TCI PORTFOLIOS, INC.
TCI Advantage
Annual Report
DECEMBER 31,
1995
[company logo]
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TABLE OF CONTENTS
Our Message to You ................................................. 1
Investment Review .................................................. 2
Schedule of Investments ............................................ 4
Statement of Assets and Liabilities ................................ 7
Statement of Operations ............................................ 8
Statements of Changes in Net Assets ................................ 9
Notes to Financial Statements ...................................... 10
Financial Highlights ............................................... 13
Independent Accountants' Report .................................... 14
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INDICES USED FOR PERFORMANCE COMPARISON
The indices listed below are used throughout this report to serve as a
comparison for the performance of the fund.
THE S&P 500 INDEX -- An index created by Standard & Poor's Corporation that is
considered to represent the performance of the stock market generally. It is not
an investment product available for purchase.
LEHMAN INTERMEDIATE GOVERNMENT BOND INDEX -- An index made up of more than 855
issues with an average maturity of 3.8 years and an average yield of 7.1%.
Approx-imately 87% of the index is U.S. Treasury issues--the other 13% is U.S.
government agency issues--and the average credit rating is AAA.
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December 31, 1995
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OUR MESSAGE TO YOU
A rising equity market accompanied by gradually declining short-term
interest rates during the 12-month period that ended December 31, 1995, was good
news for investors. In that climate, TCI Advantage achieved a 16.75% return--
the best calendar-year gain since its August 1, 1991, inception. The fund
trailed its benchmark blended index, which posted a 21.91% return. The S&P 500
index gained 37.44%.
[picture of James E. Stowers and James E. Stowers III in left margin]
TCI Advantage is a well-diversified, blended portfolio. Its approximate 40%
stock position is compiled using TCI Portfolio's focus on companies that exhibit
accelerating earnings and revenues, and it is designed to provide long-term
opportunities for capital growth. Income is derived from an approximate 40%
stake in intermediate-term government bonds, with share-price consistency aided
by a 20% weighting in money market securities. The goal is to provide income
while still providing the modest, long-term share-price growth investors need to
outpace the rate of inflation.
TCI Advantage's common stock holdings are targeted to the shares of larger,
well-established companies demonstrating earnings and revenue acceleration. For
most of the year this approach proved rewarding, and shareholders benefited from
strong returns in such industries as health care, pharmaceuticals and
technology. Yet, as concerns about a slowing U.S. economy developed late in the
period, many investors moved to more defensively postured firms characterized by
steady (albeit unspectacular) earnings growth. Most such firms do not meet the
fund's standards for accelerating growth, but they were major components of the
S&P 500's solid gains in the fourth quarter of 1995.
The Federal Reserve Board raised interest rates early in the period and
lowered rates later in the year. Responding to falling interest rates, the bond
market experienced a sharp price rebound from 1994 declines, which translated
into relatively strong performance for the year. The fixed income markets
especially favored longer-term bonds. TCI Advantage invests in less volatile
short- and intermediate-term bonds and money market instruments. As a result,
while it provided steady income and good performance, it did not fully share in
the bond market's appreciation.
Because it is designed for conservative investors, TCI Advantage is not
likely to match major stock indices in a year like 1995. Its portfolio design of
bonds, cash and large company stocks, however, does give it strong potential for
losing less value during down market years.
TCI Advantage continues to pursue its goal: to provide shareholders with
the opportunity to invest in a portfolio of stocks with earnings and revenue
acceleration, conservative government bonds and money market securities. We
remain confident that the fund has the potential to provide investors with a
long-term rate of return that could comfortably outpace the rate of inflation.
Sincerely,
/s/James E. Stowers /s/James E. Stowers III
James E. Stowers James E. Stowers III
Chairman of the Board and Founder President
1
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INVESTMENT REVIEW
Average Annual Total Returns (as of December 31, 1995)
Lehman
Blended S&P 500 Intr.Govt.
TCI Advantage Index** Index Bond Index
------------- ------- ------- ----------
6 months* 6.32% 8.29% 14.40% 4.94%
1 year 16.75% 21.91% 37.44% 14.41%
3 year 8.03% 9.69% 15.33% 6.74%
Inception 7.58% 9.78% 14.32% 8.13%
8/1/91-12/31/95
*Actual
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$10,000 OVER LIFE OF FUND (as of December 31, 1995)
[mountain chart]
Value on 12/31/95: $13,803
TCI Advantage
$18,046
S&P 500 Index
$15,248
Blended Index**
$14,124
Lehman
Intr. Govt.
Bond Index
$10,000 investment made 8/1/91
(Inception date)
LEHMAN
[graph data] INT.
GOVT.
TCI BLENDED BOND
ADVANTAGE INDEX S&P 500 INDEX
ACCT ACCT ACCT ACCT
DATE VALUE VALUE VALUE VALUE
Aug 1, 91 10,000 10,000 10,000 10,000
Dec 31, 91 11,381 10,749 10,940 10,862
Jun 30, 92 10,571 10,879 10,868 11,165
Dec 31, 92 10,953 11,453 11,773 11,615
Jun 30, 93 11,350 11,981 12,343 12,286
Dec 31, 93 11,702 12,369 12,954 12,564
Jun 30, 94 11,519 12,113 12,520 12,263
Dec 31, 94 11,823 12,443 13,130 12,345
Jun 30, 95 12,983 14,011 15,775 13,459
Dec 31, 95 13,803 15,248 18,046 14,124
Past performance is not predictive of future performance.
Source: Lipper Analytical Services, Inc.
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**Because the assets of TCI Advantage are invested in a mix of three distinct
types of assets, we have created a Blended Index that, in addition to the
Standard & Poor's 500 Index (S&P 500), can serve as a comparison for the
performance of the fund. The Blended Index averages three widely known indices
in the proportions of the asset mix of the fund. Accordingly, 40% of the Blended
Index represents the Lehman Intermediate Government Bond Index, which reflects
the 40% of the fund's assets invested in bonds and other fixed income
securities. Twenty percent of the Blended Index represents the three-month
Treasury Bill Index, which reflects the 20% of the fund's assets invested in
U.S. Government money market securities. The remaining 40% of the Blended Index
represents the S&P 500, which reflects the 40% of the fund assets invested in
common stocks. The Blended Index and the Lehman Intermediate Government Bond
Index for 7/31/91, the date closest to the inception date (8/1/91) of the fund
for which the indices are available, have been used for the starting points for
these indices in the graph and average annual total returns.
No expenses or fees are reflected in the S&P 500, Blended Index or the Lehman
Intermediate Government Bond Index. All performance illustrations for TCI
Advantage are shown net of fees and assume reinvestment of all distributions.
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QUICK
FUND
FACTS
TCI
ADVANTAGE
STRATEGY:
The fund seeks to achieve its objective by
investing in U.S. Government bonds,
U.S. Government money market securities and
equity securities.
INCEPTION DATE:
August 1, 1991
SIZE:
$24 million
(as of December 31, 1995)
INVESTMENT APPROACH:
Current Income and
Capital Growth
2
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December 31, 1995
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QUALITY DIVERSIFICATION FOR
FIXED INCOME INVESTMENTS
(as of December 31, 1995)
(Moody's ratings) % of fixed income investments
AAA 100.0%
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AVERAGE PORTFOLIO MATURITY FOR
FIXED INCOME INVESTMENTS
(as of December 31, 1995)
Years 5.2
Average years to maturity indicates the average time until the principal on the
Fund's bonds is expected to be repaid, weighted by dollar amount.
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DURATION FOR
FIXED INCOME INVESTMENTS
(as of December 31, 1995)
Years 4.2
Duration is a measure of the sensitivity of a portfolio to changes in interest
rates. As the duration of a fund increases, the impact of a change in interest
rates on the value of its portfolio also increases.
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TOP 10 EQUITY HOLDINGS*
(as of December 31, 1995)
% of fund's
investments in
% of fund's these stocks
investments** 12 months ago**
International Business
Machines Corp. 3.4% 4.7%
HFS, Inc. 2.9% --
Halliburton Co. 2.8% --
Intuit Inc. 2.7% --
Tele-Communications, Inc. 2.7% 0.6%
Hewlett-Packard Co. 2.5% 2.5%
First Data Corp. 2.4% --
Foundation Health Corp. 2.4% --
Oracle Systems Corp. 2.3% 3.4%
Columbia/HCA Healthcare Corp. 2.3% 2.5%
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ASSET ALLOCATION (as of December 31, 1995)
Percent of fund investments
[pie chart]
Short-term Cash Fixed Income Securities 40%
Investments 21%
Common
Stocks 39%
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TOP FIVE INDUSTRIES FOR EQUITY INVESTMENTS
(as of December 31, 1995)
% of fund's
investments in
% of fund's these industries
investments** 12 months ago**
Computer Software & Services 12.6% 11.0%
Computer Systems 8.4% 12.9%
Electrical & Electronic Components 7.7% 0.8%
Healthcare 7.3% 5.3%
Communications Services 6.9% 8.5%
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INVESTMENTS BY COUNTRY
expressed as a percentage of total value of investments
% of fund's
investments
Canada 0.2%
Germany 0.7%
Hong Kong 0.4%
Japan 1.8%
Mexico 0.3%
Sweden 0.7%
United Kingdom 1.5%
United States 94.4%
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100.0%
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* The composition of the portfolio may change over time.
**These percentages reflect the composition of the common stock portion of TCI
Advantage and do not relate to the bond portion of the fund.
3
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SCHEDULE OF INVESTMENTS December 31, 1995
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Shares Value
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COMMON STOCKS
Aerospace & Defense -- 2.4%
1,700 Boeing Co. $ 133,237
1,200 General Dynamics Corp. 70,950
2,100 Lockheed Martin Corp. 165,900
2,100 United Technologies Corp. 199,238
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569,325
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Automobiles & Auto Parts -- .6%
18,000 Nissan Motor Company ORD 137,980
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Banking -- 1.6%
2,000 BankAmerica Corp. 129,500
2,300 Citicorp 154,675
700 First Interstate Bancorp 95,550
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379,725
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Biotechnology -- .7%
3,000 Amgen Inc.1 177,937
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Broadcasting -- .7%
3,000 Grupo Televisa ADR 67,500
3,325 Liberty Media Corp. Cl. A.1 89,152
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156,652
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Business Services & Supplies -- 1.1%
3,300 HFS, Inc.1 269,775
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Chemicals & Resins -- .4%
800 Air Products & Chemicals, Inc. 42,200
600 du Pont (E.I.) de Nemours & Co. 41,925
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84,125
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Communications Equipment -- 1.9%
5,400 DSC Communications Corp.1 199,800
8,000 Ericsson (L.M.)
Telephone Co. ADR 156,000
1,700 Motorola, Inc. 96,900
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452,700
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Communications Services -- 2.6%
1,700 AirTouch Communications.1 48,025
8,700 Nextel Communications Inc. 1 128,869
12,500 Tele-Communications, Inc.1 249,219
5,800 Vodafone Group Plc ADR 204,450
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630,563
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Computer Software
& Services -- 4.9%
4,500 Electronic Arts.1 117,844
3,368 First Data Corp. 225,235
3,200 General Motors Corp. Cl. E 166,400
3,200 Intuit Inc.1 250,000
2,100 Microsoft Corp.1 184,406
5,100 Oracle Systems Corp.1 216,112
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1,159,997
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Computer Systems -- 3.2%
3,500 Compaq Computer Corp.1 168,000
6,000 Fujitsu Ltd. ORD 66,699
2,700 Hewlett-Packard Co. 226,125
3,400 International Business
Machines Corp. 311,950
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772,774
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Electrical
& Electronic Components -- 3.0%
3,000 Intel Corp. 170,438
4,500 Lattice Semiconductor Corp.1 147,094
600 Micron Technology, Inc. 23,775
300 Siemens AG ORD 163,940
3,900 Texas Instruments Inc. 201,825
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707,072
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Energy (Production
& Marketing) -- 2.4%
1,514 British Petroleum Co. p.l.c. ADR 154,617
7,500 Enron Oil & Gas Co. 180,000
400 Mobil Corp. 44,800
2,500 Texaco Inc. 196,250
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575,667
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Energy (Services) -- 1.5%
12,500 Global Marine Inc.1 109,375
5,000 Halliburton Co. 253,125
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362,500
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Financial Services -- .7%
8,000 Nomura Securities Co. Ltd. ORD 173,997
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Food & Beverage -- .2%
600 Coca-Cola Company (The) 44,550
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Healthcare -- 2.8%
3,500 Baxter International, Inc. 146,562
4,200 Columbia/HCA Healthcare Corp. 213,150
See Notes to Financial Statements
4
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Shares Value
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5,200 Foundation Health Corp.1 $ 223,600
1,300 United Healthcare Corp. 85,150
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668,462
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Industrial Equipment
& Machinery -- .2%
4,000 Nikon Corp. ORD 54,132
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Insurance -- .7%
1,500 CIGNA Corp. 154,875
-----------
Leisure -- .4%
4,000 Promus Companies Inc.1 89,000
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Medical Equipment & Supplies -- 1.5%
2,500 Nellcor Inc.1 145,937
4,800 St. Jude Medical, Inc.1 205,800
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351,737
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Metals & Mining -- .2%
2,400 Placer Dome Inc. ADR 57,900
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Pharmaceuticals -- 1.8%
700 Bristol-Myers Squibb Co. 60,112
2,100 Johnson & Johnson 179,813
3,000 Pfizer, Inc. 189,000
-----------
428,925
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Publishing -- .4%
8,000 K-III Communications Corp.1 97,000
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Restaurants -- .3%
3,300 Wendy's International, Inc. 70,125
-----------
Retail (Apparel) -- .8%
2,600 NIKE, Inc. 181,025
-----------
Retail (General Merchandise) -- .8%
3,000 Federated
Department Stores, Inc.1 82,500
2,600 Sears, Roebuck and Co. 101,400
-----------
183,900
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Retail (Specialty) -- .5%
5,300 OfficeMax, Inc.1 118,587
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Shares/Principal Amount Value
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Transportation -- .4%
15,000 Hutchison Whampoa ORD $ 91,368
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Total Common Stocks -- 38.7% 9,202,375
(Cost $7,328,491) -----------
FIXED INCOME SECURITIES
U.S. Treasury Securities
$ 700,000 U.S. Treasury Notes,
5.125%, 11-30-98 698,005
1,000,000 U.S. Treasury Notes,
7.75%, 1-31-00 1,087,250
1,000,000 U.S. Treasury Notes,
6.25%, 5-31-00 1,034,510
1,300,000 U.S. Treasury Notes,
5.75%, 10-31-00 1,320,111
1,150,000 U.S. Treasury Notes,
5.75%, 8-15-03 1,165,467
500,000 U.S. Treasury Notes,
7.875%, 11-15-04 578,990
1,500,000 U.S. Treasury Notes,
6.50%, 8-15-05 1,599,225
200,000 U.S. Treasury Notes,
5.875%, 11-15-05 204,568
-----------
7,688,126
-----------
Mortgage-Backed Securities*
1,000,000 FHLMC Series 1465-BPAC
REMIC, 4.50%, 8-25-96 990,635
-----------
818,824 FNMA Series G92-64-CPAC
REMIC, 4.50%, 5-15-96 812,077
-----------
1,802,712
-----------
Total Fixed Income Securities-- 39.9% 9,490,838
(Cost $9,244,587) -----------
See Notes to Financial Statements
5
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SCHEDULE OF INVESTMENTS (continued) December 31, 1995
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Principal Amount Value
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SHORT-TERM CASH INVESTMENTS
$1,700,000 par value
FFCB Discount Note,
5.96%, 1-24-96 $ 1,694,048
$100,000 par value
FHLMC Discount Note,
6.67%, 2-8-96 99,423
Repurchase Agreement
(Goldman Sachs & Co., Inc.),
5.75%, due 1-2-96; collateralized by
$885,000 par value U.S. Treasury Bonds,
8.125%, due 5-15-21
(Delivery value $1,100,703) 1,100,000
1,100,000 Units of Participation in
Provident Institutional Funds
(Fed-Fund Portfolio) 1,100,000
1,100,000 Units of Participation in
Provident Institutional Funds
(T-Fund Portfolio) 1,100,000
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Total Short-term
Cash Investments -- 21.4% 5,093,471
(Cost $5,093,471) -----------
Total Investment Securities-- 100.0% $ 23,786,684
(Cost $21,646,549) ===========
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipts
FFCB = Federal Farm Credit Banks
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
ORD = Foreign Ordinary Shares
1 Non-income producing
* Expected remaining maturity is indicated and used for purposes of calculating
the weighted average portfolio maturity.
