========
Value issued from sale
of shares .......... $14,980,266 $9,104,454$183,043,231
Value issued from reinvest-
ment of dividends and/or
distributions ...... 143,729 79,610 851,433
Value redeemed ...... (352,112) (274,344)(179,082,269)
----------- ----------------------
Increase in
outstanding capital $14,771,883 $8,909,720$ 4,812,395
=========== ======================
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended DECEMBER 31, 1994
Limited-Term Bond High Income
Bond Portfolio Portfolio Portfolio
-------------- ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 49,532 $ 5,286,973 $ 6,761,683
Realized net gain (loss)
on investments .. 455 (3,479,696) (1,428,391)
Unrealized appreciation
(depreciation) .. (47,687) (6,740,515) (7,299,167)
---------- ----------- -----------
Net increase (decrease)
in net assets resulting
from operations 2,300 (4,933,238) (1,965,875)
---------- ----------- -----------
Dividends to shareholders
from:*
Net investment income (49,532) (5,286,973) (6,761,683)
Realized gains on securities
transactions .... (455) --- ---
---------- ----------- -----------
(49,987) (5,286,973) (6,761,683)
---------- ----------- -----------
Capital share
transactions** .... 1,692,833 2,510,419 10,105,884
---------- ----------- -----------
Total increase
(decrease) .... 1,645,146 (7,709,792) 1,378,326
Net Assets
Beginning of period --- 81,726,642 71,265,349
---------- ----------- -----------
End of period ...... $1,645,146 $74,016,850 $72,643,675
========== =========== ===========
Undistributed net
investment income $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages 121-129.
**Shares issued from sale
of shares .......... 331,301 3,002,124 3,768,168
Shares issued from reinvest-
ment of dividends and/or
distributions ...... 10,283 1,081,257 1,593,245
Shares redeemed ..... (3,156) (3,587,525) (3,062,321)
------- --------- ---------
Increase in outstanding
capital shares ..... 338,428 495,856 2,299,092
======= ========= =========
Value issued from sale
of shares .......... $1,658,566 $15,437,912 $16,942,683
Value issued from reinvest-
ment of dividends and/or
distributions ...... 49,987 5,286,973 6,761,683
Value redeemed ...... (15,720)(18,214,466)(13,598,482)
---------- ----------- -----------
Increase in
outstanding capital $1,692,833 $ 2,510,419 $10,105,884
========== =========== ===========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal Year Ended DECEMBER 31, 1993
Growth Income
Portfolio Portfolio
----------- -----------
Increase in Net Assets
Operations:
Net investment income $ 1,680,381$ 1,435,262
Realized net gain (loss)
on investments .. 23,645,698 (1,146,998)
Unrealized appreciation
(depreciation) .. (3,724,710) 16,703,139
------------------------
Net increase in net
assets resulting
from operations 21,601,369 16,991,403
------------------------
Dividends to shareholders:*
From net investment
income........... (1,680,381) (1,435,262)
From realized net gain on
investment transactions(23,645,698) ---
In excess of realized net
gain from investment
transactions .... (217,003) ---
------------------------
(25,543,082) (1,435,262)
------------------------
Capital share
transactions** .... 102,168,632 74,508,737
------------------------
Total increase .. 98,226,919 90,064,878
Net Assets
Beginning of period 122,363,253 65,027,378
------------------------
End of period ...... $220,590,172$155,092,256
========================
Undistributed net
investment income $--- $---
==== ====
*See "Financial Highlights" on pages 121-129.
**Shares issued from sale
of shares .......... 13,254,238 12,309,850
Shares issued from reinvest-
ment of dividends and/or
distributions....... 4,122,379 207,468
Shares redeemed ..... (1,670,417) (1,022,164)
---------- ----------
Increase in outstanding
capital shares...... 15,706,200 11,495,154
========== ==========
Value issued from sale
of shares .......... $ 87,620,284 $79,652,858
Value issued from reinvest-
ment of dividends and/or
distributions....... 25,543,082 1,435,262
Value redeemed ...... (10,994,734) (6,579,383)
------------ -----------
Increase in outstanding
capital ............ $102,168,632 $74,508,737
============ ===========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal Year Ended DECEMBER 31, 1993
Money Market Bond High Income
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase in Net Assets
Operations:
Net investment income $ 624,768 $ 3,976,047 $ 4,820,553
Realized net gain (loss)
on investments .. --- 2,377,676 776,421
Unrealized appreciation
(depreciation) .. --- 584,399 3,303,758
----------- ----------- -----------
Net increase in net
assets resulting
from operations 624,768 6,938,122 8,900,732
----------- ----------- -----------
Dividends to shareholders:*
From net investment income (624,768) (3,976,047) (4,820,553)
From realized net gain on
investment transactions --- (2,377,676) ---
In excess of realized net
gain from investment
transactions .... --- --- ---
----------- ----------- -----------
(624,768) (6,353,723) (4,820,553)
----------- ----------- -----------
Capital share transactions**2,004,876 31,714,436 25,728,675
----------- ----------- -----------
Total increase .. 2,004,876 32,298,835 29,808,854
Net Assets
Beginning of period 23,994,992 49,427,807 41,456,495
----------- ----------- -----------
End of period ...... $25,999,868 $81,726,642 $71,265,349
=========== =========== ===========
Undistributed net
investment income $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages 121-129.
**Shares issued from sale
of shares .......... 188,336,077 5,709,768 6,007,488
Shares issued from reinvest-
ment of dividends and/or
distributions....... 624,768 1,156,980 1,068,165
Shares redeemed ..... (186,955,969) (1,137,054) (1,374,357)
----------- --------- ---------
Increase in outstanding
capital shares...... 2,004,876 5,729,694 5,701,296
=========== ========= =========
Value issued from sale
of shares .......... $188,336,077 $31,672,885 $27,116,169
Value issued from reinvest-
ment of dividends and/or
distributions....... 624,768 6,353,723 4,820,553
Value redeemed ...... (186,955,969) (6,312,172) (6,208,047)
------------ ----------- -----------
Increase in outstanding
capital ............ $ 2,004,876 $31,714,436 $25,728,675
============ =========== ===========
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE GROWTH PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
THE GROWTH PORTFOLIO
</TABLE>
<TABLE>
<CAPTION>
For the fiscal year ended December 31,
--------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987*
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period ........... $6.1962 $6.1505 $5.5973 $4.9479 $5.4025 $4.9837 $4.7846 $5.0000
------- ------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income ......... 0.1211 0.0537 0.1013 0.1229 0.1661 0.1611 0.1539 0.0523
Net realized and
unrealized gain
(loss) on
investments .... 0.0268 0.8087 1.0653 1.6636 (0.4546) 1.2150 0.4944 (0.2154)
------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations ....... 0.1479 0.8624 1.1666 1.7865 (0.2885) 1.3761 0.6483 (0.1631)
------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment
income ......... (0.1211) (0.0537) (0.1013) (0.1229) (0.1661) (0.1611) (0.1539) (0.0523)
Distribution from
capital gains .. (0.3244) (0.7569) (0.5121) (1.0142) (0.0000) (0.7962) (0.2953) (0.0000)
Distribution in
excess of capital
gains .......... (0.0000) (0.0061) (0.0000) (0.0000) (0.0000) (0.0000) (0.0000) (0.0000)
------- ------- ------- ------- ------- ------- ------- -------
Total distributions (0.4455) (0.8167) (0.6134) (1.1371) (0.1661) (0.9573) (0.4492) (0.0523)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $5.8986 $6.1962 $6.1505 $5.5973 $4.9479 $5.4025 $4.9837 $4.7846
======= ======= ======= ======= ======= ======= ======= =======
Total return ....... 2.39% 14.02% 20.84% 36.10% -5.34% 27.61% 13.55% -6.86%
Net assets, end of
period (000
omitted) ......... $276,737 $220,590 $122,363 $69,044 $37,440 $28,510 $14,521 $5,636
Ratio of expenses
to average net
assets ........... 0.77% 0.78% 0.80% 0.86% 0.86% 0.85% 0.96% 0.91%
Ratio of net investment
income to average
net assets ....... 2.07% 1.01% 2.00% 2.43% 3.58% 3.40% 3.79% 4.92%
Portfolio turnover
rate ............. 277.36% 297.81% 225.87% 316.72% 331.15% 344.71% 278.57% 127.80%
*The Money Market Portfolio, Bond Portfolio, High Income Portfolio and Growth Portfolio's inception date is December 2, 1986;
however, since these Portfolios did not have any investment activity or incur expenses prior to the date of initial offering,
the per share information is for a capital share outstanding for the period from July 13, 1987 (initial offering) through
December 31, 1987. The Income Portfolio's inception date is May 16, 1991; however, since this Portfolio did not have any
investment activity or incur expenses prior to the date of initial offering, the per share information is for a capital share
outstanding for the period from July 16, 1991 (initial offering) through December 31, 1991. The International Portfolio, Small
Cap Portfolio, Balanced Portfolio and Limited-Term Bond Portfolio's inception date is April 28, 1994; however, since these
Portfolios did not have any investment activity or incur expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from May 3, 1994 (initial offering) through December 31, 1994.
The Asset Strategy Portfolio's inception date is February 14, 1995; however, since this Portfolio did not have any investment
activity or incur expenses prior to the date of initial offering, the per share information is for a capital share outstanding
for the period from May 1, 1995 (initial offering) through September 30, 1995. Ratios and portfolio turnover rates have been
annualized.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE INCOME PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
For the fiscal year ended
December 31,
-------------------------------
1994 1993 1992 1991*
------- ------- ------- -------
Net asset value,
beginning of
period ........... $6.9180 $5.9530 $5.3158 $5.0000
------- ------- ------- -------
Income from investment
operations:
Net investment
income ......... 0.0702 0.0651 0.0803 0.0633
Net realized and
unrealized gain (loss)
on investments . (0.1490) 0.9650 0.6496 0.3158
------- ------- ------- -------
Total from investment
operations ....... (0.0788) 1.0301 0.7299 0.3791
------- ------- ------- -------
Less distributions:
Dividends from net
investment
income ......... (0.0703) (0.0651)(0.0803) (0.0633)
Distribution from
capital gains ... (0.0000) (0.0000)(0.0124) (0.0000)
------- ------- ------- -------
Total distributions (0.0703) (0.0651)(0.0927) (0.0633)
------- ------- ------- -------
Net asset value,
end of period .... $6.7689 $6.9180 $5.9530 $5.3158
======= ======= ======= =======
Total return ....... -1.14% 17.30% 13.78% 17.43%
Net assets, end of
period (000
omitted) ......... $218,774 $155,092 $65,027 $15,640
Ratio of expenses
to average net
assets............ 0.77% 0.79% 0.85% 0.89%
Ratio of net investment
income to average
net assets ....... 1.16% 1.36% 1.78% 2.47%
Portfolio turnover
rate ............. 23.32% 18.38% 15.74% 4.41%
*The Income Portfolio's inception date is May 16, 1991; however, since
this Portfolio did not have any investment activity or incur expenses
prior to the date of initial offering, the per share information is
for a capital share outstanding for the period from July 16, 1991
(initial offering) through December 31, 1991. Ratios and the
portfolio turnover rate have been annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE INTERNATIONAL PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
For the
period
ended
12/31/94*
----------
Net asset value,
beginning of
period ........... $5.0000
-------
Income from investment
operations:
Net investment
income ......... 0.0207
Net realized and
unrealized loss
on investments . (0.0074)
-------
Total from investment
operations ....... 0.0133
Less dividends from net
investment
income ......... (0.0207)
-------
Net asset value,
end of period .... $4.9926
=======
Total return ....... 0.26%
Net assets, end of
period (000
omitted) ......... $26,020
Ratio of expenses
to average net
assets............ 1.26%
Ratio of net investment
income to average
net assets ....... 1.37%
Portfolio turnover
rate ............. 23.23%
*The International Portfolio's inception date is April 28, 1994;
however, since this Portfolio did not have any investment activity or
incur expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from
May 3, 1994 (initial offering) through December 31, 1994. Ratios and
the portfolio turnover rate have been annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE SMALL CAP PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
For the
period
ended
12/31/94*
----------
Net asset value,
beginning of
period ........... $5.0000
-------
Income from investment
operations:
Net investment
income ......... 0.0376
Net realized and
unrealized gain
on investments . 1.0086
-------
Total from investment
operations ....... 1.0462
-------
Less distributions:
Dividends from net
investment income (0.0376)
Distribution from
capital gains ... (0.0168)
-------
Total distributions (0.0544)
-------
Net asset value,
end of period .... $5.9918
=======
Total return ....... 20.92%
Net assets, end of
period (000
omitted) ......... $16,080
Ratio of expenses
to average net
assets............ 1.08%
Ratio of net investment
income to average
net assets ....... 2.35%
Portfolio turnover
rate ............. 21.61%
*The Small Cap Portfolio's inception date is April 28, 1994; however,
since this Portfolio did not have any investment activity or incur
expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from
May 3, 1994 (initial offering) through December 31, 1994. Ratios and
the portfolio turnover rate have been annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE BALANCED PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
For the
period
ended
12/31/94*
----------
Net asset value,
beginning of
period ........... $5.0000
-------
Income from investment
operations:
Net investment
income ......... 0.0460
Net realized and
unrealized loss
on investments . (0.0641)
-------
Total from investment
operations ....... (0.0181)
Less dividends from net
investment
income ......... (0.0460)
-------
Net asset value,
end of period .... $4.9359
=======
Total return ....... -0.37%
Net assets, end of
period (000
omitted) ......... $8,671
Ratio of expenses
to average net
assets............ 0.95%
Ratio of net investment
income to average
net assets ....... 3.14%
Portfolio turnover
rate ............. 19.74%
*The Balanced Portfolio's inception date is April 28, 1994; however,
since this Portfolio did not have any investment activity or incur
expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from
May 3, 1994 (initial offering) through December 31, 1994. Ratios and
the portfolio turnover rate have been annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE MONEY MARKET PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
For the fiscal year ended December 31,
---------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987*
---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period .......... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- ------- ------- -------
Net investment
income .......... 0.0368 0.0260 0.0324 0.0536 0.0753 0.0852 0.0677 0.0297
Less dividends
declared ........ (0.0368) (0.0260) (0.0324) (0.0536) (0.0753) (0.0852) (0.0677) (0.0297)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value,
end of period ... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= ======= ======= =======
Total return ...... 3.72% 2.63% 3.29% 5.49% 7.82% 8.91% 7.37% 6.57%
Net assets, end of
period (000
omitted) ........ $30,812 $26,000 $23,995 $19,797 $16,870 $11,753 $8,711 $5,868
Ratio of expenses
to average net
assets .......... 0.65% 0.65% 0.65% 0.76% 0.79% 0.78% 0.94% 0.89%
Ratio of net investment
income to average
net assets ...... 3.72% 2.61% 3.17% 5.33% 7.52% 8.49% 6.84% 6.81%
*The Money Market Portfolio, Bond Portfolio, High Income Portfolio and Growth Portfolio's inception date is December 2, 1986;
however, since these Portfolios did not have any investment activity or incur expenses prior to the date of initial offering,
the per share information is for a capital share outstanding for the period from July 13, 1987 (initial offering) through
December 31, 1987. The Income Portfolio's inception date is May 16, 1991; however, since this Portfolio did not have any
investment activity or incur expenses prior to the date of initial offering, the per share information is for a capital share
outstanding for the period from July 16, 1991 (initial offering) through December 31, 1991. The International Portfolio, Small
Cap Portfolio, Balanced Portfolio and Limited-Term Bond Portfolio's inception date is April 28, 1994; however, since these
Portfolios did not have any investment activity or incur expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from May 3, 1994 (initial offering) through December 31, 1994.
The Asset Strategy Portfolio's inception date is February 14, 1995; however, since this Portfolio did not have any investment
activity or incur expenses prior to the date of initial offering, the per share information is for a capital share outstanding
for the period from May 1, 1995 (initial offering) through September 30, 1995. Ratios and portfolio turnover rates have been
annualized.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE LIMITED-TERM BOND PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
For the
period
ended
12/31/94*
----------
Net asset value,
beginning of
period ........... $5.0000
-------
Income from investment
operations:
Net investment
income ......... 0.1507
Net realized and
unrealized loss
on investments . (0.1375)
-------
Total from investment
operations ....... 0.0132
-------
Less distributions:
Dividends from net
investment
income ......... (0.1507)
Distribution from
capital gains .. (0.0014)
-------
Total distributions (0.1521)
-------
Net asset value,
end of period .... $4.8611
=======
Total return ....... 0.26%
Net assets, end of
period (000
omitted) ......... $1,645
Ratio of expenses
to average net
assets............ 0.93%
Ratio of net investment
income to average
net assets ....... 5.89%
Portfolio turnover
rate ............. 93.83%
*The Limited-Term Bond Portfolio's inception date is April 28, 1994;
however, since this Portfolio did not have any investment activity or
incur expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from
May 3, 1994 (initial offering) through December 31, 1994. Ratios and
the portfolio turnover rate have been annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE BOND PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
For the fiscal year ended December 31,
---------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987*
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period .......... $5.4045 $5.2626 $5.2661 $4.9534 $5.0249 $4.8852 $4.9246 $5.0000
------- ------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income ........ 0.3507 0.3334 0.3643 0.3867 0.4025 0.4155 0.4088 0.1861
Net realized and
unrealized gain
(loss) on
investments ... (0.6652) 0.3046 0.0216 0.3771 (0.0715) 0.1397 (0.0394) (0.0249)
------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations ...... (0.3145) 0.6380 0.3859 0.7638 0.3310 0.5552 0.3694 0.1612
------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment
income ........ (0.3507) (0.3334) (0.3643) (0.3867) (0.4025) (0.4155) (0.4088) (0.1861)
Distribution from
capital gains . (0.0000) (0.1627) (0.0251) (0.0644) (0.0000) (0.0000) (0.0000) (0.0505)
------- ------- ------- ------- ------- ------- ------- -------
Total distributions (0.3507) (0.4961) (0.3894) (0.4511) (0.4025) (0.4155) (0.4088) (0.2366)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value,
end of period ... $4.7393 $5.4045 $5.2626 $5.2661 $4.9534 $5.0249 $4.8852 $4.9246
======= ======= ======= ======= ======= ======= ======= =======
Total return ...... -5.90% 12.37% 7.67% 16.19% 7.03% 11.82% 7.74% 7.20%
Net assets, end of
period (000
omitted) ........ $74,017 $81,727 $49,428 $29,112 $16,464 $11,530 $6,465 $2,923
Ratio of expenses
to average net
assets .......... 0.62% 0.62% 0.64% 0.72% 0.78% 0.81% 0.96% 0.79%
Ratio of net investment
income to average
net assets ...... 6.73% 6.01% 6.91% 7.65% 8.05% 8.34% 8.17% 8.96%
Portfolio turnover
rate ............ 135.82% 68.75% 44.32% 52.50% 51.50% 42.83% 29.18% 187.93%
*The Money Market Portfolio, Bond Portfolio, High Income Portfolio and Growth Portfolio's inception date is December 2, 1986;
however, since these Portfolios did not have any investment activity or incur expenses prior to the date of initial offering,
the per share information is for a capital share outstanding for the period from July 13, 1987 (initial offering) through
December 31, 1987. The Income Portfolio's inception date is May 16, 1991; however, since this Portfolio did not have any
investment activity or incur expenses prior to the date of initial offering, the per share information is for a capital share
outstanding for the period from July 16, 1991 (initial offering) through December 31, 1991. The International Portfolio, Small
Cap Portfolio, Balanced Portfolio and Limited-Term Bond Portfolio's inception date is April 28, 1994; however, since these
Portfolios did not have any investment activity or incur expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from May 3, 1994 (initial offering) through December 31, 1994.
The Asset Strategy Portfolio's inception date is February 14, 1995; however, since this Portfolio did not have any investment
activity or incur expenses prior to the date of initial offering, the per share information is for a capital share outstanding
for the period from May 1, 1995 (initial offering) through September 30, 1995. Ratios and portfolio turnover rates have been
annualized.
</TABLE>
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE HIGH INCOME PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
<TABLE>
<CAPTION>
For the fiscal year ended December 31,
---------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987*
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period ........... $4.6373 $4.2886 $4.0770 $3.4067 $4.1288 $4.8837 $4.7333 $5.0000
------- ------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income ......... 0.4106 0.3899 0.4050 0.4368 0.4346 0.5810 0.5263 0.2425
Net realized and
unrealized gain
(loss) on
investments .... (0.5255) 0.3487 0.2116 0.6703 (0.7221) (0.7549) 0.1595 (0.2667)
------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations ....... (0.1149) 0.7386 0.6166 1.1071 (0.2875) (0.1739) 0.6858 (0.0242)
------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from
net investment
income ......... (0.4106) (0.3899) (0.4050) (0.4368) (0.4346) (0.5810) (0.5263) (0.2425)
Distribution from
capital gains .. (0.0000) (0.0000) (0.0000) (0.0000) (0.0000) (0.0000) (0.0091) (0.0000)
------- ------- ------- ------- ------- ------- ------- -------
Total distributions (0.4106) (0.3899) (0.4050) (0.4368) (0.4346) (0.5810) (0.5354) (0.2425)
------- ------- ------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $4.1118 $4.6373 $4.2886 $4.0770 $3.4067 $4.1288 $4.8837 $4.7333
======= ======= ======= ======= ======= ======= ======= =======
Total return ....... -2.55% 17.90% 15.70% 34.19% -7.44% -4.19% 15.14% -0.99%
Net assets, end of
period (000
omitted) ......... $72,644 $71,265 $41,456 $24,394 $13,868 $15,717 $12,779 $4,521
Ratio of expenses
to average net
assets ........... 0.74% 0.75% 0.77% 0.87% 0.90% 0.82% 0.91% 0.79%
Ratio of net investment
income to average
net assets ....... 9.03% 8.66% 9.48% 11.32% 11.55% 12.54% 10.85% 10.70%
Portfolio turnover
rate ............. 37.86% 54.22% 60.79% 34.00% 12.21% 74.97% 46.75% 7.09%
*The Money Market Portfolio, Bond Portfolio, High Income Portfolio and Growth Portfolio's inception date is December 2, 1986;
however, since these Portfolios did not have any investment activity or incur expenses prior to the date of initial offering,
the per share information is for a capital share outstanding for the period from July 13, 1987 (initial offering) through
December 31, 1987. The Income Portfolio's inception date is May 16, 1991; however, since this Portfolio did not have any
investment activity or incur expenses prior to the date of initial offering, the per share information is for a capital share
outstanding for the period from July 16, 1991 (initial offering) through December 31, 1991. The International Portfolio, Small
Cap Portfolio, Balanced Portfolio and Limited-Term Bond Portfolio's inception date is April 28, 1994; however, since these
Portfolios did not have any investment activity or incur expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from May 3, 1994 (initial offering) through December 31, 1994.
The Asset Strategy Portfolio's inception date is February 14, 1995; however, since this Portfolio did not have any investment
activity or incur expenses prior to the date of initial offering, the per share information is for a capital share outstanding
for the period from May 1, 1995 (initial offering) through September 30, 1995. Ratios and portfolio turnover rates have been
annualized.
</TABLE>
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
NOTE 1 -- Significant Accounting Policies
TMK/United Funds, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company. Capital stock is currently divided into the nine
classes that are designated the Growth Portfolio, the Income Portfolio,
the International Portfolio, the Small Cap Portfolio, the Balanced
Portfolio, the Money Market Portfolio, the Limited-Term Bond Portfolio,
the Bond Portfolio and the High Income Portfolio. The assets belonging
to each Portfolio are held separately by the Custodian. The capital
shares of each Portfolio represent a pro rata beneficial interest in the
principal, net income, and realized and unrealized capital gains or
losses of its respective investments and other assets. The following is
a summary of significant accounting policies consistently followed by
the Fund in the preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles.
A. Security valuation -- Each stock and convertible bond is valued at
the latest sale price thereof on the last business day of the
fiscal period as reported by the principal securities exchange on
which the issue is traded or, if no sale is reported for a stock,
the average of the latest bid and asked prices. Bonds, other than
convertible bonds, are valued using a pricing system provided by a
major dealer in bonds. Convertible bonds are valued using this
pricing system only on days when there is no sale reported. Stocks
which are traded over-the-counter are priced using NASDAQ (National
Association of Securities Dealers Automated Quotations) which
provides information on bid and asked or closing prices quoted by
major dealers in such stocks. Securities for which quotations are
not readily available are valued as determined in good faith in
accordance with procedures established by and under the general
supervision of the Fund's Board of Directors. Short-term debt
securities are valued at amortized cost, which approximates market.
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 identified cost basis. Original issue discount
(as defined in the Internal Revenue Code), premiums on the purchase
of bonds and post-1984 market discount are amortized for both
financial and tax reporting purposes over the remaining lives of
the bonds. Dividend income is recorded on the ex-dividend date
except that certain dividends from foreign securities are recorded
as soon as the Fund is informed of the ex-dividend date. Interest
income is recorded on the accrual basis. See Note 3 -- Investment
Securities Transactions.
C. Foreign currency translations -- All assets and liabilities
denominated in foreign currencies are translated into U.S. dollars
daily. Purchases and sales of investment securities and accruals
of income and expenses are translated at the rate of exchange
prevailing on the date of the transaction. For assets and
liabilities other than investments in securities, net realized and
unrealized gains and losses from foreign currency translations
arise from changes in currency exchange rates. The Fund combines
fluctuations from currency exchange rates and fluctuations in
market value when computing net realized and unrealized gain or
loss from investments.
D. Federal income taxes -- It is the Fund's policy to distribute all
of its taxable income and capital gains to its shareholders and
otherwise qualify as a regulated investment company under the
Internal Revenue Code. In addition, the Fund intends to pay
distributions as required to avoid imposition of excise tax.
Accordingly, provision has not been made for Federal income taxes.
See Note 4 -- Federal Income Tax Matters.
E. Dividends and distributions -- Dividends and distributions to
shareholders are recorded by each Portfolio on the record date.
Net investment income distributions and capital gains distributions
are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These
differences are due to differing treatments for items such as
deferral of wash sales and post-October losses, foreign currency
transactions, net operating losses and expiring capital loss
carryforwards.
NOTE 2 -- Investment Management And Payments To Affiliated Persons
The Fund pays a fee for investment management services. The fee is
computed daily based on the net asset value at the close of business.
The fee consists of two elements: (i) a "Specific" fee computed on net
asset value as of the close of business each day at the following annual
rates: Growth Portfolio - .20% of net assets; Income Portfolio - .20%
of net assets; International Portfolio - .30% of net assets; Small Cap
Portfolio - .35% of net assets; Balanced Portfolio - .10% of net assets;
Money Market Portfolio - none; Limited-Term Bond Portfolio - .05% of net
assets; Bond Portfolio - .03% of net assets; High Income Portfolio -
.15% of net assets and (ii) a base fee computed each day on the combined
net asset values of all of the Portfolios (approximately $725.4 million
of combined net assets at December 31, 1994) and allocated among the
Portfolios based on their relative net asset size at the annual rates of
.51% of the first $750 million dollars of combined net assets, .49% on
that amount between $750 million and $1.5 billion, .47% between $1.5
billion and $2.25 billion, and .45% of that amount over $2.25 billion.
The Fund accrues and pays this fee daily.
Pursuant to assignment of the Investment Management Agreement
between the Fund and Waddell & Reed, Inc. (W&R), Waddell & Reed
Investment Management Company ("WRIMCO"), a wholly-owned subsidiary of
W&R, serves as the Fund's investment manager.
The Fund has an Accounting Services Agreement with Waddell & Reed
Services Company ("WARSCO"), a wholly-owned subsidiary of W&R. Under
the agreement, WARSCO acts as the agent in providing accounting services
and assistance to the Fund and pricing daily the value of shares of each
Portfolio. For these services, each Portfolio pays WARSCO a monthly fee
of one-twelfth of the annual fee shown in the following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Portfolio
-------------------------- -----------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $1,000 $ 85,000
$1,000 and Over $100,000
The Fund paid Directors' fees of $21,273.
W&R is an indirect subsidiary of Torchmark Corporation, a holding
company, and United Investors Management Company, a holding company, and
a direct subsidiary of Waddell & Reed Financial Services, Inc., a
holding company.
NOTE 3 -- Investment Security Transactions
Investment securities transactions for the year ended December 31,
1994, are summarized as follows:
Growth Income International
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $610,720,993 $110,216,798 $15,533,923
Purchases of U.S. Government
securities --- --- ---
Purchases of short-term
securities 587,088,754 122,085,281 123,647,756
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 599,584,276 43,252,090 1,220,081
Proceeds from maturities
and sales of U.S.
Government securities --- --- ---
Proceeds from maturities
and sales of short-term
securities 541,578,604 119,015,514 111,641,229
Small Cap BalancedMoney Market
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $5,949,448 $5,205,411 $---
Purchases of U.S. Government
securities --- 558,734 ---
Purchases of short-term
securities 97,663,698 42,037,927 301,240,425
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 393,563 358,207 ---
Proceeds from maturities
and sales of U.S.
Government securities --- --- ---
Proceeds from maturities
and sales of short-term
securities 88,681,760 38,660,425 303,613,144
Limited- High
Term Bond Bond Income
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $1,272,587$68,447,930 $32,290,564
Purchases of U.S. Government
securities 972,063 39,942,617 ---
Purchases of short-term
securities 3,157,000 62,965,209 51,306,202
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 52,702 61,694,962 26,035,941
Proceeds from maturities
and sales of U.S.
Government securities 688,031 40,410,384 ---
Proceeds from maturities
and sales of short-term
securities 3,111,930 66,437,462 48,207,575
For Federal income tax purposes, cost of investments owned at
December 31, 1994 and the related unrealized appreciation (depreciation)
were as follows:
Aggregate
Cost Appreciation Depreciation Appreciation
--------------------------------------------------
Growth Portfolio $286,427,133 $5,310,898 $(14,928,500) $(9,617,602)
Income Portfolio 202,473,404 22,487,056 (6,115,933) 16,371,123
International Portfolio 26,445,737 529,294 (1,193,390) (664,096)
Small Cap Portfolio 14,720,884 1,448,308 (140,029) 1,308,279
Balanced Portfolio 8,826,711 98,975 (334,409) (235,434)
Money Market Portfolio 27,624,021 0 0 0
Limited-Term Bond Portfolio 1,658,060 0 (47,687) (47,687)
Bond Portfolio 77,172,386 68,638 (4,664,972) (4,596,334)
High Income Portfolio 74,841,167 852,083 (4,845,109) (3,993,026)
NOTE 4 -- Federal Income Tax Matters
The Fund's income and expenses attributed to each Portfolio and the
gains and losses on security transactions of each Portfolio have been
attributed to that Portfolio for Federal income tax purposes as well as
for accounting purposes. For Federal income tax purposes, Growth, Small
Cap and Limited-Term Bond Portfolios realized capital gain net income of
$14,154,374, $44,381 and $455, respectively, during the year ended
December 31, 1994. The capital gain net income was paid to shareholders
during the year ended December 31, 1994. For Federal income tax
purposes the Income Portfolio realized capital gain net income of
$685,306 during the year ended December 31, 1994. These capital gains
were entirely offset by utilization of capital loss carryforwards.
Remaining prior year capital loss carryforwards of Income Portfolio
aggregated $459,928 at December 31, 1994, and are available to offset
future realized capital gain net income through December 31, 2001. For
Federal income tax purposes, Bond, High Income, Balanced and
International Portfolios realized capital losses of $3,479,696,
$1,428,392, $3,218 and $21,009, respectively, during the year ended
December 31, 1994. These amounts are available to offset future
realized capital gain net income through December 31, 2002. In
addition, the High Income Portfolio has $316,713 in capital loss
carryforwards from prior years, which are available to offset future
realized capital gain net income through December 31, 1999.
Note 5 -- Organization
The inception date of the International Portfolio, the Small Cap
Portfolio, the Balanced Portfolio, and the Limited-Term Bond Portfolio
is April 28, 1994; however, these Portfolios did not have any investment
activity or incur expenses prior to the date of initial offering, May 3,
1994. The statement of operations and the statement of changes in net
assets for the remaining Portfolios are for the fiscal year ended
December 31, 1994.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
TMK/United Funds, Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of each
of the nine portfolios comprising TMK/United Funds, Inc., issuer of the
respective nine classes of capital shares (Growth Portfolio, Income
Portfolio, International Portfolio, Small Cap Portfolio, Balanced
Portfolio, Money Market Portfolio, Limited-Term Bond Portfolio, Bond
Portfolio and High Income Portfolio) at December 31, 1994, the results
of their operations, and the changes in their net assets and the
financial highlights for the periods indicated, in conformity with
generally accepted accounting principles. These financial statements
and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made
by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation
of securities at December 31, 1994 by correspondence with the custodian
and brokers and the application of alternative auditing procedures where
confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
Kansas City, Missouri
January 31, 1995
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1995
Shares Value
COMMON STOCKS
Banks and Savings and Loans - 14.85%
Ahmanson (H. F.) & Company .............. 75,000$ 1,650,000
Bank of Boston Corporation .............. 50,000 1,875,000
BankAmerica Corporation ................. 75,000 3,946,875
Barnett Banks, Inc. ..................... 50,000 2,562,500
BayBanks, Inc. .......................... 25,000 1,984,375
Boatmen's Bancshares, Inc. .............. 100,000 3,518,700
Brooklyn Bancorp, Inc.* ................. 79,200 2,653,200
California Federal Bank, F.S.B.* ........ 150,000 1,968,750
Calumet Bancorp, Inc.* .................. 25,000 671,875
Chemical Banking Corporation ............ 80,000 3,780,000
City National Corporation ............... 125,000 1,421,875
Compass Bancshares, Inc. ................ 75,000 2,151,525
Crestar Financial Corporation ........... 50,000 2,450,000
Dime Bancorp, Inc.*...................... 100,000 1,000,000
First Fidelity Bancorporation ........... 50,000 2,950,000
Great Western Financial Corporation ..... 75,000 1,546,875
Midlantic Corporation ................... 200,000 7,975,000
Northern Trust Corporation .............. 75,000 3,000,000
Roosevelt Financial Group, Inc. ......... 200,000 3,325,000
Total ................................. 50,431,550
Biotechnology and Medical Services - 1.50%
Centocor, Inc.* ......................... 200,000 2,875,000
Ventritex, Inc.* ........................ 35,600 598,507
Zoll Medical Corporation* ............... 125,000 1,609,375
Total ................................. 5,082,882
Building - 0.43%
United Dominion Realty Trust, Inc. ...... 100,000 1,475,000
Chemicals Major - 2.02%
du Pont (E.I.) de Nemours and Company ... 100,000 6,875,000
Chemicals Specialty and Miscellaneous Technology - 1.90%
Geon Company (The) ...................... 130,000 3,737,500
IMC Global, Inc. ........................ 50,000 2,706,250
Total ................................. 6,443,750
Computers and Office Equipment - 10.07%
Adobe Systems Incorporated .............. 70,000 4,077,500
America Online, Inc.* ................... 85,000 3,718,750
Automatic Data Processing, Inc. ......... 70,000 4,401,250
Broderbund Software, Inc.* .............. 40,000 2,545,000
General Motors Corporation, Class E ..... 185,000 8,047,500
HBO & Company ........................... 50,000 2,731,250
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1995
Shares Value
COMMON STOCKS (Continued)
Computers and Office Equipment (Continued)
Inference Corporation, Class A*.......... 10,500$ 148,313
NETCOM On-Line Communication Services,
Inc.* ................................. 30,000 770,610
Oracle Systems Corporation*.............. 125,000 4,820,250
Seagate Technology, Inc.*................ 75,000 2,943,750
Total ................................. 34,204,173
Drugs and Hospital Supply - 8.31%
Baxter International Inc. ............... 100,000 3,637,500
Bristol-Myers Squibb Company ............ 70,000 4,768,750
Merck & Co., Inc. ....................... 150,000 7,350,000
Schering-Plough Corporation ............. 83,600 3,688,850
SmithKline Beecham plc, ADR ............. 100,000 4,525,000
United States Surgical Corporation ...... 100,000 2,087,500
Warner-Lambert Company .................. 25,000 2,159,375
Total ................................. 28,216,975
Electrical Equipment - 1.05%
Emerson Electric Co. .................... 50,000 3,575,000
Electronics - 11.90%
Analog Devices, Inc.* ................... 75,000 2,550,000
Applied Materials, Inc.* ................ 40,000 3,460,000
Cascade Communications Corp.* ........... 40,000 1,725,000
cisco Systems, Inc.* .................... 75,000 3,792,150
Digital Link Corporation* ............... 75,000 2,146,875
Hewlett-Packard Company ................. 50,000 3,725,000
Intel Corporation ....................... 120,000 7,597,440
LSI Logic Corporation* .................. 45,000 1,760,625
Micron Technology, Inc. ................. 75,000 4,115,625
Silicon Valley Group, Inc.* ............. 75,000 2,723,400
Summa Four, Inc.* ....................... 125,000 3,484,375
Texas Instruments Incorporated .......... 25,000 3,346,875
Total ................................. 40,427,365
Financial - 2.15%
Federal National Mortgage Association ... 30,000 2,831,250
First USA, Inc. ......................... 40,000 1,775,000
Regional Acceptance Corporation* ........ 150,000 2,700,000
Total ................................. 7,306,250
Food and Related - 1.01%
Ralcorp Holdings* ....................... 150,000 3,431,250
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1995
Shares Value
COMMON STOCKS (Continued)
Hospital Management - 2.51%
Columbia/HCA Healthcare Corporation ..... 100,000$ 4,325,000
Quorum Health Group, Inc.* .............. 100,000 2,006,200
Sierra Health Services, Inc.* ........... 89,300 2,187,850
Total ................................. 8,519,050
Household Products - 1.35%
Procter & Gamble Company (The) .......... 25,000 1,796,875
Rubbermaid Incorporated ................. 100,000 2,775,000
Total ................................. 4,571,875
Insurance - 6.13%
Chubb Corporation (The) ................. 50,000 4,006,250
First Colony Corporation ................ 125,000 3,000,000
National Re Corporation ................. 93,100 3,118,850
PMI Group, Inc. (The) ................... 40,600 1,761,025
St. Paul Companies, Inc. (The) .......... 100,000 4,925,000
TIG Holdings, Inc. ...................... 175,000 4,025,000
Total ................................. 20,836,125
Leisure Time - 7.79%
Boston Chicken, Inc.* ................... 75,000 1,814,025
Capital Cities/ABC, Inc. ................ 25,000 2,700,000
Comcast Corporation, Class A ............ 300,000 5,568,600
Tele-Communications, Inc., Class A* ..... 200,000 4,687,400
Time Warner Incorporated ................ 100,000 4,112,500
Viacom Inc., Class B* ................... 125,000 5,796,875
Wendy's International, Inc. ............. 100,000 1,787,500
Total ................................. 26,466,900
Machinery - 0.72%
Keystone International, Inc. ............ 125,000 2,453,125
Multi-Industry - 3.53%
Berkshire Hathaway Inc.* ................ 10 234,500
ITT Corporation ......................... 100,000 11,750,000
Total ................................. 11,984,500
Paper - 4.33%
Bowater Incorporated .................... 150,000 6,731,250
Champion International Corporation ...... 30,000 1,563,750
James River Corporation of Virginia ..... 125,000 3,453,125
Mead Corporation (The)* ................. 50,000 2,968,750
Total ................................. 14,716,875
Publishing and Advertising - 0.67%
News Corporation Limited (The), ADR ..... 100,000 2,262,500
Railroads - 1.92%
Conrail Inc. ............................ 75,000 4,171,875
Southern Pacific Rail Corporation* ...... 150,000 2,362,500
Total ................................. 6,534,375
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1995
Shares Value
COMMON STOCKS (Continued)
Retailing - 2.82%
Borders Group, Inc.* .................... 236,000$ 3,392,500
Charming Shoppes Inc. ................... 100,000 531,200
Family Dollar Stores, Inc. .............. 225,000 3,318,750
Mercantile Stores Company, Inc. ......... 50,000 2,325,000
Total ................................. 9,567,450
Services, Consumer and Business - 0.91%
Block (H & R), Inc. ..................... 75,000 3,084,375
Telecommunications - 8.50%
ADC Telecommunications, Inc.* ........... 31,500 1,122,187
AirTouch Communications* ................ 125,000 3,562,500
Ascend Communications, Inc.* ............ 40,000 2,025,000
AT&T Corporation ........................ 150,000 7,968,750
MCI Communications Corporation .......... 200,000 4,387,400
MFS Communications Company, Inc.* ....... 125,000 4,000,000
Nokia Corporation, ADS .................. 50,000 2,981,250
Ortel Corporation* ...................... 190,200 2,805,450
Total ................................. 28,852,537
TOTAL COMMON STOCKS - 96.37% $327,318,882
(Cost: $306,926,055)
PREFERRED STOCKS - 0.90%
Building
National Health Investors, Inc.,
Convertible ........................... 125,000$ 3,062,500
(Cost: $3,048,040)
TOTAL SHORT-TERM SECURITIES - 2.59% $ 8,791,976
(Cost: $8,791,976)
TOTAL INVESTMENT SECURITIES - 99.86% $339,173,358
(Cost: $318,766,071)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.14% 460,500
NET ASSETS - 100.00% $339,633,858
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1995
Shares Value
COMMON STOCKS
Aerospace - 1.42%
Boeing Company (The) .................... 44,500$ 2,786,813
Sundstrand Corporation .................. 21,000 1,254,750
Total ................................. 4,041,563
Airlines - 2.66%
AMR Corporation* ........................ 28,000 2,089,500
Southwest Airlines Co. .................. 162,000 3,867,750
USAir Group, Inc.* ...................... 139,000 1,615,875
Total ................................. 7,573,125
Automotive - 5.40%
Chrysler Corporation .................... 75,500 3,614,563
Dana Corporation ........................ 53,000 1,517,125
Eaton Corporation ....................... 35,000 2,034,375
Ford Motor Company ...................... 130,500 3,882,375
General Motors Corporation .............. 69,500 3,257,813
Magna International Inc., Class A ....... 24,500 1,081,062
Total ................................. 15,387,313
Banks and Savings and Loans - 2.55%
Citicorp ................................ 52,000 3,009,500
First Bank System, Inc. ................. 35,000 1,435,000
First Interstate Bancorp ................ 21,000 1,685,250
Midlantic Corporation ................... 28,000 1,116,500
Total ................................. 7,246,250
Beverages - 1.08%
PepsiCo, Inc. ........................... 67,500 3,079,687
Biotechnology and Medical Services - 1.35%
Centocor, Inc.* ......................... 14,000 201,250
Medtronic, Inc. ......................... 28,000 2,159,500
Ventritex, Inc.* ........................ 89,000 1,496,268
Total ................................. 3,857,018
Building - 6.71%
Armstrong World Industries, Inc. ........ 62,500 3,132,813
Centex Corporation ...................... 134,400 3,796,800
Georgia-Pacific Corporation ............. 29,500 2,559,125
Louisiana-Pacific Corporation ........... 70,000 1,837,500
Pulte Corporation ....................... 148,900 4,169,200
Temple-Inland Inc. ...................... 24,500 1,166,812
Weyerhaeuser Company .................... 52,000 2,450,500
Total ................................. 19,112,750
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1995
Shares Value
COMMON STOCKS (Continued)
Chemicals Major - 6.51%
Air Products and Chemicals, Inc. ........ 70,000$ 3,902,500
Albemarle Corporation ................... 72,800 1,137,500
Dow Chemical Company (The) .............. 17,500 1,257,812
du Pont (E.I.) de Nemours and Company ... 68,500 4,709,375
PPG Industries, Inc. .................... 87,000 3,741,000
Praxair, Inc. ........................... 69,500 1,737,500
Union Carbide Corporation ............... 61,000 2,035,875
Total ................................. 18,521,562
Chemicals Specialty and Miscellaneous Technology - 3.77%
Geon Company (The) ...................... 100,600 2,892,250
IMC Global, Inc. ........................ 29,400 1,591,275
Polaroid Corporation .................... 97,500 3,973,125
Xerox Corporation ....................... 19,500 2,286,375
Total ................................. 10,743,025
Computers and Office Equipment - 4.57%
Computer Associates International, Inc. . 17,500 1,185,625
General Motors Corporation, Class E ..... 75,800 3,297,300
International Business Machines
Corporation ........................... 35,000 3,360,000
Microsoft Corporation* .................. 21,000 1,899,177
Oracle Systems Corporation* ............. 84,700 3,266,201
Total ................................. 13,008,303
Consumer Electronics and Appliances - 1.36%
Harman International Industries,
Incorporated .......................... 23,000 931,500
Whirlpool Corporation ................... 53,500 2,942,500
Total ................................. 3,874,000
Drugs and Hospital Supply - 0.95%
Bristol-Myers Squibb Company ............ 19,500 1,328,438
Merck & Co., Inc. ....................... 28,000 1,372,000
Total ................................. 2,700,438
Electrical Equipment - 2.34%
Emerson Electric Co. .................... 28,000 2,002,000
General Electric Company ................ 82,500 4,650,937
Total ................................. 6,652,937
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1995
Shares Value
COMMON STOCKS (Continued)
Electronics - 11.98%
AMP Incorporated ........................ 77,000$ 3,253,250
Analog Devices, Inc.* ................... 193,200 6,568,800
Applied Materials, Inc.* ................ 60,000 5,190,000
cisco Systems, Inc.* .................... 69,500 3,514,059
Intel Corporation ....................... 105,000 6,647,760
LSI Logic Corporation* .................. 134,400 5,258,400
Linear Technology Corporation ........... 21,300 1,400,475
Molex Incorporated, Class A ............. 62,550 2,275,256
Total ................................. 34,108,000
Engineering and Construction - 0.86%
Fluor Corporation ....................... 28,000 1,456,000
Foster Wheeler Corporation .............. 28,000 987,000
Total ................................. 2,443,000
Financial - 1.52%
Federal Home Loan Mortgage Corporation .. 35,000 2,406,250
Federal National Mortgage Association ... 20,500 1,934,688
Total ................................. 4,340,938
Food and Related - 0.76%
CPC International Inc. .................. 35,000 2,161,250
Hospital Management - 1.40%
Columbia/HCA Healthcare Corporation ..... 26,000 1,124,500
Tenet Healthcare Corporation* ........... 69,500 999,062
United HealthCare Corporation ........... 45,000 1,861,875
Total ................................. 3,985,437
Household Products - 3.24%
Colgate-Palmolive Company ............... 42,000 3,071,250
Gillette Company (The) .................. 70,000 3,123,750
Procter & Gamble Company (The) .......... 42,000 3,018,750
Total .................................. 9,213,750
Leisure Time - 2.30%
Walt Disney Company (The) ............... 49,000 2,725,625
McDonald's Corporation .................. 97,500 3,814,687
Total ................................. 6,540,312
Machinery - 6.86%
Case Corporation ........................ 97,500 2,900,625
Caterpillar Inc. ........................ 109,500 7,035,375
Cooper Industries, Inc. ................. 37,000 1,461,500
Deere & Company ......................... 47,500 4,067,187
Ingersoll-Rand Company .................. 28,000 1,071,000
Parker Hannifin Corporation ............. 42,000 1,522,500
Trinova Corporation ..................... 42,000 1,470,000
Total ................................. 19,528,187
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1995
Shares Value
COMMON STOCKS (Continued)
Multi-Industry - 2.08%
ITT Corporation ......................... 50,500$ 5,933,750
Paper - 2.44%
Bowater Incorporated .................... 32,000 1,436,000
International Paper Company ............. 40,500 3,472,875
Union Camp Corporation .................. 35,000 2,025,625
Total ................................. 6,934,500
Railroads - 2.82%
CSX Corporation ......................... 24,500 1,840,563
Conrail Inc. ............................ 42,000 2,336,250
Norfolk Southern Corporation ............ 21,000 1,414,875
Southern Pacific Rail Corporation* ...... 32,000 504,000
Union Pacific Corporation ............... 35,000 1,938,125
Total ................................. 8,033,813
Retailing - 8.37%
Circuit City Stores, Inc. ............... 111,500 3,526,188
Dayton Hudson Corporation ............... 32,500 2,331,875
Gap, Inc. (The) ......................... 49,000 1,708,875
Home Depot, Inc. (The) .................. 53,500 2,173,438
Limited, Inc. (The) ..................... 52,000 1,144,000
May Department Stores Company (The) ..... 67,500 2,809,688
Nordstrom, Inc. ......................... 26,000 1,074,112
OfficeMax, Inc.* ........................ 46,500 1,296,187
Penney (J.C.) Company, Inc. ............. 47,000 2,256,000
Tommy Hilfiger Corporation* ............. 108,800 3,046,400
Toys "R" Us, Inc.* ...................... 21,000 614,250
Wal-Mart Stores, Inc. ................... 69,500 1,859,125
Total ................................. 23,840,138
Steel - 0.39%
Nucor Corporation ....................... 21,000 1,123,500
Telecommunications - 8.39%
ADC Telecommunications, Inc.* ........... 16,000 570,000
AT&T Corporation ........................ 35,000 1,859,375
BellSouth Corporation ................... 22,000 1,397,000
General Instrument Corporation* ......... 69,500 2,667,063
General Motors Corporation, Class H ..... 12,300 485,850
MCI Communications Corporation .......... 130,000 2,851,810
MFS Communications Company, Inc.* ....... 29,900 956,800
Motorola, Inc. .......................... 115,500 7,752,937
Telefonaktiebolaget LM Ericsson,
Class B, ADR ......................... 140,000 2,808,680
Vanguard Cellular Systems, Inc.* ........ 105,000 2,533,125
Total ................................. 23,882,640
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1995
Shares Value
COMMON STOCKS (Continued)
Tire and Rubber - 1.01%
Goodyear Tire & Rubber Company (The) .... 69,500$ 2,866,875
TOTAL COMMON STOCKS - 95.09% $270,734,061
(Cost: $208,154,290)
TOTAL SHORT-TERM SECURITIES - 4.14% $ 11,788,766
(Cost: $11,788,766)
TOTAL INVESTMENT SECURITIES - 99.23% $282,522,827
(Cost: $219,943,056)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.77% 2,187,966
NET ASSETS - 100.00% $284,710,793
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1995
Shares Value
COMMON STOCKS
Australia - 1.79%
Westpac Banking Corp. ................... 200,000 $ 723,594
Finland - 7.57%
Enso-Gutzeit Oy ......................... 40,400 365,897
Kymmene Oy .............................. 13,000 404,634
Metsa-Serla Oy, Series B ................ 20,000 889,305
Nokia Corporation, Series K ............. 15,000 891,645
Tampella OY* ............................ 200,000 505,500
Total ................................. 3,056,981
France - 6.55%
Credit Lyonnais SA* ..................... 8,000 460,742
Lapeyre S.A. ............................ 6,625 435,631
Pechiney International .................. 30,000 757,529
Societe Industrielle de Transports
Automobiles S.A. ...................... 3,500 497,805
Television Francaise 1-TF1 S.A. ......... 5,000 492,136
Total ................................. 2,643,843
Germany - 18.14%
APCOA Parking Aktiengesellschaft* ....... 9,000 473,034
Computer 2000 AG ........................ 700 242,409
Durr Beteiligungs AG .................... 3,500 1,239,879
Fag Kugelfischer AG ..................... 6,000 817,669
GILDEMEISTER Aktiengesellschaft* ........ 11,000 890,688
Mannesmann AG ........................... 3,300 1,007,989
Rheinelektra AG ......................... 550 421,487
Tarkett Aktiengesellschaft, ADS (A)*..... 12,000 312,000
TRAUB AG* ............................... 8,500 1,136,857
VEBA AG ................................. 2,000 785,859
Total ................................. 7,327,871
Hong Kong - 4.90%
First Pacific Company Limited ........... 750,000 663,948
Guangdong Corporation Limited ........... 1,000,000 546,021
HSBC Holdings Plc ....................... 60,000 769,599
Total ................................. 1,979,568
Indonesia - 2.98%
PT Bukaka Teknik Utama, F* .............. 250,000 482,712
PT Matahari Putra Prima, F .............. 347,500 553,940
PT Matahari Putra Prima Rts* ............ 173,750 167,742
Total ................................. 1,204,394
Japan - 1.67%
Hitachi ................................. 50,000 498,584
NEC ..................................... 16,000 175,407
Total ................................. 673,991
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1995
Shares Value
COMMON STOCKS (Continued)
Korea - 2.50%
Samsung Electronics Co., Ltd., GDR (A)* . 19,000$ 1,009,470
Mexico - 7.57%
Cemex, S.A., CPO Shares, Series A ....... 150,000 508,800
Desc-Sociedad de Fomento Industrial,
S.A. de C.V., Class B* ................ 150,000 498,000
Grupo Carso, S.A. de C.V.,
Series 1A* ............................ 150,000 820,800
Grupo Financiero Bancomer, S.A. de
C.V., B, CPO Shares* .................. 1,746,000 508,435
Telefonos de Mexico S.A. de C.V., ADR ... 24,400 722,850
Total ................................. 3,058,885
Netherlands - 1.59%
Philips Electronics N.V. NY Shares ...... 15,000 641,250
Norway - 4.57%
Den Norske Luftfartselskap A/S,
Series B .............................. 25,000 1,075,225
Kvaerner a.s. ........................... 17,000 772,539
Total ................................. 1,847,764
Phillipines - 1.51%
Universal Robina Corporation ............ 1,200,000 610,807
Spain - 1.85%
Telefonica de Espana, S.A. .............. 58,000 746,997
Sweden - 8.21%
ASTRA AB, Class A ....................... 35,000 1,078,660
Kinnevik AB ............................. 21,500 655,227
Skandia Enskilda Banken, Class A ........ 91,000 472,208
Trelleborg AB, Series B ................. 30,000 350,058
AB Volvo ................................ 40,000 760,519
Total ................................. 3,316,672
United Kingdom - 8.58%
AMEC .................................... 160,000 157,837
BTR PLC ................................. 150,000 762,535
House of Fraser PLC ..................... 111,000 224,297
Next plc ................................ 150,000 815,041
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1995
Shares Value
COMMON STOCKS (Continued)
United Kingdom (Continued)
Pilkington PLC .......................... 104,000 $ 288,753
United Biscuits (Holdings) Public
Limited Co. ........................... 75,000 383,057
Vodafone Group Plc ...................... 225,000 835,924
Total ................................. 3,467,444
TOTAL COMMON STOCKS - 79.98% $32,309,531
(Cost: $31,086,924)
PREFERRED STOCKS - 4.92%
Germany
Hornbach-Baumarkt-AG .................... 700 946,356
Marschollek, Lautenschlager und
Partner AG* ........................... 800 520,532
STO AG .................................. 841 519,849
Total ................................. $ 1,986,737
(Cost: $1,673,544)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Banks and Savings and Loans - 3.24%
U.S. Bancorp,
Master Note ........................... $ 1,310 1,310,000
Chemicals Major - 2.48%
Olin Corporation,
6.07%, 7-5-95 ......................... 1,000 999,326
Financial - 5.45%
General Motors Acceptance Corporation,
6.08%, 7-17-95 ........................ 1,010 1,007,271
Textron Financial Corp.,
6.05%, 7-26-95 ........................ 1,200 1,194,958
Total ................................. 2,202,229
Food and Related - 2.46%
General Mills, Inc.,
Master Note ........................... 706 706,000
Sara Lee Corporation,
Master Note ............................ 287 287,000
Total ................................. 993,000
TOTAL SHORT-TERM SECURITIES - 13.63% $ 5,504,555
(Cost: $5,504,555)
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1995
Value
TOTAL INVESTMENT SECURITIES - 98.53% $39,800,823
(Cost: $38,265,023)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.47% 595,440
NET ASSETS - 100.00% $40,396,263
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 1995
Shares Value
COMMON STOCKS
Biotechnology and Medical Services - 5.80%
EP Technologies, Inc.* .................. 50,000 $ 500,000
OmniCare, Inc. .......................... 10,000 271,250
Pyxis Corporation* ...................... 20,000 451,240
St. Jude Medical, Inc. .................. 3,000 150,186
Tecnol Medical Products, Inc.* .......... 10,000 221,250
Ventritex, Inc.* ........................ 12,000 201,744
VidaMed, Inc.* .......................... 30,000 187,500
Total ................................. 1,983,170
Computers and Office Equipment - 19.22%
ACT Networks, Inc.* ..................... 12,500 212,500
Adobe Systems Incorporated .............. 10,000 582,500
America Online, Inc.*. .................. 8,000 350,000
ArcSys, Inc.* ........................... 7,300 250,937
Broderbund Software, Inc.* .............. 2,000 127,250
Cerner Corporation* ..................... 1,000 60,750
Eagle Point Software Corporation* ....... 20,000 337,500
Electronic Arts Inc.* ................... 8,000 217,496
Integrated Silicon Solution, Inc.* ...... 10,000 521,250
Learning Company (The)* ................. 3,000 107,250
Macromedia, Inc.* ....................... 7,500 325,313
MapInfo Corporation* .................... 5,000 176,875
Medic Computer Systems, Inc.* ........... 1,400 54,250
MicroTouch Systems, Inc.* ............... 25,000 521,875
Minnesota Educational Computing
Corporation* .......................... 10,000 360,000
Parametric Technology Corporation* ...... 12,000 595,500
PHAMIS, Inc.* ........................... 20,000 496,240
Shiva Corporation* ...................... 10,000 430,000
Synopsys, Inc.* ......................... 5,000 312,500
UUNET Technologies, Inc.* ............... 5,300 145,750
Wall Data Incorporated* ................. 20,000 307,500
Wonderware Corporation* ................. 2,000 81,250
Total ................................. 6,574,486
Drugs and Hospital Supply - 3.42%
Circa Pharmaceuticals, Inc.* ............ 15,000 478,125
LUNAR CORPORATION* ...................... 25,000 693,750
Total ................................. 1,171,875
Electronics - 5.35%
Information Storage Devices, Inc.* ...... 5,000 123,750
LSI Logic Corporation* .................. 7,000 273,875
SDL, Inc.* .............................. 36,000 1,071,000
Silicon Valley Group, Inc.* ............. 10,000 363,120
Total ................................. 1,831,745
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 1995
Shares Value
COMMON STOCKS (Continued)
Hospital Management - 4.76%
Hillhaven Corporation (The)* ............ 5,000 $ 141,250
Inphynet Medical Management Inc.* ....... 8,000 150,000
PacifiCare Health Systems, Inc.* ........ 9,000 457,875
Quorum Health Group, Inc.* .............. 11,000 220,682
Sierra Health Services, Inc.* ........... 15,000 367,500
United HealthCare Corporation ........... 7,000 289,625
Total ................................. 1,626,932
Leisure Time - 0.82%
Longhorn Steaks, Inc.* .................. 20,000 280,000
Retailing - 2.78%
Central Tractor Farm & Country, Inc.* ... 15,000 155,625
Hollywood Entertainment Corporation* .... 6,000 270,750
Movie Gallery, Inc.* .................... 15,000 525,000
Total ................................. 951,375
Services, Consumer and Business - 2.89%
CMG Information Services, Inc.* ......... 20,000 382,500
Stewart Enterprises, Inc., Class A ...... 18,000 605,250
Total ................................. 987,750
Telecommunications - 5.83%
MFS Communications Company, Inc.* ....... 22,000 704,000
Mobile Telecommunication Technologies
