<PAGE>
TMK/UNITED FUNDS, INC.
SEMIANNUAL
REPORT
--------------------------------------
For the six months ended June 30, 1996
<PAGE>
This report is submitted for the general information of the shareholders of
TMK/United Funds, Inc. It is not authorized for distribution to prospective
investors in the Fund unless accompanied with or preceded by the TMK/United
Funds, Inc. current prospectus.
<PAGE>
PRESIDENT'S LETTER
- -----------------------------------------------------------------
JUNE 30, 1996
Dear Policyholder:
As President of your Fund, I would like to thank you for your continued
confidence in our products and services. Our goal to provide the best service
possible to our shareholders has not changed since we opened our doors nearly 60
years ago. Waddell & Reed's team of professionals, including the Fund's
manager, our customer service representatives and your personal account
representative continue to strive to meet your financial needs.
Waddell & Reed plays a special role in the investment industry. We take
pride in being one of the few financial services firms committed to locally
based account representatives who provide the personal service you need. When
you're ready to evaluate your financial plan to keep up with life's changes, or
to find an answer to a financial question that you may have, your representative
is ready to assist you--when you need it. He or she is available to help you
plan for your retirement, fund a child's education or make plans for other long-
term financial goals.
All of us are committed to helping you meet the financial goals that are
important to you. This is accomplished by our offering investment products to
meet a variety of personal financial objectives, along with the personal service
to make the investment process more convenient and accessible.
We want to continue to meet your financial needs for many years to come.
Should you have any questions about your account or other financial issues that
are important to you, contact your personal account representative or your local
Waddell & Reed office. They're ready to help you make the most of your
financial future.
Respectfully,
Keith A. Tucker
President
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS
Apparel and Accessory Stores - 1.06%
Gap, Inc. (The) ........................ 150,000 $ 4,818,750
Business Services - 9.79%
America Online, Inc.*. ................. 125,000 5,453,125
CUC International Inc.* ................ 120,000 4,260,000
Cerner Corporation* .................... 300,000 6,450,000
cisco Systems, Inc.* ................... 200,000 11,337,400
Electronic Data Systems Corporation .... 250,000 13,437,500
Lycos, Inc.* ........................... 100,000 1,112,500
Physician Computer Network* ............ 100,000 1,162,500
Sync Research, Inc.* ................... 100,000 1,400,000
Total ................................. 44,613,025
Chemicals and Allied Products - 17.14%
BioChem Pharma Inc.* ................... 100,000 3,743,700
du Pont (E.I.) de Nemours and Company .. 70,000 5,538,750
Geon Company (The) ..................... 150,000 3,375,000
Georgia Gulf Corporation ............... 100,000 2,925,000
IMC Global, Inc. ....................... 100,000 3,762,500
Lilly (Eli) and Company ................ 250,000 16,250,000
Merck & Co., Inc. ...................... 200,000 12,925,000
Neurex Corporation* .................... 118,800 2,606,116
Pfizer Inc. ............................ 150,000 10,706,250
SmithKline Beecham plc, ADR ............ 300,000 16,312,500
Total ................................. 78,144,816
Communication - 0.79%
Tele-Communications, Inc., Class A* .... 200,000 3,612,400
Depository Institutions - 8.52%
Boatmen's Bancshares, Inc. ............. 100,000 4,000,000
Chase Manhattan Corporation (The) ...... 200,000 14,125,000
Dime Bancorp, Inc.* .................... 100,000 1,300,000
Great Western Financial Corporation .... 250,000 5,968,750
Long Island Bancorp, Inc. .............. 125,000 3,820,250
Northern Trust Corporation ............. 75,000 4,340,625
Roosevelt Financial Group, Inc. ........ 274,400 5,299,213
Total ................................. 38,853,838
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS (Continued)
Electric, Gas and Sanitary Services - 1.17%
Coastal Corporation (The) .............. 73,800 $ 3,081,150
Sonat Inc. ............................. 50,000 2,250,000
Total ................................. 5,331,150
Electronic and Other Electric Equipment - 0.52%
Xilinx, Inc.* .......................... 75,000 2,376,525
Engineering and Management Services - 0.23%
Owen Healthcare, Inc.* ................. 75,000 1,040,625
Fabricated Metal Products - 1.46%
Parker Hannifin Corporation ............ 125,000 5,296,875
TRINOVA Corporation .................... 41,100 1,371,712
Total ................................. 6,668,587
Food and Kindred Products - 2.68%
CPC International Inc. ................. 30,000 2,160,000
ConAgra, Inc. .......................... 63,100 2,863,162
Hart Brewing, Inc.* .................... 100,000 1,050,000
Heinz (H. J.) Company .................. 100,000 3,037,500
Ralcorp Holdings* ...................... 150,000 3,093,750
Total ................................. 12,204,412
General Merchandise Stores - 4.59%
Dillard Department Stores, Inc.,
Class A ............................... 150,000 5,475,000
Dollar General Corporation ............. 128,500 3,758,625
Kohl's Corporation* .................... 200,000 7,325,000
May Department Stores Company (The) .... 100,000 4,375,000
Total ................................. 20,933,625
Health Services - 2.76%
Beverly Enterprises, Inc.* ............. 550,000 6,600,000
Manor Care, Inc. ....................... 125,000 4,921,875
MedPartners/Mullikin, Inc.* ............ 50,000 1,043,750
Total ................................. 12,565,625
Industrial Machinery and Equipment - 2.41%
Baker Hughes Incorporated .............. 100,000 3,287,500
Cooper Cameron Corporation* ............ 8,500 371,875
Seagate Technology, Inc.* .............. 100,000 4,500,000
Silicon Valley Group, Inc.* ............ 150,000 2,821,800
Total .................................. 10,981,175
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS (Continued)
Instruments and Related Products - 3.58%
Boston Scientific Corporation* ......... 60,000 $ 2,700,000
Honeywell Inc. ......................... 100,000 5,450,000
Raytheon Company ....................... 125,000 6,453,125
Teradyne, Inc.* ........................ 100,000 1,725,000
Total .................................. 16,328,125
Insurance Carriers - 8.38%
American International Group, Inc. ..... 125,000 12,328,125
Berkley (W. R.) Corporation ............ 111,000 4,675,875
Chubb Corporation (The) ................ 120,000 5,985,000
Guarantee Life Companies Inc. (The)* ... 175,000 3,062,500
Humana Inc.* ........................... 170,000 3,038,750
Travelers Group, Inc. .................. 200,000 9,125,000
Total ................................. 38,215,250
Miscellaneous Retail - 0.10%
Alberto-Culver Company, Class A ........ 11,500 460,000
Oil and Gas Extraction - 1.43%
Noble Drilling Corporation* ............ 150,000 2,081,250
Phillips Petroleum Company ............. 50,000 2,093,750
Santa Fe Energy Resources, Inc.* ....... 200,000 2,375,000
Total ................................. 6,550,000
Petroleum and Coal Products - 5.83%
Chevron Corporation .................... 50,000 2,950,000
Exxon Corporation ...................... 125,000 10,859,375
Lyondell Petrochemical Company ......... 200,000 4,825,000
Texaco Inc. ............................ 75,000 6,290,625
Unocal Corporation ..................... 50,000 1,687,500
Total ................................. 26,612,500
Prepackaged Software - 4.18%
Broderbund Software, Inc.* ............. 125,000 4,046,875
DST Systems, Inc.* ..................... 125,000 4,000,000
Informix Corporation* .................. 300,000 6,731,100
Netscape Communications Corporation* ... 30,000 1,871,250
Summit Medical Systems, Inc.* .......... 125,000 2,406,250
Total ................................. 19,055,475
Printing and Publishing - 1.01%
Berkshire Hathaway Inc.* ............... 150 4,605,000
Railroad Transportation - 1.68%
Conrail Inc. ........................... 30,000 1,991,250
Illinois Central Corporation,
Class A ............................... 200,000 5,675,000
Total ................................. 7,666,250
Transportation by Air - 1.60%
Southwest Airlines Co. ................. 250,000 7,281,250
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS (Continued)
Transportation Equipment - 5.11%
Federal-Mogul Corporation .............. 100,000 $ 1,837,500
Ford Motor Company ..................... 250,000 8,093,750
General Motors Corporation ............. 100,000 5,237,500
Lockheed Martin Corporation ............ 75,000 6,300,000
Sundstrand Corporation ................. 50,000 1,831,250
Total ................................. 23,300,000
Wholesale Trade -- Nondurable Goods - 0.53%
Sara Lee Corporation ................... 75,000 2,428,125
TOTAL COMMON STOCKS - 86.55% $394,646,528
(Cost: $390,069,877)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Chemicals and Allied Products - 1.33%
Air Products and Chemicals, Inc.,
5.43%, 8-12-96 ........................ $ 4,565 4,536,081
Hercules, Inc.,
5.37%, 7-23-96......................... 1,510 1,505,045
Total ................................. 6,041,126
Communication - 0.66%
Bell Atlantic Financial Services Inc.,
5.32%, 7-8-96.......................... 3,000 2,996,897
Depository Institutions - 1.65%
Commonwealth Bank of Australia,
5.31%, 7-5-96 ......................... 3,020 3,018,218
U.S. Bancorp,
Master Note............................ 4,514 4,514,000
Total.................................. 7,532,218
Electric, Gas and Sanitary Services - 3.57%
Dominion Resources Inc.,
5.47%, 8-1-96 ......................... 2,990 2,975,916
Georgia Power Co.,
5.35%, 7-22-96......................... 13,365 13,323,290
Total.................................. 16,299,206
See Notes to Schedule of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Food and Kindred Products - 4.31%
ConAgra, Inc.,
5.55%, 8-9-96 ......................... $ 3,845 $ 3,821,882
General Mills, Inc.,
Master Note............................ 5,191 5,191,000
Quaker Oats Co.,
5.62%, 7-9-96 ......................... 3,540 3,535,579
Seagram (Joseph E.) & Sons Inc.,
5.39%, 7-30-96 ........................ 7,130 7,099,042
Total.................................. 19,647,503
Metal Mining - 0.44%
BHP Finance (USA) Inc.,
5.33%, 7-19-96 ........................ 2,000 1,994,670
Tobacco Products - 1.07%
B.A.T. Capital Corp.,
5.33%, 7-9-96.......................... 4,900 4,894,196
Wholesale Trade - Nondurable Goods - 0.29%
Sara Lee Corporation,
Master Note............................ 1,337 1,337,000
TOTAL SHORT-TERM SECURITIES - 13.32% $ 60,742,816
(Cost: $60,742,816)
TOTAL INVESTMENT SECURITIES - 99.87% $455,389,344
(Cost: $450,812,693)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.13% 581,678
NET ASSETS - 100.00% $455,971,022
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS
Amusement and Recreation Services - 0.92%
Walt Disney Company (The) .............. 57,100 $ 3,590,162
Apparel and Accessory Stores - 1.29%
Gap, Inc. (The) ........................ 114,200 3,668,675
Nordstrom, Inc. ........................ 30,600 1,357,875
Total ................................. 5,026,550
Apparel and Other Textile Products - 1.56%
Tommy Hilfiger Corporation* ............ 113,200 6,070,350
Automotive Dealers and Service Stations - 0.50%
AutoZone, Inc.* ........................ 56,300 1,956,425
Building Materials and Garden Supplies - 0.87%
Home Depot, Inc. (The) ................. 62,400 3,369,600
Business Services - 3.37%
cisco Systems, Inc.* ................... 147,700 8,372,670
Electronic Data Systems Corporation .... 88,200 4,740,750
Total ................................. 13,113,420
Chemicals and Allied Products - 13.85%
Abbott Laboratories .................... 93,900 4,084,650
Air Products and Chemicals, Inc. ....... 93,800 5,416,950
Colgate-Palmolive Company .............. 48,900 4,144,275
Crompton & Knowles Corporation ......... 98,500 1,649,875
Dow Chemical Company (The) ............. 46,900 3,564,400
du Pont (E.I.) de Nemours and Company .. 81,600 6,456,600
Eastman Chemical Company ............... 15,000 913,125
Geon Company (The) ..................... 100,600 2,263,500
IMC Global, Inc. ....................... 51,500 1,937,687
Merck & Co., Inc. ...................... 60,200 3,890,425
PPG Industries, Inc. ................... 101,900 4,967,625
Pfizer Inc. ............................ 54,700 3,904,213
Praxair, Inc. .......................... 81,600 3,447,600
Procter & Gamble Company (The) ......... 48,900 4,431,563
Union Carbide Corporation .............. 71,400 2,838,150
Total ................................. 53,910,638
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS (Continued)
Communication - 3.35%
AT&T Corporation ....................... 40,800 $ 2,529,600
MCI Communications Corporation ......... 152,900 3,908,430
MFS Communications Company, Inc.* ...... 59,800 2,246,208
360 Communications Company* ............ 85,800 2,059,200
Vanguard Cellular Systems, Inc.,
Class A* .............................. 105,000 2,303,385
Total ................................. 13,046,823
Depository Institutions - 2.39%
Citicorp ............................... 61,200 5,056,650
First Bank System, Inc. ................ 40,800 2,366,400
Norwest Corporation .................... 54,500 1,900,687
Total ................................. 9,323,737
Eating and Drinking Places - 0.96%
McDonald's Corporation ................. 79,800 3,730,650
Electric, Gas and Sanitary Services - 0.41%
WMX Technologies, Inc. ................. 48,900 1,601,475
Electronic and Other Electric Equipment - 14.52%
AMP Incorporated ....................... 89,700 3,599,212
Analog Devices, Inc.* .................. 289,800 7,389,900
Duracell International Inc. ............ 85,300 3,678,563
Emerson Electric Co. ................... 32,600 2,946,225
General Electric Company ............... 97,900 8,468,350
Harman International Industries,
Incorporated .......................... 24,150 1,189,388
Intel Corporation ...................... 124,800 9,164,938
LSI Logic Corporation* ................. 134,400 3,494,400
Molex Incorporated, Class A ............ 78,187 2,316,290
Motorola, Inc. ......................... 108,400 6,815,650
Rival Company (The) .................... 130,300 2,964,325
Texas Instruments Incorporated ......... 28,500 1,421,438
Whirlpool Corporation .................. 62,400 3,096,600
Total ................................. 56,545,279
Fabricated Metal Products - 2.26%
Gillette Company (The) ................. 81,600 5,089,800
Parker Hannifin Corporation ............ 48,900 2,072,137
TRINOVA Corporation .................... 48,900 1,632,038
Total ................................. 8,793,975
Food and Kindred Products - 2.46%
CPC International Inc. ................. 40,800 2,937,600
Pepsi-Cola Puerto Rico Bottling Company,
Class B ............................... 105,600 884,400
PepsiCo, Inc. .......................... 163,200 5,773,200
Total ................................. 9,595,200
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS (Continued)
Furniture and Home Furnishings Stores - 1.21%
Circuit City Stores, Inc. .............. 130,500 $ 4,714,312
General Building Contractors - 0.51%
Pulte Corporation ...................... 74,600 1,995,550
General Merchandise Stores - 3.62%
Dayton Hudson Corporation .............. 37,900 3,908,437
May Department Stores Company (The) .... 81,600 3,570,000
OfficeMax, Inc.* ....................... 69,750 1,665,281
Penney (J.C.) Company, Inc. ............ 55,100 2,892,750
Wal-Mart Stores, Inc. .................. 81,600 2,070,600
Total ................................. 14,107,068
