TMK/UNITED FUNDS, INC.
SEMIANNUAL
REPORT
--------------------------------------
For the six months ended June 30, 1998
<PAGE>
- -----------------------------------------------------------------
JUNE 30, 1998
Dear Policyholder:
The accompanying report contains the financial statements of the TMK/United
Funds, Inc. for the fiscal period ended June 30, 1998. The assets of your
Advantage I or Advantage Plus (Variable Life) or Advantage II (Variable Annuity)
policy are invested in the investment portfolios of the TMK/United Funds, Inc.
according to the allocations you have made among the corresponding investment
divisions of United Investors Life's variable accounts.
As the value of your policy will vary in accordance with the investment
performance of these underlying portfolios, it is important that you review the
information contained in the report. In addition to the financial statements,
the report contains a brief discussion of each portfolio's objectives and
strategy, and a detailed schedule of the investments held at June 30, 1998.
If your state has approved our fixed account and if the assets of your policy
have been allocated to the fixed account, the results of such allocation will be
reflected in your policy annual report which will be sent on your policy
anniversary.
Please do not hesitate to contact us or your sales representative if we may be
of service with regard to your Advantage policy.
Respectfully,
James L. Sedgwick
President, United Investors Life
<PAGE>
PRESIDENT'S LETTER
- -----------------------------------------------------------------
JUNE 30, 1998
Dear Policyholder:
As president of your Fund, I would like to thank you for your continued
confidence as an investor. From every area of Waddell & Reed, including your
personal financial advisor, our goal has been to provide the best service
possible to our shareholders.
While it is impossible to predict the future direction of the markets, there are
some basic principles that we stand by that can help investors achieve their
objectives:
. Develop a financial plan that helps you pinpoint your financial objectives,
and identify specific strategies for turning your dreams into reality. There
is no better way to plan for your future.
. Invest on a regular basis. It can be one of the best ways to invest long
term and provide a hedge against market volatility.
. Adopt a long-term view to take advantage of compounding. The key to
successful investing is time, not timing. The power of compounding is
awesome and, on a long-term basis, can overwhelm any nuances of timing.
. Review your financial plan regularly. Financial planning is an ongoing
process that requires periodic review.
Waddell & Reed is positioned to assist you as you work toward your financial
goals. We will continue to offer quality investment products and personal
service to make the financial planning and investment process convenient and
accessible to you. Our locally based financial advisors are ready to assist you
with your total financial plan to help you plan for your retirement, to help you
meet your education funding goals or to achieve other financial objectives.
We look forward to assisting you in the future. If you have any questions about
your account, wish to review your financial plan or have other financial issues
that are important to you, contact your financial advisor or your local Waddell
& Reed office.
Respectfully,
Robert L. Hechler
President
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS
Apparel and Accessory Stores - 5.89%
Abercrombie & Fitch Co., Class A* ...... 338,400 $ 14,847,300
Kohl's Corporation* .................... 280,000 14,525,000
Payless ShoeSource, Inc.* .............. 195,000 14,368,965
Total ................................. 43,741,265
Building Materials and Garden Supplies - 2.57%
Home Depot, Inc. (The) ................. 230,000 19,104,260
Business Services - 5.57%
BMC Software, Inc.* .................... 273,800 14,228,838
Microsoft Corporation* ................. 250,000 27,101,500
Total ................................. 41,330,338
Chemicals and Allied Products - 12.84%
Bristol-Myers Squibb Company ........... 138,600 15,930,268
Colgate-Palmolive Company .............. 197,000 17,348,214
Lilly (Eli) and Company ................ 70,000 4,628,750
Pfizer Inc. ............................ 131,000 14,237,997
Procter & Gamble Company (The) ......... 78,700 7,166,579
Schering-Plough Corporation ............ 187,200 17,152,200
Warner-Lambert Company ................. 271,700 18,849,188
Total ................................. 95,313,196
Communication - 3.62%
AT&T Corporation ....................... 159,200 9,094,300
Capstar Broadcasting Corporation,
Class A* .............................. 100,000 2,512,500
Clear Channel Communications, Inc.* .... 140,000 15,277,500
Total ................................. 26,884,300
Depository Institutions - 4.77%
BankAmerica Corporation ................ 165,400 14,296,680
Comerica Incorporated .................. 174,450 11,557,313
MBNA Corp. ............................. 289,000 9,537,000
Total ................................. 35,390,993
Electronic and Other Electric Equipment - 5.55%
Emerson Electric Co. ................... 101,900 6,152,212
General Electric Company ............... 174,500 15,879,500
Intel Corporation ...................... 89,300 6,616,505
Philips Electronics N.V., NY Shares .... 45,000 3,822,165
Telefonaktiebolaget LM Ericsson, ADR,
Class B ............................... 304,800 8,743,798
Total ................................. 41,214,180
Fabricated Metal Products - 1.33%
Illinois Tool Works, Inc. .............. 148,700 9,916,357
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS (Continued)
Food and Kindred Products - 3.93%
Coca-Cola Company (The) ................ 125,000 $ 10,687,500
PepsiCo, Inc. .......................... 264,900 10,910,436
Ralston-Ralston Purina Group ........... 64,800 7,569,418
Total ................................. 29,167,354
Furniture and Home Furnishings Stores - 1.06%
Williams-Sonoma, Inc.* ................. 247,000 7,857,564
General Merchandise Stores - 2.90%
Dollar General Corporation ............. 241,250 9,544,333
Wal-Mart Stores, Inc. .................. 197,200 11,979,900
Total ................................. 21,524,233
Health Services - 2.52%
Health Management Associates, Inc.,
Class A* .............................. 373,500 12,488,720
Tenet Healthcare Corporation* .......... 200,000 6,250,000
Total ................................. 18,738,720
Hotels and Other Lodging Places - 0.03%
Sun International Hotels, Ltd.* ........ 4,300 195,650
Industrial Machinery and Equipment - 7.74%
Applied Materials, Inc.* ............... 176,500 5,212,221
Cisco Systems, Inc.* ................... 200,950 18,506,088
EMC Corporation* ....................... 752,600 33,725,511
Total ................................. 57,443,820
Instruments and Related Products - 1.83%
Guidant Corporation .................... 128,000 9,127,936
Medtronic, Inc. ........................ 70,000 4,462,500
Total ................................. 13,590,436
Insurance Carriers - 5.40%
American International Group, Inc. ..... 97,800 14,278,800
MBIA Inc. .............................. 175,100 13,110,612
MGIC Investment Corporation ............ 222,200 12,679,176
Total ................................. 40,068,588
Miscellaneous Retail - 2.29%
Costco Companies, Inc.* ................ 100,000 6,306,200
Walgreen Co. ........................... 258,300 10,670,890
Total ................................. 16,977,090
Motion Pictures - 1.47%
Walt Disney Company (The) .............. 104,000 10,926,448
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS (Continued)
Nondepository Institutions - 6.29%
Capital One Financial Corp. ............ 65,100 $ 8,084,574
Fannie Mae ............................. 403,600 24,518,700
Freddie Mac ............................ 300,000 14,118,600
Total ................................. 46,721,874
Petroleum and Coal Products - 2.36%
Exxon Corporation ...................... 147,000 10,482,864
Royal Dutch Petroleum Company .......... 128,900 7,065,267
Total ................................. 17,548,131
Printing and Publishing - 2.61%
Gannett Co., Inc. ...................... 151,400 10,758,787
Tribune Company ........................ 125,400 8,629,025
Total ................................. 19,387,812
Security and Commodity Brokers - 1.46%
Franklin Resources, Inc. ............... 200,400 10,821,600
Transportation Equipment - 3.30%
Harley-Davidson, Inc. .................. 631,800 24,482,250
Transportation Services - 0.58%
Dial Corporation (The) ................. 165,800 4,310,800
Water Transportation - 2.96%
Carnival Corporation, Class A .......... 555,600 22,015,650
Wholesale Trade -- Durable Goods - 1.19%
Johnson & Johnson ...................... 120,200 8,864,750
Wholesale Trade -- Nondurable Goods - 1.59%
Unilever N.V., N Y Shares .............. 149,200 11,777,400
TOTAL COMMON STOCKS - 93.65% $695,315,059
(Cost: $510,728,536)
PREFERRED STOCK - 0.34%
Holding and Other Investment Offices
LTC Properties, Inc., 9.5% ............. 100,000 $ 2,531,200
(Cost: $2,500,000)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITY - 0.26%
Business Services
Adaptec Inc., Convertible,
4.75%, 2-1-2004 (A) ................... $2,500 $ 1,962,500
(Cost: $2,495,827)
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1998
Value
TOTAL SHORT-TERM SECURITIES - 6.69% $ 49,654,154
(Cost: $49,654,154)
TOTAL INVESTMENT SECURITIES - 100.94% $749,462,913
(Cost: $565,378,517)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.94%) (6,981,882)
NET ASSETS - 100.00% $742,481,031
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS
Apparel and Accessory Stores - 1.14%
Gap, Inc. (The) ........................ 137,800 $ 8,491,925
Building Materials and Garden Supplies - 0.55%
Home Depot, Inc. (The) ................. 49,300 4,094,957
Business Services - 2.19%
ABM Industries Incorporated ............ 63,000 1,756,125
BMC Software, Inc.* .................... 103,900 5,399,475
Microsoft Corporation* ................. 85,100 9,225,351
Total ................................. 16,380,951
Chemicals and Allied Products - 12.78%
Air Products and Chemicals, Inc. ....... 101,900 4,076,000
Colgate-Palmolive Company .............. 57,200 5,037,147
Dow Chemical Company (The) ............. 8,500 821,840
du Pont (E.I.) de Nemours and Company .. 114,300 8,529,638
Gillette Company (The) ................. 251,622 14,263,696
Lilly (Eli) and Company ................ 116,200 7,683,725
Monsanto Company ....................... 156,300 8,733,263
Novartis, AG (B) ....................... 3,850 6,417,090
PPG Industries, Inc. ................... 93,600 6,511,003
Pfizer Inc. ............................ 90,300 9,814,436
Procter & Gamble Company (The) ......... 56,500 5,145,003
Solutia Inc. ........................... 12,840 368,341
Warner-Lambert Company ................. 263,400 18,273,375
Total ................................. 95,674,557
Communication - 3.34%
AirTouch Communications* ............... 86,600 5,033,625
Clear Channel Communications, Inc.* .... 38,700 4,223,137
Cox Communications, Inc., Class A* ..... 159,400 7,720,858
SBC Communications Inc. ................ 80,600 3,224,000
WorldCom, Inc.* ........................ 99,100 4,790,791
Total ................................. 24,992,411
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS (Continued)
Depository Institutions - 3.72%
BankAmerica Corporation ................ 43,900 $ 3,794,584
Chase Manhattan Corporation (The) ...... 96,600 7,293,300
Citicorp ............................... 22,600 3,373,050
Credit Suisse Group, Registered
Shares (B)............................. 20,700 4,613,518
Norwest Corporation .................... 94,600 3,535,675
U. S. Bancorp. ......................... 122,400 5,263,200
Total ................................. 27,873,327
Electric, Gas and Sanitary Services - 0.96%
Duke Energy Corp. ...................... 120,600 7,145,550
Electronic and Other Electric Equipment - 6.48%
Emerson Electric Co. ................... 65,200 3,936,450
General Electric Company ............... 151,800 13,813,800
General Instrument Corporation* ........ 216,200 5,864,425
Intel Corporation ...................... 164,900 12,217,936
Lucent Technologies Inc. ............... 30,900 2,570,478
Maytag Corporation ..................... 98,000 4,838,750
Telefonaktiebolaget LM Ericsson, ADR,
Class B ............................... 182,700 5,241,115
Total ................................. 48,482,954
Food and Kindred Products - 2.13%
Bestfoods .............................. 131,800 7,652,572
Coca-Cola Company (The) ................ 52,400 4,480,200
Panamerican Beverages Inc., Class A .... 23,700 748,019
PepsiCo, Inc. .......................... 74,500 3,068,431
Total ................................. 15,949,222
Food Stores - 2.04%
Kroger Co. (The)* ...................... 169,300 7,258,738
Safeway Inc.* .......................... 196,400 7,990,927
Total ................................. 15,249,665
Furniture and Fixtures - 0.44%
Lear Corporation* ...................... 63,700 3,268,574
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS (Continued)
General Merchandise Stores - 3.07%
Dayton Hudson Corporation .............. 151,800 $ 7,362,300
Federated Department Stores, Inc.* ..... 70,700 3,804,508
Wal-Mart Stores, Inc. .................. 194,000 11,785,500
Total ................................. 22,952,308
Health Services - 0.54%
Tenet Healthcare Corporation* .......... 128,600 4,018,750
Industrial Machinery and Equipment - 4.56%
Baker Hughes Incorporated .............. 147,300 5,090,982
Case Corporation ....................... 146,200 7,054,150
Caterpillar Inc. ....................... 69,000 3,648,375
Cisco Systems, Inc.* ................... 63,900 5,884,743
Deere & Company ........................ 93,200 4,927,950
International Business Machines
Corporation ........................... 54,400 6,245,773
Parker Hannifin Corporation ............ 33,050 1,260,031
Total ................................. 34,112,004
Instruments and Related Products - 3.83%
General Motors Corporation, Class H .... 63,400 2,987,725
Guidant Corporation .................... 111,600 7,958,419
Medtronic, Inc. ........................ 68,600 4,373,250
Raytheon Company, Class A .............. 42,753 2,463,642
Xerox Corporation ...................... 107,000 10,873,875
Total ................................. 28,656,911
Insurance Carriers - 2.08%
American International Group, Inc. .... 59,800 8,730,800
MGIC Investment Corporation ............ 119,500 6,818,909
Total ................................. 15,549,709
Miscellaneous Manufacturing Industries - 0.40%
Tyco International Ltd. ................ 48,000 3,024,000
Miscellaneous Retail - 0.63%
Costco Companies, Inc.* ................ 74,400 4,691,813
Motion Pictures - 0.89%
Time Warner Incorporated ............... 48,900 4,177,869
Walt Disney Company (The) .............. 23,900 2,510,982
Total ................................. 6,688,851
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS (Continued)
Nondepository Institutions - 4.16%
Associates First Capital Corporation,
Class A ............................... 73,110 $ 5,620,331
Fannie Mae ............................. 163,400 9,926,550
Freddie Mac ............................ 253,600 11,934,923
Household International, Inc.* ......... 73,200 3,650,850
Total ................................. 31,132,654
Oil and Gas Extraction - 0.49%
Schlumberger Limited ................... 53,700 3,668,354
Paper and Allied Products - 0.98%
Champion International Corporation ..... 47,400 2,331,464
International Paper Company ............ 55,600 2,390,800
Willamette Industries, Inc. ............ 81,200 2,598,400
Total ................................. 7,320,664
Petroleum and Coal Products - 2.89%
British Petroleum Company p.l.c.