Corp.* ................................ 20,000 546,240
Ortel Corporation* ...................... 26,400 389,400
TESSCO Technologies Incorporated* ....... 20,000 355,000
Total ................................. 1,994,640
Textiles and Apparel - 1.45%
Department 56, Inc.* .................... 13,000 497,250
Trucking - 0.39%
Knight Transportation, Inc.* ............ 10,000 132,500
TOTAL COMMON STOCKS - 52.71% $18,031,723
(Cost: $14,165,148)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Commercial Paper
Automotive - 2.10%
Echlin, Inc.,
6.05%, 7-27-95 ........................ $ 720 716,854
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Banks and Savings and Loans - 2.82%
U.S. Bancorp,
Master Note ........................... $ 966 $ 966,000
Chemicals Major - 1.80%
Olin Corporation,
6.07%, 7-5-95 ......................... 615 614,585
Financial - 11.43%
B.A.T. Capital Corp.,
5.92%, 7-5-95 ......................... 1,000 999,342
Merrill Lynch & Co., Inc.,
5.97%, 7-26-95 ........................ 820 816,600
Textron Financial Corp.,
6.05%, 7-26-95 ........................ 1,000 995,799
UBS Finance, Inc.,
5.95%, 7-5-95 ......................... 1,100 1,099,273
Total ................................. 3,911,014
Food and Related - 10.63%
ConAgra, Inc.,
6.05%, 7-17-95 ........................ 1,000 997,311
General Mills, Inc.,
Master Note ........................... 1,445 1,445,000
Sara Lee Corporation,
Master Note ........................... 1,193 1,193,000
Total ................................. 3,635,311
Multi-Industry - 2.92%
Alco Standard Corporation,
6.02%, 7-12-95 ........................ 1,000 998,161
Public Utilities - Electric - 4.37%
Idaho Power Company,
6.0%, 7-12-95 ......................... 500 499,083
Western Resources Inc.,
6.03%, 7-19-95 ........................ 1,000 996,985
Total ................................. 1,496,068
Retailing - 2.92%
Rite Aid Corp.,
6.02%, 7-10-95 ........................ 1,000 998,495
Total Commercial Paper - 38.99% 13,336,488
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (backed by irrevocable
bank letter of credit) - 4.35%
International Oil
Petroleo Brasileiro S.A. - Petrobras
(Barclays Bank PLC),
5.98%, 8-17-95 ........................ $1,500 $ 1,488,289
Municipal Obligations - 3.50%
Michigan
Michigan Underground Storage Tank Financial
Assurance Authority, State of Michigan,
Series 1 (Canadian Imperial Bank of Commerce),
6.12%, 7-10-95 ........................ 1,200 1,198,164
TOTAL SHORT-TERM SECURITIES - 46.84% $16,022,941
(Cost: $16,022,941)
TOTAL INVESTMENT SECURITIES - 99.55% $34,054,664
(Cost: $30,188,089)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.45% 152,729
NET ASSETS - 100.00% $34,207,393
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1995
Shares Value
COMMON STOCKS
Airlines - 1.21%
Southwest Airlines Co. .................. 8,000 $ 191,000
Automotive - 0.61%
AB Volvo, ADR, Series B ................. 5,100 96,900
Banks and Savings and Loans - 3.46%
Ahmanson (H. F.) & Company .............. 14,500 319,000
Great Western Financial Corporation ..... 11,000 226,875
Total ................................. 545,875
Beverages - 1.79%
PepsiCo, Inc. ........................... 6,200 282,875
Biotechnology and Medical Services - 0.70%
St. Jude Medical, Inc. .................. 2,200 110,136
Building - 3.29%
National Health Investors, Inc. ......... 12,000 327,000
Temple-Inland Inc. ...................... 800 38,100
York International Corporation .......... 3,400 153,000
Total ................................. 518,100
Chemicals Major - 4.08%
Air Products and Chemicals, Inc. ........ 2,900 161,675
du Pont (E.I.) de Nemours and Company ... 1,200 82,500
PPG Industries, Inc. .................... 6,500 279,500
Praxair, Inc. ........................... 4,800 120,000
Total ................................. 643,675
Chemicals Specialty and Miscellaneous
Technology - 3.32%
Browning-Ferris Industries, Inc. ........ 7,000 252,875
Crompton & Knowles Corporation .......... 14,300 201,987
Minnesota Mining and Manufacturing
Company ............................... 1,200 68,700
Total ................................. 523,562
Computers and Office Equipment - 3.89%
Compaq Computer Corporation* ............ 4,600 208,725
Global DirectMail Corp.* ................ 10,800 213,300
International Business Machines
Corporation ........................... 2,000 192,000
Total ................................. 614,025
Domestic Oil - 3.25%
Amoco Corporation........................ 2,100 139,913
Apache Corporation ...................... 6,000 164,250
Atlantic Richfield Company .............. 1,900 208,525
Total ................................. 512,688
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1995
Shares Value
COMMON STOCKS (Continued)
Drugs and Hospital Supply - 1.72%
American Home Products Corporation ...... 3,500 $ 270,813
Electrical Equipment - 1.36%
Emerson Electric Co. .................... 3,000 214,500
Electronics - 3.54%
AMP Incorporated ........................ 1,600 67,600
Applied Materials, Inc.* ................ 4,500 389,250
Intel Corporation ....................... 1,600 101,299
Total ................................. 558,149
Engineering and Construction - 1.23%
Foster Wheeler Corporation .............. 5,500 193,875
Financial - 1.56%
Federal National Mortgage Association ... 2,600 245,375
Hospital Management - 2.78%
LTC Properties, Inc. .................... 9,000 118,125
Tenet Healthcare Corporation* ........... 9,600 138,000
United HealthCare Corporation ........... 4,400 182,050
Total ................................. 438,175
Household Products - 1.90%
Colgate-Palmolive Company ............... 4,100 299,812
Insurance - 6.42%
Chubb Corporation (The) ................. 3,100 248,387
PMI Group, Inc. (The) ................... 10,000 433,750
SAFECO Corporation ...................... 3,000 171,936
St. Paul Companies, Inc. (The) .......... 3,200 157,600
Total ................................. 1,011,673
Leisure Time - 2.97%
Walt Disney Company (The) ............... 4,500 250,313
Time Warner Incorporated ................ 5,300 217,962
Total ................................. 468,275
Machinery - 2.58%
Deere & Company ......................... 2,000 171,250
Keystone International, Inc. ............ 12,000 235,500
Total ................................. 406,750
Multi-Industry - 1.57%
ITT Corporation ......................... 2,100 246,750
Oil Services - 1.50%
Schlumberger Limited .................... 3,800 236,075
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1995
Shares Value
COMMON STOCKS (Continued)
Paper - 1.62%
Champion International Corporation ...... 2,900 $ 151,163
Union Camp Corporation .................. 1,800 104,175
Total ................................. 255,338
Publishing and Advertising - 2.09%
American Greetings Corporation,
Class A ............................... 4,500 131,904
McGraw-Hill, Inc. ....................... 2,600 197,275
Total ................................. 329,179
Railroads - 0.56%
Conrail Inc. ............................ 1,600 89,000
Retailing - 2.33%
May Department Stores Company (The) ..... 1,900 79,087
Mercantile Stores Company, Inc. ......... 1,000 46,500
Penney (J.C.) Company, Inc. ............. 2,000 96,000
Tommy Hilfiger Corporation* ............. 5,200 145,600
Total ................................. 367,187
Services, Consumer and Business - 1.49%
Block (H & R), Inc. ..................... 5,700 234,413
Telecommunications - 7.36%
AT&T Corporation ........................ 4,100 217,813
BellSouth Corporation ................... 2,400 152,400
GTE Corporation ......................... 5,300 180,863
General Motors Corporation, Class H ..... 6,600 260,700
MCI Communications Corporation .......... 6,000 131,622
Motorola, Inc. .......................... 1,600 107,400
Nokia Corporation, ADR, Series A ........ 800 47,700
Telefonos de Mexico S.A. de C.V., ADR ... 2,100 62,212
Total ................................. 1,160,710
Textiles and Apparel - 0.67%
Liz Claiborne, Inc. ..................... 5,000 106,250
TOTAL COMMON STOCKS - 70.85% $11,171,135
(Cost: $10,477,934)
PREFERRED STOCKS
Airlines - 0.22%
Delta Air Lines, Incorporated, Depository Shares,
Convertible, Series C ................. 600 35,100
Computers and Office Equipment - 0.44%
General Motors Corporation, Class E,
Depository Shares, Convertible ........ 1,100 69,300
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1995
Shares Value
PREFERRED STOCKS (Continued)
Drugs and Hospital Supply - 1.78%
United States Surgical Corporation,
Convertible, Series A ................. 11,000 $ 280,500
TOTAL PREFERRED STOCKS - 2.44% $ 384,900
(Cost: $374,906)
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES - 20.69%
United States Treasury:
6.875%, 8-31-99 ....................... $ 250 257,930
7.75%, 11-30-99 ....................... 1,500 1,599,840
7.125%, 2-29-2000 ..................... 500 522,265
6.375%, 8-15-2002 ..................... 100 101,187
7.5%, 2-15-2005 ....................... 500 544,455
6.25%, 8-15-2023 ...................... 250 236,133
Total ................................. $ 3,261,810
(Cost: $3,071,712)
TOTAL SHORT-TERM SECURITIES - 9.52% $ 1,500,342
(Cost: $1,500,342)
TOTAL INVESTMENT SECURITIES - 103.50% $16,318,187
(Cost: $15,424,894)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (3.50%) (551,744)
NET ASSETS - 100.00% $15,766,443
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES
Commercial Paper - 0.24%
Food and Related
Sara Lee Corporation,
Master Note ............................ $ 2 $ 2,000
United States Treasury - 97.41%
United States Treasury Bills:
5.3%, 7-27-95 ......................... 20 19,923
5.35%, 7-27-95 ........................ 105 104,595
5.38%, 7-27-95 ........................ 20 19,922
5.45%, 7-27-95 ........................ 100 99,606
5.54%, 7-27-95 ........................ 115 114,540
5.56%, 7-27-95 ........................ 45 44,819
5.6%, 7-27-95 ......................... 55 54,778
5.67%, 7-27-95 ........................ 40 39,839
5.18%, 8-24-95 ........................ 40 39,689
5.28%, 8-24-95 ........................ 50 49,604
5.3%, 8-24-95 ......................... 70 69,444
5.32%, 8-24-95 ........................ 40 39,681
5.35%, 8-24-95 ........................ 100 99,197
Total ................................. 795,637
TOTAL SHORT-TERM SECURITIES - 97.65% $797,637
(Cost: $797,637)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 2.35% 19,164
NET ASSETS - 100.00% $816,801
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
BANK OBLIGATIONS
Certificates of Deposit
Domestic - 3.23%
First National Bank of Chicago,
6.24%, 6-3-96 ......................... $1,000 $ 1,000,646
Yankee - 3.22%
Societe Generale - New York,
6.19%, 6-3-96 ......................... 1,000 1,000,000
Total Certificates of Deposit - 6.45% 2,000,646
Commercial Paper
Abbey National North America Corporation,
5.95%, 7-21-95 ........................ 735 731,356
Svenska Handelsbanken,
5.98%, 8-7-95 ......................... 800 795,083
U.S. Bancorp,
Master Note ........................... 1,287 1,287,000
Total Commercial Paper - 9.06% 2,813,439
Notes
Abbey National Treasury Services plc,
7.4%, 12-15-95 ........................ 500 500,000
Bank One Milwaukee, N.A.,
7.25%, 2-9-96 ......................... 500 500,000
Comerica Bank,
5.62%, 7-5-95 ......................... 500 499,905
Total Notes - 4.83% 1,499,905
TOTAL BANK OBLIGATIONS - 20.34% $ 6,313,990
(Cost: $6,313,990)
CORPORATE OBLIGATIONS
Commercial Paper
Automotive - 1.92%
Echlin, Inc.,
6.0%, 7-27-95 ......................... 600 597,400
Chemicals Major - 1.68%
Air Products and Chemicals, Inc.,
5.62%, 11-30-95 ....................... 535 522,305
Consumer Electronics and Appliances - 2.57%
TDK (USA) Corp.,
5.93%, 7-17-95 ........................ 800 797,892
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (Continued)
Electrical Equipment - 3.18%
General Electric Capital Corp.,
5.85%, 9-15-95 ........................ $1,000 $ 987,650
Financial - 9.03%
BHP Finance (U.S.A.) Inc.,
6.0%, 8-1-95 .......................... 850 845,608
Bell Atlantic Financial Services, Inc.,
6.0%, 7-25-95 ......................... 500 498,000
Merrill Lynch & Co., Inc.,
5.96%, 7-17-95 ........................ 665 663,238
Sony Capital Corp.,
5.93%, 8-14-95 ........................ 800 794,202
Total ................................. 2,801,048
Food and Related - 10.21%
General Mills, Inc.,
Master Note ........................... 1,180 1,180,000
Heinz (H.J.) Company,
5.93%, 7-14-95 ........................ 800 798,287
Sara Lee Corporation,
Master Note ........................... 1,190 1,190,000
Total ................................. 3,168,287
Public Utilities - Electric - 7.53%
Baltimore Gas and Electric Company,
5.94%, 8-14-95 ........................ 950 943,103
Idaho Power Company,
5.97%, 7-26-95 ........................ 700 697,098
Tampa Electric Company,
5.97%, 8-11-95 ........................ 700 695,241
Total ................................. 2,335,442
Retailing - 1.01%
Toys "R" Us, Inc.,
5.97%, 7-10-95 ........................ 315 314,530
Telecommunications - 5.14%
AT&T Corporation,
5.95%, 7-10-95 ........................ 900 898,661
GTE Southwest, Inc.,
6.0%, 8-8-95 .......................... 700 695,567
Total ................................. 1,594,228
Tobacco - 2.24%
Philip Morris Companies,
5.9%, 8-22-95 ......................... 700 694,034
Total Commercial Paper - 44.51% 13,812,816
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (backed by irrevocable
bank letter of credit) - 3.21%
Financial
Omnicom Finance Inc. (Swiss Bank Corp.),
5.95%, 7-28-95 ........................ $1,000 $ 995,538
Notes
Financial - 1.61%
Merrill Lynch & Co., Inc.,
6.185%, 8-21-95 ....................... 500 500,030
Public Utilities - Electric - 1.61%
Georgia Power Co.,
5.125%, 9-1-95 ........................ 500 499,377
Total Notes - 3.22% 999,407
TOTAL CORPORATE OBLIGATIONS - 50.94% $15,807,761
(Cost: $15,807,761)
MUNICIPAL OBLIGATIONS
California - 5.77%
Modesto Irrigation District Finance
Authority (Bank of America),
6.02%, 8-18-95 ........................ 1,000 991,973
City of Anaheim, California, Certificates
of Participation (1993 Arena Financing
Project), Municipal Adjustable Rate
Taxable Securities (Credit Suisse),
6.2675%, 8-2-95 ....................... 800 800,000
Total ................................. 1,791,973
Michigan - 3.22%
Michigan Underground Storage Tank Financial
Assurance Authority, State of Michigan,
Series 1 (Canadian Imperial Bank of Commerce),
6.12%, 7-10-95 ........................ 1,000 998,470
New Hampshire - 1.61%
The Industrial Development Authority
of the State of New Hampshire,
Pollution Control Revenue Bonds
(Public Service Company of New
Hampshire Project-1991 Taxable
Series D and E) (Barclays Bank),
6.125%, 7-5-95 ........................ 500 500,000
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
Texas - 1.60%
Metrocrest Hospital Authority, Series 1989A
(The Bank of New York),
6.1216%, 8-1-95 ....................... $ 500 $ 497,364
TOTAL MUNICIPAL OBLIGATIONS - 12.20% $ 3,787,807
(Cost: $3,787,807)
UNITED STATES GOVERNMENT OBLIGATIONS
Federal Home Loan Banks,
6.4%, 7-10-95 ......................... 1,000 1,000,000
Federal Home Loan Mortgage Corporation,
6.45%, 9-7-95 ......................... 1,000 1,000,000
Federal National Mortgage Association,
6.4%, 9-20-95 ......................... 500 500,000
Student Loan Management Association,
5.81%, 7-5-95 ......................... 1,000 1,000,000
TOTAL UNITED STATES GOVERNMENT
OBLIGATIONS - 11.28% $ 3,500,000
(Cost: $3,500,000)
TOTAL INVESTMENT SECURITIES - 94.76% $29,409,558
(Cost: $29,409,558)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 5.24% 1,625,570
NET ASSETS - 100.00% $31,035,128
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Airlines - 2.32%
Federal Express Corporation,
9.75%, 5-15-96 ........................ $ 50 $ 51,367
Automotive - 2.29%
General Motors Corporation,
7.625%, 2-15-97 ....................... 50 50,923
Banks and Savings and Loans - 9.74%
BankAmerica Corporation,
9.7%, 8-1-2000 ........................ 50 56,140
Boatmen's Bancshares, Inc.,
9.25%, 11-1-2001 ...................... 50 55,790
NCNB Corporation,
10.5%, 3-15-99 ........................ 50 51,410
Norwest Financial, Inc.,
7.75%, 8-15-2001 ...................... 50 52,793
Total ................................. 216,133
Chemicals Major - 6.51%
Dow Chemical Company (The),
4.625%, 10-15-95 ...................... 60 59,736
ICI Wilmington, Inc.,
9.5%, 11-15-2000 ...................... 75 84,612
Total ................................. 144,348
Chemicals Specialty and Miscellaneous
Technology - 8.49%
Polaroid Corporation,
8.0%, 3-15-99 ......................... 85 88,500
Waste Management, Inc.,
6.25%, 12-15-95 ....................... 50 49,998
Xerox Credit Corporation,
6.25%, 1-15-96 ........................ 50 49,976
Total ................................. 188,474
Domestic Oil - 2.42%
BP America Inc.,
9.5%, 1-1-98 .......................... 50 53,667
Drugs and Hospital Supply - 4.69%
American Home Products Corporation,
7.7%, 2-15-2000 ....................... 50 52,334
Baxter International Inc.,
9.25%, 9-15-96 ........................ 50 51,686
Total ................................. 104,020
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Financial - 12.76%
American General Finance Corporation,
8.25%, 1-15-98 ........................ $ 50 $ 52,191
Associates Corporation of North America,
8.8%, 8-1-98 .......................... 50 53,211
Avco Financial Services, Inc.,
5.5%, 4-1-2000 ........................ 50 47,751
Ford Motor Credit Company,
8.0%, 1-15-99 ......................... 75 78,631
Household Finance Corporation,
7.75%, 6-15-97 ........................ 50 51,331
Total ................................. 283,115
Insurance - 4.71%
ITT Hartford,
7.25%, 12-1-96 ........................ 50 50,578
Transamerica Finance Corporation,
8.75%, 10-1-99 ........................ 50 53,961
Total ................................. 104,539
International Oil - 4.89%
Chevron Corporation,
8.11%, 12-1-2004 ...................... 50 53,695
Texaco Capital Inc.,
9.0%, 12-15-99 ........................ 50 54,882
Total ................................. 108,577
Machinery - 2.30%
Ingersoll-Rand Company,
8.25%, 11-1-96 ........................ 50 51,111
Multi-Industry - 2.58%
ITT Corporation,
8.875%, 6-15-2003 ..................... 50 57,241
Public Utilities - Pipelines - 4.69%
Consolidated Natural Gas Company,
8.75%, 6-1-99 ......................... 50 53,934
Tenneco Credit Corporation,
9.0%, 7-15-95 ......................... 50 50,029
Total ................................. 103,963
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Retailing - 4.85%
Penney (J.C.) Company, Inc.,
10.0%, 10-15-97 ....................... $ 50 $ 53,951
Sears, Roebuck and Co.,
9.25%, 4-15-98 ........................ 50 53,591
Total ................................. 107,542
TOTAL CORPORATE DEBT SECURITIES - 73.24% $1,625,020
(Cost: $1,582,094)
UNITED STATES GOVERNMENT SECURITIES
Government National Mortgage Association,
7.0%, 6-15-2010 ....................... 100 100,468
United States Treasury:
5.125%, 11-30-98 ...................... 100 97,437
6.375%, 8-15-2002 ...................... 100 101,187
6.25%, 2-15-2003 ...................... 100 100,266
TOTAL UNITED STATES GOVERNMENT SECURITIES - 18.00% $ 399,358
(Cost: $386,972)
SHORT-TERM SECURITIES
Banks and Savings and Loans - 3.38%
U.S. Bancorp,
Master Note ........................... 75 75,000
Financial - 4.50%
UBS Finance, Inc.,
5.95%, 7-5-95 ......................... 100 99,934
Food and Related - 4.96%
General Mills, Inc.,
Master Note ........................... 20 20,000
Sara Lee Corporation,
Master Note ........................... 90 90,000
Total ................................. 110,000
TOTAL SHORT-TERM SECURITIES - 12.84% $ 284,934
(Cost: $284,934)
TOTAL INVESTMENT SECURITIES - 104.08% $2,309,312
(Cost: $2,254,000)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (4.08%) (90,600)
NET ASSETS - 100.00% $2,218,712
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Aerospace - 1.35%
McDonnell Douglas Corporation,
9.25%, 4-1-2002 ....................... $1,000 $ 1,128,780
Airlines - 1.25%
Federal Express Corporation,
7.89%, 9-23-2008 ...................... 1,000 1,049,750
Automotive - 5.49%
General Motors Corporation,
8.8%, 3-1-2021 ........................ 2,600 2,944,968
Toyota Motor Credit Corporation, Medium Term,
Three Year Basket Inverse Floating Rate,
0.74%, 8-5-96 (B) ..................... 1,750 1,652,088
Total ................................. 4,597,056
Banks and Savings and Loans - 8.90%
BarclaysAmericanCorporation,
9.125%, 12-1-97 ....................... 225 238,367
Bayerische Landesbank Girozentale, NY
Branch, CD, Currency Protected Deutschemark
Swap Rate Inverse Floating Rate,
3.85%, 3-28-97 (C) .................... 1,000 958,750
Chevy Chase Savings Bank, F.S.B.,
9.25%, 12-1-2005 ...................... 500 485,000
Citicorp,
7.75%, 6-15-2006 ...................... 1,000 1,048,390
Kansallis-Osake-Pankki,
10.0%, 5-1-2002 ....................... 1,000 1,159,370
Riggs National Corporation,
8.5%, 2-1-2006 ........................ 1,000 1,020,000
Skandia Enskilda Banken, NY Branch
Certificate of Deposit Dollarized
Australian Dollar Reset,
4.0%, 4-5-99 .......................... 1,000 910,000
SouthTrust Bank of Alabama, N.A.,
7.69%, 5-15-2025 ...................... 500 531,525
Wells Fargo & Company,
8.75%, 5-1-2002 ....................... 1,000 1,100,310
Total ................................. 7,451,712
Beverages - 0.97%
Coca-Cola Enterprises Inc.,
0%, 6-20-2020 ......................... 5,000 812,500
Building - 6.55%
Canadian Pacific Forest Products Ltd.,
9.25%, 6-15-2002 ...................... 1,000 1,045,320
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Building (Continued)
Doman Industries Limited,
8.75%, 3-15-2004 ...................... $ 500 $ 475,000
Noranda Forest Inc.,
7.5%, 7-15-2003 ....................... 1,000 1,017,560
Noranda Inc.,
8.625%, 7-15-2002 ..................... 950 1,034,731
Owens-Corning Fiberglas Corporation,
8.875%, 6-1-2002 ...................... 1,000 1,088,090
Del Webb Corporation,
10.875%, 3-31-2000 .................... 800 820,000
Total ................................. 5,480,701
Chemicals Major - 1.41%
Dow Capital BV,
9.0%, 5-15-2010 ....................... 1,000 1,179,110
Computers and Office Equipment - 1.25%
Unisys Corporation:
9.75%, 9-15-96 ........................ 500 511,250
10.625%, 10-1-99 ...................... 500 537,500
Total ................................. 1,048,750
Domestic Oil - 4.19%
Apache Corporation,
9.25%, 6-1-2002 ....................... 500 555,990
LASMO (USA) INC.,
7.125%, 6-1-2003 ...................... 1,000 1,000,700
Seagull Energy Corporation,
7.875%, 8-1-2003 ...................... 1,500 1,425,000
Union Texas Petroleum Holdings, Inc.,
8.25%, 11-15-99 ....................... 500 520,190
Total ................................. 3,501,880
Drugs and Hospital Supply - 1.25%
American Home Products Corporation,
7.7%, 2-15-2000 ....................... 1,000 1,046,680
Electrical Equipment - 3.11%
General Electric Capital Corporation:
8.3%, 9-20-2009 ....................... 1,500 1,686,600
8.65%, 5-1-2018 ....................... 895 912,077
Total ................................. 2,598,677
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Financial - 9.80%
Banc One Credit Card Master Trust,
7.55%, 12-15-99 ....................... $1,000 $ 1,025,620
Chrysler Financial Corporation,
12.75%, 11-1-99 ....................... 1,000 1,221,970
Countrywide Mortgage Backed Securities,
Inc.,
6.5%, 4-25-2024 ....................... 2,000 1,948,740
DLJ Mortgage Acceptance Corp., 1994-3 A13,
6.5%, 4-25-2024 ....................... 975 923,881
General Motors Acceptance Corporation,
8.875%, 6-1-2010 ...................... 1,000 1,150,910
Greyhound Financial Corporation,
8.0%, 1-15-97 ......................... 1,000 1,023,240
JCP Master Credit Card Trust,
9.625%, 6-15-2000 ..................... 500 550,310
National Credit Card Trust 1989-4,
9.45%, 12-31-97 ....................... 350 359,842
Total ................................. 8,204,513
Food and Related - 2.10%
Nabisco, Inc.,
8.625%, 3-15-2017 ..................... 1,669 1,755,371
Hospital Management - 0.59%
Columbia/HCA Healthcare Corporation,
7.69%, 6-15-2025 ...................... 500 497,120
Household Products - 2.75%
Procter & Gamble Company (The),
8.0%, 9-1-2024 ........................ 2,000 2,298,460
Insurance - 1.28%
Penn Central Corporation (The),
10.625%, 4-15-2000 .................... 1,000 1,073,340
International Oil - 0.52%
YPF Sociedad Anoima,
8.0%, 2-15-2004 ....................... 500 435,000
Leisure Time - 5.66%
Jones Intercable, Inc.,
9.625%, 3-15-2002 ..................... 500 522,500
Marriott International, Inc.,
6.75%, 12-15-2003 ..................... 1,000 980,630
Tele-Communications, Inc.,
9.8%, 2-1-2012 ........................ 750 824,670
Time Warner Incorporated,
7.75%, 6-15-2005 ...................... 1,000 992,750
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Leisure Time (Continued)
Turner Broadcasting System, Inc.,
8.375%, 7-1-2013 ...................... $1,000 $ 914,900
Viacom International, Inc.,
7.75%, 6-1-2005 ....................... 500 504,820
Total ................................. 4,740,270
Machinery - 0.72%
Caterpillar Inc.,
9.375%, 8-15-2011 ..................... 500 601,640
Multi-Industry - 2.61%
ITT Corporation,
8.85%, 7-15-2005 ...................... 1,000 1,166,660
Mark IV Industries, Inc.,
8.75%, 4-1-2003 ....................... 1,000 1,020,000
Total ................................. 2,186,660
Public Utilities - Electric - 1.25%
Kansas Gas & Electric Company,
7.6%, 12-15-2003 ...................... 1,000 1,043,780
Public Utilities - Pipelines - 1.94%
Arkla, Inc.,
8.875%, 7-15-99 ....................... 1,000 1,050,000
Coastal Corporation (The),
10.375%, 10-1-2000 .................... 500 571,245
Total ................................. 1,621,245
Publishing and Advertising - 1.88%
News America Holdings Incorporated:
9.125%, 10-15-99 ...................... 500 542,325
8.25%, 8-10-2018 ...................... 1,000 1,026,900
Total ................................. 1,569,225
Railroad Equipment - 0.01%
Union Tank Car Co.,
9.5%, 12-15-95 ........................ 9 9,126
Steel - 1.26%
USX Corporation,
8.21%, 1-21-2000 ...................... 1,000 1,053,780
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Telecommunications - 4.46%
New England Telephone & Telegraph Company,
7.875%, 11-15-2029 .................... $2,000 $ 2,166,300
Southwestern Bell Telephone Company,
7.0%, 8-26-2002 ....................... 1,000 1,031,460
US WEST, Inc.,
8.4%, 9-15-99 ......................... 500 533,255
Total ................................. 3,731,015
TOTAL CORPORATE DEBT SECURITIES - 72.55% $60,716,141
(Cost: $59,329,164)
OTHER GOVERNMENT SECURITIES
Australia - 0.82%
New South Wales Treasury,
7.0%, 8-15-98 (D) ..................... $A1,000 688,154
Canada - 4.20%
Hydro Quebec,
8.05%, 7-7-2024 ....................... $1,000 1,092,930
Province of Manitoba,
9.125%, 1-15-2018 ..................... 2,000 2,421,780
Total ................................. 3,514,710
Supranational - 1.40%
Inter-American Development Bank,
8.4%, 9-1-2009 ........................ 1,000 1,167,880
TOTAL OTHER GOVERNMENT SECURITIES - 6.42% $ 5,370,744
(Cost: $4,979,210)
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Banks,
7.83%, 6-27-2005 ...................... 500 500,500
Federal Home Loan Mortgage Corporation:
6.83%, 7-3-2002 ....................... 500 496,170
7.5%, 11-15-2017 ...................... 1,538 1,574,528
7.5%, 4-15-2019 ....................... 1,236 1,226,678
7.0%, 1-15-2021 ....................... 500 490,155
8.0%, 11-1-2024 ....................... 978 996,634
8.0%, 4-1-2025 ........................ 980 998,007
Federal National Mortgage Association:
7.09%, 4-1-2004 ....................... 500 499,000
7.5%, 9-1-2009 ........................ 974 990,339
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES (Continued)
United States Treasury:
8.875%, 8-15-2017 ..................... $2,000 $ 2,490,000
TOTAL UNITED STATES GOVERNMENT
SECURITIES - 12.26% $10,262,011
(Cost: $9,865,716)
TOTAL SHORT-TERM SECURITIES - 7.77% $ 6,506,372
(Cost: $6,506,372)
TOTAL INVESTMENT SECURITIES - 99.00% $82,855,268
(Cost: $80,680,462)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.00% 833,957
NET ASSETS - 100.00% $83,689,225
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1995
Shares Value
COMMON STOCKS
Hospital Management - 0.81%
LTC Properties, Inc. .................... 50,000 $ 656,250
Leisure Time - 1.51%
Infinity Broadcasting Corporation* ...... 33,750 1,126,406
Sinclair Broadcast Group, Inc.* ......... 500 13,844
Trump Hotels & Casino Resorts, Inc.* .... 6,250 83,594
Total ................................. 1,223,844
Miscellaneous - 0.32%
Bell & Howell Holdings Company* ......... 12,500 253,125
Foodbrands America, Inc.* ............... 176 2,299
Total ................................. 255,424
TOTAL COMMON STOCKS - 2.64% $2,135,518
(Cost: $1,259,218)
PREFERRED STOCK - 0.66%
Banks and Savings and Loans
California Federal Bank, F.S.B. ......... 5,000 $ 535,000
(Cost: $500,000)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Automotive - 1.76%
Lear Seating Corporation,
8.25%, 2-1-2002 ....................... $1,500 1,425,000
Beverages - 0.46%
Dr Pepper Bottling Holdings, Inc.,
0.0%, 2-15-2003 (E) .................... 500 375,000
Biotechnology and Medical Services - 1.99%
Abbey Healthcare Group Incorporated,
9.5%, 11-1-2022 ....................... 500 515,000
Quorum Health Group, Inc.,
11.875%, 12-15-2002 ................... 1,000 1,095,000
Total ................................. 1,610,000
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Building - 7.48%
American Standard Inc.:
9.875%, 6-1-2001 ...................... $1,000 $ 1,030,000
9.25%, 12-1-2016 ...................... 500 500,000
Beazer Homes USA, Inc.,
9.0%, 3-1-2004 ........................ 750 661,875
Eagle Industries, Inc.,
0.0%, 7-15-2003 (E) ................... 1,500 1,110,000
Hillsborough Company,
17.0%, 1-1-96 (F) ..................... 500 373,630
NVR L.P.,
11.0%, 4-15-2003 ...................... 1,000 910,000
Nortek, Inc.,
9.875%, 3-1-2004 ...................... 500 450,000
Triangle Pacific Corp.,
10.5%, 8-1-2003 ....................... 1,000 1,017,500
Total ................................. 6,053,005
Chemicals Specialty and Miscellaneous Technology - 3.44%
Buckeye Cellulose Corporation,
10.25%, 5-15-2001 ..................... 1,250 1,243,750
LaRoche Industries Inc.,
13.0%, 8-15-2004 ...................... 500 515,000
OSi Specialties, Inc.,
9.25%, 10-1-2003 ...................... 500 505,000
Pioneer Americas Acquisition Corp.,
13.375%, 4-1-2005 (A) ................. 500 517,500
Total ................................. 2,781,250
Computers and Office Equipment - 1.18%
Mail-Well Corporation,
10.5%, 2-15-2004 ...................... 500 445,000
United Stationers Supply Co.,
12.75%, 5-1-2005 (A) .................. 500 508,750
Total ................................. 953,750
Consumer Electronics and Appliances - 0.39%
Sealy Corporation,
9.5%, 5-1-2003 ........................ 325 318,500
Domestic Oil - 1.53%
Clark R&M Holdings, Inc.,
0.0%, 2-15-2000 ....................... 2,000 1,240,000
Drugs and Hospital Supply - 1.81%
AmeriSource Distribution Corporation,
11.25%, 7-15-2005 ..................... 368 388,492
General Medical Corporation,
12.125%, 8-15-2005 .................... 1,060 1,075,265
Total ................................. 1,463,757
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Electronics - 1.19%
Essex Group, Inc.,
10.0%, 5-1-2003 ....................... $1,000 $ 965,000
Food and Related - 2.07%
General Nutrition, Incorporated,
11.375%, 3-1-2000 ..................... 393 434,756
Pilgrim's Pride Corporation,
10.875%, 8-1-2003 ..................... 300 282,750
Specialty Foods Corporation,
10.25%, 8-15-2001 ..................... 1,000 960,000
Total ................................. 1,677,506
Hospital Management - 3.72%
LTC Properties, Inc., Convertible,
8.5%, 1-1-2000 ........................ 1,000 985,000
National Medical Enterprises, Inc.,
9.625%, 9-1-2002 ...................... 1,000 1,055,000
Pathmark,
9.625%, 5-1-2003 ...................... 1,000 975,000
Total ................................. 3,015,000
Household Products - 2.18%
Exide Corporation:
10.75%, 12-15-2002 .................... 750 793,125
0.0%, 12-15-2004 (E) .................. 500 357,500
10.0%, 4-15-2005 (A) .................. 500 513,750
MacAndrews & Forbes Group, Incorporated,
13.0%, 3-1-99 ......................... 100 100,500
Total ................................. 1,764,875
Leisure Time - 17.83%
Cablevision Industries Corporation,
10.75%, 1-30-2002 ..................... 500 546,250
California Hotel Finance Corporation,
11.0%, 12-1-2002 ...................... 1,000 1,025,000
COMCAST CORPORATION,
0.0%, 3-5-2000 ........................ 1,000 710,000
Continental Cablevision, Inc.:
10.625%, 6-15-2002 .................... 500 525,000
8.875%, 9-15-2005 ..................... 500 510,000
11.0%, 6-1-2007 ....................... 500 555,000
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Leisure Time (Continued)
FLAGSTAR COMPANIES, INC.:
10.75%, 9-15-2001 ..................... $1,000 $ 940,000
11.25%, 11-1-2004 ..................... 1,000 780,000
GNS Finance Corp.,
9.25%, 3-15-2003 ...................... 1,500 1,605,000
Granite Broadcasting Corporation,
10.375%, 5-15-2005 (A) ................ 500 500,000
Heartland Wireless Communications, Inc., Units,
13.0%, 4-15-2003 (A)(G) ............... 500 530,000
Infinity Broadcasting Corporation,
10.375%, 3-15-2002 .................... 1,000 1,060,000
Plitt Theatres, Inc.,
10.875%, 6-15-2004 .................... 1,000 990,000
Showboat, Inc.,
9.25%, 5-1-2008 ....................... 1,000 917,500
Sinclair Broadcast Group, Inc.,
10.0%, 12-15-2003 ..................... 375 375,000
Trump Hotels & Casino Resorts
Holdings, L.P.,
15.5%, 6-15-2005 ...................... 1,000 977,500
Turner Broadcasting System, Inc.,
8.375%, 7-1-2013 ...................... 1,000 914,900
Viacom International, Inc.,
8.0%, 7-7-2006 ........................ 1,000 973,750
Total ................................. 14,434,900
Metals and Mining - 0.67%
UCAR Global Enterprises Inc.,
12.0%, 1-15-2005 ...................... 500 540,000
Multi-Industry - 3.61%
Federal Industries Ltd.,
10.25%, 6-15-2000 ..................... 500 468,750
Jordan Industries, Inc.,
10.375%, 8-1-2003 ..................... 1,000 922,500
Mark IV Industries, Inc.,
8.75%, 4-1-2003 ....................... 1,500 1,530,000
Total ................................. 2,921,250
Oil Services - 1.27%
Wainoco Oil Corporation,
12.0%, 8-1-2002 ....................... 1,000 1,030,000
Packaging and Containers - 5.27%
Container Corporation of America,
11.25%, 5-1-2004 ...................... 1,500 1,560,000
Gaylord Container Corporation,
0.0%, 5-15-2005 (E) ................... 500 490,000
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Packaging and Containers (Continued)
Owens-Illinois, Inc.,
10.25%, 4-1-99 ........................ $1,000 $ 1,020,000
Silgan Corporation,
0.0%, 12-15-2002 (E) ................... 500 457,500
Sweetheart Cup Company, Inc.,
10.5%, 9-1-2003 ....................... 750 742,500
Total ................................. 4,270,000
Paper - 3.17%
Fort Howard Corporation,
11.0%, 1-2-2002 ....................... 468 482,358
Repap New Brunswick Inc.,
10.625%, 4-15-2005 .................... 500 505,000
Stone Container Corporation,
10.75%, 10-1-2002 ..................... 750 785,625
Williamhouse - Regency of Delaware, Inc.,
11.5%, 6-15-2005 ..................... 800 796,000
Total ................................. 2,568,983
Public Utilities - Gas - 0.64%
AmeriGas Partners, L.P.,
10.125%, 4-15-2007 (A) ................ 500 520,000
Publishing and Advertising - 3.71%
American Media Operations, Inc.,
11.625%, 11-15-2004 ................... 1,000 1,070,000
Big Flower Press, Inc.,
10.75%, 8-1-2003 ...................... 1,000 985,000
Outdoor Systems, Inc.,
10.75%, 8-15-2003 ..................... 1,000 950,000
Total ................................. 3,005,000
Railroad Equipment - 0.63%
Westinghouse Air Brake Company,
9.375%, 6-15-2005 ..................... 500 506,250
Retailing - 8.51%
Barnes & Noble, Inc.,
11.875%, 1-15-2003 ................... 500 546,250
Big V Supermarkets, Inc.,
11.0%, 2-15-2004 ...................... 500 420,000
Kroger Co. (The),
9.75%, 2-15-2004 ...................... 1,000 1,070,000
Musicland Stores Corporation,
9.0%, 6-15-2003 ....................... 1,500 1,350,000
Penn Traffic Company,
10.375%, 10-1-2004 .................... 1,500 1,541,250
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Retailing (Continued)
Ralphs Grocery Company,
10.45%, 6-15-2004 ..................... $1,000 $ 1,000,000
WestPoint Stevens Inc.,
9.375%, 12-15-2005 .................... 1,000 962,500
Total ................................. 6,890,000
Services, Consumer and Business - 0.99%
Bell & Howell Company,
10.75%, 10-1-2002 ..................... 750 798,750
Steel - 1.01%
AK Steel Corporation,
10.75%, 4-1-2004 ...................... 250 262,500
Inland Steel Industries, Inc.,
12.75%, 12-15-2002 .................... 500 557,500
Total ................................. 820,000
Telecommunications - 3.55%
MFS Communications Company, Inc.,
0.0%, 1-15-2004 (E) ................... 1,000 695,000
PanAmSat, L.P.:
9.75%, 8-1-2000 ....................... 1,000 1,020,000
0.0%, 8-1-2003 (E) .................... 1,000 715,000
USA Mobile Communications, Inc.,
9.5%, 2-1-2004 ........................ 500 440,000
Total ................................. 2,870,000
Textiles and Apparel - 1.13%
CONSOLTEX GROUP INC.,
11.0%, 10-1-2003 ...................... 1,000 915,000
TOTAL CORPORATE DEBT SECURITIES - 81.19% $65,732,776
(Cost: $65,517,852)
SHORT-TERM SECURITIES
Banks and Savings and Loans - 4.24%
U.S. Bancorp,
Master Note ........................... 3,432 3,432,000
Food and Related - 3.75%
General Mills, Inc.,
Master Note ........................... 1,095 1,095,000
Sara Lee Corporation,
Master Note ........................... 1,940 1,940,000
Total ................................. 3,035,000
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1995
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Railroads - 4.21%
Burlington Northern Railroad Co.,
6.1%, 8-4-95 .......................... $3,430 $ 3,410,239
Retailing - 1.60%
Rite Aid Corp.,
6.02%, 7-10-95 ........................ 1,300 1,298,044
TOTAL SHORT-TERM SECURITIES - 13.80% $11,175,283
(Cost: $11,175,283)
TOTAL INVESTMENT SECURITIES - 98.29% $79,578,577
(Cost: $78,452,353)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.71% 1,385,012
NET ASSETS - 100.00% $80,963,589
See Notes to Schedules of Investments on page .
<PAGE>
Notes to Schedules of Investments
*No income dividends were paid during the preceding 12 months.
(A) As of June 30, 1995, the following restricted securities were owned
in the International Portfolio:
Acquisition Acquisition Market
Security Date Shares Cost Value
---------------- --------------------------------------------
Samsung Electronics Co.,
Ltd., GDR 05/17/95 15,000$ 777,750$ 796,950
05/25/95 4,000 206,500 212,520
Tarkett Aktiengesellschaft,
ADS 06/27/95 12,000 275,760 312,000
--------------------
$1,260,010$1,321,470
====================
The total market value of restricted securities represents
approximately 3.27% of the total net assets in the International
Portfolio at June 30, 1995.
As of June 30, 1995, the following restricted securities were owned
in the High Income Portfolio:
Principal
Acquisition AmountAcquisition Market
Security Date in 000's Cost Value
---------------- --------------------------------------------
AmeriGas Partners, L.P.,
10.125%, 4-15-2007 04/12/95 $500$ 500,000$ 520,000
Exide Corporation,
10.0%, 4-15-2005 04/21/95 500 500,000 513,750
Granite Broadcasting
Corporation,
10.375%, 5-15-2005 05/12/95 500 500,000 500,000
Heartland Wireless
Communications, Inc., Units,
13.0%, 4-15-2003 04/20/95 500 500,000 530,000
Pioneer Americas
Acquisition Corp.,
13.375%, 4-1-2005 04/13/95 500 500,000 517,500
United Stationers
Supply Co.,
12.75%, 5-1-2005 04/26/95 500 500,000 508,750
--------------------
$3,000,000$3,090,000
====================
The total market value of restricted securities represents
approximately 3.82% of the total net assets in the High Income
Portfolio at June 30, 1995.
(B) Coupon resets semiannually based on the arithmetic mean of two year
swap rates in four nations: Italy, France, Spain, and the United
Kingdom, determined by the following formula (minimum coupon of
0%):
19.65% - 2X(Average two year swap rate in the aforementioned
nations).
(C) Coupon resets semiannually based on 14.13% - 1.5 (5 year
Deutschemark swap rate). Coupon guaranteed at 3%.
(D) Principal amounts are denominated in the indicated foreign currency
where applicable ($A - Australian dollar).
(E) The security does not bear interest for an initial period of time
and subsequently becomes interest bearing.
(F) Non-income producing as the issuer has either missed its most
recent interest payment or declared bankruptcy.
(G) Each unit consists of one thousand face value corporate bond and
six warrants expiring 4-15-2003.
See Note 1 to financial statements for security valuation and other
significant accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation
and depreciation of investments owned for Federal income tax
purposes.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
(Unaudited) Growth IncomeInternational
Portfolio Portfolio Portfolio
Assets ----------- ---------- -----------
Investment securities--at
value (Notes 1 and 3) $339,173,358$282,522,827 $39,800,823
Cash .............. 3,070 2,523 3,397
Receivables:
Investment securities
sold ............ 11,058,592 1,776,922 213,713
Dividends and interest 564,740 323,354 203,821
Fund shares sold . 220,318 186,427 217,627
Prepaid insurance
premium .......... 8,320 6,105 1,694
------------------------ -----------
Total assets .... 351,028,398 284,818,158 40,441,075
Liabilities ------------------------ -----------
Payable for investment
securities purchased 11,228,407 --- ---
Payable for Fund shares
redeemed ......... 150,352 94,861 11,623
Accrued accounting
services fee ..... 4,167 4,167 1,667
Dividends payable .. --- --- ---
Other .............. 11,614 8,337 31,522
------------------------ -----------
Total liabilities 11,394,540 107,365 44,812
------------------------ -----------
Total net assets $339,633,858$284,710,793 $40,396,263
Net Assets ======================== ===========
$0.01 par value capital stock
Capital stock .... $ 489,848$ 345,709 $ 75,375
Additional paid-in
capital ......... 298,721,086 219,022,178 38,324,552
Accumulated undistributed gain (loss):
Accumulated undistributed
net investment income 2,282,675 1,474,449 452,705
Accumulated undistributed
net realized gain (loss)
on investment
transactions .... 17,732,962 1,288,604 7,144
Net unrealized appreciation
of investments at end of
period .......... 20,407,287 62,579,853 1,536,487
------------------------ -----------
Net assets applicable to
outstanding units
of capital .... $339,633,858$284,710,793 $40,396,263
======================== ===========
Net asset value, redemption
and offering price per share $6.9334 $8.2356 $5.3593
======= ======= =======
Capital shares outstanding 48,984,830 34,570,896 7,537,534
Capital shares authorized 100,000,000 100,000,000 100,000,000
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
(Unaudited) Small Cap BalancedAsset Strategy
Portfolio Portfolio Portfolio
Assets ---------- ---------- -----------
Investment securities--at
value (Notes 1 and 3) $34,054,664 $16,318,187 $797,637
Cash .............. 7,178 2,701 1,317
Receivables:
Investment securities
sold ............ --- --- ---
Dividends and interest 18,635 81,680 192
Fund shares sold . 134,192 92,044 32,949
Prepaid insurance
premium .......... 1,606 990 176
----------- ----------- --------
Total assets .... 34,216,275 16,495,602 832,271
Liabilities ----------- ----------- --------
Payable for investment
securities purchased --- 724,540 ---
Payable for Fund shares
redeemed ......... 5,291 2,871 15,404
Accrued accounting
services fee ..... 1,667 833 ---
Dividends payable .. --- --- ---
Other .............. 1,924 915 66
----------- ----------- --------
Total liabilities 8,882 729,159 15,470
----------- ----------- --------
Total net assets $34,207,393 $15,766,443 $816,801
Net Assets =========== =========== ========
$0.01 par value capital stock
Capital stock .... $ 49,340 $ 28,577 $ 1,622
Additional paid-in
capital ......... 29,052,186 14,620,331 813,035
Accumulated undistributed gain (loss):
Accumulated undistributed
net investment income 296,064 209,195 2,144
Accumulated undistributed
net realized gain (loss)
on investment transactions
and foreign currency
transactions .... 943,228 15,047 ---
Net unrealized appreciation
of investments at end of
period .......... 3,866,575 893,293 ---
----------- ----------- --------
Net assets applicable to
outstanding units
of capital .... $34,207,393 $15,766,443 $816,801
=========== =========== ========
Net asset value, redemption
and offering price per share $6.9330 $5.5171 $5.0360
======= ======= =======
Capital shares outstanding 4,934,027 2,857,735 162,194
Capital shares authorized 100,000,000 50,000,000 100,000,000
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
(Unaudited) Money MarketLimited-Term Bond
PortfolioBond Portfolio Portfolio
Assets ------------------------- -----------
Investment securities--at
value (Notes 1 and 3) $29,409,558 $2,309,312 $82,855,268
Cash .............. 16,639 3,317 5,066
Receivables:
Investment securities
sold ............ --- --- 552,099
Dividends and interest 108,359 40,967 1,371,078
Fund shares sold . 2,046,883 500 85,447
Prepaid insurance
premium .......... 2,209 539 3,426
----------- ---------- -----------
Total assets .... 31,583,648 2,354,635 84,872,384
Liabilities ----------- ---------- -----------
Payable for investment
securities purchased --- 99,875 992,169
Payable for Fund shares
redeemed ......... 541,661 35,459 184,087
Accrued accounting
services fee ..... 1,667 --- 2,500
Dividends payable .. 4,378 --- ---
Other .............. 814 589 4,403
----------- ---------- -----------
Total liabilities 548,520 135,923 1,183,159
----------- ---------- -----------
Total net assets $31,035,128 $2,218,712 $83,689,225
Net Assets =========== ========== ===========
$0.01 par value capital stock
Capital stock .... $ 310,351 $ 4,190 $ 157,125
Additional paid-in
capital ......... 30,724,777 2,098,456 82,402,140
Accumulated undistributed gain (loss):
Accumulated undistributed
net investment income --- 60,754 2,712,910
Accumulated undistributed
net realized gain (loss)
on investment transactions
and foreign currency
transactions .... --- --- (3,757,250)
Net unrealized appreciation
of investments at end of
period .......... --- 55,312 2,174,300
----------- ---------- -----------
Net assets applicable to
outstanding units
of capital .... $31,035,128 $2,218,712 $83,689,225
=========== ========== ===========
Net asset value, redemption
and offering price per share $1.0000 $5.2947 $5.3263
======= ======= =======
Capital shares outstanding 31,035,128 419,040 15,712,505
Capital shares authorized 200,000,000 50,000,000 100,000,000
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
(Unaudited) High Income
Portfolio
Assets -------------
Investment securities--at
value (Notes 1 and 3) $79,578,577
Cash .............. 2,599
Receivables:
Investment securities
sold ............ 490,000
Dividends and interest 1,459,478
Fund shares sold . 61,962
Prepaid insurance
premium .......... 3,606
-----------
Total assets .... 81,596,222
Liabilities -----------
Payable for investment
securities purchased 490,000
Payable for Fund shares
redeemed ......... 132,670
Accrued accounting
services fee ..... 2,500
Dividends payable .. ---
Other .............. 7,463
-----------
Total liabilities 632,633
-----------
Total net assets $80,963,589
Net Assets ===========
$0.01 par value capital stock
Capital stock .... $ 178,688
Additional paid-in
capital ......... 79,067,098
Accumulated undistributed gain (loss):
Accumulated undistributed
net investment income 3,514,260
Accumulated undistributed
net realized gain (loss)
on investment transactions
and foreign currency
transactions .... (2,922,681)
Net unrealized appreciation
of investments at end of
period .......... 1,126,224
-----------
Net assets applicable to
outstanding units
of capital .... $80,963,589
===========
Net asset value, redemption
and offering price per share $4.5310
=======
Capital shares outstanding 17,868,806
Capital shares authorized 100,000,000
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Period Ended JUNE 30, 1995
(Unaudited)
Growth IncomeInternational
Portfolio Portfolio Portfolio
---------- ---------- ----------
Investment Income
Income:
Interest ......... $ 1,202,238 $ 413,932 $ 373,372
Dividends ........ 2,230,866 2,008,061 355,378
----------- ----------- ----------
Total income .... 3,433,104 2,421,993 728,750
----------- ----------- ----------
Expenses (Note 2):
Investment management
fee ............. 1,068,022 869,634 131,775
Accounting services
fee ............. 25,000 25,000 10,000
Registration fees 17,376 23,065 9,177
Custodian fees ... 12,633 6,968 16,624
Audit fees ....... 15,088 12,281 2,556
Legal fees ....... 2,690 2,183 300
Other ............ 10,232 8,860 206
----------- ----------- ----------
Total expenses .. 1,151,041 947,991 170,638
----------- ----------- ----------
Net investment income 2,282,063 1,474,002 558,112
----------- ----------- ----------
Realized and Unrealized Gain (Loss)
on Investments
Realized net gain (loss)
on securities .... 17,732,962 1,751,455 28,153
Realized net gain (loss)
on foreign currency
transactions ..... 612 447 (105,407)
----------- ----------- ----------
Realized net gain (loss)
on investments .. 17,733,574 1,751,902 (77,254)
Unrealized appreciation
in value of investments
during the period 30,024,889 46,205,807 2,200,583
----------- ----------- ----------
Net gain on
investments ... 47,758,463 47,957,709 2,123,329
----------- ----------- ----------
Net increase in net
assets resulting
from operations $50,040,526 $49,431,711 $2,681,441
=========== =========== ==========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Period Ended JUNE 30, 1995
(Unaudited)
Small Cap BalancedAsset Strategy
Portfolio Portfolio Portfolio
---------- ---------- ----------
Investment Income
Income:
Interest ......... $ 421,796 $ 149,056 $2,587
Dividends ........ 630 106,653 ---
---------- ---------- ------
Total income .... 422,426 255,709 2,587
---------- ---------- ------
Expenses (Note 2):
Investment management
fee ............. 107,924 35,969 375
Accounting services
fee ............. 7,500 4,167 ---
Registration fees 5,048 3,047 ---
Custodian fees ... 2,803 571 ---
Audit fees ....... 2,083 1,658 ---
Legal fees ....... 238 121 ---
Other ............ 766 981 68
---------- ---------- ------
Total expenses .. 126,362 46,514 443
---------- ---------- ------
Net investment income 296,064 209,195 2,144
---------- ---------- ------
Realized and Unrealized Gain (Loss)
on Investments
Realized net gain (loss)
on securities .... 943,228 18,265 ---
Realized net gain (loss)
on foreign currency
transactions ..... --- --- ---
---------- ---------- ------
Realized net gain (loss)
on investments .. 943,228 18,265 ---
Unrealized appreciation
in value of investments
during the period 2,558,296 1,128,727 ---
---------- ---------- ------
Net gain on
investments .... 3,501,524 1,146,992 ---
---------- ---------- ------
Net increase in net
assets resulting
from operations $3,797,588 $1,356,187 $2,144
========== ========== ======
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Period Ended JUNE 30, 1995
(Unaudited)
Money MarketLimited-Term Bond
PortfolioBond Portfolio Portfolio
--------------- ---------- ----------
Investment Income
Income:
Interest ......... $807,623 $ 68,664 $2,955,579
Dividends ........ --- --- ---
-------- -------- ----------
Total income .... 807,623 68,664 2,955,579
-------- -------- ----------
Expenses (Note 2):
Investment management
fee ............. 67,037 5,325 211,321
Accounting services
fee ............. 10,000 --- 15,000
Registrations fees 1,370 567 13
Custodian fees ... 1,654 16 6,085
Audit fees ....... 2,503 1,283 4,898
Legal fees ....... 226 17 697
Other ............ 2,449 702 4,053
-------- -------- ----------
Total expenses .. 85,239 7,910 242,067
-------- -------- ----------
Net investment income 722,384 60,754 2,713,512
-------- -------- ----------
Realized and Unrealized Gain (Loss)
on Investments
Realized net gain (loss)
on securities .... --- --- (277,554)
Realized net gain (loss)
on foreign currency
transactions ..... --- --- (602)
-------- -------- ----------
Realized net gain (loss)
on investments .. --- --- (278,156)
Unrealized appreciation
in value of investments
during the period --- 102,999 6,770,634
-------- -------- ----------
Net gain on
investments ... --- 102,999 6,492,478
-------- -------- ----------
Net increase in net
assets resulting
from operations $722,384 $163,753 $9,205,990
======== ======== ==========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Period Ended JUNE 30, 1995
(Unaudited)
High Income
Portfolio
---------------
Investment Income
Income:
Interest ......... $3,738,490
Dividends ........ 55,562
----------
Total income .... 3,794,052
----------
Expenses (Note 2):
Investment management
fee ............. 252,307
Accounting services
fee ............. 15,000
Registration fees 1,165
Custodian fees ... 1,790
Audit fees ....... 4,805
Legal fees ....... 684
Other ............ 4,041
----------
Total expenses .. 279,792
----------
Net investment income 3,514,260
----------
Realized and Unrealized Gain (Loss)
on Investments
Realized net gain (loss)
on securities .... (1,177,577)
Realized net gain (loss)
on foreign currency
transactions ..... ---
----------
Realized net gain (loss)
on investments .. (1,177,577)
Unrealized appreciation
in value of investments
during the period 5,119,250
----------
Net gain on
investments ... 3,941,673
----------
Net increase in net
assets resulting
from operations $7,455,933
==========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended JUNE 30, 1995
(Unaudited)
Growth IncomeInternational
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase in Net Assets
Operations:
Net investment
income .......... $ 2,282,063$ 1,474,002 $ 558,112
Realized net gain (loss)
on investments .. 17,733,574 1,751,902 (77,254)
Unrealized
appreciation .... 30,024,889 46,205,807 2,200,583
------------------------------------
Net increase in net
assets resulting
from operations 50,040,526 49,431,711 2,681,441
------------------------ -----------
Dividends to shareholders from
net investment income* --- --- ---
------------------------ -----------
Capital share
transactions** ... 12,856,697 16,505,480 11,695,188
------------------------ -----------
Total increase 62,897,223 65,937,191 14,376,629
Net Assets
Beginning of period 276,736,635 218,773,602 26,019,634
------------------------ -----------
End of period ...... $339,633,858$284,710,793 $40,396,263
======================== ===========
Undistributed net
investment income $2,282,675 $1,474,449 $452,705
========== ========== ========
*See "Financial Highlights" on pages .
**Shares issued from sale
of shares .......... 4,145,291 3,730,935 2,818,241
Shares issued from reinvest-
ment of dividends .. --- --- ---
Shares redeemed ..... (2,076,329) (1,480,664) (492,299)
--------- --------- ---------
Increase in outstanding
capital shares...... 2,068,962 2,250,271 2,325,942
========= ========= =========
Value issued from sale
of shares .......... $25,923,536 $27,319,404 $14,153,273
Value issued from reinvest-
ment of dividends .. --- --- ---
Value redeemed ...... (13,066,839)(10,813,924) (2,458,085)
----------- ----------- -----------
Increase in
outstanding capital $12,856,697 $16,505,480 $11,695,188
=========== =========== ===========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended JUNE 30, 1995
(Unaudited)
Small Cap BalancedAsset Strategy
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase in Net Assets
Operations:
Net investment income $ 296,064 $ 209,195 $ 2,144
Realized net gain (loss)
on investments .. 943,228 18,265 ---
Unrealized
appreciation .... 2,558,296 1,128,727 ---
----------- ----------- --------
Net increase in net
assets resulting
from operations 3,797,588 1,356,187 2,144
----------- ----------- --------
Dividends to shareholders from
net investment income* --- --- ---
Capital share
transactions** ... 14,329,643 5,739,188 814,657
----------- ----------- --------
Total increase . 18,127,231 7,095,375 816,801
Net Assets
Beginning of period 16,080,162 8,671,068 ---
----------- ----------- --------
End of period ...... $34,207,393 $15,766,443 $816,801
=========== =========== ========
Undistributed net
investment income $296,064 $209,195 $2,144
======== ======== ======
*See "Financial Highlights" on pages .
**Shares issued from sale
of shares .......... 2,532,540 1,194,969 162,692
Shares issued from reinvest-
ment of dividends .. --- --- ---
Shares redeemed ..... (282,193) (93,954) (498)
--------- --------- -------
Increase in outstanding
capital shares .... 2,250,347 1,101,015 162,194
========= ========= =======
Value issued from sale
of shares .......... $16,152,071 $6,221,023 $817,163
Value issued from reinvest-
ment of dividends .. --- --- ---
Value redeemed ...... (1,822,428) (481,835) (2,506)
----------- ---------- --------
Increase in
outstanding capital $14,329,643 $5,739,188 $814,657
=========== ========== ========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended JUNE 30, 1995
(Unaudited)
Money MarketLimited-Term Bond
PortfolioBond Portfolio Portfolio
-------------- ----------- -----------
Increase in Net Assets
Operations:
Net investment income $ 722,384 $ 60,754 $ 2,713,512
Realized net gain (loss)
on investments .. --- --- (278,156)
Unrealized
appreciation .... --- 102,999 6,770,634
----------- ---------- -----------
Net increase in net
assets resulting
from operations 722,384 163,753 9,205,990
----------- ---------- -----------
Dividends to shareholders
from net investment
income* ........... (722,384) --- ---
----------- ---------- -----------
Capital share
transactions** .... 222,865 409,813 466,385
----------- ---------- -----------
Total increase .. 222,865 573,566 9,672,375
Net Assets
Beginning of period 30,812,263 1,645,146 74,016,850
----------- ---------- -----------
End of period ...... $31,035,128 $2,218,712 $83,689,225
=========== ========== ===========
Undistributed net
investment income $--- $60,754 $2,712,910
==== ======= ==========
*See "Financial Highlights" on pages .
**Shares issued from sale
of shares .......... 76,522,981 103,619 1,067,979
Shares issued from reinvest-
ment of dividends .. 722,384 --- ---
Shares redeemed ..... (77,022,500) (23,007) (973,231)
------- ------ ------
Increase in outstanding
capital shares ..... 222,865 80,612 94,748
======= ====== ======
Value issued from sale
of shares .......... $76,522,981 $526,097 $5,337,558
Value issued from reinvest-
ment of dividends .. 722,384 --- ---
Value redeemed ...... (77,022,500) (116,284) (4,871,173)
-------- -------- --------
Increase in
outstanding capital $222,865 $409,813 $466,385
======== ======== ========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended JUNE 30, 1995
(Unaudited)
High Income
Portfolio
-----------
Increase in Net Assets
Operations:
Net investment income $ 3,514,260
Realized net gain (loss)
on investments .. (1,177,577)
Unrealized
appreciation .... 5,119,250
-----------
Net increase in net
assets resulting
from operations 7,455,933
-----------
Dividends to shareholders
from net investment
income* ........... ---
-----------
Capital share
transactions** .... 863,981
-----------
Total increase .. 8,319,914
Net Assets
Beginning of period 72,643,675
-----------
End of period ...... $80,963,589
===========
Undistributed net
investment income $3,514,260
==========
*See "Financial Highlights" on pages .
**Shares issued from sale
of shares .......... 1,367,697
Shares issued from reinvest-
ment of dividends .. ---
Shares redeemed ..... (1,165,892)
-------
Increase in outstanding
capital shares ..... 201,805
=======
Value issued from sale
of shares .......... $5,904,797
Value issued from reinvest-
ment of dividends .. ---
Value redeemed ...... (5,040,816)
--------
Increase in
outstanding capital $863,981
========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended DECEMBER 31, 1994
(Unaudited)
Growth IncomeInternational
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 5,286,234$ 2,248,257 $ 106,617
Realized net gain (loss)
on investments .. 14,371,377 684,147 (21,009)
Unrealized appreciation
(depreciation) .. (13,761,465) (6,030,073) (664,096)
------------------------ -----------
Net increase (decrease)
in net assets resulting
from operations 5,896,146 (3,097,669) (578,488)
------------------------ -----------
Dividends to shareholders from:*
Net investment income (5,286,234) (2,248,257) (106,617)
Realized gains on securities
transactions .... (14,154,374) --- ---
------------------------ -----------
(19,440,608) (2,248,257) (106,617)
------------------------ -----------
Capital share
transactions** ... 69,690,925 69,027,272 26,704,739
------------------------ -----------
Total increase
(decrease) ..... 56,146,463 63,681,346 26,019,634
Net Assets
Beginning of period 220,590,172 155,092,256 ---
------------------------ -----------
End of period ...... $276,736,635$218,773,602 $26,019,634
======================== ===========
Undistributed net
investment income $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages .
**Shares issued from sale
of shares .......... 11,752,596 11,914,285 5,355,035
Shares issued from reinvest-
ment of dividends and/or
distributions ...... 3,295,800 332,145 21,355
Shares redeemed ..... (3,733,563) (2,344,370) (164,798)
---------- ---------- ---------
Increase in outstanding
capital shares...... 11,314,833 9,902,060 5,211,592
========== ========== =========
Value issued from sale
of shares .......... $73,683,884 $83,060,254 $27,436,654
Value issued from reinvest-
ment of dividends and/or
distributions ...... 19,440,608 2,248,256 106,617
Value redeemed ...... (23,433,567)(16,281,238) (838,532)
----------- ----------- -----------
Increase in
outstanding capital $69,690,925 $69,027,272 $26,704,739
=========== =========== ===========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended DECEMBER 31, 1994
(Unaudited)
Small Cap BalancedMoney Market
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 99,347 $ 79,610 $ 851,434
Realized net gain (loss)
on investments .. 44,381 (3,218) ---
Unrealized appreciation
(depreciation) .. 1,308,279 (235,434) ---
----------- ---------- -----------
Net increase (decrease)
in net assets resulting
from operations 1,452,007 (159,042) 851,434
----------- ---------- -----------
Dividends to shareholders from:*
Net investment income (99,347) (79,610) (851,434)
Realized gains on securities
transactions .... (44,381) --- ---
----------- ---------- -----------
(143,728) (79,610) (851,434)
----------- ---------- -----------
Capital share
transactions** ... 14,771,883 8,909,720 4,812,395
----------- ---------- -----------
Total increase
(decrease) ... 16,080,162 8,671,068 4,812,395
Net Assets
Beginning of period --- --- 25,999,868
----------- ---------- -----------
End of period ...... $16,080,162 $8,671,068 $30,812,263
=========== ========== ===========
Undistributed net
investment income $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages .
**Shares issued from sale
of shares .......... 2,722,519 1,795,318 183,043,231
Shares issued from reinvest-
ment of dividends and/or
distributions ...... 23,987 16,128 851,433
Shares redeemed ..... (62,826) (54,726)(179,082,269)
--------- --------- -----------
Increase in outstanding
capital shares .... 2,683,680 1,756,720 4,812,395
========= ========= ==========
Value issued from sale
of shares .......... $14,980,266 $9,104,454$183,043,231
Value issued from reinvest-
ment of dividends and/or
distributions ...... 143,729 79,610 851,433
Value redeemed ...... (352,112) (274,344)(179,082,269)
----------- ----------------------
Increase in
outstanding capital $14,771,883 $8,909,720$ 4,812,395
=========== =====================+
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended DECEMBER 31, 1994
(Unaudited)
Limited-Term Bond High Income
Bond Portfolio Portfolio Portfolio
-------------- ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 49,532 $ 5,286,973 $ 6,761,683
Realized net gain (loss)
on investments .. 455 (3,479,696) (1,428,391)
Unrealized appreciation
(depreciation) .. (47,687) (6,740,515) (7,299,167)
---------- ----------- -----------
Net increase (decrease)
in net assets resulting
from operations 2,300 (4,933,238) (1,965,875)
---------- ----------- -----------
Dividends to shareholders
from:*
Net investment income (49,532) (5,286,973) (6,761,683)
Realized gains on securities
transactions .... (455) --- ---
---------- ----------- -----------
(49,987) (5,286,973) (6,761,683)
---------- ----------- -----------
Capital share
transactions** .... 1,692,833 2,510,419 10,105,884
---------- ----------- -----------
Total increase
(decrease) .... 1,645,146 (7,709,792) 1,378,326
Net Assets
Beginning of period --- 81,726,642 71,265,349
---------- ----------- -----------
End of period ...... $1,645,146 $74,016,850 $72,643,675
========== =========== ===========
Undistributed net
investment income $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages .
**Shares issued from sale
of shares .......... 331,301 3,002,124 3,768,168
Shares issued from reinvest-
ment of dividends and/or
distributions ...... 10,283 1,081,257 1,593,245
Shares redeemed ..... (3,156) (3,587,525) (3,062,321)
------- --------- ---------
Increase in outstanding
capital shares ..... 338,428 495,856 2,299,092
======= ========= =========
Value issued from sale
of shares .......... $1,658,566 $15,437,912 $16,942,683
Value issued from reinvest-
ment of dividends and/or
distributions ...... 49,987 5,286,973 6,761,683
Value redeemed ...... (15,720)(18,214,466)(13,598,482)
---------- ----------- -----------
Increase in
outstanding capital $1,692,833 $ 2,510,419 $10,105,884
========== =========== ===========
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE GROWTH PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
(Unaudited)
For the
six months For the fiscal year ended December 31,
ended -----------------------------------------
6/30/95 1994 1993 1992 1991 1990
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $5.8986 $6.1962 $6.1505 $5.5973 $4.9479 $5.4025
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income ......... 0.0466 0.1211 0.0537 0.1013 0.1229 0.1661
Net realized and
unrealized gain
(loss) on
investments .... 0.9882 0.0268 0.8087 1.0653 1.6636 (0.4546)
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 1.0348 0.1479 0.8624 1.1666 1.7865 (0.2885)
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment
income ......... (0.0000)(0.1211) (0.0537)(0.1013) (0.1229)
(0.1661)
Distribution from
capital gains .. (0.0000)(0.3244) (0.7569)(0.5121) (1.0142)
(0.0000)
Distribution in
excess of capital
gains .......... (0.0000)(0.0000) (0.0061)(0.0000) (0.0000)
(0.0000)
------- ------- ------- ------- ------- -------
Total distributions (0.0000)(0.4455) (0.8167)(0.6134) (1.1371)
(0.1661)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $6.9334 $5.8986 $6.1962 $6.1505 $5.5973 $4.9479
======= ======= ======= ======= ======= =======
Total return ...... 17.54% 2.39% 14.02% 20.84% 36.10% -5.34%
Net assets, end of
period (000
omitted) .........$339,634$276,737 $220,590$122,363 $69,044 $37,440
Ratio of expenses
to average net
assets............ 0.77%* 0.77% 0.78% 0.80% 0.86% 0.86%
Ratio of net investment
income to average
net assets ....... 1.52%* 2.07% 1.01% 2.00% 2.43% 3.58%
Portfolio turnover
rate ............. 234.38%*277.36% 297.81% 225.87% 316.72% 331.15%
*Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE INCOME PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
(Unaudited)
For the
six months For the fiscal year ended December 31,
ended -----------------------------------------
6/30/95 1994 1993 1992 1991 1990
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $6.7689 $6.9180 $5.9530 $5.3158 $5.0000
------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income ......... 0.0426 0.0703 0.0651 0.0803 0.0633
Net realized and
unrealized gain (loss)
on investments . 1.4241 (0.1491) 0.9650 0.6496 0.3158
------- ------- ------- ------- -------
Total from investment
operations ....... 1.4667 (0.0788) 1.0301 0.7299 0.3791
------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment
income ......... (0.0000)(0.0703) (0.0651)(0.0803) (0.0633)
Distribution from
capital gains ... (0.0000)(0.0000) (0.0000)(0.0124) (0.0000)
------- ------- ------- ------- -------
Total distributions (0.0000)(0.0703) (0.0651)(0.0927) (0.0633)
------- ------- ------- ------- -------
Net asset value,
end of period .... $8.2356 $6.7689 $6.9180 $5.9530 $5.3158
======= ======= ======= ======= =======
Total return ....... 21.67% -1.14% 17.30% 13.78% 17.43%
Net assets, end of
period (000
omitted) .........$284,711$218,774 $155,092 $65,027 $15,640
Ratio of expenses
to average net
assets............ 0.78%** 0.77% 0.79% 0.85% 0.89%
Ratio of net investment
income to average
net assets ....... 1.21%** 1.16% 1.36% 1.78% 2.47%
Portfolio turnover
rate ............. 13.78%**23.32% 18.38% 15.74% 4.41%
*The Income Portfolio's inception date is May 16, 1991; however, since
this Portfolio did not have any investment activity or incur expenses
prior to the date of initial offering, the per share information is
for a capital share outstanding for the period from July 16, 1991
(initial offering) through December 31, 1991. Ratios and the
portfolio turnover rate have been annualized.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE INTERNATIONAL PORTFOLIO
For a Share of Capital Stock Outstanding Throughout The Period:
(Unaudited)
For the For the
six months period
ended ended
6/30/95 12/31/94*
---------- ----------
Net asset value,
beginning of
period ........... $4.9926 $5.0000
------- -------
Income from investment
operations:
Net investment
income ......... 0.0740 0.0207
Net realized and
unrealized gain (loss)
on investments .. 0.2927 (0.0074)
------- -------
Total from investment
operations ....... 0.3667 0.0133
Less dividends from net
investment
income ......... (0.0000) (0.0207)
------- -------
Net asset value,
end of period .... $5.3593 $4.9926
======= =======
Total return ....... 7.34% 0.26%
Net assets, end of
period (000
omitted) ......... $40,396 $26,020
Ratio of expenses
to average net
assets............ 1.05%** 1.26%
Ratio of net investment
income to average
net assets ....... 3.44%** 1.36%
Portfolio turnover
rate ............. 27.66%** 23.23%
*The International Portfolio's inception date is April 28, 1994;
however, since this Portfolio did not have any investment activity or
incur expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from
May 3, 1994 (initial offering) through December 31, 1994. Ratios and
the portfolio turnover rate have been annualized.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE SMALL CAP PORTFOLIO
For a Share of Capital Stock Outstanding Throughout The Period:
(Unaudited)
For the For the
six months period
ended ended
6/30/95 12/31/94*
---------- ----------
Net asset value,
beginning of
period ........... $5.9918 $5.0000
------- -------
Income from investment
operations:
Net investment
income ......... 0.0600 0.0376
Net realized and
unrealized gain
on investments . 0.8812 1.0086
------- -------
Total from investment
operations ....... 0.9412 1.0462
------- -------
Less distributions:
Dividends from net
investment income (0.0000) (0.0376)
Distributions from
capital gains ... (0.0000) (0.0168)
------- -------
Total distributions (0.0000) (0.0544)
------- -------
Net asset value,
end of period .... $6.9330 $5.9918
======= =======
Total return ....... 15.71% 20.92%
Net assets, end of
period (000
omitted) ......... $34,207 $16,080
Ratio of expenses
to average net
assets............ 1.01%** 1.08%
Ratio of net investment
income to average
net assets ....... 2.36%** 2.35%
Portfolio turnover
rate ............. 56.10%** 21.61%
*The Small Cap Portfolio's inception date is April 28, 1994; however,
since this Portfolio did not have any investment activity or incur
expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from
May 3, 1994 (initial offering) through December 31, 1994. Ratios and
the portfolio turnover rate have been annualized.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE BALANCED PORTFOLIO
For a Share of Capital Stock Outstanding Throughout The Period:
(Unaudited)
For the For the
six months period
ended ended
6/30/95 12/31/94*
---------- ----------
Net asset value,
beginning of
period ........... $4.9359 $5.0000
------- -------
Income from investment
operations:
Net investment
income ......... 0.0732 0.0460
Net realized and
unrealized gain (loss)
on investments . 0.5080 (0.0641)
------- -------
Total from investment
operations ....... 0.5812 (0.0181)
Less dividends from net
investment
income ......... (0.0000) (0.0460)
------- -------
Net asset value,
end of period .... $5.5171 $4.9359
======= =======
Total return ....... 11.78% -0.37%
Net assets, end of
period (000
omitted) ......... $15,766 $8,671
Ratio of expenses
to average net
assets............ 0.79%** 0.95%
Ratio of net investment
income to average
net assets ....... 3.54%** 3.14%
Portfolio turnover
rate ............. 78.58%** 19.74%
*The Balanced Portfolio's inception date is April 28, 1994; however,
since this Portfolio did not have any investment activity or incur
expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from
May 3, 1994 (initial offering) through December 31, 1994. Ratios and
the portfolio turnover rate have been annualized.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE ASSET STRATEGY PORTFOLIO
For a Share of Capital Stock Outstanding Throughout The Period:
(Unaudited)
For the
period
ended
6/30/95*
----------
Net asset value,
beginning of
period ........... $5.0000
-------
Income from investment
operations:
Net investment
income ......... 0.0132
Net realized and
unrealized gain
on investments . 0.0228
-------
Total from investment
operations ....... 0.0360
-------
Net asset value,
end of period .... $5.0360
=======
Total return ....... 0.72%
Net assets, end of
period (000
omitted) ......... $817
Ratio of expenses
to average net
assets............ 0.95%
Ratio of net investment
income to average
net assets ....... 4.61%
Portfolio turnover
rate ............. 0.00%
*The Asset Strategy Portfolio's inception date is February 14, 1995;
however, since this Portfolio did not have any investment activity or
incur expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from
May 1, 1995 (initial offering) through June 30, 1995. Ratios and the
portfolio turnover rate have been annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE MONEY MARKET PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
(Unaudited)
For the
six months For the fiscal year ended December 31,
ended -----------------------------------------
6/30/95 1994 1993 1992 1991 1990
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- -------
Net investment
income ......... 0.0273 0.0368 0.0260 0.0324 0.0536 0.0753
Less dividends
declared ......... (0.0273)(0.0368) (0.0260)(0.0324) (0.0536)
(0.0753)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= =======
Total return ...... 2.76% 3.72% 2.63% 3.29% 5.49% 7.82%
Net assets, end of
period (000
omitted) ......... $31,035 $30,812 $26,000 $23,995 $19,797 $16,870
Ratio of expenses
to average net
assets............ 0.65%* 0.65% 0.65% 0.65% 0.76% 0.79%
Ratio of net investment
income to average
net assets ....... 5.51%* 3.72% 2.61% 3.17% 5.33% 7.52%
*Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE LIMITED-TERM BOND PORTFOLIO
For a Share of Capital Stock Outstanding Throughout The Period:
(Unaudited)
For the For the
six months period
ended ended
6/30/95 12/31/94*
---------- ----------
Net asset value,
beginning of
period ........... $4.8611 $5.0000
------- -------
Income from investment
operations:
Net investment
income ......... 0.1450 0.1507
Net realized and
unrealized gain (loss)
on investments . 0.2886 (0.1375)
------- -------
Total from investment
operations ....... 0.4336 0.0132
------- -------
Less distributions:
Dividends from net
investment
income ......... (0.0000) (0.1507)
Distribution from
capital gains .. (0.0000) (0.0014)
------- -------
Total distributions (0.0000) (0.1521)
------- -------
Net asset value,
end of period .... $5.2947 $4.8611
======= =======
Total return ....... 8.92% 0.26%
Net assets, end of
period (000
omitted) ......... $2,219 $1,645
Ratio of expenses
to average net
assets............ 0.83%** 0.93%
Ratio of net investment
income to average
net assets ....... 6.37%** 5.89%
Portfolio turnover
rate ............. 0.00%** 93.83%
*The Limited-Term Bond Portfolio's inception date is April 28, 1994;
however, since this Portfolio did not have any investment activity or
incur expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from
May 3, 1994 (initial offering) through December 31, 1994. Ratios and
the portfolio turnover rate have been annualized.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE BOND PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
(Unaudited)
For the
six months For the fiscal year ended December 31,
ended -----------------------------------------
6/30/95 1994 1993 1992 1991 1990
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $4.7393 $5.4045 $5.2626 $5.2661 $4.9534 $5.0249
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income ......... 0.1727 0.3507 0.3334 0.3643 0.3867 0.4025
Net realized and
unrealized gain
(loss) on
investments .... 0.4143 (0.6652) 0.3046 0.0216 0.3771 (0.0715)
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 0.5870 (0.3145) 0.6380 0.3859 0.7638 0.3310
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment
income ......... (0.0000)(0.3507) (0.3334)(0.3643) (0.3867)
(0.4025)
Distribution from
capital gains .. (0.0000)(0.0000) (0.1627)(0.0251) (0.0644)
(0.0000)
------- ------- ------- ------- ------- -------
Total distributions (0.0000)(0.3507) (0.4961)(0.3894) (0.4511)
(0.4025)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $5.3263 $4.7393 $5.4045 $5.2626 $5.2661 $4.9534
======= ======= ======= ======= ======= =======
Total return ...... 12.39% -5.90% 12.37% 7.67% 16.19% 7.03%
Net assets, end of
period (000
omitted) ......... $83,689 $74,017 $81,727 $49,428 $29,112 $16,464
Ratio of expenses
to average net
assets............ 0.62%* 0.62% 0.62% 0.64% 0.72% 0.78%
Ratio of net investment
income to average
net assets ....... 6.95%* 6.73% 6.01% 6.91% 7.65% 8.05%
Portfolio turnover
rate ............. 64.96%*135.82% 68.75% 44.32% 52.50% 51.50%
*Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE HIGH INCOME PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
(Unaudited)
For the
six months For the fiscal year ended December 31,
ended -----------------------------------------
6/30/95 1994 1993 1992 1991 1990
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $4.1118 $4.6373 $4.2886 $4.0770 $3.4067 $4.1288
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income ......... 0.1967 0.4106 0.3899 0.4050 0.4368 0.4346
Net realized and
unrealized gain
(loss) on
investments .... 0.2225 (0.5255) 0.3487 0.2116 0.6703 (0.7221)
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 0.4192 (0.1149) 0.7386 0.6166 1.1071 (0.2875)
------- ------- ------- ------- ------- -------
Less dividends from
net investment
income ........... (0.0000)(0.4106) (0.3899)(0.4050) (0.4368)
(0.4346)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $4.5310 $4.1118 $4.6373 $4.2886 $4.0770 $3.4067
======= ======= ======= ======= ======= =======
Total return ...... 10.20% -2.55% 17.90% 15.70% 34.19% -7.44%
Net assets, end of
period (000
omitted) ......... $80,964 $72,644 $71,265 $41,456 $24,394 $13,868
Ratio of expenses
to average net
assets............ 0.73%* 0.74% 0.75% 0.77% 0.87% 0.90%
Ratio of net investment
income to average
net assets ....... 9.22%* 9.03% 8.66% 9.48% 11.32% 11.55%
Portfolio turnover
rate ............. 33.82%* 37.86% 54.22% 60.79% 34.00% 12.21%
*Annualized.
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
NOTE 1 -- Significant Accounting Policies
TMK/United Funds, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company. Capital stock is currently divided into the ten
classes that are designated the Growth Portfolio, the Income Portfolio,
the International Portfolio, the Small Cap Portfolio, the Balanced
Portfolio, the Asset Strategy Portfolio, the Money Market Portfolio, the
Limited-Term Bond Portfolio, the Bond Portfolio and the High Income
Portfolio. The assets belonging to each Portfolio are held separately
by the Custodian. The capital shares of each Portfolio represent a pro
rata beneficial interest in the principal, net income, and realized and
unrealized capital gains or losses of its respective investments and
other assets. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with generally
accepted accounting principles.
A. Security valuation -- Each stock and convertible bond is valued at
the latest sale price thereof on the last business day of the
fiscal period as reported by the principal securities exchange on
which the issue is traded or, if no sale is reported for a stock,
the average of the latest bid and asked prices. Bonds, other than
convertible bonds, are valued using a pricing system provided by a
major dealer in bonds. Convertible bonds are valued using this
pricing system only on days when there is no sale reported. Stocks
which are traded over-the-counter are priced using Nasdaq (National
Association of Securities Dealers Automated Quotations) which
provides information on bid and asked or closing prices quoted by
major dealers in such stocks. Securities for which quotations are
not readily available are valued as determined in good faith in
accordance with procedures established by and under the general
supervision of the Fund's Board of Directors. Short-term debt
securities are valued at amortized cost, which approximates market.
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 identified cost basis. Original issue discount
(as defined in the Internal Revenue Code), premiums on the purchase
of bonds and post-1984 market discount are amortized for both
financial and tax reporting purposes over the remaining lives of
the bonds. Dividend income is recorded on the ex-dividend date
except that certain dividends from foreign securities are recorded
as soon as the Fund is informed of the ex-dividend date. Interest
income is recorded on the accrual basis. See Note 3 -- Investment
Securities Transactions.
C. Foreign currency translations -- All assets and liabilities
denominated in foreign currencies are translated into U.S. dollars
daily. Purchases and sales of investment securities and accruals
of income and expenses are translated at the rate of exchange
prevailing on the date of the transaction. For assets and
liabilities other than investments in securities, net realized and
unrealized gains and losses from foreign currency translations
arise from changes in currency exchange rates. The Fund combines
fluctuations from currency exchange rates and fluctuations in
market value when computing net realized and unrealized gain or
loss from investments.
D. Federal income taxes -- It is the Fund's policy to distribute all
of its taxable income and capital gains to its shareholders and
otherwise qualify as a regulated investment company under the
Internal Revenue Code. In addition, the Fund intends to pay
distributions as required to avoid imposition of excise tax.
Accordingly, provision has not been made for Federal income taxes.
See Note 4 -- Federal Income Tax Matters.
E. Dividends and distributions -- Dividends and distributions to
shareholders are recorded by each Portfolio on the record date.
Net investment income distributions and capital gains distributions
are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These
differences are due to differing treatments for items such as
deferral of wash sales and post-October losses, foreign currency
transactions, net operating losses and expiring capital loss
carryforwards.
NOTE 2 -- Investment Management And Payments To Affiliated Persons
The Fund pays a fee for investment management services. The fee is
computed daily based on the net asset value at the close of business.
The fee consists of two elements: (i) a "Specific" fee computed on net
asset value as of the close of business each day at the following annual
rates: Growth Portfolio - .20% of net assets; Income Portfolio - .20%
of net assets; International Portfolio - .30% of net assets; Small Cap
Portfolio - .35% of net assets; Balanced Portfolio - .10% of net assets;
Asset Strategy Portfolio - .30% of net assets; Money Market Portfolio -
none; Limited-Term Bond Portfolio - .05% of net assets; Bond Portfolio -
.03% of net assets; High Income Portfolio - .15% of net assets and (ii)
a base fee computed each day on the combined net asset values of all of
the Portfolios (approximately $913.4 million of combined net assets at
June 30, 1995) and allocated among the Portfolios based on their
relative net asset size at the annual rates of .51% of the first $750
million dollars of combined net assets, .49% on that amount between $750
million and $1.5 billion, .47% between $1.5 billion and $2.25 billion,
and .45% of that amount over $2.25 billion. The Fund accrues and pays
this fee daily.
Pursuant to assignment of the Investment Management Agreement
between the Fund and Waddell & Reed, Inc. (W&R), Waddell & Reed
Investment Management Company ("WRIMCO"), a wholly-owned subsidiary of
W&R, serves as the Fund's investment manager.
The Fund has an Accounting Services Agreement with Waddell & Reed
Services Company ("WARSCO"), a wholly-owned subsidiary of W&R. Under
the agreement, WARSCO acts as the agent in providing accounting services
and assistance to the Fund and pricing daily the value of shares of each
Portfolio. For these services, each Portfolio pays WARSCO a monthly fee
of one-twelfth of the annual fee shown in the following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Portfolio
-------------------------- -----------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $1,000 $ 85,000
$1,000 and Over $100,000
The Fund paid Directors' fees of $12,528.
W&R is an indirect subsidiary of Torchmark Corporation, a holding
company, and United Investors Management Company, a holding company, and
a direct subsidiary of Waddell & Reed Financial Services, Inc., a
holding company.
NOTE 3 -- Investment Security Transactions
Investment securities transactions for the period ended June 30,
1995, are summarized as follows:
Growth Income International
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $383,940,220 $30,274,539 $21,331,023
Purchases of U.S. Government
securities --- --- ---
Purchases of short-term
securities 307,948,586 66,383,589 59,716,875
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 306,613,991 15,946,372 2,892,515
Proceeds from maturities
and sales of U.S.
Government securities --- --- ---
Proceeds from maturities
and sales of short-term
securities 371,710,022 65,185,771 66,654,849
Small Cap BalancedAsset Strategy
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $10,866,216 $9,964,318 $---
Purchases of U.S. Government
securities --- 2,512,968 ---
Purchases of short-term
securities 78,453,779 13,121,833 883,252
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 3,244,562 3,973,732 ---
Proceeds from maturities
and sales of U.S.
Government securities --- --- ---
Proceeds from maturities
and sales of short-term
securities 71,896,446 15,078,329 88,000
Money Limited-
Market Term Bond Bond
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities --- $262,833 $12,249,933
Purchases of U.S. Government
securities --- 99,875 11,882,444
Purchases of short-term
securities $127,300,639 642,686 26,906,380
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities --- --- 11,352,528
Proceeds from maturities
and sales of U.S.
Government securities --- --- 14,441,065
Proceeds from maturities
and sales of short-term
securities 125,966,093 405,000 21,341,800
High
Income
Portfolio
-----------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $11,456,949
Purchases of U.S. Government
securities ---
Purchases of short-term
securities 26,154,865
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 13,100,319
Proceeds from maturities
and sales of U.S.
Government securities ---
Proceeds from maturities
and sales of short-term
securities 20,001,000
For Federal income tax purposes, cost of investments owned at June
30, 1995 and the related unrealized appreciation (depreciation) were as
follows:
Aggregate
Cost Appreciation Depreciation Appreciation
--------------------------------------------------
Growth Portfolio $318,766,071 $27,993,456 $7,586,169 $20,407,287
Income Portfolio 219,943,056 65,032,099 2,452,328 62,579,771
International Portfolio 38,265,023 2,864,023 1,328,223 1,535,800
Small Cap Portfolio 30,188,089 4,596,210 729,635 3,866,575
Balanced Portfolio 15,424,894 1,079,020 185,727 893,293
Asset Strategy Portfolio 797,637 --- --- ---
Money Market Portfolio 29,409,558 --- --- ---
Limited-Term Bond Portfolio 2,254,000 55,819 507 55,312
Bond Portfolio 80,680,462 2,812,728 637,922 2,174,806
High Income Portfolio 78,452,353 2,832,692 1,706,468 1,126,224
NOTE 4 -- Federal Income Tax Matters
The Fund's income and expenses attributed to each Portfolio and the
gains and losses on security transactions of each Portfolio have been
attributed to that Portfolio for Federal income tax purposes as well as
accounting purposes. For Federal income tax purposes, Growth, Small Cap
and Limited-Term Bond Portfolios realized capital gain net income of
$14,154,374, $44,381 and $455, respectively, during the year ended
December 31, 1994. The capital gain net income was paid to shareholders
during the year ended December 31, 1994. For Federal income tax
purposes the Income Portfolio realized capital gain net income of
$685,306 during the year ended December 31, 1994. These capital gains
were entirely offset by utilization of capital loss carryforwards.
Remaining prior year capital loss carryforwards of Income Portfolio
aggregated $459,928 at December 31, 1994, and are available to offset
future realized capital gain net income through December 31, 2001. For
Federal income tax purposes, Bond, High Income, Balanced and
International Portfolios realized capital losses of $3,479,696,
$1,428,392, $3,218 and $21,009, respectively, during the year ended
December 31, 1994. These amounts are available to offset future
realized capital gain net income through December 31, 2002. In
addition, the High Income Portfolio has $316,713 in capital loss
carryforwards from prior years, which are available to offset future
realized capital gain net income through December 31, 1999.
Note 5 -- Organization
The inception date of the International Portfolio, the Small Cap
Portfolio, the Balanced Portfolio, and the Limited-Term Bond Portfolio
is April 28, 1994; however, these Portfolios did not have any investment
activity or incur expenses prior to the date of initial offering, May 3,
1994. The inception date of the Asset Strategy Portfolio is February
14, 1995; however, this Portfolio did not have any investment activity
or incur expenses prior to the date of initial offering, May 1, 1995.
The accompanying financial statements reflect activity for these
periods.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
SEPTEMBER 30, 1995
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITY - 63.19%
United States Treasury Notes,
5.125%, 11-15-95 ...................... $1,604 $1,602,989
(Cost: $1,602,986)
SHORT-TERM SECURITIES
Commercial Paper
Banks and Savings and Loans - 4.38%
U.S. Bancorp,
Master Note ........................... 111 111,000
Consumer Electronics and Appliances - 3.93%
TDK (USA) Corp.,
5.74%, 10-17-95 ....................... 100 99,745
Food and Related - 5.91%
General Mills, Inc.,
Master Note ........................... 43 43,000
Sara Lee Corporation,
Master Note ............................ 107 107,000
Total ................................. 150,000
Public Utilities - Electric - 3.94%
Southern California Edison Co.,
5.75%, 10-5-95 ........................ 100 99,936
Telecommunications - 7.86%
BellSouth Telecommunications Inc.,
5.71%, 10-11-95 ....................... 100 99,841
GTE Corporation,
5.84%, 10-31-95 ....................... 100 99,514
Total ................................. 199,355
Total Commercial Paper - 26.02% 660,036
United States Treasury - 9.24%
United States Treasury Bills:
5.17%, 10-12-95 ....................... 35 34,945
5.25%, 10-12-95 ....................... 60 59,904
5.2%, 10-19-95 ........................ 100 99,740
5.23%, 10-19-95 ....................... 40 39,895
Total .................................. 234,484
TOTAL SHORT-TERM SECURITIES - 35.26% $ 894,520
(Cost: $894,520)
TOTAL INVESTMENT SECURITIES - 98.45% $2,497,509
(Cost: $2,497,506)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.55% 39,254
NET ASSETS - 100.00% $2,536,763
See Notes to Schedules of Investments on page .
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
SEPTEMBER 30, 1995
Notes to Schedules of Investments
See Note 1 to financial statements for security valuation and other
significant accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation
and depreciation of investments owned for Federal income tax
purposes.
<PAGE>
THE ASSET STRATEGY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
(Unaudited)
Assets
Investment securities -- at value
(Notes 1 and 3) ................................. $2,497,509
Cash ............................................. 7,672
Receivables for dividends and interest ............ 32,063
Prepaid insurance premium ......................... 128
----------
Total assets ................................... 2,537,372
----------
Liabilities
Other liabilities ................................. 609
----------
Total liabilities .............................. 609
----------
Total net assets ............................. $2,536,763
==========
Net Assets
$0.01 par value capital stock, authorized --
100,000,000; shares outstanding -- 498,104
Capital stock ................................... $ 4,981
Additional paid-in capital ...................... 2,511,046
Accumulated undistributed income:
Accumulated undistributed net investment
income ......................................... 20,733
Net unrealized appreciation in value of
investments at end of period ................... 3
----------
Net assets applicable to outstanding
units of capital .............................. $2,536,763
==========
Net asset value per share (net assets divided
by shares outstanding) ............................ $5.0928
=======
See notes to financial statements.
<PAGE>
ASSET STRATEGY PORTFOLIO
STATEMENT OF OPERATIONS
For the Period Ended SEPTEMBER 30, 1995
(Unaudited)
Investment Income
Income:
Interest ........................................ $25,276
-------
Total income ................................... 25,276
-------
Expenses (Note 2):
Investment management fee ....................... 3,715
Custodian fees .................................. 259
Legal fee ....................................... 4
Other ........................................... 565
-------
Total expenses ................................. 4,543
-------
Net investment income ........................ 20,733
-------
Unrealized Gain on Investments
Unrealized appreciation in value of investments
during the period ................................ 3
-------
Net increase in net assets resulting
from operations ............................. $20,736
=======
See notes to financial statements.
<PAGE>
THE ASSET STRATEGY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
For the
period
ended
September 30,
1995
------------
Increase in Net Assets
Operations:
Net investment income ............ $ 20,733
Unrealized appreciation ........... 3
----------
Net increase in net assets
resulting from operations ..... 20,736
----------
Dividends to shareholders from
net investment income* ........... ---
----------
Capital share transactions:
Proceeds from sale of shares
(508,142 shares) ................ 2,566,796
Proceeds from reinvestment of
dividends (0 shares) ............ ---
Payments for shares redeemed
(10,038 shares) ................. (50,769)
----------
Net increase in net assets
resulting from capital
share transactions ............ 2,516,027
----------
Total increase ................ 2,536,763
Net Assets
Beginning of period ................ ---
----------
End of period, including undistributed
net investment income of $20,733 . $2,536,763
==========
*See "Financial Highlights" on page .
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE ASSET STRATEGY PORTFOLIO
For a Share of Capital Stock Outstanding Throughout The Period:
(Unaudited)
For the
period
ended
9/30/95*
----------
Net asset value,
beginning of
period ........... $5.0000
-------
Income from investment
operations:
Net investment
income ......... .0416
Net realized and
unrealized gain
on investments . .0512
-------
Total from investment
operations ....... .0928
-------
Net asset value,
end of period .... $5.0928
=======
Total return ....... ????%
Net assets, end of
period (000
omitted) ......... $2,537
Ratio of expenses
to average net
assets............ 0.99%
Ratio of net investment
income to average
net assets ....... 4.50%
Portfolio turnover
rate ............. 0.00%
*The Asset Strategy Portfolio's inception date is February 14, 1995;
however, since this Portfolio did not have any investment activity or
incur expenses prior to the date of initial offering, the per share
information is for a capital share outstanding for the period from
May 1, 1995 (initial offering) through September 30, 1995. Ratios and
the portfolio turnover rate have been annualized.
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(Unaudited)
NOTE 1 -- Significant Accounting Policies
TMK/United Funds, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company. Capital stock is currently divided into the ten
classes that are designated the Growth Portfolio, the Income Portfolio,
the International Portfolio, the Small Cap Portfolio, the Balanced
Portfolio, the Asset Strategy Portfolio, the Money Market Portfolio, the
Limited-Term Bond Portfolio, the Bond Portfolio and the High Income
Portfolio. The assets belonging to each Portfolio are held separately
by the Custodian. The capital shares of each Portfolio represent a pro
rata beneficial interest in the principal, net income, and realized and
unrealized capital gains or losses of its respective investments and
other assets. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with generally
accepted accounting principles.
A. Security valuation -- Each stock and convertible bond is valued at
the latest sale price thereof on the last business day of the
fiscal period as reported by the principal securities exchange on
which the issue is traded or, if no sale is reported for a stock,
the average of the latest bid and asked prices. Bonds, other than
convertible bonds, are valued using a pricing system provided by a
major dealer in bonds. Convertible bonds are valued using this
pricing system only on days when there is no sale reported. Stocks
which are traded over-the-counter are priced using Nasdaq (National
Association of Securities Dealers Automated Quotations) which
provides information on bid and asked or closing prices quoted by
major dealers in such stocks. Securities for which quotations are
not readily available are valued as determined in good faith in
accordance with procedures established by and under the general
supervision of the Fund's Board of Directors. Short-term debt
securities are valued at amortized cost, which approximates market.
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 identified cost basis. Original issue discount
(as defined in the Internal Revenue Code), premiums on the purchase
of bonds and post-1984 market discount are amortized for both
financial and tax reporting purposes over the remaining lives of
the bonds. Dividend income is recorded on the ex-dividend date
except that certain dividends from foreign securities are recorded
as soon as the Fund is informed of the ex-dividend date. Interest
income is recorded on the accrual basis. See Note 3 -- Investment
Securities Transactions.
C. Foreign currency translations -- All assets and liabilities
denominated in foreign currencies are translated into U.S. dollars
daily. Purchases and sales of investment securities and accruals
of income and expenses are translated at the rate of exchange
prevailing on the date of the transaction. For assets and
liabilities other than investments in securities, net realized and
unrealized gains and losses from foreign currency translations
arise from changes in currency exchange rates. The Fund combines
fluctuations from currency exchange rates and fluctuations in
market value when computing net realized and unrealized gain or
loss from investments.
D. Federal income taxes -- It is the Fund's policy to distribute all
of its taxable income and capital gains to its shareholders and
otherwise qualify as a regulated investment company under the
Internal Revenue Code. In addition, the Fund intends to pay
distributions as required to avoid imposition of excise tax.
Accordingly, provision has not been made for Federal income taxes.
See Note 4 -- Federal Income Tax Matters.
E. Dividends and distributions -- Dividends and distributions to
shareholders are recorded by each Portfolio on the record date.
Net investment income distributions and capital gains distributions
are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These
differences are due to differing treatments for items such as
deferral of wash sales and post-October losses, foreign currency
transactions, net operating losses and expiring capital loss
carryforwards.
NOTE 2 -- Investment Management And Payments To Affiliated Persons
The Fund pays a fee for investment management services. The fee is
computed daily based on the net asset value at the close of business.
The fee consists of two elements: (i) a "Specific" fee computed on net
asset value as of the close of business each day at the following annual
rates: Growth Portfolio - .20% of net assets; Income Portfolio - .20%
of net assets; International Portfolio - .30% of net assets; Small Cap
Portfolio - .35% of net assets; Balanced Portfolio - .10% of net assets;
Asset Strategy Portfolio - .30% of net assets; Money Market Portfolio -
none; Limited-Term Bond Portfolio - .05% of net assets; Bond Portfolio -
.03% of net assets; High Income Portfolio - .15% of net assets and (ii)
a base fee computed each day on the combined net asset values of all of
the Portfolios (approximately $1.0 billion of combined net assets at
September 30, 1995) and allocated among the Portfolios based on their
relative net asset size at the annual rates of .51% of the first $750
million dollars of combined net assets, .49% on that amount between $750
million and $1.5 billion, .47% between $1.5 billion and $2.25 billion,
and .45% of that amount over $2.25 billion. The Fund accrues and pays
this fee daily.
Pursuant to assignment of the Investment Management Agreement
between the Fund and Waddell & Reed, Inc. (W&R), Waddell & Reed
Investment Management Company ("WRIMCO"), a wholly-owned subsidiary of
W&R, serves as the Fund's investment manager.
The Fund has an Accounting Services Agreement with Waddell & Reed
Services Company ("WARSCO"), a wholly-owned subsidiary of W&R. Under
the agreement, WARSCO acts as the agent in providing accounting services
and assistance to the Fund and pricing daily the value of shares of each
Portfolio. For these services, each Portfolio pays WARSCO a monthly fee
of one-twelfth of the annual fee shown in the following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Portfolio
-------------------------- -----------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $1,000 $ 85,000
$1,000 and Over $100,000
The Asset Strategy Portfolio (the "Portfolio") paid no Directors'
fees.
W&R is an indirect subsidiary of Torchmark Corporation, a holding
company, and United Investors Management Company, a holding company, and
a direct subsidiary of Waddell & Reed Financial Services, Inc., a
holding company.
NOTE 3 -- Investment Security Transactions
The Portfolio, for the period ending September 30, 1995, had
purchases of short-term securities, including short-term government
securities aggregated $4,837,978 while proceeds from maturities and
sales aggregated $2,355,000.
For Federal income tax purposes, cost of investments owned at
September 30, 1995 was $2,497,506, resulting in net unrealized
appreciation of $3, all of which was due to appreciation on securitites.
<PAGE>
REGISTRATION STATEMENT
PART C
OTHER INFORMATION
24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements -- TMK/United Funds, Inc.
Included in Part B:
-------------------
As of June 30, 1995 and December 31, 1994
Statements of Assets and Liabilities
For the year ended December 31, 1994 and the six months ended June
30, 1995
Statements of Operations
For each of the two years in the period ended December 31, 1994 and
the six months ended June 30, 1995
Statement of Changes in Net Assets
Schedule I -- Investment Securities as of June 30, 1995 and
December 31, 1994
For TMK/United Funds, Inc. Asset Strategy Portfolio only:
As of September 30, 1995
Statement of Assets and Liabilities
For the period ended September 30, 1995
Statements of Operations
For the period ended September 30, 1995
Statement of Changes in Net Assets
Schedule I -- Investment Securities as of September 30, 1995
Report of Independent Accountants
Included in Part C:
-------------------
Financial Data Schedules
Other schedules prescribed by Regulation S-X are not filed because
the required matter is not present or is insignificant.
<PAGE>
(b) Exhibits:
(1) Articles of Incorporation, as amended, filed February 15, 1995
as EX-99.B1-tmkart to Post-Effective Amendment No. 11 to the
Registration Statement on Form N-1A*
(1) Articles Supplementary reflecting the addition of Asset
Strategy Portfolio, filed February 15, 1995 as EX-99.B1-
tmksup1 to Post-Effective Amendment No. 11 to the
Registration Statement on Form N-1A*
(2) Articles Supplementary filed February 15, 1995 as EX-
99.B1-tmksup2 to Post-Effective Amendment No. 11 to the
Registration Statement on Form N-1A*
(3) Articles Supplementary filed February 15, 1995 as EX-
99.B1-tmksup3 to Post-Effective Amendment No. 11 to the
Registration Statement on Form N-1A*
(2) By-Laws (refiling by EDGAR), attached hereto as EX-99.B2-
tmkbylaw
(3) Not applicable
(4) Article FIFTH and Article SEVENTH of the Articles of
Incorporation of Registrant, filed February 15, 1995 as EX-
99.B1-tmkart to Post-Effective Amendment No. 11 to the
Registration Statement on Form N-1A*; Article I, Article IV
and Article VII of the Bylaws of the Registrant, attached
hereto as EX-99.B2-tmkbylaw
(5) Investment Management Agreement with fee schedule amended to
reflect the addition of Asset Strategy Portfolio filed
February 15, 1995 as EX-99.B5-tmkima to Post-Effective
Amendment No. 11 to the Registration Statement on Form N-1A*
Assignment of Investment Management Agreement (refiling by
EDGAR) attached hereto as EX-99.B5-tmkassign
(6) Form of Distribution Contract reflecting addition of Asset
Strategy Portfolio filed February 15, 1995 as EX-99.B6-
tmkdisco to Post-Effective Amendment No. 11 to the
Registration Statement on Form N-1A*
Principal Underwriting Agreement between Waddell & Reed, Inc.
and United Investors Life Insurance Company (refiling by
EDGAR), attached hereto as EX-99.B6-tmkpua
(7) Not applicable
(8) Custodian Agreement, attached hereto as EX-99.B8-tmkca
(9) Accounting Services Agreement, attached hereto as EX-99.B9-
tmkasa
(10) Opinion and Consent of Counsel filed March 18, 1987 as Exhibit
(b)(10) to Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-1A*
(11) Consent of Independent Accountants, attached hereto as EX-
99.B11-tmkconsent
(12) Not applicable
(13) Agreement between United Investors Life Insurance Company and
Income Portfolio filed April 21, 1992 as Exhibit No. 13 to
Post-Effective Amendment No. 8 to the Registration Statement
on Form N-1A*
Agreement between United Investors Life Insurance Company and
International Portfolio, Small Cap Portfolio, Balanced
Portfolio and Limited-Term Bond Portfolio filed February 15,
1995 as EX-99.B13-tmkuil to Post-Effective Amendment No. 11 to
the Registration Statement on Form N-1A*
Agreement between United Investors Life Insurance Company and
Asset Strategy Portfolio, attached hereto as EX-99.B13-
tmkuilasp
(14) Not applicable
(15) Not applicable
(16) Schedules for yield and total return computation attached
hereto as EX-99.B16-tmksched
(17) Financial Data Schedules, attached hereto as EX-27.B17-tmkfds
25. Persons Controlled by or under common control with Registrant
-------------------------------------------------------------
None
26. Number of Holders of Securities
-------------------------------
Number of Record Holders as of
Title of Class September 30, 1995
-------------- ------------------------------
Common 3
27. Indemnification
---------------
Reference is made to Section 7 of Article SEVENTH of the Articles
of Incorporation of Registrant, as amended, filed February 15, 1995
as EX-99.B1-tmkart to Post-Effective Amendment No. 11 to the
Registration Statement on Form N-1A*, and to Paragraph 7 of the
Distribution Agreement between United Investors Life Insurance
Company and the Registrant, filed February 15, 1995 as EX-99.B6-
tmkdisco to Post-Effective Amendment No. 11 to the Registration
Statement on Form N-1A*, each of which provides for
indemnification. Also refer to Section 2-418 of the Maryland
General Corporation Law regarding indemnification of directors,
officers, employees and agents.
28. Business and Other Connections of Investment Manager
----------------------------------------------------
Waddell & Reed Investment Management Company is the investment
manager of the Registrant. Under the terms of an Investment
Management Agreement between Waddell & Reed, Inc. and the
Registrant, Waddell & Reed, Inc. is to provide investment
management services to the Registrant. Waddell & Reed, Inc.
assigned its investment management duties under this agreement to
Waddell & Reed Investment Management Company on January 8, 1992.
Waddell & Reed Investment Management Company is not engaged in any
business other than the provision of investment management services
to those registered investment companies as described in Part A and
Part B of this Post-Effective Amendment.
Each director and executive officer of Waddell & Reed Investment
Management Company or its predecessors, has had as his sole
business, profession, vocation or employment during the past two
years only his duties as an executive officer and/or employee of
Waddell & Reed Investment Management Company or its predecessors,
except as to persons who are directors and/or officers of the
Registrant and have served in the capacities shown in the Statement
of Additional Information of the Registrant, and except for Mr.
Ronald K. Richey. Mr. Richey is Chairman of the Board and Chief
Executive Officer of Torchmark Corporation, the parent company of
Waddell & Reed, Inc., and Chairman of the Board of United Investors
Management Company, a holding company of which Waddell & Reed, Inc.
is an indirect subsidiary. Mr. Richey's address is 2001 Third
Avenue South, Birmingham, Alabama 35233. The address of the others
is 6300 Lamar Avenue, Shawnee Mission, Kansas 66202-4200.
As to each director and officer of Waddell & Reed Investment
Management Company, reference is made to the Prospectus and SAI of
this Registrant.
29. Principal Underwriter and Distributor
-------------------------------------
(a) Waddell & Reed, Inc. is the Principal Underwriter and
Distributor of the Registrant's shares. It is the principal
underwriter to the following investment companies:
United Funds, Inc.
United International Growth Fund, Inc.
United Continental Income Fund, Inc.
United Vanguard Fund, Inc.
United Retirement Shares, Inc.
United Municipal Bond Fund, Inc.
United High Income Fund, Inc.
United Cash Management, Inc.
United Government Securities Fund, Inc.
United New Concepts Fund, Inc.
United Gold & Government Fund, Inc.
United Municipal High Income Fund, Inc.
United High Income Fund II, Inc.
United Asset Strategy Fund, Inc.
Waddell & Reed Funds, Inc.
and is depositor of the following unit investment trusts:
United Periodic Investment Plans to acquire shares of United
Science and Energy Fund
United Periodic Investment Plans to acquire shares of United
Accumulative Fund
United Income Investment Programs
United International Growth Investment Programs
United Continental Income Investment Programs
United Vanguard Investment Programs
(b) The information contained in the underwriter's application on
form BD, under the Securities Exchange Act of 1934, is herein
incorporated by reference.
(c) No compensation was paid by the Registrant to any principal
underwriter who is not an affiliated person of the Registrant
or any affiliated person of such affiliated person.
30. Location of Accounts and Records
--------------------------------
The accounts, books and other documents required to be maintained
by Registrant pursuant to Section 31(a) of the Investment Company
Act and rules promulgated thereunder are under the possession of M.
Sharon K. Pappas and Mr. Robert L. Hechler, as officers of the
Registrant, each of whose business address is Post Office Box
29217, Shawnee Mission, Kansas 66201-9217.
31. Management Services
-------------------
There are no service contracts other than as discussed in Part A
and B of this Post-Effective Amendment and as listed in response to
Item (b)(9) hereof.
32. Undertakings
------------
(a) Not applicable
(b) Not applicable
(c) The Fund agrees to furnish to each person to whom a prospectus
is delivered a copy of the Fund's latest annual report to
shareholders upon request and without charge.
(d) To the extent that Section 16(c) of the Investment Company Act
of 1940, as amended, applies to the Fund, the Fund agrees, if
requested in writing by the shareholders of record of not less
than 10% of the Fund's outstanding shares, to call a meeting
of the shareholders of the Fund for the purpose of voting upon
the question of removal of any director and to assist in
communications with other shareholders as required by Section
16(c).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for effectiveness of this Post-Effective
Amendment pursuant to Rule 485(b) of the Securities Act of 1933 and has
duly caused this Post-Effective Amendment to be signed on its behalf by
the undersigned, thereunto duly authorized, in the city of Overland
Park, and State of Kansas, on the 30th day of October, 1995.
TMK/UNITED FUNDS, INC.
(Registrant)
By /s/ Keith A. Tucker*
------------------------
Keith A. Tucker, President
Pursuant to the requirements of the Securities Act of 1933, and/or
the Investment Company Act of 1940, this Post-Effective Amendment has
been signed below by the following persons in the capacities and on the
date indicated.
Signatures Title
---------- -----
/s/Ronald K. Richey* Chairman of the Board October 30, 1995
---------------------- ----------------
Ronald K. Richey
/s/Keith A. Tucker* President and Director October 30, 1995
---------------------- (Principal Executive Officer) ----------------
Keith A. Tucker
/s/Theodore W. Howard* Vice President, Treasurer October 30, 1995
---------------------- and Principal Accounting ----------------
Theodore W. Howard Officer
/s/Robert L. Hechler* Vice President and October 30, 1995
---------------------- Principal Financial ----------------
Robert L. Hechler Officer
/s/Henry L. Bellmon* Director October 30, 1995
---------------------- ----------------
Henry L. Bellmon
Director
--------------------- ----------------
Dodds I. Buchanan
/s/Jay B. Dillingham* Director October 30, 1995
-------------------- ----------------
Jay B. Dillingham
/s/Linda Graves* Director October 30, 1995
------------------- ----------------
Linda Graves
/s/John F. Hayes* Director October 30, 1995
------------------- ----------------
John F. Hayes
/s/Glendon E. Johnson* Director October 30, 1995
------------------- ----------------
Glendon E. Johnson
/s/James B. Judd* Director October 30, 1995
------------------- ----------------
James B. Judd
/s/William T. Morgan* Director October 30, 1995
------------------- ----------------
William T. Morgan
Director
------------------- ----------------
Doyle Patterson
/s/Eleanor B. Schwartz* Director October 30, 1995
------------------- ----------------
Eleanor B. Schwartz
/s/Frederick Vogel III* Director October 30, 1995
------------------- ----------------
Frederick Vogel III
/s/Paul S. Wise* Director October 30, 1995
------------------- ----------------
Paul S. Wise
Director
------------------- ----------------
Leslie S. Wright
*By
Sharon K. Pappas
Attorney-in-Fact
ATTEST:
Sheryl Strauss
Assistant Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, That each of the undersigned, UNITED FUNDS,
INC., UNITED INTERNATIONAL GROWTH FUND, INC., UNITED MUNICIPAL BOND FUND, INC.,
UNITED VANGUARD FUND, INC., UNITED HIGH INCOME FUND, INC., UNITED CASH
MANAGEMENT, INC., UNITED NEW CONCEPTS FUND, INC., UNITED GOVERNMENT SECURITIES
FUND, INC., UNITED MUNICIPAL HIGH INCOME FUND, INC., UNITED GOLD & GOVERNMENT
FUND, INC., UNITED HIGH INCOME FUND II, INC., UNITED CONTINENTAL INCOME FUND,
INC., UNITED RETIREMENT SHARES, INC., UNITED ASSET STRATEGY FUND, INC.,
TMK/UNITED FUNDS, INC., WADDELL & REED FUNDS, INC., TORCHMARK INSURED TAX-FREE
FUND, INC. AND TORCHMARK GOVERNMENT SECURITIES FUND, INC. (each hereinafter
called the "Corporation"), and certain directors and officers for the
Corporation, do hereby constitute and appoint KEITH A. TUCKER, ROBERT L.
HECHLER, and SHARON K. PAPPAS, and each of them individually, their true and
lawful attorneys and agents to take any and all action and execute any and all
instruments which said attorneys and agents may deem necessary or advisable to
enable each Corporation to comply with the Securities Act of 1933 and/or the
Investment Company Act of 1940, as amended, and any rules, regulations, orders
or other requirements of the United States Securities and Exchange Commission
thereunder, in connection with the registration under the Securities Act of 1933
and/or the Investment Company Act of 1940, as amended, including specifically,
but without limitation of the foregoing, power and authority to sign the names
of each of such directors and officers in his behalf as such director or officer
has indicated below opposite his signature hereto, to any amendment or
supplement to the Registration Statement filed with the Securities and Exchange
Commission under the Securities Act of 1933 and/or the Investment Company Act of
1940, as amended, and to any instruments or documents filed or to be filed as a
part of or in connection with such Registration Statement; and each of the
undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
Date: July 12, 1995 /s/Keith A. Tucker
---------------------
Keith A. Tucker, President
/s/Ronald K. Richey Chairman of the Board July 12, 1995
- -------------------- --------------
Ronald K. Richey
/s/Keith A. Tucker President and Director July 12, 1995
- -------------------- (Principal Executive Officer) --------------
Keith A. Tucker
/s/Theodore W. Howard Vice President, Treasurer July 12, 1995
- -------------------- and Principal Accounting --------------
Theodore W. Howard Officer
/s/Robert L. Hechler Vice President and July 12, 1995
- -------------------- Principal Financial --------------
Robert L. Hechler Officer
/s/Henry L. Bellmon Director July 12, 1995
- -------------------- --------------
Henry L. Bellmon
Director
- -------------------- --------------
Dodds I. Buchanan
/s/Jay B. Dillingham Director July 12, 1995
- -------------------- --------------
Jay B. Dillingham
/s/John F. Hayes Director July 12, 1995
- -------------------- --------------
John F. Hayes
/s/Glendon E. Johnson Director July 12, 1995
- -------------------- --------------
Glendon E. Johnson
/s/William T. Morgan Director July 12, 1995
- -------------------- --------------
William T. Morgan
Director
- -------------------- --------------
Doyle Patterson
/s/Frederick Vogel III Director July 12, 1995
- -------------------- --------------
Frederick Vogel III
/s/Paul S. Wise Director July 12, 1995
- -------------------- --------------
Paul S. Wise
Director
- -------------------- --------------
Leslie S. Wright
/s/Linda Graves Director July 12, 1995
- -------------------- --------------
Linda Graves
/s/Eleanor Schwartz Director July 12, 1995
- -------------------- --------------
Eleanor Schwartz
/s/James Judd Director July 12, 1995
- -------------------- --------------
James Judd
Attest:
/s/Sharon K. Pappas
- --------------------------------
Sharon K. Pappas, Vice President
and Secretary
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 12 to the Registration
Statement on Form N-1A (the "Registration Statement") of our report dated
January 31, 1995, relating to the financial statements and financial highlights
of TMK/United Funds, Inc., which appears in such Statement of Additional
Information, and to the incorporation by reference of our report into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the reference to us under the heading "Custodial and Auditing
Services" in such Statement of Additional Information and to the references to
us under the headings "Financial Highlights" and "Independent Accountants" in
such Prospectus.
