<PAGE>
TARGET/UNITED FUNDS, INC.
SEMIANNUAL
REPORT
-------------
June 30, 2000
<PAGE>
JUNE 30, 2000
---------------------------------------------------------------------------
Dear Policyholder:
The accompanying report contains the financial statements of the Target/United
Funds, Inc. for the fiscal period ended June 30, 2000. The assets of your
Advantage I (Variable Life), Advantage II (Variable Annuity), Advantage Plus
(Variable Universal Life) or Advantage Gold (Variable Annuity) 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, 2000.
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, 2000
Dear Policyholder:
We are delighted to share with you this report on your Fund's operations for the
six months ended June 30, 2000.
The last six months marked an unusual and frenetic time for the markets and the
economy. While the first quarter of 2000 was quite strong, especially for
stocks in the technology sector, the second quarter brought a decline for those
same stocks and a slowdown in the overheated U.S. economy. The slowdown was
engineered by the Federal Reserve, which raised interest rates 25 basis points
in both February and March, followed by a 50-basis-point increase in May.
The efforts at slowing the economy have apparently worked, although a parallel
acceleration in inflation remains a possibility. As a result of the Fed's
actions, the stock market didn't make much progress during the first half of the
year - in fact, it receded a bit. While the first few months of this year were
strong, the last few months saw negative returns - especially April and May.
Year-to-date, the technology-heavy Nasdaq Composite Index was down 2.54 percent,
while the Nasdaq Industrial Index was down 5.91 percent. The performance of the
two major indices was also down from January through June, as the Dow Jones
Industrial Average declined 8.55 percent and the Standard & Poor's 500 was down
0.47 percent. One of the broadest indices, the Wilshire 5000, was also down for
the first half of this year, declining 1.41 percent. The one positive return
came in the smaller-company index, the Russell 2000 Index, which was up 3.07
percent.
Looking ahead, the market is still trying to find direction. Currently,
statistics suggest that the economy has slowed significantly since the beginning
of the year. The question remains, however, whether it has slowed enough to
prevent any further interest rate increases by the Federal Reserve. Other
factors that may affect the market during the remainder of the year include the
presidential election, the high trade deficit and the implications of that
deficit for the value of the U.S. dollar abroad.
Overall, investors have been rewarded well in recent years. Those who continue
a structured and consistent investment program remain well positioned to take
advantage of opportunities, including those presented by the market's occasional
downdrafts. Just as we urge you not to become unduly concerned if the market
moves downward in the near term, we would urge that you not become too exuberant
when it moves higher in similarly short time periods.
It is impossible to predict with certainty where markets will go next, but one
thing that remains certain is that a well-thought-out investment plan is
essential. Remember, a plan that is appropriate for you is appropriate
regardless of inevitable market changes. You have a partnership with your
Waddell & Reed financial advisor, and that partnership is built upon a
customized program based on your specific needs. Focusing on that plan, despite
market fluctuations, could be your key to a sound financial future. Thank you
for your ongoing commitment and support.
Respectfully,
Robert L. Hechler
President
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 2000
Troy
Ounces Value
BULLION - 1.77%
Gold ................................... 2,020 $ 588,826
(Cost: $586,320)
Shares
COMMON STOCKS
Business Services - 2.85%
Catalina Marketing Corporation* ........ 2,000 204,000
CheckFree Holdings Corporation* ........ 3,800 196,294
Clear Channel Communications, Inc.* .... 4,100 307,500
Electronic Data Systems Corporation .... 5,800 239,250
Total ................................. 947,044
Chemicals and Allied Products - 19.42%
American Home Products Corporation ..... 10,500 616,875
Biogen, Inc.* .......................... 3,450 222,417
Bristol-Myers Squibb Company ........... 6,000 349,500
Dial Corporation (The) ................. 24,000 249,000
Dow Chemical Company (The) ............. 8,500 256,594
Forest Laboratories, Inc.* ............. 9,800 989,800
Johnson & Johnson ...................... 4,200 427,875
Merck & Co., Inc. ...................... 4,900 375,462
NOVA Chemicals Corporation (A) ......... 15,200 319,492
Pfizer Inc. ............................ 15,150 727,200
Pharmacia Corporation .................. 5,200 268,775
Pharmacyclics, Inc.* ................... 8,200 499,431
QLT Inc.* .............................. 3,600 279,563
Schering-Plough Corporation ............ 10,500 530,250
Smith International, Inc.* ............. 4,700 342,219
Total ................................. 6,454,453
Coal Mining - 1.57%
CONSOL Energy Inc. ..................... 34,600 523,325
Communication - 1.09%
Emmis Communications Corporation,
Class A* .............................. 8,700 360,234
Depository Institutions - 0.70%
Bank of America Corporation ............ 5,400 232,200
Eating and Drinking Places - 1.77%
Papa John's International, Inc.* ....... 12,400 304,188
Wendy's International, Inc. ............ 16,000 285,000
Total ................................. 589,188
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Electronic and Other Electric Equipment - 5.67%
Analog Devices, Inc.* .................. 1,936 $ 147,136
JDS Uniphase Corporation* .............. 2,200 263,656
LSI Logic Corporation* ................. 2,523 136,557
Maxim Integrated Products, Inc.* ....... 2,500 169,766
Nortel Networks Corporation ............ 3,200 218,400
PMC - Sierra Inc.* ..................... 1,000 177,656
POWERTEL, INC.* ........................ 2,600 184,519
Rambus Inc.* ........................... 2,800 288,400
Samsung Electronics (A) ................ 900 297,841
Total ................................. 1,883,931
Engineering and Management Services - 0.39%
Charles River Laboratories Holdings, Inc.* 5,800 128,688
Food and Kindred Products - 2.08%
American Italian Pasta Company,
Class A* .............................. 13,900 287,557
PepsiCo, Inc. .......................... 9,100 404,381
Total ................................. 691,938
Food Stores - 1.62%
Kroger Co. (The)* ...................... 24,400 538,325
General Merchandise Stores - 1.95%
BJ's Wholesale Club, Inc.* ............. 10,000 330,000
Target Corporation ..................... 5,500 319,000
Total ................................. 649,000
Health Services - 2.26%
HCA - The Healthcare Company ........... 14,000 425,250
Health Management Associates, Inc.,
Class A* .............................. 25,000 326,562
Total ................................. 751,812
Holding and Other Investment Offices - 1.10%
ABB Ltd. (A) ........................... 1,400 162,202
"Shell" Transport and Trading Company,
p.l.c. (The), ADR ..................... 4,100 204,744
Total ................................. 366,946
Industrial Machinery and Equipment - 3.24%
Cooper Cameron Corporation* ............ 5,100 336,600
Illinois Tool Works, Inc. .............. 7,100 404,700
Ingersoll-Rand Company ................. 5,800 233,450
Invensys plc (A) ....................... 27,000 101,317
Total ................................. 1,076,067
Instruments and Related Products - 1.41%
Beckman Coulter, Inc. .................. 5,100 297,713
PE Corporation - PE Biosystems Group ... 2,600 171,275
Total ................................. 468,988
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Insurance Carriers - 3.08%
American International Group, Inc. ..... 2,775 $ 326,062
CIGNA Corporation ...................... 4,000 374,000
Lincoln National Corporation ........... 9,000 325,125
Total ................................. 1,025,187
Leather and Leather Products - 0.79%
Kenneth Cole Productions, Inc.,
Class A* .............................. 6,600 264,000
Lumber and Wood Products - 0.58%
Weyerhaeuser Company ................... 4,500 193,500
Metal Mining - 3.08%
Homestake Mining Company ............... 73,500 505,313
Newmont Mining Corporation ............. 24,000 519,000
Total ................................. 1,024,313
Motion Pictures - 0.73%
AT&T Corp. - Liberty Media Group,
Class A* .............................. 10,000 242,500
Nondepository Institutions - 1.86%
Fannie Mae ............................. 5,800 302,687
Freddie Mac ............................ 7,800 315,900
Total ................................. 618,587
Oil and Gas Extraction - 3.64%
Burlington Resources Incorporated ...... 6,600 252,450
Schlumberger Limited ................... 4,100 305,963
Transocean Sedco Forex Inc. ............ 7,603 406,285
USX Corporation - Marathon Group ....... 9,800 245,612
Total ................................. 1,210,310
Paper and Allied Products - 2.39%
Bowater Incorporated ................... 5,600 247,100
International Paper Company ............ 8,500 253,406
Smurfit-Stone Container Corporation* ... 22,800 292,836
Total ................................. 793,342
Petroleum and Coal Products - 1.85%
Exxon Mobil Corporation ................ 3,700 290,450
Texaco Inc. ............................ 6,100 324,825
Total ................................. 615,275
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Primary Metal Industries - 2.99%
Alcan Aluminium Limited ................ 11,500 $ 356,500
Alcoa Incorporated ..................... 22,028 638,812
Total ................................. 995,312
Telephone Communication - 0.73
BellSouth Corporation .................. 5,700 242,963
Transportation Equipment - 2.52%
Boeing Company (The) ................... 8,500 355,406
Ford Motor Company ..................... 5,200 223,600
Gentex Corporation* .................... 10,300 258,144
Total ................................. 837,150
Wholesale Trade -- Durable Goods - 0.03%
Visteon Corporation .................... 681 8,255
TOTAL COMMON STOCKS - 71.39% $23,732,833
(Cost: $21,161,022)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Electric, Gas and Sanitary Services - 0.60%
Transportadora de Gas del Sur S.A.,
10.375%, 4-15-03 (B) .................. $ 200 200,000
Fabricated Metal Products - 0.57%
Crown Cork & Seal Company, Inc.,
7.125%, 9-1-02 ........................ 200 190,332
TOTAL CORPORATE DEBT SECURITIES - 1.17% $ 390,332
(Cost: $399,083)
OTHER GOVERNMENT SECURITY - 0.53%
Argentina
Republic of Argentina (The),
0.0%, 10-15-01 ........................ 200 $ 177,000
(Cost: $177,989)
UNITED STATES GOVERNMENT SECURITY - 4.29%
United States Treasury,
5.625%, 12-31-02 ...................... 1,450 $ 1,424,393
(Cost: $1,444,913)
Number of
Contracts
OPTION - 1.70%
S&P Put Option,
Expires 9/16/2000 ..................... 235 $ 564,000
(Cost: $917,205)
See Notes to Schedule of Investments on page 12.
<PAGE>
THE INVESTMENTS OF THE ASSET STRATEGY PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES
Commercial Paper
Chemicals and Allied Products - 3.89%
Pharmacia Corporation,
6.56%, 7-25-00 ........................ $ 1,300 $ 1,294,315
Depository Institutions - 3.00%
Banc One Financial Corp. (Bank One Corporation),
6.58%, 7-7-00 ......................... 1,000 998,903
Electric, Gas and Sanitary Services - 3.90%
Bay State Gas Co.,
6.51%, 7-12-00 ........................ 1,300 1,297,414
Fabricated Metal Products - 1.33%
Danaher Corporation,
6.6738%, Master Note .................. 441 441,000
Food and Kindred Products - 3.90%
General Mills, Inc.,
6.5288%, Master Note .................. 1,295 1,295,000
Nondepository Institutions - 0.17%
PACCAR Financial Corp.,
6.57%, Master Note .................... 55 55,000
Total Commercial Paper - 16.19% 5,381,632
Commercial Paper (backed by irrevocable bank
letter of credit) - 4.73%
Nondepository Institutions
ED&F Man Finance Inc. (Rabobank Nederland),
6.57%, 7-13-00 ........................ 1,575 1,571,551
TOTAL SHORT-TERM SECURITIES - 20.92% $ 6,953,183
(Cost: $6,953,183)
TOTAL INVESTMENT SECURITIES - 101.77% $33,830,567
(Cost: $31,639,715)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (1.77%) (587,879)
NET ASSETS - 100.00% $33,242,688
See Notes to Schedule of Investments on page 12.
<PAGE>
ASSET STRATEGY PORTFOLIO
Notes to Schedule of Investments
*No dividends were paid during the preceding 12 months.
(A) Listed on an exchange outside of the United States.
(B) 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, 2000, the value of this
security amounted to $200,000 or 0.60% of net assets.
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>
ASSET STRATEGY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(In Thousands, Except for Per Share Amounts)
(Unaudited)
Assets
Investment securities--at
value (Notes 1 and 3) $33,831
Cash ................. 1
Receivables:
Fund shares sold ..... 179
Dividends and interest 34
Prepaid insurance
premium .............. ---
-------
Total assets ....... 34,045
Liabilities -------
Payable for investment
securities purchased . 787
Accrued service
fee (Note 2) ......... 7
Payable to Fund
shareholders ......... 4
Accrued accounting
services fee (Note 2). 2
Accrued management
fee (Note 2) ......... 1
Other ................. 1
-------
Total liabilities .. 802
-------
Total net assets .. $33,243
Net Assets =======
$0.001 par value capital stock:
Capital stock ........ $ 5
Additional paid-in
capital ............ 26,561
Accumulated undistributed gain:
Accumulated undistributed net
investment income .. 180
Accumulated net realized gain
on investment
transactions ....... 4,306
Net unrealized appreciation
of investments ...... 2,191
-------
Net assets applicable to
outstanding units
of capital ........ $33,243
=======
Net asset value, redemption
and offering price per share $7.2401
=======
Capital shares outstanding 4,591
Capital shares authorized 30,000
See notes to financial statements.
<PAGE>
ASSET STRATEGY PORTFOLIO
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 2000
(In Thousands)
(Unaudited)
Investment Income
Income (Note 1B):
Interest and
amortization ....... $ 204
Dividends (net of foreign withholding
taxes of $1) ....... 95
------
Total income ....... 299
------
Expenses (Note 2):
Investment management
fee ................ 92
Service fee .......... 33
Accounting services
fee ................ 8
Custodian fees ....... 8
Audit fees ........... 6
Other ................ 2
------
Total .............. 149
Less expenses in
excess of voluntary
waiver of management
fee (Note 2)....... (30)
------
Total expenses..... 119
------
Net investment
income ........... 180
------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net gain
on securities ........ 4,138
Realized net gain
on options............ 168
------
Realized net gain
on investments ..... 4,306
------
Unrealized depreciation in value
of securities during
the period ........... (566)
Unrealized depreciation in value
of purchased put options
during the period .... (353)
------
Unrealized depreciation in
value of investments during
the period ......... (919)
------
Net gain on
investments ....... 3,387
------
Net increase in net assets
resulting from
operations ...... $3,567
======
See notes to financial statements.
<PAGE>
ASSET STRATEGY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
(Unaudited) For the six For the fiscal
months ended year ended
June 30, December 31,
2000 1999
------------ ------------
Increase in Net Assets
Operations:
Net investment
income............................... $ 180 $ 370
Realized net gain
on investments ...................... 4,306 807
Unrealized appreciation
(depreciation) ...................... (919) 2,695
------- -------
Net increase in net assets
resulting from operations .......... 3,567 3,872
------- -------
Dividends to shareholders (Note 1E):*
From net investment
income............................... --- (370)
From realized gains on
security transactions................ --- (807)
------- -------
.................................. --- (1,177)
------- -------
Capital share
transactions** ....................... 8,089 4,802
------- -------
Total increase ...................... 11,656 7,497
Net Assets
Beginning of period .................... 21,587 14,090
------- -------
End of period .......................... $33,243 $21,587
======= =======
Undistributed net investment
income .............................. $180 $---
==== ====
*See "Financial Highlights" on pages 16 - 17.
**Shares issued from sale
of shares .............................. 1,550 979
Shares issued from reinvest-
ment of dividends and/or
capital gains distribution ............. --- 188
Shares redeemed ........................ (406) (336)
----- ---
Increase in outstanding
capital shares.......................... 1,144 831
===== ===
Value issued from sale
of shares .............................. $10,886 $5,534
Value issued from reinvest-
ment of dividends and/or
capital gains distribution ............. --- 1,177
Value redeemed ......................... (2,797) (1,909)
------- ------
Increase in outstanding
capital ................................ $ 8,089 $4,802
======= ======
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
ASSET STRATEGY PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
(Unaudited)
For the
six For the fiscal year For the
months ended December 31, period
ended --------------------------------- ended
6/30/00 1999 1998 1997 1996 12/31/95*
------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $6.2625 $5.3868 $5.1969 $5.1343 $5.0137 $5.0000
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment
income .......... 0.0392 0.1138 0.1391 0.1915 0.1814 0.0717
Net realized and
unrealized gain
on investments .. 0.9384 1.1232 0.3779 0.5277 0.1206 0.0193
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 0.9776 1.2370 0.5170 0.7192 0.3020 0.0910
------- ------- ------- ------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.1136)(0.1391) (0.1919)(0.1814) (0.0713)
From capital gains (0.0000) (0.2477)(0.1880) (0.4647)(0.0000) (0.0060)
------- ------- ------- ------- ------- -------
Total distributions (0.0000) (0.3613)(0.3271) (0.6566)(0.1814) (0.0773)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $7.2401 $6.2625 $5.3868 $5.1969 $5.1343 $5.0137
======= ======= ======= ======= ======= =======
Total return........ 15.61% 22.96% 9.95% 14.01% 6.05% 1.80%
Net assets, end of
period (in
millions) ........ $33 $22 $14 $10 $8 $4
Ratio of expenses
to average net
assets ............ 0.90%** 0.73% 1.07% 0.93% 0.93% 0.91%
Ratio of net investment
income to average
net assets ....... 1.37%** 2.18% 2.97% 3.55% 3.92% 4.42%
Portfolio turnover
rate ............. 97.10% 179.63% 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.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS
Building Materials and Garden Supplies - 0.58%
Home Depot, Inc. (The) ................. 15,538 $ 775,929
Business Services - 3.13%
Clear Channel Communications, Inc.* .... 9,000 675,000
Electronic Data Systems Corporation .... 6,000 247,500
Intuit Inc.* ........................... 13,700 565,981
Microsoft Corporation* ................. 16,700 1,335,478
Oracle Corporation* .................... 16,000 1,344,500
Total ................................. 4,168,459
Chemicals and Allied Products - 7.34%
Air Products and Chemicals, Inc. ....... 29,700 915,131
American Home Products Corporation ..... 22,000 1,292,500
Colgate-Palmolive Company .............. 15,000 898,125
Dow Chemical Company (The) ............. 30,000 905,625
Forest Laboratories, Inc.* ............. 15,000 1,515,000
Merck & Co., Inc. ...................... 12,000 919,500
Pfizer Inc. ............................ 47,550 2,282,400
Pharmacia Corporation .................. 14,280 738,098
Smith International, Inc.* ............. 4,500 327,656
Total ................................. 9,794,035
Communication - 1.11%
Cox Communications, Inc., Class A* ..... 12,000 546,750
General Motors Corporation, Class H* ... 3,168 278,025
Sinclair Broadcast Group, Inc.* ........ 60,000 658,125
Total ................................. 1,482,900
Depository Institutions - 0.98%
Bank of America Corporation ............ 20,089 863,827
Comerica Incorporated .................. 10,000 448,750
Total ................................. 1,312,577
Electric, Gas and Sanitary Services - 0.96%
Reliant Energy ......................... 12,000 354,750
Unicom Corporation ..................... 24,000 928,500
Total ................................. 1,283,250
Electronic and Other Electric Equipment - 7.84%
Analog Devices, Inc.* .................. 18,800 1,428,800
General Electric Company ............... 18,600 985,800
Intel Corporation ...................... 10,200 1,363,294
Koninklijke Philips Electronics N.V.,
NY Shares ............................. 20,800 988,000
LSI Logic Corporation* ................. 17,600 952,600
Maxim Integrated Products, Inc.* ....... 15,600 1,059,338
See Notes to Schedule of Investments on page 25.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Electronic and Other Electric Equipment (Continued)
Motorola, Inc. ......................... 16,200 $ 470,812
Nokia Corporation, Series A, ADR ........ 20,000 998,750
Nortel Networks Corporation ............ 20,000 1,365,000
Texas Instruments Incorporated ......... 12,400 851,725
Total ................................. 10,464,119
Fabricated Metal Products - 0.61%
Tower Automotive, Inc.* ................ 65,000 812,500
Food and Kindred Products - 2.41%
Anheuser-Busch Companies, Inc. ......... 12,000 896,250
PepsiCo, Inc. .......................... 32,500 1,444,219
Seagram Company Ltd. (The) ............. 15,000 870,000
Total ................................. 3,210,469
Food Stores - 0.74%
Kroger Co. (The)* ...................... 45,000 992,813
Furniture and Home Furnishings Stores - 0.44%
Lear Corporation* ...................... 29,100 582,000
General Merchandise Stores - 1.77%
BJ's Wholesale Club, Inc.* ............. 20,000 660,000
Target Corporation ..................... 13,500 783,000
Wal-Mart Stores, Inc. .................. 16,000 922,000
Total ................................. 2,365,000
Industrial Machinery and Equipment - 2.33%
Apple Computer, Inc.* .................. 10,400 544,375
Dell Computer Corporation* ............. 15,000 740,156
EMC Corporation* ....................... 16,600 1,277,163
Hewlett-Packard Company ................ 4,400 549,450
Total ................................. 3,111,144
Instruments and Related Products - 0.63%
Agilent Technologies, Inc.* ............ 3,204 236,277
Emerson Electric Co. ................... 10,000 603,750
Total ................................. 840,027
Insurance Agents, Brokers and Service - 0.76%
Hartford Financial Services Group Inc. (The) 18,200 1,018,063
Insurance Carriers - 0.41%
Lincoln National Corporation ........... 15,000 541,875
Leather and Leather Products - 0.72%
Kenneth Cole Productions, Inc.,
Class A* .............................. 24,000 960,000
See Notes to Schedule of Investments on page 25.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Motion Pictures - 1.50%
News Corporation Limited (The), ADR .... 20,000 $ 1,090,000
Time Warner Incorporated ............... 12,000 912,000
Total ................................. 2,002,000
Nondepository Institutions - 1.50%
Fannie Mae ............................. 22,000 1,148,125
Freddie Mac ............................ 21,100 854,550
Total ................................. 2,002,675
Oil and Gas Extraction - 1.90%
Burlington Resources Incorporated ...... 32,600 1,246,950
Schlumberger Limited ................... 15,200 1,134,300
Transocean Sedco Forex Inc. ............ 2,942 157,213
Total ................................. 2,538,463
Paper and Allied Products - 1.31%
Consolidated Papers, Inc. .............. 31,500 1,151,719
International Paper Company ............ 20,138 600,364
Total ................................. 1,752,083
Petroleum and Coal Products - 2.58%
BP Amoco p.l.c., ADR ................... 10,160 574,675
Exxon Mobil Corporation ................ 13,873 1,089,030
Royal Dutch Petroleum Company, NY Shares 15,000 923,438
Texaco Inc. ............................ 16,000 852,000
Total ................................. 3,439,143
Primary Metal Industries - 1.58%
Alcan Aluminum Limited ................. 30,000 930,000
Alcoa Incorporated ..................... 32,000 928,000
Corus Group plc, ADR ................... 17,000 244,375
Total ................................. 2,102,375
Printing and Publishing - 0.94%
Belo (A. H.) Corporation, Class A ...... 23,800 412,037
Meredith Corporation ................... 25,000 843,750
Total ................................. 1,255,787
Stone, Clay and Glass Products - 1.30%
Corning Incorporated ................... 6,400 1,727,200
Telephone Communication - 2.10%
Nextel Communications, Inc.* ........... 14,400 880,650
SBC Communications Inc. ................ 34,700 1,500,775
Vodafone Airtouch Public Limited
Company, ADR .......................... 10,000 414,375
Total ................................. 2,795,800
See Notes to Schedule of Investments on page 25.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Transportation by Air - 0.65%
UAL Corporation ........................ 15,000 $ 872,812
Transportation Equipment - 1.18%
Boeing Company (The) ................... 25,000 1,045,312
General Motors Corporation ............. 9,025 524,014
Total ................................. 1,569,326
TOTAL COMMON STOCKS - 49.30% $65,772,824
(Cost: $51,566,304)
PREFERRED STOCK - 0.65%
Communication
Cox Communications, Inc., 7.0%, Convertible 14,000 $ 860,125
(Cost: $700,000)
Principal
Amount in
Thousands
CORPORATE DEBT SECURITIES
Apparel and Accessory Stores - 1.77%
Gap, Inc. (The),
6.9%, 9-15-07 ......................... $ 2,500 2,367,675
Business Services - 0.59%
Clear Channel Communications, Inc., Convertible,
2.625%, 4-1-03 ........................ 600 794,244
Chemicals and Allied Products - 0.19%
American Home Products Corporation,
7.9%, 2-15-05 ......................... 250 253,612
Depository Institutions - 0.17%
Wachovia Corporation,
6.25%, 8-4-08 ......................... 250 225,620
Food and Kindred Products - 0.37%
Coca-Cola Enterprises Inc.,
6.7%, 10-15-36 ........................ 500 488,525
Industrial Machinery and Equipment - 0.18%
Tyco International Group S.A.,
6.375%, 6-15-05 ....................... 250 238,483
See Notes to Schedule of Investments on page 25.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Nondepository Institutions - 0.75%
National Rural Utilities Cooperative
Finance Corp.,
6.1%, 12-22-00 ........................ $1,000 $ 995,220
Telephone Communication - 0.11%
Southwestern Bell Telephone Company,
5.77%, 10-14-03 ....................... 150 142,745
Transportation by Air - 0.27%
Southwest Airlines Co.,
7.875%, 9-1-07 ........................ 360 360,025
TOTAL CORPORATE DEBT SECURITIES - 4.40% $ 5,866,149
(Cost: $6,025,794)
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation,
7.0%, 2-15-03 ......................... 5,000 4,999,200
Federal National Mortgage Association:
6.51%, 5-6-08 ......................... 750 706,170
6.19%, 7-7-08 ......................... 500 460,470
7.25%, 1-15-10 ........................ 1,000 1,010,070
7.0%, 9-1-25 .......................... 2,056 1,984,420
Government National Mortgage Association,
6.5%, 8-15-28 ......................... 1,383 1,312,289
United States Treasury:
5.25%, 1-31-01 ........................ 2,000 1,986,880
6.5%, 3-31-02 ......................... 5,000 5,003,100
6.375%, 8-15-02 ....................... 1,100 1,098,966
7.5%, 2-15-05 ......................... 2,250 2,358,270
6.5%, 8-15-05 ......................... 4,000 4,041,240
7.25%, 8-15-22 ........................ 4,000 4,499,360
6.25%, 8-15-23 ........................ 5,250 5,292,630
6.75%, 8-15-26 ........................ 3,000 3,228,270
TOTAL UNITED STATES GOVERNMENT
SECURITIES - 28.47% $37,981,335
(Cost: $38,867,869)
See Notes to Schedule of Investments on page 25.