Health Services - 0.87%
Columbia/HCA Healthcare Corporation .... 30,600 1,633,275
Tenet Healthcare Corporation* .......... 81,600 1,744,200
Total ................................. 3,377,475
Heavy Construction, Excluding Building - 0.92%
Fluor Corporation ...................... 32,600 2,131,225
Foster Wheeler Corporation ............. 32,600 1,462,925
Total ................................. 3,594,150
Hotels and Other Lodging Places - 0.95%
ITT Corporation* ....................... 55,700 3,690,125
Industrial Machinery and Equipment - 8.67%
Applied Materials, Inc.* ............... 141,100 4,294,661
Case Corporation ....................... 146,200 7,017,600
Caterpillar Inc. ....................... 107,000 7,249,250
Ceridian Corporation* .................. 36,400 1,838,200
Deere & Company ........................ 167,600 6,704,000
Harnischfeger Industries, Inc. ......... 49,000 1,629,250
Hewlett-Packard Company ................ 36,000 3,586,500
Ingersoll-Rand Company ................. 32,600 1,426,250
Total ................................. 33,745,711
Instruments and Related Products - 3.14%
Baxter International Inc. .............. 85,300 4,030,425
General Motors Corporation, Class H .... 14,400 865,800
Medtronic, Inc. ........................ 65,200 3,651,200
Xerox Corporation ...................... 68,400 3,659,400
Total ................................. 12,206,825
Insurance Carriers - 0.69%
United HealthCare Corporation .......... 53,000 2,676,500
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS (Continued)
Lumber and Wood Products - 0.63%
Georgia-Pacific Corporation ............ 34,700 $ 2,463,700
Nondepository Institutions - 1.72%
Federal Home Loan Mortgage Corporation . 40,800 3,488,400
Federal National Mortgage Association .. 96,300 3,226,050
Total ................................. 6,714,450
Paper and Allied Products - 2.55%
Champion International Corporation ..... 41,300 1,724,275
International Paper Company ............ 97,900 3,610,062
Union Camp Corporation ................. 40,800 1,989,000
Weyerhaeuser Company ................... 61,200 2,601,000
Total ................................. 9,924,337
Petroleum and Coal Products - 0.51%
Royal Dutch Petroleum Company .......... 12,800 1,968,000
Prepackaged Software - 3.71%
Broderbund Software, Inc.* ............. 37,300 1,207,587
Computer Associates International, Inc. 30,550 2,176,688
Informix Corporation* .................. 125,400 2,813,600
Microsoft Corporation* ................. 24,500 2,941,519
Oracle Systems Corporation* ............ 134,550 5,306,248
Total ................................. 14,445,642
Primary Metal Industries - 1.14%
Aluminum Company of America ............ 56,000 3,213,000
Nucor Corporation ...................... 24,500 1,240,312
Total ................................. 4,453,312
Railroad Transportation - 2.81%
CSX Corporation ........................ 57,100 2,755,075
Conrail Inc. ........................... 48,900 3,245,737
Norfolk Southern Corporation ........... 24,500 2,076,375
Union Pacific Corporation .............. 40,800 2,850,900
Total ................................. 10,928,087
Rubber and Miscellaneous Plastics Products - 2.10%
Armstrong World Industries, Inc. ....... 73,400 4,229,675
Goodyear Tire & Rubber Company (The) ... 81,600 3,937,200
Total ................................. 8,166,875
Special Trade Contractors - 0.90%
Telefonaktiebolaget LM Ericsson,
Class B, ADR ......................... 163,100 3,496,375
Transportation by Air - 3.37%
AMR Corporation* ....................... 32,600 2,966,600
Southwest Airlines Co. ................. 201,900 5,880,338
USAir Group, Inc.* ..................... 236,500 4,257,000
Total ................................. 13,103,938
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS (Continued)
Transportation Equipment - 7.85%
Boeing Company (The) ................... 51,800 $ 4,513,075
Chrysler Corporation ................... 89,700 5,561,400
Dana Corporation ....................... 62,000 1,922,000
Eaton Corporation ...................... 40,800 2,391,900
Ford Motor Company ..................... 155,000 5,018,125
General Motors Corporation ............. 81,600 4,273,800
Northrop Grumman Corporation ........... 78,300 5,334,188
Sundstrand Corporation ................. 42,000 1,538,250
Total ................................. 30,552,738
TOTAL COMMON STOCKS - 96.58% $375,999,454
(Cost: $269,954,885)
TOTAL SHORT-TERM SECURITIES - 3.23% $ 12,592,171
(Cost: $12,592,171)
TOTAL INVESTMENT SECURITIES - 99.81% $388,591,625
(Cost: $282,547,056)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.19% 739,119
NET ASSETS - 100.00% $389,330,744
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS AND RIGHTS
Argentina - 1.60%
Disco S.A., Sponsored ADR* ............. 46,700 $ 1,033,238
Australia - 1.37%
Westpac Banking Corp. (A) .............. 200,000 884,586
Denmark - 3.82%
Bang & Olufsen Holding A/S Class B (A) . 20,000 785,372
Neurosearch A/S (A)* ................... 20,000 768,298
Tele Danmark A/S (A) ................... 18,000 906,592
Total ................................. 2,460,262
Finland - 1.45%
Nokia Corporation, Series K (A) ........ 15,000 550,093
Tampella OY (A)* ....................... 200,000 382,504
Total ................................. 932,597
France - 4.96%
But S.A. (A) ........................... 10,800 739,237
Christian Dior S.A. (A) ................ 4,800 625,365
Lapeyre S.A. (A) ....................... 6,625 388,410
Societe Industrielle de Transports
Automobiles S.A. (A) .................. 3,500 865,029
Television Francaise 1-TF1 S.A. (A) .... 5,000 571,695
Total ................................. 3,189,736
Germany - 9.55%
CKAG Colonia Konzern
Aktiengesellschaft (A) ................ 1,100 889,839
Daimler-Benz AG (A)* ................... 3,150 1,687,389
Daimler-Benz AG, Rights (A)* ........... 3,150 435
Depfa Bank (A) ......................... 7,000 276,685
GILDEMEISTER Aktiengesellschaft (A)* ... 13,750 587,800
Herlitz International Trading AG (A) ... 1,500 492,272
Mannesmann AG (A) ...................... 4,300 1,487,537
Metallgesellschaft AG (A)* ............. 10,000 171,983
TRAUB AG (A)* .......................... 8,500 550,641
Total ................................. 6,144,581
Hong Kong - 5.35%
Asia Satellite Telecommunications
Holdings Limited ADS* ................. 25,000 743,750
First Pacific Company Limited (A) ...... 750,000 1,153,399
Guangdong Corporation Limited (A) ...... 1,000,000 633,239
HSBC Holdings Plc (A) .................. 60,000 907,211
Total ................................. 3,437,599
Indonesia - 2.99%
PT Matahari Putra Prima, F (A) ......... 573,750 1,048,119
PT Steady Safe Transportation
Service, F (A) ........................ 400,000 550,185
PT United Tractors, F (A) .............. 205,000 323,825
Total ................................. 1,922,129
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS AND RIGHTS (Continued)
Italy - 2.10%
Mediolanum S.p.A. (A)* ................. 70,000 $ 695,245
STET - Societa Financiaria
Telefonica p.a. (A) ................... 250,000 658,067
Total .................................. 1,353,312
Japan - 6.93%
Aloka Co. Ltd. (A) ..................... 13,000 207,933
Honda Motor Co., Ltd. (A) .............. 25,000 648,935
Promise Co., Ltd. (A) .................. 13,700 676,172
Sankyo Co., Ltd. (A) ................... 50,000 1,297,870
Sony Corporation (A) ................... 15,000 988,484
Xebio Co., Ltd. (A) .................... 17,000 638,607
Total ................................. 4,458,001
Mexico - 9.98%
Cemex, S.A., CPO Shares, Series A (A) .. 150,000 535,289
Corporacion Industrial Sanluis, S.A.
de C.V., CPO (A) ...................... 75,500 465,015
Desc-Sociedad de Fomento Industrial,
S.A. de C.V., Class B (A)* ............ 200,000 1,081,153
Desc-Sociedad de Fomento Industrial,
S.A. de C.V., Class C (A)* ............ 1 3
Empresas ICA Sociedad Controladora,
S.A. de C.V., ADS* .................... 50,000 693,750
Grupo Carso, S.A. de C.V.,
Series 1A (A)* ........................ 150,000 1,066,614
Grupo Financiero Bancomer, S.A. de
C.V., B, CPO Shares (A)* .............. 2,000,000 872,324
Grupo Financiero Inbursa S.A. de
C.V., Class B (A) ..................... 170,000 705,525
Telefonos de Mexico, S.A. de C.V., ADR . 30,000 1,005,000
Total ................................. 6,424,673
Netherlands - 5.69%
Baan Company N.V. (A)* ................. 24,300 832,231
Koninklijke Boskalis
Westminster N.V. (A)* ................. 35,000 626,026
Koninklijke PTT Nederland NV (A) ....... 25,000 947,103
Vendex International N.V. (A) .......... 18,500 645,525
Verenigd Bezit VNU (A)* ................ 39,400 612,304
Total ................................. 3,663,189
Norway - 1.99%
Merkantildata A/S (A) .................. 61,000 761,407
Schibsted AS (A) ....................... 40,000 517,775
Total ................................. 1,279,182
Phillipines - 1.41%
Universal Robina Corporation (A) ....... 1,700,000 908,744
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS AND RIGHTS (Continued)
Spain - 2.99%
Corporacion Bancaria de
Espana, S.A. (A) ...................... 27,000 $ 1,179,509
Sociedad General de Aquas de
Barcelona, S.A. (A) ................... 20,000 743,982
Total ................................. 1,923,491
Sweden - 8.39%
Althin Medical AB, Class B (A) ......... 13,000 304,362
Astra AB, Class A (A) .................. 35,000 1,549,000
Celsius Industrier AB, Class B (A)* .... 20,000 262,824
Enator AB (A)* ......................... 10,000 230,349
Frontec AB, Class B (A)* ............... 41,500 510,883
Kinnevik AB, Series B (A) .............. 21,500 652,755
NetCom Systems AB, Class B (A)* ........ 21,500 243,565
Skandia Enskilda Banken, Class A (A) ... 150,000 1,200,834
WM-data AB, Class B (A) ................ 7,000 444,082
Total ................................. 5,398,654
Switzerland - 5.42%
Adia SA, Bearer Shares (A) ............. 3,500 879,270
Choco Lindt & Spru AG, Registered (A) ... 50 944,076
Ciba-Geigy AG, Registered (A) .......... 850 1,037,083
SMH Swiss Corporation (A) .............. 900 626,450
Total ................................. 3,486,879
United Kingdom - 5.12%
Corporate Services Group plc (A) ....... 375,000 1,054,777
Next plc (A) ........................... 150,000 1,312,352
Vodafone Group Plc (A) ................. 250,000 930,457
Total ................................. 3,297,586
TOTAL COMMON STOCKS AND RIGHTS- 81.11% $ 52,198,439
(Cost: $47,682,273)
PREFERRED STOCKS
Brazil - 0.95%
Banco Itau S.A. (A) .................... 1,500,000 608,068
Germany - 3.56%
Hornbach Holding AG (A) ................ 7,000 603,091
Marschollek, Lautenschlager und
Partner AG (A) ........................ 1,289 1,356,396
STO AG (A) ............................. 666 332,891
Total ................................. 2,292,378
TOTAL PREFERRED STOCKS - 4.51% $ 2,900,446
(Cost: $2,495,186)
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1996
Face
Amount in
Thousands Value
UNREALIZED GAIN ON OPEN FORWARD
CURRENCY CONTRACTS - 0.37%
Deutsche Marks, 10-2-96 (B) ............ DM8,000 $ 192,151
Japanese Yen, 10-2-96 (B) .............. Y117,000 43,066
Total ................................. $ 235,217
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Communication - 4.88%
Bell Atlantic Financial Services Inc.,
5.37%, 7-9-96.......................... $3,145 3,141,247
Depository Institutions - 0.54%
U.S. Bancorp,
Master Note............................ 346 346,000
Electric, Gas and Sanitary Services - 2.92%
Public Service Electric & Gas Co.,
5.5%, 7-11-96 ......................... 1,885 1,882,120
Food and Kindred Products - 6.44%
General Mills, Inc.,
Master Note............................ 1,543 1,543,000
Seagram (Joseph E.) & Sons Inc.,
5.43%, 7-30-96 ........................ 2,610 2,598,583
Total.................................. 4,141,583
Wholesale Trade - Nondurable Goods - 1.62%
Sara Lee Corporation,
Master Note............................ 1,043 1,043,000
TOTAL SHORT-TERM SECURITIES - 16.40% $10,553,950
(Cost: $10,553,950)
TOTAL INVESTMENT SECURITIES - 102.39% $65,888,052
(Cost: $60,731,409)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (2.39%) (1,534,905)
NET ASSETS - 100.00% $64,353,147
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS
Business Services - 23.23%
Affinity Technology Group, Inc.* ....... 56,000 $ 465,472
America Online, Inc.* .................. 22,000 959,750
APACHE Medical Systems, Inc.* .......... 77,000 952,875
CKS Group, Inc.* ....................... 30,000 965,610
CMG Information Services, Inc.* ........ 50,000 1,337,500
Cerner Corporation* .................... 70,000 1,505,000
CyCare Systems, Inc.* .................. 15,000 781,875
Documentum, Inc.* ...................... 20,000 615,000
Donna Karan International Inc.* ........ 30,000 840,000
Eagle River Interactive, Inc.* ......... 60,000 1,192,500
Mechanical Dynamics, Inc.* ............. 70,500 1,057,500
Mecon, Inc.* ........................... 50,000 1,125,000
PHAMIS, Inc.* .......................... 50,000 734,350
Shiva Corporation* ..................... 30,000 2,400,000
Sync Research, Inc.* ................... 90,000 1,260,000
VitalCom Inc.* ......................... 65,000 1,121,250
Workgroup Technology Corporation* ...... 45,000 1,125,000
Xylan Corporation* ..................... 30,000 1,398,750
Total ................................. 19,837,432
Chemicals and Allied Products - 2.79%
Dura Pharmaceuticals, Inc.* ............ 10,000 560,620
Neurex Corporation* .................... 40,000 877,480
Watson Pharmaceuticals Inc.* ........... 25,000 946,875
Total ................................. 2,384,975
Communication - 3.21%
Intermedia Communications of Florida,
Inc.* ................................ 50,000 1,612,500
MFS Communications Company, Inc.* ...... 30,000 1,126,860
Total ................................. 2,739,360
Eating and Drinking Places - 0.87%
Longhorn Steaks, Inc.* ................. 30,000 742,500
Electronic and Other Electric Equipment - 2.43%
LSI Logic Corporation* ................. 47,000 1,222,000
XeTel Corporation* ..................... 125,000 851,500
Total ................................. 2,073,500
Engineering and Management Services - 2.46%
Owen Healthcare, Inc.* ................. 70,000 971,250
Transition Systems, Inc.* .............. 40,000 1,130,000
Total ................................. 2,101,250
Food and Kindred Products - 0.48%
Lion Brewery, Inc. (The)* .............. 75,000 412,500
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS (Continued)
Health Services - 11.32%
ARV Assisted Living, Inc.* ............. 61,000 $ 922,625
American Healthcorp, Inc.* ............. 100,000 1,237,500
Emeritus Corporation* .................. 50,000 881,250
Inphynet Medical Management Inc.* ...... 70,000 1,330,000
Physicians Resource Group, Inc.* ....... 60,000 2,002,500
Quorum Health Group, Inc.* ............. 40,000 1,055,000
Renal Care Group, Inc.* ................ 40,000 1,287,480
Sterling House Corporation* ............ 50,000 950,000
Total ................................. 9,666,355
Industrial Machinery and Equipment - 3.53%
DuPont Photomasks, Inc.* ............... 80,000 1,660,000
Raptor Systems, Inc.* .................. 30,000 791,250
Silicon Valley Group, Inc.* ............ 30,000 564,360
Total ................................. 3,015,610
Instruments and Related Products - 12.40%
Cardiac Pathways Corporation* .......... 50,000 734,350
CardioThoracic Systems, Inc.* .......... 9,000 119,808
ESC Medical Systems Ltd.* .............. 45,000 1,231,875
Fusion Medical Technologies, Inc.* ..... 112,500 815,625
Heartport, Inc.* ....................... 40,000 1,205,000
Imagyn Medical, Inc.* .................. 100,000 1,081,200
Innovasive Devices, Inc.* .............. 50,000 487,500
LUNAR CORPORATION* ..................... 40,000 1,405,000
St. Jude Medical, Inc.* ................ 30,000 1,001,250
Ventritex, Inc.* ....................... 50,000 859,350
