TARGET/UNITED FUNDS, INC.
SEMIANNUAL
REPORT
--------------------------------------
For the six months ended June 30, 1999
<PAGE>
JUNE 30, 1999
- ---------------------------------------------------------------------------
Dear Policyholder:
The accompanying report contains the financial statements of the Target/United
Funds, Inc. for the fiscal period ended June 30, 1999. The assets of your
Advantage I (Variable Life), Advantage II (Variable Annuity) or Advantage Plus
(Variable Universal Life) policy are invested in the investment portfolios of
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, 1999.
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 financial advisor if we may be of
service with regard to your Advantage policy.
Sincerely,
Anthony L. McWhorter
President
<PAGE>
PRESIDENT'S LETTER
- -----------------------------------------------------------------
JUNE 30, 1999
Dear Policyholder:
As president of your Fund, I would like to thank you for your continued
confidence as an investor.
With respect to your investment program, while it is impossible to predict the
future of the markets, there are some basic principles that we stand by that can
help investors achieve their financial goals.
. Work with your financial advisor to develop a comprehensive financial plan.
A comprehensive plan can help you pinpoint your financial objectives and
identify specific strategies for turning your financial dreams into reality.
A financial plan can also help ensure that your investment portfolio is
appropriately diversified. It can be one of the best ways to plan for your
financial future.
. Review your financial plan regularly. Financial planning is an ongoing
process that requires periodic reviews to adapt to life's changes.
. Make regular investments and adopt a long-term investment view. Over the
long term, regular contributions to your investments can smooth out the bumps
of volatility and enable investors to take advantage of the power of
compounding.
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. Your financial advisor is ready to assist you in completing
your comprehensive financial plan to reach the financial goals that are most
important to you.
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,
please contact your financial advisor or your local Waddell & Reed office.
Again, thank you for your continued confidence.
Respectfully,
Robert L. Hechler
President
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS
Business Services - 2.97%
Compuware Corporation* ................. 5,900 $ 187,509
Teradyne, Inc.* ........................ 2,900 208,075
Young & Rubicam Inc. ................... 2,500 113,594
Total ................................. 509,178
Chemicals and Allied Products - 9.78%
Bristol-Myers Squibb Company ........... 1,100 77,481
Forest Laboratories, Inc.* ............. 4,000 185,000
Gillette Company (The) ................. 1,900 77,900
Lilly (Eli) and Company ................ 4,100 293,662
Merck & Co., Inc. ...................... 2,600 192,400
Pharmacia & Upjohn, Inc. ............... 4,100 232,931
Schering-Plough Corporation ............ 6,800 360,400
Warner-Lambert Company ................. 3,700 256,688
Total ................................. 1,676,462
Communication - 2.36%
Clear Channel Communications, Inc.* .... 2,600 179,237
Cox Communications, Inc., Class A* ..... 2,900 106,756
TCA Cable TV, Inc. ..................... 2,150 119,191
Total ................................. 405,184
Eating and Drinking Places - 1.99%
McDonald's Corporation ................. 2,300 95,019
Wendy's International, Inc. ............ 8,700 246,319
Total ................................. 341,338
Electric, Gas and Sanitary Services - 1.07%
Montana Power Company (The) ............ 2,600 183,300
Electronic and Other Electric Equipment - 3.92%
Analog Devices, Inc.* .................. 4,800 240,900
EchoStar Communications Corporation,
Class A*............................... 1,300 199,509
Intel Corporation ...................... 2,600 154,619
Micron Technology, Inc.* ............... 1,900 76,594
Total ................................. 671,622
Fabricated Metal Products - 0.83%
Lockheed Martin Corporation ............ 3,800 141,550
Food and Kindred Products - 2.67%
Pepsi Bottling Group, Inc. ............. 7,600 175,275
Ralston-Ralston Purina Group ........... 9,300 283,069
Total ................................. 458,344
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Furniture and Homefurnishings Stores - 0.59%
Best Buy Co., Inc.* .................... 1,500 $ 101,250
Holding and Other Investment Offices - 0.46%
"Shell" Transport and Trading Company,
p.l.c. (The), ADR ..................... 1,700 78,837
Industrial Machinery and Equipment - 4.56%
Applied Materials, Inc.* ............... 2,600 191,994
Case Corporation ....................... 5,200 250,250
Eaton Corporation ...................... 1,800 165,600
Parker Hannifin Corporation ............ 3,800 173,850
Total ................................. 781,694
Instruments and Related Products - 4.94%
Beckman Coulter, Inc. .................. 1,900 92,387
CONMED Corporation* .................... 3,000 91,781
Guidant Corporation .................... 3,600 185,175
KLA-Tencor Corporation* ................ 2,600 168,594
Raytheon Company, Class B .............. 4,400 309,650
Total ................................. 847,587
Insurance Carriers - 2.69%
American International Group, Inc. ..... 1,500 175,594
StanCorp Financial Group, Inc.* ........ 6,700 201,000
WellPoint Health Networks, Inc.* ....... 1,000 84,875
Total ................................. 461,469
Motion Pictures - 2.17%
AT&T Corp. - Liberty Media Group, Class A* 6,200 227,850
Time Warner Incorporated ............... 1,950 143,325
Total ................................. 371,175
Nonmetallic Minerals, Except Fuels - 1.02%
Rambus Inc.* ........................... 1,900 175,097
Oil and Gas Extraction - 1.47%
Schlumberger Limited ................... 1,300 82,794
Transocean Offshore Incorporated ....... 3,100 81,375
USX Corporation - Marathon Group ....... 2,700 87,919
Total ................................. 252,088
Petroleum and Coal Products - 0.47%
Texaco Inc. ............................ 1,300 81,250
Prepackaged Software - 2.92%
BMC Software, Inc.* .................... 3,300 178,097
Microsoft Corporation* ................. 2,500 225,313
Oracle Corporation* .................... 2,600 96,525
Total ................................. 499,935
Stone, Clay and Glass Products - 0.88%
Gentex Corporation* .................... 5,400 151,200
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Transportation by Air - 1.34%
Southwest Airlines Co. ................. 7,400 $ 230,325
Transportation Equipment - 1.98%
Ford Motor Company ..................... 2,500 141,094
General Motors Corporation ............. 3,000 198,000
Total ................................. 339,094
Trucking and Warehousing - 1.41%
CNF Transportation Inc. ................ 6,300 241,762
Wholesale Trade - Durable Goods - 0.97%
Johnson & Johnson ...................... 1,700 166,600
Wholesale Trade -- Nondurable Goods - 1.04%
U.S. Foodservice* ...................... 4,200 179,025
TOTAL COMMON STOCKS - 54.50% $9,345,366
(Cost: $8,149,963)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Communication - 1.17%
Grupo Televisa, S.A.,
11.375%, 5-15-2003 .................... $ 200 201,000
Finance, Taxation and Monetary Policy - 1.05%
Banco Nacional de Comercio Exterior, S.N.C.,
7.25%, 2-2-2004 ....................... 200 180,500
Petroleum and Coal Products - 1.09%
Petroleos Mexicanos (Daily Adjusted Yield
Securities (DAYS)),
9.65713%, 7-15-2005 ................... 200 186,500
Stone, Clay and Glass Products - 1.07%
Vicap, S.A. de C.V.,
10.25%, 5-15-2002 ..................... 200 183,000
TOTAL CORPORATE DEBT SECURITIES - 4.38% $ 751,000
(Cost: $761,416)
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Banks:
6.2%, 2-27-2004 ....................... 200 198,630
6.02%, 3-30-2006 ...................... 200 192,750
United States Treasury,
5.625%, 12-31-2002 .................... 5,150 5,144,386
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 1999
Value
TOTAL UNITED STATES GOVERNMENT SECURITIES - 32.29% $ 5,535,766
(Cost: $5,528,608)
TOTAL SHORT-TERM SECURITIES - 8.65% $ 1,482,979
(Cost: $1,482,979)
TOTAL INVESTMENT SECURITIES - 99.82% $17,115,111
(Cost: $15,922,966)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.18% 30,302
NET ASSETS - 100.00% $17,145,413
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS
Apparel and Accessory Stores - 0.23%
Abercrombie & Fitch Co., Class A* ...... 5,000 $ 240,000
Apparel and Other Textile Products - 0.77%
Tommy Hilfiger Corporation* ............ 11,000 808,500
Business Services - 2.53%
America Online, Inc.* .................. 7,500 828,750
Teradyne, Inc.* ........................ 13,000 932,750
Young & Rubicam Inc. ................... 20,000 908,750
Total ................................. 2,670,250
Chemicals and Allied Products - 4.56%
Crompton & Knowles Corporation ......... 14,300 279,744
Lilly (Eli) and Company ................ 9,500 680,438
Neutraceutical International
Corporation* .......................... 4,900 25,725
Pfizer Inc. ............................ 11,000 1,207,250
Pharmacia & Upjohn, Inc. ............... 15,000 852,187
Procter & Gamble Company (The) ......... 7,100 633,675
Warner-Lambert Company ................. 16,200 1,123,875
Total ................................. 4,802,894
Communication - 2.64%
Clear Channel Communications, Inc.* .... 17,000 1,171,938
Cox Communications, Inc., Class A* ..... 24,000 883,500
Level 3 Communications, Inc.* .......... 12,000 721,500
Total ................................. 2,776,938
Depository Institutions - 1.56%
Bank of America Corporation ............ 14,289 1,047,562
Comerica Incorporated .................. 10,000 594,375
Total ................................. 1,641,937
Eating and Drinking Places - 0.81%
Wendy's International, Inc. ............ 30,000 849,375
Electric, Gas and Sanitary Services - 1.19%
Reliant Energy ......................... 12,000 331,500
Unicom Corporation ..................... 24,000 925,500
Total ................................. 1,257,000
Electronic and Other Electric Equipment - 4.63%
Analog Devices, Inc.* .................. 20,000 1,003,750
Emerson Electric Co. ................... 10,000 628,750
General Electric Company ............... 7,000 791,000
Koninklijke Philips Electronics N.V.,
NY Shares ............................. 10,000 1,008,750
Texas Instruments Incorporated ......... 10,000 1,450,000
Total ................................. 4,882,250
Food and Kindred Products - 0.75%
Ralston-Ralston Purina Group ........... 26,000 791,375
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Furniture and Homefurnishings Stores - 0.66%
Williams-Sonoma, Inc.* ................. 20,000 $ 696,250
General Merchandise Stores - 1.37%
Wal-Mart Stores, Inc. .................. 30,000 1,447,500
Holding and Other Investment Offices - 0.26%
National Health Investors, Inc. ........ 12,000 273,750
Industrial Machinery and Equipment - 8.22%
Apple Computer, Inc.* .................. 20,000 927,500
Applied Materials, Inc.* ............... 15,000 1,107,656
Baker Hughes Incorporated .............. 17,500 586,250
Case Corporation ....................... 21,000 1,010,625
EMC Corporation* ....................... 16,000 880,000
Eaton Corporation ...................... 12,000 1,104,000
International Business Machines Corporation 12,000 1,551,000
New Holland NV ......................... 25,000 428,125
Parker Hannifin Corporation ............ 23,400 1,070,550
Total ................................. 8,665,706
Instruments and Related Products - 1.33%
Raytheon Company, Class B .............. 20,000 1,407,500
Insurance Carriers - 2.31%
Chubb Corporation (The) ................ 14,200 986,900
Hartford Financial Services Group Inc. (The) 18,200 1,061,288
Old Republic International Corporation . 22,500 389,531
Total ................................. 2,437,719
Miscellaneous Manufacturing Industries - 0.35%
Mattel, Inc. ........................... 14,000 370,125
Miscellaneous Retail - 2.89%
Costco Companies, Inc.* ................ 15,000 1,200,469
Rite Aid Corp. ......................... 35,000 861,875
Spiegel, Inc., Class A* ................ 110,000 979,687
Total ................................. 3,042,031
Motion Pictures - 0.73%
Walt Disney Company (The) .............. 25,000 770,312
Nondepository Institutions - 1.82%
Freddie Mac ............................ 18,400 1,067,200
Household International, Inc. .......... 18,000 852,750
Total ................................. 1,919,950
Oil and Gas Extraction - 2.65%
Burlington Resources Incorporated ...... 22,600 977,450
Schlumberger Limited ................... 28,500 1,815,094
Total ................................. 2,792,544
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Paper and Allied Products - 1.09%
Champion International Corporation ..... 10,800 $ 517,050
International Paper Company ............ 12,500 631,250
Total ................................. 1,148,300
Petroleum and Coal Products - 1.42%
BP Amoco p.l.c., ADR ................... 5,080 551,180
Mobil Corporation ...................... 9,600 950,400
Total ................................. 1,501,580
Prepackaged Software - 1.03%
BMC Software, Inc.* .................... 20,000 1,079,375
Primary Metal Industries - 0.42%
British Steel plc, ADR ................. 17,000 443,062
Printing and Publishing - 0.53%
McGraw-Hill Companies, Inc. (The) ...... 10,400 560,950
Rubber and Miscellaneous Plastics Products - 1.64%
A. Schulman, Inc. ...................... 25,000 427,344
NIKE, Inc., Class B .................... 20,500 1,297,906
Total ................................. 1,725,250
Telephone Communication - 1.13%
SBC Communications Inc. ................ 20,600 1,194,800
Transportation by Air - 1.50%
FDX Corporation* ....................... 13,000 705,250
UAL Corporation* ....................... 13,500 877,500
Total ................................. 1,582,750
Transportation Equipment - 0.88%
Delphi Automotive Systems Corporation .. 8,177 151,786
General Motors Corporation ............. 11,700 772,200
Total ................................. 923,986
Trucking and Warehousing - 1.38%
CNF Transportation Inc. ................ 38,000 1,458,250
Water Transportation - 0.92%
Carnival Corporation, Class A .......... 20,000 970,000
Wholesale Trade - Durable Goods - 2.38%
Motorola, Inc. ......................... 13,500 1,279,125
WESCO International, Inc.* ............. 60,000 1,230,000
Total ................................. 2,509,125
TOTAL COMMON STOCKS - 56.58% $59,641,334
(Cost: $46,979,691)
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Apparel and Accessory Stores - 2.39%
Gap, Inc. (The),
6.9%, 9-15-2007 ....................... $ 2,500 $ 2,522,050
Building Materials and Garden Supplies - 1.06%
Home Depot, Inc. (The), Convertible,
3.25%, 10-1-2001 ...................... 400 1,119,000
Chemicals and Allied Products - 0.25%
American Home Products Corporation,
7.9%, 2-15-2005 ....................... 250 265,808
Communication - 0.71%
Clear Channel Communications, Inc., Convertible,
2.625%, 4-1-2003 ...................... 600 750,000
Depository Institutions - 0.23%
Wachovia Corporation,
6.25%, 8-4-2008 ....................... 250 238,388
Food and Kindred Products - 0.48%
Coca-Cola Enterprises Inc.,
6.7%, 10-15-2036 ...................... 500 504,155
Miscellaneous Manufacturing Industries - 0.23%
Tyco International Group S.A.,
6.375%, 6-15-2005 ..................... 250 244,532
Nondepository Institutions - 0.95%
National Rural Utilities Cooperative
Finance Corp.,
6.1%, 12-22-2000 ...................... 1,000 998,580
Telephone Communication - 0.14%
Southwestern Bell Telephone Company,
5.77%, 10-14-2003 ..................... 150 145,632
Transportation by Air - 0.36%
Southwest Airlines Co.,
7.875%, 9-1-2007 ...................... 360 376,909
TOTAL CORPORATE DEBT SECURITIES - 6.80% $ 7,165,054
(Cost: $6,442,696)
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES
Federal National Mortgage Association:
6.51%, 5-6-2008 ....................... $ 750 $ 731,370
6.19%, 7-7-2008 ....................... 500 478,985
7.0%, 9-1-2025 ........................ 2,411 2,383,439
Government National Mortgage Association,
6.5%, 8-15-2028 ....................... 1,456 1,399,585
United States Treasury:
6.875%, 8-31-99 ....................... 250 250,860
7.75%, 11-30-99 ....................... 1,500 1,516,410
7.125%, 2-29-2000 ..................... 500 506,330
5.25%, 1-31-2001 ...................... 2,000 1,993,740
6.375%, 8-15-2002 ..................... 1,100 1,122,176
7.5%, 2-15-2005 ....................... 2,250 2,422,260
7.25%, 8-15-2022 ...................... 4,000 4,478,760
6.25%, 8-15-2023 ...................... 5,250 5,274,622
6.75%, 8-15-2026 ...................... 3,000 3,211,860
TOTAL UNITED STATES GOVERNMENT SECURITIES - 24.44% $25,770,397
(Cost: $26,512,470)
SHORT-TERM SECURITIES
Commercial Paper
Fabricated Metal Products - 3.32%
Danaher Corporation,
5.2208%, Master Note .................. 3,501 3,501,000
Food and Kindred Products - 4.79%
General Mills, Inc.,
5.075%, Master Note ................... 5,052 5,052,000
Total Commercial Paper - 8.11% 8,553,000
Commercial Paper (backed by irrevocable bank
letter of credit) - 3.79%
Depository Institutions
Omnicom Finance Inc. (ABN-AMRO Bank N.V.),
5.02%, 7-19-99 ........................ 4,000 3,989,960
TOTAL SHORT-TERM SECURITIES - 11.90% $ 12,542,960
(Cost: $12,542,960)
TOTAL INVESTMENT SECURITIES - 99.72% $105,119,745
(Cost: $92,477,817)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.28% 296,497
NET ASSETS - 100.00% $105,416,242
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Chemicals and Allied Products - 1.99%
Procter & Gamble Company (The),
8.0%, 9-1-2024 ........................ $2,000 $ 2,277,980
Communication - 1.40%
Jones Intercable, Inc.,
9.625%, 3-15-2002 ..................... 500 535,000
Tele-Communications, Inc.,
8.35%, 2-15-2005 ...................... 1,000 1,078,580
Total ................................. 1,613,580
Depository Institutions - 10.71%
AmSouth Bancorporation,
6.75%, 11-1-2025 ...................... 2,000 1,972,760
Chevy Chase Savings Bank, F.S.B.,
9.25%, 12-1-2005 ...................... 500 506,250
First Union Corporation:
6.824%, 8-1-2026 ...................... 1,132 1,146,841
6.55%, 10-15-2035 ..................... 525 519,965
Kansallis-Osake-Pankki,
10.0%, 5-1-2002 ....................... 1,000 1,083,720