<PAGE>
THE INVESTMENTS OF THE BALANCED PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES
Electric, Gas and Sanitary Services - 3.08%
Georgia Power Co.,
6.54%, 7-18-00 ........................ $4,120 $ 4,107,276
Fabricated Metal Products - 0.38%
Danaher Corporation,
6.6738%, Master Note .................. 514 514,000
Food and Kindred Products - 4.58%
General Mills, Inc.,
6.5288%, Master Note .................. 6,110 6,110,000
Nondepository Institutions - 4.48%
PACCAR Financial Corp.,
6.57%, Master Note .................... 5,981 5,981,000
Stone, Clay and Glass Products - 3.74%
United Technologies Corp.,
6.54%, 7-19-00 ........................ 5,000 4,983,650
TOTAL SHORT-TERM SECURITIES - 16.26% $ 21,695,926
(Cost: $21,695,926)
TOTAL INVESTMENT SECURITIES - 99.08% $132,176,359
(Cost: $118,855,893)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.92% 1,228,292
NET ASSETS - 100.00% $133,404,651
Notes to Schedule of Investments
*No dividends were paid during the preceding 12 months.
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>
BALANCED PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(In Thousands, Except for Per Share Amounts)
(Unaudited)
Assets
Investment securities--at
value (Notes 1 and 3) $132,176
Cash ................. 1
Receivables:
Fund shares sold ..... 246
Dividends and interest 1,050
--------
Total assets ....... 133,473
Liabilities --------
Payable to Fund
shareholders ......... 33
Accrued service
fee (Note 2) ......... 28
Accrued accounting
services fee (Note 2). 3
Accrued management
fee (Note 2) ......... 3
Other ................. 1
--------
Total liabilities .. 68
--------
Total net assets .. $133,405
Net Assets ========
$0.001 par value capital stock:
Capital stock ........ $ 17
Additional paid-in
capital ............ 114,355
Accumulated undistributed gain:
Accumulated undistributed net
investment income .. 1,544
Accumulated net realized gain
on investment transactions 4,169
Net unrealized appreciation
of investments ...... 13,320
--------
Net assets applicable to
outstanding units
of capital ........ $133,405
========
Net asset value, redemption
and offering price per share $7.6449
=======
Capital shares outstanding 17,450
Capital shares authorized 40,000
See notes to financial statements.
<PAGE>
BALANCED PORTFOLIO
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 2000
(In Thousands)
(Unaudited)
Investment Income
Income (Note 1B):
Interest and
amortization ........ $1,809
Dividends ............ 359
------
Total income ....... 2,168
------
Expenses (Note 2):
Investment management
fee ................ 431
Service fee .......... 155
Accounting services
fee ................ 20
Audit fees ........... 6
Custodian fees ....... 6
Other ................ 6
------
Total expenses ..... 624
------
Net investment
income ........... 1,544
------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net gain
on securities ........ 4,169
Unrealized depreciation in
value of investments
during the period .... (162)
------
Net gain on
investments ........ 4,007
------
Net increase in net
assets resulting
from operations ... $5,551
======
See notes to financial statements.
<PAGE>
BALANCED PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
(Unaudited)
For the six For the fiscal
months ended year ended
June 30, December 31,
2000 1999
------------ ------------
Increase in Net Assets
Operations:
Net investment
income ............. $ 1,544 $ 2,634
Realized net gain
on investments ..... 4,169 5,101
Unrealized appreciation
(depreciation) ..... (162) 2,691
-------- --------
Net increase in net
assets resulting from
operations ........ 5,551 10,426
-------- --------
Dividends to shareholders (Note 1E):*
From net investment
income .............. --- (2,633)
From realized gains on
security transactions --- (5,102)
-------- --------
--- (7,735)
-------- --------
Capital share
transactions** ....... 10,621 22,322
-------- --------
Total increase .... 16,172 25,013
Net Assets
Beginning of period 117,233 92,220
-------- --------
End of period ......... $133,405 $117,233
======== ========
Undistributed net investment
income ............. $1,544 $---
====== ====
*See "Financial Highlights" on pages 29 - 30.
**Shares issued from sale
of shares ............. 2,667 3,789
Shares issued from reinvest-
ment of dividends and/or
capital gains distribution --- 1,058
Shares redeemed ......... (1,250) (1,788)
----- -----
Increase in outstanding
capital shares ......... 1,417 3,059
===== =====
Value issued from sale
of shares ............. $19,907 $27,717
Value issued from reinvest-
ment of dividends and/or
capital gains distribution --- 7,735
Value redeemed .......... (9,286) (13,130)
------- -------
Increase in outstanding
capital ............... $10,621 $22,322
======= =======
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
BALANCED PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
(Unaudited)
For the
six
months For the fiscal year ended December 31,
ended -----------------------------------------
6/30/00 1999 1998 1997 1996 1995
--------- ------- ------ ------- ------- -------
Net asset value,
beginning of
period ........... $7.3120 $7.1081 6.7686 $6.1967 $5.9000 $4.9359
------- ------- ------ ------- ------- -------
Income from investment operations:
Net investment
income .......... 0.0885 0.1760 0.1865 0.1805 0.1594 0.1333
Net realized and
unrealized gain
on investments .. 0.2444 0.5446 0.4003 0.9650 0.5003 1.0611
------- ------- ------ ------- ------- -------
Total from investment
operations ....... 0.3329 0.7206 0.5868 1.1455 0.6597 1.1944
------- ------- ------ ------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.1759)(0.1865) (0.1805)(0.1594) (0.1333)
From capital gains (0.0000) (0.3408)(0.0608) (0.3931)(0.2036) (0.0970)
------- ------- ------ ------- ------- -------
Total distributions (0.0000) (0.5167)(0.2473) (0.5736)(0.3630) (0.2303)
------- ------- ------ ------- ------- -------
Net asset value,
end of period .... $7.6449 $7.3120 $7.1081 $6.7686 $6.1967 $5.9000
======= ======= ======= ======= ======= =======
Total return........ 4.55% 10.14% 8.67% 18.49% 11.19% 24.19%
Net assets, end of period
(in millions) .... $133 $117 $92 $68 $42 $24
Ratio of expenses
to average net
assets ............ 1.01%* 0.95% 0.74% 0.67% 0.70% 0.72%
Ratio of net investment
income to average
net assets ....... 2.51%* 2.56% 2.92% 3.06% 3.18% 3.22%
Portfolio turnover
rate ............. 22.45% 62.90% 54.62% 55.66% 44.23% 62.87%
*Annualized.
See notes to financial statements.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Chemicals and Allied Products - 1.96%
Procter & Gamble Company (The),
8.0%, 9-1-24 .......................... $2,000 $ 2,133,340
Communication - 1.87%
Cox Trust II,
7.0%, 8-16-04 ......................... 500 488,250
Jones Intercable, Inc.,
9.625%, 3-15-02 ....................... 500 510,110
Tele-Communications, Inc.,
8.35%, 2-15-05 ........................ 1,000 1,036,860
Total ................................. 2,035,220
Depository Institutions - 10.07%
AmSouth Bancorporation,
6.75%, 11-1-25 ........................ 2,000 1,904,600
Chevy Chase Savings Bank, F.S.B.,
9.25%, 12-1-05 ........................ 500 470,000
First Union Corporation:
6.824%, 8-1-26 ........................ 1,132 1,101,402
6.55%, 10-15-35 ....................... 525 497,443
ING Groep N.V.,
5.5%, 5-11-05 (A) ..................... EUR1,000 949,412
Kansallis-Osake-Pankki,
10.0%, 5-1-02 ......................... $1,000 1,041,130
National Westminster Bank plc,
7.375%, 10-1-09 ....................... 750 728,917
NationsBank Corporation,
8.57%, 11-15-24 ....................... 1,000 1,074,250
SouthTrust Bank of Alabama, National
Association:
5.58%, 2-6-06 ......................... 2,000 1,982,600
7.69%, 5-15-25 ........................ 500 517,175
Wachovia Corporation,
6.605%, 10-1-25 ....................... 750 719,535
Total ................................. 10,986,464
Electric, Gas and Sanitary Services - 7.99%
California Infrastructure and Economic
Development Bank, Special Purpose
Trust:
PG&E-1,
6.42%, 9-25-08 ........................ 1,000 971,410
SCE-1,
6.38%, 9-25-08 ........................ 1,000 967,810
Cleveland Electric Illuminating Co. (The),
9.5%, 5-15-05 ......................... 678 686,041
See Notes to Schedule of Investments on page 39.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Electric, Gas and Sanitary Services (Continued)
Entergy Arkansas, Inc.,
7.5%, 8-1-07 .......................... $ 750 $ 733,103
Kansas Gas and Electric Company,
7.6%, 12-15-03 ........................ 1,000 970,470
Korea Electric Power Corporation,
6.375%, 12-1-03 ....................... 500 474,810
Niagara Mohawk Power Corporation,
7.375%, 7-1-03 ........................ 756 745,845
TXU Eastern Funding Company,
6.45%, 5-15-05 ........................ 1,750 1,629,845
Union Electric Co.,
8.25%, 10-15-22 ....................... 1,500 1,532,895
Total ................................. 8,712,229
Electronic and Other Electric Equipment - 1.49%
Motorola, Inc.,
8.4%, 8-15-31 ......................... 1,500 1,622,790
Finance, Taxation and Monetary Policy - 0.44%
Banco Nacional de Comercio Exterior, S.N.C.,
7.25%, 2-2-04 ......................... 500 475,000
Food and Kindred Products - 0.90%
Anheuser-Busch Companies, Inc.,
7.0%, 9-1-05 .......................... 500 487,245
Coca-Cola FEMSA, S.A. de C.V.,
8.95%, 11-1-06 ........................ 500 495,625
Total ................................. 982,870
General Merchandise Stores - 0.66%
Fred Meyer, Inc.:
7.15%, 3-1-03 ......................... 250 244,752
7.45%, 3-1-08 ......................... 500 476,875
Total ................................. 721,627
Health Services - 0.45%
Tenet Healthcare Corporation,
7.875%, 1-15-03 ....................... 500 486,250
Holding and Other Investment Offices - 1.78%
Bay Apartment Communities, Inc.,
6.5%, 1-15-05 ......................... 500 470,520
GRUMA, S.A. de C.V.,
7.625%, 10-15-07 ...................... 500 428,125
NBD Bank, National Association,
8.25%, 11-1-24 ........................ 1,000 1,048,310
Total ................................. 1,946,955
See Notes to Schedule of Investments on page 39.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Industrial Machinery and Equipment - 1.29%
Coltec Industries Inc.,
7.5%, 4-15-08 ......................... $ 500 $ 471,200
International Business Machines Corporation,
5.375%, 3-31-05 (A) ................... EUR1,000 939,314
Total ................................. 1,410,514
Insurance Carriers - 0.18%
Reliance Group Holdings, Inc.,
9.0%, 11-15-00 ........................ $ 250 195,000
Nondepository Institutions - 7.61%
Asset Securitization Corporation,
7.49%, 4-14-29 ........................ 1,244 1,245,119
CHYPS CBO 1997-1 Ltd.,
6.72%, 1-15-10 (B) .................... 1,500 1,386,090
General Electric Capital Corporation,
7.5%, 5-15-05 ......................... 750 757,695
General Motors Acceptance Corporation:
5.5%, 2-2-05 (A) ...................... EUR1,250 1,171,950
8.875%, 6-1-10 ........................ $ 500 539,230
IMC Home Equity Loan Trust,
6.9%, 1-20-22 ......................... 1,000 992,500
Norse CBO, Ltd. and Norse CBO, Inc.,
6.515%, 8-13-10 (B) ................... 1,250 1,160,937
Residential Asset Securities Corporation,
8.0%, 10-25-24 ........................ 519 520,137
Westinghouse Electric Corporation,
8.875%, 6-14-14 ....................... 500 530,900
Total ................................. 8,304,558
Oil and Gas Extraction - 0.78%
Mitchell Energy & Development Corp.,
9.25%, 1-15-02 ........................ 27 27,366
Oryx Energy Company,
10.0%, 4-1-01 ......................... 400 406,608
Pemex Finance Ltd.,
5.72%, 11-15-03 ....................... 437 420,936
Total ................................. 854,910
Paper and Allied Products - 2.21%
Canadian Pacific Forest Products Ltd.,
9.25%, 6-15-02 ........................ 1,000 1,016,220
Champion International Corporation,
6.4%, 2-15-26 ......................... 1,500 1,392,570
Total ................................. 2,408,790
See Notes to Schedule of Investments on page 39.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Petroleum and Coal Products - 1.13%
Pemex Finance Ltd. and Petroleos Mexicanos,
9.03%, 2-15-11 (B) .................... $ 250 $ 254,368
YPF Sociedad Anoima,
8.0%, 2-15-04 ......................... 1,000 980,990
Total ................................. 1,235,358
Printing and Publishing - 1.48%
Quebecor Printing Capital Corporation,
6.5%, 8-1-27 .......................... 1,750 1,616,983
Railroad Transportation - 0.52%
CSX Corporation,
6.95%, 5-1-27 ......................... 575 566,444
Security and Commodity Brokers - 0.97%
Salomon Inc.,
3.65%, 2-14-02 ........................ 1,000 1,059,150
Stone, Clay and Glass Products - 1.56%
Cemex, S.A. de C.V.,
9.5%, 9-20-01 ......................... 500 505,000
Owens-Illinois, Inc.,
7.15%, 5-15-05 ........................ 750 685,590
USG Corporation,
9.25%, 9-15-01 ........................ 500 506,225
Total ................................. 1,696,815
Telephone Communication - 1.37%
Bell Atlantic Financial Services, Inc.,
7.6%, 3-15-07 ......................... 500 498,980
BellSouth Telecommunications, Inc.,
5.85%, 11-15-45 ....................... 1,000 996,500
Total ................................. 1,495,480
Transportation Equipment - 0.34%
Federal-Mogul Corporation,
7.75%, 7-1-06 ......................... 500 367,500
United States Postal Service - 0.20%
Postal Square Limited Partnership,
6.5%, 6-15-22 ......................... 238 220,933
See Notes to Schedule of Investments on page 39.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
TOTAL CORPORATE DEBT SECURITIES - 47.25% $51,535,180
(Cost: $53,170,994)
OTHER GOVERNMENT SECURITIES
Canada - 4.21%
Hydro-Quebec:
8.05%, 7-7-24 ......................... 1,000 1,060,570
8.4%, 3-28-25 ......................... 1,000 1,066,840
Province de Quebec:
5.67%, 2-27-26 ........................ 1,500 1,485,060
6.29%, 3-6-26 ......................... 1,000 979,670
Total ................................. 4,592,140
Korea - 0.46%
Korea Development Bank (The),
7.9%, 2-1-02 .......................... 500 499,540
Supranational - 0.99%
Inter-American Development Bank,
8.4%, 9-1-09 .......................... 1,000 1,087,890
TOTAL OTHER GOVERNMENT SECURITIES - 5.66% $ 6,179,570
(Cost: $6,144,033)
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation:
7.5%, 2-15-07 ......................... 823 826,596
6.5%, 9-25-18 ......................... 500 480,000
7.5%, 4-15-19 ......................... 1,172 1,176,024
6.25%, 1-15-21 ........................ 4,000 3,868,720
7.5%, 3-15-29 ......................... 2,000 2,017,500
7.5%, 9-15-29 ......................... 529 518,923
Federal National Mortgage Association:
6.09%, 4-1-09 ......................... 1,978 1,819,637
0.0%, 2-12-18 ......................... 2,500 737,975
7.0%, 9-25-20 ......................... 500 493,750
6.5%, 8-25-21 ......................... 500 480,545
7.0%, 6-1-24 .......................... 2,237 2,159,039
6.0%, 12-1-28 ......................... 2,507 2,294,093
See Notes to Schedule of Investments on page 39.