(The), ADR ............................ 37,400 3,300,550
Chevron Corporation .................... 44,000 3,654,728
Exxon Corporation ...................... 48,100 3,430,107
Mobil Corporation ...................... 72,200 5,532,325
Royal Dutch Petroleum Company .......... 104,800 5,744,298
Total ................................. 21,662,008
Primary Metal Industries - 0.49%
Aluminum Company of America ............ 56,000 3,692,472
Railroad Transportation - 0.40%
Burlington Northern Santa Fe Corporation 30,700 3,018,179
Rubber and Miscellaneous Plastics Products - 0.21%
Goodyear Tire & Rubber Company (The) ... 23,900 1,540,044
Transportation By Air - 1.30%
AMR Corporation* ....................... 65,200 5,427,900
Delta Air Lines, Inc. .................. 33,500 4,329,875
Total ................................. 9,757,775
Transportation Equipment - 4.29%
AlliedSignal Inc. ...................... 79,600 3,532,250
Chrysler Corporation ................... 112,100 6,319,638
Dana Corporation ....................... 62,000 3,317,000
Ford Motor Company ..................... 98,100 5,787,900
General Motors Corporation ............. 76,000 5,077,712
Northrop Grumman Corporation ........... 78,300 8,074,687
Total ................................. 32,109,187
Trucking and Warehousing - 0.68%
Republic Services, Inc., Class A* ..... 213,500 5,124,000
TOTAL COMMON STOCKS - 67.66% $506,323,776
(Cost: $282,906,990)
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Certificates of Deposit - 1.34%
Bank of America N.T. and S.A.,
5.55%, 7-13-98 ........................ $10,000 9,999,228
Commercial Paper
Apparel and Accessory Stores - 0.76%
Limited Inc. (The),
6.6%, 7-1-98 .......................... 5,675 5,675,000
Auto Repair, Services and Parking - 0.20%
PHH Corporation,
5.75%, 7-6-98 ......................... 1,470 1,468,826
Chemicals and Allied Products - 0.60%
Tampa Electric Co.,
5.53%, 7-16-98 ........................ 4,500 4,489,631
Communication - 0.36%
Dominion Resources Inc.,
5.67%, 7-9-98 ......................... 2,710 2,706,586
Depository Institutions - 2.66%
Deutsche Bank Financial Inc.,
5.52%, 7-29-98 ........................ 10,000 9,957,067
Morgan (J.P.) & Co. Inc.,
5.54%, 7-28-98 ........................ 10,000 9,958,450
Total ................................. 19,915,517
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Electric, Gas and Sanitary Services - 3.86%
Commonwealth Edison Co.,
5.75%, 7-15-98 ........................ $ 5,000 $ 4,988,820
PacifiCorp,
5.55%, 7-29-98 ........................ 4,600 4,580,143
Public Service Electric & Gas Co.,
5.65%, 7-7-98 ......................... 13,360 13,347,419
Tampa Electric Co.,
5.53%, 7-17-98 ........................ 6,000 5,985,253
Total ................................. 28,901,635
Fabricated Metal Products - 0.28%
Danaher Corporation,
5.6602%, Master Note .................. 2,089 2,089,000
Food and Kindred Products - 0.56%
Hercules Inc.,
5.7%, 7-13-98 ......................... 3,880 3,872,628
General Mills, Inc.,
5.5152%, Master Note .................. 309 309,000
Total ................................. 4,181,628
Instruments and Related Products - 0.73%
General Signal Corp.,
5.62%, 7-15-98 ........................ 5,450 5,438,089
Insurance Agents, Brokers and Service - 1.46%
Aon Corp.,
5.58%, 8-4-98 ......................... 11,000 10,942,030
Insurance Carriers - 5.34%
Prudential Funding Corp.,
5.58%, 7-9-98 ......................... 25,000 24,969,000
USAA Capital Corp.:
5.52%, 7-24-98 ........................ 10,000 9,964,733
5.52%, 8-17-98 ........................ 5,100 5,063,246
Total ................................. 39,996,979
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Nondepository Institutions - 6.80%
Associates Corporation of North America,
5.53%, 7-27-98 ........................ $10,000 $ 9,960,061
General Motors Acceptance Corporation:
5.52%, 7-10-98 ........................ 7,500 7,489,650
5.58%, 7-13-98 ........................ 20,000 19,962,800
Penney (J.C.) Funding Corp.,
5.52%, 7-15-98 ........................ 1,500 1,496,780
Textron Financial Corp.,
5.7%, 7-8-98 .......................... 12,000 11,986,700
Total ................................. 50,895,991
Primary Metal Industries - 4.40%
Aluminum Company of America:
5.53%, 7-15-98 ........................ 23,000 22,950,537
5.53%, 7-28-98 ........................ 10,000 9,958,525
Total ................................. 32,909,062
Security and Commodity Brokers - 2.66%
Merrill Lynch & Co., Inc.,
5.58%, 7-24-98 ........................ 20,000 19,928,700
Textile Mill Products - 0.84%
Sara Lee Corporation,
5.5102%, Master Note .................. 6,276 6,276,000
Total Commercial Paper - 31.51% 235,814,674
TOTAL SHORT-TERM SECURITIES - 32.85% $245,813,902
(Cost: $245,813,902)
TOTAL INVESTMENT SECURITIES - 100.51% $752,137,678
(Cost: $528,720,892)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.51%) (3,781,900)
NET ASSETS - 100.00% $748,355,778
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE SCIENCE AND TECHNOLOGY PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS
Building Materials and Garden Supplies - 1.02%
Fastenal Company ....................... 4,000 $ 185,872
Business Services - 49.47%
America Online, Inc.* .................. 6,000 636,000
American Management Systems,
Incorporated* ......................... 6,000 179,622
At Home Corporation, Series A* ......... 10,000 472,810
BMC Software, Inc.* .................... 7,000 363,776
Cerner Corporation* .................... 15,000 426,090
Citrix Systems, Inc.* .................. 6,000 410,436
Fiserv, Inc.* .......................... 6,000 254,808
FORE Systems, Inc.* .................... 16,000 423,488
HBO & Company .......................... 10,000 352,810
HNC Software Inc.* ..................... 6,000 244,872
i2 Technologies, Inc.* ................. 8,000 281,000
IDX Systems Corporation* ............... 4,000 184,748
Intuit Inc.* ........................... 7,000 429,401
J. D. Edwards* ......................... 10,000 429,370
MemberWorks Incorporated* .............. 15,000 486,555
Networks Associates, Inc.* ............. 6,000 287,058
Parametric Technology Corporation* ..... 10,000 270,930
Snyder Communications, Inc.* ........... 6,000 261,750
Synopsys, Inc.* ........................ 5,000 228,905
TMP Worldwide Inc.* .................... 10,000 348,430
Transaction Systems Architects, Inc.,
Class A * ............................. 10,000 385,310
Verio Inc.* ............................ 12,000 299,244
Visio Corporation* ..................... 8,000 383,000
Wind River Systems, Inc.* .............. 10,000 359,680
Yahoo! Inc.* ........................... 4,000 629,748
Total ................................. 9,029,841
Chemicals and Allied Products - 0.99%
SmithKline Beecham plc, ADR ............ 3,000 181,500
Communication - 11.07%
AirTouch Communications* ............... 5,000 290,625
Clear Channel Communications, Inc.* .... 4,000 436,500
COLT Telecom Group plc, ADR* ........... 4,000 648,500
Intermedia Communications of Florida,
Inc.* ................................. 8,000 335,248
MGC Communications, Inc.* .............. 11,000 169,466
Paging Network, Inc.* .................. 10,000 139,680
Total ................................. 2,020,019
Electronic and Other Electric Equipment - 10.04%
Advanced Fibre Communications, Inc.* ... 9,000 360,837
Ascend Communications, Inc.* ........... 5,000 247,655
Broadcom Corporation, Class A* ......... 4,000 294,748
Concord Communications, Inc.* .......... 10,000 257,180
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE SCIENCE AND TECHNOLOGY PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS (Continued)
Electronic and Other Electric Equipment (Continued)
RELTEC Corporation* .................... 7,000 $ 314,559
Tellabs* ............................... 5,000 357,965
Total ................................. 1,832,944
Engineering and Management Services - 4.33%
Incyte Pharmaceuticals, Inc.* .......... 10,000 341,560
Paychex, Inc. .......................... 5,000 203,280
Quintiles Transnational Corp.* ......... 5,000 245,780
Total ................................. 790,620
Food and Kindred Products - 1.83%
American Italian Pasta Company, Class A* 5,000 186,250
J. M. Smucker Company (The), Class A ... 6,000 148,872
Total ................................. 335,122
Furniture and Fixtures - 1.97%
Lear Corporation* ...................... 7,000 359,184
Health Services - 1.09%
American Healthcorp, Inc.* ............. 20,000 198,740
Instruments and Related Products - 3.95%
Bionx Implants, Inc.* .................. 10,000 151,600
STERIS Corporation* .................... 5,000 317,965
Uniphase Corporation* .................. 4,000 251,124
Total ................................. 720,689
Wholesale Trade -- Durable Goods - 2.91%
OmniCare, Inc. ......................... 9,000 343,125
Peerless Systems Corporation* .......... 9,000 187,875
Total ................................. 531,000
Wholesale Trade -- Nondurable Goods - 3.04%
Cardinal Health, Inc. .................. 4,000 375,000
800-JR CIGAR Inc.* ..................... 9,000 180,000
Total ................................. 555,000
TOTAL COMMON STOCKS - 91.71% $16,740,531
(Cost: $12,330,052)
TOTAL SHORT-TERM SECURITIES - 7.92%
(Cost: $1,446,000) $ 1,446,000
TOTAL INVESTMENT SECURITIES - 99.63% $18,186,531
(Cost: $13,776,052)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.37% 66,930
NET ASSETS - 100.00% $18,253,461
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS AND RIGHTS
Argentina - 0.03%
Capex S.A., Class A (B) ................ 11,500 $ 41,975
Australia - 0.63%
Reinsurance Australia Corporation
Limited (B) ........................... 400,000 1,023,410
Brazil - 0.22%
CompanLia de Saneamento Desico do
Estado De Sao Paulo (B) ............... 3,000,000 360,571
Telecomunicacoes de Sao Paulo S.A.,
Rights (B)* ........................... 343,083 5,488
Total ................................. 366,059
China - 0.32%
Jinpan International Limited* .......... 93,000 523,125
Denmark - 0.95%
Neurosearch A/S (B)* ................... 20,000 1,549,214
Finland - 0.65%
Sponda Oyj (B)* ........................ 150,000 1,053,832
France - 9.71%
AXA-UAP (B) ............................ 20,000 2,249,905
Accor S.A. (B) ......................... 5,500 1,539,530
Alcatel Alsthom Compagnie Generale
d'Electricite (B)...................... 5,000 1,018,247
Alstom (B)* ............................ 47,000 1,547,306
Banque Nationale de Paris (B) .......... 20,000 1,634,490
Comptoirs Modernes (B) ................. 2,420 1,261,105
Generale de Geophysique S.A. (B)* ...... 8,000 1,173,921
SITA (B)* .............................. 875 224,949
Societe Generale (B) .................... 10,000 2,079,508
Societe Industrielle de Transports
Automobiles S.A. (B) .................. 3,500 885,900
Suez Lyonnaise des Eaux (B) ............ 13,000 2,139,891
Total ................................. 15,754,752
Germany - 4.97%
Altana AG (B) .......................... 9,000 687,490
Mannesmann AG (B) ...................... 37,000 3,806,078
Rhoen-Klinikum AG (B) .................. 16,600 1,643,154
Volkswagen AG (B) ...................... 2,000 1,933,123
Total ................................. 8,069,845
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS AND RIGHTS (Continued)
Italy - 5.89%
Alleanza Assicurazioni (B) ............. 114,000 $ 1,549,558
Banca Popolare Di Brescia (B) .......... 100,000 1,891,146
CSP International Industria
Calze S.p.A. (B) ...................... 50,000 478,415
Credito Italiano S.p.A. (B) ............ 412,000 2,157,742
Instituto Nazionale delle
Assicurazioni (B) ..................... 630,000 1,790,679
Telecom Italia Mobile S.p.A., Risp (B) . 350,000 1,695,137
Total ................................. 9,562,677
Japan - 0.68%
Sony Corporation (B) ................... 12,700 1,097,599
Mexico - 1.11%
Empresas ICA Sociedad Controladora,
S.A. de C.V., ADS ..................... 50,000 471,850
Grupo Financiero Banamex Accival,
S.A. de C.V., B, CPO shares (B)* ...... 450,000 876,753
Grupo Financiero Inbursa, S.A. de
C.V., Class B (B) ..................... 175,234 448,718
Total ................................. 1,797,321
Netherlands - 6.38%
Akzo Nobel N.V. (B) .................... 8,000 1,779,789
Benckiser N.V., Class B (B)* ............ 30,000 1,846,404
Fugro N.V. (B) ......................... 44,496 1,773,185
Internatio-Muller N.V. (B) ............. 31,433 1,053,128
Ordina N.V. (B)* ....................... 84,240 2,731,190
Smit Internationale N.V. (B) ........... 43,166 1,170,150
Total ................................. 10,353,846
Norway - 2.79%
Merkantildata A/S (B) .................. 305,000 3,860,759
Schibsted AS (B) ....................... 40,000 673,365
Total ................................. 4,534,124
Portugal - 1.99%
Portugal Telecom, S.A., ADS ............ 27,500 1,455,768
Telecel-Comunicacaoes Pessoais, SA (B) . 10,000 1,777,248
Total ................................. 3,233,016
Spain - 3.07%
Bankinter, S.A. (B) .................... 16,000 1,040,115
Tele Pizza, S.A. (B)* .................. 163,000 1,730,531
Telefonica de Espana, S.A. (B) ......... 47,818 2,215,011
Total ................................. 4,985,657
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS AND RIGHTS (Continued)
Sweden - 4.15%
AB Volvo, B Shares (B) ................. 47,000 1,399,862
Biacore International AB, ADR* ......... 25,000 $ 226,550
Biora AB, ADR* ......................... 20,000 543,740
Munters AB (B) ......................... 89,000 971,031
Skandia Group Insurance Company Ltd. (B) 251,000 3,588,412
Total ................................. 6,729,595
Switzerland - 14.04%
Adecco SA, Bearer Shares (B) ........... 4,400 1,987,453
Bank Sarasin & Cie, Registered Shares (B) 970 1,703,890
Choco Lindt & Spru AG,
Registered Shares (B) ................. 50 1,304,233
Credit Suisse Group, Registered Shares (B) 26,000 5,794,757
Eichhof Holding AG, Registered Shares (B) 1,120 1,109,423
Julius Baer Holding AG (B) ............. 500 1,566,730
Novartis, AG (B) ....................... 1,500 2,500,165
Swisslog Holding AG, Registered Shares (B) 24,250 2,802,450
UBS AG, Registered Shares (B)* ......... 10,769 4,010,907
Total ................................. 22,780,008
Thailand - 0.01%
Srithai Superware Public Company
Limited, F (B)* ....................... 62,200 8,136
United Kingdom - 18.80%
COLT Telecom Group plc, ADR* ........... 40,800 6,614,700
Corporate Services Group plc (B) ....... 575,000 2,294,585
Freepages Group plc (B)* ............... 2,000,000 1,260,623
General Electric Company plc (B) ........ 350,000 3,018,400
Misys plc (B) .......................... 94,764 5,387,645
Newsquest plc (B)* ..................... 230,000 1,244,260
Orange plc (B)* ........................ 300,000 3,180,778
Rentokil Initial plc (B) ............... 254,500 1,831,486
Select Appointments (Holdings)
Public Limited Company (B) ............ 90,000 1,284,834
Vodafone Group Plc (B) ................. 251,767 3,196,955
Williams plc (B) ....................... 185,000 1,189,244
Total ................................. 30,503,510
United States - 0.83%
ESG Re Limited ......................... 61,000 1,345,782
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1998
Shares Value
TOTAL COMMON STOCKS AND RIGHTS - 77.22% $ 125,313,483
(Cost: $83,261,848)
PREFERRED STOCKS
Brazil - 2.63%
Telebras S.A., ADR, .................... 23,400 2,550,600
Telecomunicacoes de Sao Paulo S.A. (B) .. 7,300,000 1,716,904
Total ................................. 4,267,504
Germany - 8.74%
Fresenius Medical Care AG, (B) ......... 5,000 948,261
GEA AG, (B) ............................ 2,700 1,055,565
Marschollek, Lautenschlager und
Partner AG, (B) ....................... 12,890 6,290,246
Moebel Walther AG, (B) ................. 10,000 471,358
Porsche AG, (B) ........................ 700 2,018,522
SAP AG, (B) ............................ 5,000 3,396,551
Total ................................. 14,180,503
Portugal - 1.22%
Lusomundo-SGPS, S.A., (B) .............. 150,000 1,979,897
TOTAL PREFERRED STOCKS - 12.59% $ 20,427,904
(Cost: $12,654,601)
Face
Amount in
Thousands
UNREALIZED GAIN ON OPEN FORWARD CURRENCY CONTRACTS - 0.02%
Deutsche Marks, 7-29-98 (C) ............ DM5,105 $ 33,460
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Commercial Paper
Communication - 3.13%
Dominion Resources Inc.:
5.66%, 7-9-98 ......................... $3,800 3,795,221
5.68%, 7-9-98 ......................... 1,290 1,288,372
Total ................................. 5,083,593
Electric, Gas and Sanitary Services - 1.11%
Western Resources Inc.,
5.68%, 7-13-98 ........................ 1,800 1,796,592
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Fabricated Metal Products - 1.26%
Danaher Corporation,
5.6602%, Master Note .................. $2,042 $ 2,042,000
Food and Kindred Products - 0.55%
General Mills, Inc.,
5.5152%, Master Note .................. 882 882,000
Nondepository Institutions - 3.26%
Associates Financial Services Co. of Puerto
Rico Inc. (Associates Corp. of North
America, Guarantor),
5.54%, 7-17-98 ........................ 4,000 3,990,151
Penney (J.C.) Funding Corp.,
5.52%, 7-15-98 ........................ 1,300 1,297,209
Total ................................. 5,287,360
Textile Mill Products - 1.60%
Sara Lee Corporation,
5.5102%, Master Note .................. 2,602 2,602,000
TOTAL SHORT-TERM SECURITIES - 10.91% $ 17,693,545
(Cost: $17,693,545)
TOTAL INVESTMENT SECURITIES - 100.74% $163,468,392
(Cost: $113,609,994)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.74%) (1,194,360)
NET ASSETS - 100.00% $162,274,032
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS
Amusement and Recreation Services - 1.86%
Premier Parks Inc.* .................... 50,000 $ 3,331,250
Business Services - 15.25%
Cerner Corporation* .................... 300,000 8,521,800
Com21, Inc.* ........................... 100,000 2,118,700
Earthlink Network, Inc.* ............... 50,000 3,840,600
Freepages Group plc (B)* ............... 4,500,000 2,836,403
Fundtech Ltd.* ......................... 100,000 1,881,200
Interplay Entertainment Corp.* ......... 300,000 1,752,900
PMT Services, Inc.* .................... 250,000 6,359,250
Total ................................. 27,310,853
Chemicals and Allied Products - 3.42%
Genzyme Corporation - General Division* 80,000 2,034,960
OSI Pharmaceuticals, Inc.* ............. 150,000 829,650
Spiros Development Corporation II,
Inc., Units (D)* ...................... 200,000 3,262,400
Total ................................. 6,127,010
Communication - 1.11%
Western Wireless Corporation,
Class A* .............................. 100,000 1,990,600
Eating and Drinking Places - 2.63%
Fresh Foods, Inc.* ..................... 257,700 3,978,115
G B Foods Corp.* ....................... 114,000 723,102
Total ................................. 4,701,217
Electric, Gas and Sanitary Services - 6.47%
Allied Waste Industries, Inc., New* .... 200,000 4,793,600
Browning-Ferris Industries, Inc. ....... 76,000 2,641,000
Waste Industries, Inc.* ................ 200,000 4,156,200
