TMK/UNITED FUNDS, INC.
SEMIANNUAL
REPORT
--------------------------------------
For the six months ended June 30, 1997
<PAGE>
PRESIDENT'S LETTER
-----------------------------------------------------------------
JUNE 30, 1997
Dear Policyholder:
As Waddell & Reed celebrates its 60th anniversary in the financial services
industry, I would like to thank you for your continued confidence in our
products and services. Since we opened our doors in 1937, our goal has been
and continues to be to provide the best service possible to our
shareholders and policyholders. This commitment is reflected in every area
of our organization: starting with your financial advisor and continuing
with our investment management and customer service people of our
affiliated companies.
Your confidence in the success of the products and services offered by
Waddell & Reed and its affiliates is reflected in the growth the Funds have
experienced over our 60 years. Total mutual fund assets under management
reached the $1 billion mark in 1961, and over the $5 billion mark in 1985.
As of June 30, 1997, mutual fund assets under management totaled more than
$19.3 billion.
We look forward to helping you meet the financial goals that are important
to you, now and for many years to come. Should you have any questions about
your account or other financial issues that are important to you, contact
your financial advisor 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, 1997
Shares Value
COMMON STOCKS
Apparel and Other Textile Products - 2.10%
Liz Claiborne, Inc. .................... 132,300 $ 6,168,487
Tommy Hilfiger Corporation* ............ 167,500 6,731,323
Total ................................. 12,899,810
Business Services - 3.39%
Manpower Inc. .......................... 469,200 20,879,400
Chemicals and Allied Products - 15.19%
American Home Products Corporation ..... 128,100 9,799,650
Amgen Inc. ............................. 142,900 8,301,490
Avon Products, Inc. .................... 94,000 6,632,828
Colgate-Palmolive Company .............. 152,000 9,918,000
Merck & Co., Inc. ...................... 122,100 12,637,350
Monsanto Company ....................... 100,000 4,306,200
Novartis AG (A) ........................ 4,600 7,350,678
Pfizer Inc. ............................ 80,000 9,560,000
Praxair, Inc. .......................... 291,500 16,324,000
Schering-Plough Corporation ............ 180,200 8,627,075
Total ................................. 93,457,271
Communication - 4.70%
Ameritech Corporation .................. 90,900 6,175,473
Nokia Corporation, Series A, ADR ....... 224,000 16,520,000
SBC Communications Inc. ................ 100,000 6,187,500
Total ................................. 28,882,973
Depository Institutions - 3.90%
BankAmerica Corporation ................ 108,400 6,998,521
Comerica Incorporated .................. 146,300 9,948,400
Wells Fargo & Company .................. 26,200 7,060,900
Total ................................. 24,007,821
Electronic and Other Electric Equipment - 6.36%
Altera Corp.* .......................... 100,000 5,062,500
Emerson Electric Co. ................... 161,900 8,914,538
General Electric Company ............... 152,000 9,937,000
Intel Corporation ...................... 67,700 9,585,846
Micron Technology, Inc.* ............... 140,000 5,591,180
Total ................................. 39,091,064
Food and Kindred Products - 3.12%
ConAgra, Inc. .......................... 125,000 8,015,625
PepsiCo, Inc. .......................... 297,400 11,170,939
Total ................................. 19,186,564
Health Services - 4.12%
Columbia/HCA Healthcare Corporation .... 302,000 11,872,224
Vencor, Incorporated* .................. 319,300 13,490,425
Total ................................. 25,362,649
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS (Continued)
Holding and Other Investment Offices - 1.90%
Randstad Holding nv (A) ................ 111,000 $ 11,704,447
Industrial Machinery and Equipment - 10.37%
Applied Materials, Inc.* ............... 431,700 30,556,158
Case Corporation ....................... 102,000 7,025,250
Cummins Engine Company, Inc. ........... 46,100 3,252,908
Eaton Corporation ...................... 51,100 4,461,643
Parker Hannifin Corporation ............ 250,600 15,208,162
United Technologies Corporation ........ 39,700 3,295,100
Total ................................. 63,799,221
Instruments and Related Products - 4.06%
Baxter International Inc. .............. 171,900 8,981,775
Honeywell Inc. ......................... 37,500 2,845,313
KLA Instruments Corporation* ........... 124,000 6,048,844
Medtronic, Inc. ........................ 88,000 7,128,000
Total ................................. 25,003,932
Insurance Carriers - 6.85%
Allstate Corporation (The) ............. 150,700 11,001,100
American International Group, Inc. ..... 65,200 9,739,250
MGIC Investment Corporation ............ 222,200 10,651,601
United HealthCare Corporation .......... 206,300 10,727,600
Total ................................. 42,119,551
Motion Pictures - 1.55%
Walt Disney Company (The) .............. 119,000 9,549,750
Nondepository Institutions - 2.84%
Fannie Mae ............................. 229,000 9,990,125
Student Loan Marketing Association ..... 58,700 7,454,900
Total ................................. 17,445,025
Petroleum and Coal Products - 4.13%
Exxon Corporation ...................... 147,000 9,040,500
Royal Dutch Petroleum Company .......... 208,000 11,310,000
Tosco Corporation ...................... 169,500 5,074,322
Total ................................. 25,424,822
Railroad Transportation - 2.92%
Burlington Northern Santa Fe Corporation 100,000 8,987,500
Union Pacific Corporation .............. 127,400 8,981,700
Total ................................. 17,969,200
Special Trade Contractors - 1.90%
Telefonaktiebolaget LM Ericsson, ADR,
Class B ............................... 295,900 11,660,235
Tobacco Products - 3.37%
Philip Morris Companies Inc. ........... 467,000 20,723,125
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS (Continued)
Transportation Equipment - 7.24%
AlliedSignal Inc. ...................... 75,900 $ 6,375,600
Boeing Company (The) ................... 222,200 11,790,376
Harley-Davidson, Inc. .................. 325,900 15,643,200
Sundstrand Corporation ................. 198,100 10,697,400
Total ................................. 44,506,576
Wholesale Trade -- Durable Goods - 4.55%
Johnson & Johnson ...................... 180,000 11,587,500
Motorola, Inc. ......................... 215,700 16,393,200
Total ................................. 27,980,700
Wholesale Trade -- Nondurable Goods - 2.62%
Gillette Company (The) ................. 64,000 6,064,000
Unilever N.V. .......................... 46,000 10,028,000
Total ................................. 16,092,000
TOTAL COMMON STOCKS - 97.18% $597,746,136
(Cost: $501,007,403)
PREFERRED STOCK - 0.41%
Holding and Other Investment Offices
LTC Properties, Inc., 9.5% ............. 100,000 $ 2,550,000
(Cost: $2,500,000)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITY - 0.41%
Business Services
Adaptec Inc., Convertible,
4.75%, 2-1-2004 (B) ................... $2,500 $ 2,490,625
(Cost: $2,495,197)
TOTAL SHORT-TERM SECURITIES - 2.99% $ 18,411,134
(Cost: $18,411,134)
TOTAL INVESTMENT SECURITIES - 100.99% $621,197,895
(Cost: $524,413,734)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.99%) (6,089,853)
NET ASSETS - 100.00% $615,108,042
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS
Apparel and Accessory Stores - 1.19%
Gap, Inc. (The) ........................ 177,300 $ 6,892,538
Apparel and Other Textile Products _ 0.54%
Tommy Hilfiger Corporation* ............ 77,200 3,102,436
Building Materials and Garden Supplies - 0.74%
Home Depot, Inc. (The) ................. 62,400 4,301,669
Business Services - 3.79%
Computer Associates International, Inc. 45,825 2,551,857
Manpower Inc. .......................... 86,600 3,853,700
Microsoft Corporation* ................. 69,200 8,751,585
Oracle Systems Corporation* ............ 134,550 6,773,651
Total ................................. 21,930,793
Chemicals and Allied Products - 17.50%
Abbott Laboratories .................... 93,900 6,267,825
Air Products and Chemicals, Inc. ....... 93,800 7,621,250
Amgen Inc. ............................. 87,100 5,059,900
Avon Products, Inc. .................... 42,100 2,970,660
BetzDearborn Inc. ...................... 79,100 5,220,600
Colgate-Palmolive Company .............. 97,800 6,381,450
Crompton & Knowles Corporation ......... 98,500 2,197,732
Dow Chemical Company (The) ............. 46,900 4,086,163
du Pont (E.I.) de Nemours and Company .. 163,200 10,108,118
Geon Company (The) ..................... 100,600 2,037,150
IMC Global, Inc. ....................... 51,500 1,802,500
Lilly (Eli) and Company ................ 58,100 6,351,027
Merck & Co., Inc. ...................... 60,200 6,230,700
PPG Industries, Inc. ................... 101,900 5,922,938
Pfizer Inc. ............................ 54,700 6,536,650
Praxair, Inc. .......................... 81,600 4,569,600
Procter & Gamble Company (The) ......... 48,900 6,907,125
Union Carbide Corporation .............. 71,400 3,360,227
Warner-Lambert Company ................. 60,400 7,504,700
Total ................................. 101,136,315
Communication - 1.26%
MCI Communications Corporation ......... 86,000 3,292,166
SBC Communications Inc. ................ 40,300 2,493,562
360. Communications Company* ........... 85,800 1,469,325
Total ................................. 7,255,053
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS (Continued)
Depository Institutions - 4.78%
BankAmerica Corporation ................ 87,400 $ 5,642,719
Chase Manhattan Corporation (The) ...... 48,300 4,688,095
Citicorp ............................... 47,200 5,690,526
First Bank System, Inc. ................ 40,800 3,483,300
Norwest Corporation .................... 99,500 5,596,875
Wells Fargo & Company .................. 9,400 2,533,300
Total ................................. 27,634,815
Electric, Gas and Sanitary Services - 1.14%
Duke Energy Corp. ...................... 54,200 2,598,185
Southern Company (The) ................. 110,700 2,421,563
Waste Management Inc. .................. 48,900 1,570,911
Total ................................. 6,590,659
Electronic and Other Electric Equipment - 9.45%
AMP Incorporated ....................... 89,700 3,744,975
Aeroquip-Vickers Inc. .................. 48,900 2,310,525
Analog Devices, Inc.* .................. 386,400 10,263,557
Emerson Electric Co. ................... 65,200 3,590,042
General Electric Company ............... 195,800 12,800,425
Harman International Industries,
Incorporated .......................... 24,150 1,017,319
Intel Corporation ...................... 80,100 11,341,599
LSI Logic Corporation* ................. 134,400 4,300,800
Molex Incorporated, Class A ............ 97,733 3,399,251
Rival Company (The) .................... 130,300 1,864,854
Total ................................. 54,633,347
Engineering and Management Services - 0.51%
Fluor Corporation ...................... 53,800 2,969,061
Food and Kindred Products - 2.11%
CPC International Inc. ................. 65,900 6,083,361
PepsiCo, Inc. .......................... 163,200 6,130,118
Total ................................. 12,213,479
Food Stores - 0.47%
Kroger Co. (The)* ...................... 92,600 2,685,400
Forestry - 1.06%
Georgia-Pacific Corporation ............ 34,700 2,962,513
Weyerhaeuser Company ................... 61,200 3,182,400
Total ................................. 6,144,913
Furniture and Fixtures - 0.10%
Lear Corporation* ...................... 13,400 594,625
Furniture and Home Furnishings Stores - 0.81%
Circuit City Stores, Inc. .............. 130,500 4,665,375
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS (Continued)
General Building Contractors - 0.45%
Pulte Corporation ...................... 74,600 $ 2,578,325
General Merchandise Stores - 4.67%
Dayton Hudson Corporation .............. 113,700 6,047,362
Federated Department Stores, Inc.* ..... 70,700 2,456,825
Kmart Corporation* ..................... 467,000 5,720,750
May Department Stores Company (The) .... 81,600 3,855,600
Sears, Roebuck and Co. ................. 53,200 2,859,500
Wal-Mart Stores, Inc. .................. 178,500 6,035,442
Total ................................. 26,975,479
Health Services - 1.12%
Tenet Healthcare Corporation* .......... 128,600 3,801,673
Vencor, Incorporated* .................. 62,800 2,653,300
Total ................................. 6,454,973
Heavy Construction, Excluding Building - 0.23%
Foster Wheeler Corporation ............. 32,600 1,320,300
Industrial Machinery and Equipment - 15.86%
AGCO Corporation ....................... 241,800 8,689,567
Applied Materials, Inc.* ............... 141,100 9,987,199
Case Corporation ....................... 146,200 10,069,525
Caterpillar Inc. ....................... 107,000 11,489,125
cisco Systems, Inc.* ................... 138,500 9,301,106
Compaq Computer Corporation* ........... 60,100 5,964,925
Deere & Company ........................ 167,600 9,186,491
Eaton Corporation ...................... 40,800 3,562,330
Harnischfeger Industries, Inc. ......... 111,900 4,643,850
Ingersoll-Rand Company ................. 32,600 2,013,050
International Business Machines Corporation 54,400 4,906,173
New Holland NV ......................... 111,200 3,044,100
Parker Hannifin Corporation ............ 48,900 2,967,594
United Technologies Corporation ........ 70,800 5,876,400
Total ................................. 91,701,435
Instruments and Related Products - 3.44%
General Motors Corporation, Class H .... 14,400 831,600
Guidant Corporation .................... 83,700 7,114,500
Medtronic, Inc. ........................ 65,200 5,281,200
Xerox Corporation ...................... 84,500 6,664,937
Total ................................. 19,892,237
Insurance Carriers - 2.24%
Aetna Life & Casualty Company .......... 60,400 6,183,450
Oxford Health Plans Inc.* .............. 93,800 6,733,058
Total ................................. 12,916,508
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS (Continued)
Miscellaneous Manufacturing Industries - 0.93%
Armstrong World Industries, Inc. ....... 73,400 $ 5,385,725
Miscellaneous Retail - 0.26%
OfficeMax, Inc.* ....................... 104,625 1,510,471
Motion Pictures - 0.79%
Walt Disney Company (The) .............. 57,100 4,582,275
Nondepository Institutions - 2.74%
Fannie Mae ............................. 163,400 7,128,325
Federal Home Loan Mortgage Corporation . 253,600 8,717,500
Total ................................. 15,845,825
Paper and Allied Products - 0.47%
International Paper Company ............ 55,600 2,700,047
Petroleum and Coal Products - 2.74%
Mobil Corporation ...................... 72,200 5,044,975
Royal Dutch Petroleum Company .......... 104,800 5,698,500
Tosco Corporation ...................... 170,500 5,104,259
Total ................................. 15,847,734
Primary Metal Industries - 0.73%
Aluminum Company of America ............ 56,000 4,221,000
Railroad Transportation - 0.50%
Union Pacific Corporation .............. 40,800 2,876,400
Rubber and Miscellaneous Plastics Products - 0.89%
Goodyear Tire & Rubber Company (The) ... 81,600 5,166,259
Special Trade Contractors - 1.11%
Telefonaktiebolaget LM Ericsson, ADR,
Class B ............................... 163,100 6,427,119
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS (Continued)
Transportation by Air - 0.52%
AMR Corporation* ....................... 32,600 $ 3,015,500
Transportation Equipment - 5.54%
AlliedSignal Inc. ...................... 61,900 5,199,600
Boeing Company (The) ................... 103,600 5,497,223
Chrysler Corporation ................... 179,400 5,886,473
Dana Corporation ....................... 62,000 2,356,000
Ford Motor Company ..................... 44,000 1,661,000
General Motors Corporation ............. 40,800 2,274,600
Northrop Grumman Corporation ........... 78,300 6,875,680
Sundstrand Corporation ................. 42,000 2,268,000
Total ................................. 32,018,576
Wholesale Trade -- Durable Goods - 0.61%
Motorola, Inc. ......................... 46,500 3,534,000
Wholesale Trade -- Nondurable Goods - 3.00%
Gillette Company (The) ................. 158,711 15,037,867
Safeway Inc.* .......................... 49,700 2,292,413
Total ................................. 17,330,280
TOTAL COMMON STOCKS - 94.29% $545,050,946
(Cost: $328,925,749)
TOTAL SHORT-TERM SECURITIES - 5.68% $ 32,814,851
(Cost: $32,814,851)
TOTAL INVESTMENT SECURITIES - 99.97% $577,865,797
(Cost: $361,740,600)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.03% 195,548
NET ASSETS - 100.00% $578,061,345
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE SCIENCE AND TECHNOLOGY PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS
Agricultural Production _- Crops - 1.73%
Pioneer Hi-Bred International, Inc. .... 700 $ 56,000
Auto Repair, Services and Parking - 1.78%
Hertz Corp (The), Class A* ............. 1,600 57,600
Business Services - 28.14%
America Online, Inc.* .................. 900 50,062
Autodesk, Inc. ......................... 1,500 57,515
CUC International Inc.* ................ 2,300 59,368
HCIA Inc.* ............................. 2,500 83,750
HPR Inc.* .............................. 2,800 51,274
i2 Technologies, Inc.* ................. 1,300 40,056
IDX Systems Corporation* ............... 1,300 45,012
Intuit Inc.* ........................... 1,800 41,231
McAfee Associates, Inc.* ............... 700 44,143
Parametric Technology Corporation* ..... 1,100 46,784
Primark Corporation* ................... 2,200 58,575
Security Dynamics Technologies, Inc.* .. 1,900 69,943
Simulation Sciences, Inc.* ............. 3,000 45,186
TMP Worldwide Inc.* .................... 2,500 60,468
Visio Corporation* ..................... 800 56,374
Wind River Systems, Inc.* .............. 2,600 99,936
Total ................................. 909,677
Communication - 4.87%
Intermedia Communications of Florida,
Inc.* ................................. 1,600 51,600
Nokia Corporation, Series A, ADR ....... 700 51,625
WorldCom Inc.* ......................... 1,700 54,346
Total ................................. 157,571
Electronic and Other Electric Equipment - 5.35%
ADC Telecommunications, Inc.* .......... 1,000 33,437
Ascend Communications, Inc.* ........... 1,300 51,065
PairGain Technologies, Inc.* ........... 2,100 32,615
Tellabs* ............................... 1,000 55,812
Total ................................. 172,929
Industrial Machinery and Equipment _ 1.38%
Culligan Water Technologies, Inc.* ..... 1,000 44,750
Instruments and Related Products - 1.50%
STERIS Corporation* .................... 1,300 48,425
Oil and Gas Extraction - 1.39%
Enron Corporation ...................... 1,100 44,893
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE SCIENCE AND TECHNOLOGY PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS (Continued)
Wholesale Trade -- Durable Goods - 2.85%
OmniCare, Inc. ......................... 1,600 $ 50,200
Peerless Systems Corporation* .......... 3,000 42,000
Total ................................. 92,200
Wholesale Trade -- Nondurable Goods - 1.88%
800_Jr. CIGAR Inc.* .................... 2,900 60,717
TOTAL COMMON STOCKS - 50.87% $1,644,762
(Cost: $1,466,213)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Commercial Paper - 3.09%
Instruments and Related Products
Hughes Electronics Corp.,
5.82%, 7-10-97 ........................ $ 100 99,854
Repurchase Agreement - 12.84%
J. P. Morgan Securities, 5.9%
Repurchase Agreement dated
6-30-97 to be repurchased
at $415,068 on 7-1-97 (C).............. 415 415,000
United States Government - 30.89%
Federal Mortgage Corporation,
5.55%, 7-8-97 ......................... 1,000 998,931
TOTAL SHORT-TERM SECURITIES - 46.82% $1,513,785
(Cost: $1,513,785)
TOTAL INVESTMENT SECURITIES - 97.69% $3,158,547
(Cost: $2,979,998)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 2.31% $74,833
NET ASSETS - 100.00% $3,233,380
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS AND RIGHTS
Argentina _ 0.45%
Capex S.A., Class A (A) ................ 50,000 $ 470,000
Australia _ 2.68%
News Corporation Limited (A) ........... 150,000 719,614
Publishing & Broadcasting PBL (A) ...... 150,000 864,670
Westpac Banking Corporation Limited (A) 200,000 1,204,267
Total ................................. 2,788,551
Brazil _ 1.96%
CompanLia de Saneamento Desico do
Estado De Sao Paulo (A) ............... 3,000,000 910,352
Telecomunicacoes de Sao Paulo
S.A., Rights (A)* ..................... 217,889 2,822
Telecomunicacoes do Rio de Janeiro
S.A., Rights (A)* ..................... 711,356 6,581
Uniao de Bancos Brasileiros S.A., GDR* . 30,000 1,113,750
Total ................................. 2,033,505
Denmark _ 2.03%
Neurosearch A/S (A)* ................... 20,000 1,262,314
Sydbank A/S (A) ........................ 18,500 844,380
Total ................................. 2,106,694
Finland _ 1.08%
Nokia Corporation, Series K (A) ........ 15,000 1,119,489
France _ 4.82%
Accor S.A. (A) ......................... 5,500 823,591
Business Objects S.A., ADR* ............ 31,000 304,172
Compagnie Generale de Eaux (A) ......... 7,500 960,999
GEA Grenobloise d'Electronique et
d'Automatismes (A) .................... 6,000 270,560
Generale de Geophysique S.A. (A)* ...... 8,000 778,668
Group Axime (A)* ....................... 10,139 1,199,075
Societe Industrielle de Transports
Automobiles S.A. (A) .................. 3,500 668,232
Total ................................. 5,005,297
Germany _ 4.79%
Herlitz International Trading AG (A)* .. 1,500 231,967
Hoechst AG (A) ......................... 53,100 2,252,487
Siemens AG (A) ......................... 20,000 1,187,500
Volkswagen AG (A) ...................... 1,700 1,303,268
Total ................................. 4,975,222
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS AND RIGHTS (Continued)
Hong Kong _ 2.46%
Cheung Kong Infrastructure Holdings
Limited (A) ........................... 95,000 $ 938,129
Guangdong Kelon Electrical Holdings
Company Limited (A) ................... 421,000 402,153
JCG Holdings Ltd. (A) .................. 800,000 650,591
New World Infrastructure Ltd. (A)* ..... 200,000 567,976
Total ................................. 2,558,849
Indonesia _ 3.11%
PT Bank NISP, F (A) .................... 1,400,000 777,778
PT Matahari Putra Prima, F (A) ......... 573,750 1,156,944
PT Steady Safe Transportation
Service, F (A) ........................ 453,333 531,687
PT United Tractors, F (A) .............. 205,000 759,259
Total ................................. 3,225,668
Italy _ 1.82%
Industrie Natuzzi S.p.A., ADR .......... 40,000 1,025,000
STET - Societa Financiaria
Telefonica p.a. (A)* .................. 250,000 867,519
Total ................................. 1,892,519
Japan _ 10.68%
Aloka Co. Ltd. (A) ..................... 13,000 127,040
Alps Electric Co., Ltd. (A) ............ 118,000 1,647,326
Eisai Co., Ltd. (A) .................... 60,000 1,136,027
Fujitsu Ltd. (A) ....................... 100,000 1,387,314
Matsushita Electric Industrial (A) ..... 40,000 806,212
Murata Manufacturing Co. Ltd. (A) ...... 25,000 994,678
NEC Corporation (A) .................... 77,000 1,074,950
Nintendo Corp., Ltd. (A) ............... 15,000 1,256,435
Promise Co., Ltd. (A) .................. 16,000 915,801
Sony Corporation (A) ................... 20,000 1,743,303
Total ................................. 11,089,086
Malaysia _ 0.54%
Multi-Purpose Hldgs Bhd (A) ............ 400,000 561,059
Mexico _ 3.87%
Corporacion Industrial Sanluis, S.A.