<PAGE>
THE INVESTMENTS OF THE BOND PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES (Continued)
Government National Mortgage Association:
7.5%, 7-15-23 ......................... $ 882 $ 878,010
7.5%, 12-15-23 ........................ 1,201 1,195,296
8.0%, 9-15-25 ......................... 799 811,846
7.0%, 7-20-27 ......................... 427 413,307
7.0%, 8-20-27 ......................... 903 873,039
7.5%, 7-15-29 ......................... 1,929 1,915,220
7.75%, 10-15-31 ....................... 313 314,754
United States Treasury:
6.5%, 8-15-05 ......................... 2,500 2,525,775
11.25%, 2-15-15 ....................... 2,750 4,054,957
6.125%, 11-15-27 ...................... 9,000 8,980,290
Miscellaneous United States Government Backed
Securities:
Tennessee Valley Authority,
5.88%, 4-1-36 ....................... 1,000 953,630
United States Department of Veterans Affairs,
Guaranteed Remic Pass-Through Certificates,
Vendee Mortgage Trust:
1998-1 Class 2-B,
7.0%, 6-15-19 ....................... 250 248,045
1999 Class 3-B,
6.5%, 2-15-20 ....................... 500 482,185
1999-2 Class 1-B,
6.5%, 7-15-19 ....................... 1,000 963,430
2000-1 Class 2-C,
7.25%, 11-15-21 ..................... 500 488,125
2000-2 Class 2-D,
7.5%, 9-15-26 ....................... 2,000 1,970,620
TOTAL UNITED STATES GOVERNMENT SECURITIES - 40.28% $ 43,941,331
(Cost: $44,346,083)
TOTAL SHORT-TERM SECURITIES - 5.45% $ 5,943,633
(Cost: $5,943,633)
TOTAL INVESTMENT SECURITIES - 98.64% $107,599,714
(Cost: $109,604,743)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.36% 1,480,129
NET ASSETS - 100.00% $109,079,843
See Notes to Schedule of Investments on page 39.
<PAGE>
BOND PORTFOLIO
Notes to Schedule of Investments
(A) Principal amounts are denominated in the indicated foreign currency, where
applicable (EUR-EURO).
(B) 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, 2000, the value of these
securities amounted to $2,801,395 or 2.57% of net assets.
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>
BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(In Thousands, Except for Per Share Amounts)
(Unaudited)
Assets
Investment securities--at
value (Notes 1 and 3) $107,600
Cash ................. 1
Receivables:
Dividends and interest 1,501
Fund shares sold ..... 33
Prepaid insurance
premium .............. 1
--------
Total assets ....... 109,136
Liabilities --------
Payable to Fund
shareholders ......... 27
Accrued service
fee (Note 2) ......... 22
Accrued accounting
services fee (Note 2). 3
Accrued management
fee (Note 2) ......... 2
Other ................. 2
--------
Total liabilities .. 56
--------
Total net assets .. $109,080
Net Assets ========
$0.001 par value capital stock:
Capital stock ........ $ 21
Additional paid-in
capital ............ 110,384
Accumulated undistributed gain (loss):
Accumulated undistributed net
investment income .. 3,282
Accumulated net realized
loss on investment
transactions ....... (2,603)
Net unrealized depreciation
of investments ...... (2,004)
--------
Net assets applicable to
outstanding units
of capital ........ $109,080
========
Net asset value, redemption
and offering price per share $5.2372
=======
Capital shares outstanding 20,828
Capital shares authorized 100,000
See notes to financial statements.
<PAGE>
BOND PORTFOLIO
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 2000
(In Thousands)
(Unaudited)
Investment Income
Income (Note 1B):
Interest and
amortization ........ $3,735
------
Expenses (Note 2):
Investment management
fee ................ 283
Service fee .......... 136
Accounting services
fee ................ 20
Audit fees ........... 6
Custodian fees ....... 4
Legal fees ........... 1
Other ................ 3
------
Total expenses ...... 453
------
Net investment
income ........... 3,282
------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net loss
on securities ........ (745)
Unrealized appreciation
in value of
investments during
the period ........... 1,423
------
Net gain on
investments ........ 678
------
Net increase
in net assets
resulting from
operations $3,960
======
See notes to financial statements.
<PAGE>
BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
(Unaudited)
For the six For the fiscal
months ended year ended
June 30, December 31,
2000 1999
------------ ------------
Decrease in Net Assets
Operations:
Net investment
income ............. $ 3,282 $ 6,535
Realized net loss
on investments ..... (745) (452)
Unrealized appreciation
(depreciation) ..... 1,423 (7,745)
-------- --------
Net increase (decrease)
in net assets
resulting from
operations......... 3,960 (1,662)
-------- --------
Dividends to shareholders
from net investment
income (Note 1E):* .. --- (6,535)
-------- --------
--- (6,535)
-------- --------
Capital share
transactions** ....... (5,416) 4,437
-------- --------
Total decrease .... (1,456) (3,760)
Net Assets
Beginning of period 110,536 114,296
-------- --------
End of period ......... $109,080 $110,536
======== ========
Undistributed net investment
income ............. $3,282 $---
====== ====
*See "Financial Highlights" on pages 43 - 44.
**Shares issued from sale
of shares ............. 1,464 3,554
Shares issued from reinvest-
ment of dividends ..... --- 1,294
Shares redeemed ......... (2,526) (3,949)
------ -----
Increase (decrease) in outstanding
capital shares ......... (1,062) 899
====== =====
Value issued from sale
of shares ............. $ 7,533 $19,146
Value issued from reinvest-
ment of dividends ..... --- 6,535
Value redeemed .......... (12,949) (21,244)
------- -------
Increase (decrease) in
outstanding capital ... $(5,416) $ 4,437
======= =======
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
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 -----------------------------------------
6/30/00 1999 1998 1997 1996 1995
------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $5.0497 $5.4451 $5.3686 $5.2004 $5.3592 $4.7393
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.1576 0.3173 0.3180 0.3400 0.3407 0.3556
Net realized and
unrealized gain
(loss) on
investments ..... 0.0299 (0.3954) 0.0765 0.1682 (0.1588) 0.6202
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 0.1875 (0.0781) 0.3945 0.5082 0.1819 0.9758
------- ------- ------- ------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.3173)(0.3180) (0.3400)(0.3407) (0.3559)
From capital gains (0.0000) (0.0000)(0.0000) (0.0000)(0.0000) (0.0000)
------- ------- ------- ------- ------- -------
Total distributions. (0.0000) (0.3173)(0.3180) (0.3400)(0.3407) (0.3559)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $5.2372 $5.0497 $5.4451 $5.3686 $5.2004 $5.3592
======= ======= ======= ======= ======= =======
Total return ....... 3.71% -1.44% 7.35% 9.77% 3.43% 20.56%
Net assets, end of
period (in
millions) ........ $109 $111 $114 $99 $92 $89
Ratio of expenses
to average net
assets ............ 0.84%* 0.81% 0.67% 0.58% 0.59% 0.60%
Ratio of net investment
income to average
net assets ....... 6.08%* 5.73% 5.99% 6.35% 6.39% 6.73%
Portfolio turnover
rate ............. 16.34% 47.27% 32.75% 36.81% 64.02% 71.17%
*Annualized.
See notes to financial statements.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS
Amusement and Recreation Services - 1.04%
Walt Disney Company (The) .............. 360,000 $ 13,972,500
Building Materials and Garden Supplies - 1.63%
Home Depot, Inc. (The) ................. 225,000 11,235,937
Lowe's Companies, Inc. ................. 260,000 10,676,250
Total ................................. 21,912,187
Business Services - 10.94%
America Online, Inc.* .................. 165,000 8,703,750
CheckFree Holdings Corporation* ........ 190,000 9,814,688
Clear Channel Communications, Inc.* .... 256,400 19,230,000
Intuit Inc.* ........................... 235,000 9,708,438
Microsoft Corporation* ................. 499,000 39,904,406
Oracle Corporation* .................... 355,000 29,831,094
Siebel Systems, Inc.* .................. 80,000 13,087,500
Veritas Software Corp.* ................ 90,000 10,167,187
Yahoo! Inc.* ........................... 50,000 6,195,312
Total ................................. 146,642,375
Chemicals and Allied Products - 14.58%
Bristol-Myers Squibb Company ........... 125,000 7,281,250
Forest Laboratories, Inc.* ............. 255,000 25,755,000
Johnson & Johnson ...................... 242,200 24,674,125
Merck & Co., Inc. ...................... 250,000 19,156,250
Pfizer Inc. ............................ 1,101,425 52,868,400
Pharmacia Corporation .................. 354,850 18,341,309
Schering-Plough Corporation ............ 479,400 24,209,700
Smith International, Inc.* ............. 320,000 23,300,000
Total ................................. 195,586,034
Communication - 3.42%
Comcast Corporation, Class A* .......... 225,000 9,119,531
Cox Communications, Inc., Class A* ..... 150,000 6,834,375
Infinity Broadcasting Corporation,
Class A* .............................. 437,200 15,930,475
Viacom Inc., Class B* .................. 205,000 13,978,438
Total ................................. 45,862,819
Depository Institutions - 2.75%
Bank of America Corporation ............ 255,000 10,965,000
Chase Manhattan Corporation (The) ...... 240,000 11,055,000
Citigroup Inc. ......................... 247,500 14,911,875
Total ................................. 36,931,875
Eating and Drinking Places - 0.43%
Wendy's International, Inc. ............ 325,000 5,789,062
See Notes to Schedule of Investments on page 51.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Electronic and Other Electric Equipment - 18.22%
ADC Telecommunications, Inc.* .......... 240,000 $ 20,122,500
Altera Corporation* .................... 100,000 10,190,625
Analog Devices, Inc.* .................. 230,000 17,480,000
Broadcom Corporation, Class A* ......... 50,000 10,946,875
General Electric Company ............... 538,500 28,540,500
Intel Corporation ...................... 263,600 35,231,788
JDS Uniphase Corporation* .............. 155,000 18,575,781
LSI Logic Corporation* ................. 200,000 10,825,000
Maxim Integrated Products, Inc.* ....... 70,000 4,753,437
Nokia Corporation, Series A, ADR ....... 420,000 20,973,750
Nortel Networks Corporation ............ 430,000 29,347,500
PMC - Sierra Inc.* ..................... 35,000 6,217,969
Texas Instruments Incorporated ......... 170,000 11,676,875
Xilinx, Inc.* .......................... 235,000 19,409,531
Total ................................. 244,292,131
Fabricated Metal Products - 0.55%
Parker Hannifin Corporation ............ 215,000 7,363,750
Food and Kindred Products - 2.81%
Anheuser-Busch Companies, Inc. ......... 240,000 17,925,000
PepsiCo, Inc. .......................... 445,000 19,774,687
Total ................................. 37,699,687
Furniture and Fixtures - 0.45%
Lear Corporation* ...................... 300,000 6,000,000
General Merchandise Stores - 3.09%
BJ's Wholesale Club, Inc.* ............. 475,000 15,675,000
Target Corporation ..................... 445,000 25,810,000
Total ................................. 41,485,000
Industrial Machinery and Equipment - 11.06%
Applied Materials, Inc.* ............... 186,000 16,862,062
Cisco Systems, Inc.* ................... 615,700 39,116,191
Cooper Cameron Corporation* ............ 285,000 18,810,000
Dell Computer Corporation* ............. 300,000 14,803,125
Dover Corporation ...................... 240,000 9,735,000
EMC Corporation* ...................... 358,400 27,574,400
Ingersoll-Rand Company ................. 200,000 8,050,000
SPX Corporation* ....................... 110,000 13,303,125
Total ................................. 148,253,903
Instruments and Related Products - 3.08%
Guidant Corporation* ................... 351,000 17,374,500
Medtronic, Inc. ........................ 280,000 13,947,500
Teradyne, Inc.* ........................ 135,000 9,922,500
Total ................................. 41,244,500
See Notes to Schedule of Investments on page 51.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Insurance Agents, Brokers and Service - 0.94%
Hartford Financial Services Group
Inc. (The) ............................ 225,000 $ 12,585,938
Insurance Carriers - 1.02%
American International Group, Inc. ..... 115,875 13,615,313
Motion Pictures - 1.39%
Time Warner Incorporated ............... 246,000 18,696,000
Nondepository Institutions - 3.70%
Fannie Mae ............................. 478,600 24,976,938
Freddie Mac ............................ 320,000 12,960,000
Morgan Stanley, Dean Witter, Discover & Co. 140,000 11,655,000
Total ................................. 49,591,938
Oil and Gas Extraction - 4.61%
Burlington Resources Incorporated ...... 575,000 21,993,750
Schlumberger Limited ................... 440,100 32,842,463
Transocean Sedco Forex Inc. ............ 131,811 7,043,650
Total ................................. 61,879,863
Petroleum and Coal Products - 1.61%
Exxon Mobil Corporation ................ 275,000 21,587,500
Telephone Communication - 1.47%
ALLTEL Corporation ..................... 160,000 9,910,000
Nextel Communications, Inc.* ........... 160,000 9,785,000
Total ................................. 19,695,000
Transportation Equipment - 0.89%
Harley-Davidson, Inc. .................. 310,600 11,958,100
Wholesale Trade -- Nondurable Goods - 0.70%
Enron Corp. ............................ 145,000 9,352,500
TOTAL COMMON STOCKS - 90.38% $1,211,997,975
(Cost: $774,642,536)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Commercial Paper
Chemicals and Allied Products - 1.19%
Pharmacia Corporation,
6.56%, 7-25-00 ........................ $16,000 15,930,027
Electric, Gas and Sanitary Services - 0.75%
Carolina Power & Light Co.,
6.52%, 7-6-00 ......................... 10,000 9,990,944
See Notes to Schedule of Investments on page 51.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Electronic and Other Electric Equipment - 0.52%
Sony Capital Corp.,
6.8%, 7-6-00 .......................... $ 7,000 $ 6,993,389
Fabricated Metal Products - 0.09%
Danaher Corporation,
6.6738%, Master Note .................. 1,188 1,188,000
Food and Kindred Products - 1.42%
Bestfoods,
6.68%, 7-17-00 ........................ 13,000 12,961,405
General Mills, Inc.,
6.5288%, Master Note .................. 6,013 6,013,000
Total ................................. 18,974,405
General Merchandise Stores - 0.76%
Wal-Mart Stores, Inc.,
6.5%, 7-11-00 ......................... 10,250 10,231,493
Lumber and Wood Products - 0.13%
Weyerhaeuser Company,
6.65%, 7-24-00 ........................ 1,800 1,792,353
Miscellaneous Retail - 0.52%
Toys `
`R'
' Us Inc.,
6.79%, 7-5-00 ......................... 7,000 6,994,719
Nondepository Institutions - 2.24%
Island Finance Puerto Rico Inc.,
6.57%, 7-17-00 ........................ 12,000 11,964,960
PACCAR Financial Corp.,
6.57%, Master Note .................... 13,027 13,027,000
Transamerica Finance Corporation,
6.62%, 7-7-00 ......................... 5,000 4,994,483
Total ................................. 29,986,443
Paper and Allied Products - 0.56%
International Paper Company,
7.2%, 7-3-00 .......................... 2,578 2,576,969
Westvaco Corp.,
6.85%, 7-26-00 ........................ 5,000 4,976,215
Total ................................. 7,553,184
See Notes to Schedule of Investments on page 51.
<PAGE>
THE INVESTMENTS OF THE GROWTH PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Telephone Communication - 1.10%
Dominion Resources Inc.,
6.84%, 7-11-00 ........................ $ 4,800 $ 4,790,880
U S WEST Communications Inc.,
6.8%, 7-18-00 ......................... 10,000 9,967,889
Total ................................. 14,758,769
Total Commercial Paper - 9.28% 124,393,726
Commercial Paper (backed by irrevocable bank
letter of credit) - 0.22%
Nondepository Institutions
ED&F Man Finance Inc. (Rabobank Nederland),
6.57%, 7-13-00 ........................ 3,000 2,993,430
Municipal Obligations - 0.74%
California Pollution Control Financing
Authority, Environmental Improvement
Revenue Bonds (Shell Martinez Refining
Company Project), Series 1996 (Taxable),
6.63%, 8-3-00 ......................... 10,000 10,000,000
TOTAL SHORT-TERM SECURITIES - 10.24% $ 137,387,156
(Cost: $137,387,156)
TOTAL INVESTMENT SECURITIES - 100.62% $1,349,385,131
(Cost: $912,029,692)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.62%) (8,340,284)
NET ASSETS - 100.00% $1,341,044,847
Notes to Schedule of Investments
*No dividends were paid during the preceding 12 months.
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>
GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(In Thousands, Except for Per Share Amounts)
(Unaudited)
Assets
Investment securities--at
value (Notes 1 and 3) $1,349,385
Cash ................. 3
Receivables:
Fund shares sold ..... 934
Dividends and interest 447
Prepaid insurance
premium .............. 2
----------
Total assets ....... 1,350,771
Liabilities ----------
Payable for investment
securities purchased . 9,246
Accrued service
fee (Note 2) ......... 278
Payable to Fund
shareholders ......... 155
Accrued management
fee (Note 2) ......... 25
Accrued accounting
services fee (Note 2). 8
Other ................. 14
----------
Total liabilities .. 9,726
----------
Total net assets .. $1,341,045
Net Assets ==========
$0.001 par value capital stock:
Capital stock ........ $ 110
Additional paid-in
capital ............ 824,281
Accumulated undistributed gain (loss):
Accumulated undistributed net
investment loss .... (15)
Accumulated net realized
gain on investment
transactions ....... 79,314
Net unrealized appreciation
of investments 437,355
----------
Net assets applicable to
outstanding units
of capital ........ $1,341,045
==========
Net asset value, redemption
and offering price per share $12.1667
========
Capital shares outstanding 110,223
Capital shares authorized 200,000
See notes to financial statements.
<PAGE>
GROWTH PORTFOLIO
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 2000
(In Thousands)
(Unaudited)
Investment Loss
Income (Note 1B):
Dividends (net of foreign withholding
taxes of $2) ....... $ 3,476
Interest and
amortization ........ 2,553
--------
Total income ....... 6,029
--------
Expenses (Note 2):
Investment management
fee ................ 4,332
Service fee .......... 1,574
Accounting services
fee ................ 50
Custodian fees ....... 32
Audit fees ........... 8
Legal fees ........... 6
Other ................ 42
--------
Total expenses..... 6,044
--------
Net investment
loss ............ (15)
--------
Realized and Unrealized Gain
on Investments (Notes 1 and 3)
Realized net gain
on securities ........ 79,314
Unrealized appreciation
in value of investments
during the period .... 60,407
--------
Net gain on
investments ........ 139,721
--------
Net increase in net
assets resulting
from operations $139,706
========
See notes to financial statements.
<PAGE>
GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
(Unaudited)
For the six For the fiscal
months ended year ended
June 30, December 31,
2000 1999
------------ ------------
Increase in Net Assets
Operations:
Net investment
income (loss) ...... $ (15) $ 522
Realized net gain on
investments ....... 79,314 150,006
Unrealized appreciation 60,407 142,019
---------- ---------
Net increase in net assets
resulting from
operations......... 139,706 292,547
---------- ---------
Dividends to shareholders (Note 1E):*
From net investment
income .............. --- (522)
From realized gains on
security transactions --- (150,006)
---------- ---------
--- (150,528)
---------- ---------
Capital share
transactions** ....... 38,591 195,614
---------- ---------
Total increase .... 178,297 337,633
Net Assets
Beginning of period 1,162,748 825,115
---------- ----------
End of period ......... $1,341,045 $1,162,748
========== ==========
Undistributed net investment
income (loss) ...... $(15) $---
==== ====
*See "Financial Highlights" on pages 55 - 56.
**Shares issued from sale
of shares ............. 8,755 12,932
Shares issued from reinvest-
ment of dividends and/or
capital gains distribution --- 13,841
Shares redeemed ......... (5,450) (8,588)
----- ------
Increase in outstanding
capital shares ......... 3,305 18,185
===== ======
Value issued from sale
of shares ............. $101,757 $133,490
Value issued from reinvest-
ment of dividends and/or
capital gains distribution --- 150,528
Value redeemed .......... (63,166) (88,404)
-------- --------
Increase in outstanding
capital ............... $ 38,591 $195,614
======== ========
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
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 -----------------------------------------
6/30/00 1999 1998 1997 1996 1995
--------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $10.8751 $ 9.2989 $7.5679 $6.7967 $6.8260 $5.8986
-------- -------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income (loss) ... (0.0001) 0.0056 0.0456 0.0574 0.0990 0.0903
Net realized and
unrealized gain
on investments .. 1.2917 3.1886 2.0215 1.4003 0.7478 2.1842
-------- -------- ------- ------- ------- -------
Total from investment
operations ....... 1.2916 3.1942 2.0671 1.4577 0.8468 2.2745
-------- -------- ------- ------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.0056)(0.0456) (0.0570)(0.0990) (0.0903)
From capital gains (0.0000) (1.6124)(0.2905) (0.6295)(0.7771) (1.2568)
-------- -------- ------- ------- ------- -------
Total distributions. (0.0000) (1.6180)(0.3361) (0.6865)(0.8761) (1.3471)
-------- -------- ------- ------- ------- -------
Net asset value,
end of period .... $12.1667 $10.8751 $9.2989 $7.5679 $6.7967 $6.8260
======== ======== ======= ======= ======= =======
Total return ....... 11.88% 34.35% 27.31% 21.45% 12.40% 38.57%
Net assets, end of
period (in
millions) ........ $1,341 $1,163 $825 $639 $513 $419
Ratio of expenses
to average net
assets ............ 0.96%* 0.96% 0.80% 0.72% 0.73% 0.75%
Ratio of net investment
income (loss) to average
net assets ....... -0.00%* 0.06% 0.55% 0.75% 1.44% 1.35%
Portfolio turnover
rate ............. 27.16% 65.82% 75.58% 162.41% 243.00% 245.80%
*Annualized.
