OCTOBER 31, 1997
ANNUAL
REPORT
INSTITUTIONAL CLASS
BALANCED FUND
GROWTH AND INCOME FUND
EQUITY INDEX FUND
GROWTH FUND
SPECIAL GROWTH FUND
INTERNATIONAL EQUITY FUND
NOTICE TO INVESTORS
- -Shares of Portico Funds:
- ARE NOT INSURED BY THE FDIC, the US Government or any other governmental
agency;
- are not bank deposits or obligations of or guaranteed by Firstar Bank, its
parent company or its affiliates;
- are subject to investment risks, including possible loss of principal; and
- are offered by B.C. Ziegler and Company, member NASD, SIPC, and an
independent third-party distributor.
- -Firstar Bank affiliates serve as investment adviser, custodian, transfer
agent, administrator, and accounting services agent and receive compensation
for such services as disclosed in the current prospectus.
TABLE OF CONTENTS
Page(s)
SHAREOWNER LETTER...................................................1-2
PORTICO BALANCED FUND...............................................4-5
PORTICO GROWTH AND INCOME FUND......................................6-7
PORTICO EQUITY INDEX FUND...........................................8-9
PORTICO GROWTH FUND................................................10-11
PORTICO SPECIAL GROWTH FUND........................................12-13
PORTICO INTERNATIONAL EQUITY FUND..................................14-15
STATEMENT OF ASSETS AND LIABILITIES................................16-17
STATEMENT OF CHANGES IN NET ASSETS.................................18-19
FINANCIAL HIGHLIGHTS...............................................20-25
STATEMENT OF OPERATIONS..............................................26
SCHEDULE OF INVESTMENTS............................................27-50
NOTES TO THE FINANCIAL STATEMENTS..................................51-56
REPORT OF INDEPENDENT ACCOUNTANTS....................................57
December, 1997
DEAR SHAREOWNER:
INVESTMENT REVIEW
Investors enjoyed strong financial market returns over the past year. Inflation
was subdued, unemployment fell to its lowest level in a generation and consumer
confidence soared. We witnessed a change in stock market leadership during the
year as small and midcap stocks outperformed large cap stocks in the second
half. This trend should continue as earnings growth slows for big companies and
valuations improve for small and midcap stocks.
The year's stock market advance was bumpy, with significant declines in March,
August and October. For the year, the Dow Jones Industrial Average rose over
1400 points, rewarding those investors who "stayed the course." The market's
roller coaster ride was most unsettling in October. Responding to financial
turmoil in Southeast Asia, the Dow plunged 556 points on October 27th, the
largest single-day point decline in history. Then, to make things interesting,
the market set another record the next day, rising 337 points. The bond market
also got into the volatility act as the yield on the 30-year U.S. Treasury bond
gyrated between 6.13% and 7.17% during the year.
IT'S TIME, NOT TIMING
We believe the best advice for times like these is "it's time, not timing." In
volatile markets, our consistent approach to investing, featuring our structured
fixed income and growth-at-a-reasonable-price equity management styles, is
especially attractive. For our investors, it's reassuring to know we offer
investment strategies with no hidden surprises.
Along with an eventful year in the markets, we were busy evaluating the Portico
Family of Funds. We made several enhancements to the Portico lineup during the
year. These enhancements include:
- -A pure midcap stock focus for Portico Special Growth Fund.
- -A new small cap stock fund, Portico Emerging Growth Fund, launched August 15,
1997.
- -A name change for Portico MidCore Growth Fund. The new name, Portico Growth
Fund, reflects the Fund's new focus on large cap stocks.
- -A new sub-adviser and a move from passive to active management for Portico
International Equity Fund.
- -A new balanced fund, Portico Balanced Income Fund, launched December 1, 1997.
A NAME CHANGE FOR PORTICO FUNDS: FIRSTAR FUNDS
As previously announced, we will change our name to Firstar Funds on February 1,
1998. Changing our name allows us to take advantage of the Firstar identity in
markets where Firstar has a presence. This also eliminates confusion over the
relationship between Firstar and Portico. Again, we want to emphasize, THIS IN
NO WAY AFFECTS HOW YOUR FUNDS ARE MANAGED. It's a change in name only. Once the
name change takes effect, you can expect all sales materials, shareowner
communications, newspaper listings and our web site to carry the new Firstar
Funds name.
MARKET OUTLOOK
Before looking ahead, let's revisit our economic and market forecast from last
year's annual report. We're pleased to report we got most of the important
trends right. We correctly anticipated a sooner-than-expected balanced Federal
budget and we accurately forecast a stronger-than-expected American consumer.
While our forecast of 5% nominal growth for the U.S. economy was right on, we
underestimated "real" (inflation-adjusted) growth and overestimated inflation.
Corporate profits were better than we expected, especially for the "mega"
companies that dominate the S&P 500 Stock Index. We underestimated Corporate
America's ability to continuously improve productivity, enabling profit margins
to expand despite today's competitive, no-pricing-power, global marketplace.
Strong profit growth and low inflation led to higher stock returns than we
expected, although at the time, we felt rather bold forecasting an above-average
year for the market. Bond market total returns were below our forecast, although
investors earned historically high real yields, thanks to low inflation.
Looking ahead, our forecast for 1998 includes the following:
- -Pacific Rim economic activity will decline while their devalued currencies
make their exports cheaper and limit the ability of U.S. firms to raise
prices.
- -The Asian "wave of deflation" will offset inflation pressures from rising
wages and higher capacity utilization in the U.S.
- -Further U.S. economic expansion will require strong job and consumer spending
growth to offset weakness in the government, healthcare and foreign trade
sectors.
- -The Federal budget will be balanced in 1998 due to higher-than-forecast tax
receipts and continued spending restraint.
- -Moderate economic growth and low inflation will persist through 1998 with a 3%
inflation-adjusted gain in gross domestic product (GDP) and a 2% rise in
consumer prices (CPI).
- -Despite solid economic underpinnings, the financial markets will experience
above-average volatility.
- -Due to lower-than-expected inflation, real yields for fixed income investments
will remain at the upper end of their historical range.
- -Long-term interest rates will decline gradually as a balanced Federal budget
reduces the supply of bonds and high real yields attract investors whipsawed
by stock market volatility.
- -With household liquidity at a record $1.6 trillion, cash flow into the stock
market will be robust.
- -The U.S. stock market will be the world's market of choice in 1998.
- -Stock market returns will be above-average in 1998. History shows a 15%
average annual return for stocks in years when inflation is low (+2-5% gain in
CPI) with 1966 the last year the market declined in a low inflation
environment.
- -S&P 500 companies will earn $48 per share in profits for 1998, yielding a
twelve month price target for the Index in the 1000 to 1100 range, up 10-20%
from October 31, 1997 levels.
- -Small and midcap stocks will outperform as earnings gains for large and mega-
sized multinational companies slow, prompting investors to place higher
valuations on faster growing small and medium-sized domestically-focused
companies.
IN SUMMARY
Inflation is the single most important variable in the outlook for stock and
bond market returns. Intense global competition, improved productivity through
technology and restrained growth in government should keep the inflation genie
"bottled up." Prospects for further financial market gains are bright. Just
remember, patience and perseverance win the investment marathon.
We appreciate your continued confidence in the Portico Family of Funds and urge
you to read the following portfolio reviews.
<PHOTO> <PHOTO>
J. SCOTT HARKNESS, CFA MARY ELLEN STANEK, CFA
Chairman/Chief President
Investment Officer
Firstar Investment Research & Management Company, LLC
This page intentionally left blank.
BALANCED FUND
Portico Balanced Fund provided a respectable +18.4% return for the year ended
October 31, 1997, finishing within "hailing distance" of the +20.1% return
posted by the Lipper Balanced Fund Index. Our modest underperformance versus the
Lipper Index reflects the Fund's emphasis on small and medium-sized company
stocks (market capitalizations below $3 billion). Small and midcap company
stocks underperformed large company stocks during the year. For example, the
large company dominated S&P 500 Stock Index gained +32.1% while the Russell
Midcap and Russell 2000 (small cap) Indexes provided +28.8% and +29.3% returns,
respectively. As of October 31, 47% of the Fund's equity component was invested
in companies with market capitalizations below $3 billion.
Sector selection provided an incremental benefit to our equity performance. The
Fund was overweighted in finance, technology and consumer cyclical stocks, the
top-performing sectors last year. We continue to find all three sectors
attractive, despite their recent strength. We're still able to find stocks that
are reasonably priced relative to their long-term earnings growth rates. Stock
selection in the finance sector emphasizes companies that benefit from the
increased savings rate of the "baby boomers", who are accumulating assets for
retirement. Technology is a driving force in our economy and presents many
exciting growth opportunities. Finally, low unemployment and strong income gains
have boosted consumer confidence to record levels. Companies that benefit from
discretionary consumer spending are showing better-than-expected earnings gains.
Portico Balanced Fund follows a diversified investment strategy, emphasizing
common stocks for capital appreciation and fixed-income securities for stability
and current income. Asset allocation as of October 31, 1997 was 55% common
stocks, 36% bonds, and 9% money market instruments.
The fixed-income component of Portico Balanced Fund is managed using an
"enhanced-index" or "structured" approach. The objective of the Fund's fixed-
income segment is to provide an annual rate of total return comparable to the
return of the Lehman Brothers Government/Corporate Bond Index. A decline in
interest rates during the year (the yield on the 10-year U.S. Treasury Note
dropped from 6.3% to 5.8%) boosted the total return of the Lehman Brothers
Government/Corporate Bond Index to +8.8%. While not as impressive as the stock
market's return, this represents a generous real rate of return when compared to
inflation, which rose just 2.1% during this period.
The Fund's bond holdings have an average maturity of 9.9 years and a duration of
5.2 years. (Duration measures the price sensitivity of the Fund's bond holdings
to changes in interest rates. The longer the duration, the greater the price
swing for a given move in rates.) The Fund's holdings are high quality with over
60% of the fixed-income segment invested in securities rated Aaa/AAA or higher
by Moody's or Standard & Poor's. In the non-government sector of the bond
market, we follow a research-intensive selection process focused exclusively on
investment grade issues (Portico Balanced Fund does not invest in "high-yield"
or "junk" bonds). Sectors that we currently favor include finance, banking and
brokerage. The Fund's asset-backed holdings are all rated Aaa/AAA and represent
the highest credit quality investments available in the non-government sector.
Portico Balanced Fund combines the growth potential of stocks with the stability
of high quality bonds. For investors unnerved by the occasional "squall" in
the stock market, the Fund's fixed-income holdings are a good "anchor-to-the-
wind." We are optimistic for the year ahead and appreciate your continued
support and confidence in Portico Balanced Fund.
<PHOTO> <PHOTO>
MARIAN E. ZENTMYER, CFA, CFP TERESA R. WESTMAN, CFA
PORTFOLIO MANAGER PROFILE
- -------------------------------------------------------------------------------
MARIAN E. ZENTMYER, CFA, CFP, Senior Vice President and Senior Portfolio Manager
of Firstar Investment Research &Management Company, LLC (FIRMCO) and TERESA R.
WESTMAN, CFA, Senior Portfolio Manager co-manage the Fund, Teresa since its
inception on March 30, 1992, and Marian since June 19, 1996. Marian has been
with Firstar since 1982 and has 19 years of investment management experience.
She received her BAfrom Stanford University in 1978. Teresa has been with
Firstar since 1987 and has ten years of investment management experience. Teresa
received her BAfrom Augustana College in 1985 and her MBAfrom the University of
Chicago in 1991. Marian is a Chartered Financial Analyst and a Certified
Financial Planner. Teresa is a Chartered Financial Analyst.
3/30/92 10/92 10/93 10/94 10/95 10/96 10/97
------- ----- ----- ----- ----- ----- -----
PORTICO BALANCED
FUND 10,000 10,372 11,771 11,662 13,969 15,724 18,615
LIPPER BALANCED FUND
INDEX 10,000 10,481 12,167 12,093 14,220 16,281 19,553
S&P 500 STOCK INDEX 10,000 10,548 12,124 12,593 15,923 19,760 26,106
This chart assumes an initial investment of $10,000 made on 3/30/92 (inception).
Performance reflects fee waivers in effect. In the absence of fee waivers, total
return would be reduced. Returns shown include the reinvestment of all dividends
and other distributions. Past performance is not predictive of future
performance. Investment return and principal value will fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost.
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED OCTOBER 31, 1997
Since Inception
1 Year 3 Years 5 Years 3/30/92
------ ------- ------- -------
PORTICO BALANCED
FUND 18.4 16.9 12.4 11.8
LIPPER BALANCED FUND INDEX* 20.1 17.4 13.3 12.7
S&P 500 STOCK INDEX** 32.1 27.5 19.9 18.7
* The Lipper Balanced Fund Index is composed of the 30 largest mutual funds
whose primary objective is to conserve principal by maintaining a balanced
portfolio of stocks and bonds.
** The S&P 500 Stock Index is an index of 500 selected common stocks, most of
which are listed on the New York Stock Exchange. The Index is heavily weighted
toward stocks with large market capitalizations and represents approximately
two-thirds of the total market value of all domestic common stocks.
An investment cannot be made directly in an index.
Effective at the close of business on January 9, 1995, Portico Funds began to
offer Series A (retail) shares and Series Institutional shares. Series A shares,
unlike the Series Institutional shares, have a 4% maximum sales load and are
subject to an annual 0.25% service organization fee. Performance reflects fee
waivers in effect. In the absence of fee waivers, total return would be reduced.
TOP 5 EQUITY HOLDINGS 10/31/97
- -----------------------------------
TYCO INTERNATIONAL, LTD. 1.2%
CUC INTERNATIONAL, INC. 1.0%
MBIA, INC. 1.0%
LINCARE HOLDINGS, INC. 1.0%
SUNGARD DATA SYSTEMS, INC. 0.9%
Portfolio holdings are subject to
change and are not a representation
of the Fund's entire portfolio holdings.
TOTAL FUND NET ASSETS 10/31/97
- -----------------------------------
$208,408,180
GROWTH AND INCOME FUND
Portico Growth and Income Fund continues to provide competitive returns when
compared to its benchmarks. For the year ended October, the Fund posted a strong
+30.8% return, just behind the +32.1% gain of the S&P 500 Stock Index, but
comfortably ahead of the returns of the Lipper Growth & Income Index (+28.0%)
and the Lipper Equity Income Index (+26.7%).
The Growth and Income Fund's emphasis on dividend yield results in a chronic
underweighting of the technology sector. Since technology was among the top-
performing S&P 500 sectors during the past year, this hampered the Fund's return
versus the Index. The Fund's strong performance relative to the Lipper Indexes
can be attributed to significant exposure in two other top-performing market
sectors: finance and consumer cyclicals. The finance sector's performance was
driven by persistent earnings gains, no signs of inflation and lower interest
rates. Contributing to the Growth and Income Fund's solid performance in the
finance sector were holdings in Bank of New York, MGIC, Northern Trust, Norwest
Bancorp, Reliastar and Western National.
Low unemployment and improving income gains boosted consumer confidence,
resulting in impressive returns for stocks in the consumer cyclicals sector. The
Fund was double-weighted versus the market in this sector and outperformed with
strong results from The Gap, Interpublic Group and The New York Times. In the
consumer staples sector, stock selection played a key role with the Fund
outperforming the market thanks to winners CVS Corp. and McKesson (both
companies benefit from rising trends for prescriptions). Other stocks with a
favorable impact on the Fund's performance during the last year were Tyco
International, Pfizer and Xerox.
The market was volatile during the past year with significant declines in March,
August and October. Recurring inflation fears and, most recently, the economic
crisis in Southeast Asia caused the bull market to stumble. We used market
volatility to initiate positions in companies that meet our investment criteria
with new holdings in WW Grainger (as a major industrial distributor, Grainger
benefits from the trend toward corporate outsourcing), Warner-Lambert (we expect
an acceleration in earnings growth over the next three years due to several new
blockbuster drugs), and Travelers Group (the recent acquisition of Salomon
offers tremendous opportunities for this financial services company). See page
32 for a complete listing of portfolio holdings.
Going forward, the Fund is well-positioned to provide competitive returns. After
reviewing our Asian exposure, we anticipate only a modest impact on the
companies we own. Our intensive, company-focused research process not only helps
us to identify "undiscovered gems", but also helps us to avoid "negative
surprises." Our sell discipline, taking profits when stocks are fully valued
and eliminating companies where business trends are deteriorating, along with
our broad sector diversification strategy should enable the Fund to successfully
navigate today's market turbulence. The Growth and Income Fund's strong
performance during October, declining just -1.4% while the S&P 500 was down -
3.3%, illustrates the risk control built into our approach.
By sticking to our proven buy and sell disciplines, we believe the Fund can
continue to provide attractive returns for shareowners.
Thank you for your confidence in Portico Growth and Income Fund.
<PHOTO> <PHOTO>
MARIAN E. ZENTMYER, CFA, CFP MAYA K. BITTAR, CFA
PORTFOLIO MANAGER PROFILE
- ----------------------------------------------------------------------
MARIAN E. ZENTMYER, CFA, CFP, Senior Vice President and Senior Portfolio Manager
of Firstar Investment Research &Management Company, LLC (FIRMCO) and MAYA K.
BITTAR, CFA, Vice President and Portfolio Manager co-manage the Fund, Marian
since February 22, 1993, and Maya since October 1, 1995. Marian has been with
Firstar since 1982 and has 19 years of investment management experience. She
received her BAfrom Stanford University in 1978. Maya has been with Firstar
since 1993 and has six years of investment management experience. She received
her BBA in 1985 and her MBA and MS in 1991from the University of Wisconsin.
Marian is a Chartered Financial Analyst and a Certified Financial Planner. Maya
is a Chartered Financial Analyst.
<TABLE>
<CAPTION>
12/29/89 10/90 10/91 10/92 10/93 10/94 10/95 10/96 10/97
-------- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PORTICO GROWTH AND
INCOME FUND 10,000 9,304 11,688 12,368 13,596 13,846 17,307 21,963 28,734
S&P 500 STOCK INDEX 10,000 8,855 11,821 12,999 14,941 15,519 19,622 24,351 32,170
</TABLE>
This chart assumes an initial investment of $10,000 made on 12/29/89
(inception). Performance reflects fee waivers in effect. In the absence of fee
waivers, total return would be reduced. Returns shown include the reinvestment
of all dividends and other distributions. Past performance is not predictive of
future performance. Investment return and principal value will fluctuate, so
that your shares, when redeemed, may be worth more or less than their original
cost.
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED OCTOBER 31, 1997
Since Inception
1 Year 3 Years 5 Years 12/29/89
------ ------- ------- ---------
PORTICO GROWTH AND INCOME FUND 30.8 27.5 18.4 14.4
S&P 500 STOCK INDEX* 32.1 27.5 19.9 16.1
* The S&P 500 Stock Index is an index of 500 selected common stocks, most of
which are listed on the New York Stock Exchange. The Index is heavily weighted
toward stocks with large market capitalizations and represents approximately
two-thirds of the total market value of all domestic common stocks.
An investment cannot be made directly in an index.
Effective at the close of business on January 9, 1995, Portico Funds began to
offer Series A (retail) shares and Series Institutional shares. Series A shares,
unlike the Series Institutional shares, have a 4% maximum sales load and are
subject to an annual 0.25% service organization fee. Performance reflects fee
waivers in effect. In the absence of fee waivers, total return would be reduced.
TOP 5 HOLDINGS 10/31/97
- ------------------------------------
GAP, INC. 3.7%
TYCO INTERNATIONAL, LTD. 3.4%
MGICINVESTMENT CORPORATION 3.2%
MCKESSON CORPORATION 3.1%
XEROX CORPORATION 3.0%
Portfolio holdings are subject to
change and are not a representation
of the Fund's entire portfolio holdings.
TOTAL FUND NET ASSETS 10/31/97
- ------------------------------------
$494,089,535
EQUITY INDEX FUND
Portico Equity Index Fund seeks to provide investment returns, before Fund
expenses, comparable to the price and yield performance of publicly traded
stocks in the aggregate, as represented by the S&P 500 Stock Index. The Fund
does not use traditional methods of financial and market analysis when making
purchase and sale decisions; rather, the Fund invests primarily in common stocks
that comprise the S&P 500 Index in proportion with their relative capitalization
and sector weightings.
Portico Equity Index Fund's net asset value of $63.16 on October 31, 1997
represents a total return of +31.4% for the 12-month period, which was
comparable to the S&P 500's return of +32.1% over the same period.
We believe that by applying a capitalization weighting and sector balancing
technique that matches the structure of the S&P 500, as well as using S&P 500
futures contracts to equitize the cash, the Fund should reasonably track the
performance of the Index.
<PHOTO> <PHOTO>
DANIEL A. TRANCHITA, CFA CARL J. SMITH
PORTFOLIO MANAGER PROFILE
- ------------------------------------------------------------------------------
DANIEL A. TRANCHITA, CFA Vice President and Senior Portfolio Manager of Firstar
Investment Research & Management Company, LLC (FIRMCO) and CARL J. SMITH,
Assistant Vice President and Portfolio Manager co-manage the Fund - Dan since
July 1, 1992 and Carl since January 1, 1996. Dan has been with Firstar since
1989 and has eight years of investment management experience. He received his BA
in 1987 and his MBA in 1989 from Marquette University. Dan is a Chartered
Financial Analyst. Carl has been with Firstar since 1982 and has four years of
investment management experience. He received his BS in 1994 from Cardinal
Stritch College.