de C.V., CPO (A) ...................... 75,500 558,907
Empresas ICA Sociedad Controladora,
S.A. de C.V., ADS ..................... 50,000 803,100
Gruma, S.A., Class B (A)* .............. 71,400 332,595
Grupo Financiero Bancomer, S.A. de
C.V., B, CPO (A)* ..................... 2,000,000 964,371
Grupo Financiero Inbursa, S.A. de
C.V., Class B (A) ..................... 175,234 745,677
Grupo Televisa, S.A., GDR* ............. 20,100 610,538
Total ................................. 4,015,188
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS AND RIGHTS (Continued)
Netherlands _ 7.51%
Fugro N.V. (A) ......................... 42,000 $ 1,080,434
Getronics N.V. (A) ..................... 35,000 1,130,355
Internatio-Muller N.V. (A) ............. 30,000 945,953
Koninklijke Boskalis Westminster N.V. (A) 47,900 939,407
Koninklijke Pakhoed NV (A) ............. 17,000 599,256
Ordina Beheer N.V. (A)* ................ 52,000 940,349
Philips Electric N.V. .................. 12,000 862,500
Randstad Holding nv (A) ................ 8,500 896,286
Stork N.V. (A) ......................... 10,000 407,519
Total ................................. 7,802,059
Norway _ 1.93%
Merkantildata A/S (A) .................. 61,000 1,207,904
Schibsted AS (A) ....................... 40,000 792,068
Total ................................. 1,999,972
Philippines - 0.56%
Belle Corporation (A)* ................. 2,000,000 583,776
Portugal _ 1.08%
Electricidade De PT, ADR* .............. 8,000 288,000
Telecel-Comunicacaoes Pessoais, SA (A)* 10,000 829,428
Total ................................. 1,117,428
Russian Federation _ 1.53%
Open Joint Stock Company
Vimpel-Communications, ADR* ........... 41,805 1,588,590
Spain _ 1.74%
Sociedad General de Aquas de
Barcelona, S.A. (A) ................... 20,000 818,515
Union Electrica Fenosa, S.A. (A) ....... 109,000 991,313
Total ................................. 1,809,828
Sweden _ 5.52%
Biacore International AB, ADR* ......... 25,000 295,300
Biora AB, ADR* ......................... 20,000 361,240
Bure Investment AB (A) ................. 65,000 820,835
Enator AB (A)* ......................... 30,000 536,214
Frontec AB, Class B (A)* ............... 54,900 462,193
Kinnevik AB, B Shares (A) .............. 21,500 600,100
Skandia Enskilda Banken, Class A (A) .... 75,000 811,121
Skandia Group Insurance Company Ltd. (A) 50,000 1,845,664
Total ................................. 5,732,667
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS AND RIGHTS (Continued)
Switzerland _ 11.42%
AFG Arbonia-Forster Holding AG (A)* .... 975 $ 594,105
Brauerei Eichhof AG (A) ................ 280 718,883
Choco Lindt & Spru AG, Registered (A) .. 50 1,095,440
Clariant AG (A) ........................ 3,100 2,005,683
Credit Suisse Group, Registered Shares (A) 20,000 2,567,438
Julius Baer Holding AG (A) ............. 500 765,097
Novartis AG (A) ........................ 1,100 1,757,771
SMH Swiss Corporation (A) .............. 1,300 742,298
Swisslog Holding AG (A)* ............... 4,850 1,610,468
Total ................................. 11,857,183
Thailand _ 0.29%
Srithai Superware Public Company
Limited, F (A) ........................ 130,000 305,422
Turkey _ 0.83%
Haci Omer Sabanci Holding
A.S., ADR(A)(B)* ...................... 96,000 864,000
United Kingdom _ 11.65%
Corporate Services Group plc (A) ....... 575,000 1,804,978
Dr Solomon's Group PLC, ADR* ........... 25,000 639,050
Freepages Group plc (A)* ............... 2,000,000 1,222,664
Hays plc (A) ........................... 100,000 950,887
Imperial Chemical Industries PLC, ADR .. 20,000 1,137,500
Misys plc (A) .......................... 50,209 1,139,228
National Westminster Bank Plc (A) ...... 100,000 1,344,731
Norwich Union plc (A)* ................. 144,000 762,575
Professional Staff plc, ADR* ........... 55,000 639,375
Rolls-Royce plc (A) .................... 200,000 764,373
Storehouse PLC (A) ..................... 150,000 470,864
Vodafone Group Plc (A) ................. 250,000 1,217,751
Total ................................. 12,093,976
United States _ 0.86%
Manpower Inc. .......................... 20,000 890,000
TOTAL COMMON STOCKS AND RIGHTS _ 85.21% $88,486,028
(Cost: $79,354,231)
CONVERTIBLE PREFERRED STOCKS
Brazil - 3.91%
Telebras S.A., ADR ..................... 10,000 1,517,500
Telecomunicacoes de Sao Paulo S.A. (A) . 5,000,000 1,628,273
Telecomunicacoes do Rio de
Janeiro S.A. (A)* ..................... 6,000,000 921,454
Total ................................. 4,067,227
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1997
Shares Value
CONVERTIBLE PREFERRED STOCKS (Continued)
Germany _ 4.71%
Marschollek, Lautenschlager und
Partner AG (A) ........................ 12,890 $ 3,067,288
Moebel Walther AG (A) .................. 10,000 584,862
SAP Aktiengesellschaft (A) ............. 6,000 1,238,532
Total ................................. 4,890,682
Portugal _ 0.96%
Lusomundo-SGPS, S.A. (A) ............... 119,000 993,779
TOTAL CONVERTIBLE PREFERRED STOCKS _ 9.58% $ 9,951,688
(Cost: $6,711,865)
Face
Amount in
Thousands
UNREALIZED GAIN ON OPEN FORWARD CURRENCY CONTRACTS _ 0.04%
Deutsche Marks, 6-4-98 (D) ............. DM3,293 21,186
French Francs, 6-4-98 (D) .............. F19,522 25,543
Total ................................. $ 46,729
TOTAL SHORT-TERM SECURITIES _ 8.38% $ 8,698,318
(Cost: $8,698,318)
TOTAL INVESTMENT SECURITIES - 103.21% $107,182,763
(Cost: $94,764,414)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (3.21%) (3,333,605)
NET ASSETS - 100.00% $103,849,158
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS
Business Services - 8.27%
America Online, Inc.* .................. 40,000 $ 2,225,000
Cerner Corporation* .................... 183,100 3,845,100
Dr Solomon's Group PLC, ADR* ........... 55,000 1,405,910
Intuit Inc.* ........................... 50,000 1,145,300
Mechanical Dynamics, Inc.* ............. 105,500 758,229
Summit Medical Systems, Inc.* .......... 160,000 454,880
Total ................................. 9,834,419
Chemicals and Allied Products - 3.65%
Carson, Inc., Class A* ................. 90,000 967,500
Dura Pharmaceuticals, Inc.* ............ 50,000 1,990,600
Genzyme Corporation - General Division* 50,000 1,384,350
Total ................................. 4,342,450
Communication - 5.25%
COLT Telecom Group plc, ADR* ........... 100,000 2,050,000
Intermedia Communications of Florida,
Inc.* ................................ 130,000 4,192,500
Total ................................. 6,242,500
Eating and Drinking Places - 1.25%
Rare Hospitality International Inc.* ... 120,000 1,481,160
Electric, Gas and Sanitary Services - 1.12%
Waste Industries, Inc.* ................ 75,000 1,326,525
Electronic and Other Electric Equipment - 5.94%
Aavid Thermal Technologies* ............ 50,000 1,021,850
ASM Lithography Holding NV* ............ 42,000 2,453,052
Etec Systems, Inc.* .................... 45,000 1,927,935
Speedfam International, Inc.* .......... 46,000 1,658,852
Total ................................. 7,061,689
Engineering and Management Services - 2.45%
Transition Systems, Inc.* .............. 160,000 2,914,880
Furniture and Fixtures - 1.52%
Kinetic Concepts, Inc. ................. 100,000 1,806,200
Health Services - 13.26%
American Retirement Corporation* ....... 115,000 2,041,250
Beverly Enterprises, Inc.* ............. 100,000 1,625,000
Healthcare Recoveries, Inc.* ........... 155,000 2,983,750
MedPartners, Inc.* ..................... 135,700 2,934,512
Physicians Resource Group, Inc.* ....... 200,000 1,800,000
Quorum Health Group, Inc.* ............. 100,000 3,562,500
Sterling House Corporation* ............ 50,000 818,750
Total ................................. 15,765,762
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS (Continued)
Industrial Machinery and Equipment - 10.91%
Integrated Process Equipment Corp.* .... 285,000 $ 7,213,920
Kulicke & Soffa Industries, Inc.* ...... 60,000 1,944,360
LAM Research Corporation* .............. 50,000 1,854,650
Waterlink, Inc.* ....................... 150,000 1,950,000
Total ................................. 12,962,930
Instruments and Related Products - 13.59%
ESC Medical Systems Ltd.* .............. 80,000 2,044,960
Heartport, Inc.* ....................... 80,000 1,412,480
Hologic, Inc.* ......................... 75,000 2,001,525
LeCroy Corp.* .......................... 66,000 2,437,842
St. Jude Medical, Inc.* ................ 80,000 3,120,000
Sabratek Corporation* .................. 55,000 1,546,875
Waters Corporation* .................... 100,000 3,587,500
Total ................................. 16,151,182
Personal Services - 7.28%
Carriage Services, Inc.* ............... 75,000 1,612,500
Equity Corporation International* ...... 135,000 3,265,245
Loewen Group Inc. (The) ................ 108,400 3,780,450
Total ................................. 8,658,195
Real Estate - 2.11%
Stewart Enterprises, Inc., Class A ..... 60,000 2,512,500
Tobacco Products - 1.64%
Consolidated Cigar Holdings, Inc.* ..... 70,000 1,942,500
Trucking and Warehousing _ 1.06%
Pierce Leahy Corp.* .................... 70,000 1,260,000
Wholesale Trade -- Durable Goods - 3.51%
Freepages Group plc (A)* ................ 4,500,000 2,750,994
Fusion Systems Corporation* ............ 35,900 1,421,389
Total ................................. 4,172,383
Wholesale Trade -- Nondurable Goods - 1.37%
Capstone Pharmacy Services, Inc.* ...... 150,000 1,626,450
TOTAL COMMON STOCKS - 84.18% $100,061,725
(Cost: $88,557,949)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITY - 0.87%
Holding and Other Investment Offices
LTC Properties, Inc., Convertible,
8.25%, 7-1-2001 ....................... $1,000 $ 1,036,250
(Cost: $1,000,000)
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES
Auto Repair, Services and Parking - 3.00%
PHH Corporation,
5.53%, 7-10-97 ........................ $3,565 $ 3,560,072
Depository Institutions - 2.53%
U.S. Bancorp,
5.47%, Master Note..................... 3,012 3,012,000
Food and Kindred Products - 2.68%
General Mills, Inc.,
5.495%, Master Note ................... 1,196 1,196,000
Hercules Inc.,
5.7%, 7-25-97 ......................... 2,000 1,992,400
Total ................................. 3,188,400
Instruments and Related Products - 2.52%
Hughes Electronics Corp.,
5.82%, 7-10-97 ........................ 3,000 2,995,635
Nondepository Institutions - 1.76%
Textron Financial Corp.,
5.72%, 7-15-97 ........................ 2,090 2,085,351
Textile Mill Products - 0.58%
Sara Lee Corporation,
5.5%, Master Note ..................... 685 685,000
Transportation Equipment - 2.98%
Dana Credit Corp.,
5.8%, 7-22-97 ......................... 3,560 3,547,955
TOTAL SHORT-TERM SECURITIES - 16.05% $ 19,074,413
(Cost: $19,074,413)
TOTAL INVESTMENT SECURITIES - 101.10% $120,172,388
(Cost: $108,632,362)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (1.10%) (1,302,908)
NET ASSETS - 100.00% $118,869,480
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS
Automotive Dealers and Service Stations - 0.66%
Circuit City Stores-CarMax Group* ...... 25,000 $ 357,800
Building Materials and Garden Supplies - 1.13%
Sherwin-Williams Company (The) ......... 20,000 617,500
Chemicals and Allied Products - 10.91%
American Home Products Corporation ..... 7,000 535,500
Avon Products, Inc. .................... 8,300 585,665
Crompton & Knowles Corporation ......... 14,300 319,062
Dow Chemical Company (The) ............. 5,500 479,187
du Pont (E.I.) de Nemours and Company .. 4,800 297,298
Hoechst AG (A) ......................... 11,000 466,617
IMC Global, Inc. ....................... 13,000 455,000
International Flavors & Fragrances Inc. 700 35,262
Merck & Co., Inc. ...................... 6,600 683,100
Nalco Chemical Company ................. 7,000 270,375
Pfizer Inc. ............................ 5,500 657,250
Praxair, Inc. .......................... 8,800 492,800
Warner-Lambert Company ................. 5,400 670,950
Total ................................. 5,948,066
Communication - 1.81%
GTE Corporation ........................ 5,300 232,538
Nokia Corporation, Series A, ADR ....... 1,600 118,000
SBC Communications Inc. ................ 10,300 637,312
Total ................................. 987,850
Depository Institutions - 2.00%
BankAmerica Corporation ................ 9,000 581,058
Wells Fargo & Company .................. 1,900 512,050
Total ................................. 1,093,108
Electric, Gas and Sanitary Services - 2.88%
Baltimore Gas and Electric Company ..... 7,600 202,821
Houston Industries Incorporated ........ 12,000 257,244
PECO Energy Company .................... 14,000 294,000
Southern Company (The) ................. 13,000 284,375
Unicom Corporation ..................... 24,000 532,488
Total ................................. 1,570,928
Electronic and Other Electric Equipment - 1.20%
Emerson Electric Co. ................... 9,000 495,558
LSI Logic Corporation* ................. 5,000 160,000
Total ................................. 655,558
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS (Continued)
Food and Kindred Products - 1.64%
CPC International Inc. ................. 5,600 $ 516,947
ConAgra, Inc. .......................... 5,900 378,338
Total ................................. 895,285
Forestry - 2.02%
Georgia-Pacific Corporation ............ 6,800 580,550
Weyerhaeuser Company ................... 10,000 520,000
Total ................................. 1,100,550
General Merchandise Stores - 1.15%
Mercantile Stores Company, Inc. ........ 10,000 629,370
Health Services - 1.88%
American Retirement Corporation* ....... 25,000 443,750
Tenet Healthcare Corporation* .......... 19,600 579,415
Total ................................. 1,023,165
Heavy Construction, Excluding Building - 0.41%
Foster Wheeler Corporation ............. 5,500 222,750
Holding and Other Investment Offices - 2.56%
LTC Properties, Inc. ................... 18,000 326,250
National Health Investors, Inc. ........ 12,000 471,000
Zurich Insurance Company (A) ........... 1,500 596,673
Total ................................. 1,393,923
Industrial Machinery and Equipment - 2.74%
Applied Materials, Inc.* ............... 6,000 424,686
Deere & Company ........................ 6,000 328,872
Parker Hannifin Corporation ............ 9,600 582,595
York International Corporation ......... 3,400 156,400
Total ................................. 1,492,553
Instruments and Related Products - 1.71%
General Motors Corporation, Class H .... 6,600 381,150
St. Jude Medical, Inc.* ................ 14,200 553,800
Total ................................. 934,950
Insurance Carriers - 1.80%
Chubb Corporation (The) ................ 6,200 414,625
Hartford Financial Services Group (The) 4,100 339,275
United HealthCare Corporation .......... 4,400 228,800
Total ................................. 982,700
Metal Mining - 0.81%
Homestake Mining Company ............... 34,000 444,108
Miscellaneous Manufacturing Industries - 0.98%
Hasbro, Inc. ........................... 18,750 532,031
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS (Continued)
Nondepository Institutions - 0.68%
Federal Home Loan Mortgage Corporation . 10,800 $ 371,250
Oil and Gas Extraction - 2.60%
Noble Affiliates, Inc. ................. 8,500 328,840
Santa Fe International Corp.* .......... 18,000 612,000
Schlumberger Limited ................... 3,800 475,000
Total ................................. 1,415,840
Paper and Allied Products - 1.39%