See notes to financial statements.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS, RIGHTS AND WARRANTS
Business Services - 0.08%
deltathree.com, Inc.* .................. 6,500 $ 94,453
Chemicals and Allied Products - 0.66%
Smith International, Inc.* ............. 10,000 728,125
Communication - 0.82%
Classic Communications, Inc., Class A* . 15,000 135,469
Crown Castle International Corp.* ...... 6,700 244,341
Infinity Broadcasting Corporation,
Class A* .............................. 10,000 364,375
Spanish Broadcasting System, Inc.* ..... 7,500 153,984
Total ................................. 898,169
Total ................................. 2,938,947
Data Processing and Preparation - 0.03%
Cybernet Internet Services International,
Inc., Warrants (A)* ................... 1,000 30,000
Electronic and Other Electric Equipment - 0.54%
Alamosa PCS Holdings, Inc.* ............ 7,400 155,631
Amkor Technology, Inc.* ................ 5,000 176,406
Metricom, Inc.* ........................ 5,000 139,219
Metricom, Inc., Warrants* .............. 500 1,000
TeleCorp PCS, Inc.* .................... 3,000 121,125
Total ................................. 593,381
Engineering and Management Services - 0.07%
Harris Interactive Inc.* ............... 15,000 72,656
Food Stores - 0.20%
Kroger Co. (The)* ...................... 10,000 220,625
Holding and Other Investment Offices - 0.23%
"Shell" Transport and Trading Company,
p.l.c. (The), ADR ..................... 5,000 249,688
Industrial Machinery and Equipment - 0.89%
Baker Hughes Incorporated .............. 10,000 320,000
Cooper Cameron Corporation* ............ 10,000 660,000
Total ................................. 980,000
Oil and Gas Extraction - 1.23%
Burlington Resources Incorporated ...... 2,500 95,625
Schlumberger Limited ................... 2,500 186,562
Transocean Sedco Forex Inc. ............ 20,000 1,068,750
Total ................................. 1,350,937
See Notes to Schedule of Investments on page 68.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS, RIGHTS AND WARRANTS (Continued)
Paper and Allied Products - 0.00%
SF Holdings Group, Inc., Class C (A)* .. 1,500 $ 15
Petroleum and Coal Products - 0.42%
Royal Dutch Petroleum Company, NY Shares 7,500 461,719
Telephone Communication - 1.86%
AirGate PCS, Inc., Warrants* ........... 2,000 220,000
Allegiance Telecom, Inc., Warrants (A)* 1,250 187,500
ITXC Corp.* ............................ 5,000 177,031
Microcell Telecommunications Inc.,
Warrants (A)* ......................... 5,000 392,500
Nextel Partners, Inc., Class A* ........ 7,500 244,453
ONO Finance Plc, Rights (A)* ........... 250 23,625
OnePoint Communications Corp., Warrants (A)* 900 18,000
Powertel, Inc., Warrants* .............. 2,400 139,200
Primus Telecommunications Group,
Incorporated* ......................... 14,500 361,594
Primus Telecommunications Group,
Incorporated, Warrants* ............... 500 16,875
VersaTel Telecom International N.V.,
Warrants (A)* ......................... 500 260,000
Total ................................. 2,040,778
TOTAL COMMON STOCKS, RIGHTS AND WARRANTS - 7.03% $ 7,720,546
(Cost: $6,090,628)
PREFERRED STOCKS
Nondepository Institutions - 0.24%
California Federal Preferred Capital
Corporation, 9.125% ................... 12,500 264,844
Printing and Publishing - 0.44%
PRIMEDIA Inc., 10.0% ................... 5,000 480,000
Telephone Communication - 0.16%
IXC Communications, Inc., 12.5% ........ 182 180,180
Textile Mill Products - 0.72%
Anvil Holdings, Inc., 13.0% ............ 52,463 786,945
TOTAL PREFERRED STOCKS - 1.56% $ 1,711,969
(Cost: $1,482,085)
See Notes to Schedule of Investments on page 68.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Agricultural Production -- Crops - 1.98%
Hines Horticulture, Inc.,
11.75%, 10-15-05 ...................... $ 2,161 $ 2,171,805
Amusement and Recreation Services - 4.26%
Aztar Corporation,
8.875%, 5-15-07 ....................... 1,000 940,000
Hollywood Park, Inc.,
9.25%, 2-15-07 ........................ 500 497,500
Premier Parks Inc.:
9.75%, 6-15-07 ........................ 1,000 962,500
0.0%, 4-1-08 (B) ...................... 1,500 1,020,000
Station Casinos, Inc.:
10.125%, 3-15-06 ...................... 500 502,500
9.875%, 7-1-10 (A) .................... 750 755,625
Total ................................. 4,678,125
Business Services - 3.99%
Adams Outdoor Advertising Limited Partnership,
10.75%, 3-15-06 ....................... 2,030 2,090,900
Lamar Advertising Company,
9.625%, 12-1-06 ....................... 1,000 1,000,000
National Equipment Services, Inc.,
10.0%, 11-30-04 ....................... 1,250 1,047,250
Outdoor Systems, Inc.,
8.875%, 06-15-07 ...................... 250 245,288
Total ................................. 4,383,438
Communication - 17.28%
ACME Television, LLC,
0.0%, 9-30-04 (B) ..................... 1,026 979,830
Adelphia Communications Corporation:
10.25%, 7-15-00 ....................... 1,500 1,501,875
10.5%, 7-15-04 ........................ 500 500,000
Chancellor Media Corporation of Los Angeles,
8.0%, 11-1-08 ......................... 3,250 3,262,187
Classic Cable, Inc.,
9.375%, 8-1-09 ........................ 500 436,250
Crown Castle International Corp.:
0.0%, 11-15-07 (B) .................... 1,000 730,000
10.75%, 8-1-11 ........................ 1,000 1,018,750
Diamond Cable Communications Plc,
0.0%, 12-15-05 (B) .................... 1,111 1,055,450
EchoStar DBS Corporation,
9.375%, 2-1-09 ........................ 1,500 1,447,500
ICG Services, Inc.,
0.0%, 5-1-08 (B) ...................... 900 468,000
See Notes to Schedule of Investments on page 68.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Communication (Continued)
LIN Holdings Corp.,
0.0%, 3-1-08 (B) ...................... $1,325 $ 861,250
Salem Communications Corporation,
9.5%, 10-1-07 ......................... 500 470,000
Spanish Broadcasting System, Inc.,
9.625%, 11-1-09 ....................... 1,000 1,000,000
Spectasite Holdings, Inc.,
0.0%, 4-15-09 (B) ..................... 1,000 580,000
Telewest Communications plc,
0.0%, 10-1-07 (B) ..................... 3,500 3,333,750
United International Holdings, Inc.,
0.0%, 2-15-08 (B) ..................... 2,000 1,340,000
Total ................................. 18,984,842
Data Processing and Preparation - 0.46%
Cybernet Internet Services
International, Inc.,
14.0%, 7-1-09 ......................... 1,000 505,000
Depository Institutions - 2.73%
Sovereign Bancorp, Inc.,
10.5%, 11-15-06 ....................... 3,000 3,000,000
Eating and Drinking Places - 1.85%
Avado Brands, Inc.,
11.75%, 6-15-09 ....................... 1,000 512,500
Foodmaker, Inc.,
8.375%, 4-15-08 ....................... 1,000 935,000
NE Restaurant Company, Inc.,
10.75%, 7-15-08 ....................... 750 588,750
Total ................................. 2,036,250
Electric, Gas and Sanitary Services - 1.59%
Transportadora de Gas del Sur S.A.,
10.375%, 4-15-03 (A) .................. 1,750 1,750,000
See Notes to Schedule of Investments on page 68.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Electronic and Other Electric Equipment - 5.64%
Alamosa PCS Holdings, Inc.,
0.0%, 2-15-10 (B) ..................... $1,250 $ 656,250
Elgar Holdings, Inc.,
9.875%, 2-1-08 ........................ 500 277,500
Flextronics International Ltd.,
9.875%, 7-1-10 (A) .................... 500 506,250
Hadco Corporation,
9.5%, 6-15-08 ......................... 2,100 2,100,000
PF.Net Communications, Units,
13.75%, 5-15-10 (A)(C) ................ 2,000 2,005,000
TeleCorp PCS, Inc.,
0.0%, 4-15-09 (B) ..................... 1,000 655,000
Total ................................. 6,200,000
Fabricated Metal Products - 0.17%
Neenah Corporation,
11.125%, 5-1-07 ....................... 250 185,000
Food and Kindred Products - 0.27%
Pilgrim's Pride Corporation,
10.875%, 8-1-03 ....................... 300 302,250
Food Stores - 0.39%
Big V Supermarkets, Inc.,
11.0%, 2-15-04 ........................ 500 427,500
Health Services - 0.23%
Tenet Healthcare Corporation,
9.25%, 9-1-10 (A) ..................... 250 253,125
Hotels and Other Lodging Places - 2.88%
CapStar Hotel Company,
8.75%, 8-15-07 ........................ 500 443,750
MGM Grand, Inc.,
9.75%, 6-01-07 ........................ 750 761,250
Prime Hospitality Corp.:
9.25%, 1-15-06 ........................ 1,500 1,485,000
9.75%, 4-1-07 ......................... 500 480,000
Total ................................. 3,170,000
Industrial Machinery and Equipment - 1.63%
Terex Corporation,
8.875%, 4-1-08 ........................ 1,000 890,000
WEC Company,
12.0%, 7-15-09 ........................ 1,000 896,250
Total ................................. 1,786,250
See Notes to Schedule of Investments on page 68.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Miscellaneous Retail - 2.90%
Amazon.com, Inc.,
0.0%, 5-1-08 (B) ...................... $1,000 $ 585,000
Michaels Stores, Inc.,
10.875%, 6-15-06 ...................... 2,500 2,600,000
Total ................................. 3,185,000
Paper and Allied Products - 5.77%
Container Corporation of America,
11.25%, 5-1-04 ........................ 1,500 1,515,000
Huntsman Packaging Corporation, Units,
13.0%, 6-1-10 (A)(D) .................. 1,000 1,035,000
SF Holdings Group, Inc.,
0.0%, 3-15-08 (B) ..................... 7,500 3,787,500
Total ................................. 6,337,500
Petroleum and Coal Products - 0.43%
Building Materials Corporation of America,
8.0%, 12-1-08 ......................... 600 474,000
Primary Metal Industries - 1.91%
Dayton Superior Corporation, Units,
13.0%, 6-15-09 (A)(E) ................. 1,000 990,000
ISG Resources, Inc.,
10.0%, 4-15-08 ........................ 1,000 915,000
Wheeling-Pittsburgh Corporation,
9.25%, 11-15-07 ....................... 250 192,500
Total ................................. 2,097,500
Rubber and Miscellaneous Plastics Products - 2.42%
Graham Packaging Holdings Company,
0.0%, 1-15-09 (B) .................... 1,750 1,032,500
Home Products International, Inc.,
9.625%, 5-15-08 ....................... 750 622,500
Tekni-Plex, Inc.,
12.75%, 6-15-10 (A) ................... 1,000 1,005,000
Total ................................. 2,660,000
Special Trade Contractors - 0.64%
SBA Communications Corporation,
0.0%, 3-1-08 (B) ...................... 1,000 700,000
See Notes to Schedule of Investments on page 68.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Telephone Communication - 21.62%
AirGate PCS, Inc.,
0.0%, 10-1-09 (B) ..................... $2,000 $ 1,135,000
Alestra, S. de R.L. de C.V.,
12.625%, 5-15-09 ...................... 1,000 900,000
Allegiance Telecom, Inc.,
0.0%, 2-15-08 (B) ..................... 1,250 900,000
Concentric Network Corporation,
12.75%, 12-15-07 ...................... 750 795,000
GST Telecommunications,
0.0%, 11-15-07 (B) .................... 1,000 145,000
GT Group Telecom, Inc., Units,
0.0%, 2-1-10 (A)(B)(F) ................ 1,000 560,000
Global Crossing Holdings Ltd.:
9.625% 5-15-08 ........................ 500 487,500
9.5%, 11-15-09 ........................ 500 482,500
Grupo Iusacell, S.A. de C.V.,
14.25%, 12-1-06 ....................... 850 877,625
Hyperion Telecommunications, Inc.:
0.0%, 4-15-03 (B) ..................... 2,000 1,840,000
12.0%, 11-1-07 ........................ 500 465,000
ITC /\ DeltaCom, Inc.:
8.875%, 3-1-08 ........................ 250 227,500
9.75%, 11-15-08 ....................... 750 712,500
Intercel, Inc.,
0.0%, 2-1-06 (B) ...................... 750 702,188
Intermedia Communications of Florida, Inc.,
0.0%, 5-15-06 (B) ..................... 750 693,750
Leap Wireless International, Inc., Units,
12.5%, 4-15-10 (A)(G) ................. 1,250 1,075,000
Microcell Telecommunications Inc.,
0.0%, 6-1-06 (B) ..................... 750 690,000
Nextel Communications, Inc.,
9.375%, 11-15-09 ...................... 1,000 955,000
Nextel Partners, Inc.,
11.0%, 3-15-10 (A) .................... 1,000 990,000
NEXTLINK Communications, Inc.,
10.75%, 6-1-09 ........................ 500 495,000
ONO Finance Plc,
13.0%, 5-1-09 ......................... 250 237,500
OnePoint Communications Corp.,
14.5%, 6-1-08 ........................ 900 454,500
Primus Telecommunications Group, Incorporated:
11.75%, 8-1-04 ........................ 500 402,500
5.75%, 2-15-07 (Convertible)(A) ....... 750 524,062
12.75%, 10-15-09 ...................... 750 630,000
Rhythms NetConnections Inc.,
0.0%, 5-15-08 (B) ..................... 2,000 800,000
See Notes to Schedule of Investments on page 68.
<PAGE>
THE INVESTMENTS OF THE HIGH INCOME PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Telephone Communication (Continued)
Time Warner Telecom LLC and
Time Warner Telecom Inc.,
9.75%, 7-15-08 ........................ $ 500 $ 485,000
Tritel PCS, Inc.,
0.0%, 5-15-09 (B) ..................... 1,500 990,000
Triton PCS, Inc.,
0.0%, 5-1-08 (B) ...................... 500 360,000
US Unwired Inc.,
0.0%, 11-01-09 (B) .................... 1,000 540,000
VersaTel Telecom B.V.,
11.875%, 7-15-09 ...................... 250 247,500
VersaTel Telecom International N.V.,
13.25%, 5-15-08 ....................... 500 511,250
Viatel, Inc.,
11.5%, 3-15-09 ........................ 500 375,000
VoiceStream Wireless Corporation,
0.0%, 11-15-09 (B) .................... 1,500 1,012,500
Winstar Communications, Inc.:
0.0%, 4-15-10 (A)(B) ................. 1,241 570,860
12.75%, 4-15-10 (A) ................... 510 479,400
Total ................................. 23,748,635
Textile Mill Products - 1.63%
Anvil Knitwear, Inc.,
10.875%, 3-15-07 ...................... 1,000 880,000
Consoltex Group Inc.,
11.0%, 10-1-03 ........................ 1,000 915,000
Total ................................. 1,795,000
Wholesale Trade -- Durable Goods - 0.80%
AAi.Fostergrant, Inc.,
10.75%, 7-15-06 ....................... 500 142,500
Heafner (J. H.) Company, Inc. (The),
10.0%, 5-15-08 ........................ 1,000 735,000
Total ................................. 877,500
TOTAL CORPORATE DEBT SECURITIES - 83.47% $ 91,708,720
(Cost: $98,573,060)
TOTAL SHORT-TERM SECURITIES - 7.37% $ 8,101,557
(Cost $8,101,557)
TOTAL INVESTMENT SECURITIES - 99.43% $109,242,792
(Cost: $114,247,330)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.57% 623,877
NET ASSETS - 100.00% $109,866,669
See Notes to Schedule of Investments on page 68.
<PAGE>
Notes to Schedule 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, 2000, the value of these
securities amounted to $13,410,962 or 12.21% of net assets.
(B) The security does not bear interest for an initial period of time and
subsequently becomes interest bearing.
(C) Each unit of PF.Net Communications consists of $1,000 principal amount of
13.75% senior notes due 2010 and one warrant to purchase 36.87243 shares of
common stock.
(D) Each unit of Huntsman Packaging Corporation consists of $1,000 principal
amount of 13% senior subordinated notes due 2010 and one warrant to
purchase 0.08424 of a share of common stock.
(E) Each unit of Dayton Superior Corporation consists of $1,000 principal
amount of 13% senior subordinated notes due 2009 and one warrant to
purchase 0.68986 of a common share.
(F) Each unit of GT Group Telecom, Inc. consists of $1,000 principal amount of
13.25% senior discount notes due 2010 and one warrant to purchase 4.9106
Class B non-voting shares.
(G) Each unit of Leap Wireless International, Inc. consists of one 12.5% senior
note due 2010 and one warrant to purchase common stock.
See Note 1 to financial statements for security valuation and other significant
accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation and
depreciation of investments owned for Federal income tax purposes.
<PAGE>
HIGH INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(In Thousands, Except for Per Share Amounts)
(Unaudited)
Assets
Investment securities--at
value (Notes 1 and 3) $109,243
Cash ................. 1
Receivables:
Dividends and interest 1,368
Fund shares sold ..... 42
Prepaid insurance
premium .............. 1
--------
Total assets ....... 110,655
Liabilities --------
Payable for investment
securities purchased . 747
Accrued service
fee (Note 2) ......... 22
Payable to Fund
shareholders ......... 12
Accrued accounting
services fee (Note 2). 3
Accrued management
fee (Note 2) ......... 2
Other ................. 2
--------
Total liabilities .. 788
--------
Total net assets .. $109,867
Net Assets ========
$0.001 par value capital stock:
Capital stock ........ $27
Additional paid-in
capital ............ 122,845
Accumulated undistributed gain (loss):
Accumulated undistributed net
investment income .. 5,521
Accumulated net realized
loss on investment
transactions ....... (13,521)
Net unrealized depreciation
of investments ...... (5,005)
--------
Net assets applicable to
outstanding units
of capital ........ $109,867
========
Net asset value, redemption
and offering price per share $4.0267
=======
Capital shares outstanding 27,285
Capital shares authorized 100,000
See notes to financial statements.
<PAGE>
HIGH INCOME PORTFOLIO
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 2000
(In Thousands)
(Unaudited)
Investment Income
Income (Note 1B):
Interest and
amortization ........ $ 5,985
Dividends ............ 83
-------
Total income ....... 6,068
-------
Expenses (Note 2):
Investment management
fee ................ 357
Service fee .......... 151
Accounting services
fee ................ 20
Audit fees ........... 7
Custodian fees ....... 2
Legal fees ........... 1
Other ................ 9
-------
Total expenses ...... 547
-------
Net investment
income ........... 5,521
-------
Realized and Unrealized Loss
on Investments (Notes 1 and 3)
Realized net loss
on securities ........ (5,207)
Unrealized depreciation
in value of investments
during the period .... (4,243)
-------
Net loss on
investments ........ (9,450)
-------
Net decrease
in net assets
resulting from
operations ........ $(3,929)
=======
See notes to financial statements.
<PAGE>
HIGH INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
(Unaudited)
For the six For the fiscal
months ended year ended
June 30, December 31,
2000 1999
------------ ------------
Decrease in Net Assets
Operations:
Net investment
income ............. $ 5,521 $ 11,321
Realized net loss
on investments ..... (5,207) (7,976)
Unrealized appreciation
(depreciation) ..... (4,243) 1,657
------- --------
Net increase (decrease)
in net assets
resulting from
operations......... (3,929) 5,002
------- --------
Dividends to shareholders (Note 1E):*
From net investment
income .............. --- (11,321)
From realized gains on
security transactions --- ---
------- --------
--- (11,321)
------- --------
Capital share
transactions** ....... (6,903) 665
-------- --------
Total decrease .... (10,832) (5,654)
Net Assets
Beginning of period 120,699 126,353
-------- --------
End of period ......... $109,867 $120,699
======== ========
Undistributed net investment
income ............. $5,521 $---
====== ====
*See "Financial Highlights" on pages 72 - 73.
**Shares issued from sale
of shares ............. 1,959 3,202
Shares issued from reinvest-
ment of dividends ..... --- 2,715
Shares redeemed ......... (3,625) (5,590)
----- -----
Increase (decrease) in outstanding
capital shares........ (1,666) 327
===== =====
Value issued from sale
of shares ............. $ 8,018 $14,259
Value issued from reinvest-
ment of dividends ...... --- 11,321
Value redeemed .......... (14,921) (24,915)
------- -------
Increase (decrease) in
outstanding capital .. $(6,903) $ 665
======= =======
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
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 -----------------------------------------
6/30/00 1999 1998 1997 1996 1995
------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $4.1691 $4.4143 $4.7402 $4.5750 $4.4448 $4.1118
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.2024 0.4313 0.4185 0.4098 0.4216 0.4165
Net realized and
unrealized gain
(loss) on
investments ..... (0.3448) (0.2452)(0.3259) 0.2324 0.1302 0.3330
------- ------- ------- ------- ------- -------
Total from investment
operations ....... (0.1424) 0.1861 0.0926 0.6422 0.5518 0.7495
------- ------- ------- ------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.4313)(0.4185) (0.4098)(0.4216) (0.4165)
From capital gains (0.0000) (0.0000)(0.0000) (0.0672)(0.0000) (0.0000)
------- ------- ------- ------- ------- -------
Total distributions (0.0000) (0.4313)(0.4185) (0.4770)(0.4216) (0.4165)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $4.0267 $4.1691 $4.4143 $4.7402 $4.5750 $4.4448
======= ======= ======= ======= ======= =======
Total return ....... -3.42% 4.22% 1.95% 14.04% 12.46% 18.19%
Net assets, end of
period (in
millions) ........ $110 $121 $126 $120 $97 $87
Ratio of expenses
to average net
assets ............ 0.96%* 0.92% 0.77% 0.70% 0.71% 0.72%
Ratio of net investment
income to average
net assets ....... 9.67%* 9.17% 8.76% 8.79% 9.10% 9.25%
Portfolio turnover
rate ............. 52.54% 87.84% 63.64% 65.28% 58.91% 41.78%
*Annualized.