NBD Bank, National Association,
8.25%, 11-1-2024 ...................... 1,000 1,106,720
NationsBank Corporation,
8.57%, 11-15-2024 ..................... 1,000 1,125,990
Riggs National Corporation,
8.5%, 2-1-2006 ........................ 1,500 1,563,705
SouthTrust Bank of Alabama, National
Association:
5.58%, 2-6-2006 ....................... 2,000 1,987,220
7.69%, 5-15-2025 ...................... 500 536,020
Wachovia Corporation,
6.605%, 10-1-2025 ..................... 750 739,357
Total ................................. 12,288,548
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Electric, Gas and Sanitary Services - 8.19%
California Infrastructure and Economic
Development Bank, Special Purpose
Trust:
PG&E-1,
6.42%, 9-25-2008 ...................... $ 1,000 $ 994,480
SCE-1,
6.38%, 9-25-2008 ...................... 1,000 989,370
Cleveland Electric Illuminating Co. (The),
9.5%, 5-15-2005 ....................... 678 723,060
Entergy Arkansas, Inc.,
7.5%, 8-1-2007 ........................ 750 778,237
Kansas Gas and Electric Company,
7.6%, 12-15-2003 ...................... 1,000 1,040,770
Korea Electric Power Corporation,
6.375%, 12-1-2003 ..................... 500 466,685
Niagara Mohawk Power Corporation:
9.5%, 6-1-2000 ........................ 500 514,440
7.375%, 7-1-2003 ...................... 1,000 1,017,120
Pacific Gas & Electric Co.,
6.875%, 12-1-99 ....................... 500 500,430
Pennsylvania Power & Light Co.,
9.25%, 10-1-2019 ...................... 656 684,031
TXU Eastern Funding Company,
6.45%, 5-15-2005 (A) .................. 1,750 1,690,535
Total ................................. 9,399,158
Food and Kindred Products - 2.80%
Anheuser-Busch Companies, Inc.,
7.0%, 9-1-2005 ........................ 500 501,170
Coca-Cola Enterprises Inc.,
0.0%, 6-20-2020 ....................... 10,000 2,227,300
Coca-Cola FEMSA, S.A. de C.V.,
8.95%, 11-1-2006 ...................... 500 490,000
Total ................................. 3,218,470
General Merchandise Stores - 0.66%
Fred Meyer, Inc.:
7.15%, 3-1-2003 ....................... 250 251,852
7.45%, 3-1-2008 ....................... 500 504,425
Total ................................. 756,277
Health Services - 0.86%
Tenet Healthcare Corporation:
7.875%, 1-15-2003 ..................... 500 490,000
8.625%, 12-1-2003 ..................... 500 500,000
Total ................................. 990,000
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Holding and Other Investment Offices - 0.81%
Bay Apartment Communities, Inc.,
6.5%, 1-15-2005 ....................... $ 500 $ 479,245
GRUMA, S.A. de C.V.,
7.625%, 10-15-2007 .................... 500 447,500
Total ................................. 926,745
Insurance Carriers - 0.44%
Reliance Group Holdings, Inc.,
9.0%, 11-15-2000 ...................... 500 509,585
Nondepository Institutions - 8.94%
Asset Securitization Corporation,
7.49%, 4-14-2029 ...................... 1,244 1,275,299
CHYPS CBO 1997-1 Ltd.,
6.72%, 1-15-2010 (A) .................. 1,500 1,439,760
Chrysler Financial Corporation,
12.75%, 11-1-99 ....................... 1,000 1,023,190
General Electric Capital Corporation,
8.625%, 6-15-2008 ..................... 1,940 2,200,367
General Motors Acceptance Corporation,
8.875%, 6-1-2010 ...................... 500 566,170
IMC Home Equity Loan Trust,
6.9%, 1-20-2022 ....................... 1,000 999,680
Norse CBO, Ltd. and Norse CBO, Inc.,
6.515%, 8-13-2010 (A) ................. 1,250 1,181,250
Residential Asset Securities Corporation,
Mortgage Pass-Through Certificates,
8.0%, 10-25-2024 ...................... 1,000 1,016,560
Westinghouse Electric Corporation,
8.875%, 6-14-2014 ..................... 500 553,965
Total ................................. 10,256,241
Oil and Gas Extraction - 2.54%
Anadarko Petroleum Corporation,
7.25%, 3-15-2025 ...................... 1,000 1,005,780
Mitchell Energy & Development Corp.,
9.25%, 1-15-2002 ...................... 27 28,140
Oryx Energy Company,
10.0%, 4-1-2001 ....................... 400 421,804
Pemex Finance Ltd.,
5.72%, 11-15-2003 (A) ................. 500 489,375
YPF Sociedad Anoima,
8.0%, 2-15-2004 ....................... 1,000 974,010
Total ................................. 2,919,109
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Paper and Allied Products - 2.18%
Canadian Pacific Forest Products Ltd.,
9.25%, 6-15-2002 ...................... $1,000 $ 1,053,610
Champion International Corporation,
6.4%, 2-15-2026 ....................... 1,500 1,447,035
Total ................................. 2,500,645
Petroleum and Coal Products - 0.43%
Conoco Inc.,
5.9%, 4-15-2004 ....................... 500 487,890
Printing and Publishing - 1.28%
News America Holdings Incorporated,
7.45%, 6-1-2000 ....................... 500 506,095
Quebecor Printing Capital Corporation,
6.5%, 8-1-2027 ........................ 1,000 963,310
Total ................................. 1,469,405
Railroad Transportation - 0.50%
CSX Corporation,
6.95%, 5-1-2027 ....................... 575 578,738
Security and Commodity Brokers - 0.89%
Salomon Inc.,
3.65%, 2-14-2002 ...................... 1,000 1,021,540
Stone, Clay and Glass Products - 1.53%
Cemex, S.A. de C.V.,
9.5%, 9-20-2001 ....................... 500 507,500
Owens-Illinois, Inc.,
7.15%, 5-15-2005 ...................... 750 721,035
USG Corporation,
9.25%, 9-15-2001 ...................... 500 523,720
Total ................................. 1,752,255
Telephone Communication - 0.87%
BellSouth Telecommunications, Inc.,
5.85%, 11-15-2045 ..................... 1,000 996,750
Transportation Equipment - 0.85%
Coltec Industries Inc.,
7.5%, 4-15-2008 ....................... 500 501,250
Federal-Mogul Corporation,
7.75%, 7-1-2006 ....................... 500 478,755
Total ................................. 980,005
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
United States Postal Service - 0.20%
Postal Square Limited Partnership,
6.5%, 6-15-2022 ....................... $ 243 $ 233,383
Wholesale Trade -- Durable Goods - 1.46%
Motorola, Inc.,
8.4%, 8-15-2031 ....................... 1,500 1,676,985
TOTAL CORPORATE DEBT SECURITIES - 49.53% $56,853,289
(Cost: $56,996,021)
OTHER GOVERNMENT SECURITIES
Canada - 4.09%
Hydro-Quebec:
8.05%, 7-7-2024 ....................... 1,000 1,083,730
7.4%, 3-28-2025 ....................... 1,000 1,121,270
Province de Quebec:
5.67%, 2-27-2026 ...................... 1,500 1,498,440
6.29%, 3-6-2026 ....................... 1,000 994,290
Total ................................. 4,697,730
Korea - 0.44%
Korea Development Bank (The),
7.9%, 2-1-2002 ........................ 500 498,235
Supranational - 0.99%
Inter-American Development Bank,
8.4%, 9-1-2009 ........................ 1,000 1,138,580
TOTAL OTHER GOVERNMENT SECURITIES - 5.52% $ 6,334,545
(Cost: $6,147,753)
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation:
7.5%, 2-15-2007 ....................... 1,279 1,298,084
6.5%, 9-25-2018 ....................... 500 496,250
7.5%, 4-15-2019 ....................... 1,667 1,682,417
7.95%, 12-15-2020 ..................... 392 392,600
6.25%, 1-15-2021 ...................... 4,000 3,953,720
Federal National Mortgage Association:
5.875%, 7-16-2003 ..................... 2,250 2,206,057
6.09%, 4-1-2009 ....................... 1,998 1,904,968
0.0%, 2-12-2018 ....................... 2,500 723,950
7.0%, 9-25-2020 ....................... 500 501,875
6.5%, 8-25-2021 ....................... 500 491,640
7.0%, 6-1-2024 ........................ 2,525 2,495,404
6.0%, 12-1-2028 ....................... 2,707 2,543,196
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES (Continued)
Government National Mortgage Association:
7.5%, 7-15-2023 ....................... $1,028 $ 1,038,753
7.5%, 12-15-2023 ...................... 1,423 1,438,783
8.0%, 9-15-2025 ....................... 959 992,553
7.0%, 7-20-2027 ....................... 489 479,977
7.0%, 8-20-2027 ....................... 1,005 987,179
7.75%, 10-15-2031 ..................... 316 335,360
United States Treasury:
5.25%, 1-31-2001 ...................... 1,000 996,870
7.5%, 2-15-2005 ....................... 1,000 1,076,560
6.5%, 8-15-2005 ....................... 1,500 1,546,170
6.5%, 10-15-2006 ...................... 7,400 7,640,500
11.25%, 2-15-2015 ..................... 500 748,435
6.125%, 11-15-2027 .................... 4,500 4,469,760
Miscellaneous United States Government Backed
Securities:
Tennessee Valley Authority,
5.88%, 4-1-2036 ..................... 750 735,405
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 2,035,000
1998-1 Class 2-B,
7.0%, 6-15-2019 ..................... 250 252,577
1999-2 Class 1-B,
6.5%, 7-15-2019 ..................... 1,000 990,620
TOTAL UNITED STATES GOVERNMENT SECURITIES - 38.73% $ 44,454,663
(Cost: $45,684,542)
TOTAL SHORT-TERM SECURITIES - 5.02% $ 5,754,806
(Cost: $5,754,806)
TOTAL INVESTMENT SECURITIES - 98.80% $113,397,303
(Cost: $114,583,122)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.20% 1,380,228
NET ASSETS - 100.00% $114,777,531
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS
Apparel and Accessory Stores - 2.30%
Abercrombie & Fitch Co., Class A* ...... 296,800 $ 14,246,400
Kohl's Corporation* .................... 96,400 7,440,875
Total ................................. 21,687,275
Building Materials and Garden Supplies - 3.79%
Home Depot, Inc. (The) ................. 410,000 26,419,375
Lowe's Companies, Inc. ................. 165,000 9,353,438
Total ................................. 35,772,813
Business Services - 2.54%
America Online, Inc.* .................. 25,000 2,762,500
Compuware Corporation* ................. 210,000 6,674,063
Teradyne, Inc.* ........................ 95,000 6,816,250
Young & Rubicam Inc. ................... 170,000 7,724,375
Total ................................. 23,977,188
Chemicals and Allied Products - 16.67%
Biogen, Inc.* .......................... 140,000 9,008,125
Bristol-Myers Squibb Company ........... 272,200 19,173,087
Colgate-Palmolive Company .............. 97,000 9,578,750
Lilly (Eli) and Company ................ 165,000 11,818,125
Merck & Co., Inc. ...................... 190,000 14,060,000
Monsanto Company ....................... 250,000 9,859,375
Pfizer Inc. ............................ 100,000 10,975,000
Pharmacia & Upjohn, Inc. ............... 235,000 13,350,938
Procter & Gamble Company (The) ......... 100,000 8,925,000
Schering-Plough Corporation ............ 424,400 22,493,200
Warner-Lambert Company ................. 403,700 28,006,688
Total ................................. 157,248,288
Communication - 3.49%
Clear Channel Communications, Inc.* .... 191,400 13,194,638
Comcast Corporation, Class A ........... 120,000 4,612,500
Infinity Broadcasting Corporation,
Class A* .............................. 507,200 15,089,200
Total ................................. 32,896,338
Depository Institutions - 5.35%
Bank of America Corporation ............ 170,000 12,463,125
Chase Manhattan Corporation (The) ...... 125,000 10,828,125
Citigroup Inc. ......................... 247,500 11,756,250
Comerica Incorporated .................. 259,450 15,421,059
Total ................................. 50,468,559
Eating and Drinking Places - 1.72%
McDonald's Corporation ................. 170,000 7,023,125
Wendy's International, Inc. ............ 325,000 9,201,563
Total ................................. 16,224,688
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Electronic and Other Electric Equipment - 9.83%
Analog Devices, Inc.* .................. 195,000 $ 9,786,563
General Electric Company ............... 199,500 22,543,500
Intel Corporation ...................... 348,600 20,730,806
Nokia Corporation, Series A, ADR ....... 145,000 13,276,563
Tellabs* ............................... 60,000 4,055,625
Texas Instruments Incorporated ......... 65,000 9,425,000
Xilinx, Inc.* .......................... 225,000 12,888,281
Total ................................. 92,706,338
Food and Kindred Products - 2.62%
Bestfoods .............................. 120,000 5,940,000
Pepsi Bottling Group, Inc. ............. 200,000 4,612,500
Ralston-Ralston Purina Group ........... 465,000 14,153,437
Total ................................. 24,705,937
General Merchandise Stores - 4.80%
Dayton Hudson Corporation .............. 225,000 14,625,000
Dollar General Corporation ............. 401,952 11,656,608
Wal-Mart Stores, Inc. .................. 394,400 19,029,800
Total ................................. 45,311,408
Industrial Machinery and Equipment - 8.51%
Apple Computer, Inc.* .................. 150,000 6,956,250
Applied Materials, Inc.* ............... 176,500 13,033,422
Cisco Systems, Inc.* ................... 442,850 28,522,308
Cooper Cameron Corporation* ............ 150,000 5,559,375
Dover Corporation ...................... 125,000 4,375,000
EMC Corporation* ...................... 189,200 10,406,000
SPX Corporation* ....................... 85,000 7,097,500
Smith International, Inc.* ............. 100,000 4,343,750
Total ................................. 80,293,605
Instruments and Related Products - 2.32%
Guidant Corporation .................... 251,000 12,910,812
Medtronic, Inc. ........................ 115,000 8,955,625
Total ................................. 21,866,437
Insurance Carriers - 1.45%
American International Group, Inc. ..... 116,700 13,661,194
Miscellaneous Retail - 2.77%
Costco Companies, Inc.* ................ 155,000 12,404,844
Walgreen Co. ........................... 466,600 13,706,375
Total ................................. 26,111,219
Motion Pictures - 2.27%
Time Warner Incorporated ............... 226,000 16,611,000
Walt Disney Company (The) .............. 155,000 4,775,937
Total ................................. 21,386,937
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Nondepository Institutions - 3.69%
Fannie Mae ............................. 318,600 $ 21,784,275
Freddie Mac ............................ 225,000 13,050,000
Total ................................. 34,834,275
Oil and Gas Extraction - 1.18%
Schlumberger Limited ................... 175,000 11,145,312
Petroleum and Coal Products - 0.86%
Exxon Corporation ...................... 105,000 8,098,125
Prepackaged Software - 5.53%
BMC Software, Inc.* .................... 135,000 7,285,781
Microsoft Corporation* ................. 444,000 40,015,500
Oracle Corporation* .................... 130,000 4,826,250
Total ................................. 52,127,531
Printing and Publishing - 2.38%
Gannett Co., Inc. ...................... 180,000 12,847,500
Tribune Company ........................ 110,400 9,618,600
Total ................................. 22,466,100
Security and Commodity Brokers - 1.66%
Goldman Sachs Group, Inc. (The) ........ 33,000 2,384,250
Morgan Stanley, Dean Witter, Discover & Co. 130,000 13,325,000
Total ................................. 15,709,250
Telephone Communication - 1.41%
SBC Communications Inc. ................ 230,000 13,340,000
Transportation by Air - 0.49%
Southwest Airlines Co. ................. 150,000 4,668,750
Transportation Equipment - 1.47%
Harley-Davidson, Inc. .................. 255,300 13,881,937
Water Transportation - 1.04%
Carnival Corporation, Class A .......... 203,000 9,845,500
Wholesale Trade -- Durable Goods - 3.34%
Johnson & Johnson ...................... 147,200 14,425,600
Motorola, Inc. ......................... 180,000 17,055,000
Total ................................. 31,480,600
Wholesale Trade -- Nondurable Goods - 1.74%
Safeway Inc.* .......................... 242,000 11,979,000
SYSCO Corporation ...................... 150,000 4,471,875
Total ................................. 16,450,875
TOTAL COMMON STOCKS - 95.22% $898,366,479
(Cost: $615,825,076)
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 1999
Value
TOTAL SHORT-TERM SECURITIES - 4.46% $ 42,132,401
(Cost: $42,132,401)
TOTAL INVESTMENT SECURITIES - 99.68% $940,498,880
(Cost: $657,957,477)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.32% 3,000,947
NET ASSETS - 100.00% $943,499,827
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS AND WARRANTS
Communication - 1.38%
Cox Communications, Inc., Class A* ..... 7,500 $ 276,094
Crown Castle International Corp.* ...... 20,000 415,625
Infinity Broadcasting Corporation,
Class A* .............................. 31,200 928,200
Iridium LLC, Warrants (A)* ............. 500 250
Microcell Telecommunications Inc.,
Warrants (A)* ......................... 5,000 83,865
OnePoint Communications Corp., Warrants (A)* 900 900
Total ................................. 1,704,934
Electronic and Other Electric Equipment - 0.02%
Powertel, Inc., Warrants* .............. 2,400 25,200
Food and Kindred Products - 0.88%
Keebler Foods Company* ................. 36,000 1,093,500
Industrial Machinery and Equipment - 0.65%
Cooper Cameron Corporation* ............ 10,000 370,625
Smith International, Inc.* ............. 10,000 434,375
Total ................................. 805,000
Oil and Gas Extraction - 0.42%
Transocean Offshore Incorporated ....... 20,000 525,000
Paper and Allied Products - 0.00%
SF Holdings Group, Inc., Class C (A)* .. 2,000 20
Telephone Communication - 0.08%
Allegiance Telecom, Inc., Warrants (A)* 1,250 $ 61,875
Primus Telecommunications Group,
Incorporated, Warrants* ............... 500 10,000
VersaTel Telecom International N.V.,
Warrants (A)* ......................... 500 25,000
Total ................................. 96,875
Wholesale Trade -- Durable Goods - 0.41%
WESCO International, Inc.* ............. 25,000 512,500
Wholesale Trade -- Nondurable Goods - 0.17%
U.S. Foodservice* ...................... 5,000 213,125
TOTAL COMMON STOCKS AND WARRANTS - 4.01% $ 4,976,154
(Cost: $4,287,999)
PREFERRED STOCKS
Depository Institutions - 0.26%
California Federal Preferred Capital
Corporation, 9.125% ................... 12,500 327,350
Printing and Publishing - 0.41%
PRIMEDIA Inc., 10.0% ................... 5,000 511,250
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1999
Shares Value
PREFERRED STOCKS (Continued)
Telephone Communication - 0.25%
IXC Communications, Inc., 12.5% ........ 317 $ 304,320
TOTAL PREFERRED STOCKS - 0.92% $ 1,142,920
(Cost: $1,127,010)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Agricultural Production -- Crops - 0.88%
Frank's Nursery & Crafts, Inc.,
10.25%, 3-1-2008 ...................... $ 750 748,125
Hines Horticulture, Inc.,
11.75%, 10-15-2005 .................... 325 346,937
Total ................................. 1,095,062
Agricultural Production -- Livestock - 0.25%
Pilgrim's Pride Corporation,
10.875%, 8-1-2003 ..................... 300 310,500
Amusement and Recreation Services - 2.73%
Hollywood Park, Inc.,