PRICE WATERHOUSE LLP
Kansas City, Missouri
October 30, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE SEMIANNUAL REPORT
TO SHAREHOLDERS DATED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 10
<NAME> ASSET STRATEGY PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 797,637
<INVESTMENTS-AT-VALUE> 797,637
<RECEIVABLES> 33,141
<ASSETS-OTHER> 176
<OTHER-ITEMS-ASSETS> 1,317
<TOTAL-ASSETS> 832,271
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 15,470
<TOTAL-LIABILITIES> 15,470
<SENIOR-EQUITY> 1,622
<PAID-IN-CAPITAL-COMMON> 813,035
<SHARES-COMMON-STOCK> 162,194
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,144
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 816,801
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,587
<OTHER-INCOME> 0
<EXPENSES-NET> 443
<NET-INVESTMENT-INCOME> 2,144
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2,144
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 162,692
<NUMBER-OF-SHARES-REDEEMED> 498
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 816,801
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 375
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 443
<AVERAGE-NET-ASSETS> 282,737
<PER-SHARE-NAV-BEGIN> 5
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> .02
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 5.04
<EXPENSE-RATIO> .95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS DATED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 10
<NAME> ASSET STRATEGY PORTFOLIO
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 2,497,506
<INVESTMENTS-AT-VALUE> 2,497,509
<RECEIVABLES> 32,063
<ASSETS-OTHER> 128
<OTHER-ITEMS-ASSETS> 7,672
<TOTAL-ASSETS> 2,537,372
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 609
<TOTAL-LIABILITIES> 609
<SENIOR-EQUITY> 4,981
<PAID-IN-CAPITAL-COMMON> 2,511,046
<SHARES-COMMON-STOCK> 498,104
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 20,733
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3
<NET-ASSETS> 2,536,763
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 25,276
<OTHER-INCOME> 25,276
<EXPENSES-NET> 4,543
<NET-INVESTMENT-INCOME> 20,733
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 3
<NET-CHANGE-FROM-OPS> 20,736
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 508,142
<NUMBER-OF-SHARES-REDEEMED> 10,038
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,516,027
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,715
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,543
<AVERAGE-NET-ASSETS> 1,098,293
<PER-SHARE-NAV-BEGIN> 5
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> .05
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 5.09
<EXPENSE-RATIO> .99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE SEMIANNUAL REPORT
TO SHAREHOLDERS DATED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 01
<NAME> MONEY MARKET PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 29,409,558
<INVESTMENTS-AT-VALUE> 29,409,558
<RECEIVABLES> 2,155,242
<ASSETS-OTHER> 2,209
<OTHER-ITEMS-ASSETS> 16,639
<TOTAL-ASSETS> 31,583,648
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 548,520
<TOTAL-LIABILITIES> 548,520
<SENIOR-EQUITY> 310,351
<PAID-IN-CAPITAL-COMMON> 30,724,777
<SHARES-COMMON-STOCK> 31,035,128
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 31,035,128
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 807,623
<OTHER-INCOME> 0
<EXPENSES-NET> 85,239
<NET-INVESTMENT-INCOME> 722,384
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 722,384
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 722,384
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 76,522,981
<NUMBER-OF-SHARES-REDEEMED> 77,022,500
<SHARES-REINVESTED> 722,384
<NET-CHANGE-IN-ASSETS> 222,865
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 67,037
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 85,239
<AVERAGE-NET-ASSETS> 26,424,189
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .03
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1
<EXPENSE-RATIO> .65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE ANNUAL REPORT TO
SHAREDHOLDERS DATED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 1
<NAME> MONEY MARKET PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 27,627,021
<INVESTMENTS-AT-VALUE> 27,624,021
<RECEIVABLES> 3,545,208
<ASSETS-OTHER> 1,506
<OTHER-ITEMS-ASSETS> 18,970
<TOTAL-ASSETS> 31,189,705
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 377,442
<TOTAL-LIABILITIES> 377,442
<SENIOR-EQUITY> 308,123
<PAID-IN-CAPITAL-COMMON> 30,504,140
<SHARES-COMMON-STOCK> 30,812,263
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 30,812,263
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 999,857
<OTHER-INCOME> 0
<EXPENSES-NET> 148,423
<NET-INVESTMENT-INCOME> 851,434
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 851,434
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 851,434
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 183,043,231
<NUMBER-OF-SHARES-REDEEMED> 179,082,269
<SHARES-REINVESTED> 851,433
<NET-CHANGE-IN-ASSETS> 4,812,395
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 116,644
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 148,423
<AVERAGE-NET-ASSETS> 22,871,453
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .04
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1
<EXPENSE-RATIO> .65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE SEMIANNUAL REPORT
TO SHAREHOLDERS DATED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 02
<NAME> BOND PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 80,680,462
<INVESTMENTS-AT-VALUE> 82,855,268
<RECEIVABLES> 2,008,624
<ASSETS-OTHER> 3,426
<OTHER-ITEMS-ASSETS> 5,066
<TOTAL-ASSETS> 84,872,384
<PAYABLE-FOR-SECURITIES> 992,169
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 190,990
<TOTAL-LIABILITIES> 1,183,159
<SENIOR-EQUITY> 157,125
<PAID-IN-CAPITAL-COMMON> 82,402,140
<SHARES-COMMON-STOCK> 15,712,505
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,712,910
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,757,250)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,174,300
<NET-ASSETS> 83,689,225
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,955,579
<OTHER-INCOME> 0
<EXPENSES-NET> 242,067
<NET-INVESTMENT-INCOME> 2,713,512
<REALIZED-GAINS-CURRENT> (278,156)
<APPREC-INCREASE-CURRENT> 6,770,634
<NET-CHANGE-FROM-OPS> 9,205,990
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,067,979
<NUMBER-OF-SHARES-REDEEMED> 973,231
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 9,672,375
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 211,321
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 242,067
<AVERAGE-NET-ASSETS> 78,747,862
<PER-SHARE-NAV-BEGIN> 4.74
<PER-SHARE-NII> .17
<PER-SHARE-GAIN-APPREC> .42
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 5.33
<EXPENSE-RATIO> .62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE ANNUAL REPORT TO
SHAREHOLDERS DATED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 2
<NAME> BOND PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 77,172,386
<INVESTMENTS-AT-VALUE> 72,576,052
<RECEIVABLES> 1,453,952
<ASSETS-OTHER> 2,062
<OTHER-ITEMS-ASSETS> 7,680
<TOTAL-ASSETS> 74,039,746
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22,896
<TOTAL-LIABILITIES> 22,896
<SENIOR-EQUITY> 156,178
<PAID-IN-CAPITAL-COMMON> 81,936,702
<SHARES-COMMON-STOCK> 15,617,757
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,479,696)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (4,596,334)
<NET-ASSETS> 74,016,850
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,773,265
<OTHER-INCOME> 0
<EXPENSES-NET> 486,292
<NET-INVESTMENT-INCOME> 5,286,973
<REALIZED-GAINS-CURRENT> (3,479,696)
<APPREC-INCREASE-CURRENT> (6,740,515)
<NET-CHANGE-FROM-OPS> (10,220,211)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,286,973
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,002,124
<NUMBER-OF-SHARES-REDEEMED> 3,587,525
<SHARES-REINVESTED> 1,081,257
<NET-CHANGE-IN-ASSETS> (7,709,792)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 424,370
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 486,292
<AVERAGE-NET-ASSETS> 78,587,023
<PER-SHARE-NAV-BEGIN> 5.40
<PER-SHARE-NII> .35
<PER-SHARE-GAIN-APPREC> (.67)
<PER-SHARE-DIVIDEND> .35
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 4.74
<EXPENSE-RATIO> .62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE SEMIANNUAL REPORT
TO SHAREHOLDERS DATED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 03
<NAME> HIGH INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 78,452,353
<INVESTMENTS-AT-VALUE> 79,578,577
<RECEIVABLES> 2,011,440
<ASSETS-OTHER> 3,606
<OTHER-ITEMS-ASSETS> 2,599
<TOTAL-ASSETS> 81,596,222
<PAYABLE-FOR-SECURITIES> 490,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 142,633
<TOTAL-LIABILITIES> 632,633
<SENIOR-EQUITY> 178,688
<PAID-IN-CAPITAL-COMMON> 79,067,098
<SHARES-COMMON-STOCK> 17,868,806
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 3,514,260
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,922,681)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,126,224
<NET-ASSETS> 80,963,589
<DIVIDEND-INCOME> 55,562
<INTEREST-INCOME> 3,738,490
<OTHER-INCOME> 0
<EXPENSES-NET> 279,792
<NET-INVESTMENT-INCOME> 3,514,260
<REALIZED-GAINS-CURRENT> (1,177,577)
<APPREC-INCREASE-CURRENT> 5,119,250
<NET-CHANGE-FROM-OPS> 7,455,933
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,367,697
<NUMBER-OF-SHARES-REDEEMED> 1,165,892
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 8,319,914
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 252,307
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 279,792
<AVERAGE-NET-ASSETS> 76,873,366
<PER-SHARE-NAV-BEGIN> 4.11
<PER-SHARE-NII> .20
<PER-SHARE-GAIN-APPREC> .22
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 4.53
<EXPENSE-RATIO> .73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE ANNUAL REPORT TO
SHAREHOLDERS DATED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 3
<NAME> HIGH INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 74,841,167
<INVESTMENTS-AT-VALUE> 70,848,141
<RECEIVABLES> 1,884,940
<ASSETS-OTHER> 2,200
<OTHER-ITEMS-ASSETS> 5,708
<TOTAL-ASSETS> 72,740,989
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 97,314
<TOTAL-LIABILITIES> 97,314
<SENIOR-EQUITY> 176,670
<PAID-IN-CAPITAL-COMMON> 78,205,135
<SHARES-COMMON-STOCK> 17,667,001
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,745,104)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,993,026)
<NET-ASSETS> 72,643,675
<DIVIDEND-INCOME> 92,656
<INTEREST-INCOME> 7,220,542
<OTHER-INCOME> 0
<EXPENSES-NET> 551,515
<NET-INVESTMENT-INCOME> 6,761,683
<REALIZED-GAINS-CURRENT> (1,428,391)
<APPREC-INCREASE-CURRENT> (7,299,167)
<NET-CHANGE-FROM-OPS> (1,965,875)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,761,683
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,768,168
<NUMBER-OF-SHARES-REDEEMED> 3,062,321
<SHARES-REINVESTED> 1,593,245
<NET-CHANGE-IN-ASSETS> 1,378,326
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 494,237
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 551,515
<AVERAGE-NET-ASSETS> 74,887,129
<PER-SHARE-NAV-BEGIN> 4.64
<PER-SHARE-NII> .41
<PER-SHARE-GAIN-APPREC> (.53)
<PER-SHARE-DIVIDEND> .41
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 4.11
<EXPENSE-RATIO> .74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE SEMIANNUAL REPORT
TO SHAREHOLDERS DATED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 04
<NAME> GROWTH PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 318,766,071
<INVESTMENTS-AT-VALUE> 339,173,358
<RECEIVABLES> 11,843,650
<ASSETS-OTHER> 8,320
<OTHER-ITEMS-ASSETS> 3,070
<TOTAL-ASSETS> 351,028,398
<PAYABLE-FOR-SECURITIES> 11,228,407
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 166,133
<TOTAL-LIABILITIES> 11,394,540
<SENIOR-EQUITY> 489,848
<PAID-IN-CAPITAL-COMMON> 298,721,086
<SHARES-COMMON-STOCK> 48,984,830
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,282,675
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 17,732,962
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 20,407,287
<NET-ASSETS> 339,633,858
<DIVIDEND-INCOME> 2,230,866
<INTEREST-INCOME> 1,202,238
<OTHER-INCOME> 0
<EXPENSES-NET> 1,151,041
<NET-INVESTMENT-INCOME> 2,282,063
<REALIZED-GAINS-CURRENT> 17,733,574
<APPREC-INCREASE-CURRENT> 30,024,889
<NET-CHANGE-FROM-OPS> 50,04,0526
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,145,291
<NUMBER-OF-SHARES-REDEEMED> 2,076,329
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 62,897,223
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,068,022
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,151,041
<AVERAGE-NET-ASSETS> 302,510,938
<PER-SHARE-NAV-BEGIN> 5.90
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> .99
<PER-SHARE-DIVIDEND> 1.03
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 6.93
<EXPENSE-RATIO> .77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE ANNUAL REPORT TO
SHAREHOLDERS DATED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 4
<NAME> GROWTH PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 286,427,133
<INVESTMENTS-AT-VALUE> 276,809,531
<RECEIVABLES> 681,009
<ASSETS-OTHER> 3,991
<OTHER-ITEMS-ASSETS> 6,687
<TOTAL-ASSETS> 277,501,218
<PAYABLE-FOR-SECURITIES> 548,125
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 216,458
<TOTAL-LIABILITIES> 764,583
<SENIOR-EQUITY> 469,159
<PAID-IN-CAPITAL-COMMON> 285,885,078
<SHARES-COMMON-STOCK> 46,915,868
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (9,617,602)
<NET-ASSETS> 276,736,635
<DIVIDEND-INCOME> 5,347,449
<INTEREST-INCOME> 1,893,626
<OTHER-INCOME> 0
<EXPENSES-NET> 1,954,841
<NET-INVESTMENT-INCOME> 5,286,234
<REALIZED-GAINS-CURRENT> 14,371,377
<APPREC-INCREASE-CURRENT> (13,761,465)
<NET-CHANGE-FROM-OPS> 5,896,146
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,286,234
<DISTRIBUTIONS-OF-GAINS> 14,154,374
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,752,596
<NUMBER-OF-SHARES-REDEEMED> 3,733,563
<SHARES-REINVESTED> 3,295,800
<NET-CHANGE-IN-ASSETS> 56,146,463
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,812,171
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,954,841
<AVERAGE-NET-ASSETS> 255,376,262
<PER-SHARE-NAV-BEGIN> 6.20
<PER-SHARE-NII> .12
<PER-SHARE-GAIN-APPREC> .03
<PER-SHARE-DIVIDEND> .12
<PER-SHARE-DISTRIBUTIONS> .32
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 5.90
<EXPENSE-RATIO> 0.77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE SEMIANNUAL REPORT
TO SHAREHOLDERS DATED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 05
<NAME> INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 219,943,056
<INVESTMENTS-AT-VALUE> 282,522,827
<RECEIVABLES> 2,286,703
<ASSETS-OTHER> 6,105
<OTHER-ITEMS-ASSETS> 2,523
<TOTAL-ASSETS> 284,818,158
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 107,365
<TOTAL-LIABILITIES> 107,365
<SENIOR-EQUITY> 345,709
<PAID-IN-CAPITAL-COMMON> 219,022,178
<SHARES-COMMON-STOCK> 34,570,896
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,474,449
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,288,604
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 62,579,853
<NET-ASSETS> 284,710,793
<DIVIDEND-INCOME> 2,008,061
<INTEREST-INCOME> 413,932
<OTHER-INCOME> 0
<EXPENSES-NET> 947,991
<NET-INVESTMENT-INCOME> 1,474,002
<REALIZED-GAINS-CURRENT> 1,751,902
<APPREC-INCREASE-CURRENT> 46,205,807
<NET-CHANGE-FROM-OPS> 49,431,711
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,730,935
<NUMBER-OF-SHARES-REDEEMED> 1,480,664
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 65,937,191
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 869,634
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 947,991
<AVERAGE-NET-ASSETS> 246,288,741
<PER-SHARE-NAV-BEGIN> 6.77
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 1.43
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.24
<EXPENSE-RATIO> .78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE ANNUAL REPORT TO
SHAREHOLDERS DATED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 5
<NAME> INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 202,470,481
<INVESTMENTS-AT-VALUE> 218,844,527
<RECEIVABLES> 712,750
<ASSETS-OTHER> 2,819
<OTHER-ITEMS-ASSETS> 4,431
<TOTAL-ASSETS> 219,564,527
<PAYABLE-FOR-SECURITIES> 610,437
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 180,488
<TOTAL-LIABILITIES> 790,925
<SENIOR-EQUITY> 323,206
<PAID-IN-CAPITAL-COMMON> 202,539,201
<SHARES-COMMON-STOCK> 32,320,625
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (462,851)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 16,374,046
<NET-ASSETS> 218,773,602
<DIVIDEND-INCOME> 3,354,791
<INTEREST-INCOME> 382,961
<OTHER-INCOME> 0
<EXPENSES-NET> 1,489,495
<NET-INVESTMENT-INCOME> 2,248,257
<REALIZED-GAINS-CURRENT> 684,147
<APPREC-INCREASE-CURRENT> (6,030,073)
<NET-CHANGE-FROM-OPS> (3,097,669)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,248,257
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,914,285
<NUMBER-OF-SHARES-REDEEMED> 2,344,370
<SHARES-REINVESTED> 332,145
<NET-CHANGE-IN-ASSETS> 63,681,346
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,374,533
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,489,495
<AVERAGE-NET-ASSETS> 193,596,175
<PER-SHARE-NAV-BEGIN> 6.92
<PER-SHARE-NII> .07
<PER-SHARE-GAIN-APPREC> (0.15)
<PER-SHARE-DIVIDEND> .07
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 6.77
<EXPENSE-RATIO> .77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS CUMMARY INFORMATION EXTRACTED FROM THE SEMIANNUAL REPORT
TO SHAREHOLDERS DATED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 6
<NAME> INTERNATIONAL PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 38,265,023
<INVESTMENTS-AT-VALUE> 39,800,823
<RECEIVABLES> 635,161
<ASSETS-OTHER> 1,694
<OTHER-ITEMS-ASSETS> 3,397
<TOTAL-ASSETS> 40,441,075
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 44,812
<TOTAL-LIABILITIES> 44,812
<SENIOR-EQUITY> 75,375
<PAID-IN-CAPITAL-COMMON> 38,324,552
<SHARES-COMMON-STOCK> 7,537,534
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 452,705
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,144
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,536,487
<NET-ASSETS> 4,0396,263
<DIVIDEND-INCOME> 355,378
<INTEREST-INCOME> 373,372
<OTHER-INCOME> 0
<EXPENSES-NET> 170,638
<NET-INVESTMENT-INCOME> 558,112
<REALIZED-GAINS-CURRENT> (77,254)
<APPREC-INCREASE-CURRENT> 2,200,583
<NET-CHANGE-FROM-OPS> 2,681,441
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,818,241
<NUMBER-OF-SHARES-REDEEMED> 492,299
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 14,376,629
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 131,775
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 170,638
<AVERAGE-NET-ASSETS> 32,723,463
<PER-SHARE-NAV-BEGIN> 4.99
<PER-SHARE-NII> .08
<PER-SHARE-GAIN-APPREC> .29
<PER-SHARE-DIVIDEND> .37
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 5.36
<EXPENSE-RATIO> 1.05
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE ANNUAL REPORT TO
SHAREHOLDERS DATED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 6
<NAME> INTERNATIONAL PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 26,445,737
<INVESTMENTS-AT-VALUE> 25,781,641
<RECEIVABLES> 253,424
<ASSETS-OTHER> 182
<OTHER-ITEMS-ASSETS> 1,384
<TOTAL-ASSETS> 26,036,631
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16,997
<TOTAL-LIABILITIES> 16,997
<SENIOR-EQUITY> 52,116
<PAID-IN-CAPITAL-COMMON> 26,652,623
<SHARES-COMMON-STOCK> 5,211,592
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (21,009)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (664,096)
<NET-ASSETS> 26,019,634
<DIVIDEND-INCOME> 47,329
<INTEREST-INCOME> 158,020
<OTHER-INCOME> 0
<EXPENSES-NET> 98,732
<NET-INVESTMENT-INCOME> 106,617
<REALIZED-GAINS-CURRENT> (21,009)
<APPREC-INCREASE-CURRENT> (664,096)
<NET-CHANGE-FROM-OPS> (578,488)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 106,617
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,355,035
<NUMBER-OF-SHARES-REDEEMED> 164,798
<SHARES-REINVESTED> 21,355
<NET-CHANGE-IN-ASSETS> 26,019,634
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 63,291
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 98,732
<AVERAGE-NET-ASSETS> 11,736,614
<PER-SHARE-NAV-BEGIN> 5
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> (0.01)
<PER-SHARE-DIVIDEND> .02
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 4.99
<EXPENSE-RATIO> 1.26
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE SEMIANNUAL REPORT
TO SHAREHOLDERS DATED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 07
<NAME> SMALL CALL PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 30,188,089
<INVESTMENTS-AT-VALUE> 34,054,664
<RECEIVABLES> 152,827
<ASSETS-OTHER> 1,606
<OTHER-ITEMS-ASSETS> 7,178
<TOTAL-ASSETS> 34,216,275
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,882
<TOTAL-LIABILITIES> 8,882
<SENIOR-EQUITY> 49,340
<PAID-IN-CAPITAL-COMMON> 29,052,186
<SHARES-COMMON-STOCK> 4,934,027
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 296,064
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 943,228
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,866,575
<NET-ASSETS> 34,207,393
<DIVIDEND-INCOME> 630
<INTEREST-INCOME> 421,796
<OTHER-INCOME> 0
<EXPENSES-NET> 126,362
<NET-INVESTMENT-INCOME> 296,064
<REALIZED-GAINS-CURRENT> 943,228
<APPREC-INCREASE-CURRENT> 2,558,296
<NET-CHANGE-FROM-OPS> 3,797,588
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,532,540
<NUMBER-OF-SHARES-REDEEMED> 282,193
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 18,127,231
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 107,924
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 126,362
<AVERAGE-NET-ASSETS> 25,326,864
<PER-SHARE-NAV-BEGIN> 5.99
<PER-SHARE-NII> .06
<PER-SHARE-GAIN-APPREC> .88
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 6.93
<EXPENSE-RATIO> 1.01
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE ANNUAL REPORT TO
SHAREHOLDERS DATED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 7
<NAME> SMALL CAP PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 14,720,884
<INVESTMENTS-AT-VALUE> 16,029,163
<RECEIVABLES> 116,965
<ASSETS-OTHER> 182
<OTHER-ITEMS-ASSETS> 7,362
<TOTAL-ASSETS> 16,153,672
<PAYABLE-FOR-SECURITIES> 66,102
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,408
<TOTAL-LIABILITIES> 73,510
<SENIOR-EQUITY> 26,837
<PAID-IN-CAPITAL-COMMON> 14,745,046
<SHARES-COMMON-STOCK> 2,683,680
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,308,279
<NET-ASSETS> 16,080,162
<DIVIDEND-INCOME> 292
<INTEREST-INCOME> 144,765
<OTHER-INCOME> 0
<EXPENSES-NET> 45,710
<NET-INVESTMENT-INCOME> 99,347
<REALIZED-GAINS-CURRENT> 44,381
<APPREC-INCREASE-CURRENT> 1,308,279
<NET-CHANGE-FROM-OPS> 1,452,007
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 99,347
<DISTRIBUTIONS-OF-GAINS> 44,381
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,722,519
<NUMBER-OF-SHARES-REDEEMED> 62,826
<SHARES-REINVESTED> 23,987
<NET-CHANGE-IN-ASSETS> 16,080,162
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 36,355
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 45,710
<AVERAGE-NET-ASSETS> 6,349,716
<PER-SHARE-NAV-BEGIN> 5
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 1.01
<PER-SHARE-DIVIDEND> .04
<PER-SHARE-DISTRIBUTIONS> .02
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 5.99
<EXPENSE-RATIO> 1.08
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE SEMIANNUAL REPORT
TO SHAREHOLDERS DATED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 08
<NAME> BALANCED PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 15,424,894
<INVESTMENTS-AT-VALUE> 16,318,187
<RECEIVABLES> 173,724
<ASSETS-OTHER> 990
<OTHER-ITEMS-ASSETS> 2,701
<TOTAL-ASSETS> 16,495,602
<PAYABLE-FOR-SECURITIES> 724,540
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,619
<TOTAL-LIABILITIES> 729,159
<SENIOR-EQUITY> 28,577
<PAID-IN-CAPITAL-COMMON> 14,620,331
<SHARES-COMMON-STOCK> 2,857,735
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 209,195
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 15,047
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 893,293
<NET-ASSETS> 15,766,443
<DIVIDEND-INCOME> 106,653
<INTEREST-INCOME> 149,056
<OTHER-INCOME> 0
<EXPENSES-NET> 46,514
<NET-INVESTMENT-INCOME> 209,195
<REALIZED-GAINS-CURRENT> 18,265
<APPREC-INCREASE-CURRENT> 1,128,727
<NET-CHANGE-FROM-OPS> 1,356,187
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,194,969
<NUMBER-OF-SHARES-REDEEMED> 93,954
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 7,095,375
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 35,969
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 46,514
<AVERAGE-NET-ASSETS> 11,920,239
<PER-SHARE-NAV-BEGIN> 4.94
<PER-SHARE-NII> .07
<PER-SHARE-GAIN-APPREC> .51
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 5.52
<EXPENSE-RATIO> .79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE ANNUAL REPORT TO
SHAREHOLDERS DATED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC,
<SERIES>
<NUMBER> 8
<NAME> BALANCED PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 8,826,711
<INVESTMENTS-AT-VALUE> 8,591,277
<RECEIVABLES> 99,033
<ASSETS-OTHER> 182
<OTHER-ITEMS-ASSETS> 6,057
<TOTAL-ASSETS> 8,696,549
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25,481
<TOTAL-LIABILITIES> 25,481
<SENIOR-EQUITY> 17,567
<PAID-IN-CAPITAL-COMMON> 8,892,153
<SHARES-COMMON-STOCK> 1,756,720
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,218)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (235,434)
<NET-ASSETS> 8,671,068
<DIVIDEND-INCOME> 38,828
<INTEREST-INCOME> 64,909
<OTHER-INCOME> 0
<EXPENSES-NET> 24,127
<NET-INVESTMENT-INCOME> 79,610
<REALIZED-GAINS-CURRENT> (3,218)
<APPREC-INCREASE-CURRENT> (235,434)
<NET-CHANGE-FROM-OPS> (159,042)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 79,610
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,795,318
<NUMBER-OF-SHARES-REDEEMED> 54,726
<SHARES-REINVESTED> 16,128
<NET-CHANGE-IN-ASSETS> 8,671,068
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 15,489
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 24,127
<AVERAGE-NET-ASSETS> 3,814,066
<PER-SHARE-NAV-BEGIN> 5
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> (.06)
<PER-SHARE-DIVIDEND> .02
<PER-SHARE-DISTRIBUTIONS> .05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 4.94
<EXPENSE-RATIO> .95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE SEMIANNUAL REPORT
TO SHAREHOLDERS DATED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 09
<NAME> LIMITED-TERM BOND PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 2,254,000
<INVESTMENTS-AT-VALUE> 2,309,312
<RECEIVABLES> 41,467
<ASSETS-OTHER> 539
<OTHER-ITEMS-ASSETS> 3,317
<TOTAL-ASSETS> 2,354,635
<PAYABLE-FOR-SECURITIES> 99,875
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 36,048
<TOTAL-LIABILITIES> 135,923
<SENIOR-EQUITY> 4,190
<PAID-IN-CAPITAL-COMMON> 2,098,456
<SHARES-COMMON-STOCK> 419,040
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 60,754
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 55,312
<NET-ASSETS> 2,218,712
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 68,664
<OTHER-INCOME> 0
<EXPENSES-NET> 7,910
<NET-INVESTMENT-INCOME> 60,754
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 102,999
<NET-CHANGE-FROM-OPS> 163,753
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 103,619
<NUMBER-OF-SHARES-REDEEMED> 23,007
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 573,566
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,325
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,910
<AVERAGE-NET-ASSETS> 1,922,386
<PER-SHARE-NAV-BEGIN> 4.86
<PER-SHARE-NII> .14
<PER-SHARE-GAIN-APPREC> .29
<PER-SHARE-DIVIDEND> .43
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE ANNUAL REPORT TO
SHAREHOLDERS DATED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000810016
<NAME> TMK/UNITED FUNDS, INC.
<SERIES>
<NUMBER> 9
<NAME> LIMITED-TERM BOND PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 1,658,060
<INVESTMENTS-AT-VALUE> 1,610,373
<RECEIVABLES> 32,608
<ASSETS-OTHER> 182
<OTHER-ITEMS-ASSETS> 4,791
<TOTAL-ASSETS> 1,647,954
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,808
<TOTAL-LIABILITIES> 2,808
<SENIOR-EQUITY> 3,384
<PAID-IN-CAPITAL-COMMON> 1,689,449
<SHARES-COMMON-STOCK> 338,428
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (47,687)
<NET-ASSETS> 1,645,146
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 57,386
<OTHER-INCOME> 0
<EXPENSES-NET> 7,854
<NET-INVESTMENT-INCOME> 49,532
<REALIZED-GAINS-CURRENT> 455
<APPREC-INCREASE-CURRENT> (47,687)
<NET-CHANGE-FROM-OPS> 2,300
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 49,532
<DISTRIBUTIONS-OF-GAINS> 455
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 331,301
<NUMBER-OF-SHARES-REDEEMED> 3,156
<SHARES-REINVESTED> 10,283
<NET-CHANGE-IN-ASSETS> 1,645,146
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,712
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,854
<AVERAGE-NET-ASSETS> 1,263,918
<PER-SHARE-NAV-BEGIN> 5
<PER-SHARE-NII> .15
<PER-SHARE-GAIN-APPREC> (.14)
<PER-SHARE-DIVIDEND> .15
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 4.86
<EXPENSE-RATIO> .93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
EX-99.B2-tmkbylaw
TMK/UNITED FUNDS, INC.
BY-LAWS
ARTICLE I
STOCKHOLDERS
Section 1. Place of Meeting. All meetings of the stockholders shall be
held at the principal office of the Corporation or at such other place within or
without the State of Maryland as may from time to time be designated by the
Board of Directors and stated in the notice of meeting.
Section 2. Annual Meeting. The annual meeting of the stockholders of the
Corporation shall be held at such hour as may be determined by the Board of
Directors and as shall be designated in the notice of meeting on such date
within 31 days after the 1st day of June in each year as may be fixed by the
Board of Directors for the purpose of electing directors for the ensuing year
and for the transaction of such other business as may properly be brought before
the meeting. The Corporation shall not be required to hold an annual meeting in
any year in which the election of directors is not required to be acted upon
under the Investment Company Act of 1940.
Section 3. Special or Extraordinary Meetings. Special or extraordinary
meetings of the stockholders for any purpose or purposes may be called by the
Chairman of the Board of Directors, if any, or by the President or by the Board
of Directors and shall be called by the Secretary upon receipt of the request in
writing signed by stockholders holding not less than one fourth in amount of the
entire capital stock issued and outstanding and entitled to vote thereat. Such
request shall state the purpose or purposes of the proposed meeting.
Section 4. Notice of Meetings of Stockholders. Not less than ten days'
and not more than ninety days' written or printed notice of every meeting of
stockholders, stating the time and place thereof (and the general nature of the
business proposed to be transacted at any special or extraordinary meeting),
shall be given to each stockholder entitled to vote thereat by leaving the same
with him or at his residence or usual place of business or by mailing it,
postage prepaid, and addressed to him at his address as it appears upon the
books of the Corporation.
No notice of the time, place or purpose of any meeting of stockholders need
be given to any stockholder who attends in person or by proxy or to any
stockholder who, in writing executed and filed with the records of the meeting,
either before or after the holding thereof, waives such notice.
Section 5. Record Dates. The Board of Directors may fix, in advance, a
date, not exceeding ninety days and not less than ten days preceding the date of
any meeting of stockholders, and not exceeding ninety days preceding any
dividend payment date or any date for the allotment of rights, as a record date
for the determination of the stockholders entitled to receive such dividends or
rights, as the case may be; and only stockholders of record on such date shall
be entitled to notice of and to vote at such meeting or to receive such
dividends or rights, as the case may be.
Section 6. Quorum, Adjournment of Meetings. The presence in person or by
proxy of the holders of record of one-third of the shares of the stock of the
Corporation issued and outstanding and entitled to vote thereat, shall
constitute a quorum at all meetings of the stockholders. If at any meeting of
the stockholders there shall be less than a quorum present, the stockholders
present at such meeting may, without further notice, adjourn the same from time
to time until a quorum shall attend, but no business shall be transacted at any
such adjourned meeting except such as might have been lawfully transacted had
the meeting not been adjourned.
Section 7. Voting and Inspectors. At all meetings of stockholders every
stockholder of record entitled to vote thereat shall be entitled to vote at such
meeting either in person or by proxy appointed by instrument in writing
subscribed by such stockholder or his duly authorized attorney. No proxy which
is dated more than three months before the meeting at which it is offered shall
be accepted, unless such proxy shall, on its face, name a longer period for
which it is to remain in force.
All elections shall be had and all questions decided by a majority of the
votes cast at a duly constituted meeting, except as otherwise provided in the
Articles of Incorporation or in these By-Laws or by specific statutory provision
superseding the restrictions and limitations contained in the Articles of
Incorporation or in these By-Laws.
At any election of Directors, the Board of Directors prior thereto may, or,
if they have not so acted, the Chairman of the meeting may, and upon the request
of the holders of ten per cent (10%) of the stock entitled to vote at such
election shall, appoint two inspectors of election who shall first subscribe an
oath or affirmation to execute faithfully the duties of inspectors at such
election with strict impartiality and according to the best of their ability,
and shall after the election make a certificate of the result of the vote taken.
No candidate for the office of Director shall be appointed such Inspector.
The Chairman of the meeting may cause a vote by ballot to be taken upon any
election or matter, and such vote shall be taken upon the request of the holders
of ten per cent (10%) of the stock entitled to vote on such election or matter.
Section 8. Conduct of Stockholders' Meetings. The meetings of the
stockholders shall be presided over by the Chairman of the Board of Directors,
if any, or if he shall not be present, by the President, or if he shall not be
present, by a Vice-President, or if neither the Chairman of the Board of
Directors, the President nor any Vice President is present, by a chairman to be
elected at the meeting. The Secretary of the Corporation, if present, shall act
as Secretary of such meetings, or if he is not present, an Assistant Secretary
shall so act, if neither the Secretary nor an Assistant Secretary is present,
then the meeting shall elect its secretary.
Section 9. Concerning Validity of Proxies, Ballots, Etc. At every meeting
of the stockholders, all proxies shall be received and taken in charge of and
all ballots shall be received and canvassed by the secretary of the meeting, who
shall decide all questions touching the qualification of voters, the validity of
the proxies, and the acceptance or rejection of votes, unless inspectors of
election shall have been appointed as provided in Section 7, in which event such
inspectors of election shall decide all such questions.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Number and Tenure of Office. The business and property of the
Corporation shall be conducted and managed by a Board of Directors consisting of
that number of Directors named in the Articles of Incorporation, which number
may be increased or decreased as provided in Section 2 of this Article. Each
director shall hold office until the annual meeting of stockholders of the
Corporation next succeeding his election or until his successor is duly elected
and qualifies. Directors need not be stockholders.
Section 2. Increase or Decrease in Number of Directors. The Board of
Directors, by the vote of a majority of the entire Board, may increase the
number of Directors to a number not exceeding twenty, and may elect Directors to
fill the vacancies created by any such increase in the number of Directors until
the next annual meeting or until their successors are duly elected and qualify;
the Board of Directors, by the vote of a majority of the entire Board, may
likewise decrease the number of Directors to a number not less than three.
Vacancies occurring other than by reason of any such increase shall be filled as
provided by the Maryland General Corporation Law.
Section 3. Place of Meeting. The Directors may hold their meetings, have
one or more offices, and keep the books of the Corporation outside the State of
Maryland, at any office or offices of the Corporation or at any other place as
they may from time to time by resolution determine, or, in the case of meetings,
as they may from time to time by resolution determine or as shall be specified
or fixed in the respective notices or waivers of notice thereof.
Section 4. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such time and on such notice, if any, as the Directors may from
time to time determine.
The annual meeting of the Board of Directors shall be held as soon as
practicable after the annual meeting of the stockholders for the election of
Directors.
Section 5. Special Meetings. Special meetings of the Board of Directors
may be held from time to time upon call of the Chairman of the Board of
Directors, if any, the President or two or more of the Directors, by oral or
telegraphic or written notice duly served on or sent or mailed to each Director
not less than one day before such meeting. No notice need be given to any
Director who attends in person or to any Director who, in writing executed and
filed with the records of the meeting either before or after the holding
thereof, waives such notice. Such notice or waiver of notice need not state the
purpose or purposes of such meeting.
Section 6. Quorum. One-third of the Directors then in office shall
constitute a quorum for the transaction of business, provided that a quorum for
the transaction of business, provided that a quorum shall in no case be less
than two Directors. If at any meeting of the Board there shall be less than a
quorum present, a majority of those present may adjourn the meeting from time to
time until a quorum shall have been obtained. The act of the majority of the
Directors present at any meeting at which there is a quorum shall be the act of
the Directors, except as may be otherwise specifically provided by statute, by
the Articles of Incorporation or by these By-Laws.
Section 7. Executive Committee. The Board of Directors may, by the
affirmative vote of a majority of the entire Board, elect from the Directors an
Executive Committee to consist of such number of Directors as the Board may from
time to time determine. The Board of Directors by such affirmative vote shall
have power at any time to change the members of such Committee and may fill
vacancies in the Committee by election from the Directors. When the Board of
Directors is not in session, the Executive Committee shall have and may exercise
any or all of the powers of the Board of Directors in the management of the
business and affairs of the Corporation (including the power to authorize the
seal of the Corporation to be affixed to all papers which may require it) except
as provided by law and except the power to increase or decrease the size of, or
fill vacancies on the Board. The Executive Committee may fix its own rules of
procedure, and may meet, when and as provided by such rules or by resolution of
the Board of Directors, but in every case the presence of a majority shall be
necessary to constitute a quorum. In the absence of any member of the Executive
Committee the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint a member of the Board of Directors to act in
the place of such absent member.
Section 8. Other Committees. The Board of Directors, by the affirmative
vote of a majority of the entire Board; may appoint other committees which shall
in each case consist of such number of members (not less than two) and shall
have and may exercise such powers as the Board may determine in the resolution
appointing them. A majority of all members of any such committee may determine
its action, and fix the time and place of its meetings, unless the Board of
Directors shall otherwise provide. The Board of Directors shall have power at
any time to change the members and powers of any such committee, to fill
vacancies, and to discharge any such committee.
Section 9. Informal Action by Directors and Committees. Any action
required or permitted to be taken at any meeting of the Board of Directors or
any committee thereof may be taken without a meeting, if a written consent to
such action is signed by all members of the Board, or of such committee, as the
case may be.
Section 10. Compensation of Directors. Directors shall be entitled to
receive such compensation from the Corporation for their services as may from
time to time be voted by the Board of Directors.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The executive officers of the Corporation
shall be chosen by the Board of Directors as soon as may be practicable after
the annual meeting of the stockholders. These may include a Chairman of the
Board of Directors, and shall include a President, one or more Vice Presidents
(the number thereof to be determined by the Board of Directors), a Secretary and
a Treasurer. The Chairman of the Board of Directors, if any, and the President
shall be selected from among the Directors. The Board of Directors may also in
its discretion appoint Assistant Secretaries, Assistant Treasurers, and other
officers, agents and employees, who shall have such authority and perform such
duties as the Board or the Executive Committee may determine. The Board of
Directors may fill any vacancy which may occur in any office. Any two offices,
except those of President and Vice President, may be held by the same person,
but no officer shall execute, acknowledge or verify any instrument in more than
one capacity, if such instrument is required by law or these By-Laws to be
executed, acknowledged or verified by two or more officers.
Section 2. Term of Office. The term of office of all officers shall be
one year and until their respective successors are chosen and qualify; however,
any officer may be removed from office at any time with or without cause by the
vote of a majority of the entire Board of Directors.
Section 3. Powers and Duties. The officers of the Corporation shall have
such powers and duties as generally pertain to their respective offices, as well
as such powers and duties as may from time to time be conferred by the Board of
Directors or the Executive Committee.
ARTICLE IV
CAPITAL STOCK
Section 1. Certificates of Shares. Each stockholder of the Corporation
shall be entitled to a certificate or certificates for the full shares of the
class of stock of the Corporation owned by them in such form as the Board of
Directors may from time to time prescribe.
Section 2. Transfer of Shares. Shares of the Corporation shall be
transferable on the books of the Corporation by the holder thereof in person or
by his duly authorized attorney or legal representative, upon surrender and
cancellation of certificates, if any, for the same number of shares, duly
endorsed or accompanied by proper instruments of assignment and transfer, with
such proof of the authenticity of the signature as the Corporation or its agents
may reasonably require, in the case of shares not represented by certificates,
the same or similar requirements may be imposed by the Board of Directors.
Section 3. Stock Ledgers. The stock ledgers of the Corporation,
containing the name and address of the stockholders and the number of shares
held by them respectively, shall be kept at the principal offices of the
Corporation or, if the Corporation employs a transfer agent, at the offices of
the transfer agent of the Corporation.
Section 4. Lost, Stolen or Destroyed Certificates. The Board of Directors
may determine the conditions upon which a new certificate of stock of the
Corporation of any class may be issued in place of a certificate which is
alleged to have been lost, stolen or destroyed; and may, in their discretion,
require the owner of such certificate or his legal representative to give bond,
with sufficient surety to the Corporation and the transfer agent, if any, to
indemnify it and such transfer agent against any and all loss or claims which
may arise by reason of the issue of a new certificate in the place of the one so
lost, stolen or destroyed.
ARTICLE V
CORPORATE SEAL
The Board of Directors shall provide a suitable corporate seal, in such
form and bearing such inscriptions as it may determine.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of
Directors.
ARTICLE VII
AMENDMENT OF BY-LAWS
The By-Laws of the Corporation may be altered, amended, added to or
repealed by the stockholders or by majority vote of the entire Board of
Directors; but any such alteration, amendment, addition or repeal of the By-Laws
by action of the Board of Directors may be altered or repealed by the
stockholders.
<PAGE>
EX-99.B5-tmkassign
Assignment
TMK/United Funds, Inc. Asset Strategy Portfolio does hereby consent to the
assignment, transfer and conveyance, effective January 8, 1992 of the Investment
Management Agreement between Waddell & Reed, Inc. ("W&R") and TMK/United Funds,
Inc., dated July l, 1990, as amended, to Waddell & Reed Investment Management
Company ("WRIMCO"), a wholly owned subsidiary of W&R. W&R has provided certain
undertakings, agreements and guarantees in connection with this assignment as
provided in the Guarantee of Performance attached hereto as Exhibit A which such
undertakings, agreements and guarantees it hereby provides to TMK/United Funds,
Inc. Asset Strategy Portfolio.
Executed this 1st day of May, 1995.
Waddell & Reed, Inc.
By: /s/Robert L. Hechler
--------------------------
Robert L. Hechler, President
TMK/United Funds, Inc. Asset Strategy
Portfolio
By: /s/Robert L. Hechler
--------------------------
Robert L. Hechler, Vice President
Accepted:
Waddell & Reed Investment Management Company
By /s/Sharon K. Pappas
- -----------------------
Sharon K. Pappas, Sr. Vice President
Guarantee of Performance
In consideration of each of the Funds' listed in Exhibit A hereto consent to the
assignment by Waddell & Reed, Inc., of the Investment Management Agreement
between Waddell & Reed, Inc., and the particular Fund to Waddell & Reed
Investment Management Company ("WRIMCO"), a wholly owned subsidiary of Waddell &
Reed, Inc., Waddell & Reed, Inc. hereby undertakes and agrees that at all times
WRIMCO shall be staffed and adequately supported to assure that WRIMCO is fully
capable of carrying out any and all of its obligations, duties and
responsibilities under the Investment Management Agreements assigned to it and
hereby further guarantees that WRIMCO shall perform its obligations, duties and
responsibilities in accordance with the terms of the several Investment
Management Agreements and in accordance with all applicable Federal laws and
regulations.
Dated this 11th day of December, 1991.
Waddell & Reed, Inc.
By: /s/Rodney O. McWhinney
- --------------------------
Rodney O. McWhinney
Senior Vice President
<PAGE>
EXHIBIT A
United Funds, Inc.
United Bond Fund
United Income Fund
United Accumulative Fund
United Science & Energy Fund
United Municipal Bond Fund, Inc.
United Municipal High Income Fund, Inc.
United Government Securities Fund, Inc.
United Vanguard Fund, Inc.
United Vanguard Fund, Inc.
United Cash Management, Inc.
United Retirement Shares, Inc.
United High Income Fund II, Inc.
United Vanguard Fund, Inc.
United Gold & Government Fund, Inc.
United Continental Income Fund, Inc.
United International Growth Fund, Inc.
TMK/United Funds, Inc.
Bond Portfolio
Growth Portfolio
High Income Portfolio
Income Portfolio
Money Market Portfolio
EX-99.B6-tmkpua
PRINCIPAL UNDERWRITING AGREEMENT
AGREEMENT dated May 1, 1990, by and between United Investors Life Insurance
("United Investors"), a Missouri corporation, on its own behalf and on behalf of
United Investors Annuity Variable Account ("Variable Account"), and Waddell &
Reed, Inc. ("W&R"), a Missouri corporation.
WITNESSETH:
WHEREAS, Variable Account is a segregated asset account established and
maintained by United Investors pursuant to the laws of the State of Missouri for
certain deferred variable annuity policies to be issued by United Investors (the
"Policies"), under which income, gains, and losses, whether or not realized,
from assets allocated to such account, will be, in accordance with the Policies,
credited to or charged against such account without regard to other income,
gains, or losses of United Investors; and
WHEREAS, United Investors has registered Variable Account as a unit
investment trust under the Investment Company Act of 1940 ("the Investment
Company Act"); and
WHEREAS, W&R has registered as a broker-dealer under the Securities
Exchange Act of 1934 (the "Exchange Act") and is a member firm of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, United Investors has registered the Policies under the Securities
Act of 1933 (the "Securities Act") and proposes to issue and sell the Policies
through W&R acting as its principal underwriter.
NOW, THEREFORE, United Investors and W&R hereby mutually agree to as
follows:
1. Underwriter.
(a) United Investors grants to W&R the right, during the term of this
Agreement, subject to the registration requirements of the Securities Act and
the Investment Company Act and the provisions of the Exchange Act, to be the
distributor and principal underwriter of the Policies. W&R agrees to use its
best efforts to distribute the Policies, and to undertake to provide sales
services relative to the Policies and otherwise to perform all duties and
functions necessary and proper for the distribution of the Policies.
(b) To the extent necessary to offer the Policies, W&R shall be duly
registered or otherwise qualified under the securities laws of any state or
other jurisdiction. Any sales representatives of W&R soliciting applications
for the Policies shall by duly and appropriately licensed, registered or
otherwise qualified for the sale of such Policies under the federal securities
laws, any applicable insurance laws and securities laws of each state or other
jurisdiction in which such policies may lawfully be sold and in which United
Investors is licensed to sell Policies. Such direct sales representatives of
W&R shall be independent contractors. W&R shall be responsible for the
training, supervision, and control of its representatives for the purposes of
NASD Rules of Fair Practice and federal and state securities law requirements
applicable in connection with the offering and sale of the Policies. In this
connection, W&R shall retain written supervisory procedures in compliance with
NASD Rules of Fair Practice, Section 27, Paragraph 2177.
(c) W&R agrees to offer the Polices for sale accordance with the
prospectus therefor filed with the Securities and Exchange Commission
("Commission") then in effect. W&R is not authorized to give any information or
to make any representations concerning the Policies other than those contained
in such current prospectus or in such sales literature as may be authorized by
United Investors.
(d) All purchase payments made or other monies payable under the Policies
shall be paid or remitted by or on behalf of Policyowners directly to United
Investors or its designated servicing agent and shall become the exclusive
property of United Investors. United Investors will retain all such payments
and monies except to the extent such payments and monies are allocated to the
Variable Account.
2. Sales Agreement.
(a) W&R is hereby authorized to enter into separate written agreements, on
such terms and conditions as W&R may determine to be not inconsistent with this
Agreement, with broker-dealers registered as such under the Exchange Act which
agree to participate in the distribution of the Policies and to use their best
efforts to solicit applications for the Policies.
(b) It is understood and agreed to by United Investors and W&R that United
Investors may from time to time propose that the Policies be distributed through
broker-dealers other than W&R. In such circumstances, W&R will agree to enter
into a sales agreement with another broker-dealer, subject to W&R's reasonable
satisfaction, through its customary review, with such other broker-dealer's
credentials and practices. W&R agrees that, if reasonably satisfied with the
credentials and practices of such other broker-dealer, a sales agreement will
not be withheld. If W&R withholds a sales agreement without substantiating its
reasons for doing so, United Investors may terminate this agreement by giving
W&R thirty (30) days written notice, notwithstanding any other provision of this
Agreement.
(c) All such sales agreements shall provide that each broker-dealer will
assume full responsibility for continued compliance by itself and its
representatives with applicable federal and state securities laws and state
insurance laws, and shall be in such form and contain such other provisions as
United Investors may from time to time require. Such broker-dealer shall assume
any legal responsibility of United Investors for the acts, commissions,
defalcations of such representatives insofar as they relate to the sale of the
Policies. Such broker-dealers and their representatives soliciting applications
for the Policies shall be duly and appropriately licensed, registered, or
otherwise qualified for the sale of such Policies under the federal securities
laws, any applicable insurance and securities laws of each state or other
jurisdiction in which such Policies may be lawfully sold and in which United
Investors is licensed to sell the Policies. Each such organization shall be
both registered as a broker-dealer under the Exchange Act and a member of the
NASD, or if not so registered or not such a member, then the representatives of
such organization soliciting applications for Policies shall be registered
representatives of a registered broker-dealer and NASD member which is an
affiliate of such organization and which maintains full responsibility for the
training, supervision, and control of the representatives selling the Policies.
(d) Applications for the Policies solicited by such organizations through
their representatives shall be forwarded to United Investors. All payments for
Policies shall be made by check or money order payable to "United Investors Life
Insurance Company" and remitted promptly by such organizations to United
Investors as agent for W&R. United Investors may also accepts wire transfers
via Federal Funds to an account designated by United Investors. All broker-
dealers who agree to participate in the distribution of the Policies shall act
as independent contractors and nothing herein contained shall constitute such
broker-dealers or their agents or employees as employees of United Investors or
W&R in connection with the sale of the Policies.
3. Compensation.
(a) For the sales services rendered by W&R and its sales representatives
and the continuing obligations spelled out herein, United Investors shall pay
W&R the commissions set forth in Schedule A to this Agreement, which Schedule
may be hereafter amended from time to time by mutual agreement of United
Investors and W&R.
(b) For Policies sold under sales agreements that W&R enters into with
other broker-dealers pursuant to paragraph 2, above, United Investors shall pay
W&R the commissions which are set forth in Schedule B to this Agreement, which
Schedule may be hereafter amended from time to time by mutual agreement of
United Investors and W&R.
4. Administrative Services.
United Investors agrees to maintain all required books of account and
related financial records on behalf of W&R. All such books of account and
records shall be maintained and preserved pursuant to Rules 17a-3 and 17a-4
under the Exchange Act (or the corresponding provisions of any future applicable
federal securities laws or regulations). In addition, United Investors will
maintain records of all sales commissions paid to sales representatives of W&R
in connection with the sale of the Policies. All such books and records shall
be maintained by United Investors on behalf of and as agent for W&R whose
property they are and shall remain for all purposes, and shall at all times be
subject to reasonable periodic, special, or other examination by the Commission
and all other regulatory bodies having jurisdiction. United Investors also
agrees to send to W&R's customers all required confirmations of customer
transactions.
5. Reports.
W&R shall have the responsibility for maintaining the records of sales
representatives licensed, registered, and otherwise qualified to sell the
Policies and for furnishing periodic reports thereof to United Investors.
6. Regulation.
(a) This Agreement shall be subject to the provisions of the Investment
Company Act and the Exchange Act and the rules, regulations, and rulings
thereunder and of the NASD, from time to time in effect, including such
exemptions from the Investment Company Act as the Commission may grant, and the
terms hereof shall be interpreted and construed in accordance therewith.
Without limiting the generality of the foregoing, the term "assigned" shall not
include any transactions exempted from section 15(b)(2) of the Investment
Company Act.
(b) W&R shall submit to all regulatory and administrative bodies having
jurisdiction over the present and future operations of United Investors or
Variable Account any information, reports or other material which any such body
by reason of this Agreement may request or require pursuant to applicable laws
or regulations. Without limiting the generality of the foregoing, W&R shall
furnish the State of Missouri Secretary of State and/or the Director of
Insurance with any information or reports which the Secretary of State and/or
the Director of Insurance may request in order to ascertain whether the variable
life operations of United Investors are being conducted in a manner consistent
with any other applicable law or regulations.
7. Suitability.
United Investors and W&R each wish to ensure that the Policies distributed
by W&R will be issued to purchasers for whom the Policy will be suitable. W&R
shall take reasonable steps to ensure that the various sales representatives
appointed by it shall not make recommendations to an applicant to purchase a
Policy in the absence of reasonable grounds to believe that the purchase of the
Policy is suitable for such applicant. While not limited to the following, a
determination of suitability shall be based on information furnished to a sales
representative after reasonable inquiry of such applicant concerning the
applicant's insurance and investment objectives and financial situation and
needs. W&R will require that the applicant complete the Confidential Owner's
Information and Suitability sections of the application for the Policy.
8. Prospectuses and Promotional Material.
United Investors shall furnish W&R with copies of all prospectuses,
financial statements, and other documents and materials which W&R reasonably
requests for use in connection with the distribution of the Policies. United
Investors shall have responsibility for the preparation, filing, and printing of
all required prospectuses and/or registration statements in connection with the
Policies, and the payment of all related expenses. W&R and United Investors
shall cooperate fully in designing, drafting, and reviewing sales promotion
materials, and with respect to the preparation of individual sales proposals
related to the sale of the Policies. W&R shall not use any such materials not
provided or approved by United Investors.
9. Investigation and Proceedings.
(a) W&R and United Investors agree to cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding arising in
connection with the Policies distributed under this Agreement. W&R and United
Investors further agree to cooperate fully in any securities regulatory
inspection, inquiry, investigation or proceeding or any judicial proceeding with
respect to United Investors, W&R their affiliates and their representatives to
the extent that such inspection, inquiry, investigation or proceeding is in
connection with Policies distributed under this Agreement. Without limiting the
foregoing:
(i) W&R will be notified promptly of any customer complaint or notice
of any regulatory inspection, inquiry, investigation or proceeding or
judicial proceeding received by United Investors with respect to W&R or any
representative or which may affect United Investors' issuance of any
Policies marketed under this Agreement; and
(ii) W&R will promptly notify United Investors of any customer
complaint or notice of any regulatory inspection, inquiry, investigation or
judicial proceeding received by W&R or any representative with respect to
United Investors or its affiliates in connection with any Policies
distributed under this Agreement or any activity in connection with any
Policies.
(b) In the case of a customer complaint, W&R and United Investors will
cooperate in investigating such complaint and shall arrive at a mutually
satisfactory response.
10. Exclusivity.
The services of W&R and United Investors under this Agreement are not
deemed to be exclusive and W&R and United Investors shall be free to render
similar services to others, including, without implied limitation, such other
separate investment accounts as are now or hereafter established by United
Investors, W&R or any affiliate of W&R so long as the services of W&R and United
Investors hereunder are not impaired or interfered with thereby.
11. Benefit.
This Agreement shall inure to the benefit of and be binding upon the
successors of the parties hereto.
12. Liability.
Neither party hereto shall be liable to the other for any action taken or
omitted by it, or any of its officers, agents or employees, in performing their
responsibilities under this Agreement in good faith and without gross
negligence, willful misfeasance or reckless disregard of such responsibilities.
13. Notice.
All notices and other communications provided for hereunder shall be in
writing and shall be delivered by hand or mailed first class, postage prepaid,
addressed as follows:
(a) If to United Investors:
United Investors Life Insurance Company
2001 Third Avenue South
Birmingham, Alabama 35233
Attention: James L. Sedgwick, Esq.
(b) If to W&R:
Waddell & Reed, Inc.
Post Office box 418343
Kansas City, Missouri 64141-9343
Attention: Rodney O. McWhinney, Esq.
or to such other address as United Investors or W&R shall designate by written
notice to the other.
14. Amendment.
This Agreement may be amended from time to time by the mutual agreement and
consent of the parties hereto.
15. Severability.
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
16. Termination.
This Agreement shall be effective upon its execution. It may be terminated
at any time by either party hereto on 60 days' written notice to the other party
hereto, without the payment of any penalty. Upon termination of this Agreement,
all authorizations, rights and obligations shall cease except (i) the obligation
to settle accounts hereunder, issued pursuant to applications received by United
Investors prior to termination and (ii) the agreements contained in paragraph 9
hereof.
17. Applicable Law.
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Missouri.
18. Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original and all of which shall be deemed an instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
(seal)
Attest: UNITED INVESTORS LIFE
INSURANCE COMPANY
By: /s/John H. Livingston By: /s/James L. Sedgwick
- --------------------- --------------------
John H. Livingston James L. Sedgwick
Assistant Secretary Secretary
(seal)
Attest: WADDELL & REED, INC.
By: /s/David R. Burford By: /s/Rodney O. McWhinney
- ------------------- -----------------------
David R. Burford Rodney O. McWhinney
Assistant Secretary Senior Vice President
<PAGE>
Ex-99.B8-tmkca
CUSTODIAN AGREEMENT
Dated as of May 1, 1995
Between
UMB BANK, n.a.
and
TMK/UNITED FUNDS, INC. ASSET STRATEGY PORTFOLIO
<PAGE>
Table of Contents
ARTICLE
I. Appointment of Custodian
II. Powers and Duties of Custodian
2.01 Safekeeping
2.02 Manner of Holding Securities
2.03 Purchase of Assets
2.04 Exchanges of Securities
2.05 Sales of Securities
2.06 Depositary Receipts
2.07 Exercise of Rights, Tender Offers, Etc.
2.08 Stock Dividends, Rights, Etc.
2.09 Options
2.10 Futures Contracts
2.11 Borrowing
2.12 Interest Bearing Deposit
2.13 Foreign Exchange Transactions
2.14 Securities Loan
2.15 Collections
2.16 Dividends, Distributions and Redemptions
2.17 Proceeds from Shares Sold
2.18 Proxies, Notices, Etc.
2.19 Bills and Other Disbursements
2.20 Nondiscretionary Functions
2.21 Bank Accounts
2.22 Deposit of Fund Assets in Securities System
2.23 Other Transfers
2.24 Establishment of Segregated Account
2.25 Custodian's Books and Records
2.26 Opinion of Fund's Independent
Certified Public Accountants
2.27 Reports by Independent Certified Public
Accountants
2.28 Overdraft Facility
III. Proper Instructions, Special Instructions
and Related Matters
3.01 Proper Instruction and Special Instructions
3.02 Authorized Persons
3.03 Persons Having Access to Assets of the Portfolios
3.04 Actions of Custodian Based on Proper
Instructions and Special Instructions
IV. Subcustodians
4.01 Domestic Subcustodians
4.02 Foreign Sub-Subcustodians and
Interim Sub-Subcustodians
4.03 Special Subcustodians
4.04 Termination of a Subcustodian
4.05 Certification Regarding Foreign Sub-Subcustodians
V. Standard of Care, Indemnification
5.01 Standard of Care
5.02 Liability of the Custodian for Actions
of Other Person
5.03 Indemnification by Fund
5.04 Investment Limitations
5.05 Fund's Right to Proceed
5.06 Indemnification by Custodian
5.07 Custodian's Right to Proceed
VI. Compensation
VII. Termination
VIII. Defined Terms
IX. Miscellaneous
9.01 Execution of Documents, Etc.
9.02 Representations and Warranties
9.03 Entire Agreement
9.04 Waivers and Amendments
9.05 Interpretation
9.06 Captions
9.07 Governing Law
9.08 Notices
9.09 Assignment
9.10 Counterparts
9.11 Confidentiality
Appendices
Appendix "A"
Appendix "B"
<PAGE>
CUSTODIAN AGREEMENT
AGREEMENT made as of the 1st day of May, 1995 between TMK/United Funds,
Inc. Asset Strategy Portfolio (the "Fund") and UMB Bank, n.a. (the "Custodian").
WITNESSETH
WHEREAS, the Fund desires to appoint the Custodian as custodian on behalf
of the Fund in accordance with the provisions of the Investment Company Act of
1940, as amended (the "1940 Act") and the rules and regulations thereunder,
under the terms and conditions set forth in this Agreement, and the Custodian
has agreed so to act as custodian.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
APPOINTMENT OF CUSTODIAN
Subject to the terms and provisions of this Agreement, the Fund hereby
employs and appoints the Custodian as a custodian of the cash, securities and
other assets owned by the Fund and deposited from time to time with the
Custodian ("Assets"). The Fund shall deliver to the Custodian, or shall cause
to be delivered to the Custodian, Assets during the term of this Agreement. The
Custodian is authorized to act under the terms and conditions of this Agreement
as the Fund's agent and shall be representing the Fund when acting within the
scope of this Agreement. The Custodian hereby accepts such appointment as
custodian and shall perform the duties and responsibilities set forth herein on
the terms and conditions set forth herein.
ARTICLE II
POWERS AND DUTIES OF CUSTODIAN
As custodian, the Custodian shall have and perform the powers and duties
set forth in this Article II. Pursuant to and in accordance with Article IV
hereof, the Custodian may appoint one or more Subcustodians (as hereinafter
defined) to exercise the powers and perform the duties of the Custodian set
forth in this Article II and references to the Custodian in this Article II
shall include any Subcustodian so appointed.
Section 2.01. Safekeeping. The Custodian shall accept delivery of and
keep safely the Assets in accordance with the terms and conditions hereof on
behalf of the Fund.
Section 2.02. Manner of Holding Securities.
(a) The Custodian shall at all times hold securities of the Fund either:
(i) by physical possession of the share certificates or other instruments
representing such securities in registered or bearer form; or (ii) in book-entry
form by a Securities System (as hereinafter defined) in accordance with the
provisions of Section 2.22 below.
(b) The Custodian may at all times hold registered securities of the Fund
in the name of the Fund or the Fund's nominee, or in the nominee name of the
Custodian unless specifically directed by Proper Instructions (as hereinafter
defined) to hold such registered securities in so-called street name; provided
that, in any event, all Assets shall be held in an account of the Custodian
containing only assets of the Fund. Notwithstanding the foregoing, unless it
receives Proper Instructions to the contrary, the Custodian shall register all
securities in the name of the Custodian's nominee as authorized by the Fund.
All securities held directly or indirectly by the Custodian hereunder shall at
all times be identifiable on the records of the Custodian. Except as otherwise
provided herein, the Custodian shall keep the Assets physically segregated from
those of other persons or entities. The Custodian shall execute and deliver all
certificates and documents in connection with registration of securities as may
be required by the applicable provisions of the Internal Revenue Code, the laws
of any State or territory of the United States and the laws of any jurisdiction
in which the securities are held.
Section 2.03. Purchase of Assets.
(a) Security Purchases. Upon receipt of Proper Instructions, the
Custodian shall pay for and receive securities purchased for the account of the
Fund, provided that payment shall be made by Custodian only upon receipt of the
securities: (a) by the Custodian; (b) by a clearing corporation of a national
securities exchange of which the Custodian is a member; or (c) by a Securities
System. Notwithstanding the foregoing, upon receipt of Proper Instructions:
(i) in the case of a repurchase agreement, the Custodian may release funds to a
Securities System prior to the receipt of advice from the Securities System that
the securities underlying such repurchase agreement have been transferred by
book-entry into the Account (as hereinafter defined) maintained with such
Securities System by the Custodian, provided that the Custodian's instructions
to the Securities System require that the Securities System may make payment of
such funds to the other party to the repurchase agreement only upon transfer by
book-entry of the securities underlying the repurchase agreement into the
Account; (ii) in the case of time deposits, call account deposits, currency
deposits and other deposits, foreign exchange transactions, futures contracts or
options, pursuant to Sections 2.09, 2.10, 2.12 and 2.13 hereof, the Custodian
may make payment therefor before receipt of an advice or transaction; and (iii)
in the case of the purchase of securities, the settlement of which occurs
outside of the United States of America, the Custodian may make payment therefor
and receive delivery of such securities in accordance with local custom and
practice generally accepted by Institutional Clients (as hereinafter defined) in
the country in which the settlement occurs, but in all events subject to the
standard of care set forth in Article V hereof. For purposes of this Agreement,
an "Institutional Client" shall mean a major commercial bank, corporation,
insurance company, or substantially similar institution, which, as a substantial
part of its business operations, purchases or sells securities and makes use of
custodial services.
(b) Other Asset Purchases. Upon receipt of Proper Instructions and except
as otherwise provided herein, the Custodian shall pay for and receive other
Assets for the account of the Fund as provided in Proper Instructions.
Section 2.04. Exchanges of Securities. Upon receipt of Proper
Instructions, the Custodian shall exchange securities held by it for the account
of the Fund for other securities in connection with any reorganization,
recapitalization, split-up of shares, change of par value, conversion or other
event relating to the securities or the issuer of such securities, and shall
deposit any such securities in accordance with the terms of any reorganization
or protective plan. The Custodian shall, without receiving Proper Instructions:
surrender securities for transfer into the name of the Fund, the Fund's nominee
or the nominee name of the Custodian as permitted by Section 2.02(b); and
surrender securities for a different number of certificates or instruments
representing the same number of shares or same principal amount of indebtedness,
provided that the securities to be issued will be delivered to the Custodian.
Section 2.05. Sales of Securities. Upon receipt of Proper Instructions,
the Custodian shall make delivery of securities which have been sold for the
account of the Fund, but only against payment therefor in the form of: (a)
cash, certified check, bank cashier's check, bank credit, or bank wire transfer;
(b) credit to the account of the Custodian with a clearing corporation of a
national securities exchange of which the Custodian is a member; or (c) credit
to the Account of the Custodian with a Securities System, in accordance with the
provisions of Section 2.22 hereof. Notwithstanding the foregoing: (i) in the
case of the sale of securities, the settlement of which occurs outside of the
United States of America, such securities shall be delivered and paid for in
accordance with local custom and practice generally accepted by Institutional
Clients in the country in which the settlement occurs, but in all events subject
to the standard of care set forth in Article V hereof; and (ii) in the case of
securities held in physical form, such securities shall be delivered and paid
for in accordance with "street delivery custom" to a broker or its clearing
agent, against delivery to the Custodian of a receipt for such securities,
provided that the Custodian shall have taken reasonable steps to ensure prompt
collection of the payment for, or return of, such securities by the broker or
its clearing agent, and provided further that, subject to the standard of care
set forth in Article V hereof, the Custodian shall not be responsible for the
selection of or the failure or inability to perform of such broker or its
clearing agent.
Section 2.06. Depositary Receipts. Upon receipt of Proper Instructions,
the Custodian shall surrender securities to the depositary used for such
securities by an issuer of American Depositary Receipts or International
Depositary Receipts (hereinafter referred to, collectively , a "ADRs"), against
a written receipt therefor adequately describing such securities and written
evidence satisfactory to the Custodian that the depositary has acknowledged
receipt of instructions to issue ADRs with respect to such securities in the
name of the Custodian or a nominee of the Custodian, for delivery to the
Custodian at such place as the Custodian may from time to time designate. Upon
receipt of Proper Instructions, the Custodian shall surrender ADRs to the issuer
thereof, against a written receipt therefor adequately describing the ADRs
surrendered and written evidence satisfactory to the Custodian that the issuer
of the ADRs has acknowledged receipt of instructions to cause its depository to
deliver the securities underlying such ADRs to the Custodian.
Section 2.07. Exercise of Rights, Tender Offers, Etc. Upon receipt of
Proper Instructions, the Custodian shall: (a) deliver warrants, puts, calls,
rights or similar securities to the issuer or trustee thereof (or to the agent
of such issuer or trustee) for the purpose of exercise or sale, provided that
the new securities, cash or other Assets, if any, acquired as a result of such
actions are to be delivered to the Custodian; and (b) deposit securities upon
invitations for tenders thereof, provided that the consideration for such
securities is to be paid or delivered to the Custodian, or the tendered
securities are to be returned to the Custodian. Notwithstanding any provision
of this Agreement to the contrary, the Custodian shall promptly notify the Fund
in writing of (i) any default in payment of funds on securities; (ii) any
securities that have matured, been called or redeemed; and (iii) to the extent
the Custodian has notice which is contained in services to which it normally
subscribes for such purposes, or actual knowledge if not contained in such
services, any other default involving securities; and all announcements of
defaults, bankruptcies, reorganizations, mergers, consolidations,
recapitalizations or rights or privileges to subscribe, convert, exchange, put,
redeem or tender securities held subject to this Agreement. The Custodian
shall, following receipt or knowledge, convey such information to the Fund in a
timely manner based upon the circumstances of each particular case. Whenever
any such rights or privileges exist, the Fund will, in a timely manner based
upon the circumstances of each particular case, provide the Custodian with
Proper Instructions. Absent the Custodian's timely receipt of Proper
Instructions, the Custodian shall not be liable for not taking any action or not
exercising such rights prior to their expiration unless such failure is due to
Custodian's failure to give timely notice to the Fund in accordance with this
Section 2.07.
Section 2.08. Stock Dividends, Rights, Etc. The Custodian shall receive
and collect all stock dividends, rights and other items of like nature and, upon
receipt of Proper Instructions, take action with respect to the same as directed
in such Proper Instructions.
Section 2.09. Options. Upon receipt of Proper Instructions and in
accordance with the provisions of any agreement between the Custodian, any
registered broker-dealer and, if necessary, the Fund relating to compliance with
the rules of the Options Clearing Corporation (the "OCC") or of any registered
national securities exchange or similar organization(s), the Custodian shall:
(a) receive and retain confirmations or other documents, if any, evidencing the
purchase or writing of an option by the Fund; (b) deposit and maintain in a
segregated account, securities (either physically or by book-entry in a
Securities System), cash or other Assets; and (c) pay, release and/or transfer
such securities, cash or other Assets in accordance with any such agreement and
with notices or other communications evidencing the expiration, termination or
exercise of such options furnished by the OCC, the securities or options
exchange on which such options are traded or such other organization as may be
responsible for handling such option transactions. The Fund and the broker-
dealer shall be responsible for determining the sufficiency of assets held in
any segregated account established in compliance with applicable margin
maintenance requirements and the performance of other terms of any option
contract; provided, however, that the Custodian shall be liable for performance
of its duties under this Agreement and in accordance with Proper Instructions,
and shall be liable for performance of its duties under any other agreement
between the Custodian, any registered broker-dealer and, if necessary, the Fund.
Notwithstanding anything herein to the contrary, if the Fund issues Proper
Instructions to sell a naked option (including stock index options), then as
part of the transaction, the Custodian, the Fund and the broker-dealer shall
have entered into a tri-party agreement, as described above.
Section 2.10. Futures Contracts. Upon receipt of Proper Instructions,
or pursuant to the provisions of any futures margin procedural agreement among
the Fund, the Custodian and any futures commission merchant (a "Procedural
Agreement"), the Custodian shall: (a) receive and retain confirmations, if any
evidencing the purchase of or sale of a futures contract or an option on a
futures contract by the Fund; (b) deposit and maintain in a segregated account
cash, securities and other Assets designated as initial, maintenance or
variation "margin" deposits intended to secure the Fund's performance of its
obligations under any futures contracts purchased or sold or any options on
futures contracts written by the Fund, in accordance with the provisions of the
Commodity Futures Trading Commission and/or any commodity exchange or contract
market (such as the Chicago Board of Trade), or any similar organization(s),
regarding such margin deposits; and (c) release assets from and/or transfer
assets into such margin accounts only in accordance with any such Procedural
Agreements. The Fund and such futures commission merchant shall be responsible
for determining the sufficiency of assets held in the segregated account in
compliance with applicable margin maintenance requirements and the performance
of any futures contract or option on a futures contract in accordance with its
terms; provided, however, that the Custodian shall be liable for performance of
its duties under this Agreement and in accordance with Proper Instructions, and
shall be liable for performance of its duties under any Procedural Agreement.