See notes to financial statements.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS
Amusement and Recreation Services - 1.29%
Walt Disney Company (The) .............. 350,800 $ 13,615,425
Building Materials and Garden Supplies - 0.47%
Home Depot, Inc. (The) ................. 99,300 4,958,794
Business Services - 6.76%
America Online, Inc.* .................. 109,200 5,760,300
Citrix Systems, Inc.* .................. 276,400 5,242,963
Clear Channel Communications, Inc.* .... 158,700 11,902,500
Microsoft Corporation* ................. 397,000 31,747,594
Oracle Corporation* .................... 127,500 10,713,984
Veritas Software Corp.* ................ 51,300 5,795,297
Total ................................. 71,162,638
Chemicals and Allied Products - 20.24%
Air Products and Chemicals, Inc. ....... 227,700 7,016,006
American Home Products Corporation ..... 216,800 12,737,000
Biogen, Inc.* .......................... 63,300 4,080,872
Bristol-Myers Squibb Company ........... 95,600 5,568,700
Dow Chemical Company (The) ............. 487,200 14,707,350
du Pont (E.I.) de Nemours and Company .. 274,300 12,000,625
Forest Laboratories, Inc.* ............. 192,800 19,472,800
Johnson & Johnson ...................... 162,900 16,595,438
Merck & Co., Inc. ...................... 211,500 16,206,187
Pfizer Inc. ............................ 832,150 39,943,200
Pharmacia Corporation .................. 619,427 32,016,633
QLT Inc.* .............................. 121,800 9,458,531
Schering-Plough Corporation ............ 463,200 23,391,600
Total ................................. 213,194,942
Communication - 2.06%
Cox Communications, Inc., Class A* ..... 333,200 15,181,425
General Motors Corporation, Class H* ... 73,900 6,484,725
Total ................................. 21,666,150
Depository Institutions - 3.49%
Bank of America Corporation ............ 291,300 12,525,900
Chase Manhattan Corporation (The) ...... 222,850 10,265,028
Citigroup Inc. ......................... 232,650 14,017,163
Total ................................. 36,808,091
Electronic and Other Electric Equipment - 9.40%
Analog Devices, Inc.* .................. 190,700 14,493,200
General Electric Company ............... 383,800 20,341,400
Intel Corporation ...................... 218,700 29,230,622
Nortel Networks Corporation ............ 195,300 13,329,225
Rambus Inc.* ........................... 209,600 21,588,800
Total ................................. 98,983,247
See Notes to Schedule of Investments on page 78.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Fabricated Metal Products - 0.58%
Gillette Company (The) ................. 174,222 $ 6,086,881
Food Stores - 4.09%
Kroger Co. (The)* ...................... 1,299,200 28,663,600
Safeway Inc.* .......................... 319,900 14,435,488
Total ................................. 43,099,088
Furniture and Fixtures - 0.21%
Lear Corporation* ...................... 108,500 2,170,000
Furniture and Home Furnishings Stores - 1.83%
Best Buy Co., Inc.* .................... 81,300 5,142,225
Circuit City Stores, Inc. -
Circuit City Group .................... 425,100 14,108,006
Total ................................. 19,250,231
General Merchandise Stores - 1.84%
Target Corporation ..................... 190,800 11,066,400
Wal-Mart Stores, Inc. .................. 143,400 8,263,425
Total ................................. 19,329,825
Holding and Other Investment Offices - 1.83%
ABB Ltd. (A) ........................... 162,100 19,400,530
Industrial Machinery and Equipment - 8.22%
Baker Hughes Incorporated .............. 572,400 18,316,800
Cisco Systems, Inc.* ................... 212,400 13,494,038
Dell Computer Corporation* ............. 353,700 17,452,884
EMC Corporation* ....................... 295,200 22,711,950
International Business Machines
Corporation ........................... 133,200 14,593,725
Total ................................. 86,569,397
Instruments and Related Products - 2.22%
Guidant Corporation* ................... 266,400 13,186,800
Medtronic, Inc. ........................ 110,200 5,489,338
Raytheon Company, Class A .............. 242,453 4,712,680
Total ................................. 23,388,818
Insurance Carriers - 2.54%
American International Group, Inc. .... 127,225 14,948,938
Chubb Corporation (The) ................ 192,600 11,844,900
Total ................................. 26,793,838
Motion Pictures - 1.57%
Time Warner Incorporated ............... 217,700 16,545,200
See Notes to Schedule of Investments on page 78.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Nondepository Institutions - 4.88%
Associates First Capital Corporation,
Class A ............................... 683,320 $ 15,246,577
Fannie Mae ............................. 341,600 17,827,250
Freddie Mac ............................ 453,200 18,354,600
Total ................................. 51,428,427
Oil and Gas Extraction - 6.28%
Anadarko Petroleum Corporation ......... 419,900 20,706,319
Burlington Resources Incorporated ...... 412,100 15,762,825
Schlumberger Limited ................... 278,400 20,775,600
Transocean Sedco Forex Inc. ............ 166,171 8,879,763
Total ................................. 66,124,507
Paper and Allied Products - 0.98%
International Paper Company ............ 344,900 10,282,331
Petroleum and Coal Products - 2.73%
Exxon Mobil Corporation ................ 178,229 13,990,977
Royal Dutch Petroleum Company .......... 240,500 14,805,781
Total ................................. 28,796,758
Primary Metal Industries - 0.94%
Alcoa Incorporated ..................... 343,000 9,947,000
Security and Commodity Brokers - 0.50%
Charles Schwab Corporation (The) ....... 156,300 5,255,587
Telephone Communication - 5.79%
Nippon Telegraph and
Telephone Corporation (A) ............. 495 6,576,368
SBC Communications Inc. ................ 438,300 18,956,475
Telefonaktiebolaget LM Ericsson, ADR,
Class B ............................... 760,000 15,223,750
Vodafone Airtouch Public Limited
Company, ADR .......................... 249,700 10,346,944
Worldcom, Inc.* ........................ 215,650 9,899,683
Total ................................ 61,003,220
Transportation Equipment - 0.68%
Lockheed Martin Corporation ............ 288,200 7,150,962
Wholesale Trade -- Nondurable Goods - 1.48%
Cardinal Health, Inc. .................. 106,300 7,866,200
Enron Corp. ............................ 119,700 7,720,650
Total ................................. 15,586,850
TOTAL COMMON STOCKS - 92.90% $978,598,737
(Cost: $666,387,613)
See Notes to Schedule of Investments on page 78.
<PAGE>
THE INVESTMENTS OF THE INCOME PORTFOLIO
JUNE 30, 2000
Shares Value
PREFERRED STOCK - 0.31%
Communication
Cox Communications, Inc., 7.0%, Convertible 53,500 $ 3,286,906
(Cost: $2,675,000)
TOTAL SHORT-TERM SECURITIES - 6.92% $ 72,909,481
(Cost: $72,909,481)
TOTAL INVESTMENT SECURITIES - 100.13% $1,054,795,124
(Cost: $741,972,094)
LIABILITIES, NET OF CASH AND OTHER ASSETS - (0.13%) (1,409,094)
NET ASSETS - 100.00% $1,053,386,030
Notes to Schedule of Investments
*No dividends were paid during the preceding 12 months.
(A) Listed on an exchange outside of the United States.
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>
INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(In Thousands, Except for Per Share Amounts)
(Unaudited)
Assets
Investment securities--at
value (Notes 1 and 3) $1,054,795
Cash ................. 1
Receivables:
Investment securities
sold ............... 5,852
Fund shares sold ..... 888
Dividends and interest 714
Prepaid insurance
premium .............. 1
----------
Total assets ....... 1,062,251
Liabilities ----------
Payable for investment
securities purchased . 8,477
Accrued service
fee (Note 2) ......... 219
Payable to Fund
shareholders ......... 124
Accrued management
fee (Note 2) ......... 20
Accrued accounting
services fee (Note 2). 8
Other ................. 17
----------
Total liabilities .. 8,865
----------
Total net assets .. $1,053,386
Net Assets ==========
$0.001 par value capital stock:
Capital stock ........ $ 73
Additional paid-in
capital ............ 664,047
Accumulated undistributed gain:
Accumulated undistributed net
investment income .. 1,496
Accumulated net realized gain
on investment
transactions ....... 74,951
Net unrealized appreciation
of investments ...... 312,819
----------
Net assets applicable to
outstanding units
of capital ........ $1,053,386
==========
Net asset value, redemption
and offering price per share $14.4262
=======
Capital shares outstanding 73,019
Capital shares authorized 150,000
See notes to financial statements.
<PAGE>
INCOME PORTFOLIO
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 2000
(In Thousands)
(Unaudited)
Investment Income
Income (Note 1B):
Dividends (net of foreign withholding
taxes of $28) ...... $ 4,485
Interest and
amortization ........ 1,898
--------
Total income ....... 6,383
--------
Expenses (Note 2):
Investment management
fee ................ 3,459
Service fee .......... 1,245
Accounting services
fee ................ 46
Custodian fees ....... 45
Audit fees ........... 8
Legal fees ........... 5
Other ................ 20
--------
Total expenses ...... 4,828
--------
Net investment
income .......... 1,555
--------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net gain
on securities ........ 74,951
Realized net loss on foreign
currency transactions. (59)
--------
Realized net gain
on investments ..... 74,892
Unrealized appreciation
in value of
investments during
the period ........... 29,175
--------
Net gain on
investments ....... 104,067
--------
Net increase
in net assets
resulting from
operations $105,622
========
See notes to financial statements.
<PAGE>
INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
(Unaudited)
For the six For the fiscal
months ended year ended
June 30, December 31,
2000 1999
------------ ------------
Increase in Net Assets
Operations:
Net investment
income ............. $ 1,555 $ 10,639
Realized net gain
on investments ..... 74,892 51,639
Unrealized
appreciation ....... 29,175 42,185
---------- --------
Net increase in
net assets
resulting from
operations......... 105,622 104,463
---------- --------
Dividends to shareholders (Note 1E):*
From net investment
income .............. --- (10,635)
From realized gains on
security transactions --- (51,643)
---------- --------
--- (62,278)
---------- --------
Capital share
transactions** ....... 7,229 87,016
---------- --------
Total increase .... 112,851 129,201
Net Assets
Beginning of period 940,535 811,334
---------- --------
End of period ......... $1,053,386 $940,535
========== ========
Undistributed net investment
income ............. $1,496 $---
====== ====
*See "Financial Highlights" on pages 82 - 83.
**Shares issued from sale
of shares ............. 5,627 9,942
Shares issued from reinvest-
ment of dividends and/or
capital gains distribution --- 4,805
Shares redeemed ......... (5,175) (7,954)
------ ------
Increase in outstanding
capital shares ......... 452 6,793
====== ======
Value issued from sale
of shares ............. $77,560 $126,991
Value issued from reinvest-
ment of dividends and/or
capital gains distribution --- 62,278
Value redeemed .......... (70,331) (102,253)
------- --d------
Increase in outstanding
capital ............... $ 7,229 $ 87,016
======= ========
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
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 -----------------------------------------
6/30/00 1999 1998 1997 1996 1995
---------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $12.9609 $12.3351$11.9615 $10.1373$ 8.6756 $6.7689
-------- ---------------- ---------------- -------
Income from investment
operations:
Net investment
income .......... 0.0205 0.1571 0.1752 0.0916 0.0856 0.0839
Net realized and
unrealized gain
on investments .. 1.4448 1.3879 2.3532 2.5598 1.6280 2.0525
-------- ---------------- ---------------- -------
Total from investment
operations ....... 1.4653 1.5450 2.5284 2.6514 1.7136 2.1364
-------- ---------------- ---------------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.1570)(0.1752) (0.0915)(0.0856) (0.0839)
From capital gains (0.0000) (0.7622)(1.9796) (0.7357)(0.1663) (0.1457)
In excess of
capital gains ... (0.0000) (0.0000)(0.0000) (0.0000)(0.0000) (0.0001)
-------- ---------------- ---------------- -------
Total distributions. (0.0000) (0.9192)(2.1548) (0.8272)(0.2519) (0.2297)
-------- -------- ------- ---------------- -------
Net asset value,
end of period .... $14.4262 $12.9609$12.3351 $11.9615$10.1373 $8.6756
======== ================ ================ =======
Total return........ 11.31% 12.52% 21.14% 26.16% 19.75% 31.56%
Net assets, end of
period (in
millions) ........ $1,053 $941 $811 $637 $462 $331
Ratio of expenses
to average net
assets ............ 0.98%* 0.96% 0.80% 0.72% 0.73% 0.77%
Ratio of net investment
income to average
net assets ....... 0.30%* 1.23% 1.35% 0.80% 0.97% 1.13%
Portfolio turnover
rate ............. 26.41% 70.20% 62.84% 36.61% 22.95% 15.00%
*Annualized.
See notes to financial statements.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS
Argentina - 0.66%
IMPSAT Fiber Networks, Inc.* ........... 120,000 $ 2,002,500
Canada - 5.18%
AT&T Canada Inc., Class B (A)* ......... 80,000 2,676,399
Nortel Networks Corporation ............ 108,000 7,371,000
Research In Motion Limited* ............ 33,300 1,505,784
Rogers Communications Inc.,
Class B (A)* .......................... 89,400 2,534,692
724 Solutions Inc.* .................... 38,075 1,663,402
Total ................................. 15,751,277
China - 0.85%
China Unicom Limited* (A) .............. 1,186,000 2,502,495
Jinpan International Limited* .......... 30,300 72,909
Total ................................. 2,575,404
Finland - 2.32%
Nokia Oyj (A) ........................... 100,000 5,100,199
Perlos Oy (A)(B) ....................... 61,600 1,945,576
Total ................................. 7,045,775
France - 8.79%
AXA-UAP (A) ............................ 26,700 4,203,728
Alcatel Alsthom CGE, SA, ADR ........... 50,000 3,325,000
Bouygues S.A. (A) ...................... 5,150 3,439,891
Credit Lyonnais SA (A) ................. 73,000 3,468,899
Essilor International SA (A) ........... 12,175 3,487,539
Suez Lyonnaise des Eaux (A) ............ 30,000 5,252,871
TOTAL FINA ELF, S.A. (A) ............... 23,000 3,524,624
Total ................................. 26,702,552
Germany - 7.80%
Deutsche Prandbrief- und
Hypothekenbank AG (A) ................. 18,725 1,885,010
EM.TV & Merchandising AG (A) ........... 45,000 2,649,336
freenet.de AG (A)* ..................... 12,500 1,025,765
Heyde AG* (A) .......................... 20,000 3,110,692
Kamps AG (A) ........................... 50,000 1,598,285
R.T. SET Real Time Synthesized
Entertainment Technology Ltd. (A) (B)* 60,000 933,208
Rhoen-Klinikum AG (A) .................. 49,800 1,972,045
Siemens AG (A) ......................... 24,000 3,606,876
Singulus Technologies AG (A)* .......... 65,000 3,845,426
Techem AG (A) (B)* ..................... 130,000 3,076,341
Total ................................. 23,702,984
See Notes to Schedule of Investments on page 90.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Hong Kong - 2.29%
China Telecom (Hong Kong) Limited (A)* . 600,000 $ 5,291,107
Chinadotcom Corporation, Class A* ...... 82,000 1,673,313
Total ................................. 6,964,420
Ireland - 0.39%
Bank of Ireland (The) (A) .............. 191,182 1,194,889
Israel - 0.30%
Partner Communications, ADR* ........... 95,000 896,563
Italy - 7.24%
Assicurazioni Gernerali S.p.A. (A) ..... 115,900 3,970,245
AutosTrade S.p.A. (A) .................. 363,800 2,721,562
Banca Intesa S.p.A (A) ................. 478,500 2,141,382
Finmeccanica S.p.A. (A)(B)* ............ 900,000 1,236,643
RAS S.p.A. (A) ......................... 345,000 3,785,789
Saipem S.p.A. (A) ...................... 701,500 4,150,102
UniCredito Italiano SpA (A) ............ 835,000 3,991,752
Total ................................. 21,997,475
Korea - 1.36%
Samsung Electronics (A) ................ 12,500 4,136,679
Japan - 8.63%
Benesse Corporation (A) ................ 10,000 692,547
FUJITSU LIMITED (A) .................... 160,000 5,532,837
Keyence Corporation (A) ................ 9,300 3,066,993
Kyocera Corporation (A) ................ 19,500 3,305,427
Nippon Telegraph and
Telephone Corporation (A) ............. 350 4,649,958
SECOM Co., Ltd. (A) .................... 30,000 2,190,710
SOFTBANK CORP. (A) ..................... 8,600 1,166,871
Sony Corporation (A) ................... 20,000 1,865,636
TransCosmos Inc. (A) ................... 15,750 2,362,574
Uni-Charm Corporation (A) .............. 23,200 1,403,411
Total ................................. 26,236,964
Netherlands - 8.40%
EQUANT N.V. (A)* ....................... 72,000 2,923,974
Koninklijke KPN N.V. (A) ............... 27,660 1,236,520
Koninklijke Philips Electronics N.V.,
Ordinary Shares (A) ................... 137,400 6,476,690
Ordina N.V. (A)* ....................... 87,609 2,925,878
QIAGEN N.V. (A)* ....................... 33,600 5,835,124
Royal Dutch Petroleum Company (A) ...... 59,000 3,664,987
United Pan-Europe Communications
N.V. (A)* ............................. 94,050 2,458,047
Total ................................. 25,521,220
See Notes to Schedule of Investments on page 90.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Portugal - 0.32%
Banco Portugues do Atlantico, S.A. (A)(B) 229,500 $ 954,792
Spain - 3.57%
BANCO BILBAO VIZCAYA, S.A. (A)* ........ 121,000 1,806,921
BANCO SANTANDER CENTRAL HISPANO S.A. (A) 307,500 3,242,252
Red Electrica de Espana (A) ............ 119,225 1,365,174
Repsol-YPF, S.A. (A) ................... 172,250 3,426,926
Tele Pizza, S.A. (A)* .................. 179,300 1,009,419
Total ................................. 10,850,692
Sweden - 0.76%
Telia Ab (A)(B)* ....................... 246,000 2,314,677
Switzerland - 4.15%
Charles Vogele Holding AG (A) .......... 16,000 3,148,216
Ciba Specialty Chemicals, Registered
Shares (A) ......................36,600 2,277,124
Clariant Limited, Registered Shares (A) 10,000 3,714,601
Givaudan SA (A)* ....................... 245 74,563
PubliGroupe SA (A) ..................... 1,340 1,002,084
Roche Holdings AG (A) .................. 245 2,384,823
Total ................................. 12,601,411
United Kingdom - 12.38%
Capita Group Plc (The) (A)(B) .......... 73,382 1,795,425
COLT Telecom Group plc, ADR* ........... 56,300 7,598,741
Diageo plc (A) ......................... 417,500 3,746,095
Energis plc (A)* ....................... 58,608 2,197,484
GKN plc (A) ............................ 261,000 3,329,168
Independent Energy Holdings plc, ADR* .. 225,000 1,877,344
Invensys plc (A) ....................... 543,500 2,039,477
Kingfisher plc (A) ..................... 148,475 1,351,315
Lloyds TSB Group plc (A) ............... 335,564 3,168,309
Misys plc (A) .......................... 255,896 2,160,555
Reckitt Benckiser plc (A) .............. 300,980 3,370,055
Reed International P.L.C. (A) .......... 218,000 1,896,671
Sema Group plc (A) ..................... 94,725 1,347,287
SmithKline Beecham plc (A) ............. 134,000 1,753,834
Total ................................. 37,631,760
United States - 2.45%
Global TeleSystems Group, Inc.* ........ 126,500 1,525,906
Pharmacia Corporation .................. 50,500 2,610,219
Schlumberger Limited ................... 21,300 1,589,512
Transocean Sedco Forex Inc. ............ 32,300 1,726,031
Total ................................. 7,451,668
TOTAL COMMON STOCKS - 77.84% $236,533,702
(Cost: $201,279,651)
See Notes to Schedule of Investments on page 90.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 2000
Shares Value
PREFERRED STOCKS
Brazil - 0.77%
Petroleo Brasileiro S.A. -
Petrobras (A) ......................... 78,000$ 2,357,084
Germany - 4.94%
MLP AG (A) ............................. 30,000 15,000,024
TOTAL PREFERRED STOCKS - 5.71% $ 17,357,108
(Cost: $1,877,793)
CORPORATE DEBT SECURITY - 0.06%
Germany
Kamps AG, Convertible,
0.0%, 3-17-15 (C) .....................EUR407,000 $ 181,801
(Cost: $193,194)
Principal
Amount in
Thousands
SHORT-TERM SECURITIES
Depository Institutions - 1.97%
Banc One Financial Corp. (Bank One Corporation),
6.58%, 7-7-00 ......................... 6,000 5,993,420
Electric, Gas and Sanitary Services - 1.64%
Bay State Gas Co.,
6.51%, 7-12-00 ........................ 5,000 4,990,054
Food and Kindred Products - 1.27%
General Mills, Inc.,
6.5288%, Master Note .................. 3,841 3,841,000
General Merchandise Stores - 1.81%
Wal-Mart Stores, Inc.,
6.5%, 7-11-00 ......................... 5,500 5,490,070
Industrial Machinery and Equipment - 1.64%
Ingersoll-Rand Company,
6.87%, 7-13-00 ........................ 5,000 4,988,550
Nondepository Institutions - 4.51%
Island Finance Puerto Rico Inc.,
6.57%, 7-17-00 ........................ 5,000 4,985,400
PACCAR Financial Corp.,
6.57%, Master Note .................... 8,730 8,730,000
Total ................................. 13,715,400
Electronic and Other Electric Equipment - 1.64%
Sony Capital Corp.,
6.55%, 7-13-00 ........................ 5,000 4,989,083
TOTAL SHORT-TERM SECURITIES - 14.48% $ 44,007,577
(Cost: $44,007,577)
See Notes to Schedule of Investments on page 90.