9.25%, 2-15-2007 ...................... 500 491,250
Premier Parks Inc.:
9.75%, 6-15-2007 ...................... 1,000 1,015,000
0.0%, 4-1-2008 (B) .................... 2,500 1,625,000
Trump Hotels & Casino Resorts
Holdings, L.P.,
15.5%, 6-15-2005 ...................... 250 255,000
Total ................................. 3,386,250
Apparel and Accessory Stores - 0.41%
Wilsons The Leather Experts Inc.,
11.25%, 8-15-2004 ..................... 500 506,250
Apparel and Other Textile Products - 0.82%
Consoltex Group Inc.,
11.0%, 10-1-2003 ...................... 1,000 1,022,500
Auto Repair, Services and Parking - 0.61%
Avis Rent A Car, Inc.,
11.0%, 5-1-2009 (A) ................... 750 752,812
Building Materials and Garden Supplies - 0.83%
ISG Resources, Inc.,
10.0%, 4-15-2008 ...................... 1,000 1,026,250
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Business Services - 2.76%
Adams Outdoor Advertising Limited Partnership,
10.75%, 3-15-2006 ..................... $ 750 $ 802,500
Amazon.com, Inc.,
0.0%, 5-1-2008 (B) .................... 1,000 680,000
Federal Data Corporation,
10.125%, 8-1-2005 ..................... 500 485,000
Lamar Advertising Company,
9.625%, 12-1-2006 ..................... 1,000 1,025,000
Rental Service Corporation,
9.0%, 5-15-2008 ....................... 400 424,000
Total ................................. 3,416,500
Chemicals and Allied Products - 1.15%
AMM Holdings, Inc.,
0.0%, 7-1-2009 (B) .................... 1,000 340,000
Aqua-Chem, Inc.,
11.25%, 7-1-2008 ...................... 750 555,000
Dade International Inc.,
11.125%, 5-1-2006 ..................... 500 525,000
Total ................................. 1,420,000
Communication - 18.98%
Adelphia Communications Corporation:
10.25%, 7-15-2000 ..................... 500 510,000
9.25%, 10-1-2002 ...................... 500 506,250
10.5%, 7-15-2004 ...................... 500 533,750
9.875%, 3-1-2007 ...................... 500 522,500
Allbritton Communications Company,
9.75%, 11-30-2007 ..................... 500 502,500
American Radio Systems Corporation,
9.0%, 2-1-2006 ........................ 750 808,125
Bresnan Communications Group LLC and Bresnan
Capital Corporation:
0.0%, 2-1-2009 (A)(B) ................. 250 162,500
8.0%, 2-1-2009 (A) .................... 250 250,625
CSC Holdings, Inc.,
9.875%, 2-15-2013 ..................... 1,450 1,566,000
Chancellor Media Corporation of Los Angeles,
8.0%, 11-1-2008 ....................... 750 735,000
Charter Communications Holdings, LLC and
Charter Communications Holdings Capital
Corporation:
8.625%, 4-1-2009 (A) .................. 1,500 1,436,250
0.0%, 4-1-2011 (A) (B) ................ 1,500 930,000
Comcast Corporation,
9.5%, 1-15-2008 ....................... 350 366,534
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Communication (Continued)
Diamond Cable Communications Plc,
0.0%, 12-15-2005 (B) .................. $ 500 $ 446,250
LIN Holdings Corp.,
0.0%, 3-1-2008 (B) .................... 750 495,000
Level 3 Communications, Inc.:
9.125%, 5-1-2008 ...................... 750 737,813
0.0%, 12-1-2008 (B) ................... 1,500 926,250
MetroNet Communications Corp.,
0.0%, 6-15-2008 (B) ................... 1,000 740,000
Microcell Telecommunications Inc.,
0.0%, 6-1-2006 (B) .................... 750 607,500
NTL Incorporated,
0.0%, 4-1-2008 (B) .................... 2,000 1,340,000
Nextel Communications, Inc.:
9.75%, 8-15-2004 ...................... 1,500 1,522,500
0.0%, 2-15-2008 (B) ................... 1,000 690,000
Nextel Partners, Inc.,
0.0%, 2-1-2009 (A) (B) ................ 2,000 1,140,000
OnePoint Communications Corp.,
14.5%, 6-1-2008 (A) ................... 900 499,500
Salem Communications Corporation,
9.5%, 10-1-2007 ....................... 500 520,000
Sprint Spectrum L.P.,
0.0%, 8-15-2006 (B) ................... 1,750 1,593,690
Susquehanna Media Co.,
8.5%, 5-15-2009 (A) ................... 500 492,500
Telewest Communications plc,
0.0%, 4-15-2009 (A) (B)................ 500 333,750
Triton PCS, Inc.,
0.0%, 5-1-2008 (B) .................... 2,000 1,280,000
WinStar Communications, Inc.:
0.0%, 3-15-2008 (B) ................... 1,000 880,000
10.0%, 3-15-2008 ...................... 500 445,000
Total ................................. 23,519,787
Eating and Drinking Places - 2.48%
Avado Brands, Inc.,
11.75%, 6-15-2009 (A) ................. 1,000 992,500
Domino's, Inc.,
10.375%, 1-15-2009 .................... 400 404,000
Foodmaker, Inc.,
8.375%, 4-15-2008 ..................... 1,000 982,500
NE Restaurant Company, Inc.,
10.75%, 7-15-2008 ..................... 750 691,875
Total ................................. 3,070,875
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Electronic and Other Electric Equipment - 4.93%
Communications Instruments, Inc.,
10.0%, 9-15-2004 ...................... $ 450 $ 407,250
EchoStar DBS Corporation,
9.375%, 2-1-2009 (A) .................. 2,500 2,550,000
Elgar Holdings, Inc.,
9.875%, 2-1-2008 ...................... 500 400,000
Exide Corporation,
2.9%, 12-15-2005 (Convertible) (A) .... 1,000 601,250
Intercel, Inc.,
0.0%, 2-1-2006 (B) .................... 750 630,000
Juno Lighting, Inc.,
11.875%, 7-1-2009 (A) ................. 1,500 1,515,000
Total ................................. 6,103,500
Engineering and Management Services - 0.53%
United International Holdings, Inc.,
0.0%, 2-15-2008 (B) ................... 1,000 660,000
Fabricated Metal Products - 2.52%
AXIA Incorporated,
10.75%, 7-15-2008 ..................... 750 741,563
Neenah Corporation,
11.125%, 5-1-2007 ..................... 1,500 1,486,875
Safety Components International, Inc.,
10.125%, 7-15-2007 .................... 1,000 900,000
Total ................................. 3,128,438
Food and Kindred Products - 0.42%
Southern Foods Group, L.P. and
SFG Capital Corporation,
9.875%, 9-1-2007 ...................... 500 516,250
Food Stores - 0.81%
Big V Supermarkets, Inc.,
11.0%, 2-15-2004 ...................... 500 510,000
Pueblo Xtra International, Inc.,
9.5%, 8-1-2003 ........................ 500 491,250
Total ................................. 1,001,250
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Hotels and Other Lodging Places - 4.20%
CapStar Hotel Company,
8.75%, 8-15-2007 ...................... $ 500 $ 465,000
Coast Hotels and Casinos, Inc.,
9.5%, 4-1-2009 (A) .................... 500 480,000
MGM Grand, Inc.,
6.875%, 2-6-2008 ...................... 1,000 907,610
Prime Hospitality Corp.:
9.25%, 1-15-2006 ...................... 1,500 1,515,000
9.75%, 4-1-2007 ....................... 500 495,000
Station Casinos, Inc.:
10.125%, 3-15-2006 .................... 500 515,000
8.875%, 12-1-2008 ..................... 850 828,750
Total ................................. 5,206,360
Industrial Machinery and Equipment - 2.89%
Falcon Building Products, Inc.,
0.0%, 6-15-2007 (B) ................... 2,000 1,340,000
National Equipment Services, Inc.,
10.0%, 11-30-2004 ..................... 1,250 1,275,000
Terex Corporation,
8.875%, 4-1-2008 ...................... 1,000 960,000
Total ................................. 3,575,000
Instruments and Related Products - 2.83%
Cole National Group, Inc.,
9.875%, 12-31-2006 .................... 500 431,250
Maxxim Medical, Inc.,
10.5%, 8-1-2006 ....................... 1,500 1,612,500
Universal Hospital Services, Inc.,
10.25%, 3-1-2008 ...................... 1,645 1,464,050
Total ................................. 3,507,800
Insurance Carriers - 0.20%
LifePoint Hospitals, Inc.,
10.75%, 5-15-2009 (A) ................. 250 254,375
Miscellaneous Manufacturing Industries - 0.98%
AAi.Fostergrant, Inc.,
10.75%, 7-15-2006 ..................... 500 352,500
Amscan Holdings, Inc.,
9.875%, 12-15-2007 .................... 500 416,250
Hedstrom Corporation,
10.0%, 6-1-2007 ....................... 500 450,000
Total ................................. 1,218,750
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Miscellaneous Retail - 2.13%
Michaels Stores, Inc.:
6.75%, 1-15-2003 (Convertible) ........ $ 500 $ 495,000
10.875%, 6-15-2006 .................... 2,000 2,150,000
Total ................................. 2,645,000
Motion Pictures - 1.52%
Regal Cinemas, Inc.,
9.5%, 6-1-2008 ........................ 2,000 1,880,000
Paper and Allied Products - 3.91%
Buckeye Technologies Inc.,
8.0%, 10-15-2010 ...................... 750 716,250
Container Corporation of America,
11.25%, 5-1-2004 ...................... 1,500 1,556,250
Mail-Well I Corporation,
8.75%, 12-15-2008 ..................... 1,000 975,000
Outsourcing Services Group, Inc.,
10.875%, 3-1-2006 ..................... 500 492,500
Republic Group Incorporated,
9.5%, 7-15-2008 ....................... 750 750,000
SF Holdings Group, Inc.,
0.0%, 3-15-2008 (B) ................... 1,000 350,000
Total ................................. 4,840,000
Petroleum and Coal Products - 0.45%
Building Materials Corporation of America,
8.0%, 12-1-2008 ....................... 600 562,500
Primary Metal Industries - 0.39%
Wheeling-Pittsburgh Corporation,
9.25%, 11-15-2007 ..................... 500 480,000
Printing and Publishing - 3.45%
Big Flower Press Holdings, Inc.,
8.625%, 12-1-2008 ..................... 1,000 930,000
K-III Communications Corporation,
8.5%, 2-1-2006 ........................ 500 502,500
Perry-Judd's Incorporated,
10.625%, 12-15-2007 ................... 1,000 985,000
TransWestern Publishing Company LLC and
TWP Capital Corp. II,
9.625%, 11-15-2007 .................... 900 884,250
World Color Press, Inc.,
8.375%, 11-15-2008 .................... 1,000 977,500
Total ................................. 4,279,250
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Real Estate - 0.40%
Delco Remy International, Inc.,
8.625%, 12-15-2007 .................... $ 500 $ 490,000
Rubber and Miscellaneous Plastics Products - 5.11%
Berry Plastics Corporation,
11.0%, 7-15-2007 (A) .................. 1,500 1,518,750
Graham Packaging Holdings Company,
0.0%, 1-15-2009 (B) ................... 3,750 2,606,250
Home Products International, Inc.,
9.625%, 5-15-2008 ..................... 750 682,500
J.H. Heafner Company, Inc. (The):
10.0%, 5-15-2008 ...................... 500 513,125
10.0%, 5-15-2008 (A) .................. 500 513,125
LDM Technologies, Inc.,
10.75%, 1-15-2007 ..................... 500 495,000
Total ................................. 6,328,750
Social Services - 0.60%
La Petite Academy, Inc. and LPA Holding Corp.,
10.0%, 5-15-2008 ...................... 750 737,813
Stone, Clay and Glass Products - 0.30%
SIMCALA, Inc.,
9.625%, 4-15-2006 ..................... 500 367,500
Telephone Communication - 12.48%
Alestra, S.A. de C.V.,
12.625%, 5-15-2009 (A) ................ 1,000 950,000
Allegiance Telecom, Inc.,
0.0%, 2-15-2008 (B) ................... 1,250 771,875
Concentric Network Corporation,
12.75%, 12-15-2007 .................... 750 776,250
GST Telecommunications,
0.0%, 11-15-2007 (B) .................. 1,000 1,083,750
Hyperion Telecommunications, Inc.:
0.0%, 4-15-2003 (B) ................... 2,000 1,650,000
12.0%, 11-1-2007 (A) .................. 500 507,500
ICG Services, Inc.,
0.0%, 5-1-2008 (B) .................... 900 477,000
ITC /\ DeltaCom, Inc.:
8.875%, 3-1-2008 ...................... 250 248,750
9.75%, 11-15-2008 ..................... 750 768,750
Intermedia Communications Inc.,
8.5%, 1-15-2008 ....................... 750 688,125
Intermedia Communications of Florida, Inc.,
0.0%, 5-15-2006 (B) ................... 750 615,000
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Telephone Communication (Continued)
NEXTLINK Communications, Inc.,
10.75%, 6-1-2009 ...................... $ 500 $ 512,500
ONO Finance Plc, Units,
13.0%, 5-1-2009 (A)(C) ................ 250 251,875
Primus Telecommunications Group, Incorporated,
11.75%, 8-1-2004 ...................... 500 507,500
RSL Communications, Ltd.,
10.5%, 11-15-2008 ..................... 2,000 1,975,000
Rhythms NetConnections Inc.,
0.0%, 5-15-2008 (B) ................... 2,000 1,065,000
Time Warner Telecom LLC and
Time Warner Telecom Inc.,
9.75%, 7-15-2008 ...................... 500 512,500
Tritel PCS, Inc.,
0.0%, 5-15-2009 (A) (B) ............... 2,000 1,065,000
VersaTel Telecom International N.V.,
13.25%, 5-15-2008 ..................... 500 520,000
Viatel, Inc.,
11.5%, 3-15-2009 (A) .................. 500 515,000
Total ................................. 15,461,375
Textile Mill Products - 1.39%
Avondale Mills, Inc.,
10.25%, 5-1-2006 ...................... 500 492,500
Glenoit Corporation,
11.0%, 4-15-2007 ...................... 500 440,000
Globe Manufacturing Corp.,
10.0%, 8-1-2008 ....................... 1,000 785,000
Total ................................. 1,717,500
Transportation by Air - 1.19%
Atlas Air, Inc.,
9.375%, 11-15-2006 .................... 1,500 1,470,000
Transportation Equipment - 1.56%
Federal-Mogul Corporation:
7.75%, 7-1-2006 ....................... 1,000 957,510
7.875%, 7-1-2010 ...................... 500 470,910
Westinghouse Air Brake Company (The),
9.375%, 6-15-2005 ..................... 500 510,000
Total ................................. 1,938,420
TOTAL CORPORATE DEBT SECURITIES - 87.09% $107,896,617
(Cost: $110,118,618)
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 1999
Value
TOTAL SHORT-TERM SECURITIES - 5.99% $ 7,416,909
(Cost $7,416,909)
TOTAL INVESTMENT SECURITIES - 98.01% $121,432,600
(Cost: $122,950,536)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.99% 2,460,213
NET ASSETS - 100.00% $123,892,813
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS
Apparel and Accessory Stores - 0.44%
Gap, Inc. (The) ........................ 77,475 $ 3,902,803
Building Materials and Garden Supplies - 0.72%
Home Depot, Inc. (The) ................. 98,600 6,353,538
Business Services - 0.89%
America Online, Inc.* .................. 27,400 3,027,700
SAP AG, ADR ............................ 138,800 4,805,950
Total ................................. 7,833,650
Chemicals and Allied Products - 15.71%
ABB AG (D) ............................. 10,000 14,797,658
Air Products and Chemicals, Inc. ....... 101,900 4,101,475
Biogen, Inc.* .......................... 71,300 4,587,709
Bristol-Myers Squibb Company ........... 141,500 9,966,906
Colgate-Palmolive Company .............. 57,200 5,648,500
du Pont (E.I.) de Nemours and Company .. 218,000 14,892,125
Forest Laboratories, Inc.* ............. 8,300 383,875
Gillette Company (The) ................. 125,822 5,158,702
Lilly (Eli) and Company ................ 155,900 11,166,338
Merck & Co., Inc. ...................... 157,700 11,669,800
Monsanto Company ....................... 205,900 8,120,181
PPG Industries, Inc. ................... 48,300 2,852,719
Pfizer Inc. ............................ 77,200 8,472,700
Pharmacia & Upjohn, Inc. ............... 109,100 6,198,244
Procter & Gamble Company (The) ......... 56,500 5,042,625
Schering-Plough Corporation ............ 142,600 7,557,800
Warner-Lambert Company ................. 263,400 18,273,375
Total ................................. 138,890,732
Communication - 3.47%
Clear Channel Communications, Inc.* .... 118,400 8,162,200
Cox Communications, Inc., Class A* ..... 380,000 13,988,750
Vodafone Airtouch Public Limited
Company, ADR .......................... 43,300 8,530,100
Total ................................. 30,681,050
Depository Institutions - 2.20%
Chase Manhattan Corporation (The) ...... 96,600 8,367,975
Citigroup Inc. ......................... 232,650 11,050,875
Total ................................. 19,418,850
Electric, Gas and Sanitary Services - 3.07%
Duke Energy Corp. ...................... 120,600 6,557,625
Republic Services, Inc., Class A* ...... 266,700 6,600,825
Texas Utilities Company ................ 338,000 13,942,500
Total ................................. 27,100,950
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Electronic and Other Electric Equipment - 6.18%
Analog Devices, Inc.* .................. 160,100 $ 8,035,019
General Electric Company ............... 151,800 17,153,400
Intel Corporation ...................... 295,400 17,567,069
Telefonaktiebolaget LM Ericsson, ADR,
Class B ............................... 361,400 11,892,318
Total ................................. 54,647,806
Fabricated Metal Products - 1.89%
Lockheed Martin Corporation ............ 448,900 16,721,525
Food and Kindred Products - 2.12%
Bestfoods .............................. 131,800 6,524,100
Coca-Cola Company (The) ................ 68,100 4,256,250
Panamerican Beverages Inc., Class A .... 131,300 3,126,581
Ralston-Ralston Purina Group ........... 159,400 4,851,738
Total ................................. 18,758,669
Food Stores - 1.07%
Kroger Co. (The)* ...................... 338,600 9,459,638
General Merchandise Stores - 2.47%
Dayton Hudson Corporation .............. 75,900 4,933,500
Wal-Mart Stores, Inc. .................. 350,200 16,897,150
Total ................................. 21,830,650
Health Services - 0.75%
Tenet Healthcare Corporation* .......... 358,700 6,658,369
Industrial Machinery and Equipment - 6.84%
Apple Computer, Inc.* .................. 113,800 5,277,475
Case Corporation ....................... 349,500 16,819,688
Cisco Systems, Inc.* ................... 191,700 12,346,678
Deere & Company ........................ 93,200 3,693,050
EMC Corporation* ....................... 150,000 8,250,000
International Business Machines
Corporation ........................... 108,800 14,062,400
Total ................................. 60,449,291
Instruments and Related Products - 3.32%
General Motors Corporation, Class H* ... 73,900 4,156,875
Guidant Corporation .................... 223,200 11,480,850
Medtronic, Inc. ........................ 68,600 5,342,225
Raytheon Company, Class A .............. 121,153 8,344,413
Total ................................. 29,324,363
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Insurance Carriers - 2.23%
American International Group, Inc. .... 89,700 $ 10,500,506
Chubb Corporation (The) ................ 132,700 9,222,650
Total ................................. 19,723,156
Miscellaneous Retail - 0.34%
Costco Companies, Inc.* ................ 37,200 2,977,163
Motion Pictures - 2.12%
Time Warner Incorporated ............... 190,000 13,965,000
Walt Disney Company (The) .............. 156,200 4,812,912
Total ................................. 18,777,912
Nondepository Institutions - 5.52%
Associates First Capital Corporation,
Class A ............................... 323,820 14,349,274
Fannie Mae ............................. 288,900 19,753,537
Freddie Mac ............................ 253,600 14,708,800
Total ................................. 48,811,611
Oil and Gas Extraction - 2.19%