Waters Corporation* .................... 50,000 1,650,000
Total ................................. 10,590,958
Insurance Agents, Brokers and Service - 1.06%
CRA Managed Care, Inc.* ................ 20,000 905,000
Miscellaneous Retail - 0.87%
OmniCare, Inc. ......................... 28,000 742,000
Nondepository Institutions - 1.17%
First USA Paymentech, Inc.* ............ 25,000 1,000,000
Personal Services - 1.57%
Equity Corporation International* ...... 50,000 1,343,750
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS (Continued)
Prepackaged Software - 18.64%
AXENT Technologies, Inc.* .............. 45,000 $ 731,250
Cylink Corporation* .................... 40,000 685,000
Datalogix International Inc.* .......... 100,000 712,500
Edify Corporation* ..................... 11,000 288,750
Expert Software, Inc.* ................. 125,000 976,500
GT Interactive Software Corp.* ......... 50,000 843,750
Health Systems Design Corporation* ..... 65,000 966,875
Inference Corporation, Class A* ........ 95,000 2,256,250
Macromedia, Inc.* ...................... 15,000 330,000
Parametric Technology Corporation* ..... 36,000 1,559,232
Pure Software Inc.* .................... 25,000 840,625
Quarterdeck Corporation* ............... 100,000 943,700
Segue Software, Inc.* .................. 30,000 877,500
Summit Medical Systems, Inc.* .......... 50,000 962,500
SystemSoft Corporation* ................ 50,000 2,346,850
Synopsys, Inc.* ........................ 15,000 598,125
Total ................................. 15,919,407
Real Estate - 1.46%
Stewart Enterprises, Inc., Class A ..... 39,750 1,252,125
Wholesale Trade -- Durable Goods - 2.36%
Conceptus, Inc.* ....................... 65,000 1,088,750
TESSCO Technologies Incorporated* ...... 25,000 925,000
Total ................................. 2,013,750
TOTAL COMMON STOCKS - 89.85% $76,740,472
(Cost: $65,086,899)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES - 1.17%
Holding and Other Investment Offices
LTC Properties, Inc., Convertible,
7.75%, 1-1-2002 ....................... $1,000 $ 1,000,000
(Cost: $1,000,000)
SHORT-TERM SECURITIES
Chemicals and Allied Products - 2.56%
Procter & Gamble Company (The),
5.35%, 8-12-96 ........................ 2,200 2,186,269
Depository Institutions - 2.15%
U.S. Bancorp,
Master Note............................ 1,838 1,838,000
Electric, Gas and Sanitary Services - 2.71%
Georgia Power Co.,
5.35%, 7-22-96......................... 2,315 2,307,775
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Food and Kindred Products - 0.09%
General Mills, Inc.,
Master Note............................ $ 80 $ 80,000
Wholesale Trade - Nondurable Goods - 3.11%
Sara Lee Corporation,
Master Note............................ 2,655 2,655,000
TOTAL SHORT-TERM SECURITIES - 10.62% $ 9,067,044
(Cost: $9,067,044)
TOTAL INVESTMENT SECURITIES - 101.64% $86,807,516
(Cost: $75,153,943)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (1.64%) (1,403,711)
NET ASSETS - 100.00% $85,403,805
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS
Apparel and Accessory Stores - 1.02%
Gap, Inc. (The) ........................ 10,000 $ 321,250
Apparel and Other Textile Products - 0.88%
Tommy Hilfiger Corporation* ............ 5,200 278,850
Business Services - 1.08%
Cerner Corporation* .................... 12,000 258,000
Electronic Data Systems Corporation .... 1,548 83,205
Total ................................. 341,205
Chemicals and Allied Products - 7.37%
American Home Products Corporation ..... 7,000 420,875
Crompton & Knowles Corporation ......... 14,300 239,525
Dow Chemical Company (The) ............. 5,500 418,000
du Pont (E.I.) de Nemours and Company .. 2,400 189,900
Pfizer Inc. ............................ 5,500 392,563
Praxair, Inc. .......................... 8,800 371,800
Warner-Lambert Company ................. 5,400 297,000
Total ................................. 2,329,663
Communication - 4.19%
AT&T Corporation ....................... 4,100 254,200
GTE Corporation ........................ 5,300 237,175
MCI Communications Corporation ......... 3,000 76,686
Nokia Corporation, Series A, ADS ....... 1,600 59,200
SBC Communications Inc. ................ 6,300 310,275
Viacom Inc., Class B* .................. 10,000 388,750
Total ................................. 1,326,286
Depository Institutions - 2.06%
BankAmerica Corporation ................ 4,500 340,875
Wells Fargo & Company .................. 1,300 310,537
Total ................................. 651,412
Electric, Gas and Sanitary Services - 1.62%
Baltimore Gas and Electric Company ..... 7,600 215,650
Houston Industries Incorporated ........ 12,000 295,500
Total ................................. 511,150
Electronic and Other Electric Equipment - 2.68%
AVX Corporation ........................ 13,700 253,450
Duracell International Inc. ............ 7,500 323,437
Emerson Electric Co. ................... 3,000 271,125
Total ................................. 848,012
Fabricated Metal Products - 1.12%
Keystone International, Inc. ........... 17,000 352,750
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS (Continued)
Food and Kindred Products - 2.23%
ConAgra, Inc. .......................... 5,900 $ 267,713
PepsiCo, Inc. .......................... 12,400 438,650
Total ................................. 706,363
General Merchandise Stores - 3.14%
Dillard Department Stores, Inc., Class A 5,700 208,050
May Department Stores Company (The) .... 10,400 455,000
Wal-Mart Stores, Inc. .................. 13,000 329,875
Total ................................. 992,925
Health Services - 1.32%
Tenet Healthcare Corporation* .......... 19,600 418,950
Heavy Construction, Excluding Building - 0.78%
Foster Wheeler Corporation ............. 5,500 246,813
Holding and Other Investment Offices - 2.18%
LTC Properties, Inc. ................... 18,000 297,000
National Health Investors, Inc.* ....... 12,000 393,000
Total ................................. 690,000
Hotels and Other Lodging Places - 1.29%
ITT Corporation* ....................... 4,100 271,625
Red Lion Hotels, Inc.* ................. 6,500 136,500
Total ................................. 408,125
Industrial Machinery and Equipment - 3.39%
Applied Materials, Inc.* ............... 9,000 273,933
Deere & Company ........................ 6,000 240,000
Seagate Technology, Inc.* .............. 8,500 382,500
York International Corporation ......... 3,400 175,950
Total ................................. 1,072,383
Instruments and Related Products - 2.82%
General Motors Corporation, Class H .... 6,600 396,825
St. Jude Medical, Inc.* ................ 7,200 240,300
Teradyne, Inc.* ........................ 14,700 253,575
Total ................................. 890,700
Insurance Agents, Brokers and Service - 0.69%
ITT Hartford Group, Inc. ............... 4,100 218,325
Insurance Carriers - 1.68%
Chubb Corporation (The) ................ 6,200 309,225
United HealthCare Corporation .......... 4,400 222,200
Total ................................. 531,425
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS (Continued)
Nondepository Institutions - 1.02%
Associates First Capital Corporation* .. 8,600 $ 323,575
Oil and Gas Extraction - 1.01%
Schlumberger Limited ................... 3,800 320,150
Paper and Allied Products - 1.16%
Champion International Corporation ..... 5,800 242,150
Temple-Inland Inc. ..................... 800 37,400
Union Camp Corporation ................. 1,800 87,750
Total ................................. 367,300
Petroleum and Coal Products - 0.53%
Mobil Corporation ...................... 1,500 168,187
Prepackaged Software - 0.64%
Broderbund Software, Inc.* ............. 6,300 203,963
Printing and Publishing - 2.71%
Belo (A. H.) Corporation, Class A ...... 11,000 409,750
McGraw-Hill, Inc. ...................... 5,200 237,900
Time Warner Incorporated ............... 5,300 208,025
Total ................................. 855,675
Railroad Transportation - 0.34%
Conrail Inc. ........................... 1,600 106,200
Textile Mill Products - 0.83%
Unifi, Inc. ............................ 9,300 261,563
Transportation by Air - 0.37%
Southwest Airlines Co. ................. 4,000 116,500
Wholesale Trade -- Nondurable Goods - 1.97%
SYSCO Corporation ...................... 9,000 308,250
Sara Lee Corporation ................... 9,700 314,037
Total ................................. 622,287
TOTAL COMMON STOCKS - 52.12% $16,481,987
(Cost: $14,569,619)
PREFERRED STOCK - 0.12%
Transportation By Air
Delta Air Lines, Incorporated,
Convertible ........................... 600 $ 37,800
(Cost: $27,811)
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Electronic and Other Electric Equipment - 1.00%
Cooper Industries, Inc.,
6.0%, 1-1-99 (Exchangeable) ........... $ 257 $ 318,250
Oil and Gas Extraction - 0.98%
Enron Corp.,
6.25%, 12-13-98 (Exchangeable) ........ 261 310,500
Security and Commodity Brokers - 0.88%
Salomon Inc.,
7.625%, 5-15-99 (Exchangeable) ........ 266 277,500
TOTAL CORPORATE DEBT SECURITIES - 2.86% $ 906,250
(Cost: $783,750)
UNITED STATES GOVERNMENT SECURITIES - 22.34%
United States Treasury:
6.875%, 8-31-99 ....................... 250 253,555
7.75%, 11-30-99 ....................... 1,500 1,561,875
7.125%, 2-29-2000 ..................... 500 511,330
6.375%, 8-15-2002 ..................... 1,100 1,091,233
7.5%, 2-15-2005 ....................... 3,250 3,419,097
6.25%, 8-15-2023 ...................... 250 226,640
Total ................................. $ 7,063,730
(Cost: $7,153,842)
SHORT-TERM SECURITIES
Auto Repair, Services and Parking - 3.45%
PHH Corporation,
5.4%, 7-18-96 ......................... 1,095 1,092,208
Chemicals and Allied Products - 3.14%
Procter & Gamble Company (The),
5.35%, 8-12-96 ........................ 1,000 993,758
Depository Institutions - 3.07%
U.S. Bancorp,
Master Note............................ 969 969,000
Food and Kindred Products - 4.35%
General Mills, Inc.,
Master Note............................ 1,375 1,375,000
Security and Commodity Brokers - 3.65%
Merrill Lynch & Co., Inc.,
5.36%, 7-31-96 ........................ 1,160 1,154,819
Wholesale Trade - Nondurable Goods - 3.79%
Sara Lee Corporation,
Master Note............................ 1,198 1,198,000
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1996
Value
TOTAL SHORT-TERM SECURITIES - 21.45% $ 6,782,785
(Cost: $6,782,785)
TOTAL INVESTMENT SECURITIES - 98.89% $31,272,552
(Cost: $29,317,807)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.11% 350,868
NET ASSETS - 100.00% $31,623,420
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS
Chemicals and Allied Products - 1.91%
IMC Global, Inc. ....................... 4,000 $ 150,500
Communication - 2.81%
Nokia Corporation, Series A, ADS ....... 2,400 88,800
360 Communications Company* ............ 5,500 132,000
Total ................................. 220,800
Electronic and Other Electric Equipment - 4.96%
Motorola, Inc. ......................... 2,000 125,750
QUALCOMM Incorporated* ................. 5,000 265,310
Total ................................. 391,060
Food and Kindred Products - 4.00%
Seagram Company Ltd. (The) ............. 4,500 151,313
Tyson Foods, Inc. ...................... 6,000 163,872
Total ................................. 315,185
Health Services - 1.52%
Beverly Enterprises, Inc.* ............. 10,000 120,000
Holding and Other Investment Offices - 2.17%
Grupo Financiero Banamex Accival,
S.A. de C.V., B, CPO Shares (A)* ...... 45,000 93,735
Grupo Financiero Banamex Accival,
S.A. de C.V., L (A)* .................. 1,350 2,570
LTC Properties, Inc. ................... 4,500 74,250
Total ................................. 170,555
Industrial Machinery and Equipment - 1.48%
Silicon Valley Group, Inc.* ............ 6,200 116,634
Insurance Carriers - 2.56%
United HealthCare Corporation .......... 4,000 202,000
Oil and Gas Extraction - 1.49%
Enron Oil & Gas Company ................ 4,200 117,075
Petroleum and Coal Products - 2.70%
Kerr-McGee Corporation ................. 3,500 213,062
Prepackaged Software - 2.60%
Broderbund Software, Inc.* ............. 4,000 129,500
Intuit Inc.* ........................... 1,600 75,200
Total ................................. 204,700
TOTAL COMMON STOCKS - 28.20% $2,221,571
(Cost: $2,199,511)
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Amusement and Recreation Services - 2.55%
Trump Atlantic City Associates,
11.25%, 5-1-2006 ...................... $200 $ 201,000
Communication - 3.67%
MFS Communications Company, Inc.,
0.00%, 1-15-2006 (C) .................. 225 136,125
Viacom International, Inc.,
9.125%, 8-15-99 ....................... 150 153,000
Total ................................. 289,125
Electronic and Other Electric Equipment - 1.46%
VLSI Technology, Inc., Convertible,
8.25%, 10-1-2005 ...................... 130 115,050
Health Services - 1.46%
ARV Assisted Living, Inc., Convertible,
6.75%, 4-1-2006 (D) ................... 120 115,200
Paper and Allied Products - 3.82%
Buckeye Cellulose Corporation,
9.25%, 9-15-2008 ...................... 300 300,375
Security and Commodity Brokers - 1.97%
Salomon Inc.,
7.625%, 5-15-99 (Exchangeable) ........ 149 155,400
TOTAL CORPORATE DEBT SECURITIES - 14.93% $1,176,150
(Cost: $1,193,582)
UNITED STATES GOVERNMENT SECURITIES
United States Treasury:
6.875%, 2-28-97 ....................... 40 40,312
6.125%, 5-31-97 ....................... 400 401,248
7.25%, 2-15-98 ........................ 60 61,059
7.125%, 2-29-2000 ..................... 60 61,360
7.5%, 2-15-2005 ....................... 130 136,764
9.125%, 5-15-2018 ..................... 450 553,851
TOTAL UNITED STATES GOVERNMENT
SECURITIES - 15.93% $1,254,594
(Cost: $1,324,126)
SHORT-TERM SECURITIES
Auto Repair, Services and Parking - 4.43%
PHH Corporation,
5.4%, 7-18-96 ......................... 350 349,108
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (CONTINUED)
Chemicals and Allied Products - 8.20%
Air Products and Chemicals, Inc.,
5.38%, 8-12-96 ........................ $300 $ 298,117
Procter & Gamble Company (The),
5.35%, 8-12-96 ........................ 350 347,815
Total ................................. 645,932
Depository Institutions - 1.59%
U.S. Bancorp,
Master Note ........................... 125 125,000
Electric, Gas and Sanitary Services - 4.43%
Northern Illinois Gas Company,
5.38%, 7-23-96 ........................ 350 348,849
Electronic and Other Electric Equipment - 3.80%
TDK (USA) Corp.,
5.35%, 7-17-96 ........................ 300 299,287
Food and Kindred Products - 8.03%
General Mills, Inc.,
Master Note ........................... 284 284,000
Seagram (Joseph E.) & Sons Inc.,
5.39%, 7-30-96 ........................ 350 348,480
Total ................................. 632,480
Nondepository Institutions - 2.79%
USL Capital Corp.,
5.36%, 7-22-96 ........................ 220 219,312
Security and Commodity Brokers - 4.44%
Merrill Lynch & Co., Inc.,
5.35%, 7-1-96 ......................... 350 350,000
Tobacco Products - 3.80%
B.A.T. Capital Corp.,
5.33%, 7-9-96 ......................... 300 299,645
Wholesale Trade - Nondurable Goods - 4.70%
Sara Lee Corporation,
Master Note ........................... 370 370,000
TOTAL SHORT-TERM SECURITIES - 46.21% $3,639,613
(Cost: $3,639,613)
TOTAL INVESTMENT SECURITIES - 105.27% $8,291,928
(Cost: $8,356,832)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (5.27%) (415,326)
NET ASSETS - 100.00% $7,876,602
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
BANK OBLIGATIONS
Certificates of Deposit - 4.71%
Yankee
Creditanstalt - Bankverein,
5.38%, 3-7-97 ......................... $1,000 $ 1,000,000
Societe Generale - New York,
5.3%, 2-21-97 ......................... 1,000 1,000,000
Total ................................. 2,000,000
Commercial Paper - 3.85%
U.S. Bancorp,
Master Note ........................... 1,635 1,635,000
Commercial Paper (backed by irrevocable
bank letter of credit) - 2.34%
Banco Nacional de Mexico S.A.