Total ................................. 11,590,800
Electronic and Other Electric Equipment - 5.19%
American Xtal Technology, Inc.* ........ 100,000 1,456,200
Artisan Components, Inc.* .............. 100,000 1,325,000
Micron Technology, Inc.* ............... 100,000 2,481,200
Optek Technology, Inc.* ................ 125,000 2,359,375
Powerwave Technologies, Inc.* .......... 100,000 1,668,700
Total ................................. 9,290,475
Engineering and Management Services - 1.65%
Cornell Corrections, Inc.* ............. 141,000 2,961,000
Fishing, Hunting and Trapping - 0.72%
Omega Protein Corporation* ............. 81,800 1,257,675
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS (Continued)
Health Services - 6.88%
Centennial HealthCare Corporation* ..... 146,000 $ 2,609,750
Province Healthcare Company* ........... 71,700 1,951,531
Quorum Health Group, Inc.* ............. 150,000 3,984,300
Sierra Health Services, Inc.* .......... 150,000 3,778,050
Total ................................. 12,323,631
Hotels and Other Lodging Places - 0.91%
American Skiing Company* ............... 126,000 1,638,000
Industrial Machinery and Equipment - 2.38%
RADCOM LTD.* ........................... 150,000 750,000
MIPS Technologies, Inc.* ............... 135,000 1,818,180
Waterlink, Inc.* ....................... 200,000 1,700,000
Total ................................. 4,268,180
Instruments and Related Products - 12.87%
Arterial Vascular Engineering, Inc.* ... 80,000 2,857,440
ESC Medical Systems Ltd.* .............. 155,000 5,250,625
LeCroy Corp.* .......................... 100,000 2,300,000
Maxxim Medical, Inc.* .................. 175,000 5,075,000
St. Jude Medical, Inc.* ................ 80,000 2,944,960
Wesley Jessen VisionCare, Inc.* ........ 200,000 4,618,600
Total ................................. 23,046,625
Insurance Carriers - 2.47%
Annuity and Life Re (Holdings) Ltd.* ... 75,000 1,673,400
ESG Re Limited ......................... 125,000 2,757,750
Total ................................. 4,431,150
Paper and Allied Products - 3.43%
EarthShell Container Corporation* ...... 227,300 2,208,901
IVEX Packaging Corporation* ............ 169,000 3,929,250
Total ................................. 6,138,151
Personal Services - 6.40%
Carriage Services, Inc.* ............... 175,000 4,418,750
Equity Corporation International* ...... 135,000 3,240,000
Loewen Group Inc. (The) ................ 140,000 3,797,500
Total ................................. 11,456,250
Real Estate - 3.48%
Bluegreen Corporation* ................. 100,000 881,200
ElderTrust ............................. 312,000 5,343,000
Total ................................. 6,224,200
Social Services - 2.02%
Balanced Care Corporation* ............. 500,000 3,625,000
Wholesale Trade -- Durable Goods - 0.87%
TriStar Aerospace Co.* ................. 100,000 1,550,000
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 1998
Shares Value
TOTAL COMMON STOCKS - 80.01% $143,262,067
(Cost: $136,321,984)
PREFERRED STOCK - 2.03%
Holding and Other Investment Offices
CCA Prison Realty Trust, 8.0% .......... 158,000 $ 3,643,796
(Cost: $3,949,350)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Commercial Paper
Electric, Gas and Sanitary Services - 4.35%
Georgia Power Co.,
5.55%, 7-6-98 ......................... $ 800 799,383
Western Resources, Inc.,
5.68%, 7-13-98 ........................ 7,000 6,986,747
Total ................................. 7,786,130
Fabricated Metal Products - 0.15%
Danaher Corporation,
5.6602%, Master Note .................. 272 272,000
Food and Kindred Products - 1.03%
General Mills, Inc.,
5.5152%, Master Note .................. 564 564,000
Ralston Purina Company,
5.78%, 7-10-98 ........................ 1,285 1,283,143
Total ................................. 1,847,143
Food Stores - 1.84%
Albertson's Inc.,
5.57%, 7-17-98 ........................ 3,300 3,291,831
Nondepository Institutions - 2.60%
Associates Financial Services Co. of Puerto
Rico Inc. (Associates Corp. of North
America, Guarantor),
5.54%, 7-17-98 ........................ 1,565 1,561,147
Penney (J.C.) Funding Corp.,
5.52%, 7-15-98 ........................ 3,100 3,093,345
Total ................................. 4,654,492
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Tobacco Products - 1.74%
B.A.T. Capital Corp.,
5.64%, 7-14-98 ....................... $3,125 $ 3,118,635
Transportation Equipment - 2.67%
Dana Credit Corp.,
5.71%, 7-14-98 ........................ 4,785 4,775,133
Wholesale Trade - Nondurable Goods - 3.36%
Enron Corp.,
5.58%, 7-16-98 ........................ 6,035 6,020,969
TOTAL SHORT-TERM SECURITIES - 17.74% $ 31,766,333
(Cost: $31,766,333)
TOTAL INVESTMENT SECURITIES - 99.78% $178,672,196
(Cost: $172,037,667)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.22% 394,262
NET ASSETS - 100.00% $179,066,458
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS
Apparel And Accessory Stores - 1.90%
Kohl's Corporation* .................... 16,000 $ 830,000
Payless ShoeSource, Inc.* .............. 10,000 736,870
Total ................................. 1,566,870
Apparel and Other Textile Products - 1.21%
Liz Claiborne, Inc. .................... 19,200 1,004,390
Building Materials and Garden Supplies - 0.80%
Sherwin-Williams Company (The) ......... 20,000 662,500
Business Services - 2.59%
BMC Software, Inc.* .................... 19,600 1,018,573
Young & Rubicam Inc.* .................. 35,000 1,120,000
Total ................................. 2,138,573
Chemicals and Allied Products - 7.69%
Crompton & Knowles Corporation ......... 14,300 360,174
Dow Chemical Company (The) ............. 3,500 338,405
du Pont (E.I.) de Nemours and Company .. 4,800 358,200
Lilly (Eli) and Company ................ 9,500 628,187
Monsanto Company ....................... 14,800 826,950
Neutraceutical International
Corporation* .......................... 9,000 95,058
Novartis, AG (B) ....................... 470 783,385
Pfizer Inc. ............................ 11,000 1,195,557
Procter & Gamble Company (The) ......... 7,100 646,540
Warner-Lambert Company ................. 16,200 1,123,875
Total ................................. 6,356,331
Communication - 3.81%
AT&T Corporation ....................... 12,000 685,500
Cox Communications, Inc., Class A* ..... 12,000 581,244
MediaOne Group, Inc.* .................. 24,000 1,054,488
SBC Communications Inc. ................ 20,600 824,000
Total ................................. 3,145,232
Depository Institutions - 0.94%
BankAmerica Corporation ................ 9,000 777,933
Electric, Gas and Sanitary Services - 1.90%
Houston Industries Incorporated ........ 12,000 370,500
Southern Company (The) ................. 13,000 359,931
Unicom Corporation ..................... 24,000 840,000
Total ................................. 1,570,431
Electronic and Other Electric Equipment - 3.32%
Emerson Electric Co. ................... 12,500 754,688
Intel Corporation ...................... 10,000 740,930
Texas Instruments Incorporated ......... 10,000 583,120
U. S. Industries, Inc. ................. 27,000 668,250
Total ................................. 2,746,988
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS (Continued)
Food and Kindred Products - 4.28%
Beringer Wine Estates
Holdings, Inc., Class B* .............. 12,500 $ 550,387
ConAgra, Inc. .......................... 11,800 373,907
General Mills, Inc. .................... 8,000 547,000
Heinz (H. J.) Company .................. 12,000 673,500
Hormel Foods Corporation ............... 20,000 691,240
Ralston-Ralston Purina Group ........... 6,000 700,872
Total ................................. 3,536,906
General Merchandise Stores - 1.10%
Wal-Mart Stores, Inc. .................. 15,000 911,250
Health Services - 1.45%
Columbia/HCA Healthcare Corporation .... 20,000 582,500
Tenet Healthcare Corporation* .......... 19,600 612,500
Total ................................. 1,195,000
Holding and Other Investment Offices - 2.14%
Equity Office Properties Trust ......... 20,000 567,500
LTC Properties, Inc. ................... 43,000 800,875
National Health Investors, Inc. ........ 12,000 397,500
Total ................................. 1,765,875
Industrial Machinery and Equipment - 2.09%
Baker Hughes Incorporated* ............. 17,500 604,835
Deere & Company ........................ 6,000 317,250
Minnesota Mining and Manufacturing Company 7,000 575,309
Parker Hannifin Corporation ............ 6,000 228,750
Total ................................. 1,726,144
Instruments and Related Products - 0.63%
St. Jude Medical, Inc.* ................ 14,200 522,730
Insurance Carriers - 3.18%
Chubb Corporation (The) ................ 9,200 739,450
Hartford Financial Services Group Inc. (The) 4,100 468,938
MGIC Investment Corporation ............ 9,200 524,970
Mercury General Corporation ............ 3,700 238,417
Old Republic International Corporation . 22,500 659,520
Total ................................. 2,631,295
Miscellaneous Manufacturing Industries - 0.77%
Mattel, Inc. ........................... 15,000 634,680
Miscellaneous Retail - 1.39%
Costco Companies, Inc.* ................ 15,000 945,930
Paper Warehouse, Inc.* ................. 50,000 206,250
Total ................................. 1,152,180
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS (Continued)
Motion Pictures - 0.72%
Walt Disney Company (The) .............. 5,700 $ 598,853
Nondepository Institutions - 2.51%
Freddie Mac ............................ 14,400 677,693
Household International, Inc.* ......... 13,200 658,350
Providian Financial Corporation ........ 9,400 738,483
Total ................................. 2,074,526
Oil and Gas Extraction - 0.72%
Noble Affiliates, Inc. ................. 8,500 322,465
Santa Fe International Corp. ........... 9,000 272,250
Total ................................. 594,715
Paper and Allied Products - 0.64%
Champion International Corporation ..... 10,800 531,220
Petroleum and Coal Products - 2.95%
British Petroleum Company p.l.c.
(The), ADR ............................ 5,040 444,780
Mobil Corporation ...................... 9,600 735,600
Royal Dutch Petroleum Company .......... 15,400 844,105
Tosco Corporation ...................... 14,000 411,250
Total ................................. 2,435,735
Primary Metal Industries - 0.47%
British Steel plc, ADR ................. 17,000 386,750
Printing and Publishing - 3.29%
Gannett Co., Inc. ...................... 10,500 746,151
McGraw-Hill Companies, Inc. (The) ...... 5,200 424,122
Meredith Corporation ................... 15,000 704,055
New York Times Company (The), Class A .. 10,700 847,975
Total ................................. 2,722,303
Rubber and Miscellaneous Plastics Products - 1.10%
A. Schulman, Inc. ...................... 25,000 487,500
Goodyear Tire & Rubber Company (The) ... 6,500 418,841
Total ................................. 906,341
Stone, Clay and Glass Products - 0.98%
USG Corporation ........................ 15,000 811,875
Transportation by Air - 1.02%
SkyWest, Inc.* ......................... 30,000 840,000
Transportation Equipment - 0.39%
Chrysler Corporation ................... 5,700 321,337
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS (Continued)
Transportation Services - 1.10%
Dial Corporation (The) ................. 35,000 $ 910,000
TOTAL COMMON STOCKS - 57.08% $47,178,963
(Cost: $37,190,328)
PREFERRED STOCK - 0.69%
Communication
Telebras S.A., ADR ..................... 5,200 $ 566,800
(Cost: $494,927)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Apparel And Accessory Stores - 3.15%
Gap, Inc. (The),
6.9%, 9-15-2007 ....................... $2,500 2,607,350
Building Materials and Garden Supplies - 0.90%
Home Depot, Inc. (The), Convertible,
3.25%, 10-1-2001 ...................... 400 744,000
Communication - 0.78%
Clear Channel Communications, Inc., Convertible,
2.625%, 4-1-2003 ...................... 600 648,000
Electronic and Other Electric Equipment - 0.41%
Cooper Industries, Inc.,
6.0%, 1-1-99 (Exchangeable) ........... 257 334,875
Food and Kindred Products - 0.63%
Coca-Cola Enterprises Inc.,
6.7%, 10-15-2036 ...................... 500 521,200
Nondepository Institutions - 1.22%
National Rural Utilities Cooperative
Finance Corp.,
6.1%, 12-22-2000 ...................... 1,000 1,004,950
Oil and Gas Extraction - 0.29%
Enron Corp.,
6.25%, 12-13-98 (Exchangeable) ........ 261 240,000
TOTAL CORPORATE DEBT SECURITIES - 7.38% $ 6,100,375
(Cost: $5,651,029)
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES
Federal National Mortgage Association,
7.0%, 9-1-2025 ........................ $3,671 $ 3,722,602
United States Treasury:
5.5%, 2-28-99 ......................... 1,000 1,000,160
6.875%, 8-31-99 ....................... 250 253,750
7.75%, 11-30-99 ....................... 1,500 1,544,760
7.125%, 2-29-2000 ..................... 500 512,500
5.25%, 1-31-2001 ...................... 2,000 1,987,500
6.375%, 8-15-2002 ..................... 1,100 1,133,682
7.5%, 2-15-2005 ....................... 2,250 2,490,458
6.25%, 8-15-2023 ...................... 250 267,655
6.75%, 8-15-2026 ...................... 3,000 3,434,520
TOTAL UNITED STATES GOVERNMENT SECURITIES - 19.78% $ 16,347,587
(Cost: $15,611,752)
SHORT-TERM SECURITIES
Commercial Paper
Fabricated Metal Products - 1.71%
Danaher Corporation,
5.6602%, Master Note .................. 1,413 1,413,000
Food and Kindred Products - 7.59%
General Mills, Inc.,
5.5152%, Master Note .................. 2,379 2,379,000
Hercules Inc.,
5.75%, 7-13-98 ........................ 3,900 3,892,525
Total ................................. 6,271,525
General Merchandise Stores - 2.41%
Dillard Investment Co. Inc.,
5.78%, 7-20-98 ........................ 2,000 1,993,899
Nondepository Institutions - 3.02%
Penney (J.C.) Funding Corp.,
5.52%, 7-15-98 ........................ 1,500 1,496,780
Textron Financial Corp.,
5.7%, 7-8-98 .......................... 1,000 998,891
Total ................................. 2,495,671
Textile Mill Products - 0.57%
Sara Lee Corporation,
5.5102%, Master Note .................. 468 468,000
TOTAL SHORT-TERM SECURITIES - 15.30% $12,642,095
(Cost: $12,642,095)
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1998
Value
TOTAL INVESTMENT SECURITIES - 100.23% $82,835,820
(Cost: $71,590,131)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.23%) (188,793)
NET ASSETS - 100.00% $82,647,027
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS
Apparel and Accessory Stores - 1.99%
Payless ShoeSource, Inc.* .............. 3,100 $ 228,430
Business Services - 6.94%
BMC Software, Inc.* .................... 3,800 197,478
Cerner Corporation* .................... 4,100 116,465
J. D. Edwards* ......................... 4,800 206,098
Manugistics Group Incorporated* ........ 3,800 94,525
Microsoft Corporation* ................. 1,700 184,290
Total ................................. 798,856
Chemicals and Allied Products - 6.79%
Bristol-Myers Squibb Company ........... 1,000 114,937
Lilly (Eli) and Company ................ 2,600 171,925
Shire Pharmaceuticals Group plc, ADR* .. 7,200 154,346
Warner-Lambert Company ................. 4,900 339,937
Total ................................. 781,145
Communication - 6.30%
Clear Channel Communications, Inc.* .... 2,000 218,250
Cox Communications, Inc., Class A* ..... 2,400 116,249
MediaOne Group, Inc.* .................. 2,600 114,236
PanAmSat Corporation* .................. 3,000 170,811
Western Wireless Corporation, Class A* . 5,300 105,502
Total ................................. 725,048
Depository Institutions - 1.63%
U. S. Bancorp. ......................... 4,350 187,050
Electric, Gas and Sanitary Services - 4.74%
Allied Waste Industries, Inc. New* ..... 8,600 206,125
Browning-Ferris Industries, Inc. ....... 4,800 166,800
Duke Energy Corp. ...................... 2,900 171,825
Total ................................. 544,750
Electronic and Other Electric Equipment - 2.59%
Intel Corporation ...................... 1,500 111,140
Maytag Corporation ..................... 1,900 93,812
Texas Instruments Incorporated ......... 1,600 93,299
Total ................................. 298,251
Furniture and Fixtures - 1.52%
Lear Corporation* ...................... 3,400 174,461
Furniture and Home Furnishings Stores - 1.82%
Williams-Sonoma, Inc.* ................. 6,600 209,959
General Merchandise Stores - 2.11%
Wal-Mart Stores, Inc. .................. 4,000 243,000
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS (Continued)
Health Services - 1.39%
Centennial HealthCare Corporation* ..... 3,500 $ 62,562
Tenet Healthcare Corporation* .......... 3,100 96,875
Total ................................. 159,437
Industrial Machinery and Equipment - 0.78%
Baker Hughes Incorporated .............. 2,600 89,861
Instruments and Related Products - 4.03%
ESC Medical Systems Ltd.* .............. 3,200 108,400
Medtronic, Inc. ........................ 2,200 140,250
Wesley Jessen VisionCare, Inc.* ........ 9,300 214,765
Total ................................. 463,415
Miscellaneous Retail - 1.70%
Costco Companies, Inc.* ................ 3,100 195,492
Motion Pictures - 2.15%
Telecommunications, Inc., Liberty Media
Group, Series A* ...................... 3,300 128,182
Time Warner Incorporated ............... 1,400 119,612
Total ................................. 247,794
Nondepository Institutions - 1.58%
Fannie Mae ............................. 3,000 182,250
Oil and Gas Extraction - 0.83%
Schlumberger Limited ................... 1,400 95,637
Personal Services - 1.65%
Equity Corporation International* ...... 7,900 189,600
Real Estate - 1.27%
ElderTrust ............................. 8,500 145,563
Transportation Equipment - 1.00%
AlliedSignal Inc. ...................... 2,600 115,375
TOTAL COMMON STOCKS - 52.81% $ 6,075,374
(Cost: $5,326,051)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Depository Institutions - 1.73%
Unibanco-Uniao de Bancos Brasileiros S.A.,
6.75%, 10-8-98 ........................ $ 200 198,750
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Electric, Gas and Sanitary Services - 1.75%
Centrais Electricas Brasileiras S.A.,
10.0%, 10-30-98 (A) ................... $ 200 $ 201,500
Industrial Machinery and Equipment - 1.76%
Tyco International Ltd.,
6.5%, 11-1-2001 ....................... 200 202,438
TOTAL CORPORATE DEBT SECURITIES - 5.24% $ 602,688
(Cost: $599,061)
UNITED STATES GOVERNMENT SECURITIES
Federal Farm Credit Banks Funding Corporation,
6.375%, 12-11-2003 .................... 200 199,218
Federal Home Loan Banks:
6.38%, 4-29-2003 ...................... 200 199,062
6.415%, 12-4-2003 ..................... 200 199,312
6.57%, 2-11-2005 ...................... 200 199,124
6.75%, 2-5-2008 ....................... 200 199,750
6.75%, 2-12-2008 ...................... 200 199,594
6.785%, 3-3-2008 ...................... 200 198,594
Federal Home Loan Mortgage Corporation:
6.375%, 12-23-2003 .................... 400 398,188
6.5%, 2-15-2023 ....................... 1,873 330,252
United States Treasury,
5.625%, 12-31-2002 .................... 1,550 1,556,774
TOTAL UNITED STATES GOVERNMENT SECURITIES - 31.98% $ 3,679,868