Burlington Resources Incorporated ...... 336,200 14,540,650
Schlumberger Limited ................... 75,500 4,808,406
Total ................................. 19,349,056
Petroleum and Coal Products - 2.84%
Chevron Corporation .................... 44,000 4,188,250
Exxon Corporation ...................... 48,100 3,709,712
Mobil Corporation ...................... 72,200 7,147,800
Royal Dutch Petroleum Company .......... 167,700 10,103,925
Total ................................. 25,149,687
Prepackaged Software - 1.73%
Microsoft Corporation* ................. 170,200 15,339,275
Primary Metal Industries - 0.78%
Alcoa Incorporated ..................... 112,000 6,930,000
Telephone Communication - 1.99%
MCI WORLDCOM, Inc.* .................... 99,100 8,525,697
SBC Communications Inc. ................ 156,000 9,048,000
Total ................................. 17,573,697
Transportation By Air - 0.50%
AMR Corporation* ....................... 65,200 4,449,900
Transportation Equipment - 1.60%
DaimlerChrysler AG ..................... 69,894 6,211,829
Ford Motor Company ..................... 140,300 7,918,181
Total ................................. 14,130,010
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Wholesale Trade -- Durable Goods - 1.05%
Johnson & Johnson ...................... 94,400 $ 9,251,200
Wholesale Trade -- Nondurable Goods - 1.10%
Safeway Inc.* .......................... 196,400 9,721,800
TOTAL COMMON STOCKS - 75.13% $664,216,351
(Cost: $402,293,605)
Principal
Amount in
Thousands
UNITED STATES GOVERNMENT SECURITY - 13.67%
United States Treasury,
5.5%, 8-15-2028 (E) ................... $132,000 $120,861,840
(Cost: $136,623,290)
SHORT-TERM SECURITIES
Commercial Paper
Auto Repair, Services and Parking - 1.24%
PHH Corp.,
5.01%, 7-6-99 ......................... 11,000 10,992,346
Business Services - 0.61%
Electronic Data Systems Corporation,
5.8%, 7-1-99 .......................... 5,400 5,400,000
Communication - 0.72%
Dominion Resources Inc.,
5.23%, 7-12-99 ........................ 6,400 6,389,772
Electric, Gas and Sanitary Services - 2.75%
Commonwealth Edison Co.,
5.26%, 7-19-99 ........................ 10,000 9,973,700
OGE Energy Corp.,
5.1%, 7-6-99 .......................... 8,365 8,359,075
Southern California Edison Co.,
4.86%, 7-19-99 ........................ 6,000 5,985,420
Total ................................. 24,318,195
Fabricated Metal Products - 0.32%
Danaher Corporation,
5.2208%, Master Note .................. 2,814 2,814,000
Food and Kindred Products - 0.68%
General Mills, Inc.,
5.075%, Master Note ................... 5,986 5,986,000
Industrial Machinery and Equipment - 0.57%
Deere & Company,
4.99%, 7-19-99 ........................ 5,000 4,987,525
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Instruments and Related Products - 1.36%
Hughes Electronics Corp.,
5.3%, 7-9-99 .......................... $12,000 $ 11,985,867
Paper and Allied Products - 1.02%
Westvaco Corp.,
4.85%, 7-8-99 ......................... 9,000 8,991,512
Petroleum and Coal Products - 1.69%
Kerr-McGee Credit Corp.:
5.05%, 7-8-99 ......................... 10,000 9,990,181
5.27%, 7-20-99 ........................ 5,000 4,986,093
Total ................................. 14,976,274
TOTAL SHORT-TERM SECURITIES - 10.96% $ 96,841,491
(Cost: $96,841,491)
TOTAL INVESTMENT SECURITIES - 99.76% $881,919,682
(Cost: $635,758,386)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.24% 2,126,315
NET ASSETS - 100.00% $884,045,997
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS
Australia - 0.19%
Solution 6 Holdings Limited (D)* ....... 148,829 $ 344,368
China - 0.11%
Jinpan International Limited* .......... 93,000 203,437
Canada - 2.45%
AT&T Canada Inc., Class B (D)* ......... 40,000 2,545,998
Rogers Communications Inc.,
Class B (D)* .......................... 120,000 1,926,811
Total ................................. 4,472,809
Finland - 4.66%
Perlos Oy (A) (D)* ...................... 61,600 888,876
Sonera Group plc (A) (D) ............... 178,000 3,889,450
TT Tieto Oy, Class B (D) ............... 11,540 480,529
Teleste Oy (A) (D)* .................... 164,100 1,488,413
UPM-Kymmene Corporation (D) ............ 57,500 1,777,957
Total ................................. 8,525,225
France - 8.83%
AXA-UAP (D) ............................ 26,700 3,255,579
Cap Gemini N.V. (D) .................... 10,400 1,633,618
Elf Acquitaine (D) ..................... 11,200 1,642,688
Lagardere SCA (D) ...................... 29,000 1,079,040
Societe Generale, Class A (D) .......... 10,950 1,928,806
Societe Industrielle de Transports
Automobiles S.A. (D) .................. 4,375 989,343
Suez Lyonnaise des Eaux (D) ............ 23,000 4,146,197
Transiciel S.A. (A) (D) ................ 13,750 1,459,729
Total ................................. 16,135,000
Germany - 5.76%
Bayer Group (The) (D) .................. 50,000 2,082,014
Deutsche Prandbrief- und
Hypothekenbank AG (D) ................. 18,725 1,698,387
Mannesmann AG (D) ...................... 21,200 3,161,817
Rhoen-Klinikum AG (D) .................. 16,600 1,651,078
Siemens AG (D) ......................... 25,000 1,927,409
Total ................................. 10,520,705
Greece - 1.09%
Panafon Hellenic Telecommunications
Company S.A. (D)* ..................... 42,200 1,016,263
Panafon Hellenic Telecommunications
Company S.A. (A) (D)* ................. 40,650 978,936
Total ................................. 1,995,199
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Hong Kong - 1.41%
Beijing Enterprises Holdings Limited (D) 505,000 $ 1,041,412
Dah Sing Financial Holdings Limited (D) 253,000 965,213
Dickson Concepts International
Limited (D) ........................... 310,500 220,108
Ng Fung Hong Limited (D) ............... 418,000 347,494
Total ................................. 2,574,227
Ireland - 0.87%
Bank of Ireland (The) (D) .............. 94,300 1,591,014
Italy - 3.43%
Banca Monte dei Paschi di
Siena S.p.A. (A) (D)* ................. 172,500 764,522
Class Editori S.p.A. (D) ............... 150,000 1,198,189
Istituto Bancario San Paolo di Torino -
Istituto Mobiliare Italiano S.p.A. (D) 97,500 1,326,511
Telecom Italia Mobile S.p.A., Risp (D) . 550,000 2,981,815
Total ................................. 6,271,037
Japan - 15.96%
FUJITSU LIMITED (D) .................... 160,000 3,221,033
Kao Corporation (D) .................... 78,000 2,192,551
Keyence Corporation (D) ................ 13,000 2,276,384
Matsushita Communication Industrial
Co., Ltd. (D) ......................... 26,000 1,859,369
NTT Mobile Communications Network, Inc. (D) 210 2,847,340
Nichiei Co., Ltd. (D) .................. 39,300 3,444,091
Nippon Express Co., Ltd. (D) ........... 272,000 1,630,358
Nippon Telegraph and Telephone
Corporation (D) ....................... 195 2,273,159
Olympus Optical Co., Ltd. (D) .......... 140,000 2,070,687
ROHM CO., LTD. (D) ..................... 15,000 2,350,048
Sumitomo Electric Industries, Ltd. (D) . 151,000 1,717,796
Takeda Chemical Industries, Ltd. (D) ... 71,000 3,293,043
Total ................................. 29,175,859
Mexico - 0.63%
Grupo Financiero Banamex-Accival S.A. (D)* 450,000 1,146,071
Netherlands - 7.87%
Akzo Nobel N.V. (D) .................... 45,500 1,913,391
Benckiser N.V., Class B (D) ............. 30,196 1,610,616
CMG plc (D) ............................ 49,400 1,298,373
EQUANT N.V. (D)* ....................... 24,750 2,280,578
Koninklijke Philips Electronics N.V.,
Ordinary Shares (D) ................... 29,200 2,878,724
Ordina N.V. (D)* ....................... 87,609 2,528,378
Unique International NV (A) (D) ........ 50,893 1,240,567
United Pan-Europe Communications
N.V. (D)* ............................. 11,500 623,470
Total ................................. 14,374,097
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Norway - 1.61%
Merkantildata ASA (D) .................. 305,000 $ 2,941,438
Portugal - 1.00%
Banco Portugues do Atlantico, S.A. (A) (D)* 45,900 689,294
Portugal Telecom, S.A., ADS ............ 27,500 1,132,656
Total ................................. 1,821,950
Spain - 2.43%
Baron de Ley, S.A. (D)* ................ 21,650 747,541
Tele Pizza, S.A. (D)* .................. 250,000 1,293,528
Telefonica de Espana, S.A. (D) ......... 49,749 2,401,269
Total ................................. 4,442,338
Sweden - 1.25%
Telefonaktiebolaget LM Ericsson, ADR,
Class B ............................... 69,200 2,277,113
Switzerland - 4.16%
Choco Lindt & Spru AG, Registered (D) .. 50 1,222,415
Clariant Limited, Registered Shares (D) 3,700 1,523,515
Julius Baer Holding AG (D) ............. 400 1,140,063
Roche Holdings AG (D) .................. 245 2,518,883
UBS AG, Registered Shares (D) .......... 4,000 1,194,107
Total ................................. 7,598,983
United Kingdom - 20.24%
Barclays PLC (D) ....................... 36,000 1,046,846
COLT Telecom Group plc, ADR* ........... 115,000 9,886,406
Energis plc (D)* ....................... 109,250 2,603,496
Independent Energy Holdings plc, ADS* .. 225,000 3,065,625
Kingfisher plc (D) ..................... 148,475 1,710,624
Lloyds TSB Group plc (D) ............... 55,000 746,796
Misys plc (D) .......................... 388,470 3,324,613
NTL Incorporated* ...................... 23,000 1,983,031
Newsquest plc (A) (D) .................. 230,000 1,653,014
Securicor plc (D) ....................... 123,700 1,088,872
Select Appointments (Holdings)
Public Limited Company (D)* ........... 90,000 1,073,797
Sema Group plc (D) ..................... 210,600 2,031,391
Telewest Communications plc (D)* ....... 400,000 1,792,026
Vodafone Group Plc (D) ................. 253,627 4,988,774
Total ................................. 36,995,311
United States - 1.89%
ESG Re Limited ......................... 61,000 909,281
Global TeleSystems Group, Inc.* ........ 31,500 2,550,516
Total ................................. 3,459,797
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1999
Shares Value
TOTAL COMMON STOCKS - 85.84% $ 156,865,978
(Cost: $121,656,389)
PREFERRED STOCKS
Brazil - 1.59%
Petroleo Brasileiro S.A. -
Petrobras (D) ......................... 7,800,000 1,207,458
Telebras S.A., ADR ..................... 18,900 1,704,544
Total ................................. 2,912,002
Germany - 4.18%
Fresenius Medical Care AG (D) .......... 5,000 883,825
Marschollek, Lautenschlager und
Partner AG (D) ........................ 10,000 4,761,834
Moebel Walther AG (D) .................. 20,000 319,517
SAP AG (D) ............................. 4,200 1,677,464
Total ................................. 7,642,640
Portugal - 0.84%
Lusomundo-SGPS, S.A. (D) ............... 150,000 1,527,497
TOTAL PREFERRED STOCKS - 6.61% $ 12,082,139
(Cost: $8,466,512)
Face
Amount in
Thousands
UNREALIZED GAIN ON OPEN FORWARD CURRENCY
CONTRACTS - 0.02%
Japanese Yen, 10-8-99 (D) ..............Y1,041,527 $ 48,286
TOTAL SHORT-TERM SECURITIES _ 6.16% $ 11,252,345
(Cost: $11,252,345)
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 1999
Value
TOTAL INVESTMENT SECURITIES - 98.63% $180,248,748
(Cost: $141,375,246)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.37% 2,495,953
NET ASSETS - 100.00% $182,744,701
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Auto Repair, Services and Parking - 1.74%
Hertz Corporation (The),
7.375%, 6-15-2001 ..................... $100 $ 101,740
Chemicals and Allied Products - 3.46%
American Home Products Corporation,
7.7%, 2-15-2000 ....................... 100 101,278
Praxair, Inc.,
6.7%, 4-15-2001 ....................... 100 100,599
Total ................................. 201,877
Depository Institutions - 9.52%
Aristar, Inc.,
5.85%, 1-27-2004 ...................... 150 145,000
BankAmerica Corporation,
9.7%, 8-1-2000 ........................ 100 103,701
Society National Bank,
6.75%, 6-15-2003 ...................... 200 201,790
Wells Fargo & Company,
8.375%, 5-15-2002 ..................... 100 105,297
Total ................................. 555,788
Electric, Gas and Sanitary Services - 9.77%
NorAm Energy Corp.,
6.375%, 11-1-2003 ..................... 150 146,940
UtiliCorp United,
6.875%, 10-1-2004 ..................... 100 100,007
WMX Technologies, Inc.,
8.25%, 11-15-99 ....................... 200 201,864
Western Resources, Inc.,
7.25%, 8-15-2002 ...................... 120 121,862
Total ................................. 570,673
Electronic and Other Electric Equipment - 1.76%
Black & Decker Corp.,
7.5%, 4-1-2003 ........................ 100 102,475
Food and Kindred Products - 2.31%
Pet Inc.,
6.5%, 7-1-2003 ........................ 135 134,876
Furniture and Fixtures - 1.72%
Masco Corporation,
6.625%, 9-15-99 ....................... 100 100,177
General Merchandise Stores - 2.61%
J.C. Penney Company, Inc.,
7.6%, 4-1-2007 ........................ 150 152,340
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Instruments and Related Products - 4.34%
Baxter International Inc.,
7.625%, 11-15-2002 .................... $100 $ 103,126
Raytheon Company,
6.3%, 8-15-2000 ....................... 150 150,433
Total ................................. 253,559
Nondepository Institutions - 11.95%
American General Finance Corporation,
6.2%, 3-15-2003 ....................... 150 148,477
Associates Corporation of North America,
8.25%, 12-1-99 ........................ 100 101,066
Avco Financial Services, Inc.,
7.375%, 8-15-2001 ..................... 140 143,240
Ford Motor Credit Company,
5.75%, 1-25-2001 ...................... 100 99,306
General Motors Acceptance Corporation,
7.0%, 9-15-2002 ....................... 203 205,958
Total ................................. 698,047
Oil and Gas Extraction - 1.99%
USX Corporation,
9.8%, 7-1-2001 ........................ 110 116,466
Petroleum and Coal Products - 1.48%
Chevron Corporation Profit Sharing/Savings
Plan Trust Fund,
8.11%, 12-1-2004 ...................... 83 86,497
Railroad Transportation - 5.62%
Norfolk Southern Corporation,
7.35%, 5-15-2007 ...................... 150 153,140
Union Pacific Corporation,
7.875%, 2-15-2002 ..................... 170 175,261
Total ................................. 328,401
Security and Commodity Brokers - 1.74%
Salomon Inc.,
7.75%, 5-15-2000 ...................... 100 101,504
Telephone Communication - 1.79%
GTE Corporation,
9.375%, 12-1-2000 ..................... 100 104,516
Wholesale Trade -- Durable Goods - 4.52%
Lockheed Martin Corporation,
7.25%, 5-15-2006 ...................... 160 160,109
Westinghouse Electric Corporation,
8.875%, 6-1-2001 ...................... 100 103,846
Total ................................. 263,955
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
TOTAL CORPORATE DEBT SECURITIES - 66.32% $3,872,891
(Cost: $3,892,084)
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation:
5.33%, 10-8-2002 ...................... $150 146,180
7.0%, 5-15-2005 ....................... 36 36,471
6.05%, 9-15-2020 ...................... 121 119,802
Federal National Mortgage Association:
6.0%, 11-1-2000 ....................... 33 32,380
6.4%, 12-27-2004 ...................... 155 152,942
7.95%, 3-7-2005 ....................... 100 101,203
6.21%, 8-15-2005 ...................... 100 97,469
7.5%, 11-15-2006 ...................... 100 99,859
6.5%, 12-1-2010 ....................... 63 61,858
6.0%, 1-1-2011 ........................ 58 56,252
6.5%, 2-1-2011 ........................ 66 65,447
7.0%, 5-1-2011 ........................ 54 53,914
7.0%, 7-1-2011 ........................ 57 57,301
7.0%, 9-1-2012 ........................ 67 67,655
6.0%, 11-1-2013 ....................... 240 231,775
11.0%, 10-1-2020 ...................... 16 17,460
7.0%, 4-1-2026 ........................ 65 64,417
Government National Mortgage Association:
7.0%, 9-15-2008 ....................... 44 44,070
6.5%, 1-15-2014 ....................... 132 130,097
United States Treasury,
6.25%, 2-15-2007 ...................... 150 152,837
TOTAL UNITED STATES GOVERNMENT SECURITIES - 30.64% $1,789,389
(Cost: $1,824,354)
TOTAL SHORT-TERM SECURITIES - 1.51% $ 88,000
(Cost: $88,000)
TOTAL INVESTMENT SECURITIES - 98.47% $5,750,280
(Cost: $5,804,438)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.53% 89,517
NET ASSETS - 100.00% $5,839,797
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
BANK OBLIGATIONS
Certificates of Deposit - 3.38%
Yankee
Bank Austria - New York,
5.11%, 4-25-2000 ...................... $2,000 $ 1,997,756
Commercial Paper - 4.23%
Wells Fargo & Company,
4.82%, 7-14-99 ........................ 2,500 2,495,649
Notes - 7.99%
Abbey National Treasury Services PLC,
5.64%, 7-15-99 ........................ 1,000 999,855
Harris Trust and Savings Bank,
5.05%, 2-17-2000 ...................... 2,000 1,999,337
Shawmut National Corporation
(Fleet Financial Group Inc.),
8.625%, 12-15-99 ...................... 1,690 1,716,374
Total ................................. 4,715,566
TOTAL BANK OBLIGATIONS - 15.60% $ 9,208,971
(Cost: $9,208,971)
CORPORATE OBLIGATIONS
Commercial Paper
Business Services - 3.39%
Electronic Data Systems Corporation,
5.8%, 7-1-99 .......................... 2,000 2,000,000
Electric, Gas and Sanitary Services - 9.04%
Central Illinois Light Co.,
4.95%, 7-8-99 ......................... 2,100 2,097,979
Southern California Edison Co.,
4.86%, 7-19-99 ........................ 2,000 1,995,140
Tampa Electric Co.,
5.0%, 7-30-99 ......................... 1,250 1,244,965
Total ................................. 5,338,084
Engineering and Management Services - 4.73%
Halliburton Company,
5.01%, 7-23-99 ........................ 2,800 2,791,427
Fabricated Metal Products - 0.71%
Danaher Corporation,
5.2208%, Master Note .................. 422 422,000
Insurance Carriers - 1.69%
Transamerica Finance Corp.,
4.84%, 7-20-99 ........................ 1,000 997,446
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (Continued)
Nondepository Institutions - 4.22%
Associates Financial Services Co. of
Puerto Rico Inc. (Associates Corp. of North America),
4.87%, 8-17-99 ........................ $ 500 $ 496,821
General Electric Capital Corporation:
4.88%, 7-16-99 ........................ 500 498,983
4.85%, 7-30-99 ........................ 1,500 1,494,140
Total ................................. 2,489,944
Oil and Gas Extraction - 4.19%
Arco British Ltd. (Atlantic Richfield Co.),
5.02%, 7-14-99 ........................ 2,480 2,475,504
Paper and Allied Products - 4.23%
Westvaco Corp.,
4.9%, 7-15-99 ......................... 2,500 2,495,236
Total Commercial Paper - 32.20% 19,009,641
Notes
Electric, Gas and Sanitary Services - 3.38%
Baltimore Gas and Electric Company,
4.9713%, 9-1-99 ....................... 2,000 1,999,941
General Merchandise Stores - 3.40%