(Barclays Bank PLC),
5.12%, 7-24-96......................... 1,000 996,729
Notes - 7.08%
Abbey National Treasury Services plc,
7.8%, 12-16-96......................... 1,000 1,009,918
Comerica Bank,
5.4605%, 7-15-96....................... 1,000 1,000,000
PNC Bank, N.A.,
5.3992%, 7-22-96 ...................... 1,000 999,816
Total ................................. 3,009,734
TOTAL BANK OBLIGATIONS - 17.98% $ 7,641,463
(Cost: $7,641,463)
CORPORATE OBLIGATIONS
Commercial Paper
Chemicals and Allied Products - 8.70%
Air Products and Chemicals, Inc.,
5.37%, 8-12-96 ........................ 1,210 1,202,419
Ciba-Geigy PLC,
5.35%, 7-10-96 ........................ 1,200 1,198,395
Hercules Inc.,
5.3%, 7-23-96 ......................... 1,300 1,295,789
Total ................................. 3,696,603
Communication - 2.81%
BellSouth Telecommunications Inc.,
5.33%, 8-2-96 ......................... 1,200 1,194,315
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (Continued)
Electric, Gas and Sanitary Services - 6.33%
Idaho Power Co.,
5.36%, 7-22-96 ........................ $1,200 $ 1,196,248
Pacificorp,
5.3%, 7-16-96 ......................... 1,500 1,496,688
Total ................................. 2,692,936
Electronic and Other Electric Equipment - 2.35%
TDK (USA) Corp.,
5.35%, 7-17-96 ........................ 1,000 997,622
Food and Kindred Products - 4.10%
General Mills, Inc.,
Master Note ........................... 1,745 1,745,000
Metal Mining - 2.34%
BHP Finance (USA) Inc.,
5.38%, 8-12-96 ........................ 1,000 993,723
Nondepository Institutions - 2.96%
Island Finance Puerto Rico Inc.,
5.31%, 7-12-96 ........................ 1,260 1,257,956
Petroleum and Coal Products - 2.35%
Amoco Corporation,
5.48%, 7-25-96 ........................ 1,000 1,000,000
Printing and Publishing - 5.64%
American Greetings Corp.,
5.32%, 7-2-96 ......................... 1,000 999,852
Gannett Co.,
5.35%, 7-16-96 ........................ 1,400 1,396,879
Total ................................. 2,396,731
Tobacco Products - 2.18%
B.A.T. Capital Corp.,
5.32%, 7-3-96 ......................... 925 924,727
Wholesale Trade - Nondurable Goods - 4.09%
Sara Lee Corporation,
Master Note ........................... 1,739 1,739,000
Total Commercial Paper - 43.85% 18,638,613
Commercial Paper (backed by irrevocable
bank letter of credit) - 2.35%
Electric, Gas and Sanitary Services
CommEd Fuel Co. Inc. (First National
Bank of Chicago),
5.29%, 7-23-96 ........................ 1,000 996,767
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Notes
Auto Repair, Services and Parking - 2.35%
PHH Corporation,
5.4451%, 7-26-96 ...................... $1,000 $ 999,568
Communication - 2.35%
AT&T Capital Corp.,
5.5344%, 7-18-96 ...................... 1,000 1,000,149
Nondepository Institutions - 3.55%
American Express Credit Corp.,
7.875%, 12-1-96 ....................... 500 504,935
Associates Corporation of North America,
6.02%, 8-19-96 ........................ 1,000 1,000,727
Total ................................. 1,505,662
Security and Commodity Brokers - 2.35%
Merrill Lynch & Co., Inc.,
5.4197%, 5-29-97 ...................... 1,000 1,000,000
Total Notes - 10.60% 4,505,379
TOTAL CORPORATE OBLIGATIONS - 56.80% $24,140,759
(Cost: $24,140,759)
MUNICIPAL OBLIGATIONS
California - 5.65%
City of Anaheim, California, Certificates
of Participation (1993 Arena Financing
Project), Municipal Adjustable Rate
Taxable Securities (Credit Suisse),
5.5%, 8-1-96 .......................... 1,000 1,000,000
Oakland-Alameda County Coliseum Lease
Revenue Bonds (Oakland Coliseum Project),
1995 Series B-1 (Canadian Imperial Bank
of Commerce),
5.43%, 8-7-96 ......................... 1,400 1,400,000
Total ................................. 2,400,000
New York - 4.00%
Health Insurance Plan of Greater New York
(Morgan Guaranty Trust Company of New York),
5.55%, 7-3-96 ......................... 1,700 1,700,000
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
Pennsylvania - 2.56%
Montgomery County Industrial Development
Authority, Taxable Fixed Rate/Variable
Rate Demand Revenue Bonds (410 Horsham
Associates Project), Series of 1995
(Meridian Bank),
5.55%, 7-3-96 ......................... $ 200 $ 200,000
Schuylkill County Industrial Development
Authority, Commercial Development Revenue
Bonds (Midway Supermarket, Inc. Project),
Taxable Series of 1995 (Meridian Bank),
5.55%, 7-3-96 ......................... 890 890,000
Total ................................. 1,090,000
Texas - 2.34%
Metrocrest Hospital Authority, Series 1989A
(The Bank of New York),
5.4689%, 8-1-96 ....................... 1,000 995,291
TOTAL MUNICIPAL OBLIGATIONS - 14.55% $ 6,185,291
(Cost: $6,185,291)
UNITED STATES GOVERNMENT OBLIGATIONS
Federal Farm Credit Banks,
4.95%, 3-3-97.......................... 1,000 997,753
Federal Home Loan Banks,
5.65%, 7-3-96 ......................... 1,000 1,000,000
Federal National Mortgage Association,
5.47%, 9-20-96......................... 1,000 999,034
Student Loan Marketing Association,
5.54%, 7-2-96 ......................... 1,000 1,000,000
TOTAL UNITED STATES GOVERNMENT
OBLIGATIONS - 9.40% $ 3,996,787
(Cost: $3,996,787)
TOTAL INVESTMENT SECURITIES - 98.73% $41,964,300
(Cost: $41,964,300)
CASH AND OTHER ASSETS,
NET OF LIABILITIES - 1.27% 541,463
NET ASSETS - 100.00% $42,505,763
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Chemicals and Allied Products - 5.76%
American Home Products Corporation,
7.7%, 2-15-2000 ....................... $100 $ 103,032
ICI Wilmington, Inc.,
9.5%, 11-15-2000 ...................... 75 81,679
Total ................................. 184,711
Depository Institutions - 12.42%
BankAmerica Corporation,
9.7%, 8-1-2000 ........................ 100 109,951
Boatmen's Bancshares, Inc.,
9.25%, 11-1-2001 ...................... 50 54,602
First Chicago Corporation,
7.625%, 1-15-2003 ..................... 125 127,866
Wells Fargo & Company,
8.375%, 5-15-2002 ..................... 100 105,702
Total ................................. 398,121
Electric, Gas and Sanitary Services - 1.64%
Consolidated Natural Gas Company,
8.75%, 6-1-99 ......................... 50 52,522
General Merchandise Stores - 6.52%
Penney (J.C.) Company, Inc.,
10.0%, 10-15-97 ....................... 100 104,471
Sears, Roebuck and Co.,
9.25%, 4-15-98 ........................ 100 104,629
Total ................................. 209,100
Industrial Machinery and Equipment - 1.57%
Ingersoll-Rand Company,
8.25%, 11-1-96 ........................ 50 50,316
Instruments and Related Products - 4.28%
Baxter International Inc.,
9.25%, 9-15-96 ........................ 50 50,305
Polaroid Corporation,
8.0%, 3-15-99 ......................... 85 87,005
Total ................................. 137,310
Insurance Agents, Brokers and Service - 1.56%
ITT Hartford,
7.25%, 12-1-96 ........................ 50 50,084
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Nondepository Institutions - 16.78%
American General Finance Corporation,
8.25%, 1-15-98 ........................ $ 50 $ 51,317
Associates Corporation of North America,
7.875%, 9-30-2001 ..................... 100 104,043
Avco Financial Services, Inc.,
5.5%, 4-1-2000 ........................ 50 47,646
Ford Motor Credit Company,
8.0%, 1-15-99 ......................... 75 77,330
General Motors Acceptance Corporation,
7.75%, 1-15-99 ........................ 100 102,347
Household Finance Corporation,
7.75%, 6-15-97 ........................ 50 50,655
Norwest Financial, Inc.,
7.75%, 8-15-2001 ...................... 50 51,718
Transamerica Finance Corporation,
8.75%, 10-1-99 ........................ 50 52,615
Total ................................. 537,671
Oil and Gas Extraction - 4.13%
Burlington Resources Inc.,
8.5%, 10-1-2001 ....................... 125 132,480
Petroleum and Coal Products - 3.31%
Chevron Corporation,
8.11%, 12-1-2004 ...................... 50 52,593
Texaco Capital Inc.,
9.0%, 12-15-99 ........................ 50 53,515
Total ................................. 106,108
Transportation by Air - 3.33%
Federal Express Corporation,
10.0%, 9-1-98 ......................... 100 106,557
Transportation Equipment - 1.58%
General Motors Corporation,
7.625%, 2-15-97 ....................... 50 50,520
TOTAL CORPORATE DEBT SECURITIES - 62.88% $2,015,500
(Cost: $2,009,137)
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES
Federal National Mortgage Association:
6.0%, 11-1-2000 ....................... $ 77 $ 74,143
5.0%, 12-25-2001 ...................... 71 70,760
6.5%, 12-1-2010 ....................... 101 97,604
6.0%, 1-1-2011 ........................ 96 90,453
6.5%, 2-1-2011 ........................ 97 93,442
7.0%, 5-1-2011 ........................ 101 99,642
11.0%, 10-1-2020 ...................... 37 41,271
7.0%, 4-1-2026 ........................ 101 97,584
Government National Mortgage Association,
7.0%, 9-15-2008 ....................... 83 82,570
United States Treasury:
6.375%, 8-15-2002 ..................... 100 99,203
6.25%, 2-15-2003....................... 100 98,234
TOTAL UNITED STATES GOVERNMENT SECURITIES - 29.48% $ 944,906
(Cost: $956,369)
TOTAL SHORT-TERM SECURITIES - 5.80% $ 186,000
(Cost: $186,000)
TOTAL INVESTMENT SECURITIES - 98.16% $3,146,406
(Cost: $3,151,506)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.84% 59,041
NET ASSETS - 100.00% $3,205,447
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Chemicals and Allied Products - 3.23%
Dow Capital BV,
9.0%, 5-15-2010 ....................... $ 500 $ 560,455
Procter & Gamble Company (The),
8.0%, 9-1-2024 ........................ 2,000 2,225,560
Total ................................. 2,786,015
Communication - 9.70%
Bell Telephone Company of Pennsylvania (The),
8.35%, 12-15-2030 ..................... 1,000 1,140,420
BellSouth Telecommunications, Inc.,
5.85%, 11-15-2045 ..................... 1,000 972,850
Continental Cablevision, Inc.,
8.5%, 9-15-2001 ....................... 1,000 1,046,960
Infinity Broadcasting Corporation,
10.375%, 3-15-2002 .................... 250 266,250
Jones Intercable, Inc.,
9.625%, 3-15-2002 ..................... 500 502,500
Southwestern Bell Telephone Company,
7.0%, 8-26-2002 ....................... 1,000 1,004,130
Tele-Communications, Inc.,
6.58%, 2-15-2005 ...................... 1,000 984,330
Turner Broadcasting System, Inc.,
8.375%, 7-1-2013 ...................... 1,000 958,140
U S WEST, Inc.,
8.4%, 9-15-99 ......................... 500 520,830
Viacom International Inc.:
9.125%, 8-15-99 ....................... 500 510,000
6.75%, 1-15-2003 ...................... 500 471,755
Total ................................. 8,378,165
Depository Institutions - 14.52%
AmSouth Bancorporation,
6.75%, 11-1-2025 ...................... 1,500 1,447,830
BarclaysAmericanCorporation,
9.125%, 12-1-97 ....................... 225 232,868
First Union Corporation,
6.55%, 10-15-2035 ..................... 1,000 952,640
Kansallis-Osake-Pankki,
10.0%, 5-1-2002 ....................... 1,000 1,128,070
NBD Bank, National Association,
8.25%, 11-1-2024 ...................... 1,000 1,092,620
NationsBank Corporation,
8.57%, 11-15-2024 ..................... 1,000 1,120,400
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Depository Institutions (Continued)
Riggs National Corporation,
8.5%, 2-1-2006 ........................ $1,500 $ 1,492,500
SouthTrust Bank of Alabama, N.A.:
5.58%, 2-6-2006 ....................... 500 475,905
7.69%, 5-15-2025 ...................... 500 519,505
Wells Fargo & Company:
5.632%, 9-5-97......................... 3,000 2,999,790
8.75%, 5-1-2002 ....................... 1,000 1,069,400
Total ................................. 12,531,528
Eating and Drinking Places - 2.28%
Marriott International, Inc.:
6.75%, 12-15-2003 ..................... 1,000 954,010
7.875%, 4-15-2005 ..................... 1,000 1,017,980
Total ................................. 1,971,990
Electric, Gas and Sanitary Services - 4.73%
Arkla, Inc.,
10.0%, 11-15-2019 ..................... 975 1,066,592
Coastal Corporation (The),
10.375%, 10-1-2000 .................... 500 560,690
El Paso Electric Company,
7.25%, 2-1-99 ......................... 250 246,150
Kansas Gas and Electric Company,
7.6%, 12-15-2003 ...................... 1,000 1,010,910
Seagull Energy Corporation,
7.875%, 8-1-2003 ...................... 1,250 1,203,125
Total ................................. 4,087,467
Electronic and Other Electric Equipment - 1.33%
Motorola, Inc.,
8.4%, 8-15-2031 ....................... 1,000 1,151,230
Food and Kindred Products - 3.68%
Coca-Cola Enterprises Inc.:
8.0%, 1-4-2005 ....................... 1,000 1,065,610
0.0%, 6-20-2020 ....................... 10,000 1,765,100
Nabisco, Inc.,
6.8%, 9-1-2001 ........................ 345 347,553
Total ................................. 3,178,263
Forestry - 0.26%
Doman Industries Limited,
8.75%, 3-15-2004 ...................... 250 225,000
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
General Building Contractors - 0.96%
Del Webb Corporation,
10.875%, 3-31-2000 .................... $ 800 $ 826,000
Health Services - 0.59%
Tenet Healthcare Corporation,
8.625%, 12-1-2003 ..................... 500 506,875
Hotels and Other Lodging Places - 0.60%
RHG Finance Corporation,
8.875%, 10-1-2005 ..................... 500 516,955
Industrial Machinery and Equipment - 1.27%
Joy Technologies Inc.,
10.25%, 9-1-2003 ...................... 1,000 1,100,000
Instruments and Related Products - 1.16%
Mark IV Industries, Inc.,
8.75%, 4-1-2003 ....................... 1,000 1,000,000
Insurance Carriers - 1.83%
Penn Central Corporation (The),
10.625%, 4-15-2000 .................... 1,000 1,082,450
Reliance Group Holdings, Inc.,
9.0%, 11-15-2000 ...................... 500 495,000
Total ................................. 1,577,450
Metal Mining - 0.56%
Noranda Inc.,
7.0%, 7-15-2005 ....................... 500 480,690
Nondepository Institutions - 8.85%
Associates Corporation of North America,
7.95%, 2-15-2010 ...................... 500 529,205
Chevy Chase Savings Bank, F.S.B.,
9.25%, 12-1-2005 ...................... 500 480,000
Chrysler Financial Corporation,
12.75%, 11-1-99 ....................... 1,000 1,171,650
Countrywide Mortgage Backed Securities,
Inc.,
6.5%, 4-25-2024 ....................... 2,000 1,925,000
DLJ Mortgage Acceptance Corp.,
6.5%, 4-25-2024 ....................... 965 889,140
General Electric Capital Corporation,
8.3%, 9-20-2009 ....................... 500 545,400
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Nondepository Institutions (Continued)
General Motors Acceptance Corporation,
8.875%, 6-1-2010 ...................... $1,000 $ 1,115,530
Residential Asset Securities Corporation,
Mortgage Pass-Through Certificates,
1995-KS3 Class D,
8.0%, 10-25-2024 ...................... 1,000 984,380
Total ................................. 7,640,305
Oil and Gas Extraction - 2.81%
Anadarko Petroleum Corporation,
7.25%, 3-15-2025 ...................... 1,000 1,022,890
Union Texas Petroleum Holdings, Inc.,
8.25%, 11-15-99 ....................... 500 512,650
YPF Sociedad Anoima,
8.0%, 2-15-2004 ....................... 1,000 886,250
Total ................................. 2,421,790
Paper and Allied Products - 1.84%
Boise Cascade Office Products Corporation,
9.875%, 2-15-2001 ..................... 500 531,690
Canadian Pacific Forest Products Ltd.,
9.25%, 6-15-2002 ...................... 1,000 1,059,450
Total ................................. 1,591,140
Printing and Publishing - 1.75%
News America Holdings Incorporated,
9.125%, 10-15-99 ...................... 500 532,155
Time Warner Incorporated,
7.75%, 6-15-2005 ...................... 1,000 976,220
Total ................................. 1,508,375
Stone, Clay and Glass Products - 1.21%
Owens-Corning Fiberglas Corporation,
8.875%, 6-1-2002 ...................... 500 534,465
USG Corporation,
9.25%, 9-15-2001 ...................... 500 512,500
Total ................................. 1,046,965