(Cost: $3,704,086)
SHORT-TERM SECURITIES
Commercial Paper
Fabricated Metal Products - 4.35%
Danaher Corporation,
5.6602%, Master Note .................. 500 500,000
Food and Kindred Products - 3.28%
General Mills, Inc.,
5.5152%, Master Note .................. 377 377,000
General Merchandise Stores - 4.29%
Dillard Investment Co. Inc.,
5.78%, 7-20-98 ........................ 495 493,490
Textile Mill Products - 0.64%
Sara Lee Corporation,
5.5102%, Master Note .................. 74 74,000
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 1998
Value
TOTAL SHORT-TERM SECURITIES - 12.56% $ 1,444,490
(Cost: $1,444,490)
TOTAL INVESTMENT SECURITIES - 102.59% $11,802,420
(Cost: $11,073,688)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (2.59%) (297,593)
NET ASSETS - 100.00% $11,504,827
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
BANK OBLIGATIONS
Certificates of Deposit
Domestic - 2.24%
Morgan Guaranty Trust Company of New York,
5.8%, 7-28-99 ......................... $1,000 $ 999,739
Yankee - 4.48%
Societe Generale - New York,
5.55%, 2-9-99 ......................... 1,000 999,028
Svenska Handelsbanken,
5.79%, 5-7-99 ......................... 1,000 999,166
Total ................................. 1,998,194
Total Certificates of Deposit - 6.72% 2,997,933
Commercial Paper - 5.70%
J.P. Morgan & Co., Incorporated,
5.54%, 7-28-98 ........................ 1,800 1,792,521
Toronto-Dominion Holdings USA Inc.,
5.56%, 7-7-98 ......................... 750 749,305
Total ................................. 2,541,826
TOTAL BANK OBLIGATIONS - 12.42% $5,539,759
(Cost: $5,539,759)
CORPORATE OBLIGATIONS
Commercial Paper
Chemicals and Allied Products - 4.90%
Air Products and Chemicals Inc.,
5.55%, 9-4-98 ......................... 1,200 1,187,975
du Pont (E.I.) de Nemours and Company,
5.52%, 7-16-98 ........................ 1,000 997,700
Total ................................. 2,185,675
Electric, Gas and Sanitary Services - 10.44%
Allegheny Power System Inc.,
5.54%, 7-20-98 ........................ 1,900 1,894,445
PacifiCorp,
5.55%, 7-29-98 ........................ 1,975 1,966,474
Questar Corp.,
5.65%, 7-28-98 ........................ 800 796,610
Total ................................. 4,657,529
Engineering and Management Services - 2.45%
Halliburton Co.,
5.62%, 7-28-98 ........................ 1,100 1,095,363
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (Continued)
Fabricated Metal Products - 4.91%
Danaher Corporation,
5.6602%, Master Note .................. $2,190 $ 2,190,000
Food and Kindred Products - 7.53%
Coca-Cola Company (The),
5.52%, 7-21-98 ........................ 1,900 1,894,173
General Mills, Inc.,
5.5152%, Master Note .................. 471 471,000
Golden Peanut Co.,
5.51%, 8-6-98 ......................... 1,000 994,490
Total ................................. 3,359,663
Furniture and Fixtures - 4.26%
Johnson Controls Inc.,
6.35%, 7-1-98 ......................... 1,900 1,900,000
General Merchandise Stores - 4.26%
Dillard Investment Co. Inc.:
5.85%, 7-7-98 ......................... 900 899,123
5.78%, 7-20-98 ........................ 1,005 1,001,934
Total ................................. 1,901,057
Insurance Carriers - 7.78%
Transamerica Finance Corp.,
5.55%, 7-9-98 ......................... 1,650 1,647,965
USAA Capital Corp.,
5.53%, 7-30-98 ........................ 1,830 1,821,848
Total ................................. 3,469,813
Metal Mining - 4.25%
BHP Finance (USA) Inc.,
5.55%, 7-7-98 ......................... 1,900 1,898,243
Nondepository Institutions - 6.48%
Associates Financial Services Co. of Puerto
Rico Inc. (Associates Corp. of North
America, Guarantor),
5.52%, 7-29-98 ........................ 1,800 1,792,272
Penney (J.C.) Funding Corp.,
5.52%, 7-15-98 ........................ 1,100 1,097,639
Total ................................. 2,889,911
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (Continued)
Oil and Gas Extraction - 2.23%
Arco British Ltd. (Atlantic Richfield
Company, Guarantor),
5.56%, 7-30-98 ........................ $1,000 $ 995,521
Personal Services - 3.85%
Block Financial Corp.,
5.53%, 8-27-98 ........................ 1,735 1,719,809
Printing and Publishing - 4.03%
American Greetings Corp.,
5.7%, 7-10-98 ......................... 1,800 1,797,435
Security and Commodity Brokers - 3.20%
Merrill Lynch & Co., Inc.,
5.52%, 9-1-98 ......................... 1,440 1,426,310
Textile Mill Products - 0.33%
Sara Lee Corp.,
5.5102%, Master Note .................. 149 149,000
Total Commercial Paper - 70.90% 31,635,329
Notes
Auto Repair, Services and Parking - 3.36%
PHH Corporation,
5.61%, 3-11-98 ........................ 1,500 1,498,307
Electric, Gas and Sanitary Services - 2.24%
Baltimore Gas and Electric Company,
5.6175%, 9-1-98 ....................... 1,000 1,000,000
Nondepository Institutions - 2.24%
General Electric Capital Corp.,
5.5625%, 9-8-98 ....................... 1,000 999,540
Total Notes - 7.84% 3,497,847
TOTAL CORPORATE OBLIGATIONS - 78.74% $35,133,176
(Cost: $35,133,176)
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS
California - 1.12%
Oakland-Alameda County Coliseum Authority,
Lease Revenue Bonds (Oakland Coliseum
Arena Project), (Canadian Imperial Bank
of Commerce),
5.59%, 7-14-98 ........................ $ 500 $ 500,000
New Jersey - 0.59%
New Jersey Economic Development Authority,
Federally Taxable Variable Rate Demand/
Fixed Rate Revenue Bonds (The Morey
Organization, Inc. Project), Series of 1997
(CoreStates Bank, N.A.),
5.75%, 7-1-98 ......................... 265 265,000
Pennsylvania - 3.79%
Schuylkill County Industrial Development
Authority, Commercial Development Revenue
Bonds (Midway Supermarket, Inc. Project),
Taxable Series of 1995 (CoreStates Bank, N.A.),
5.75%, 7-1-98 ......................... 1,490 1,490,000
Montgomery County Industrial Development
Authority, Taxable Fixed Rate/Variable
Rate Demand Revenue Bonds (410 Horsham
Associates Project), Series of 1995
(CoreStates Bank, N.A.),
5.75%, 7-1-98 ......................... 200 200,000
Total ................................. 1,690,000
Texas - 2.23%
Metrocrest Hospital Authority, Series 1989A
(The Bank of New York),
5.5696%, 8-4-98........................ 1,000 994,740
TOTAL MUNICIPAL OBLIGATIONS - 7.73% $ 3,449,740
(Cost: $3,449,740)
TOTAL INVESTMENT SECURITIES - 98.89% $44,122,675
(Cost: $44,122,675)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.11% 493,208
NET ASSETS - 100.00% $44,615,883
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Chemicals and Allied Products - 5.96%
American Home Products Corporation,
7.7%, 2-15-2000 ....................... $100 $ 102,780
Praxair, Inc.,
6.7%, 4-15-2001 ....................... 100 101,560
Total ................................. 204,340
Depository Institutions - 6.25%
BankAmerica Corporation,
9.7%, 8-1-2000 ........................ 100 107,132
Wells Fargo & Company,
8.375%, 5-15-2002 ..................... 100 107,367
Total ................................. 214,499
Electric, Gas and Sanitary Services - 9.60%
UtiliCorp United,
6.875%, 10-1-2004 ..................... 100 101,749
WMX Technologies, Inc.,
8.25%, 11-15-99 ....................... 100 102,573
Western Resources, Inc.,
7.25%, 8-15-2002 ...................... 120 124,829
Total ................................. 329,151
Electronic and Other Electric Equipment - 3.04%
Black & Decker Corp.,
7.5%, 4-1-2003 ........................ 100 104,275
Furniture and Fixtures - 2.93%
Masco Corporation,
6.625%, 9-15-99 ....................... 100 100,658
Instruments and Related Products - 3.08%
Baxter International Inc.,
7.625%, 11-15-2002 .................... 100 105,574
Insurance Carriers - 4.39%
American General Finance Corporation,
6.2%, 3-15-2003 ....................... 150 150,644
Nondepository Institutions - 2.95%
General Motors Acceptance Corporation,
7.75%, 1-15-99 ........................ 100 101,010
Oil and Gas Extraction - 3.52%
USX Corporation,
9.8%, 7-1-2001 ........................ 110 120,596
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Petroleum and Coal Products - 2.86%
Chevron Corporation Profit Sharing/Savings
Plan Trust Fund,
8.11%, 12-1-2004 ...................... $ 92 $ 98,102
Railroad Transportation - 3.05%
Union Pacific Corporation,
7.875%, 2-15-2002 ..................... 100 104,691
Security and Commodity Brokers - 3.00%
Salomon Inc.,
7.75%, 5-15-2000 ...................... 100 103,016
Textile Mill Products - 2.93%
Fruit of the Loom, Inc.,
7.875%, 10-15-99 ...................... 100 100,389
Transportation by Air - 2.93%
Federal Express Corporation,
10.0%, 9-1-98 ......................... 100 100,654
Wholesale Trade -- Durable Goods - 3.07%
Westinghouse Electric Corporation,
8.875%, 6-1-2001 ...................... 100 105,247
TOTAL CORPORATE DEBT SECURITIES - 59.56% $2,042,846
(Cost: $2,017,637)
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation,
7.0%, 5-15-2005 ....................... 100 100,843
Federal National Mortgage Association:
6.0%, 11-1-2000 ....................... 53 52,447
6.4%, 12-27-2004 ...................... 155 155,702
7.95%, 3-7-2005 ....................... 100 103,375
7.5%, 11-15-2006 ...................... 100 101,969
6.5%, 12-1-2010 ....................... 81 81,180
6.0%, 1-1-2011 ........................ 76 74,742
6.5%, 2-1-2011 ........................ 82 82,313
7.0%, 5-1-2011 ........................ 74 75,234
7.0%, 7-1-2011 ........................ 80 81,080
7.0%, 9-1-2012 ........................ 89 90,956
6.0%, 9-25-2014 ....................... 31 31,398
11.0%, 10-1-2020 ...................... 22 25,478
7.0%, 4-1-2026 ........................ 86 87,453
Government National Mortgage Association,
7.0%, 9-15-2008 ....................... 56 57,017
TOTAL UNITED STATES GOVERNMENT SECURITIES - 35.02% $1,201,187
(Cost: $1,187,322)
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
JUNE 30, 1998
Value
TOTAL SHORT-TERM SECURITIES - 3.36% $ 115,000
(Cost: $115,000)
TOTAL INVESTMENT SECURITIES - 97.94% $3,359,033
(Cost: $3,319,959)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 2.06% 70,752
NET ASSETS - 100.00% $3,429,785
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Chemicals and Allied Products - 4.10%
Dow Capital BV,
9.0%, 5-15-2010 ....................... $ 500 $ 600,125
Dow Chemical Company (The),
8.55%, 10-15-2009 ..................... 1,000 1,171,170
Procter & Gamble Company (The),
8.0%, 9-1-2024 ........................ 2,000 2,445,060
Total ................................. 4,216,355
Communication - 5.86%
Bell Telephone Company of Pennsylvania (The),
8.35%, 12-15-2030 ..................... 1,000 1,260,890
BellSouth Telecommunications, Inc.,
5.85%, 11-15-2045 ..................... 1,000 998,860
Jones Intercable, Inc.,
9.625%, 3-15-2002 ..................... 500 540,000
Tele-Communications, Inc.,
6.58%, 2-15-2005 ...................... 1,000 1,096,810
Teleport Communications Group Inc.,
0.0%, 7-1-2007 (E) .................... 500 430,000
Turner Broadcasting System, Inc.,
8.375%, 7-1-2013 ...................... 1,000 1,146,180
Viacom International Inc.,
10.25%, 9-15-2001 ..................... 500 554,580
Total ................................. 6,027,320
Depository Institutions - 11.07%
AmSouth Bancorporation,
6.75%, 11-1-2025 ...................... 1,500 1,540,305
Chevy Chase Savings Bank, F.S.B.,
9.25%, 12-1-2005 ...................... 500 507,500
Citicorp,
9.5%, 2-1-2002 ........................ 500 551,980
First Union Corporation:
6.824%, 8-1-2026 ...................... 1,132 1,272,153
6.55%, 10-15-2035 ..................... 525 534,208
Kansallis-Osake-Pankki,
10.0%, 5-1-2002 ....................... 1,000 1,127,490
NBD Bank, National Association,
8.25%, 11-1-2024 ...................... 1,000 1,201,030
NationsBank Corporation,
8.57%, 11-15-2024 ..................... 1,000 1,259,480
Riggs National Corporation,
8.5%, 2-1-2006 ........................ 1,500 1,570,815
SouthTrust Bank of Alabama, N.A.:
5.58%, 2-6-2006 ....................... 1,000 990,450
7.69%, 5-15-2025 ...................... 500 592,725
Sumitomo Bank, Limited (The),
9.4%, 12-29-2049 (A) .................. 250 248,460
Total ................................. 11,396,596
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Electric, Gas and Sanitary Services - 10.26%
Cajun Electric Power Cooperative, Inc.,
8.92%, 3-15-2019 ...................... $1,500 $ 1,573,230
California Infrastructure and Economic
Development Bank, Special Purpose
Trust:
PG&E-1,
6.42%, 9-25-2008 ...................... 1,000 1,021,410
SCE-1,
6.38%, 9-25-2008 ...................... 1,000 1,011,900
Cleveland Electric Illuminating Co. (The),
9.5%, 5-15-2005 ....................... 678 748,885
El Paso Electric Company,
7.25%, 2-1-99 ......................... 500 501,745
Entergy Arkansas, Inc.,
7.5%, 8-1-2007 ........................ 750 781,552
Kansas Gas and Electric Company,
7.6%, 12-15-2003 ...................... 1,000 1,063,420
Niagara Mohawk Power:
9.5%, 6-1-2000 ........................ 500 524,960
7.375%, 7-1-2003 ...................... 500 503,125
Pacific Gas & Electric Co.,
6.875%, 12-1-99 ....................... 500 501,425
Pennsylvania Power & Light Co.,
9.25%, 10-1-2019 ...................... 656 703,521
Southern Company Capital Trust I,
8.19%, 2-1-2037 ....................... 1,500 1,622,490
Total ................................. 10,557,663
Fabricated Metal Products - 0.48%
Mark IV Industries, Inc.,
7.5%, 9-1-2007 ........................ 500 496,250
Food and Kindred Products - 2.90%
Anheuser-Busch,
7.0%, 9-1-2005 ........................ 500 518,565
Coca-Cola Enterprises Inc.,
0.0%, 6-20-2020 ....................... 10,000 2,465,600
Total ................................. 2,984,165
Food Stores - 0.52%
Kroger Co. (The),
7.65%, 4-15-2007 ...................... 500 538,120
General Merchandise Stores - 0.24%
Fred Meyer, Inc.,
7.15%, 3-1-2003 ....................... 250 251,233
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Health Services - 1.00%
Tenet Healthcare Corporation:
7.875%, 1-15-2003 ..................... $ 500 $ 508,750
8.625%, 12-1-2003 ..................... 500 525,000
Total ................................. 1,033,750
Holding and Other Investment Offices - 0.48%
Bay Apartment Communities, Inc.,
6.5%, 1-15-2005 ....................... 500 496,185
Instruments and Related Products - 0.73%
Raytheon Company,
6.45%, 8-15-2002 ...................... 750 757,440
Insurance Carriers - 0.51%
Reliance Group Holdings, Inc.,
9.0%, 11-15-2000 ...................... 500 522,125
Lumber and Wood Products - 0.24%
Doman Industries Limited,
8.75%, 3-15-2004 ...................... 250 244,375
Nondepository Institutions - 6.72%
CHYPS CBO 1997-1 Ltd.,
0.0%, 1-15-2010 (A)(E) ................ 1,500 1,509,375
Chrysler Financial Corporation,
12.75%, 11-1-99 ....................... 1,000 1,084,560
General Motors Acceptance Corporation,
8.875%, 6-1-2010 ...................... 1,000 1,201,460
IMC Home Equity Loan Trust,
6.9%, 1-20-2022 ....................... 1,000 1,015,000
National Rural Utilities Cooperative
Finance Corp.,
6.1%, 12-22-2000 ...................... 500 502,475
Residential Asset Securities Corporation,
Mortgage Pass-Through Certificates,
8.0%, 10-25-2024 ...................... 1,000 1,037,270
Westinghouse Electric Corporation,
8.875%, 6-14-2014 ..................... 500 570,325
Total ................................. 6,920,465
Oil and Gas Extraction - 3.05%
Anadarko Petroleum Corporation,
7.25%, 3-15-2025 ...................... 1,000 1,118,390
Louis Dreyfus Natural Gas Corp.,
9.25%, 6-15-2004 ...................... 500 547,500
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Oil and Gas Extraction (Continued)
Mitchell Energy & Development Corp.,
9.25%, 1-15-2002 ...................... $ 27 $ 29,251
Oryx Energy Company,
10.0%, 4-1-2001 ....................... 400 435,060
YPF Sociedad Anoima,
8.0%, 2-15-2004 ....................... 1,000 1,007,300
Total ................................. 3,137,501
Paper and Allied Products - 1.56%
Boise Cascade Office Products Corporation,
9.875%, 2-15-2001 ..................... 500 511,035
Canadian Pacific Forest Products Ltd.,
9.25%, 6-15-2002 ...................... 1,000 1,090,760
Total ................................. 1,601,795
Printing and Publishing - 1.52%
News America Holdings Incorporated,
7.45%, 6-1-2000 ....................... 500 512,340
Quebecor Printing Capital Corporation,
6.5%, 8-1-2027 ........................ 1,000 1,050,740
Total ................................. 1,563,080
Security and Commodity Brokers - 1.46%
Lehman Brothers Holdings Inc.,
6.05%, 4-28-2000 ...................... 500 500,345
Salomon Inc.,
3.65%, 2-14-2002 ...................... 1,000 999,330
Total ................................. 1,499,675
Stone, Clay and Glass Products - 1.78%
Owens-Corning Fiberglas Corporation,
8.875%, 6-1-2002 ...................... 500 533,315
Owens-Illinois, Inc.,
7.15%, 5-15-2005 ...................... 750 757,275
USG Corporation,
9.25%, 9-15-2001 ...................... 500 539,165
Total ................................. 1,829,755
Transportation Equipment - 0.49%
Coltec Industries Inc.,
7.5%, 4-15-2008 (A) ................... 500 506,250
United States Postal Service - 0.25%
Postal Square Limited Partnership,
6.5%, 6-15-2022 ....................... 247 253,373
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Wholesale Trade -- Durable Goods - 2.61%
Fisher Scientific International Inc.,
7.125%, 12-15-2005 .................... $ 900 $ 843,777
Motorola, Inc.,
8.4%, 8-15-2031 ....................... 1,500 1,838,445
Total ................................. 2,682,222
TOTAL CORPORATE DEBT SECURITIES - 57.83% $ 59,515,693
(Cost: $56,723,365)
OTHER GOVERNMENT SECURITIES
Canada - 4.93%
Hydro-Quebec:
8.05%, 7-7-2024 ....................... 1,000 1,189,720
7.4%, 3-28-2025 ....................... 1,000 1,207,100
Province de Quebec:
5.67%, 2-27-2026 ...................... 1,500 1,594,440
6.29%, 3-6-2026 ....................... 1,000 1,084,450
Total ................................. 5,075,710
Korea - 0.22%
Korea Development Bank (The),
6.25%, 5-1-2000 ....................... 250 229,262
Supranational - 1.17%
Inter-American Development Bank,
8.4%, 9-1-2009 ........................ 1,000 1,197,850
TOTAL OTHER GOVERNMENT SECURITIES - 6.32% $ 6,502,822
(Cost: $5,876,608)
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation:
7.5%, 2-15-2007 ....................... 2,000 2,044,360
7.5%, 11-15-2017 ...................... 856 860,585
6.5%, 9-25-2018 ....................... 500 504,580
7.5%, 4-15-2019 ....................... 1,547 1,583,937
7.95%, 12-15-2020 ..................... 2,876 2,912,681
6.25%, 1-15-2021 ...................... 4,000 4,001,240
Federal National Mortgage Association:
5.98%, 6-18-2003 ...................... 1,000 1,000,160
0.0%, 10-9-2019 ....................... 4,000 1,150,640
7.0%, 9-25-2020 ....................... 500 512,185
6.5%, 7-25-2028 ....................... 500 500,720
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES (Continued)
Government National Mortgage Association:
7.5%, 7-15-2023 ....................... $1,604 $ 1,650,616