See Notes to Financial Statements
6
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STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
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ASSETS
Investment securities, at value
(identified cost of $21,646,549) (Note 3) ........ $23,786,684
Cash ............................................... 108,445
Receivable for forward foreign currency
exchange contracts held (Note 4) ................. 2,400
Receivable for investments sold .................... 12,154
Dividends and interest receivable .................. 148,077
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24,057,760
----------
LIABILITIES
Payable for capital shares redeemed ................ 1,968
Accrued management fees (Note 2) ................... 18,484
Other liabilities .................................. 21
----------
20,473
----------
NET ASSETS APPLICABLE
TO OUTSTANDING SHARES .............................. $24,037,287
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CAPITAL SHARES, $.01 PAR VALUE
Authorized ......................................... 20,000,000
==========
Outstanding ........................................ 3,883,369
==========
NET ASSET VALUE PER SHARE .......................... $ 6.19
==========
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus) ............ $20,751,569
Undistributed net investment income ................ 18,848
Accumulated undistributed net realized gain
from investments and foreign currency transactions 1,124,335
Net unrealized appreciation on investments and
translation of assets and liabilities in foreign
currencies (Notes 3 and 4) ....................... 2,142,535
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$24,037,287
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See Notes to Financial Statements
7
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STATEMENT OF OPERATIONS
Year Ended December 31, 1995
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INVESTMENT INCOME
Income:
Interest ..........................................$ 875,281
Dividends (net of foreign
taxes withheld of $3,251) ....................... 104,571
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979,852
----------
Expenses:
Management fees (Note 2) .......................... 218,240
Directors' fees and expenses ...................... 238
----------
218,478
----------
NET INVESTMENT INCOME ............................... 761,374
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REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
(NOTES 3 AND 4)
Net realized gain (loss) during the year on:
Investments ....................................... 1,257,429
Foreign currency transactions ..................... (213)
----------
1,257,216
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Change in net unrealized appreciation during
the year on:
Investments ....................................... 1,497,174
Translation of assets and
liabilities in foreign currencies ............... 4,990
----------
1,502,164
----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY .................... 2,759,380
----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...........................$ 3,520,754
==========
See Notes to Financial Statements
8
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STATEMENTS OF CHANGES IN NET ASSETS
Years Ended December 31, 1995
and December 31, 1994
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INCREASE IN NET ASSETS 1995 1994
OPERATIONS
Net investment income ........................ $ 761,374 $ 594,351
Net realized gain on investments
and foreign currency transactions .......... 1,257,216 404,123
Change in net unrealized
appreciation (depreciation)
on investments and translation
of assets and liabilities
in foreign currencies ...................... 1,502,164 (785,941)
------------ ------------
Net increase in net assets
resulting from operations .................. 3,520,754 212,533
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ................... (762,109) (594,797)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold .................... 1,177,622 3,755,842
Proceeds from reinvestment of distributions .. 762,109 594,797
Payments for shares redeemed ................. (3,074,036) (2,514,822)
------------ ------------
Net increase (decrease) in net assets
from capital share transactions ............ (1,134,305) 1,835,817
------------ ------------
NET INCREASE IN NET ASSETS ..................... 1,624,340 1,453,553
NET ASSETS
Beginning of year ............................ 22,412,947 20,959,394
------------ ------------
End of year .................................. $ 24,037,287 $ 22,412,947
============ ============
Undistributed net investment income .......... $ 18,848 --
============ ============
TRANSACTIONS IN SHARES OF THE FUND:
Sold ......................................... 201,029 673,012
Issued in reinvestment of distributions ...... 127,772 108,621
Redeemed ..................................... (535,680) (454,386)
------------ ------------
Net increase (decrease) ...................... (206,879) 327,247
============ ============
See Notes to Financial Statements
9
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NOTES TO FINANCIAL STATEMENTS December 31, 1995
1. Organization and Summary of Significant Accounting Policies
Organization --
TCI Portfolios, Inc. (the Corporation) is registered under the Investment
Company Act of 1940 as an open-end diversified management investment company.
Four series of shares are currently issued as TCI Growth, TCI Balanced, TCI
Advantage and TCI International. With the exception of shares issued for the
initial capitalization of a series of the Corporation, shares may be purchased
only by insurance companies to fund the benefits of variable annuity or variable
life insurance policies. The investment objective of TCI Advantage (the Fund) is
current income and capital growth. The following significant accounting policies
related to the Fund are in accordance with accounting policies generally
accepted in the investment company industry.
Security Valuations --
Portfolio securities traded primarily on a principal securities exchange
are valued at the last reported sales price, or the mean between the latest bid
and asked prices where no last sales price is available. Securities traded
over-the-counter are valued at the mean of the latest bid and asked prices or,
in the case of certain foreign securities, at the last reported sales price.
Debt securities not traded on a principal securities exchange are valued through
valuations obtained from a commercial pricing service or at the mean of the most
recent bid and asked prices. Short-term securities are valued at amortized cost,
which approximates value. When valuations are not readily available, securities
are valued at fair value as determined in good faith by the board of directors.
Security Transactions --
Security transactions are accounted for on the date purchased or sold. Net
realized gains and losses are determined on the identified cost basis, which is
also used for federal income tax purposes.
Investment Income --
Dividend income less foreign taxes withheld (if any) is recorded as of the
ex-dividend date or upon receipt of ex-dividend notification in the case of
certain foreign securities. Interest income is recognized on the accrual basis
and includes amortization of discounts and premiums.
Foreign Currency Transactions --
The accounting records of the Fund are maintained in U.S. dollars. All
assets and liabilities initially expressed in foreign currencies are converted
into U.S. dollars at prevailing exchange rates. Purchases and sales of
investment securities, dividend and interest income, and certain expenses are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in the foreign exchange rates on investments from the
fluctuations arising from changes in the market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss on
investments.
Net realized foreign currency exchange gains or losses arise from sales of
portfolio securities, sales of foreign currencies, and the difference between
asset and liability amounts initially stated in foreign currencies and the U.S.
dollar value of the amounts actually received or paid. Net unrealized foreign
currency exchange gains or losses arise from changes in the value of assets and
liabilities other than portfolio securities at the end of the reporting period,
resulting from changes in the exchange rates.
10
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1. Organization and Summary of Significant Accounting Policies (continued)
Forward Foreign Currency Exchange Contracts --
The Fund may enter into forward foreign currency exchange contracts for the
purpose of settling specific purchases or sales of securities denominated in a
foreign currency or to hedge the Fund's exposure to foreign currency exchange
rate fluctuations. The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined daily using prevailing exchange
rates.
Repurchase Agreements --
Securities pledged as collateral for repurchase agreements are held by the
Federal Reserve Bank and are designated as being held on the Fund's behalf by
its custodian under a book-entry system. The Fund monitors the adequacy of the
collateral daily and can require the seller to provide additional collateral in
the event the market value of the securities pledged falls below the carrying
value of the repurchase agreement.
Income Tax Status --
It is the policy of the Fund to distribute all taxable income and capital
gains to shareholders and to otherwise qualify as a regulated investment company
under provisions of the Internal Revenue Code. Accordingly, no provision has
been made for federal or state taxes.
Distributions to Shareholders --
Distributions to shareholders are recorded on the ex-dividend date.
Distributions from net invest-ment income are declared and paid quarterly.
Distributions from net realized gains are declared and paid annually.
The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences are primarily due to differing
treatments for foreign currency transactions and wash sales.
Supplementary Information --
Certain officers and directors of the Corporation are also officers and/or
directors, and, as a group, controlling stockholders of Twentieth Century
Companies, Inc., the parent of the Corporation's investment manager, Investors
Research Corporation (IRC).
11
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NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 1995
2. Management Agreement
The Management Agreement with IRC provides for a monthly management fee
computed by multiplying the applicable fee for the Fund by the average daily
closing value of the Fund's net assets during the previous month. The Agreement
further provides that all expenses of the Fund, except brokerage commissions,
taxes, interest, expenses of those directors who are not considered "interested
persons" as defined in the Investment Company Act of 1940 (including counsel
fees) and extraordinary expenses, will be paid by IRC. The agreement may be
terminated by either party upon 60 days' written notice. The current annual
management fee for the Fund is 1%.
3. Investment Transactions
The aggregate cost of investment securities purchased (excluding short-term
investments) for the year ended December 31, 1995, totaled $8,045,556 for common
stocks and $9,178,160 for U.S. Treasury and Agency obligations. Investment
securities sold totaled $9,040,814 for common stocks and $9,155,132 for U.S.
Treasury and Agency obligations. On December 31, 1995, accumulated net
unrealized appreciation on investments, based on the aggregate cost of
investments of $21,656,077 for federal income tax purposes, was $2,130,607,
consisting of $2,180,917 unrealized appreciation and $50,310 unrealized
depreciation.
4. Commitments
As of December 31, 1995, the fund had entered into forward foreign currency
exchange contracts that obligate the Fund to deliver currencies at specified
future dates. Forward contracts involve elements of market risk in excess of the
amount reflected in the Statement of Assets and Liabilities. The Fund bears the
risk of an unfavorable change in the foreign currency exchange rate underlying
the forward contract. Additionally, losses may arise if the counterparties do
not perform under the contract terms. Outstanding contracts on December 31,
1995, were as follows:
<TABLE>
<CAPTION>
U.S. Dollar U.S. Dollar
Currency to Value as of Currency to Value as of Unrealized
Settlement Date be Delivered 12/31/95 be Received 12/31/95 Gain
- --------------- ------------ ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
January 31, 1996 80,733 $ 56,289 56,461 $ 56,461 $ 172
German Mark U.S. Dollar
January 31, 1996 28,435,680 276,032 278,260 278,260 2,228
Japanese Yen U.S. Dollar
----------- ----------- ----------
$ 332,321 $ 334,721 $ 2,400
=========== =========== ==========
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
INCOME FROM
INVESTMENT OPERATIONS DISTRIBUTIONS
--------------------------------- --------------
Net Realized
and
Unrealized
Gains
(Losses) on
Net Asset Investments Total Distributions Net Asset
Value, Net and Foreign from from Net Value,
Beginning Investment Currency Investment Investment End of Total
of Period Income Transactions Operations Income Period Return
TCI ADVANTAGE
August 1, 1991
(Inception)
Through
December
<S> <C> <C> <C> <C> <C> <C> <C>
31, 1991 $5.00 $.05 $.64 $.69 $(.05) $5.64 33.14%*
Year Ended
Dec. 31,
1992 5.64 .11 (.32) (.21) (.11) 5.32 (3.75%)1
1993 5.32 .11 .25 .36 (.11) 5.57 6.82%1
1994 5.57 .15 (.09) .06 (.15) 5.48 1.03%1
1995 5.48 .20 .71 .91 (.20) 6.19 16.75%1
1995 average commission paid per share traded $.041 (table is continued below)
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------
Ratio of Ratio of Net
(table Operating Investment Net
continued) Expenses Income to Portfolio Assets,
to Average Average Turnover End of
Net Assets Net Assets Rate1 Period
August 1, 1991
(Inception)
Through
December
31, 1991 1.00%* 3.14%* 5% $ 3,068,924
Year Ended
Dec. 31,
1992 1.00% 2.32% 85% 16,579,987
1993 1.00% 2.07% 77% 20,959,394
1994 1.00% 2.65% 57% 22,412,947
1995 .95% 3.32% 99% 24,037,287
</TABLE>
1 Actual total return and portfolio turnover rate for periods indicated
* Annualized
See Notes to Financial Statements
13
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS' REPORT
The Shareholders and Board of Directors
TCI Portfolios, Inc.
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of TCI Advantage (a series of TCI
Portfolios, Inc.) as of December 31, 1995, and the related statement of
operations, the statements of changes in net assets, and the financial
highlights for each of the periods indicated. These financial statements and
financial highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of TCI
Advantage as of December 31, 1995, and the results of their operations, changes
in their net assets, and the financial highlights for each of the periods
indicated in conformity with generally accepted accounting principles.
Kansas City, Missouri /s/Baird, Kurtz & Dobson
January 26, 1996 Baird, Kurtz & Dobson
14
<PAGE>
This page left blank for your notes.
15
<PAGE>
This page left blank for your notes.
16
<PAGE>
This page left blank for your notes.
17
<PAGE>
TCI ADVANTAGE TCI PORTFOLIOS, INC.
TCI Advantage
Investment Manager
INVESTORS RESEARCH CORPORATION
Kansas City, Missouri Annual Report
This report and the financial statements December 31, 1995
contained herein are submitted for the
general information of our shareholders.
The report is not authorized for distribution
to prospective investors unless preceded or
accompanied by an effective prospectus.
[company logo]
=======================================
- ---------------------------------------
TCI PORTFOLIOS
- ---------------------------------------
Part of the Twentieth Century
Family of Funds
- ---------------------------------------
P.O. Box 419385
Kansas City, Missouri
64141-6385
- ---------------------------------------
Person-to-person assistance:
1-800-345-3533 or 816-531-5575
- ---------------------------------------
Telecommunications Device for the Deaf:
1-800-345-1833 or 816-753-0070
- ---------------------------------------
Fax: 816-340-4360
- ---------------------------------------
[company logo]
================================================================================
- --------------------------------------------------------------------------------
SH-BKT-4164
9602 Recycled
(C) 1996 Twentieth Century Services, Inc.
Twentieth Century Securities, Inc.
<PAGE>
TCI PORTFOLIOS, INC.
TCI Balanced
Annual Report
DECEMBER 31,
1995
[company logo]
================================================================================
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Table of contents
Our Message to You .................................................... 1
Investment Review ..................................................... 2
Schedule of Investments ............................................... 4
Statement of Assets and Liabilities ................................... 8
Statement of Operations ............................................... 9
Statements of Changes in Net Assets ................................... 10
Notes to Financial Statements ......................................... 11
Financial Highlights .................................................. 14
Independent Accountants' Report ....................................... 15
- --------------------------------------------------------------------------------
INDICES USED FOR PERFORMANCE COMPARISON
The indices listed below are used throughout this report to serve as a
comparison for the performance of the fund.
THE S&P 500 INDEX is an index created by Standard & Poor's Corporation that is
considered to represent the performance of the stock market generally. It is not
an investment product available for purchase.
LEHMAN INTERMEDIATE GOVT./CORP. INDEX includes the Lehman Government and
Corporate Bond Indices, including U.S. government Treasury and agency
securities, corporate and Yankee bonds with 1- to 10 - year maturities.