Wal-Mart Stores, Inc.,
5.65%, 2-1-2000 ....................... 2,000 2,006,058
Insurance Carriers - 2.54%
Atlantic American Corporation (Wachovia Bank, N.A.),
5.22%, 7-7-99 ......................... 1,500 1,500,000
Motion Pictures - 3.64%
Walt Disney Company (The),
5.6%, 4-17-2000 ....................... 2,145 2,150,874
Nondepository Institutions - 5.96%
Associates Corporation of North America,
5.096%, 7-29-99 ....................... 1,500 1,499,104
Deere (John) Capital Corp.,
6.43%, 8-9-99 ......................... 1,000 1,000,661
General Motors Acceptance Corporation,
7.875%, 3-15-2000 ..................... 1,000 1,018,605
Total ................................. 3,518,370
Total Notes - 18.92% 11,175,243
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
TOTAL CORPORATE OBLIGATIONS - 51.12% $30,184,884
(Cost: $30,184,884)
MUNICIPAL OBLIGATIONS
California - 4.23%
California Pollution Control Financing Authority,
Environmental Improvement Revenue Bonds
(Shell Martinez Refining Company Project),
Series 1996 (Taxable), (Shell Oil Company),
4.93%, 7-1-99 ......................... 2,000 2,000,000
Oakland-Alameda County Coliseum Authority,
Lease Revenue Bonds (Oakland Coliseum
Arena Project), 1996 Series A-1 Variable Rate
Lease Revenue Bonds (Taxable),(Canadian
Imperial Bank of Commerce),
5.0%, 8-3-99 .......................... 500 500,000
Total ................................. 2,500,000
Indiana - 2.88%
City of Whiting, Indiana, Industrial Sewage
and Solid Waste Disposal Revenue Bonds, Taxable
Series 1995 (Amoco Oil Company Project),
4.9%, 7-14-99 ......................... 1,700 1,700,000
Louisiana - 12.79%
Industrial District No. 3 of the Parish of West
Baton Rouge, State of Louisiana, Variable Rate
Demand Revenue Bonds, Series 1995 (Taxable),
(The Dow Chemical Company Project),
5.1%, 8-5-99 .......................... 2,850 2,850,000
Gulf Coast Industrial Development Authority,
Environmental Facilities Revenue Bonds
(CITGO Petroleum Corporation Project), Taxable
Series 1998 (Royal Bank of Canada),
4.92%, 7-7-99 ......................... 2,500 2,500,000
Industrial Development Board of the Parish
Of Calcasieu, Inc., Environmental Revenue
Bonds (CITGO Petroleum Corporation Project),
Series 1996 (Taxable), (West Deutsche Bank),
5.25%, 7-29-99 ........................ 2,200 2,200,000
Total ................................. 7,550,000
New Jersey - 0.35%
New Jersey Economic Development Authority,
Federally Taxable Variable Rate Demand/
Fixed Rate Revenue Bonds (The Morey
Organization, Inc. Project), Series of 1997
(First Union National Bank),
5.3%, 7-7-99 .......................... 205 205,000
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
New York - 3.39%
The City of New York, General Obligation Bonds,
Fiscal 1995 Series B, Taxable Adjustable Rate
Bonds (Bayerische Landesbank Girozentrale,
New York Branch),
5.145%, 8-5-99 ........................ $ 2,000 $ 2,000,000
Pennsylvania - 2.69%
Schuylkill County Industrial Development
Authority, Commercial Development Revenue
Bonds (Midway Supermarket, Inc. Project),
Taxable Series of 1995 (First Union National Bank),
5.3%, 7-7-99 .......................... 1,390 1,390,000
Montgomery County Industrial Development
Authority, Taxable Fixed Rate/Variable
Rate Demand Revenue Bonds (410 Horsham
Associates Project), Series of 1995
(First Union National Bank),
5.3%, 7-7-99 .......................... 200 200,000
Total ................................. 1,590,000
Texas - 1.69%
Metrocrest Hospital Authority, Series 1989A
(The Bank of New York),
4.993%, 8-2-99......................... 1,000 995,562
TOTAL MUNICIPAL OBLIGATIONS - 28.02% $16,540,562
(Cost: $16,540,562)
UNITED STATES GOVERNMENT SECURITY - 2.37%
Federal Farm Credit Bank,
5.24%, 9-29-99 ........................ $1,400 $ 1,400,000
(Cost: $1,400,000)
TOTAL INVESTMENT SECURITIES - 97.11% $57,334,417
(Cost: $57,334,417)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 2.89% 1,705,822
NET ASSETS - 100.00% $59,040,239
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE SCIENCE AND TECHNOLOGY PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS
Business Services - 29.89%
About.com, Inc.* ....................... 10,000 $ 516,875
Amazon.com, Inc.* ...................... 13,000 1,626,219
America Online, Inc.* .................. 20,000 2,210,000
BroadVision, Inc.* ..................... 30,000 2,210,625
DoubleClick Inc.* ...................... 16,000 1,464,500
EarthLink Network, Inc.* ............... 11,000 676,156
eBay Inc.* ............................. 8,000 1,210,250
Fiserv, Inc.* .......................... 24,000 752,250
Inktomi Corporation* ................... 13,000 1,709,906
Macromedia, Inc.* ...................... 30,000 1,065,937
MemberWorks Incorporated* .............. 28,400 829,813
Portal Software, Inc.* ................. 38,500 1,784,234
Redback Networks* ...................... 10,000 1,258,750
Securities First Technologies Corporation* 25,000 1,126,563
SunGard Data Systems, Inc.* ............ 25,000 862,500
TMP Worldwide Inc.* .................... 12,000 764,250
TenFold Corporation* ................... 13,000 409,500
USWeb Corporation* ..................... 25,000 555,469
Wind River Systems, Inc.* .............. 40,000 641,250
Yahoo! Inc.* ........................... 10,000 1,722,188
Total ................................. 23,397,235
Chemicals and Allied Products - 1.85%
Albany Molecular Research, Inc.* ....... 24,000 717,000
Gilead Sciences* ....................... 14,000 730,625
Total ................................. 1,447,625
Communication - 4.25%
Clear Channel Communications, Inc.* .... 18,000 1,240,875
COLT Telecom Group plc, ADR* ........... 10,000 859,687
Cox Communications, Inc., Class A* ..... 7,100 261,369
Intraware, Inc.* ....................... 20,000 480,625
Level 3 Communications, Inc.* .......... 8,000 481,000
Total ................................. 3,323,556
Depository Institutions - 0.99%
TeleBanc Financial Corporation* ........ 20,000 773,750
Electronic and Other Electric Equipment - 15.48%
ADC Telecommunications, Inc.* .......... 16,000 728,500
Broadcom Corporation, Class A* ......... 17,000 2,457,031
Concord Communications, Inc.* .......... 30,000 1,338,750
Copper Mountain Networks, Inc.* ........ 8,700 670,988
EchoStar Communications Corporation,
Class A* .............................. 8,000 1,227,750
Gemstar International Group Limited* ... 30,000 1,959,375
Micron Technology, Inc.* ............... 25,000 1,007,812
Nokia Corporation, Series A, ADR ....... 15,000 1,373,438
Tellabs* ............................... 20,000 1,351,875
Total ................................. 12,115,519
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE SCIENCE AND TECHNOLOGY PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Engineering and Management Services - 7.18%
Abacus Direct Corporation* ............. 10,000 $ 907,188
Incyte Pharmaceuticals, Inc.* .......... 37,000 977,031
MAXIMUS, Inc.* ......................... 30,000 862,500
Paychex, Inc. .......................... 40,000 1,272,500
Quintiles Transnational Corp.* ......... 23,000 965,281
Whittman-Hart, Inc.* ................... 20,000 636,250
Total ................................. 5,620,750
Food and Kindred Products - 1.05%
American Italian Pasta Company, Class A* 27,000 820,125
Health Services - 0.32%
American Healthcorp, Inc.* ............. 30,000 247,500
Industrial Machinery and Equipment - 2.56%
Apple Computer, Inc.* .................. 20,000 927,500
Juniper Networks, Inc.* ................ 7,200 1,073,925
Total ................................. 2,001,425
Instruments and Related Products - 4.63%
CONMED Corporation* .................... 20,000 611,875
Guidant Corporation .................... 11,000 565,812
JDS Uniphase Corporation* .............. 13,000 2,159,625
STERIS Corporation* .................... 15,000 290,625
Total ................................. 3,627,937
Insurance Carriers - 1.18%
Rambus Inc.* ........................... 10,000 921,563
Miscellaneous Retail - 0.77%
Gerald Stevens, Inc.* .................. 50,000 601,562
Motion Pictures - 0.94%
AT&T Corp. - Liberty Media Group, Class A* 20,000 735,000
Prepackaged Software - 13.88%
Allaire Corporation* ................... 15,000 1,022,344
Ariba, Inc.* ........................... 12,750 1,245,516
Bottomline Technologies (de), Inc.* .... 10,000 529,375
Citrix Systems, Inc.* .................. 30,000 1,690,312
HNC Software Inc.* ..................... 25,000 769,531
Intuit Inc.* ........................... 15,000 1,352,812
Marimba, Inc.* ......................... 10,000 527,188
Transaction Systems Architects, Inc.,
Class A* .............................. 20,000 780,000
Veritas Software Corp.* ................ 15,000 1,424,531
Vignette Corporation* .................. 20,000 1,521,250
Total ................................. 10,862,859
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE SCIENCE AND TECHNOLOGY PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Telephone Communication - 0.57%
Intermedia Communications of Florida,
Inc.* ................................. 15,000 $ 449,531
Wholesale Trade -- Durable Goods - 0.62%
Latitude Communications, Inc.* ......... 37,500 489,844
Wholesale Trade -- Nondurable Goods - 0.98%
Cardinal Health, Inc. .................. 12,000 769,500
TOTAL COMMON STOCKS - 87.14% $68,205,281
(Cost: $44,316,289)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Commercial Paper
Business Services - 2.05%
Electronic Data Systems Corporation,
5.8%, 7-1-99 .......................... $ 1,600 1,600,000
Fabricated Metal Products - 3.67%
Danaher Corporation,
5.2208%, Master Note .................. 2,874 2,874,000
Food and Kindred Products - 3.90%
General Mills, Inc.,
5.075%, Master Note ................... 3,053 3,053,000
Instruments and Related Products - 3.83%
Raytheon Company,
5.1%, 7-1-99 .......................... 3,000 3,000,000
TOTAL SHORT-TERM SECURITIES - 13.45% $10,527,000
(Cost: $10,527,000)
TOTAL INVESTMENT SECURITIES - 100.59% $78,732,281
(Cost: $54,843,289)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.59%) (461,750)
NET ASSETS - 100.00% $78,270,531
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS
Automotive Dealers and Service Stations - 1.93%
O'Reilly Automotive, Inc.* ............. 81,000 $ 4,075,313
Business Services - 17.83%
CheckFree Holdings Corporation* ........ 150,000 4,129,688
Getty Images, Inc.* .................... 150,000 2,840,625
Medical Manager Corporation* ........... 50,000 2,214,062
MemberWorks Incorporated* .............. 140,000 4,090,625
National Data Corporation .............. 60,000 2,565,000
Primark Corporation* ................... 150,000 4,209,375
Sanchez Computer Associates, Inc.* ..... 45,000 1,555,312
Securities First Technologies Corporation* 93,500 4,213,344
Shared Medical Systems Corporation ..... 75,000 4,893,750
USINTERNETWORKING, Inc.* ............... 75,000 3,147,656
USWeb Corporation* ..................... 175,000 3,888,281
Total ................................. 37,747,718
Communication - 9.84%
Emmis Broadcasting Corporation* ........ 100,000 4,921,875
Paging Network, Inc.* .................. 600,000 2,925,000
RCN Corporation* ....................... 125,000 5,207,031
VoiceStream Wireless Corporation* ...... 140,000 3,985,625
Western Wireless Corporation,
Class A* .............................. 140,000 3,784,375
Total ................................. 20,823,906
Engineering and Management Services - 4.87%
Incyte Pharmaceuticals, Inc.* .......... 200,000 5,281,250
MAXIMUS, Inc.* ......................... 175,000 5,031,250
Total ................................. 10,312,500
Food and Kindred Products - 2.01%
American Italian Pasta Company, Class A* 140,000 4,252,500
Health Services - 3.51%
American Healthcorp, Inc.* ............. 210,000 1,732,500
Amsurg Corp., Class A* ................. 282,000 2,159,062
Concentra Managed Care, Inc.* .......... 240,000 3,547,500
Total ................................. 7,439,062
Industrial Machinery and Equipment - 4.69%
MedE America Corporation* .............. 190,000 7,178,438
Tractor Supply Company* ................ 100,000 2,750,000
Total ................................. 9,928,438
Instruments and Related Products - 0.75%
Lunar Corporation* ..................... 200,000 1,587,500
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 1999
Shares Value
COMMON STOCKS (Continued)
Insurance Carriers - 2.18%
Rambus Inc.* ........................... 50,000 $ 4,607,813
Miscellaneous Retail - 1.45%
MSC Industrial Direct Co., Inc., Class A* 300,000 3,075,000
Prepackaged Software - 11.43%
Cerner Corporation* .................... 255,000 5,347,031
Citrix Systems, Inc.* .................. 110,000 6,197,813
Dendrite International, Inc.* .......... 150,000 5,442,188
NEON Systems, Inc.* ................... 70,200 2,334,150
Transaction Systems Architects, Inc.,
Class A* .............................. 125,000 4,875,000
Total ................................. 24,196,182
Real Estate - 1.37%
Stewart Enterprises, Inc., Class A ..... 200,000 2,906,250
Stone, Clay and Glass Products - 1.65%
Gentex Corporation* .................... 125,000 3,500,000
Telephone Communication - 2.48%
Intermedia Communications of
Florida, Inc.* ........................ 175,000 5,244,531
Transportation by Air - 2.09%
Midwest Express Holdings, Inc.* ........ 130,000 4,420,000
Wholesale Trade -- Durable Goods - 1.27%
Department 56, Inc.* ................... 100,000 2,687,500
Wholesale Trade -- Nondurable Goods - 0.52%
NCS Healthcare, Inc., Class A* ......... 200,000 1,093,750
TOTAL COMMON STOCKS - 69.87% $147,897,963
(Cost: $125,111,651)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Commercial Paper
Auto Repair, Services and Parking - 2.36%
PHH Corp.,
5.01%, 7-6-99 ......................... $5,000 4,996,521
Communication - 0.94%
Dominion Resources Inc.,
5.1%, 7-8-99 .......................... 2,000 1,998,016
See Notes to Schedules of Investments on page 57.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 1999
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Electric, Gas and Sanitary Services - 4.74%
Bay State Gas Co.,
5.0%, 7-20-99 ......................... $ 3,650 $ 3,640,368
Public Service Co. of Colorado,
6.05%, 7-1-99 ......................... 6,400 6,400,000
Total ................................. 10,040,368
Fabricated Metal Products - 2.44%
Danaher Corporation,
5.2208%, Master Note .................. 5,153 5,153,000
Food and Kindred Products - 4.97%
ConAgra Inc.,
6.02%, 7-1-99 ......................... 9,975 9,975,000
General Mills, Inc.,
5.075%, Master Note ................... 537 537,000
Total ................................. 10,512,000
Instruments and Related Products - 6.61%
Hughes Electronics Corp.,
5.3%, 7-9-99 .......................... 8,000 7,990,578
Raytheon Company,
5.1%, 7-1-99 .......................... 6,000 6,000,000
Total ................................. 13,990,578
Petroleum and Coal Products - 4.71%
Kerr-McGee Credit Corp.,
5.27%, 7-20-99 ........................ 10,000 9,972,186
Total Commercial Paper - 26.77% 56,662,669
Commercial Paper (backed by irrevocable bank
letter of credit) - 2.82%
Depository Institutions
Omnicom Finance Inc. (ABN-AMRO Bank N.V.),
5.02%, 7-19-99 ........................ 6,000 5,984,940
TOTAL SHORT-TERM SECURITIES - 29.59% $ 62,647,609
(Cost: $62,647,609)
TOTAL INVESTMENT SECURITIES - 99.46% $210,545,572
(Cost: $187,759,260)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.54% 1,135,447
NET ASSETS - 100.00% $211,681,019
See Notes to Schedules of Investments on page 57.
<PAGE>
TARGET/UNITED FUNDS, INC.
Notes to Schedules of Investments
*No dividends were paid during the preceding 12 months.
(A) Security was purchased pursuant to Rule 144a under the Securities Act of
1933 and may be resold in transactions exempt from registration, normally
to qualified institutional buyers. At June 30, 1999, the value of these
securities amounted to $4,800,920, $17,884,222 and $13,052,801,
respectively, or 4.18%, 14.44% and 7.14%, respectively, of the total net
assets in the Bond Portfolio, High Income Portfolio and International
Portfolio, respectively.
(B) The security does not bear interest for an initial period of time and
subsequently becomes interest bearing.
(C) Each unit of ONO Finance Plc consists of $1,000 principal amount of 13.0%
Dollar Notes and one Dollar Equity Value Certificate evidencing the right
to receive the cash value of 0.002299657 of one ordinary share of
Cableuropa in dollars.
(D) Listed on an exchange outside of the United States.
(E) See Note 5 to financial statements.
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>
TARGET/UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
(In Thousands, Except for Per Share Amounts)
(Unaudited) Asset
Strategy Balanced Bond
Portfolio Portfolio Portfolio
Assets ----------- ---------- -----------
Investment securities--at
value (Notes 1 and 3) $17,115 $105,120 $113,397
Cash ................. 1 1 2
Receivables:
Investment securities
sold ............... --- 626 ---
Fund shares sold ..... 19 25 24
Dividends and interest 26 727 1,534
Prepaid insurance
premium .............. --- --- 1
------- -------- --------
Total assets ....... 17,161 106,499 114,958
Liabilities ------- -------- --------
Payable for investment
securities purchased . --- 967 ---
Payable to Fund
shareholders ......... 10 88 151
Accrued service
fee (Note 2) ......... 3 21 23
Accrued accounting
services fee (Note 2). 1 3 3
Accrued management
fee (Note 2) ......... --- 2 2
Due to custodian ...... --- --- ---
Dividends payable ..... --- --- ---
Other ................. 2 2 1
------- -------- --------
Total liabilities .. 16 1,083 180
------- -------- --------
Total net assets .. $17,145 $105,416 $114,778
Net Assets ======= ======== ========
$0.001 par value capital stock (Note 6):
Capital stock ........ $ 3 $ 14 $ 21
Additional paid-in
capital ............ 15,744 89,644 113,831
Accumulated undistributed gain (loss):
Accumulated undistributed net
investment income (loss) 149 1,228 3,213
Accumulated net realized gain
(loss) on investment
transactions ....... 57 1,888 (1,101)
Net unrealized appreciation
(depreciation) of
investments 1,192 12,642 (1,186)
------- -------- --------
Net assets applicable to
outstanding units
of capital ........ $17,145 $105,416 $114,778
======= ======== ========
Net asset value, redemption
and offering price per share $5.7287 $7.4664 $5.3523
======= ======= =======
Capital shares outstanding 2,993 14,119 21,444
Capital shares authorized 500,000 50,000 100,000
See notes to financial statements.