<TABLE>
<CAPTION>
12/29/89 10/90 10/91 10/92 10/93 10/94 10/95 10/96 10/97
-------- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PORTICO EQUITY INDEX
FUND 10,000 8,854 11,767 12,869 14,644 15,157 19,101 23,624 31,037
S&P 500 STOCK INDEX 10,000 8,855 11,821 12,999 14,941 15,519 19,622 24,351 32,170
</TABLE>
This chart assumes an initial investment of $10,000 made on 12/29/89
(inception). Performance reflects fee waivers in effect. In the absence of fee
waivers, total return would be reduced. Returns shown include the reinvestment
of all dividends and other distributions. Past performance is not predictive of
future performance. Investment return and principal value will fluctuate, so
that your shares, when redeemed, may be worth more or less than their original
cost.
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED OCTOBER 31, 1997
Since Inception
1 Year 3 Years 5 Years 12/29/89
------- ------- ------- --------
PORTICO EQUITY INDEX FUND 31.4 27.0 19.2 15.5
S&P 500 STOCK INDEX* 32.1 27.5 19.9 16.1
* The S&P 500 Stock Index is an index of 500 selected common stocks, most of
which are listed on the New York Stock Exchange. The Index is heavily weighted
toward stocks with large market capitalizations and represents approximately
two-thirds of the total market value of all domestic common stocks.
An investment cannot be made directly in an index.
Effective at the close of business on January 9, 1995, Portico Funds began to
offer Series A (retail) shares and Series Institutional shares. Series A shares,
unlike the Series Institutional shares, have a 4% maximum sales load and are
subject to an annual 0.25% service organization fee. In addition, the purchase
price adjustment on the Fund no longer applies to either the Series A or Series
Institutional shares. The performance for the Series Institutional shares have
been restated to reflect the elimination of the purchase price adjustment.
Performance reflects fee waivers in effect. In the absence of fee waivers, total
return would be reduced.
TOP 5 HOLDINGS 10/31/97
- ------------------------------------
GENERAL ELECTRIC COMPANY 2.8%
MICROSOFT CORPORATION 2.1%
EXXON CORPORATION 2.0%
COCA-COLA COMPANY 1.9%
INTEL CORPORATION 1.7%
Portfolio holdings are subject to
change and are not a representation
of the Fund's entire portfolio holdings.
TOTAL FUND NET ASSETS 10/31/97
- ------------------------------------
$392,625,201
GROWTH FUND
Portico Growth Fund achieved a +21.6% total return for the twelve months ended
October 31, 1997. While we are pleased with the Fund's absolute return, we are
not satisfied with the return relative to the Fund's benchmarks. During this
same time period, the S&P 500 Stock Index posted a +32.1% return while the S&P
MidCap 400 Index gained +32.7% and the Lipper Growth Fund Index advanced +28.4%.
Significantly impacting the relative performance of the Fund during the year was
the market capitalization of the portfolio's holdings. In April's semi-annual
report, the weighted-average market capitalization of the Fund was reported at
$11.9 billion. On October 31, 1997, the weighted-average market capitalization
was $17.9 billion, a 50% increase. In May, we changed the name of the Fund from
Portico MidCore Growth Fund to Portico Growth Fund. While no major change in
objectives or investment strategy occurred (we continue to invest in medium to
large-sized companies), we made a conscious decision to increase the average
market capitalization of the portfolio's holdings. We made this decision for two
reasons. First, to better differentiate Portico Growth Fund from our medium-
sized company portfolio, Portico Special Growth Fund. And second, to better
reflect the capitalization characteristics of the Fund's benchmark, the S&P 500
Stock Index.
The timing of this decision hurt the Fund's return. Large company stocks
performed poorly compared to medium-sized company stocks in the May-October time
period. Conversely, large company stocks dominated medium-sized company stocks
during the November 1996 to April 1997 time period. For example, combining the
return of the S&P MidCap 400 Index for the first half of the fiscal year with
the return of the S&P 500 Index for the second half produces a +23.1% return for
the full year. Although this timing difference hurt our fiscal year return, we
are encouraged by the fact that the Fund's +16.1% return during the last six
months of the year comfortably exceeded the +15.2% return of the S&P 500.
Over the last year, the Fund's over-weighted position in finance, one of the
market's top-performing sectors, was well rewarded with excellent returns from
MBNA and MGIC. Extensive holdings in consumer cyclical stocks, another strong
sector, including companies such as Carnival Cruise Lines, CUC International,
Harley Davidson, Interpublic Group, and Pittston Brinks, were positive
contributors to the Fund's performance. Together, the finance and consumer
cyclical sectors represented 42% of the Growth Fund's holdings. Offsetting our
positive relative performance in these two sectors was weakness in our
healthcare and technology investments. Deteriorating business trends for core
holdings Columbia/HCA, Electronic Data Systems, First Data, and IKON Office
Solutions resulted in poor stock performance and negatively impacted the Fund's
return.
The Fund added several new positions during the last six months, particularly in
the large company area. Disney will soon open another gate attraction in
Orlando, called "Animal Kingdom." Historically, new attractions are a positive
for the stock's valuation. Travelers, a large financial services provider,
should have strong earnings growth over the next year as recently acquired
Salomon is integrated. Lucent Technologies, spun out of AT&T in 1996, is growing
rapidly as an independent company as demand for communication networks continues
to accelerate both domestically and abroad. See page 41 for a complete listing
of portfolio holdings.
Looking forward, we are optimistic. The current economic environment,
characterized by low unemployment, low inflation and strong corporate profit
growth, is ideal for the stock market. Increased market volatility should
provide more opportunities to purchase quality, persistent growth companies at
attractive prices. We intend to take advantage of these opportunities.
We appreciate your patience during this transition year for Portico Growth Fund.
We believe the shift in Fund focus to larger company stocks strengthens the
Portico Fund "lineup." We are committed to the diligent execution of our
growth-at-a-reasonable-price strategy and look forward to generating strong
relative investment performance for our shareowners in the new year.
<PHOTO> <PHOTO> <PHOTO>
MARIAN E. ZENTMYER, CFA, CFP MAYA K. BITTAR, CFA WALTER DEWEY, CFA
PORTFOLIO MANAGER PROFILE
- ----------------------------------------------------------------------
MARIAN E. ZENTMYER, CFA, CFP, Senior Vice President and Senior Portfolio Manager
of Firstar Investment Research & Management Company, LLC (FIRMCO), MAYA K.
BITTAR, CFA, Vice President and Portfolio Manager and WALTER DEWEY, CFA, Vice
President and Senior Portfolio Manager co-manage the Fund -- Marian since June
19, 1996, Maya since December 1, 1996, and Walter since July 7, 1997. Marian has
been with Firstar since 1982 and has 19 years of investment management
experience. She received her BA from Stanford University in 1978. Maya has been
with Firstar since 1993 and has six years of investment management experience.
She received her BBA in 1985 and her MBA and MS in 1991 from the University of
Wisconsin. Walter has been with Firstar since 1986 and has 14 years of
investment management experience. He received his BBA in 1983 from the
University of Wisconsin.
12/29/92 10/93 10/94 10/95 10/96 10/97
-------- ----- ----- ----- ----- -----
PORTICO GROWTH FUND 10,000 10,753 10,813 12,927 15,360 18,671
S&P 500 STOCK INDEX 10,000 10,981 11,406 14,422 17,898 23,645
This chart assumes an initial investment of $10,000 made on 12/29/92
(inception). Performance reflects fee waivers in effect. In the absence of fee
waivers, total return would be reduced. Returns shown include the reinvestment
of all dividends and other distributions. Past performance is not predictive of
future performance. Investment return and principal value will fluctuate, so
that your shares, when redeemed, may be worth more or less than their original
cost.
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED OCTOBER 31, 1997
Since Inception
1 Year 3 Years 12/29/92
------ ------- --------
PORTICO GROWTH FUND 21.6 20.0 13.8
S&P 500 STOCK INDEX* 32.1 27.5 19.5
The S&P500 Stock Index is an index of 500 selected common stocks, most of
which are listed on the New York Stock Exchange. The Index is heavily weighted
toward stocks with large market capitalizations and represents approximately
two-thirds of the total market value of all domestic common stocks.
An investment cannot be made directly in an index.
Effective at the close of business on January 9, 1995, Portico Funds began to
offer Series A (retail) shares and Series Institutional shares. Series A shares,
unlike the Series Institutional shares, have a 4% maximum sales load and are
subject to an annual 0.25% service organization fee. Performance reflects fee
waivers in effect. In the absence of fee waivers, total return would be reduced.
TOP 5 HOLDINGS 10/31/97
- ------------------------------------
TYCO INTERNATIONAL, LTD. 3.6%
MBIA, INC. 3.3%
CUC INTERNATIONAL, INC. 3.0%
PITTSTON BRINK'S GROUP 2.6%
SUNGARD DATA SYSTEMS, INC 2.5%
Portfolio holdings are subject to
change and are not a representation
of the Fund's entire portfolio holdings.
TOTAL FUND NET ASSETS 10/31/97
- ------------------------------------
$206,692,558
SPECIAL GROWTH FUND
Portico Special Growth Fund gained +22.4% for the fiscal year ended October 31,
1997, compared to a +32.7% return for the S&P MidCap 400 Index and a +27.2%
return for the Wilshire MidCap 750 Index. The Fund's return lagged the S&P 500
Stock Index return of +32.1% during the fiscal year as large company stocks
outpaced most mid and small cap stocks. However, in the final three months of
the fiscal year, midcap and small cap companies significantly out-gained larger
companies. Since inception on December 28, 1989, your Fund's return has been
competitive, gaining an average +16.1% annually against returns of +15.3% for
the Wilshire MidCap 750 Index and +16.1% for the S&P 500 Stock Index.
Over the past fiscal year, the Fund continued to be overweighted in the areas of
finance, health care, consumer cyclicals, and technology sectors. The Fund's
relative-return was hurt by its double weighting in health care which was one of
the weakest performing sectors of the S&P MidCap 400 Index, posting a modest +6%
return for the year. However, the Fund benefited from a 22% weighting in finance
stocks. The Fund's finance holdings gained +52% versus a +61% return for the
finance sector of the Index. We continued to underweight slower growing sectors
such as transportation, utilities, and energy. Though these sectors were above
average performers in the fiscal year, our investment philosophy emphasizes
sustainable growth and consistent operating results.
During fiscal 1997, Charles Schwab, Quick & Reilly, Health Management
Associates, Dollar General, and General Nutrition each added over +1% to the
Fund's return. Laggards Oxford Health, Chesapeake Energy, Xilinx, and Credit
Acceptance cost the Fund over 3% of performance. However, only Oxford Health
impacted the Fund by more than 1%. See page 43 for a complete listing of
portfolio holdings.
With a weighted average market capitalization of $3.1 billion, the Fund is in
lockstep with the S&P MidCap 400 Index and is significantly below the $50
billion weighted average capitalization of the S&P 500 Stock Index. The Fund's
weighted price-to-earnings ratio is currently 21X, similar to that of the S&P
MidCap 400 Index and the S&P 500 Stock Index. However, the estimated earnings
growth of the Fund's holdings is significantly higher than both indices. We
believe the midcap area of the domestic equity market offers good value at
current price, hence, we remain fully invested.
We feel Portico Special Growth is well positioned to benefit from the high
relative growth rates of mid-sized companies. We appreciate your continued
support.
<PHOTO> <PHOTO>
J. SCOTT HARKNESS, CFA TODD M. KRIEG, CFA, JD
PORTFOLIO MANAGER PROFILE
- ------------------------------------------------------------------------------
J. SCOTT HARKNESS, CFA, Chief Investment Officer of Firstar Investment Research
& Management Company, LLC (FIRMCO), and TODD M. KRIEG, CFA, JD, Vice President,
Portfolio Manager and Research Director co-manage the Fund - Scott since its
inception on December 28, 1989 and Todd since September 1994. Scott has been
with Firstar for 17 years and has more than 19 years of investment management
experience. He received his BA from the University of Wisconsin in 1977. Todd
has been with Firstar for five years and received his BA from Williams College
in 1983 and a JD from Georgetown University in 1989. Scott and Todd are both
Chartered Financial Analysts.
<TABLE>
<CAPTION>
12/29/89 10/90 10/91 10/92 10/93 10/94 10/95 10/96 10/97
-------- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PORTICO SPECIAL
GROWTH FUND 10,000 8,953 14,346 15,617 18,138 18,641 23,449 26,399 32,323
S&P MIDCAP 400 10,000 8,293 13,360 14,804 17,992 18,420 22,327 26,200 34,760
S&P 500 STOCK INDEX 10,000 8,855 11,821 12,999 14,941 15,519 19,622 24,351 32,170
</TABLE>
This chart assumes an initial investment of $10,000 made on 12/28/89
(inception). Performance reflects fee waivers in effect. In the absence of fee
waivers, total return would be reduced. Returns shown include the reinvestment
of all dividends and other distributions. Past performance is not predictive of
future performance. Investment return and principal value will fluctuate, so
that your shares, when redeemed, may be worth more or less than their original
cost.
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED OCTOBER 31, 1997
Since Inception
1 Year 3 Years 5 Years 12/28/89
------ ------- ------- ---------
PORTICO SPECIAL GROWTH FUND 22.4 20.1 15.7 16.1
S&P 500 STOCK INDEX* 32.1 27.5 19.9 16.1
S&P MIDCAP 400 INDEX** 32.7 23.6 18.6 17.2
* The S&P 500 Stock Index is an index of 500 selected common stocks, most of
which are listed on the New York Stock Exchange. The Index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks.
**The S&P MidCap 400 Index is a capital-weighted index, representing the
aggregate market value of the common equity of 400 stocks chosen by Standard
&Poor's with a median capitalization of approximately $700 million.
An investment cannot be made directly in an index.
Effective at the close of business on January 9, 1995, Portico Funds began to
offer Series A (retail) shares and Series Institutional shares. Series A shares,
unlike the Series Institutional shares, have a 4% maximum sales load and are
subject to an annual 0.25% service organization fee. Performance reflects fee
waivers in effect. In the absence of fee waivers, total return would be reduced.
TOP 5 HOLDINGS 10/31/97
- -------------------------------------------
PROTECTIVE LIFE CORPORATION 3.6%
HEALTH MANAGEMENT ASSOCIATES, INC. 3.4%
AMBAC, INC. 3.3%
SHARED MEDICAL SYSTEMS CORPORATION 3.2%
THE CHARLES SCHWAB CORPORATION 3.1%
Portfolio holdings are subject to change
and are not a representation of the Fund's
entire portfolio holdings.
TOTAL FUND NET ASSETS 10/31/97
- -------------------------------------------
$716,424,422
INTERNATIONAL EQUITY FUND
The change in sub-adviser from State Street Global Advisors to Hansberger Global
Investors (HGI) for Portico International Equity Fund took effect on September
2, 1997. Hansberger is headquartered in Fort Lauderdale, Florida with offices in
Dublin, Hong Kong, and Moscow. As of October 31, 1997, HGI had approximately
$1.4 billion in assets under management for separate, private and institutional
accounts and investment companies.
Hansberger's research discipline, a significant change from the passive style
employed by the previous sub-adviser, is a fundamental, bottom-up approach
searching internationally for undervalued companies. This research focuses on
over 50 developed and emerging markets.
Portico International Equity Fund's restructuring occurred throughout September,
with the number of holdings falling from 780 to 169. The current portfolio is
well diversified across many industries and 38 markets. Among the most
significant changes to the Fund's market allocation has been reduced exposure to
Germany, Japan, France, and Italy. Previously representing 65% of the Fund,
these markets now account for approximately 15% of the Fund's portfolio. The
largest market exposure is now the Great Britain, which represents approximately
15% of the portfolio.
The investment environment in Asia has changed in recent months with an
overabundance of pessimism -- a change which has created enthusiasm among
Hansberger analysts as this recent volatility in global markets has made
companies inexpensive and/or overlooked. Overall, despite the uncertainty in the
current financial markets, we remain optimistic as long-term value investors.
As always, we continue to believe investing internationally is an effective
strategy to diversify your portfolio while offering the potential for attractive
returns over the long-term.
Note: Investments in foreign securities involve some risk not associated with
investments in domestic securities such as foreign currency fluctuations, and
economic and political risks.
<PHOTO> <PHOTO> <PHOTO> <PHOTO>
JAMES E. CHANEY JOHN HOCK, CFA ROBERT MAZUELOS DANIEL TRANCHITA, CFA
PORTFOLIO MANAGER PROFILE
- ----------------------------------------------------------------------
JAMES E. CHANEY, Chief Investment Officer of Hansberger Global Investors, Inc.
(HGI), the Fund's sub-adviser, JOHN HOCK, CFA, Research Analyst and Assistant
Portfolio Manager of HGI, ROBERT MAZUELOS, Research Analyst and Assistant
Portfolio Manager of HGI, and DANIEL A. TRANCHITA, CFA, Vice President and
Senior Portfolio Manager of Firstar Investment Research & Management Company,
LLC (FIRMCO), the Fund's adviser, co-manage the Fund -- James, John and Robert
since September 2, 1997 (when the sub-advisory agreement with HGI went into
affect) and Dan since the funds inception April 28, 1994. Jim has been with HGI
since 1996 and has 13 years of investment management experience. He received his
BS from the University of Massachusetts - Amherst in 1979, his MS from
Northeastern University in 1983 and his MBA from Columbia University in 1987.
John has been with HGI since 1995 and has seven years of investment management
experience. He received his BS from Cornell University in 1990 and his MBA from
New York University in 1995. John is a Chartered Financial Analyst. Robert has
been with HGI since 1995 and has seven years of investment management
experience. He received his BS from the University of Florida in 1990. Dan has
been with Firstar since 1989 and has eight years of investment management
experience. He received his BA in 1987 and his MBA in 1989 from Marquette
University. Dan is a Chartered Financial Analyst.
4/28/94 10/94 10/95 10/96 10/97
-------- ----- ------ ------ -----
PORTICO INTERNATIONAL
EQUITY FUND 10,000 9,995 9,620 10,410 9,879
EAFE INDEX 10,000 10,429 10,390 11,478 12,009
This chart assumes an initial investment of $10,000 made on 4/28/94 (inception).
Performance reflects fee waivers in effect. In the absence of fee waivers, total
return would be reduced. Returns shown include the reinvestment of all dividends
and other distributions. Past performance is not predictive of future
performance. Investment return and principal value will fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost.
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED OCTOBER 31, 1997
Since Inception
1 Year 3 Years 4/28/94
------ ------- -------
PORTICO INTERNATIONAL EQUITY (5.1) (0.4) (0.3)
FUND
EAFE Index* 4.6 4.8 5.4
* The Morgan Stanely Capital International Europe, Australia and Far East Index
("MSCI/EAFE") is an unmanaged index composed of companies representative of
the market structure of 20 Eurpoean and Pacific Basin countries. The
MSCI/EAFE Index is the most recognized international index and is weighted by
market capitalization.
An investment cannot be made directly in an index.
Effective at the close of business on January 9, 1995, Portico Funds began to
offer Series A (retail) shares and Series Institutional shares. Series A shares,
unlike the Series Institutional shares, have a 4% maximum sales load and are
subject to an annual 0.25% service organization fee. In addition, the purchase
price adjustment on the Fund no longer applies to either the Series A or Series
Institutional shares. The performance for the Series Institutional shares have
been restated to reflect the elimination of the purchase price adjustment.
Performance reflects fee waivers in effect. In the absence of fee waivers, total
return would be reduced.
TOP 5 COUNTRIES 10/31/97
- -----------------------------------
GREAT BRITAIN 15.4%
JAPAN 6.2%
HONG KONG 5.3%
SPAIN 4.9%
FRANCE 4.7%
Portfolio holdings are subject to
change and are not a representation
of the Fund's entire portfolio holdings.