<PAGE>
December 31, 1995
- --------------------------------------------------------------------------------
OUR MESSAGE TO YOU
TCI Balanced seeks to provide investors with opportunities for capital
growth and current income through a combination of approximately 60% common
stocks and 40% investment-grade fixed income securities. For the 12-month period
ended December 31, 1995, the fund posted a 21.12% return, the best calendar-year
gain since its May 1, 1991, inception. The fund did, however, trail its
benchmark blended index, which gained 28.65% for the period. The S&P 500 Index
gained 37.44%.
[photo of James E. Stowers and James E. Stowers III in left margin]
TCI Balanced's common stock holdings are targeted to the shares of
larger, well-established companies demonstrating earnings and revenue
acceleration. For most of the year this approach proved rewarding, and
shareholders benefited from strong returns in such industries as healthcare,
pharmaceuticals and technology. Yet, as concerns about a slowing U.S. economy
developed late in the period, many investors moved to more defensively postured
firms characterized by steady (albeit unspectacular) earnings growth. Most such
firms do not meet the fund's standards for accelerating growth, but they were
major components of the S&P 500's solid gains in the fourth quarter of 1995.
History shows us that over time investors will favor companies with the
above-average earnings growth we seek on your behalf.
The Federal Reserve Board raised interest rates early in the period and
lowered rates later in the year. Responding to falling interest rates, the bond
market experienced a sharp price rebound from 1994 declines, which translated
into relatively strong performance for the year. The fixed income markets
especially favored longer-term bonds. TCI Balanced focuses on less volatile
short- and intermediate-term bonds. As a result, while it provided steady income
and good performance, it did not fully share in the bond market's appreciation.
Because it is designed to be a more conservative investment, TCI
Balanced is not likely to match major stock indices in a year like 1995. Its
portfolio design of large company stocks and bonds, however, should lessen the
impact of down market years on its portfolio as compared to more aggressive
funds.
TCI Balanced continues to pursue its original goal of providing
shareholders with the opportunity to invest in a portfolio of growing companies
while using bonds to reduce share-price fluctuations along the way. We will
continue to target accelerating growth in earnings and revenues for our stock
holdings, while limiting our bond holdings to investment-grade issues. We remain
confident that the fund has the potential to provide shareholders with a
long-term rate of return that could comfortably outpace the rate of inflation.
Sincerely,
/s/James E. Stowers /s/James E. Stowers III
James E. Stowers James E. Stowers III
Chairman of the Board and Founder President
1
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (as of December 31, 1995)
Lehman
Blended S&P 500 Intr.Govt./
TCI Balanced Index** Index Corp.Index
------------ -------- ------- -----------
6 months* 7.58% 10.75% 14.40% 5.23%
1 year 21.12% 28.65% 37.44% 15.33%
3 year 9.50% 12.06% 15.33% 7.16%
Inception 9.82% 12.02% 14.14% 8.42%
(5/1/91-12/31/95)
*Actual
- --------------------------------------------------------------------------------
$10,000 OVER LIFE OF FUND (as of December 31, 1995)
[mountain chart]
$10,000 investment made 5/1/91
[graph data]
BLENDED
DATE TCI BALANCED INDEX S & P 500 LEHMAN
May 1, 91 10,000 10,000 10,000 10,000
Dec 31, 91 12,554 11,241 11,234 11,060
Jun 30, 92 11,349 11,329 11,160 11,394
Dec 31, 92 11,795 12,077 12,089 11,854
Jun 30, 93 12,246 12,729 12,675 12,590
Dec 31, 93 12,702 13,231 13,302 12,895
Jun 30, 94 12,379 12,823 12,856 12,558
Dec 31, 94 12,780 13,238 13,482 12,646
Jun 30, 95 14,388 15,375 16,198 13,861
Dec 31, 95 15,479 17,084 18,531 14,586
Value on 12/31/95: $15,479
TCI Balanced
$18,531
S&P 500 Index
$17,084
Blended Index**
$14,586
Lehman Intr. Govt./Corp. Index
Past performance is not predictive of future performance.
Source: Lipper Analytical Services, Inc.
- --------------------------------------------------------------------------------
QUICK
FUND
FACTS
TCI
BALANCED
STRATEGY:
A mix of growth stocks and intermediate bonds,
with approximately 60% allocated
to stocks.
INCEPTION DATE:
May 1, 1991
SIZE:
$153.8 million
(as of December 31, 1995)
INVESTMENT APPROACH:
Capital Growth and
Current Income
- --------------------------------------------------------------------------------
**Because the assets of TCI Balanced are invested in a mix of two distinct types
of assets, we have created a Blended Index that, in addition to the Standard &
Poor's 500 Index (S&P 500), can serve as a comparison for the performance of the
fund. The Blended Index averages two widely known indices in the proportions of
the asset mix of the fund. Accordingly, 60% of the Blended Index represents the
S&P 500, which reflects the 60% of the fund's total assets invested in common
stocks. The remaining 40% of the Blended Index represents the Lehman
Intermediate Government/Corporate Index, which reflects the 40% of the fund's
total assets invested in bonds and other fixed income securities. The Blended
Index and the Lehman Intermediate Government/Corporate Index for 4/30/91, the
date closest to the inception date (5/1/91) of the fund for which the indices
are available, have been used for the starting points for these indices in the
graph and average annual total returns.
No expenses or fees are reflected in the S&P 500, Blended Index or the Lehman
Intermediate Government/Corporate Index. All performance illustrations for TCI
Balanced are shown net of fees and assume reinvestment of all distributions.
2
<PAGE>
December 31, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
QUALITY DIVERSIFICATION FOR
FIXED INCOME INVESTMENTS
(as of December 31, 1995)
(Moody's ratings) % of fixed income investments
AAA 40%
AA 14%
A 39%
BBB 7%
------
100.0%
======
- --------------------------------------------------------------------------------
AVERAGE PORTFOLIO MATURITY FOR
FIXED INCOME INVESTMENTS
(as of December 31, 1995)
Years 5.5
Average years to maturity indicates the average time until the principal on the
Fund's bonds is expected to be repaid, weighted by dollar amount.
- --------------------------------------------------------------------------------
DURATION FOR
FIXED INCOME INVESTMENTS
(as of December 31, 1995)
Years 4.1
Duration is a measure of the sensitivity of a portfolio to changes in interest
rates. As the duration of a fund increases, the impact of a change in interest
rates on the value of its portfolio also increases.
- --------------------------------------------------------------------------------
TOP 10 EQUITY HOLDINGS*
(as of December 31, 1995)
% of fund's
investments in
% of fund's these stocks
investments** 12 months ago**
HFS, Inc. 3.1% --
International Business
Machines Corp. 3.1% 4.7%
First Data Corp. 2.6% --
Halliburton Co. 2.6% --
Tele-Communications, Inc. 2.6% 0.7%
Intuit Inc. 2.5% --
Hewlett-Packard Co. 2.4% 2.5%
Oracle Systems Corp. 2.4% 3.2%
Columbia/HCA Healthcare Corp. 2.3% 2.5%
United Technologies Corp. 2.3% --
- --------------------------------------------------------------------------------
ASSET ALLOCATION (as of December 31, 1995)
Percent of fund investments
[pie chart]
Temporary Cash U.S. Treasury Securities 11%
Investments 4%
Mortgage-Backed Securities 3% Common Stocks 57%
Sovereign Corporate Bonds 23%
Governments 2%
- --------------------------------------------------------------------------------
TOP FIVE INDUSTRIES FOR EQUITY INVESTMENTS
(as of December 31, 1995)
% of fund's
investments in
% of fund's these industries
investments** 12 months ago**
Computer Software & Services 12.5% 10.9%
Computer Systems 8.1% 13.1%
Electrical & Electronic Components 8.0% 0.9%
Healthcare 7.2% 5.4%
Communications Services 6.7% 8.1%
- --------------------------------------------------------------------------------
INVESTMENTS BY COUNTRY
expressed as a percentage of total value of investments
% of fund's
investments
Canada 3.3%
Germany 0.9%
Hong Kong 0.6%
Japan 3.2%
Mexico 0.5%
Sweden 0.8%
United Kingdom 2.2%
United States 88.5%
-----
100.0%
=====
- --------------------------------------------------------------------------------
* The composition of the portfolio may change over time.
**These percentages reflect the composition of the common stock portion of TCI
Balanced and do not relate to the bond portion of the fund.
3
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS December 31, 1995
TCI BALANCED
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS
Aerospace & Defense -- 3.5%
16,000 Boeing Co. $ 1,254,000
11,500 General Dynamics Corp. 679,937
18,000 Lockheed Martin Corp. 1,422,000
20,500 United Technologies Corp. 1,944,938
---------
5,300,875
---------
Automobiles & Auto Parts -- .9%
170,000 Nissan Motor Company ORD 1,303,142
---------
Banking -- 2.3%
19,000 BankAmerica Corp. 1,230,250
18,000 Citicorp 1,210,500
7,000 First Interstate Bancorp 955,500
---------
3,396,250
---------
Biotechnology -- 1.2%
31,000 Amgen Inc.1 1,838,687
---------
Broadcasting -- 1.1%
36,000 Grupo Televisa ADR 810,000
29,525 Liberty Media Corp. Cl. A.1 791,639
---------
1,601,639
---------
Business Services & Supplies -- 1.8%
33,000 HFS, Inc.1 2,697,750
---------
Chemicals & Resins -- .5%
6,700 Air Products & Chemicals, Inc. 353,425
7,000 du Pont (E.I.)
de Nemours & Co. 489,125
---------
842,550
---------
Communications Equipment -- 2.6%
47,000 DSC Communications Corp.1 1,739,000
64,000 Ericsson (L.M.)
Telephone Co. ADR 1,248,000
17,000 Motorola, Inc. 969,000
---------
3,956,000
---------
Communications Services -- 3.8%
15,500 AirTouch Communications1 437,875
85,000 Nextel Communications Inc.1 1,259,063
110,000 Tele-Communications, Inc.1 2,193,125
54,000 Vodafone Group Plc ADR 1,903,500
---------
5,793,563
---------
Computer Software & Services -- 7.1%
44,000 Electronic Arts1 1,152,250
33,001 First Data Corp. 2,206,942
26,000 General Motors Corp. Cl. E 1,352,000
28,000 Intuit Inc.1 2,187,500
20,000 Microsoft Corp.1 1,756,250
49,000 Oracle Systems Corp.1 2,076,375
---------
10,731,317
---------
Computer Systems -- 4.6%
33,000 Compaq Computer Corp.1 1,584,000
58,000 Fujitsu Ltd. ORD 644,756
25,000 Hewlett-Packard Co. 2,093,750
29,000 International Business
Machines Corp. 2,660,750
---------
6,983,256
---------
Electrical &
Electronic Components -- 4.6%
27,500 Intel Corp. 1,562,344
7,000 Kyocera Corp. ORD 518,995
45,000 Lattice Semiconductor Corp.1 1,470,937
5,000 Micron Technology, Inc. 198,125
2,400 Siemens AG ORD 1,311,521
35,000 Texas Instruments Inc. 1,811,250
---------
6,873,172
---------
Energy (Production & Marketing) -- 3.5%
14,034 British Petroleum Co. p.l.c. ADR 1,433,222
72,000 Enron Oil & Gas Co. 1,728,000
4,000 Mobil Corp. 448,000
22,000 Texaco Inc. 1,727,000
---------
5,336,222
---------
Energy (Services) -- 2.1%
115,000 Global Marine Inc.1 1,006,250
44,000 Halliburton Co. 2,227,500
---------
3,233,750
---------
Financial Services -- 1.2%
80,000 Nomura Securities
Co. Ltd. ORD 1,739,971
---------
Food & Beverage -- .3%
6,000 Coca-Cola Company (The) 445,500
---------
See Notes to Financial Statements
4
<PAGE>
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
Healthcare -- 4.1%
36,000 Baxter International, Inc.$ 1,507,500
39,000 Columbia/HCA Healthcare Corp. 1,979,250
45,000 Foundation Health Corp.1 1,935,000
12,000 United Healthcare Corp. 786,000
---------
6,207,750
---------
Industrial Equipment & Machinery -- .4%
40,000 Nikon Corp. ORD 541,324
---------
Insurance -- 1.0%
14,000 CIGNA Corp. 1,445,500
---------
Leisure -- .5%
37,350 Promus Companies Inc.1 831,037
---------
Medical Equipment & Supplies -- 2.2%
23,000 Nellcor Inc.1 1,342,625
45,250 St. Jude Medical, Inc.1 1,940,094
---------
3,282,719
---------
Metals & Mining -- .3%
19,000 Placer Dome Inc. ADR 458,375
Pharmaceuticals -- 2.8%
7,000 Bristol-Myers Squibb Co. 601,125
21,500 Johnson & Johnson 1,840,938
28,000 Pfizer, Inc. 1,764,000
---------
4,206,063
---------
Publishing -- .6%
72,000 K-III Communications Corp.1 873,000
---------
Restaurants -- .4%
31,000 Wendy's International, Inc. 658,750
---------
Retail (Apparel) -- 1.2%
25,000 NIKE, Inc. 1,740,625
---------
Retail (General Merchandise) -- 1.1%
30,000 Federated
Department Stores, Inc.1 825,000
22,000 Sears, Roebuck & Co. 858,000
---------
1,683,000
---------
Retail (Specialty) -- .7%
50,000 OfficeMax, Inc.1 1,118,750
---------
- --------------------------------------------------------------------------------
Shares/Principal Amount Value
- --------------------------------------------------------------------------------
Transportation -- .6%
141,000 Hutchison Whampoa ORD $ 858,855
---------
Total Common Stocks -- 57.1% 85,979,392
(Cost $70,042,492) ---------
FIXED INCOME SECURITIES
U.S. Treasury Securities
$ 2,000,000 U.S. Treasury Notes,
6.875%, 10-31-96 2,025,880
1,000,000 U.S. Treasury Notes,
5.50%, 11-15-98 1,007,300
3,000,000 U.S. Treasury Notes,
5.875%, 6-30-00 3,064,560
500,000 U.S. Treasury Notes,
6.25%, 8-31-00 517,685
1,000,000 U.S. Treasury Notes,
6.125%, 9-30-00 1,030,730
2,700,000 U.S. Treasury Notes,
5.75%, 10-31-00 2,741,769
2,500,000 U.S. Treasury Notes,
5.625%, 11-30-00 2,524,900
1,000,000 U.S. Treasury Notes,
6.375%, 8-15-02 1,050,180
750,000 U.S. Treasury Notes,
5.75%, 8-15-03 760,087
2,500,000 U.S. Treasury Notes,
6.50%, 8-15-05 2,665,375
---------
Total U.S. Treasury Securities-- 11.5% 17,388,466
(Cost $17,066,152) ---------
Mortgage-Backed Securities*
91,056 FHLMC Series
1439-BPAC REMIC,
4.00%, 1-15-96 90,858
354,921 FHLMC Series
1449-BPAC REMIC,
4.00%, 2-15-96 353,919
818,824 FNMA Series
G92-64-CPAC REMIC,
4.50%, 5-15-96 812,077
See Notes to Financial Statements
5
<PAGE>
- --------------------------------------------------------------------------------
Schedule of investments (continued) December 31, 1995
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
$1,740,356 FNMA Pool #248679,
5.50%, 5-15-99 $ 1,702,196
1,050,000 UCFC Series 1995-D1,
6.20%, 12-1-98 1,050,315
---------
Total Mortgage-Backed
Securities -- 2.7% 4,009,365
(Cost $3,972,578) ---------
CORPORATE BONDS
Automobiles & Auto Parts -- 1.7%
1,500,000 Ford Motor Credit Co.,
6.375%, 10-6-00 1,526,250
1,000,000 General Motors Acceptance
Corp., MTN, 7.00%, 6-15-03 1,052,500
---------
2,578,750
---------
Banking -- 4.3%
1,000,000 Abbey National First Capital,
8.20%, 10-15-04 1,135,000
1,000,000 Chase Manhattan Corp.,
8.80%, 2-1-00 1,032,500
1,000,000 First Union Corp.,
8.77%, 11-15-04 1,113,750
1,000,000 First Union Corp.,
7.05%, 8-1-05 1,055,000
1,000,000 First USA Bank,
5.75%, 1-15-99 996,250
1,000,000 Republic of New York Corp.,
7.25%, 7-15-02 1,070,000
---------
6,402,500
---------
Communications Services -- .7%
1,000,000 GTE Southwest, Inc.,
5.82%, 12-1-99 1,001,250
---------
Diversified Companies -- 1.3%
1,000,000 Hanson Overseas BV,
5.50%, 1-15-96 1,000,125
1,000,000 Hanson Overseas BV,
6.75%, 9-15-05 1,037,500
---------
2,037,625
---------
Financial Services -- 4.2%
1,300,000 Keycorp Inc., MTN,
7.30%, 2-3-03 1,386,125
1,000,000 Lehman Brothers
Holdings Inc., MTN,
9.17%, 2-28-02 1,138,750
1,750,000 Norwest Financial, Inc.,
6.25%, 11-1-02 1,780,625
1,000,000 Standard Credit Card Trust
Series 1995-2A,
8.625%, 1-7-00 1,054,723
1,000,000 Xerox Credit Corp. Notes,
6.25%, 1-15-96 1,000,476
---------
6,360,699
---------
Food & Beverage -- 1.1%
1,500,000 Nabisco Inc.,
8.00%, 1-15-00 1,606,875
---------
Insurance -- .7%
1,000,000 London Insurance Group,
6.875%, 9-15-05 1,033,750
---------
Paper & Forest Products -- 1.2%
1,500,000 Boise Cascade Corp., MTN,
9.98%, 3-27-03 1,805,625
---------
Retail (General Merchandise) -- 3.0%
1,000,000 Sears Roebuck & Co., MTN,
8.00%, 2-16-99 1,063,750
1,000,000 Sears Roebuck & Co., MTN,
8.23%, 10-21-04 1,136,250
1,100,000 Wal-Mart Stores, Inc.,
7.50%, 5-15-04 1,204,500
1,000,000 Wal-Mart Stores, Inc.,
8.00%, 9-15-06 1,150,000
---------
4,554,500
---------
Utilities (Electric) -- 3.9%
1,000,000 Detroit Edison Co., MTN,
5.41%, 5-1-97 996,250
1,000,000 Florida Power & Light Co.,
5.50%, 7-1-99 998,750
1,000,000 Kansas Power & Light Co.,
8.875%, 3-1-00 1,115,000
1,700,000 Pacific Gas & Electric Co.,
6.25%, 8-1-03 1,710,625
1,000,000 Texas Utilities Electric Co.,
5.75%, 7-1-98 1,001,250
---------
5,821,875
---------
Utilities (Natural Gas) -- .7%
1,000,000 Consolidated Natural Gas Co.,
9.375%, 2-1-97 1,042,500
---------
Total Corporate Bonds -- 22.8% 34,245,949
(Cost $33,108,990) ---------
See Notes to Financial Statements
6
<PAGE>
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
Sovereign Governments
$1,000,000 Province of Ontario
Global Bonds,
7.625%, 6-22-04 $ 1,102,500
2,000,000 Quebec Province,
8.625%, 1-19-05 2,312,500
Total Sovereign Governments-- 2.3% 3,415,000
(Cost $3,247,910) ---------
TEMPORARY
CASH INVESTMENTS -- 3.6%
Repurchase Agreement
(Goldman Sachs & Co., Inc.),
5.75%, due 1-2-96; collateralized by
$4,275,000 par value
U.S. Treasury Bonds,
8.125%, due 8-15-21
(Delivery value $5,403,450) 5,400,000
(Cost $5,400,000) ---------
Total Investment Securities-- 100.0% $ 150,438,172
(Cost $132,838,122) ===========
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipts
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
MTN = Medium Term Note
ORD = Foreign Ordinary Shares
UCFC = United Companies Financial Corporation
1 Non-income producing
* Expected remaining maturity is indicated and used for purposes of calculating
the weighted average portfolio maturity.