<PAGE>
THE INVESTMENTS OF THE INTERNATIONAL PORTFOLIO
JUNE 30, 2000
Value
TOTAL INVESTMENT SECURITIES - 98.09% $298,080,188
(Cost: $247,358,215)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.91% 5,813,864
NET ASSETS - 100.00% $303,894,052
Notes to Schedule of Investments
*No dividends were paid during the preceding 12 months.
(A) Listed on an exchange outside of the United States.
(B) 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, 2000, the value of these
securities amounted to $12,256,662 or 4.03% of net assets.
(C) Principal amounts are denominated in the indicated foreign currency, where
applicable(EUR-EURO).
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>
INTERNATIONAL PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(In Thousands, Except for Per Share Amounts)
(Unaudited)
Assets
Investment securities--at
value (Notes 1 and 3) $298,080
Cash ................. 188
Receivables:
Investment securities
sold ............... 5,168
Fund shares sold ..... 232
Dividends and interest 409
--------
Total assets ....... 304,077
Liabilities --------
Payable to Fund
shareholders ......... 48
Accrued service
fee (Note 2) ......... 64
Accrued accounting
services fee (Note 2). 4
Accrued management
fee (Note 2) ......... 7
Other ................. 60
--------
Total liabilities .. 183
--------
Total net assets .. $303,894
Net Assets ========
$0.001 par value capital stock:
Capital stock ........ $ 28
Additional paid-in
capital ............ 201,403
Accumulated undistributed gain (loss):
Accumulated undistributed net
investment loss .... (164)
Accumulated net realized gain
on investment
transactions ....... 51,905
Net unrealized appreciation
of investments ...... 50,722
--------
Net assets applicable to
outstanding units
of capital ........ $303,894
========
Net asset value, redemption
and offering price per share $10.8556
=======
Capital shares outstanding 27,994
Capital shares authorized 80,000
See notes to financial statements.
<PAGE>
INTERNATIONAL PORTFOLIO
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 2000
(In Thousands)
(Unaudited)
Investment Income
Income (Note 1B):
Dividends (net of foreign withholding
taxes of $46) ...... $ 1,241
Interest and
amortization ........ 898
--------
Total income ....... 2,139
--------
Expenses (Note 2):
Investment management
fee ................ 1,341
Service fee .......... 398
Custodian fees ....... 153
Accounting services
fee ................ 26
Audit fees ........... 8
Legal fees ........... 2
Other ................ 10
--------
Total expenses..... 1,938
--------
Net investment
income ........... 201
--------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net gain
on securities ........ 52,117
Realized net loss
on foreign currency
transactions ......... (365)
--------
Realized net gain
on investments ..... 51,752
Unrealized
depreciation in value
of investments during
the period ........... (82,300)
--------
Net loss on
investments ........ (30,548)
--------
Net decrease
in net assets
resulting from
operations $(30,347)
========
See notes to financial statements.
<PAGE>
INTERNATIONAL PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
(Unaudited)
For the six For the fiscal
months ended year ended
June 30, December 31,
2000 1999
------------ ------------
Increase in Net Assets
Operations:
Net investment
income ............. $ 201 $ 80
Realized net gain
on investments ..... 51,752 23,079
Unrealized appreciation
(depreciation) ..... (82,300) 94,082
-------- --------
Net increase (decrease)
in net assets
resulting from
operations......... (30,347) 117,241
-------- --------
Dividends to shareholders from
realized gains on security
transactions(Note 1E):* --- (23,371)
-------- --------
--- (23,371)
-------- --------
Capital share
transactions** ....... 34,212 37,198
-------- --------
Total increase .... 3,865 131,068
Net Assets
Beginning of period 300,029 168,961
-------- --------
End of period ......... $303,894 $300,029
======== ========
Undistributed net investment
income (loss) ...... $(164) $---
====== ====
*See "Financial Highlights" on page 94.
**Shares issued from sale
of shares ............. 4,036 3,867
Shares issued from reinvest-
ment of capital gains
distribution .......... --- 1,958
Shares redeemed ......... (1,180) (2,300)
------ ------
Increase in outstanding
capital shares ......... 2,856 3,525
====== ======
Value issued from sale
of shares ............. $48,095 $33,901
Value issued from reinvest-
ment of capital
gains distribution .... --- 23,371
Value redeemed .......... (13,883) (20,074)
------- -------
Increase in outstanding
capital ............... $34,212 $37,198
======= =======
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
INTERNATIONAL PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
(Unaudited)
For the
six
months For the fiscal year ended December 31,
ended ---------------------------------------
6/30/00 1999 1998 1997 1996 1995
------- ------ ------ ------- --------------
Net asset value,
beginning of
period ........... $11.9354 $ 7.8176 $6.3842 $5.9990 $5.2790 $4.9926
-------- -------- ------- ------- ------- -------
Income from investment operations:
Net investment
income .......... 0.0072 0.0032 0.0353 0.0485 0.0644 0.0846
Net realized and
unrealized gain (loss)
on investments... (1.0870) 5.1235 2.1283 0.9534 0.7329 0.2790
-------- -------- ------- ------- ------- -------
Total from investment
operations ....... (1.0798) 5.1267 2.1636 1.0019 0.7973 0.3636
-------- -------- ------- ------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.0000)(0.0353) (0.0463)(0.0644) (0.0772)
From capital gains (0.0000) (1.0089)(0.6949) (0.5704)(0.0129) (0.0000)
-------- -------- ------- ------- ------- -------
Total distributions. (0.0000) (1.0089)(0.7302) (0.6167)(0.0773) (0.0772)
-------- -------- ------- ------- ------- -------
Net asset value,
end of period .... $10.8556 $11.9354 $7.8176 $6.3842 $5.9990 $5.2790
======== ======== ======= ======= ======= =======
Total return........ -9.05% 65.58% 33.89% 16.70% 15.11% 7.28%
Net assets, end of
period (in
millions) ........ $304 $300 $169 $115 $80 $50
Ratio of expenses
to average net
assets ............ 1.23%* 1.21% 1.02% 0.98% 1.00% 1.02%
Ratio of net investment
income to average
net assets ....... 0.13%* 0.04% 0.47% 0.79% 1.42% 1.99%
Portfolio turnover
rate ............. 58.49% 118.71% 88.84% 117.37% 75.01% 34.93%
*Annualized.
See notes to financial statements.
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES
Auto Repair, Services and Parking - 2.56%
Hertz Corporation (The),
7.375%, 6-15-01 ....................... $150 $ 149,724
Chemicals and Allied Products - 1.69%
Praxair, Inc.,
6.7%, 4-15-01 ......................... 100 99,086
Communication - 1.73%
Westinghouse Electric Corporation,
8.875%, 6-1-01 ........................ 100 101,108
Depository Institutions - 10.92%
BankAmerica Corporation,
9.7%, 8-1-00 .......................... 100 100,188
Mercantile Bancorporation Inc.,
7.625%, 10-15-02 ...................... 217 216,355
Society National Bank,
6.75%, 6-15-03 ........................ 200 194,850
Wells Fargo & Company,
8.375%, 5-15-02 ....................... 125 127,264
Total ................................. 638,657
Electric, Gas and Sanitary Services - 6.93%
NorAm Energy Corp.,
6.375%, 11-1-03 ....................... 200 193,146
UtiliCorp United,
6.875%, 10-1-04 ....................... 100 95,310
Western Resources, Inc.,
7.25%, 8-15-02 ........................ 120 116,996
Total ................................. 405,452
Food and Kindred Products - 3.37%
Grand Metropolitan Investment Corp.,
7.125%, 9-15-04 ....................... 200 197,308
General Merchandise Stores - 2.24%
Penney (J.C.) Company, Inc.,
7.6%, 4-1-07 .......................... 150 131,049
Instruments and Related Products - 5.83%
Baxter International Inc.,
7.625%, 11-15-02 ...................... 200 200,482
Raytheon Company,
6.75%, 8-15-07 ........................ 150 140,930
Total ................................. 341,412
See Notes to Schedule of Investments on page 98.
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE DEBT SECURITIES (Continued)
Nondepository Institutions - 11.62%
American General Finance Corporation,
6.2%, 3-15-03 ......................... $150 $ 144,914
Aristar, Inc.,
5.85%, 1-27-04 ........................ 150 140,344
Ford Motor Credit Company,
6.7%, 7-16-04 ......................... 200 193,772
General Motors Acceptance Corporation,
7.0%, 9-15-02 ......................... 203 200,854
Total ................................. 679,884
Petroleum and Coal Products - 3.17%
Chevron Corporation Profit Sharing/Savings
Plan Trust Fund,
8.11%, 12-1-04 ........................ 72 73,226
USX Corporation,
9.8%, 7-1-01 .......................... 110 112,306
Total ................................. 185,532
Railroad Transportation - 6.24%
Norfolk Southern Corporation,
7.35%, 5-15-07 ........................ 200 194,676
Union Pacific Corporation,
7.875%, 2-15-02 ....................... 170 170,485
Total ................................. 365,161
Transportation Equipment - 2.66%
Lockheed Martin Corporation,
7.25%, 5-15-06 ........................ 160 155,450
TOTAL CORPORATE DEBT SECURITIES - 58.96% $3,449,823
(Cost: $3,553,092)
UNITED STATES GOVERNMENT SECURITIES
Federal Home Loan Mortgage Corporation:
5.33%, 10-8-02 ........................ 150 144,774
6.05%, 9-15-20 ........................ 89 87,216
See Notes to Schedule of Investments on page 98.
<PAGE>
THE INVESTMENTS OF THE LIMITED-TERM BOND PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
UNITED STATES GOVERNMENT SECURITIES (Continued)
Federal National Mortgage Association:
6.0%, 11-1-00 ......................... $ 22 $ 21,573
6.4%, 12-27-04 ........................ 155 149,477
6.21%, 8-15-05 ........................ 100 95,359
7.5%, 11-15-06 ........................ 100 97,875
6.5%, 12-1-10 ......................... 48 46,861
6.0%, 1-1-11 .......................... 49 46,848
6.5%, 2-1-11 .......................... 58 55,802
7.0%, 5-1-11 .......................... 42 40,892
7.0%, 7-1-11 .......................... 47 46,047
7.0%, 9-1-12 .......................... 57 55,938
6.0%, 11-1-13 ......................... 216 203,794
7.0%, 9-1-14 .......................... 139 136,853
7.0%, 4-1-26 .......................... 57 54,998
Government National Mortgage Association:
7.0%, 9-15-08 ......................... 38 37,192
6.5%, 1-15-14 ......................... 118 114,514
7.5%, 3-15-15 ......................... 200 200,812
7.0%, 7-15-29 ......................... 194 188,873
United States Treasury,
6.25%, 2-15-07 ........................ 150 150,117
TOTAL UNITED STATES GOVERNMENT SECURITIES - 33.77% $1,975,815
(Cost: $2,034,327)
TOTAL SHORT-TERM SECURITIES - 5.85% $ 342,000
(Cost: $342,000)
TOTAL INVESTMENT SECURITIES - 98.58% $5,767,638
(Cost: $5,929,419)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.42% 83,000
NET ASSETS - 100.00% $5,850,638
Notes to Schedule of Investments
See Note 1 to financial statements for security valuation and other significant
accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation and
depreciation of investments owned for Federal income tax purposes.
<PAGE>
LIMITED-TERM BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(In Thousands, Except for Per Share Amounts)
(Unaudited)
Assets
Investment securities--at
value (Notes 1 and 3) $5,768
Cash ................. 1
Receivables:
Dividends and interest 83
Fund shares sold ..... 1
-------
Total assets ....... 5,853
Liabilities.............. -------
Accrued service
fee (Note 2) ......... 1
Other ................. 1
-------
Total liabilities .. 2
-------
Total net assets .. $5,851
Net Assets =======
$0.001 par value capital stock:
Capital stock ........ $ 1
Additional paid-in
capital ............ 5,848
Accumulated undistributed gain (loss):
Accumulated undistributed net
investment income .. 177
Accumulated net realized
loss on investment
transactions ....... (13)
Net unrealized
depreciation of
investments ......... (162)
-------
Net assets applicable to
outstanding units
of capital ........ $5,851
=======
Net asset value, redemption
and offering price per share $5.1892
=======
Capital shares outstanding 1,127
Capital shares authorized 30,000
See notes to financial statements.
<PAGE>
LIMITED-TERM BOND PORTFOLIO
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 2000
(In Thousands)
(Unaudited)
Investment Income
Income (Note 1B):
Interest and
amortization ........ $191
------
Expenses (Note 2):
Investment management
fee ................ 14
Service fee .......... 7
Audit fees ........... 5
Custodian fees ....... 1
Other ................ 1
------
Total .............. 28
Less expenses in
excess of voluntary
waiver of management
fee (Note 2)....... (14)
------
Total expenses..... 14
------
Net investment
income .......... 177
------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net loss
on investments........ (6)
Unrealized depreciation
in value of
investments during
the period ........... (6)
------
Net loss on
investments ........ (12)
------
Net increase in net
assets resulting
from operations ... $165
======
See notes to financial statements.
<PAGE>
LIMITED-TERM BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
(Unaudited)
For the six For the fiscal
months ended year ended
June 30, December 31,
2000 1999
------------ ------------
Increase (Decrease) in Net Assets
Operations:
Net investment
income ............. $ 177 $ 318
Realized net loss
on investments ..... (6) (7)
Unrealized
depreciation ........ (6) (217)
------ ------
Net increase
in net assets
resulting from
operations......... 165 94
------ ------
Dividends to shareholders (Note 1E):*
From net investment
income .............. --- (318)
From realized gains on
security transactions --- ---
----- --------
--- (318)
------ --------
Capital share
transactions** ....... (353) 1,744
------ ------
Total increase
(decrease) ...... (188) 1,520
Net Assets
Beginning of period 6,039 4,519
------ ------
End of period ......... $5,851 $6,039
====== ======
Undistributed net investment
income ............. $177 $---
==== ====
*See "Financial Highlights" on page 102.
**Shares issued from sale
of shares ............. 142 554
Shares issued from reinvest-
ment of dividends ..... --- 63
Shares redeemed ......... (213) (283)
------ ------
Increase (decrease) in
outstanding capital
shares ................ (71) 334
=== ===
Value issued from sale
of shares ............. $ 719 $2,914
Value issued from reinvest-
ment of dividends ..... --- 318
Value redeemed .......... (1,072) (1,488)
------ ------
Increase (decrease) in
outstanding capital ... $ (353) $1,744
====== ======
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
LIMITED-TERM 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 ----------------------------------------
6/30/00 1999 1998 1997 1996 1995
------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $5.0405 $5.2292 $5.1882 $5.1639 $5.2521 $4.8611
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.1574 0.2799 0.2935 0.3086 0.2842 0.2841
Net realized and
unrealized gain (loss)
on investments .. (0.0087) (0.1887) 0.0522 0.0451 (0.0870) 0.4122
------- ------- ------- ------- ------- -------
Total from investment
operations ....... 0.1487 0.0912 0.3457 0.3537 0.1972 0.6963
------- ------- ------- ------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.2799)(0.2935) (0.3086)(0.2842) (0.2841)
From capital gains (0.0000) (0.0000)(0.0112) (0.0208)(0.0012) (0.0212)
------- ------- ------- ------- ------- -------
Total distributions (0.0000) (0.2799)(0.3047) (0.3294)(0.2854) (0.3053)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $5.1892 $5.0405 $5.2292 $5.1882 $5.1639 $5.2521
======= ======= ======= ======= ======= =======
Total return ....... 2.95% 1.74% 6.66% 6.85% 3.79% 14.29%
Net assets, end of
period (in
millions) ........ $6 $6 $5 $4 $4 $3
Ratio of expenses to
average net assets 0.50%* 0.64% 0.79% 0.73% 0.76% 0.71%
Ratio of net investment
income to average
net assets ....... 6.21%* 5.63% 5.65% 5.93% 5.92% 6.22%
Portfolio turnover
rate ............. 9.93% 22.81% 47.11% 35.62% 15.81% 18.16%
*Annualized.
See notes to financial statements.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
BANK OBLIGATIONS
Certificates of Deposit - 1.78%
Yankee
Societe Generale - New York,
6.6%, 7-17-00 ......................... $1,000 $ 999,919
Notes - 9.23%
Banc One Corp.,
6.67625%, 1-3-01 ...................... 1,000 1,000,000
First Union National Bank:
6.68%, 3-7-01 ......................... 1,000 1,000,000
6.64875%, 5-18-01 ..................... 1,000 1,000,000
Shepherd Capital L.L.C. (Comerica Bank),
6.6295%, 7-5-00 ....................... 1,190 1,190,000
Wells Fargo & Company,
6.7175%, 9-19-00 ...................... 1,000 999,771
Total ................................. 5,189,771
TOTAL BANK OBLIGATIONS - 11.01% $ 6,189,690
(Cost: $6,189,690)
CORPORATE OBLIGATIONS
Commercial Paper
Chemicals and Allied Products - 3.56%
BOC Group Inc. (DE),
6.95%, 7-5-00 ......................... 2,000 1,998,456
Electric, Gas and Sanitary Services - 3.56%
Carolina Power & Light Co.,
7.0%, 7-5-00 .......................... 2,000 1,998,444
Fabricated Metal Products - 3.41%
Danaher Corporation,
6.6738%, Master Note .................. 1,918 1,918,000
Instruments and Related Products - 1.77%
Honeywell International Inc.,
6.62%, 7-24-00 ........................ 1,000 995,771
Telephone Communication - 3.55%
AT&T Corp.,
6.67%, 3-8-01 ......................... 1,000 1,000,000
U S WEST Communications Inc.,
6.8%, 7-11-00 ......................... 1,000 998,111
Total ................................. 1,998,111
Total Commercial Paper - 15.85% 8,908,782
See Notes to Schedule of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Commercial Paper (backed by irrevocable bank
letter of credit) - 4.58%
Nondepository Institutions
ED&F Man Finance Inc. (Rabobank Nederland),
6.58%, 7-24-00 ........................ $1,000 $ 995,796
Hyundai Motor Finance Co. (Bank of America NT & SA),
7.15%, 7-3-00 ......................... 1,580 1,579,372
Total ................................. 2,575,168
Notes
Electric, Gas and Sanitary Services - 3.56%
Baltimore Gas and Electric Company,
6.84%, 9-1-00 ......................... 2,000 1,999,949
Food Stores - 3.56%
Albertson's Inc.,
6.62875%, 7-14-00 ..................... 2,000 1,999,972
Industrial Machinery and Equipment - 2.29%
International Business Machines Corporation,
5.56%, 3-8-01 ......................... 1,300 1,290,072
Instruments and Related Products - 2.65%
Honeywell International Inc.,
5.75%, 3-15-01 ........................ 1,500 1,488,675
Insurance Carriers - 2.67%
Atlantic American Corporation (Wachovia Bank, N.A.),
6.67%, 7-5-00 ......................... 1,500 1,500,000
Miscellaneous Retail - 2.67%
Todd Shopping Center, L.L.C., Taxable
Variable Rate Demand Bonds, Series 1999
(Wachovia Bank, N.A.),
6.67%, 7-5-00 ......................... 1,500 1,500,000
Nondepository Institutions - 13.33%
Associates Corp. of North America,
6.91%, 9-14-00 ........................ 1,000 1,001,211
Deere (John) Capital Corp.,
6.58%, 1-26-01 ........................ 2,500 2,500,000
Ford Motor Credit Company,
6.375%, 10-6-00 ....................... 1,000 1,000,349
General Motors Acceptance Corporation,
5.4%, 2-26-01 ......................... 1,000 991,426
Transamerica Finance Corporation:
6.72%, 7-17-00 ........................ 1,000 1,000,000
6.9625%, 9-2-00 ....................... 1,000 1,000,000
Total ................................. 7,492,986
See Notes to Schedule of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
CORPORATE OBLIGATIONS (Continued)
Notes (Continued)
Security and Commodity Brokers - 2.49%
Merrill Lynch & Co., Inc.,
6.7%, 2-22-01 ......................... $1,400 $ 1,398,305
Telephone Communication - 3.56%
AT&T Corp.,
6.24%, 7-13-00 ........................ 2,000 1,999,974
Total Notes - 36.78% 20,669,933
TOTAL CORPORATE OBLIGATIONS - 57.21% $32,153,883
(Cost: $32,153,883)
MUNICIPAL OBLIGATIONS
California - 7.12%
City of Anaheim, California, Certificates
of Participation (1993 Arena Financing
Project), Municipal Adjustable Rate
Taxable Securities (Credit Suisse),
6.65%, 7-10-00 ........................ 2,000 2,000,000
Oakland-Alameda County Coliseum Authority, Lease
Revenue Bonds (Oakland Coliseum Arena Project),
1996 Series A-2 Variable Rate Lease Revenue Bonds
(Taxable), (Canadian Imperial Bank of Commerce),
6.62%, 7-5-00 ......................... 2,000 2,000,000
Total ................................. 4,000,000
Colorado - 1.76%
City and County of Denver, Colorado, Department
of Aviation, Airport System, Subordinate
Commercial Paper Taxable Notes, Series 2000B,
6.58%, 8-15-00 ........................ 1,000 991,775
See Notes to Schedule of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
Louisiana - 12.10%
Gulf Coast Industrial Development Authority,
Environmental Facilities Revenue Bonds
(CITGO Petroleum Corporation Project), Taxable
Series 1998 (Royal Bank of Canada),
6.57%, 7-7-00 ......................... $2,400 $ 2,400,000
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),
6.67%, 8-7-00 ......................... 2,400 2,400,000
Industrial Development Board of the Parish
Of Calcasieu, Inc., Environmental Revenue
Bonds (CITGO Petroleum Corporation Project),
Series 1996 (Taxable), (Westdeutsche
Landesbank Girozentrale):
6.65%, 8-2-00 ......................... 1,000 1,000,000
6.75%, 9-6-00 ......................... 1,000 1,000,000
Total ................................. 6,800,000
Mississippi - 0.89%
Mississippi Business Finance Corporation,
Taxable Adjustable Mode, Industrial Development
Revenue Bonds (BenchCraft Project), Series 1999
(Wachovia Bank, N.A.),
6.67%, 7-5-00 ......................... 500 500,000
New Jersey - 0.25%
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),
6.83%, 7-5-00.......................... 140 140,000
New York - 3.56%
The City of New York, General Obligation Bonds,
Fiscal 1995 Series B, Taxable Adjustable Rate
Bonds (Bayerische Landesbank Girozentrale,
New York Branch),
6.75%, 8-17-00 ........................ 1,000 1,000,000
Putnam Hospital Center, Multi-Mode Revenue Bonds,
Series 1999 (The Bank of New York),
6.88%, 7-5-00 ......................... 1,000 1,000,000
Total ................................. 2,000,000
See Notes to Schedule of Investments on page 109.