Section 2.11. Borrowing. Upon receipt of Proper Instructions, the
Custodian shall deliver securities of the Fund to lenders or their agents, or
otherwise establish a segregated account as agreed to by the Fund and the
Custodian, as collateral for borrowings effected by the Fund, provided that such
borrowed money is payable by the lender (a) to or upon the Custodian's order, as
Custodian for the Fund, and (b) concurrently with delivery of such securities.
Section 2.12. Interest Bearing Deposits. Upon receipt of Proper
Instructions directing the Custodian to purchase interest bearing fixed term and
call deposits (hereinafter referred to collectively, as "Interest Bearing
Deposits") for the account of the Fund, the Custodian shall purchase such
Interest Bearing Deposits in the name of the Fund with such banks or trust
companies (including the Custodian, any Subcustodian or any subsidiary or
affiliate of the Custodian) (hereinafter referred to as "Banking Institutions")
and in such amounts as the Fund may direct pursuant to Proper Instructions.
Such Interest Bearing Deposits may be denominated in U.S. Dollars or other
currencies, as the Fund may determine and direct pursuant to Proper
Instructions. The Custodian shall include in its records with respect to the
Assets of the Fund appropriate notation as to the amount and currency of each
such Interest Bearing Deposit, the accepting Banking Institution and all other
appropriate details, and shall retain such forms of advice or receipt evidencing
such account, if any, as may be forwarded to the Custodian by the Banking
Institution. The responsibilities of the Custodian to the Fund for Interest
Bearing Deposits accepted on the Custodian's books in the United States shall be
that of a U.S. bank for a similar deposit. With respect to Interest Bearing
Deposits other than those accepted on the Custodian's books, (a) the Custodian
shall be responsible for the collection of income as set forth in Section 2.15
and the transmission of cash and instructions to and from such accounts; and
(b) the Custodian shall have no duty with respect to the selection of the
Banking Institution or, so long as the Custodian acts in accordance with Proper
Instructions and the terms and conditions of this Agreement, for the failure of
such Banking Institution to pay upon demand. Upon receipt of Proper
Instructions, the Custodian shall take such reasonable actions as the Fund deems
necessary or appropriate to cause each such Interest Bearing Deposit account to
be insured to the maximum extent possible by all applicable deposit insurers
including, without limitation, the Federal Deposit Insurance Corporation.
Section 2.13. Foreign Exchange Transactions.
(a) Foreign Exchange Transactions Other than as Principal. Upon receipt
of Proper Instructions, the Custodian shall settle foreign exchange contracts or
options to purchase and sell foreign currencies for spot and future delivery on
behalf of and for the account of the Fund with such currency brokers or Banking
Institutions as the Fund may determine and direct pursuant to Proper
Instructions. The Fund accepts full responsibility for its use of third party
foreign exchange brokers (any dealer other than the Foreign Subcustodian) (as
hereinafter defined) and for execution of said foreign exchange contracts and
understands that the Fund shall be responsible for any and all costs and
interest charges which may be incurred as a result of the failure or delay of
its third party broker to deliver foreign exchange unless such loss, damage, or
expense is caused by, or results from the negligence, misfeasance or misconduct
of the Custodian. Notwithstanding the foregoing, the Custodian shall be
responsible for the transmission of cash and instructions to and from the
currency broker or Banking Institution with which the contract or option is
made, the safekeeping of all certificates and other documents and agreements
evidencing or relating to such foreign exchange transactions and the maintenance
of proper records as set forth in Section 2.25. The Custodian shall have no
duty with respect to the selection of the currency brokers or Banking
Institutions with which the Fund deals or, so long as the Custodian acts in
accordance with Proper Instructions, for the failure of such brokers or Banking
Institutions to comply with the terms of any contract or option.
(b) Foreign Exchange Contracts as Principal. The Custodian shall not be
obligated to enter into foreign exchange transactions as principal. However, if
the Custodian has made available to the Fund its services as a principal in
foreign exchange transactions, upon receipt of Proper Instructions, the
Custodian shall enter into foreign currencies for spot and future delivery on
behalf of and for the account of the Fund with the Custodian as principal. The
Custodian shall be responsible for the selection of the currency brokers or
Banking Institutions and the failure of such currency brokers or Banking
Institutions to comply with the terms of any contract or option.
(c) Payments. Notwithstanding anything to the contrary contained herein,
upon receipt of Proper Instructions the Custodian may, in connection with a
foreign exchange contract, make free outgoing payments of cash in the form of
U.S. Dollars or foreign currency prior to receipt of confirmation of such
foreign exchange contract or confirmation that the countervalue currency
completing such contract has been delivered or received.
Section 2.14. Securities Loans. Upon receipt of Proper Instructions,
the Custodian shall, in connection with loans of securities by the Fund, deliver
securities of the Fund to the borrower thereof and may, except as otherwise
provided below, deliver such securities prior to receipt of the collateral, if
any, for such borrowing; provided that, in cases of loans of securities secured
by cash collateral, the Custodian's instructions to the Securities System shall
require that the Securities System deliver the securities of the Fund to the
borrower thereof only upon receipt of the collateral for such borrowing. The
Custodian shall retain on the Fund's behalf the right to any dividends, interest
or distribution on such loaned securities and any other rights specified in
Proper Instructions. Upon receipt of Proper Instructions and the loaned
securities, the Custodian will release the collateral to the borrower.
Section 2.15. Collections. The Custodian shall: (a) collect amounts
due and payable to the Fund with respect to portfolio securities and other
Assets; (b) promptly credit to the account of the Fund all income and other
payments relating to portfolio securities and other Assets held by the Custodian
hereunder upon Custodian's receipt of such income or payments or as otherwise
agreed in writing by the Custodian and the Fund; (c) promptly endorse and
deliver any instruments required to effect such collection; and (d) promptly
execute ownership and other certificates and affidavits for all federal, state,
local and foreign tax purposes in connection with receipt of income or other
payments with respect to portfolio securities and other Assets, or in connection
with the transfer of such securities or other Assets; provided, however, that
with respect to portfolio securities registered in so-called street name, or
physical securities with variable interest rates, the Custodian shall use its
best efforts to collect amounts due and payable to the Fund. The Custodian
shall promptly notify the Fund in writing by facsimile transmission or in such
other manner as the Fund and Custodian may agree in writing if any amount
payable with respect to portfolio securities or other Assets is not received by
the Custodian when due. The Custodian shall not be responsible for the
collection of amounts due and payable with respect to portfolio securities or
other Assets that are in default.
Section 2.16. Dividends, Distributions and Redemptions. To enable the
Fund to pay dividends or other distributions to shareholders of the Fund and to
make payment to shareholders who have requested repurchase or redemption of
their shares of the Fund (collectively, the "Shares"), the Custodian shall
promptly release cash or securities (a) in the case of cash, upon receipt of
Proper Instructions, to one or more Distribution Accounts (as hereinafter
defined) designated by the Fund in such Proper Instructions; or (b) in the case
of securities, upon the receipt of Special Instructions (as hereinafter defined)
to such entity or account designated by the Fund in such Special Instructions.
For purposes of this Agreement, a "Distribution Account" shall mean an account
established at a Banking Institution designated by the Fund in Special
Instructions.
Section 2.17. Proceeds from Shares Sold. The Custodian shall receive
funds representing cash payments received for Shares issued or sold from time to
time by the Fund, and shall promptly credit such funds to the account of the
Fund. The Custodian shall promptly notify the Fund of Custodian's receipt of
cash in payment for Shares issued by the Fund by facsimile transmission or in
such other manner as the Fund and Custodian may agree in writing. Upon receipt
of Proper Instructions, the Custodian shall: (a) deliver all federal funds
received by the Custodian in payment for Shares in payment for such investments
as may be set forth in such Proper Instructions and at a time agreed upon
between the Custodian and the Fund; and (b) make federal funds available to the
Fund as of specified times agreed upon from time to time by the Fund and the
Custodian, in the amount of checks received in payment for Shares which are
deposited to the accounts of the Fund.
Section 2.18. Proxies, Notices, Etc. The Custodian shall deliver or
cause to be delivered to the Fund, in the most expeditious manner practicable,
all forms of proxies, all notices of meetings, and any other notices or
announcements affecting or relating to securities owned by the Fund that are
received by the Custodian, any Subcustodian, or any nominee of either of them,
and, upon receipt of Proper Instructions, the Custodian shall execute and
deliver, or cause such Subcustodian or nominee to execute and deliver, such
proxies or other authorizations as may be required. Except as directed pursuant
to Proper Instructions, neither the Custodian nor any Subcustodian or nominee
shall vote upon any such securities, or execute any proxy to vote thereon, or
give any consent or take any other action with respect thereto. The Custodian
will not release the identity of the Fund to an issuer which requests such
information pursuant to the Shareholder Communications Act of 1985, for the
specific purpose of direct communications between such issuer and the Fund
unless the Fund directs the Custodian otherwise in writing.
Section 2.19. Bills and Other Disbursements. Upon receipt of Proper
Instructions, the Custodian shall pay or cause to be paid, all bills,
statements, or other obligations of the Fund.
Section 2.20. Nondiscretionary Functions. The Custodian shall attend
to all nondiscretionary details not specifically covered by this Agreement in
accordance with industry standards in connection with the sale, exchange,
substitution, purchase, transfer or other dealings with securities or other
Assets held by the Custodian, except as otherwise directed from time to time
pursuant to Proper Instructions.
Section 2.21. Bank Accounts.
(a) Accounts with the Custodian. The Custodian shall open and operate a
bank account or accounts (hereinafter referred to collectively, as "Bank
Accounts") on the books of the Custodian; provided that such Bank Account(s)
shall be in the name of the Custodian or a nominee thereof, for the account of
the Fund, and shall be subject only to draft or order of the Custodian. The
responsibilities of the Custodian to the Fund for deposits accepted on the
Custodian's books shall be that of a U.S. bank for a similar deposit.
(b) Deposit Insurance. Upon receipt of Proper Instructions, the
Custodian shall take such action as the Fund deems necessary or appropriate to
cause each deposit account established by the Custodian pursuant to this Section
2.21 to be insured to the maximum extent possible by all applicable deposit
insurers, including, without limitation, the Federal Deposit Insurance
Corporation.
Section 2.22. Deposit of Fund Assets in Securities Systems. The
Custodian may deposit and/or maintain domestic securities owned by the Fund in:
(a) The Depository Trust Company; (b) the Participants Trust Company; (c) any
book-entry system as provided in (i) Subpart O of Treasury Circular No. 300, 31
CFR 306.115 (ii) Subpart B of Treasury Circular Public Debt Series No. 27-76, 31
CFR 350.2, or (iii) the book-entry regulations of federal agencies substantially
in the form of 31 CFR 306.115; or (d) any other domestic clearing agency
registered with the Securities and Exchange Commission ("SEC") under Section 17A
of the Securities Exchange Act of 1934 (or as may otherwise be authorized by the
Securities and Exchange Commission to serve in the capacity of depository or
clearing agent for the securities or other assets of investment companies) which
acts as a securities depository; provided, however, that no such deposit or
maintenance of securities may be made except with respect to those agencies and
entities the use of which the Fund has previously approved by Special
Instructions (each of the foregoing being referred to in this Agreement as a
"Securities System"). Use of a Securities System shall be in accordance with
applicable Federal Reserve Board and SEC rules and regulations, if any, and
subject to the following provisions:
(A) The Custodian or any Subcustodian may deposit and/or maintain
securities held hereunder in a Securities System, provided that such securities
are represented in an account ("Account") of the Custodian in the Securities
System which Account shall not contain any assets of the Custodian other than
assets held as fiduciary, custodian or otherwise for customers.
(B) The books and records of the Custodian shall at all times identify
those securities belonging to the Fund which are maintained in a Securities
System.
(C) The Custodian shall pay for securities purchased for the account of the
Fund only upon (i) receipt of advice from the Securities System that such
securities have been transferred to the Account of the Custodian, and (ii) the
making of an entry on the records of the Custodian to reflect such payment and
transfer for the account of the Fund. The Custodian shall transfer securities
sold for the account of the Fund only upon (iii) receipt of advice from the
Securities System that payment for such securities has been transferred to the
Account of the Custodian, and (iv) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account of the Fund.
Copies of all advices from the Securities System relating to transfers of
securities for the account of the Fund shall identify the Fund, and shall be
maintained for the Fund by the Custodian. The Custodian shall deliver to the
Fund on the next succeeding business day daily transaction reports which shall
include each day's transactions in the Securities System for the account of the
Fund. Such transaction reports shall be delivered to the Fund or any agent
designated by the Fund pursuant to Proper Instructions, by computer or in such
other manner as the Fund and Custodian may agree in writing.
(D) The Custodian shall, if requested by the Fund pursuant to Proper
Instructions, provide the Fund with all reports obtained by the Custodian or any
Subcustodian with respect to a Securities System's accounting system, internal
accounting control and procedures for safeguarding securities deposited in the
Securities System.
(E) Upon receipt of Special Instructions, the Custodian shall terminate the
use of any Securities System (except the federal book-entry system) on behalf of
the Fund as promptly as practicable and shall take all actions reasonably
practicable to safeguard the securities of the Fund maintained with such
Securities System.
Section 2.23. Other Transfers. Upon receipt of Special Instructions,
the Custodian shall make such other dispositions of securities, funds, or other
Assets of the Fund in a manner or for purposes other than as expressly set forth
in this Agreement, provided that the Special Instructions relating to such
disposition shall include a statement of the purposes for which the delivery is
to be made, the amount of funds, Assets and/or securities to be delivered and
the name of the person or persons to whom delivery is to be made, and shall
otherwise comply with the provisions of Sections 3.01 and 3.03 hereof.
Section 2.24. Establishment of Segregated Account. Upon receipt of
Proper Instructions, the Custodian shall establish and maintain on its books a
segregated account or accounts for and on behalf of the Fund, into which account
or accounts may be transferred cash and/or securities or other Assets of the
Fund, including securities maintained by the Custodian in a Securities System
pursuant to Section 2.22 hereof, said account or accounts to be maintained: (a)
for the purposes set forth in Section 2.09, 2.10 and 2.11 hereof; (b) for the
purposes of compliance by the Fund with the procedures required by Investment
Company Act Release No. 10666, or any subsequent release or releases of the SEC
relating to the maintenance of segregated accounts by registered investment
companies; or (c) for such other purposes as may be set forth, from time to
time, in Special Instructions. The Custodian shall not be responsible for the
determination of the type or amount of Assets to be held in any segregated
account referred to in this Section 2.24.
Section 2.25. Custodian's Books and Records. The Custodian shall
provide any assistance reasonably requested by the Fund in the preparation of
reports to Fund shareholders and others, audits of accounts, and other
ministerial matters of like nature. The Custodian shall maintain complete and
accurate records with respect to securities and other Assets held for the
accounts of the Fund as required by the rules and regulations of the SEC
applicable to investment companies registered under the 1940 Act, including, but
not limited to: (a) journals or other records of original entry containing a
detailed and itemized daily record of all receipts and deliveries of securities
(including certificate and transaction identification numbers, if any), and all
receipts and disbursements of cash; (b) ledgers or other records reflecting (i)
securities in transfer, (ii) securities in physical possession, (iii) securities
borrowed, loaned or collateralizing obligations of the Fund, (iv) monies
borrowed and monies loaned (together with a record of the collateral therefor
and substitutions of such collateral), and (v) dividends and interest received;
and (c) cancelled checks and bank records relating thereto. The Custodian shall
keep such other books and records of the Fund as the Fund shall reasonably
request. All such books and records maintained by the Custodian shall be
maintained in a form acceptable to the Fund and in compliance with the rules and
regulations of the SEC, including, but not limited to, books and records
required to be maintained by Section 31(a) of the 1940 Act and the rules and
regulations from time to time adopted thereunder. All books and records
maintained by the Custodian pursuant to this Agreement shall at all times be the
property of the Fund and shall be available during normal business hours for
inspection and use by the Fund and its agents, including without limitation, its
independent certified public accountants. Notwithstanding the preceding
sentence, the Funds shall not take any actions or cause the Custodian to take
any actions which would knowingly cause, either directly or indirectly, the
Custodian to violate any applicable laws, regulations or orders.
Notwithstanding the provisions of this Section 2.25, in the event the Fund
purchases cash, securities and other Assets requiring the use of a Domestic
Subcustodian or Foreign Sub-Subcustodian, the Custodian shall be entitled to
rely upon and use the books, records and accountings of the Domestic
Subcustodian as its means of accounting to the Fund for all cash, securities and
other Assets deposited with such entities; provided however, that such books,
records and accountings on which the Bank may rely must be maintained in the
United States by such Domestic Subcustodian and, provided further, that any
agreement between the Custodian and such Domestic Subcustodian must state that
the Domestic Subcustodian agrees to make any records available upon request and
preserve, for the periods described in Rule 31a-2 of the 1940 Act, the records
required to be maintained by Rule 31a-1 of the 1940 Act. In no event shall the
Custodian be entitled to rely upon and use books, records and accountings which
are maintained outside of the United States.
Section 2.26. Opinion of Fund's Independent Certified Public
Accountants. The Custodian shall take all reasonable action as the Fund may
request to obtain from year to year favorable opinions from the Fund's
independent certified public accountants with respect to the Custodian's
activities hereunder in connection with the preparation of the Fund's Form N-1A
and the Fund's Form N-SAR or other periodic reports to the SEC and with respect
to any other requirements of the SEC.
Section 2.27. Reports by Independent Certified Public Accountants. At
the request of the Fund, the Custodian shall deliver to the Fund a written
report prepared by the Custodian's independent certified public accountants with
respect to the services provided by the Custodian under this Agreement,
including, without limitation, the Custodian's accounting system, internal
accounting control and procedures for safeguarding cash, securities and other
assets, including cash, securities and other assets deposited and/or maintained
in a Securities System or with a Subcustodian. Such report shall be of
sufficient scope and in sufficient detail as may reasonably be required by the
Fund and as may reasonably be obtained by the Custodian.
Section 2.28. Overdraft Facility. In the event that the Custodian is
directed by Proper Instructions to make any payment or transfer of funds on
behalf of the Fund for which there would be, at the close of business on the
date of such payment or transfer, insufficient funds held by the Custodian on
behalf of the Fund, the Custodian may, in its sole discretion, provide an
overdraft (an "Overdraft") to the Fund in an amount sufficient to allow the
completion of such payment. Any Overdraft provided hereunder: (a) shall be
payable on the next business day, unless otherwise agreed by the Fund and the
Custodian; and (b) shall accrue interest from the date of the Overdraft to the
date of payment in full by the Fund at a rate agreed upon in writing, from time
to time, by the Custodian and the Fund. The purpose of such Overdrafts is to
temporarily finance extraordinary or emergency expenses not reasonably
foreseeable by the Fund. The Custodian shall promptly notify the Fund in
writing ("Overdraft Notice") of any Overdraft by facsimile transmission or in
such other manner as the Fund and the Custodian may agree in writing. The
Custodian shall have a right of set-off against all Assets (except for Assets
held in a segregated margin account or otherwise pledged in connection with
options or futures contracts held for the benefit of the Fund and for Assets
allocated to any other Overdraft or loan made hereunder); provided, however, the
Custodian shall promptly notify the Fund in writing of any intent to exercise a
right of set-off against Assets hereunder and shall not exercise any such right
of set-off against Assets hereunder unless and until the Fund has failed to pay
(within ten (10) days after the Fund's receipt of such notice of intent to
exercise a right of set-off), any Overdraft, together with all accrued interest
thereon. Notwithstanding the provisions of any applicable law, including,
without limitation, the Uniform Commercial Code, the only rights or remedies
which the Custodian is entitled to with respect to Overdrafts is the right of
set-off granted herein.
ARTICLE III
PROPER INSTRUCTIONS, SPECIAL INSTRUCTIONS
AND RELATED MATTERS
Section 3.01. Proper Instructions and Special Instructions.
(a) Proper Instructions. As used herein, the term "Proper Instructions"
shall mean: (i) a tested telex, a written (including, without limitation,
facsimile transmission) request, direction, instruction or certification signed
or initialed by or on behalf of the Fund by two or more Authorized Persons (as
hereinafter defined); (ii) a telephonic or other oral communication by one or
more Authorized Persons; or (iii) a communication effected directly between an
electro-mechanical or electronic device or system (including, without
limitation, computers) by or on behalf of the Fund by one or more Authorized
Persons; provided, however, that communications of the types described in
clauses (ii) and (iii) above purporting to be given by an Authorized Person
shall be considered Proper Instructions only if the Custodian reasonably
believes such communications to have been given by an Authorized Person with
respect to the transaction involved. Proper Instructions in the form of oral
communications shall be confirmed by the Fund by tested telex or in writing in
the manner set forth in clause (i) above, but the lack of such confirmation
shall in no way affect any action taken by the Custodian in reliance upon such
oral instructions prior to the Custodian's receipt of such confirmation. The
Fund and the Custodian are hereby authorized to record any and all telephonic or
other oral instructions communicated to the Custodian. Proper Instructions may
relate to specific transactions or to types or classes of transactions, and may
be in the form of standing instructions.
(b) Special Instructions. As used herein, the term "Special Instructions"
shall mean Proper Instructions countersigned or confirmed in writing by the
Treasurer or any Assistant Treasurer of the Fund or any other person designated
by the Treasurer of the Fund in writing, which countersignature or confirmation
shall be (i) included on the same instrument containing the Proper Instructions
or on a separate instrument relating thereto, and (ii) delivered by hand, by
facsimile transmission or in such other manner as the Fund and the Custodian
agree in writing.
(c) Address for Proper Instructions and Special Instructions. Proper
Instructions and Special Instructions shall be delivered to the Custodian at the
address and/or telephone, telecopy or telex number agreed upon from time to time
by the Custodian and the Fund.
Section 3.02. Authorized Persons. Concurrently with the execution of
this Agreement and from time to time thereafter, as appropriate, the Fund shall
deliver to the Custodian, duly certified as appropriate by a Treasurer or
Assistant Treasurer of the Fund, a certificate setting forth: (a) the names,
titles, signatures, and scope of authority of all persons authorized to give
Proper Instructions or any other notice, request, direction, instruction,
certificate or instrument on behalf of the Fund (collectively, the "Authorized
Persons" and individually, an "Authorized Person"); and (b) the names, titles
and signatures of those persons authorized to issue Special Instructions. Such
certificate may be accepted and relied upon by the Custodian as conclusive
evidence of the facts set forth therein and shall be considered to be in full
force and effect until delivery to the Custodian of a similar certificate to the
contrary. Upon delivery of a certificate which deletes or does not include the
name(s) of a person previously authorized to give Proper Instructions or to
issue Special Instructions, such persons shall no longer be considered an
Authorized Person or authorized to issue Special Instructions.
Section 3.03. Persons Having Access to Assets of the Portfolios.
Notwithstanding anything to the contrary contained in this Agreement, no
Authorized Person, Director, officer, employee or agent of the Fund shall have
physical access to the Assets of the Fund held by the Custodian nor shall the
Custodian deliver any Assets of the Fund to an account of such person; provided,
however, that nothing in this Section 3.03 shall prohibit (a) any Authorized
Person from giving Proper Instructions, or any person authorized to issue
Special Instructions from issuing Special Instructions, so long as such action
does not result in delivery of or access to Assets of the Fund prohibited by
this Section 3.03; or (b) the Fund's independent certified public accountants
from examining or reviewing the Assets of the Fund held by the Custodian. The
Fund will deliver from time to time a written certificate executed by two
Authorized Persons identifying such Authorized Persons, Directors, officers,
employees and agents of the Fund. Notwithstanding the foregoing, to the extent
that the person acting on behalf of the Custodian in making such delivery has
actual knowledge that any person is an Authorized Person, Director, officer,
employee or agent of the Fund, the Custodian will comply with this Section 3.03
as if the name of such Authorized Person, Director, officer, employee or agent
had been contained in a written certificate provided pursuant to this Section
3.03.
Section 3.04. Actions of Custodian Based on Proper Instructions and
Special Instructions. So long as and to the extent that the Custodian acts in
accordance with (a) Proper Instructions or Special Instructions, as the case may
be, and (b) the terms of this Agreement, the Custodian shall not be responsible
for the title, validity or genuineness of any property, or evidence of title
thereof, received by it or delivered by it pursuant to this Agreement.
ARTICLE IV
SUBCUSTODIANS
From time to time, in accordance with the relevant provisions of this
Agreement, (i) the Custodian may appoint one or more Domestic Subcustodians and
Special Subcustodians (each, as hereinafter defined) to act on behalf of the
Fund; and (ii) any Domestic Subcustodian so appointed may appoint a Foreign Sub-
Subcustodian or Interim Sub-Subcustodian (as each are hereinafter defined) in
accordance with this Article IV. For purposes of this Agreement, all Domestic
Subcustodians, Special Subcustodians, Foreign Sub-Subcustodians and Interim Sub-
Subcustodians shall be referred to collectively as "Subcustodians".
Section 4.01. Domestic Subcustodians. The Custodian may, at any time
and from time to time, appoint any bank as defined in Section 2(a)(5) of the
1940 Act or any trust company or other entity any of which meet requirements of
a custodian under Section 17(f) of the 1940 Act and the rules and regulations
thereunder, to act as agent for the Custodian on behalf of the Fund as a
subcustodian for purposes of holding cash, securities and other Assets of the
Fund and performing other functions of the Custodian within the United States (a
"Domestic Subcustodian"); provided, that, the Custodian shall notify the Fund in
writing of the identity and qualifications of any proposed Domestic Subcustodian
at least sixty (60) days prior to the desired appointment of such Domestic
Subcustodian, and the Fund will notify the Custodian, in writing signed by two
or more Authorized Persons, of approval or disapproval of the appointment of the
proposed Domestic Subcustodian; and provided, further, that the Custodian may
not appoint any such Domestic Subcustodian without such prior written approval
of the Fund by such Authorized Persons. Each such duly approved Domestic
Subcustodian and the countries where, Foreign Sub-Subcustodians and the
securities depositories and clearing agencies through which they may hold
securities and other Assets of the Fund shall be as agreed upon by the parties
hereto in writing, from time to time, in accordance with the provisions of
Section 9.04 hereof (the "Subcustodian List").
Section 4.02. Foreign Sub-Subcustodians and Interim Sub-Subcustodians.
(a) Foreign Sub-Subcustodians. The Custodian may at any time appoint, or
cause a Domestic Subcustodian to appoint: (i) any bank, trust company or other
entity meeting requirements of an "eligible foreign custodian" under Section
17(f) of the 1940 Act and the rules and regulations thereunder or by order of
the Securities and Exchange Commission exempted therefrom, or (ii) any bank as
defined in Section 2(a)(5) of the 1940 Act meeting the requirements of a
custodian under Section 17(f) of the 1940 Act and the rules and regulations
thereunder to act on behalf of the Fund as a sub-subcustodian for purposes of
holding cash, securities and other Assets of the Fund and performing other
functions of the Domestic Subcustodian in countries other than the United States
of America (a "Foreign Sub-Subcustodian"); provided that, prior to the
appointment or approval of any Foreign Sub-Subcustodian the Custodian shall, or
shall cause the Domestic Subcustodian to, notify the Fund, in writing, of the
identity and qualifications of the proposed Foreign Sub-Subcustodian and make a
copy of the proposed sub-subcustodian agreement available to the Fund at least
sixty (60) days prior to the desired appointment; and provided further that the
Custodian shall have obtained written confirmation from two or more Authorized
Persons of the approval of the Board of Directors or other governing body of the
Fund (which approval may be withheld in the sole discretion of such Board of
Directors or other governing body or entity) with respect to (i) the identity
and qualifications of any proposed Foreign Sub-Subcustodian, and (ii) the
country or countries in which, and the securities depositories or clearing
agencies (hereinafter "Securities Depositories and Clearing Agencies"), if any,
through which, any proposed Foreign Sub-Subcustodian is authorized to hold
securities and other Assets of the Fund. Each such duly approved Foreign Sub-
Subcustodian and the countries where and the Securities Depositories and
Clearing Agencies through which they may hold securities and other Assets of the
Fund shall be listed on the Subcustodian List. The Fund shall be responsible
for informing the Custodian sufficiently in advance of a proposed investment
which is to be held in a country in which no Foreign Sub-Subcustodian is
authorized to act, in order that there shall be sufficient time for the
Custodian or any Domestic Subcustodian to effect the appropriate arrangements
with a proposed Foreign Sub-Subcustodian, including obtaining approval as
provided in this Section 4.02(a). In connection with the appointment of any
Foreign Sub-Subcustodian, the Custodian shall, or shall cause the Domestic
Subcustodian to, enter into a sub-subcustodian agreement with the Foreign Sub-
Subcustodian in form and substance approved by the Fund, provided that the
agreement shall, in all events, comply with the provisions of the 1940 Act and
the rules and regulations thereunder, and the terms and provisions of this
Agreement. The Custodian shall not and shall cause any Domestic Subcustodian
not to consent to the amendment of any sub-subcustodian agreement entered into
with a Foreign Sub-Subcustodian, or agree to any changes thereunder, or waive
any rights under such agreement, except upon prior approval pursuant to Special
Instructions.
(b) Interim Sub-Subcustodians. Notwithstanding the foregoing, in the
event that the Fund shall invest in a security or other Asset to be held in a
country in which no Foreign Sub-Subcustodian is authorized to act, the Custodian
shall, or shall cause the Domestic Subcustodian to, promptly notify the Fund in
writing by facsimile transmission or in such other manner as the Fund and
Custodian shall agree in writing of the unavailability of an approved Foreign
Sub-Subcustodian in such country; and upon the receipt of Special Instructions,
the Custodian shall, or shall cause the Domestic Subcustodian to, appoint or
approve any Person (as hereinafter defined) designated by the Fund in such
Special Instructions, to hold such security or other Asset. (Any Person
appointed or approved as a sub-subcustodian pursuant to this Section 4.02(b) is
hereinafter referred to as an "Interim Sub-Subcustodian.")
Section 4.03. Special Subcustodians. Upon receipt of Special
Instructions, the Custodian shall, on behalf of the Fund, appoint one or more
banks, trust companies or other entities designated in such Special Instructions
to act as a subcustodian for the purpose of (i) effecting third-party repurchase
transactions with banks, brokers, dealers or other entities, (ii) providing
depository and clearing agency services with respect to certain variable rate
demand note securities; and (iii) effecting any other transactions designated by
the Fund in Special Instructions. (Each such designated subcustodian is
hereinafter referred to as a "Special Subcustodian.") Each such duly appointed
Special Subcustodian shall be listed on the Subcustodian List. In connection
with the appointment of any Special Subcustodian, the Custodian shall enter into
a subcustodian agreement with the Special Subcustodian in form and substance
approved by the Fund, provided that such agreement shall in all events comply
with the provisions of the 1940 Act and the rules and regulations thereunder and
the terms and provisions of this Agreement. The Custodian shall not amend any
subcustodian agreement entered into with a Special Subcustodian, or agree to
change or permit any changes thereunder, or waive any rights under such
agreement, except upon prior approval pursuant to Special Instructions.
Section 4.04. Termination of a Subcustodian. The Custodian shall (i)
cause each Domestic Subcustodian to, and (ii) use its best efforts to cause each
Interim Sub-Subcustodian and Special Subcustodian to, perform all of its
obligations in accordance with the terms and conditions of the subcustodian
agreement between the Custodian and such Domestic Subcustodian and Special
Subcustodian or between the Domestic Subcustodian and a Foreign Sub-Subcustodian
or Interim Sub-Subcustodian. In the event that the Custodian is unable to cause
such subcustodian or sub-subcustodian to fully perform its obligations
thereunder, the Custodian shall promptly notify the Fund in writing and
forthwith, upon the receipt of Special Instructions, terminate or cause the
termination of such Subcustodian or Sub-Subcustodian with respect to the Fund
and, if necessary or desirable, appoint or cause the appointment of a
replacement Subcustodian or Sub-Subcustodian in accordance with the provisions
of this Article IV. In addition to the foregoing, the Custodian (A) may, at any
time in its discretion, upon written notification to the Fund, terminate any
Domestic Subcustodian, and (B) shall, upon receipt of Special Instructions,
terminate any Special Subcustodian with respect to the Fund, in accordance with
the termination provisions under the applicable subcustodian agreement, and (C)
shall, upon receipt of Special Instructions, cause the Domestic Subcustodian to
terminate any Foreign Sub-Subcustodian or Interim Sub-Subcustodian as to its use
of such entities with respect to the Fund, in accordance with the termination
provisions under the applicable sub-subcustodian agreement.
Section 4.05. Certification Regarding Foreign Sub-Subcustodians. Upon
request of the Fund, the Custodian shall deliver to the Fund a certificate
stating: (i) the identity of each Foreign Sub-Subcustodian then acting on
behalf of the Custodian; (ii) the countries in which and the Securities
Depositories and Clearing Agents through which each such Foreign Sub-
Subcustodian is then holding cash, securities and other Assets of the Fund; and
(iii) such other information as may be requested by the Fund to ensure
compliance with rules and regulations under the 1940 Act.
ARTICLE V
STANDARD OF CARE: INDEMNIFICATION
Section 5.01. Standard of Care.
(a) General Standard of Care. The Custodian shall exercise reasonable
care and diligence in carrying out all of its duties and obligations under this
Agreement, and shall be liable to the Fund for all loss, damage and expense
suffered or incurred by the Fund resulting from the failure of the Custodian to
exercise such reasonable care and diligence.
(b) Actions Prohibited by Applicable Law, Etc. In no event shall the
Custodian incur liability hereunder if the Custodian or any Subcustodian or
Securities System, or any subcustodian, Securities Depository or Clearing Agency
utilized by any such Subcustodian, or any nominee of the Custodian or any
Subcustodian (individually, a "Person") is prevented, forbidden or delayed from
performing, or omits to perform, any act or thing which this Agreement provides
shall be performed or omitted to be performed, by reason of: (i) any provision
of any present or future law or regulation or order of the United States of
America, or any state thereof, or of any foreign country, or political
subdivision thereof or of any court of competent jurisdiction (and the Custodian
nor any other Person shall not be obligated to take any action contrary
thereto); or (ii) any act of God or war or other similar circumstance beyond the
control of the Custodian unless in each case, such delay or nonperformance is
caused by the negligence, misfeasance or misconduct of the Custodian.
(c) Mitigation by Custodian. Upon the occurrence of any event which
causes or may cause any loss, damage or expense to the Fund, (i) the Custodian
shall, (ii) the Custodian shall cause any applicable Domestic Subcustodian or
Foreign Sub-Subcustodian to, and (iii) the Custodian shall use its best efforts
to cause any applicable Interim Sub-Subcustodian or Special Subcustodian to, use
all commercially reasonable efforts and take all reasonable steps under the
circumstances to mitigate the effects of such event and to avoid continuing harm
to the Fund.
(d) Advice of Counsel. The Custodian shall be without liability for any
action reasonably taken or omitted in good faith pursuant to the written advise
of (i) counsel for the Fund, or (ii) at the expense of the Custodian, such other
counsel as the Fund and the Custodian may agree upon in writing; provided,
however, with respect to the performance of any action or omission of any action
upon such advice, the Custodian shall be required to conform to the standard of
care set forth in Section 5.01 (a).
(e) Expenses of the Fund. In addition to the liability of the Custodian
under this Article V, the Custodian shall be liable to the Fund for all
reasonable costs and expenses incurred by the Fund in connection with any claim
by the Fund against the Custodian arising from the obligations of the Custodian
hereunder including, without limitation, all reasonable attorneys' fees and
expenses incurred by the Fund in asserting any such claim, and all expenses
incurred by the Fund in connection with any investigations, lawsuits or
proceedings relating to such claim; provided however, that the Fund has
recovered from the Custodian for such claim.
(f) Liability for Past Records. The Custodian shall have no liability in
respect of any loss, damage or expense suffered by the Fund, insofar as such
loss, damage or expense arises from the performance of the Custodian in reliance
upon records that were maintained for the Fund by entities other than the
Custodian prior to the Custodian's employment hereunder which the Custodian has
no reason to believe are inaccurate or incomplete after reasonable inquiry.
Section 5.02. Liability of the Custodian for Actions of Other Persons.
(a) Domestic Subcustodian and Foreign Sub-Subcustodian. The Custodian
shall be liable for the actions or omissions of any Domestic Subcustodian or
Foreign Sub-Subcustodian (excluding any Securities Depository or Clearing Agency
appointed by them) to the same extent as if such actions or omissions were
performed by the Custodian itself. In the event of any loss, damage or expense
suffered or incurred by the Fund caused by or resulting from the actions or
omissions of any Domestic Subcustodian or Foreign Sub-Subcustodian for which the
Custodian would otherwise be liable, the Custodian shall promptly reimburse the
Fund in the amount of any such loss, damage or expense.
(b) Special Subcustodians, Interim Sub-Subcustodians, Security Systems,
Securities Depositories and Clearing Agencies. The Custodian shall not be
liable to the Fund for any loss, damage or expense suffered or incurred by the
Fund resulting from the actions or omissions of a Special Subcustodian, Interim
Sub-Subcustodian, Securities System, Securities Depository or Clearing Agency
unless such loss, damage or expense is caused by, or results from, the
negligence, misfeasance or misconduct of the Custodian; provided, however, in
the event of any such loss, damage or expense, the Custodian shall take all
reasonable steps to enforce such rights as it may have against such Special
Subcustodian, Interim Sub-Subcustodian, Security System, Securities Depository
or Clearing Agency to protect the interest of the Fund.
(c) Reimbursement of Expenses. The Fund agrees to reimburse the
Custodian for all reasonable out-of-pocket expenses incurred by the Custodian in
connection with the fulfillment of its obligations under Section 5.01(c) as it
relates to Interim Sub-Subcustodians and Special Subcustodians and 5.02(b);
provided however, that such reimbursement shall not apply to expenses occasioned
by or resulting from the negligence, misfeasance or misconduct of the Custodian.
Section 5.03. Indemnification by Fund.
(a) Indemnification Obligations of Fund. Subject to the limitations set
forth in this Agreement, the Fund agrees to indemnify and hold harmless the
Custodian and its nominees from all loss, damage and expense (including
reasonable attorneys' fees) suffered or incurred by the Custodian or its nominee
caused by or arising from actions taken by the Custodian, its employees or
agents in the performance of its duties and obligations under this Agreement;
provided, however, that such indemnity shall not apply to loss, damage and
expense occasioned by or resulting from the negligence, misfeasance or
misconduct of the Custodian or its nominee. In addition, the Fund agrees to
indemnify any Person against liability incurred by reason of taxes assessed to
such Person resulting from the fact that securities and other property of the
Fund are registered in the name of such Person in accordance with the provisions
of this Agreement; provided, however, that in no event shall such
indemnification be applicable to income, franchise or similar taxes which may be
imposed or assessed against any Person. It is also understood that the Fund
agrees to indemnify and hold harmless the Custodian and its nominee for any loss
arising from a foreign currency transaction or contract, where the loss results
from a Sovereign Risk (as hereinafter defined) or where any Person maintaining
securities, currencies, deposits or other Assets of the Fund in connection with
any such transactions has exercised reasonable care maintaining such property or
in connection with any such transaction involving such Assets. A "Sovereign
Risk" shall mean nationalization, expropriation, devaluation, revaluation,
confiscation, seizure, cancellation, destruction or similar action by any
governmental authority, de facto or de jure; or enactment, promulgation,
imposition or enforcement by any such governmental authority of currency
restrictions, exchange controls, taxes, levies or other charges affecting the
Fund's property; or acts of war, terrorism, insurrection or revolution.
(b) Notice of Litigation. Right to Prosecute, Etc. The Fund shall not
be liable for indemnification under this Section 5.03 unless a Person shall have
promptly notified the Fund in writing of the commencement of any litigation or
proceeding brought against the Custodian or other Person in respect of which
indemnity may be sought under this Section 5.03. With respect to claims in such
litigation or proceedings for which indemnity by the Fund may be sought and
subject to applicable law and the ruling of any court of competent jurisdiction,
the Fund shall be entitled to participate in any such litigation or proceeding
with counsel of its choice at its own expense in respect of that portion of the
litigation for which the Fund may be subject to an indemnification obligation;
provided, however, a Person shall be entitled to participate in (but not
control) at its own cost and expense, the defense of any such litigation or
proceeding if the Fund has not acknowledged in writing it obligation to
indemnify the Person with respect to such litigation or proceeding. If the Fund
is not permitted to participate or control such litigation or proceeding under
applicable law or by a ruling of a court of competent jurisdiction, or if the
Fund chooses not to so participate, the Custodian or other Person shall not
consent to the entry of any judgment or enter into any settlement in any such
litigation or proceeding without providing the Fund with adequate notice of any
such settlement or judgment, and without the Fund's prior written consent which
consent shall not be unreasonably withheld or delayed. All Persons shall submit
written evidence to the Fund with respect to any cost or expense for which they
are seeking indemnification in such form and detail as the Fund may reasonably
request.
Section 5.04. Investment Limitations. If the Custodian has otherwise
complied with the terms and conditions of this Agreement in performing its duty
generally, and more particularly in connection with the purchase, sale or
exchange of securities made by or for the Fund, the Custodian shall not be
liable to the Fund and the Fund agrees to indemnify the Custodian and its
nominees, for any loss, damage or expense suffered or incurred by the Custodian
and its nominees arising out of any violation of any investment or other
limitation to which the Fund is subject except for violations of which the
Custodian has actual knowledge. For purposes of this Section 5.04 the term
"actual knowledge" shall mean knowledge gained by the Custodian by means other
than from any prospectus published by the Fund or contained in any filing by the
Fund with the SEC.
Section 5.05. Fund's Right to Proceed. Notwithstanding anything to the
contrary contained herein, the Fund shall have, at its election upon reasonable
notice to the Custodian, the right to enforce, to the extent permitted by any
applicable agreement and applicable law, the Custodian's rights against any
Subcustodian, Securities System or other Person for loss, damage or expense
caused the Fund by such Subcustodian, Securities System or other Person, which
the Custodian may have as a consequence of any such loss, damage or expense, if
and to the extent that the Fund has not been made whole for any such loss,
expense or damage. If the Custodian makes the Fund whole for any such loss,
expense or damage, the Custodian shall retain the ability to enforce its rights
directly against such Subcustodian, Securities System or other Person. Upon the
Fund's election to enforce any rights of the Custodian under this Section 5.05,
the Fund shall reasonably prosecute all actions and proceedings directly
relating to the rights of the Custodian in respect of the loss, damage or
expense incurred by the Fund; provided that, so long as the Fund has
acknowledged in writing its obligation to indemnify the Custodian under Section
5.03 hereof with respect to such claim, the Fund shall retain the right to
settle, compromise and/or terminate any action or proceeding in respect of the
loss, damage or expense incurred by the Fund without the Custodian's consent and
provided further, that if the Fund has not made an acknowledgement of its
obligation to indemnify, the Fund shall not settle, compromise or terminate any
such action or proceeding without the written consent of the Custodian, which
consent shall not be unreasonably withheld or delayed. The Custodian agrees to
cooperate with the Fund and take all actions reasonably requested by the Fund in
connection with the Fund's enforcement of any rights of the Custodian. Nothing
contained in this Section 5.05 shall be construed as an obligation of the Fund
to enforce the Custodian's rights. The Fund agrees to reimburse the Custodian
for out-of-pocket expenses incurred by it in connection with the fulfillment of
its obligations under this Section 5.05; provided, however, that such
reimbursement shall not apply to expenses occasioned by or resulting from the
negligence, misfeasance or misconduct of the Custodian.
Section 5.06. Indemnification by Custodian.
(a) Indemnification Obligations of Custodian. Subject to the limitations
set forth in this Agreement and in addition to the reimbursement obligations
provided in Section 5.02(a), the Custodian agrees to indemnify and hold harmless
the Fund and its nominees from all loss, damage and expense (including
reasonable attorneys' fees) suffered or incurred by the Fund or its nominee
caused by or arising from the failure of the Custodian, its nominee, employees
or agents to comply with the terms or conditions of this Agreement or arising
out of the negligence, misfeasance or misconduct of the Custodian or its
nominee.
(b) Notice of Litigation, Right to Prosecute, Etc. The Custodian shall
not be liable for indemnification under this Section 5.06 unless the Fund shall
have promptly notified the Custodian in writing of the commencement of any
litigation or proceeding brought against the Fund in respect of which indemnity
may be sought under this Section 5.06. With respect to claims in such
litigation or proceedings for which indemnity by the Custodian may be sought and
subject to applicable law and the ruling of any court of competent jurisdiction,
the Custodian shall be entitled to participate in any such litigation or
proceeding with counsel of its choice at its own expense in respect of that
portion of the litigation for which the Custodian may be subject to an
indemnification obligation; provided, however, the Fund shall be entitled to
participate in (but not control) at its own cost and expense, the defense of any
such litigation or proceeding if the Custodian has not acknowledged in writing
its obligation to indemnify the Fund with respect to such litigation or
proceeding. If the Custodian is not permitted to participate or control such
litigation or proceeding under applicable law or by a ruling of a court of
competent jurisdiction, or if the Custodian chooses not to so participate, the
Fund shall not consent to the entry of any judgement or enter into any
settlement in any such litigation or proceeding without providing the Custodian
with adequate notice of any such settlement or judgement, and without the
Custodian's prior written consent which consent shall not be unreasonably
withheld or delayed. The Fund shall submit written evidence to the Custodian
with respect to any cost or expense for which it is seeking indemnification in
such form and detail as the Custodian may reasonably request.
Section 5.07. Custodian's Right to Proceed. Notwithstanding anything
to the contrary contained herein, the Custodian shall have, at its election upon
reasonable notice to the Fund, the right to enforce, to the extent permitted by
any applicable agreement and applicable law, the Fund's rights against any
Subcustodian, Securities System or other Person for loss, damage or expense
caused the Custodian by such Subcustodian, Securities System or other Person,
which the Fund may have as a consequence of any such loss, damage or expense, if
and to the extent that the Custodian has not been made whole for any such loss,
expense or damage. If the Fund makes the Custodian whole for any such loss,
expense or damage, the Fund shall retain the ability to enforce its rights
directly against such Subcustodian, Securities System or other Person. Upon the
Custodian's election to enforce any rights of the Fund under this Section 5.07,
the Custodian shall reasonably prosecute all actions and proceedings directly
relating to the rights of the Fund in respect of the loss, damage and expense
incurred by the Custodian; provided that, so long as the Custodian has
acknowledged in writing its obligation to indemnify the Fund under Section 5.06
hereof with respect to such claim, the Custodian shall retain the right to
settle, compromise and/or terminate any action or proceeding in respect of the
loss, damage or expense incurred by the Custodian without the Fund's consent and
provided further, that if the Custodian has not made an acknowledgement of its
obligation to indemnify, the Custodian shall not settle, compromise or terminate
any such action or proceeding without the written consent of the Fund, which
consent shall not be unreasonably withheld or delayed. The Fund agrees to
cooperate with the Custodian and take all actions reasonably requested by the
Custodian in connection with the Custodian's enforcement of any rights of the
Fund. Nothing contained in this Section 5.07 shall be construed as an
obligation of the Custodian to enforce the Fund's rights. The Custodian agrees
to reimburse the Fund for out-of-pocket expenses incurred by it in connection
with the fulfillment of its obligations under this Section 5.07; provided,
however, that such reimbursement shall not apply to expenses occasioned by or
resulting from the negligence, misfeasance or misconduct of the Fund.
ARTICLE VI
COMPENSATION
For the initial three year period beginning on the effective date of this
Agreement, the Fund shall compensate the Custodian in the amount and at the
times specified in Appendix "B" attached hereto. Thereafter, the Fund shall
compensate the Custodian in the amount, and at times, as may be agreed upon in
writing, from time to time, by the Custodian and the Fund.
ARTICLE VII
TERMINATION
This Agreement shall continue in full force and effect until the first to
occur of: (a) termination by the Custodian by an instrument in writing
delivered or mailed (certified mail, return receipt requested) to the Fund, such
termination to take effect not sooner than ninety (90) days after the date of
such delivery or receipt; (b) termination by the Fund by an instrument in
writing delivered or mailed (certified mail, return receipt requested) to the
Custodian, such termination to take effect not sooner than ninety (90) days
after the date of such delivery or receipt; or (c) termination by the Fund by an
instrument in writing delivered to the Custodian, based upon the Fund's
determination that there is reasonable basis to conclude that the Custodian is
insolvent or that the financial condition of the Custodian is deteriorating in
any material respect, in which case termination shall take effect upon the
Custodian's receipt of such notice or at such later time as the Fund shall
designate. In the event of termination pursuant to this Article VII, the Fund
shall make payment of all accrued fees and unreimbursed expenses within a
reasonable time following termination and delivery of a statement to the Fund
setting forth such fees and expenses. The Fund shall identify in any notice of
termination a successor custodian to which the cash, securities and other Assets
of the Fund shall, upon termination of this Agreement, be delivered. In the
event that securities and other Assets remain in the possession of the Custodian
after the date of termination hereof owing to failure of the Fund to appoint a
successor custodian, the Custodian shall be entitled to compensation for its
services in accordance with the fee schedule most recently in effect, for such
period as the Custodian retains possession of such securities and other Assets,
and the provisions of this Agreement relating to the duties and obligations of
the Custodian and the Fund shall remain in full force and effect for such
period. In the event of the appointment of a successor custodian, the cash,
securities and other Assets owned by the Fund and held by the Custodian, any
Subcustodian or nominee shall be delivered, at the terminating party's expense,
to the successor custodian; and the Custodian agrees to cooperate with the Fund
in the execution of documents and performance of other actions necessary or
desirable in order to substitute the successor custodian for the Custodian under
this Agreement.
ARTICLE VIII
DEFINED TERMS
The following terms are defined in the following sections:
Term Section
Account 2.22(A)
ADRs 2.06
Assets Article I
Authorized Person 3.02
Banking Institution 2.12
Bank Accounts 2.21
Clearing Agency 4.02(a)
Distribution Account 2.16
Domestic Subcustodian 4.01
Foreign Sub-Subcustodian 4.02(a)
Institutional Client 2.03
Interest Bearing Deposit 2.12
Interim Sub-Subcustodian 4.02(b)
OCC 2.09
Overdraft 2.28
Overdraft Notice 2.28
Person 5.01(b)
Procedural Agreement 2.10
Proper Instruction 3.01(a)
SEC 2.22
Securities Depositories 4.02(a)
Securities System 2.22
Shares 2.16
Sovereign Risk 5.03(a)
Special Instruction 3.01(b)
Special Subcustodian 4.03
Subcustodian Article IV
1940 Act Preamble
ARTICLE IX
MISCELLANEOUS
Section 9.01. Execution of Documents, Etc.
(a) Actions by the Fund. Upon request, the Fund shall execute and
deliver to the Custodian such proxies, powers of attorney or other instruments
as may be reasonable and necessary or desirable in connection with the
performance by the Custodian or any Subcustodian of their respective obligations
under this Agreement or any applicable subcustodian agreement, provided that the
exercise by the Custodian or any Subcustodian of any such rights shall in all
events be in compliance with the terms of this Agreement.
(b) Actions by Custodian. Upon receipt of Proper Instructions, the
Custodian shall execute and deliver to the Fund or to such other parties as the
Fund may designate in such Proper Instructions, all such documents, instruments
or agreements as may be reasonable and necessary or desirable in order to
effectuate any of the transactions contemplated hereby and designated therein.
Section 9.02. Representations and Warranties.
(a) Representations and Warranties of the Fund. The Fund hereby
represents and warrants that each of the following shall be true, correct and
complete as of the date of execution of this Agreement and, unless notice to the
contrary is provided by the Fund to the Custodian, at all times during the term
of this Agreement: (i) the Fund is duly organized under the laws of its
jurisdiction of organization and is registered as an open-end management
investment company under the 1940 Act or is a series of portfolio of such
entity; and (ii) the execution, delivery and performance by the Fund of this
Agreement are (w) within its power, (x) have been duly authorized by all
necessary action, and (y) will not (A) contribute to or result in a breach of or
default under or conflict with any existing law, order, regulation or ruling of
any governmental or regulatory agency or authority, or (B) violate any provision
of the Fund's corporate charter or other organizational document, or bylaws, or
any amendment thereof or any provision of its most recent Prospectus or
Statement of Additional Information.
(b) Representations and Warranties of the Custodian. The Custodian
hereby represents and warrants that each of the following shall be true, correct
and complete as of the date of execution of this Agreement and, unless notice to
the contrary is provided by the Custodian to the Fund, at all times during the
term of this Agreement: (i) the Custodian is duly organized under the laws of
its jurisdiction of organization and qualifies to serve as a custodian to open-
end management investment companies under the provisions of the 1940 Act; and
(ii) the execution, delivery and performance by the Custodian of this Agreement
are (w) within its power (x) have been duly authorized by all necessary action,
and (y) will not (A) contribute to or result in a breach of or default under or
conflict with any existing law, order, regulation or ruling of any governmental
or regulatory agency or authority, or (B) violate any provision of the
Custodian's corporate charter, or other organizational document, or bylaws, or
any amendment thereof. The Custodian acknowledges receipt of a copy of the
Fund's most recent Prospectus and Statement of Additional Information.
Section 9.03. Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof and accordingly, supersedes as of the effective date of this
Agreement any custodian agreement heretofore in effect between the Fund and the
Custodian.
Section 9.04. Waivers and Amendments. No provisions of this Agreement
may be waived, amended or deleted except by a statement in writing signed by the
party against which enforcement of such waiver, amendment or deletion is sought;
provided, however, the Subcustodian List may be amended from time to time by the
Fund's execution and delivery to the Custodian of an amended Subcustodian List,
in which case such amendment shall take effect immediately upon execution by the
Custodian.
Section 9.05. Interpretation. In connection with the operation of this
Agreement, the Custodian and the Fund may agree in writing from time to time on
such provisions interpretative of or in addition to the provisions of this
Agreement as may in their joint opinion be consistent with the general tenor of
this Agreement. No interpretative or additional provisions made as provided in
the preceding sentence shall be deemed to be an amendment of this Agreement.
Section 9.06. Captions. Headings contained in this Agreement, which
are included as convenient references only, shall have no bearing upon the
interpretation of the terms of the Agreement or the obligations of the parties
hereto.
Section 9.07. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Missouri, in each case
without giving effect to principles of conflicts of law.
Section 9.08. Notices. Except in the case of Proper Instructions or
Special Instructions, and as otherwise provided in this Agreement, notices and
other writings contemplated by this Agreement shall be delivered by hand or by
facsimile transmission or as otherwise agreed to by the Fund and the Custodian
in writing (provided that in the case of delivery by facsimile transmission,
notice shall also be mailed postage prepaid) to the parties at the following
addresses:
(a) If to the Fund:
TMK/United Funds, Inc. Asset Strategy Portfolio
6300 Lamar Avenue
Overland Park, Kansas 66202
Attn: Fund Treasurer
Telephone: 913-236-2000
Telefax: 913-236-1595
(b) If to the Custodian:
UMB Bank, n.a.
928 Grand Avenue, 10th Floor
Kansas City, Missouri 64106
Attn: Securities Administration
Telephone: 816-860-7764
Telefax: 816-860-4869
or such other address as either party may have designated in writing to the
other party hereto.
Section 9.09. Assignment. This Agreement shall be binding on and shall
inure to the benefit of the Fund and the Custodian and their respective
successors and assigns, provided that, subject to the provisions of Section 7.01
hereof, neither party hereto may assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of the other party.
Section 9.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original. This
Agreement shall become effective when one or more counterparts have been signed
and delivered by each of the parties.
Section 9.11. Confidentiality; Survival of Obligations. The parties
hereto agree that each shall treat confidentially the terms and conditions of
this Agreement and all information provided by each party to the other regarding
its business and operations. All confidential information provided by a party
hereto shall be used by any other party hereto solely for the purpose of
rendering services pursuant to this Agreement and, except as may be required in
carrying out this Agreement, shall not be disclosed to any third party without
the prior consent of such providing party. The foregoing shall not be
applicable to any information that is publicly available when provided or
thereafter becomes publicly available other than through a breach of this
Agreement, or that is required to be disclosed by any bank examiner of the
Custodian or any Subcustodians, any auditor or examiner of the parties hereto,
by judicial or administrative process or otherwise by applicable law or
regulation. The provisions of this Section 9.11 and Section 9.01, 9.07, Section
2.28, Section 3.04, Section 4.05, Section 7.01, Article V and Article VI hereof
and any other rights or obligations incurred or accrued by any party hereto
prior to termination of this Agreement shall survive any termination of this
Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and behalf on the day and year first above written.
TMK/UNITED FUNDS, INC. UMB BANK, n.a.
ASSET STRATEGY PORTFOLIO
By: /s/Sharon K. Pappas By: /s/Patricia A. Peterson
Name: Sharon K. Pappas Name: Patricia A. Peterson
Title: Vice President Title: Senior Vice President
<PAGE>
APPENDIX "A"
TO CUSTODIAN AGREEMENT
BETWEEN
TMK/UNITED FUNDS, INC. ASSET STRATEGY PORTFOLIO
AND
UMB BANK, n.a.
Dated as of September 6, 1995
The following is a list of Domestic Subcustodians, Foreign Sub-Subcustodian
and Special Subcustodians under the Custodian Agreement as amended:
A. Domestic Subcustodians:
Brown Brothers Harriman & Co.
UMB Trust Company of New York
B. Foreign Sub-Subcustodians:
Country Sub-Subcustodian Depository
Argentina Citibank, n.a. CDV
Australia National Australia Bank Ltd. AUSTRACLEAR, RITs
Austria Creditanstalt Bankverein KONTROLLBANK (OEKB)
Belgium Banque Bruxelles Lambert CIK, BNB
Brazil First National Bank of Boston, Brazil BOVESPA, CLC
Canada Canadian Imperial Bank of Commerce CDS
Chile Citibank, n.a. None
Denmark Den Danske Bank VP
Finland Union Bank of Finland Securities Association
France Banque Indosuez SICOVAM; Banque De
France
Germany Berliner Handels Und Frankfurter Bank KASSENVEREIN
Hong Kong HongKong & Shanghai Banking Corp. HongKong Securities
Clearing Company
India Citibank, N.A., Bombay None
Indonesia Citibank, n.a. None
Ireland Allied Irish Banks PLC Gilt Settlement Office
Italy Banca Commerciale Italiana MONTE TITOLI, Banca
D'Italia
Japan The Bank of Tokyo, Ltd. JASDEC, Bank of Japan
Korea Citibank, n.a. Korean Securities
Depository Corporation
(KSD)
Malaysia HongKong & Shanghai Banking Corp. MCD; Bank Negara
Malaysia
Mexico Citibank Mexico, s.a. INDEVAL; Banco De Mexico
Netherlands ABN - Amro Bank NECIGER; De
Nederlandsche Bank
Norway Christiana Bank VPS
Peru Citibank, n.a. Caja De Valores (CAVAL)
Philippines Citibank, n.a. None
Portugal Banco Espirito Santo E Comercial Interbolsa
De Lisboa
Singapore HongKong & Shanghai Banking Corp. CDP
Spain Banco Santander SCLV; Banco De Espana
Sweden Skandinaviska Enskilda Banken VPC
Switzerland Union Bank of Switzerland SEGA
Taiwan Standard Chartered Bank, Taipei TSCD
Thailand HongKong & Shanghai Banking Corp. Share Depository Center
(SDC)
Turkey Citibank, n.a. TvS, Central Bank of
Turkey
United Kingdom Midland Securities PLC CMO, CGO
C. Special Subcustodians:
Wilmington Trust Co.
The Bank of New York, n.a.
Euroclear
<PAGE>
APPENDIX "B"
TO
CUSTODIAN AGREEMENT
BETWEEN
TMK/UNITED FUNDS, INC. ASSET STRATEGY PORTFOLIO
AND
UMB BANK, n.a.
Dated as of May 1, 1995
The Fund shall be responsible for providing the Custodian the net asset
levels the Custodian requires to calculate the net asset portion of the
Custodian's fees. Such determinations shall be based upon the average monthly
assets of each Fund and shall specify the level of domestic assets and foreign
assets by country, as appropriate. Domestic assets shall include all assets
held in the United States including but not limited to American Depositary
Receipts. Foreign assets shall include all assets held outside the United
States including but not limited to securities which clear through Euroclear or
CEDEL. The Custodian will provide as soon as practicable after receiving the
information provided by the Fund with respect to the net asset level numbers, a
bill for the Fund, including such reasonable detail in support of each bill as
may be reasonably requested by the Fund. As used in this Appendix "B", "United
Funds" shall mean all funds in the United Group of Funds, TMK/United Funds,
Inc., TMK/United Funds, Inc. Asset Strategy Portfolio, Torchmark Insured Tax-
Free Fund, Inc. and Torchmark Government Securities Fund, Inc.
DOMESTIC CUSTODY FEE SCHEDULE
A. Annual Fee (combining all domestic assets):
An annual fee to be computed as of month end and payable each month of the
Fund's fiscal year (after receipt of the bill issued to each Fund based
upon its portion of domestic assets), at the annual rate of:
.00005 for the first $5,000,000,000 of the net assets of all the United
Funds, plus
.00004 for any net assets exceeding $5,000,000,000 of the assets of all the
United Funds.
B. Portfolio Transaction Fees (billed to each Fund):
(a)For each portfolio transaction* processed through a
Depository (DTC, PTC or Fed) $ 7.00
(b) For each portfolio transaction* processed through the
New York office (physical settlement) 20.00
(c)For each futures/options contract written 25.00
(d)For each principal/interest paydown 6.00
(e)For each interfund note transaction 5.00
* A portfolio transaction includes a receive, delivery, maturity, free
security movement and corporate action.
C. Earnings Credits:
Positive earnings credits will be applied on all collected custody and cash
management balances of each Fund at the Custodian to earn the Custodian's
daily repurchase agreement rate less reserve requirements and FDIC
premiums. Negative earnings credits will be charged on all uncollected
custody and cash management balances of each Fund at the Custodian's prime
rate less 150 basis points on each day a negative balance occurs. Positive
and/or negative earnings credits will be monitored daily for each Fund and
the net positive or negative amount for each Fund will be included in the
monthly statements. Excess positive credits for each Fund will be carried
forward indefinitely.