See Notes to Financial Statements
7
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
- --------------------------------------------------------------------------------
ASSETS
Investment securities, at value
(identified cost of $132,838,122) (Note 3) ............ $150,438,172
Cash .................................................... 2,311,070
Receivable for forward foreign currency exchange
contracts held (Note 4) ............................... 21,227
Dividends and interest receivable ....................... 1,213,163
-----------
153,983,632
-----------
LIABILITIES
Payable for capital shares redeemed ..................... 37,332
Accrued management fees (Note 2) ........................ 123,000
Other liabilities ....................................... 130
-----------
160,462
-----------
NET ASSETS APPLICABLE
TO OUTSTANDING SHARES ................................... $153,823,170
===========
CAPITAL SHARES, $.01 PAR VALUE
Authorized .............................................. 30,000,000
===========
Outstanding ............................................. 21,857,694
===========
NET ASSET VALUE PER SHARE ............................... $7.04
===========
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus) ................. $131,380,683
Undistributed net investment income ..................... 62,692
Accumulated undistributed net realized gain
from investments and foreign currency transactions .... 4,758,581
Net unrealized appreciation on investments and
translation of assets and liabilities in foreign
currencies (Notes 3 and 4) ............................ 17,621,214
-----------
$153,823,170
===========
See Notes to Financial Statements
8
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Year Ended December 31, 1995
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income:
Interest ............................................. $3,762,706
Dividends (net of foreign taxes withheld of $26,322) . 850,490
-----------
4,613,196
-----------
Expenses:
Management fees (Note 2) ............................. 1,222,757
Directors' fees and expenses ......................... 1,296
-----------
1,224,053
-----------
NET INVESTMENT INCOME ................................... 3,389,143
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY (Notes 3 and 4)
Net realized gain (loss) during the year on:
Investments .......................................... 6,884,330
Foreign currency transactions ........................ (67,603)
-----------
6,816,727
-----------
Change in net unrealized appreciation during the year on:
Investments .......................................... 13,419,338
Translation of assets and
liabilities in foreign currencies .................. 38,523
-----------
13,457,861
-----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY ........................ 20,274,588
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............................... $23,663,731
===========
See Notes to Financial Statements
9
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended December 31, 1995
and December 31, 1994
- --------------------------------------------------------------------------------
INCREASE IN NET ASSETS 1995 1994
OPERATIONS
Net investment income ..................... $3,389,143 $2,270,095
Net realized gain on investments
and foreign currency transactions ....... 6,816,727 336,417
Change in net unrealized
appreciation (depreciation)
on investments and
translation of assets and
liabilities in foreign currencies ....... 13,457,861 (2,068,007)
----------- -----------
Net increase in net assets
resulting from operations ............... 23,663,731 538,505
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ................ (3,317,076) (2,284,710)
----------- -----------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ................. 36,523,452 36,218,233
Proceeds from reinvestment
of distributions ........................ 3,317,076 2,284,709
Payments for shares redeemed .............. (11,464,097) (7,580,261)
----------- -----------
Net increase in net assets
from capital share transactions ......... 28,376,431 30,922,681
----------- -----------
NET INCREASE IN NET ASSETS ................... 48,723,086 29,176,476
NET ASSETS
Beginning of year ......................... 105,100,084 75,923,608
----------- -----------
End of year ............................... $153,823,170 $105,100,084
=========== ===========
Undistributed net investment income .......... $ 62,692 --
=========== ===========
TRANSACTIONS IN SHARES OF THE FUND:
Sold ...................................... 5,501,320 5,984,443
Issued in reinvestment of distributions ... 494,003 384,871
Redeemed .................................. (1,765,833) (1,245,028)
----------- -----------
Net increase .............................. 4,229,490 5,124,286
=========== ===========
See Notes to Financial Statements
10
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS December 31, 1995
1. Organization and Summary of Significant Accounting Policies
Organization --
TCI Portfolios, Inc. is registered under the Investment Company Act of 1940
as an open-end diversified management investment company. Four series of shares
are currently issued as TCI Growth, TCI Balanced, TCI Advantage and TCI
International. With the exception of shares issued for the initial
capitalization of a series of the Corporation, shares may be purchased only by
insurance companies to fund the benefits of variable annuity or variable life
insurance policies. The investment objective of TCI Balanced (the Fund) is
capital growth and current income. The following significant accounting policies
related to the Fund are in accordance with accounting policies generally
accepted in the investment company industry.
Security Valuations --
Portfolio securities traded primarily on a principal securities exchange
are valued at the last reported sales price, or the mean between the latest bid
and asked prices where no last sales price is available. Securities traded
over-the-counter are valued at the mean of the latest bid and asked prices or,
in the case of certain foreign securities, at the last reported sales price.
Debt securities not traded on a principal securities exchange are valued through
valuations obtained from a commercial pricing service or at the mean of the most
recent bid and asked prices. Short-term securities are valued at amortized cost,
which approximates value. When valuations are not readily available, securities
are valued at fair value as determined in good faith by the board of directors.
Security Transactions --
Security transactions are accounted for on the date purchased or sold. Net
realized gains and losses are determined on the identified cost basis, which is
also used for federal income tax purposes.
Investment Income --
Dividend income less foreign taxes withheld (if any) is recorded as of the
ex-dividend date or upon receipt of ex-dividend notification in the case of
certain foreign securities. Interest income is recognized on the accrual basis
and includes amortization of discounts and premiums.
Foreign Currency Transactions --
The accounting records of the Fund are maintained in U.S. dollars. All
assets and liabilities initially expressed in foreign currencies are converted
into U.S. dollars at prevailing exchange rates. Purchases and sales of
investment securities, dividend and interest income, and certain expenses are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in the foreign exchange rates on investments from the
fluctuations arising from changes in the market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss on
investments.
Net realized foreign currency exchange gains or losses arise from sales of
portfolio securities, sales of foreign currencies, and the difference between
asset and liability amounts initially stated in foreign currencies and the U.S.
dollar value of the amounts actually received or paid. Net unrealized foreign
currency exchange gains or losses arise from changes in the value of assets and
liabilities other than portfolio securities at the end of the reporting period,
resulting from changes in the exchange rates.
11
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 1995
1. Organization and Summary of Significant Accounting Policies (continued)
Forward Foreign Currency Exchange Contracts --
The Fund may enter into forward foreign currency exchange contracts for the
purpose of settling specific purchases or sales of securities denominated in a
foreign currency or to hedge the Fund's exposure to foreign currency exchange
rate fluctuations. The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined daily using prevailing exchange
rates.
Repurchase Agreements --
Securities pledged as collateral for repurchase agreements are held by the
Federal Reserve Bank and are designated as being held on the Fund's behalf by
its custodian under a book-entry system. The Fund monitors the adequacy of the
collateral daily and can require the seller to provide additional collateral in
the event the market value of the securities pledged falls below the carrying
value of the repurchase agreement.
Income Tax Status --
It is the policy of the Fund to distribute all taxable income and capital
gains to shareholders and to otherwise qualify as a regulated investment company
under provisions of the Internal Revenue Code. Accordingly, no provision has
been made for federal or state taxes.
Distributions to Shareholders --
Distributions to shareholders are recorded on the ex-dividend date.
Distributions from net invest-ment income are declared and paid quarterly.
Distributions from net realized gains are declared and paid annually.
The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences are primarily due to differing
treatments for foreign currency transactions and wash sales.
Supplementary Information --
Certain officers and directors of the Corporation are also officers and/or
directors, and, as a group, controlling stockholders of Twentieth Century
Companies, Inc., the parent of the Corporation's investment manager, Investors
Research Corporation (IRC).
12
<PAGE>
- --------------------------------------------------------------------------------
2. Management Agreement
The Management Agreement with IRC provides for a monthly management fee
computed by multiplying the applicable fee for the Fund by the average daily
closing value of the Fund's net assets during the previous month. The Agreement
further provides that all expenses of the Fund, except brokerage commissions,
taxes, interest, expenses of those directors who are not considered "interested
persons" as defined in the Investment Company Act of 1940 (including counsel
fees) and extraordinary expenses, will be paid by IRC. The agreement may be
terminated by either party upon 60 days' written notice.
The current annual management fee for the Fund is 1%.
3. Investment Transactions
The aggregate cost of investment securities purchased (excluding short-term
investments) for the year ended December 31, 1995, totaled $75,144,690 for
common stocks, $27,691,703 U.S. Treasury and Agency obligations and $29,392,826
for other debt obligations. Investment securities sold totaled $61,391,578 for
common stocks, $25,077,824 for U.S. Treasury and Agency obligations and
$15,085,475 for other debt obligations. On December 31, 1995, accumulated net
unrealized appreciation on investments, based on the aggregate cost of
investments of $132,879,586 for federal income tax purposes, was $17,558,586,
consisting of unrealized appreciation of $17,841,143 and unrealized depreciation
of $282,557.
4. Commitments
As of December 31, 1995, the Fund had entered into forward foreign currency
exchange contracts that obligate the Fund to deliver currencies at specified
future dates. Forward contracts involve elements of market risk in excess of the
amount reflected in the Statement of Assets and Liabilities. The Fund bears the
risk of an unfavorable change in the foreign currency exchange rate underlying
the forward contract. Additionally, losses may arise if the counterparties do
not perform under the contract terms. Outstanding contracts as of December 31,
1995, were as follows:
<TABLE>
<CAPTION>
U.S. Dollar U.S. Dollar
Currency to Value as of Currency to Value as of Unrealized
Settlement Date be Delivered 12/31/95 be Received 12/31/95 Gain
<S> <C> <C> <C> <C> <C>
January 31, 1996 683,856 $ 476,804 478,254 $ 478,254 $ 1,450
German Mark U.S. Dollar
January 31, 1996 252,358,200 2,449,699 2,469,476 2,469,476 19,777
Japanese Yen U.S. Dollar
---------- --------- --------
$ 2,926,503 $ 2,947,730 $ 21,227
========== ========= ========
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
INCOME FROM
INVESTMENT OPERATIONS DISTRIBUTIONS
----------------------------------- --------------
Net Realized
and
Unrealized
Gains
(Losses) on
Net Asset Investments Total Distributions Net Asset
Value, Net and Foreign from from Net Value,
Beginning Investment Currency Investment Investment End of Total
of Period Income Transactions Operations Income Period Return
TCI Balanced
May 1, 1991
(Inception)
Through
December
<S> <C> <C> <C> <C> <C> <C> <C>
31, 1991 $5.00 $.08 $1.19 $1.27 $(.08) $6.19 38.02%*
Year Ended
Dec. 31,
1992 6.19 .08 (.45) (.37) (.08) 5.74 (6.04%)1
1993 5.74 .11 .33 .44 (.11) 6.07 7.68%1
1994 6.07 .15 (.11) .04 (.15) 5.96 .61%1
1995 5.96 .17 1.08 1.25 (.17) 7.04 21.12%1 (table continued below)
1995 average commission paid per share traded $.040
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------
(table Ratio of Ratio of Net
continued) Operating Investment Net
Expenses Income to Portfolio Assets,
to Average Average Turnover End of
Net Assets Net Assets Rate1 Period
May 1, 1991
(Inception)
Through
December
31, 1991 1.00%* 2.36%* 28% $1,411,775
Year Ended
Dec. 31,
1992 1.00% 1.91% 85% 34,381,661
1993 1.00% 1.97% 68% 75,923,608
1994 1.00% 2.49% 63% 105,100,084
1995 .97% 2.69% 87% 153,823,170
</TABLE>
1 Actual total return and portfolio turnover rate for periods indicated
* Annualized
See Notes to Financial Statements
14
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS' REPORT
The Shareholders and Board of Directors
TCI Portfolios, Inc.