TOTAL FUND NET ASSETS 10/31/97
- -----------------------------------
$63,707,801
STATEMENT OF ASSETS AND LIABILITIES
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
OCTOBER 31, 1997
GROWTH
BALANCED AND INCOME EQUITY INDEX
FUND FUND FUND
---- ---- ----
ASSETS:
Investments, at value (cost $173,221,
$348,011, $239,687, $150,334,
$548,046 and $69,751, respectively) $208,182 $500,737 $392,365
Foreign currency (cost $522) - - -
Income receivable 1,131 881 557
Capital shares sold 556 1,107 1,939
Receivable for securities sold 871 - 575
Receivable for foreign currency sold - - -
Other assets 6 27 14
--------- --------- ---------
Total Assets 210,746 502,752 395,450
--------- --------- ---------
LIABILITIES:
Payable for securities purchased 1,945 7,970 2,084
Payable for foreign currency purchased - - -
Capital shares redeemed 193 211 525
Payable to affiliates 179 441 189
Accrued expenses and other liabilities 21 40 27
--------- --------- ---------
Total Liabilities 2,338 8,662 2,825
--------- --------- ---------
NET ASSETS $208,408 $494,090 $392,625
========= ========= =========
NET ASSETS CONSIST OF:
Capital stock $156,308 $323,132 $232,915
Undistributed net investment income
(loss) 460 535 513
Undistributed accumulated net
realized gains on:
Investments 16,679 17,697 6,563
Unrealized net appreciation
(depreciation) on:
Investments 34,961 152,726 152,678
Futures contracts - - (44)
Foreign currency - - -
--------- --------- ---------
Total Net Assets $208,408 $494,090 $392,625
========= ========= =========
SERIES A:
Net assets $ 44,026 $128,070 $ 76,866
Shares authorized ($.0001 par value) 500,000 500,000 500,000
Shares issued and outstanding 1,444 3,264 1,218
Net asset value and redemption price
per share <F1> $30.48 $39.24 $63.11
========= ========= =========
Maximum offering price per share <F1> $31.75 $40.88 $65.74
========= ========= =========
SERIES INSTITUTIONAL:
Net assets $164,382 $366,020 $315,759
Shares authorized ($.0001 par value) 500,000 500,000 500,000
Shares issued and outstanding 5,388 9,319 5,000
Net asset value, redemption price
and offering price per share <F1> $30.51 $39.28 $63.16
========= ========= =========
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
OCTOBER 31, 1997
SPECIAL INTERNATIONAL
GROWTH GROWTH EQUITY
FUND FUND FUND
---- ---- ----
ASSETS:
Investments, at value (cost $173,221,
$348,011, $239,687, $150,334,
$548,046 and $69,761, respectively) $207,654 $721,245 $63,527
Foreign currency (cost $522) - - 523
Income receivable 142 170 271
Capital shares sold 502 1,108 895
Receivable for securities sold 631 10,247 134
Receivable for foreign currency sold - - 1
Other asset 9 6 21
--------- --------- ---------
Total Assets 208,938 732,776 65,372
--------- --------- ---------
LIABILITIES:
Payable for securities purchased 1,875 15,025 431
Payable for foreign currency purchased - - 29
Capital shares redeemed 151 611 70
Payable to affiliates 201 681 260
Accrued expenses and other liabilities 18 35 874
--------- --------- ---------
Total Liabilities 2,245 16,352 1,664
--------- --------- ---------
NET ASSETS $206,693 $716,424 $63,708
========= ========= =========
NET ASSETS CONSIST OF:
Capital stock $119,330 $472,794 $68,403
Undistributed net investment
income (loss) 121 (2) 275
Undistributed accumulated net
realized gains on:
Investments 29,922 70,433 1,254
Unrealized net appreciation
(depreciation) on:
Investments 57,320 173,199 (6,224)
Futures contracts - - -
Foreign currency - - -
--------- --------- ---------
Total Net Assets $206,693 $716,424 $63,708
========= ========= =========
SERIES A:
Net assets $ 25,043 $147,396 $ 6,502
Shares authorized ($.0001 par value) 500,000 500,000 500,000
Shares issued and outstanding 710 3,323 350
Net asset value and redemption price
per share <F1> $35.27 $44.36 $18.58
========= ========= =========
Maximum offering price per share <F1> $36.74 $46.21 $19.35
========= ========= =========
SERIES INSTITUTIONAL:
Net assets $181,650 $569,028 $ 57,206
Shares authorized ($.0001 par value) 500,000 500,000 500,000
Shares issued and outstanding 5,120 12,729 3,068
Net asset value, redemption price and
offering price per share <F1> $35.48 $44.70 $18.64
========= ========= =========
<F1> Amounts may not recalculate due to rounding.
See notes to the financial statements.
STATEMENT OF CHANGES IN NET ASSETS
(AMOUNTS IN THOUSANDS)
BALANCED FUND GROWTH AND INCOME FUND
-------------- ---------------
Year ended Year ended
October 31, October 31,
--------------------- -------------------
1997 1996 1997 1996
---- ---- ---- ----
OPERATIONS:
Net investment income (loss) $ 4,197 $ 2,939 $ 5,272 $ 4,076
Net realized gain on:
Investments 17,108 9,418 17,736 25,182
Foreign currency - - - -
Change in unrealized appreciation
(depreciation) on:
Investments 9,540 4,478 83,976 29,232
Foreign currency - - - -
-------- -------- -------- --------
Net increase in net assets
resulting from operations 30,845 16,835 106,984 58,490
-------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Shares sold 82,936 65,662 182,721 83,323
Shares issued to owners in
reinvestment of dividends 13,325 5,339 27,125 11,607
Shares redeemed (63,501) (50,314) (90,531) (47,816)
-------- -------- -------- --------
Net increase (decrease) in
net assets as a result of
capital share transactions 32,760 20,687 119,315 47,114
-------- -------- -------- --------
DISTRIBUTIONS TO SERIES A
SHAREOWNERS:
From net investment income (722) (449) (1,107) (724)
From net realized gains (1,751) (485) (5,918) (1,827)
-------- -------- -------- --------
(2,473) (934) (7,025) (2,551)
-------- -------- -------- --------
DISTRIBUTIONS TO SERIES
INSTITUTIONAL SHAREOWNERS:
From net investment income (3,385) (2,354) (4,136) (3,021)
From net realized gains (7,788) (2,169) (19,246) (7,010)
-------- -------- -------- --------
(11,173) (4,523) (23,382) (10,031)
-------- -------- -------- --------
TOTAL INCREASE IN NET ASSETS 49,959 32,065 195,892 93,022
NET ASSETS:
Beginning of year 158,449 126,384 298,198 205,176
-------- -------- -------- --------
End of year (including
undistributed net
investment income (loss)
of $460, $367, $535, $507,
$513, $382, $121, $(2),
$(2), $(1), $275 and $207,
respectively) $208,408 $158,449 $494,090 $298,198
======== ======== ======== ========
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
(AMOUNTS IN THOUSANDS)
EQUITY INDEX FUND GROWTH FUND
----------------- -----------
Year ended Year ended
October 31, October 31,
------------------- ------------
1997 1996 1997 1996
---- ---- ---- ----
OPERATIONS:
Net investment income (loss) $ 5,279 $ 4,423 $ 119 $ (103)
Net realized gain on:
Investments 7,245 2,908 30,037 12,442
Foreign currency - - - -
Change in unrealized appreciation
(depreciation) on:
Investments 68,766 38,137 6,762 15,736
Foreign currency - - - -
-------- -------- -------- --------
Net increase in net assets
resulting from operations 81,290 45,468 36,918 28,075
-------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Shares sold 164,226 113,777 56,737 50,218
Shares issued to owners in
reinvestment of dividends 7,676 5,332 5,867 -
Shares redeemed (103,969) (63,944) (57,271) (50,897)
-------- -------- -------- --------
Net increase (decrease) in
net assets as a result of
capital share transactions 67,933 55,165 5,333 (679)
-------- -------- -------- --------
DISTRIBUTIONS TO SERIES A
SHAREOWNERS:
From net investment income (822) (495) - -
From net realized gains (516) (165) (740) -
-------- -------- -------- --------
(1,338) (660) (740) -
======== ======== ======== ========
DISTRIBUTIONS TO SERIES
INSTITUTIONAL SHAREOWNERS:
From net investment income (4,327) (3,791) - -
From net realized gains (2,661) (1,223) (6,747) -
-------- -------- -------- --------
(6,988) (5,014) (6,747) -
-------- -------- -------- --------
TOTAL INCREASE IN NET ASSETS 140,897 94,959 34,764 27,39
NET ASSETS:
Beginning of year 251,728 156,769 171,929 144,533
-------- -------- -------- --------
End of year (including
undistributed net investment
income (loss) of $460, $367,
$535, $507, $513, $382, $121,
$(2), $(2), $(1), $(275) and
$207, respectively) $392,625 $251,728 $206,693 $171,929
======== ======== ======== ========
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
(AMOUNTS IN THOUSANDS)
INTERNATIONAL
SPECIAL GROWTH FUND EQUITY FUND
------------------- -------------
Year ended Year ended
October 31, October 31,
------------------ ---------------
1997 1996 1997 1996
---- ---- ---- ----
OPERATIONS:
Net investment income (loss) $ (2,028) $ (841) $ (174) $ 259
Net realized gain on:
Investments 70,538 77,360 1,964 1,006
Foreign currency - - 28 (33)
Change in unrealized appreciation
(depreciation) on:
Investments 67,542 (11,614) (5,960) 1,581
Foreign currency - - (1) (2)
-------- -------- -------- --------
Net increase in net assets
resulting from operations 136,052 64,905 (4,143) 2,811
-------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Shares sold 204,220 166,347 32,361 17,724
Shares issued to owners in
reinvestment of dividends 67,741 52,218 1,265 753
Shares redeemed (210,150) (153,470) (11,236) (6,306)
-------- -------- -------- --------
Net increase (decrease) in
net assets as a result of
capital share transactions 61,811 65,095 22,390 12,171
-------- -------- -------- --------
DISTRIBUTIONS TO SERIES A
SHAREOWNERS:
From net investment income - - (25) (6)
From net realized gains (14,101) (9,690) (92) (34)
-------- -------- -------- --------
(14,101) (9,690) (117) (40)
-------- -------- -------- --------
DISTRIBUTIONS TO SERIES
INSTITUTIONAL SHAREOWNERS:
From net investment income - - (363) (174)
From net realized gains (61,354) (47,791) (1,010) (637)
-------- -------- -------- --------
(61,354) (47,791) (1,373) (811)
-------- -------- -------- --------
TOTAL INCREASE IN NET ASSETS 122,408 72,519 16,757 14,131
NET ASSETS:
Beginning of year 594,016 521,497 46,951 32,820
-------- -------- -------- --------
End of year (including
undistributed net
investment income (loss)
of $460, $367, $535, $507,
$513, $382, $121, $(2),
$(2), $(1), $(275) and
$207, respectively) $716,424 $594,016 $63,708 $46,951
======== ======== ======== ========
See notes to the financial statements.
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
BALANCED FUND
--------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended
October 31, 1997 October 31, 1996 October 31, 1995<F4> October 31,
---------------- ---------------- ---------------- ----------------
Series Series Series Series Series Series
A Institutional A Institutional A Institutional 1994 1993
-------- -------- -------- -------- -------- -------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Data:
Net asset value,
beginning of period $27.98 $27.99 $25.89 $25.90 $22.10 $22.10 $22.76 $20.49
Income from investment operations:
Net investment income 0.58 0.66 0.47<F9> 0.55<F9> 0.49 0.53 0.44 0.47
Net realized and unrealized
gains (losses) on securities 4.19 4.20 2.64 2.62 3.77 3.78 (0.66) 2.27
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 4.77 4.86 3.11 3.17 4.26 4.31 (0.22) 2.74
------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment
income (0.59) (0.66) (0.47) (0.53) (0.47) (0.51) (0.44) (0.47)
Distributions from capital gains (1.68) (1.68) (0.55) (0.55) - - - -
------ ------ ------ ------ ------ ------ ------ ------
Total distributions (2.27) (2.34) (1.02) (1.08) (0.47) (0.51) (0.44) (0.47)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $30.48 $30.51 $27.98 $27.99 $25.89 $25.90 $22.10 $22.76
====== ====== ====== ====== ====== ====== ====== ======
Total return <F5><F6> 18.07% 18.39% 12.30% 12.56% 19.55% 19.79% (0.93)% 13.49%
Supplemental data and ratios:
Net assets, in thousands, end
of period $44,026 $164,382 $29,034 $129,415 $21,832 $104,552 $94,657 $82,099
Ratio of net expenses
to average net assets <F7> 1.00% 0.75% 1.00% 0.75% 0.94% 0.75% 0.75% 0.75%
Ratio of net investment income
to average net assets <F7> 2.06% 2.31% 1.80% 2.05% 2.05% 2.24% 2.03% 2.24%
Portfolio turnover rate <F8> 69.90% 69.90% 63.91% 63.91% 61.87% 61.87% 59.77% 71.60%
Average commission rate paid <F8> $0.0552 $0.0552 $0.0581 $0.0581
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<CAPTION>
GROWTH AND INCOME FUND
---------------------------------------------------------------------------------
Year ended Year ended Year ended
October 31, 1997 October 31, 1996 October 31, 1995<F4>Year ended October 31,
---------------- ---------------- ---------------- ----------------
Series Series Series Series Series Series
A Institutional A Institutional A Institutional 1994 1993<F2>
-------- -------- -------- -------- -------- -------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Data:
Net asset value,
beginning of period $33.07 $33.08 $27.62 $27.63 $23.09 $23.09 $23.70 $22.27
Income from investment operations:
Net investment income 0.37 0.46 0.42<F9> 0.50<F9> 0.37 0.42 0.43 0.56
Net realized and unrealized
gains (losses) on securities 8.92 8.94 6.61 6.61 5.14 5.14 (0.03) 1.63
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 9.29 9.40 7.03 7.11 5.51 5.56 0.40 2.19
------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment
income (0.39) (0.47) (0.39) (0.47) (0.38) (0.42) (0.42) (0.57)
Distributions from capital gains (2.73) (2.73) (1.19) (1.19) (0.60) (0.60) (0.59) (0.19)
------ ------ ------ ------ ------ ------ ------ ------
Total distributions (3.12) (3.20) (1.58) (1.66) (0.98) (1.02) (1.01) (0.76)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $39.24 $39.28 $33.07 $33.08 $27.62 $27.63 $23.09 $23.70
====== ====== ====== ====== ====== ====== ====== ======
Total return <F5><F6> 30.47% 30.83% 26.62% 26.90% 24.75% 25.00% 1.84% 9.93%
Supplemental data and ratios:
Net assets, in thousands, end
of period $128,070 $366,020 $71,310 $226,888 $42,424 $162,752 $164,053 $160,704
Ratio of net expenses
to average net assets <F7> 1.12% 0.87% 1.15% 0.90% 1.09% 0.90% 0.90% 0.88%
Ratio of net investment income
to average net assets <F7> 1.09% 1.34% 1.42% 1.67% 1.51% 1.70% 1.89% 2.44%
Portfolio turnover rate <F8> 31.36% 31.36% 51.37% 51.37% 47.85% 47.85% 56.85% 86.24%
Average commission rate paid <F8> $0.0558 $0.0558 $0.0573 $0.0573
<FN>
<F1> Commencement of operations.
<F2> Effective June 17, 1993, FIRMCO assumed the investment advisory responsibilities of Firstar Trust Company.
<F3> Effective February 3, 1992, FIRMCO assumed the investment advisory responsibilities of Firstar Trust Company.
<F4> On January 9, 1995, all previously existing series of shares of each Fund were reclassified as Series A shares. Effective
January 9, 1995, Institutional shareowners exchanged their Series A shares for the Funds' Institutional series shares. For the
year ended October 31, 1995, the Financial Highlights ratios of net expenses to average net assets, ratios of net investment
income to average net assets, total return and the per share income from investment operations and distributions are presented
on a basis whereby the Funds' net investment income, net expenses, net realized and unrealized gains (losses) and distributions
for the period November 1, 1994, through January 9, 1995, were allocated to each class of shares based upon the relative net
assets of each class of shares as of the close of business on January 9, 1995, and the results thereof combined with the
results of operations and distributions for each applicable class for the period January 10, 1995, through October 31, 1995.
<F5> Not annualized for the period ended October 31, 1993, for the Growth Fund and for the period ended October 31, 1994, for the
International Equity Fund.
<F6> The total return does not reflect the 4% front-end sales charge for Series A.
<F7> Annualized for the period ended October 31, 1993, for the Growth Fund and for the period ended October 31, 1994, for the
International Equity Fund.
<F8> Portfolio turnover and average commission rate paid is calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
<F9> Net investment income per share is calculated using ending balances prior to consideration of adjustments for permanent book
and tax differences.
<F10>Effective September 2, 1997, Hansberger Global Investors assumed the investment sub-advisory responsibilities of State Street
Global Advisors.
</TABLE>
See notes to the financial statements.
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
EQUITY INDEX FUND
------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended
October 31, 1997 October 31, 1996 October 31, 1995<F4> October 31,
---------------- ---------------- ---------------- ----------------
Series Series Series Series Series Series
A Institutional A Institutional A Institutional 1994 1993
-------- -------- -------- -------- -------- -------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Data:
Net asset value,
beginning of period $49.40 $49.43 $41.07 $41.08 $33.41 $33.41 $33.04 $29.72
Income from investment operations:
Net investment income (loss) 0.80 0.95 0.77<F9> 0.91<F9> 0.70 0.76 0.77 0.75
Net realized and unrealized
gains (losses) on securities 14.33 14.33 8.69 8.68 7.70 7.71 0.35 3.32
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 15.13 15.28 9.46 9.59 8.40 8.47 1.12 4.07
------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment
income (0.81) (0.94) (0.78) (0.89) (0.68) (0.74) (0.75) (0.75)
Distributions from capital gains (0.61) (0.61) (0.35) (0.35) (0.06) (0.06) - -
------ ------ ------ ------ ------ ------ ------ ------
Total distributions (1.42) (1.55) (1.13) (1.24) (0.74) (0.80) (0.75) (0.75)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $63.11 $63.16 $49.40 $49.43 $41.07 $41.08 $33.41 $33.04
====== ====== ====== ====== ====== ====== ====== ======
Total return <F5><F6> 31.08% 31.38% 23.36% 23.68% 25.79% 26.02% 3.51% 13.79%
Supplemental data and ratios:
Net assets, in thousands, end
of period $76,866 $315,759 $39,656 $212,072 $18,663 $138,106 $107,563 $83,820
Ratio of net expenses
to average net assets <F7> 0.63% 0.38% 0.66% 0.41% 0.66% 0.46% 0.50% 0.50%
Ratio of net investment income
to average net assets <F7> 1.40% 1.66% 1.76% 2.01% 2.14% 2.34% 2.38% 2.32%
Portfolio turnover rate <F8> 9.81% 9.81% 7.48% 7.48% 4.61% 4.61% 13.28% 13.78%
Average commission rate paid <F8> $0.0592 $0.0592 $0.0604 $0.0604
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<CAPTION>
GROWTH FUND
---------------------------------------------------------------------------------
Year ended Year ended Year ended Dec. 29,
October 31, 1997 October 31, 1996 October 31, 1995<F4> Year 1992<F1>
---------------- ---------------- ---------------- ended through
Series Series Series Series Series Series Oct. 31, Oct. 31,
A Institutional A Institutional A Institutional 1994 1993
-------- -------- -------- -------- -------- -------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Data:
Net asset value,
beginning of period $30.32 $30.43 $25.58 $25.61 $21.47 $21.47 $21.40 $20.09
Income from investment operations:
Net investment income (loss) (0.05)<F9> 0.04<F9> (0.07)<F9> (0.01)<F9>(0.02) 0.03 0.06 0.09
Net realized and unrealized
gains (losses) on securities 6.30 6.31 4.81 4.83 4.16 4.16 0.06 1.32
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 6.25 6.35 4.74 4.82 4.14 4.19 0.12 1.41
------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment
income - - - - (0.03) (0.05) (0.05) (0.10)
Distributions from capital gains (1.30) (1.30) - - - - - -
------ ------ ------ ------ ------ ------ ------ ------
Total distributions (1.30) (1.30) - - (0.03) (0.05) (0.05) (0.10)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $35.27 $35.48 $30.32 $30.43 $25.58 $25.61 $21.47 $21.40
====== ====== ====== ====== ====== ====== ====== ======
Total return <F5><F6> 21.30% 21.56% 18.53% 18.82% 19.31% 19.55% 0.56% 7.53%
Supplemental data and ratios:
Net assets, in thousands, end
of period $25,043 $181,650 $16,636 $155,293 $10,105 $134,428 $113,197 $84,467
Ratio of net expenses
to average net assets <F7> 1.14% 0.89% 1.15% 0.90% 1.09% 0.90% 0.88% 0.89%
Ratio of net investment income
to average net assets <F7> (0.16)% 0.09% (0.29)% (0.04)% (0.06)% 0.13% 0.30% 0.57%
Portfolio turnover rate <F8. 62.09% 62.09% 56.75% 56.75% 49.84% 49.84% 33.24% 46.29%
Average commission rate paid <F8> $0.0557 $0.0557 $0.0582 $0.0582
<FN>
<F1> Commencement of operations.
<F2> Effective June 17, 1993, FIRMCO assumed the investment advisory responsibilities of Firstar Trust Company.
<F3> Effective February 3, 1992, FIRMCO assumed the investment advisory responsibilities of Firstar Trust Company.
<F4> On January 9, 1995, all previously existing series of shares of each Fund were reclassified as Series A shares. Effective
January 9, 1995, Institutional shareowners exchanged their Series A shares for the Funds' Institutional series shares. For the
year ended October 31, 1995, the Financial Highlights ratios of net expenses to average net assets, ratios of net investment
income to average net assets, total return and the per share income from investment operations and distributions are presented
on a basis whereby the Funds' net investment income, net expenses, net realized and unrealized gains (losses) and distributions
for the period November 1, 1994, through January 9, 1995, were allocated to each class of shares based upon the relative net
assets of each class of shares as of the close of business on January 9, 1995, and the results thereof combined with the
results of operations and distributions for each applicable class for the period January 10, 1995, through October 31, 1995.
<F5> Not annualized for the period ended October 31, 1993, for the Growth Fund and for the period ended October 31, 1994, for the
International Equity Fund.
<F6> The total return does not reflect the 4% front-end sales charge for Series A.
<F7> Annualized for the period ended October 31, 1993, for the Growth Fund and for the period ended October 31, 1994, for the
International Equity Fund.
<F8> Portfolio turnover and average commission rate paid is calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
<F9> Net investment income per share is calculated using ending balances prior to consideration of adjustments for permanent book
and tax differences.
<F10>Effective September 2, 1997, Hansberger Global Investors assumed the investment sub-advisory responsibilities of State Street
Global Advisors.
</TABLE>
See notes to the financial statements.