Champion International Corporation ..... 5,800 320,450
Union Camp Corporation ................. 8,800 440,000
Total ................................. 760,450
Petroleum and Coal Products - 2.84%
Mobil Corporation ...................... 5,600 391,300
Royal Dutch Petroleum Company .......... 13,600 739,500
Tosco Corporation ...................... 14,000 419,118
Total ................................. 1,549,918
Primary Metal Industries - 1.82%
British Steel plc, ADR ................. 17,000 429,250
Nucor Corporation ...................... 10,000 565,000
Total ................................. 994,250
Printing and Publishing - 3.26%
Gannett Co., Inc. ...................... 6,000 592,500
McGraw-Hill, Inc. ...................... 5,200 305,822
Meredith Corporation ................... 20,000 580,000
Viacom Inc., Class B* .................. 10,000 300,000
Total ................................. 1,778,322
Textile Mill Products - 1.38%
Sara Lee Corporation ................... 9,700 403,762
Unifi, Inc. ............................ 9,300 347,588
Total ................................. 751,350
Transportation by Air - 0.19%
Southwest Airlines Co. ................. 4,000 103,500
Transportation Equipment - 1.82%
Echlin Inc. ............................ 14,000 504,000
Sundstrand Corporation ................. 9,000 486,000
Total ................................. 990,000
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS (Continued)
Wholesale Trade -- Nondurable Goods - 1.66%
Gillette Company (The) ................. 6,780 642,405
Nu Skin Asia Pacific, Inc. - A* ........ 10,000 265,000
Total ................................. 907,405
TOTAL COMMON STOCKS - 55.93% $30,504,480
(Cost: $24,370,921)
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Building Materials and Garden Supplies - 0.84%
Home Depot, Inc. (The), Convertible,
3.25%, 10-1-2001 ...................... $ 400 458,000
Electronic and Other Electric Equipment - 0.80%
Cooper Industries, Inc.,
6.0%, 1-1-99 (Exchangeable) ........... 257 437,000
Oil and Gas Extraction - 0.42%
Enron Corp.,
6.25%, 12-13-98 (Exchangeable) ........ 261 229,500
Security and Commodity Brokers - 0.63%
Salomon Inc.,
7.625%, 5-15-99 (Exchangeable) ........ 266 342,500
TOTAL CORPORATE DEBT SECURITIES - 2.69% $ 1,467,000
(Cost: $1,183,750)
UNITED STATES GOVERNMENT SECURITIES
Federal National Mortgage Association,
7.0%, 9-1-2025 ........................ 4,237 4,151,100
United States Treasury:
5.625%, 8-31-97 ....................... 1,000 1,000,000
5.5%, 2-28-99 ......................... 1,000 991,720
6.875%, 8-31-99 ....................... 250 253,710
7.75%, 11-30-99 ....................... 1,500 1,552,260
7.125%, 2-29-2000 ..................... 500 510,935
6.375%, 8-15-2002 ..................... 1,100 1,099,659
7.5%, 2-15-2005 ....................... 2,250 2,380,770
6.25%, 8-15-2023 ...................... 250 231,445
6.75%, 8-15-2026 ...................... 3,000 2,969,070
Total ................................. 10,989,569
TOTAL UNITED STATES GOVERNMENT SECURITIES - 27.76% 15,140,669
(Cost: $15,207,861)
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES
Depository Institutions - 1.98%
U.S. Bancorp,
5.47%, Master Note..................... $1,083 $ 1,083,000
Food and Kindred Products - 2.51%
General Mills, Inc.,
5.495%, Master Note.................... 260 260,000
Hercules, Inc.,
5.57%, 7-14-97 ........................ 1,110 1,107,767
Total ................................. 1,367,767
Nondepository Institutions - 2.02%
Textron Financial Corp.,
5.7%, 7-2-97 .......................... 1,100 1,099,826
Textile Mill Products - 3.73%
Sara Lee Corporation,
5.5%, Master Note...................... 2,034 2,034,000
Transportation Equipment - 3.18%
Dana Credit Corp.,
5.77%, 7-24-97 ........................ 1,740 1,733,586
TOTAL SHORT-TERM SECURITIES - 13.42% $ 7,318,179
(Cost: $7,318,179)
TOTAL INVESTMENT SECURITIES - 99.80% $54,430,328
(Cost: $48,080,711)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.20% 108,126
NET ASSETS - 100.00% $54,538,454
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS
Apparel and Accessory Stores - 1.51%
Payless ShoeSource, Inc. ............... 2,500 $ 136,718
Auto Repair, Services, and Parking - 1.52%
Hertz Corp (The), Class A .............. 3,800 136,800
Business Services - 3.51%
Adaptec Inc.* .......................... 2,900 100,775
First Data Corporation ................. 2,000 87,874
Oracle Systems Corporation* ............ 2,550 128,375
Total ................................. 317,024
Chemicals and Allied Products - 11.30%
American Home Products Corporation ..... 1,800 137,700
BetzDearborn Inc. ...................... 2,000 132,000
Bristol-Myers Squibb Company ........... 1,700 137,700
Imperial Chemical Industries plc, ADR .. 2,600 147,875
Lilly (Eli) and Company ................ 1,400 153,037
Pfizer Inc. ............................ 1,300 155,350
Praxair, Inc. .......................... 2,800 156,800
Total ................................. 1,020,462
Communication - 6.03%
Clear Channel Communications, Inc. ..... 2,000 123,000
Nokia Corporation, Series A, ADR ....... 2,700 199,125
SBC Communications Inc. ................ 3,600 222,750
Total ................................. 544,875
Depository Institutions - 1.40%
BankAmerica Corporation ................ 600 38,737
First Bank System, Inc. ................ 500 42,688
Norwest Corporation .................... 800 45,000
Total ................................. 126,425
Electric, Gas and Sanitary Services - 4.25%
Duke Energy Corp. ..................... 2,900 139,017
PacifiCorp ............................. 2,300 50,455
Sonat Inc. ............................. 2,800 143,500
Southern Company (The) ................. 2,300 50,313
Total ................................. 383,285
Forestry - 1.50%
Weyerhaeuser Company ................... 2,600 135,200
Furniture and Fixtures - 1.62%
Lear Corporation* ...................... 3,300 146,438
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS (Continued)
General Merchandise Stores - 2.96%
Federated Department Stores, Inc. ...... 3,600 $ 125,100
Wal-Mart Stores, Inc. .................. 4,200 142,010
Total ................................. 267,110
Heavy Construction, Excluding Building - 0.93%
Koninklijke Boskalis Westminster N.V. (A) 4,288 84,096
Industrial Machinery and Equipment - 5.09%
AGCO Corporation ....................... 1,300 46,718
Case Corporation ....................... 1,500 103,312
Integrated Process Equipment Corp.* .... 10,400 263,245
New Holland NV ......................... 1,700 46,537
Total ................................. 459,812
Instruments and Related Products - 1.22%
General Motors Corporation, Class H .... 1,900 109,725
Paper and Allied Products - 1.38%
Mead Corporation (The) ................. 2,000 124,500
Personal Services - 1.93%
Equity Corporation International* ...... 7,200 174,146
Petroleum and Coal Products - 4.41%
Mobil Corporation ...................... 1,600 111,800
Royal Dutch Petroleum Company .......... 2,400 130,500
Tosco Corporation ...................... 5,200 155,672
Total ................................. 397,972
Transportation by Air - 1.46%
Southwest Airlines Co. ................. 5,100 131,962
Transportation Equipment - 2.15%
Sundstrand Corporation ................. 3,600 194,400
TOTAL COMMON STOCKS - 54.17% $4,890,950
(Cost: $4,378,487)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Chemicals and Allied Products - 2.16%
BOC Group (The), Inc.,
5.875%, 1-29-2001 ..................... $200 194,666
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Depository Institutions - 4.52%
Banco de Inversion y Comercio
Exterior S.A.,
9.375%, 12-27-2000 (B) ................ $200 $ 208,750
Banco Nacional de Comercio Exterior, S.N.C.,
7.5%, 7-1-2000 ........................ 200 199,500
Total ................................. 408,250
Electric, Gas and Sanitary Services - 2.29%
Companhia Paranaense de Energia-COPEL,
9.75%, 5-2-2005 (B).................... 200 207,250
Fabricated Metal Products - 2.36%
Silgan Corp.,
11.75%, 6-15-2002 ..................... 200 213,000
Food and Kindred Products - 4.47%
Jg Summit Holding, Inc.,
8.0%, 5-6-2002 (B) .................... 200 198,500
Pepsi-Gemex, S.A. de C.V.,
9.75%, 3-30-2004 (B) .................. 200 205,250
Total ................................. 403,750
Industrial Machinery and Equipment - 2.19%
Tyco International Ltd.,
6.5%, 11-1-2001 ....................... 200 197,446
Primary Metal Industries - 2.33%
Ispat Mexicana, S.A. de C.V.,
10.375%, 3-15-2001 (B) ................ 200 210,250
Stone, Clay and Glass Products _ 2.28%
Vicap, S.A. de C.V.,
10.25%, 5-15-2002 (B) ................. 200 206,000
TOTAL CORPORATE DEBT SECURITIES - 22.60% $2,040,612
(Cost: $2,021,458)
OTHER GOVERNMENT SECURITIES
Argentina - 2.32%
Republic of Argentina (The),
9.25%, 2-23-2001 ...................... 200 209,250
Poland - 2.20%
Republic of Poland (The),
7.125%, 7-1-2004 ...................... 200 199,000
TOTAL OTHER GOVERNMENT SECURITIES - 4.52% $408,250
(Cost: $400,824)
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Banks,
7.04%, 1-2-2003 ....................... $200 $ 198,844
United States Treasury:
7.25%, 2-15-98 ........................ 60 60,553
7.125%, 2-29-2000 ..................... 60 61,312
7.5%, 2-15-2005 ....................... 130 137,556
TOTAL UNITED STATES GOVERNMENT
SECURITIES - 5.08% $ 458,265
(Cost: $466,928)
SHORT-TERM SECURITIES
Chemicals and Allied Products - 3.32%
PPG Industries, Inc.,
5.5%, 7-7-97 .......................... 300 299,725
Depository Institutions - 4.60%
U.S. Bancorp,
5.47%, Master Note .................... 415 415,000
Electric, Gas and Sanitary Services - 4.42%
Pacific Gas & Electric Co.,
5.55%, 7-8-97 ......................... 400 399,569
Food and Kindred Products - 1.93%
General Mills, Inc.,
5.495%, Master Note ................... 174 174,000
Textile Mill Products - 0.43%
Sara Lee Corporation,
5.5%, Master Note ..................... 39 39,000
TOTAL SHORT-TERM SECURITIES - 14.70% $1,327,294
(Cost: $1,327,294)
TOTAL INVESTMENT SECURITIES - 101.07% $9,125,371
(Cost: $8,594,991)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (1.07%) (96,788)
NET ASSETS - 100.00% $9,028,583
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
BANK OBLIGATIONS
Bankers Acceptance _ 2.86%
SunTrust Banks Inc.,
5.5%, 7-7-97 .......................... $1,111 $ 1,109,660
Certificates of Deposit
Domestic _ 2.58%
Bankers Trust New York Corp.,
5.4%, 10-16-97 ........................ 1,000 999,908
Yankee _ 10.31%
Banque Nationale de Paris,
5.9%, 3-19-98 ......................... 1,000 1,000,000
Canadian Imperial Bank of Commerce,
5.95%, 6-29-98 ........................ 1,000 999,392
Deutsche Bank AG - New York,
5.71%, 11-7-97 ........................ 1,000 998,376
Societe Generale - New York,
5.85%, 3-3-98 ......................... 1,000 999,007
Total ................................. 3,996,775
Total Certificates of Deposit _ 12.89% 4,996,683
Notes _ 5.80%
Abbey National Treasury Services plc,
5.61%, 2-10-98 ........................ 1,250 1,249,555
PNC Bank, N.A.,
5.5975%, 12-11-97 ..................... 1,000 999,689
Total ................................. 2,249,244
TOTAL BANK OBLIGATIONS _ 21.55% $8,355,587
(Cost: $8,355,587)
CORPORATE OBLIGATIONS
Commercial Paper
Chemicals and Allied Products _ 11.16%
Abbott Laboratories,
5.7%, 7-9-97 .......................... 1,500 1,498,100
Air Products & Chemicals Inc.,
5.7%, 7-8-97 .......................... 1,500 1,498,338
BOC Group Inc.,
5.54%, 7-28-97 ........................ 1,335 1,329,453
Total ................................. 4,325,891
Depository Institutions - 1.95%
U.S. Bancorp,
5.47%, Master Note..................... 755 755,000
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (Continued)
Electric, Gas and Sanitary Services _ 4.61%
Idaho Power Co.,
5.56%, 7-18-97 ........................ $1,000 $ 997,374
Questar Corp.,
5.585%, 7-3-97 ........................ 790 789,755
Total ................................. 1,787,129
Food and Kindred Products _ 6.03%
General Mills, Inc.,
5.495%, Master Note ................... 43 43,000
Heinz (H.J.) Co.,
5.54%, 7-17-97 ........................ 1,000 997,538
Hercules Inc.,
5.57%, 7-14-97 ........................ 1,300 1,297,385
Total ................................. 2,337,923
Metal Mining _ 3.86%
BHP Finance (USA) Inc.,
5.53%, 7-7-97 ......................... 1,500 1,498,618
Nondepository Institutions _ 6.44%
Associates Corp. of North America,
5.5%, 7-16-97 ......................... 1,000 997,708
Island Finance Puerto Rico Inc.,
5.57%, 7-7-97 ......................... 1,500 1,498,608
Total ................................. 2,496,316
Personal Services _ 2.63%
Block Financial Corp.,
5.6%, 7-18-97 ......................... 1,024 1,021,292
Textile Mill Products - 1.44%
Sara Lee Corporation,
5.5%, Master Note ..................... 558 558,000
Transportation Equipment - 3.40%
Echlin, Inc.,
5.67%, 8-1-97 ......................... 1,325 1,318,531
Total Commercial Paper _ 41.52% 16,098,700
Notes
Auto Repair, Services and Parking _ 2.58%
PHH Corporation,
5.677%, 7-24-97 ....................... 1,000 1,000,000
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Notes (Continued)
Electric, Gas, and Sanitary Services _ 2.62%
PacifiCorp,
8.75%, 2-12-98 ........................ $1,000 $ 1,018,354
Food and Kindred Products _ 2.59%
PepsiCo Inc.,
6.125%, 1-15-98 ....................... 1,000 1,002,507
Nondepository Institutions _ 2.58%
Caterpillar Financial Services Corp.,
5.6447%, 7-28-97 ...................... 1,000 1,000,000
Total Notes _ 10.37% 4,020,861
TOTAL CORPORATE OBLIGATIONS _ 51.89% $20,119,561
(Cost: $20,119,561)
MUNICIPAL OBLIGATIONS
California _ 2.58%
City of Anaheim, California, Certificates
of Participation (1993 Arena Financing
Project), Municipal Adjustable Rate
Taxable Securities (Credit Suisse),
5.72%, 8-1-97 ......................... 1,000 1,000,000
Kentucky _ 1.35%
City of Bardstown, Kentucky, Taxable Variable
Rate Demand Industrial Revenue Bonds, Series 1994
(R.J. Tower Corporation Project), (Comerica Bank),
5.68%, 7-3-97 ......................... 525 525,000
Louisiana _ 2.58%
Industrial Development Board of the Parish
Of Calcasieu, Inc., Environmental Revenue
Bonds (CITGO Petroleum Corporation Project),
Series 1996 (Taxable),(ABN AMRO Bank N.V.),
5.62%, 7-1-97 ......................... 1,000 1,000,000
Michigan _ 1.55%
Crystal Enterprises, Inc., Crystal Mountain Resort,
Taxable Variable Rate Demand Notes, Series 1995
(NBD Bank),
5.68%, 7-3-97 ......................... 600 600,000
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
New York - 2.58%
Metrocrest Hospital Authority, Taxable Commercial
Paper Program, Series 1989 (The Bank of New York),
5.6235%, 7-2-97 ....................... $1,000 $ 999,844
Pennsylvania _ 3.23%
Schuylkill County Industrial Development
Authority, Commercial Development Revenue
Bonds (Midway Supermarket, Inc. Project),
Taxable Series of 1995 (Meridian Bank),
5.8%, 7-9-97 .......................... 890 890,000
Montgomery County Industrial Development
Authority, Federally Taxable Variable Rate
Demand/Fixed Rate Revenue Bonds (Collegeville
Inn Project), Series of 1996 (CoreStates Bank,
N.A.),
5.8%, 7-9-97 .......................... 200 200,000
Monroe County Industrial Development
Authority, Manufacturing Facilities
Revenue Bonds (United Steel Enterprises,
Inc., Project), Taxable Variable Rate Demand/
Fixed Rate Revenue Bonds, Series B of 1996