D. Out-of-Pocket Expenses (passed directly from Special Subcustodians):
Includes all charges by any Special Subcustodian to the Custodian as
Custodian for any Assets held at the Special Subcustodian.
GLOBAL CUSTODY FEE SCHEDULE
A. Global Fee Schedule:
Market: Annual Asset Fees Transaction Fees
Argentina .0037 $85
Australia .0009 $85
Austria .0011 $70
Belgium .0011 $60
Brazil .0035 $60
Canada .0008 $35
Chile .0045 $85
Denmark .0011 $60
Finland .0011 $85
France .0011 $85
Germany .0008 $60
Hong Kong .0009 $85
India .0055 $135
Indonesia .0009 $85
Ireland .0011 $60
Italy .0011 $70
Japan .0008 $40
Korea .0035 $60
Malaysia .0009 $85
Mexico .0016 $60
Netherlands .0011 $35
New Zealand .0009 $85
Norway .0011 $85
Peru .0070 $160
Phillippines .0035 $95
Portugal .0035 $145
Singapore .0009 $85
Spain .0009 $85
Sweden .0011 $70
Switzerland .0009 $85
Thailand .0009 $85
Turkey .0045 $110
U.K. .0011 $60
Note:Fee Schedule eliminates sub-custodian asset and transaction-based out-of-
pocket expenses. Other sub-custodian out-of-pocket expenses (i.e. Scrip
fees, stamp duties, certificate fees, etc.)
B. Out-of-Pocket Expenses (passed directly from Brown Brothers Harriman &
Co.):
Includes, but is not limited to telex, legal, telephones, postage, and
direct expenses including but not limited to tax reclaim, customized
systems programming, certificate fees, duties, and registration fees.
C. Short-term Dollar Denominated Global Assets
Eurodollar CDs, Time Deposits
(1) An annual fee to be computed as of month end and payable each month of
the Fund's fiscal year (after receipt of the bill issued to the Fund
based upon its portion of short-term dollar denominated assets), at
the annual rate of:
.0004 on all short-term dollar denominated assets of the United
Funds.
(2) Portfolio Transaction Fees:
First Chicago Clearing Centre-Trades with Members $136.00
First Chicago Clearing Centre-Trades with Non-members 153.00
First Chicago Clearing Centre-Income Collection 64.00
D. Euroclear Eligible Issues:
(1) An annual fee to be computed as of month end and payable each month of
the Fund's fiscal year (after receipt of the bill issued to the Fund
based upon its portion of Euroclear issues), at the annual rate of:
2.5 basis points on all United Funds Euroclear assets held in account
at UMB Bank, n.a.
(2) Portfolio Transaction Fees:
Euroclear $60.00
Ex-99.B9-tmkasa
ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT, made as of the 1st day of August, 1990, by and between
TMK/United Funds, Inc. (the "Fund"), a Maryland corporation and Waddell & Reed
Services Company ("Agent"), a Missouri corporation,
WITNESSETH:
WHEREAS, the Fund wishes to appoint the Agent to be its Accounting Services
Agent upon and subject to the terms and provisions of this Agreement;
NOW THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the parties agree as follows:
A. Appointment of the Agent as Accounting Services Agent for the Fund;
Acceptance.
(1) The Fund hereby appoints the Agent to act as Accounting Services
Agent for the Fund upon and subject to the terms and provisions of this
Agreement.
(2) Agent hereby accepts the appointment as Accounting Services Agent
for the Fund and agrees to act as such upon and subject to the terms and
provisions of this Agreement.
B. Duties of the Agent.
The Agent shall perform such duties as set forth in this Paragraph B
as agent for and on behalf of the Fund.
(1) Agent shall provide bookkeeping and accounting services and
assistance by providing to the Fund the necessary personnel and facilities to
maintain the Fund's portfolio records and general accounting records, to price
daily the value of shares of the Fund, and with the assistance and advice of the
Fund's attorneys and independent accountants, to prepare or assist the Fund's
attorneys and independent accountants to prepare, as may be applicable, reports
required to be filed by the Fund with regulatory agencies including the
preparation of proxy statements, prospectuses, shareholder reports and other
reports as required by law.
(2) Agent shall maintain and keep current the accounts, books,
records, and other documents relating to the Fund's financial and portfolio
transactions as may be required by rules and regulations of the Securities and
Exchange Commission adopted under Section 31(a) of the Investment Company Act of
1940 as amended (the "Act").
(3) Agent shall cause the subject records of the Fund to be
maintained and preserved pursuant to the requirements under the Act.
(4) In pricing daily the value of shares of the Fund, Agent may make
arrangements to and obtain the value of portfolio securities from pricing
services or quotation services that are compensated by the Fund directly or
indirectly through the placement of portfolio transactions with broker-dealers
who provide such valuation or quotation services to the Agent.
(5) The Agent shall maintain duplicate copies of, or information from
which copies of, the records necessary to the preparation of the Fund's
financial statements and valuations of its assets may be reconstructed. Such
duplicate copies or information shall be maintained at a location other than
where the Agent performs its normal duties hereunder so that in the event the
records established and maintained pursuant to the foregoing provisions of this
Section B are damaged or destroyed, the Agent shall be able to provide the
bookkeeping and accounting services and assistance specified in this Section B.
(6) In the event any of the Agent's facilities or equipment necessary
for the performance of its duties hereunder is damaged, destroyed or rendered
inoperable by reason of fire, vandalism, riot, natural disaster or otherwise,
Agent will use its best efforts to restore all services hereunder to the Fund
and will not seek from the Fund additional compensation to repair or replace
damaged or destroyed facilities or equipment. The Agent shall also make and
maintain arrangements for emergency use of alternative facilities for use in the
event of the aforesaid destruction of or damage to its facilities.
C. Compensation of the Agent.
The Fund agrees to pay to the Agent for its services under this
Agreement, an amount payable on the first day of the month as shown on the
following table pertinent to the average daily net assets of the Fund during the
prior month:
Fund's Average Daily Net Asset for Monthly Fee
the Month
$ 0 - $ 10 million $ 0
$ 10 - $ 25 million $ 833
$ 25 - $ 50 million $ 1,667
$ 50 - $ 100 million $ 2,500
$100 - $ 200 million $ 3,333
$200 - $ 350 million $ 4,167
$350 - $ 550 million $ 5,000
$550 - $ 750 million $ 5,833
$750 - $ 1.0 billion $ 7,083
$1.0 billion and over $ 8,333
D. Right of Fund to Inspect, and Ownership of Records.
The Fund will have the right under this Agreement to perform on-site
inspection of records and accounts, and audits directly pertaining to the Fund's
accounting and portfolio records maintained by the Agent hereunder at the
Agent's facilities. The Agent will cooperate with the Fund's independent
accountants or representatives of appropriate regulatory agencies and furnish
all reasonably requested records and data. Agent acknowledges that these
records are the property of the Fund, and that it will surrender to the Fund all
such records promptly on request.
E. Standard of Care; Indemnification.
The Agent will at all times exercise due diligence and good faith in
performing its duties hereunder. The Agent will make every reasonable effort
and take all reasonably available measures to assure the adequacy of its
personnel, facilities and equipment as well as the accurate performance of all
services to be performed by it hereunder within, at a minimum, the time
requirements of any applicable statutes, rules or regulations and in conformity
with the Fund's Articles of Incorporation, Bylaws and representations made in
the Fund's current registration statement as filed with the Securities and
Exchange Commission.
The Agent shall not be responsible for, and the Fund agrees to
indemnify the Agent for, any losses, damages or expenses (including reasonable
counsel fees and expenses) (i) resulting from any claim, demand, action or suit
not resulting from the Agent's failure to exercise good faith or due diligence
and arising out of or in connection with the Agent's duties on behalf of the
Fund hereunder; (ii) for any delay, error or omission by reason of circumstances
beyond its control, including acts of civil or military authority, national
emergencies, labor difficulties (except with respect to the Agent's employees),
fire, mechanical breakdown beyond its control, flood catastrophe, acts of God,
insurrection, war, riots or failure beyond its control of transportation,
communication or power supply; or (iii) for any action taken or omitted to be
taken by the Agent in good faith in reliance on the accuracy of any information
provided to it by the Fund or its directors or in reliance on any advice of
counsel who may be internally employed counsel or outside counsel for the Fund
or advice of any independent accountant or expert employed by the Fund with
respect to the preparation and filing of any document with a governmental agency
or authority.
In order for the rights to indemnification to apply, it is understood
that if in any case the Fund may be asked to indemnify or hold the Agent
harmless, the Fund shall be advised of all pertinent facts concerning the
situation in question, and it is further understood that the Agent will use
reasonable care to identify and notify the Fund promptly concerning any
situation which presents or appears likely to present a claim for
indemnification against the Fund. The Fund shall have the option to defend the
Agent against any claim which may be the subject of this indemnification and, in
the event that the Fund so elects, it will so notify the Agent, and thereupon
the Fund shall take over complete defense of the claim, and the Agent shall
sustain no further legal or other expenses in such situation for which the Agent
shall seek indemnification under this paragraph. The Agent will in no case
confess any claim or make any compromise in any case in which the Fund will be
asked to indemnify the Agent except with the Fund's prior written consent.
F. Term of the Agreement; Taking Effect; Amendments.
This Agreement shall become effective at the start of business on the
date hereof and shall continue, unless terminated as hereinafter provided, for a
period of one (1) year and from year-to-year thereafter, provided that such
continuance shall be specifically approved as provided below.
This Agreement shall go into effect, or may be continued, or may be
amended, or a new agreement covering the same topics between the Fund and the
Agent may be entered into only if the terms of this Agreement, such continuance,
the terms of such amendment or the terms of such new agreement have been
approved by the Board of Directors of the Fund, including the vote of a majority
of the directors who are not "interested persons," as defined in the Act, of
either party to this Agreement, the agreement to be continued, amendment or new
agreement, cast in person at a meeting called for the purpose of voting on such
approval. Such a vote is hereinafter referred to as a "disinterested director
vote."
Any disinterested director's vote shall, in favor of continuance,
amendment or execution of a new agreement, include a determination that (i) the
Agreement, amendment, new agreement or continuance in question is in the best
interests of the Fund and its shareholders; (ii) the services to be performed
under the Agreement, the Agreement as amended, new agreement or agreement to be
continued, are services required for the operation of the Fund; (iii) the Agent
can provide services, the nature and quality of which are at least equal to
those provided by others offering the same or similar services; and (iv) the
fees for such services are fair and reasonable in the light of the usual and
customary charges made by others for services of the same nature and quality.
Nothing herein contained shall prevent any disinterested director vote
from being conditioned on the favorable vote of the holders of a majority (as
defined in or under the Act) of the outstanding shares of the Fund.
G. Termination.
(1) This Agreement may be terminated by the Agent at any time without
penalty upon giving the Fund at least one hundred twenty (120) days' written
notice (which notice may be waived by the Fund) and may be terminated by the
Fund at any time without penalty upon giving the Agent at least sixty (60) days'
written notice (which notice may be waived by the Agent), provided that such
termination by the Fund shall be directed or approved by the vote of a majority
of the Board of Directors of the Fund in office at the time or by the vote of
the holders of a majority (as defined in or under the Act) of the outstanding
shares of the Fund.
(2) On termination, the Agent will deliver to the Fund or its
designee all files, documents and records of the Fund used, kept or maintained
by the Agent in the performance of its services hereunder, including such of the
Fund's records in machine readable form as may be maintained by the Agent, as
well as such summary and/or control data relating thereto used by or available
to the Agent.
(3) In addition, on such termination or in preparation therefore at
the request of the Fund and at the Fund's expense, the Agent shall provide, to
the extent that its capabilities then permit, such documentation, personnel and
equipment as may be reasonably necessary in order for a new agent or the Fund to
fully assume and commence to perform the agency functions described in this
Agreement with a minimum disruption to the Fund's activities.
(4) This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the Investment Company Act of 1940 and the rules and
regulations thereunder of the Securities and Exchange Commission.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date and year first above written.
TMK/United Funds, Inc.
By:/s/Rodney O. McWhinney
-------------------------
Rodney O. McWhinney
ATTEST:
By:/s/Sharon K. Pappas
- ----------------------
Sharon K. Pappas, Secretary
WADDELL & REED SERVICES COMPANY
By: /s/Robert L. Hechler
------------------------
Robert L. Hechler
ATTEST:
By:/s/Rodney O. McWhinney
- -------------------------
Rodney O. McWhinney, Secretary
EX-99.B13-tmkuilasp
AGREEMENT
United Investors Life Insurance Company, as depositor of United Investors
Annuity Variable Account (the "Variable Annuity Account"), in consideration of
the issuance and sale to the Variable Annuity Account of TMK/United Funds, Inc.
Asset Strategy Portfolio (the "Portfolio") of 2,000 units of the Portfolio for
the payment of $10,000, the receipt of which is acknowledged by the Portfolio,
acknowledges that it is purchasing said units for investment purposes without
any present intention of redeeming or reselling said units.
Dated this 1st day of May, 1995.
United Investors Life Insurance Company
By:/s/James L. Sedgwick
---------------------
Name: James L. Sedgwick
-----------------
Title: President
----------------
Accepted:
TMK/United Funds, Inc.
Asset Strategy Portfolio
By:/s/Sharon K. Pappas
-------------------
Sharon K. Pappas
Vice President
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
TMK/UNITED BOND PORTFOLIO
Yield for Advertising
For the 30 days ended December 31, 1994
TICKER
CUSIP SECURITY RATE MATURITY SYMBOL
P22561-AE-7 Cemex 8.875% 06/10/98 *CEM98
037411-AG-0 Apache Corp 9.250% 06/01/2002 *APA02
040114-AH-3 Rep of Argentina 8.375% 12/20/2003 *ARG03
041237-AL-2 Arkla Inc 8.875% 07/15/99 *ALG99
05944Q-AC-4 BOMT 1994-B A 7.550% 12/15/99 *BCC99
066050-CD-5 Bankamerica Corp 8.125% 08/15/2004 *BAC04
067379-AT-4 Barclays 9.125% 12/01/97 *BRL97
072738-9A-7 Bayer Landesbk 5.340% 03/28/97 *BAL97
086516-AB-7 Best Buy 8.625% 10/01/2000 *BBY00
126690-YL-4 CWMBS 1994-G A5 6.500% 04/25/2024 *CWM24
13642N-AB-2 CP Forest 9.250% 06/15/2002 *CPF02
149123-BC-4 Caterpillar Inc 9.375% 08/15/2011 *CAT11
153469-AA-9 Central Fidelity 8.150% 11/15/2002 *CFB02
166784-AE-8 Chevy Chase Bank 9.250% 12/01/2005 *CCS05
171205-AU-1 Chrysler Fin Cor 12.750% 11/01/99 *C99
173034-GM-5 Citicorp 7.750% 06/15/2006 *CTY06
190441-AJ-4 Coastal Corp 10.375% 10/01/2000 *COC00
23321P-JA-7 DLJMA 1994-3 A13 6.500% 04/25/2024 *DLJ24
257039-AB-3 Doman Industries 8.750% 03/15/2004 *DMI04
260540-AA-7 Dow Capital 9.000% 05/15/2010 *DOC10
312908-X4-3 FHR 1228 G 7.000% 01/15/2021 *FHL21
312910-BS-0 FHR 1290 F 7.500% 11/15/2017 *FHR17
312911-SC-5 FHR 1349-PN 7.500% 04/15/2019 *FPN19
312911-SC-5 FHR 1349-PN 7.500% 04/15/2019 *FPN19
31331F-AH-4 Federal Express 7.890% 09/23/2008 *FDP08
31358F-X7-9 FNMA 91-18-E Pac 8.000% 05/25/2019 *FN19
337358-AP-0 First Union Corp 8.000% 11/15/2002 *FTU02
369622-BR-5 GE Capital Corp 8.650% 05/01/2018 *GEC18
369622-CB-9 Gen Ele Cap 8.300% 09/20/2009 *GCC09
370424-FV-0 GMAC 95-00-05 Put 8.875% 06/01/2010 *GMA10
370442-AJ-4 GM 98 Put 8.800% 03/01/2021 *GMC21
391442-AE-0 Great Western Fin 8.600% 02/01/2002 *GW/02
39804H-AG-3 Greyhound Fin Mtn 8.790% 11/15/2001 *GRH01
42221H-AF-4 Healthtrust Inc 10.750% 05/01/2002 *HTR02
42221H-AG-2 Healthtrust Inc 8.750% 03/15/2005 *HTR05
448814-EJ-8 Hydro Quebec 06 Put 8.050% 07/07/2024 *HYQ24
458182-BS-0 IADB 99-04 Put 8.400% 09/01/2009 *IA09
465410-AG-3 Italy 6.000% 09/27/2003 *ITY03
466115-AC-6 JCP Cr Cd Trst 9.625% 06/15/2000 *JCP00
484610-AB-6 Kansallis-Osake 10.000% 05/01/2002 *KAO02
485260-AT-0 KS G7E 1st Mtg 7.600% 12/15/2003 *KG03
51808B-AA-0 Lasmo Inc 7.125% 06/01/2003 *LSM03
546608-ZA-1 Louis & Nash 12.300% 02/01/95 *LN95
563469-CJ-2 Manitoba 98 Put 9.125% 01/15/2018 *MAN18
570387-AG-5 Mark IV Indust Sr Sub Notes 8.750% 04/01/2003 *M/403
571900-AA-7 Marriott Intl 6.750% 12/15/2003 *MHI03
580169-AL-4 McDonnell Douglas 9.250% 04/01/2002 *MCD02
635576-AE-1 Natl Craedit Card 9.450% 12/31/97 *NCC97
644239-AY-1 N E T&T 96 Put 7.875% 11/15/2029 *NT29
652478-AD-0 News Amer Hldgs 9.125% 10/15/99 *NAH99
652478-AQ-1 News Amer Hldgs 8.250% 08/10/2018 *NAH18
65542L-AF-8 Noranda Forest 7.500% 07/15/2003 *NRF03
655422-AK-9 Noranda Inc 8.625% 07/15/2002 *NOR02
690734-AH-1 Owens Corning Fiber 8.875% 06/01/2002 *OCF02
707271-AL-6 Penn Central 10.625% 04/15/2000 *PCC00
742718-BG-3 Proctor/Gam 04-14 Put 8.000% 09/01/2024 *PG24
<PAGE>
TMK/UNITED BOND PORTFOLIO
Yield for Advertising
For the 30 days ended December 31, 1994
TICKER
CUSIP SECURITY RATE MATURITY SYMBOL
766570-AD-7 Riggs National 8.500% 02/01/2006 *RGS06
784092-Z9-2 SE Banken CD 6.125% 04/05/99 *SEB99
812007-AC-6 Seagull Energy 7.875% 08/01/2003 *SGE03
84534E-AN-8 SW Bell Tel Mtn 7.000% 08/26/2002 *SWB02
879240-AN-9 Telecommunications Inc Sr Deb 9.800% 02/01/2012 *TCO12
880370-BG-5 Tenneco Inc 10.375% 11/15/2000 *TGT00
887315-AL-3 Time Warner 7.950% 02/01/2000 *TWX00
89233P-DQ-6 Toyota Motor Mtn 6.695% 08/05/96 *TYC96
900262-AR-7 Turner Broadcast 8.375% 07/01/2013 *TUB13
90337Q-AV-9 USX Corp Mtn 8.210% 01/21/2000 *USX00
908584-BB-0 Union Tank Car 9.500% 12/15/95 *UTK95
908584-BB-0 Union Tank Car 9.500% 12/15/95 *UTK95
908640-AD-7 Union Texas Ptrl 8.250% 11/15/99 *UTP99
912810-DP-0 U S Treasury Note 11.250% 02/15/2015 *UST15
912810-DZ-8 US Treasury Bond 8.875% 08/15/2017 *
912810-DZ-8 US Treasury Bond 8.875% 08/15/2017 *
912810-ES-3 U S Treasury Bond 7.500% 11/15/2024 *UST24
912827-H4-7 U S Treasury Note 5.750% 10/31/97 *UTR97
912827-P7-1 U S Treas Note 6.500% 05/15/97 *US697
912917-AL-5 U S West Mtn 94 Put 8.400% 09/15/99 *USW99
947423-AD-1 Del Webb 10.875% 03/31/2000 *DLW00
949740-BU-7 Wells Fargo & Co 8.750% 05/01/2002 *WF02
984245-AA-8 YPF SA 8.000% 02/15/2004 *YPF04
Gain (loss) on paydowns
Short-term investment income
Gross income
Expenses
Net income
Shares Outstanding
Maximum offering price on last day of period
Yield
<PAGE>
MARKET PRICE MARKET VALUE ACCRUED
CUSIP POSITION PER UNIT OF SECURITY INTEREST TOTAL
P22561-AE-7 1,000,000 97.000000 970,000.00 42,192.59 1,012,192.59
037411-AG-0 500,000 101.833000 509,165.00 23,123.64 532,288.64
040114-AH-3 500,000 77.250000 386,250.00 18,763.71 405,013.71
041237-AL-2 1,000,000 97.500000 975,000.00 33,522.80 1,008,522.80
05944Q-AC-4 1,000,000 98.906000 989,060.00 3,565.24 992,625.24
066050-CD-5 1,000,000 94.848000 948,480.00 23,845.78 972,325.78
067379-AT-4 225,000 102.472000 230,562.00 10,265.56 240,827.56
072738-9A-7 1,000,000 89.375000 893,750.00 5,409.99 899,159.99
086516-AB-7 500,000 94.000000 470,000.00 7,227.63 477,227.63
126690-YL-4 2,000,000 92.891000 1,857,820.00 10,833.57 1,868,653.57
13642N-AB-2 1,000,000 92.886000 928,860.00 42,711.78 971,571.78
149123-BC-4 500,000 105.855000 529,275.00 13,757.38 543,032.38
153469-AA-9 500,000 97.329000 486,645.00 1,801.67 488,446.67
166784-AE-8 500,000 84.500000 422,500.00 23,125.00 445,625.00
171205-AU-1 1,000,000 116.592000 1,165,920.00 10,567.80 1,176,487.80
173034-GM-5 1,000,000 94.517000 945,170.00 36,216.20 981,386.20
190441-AJ-4 500,000 106.517000 532,585.00 8,693.79 541,278.79
23321P-JA-7 979,623 85.875000 841,251.00 5,310.31 846,561.31
257039-AB-3 500,000 87.000000 435,000.00 9,306.60 444,306.60
260540-AA-7 1,000,000 103.918000 1,039,180.00 3,979.35 1,043,159.35
312908-X4-3 500,000 87.250000 436,250.00 2,916.77 439,166.77
312910-BS-0 1,538,000 94.000000 1,445,720.00 9,585.34 1,455,305.34
312911-SC-5 1,183,202 84.031000 994,256.00 7,395.04 1,001,651.04
312911-SC-5 7,395 100.000000 7,395.00 0.00 7,395.00
31331F-AH-4 1,000,000 93.118000 931,180.00 15,039.60 946,219.60
31358F-X7-9 1,003,746 95.937000 962,964.00 6,273.54 969,237.54
337358-AP-0 1,000,000 96.376000 963,760.00 3,536.65 967,296.65
369622-BR-5 895,000 101.238000 906,080.00 6,415.89 912,495.89
369622-CB-9 1,500,000 103.718000 1,555,770.00 24,762.72 1,580,532.72
370424-FV-0 1,000,000 105.412000 1,054,120.00 44,375.00 1,098,495.00
370442-AJ-4 2,600,000 104.364000 2,713,464.00 57,516.40 2,770,980.40
391442-AE-0 1,500,000 99.255000 1,488,825.00 42,766.52 1,531,591.52
39804H-AG-3 1,000,000 100.368000 1,003,680.00 11,372.87 1,015,052.87
42221H-AF-4 500,000 105.500000 527,500.00 4,454.52 531,954.52
42221H-AG-2 500,000 94.500000 472,500.00 9,305.28 481,805.28
448814-EJ-8 1,000,000 95.571000 955,710.00 32,156.25 987,866.25
458182-BS-0 1,000,000 103.424000 1,034,240.00 21,116.40 1,055,356.40
465410-AG-3 1,000,000 84.416000 844,160.00 10,774.16 854,934.16
466115-AC-6 500,000 104.968000 524,840.00 22,221.78 547,061.78
484610-AB-6 1,000,000 106.985000 1,069,850.00 8,287.76 1,078,137.76
485260-AT-0 1,000,000 93.913000 939,130.00 35,092.90 974,222.90
51808B-AA-0 1,000,000 88.524000 885,240.00 35,625.00 920,865.00
546608-ZA-1 8,000 100.250000 8,020.00 326.46 8,346.46
563469-CJ-2 2,000,000 107.676000 2,153,520.00 68,933.60 2,222,453.60
570387-AG-5 1,000,000 90.000000 900,000.00 14,664.02 914,664.02
571900-AA-7 1,000,000 87.698000 876,980.00 31,168.12 908,148.12
580169-AL-4 1,000,000 102.560000 1,025,600.00 15,501.48 1,041,101.48
635576-AE-1 350,000 102.125000 357,438.00 2,755.95 360,193.95
644239-AY-1 2,000,000 102.636000 2,052,720.00 6,961.80 2,059,681.80
652478-AD-0 500,000 101.114000 505,570.00 5,891.60 511,461.60
652478-AQ-1 1,000,000 87.368000 873,680.00 25,333.22 899,013.22
65542L-AF-8 1,000,000 91.643000 916,430.00 28,329.00 944,759.00
655422-AK-9 950,000 99.256000 942,932.00 30,949.50 973,881.50
690734-AH-1 1,000,000 100.000000 1,000,000.00 44,375.00 1,044,375.00
707271-AL-6 1,000,000 104.574000 1,045,740.00 13,719.85 1,059,459.85
742718-BG-3 2,000,000 99.408000 1,988,160.00 40,220.90 2,028,380.90
<PAGE>
MARKET PRICE MARKET VALUE ACCRUED
CUSIP POSITION PER UNIT OF SECURITY INTEREST TOTAL
766570-AD-7 1,000,000 91.500000 915,000.00 28,179.86 943,179.86
784092-Z9-2 1,000,000 84.875000 848,750.00 9,592.50 858,342.50
812007-AC-6 1,500,000 88.000000 1,320,000.00 39,161.12 1,359,161.12
84534E-AN-8 1,000,000 93.085000 930,850.00 3,043.36 933,893.36
879240-AN-9 1,000,000 99.765000 997,650.00 32,489.40 1,030,139.40
880370-BG-5 500,000 108.066000 540,330.00 2,293.00 542,623.00
887315-AL-3 1,000,000 94.065000 940,650.00 26,356.14 967,006.14
89233P-DQ-6 1,750,000 88.750000 1,553,125.00 16,946.74 1,570,071.74
900262-AR-7 1,000,000 80.513000 805,130.00 34,820.02 839,950.02
90337Q-AV-9 1,000,000 98.209000 982,090.00 37,909.66 1,019,999.66
908584-BB-0 22,000 101.878000 22,413.00 965.06 23,378.06
908584-BB-0 9,000 101.878000 9,169.00 394.80 9,563.80
908640-AD-7 1,000,000 97.348000 973,480.00 3,649.02 977,129.02
912810-DP-0 1,000,000 130.953000 1,309,530.00 33,016.80 1,342,546.80
912810-DZ-8 1,000,000 109.500000 1,095,000.00 32,316.58 1,127,316.58
912810-DZ-8 1,000,000 110.500000 1,105,000.00 32,557.74 1,137,557.74
912810-ES-3 1,000,000 94.375000 943,750.00 3,315.30 947,065.30
912827-H4-7 2,500,000 95.125000 2,378,125.00 12,311.50 2,390,436.50
912827-P7-1 1,000,000 97.672000 976,720.00 2,874.17 979,594.17
912917-AL-5 500,000 99.904000 499,520.00 8,933.92 508,453.92
947423-AD-1 800,000 94.500000 756,000.00 14,818.80 770,818.80
949740-BU-7 1,000,000 100.662000 1,006,620.00 7,251.77 1,013,871.77
984245-AA-8 500,000 78.500000 392,500.00 11,739.56 404,239.56
75,320,966 73,221,299.00
<PAGE>
YIELD YIELD TO
CALL CALL SETTLEMENT TO MATURITY
CUSIP DATE PRICE OID DATE MATURITY PER INTEX
P22561-AE-7 11/30/94 27.87% 8.466371%
037411-AG-0 11/30/94 8.08% 8.085133%
040114-AH-3 11/30/94 11.85% 11.849907%
041237-AL-2 11/30/94 8.64% 8.642829%
05944Q-AC-4 11/30/94 7.72% 7.728055%
066050-CD-5 11/30/94 8.55% 8.547035%
067379-AT-4 11/30/94 6.50% 6.508047%
072738-9A-7 11/30/94 7.89% 10.315739%
086516-AB-7 10/01/98 102.50 11/30/94 9.66% 9.659033%
126690-YL-4 11/30/94 7.03% 7.030691%
13642N-AB-2 11/30/94 9.79% 9.790216%
149123-BC-4 11/30/94 8.40% 8.404436%
153469-AA-9 11/30/94 8.55% 8.555115%
166784-AE-8 12/01/2005 100.00 11/30/94 10.71% 10.976341%
171205-AU-1 11/30/94 8.30% 8.302692%
173034-GM-5 11/30/94 8.00% 7.999225%
190441-AJ-4 11/30/94 8.54% 8.543854%
23321P-JA-7 11/30/94 7.66% 7.668790%
257039-AB-3 11/30/94 10.66% 10.663711%
260540-AA-7 11/30/94 8.49% 8.492584%
312908-X4-3 11/30/94 8.12% 8.128709%
312910-BS-0 11/30/94 8.01% 8.015339%
312911-SC-5 11/30/94 9.06% 9.071250%
312911-SC-5 12/19/94 7.500000%
31331F-AH-4 11/30/94 8.56% 8.558780%
31358F-X7-9 11/30/94 8.02% 8.331112%
337358-AP-0 11/30/94 8.57% 8.574259%
369622-BR-5 11/30/94 8.45% 8.455759%
369622-CB-9 11/30/94 7.68% 7.684441%
370424-FV-0 11/30/94 7.77% 7.770958%
370442-AJ-4 11/30/94 8.18% 8.185080%
391442-AE-0 11/30/94 8.20% 8.202002%
39804H-AG-3 11/30/94 8.49% 8.497669%
42221H-AF-4 11/30/94 9.52% 9.525912%
42221H-AG-2 11/30/94 9.30% 9.303344%
448814-EJ-8 11/30/94 8.16% 8.158041%
458182-BS-0 11/30/94 7.76% 7.761034%
465410-AG-3 11/30/94 8.35% 8.353883%
466115-AC-6 11/30/94 7.51% 7.515557%
484610-AB-6 11/30/94 8.55% 8.553329%
485260-AT-0 11/30/94 8.00% 8.005135%
51808B-AA-0 11/30/94 8.44% 8.448306%
546608-ZA-1 11/30/94 11.93% -12.231497%
563469-CJ-2 11/30/94 8.05% 8.055444%
570387-AG-5 04/01/98 104.37 11/30/94 10.29% 10.295283%
571900-AA-7 11/30/94 8.21% 8.208009%
580169-AL-4 11/30/94 8.48% 8.482105%
635576-AE-1 11/30/94 8.37% 8.353973%
644239-AY-1 11/30/94 7.63% 7.628958%
652478-AD-0 11/30/94 8.53% 8.535813%
652478-AQ-1 11/30/94 9.31% 9.311015%
65542L-AF-8 11/30/94 8.41% 8.411051%
655422-AK-9 11/30/94 8.17% 8.172605%
690734-AH-1 11/30/94 8.07% 8.074812%
707271-AL-6 11/30/94 9.19% 9.192960%
742718-BG-3 11/30/94 7.87% 7.874092%
<PAGE>
YIELD YIELD TO
CALL CALL SETTLEMENT TO MATURITY
CUSIP DATE PRICE OID DATE MATURITY PER INTEX
766570-AD-7 02/01/99 104.25 11/30/94 9.33% 9.326476%
784092-Z9-2 11/30/94 10.24% 10.239122%
812007-AC-6 11/30/94 9.48% 9.484222%
84534E-AN-8 11/30/94 8.17% 8.166048%
879240-AN-9 11/30/94 9.44% 9.439031%
880370-BG-5 11/30/94 8.51% 8.519179%
887315-AL-3 11/30/94 8.75% 8.752448%
89233P-DQ-6 11/30/94 9.81% 13.735448%
900262-AR-7 11/30/94 10.33% 10.326569%
90337Q-AV-9 11/30/94 7.73% 7.727487%
908584-BB-0 11/30/94 3.30% 3.328926%
908584-BB-0 11/30/94 3.30% 3.328451%
908640-AD-7 11/30/94 8.82% 8.827791%
912810-DP-0 11/30/94 7.84% 7.841557%
912810-DZ-8 12/27/94 7.678757%
912810-DZ-8 12/28/94 7.591814%
912810-ES-3 11/30/94 7.96% 7.966133%
912827-H4-7 11/30/94 7.44% 7.446538%
912827-P7-1 11/30/94 7.42% 7.421317%
912917-AL-5 11/30/94 7.96% 7.963570%
947423-AD-1 03/31/97 100.00 11/30/94 11.81% 11.807183%
949740-BU-7 11/30/94 8.49% 8.491919%
984245-AA-8 11/30/94 11.41% 11.409274%
<PAGE>
YIELD YIELD TO
TO CALL DAILY DAILY
CUSIP CALL PER INTEX YIELD YIELD YIELD ACCRUAL
P22561-AE-7 8.466% 0.02351770% 238.04
037411-AG-0 8.085% 0.02245870% 119.55
040114-AH-3 11.850% 0.03291641% 133.32
041237-AL-2 8.643% 0.02400786% 242.12
05944Q-AC-4 7.728% 0.02146682% 213.09
066050-CD-5 8.547% 0.02374177% 230.85
067379-AT-4 6.508% 0.01807791% 43.54
072738-9A-7 10.316% 0.02865483% 257.65
086516-AB-7 10.64% 10.638578% 9.659% 0.02683065% 128.04
126690-YL-4 7.031% 0.01952970% 364.94
13642N-AB-2 9.790% 0.02719505% 264.22
149123-BC-4 8.404% 0.02334566% 126.77
153469-AA-9 8.555% 0.02376421% 116.08
166784-AE-8 10.71% 10.976341% 10.976% 0.03048984% 135.87
171205-AU-1 8.303% 0.02306303% 271.33
173034-GM-5 7.999% 0.02222007% 218.06
190441-AJ-4 8.544% 0.02373293% 128.46
23321P-JA-7 7.669% 6.500% 0.01805556% 176.88
257039-AB-3 10.664% 0.02962142% 131.61
260540-AA-7 8.493% 0.02359051% 246.09
312908-X4-3 8.129% 0.02257975% 99.16
312910-BS-0 8.015% 0.02226483% 324.02
312911-SC-5 9.071% 0.02519792% 252.40
312911-SC-5 7.500% 0.02083333% 1.54
31331F-AH-4 8.559% 0.02377439% 224.96
31358F-X7-9 8.331% 8.000% 0.02222222% 223.05
337358-AP-0 8.574% 0.02381739% 230.38
369622-BR-5 8.456% 0.02348822% 214.33
369622-CB-9 7.684% 0.02134567% 337.38
370424-FV-0 7.771% 0.02158599% 237.12
370442-AJ-4 8.185% 0.02273633% 630.02
391442-AE-0 8.202% 0.02278334% 348.95
39804H-AG-3 8.498% 0.02360464% 239.60
42221H-AF-4 9.526% 0.02646087% 140.76
42221H-AG-2 9.303% 0.02584262% 124.51
448814-EJ-8 8.158% 0.02266123% 223.86
458182-BS-0 7.761% 0.02155843% 227.52
465410-AG-3 8.354% 0.02320523% 198.39
466115-AC-6 7.516% 0.02087655% 114.21
484610-AB-6 8.553% 0.02375925% 256.16
485260-AT-0 8.005% 0.02223649% 216.63
51808B-AA-0 8.448% 0.02346752% 216.10
546608-ZA-1 -12.231% -0.03397638% (2.84)
563469-CJ-2 8.055% 0.02237623% 497.30
570387-AG-5 13.07% 13.062358% 10.295% 0.02859801% 261.58
571900-AA-7 8.208% 0.02280002% 207.06
580169-AL-4 8.482% 0.02356140% 245.30
635576-AE-1 8.354% 0.02320548% 83.58
644239-AY-1 7.629% 0.02119155% 436.48
652478-AD-0 8.536% 0.02371059% 121.27
652478-AQ-1 9.311% 0.02586393% 232.52
65542L-AF-8 8.411% 0.02336403% 220.73
655422-AK-9 8.173% 0.02270168% 221.09
690734-AH-1 8.075% 0.02243003% 234.25
707271-AL-6 9.193% 0.02553600% 270.54
742718-BG-3 7.874% 0.02187248% 443.66
<PAGE>
YIELD YIELD TO
TO CALL DAILY DAILY
CUSIP CALL PER INTEX YIELD YIELD YIELD ACCRUAL
766570-AD-7 11.06% 11.059643% 9.326% 0.02590688% 244.35
784092-Z9-2 10.239% 0.02844201% 244.13
812007-AC-6 9.484% 0.02634506% 358.07
84534E-AN-8 8.166% 0.02268347% 211.84
879240-AN-9 9.439% 0.02621953% 270.10
880370-BG-5 8.519% 0.02366439% 128.41
887315-AL-3 8.752% 0.02431236% 235.10
89233P-DQ-6 13.735% 0.03815402% 599.05
900262-AR-7 10.327% 0.02868491% 240.94
90337Q-AV-9 7.727% 0.02146524% 218.95
908584-BB-0 3.329% 0.00924702% 2.16
908584-BB-0 3.328% 0.00924570% 0.88
908640-AD-7 8.828% 0.02452164% 239.61
912810-DP-0 7.842% 0.02178210% 292.43
912810-DZ-8 7.679% 0.02132988% 240.46
912810-DZ-8 7.592% 0.02108837% 239.89
912810-ES-3 7.966% 0.02212815% 209.57
912827-H4-7 7.447% 0.02068483% 494.46
912827-P7-1 7.421% 0.02061477% 201.94
912917-AL-5 7.964% 0.02212103% 112.48
947423-AD-1 12.72% 12.711509% 11.807% 0.03279773% 252.81
949740-BU-7 8.492% 0.02358866% 239.16
984245-AA-8 11.409% 0.03169243% 128.11
<PAGE>
12/02/94 12/03/94 12/04/94 12/05/94
CUSIP Day 1 Day 2 Day 3 Day 4
P22561-AE-7 238.04 238.04 238.04 238.04
037411-AG-0 119.55 119.55 119.55 119.55
040114-AH-3 133.32 133.32 133.32 133.32
041237-AL-2 242.12 242.12 242.12 242.12
05944Q-AC-4 213.09 213.09 213.09 213.09
066050-CD-5 230.85 230.85 230.85 230.85
067379-AT-4 43.54 43.54 43.54 43.54
072738-9A-7 257.65 257.65 257.65 257.65
086516-AB-7 128.04 128.04 128.04 128.04
126690-YL-4 364.94 364.94 364.94 364.94
13642N-AB-2 264.22 264.22 264.22 264.22
149123-BC-4 126.77 126.77 126.77 126.77
153469-AA-9 116.08 116.08 116.08 116.08
166784-AE-8 135.87 135.87 135.87 135.87
171205-AU-1 271.33 271.33 271.33 271.33
173034-GM-5 218.06 218.06 218.06 218.06
190441-AJ-4 128.46 128.46 128.46 128.46
23321P-JA-7 176.88 176.88 176.88 176.88
257039-AB-3 131.61 131.61 131.61 131.61
260540-AA-7 246.09 246.09 246.09 246.09
312908-X4-3 99.16 99.16 99.16 99.16
312910-BS-0 324.02 324.02 324.02 324.02
312911-SC-5 252.40 252.40 252.40 252.40
312911-SC-5
31331F-AH-4 224.96 224.96 224.96 224.96
31358F-X7-9 223.05 223.05 223.05 223.05
337358-AP-0 230.38 230.38 230.38 230.38
369622-BR-5 210.22 210.22 210.22 210.22
369622-CB-9 320.19 320.19 320.19 320.19
370424-FV-0 237.12 237.12 237.12 237.12
370442-AJ-4 630.02 630.02 630.02 630.02
391442-AE-0 348.95 348.95 348.95 348.95
39804H-AG-3 239.60 239.60 239.60 239.60
42221H-AF-4 140.76 140.76 140.76 140.76
42221H-AG-2 124.51 124.51 124.51 124.51
448814-EJ-8 223.86 223.86 223.86 223.86
458182-BS-0 227.52 227.52 227.52 227.52
465410-AG-3 198.39 198.39 198.39 198.39
466115-AC-6 114.21 114.21 114.21 114.21
484610-AB-6 256.16 256.16 256.16 256.16
485260-AT-0 216.63 216.63 216.63 216.63
51808B-AA-0 216.10 216.10 216.10 216.10
546608-ZA-1 (2.84) (2.84) (2.84) (2.84)
563469-CJ-2 497.30 497.30 497.30 497.30
570387-AG-5 261.58 261.58 261.58 261.58
571900-AA-7 207.06 207.06 207.06 207.06
580169-AL-4 245.30 245.30 245.30 245.30
635576-AE-1 83.58 83.58 83.58 83.58
644239-AY-1 436.48 436.48 436.48 436.48
652478-AD-0 121.27 121.27 121.27 121.27
652478-AQ-1 232.52 232.52 232.52 232.52
65542L-AF-8 220.73 220.73 220.73 220.73
655422-AK-9 221.09 221.09 221.09 221.09
690734-AH-1 234.25 234.25 234.25 234.25
707271-AL-6 270.54 270.54 270.54 270.54
742718-BG-3 443.66 443.66 443.66 443.66
<PAGE>
12/02/94 12/03/94 12/04/94 12/05/94
CUSIP Day 1 Day 2 Day 3 Day 4
766570-AD-7 244.35 244.35 244.35 244.35
784092-Z9-2 244.13 244.13 244.13 244.13
812007-AC-6 358.07 358.07 358.07 358.07
84534E-AN-8 211.84 211.84 211.84 211.84
879240-AN-9 270.10 270.10 270.10 270.10
880370-BG-5 128.41 128.41 128.41 128.41
887315-AL-3 235.10 235.10 235.10 235.10
89233P-DQ-6 599.05 599.05 599.05 599.05
900262-AR-7 240.94 240.94 240.94 240.94
90337Q-AV-9 218.95 218.95 218.95 218.95
908584-BB-0 2.16 2.16 2.16 2.16
908584-BB-0
908640-AD-7 239.61 239.61 239.61 239.61
912810-DP-0 292.43 292.43 292.43 292.43
912810-DZ-8
912810-DZ-8
912810-ES-3 209.57 209.57 209.57 209.57
912827-H4-7 494.46 494.46 494.46 494.46
912827-P7-1 201.94 201.94 201.94 201.94
912917-AL-5 112.48 112.48 112.48 112.48
947423-AD-1 252.81 252.81 252.81 252.81
949740-BU-7 239.16 239.16 239.16 239.16
984245-AA-8 128.11 128.11 128.11 128.11
17,240.91 17,240.91 17,240.91 17,240.91
0.00 0.00
170.88 526.04
17,411.79 17,240.91 17,240.91 17,766.95
1,200.44 3,627.10
$16,211.35 $17,240.91 $17,240.91 $14,139.85
14,770,045.893 14,769,944.385 14,769,944.385 14,769,944.385
<PAGE>
12/06/94 12/07/94 12/08/94 12/09/94
CUSIP Day 5 Day 6 Day 7 Day 8
P22561-AE-7 238.04 238.04 238.04 238.04
037411-AG-0 119.55 119.55 119.55 119.55
040114-AH-3 133.32 133.32 133.32 133.32
041237-AL-2 242.12 242.12 242.12 242.12
05944Q-AC-4 213.09 213.09 213.09 213.09
066050-CD-5 230.85 230.85 230.85 230.85
067379-AT-4 43.54 43.54 43.54 43.54
072738-9A-7 257.65 257.65 257.65 257.65
086516-AB-7 128.04 128.04 128.04 128.04
126690-YL-4 364.94 364.94 364.94 364.94
13642N-AB-2 264.22 264.22 264.22 264.22
149123-BC-4 126.77 126.77 126.77 126.77
153469-AA-9 116.08 116.08 116.08 116.08
166784-AE-8 135.87 135.87 135.87 135.87
171205-AU-1 271.33 271.33 271.33 271.33
173034-GM-5 218.06 218.06 218.06 218.06
190441-AJ-4 128.46 128.46 128.46 128.46
23321P-JA-7 176.88 176.88 176.88 176.88
257039-AB-3 131.61 131.61 131.61 131.61
260540-AA-7 246.09 246.09 246.09 246.09
312908-X4-3 99.16 99.16 99.16 99.16
312910-BS-0 324.02 324.02 324.02 324.02
312911-SC-5 252.40 252.40 252.40 252.40
312911-SC-5
31331F-AH-4 224.96 224.96 224.96 224.96
31358F-X7-9 223.05 223.05 223.05 223.05
337358-AP-0 230.38 230.38 230.38 230.38
369622-BR-5 210.22 210.22 210.22 210.22
369622-CB-9 320.19 320.19 320.19 320.19
370424-FV-0 237.12 237.12 237.12 237.12
370442-AJ-4 630.02 630.02 630.02 630.02
391442-AE-0 348.95 348.95 348.95 348.95
39804H-AG-3 239.60 239.60 239.60 239.60
42221H-AF-4 140.76 140.76 140.76 140.76
42221H-AG-2 124.51 124.51 124.51 124.51
448814-EJ-8 223.86 223.86 223.86 223.86
458182-BS-0 227.52 227.52 227.52 227.52
465410-AG-3 198.39 198.39 198.39
466115-AC-6 114.21 114.21 114.21 114.21
484610-AB-6 256.16 256.16 256.16 256.16
485260-AT-0 216.63 216.63 216.63 216.63
51808B-AA-0 216.10 216.10 216.10 216.10
546608-ZA-1 (2.84) (2.84) (2.84) (2.84)
563469-CJ-2 497.30 497.30 497.30 497.30
570387-AG-5 261.58 261.58 261.58 261.58
571900-AA-7 207.06 207.06 207.06 207.06
580169-AL-4 245.30 245.30 245.30 245.30
635576-AE-1 83.58 83.58 83.58 83.58
644239-AY-1 436.48 436.48 436.48 436.48
652478-AD-0 121.27 121.27 121.27 121.27
652478-AQ-1 232.52 232.52 232.52 232.52
65542L-AF-8 220.73 220.73 220.73 220.73
655422-AK-9 221.09 221.09 221.09 221.09
690734-AH-1 234.25 234.25 234.25 234.25
707271-AL-6 270.54 270.54 270.54 270.54
742718-BG-3 443.66 443.66 443.66 443.66
<PAGE>
12/06/94 12/07/94 12/08/94 12/09/94
CUSIP Day 5 Day 6 Day 7 Day 8
766570-AD-7 244.35 244.35 244.35 244.35
784092-Z9-2 244.13 244.13 244.13 244.13
812007-AC-6 358.07 358.07 358.07 358.07
84534E-AN-8 211.84 211.84 211.84 211.84
879240-AN-9 270.10 270.10 270.10 270.10
880370-BG-5 128.41 128.41 128.41 128.41
887315-AL-3 235.10 235.10 235.10 235.10
89233P-DQ-6 599.05 599.05 599.05 599.05
900262-AR-7 240.94 240.94 240.94 240.94
90337Q-AV-9 218.95 218.95 218.95 218.95
908584-BB-0 2.16 2.16 2.16 2.16
908584-BB-0
908640-AD-7 239.61 239.61 239.61 239.61
912810-DP-0 292.43 292.43 292.43 292.43
912810-DZ-8
912810-DZ-8
912810-ES-3 209.57 209.57 209.57 209.57
912827-H4-7 494.46 494.46 494.46 494.46
912827-P7-1 201.94 201.94 201.94 201.94
912917-AL-5 112.48 112.48 112.48 112.48
947423-AD-1 252.81 252.81 252.81 252.81
949740-BU-7 239.16 239.16 239.16 239.16
984245-AA-8 128.11 128.11 128.11 128.11
17,240.91 17,240.91 17,240.91 17,042.52
0.00 0.00 0.00 0.00
188.15 175.69 163.80 168.40
17,429.06 17,416.60 17,404.71 17,210.92
1,209.29 1,214.51 1,210.65 1,210.81
$16,219.77 $16,202.09 $16,194.06 $16,000.11
14,755,911.761 14,752,245.325 14,758,216.180 14,746,565.650
<PAGE>
12/10/94 12/11/94 12/12/94 12/13/94
CUSIP Day 9 Day 10 Day 11 Day 12
P22561-AE-7 238.04 238.04 238.04 238.04
037411-AG-0 119.55 119.55 119.55 119.55
040114-AH-3 133.32 133.32 133.32 133.32
041237-AL-2 242.12 242.12 242.12 242.12
05944Q-AC-4 213.09 213.09 213.09 213.09
066050-CD-5 230.85 230.85 230.85 230.85
067379-AT-4 43.54 43.54 43.54 43.54
072738-9A-7 257.65 257.65 257.65 257.65
086516-AB-7 128.04 128.04 128.04
126690-YL-4 364.94 364.94 364.94 364.94
13642N-AB-2 264.22 264.22 264.22 264.22
149123-BC-4 126.77 126.77 126.77 126.77
153469-AA-9 116.08 116.08 116.08 116.08
166784-AE-8 135.87 135.87 135.87 135.87
171205-AU-1 271.33 271.33 271.33 271.33
173034-GM-5 218.06 218.06 218.06 218.06
190441-AJ-4 128.46 128.46 128.46 128.46
23321P-JA-7 176.88 176.88 176.88 176.88
257039-AB-3 131.61 131.61 131.61 131.61
260540-AA-7 246.09 246.09 246.09 246.09
312908-X4-3 99.16 99.16 99.16 99.16
312910-BS-0 324.02 324.02 324.02 324.02
312911-SC-5 252.40 252.40 252.40 252.40
312911-SC-5
31331F-AH-4 224.96 224.96 224.96 224.96
31358F-X7-9 223.05 223.05 223.05 223.05
337358-AP-0 230.38 230.38 230.38 230.38
369622-BR-5 210.22 210.22 210.22 210.22
369622-CB-9 320.19 320.19 320.19 320.19
370424-FV-0 237.12 237.12 237.12 237.12
370442-AJ-4 630.02 630.02 630.02 630.02
391442-AE-0 348.95 348.95 348.95 348.95
39804H-AG-3 239.60 239.60 239.60 239.60
42221H-AF-4 140.76 140.76 140.76 140.76
42221H-AG-2 124.51 124.51 124.51 124.51
448814-EJ-8 223.86 223.86 223.86 223.86
458182-BS-0 227.52 227.52 227.52 227.52
465410-AG-3
466115-AC-6 114.21 114.21 114.21 114.21
484610-AB-6 256.16 256.16 256.16 256.16
485260-AT-0 216.63 216.63 216.63 216.63
51808B-AA-0 216.10 216.10 216.10 216.10
546608-ZA-1 (2.84) (2.84) (2.84) (2.84)
563469-CJ-2 497.30 497.30 497.30 497.30
570387-AG-5 261.58 261.58 261.58 261.58
571900-AA-7 207.06 207.06 207.06 207.06
580169-AL-4 245.30 245.30 245.30 245.30
635576-AE-1 83.58 83.58 83.58 83.58
644239-AY-1 436.48 436.48 436.48 436.48
652478-AD-0 121.27 121.27 121.27 121.27
652478-AQ-1 232.52 232.52 232.52 232.52
65542L-AF-8 220.73 220.73 220.73 220.73
655422-AK-9 221.09 221.09 221.09 221.09
690734-AH-1 234.25 234.25 234.25 234.25
707271-AL-6 270.54 270.54 270.54 270.54
742718-BG-3 443.66 443.66 443.66 443.66
<PAGE>
12/10/94 12/11/94 12/12/94 12/13/94
CUSIP Day 9 Day 10 Day 11 Day 12
766570-AD-7 244.35 244.35 244.35 244.35
784092-Z9-2 244.13 244.13 244.13 244.13
812007-AC-6 358.07 358.07 358.07 358.07
84534E-AN-8 211.84 211.84 211.84 211.84
879240-AN-9 270.10 270.10 270.10 270.10
880370-BG-5 128.41 128.41 128.41 128.41
887315-AL-3 235.10 235.10 235.10 235.10
89233P-DQ-6 599.05 599.05 599.05 599.05
900262-AR-7 240.94 240.94 240.94 240.94
90337Q-AV-9 218.95 218.95 218.95 218.95
908584-BB-0 2.16 2.16 2.16 2.16
908584-BB-0
908640-AD-7 239.61 239.61 239.61 239.61
912810-DP-0 292.43 292.43 292.43 292.43
912810-DZ-8
912810-DZ-8
912810-ES-3 209.57 209.57 209.57 209.57
912827-H4-7 494.46 494.46 494.46 494.46
912827-P7-1 201.94 201.94 201.94 201.94
912917-AL-5 112.48 112.48 112.48 112.48
947423-AD-1 252.81 252.81 252.81 252.81
949740-BU-7 239.16 239.16 239.16 239.16
984245-AA-8 128.11 128.11 128.11 128.11
17,042.52 17,042.52 17,042.52 16,914.47
0.00 0.00
502.71 166.06
17,042.52 17,042.52 17,545.23 17,080.53
3,639.02 1,207.90
$17,042.52 $17,042.52 $13,906.21 $15,872.63
14,746,967.874 14,746,967.874 14,746,967.874 14,751,249.564
<PAGE>
12/14/94 12/15/94 12/16/94 12/17/94
CUSIP Day 13 Day 14 Day 15 Day 16
P22561-AE-7 238.04 238.04 238.04 238.04
037411-AG-0 119.55 119.55 119.55 119.55
040114-AH-3 133.32 133.32 133.32 133.32
041237-AL-2 242.12 242.12 242.12 242.12
05944Q-AC-4 213.09 213.09 213.09 213.09
066050-CD-5 230.85 230.85 230.85 230.85
067379-AT-4 43.54 43.54 43.54 43.54
072738-9A-7 257.65 257.65 257.65 257.65
086516-AB-7
126690-YL-4 364.94 364.94 364.94 364.94
13642N-AB-2 264.22 264.22 264.22 264.22
149123-BC-4 126.77 126.77 126.77 126.77
153469-AA-9 116.08 116.08 116.08 116.08
166784-AE-8 135.87 135.87 135.87 135.87
171205-AU-1 271.33 271.33 271.33 271.33
173034-GM-5 218.06 218.06 218.06 218.06
190441-AJ-4 128.46 128.46 128.46 128.46
23321P-JA-7 176.88 176.88 176.88 176.88
257039-AB-3 131.61 131.61 131.61 131.61
260540-AA-7 246.09 246.09 246.09 246.09
312908-X4-3 99.16 99.16 99.16 99.16
312910-BS-0 324.02 324.02 324.02 324.02
312911-SC-5 252.40 252.40 252.40 252.40
312911-SC-5
31331F-AH-4 224.96 224.96 224.96 224.96
31358F-X7-9 223.05 223.05 223.05 223.05
337358-AP-0 230.38 230.38 230.38 230.38
369622-BR-5 210.22 210.22 210.22 210.22
369622-CB-9 320.19 320.19 320.19 320.19
370424-FV-0 237.12 237.12 237.12 237.12
370442-AJ-4 630.02 630.02 630.02 630.02
391442-AE-0 348.95 348.95 348.95 348.95
39804H-AG-3 239.60 239.60 239.60 239.60
42221H-AF-4 140.76 140.76 140.76 140.76
42221H-AG-2 124.51 124.51 124.51 124.51
448814-EJ-8 223.86 223.86 223.86 223.86
458182-BS-0 227.52 227.52 227.52 227.52
465410-AG-3