<PAGE>
TARGET/UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
(In Thousands, Except for Per Share Amounts)
(Unaudited)
Growth High Income Income
Portfolio Portfolio Portfolio
Assets ------------ ------------ -----------
Investment securities--at
value (Notes 1 and 3) $940,499 $121,433 $881,920
Cash ................. 2 456 781
Receivables:
Investment securities
sold ............... 5,273 2,057 268
Fund shares sold ..... 304 67 183
Dividends and interest 440 1,965 3,344
Prepaid insurance
premium .............. 1 1 1
-------- -------- --------
Total assets ....... 946,519 125,979 886,497
Liabilities -------- -------- --------
Payable for investment
securities purchased . 2,475 2,000 1,818
Payable to Fund
shareholders ......... 324 54 421
Accrued service
fee (Note 2) ......... 186 25 174
Accrued accounting
services fee (Note 2). 7 3 7
Accrued management
fee (Note 2) ......... 18 2 17
Due to custodian ...... --- --- ---
Dividends payable ..... --- --- ---
Other ................. 9 2 14
-------- -------- --------
Total liabilities .. 3,019 2,086 2,451
-------- -------- --------
Total net assets .. $943,500 $123,893 $884,046
Net Assets ======== ======== ========
$0.001 par value capital stock (Note 6):
Capital stock ........ $ 91 $ 28 $ 68
Additional paid-in
capital ............ 607,693 126,022 596,836
Accumulated undistributed gain (loss):
Accumulated undistributed net
investment income (loss) 389 5,591 5,470
Accumulated net realized gain
(loss) on investment
transactions ....... 52,786 (6,230) 35,513
Net unrealized appreciation
(depreciation) of
investments 282,541 (1,518) 246,159
-------- -------- --------
Net assets applicable to
outstanding units
of capital ........ $943,500 $123,893 $884,046
======== ======== ========
Net asset value, redemption
and offering price per share $10.4224 $4.4347 $13.0161
======== ======= ========
Capital shares outstanding 90,526 27,937 67,919
Capital shares authorized 50,000 100,000 100,000
See notes to financial statements.
<PAGE>
TARGET/UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
(In Thousands, Except for Per Share Amounts)
(Unaudited)
International Limited-Term Money Market
Portfolio Bond Portfolio Portfolio
Assets ------------- ------------ -----------
Investment securities--at
value (Notes 1 and 3) $180,249 $5,750 $57,334
Cash ................. --- 2 1
Receivables:
Investment securities
sold ............... 1,866 --- ---
Fund shares sold ..... 92 --- 1,518
Dividends and interest 738 89 343
Prepaid insurance
premium .............. --- --- 1
-------- ------ -------
Total assets ....... 182,945 5,841 59,197
Liabilities -------- ------ -------
Payable for investment
securities purchased . --- --- ---
Payable to Fund
shareholders ......... 34 --- 133
Accrued service
fee (Note 2) ......... 37 1 11
Accrued accounting
services fee (Note 2). 3 --- 3
Accrued management
fee (Note 2) ......... 4 --- 1
Due to custodian ...... 44 --- ---
Dividends payable ..... --- --- 7
Other ................. 78 --- 2
-------- ------ -------
Total liabilities .. 200 1 157
-------- ------ -------
Total net assets .. $182,745 $5,840 $59,040
Net Assets ======== ====== =======
$0.001 par value capital stock (Note 6):
Capital stock ........ $ 23 $ 1 $ 59
Additional paid-in
capital ............ 137,359 5,756 58,981
Accumulated undistributed gain (loss):
Accumulated undistributed net
investment income (loss) 528 137 ---
Accumulated net realized gain
(loss) on investment
transactions ....... 5,978 --- ---
Net unrealized appreciation
(depreciation) of
investments 38,857 (54) ---
-------- ------ -------
Net assets applicable to
outstanding units
of capital ........ $182,745 $5,840 $59,040
======== ====== =======
Net asset value, redemption
and offering price per share $8.1096 $5.2553 $1.0000
======= ======= =======
Capital shares outstanding 22,534 1,111 59,040
Capital shares authorized 100,000 50,000 100,000
See notes to financial statements.
<PAGE>
TARGET/UNITED FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
(In Thousands, Except for Per Share Amounts)
(Unaudited) Science and
Technology Small Cap
Portfolio Portfolio
Assets ------------- -------------
Investment securities--at
value (Notes 1 and 3) $78,732 $210,546
Cash ................. 8 2
Receivables:
Investment securities
sold ............... --- 2,063
Fund shares sold ..... 144 128
Dividends and interest 21 46
Prepaid insurance
premium .............. --- ---
------- --------
Total assets ....... 78,905 212,785
Liabilities ------- --------
Payable for investment
securities purchased . 607 1,014
Payable to Fund
shareholders ......... 6 38
Accrued service
fee (Note 2) ......... 15 42
Accrued accounting
services fee (Note 2). 3 4
Accrued management
fee (Note 2) ......... 2 5
Due to custodian ...... --- ---
Dividends payable ...... --- ---
Other ................. 1 1
------- --------
Total liabilities .. 634 1,104
------- --------
Total net assets .. $78,271 $211,681
Net Assets ======= ========
$0.001 par value capital stock (Note 6):
Capital stock ........ $ 7 $ 24
Additional paid-in
capital ............ 53,486 189,192
Accumulated undistributed gain (loss):
Accumulated undistributed net
investment income (loss) (45) 764
Accumulated net realized gain
(loss) on investment
transactions ....... 934 (1,085)
Net unrealized appreciation
(depreciation) of
investments 23,889 22,786
------- --------
Net assets applicable to
outstanding units
of capital ........ $78,271 $211,681
======= ========
Net asset value, redemption
and offering price per share $11.0941 $8.7443
======== =======
Capital shares outstanding 7,055 24,208
Capital shares authorized 100,000 100,000
See notes to financial statements.
<PAGE>
TARGET/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 1999
(In Thousands)
(Unaudited) Asset
Strategy Balanced Bond
Portfolio Portfolio Portfolio
---------- ---------- ----------
Investment Income
Income (Note 1B):
Interest and
amortization ........ $216 $1,364 $ 3,676
Dividends ............ 25 294 ---
---- ------ -------
Total income ....... 241 1,658 3,676
---- ------ -------
Expenses (Note 2):
Investment management
fee ................ 60 283 294
Service fee .......... 18 114 133
Accounting services
fee ................ 5 17 20
Custodian fees ....... 2 5 4
Audit fees ........... 6 7 7
Legal fees ........... --- 1 2
Other ................ 1 2 3
---- ------ -------
Total expenses ..... 92 429 463
---- ------ -------
Net investment
income (loss) ... 149 1,229 3,213
---- ------ -------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net gain (loss)
on securities ........ 57 1,888 305
Realized net loss
on foreign currency
transactions ......... --- (1) ---
---- ------ -------
Realized net gain (loss)
on investments ..... 57 1,887 305
Unrealized appreciation
(depreciation) in value
of investments during
the period ........... 778 1,851 (5,504)
---- ------ -------
Net gain (loss) on
investments ....... 835 3,738 (5,199)
---- ------ -------
Net increase (decrease)
in net assets
resulting from
operations $984 $4,967 $(1,986)
==== ====== =======
See notes to financial statements.
<PAGE>
TARGET/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 1999
(In Thousands)
(Unaudited)
Growth High Income Income
Portfolio Portfolio Portfolio
---------- ---------- ----------
Investment Income
Income (Note 1B):
Interest and
amortization ........ $ 1,641 $6,086 $ 5,860
Dividends ............ 2,846 84 3,562
-------- ------ -------
Total income ....... 4,487 6,170 9,422
-------- ------ -------
Expenses (Note 2):
Investment management
fee ................ 2,965 397 2,848
Service fee .......... 1,025 146 977
Accounting services
fee ................ 43 20 43
Custodian fees ....... 23 4 28
Audit fees ........... 7 7 7
Legal fees ........... 14 2 13
Other ................ 21 3 21
-------- ------ -------
Total expenses ..... 4,098 579 3,937
-------- ------ -------
Net investment
income (loss) ... 389 5,591 5,485
-------- ------ -------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net gain (loss)
on securities ........ 52,786 (5,892) 35,513
Realized net loss
on foreign currency
transactions ......... --- --- (15)
-------- ------ -------
Realized net gain (loss)
on investments ..... 52,786 (5,892) 35,498
Unrealized appreciation
(depreciation) in value
of investments during
the period ........... 47,612 901 4,700
-------- ------ -------
Net gain (loss) on
investments ....... 100,398 (4,991) 40,198
-------- ------ -------
Net increase (decrease)
in net assets
resulting from
operations $100,787 $ 600 $45,683
======== ====== =======
See notes to financial statements.
<PAGE>
TARGET/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 1999
(In Thousands)
(Unaudited)
International Limited-Term Money Market
Portfolio Bond Portfolio Portfolio
--------------- ---------- ----------
Investment Income
Income (Note 1B):
Interest and
amortization ........ $ 341 $164 $1,410
Dividends ............ 1,454 --- ---
------ ---- ------
Total income ....... 1,795 164 1,410
------ ---- ------
Expenses (Note 2):
Investment management
fee ................ 688 14 135
Service fee .......... 206 6 64
Accounting services
fee ................ 20 --- 15
Custodian fees ....... 118 1 4
Audit fees ........... 8 5 4
Legal fees ........... 3 --- 3
Other ................ 4 1 2
------ ---- ------
Total expenses ..... 1,047 27 227
------ ---- ------
Net investment
income (loss) ... 748 137 1,183
------ ---- ------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net gain (loss)
on securities ........ 5,978 --- ---
Realized net loss
on foreign currency
transactions ......... (220) --- ---
------ ---- ------
Realized net gain (loss)
on investments ..... 5,758 --- ---
Unrealized appreciation
(depreciation) in value
of investments during
the period ........... (83) (115) ---
------ ---- ------
Net gain (loss) on
investments ....... 5,675 (115) ---
------ ---- ------
Net increase (decrease)
in net assets
resulting from
operations $6,423 $ 22 $1,183
====== ==== ======
See notes to financial statements.
<PAGE>
TARGET/UNITED FUNDS, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 1999
(In Thousands)
(Unaudited) Science and
Technology Small Cap
Portfolio Portfolio
------------- -------------
Investment Income
Income (Note 1B):
Interest and
amortization ........ $ 213 $ 1,719
Dividends ............ 7 98
------- -------
Total income ....... 220 1,817
------- -------
Expenses (Note 2):
Investment management
fee ................ 178 784
Service fee .......... 63 220
Accounting services
fee ................ 12 22
Custodian fees ....... 4 7
Audit fees ........... 6 6
Legal fees ........... 1 3
Other ................ 1 4
------- -------
Total expenses ..... 265 1,046
------- -------
Net investment
income (loss) ... (45) 771
------- -------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net gain (loss)
on securities ........ 934 203
Realized net loss
on foreign currency
transactions ......... --- (7)
------- -------
Realized net gain (loss)
on investments ..... 934 196
Unrealized appreciation
(depreciation) in value
of investments during
the period ........... 15,700 19,136
------- -------
Net gain (loss) on
investments ....... 16,634 19,332
------- -------
Net increase
in net assets
resulting from
operations $16,589 $20,103
======= =======
See notes to financial statements.
<PAGE>
TARGET/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended JUNE 30, 1999
(Dollars In Thousands)
(Unaudited) Asset
Strategy Balanced Bond
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment
income (loss) ...... $ 149 $ 1,229 $ 3,213
Realized net gain (loss)
on investments ..... 57 1,887 305
Unrealized appreciation
(depreciation) ..... 778 1,851 (5,504)
------- -------- --------
Net increase (decrease)
in net assets
resulting from
operations......... 984 4,967 (1,986)
------- -------- --------
Dividends to shareholders
from net investment
income (Note 1E)*..... --- --- ---
------- -------- --------
Capital share
transactions** ....... 2,071 8,229 2,468
------- -------- --------
Total increase
(decrease) ....... 3,055 13,196 482
Net Assets
Beginning of period 14,090 92,220 114,296
------- -------- --------
End of period ......... $17,145 $105,416 $114,778
======= ======== ========
Undistributed net investment
income (loss) ...... $149 $1,228 $3,213
==== ====== ======
*See "Financial Highlights" on pages 66 - 76.
**Shares issued from sale
of shares ............. 554,713 1,975,544 2,175,563
Shares issued from reinvest-
ment of dividends ..... --- --- ---
Shares redeemed ......... (177,405) (830,686) (1,721,662)
------- --------- ---------
Increase (decrease) in
outstanding capital
shares ................. 377,308 1,144,858 453,901
======= ========= =========
Value issued from sale
of shares ............. $3,037 $14,225 $11,760
Value issued from reinvest-
ment of dividends ..... --- --- ---
Value redeemed .......... (966) (5,996) (9,292)
------ ------- -------
Increase (decrease) in
outstanding capital ... $2,071 $ 8,229 $ 2,468
====== ======= =======
See notes to financial statements.
<PAGE>
TARGET/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended JUNE 30, 1999
(Dollars In Thousands)
(Unaudited)
Growth High Income Income
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment
income (loss) ...... $ 389 $ 5,591 $ 5,485
Realized net gain (loss)
on investments ..... 52,786 (5,892) 35,498
Unrealized appreciation
(depreciation) ..... 47,612 901 4,700
-------- -------- --------
Net increase (decrease)
in net assets
resulting from
operations......... 100,787 600 45,683
-------- -------- --------
Dividends to shareholders
from net investment
income (Note 1E)*..... --- --- ---
-------- -------- --------
Capital share
transactions** ....... 17,598 (3,060) 27,029
-------- -------- --------
Total increase
(decrease) ...... 118,385 (2,460) 72,712
Net Assets
Beginning of period 825,115 126,353 811,334
-------- -------- --------
End of period ......... $943,500 $123,893 $884,046
======== ======== ========
Undistributed net investment
income (loss) ...... $389 $5,591 $5,470
==== ====== ======
*See "Financial Highlights" on pages 66 - 76.
**Shares issued from sale
of shares ............. 6,392,976 1,888,698 5,654,881
Shares issued from reinvest-
ment of dividends ..... --- --- ---
Shares redeemed ......... (4,600,107) (2,575,352) (3,510,118)
--------- --------- ---------
Increase (decrease) in
outstanding capital
shares ................. 1,792,869 (686,654) 2,144,763
========= ========= =========
Value issued from sale
of shares ............. $62,404 $ 8,407 $71,097
Value issued from reinvest-
ment of dividends ..... --- --- ---
Value redeemed .......... (44,806) (11,467) (44,068)
------- ------- -------
Increase (decrease) in
outstanding capital ... $17,598 $(3,060) $27,029
======= ======= =======
See notes to financial statements.
<PAGE>
TARGET/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended JUNE 30, 1999
(Dollars In Thousands)
(Unaudited)
International Limited-Term Money Market
Portfolio Bond Portfolio Portfolio
-------------- ----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment
income (loss) ...... $ 748 $ 137 $ 1,183
Realized net gain (loss)
on investments ..... 5,758 --- ---
Unrealized appreciation
(depreciation) ..... (83) (115) ---
-------- ------ -------
Net increase (decrease)
in net assets
resulting from
operations......... 6,423 22 1,183
-------- ------ -------
Dividends to shareholders
from net investment
income (Note 1E)*..... --- --- (1,183)
-------- ------ -------
Capital share
transactions** ....... 7,361 1,299 5,017
-------- ------ -------
Total increase
(decrease) ...... 13,784 1,321 5,017
Net Assets
Beginning of period 168,961 4,519 54,023
-------- ------ -------
End of period ......... $182,745 $5,840 $59,040
======== ====== =======
Undistributed net investment
income (loss) ...... $528 $137 $---
==== ==== ====
*See "Financial Highlights" on pages 66 - 76.
**Shares issued from sale
of shares ............. 2,039,419 414,935 163,285,592
Shares issued from reinvest-
ment of dividends ...... --- --- 1,183,330
Shares redeemed ......... (1,118,048) (167,896) (159,451,429)
--------- ------- -----------
Increase (decrease) in
outstanding capital
shares ................. 921,371 247,039 5,017,493
========= ======= ===========
Value issued from sale
of shares ............. $16,298 $2,180 $163,286
Value issued from reinvest-
ment of dividends ...... --- --- 1,183
Value redeemed .......... (8,937) (881) (159,452)
------- ------ --------
Increase (decrease) in
outstanding capital ... $ 7,361 $1,299 $ 5,017
======= ====== ========
See notes to financial statements.
<PAGE>
TARGET/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended JUNE 30, 1999
(Dollars In Thousands)
(Unaudited) Science and
Technology Small Cap
Portfolio Portfolio
----------- -----------
Increase (Decrease) in Net Assets
Operations:
Net investment
income (loss) ...... $ (45) $ 771
Realized net gain (loss)
on investments ..... 934 196
Unrealized appreciation
(depreciation) ..... 15,700 19,136
------- --------
Net increase (decrease)
in net assets
resulting from
operations......... 16,589 20,103
------- --------
Dividends to shareholders
from net investment
income (Note 1E)*..... --- ---
------- --------
Capital share
transactions** ....... 27,087 11,009
------- --------
Total increase
(decrease) ...... 43,676 31,112
Net Assets
Beginning of period 34,595 180,569
------- --------
End of period ......... $78,271 $211,681
======= ========
Undistributed net investment
income (loss) ...... $(45) $764
===== ====
*See "Financial Highlights" on pages 66 - 76.
**Shares issued from sale
of shares ............. 3,164,502 2,731,164
Shares issued from reinvest-
ment of dividends ...... --- ---
Shares redeemed ......... (290,058) (1,374,465)
--------- ---------
Increase (decrease) in
outstanding capital
shares ................. 2,874,444 1,356,699
========= =========
Value issued from sale
of shares ............. $29,844 22,081
Value issued from reinvest-
ment of dividends ...... --- ---
Value redeemed .......... (2,757) (11,072)
------- -------
Increase (decrease) in
outstanding capital ... $27,087 $11,009
======= =======
See notes to financial statements.
<PAGE>
TARGET/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal Year Ended DECEMBER 31, 1998
(Dollars In Thousands)
(Unaudited) Asset
Strategy Balanced Bond
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase in Net Assets
Operations:
Net investment
income ............ $ 344 $ 2,337 $ 6,300
Realized net gain (loss)
on investments ..... 460 758 783
Unrealized appreciation
(depreciation) ..... 225 3,437 369
------- ------- --------
Net increase
in net assets
resulting from
operations......... 1,029 6,532 7,452
------- ------- --------
Dividends to shareholders (Note 1E):*
From net investment
income ............. (342) (2,334) (6,300)
From realized gains on
security transactions (462) (761) ---
In excess of realized
capital gains ...... --- --- ---
------- ------- --------
(804) (3,095) (6,300)
------- ------- --------
Capital share
transactions** ....... 4,055 21,024 13,655
------- ------- --------
Total increase .... 4,280 24,461 14,807
Net Assets
Beginning of period ... 9,810 67,759 99,489
------- ------- --------
End of period ......... $14,090 $92,220 $114,296
======= ======= ========
Undistributed net investment
income ............. $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages 66 - 76.