(CoreStates Bank, N.A.),
5.80%, 10-1-97 ........................ 165 165,000
Total ............................... 1,255,000
Texas _ 2.58%
Gulf Coast Waste Disposal Authority, Pollution
Control Revenue Bonds (Amoco Oil Company
Project), Taxable Series 1995,
5.65%, 8-19-97 ........................ 1,000 1,000,000
TOTAL MUNICIPAL OBLIGATIONS _ 16.45% $6,379,844
(Cost: $6,379,844)
UNITED STATES GOVERNMENT OBLIGATIONS
Federal Farm Credit Banks,
5.85%, 8-1-97.......................... 1,400 1,399,947
Federal Home Loan Banks,
5.82%, 11-6-97 ........................ 1,000 999,460
Student Loan Marketing Association,
5.37%, 2-17-98......................... 1,000 1,000,000
TOTAL UNITED STATES GOVERNMENT OBLIGATIONS _ 8.77% $3,399,407
(Cost: $3,399,407)
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1997
Value
TOTAL INVESTMENT SECURITIES - 98.66% $38,254,399
(Cost: $38,254,399)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.34% 518,959
NET ASSETS - 100.00% $38,773,358
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Chemicals and Allied Products - 6.84%
American Home Products Corporation,
7.7%, 2-15-2000 ....................... $100 $ 102,889
ICI Wilmington, Inc.,
9.5%, 11-15-2000 ...................... 75 81,096
Praxair, Inc.,
6.7%, 4-15-2001 ....................... 100 99,808
Total ................................. 283,793
Depository Institutions - 8.90%
Ahmanson (H.F.), Series A,
6.35%, 9-1-98 ......................... 100 100,294
BankAmerica Corporation,
9.7%, 8-1-2000 ........................ 100 108,234
Boatmen's Bancshares, Inc.,
9.25%, 11-1-2001 ...................... 50 54,452
Wells Fargo & Company,
8.375%, 5-15-2002 ..................... 100 105,894
Total ................................. 368,874
Electric, Gas and Sanitary Services - 1.26%
Consolidated Natural Gas Company,
8.75%, 6-1-99 ......................... 50 52,048
Electronic and Other Electric Equipment - 2.45%
Black & Decker Corp.,
7.5%, 4-1-2003 ........................ 100 101,754
General Merchandise Stores - 4.91%
Penney (J.C.) Company, Inc.,
10.0%, 10-15-97 ....................... 100 101,149
Sears, Roebuck and Co.,
9.25%, 4-15-98 ........................ 100 102,416
Total ................................. 203,565
Instruments and Related Products - 4.58%
Baxter International Inc.,
7.625%, 11-15-2002 .................... 100 103,074
Polaroid Corporation,
8.0%, 3-15-99 ......................... 85 87,036
Total ................................. 190,110
Insurance Carriers - 1.26%
Transamerica Finance Corporation,
8.75%, 10-1-99 ........................ 50 52,221
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Nondepository Institutions - 9.90%
American General Finance Corporation,
8.25%, 1-15-98 ........................ $ 50 $ 50,580
Associates Corporation of North America,
7.875%, 9-30-2001 ..................... 100 104,220
Ford Motor Credit Company,
8.0%, 1-15-99 ......................... 150 153,738
General Motors Acceptance Corporation,
7.75%, 1-15-99 ........................ 100 101,959
Total ................................. 410,497
Oil and Gas Extraction - 3.19%
Burlington Resources Inc.,
8.5%, 10-1-2001 ....................... 125 132,284
Paper and Allied Products - 2.43%
International Paper Company,
6.875%, 7-10-2000 ..................... 100 100,694
Petroleum and Coal Products - 3.80%
Chevron Corporation,
8.11%, 12-1-2004 ...................... 100 104,698
Texaco Capital Inc.,
9.0%, 12-15-99 ........................ 50 52,823
Total ................................. 157,521
Railroad Transportation - 2.50%
Union Pacific Corporation,
7.875%, 2-15-2002 ..................... 100 103,810
Security and Commodity Brokers - 2.48%
Salomon Inc.,
7.75%, 5-15-2000 ...................... 100 102,706
Transportation by Air - 2.51%
Federal Express Corporation,
10.0%, 9-1-98 ......................... 100 104,173
TOTAL CORPORATE DEBT SECURITIES - 57.01% $2,364,050
(Cost: $2,348,702)
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation,
7.0%, 5-15-2005 ....................... $100 $ 100,625
Federal National Mortgage Association:
6.0%, 11-1-2000 ....................... 67 64,690
7.95%, 3-7-2005 ....................... 100 102,562
6.5%, 12-1-2010 ....................... 95 92,736
6.0%, 1-1-2011 ........................ 86 83,061
6.5%, 2-1-2011 ........................ 90 88,588
7.0%, 5-1-2011 ........................ 91 91,074
7.0%, 7-1-2011 ........................ 92 92,151
6.0%, 9-25-2014 ....................... 100 99,625
11.0%, 10-1-2020 ...................... 30 33,455
7.0%, 4-1-2026 ........................ 97 94,887
Government National Mortgage Association,
7.0%, 9-15-2008 ....................... 73 72,986
United States Treasury:
6.375%, 8-15-2002 ..................... 100 99,969
6.25%, 2-15-2003....................... 100 99,219
7.25%, 5-15-2004....................... 100 104,234
TOTAL UNITED STATES GOVERNMENT SECURITIES - 31.83% $1,319,862
(Cost: $1,318,414)
TOTAL SHORT-TERM SECURITIES - 9.34% $ 387,000
(Cost: $387,000)
TOTAL INVESTMENT SECURITIES - 98.18% $4,070,912
(Cost: $4,054,116)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.82% 75,593
NET ASSETS - 100.00% $4,146,505
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Chemicals and Allied Products - 4.28%
Dow Capital BV,
9.0%, 5-15-2010 ....................... $ 500 $ 571,655
Dow Chemical Company (The),
8.55%, 10-15-2009 ..................... 1,000 1,107,370
Procter & Gamble Company (The),
8.0%, 9-1-2024 ........................ 2,000 2,259,240
Total ................................. 3,938,265
Communication - 9.26%
Bell Telephone Company of Pennsylvania (The),
8.35%, 12-15-2030 ..................... 1,000 1,142,690
BellSouth Telecommunications, Inc.,
5.85%, 11-15-2045 ..................... 1,000 983,670
Cablevision Industries Corporation,
9.25%, 4-1-2008 ....................... 1,000 1,063,160
Centel Capital Corporation,
9.0%, 10-15-2019 ...................... 1,000 1,153,340
Continental Cablevision, Inc.,
8.5%, 9-15-2001 ....................... 1,000 1,056,220
Jones Intercable, Inc.,
9.625%, 3-15-2002 ..................... 500 523,750
Tele-Communications, Inc.,
6.58%, 2-15-2005 ...................... 1,000 1,033,420
Turner Broadcasting System, Inc.,
8.375%, 7-1-2013 ...................... 1,000 1,037,150
U S WEST, Inc.,
8.4%, 9-15-99 ......................... 500 518,415
Total ................................. 8,511,815
Depository Institutions - 9.40%
AmSouth Bancorporation,
6.75%, 11-1-2025 ...................... 1,500 1,466,625
Chevy Chase Savings Bank, F.S.B.,
9.25%, 12-1-2005 ...................... 500 501,250
J.P. Morgan & Co. Incorporated,
7.54%, 1-15-2027 ...................... 750 717,578
Kansallis-Osake-Pankki,
10.0%, 5-1-2002 ....................... 1,000 1,121,450
NBD Bank, National Association,
8.25%, 11-1-2024 ...................... 1,000 1,111,280
NationsBank Corporation,
8.57%, 11-15-2024 ..................... 1,000 1,139,050
Riggs National Corporation,
8.5%, 2-1-2006 ........................ 1,500 1,560,000
SouthTrust Bank of Alabama, N.A.:
5.58%, 2-6-2006 ....................... 500 482,975
7.69%, 5-15-2025 ...................... 500 539,855
Total ................................. 8,640,063
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Electric, Gas and Sanitary Services - 6.66%
Arkla, Inc.,
10.0%, 11-15-2019 ..................... $ 975 $ 1,072,978
Cajun Electric Power Cooperative, Inc.,
8.92%, 3-15-2019 ...................... 1,000 1,083,470
Cleveland Electric Illuminating Co. (The),
9.5%, 5-15-2005 ....................... 678 729,291
Consolidated Edison Company of New York, Inc.,
8.05%, 12-15-2027 ..................... 500 496,830
El Paso Electric Company,
7.25%, 2-1-99 ......................... 500 500,915
Kansas Gas and Electric Company,
7.6%, 12-15-2003 ...................... 1,000 1,028,930
Pacific Gas & Electric Co.,
6.875%, 12-1-99 ....................... 500 500,170
Pennsylvania Power & Light Co.,
9.25%, 10-1-2019 ...................... 656 708,919
Total ................................. 6,121,503
Fabricated Metal Products - 1.12%
Mark IV Industries, Inc.,
8.75%, 4-1-2003 ....................... 1,000 1,032,500
Food and Kindred Products - 2.54%
Coca-Cola Enterprises Inc.,
0.0%, 6-20-2020 ....................... 10,000 1,988,000
Nabisco, Inc.,
6.8%, 9-1-2001 ........................ 345 345,562
Total ................................. 2,333,562
Food Stores - 0.56%
Kroger Co. (The),
7.65%, 4-15-2007 ...................... 500 511,775
Health Services - 1.11%
Tenet Healthcare Corporation:
7.875%, 1-15-2003 ..................... 500 501,250
8.625%, 12-1-2003 ..................... 500 517,500
Total ................................. 1,018,750
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Hotels and Other Lodging Places - 1.72%
Marriott International, Inc.,
7.875%, 4-15-2005 ..................... $ 1,000 $ 1,037,200
RHG Finance Corporation,
8.875%, 10-1-2005 ..................... 500 544,610
Total ................................. 1,581,810
Industrial Machinery and Equipment - 1.18%
Joy Technologies Inc.,
10.25%, 9-1-2003 ...................... 1,000 1,085,590
Insurance Carriers - 0.56%
Reliance Group Holdings, Inc.,
9.0%, 11-15-2000 ...................... 500 520,000
Lumber and Wood Products - 0.26%
Doman Industries Limited,
8.75%, 3-15-2004 ...................... 250 241,250
Nondepository Institutions - 8.47%
Associates Corporation of North America,
7.95%, 2-15-2010 ...................... 500 534,605
BarclaysAmerican Corporation,
9.125%, 12-1-97 ....................... 225 227,698
Chrysler Financial Corporation,
12.75%, 11-1-99 ....................... 1,000 1,133,370
Countrywide Mortgage Backed Securities,
Inc.,
6.5%, 4-25-2024 ....................... 2,000 1,995,780
DLJ Mortgage Acceptance Corp.,
6.5%, 4-25-2024 ....................... 955 914,570
General Electric Capital Corporation,
8.3%, 9-20-2009 ....................... 250 274,340
General Motors Acceptance Corporation,
8.875%, 6-1-2010 ...................... 1,000 1,139,830
Residential Asset Securities Corporation,
Mortgage Pass-Through Certificates,
1995-KS3 Class D,
8.0%, 10-25-2024 ...................... 1,000 1,025,520
Westinghouse Electric Corporation,
8.875%, 6-14-2014 ..................... 500 541,990
Total ................................. 7,787,703
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Oil and Gas Extraction - 4.40%
Anadarko Petroleum Corporation,
7.25%, 3-15-2025 ...................... $ 1,000 $1,018,030
Mitchell Energy & Development Corp.,
9.25%, 1-15-2002 ...................... 500 538,715
Oryx Energy Company:
10.0%, 4-1-2001 ....................... 400 436,304
8.375%, 7-15-2004 ..................... 500 521,045
Seagull Energy Corporation,
7.875%, 8-1-2003 ...................... 500 512,500
YPF Sociedad Anoima,
8.0%, 2-15-2004 ....................... 1,000 1,018,700
Total ................................. 4,045,294
Paper and Allied Products - 1.70%
Boise Cascade Office Products Corporation,
9.875%, 2-15-2001 ..................... 500 524,420
Canadian Pacific Forest Products Ltd.,
9.25%, 6-15-2002 ...................... 1,000 1,034,510
Total ................................. 1,558,930
Printing and Publishing - 1.73%
News America Holdings Incorporated,
9.125%, 10-15-99 ...................... 500 527,120
Viacom International Inc.:
9.125%, 8-15-99 ....................... 500 512,500
10.25%, 9-15-2001 ..................... 500 546,750
Total ................................. 1,586,370
Security and Commodity Brokers - 1.07%
Salomon Inc.,
3.65%, 2-14-2002 ...................... 1,000 982,000
Stone, Clay and Glass Products - 1.71%
Owens-Corning Fiberglas Corporation,
8.875%, 6-1-2002 ...................... 500 537,825
Owens-Illinois, Inc.,
7.85%, 5-15-2004 ...................... 500 507,795
USG Corporation,
9.25%, 9-15-2001 ...................... 500 528,750
Total ................................. 1,574,370
Transportation Equipment - 0.60%
McDonnell Douglas Corporation,
9.25%, 4-1-2002 ....................... 500 549,770
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Wholesale Trade -- Durable Goods- 2.84%
Fisher Scientific International Inc.,
7.125%, 12-15-2005 .................... $ 900 $ 881,496
Motorola, Inc.,
8.4%, 8-15-2031 ....................... 1,500 1,731,120
Total ................................. 2,612,616
TOTAL CORPORATE DEBT SECURITIES - 61.17% $56,233,936
(Cost: $55,169,733)
OTHER GOVERNMENT SECURITIES
Canada - 5.19%
Hydro-Quebec:
8.05%, 7-7-2024 ....................... 1,000 1,083,980
7.4%, 3-28-2025 ....................... 1,000 1,083,850
Province de Quebec:
5.67%, 2-27-2026 ...................... 500 497,695
6.29%, 3-6-2026 ....................... 1,000 989,790
Province of Nova Scotia,
8.25%, 11-15-2019...................... 1,000 1,111,950
Total ................................. 4,767,265
Supranational - 1.23%
Inter-American Development Bank,
8.4%, 9-1-2009 ........................ 1,000 1,130,540
TOTAL OTHER GOVERNMENT SECURITIES - 6.42% $ 5,897,805
(Cost: $5,730,121)
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation:
7.5%, 2-15-2007 ....................... 2,000 2,040,620
7.5%, 11-15-2017 ...................... 1,538 1,559,624
7.5%, 4-15-2019 ....................... 1,435 1,420,485
6.5%, 11-25-2020 ...................... 819 797,121
7.95%, 12-15-2020 ..................... 3,000 3,068,430
Federal National Mortgage Association,
7.09%, 4-1-2004 ....................... 500 494,530
Government National Mortgage Association:
7.5%, 7-15-2023 ....................... 2,052 2,071,410
7.5%, 12-15-2023 ...................... 2,169 2,189,484
8.0%, 9-15-2025 ....................... 1,863 1,931,776
7.75%, 10-15-2031 ..................... 320 324,346
Tennessee Valley Authority,
5.98%, 4-1-2036 ....................... 2,000 2,016,160
United States Treasury:
5.5%, 2-28-99 ......................... 5,000 4,958,600
6.75%, 5-31-99 ........................ 1,000 1,011,560
0.0%, 2-15-2019 ....................... 5,000 1,122,250
Veterans Administration,
7.5%, 8-15-2017 ....................... 2,000 2,022,500
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1997
Value
TOTAL UNITED STATES GOVERNMENT SECURITIES - 29.40% $27,028,896
(Cost: $26,902,554)
TOTAL SHORT-TERM SECURITIES - 1.45% $ 1,329,000
(Cost: $1,329,000)
TOTAL INVESTMENT SECURITIES - 98.44% $90,489,637
(Cost: $89,131,408)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.56% 1,437,659
NET ASSETS - 100.00% $91,927,296
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1997
Shares Value
COMMON STOCKS AND WARRANTS
Chemicals and Allied Products - 0.17%
Carson, Inc.* .......................... 16,500 $ 177,375
Communication - 0.22%
Heartland Wireless Communications,
Inc., Warrants (B)* ................... 3,000 30
Microcell Telecommunications Inc.,
Conditional Warrants (B)* ............. 5,000 3,125
Microcell Telecommunications Inc.,
Warrants(B)* .......................... 5,000 62,500
Young Broadcasting Inc.* ............... 5,000 163,750
Total ................................. 229,405
Electronic and Other Electric Equipment - 0.02%
Electronic Retailing Systems
International, Inc., Warrants* ........ 500 20,000
Furniture and Fixtures - 0.33%
Lear Corporation* ...................... 8,000 355,000
General Building Contractors - 0.37%
Walter Industries, Inc.* ............... 23,272 391,970
Hotels and Other Lodging Places - 0.83%
Trump Hotels & Casino Resorts, Inc.* ... 6,250 67,188