7.5%, 12-15-2023 ...................... 1,840 1,892,856
8.0%, 9-15-2025 ....................... 1,436 1,501,048
7.0%, 7-20-2027 ....................... 627 635,422
7.0%, 8-20-2027 ....................... 1,284 1,300,767
7.75%, 10-15-2031 ..................... 318 330,424
United States Treasury:
6.75%, 5-31-99 ........................ 500 505,390
5.75%, 10-31-2000 ..................... 6,000 6,028,140
5.25%, 1-31-2001 ...................... 1,000 993,750
Miscellaneous United States Government Backed
Securities:
Tennessee Valley Authority,
5.88%, 4-1-2036 ..................... 750 779,752
United States Department of Veterans Affairs,
Guaranteed Remic Pass-Through Certificates,
Vendee Mortgage Trust:
1997-2 Class C,
7.5%, 8-15-2017 ..................... 2,000 2,051,240
1998-1 Class 2B,
7.0%, 5-15-2005 ..................... 250 258,125
TOTAL UNITED STATES GOVERNMENT SECURITIES - 32.06% $ 32,998,618
(Cost: $32,538,677)
TOTAL SHORT-TERM SECURITIES - 1.87% $ 1,925,698
(Cost: $1,925,698)
TOTAL INVESTMENT SECURITIES - 98.08% $100,942,831
(Cost: $97,064,348)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.92% 1,976,278
NET ASSETS - 100.00% $102,919,109
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1998
Shares Value
COMMON STOCKS AND WARRANTS
Communication - 0.51%
Allegiance Telecom, Inc., Warrants (A)* 1,000 $ 5,450
Concentric Network Corporation,
Warrants (A)* ......................... 750 101,250
Heartland Wireless Communications,
Inc., Warrants (A)* ................... 3,000 30
Iridium LLC, Warrants (A)* ............. 500 107,500
Microcell Telecommunications Inc.,
Warrants(A)* .......................... 5,000 95,155
Primus Telecommunications Group,
Incorporated, Warrants* ............... 500 10,000
Young Broadcasting Inc., Class A* ...... 5,000 325,310
Total ................................. 644,695
Electronic and Other Electric Equipment - 0.01%
Powertel, Inc., Warrants* .............. 2,400 19,800
Food and Kindred Products - 0.78%
Keebler Foods Company* ................. 36,000 990,000
Furniture and Fixtures - 0.32%
Lear Corporation* ...................... 8,000 410,496
General Building Contractors - 0.35%
Walter Industries, Inc.* ............... 23,272 440,702
Instruments and Related Products - 0.91%
Maxxim Medical, Inc.* .................. 40,000 1,160,000
Miscellaneous Retail - 0.95%
Duane Reade Holding Corp.* ............. 20,000 600,000
Finlay Enterprises, Inc.* .............. 25,000 603,900
Total ................................. 1,203,900
TOTAL COMMON STOCKS AND WARRANTS - 3.83% $ 4,869,593
(Cost: $3,790,097)
PREFERRED STOCKS
Communication - 0.50%
IXC Communications, Inc., 12.5%* ....... 546 633,360
Depository Institutions - 0.70%
California Federal Bank,
F.S.B., 10.625% ....................... 5,000 552,500
California Federal Preferred Capital
Corporation, 9.125% ................... 12,500 337,500
Total ................................. 890,000
Printing and Publishing - 0.41%
PRIMEDIA Inc., 10.0% ................... 5,000 522,500
TOTAL PREFERRED STOCKS - 1.61% $ 2,045,860
(Cost: $1,864,884)
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Agricultural Production -- Crops - 1.03%
Frank's Nursery & Crafts, Inc.,
10.25%, 3-1-2008 (A) .................. $ 750 $ 755,625
Hines Horticulture, Inc.,
11.75%, 10-15-2005 .................... 500 551,250
Total ................................. 1,306,875
Agricultural Production -- Livestock - 0.24%
Pilgrim's Pride Corporation,
10.875%, 8-1-2003 ..................... 300 310,500
Amusement and Recreation Services - 3.53%
American Skiing Company,
12.0%, 7-15-2006 ...................... 1,000 1,125,000
Premier Parks Inc.,
0.0%, 4-1-2008 (E) .................... 2,500 1,656,250
Showboat Marina Casino Partnership,
13.5%, 3-15-2003 ...................... 500 585,000
Trump Hotels & Casino Resorts
Holdings, L.P.,
15.5%, 6-15-2005 ...................... 1,000 1,125,000
Total ................................. 4,491,250
Apparel and Accessory Stores - 0.41%
Wilsons The Leather Experts Inc.,
11.25%, 8-15-2004 ..................... 500 525,000
Apparel and Other Textile Products - 1.64%
CONSOLTEX GROUP INC.,
11.0%, 10-1-2003 ...................... 1,000 1,057,500
Pillowtex Corporation,
9.0%, 12-15-2007 ...................... 1,000 1,030,000
Total ................................. 2,087,500
Auto Repair, Services and Parking - 0.41%
Safelite Glass Corp.,
9.875%, 12-15-2006 (A) ................ 500 525,000
Automotive Dealers and Service Stations - 0.89%
Chief Auto Parts Inc.,
10.5%, 5-15-2005 ...................... 1,000 1,130,000
Building Materials and Garden Supplies - 0.80%
JTM Industries, Inc.,
10.0%, 4-15-2008 (A) .................. 1,000 1,015,000
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Business Services - 3.03%
Adams Outdoor Advertising Limited Partnership,
10.75%, 3-15-2006 ..................... $ 750 $ 821,250
DecisionOne Holdings Corp., Units,
0.0%, 8-1-2008 (E)(F) ................. 1,750 1,050,000
Federal Data Corporation,
10.125%, 8-1-2005 ..................... 500 516,875
Lamar Advertising Company,
9.625%, 12-1-2006 ..................... 1,000 1,072,500
Rental Service Corporation,
9.0%, 5-15-2008 (A) ................... 400 400,000
Total ................................. 3,860,625
Chemicals and Allied Products - 1.86%
Aqua-Chem, Inc.,
11.25%, 7-1-2008 (A) .................. 750 761,250
Dade International Inc.,
11.125%, 5-1-2006 ..................... 500 565,000
Spinnaker Industries, Inc.,
10.75%, 10-15-2006 .................... 1,000 1,040,000
Total ................................. 2,366,250
Communication - 23.57%
Adelphia Communications Corporation:
10.25%, 7-15-2000 ..................... 500 516,250
9.25%, 10-1-2002 ...................... 500 517,500
10.5%, 7-15-2004 ...................... 500 546,250
9.875%, 3-1-2007 ...................... 500 541,250
Allbritton Communications Company,
9.75%, 11-30-2007 ..................... 500 550,000
Allegiance Telecom, Inc.,
0.0%, 2-15-2008 (A)(E) ................ 1,000 532,500
American Radio Systems Corporation,
9.0%, 2-1-2006 ........................ 750 802,500
CSC Holdings, Inc.,
9.875%, 2-15-2013 ..................... 1,450 1,602,250
Comcast Corporation,
9.5%, 1-15-2008 ....................... 350 373,744
Concentric Network Corporation,
12.75%, 12-15-2007 .................... 750 796,875
Crown Castle International Corp.,
0.0%, 11-15-2007 (E) .................. 1,000 685,000
Diamond Cable Communications Plc,
0.0%, 12-15-2005 (E) .................. 500 415,000
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Communication (Continued)
GST Telecommunications,
0.0%, 11-15-2007 (E) .................. $1,000 $ 1,162,500
Hyperion Telecommunications, Inc.,
0.0%, 4-15-2003 (E) ................... 2,000 1,490,000
ICG Services, Inc.,
0.0%, 5-1-2008 (A)(E) ................. 900 526,500
ITC /\ DeltaCom, Inc.,
8.875%, 3-1-2008 ...................... 500 508,750
IXC Communications, Inc.,
9.0%, 4-15-2008 (A) ................... 500 502,500
Intermedia Communications of Florida, Inc.:
0.0%, 5-15-2006 (E) ................... 750 613,125
8.5%, 1-15-2008 ....................... 750 751,875
Iridium LLC:
10.875%, 7-15-2005 .................... 650 645,125
11.25%, 7-15-2005 ..................... 500 501,250
13.0%, 7-15-2005 ...................... 1,000 1,065,000
LIN Holdings Corp.,
0.0%, 3-1-2008 (A)(E) ................. 750 502,500
Marcus Cable Co.,
0.0%, 12-15-2005 (E) .................. 1,000 930,000
Marcus Cable Operating Company, L.P.,
0.0%, 8-1-2004 (E) .................... 1,500 1,455,000
MetroNet Communications Corp.,
0.0%, 6-15-2008 (A)(E) ................ 1,000 617,500
Microcell Telecommunications Inc.,
0.0%, 6-1-2006 (E) .................... 1,750 1,308,125
Micron Custom Manufacturing Services, Inc.,
9.75%, 3-1-2008 (A) ................... 500 471,250
Nextel Communications, Inc.:
0.0%, 8-15-2004 (E) ................... 1,000 972,500
0.0%, 2-15-2008 (A)(E) ................ 1,000 637,500
NEXTLINK Communications, Inc.,
9.625%, 10-1-2007 ..................... 900 918,000
OnePoint Communications Corp., Units,
14.5%, 6-1-2008 (A)(G) ................ 900 864,000
Pathnet, Inc., Units,
12.25%, 4-15-2008 (A)(H) .............. 500 530,000
Primus Telecommunications Group, Incorporated,
11.75%, 8-1-2004 ...................... 500 531,250
Salem Communications Corporation,
9.5%, 10-1-2007 ....................... 500 520,000
Sprint Spectrum L.P.,
0.0%, 8-15-2006 (E) ................... 1,000 855,000
Vanguard Cellular Systems, Inc.,
9.375%, 4-15-2006 ..................... 500 525,000
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Communication (Continued)
VersaTel Telecom B.V., Units,
13.25%, 5-15-2008 (A)(I) .............. $ 500 $ 527,500
WinStar Communications, Inc.:
0.0%, 10-15-2005 (Convertible) (A)(E) . 500 695,000
0.0%, 3-15-2008 (A)(E) ................ 1,000 992,500
10.0%, 3-15-2008 (A) .................. 500 497,500
Total ................................. 29,995,869
Depository Institutions - 1.28%
First Nationwide Holdings Inc.:
9.125%, 1-15-2003 ..................... 1,000 1,062,500
12.5%, 4-15-2003 ...................... 500 567,500
Total ................................. 1,630,000
Eating and Drinking Places - 0.39%
Foodmaker, Inc.,
8.375%, 4-15-2008 (A) ................. 500 500,000
Electric, Gas and Sanitary Services - 1.01%
Allied Waste Industries, Inc.,
0.0%, 6-1-2007 (E) .................... 1,000 735,000
Allied Waste North America, Inc.,
10.25%, 12-1-2006 ..................... 500 548,750
Total ................................. 1,283,750
Electronic and Other Electric Equipment - 4.34%
Communications Instruments, Inc.,
10.0%, 9-15-2004 ...................... 450 464,063
Echostar Communications Corporation:
0.0%, 3-15-2004 (E) ................... 500 459,375
0.0%, 6-1-2004 (E) .................... 1,000 972,500
Elgar Holdings, Inc.,
9.875%, 2-1-2008 (A) .................. 500 463,750
Intercel, Inc.,
0.0%, 2-1-2006 (E) .................... 750 585,937
Omnipoint Corporation,
11.625%, 8-15-2006 .................... 1,250 1,325,000
Telex Communications, Inc.,
10.5%, 5-1-2007 ....................... 500 460,000
WESCO Distribution, Inc.,
9.125%, 6-1-2008 (A) .................. 500 495,625
WESCO International, Inc.,
0.0%, 6-1-2008 (A)(E) ................. 500 293,750
Total ................................. 5,520,000
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Engineering and Management Services - 0.49%
United International Holdings, Inc.,
0.0%, 2-15-2008 (E) ................... $1,000 $ 617,500
Fabricated Metal Products - 2.92%
Neenah Corporation,
11.125%, 5-1-2007 ..................... 1,500 1,638,750
Nortek, Inc.,
9.875%, 3-1-2004 ...................... 500 517,500
Safety Components International, Inc.,
10.125%, 7-15-2007 .................... 1,000 1,040,000
U.S. Can Corporation,
10.125%, 10-15-2006 ................... 500 526,250
Total ................................. 3,722,500
Food and Kindred Products - 1.19%
B & G Foods, Inc.,
9.625%, 8-1-2007 ...................... 500 508,750
Eagle Family Foods, Inc.,
8.75%, 1-15-2008 (A) .................. 500 490,000
Southern Foods Group, L.P.,
9.875%, 9-1-2007 (A) .................. 500 520,000
Total ................................. 1,518,750
Food Stores - 0.80%
Big V Supermarkets, Inc.,
11.0%, 2-15-2004 ...................... 500 522,500
Pueblo Xtra International, Inc.,
9.5%, 8-1-2003 ........................ 500 490,000
Total ................................. 1,012,500
Health Services - 2.09%
Hudson Respiratory Care Inc.,
9.125%, 4-15-2008 (A) ................. 500 487,500
Multicare Companies, Inc. (The),
9.0%, 8-1-2007 ........................ 750 742,500
Paragon Health Network, Inc.,
9.5%, 11-1-2007 ....................... 900 913,500
Tenet Healthcare Corporation,
8.625%, 1-15-2007 ..................... 500 512,500
Total ................................. 2,656,000
Heavy Construction, Except Building - 0.57%
Level 3 Communications, Inc.,
9.125%, 5-1-2008 (A) .................. 750 729,375
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Holding and Other Investment Offices - 1.82%
Grupo Industrial Durango, S.A. de C.V.,
12.625%, 8-1-2003 ..................... $1,000 $ 1,065,000
LTC Properties, Inc., Convertible,
8.5%, 1-1-2000 ........................ 1,000 1,250,000
Total ................................. 2,315,000
Hotels and Other Lodging Places - 2.94%
CapStar Hotel Company,
8.75%, 8-15-2007 ...................... 500 517,500
HMC Acquisition Properties, Inc.,
9.0%, 12-15-2007 ...................... 500 542,500
Prime Hospitality Corp.:
9.25%, 1-15-2006 ...................... 1,500 1,593,750
9.75%, 4-1-2007 ....................... 500 531,250
Station Casinos, Inc.,
10.125%, 3-15-2006 .................... 500 555,625
Total ................................. 3,740,625
Industrial Machinery and Equipment - 3.53%
Falcon Building Products, Inc.,
0.0%, 6-15-2007 (E) ................... 2,000 1,330,000
Morris Material Handling, Inc.,
9.5%, 4-1-2008 (A) .................... 1,000 932,500
National Equipment Services, Inc.,
10.0%, 11-30-2004 (A) ................. 750 753,750
Terex Corporation,
8.875%, 4-1-2008 (A) .................. 1,000 985,000
Walbro Corporation,
9.875%, 7-15-2005 ..................... 500 490,000
Total ................................. 4,491,250
Instruments and Related Products - 1.72%
Cole National Group, Inc.,
9.875%, 12-31-2006 .................... 500 540,000
Maxxim Medical, Inc.,
10.5%, 8-1-2006 ....................... 1,500 1,653,750
Total ................................. 2,193,750
Miscellaneous Manufacturing Industries - 0.81%
Amscan Holdings Inc.,
9.875%, 12-15-2007 .................... 500 520,000
Hedstrom Corporation,
10.0%, 6-1-2007 ....................... 500 513,750
Total ................................. 1,033,750
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Miscellaneous Retail - 0.87%
Michaels Stores, Inc.,
10.875%, 6-15-2006 .................... $1,000 $ 1,110,000
Motion Pictures - 1.95%
AMC Entertainment, Inc.,
9.5%, 3-15-2009 ....................... 500 505,000
Hollywood Theaters, Inc.,
10.625%, 8-1-2007 ..................... 1,500 1,575,000
Regal Cinemas, Inc.,
9.5%, 6-1-2008 (A) .................... 400 401,500
Total ................................. 2,481,500
Oil and Gas Extraction - 1.67%
Cross Timbers Oil,
8.75%, 11-1-2009 ...................... 500 502,500
Flores & Rucks, Inc.,
9.75%, 10-1-2006 ...................... 1,000 1,087,500
Pride Petroleum Services, Inc.,
9.375%, 5-1-2007 ...................... 500 532,500
Total ................................. 2,122,500
Paper and Allied Products - 4.05%
Buckeye Technologies Inc.,
8.0%, 10-15-2010 (A) .................. 750 757,500
Container Corporation of America,
11.25%, 5-1-2004 ...................... 1,500 1,616,250
Fort Howard Corporation,
11.0%, 1-2-2002 ....................... 421 430,788
Huntsman Packaging Corporation,
9.125%, 10-1-2007 ..................... 750 748,125
Mail-Well Corporation,
10.5%, 2-15-2004 ...................... 500 535,625
Outsourcing Services Group, Inc.,
10.875%, 3-1-2006 (A) ................. 500 511,250
SF Holdings Group, Inc.,
0.0%, 3-15-2008 (A)(E) ................ 1,000 550,000
Total ................................. 5,149,538
Personal Services - 0.43%
Prime Succession Acquisition Corp.,
10.75%, 8-15-2004 ..................... 500 548,750
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Primary Metal Industries - 0.82%
Weirton Steel Corporation,
11.375%, 7-1-2004 ..................... $ 500 $ 532,500
Wheeling-Pittsburgh Corporation,
9.25%, 11-15-2007 ..................... 500 510,000
Total ................................. 1,042,500
Printing and Publishing - 2.80%
American Media Operations, Inc.,
11.625%, 11-15-2004 ................... 1,000 1,080,000
K-III Communications Corporation,
8.5%, 2-1-2006 ........................ 500 508,750
Perry-Judd's Incorporated,
10.625%, 12-15-2007 (A) ............... 1,000 1,055,000
TransWestern Publishing Company LLC,
9.625%, 11-15-2007 .................... 900 922,500
Total ................................. 3,566,250
Real Estate - 0.40%
Delco Remy International, Inc.,
8.625%, 12-15-2007 .................... 500 508,750
Rubber and Miscellaneous Plastics Products - 4.36%
Graham Packaging Holdings Company and
GPC Capital Corp. II,
0.0%, 1-15-2009 (A)(E) ................ 6,000 3,765,000
Heafner (J.H.) Company, Inc. (The),
10.0%, 5-15-2008 (A) .................. 500 510,000
Home Products International, Inc.,
9.625%, 5-15-2008 (A) ................. 750 746,250
LDM Technologies, Inc.,
10.75%, 1-15-2007 ..................... 500 525,000
Total ................................. 5,546,250
Social Services - 0.60%
La Petite Academy, Inc. and LPA Holding Corp.,
10.0%, 5-15-2008 (A) .................. 750 759,375
Stone, Clay and Glass Products - 0.78%
SIMCALA, Inc.,
9.625%, 4-15-2006 (A) ................. 1,000 992,500
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1998
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Textile Mill Products - 2.41%
Avondale Mills, Inc.,
10.25%, 5-1-2006 ...................... $ 500 $ 537,500
Collins & Aikman Products Co.,
11.5%, 4-15-2006 ...................... 500 555,000
Galey & Lord, Inc.,
9.125%, 3-1-2008 ...................... 1,500 1,443,750
Glenoit Corporation,
11.0%, 4-15-2007 ...................... 500 536,250
Total ................................. 3,072,500
Transportation Equipment - 1.60%
Federal-Mogul Corporation:
7.75%, 7-1-2006 ....................... 1,000 1,013,750
7.875%, 7-1-2010 ...................... 500 502,500
Westinghouse Air Brake Company,
9.375%, 6-15-2005 ..................... 500 520,000
Total ................................. 2,036,250
Transportation Services - 0.55%
Transportacion Maritima Mexicana,
S.A. de C.V.,
10.0%, 11-15-2006 ..................... 750 701,250
Trucking and Warehousing - 0.43%
Iron Mountain Incorporated,
10.125%, 10-1-2006 .................... 500 542,500
Wholesale Trade -- Durable Goods - 1.26%
Alvey Systems, Inc.,
11.375%, 1-31-2003 .................... 1,000 1,075,000
Sealy Mattress Company,
9.875%, 12-15-2007 (A) ................ 500 530,000
Total ................................. 1,605,000
Wholesale Trade -- Nondurable Goods - 2.61%
Color Spot Nurseries Inc.,
10.5%, 12-15-2007 ..................... 900 864,000
Gaylord Container Corporation,
9.375%, 6-15-2007 ..................... 500 481,250
Nebraska Book Company, Inc.,
8.75%, 2-15-2008 (A) .................. 1,000 966,250
Richmont Marketing Specialists Inc.,
10.125%, 12-15-2007 (A) ............... 500 510,625
U.S. Office Products Company,
9.75%, 6-15-2008 (A) .................. 500 501,250
Total ................................. 3,323,375
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1998
Value
TOTAL CORPORATE DEBT SECURITIES - 90.90% $115,687,407
(Cost: $111,800,625)
TOTAL SHORT-TERM SECURITIES - 1.90% $ 2,422,850
(Cost $2,422,850)
TOTAL INVESTMENT SECURITIES - 98.24% $125,025,710
(Cost: $119,878,456)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.76% 2,235,417
NET ASSETS - 100.00% $127,261,127
See Notes to Schedules of Investments on pages 58 - 61.