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
SPECIAL GROWTH FUND
----------------------------------
Year ended Year ended Year ended
October 31, 1997 October 31, 1996 October 31, 1995(4) Year ended October 31,
---------------- ---------------- ---------------- ----------------
Series Series Series Series Series Series
A Inst'l A Inst'l A Inst'l 1994 1993
-------- -------- -------- -------- -------- -------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Data:
Net asset value,
beginning of period $41.38 $41.58 $41.40 $41.47 $33.19 $33.19 $32.34 $28.50
Income (loss) from investment
operations:
Net investment income (loss) (0.20)<F9> (0.11)<F9>(0.13)<F9> (0.04)<F9>(0.07) 0.00 0.04 0.07
Net realized and unrealized
gains (losses) on securities 8.44 8.49 4.70 4.74 8.49 8.49 0.85 4.47
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 8.24 8.38 4.57 4.70 8.42 8.49 0.89 4.54
------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment
income - - - - (0.04) (0.08) (0.18)
Distributions from capital gains (5.26) (5.26) (4.59) (4.59) (0.21) (0.21) - (0.62)
------ ------ ------ ------ ------ ------ ------ ------
Total distributions (5.26) (5.26) (4.59) (4.59) (0.21) (0.21) (0.04) (0.70)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $44.36 $44.70 $41.38 $41.58 $41.40 $41.47 $33.19 $32.34
====== ====== ====== ====== ====== ====== ====== ======
Total return <F5><F6> 22.18% 22.44% 12.27% 12.58% 25.56% 25.79% 2.77% 16.15%
Supplemental data and ratios:
Net assets, in thousands, end
of period $147,396 $569,028 $111,159 $482,857 $87,269 $434,228 $395,584 $347,130
Ratio of net expenses
to average net assets <F7> 1.12% 0.87% 1.13% 0.88% 1.09% 0.90% 0.89% 0.88%
Ratio of net investment income
to average net assets <F7> (0.50)% (0.25)% (0.35)% (0.10)% (0.19)% 0.00% 0.13% 0.24%
Portfolio turnover rate <F8> 97.40% 97.40% 103.34% 103.34% 79.25% 79.25% 69.74% 58.80%
Average commission rate paid <F8> $0.0550 $0.0550 $0.0576 $0.0576
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<CAPTION>
INTERNATIONAL EQUITY FUND
--------------------------------------------
Year ended Year ended Year ended April 28,
October 31, 1997<F10> October 31, 1996 October 31, 1995<F4> 1994<F1>
-------------------- ---------------- ------------------- through
Series Series Series Series Series Series Oct. 31,
A Institutional A Institutional A Institutional 1994
------ ------------ ------ ------------- ------ ------------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Data:
Net asset value,
beginning of period $20.21 $20.27 $19.15 $19.19 $19.99 $19.99 $20.00
Income (loss) from investment
operations:
Net investment income (loss) (0.06)<F9> (0.10)<F9> 0.07<F9> 0.11<F9> 0.08 0.12 0.04
Net realized and unrealized
gains (losses) on securities (1.10) (1.10) 1.43 1.44 (0.87) (0.87) (0.05)
------ ------ ------ ------ ------ ------ ------
Total from investment operations (1.04) (1.00) 1.50 1.55 (0.79) (0.75) (0.01)
------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment
income (0.13) (0.17) (0.07) (0.10) (0.04) (0.04) -
Distributions from capital gains (0.46) (0.46) (0.37) (0.37) (0.01) (0.01) -
------ ------ ------ ------ ------ ------ ------
Total distributions (0.59) (0.63) (0.44) (0.47) (0.05) (0.05) -
------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $18.58 $18.64 $20.21 $20.27 $19.15 $19.19 $19.99
====== ====== ====== ====== ====== ====== ======
Total return <F5><F6> (5.30)% (5.10)% 7.95% 8.21% (3.95)% (3.75)% (0.05)%
Supplemental data and ratios:
Net assets, in thousands, end
of period $6,502 $57,206 $3,769 $43,182 $1,633 $31,187 $23,756
Ratio of net expenses
to average net assets <F7> 1.75% 1.50% 1.75% 1.50% 1.70% 1.50% 1.49%
Ratio of net investment income
to average net assets <F7> (0.25)% (0.50)% 0.29% 0.54% 0.46% 0.66% 0.44%
Portfolio turnover rate <F8> 97.09% 97.09% 31.57% 31.57% 15.12% 15.12% 6.55%
Average commission rate paid <F8> $0.0087 $0.0087 $0.0167 $0.0167
<FN>
<F1> Commencement of operations.
<F2> Effective June 17, 1993, FIRMCO assumed the investment advisory responsibilities of Firstar Trust Company.
<F3> Effective February 3, 1992, FIRMCO assumed the investment advisory responsibilities of Firstar Trust Company.
<F4> On January 9, 1995, all previously existing series of shares of each Fund were reclassified as Series A shares. Effective
January 9, 1995, Institutional shareowners exchanged their Series A shares for the Funds' Institutional series shares. For the
year ended October 31, 1995, the Financial Highlights ratios of net expenses to average net assets, ratios of net investment
income to average net assets, total return and the per share income from investment operations and distributions are presented
on a basis whereby the Funds' net investment income, net expenses, net realized and unrealized gains (losses) and distributions
for the period November 1, 1994, through January 9, 1995, were allocated to each class of shares based upon the relative net
assets of each class of shares as of the close of business on January 9, 1995, and the results thereof combined with the
results of operations and distributions for each applicable class for the period January 10, 1995, through October 31, 1995.
<F5> Not annualized for the period ended October 31, 1993, for the Growth Fund and for the period ended October 31, 1994, for the
International Equity Fund.
<F6> The total return does not reflect the 4% front-end sales charge for Series A.
<F7> Annualized for the period ended October 31, 1993, for the Growth Fund and for the period ended October 31, 1994, for the
International Equity Fund.
<F8> Portfolio turnover and average commission rate paid is calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
<F9> Net investment income per share is calculated using ending balances prior to consideration of adjustments for permanent book
and tax differences.
<F10>Effective September 2, 1997, Hansberger Global Investors assumed the investment sub-advisory responsibilities of State Street
Global Advisors.
</TABLE>
See notes to the financial statements.
<TABLE>
STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS)
YEAR ENDED OCTOBER 31, 1997
<CAPTION>
GROWTH EQUITY SPECIAL INTERNATIONAL
BALANCED AND INCOME INDEX GROWTH GROWTH EQUITY
FUND FUND FUND FUND FUND FUND
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income:
Domestic $ 481 $ 6,601 $ 5,628 $ 1,070 $ 1,863 -
Foreign(net of withholding taxes
of $144) - - - - - $1,008
Interest income:
Domestic 5,139 2,498 1,049 718 2,330 -
Foreign - - - - - 91
Other income: 56 15 1 129 114 -
------- ------- ------- ------- ------- -------
5,676 9,114 6,678 1,917 4,307 1,099
------- ------- ------- ------- ------- -------
EXPENSES:
Investment advisory fees 1,391 3,086 815 1,472 5,168 793
Administration fees 207 459 364 219 767 61
Shareowner servicing and accounting costs 112 148 131 93 266 171
Service organization fees - Series A 88 249 147 55 331 12
Custody fees 62 65 74 43 149 143
Federal and state registration fees 24 47 26 14 37 11
Professional fees 29 19 21 19 18 29
Reports to shareowners 23 46 31 19 98 12
Amortization of organization costs 4 - - 3 - 5
Directors' fees and expenses 5 4 5 5 5 5
Other 2 6 14 5 17 2
------- ------- ------- ------- ------- -------
Total expenses before waiver 1,947 4,129 1,628 1,947 6,856 1,244
Less: Waiver of expenses (468) (287) (229) (149) (521) (410)
------- ------- ------- ------- ------- -------
Net Expenses 1,479 3,842 1,399 1,798 6,335 834
------- ------- ------- ------- ------- -------
NET INVESTMENT INCOME (LOSS) 4,197 5,272 5,279 119 (2,028) 265
------- ------- ------- ------- ------- -------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments 17,108 17,736 7,245 30,037 70,538 1,964
Foreign currency - - - - - (411)
Change in unrealized appreciation
(depreciation) on:
Investments 9,540 83,976 68,766 6,762 67,542 (5,960)
Foreign currency - - - - - (1)
------- ------- ------- ------- ------- -------
Net gain (loss) on investments
and foreign currency 26,648 101,712 76,011 36,799 138,080 (4,408)
------- ------- ------- ------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $30,845 $106,984 $81,290 $36,918 $136,052 (4,143)
======= ======= ======= ======= ======= =======
</TABLE>
See notes to the financial statements.
BALANCED FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market Value
of Shares (in thousands)
--------- --------------
COMMON STOCKS 54.9%
AEROSPACE & AIRCRAFT 0.5%
39,300 Gulfstream Aerospace Corporation* $ 1,140
-------
AIR TRANSPORTATION 0.5%
14,900 Federal Express Corporation* 995
-------
BANKING 2.0%
14,175 Charter One Financial, Inc. 824
11,900 Chase Manhattan Corporation 1,373
26,300 First Union Corporation 1,290
9,500 Washington Mutual, Inc. 650
-------
4,137
-------
BUILDING MATERIALS 0.2%
15,800 Royal Group Technologies Ltd.* 401
-------
BUSINESS MACHINES & SOFTWARE 2.2%
7,900 Adaptec, Inc.* 383
6,800 BMC Software, Inc.* 411
22,800 Cadence Design Systems, Inc.* 1,214
20,700 Cambridge Technology Partners, Inc.* 756
18,600 HNC Software, Inc.* 688
6,700 National Instruments Corporation* 305
1,000 Remedy Corporation* 47
26,300 Sterling Commerce, Inc.* 873
-------
4,677
-------
BUSINESS SERVICES 5.9%
6,000 ABR Information Services, Inc.* 141
8,392 AccuStaff, Inc.* 240
3,600 American Business Information, Inc. - Class A* 38
3,600 American Business Information, Inc. - Class B* 47
12,600 BA Merchant Services, Inc. - Class A* 188
4,600 Bell & Howell Company* 127
9,100 Ciber, Inc.* 403
11,500 Cintas Corporation 831
36,300 Cognizant Corporation 1,423
37,000 Concord EFS, Inc.* 1,098
4,300 Danka Business Systems PLC ADR 159
23,822 First Data Corporation 692
19,825 FIserv, Inc.* 887
8,200 F.Y.I. Incorporated* 211
1,200 Manpower, Inc. 46
14,500 Mastech Corporation* 480
4,500 Metromail Corporation* 89
18,000 National Data Corporation 665
1,650 Paychex, Inc. 63
47,000 Pittston Brink's Group 1,698
16,650 Robert Half International, Inc.* 682
9,500 Sabre Group Holdings, Inc.* 252
79,000 SunGard Data Systems, Inc. 1,866
-------
12,326
-------
Number Market Value
of Shares (in thousands)
--------- --------------
CHEMICALS 0.3%
10,900 Dupont (E.I.) De Nemours and Company $ 620
-------
COMMUNICATIONS & MEDIA 0.6%
28,200 Interpublic Group of Companies, Inc. 1,339
-------
COMPUTERS 0.8%
6,600 CDW Computer Centers, Inc.* 409
3,700 Dell Computer Corporation* 296
22,600 Tech Data Corporation* 1,006
-------
1,711
-------
CONSUMER PRODUCTS 0.5%
18,300 Newell Company 702
9,000 Sunbeam Corporation 408
-------
1,110
-------
DATA PROCESSING 0.3%
30,000 Axciom Corporation* 493
3,300 CCC Information Systems Group Inc.* 61
3,500 CSG Systems International, Inc.* 137
------
691
-------
DRUGS 2.0%
13,000 Elan Corporation PLC ADR* 648
11,100 Merck & Co., Inc. 991
34,900 Teva Pharmaceutical Industries Ltd. ADR 1,632
6,100 Warner-Lambert Company 873
-------
4,144
-------
ELECTRICAL EQUIPMENT 0.1%
7,600 Cable Design Technologies* 298
-------
ELECTRONICS & SCIENTIFIC INSTRUMENTS 1.9%
15,000 BMC Industries, Inc. 483
12,600 Cisco Systems, Inc.* 1,034
20,600 Gemstar International Group Limited* 456
12,200 Hewlett-Packard Company 753
22,108 Molex, Inc. - Class A 775
8,100 Seitel, Inc.* 382
4,000 Thermo Instrument Systems Inc.* 144
-------
4,027
-------
ENTERTAINMENT & LEISURE 0.6%
3,000 Cinar Films Inc. - Class B* 117
10,300 GTECH Holdings Corporation* 332
8,900 The Walt Disney Company 732
-------
1,181
-------
FINANCIAL SERVICES 4.3%
8,300 Associates First Capital Corporation 528
5,100 CMAC Investment Corporation 279
3,900 Credit Acceptance Corporation* 22
15,400 Federal National Mortgage Association 746
See notes to the financial statements.
BALANCED FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market Value
of Shares (in thousands)
--------- --------------
FINANCIAL SERVICES 4.3% (CONT.)
2,900 Financial Security Assurance Holdings Ltd. $ 126
34,500 Green Tree Financial Corporation 1,453
60,300 MBNA Corporation 1,587
4,600 Medallion Financial Corp. 97
31,450 Quick and Reilly Group, Inc. 1,144
45,000 The Charles Schwab Corporation 1,536
2,500 SEI Investments Company 106
18,450 SunAmerica, Inc. 663
9,700 Travelers Group, Inc. 679
-------
8,966
-------
HEALTH CARE SERVICES & SUPPLIES 5.0%
4,350 Cardinal Health, Inc. 323
4,700 Cooper Companies, Inc.* 168
10,500 Gulf South Medical Supply, Inc.* 346
3,500 HBO & Company 152
3,400 HealthCare COMPARE Corporation* 183
18,050 Health Care & Retirement Corporation* 683
54,102 Health Management Associates, Inc. - Class A* 1,319
37,500 Lincare Holdings, Inc.* 2,011
37,170 MedPartners, Inc.* 946
9,400 Mentor Corporation 343
4,950 National Surgery Centers, Inc.* 124
26,800 PhyCor, Inc.* 618
23,150 Quorum Health Group, Inc.* 562
17,500 Rural/Metro Corporation* 608
3,400 Henry Schein, Inc.* 112
17,900 Shared Medical Systems Corporation 980
12,300 Twinlab Corporation* 234
23,700 Vencor, Inc.* 640
-------
10,352
-------
HOSPITAL SUPPLIES & SERVICES 0.5%
22,400 Ballard Medical Products 505
10,100 Boston Scientific Corporation* 460
3,000 Omnicare, Inc. 83
-------
1,048
-------
HOUSING 0.3%
30,800 Toll Brothers, Inc.* 681
-------
INSURANCE 5.3%
18,650 AFLAC, Inc. 949
31,200 AMBAC, Inc. 1,318
4,850 W.R. Berkley Corporation 199
12,800 Chartwell Re Corporation 414
4,700 Delphi Financial Group, Inc.* 194
9,000 Enhance Financial Services Group, Inc. 475
34,200 MBIA, Inc. 2,043
19,900 MGIC Investment Corporation 1,200
33,100 Protective Life Corporation 1,750
32,900 ReliaStar Financial Corporation 1,230
6,900 Terra Nova (Bermuda) Holdings Ltd. 179
Number Market Value
of Shares (in thousands)
--------- --------------
INSURANCE 5.3% (CONT.)
10,000 United Wisconsin Services, Inc. $ 278
9,900 Vesta Insurance Group, Inc. 575
8,400 Western National Corporation 242
-------
11,046
-------
INVESTMENT COMPANIES 0.1%
10,300 United Assets Management Corporation 273
-------
LODGING 0.4%
2,500 Mirage Resorts, Inc.* 62
20,400 Promus Hotel Corporation* 801
-------
863
MACHINERY - INDUSTRIAL 0.1%
4,500 MSC Industrial Direct Co., Inc. - Class A* 187
-------
MEDICAL INSTRUMENTS 0.6%
8,400 Hologic, Inc.* 215
6,600 Physio-Control International Corporation* 105
12,400 Sofamor Danek Group, Inc.* 854
8,000 VISX, Inc.* 183
-------
1,357
-------
METALS & MINERALS 0.3%
8,600 Nucor Corporation 449
4,300 Worthington Industries, Inc. 89
-------
538
-------
MULTI-INDUSTRY 2.1%
15,700 Leggett & Platt, Inc. 655
35,750 Thermo Electron Corporation* 1,334
66,400 Tyco International, Ltd. 2,507
-------
4,496
-------
NATURAL GAS 0.3%
16,300 Enron Corporation 619
-------
OIL & GAS - DOMESTIC 0.4%
1,000 NGC Corporation 19
5,600 Pogo Producing Company 203
9,170 Tejas Gas Corporation* 550
-------
772
-------
OIL & GAS - SERVICES 0.5%
8,600 Halliburton Company 513
4,500 Newpark Resources, Inc.* 187
11,770 Swift Energy Company* 305
2,200 Tidewater, Inc. 145
-------
1,150
-------
See notes to the financial statements.
BALANCED FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market Value
of Shares (in thousands)
--------- --------------
POLLUTION CONTROL 1.2%
31,343 Philip Services Corp.*$ 549
11,100 Tetra Technologies, Inc.* 256
45,200 USA Waste Services, Inc.* 1,672
-------
2,477
-------
PUBLISHING/PERIODICALS 0.1%
6,700 The Petersen Companies, Inc.* 132
-------
RAILROADS 0.3%
17,200 Wisconsin Central Transportation Corporation* 535
-------
REAL ESTATE 0.1%
4,600 Security Capital Group Incorporated - Class B* 147
-------
RETAIL 5.7%
5,300 Barnett, Inc.* 109
31,100 Bed Bath and Beyond, Inc.* 987
70,300 CUC International, Inc.* 2,074
21,900 Costco Companies, Inc.* 843
38,437 Dollar General Corporation 1,271
22,000 Eagle Hardware & Garden, Inc.* 374
19,500 Federated Department Stores, Inc.* 858
28,800 General Nutrition Companies, Inc.* 907
19,600 Goody's Family Clothing, Inc.* 513
7,200 Home Depot, Inc. 400
3,500 Hughes Supply, Inc. 122
9,900 The Men's Wearhouse, Inc.* 384
19,300 Petco Animal Supplies, Inc.* 594
16,800 Ross Stores, Inc. 628
9,500 Safeway, Inc.* 552
18,700 Stein Mart, Inc.* 547
18,400 Toys "R" Us, Inc.* 627
-------
11,790
-------
SCHOOLS 0.4%
12,900 Apollo Group, Inc.* 545
5,000 Sylvan Learning Systems, Inc.* 211
-------
756
-------
SECURITY SERVICES 0.3%
18,200 Corrections Corporation of America* 555
-------
SEMICONDUCTORS 1.9%
23,500 Altera Corporation* 1,043
10,800 Intel Corporation 832
21,900 Lattice Semiconductor Corporation* 1,096
5,300 Maxim Integrated Products, Inc.* 351
17,100 Xilinx, Inc.* 584
-------
3,906
-------
SOFTWARE 0.7%
17,200 McAfee Associates, Inc.* 856
5,200 Microsoft Corporation* 676
-------
1,532
-------
Number Market Value
of Shares (in thousands)
--------- --------------
TELECOMMUNICATIONS EQUIPMENT 2.0%
23,700 ADC Telecommunications* $ 785
10,500 CIENA Corporation* 577
25,800 ECI Telecommunications Limited Designs 713
10,200 Lucent Technologies, Inc. 841
21,800 Tellabs, Inc.* 1,177
-------
4,093
-------
TELECOMMUNICATIONS 1.0%
38,800 Cincinnati Bell, Inc. 1,048
30,900 WorldCom, Inc.* 1,039
-------
2,087
-------
TEXTILES & APPAREL 1.3%
14,400 Jones Apparel Group, Inc.* 733
14,900 Liz Claiborne, Inc. 755
27,000 Polo Ralph Lauren Corporation* 702
22,200 Wolverine World Wide, Inc. 488
-------
2,678
-------
TRANSPORTATION 0.7%
49,800 Harley-Davidson, Inc. 1,381
-------
TRAVEL & RECREATION 0.6%
23,900 Carnival Corporation - Class A 1,159
-------
Total Common Stocks (Cost $82,546) 114,373
-------
PREFERRED STOCK 0.1%
INSURANCE 0.1%
5,000 U.S. West Communications Group (convertible to
Enhance Financial Services Group common stock) 238
-------
Total Preferred Stock (Cost $203) 238
-------
Principal
Amount
(in thousands)
--------------
LONG-TERM INVESTMENTS - 35.5%
ASSET-BACKED SECURITIES 6.3%
AUTO LOAN RECEIVABLES 0.2%
Premier Auto Trust,
$175 Series 1993-5, Class A2, 4.22%, 3/02/99 173
Western Financial Grantor Trust,
237 Series 1995-2, Class A-1, 7.10%, 7/01/00 240
-------
413
-------
CREDIT CARD RECEIVABLES 6.1%
Banc One Credit Card Master Trust,
1,750 Series 1995-B, Class A, 6.30%, 9/15/00 1,769
Chase Credit Card Master Trust,
2,300 Series 1995-2, Class XX, 6.23%, 6/15/03 2,321
See notes to the financial statements.
BALANCED FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Principal
Amount Market Value
(in thousands) (in thousands)
--------- --------------
CREDIT CARD RECEIVABLES 6.1% (CONT.)