Wyndham Hotel Corporation* ............. 25,000 815,625
Total ................................. 882,813
Industrial Machinery and Equipment - 0.18%
Bell & Howell Company* ................. 6,250 192,575
Printing and Publishing - 0.50%
Knight-Ridder, Inc. .................... 5,000 245,310
Tribune Company ........................ 6,000 288,372
Total ................................. 533,682
TOTAL COMMON STOCKS AND WARRANTS - 2.62% $ 2,782,820
(Cost: $2,119,514)
PREFERRED STOCKS
Depository Institutions - 0.82%
California Federal Bank,
F.S.B., 10.625% ....................... 5,000 551,250
California Federal Preferred Capital
Corporation, 9.125% ................... 12,500 320,313
Total ................................. 871,563
Printing and Publishing - 0.47%
K-III Communications Corporation, $10 . 5,000 503,750
TOTAL PREFERRED STOCKS - 1.29% $ 1,375,313
(Cost: $1,312,500)
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Agricultural Production -- Crops - 0.50%
Hines Horticulture, Inc.,
11.75%, 10-15-2005 .................... $ 500 $ 536,250
Agricultural Production -- Livestock - 0.29%
Pilgrim's Pride Corporation,
10.875%, 8-1-2003 ..................... 300 310,500
Amusement and Recreation Services - 5.58%
American Skiing Company,
12.0%, 7-15-2006 ...................... 1,000 1,055,000
California Hotel Finance Corporation,
11.0%, 12-1-2002 ...................... 1,500 1,578,750
Rio Hotel & Casino, Inc.,
10.625%, 7-15-2005 .................... 1,000 1,080,000
Showboat Marina Casino Partnership,
13.5%, 3-15-2003 ...................... 500 572,500
Trump Atlantic City Associates,
11.25%, 5-1-2006 ...................... 500 488,750
Trump Hotels & Casino Resorts
Holdings, L.P.,
15.5%, 6-15-2005 ...................... 1,000 1,160,000
Total ................................. 5,935,000
Apparel and Other Textile Products - 2.44%
CONSOLTEX GROUP INC.,
11.0%, 10-1-2003 ...................... 1,000 1,023,750
Pillowtex Corporation,
10.0%, 11-15-2006 ..................... 500 525,000
WestPoint Stevens Inc.,
9.375%, 12-15-2005 .................... 1,000 1,045,000
Total ................................. 2,593,750
Automotive Dealers and Service Stations - 0.94%
Chief Auto Parts Inc.,
10.5%, 5-15-2005 ...................... 1,000 1,000,000
Building Materials and Garden Supplies - 0.48%
American Builders & Contractors
Supply Co., Inc.,
10.625%, 5-15-2007 (B) ................ 500 515,000
Business Services - 3.03%
Adams Outdoor Advertising Limited Partnership,
10.75%, 3-15-2006 ..................... 750 804,375
Lamar Advertising Company,
9.625%, 12-1-2006 ..................... 1,000 1,027,500
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Business Services (Continued)
Shared Technologies Fairchild
Communications Corp.,
0.0%, 3-1-2006 (E) .................... $1,000 $ 875,000
Universal Outdoor, Inc.,
9.75%, 10-15-2006 ..................... 500 517,500
Total ................................. 3,224,375
Chemicals and Allied Products - 2.23%
Dade International Inc.,
11.125%, 5-1-2006 ..................... 500 557,500
Freedom Chemical Company,
10.625%, 10-15-2006 ................... 1,250 1,310,937
Spinnaker Industries, Inc.,
10.75%, 10-15-2006 .................... 500 506,875
Total ................................. 2,375,312
Communication - 13.43%
Adelphia Communications Corporation:
10.25%, 7-15-2000 ..................... 500 502,500
12.5%, 5-15-2002 ...................... 675 715,500
Allbritton Communications Company,
9.75%, 11-30-2007 ..................... 500 492,500
American Radio Systems Corporation,
9.0%, 2-1-2006 ........................ 750 765,000
Argyle Television Operations, Inc.,
9.75%, 11-1-2005 ...................... 1,000 1,040,000
Cablevision Systems Corporation,
9.875%, 2-15-2013 ..................... 1,450 1,500,750
Comcast Corporation,
9.5%, 1-15-2008 ....................... 350 367,500
Diamond Cable Communications Plc,
0.0%, 12-15-2005 (E) .................. 500 346,250
Globalstar, L.P., Units,
11.375%, 2-15-2004 (B)(F) ............. 500 501,250
Intermedia Communications of Florida, Inc.,
0.0%, 5-15-2006 (E) ................... 750 540,000
MFS Communications Company, Inc.:
0.0%, 1-15-2004 (E) ................... 500 465,400
0.0%, 1-15-2006 (E) ................... 1,000 791,790
Marcus Cable Operating Company, L.P.:
0.0%, 8-1-2004 (E) .................... 1,500 1,305,000
0.0%, 12-15-2005 (E) .................. 500 395,000
Microcell Telecommunications Inc.,
0.0%, 6-1-2006 (E) .................... 1,250 700,000
Rogers Cantel Inc.,
9.375%, 6-1-2008 ...................... 500 527,500
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Communication (Continued)
Sprint Spectrum L.P.,
0.0%, 8-15-2006 (E) ................... $ 500 $ 365,000
Teleport Communications Group Inc.,
0.0%, 7-1-2007 (E)..................... 1,250 901,563
USA Mobile Communications, Inc. II,
9.5%, 2-1-2004 ........................ 500 470,000
Vanguard Cellular Systems, Inc.,
9.375%, 4-15-2006 ..................... 500 505,000
Videotron Plc,
0.0%, 8-15-2005 (E) ................... 500 417,500
WinStar Communications, Inc.,
0.0%, 10-15-2005 (B)(E) ............... 500 487,500
Wireless One, Inc., Units,
0.0%, 8-1-2006 (E)(G) ................. 750 195,000
Total ................................. 14,297,503
Depository Institutions - 1.49%
First Nationwide Holdings Inc.:
9.125%, 1-15-2003 ..................... 1,000 1,030,000
12.5%, 4-15-2003 ...................... 500 557,500
Total ................................. 1,587,500
Eating and Drinking Places - 0.48%
Foodmaker, Inc.,
9.25%, 3-1-99 ......................... 500 515,000
Electric, Gas and Sanitary Services - 0.58%
Allied Waste Industries, Inc.,
0.0%, 6-1-2007 (B)(E) ................. 1,000 615,000
Electronic and Other Electric Equipment - 2.29%
Advanced Micro Devices, Inc.,
11.0%, 8-1-2003 ....................... 500 556,875
Electronic Retailing Systems
International, Inc., Units,
0.0%, 2-1-2004 (B)(E)(H) .............. 500 326,250
Rayovac Corporation,
10.25%, 11-1-2006 ..................... 500 526,250
Telex Communications, Inc.,
10.5%, 5-1-2007 (B) ................... 500 522,500
Viasystems, Inc.,
9.75%, 6-1-2007 (B) ................... 500 506,250
Total ................................. 2,438,125
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Engineering and Management Services - 0.72%
United International Holdings, Inc.,
0.0%, 11-15-99 ........................ $1,000 $ 770,000
Fabricated Metal Products - 3.94%
Mark IV Industries, Inc.,
8.75%, 4-1-2003 ....................... 1,500 1,548,750
Neenah Corporation:
11.125%, 5-1-2007 (B) ................. 500 532,500
11.125%, 5-1-2007 (B) ................. 1,000 1,065,000
Nortek, Inc.,
9.875%, 3-1-2004 ...................... 500 512,500
U.S. Can Corporation,
10.125%, 10-15-2006 ................... 500 531,250
Total ................................. 4,190,000
Food and Kindred Products - 0.95%
Archibald Candy Corporation,
10.25%, 7-1-2004 (B) .................. 500 507,500
Dr Pepper Bottling Holdings, Inc.,
0.0%, 2-15-2003 (E) ................... 500 498,750
Total ................................. 1,006,250
Food Stores - 4.42%
Big V Supermarkets, Inc.,
11.0%, 2-15-2004 ...................... 500 511,250
Bruno's, Inc.,
10.5%, 8-1-2005 ....................... 1,500 1,511,250
Jitney-Jungle Stores of America, Inc.,
12.0%, 3-1-2006 ....................... 1,000 1,110,000
Pueblo Xtra International, Inc.,
9.5%, 8-1-2003 ........................ 500 485,000
Ralphs Grocery Company,
11.0%, 6-15-2005 ...................... 1,000 1,081,250
Total ................................. 4,698,750
Furniture and Fixtures - 1.43%
Lear Seating Corporation,
8.25%, 2-1-2002 ....................... 1,500 1,522,500
General Building Contractors - 1.48%
NVR L.P.,
11.0%, 4-15-2003 ...................... 1,000 1,070,000
Standard Pacific Corporation,
8.5%, 6-15-2007 ....................... 500 500,000
Total ................................. 1,570,000
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Health Services - 2.40%
Quorum Health Group, Inc.,
8.75%, 11-1-2005 ...................... $1,000 $ 1,035,000
Regency Health Services, Inc.,
9.875%, 10-15-2002 .................... 500 512,500
Tenet Healthcare Corporation:
8.0%, 1-15-2005 ....................... 500 501,250
8.625%, 1-15-2007 ..................... 500 510,000
Total ................................. 2,558,750
Holding and Other Investment Offices - 2.11%
Grupo Industrial Durango, S.A. de C.V.,
12.625%, 8-1-2003 ..................... 1,000 1,130,000
LTC Properties, Inc., Convertible,
8.5%, 1-1-2000 ........................ 1,000 1,110,000
Total ................................. 2,240,000
Hotels and Other Lodging Places - 5.07%
Casino America, Inc.,
12.5%, 8-1-2003 ....................... 750 774,375
HMC Acquisition Properties, Inc.,
9.0%, 12-15-2007 ...................... 500 508,125
Prime Hospitality Corp.:
9.25%, 1-15-2006 ...................... 1,500 1,556,250
9.75%, 4-1-2007 ....................... 500 522,500
Showboat, Inc.,
9.25%, 5-1-2008 ....................... 1,000 1,030,000
Station Casinos, Inc.,
10.125%, 3-15-2006 .................... 1,000 1,007,500
Total ................................. 5,398,750
Industrial Machinery and Equipment - 2.77%
American Standard Inc.,
9.875%, 6-1-2001 ...................... 1,000 1,060,000
Bell & Howell Company,
10.75%, 10-1-2002 ..................... 750 783,750
Falcon Building Products, Inc.,
0.0%, 6-15-2007 (B)(E) ................ 1,000 590,000
Walbro Corporation,
9.875%, 7-15-2005 ..................... 500 512,500
Total ................................. 2,946,250
Instruments and Related Products - 2.49%
Cole National Group, Inc.,
9.875%, 12-31-2006 .................... 500 523,750
InterCel, Inc., Units,
0.0%, 2-1-2006 (E)(I) ................. 7 495,000
Maxxim Medical, Inc.,
10.5%, 8-1-2006 ....................... 1,500 1,627,500
Total ................................. 2,646,250
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Lumber and Wood Products - 1.00%
Triangle Pacific Corp.,
10.5%, 8-1-2003 ....................... $1,000 $ 1,067,500
Miscellaneous Manufacturing Industries - 1.47%
Hedstrom Corporation,
10.0%, 6-1-2007 (B) ................... 500 510,000
Pen-Tab Industries, Inc.,
10.875%, 2-1-2007 (B) ................. 500 512,500
Syratech Corporation,
11.0%, 4-15-2007 ...................... 500 536,250
Total ................................. 1,558,750
Miscellaneous Retail - 1.00%
Michaels Stores, Inc.,
10.875%, 6-15-2006 .................... 500 542,500
TravelCenters of America, Inc.,
10.25%, 4-1-2007 (B) .................. 500 517,500
Total ................................. 1,060,000
Motion Pictures - 1.07%
MacAndrews & Forbes Group, Incorporated,
13.0%, 3-1-99 ......................... 81 81,405
Plitt Theatres, Inc.,
10.875%, 6-15-2004 .................... 1,000 1,060,000
Total ................................. 1,141,405
Oil and Gas Extraction - 1.94%
Flores & Rucks, Inc.,
9.75%, 10-1-2006 ...................... 1,000 1,045,000
Lomak Petroleum, Inc.,
8.75%, 1-15-2007 ...................... 500 500,000
Pride Petroleum Services, Inc.,
9.375%, 5-1-2007 ...................... 500 522,500
Total ................................. 2,067,500
Paper and Allied Products - 4.70%
Asia Pulp & Paper Company Ltd.,
11.75%, 10-1-2005 ..................... 1,000 1,102,500
Container Corporation of America,
11.25%, 5-1-2004 ...................... 1,500 1,620,000
Fort Howard Corporation,
11.0%, 1-2-2002 ....................... 438 491,951
Indah Kiat Finance Mauritius Limited,
10.0%, 7-1-2007 (B).................... 500 499,375
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Paper and Allied Products (Continued)
Mail-Well Corporation,
10.5%, 2-15-2004 ...................... $ 500 $ 527,500
Sweetheart Cup Company, Inc.,
10.5%, 9-1-2003 ....................... 750 761,250
Total ................................. 5,002,576
Personal Services - 0.52%
Prime Succession Acquisition Corp.,
10.75%, 8-15-2004 ..................... 500 550,000
Primary Metal Industries - 0.99%
Essex Group, Inc.,
10.0%, 5-1-2003 ....................... 1,000 1,052,500
Printing and Publishing - 5.47%
American Media Operations, Inc.,
11.625%, 11-15-2004 ................... 1,000 1,090,000
Big Flower Press, Inc.,
10.75%, 8-1-2003 ...................... 666 704,295
Jordan Industries, Inc.,
10.375%, 8-1-2003 ..................... 1,500 1,590,000
K-III Communications Corporation,
8.5%, 2-1-2006 ........................ 500 500,000
Viacom International, Inc.,
8.0%, 7-7-2006 ........................ 2,000 1,940,000
Total ................................. 5,824,295
Rubber and Miscellaneous Plastics Products - 0.90%
LDM Technologies, Inc.,
10.75%, 1-15-2007 ..................... 500 530,000
RBX Corporation,
11.25%, 10-15-2005 .................... 500 425,000
Total ................................. 955,000
Stone, Clay and Glass Products - 0.95%
Owens-Illinois, Inc.,
7.85%, 5-15-2004 ...................... 1,000 1,015,590
Textile Mill Products - 2.44%
Avondale Mills, Inc.,
10.25%, 5-1-2006 ...................... 500 526,250
Collins & Aikman Products Co.,
11.5%, 4-15-2006 ...................... 500 562,500
Glenoit Corporation,
11.0%, 4-15-2007 (B) .................. 500 526,875
Polymer Group Inc.,
9.0%, 7-1-2007 (B) .................... 1,000 983,910
Total ................................. 2,599,535
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1997
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Transportation Equipment - 2.05%
Aetna Industries, Inc.,
11.875%, 10-1-2006 .................... $1,000 $ 1,090,000
Greenwich Air Services, Inc.,
10.5%, 6-1-2006 ....................... 500 581,250
Westinghouse Air Brake Company,
9.375%, 6-15-2005 ..................... 500 510,000
Total ................................. 2,181,250
Transportation Services _ 0.71%
Transportacion Maritima Mexicana,
S.A. de C.V.,
10.0%, 11-15-2006 ..................... 750 757,500
Trucking and Warehousing - 0.50%
Iron Mountain Incorporated,
10.125%, 10-1-2006 .................... 500 535,000
Wholesale Trade -- Durable Goods - 2.92%
Alvey Systems, Inc.,
11.375%, 1-31-2003 .................... 1,000 1,035,000
E&S Holdings Corporation,
10.375%, 10-1-2006 .................... 500 520,000
Exide Corporation,
10.0%, 4-15-2005 ...................... 1,500 1,552,500
Total ................................. 3,107,500
Wholesale Trade -- Nondurable Goods - 1.92%
Corporate Express, Inc.,
9.125%, 3-15-2004 ..................... 1,000 998,750
Di Giorgio Corporation,
10.0%, 6-15-2007 (B) .................. 500 487,500
United Stationers Supply Co.,
12.75%, 5-1-2005 ...................... 500 560,000
Total ................................. 2,046,250
TOTAL CORPORATE DEBT SECURITIES - 92.09% $ 98,012,966
(Cost: $94,224,849)
OTHER GOVERNMENT SECURITIES _ 0.53%
Argentina
The Republic of Argentina,
11.375%, 1-30-2017 .................... 500 $ 562,500
(Cost: $496,989)
TOTAL SHORT-TERM SECURITIES - 3.00% $ 3,193,023
(Cost: $3,193,023)
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1997
Value
TOTAL INVESTMENT SECURITIES - 99.53% $105,926,622
(Cost: $101,346,875)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.47% 500,493
NET ASSETS - 100.00% $106,427,115
See Notes to Schedules of Investments on pages 52 - 53.
<PAGE>
TMK/UNITED FUNDS, INC.
Notes to Schedules of Investments
*No dividends were paid during the preceding 12 months.
(A) Listed on an exchange outside of the United States.