Transportation Equipment - 1.94%
General Motors Corporation,
8.8%, 3-1-2021 ........................ 1,000 1,120,690
McDonnell Douglas Corporation,
9.25%, 4-1-2002 ....................... 500 550,110
Total ................................. 1,670,800
Wholesale Trade -- Durable Goods- 0.59%
Lockheed Martin Corporation,
7.7%, 6-15-2008 ....................... 500 509,355
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
TOTAL CORPORATE DEBT SECURITIES - 65.69% $56,706,358
(Cost: $57,007,292)
OTHER GOVERNMENT SECURITIES
Australia - 0.87%
New South Wales Treasury Corporation,
7.0%, 2-1-2000 (B) .................... $A 1,000 750,075
Canada - 3.73%
Hydro Quebec:
8.05%, 7-7-2024 ....................... $ 1,000 1,060,040
7.4%, 3-28-2025 ....................... 1,000 1,085,490
Province of Nova Scotia,
8.25%, 11-15-2019...................... 1,000 1,077,340
Total ................................. 3,222,870
Supranationals - 1.30%
Inter-American Development Bank,
8.4%, 9-1-2009 ........................ 1,000 1,118,960
TOTAL OTHER GOVERNMENT SECURITIES - 5.90% $ 5,091,905
(Cost: $4,977,632)
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation:
6.83%, 7-3-2002 ....................... 500 492,265
7.5%, 11-15-2017 ...................... 1,538 1,552,888
7.5%, 4-15-2019 ....................... 1,332 1,274,866
7.95%, 12-15-2020 ..................... 3,000 3,061,860
7.0%, 1-15-2021 ....................... 500 478,590
Federal National Mortgage Association,
7.09%, 4-1-2004 ....................... 500 490,860
Government National Mortgage Association:
7.5%, 7-15-2023 ....................... 2,286 2,271,660
7.5%, 12-15-2023 ...................... 2,395 2,379,813
8.0%, 9-15-2025 ....................... 2,012 2,045,354
United States Treasury:
5.625%, 1-31-98 ....................... 3,000 2,981,730
5.5%, 2-28-99 ......................... 4,000 3,925,640
TOTAL UNITED STATES GOVERNMENT SECURITIES - 24.27% $20,955,526
(Cost: $20,968,775)
TOTAL SHORT-TERM SECURITIES - 3.17% $2,735,335
(Cost: $2,735,335)
TOTAL INVESTMENT SECURITIES - 99.03% $85,489,124
(Cost: $85,689,034)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.97% 841,685
NET ASSETS - 100.00% $86,330,809
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1996
Shares Value
COMMON STOCKS AND WARRANTS
Amusement and Recreation Services - 0.20%
Trump Hotels & Casino Resorts, Inc.* ... 6,250 $ 178,125
Business Services - 0.23%
Bell & Howell Company* ................. 6,250 203,906
Communication - 0.45%
Heartland Wireless Communications,
Inc., Warrants (D)* ................... 3,000 21,750
Infinity Broadcasting Corporation,
Class A* .............................. 12,625 378,750
Total ................................. 400,500
General Building Contractors - 0.37%
Walter Industries, Inc.* ............... 23,272 330,160
Holding and Other Investment Offices - 0.93%
LTC Properties, Inc. ................... 50,000 825,000
Hotels and Other Lodging Places - 0.59%
Wyndham Hotel Corporation* ............. 25,000 521,875
TOTAL COMMON STOCKS AND WARRANTS - 2.77% $ 2,459,566
(Cost: $1,642,219)
PREFERRED STOCKS
Depository Institutions - 0.62%
California Federal Bank, F.S.B. ........ 5,000 547,500
Printing and Publishing - 0.52%
K-III Communications Corporation (D) .... 5,000 460,000
TOTAL PREFERRED STOCKS - 1.14% % $ 1,007,500
(Cost: $1,000,000)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Agricultural Services - 0.59%
Hines Horticulture, Inc.,
11.75%, 10-15-2005 .................... $ 500 520,000
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Amusement and Recreation Services - 7.64%
American Skiing Company,
12.0%, 7-15-2006 (D) .................. $ 500 $ 490,000
Argosy Gaming Company:
12.0%, 6-1-2001 (Convertible) ......... 1,000 928,750
13.25%, 6-1-2004 (D) .................. 500 506,250
GNS Finance Corp.,
9.25%, 3-15-2003 ...................... 1,500 1,582,500
Rio Hotel & Casino, Inc.,
10.625%, 7-15-2005 .................... 1,000 1,052,500
Showboat Marina Casino Partnership,
13.5%, 3-15-2003 (D) .................. 500 542,500
Trump Atlantic City Associates,
11.25%, 5-1-2006 ...................... 500 502,500
Trump Hotels & Casino Resorts
Holdings, L.P.,
15.5%, 6-15-2005 ...................... 1,000 1,177,500
Total ................................. 6,782,500
Business Services - 4.02%
Adams Outdoor Advertising Limited Partnership,
10.75%, 3-15-2006 (D) ................. 750 770,625
Bell & Howell Company,
10.75%, 10-1-2002 ..................... 750 795,000
Heritage Media Corporation,
8.75%, 2-15-2006 ...................... 500 465,000
Outdoor Systems, Inc.,
10.75%, 8-15-2003 ..................... 1,000 1,030,000
Scotsman Group, Inc.,
9.5%, 12-15-2000 ...................... 500 503,750
Total ................................. 3,564,375
Chemicals and Allied Products - 0.47%
Revlon Worldwide Corporation,
0.0%, 3-15-98 ......................... 500 415,625
Communication - 24.74%
Adelphia Communications Corporation,
12.5%, 5-15-2002 ...................... 500 507,500
Allbritton Communications Company,
9.75%, 11-30-2007_..................... 500 457,500
American Radio Systems Corporation,
9.0%, 2-1-2006 ........................ 750 706,875
Arch Communications Group, Inc.,
0.0%, 3-15-2008 (C) ................... 1,500 772,500
Argyle Television Operations, Inc.,
9.75%, 11-1-2005 ...................... 1,000 940,000
Cablevision Systems Corporation,
9.875%, 2-15-2013 ..................... 1,450 1,344,875
Chancellor Broadcasting Company,
9.375%, 10-1-2004 ..................... 1,000 945,000
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Communication (Continued)
COMCAST CELLULAR CORPORATION,
0.0%, 3-5-2000 ........................ $ 500 $ 342,500
Continental Cablevision, Inc.:
10.625%, 6-15-2002 .................... 500 535,000
11.0%, 6-1-2007 ....................... 500 561,250
Diamond Cable Communications Plc,
0.0%, 12-15-2005 (C) .................. 500 293,750
EZ Communications, Inc.,
9.75%, 12-1-2005 ...................... 1,000 955,000
Granite Broadcasting Corporation,
10.375%, 5-15-2005 .................... 500 490,000
Heartland Wireless Communications, Inc.,
13.0%, 4-15-2003 ...................... 500 545,000
Infinity Broadcasting Corporation,
10.375%, 3-15-2002 .................... 500 532,500
InterCel, Inc., Units,
0.0%, 2-1-2006 (C)(E) ................. 8 451,875
Intermedia Communications of Florida, Inc.,
0.0%, 5-15-2006 (C) ................... 750 408,750
MFS Communications Company, Inc.:
0.0%, 1-15-2004 (C) ................... 500 375,000
0.0%, 1-15-2006 (C) ................... 1,000 605,000
Marcus Cable Operating Company,
0.0%, 8-1-2004 (C) .................... 1,500 1,072,500
Metrocall, Inc.,
10.375%, 10-1-2007 .................... 500 462,500
Microcell Telecommunications Inc., Units,
0.0%, 6-1-2006 (C)(D)(F) .............. 1,250 609,375
PanAmSat, L.P.:
9.75%, 8-1-2000 ....................... 1,000 1,033,750
0.0%, 8-1-2003 (C) .................... 1,000 870,000
Rogers Cantel Inc.,
9.375%, 6-1-2008 ...................... 500 485,000
Shared Technologies Fairchild
Communications Corp.,
0.0%, 3-1-2006 (C)(D) ................. 500 375,000
Teleport Communications Group Inc.,
0.0%, 7-1-2007 (C)..................... 1,500 873,750
Turner Broadcasting System, Inc.,
8.375%, 7-1-2013 ...................... 1,000 958,140
USA Mobile Communications, Inc. II,
9.5%, 2-1-2004 ........................ 500 475,000
United International Holdings, Inc.,
0.0%, 11-15-99 ........................ 1,000 655,000
Vanguard Cellular Systems, Inc.,
9.375%, 4-15-2006 ..................... 500 483,750
Viacom International, Inc.,
8.0%, 7-7-2006 ........................ 2,000 1,830,000
Total ................................. 21,953,640
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Eating and Drinking Places - 1.12%
Foodmaker, Inc.,
9.25%, 3-1-99 ......................... $1,000 $ 995,000
Electronic and Other Electric Equipment - 1.62%
A+ Network, Inc.,
11.875%, 11-1-2005 .................... 1,000 1,027,500
Exide Corporation,
0.0%, 12-15-2004 (C) .................. 500 410,000
Total ................................. 1,437,500
Engineering and Management Services - 1.14%
Essex Group, Inc.,
10.0%, 5-1-2003 ....................... 1,000 1,015,000
Fabricated Metal Products - 0.53%
Nortek, Inc.,
9.875%, 3-1-2004 ...................... 500 475,000
Food and Kindred Products - 3.50%
Dr Pepper Bottling Holdings, Inc.,
0.0%, 2-15-2003 (C) ................... 500 423,750
Keebler Corporation,
10.75%, 7-1-2006 (D) .................. 500 516,250
Pilgrim's Pride Corporation,
10.875%, 8-1-2003 ..................... 300 283,500
Specialty Foods Corporation:
10.25%, 8-15-2001 ..................... 1,000 930,000
11.125%, 10-1-2002 .................... 1,000 950,000
Total ................................. 3,103,500
Food Stores - 6.08%
Big V Supermarkets, Inc.,
11.0%, 2-15-2004 ...................... 500 467,500
Bruno's Inc.,
10.5%, 8-1-2005 ....................... 1,500 1,479,375
Kroger Co. (The),
9.75%, 2-15-2004 ...................... 1,000 1,065,000
Penn Traffic Company,
10.375%, 10-1-2004 .................... 1,000 900,000
Ralphs Grocery Company,
10.45%, 6-15-2004 ..................... 1,000 980,000
Smith's Food & Drug Centers, Inc.,
11.25%, 5-15-2007 ..................... 500 503,750
Total ................................. 5,395,625
Furniture and Fixtures - 1.61%
Lear Seating Corporation,
8.25%, 2-1-2002 ....................... 1,500 1,425,000
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
General Building Contractors - 2.45%
Beazer Homes USA, Inc.,
9.0%, 3-1-2004 ........................ $ 750 $ 682,500
NVR L.P.,
11.0%, 4-15-2003 ...................... 1,000 1,010,000
U.S. Home Corporation,
9.75%, 6-15-2003 ...................... 500 485,000
Total ................................. 2,177,500
General Merchandise Stores - 0.98%
Kmart Corporation,
8.99%, 7-5-2010 ....................... 1,000 870,000
Health Services - 4.78%
Abbey Healthcare Group Incorporated,
9.5%, 11-1-2002 ....................... 500 512,500
General Medical Corporation,
12.125%, 8-15-2005 .................... 1,192 1,203,111
Quorum Health Group, Inc.,
8.75%, 11-1-2005 ...................... 1,000 980,000
Regency Health Services, Inc.,
9.875%, 10-15-2002 .................... 500 480,000
Tenet Healthcare Corporation,
9.625%, 9-1-2002 ...................... 1,000 1,062,500
Total ................................. 4,238,111
Holding and Other Investment Offices - 1.13%
LTC Properties, Inc., Convertible,
8.5%, 1-1-2000 ........................ 1,000 1,007,500
Hotels and Other Lodging Places - 4.97%
GNF, CORP.,
10.625%, 4-1-2003 ..................... 500 543,750
HMC Acquisition Properties, Inc.,
9.0%, 12-15-2007 ...................... 500 455,000
Prime Hospitality Corp.,
9.25%, 1-15-2006 ...................... 1,500 1,426,875
Showboat, Inc.,
9.25%, 5-1-2008 ....................... 1,000 1,010,000
Station Casinos, Inc.,
10.125%, 3-15-2006 .................... 1,000 975,000
Total ................................. 4,410,625
Industrial Machinery and Equipment - 1.73%
American Standard Inc.,
9.875%, 6-1-2001 ...................... 1,000 1,030,000
Collins & Aikman Products Co.,
11.5%, 4-15-2006 ...................... 500 506,250
Total ................................. 1,536,250
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Instruments and Related Products - 2.84%
Dade International Inc.,
11.125%, 5-1-2006 (D) ................. $ 500 $ 517,500
IVAC Corporation,
9.25%, 12-1-2002 ...................... 500 502,500
Mark IV Industries, Inc.,
8.75%, 4-1-2003 ....................... 1,500 1,500,000
Total ................................. 2,520,000
Lumber and Wood Products - 1.17%
Triangle Pacific Corp.,
10.5%, 8-1-2003 ....................... 1,000 1,037,500
Metal Mining - 0.34%
Ucar Global Enterprises Inc.,
12.0%, 1-15-2005 ...................... 265 300,775
Miscellaneous Manufacturing Industries - 0.11%
MacAndrews & Forbes Group, Incorporated,
13.0%, 3-1-99 ......................... 100 102,000
Motion Pictures - 1.14%
Plitt Theatres, Inc.,
10.875%, 6-15-2004 .................... 1,000 1,010,000
Nondepository Institutions - 0.59%
First Nationwide Holdings Inc.,
12.5%, 4-15-2003 ...................... 500 522,500
Paper and Allied Products - 4.80%
Asia Pulp & Paper Company Ltd,
11.75%, 10-1-2005 ..................... 1,000 1,025,000
Container Corporation of America,
11.25%, 5-1-2004 ...................... 1,500 1,548,750
Fort Howard Corporation,
11.0%, 1-2-2002 ....................... 454 468,005
Mail-Well Corporation,
10.5%, 2-15-2004 ...................... 500 478,750
Sweetheart Cup Company, Inc.,
10.5%, 9-1-2003 ....................... 750 742,500
Total ................................. 4,263,005
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Printing and Publishing - 3.50%
American Media Operations, Inc.,
11.625%, 11-15-2004 ................... $1,000 $ 1,020,000
Big Flower Press, Inc.,
10.75%, 8-1-2003 ...................... 666 679,320
Jordan Industries, Inc.,
10.375%, 8-1-2003 ..................... 1,000 950,000
K-III Communications Corporation,
8.5%, 2-1-2006 (D) .................... 500 457,500
Total ................................. 3,106,820
Railroad Transportation - 1.05%
Southern Pacific Rail Corporation,
9.375%, 8-15-2005 ..................... 900 936,000
Rubber and Miscellaneous Plastics Products - 0.55%
RBX Corporation,
11.25%, 10-15-2005 .................... 500 485,000
Textile Mill Products - 2.68%
Avondale Mills, Inc.,
10.25%, 5-1-2006 (D) .................. 500 491,875
CONSOLTEX GROUP INC.,
11.0%, 10-1-2003 ...................... 1,000 920,000
WestPoint Stevens Inc.,
9.375%, 12-15-2005 .................... 1,000 965,000
Total ................................. 2,376,875
Transportation Equipment - 2.19%
Greenwich Air Services, Inc.,
10.5%, 6-1-2006 ....................... 500 495,000
Silgan Corporation,
13.25%, 12-15-2002 .................... 460 465,750
Walbro Corporation,
9.875%, 7-15-2005 ..................... 500 490,000
Westinghouse Air Brake Company,
9.375%, 6-15-2005 ..................... 500 495,000
Total ................................. 1,945,750
Wholesale Trade - Durable Goods - 1.17%
Alvey Systems, Inc.,
11.375%, 1-31-2003 .................... 1,000 1,035,000
See Notes to Schedules of Investments on page 53.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1996
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Wholesale Trade - Nondurable Goods - 0.61%
AmeriSource Distribution Corporation,
11.25%, 7-15-2005 ..................... $ 1 $ 1,112
United Stationers Supply Co.,
12.75%, 5-1-2005 ...................... 500 538,750
Total ................................. 539,862
TOTAL CORPORATE DEBT SECURITIES - 91.84% $81,503,838
(Cost: $81,560,925)
TOTAL SHORT-TERM SECURITIES - 3.00% $ 2,662,695
(Cost: $2,662,695)
TOTAL INVESTMENT SECURITIES - 98.75% $87,633,599
(Cost: $86,865,839)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.25% 1,111,537
NET ASSETS - 100.00% $88,745,136
See Notes to Schedules of Investments on page 53.
<PAGE>
TMK/UNITED FUNDS, INC.
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) Principal amounts are denominated in the indicated foreign currency where
applicable (DM - German Mark, Y - Japanese Yen, $A - Australian Dollar).
(C) The security does not bear interest for an initial period of time and
subsequently becomes interest bearing.
(D) As of June 30, 1996, the following restricted security was owned in the
Asset
Strategy Portfolio:
Acquisition Acquisition Market
Security Date Shares Cost Value
---------------- --------------------------------------------
ARV Assisted Living,
Inc., Convertible,
6.75%, 4-1-2006 3/28/96 120 $120,000 $115,200
==================
The total market value of restricted securities represents approximately
1.46% of the total net assets in the Asset Strategy Portfolio at June 30,
1996.