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of TCI Balanced (a series of TCI
Portfolios, Inc.) as of December 31, 1995, and the related statement of
operations, the statements of changes in net assets, and the financial
highlights for each of the periods indicated. These financial statements and
financial highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of TCI
Balanced as of December 31, 1995, and the results of their operations, changes
in their net assets, and the financial highlights for each of the periods
indicated in conformity with generally accepted accounting principles.
Kansas City, Missouri /s/Baird, Kurtz & Dobson
January 26, 1996 BAIRD, KURTZ & DOBSON
15
<PAGE>
This page left blank for your notes.
16
<PAGE>
This page left blank for your notes.
17
<PAGE>
TCI BALANCED TCI PORTFOLIOS, INC.
TCI Balanced
Investment Manager
Investors Research Corporation Annual Report
Kansas City, Missouri
December 31, 1995
This report and the financial statements
contained herein are submitted for the
general information of our shareholders.
The report is not authorized for distribution
to prospective investors unless preceded or
accompanied by an effective prospectus.
[company logo]
=============================
- -----------------------------
TCI PORTFOLIOS, INC.
- -----------------------------
Part of the Twentieth Century
Family of Funds
- ----------------------------------------
P.O. Box 419385
Kansas City, Missouri
64141-6385
- ----------------------------------------
Person-to-person assistance:
1-800-345-3533 or 816-531-5575
- ----------------------------------------
Telecommunications Device for the Deaf:
1-800-345-1833 or 816-753-0070
- ----------------------------------------
Fax: 816-340-4360
- ----------------------------------------
[company logo]
================================================================================
- --------------------------------------------------------------------------------
SH-BKT-4166
9602 Recycled
(C) 1996 Twentieth Century Services, Inc.
Twentieth Century Securities, Inc.
<PAGE>
TCI PORTFOLIOS, INC.
TCI Growth
Annual Report
DECEMBER 31,
1995
[company logo]
================================================================================
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Our Message to You ................................................. 1
Investment Review .................................................. 2
Schedule of Investments ............................................ 4
Statement of Assets and Liabilities ................................ 7
Statement of Operations ............................................ 8
Statements of Changes in Net Assets ................................ 9
Notes to Financial Statements ...................................... 10
Financial Highlights ............................................... 13
Independent Accountants' Report .................................... 14
- --------------------------------------------------------------------------------
INDEX USED FOR PERFORMANCE COMPARISON
The index listed below is used throughout this report to serve as a comparison
for the performance of the fund.
THE S&P 500 INDEX -- An index created by Standard & Poor's Corporation that is
considered to represent the performance of the stock market generally. It is not
an investment product available for purchase.
- --------------------------------------------------------------------------------
<PAGE>
December 31, 1995
- --------------------------------------------------------------------------------
OUR MESSAGE TO YOU
TCI Growth reported a gain of 31.10% for the 12 months ended December
31, 1995, reflecting the year's powerful market climb. According to Lipper
Analytical Services, the average total return for funds with growth investment
objectives was 30.79% during the period. The S&P 500 index returned 37.44% for
the 12 months.
[picture of James E. Stowers and James E. Stowers III in left margin]
TCI Growth's best gains came during the year's first three quarters. It
climbed steadily in the first half of the period with a 19.47% gain and surged
sharply in the third quarter with a 14.01% return (compared to the S&P's 7.92%).
Hot-selling new technologies -- the introduction of Windows 95 in August, for
example -- contributed to the market's extended rally during this period. With
nearly half of its portfolio in technology stocks during the 12-month period,
the fund made the most of this trend.
Moderate holdings in international stocks provided a positive effect on returns
as well.
In the face of growing economic uncertainty late in the year, many
investors moved from technology stocks to stocks of large, more established
companies with steady earnings, which investors typically consider to be
defensive. This change in emphasis clipped fund performance, especially in
comparison with the positive return of the S&P, which was heavily influenced by
the returns of large "steady growers" in the index.
TCI Growth, which invests in the stocks of small, medium and large
companies, is designed for investors seeking capital growth. To meet that
objective the fund seeks to single out companies with earnings and revenue
acceleration because we have found that such an approach has provided attractive
returns over the long run.
TCI Growth's continued performance (despite the recent setback in
technology-oriented companies) reaffirms to us the potential of combining
growth-oriented stocks with a disciplined buying and selling process. We
strongly believe that this strategy has the potential to provide significant
benefits to those shareholders investing to achieve long-term financial goals.
Sincerely,
/s/James E. Stowers /s/James E. Stowers III
James E. Stowers James E. Stowers III
Chairman of the Board and Founder President
1
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT REVIEW
Average Annual Total Returns (as of December 31, 1995)
TCI Growth S&P 500 Index
---------- -------------
6 months* 9.74% 14.40%
1 year 31.10% 37.44%
3 year 12.67% 15.33%
5 year 14.89% 16.56%
Inception 12.85% 15.82%
(11/20/87-12/31/95)
*Actual
- --------------------------------------------------------------------------------
$10,000 OVER LIFE OF FUND (as of December 31, 1995)
[mountain chart]
Value on 12/31/95: $26,642 $32,892
TCI Growth S&P 500 Index
$10,000 investment made 11/20/87
(Inception date)
[graph data]
TCI GROWTH
TCI Growth S&P Index
DATE ACCT VALUE ACCT VALUE
Nov 20, 87 10000 10000
Dec 31, 87 10720 10301
Jun 30, 88 10801 11609
Dec 31, 88 10477 12001
Jun 30, 89 12072 13981
Dec 31, 89 13486 15792
Jun 30, 90 14852 16273
Dec 31, 90 13317 15300
Jun 30, 91 15264 17475
Dec 31, 91 18894 19940
Jun 30, 92 16858 19809
Dec 31, 92 18640 21457
Jun 30, 93 19543 22498
Dec 31, 93 20563 23611
Jun 30, 94 19109 22820
Dec 31, 94 20322 23931
Jun 30, 95 24278 28752
Dec 31, 95 26642 32892
Past performance is not predictive of future performance.
No expenses or fees are reflected in the S&P 500. All performance illustrations
for TCI Growth are shown net of fees and assume reinvestment of all
distributions.
- --------------------------------------------------------------------------------
QUICK
FUND
FACTS
TCI
GROWTH
STRATEGY:
Growth over time
through investments in stocks of
small, medium and large companies.
INCEPTION DATE:
November 20, 1987
SIZE:
$1.46 billion
(as of December 31, 1995)
INVESTMENT APPROACH:
Capital Growth
2
<PAGE>
December 31, 1995
- --------------------------------------------------------------------------------
TOP 10 HOLDINGS* (as of December 31, 1995)
*The composition of the portfolio may change over time.
% of fund's
investments in
% of fund's these stocks
investments 12 months ago
Sybase, Inc. 2.7% --
Intel Corp. 2.3% 1.2%
Structural Dynamics
Research Corp. 2.2% --
Cephalon Inc. 2.0% --
Glenayre Technologies, Inc. 2.0% --
StrataCom, Inc. 2.0% 0.7%
Chiron Corp. 1.9% 1.2%
Nellcor Inc. 1.9% 1.1%
Andrew Corp. 1.8% 3.5%
QUALCOMM Inc. 1.8% 1.3%
- --------------------------------------------------------------------------------
TOP FIVE INDUSTRIES (as of December 31, 1995)
% of fund's
investments in
% of fund's these industries
investments 12 months ago
Computer Software & Services 14.2% 7.5%
Communications Equipment 11.1% 11.8%
Electrical & Electronic Components 11.1% 5.7%
Industrial Equipment & Machinery 8.5% 2.1%
Computer Peripherals 8.1% 7.7%
- --------------------------------------------------------------------------------
INVESTMENTS BY COUNTRY
expressed as a percentage of total value of investments
% of fund's
investments
Canada 0.8%
Finland 0.7%
France 0.5%
Germany 1.1%
Japan 11.3%
Netherlands 0.6%
Sweden 1.0%
United Kingdom 0.4%
United States 83.6%
-----
100.0%
=====
3
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS December 31, 1995
TCI GROWTH
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS
Banking -- 1.1%
140,000 Citicorp $ 9,415,000
80,000 Morgan (J.P.) & Co. Inc. 6,420,000
-----------
15,835,000
-----------
Biotechnology -- 3.0%
275,000 Amgen Inc.1 16,310,938
250,000 Chiron Corp.1 27,656,250
-----------
43,967,188
-----------
Broadcasting -- .9%
250,000 Cablevision Systems Corp.1 13,562,500
-----------
Business Services & Supplies -- 2.0%
300,000 Gartner Group, Inc.1 14,362,500
400,000 Medaphis Corp.1 14,850,000
29,212,500
-----------
Communications Equipment -- 11.1%
690,000 Andrew Corp.1 26,651,250
750,000 Ericsson (L.M.)
Telephone Co. ADR 14,625,000
475,000 Glenayre Technologies, Inc.1 29,568,750
120,000 Motorola, Inc. 6,840,000
275,000 Nokia Corp. ADR 10,690,625
228,100 Premisys Communications, Inc.1 12,887,650
600,000 QUALCOMM Inc.1 25,762,500
401,500 Tellabs, Inc.1 14,905,688
670,000 VTEL Corp.1++ 12,478,750
200,000 VideoServer, Inc.1 6,400,000
-----------
160,810,213
-----------
Communications Services -- 2.4%
350,000 MFS Communications Co., Inc.1 18,725,000
900,000 Nextel Communications Inc.1 13,331,250
100,000 Vodafone Group Plc ADR 3,525,000
-----------
35,581,250
-----------
Computer Peripherals -- 8.1%
463,000 Bay Networks, Inc.1 19,011,937
1,000 Cirrus Logic, Inc.1 19,813
321,000 Cisco Systems Inc.1 23,974,688
180,000 FORE Systems, Inc.1 10,721,250
100,000 Gandalf Technologies Inc. ADR1 1,706,250
400,000 General DataComm
Industries, Inc.1 6,850,000
600,000 Microcom, Inc.1 15,637,500
650,000 Oki Electric Industries ORD.1 5,830,836
400,000 StrataCom, Inc.1 29,300,000
100,000 3Com Corp.1 4,668,750
-----------
117,721,024
-----------
Computer Software & Services -- 14.2%
375,000 BBN Corp.1 15,421,875
200,000 Baan Co., N.V. ADR.1 9,050,000
210,000 Cambridge Technology
Partners (Mass.) Inc.1 11,891,250
282,500 DST Systems, Inc.1 8,051,250
473,100 FTP Software, Inc.1 13,749,469
140,000 Fuji Soft Corporation ORD 4,763,654
540,000 Informix Corp.1 16,233,750
175,000 Microsoft Corp.1 15,367,187
550,000 PLATINUM technology, inc.1 10,140,625
100,000 SAP Aktiengesellschaft AG ORD 15,489,036
1,072,300 Structural Dynamics
Research Corp.1 31,364,775
1,100,000 Sybase, Inc.1 39,462,500
236,400 UUNET Technologies Inc.1 14,952,300
-----------
205,937,671
-----------
Computer Systems -- .6%
371,700 Auspex Systems, Inc.1 6,737,063
250,000 Micron Electronics, Inc.1 2,703,125
-----------
9,440,188
-----------
Consumer Products -- .6%
160,000 Mitsubishi Corp. ORD 1,964,234
1,400,000 Nissho Iwai Corp. ORD 7,172,547
-----------
9,136,781
-----------
Control & Measurement -- .5%
800,000 LTX Corp.1 7,300,000
-----------
Electrical
& Electronic Components -- 11.1%
128,600 Advantest Corporation ORD 6,588,497
250,000 Altera Corp.1 12,421,875
649,100 AVX Technology 17,201,150
200,000 Integrated Device
Technology, Inc.1 2,587,500
590,000 Intel Corp. 33,519,375
90,000 Kyocera Corp. ORD 6,672,789
See Notes to Financial Statements
4
<PAGE>
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
200,000 LSI Logic Corp.1 $ 6,550,000
300,000 Matsushita Communications
Industrial Co., Ltd. ORD 6,959,884
380,000 Micron Technology, Inc. 15,057,500
500,000 Nichicon ORD 7,346,544
230,000 Omron Corporation ORD 5,291,445
300,000 ROSS Technology, Inc.1 2,981,250
160,000 SGS-THOMSON
Microelectronics N.V. ADR.1 6,500,000
850,000 Sierra Semiconductor Corp.1 11,846,875
292,200 Texas Instruments Inc. 15,121,350
400,000 Toshiba Ceramics Co.