Chemical Master Credit Card Trust I,
$ 500 Series 1996-1, Class A, 5.55%, 9/15/03 $ 495
Citibank Credit Card Master Trust, Principal Only,
3,300 Series 1996-1, 0.00%, 2/07/01 2,721
First Chicago Master Trust II,
1,150 Series 1994-L, Class A, 7.15%, 2/15/00 1,173
Household Affinity Credit Card Master Trust I,
500 Series 1993-2, Class A, 5.60%, 11/15/00 497
Private Label Credit Card Master Trust II,
350 Series 1994-2, Class A, 7.80%, 9/20/03 357
Sears Credit Account Master Trust:
2,700 Series 1994-1, Class A, 7.00%, 8/15/00 2,754
700 Series 1995-2, Class A, 8.10%, 1/15/01 730
-------
12,817
-------
CORPORATE BONDS (DOMESTIC) 11.7%
Atlantic Richfield Co. Debentures,
300 8.50%, 4/01/12 359
BankAmerica Corporation Subordinated Notes,
350 7.75%, 7/15/02 370
Barclays American Corp. Debentures,
250 9.75%, 5/15/21 285
Chase Manhattan Corporation Debentures,
250 10.00%, 6/15/99 265
Chemical Banking Corporation Subordinated Capital
750 Notes, 9.75%, 6/15/99 793
Chrysler Financial Corporation Debentures,
1,050 13.25%, 10/15/99 1,187
Commonwealth Edison Debentures,
900 9.875%, 6/15/20 1,051
Continental Bank Subordinated Notes,
300 12.50%, 4/01/01 355
Continental Cablevision, Inc. Debentures:
350 8.875%, 9/15/05 389
600 9.50%, 8/01/13 701
Dayton Hudson Corporation Debentures,
250 10.00%, 1/01/11 319
Deseret Generation & Transmission Coop
197 Debentures, 9.375%, 1/02/11 205
Dresdner Bank New York Subordinated Debentures,
800 7.25%, 9/15/15 825
Federal Express Corporation Debentures,
250 9.625%, 10/15/19 271
Federal Express Corporation Notes,
500 9.65%, 6/15/12 639
Ford Capital BV Notes,
250 10.125%, 11/15/00 277
Ford Motor Credit Co. Notes,
650 6.375%, 4/15/00 654
General Motors Acceptance Corp. Medium Term Notes,
1,000 6.70%, 4/30/01 1,016
Principal
Amount Market Value
(in thousands) (in thousands)
--------- --------------
CORPORATE BONDS (DOMESTIC) 11.7% (CONT.)
Georgia Pacific Corporation Debentures:
300 9.50%, 12/01/11 $ 374
300 9.875%, 11/01/21 336
100 9.50%, 5/15/22 114
Goldman Sachs Group Notes,
$1,500 6.25%, 2/01/03 (Acquired 2/01/96; Cost $1,496) ** 1,479
GTE Corporation Debentures,
250 10.25%, 11/01/20 282
Heller Financial, Inc. Notes:
750 9.375%, 3/15/98 759
350 7.875%, 11/01/99 362
Household Finance Corporation Limited Senior
1,000 Notes, 7.125%, 4/30/99 1,016
Household Finance Corporation Senior Subordinated
500 Notes, 9.625%, 7/15/00 543
International Paper Co. Debentures,
350 9.70%, 3/15/00 377
Lehman Brothers Holdings, Inc. Notes:
350 6.65%, 11/08/99 353
300 8.875%, 2/15/00 317
Lehman Brothers, Inc. Debentures,
700 9.875%, 10/15/00 758
Lehman Brothers, Inc. Senior Subordinated Notes,
700 10.00%, 5/15/99 739
The May Department Stores Company Debentures,
300 9.875%, 6/15/21 344
NCNB Corporation Subordinated Notes,
750 10.20%, 7/15/15 988
News America Holdings, Inc., Debentures,
300 10.125%, 10/15/12 350
Oneok, Inc. Debentures,
400 9.70%, 12/01/19 439
J.C. Penney Company, Inc. Debentures,
625 9.75%, 6/15/21 698
Rochester Telephone Debentures,
400 9.00%, 8/15/21 444
Rohm & Haas, Debentures,
650 9.50%, 4/01/21 742
Salomon, Inc. Senior Notes:
350 7.75%, 5/15/00 363
575 6.75%, 2/15/03 582
The Charles Schwab Corporation Medium
550 Term Notes, 5.90%, 10/01/99 548
Smith Barney Holdings, Inc. Notes,
700 6.875%, 6/15/05 712
Tenneco, Inc. Debentures,
425 7.45%, 12/15/25 442
-------
24,422
-------
MORTGAGE-BACKED SECURITIES 0.4%
Westam Mortgage Financial Corporation,
850 Series 11, Class A, 6.36%, 8/26/20 871
-------
See notes to the financial statements.
BALANCED FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Principal
Amount Market Value
(in thousands) (in thousands)
-------------- --------------
INTERNATIONAL/YANKEE (U.S. $ DENOMINATED) 2.3%
Hydro-Quebec Debentures:
$ 350 11.75%, 2/01/12 $ 505
500 9.75%, 1/15/18 567
Korea Development Bank Bonds,
285 7.125%, 9/17/01 277
Korea Electric Power Debentures:
290 7.75%, 4/01/13 273
200 6.75%, 8/01/27 184
Midland Bank PLC Subordinated Notes,
950 6.95%, 3/15/11 964
National Bank of Hungary Debentures,
250 8.875%, 11/01/13 276
Norsk Hydro A/S Debentures,
350 9.00%, 4/15/12 416
Pohang Iron & Steel Notes,
200 7.125%, 7/15/04 201
Quebec (Province of) Debentures,
250 11.00%, 6/15/15 286
Sweden (Kingdom of) Debentures,
150 11.125%, 6/01/15 218
Wharf Capital International Ltd. Notes:
325 8.875%, 11/01/04 359
225 7.625%, 3/13/07 229
-------
4,755
-------
U.S. GOVERNMENT AGENCY BACKED MORTGAGE ISSUES 2.1%
Federal Home Loan Mortgage Corporation (FHLMC)
Real Estate Mortgage Investment Conduit (REMIC):
637 Series 85, Class C, 8.60%, 1/15/21 667
966 Series 1169, Class D, 7.00%, 5/15/21 974
700 Series 1201, Class E, 7.40%, 12/15/21 714
Federal National Mortgage Association (FNMA)
Real Estate Mortgage Investment Conduit (REMIC):
674 Series 1989-37, Class XX, 8.00%, 7/25/19 698
645 Series 1990-30, Class E, 6.50%, 3/25/20 644
638 Series 1990-105, Class J, 6.50%, 9/25/20 634
-------
4,331
-------
U.S. TREASURY OBLIGATIONS 12.7%
U.S. Treasury Bonds:
3,200 10.75%, 2/15/03 3,912
15,910 9.25%, 2/15/16 21,195
U.S. Treasury Inflation-Indexed Notes,
558 3.375%, 1/15/07 551
U.S. Treasury Notes,
750 6.625%, 7/31/01 772
-------
26,430
-------
Total Long-Term Investments (Cost $70,940) 74,039
-------
Number
of Shares Market Value
(in thousands) (in thousands)
-------------- --------------
SHORT-TERM INVESTMENTS - 9.4%
INVESTMENT COMPANIES - 9.4%
9,736 Financial Square Prime Obligation Fund $ 9,736
9,796 Short-Term Investments Co. Liquid Assets Portfolio 9,796
-------
Total Short-Term Investments (Cost $19,532) 19,532
-------
Total Investments (Cost $173,221) 99.9% 208,182
-------
Other Assets, less Liabilities 0.1% 226
-------
TOTAL NET ASSETS 100.0% $208,408
========
* Non-income producing
** Unregistered Security
See notes to the financial statements.
GROWTH AND INCOME FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market Value
of Shares (in thousands)
--------- --------------
COMMON STOCKS 87.5%
AUTO SUPPLIES 0.9%
100,950 Johnson Controls, Inc. $ 4,530
-------
BANKING 7.2%
202,300 Bank of New York 9,521
100,000 Mellon Bank Corporation 5,156
133,300 Northern Trust Corporation 7,798
405,000 Norwest Corporation 12,985
-------
35,460
-------
BUSINESS MACHINES & SOFTWARE 5.3%
256,500 Diebold, Inc. 11,302
185,900 Xerox Corporation 14,744
-------
26,046
-------
BUSINESS SERVICES 1.2%
83,500 Kelly Services - Class A 2,964
78,000 Wallace Computer Services, Inc. 2,998
-------
5,962
-------
CHEMICALS 6.4%
140,000 BetzDearborn, Inc. 8,978
100,100 Ecolab, Inc. 4,761
67,925 Dupont (E.I.) De Nemours & Company 3,863
64,600 Monsanto Company 2,762
95,750 Praxair, Inc. 4,171
169,700 Sherwin-Williams Company 4,709
87,900 Valspar Corporation 2,593
-------
31,837
-------
COMMUNICATIONS & MEDIA 4.3%
257,450 Interpublic Group of Companies, Inc. 12,229
161,100 New York Times Company - Class A 8,820
-------
21,049
-------
CONSUMER PRODUCTS 3.3%
220,000 Avery Dennison Corporation 8,759
196,050 Newell Company 7,523
-------
16,282
-------
CONSUMER SERVICES 1.1%
181,838 Service Corporation International 5,535
-------
CONTAINERS 1.0%
128,400 Bemis Company, Inc. 4,895
-------
COSMETICS & SOAP 3.1%
100,600 Estee Lauder Companies - Class A 4,471
23,800 Gillette Company 2,120
130,250 Procter & Gamble Company 8,857
-------
15,448
-------
Number Market Value
of Shares (in thousands)
--------- --------------
DRUGS 10.3%
79,800 Baxter International, Inc. $ 3,691
97,100 Johnson & Johnson 5,571
141,000 McKesson Corporation 15,131
205,300 Pfizer, Inc. 14,525
119,000 SmithKline Beecham - PLC ADR 5,667
43,400 Warner-Lambert Company 6,214
-------
50,799
-------
ELECTRIC 1.1%
120,350 NIPSCO Industries, Inc. 5,288
-------
ELECTRICAL EQUIPMENT 1.6%
26,750 Emerson Electric Company 1,403
75,300 Grainger (W.W.), Inc. 6,584
-------
7,987
-------
ELECTRONICS 1.0%
82,800 Hewlett-Packard Company 5,108
-------
ENVIRONMENTAL SERVICES 1.1%
364,600 Laidlaw, Inc. - Class B 5,150
-------
FINANCIAL SERVICES 5.6%
251,475 Equifax 7,812
103,300 Federal National Mortgage Association 5,004
91,800 Household International, Inc. 10,396
61,900 Travelers Group, Inc. 4,333
-------
27,545
-------
FOOD, BEVERAGES & TOBACCO 0.5%
61,000 Nabisco Holdings Corporation - Class A 2,509
-------
INSURANCE 5.1%
117,800 MBIA, Inc. 7,039
352,400 ReliaStar Financial Corporation 13,171
179,100 Western National Corporation 5,160
-------
25,370
-------
INVESTMENT COMPANIES 0.4%
72,500 United Assets Management Corporation 1,921
-------
METAL & MINERALS 0.1%
31,790 Worthington Industries, Inc. 658
-------
MULTI-INDUSTRY 5.4%
103,100 Dover Corporation 6,959
72,300 Harsco Corporation 3,000
449,600 Tyco International, Ltd. 16,972
-------
26,931
-------
NATURAL GAS 2.3%
107,000 Enron Corporation 4,066
140,700 The Williams Companies, Inc. 7,167
-------
11,233
-------
See notes to the financial statements.
GROWTH AND INCOME FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market Value
of Shares (in thousands)
--------- --------------
OIL - DOMESTIC 1.2%
118,400 Phillips Petroleum Company $ 5,728
-------
OIL - INTERNATIONAL 1.8%
120,450 Mobil Corporation 8,770
-------
PAPER & FOREST PRODUCTS 0.7%
72,500 Kimberly-Clark Corporation 3,765
-------
PRINTING & PUBLISHING 2.1%
86,400 Houghton Mifflin Company 3,067
113,100 McGraw-Hill, Inc. 7,394
-------
10,461
-------
RAILROADS 0.8%
113,600 Illinois Central Corporation - Class A 4,047
-------
REAL ESTATE 2.3%
113,800 Bay Apartments Communities, Inc. 4,453
56,100 Boston Properties, Inc. 1,774
98,300 CCA Prison Realty Trust 3,391
67,300 Security Capital Industrial 1,653
-------
11,271
-------
RETAIL 5.6%
106,800 CVS Corporation 6,548
347,200 Gap, Inc. 18,467
56,275 Hannaford Brothers Company 2,128
17,700 Walgreen Company 498
-------
27,641
-------
TELECOMMUNICATIONS 0.9%
101,600 GTE Corporation 4,312
-------
TELECOMMUNICATIONS EQUIPMENT 1.6%
97,398 Lucent Technologies, Inc. 8,029
-------
TEXTILES & APPAREL 2.2%
94,200 Liz Claiborne, Inc. 4,775
212,500 Warnaco Group - Class A 6,003
-------
10,778
-------
Total Common Stock (Cost $287,625) 432,345
-------
PREFERRED STOCK 2.9%
COMMUNICATIONS & MEDIA 1.4%
159,700 Time Warner, Inc.
(convertible to Hasbro common stock) 6,907
-------
COMPUTERS 0.8%
45,800 MicroSoft Corporation
(convertible to Microsoft Corp. common stock) 4,042
-------
Number Market Value
of Shares (in thousands)
--------- --------------
FINANCIAL SERVICES 0.7%
65,600 Salomon, Inc.
(convertible to Cincinnati Bell, Inc.
common stock) $ 3,542
-------
Total Preferred Stock (Cost $13,473) 14,491
-------
Number
of Shares
(in thousands)
--------------
LONG-TERM INVESTMENTS 5.1%
Corporate Convertible BONDS 5.1%
111 DECS Trust II,
6.875%, 11/15/00 (convertible to Royal
Group Technologies common stock) 2,861
153 Merrill Lynch Strypes,
6.50%, 8/15/98 (convertible to MGIC
Investment Corporation common stock) 15,616
Principal
Amount
(in thousands)
--------------
$2,900 Federated Department Stores,
5.00%, 10/01/03 (convertible to Federated
Department Stores, Inc. common stock) 3,944
2,745 Tenet Health Care Subordinated
Convertible Debentures, 6.00%, 12/01/05
(convertible to Vencor, Inc. common stock) 2,728
-------
Total Long-Term Investments (Cost $18,161) 25,149
-------
Number
of Shares
(in thousands)
--------------
SHORT-TERM INVESTMENTS 5.8%
INVESTMENT COMPANIES 3.8%
59 Financial Square Prime Obligation Fund 59
18,693 Short-Term Investments Co. Liquid Assets Portfolio 18,693
-------
18,752
-------
Principal
Amount
(in thousands)
--------------
VARIABLE RATE DEMAND NOTES 2.0%
$10,000 Warner-Lambert Co. 10,000
-------
Total Short-Term Investments (Cost $28,752) 28,752
-------
Total Investments (Cost $348,011) 101.3% 500,737
-------
Liabilities, less Other Assets (1.3)% (6,647)
-------
TOTAL NET ASSETS 100.0% $494,090
========
See notes to the financial statements.
EQUITY INDEX FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market Value
of Shares (in thousands)
--------- --------------
COMMON STOCKS 93.1%
AEROSPACE & AIRCRAFT 1.9%
29,000 Allied Signal, Inc. $1,044
52,426 Boeing Company 2,510
3,200 General Dynamics Corporation 260
10,334 Lockheed Martin Corporation 982
3,300 Northrop Grumman Corporation 361
12,300 Raytheon Company 667
11,000 Rockwell International Corporation 539
8,400 Textron, Inc. 486
12,000 United Technologies Corporation 840
-------
7,689
-------
AIR TRANSPORTATION 0.4%
4,700 AMR Corporation* 547
3,800 Delta Air Lines, Inc. 383
5,600 Federal Express Corporation* 374
7,000 Southwest Airlines Company 228
5,300 US Airways Group, Inc.* 249
-------
1,781
-------
APPLIANCES 0.2%
2,200 Armstrong World Industries, Inc. 146
4,200 Black & Decker Corporation 160
6,200 Maytag Corporation 207
3,100 Snap-On Tools, Inc. 133
3,700 Whirlpool Corporation 224
-------
870
-------
AUTOS & TRUCKS 2.1%
7,200 Autozone, Inc.* 213
35,050 Chrysler Corporation 1,236
4,800 Dana Corporation 225
3,900 Eaton Corporation 377
3,700 Echlin, Inc. 121
62,500 Ford Motor Company 2,730
38,400 General Motors Corporation 2,465
8,737 Genuine Parts Company 274
5,600 ITT Industries, Inc. 177
3,666 Meritor Automotive, Inc.* 82
4,240 PACCAR, Inc. 191
6,200 TRW, Inc. 355
-------
8,446
-------
BANKING 7.5%
30,745 Banc One Corporation 1,603
7,200 Bank of Boston Corporation 584
19,300 Bank of New York Company, Inc. 908
36,524 BankAmerica Corporation 2,611
5,000 Bankers Trust New York Corporation 590
10,100 Barnett Banks, Inc. 697
21,910 Chase Manhattan Corporation 2,528
23,700 Citicorp 2,964
5,400 Comerica, Inc. 427
Number Market Value
of Shares (in thousands)
--------- --------------
BANKING 7.5% (CONT.)
10,300 CoreStates Financial Corporation $ 749
7,900 Fifth Third Bancorp 507
15,985 First Chicago Corporation 1,163
30,060 First Union Corporation 1,475
13,071 Fleet Financial Group, Inc. 841
10,000 Huntington Bancshares Incorporated 323
13,200 Mellon Bank Corporation 681
9,200 J.P. Morgan & Company, Inc. 1,010
37,406 NationsBank Corporation 2,240
39,400 Norwest Corporation 1,263
15,700 PNC Bank Corporation 746
2,800 Republic New York Corporation 296
8,200 State Street Corporation 457
10,800 Sun Trust Banks, Inc. 700
12,485 US Bancorp 1,270
8,200 Wachovia Corporation 618
13,590 Washington Mutual, Inc. 930
4,533 Wells Fargo & Company 1,321
-------
29,502
-------
BIO-TECHNOLOGY 0.2%
13,600 Amgen, Inc.* 670
-------
BUILDING & HOUSING 0.4%
12,200 Corning, Inc. 551
4,600 Fluor Corporation 189
8,100 Masco Corporation 355
2,900 Owens-Corning Fiberglass Corporation 99
6,100 The Stanley Works 258
-------
1,452
-------
BUILDING MATERIALS 0.1%
4,800 Johnson Controls, Inc. 215
-------
BUSINESS MACHINES & SOFTWARE 3.3%
6,500 Apple Computer, Inc.* 111
39,545 COMPAQ Computer Corporation 2,521
7,650 Digital Equipment Corporation* 383
6,500 Honeywell, Inc. 442
50,900 International Business Machines Corporation 4,991
52,212 Oracle Systems Corporation* 1,868
7,900 Pitney-Bowes, Inc. 627
18,600 Sun Microsystems, Inc.* 637
17,150 Xerox Corporation 1,360
-------
12,940
-------
BUSINESS SERVICES 2.0%
3,300 Autodesk, Inc. 122
15,800 Automatic Data Processing, Inc. 808
5,700 H & R Block, Inc. 211
3,200 Ceridian Corporation* 125
35,000 Cisco Systems, Inc.* 2,871
18,525 Computer Associates International, Inc. 1,381
See notes to the financial statements.
EQUITY INDEX FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market Value
of Shares (in thousands)
--------- --------------
BUSINESS SERVICES 2.0% (CONT.)
4,400 Computer Sciences Corporation* $ 312
4,700 Deluxe Corporation 154
8,021 Dun & Bradstreet Corporation 229
7,600 Equifax Inc. 236
22,900 First Data Corporation 666
3,600 Moore Corporation Limited 58
2,600 National Service Industries 115
12,200 Service Corporation International 371
-------
7,659
-------
CHEMICALS 2.5%
5,400 Air Products and Chemicals, Inc. 410
11,600 Dow Chemical Company 1,053
59,200 Dupont (E.I.) De Nemours & Company 3,367
3,300 Ecolab, Inc. 157
3,600 W.R. Grace & Company 245
3,100 Great Lakes Chemical Corporation 146
5,300 Hercules, Inc. 243
1,800 Millipore Corporation 70
30,200 Monsanto Company 1,291
6,900 Morton International, Inc. 228
2,500 Nalco Chemical Company 100
8,800 PPG Industries, Inc. 498
8,300 Praxair, Inc. 362
2,800 Rohm & Haas Company 233
6,600 Rubbermaid, Inc. 159
8,400 Sherwin-Williams Company 233
6,300 Sigma-Aldrich Corporation 221
6,450 Union Carbide Corporation 295
8,650 The Williams Companies, Inc. 441
-------
9,752
-------
COMMUNICATIONS & MEDIA 1.5%
4,350 Andrew Corporation* 101
5,200 Clear Channel Communications, Inc.* 343
18,600 Comcast Corporation - Class A 512
4,700 Dow Jones & Company, Inc. 219
14,800 Gannett Company, Inc. 778
3,400 Harcourt General, Inc. 170
7,150 Interpublic Group of Companies, Inc. 340
5,000 Knight-Ridder, Inc. 261
4,400 New York Times Company - Class A 241
26,500 Tele-Communications, Inc. - Class A* 608
30,000 Time Warner, Inc. 1,731
4,623 Times Mirror Company - Class A 250
6,900 Tribune Company 380
-------
5,934
-------
COMPUTERS 0.7%
17,100 Dell Computer Corporation* 1,370
12,900 EMC Corporation* 722
13,900 Seagate Technology, Inc.* 377
9,400 Silicon Graphics, Inc.* 138
-------
2,607
-------
Number Market Value
of Shares (in thousands)
--------- --------------
CONGLOMERATES 0.2%
5,900 ITT Destinations, Inc.* $ 441
9,624 Tenneco, Inc. 432
-------
873
-------
CONSUMER DURABLES 0.3%
3,637 Eastman Chemical Company 217
16,450 Eastman Kodak Company 985
2,128 Polaroid Corporation 96
-------
1,298
-------
CONSUMER PRODUCTS 0.2%
4,400 Avery Dennison Corporation 175
8,021 Cognizant Corporation 314
7,600 Newell Company 292
3,200 Tupperware Corporation 80
-------
861
-------
CONTAINERS 0.2%
2,100 Bemis Company, Inc. 80
6,900 Crown Cork & Seal Company, Inc. 311
6,700 Owens-Illinois, Inc.* 231
-------
622
-------
COSMETICS & SOAP 2.4%
6,400 Avon Products, Inc. 419
5,400 Clorox Company 378
15,100 Colgate-Palmolive Company 978
29,444 Gillette Company 2,622
5,800 International Flavors & Fragrances, Inc. 281
70,700 Procter & Gamble Company 4,808
-------
9,486
-------
DISTRIBUTION 0.1%
6,358 Ikon Office Solutions, Inc. 180
-------
DIVERSIFIED 0.5%
32,800 Unilever N.V. 1,751
-------
DRUGS 8.7%
39,600 Abbott Laboratories 2,428
2,400 Allergan, Inc. 79
3,900 Alza Corporation* 102
34,000 American Home Products Corporation 2,520
3,100 Bard (C.R.), Inc. 86
15,300 Baxter International, Inc. 708
6,200 Becton, Dickinson & Company 286
52,220 Bristol-Meyers Squibb Company 4,582
5,600 Cardinal Health, Inc. 416
195 Crescenco Pharmaceuticals Corporation* 2
7,300 Humana, Inc.* 153
69,700 Johnson & Johnson 3,999
58,200 Eli Lilly & Company 3,892
25,200 Medtronic, Inc. 1,096
See notes to the financial statements.