**Shares issued from sale
of shares ............. 782,664 3,612,259 4,065,889
Shares issued from reinvest-
ment of dividends and/or
distributions ......... 149,309 435,475 1,156,993
Shares redeemed ......... (203,962) (1,084,517) (2,764,025)
------- --------- ---------
Increase in
outstanding capital
shares ................. 728,011 2,963,217 2,458,857
======= ========= =========
Value issued from sale
of shares ............. $4,385 $25,583 $22,739
Value issued from reinvest-
ment of dividends and/or
distributions ......... 804 3,095 6,300
Value redeemed .......... (1,134) (7,654) (15,384)
------ ------- -------
Increase in
outstanding capital ... $4,055 $21,024 $13,655
====== ======= =======
See notes to financial statements.
<PAGE>
TARGET/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal Year Ended DECEMBER 31, 1998
(Dollars In Thousands)
(Unaudited) High
Growth Income Income
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase in Net Assets
Operations:
Net investment
income ............ $ 3,876 $10,944 $ 9,832
Realized net gain (loss)
on investments ..... 24,895 (338) 110,690
Unrealized appreciation
(depreciation) ..... 146,953 (8,207) 16,851
-------- -------- --------
Net increase
in net assets
resulting from
operations......... 175,724 2,399 137,373
-------- -------- --------
Dividends to shareholders (Note 1E):*
From net investment
income ............. (3,904) (10,944) (9,799)
From realized gains on
security transactions (24,867) --- (110,723)
In excess of realized
capital gains ...... --- --- ---
-------- -------- --------
(28,771) (10,944) (120,522)
-------- -------- --------
Capital share
transactions** ....... 38,803 15,374 157,579
-------- -------- --------
Total increase .... 185,756 6,829 174,430
Net Assets
Beginning of period ... 639,359 119,524 636,904
-------- -------- --------
End of period ......... $825,115 $126,353 $811,334
======== ======== ========
Undistributed net investment
income ............. $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages 66 - 76.
**Shares issued from sale
of shares ............. 10,496,688 4,966,466 9,126,482
Shares issued from reinvest-
ment of dividends and/or
distributions ......... 3,093,937 2,479,124 9,770,626
Shares redeemed ......... (9,340,560) (4,037,179) (6,368,869)
--------- --------- ----------
Increase in
outstanding capital
shares ................. 4,250,065 3,408,411 12,528,239
========= ========= ==========
Value issued from sale
of shares ............. $88,088 $24,022 $122,003
Value issued from reinvest-
ment of dividends and/or
distributions ......... 28,771 10,944 120,522
Value redeemed .......... (78,056) (19,592) (84,946)
------- ------- --------
Increase in
outstanding capital ... $38,803 $15,374 $157,579
======= ======= ========
See notes to financial statements.
<PAGE>
TARGET/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal Year Ended DECEMBER 31, 1998
(Dollars In Thousands)
(Unaudited)
International Limited-Term Money Market
Portfolio Portfolio Portfolio
----------- ----------- -----------
Increase in Net Assets
Operations:
Net investment
income ............. $ 814 $ 240 $ 2,230
Realized net gain (loss)
on investments ..... 13,612 9 ---
Unrealized appreciation
(depreciation) ..... 25,132 18 ---
-------- ------ -------
Net increase
in net assets
resulting from
operations......... 39,558 267 2,230
-------- ------ -------
Dividends to shareholders (Note 1E):*
From net investment
income ............. (698) (240) (2,230)
From realized gains on
security transactions (13,728) (9) ---
In excess of realized
capital gains ...... --- --- ---
-------- ------ -------
(14,426) (249) (2,230)
-------- ------ -------
Capital share
transactions** ....... 29,198 249 10,723
-------- ------ -------
Total increase .... 54,330 267 10,723
Net Assets
Beginning of period ... 114,631 4,252 43,300
-------- ------ -------
End of period ......... $168,961 $4,519 $54,023
======== ====== =======
Undistributed net investment
income ............. $--- $--- $---
==== ==== ====
*See "Financial Highlights" on pages 66 - 76.
**Shares issued from sale
of shares ............. 3,799,283 376,497 261,149,946
Shares issued from reinvest-
ment of dividends and/or
distributions ......... 1,845,305 47,562 2,230,118
Shares redeemed ......... (1,986,996) (379,449) (252,657,467)
--------- ------- -----------
Increase in
outstanding capital
shares ................. 3,657,592 44,610 10,722,597
========= ======= ===========
Value issued from sale
of shares ............. $30,196 $2,035 $261,150
Value issued from reinvest-
ment of dividends and/or
distributions ......... 14,426 249 2,230
Value redeemed .......... (15,424) (2,035) (252,657)
------- ------ --------
Increase in
outstanding capital ... $29,198 $ 249 $ 10,723
======= ====== ========
See notes to financial statements.
<PAGE>
TARGET/UNITED FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Fiscal Year Ended DECEMBER 31, 1998
(Dollars In Thousands)
(Unaudited) Science and
Technology Small Cap
Portfolio Portfolio
----------- -----------
Increase in Net Assets
Operations:
Net investment
income ............. $ 13 $ 1,558
Realized net gain (loss)
on investments ..... 624 23,232
Unrealized appreciation
(depreciation) ..... 7,947 (8,246)
------- --------
Net increase
in net assets
resulting from
operations......... 8,584 16,544
------- --------
Dividends to shareholders (Note 1E):*
From net investment
income ............. (13) (1,558)
From realized gains on
security transactions (624) (23,232)
In excess of realized
capital gains ...... --- (1,288)
------- --------
(637) (26,078)
------- --------
Capital share
transactions** ....... 16,441 41,865
------- --------
Total increase .... 24,388 32,331
Net Assets
Beginning of period ... 10,207 148,238
------- --------
End of period ......... $34,595 $180,569
======= ========
Undistributed net investment
income ............. $--- $---
==== ====
*See "Financial Highlights" on pages 66 - 76.
**Shares issued from sale
of shares ............. 2,834,669 3,802,845
Shares issued from reinvest-
ment of dividends and/or
distributions ......... 76,928 3,300,299
Shares redeemed ......... (499,069) (2,044,217)
--------- ---------
Increase in
outstanding capital
shares ................. 2,412,528 5,058,927
========= =========
Value issued from sale
of shares ............. $19,146 $33,860
Value issued from reinvest-
ment of dividends and/or
distributions ......... 637 26,079
Value redeemed .......... (3,342) (18,074)
------- -------
Increase in
outstanding capital ... $16,441 41,865
======= =======
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
six For the fiscal year ended For the
months December 31, period
ended ------------------------- ended
6/30/99 1998 1997 1996 12/31/95*
------- ------- ------- -------- ---------
Net asset value,
beginning of
period ........... $5.3868 $5.1969 $5.1343 $5.0137 $5.0000
------- ------- ------- ------- -------
Income from investment operations:
Net investment
income .......... 0.0498 0.1391 0.1915 0.1814 0.0717
Net realized and
unrealized gain
on investments .. 0.2921 0.3779 0.5277 0.1206 0.0193
------- ------- ------- ------- -------
Total from investment
operations ....... 0.3419 0.5170 0.7192 0.3020 0.0910
------- ------- ------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.1391)(0.1919) (0.1814) (0.0713)
From capital gains (0.0000) (0.1880)(0.4647) (0.0000) (0.0060)
------- ------- ------- ------- -------
Total distributions (0.0000) (0.3271)(0.6566) (0.1814) (0.0773)
------- ------- ------- ------- -------
Net asset value,
end of period .... $5.7287 $5.3868 $5.1969 $5.1343 $5.0137
======= ======= ======= ======= =======
Total return........ 6.35% 9.95% 14.01% 6.05% 1.80%
Net assets, end of
period (in
millions) ........ $17 $14 $10 $8 $4
Ratio of expenses
to average net
assets ............ 1.20%** 1.07% 0.93% 0.93% 0.91%
Ratio of net investment
income to average
net assets ....... 1.95%** 2.97% 3.55% 3.92% 4.42%
Portfolio turnover
rate ............. 117.85% 189.02% 222.50% 49.92% 149.17%
*The Asset Strategy Portfolio's inception date is February 14, 1995; however,
since this Portfolio did not have any investment activity or incur expenses
prior to the date of initial offering, the per share information is for a
capital share outstanding for the period from May 1, 1995 (initial offering)
through December 31, 1995. Ratios have been annualized.
**Annualized
See notes to financial statements.
#
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
6/30/99 1998 1997 1996 1995 12/31/94*
-------- ------- -------- ---------------- ---------
Net asset value,
beginning of
period ........... $7.1081 6.7686 $6.1967 $5.9000 $4.9359 $5.0000
------- ------ ------- ------- ------- -------
Income from investment operations:
Net investment
income .......... 0.0869 0.1865 0.1805 0.1594 0.1333 0.0460
Net realized and
unrealized gain (loss)
on investments .. 0.2714 0.4003 0.9650 0.5003 1.0611 (0.0641)
------- ------ ------- ------- ------- -------
Total from investment
operations ....... 0.3583 0.5868 1.1455 0.6597 1.1944 (0.0181)
------- ------ ------- ------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.1865)(0.1805) (0.1594)(0.1333) (0.0460)
From capital gains (0.0000) (0.0608)(0.3931) (0.2036)(0.0970) (0.0000)
------- ------ ------- ------- ------- -------
Total distributions (0.0000) (0.2473)(0.5736) (0.3630)(0.2303) (0.0460)
------- ------ ------- ------- ------- -------
Net asset value,
end of period .... $7.4664 $7.1081 $6.7686 $6.1967 $5.9000 $4.9359
======= ======= ======= ======= ======= =======
Total return........ 5.04% 8.67% 18.49% 11.19% 24.19% -0.37%
Net assets, end of period
(in millions) .... $105 $92 $68 $42 $24 $9
Ratio of expenses
to average net
assets ............ 0.89%** 0.74% 0.67% 0.70% 0.72% 0.95%
Ratio of net investment
income to average
net assets ....... 2.54%** 2.92% 3.06% 3.18% 3.22% 3.14%
Portfolio turnover
rate ............. 24.77% 54.62% 55.66% 44.23% 62.87% 19.74%
*The Balanced Portfolio's inception date is April 28, 1994; however, since
this Portfolio did not have any investment activity or incur expenses prior
to the date of initial offering, the per share information is for a capital
share outstanding for the period from May 3, 1994 (initial offering) through
December 31, 1994. Ratios and the portfolio turnover rate have been
annualized.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE 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 -----------------------------------------
6/30/99 1998 1997 1996 1995 1994
------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $5.4451 $5.3686 $5.2004 $5.3592 $4.7393 $5.4045
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.1499 0.3180 0.3400 0.3407 0.3556 0.3507
Net realized and
unrealized gain
(loss) on
investments ..... (0.2427) 0.0765 0.1682 (0.1588) 0.6202 (0.6652)
------- ------- ------- ------- ------- -------
Total from investment
operations ....... (0.0928) 0.3945 0.5082 0.1819 0.9758 (0.3145)
------- ------- ------- ------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.3180)(0.3400) (0.3407)(0.3559) (0.3507)
From capital gains (0.0000) (0.0000)(0.0000) (0.0000)(0.0000) (0.0000)
------- ------- ------- ------- ------- -------
Total distributions. (0.0000) (0.3180)(0.3400) (0.3407)(0.3559) (0.3507)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $5.3523 $5.4451 $5.3686 $5.2004 $5.3592 $4.7393
======= ======= ======= ======= ======= =======
Total return ....... -1.70% 7.35% 9.77% 3.43% 20.56% -5.90%
Net assets, end of
period (in
millions) ........ $115 $114 $99 $92 $89 $74
Ratio of expenses
to average net
assets ............ 0.81%* 0.67% 0.58% 0.59% 0.60% 0.62%
Ratio of net investment
income to average
net assets ....... 5.64%* 5.99% 6.35% 6.39% 6.73% 6.73%
Portfolio turnover
rate ............. 26.83% 32.75% 36.81% 64.02% 71.17% 135.82%
*Annualized.
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 -----------------------------------------
6/30/99 1998 1997 1996 1995 1994
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $ 9.2989 $7.5679 $6.7967 $6.8260 $5.8986 $6.1962
-------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0043 0.0456 0.0574 0.0990 0.0903 0.1211
Net realized and
unrealized gain
on investments .. 1.1192 2.0215 1.4003 0.7478 2.1842 0.0268
-------- ------- ------- ------- ------- -------
Total from investment
operations ....... 1.1235 2.0671 1.4577 0.8468 2.2745 0.1479
-------- ------- ------- ------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.0456)(0.0570) (0.0990)(0.0903) (0.1211)
From capital gains (0.0000) (0.2905)(0.6295) (0.7771)(1.2568) (0.3244)
-------- ------- ------- ------- ------- -------
Total distributions. (0.0000) (0.3361)(0.6865) (0.8761)(1.3471) (0.4455)
-------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $10.4224 $9.2989 $7.5679 $6.7967 $6.8260 $5.8986
======== ======= ======= ======= ======= =======
Total return ....... 12.08% 27.31% 21.45% 12.40% 38.57% 2.39%
Net assets, end of
period (in
millions) ........ $944 $825 $639 $513 $419 $277
Ratio of expenses
to average net
assets ............ 0.95%* 0.80% 0.72% 0.73% 0.75% 0.77%
Ratio of net investment
income to average
net assets ....... 0.09%* 0.55% 0.75% 1.44% 1.35% 2.07%
Portfolio turnover
rate ............. 27.84% 75.58% 162.41% 243.00% 245.80% 277.36%
*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 -----------------------------------------
6/30/99 1998 1997 1996 1995 1994
------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $4.4143 $4.7402 $4.5750 $4.4448 $4.1118 $4.6373
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.2001 0.4185 0.4098 0.4216 0.4165 0.4106
Net realized and
unrealized gain
(loss) on
investments ..... (0.1797) (0.3259) 0.2324 0.1302 0.3330 (0.5255)
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 0.0204 0.0926 0.6422 0.5518 0.7495 (0.1149)
------- ------- ------- ------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.4185)(0.4098) (0.4216)(0.4165) (0.4106)
From capital gains (0.0000) (0.0000)(0.0672) (0.0000)(0.0000) (0.0000)
------- ------- ------- ------- ------- -------
Total distributions (0.0000) (0.4185)(0.4770) (0.4216)(0.4165) (0.4106)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $4.4347 $4.4143 $4.7402 $4.5750 $4.4448 $4.1118
======= ======= ======= ======= ======= =======
Total return ....... 0.46% 1.95% 14.04% 12.46% 18.19% -2.55%
Net assets, end of
period (in
millions) ........ $124 $126 $120 $97 $87 $73
Ratio of expenses
to average net
assets ............ 0.93%* 0.77% 0.70% 0.71% 0.72% 0.74%
Ratio of net investment
income to average
net assets ....... 8.95%* 8.76% 8.79% 9.10% 9.25% 9.03%
Portfolio turnover
rate ............. 45.37% 63.64% 65.28% 58.91% 41.78% 37.86%
*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 -----------------------------------------
6/30/99 1998 1997 1996 1995 1994
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $12.3351 $11.9615$10.1373 $ 8.6756 $6.7689 $6.9180
-------- ---------------- -------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0808 0.1752 0.0916 0.0856 0.0839 0.0703
Net realized and
unrealized gain (loss)
on investments .. 0.6002 2.3532 2.5598 1.6280 2.0525 (0.1491)
-------- ---------------- -------- ------- -------
Total from investment
operations ....... 0.6810 2.5284 2.6514 1.7136 2.1364 (0.0788)
-------- ---------------- -------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.1752)(0.0915) (0.0856)(0.0839) (0.0703)
From capital gains (0.0000) (1.9796)(0.7357) (0.1663)(0.1457) (0.0000)
In excess of
capital gains ... (0.0000) (0.0000)(0.0000) (0.0000)(0.0001) (0.0000)
-------- ---------------- -------- ------- -------
Total distributions. (0.0000) (2.1548)(0.8272) (0.2519)(0.2297) (0.0703)
-------- ---------------- -------- ------- -------
Net asset value,
end of period .... $13.0161 $12.3351$11.9615 $10.1373 $8.6756 $6.7689
======== ================ ======== ======= =======
Total return........ 5.52% 21.14% 26.16% 19.75% 31.56% -1.14%
Net assets, end of
period (in
millions) ........ $884 $811 $637 $462 $331 $219
Ratio of expenses
to average net
assets ............ 0.95%* 0.80% 0.72% 0.73% 0.77% 0.77%
Ratio of net investment
income to average
net assets ....... 1.32%* 1.35% 0.80% 0.97% 1.13% 1.16%
Portfolio turnover
rate ............. 17.13% 62.84% 36.61% 22.95% 15.00% 23.32%
*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
6/30/99 1998 1997 1996 1995 12/31/94*
-------- ------ ------ ------- ------- ---------
Net asset value,
beginning of
period ........... $7.8176 $6.3842 $5.9990 $5.2790 $4.9926 $5.0000
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment
income .......... 0.0332 0.0353 0.0485 0.0644 0.0846 0.0207
Net realized and
unrealized gain (loss)
on investments... 0.2588 2.1283 0.9534 0.7329 0.2790 (0.0074)
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 0.2920 2.1636 1.0019 0.7973 0.3636 0.0133
------- ------- ------- ------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.0353)(0.0463) (0.0644)(0.0772) (0.0207)
From capital gains (0.0000) (0.6949)(0.5704) (0.0129)(0.0000) (0.0000)
------- ------- ------- ------- ------- -------
Total distributions. (0.0000) (0.7302)(0.6167) (0.0773)(0.0772) (0.0207)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $8.1096 $7.8176 $6.3842 $5.9990 $5.2790 $4.9926
======= ======= ======= ======= ======= =======
Total return........ 3.74% 33.89% 16.70% 15.11% 7.28% 0.26%
Net assets, end of
period (in
millions) ........ $183 $169 $115 $80 $50 $26
Ratio of expenses
to average net
assets ............ 1.20%** 1.02% 0.98% 1.00% 1.02% 1.26%
Ratio of net investment
income to average
net assets ....... 0.85%** 0.47% 0.79% 1.42% 1.99% 1.36%
Portfolio turnover
rate ............. 70.25% 88.84% 117.37% 75.01% 34.93% 23.23%
*The International Portfolio's inception date is April 28, 1994; however,
since this Portfolio did not have any investment activity or incur expenses
prior to the date of initial offering, the per share information is for a
capital share outstanding for the period from May 3, 1994 (initial offering)
through December 31, 1994. Ratios and the portfolio turnover rate have been
annualized.