<PAGE>
TMK/UNITED FUNDS, INC.
Notes to Schedules of Investments
*No dividends were paid during the preceding 12 months.
(A) As of June 30, 1998, 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$1,177,500
2/28/97 1,000 995,000 785,000
--------------------
$2,495,000$1,962,500
====================
Asset Strategy Portfolio
Centrais Electricas Brasileiras S.A.,
10.0%, 10-30-98 2/20/98 $ 200 $203,500 $201,500
======== ========
Bond Portfolio
CHYPS CBO 1997-1 Ltd.,
0.0%, 1-15-2010 11/25/97 $1,500$1,444,062$1,509,375
Coltec Industries Inc.,
7.5%, 4-15-2008 4/8/98 500 499,235 506,250
Sumitomo Bank, Limited (The),
9.4%, 12-29-2049 2/6/98 250 250,000 248,460
--------------------
$2,193,297$2,264,085
====================
High Income Portfolio
Allegiance Telecom, Inc.,
Warrants 1/29/98 1,000$ 19,096$ 5,450
Concentric Network Corporation,
Warrants 12/15/97 750 24,375 101,250
Heartland Wireless Communications,
Inc., Warrants 4/20/95 3,000 18,500 30
Iridium LLC, Warrants 7/15/97 500 28,414 107,500
Microcell Telecommunications Inc.,
Warrants 6/13/96 5,000 61,247 95,155
Allegiance Telecom, Inc.,
0.0%, 2-15-2008 1/29/98 $1,000 565,424 532,500
Aqua-Chem, Inc.,
11.25%, 7-1-2008 6/18/98 750 750,000 761,250
Buckeye Technologies Inc.,
8.0%, 10-15-2010 6/8/98 750 745,763 757,500
Eagle Family Foods, Inc.,
8.75%, 1-15-2008 2/10/98 500 504,375 490,000
Elgar Holdings, Inc.,
9.875%, 2-1-2008 1/30/98 500 500,000 463,750
Foodmaker, Inc.,
8.375%, 4-15-2008 4/8/98 500 499,160 500,000
Frank's Nursery & Crafts, Inc.,
10.25%, 3-1-2008 2/23/98 750 750,000 755,625
Graham Packaging Holdings Company and
GPC Capital Corp. II,
0.0%, 1-15-2009 1/23/98 to
1/26/98 6,000 3,666,020 3,765,000
Heafner (J.H.) Company, Inc. (The),
10.0%, 5-15-2008 5/15/98 500 500,000 510,000
Home Products International, Inc.,
9.625%, 5-15-2008 5/7/98 750 750,000 746,250
Hudson Respiratory Care Inc.,
9.125%, 4-15-2008 4/2/98 500 500,000 487,500
ICG Services, Inc.,
0.0%, 5-1-2008 4/22/98 900 555,219 526,500
IXC Communications, Inc.,
9.0%, 4-15-2008 4/16/98 500 500,000 502,500
JTM Industries, Inc.,
10.0%, 4-15-2008 4/30/98 1,000 1,012,500 1,015,000
La Petite Academy, Inc. and LPA Holding Corp.,
10.0%, 5-15-2008 5/6/98 750 750,000 759,375
Level 3 Communications, Inc.,
9.125%, 5-1-2008 4/23/98 750 746,843 729,375
LIN Holdings Corp.,
0.0%, 3-1-2008 2/18/98 750 460,688 502,500
MetroNet Communications Corp.,
0.0%, 6-15-2008 6/4/98 1,000 614,550 617,500
Micron Custom Manufacturing Services, Inc.,
9.75%, 3-1-2008 2/19/98 500 500,000 471,250
Morris Material Handling, Inc.,
9.5%, 4-1-2008 3/23/98 1,000 1,000,000 932,500
National Equipment Services, Inc.,
10.0%, 11-30-2004 11/20/97 750 740,752 753,750
Nebraska Book Company, Inc.,
8.75%, 2-15-2008 2/10/98 1,000 1,003,437 966,250
Nextel Communications, Inc.,
0.0%, 2-15-2008 2/10/98 1,000 617,500 637,500
OnePoint Communications Corp., Units,
14.5%, 6-1-2008 5/15/98 900 900,000 864,000
Outsourcing Services Group, Inc.,
10.875%, 3-1-2006 2/26/98 500 500,000 511,250
Pathnet, Inc., Units,
12.25%, 4-15-2008 4/1/98 500 500,000 530,000
Perry-Judd's Incorporated,
10.625%, 12-15-2007 12/10/97 650 650,000 685,750
2/9/98 350 370,125 369,250
Regal Cinemas, Inc.,
9.5%, 6-1-2008 5/21/98 400 399,324 401,500
Rental Service Corporation,
9.0%, 5-15-2008 5/8/98 400 400,000 400,000
Richmont Marketing Specialists Inc.,
10.125%, 12-15-2007 12/16/97 500 500,000 510,625
SF Holdings Group, Inc.,
0.0%, 3-15-2008 3/6/98 1,000 552,500 550,000
SIMCALA, Inc.,
9.625%, 4-15-2006 3/24/98 1,000 1,000,000 992,500
Safelite Glass Corp.,
9.875%, 12-15-2006 3/25/98 500 531,250 525,000
Sealy Mattress Company,
9.875%, 12-15-2007 12/11/97 500 500,000 530,000
Southern Foods Group, L.P.,
9.875%, 9-1-2007 8/27/97 500 500,000 520,000
Terex Corporation,
8.875%, 4-1-2008 3/24/98 1,000 995,760 985,000
U.S. Office Products Company,
9.75%, 6-15-2008 6/5/98 500 497,690 501,250
VersaTel Telecom B.V., Units,
13.25%, 5-15-2008 5/20/98 500 500,000 527,500
WESCO Distribution, Inc.,
9.125%, 6-1-2008 5/29/98 500 498,375 495,625
WESCO International, Inc.,
0.0%, 6-1-2008 5/29/98 500 290,105 293,750
WinStar Communications, Inc.: 0.0%, 10-15-2005
(Convertible) 10/14/97 500 467,500 695,000
0.0%, 3-15-2008 3/25/98 1,000 1,030,000 992,500
10.0%, 3-15-2008 3/17/98 500 500,000 497,500
----------------------
$30,466,492$30,870,760
======================
The total market value of restricted securities represents 0.26%, 1.75%,
2.20% and 24.26%, respectively, of the total net assets in the Growth
Portfolio, Asset Strategy Portfolio, Bond Portfolio and High Income
Portfolio at June 30, 1998.
<PAGE>
TMK/UNITED FUNDS, INC.
Notes to Schedules of Investments
(B) Listed on an exchange outside of the United States.
(C) Principal amounts are denominated in the indicated foreign currency where
applicable (DM - Deutsche Mark).
(D) Each unit of Spiros Development Corporation II, Inc. consists of one share
of callable common stock, par value $0.001 per share, of Spiros Development
Corporation II, Inc. and one warrant to purchase one-fourth of one share of
common stock, par value $0.001 per share, of Dura Pharmaceuticals, Inc.
(E) The security does not bear interest for an initial period of time and
subsequently becomes interest bearing.
(F) Each Unit of DecisionOne Holdings Corp. consists of $1,000 principal amount
at maturity of 11.5% senior discount debentures due 2008 and one warrant to
purchase 1.9 shares of common stock, par value $0.01 per share, of Quaker
Holding Co.
(G) Each Unit of OnePoint Communications Corp. consists of $1,000 principal
amount of 14.5% senior notes due 2008 and one warrant to purchase 0.635
shares of common stock, $0.01 par value of the company at an exercise price
of $0.01 per share.
(H) Each Unit of Pathnet, Inc. consists of $1,000 principal amount of 12.25%
senior notes due 2008 of the company and one warrant initially entitling
the holder thereof to purchase 1.1 shares of common stock, par value $0.01
per share of the company at an exercise price of $0.01 per share.
(I) Each Unit of VersaTel Telecom B.V. consists of $1,000 principal amount of
13.25% senior notes due 2008 and one warrant to purchase 6.667 ordinary
shares of VersaTel, par value NLG 0.10 per share.
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, 1998
(Unaudited)
(In Thousands,
Except for Per Share Amounts) Science and
Growth Income Technology
Portfolio Portfolio Portfolio
Assets ----------- ---------- -----------
Investment securities--at
value (Notes 1 and 3) $749,463 $752,138 $18,187
Cash ................. 4 --- 1
Receivables:
Investment securities
sold ............... --- 361 ---
Fund shares sold ..... 656 561 64
Dividends and interest 514 636 5
Prepaid insurance
premium .............. 2 1 ---
-------- -------- -------
Total assets ....... 750,639 753,697 18,257
Liabilities -------- -------- -------
Payable for investment
securities purchased . 7,886 5,124 ---
Payable to Fund
shareholders ......... 252 188 2
Accrued accounting
services fee (Note 2). 6 6 1
Accrued management
fee (Note 2) ......... 14 14 ---
Due to custodian ...... --- 1 ---
Dividends payable ..... --- --- ---
Other ................. --- 8 1
-------- -------- -------
Total liabilities .. 8,158 5,341 4
-------- -------- -------
Total net assets .. $742,481 $748,356 $18,253
Net Assets ======== ======== =======
$0.01 par value capital stock
Capital stock ........ $ 840 $ 539 $ 24
Additional paid-in
capital ............ 546,177 419,762 14,327
Accumulated undistributed gain (loss):
Accumulated undistributed net
investment income (loss) 1,881 3,315 (7)
Accumulated undistributed
net realized gain (loss)
on investment
transactions ....... 9,499 101,324 (501)
Net unrealized appreciation
of investments ..... 184,084 223,416 4,410
-------- -------- -------
Net assets applicable to
outstanding units
of capital ........ $742,481 $748,356 $18,253
======== ======== =======
Net asset value, redemption
and offering price per share $8.8400 $13.8918 $7.4532
======= ======== =======
Capital shares outstanding 83,991 53,870 2,449
Capital shares authorized 100,000 100,000 100,000
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
(Unaudited)
(In Thousands,
Except for Per Share Amounts)
International Small Cap Balanced
Portfolio Portfolio Portfolio
Assets ------------ ------------ -----------
Investment securities--at
value (Notes 1 and 3) $163,468 $178,672 $82,836
Cash ................. --- 1 1
Receivables:
Investment securities
sold ............... 9 2,050 38
Fund shares sold ..... 174 101 141
Dividends and interest 353 122 489
Prepaid insurance
premium .............. --- --- ---
-------- -------- -------
Total assets ....... 164,004 180,946 83,505
Liabilities -------- -------- -------
Payable for investment
securities purchased . 1,628 1,815 602
Payable to Fund
shareholders ......... 43 55 251
Accrued accounting
services fee (Note 2). 3 3 3
Accrued management
fee (Note 2) ......... 4 4 1
Due to custodian ...... --- --- ---
Dividends payable ..... --- --- ---
Other ................. 52 3 1
-------- -------- -------
Total liabilities .. 1,730 1,880 858
-------- -------- -------
Total net assets .. $162,274 $179,066 $82,647
Net Assets ======== ======== =======
$0.01 par value capital stock
Capital stock ........ $ 187 $ 186 $ 112
Additional paid-in
capital ............ 106,240 143,444 69,064
Accumulated undistributed gain (loss):
Accumulated undistributed net
investment income (loss) 655 447 1,045
Accumulated undistributed
net realized gain (loss)
on investment
transactions ....... 5,339 28,354 1,180
Net unrealized appreciation
of investments ..... 49,853 6,635 11,246
-------- -------- -------
Net assets applicable to
outstanding units
of capital ........ $162,274 $179,066 $82,647
======== ======== =======
Net asset value, redemption
and offering price per share $8.7000 $9.6395 $7.3492
======= ======== =======
Capital shares outstanding 18,652 18,576 11,246
Capital shares authorized 100,000 100,000 50,000
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
(Unaudited)
(In Thousands,
Except for Per Share Amounts) Asset
Strategy Money Market Limited-Term
Portfolio Portfolio Bond Portfolio
Assets ------------- ------------ -----------
Investment securities--at
value (Notes 1 and 3) $11,802 $44,123 $3,359
Cash ................. 7 3 1
Receivables:
Investment securities
sold ............... 99 --- ---
Fund shares sold ..... 4 1,438 17
Dividends and interest 56 118 53
Prepaid insurance
premium .............. --- 1 ---
------- ------- ------
Total assets ....... 11,968 45,683 3,430
Liabilities ------- ------- ------
Payable for investment
securities purchased . 460 --- ---
Payable to Fund
shareholders ......... 1 1,058 ---
Accrued accounting
services fee (Note 2). 1 2 ---
Accrued management
fee (Note 2) ......... --- 1 ---
Due to custodian ...... --- --- ---
Dividends payable ..... --- 6 ---
Other ................. 1 --- ---
------- ------- ------
Total liabilities .. 463 1,067 ---
------- ------- ------
Total net assets .. $11,505 $44,616 $3,430
Net Assets ======= ======= ======
$0.01 par value capital stock
Capital stock ........ $ 20 $ 446 $ 6
Additional paid-in
capital ............ 10,087 44,170 3,247
Accumulated undistributed gain (loss):
Accumulated undistributed net
investment income (loss) 165 --- 129
Accumulated undistributed
net realized gain (loss)
on investment
transactions ....... 504 --- 9
Net unrealized appreciation
of investments ..... 729 --- 39
------- ------- ------
Net assets applicable to
outstanding units
of capital ........ $11,505 $44,616 $3,430
======= ======= ======
Net asset value, redemption
and offering price per share $5.8244 $1.0000 $5.3451
======= ======== =======
Capital shares outstanding 1,975 44,616 642
Capital shares authorized 100,000 100,000 50,000
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
(Unaudited)
(In Thousands,
Except for Per Share Amounts)
Bond High Income
Portfolio Portfolio
Assets ------------- -------------
Investment securities--at
value (Notes 1 and 3) $100,943 $125,026
Cash ................. 1,194 1
Receivables:
Investment securities
sold ............... --- 763
Fund shares sold ..... 32 91
Dividends and interest 1,318 2,193
Prepaid insurance
premium .............. --- 1
-------- --------
Total assets ....... 103,487 128,075
Liabilities -------- --------
Payable for investment
securities purchased . 500 750
Payable to Fund
shareholders ......... 62 57
Accrued accounting
services fee (Note 2). 3 3
Accrued management
fee (Note 2) ......... 1 2
Due to custodian ...... --- ---
Dividends payable ..... --- ---
Other ................. 2 2
-------- --------
Total liabilities .. 568 814
-------- --------
Total net assets .. $102,919 $127,261
Net Assets ======== ========
$0.01 par value capital stock
Capital stock ........ $ 185 $ 256
Additional paid-in
capital ............ 97,188 115,261
Accumulated undistributed gain (loss):
Accumulated undistributed net
investment income (loss) 3,190 5,506
Accumulated undistributed
net realized gain (loss)
on investment
transactions ....... (1,522) 1,091
Net unrealized appreciation
of investments ..... 3,878 5,147
-------- --------
Net assets applicable to
outstanding units
of capital ........ $102,919 $127,261
======== ========
Net asset value, redemption
and offering price per share $5.5719 $4.9731
======= ========
Capital shares outstanding 18,471 25,590
Capital shares authorized 100,000 100,000
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 1998
(Unaudited)
(In Thousands) Science and
Growth Income Technology
Portfolio Portfolio Portfolio
---------- ---------- ----------
Investment Income
Income (Note 1B):
Interest and
amortization ........ $ 1,085 $ 2,281 $ 49
Dividends ............ 3,220 3,570 3
-------- -------- ------
Total income ....... 4,305 5,851 52
-------- -------- ------
Expenses (Note 2):
Investment management
fee ................ 2,373 2,439 48
Accounting services
fee ................ 35 35 5
Custodian fees ....... 9 23 3
Audit fees ........... 8 8 4
Legal fees ........... 8 7 ---
Other ................ 18 18 (1)
-------- -------- ------
Total expenses ..... 2,451 2,530 59
-------- -------- ------
Net investment
income (loss) ... 1,854 3,321 (7)
-------- -------- ------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net gain (loss)
on securities ........ 9,499 101,324 (501)
Realized net gain (loss)
on foreign currency
transactions ......... 27 (6) ---
Realized net gain on forward
currency contracts ... --- --- ---
Realized net gain on
options .............. --- --- ---
-------- -------- ------
Realized net gain (loss)
on investments ..... 9,526 101,318 (501)
Unrealized appreciation
(depreciation) in value
of investments during
the period ........... 96,109 (1,192) 4,169
-------- -------- ------
Net gain on
investments ....... 105,635 100,126 3,668
-------- -------- ------
Net increase
in net assets
resulting from
operations ...... $107,489 $103,447 $3,661
======== ======== ======
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 1998
(Unaudited)
(In Thousands)
International Small Cap Balanced
Portfolio Portfolio Portfolio
---------- ---------- ----------
Investment Income
Income (Note 1B):
Interest and
amortization ........ $ 381 $ 875 $ 915
Dividends ............ 1,072 302 382
------- ------- ------
Total income ....... 1,453 1,177 1,297
------- ------- ------
Expenses (Note 2):
Investment management
fee ................ 550 690 222
Accounting services
fee ................ 20 20 15
Custodian fees ....... 74 8 3
Audit fees ........... 7 6 6
Legal fees ........... 2 2 1
Other ................ 4 4 2
------- ------- ------
Total expenses ..... 657 730 249
------- ------- ------
Net investment
income (loss) ... 796 447 1,048
------- ------- ------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net gain (loss)
on securities ........ 4,991 28,126 1,180
Realized net gain (loss)
on foreign currency
transactions ......... (141) --- (3)
Realized net gain on forward
currency contracts.... 348 --- ---
Realized net gain on
options .............. --- 228 ---
------- ------- ------
Realized net gain (loss)
on investments ..... 5,198 28,354 1,177
Unrealized appreciation
(depreciation) in value
of investments during
the period ........... 36,044 (5,262) 3,892
------- ------- ------
Net gain on
investments ....... 41,242 23,092 5,069
------- ------- ------
Net increase
in net assets
resulting from
operations ...... $42,038 $23,539 $6,117
======= ======= ======
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 1998
(Unaudited)
(In Thousands)
Asset Strategy Money Market Limited-Term
Portfolio Portfolio Bond Portfolio
--------------- ---------- ----------
Investment Income
Income (Note 1B):
Interest and
amortization ........ $ 197 $1,158 $147
Dividends ............ 23 --- ---
------ ------ ----
Total income ....... 220 1,158 147
------ ------ ----
Expenses (Note 2):
Investment management
fee ................ 42 101 12
Accounting services
fee ................ 4 10 ---
Custodian fees ....... 3 4 1
Audit fees ........... 5 4 5
Legal fees ........... --- 4 ---
Other ................ --- 1 ---
------ ------ ----
Total expenses ..... 54 124 18
------ ------ ----
Net investment
income (loss) ... 166 1,034 129
------ ------ ----
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net gain (loss)
on securities ........ 504 --- 9
Realized net gain (loss)
on foreign currency
transactions ......... (1) --- ---
Realized net gain on forward
currency contracts ... --- --- ---
Realized net gain on
options .............. --- --- ---
------ ------ ----
Realized net gain (loss)
on investments ..... 503 --- 9
Unrealized appreciation
(depreciation) in value
of investments during
the period ........... 540 --- (4)
------ ------ ----
Net gain on
investments ....... 1,043 --- 5
------ ------ ----
Net increase
in net assets
resulting from
operations ...... $1,209 $1,034 $134
====== ====== ====
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 1998
(Unaudited)
(In Thousands)
Bond High Income
Portfolio Portfolio
------------- -------------
Investment Income
Income (Note 1B):
Interest and
amortization ........ $3,488 $5,841
Dividends ............ --- 103
------ ------
Total income ....... 3,488 5,944
------ ------
Expenses (Note 2):
Investment management
fee ................ 264 403
Accounting services
fee ................ 20 20
Custodian fees ....... 3 3
Audit fees ........... 6 6
Legal fees ........... 1 2
Other ................ 4 4
------ ------
Total expenses ..... 298 438
------ ------
Net investment
income (loss) ... 3,190 5,506
------ ------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net gain (loss)
on securities ........ 667 1,091
Realized net gain (loss)
on foreign currency
transactions ......... --- ---
Realized net gain on
forward currency
contracts ............ --- ---
Realized net gain on
options .............. --- ---
------ ------
Realized net gain (loss)
on investments ..... 667 1,091
Unrealized appreciation
(depreciation) in value
of investments during
the period ........... (71) (641)
------ -----
Net gain on
investments ....... 596 450
------ -----
Net increase
in net assets
resulting from
operations ...... $3,786 $5,956
====== ======
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended JUNE 30, 1998
(Unaudited)
(Dollars In Thousands) Science and
Growth Income Technology
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment
income (loss) ...... $ 1,854 $ 3,321 $ (7)
Realized net gain (loss)
on investments ..... 9,526 101,318 (501)
Unrealized appreciation
(depreciation) ..... 96,109 (1,192) 4,169
-------- -------- --------
Net increase
in net assets
resulting from
operations......... 107,489 103,447 3,661
-------- -------- --------
Dividends to shareholders (Note 1E):*
From net investment
income ............. --- --- ---
-------- -------- --------
Capital share
transactions** ....... (4,367) 8,005 4,385
-------- -------- --------
Total increase
(decrease) ...... 103,122 111,452 8,046
Net Assets
Beginning of period ... 639,359 636,904 10,207
-------- -------- --------
End of period ......... $742,481 $748,356 $18,253
======== ======== ========
Undistributed net investment
income (loss) ...... $1,881 $3,315 $(7)
====== ====== ====
*See "Financial Highlights" on pages 70 - 80.