EQUITY INDEX FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market Value
of Shares (in thousands)
--------- --------------
DRUGS 8.7% (CONT.)
$62,400 Merck & Company, Inc. $ 5,569
66,600 Pfizer, Inc. 4,712
27,755 Pharmacia & Upjohn, Inc. 881
37,600 Schering-Plough 2,108
3,800 St. Jude Medical, Inc.* 115
15,000 Tenet Healthcare Corporation* 459
-------
34,193
-------
ELECTRIC 0.9%
8,032 CINergy Corporation 265
13,300 Consolidated Edison Company of New York, Inc. 456
19,528 Duke Power Company 942
19,400 Edison International 497
5,600 General Public Utilities Corporation 203
17,300 PacifiCorp 375
11,800 Texas Utilities Company 423
5,500 Union Electric Company 207
-------
3,368
-------
ELECTRICAL EQUIPMENT 3.3%
11,900 AMP, Inc. 536
23,900 Emerson Electric Company 1,253
171,400 General Electric Company 11,066
2,800 Grainger (W.W.), Inc. 245
-------
13,100
-------
ELECTRONICS 3.9%
3,400 General Signal Corporation 136
4,200 Harris Corporation 183
54,500 Hewlett-Packard Company 3,362
84,300 Intel Corporation 6,491
30,600 Motorola, Inc. 1,890
8,500 National Semiconductor Corporation* 306
14,100 Northern Telecom Ltd. 1,265
2,100 Perkin-Elmer Corporation 131
2,300 Tektronix, Inc. 136
9,800 Texas Intruments, Inc. 1,046
2,500 Thomas & Betts Corporation 124
2,700 Western Atlas, Inc.* 233
-------
15,303
-------
ENERGY 1.7%
9,300 American Electric Power Company 439
7,150 Baltimore Gas & Electric Company 196
7,700 Carolina Power & Light Company 275
10,600 Central & South West Corporation 229
5,225 Coastal Corporation 314
4,800 Consolidated Natural Gas Company 260
10,000 Dominion Resources, Inc. 372
7,800 DTE Energy Company 240
11,800 Entergy Corporation 288
9,100 FPL Group, Inc. 470
14,972 Houston Industries, Inc. 326
4,100 Niagara Mohawk Power Corporation* 40
Number Market Value
of Shares (in thousands)
--------- --------------
ENERGY 1.7% (CONT.)
3,300 NICOR, Inc. $ 127
4,500 Northern States Power Company 227
6,500 Ohio Edison Company 161
4,600 Pacific Enterprises, Inc. 150
22,300 Pacific Gas & Electric Company 570
10,700 Peco Energy Company 243
12,500 Public Service Enterprises Group, Inc. 324
4,200 Sonat, Inc. 193
34,800 Southern Company 798
10,400 Unicom Corporation 291
-------
6,533
-------
ENERGY - RAW MATERIALS 0.5%
8,300 Baker Hughes, Inc. 381
8,900 Dresser Industries, Inc. 375
13,600 Halliburton Company 811
17,100 Occidental Petroleum Corporation 477
-------
2,044
-------
ENTERTAINMENT & LEISURE 0.9%
4,500 Brunswick Corporation 152
7,125 Hasbro, Inc. 207
14,887 Mattel, Inc. 579
35,200 McDonald's Corporation 1,577
8,100 Mirage Resorts, Incorporated* 203
17,285 Viacom, Inc. - Class B* 523
8,050 Wendy's International, Inc. 169
-------
3,410
-------
ENVIRONMENTAL SERVICES 0.1%
15,600 Laidlaw, Inc. - Class B 220
-------
FINANCE 1.9%
24,200 American Express Company 1,888
2,400 Beneficial Corporation 184
5,000 H.F. Ahmanson & Company 295
5,400 Household International, Inc. 612
16,900 Merrill Lynch & Company, Inc. 1,143
10,700 National City Corporation 639
5,400 Salomon, Inc. 420
33,810 The Travelers, Inc. 2,367
-------
7,548
-------
FINANCIAL SERVICES 1.7%
10,400 Conseco, Inc. 454
5,600 Countrywide Credit Industries, Inc. 192
55,800 Federal National Mortgage Association 2,703
6,600 Green Tree Financial Corporation 278
4,200 MBIA, Inc. 251
25,575 MBNA Corporation 673
30,766 Morgan Stanley Group, Inc. 1,508
9,900 SunAmerica, Inc. 356
12,900 The Charles Schwab Corporation 440
-------
6,855
-------
See notes to the financial statements.
EQUITY INDEX FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market Value
of Shares (in thousands)
--------- --------------
FOOD, BEVERAGES & TOBACCO 6.7%
31,194 Archer-Daniels-Midland Company $ 694
24,700 Campbell Soup Company 1,274
129,900 Coca-Cola Company 7,339
24,150 ConAgra, Inc. 728
7,300 CPC International, Inc. 723
9,800 Dardeen Restaurants, Inc. 111
8,600 Fortune Brands, Inc. 284
7,900 General Mills, Inc. 521
18,500 Heinz (H.J.) Company 859
7,400 Hershey Foods Corporation 409
22,300 Kellogg Company 960
9,900 Lowe's Companies, Inc 412
80,300 PepsiCo, Inc. 2,956
126,900 Philip Morris Companies, Inc. 5,028
4,200 Pioneer Hi-Bred International, Inc. 385
6,800 Quaker Oats Company 326
5,200 Ralston-Ralston Purina Group 467
24,500 Sara Lee Corporation 1,253
8,200 Sysco Corporation 328
15,820 Tricon Global Restaurants, Inc.* 480
10,900 UST, Inc. 326
6,000 Wrigley (Wm) Jr. Company 434
-------
26,297
-------
GOLD & PRECIOUS METALS 0.3%
18,200 Barrick Gold Corporation 374
13,600 Battle Mountain Gold Company 83
3,500 Cyprus Amax Minerals Company 73
9,600 Freeport McMoRan Copper & Gold, Inc. 229
6,100 Homestake Mining Company 75
11,361 Placer Dome, Inc. 176
-------
1,010
-------
HEALTH CARE SERVICES & SUPPLIES 1.3%
2,900 Bausch & Lomb, Inc. 114
9,700 Boston Scientific Corporation* 441
32,928 Columbia/HCA Healthcare Corporation 930
10,200 HBO & Company 444
18,000 HEALTHSOUTH Corporation* 460
2,200 Manor Care, Inc. 75
9,400 United Healthcare Corporation 435
13,900 Warner-Lambert Company 1,990
-------
4,889
-------
HOSPITAL SUPPLIES & SERVICES 0.1%
6,500 Biomet, Inc. 162
2,900 US Surgical Corporation 78
-------
240
-------
Number Market Value
of Shares (in thousands)
--------- --------------
HOUSEHOLD PRODUCTS 0.1%
10,600 Federated Department Stores* $ 466
-------
INSURANCE 3.7%
7,694 Aetna Life and Casualty Company 547
23,073 Allstate Corporation 1,914
13,100 American General Corporation 668
36,732 American International Group, Inc. 3,749
8,400 Aon Corporation 453
8,900 Chubb Corporation 590
3,700 CIGNA Corporation 574
4,100 General Re Corporation 808
5,700 The Hartford Financial Services Group, Inc. 462
4,150 Jefferson-Pilot Corporation 321
11,402 KeyCorp 698
5,300 Lincoln National Corporation 364
8,500 Marsh & McLennan Companies, Inc. 604
6,400 MGIC Investment Corporation 386
3,600 Progressive Corporation 375
4,900 Providian Corporation 181
6,500 SAFECO Corporation 310
4,300 St Paul Companies, Inc. 344
6,500 Torchmark Corporation 259
3,200 Transamerica Corporation 323
8,000 UNUM Corporation 390
5,200 USF&G Corporation 105
-------
14,425
-------
LIQUOR 0.5%
26,400 Anheuser-Busch Companies, Inc. 1,054
3,400 Brown-Foreman Corporation - Class B 167
18,300 Seagram Company Ltd. 616
-------
1,837
-------
LODGING 0.1%
8,600 HFS, Inc.* 606
-------
MACHINERY - AGRICULTURE & AUTOMOTIVE 0.1%
3,700 Case Equipment 221
-------
MACHINERY - INDUSTRIAL 0.1%
3,400 Harnischfeger Industries, Inc. 134
7,400 Thermo Electron Corporation* 276
-------
410
-------
MEDICAL INSTRUMENTS 0.1%
7,400 Guidant Corporation 426
-------
See notes to the financial statements.
EQUITY INDEX FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market Value
of Shares (in thousands)
--------- --------------
METALS & MINERALS 0.3%
8,760 Allegheny Teledyne, Inc. $ 231
4,600 Nucor Corporation 240
15,666 USX Corporation-Marathon Group, Inc. 560
4,793 USX Corporation-US Steel Group, Inc. 163
5,125 Worthington Industries, Inc. 106
-------
1,299
-------
MISCELLANEOUS 0.9%
19,600 Applied Materials, Inc.* 654
4,100 Mallinckrodt Group, Inc. 154
6,900 PP&L Resources, Inc. 149
18,000 3 Com Corporation* 746
22,100 3M Corporation 2,022
-------
3,725
-------
MULTI-INDUSTRY 0.4%
5,800 Loews Corporation 648
27,200 Tyco International, Ltd. 1,027
-------
1,675
-------
NATURAL GAS 0.2%
16,700 Enron Corporation 635
-------
NON-FERROUS METALS 0.5%
11,550 Alcan Aluminum Ltd. 330
9,600 Aluminum Company of America 701
1,200 ASARCO, Inc. 33
6,300 Englehard Corporation 109
8,100 Inco, Ltd. 167
7,436 Newmont Mining Corporation 260
3,300 Phelps Dodge Corporation 245
3,600 Reynolds Metals Company 219
-------
2,064
-------
OFFICE EQUIPMENT 0.0%
16,700 Novell, Inc.* 141
-------
OIL - DOMESTIC 1.8%
4,700 Amerada Hess Corporation 289
25,400 Amoco Corporation 2,329
3,200 Anadarko Petroleum Corporation 234
3,800 Ashland, Inc. 181
16,500 Atlantic Richfield Company 1,358
9,793 Burlington Resources, Inc. 479
2,700 Columbia Gas System, Inc. 195
2,000 Kerr-McGee Corporation 135
4,900 Oryx Energy Company* 135
2,400 Pennzoil Company 178
14,500 Phillips Petroleum Company 701
4,400 Rowan Companies, Inc.* 171
3,800 Sun Company, Inc. 152
13,000 Unocal Corporation 536
-------
7,073
-------
Number Market Value
of Shares (in thousands)
--------- --------------
OIL - INTERNATIONAL 5.4%
4,600 Apache Corporation $ 193
33,800 Chevron Corporation 2,803
127,800 Exxon Corporation 7,852
40,600 Mobil Corporation 2,956
110,800 Royal Dutch Petroleum Company 5,831
27,300 Texaco, Inc. 1,554
-------
21,189
-------
OIL & GAS SERVICES 0.7%
26,200 Schlumberger, Ltd. 2,293
12,938 Union Pacific Resources Group 319
-------
2,612
-------
PAPER & FOREST PRODUCTS 1.2%
2,500 Boise Cascade Corporation 87
5,500 Champion International Corporation 304
9,600 Fort James Corporation 381
4,600 Georgia-Pacific Corporation 390
16,400 International Paper Company 738
28,612 Kimberly-Clark Corporation 1,486
4,972 Louisiana Pacific Corporation 104
2,200 Mead Corporation 133
3,250 Temple-Inland, Inc. 186
3,050 Union Camp Corporation 165
4,225 Westvaco Corporation 139
10,950 Weyerhaeuser Company 523
5,800 Willamette Industries 192
-------
4,828
-------
POLLUTION CONTROL 0.2%
11,200 Browning-Ferris Industries, Inc. 364
23,200 Waste Management, Inc. 542
-------
906
-------
PRINTING & PUBLISHING 0.1%
5,100 McGraw-Hill, Inc. 333
7,000 R.R. Donnelley & Sons Company 228
-------
561
-------
PRODUCTION 1.3%
1,200 Briggs & Stratton Corporation 60
20,200 Caterpillar, Inc. 1,035
6,100 Cooper Industries, Inc. 318
13,000 Deere & Company 684
5,300 Dover Corporation 358
1,900 FMC Corporation* 154
1,600 Foster Wheeler Corporation 53
13,100 Illinois Tool Works, Inc. 644
8,100 Ingersoll-Rand Company 315
6,366 Pall Corporation 132
6,525 Parker-Hannifin Corporation 273
1,850 Raychem Corporation 168
2,600 Timken Company 87
37,000 Westinghouse Electric Corporation 978
-------
5,259
-------
See notes to the financial statements.
EQUITY INDEX FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market Value
of Shares (in thousands)
--------- --------------
RAILROADS 0.7%
7,881 Burlington Northern Santa Fe $ 749
11,920 CSX Corporation 652
18,900 Norfolk Southern Corporation 607
12,300 Union Pacific Corporation 753
5,300 Whitman Corporation 139
-------
2,900
-------
RETAIL 4.0%
11,800 Albertson's, Inc. 435
4,400 American Greetings Corporation 153
15,600 American Stores Company 401
4,700 Circuit City Stores, Inc. 187
10,521 Costco Companies, Inc.* 405
11,100 Dayton Hudson Corporation 697
5,500 Dillard Department Stores, Inc. - Class A 211
14,400 Gap, Inc. 766
2,500 Giant Food, Inc. 77
38,850 Home Depot, Inc. 2,161
23,500 Kmart Corporation* 310
14,300 Kroger Corporation* 467
13,911 The Limited, Inc. 328
12,376 The May Department Stores Company* 667
1,600 Mercantile Stores Company, Inc. 94
3,400 Nordstrom, Inc. 208
13,700 J.C. Penney Company, Inc. 804
2,000 Pep Boys - Manny, Moe & Jack 50
7,100 Rite Aid Corporation 422
20,700 Sears Roebuck and Company 867
3,500 Supervalu, Inc. 128
4,600 Tandy Corporation 158
7,400 TJX Companies, Inc. 219
15,625 Toys "R" Us, Inc.* 532
25,100 Walgreen Company 706
118,600 Wal-Mart Stores, Inc. 4,166
7,800 Winn-Dixie Stores, Inc. 290
6,600 Woolworth Corporation* 125
-------
16,034
-------
SAVINGS & LOAN 0.4%
35,400 Federal Home Loan Mortgage Corporation 1,341
3,400 Golden West Financial Corporation 295
-------
1,636
-------
SEMICONDUCTORS 0.2%
7,500 Advanced Micro Devices, Inc.* 173
4,500 KLA-Tencor Corporation* 198
7,100 LSI Logic Corp* 155
10,500 Micron Technology Incorporated 282
-------
808
-------
Number Market Value
of Shares (in thousands)
--------- --------------
SOFTWARE 2.3%
3,300 Adobe Systems Incorporated $ 158
10,700 Bay Networks* 338
61,900 Microsoft Corporation* 8,047
6,600 Parametric Technology Company* 291
11 Siebel Sytems, Inc.* 1
-------
8,835
-------
TELECOMMUNICATIONS 7.0%
27,200 Airtouch Communications, Inc.* 1,051
9,200 Alltell Corporation 325
28,400 Ameritech Corporation 1,846
85,056 AT&T Corporation 4,162
40,604 Bell Atlantic Corporation 3,243
51,200 BellSouth Corp. 2,422
7,300 Cabletron Systems* 212
5,800 DSC Communications Corporation* 141
7,300 Frontier Corporation 158
49,400 GTE Corporation 2,096
33,696 Lucent Technologies, Inc. 2,778
35,100 MCI Communications Corporation 1,246
47,894 SBC Communications, Inc. 3,047
22,000 Sprint Corporation 1,144
24,453 US West, Inc. 974
30,153 US West Media Group, Inc.* 761
47,800 WorldCom, Inc.* 1,607
-------
27,213
-------
TELECOMMUNICATIONS EQUIPMENT 0.2%
5,700 NextLevel Systems, Inc.* 77
10,000 Tellabs, Inc.* 540
-------
617
-------
TEXTILES & APPAREL 0.5%
9,700 CVS Corporation 595
4,100 Fruit of The Loom, Inc.* 107
3,600 Liz Claiborne, Inc. 182
15,900 Nike, Inc. - Class B 747
2,600 Reebok International Ltd. 96
2,000 Russell Corporation 59
3,277 VF Corporation 293
-------
2,079
-------
TIRE & RUBBER 0.2%
4,800 Cooper Tire & Rubber Company 102
2,600 Goodrich (B.F.) Company 116
7,862 Goodyear Tire & Rubber Company 492
-------
710
-------
TRANSPORTATION EQUIPMENT 0.0%
1,700 Cummins Engine Company, Inc. 104
-------
See notes to the financial statements.
EQUITY INDEX FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market Value
of Shares (in thousands)
--------- --------------
TRAVEL & RECREATION 1.1%
20,875 CUC International, Inc.* $ 616
35,500 The Walt Disney Company 2,920
4,950 Harrahs Entertainment, Inc.* 97
12,100 Hilton Hotels Corporation 373
6,500 Marriott International, Inc. 453
-------
4,459
-------
TRUCKING 0.1%
2,000 Caliber System, Inc. 104
3,550 Ryder System, Inc. 124
-------
228
-------
Total Common Stock (Cost $212,901) 365,579
-------
Principal
Amount Market Value
(in thousands) (in thousands)
-------------- -------------
SHORT-TERM INVESTMENTS 6.8%
U.S. TREASURIES 0.4%
$ 1,500 US Treasury Bill, 5.14%, 12/11/97 $ 1,492
-------
Total U.S. Treasuries (Cost $1,492) 1,492
-------
VARIABLE RATE DEMAND NOTES 6.4%
13,492 Sara Lee Corporation 13,492
11,802 Warner-Lambert Co. 11,802
-------
Total Variable Rate Demand Notes (Cost $25,294) 25,294
-------
Total Short-Term Investments (Cost $26,786) 26,786
-------
Total Investments (Cost $239,687) 99.9% 392,365
-------
Other Assets, less Liabilities 0.1% 260
-------
TOTAL NET ASSETS - 100.0% $392,625
========
* Non-income producing
See notes to the financial statements.
GROWTH FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market Value
of Shares (in thousands)
--------- --------------
COMMON STOCKS 90.6%
AEROSPACE & AIRCRAFT 1.5%
109,000 Gulfstream Aerospace Corporation* $ 3,161
-------
AIR TRANSPORTATION 1.6%
48,000 Federal Express Corporation* 3,204
-------
BANKING 5.8%
40,005 Charter One Financial, Inc. 2,325
34,100 Chase Manhattan Corporation 3,934
85,400 First Union Corporation 4,190
22,200 Washington Mutual, Inc. 1,519
-------
11,968
-------
BUILDING MATERIALS .5%
44,300 Royal Group Technologies Ltd.* 1,124
-------
BUSINESS MACHINES & SOFTWARE 2.8%
16,800 BMC Software, Inc.* 1,014
16,500 Microsoft Corporation* 2,145
82,400 Sterling Commerce, Inc.* 2,735
-------
5,894
-------
BUSINESS SERVICES 10.1%
9,200 Bell & Howell Company* 254
36,000 Cintas Corporation 2,601
102,000 Cognizant Corporation 3,997
76,728 First Data Corporation 2,230
9,600 Manpower, Inc. 368
149,900 Pittston Brink's Group 5,415
28,900 Sabre Group Holdings, Inc.* 766
221,200 SunGard Data Systems, Inc.* 5,226
-------
20,857
-------
CHEMICALS .9%
33,500 Dupont (E.I.) De Nemours and Company 1,905
-------
COMMUNICATIONS & MEDIA 2.0%
86,600 Interpublic Group of Companies, Inc. 4,114
-------
COMPUTERS .4%
10,900 Dell Computer Corporation* 873
-------
CONSUMER PRODUCTS 1.6%
56,400 Newell Company 2,164
25,600 Sunbeam Corporation 1,160
-------
3,324
-------
DRUGS 4.6%
40,300 Elan Corporation, PLC ADR* 2,010
33,500 Merck & Co., Inc. 2,990
38,300 Teva Pharmaceutical Industries, Ltd. ADR 1,791
18,700 Warner-Lambert Company 2,678
-------
9,469
-------
Number Market Value
of Shares (in thousands)
--------- --------------
ELECTRONICS & SCIENTIFIC INSTRUMENTS 4.2%
37,600 Cisco Systems, Inc.* $ 3,085
38,700 Hewlett-Packard Company 2,387
79,116 Molex, Inc. - Class A 2,774
11,800 Thermo Instrument Systems Inc.* 426
-------
8,672
-------
ENTERTAINMENT & LEISURE 1.6%
33,400 GTECH Holdings Corporation* 1,077
26,700 The Walt Disney Company 2,196
-------
3,273
-------
FINANCIAL SERVICES 6.2%
27,100 Associates First Capital Corporation 1,724
46,600 Federal National Mortgage Association 2,257
181,350 MBNA Corporation 4,772
60,700 SunAmerica, Inc. 2,181
27,790 Travelers Group, Inc. 1,945
-------
12,879
-------
HEALTH CARE SERVICES & SUPPLIES 5.1%
28,200 Boston Scientific Corporation* 1,283
14,700 Cardinal Health, Inc. 1,091
62,350 Health Care & Retirement Corporation* 2,358
63,300 Lincare Holdings, Inc.* 3,394
87,200 Vencor, Inc.* 2,354
-------
10,480
-------
INSURANCE 6.6%
52,225 AFLAC, Inc. 2,657
113,000 MBIA, Inc. 6,752
70,000 MGIC Investment Corporation 4,222
-------
13,631
-------
INVESTMENT COMPANIES .4%
34,900 United Assets Management Corporation 925
-------
LODGING 1.6%
23,700 Mirage Resorts, Inc.* 593
67,200 Promus Hotel Corporation* 2,638
-------
3,231
-------
METALS & MINERALS 0.8%
24,300 Nucor Corporation 1,270
14,600 Worthington Industries, Inc. 302
-------
1,572
-------
MULTI-INDUSTRY 6.6%
42,500 Leggett & Platt, Inc. 1,774
122,200 Thermo Electron Corporation* 4,560
194,600 Tyco International, Ltd. 7,346
-------
13,680
-------
See notes to the financial statements.