As of June 30, 1996, the following restricted securities were owned in the
High Income Portfolio: Shares/
Principal
Acquisition Amount Acquisition Market
Security Date (in 000's) Cost Value
---------------- --------------------------------------------
Heartland Wireless Communications,
Inc., Warrants 4/20/95 3,000$ 18,500$ 21,750
K-III Communications Corporation,
Preferred 1/19/96 5,000 500,000 460,000
Adams Outdoor Advertising Limited Partnership,
10.75%, 3-15-2006 3/5/96 $ 750 750,000 770,625
American Skiing Company,
12.0%, 7-15-2006 6/25/96 500 485,825 490,000
Argosy Gaming Company,
13.25%, 6-1-2004 5/31/96 500 500,000 506,250
Avondale Mills, Inc.,
10.25%, 5-1-2006 4/23/96 500 492,350 491,875
Dade International Inc.,
11.125%, 5-1-2006 4/30/96 500 500,000 517,500
K-III Communications Corporation,
8.5%, 2-1-2006 1/19/96 500 497,890 457,500
Keebler Corporation,
10.75%, 7-1-2006 6/20/96 500 507,500 516,250
Microcell Telecommunications Inc., Units,
0.0%, 6-1-2006 6/13/96 1,250 598,125 609,375
Shared Technologies Fairchild
Communications Corp.,
0.0%, 3-1-2006 3/8/96 500 351,385 375,000
Showboat Marina Casino Partnership,
13.5%, 3-15-2003 3/21/96 500 500,000 542,500
--------------------
$5,701,575$5,758,625
====================
The total market value of restricted securities represents approximately
6.49% of the total net assets in the High Income Portfolio at June 30,
1996.
(E) Each unit consists of ten senior discount notes due 2-1-2006 and 32
warrants.
(F) Each unit consists of $1,000 principal amount at maturity of senior
discount notes due 2006, four initial warrants to purchase Class B non-
voting shares, and four conditional warrants to purchase Class B shares.
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, 1996
(Unaudited)
Growth Income International
Portfolio Portfolio Portfolio
Assets ----------- ---------- -----------
Investment securities--at
value (Notes 1 and 3) $455,389,344 $388,591,625 $65,888,052
Cash ................. 4,592 4,928 2,324
Receivables:
Investment securities
sold ............... 5,850,866 --- ---
Fund shares sold ..... 425,857 420,639 162,461
Dividends and interest 427,002 391,169 177,940
Prepaid insurance
premium .............. 642 --- ---
------------ ----------- ----------
Total assets ....... 462,098,303 389,408,361 66,230,777
Liabilities ------------ ------------ -----------
Payable for investment
securities purchased . 6,028,974 --- 1,837,254
Payable for Fund shares
redeemed ............. 63,883 48,955 20,300
Accrued accounting
services fee ......... 5,000 5,000 2,500
Dividends payable ..... --- --- ---
Other ................. 29,424 23,662 17,576
------------ ------------ -----------
Total liabilities .. 6,127,281 77,617 1,877,630
------------ ------------ -----------
Total net assets .. $455,971,022 $389,330,744 $64,353,147
Net Assets ============ ============ ===========
$0.01 par value capital stock
Capital stock ........ $ 643,177 $ 412,165 $ 113,213
Additional paid-in
capital ............ 405,606,568 278,403,763 59,198,331
Accumulated undistributed gain (loss):
Accumulated undistributed
net investment income 2,872,526 1,803,134 631,623
Accumulated undistributed
net realized gain
(loss) on investment
transactions ....... 42,272,100 2,667,094 (738,622)
Net unrealized appreciation
(depreciation) of investments
at end of period ... 4,576,651 106,044,588 5,148,602
------------ ------------ -----------
Net assets applicable to
outstanding units
of capital ........ $455,971,022 $389,330,744 $64,353,147
============ ============ ===========
Net asset value, redemption
and offering price per share $7.0894 $9.4460 $5.6843
======= ======= =======
Capital shares outstanding 64,317,695 41,216,461 11,321,260
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, 1996
(Unaudited) Asset
Small Cap Balanced Strategy
Portfolio Portfolio Portfolio
Assets ------------ ------------ -----------
Investment securities--at
value (Notes 1 and 3). $86,807,516 $31,272,552 $8,291,928
Cash ................. 4,345 5,996 4,655
Receivables:
Investment securities
sold ............... 758,750 103,517 28,600
Fund shares sold ..... 360,141 54,187 24,043
Dividends and interest 45,811 210,286 36,439
Prepaid insurance
premium .............. --- --- ---
----------- ----------- ----------
Total assets ....... 87,976,563 31,646,538 8,385,665
Liabilities ----------- ------------ ----------
Payable for investment
securities purchased . 2,539,000 --- 508,281
Payable for Fund shares
redeemed ............. 24,338 19,629 41
Accrued accounting
services fee ......... 2,500 1,667 ---
Dividends payable ..... --- --- ---
Other ................. 6,920 1,822 741
----------- ----------- ----------
Total liabilities .. 2,572,758 23,118 509,063
----------- ----------- ----------
Total net assets .. $85,403,805 $31,623,420 $7,876,602
Net Assets =========== =========== ==========
$0.01 par value capital stock
Capital stock ........ $ 95,325 $ 51,213 $ 15,289
Additional paid-in
capital ............ 66,737,502 28,079,812 7,744,897
Accumulated undistributed gain (loss):
Accumulated undistributed
net investment income 27,313 427,765 116,343
Accumulated undistributed
net realized gain
(loss) on investment
transactions ....... 6,890,092 1,109,885 64,977
Net unrealized appreciation
(depreciation) of investments
at end of period ... 11,653,573 1,954,745 (64,904)
----------- ----------- ----------
Net assets applicable to
outstanding units
of capital ........ $85,403,805 $31,623,420 $7,876,602
=========== =========== ==========
Net asset value, redemption
and offering price per share $8.9592 $6.1749 $5.1517
======= ======= =======
Capital shares outstanding 9,532,534 5,121,315 1,528,930
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, 1996
(Unaudited)
Money Market Limited-Term Bond
Portfolio Bond Portfolio Portfolio
Assets ------------- ------------ -----------
Investment securities--at
value (Notes 1 and 3). $41,964,300 $3,146,406 $85,489,124
Cash ................. 2,405 3,207 2,656
Receivables:
Investment securities
sold ............... --- --- ---
Fund shares sold ..... 1,755,600 1,335 35,382
Dividends and interest 143,055 54,763 1,336,712
Prepaid insurance
premium .............. 603 --- 401
----------- ---------- ----------
Total assets ....... 43,865,963 3,205,711 86,864,275
Liabilities ----------- ---------- -----------
Payable for investment
securities purchased . --- --- 497,500
Payable for Fund shares
redeemed ............. 1,344,563 --- 23,229
Accrued accounting
services fee ......... 1,667 --- 2,500
Dividends payable ..... 11,826 --- ---
Other ................. 2,144 264 10,237
----------- ---------- -----------
Total liabilities .. 1,360,200 264 533,466
----------- ---------- -----------
Total net assets .. $42,505,763 $3,205,447 $86,330,809
Net Assets =========== ========== ===========
$0.01 par value capital stock
Capital stock ........ $ 425,058 $ 6,119 $ 164,243
Additional paid-in
capital ............ 42,080,705 3,116,207 86,232,241
Accumulated undistributed gain (loss):
Accumulated undistributed
net investment income --- 88,415 2,753,556
Accumulated undistributed
net realized gain
(loss) on investment
transactions ....... --- (194) (2,619,471)
Net unrealized appreciation
(depreciation) of investments
at end of period ... --- (5,100) (199,760)
----------- ---------- -----------
Net assets applicable to
outstanding units
of capital ........ $42,505,763 $3,205,447 $86,330,809
=========== ========== ===========
Net asset value, redemption
and offering price per share $1.0000 $5.2382 $5.2563
======= ======= =======
Capital shares outstanding 42,505,763 611,937 16,424,314
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, 1996
(Unaudited)
High Income
Portfolio
Assets -------------
Investment securities--at
value (Notes 1 and 3). $87,633,599
Cash ................. 4,134
Receivables:
Investment securities
sold ............... 253,750
Fund shares sold ..... 61,857
Dividends and interest 1,958,092
Prepaid insurance
premium .............. 581
-----------
Total assets ....... 89,912,013
Liabilities -----------
Payable for investment
securities purchased . 1,123,225
Payable for Fund shares
redeemed ............. 35,907
Accrued accounting
services fee ......... 2,500
Dividends payable ..... ---
Other ................. 5,245
-----------
Total liabilities .. 1,166,877
-----------
Total net assets .. $88,745,136
Net Assets ===========
$0.01 par value capital stock
Capital stock ........ $ 192,751
Additional paid-in
capital ............ 85,270,437
Accumulated undistributed gain (loss):
Accumulated undistributed
net investment income 3,929,684
Accumulated undistributed
net realized gain
(loss) on investment
transactions ....... (1,415,496)
Net unrealized appreciation
(depreciation) of investments
at end of period ... 767,760
-----------
Net assets applicable to
outstanding units
of capital ........ $88,745,136
===========
Net asset value, redemption
and offering price per share $4.6041
=======
Capital shares outstanding 19,275,108
Capital shares authorized 100,000,000
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 1996
(Unaudited)
Growth Income International
Portfolio Portfolio Portfolio
---------- ---------- ----------
Investment Income
Income:
Interest ............. $ 1,420,146 $ 571,054 $ 481,184
Dividends ............ 3,067,858 2,573,112 462,616
------------ ----------- ----------
Total income ....... 4,488,004 3,144,166 943,800
----------- ----------- ----------
Expenses (Note 2):
Investment management
fee ................ 1,546,133 1,286,723 230,015
Accounting services
fee ................ 30,000 29,167 15,000
Custodian fees ....... 14,147 3,875 28,979
Audit fees ........... 11,296 9,119 5,051
Legal fees ........... 2,941 2,452 418
Other ................ 10,961 9,696 1,587
----------- ----------- ----------
Total expenses ..... 1,615,478 1,341,032 281,050
----------- ----------- ----------
Net investment income 2,872,526 1,803,134 662,750
----------- ----------- ----------
Realized and Unrealized Gain (Loss)
on Investments
Realized net gain (loss)
on securities ........ 42,272,100 2,668,858 (632,845)
Realized net loss
on foreign currency
transactions ......... --- --- (31,127)
----------- ----------- ----------
Realized net gain (loss)
on investments ..... 42,272,100 2,668,858 (663,972)
Unrealized appreciation
(depreciation) in value
of investments during
the period ........... (28,731,083) 25,692,603 4,143,470
----------- ----------- ----------
Net gain (loss) on
investments ....... 13,541,017 28,361,461 3,479,498
----------- ----------- ----------
Net increase (decrease)
in net assets
resulting from
operations ...... $16,413,543 $30,164,595 $4,142,248
=========== =========== ==========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 1996
(Unaudited)
Small Cap Balanced Asset Strategy
Portfolio Portfolio Portfolio
---------- ---------- ----------
Investment Income
Income:
Interest ............. $ 360,033 $ 340,823 $141,391
Dividends ............ 3,991 184,874 7,725
---------- ---------- --------
Total income ....... 364,024 525,697 149,116
---------- ---------- --------
Expenses (Note 2):
Investment management
fee ................ 312,161 82,940 25,547
Accounting services
fee ................ 15,000 9,168 ---
Custodian fees ....... 2,211 1,559 1,793
Audit fees ........... 5,062 4,998 4,959
Legal fees ........... 500 154 46
Other ................ 1,777 (887) (26)
---------- ---------- --------
Total expenses ..... 336,711 97,932 32,319
---------- ---------- --------
Net investment income 27,313 427,765 116,797
---------- ---------- --------
Realized and Unrealized Gain (Loss)
on Investments
Realized net gain (loss)
on securities ........ 6,890,092 1,109,885 64,977
Realized net loss
on foreign currency
transactions ......... --- --- (454)
---------- ---------- --------
Realized net gain (loss)
on investments ..... 6,890,092 1,109,885 64,523
Unrealized appreciation
(depreciation) in value
of investments during
the period ........... 2,701,983 (310,768) (10,923)
---------- ---------- --------
Net gain (loss) on
investments ....... 9,592,075 799,117 53,600
---------- ---------- --------
Net increase (decrease)
in net assets
resulting from
operations ...... $9,619,388 $1,226,882 $170,397
========== ========== ========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 1996
(Unaudited)
Money Market Limited-Term Bond
Portfolio Bond Portfolio Portfolio
--------------- ---------- ----------
Investment Income
Income:
Interest ............. $979,058 $102,546 $3,009,450
Dividends ............ --- --- ---
-------- -------- ----------
Total income ....... 979,058 102,546 3,009,450
-------- -------- ----------
Expenses (Note 2):
Investment management
fee ................ 89,741 8,501 230,988
Accounting services
fee ................ 10,000 --- 15,000
Custodian fees ....... 1,077 550 800
Audit fees ........... 5,024 4,956 5,629
Legal fees ........... 240 21 571
Other ................ 1,211 103 2,670
-------- -------- ----------
Total expenses ..... 107,293 14,131 255,658
-------- -------- ----------
Net investment income 871,765 88,415 2,753,792
-------- -------- ----------
Realized and Unrealized Gain (Loss)
on Investments
Realized net gain (loss)
on securities ........ --- (194) (16,436)
Realized net loss
on foreign currency
transactions ......... --- --- (236)
-------- -------- ----------
Realized net gain (loss)
on investments ..... --- (194) (16,672)
Unrealized appreciation
(depreciation) in value
of investments during
the period ........... --- (96,937) (4,461,408)
-------- -------- ----------
Net gain (loss) on
investments ....... --- (97,131) (4,478,080)
-------- -------- ----------
Net increase (decrease)
in net assets
resulting from
operations ...... $871,765 $ (8,716) $(1,724,288)
======== ======== ===========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 1996
(Unaudited)
High Income
Portfolio
---------------
Investment Income
Income:
Interest ............. $4,168,564
Dividends ............ 72,924
----------
Total income ....... 4,241,488
----------
Expenses (Note 2):
Investment management
fee ................ 287,245
Accounting services
fee ................ 15,000
Custodian fees ....... 720
Audit fees ........... 5,625
Legal fees ........... 582
Other ................ 2,632
----------
Total expenses ..... 311,804
----------
Net investment income 3,929,684
----------
Realized and Unrealized Gain (Loss)
on Investments
Realized net gain (loss)
on securities ........ 1,773,538
Realized net loss
on foreign currency
transactions ......... ---
----------
Realized net gain (loss)
on investments ..... 1,773,538
Unrealized appreciation
(depreciation) in value
of investments during
the period ........... (2,603,915)
----------
Net gain (loss) on
investments ....... (830,377)
----------
Net increase (decrease)
in net assets
resulting from
operations ...... $3,099,307
==========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended JUNE 30, 1996
(Unaudited)
Growth Income International
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment
income ............. $ 2,872,526 $ 1,803,134 $ 662,750
Realized net gain (loss)
on investments ..... 42,272,100 2,668,858 (663,972)
Unrealized appreciation
(depreciation) ..... (28,731,083) 25,692,603 4,143,470
------------ ------------ -----------
Net increase (decrease)
in net assets
resulting from
operations......... 16,413,543 30,164,595 4,142,248
------------ ------------ -----------
Dividends to shareholders:*
From net investment
income ............. --- --- ---
From realized gains
on securities
transactions ....... --- --- ---
In excess of realized
gains .............. --- --- ---
------------ ------------ -----------
--- --- ---
------------ ------------ -----------
Capital share
transactions** ....... 20,731,795 27,972,117 10,014,554
------------ ------------ -----------
Total increase
(decrease) ....... 37,145,338 58,136,712 14,156,802
Net Assets
Beginning of period ... 418,825,684 331,194,032 50,196,345
------------ ------------ -----------
End of period ......... $455,971,022 $389,330,744 $64,353,147
============ ============ ===========
Undistributed net
investment income .. $2,872,526 $1,803,134 $631,623
========== ========== ========
*See "Financial Highlights" on pages 62-71.