Limited ORD.1 4,098,598
-----------
160,744,632
-----------
Energy (Services) -- 1.3%
325,000 Input/Output, Inc.1 18,768,750
-----------
Environmental Services -- .6%
250,000 Molten Metal Technology, Inc.1 8,156,250
-----------
Financial Services -- 7.6%
145,300 ADVANTA Corp. Cl. A 5,503,238
340,000 Countrywide Credit
Industries, Inc. 7,395,000
245,000 Credit Acceptance Corp.1 5,022,500
100,000 First USA, Inc. 4,437,500
250,000 Franklin Resources, Inc. 12,593,750
245,000 Merrill Lynch & Co., Inc. 12,495,000
674,125 Money Store, Inc. (The) 10,533,203
125,000 Morgan Stanley Group Inc. 10,078,125
500,000 Nikko Securities Co. ORD 6,428,226
700,000 Nomura Securities Co. Ltd. ORD 15,224,746
810,000 Schwab (Charles) Corp. 16,301,250
100,000 Sunamerica, Inc. 4,750,000
-----------
110,762,538
-----------
Industrial Equipment
& Machinery -- 8.5%
510,000 Applied Materials, Inc.1 20,049,375
620,400 Cognex Corp.1 21,714,000
508,100 Credence Systems Corp.1 11,559,275
208,700 Helix Technology Corp. 8,269,738
473,800 KLA Instruments Corp.1 12,378,025
43,000 Keyence Corporation ORD 4,946,351
310,700 Lam Research Corp.1 14,175,687
220,000 NSK Limited ORD 1,594,973
1,000,000 Nikon Corp. ORD 13,533,108
397,000 Tokyo Electron LTD ORD 15,350,411
-----------
123,570,943
-----------
Leisure -- 2.8%
300,000 Grand Casinos, Inc.1 6,975,000
440,000 Mirage Resorts, Inc.1 15,180,000
179,000 Nintendo Co., Ltd ORD 13,582,890
200,000 Trump Hotels
& Casino Resorts, Inc.1 4,300,000
-----------
40,037,890
-----------
Medical Equipment & Supplies -- 4.4%
100,000 Biomet, Inc.1 1,781,250
115,000 Medtronic, Inc. 6,425,625
475,000 Nellcor Inc.1 27,728,125
425,000 Summit Technology, Inc.1 14,396,875
208,600 Target Therapeutics, Inc.1 8,943,725
304,300 Ventritex, Inc.1 5,344,269
-----------
64,619,869
-----------
Metals & Mining -- .9%
225,000 Nucor Corp. 12,853,125
-----------
Office Equipment -- 1.4%
315,000 Canon Inc. ORD 8,373,610
59,600 Danka Business
Systems plc ADR 2,201,475
1,600,000 Sanyo Electric
Company Ltd. ORD 9,202,513
-----------
19,777,598
-----------
Pharmaceuticals -- 7.2%
250,000 BioChem Pharma Inc. ADR.1 10,031,250
710,000 Cephalon Inc.1 28,976,875
700,000 Gilead Sciences, Inc.1 22,575,000
255,000 Merck & Co., Inc. 16,766,250
325,000 Neurogen Corp.1 8,835,938
575,000 Sepracor Inc.1 10,637,500
380,000 Somatogen, Inc.1 7,196,250
-----------
105,019,063
-----------
Restaurants -- .8%
150,000 Lone Star Steakhouse
& Saloon, Inc.1 5,746,875
153,000 Outback Steakhouse, Inc.1 5,498,438
-----------
11,245,313
-----------
Retail (Apparel) -- 2.0%
300,000 Aoyama Trading Co., Ltd. ORD 9,569,840
292,200 Gap, Inc. 12,272,400
200,000 Men's Wearhouse Inc. (The)1 5,200,000
40,000 World Co., LTD ORD 1,736,104
-----------
28,778,344
-----------
See Notes to Financial Statements
5
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) December 31, 1995
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
Retail (General Merchandise) -- .7%
200,000 Kohl's Corp.1 $ 10,500,000
-----------
Retail (Specialty) -- 1.9%
482,500 General Nutrition
Companies, Inc.1 11,218,125
250,000 PETsMART, Inc.1 7,750,000
90,000 Skylark ORD 1,652,972
140,000 Tiffany & Co. 7,052,500
-----------
27,673,597
-----------
Miscellaneous -- 1.5%
115,400 Concord EFS, Inc.1 4,817,950
197,500 Estee Lauder
Companies Inc. Cl. A.1 6,887,812
300,000 Honda Motor Co. Ltd. ORD 6,176,897
50,000 Wisconsin Central
Transportation Corp.1 3,271,875
-----------
21,154,534
-----------
Total Common Stocks -- 97.2% 1,412,166,761
(Cost $1,170,539,551) -----------
TEMPORARY CASH INVESTMENTS
Repurchase Agreement
(Goldman Sachs & Co., Inc.),
5.75%, due 1-2-96; collateralized
by $5,180,000 par value
U.S. Treasury Bonds,
8.125%-11.75%, due 2-15-10
through 5-15-21
(Delivery value $6,504,152) 6,500,000
34,300,000 Units of Participation in
Provident Institutional Funds
(Temp Cash Portfolio) 34,300,000
-----------
Total Temporary
Cash Investments -- 2.8% 40,800,000
(Cost $40,800,000) -----------
Total Investment
Securities -- 100.0% $1,452,966,761
(Cost $1,211,339,551) -----------
See Notes to Financial Statements
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipts
ORD = Foreign Ordinary Shares
1 Non-income producing.
++ Affiliated Company: represents ownership of at least 5% of the voting
securities of the issuer and is, therefore, an affiliate as defined in the
Investment Company Act of 1940. See Note 4 in Notes to Financial Statements for
a summary of transactions for each issuer who is or was an affiliate at or
during the year ended December 31, 1995.
6
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
- --------------------------------------------------------------------------------
ASSETS
Investment securities, at value
(identified cost of $1,211,339,551)
(Notes 3 and 4) ...................................... $ 1,452,966,761
Cash .................................................... 4,396,532
Receivable for forward foreign currency
exchange contracts held (Note 5) ..................... 761,646
Receivable for investments sold ......................... 30,192,227
Dividends and interest receivable ....................... 621,325
-------------
1,488,938,491
-------------
LIABILITIES
Payable for investments purchased ....................... 23,460,966
Payable for capital shares redeemed ..................... 3,157,596
Accrued management fees (Note 2) ........................ 1,195,012
Other liabilities ....................................... 1,263
-------------
27,814,837
-------------
NET ASSETS APPLICABLE
TO OUTSTANDING SHARES ................................... $ 1,461,123,654
=============
CAPITAL SHARES, $.01 PAR VALUE
Authorized .............................................. 180,000,000
=============
Outstanding ............................................. 121,135,825
=============
NET ASSET VALUE PER SHARE ............................... $ 12.06
=============
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus) ................. $ 1,056,116,078
Distributions in excess of
net investment income ................................. (751,266)
Accumulated undistributed
net realized gain from investments
and foreign currency transactions ..................... 163,386,583
Net unrealized appreciation
on investments and translation of assets
and liabilities in foreign
currencies (Notes 3 and 5) ............................ 242,372,259
-------------
$ 1,461,123,654
=============
See Notes to Financial Statements
7
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Year Ended December 31, 1995
- --------------------------------------------------------------------------------
Investment Income (Loss)
Income:
Dividends (net of foreign taxes
withheld of $241,096) ............................ $ 7,660,571
Interest ............................................. 1,818,694
-------------
9,479,265
-------------
Expenses:
Management fees (Note 2) ............................. 12,365,098
Directors' fees and expenses ......................... 13,112
-------------
12,378,210
-------------
NET INVESTMENT (LOSS) ................................... (2,898,945)
-------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY
(NOTES 3 AND 5)
Net realized gain during the year on:
Investments .......................................... 185,941,790
Foreign currency transactions ........................ 1,971,858
-------------
187,913,648
-------------
Change in net unrealized appreciation during the year on:
Investments .......................................... 133,389,269
Translation of assets and
liabilities in foreign currencies .................. 864,200
-------------
134,253,469
-------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY ........................ 322,167,117
-------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............................... $ 319,268,172
=============
See Notes to Financial Statements
8
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended December 31, 1995
and December 31, 1994
- --------------------------------------------------------------------------------
Increase in Net Assets 1995 1994
OPERATIONS
Net investment income (loss) ..............$ (2,898,945) $ 1,008,159
Net realized gain on investments
and foreign currency transactions ....... 187,913,648 9,711,049
Change in net unrealized
appreciation (depreciation)
on investments and translation
of assets and liabilities in
foreign currencies ...................... 134,253,469 (22,279,079)
------------ ------------
Net increase (decrease) in net
assets resulting from operations ........ 319,268,172 (11,559,871)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ................ (1,019,296) (90,428)
In excess of net investment income ........ (133,044) --
------------ ------------
(Decrease) in net assets from distributions (1,152,340) (90,428)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ................. 812,061,191 398,744,842
Proceeds from reinvestment of distributions 1,152,340 90,428
Payments for shares redeemed .............. (672,782,929) (140,297,104)
------------ ------------
Net increase in net assets
from capital share transactions ......... 140,430,602 258,538,166
------------ ------------
NET INCREASE IN NET ASSETS .................. 458,546,434 246,887,867
NET ASSETS
Beginning of year ......................... 1,002,577,220 755,689,353
------------ ------------
End of year ...............................$ 1,461,123,654 $ 1,002,577,220
============ ============
Distributions in excess
of net investment income ...........$ (751,266) $ 1,047,145
============ ============
TRANSACTIONS IN SHARES OF THE FUND:
Sold ...................................... 75,063,678 43,022,090
Issued in reinvestment of distributions ... 126,492 9,723
Redeemed .................................. (62,925,631) (15,228,020)
------------ ------------
Net increase .............................. 12,264,539 27,803,793
============ ============
See Notes to Financial Statements
9
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS December 31, 1995
1. Organization and Summary of Significant Accounting Policies
Organization --
TCI Portfolios, Inc. is registered under the Investment Company Act of 1940
as an open-end diversified management investment company. Four series of shares
are currently issued as TCI Growth, TCI Balanced, TCI Advantage and TCI
International. With the exception of shares issued for the initial
capitalization of a series of the Corporation, shares may be purchased only by
insurance companies to fund the benefits of variable annuity or variable life
insurance policies. The investment objective of TCI Growth (the Fund) is capital
growth. The following significant accounting policies related to the Fund are in
accordance with accounting policies generally accepted in the investment company
industry.
Security Valuations --
Portfolio securities traded primarily on a principal securities exchange
are valued at the last reported sales price, or the mean between the latest bid
and asked prices where no last sales price is available. Securities traded
over-the-counter are valued at the mean of the latest bid and asked prices or,
in the case of certain foreign securities, at the last reported sales price.
Short-term securities are valued at amortized cost, which approximates value.
When valuations are not readily available, securities are valued at fair value
as determined in good faith by the board of directors.
Security Transactions --
Security transactions are accounted for on the date purchased or sold. Net
realized gains and losses are determined on the identified cost basis, which is
also used for federal income tax purposes.
Investment Income --
Dividend income less foreign taxes withheld (if any) is recorded as of the
ex-dividend date or upon receipt of ex-dividend notification in the case of
certain foreign securities. Interest income is recognized on the accrual basis
and includes amortization of discounts and premiums.
Foreign Currency Transactions --
The accounting records of the Fund are maintained in U.S. dollars. All
assets and liabilities initially expressed in foreign currencies are converted
into U.S. dollars at prevailing exchange rates. Purchases and sales of
investment securities, dividend and interest income, and certain expenses are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in the foreign exchange rates on investments from the
fluctuations arising from changes in the market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss on
investments.
Net realized foreign currency exchange gains or losses arise from sales of
portfolio securities, sales of foreign currencies, and the difference between
asset and liability amounts initially stated in foreign currencies and the U.S.
dollar value of the amounts actually received or paid. Net unrealized foreign
currency exchange gains or losses arise from changes in the value of assets and
liabilities other than portfolio securities at the end of the reporting period,
resulting from changes in the exchange rates.
10
<PAGE>
- --------------------------------------------------------------------------------
1. Organization and Summary of Significant Accounting Policies (continued)
Forward Foreign Currency Exchange Contracts --
The Fund may enter into forward foreign currency exchange contracts for the
purpose of settling specific purchases or sales of securities denominated in a
foreign currency or to hedge the Fund's exposure to foreign currency exchange
rate fluctuations. The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined daily using prevailing exchange
rates.
Repurchase Agreements --
Securities pledged as collateral for repurchase agreements are held by the
Federal Reserve Bank and are designated as being held on the Fund's behalf by
its custodian under a book-entry system. The Fund monitors the adequacy of the
collateral daily and can require the seller to provide additional collateral in
the event the market value of the securities pledged falls below the carrying
value of the repurchase agreement.
Income Tax Status --
It is the policy of the Fund to distribute all taxable income and capital
gains to shareholders and to otherwise qualify as a regulated investment company
under provisions of the Internal Revenue Code. Accordingly, no provision has
been made for federal or state taxes.
Distributions to Shareholders --
Distributions to shareholders are recorded on the ex-dividend date.
Distributions from net invest-ment income and net realized gains are declared
and paid annually.
The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences are primarily due to differing
treatments for foreign currency transactions and wash sales.
Supplementary Information --
Certain officers and directors of the Corporation are also officers and/or
directors, and, as a group, controlling stockholders of Twentieth Century
Companies, Inc., the parent of the Corporation's investment manager, Investors
Research Corporation (IRC).
2. Management Agreement
The Management Agreement with IRC provides for a monthly management fee
computed by multiplying the applicable fee for the Fund by the average daily
closing value of the Fund's net assets during the previous month. The Agreement
further provides that all expenses of the Fund, except brokerage commissions,
taxes, interest, expenses of those directors who are not considered "interested
persons" as defined in the Investment Company Act of 1940 (including counsel
fees) and extraordinary expenses, will be paid by IRC. The agreement may be
terminated by either party upon 60 days' written notice.
The current annual management fee for the Fund is 1%.
11
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 1995
3. Investment Transactions
The aggregate cost of investment securities purchased (excluding short-term
investments) for the year ended December 31, 1995, totaled $1,906,745,256 for
common stocks, and $1,991,880 for preferred stocks. Proceeds from investment
securities sold (excluding short-term investments) totaled $1,786,558,998 for
common stocks and $2,617,991 for preferred stocks.
On December 31, 1995, accumulated net unrealized appreciation on
investments, based on the aggregate cost of investments of $1,212,985,857 for
federal income tax purposes, was $239,980,904, consisting of unrealized
appreciation of $249,705,897 and unrealized depreciation of $9,724,993.
4. Affiliated Company Transactions
A summary of transactions for each issuer who is or was an affiliate at or
during the year ended December 31, 1995, follows:
<TABLE>
<CAPTION>
December 31, 1995
Share -------------------
Balance Purchase Sales Realized Share Market
Issuer 12/31/94 Cost Cost Gain (Loss) Income Balance Value
- ------ -------- --------- --------- ----------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Caere Corp. 320,000 $ 397,487 $ 9,387,490 ($3,431,044) -- -- --
VTEL Corp. 200,000 10,808,890 2,517,057 567,511 -- 670,000 $12,478,750
---------- ---------- --------- --------- ----------
$ 11,206,377 $11,904,547 ($2,863,533) -- $12,478,750
========== ========== ========= ========= ==========
</TABLE>
5. Commitments
As of December 31, 1995, the Fund had entered into forward foreign currency
exchange contracts that obligate the Fund to deliver currencies at specified
future dates. Forward contracts involve elements of market risk in excess of the
amount reflected in the Statement of Assets and Liabilities. The Fund bears the
risk of an unfavorable change in the foreign currency exchange rate underlying
the forward contract. Additionally, losses may arise if the counterparties do
not perform under the contract terms. Outstanding contracts as of December 31,
1995, were as follows:
<TABLE>
<CAPTION>
U.S. Dollar U.S. Dollar
Currency to Value as of Currency to Value as of Unrealized
Settlement Date be Delivered 12/31/95 be Received 12/31/95 Gain
<S> <C> <C> <C> <C> <C>
January 31, 1996 18,248,412 $ 12,723,313 12,749,180 $ 12,749,180 $ 25,867
German Mark U.S. Dollar
January 31, 1996 11,845,273,417 114,984,793 115,720,572 115,720,572 735,779
Japanese Yen U.S. Dollar
----------- ----------- -------
$ 127,708,106 $128,469,752 $ 761,646
=========== =========== =======
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
INCOME FROM
INVESTMENT OPERATIONS DISTRIBUTIONS
--------------------------------------- -------------------------------------------
Net Realized
and
Unrealized
Gains Distributions
(Losses) on from Net
Net Asset Net Investments Total Distributions Realized Net Asset
Value, Investment and Foreign from from Net Gains on Value,
Beginning Income Currency Investment Investment Investment Total End of Total
of Period (Loss) Transactions Operations Income Transactions Distributions Period Return 1
TCI GROWTH
Year Ended Dec. 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1991 $6.16 $ .04 $2.51 $2.55 $(.07) -- $(.07) $ 8.64 41.86%
1992 8.64 .02 (.14) (.12) (.052) $(.003) (.055) 8.47 (1.33%)
1993 8.47 .03 .84 .87 (.023) -- (.023) 9.32 10.30%
1994 9.32 .01 (.12) (.11) (.001) -- (.001) 9.21 (1.17%)
1995 9.21 (.02) 2.88 2.86 (.011) -- (.011) 12.06 31.10%
1995 average commission paid per share traded $.037 (the table is continued below)
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------
(table Ratio of Ratio of Net
continued) Operating Investment Net
Expenses Income to Portfolio Assets,
to Average Average Turnover End of
Net Assets Net Assets Rate 1 Period
Year Ended Dec. 31,
1991 1.00% .62% 182% $ 255,591,799
1992 1.00% .32% 135% 415,004,751
1993 1.00% .35% 87% 755,689,353
1994 1.00% .11% 115% 1,002,577,220
1995 .99% (.23%) 147% 1,461,123,654
</TABLE>
1 Actual total return and portfolio turnover rate for periods indicated
See Notes to Financial Statements
13
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS' REPORT
The Shareholders and Board of Directors
TCI Portfolios, Inc.