GROWTH FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market Value
of Shares (in thousands)
--------- --------------
NATURAL GAS .9%
49,800 Enron Corporation $ 1,892
-------
OIL & GAS SERVICES 1.1%
26,600 Halliburton Company 1,586
9,200 Tidewater, Inc. 604
-------
2,190
-------
POLLUTION CONTROL 1.5%
86,400 USA Waste Services, Inc.* 3,197
-------
REAL ESTATE .2%
13,600 Security Capital Group Incorporated - Class B* 435
-------
RETAIL 7.9%
13,100 Bed Bath & Beyond, Inc.* 416
208,400 CUC International, Inc.* 6,148
70,400 Costco Companies, Inc.* 2,711
61,800 Federated Department Stores, Inc.* 2,719
21,700 Home Depot, Inc. 1,207
26,300 Safeway, Inc.* 1,529
49,700 Toys "R" Us, Inc.* 1,693
-------
16,423
-------
SEMICONDUCTORS 1.2%
31,000 Intel Corporation 2,387
-------
TELECOMMUNICATIONS 2.9%
108,600 Cincinnati Bell, Inc. 2,932
91,400 WorldCom, Inc.* 3,073
-------
6,005
-------
TELECOMMUNICATIONS EQUIPMENT 4.2%
83,100 ECI Telecommunications Limited Designs 2,296
31,300 Lucent Technologies, Inc. 2,580
70,400 Tellabs, Inc.* 3,802
-------
8,678
-------
TEXTILES & APPAREL 2.0%
40,900 Liz Claiborne, Inc. 2,073
79,500 Polo Ralph Lauren Corporation* 2,067
-------
4,140
-------
TRANSPORTATION 2.1%
153,800 Harley-Davidson, Inc. 4,268
-------
TRAVEL & RECREATION 1.7%
71,100 Carnival Corporation - Class A 3,448
-------
Total Common Stock (Cost $129,979) 187,299
-------
Number
of Shares Market Value
(in thousands) (in thousands)
-------------- --------------
SHORT-TERM INVESTMENTS 9.9%
INVESTMENT COMPANIES 7.5%
5,755 Financial Square Prime Obligation Fund $ 5,755
9,600 Short-Term Investments Co. Liquid Assets Portfolio 9,600
-------
Total Investment Companies (Cost $15,355) 15,355
-------
Principal
Amount
(in thousands)
--------------
VARIABLE RATE DEMAND NOTES 2.4%
$5,000 Warner-Lambert Co. 5,000
-------
Total Variable Rate Demand Notes (Cost $5,000) 5,000
-------
Total Short-Term Investments (Cost $20,355) 20,355
-------
Total Investments (Cost $150,334) 100.5% 207,654
-------
Other Assets, less Liabilities (0.5)% (961)
-------
TOTAL NET ASSETS 100.0% $206,693
========
* Non-income producing
See notes to the financial statements.
SPECIAL GROWTH FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market Value
of Shares (in thousands)
--------- --------------
COMMON STOCKS 96.0%
BUSINESS MACHINES & SOFTWARE 0.9%
124,900 Adaptec, Inc.* $ 6,042
-------
BUSINESS SERVICES 8.3%
109,299 AccuStaff, Inc.* 3,122
113,300 Ciber, Inc.* 5,014
552,800 Concord EFS, Inc.* 16,411
61,600 Danka Business Systems PLC ADR 2,279
339,500 FIserv, Inc.* 15,193
156,300 National Data Corporation 5,773
9,000 Paychex, Inc. 343
273,950 Robert Half International, Inc.* 11,219
-------
59,354
-------
COMPUTERS 2.6%
64,100 CDW Computer Centers, Inc.* 3,974
336,500 Tech Data Corporation* 14,974
-------
18,948
-------
DATA PROCESSING 0.9%
407,600 Axciom Corporation* 6,700
-------
DRUGS 2.8%
423,900 Teva Pharmaceutical Industries, Ltd. ADR 19,819
-------
FINANCIAL SERVICES 8.8%
120,800 Credit Acceptance Corporation* 668
528,100 Green Tree Financial Corporation 22,246
488,004 Quick and Reilly Group, Inc. 17,751
659,300 The Charles Schwab Corporation 22,499
-------
63,164
-------
HEALTH CARE SERVICES & SUPPLIES 16.5%
998,193 Health Management Associates, Inc. - Class A* 24,331
42,400 HealthCare COMPARE Corporation* 2,279
83,100 HBO & Company 3,615
357,600 Lincare Holdings, Inc.* 19,176
674,950 MedPartners, Inc.* 17,169
466,800 PhyCor, Inc.* 10,766
223,150 Quorum Health Group, Inc.* 5,418
413,000 Shared Medical Systems Corporation 22,612
466,100 Vencor, Inc.* 12,585
-------
117,951
-------
HOSPITAL SUPPLIES & SERVICES .2%
58,900 Omnicare, Inc. 1,637
-------
HOUSING 1.3%
429,900 Toll Brothers, Inc.* 9,511
-------
Number Market Value
of Shares (in thousands)
--------- --------------
INSURANCE 14.3%
556,200 AMBAC, Inc. $ 23,499
305,300 MGIC Investment Corporation 18,413
493,475 Protective Life Corporation 26,092
497,900 ReliaStar Financial Corporation 18,609
194,900 Vesta Insurance Group, Inc. 11,329
152,800 Western National Corporation 4,403
-------
102,345
-------
LODGING .2%
64,900 Mirage Resorts, Inc.* 1,623
-------
MEDICAL INSTRUMENTS 1.6%
160,000 Sofamor Danek Group, Inc.* 11,020
-------
OIL & GAS - DOMESTIC 1.8%
15,600 NGC Corporation 296
62,800 Pogo Producing Company 2,273
174,550 Tejas Gas Corporation* 10,462
-------
13,031
-------
POLLUTION CONTROL 2.7%
342,323 Philip Services Corp.* 5,991
368,800 USA Waste Services, Inc.* 13,646
-------
19,637
-------
RAILROADS 1.3%
296,600 Wisconsin Central Transportation Corporation* 9,232
-------
RETAIL 8.9%
482,500 Bed Bath and Beyond, Inc.* 15,319
549,118 Dollar General Corporation 18,155
538,600 General Nutrition Companies, Inc.* 16,967
120,000 The Men's Wearhouse, Inc.* 4,650
51,800 MSC Industrial Direct Co., Inc. - Class A* 2,156
230,500 Stein Mart, Inc.* 6,742
-------
63,989
-------
SCHOOLS 0.8%
134,300 Apollo Group, Inc.* 5,674
-------
SECURITY SERVICES 1.4%
317,700 Corrections Corporation of America* 9,690
-------
SEMICONDUCTORS 6.9%
368,500 Altera Corporation* 16,352
332,100 Lattice Semiconductor Corporation* 16,626
91,200 Maxim Integrated Products* 6,033
313,900 Xilinx, Inc.* 10,712
-------
49,723
-------
SPECIAL GROWTH FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Market
Number Value
of Shares (in thousands)
--------- --------------
SOFTWARE 6.2%
328,500 Cadence Design Systems, Inc.* $ 17,493
319,700 Cambridge Technologies Partners, Inc.* 11,669
307,500 McAfee Associates, Inc.* 15,298
-------
44,460
-------
TELECOMMUNICATIONS EQUIPMENT 4.4%
448,600 ADC Telecommunications* 14,860
294,900 ECI Telecommunications Limited 8,147
155,200 CIENA Corporation* 8,536
-------
31,543
-------
TEXTILES & APPAREL 3.2%
232,500 Jones Apparel Group, Inc.* 11,828
299,500 Ross Stores, Inc. 11,194
-------
23,022
-------
Total Common Stock (Cost $514,916) 688,115
-------
Number Market
of Shares Value
(in thousands) (in thousands)
-------------- --------------
SHORT-TERM INVESTMENTS 4.6%
INVESTMENT COMPANIES 4.6%
47 Financial Square Prime Obligation Fund $ 47
33,083 Short-Term Investments Co. Liquid Assets Portfolio 33,083
-------
Total Investment Companies (Cost $33,130) 33,130
-------
Total Short-Term Investments (Cost $33,130) 33,130
-------
Total Investments (Cost $548,046) 100.6% 721,245
-------
Liabilities, less Other Assets (0.6)% (4,821)
-------
TOTAL NET ASSETS 100.0% $716,424
========
* Non-income producing
See notes to the financial statements.
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market
of Shares Industry Value
--------- -------- ------
COMMON AND PREFERRED STOCKS 89.3%
ARGENTINA 1.4%
21,000 Banco Rio de La Plata SA ADR * Banks $ 220,500
12,000 Telefonica de Argentina SA ADR Telecommunications 324,140
37,000 Transportadora de Gas del
Sur SA ADR Natural Gas - Pipeline 349,188
---------
893,828
---------
AUSTRALIA 3.1%
44,300 Australian Gas Light
Company Ltd. Oil & Gas - International 296,647
254,622 Burns, Philp & Company Ltd. Food & Beverage 134,608
59,164 Cole Myer Ltd. Retail - Miscellaneous 285,251
107,391 Pacific Dunlop Ltd. Diversified Manufacturing 229,893
44,722 Email Limited Diversified Manufacturing 119,159
159,370 GIO Australia Holdings Limited Insurance 408,903
20,000 National Australia Bank Ltd. Banks 274,197
85,100 Pioneer International Limited Building/Cement Products 225,543
183 Stockland Trust Group Real Estate 427
1,558 Westfield Trust Real Estate 2,976
---------
1,977,604
---------
AUSTRIA 1.6%
3,900 Boehler- Uddeholm AG Steel 280,090
1,520 Creditanstalt-Bankverein Banks 100,756
300 Bank Austria AG - Vorzug Banks 14,116
14,287 Bank Austria AG * Banks 653,379
---------
1,048,341
---------
BELGIUM 1.0%
6,210 Delhaize-Le Lion, SA Retail - Food 294,694
5,665 Solvay SA * Chemicals 341,423
---------
636,117
---------
BRAZIL 1.2%
15,000 Aracruz Celulose SA ADR Paper & Related Products 225,000
160,000 Rhodia-Ster SAGDR* Chemicals 290,256
2,500 Telecomunicacoes Brasileiras
SA-Telebras ADR Telecommunications 252,500
---------
767,756
---------
CANADA 1.3%
27,000 Moore Corporation Ltd. Business Services 437,062
25,000 Noranda Forest, Inc. Building Products - Wood 158,804
50,000 Primex Forest Products Ltd. Building Products - Wood 248,409
---------
844,275
---------
CHINA 0.5%
47,000 Shandong Huaneng Power
Company Ltd. ADR Electric Utility 349,561
---------
CZECH REPUBLIC 2.9%
10,500 The Czech Power Company * Electric Power Company 334,142
38,500 Komercni Banka A.S. ADR Banks 563,409
4,500 SPT Telecom AS * Telecommunications 518,260
16,000 Skoda Plzen AS * Building & Construction 417,033
---------
1,832,844
---------
See notes to the financial statements.
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market
of Shares Industry Value
--------- -------- ------
DENMARK 2.3%
3,055 Den Danske Bank Banks $ 345,098
10,000 Tele Danmark AS Telecommunications 587,705
7,565 Unidanmark AS Financial Services 511,578
---------
1,444,381
---------
FINLAND 1.8%
2,500 Kone Corporation Machinery - Electrical 297,546
50,200 Kemira Oyj Chemicals 510,037
70,520 Merita Ltd. Financial Services 345,280
---------
1,152,863
---------
FRANCE 4.7%
3,500 Bail Investissement Real Estate 476,716
2,150 Eridania Beghin-Say SA Agricultural Products 310,022
13,500 Banque Nationale de Paris Banks 598,068
86 Havas SA Advertising 5,678
12,000 Scor Insurance 558,509
5,000 Elf Aquitaine SA Oil & Gas - International 620,218
4,450 Unibail Real Estate 425,206
---------
2,994,417
---------
GERMANY 2.8%
1,650 Karstadt AG Retail 575,196
1,500 Viag AG Diversified Manufacturing 697,643
13,500 Bilfinger & Berger Bau AG Building & Construction 485,518
---------
1,758,357
---------
GREAT BRITAIN 15.4%
215,000 BTR PLC Diversified Operations 732,785
281,949 The BICC Group PLC Wire & Cable Products 777,757
105,000 British Telecommunciations PLC Telecommunications 795,417
254,850 Caradon PLC Building & Construction 811,981
340 Costain Group PLC * Building & Construction 234
46,139 De La Rue PLC Office Supplies & Forms 329,599
228,000 Hillsdown Holdings PLC Food & Beverage 646,144
195,000 House Of Fraser PLC Retail 699,771
32,017 Hyder PLC Water, Power & Transport 482,936
137,501 LucasVarity PLC Auto & Truck Components 470,374
45,000 National Westminster Bank PLC Banks 650,470
39,477 United Utilities PLC Utility Services 479,943
127,367 Pilkington PLC Glass 322,509
285 Railtrack Group PLC Transportation - Railways 4,523
190,000 Rolls-Royce PLC * Aerospace & Aircraft 668,287
78,024 Southern Electric PLC Electricity - Distribution 597,932
45,100 Thames Water PLC Water 683,679
349,209 Coats Viyella PLC Textiles 638,292
---------
9,792,633
---------
See notes to the financial statements.
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market
of Shares Industry Value
--------- -------- ------
HONG KONG 5.3%
170,000 Cathay Pacific Airways Airlines $ 179,248
65,000 Cheung Kong Ltd. Real Estate 452,002
500,000 Dairy Farm International
Holdings Ltd. Retail - Food 395,000
418,000 Giordano International Limited Retail - Apparel/Shoes 154,124
140,000 Guoco Group Ltd. Financial Services 306,100
100,000 Jardine Matheson Holdings Ltd. Diversified Operations 640,000
980,000 Pacific Ports Company Ltd. * Traffic Management 177,502
142,000 Peregrine Investments
Holdings Limited Financial Services 139,621
470,000 Swire Pacific Ltd. Diversified Operations 498,609
386,300 Tai Cheung Holdings Ltd. Real Estate 187,415
54,390 Wing Lung Bank Banks 232,210
---------
3,361,831
---------
INDIA 1.8%
17,000 BSES Ltd. GDR Electric Utility 274,550
130,000 Crompton & Greaves GDR Electrical Equipment 260,000
100,000 Indian Aluminum Company
Ltd. GDR * Metal & Mineral 335,000
20,000 Industrial Credit & Investment
Corp of India Ltd. GDR Investment 285,000
---------
1,154,550
---------
INDONESIA 1.0%
175,000 PT Indosat Telecommunications 394,417
750,000 PT Pabrik Kertas Tjiwi Kimia Paper & Related Products 275,659
---------
670,076
---------
IRELAND 0.4%
111 Allied Irish Banks PLC Banks 943
16 Fyffes PLC Food & Beverage 25
53,480 Irish Life PLC Insurance 281,584
---------
282,552
---------
ISRAEL 0.9%
26,000 Koor Industries Limited ADR Telecommunications 557,375
---------
ITALY 3.4%
246,500 Banca Commerciale Italiana Banks 673,804
48,600 Burgo SPA Paper & Related Products 290,999
375 La Rinascente SPA Retail - Food 2,785
65,000 Edison SPA Energy 340,354
250,000 Telecom Italia Mobile SPA Telecommunications 513,268
416,240 Montedison SPA Food & Beverage 338,380
---------
2,159,590
---------
JAPAN 6.2%
15,000 Aoyamma Trading Co., Ltd. Retail - Apparel/Shoes 402,845
6,000 Chiyoda Corporation * Building & Construction 11,474
33,000 Daichi Pharmaceutical Co., Ltd. Drugs 469,194
70,000 Daito Trust Construction Co. Real Estate 622,765
79,000 Kyudenko Co., Ltd. Electrical Engineering 506,435
185,000 Marubeni Corporation Distribution / Wholesale 578,365
64,600 Nichido Fire & Marine Insurance Insurance 417,346
120,000 Nippon Fire & Marine Insurance Insurance 462,958
249,000 Showa Denko K.K. Chemicals 449,264
50 Toho Co., Ltd. Entertainment & Leisure 6,569
---------
3,927,215
---------
See notes to the financial statements.
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market
of Shares Industry Value
--------- -------- ------
MALAYSIA 0.9%
120,000 AMMB Holdings Bhd Investments $ 195,224
45,000 Malakoff Bhd Agricultural Operations 107,463
666 Malaysian Resources
Corporation Bhd Investments 394
2,500 Mulpha International Bhd Investments 634
110,000 Road Builder (M) Holdings Bhd Building &Construction 128,717
204,000 Leader Universal Holdings Bhd Investments 124,227
---------
556,659
---------
MEXICO 0.7%
51,000 Elamex SA de CV * Manufacturing - Misc 452,625
---------
NETHERLANDS 2.6%
9,000 Ballast Nedam NV Building & Construction 459,107
5,000 Eriks Holdings NV Diversified Operations 335,184
18,500 European Vinyls Corporation
International NV Chemicals 459,468
11,922 Koninklijke Pakhoed NV Storage & Transportation 390,699
---------
1,644,458
---------
NEW ZEALAND 1.6%
671,575 Brierley Investments Limited Diversified Operations 519,434
130,100 Carter Holt Harvey Limited Paper & Related Products 227,221
81,329 Fisher & Paykel
Industries Ltd. Consumer Appliances 258,719
---------
1,005,374
---------
NORWAY 1.7%
7,300 Aker RGI ASA Building Materials 134,516
4,600 Kvaerner ASA Building & Construction 236,880
15,000 Sparebanken NOR Banks 519,599
10,500 Unitor ASA Marine Services 166,486
---------
1,057,481
---------
PAKISTAN 0.6%
5,000 Pakistan Telecom
Corporation 144A GDR Telecommunications 410,739
---------
PERU 0.6%
70,000 Banco Wiese ADR * Banks 389,375
---------
PHILIPPINES 0.5%
80,000 Philippine National Bank* Banks 186,572
630,000 Pilipino Telehone Corporation* Telecommunications 137,131
---------
323,703
---------
POLAND 0.6%
145,000 Mostostal-Export SA ADR Containers 391,094
---------
See notes to the financial statements.
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market
of Shares Industry Value
--------- -------- ------
PORTUGAL 1.2%
22,000 Banco Totta & Acores, SA Banks $ 425,628
9,000 Electricidade de Portugal,
SA ADR * Electric Utility 314,438
---------
740,066
---------
RUSSIA 1.7%
35,000 Irkutskenergo ADR Electric Utility 485,975
7,000 Lukoil Holding ADR Oil & Gas - International 605,430
---------
1,091,405
---------
SINGAPORE 0.6%
90,000 City Developments Limited Real Estate 377,617
---------
SLOVAK REPUBLIC 2.3%
13,000 Nafta Gbely AS Geological Exploration 507,568
30,000 Slovakofarma 144A GDR Health & Beauty Aids 265,500
33,000 VSZ AS * Steel 703,688
---------
1,476,756
---------
SOUTH AFRICA 1.5%
100,000 Murray & Roberts Holdings
Limited Building & Construction 187,013
45,000 Sappi Limited Paper & Related Products 285,194
20,000 Southvaal Holdings Limited Gold Mining 355,324
3,500 Standard Bank Investment
Corporation Limited Banks 148,363
---------
975,894
---------
SOUTH KOREA 1.0%
165,000 Cho Hung Bank * Banks 602,250
---------
SPAIN 4.9%
11,300 Corporacion Bancaria de
Espana SA Banks 628,122
10,450 Corporacion Mapfre Insurance 478,072
63,500 Iberdrola SA Electricity - Distribution 760,113
1,575 Inmobiliaria Metropolitana
Vasco Central SA Real Estate 64,253
15,000 Repsol SA Oil & Gas - International 629,472
29,000 Banco Central
Hispanoamericano SA Banks 542,653
---------
3,102,685
---------
SWEDEN 4.3%
6,000 Electrolux AB Consumer Appliances 497,044
12,300 Esselte Office Supplies & Forms 261,310
27,000 Getinge Industrier AB Medical Instruments 465,379
7,100 Skandia Forsakrings AB Insurance 332,032
4,400 Svenska Handelsbanken Banks 139,333
48,000 ABB AB Rail Transit Systems 554,767
12,800 Autoliv, Inc. Auto & Truck Components 513,934
---------
2,763,799
---------
SWITZERLAND 1.2%
338 Holderbank Building Products 272,794
70 Kuoni Reisen AG Travel Services 265,686
230 Schindler Holding AG Electrical Machinery 254,478
---------
792,958
---------
See notes to the financial statements.