(B) As of June 30, 1997, the following restricted securities were owned:
Shares/
Principal
Acquisition Amount Acquisition Market
Security Date (in 000's) Cost Value
---------------- --------------------------------------------
Growth Portfolio
Adaptec Inc., Convertible,
4.75%, 2-1-2004 1/28/97 $1,500$1,500,000$1,494,375
2/28/97 1,000 995,000 996,250
--------------------
$2,495,000$2,490,625
====================
International Portfolio
Haci Omer Sabanci
Holding A.S., ADR 6/30/97 96,000 $864,000 $864,000
======== ========
Asset Strategy Portfolio
Banco de Inversion y Comercio
Exterior S.A.,
9.375%, 12-27-2000 2/18/97 $200$ 208,000$ 208,750
Companhia Paranaense de Energia-COPEL,
9.75%, 5-2-2005 4/22/97 200 199,236 207,250
Jg Summit Holding, Inc.,
8.0%, 5-6-2002 5/19/97 200 197,750 198,500
Pepsi-Gemex, S.A. de C.V.,
9.75%, 3-30-2004 6/24/97 200 205,750 205,250
Ispat Mexicana, S.A. de C.V.,
10.375%, 3-15-2001 3/17/97 200 202,250 210,250
Vicap, S.A. de C.V.,
10.25%, 5-15-2002 6/18/97 200 206,400 206,000
--------------------
$1,219,386$1,236,000
====================
High Income Portfolio
Heartland Wireless Communications,
Inc., Warrants 4/20/95 3,000$ 18,500 $ 30
Microcell Telecommunications Inc.,
Conditional Warrants 6/13/96 5,000 --- 3,125
Microcell Telecommunications Inc.,
Warrants 6/13/96 5,000 61,247 62,500
Allied Waste Industries, Inc.,
0.0%, 6-1-2007 5/1/97 $1,000 574,360 615,000
American Builders & Contractors
Supply Co., Inc.,
10.625%, 5-15-2007 5/2/97 500 500,000 515,000
Archibald Candy Corporation,
10.25%, 7-1-2004 6/27/97 500 500,000 507,500
Di Giorgio Corporation,
10.0%, 6-15-2007 6/13/97 500 500,000 487,500
Electronic Retailing Systems
International, Inc., Units,
0.0%, 2-1-2004 1/21/97 500 336,458 326,250
Falcon Building Products, Inc.,
0.0%, 6-15-2007 6/5/97 1,000 599,820 590,000
Glenoit Corporation,
11.0%, 4-15-2007 3/26/97 500 499,045 526,875
Globalstar, L.P., Units,
11.375%, 2-15-2004 2/13/97 500 500,000 501,250
Hedstrom Corporation,
10.0%, 6-1-2007 6/9/97 500 500,000 510,000
Indah Kiat Finance Mauritius Limited,
10.0%, 7-1-2007 6/26/97 500 496,735 499,375
Neenah Corporation:
11.125%, 5-1-2007 4/23/97 500 500,000 532,500
11.125%, 5-1-2007 6/26/97 1,000 1,057,500 1,065,000
Pen-Tab Industries, Inc.,
10.875%, 2-1-2007 1/30/97 500 500,000 512,500
Polymer Group Inc.,
9.0%, 7-1-2007 6/30/97 1,000 983,910 983,910
Telex Communications, Inc.,
10.5%, 5-1-2007 4/29/97 500 500,000 522,500
TravelCenters of America, Inc.,
10.25%, 4-1-2007 3/24/97 500 500,000 517,500
Viasystems, Inc.,
9.75%, 6-1-2007 6/2/97 500 500,000 506,250
WinStar Communications, Inc.,
0.0%, 10-15-2005 3/13/97 500 500,000 487,500
----------------------
$10,127,575$10,272,065
======================
The total market value of restricted securities represents
approximately 0.40%, 0.83%, 13.69% and 9.65%, respectively, of the
total net assets in the Growth Portfolio, International Portfolio,
Asset Strategy Portfolio and High Income Portfolio at June 30, 1997.
<PAGE>
TMK/UNITED FUNDS, INC.
Notes to Schedules of Investments
(C) Collateralized by $277,000 U.S. Treasury Notes, 12.5% due 8-15-2014,
market value and accrued interest aggregate $420,227.
(D) Principal amounts are denominated in the indicated foreign currency
where applicable (DM _ Deutsche Mark, F _ French Franc).
(E) The security does not bear interest for an initial period of time and
subsequently becomes interest bearing.
(F) Each Unit consists of $1,000 principal amount of 11.375% senior notes
due 2004 and one warrant to purchase 2.0645 shares of common stock.
(G) Each Unit consists of $1,000 principal amount of 13.5% senior discount
notes due 2006 and one warrant to purchase 2.274 shares of common
stock.
(H) Each Unit consists of $1,000 principal amount of 13.25% senior
discount notes due 2004 and one warrant to purchase 17.23 shares of
common stock.
(I) Each Unit consists of 10 $1,000 principal amount of 12% senior
discount notes due 2-1-2006 and 32 warrants. Each warrant entitles
the holder to purchase one share of common stock.
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, 1997
(Unaudited) Science and
Growth Income Technology
Portfolio Portfolio Portfolio
Assets ----------- ---------- -----------
Investment securities--at
value (Notes 1 and 3) $621,197,895 $577,865,797 $3,158,547
Cash ................. 3,820 5,752 2,839
Receivables:
Investment securities
sold ............... --- 178,318 ---
Fund shares sold ..... 971,128 1,454,838 121,120
Dividends and interest 573,081 385,391 250
Prepaid insurance
premium .............. 642 --- ---
Other ................. --- --- 31
------------ ------------ ----------
Total assets ....... 622,746,566 579,890,096 3,282,787
Liabilities ------------ ------------ ----------
Payable for investment
securities purchased . 7,521,976 1,718,640 49,300
Payable to Fund
shareholders ......... 95,832 90,993 48
Accrued accounting
services fee (Note 2). 5,833 5,833 ---
Accrued management
fee (Note 2) ......... 11,715 10,999 59
Dividends payable ...... --- --- ---
Due to custodian ...... --- --- ---
Other ................. 3,168 2,286 ---
------------ ------------ ----------
Total liabilities .. 7,638,524 1,828,751 49,407
------------ ------------ ----------
Total net assets .. $615,108,042 $578,061,345 $3,233,380
Net Assets ============ ============ ==========
$0.01 par value capital stock
Capital stock ........ $ 765,890 $ 479,202 $ 5,802
Additional paid-in
capital ............ 490,427,149 346,622,238 3,034,862
Accumulated undistributed gain (loss):
Accumulated undistributed
net investment income 2,686,120 2,226,074 14,167
Accumulated undistributed
net realized gain (loss)
on investment
transactions ....... 24,444,722 12,608,698 ---
Net unrealized appreciation
of investments ..... 96,784,161 216,125,133 178,549
------------ ------------ ----------
Net assets applicable to
outstanding units
of capital ........ $615,108,042 $578,061,345 $3,233,380
============ ============ ==========
Net asset value, redemption
and offering price per share $8.0313 $12.0630 $5.5724
======= ======== =======
Capital shares outstanding 76,588,966 47,920,179 580,246
Capital shares authorized 100,000,000 100,000,000 100,000,000
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
(Unaudited)
International Small Cap Balanced
Portfolio Portfolio Portfolio
Assets ------------ ------------ -----------
Investment securities--at
value (Notes 1 and 3) $107,182,763 $120,172,388 $54,430,328
Cash ................. --- 625 3,737
Receivables:
Investment securities
sold ............... --- 98,747 ---
Fund shares sold ..... 248,234 216,150 244,991
Dividends and interest 389,248 62,072 353,313
Prepaid insurance
premium .............. --- --- ---
Other ................. --- --- ---
------------ ----------- ----------
Total assets ....... 107,820,245 120,549,982 55,032,369
Liabilities ------------ ------------ -----------
Payable for investment
securities purchased . 3,884,460 1,648,100 467,950
Payable to Fund
shareholders ......... 15,677 25,345 22,226
Accrued accounting
services fee (Note 2). 3,333 3,333 2,500
Accrued management
fee (Note 2) ......... 2,260 2,751 887
Dividends payable ...... --- --- ---
Due to custodian ...... 22,723 --- ---
Other ................. 42,634 973 352
------------ ------------ -----------
Total liabilities .. 3,971,087 1,680,502 493,915
------------ ------------ -----------
Total net assets .. $103,849,158 $118,869,480 $54,538,454
Net Assets ============ ============ ===========
$0.01 par value capital stock
Capital stock ........ $ 152,436 $ 132,795 $ 80,202
Additional paid-in
capital ............ 82,761,773 97,252,927 46,393,517
Accumulated undistributed gain (loss):
Accumulated undistributed
net investment income 604,188 47,431 788,059
Accumulated undistributed
net realized gain (loss)
on investment
transactions ....... 7,920,891 9,896,301 927,074
Net unrealized appreciation
of investments ..... 12,409,870 11,540,026 6,349,602
------------ ------------ -----------
Net assets applicable to
outstanding units
of capital ........ $103,849,158 $118,869,480 $54,538,454
============ ============ ===========
Net asset value, redemption
and offering price per share $6.8126 $8.9513 $6.8002
======= ======== =======
Capital shares outstanding 15,243,592 13,279,530 8,020,174
Capital shares authorized 100,000,000 100,000,000 50,000,000
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
(Unaudited)
Asset
Strategy Money Market Limited-Term
Portfolio Portfolio Bond Portfolio
Assets ------------- ------------ -----------
Investment securities--at
value (Notes 1 and 3) $9,125,371 $38,254,399 $4,070,912
Cash ................. 4,276 2,117 2,622
Receivables:
Investment securities
sold ............... 375,779 --- ---
Fund shares sold ..... 5,790 3,346,153 5,635
Dividends and interest 51,593 275,781 67,748
Prepaid insurance
premium .............. --- 603 ---
Other ................. --- --- ---
---------- ----------- ----------
Total assets ....... 9,562,809 41,879,053 4,146,917
Liabilities ---------- ----------- ----------
Payable for investment
securities purchased . 532,408 --- ---
Payable to Fund
shareholders ......... 1,172 3,087,102 203
Accrued accounting
services fee (Note 2). --- 1,667 ---
Accrued management
fee (Note 2) ......... 197 524 62
Dividends payable ..... --- 15,955 ---
Due to custodian ...... --- --- ---
Other ................. 449 447 147
---------- ----------- ----------
Total liabilities .. 534,226 3,105,695 412
---------- ----------- ----------
Total net assets .. $9,028,583 $38,773,358 $4,146,505
Net Assets ========== =========== ==========
$0.01 par value capital stock
Capital stock ........ $ 16,434 $ 387,734 $ 7,829
Additional paid-in
capital ............ 8,316,095 38,385,624 4,012,942
Accumulated undistributed gain (loss):
Accumulated undistributed
net investment income 147,212 --- 112,387
Accumulated undistributed
net realized gain (loss)
on investment
transactions ....... 18,462 --- (3,449)
Net unrealized appreciation
of investments ..... 530,380 --- 16,796
---------- ----------- ----------
Net assets applicable to
outstanding units
of capital ........ $9,028,583 $38,773,358 $4,146,505
========== =========== ==========
Net asset value, redemption
and offering price per share $5.4939 $1.0000 $5.2961
======= ======== =======
Capital shares outstanding 1,643,371 38,773,358 782,938
Capital shares authorized 100,000,000 100,000,000 50,000,000
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
(Unaudited)
Bond High Income
Portfolio Portfolio
Assets ------------- -------------
Investment securities--at
value (Notes 1 and 3) $90,489,637 $105,926,622
Cash ................. 3,898 6,202
Receivables:
Investment securities
sold ............... --- 2,005,000
Fund shares sold ..... 83,109 371,460
Dividends and interest 1,366,216 2,210,482
Prepaid insurance
premium .............. 401 581
Other ................. --- ---
----------- ------------
Total assets ....... 91,943,261 110,520,347
Liabilities ----------- ------------
Payable for investment
securities purchased . --- 4,050,020
Payable to Fund
shareholders ......... 11,627 17,575
Accrued accounting
services fee (Note 2). 2,500 3,333
Accrued management
fee (Note 2) ......... 1,324 1,878
Dividends payable ..... --- ---
Due to custodian ...... --- ---
Other ................. 514 20,426
----------- ------------
Total liabilities .. 15,965 4,093,232
----------- ------------
Total net assets .. $91,927,296 $106,427,115
Net Assets =========== ============
$0.01 par value capital stock
Capital stock ........ $ 171,578 $ 218,963
Additional paid-in
capital ............ 90,119,363 97,421,537
Accumulated undistributed gain (loss):
Accumulated undistributed
net investment income 2,900,930 4,411,888
Accumulated undistributed
net realized gain (loss)
on investment
transactions ....... (2,622,804) (205,020)
Net unrealized appreciation
of investments ..... 1,358,229 4,579,747
----------- ------------
Net assets applicable to
outstanding units
of capital ........ $91,927,296 $106,427,115
=========== ============
Net asset value, redemption
and offering price per share $5.3578 $4.8605
======= =======
Capital shares outstanding 17,157,779 21,896,293
Capital shares authorized 100,000,000 100,000,000
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Period Ended JUNE 30, 1997
(Unaudited) Science and
Growth Income Technology
Portfolio Portfolio Portfolio
---------- ---------- ----------
Investment Income
Income (Note 1B):
Interest and
amortization ........ $ 848,527 $ 852,508 $ 17,972
Dividends ............ 3,872,632 3,214,335 182
----------- ----------- --------
Total income 4,721,159 4,066,843 18,154
----------- ----------- --------
Expenses (Note 2):
Investment management
fee ................ 1,923,068 1,771,958 3,196
Accounting services
fee ................ 32,500 30,833 ---
Custodian fees ....... 16,943 13,286 591
Audit fees ........... 6,890 7,191 ---
Legal fees ........... 5,867 5,409 231
Other ................ 13,700 12,092 (31)
----------- ----------- --------
Total expenses ..... 1,998,968 1,840,769 3,987
----------- ----------- --------
Net investment income 2,722,191 2,226,074 14,167
----------- ----------- --------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net gain (loss)
on securities ........ 24,444,722 12,608,698 ---
Realized net gain (loss)
on foreign currency
transactions ......... (36,071) --- ---
----------- ----------- --------
Realized net gain (loss)
on investments ..... 24,408,651 12,608,698 ---
Unrealized appreciation
(depreciation) in value
of investments during
the period ........... 66,842,068 75,619,091 178,549
----------- ----------- --------
Net gain (loss) on
investments ....... 91,250,719 88,227,789 178,549
----------- ----------- --------
Net increase
in net assets
resulting from
operations ...... $93,972,910 $90,453,863 $192,716
=========== =========== ========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Period Ended JUNE 30, 1997
(Unaudited)
International Small Cap Balanced
Portfolio Portfolio Portfolio
---------- ---------- ----------
Investment Income
Income (Note 1B):
Interest and
amortization ........ $ 218,111 $ 480,537 $ 655,647
Dividends ............ 837,873 23,578 294,162
----------- ----------- ----------
Total income 1,055,984 504,115 949,809
----------- ----------- ----------
Expenses (Note 2):
Investment management
fee ................ 359,608 431,129 141,138
Accounting services
fee ................ 15,833 18,333 10,833
Custodian fees ....... 58,002 3,103 1,722
Audit fees ........... 7,333 5,980 6,037
Legal fees ........... 950 1,078 499
Other ................ 2,619 3,046 1,509
----------- ----------- ----------
Total expenses ..... 444,345 462,669 161,738
----------- ----------- ----------
Net investment income 611,639 41,446 788,071
----------- ----------- ----------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net gain (loss)
on securities ........ 9,169,193 9,896,301 927,074
Realized net gain (loss)
on foreign currency
transactions ......... (7,451) 5,985 (12)
----------- ----------- ----------
Realized net gain (loss)
on investments ..... 9,161,742 9,902,286 927,062
Unrealized appreciation
(depreciation) in value
of investments during
the period ........... 2,039,953 2,415,651 2,874,616
----------- ----------- ----------
Net gain (loss) on
investments ....... 11,201,695 12,317,937 3,801,678
----------- ----------- ----------
Net increase
in net assets
resulting from
operations ...... $11,813,334 $12,359,383 $4,589,749
=========== =========== ==========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Period Ended JUNE 30, 1997
(Unaudited)
Asset Strategy Money Market Limited-Term
Portfolio Portfolio Bond Portfolio
--------------- ---------- ----------
Investment Income
Income (Note 1B):
Interest and
amortization ........ $159,031 $1,031,055 $129,219
Dividends ............ 29,818 --- ---
-------- ---------- --------
Total income 188,849 1,031,055 129,219
-------- ---------- --------
Expenses (Note 2):
Investment management
fee ................ 33,683 92,312 10,548
Accounting services
fee ................ --- 10,000 ---
Custodian fees ....... 2,392 2,362 653
Audit fees ........... 5,493 3,564 4,892
Legal fees ........... 293 778 243
Other ................ 568 1,340 496
-------- ---------- --------
Total expenses ..... 42,429 110,356 16,832
-------- ---------- --------
Net investment income 146,420 920,699 112,387
-------- ---------- --------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net gain (loss)
on securities ........ 65,034 --- (3,449)
Realized net gain (loss)
on foreign currency
transactions ......... 792 --- ---
-------- ---------- --------
Realized net gain (loss)
on investments ..... 65,826 --- (3,449)
Unrealized appreciation
(depreciation) in value
of investments during
the period ........... 373,015 --- (8,557)
-------- ---------- --------
Net gain (loss) on
investments ....... 438,841 --- (12,006)
-------- ---------- --------
Net increase
in net assets
resulting from
operations ...... $585,261 $ 920,699 $100,381
======== ========== ========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Period Ended JUNE 30, 1997
(Unaudited)
Bond High Income
Portfolio Portfolio
------------- -------------
Increase (Decrease) in Net Assets
Income (Note 1B):
Interest and
amortization ........ $3,166,987 $4,701,001
Dividends ............ --- 67,443
---------- ----------
Total income 3,166,987 4,768,444
---------- ----------
Expenses (Note 2):
Investment management
fee ................ 238,539 323,802
Accounting services
fee ................ 15,000 18,333
Custodian fees ....... 2,588 3,514
Audit fees ........... 6,187 6,419
Legal fees ........... 968 1,065
Other ................ 2,775 3,423
---------- ----------
Total expenses ..... 266,057 356,556
---------- ----------
Net investment income 2,900,930 4,411,888
---------- ----------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net gain (loss)
on securities ........ (3,073) 32,496
Realized net gain (loss)
on foreign currency
transactions ......... --- ---
---------- ----------
Realized net gain (loss)
on investments ..... (3,073) 32,496
Unrealized appreciation
(depreciation) in value
of investments during
the period ........... (208,952) 1,695,045
---------- ----------
Net gain (loss) on
investments ....... (212,025) 1,727,541
---------- ----------
Net increase
in net assets
resulting from
operations ...... $2,688,905 $6,139,429
========== ==========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended JUNE 30, 1997
(Unaudited) Science and
Growth Income Technology
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment
income ............. $ 2,722,191 $ 2,226,074 $ 14,167
Realized net gain (loss)
on investments ..... 24,408,651 12,608,698 ---
Unrealized appreciation
(depreciation) ..... 66,842,068 75,619,091 178,549
------------ ------------ ----------
Net increase
in net assets
resulting from
operations......... 93,972,910 90,453,863 192,716
------------ ------------ ----------
Dividends to shareholders
from net investment
income (Note 1E)*..... --- --- ---
------------ ------------ ----------
--- --- ---
------------ ------------ ----------
Capital share
transactions** ....... 7,972,442 25,216,062 3,040,664
------------ ------------ ----------
Total increase
(decrease) ...... 101,945,352 115,669,925 3,233,380
Net Assets
Beginning of period ... 513,162,690 462,391,420 ---
------------ ------------ ----------
End of period ......... $615,108,042 $578,061,345 $3,233,380
============ ============ ==========
Undistributed net
investment income .. $2,686,120 $2,226,074 $14,167
========== ========== =======
*See "Financial Highlights" on pages 62 - 72.