<PAGE>
THE INVESTMENTS OF THE MONEY MARKET PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
MUNICIPAL OBLIGATIONS (Continued)
Pennsylvania - 2.65%
Schuylkill County Industrial Development
Authority, Commercial Development Revenue
Bonds (Midway Supermarket, Inc. Project),
Taxable Series of 1995 (First Union National Bank),
6.83%, 7-5-00 ......................... $1,290 $ 1,290,000
Montgomery County Industrial Development
Authority, Federally Taxable Variable
Rate Demand Revenue Bonds (Neose
Technologies, Inc. Project), Series
B of 1997 (First Union National Bank),
6.83%, 7-5-00 ......................... 200 200,000
Total ................................. 1,490,000
Texas - 1.42%
Metrocrest Hospital Authority, Series 1989A
(The Bank of New York),
6.6%, 7-6-00 .......................... 800 799,266
TOTAL MUNICIPAL OBLIGATIONS - 29.75% $16,721,041
(Cost: $16,721,041)
TOTAL INVESTMENT SECURITIES - 97.97% $55,064,614
(Cost: $55,064,614)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 2.03% 1,141,993
NET ASSETS - 100.00% $56,206,607
Notes to Schedule of Investments
See Note 1 to financial statements for security valuation and other significant
accounting policies concerning investments.
See Note 3 to financial statements for cost and unrealized appreciation and
depreciation of investments owned for Federal income tax purposes.
<PAGE>
MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(In Thousands, Except for Per Share Amounts)
(Unaudited)
Assets
Investment securities--at
value (Notes 1 and 3) $55,065
Cash ................. 2
Receivables:
Fund shares sold ..... 2,004
Dividends and interest 390
Prepaid insurance
premium .............. 1
-------
Total assets ....... 57,462
Liabilities.............. -------
Payable to Fund
shareholders.......... 1,229
Accrued service
fee (Note 2).......... 12
Dividends payable ...... 9
Accrued accounting
services fee (Note 2). 3
Accrued management
fee (Note 2).......... 1
Other ................. 1
-------
Total liabilities .. 1,255
-------
Total net assets .. $56,207
Net Assets =======
$0.001 par value capital stock:
Capital stock ........ $ 56
Additional paid-in
capital ............ 56,151
-------
Net assets applicable to
outstanding units
of capital ........ $56,207
=======
Net asset value, redemption
and offering price per share $1.0000
=======
Capital shares outstanding 56,207
Capital shares authorized 120,000
See notes to financial statements.
<PAGE>
MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 2000
(In Thousands)
(Unaudited)
Investment Income
Interest and
amortization (Note 1B) $1,871
------
Expenses (Note 2):
Investment management
fee ................ 121
Service fee .......... 76
Accounting services
fee ................. 15
Custodian fees ....... 6
Audit fees ........... 4
Legal fees............ 1
Other ................ 12
------
Total expenses ...... 235
------
Net investment
income .......... 1,636
------
Net increase in net
assets resulting from
operations ..... $1,636
======
See notes to financial statements.
<PAGE>
MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
(Unaudited)
For the six For the fiscal
months ended year ended
June 30, December 31,
2000 1999
------------ ------------
Increase (Decrease) in Net Assets
Operations:
Net investment
income ............. $1,636 $2,601
------- ------
Net increase
in net assets
resulting from
operations .......... 1,636 2,601
------- ------
Dividends to shareholders
from net investment
income (Note 1E)*..... (1,636) (2,601)
------- ------
(1,636) (2,601)
------- ------
Capital share
transactions** ....... (8,195) 10,379
------- ------
Total increase
(decrease) ...... (8,195) 10,379
Net Assets
Beginning of period 64,402 54,023
------- ------
End of period ......... $56,207 $64,402
======= =======
Undistributed net investment
income ............. $--- $---
==== ====
*See "Financial Highlights" on page 113.
**Shares issued from sale
of shares ............. 196,924 322,588
Shares issued from reinvest-
ment of dividends ..... 1,636 2,601
Shares redeemed ......... (206,755) (314,810)
------- -------
Increase (decrease) in
outstanding capital shares (8,195) 10,379
======= =======
Value issued from sale
of shares ............. $196,924 $322,588
Value issued from reinvest-
ment of dividends ..... 1,636 2,601
Value redeemed .......... (206,755) (314,810)
-------- --------
Increase (decreased) in
outstanding capital .... $ (8,195) $ 10,379
======== ========
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
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 -----------------------------------------
6/30/00 1999 1998 1997 1996 1995
------- ------- ------- ------- ------- -------
Net asset value,
beginning of
period ........... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- -------
Net investment
income ........... 0.0270 0.0450 0.0492 0.0503 0.0486 0.0542
Less dividends
declared ......... (0.0270) (0.0450)(0.0492) (0.0503)(0.0486) (0.0542)
------- ------- ------- ------- ------- -------
Net asset value,
end of period .... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= =======
Total return ....... 2.74% 4.62% 5.04% 5.13% 5.01% 5.56%
Net assets, end of
period (in
millions) ........ $56 $64 $54 $43 $37 $37
Ratio of expenses
to average net
assets ............ 0.78%* 0.77% 0.68% 0.58% 0.61% 0.62%
Ratio of net investment
income to average
net assets ....... 5.41%* 4.51% 4.90% 5.04% 4.87% 5.42%
*Annualized.
See notes to financial statements.
<PAGE>
THE INVESTMENTS OF THE SCIENCE AND TECHNOLOGY PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS
Business Services - 24.47%
America Online, Inc.* .................. 50,000 $ 2,637,500
BindView Development Corporation* ...... 75,000 897,656
BroadVision, Inc.* ..................... 255,000 12,933,281
CheckFree Holdings Corporation* ........ 31,000 1,601,344
Critical Path, Inc.* ................... 28,000 1,631,875
Cysive, Inc.* .......................... 51,950 1,245,177
DoubleClick Inc.* ...................... 11,400 434,625
E.piphany, Inc.* ....................... 22,000 2,358,812
Electronic Data Systems Corporation .... 65,000 2,681,250
Getty Images, Inc.* .................... 72,500 2,689,297
HNC Software Inc.* ..................... 25,000 1,546,875
Intuit Inc.* ........................... 90,000 3,718,125
MemberWorks Incorporated* .............. 31,000 1,039,469
NetIQ Corporation* ..................... 56,500 3,368,812
Phone.com, Inc.* ....................... 41,500 2,706,578
Redback Networks* ...................... 40,000 7,170,000
S1 Corporation* ........................ 45,000 1,050,469
724 Solutions Inc.* .................... 22,000 961,125
Siebel Systems, Inc.* .................. 21,700 3,549,984
TMP Worldwide Inc.* .................... 49,600 3,659,550
Transaction Systems Architects, Inc.,
Class A* .............................. 30,000 512,812
VeriSign, Inc.* ........................ 25,000 4,408,594
Veritas Software Corp.* ................ 60,000 6,778,125
Yahoo! Inc.* ........................... 32,000 3,965,000
Total ................................. 73,546,335
Chemicals and Allied Products - 5.67%
Bristol-Myers Squibb Company ........... 53,400 3,110,550
Forest Laboratories, Inc.* ............. 53,000 5,353,000
Pharmacyclics, Inc.* ................... 70,000 4,263,437
QLT Inc.* .............................. 8,500 660,078
Schering-Plough Corporation ............ 72,000 3,636,000
Total ................................. 17,023,065
Communication - 2.45%
COLT Telecom Group plc, ADR* ........... 10,000 1,349,688
EchoStar Communications Corporation,
Class A* .............................. 64,000 2,118,000
USA Networks, Inc.* .................... 180,000 3,898,125
Total ................................. 7,365,813
Depository Institutions - 1.04%
Concord EFS, Inc.* ..................... 120,000 3,120,000
Electronic and Other Electric Equipment - 21.40%
Broadcom Corporation, Class A* ......... 34,000 7,443,875
Data Critical Corporation* ............. 100,000 1,303,125
Gemstar International Group Limited* ... 60,000 3,688,125
Inet Technologies, Inc.* ............... 50,000 2,715,625
JDS Uniphase Corporation* .............. 100,000 11,984,375
Kopin Corporation* ..................... 25,000 1,730,469
See Notes to Schedule of Investments on page 118.
<PAGE>
THE INVESTMENTS OF THE SCIENCE AND TECHNOLOGY PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Electronic and Other Electric Equipment (Continued)
Maxim Integrated Products, Inc.* ....... 41,300 $ 2,804,528
Micron Technology, Inc.* ............... 72,000 6,340,500
Nokia Corporation, Series A, ADR ....... 72,000 3,595,500
Nortel Networks Corporation ............ 50,000 3,412,500
PMC - Sierra Inc.* ..................... 15,000 2,664,844
Rambus Inc.* ........................... 108,800 11,206,400
Sycamore Networks, Inc.* ............... 30,000 3,312,188
Wink Communications, Inc.* ............. 70,000 2,124,062
Total ................................. 64,326,116
Engineering and Management Services - 2.34%
Gene Logic Inc.* ....................... 40,000 1,428,750
Incyte Pharmaceuticals, Inc.* .......... 30,000 2,464,688
Paychex, Inc. .......................... 75,000 3,150,000
Total ................................. 7,043,438
Industrial Machinery and Equipment - 6.37%
Apple Computer, Inc.* .................. 61,800 3,234,844
Cooper Cameron Corporation* ............ 18,000 1,188,000
Dell Computer Corporation* ............. 61,500 3,034,640
EMC Corporation* ....................... 38,400 2,954,400
Juniper Networks, Inc.* ................ 60,000 8,731,875
Total ................................. 19,143,759
Instruments and Related Products - 1.85%
Agilent Technologies, Inc.* ............ 9,649 711,645
Guidant Corporation* ................... 65,900 3,262,050
PE Corporation - Celera Genomics Group* 17,000 1,589,500
Total ................................. 5,563,195
Oil and Gas Extraction - 1.41%
Apache Corporation ..................... 50,700 2,981,794
Schlumberger Limited ................... 16,600 1,238,775
Total ................................. 4,220,569
Telephone Communication - 3.40%
BellSouth Corporation .................. 52,000 2,216,500
Illuminet Holdings, Inc.* .............. 40,000 2,020,000
Nextel Communications, Inc.* ........... 70,000 4,280,938
Telefonos de Mexico, S.A. de C.V., ADR . 29,700 1,696,612
Total ................................. 10,214,050
Transportation Equipment - 0.82%
General Dynamics Corporation* .......... 47,400 2,476,650
Wholesale Trade -- Nondurable Goods - 0.38%
Allscripts, Inc.* ...................... 50,000 1,148,438
TOTAL COMMON STOCKS - 71.60% $215,191,428
(Cost: $128,222,569)
See Notes to Schedule of Investments on page 118.
<PAGE>
THE INVESTMENTS OF THE SCIENCE AND TECHNOLOGY PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES
Chemicals and Allied Products - 2.65%
Pharmacia Corporation,
6.56%, 7-25-00 ........................ $ 8,000 $ 7,965,013
Electric, Gas and Sanitary Services - 6.28%
Carolina Power & Light Co.,
6.52%, 7-6-00 ......................... 5,000 4,995,472
Commonwealth Edison Co.,
6.8%, 7-20-00 ......................... 12,000 11,956,933
Georgia Power Co.,
6.54%, 7-18-00 ........................ 1,930 1,924,040
Total ................................. 18,876,445
Electronic and Other Electric Equipment - 1.99%
Sony Capital Corp.,
6.55%, 7-13-00 ........................ 6,000 5,986,900
Fabricated Metal Products - 0.29%
Danaher Corporation,
6.6738%, Master Note .................. 863 863,000
Food and Kindred Products - 2.67%
Bestfoods,
6.68%, 7-17-00 ........................ 6,200 6,181,593
General Mills, Inc.,
6.5288%, Master Note .................. 1,849 1,849,000
Total ................................. 8,030,593
Nondepository Institutions - 5.49%
Deere (John) Capital Corp.,
6.53%, 7-26-00 ........................ 10,000 9,954,653
PACCAR Financial Corp.,
6.57%, Master Note .................... 6,548 6,548,000
Total ................................. 16,502,653
Stone, Clay and Glass Products - 3.32%
United Technologies Corp.,
6.54%, 7-20-00 ........................ 10,000 9,965,483
Telephone Communication - 2.92%
Bell Atlantic Network Funding Corp.,
6.53%, 7-25-00 ........................ 8,800 8,761,691
Wholesale Trade -- Nondurable Goods - 1.66%
Enron Corp.,
6.8%, 7-11-00 ......................... 5,000 4,990,555
See Notes to Schedule of Investments on page 118.
<PAGE>
THE INVESTMENTS OF THE SCIENCE AND TECHNOLOGY PORTFOLIO
JUNE 30, 2000
Value
TOTAL SHORT-TERM SECURITIES - 27.27% $ 81,942,333
(Cost: $81,942,333)
TOTAL INVESTMENT SECURITIES - 98.87% $297,133,761
(Cost: $210,164,902)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 1.13% 3,407,625
NET ASSETS - 100.00% $300,541,386
Notes to Schedule of Investments
*No dividends were paid during the preceding 12 months.
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>
SCIENCE AND TECHNOLOGY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(In Thousands, Except for Per Share Amounts)
(Unaudited)
Assets
Investment securities--at
value (Notes 1 and 3) $297,134
Cash ................. 1
Receivables:
Investment securities
sold ............... 12,506
Fund shares sold ..... 526
Dividends and interest 43
--------
Total assets ....... 310,210
Liabilities --------
Payable for investment
securities purchased . 9,516
Payable to Fund
shareholders ......... 76
Accrued service
fee (Note 2) ......... 62
Accrued management
fee (Note 2) ......... 7
Accrued accounting
services fee (Note 2). 4
Other ................. 4
--------
Total liabilities .. 9,669
--------
Total net assets .. $300,541
Net Assets ========
$0.001 par value capital stock:
Capital stock ........ $ 15
Additional paid-in
capital ............ 200,689
Accumulated undistributed gain:
Accumulated undistributed net
investment income .. 23
Accumulated net realized
gain on investment
transactions ....... 12,845
Net unrealized appreciation
of investments 86,969
--------
Net assets applicable to
outstanding units
of capital ........ $300,541
========
Net asset value, redemption
and offering price per share $20.0742
========
Capital shares outstanding 14,972
Capital shares authorized 70,000
See notes to financial statements.
<PAGE>
SCIENCE AND TECHNOLOGY PORTFOLIO
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 2000
(In Thousands)
(Unaudited)
Investment Income
Income (Note 1B):
Interest and
amortization ........ $ 1,665
Dividends ............ 30
--------
Total income ....... 1,695
--------
Expenses (Note 2):
Investment management
fee ................ 1,245
Service fee .......... 372
Accounting services
fee ................ 26
Custodian fees ....... 9
Audit fees ........... 7
Legal fees ........... 2
Other ................ 11
--------
Total expenses ...... 1,672
--------
Net investment
income ........... 23
--------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net gain
on investments ....... 12,844
Unrealized depreciation
in value of
investments during
the period ........... (49,081)
--------
Net loss on
investments ........ (36,237)
--------
Net decrease
in net assets
resulting from
operations ........ $(36,214)
========
See notes to financial statements.
<PAGE>
SCIENCE AND TECHNOLOGY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
(Unaudited)
For the six For the fiscal
months ended year ended
June 30, December 31,
2000 1999
------------ ------------
Increase in Net Assets
Operations:
Net investment
income (loss) ...... $ 23 $ (349)
Realized net gain
on investments ..... 12,844 3,893
Unrealized appreciation
(depreciation) ..... (49,081) 127,861
-------- --------
Net increase (decrease)
in net assets
resulting from
operations......... (36,214) 131,405
-------- --------
Dividends to shareholders (Note 1E):*
From net investment
income .............. --- ---
From realized gains on
security transactions --- (3,543)
-------- --------
--- (3,543)
-------- --------
Capital share
transactions** ....... 84,071 90,227
-------- --------
Total increase ... 47,857 218,089
Net Assets
Beginning of period 252,684 34,595
-------- --------
End of period ......... $300,541 $252,684
======== ========
Undistributed net investment
income ............. $23 $---
=== ====
*See "Financial Highlights" on page 122.