**Shares issued from sale
of shares ............. 4,432,101 3,901,488 999,144
Shares issued from reinvest-
ment of dividends ..... --- --- ---
Shares redeemed ......... (4,923,841) (3,277,423) (318,253)
--------- --------- -------
Increase (decrease) in
outstanding capital
shares ................. (491,740) 624,065 680,891
========= ========= =======
Value issued from sale
of shares ............. $36,271 $51,576 $6,517
Value issued from reinvest-
ment of dividends ..... --- --- ---
Value redeemed .......... (40,638) (43,571) (2,132)
------- ------- ------
Increase (decrease) in
outstanding capital ... $(4,367) $ 8,005 $4,385
======= ======= ======
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended JUNE 30, 1998
(Unaudited)
(Dollars In Thousands)
International Small Cap Balanced
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment
income (loss) ...... $ 796 $ 447 $ 1,048
Realized net gain (loss)
on investments ..... 5,198 28,354 1,177
Unrealized appreciation
(depreciation) ..... 36,044 (5,262) 3,892
-------- -------- -------
Net increase
in net assets
resulting from
operations......... 42,038 23,539 6,117
-------- -------- -------
Dividends to shareholders (Note 1E):*
From net investment
income ............. --- --- ---
-------- -------- -------
Capital share
transactions** ....... 5,605 7,289 8,771
-------- -------- -------
Total increase
(decrease) ...... 47,643 30,828 14,888
Net Assets
Beginning of period ... 114,631 148,238 67,759
-------- -------- -------
End of period ......... $162,274 $179,066 $82,647
======== ======== =======
Undistributed net investment
income (loss) ...... $655 $447 $1,045
==== ==== ======
*See "Financial Highlights" on pages 70 - 80.
**Shares issued from sale
of shares ............. 1,584,255 1,665,041 1,680,374
Shares issued from reinvest-
ment of dividends ..... --- --- ---
Shares redeemed ......... (887,554) (881,124) (445,356)
--------- --------- ---------
Increase (decrease) in
outstanding capital shares 696,701 783,917 1,235,018
========= ========= =========
Value issued from sale
of shares ............. $12,329 $15,238 $11,951
Value issued from reinvest-
ment of dividends ..... --- --- ---
Value redeemed .......... (6,724) (7,949) (3,180)
------- ------- -------
Increase (decrease) in
outstanding capital ... $ 5,605 $ 7,289 $ 8,771
======= ======= =======
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended JUNE 30, 1998
(Unaudited)
(Dollars In Thousands)
Asset Strategy Money Market Limited-Term
Portfolio Portfolio Bond Portfolio
-------------- ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment
income (loss) ...... $ 166 $1,034 $ 129
Realized net gain (loss)
on investments ..... 503 --- 9
Unrealized appreciation
(depreciation) ..... 540 --- (4)
------- ------- ------
Net increase
in net assets
resulting from
operations......... 1,209 1,034 134
------- ------- ------
Dividends to shareholders (Note 1E):*
From net investment
income ............. --- (1,034) ---
------- ------- ------
Capital share
transactions** ....... 486 1,316 (956)
------- ------- ------
Total increase
(decrease) ...... 1,695 1,316 (822)
Net Assets
Beginning of period ... 9,810 43,300 4,252
------- ------- ------
End of period ......... $11,505 $44,616 $3,430
======= ======= ======
Undistributed net investment
income (loss) ...... $165 $--- $129
==== ==== ====
*See "Financial Highlights" on pages 70 - 80.
**Shares issued from sale
of shares ............. 198,196 107,862,958 112,251
Shares issued from reinvest-
ment of dividends ..... --- 1,034,059 ---
Shares redeemed ......... (110,480) (107,581,283) (290,155)
------- ----------- -------
Increase (decrease) in
outstanding capital shares 87,716 1,315,734 (177,904)
======= =========== =======
Value issued from sale
of shares ............. $1,092 $107,863 $ 591
Value issued from reinvest-
ment of dividends ..... --- 1,034 ---
Value redeemed .......... (606) (107,581) (1,547)
................. ------ -------- ------
Increase (decrease) in
outstanding capital ... $ 486 $ 1,316 $ (956)
====== ======== ======
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended JUNE 30, 1998
(Unaudited)
(Dollars In Thousands)
Bond High Income
Portfolio Portfolio
----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment
income (loss) ...... $ 3,190 $ 5,506
Realized net gain (loss)
on investments ..... 667 1,091
Unrealized appreciation
(depreciation) ..... (71) (641)
-------- --------
Net increase
in net assets
resulting from
operations......... 3,786 5,956
-------- --------
Dividends to shareholders (Note 1E):*
From net investment
income ............. --- ---
-------- --------
Capital share
transactions** ....... (356) 1,781
-------- --------
Total increase
(decrease) ....... 3,430 7,737
Net Assets
Beginning of period ... 99,489 119,524
-------- --------
End of period ......... $102,919 $127,261
======== ========
Undistributed net investment
income (loss) ...... $3,190 $5,506
====== ======
*See "Financial Highlights" on pages 70 - 80.
**Shares issued from sale
of shares ............. 1,393,301 2,580,950
Shares issued from reinvest-
ment of dividends ..... --- ---
Shares redeemed ......... (1,454,053) (2,206,253)
--------- ---------
Increase (decrease) in
outstanding capital shares (60,752) 374,697
========= =========
Value issued from sale
of shares ............. $7,617 $12,660
Value issued from reinvest-
ment of dividends ..... --- ---
Value redeemed .......... (7,973) (10,879)
------ -------
Increase (decrease) in
outstanding capital ... $ (356) $ 1,781
====== =======
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended DECEMBER 31, 1997
(Unaudited)
(Dollars In Thousands) Science and
Growth Income Technology
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase in Net Assets
Operations:
Net investment
income ............. $ 4,445 $ 4,562 $ 25
Realized net gain
on investments ..... 48,713 36,631 43
Unrealized
appreciation ....... 58,034 84,102 242
-------- -------- -------
Net increase
in net assets
resulting from
operations......... 111,192 125,295 310
-------- -------- -------
Dividends to shareholders (Note 1E):*
From net investment
income ............. (4,415) (4,556) (25)
From realized gains on
security transactions (48,744) (36,637) (43)
-------- -------- -------
(53,159) (41,193) (68)
-------- -------- -------
Capital share
transactions** ....... 68,163 90,411 9,965
-------- -------- -------
Total increase .... 126,196 174,513 10,207
Net Assets
Beginning of period ... 513,163 462,391 ---
-------- -------- -------
End of period ......... $639,359 $636,904 $10,207
======== ======== =======
Undistributed net
investment income .. $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages 70 - 80.
**Shares issued from sale
of shares ............. 8,757,287 8,155,958 1,872,760
Shares issued from reinvest-
ment of dividends and/or
distributions ......... 7,024,201 3,443,827 11,856
Shares redeemed ......... (6,800,077) (3,966,432) (116,416)
--------- --------- ---------
Increase in outstanding
capital shares ......... 8,981,411 7,633,353 1,768,200
========= ========= =========
Value issued from sale
of shares ............. $68,063 $96,368 $10,542
Value issued from reinvest-
ment of dividends and/or
distributions ......... 53,159 41,193 68
Value redeemed .......... (53,059) (47,150) (645)
................. ------- ------- ------
Increase in
outstanding capital ... $68,163 $90,411 $9,965
======= ======= ======
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended DECEMBER 31, 1997
(Unaudited)
(Dollars In Thousands)
International Small Cap Balanced
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase in Net Assets
Operations:
Net investment
income ............. $ 798 $ 390 $ 1,665
Realized net gain
on investments ..... 10,548 30,677 3,626
Unrealized
appreciation ....... 3,439 2,772 3,878
-------- -------- -------
Net increase
in net assets
resulting from
operations......... 14,785 33,839 9,169
-------- -------- -------
Dividends to shareholders (Note 1E):*
From net investment
income ............. (759) (396) (1,665)
From realized gains on
security transactions (9,339) (30,671) (3,626)
-------- -------- -------
(10,098) (31,067) (5,291)
-------- -------- -------
Capital share
transactions** ....... 30,095 48,058 21,454
-------- -------- -------
Total increase .... 34,782 50,830 25,332
Net Assets
Beginning of period ... 79,849 97,408 42,427
-------- -------- -------
End of period ......... $114,631 $148,238 $67,759
======== ======== =======
Undistributed net
investment income .. $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages 70 - 80.
**Shares issued from sale
of shares ............. 4,424,820 3,274,112 3,058,976
Shares issued from reinvest-
ment of dividends and/or
distributions ......... 1,581,672 3,728,844 781,696
Shares redeemed ......... (1,361,494) (1,359,852) (676,618)
--------- --------- ---------
Increase in outstanding
capital shares ......... 4,644,998 5,643,104 3,164,054
========= ========= =========
Value issued from sale
of shares ............. $29,101 $29,240 $20,762
Value issued from reinvest-
ment of dividends and/or
distributions ......... 10,098 31,067 5,291
Value redeemed .......... (9,104) (12,249) (4,599)
................. ------- ------- -------
Increase in
outstanding capital ... $30,095 $48,058 $21,454
======= ======= =======
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended DECEMBER 31, 1997
(Unaudited)
(Dollars In Thousands)
Asset Strategy Money Market Limited-Term
Portfolio Portfolio Bond Portfolio
-------------- ----------- -----------
Increase in Net Assets
Operations:
Net investment
income ............. $ 321 $ 1,952 $ 238
Realized net gain
on investments ..... 826 --- 16
Unrealized
appreciation ....... 31 --- 17
------ ------- ------
Net increase
in net assets
resulting from
operations......... 1,178 1,952 271
------ ------- ------
Dividends to shareholders (Note 1E):*
From net investment
income ............. (321) (1,952) (238)
From realized gains on
security transactions (779) --- (16)
------ ------- ------
(1,100) (1,952) (254)
------ ------- ------
Capital share
transactions** ....... 1,258 6,042 520
------ ------- ------
Total increase ... 1,336 6,042 537
Net Assets
Beginning of period ... 8,474 37,258 3,715
------ ------- ------
End of period ......... $9,810 $43,300 $4,252
====== ======= ======
Undistributed net
investment income .. $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages 70 - 80.
**Shares issued from sale
of shares ............. 282,151 208,969,939 161,256
Shares issued from reinvest-
ment of dividends and/or
distributions ......... 211,668 1,952,260 48,888
Shares redeemed ......... (256,770) (204,879,652) (110,075)
--------- ------------ --------
Increase in outstanding
capital shares ......... 237,049 6,042,547 100,069
========= ============ ========
Value issued from sale
of shares ............. $1,517 $208,970 $857
Value issued from reinvest-
ment of dividends and/or
distributions ......... 1,100 1,952 254
Value redeemed .......... (1,359) (204,880) (591)
................. ------- -------- ----
Increase in
outstanding capital ... $1,258 $ 6,042 $520
======= ======== ====
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended DECEMBER 31, 1997
(Unaudited)
(Dollars In Thousands)
Bond High Income
Portfolio Portfolio
----------- -----------
Increase in Net Assets
Operations:
Net investment
income ............. $ 5,928 $ 9,390
Realized net gain
on investments ..... 431 1,777
Unrealized
appreciation ....... 2,382 2,903
-------- --------
Net increase
in net assets
resulting from
operations......... 8,741 14,070
-------- --------
Dividends to shareholders (Note 1E):*
From net investment
income ............. (5,928) (9,390)
From realized gains on
security transactions --- (1,539)
-------- --------
(5,928) (10,929)
-------- --------
Capital share
transactions** ....... 4,309 18,977
-------- --------
Total increase .... 7,122 22,118
Net Assets
Beginning of period ... 92,367 97,406
-------- --------
End of period ......... $99,489 $119,524
======== ========
Undistributed net
investment income .. $--- $---
==== ====
*See "Financial Highlights" on pages 70 - 80.