**Shares issued from sale
of shares ............. 4,449,151 4,267,229 653,651
Shares issued from reinvest-
ment of dividends ..... --- --- ---
Shares redeemed ......... (3,361,723) (1,959,902) (73,405)
--------- --------- --------
Increase (decrease) in outstanding
capital shares ......... 1,087,428 2,307,327 580,246
========= ========= ========
Value issued from sale
of shares ............. $32,374,354 $46,633,262 $3,439,705
Value issued from reinvest-
ment of dividends ..... --- --- ---
Value redeemed .......... (24,401,912) (21,417,200) (399,041)
................. ----------- ----------- -----------
Increase (decrease) in
outstanding capital ... $ 7,972,442 $25,216,062 $3,040,664
=========== =========== ===========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended JUNE 30, 1997
(Unaudited)
International Small Cap Balanced
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment
income ............. $ 611,639 $ 41,446 $ 788,071
Realized net gain (loss)
on investments ..... 9,161,742 9,902,286 927,062
Unrealized appreciation
(depreciation) ..... 2,039,953 2,415,651 2,874,616
------------ ------------ -----------
Net increase
in net assets
resulting from
operations......... 11,813,334 12,359,383 4,589,749
------------ ------------ -----------
Dividends to shareholders
from net investment
income (Note 1E)*..... --- --- ---
------------ ------------ -----------
--- --- ---
------------ ------------ -----------
Capital share
transactions** ....... 12,186,371 9,101,807 7,521,647
------------ ------------ -----------
Total increase
(decrease) ...... 23,999,705 21,461,190 12,111,396
Net Assets
Beginning of period ... 79,849,453 97,408,290 42,427,058
------------ ------------ -----------
End of period ......... $103,849,158 $118,869,480 $54,538,454
============ ============ ===========
Undistributed net
investment income .. $604,188 $47,431 $788,059
======== ======= ========
*See "Financial Highlights" on pages 62 - 72.
**Shares issued from sale
of shares ............. 2,449,116 1,836,236 1,508,298
Shares issued from reinvest-
ment of dividends ..... --- --- ---
Shares redeemed ......... (515,955) (705,954) (334,819)
--------- --------- ---------
Increase (decrease) in outstanding
capital shares ......... 1,933,161 1,130,282 1,173,479
========= ========= =========
Value issued from sale
of shares ............. $15,451,869 $14,730,364 $9,675,702
Value issued from reinvest-
ment of dividends ..... --- --- ---
Value redeemed .......... (3,265,498) (5,628,557) (2,154,055)
................. ----------- ----------- -----------
Increase (decrease) in
outstanding capital ... $12,186,371 $ 9,101,807 $ 7,521,647
=========== =========== ===========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended JUNE 30, 1997
(Unaudited)
Asset Strategy Money Market Limited-Term
Portfolio Portfolio Bond Portfolio
-------------- ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment
income ............. $ 146,420 $ 920,699 $ 112,387
Realized net gain (loss)
on investments ..... 65,826 --- (3,449)
Unrealized appreciation
(depreciation) ..... 373,015 --- (8,557)
---------- ----------- ----------
Net increase
in net assets
resulting from
operations......... 585,261 920,699 100,381
---------- ----------- ----------
Dividends to shareholders
from net investment
income (Note 1E)*..... --- (920,699) ---
---------- ----------- ----------
--- (920,699) ---
---------- ----------- ----------
Capital share
transactions** ....... (30,876) 1,515,756 330,700
---------- ----------- ----------
Total increase
(decrease) ...... 554,385 1,515,756 431,081
Net Assets
Beginning of period ... 8,474,198 37,257,602 3,715,424
---------- ----------- ----------
End of period ......... $9,028,583 $38,773,358 $4,146,505
========== =========== ==========
Undistributed net
investment income .. $147,212 $--- $112,387
======== ==== ========
*See "Financial Highlights" on pages 62 - 72.
**Shares issued from sale
of shares ............. 165,493 96,311,750 90,010
Shares issued from reinvest-
ment of dividends ..... --- 920,699 ---
Shares redeemed ......... (172,634) (95,716,693) (26,572)
------- ---------- ------
Increase (decrease) in outstanding
capital shares ......... (7,141) 1,515,756 63,438
======= ========== ======
Value issued from sale
of shares ............. $846,639 $96,311,750 $469,165
Value issued from reinvest-
ment of dividends ..... --- 920,699 ---
Value redeemed .......... (877,515) (95,716,693) (138,465)
................. -------- ----------- --------
Increase (decrease) in
outstanding capital ... ($ 30,876) $ 1,515,756 $330,700
======== =========== ========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended JUNE 30, 1997
(Unaudited)
Bond High Income
Portfolio Portfolio
----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment
income ............. $2,900,930 $4,411,888
Realized net gain (loss)
on investments ..... (3,073) 32,496
Unrealized appreciation
(depreciation) ..... (208,952) 1,695,045
----------- ------------
Net increase
in net assets
resulting from
operations......... 2,688,905 6,139,429
----------- ------------
Dividends to shareholders
from net investment
income (Note 1E)*..... --- ---
----------- ------------
--- ---
----------- ------------
Capital share
transactions** ....... (3,128,395) 2,881,615
----------- ------------
Total increase
(decrease) ...... (439,490) 9,021,044
Net Assets
Beginning of period ... 92,366,786 97,406,071
----------- ------------
End of period ......... $91,927,296 $106,427,115
=========== ============
Undistributed net
investment income .. $2,900,930 $4,411,888
========== ==========
*See "Financial Highlights" on pages 62 - 72.
**Shares issued from sale
of shares ............. 851,086 1,842,848
Shares issued from reinvest-
ment of dividends ..... --- ---
Shares redeemed ......... (1,454,754) (1,237,393)
--------- ---------
Increase (decrease) in outstanding
capital shares ......... (603,668) 605,455
========= =========
Value issued from sale
of shares ............. $4,462,626 8,668,438
Value issued from reinvest-
ment of dividends ...... --- ---
Value redeemed .......... (7,591,021) (5,786,823)
................. ----------- ----------
Increase (decrease) in
outstanding capital ... ($3,128,395) $2,881,615
=========== ==========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal Year Ended DECEMBER 31, 1996
Growth Income International
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase in Net Assets
Operations:
Net investment
income ............. $ 6,619,255 $ 3,809,484 $ 909,905
Realized net gain (loss)
on investments ..... 51,961,378 7,401,806 (1,037,336)
Unrealized appreciation
(depreciation) ..... (3,365,641) 60,154,057 9,364,785
------------ ------------ -----------
Net increase
in net assets
resulting from
operations......... 55,214,992 71,365,347 9,237,354
------------ ------------ -----------
Distributions to shareholders (Note 1E):*
From net investment
income ............. (6,621,032) (3,809,484) (845,962)
From realized gains
on securities
transactions ....... (51,959,601) (7,400,042) (169,132)
In excess of realized
gains .............. --- --- ---
------------ ------------ -----------
(58,580,633) (11,209,526) (1,015,094)
------------ ------------ -----------
Capital share
transactions** ....... 97,702,647 71,041,567 21,430,848
------------ ------------ -----------
Total increase .... 94,337,006 131,197,388 29,653,108
Net Assets
Beginning of period ... 418,825,684 331,194,032 50,196,345
------------ ------------ -----------
End of period ......... $513,162,690 $462,391,420 $79,849,453
============ ============ ===========
Undistributed net
investment income .. $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages 62 - 72.
**Shares issued from sale
of shares ............. 10,798,375 9,532,901 4,545,608
Shares issued from reinvest-
ment of dividends and/or
distributions .......... 8,618,982 1,105,770 169,211
Shares redeemed ......... (5,273,088) (3,201,312) (913,129)
---------- --------- ---------
Increase in outstanding
capital shares ......... 14,144,269 7,437,359 3,801,690
========== ========= =========
Value issued from sale
of shares ............. $76,770,633 $90,220,484 $25,545,695
Value issued from reinvest-
ment of dividends and/or
distributions .......... 58,580,633 11,209,526 1,015,094
Value redeemed .......... (37,648,619) (30,388,443) (5,129,941)
................. ----------- ----------- -----------
Increase in
outstanding capital ... $97,702,647 $71,041,567 $21,430,848
=========== =========== ===========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal Year Ended DECEMBER 31, 1996
Small Cap Balanced Asset Strategy
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase in Net Assets
Operations:
Net investment
income ............. $ 198,002 $ 1,028,296 $ 289,259
Realized net gain (loss)
on investments ..... 3,641,030 1,316,721 (46,700)
Unrealized appreciation
(depreciation) ..... 172,785 1,209,473 211,346
----------- ----------- ----------
Net increase
in net assets
resulting from
operations......... 4,011,817 3,554,490 453,905
----------- ----------- ----------
Distributions to shareholders (Note 1E):*
From net investment
income ............. (198,002) (1,029,586) (289,131)
From realized gains
on securities
transactions ....... (3,641,030) --- ---
In excess of realized
gains .............. --- (1,315,431) ---
----------- ----------- ----------
(3,839,032) (2,345,017) (289,131)
----------- ----------- ----------
Capital share
transactions** ....... 41,644,058 17,614,713 3,965,482
----------- ----------- ----------
Total increase .... 41,816,843 18,824,186 4,130,256
Net Assets
Beginning of period ... 55,591,447 23,602,872 4,343,942
----------- ----------- ----------
End of period ......... $97,408,290 $42,427,058 $8,474,198
=========== =========== ==========
Undistributed net
investment income . $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages 62 - 72.
**Shares issued from sale
of shares ............. 5,458,630 2,884,829 1,038,946
Shares issued from reinvest-
ment of dividends and/or
distributions .......... 478,826 378,430 56,314
Shares redeemed ......... (1,014,254) (417,037) (311,169)
--------- --------- ---------
Increase in outstanding
capital shares ......... 4,923,202 2,846,222 784,091
========= ========= =========
Value issued from sale
of shares ............. $46,147,982 $17,870,938 $5,287,460
Value issued from reinvest-
ment of dividends and/or
distributions .......... 3,839,032 2,345,016 289,131
Value redeemed .......... (8,342,956) (2,601,241) (1,611,109)
----------- ----------- ----------
Increase in
outstanding capital ... $41,644,058 $17,614,713 $3,965,482
=========== =========== ==========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal Year Ended DECEMBER 31, 1996
Money Market Limited-Term Bond
Portfolio Bond Portfolio Portfolio
-------------- ----------- -----------
Increase in Net Assets
Operations:
Net investment
income ............. $ 1,758,102 $ 193,799 $ 5,629,686
Realized net gain (loss)
on investments ..... --- 848 33,713
Unrealized appreciation
(depreciation) ..... --- (66,484) (2,694,467)
----------- ---------- -----------
Net increase
in net assets
resulting from
operations......... 1,758,102 128,163 2,968,932
----------- ---------- -----------
Distributions to shareholders (Note 1E):*
From net investment
income ............. (1,758,102) (193,799) (5,680,095)
From realized gains
on securities
transactions ....... --- (848) ---
In excess of realized
gains .............. --- --- ---
----------- ---------- -----------
(1,758,102) (194,647) (5,680,095)
----------- ---------- -----------
Capital share
transactions** ....... 385,358 928,429 6,508,442
----------- ---------- -----------
Total increase .... 385,358 861,945 3,797,279
Net Assets
Beginning of period ... 36,872,244 2,853,479 88,569,507
----------- ---------- -----------
End of period ......... $37,257,602 $3,715,424 $92,366,786
=========== ========== ===========
Undistributed net
investment income .. $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages 62 - 72.
**Shares issued from sale
of shares ............. 217,565,342 223,662 2,284,864
Shares issued from reinvest-
ment of dividends and/or
distributions .......... 1,758,186 37,694 1,092,242
Shares redeemed ......... (218,938,170) (85,156) (2,142,176)
----------- ------- ---------
Increase in outstanding
capital shares ......... 385,358 176,200 1,234,930
=========== ======= =========
Value issued from sale
of shares ............. $217,565,342 $1,180,216 $12,180,349
Value issued from reinvest-
ment of dividends and/or
distributions .......... 1,758,186 194,647 5,680,095
Value redeemed .......... (218,938,170) (446,434) (11,352,002)
------------ ---------- -----------
Increase in
outstanding capital ... $ 385,358 $ 928,429 $ 6,508,442
============ ========== ===========
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal Year Ended DECEMBER 31, 1996
High Income
Portfolio
-----------
Increase in Net Assets
Operations:
Net investment
income ............. $ 8,219,559
Realized net gain (loss)
on investments ..... 2,951,518
Unrealized appreciation
(depreciation) ..... (486,973)
----------
Net increase
in net assets
resulting from
operations......... 10,684,104
----------
Distributions to shareholders (Note 1E):*
From net investment
income ............. (8,219,559)
From realized gains
on securities
transactions ....... ---
In excess of realized
gains .............. ---
-----------
(8,219,559)
-----------
Capital share
transactions** ....... 8,255,333
-----------
Total increase .... 10,719,878
Net Assets
Beginning of period ... 86,686,193
-----------
End of period ......... $97,406,071
===========
Undistributed net
investment income .. $---
====
*See "Financial Highlights" on pages 62 - 72.