**Shares issued from sale
of shares ............. 5,533,014 4,600,198 2,297,677
Shares issued from reinvest-
ment of dividends ..... --- --- ---
Shares redeemed ......... (2,572,588) (1,559,230) (485,158)
--------- --------- ---------
Increase (decrease) in outstanding
capital shares ......... 2,960,426 3,040,968 1,812,519
========= ========= =========
Value issued from sale
of shares ............. $38,821,746 $42,386,810 $12,692,954
Value issued from reinvest-
ment of dividends ..... --- --- ---
Value redeemed .......... (18,089,951) (14,414,693) (2,678,400)
................. ----------- ----------- -----------
Increase (decrease) in
outstanding capital ... $20,731,795 $27,972,117 $10,014,554
=========== =========== ===========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended JUNE 30, 1996
(Unaudited)
Small Cap Balanced Asset Strategy
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment
income ............. $ 27,313 $ 427,765 $ 116,797
Realized net gain (loss)
on investments ..... 6,890,092 1,109,885 64,523
Unrealized appreciation
(depreciation) ..... 2,701,983 (310,768) (10,923)
----------- ----------- ----------
Net increase (decrease)
in net assets
resulting from
operations......... 9,619,388 1,226,882 170,397
----------- ----------- ----------
Dividends to shareholders:*
From net investment
income ............. --- --- ---
From realized gains
on securities
transactions ....... --- --- ---
In excess of realized
gains .............. --- --- ---
----------- ----------- ----------
--- --- ---
----------- ----------- ----------
Capital share
transactions** ....... 20,192,970 6,793,666 3,362,263
----------- ----------- ----------
Total increase
(decrease) ...... 29,812,358 8,020,548 3,532,660
Net Assets
Beginning of period ... 55,591,447 23,602,872 4,343,942
----------- ----------- ----------
End of period ......... $85,403,805 $31,623,420 $7,876,602
=========== =========== ==========
Undistributed net
investment income . $27,313 $427,765 $116,343
======= ======== ========
*See "Financial Highlights" on pages 62-71.
**Shares issued from sale
of shares ............. 2,644,116 1,305,926 723,580
Shares issued from reinvest-
ment of dividends ..... --- --- ---
Shares redeemed ......... (337,628) (185,084) (61,071)
---------- --------- ---------
Increase (decrease) in outstanding
capital shares ......... 2,306,488 1,120,842 662,509
========= ========= =======
Value issued from sale
of shares ............. $23,084,004 $7,916,670 $3,674,323
Value issued from reinvest-
ment of dividends ..... --- --- ---
Value redeemed .......... (2,891,034) (1,123,004) (312,060)
----------- ----------- -----------
Increase (decrease) in
outstanding capital ... $20,192,970 $6,793,666 $3,362,263
=========== ========== ==========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended JUNE 30, 1996
(Unaudited)
Money Market Limited-Term Bond
Portfolio Bond Portfolio Portfolio
-------------- ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment
income ............. $ 871,765 $ 88,415 $ 2,753,792
Realized net gain (loss)
on investments ..... --- (194) (16,672)
Unrealized appreciation
(depreciation) ..... --- (96,937) (4,461,408)
----------- ---------- -----------
Net increase (decrease)
in net assets
resulting from
operations......... 871,765 (8,716) (1,724,288)
----------- ---------- -----------
Dividends to shareholders:*
From net investment
income ............. (871,765) --- ---
From realized gains
on securities
transactions ....... --- --- ---
In excess of realized
gains .............. --- --- ---
----------- ---------- -----------
(871,765) --- ---
----------- ---------- -----------
Capital share
transactions** ....... 5,633,519 360,684 (514,410)
----------- ---------- -----------
Total increase
(decrease) ....... 5,633,519 351,968 (2,238,698)
Net Assets
Beginning of period ... 36,872,244 2,853,479 88,569,507
----------- ---------- -----------
End of period ......... $42,505,763 $3,205,447 $86,330,809
=========== ========== ===========
Undistributed net
investment income .. $--- $88,415 $2,753,556
==== ======= ==========
*See "Financial Highlights" on pages 62-71.
**Shares issued from sale
of shares ............. 109,433,310 136,348 1,162,650
Shares issued from reinvest-
ment of dividends ..... 860,024 --- ---
Shares redeemed ......... (104,659,815) (67,711) (1,264,853)
----------- ------- ---------
Increase (decrease) in outstanding
capital shares ......... 5,633,519 68,637 (102,203)
=========== ======= =========
Value issued from sale
of shares ............. $109,433,310 $713,378 $6,113,847
Value issued from reinvest-
ment of dividends ..... 860,024 --- --
Value redeemed .......... (104,659,815) (352,694) (6,628,257)
----------- ---------- ----------
Increase (decrease) in
outstanding capital ... $5,633,519 $360,684 $ (514,410)
=========== ========== ==========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended JUNE 30, 1996
(Unaudited)
High Income
Portfolio
-----------
Increase (Decrease) in Net Assets
Operations:
Net investment
income ............. $3,929,684
Realized net gain (loss)
on investments ..... 1,773,538
Unrealized appreciation
(depreciation) ..... (2,603,915)
----------
Net increase (decrease)
in net assets
resulting from
operations......... 3,099,307
----------
Dividends to shareholders:*
From net investment
income ............. ---
From realized gains
on securities
transactions ....... ---
In excess of realized
gains .............. ---
-----------
---
-----------
Capital share
transactions** ....... (1,040,364)
-----------
Total increase
(decrease) ....... 2,058,943
Net Assets
Beginning of period ... 86,686,193
................. -----------
End of period ......... $88,745,136
................. ===========
Undistributed net
investment income .. $3,929,684
==========
*See "Financial Highlights" on pages 62-71.
**Shares issued from sale
of shares ............. 1,101,530
Shares issued from reinvest-
ment of dividends ...... ---
Shares redeemed ......... (1,329,460)
---------
Increase (decrease) in outstanding
capital shares ......... (227,930)
=========
Value issued from sale
of shares ............. $5,008,360
Value issued from reinvest-
ment of dividends ..... ---
Value redeemed .......... (6,048,724)
----------
Increase (decrease) in
outstanding capital ... $(1,040,364)
==========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended DECEMBER 31, 1995
(Unaudited)
Growth Income International
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase in Net Assets
Operations:
Net investment
income ............. $ 4,620,896 $ 3,112,227 $ 791,682
Realized net gain (loss)
on investments ..... 64,283,233 5,870,913 (155,262)
Unrealized appreciation
(depreciation) ..... 42,925,336 63,977,939 1,669,228
------------ ------------ -----------
Net increase in net
assets resulting
from operations.... 111,829,465 72,961,079 2,305,648
------------ ------------ -----------
Dividends to shareholders:*
From net investment
income ............. (4,621,508) (3,112,674) (721,188)
From realized gains
on securities
transactions ....... (64,282,621) (5,407,615) ---
In excess of realized
gains .............. ---- (1,764) ---
------------ ------------ -----------
(68,904,129) (8,522,053) (721,188)
------------ ------------ -----------
Capital share
transactions** ....... 99,163,713 47,981,404 22,592,251
------------ ------------ -----------
Total increase .... 142,089,049 112,420,430 24,176,711
Net Assets
Beginning of period ... 276,736,635 218,773,602 26,019,634
------------ ------------ -----------
End of period ......... $418,825,684 $331,194,032 $50,196,345
============ ============ ===========
Undistributed net
investment income .. $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages 62-71.
**Shares issued from sale
of shares ............. 8,244,920 7,529,946 5,011,325
Shares issued from reinvest-
ment of dividends and/or
distributions ......... 10,094,216 982,290 136,620
Shares redeemed ......... (3,897,735) (2,657,368) (850,796)
---------- --------- ---------
Increase in outstanding
capital shares ......... 14,441,401 5,854,868 4,297,149
========== ========= =========
Value issued from sale
of shares ............. $57,245,750 $60,548,279 $26,298,441
Value issued from reinvest-
ment of dividends and/or
distributions ......... 68,904,129 8,522,053 721,188
Value redeemed .......... (26,986,166) (21,088,928) (4,427,378)
----------- ----------- -----------
Increase in
outstanding capital ... $99,163,713 $47,981,404 $22,592,251
=========== =========== ===========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended DECEMBER 31, 1995
(Unaudited)
Small Cap Balanced Asset Strategy
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase in Net Assets
Operations:
Net investment income $ 625,470 $ 511,312 $ 60,277
Realized net gain (loss)
on investments ..... 1,011,622 375,170 4,660
Unrealized appreciation
(depreciation) ..... 7,643,311 2,500,947 (53,981)
----------- ----------- ----------
Net increase in net
assets resulting
from operations.... 9,280,403 3,387,429 10,956
----------- ----------- ----------
Dividends to shareholders:*
From net investment
income ............. (625,470) (511,312) (59,911)
From realized gains
on securities
transactions ....... (1,011,622) (371,952) (5,026)
In excess of realized
gains .............. ---- --- ---
----------- ----------- ----------
(1,637,092) (883,264) (64,937)
----------- ----------- ----------
Capital share
transactions** ....... 31,867,974 12,427,639 4,397,923
----------- ----------- ----------
Total increase .... 39,511,285 14,931,804 4,343,942
Net Assets
Beginning of period ... 16,080,162 8,671,068 ---
----------- ----------- ----------
End of period ......... $55,591,447 $23,602,872 $4,343,942
=========== =========== ==========
Undistributed net
investment income .. $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages 62-71.
**Shares issued from sale
of shares ............. 4,818,197 2,264,439 876,052
Shares issued from reinvest-
ment of dividends and/or
distributions ......... 212,809 149,718 12,955
Shares redeemed ......... (488,640) (170,404) (22,586)
--------- --------- -------
Increase in outstanding
capital shares........ 4,542,366 2,243,753 866,421
========= ========= =======
Value issued from sale
of shares ............. $33,624,752 $12,476,652 $4,448,147
Value issued from reinvest-
ment of dividends and/or
distributions ......... 1,637,092 883,263 64,938
Value redeemed .......... (3,393,870) (932,276) (115,162)
----------- ----------- ----------
Increase in
outstanding capital ... $31,867,974 $12,427,639 $4,397,923
=========== =========== ==========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended DECEMBER 31, 1995
(Unaudited)
Money Market Limited-Term Bond
Portfolio Bond Portfolio Portfolio
-------------- ----------- -----------
Increase in Net Assets
Operations:
Net investment income $ 1,574,075 $ 144,743 $ 5,511,692
Realized net gain (loss)
on investments ..... --- 10,804 882,169
Unrealized appreciation
(depreciation) ..... --- 139,524 8,857,982
----------- ---------- -----------
Net increase in net
assets resulting
from operations.... 1,574,075 295,071 15,251,843
----------- ---------- -----------
Dividends to shareholders:*
From net investment
income ............. (1,574,075) (144,743) (5,517,200)
From realized gains
on securities
transactions ....... --- (10,804) ---
In excess of realized
gains .............. ---- --- ---
----------- ---------- -----------
(1,574,075) (155,547) (5,517,200)
Capital share
transactions**........ 6,059,981 1,068,809 4,818,014
----------- ---------- -----------
Total increase ..... 6,059,981 1,208,333 14,552,657
Net Assets
Beginning of period ... 30,812,263 1,645,146 74,016,850
----------- ---------- -----------
End of period ......... $36,872,244 $2,853,479 $88,569,507
=========== ========== ===========
Undistributed net
investment income .. $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages 62-71.
**Shares issued from sale
of shares ............. 169,760,641 294,605 1,918,955
Shares issued from reinvest-
ment of dividends and/or
distributions ......... 1,573,890 29,626 1,029,828
Shares redeemed ......... (165,274,550) (119,359) (2,040,023)
----------- ------- ---------
Increase in outstanding
capital shares ........ 6,059,981 204,872 908,760
=========== ======= =========
Value issued from sale
of shares ............. $169,760,641 $1,551,139 $9,976,902
Value issued from reinvest-
ment of dividends and/or
distributions ......... 1,573,890 155,548 5,517,200
Value redeemed .......... (165,274,550) (637,878) (10,676,088)
------------ ---------- ----------
Increase in
outstanding capital ... $ 6,059,981 $1,068,809 $4,818,014
============ ========== ==========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended DECEMBER 31, 1995
(Unaudited)
High Income
Portfolio
-----------
Increase in Net Assets
Operations:
Net investment income $ 7,429,973
Realized net gain (loss)
on investments ..... (1,443,930)
Unrealized appreciation
(depreciation) ..... 7,364,701
-----------
Net increase in net
assets resulting
from operations.... 13,350,744
-----------
Dividends to shareholders:*
From net investment
income ............. (7,429,973)
From realized gains
on securities
transactions ....... ---
In excess of realized
gains .............. ---
-----------
(7,429,973)
-----------
Capital share
transactions**........ 8,121,747
-----------
Total increase ..... 14,042,518
Net Assets
Beginning of period ... 72,643,675
-----------
End of period ......... $86,686,193
===========
Undistributed net
investment income .. $---
====
*See "Financial Highlights" on pages 62-71.
**Shares issued from sale
of shares ............. 2,353,273
Shares issued from reinvest-
ment of dividends and/or
distributions ......... 1,672,287
Shares redeemed ......... (2,189,523)
................. ---------
Increase in outstanding
capital shares ........ 1,836,037
................. =========
Value issued from sale
of shares ............. $10,517,788
Value issued from reinvest-
ment of dividends and/or
distributions ......... 7,429,973
Value redeemed .......... (9,826,014)
................. -----------
Increase in
outstanding capital ... $ 8,121,747
................. ===========
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 -----------------------------------------
6/30/96 1995 1994 1993 1992 1991
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $6.8260 $5.8986 $6.1962 $6.1505 $5.5973 $4.9479
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0447 0.0903 0.1211 0.0537 0.1013 0.1229
Net realized and
unrealized gain
on investments .. 0.2187 2.1842 0.0268 0.8087 1.0653 1.6636
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 0.2634 2.2745 0.1479 0.8624 1.1666 1.7865
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment
income .......... (0.0000) (0.0903)(0.1211) (0.0537)(0.1013) (0.1229)
Distribution from
capital gains ... (0.0000) (1.2568)(0.3244) (0.7569)(0.5121) (1.0142)
Distribution in
excess of capital
gains ........... (0.0000) (0.0000)(0.0000) (0.0061)(0.0000) (0.0000)
------- ------- ------- ------- ------- -------
Total distributions. (0.0000) (1.3471)(0.4455) (0.8167)(0.6134) (1.1371)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $7.0894 $6.8260 $5.8986 $6.1962 $6.1505 $5.5973
======= ======= ======= ======= ======= =======
Total return ....... 3.86% 38.57% 2.39% 14.02% 20.84% 36.10%
Net assets, end of
period (000
omitted) .........$455,971$418,826$276,737 $220,590$122,363 $69,044
Ratio of expenses
to average net
assets ............ 0.73%* 0.75% 0.77% 0.78% 0.80% 0.86%
Ratio of net investment
income to average
net assets ....... 1.30%* 1.35% 2.07% 1.01% 2.00% 2.43%
Portfolio turnover
rate ............. 124.93% 245.80% 277.36% 297.81% 225.87% 316.72%
*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 -----------------------------------------
6/30/96 1995 1994 1993 1992 1991*
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $8.6756 $6.7689 $6.9180 $5.9530 $5.3158 $5.0000
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0437 0.0839 0.0703 0.0651 0.0803 0.0633
Net realized and
unrealized gain (loss)
on investments .. 0.7267 2.0525 (0.1491) 0.9650 0.6496 0.3158
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 0.7704 2.1364 (0.0788) 1.0301 0.7299 0.3791
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment
income .......... (0.0000) (0.0839)(0.0703) (0.0651)(0.0803) (0.0633)
Distribution from
capital gains.... (0.0000) (0.1457)(0.0000) (0.0000)(0.0124) (0.0000)
Distribution in excess
of capital gains (0.0000) (0.0001)(0.0000) (0.0000)(0.0000) (0.0000)
------- ------- ------- ------- ------- -------
Total distributions. (0.0000) (0.2297)(0.0703) (0.0651)(0.0927) (0.0633)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $9.4460 $8.6756 $6.7689 $6.9180 $5.9530 $5.3158
======= ======= ======= ======= ======= =======
Total return........ 8.88% 31.56% -1.14% 17.30% 13.78% 17.43%
Net assets, end of
period (000
omitted) .........$389,331$331,194$218,774 $155,092 $65,027 $15,640
Ratio of expenses
to average net
assets ............ 0.73%** 0.77% 0.77% 0.79% 0.85% 0.89%
Ratio of net investment
income to average
net assets ....... 0.98%** 1.13% 1.16% 1.36% 1.78% 2.47%
Portfolio turnover
rate ............. 9.68% 15.00% 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 Each Period:
(Unaudited)
For the For the For the
six months fiscal year period
ended ended ended
6/30/96 12/31/95 12/31/94*
---------- ---------- ----------
Net asset value,
beginning of
period ........... $5.2790 $4.9926 $5.0000
------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0574 0.0846 0.0207
Net realized and
unrealized gain (loss)
on investments... 0.3479 0.2790 (0.0074)
------- ------- -------
Total from investment
operations ....... 0.4053 0.3636 0.0133
Less dividends from net
investment
income .......... (0.0000) (0.0772) (0.0207)
------- ------- -------
Net asset value,
end of period .... $5.6843 $5.2790 $4.9926
======= ======= =======
Total return........ 7.68% 7.28% 0.26%
Net assets, end of
period (000
omitted) ......... $64,353 $50,196 $26,020
Ratio of expenses
to average net
assets ............ 0.98%** 1.02% 1.26%
Ratio of net investment
income to average
net assets ....... 2.31%** 1.99% 1.36%
Portfolio turnover
rate ............. 35.95% 34.93% 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 Each Period:
(Unaudited)
For the For the For the
six months fiscal year period
ended ended ended
6/30/96 12/31/95 12/31/94*
---------- ---------- ----------
Net asset value,
beginning of
period ........... $7.6932 $5.9918 $5.0000
------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0029 0.0900 0.0376
Net realized and
unrealized gain
on investments .. 1.2631 1.8470 1.0086
------- ------- -------
Total from investment
operations ....... 1.2660 1.9370 1.0462
------- ------- -------
Less distributions:
Dividends from net
investment income (0.0000) (0.0900) (0.0376)
Distribution from
capital gains.... (0.0000) (0.1456) (0.0168)
------- ------- -------
Total distributions (0.0000) (0.2356) (0.0544)
------- ------- -------
Net asset value,
end of period .... $8.9592 $7.6932 $5.9918
======= ======= =======
Total return........ 16.46% 32.32% 20.92%
Net assets, end of
period (000
omitted) ......... $85,404 $55,591 $16,080
Ratio of expenses
to average net
assets ............ 0.92%** 0.96% 1.08%
Ratio of net investment
income to average
net assets ....... 0.07%** 1.77% 2.35%
Portfolio turnover
rate ............. 63.81% 43.27% 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 Each Period:
(Unaudited)
For the For the For the
six months fiscal year period
ended ended ended
6/30/96 12/31/95 12/31/94*
---------- ---------- ----------
Net asset value,
beginning of
period ........... $5.9000 $4.9359 $5.0000
------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0835 0.1333 0.0460
Net realized and
unrealized gain (loss)
on investments .. 0.1914 1.0611 (0.0641)
------- ------- -------
Total from investment
operations ....... 0.2749 1.1944 (0.0181)
------- ------- -------
Less distributions:
Dividends from net
investment
income .......... (0.0000) (0.1333) (0.0460)
Distribution from
capital gains.... (0.0000) (0.0970) (0.0000)
------- ------- -------
Total distributions (0.0000) (0.2303) (0.0460)
------- ------- -------
Net asset value,
end of period .... $6.1749 $5.9000 $4.9359
======= ======= =======
Total return........ 4.66% 24.19% -0.37%
Net assets, end of
period (000
omitted) ......... $31,623 $23,603 $8,671
Ratio of expenses
to average net
assets ............ 0.71%** 0.72% 0.95%
Ratio of net investment
income to average
net assets ....... 3.11%** 3.22% 3.14%
Portfolio turnover
rate ............. 31.97% 62.87% 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 Each Period:
(Unaudited)
For the For the
six months period
ended ended
6/30/96 12/31/95*
---------- ----------
Net asset value,
beginning of
period ........... $5.0137 $5.0000
------- -------
Income from investment
operations:
Net investment
income .......... 0.0766 0.0717
Net realized and
unrealized gain
on investments .. 0.0614 0.0193
------- -------
Total from investment
operations ....... 0.1380 0.0910
------- -------
Less distributions:
Dividends from net
investment
income .......... (0.0000) (0.0713)
Distribution from
capital gains.... (0.0000) (0.0060)
------- -------
Total distributions (0.0000) (0.0773)
------- -------
Net asset value,
end of period .... $5.1517 $5.0137
======= =======
Total return........ 2.76% 1.80%
Net assets, end of
period (000
omitted) ......... $7,877 $4,344
Ratio of expenses
to average net
assets ............ 1.01%** 0.91%
Ratio of net investment
income to average
net assets ....... 3.67%** 4.42%
Portfolio turnover
rate ............. 23.17% 149.17%
*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 December 31, 1995. Ratios have been annualized.