**Shares issued from sale
of shares ............. 2,087,123 4,093,165
Shares issued from reinvest-
ment of dividends and/or
distributions ......... 1,104,169 2,305,606
Shares redeemed ......... (2,421,031) (2,474,500)
--------- ---------
Increase in outstanding
capital shares ......... 770,261 3,924,271
========= =========
Value issued from sale
of shares ............. $11,323 $20,075
Value issued from reinvest-
ment of dividends and/or
distributions ......... 5,928 10,929
Value redeemed .......... (12,942) (12,027)
................. ------- -------
Increase in
outstanding capital ... $ 4,309 $18,977
======= =======
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 -----------------------------------------
6/30/98 1997 1996 1995 1994 1993
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $7.5679 $6.7967 $6.8260 $5.8986 $6.1962 $6.1505
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0221 0.0574 0.0990 0.0903 0.1211 0.0537
Net realized and
unrealized gain
on investments .. 1.2500 1.4003 0.7478 2.1842 0.0268 0.8087
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 1.2721 1.4577 0.8468 2.2745 0.1479 0.8624
------- ------- ------- ------- ------- -------
Less distributions:
From net
investment
income .......... (0.0000) (0.0570)(0.0990) (0.0903)(0.1211) (0.0537)
From capital
gains ........... (0.0000) (0.6295)(0.7771) (1.2568)(0.3244) (0.7569)
In excess of
capital gains ... (0.0000) (0.0000)(0.0000) (0.0000)(0.0000) (0.0061)
------- ------- ------- ------- ------- -------
Total distributions. (0.0000) (0.6865)(0.8761) (1.3471)(0.4455) (0.8167)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $8.8400 $7.5679 $6.7967 $6.8260 $5.8986 $6.1962
======= ======= ======= ======= ======= =======
Total return ....... 16.81% 21.45% 12.40% 38.57% 2.39% 14.02%
Net assets, end of
period (in
millions) ........ $742 $639 $513 $419 $277 $221
Ratio of expenses
to average net
assets ............ 0.71%* 0.72% 0.73% 0.75% 0.77% 0.78%
Ratio of net investment
income to average
net assets ....... 0.54%* 0.75% 1.44% 1.35% 2.07% 1.01%
Portfolio turnover
rate ............. 38.52% 162.41% 243.00% 245.80% 277.36% 297.81%
Average commission
rate paid ........ $0.0598 $0.0592$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 -----------------------------------------
6/30/98 1997 1996 1995 1994 1993
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $11.9615 $10.1373$ 8.6756 $6.7689 $6.9180 $5.9530
-------- ---------------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0617 0.0916 0.0856 0.0839 0.0703 0.0651
Net realized and
unrealized gain (loss)
on investments .. 1.8686 2.5598 1.6280 2.0525 (0.1491) 0.9650
-------- ---------------- ------- ------- -------
Total from investment
operations ....... 1.9303 2.6514 1.7136 2.1364 (0.0788) 1.0301
-------- ---------------- ------- ------- -------
Less distributions:
From net
investment
income .......... (0.0000) (0.0915)(0.0856) (0.0839)(0.0703) (0.0651)
From capital
gains............ (0.0000) (0.7357)(0.1663) (0.1457)(0.0000) (0.0000)
In excess of
capital gains ... (0.0000) (0.0000)(0.0000) (0.0001)(0.0000) (0.0000)
-------- ---------------- ------- ------- -------
Total distributions. (0.0000) (0.8272)(0.2519) (0.2297)(0.0703) (0.0651)
-------- ---------------- ------- ------- -------
Net asset value,
end of period .... $13.8918 $11.9615$10.1373 $8.6756 $6.7689 $6.9180
======== ================ ======= ======= =======
Total return........ 16.14% 26.16% 19.75% 31.56% -1.14% 17.30%
Net assets, end of
period (in
millions) ........ $748 $637 $462 $331 $219 $155
Ratio of expenses
to average net
assets ............ 0.72%* 0.72% 0.73% 0.77% 0.77% 0.79%
Ratio of net investment
income to average
net assets ....... 0.94%* 0.80% 0.97% 1.13% 1.16% 1.36%
Portfolio turnover
rate ............. 17.68% 36.61% 22.95% 15.00% 23.32% 18.38%
Average commission
rate paid ........ $0.0615 $0.0602$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 Each Period:
(Unaudited)
For the
six For the
months period
ended ended
6/30/98 12/31/97*
---------- ----------
Net asset value,
beginning of
period ........... $5.7726 $5.0000
------- -------
Income from investment operations:
Net investment
income (loss) ... (0.0027) 0.0146
Net realized and
unrealized gain
on investments .. 1.6833 0.7971
------- -------
Total from investment
operations ....... 1.6806 0.8117
------- -------
Less distributions:
From net
investment
income .......... (0.0000) (0.0146)
From capital
gains............ (0.0000) (0.0245)
------- -------
Total distributions (0.0000) (0.0391)
------- -------
Net asset value,
end of period .... $7.4532 $5.7726
======= =======
Total return........ 29.11% 16.24%
Net assets, end of
period (in
millions) ........ $18 $10
Ratio of expenses
to average net
assets ............ 0.84%** 0.94%
Ratio of net investment
income to average
net assets ....... -0.10%** 0.64%
Portfolio turnover
rate ............. 35.31% 15.63%
Average commission
rate paid ........ $0.0406 $0.0361
*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 December 31, 1997. Ratios have been annualized.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE INTERNATIONAL PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
(Unaudited)
For the
six For the fiscal year ended For the
months December 31, period
ended ------------------------- ended
6/30/98 1997 1996 1995 12/31/94*
---------- ------ ------- -------- ----------
Net asset value,
beginning of
period ........... $6.3842 $5.9990 $5.2790 $4.9926 $5.0000
------- ------- ------- ------- -------
Income from investment operations:
Net investment
income .......... 0.0427 0.0485 0.0644 0.0846 0.0207
Net realized and
unrealized gain (loss)
on investments... 2.2731 0.9534 0.7329 0.2790 (0.0074)
------- ------- ------- ------- -------
Total from investment
operations ....... 2.3158 1.0019 0.7973 0.3636 0.0133
------- ------- ------- ------- -------
Less distributions:
From net
investment
income .......... (0.0000) (0.0463)(0.0644) (0.0772) (0.0207)
From capital
gains ........... (0.0000) (0.5704)(0.0129) (0.0000) (0.0000)
------- ------- ------- ------- -------
Total distributions. (0.0000) (0.6167)(0.0773) (0.0772) (0.0207)
------- ------- ------- ------- -------
Net asset value,
end of period .... $8.7000 $6.3842 $5.9990 $5.2790 $4.9926
======= ======= ======= ======= =======
Total return........ 36.27% 16.70% 15.11% 7.28% 0.26%
Net assets, end of
period (in
millions) ........ $162 $115 $80 $50 $26
Ratio of expenses
to average net
assets ............ 0.95%** 0.98% 1.00% 1.02% 1.26%
Ratio of net investment
income to average
net assets ....... 1.15%** 0.79% 1.42% 1.99% 1.36%
Portfolio turnover
rate ............. 34.70% 117.37% 75.01% 34.93% 23.23%
Average commission
rate paid ........ $0.0221 $0.0093$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
six For the fiscal year ended For the
months December 31, period
ended-------------------------- ended
6/30/98 1997 1996 1995 12/31/94*
------- ------- -------- -------- ----------
Net asset value,
beginning of
period ........... $8.3316 $8.0176 $7.6932 $5.9918 $5.0000
------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0240 0.0279 0.0170 0.0900 0.0376
Net realized and
unrealized gain
on investments .. 1.2839 2.5004 0.6367 1.8470 1.0086
------- ------- ------- ------- -------
Total from investment
operations ....... 1.3079 2.5283 0.6537 1.9370 1.0462
------- ------- ------- ------- -------
Less distributions:
From net
investment income (0.0000) (0.0282)(0.0170) (0.0900) (0.0376)
From capital
gains............ (0.0000) (2.1861)(0.3123) (0.1456) (0.0168)
------- ------- ------- ------- -------
Total distributions (0.0000) (2.2143)(0.3293) (0.2356) (0.0544)
------- ------- ------- ------- -------
Net asset value,
end of period .... $9.6395 $8.3316 $8.0176 $7.6932 $5.9918
======= ======= ======= ======= =======
Total return........ 15.70% 31.53% 8.50% 32.32% 20.92%
Net assets, end of
period (in
millions) ........ $179 $148 $97 $56 $16
Ratio of expenses
to average net
assets ............ 0.89%** 0.90% 0.91% 0.96% 1.08%
Ratio of net investment
income to average
net assets ....... 0.54%** 0.32% 0.25% 1.77% 2.35%
Portfolio turnover
rate ............. 76.92% 211.46% 133.77% 43.27% 21.61%
Average commission
rate paid ........ $0.0545 $0.0521$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
six For the fiscal year ended For the
months December 31, period
ended---------------------------- ended
6/30/98 1997 1996 1995 12/31/94*
-------- -------- -------- -------- ----------
Net asset value,
beginning of
period ........... $6.7686 $6.1967 $5.9000 $4.9359 $5.0000
------- ------- ------- ------- -------
Income from investment operations:
Net investment
income .......... 0.0932 0.1805 0.1594 0.1333 0.0460
Net realized and
unrealized gain (loss)
on investments .. 0.4874 0.9650 0.5003 1.0611 (0.0641)
------- ------- ------- ------- -------
Total from investment
operations ....... 0.5806 1.1455 0.6597 1.1944 (0.0181)
------- ------- ------- ------- -------
Less distributions:
From net
investment
income .......... (0.0000) (0.1805)(0.1594) (0.1333) (0.0460)
From capital
gains............ (0.0000) (0.3931)(0.2036) (0.0970) (0.0000)
------- ------- ------- ------- -------
Total distributions (0.0000) (0.5736)(0.3630) (0.2303) (0.0460)
------- ------- ------- ------- -------
Net asset value,
end of period .... $7.3492 $6.7686 $6.1967 $5.9000 $4.9359
======= ======= ======= ======= =======
Total return........ 8.58% 18.49% 11.19% 24.19% -0.37%
Net assets, end of period
(in millions) .... $83 $68 $42 $24 $9
Ratio of expenses
to average net
assets ............ 0.66%** 0.67% 0.70% 0.72% 0.95%
Ratio of net investment
income to average
net assets ....... 2.80%** 3.06% 3.18% 3.22% 3.14%
Portfolio turnover
rate ............. 27.67% 55.66% 44.23% 62.87% 19.74%
Average commission
rate paid ........ $0.0583 $0.0546$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 fiscal
six year ended For the
months December 31, period
ended ---------------- ended
6/30/98 1997 1996 12/31/95*
------- ------- -------- ---------
Net asset value,
beginning of
period ........... $5.1969 $5.1343 $5.0137 $5.0000
------- ------- ------- -------
Income from investment operations:
Net investment
income .......... 0.0843 0.1915 0.1814 0.0717
Net realized and
unrealized gain
on investments .. 0.5432 0.5277 0.1206 0.0193
------- ------- ------- -------
Total from investment
operations ....... 0.6275 0.7192 0.3020 0.0910
------- ------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.1919)(0.1814) (0.0713)
From capital
gains............ (0.0000) (0.4647)(0.0000) (0.0060)
------- ------- ------- -------
Total distributions (0.0000) (0.6566)(0.1814) (0.0773)
------- ------- ------- -------
Net asset value,
end of period .... $5.8244 $5.1969 $5.1343 $5.0137
======= ======= ======= =======
Total return........ 12.07% 14.01% 6.05% 1.80%
Net assets, end of
period (in
millions) ........ $12 $10 $8 $4
Ratio of expenses
to average net
assets ............ 1.03%** 0.93% 0.93% 0.91%
Ratio of net investment
income to average
net assets ....... 3.16%** 3.55% 3.92% 4.42%
Portfolio turnover
rate ............. 105.13% 222.50% 49.92% 149.17%
Average commission
rate paid ........ $0.0446 $0.0400$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 -----------------------------------------
6/30/98 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- -------
Net investment
income ........... 0.0248 0.0503 0.0486 0.0542 0.0368 0.0260
Less dividends
declared ......... (0.0248) (0.0503)(0.0486) (0.0542)(0.0368) (0.0260)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= =======
Total return ....... 2.54% 5.13% 5.01% 5.56% 3.72% 2.63%
Net assets, end of
period (in
millions) ........ $45 $43 $37 $37 $31 $26
Ratio of expenses
to average net
assets ............ 0.60%* 0.58% 0.61% 0.62% 0.65% 0.65%
Ratio of net investment
income to average
net assets ....... 5.05%* 5.04% 4.87% 5.42% 3.72% 2.61%
*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
six For the fiscal year ended For the
months December 31, period
ended -------------------------- ended
6/30/98 1997 1996 1995 12/31/94*
------- ------- ------- ------- ----------
Net asset value,
beginning of
period ........... $5.1882 $5.1639 $5.2521 $4.8611 $5.0000
------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.2003 0.3086 0.2842 0.2841 0.1507
Net realized and
unrealized gain (loss)
on investments .. (0.0434) 0.0451 (0.0870) 0.4122 (0.1375)
------- ------- ------- ------- -------
Total from investment
operations ....... 0.1569 0.3537 0.1972 0.6963 0.0132
------- ------- ------- ------- -------
Less distributions:
From net
investment
income .......... (0.0000) (0.3086)(0.2842) (0.2841) (0.1507)
From capital
gains ........... (0.0000) (0.0208)(0.0012) (0.0212) (0.0014)
------- ------- ------- ------- -------
Total distributions (0.0000) (0.3294)(0.2854) (0.3053) (0.1521)
------- ------- ------- ------- -------
Net asset value,
end of period .... $5.3451 $5.1882 $5.1639 $5.2521 $4.8611
======= ======= ======= ======= =======
Total return........ 3.02% 6.85% 3.79% 14.29% 0.26%
Net assets, end of
period (in
millions) ........ $3 $4 $4 $3 $2
Ratio of expenses
to average net
assets ............ 0.80%** 0.73% 0.76% 0.71% 0.93%
Ratio of net investment
income to average
net assets ....... 5.72%** 5.93% 5.92% 6.22% 5.89%
Portfolio turnover
rate ............. 24.13% 35.62% 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 -----------------------------------------
6/30/98 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $5.3686 $5.2004 $5.3592 $4.7393 $5.4045 $5.2626
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.1727 0.3400 0.3407 0.3556 0.3507 0.3334
Net realized and
unrealized gain
(loss) on
investments ..... 0.0306 0.1682 (0.1588) 0.6202 (0.6652) 0.3046
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 0.2033 0.5082 0.1819 0.9758 (0.3145) 0.6380
------- ------- ------- ------- ------- -------
Less distributions:
From net
investment
income .......... (0.0000) (0.3400)(0.3407) (0.3559)(0.3507) (0.3334)
From capital
gains ........... (0.0000) (0.0000)(0.0000) (0.0000)(0.0000) (0.1627)
------- ------- ------- ------- ------- -------
Total distributions. (0.0000) (0.3400)(0.3407) (0.3559)(0.3507) (0.4961)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $5.5719 $5.3686 $5.2004 $5.3592 $4.7393 $5.4045
======= ======= ======= ======= ======= =======
Total return ....... 3.79% 9.77% 3.43% 20.56% -5.90% 12.37%
Net assets, end of
period (in
millions) ........ $103 $99 $92 $89 $74 $82
Ratio of expenses
to average net
assets ............ 0.59%* 0.58% 0.59% 0.60% 0.62% 0.62%
Ratio of net investment
income to average
net assets ....... 6.30%* 6.35% 6.39% 6.73% 6.73% 6.01%
Portfolio turnover
rate ............. 21.50% 36.81% 64.02% 71.17% 135.82% 68.75%
*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 -----------------------------------------
6/30/98 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $4.7402 $4.5750 $4.4448 $4.1118 $4.6373 $4.2886
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.2151 0.4098 0.4216 0.4165 0.4106 0.3899
Net realized and
unrealized gain
(loss) on
investments ..... 0.0178 0.2324 0.1302 0.3330 (0.5255) 0.3487
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 0.2329 0.6422 0.5518 0.7495 (0.1149) 0.7386
------- ------- ------- ------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.4098)(0.4216) (0.4165)(0.4106) (0.3899)
From capital
gains............ (0.0000) (0.0672)(0.0000) (0.0000)(0.0000) (0.0000)
------- ------- ------- ------- ------- -------
Total distributions (0.0000) (0.4770)(0.4216) (0.4165)(0.4106) (0.3899)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $4.9731 $4.7402 $4.5750 $4.4448 $4.1118 $4.6373
======= ======= ======= ======= ======= =======
Total return ....... 4.91% 14.04% 12.46% 18.19% -2.55% 17.90%
Net assets, end of
period (in
millions) ........ $127 $120 $97 $87 $73 $71
Ratio of expenses
to average net
assets ............ 0.70%* 0.70% 0.71% 0.72% 0.74% 0.75%
Ratio of net investment
income to average
net assets ....... 8.76%* 8.79% 9.10% 9.25% 9.03% 8.66%
Portfolio turnover
rate ............. 48.99% 65.28% 58.91% 41.78% 37.86% 54.22%
*Annualized.
See notes to financial statements.
<PAGE>
TMK/UNITED FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
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 the Nasdaq Stock Market, which provides information on bid and
asked 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 $138,846. 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
carryovers.
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 $2.2 billion of combined net assets at June 30, 1998)
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 $37,503, which are included in other
expenses. W&R is an indirect subsidiary of Torchmark Corporation, a holding
company, and Waddell & Reed Financial, Inc., 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, 1998 are
summarized as follows:
Science and
Growth Income Technology
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $263,285,717 $107,900,742 $8,652,082
Purchases of U.S. Government
securities --- --- ---
Purchases of short-term
securities 316,202,960 609,864,141 197,478,000
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 252,233,988 276,019,069 4,435,327
Proceeds from maturities
and sales of U.S.
Government securities --- --- ---
Proceeds from maturities
and sales of short-term
securities 332,374,349 430,339,943 197,337,000
International Small Cap Balanced
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $49,766,201 $125,369,242 $24,375,390
Purchases of U.S. Government
securities --- --- ---
Purchases of short-term
securities 94,338,750 198,410,498 61,784,920
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 43,411,765 104,042,072 17,623,325
Proceeds from maturities
and sales of U.S.
Government securities --- --- 362,032
Proceeds from maturities
and sales of short-term
securities 92,931,354 214,229,809 58,608,689
Limited-
Asset Strategy Term Bond Bond
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $ 7,527,539 $ 821,398 $16,690,639
Purchases of U.S. Government
securities 4,151,051 155,145 9,277,776
Purchases of short-term
securities 12,325,877 2,043,835 28,371,635
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 6,942,798 1,207,435 16,031,535
Proceeds from maturities
and sales of U.S.
Government securities 2,128,788 317,393 4,683,874
Proceeds from maturities
and sales of short-term
securities 13,872,696 2,307,000 31,647,393
High
Income
Portfolio
-----------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $60,172,734
Purchases of U.S. Government
securities ---
Purchases of short-term
securities 43,664,513
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 50,502,569
Proceeds from maturities
and sales of U.S.
Government securities ---
Proceeds from maturities
and sales of short-term
securities 47,155,655
For Federal income tax purposes, cost of investments owned at June 30,
1998, and the related unrealized appreciation (depreciation) were as follows:
Aggregate
Cost AppreciationDepreciationAppreciation
------------------------------------------------
Growth Portfolio $565,378,517$184,783,334 $(698,938)$184,084,396
Income Portfolio 528,722,656 226,692,807 (3,277,785) 223,415,022
Science and Technology 13,776,052 4,570,199 (159,720) 4,410,479
Portfolio
International Portfolio113,609,994 53,184,753 (3,359,815) 49,824,938
Small Cap Portfolio 172,037,667 18,654,302(12,019,773) 6,634,529
Balanced Portfolio 71,590,131 12,263,801 (1,018,112) 11,245,689
Asset Strategy Portfolio11,073,688 941,613 (212,881) 728,732
Money Market Portfolio 44,122,675 --- --- ---
Limited-Term Bond Portfolio3,319,959 40,742 (1,668) 39,074
Bond Portfolio 97,064,348 3,996,827 (118,344) 3,878,483
High Income Portfolio 119,878,456 6,178,973 (1,031,719) 5,147,254
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, Science and Technology,
Balanced, and Limited-Term Bond Portfolios realized capital gain net income of
$48,833,675, $36,637,583, $42,856, $3,625,975 and $16,019, respectively, during
the year ended December 31, 1997. For Federal income tax purposes, Small Cap
Portfolio realized capital gain net income of $25,739,086 for the year ended
December 31, 1997, which included the effect of certain losses deferred into the
next fiscal year, as well as the effect of losses recognized from the prior year
(see discussion below). For Federal income tax purposes, International
Portfolio realized capital gain net income of $9,721,076 during the year ended
December 31, 1997, which included utilization of capital loss carryovers of
$1,248,303. For Federal income tax purposes, Asset Strategy Portfolio realized
capital gain net income of $778,557 during the year ended December 31, 1997,
which included utilization of capital loss carryovers of $46,572. For Federal
income tax purposes, High Income Portfolio realized capital gain net income of
$1,538,783 for the year ended December 31, 1997, which included utilization of
capital loss carryovers of $237,516. For Federal income tax purposes, Bond
Portfolio realized capital gains of $430,660 during the year ended December 31,
1997, which were entirely offset by capital loss carryovers. In addition, prior
year capital loss carryovers of Bond Portfolio aggregated $2,189,071 as of
December 31, 1997, and are available to offset future realized capital gain net
income as follows: $2,172,375 through December 31, 2002, and $16,696 through
December 31, 2004. The capital gain net income of Growth, Income, Science and
Technology, International, Small Cap, Balanced, Asset Strategy, Limited-Term
Bond and High Income Portfolios was paid to shareholders during the year ended
December 31, 1997.
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, 1997 through December 31, 1997, Small Cap Portfolio incurred
net capital losses of $352,811, which have been deferred to the fiscal year
ending December 31, 1998. In addition, during the year ended December 31, 1997,
the Portfolio recognized post-October losses of $5,285,152 that had been
deferred from the year ended December 31, 1996.
NOTE 5 -- Subsequent Event
On August 21, 1998, a meeting of shareholders was held at which the name of
the Fund was changed to Target/United Funds, Inc. effective August 31, 1998.
<PAGE>
DIRECTORS
Keith A. Tucker, Overland Park, Kansas, Chairman of the Board
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
David P. Gardner, Menlo Park, California
Linda Graves, Topeka, Kansas
John F. Hayes, Hutchinson, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
Ronald K. Richey, Birmingham, Alabama
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Frederick Vogel III, Milwaukee, Wisconsin
Paul S. Wise, Carefree, Arizona
OFFICERS
Robert L. Hechler, President
Michael L. Avery, Vice President
Daniel P. Becker, Vice President
James C. Cusser, Vice President
Abel Garcia, 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
Cynthia P. Prince-Fox, Vice President
Louise D. Rieke, Vice President
Zachary H. Shafran, Vice President
W. Patrick Sterner, Vice President
Mira Stevovich, 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.
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Advantage I. A flexible premium variable life insurance policy.
Advantage II. A deferred variable annuity policy.
Advantage Plus. A flexible premium variable life insurance policy.
All three 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, with
capital growth
as a secondary goal.
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 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.
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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(6-98)
printed on recycled paper