**Shares issued from sale
of shares ............. 2,475,713
Shares issued from reinvest-
ment of dividends and/or
distributions .......... 1,796,625
Shares redeemed ......... (2,484,538)
---------
Increase in outstanding
capital shares ......... 1,787,800
=========
Value issued from sale
of shares ............. $11,575,727
Value issued from reinvest-
ment of dividends and/or
distributions .......... 8,219,560
Value redeemed .......... (11,539,954)
-----------
Increase in
outstanding capital ... $ 8,255,333
===========
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 -----------------------------------------
6/30/97 1996 1995 1994 1993 1992
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $6.7967 $6.8260 $5.8986 $6.1962 $6.1505 $5.5973
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0355 0.0990 0.0903 0.1211 0.0537 0.1013
Net realized and
unrealized gain
on investments .. 1.1991 0.7478 2.1842 0.0268 0.8087 1.0653
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 1.2346 0.8468 2.2745 0.1479 0.8624 1.1666
------- ------- ------- ------- ------- -------
Less distributions:
From net
investment
income .......... (0.0000) (0.0990)(0.0903) (0.1211)(0.0537) (0.1013)
From capital
gains ........... (0.0000) (0.7771)(1.2568) (0.3244)(0.7569) (0.5121)
In excess of
capital gains ... (0.0000) (0.0000)(0.0000) (0.0000)(0.0061) (0.0000)
------- ------- ------- ------- ------- -------
Total distributions. (0.0000) (0.8761)(1.3471) (0.4455)(0.8167) (0.6134)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $8.0313 $6.7967 $6.8260 $5.8986 $6.1962 $6.1505
======= ======= ======= ======= ======= =======
Total return ....... 18.17% 12.40% 38.57% 2.39% 14.02% 20.84%
Net assets, end of
period (000
omitted) .........$615,108$513,163$418,826 $276,737$220,590 $122,363
Ratio of expenses
to average net
assets ............ 0.73%* 0.73% 0.75% 0.77% 0.78% 0.80%
Ratio of net investment
income to average
net assets ....... 0.99%* 1.44% 1.35% 2.07% 1.01% 2.00%
Portfolio turnover
rate ............. 99.20% 243.00% 245.80% 277.36% 297.81% 225.87%
Average commission
rate paid ........ $0.0595 $0.0572
*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 -----------------------------------------
6/30/97 1996 1995 1994 1993 1992
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $10.1373 $ 8.6756 $6.7689 $6.9180 $5.9530 $5.3158
-------- -------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0465 0.0856 0.0839 0.0703 0.0651 0.0803
Net realized and
unrealized gain (loss)
on investments .. 1.8792 1.6280 2.0525 (0.1491) 0.9650 0.6496
-------- -------- ------- ------- ------- -------
Total from investment
operations ....... 1.9257 1.7136 2.1364 (0.0788) 1.0301 0.7299
-------- -------- ------- ------- ------- -------
Less distributions:
From net
investment
income .......... (0.0000) (0.0856)(0.0839) (0.0703)(0.0651) (0.0803)
From capital
gains............ (0.0000) (0.1663)(0.1457) (0.0000)(0.0000) (0.0124)
In excess of
capital gains (0.0000) (0.0000)(0.0001) (0.0000)(0.0000) (0.0000)
-------- -------- ------- ------- ------- -------
Total distributions. (0.0000) (0.2519)(0.2297) (0.0703)(0.0651) (0.0927)
-------- -------- ------- ------- ------- -------
Net asset value,
end of period .... $12.0630 $10.1373 $8.6756 $6.7689 $6.9180 $5.9530
======== ======== ======= ======= ======= =======
Total return........ 19.00% 19.75% 31.56% -1.14% 17.30% 13.78%
Net assets, end of
period (000
omitted) .........$578,061$462,391$331,194 $218,774$155,092 $65,027
Ratio of expenses
to average net
assets ............ 0.73%* 0.73% 0.77% 0.77% 0.79% 0.85%
Ratio of net investment
income to average
net assets ....... 0.88%* 0.97% 1.13% 1.16% 1.36% 1.78%
Portfolio turnover
rate ............. 12.11% 22.95% 15.00% 23.32% 18.38% 15.74%
Average commission
rate paid ........ $0.0585 $0.0586
*Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE SCIENCE AND TECHNOLOGY PORTFOLIO
For a Share of Capital Stock Outstanding Throughout The Period:
(Unaudited)
For the
period
ended
6/30/97*
----------
Net asset value,
beginning of
period ........... $5.0000
-------
Income from investment
operations:
Net investment
income .......... 0.0244
Net realized and
unrealized gain
on investments .. 0.5480
-------
Total from investment
operations ....... 0.5724
-------
Less distributions:
From net
investment
income .......... (0.0000)
From capital
gains............ (0.0000)
-------
Total distributions (0.0000)
-------
Net asset value,
end of period .... $5.5724
=======
Total return........ 11.45%
Net assets, end of
period (000
omitted) ......... $3,233
Ratio of expenses
to average net
assets ............ 0.87%
Ratio of net investment
income to average
net assets ....... 3.09%
Portfolio turnover
rate ............. 0.00%
Average commission
rate paid ........ $0.0339
*The Science and Technology Portfolio's inception date is March 13, 1997;
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 April
4, 1997 (initial offering) through June 30, 1997. Ratios have been
annualized.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE INTERNATIONAL PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
(Unaudited)
For the For the fiscal year ended For the
six months December 31, period
ended ------------------------ ended
6/30/97 1996 1995 12/31/94*
------ ------- -------- ----------
Net asset value,
beginning of
period ........... $5.9990 $5.2790 $4.9926 $5.0000
------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0401 0.0644 0.0846 0.0207
Net realized and
unrealized gain (loss)
on investments... 0.7735 0.7329 0.2790 (0.0074)
------- ------- ------- -------
Total from investment
operations ....... 0.8136 0.7973 0.3636 0.0133
------- ------- ------- -------
Less distributions:
From net
investment
income .......... (0.0000) (0.0644) (0.0772) (0.0207)
From capital
gains ........... (0.0000) (0.0129) (0.0000) (0.0000)
------- ------- ------- -------
Total distributions. (0.0000) (0.0773) (0.0772) (0.0207)
------- ------- ------- -------
Net asset value,
end of period .... $6.8126 $5.9990 $5.2790 $4.9926
======= ======= ======= =======
Total return........ 13.56% 15.11% 7.28% 0.26%
Net assets, end of
period (000
omitted) .........$103,849 $79,849 $50,196 $26,020
Ratio of expenses
to average net
assets ............ 0.99%** 1.00% 1.02% 1.26%
Ratio of net investment
income to average
net assets ....... 1.36%** 1.42% 1.99% 1.36%
Portfolio turnover
rate ............. 50.18% 75.01% 34.93% 23.23%
Average commission
rate paid ........ $0.0102 $0.0217
*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 fiscal year ended For the
six months December 31, period
ended-------------------------- ended
6/30/97 1996 1995 12/31/94*
------- -------- -------- ----------
Net asset value,
beginning of
period ........... $8.0176 $7.6932 $5.9918 $5.0000
------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0031 0.0170 0.0900 0.0376
Net realized and
unrealized gain
on investments .. 0.9306 0.6367 1.8470 1.0086
------- ------- ------- -------
Total from investment
operations ....... 0.9337 0.6537 1.9370 1.0462
------- ------- ------- -------
Less distributions:
From net
investment income (0.0000) (0.0170) (0.0900) (0.0376)
From capital
gains............ (0.0000) (0.3123) (0.1456) (0.0168)
------- ------- ------- -------
Total distributions (0.0000) (0.3293) (0.2356) (0.0544)
------- ------- ------- -------
Net asset value,
end of period .... $8.9513 $8.0176 $7.6932 $5.9918
======= ======= ======= =======
Total return........ 11.65% 8.50% 32.32% 20.92%
Net assets, end of
period (000
omitted) .........$118,869 $97,408 $55,591 $16,080
Ratio of expenses
to average net
assets ............ 0.91%** 0.91% 0.96% 1.08%
Ratio of net investment
income to average
net assets ....... 0.08%** 0.25% 1.77% 2.35%
Portfolio turnover
rate ............. 106.14% 133.77% 43.27% 21.61%
Average commission
rate paid ........ $0.0495 $0.0448
*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 fiscal year ended For the
six months December 31, period
ended---------------------------- ended
6/30/97 1996 1995 12/31/94*
-------- -------- -------- ----------
Net asset value,
beginning of
period ........... $6.1967 $5.9000 $4.9359 $5.0000
------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0983 0.1594 0.1333 0.0460
Net realized and
unrealized gain (loss)
on investments .. 0.5052 0.5003 1.0611 (0.0641)
------- ------- ------- -------
Total from investment
operations ....... 0.6035 0.6597 1.1944 (0.0181)
------- ------- ------- -------
Less distributions:
From net
investment
income .......... (0.0000) (0.1594) (0.1333) (0.0460)
From capital
gains............ (0.0000) (0.2036) (0.0970) (0.0000)
------- ------- ------- -------
Total distributions (0.0000) (0.3630) (0.2303) (0.0460)
------- ------- ------- -------
Net asset value,
end of period .... $6.8002 $6.1967 $5.9000 $4.9359
======= ======= ======= =======
Total return........ 9.74% 11.19% 24.19% -0.37%
Net assets, end of period
(000 omitted) ....$54,538 $42,427 $23,603 $8,671
Ratio of expenses
to average net
assets ............ 0.69%** 0.70% 0.72% 0.95%
Ratio of net investment
income to average
net assets ....... 3.34%** 3.18% 3.22% 3.14%
Portfolio turnover
rate ............. 25.23% 44.23% 62.87% 19.74%
Average commission
rate paid ........ $0.0535 $0.0579
*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 For the
six months fiscal year period
ended ended ended
6/30/97 12/31/96 12/31/95*
--------- -------- ---------
Net asset value,
beginning of
period ........... $5.1343 $5.0137 $5.0000
------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0891 0.1814 0.0717
Net realized and
unrealized gain
on investments .. 0.2705 0.1206 0.0193
------- ------- -------
Total from investment
operations ....... 0.3596 0.3020 0.0910
------- ------- -------
Less distributions:
From net
investment
income .......... (0.0000) (0.1814) (0.0713)
From capital
gains............ (0.0000) (0.0000) (0.0060)
------- ------- -------
Total distributions (0.0000) (0.1814) (0.0773)
------- ------- -------
Net asset value,
end of period .... $5.4939 $5.1343 $5.0137
======= ======= =======
Total return........ 7.00% 6.05% 1.80%
Net assets, end of
period (000
omitted) ......... $9,029 $8,474 $4,344
Ratio of expenses
to average net
assets ............ 1.01%** 0.93% 0.91%
Ratio of net investment
income to average
net assets ....... 3.47%** 3.92% 4.42%
Portfolio turnover
rate ............. 123.14% 49.92% 149.17%
Average commission
rate paid ........ $0.0406 $0.0375
*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 -----------------------------------------
6/30/97 1996 1995 1994 1993 1992
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- -------
Net investment
income ........... 0.0247 0.0486 0.0542 0.0368 0.0260 0.0324
Less dividends
declared ......... (0.0247) (0.0486)(0.0542) (0.0368)(0.0260) (0.0324)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= =======
Total return ....... 2.49% 5.01% 5.56% 3.72% 2.63% 3.29%
Net assets, end of
period (000
omitted) .........$38,773 $37,258 $36,872 $30,812 $26,000 $23,995
Ratio of expenses
to average net
assets ............ 0.60%* 0.61% 0.62% 0.65% 0.65% 0.65%
Ratio of net investment
income to average
net assets ....... 4.98%* 4.87% 5.42% 3.72% 2.61% 3.17%
*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 fiscal year ended For the
six months December 31, period
ended --------------------------- ended
6/30/97 1996 1995 12/31/94*
--------- --------- --------- ----------
Net asset value,
beginning of
period ........... $5.1639 $5.2521 $4.8611 $5.0000
------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.1435 0.2842 0.2841 0.1507
Net realized and
unrealized gain (loss)
on investments .. (0.0113) (0.0870) 0.4122 (0.1375)
------- ------- ------- -------
Total from investment
operations ....... 0.1322 0.1972 0.6963 0.0132
------- ------- ------- -------
Less distributions:
From net
investment
income .......... (0.0000) (0.2842) (0.2841) (0.1507)
From capital
gains ........... (0.0000) (0.0012) (0.0212) (0.0014)
------- ------- ------- -------
Total distributions (0.0000) (0.2854) (0.3053) (0.1521)
------- ------- ------- -------
Net asset value,
end of period .... $5.2961 $5.1639 $5.2521 $4.8611
======= ======= ======= =======
Total return........ 2.56% 3.79% 14.29% 0.26%
Net assets, end of
period (000
omitted) ......... $4,147 $3,715 $2,853 $1,645
Ratio of expenses
to average net
assets ............ 0.88%** 0.76% 0.71% 0.93%
Ratio of net investment
income to average
net assets ....... 5.85%** 5.92% 6.22% 5.89%
Portfolio turnover
rate ............. 9.77% 15.81% 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 -----------------------------------------
6/30/97 1996 1995 1994 1993 1992
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $5.2004 $5.3592 $4.7393 $5.4045 $5.2626 $5.2661
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.1691 0.3407 0.3556 0.3507 0.3334 0.3643
Net realized and
unrealized gain
(loss) on
investments ..... (0.0117) (0.1588) 0.6202 (0.6652) 0.3046 0.0216
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 0.1574 0.1819 0.9758 (0.3145) 0.6380 0.3859
------- ------- ------- ------- ------- -------
Less distributions:
From net
investment
income .......... (0.0000) (0.3407)(0.3559) (0.3507)(0.3334) (0.3643)
From capital
gains ........... (0.0000) (0.0000)(0.0000) (0.0000)(0.1627) (0.0251)
------- ------- ------- ------- ------- -------
Total distributions. (0.0000) (0.3407)(0.3559) (0.3507)(0.4961) (0.3894)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $5.3578 $5.2004 $5.3592 $4.7393 $5.4045 $5.2626
======= ======= ======= ======= ======= =======
Total return ....... 3.03% 3.43% 20.56% -5.90% 12.37% 7.67%
Net assets, end of
period (000
omitted) .........$91,927 $92,367 $88,570 $74,017 $81,727 $49,428
Ratio of expenses
to average net
assets ............ 0.59%* 0.59% 0.60% 0.62% 0.62% 0.64%
Ratio of net investment
income to average
net assets ....... 6.43%* 6.39% 6.73% 6.73% 6.01% 6.91%
Portfolio turnover
rate ............. 14.53% 64.02% 71.17% 135.82% 68.75% 44.32%
*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 -----------------------------------------
6/30/97 1996 1995 1994 1993 1992
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $4.5750 $4.4448 $4.1118 $4.6373 $4.2886 $4.0770
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.2015 0.4216 0.4165 0.4106 0.3899 0.4050
Net realized and
unrealized gain
(loss) on
investments ..... 0.0840 0.1302 0.3330 (0.5255) 0.3487 0.2116
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 0.2855 0.5518 0.7495 (0.1149) 0.7386 0.6166
------- ------- ------- ------- ------- -------
Less dividends from
net investment
income ........... (0.0000) (0.4216)(0.4165) (0.4106)(0.3899) (0.4050)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $4.8605 $4.5750 $4.4448 $4.1118 $4.6373 $4.2886
======= ======= ======= ======= ======= =======
Total return ....... 6.24% 12.46% 18.19% -2.55% 17.90% 15.70%
Net assets, end of
period (000
omitted) .........$106,427 $97,406 $86,686 $72,644 $71,265 $41,456
Ratio of expenses
to average net
assets ............ 0.71%* 0.71% 0.72% 0.74% 0.75% 0.77%
Ratio of net investment
income to average
net assets ....... 8.84%* 9.10% 9.25% 9.03% 8.66% 9.48%
Portfolio turnover
rate ............. 29.89% 58.91% 41.78% 37.86% 54.22% 60.79%
*Annualized.
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
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 eleven classes that
are designated the Growth Portfolio, the Income Portfolio, the Science and
Technology 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 $77,534. 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; Science and Technology 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 $1.7 billion of combined net assets at June 30, 1997) 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 $27,661, which are included in other
expenses.
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, 1997
are summarized as follows:
Science and
Growth Income Technology
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $538,092,760 $81,861,735 $1,466,213
Purchases of U.S. Government
securities --- --- ---
Purchases of short-term
securities 297,010,986 175,855,245 83,360,212
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 521,375,120 57,908,500 ---
Proceeds from maturities
and sales of U.S.
Government securities --- --- ---
Proceeds from maturities
and sales of short-term
securities 296,976,722 174,868,917 81,847,000
International Small Cap Balanced
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $58,697,854 $104,046,986 $10,683,818
Purchases of U.S. Government
securities --- --- 4,159,077
Purchases of short-term
securities 59,334,049 126,437,589 30,063,336
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 42,015,310 93,046,452 8,175,456
Proceeds from maturities
and sales of U.S.
Government securities --- --- 2,050,313
Proceeds from maturities
and sales of short-term
securities 60,266,695 127,246,359 26,153,000
Limited-
Asset Strategy Term Bond Bond
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $9,632,410 $407,326 $7,599,527
Purchases of U.S. Government
securities --- 302,084 7,496,307
Purchases of short-term
securities 8,049,728 787,000 19,905,919
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 6,045,904 280,142 9,361,761
Proceeds from maturities
and sales of U.S.
Government securities 3,066,398 66,709 3,333,450
Proceeds from maturities
and sales of short-term
securities 8,274,814 701,000 22,562,682
High
Income
Portfolio
-----------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $37,714,878
Purchases of U.S. Government
securities ---
Purchases of short-term
securities 42,336,729
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 28,130,645
Proceeds from maturities
and sales of U.S.
Government securities ---
Proceeds from maturities
and sales of short-term
securities 43,873,568
For Federal income tax purposes, cost of investments owned at June 30,
1997, and the related unrealized appreciation (depreciation) were as
follows:
Aggregate
CostAppreciationDepreciationAppreciation
------------------------------------------------
Growth Portfolio $524,413,734$ 99,594,999$(2,810,838)$ 96,784,161
Income Portfolio 361,742,364 218,445,862 (2,322,429) 216,123,433
Science and Technology
Portfolio 2,979,998 219,046 (40,497) 178,549
International Portfolio94,764,414 16,375,651 (4,004,031) 12,371,620
Small Cap Portfolio 108,632,362 18,466,340 (6,926,314) 11,540,026
Balanced Portfolio 48,080,711 7,147,563 (797,946) 6,349,617
Asset Strategy Portfolio8,594,991 549,358 (18,978) 530,380
Money Market Portfolio 38,254,399 -- -- --
Limited-Term Bond Portfolio4,054,116 30,348 (13,552) 16,796
Bond Portfolio 89,131,408 1,768,556 (410,327) 1,358,229
High Income Portfolio 101,346,875 5,175,198 (595,451) 4,579,747
NOTE 4 -- Federal Income Tax Matters
The Fund's income and expenses attributed to each Portfolio and the
gains and losses on security transactions of each Portfolio have been
attributed to that Portfolio for Federal income tax purposes as well as
accounting purposes. For Federal income tax purposes, Growth, Income,
Balanced, and Limited-Term Bond Portfolios realized capital gain net income
of $51,622,358, $7,401,806, $1,315,431 and $848, respectively, during the
year ended December 31, 1996. For Federal income tax purposes, Small Cap
Portfolio realized capital gain net income of $8,896,601 for the year ended
December 31, 1996, which included the effect of certain losses deferred
into the next fiscal year (see discussion below). For Federal income tax
purposes, High Income Portfolio realized capital gain net income of
$2,951,518 for the year ended December 31, 1996, which was entirely offset
by utilization of capital loss carryforwards. Remaining prior year capital
loss carryforwards of High Income Portfolio aggregated $237,516 as of
December 31, 1996, and are available to offset future capital gain net
income through December 31, 2003. For Federal income tax purposes,
International Portfolio, Asset Strategy Portfolio and Bond Portfolio
realized capital losses of $1,145,948, $46,572 and $16,696, respectively,
during the year ended December 31, 1996. These amounts are available to
offset future realized capital gain net income through December 31, 2004.
In addition, prior year capital loss carryforwards of Bond Portfolio
aggregated $2,603,035 as of December 31, 1996, and are available to offset
future realized capital gain net income through December 31, 2002. The
capital gain net income of Growth, Income, Balanced and Limited-Term Bond
Portfolios was paid to shareholders during the year ended December 31,
1996. A portion of the capital gain net income of Small Cap Portfolio was
paid to shareholders during the period ended December 31, 1996. Remaining
capital gain net income will be distributed to shareholders.
Internal Revenue Code regulations permit each Portfolio to defer into
its next fiscal year net capital losses or net long-term capital losses
incurred between each November 1 and the end of its fiscal year ("post-
October losses"). From November 1, 1996 through December 31, 1996, Small
Cap Portfolio incurred net capital losses of $5,285,152, which have been
deferred to the calendar year ending December 31, 1997.
<PAGE>
DIRECTORS
Ronald K. Richey, Birmingham, Alabama, Chairman of the Board
Henry L. Bellmon, Red Rock, Oklahoma
Dodds I. Buchanan, Boulder, Colorado
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
William L. Rogers, Los Angeles, California
Frank J. Ross, Jr., 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
Michael L. Avery, Vice President
Daniel P. Becker, Vice President
James C. Cusser, Vice President
Abel Garcia, Vice President
Robert L. Hechler, Vice President
Henry J. Herrmann, Vice President
Theodore W. Howard, Vice President and Treasurer
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
Daniel J. Vrabac, Vice President
James D. Wineland, Vice President
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>
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.
SCIENCE AND TECHNOLOGY Portfolio
Objective: Long-term capital growth.
Invested in: Common stocks of companies whose products, processes or
services are expected to benefit from scientific or
technological discoveries or developments.
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(6-97)
printed on recycled paper