**Shares issued from sale
of shares ............. 4,908 7,622
Shares issued from reinvest-
ment of capital gains
distribution .......... --- 158
Shares redeemed ......... (1,212) (685)
----- -----
Increase in outstanding
capital shares ......... 3,696 7,095
===== =====
Value issued from sale
of shares ............. $110,254 $95,174
Value issued from reinvest-
ment of capital gains
distribution .......... --- 3,543
Value redeemed .......... (26,183) (8,490)
-------- -------
Increase in outstanding
capital ............... $ 84,071 $90,227
======== =======
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
SCIENCE AND TECHNOLOGY PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
(Unaudited)
For the For the fiscal
six year ended For the
months December 31, period
ended --------------- ended
6/30/00 1999 1998 12/31/97*
--------- ------- ------- ----------
Net asset value,
beginning of
period ........... $22.4087 $ 8.2750 $5.7726 $5.0000
-------- -------- ------- -------
Income from investment operations:
Net investment
income (loss) ... 0.0016 (0.0309) 0.0032 0.0146
Net realized and
unrealized gain (loss)
on investments .. (2.3361) 14.4840 2.6551 0.7971
-------- -------- ------- -------
Total from investment
operations ....... (2.3345) 14.4531 2.6583 0.8117
-------- -------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.0000)(0.0032) (0.0146)
From capital gains (0.0000) (0.3194)(0.1527) (0.0245)
-------- -------- ------- -------
Total distributions (0.0000) (0.3194)(0.1559) (0.0391)
-------- -------- ------- -------
Net asset value,
end of period .... $20.0742 $22.4087 $8.2750 $5.7726
======== ======== ======= =======
Total return........ -10.42% 174.66% 46.05% 16.24%
Net assets, end of
period (in
millions) ........ $301 $253 $35 $10
Ratio of expenses
to average net
assets ............ 1.14%** 1.10% 0.92% 0.94%
Ratio of net investment
income (loss) to average
net assets ....... 0.02%** -0.38% 0.07% 0.64%
Portfolio turnover
rate ............. 38.52% 47.36% 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>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS
Automotive Dealers and Service Stations - 0.75%
O'Reilly Automotive, Inc.* ............. 200,000 $ 2,756,250
Business Services - 24.86%
Catalina Marketing Corporation* ........ 6,300 642,600
Cerner Corporation* .................... 375,600 10,223,363
CheckFree Holdings Corporation* ........ 185,000 9,556,406
Citrix Systems, Inc.* .................. 130,000 2,465,937
Dendrite International, Inc.* .......... 410,800 13,697,612
FactSet Research Systems, Inc. ......... 163,000 4,604,750
Getty Images, Inc.* .................... 290,000 10,757,187
GO.com* ................................ 394,100 4,704,569
MemberWorks Incorporated* .............. 198,500 6,655,953
NEON Systems, Inc.* .................... 100,000 1,893,750
OTG Software, Inc.* .................... 21,700 621,841
Primark Corporation* ................... 262,300 9,770,675
Sanchez Computer Associates, Inc.* ..... 180,000 4,218,750
Transaction Systems Architects, Inc.,
Class A* .............................. 473,700 8,097,309
USINTERNETWORKING, Inc.* ............... 202,650 4,135,327
Total ................................. 92,046,029
Chemicals and Allied Products - 2.67%
Pharmacyclics, Inc.* ................... 162,500 9,897,266
Communication - 2.60%
Emmis Communications Corporation,
Class A* .............................. 232,300 9,618,672
Data Processing and Preparation - 4.37%
Acxiom Corporation* .................... 386,900 10,809,019
Fiserv, Inc.* .......................... 123,800 5,354,350
Total ................................. 16,163,369
Eating and Drinking Places - 1.56%
Papa John's International, Inc.* ....... 235,000 5,764,844
Electronic and Other Electric Equipment - 8.36%
Advanced Fibre Communications, Inc.* ... 267,500 12,112,734
Glenayre Technologies, Inc.* ........... 558,800 5,884,863
Rambus Inc.* ........................... 76,000 7,828,000
Sawtek Inc.* ........................... 89,000 5,120,281
Total ................................. 30,945,878
Engineering and Management Services - 2.74%
Gene Logic Inc.* ....................... 157,000 5,607,844
MAXIMUS, Inc.* ......................... 205,000 4,535,625
Total ................................. 10,143,469
Food and Kindred Products - 1.74%
American Italian Pasta Company, Class A* 312,000 6,454,500
See Notes to Schedule of Investments on page 127.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 2000
Shares Value
COMMON STOCKS (Continued)
Health Services - 0.72%
American Healthways, Inc.* ............. 210,000 $ 1,069,688
Amsurg Corp., Class A* ................. 282,000 1,595,062
Total ................................. 2,664,750
Instruments and Related Products - 5.56%
Cytyc Corporation* ..................... 76,800 4,096,800
PINNACLE SYSTEMS, INC.* ................ 123,700 2,802,578
VISX, Incorporated* .................... 490,000 13,689,375
Total ................................. 20,588,753
Leather and Leather Products - 0.48%
Kenneth Cole Productions, Inc.,
Class A* .............................. 44,600 1,784,000
Personal Services - 0.06%
Stewart Enterprises, Inc., Class A ..... 66,300 231,016
Telephone Communication - 7.39%
Illuminet Holdings, Inc.* .............. 101,400 5,120,700
Intermedia Communications Inc.* ........ 229,900 6,825,156
RCN Corporation* ....................... 157,900 4,001,778
US Unwired Inc., Class A* .............. 80,000 1,055,000
Western Wireless Corporation,
Class A* .............................. 190,000 10,349,063
Total ................................. 27,351,697
Transportation by Air - 1.45%
Midwest Express Holdings, Inc.* ........ 248,700 5,347,050
Transportation Equipment - 1.98%
Gentex Corporation* .................... 292,500 7,330,781
Wholesale Trade -- Durable Goods - 2.37%
MSC Industrial Direct Co., Inc.,
Class A* .............................. 419,600 8,785,375
Wholesale Trade -- Nondurable Goods - 1.61%
Allscripts, Inc.* ...................... 260,000 5,971,875
TOTAL COMMON STOCKS - 71.27% $263,845,574
(Cost: $227,379,737)
Principal
Amount in
SHORT-TERM SECURITIES Thousands
Commercial Paper
Chemicals and Allied Products - 3.50%
Pharmacia Corporation,
6.56%, 7-25-00 ........................ $13,000 12,943,147
Depository Institutions - 3.23%
Wells Fargo & Company,
6.52%, 7-12-00 ........................ 12,000 11,976,093
See Notes to Schedule of Investments on page 127.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Commercial Paper (Continued)
Electric, Gas and Sanitary Services - 5.91%
Georgia Power Co.,
6.54%, 7-18-00 ........................ $ 5,700 $ 5,682,396
OGE Energy Corp.,
6.7%, 7-3-00 .......................... 8,700 8,696,762
Pacific Gas & Electric Co.,
6.53%, 7-11-00 ........................ 7,500 7,486,396
Total ................................. 21,865,554
Electronic and Other Electric Equipment - 1.88%
Whirlpool Corp.,
6.75%, 7-19-00 ........................ 7,000 6,976,375
Fabricated Metal Products - 0.08%
Danaher Corporation,
6.6738%, Master Note .................. 286 286,000
Food and Kindred Products - 2.02%
General Mills, Inc.,
6.5288%, Master Note .................. 7,471 7,471,000
General Merchandise Stores - 1.75%
Wal-Mart Stores, Inc.,
6.5%, 7-11-00 ......................... 6,500 6,488,264
Insurance Carriers - 2.69%
Aon Corporation,
6.62%, 7-19-00 ........................ 10,000 9,966,900
Metal Mining - 3.21%
BHP Finance (USA) Inc.,
6.85%, 7-19-00 ........................ 11,934 11,893,126
Nondepository Institutions - 0.41%
PACCAR Financial Corp.,
6.57%, Master Note .................... 1,502 1,502,000
Stone, Clay and Glass Products - 2.69%
United Technologies Corp.,
6.54%, 7-20-00 ........................ 10,000 9,965,483
Total Commercial Paper - 27.37% 101,333,942
See Notes to Schedule of Investments on page 127.
<PAGE>
THE INVESTMENTS OF THE SMALL CAP PORTFOLIO
JUNE 30, 2000
Principal
Amount in
Thousands Value
SHORT-TERM SECURITIES (Continued)
Municipal Obligation - 1.35%
Indiana
City of Whiting, Indiana, Industrial Sewage
and Solid Waste Disposal Revenue Bonds, Taxable
(Amoco Oil Company Project),
6.62%, 8-4-00 ......................... $5,000 $ 5,000,000
TOTAL SHORT-TERM SECURITIES - 28.72% $106,333,942
(Cost: $106,333,942)
TOTAL INVESTMENT SECURITIES - 99.99% $370,179,516
(Cost: $333,713,679)
CASH AND OTHER ASSETS, NET OF LIABILITIES - 0.01% 26,969
NET ASSETS - 100.00% $370,206,485
Notes to Schedule of Investments
*No dividends were paid during the preceding 12 months.
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>
SMALL CAP PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(In Thousands, Except for Per Share Amounts)
(Unaudited)
Assets
Investment securities--at
value (Notes 1 and 3) $370,180
Cash ................. 1
Receivables:
Fund shares sold ..... 516
Investment securities
sold ............... 370
Dividends and interest 63
--------
Total assets ....... 371,130
Liabilities --------
Payable for investment
securities purchased . 748
Payable to Fund
shareholders ......... 80
Accrued service
fee (Note 2) ......... 77
Accrued management
fee (Note 2) ......... 9
Accrued accounting
services fee (Note 2). 5
Other ................. 5
--------
Total liabilities .. 924
--------
Total net assets .. $370,206
Net Assets ========
$0.001 par value capital stock:
Capital stock ........ $ 31
Additional paid-in
capital ............ 267,618
Accumulated undistributed gain:
Accumulated undistributed net
investment income .. 929
Accumulated net realized
gain on investment
transactions ....... 65,162
Net unrealized appreciation
of investments ...... 36,466
--------
Net assets applicable to
outstanding units
of capital ........ $370,206
========
Net asset value, redemption
and offering price per share $11.8572
========
Capital shares outstanding 31,222
Capital shares authorized 80,000
See notes to financial statements.
<PAGE>
SMALL CAP PORTFOLIO
STATEMENT OF OPERATIONS
For the Six Months Ended JUNE 30, 2000
(In Thousands)
(Unaudited)
Investment Income
Income (Note 1B):
Interest and
amortization ........ $ 2,925
Dividends ............ 20
-------
Total income ....... 2,945
-------
Expenses (Note 2):
Investment management
fee ................ 1,510
Service fee .......... 446
Accounting services
fee ................ 28
Custodian fees ....... 12
Audit fees ........... 7
Legal fees ........... 2
Other ................ 11
-------
Total expenses ...... 2,016
-------
Net investment
income .......... 929
-------
Realized and Unrealized Gain (Loss)
on Investments (Notes 1 and 3)
Realized net gain
on securities ........ 65,162
Unrealized depreciation
in value of
investments during
the period ........... (60,583)
-------
Net gain on
investments ........ 4,579
-------
Net increase
in net assets
resulting from
operations $ 5,508
=======
See notes to financial statements.
<PAGE>
SMALL CAP PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(In Thousands)
(Unaudited)
For the six For the fiscal
months ended year ended
June 30, December 31,
2000 1999
------------ ------------
Increase in Net Assets
Operations:
Net investment
income ............. $929 $ 1,118
Realized net gain
on investments ..... 65,162 11,150
Unrealized appreciation
(depreciation) ..... (60,583) 93,399
-------- --------
Net increase in
net assets
resulting from
operations......... 5,508 105,667
-------- --------
Dividends to shareholders (Note 1E):*
From net investment
income .............. --- (1,111)
From realized gains on
security transactions --- (9,869)
-------- --------
--- (10,980)
-------- --------
Capital share
transactions** ....... 46,798 42,644
-------- --------
Total increase .... 52,306 137,331
Net Assets
Beginning of period 317,900 180,569
-------- --------
End of period ......... $370,206 $317,900
======== ========
Undistributed net investment
income ............. $929 $---
==== ====
*See "Financial Highlights" on pages 131 - 132.
**Shares issued from sale
of shares ............. 5,186 6,127
Shares issued from reinvest-
ment of dividends and/or
capital gains distribution --- 945
Shares redeemed ......... (1,338) (2,549)
----- ------
Increase in outstanding
capital shares ......... 3,848 4,523
===== ======
Value issued from sale
of shares ............. $62,960 53,564
Value issued from reinvest-
ment of dividends and/or
capital gains distribution --- 10,980
Value redeemed .......... (16,162) (21,900)
------- -------
Increase in outstanding
capital ............... $46,798 $42,644
======= =======
See notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS OF
SMALL CAP PORTFOLIO
For a Share of Capital Stock Outstanding Throughout Each Period:
(Unaudited)
For the
six
months For the fiscal year ended December 31,
ended ------------------------------------------
6/30/00 1999 1998 1997 1996 1995
------- ------- ------- ------- ------- -------
Net asset value, beginning
of period ........ $11.6130 $ 7.9019 $8.3316 $8.0176 $7.6932 $5.9918
-------- -------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income .......... 0.0298 0.0423 0.0798 0.0279 0.0170 0.0900
Net realized and
unrealized gain
on investments .. 0.2144 4.0847 0.8255 2.5004 0.6367 1.8470
-------- -------- ------- ------- ------- -------
Total from investment
operations ....... 0.2442 4.1270 0.9053 2.5283 0.6537 1.9370
-------- -------- ------- ------- ------- -------
Less distributions:
From net investment
income .......... (0.0000) (0.0421)(0.0798) (0.0282)(0.0170) (0.0900)
From capital gains (0.0000) (0.3738)(1.2027) (2.1861)(0.3123) (0.1456)
In excess of realized
capital gains ... (0.0000) (0.0000)(0.0525) (0.0000)(0.0000) (0.0000)
-------- -------- ------- ------- ------- -------
Total distributions (0.0000) (0.4159)(1.3350) (2.2143)(0.3293) (0.2356)
-------- -------- ------- ------- ------- -------
Net asset value,
end of period .... $11.8572 $11.6130 $7.9019 $8.3316 $8.0176 $7.6932
======== ======== ======= ======= ======= =======
Total return........ 2.10% 52.23% 10.87% 31.53% 8.50% 32.32%
Net assets, end of period
(in millions) .... $370 $318 $181 $148 $97 $56
Ratio of expenses
to average net
assets ............ 1.13%* 1.12% 0.97% 0.90% 0.91% 0.96%
Ratio of net investment
income to average
net assets ....... 0.52%* 0.53% 0.94% 0.32% 0.25% 1.77%
Portfolio turnover
rate ............. 39.10% 130.99% 177.32% 211.46% 133.77% 43.27%
*Annualized.
See notes to financial statements.
<PAGE>
TARGET/UNITED FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
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 (loss), 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 accounting principles generally accepted in the United States of America.
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. 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 accounting principles
generally accepted in the United States of America. 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 accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates.
NOTE 2 -- Investment Management And Payments To Affiliated Persons
The Fund pays a fee for investment management services. The fee is
computed daily based on the net asset value at the close of business. The fee
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%
However, Waddell & Reed Investment Company ("WRIMCO"), the Fund's
investment manager, has agreed to waive a Portfolio's management fee on any day
that the Portfolio's net assets are less than $25 million, subject to its right
to change or modify this waiver. 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"), 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 $57,110, 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, 2000
are summarized as follows:
Asset Strategy Balanced Bond
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
obligations $24,399,156 $ 21,333,161 $ 4,972,789
Purchases of U.S. Government
obligations --- 10,961,795 11,783,366
Purchases of short-term
securities 44,087,085 299,747,464 63,594,800
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government obligations 21,486,184 22,169,934 3,821,672
Proceeds from maturities
and sales of U.S.
Government obligations --- 659,616 19,422,232
Proceeds from maturities
and sales of short-term
securities 38,955,000 297,985,659 57,939,000
High
Growth Income Income
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
obligations $ 319,430,413 $ 56,254,410 $ 277,959,184
Purchases of U.S. Government
obligations --- --- ---
Purchases of short-term
securities 1,396,602,074 357,140,898 1,029,677,235
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government obligations 356,417,882 65,026,619 244,091,421
Proceeds from maturities
and sales of U.S.
Government obligations --- --- ---
Proceeds from maturities
and sales of short-term
securities 1,320,891,049 350,725,467 1,052,899,410
Limited- Science and
International Term Bond Technology
Portfolio Portfolio Portfolio
----------- --------- ---------
Purchases of investment
securities, excluding short-
term and U.S. Government
obligations $164,296,610 $ 342,686 $116,883,538
Purchases of U.S. Government
obligations --- 198,293 ---
Purchases of short-term
securities 588,989,424 1,603,327 746,832,450
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government obligations 167,661,218 551,498 91,216,369
Proceeds from maturities
and sales of U.S.
Government obligations --- 204,956 ---
Proceeds from maturities
and sales of short-term
securities 557,780,119 1,547,034 692,645,000
Small Cap
Portfolio
-----------
Purchases of investment
securities, excluding short-
term and U.S. Government
obligations $ 102,910,719
Purchases of U.S. Government
obligations ---
Purchases of short-term
securities 1,599,668,015
Proceeds from maturities
and sales of investment
securities, excluding
short-term and U.S.
Government obligations 104,822,665
Proceeds from maturities
and sales of U.S.
Government obligations ---
Proceeds from maturities
and sales of short-term
securities 1,554,696,000
For Federal income tax purposes, cost of investments owned at June 30,
2000, and the related unrealized appreciation (depreciation) were as follows:
Aggregate
Appreciation
CostAppreciationDepreciation(Depreciation)
------------------------------------------------
Asset Strategy Portfolio$ 31,679,814$ 3,728,361$ (1,577,608)$ 2,150,753
Balanced Portfolio 118,855,893 17,513,362 (4,192,896) 13,320,466
Bond Portfolio 109,971,357 793,875 (3,165,518) (2,371,643)
Growth Portfolio 912,095,691 461,710,474(24,421,034) 437,289,440
High Income Portfolio 114,247,330 4,055,745 (9,060,283) (5,004,538)
Income Portfolio 741,973,858 347,573,436(34,752,170) 312,821,266
International Portfolio247,358,215 67,834,243(17,112,270) 50,721,973
Limited-Term Bond Portfolio5,929,419 3,290 (165,071) (161,781)
Money Market Portfolio 55,064,614 --- --- ---
Science and Technology
Portfolio 210,164,902 102,163,491(15,194,632) 86,968,859
Small Cap Portfolio 333,713,679 64,072,212(27,606,375) 36,465,837
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, Balanced, Growth and Income Portfolios realized
capital gain net income of $5,259,986, $150,137,791 and $51,642,656,
respectively, during the year ended December 31, 1999. For Federal income tax
purposes, Asset Strategy, International and Science and Technology Portfolios
realized capital gain net income of $854,740, $23,584,801, and $3,955,213,
respectively, during the year ended December 31, 1999, which included the effect
of certain losses deferred into the next fiscal year (see discussion below).
For Federal income tax purposes, Small Cap Portfolio realized capital gain net
income of $9,864,410 during the year ended December 31, 1999, which included the
effect of certain losses recognized from the prior year (see discussion below).
For Federal income tax purposes, Bond Portfolio realized capital gains of
$51,938 during the year ended December 31, 1999, which included the effect of
certain losses deferred into the next fiscal year (see discussion below). This
capital gain net income was entirely offset by capital loss carryovers.
Remaining capital loss carryovers of Bond Portfolio aggregated $1,354,032 as of
December 31, 1999, and are available to offset future realized capital gain net
income for Federal income tax purposes but, if not utilized, will expire as
follows: $1,337,336 by December 31, 2002 and $16,696 by December 31, 2004. For
Federal income tax purposes, High Income Portfolio realized capital losses of
$6,542,253 for the year ended December 31, 1999, 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). Capital loss
carryovers aggregated $6,607,695 at December 31, 1999, and are available to
offset future realized capital gain net income for Federal income tax purposes
but, if not utilized, will expire as follows: $65,442 by December 31, 2006 and
$6,542,253 by December 31, 2007. For Federal income tax purposes, Limited-Term
Bond Portfolio realized capital losses of $649 for the year ended December 31,
1999, 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). These losses are available to offset future realized capital
gain net income for Federal income tax purposes but, if not utilized, will
expire at December 31, 2007. A portion of capital gain net income on Balanced,
Growth, Income, Asset Strategy, International and Science and Technology
Portfolios was paid to shareholders during the year ended December 31, 1999.
Remaining capital gain net income will be distributed to each Portfolio's
shareholders. The capital gain net income on Small Cap Portfolio was paid to
shareholders during the year ended December 31, 1999.
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, 1999 through December 31, 1999, Asset Strategy, International,
Science and Technology, Bond, High Income and Limited-Term Bond Portfolios
incurred net capital losses of $19,493, $196,730, $62,851, $137,277, $1,703,678
and $5,884, respectively, which have been deferred to the fiscal year ending
December 31, 2000. In addition, during the year ended December 31, 1999, Small
Cap, High Income and Limited-Term Bond Portfolios recognized post-October losses
of $1,287,773, $273,055 and $211, respectively, that had been deferred from the
year ended December 31, 1998.
<PAGE>
DIRECTORS
Keith A. Tucker, Overland Park, Kansas, Chairman of the Board
James M. Concannon, Topeka, Kansas
John A. Dillingham, Kansas City, Missouri
David P. Gardner, San Mateo, 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
Henry J. Herrmann, Vice President
Theodore W. Howard, Vice President and Treasurer
Thomas A. Mengel, Vice President
William M. Nelson, Vice President
Cynthia P. Prince-Fox, Vice President
Kristen A. Richards, Vice President and Secretary
Philip J. Sanders, Vice President
Grant P. Sarris, Vice President
Daniel C. Schulte, 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.
Advantage Gold. A deferred variable annuity policy.
All four offer you the investment flexibility of positioning your investment in
one or more of the following professionally managed portfolios:
ASSET STRATEGY Portfolio
Goal: To seek high total return over the long term.
Invested In: An allocation of its assets among stocks, bonds (of any quality)
and short-term instruments.
BALANCED Portfolio
Goal: To seek 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
Goal: To seek a reasonable return with emphasis on preservation of capital.
Invested In: Primarily domestic debt securities, usually of investment grade.
GROWTH Portfolio
Goal: To seek capital growth, with a secondary goal of current income.
Invested In: Primarily common stocks of U.S. and foreign companies with market
capitalization of at least $1 billion representing faster growing
sectors of the economy, such as the technology, health care and
consumer-oriented sectors.
HIGH INCOME Portfolio
Goal: To seek a high level of current income, with a secondary goal of
capital growth.
Invested In: Primarily high-yield, high-risk, fixed income securities of U.S.
and foreign issuers.
INCOME Portfolio
Goal: To seek capital growth and maintenance of current income.
Invested In: Primarily common stocks of large U.S. and foreign companies that
have the potential for capital appreciation.
INTERNATIONAL Portfolio
Goal: To seek long-term appreciation of capital, with a secondary goal of
current income.
Invested in: Primarily common stocks of foreign companies that may have the
potential for long-term growth.
LlMITED-TERM BOND Portfolio
Goal: To seek a high level of current income consistent with preservation of
capital.
Invested in: Primarily investment-grade debt securities of U.S. issuers,
including U.S. Government securities. The Portfolio maintains a
dollar-weighted average maturity of 2-5 years.
MONEY MARKET Portfolio
Goal: To seek 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
Goal: To seek long-term capital growth.
Invested in: Primarily the common stock of science and technology U.S. and
foreign companies whose products, processes or services are expected
to be significantly benefited by the use or application of
scientific or technological discoveries or developments.
SMALL CAP Portfolio
Goal: To seek capital growth.
Invested in: Primarily common stocks of relatively new or unseasoned companies
in their early stages of development, or smaller companies
positioned in new or in 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(6-00)