466115-AC-6 114.21 114.21 114.21 114.21
484610-AB-6 256.16 256.16 256.16 256.16
485260-AT-0 216.63 216.63 216.63 216.63
51808B-AA-0 216.10 216.10 216.10 216.10
546608-ZA-1 (2.84) (2.84) (2.84) (2.84)
563469-CJ-2 497.30 497.30 497.30 497.30
570387-AG-5 261.58 261.58 261.58 261.58
571900-AA-7 207.06 207.06 207.06 207.06
580169-AL-4 245.30 245.30 245.30 245.30
635576-AE-1 83.58 83.58 83.58 83.58
644239-AY-1 436.48 436.48 436.48 436.48
652478-AD-0 121.27 121.27 121.27 121.27
652478-AQ-1 232.52 232.52 232.52 232.52
65542L-AF-8 220.73 220.73 220.73 220.73
655422-AK-9 221.09 221.09 221.09 221.09
690734-AH-1 234.25 234.25 234.25 234.25
707271-AL-6 270.54 270.54 270.54 270.54
742718-BG-3 443.66 443.66 443.66 443.66
<PAGE>
12/14/94 12/15/94 12/16/94 12/17/94
CUSIP Day 13 Day 14 Day 15 Day 16
766570-AD-7 244.35 244.35 244.35 244.35
784092-Z9-2 244.13 244.13 244.13 244.13
812007-AC-6 358.07 358.07 358.07 358.07
84534E-AN-8 211.84 211.84 211.84 211.84
879240-AN-9 270.10 270.10 270.10 270.10
880370-BG-5 128.41 128.41 128.41 128.41
887315-AL-3 235.10 235.10 235.10 235.10
89233P-DQ-6 599.05 599.05 599.05 599.05
900262-AR-7 240.94 240.94 240.94 240.94
90337Q-AV-9 218.95 218.95 218.95 218.95
908584-BB-0 2.16
908584-BB-0 0.88 0.88 0.88
908640-AD-7 239.61 239.61 239.61 239.61
912810-DP-0 292.43 292.43 292.43 292.43
912810-DZ-8
912810-DZ-8
912810-ES-3 209.57 209.57 209.57 209.57
912827-H4-7 494.46 494.46 494.46 494.46
912827-P7-1 201.94 201.94 201.94 201.94
912917-AL-5 112.48 112.48 112.48 112.48
947423-AD-1 252.81 252.81 252.81 252.81
949740-BU-7 239.16 239.16 239.16 239.16
984245-AA-8 128.11 128.11 128.11 128.11
16,914.47 16,913.20 16,913.20 16,913.20
0.00 0.00 0.00
239.66 245.05 443.11
17,154.13 17,158.25 17,356.31 16,913.20
1,208.81 1,213.28 1,212.49
$15,945.32 $15,944.97 $16,143.82 $16,913.20
14,754,708.282 14,770,870.875 14,822,447.657 14,845,625.347
<PAGE>
12/18/94 12/19/94 12/20/94 12/21/94
CUSIP Day 17 Day 18 Day 19 Day 20
P22561-AE-7 238.04 238.04 238.04 238.04
037411-AG-0 119.55 119.55 119.55 119.55
040114-AH-3 133.32 133.32 133.32 133.32
041237-AL-2 242.12 242.12 242.12 242.12
05944Q-AC-4 213.09 213.09 213.09 213.09
066050-CD-5 230.85 230.85 230.85 230.85
067379-AT-4 43.54 43.54 43.54 43.54
072738-9A-7 257.65 257.65 257.65 257.65
086516-AB-7
126690-YL-4 364.94 364.94 364.94 364.94
13642N-AB-2 264.22 264.22 264.22 264.22
149123-BC-4 126.77 126.77 126.77 126.77
153469-AA-9 116.08 116.08 116.08 116.08
166784-AE-8 135.87 135.87 135.87 135.87
171205-AU-1 271.33 271.33 271.33 271.33
173034-GM-5 218.06 218.06 218.06 218.06
190441-AJ-4 128.46 128.46 128.46 128.46
23321P-JA-7 176.88 176.88 176.88 176.88
257039-AB-3 131.61 131.61 131.61 131.61
260540-AA-7 246.09 246.09 246.09 246.09
312908-X4-3 99.16 99.16 99.16 99.16
312910-BS-0 324.02 324.02 324.02 324.02
312911-SC-5 252.40 252.40 252.40 252.40
312911-SC-5 1.54 1.54 1.54
31331F-AH-4 224.96 224.96 224.96 224.96
31358F-X7-9 223.05 223.05 223.05 223.05
337358-AP-0 230.38 230.38 230.38 230.38
369622-BR-5 210.22 210.22 210.22 210.22
369622-CB-9 320.19 320.19 320.19 320.19
370424-FV-0 237.12 237.12 237.12 237.12
370442-AJ-4 630.02 630.02 630.02 630.02
391442-AE-0 348.95 348.95 348.95 348.95
39804H-AG-3 239.60 239.60 239.60 239.60
42221H-AF-4 140.76 140.76 140.76 140.76
42221H-AG-2 124.51 124.51 124.51 124.51
448814-EJ-8 223.86 223.86 223.86 223.86
458182-BS-0 227.52 227.52 227.52 227.52
465410-AG-3
466115-AC-6 114.21 114.21 114.21 114.21
484610-AB-6 256.16 256.16 256.16 256.16
485260-AT-0 216.63 216.63 216.63 216.63
51808B-AA-0 216.10 216.10 216.10 216.10
546608-ZA-1 (2.84) (2.84) (2.84) (2.84)
563469-CJ-2 497.30 497.30 497.30 497.30
570387-AG-5 261.58 261.58 261.58 261.58
571900-AA-7 207.06 207.06 207.06 207.06
580169-AL-4 245.30 245.30 245.30 245.30
635576-AE-1 83.58 83.58 83.58 83.58
644239-AY-1 436.48 436.48 436.48 436.48
652478-AD-0 121.27 121.27 121.27 121.27
652478-AQ-1 232.52 232.52 232.52 232.52
65542L-AF-8 220.73 220.73 220.73 220.73
655422-AK-9 221.09 221.09 221.09 221.09
690734-AH-1 234.25 234.25 234.25 234.25
707271-AL-6 270.54 270.54 270.54 270.54
742718-BG-3 443.66 443.66 443.66 443.66
<PAGE>
12/18/94 12/19/94 12/20/94 12/21/94
CUSIP Day 17 Day 18 Day 19 Day 20
766570-AD-7 244.35 244.35 244.35 244.35
784092-Z9-2 244.13 244.13 244.13 244.13
812007-AC-6 358.07 358.07 358.07 358.07
84534E-AN-8 211.84 211.84 211.84 211.84
879240-AN-9 270.10 270.10 270.10 270.10
880370-BG-5 128.41 128.41 128.41 128.41
887315-AL-3 235.10 235.10 235.10 235.10
89233P-DQ-6 599.05 599.05 599.05 599.05
900262-AR-7 240.94 240.94 240.94 240.94
90337Q-AV-9 218.95 218.95 218.95 218.95
908584-BB-0
908584-BB-0 0.88 0.88 0.88 0.88
908640-AD-7 239.61 239.61 239.61 239.61
912810-DP-0 292.43 292.43 292.43 292.43
912810-DZ-8
912810-DZ-8
912810-ES-3 209.57 209.57 209.57 209.57
912827-H4-7 494.46 494.46 494.46 494.46
912827-P7-1 201.94 201.94 201.94 201.94
912917-AL-5 112.48 112.48 112.48 112.48
947423-AD-1 252.81 252.81 252.81 252.81
949740-BU-7 239.16 239.16 239.16 239.16
984245-AA-8 128.11 128.11 128.11 128.11
16,913.20 16,914.74 16,914.74 16,914.74
0.00 0.00 0.00
1,242.53 518.90 511.23
16,913.20 18,157.27 17,433.64 17,425.97
3,642.77 1,218.54 1,220.90
$16,913.20 $14,514.50 $16,215.10 $16,205.07
14,845,625.347 14,845,625.347 14,831,811.889 14,829,149.914
<PAGE>
12/22/94 12/23/94 12/24/94 12/25/94
CUSIP Day 21 Day 22 Day 23 Day 24
P22561-AE-7 238.04 238.04 238.04 238.04
037411-AG-0 119.55 119.55 119.55 119.55
040114-AH-3 133.32 133.32 133.32 133.32
041237-AL-2 242.12 242.12 242.12 242.12
05944Q-AC-4 213.09 213.09 213.09 213.09
066050-CD-5 230.85 230.85 230.85 230.85
067379-AT-4 43.54 43.54 43.54 43.54
072738-9A-7 257.65 257.65 257.65 257.65
086516-AB-7
126690-YL-4 364.94 364.94 364.94 364.94
13642N-AB-2 264.22 264.22 264.22 264.22
149123-BC-4 126.77 126.77 126.77 126.77
153469-AA-9 116.08 116.08 116.08 116.08
166784-AE-8 135.87 135.87 135.87 135.87
171205-AU-1 271.33 271.33 271.33 271.33
173034-GM-5 218.06 218.06 218.06 218.06
190441-AJ-4 128.46 128.46 128.46 128.46
23321P-JA-7 176.88 176.88 176.88 176.88
257039-AB-3 131.61 131.61 131.61 131.61
260540-AA-7 246.09 246.09 246.09 246.09
312908-X4-3 99.16 99.16 99.16 99.16
312910-BS-0 324.02 324.02 324.02 324.02
312911-SC-5 252.40 252.40 252.40 252.40
312911-SC-5 1.54 1.54 1.54 1.54
31331F-AH-4 224.96 224.96 224.96 224.96
31358F-X7-9 223.05 223.05 223.05 223.05
337358-AP-0 230.38 230.38 230.38 230.38
369622-BR-5 210.22 210.22 210.22 210.22
369622-CB-9 320.19 320.19 320.19 320.19
370424-FV-0 237.12 237.12 237.12 237.12
370442-AJ-4 630.02 630.02 630.02 630.02
391442-AE-0 348.95 348.95 348.95 348.95
39804H-AG-3 239.60 239.60 239.60 239.60
42221H-AF-4 140.76 140.76 140.76 140.76
42221H-AG-2 124.51 124.51 124.51 124.51
448814-EJ-8 223.86 223.86 223.86 223.86
458182-BS-0 227.52 227.52 227.52 227.52
465410-AG-3
466115-AC-6 114.21 114.21 114.21 114.21
484610-AB-6 256.16 256.16 256.16 256.16
485260-AT-0 216.63 216.63 216.63 216.63
51808B-AA-0 216.10 216.10 216.10 216.10
546608-ZA-1 (2.84) (2.84) (2.84) (2.84)
563469-CJ-2 497.30 497.30 497.30 497.30
570387-AG-5 261.58 261.58 261.58 261.58
571900-AA-7 207.06 207.06 207.06 207.06
580169-AL-4 245.30 245.30 245.30 245.30
635576-AE-1 83.58 83.58 83.58 83.58
644239-AY-1 436.48 436.48 436.48 436.48
652478-AD-0 121.27 121.27 121.27 121.27
652478-AQ-1 232.52 232.52 232.52 232.52
65542L-AF-8 220.73 220.73 220.73 220.73
655422-AK-9 221.09 221.09 221.09 221.09
690734-AH-1 234.25 234.25 234.25 234.25
707271-AL-6 270.54 270.54 270.54 270.54
742718-BG-3 443.66 443.66 443.66 443.66
<PAGE>
12/22/94 12/23/94 12/24/94 12/25/94
CUSIP Day 21 Day 22 Day 23 Day 24
766570-AD-7 244.35 244.35 244.35 244.35
784092-Z9-2 244.13 244.13 244.13 244.13
812007-AC-6 358.07 358.07 358.07 358.07
84534E-AN-8 211.84 211.84 211.84 211.84
879240-AN-9 270.10 270.10 270.10 270.10
880370-BG-5 128.41 128.41 128.41 128.41
887315-AL-3 235.10 235.10 235.10 235.10
89233P-DQ-6 599.05 599.05 599.05 599.05
900262-AR-7 240.94 240.94 240.94 240.94
90337Q-AV-9 218.95 218.95 218.95 218.95
908584-BB-0
908584-BB-0 0.88 0.88 0.88 0.88
908640-AD-7 239.61 239.61 239.61 239.61
912810-DP-0 292.43 292.43 292.43 292.43
912810-DZ-8
912810-DZ-8
912810-ES-3 209.57 209.57 209.57 209.57
912827-H4-7 494.46 494.46 494.46 494.46
912827-P7-1 201.94 201.94 201.94 201.94
912917-AL-5 112.48 112.48 112.48 112.48
947423-AD-1 252.81 252.81 252.81 252.81
949740-BU-7 239.16 239.16 239.16 239.16
984245-AA-8 128.11 128.11 128.11 128.11
16,914.74 16,914.74 16,914.74 16,914.74
0.00 0.00
510.38 506.20
17,425.12 17,420.94 16,914.74 16,914.74
1,219.59 1,216.28
$16,205.53 $16,204.66 $16,914.74 $16,914.74
14,824,876.009 14,847,896.785 14,863,235.770 14,863,235.770
<PAGE>
12/26/94 12/27/94 12/28/94 12/29/94
CUSIP Day 25 Day 26 Day 27 Day 28
P22561-AE-7 238.04 238.04 238.04 238.04
037411-AG-0 119.55 119.55 119.55 119.55
040114-AH-3 133.32 133.32 133.32 133.32
041237-AL-2 242.12 242.12 242.12 242.12
05944Q-AC-4 213.09 213.09 213.09 213.09
066050-CD-5 230.85 230.85 230.85 230.85
067379-AT-4 43.54 43.54 43.54 43.54
072738-9A-7 257.65 257.65 257.65 257.65
086516-AB-7
126690-YL-4 364.94 364.94 364.94 364.94
13642N-AB-2 264.22 264.22 264.22 264.22
149123-BC-4 126.77 126.77 126.77 126.77
153469-AA-9 116.08 116.08 116.08 116.08
166784-AE-8 135.87 135.87 135.87 135.87
171205-AU-1 271.33 271.33 271.33 271.33
173034-GM-5 218.06 218.06 218.06 218.06
190441-AJ-4 128.46 128.46 128.46 128.46
23321P-JA-7 176.88 176.88 176.88 176.88
257039-AB-3 131.61 131.61 131.61 131.61
260540-AA-7 246.09 246.09 246.09 246.09
312908-X4-3 99.16 99.16 99.16 99.16
312910-BS-0 324.02 324.02 324.02 324.02
312911-SC-5 252.40 252.40 252.40 252.40
312911-SC-5 1.54 1.54 1.54 1.54
31331F-AH-4 224.96 224.96 224.96 224.96
31358F-X7-9 223.05 223.05 223.05 223.05
337358-AP-0 230.38 230.38 230.38 230.38
369622-BR-5 210.22 210.22 210.22 210.22
369622-CB-9 320.19 320.19 320.19 320.19
370424-FV-0 237.12 237.12 237.12 237.12
370442-AJ-4 630.02 630.02 630.02 630.02
391442-AE-0 348.95 348.95 348.95 348.95
39804H-AG-3 239.60 239.60 239.60 239.60
42221H-AF-4 140.76 140.76 140.76 140.76
42221H-AG-2 124.51 124.51 124.51 124.51
448814-EJ-8 223.86 223.86 223.86 223.86
458182-BS-0 227.52 227.52 227.52 227.52
465410-AG-3
466115-AC-6 114.21 114.21 114.21 114.21
484610-AB-6 256.16 256.16 256.16 256.16
485260-AT-0 216.63 216.63 216.63 216.63
51808B-AA-0 216.10 216.10 216.10 216.10
546608-ZA-1 (2.84) (2.84) (2.84) (2.84)
563469-CJ-2 497.30 497.30 497.30 497.30
570387-AG-5 261.58 261.58 261.58 261.58
571900-AA-7 207.06 207.06 207.06 207.06
580169-AL-4 245.30 245.30 245.30 245.30
635576-AE-1 83.58 83.58 83.58 83.58
644239-AY-1 436.48 436.48 436.48 436.48
652478-AD-0 121.27 121.27 121.27 121.27
652478-AQ-1 232.52 232.52 232.52 232.52
65542L-AF-8 220.73 220.73 220.73 220.73
655422-AK-9 221.09 221.09 221.09 221.09
690734-AH-1 234.25 234.25 234.25 234.25
707271-AL-6 270.54 270.54 270.54 270.54
742718-BG-3 443.66 443.66 443.66 443.66
<PAGE>
12/26/94 12/27/94 12/28/94 12/29/94
CUSIP Day 25 Day 26 Day 27 Day 28
766570-AD-7 244.35 244.35 244.35 244.35
784092-Z9-2 244.13 244.13 244.13 244.13
812007-AC-6 358.07 358.07 358.07 358.07
84534E-AN-8 211.84 211.84 211.84 211.84
879240-AN-9 270.10 270.10 270.10 270.10
880370-BG-5 128.41 128.41 128.41 128.41
887315-AL-3 235.10 235.10 235.10 235.10
89233P-DQ-6 599.05 599.05 599.05 599.05
900262-AR-7 240.94 240.94 240.94 240.94
90337Q-AV-9 218.95 218.95 218.95 218.95
908584-BB-0
908584-BB-0 0.88 0.88 0.88 0.88
908640-AD-7 239.61 239.61 239.61 239.61
912810-DP-0 292.43 292.43 292.43 292.43
912810-DZ-8 240.46 240.46 240.46
912810-DZ-8 239.89 239.89
912810-ES-3 209.57 209.57 209.57 209.57
912827-H4-7 494.46 494.46 494.46 494.46
912827-P7-1 201.94 201.94 201.94 201.94
912917-AL-5 112.48 112.48 112.48 112.48
947423-AD-1 252.81 252.81 252.81 252.81
949740-BU-7 239.16 239.16 239.16 239.16
984245-AA-8 128.11 128.11 128.11 128.11
16,914.74 17,155.19 17,395.08 17,395.08
0.00 0.00 0.00
1,856.11 155.97 155.96
16,914.74 19,011.30 17,551.05 17,551.04
4,860.95 1,223.09 (5,677.09)
$16,914.74 $14,150.35 $16,327.96 $23,228.13
14,863,235.770 14,863,235.770 14,864,540.843 14,850,530.304
<PAGE>
12/30/94 12/31/94
CUSIP Day 29 Day 30 Count Total
P22561-AE-7 238.04 238.04 30 $7,141
037411-AG-0 119.55 119.55 30 $3,586
040114-AH-3 133.32 133.32 30 $3,999
041237-AL-2 242.12 242.12 30 $7,264
05944Q-AC-4 213.09 213.09 30 $6,393
066050-CD-5 230.85 230.85 30 $6,925
067379-AT-4 43.54 43.54 30 $1,306
072738-9A-7 257.65 257.65 30 $7,730
086516-AB-7 11 $1,408
126690-YL-4 364.94 364.94 30 $10,948
13642N-AB-2 264.22 264.22 30 $7,927
149123-BC-4 126.77 126.77 30 $3,803
153469-AA-9 116.08 116.08 30 $3,482
166784-AE-8 135.87 135.87 30 $4,076
171205-AU-1 271.33 271.33 30 $8,140
173034-GM-5 218.06 218.06 30 $6,542
190441-AJ-4 128.46 128.46 30 $3,854
23321P-JA-7 176.88 176.88 30 $5,306
257039-AB-3 131.61 131.61 30 $3,948
260540-AA-7 246.09 246.09 30 $7,383
312908-X4-3 99.16 99.16 30 $2,975
312910-BS-0 324.02 324.02 30 $9,721
312911-SC-5 252.40 252.40 30 $7,572
312911-SC-5 1.54 1.54 13 $20
31331F-AH-4 224.96 224.96 30 $6,749
31358F-X7-9 223.05 223.05 30 $6,692
337358-AP-0 230.38 230.38 30 $6,912
369622-BR-5 210.22 210.22 30 $6,307
369622-CB-9 320.19 320.19 30 $9,606
370424-FV-0 237.12 237.12 30 $7,114
370442-AJ-4 630.02 630.02 30 $18,901
391442-AE-0 348.95 348.95 30 $10,468
39804H-AG-3 239.60 239.60 30 $7,188
42221H-AF-4 140.76 140.76 30 $4,223
42221H-AG-2 124.51 124.51 30 $3,735
448814-EJ-8 223.86 223.86 30 $6,716
458182-BS-0 227.52 227.52 30 $6,826
465410-AG-3 7 $1,389
466115-AC-6 114.21 114.21 30 $3,426
484610-AB-6 256.16 256.16 30 $7,685
485260-AT-0 216.63 216.63 30 $6,499
51808B-AA-0 216.10 216.10 30 $6,483
546608-ZA-1 (2.84) (2.84) 30 ($85)
563469-CJ-2 497.30 497.30 30 $14,919
570387-AG-5 261.58 261.58 30 $7,847
571900-AA-7 207.06 207.06 30 $6,212
580169-AL-4 245.30 245.30 30 $7,359
635576-AE-1 83.58 83.58 30 $2,508
644239-AY-1 436.48 436.48 30 $13,094
652478-AD-0 121.27 121.27 30 $3,638
652478-AQ-1 232.52 232.52 30 $6,976
65542L-AF-8 220.73 220.73 30 $6,622
655422-AK-9 221.09 221.09 30 $6,633
690734-AH-1 234.25 234.25 30 $7,028
707271-AL-6 270.54 270.54 30 $8,116
742718-BG-3 443.66 443.66 30 $13,310
<PAGE>
12/30/94 12/31/94
CUSIP Day 29 Day 30 Count Total
766570-AD-7 244.35 244.35 30 $7,330
784092-Z9-2 244.13 244.13 30 $7,324
812007-AC-6 358.07 358.07 30 $10,742
84534E-AN-8 211.84 211.84 30 $6,355
879240-AN-9 270.10 270.10 30 $8,103
880370-BG-5 128.41 128.41 30 $3,852
887315-AL-3 235.10 235.10 30 $7,053
89233P-DQ-6 599.05 599.05 30 $17,971
900262-AR-7 240.94 240.94 30 $7,228
90337Q-AV-9 218.95 218.95 30 $6,568
908584-BB-0 13 $28
908584-BB-0 0.88 0.88 17 $15
908640-AD-7 239.61 239.61 30 $7,188
912810-DP-0 292.43 292.43 30 $8,773
912810-DZ-8 240.46 240.46 5 $1,202
912810-DZ-8 239.89 239.89 4 $960
912810-ES-3 209.57 209.57 30 $6,287
912827-H4-7 494.46 494.46 30 $14,834
912827-P7-1 201.94 201.94 30 $6,058
912917-AL-5 112.48 112.48 30 $3,374
947423-AD-1 252.81 252.81 30 $7,584
949740-BU-7 239.16 239.16 30 $7,175
984245-AA-8 128.11 128.11 30 $3,843
17,395.08 17,395.08 $512,392
77.05 77.05
143.74 8,590.57
17,615.87 17,395.08 $521,059
1,220.93 28,300.26
$16,394.94 $17,395.08 $492,759
Average
15,617,757.258 15,656,553.859 30 14,858,197.798
$4.7393
8.55%
<PAGE>
TMK/UNITED HIGH INCOME PORTFOLIO
Yield for Advertising
For the 30 days ended December 31, 1994
TICKER
CUSIP SECURITY RATE MATURITY SYMBOL
001546-AA-8 AK Steel 10.750% 04/01/2004 *AKS04
002786-AB-7 Abbey Health 9.500% 11/01/2002 *ABY02
008318-AA-5 Aftermarket 144A 12.000% 08/01/2004 *AFM04
02744R-AA-5 Amer Media 11.625% 11/15/2004 *AMO04
029717-AB-1 Amer Standard 9.250% 12/01/2016 *AST16
029717-AH-8 American Standard 9.875% 06/01/2001 *AST01
03071P-AA-0 Amerisource PIK 11.250% 07/15/2005 *AMD05
033038-AD-2 Anchor Glass 9.875% 12/15/2008 *ACG08
040228-AB-4 Argosy Gmg Convt 12.000% 06/01/2001 *ARY01
040228-AB-4 Argosy Gmg Convt 12.000% 06/01/2001 *ARY01
067774-AB-4 Barnes & Noble 11.875% 01/15/2003 *BNL03
07556Q-AA-3 Beazer Home 9.000% 03/01/2004 *BZH04
077851-AC-7 Bell & Howell Sr Sub Notes 10.750% 10/01/2002 *BH/02
089162-AA-9 Big Flower Press 10.750% 08/01/2003 *BFP03
089698-AB-0 Big V Supermarket Series B 11.000% 02/15/2004 *BVM04
104499-AC-2 Bradlees Inc 9.250% 03/01/2003 *BDL03
11815H-AA-2 Buckeye 10.250% 05/15/2001 *BCE01
126915-AD-9 Cablevision 10.750% 01/30/2002 *CBI02
130209-50-5 Cal Fed Bk Pfd Ser B 10.625% CAL,B
13032R-AG-0 California Hotel 11.000% 12/01/2002 *CAH02
142522-AD-3 Carlisle Plastic 10.250% 06/15/97 *CPL97
181514-AB-6 Clark R&M Hldg 0.000% 02/15/2000 *CKM00
196267-AD-0 Colortile 10.750% 12/15/2001 *CRT01
199904-AB-9 Comcast Series B 0.000% 03/05/2000 *CCL00
210305-AB-4 Consoltex Ser B 11.000% 10/01/2003 *CTX03
210741-AK-0 Container Corp 11.250% 05/01/2004 *CNT04
211177-AD-2 Cont'l Cable 10.625% 06/15/2002 *CBL02
211177-AE-0 Continental Cable 11.000% 06/01/2007 *CBL07
211177-AJ-9 Contl Cable 8.875% 09/15/2005 *CCB05
25246P-AC-9 Dial Call Communications 0.000% 04/15/2004 *
25246P-AD-7 Dial Call Comm 0.000% 04/15/2004 *DLC04
25247P-12-0 Dial Page Inc Wts 04/25/99
25612T-AA-1 Dr Pepper Btlg Hldg Inc Sr Nts 0.000% 02/15/2003 *DRP03
269612-AB-3 Eagle Indust 0.000% 07/15/2003 *EGI03
29409W-AB-1 Envirotest Syst 9.125% 03/15/2001 *IVT01
297015-AB-5 Essex Group 10.000% 05/01/2003 *ESG03
302051-AB-3 Exide 10.750% 12/15/2002 *EXC02
302051-AC-1 Exide 0.000% 12/15/2004 *EXC04
307054-AA-4 Family Rest 9.750% 02/01/2002 *FMR02
313453-AD-4 Federal Ind Sr 10.250% 06/15/2000 *FDI00
338473-AB-7 Flagstar Sr Sub 11.250% 11/01/2004 *FLS04
338473-AD-3 Flagstar Senior Notes 10.750% 09/15/2001 *FLG01
344839-AE-5 Foodmaker 9.750% 06/01/2002 *FFL02
347460-AF-4 Fort Howard 14.125% 11/01/2004 *FHP04
347463-AA-9 Fort Howard Pass-Thru 11.000% 01/02/2002 *FRT02
361916-AK-5 GNS Finance 9.250% 03/15/2003 *GNS03
368145-AG-3 Gaylord Container 11.500% 05/15/2001 *GCR01
370299-AE-9 Gen Med PIK 12.125% 08/15/2005 *GMD05
370471-AC-8 Gen Nutrition 11.375% 03/01/2000 *GEN00
373280-AE-6 Hillsborough PP 17.000% 01/01/96 *HIL96
386532-AD-7 Grand Union Co 12.250% 07/15/2002 *
456626-AC-4 Infinity Broad 10.375% 03/15/2002 *IFB02
456626-10-0 Infinity Broad INFTA
457472-AB-4 Inland Steel 12.750% 12/15/2002 *IAD02
46624E-AG-3 JPS Textiles 10.250% 06/01/99 *JPS99
480695-AC-9 Jordan Indust 10.375% 08/01/2003 *JRI03
501044-AW-1 Kroger 9.750% 02/15/2004 *KR04
<PAGE>
TMK/UNITED HIGH INCOME PORTFOLIO
Yield for Advertising
For the 30 days ended December 31, 1994
TICKER
CUSIP SECURITY RATE MATURITY SYMBOL
502175-AB-8 LTC Properties Convt Sub Deb 8.500% 01/01/2000 *LCP00
502175-10-2 LTC Properties Inc LTC
517289-AA-2 LaRoche Indust 13.000% 08/15/2004 *LRC04
521893-AB-3 Lear Seating 8.250% 02/01/2002 *LRS02
55272T-AA-9 MFS Commun 0.000% 01/15/2004 *MFS04
554208-AA-6 Macandrews & Forbes 13.000% 03/01/99 *MAF99
560319-AA-3 Mail-Well 144A 10.500% 02/15/2004 *MLW04
570387-AG-5 Mark IV Indust Sr Sub Notes 8.750% 04/01/2003 *M/403
627578-AA-5 Musicland 9.000% 06/15/2003 *MLG03
62944T-AA-3 NVR Inc. Senior Notes 11.000% 04/15/2003 *NVR03
656559-AQ-4 Nortek Inc 9.875% 03/01/2004 *NTK04
671042-AA-7 OSI Specialties 9.250% 10/01/2003 *OSI03
690057-AA-2 Outdoor Systems 10.750% 08/15/2003 *ODS03
690768-AG-1 Owens Illinois 10.250% 04/01/99 *OWI99
69830C-AA-2 Panamsat LP 9.750% 08/01/2000 *PNS00
69830C-AB-0 Panamsat LP 0.000% 08/01/2003 *PNS03
70321B-AB-6 Pathmark 9.625% 05/01/2003 *PSS03
707832-AC-5 Penn Traf Sr Nt 10.375% 10/01/2004 *PEN04
721467-AB-4 Pilgrim's Pride 10.875% 08/01/2003 *PRD03
729173-AB-0 Plitt Theatre 10.875% 06/15/2004 *PLR04
749084-AA-7 Quorum Hlth 11.875% 12/15/2002 *QHG02
780232-AA-2 Royal Crown Corp 9.750% 08/01/2000 *RYC00
812139-AA-1 Sealy Corp 9.500% 05/01/2003 *SEC03
825390-AB-3 Showboat 9.250% 05/01/2008 *SBO08
827048-AB-5 Silgan Corp 0.000% 06/15/2002 *SIC02
829226-AA-7 Sinclair Broad 10.000% 12/15/2003 *SCB03
847499-AC-4 Specialty Foods 10.250% 08/15/2001 *SFD01
861589-AN-9 Stone Cont 10.750% 10/01/2002 *ST/02
86881P-AA-5 Surgical Hlth 11.500% 07/15/2004 *SHA04
870426-AA-1 Sweetheart Cup 10.500% 09/01/2003 *SHC03
895912-AC-7 Triangle Pac Sr Nt 10.500% 08/01/2003 *TPC03
90329K-AA-8 USA Mobile 9.500% 02/01/2004 *USM04
925524-AC-4 Viacom Intl 8.000% 07/07/2006 *VIA06
930676-AE-1 Wainoco Oil Corp 12.000% 08/01/2002 *WOC02
947423-AE-9 Del Webb Sr Sub Deb 9.750% 03/01/2003 *DLW03
961238-AB-8 Westpoint Stevens 9.375% 12/15/2005 *WPS05
969307-AF-4 Williamhouse Sr Sub Deb 11.500% 06/15/2005 *WMY05
Gain (loss) on paydowns
Short-term investment income
Gross income
Expenses
Net income
Shares Outstanding
Maximum offering price on last day of period
Yield
<PAGE>
MARKET PRICE MARKET VALUE ACCRUED
CUSIP POSITION PER UNIT OF SECURITY INTEREST TOTAL
001546-AA-8 1,000,000 96.250000 962,500.00 18,016.28 980,516.28
002786-AB-7 500,000 91.250000 456,250.00 3,952.43 460,202.43
008318-AA-5 500,000 101.500000 507,500.00 19,724.85 527,224.85
02744R-AA-5 1,000,000 100.500000 1,005,000.00 3,201.05 1,008,201.05
029717-AB-1 500,000 90.500000 452,500.00 23,125.00 475,625.00
029717-AH-8 1,000,000 94.500000 945,000.00 49,375.00 994,375.00
03071P-AA-0 1,112,020 100.500000 1,117,580.00 47,253.38 1,164,833.38
033038-AD-2 500,000 90.000000 450,000.00 22,798.90 472,798.90
040228-AB-4 1,000,000 98.500000 985,000.00 58,333.33 1,043,333.33
040228-AB-4 908,000 98.500000 894,380.00 52,966.66 947,346.66
067774-AB-4 500,000 107.000000 535,000.00 22,427.50 557,427.50
07556Q-AA-3 750,000 83.000000 622,500.00 16,968.60 639,468.60
077851-AC-7 750,000 98.000000 735,000.00 13,512.21 748,512.21
089162-AA-9 1,000,000 94.000000 940,000.00 35,639.18 975,639.18
089698-AB-0 500,000 81.000000 405,000.00 16,141.80 421,141.80
104499-AC-2 1,000,000 83.000000 830,000.00 23,253.20 853,253.20
11815H-AA-2 1,250,000 93.000000 1,162,500.00 5,664.05 1,168,164.05
126915-AD-9 500,000 97.500000 487,500.00 18,112.00 505,612.00
130209-50-5 5,000 101.000000 505,000.00 0.00 505,000.00
13032R-AG-0 1,000,000 90.500000 905,000.00 54,999.44 959,999.44
142522-AD-3 500,000 98.750000 493,750.00 23,664.72 517,414.72
181514-AB-6 2,000,000 58.000000 1,160,000.00 0.00 1,160,000.00
196267-AD-0 1,000,000 88.000000 880,000.00 49,638.06 929,638.06
199904-AB-9 1,000,000 65.250000 652,500.00 0.00 652,500.00
210305-AB-4 1,000,000 91.000000 910,000.00 18,435.01 928,435.01
210741-AK-0 1,500,000 101.000000 1,515,000.00 13,984.84 1,528,984.84
211177-AD-2 500,000 99.000000 495,000.00 24,530.40 519,530.40
211177-AE-0 500,000 99.500000 497,500.00 27,500.00 525,000.00
211177-AJ-9 500,000 88.000000 440,000.00 9,439.18 449,439.18
25246P-AC-9 1,000,000 55.368000 553,680.00 0.00 553,680.00
25246P-AD-7 1,000,000 38.000000 380,000.00 0.00 380,000.00
25247P-12-0 1,000 0.001000 1.00 0.00 1.00
25612T-AA-1 500,000 69.000000 345,000.00 0.00 345,000.00
269612-AB-3 1,500,000 64.000000 960,000.00 0.00 960,000.00
29409W-AB-1 1,000,000 89.000000 890,000.00 19,409.72 909,409.72
297015-AB-5 1,000,000 94.000000 940,000.00 8,287.76 948,287.76
302051-AB-3 750,000 101.000000 757,500.00 37,228.58 794,728.58
302051-AC-1 500,000 69.000000 345,000.00 0.00 345,000.00
307054-AA-4 500,000 80.500000 402,500.00 16,161.86 418,661.86
313453-AD-4 500,000 92.500000 462,500.00 23,664.72 486,164.72
338473-AB-7 1,000,000 80.500000 805,000.00 9,323.73 814,323.73
338473-AD-3 1,000,000 91.000000 910,000.00 22,866.16 932,866.16
344839-AE-5 1,000,000 73.000000 730,000.00 48,750.00 778,750.00
347460-AF-4 500,000 100.750000 503,750.00 5,853.91 509,603.91
347463-AA-9 474,484 100.000000 474,484.00 21,558.06 496,042.06
361916-AK-5 1,500,000 92.500000 1,387,500.00 29,513.88 1,417,013.88
368145-AG-3 1,000,000 100.500000 1,005,000.00 5,084.45 1,010,084.45
370299-AE-9 1,000,000 101.625000 1,016,250.00 35,584.52 1,051,834.52
370471-AC-8 393,000 110.750000 435,248.00 11,237.77 446,485.77
373280-AE-6 500,000 85.000000 425,000.00 0.00 425,000.00
386532-AD-7 1,000,000 49.000000 490,000.00 47,979.17 537,979.17
456626-AC-4 1,000,000 100.000000 1,000,000.00 22,068.60 1,022,068.60
456626-10-0 22,500 29.750000 669,375.00 0.00 669,375.00
457472-AB-4 500,000 109.000000 545,000.00 29,436.48 574,436.48
46624E-AG-3 419,000 70.000000 293,300.00 19,378.75 312,678.75
480695-AC-9 1,000,000 90.000000 900,000.00 34,395.96 934,395.96
501044-AW-1 1,000,000 97.000000 970,000.00 28,614.56 998,614.56
<PAGE>
MARKET PRICE MARKET VALUE ACCRUED
CUSIP POSITION PER UNIT OF SECURITY INTEREST TOTAL
502175-AB-8 1,000,000 98.000000 980,000.00 15,978.51 995,978.51
502175-10-2 50,000 12.125000 606,250.00 0.00 606,250.00
517289-AA-2 1,000,000 94.000000 940,000.00 37,430.02 977,430.02
521893-AB-3 1,500,000 86.750000 1,301,250.00 41,026.26 1,342,276.26
55272T-AA-9 500,000 57.000000 285,000.00 0.00 285,000.00
554208-AA-6 100,000 100.500000 100,500.00 0.00 100,500.00
560319-AA-3 500,000 87.000000 435,000.00 15,407.84 450,407.84
570387-AG-5 1,500,000 90.000000 1,350,000.00 21,994.82 1,371,994.82
627578-AA-5 1,500,000 86.750000 1,301,250.00 62,336.10 1,363,586.10
62944T-AA-3 1,000,000 84.000000 840,000.00 55,014.76 895,014.76
656559-AQ-4 500,000 88.000000 440,000.00 12,412.40 452,412.40
671042-AA-7 500,000 91.000000 455,000.00 7,750.74 462,750.74
690057-AA-2 1,000,000 91.000000 910,000.00 31,549.64 941,549.64
690768-AG-1 1,000,000 100.000000 1,000,000.00 17,177.61 1,017,177.61
69830C-AA-2 1,000,000 97.000000 970,000.00 32,323.72 1,002,323.72
69830C-AB-0 1,000,000 66.000000 660,000.00 0.00 660,000.00
70321B-AB-6 1,000,000 86.000000 860,000.00 7,977.12 867,977.12
707832-AC-5 1,500,000 94.500000 1,417,500.00 26,080.16 1,443,580.16
721467-AB-4 300,000 96.000000 288,000.00 10,816.20 298,816.20
729173-AB-0 1,000,000 94.000000 940,000.00 47,798.51 987,798.51
749084-AA-7 1,000,000 107.000000 1,070,000.00 54,833.84 1,124,833.84
780232-AA-2 1,000,000 88.000000 880,000.00 32,323.72 912,323.72
812139-AA-1 825,000 94.000000 775,500.00 6,496.00 781,996.00
825390-AB-3 1,000,000 82.000000 820,000.00 7,666.49 827,666.49
827048-AB-5 500,000 84.500000 422,500.00 0.00 422,500.00
829226-AA-7 375,000 92.000000 345,000.00 17,315.70 362,315.70
847499-AC-4 1,000,000 92.500000 925,000.00 30,081.72 955,081.72
861589-AN-9 1,000,000 96.250000 962,500.00 14,730.35 977,230.35
86881P-AA-5 500,000 99.000000 495,000.00 24,274.31 519,274.31
870426-AA-1 750,000 92.500000 693,750.00 19,796.40 713,546.40
895912-AC-7 1,000,000 95.000000 950,000.00 34,810.16 984,810.16
90329K-AA-8 500,000 84.000000 420,000.00 15,747.66 435,747.66
925524-AC-4 1,000,000 85.500000 855,000.00 13,512.13 868,512.13
930676-AE-1 1,000,000 102.500000 1,025,000.00 39,783.04 1,064,783.04
947423-AE-9 500,000 86.000000 430,000.00 12,255.60 442,255.60
961238-AB-8 1,000,000 87.500000 875,000.00 43,288.90 918,288.90
969307-AF-4 800,000 94.000000 752,000.00 42,480.97 794,480.97
76,535,004 69,319,048.00
<PAGE>
YIELD YIELD TO YIELD
CALL CALL SETTLEMENTTO MATURITY TO
CUSIP DATE PRICE DATE MATURITY PER INTEX CALL
001546-AA-8 04/01/99 104.03 11/30/94 11.09% 11.084676% 12.07%
002786-AB-7 11/01/98 104.75 11/30/94 11.03% 11.029647% 13.12%
008318-AA-5 08/01/99 106.00 11/30/94 11.06% 11.062726% 11.46%
02744R-AA-5 11/15/99 104.36 11/30/94 11.48% 11.482565% 12.06%
029717-AB-1 11/30/94 9.79% 9.793712%
029717-AH-8 06/01/98 102.82 11/30/94 9.99% 9.994564% 10.75%
03071P-AA-0 07/15/98 105.62 11/30/94 10.49% 10.493635% 10.92%
033038-AD-2 12/15/2000 104.93 11/30/94 10.63% 10.628081% 11.74%
040228-AB-4 11/30/94 11.04% 11.048130%
040228-AB-4 11/30/94 11.04% 11.048130%
067774-AB-4 01/15/98 105.94 11/30/94 9.79% 9.788117% 9.23%
07556Q-AA-3 03/01/99 102.57 11/30/94 11.64% 11.637423% 14.19%
077851-AC-7 10/01/97 104.03 11/30/94 10.78% 10.782177% 12.06%
089162-AA-9 08/01/98 104.00 11/30/94 11.19% 11.190198% 12.48%
089698-AB-0 02/15/99 104.12 11/30/94 14.11% 14.102228% 17.11%
104499-AC-2 03/01/2000 100.00 11/30/94 12.11% 12.104307% 13.21%
11815H-AA-2 05/15/98 103.87 11/30/94 11.72% 11.720942% 13.59%
126915-AD-9 01/30/97 105.38 11/30/94 10.52% 10.516917% 12.37%
130209-50-5 11/30/94
13032R-AG-0 12/01/97 104.12 11/30/94 11.78% 11.785468% 13.81%
142522-AD-3 06/15/95 102.56 11/30/94 8.68% 8.689585% 8.20%
181514-AB-6 11/30/94 10.74% 10.737056%
196267-AD-0 12/15/97 104.61 11/30/94 12.26% 12.268122% 14.96%
199904-AB-9 11/30/94 8.28% 8.277521%
210305-AB-4 11/30/94 12.35% 12.346125%
210741-AK-0 05/01/99 105.62 11/30/94 10.91% 10.913107% 11.68%
211177-AD-2 06/15/97 105.31 11/30/94 9.87% 9.876438% 10.69%
211177-AE-0 06/01/99 105.50 11/30/94 10.28% 10.280441% 10.55%
211177-AJ-9 11/30/94 10.46% 10.455671%
25246P-AC-9 12/30/94 6.464631%
25246P-AD-7 04/15/99 107.12 11/30/94 23.39% 10.591839% 25.15%
25247P-12-0 11/30/94
25612T-AA-1 02/15/98 104.35 11/30/94 11.91% 4.572049% 13.32%
269612-AB-3 11/30/94 12.70% 5.241859%
29409W-AB-1 03/15/98 103.08 11/30/94 11.16% 11.160522% 13.39%
297015-AB-5 05/01/98 103.75 11/30/94 10.95% 10.952565% 12.82%
302051-AB-3 12/15/97 105.37 11/30/94 9.66% 9.664539% 9.97%
302051-AC-1 12/15/97 100.00 11/30/94 12.58% 3.729588% 12.58%
307054-AA-4 02/01/99 102.78 11/30/94 13.34% 13.335734% 15.71%
313453-AD-4 06/15/98 103.42 11/30/94 10.92% 10.926198% 12.03%
338473-AB-7 12/01/97 105.50 11/30/94 14.88% 14.884629% 21.32%
338473-AD-3 11/30/94 12.23% 12.224710%
344839-AE-5 06/01/97 104.87 11/30/94 14.71% 14.717888% 23.46%
347460-AF-4 11/30/94 14.13% 13.758468%
347463-AA-9 11/30/94 10.08% 10.083571%
361916-AK-5 03/15/98 104.11 11/30/94 10.25% 10.251389% 12.39%
368145-AG-3 05/15/97 104.92 11/30/94 11.27% 11.273341% 12.76%
370299-AE-9 08/15/98 105.00 11/30/94 11.27% 11.272757% 11.48%
370471-AC-8 03/01/97 102.84 11/30/94 8.13% 8.133047% 6.00%
373280-AE-6 11/30/94 34.82% 34.602332%
386532-AD-7 11/30/94 26.707870%
456626-AC-4 03/15/97 105.19 11/30/94 9.94% 9.936447% 11.29%
456626-10-0 11/30/94
457472-AB-4 12/15/97 106.37 11/30/94 10.00% 10.009009% 8.91%
46624E-AG-3 11/30/94 18.85% 18.859641%
480695-AC-9 08/01/98 105.18 11/30/94 11.59% 11.588375% 13.84%
501044-AW-1 02/15/97 104.88 11/30/94 9.77% 9.768427% 11.81%
<PAGE>
YIELD YIELD TO YIELD
CALL CALL SETTLEMENTTO MATURITY TO
CUSIP DATE PRICE DATE MATURITY PER INTEX CALL
502175-AB-8 01/01/98 100.00 11/30/94 8.59% 8.596108% 8.64%
502175-10-2 11/30/94
517289-AA-2 08/15/99 106.50 11/30/94 13.42% 13.412925% 14.68%
521893-AB-3 02/01/98 101.65 11/30/94 10.36% 10.359392% 12.82%
55272T-AA-9 01/15/99 103.52 11/30/94 14.10% 6.256059% 15.00%
554208-AA-6 01/15/99 103.52 11/30/94 11.84% 12.828042%
560319-AA-3 02/15/99 105.25 11/30/94 12.33% 12.324065% 14.68%
570387-AG-5 04/01/98 104.37 11/30/94 10.30% 10.295298% 13.07%
627578-AA-5 06/15/98 103.85 11/30/94 10.64% 10.645798% 13.18%
62944T-AA-3 12/01/98 105.50 11/30/94 13.10% 13.094476% 15.66%
656559-AQ-4 03/01/99 104.21 11/30/94 11.57% 11.571378% 13.66%
671042-AA-7 10/01/98 104.62 11/30/94 10.56% 10.562860% 12.73%
690057-AA-2 08/15/98 105.37 11/30/94 11.84% 11.836553% 13.97%
690768-AG-1 04/01/97 100.00 11/30/94 9.75% 9.747090% 9.40%
69830C-AA-2 08/01/98 101.62 11/30/94 9.69% 9.689723% 10.04%
69830C-AB-0 08/01/98 104.27 11/30/94 11.65% 4.850763% 12.65%
70321B-AB-6 11/01/98 104.82 11/30/94 12.17% 12.171121% 15.15%
707832-AC-5 10/01/97 104.00 11/30/94 11.01% 11.005338% 13.21%
721467-AB-4 08/01/98 104.07 11/30/94 10.94% 10.940708% 11.92%
729173-AB-0 06/15/99 105.43 11/30/94 11.08% 11.083458% 12.16%
749084-AA-7 12/15/97 105.87 11/30/94 9.61% 9.609202% 8.82%
780232-AA-2 08/01/98 102.78 11/30/94 11.92% 11.913188% 13.46%
812139-AA-1 05/01/98 104.75 11/30/94 10.44% 10.442774% 12.57%
825390-AB-3 05/01/2000 102.77 11/30/94 11.84% 11.842280% 14.27%
827048-AB-5 06/15/96 100.00 11/30/94 11.23% 2.245690% 11.23%
829226-AA-7 12/15/98 105.00 11/30/94 10.59% 10.588714% 12.07%
847499-AC-4 08/15/98 105.12 11/30/94 11.21% 11.213123% 12.93%
861589-AN-9 10/01/99 103.07 11/30/94 11.19% 11.187625% 11.86%
86881P-AA-5 07/15/99 105.75 11/30/94 10.84% 10.840156% 11.38%
870426-AA-1 09/01/98 103.94 11/30/94 11.39% 11.384994% 13.02%
895912-AC-7 08/01/98 103.93 11/30/94 10.77% 10.768321% 11.90%
90329K-AA-8 02/01/99 104.75 11/30/94 11.83% 11.827951% 14.58%
925524-AC-4 11/30/94 9.93% 9.931646%
930676-AE-1 08/01/97 103.43 11/30/94 10.73% 10.732384% 11.27%
947423-AE-9 03/01/98 104.87 11/30/94 11.985251%
961238-AB-8 12/15/98 104.69 11/30/94 10.65% 10.649502% 12.95%
969307-AF-4 06/15/98 105.75 11/30/94 11.61% 11.613061% 13.07%
<PAGE>
YIELD TO
CALL DAILY DAILY 12/02/94
CUSIP PER INTEX YIELD YIELD ACCRUAL Day 1
001546-AA-8 12.064281% 11.085% 0.03079077% 301.91 301.91
002786-AB-7 13.120636% 11.030% 0.03063791% 141.00 141.00
008318-AA-5 11.458654% 11.063% 0.03072979% 162.02 162.02
02744R-AA-5 12.064793% 11.483% 0.03189601% 321.58 321.58
029717-AB-1 9.794% 0.02720476% 129.39 129.39
029717-AH-8 10.755844% 9.995% 0.02776268% 276.07 276.07
03071P-AA-0 10.923760% 10.494% 0.02914899% 339.54 339.54
033038-AD-2 11.738090% 10.628% 0.02952245% 139.58 139.58
040228-AB-4 11.048% 0.03068925% 320.19 320.19
040228-AB-4 11.048% 0.03068925% 290.73
067774-AB-4 9.233773% 9.234% 0.02564937% 142.98 142.98
07556Q-AA-3 14.181223% 11.637% 0.03232618% 206.72 206.72
077851-AC-7 12.053802% 10.782% 0.02995049% 224.18 224.18
089162-AA-9 12.477465% 11.190% 0.03108388% 303.27 303.27
089698-AB-0 17.097354% 14.102% 0.03917286% 164.97 164.97
104499-AC-2 13.201158% 12.104% 0.03362308% 286.89 286.89
11815H-AA-2 13.594047% 11.721% 0.03255817% 380.33 380.33
126915-AD-9 12.365144% 10.517% 0.02921366% 147.71 147.71
130209-50-5 $10.63 $0.02951389 147.57 147.57
13032R-AG-0 13.825339% 11.785% 0.03273741% 314.28 314.28
142522-AD-3 8.246456% 8.690% 0.02413774% 124.89 124.89
181514-AB-6 10.737% 0.02982516% 345.97 345.97
196267-AD-0 14.959024% 12.268% 0.03407812% 316.80 316.80
199904-AB-9 8.278% 0.02299311% 150.03 150.03
210305-AB-4 12.346% 0.03429479% 318.40 318.40
210741-AK-0 11.679115% 10.913% 0.03031419% 463.50 463.50
211177-AD-2 10.697477% 9.876% 0.02743455% 142.53 142.53
211177-AE-0 10.561289% 10.280% 0.02855678% 149.92 149.92
211177-AJ-9 10.456% 0.02904353% 130.53 130.53
25246P-AC-9 6.465% 0.01795731% 99.43
25246P-AD-7 25.148214% 10.592% 0.02942178% 111.80 111.80
25247P-12-0 $0.00 $0.00000000 0.00
25612T-AA-1 13.317440% 4.572% 0.01270014% 43.82 43.82
269612-AB-3 5.242% 0.01456072% 139.78 139.78
29409W-AB-1 13.378471% 11.161% 0.03100145% 281.93 281.93
297015-AB-5 12.815389% 10.953% 0.03042379% 288.51 288.51
302051-AB-3 9.979062% 9.665% 0.02684594% 213.35 213.35
302051-AC-1 12.579096% 3.730% 0.01035997% 35.74 35.74
307054-AA-4 15.695921% 13.336% 0.03704370% 155.09 155.09
313453-AD-4 12.031189% 10.926% 0.03035055% 147.55 147.55
338473-AB-7 21.337833% 14.885% 0.04134619% 336.69 336.69
338473-AD-3 12.225% 0.03395753% 316.78 316.78
344839-AE-5 23.473439% 14.718% 0.04088302% 318.38 318.38
347460-AF-4 13.758% 0.03821797% 194.76 194.76
347463-AA-9 10.084% 0.03055556% 144.98 144.98
361916-AK-5 12.383669% 10.251% 0.02847608% 403.51 403.51
368145-AG-3 12.768996% 11.273% 0.03131484% 316.31 316.31
370299-AE-9 11.475175% 11.273% 0.03131321% 329.36 329.36
370471-AC-8 6.011186% 6.011% 0.01669774% 74.55 74.55
373280-AE-6 34.602% 0.09611759% 408.50 408.50
386532-AD-7 26.708% 0.07418853% 399.12 399.12
456626-AC-4 11.285268% 9.936% 0.02760124% 282.10 282.10
456626-10-0 $0.00 $0.00000000 0.00 0.00
457472-AB-4 8.918972% 8.919% 0.02477492% 142.32 142.32
46624E-AG-3 18.860% 0.05238789% 163.81 163.81
480695-AC-9 13.831613% 11.588% 0.03218993% 300.78 300.78
501044-AW-1 11.803674% 9.768% 0.02713452% 270.97 270.97
<PAGE>
YIELD TO
CALL DAILY DAILY 12/02/94
CUSIP PER INTEX YIELD YIELD ACCRUAL Day 1
502175-AB-8 8.646404% 8.596% 0.02387808% 237.82 237.82
502175-10-2 $0.00 $0.00000000 0.00 0.00
517289-AA-2 14.670019% 13.413% 0.03725813% 364.17 364.17
521893-AB-3 12.817738% 10.359% 0.02877609% 386.25 386.25
55272T-AA-9 15.001775% 6.256% 0.01737794% 49.53 49.53
554208-AA-6 12.828% 0.03563345% 35.81 35.81
560319-AA-3 14.672599% 12.324% 0.03423351% 154.19 154.19
570387-AG-5 13.062389% 10.295% 0.02859805% 392.36 392.36
627578-AA-5 13.179617% 10.646% 0.02957166% 403.24 403.24
62944T-AA-3 15.667994% 13.094% 0.03637354% 325.55 325.55
656559-AQ-4 13.648283% 11.571% 0.03214272% 145.42 145.42
671042-AA-7 12.725276% 10.563% 0.02934128% 135.78 135.78
690057-AA-2 13.961181% 11.837% 0.03287931% 309.58 309.58
690768-AG-1 9.401320% 9.747% 0.02707525% 275.40 275.40
69830C-AA-2 10.039831% 9.690% 0.02691590% 269.78 269.78
69830C-AB-0 12.859686% 4.851% 0.01347434% 88.93 88.93
70321B-AB-6 15.151624% 12.171% 0.03380867% 293.45 293.45
707832-AC-5 13.200290% 11.005% 0.03057038% 441.31 441.31
721467-AB-4 11.915220% 10.941% 0.03039086% 90.81 90.81
729173-AB-0 12.159709% 11.083% 0.03078738% 304.12 304.12
749084-AA-7 8.826586% 8.827% 0.02451829% 275.79 275.79
780232-AA-2 13.453419% 11.913% 0.03309219% 301.91 301.91
812139-AA-1 12.569421% 10.443% 0.02900770% 226.84 226.84
825390-AB-3 14.273828% 11.842% 0.03289522% 272.26 272.26
827048-AB-5 11.228320% 2.246% 0.00623803% 26.36 26.36
829226-AA-7 12.074564% 10.589% 0.02941310% 106.57 106.57
847499-AC-4 12.918496% 11.213% 0.03114757% 297.48 297.48
861589-AN-9 11.860931% 11.188% 0.03107674% 303.69 303.69
86881P-AA-5 11.375643% 10.840% 0.03011154% 156.36 156.36
870426-AA-1 13.011116% 11.385% 0.03162498% 225.66 225.66
895912-AC-7 11.896394% 10.768% 0.02991200% 294.58 294.58
90329K-AA-8 14.576041% 11.828% 0.03285542% 143.17 143.17
925524-AC-4 9.932% 0.02758790% 239.60 239.60
930676-AE-1 10.296978% 10.732% 0.02981218% 317.44 317.44
947423-AE-9 15.598314% 11.985% 0.03329236% 147.24 147.24
961238-AB-8 12.950909% 10.650% 0.02958195% 271.65 271.65
969307-AF-4 13.072656% 11.613% 0.03225850% 256.29 256.29
20,979.61
408.39
21,388.00
1,475.87
$19,912.13
16,517,997.819
<PAGE>
12/03/94 12/04/94 12/05/94 12/06/94
CUSIP Day 2 Day 3 Day 4 Day 5
001546-AA-8 301.91 301.91 301.91 301.91
002786-AB-7 141.00 141.00 141.00 141.00
008318-AA-5 162.02 162.02 162.02 162.02
02744R-AA-5 321.58 321.58 321.58 321.58
029717-AB-1 129.39 129.39 129.39 129.39
029717-AH-8 276.07 276.07 276.07 276.07
03071P-AA-0 339.54 339.54 339.54 339.54
033038-AD-2 139.58 139.58 139.58 139.58
040228-AB-4 320.19 320.19 320.19 320.19
040228-AB-4
067774-AB-4 142.98 142.98 142.98 142.98
07556Q-AA-3 206.72 206.72 206.72 206.72
077851-AC-7 224.18 224.18 224.18 224.18
089162-AA-9 303.27 303.27 303.27 303.27
089698-AB-0 164.97 164.97 164.97 164.97
104499-AC-2 286.89 286.89 286.89 286.89
11815H-AA-2 380.33 380.33 380.33 380.33
126915-AD-9 147.71 147.71 147.71 147.71
130209-50-5 147.57 147.57 147.57 147.57
13032R-AG-0 314.28 314.28 314.28 314.28
142522-AD-3 124.89 124.89 124.89 124.89
181514-AB-6 345.97 345.97 345.97 345.97
196267-AD-0 316.80 316.80 316.80 316.80
199904-AB-9 150.03 150.03 150.03 150.03
210305-AB-4 318.40 318.40 318.40 318.40
210741-AK-0 463.50 463.50 463.50 463.50
211177-AD-2 142.53 142.53 142.53 142.53
211177-AE-0 149.92 149.92 149.92 149.92
211177-AJ-9 130.53 130.53 130.53 130.53
25246P-AC-9
25246P-AD-7 111.80 111.80 111.80 111.80
25247P-12-0
25612T-AA-1 43.82 43.82 43.82 43.82
269612-AB-3 139.78 139.78 139.78 139.78
29409W-AB-1 281.93 281.93 281.93 281.93
297015-AB-5 288.51 288.51 288.51 288.51
302051-AB-3 213.35 213.35 213.35 213.35
302051-AC-1 35.74 35.74 35.74 35.74
307054-AA-4 155.09 155.09 155.09 155.09
313453-AD-4 147.55 147.55 147.55 147.55
338473-AB-7 336.69 336.69 336.69 336.69
338473-AD-3 316.78 316.78 316.78 316.78
344839-AE-5 318.38 318.38 318.38 318.38
347460-AF-4 194.76 194.76 194.76 194.76
347463-AA-9 144.98 144.98 144.98 144.98
361916-AK-5 403.51 403.51 403.51 403.51
368145-AG-3 316.31 316.31 316.31 316.31
370299-AE-9 329.36 329.36 329.36 329.36
370471-AC-8 74.55 74.55 74.55 74.55
373280-AE-6 408.50 408.50 408.50 408.50
386532-AD-7 399.12 399.12 399.12
456626-AC-4 282.10 282.10 282.10 282.10
456626-10-0 0.00 0.00 0.00 0.00
457472-AB-4 142.32 142.32 142.32 142.32
46624E-AG-3 163.81 163.81 163.81 163.81
480695-AC-9 300.78 300.78 300.78 300.78
501044-AW-1 270.97 270.97 270.97 270.97
<PAGE>
12/03/94 12/04/94 12/05/94 12/06/94
CUSIP Day 2 Day 3 Day 4 Day 5
502175-AB-8 237.82 237.82 237.82 237.82
502175-10-2 0.00 0.00 0.00 0.00
517289-AA-2 364.17 364.17 364.17 364.17
521893-AB-3 386.25 386.25 386.25 386.25
55272T-AA-9 49.53 49.53 49.53 49.53
554208-AA-6 35.81 35.81 35.81 35.81
560319-AA-3 154.19 154.19 154.19 154.19
570387-AG-5 392.36 392.36 392.36 392.36
627578-AA-5 403.24 403.24 403.24 403.24
62944T-AA-3 325.55 325.55 325.55 325.55
656559-AQ-4 145.42 145.42 145.42 145.42
671042-AA-7 135.78 135.78 135.78 135.78
690057-AA-2 309.58 309.58 309.58 309.58
690768-AG-1 275.40 275.40 275.40 275.40
69830C-AA-2 269.78 269.78 269.78 269.78
69830C-AB-0 88.93 88.93 88.93 88.93
70321B-AB-6 293.45 293.45 293.45 293.45
707832-AC-5 441.31 441.31 441.31 441.31
721467-AB-4 90.81 90.81 90.81 90.81
729173-AB-0 304.12 304.12 304.12 304.12
749084-AA-7 275.79 275.79 275.79 275.79
780232-AA-2 301.91 301.91 301.91 301.91
812139-AA-1 226.84 226.84 226.84 226.84
825390-AB-3 272.26 272.26 272.26 272.26
827048-AB-5 26.36 26.36 26.36 26.36
829226-AA-7 106.57 106.57 106.57 106.57
847499-AC-4 297.48 297.48 297.48 297.48
861589-AN-9 303.69 303.69 303.69 303.69
86881P-AA-5 156.36 156.36 156.36 156.36
870426-AA-1 225.66 225.66 225.66 225.66
895912-AC-7 294.58 294.58 294.58 294.58
90329K-AA-8 143.17 143.17 143.17 143.17
925524-AC-4 239.60 239.60 239.60 239.60
930676-AE-1 317.44 317.44 317.44 317.44
947423-AE-9 147.24 147.24 147.24 147.24
961238-AB-8 271.65 271.65 271.65 271.65
969307-AF-4 256.29 256.29 256.29 256.29
20,979.61 20,979.61 20,979.61 20,580.49
1,239.05 439.86
20,979.61 20,979.61 22,218.66 21,020.35
4,412.26 1,474.54
$20,979.61 $20,979.61 $17,806.40 $19,545.81
16,516,697.354 16,516,697.354 16,516,697.354 16,491,591.829
<PAGE>
12/07/94 12/08/94 12/09/94 12/10/94
CUSIP Day 6 Day 7 Day 8 Day 9
001546-AA-8 301.91 301.91 301.91 301.91
002786-AB-7 141.00 141.00 141.00 141.00
008318-AA-5 162.02 162.02 162.02 162.02
02744R-AA-5 321.58 321.58 321.58 321.58
029717-AB-1 129.39 129.39 129.39 129.39
029717-AH-8 276.07 276.07 276.07 276.07
03071P-AA-0 339.54 339.54 339.54 339.54
033038-AD-2 139.58 139.58 139.58 139.58
040228-AB-4 320.19 320.19 320.19 320.19
040228-AB-4
067774-AB-4 142.98 142.98 142.98 142.98
07556Q-AA-3 206.72 206.72 206.72 206.72
077851-AC-7 224.18 224.18 224.18 224.18
089162-AA-9 303.27 303.27 303.27 303.27
089698-AB-0 164.97 164.97 164.97 164.97
104499-AC-2 286.89 286.89 286.89 286.89
11815H-AA-2 380.33 380.33 380.33 380.33
126915-AD-9 147.71 147.71 147.71 147.71
130209-50-5 147.57 147.57 147.57 147.57
13032R-AG-0 314.28 314.28 314.28 314.28
142522-AD-3 124.89 124.89 124.89 124.89
181514-AB-6 345.97 345.97 345.97 345.97
196267-AD-0 316.80 316.80 316.80 316.80
199904-AB-9 150.03 150.03 150.03 150.03
210305-AB-4 318.40 318.40 318.40 318.40
210741-AK-0 463.50 463.50 463.50 463.50
211177-AD-2 142.53 142.53 142.53 142.53
211177-AE-0 149.92 149.92 149.92 149.92
211177-AJ-9 130.53 130.53 130.53 130.53
25246P-AC-9
25246P-AD-7 111.80 111.80 111.80 111.80
25247P-12-0
25612T-AA-1 43.82 43.82 43.82 43.82
269612-AB-3 139.78 139.78 139.78 139.78
29409W-AB-1 281.93 281.93 281.93 281.93
297015-AB-5 288.51 288.51 288.51 288.51
302051-AB-3 213.35 213.35 213.35 213.35
302051-AC-1 35.74 35.74 35.74 35.74
307054-AA-4 155.09 155.09 155.09 155.09
313453-AD-4 147.55 147.55 147.55 147.55
338473-AB-7 336.69 336.69 336.69 336.69
338473-AD-3 316.78 316.78 316.78 316.78
344839-AE-5 318.38 318.38 318.38 318.38
347460-AF-4 194.76 194.76 194.76 194.76
347463-AA-9 144.98 144.98 144.98 144.98
361916-AK-5 403.51 403.51 403.51 403.51
368145-AG-3 316.31 316.31 316.31 316.31
370299-AE-9 329.36 329.36 329.36 329.36
370471-AC-8 74.55 74.55 74.55 74.55
373280-AE-6 408.50 408.50 408.50 408.50
386532-AD-7
456626-AC-4 282.10 282.10 282.10 282.10