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of TCI Growth (a series of TCI
Portfolios, Inc.) as of December 31, 1995, and the related statement of
operations, the statements of changes in net assets, and the financial
highlights for each of the periods indicated. These financial statements and
financial highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. As to
securities purchased but not received and securities sold but not delivered, we
requested confirmations from brokers, and when replies were not received, we
performed alternative auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of TCI Growth as of December 31, 1995, and the results of their
operations, changes in their net assets, and the financial highlights for each
of the periods indicated in conformity with generally accepted accounting
principles.
/s/Baird, Kurtz & Dobson
Kansas City, Missouri Baird, Kurtz & Dobson
January 26, 1996
14
<PAGE>
This page left blank for your notes.
15
<PAGE>
This page left blank for your notes.
16
<PAGE>
This page left blank for your notes.
17
<PAGE>
TCI GROWTH TCI PORTFOLIOS, INC.
TCI Growth
Investment Manager
INVESTORS RESEARCH CORPORATION Annual Report
Kansas City, Missouri
December 31, 1995
This report and the financial statements
contained herein are submitted for the
general information of our shareholders.
The report is not authorized for distribution
to prospective investors unless preceded or
accompanied by an effective prospectus.
[company logo]
=======================================
- ---------------------------------------
TCI PORTFOLIOS, INC.
- ---------------------------------------
Part of the Twentieth Century
Family of Funds
- ---------------------------------------
P.O. Box 419385
Kansas City, Missouri
64141-6385
- ---------------------------------------
Person-to-person assistance:
1-800-345-3533 or 816-531-5575
- ---------------------------------------
Telecommunications Device for the Deaf:
1-800-345-1833 or 816-753-0070
- ---------------------------------------
Fax: 816-340-4360
- ---------------------------------------
[company logo]
================================================================================
- --------------------------------------------------------------------------------
SH-BKT-4165
9602 Recycled
(C) 1996 Twentieth Century Services, Inc.
Twentieth Century Securities, Inc.
<PAGE>
TCI PORTFOLIOS, INC.
TCI International
Annual Report
DECEMBER 31,
1995
[company logo]
================================================================================
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Our Message to You ................................................. 1
Investment Review .................................................. 2
Schedule of Investments ............................................ 5
Statement of Assets and Liabilities ................................ 9
Statement of Operations ............................................ 10
Statements of Changes in Net Assets ................................ 11
Notes to Financial Statements ...................................... 12
Financial Highlights ............................................... 15
Independent Accountants' Report .................................... 16
- --------------------------------------------------------------------------------
INDICES USED FOR PERFORMANCE COMPARISON
The indices listed below are used throughout this report to serve as a
comparison for the performance of the fund.
THE S&P 500 INDEX -- An index created by Standard & Poor's Corporation that is
considered to represent the performance of the stock market generally. It is not
an investment product available for purchase.
EAFE(R) INDEX -- The Morgan Stanley Europe, Australia, Far East Index is a
widely followed group of stocks from 20 different countries. It is not an
investment product available for purchase.
<PAGE>
December 31, 1995
- --------------------------------------------------------------------------------
OUR MESSAGE TO YOU
Most international stocks performed modestly during 1995 in contrast to
double-digit gains by the U.S. market. Successful investment opportunities were
often overshadowed by difficult market trends during the period. Relatively high
interest rates in Europe, economic setbacks in Japan and continued weakness in
most emerging markets contributed to erratic performance by many international
indices. Yet, TCI International gained 12.21% for the 12-month period ended
December 31, 1995, surpassing the EAFE index gain of 11.21%. The S&P 500 index
gained 37.44%.
[photo of James E. Stowers and James E. Stowers III in left margin]
TCI International's largest country weighting for the period was Japan,
which showed small gains initially but ultimately contributed significantly to
the fund's return. With the Japanese economy showing strong signs of recovery,
we increased the weightings of these issues in the fund's portfolio early in the
year. Unfortunately, the strengthening yen, which makes Japanese products more
expensive overseas, reduced earnings for many of the fund's stock selections
early in the year. By midyear, however, as the yen declined in relation to the
dollar, Japanese holdings made strong gains.
Our search for companies with accelerating earnings and revenues led to
some of the best performing sectors of the Japanese stock market -- media,
technology and capital goods. Stocks like video game maker Nintendo and
semiconductor producer Advantest took advantage of the global demand for new
entertainment and technology products, while a capital goods firm like
machine-tool maker Fanuc responded to the internal economic recovery.
The fund's European holdings were another important contributor to the
fund's progress in 1995. The fund's best-performing investments were mainly in
industries that enjoy worldwide demand -- especially media and pharmaceuticals.
In general, although European economies were mixed, European investors favored
solid growth companies -- a trend that strongly benefited TCI International.
Although the U.S. market outperformed most international markets this
year, we continue to believe that many of the best growth opportunities in the
world exist outside the United States. Some of Asia's emerging market economies,
for example, are expanding up to three times faster than that of the U.S. In
addition, unlike the U.S. equities market, many foreign stock markets today are
trading at lower valuations than they were two years ago.
Looking ahead, we see opportunities to invest in fast-growing companies
around the world. We are excited by these opportunities, and we like to believe
that, over the long term, the exporting of TCI Portfolios' long-held growth
investing philosophy carries significant investment potential.
Sincerely,
/s/James E. Stowers /s/James E. Stowers III
James E. Stowers James E. Stowers III
Chairman of the Board and Founder President
1
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT REVIEW
Average Annual Total Returns (as of December 31, 1995)
TCI International EAFE Index S&P 500 Index
----------------- ---------- -------------
6 months* 7.89% 8.39% 14.40%
1 year 12.21% 11.21% 37.44%
Inception 3.92% 6.52% 23.75%
(5/1/94-12/31/95)
*Actual
- --------------------------------------------------------------------------------
$10,000 OVER LIFE OF FUND (as of December 31, 1995)
[mountain chart]
Value on 12/31/95: $10,660 $11,100
TCI International EAFE Index
$14,244
S&P 500 Index
$10,000 investment made 5/1/94
(Inception date)
[graph data]
TCI INTERNATIONAL
TCI International EAFE Index S&P 500
ACCT ACCT ACCT
DATE VALUE VALUE VALUE
May 1, 94 10,000 10,000 10,000
Jun 30, 94 9,780 10,083 9,882
Sep 30, 94 10,100 10,093 10,365
Dec 31, 94 9,500 9,990 10,363
Mar 31, 95 9,300 10,176 11,369
Jun 30, 95 9,880 10,250 12,451
Sep 30, 95 10,360 10,677 13,437
Dec 31, 95 10,660 11,110 14,244
Past performance is not predictive of future performance.
Source: Lipper Analytical Services, Inc.
No expenses or fees are reflected in the S&P 500 or the EAFE Index.
All performance illustrations for TCI International are shown net of fees and
assume reinvestment of all distributions.
- --------------------------------------------------------------------------------
Top 10 Holdings (as of December 31, 1995) The composition of the portfolio may
change over time.
% of fund's
investments in
% of fund's these stocks
investments 12 months ago
Sandoz 3.26% --
Verenigd Bezit VNU 2.58% 0.99%
Aoyama Trading 2.46% --
Novo Nordisk B 2.46% --
Schweizerischer Bankverein 2.43% --
% of fund's
investments in
% of fund's these stocks
investments 12 months ago
Astra B 2.35% 0.68%
Hutchison Whampoa 2.29% --
Nintendo 2.22% --
Hoya 2.18% --
Mannesman 2.14% 2.32%
- --------------------------------------------------------------------------------
QUICK
FUND
FACTS
TCI
INTERNATIONAL
STRATEGY:
Capital growth
through investments in international stocks,
emphasizing companies in developed markets.
INCEPTION DATE:
May 1, 1994
SIZE:
$51.6 million
(as of December 31, 1995)
INVESTMENT APPROACH:
Capital Growth
2
<PAGE>
December 31, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENTS BY COUNTRY
At December 31, 1995, and December 31, 1994, TCI International had investments
in the following countries. Size of investments is indicated as a percentage of
total fund investments.
[bar chart]
12/31/95 12/31/94
Japan 27% 16%
United Kingdom 7% 5%
Netherlands 6% 7%
Switzerland 6% 2%
Hong Kong 6% 1%
Canada 5% 1%
Germany 4% 6%
South Africa 4% 7%
Italy 4% 4%
France 3% 9%
Sweden 3% 7%
Thailand 3% 0%
Denmark 2% 2%
Israel 2% 2%
Malaysia 2% 0%
Temporary Cash Investments 8% 9%
*Other 8% 6%
*Reflects countries with investments each less than 2% of total fund
investments.
3
<PAGE>
December 31, 1995
- --------------------------------------------------------------------------------
INVESTMENT REVIEW (CONTINUED)
- --------------------------------------------------------------------------------
INVESTMENTS BY INDUSTRY
At December 31, 1995, and December 31, 1994, TCI International had investments
in these industry sectors. Size of investments is indicated as a percentage of
total fund investments.
[bar chart]
12/31/95 12/31/94
Manufacturing 12% 9%
Financial 11% 4%
Pharmaceuticals & Medical Equipment 11% 4%
Aerospace & Technology 11% 1%
Telecommunications 9% 8%
Media & Publishing 7% 7%
Construction & Property Development 6% 5%
Oil/Gas Exploration/Distribution/Services 6% 2%
Retail 4% 12%
Food & Beverage/Consumer Goods 4% 10%
Utilities 2% 7%
Transporation 2% 3%
Temporary Cash Investments 8% 9%
Other Industries 7% 8%
4
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS December 31, 1995
TCI INTERNATIONAL
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS
Austria -- 0.95%
3,800 Voest-Alpine Technologie $ 481,227
(engineering, ------------
plant construction)
Canada -- 4.87%
12,000 Canadian Pacific 218,761
(diversified
holding company)
21,500 Northern Telecom 924,500
(telecommunications
equipment)
25,000 Renaissance Energy.1 622,939
(oil and gas exploration)
62,000 Rogers Communications B.1 692,928
(communications and media)
-----------
2,459,128
-----------
Denmark -- 2.46%
9,100 Novo Nordisk B 1,243,438
(pharmaceuticals) -----------
France -- 3.42%
11,000 SGS Thomson
Microelectronics ADR.1 446,875
(semiconductors)
11,000 Societe Nationale Elf 808,886
(oil and gas)
7,000 Total 471,518
(oil and gas) -----------
1,727,279
-----------
Germany -- 4.38%
10,000 Adidas.1 528,368
(sportswear and equipment)
3,400 Mannesmann 1,080,947
(diversified manufacturing)
1,100 Siemens 601,113
(electronic equipment) -----------
2,210,428
-----------
Hong Kong -- 5.91%
129,500 Consolidated Electric Power 235,302
(power plants)
483,755 First Pacific 538,027
(trading company)
69,620 HSBC Holdings 1,053,416
(bank)
190,000 Hutchison Whampoa 1,157,323
(container parts, -----------
property development)
2,984,068
-----------
India -- 0.42%
16,000 Tata Engineering &
Locomotive GDR+ 214,000
(truck manufacturer) -----------
Ireland -- 1.01%
82,000 Independent Newspapers 511,200
(newspaper publisher) -----------
Israel -- 2.18%
150 Africa Israel Investments1 181,033
(tourism, property
development)
160,400 Bezek The Israeli
Telecommunications 465,295
(telecommunications)
20,000 ECI Telecom ADR 457,500
(digital telecommunications
equipment) -----------
1,103,828
-----------
Italy -- 3.52%
1,219,000 Olivetti.1 985,640
(office, computer
equipment)
450,000 Telecom Italia Mobile.1 790,617
(mobile telephone services)---------
1,776,257
-----------
Japan -- 27.06%
2,000 Advantest 102,465
(semiconducter
test equipment)
39,000 Aoyama Trading 1,244,079
(specialty retail)
53,000 Bridgestone 840,213
(tire and rubber maker)
6,000 Daibiru 67,859
(real estate company)
See Notes to Financial Statements
5
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) December 31, 1995
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
39,000 Dainippon Screen.1 $ 341,556
(precision machinery maker)
16,000 Fanuc 691,348
(machine tools)
50,000 Fujitsu 555,824
(computer manufacturer)
4,000 Futaba 182,890
(electronic component
manufacturer)
12,000 Hankyu Department Stores 177,477
(retail department store)
32,000 Hoya 1,098,115
(glass manufacturer,
electronic components)
5,000 Keyence 575,157
(measure and control
equipment)
17,000 Kirin Beverage 228,420
(beverages)
22,000 Kurita Water 584,824
(water treatment equipment)
28,000 Mitsubishi Estate 349,154
(property investment)
4,000 Nichiei 297,728
(finance company)
20,000 Nikon 270,662
(camera manufacturer)
14,800 Nintendo 1,123,055
(video games)
30,000 Nippon Express 288,255
(general transport)
3,000 Nippon Television Network 800,387
(television broadcasting)
22,000 Sankyo 493,378
(pharmaceutical manufacturer)
14,000 Santen Pharmaceutical 316,675
(pharmaceuticals)
14,000 Secom 971,677
(security service)
7,000 Square 286,225
(software producer)
90,000 Tokyu 634,219
(railway and properties)
37,000 Ushio 439,923
(optical equipment maker
and specialty lamps)
13,000 Venture Link 420,976
(information service firm)
4,000 Xebio 141,131
(retail sporting goods)
3,500 York-Benimaru 133,641
(supermarkets) -----------
13,657,313
-----------
Malaysia -- 1.52%
36,000 Commerce Asset 181,489
(financial services)
34,000 Kian Joo Can Factory 140,607
(food and general
packaging)
232,000 Renong 343,568
(diversified holding
company)
16,000 United Engineers 102,087
(engineering, construction)---------
767,751
-----------
Mexico -- 0.69%
7,000 Grupo Casa Autrey ADR 93,625
(wholesale distributor)
8,000 Panamerican
Beverages A ADR 256,000
(soft drink bottler) -----------
349,625
-----------
Netherlands -- 6.33%
12,360 Hagemeyer 644,134
(trading)
13,600 ING 906,667
(financial service group)
4,200 Nutricia 339,030
(food processing)
9,500 Verenigd Bezit VNU 1,301,523
(publishing) -----------
3,191,354
-----------
Singapore -- 0.94%
140,000 Straits Steamship Land 473,167
(property investment) -----------
South Africa -- 3.58%
3,500 Anglo American Industrial 159,135
(diversified holding company)
40,000 First National Bank Holdings 367,576
(financial services)
5,500 Liberty Life Association 170,484
(life insurance company) -----------
See Notes to Financial Statements
6
<PAGE>
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
22,593 Nedcor $ 390,443
(bank)
30,000 Safmarine and Rennies Holdings 109,039
(shipping, tourism)
13,800 South African Breweries 505,363
(brewery)
9,084 Southern Life Association 105,902
(life insurance company) -----------
1,807,942
-----------
South Korea -- 0.81%
13,000 Korea Electric Power ADR 347,750
(electric power supplier)
2,750 Shinhan Bank 59,162
(bank) -----------
406,912
-----------
Sweden -- 2.95%
30,000 Astra B 1,188,477
(pharmaceuticals)
10,300 Hoganas 300,990
(sintered metals) -----------
1,489,467
-----------
Switzerland -- 6.33%
1,200 Edipresse 322,357
(publishing)
1,800 Sandoz 1,647,140
(pharmaceuticals)
3,000 Schweizerischer Bankverein 1,224,437
(bank) -----------
3,193,934
-----------
Taiwan -- 0.88%
34,000 Acer GDR.1+ 442,000
(computer manufacturer) -----------
Thailand -- 2.57%
80,000 Bank of Ayudhya 443,647
(bank)
12,000 Loxley 242,001
(transmission and
telecommunications systems)
25,000 Shinawatra Computer 609,545
(cellular telecommunications
and computer services) -----------
1,295,193
-----------
United Kingdom -- 7.23%
200,000 ASDA Group 343,169
(retail, grocery superstores)
71,588 British Aerospace 885,960
(aerospace, defense and
communications)
250,000 British Gas 986,028
(gas transmission and
production)
61,204 Cookson Group 290,815
(electronics and
industrial materials)
31,400 Glaxo Holding ADR 887,050
(pharmaceuticals)
30,000 Standard Chartered 255,280
(bank) -----------
3,648,302
-----------
United States -- 0.81%
18,000 Tele-Communications
International A.1 408,375
(telecommunications
and cable television) -----------
Total Common Stocks -- 90.82% 45,842,188
(Cost $42,620,520) -----------
PREFERRED STOCKS
Brazil -- 1.13%
12,000 Telebras ADR 568,500
(telecommunications) -----------
South Korea -- 0.53%
10,000 Korea Electric Power ADR 267,500
(electric power supplier)-----------
Total Preferred Stocks-- 1.66% 836,000
(Cost $766,865) -----------
TEMPORARY CASH INVESTMENTS
Repurchase Agreement
(Goldman Sachs & Company),
5.75%, due 1-2-96; collateralized
by $1,420,000 par value
U.S. Treasury Bonds,
8.125% - 9.00%, due 11-15-18 to 8-15-21
(Delivery value $1,801,150) 1,800,000
See Notes to Financial Statements
7
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) December 31, 1995
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
$1,500,000 par value FHLB
Discount Notes, 5.67%, 1-8-96 $ 1,498,346
$500,000 par value FHLMC
Discount Notes, 5.67%, 1-9-96 499,370
-----------
Total Temporary
Cash Investments -- 7.52% 3,797,716
(Cost $3,797,716) -----------
Total Investment
Securities-- 100.00% $ 50,475,904
(Cost $47,185,101) ===========
NOTES TO SCHEDULE OF INVESTMENTS
+ The following securities were purchased under Rule 144A of the Securities Act
of 1933 and, unless registered under the Act or exempted from registration, may
only be sold to qualified institutional investors.