**Annualized.
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
THE 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
6/30/99 1998 1997 1996 1995 12/31/94*
------- ------- ------- ------- --------------
Net asset value,
beginning of
period ........... $5.2292 $5.1882 $5.1639 $5.2521 $4.8611 $5.0000
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.1235 0.2935 0.3086 0.2842 0.2841 0.1507
Net realized and
unrealized gain (loss)
on investments .. (0.0974) 0.0522 0.0451 (0.0870) 0.4122 (0.1375)
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 0.0261 0.3457 0.3537 0.1972 0.6963 0.0132
------- ------- ------- ------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.2935)(0.3086) (0.2842)(0.2841) (0.1507)
From capital gains (0.0000) (0.0112)(0.0208) (0.0012)(0.0212) (0.0014)
------- ------- ------- ------- ------- -------
Total distributions (0.0000) (0.3047)(0.3294) (0.2854)(0.3053) (0.1521)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $5.2553 $5.2292 $5.1882 $5.1639 $5.2521 $4.8611
======= ======= ======= ======= ======= =======
Total return........ 0.50% 6.66% 6.85% 3.79% 14.29% 0.26%
Net assets, end of
period (in
millions) ........ $6 $5 $4 $4 $3 $2
Ratio of expenses to
average net assets 1.02%** 0.79% 0.73% 0.76% 0.71% 0.93%
Ratio of net investment
income to average
net assets ....... 5.14%** 5.65% 5.93% 5.92% 6.22% 5.89%
Portfolio turnover
rate ............. 7.90% 47.11% 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 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 -----------------------------------------
6/30/99 1998 1997 1996 1995 1994
------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $1.0000 $1.000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- -------
Net investment
income ........... 0.0211 0.0492 0.0503 0.0486 0.0542 0.0368
Less dividends
declared ......... (0.0211) (0.0492)(0.0503) (0.0486)(0.0542) (0.0368)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= =======
Total return ....... 2.16% 5.04% 5.13% 5.01% 5.56% 3.72%
Net assets, end of
period (in
millions) ........ $59 $54 $43 $37 $37 $31
Ratio of expenses
to average net
assets ............ 0.81%* 0.68% 0.58% 0.61% 0.62% 0.65%
Ratio of net investment
income to average
net assets ....... 4.25%* 4.90% 5.04% 4.87% 5.42% 3.72%
*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 For the
six fiscal For the
months year period
ended ended ended
6/30/99 12/31/98 12/31/97*
------------------- ----------
Net asset value,
beginning of
period ........... $ 8.2750 $5.7726 $5.0000
-------- ------- -------
Income from investment operations:
Net investment
income (loss) ... (0.0064) 0.0032 0.0146
Net realized and
unrealized gain
on investments .. 2.8255 2.6551 0.7971
-------- ------- -------
Total from investment
operations ....... 2.8191 2.6583 0.8117
-------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.0032) (0.0146)
From capital gains (0.0000) (0.1527) (0.0245)
-------- ------- -------
Total distributions (0.0000) (0.1559) (0.0391)
-------- ------- -------
Net asset value,
end of period .... $11.0941 $8.2750 $5.7726
======== ======= =======
Total return........ 34.07% 46.05% 16.24%
Net assets, end of
period (in
millions) ........ $78 $35 $10
Ratio of expenses
to average net
assets ............ 1.02%** 0.92% 0.94%
Ratio of net investment
income (loss) to average
net assets ....... -0.17%** 0.07% 0.64%
Portfolio turnover
rate ............. 25.69% 64.72% 15.63%
*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 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
6/30/99 1998 1997 1996 1995 12/31/94*
-------- ------- ------- -------------------------
Net asset value, beginning
of period ........ $7.9019 $8.3316 $8.0176 $7.6932 $5.9918 $5.0000
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0319 0.0798 0.0279 0.0170 0.0900 0.0376
Net realized and
unrealized gain
on investments .. 0.8105 0.8255 2.5004 0.6367 1.8470 1.0086
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 0.8424 0.9053 2.5283 0.6537 1.9370 1.0462
------- ------- ------- ------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.0798)(0.0282) (0.0170)(0.0900) (0.0376)
From capital gains (0.0000) (1.2027)(2.1861) (0.3123)(0.1456) (0.0168)
In excess of realized
capital gains ... (0.0000) (0.0525)(0.0000) (0.0000)(0.0000) (0.0000)
------- ------- ------- ------- ------- -------
Total distributions (0.0000) (1.3350)(2.2143) (0.3293)(0.2356) (0.0544)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $8.7443 $7.9019 $8.3316 $8.0176 $7.6932 $5.9918
======= ======= ======= ======= ======= =======
Total return........ 10.67% 10.87% 31.53% 8.50% 32.32% 20.92%
Net assets, end of period
(in millions) .... $212 $181 $148 $97 $56 $16
Ratio of expenses
to average net
assets ............ 1.12%** 0.97% 0.90% 0.91% 0.96% 1.08%
Ratio of net investment
income to average
net assets ....... 0.82%** 0.94% 0.32% 0.25% 1.77% 2.35%
Portfolio turnover
rate ............. 127.30% 177.32% 211.46% 133.77% 43.27% 21.61%
*The Small Cap Portfolio's inception date is April 28, 1994; however, since
this Portfolio did not have any investment activity or incur expenses prior
to the date of initial offering, the per share information is for a capital
share outstanding for the period from May 3, 1994 (initial offering) through
December 31, 1994. Ratios and the portfolio turnover rate have been
annualized.
**Annualized.
See notes to financial statements.
<PAGE>
TARGET/UNITED FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE 1 -- Significant Accounting Policies
Target/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 Asset Strategy Portfolio, the Balanced Portfolio, the Bond Portfolio, the
Growth Portfolio, the High Income Portfolio, the Income Portfolio, the
International Portfolio, the Limited-Term Bond Portfolio, the Money Market
Portfolio, the Science and Technology Portfolio and the Small Cap 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.
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 $57,920. 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.
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 Corporation pays a fee for investment management services. The fee is
computed daily based on the net asset value at the close of business. Until
June 30, 1999, the fee consisted 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: Asset Strategy Portfolio - .30% of net assets; Balanced Portfolio - .10%
of net assets; Bond Portfolio - .03% of net assets; Growth Portfolio - .20% of
net assets; High Income Portfolio - .15% of net assets; Income Portfolio - .20%
of net assets; International Portfolio - .30% of net assets; Limited-Term Bond
Portfolio - .05% of net assets; Money Market Portfolio - none; Science and
Technology Portfolio - .20% of net assets; Small Cap Portfolio - .35% of net
assets and (ii) a base fee computed each day on the combined net asset values of
all of the Portfolios and allocated among the Portfolios based on their relative
net asset size at the annual rates 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. Beginning June 30, 1999, the fee is payable by each Portfolio at the
following annual rates:
Annual
Fund Net Asset Breakpoints Rate
------------------------------------------------------------------
Asset Strategy Portfolio Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion .600%
Over $3 Billion .550%
Balanced Portfolio Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion .600%
Over $3 Billion .550%
Bond Portfolio Up to $500 Million .525%
Over $500 Million up to $1 Billion .500%
Over $1 Billion up to $1.5 Billion .450%
Over $1.5 Billion .400%
Growth Portfolio Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion .600%
Over $3 Billion .550%
High Income Portfolio Up to $500 Million .625%
Over $500 Million up to $1 Billion .600%
Over $1 Billion up to $1.5 Billion .550%
Over $1.5 Billion .500%
Income Portfolio Up to $1 Billion .700%
Over $1 Billion up to $2 Billion .650%
Over $2 Billion up to $3 Billion .600%
Over $3 Billion .550%
International Portfolio Up to $1 Billion .850%
Over $1 Billion up to $2 Billion .830%
Over $2 Billion up to $3 Billion .800%
Over $3 Billion .760%
Limited-Term Bond Up to $500 Million .500%
Portfolio Over $500 Million up to $1 Billion .450%
Over $1 Billion up to $1.5 Billion .400%
Over $1.5 Billion .350%
Money Market Portfolio All Net Assets .400%
Science and Technology Up to $1 Billion .850%
Portfolio Over $1 Billion up to $2 Billion .830%
Over $2 Billion up to $3 Billion .800%
Over $3 Billion .760%
Small Cap Portfolio Up to $1 Billion .850%
Over $1 Billion up to $2 Billion .830%
Over $2 Billion up to $3 Billion .800%
Over $3 Billion .760%
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 has adopted a Service Plan pursuant to Rule 12b-1 of the 1940 Act.
Under the Plan, each Portfolio may pay monthly a fee to W&R in an amount not to
exceed 0.25% of the Portfolio's average annual net assets. The fee is to be
paid to compensate W&R for amounts it expends in connection with the provision
of personal services to Policyowners and/or maintenance of Policyowner accounts.
The Fund paid Directors' fees of $47,763, which are included in other
expenses.
W&R is a subsidiary of 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 six months ended June 30, 1999
are summarized as follows:
Asset Strategy Balanced Bond
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $12,724,162 $35,381,197 $15,387,593
Purchases of U.S. Government
securities 6,013,906 --- 18,789,511
Purchases of short-term
securities 11,755,643 163,930,703 76,446,638
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 9,134,849 18,889,007 12,645,280
Proceeds from maturities
and sales of U.S.
Government securities 7,716,662 1,551,310 16,769,852
Proceeds from maturities
and sales of short-term
securities 11,465,573 168,870,000 75,274,435
High
Growth Income Income
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $321,162,911 $53,149,981 $155,271,065
Purchases of U.S. Government
securities --- --- ---
Purchases of short-term
securities 810,562,102 140,706,077 860,651,061
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 224,762,492 53,671,193 128,646,069
Proceeds from maturities
and sales of U.S.
Government securities --- --- ---
Proceeds from maturities
and sales of short-term
securities 892,848,497 139,413,532 854,783,368
Limited- Science and
International Term Bond Technology
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $119,479,802 $1,397,901 $35,912,892
Purchases of U.S. Government
securities --- 456,467 ---
Purchases of short-term
securities 186,146,310 3,057,168 95,317,677
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 106,745,666 210,333 11,563,065
Proceeds from maturities
and sales of U.S.
Government securities 6,281,727 184,261 ---
Proceeds from maturities
and sales of short-term
securities 190,309,377 3,082,822 92,250,000
Small Cap
Portfolio
-----------
Purchases of investment
securities, excluding short-
term and U.S. Government
securities $162,282,964
Purchases of U.S. Government
securities ---
Purchases of short-term
securities 774,783,481
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government securities 157,840,746
Proceeds from maturities
and sales of U.S.
Government securities ---
Proceeds from maturities
and sales of short-term
securities 773,918,333
For Federal income tax purposes, cost of investments owned at June 30,
1999, and the related unrealized appreciation (depreciation) were as follows:
Aggregate
Appreciation
CostAppreciationDepreciation(Depreciation)
------------------------------------------------
Asset Strategy Portfolio$ 15,927,576$ 1,362,272$ (174,737)$ 1,187,535
Balanced Portfolio 92,477,817 14,911,013 (2,269,085) 12,641,928
Bond Portfolio 114,583,122 1,161,558 (2,347,377) (1,185,819)
Growth Portfolio 657,993,581 288,302,958 (5,797,659) 282,505,299
High Income Portfolio 122,950,536 2,300,750 (3,818,686) (1,517,936)
Income Portfolio 635,760,150 271,422,274(25,262,742) 246,159,532
International Portfolio141,375,246 46,591,558 (7,766,342) 38,825,216
Limited-Term Bond Portfolio5,804,438 13,422 (67,580) (54,158)
Money Market Portfolio 57,334,417 --- --- ---
Science and Technology
Portfolio 54,843,289 25,158,428 (1,269,436) 23,888,992
Small Cap Portfolio 187,759,260 29,010,389 (6,224,077) 22,786,312
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,
International, Balanced and Asset Strategy Portfolios realized capital gain net
income of $24,740,928, $110,722,842, $623,709, $13,346,041, $761,232 and
$474,359, respectively, during the year ended December 31, 1998. For Federal
income tax purposes, Small Cap Portfolio realized capital gain net income of
$24,172,355 for the year ended December 31, 1998, 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, Limited-Term Bond Portfolio realized capital gain net
income of $9,156 during the year ended December 31, 1998, which included the
effect of certain losses deferred into the next fiscal year (see discussion
below). For Federal income tax purposes, High Income Portfolio realized capital
losses of $65,442 for the year ended December 31, 1998, which included the
effect of certain losses deferred into the next fiscal year (see discussion
below). These losses are available to offset future realized capital gain net
income for Federal income tax purposes but will expire if not utilized at
December 31, 2006. For Federal income tax purposes, Bond Portfolio realized
capital gains of $783,100 during the year ended December 31, 1998, which were
entirely offset by capital loss carryovers. In addition, prior year capital
loss carryovers of Bond Portfolio aggregated $1,405,971 as of December 31, 1998,
and are available to offset future realized capital gain net income for Federal
income tax purposes but will expire if not utilized as follows: $1,389,275 at
December 31, 2002, and $16,696 at December 31, 2004. The capital gain net
income of Growth, Income, Science and Technology, International, Small Cap,
Balanced, Asset Strategy and Limited-Term Bond Portfolios was paid to
shareholders during the year ended December 31, 1998.
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, 1998 through December 31, 1998, Small Cap, Limited-Term Bond
and High Income Portfolios incurred net capital losses of $1,287,773, $211 and
$273,055, respectively, which have been deferred to the fiscal year ending
December 31, 1999. In addition, during the year ended December 31, 1998, Small
Cap Portfolio recognized post-October losses of $352,811 that had been deferred
from the year ended December 31, 1997.
Note 5 -- Securities Loaned
On June 30, 1999, securities with a market value of $72,093,790 (which are
included in the accompanying schedule of investments) had been loaned under
agreements whereby the Income Portfolio received securities with a market value
of $72,864,381 as collateral. The aggregate amount of such loans must be
continuously secured by 100% of the market value of the securities loaned. The
Portfolio derives income from its securities lending activities. These
agreements may be terminated by the borrower or the Portfolio upon proper
notice. In the event the borrower fails to deliver the securities within five
business days, the Portfolio has the right to use the collateral to purchase
similar or other securities. During the period ended June 30, 1999, the Income
Portfolio derived approximately $83,720 of income, net of related expenses, from
its securities lending activities.
Note 6 -- Change in Par Value of Common Stock
At a special meeting of shareholders of the fund held on June 22, 1999, the
Articles of Incorporation of the Fund were amended to change the par value of
the Fund's common stock from $0.01 to $0.001. This change became effective June
30, 1999.
<PAGE>
Shareholder Meeting Results
A special meeting of Target/United Funds, Inc. was held on June 22, 1999. The
matters voted upon by the shareholders and the resulting votes for each matter
are presented below.
Item 1. To elect the Board of Directors:
For Withheld
J. Concannon 321,048,148 8,108,699
J. Dillingham 320,864,775 8,292,072
D. Gardner 320,081,666 9,075,181
L. Graves 320,977,973 8,178,874
J. Harroz, Jr. 319,827,683 9,329,164
J. Hayes 320,477,648 8,679,199
R. Hechler 320,213,903 8,942,944
H. Herrmann 320,175,652 8,981,195
G. Johnson 320,296,358 8,860,489
W. Morgan 320,662,571 8,494,276
R. Reimer 320,005,837 9,151,010
F. Ross, Jr. 321,059,625 8,097,222
E. Schwartz 320,883,083 8,273,764
K. Tucker 321,027,737 8,129,110
F. Vogel III 320,990,051 8,166,796
Item 2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent accountants for its current fiscal year:
For Against Abstain
315,789,330 2,663,020 10,704,497
Item 3. To approve or disapprove the amendment to the Fund's investment
management agreement with Waddell & Reed Investment Management Company:
For Against Abstain
Asset Strategy Portfolio 2,492,800 173,274 113,086
Balanced Portfolio 12,254,949 838,672 403,862
Bond Portfolio 19,521,370 947,993 894,851
Growth Portfolio 82,041,246 4,402,774 2,833,334
High Income Portfolio 26,081,202 908,722 1,312,377
Income Portfolio 60,915,366 3,304,866 2,357,112
International Portfolio 20,383,542 1,136,563 569,696
Limited-Term Bond Portfolio 971,307 24,340 35,801
Money Market Portfolio 49,749,559 1,868,356 3,867,971
Science and Technology Portfolio4,837,845325,048 218,438
Small Cap Portfolio 21,369,200 1,232,139 769,186
Item 4. To approve or disapprove amendment of the Fund's policy regarding
securities lending:
For Against Abstain
Asset Strategy Portfolio 2,557,194 104,885 117,081
Balanced Portfolio 12,392,131 636,259 469,093
Bond Portfolio 19,675,367 597,681 1,091,166
Growth Portfolio 82,347,732 3,195,972 3,733,650
High Income Portfolio 26,039,201 696,173 1,566,927
Income Portfolio 61,193,339 2,421,579 2,962,426
International Portfolio 20,658,058 703,102 728,641
Limited-Term Bond Portfolio 978,956 15,760 36,732
Money Market Portfolio 50,456,866 1,030,538 3,998,482
Science and Technology Portfolio4,918,571210,548 252,212
Small Cap Portfolio 21,650,369 849,713 870,443
Item 5. To approve or disapprove the Fund's Articles of Incorporation to
change the par value of Fund shares to $0.001:
For Against Abstain
302,425,873 8,042,499 18,688,475
<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 K. Graves, Topeka, Kansas
Joseph Harroz, Jr., Norman, Oklahoma
John F. Hayes, Hutchinson, Kansas
Robert L. Hechler, Overland Park, Kansas
Henry J. Herrmann, Overland Park, Kansas
Glendon E. Johnson, Miami, Florida
William T. Morgan, Coronado, California
Ronald C. Reimer, Mission Hills, Kansas
Frank J. Ross, Jr., Kansas City, Missouri
Eleanor B. Schwartz, Kansas City, Missouri
Frederick Vogel III, Milwaukee, Wisconsin
OFFICERS
Robert L. Hechler, President
Michael L. Avery, Vice President
James C. Cusser, Vice President
Abel Garcia, Vice President
Henry J. Herrmann, Vice President
Theodore W. Howard, Vice President and Treasurer
Helge K. Lee, Vice President and Secretary
Thomas A. Mengel, Vice President
William M. Nelson, Vice President
Cynthia P. Prince-Fox, Vice President
Philip J. Sanders, Vice President
Grant P. Sarris, Vice President
Mark G. Seferovich, Vice President
W. Patrick Sterner, Vice President
Mira Stevovich, Vice President
Daniel J. Vrabac, Vice President
James D. Wineland, Vice President
This report is submitted for the general information of the shareholders of
Target/United Funds, Inc. It is not authorized for distribution to prospective
investors in the Fund unless accompanied with or preceded by the Target/United
Funds, Inc. current prospectus.
<PAGE>
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:
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.
BALANCED Portfolio
Objective: Current income with a secondary goal of long-term appreciation of
capital.
Invested in: Primarily a mix of stocks, fixed-income securities and cash,
depending on market conditions.
BOND Portfolio
Objective: Income with an emphasis on preservation of capital.
Invested In: Primarily debt securities issued by companies of any size.
GROWTH Portfolio
Objective: Capital growth with income as a secondary goal.
Invested In: Primarily common stocks of U.S. and foreign companies with large
capitalization representing major sectors of the economy.
HIGH INCOME Portfolio
Objective: High level of income with a secondary objective of capital growth
when consistent with its primary objective.
Invested In: Primarily high-yield, high-risk, fixed income securities of U.S.
and foreign issuers.
INCOME Portfolio
Objective: Maintain current income, subject to market conditions, with
capital growth
as a secondary goal.
Invested In: Primarily common stocks of U.S. and foreign companies.
INTERNATIONAL Portfolio
Objective: Long-term appreciation of capital with a secondary goal of current
income.
Invested in: Primarily common stocks issued by foreign companies.
LlMITED-TERM BOND Portfolio
Objective: High level of current income consistent with the preservation of
capital.
Invested in: Primarily investment-grade debt securities of U.S. issuers,
including U.S. Government securities.
MONEY MARKET Portfolio
Objective: Maximum current income consistent with stability of principal.
Invested In: U.S. dollar-denominated, high-quality money market obligations and
instruments.
SCIENCE AND TECHNOLOGY Portfolio
Objective: Long-term capital growth.
Invested in: Primarily common stocks of U.S. and foreign companies whose
products, processes or services are expected to benefit from
scientific or technological discoveries or developments.
SMALL CAP Portfolio
Objective: Capital growth.
Invested in: Primarily common stocks of relatively new or unseasoned companies,
companies in their early stages of development or smaller companies
positioned in new and emerging industries where the opportunity for
rapid growth is above average.
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(6-99)
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