456626-10-0 0.00 0.00 0.00 0.00
457472-AB-4 142.32 142.32 142.32 142.32
46624E-AG-3 163.81 163.81 163.81 163.81
480695-AC-9 300.78 300.78 300.78 300.78
501044-AW-1 270.97 270.97 270.97 270.97
<PAGE>
12/07/94 12/08/94 12/09/94 12/10/94
CUSIP Day 6 Day 7 Day 8 Day 9
502175-AB-8 237.82 237.82 237.82 237.82
502175-10-2 0.00 0.00 0.00 0.00
517289-AA-2 364.17 364.17 364.17 364.17
521893-AB-3 386.25 386.25 386.25 386.25
55272T-AA-9 49.53 49.53 49.53 49.53
554208-AA-6 35.81 35.81 35.81 35.81
560319-AA-3 154.19 154.19 154.19 154.19
570387-AG-5 392.36 392.36 392.36 392.36
627578-AA-5 403.24 403.24 403.24 403.24
62944T-AA-3 325.55 325.55 325.55 325.55
656559-AQ-4 145.42 145.42 145.42 145.42
671042-AA-7 135.78 135.78 135.78 135.78
690057-AA-2 309.58 309.58 309.58 309.58
690768-AG-1 275.40 275.40 275.40 275.40
69830C-AA-2 269.78 269.78 269.78 269.78
69830C-AB-0 88.93 88.93 88.93 88.93
70321B-AB-6 293.45 293.45 293.45 293.45
707832-AC-5 441.31 441.31 441.31 441.31
721467-AB-4 90.81 90.81 90.81 90.81
729173-AB-0 304.12 304.12 304.12 304.12
749084-AA-7 275.79 275.79 275.79 275.79
780232-AA-2 301.91 301.91 301.91 301.91
812139-AA-1 226.84 226.84 226.84 226.84
825390-AB-3 272.26 272.26 272.26 272.26
827048-AB-5 26.36 26.36 26.36 26.36
829226-AA-7 106.57 106.57 106.57 106.57
847499-AC-4 297.48 297.48 297.48 297.48
861589-AN-9 303.69 303.69 303.69 303.69
86881P-AA-5 156.36 156.36 156.36 156.36
870426-AA-1 225.66 225.66 225.66 225.66
895912-AC-7 294.58 294.58 294.58 294.58
90329K-AA-8 143.17 143.17 143.17 143.17
925524-AC-4 239.60 239.60 239.60 239.60
930676-AE-1 317.44 317.44 317.44 317.44
947423-AE-9
961238-AB-8 271.65 271.65 271.65 271.65
969307-AF-4 256.29 256.29 256.29 256.29
20,433.25 20,433.25 20,433.25 20,433.25
511.28 571.79 570.26
20,944.53 21,005.04 21,003.51 20,433.25
1,475.60 1,472.84 1,472.84
$19,468.93 $19,532.20 $19,530.67 $20,433.25
16,493,531.504 16,491,373.262 16,508,613.868 16,511,926.740
<PAGE>
12/11/94 12/12/94 12/13/94 12/14/94
CUSIP Day 10 Day 11 Day 12 Day 13
001546-AA-8 301.91 301.91 301.91 301.91
002786-AB-7 141.00 141.00 141.00 141.00
008318-AA-5 162.02 162.02 162.02 162.02
02744R-AA-5 321.58 321.58 321.58 321.58
029717-AB-1 129.39 129.39 129.39 129.39
029717-AH-8 276.07 276.07 276.07 276.07
03071P-AA-0 339.54 339.54 339.54 339.54
033038-AD-2 139.58 139.58 139.58 139.58
040228-AB-4 320.19 320.19 320.19
040228-AB-4 290.73
067774-AB-4 142.98 142.98 142.98 142.98
07556Q-AA-3 206.72 206.72 206.72 206.72
077851-AC-7 224.18 224.18 224.18 224.18
089162-AA-9 303.27 303.27 303.27 303.27
089698-AB-0 164.97 164.97 164.97 164.97
104499-AC-2 286.89 286.89 286.89 286.89
11815H-AA-2 380.33 380.33 380.33 380.33
126915-AD-9 147.71 147.71 147.71 147.71
130209-50-5 147.57 147.57 147.57 147.57
13032R-AG-0 314.28 314.28 314.28 314.28
142522-AD-3 124.89 124.89 124.89 124.89
181514-AB-6 345.97 345.97 345.97 345.97
196267-AD-0 316.80 316.80 316.80 316.80
199904-AB-9 150.03 150.03 150.03 150.03
210305-AB-4 318.40 318.40 318.40 318.40
210741-AK-0 463.50 463.50 463.50 463.50
211177-AD-2 142.53 142.53 142.53 142.53
211177-AE-0 149.92 149.92 149.92 149.92
211177-AJ-9 130.53 130.53 130.53 130.53
25246P-AC-9
25246P-AD-7 111.80 111.80 111.80 111.80
25247P-12-0
25612T-AA-1 43.82 43.82 43.82 43.82
269612-AB-3 139.78 139.78 139.78 139.78
29409W-AB-1 281.93 281.93 281.93 281.93
297015-AB-5 288.51 288.51 288.51 288.51
302051-AB-3 213.35 213.35 213.35 213.35
302051-AC-1 35.74 35.74 35.74 35.74
307054-AA-4 155.09 155.09 155.09 155.09
313453-AD-4 147.55 147.55 147.55 147.55
338473-AB-7 336.69 336.69 336.69 336.69
338473-AD-3 316.78 316.78 316.78 316.78
344839-AE-5 318.38 318.38 318.38
347460-AF-4 194.76 194.76 194.76 194.76
347463-AA-9 144.98 144.98 144.98 144.98
361916-AK-5 403.51 403.51 403.51 403.51
368145-AG-3 316.31 316.31 316.31 316.31
370299-AE-9 329.36 329.36 329.36 329.36
370471-AC-8 74.55 74.55 74.55 74.55
373280-AE-6 408.50 408.50 408.50 408.50
386532-AD-7
456626-AC-4 282.10 282.10 282.10 282.10
456626-10-0 0.00 0.00 0.00 0.00
457472-AB-4 142.32 142.32 142.32 142.32
46624E-AG-3 163.81 163.81 163.81 163.81
480695-AC-9 300.78 300.78 300.78 300.78
501044-AW-1 270.97 270.97 270.97 270.97
<PAGE>
12/11/94 12/12/94 12/13/94 12/14/94
CUSIP Day 10 Day 11 Day 12 Day 13
502175-AB-8 237.82 237.82 237.82 237.82
502175-10-2 0.00 0.00 0.00 0.00
517289-AA-2 364.17 364.17 364.17 364.17
521893-AB-3 386.25 386.25 386.25 386.25
55272T-AA-9 49.53 49.53 49.53 49.53
554208-AA-6 35.81 35.81 35.81 35.81
560319-AA-3 154.19 154.19 154.19 154.19
570387-AG-5 392.36 392.36 392.36 392.36
627578-AA-5 403.24 403.24 403.24 403.24
62944T-AA-3 325.55 325.55 325.55 325.55
656559-AQ-4 145.42 145.42 145.42 145.42
671042-AA-7 135.78 135.78 135.78 135.78
690057-AA-2 309.58 309.58 309.58 309.58
690768-AG-1 275.40 275.40 275.40 275.40
69830C-AA-2 269.78 269.78 269.78 269.78
69830C-AB-0 88.93 88.93 88.93 88.93
70321B-AB-6 293.45 293.45 293.45 293.45
707832-AC-5 441.31 441.31 441.31 441.31
721467-AB-4 90.81 90.81 90.81 90.81
729173-AB-0 304.12 304.12 304.12 304.12
749084-AA-7 275.79 275.79 275.79 275.79
780232-AA-2 301.91 301.91 301.91 301.91
812139-AA-1 226.84 226.84 226.84 226.84
825390-AB-3 272.26 272.26 272.26 272.26
827048-AB-5 26.36 26.36 26.36 26.36
829226-AA-7 106.57 106.57 106.57 106.57
847499-AC-4 297.48 297.48 297.48 297.48
861589-AN-9 303.69 303.69 303.69 303.69
86881P-AA-5 156.36 156.36 156.36 156.36
870426-AA-1 225.66 225.66 225.66 225.66
895912-AC-7 294.58 294.58 294.58 294.58
90329K-AA-8 143.17 143.17 143.17 143.17
925524-AC-4 239.60 239.60 239.60 239.60
930676-AE-1 317.44 317.44 317.44 317.44
947423-AE-9
961238-AB-8 271.65 271.65 271.65 271.65
969307-AF-4 256.29 256.29 256.29 256.29
20,433.25 20,433.25 20,433.25 20,085.42
1,722.41 583.84 603.77
20,433.25 22,155.66 21,017.09 20,689.19
4,411.82 1,470.02 1,471.64
$20,433.25 $17,743.84 $19,547.07 $19,217.55
16,511,926.740 16,511,926.740 16,540,832.905 16,532,793.579
<PAGE>
12/15/94 12/16/94 12/17/94 12/18/94
CUSIP Day 14 Day 15 Day 16 Day 17
001546-AA-8 301.91 301.91 301.91 301.91
002786-AB-7 141.00 141.00 141.00 141.00
008318-AA-5 162.02 162.02 162.02 162.02
02744R-AA-5 321.58 321.58 321.58 321.58
029717-AB-1 129.39 129.39 129.39 129.39
029717-AH-8 276.07 276.07 276.07 276.07
03071P-AA-0 339.54 339.54 339.54 339.54
033038-AD-2 139.58 139.58 139.58 139.58
040228-AB-4
040228-AB-4 290.73 290.73 290.73 290.73
067774-AB-4 142.98 142.98 142.98 142.98
07556Q-AA-3 206.72 206.72 206.72 206.72
077851-AC-7 224.18 224.18 224.18 224.18
089162-AA-9 303.27 303.27 303.27 303.27
089698-AB-0 164.97 164.97 164.97 164.97
104499-AC-2 286.89 286.89 286.89 286.89
11815H-AA-2 380.33 380.33 380.33 380.33
126915-AD-9 147.71 147.71 147.71 147.71
130209-50-5 147.57 147.57 147.57 147.57
13032R-AG-0 314.28 314.28 314.28 314.28
142522-AD-3 124.89 124.89 124.89 124.89
181514-AB-6 345.97 345.97 345.97 345.97
196267-AD-0 316.80 316.80 316.80 316.80
199904-AB-9 150.03 150.03 150.03 150.03
210305-AB-4 318.40 318.40 318.40 318.40
210741-AK-0 463.50 463.50 463.50 463.50
211177-AD-2 142.53 142.53 142.53 142.53
211177-AE-0 149.92 149.92 149.92 149.92
211177-AJ-9 130.53 130.53 130.53 130.53
25246P-AC-9
25246P-AD-7 111.80 111.80 111.80 111.80
25247P-12-0
25612T-AA-1 43.82 43.82 43.82 43.82
269612-AB-3 139.78 139.78 139.78 139.78
29409W-AB-1 281.93 281.93 281.93 281.93
297015-AB-5 288.51 288.51 288.51 288.51
302051-AB-3 213.35 213.35 213.35 213.35
302051-AC-1 35.74 35.74 35.74 35.74
307054-AA-4 155.09 155.09 155.09 155.09
313453-AD-4 147.55 147.55 147.55 147.55
338473-AB-7 336.69 336.69 336.69 336.69
338473-AD-3 316.78 316.78 316.78 316.78
344839-AE-5
347460-AF-4 194.76 194.76 194.76 194.76
347463-AA-9 144.98 144.98 144.98 144.98
361916-AK-5 403.51 403.51 403.51 403.51
368145-AG-3 316.31 316.31 316.31 316.31
370299-AE-9 329.36 329.36 329.36 329.36
370471-AC-8 74.55 74.55 74.55 74.55
373280-AE-6 408.50 408.50 408.50 408.50
386532-AD-7
456626-AC-4 282.10 282.10 282.10 282.10
456626-10-0 0.00 0.00 0.00 0.00
457472-AB-4 142.32 142.32 142.32 142.32
46624E-AG-3 163.81 163.81 163.81 163.81
480695-AC-9 300.78 300.78 300.78 300.78
501044-AW-1 270.97 270.97 270.97 270.97
<PAGE>
12/15/94 12/16/94 12/17/94 12/18/94
CUSIP Day 14 Day 15 Day 16 Day 17
502175-AB-8 237.82 237.82 237.82 237.82
502175-10-2 0.00 0.00 0.00 0.00
517289-AA-2 364.17 364.17 364.17 364.17
521893-AB-3 386.25 386.25 386.25 386.25
55272T-AA-9 49.53 49.53 49.53 49.53
554208-AA-6 35.81 35.81 35.81 35.81
560319-AA-3 154.19 154.19 154.19 154.19
570387-AG-5 392.36 392.36 392.36 392.36
627578-AA-5 403.24 403.24 403.24 403.24
62944T-AA-3 325.55 325.55 325.55 325.55
656559-AQ-4 145.42 145.42 145.42 145.42
671042-AA-7 135.78 135.78 135.78 135.78
690057-AA-2 309.58 309.58 309.58 309.58
690768-AG-1 275.40 275.40 275.40 275.40
69830C-AA-2 269.78 269.78 269.78 269.78
69830C-AB-0 88.93 88.93 88.93 88.93
70321B-AB-6 293.45 293.45 293.45 293.45
707832-AC-5 441.31 441.31 441.31 441.31
721467-AB-4 90.81 90.81 90.81 90.81
729173-AB-0 304.12 304.12 304.12 304.12
749084-AA-7 275.79 275.79 275.79 275.79
780232-AA-2 301.91 301.91 301.91 301.91
812139-AA-1 226.84 226.84 226.84 226.84
825390-AB-3 272.26 272.26 272.26 272.26
827048-AB-5 26.36 26.36 26.36 26.36
829226-AA-7 106.57 106.57 106.57 106.57
847499-AC-4 297.48 297.48 297.48 297.48
861589-AN-9 303.69 303.69 303.69 303.69
86881P-AA-5 156.36 156.36 156.36 156.36
870426-AA-1 225.66 225.66 225.66 225.66
895912-AC-7 294.58 294.58 294.58 294.58
90329K-AA-8 143.17 143.17 143.17 143.17
925524-AC-4 239.60 239.60 239.60 239.60
930676-AE-1 317.44 317.44 317.44 317.44
947423-AE-9
961238-AB-8 271.65 271.65 271.65 271.65
969307-AF-4 256.29 256.29 256.29 256.29
20,085.42 20,085.42 20,085.42 20,085.42
736.88 821.52
20,822.30 20,906.94 20,085.42 20,085.42
1,474.95 1,475.18
$19,347.35 $19,431.76 $20,085.42 $20,085.42
16,536,336.748 16,536,362.592 16,546,590.986 16,546,590.986
<PAGE>
12/19/94 12/20/94 12/21/94 12/22/94
CUSIP Day 18 Day 19 Day 20 Day 21
001546-AA-8 301.91 301.91 301.91 301.91
002786-AB-7 141.00 141.00 141.00 141.00
008318-AA-5 162.02 162.02 162.02 162.02
02744R-AA-5 321.58 321.58 321.58 321.58
029717-AB-1 129.39 129.39 129.39 129.39
029717-AH-8 276.07 276.07 276.07 276.07
03071P-AA-0 339.54 339.54 339.54 339.54
033038-AD-2 139.58 139.58 139.58 139.58
040228-AB-4
040228-AB-4 290.73 290.73 290.73 290.73
067774-AB-4 142.98 142.98 142.98 142.98
07556Q-AA-3 206.72 206.72 206.72 206.72
077851-AC-7 224.18 224.18 224.18 224.18
089162-AA-9 303.27 303.27 303.27 303.27
089698-AB-0 164.97 164.97 164.97 164.97
104499-AC-2 286.89 286.89 286.89 286.89
11815H-AA-2 380.33 380.33 380.33 380.33
126915-AD-9 147.71 147.71 147.71 147.71
130209-50-5 147.57 147.57 147.57 147.57
13032R-AG-0 314.28 314.28 314.28 314.28
142522-AD-3 124.89 124.89 124.89 124.89
181514-AB-6 345.97 345.97 345.97 345.97
196267-AD-0 316.80 316.80 316.80 316.80
199904-AB-9 150.03 150.03 150.03 150.03
210305-AB-4 318.40 318.40 318.40 318.40
210741-AK-0 463.50 463.50 463.50 463.50
211177-AD-2 142.53 142.53 142.53 142.53
211177-AE-0 149.92 149.92 149.92 149.92
211177-AJ-9 130.53 130.53 130.53 130.53
25246P-AC-9
25246P-AD-7 111.80 111.80 111.80 111.80
25247P-12-0
25612T-AA-1 43.82 43.82 43.82 43.82
269612-AB-3 139.78 139.78 139.78 139.78
29409W-AB-1 281.93 281.93 281.93 281.93
297015-AB-5 288.51 288.51 288.51 288.51
302051-AB-3 213.35 213.35 213.35 213.35
302051-AC-1 35.74 35.74 35.74 35.74
307054-AA-4 155.09 155.09 155.09 155.09
313453-AD-4 147.55 147.55 147.55 147.55
338473-AB-7 336.69 336.69 336.69 336.69
338473-AD-3 316.78 316.78 316.78 316.78
344839-AE-5
347460-AF-4 194.76 194.76 194.76 194.76
347463-AA-9 144.98 144.98 144.98 144.98
361916-AK-5 403.51 403.51 403.51 403.51
368145-AG-3 316.31 316.31 316.31 316.31
370299-AE-9 329.36 329.36 329.36 329.36
370471-AC-8 74.55 74.55 74.55 74.55
373280-AE-6 408.50 408.50 408.50 408.50
386532-AD-7
456626-AC-4 282.10 282.10 282.10 282.10
456626-10-0 0.00 0.00 0.00 0.00
457472-AB-4 142.32 142.32 142.32 142.32
46624E-AG-3 163.81 163.81 163.81 163.81
480695-AC-9 300.78 300.78 300.78 300.78
501044-AW-1 270.97 270.97 270.97 270.97
<PAGE>
12/19/94 12/20/94 12/21/94 12/22/94
CUSIP Day 18 Day 19 Day 20 Day 21
502175-AB-8 237.82 237.82 237.82 237.82
502175-10-2 0.00 0.00 0.00 0.00
517289-AA-2 364.17 364.17 364.17 364.17
521893-AB-3 386.25 386.25 386.25 386.25
55272T-AA-9 49.53 49.53 49.53 49.53
554208-AA-6 35.81 35.81 35.81 35.81
560319-AA-3 154.19 154.19 154.19 154.19
570387-AG-5 392.36 392.36 392.36 392.36
627578-AA-5 403.24 403.24 403.24 403.24
62944T-AA-3 325.55 325.55 325.55 325.55
656559-AQ-4 145.42 145.42 145.42 145.42
671042-AA-7 135.78 135.78 135.78 135.78
690057-AA-2 309.58 309.58 309.58 309.58
690768-AG-1 275.40 275.40 275.40 275.40
69830C-AA-2 269.78 269.78 269.78 269.78
69830C-AB-0 88.93 88.93 88.93 88.93
70321B-AB-6 293.45 293.45 293.45 293.45
707832-AC-5 441.31 441.31 441.31 441.31
721467-AB-4 90.81 90.81 90.81 90.81
729173-AB-0 304.12 304.12 304.12 304.12
749084-AA-7 275.79 275.79 275.79 275.79
780232-AA-2 301.91 301.91 301.91 301.91
812139-AA-1 226.84 226.84 226.84 226.84
825390-AB-3 272.26 272.26 272.26 272.26
827048-AB-5 26.36 26.36 26.36 26.36
829226-AA-7 106.57 106.57 106.57 106.57
847499-AC-4 297.48 297.48 297.48 297.48
861589-AN-9 303.69 303.69 303.69 303.69
86881P-AA-5 156.36 156.36 156.36 156.36
870426-AA-1 225.66 225.66 225.66 225.66
895912-AC-7 294.58 294.58 294.58 294.58
90329K-AA-8 143.17 143.17 143.17 143.17
925524-AC-4 239.60 239.60 239.60 239.60
930676-AE-1 317.44 317.44 317.44 317.44
947423-AE-9
961238-AB-8 271.65 271.65 271.65 271.65
969307-AF-4 256.29 256.29 256.29 256.29
20,085.42 20,085.42 20,085.42 20,085.42
2,467.63 834.17 822.45 806.29
22,553.05 20,919.59 20,907.87 20,891.71
4,426.27 1,477.21 1,479.40 1,480.91
$18,126.78 $19,442.38 $19,428.47 $19,410.80
16,546,590.986 16,530,697.152 16,505,335.021 16,500,245.127
<PAGE>
12/23/94 12/24/94 12/25/94 12/26/94
CUSIP Day 22 Day 23 Day 24 Day 25
001546-AA-8 301.91 301.91 301.91 301.91
002786-AB-7 141.00 141.00 141.00 141.00
008318-AA-5 162.02 162.02 162.02 162.02
02744R-AA-5 321.58 321.58 321.58 321.58
029717-AB-1 129.39 129.39 129.39 129.39
029717-AH-8 276.07 276.07 276.07 276.07
03071P-AA-0 339.54 339.54 339.54 339.54
033038-AD-2 139.58 139.58 139.58 139.58
040228-AB-4
040228-AB-4 290.73 290.73 290.73 290.73
067774-AB-4 142.98 142.98 142.98 142.98
07556Q-AA-3 206.72 206.72 206.72 206.72
077851-AC-7 224.18 224.18 224.18 224.18
089162-AA-9 303.27 303.27 303.27 303.27
089698-AB-0 164.97 164.97 164.97 164.97
104499-AC-2 286.89 286.89 286.89 286.89
11815H-AA-2 380.33 380.33 380.33 380.33
126915-AD-9 147.71 147.71 147.71 147.71
130209-50-5 147.57 147.57 147.57 147.57
13032R-AG-0 314.28 314.28 314.28 314.28
142522-AD-3 124.89 124.89 124.89 124.89
181514-AB-6 345.97 345.97 345.97 345.97
196267-AD-0 316.80 316.80 316.80 316.80
199904-AB-9 150.03 150.03 150.03 150.03
210305-AB-4 318.40 318.40 318.40 318.40
210741-AK-0 463.50 463.50 463.50 463.50
211177-AD-2 142.53 142.53 142.53 142.53
211177-AE-0 149.92 149.92 149.92 149.92
211177-AJ-9 130.53 130.53 130.53 130.53
25246P-AC-9
25246P-AD-7 111.80 111.80 111.80 111.80
25247P-12-0
25612T-AA-1 43.82 43.82 43.82 43.82
269612-AB-3 139.78 139.78 139.78 139.78
29409W-AB-1 281.93 281.93 281.93 281.93
297015-AB-5 288.51 288.51 288.51 288.51
302051-AB-3 213.35 213.35 213.35 213.35
302051-AC-1 35.74 35.74 35.74 35.74
307054-AA-4 155.09 155.09 155.09 155.09
313453-AD-4 147.55 147.55 147.55 147.55
338473-AB-7 336.69 336.69 336.69 336.69
338473-AD-3 316.78 316.78 316.78 316.78
344839-AE-5
347460-AF-4 194.76 194.76 194.76 194.76
347463-AA-9 144.98 144.98 144.98 144.98
361916-AK-5 403.51 403.51 403.51 403.51
368145-AG-3 316.31 316.31 316.31 316.31
370299-AE-9 329.36 329.36 329.36 329.36
370471-AC-8 74.55 74.55 74.55 74.55
373280-AE-6 408.50 408.50 408.50 408.50
386532-AD-7
456626-AC-4 282.10 282.10 282.10 282.10
456626-10-0 0.00 0.00 0.00 0.00
457472-AB-4 142.32 142.32 142.32 142.32
46624E-AG-3 163.81 163.81 163.81 163.81
480695-AC-9 300.78 300.78 300.78 300.78
501044-AW-1 270.97 270.97 270.97 270.97
<PAGE>
12/23/94 12/24/94 12/25/94 12/26/94
CUSIP Day 22 Day 23 Day 24 Day 25
502175-AB-8 237.82 237.82 237.82 237.82
502175-10-2 0.00 0.00 0.00 0.00
517289-AA-2 364.17 364.17 364.17 364.17
521893-AB-3 386.25 386.25 386.25 386.25
55272T-AA-9 49.53 49.53 49.53 49.53
554208-AA-6 35.81 35.81 35.81 35.81
560319-AA-3 154.19 154.19 154.19 154.19
570387-AG-5 392.36 392.36 392.36 392.36
627578-AA-5 403.24 403.24 403.24 403.24
62944T-AA-3 325.55 325.55 325.55 325.55
656559-AQ-4 145.42 145.42 145.42 145.42
671042-AA-7 135.78 135.78 135.78 135.78
690057-AA-2 309.58 309.58 309.58 309.58
690768-AG-1 275.40 275.40 275.40 275.40
69830C-AA-2 269.78 269.78 269.78 269.78
69830C-AB-0 88.93 88.93 88.93 88.93
70321B-AB-6 293.45 293.45 293.45 293.45
707832-AC-5 441.31 441.31 441.31 441.31
721467-AB-4 90.81 90.81 90.81 90.81
729173-AB-0 304.12 304.12 304.12 304.12
749084-AA-7 275.79 275.79 275.79 275.79
780232-AA-2 301.91 301.91 301.91 301.91
812139-AA-1 226.84 226.84 226.84 226.84
825390-AB-3 272.26 272.26 272.26 272.26
827048-AB-5 26.36 26.36 26.36 26.36
829226-AA-7 106.57 106.57 106.57 106.57
847499-AC-4 297.48 297.48 297.48 297.48
861589-AN-9 303.69 303.69 303.69 303.69
86881P-AA-5 156.36 156.36 156.36 156.36
870426-AA-1 225.66 225.66 225.66 225.66
895912-AC-7 294.58 294.58 294.58 294.58
90329K-AA-8 143.17 143.17 143.17 143.17
925524-AC-4 239.60 239.60 239.60 239.60
930676-AE-1 317.44 317.44 317.44 317.44
947423-AE-9
961238-AB-8 271.65 271.65 271.65 271.65
969307-AF-4 256.29 256.29 256.29 256.29
20,085.42 20,085.42 20,085.42 20,085.42
802.94
20,888.36 20,085.42 20,085.42 20,085.42
1,480.24
$19,408.12 $20,085.42 $20,085.42 $20,085.42
16,516,894.770 16,525,003.899 16,525,003.899 16,525,003.899
<PAGE>
12/27/94 12/28/94 12/29/94 12/30/94
CUSIP Day 26 Day 27 Day 28 Day 29
001546-AA-8 301.91 301.91 301.91 301.91
002786-AB-7 141.00 141.00 141.00 141.00
008318-AA-5 162.02 162.02 162.02 162.02
02744R-AA-5 321.58 321.58 321.58 321.58
029717-AB-1 129.39 129.39 129.39 129.39
029717-AH-8 276.07 276.07 276.07 276.07
03071P-AA-0 339.54 339.54 339.54 339.54
033038-AD-2 139.58 139.58 139.58 139.58
040228-AB-4
040228-AB-4 290.73 290.73 290.73 290.73
067774-AB-4 142.98 142.98 142.98 142.98
07556Q-AA-3 206.72 206.72 206.72 206.72
077851-AC-7 224.18 224.18 224.18 224.18
089162-AA-9 303.27 303.27 303.27 303.27
089698-AB-0 164.97 164.97 164.97 164.97
104499-AC-2 286.89 286.89 286.89 286.89
11815H-AA-2 380.33 380.33 380.33 380.33
126915-AD-9 147.71 147.71 147.71 147.71
130209-50-5 147.57 147.57 147.57 147.57
13032R-AG-0 314.28 314.28 314.28 314.28
142522-AD-3 124.89 124.89 124.89 124.89
181514-AB-6 345.97 345.97 345.97 345.97
196267-AD-0 316.80 316.80 316.80 316.80
199904-AB-9 150.03 150.03 150.03 150.03
210305-AB-4 318.40 318.40 318.40 318.40
210741-AK-0 463.50 463.50 463.50 463.50
211177-AD-2 142.53 142.53 142.53 142.53
211177-AE-0 149.92 149.92 149.92 149.92
211177-AJ-9 130.53 130.53 130.53 130.53
25246P-AC-9 99.43
25246P-AD-7 111.80 111.80 111.80
25247P-12-0 0.00
25612T-AA-1 43.82 43.82 43.82 43.82
269612-AB-3 139.78 139.78 139.78 139.78
29409W-AB-1 281.93 281.93 281.93 281.93
297015-AB-5 288.51 288.51 288.51 288.51
302051-AB-3 213.35 213.35 213.35 213.35
302051-AC-1 35.74 35.74 35.74 35.74
307054-AA-4 155.09 155.09 155.09 155.09
313453-AD-4 147.55 147.55 147.55 147.55
338473-AB-7 336.69 336.69 336.69 336.69
338473-AD-3 316.78 316.78 316.78 316.78
344839-AE-5
347460-AF-4 194.76 194.76 194.76 194.76
347463-AA-9 144.98 144.98 144.98 144.98
361916-AK-5 403.51 403.51 403.51 403.51
368145-AG-3 316.31 316.31 316.31 316.31
370299-AE-9 329.36 329.36 329.36 329.36
370471-AC-8 74.55 74.55 74.55 74.55
373280-AE-6 408.50 408.50 408.50 408.50
386532-AD-7
456626-AC-4 282.10 282.10 282.10 282.10
456626-10-0 0.00 0.00 0.00 0.00
457472-AB-4 142.32 142.32 142.32 142.32
46624E-AG-3 163.81 163.81 163.81 163.81
480695-AC-9 300.78 300.78 300.78 300.78
501044-AW-1 270.97 270.97 270.97 270.97
<PAGE>
12/27/94 12/28/94 12/29/94 12/30/94
CUSIP Day 26 Day 27 Day 28 Day 29
502175-AB-8 237.82 237.82 237.82 237.82
502175-10-2 0.00 0.00 0.00 0.00
517289-AA-2 364.17 364.17 364.17 364.17
521893-AB-3 386.25 386.25 386.25 386.25
55272T-AA-9 49.53 49.53 49.53 49.53
554208-AA-6 35.81 35.81 35.81 35.81
560319-AA-3 154.19 154.19 154.19 154.19
570387-AG-5 392.36 392.36 392.36 392.36
627578-AA-5 403.24 403.24 403.24 403.24
62944T-AA-3 325.55 325.55 325.55 325.55
656559-AQ-4 145.42 145.42 145.42 145.42
671042-AA-7 135.78 135.78 135.78 135.78
690057-AA-2 309.58 309.58 309.58 309.58
690768-AG-1 275.40 275.40 275.40 275.40
69830C-AA-2 269.78 269.78 269.78 269.78
69830C-AB-0 88.93 88.93 88.93 88.93
70321B-AB-6 293.45 293.45 293.45 293.45
707832-AC-5 441.31 441.31 441.31 441.31
721467-AB-4 90.81 90.81 90.81 90.81
729173-AB-0 304.12 304.12 304.12 304.12
749084-AA-7 275.79 275.79 275.79 275.79
780232-AA-2 301.91 301.91 301.91 301.91
812139-AA-1 226.84 226.84 226.84 226.84
825390-AB-3 272.26 272.26 272.26 272.26
827048-AB-5 26.36 26.36 26.36 26.36
829226-AA-7 106.57 106.57 106.57 106.57
847499-AC-4 297.48 297.48 297.48 297.48
861589-AN-9 303.69 303.69 303.69 303.69
86881P-AA-5 156.36 156.36 156.36 156.36
870426-AA-1 225.66 225.66 225.66 225.66
895912-AC-7 294.58 294.58 294.58 294.58
90329K-AA-8 143.17 143.17 143.17 143.17
925524-AC-4 239.60 239.60 239.60 239.60
930676-AE-1 317.44 317.44 317.44 317.44
947423-AE-9
961238-AB-8 271.65 271.65 271.65 271.65
969307-AF-4 256.29 256.29 256.29 256.29
20,085.42 20,085.42 20,085.42 20,073.04
3,213.75 810.71 809.49 810.25
23,299.17 20,896.13 20,894.91 20,883.29
5,922.14 1,485.21 (8,810.71) 1,490.98
$17,377.03 $19,410.92 $29,705.62 $19,392.31
16,525,003.899 16,529,392.178 16,531,387.348 17,667,001.240
<PAGE>
12/31/94
CUSIP Day 30 Count Total
001546-AA-8 301.91 30 $9,057
002786-AB-7 141.00 30 $4,230
008318-AA-5 162.02 30 $4,860
02744R-AA-5 321.58 30 $9,647
029717-AB-1 129.39 30 $3,882
029717-AH-8 276.07 30 $8,282
03071P-AA-0 339.54 30 $10,186
033038-AD-2 139.58 30 $4,187
040228-AB-4 12 $3,842
040228-AB-4 290.73 18 $5,233
067774-AB-4 142.98 30 $4,289
07556Q-AA-3 206.72 30 $6,201
077851-AC-7 224.18 30 $6,725
089162-AA-9 303.27 30 $9,098
089698-AB-0 164.97 30 $4,949
104499-AC-2 286.89 30 $8,607
11815H-AA-2 380.33 30 $11,410
126915-AD-9 147.71 30 $4,431
130209-50-5 147.57 30 $4,427
13032R-AG-0 314.28 30 $9,428
142522-AD-3 124.89 30 $3,747
181514-AB-6 345.97 30 $10,379
196267-AD-0 316.80 30 $9,504
199904-AB-9 150.03 30 $4,501
210305-AB-4 318.40 30 $9,552
210741-AK-0 463.50 30 $13,905
211177-AD-2 142.53 30 $4,276
211177-AE-0 149.92 30 $4,498
211177-AJ-9 130.53 30 $3,916
25246P-AC-9 99.43 2 $199
25246P-AD-7 28 $3,130
25247P-12-0 0.00 2 $0
25612T-AA-1 43.82 30 $1,314
269612-AB-3 139.78 30 $4,193
29409W-AB-1 281.93 30 $8,458
297015-AB-5 288.51 30 $8,655
302051-AB-3 213.35 30 $6,401
302051-AC-1 35.74 30 $1,072
307054-AA-4 155.09 30 $4,653
313453-AD-4 147.55 30 $4,427
338473-AB-7 336.69 30 $10,101
338473-AD-3 316.78 30 $9,503
344839-AE-5 12 $3,821
347460-AF-4 194.76 30 $5,843
347463-AA-9 144.98 30 $4,349
361916-AK-5 403.51 30 $12,105
368145-AG-3 316.31 30 $9,489
370299-AE-9 329.36 30 $9,881
370471-AC-8 74.55 30 $2,237
373280-AE-6 408.50 30 $12,255
386532-AD-7 4 $1,596
456626-AC-4 282.10 30 $8,463
456626-10-0 0.00 30 $0
457472-AB-4 142.32 30 $4,269
46624E-AG-3 163.81 30 $4,914
480695-AC-9 300.78 30 $9,023
501044-AW-1 270.97 30 $8,129
<PAGE>
12/31/94
CUSIP Day 30 Count Total
502175-AB-8 237.82 30 $7,135
502175-10-2 0.00 30 $0
517289-AA-2 364.17 30 $10,925
521893-AB-3 386.25 30 $11,588
55272T-AA-9 49.53 30 $1,486
554208-AA-6 35.81 30 $1,074
560319-AA-3 154.19 30 $4,626
570387-AG-5 392.36 30 $11,771
627578-AA-5 403.24 30 $12,097
62944T-AA-3 325.55 30 $9,766
656559-AQ-4 145.42 30 $4,363
671042-AA-7 135.78 30 $4,073
690057-AA-2 309.58 30 $9,287
690768-AG-1 275.40 30 $8,262
69830C-AA-2 269.78 30 $8,094
69830C-AB-0 88.93 30 $2,668
70321B-AB-6 293.45 30 $8,804
707832-AC-5 441.31 30 $13,239
721467-AB-4 90.81 30 $2,724
729173-AB-0 304.12 30 $9,124
749084-AA-7 275.79 30 $8,274
780232-AA-2 301.91 30 $9,057
812139-AA-1 226.84 30 $6,805
825390-AB-3 272.26 30 $8,168
827048-AB-5 26.36 30 $791
829226-AA-7 106.57 30 $3,197
847499-AC-4 297.48 30 $8,925
861589-AN-9 303.69 30 $9,111
86881P-AA-5 156.36 30 $4,691
870426-AA-1 225.66 30 $6,770
895912-AC-7 294.58 30 $8,837
90329K-AA-8 143.17 30 $4,295
925524-AC-4 239.60 30 $7,188
930676-AE-1 317.44 30 $9,523
947423-AE-9 5 $736
961238-AB-8 271.65 30 $8,149
969307-AF-4 256.29 30 $7,689
20,073.04 $609,045
$0
$19,587
20,073.04 $628,631
$32,519
$20,073.04 $596,112
Average
17,667,001.240 30 16,597,434.967
$4.1118
10.71%
<PAGE>
TMI/UNITED LIMITED TERM BOND PORTFOLIO
Yield for Advertising
For the 30 days ended December 31, 1994
TICKER
CUSIP SECURITY RATE MATURITY SYMBOL
046003-DU-0 Assoc Corp NA 8.800% 08/01/98 *AC98
053528-BW-4 Avco Finl Svcs 5.500% 04/01/2000 *AVC00
055625-AD-9 BP America 9.500% 01/01/98 *
066050-BH-7 BKAmerica Corp 9.700% 08/01/2000 *BAC00
071813-AC-3 Baxter Intl 9.250% 09/15/96 *BAX96
096650-AB-2 Boatmens Bancshr 9.250% 11/01/2001 *BB01
16675H-AF-9 Chevron Corp 8.110% 12/01/2004 *CHV04
209615-BH-5 Consol Nat Gas 8.750% 06/01/99 *CNG99
260543-BD-4 Dow Chem Co 4.625% 10/15/95 *DOW95
313309-AE-6 Fed Express 9.750% 05/15/96 *FDX96
345397-GM-9 Ford Motor 8.000% 01/15/98 *FMC99
370442-AP-0 GM 7.625% 02/15/97 *GM/97
441812-CE-2 Household Fin Co 7.750% 06/15/97 *HF97
449909-AA-8 ICI Wilmington 9.500% 11/15/2000 *
45068H-AB-2 ITT Hartfold 7.250% 12/01/96 *IT96
450680-AG-8 ITT Financial 8.875% 06/15/2003 *ITT03
628855-AM-0 NCNB Corp 10.500% 03/15/99 *NCN99
669383-CV-1 Norwest Finl Inc 7.750% 08/15/2001 *NOR01
708160-AY-2 Penney (JC) 10.000% 10/15/97 *JCP97
812387-AX-6 Sears Roebuck 9.250% 04/15/98 *S98
880357-AC-2 Tenneco Credit 9.000% 07/15/95 *TGT95
881685-AM-3 Texaco Capital 9.000% 12/15/99 *TXC99
893502-BH-6 Transamerica Fin 8.750% 10/01/99 *TAF99
912827-G5-5 U S Treas Note 6.375% 08/15/2002 *UST02
912827-J7-8 U S Treasury Note 6.250% 02/15/2003 *U/S03
912827-N2-4 U S Treasury 5.125% 11/30/98 *TR/98
941063-AH-2 Waste Mgmt 6.250% 12/15/95 *WXM95
983901-BK-4 Xerox Credit 6.250% 01/15/96 *XRX96
Gain (loss) on paydowns
Short-term investment income
Gross income
Expenses
Net income
Shares Outstanding
Maximum offering price on last day of period
Yield
<PAGE>
TICKER MARKET PRICE MARKET VALUE ACCRUED
CUSIP POSITION PER UNIT OF SECURITY INTEREST TOTAL
046003-DU-0 50,000 101.308000 50,654.00 1,459.10 52,113.10
053528-BW-4 50,000 88.169000 44,084.50 461.45 44,545.95
055625-AD-9 50,000 103.684000 51,842.00 2,124.31 53,966.31
066050-BH-7 50,000 104.813000 52,406.50 1,608.46 54,014.96
071813-AC-3 50,000 102.144000 51,072.00 984.42 52,056.42
096650-AB-2 50,000 102.960000 51,480.00 384.23 51,864.23
16675H-AF-9 50,000 98.312000 49,156.00 1,684.02 50,840.02
209615-BH-5 50,000 101.625000 50,812.50 2,187.50 53,000.00
260543-BD-4 60,000 97.751000 58,650.60 358.77 59,009.37
313309-AE-6 50,000 102.473000 51,236.50 216.60 51,453.10
345397-GM-9 50,000 98.578000 49,289.00 1,511.30 50,800.30
370442-AP-0 50,000 98.731000 49,365.50 1,118.89 50,484.39
441812-CE-2 50,000 99.308000 49,654.00 1,789.24 51,443.24
449909-AA-8 75,000 104.772000 78,579.00 831.25 79,410.25
45068H-AB-2 50,000 98.435000 49,217.50 1,812.50 51,030.00
450680-AG-8 50,000 102.255000 51,127.50 2,049.07 53,176.57
628855-AM-0 50,000 103.325000 51,662.50 1,115.96 52,778.46
669383-CV-1 50,000 97.111000 48,555.50 373.74 48,929.24
708160-AY-2 50,000 104.881000 52,440.50 646.45 53,086.95
812387-AX-6 50,000 102.995000 51,497.50 598.00 52,095.50
880357-AC-2 50,000 100.986000 50,493.00 1,699.65 52,192.65
881685-AM-3 50,000 103.156000 51,578.00 2,077.80 53,655.80
893502-BH-6 50,000 101.427000 50,713.50 734.29 51,447.79
912827-G5-5 100,000 91.484000 91,484.00 1,871.18 93,355.18
912827-J7-8 100,000 90.141000 90,141.00 1,834.52 91,975.52
912827-N2-4 100,000 91.031000 91,031.00 2,578.00 93,609.00
941063-AH-2 50,000 98.780000 49,390.00 1,443.08 50,833.08
983901-BK-4 50,000 98.471000 49,235.50 1,180.45 50,415.95
1,585,000 1,566,849.10
<PAGE>
YIELD YIELD TO YIELD
SETTLEMENT CALL CALL TO MATURITY TO
CUSIP DATE DATE PRICE OID MATURITYPER INTEX CALL
046003-DU-0 11/30/94 7.45% 7.456600%
053528-BW-4 11/30/94 8.05% 8.052203%
055625-AD-9 12/12/94 6.586428%
066050-BH-7 11/30/94 7.91% 7.910324%
071813-AC-3 11/30/94 6.76% 6.762791%
096650-AB-2 11/30/94 8.52% 8.523138%
16675H-AF-9 11/30/94 7.86% 7.864225%
209615-BH-5 11/30/94 7.03% 7.167278%
260543-BD-4 11/30/94 6.59% 6.589367%
313309-AE-6 11/30/94 7.59% 7.601977%
345397-GM-9 11/30/94 7.53% 7.411825%
370442-AP-0 11/30/94 7.13% 7.134988%
441812-CE-2 11/30/94 6.49% 6.497612%
449909-AA-8 12/27/94 8.215848%
45068H-AB-2 11/30/94 6.13% 6.141003%
450680-AG-8 11/30/94 7.84% 7.839529%
628855-AM-0 11/30/94 8.90% 8.905316%
669383-CV-1 11/30/94 8.17% 8.167192%
708160-AY-2 11/30/94 7.56% 7.563592%
812387-AX-6 11/30/94 7.80% 7.807811%
880357-AC-2 11/30/94 1.86% 1.901962%
881685-AM-3 11/30/94 7.24% 7.241658%
893502-BH-6 11/30/94 8.01% 8.011246%
912827-G5-5 11/30/94 7.52% 7.524245%
912827-J7-8 11/30/94 7.58% 7.578483%
912827-N2-4 11/30/94 6.98% 6.983856%
941063-AH-2 11/30/94 4.58% 4.590949%
983901-BK-4 11/30/94 5.46% 5.470126%
<PAGE>
YIELD TO
CALL DAILY DAILY
CUSIP PER INTEX YIELD YIELD YIELD ACCRUAL
046003-DU-0 7.457% 0.02071278% 10.79
053528-BW-4 8.052% 0.02236723% 9.96
055625-AD-9 6.586% 0.01829563% 9.87
066050-BH-7 7.910% 0.02197312% 11.87
071813-AC-3 6.763% 0.01878553% 9.78
096650-AB-2 8.523% 0.02367538% 12.28
16675H-AF-9 7.864% 0.02184507% 11.11
209615-BH-5 7.167% 0.01990911% 10.55
260543-BD-4 6.589% 0.01830380% 10.80
313309-AE-6 7.602% 0.02111660% 10.87
345397-GM-9 7.412% 0.02058840% 10.46
370442-AP-0 7.135% 0.01981941% 10.01
441812-CE-2 6.498% 0.01804892% 9.28
449909-AA-8 8.216% 0.02282180% 18.12
45068H-AB-2 6.141% 0.01705834% 8.70
450680-AG-8 7.840% 0.02177647% 11.58
628855-AM-0 8.905% 0.02473699% 13.06
669383-CV-1 8.167% 0.02268664% 11.10
708160-AY-2 7.564% 0.02100998% 11.15
812387-AX-6 7.808% 0.02168836% 11.30
880357-AC-2 1.902% 0.00528323% 2.76
881685-AM-3 7.242% 0.02011572% 10.79
893502-BH-6 8.011% 0.02225346% 11.45
912827-G5-5 7.524% 0.02090068% 19.51
912827-J7-8 7.578% 0.02105134% 19.36
912827-N2-4 6.984% 0.01939960% 18.16
941063-AH-2 4.591% 0.01275263% 6.48
983901-BK-4 5.470% 0.01519479% 7.66
<PAGE>
12/02/94 12/03/94 12/04/94 12/05/94
CUSIP Day 1 Day 2 Day 3 Day 4
046003-DU-0 10.79 10.79 10.79 10.79
053528-BW-4 9.96 9.96 9.96 9.96
055625-AD-9
066050-BH-7 11.87 11.87 11.87 11.87
071813-AC-3 9.78 9.78 9.78 9.78
096650-AB-2 12.28 12.28 12.28 12.28
16675H-AF-9 11.11 11.11 11.11 11.11
209615-BH-5 10.55 10.55 10.55 10.55
260543-BD-4 10.80 10.80 10.80 10.80
313309-AE-6 10.87 10.87 10.87 10.87
345397-GM-9 10.46 10.46 10.46 10.46
370442-AP-0 10.01 10.01 10.01 10.01
441812-CE-2 9.28 9.28 9.28 9.28
449909-AA-8
45068H-AB-2 8.70 8.70 8.70 8.70
450680-AG-8 11.58 11.58 11.58 11.58
628855-AM-0 13.06 13.06 13.06 13.06
669383-CV-1 11.10 11.10 11.10 11.10
708160-AY-2 11.15 11.15 11.15 11.15
812387-AX-6 11.30 11.30 11.30 11.30
880357-AC-2 2.76 2.76 2.76 2.76
881685-AM-3 10.79 10.79 10.79 10.79
893502-BH-6 11.45 11.45 11.45 11.45
912827-G5-5 19.51 19.51 19.51 19.51
912827-J7-8 19.36 19.36 19.36 19.36
912827-N2-4 18.16 18.16 18.16 18.16
941063-AH-2 6.48 6.48 6.48 6.48
983901-BK-4 7.66 7.66 7.66 7.66
290.83 290.83 290.83 290.83
11.89 39.49
302.72 290.83 290.83 330.32
42.23 127.21
$260.49 $290.83 $290.83 $203.11
314,238.282 314,501.128 314,501.128 314,501.128
<PAGE>
12/06/94 12/07/94 12/08/94 12/09/94
CUSIP Day 5 Day 6 Day 7 Day 8
046003-DU-0 10.79 10.79 10.79 10.79
053528-BW-4 9.96 9.96 9.96 9.96
055625-AD-9
066050-BH-7 11.87 11.87 11.87 11.87
071813-AC-3 9.78 9.78 9.78 9.78
096650-AB-2 12.28 12.28 12.28 12.28
16675H-AF-9 11.11 11.11 11.11 11.11
209615-BH-5 10.55 10.55 10.55 10.55
260543-BD-4 10.80 10.80 10.80 10.80
313309-AE-6 10.87 10.87 10.87 10.87
345397-GM-9 10.46 10.46 10.46 10.46
370442-AP-0 10.01 10.01 10.01 10.01
441812-CE-2 9.28 9.28 9.28 9.28
449909-AA-8
45068H-AB-2 8.70 8.70 8.70 8.70
450680-AG-8 11.58 11.58 11.58 11.58
628855-AM-0 13.06 13.06 13.06 13.06
669383-CV-1 11.10 11.10 11.10 11.10
708160-AY-2 11.15 11.15 11.15 11.15
812387-AX-6 11.30 11.30 11.30 11.30
880357-AC-2 2.76 2.76 2.76 2.76
881685-AM-3 10.79 10.79 10.79 10.79
893502-BH-6 11.45 11.45 11.45 11.45
912827-G5-5 19.51 19.51 19.51 19.51
912827-J7-8 19.36 19.36 19.36 19.36
912827-N2-4 18.16 18.16 18.16 18.16
941063-AH-2 6.48 6.48 6.48 6.48
983901-BK-4 7.66 7.66 7.66 7.66
290.83 290.83 290.83 290.83
16.91 16.91 17.62 17.62
307.74 307.74 308.45 308.45
42.99 43.14 43.09 43.24
$264.75 $264.60 $265.36 $265.21
314,522.101 315,526.508 315,526.508 315,585.487
<PAGE>
12/10/94 12/11/94 12/12/94 12/13/94
CUSIP Day 9 Day 10 Day 11 Day 12
046003-DU-0 10.79 10.79 10.79 10.79
053528-BW-4 9.96 9.96 9.96 9.96
055625-AD-9 9.87 9.87
066050-BH-7 11.87 11.87 11.87 11.87
071813-AC-3 9.78 9.78 9.78 9.78
096650-AB-2 12.28 12.28 12.28 12.28
16675H-AF-9 11.11 11.11 11.11 11.11
209615-BH-5 10.55 10.55 10.55 10.55
260543-BD-4 10.80 10.80 10.80 10.80
313309-AE-6 10.87 10.87 10.87 10.87
345397-GM-9 10.46 10.46 10.46 10.46
370442-AP-0 10.01 10.01 10.01 10.01
441812-CE-2 9.28 9.28 9.28 9.28
449909-AA-8
45068H-AB-2 8.70 8.70 8.70 8.70
450680-AG-8 11.58 11.58 11.58 11.58
628855-AM-0 13.06 13.06 13.06 13.06
669383-CV-1 11.10 11.10 11.10 11.10
708160-AY-2 11.15 11.15 11.15 11.15
812387-AX-6 11.30 11.30 11.30 11.30
880357-AC-2 2.76 2.76 2.76 2.76
881685-AM-3 10.79 10.79 10.79 10.79
893502-BH-6 11.45 11.45 11.45 11.45
912827-G5-5 19.51 19.51 19.51 19.51
912827-J7-8 19.36 19.36 19.36 19.36
912827-N2-4 18.16 18.16 18.16 18.16
941063-AH-2 6.48 6.48 6.48 6.48
983901-BK-4 7.66 7.66 7.66 7.66
290.83 290.83 300.70 300.70
52.86 11.02
290.83 290.83 353.56 311.72
129.71 43.16
$290.83 $290.83 $223.85 $268.56
318,224.028 318,224.028 318,224.028 318,222.018
<PAGE>
12/14/94 12/15/94 12/16/94 12/17/94
CUSIP Day 13 Day 14 Day 15 Day 16
046003-DU-0 10.79 10.79 10.79 10.79
053528-BW-4 9.96 9.96 9.96 9.96
055625-AD-9 9.87 9.87 9.87 9.87
066050-BH-7 11.87 11.87 11.87 11.87
071813-AC-3 9.78 9.78 9.78 9.78
096650-AB-2 12.28 12.28 12.28 12.28
16675H-AF-9 11.11 11.11 11.11 11.11
209615-BH-5 10.55 10.55 10.55 10.55
260543-BD-4 10.80 10.80 10.80 10.80
313309-AE-6 10.87 10.87 10.87 10.87
345397-GM-9 10.46 10.46 10.46 10.46
370442-AP-0 10.01 10.01 10.01 10.01
441812-CE-2 9.28 9.28 9.28 9.28
449909-AA-8
45068H-AB-2 8.70 8.70 8.70 8.70
450680-AG-8 11.58 11.58 11.58 11.58
628855-AM-0 13.06 13.06 13.06 13.06
669383-CV-1 11.10 11.10 11.10 11.10
708160-AY-2 11.15 11.15 11.15 11.15
812387-AX-6 11.30 11.30 11.30 11.30
880357-AC-2 2.76 2.76 2.76 2.76
881685-AM-3 10.79 10.79 10.79 10.79
893502-BH-6 11.45 11.45 11.45 11.45
912827-G5-5 19.51 19.51 19.51 19.51
912827-J7-8 19.36 19.36 19.36 19.36
912827-N2-4 18.16 18.16 18.16 18.16
941063-AH-2 6.48 6.48 6.48 6.48
983901-BK-4 7.66 7.66 7.66 7.66
300.70 300.70 300.70 300.70
11.02 11.02 16.03
311.72 311.72 316.73 300.70
43.50 43.64 43.73
$268.22 $268.08 $273.00 $300.70
318,812.180 322,054.783 322,376.737 325,683.860
<PAGE>
12/18/94 12/19/94 12/20/94 12/21/94
CUSIP Day 17 Day 18 Day 19 Day 20
046003-DU-0 10.79 10.79 10.79 10.79
053528-BW-4 9.96 9.96 9.96 9.96
055625-AD-9 9.87 9.87 9.87 9.87
066050-BH-7 11.87 11.87 11.87 11.87
071813-AC-3 9.78 9.78 9.78 9.78
096650-AB-2 12.28 12.28 12.28 12.28
16675H-AF-9 11.11 11.11 11.11 11.11
209615-BH-5 10.55 10.55 10.55 10.55
260543-BD-4 10.80 10.80 10.80 10.80
313309-AE-6 10.87 10.87 10.87 10.87
345397-GM-9 10.46 10.46 10.46 10.46
370442-AP-0 10.01 10.01 10.01 10.01
441812-CE-2 9.28 9.28 9.28 9.28
449909-AA-8
45068H-AB-2 8.70 8.70 8.70 8.70
450680-AG-8 11.58 11.58 11.58 11.58
628855-AM-0 13.06 13.06 13.06 13.06
669383-CV-1 11.10 11.10 11.10 11.10
708160-AY-2 11.15 11.15 11.15 11.15
812387-AX-6 11.30 11.30 11.30 11.30
880357-AC-2 2.76 2.76 2.76 2.76
881685-AM-3 10.79 10.79 10.79 10.79
893502-BH-6 11.45 11.45 11.45 11.45
912827-G5-5 19.51 19.51 19.51 19.51
912827-J7-8 19.36 19.36 19.36 19.36
912827-N2-4 18.16 18.16 18.16 18.16
941063-AH-2 6.48 6.48 6.48 6.48
983901-BK-4 7.66 7.66 7.66 7.66
300.70 300.70 300.70 300.70
48.09 18.39 18.39
300.70 348.79 319.09 319.09
132.46 44.21 44.69
$300.70 $216.33 $274.88 $274.40
325,683.860 325,683.860 325,683.860 325,683.860
<PAGE>
12/22/94 12/23/94 12/24/94 12/25/94
CUSIP Day 21 Day 22 Day 23 Day 24
046003-DU-0 10.79 10.79 10.79 10.79
053528-BW-4 9.96 9.96 9.96 9.96
055625-AD-9 9.87 9.87 9.87 9.87
066050-BH-7 11.87 11.87 11.87 11.87
071813-AC-3 9.78 9.78 9.78 9.78
096650-AB-2 12.28 12.28 12.28 12.28
16675H-AF-9 11.11 11.11 11.11 11.11
209615-BH-5 10.55 10.55 10.55 10.55
260543-BD-4 10.80 10.80 10.80 10.80
313309-AE-6 10.87 10.87 10.87 10.87
345397-GM-9 10.46 10.46 10.46 10.46
370442-AP-0 10.01 10.01 10.01 10.01
441812-CE-2 9.28 9.28 9.28 9.28
449909-AA-8
45068H-AB-2 8.70 8.70 8.70 8.70
450680-AG-8 11.58 11.58 11.58 11.58
628855-AM-0 13.06 13.06 13.06 13.06
669383-CV-1 11.10 11.10 11.10 11.10
708160-AY-2 11.15 11.15 11.15 11.15
812387-AX-6 11.30 11.30 11.30 11.30
880357-AC-2 2.76 2.76 2.76 2.76
881685-AM-3 10.79 10.79 10.79 10.79
893502-BH-6 11.45 11.45 11.45 11.45
912827-G5-5 19.51 19.51 19.51 19.51
912827-J7-8 19.36 19.36 19.36 19.36
912827-N2-4 18.16 18.16 18.16 18.16
941063-AH-2 6.48 6.48 6.48 6.48
983901-BK-4 7.66 7.66 7.66 7.66
300.70 300.70 300.70 300.70
18.45 18.45
319.15 319.15 300.70 300.70
44.72 44.63
$274.43 $274.52 $300.70 $300.70
325,841.707 327,826.382 328,286.443 328,286.443
<PAGE>
12/26/94 12/27/94 12/28/94 12/29/94
CUSIP Day 25 Day 26 Day 27 Day 28
046003-DU-0 10.79 10.79 10.79 10.79
053528-BW-4 9.96 9.96 9.96 9.96
055625-AD-9 9.87 9.87 9.87 9.87
066050-BH-7 11.87 11.87 11.87 11.87
071813-AC-3 9.78 9.78 9.78 9.78
096650-AB-2 12.28 12.28 12.28 12.28
16675H-AF-9 11.11 11.11 11.11 11.11
209615-BH-5 10.55 10.55 10.55 10.55
260543-BD-4 10.80 10.80 10.80 10.80
313309-AE-6 10.87 10.87 10.87 10.87
345397-GM-9 10.46 10.46 10.46 10.46
370442-AP-0 10.01 10.01 10.01 10.01
441812-CE-2 9.28 9.28 9.28 9.28
449909-AA-8 18.12 18.12 18.12
45068H-AB-2 8.70 8.70 8.70 8.70
450680-AG-8 11.58 11.58 11.58 11.58
628855-AM-0 13.06 13.06 13.06 13.06
669383-CV-1 11.10 11.10 11.10 11.10
708160-AY-2 11.15 11.15 11.15 11.15
812387-AX-6 11.30 11.30 11.30 11.30
880357-AC-2 2.76 2.76 2.76 2.76
881685-AM-3 10.79 10.79 10.79 10.79
893502-BH-6 11.45 11.45 11.45 11.45
912827-G5-5 19.51 19.51 19.51 19.51
912827-J7-8 19.36 19.36 19.36 19.36
912827-N2-4 18.16 18.16 18.16 18.16
941063-AH-2 6.48 6.48 6.48 6.48
983901-BK-4 7.66 7.66 7.66 7.66
300.70 318.82 318.82 318.82
75.24 7.51 7.43
300.70 394.06 326.33 326.25
178.53 45.03 (1,354.92)
$300.70 $215.53 $281.30 $1,681.17
328,286.443 328,286.443 328,286.443 328,646.684
<PAGE>
12/30/94 12/31/94
CUSIP Day 29 Day 30 Count Total
046003-DU-0 10.79 10.79 30 $324
053528-BW-4 9.96 9.96 30 $299
055625-AD-9 9.87 9.87 20 $197
066050-BH-7 11.87 11.87 30 $356
071813-AC-3 9.78 9.78 30 $293
096650-AB-2 12.28 12.28 30 $368
16675H-AF-9 11.11 11.11 30 $333
209615-BH-5 10.55 10.55 30 $317
260543-BD-4 10.80 10.80 30 $324
313309-AE-6 10.87 10.87 30 $326
345397-GM-9 10.46 10.46 30 $314
370442-AP-0 10.01 10.01 30 $300
441812-CE-2 9.28 9.28 30 $279
449909-AA-8 18.12 18.12 5 $91
45068H-AB-2 8.70 8.70 30 $261
450680-AG-8 11.58 11.58 30 $347
628855-AM-0 13.06 13.06 30 $392
669383-CV-1 11.10 11.10 30 $333
708160-AY-2 11.15 11.15 30 $335
812387-AX-6 11.30 11.30 30 $339
880357-AC-2 2.76 2.76 30 $83
881685-AM-3 10.79 10.79 30 $324
893502-BH-6 11.45 11.45 30 $343
912827-G5-5 19.51 19.51 30 $585
912827-J7-8 19.36 19.36 30 $581
912827-N2-4 18.16 18.16 30 $545
941063-AH-2 6.48 6.48 30 $194
983901-BK-4 7.66 7.66 30 $230
318.82 318.82 $9,013
$0
7.43 $442
326.25 318.82 $9,455
45.08 ($130)
$281.17 $318.82 $9,585
Average
338,427.900 338,427.900 322,802.072
$4.8611
7.44%
<PAGE>
TMK/UNITED FUNDS, INC.
The formula used to calculate the total return is:
n
P(1 + T) = ERV
Where : P = $1,000 initial payment
T = Average annual total return
n = Number of years
ERV = Ending redeemable value of the $1,000 investment for the
periods shown.
TMK/UNITED BOND PORTFOLIO
For the one year period from July 1, 1994 to
June 30, 1995:
P = $1,000
n = 1
ERV = $1,123.99
T = 12.40%
For the five-year period from July 1, 1990 to
June 30, 1995:
P = $1,000
n = 5
ERV = $1,564.80
T = 9.37%
For the period from July 13, 1987 to
June 30, 1995:
P = $1,000
n = 7.970
ERV = $1,980.48
T = 8.95%
TMK/UNITED HIGH INCOME PORTFOLIO
For the one year period from July 1, 1994 to
June 30, 1995:
P = $1,000
n = 1
ERV = $1,094.33
T = 9.43%
For the five-year period from July 1, 1990 to
June 30, 1995:
P = $1,000
n = 5
ERV = $1,823.42
T = 12.77%
For the period from July 13, 1987 to
June 30, 1995:
P = $1,000
n = 7.970
ERV = $1,997.90
T = 9.07%
TMK/UNITED GROWTH PORTFOLIO
For the one year period from July 1, 1994 to
June 30, 1995:
P = $1,000
n = 1
ERV = $1,219.13
T = 21.91%
For the five-year period from July 1, 1990 to
June 30, 1995:
P = $1,000
n = 5
ERV = $2,099.05
T = 15.99%
For the period from July 13, 1987 to
June 30, 1995:
P = $1,000
n = 7.970
ERV = $2,994.80
T = 14.75%
TMK/UNITED INCOME PORTFOLIO
For the one year period from July 1, 1994 to
June 30, 1995:
P = $1,000
n = 1
ERV = $1,237.60
T = 23.76
For the period from July 16, 1991 to
June 30, 1995:
P = $1,000
n = 3.959
ERV = $1,728.62
T = 14.83%
TMK/UNITED INTERNATIONAL PORTFOLIO
For the one year period from July 1, 1994 to
June 30, 1995:
P = $1,000
n = 1
ERV = $1,102.19
T = 10.22%
For the period from May 3, 1994 to
June 30, 1995:
P = $1,000
n = 1.159
ERV = $1,076.22
T = 6.54%
TMK/UNITED SMALL CAP PORTFOLIO
For the one year period from July 1, 1994 to
June 30, 1995:
P = $1,000
n = 1
ERV = $1,394.43
T = 39.44%
For the period from May 3, 1994 to
June 30, 1995:
P = $1,000
n = 1.159
ERV = $1,399.08
T = 33.61%
TMK/UNITED BALANCED PORTFOLIO
For the one year period from July 1, 1994 to
June 30, 1995:
P = $1,000
n = 1
ERV = $1,111.33
T = 11.13%
For the period from May 3, 1994 to
June 30, 1995:
P = $1,000
n = 1.159
ERV = $1,113.62
T = 9.73%
TMK/UNITED LIMITED-TERM BOND PORTFOLIO
For the one year period from July 1, 1994 to
June 30, 1995:
P = $1,000
n = 1
ERV = $1,094.27
T = 9.43%
For the period from May 3, 1994 to
June 30, 1995:
P = $1,000
n = 1.159
ERV = $1,091.99
T = 7.89%
TMK/UNITED ASSET STRATEGY PORTFOLIO
For the one year period from May 1, 1995 to
September 30, 1995:
P = $1,000
n = .164
ERV = $1,007.18
T = 4.45%
</TABLE>
October 30, 1995
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N. W.
Judiciary Plaza
Washington, D. C. 20549
RE: TMK/United Funds, Inc.
Post-Effective Amendment No. 12
Dear Sir or Madam:
In connection with the filing of the above-referenced Post-Effective Amendment,
I hereby represent that the Amendment does not contain disclosures which would
render it ineligible to become effective pursuant to paragraph (b) of Rule 485.
Very truly yours,
Sharon K. Pappas
General Counsel
SKP/sw
October 30, 1995
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, Northwest
Judiciary Plaza
Washington, D. C. 20549
RE: TMK/United Funds, Inc.
File Nos. 33-11466 and 811-5017/CIK #810016
Dear Sir or Madam:
We are transmitting herewith for filing through EDGAR Post-Effective Amendment
No. 12 to the Registration Statement under the Securities Act of 1933 and
Amendment No. 12 of the Investment Company Act of 1940 for the above-referenced
fund.
This filing is being made pursuant to paragraph (b) of Rule 485. It is proposed
that this filing will become effective on November 1, 1995.
If you have any questions, please call me at 913/236-1923.
Very truly yours,
Sheryl Strauss
Assistant Secretary
SS:sw