December 31, 1995
- --------------------------------------------------------------------------------
Acquisition Average Cost Percentage
Issuer Date Per Share Market Value of Net Assets
- --------------------------------------------------------------------------------
Acer GDR 10-20-95 $22.88 $ 442,000 0.86%
Tata Engineering &
Locomotive GDR 10-16-95 21.49 214,000 0.41%
---------- -----
$ 656,000 1.27%
========== =====
1 Non-income producing
ADR = American Depositary Receipts
FHLB = Federal Home Loan Banks
FHLMC = Federal Home Loan Mortgage Corporation
GDR = Global Depositary Receipts
See Notes to Financial Statements
8
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
- --------------------------------------------------------------------------------
ASSETS
Investment securities, at value
(identified cost of $47,185,101) (Note 3) ........... $50,475,904
Cash .................................................. 1,700,676
Receivable for investments sold ....................... 355,041
Receivable for forward foreign currency exchange
contracts held (Note 4) ............................. 66,717
Dividends and interest receivable ..................... 53,258
-----------
52,651,596
-----------
LIABILITIES
Payable for shares redeemed ........................... 455,816
Payable for investments purchased ..................... 524,767
Accrued management fees (Note 2) ...................... 62,076
-----------
1,042,659
-----------
NET ASSETS APPLICABLE
TO OUTSTANDING SHARES ................................. $51,608,937
===========
CAPITAL SHARES, $0.01 PAR VALUE
Authorized ............................................ 20,000,000
===========
Outstanding ........................................... 9,676,421
===========
NET ASSET VALUE PER SHARE ............................. $ 5.33
===========
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus) ............... $46,828,538
Undistributed net investment income ................... 1,142,475
Accumulated undistributed net realized gain on
investments and foreign currency transactions ....... 280,778
Net unrealized appreciation on investments and
translation of assets and liabilities in foreign
currencies (Notes 3 and 4) .......................... 3,357,146
-----------
$51,608,937
===========
See Notes to Financial Statements
9
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Year Ended December 31, 1995
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income:
Dividends (net of foreign taxes
withheld of $90,680) .............................. $ 690,704
Interest ............................................ 185,526
-----------
876,230
-----------
Expenses:
Management fees (Note 2) ............................ 596,598
Directors' fees and expenses ........................ 380
-----------
596,978
-----------
NET INVESTMENT INCOME ................................. 279,252
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY (NOTES 3 AND 4)
Net realized gain during the year on:
Investments ......................................... 1,683,431
Foreign currency transactions ....................... 268,366
-----------
1,951,797
-----------
Change in net unrealized appreciation (depreciation)
during the year on:
Investments ......................................... 4,460,617
Translation of assets and liabilities
in foreign currencies ............................. (587,548)
-----------
3,873,069
-----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY ...................... 5,824,866
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............................. $ 6,104,118
===========
See Notes to Financial Statements
10
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, 1995
and the Period May 1, 1994 (Inception) Through December 31, 1994
- --------------------------------------------------------------------------------
INCREASE IN NET ASSETS 1995 1994
OPERATIONS
Net investment income (loss) .....................$ 279,252 $ (7,528)
Net realized gain (loss) on investments
and foreign currency transactions .............. 1,951,797 (800,549)
Change in net unrealized appreciation
(depreciation) on investments and translation
of assets and liabilities in foreign currencies. 3,873,069 (515,923)
----------- -----------
Net increase (decrease) in net assets
resulting from operations ...................... 6,104,118 (1,324,000)
----------- -----------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ........................ 67,407,052 34,170,080
Payments for shares redeemed ..................... (39,895,430) (14,852,883)
----------- -----------
Net increase in net assets
from capital share transactions ................ 27,511,622 19,317,197
----------- -----------
NET INCREASE IN NET ASSETS ......................... 33,615,740 17,993,197
----------- -----------
NET ASSETS
Beginning of period .............................. 17,993,197 --
----------- -----------
End of period ....................................$ 51,608,937 $ 17,993,197
=========== ===========
Undistributed net investment income ..............$ 1,142,475 --
=========== ===========
TRANSACTIONS IN SHARES OF THE FUND:
Sold ............................................. 13,758,884 6,785,851
Redeemed ......................................... (7,872,880) (2,995,434)
----------- -----------
Net increase ..................................... 5,886,004 3,790,417
=========== ===========
See Notes to Financial Statements
11
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS December 31, 1995
1. Organization and Summary of Significant Accounting Policies
Organization --
TCI Portfolios, Inc. (the Corporation) is registered under the Investment
Company Act of 1940 as an open-end diversified management investment company.
Four series of shares are currently issued as TCI Growth, TCI Balanced, TCI
Advantage and TCI International. With the exception of shares issued for the
initial capitalization of a series of the Corporation, shares may be purchased
only by insurance companies to fund the benefits of variable annuity or variable
life insurance policies. The investment objective of TCI International (the
Fund) is capital growth. The following significant accounting policies related
to the Fund are in accordance with accounting policies generally accepted in the
investment company industry.
Security Valuations --
Portfolio securities traded primarily on a principal securities exchange
(domestic or foreign) are valued at the last reported sales price on that
exchange or the mean between the latest bid and asked prices where no last sales
price is available. Securities traded over-the-counter are valued at either the
mean of the latest bid and asked prices or at the last reported sales price,
depending on local convention or regulation. Short-term securities are valued at
amortized cost, which approximates value. When valuations are not readily
available, securities are valued at fair value as determined in good faith by
the board of directors.
Security Transactions --
Security transactions are accounted for on the date purchased or sold. Net
realized gains and losses are determined on the identified cost basis, which
also is used for federal income tax purposes.
Foreign Currency Transactions --
The accounting records of the Fund are maintained in U.S. dollars. All
assets and liabilities initially expressed in foreign currencies are converted
into U.S. dollars at prevailing exchange rates. Purchases and sales of
investment securities, dividend and interest income, and certain expenses are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The Fund isolates that portion of the results of operations resulting from
changes in the foreign exchange rates on investments from the fluctuations
arising from changes in the market prices of securities held.
Net realized foreign currency exchange gains or losses arise from sales of
portfolio securities, sales of foreign currencies, and the difference between
asset and liability amounts initially stated in foreign currencies and the U.S.
dollar value of the amounts actually received or paid. Net unrealized foreign
currency exchange gains and losses arise from changes in the value of portfolio
securities and other assets and liabilities at the end of the reporting period,
resulting from changes in the exchange rates.
Forward Foreign Currency Exchange Contracts --
The Fund may enter into forward foreign currency exchange contracts for the
purpose of settling specific purchases or sales of securities denominated in a
foreign currency or to hedge the Fund's exposure to foreign currency exchange
rate fluctuations. The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined daily using prevailing exchange
rates.
12
<PAGE>
- --------------------------------------------------------------------------------
1. Organization and Summary of Significant Accounting Policies (continued)
Investment Income --
Dividend income less foreign taxes withheld is recorded on the ex-dividend
date or upon receipt of ex-dividend notification in the case of certain foreign
securities. Interest income is recognized on the accrual basis.
Repurchase Agreements --
Securities pledged as collateral for repurchase agreements are held by the
Federal Reserve Bank and are designated as being held on the Fund's behalf by
its custodian under a book-entry system. The Fund monitors the adequacy of the
collateral daily and can require the seller to provide additional collateral in
the event the market value of the securities pledged falls below the carrying
value of the repurchase agreement.
Income Tax Status --
It is the policy of the Fund to distribute all taxable income and capital
gains to shareholders and to otherwise qualify as a regulated investment company
under provisions of the Internal Revenue Code. Accordingly, no provision has
been made for federal or state taxes.
Distributions to Shareholders --
Distributions to shareholders are recorded on the ex-dividend date.
Distributions from net investment income and net realized gains in excess of
capital loss carryovers are declared and paid annually.
The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences are primarily due to differing
treatments in the recognition of income and expense items for financial
statement and tax purposes.
Supplementary Information --
Certain officers and directors of the Corporation are also officers and/or
directors and, as a group, controlling stockholders of Twentieth Century
Companies, Inc., the parent of the Corporation's investment manager, Investors
Research Corporation (IRC).
13
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued) December 31, 1995
2. Management Agreement
The Management Agreement with IRC provides for a monthly management fee
computed by multiplying the applicable fee for the Fund by the average daily
closing value of the Fund's net assets during the previous month. The Agreement
further provides that all expenses of the Fund, except brokerage commissions,
taxes, interest, expenses of those directors who are not considered "interested
persons" as defined in the Investment Company Act of 1940 (including counsel
fees) and extraordinary expenses, will be paid by IRC. The agreement may be
terminated by either party upon 60 days' written notice.
The current annual management fee for the Fund is 1.50%.
3. Investment Transactions
The aggregate cost of securities purchased (excluding short-term
investments) for the year ended December 31, 1995, totaled $101,537,077 for
common stocks and $1,096,130 for preferred stocks. Proceeds from investment
securities sold (excluding short-term investments) totaled $76,548,039 for
common stocks, $1,359,147 for preferred stocks and $52,110 for other debt
obligations.
On December 31, 1995, accumulated net unrealized appreciation on
investments, based on the aggregate cost of investments of $47,306,852 for
federal income tax purposes, was $3,169,052, consisting of unrealized
appreciation of $3,780,438 and unrealized depreciation of $611,386.
4. Commitments
As of December 31, 1995, the Fund had entered into forward foreign currency
exchange contracts obligating the Fund to deliver currencies at specified future
dates. Forward contracts involve elements of market risk in excess of the amount
reflected in the Statement of Assets and Liabilities. The Fund bears the risk of
an unfavorable change in the foreign currency exchange rate underlying the
forward contract. Additionally, losses may arise if the counterparties do not
perform under the contract terms. Outstanding contracts as of December 31, 1995,
are as follows:
<TABLE>
<CAPTION>
U.S. Dollar U.S. Dollar
Currency to Value as of Currency to Value as of Unrealized
Settlement Date be Delivered 12/31/95 be Received 12/31/95 Gain (Loss)
<S> <C> <C> <C> <C> <C>
January 31, 1996 1,977,781 $ 1,378,965 1,383,160 $ 1,383,160 $ 4,195
German Mark U.S. Dollar
January 31, 1996 5,966,671 1,216,816 1,220,004 1,220,004 3,188
French Franc U.S. Dollar
January 31, 1996 901,050 783,263 783,181 783,181 (82)
Swiss Franc U.S. Dollar
January 31, 1996 758,173,824 7,359,768 7,419,184 7,419,184 59,416
Japanese Yen U.S. Dollar
---------- ---------- -------
$10,738,812 $10,805,529 $ 66,717
========== ========== =======
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
INCOME FROM
INVESTMENT OPERATIONS RATIOS/SUPPLEMENTAL DATA
----------------------------------------- ----------------------------------------------
Net Realized and Ratio of Net
Unrealized Gain Ratio of Investment
Net Asset Net (Loss) on Total Net Asset Operating Income Net
Value, Investment Investments and from Value, Expenses (Loss) to Portfolio Assets,
Beginning Income Foreign Currency Investment End of Total to Average Average Turnover End of
of Period (Loss) Transactions Operations Period Return 2 Net Assets Net Assets Rate 2 Period
TCI INTERNATIONAL
May 1,
1994, (Inception)
through
December 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 $5.00 $(0.003) 1 $(0.25) $(0.25) $4.75 (5.00%) 1.50% 3 (0.11%) 3 157% $17,993,197
Year
ended
December 31,
1995 4.75 0.03 4 0.55 0.58 5.33 12.21% 1.50% 0.70% 214% 51,608,937
1995 average commission paid per share traded $.002
</TABLE>
1 Computed using average shares outstanding throughout the period.
2 Actual total return and portfolio turnover rate for periods indicated.
3 Annualized
4 Computed using net investment income and average shares outstanding for the
year.
See Notes to Financial Statements
15
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS' REPORT
The Shareholders and Board of Directors
TCI Portfolios, Inc.
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of TCI International (a series of TCI
Portfolios, Inc.) as of December 31, 1995, and the related statement of
operations, the statements of changes in net assets, and the financial
highlights for each of the periods indicated. These financial statements and
financial highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. As to
securities purchased but not received and securities sold but not delivered, we
requested confirmations from brokers, and when replies were not received, we
performed alternative auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of TCI
International as of December 31, 1995, and the results of their operations,
changes in their net assets, and the financial highlights for each of the
periods indicated in conformity with generally accepted accounting principles.
Kansas City, Missouri /s/Baird, Kurtz & Dobson
January 26, 1996 Baird, Kurtz & Dobson
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TCI INTERNATIONAL TCI PORTFOLIOS, INC.
TCI International
Investment Manager
INVESTORS RESEARCH CORPORATION
Kansas City, Missouri Annual Report
This report and the financial statements December 31, 1995
contained herein are submitted for the
general information of the shareholders
of the corporation. The report is not
authorized for distribution to prospective
investors in the corporation unless preceded
or accompanied by an effective prospectus.
[company logo]
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TCI PORTFOLIOS, INC.
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Part of the Twentieth Century
Family of Funds
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P.O. Box 419385
Kansas City, Missouri
64141-6385
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Person-to-person assistance:
1-800-345-3533 or 816-531-5575
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Telecommunications Device for the Deaf:
1-800-345-1833 or 816-753-0070
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Fax: 816-340-4360
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[company logo]
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SH-BKT-4167
9602 Recycled
(C) 1996 Twentieth Century Services, Inc.
Twentieth Century Securities, Inc.