**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 -----------------------------------------
6/30/96 1995 1994 1993 1992 1991
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- -------
Net investment
income .......... 0.0243 0.0542 0.0368 0.0260 0.0324 0.0536
Less dividends
declared ......... (0.0243) (0.0542)(0.0368) (0.0260)(0.0324) (0.0536)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= =======
Total return ....... 2.45% 5.56% 3.72% 2.63% 3.29% 5.49%
Net assets, end of
period (000
omitted) .........$42,506 $36,872 $30,812 $26,000 $23,995 $19,797
Ratio of expenses
to average net
assets ............ 0.60%* 0.62% 0.65% 0.65% 0.65% 0.76%
Ratio of net investment
income to average
net assets ....... 4.88%* 5.42% 3.72% 2.61% 3.17% 5.33%
*Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE LIMITED-TERM BOND PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
(Unaudited)
For the For the For the
six months fiscal year period
ended ended ended
6/30/96 12/31/95 12/31/94*
---------- ---------- ----------
Net asset value,
beginning of
period ........... $5.2521 $4.8611 $5.0000
------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.1445 0.2841 0.1507
Net realized and
unrealized gain (loss)
on investments .. (0.1584) 0.4122 (0.1375)
------- ------- -------
Total from investment
operations ....... (0.0139) 0.6963 0.0132
------- ------- -------
Less distributions:
Dividends from net
investment
income .......... (0.0000) (0.2841) (0.1507)
Distribution from
capital gains ... (0.0000) (0.0212) (0.0014)
------- ------- -------
Total distributions (0.0000) (0.3053) (0.1521)
------- ------- -------
Net asset value,
end of period .... $5.2382 $5.2521 $4.8611
======= ======= =======
Total return........ -0.27% 14.29% 0.26%
Net assets, end of
period (000
omitted) ......... $3,205 $2,853 $1,645
Ratio of expenses
to average net
assets ............ 0.92%** 0.71% 0.93%
Ratio of net investment
income to average
net assets ....... 5.74%** 6.22% 5.89%
Portfolio turnover
rate ............. 7.10% 18.16% 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 -----------------------------------------
6/30/96 1995 1994 1993 1992 1991
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $5.3592 $4.7393 $5.4045 $5.2626 $5.2661 $4.9534
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.1677 0.3556 0.3507 0.3334 0.3643 0.3867
Net realized and
unrealized gain
(loss) on
investments ..... (0.2706) 0.6202 (0.6652) 0.3046 0.0216 0.3771
------- ------- ------- ------- ------- -------
Total from investment
operations ....... (0.1029) 0.9758 (0.3145) 0.6380 0.3859 0.7638
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment
income .......... (0.0000) (0.3559)(0.3507) (0.3334)(0.3643) (0.3867)
Distribution from
capital gains ... (0.0000) (0.0000)(0.0000) (0.1627)(0.0251) (0.0644)
------- ------- ------- ------- ------- -------
Total distributions. (0.0000) (0.3559)(0.3507) (0.4961)(0.3894) (0.4511)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $5.2563 $5.3592 $4.7393 $5.4045 $5.2626 $5.2661
======= ======= ======= ======= ======= =======
Total return ....... -1.92% 20.56% -5.90% 12.37% 7.67% 16.19%
Net assets, end of
period (000
omitted) .........$86,331 $88,570 $74,017 $81,727 $49,428 $29,112
Ratio of expenses
to average net
assets ............ 0.59%* 0.60% 0.62% 0.62% 0.64% 0.72%
Ratio of net investment
income to average
net assets ....... 6.35%* 6.73% 6.73% 6.01% 6.91% 7.65%
Portfolio turnover
rate ............. 43.06% 71.17% 135.82% 68.75% 44.32% 52.50%
*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 -----------------------------------------
6/30/96 1995 1994 1993 1992 1991
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $4.4448 $4.1118 $4.6373 $4.2886 $4.0770 $3.4067
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.2039 0.4165 0.4106 0.3899 0.4050 0.4368
Net realized and
unrealized gain
(loss) on
investments ..... (0.0446) 0.3330 (0.5255) 0.3487 0.2116 0.6703
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 0.1593 0.7495 (0.1149) 0.7386 0.6166 1.1071
------- ------- ------- ------- ------- -------
Less dividends from
net investment
income ........... (0.0000) (0.4165)(0.4106) (0.3899)(0.4050) (0.4368)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $4.6041 $4.4448 $4.1118 $4.6373 $4.2886 $4.0770
======= ======= ======= ======= ======= =======
Total return ....... 3.58% 18.19% -2.55% 17.90% 15.70% 34.19%
Net assets, end of
period (000
omitted) .........$88,745 $86,686 $72,644 $71,265 $41,456 $24,394
Ratio of expenses
to average net
assets ............ 0.71%* 0.72% 0.74% 0.75% 0.77% 0.87%
Ratio of net investment
income to average
net assets ....... 8.92%* 9.25% 9.03% 8.66% 9.48% 11.32%
Portfolio turnover
rate ............. 31.21% 41.78% 37.86% 54.22% 60.79% 34.00%
*Annualized.
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
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 pricing service or 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 System) 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. For International Portfolio,
dividend income is net of foreign withholding taxes of $55,929. 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.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
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 $1.3 billion of combined net assets at June
30, 1996) and allocated among the Portfolios based on their relative net asset
size at the annual rates of .51% of the first $750 million 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 $21,458.
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, 1996 are
summarized as follows:
Growth Income International
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $491,963,119 $74,786,611 $30,848,153
Purchases of U.S. Government
securities --- --- ---
Purchases of short-term
securities 430,492,002 150,666,231 85,979,705
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 512,726,852 33,459,705 14,623,240
Proceeds from maturities
and sales of U.S.
Government securities --- --- ---
Proceeds from maturities
and sales of short-term
securities 392,725,790 162,247,726 90,069,000
Small Cap BalancedAsset Strategy
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $71,149,763 $8,358,673 $3,340,778
Purchases of U.S. Government
securities --- 3,038,203 1,329,183
Purchases of short-term
securities 94,182,346 16,490,859 16,813,189
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 39,740,960 7,510,903 759,489
Proceeds from maturities
and sales of U.S.
Government securities --- --- ---
Proceeds from maturities
and sales of short-term
securities 103,994,135 13,301,000 16,822,554
Limited- High
Term Bond Bond Income
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $135,862 $20,126,421 $33,116,610
Purchases of U.S. Government
securities 547,470 18,100,521 ---
Purchases of short-term
securities 913,000 28,356,722 30,741,825
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 152,302 20,427,881 25,976,546
Proceeds from maturities
and sales of U.S.
Government securities 50,460 15,245,047 ---
Proceeds from maturities
and sales of short-term
securities 915,000 28,165,432 33,365,783
For Federal income tax purposes, cost of investments owned at June 30, 1996
and the related unrealized appreciation (depreciation) were as follows:
Aggregate
Appreciation
Cost Appreciation Depreciation(Depreciation)
-----------------------------------------------
Growth Portfolio $450,812,693 $24,171,088 $(19,594,437) $4,576,651
Income Portfolio 282,548,820 109,593,424 (3,550,619)106,042,805
International Portfolio 60,731,409 7,218,146 (2,296,720) 4,921,426
Small Cap Portfolio 75,153,943 17,734,603 (6,081,030) 11,653,573
Balanced Portfolio 29,317,807 2,716,017 (761,272) 1,954,745
Asset Strategy Portfolio 8,356,832 183,624 (248,528) (64,904)
Money Market Portfolio 41,964,300 --- --- ---
Limited-Term Bond Portfolio 3,151,506 25,882 (30,982) (5,100)
Bond Portfolio 85,689,034 909,731 (1,109,641) (199,910)
High Income Portfolio 86,865,839 2,664,142 (1,896,382) 767,760
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, Asset Strategy, Small Cap, Limited-Term Bond
and Growth Portfolios realized capital gain net income of $5,026, $1,041,204,
$10,804 and $64,691,827, respectively, during the year ended December 31, 1995.
For Federal income tax purposes, Bond Portfolio realized capital gains of
$876,661 during the year ended December 31, 1995. The capital gains were
entirely offset by utilization of capital loss carryforwards. Remaining capital
loss carryforwards of Bond Portfolio totaled $2,603,035 at December 31, 1995,
and are available to offset future realized capital gain net income through
December 31, 2002. For Federal income tax purposes, Income, International and
Balanced Portfolios realized capital gain net income of $5,409,380, $169,132 and
$371,952, respectively, which includes utilization of capital loss carryovers of
$459,928, $21,009 and $3,218, respectively. For Federal income tax purposes,
High Income Portfolio realized capital losses of $1,443,930 during the year
ended December 31, 1995. These amounts are available to offset future realized
capital gain net income through December 31, 2003. Remaining prior year capital
loss carryforwards of High Income Portfolio aggregated $1,745,105, which are
available to offset future realized capital gain net income through December 31,
1999; $1,428,392 is available through December 31, 2002. The capital gain net
income of Asset Strategy, Limited-Term Bond, Income and Balanced Portfolios was
paid to shareholders during the year ended December 31, 1995. A portion of the
capital gain net income of Growth, Small Cap and International Portfolios was
paid to shareholders during the period ended December 31, 1995. Remaining
capital gain net income will be distributed to shareholders.
Internal Revenue Code regulations permit each Portfolio to defer into its
next calendar year net capital losses or net long-term capital losses incurred
between each November 1 and the end of its calendar year ("post-October
losses"). From November 1, 1995 through December 31, 1995, Growth,
International and Small Cap Portfolios incurred post-October losses of $409,206,
$274,909 and $29,582, respectively, which have been deferred to the calendar
year ending December 31, 1996.
<PAGE>
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
Dodds I. Buchanan, Boulder, Colorado
Jay B. Dillingham, Kansas City, Missouri
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
Doyle Patterson, Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Keith A. Tucker, Overland Park, Kansas
Frederick Vogel III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
OFFICERS
Keith A. Tucker, President
James C. Cusser, Vice President
Robert L. Hechler, Vice President
Henry J. Herrmann, Vice President
Theodore W. Howard, Vice President and Treasurer
Antonio Intagliata, Vice President
Thomas A. Mengel, Vice President
Sharon K. Pappas, Vice President and Secretary
Richard K. Poettgen, Vice President
Cynthia P. Prince-Fox, Vice President
Louise D. Rieke, Vice President
Zachary H. Shafran, Vice President
W. Patrick Sterner, Vice President
Carl E. Sturgeon, Vice President
Russell E. Thompson, Vice President
James D. Wineland, Vice President
<PAGE>
Advantage I. A flexible premium variable life insurance policy.
Advantage II. A deferred variable annuity policy.
Both offer you the investment flexibility of positioning your investment in one
or more of the following professionally managed portfolios:
GROWTH Portfolio
Objective: Capital growth with income as a secondary goal.
Invested In: Mainly common stocks of large, well-known companies representing
major sectors of the economy.
INCOME Portfolio
Objective: Maintain current income, subject to market conditions.
Invested In: Primarily common stocks or securities convertible into common
stocks.
INTERNATIONAL Portfolio
Objective: Long-term appreciation of capital with a secondary goal of current
income.
Invested in: Securities issued by companies or governments of any nation.
SMALL CAP Portfolio
Objective: Capital growth.
Invested in: Common stocks of relatively new or unseasoned companies, or
smaller companies positioned in new and emerging industries.
BALANCED Portfolio
Objective: Current income with a secondary goal of long-term appreciation of
capital.
Invested in: A variety of securities including debt securities, common stocks
and preferred stocks.
ASSET STRATEGY Portfolio
Objective: High total return with reduced risk over the long term.
Invested In: An allocation of its assets among stocks, bonds, and short-term
instruments.
MONEY MARKET Portfolio
Objective: Maximum income consistent with stability of principal.
Invested In: Short-term securities including bank CD's, government securities,
investment grade commercial paper and other corporate debt
securities.
LlMITED-TERM BOND Portfolio
Objective: High level of current income consistent with the preservation of
capital.
Invested in: Debt securities of investment grade, including debt securities
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities; the portfolio will maintain a dollar weighted
average maturity of two to five years.
BOND Portfolio
Objective: Income with an emphasis on preservation of capital.
Invested In: High-quality bonds issued by companies in a variety of industries;
government securities.
HIGH INCOME Portfolio
Objective: High level of income with a secondary objective of capital
appreciation when consistent with its primary objective.
Invested In: Corporate bonds offering higher rates of return than investment-
grade bonds.
FOR MORE INFORMATION:
Contact your representative, or your local office as listed on your Account
Statement, or contact:
United Investors Life
Variable Products Division
P.O. Box 156
Birmingham, AL 35201-0156
(205)325-4300
NUR1016SA(6-96)
printed on recycled paper