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
Number Market
of Shares Industry Value
--------- -------- ------
THAILAND 1.8%
260,000 Land and House Public
Company Limited Real Estate $ 221,816
35,000 The Siam Cement Public
Company Limited Building Products-Cement 291,773
235,000 Thai Farmers Bank Public
Company Limited Banks 630,103
---------
1,143,692
---------
Total Common and Preferred Stocks
(Cost $62,550,081) 56,904,796
----------
SENIOR SECURITIES 0.9%
14,000 Telmex 11.25% Prides 5/15/98 608,125
---------
Total Senior Securities
(Cost $694,262) 608,125
---------
SHORT-TERM INVESTMENTS 9.5%
INVESTMENT COMPANIES 2.0%
88,000 Korea Fund, Inc. 720,500
55 Thailand International Fund 543,125
---------
Total Investment Companies
(Cost $1,765,289) 1,263,625
---------
Principal
Amount
(in thousands)
- --------------
VARIABLE RATE DEMAND NOTES 7.5%
$4,751 Chase U.S. 4,750,776
---------
Total Variable Rate Demand Notes
(Cost $4,750,776) 4,750,776
---------
Total Short-Term Investments
(Cost $6,516,065) 6,014,401
---------
Total Investments 99.7%
(Cost $69,760,408) 63,527,322
---------
Other Assets, Less Liabilities 0.3% 180,479
---------
TOTAL NET ASSETS 100% $63,707,801
===========
* Non-Income producing
See notes to the financial statements.
BALANCED FUND
GROWTH AND INCOME FUND
EQUITY INDEX FUND
GROWTH FUND
SPECIAL GROWTH FUND
INTERNATIONAL EQUITY FUND
NOTES TO THE FINANCIAL STATEMENTS
1. ORGANIZATION
Portico Funds, Inc. (the "Company") was incorporated on February 15, 1988,
as a Wisconsin Corporation and is registered as an open-end management
investment company under the Investment Company Act of 1940. The Balanced Fund,
the Growth and Income Fund, the Equity Index Fund, the Growth Fund (formerly the
MidCore Growth Fund), the Special Growth Fund, and the International Equity Fund
(the "Funds") are separate, diversified investment portfolios of the Company.
The Special Growth Fund commenced operations on December 28, 1989; the Growth
and Income Fund and Equity Index Fund commenced operations on December 29, 1989;
the Balanced Fund commenced operations on March 30, 1992; the Growth Fund
commenced operations on December 29, 1992; and the International Equity Fund
commenced operations on April 28, 1994. The objective of the Balanced Fund is to
achieve a balance of capital appreciation and current income with relatively low
volatility of capital. The objective of the Growth and Income Fund is to seek
both reasonable income and long-term capital appreciation. The objective of the
Equity Index Fund is to seek returns, before Fund expenses, comparable to the
price and yield performance of publicly traded common stocks in the aggregate,
as represented by the S&P 500 Stock Index. The objective of the Growth Fund is
capital appreciation through investment in securities of medium- to large-sized
companies. The objective of the Special Growth Fund is capital appreciation
through investment in securities of small- to medium-sized companies. The
objective of the International Equity Fund is to seek capital appreciation
through investment in foreign securities which the Sub-Adviser believes are
undervalued.
The costs, in thousands, incurred in connection with the organization,
initial registration and public offering of shares aggregating $25, $14 and $27
for the Balanced, Growth and International Equity Funds, respectively, have been
paid by the Funds. These costs are being amortized over the period of benefit,
but not to exceed sixty months from each Fund's commencement of operations.
The Company has issued two classes of Fund shares in each of the
Funds:Series A and Series Institutional. The Series A shares are subject to a
0.25% service organization fee and an initial sales charge imposed at the time
of purchase, in accordance with the Funds' prospectus. The maximum sales charge
is 4% of the offering price or 4.16% of the net asset value. Each class of
shares for each Fund has identical rights and privileges except with respect to
service organization fees paid by Series A shares, voting rights on matters
affecting a single class of shares and the exchange privileges of each class of
shares.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
a) Investment Valuation - Securities which are traded on a recognized stock
exchange are valued at the last sale price on the securities exchange on which
such securities are primarily traded or at the last sale price on a national
securities exchange. Exchange-traded securities for which there were no
transactions are valued at the current bid prices, with the exception of the
International Equity Fund, which is valued at the average of the current bid and
asked prices. Securities traded on only over-the-counter markets are valued on
the basis of closing over-the-counter bid prices. Instruments with a remaining
maturity of 60 days or less are valued on an amortized cost basis. Securities
for which market quotations are not readily available and other assets are
valued at fair value as determined by the investment adviser under the
supervision of the Board of Directors. Portfolio securities which are primarily
traded on foreign securities exchanges are generally valued at the preceding
closing values of such securities on their respective exchanges, except when an
occurrence subsequent to the time a value was so established is likely to have
changed such value. In such an event, the fair value of those securities is
determined through the consideration of other factors by or under the direction
of the Board of Directors. Quotations of foreign securities in foreign currency
are converted to United States ("U.S.") dollar equivalents using the foreign
exchange quotation in effect at the time net asset value is computed. Foreign
securities held by the International Equity Fund may trade in their local
markets on days the U.S. exchanges are closed, and the International Equity
Fund's net asset value may, therefore, change on days when investors may not
purchase or redeem Fund shares.
b) Federal Income Taxes - It is each Fund's policy to meet the requirements of
the Internal Revenue Code applicable to regulated investment companies and each
Fund intends to distribute investment company net taxable income and net capital
gains to shareholders. Therefore, no federal income tax provision is required.
c) Income and Expenses - The Funds are charged for those expenses that are
directly attributable to each portfolio, such as advisory, administration and
certain shareowner service fees. Expenses that are not directly attributable to
a portfolio are typically allocated among the Company's portfolios in proportion
to their respective net assets, number of shareowner accounts, or net sales,
where applicable. Net investment income other than class specific expenses, and
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative net asset value of outstanding shares of each
class of shares at the beginning of the day (after adjusting for the current
day's capital share activity of the respective class).
d) Distributions to Shareowners - Dividends from net investment income are
declared and paid quarterly, for the Balanced, Growth and Income and Equity
Index Funds and annually for the Growth, Special Growth and International Equity
Funds. Distributions of net realized capital gains, if any, will be declared at
least annually.
e) Futures Contracts - The Equity Index Fund may utilize futures contracts to a
limited extent. The risk associated with the use of futures contracts includes
the possibility of an illiquid market. Futures contracts are valued based upon
their quoted daily settlement prices. Changes in initial settlement value are
accounted for as unrealized appreciation (depreciation) until the contracts are
terminated at which time realized gains and losses are recognized.
f) When-Issued Securities - The Funds may purchase securities on a when-issued
or delayed delivery basis. Although the payment and interest terms of these
securities are established at the time the purchaser enters into the agreement,
these securities may be delivered and paid for at a future date, generally
within 45 days. The Fund records purchases of when-issued securities and
reflects the values of such securities in determining net asset value in the
same manner as other portfolio securities. The Fund segregates and maintains at
all times cash, cash equivalents, or other liquid securities in an amount at
least equal to the amount of outstanding commitments for when-issued securities.
g) Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
h) Foreign Currency Translations - The books and records of the International
Equity Fund are maintained in U.S. dollars. Foreign currencies, investments, and
other assets and liabilities denominated in foreign currencies are translated
into U.S. dollars at the exchange rates prevailing at the end of the period, and
purchases and sales of investment securities, and income and expenses
denominated in foreign currencies are translated on the respective dates of such
transactions. Unrealized gains and losses on investments which result from
changes in foreign currency exchange rates have been included in the unrealized
net appreciation (depreciation) on investments. Foreign currency exchange gains
and losses included in net appreciation (depreciation) on foreign currency and
net realized gains and losses on foreign currency include foreign currency gains
and losses between trade date and settlement date on investment securities
transactions, foreign currency transactions and the difference between the
amounts of interest and dividends recorded on the books of the Fund and the
amount actually received. The portion of the foreign currency gains and losses
related to fluctuation in exchange rates between the initial purchase trade date
and subsequent sale trade date of a security is included in realized gains and
losses on investment transactions.
i) Other - Investment and shareowner transactions are recorded on the trade
date. The Funds determine the gain or loss realized from the investment
transactions by comparing the original cost of the security lot sold with the
net sale proceeds. Dividend income is recognized on the ex-dividend date or as
soon as information is available to the Funds, and interest income is recognized
on an accrual basis. Generally accepted accounting principles require that
permanent financial reporting and tax differences be reclassified to capital
stock.
3. CAPITAL SHARE TRANSACTIONS
Transactions, in thousands, of shares of the Funds were as follows:
<TABLE>
<CAPTION>
BALANCED GROWTH AND INCOME EQUITY INDEX
FUND FUND FUND
-------- -------- --------
Amount Shares Amount Shares Amount Shares
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31, 1997:
Series A shares:
Shares sold $15,346 529 $43,063 1,218 $30,916 529
Shares issued to owners in
reinvestment of dividends 2,448 89 6,930 218 1,307 23
Shares redeemed (6,070) (211) (11,682) (328) (8,112) (137)
-------- -------- -------- -------- -------- --------
Net increase $11,724 407 $38,311 1,108 $24,111 415
======== ======== ======== ======== ======== ========
Series Institutional shares:
Shares sold $67,590 2,347 $139,658 3,995 $133,310 2,298
Shares issued to owners in
revinvestment of dividends 10,877 394 20,195 632 6,369 115
Shares redeemed (57,431) (1,976) (78,849) (2,165) (95,857) (1,703)
-------- -------- -------- -------- -------- --------
Net increase $21,036 765 $81,004 2,462 $43,822 710
======== ======== ======== ======== ======== ========
YEAR ENDED OCTOBER 31, 1996:
Series A shares:
Shares sold $ 7,996 296 $22,872 751 $19,090 418
Shares issued to owners in
reinvestment of dividends 923 35 2,501 90 638 14
Shares redeemed (3,691) (137) (6,621) (220) (3,814) (84)
-------- -------- -------- -------- -------- --------
Net increase $ 5,228 194 $18,752 621 $15,914 348
======== ======== ======== ======== ======== ========
Series Institutional shares:
Shares sold $57,666 2,169 $60,451 2,000 $94,687 2,097
Shares issued to owners in
revinvestment of dividends 4,416 167 9,106 326 4,694 104
Shares redeemed (46,623) (1,749) (41,195) (1,359) (60,130) (1,272)
-------- -------- -------- -------- -------- --------
Net increase $15,459 587 $28,362 967 $39,251 929
======== ======== ======== ======== ======== ========
</TABLE>
3. CAPITAL SHARE TRANSACTIONS
Transactions, in thousands, of shares of the Funds were as follows:
<TABLE>
<CAPTION>
GROWTH SPECIAL GROWTH INTERNATIONAL
FUND FUND EQUITY FUND
-------- -------- --------
Amount Shares Amount Shares Amount Shares
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31, 1997:
Series A shares:
Shares sold $ 8,130 250 $39,485 949 $4,828 226
Shares issued to owners in
reinvestment of dividends 727 24 13,955 370 116 6
Shares redeemed (3,796) (113) (28,518) (683) (1,624) (79)
-------- -------- -------- -------- -------- --------
Net increase $5,061 161 $24,922 636 $3,320 153
======== ======== ======== ======== ======== ========
Series Institutional shares:
Shares sold $48,607 1,489 $164,735 3,973 $27,533 1,361
Shares issued to owners in
revinvestment of dividends 5,140 168 53,786 1,420 1,149 59
Shares redeemed (53,475) (1,641) (181,632) (4,277) (9,612) (476)
-------- -------- -------- -------- -------- --------
Net increase $272 16 $36,889 1,116 $19,070 944
======== ======== ======== ======== ======== ========
YEAR ENDED OCTOBER 31, 1996:
Series A shares:
Shares sold $ 6,366 223 $ 32,914 823 $2,392 118
Shares issued to owners in
reinvestment of dividends - - 9,553 257 40 2
Shares redeemed (1,982) (69) (20,050) (501) (387) (19)
-------- -------- -------- -------- -------- --------
Net increase $4,384 154 $ 22,417 579 $2,045 101
======== ======== ======== ======== ======== ========
Series Institutional shares:
Shares sold $43,852 1,555 $133,433 3,375 $15,332 756
Shares issued to owners in
revinvestment of dividends - - 42,665 1,144 713 37
Shares redeemed (48,915) (1,701) (133,420) (3,376) (5,919) (291)
-------- -------- -------- -------- -------- --------
Net increase $ (5,063) (146) $ 42,678 1,143 $10,126 502
======== ======== ======== ======== ======== ========
</TABLE>
4. INVESTMENT TRANSACTIONS
The aggregate purchases and sales, in thousands, of securities, excluding
short-term investments, for the Funds for the year ended October 31 1997, were
as follows:
<TABLE>
<CAPTION>
BALANCED GROWTH AND EQUITY GROWTH SPECIAL INTERNATIONAL
FUND INCOME FUND INDEX FUND FUND GROWTH FUND EQUITY FUND
-------- ----------- ---------- ------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Purchases:
U.S. Government $ 18,067 - - - - -
Other 114,023 $215,469 $73,753 $113,008 $626,201 $66,720
Sales:
U.S. Government 17,031 - - - - -
Other 105,738 115,904 29,889 131,045 633,559 50,721
</TABLE>
Equity Index Fund transactions in futures contracts during the period October
31, 1996 to October 31, 1997, in thousands, were as follows:
AGGREGATE
NUMBER OF FACE VALUE OF
CONTRACTS CONTRACTS <F1>
---------- --------------
Outstanding at October 31, 1996 7 $ 2,342
Contracts opened 508 215,504
Contracts closed (460) (192,392)
----- ---------
Outstanding at October 31, 1997 55 $ 25,454
===== =========
<F1> The aggregate face value of contracts is computed on the date each contract
is opened.
The number of futures contracts and gross unrealized depreciation, in thousands,
as of October 31, 1997, were as follows:
NUMBER OF UNREALIZED
CONTRACTS DEPRECIATION
--------- ------------
S&P 500 Financial Futures Contract
Expiration date 12/97 <F2> 55 $44
<F2> At October 31, 1997, U.S. Treasury Bills of $1,492, in thousands, were held
as collateral by the custodian in an initial margin account in connection with
open futures contracts held by the Equity Index Fund.
At October 31, 1997, gross unrealized appreciation and depreciation of
investments for federal tax purposes, in thousands, were as follows:
<TABLE>
<CAPTION>
GROWTH EQUITY SPECIAL INTERNATIONAL
BALANCED AND INCOME INDEX GROWTH GROWTH EQUITY
FUND FUND FUND FUND FUND FUND
-------- ---------- ------ ------ ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Appreciation $36,768 $158,152 $157,916 $58,987 $193,289 $2,102
(Depreciation) (2,312) (2,201) (6,069) (1,896) (21,538) (8,332)
------- -------- -------- ------- -------- -------
Net unrealized appreciation
(depreciation) on investments $34,456 $152,687 $152,083 $57,091 $171,751 (6,230)
======= ======== ======== ======= ======== =======
</TABLE>
At October 31, 1997, the cost of investments, in thousands, for federal
income tax purposes was $173,726, $348,050, $240,282, $150,563, $549,494, and
$69,757 for the Balanced, Growth and Income, Equity Index, Growth, Special
Growth and International Equity Funds, respectively.
For the year ended October 31, 1997, the following percent of ordinary
income dividends qualifies for the dividend received deduction available to
corporate stockholders:Balanced Fund 8%, Growth and Income Fund 63%, Equity
Index Fund 70% and Special Growth Fund 7%.
5. INVESTMENT ADVISORY AND OTHER AGREEMENTS
The Funds have entered into an Investment Advisory Agreement with Firstar
Investment Research & Management Company, LLC ("FIRMCO"). FIRMCO is a
subsidiary of Firstar Corporation, a publicly held bank holding company.
Pursuant to its Advisory Agreement with the Funds, the Adviser is entitled to
receive a fee, calculated daily and payable monthly, at the annual rates
presented below as applied to each Fund's daily net assets. Effective September
2, 1997, FIRMCOentered into a Sub-Advisory Agreement with Hansberger Global
Investors (the "Sub-Adviser") for the International Equity Fund. Prior to
September 2, 1997, FIRMCOhad entered into a sub-advisory agreement with State
Street Global Advisors for the International Equity Fund. Pursuant to its Sub-
Advisory Agreement with FIRMCO, the Sub-Adviser is entitled to receive a fee
from FIRMCO, calculated daily and payable monthly, at the annual rate presented
below as applied to the International Equity Fund's daily net assets.
For the period ended October 31, 1997, FIRMCO voluntarily waived the following
fees, in thousands, by Fund:
GROWTH EQUITY SPECIAL INTERNATIONAL
BALANCED AND INCOME INDEX GROWTH GROWTH EQUITY
FUND FUND FUND FUND FUND FUND
-------- ---------- ------ ------ ------- -------------
Annual Rate 0.75% 0.75% 0.25% 0.75% 0.75% <F1><F2>
Fees waived $335 - - $2 - $371
<F1>FIRMCO is entitled to receive a fee, calculated daily and payable monthly,
at the annual rate of 1.50% of the Fund's first $25 million of average daily
net assets, 1.25% on the next $75 million and 1.10% of the Fund's average
daily net assets in excess of $100 million.
<F2>Pursuant to its Sub-Advisory Agreement with FIRMCO, the Sub-Adviser is
entitled to receive a fee from FIRMCO, calculated daily and payable monthly,
at the annual rate of 0.75% of the Fund's first $25 million of average daily
net assets, 0.50% on the next $75 million and 0.35% of the Fund's average
daily net assets in excess of $100 million.
Chase Manhattan Bank serves as custodian for the International Equity Fund,
and Firstar Trust Company, an affiliate of FIRMCO, serves as custodian for the
remaining Funds. Firstar Trust Company serves as transfer agent and accounting
services agent for all the Funds.
The Company has entered into a Co-Administration Agreement with B.C. Ziegler
and Company and Firstar Trust Company (the "Co-Administrators") for certain
administrative services. Pursuant to the Co-Administration Agreement with the
Company, the Co-Administrators are entitled to receive a fee, computed daily and
payable monthly, at the annual rate of 0.125% of the Company's first $2 billion
of average aggregate daily net assets, plus 0.10% of the Company's average
aggregate daily net assets in excess of $2 billion. For the year ended October
31, 1997, $133, $287, $229, $147, $521 and $39 of administration fees, in
thousands, were voluntarily waived for the Balanced, Growth and Income, Equity
Index, Growth, Special Growth and International Equity Funds, respectively.
The Company has entered into Servicing Agreements with certain Service
Organizations, including FIRMCO affiliates, for the Series A class of shares.
The Service Organizations are entitled to receive fees from the Funds up to the
annual rate of 0.25% of the average daily net asset value of the Series A Shares
for certain support and/or distribution services to customers of the Service
Organizations who are beneficial owners of Fund Series A Shares. These services
may include assisting customers in processing purchase, exchange and redemption
requests; processing dividend and distribution payments from the Funds; and
providing information periodically to customers showing their positions in Fund
Series A Shares. Service Organization fees, in thousands, incurred by the
Balanced, Growth and Income, Equity Index, Growth, Special Growth and
International Equity Funds aggregated $88, $249, $147, $55, $331 and $12
respectively, for the year ended October 31, 1997.
Each Director of the Company who is not affiliated with FIRMCO receives an
annual fee from the Company for service as a Director and is eligible to
participate in a deferred compensation plan with respect to these fees.
Participants in the plan may designate their deferred Director's fees as if
invested in any one of the Portico Funds (with the exception of the MicroCap
Fund) or in 90-day U.S. Treasury bills. The value of each Director's deferred
compensation account will increase or decrease as if it were invested in shares
of the selected Portico Funds or 90-day U.S. Treasury bills. The Funds maintain
their proportionate share of the Company's liability for deferred fees.
6. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments
involves special risks and considerations not typically associated with
investing in U.S.companies and the U.S. government. These risks include
revaluation of currencies and future adverse political and economic
developments. Moreover, securities of many foreign companies and foreign
governments and their markets may be less liquid and their prices more volatile
than those of securities of comparable U.S. companies and the U.S.Government.
7. DISTRIBUTIONS
During the year ended October 31, 1997, the following Funds piad capital
gain distributions (taxable as long-term capital gains) to both Series A and
Series Institutional shareowners.
GROWTH EQUITY SPECIAL INTERNATIONAL
BALANCED AND INCOME INDEX GROWTH GROWTH EQUITY
FUND FUND FUND FUND FUND FUND
----- ----- ----- ----- ----- -----
Per Share $1.25 $1.98 $0.37 $1.30 $3.52 $0.36
On November 10, 1997, the following Funds paid capital gain distributions
(taxable as long-term gains) to both Series A and Series Institutional
shareowners:
BALANCED GROWTH SPECIAL GROWTH
FUND FUND FUND
----- ----- -----
Per Share $2.27 $4.73 $4.46
Percentage of capital gain
distribution taxed at a
minimum rate of 20% 56.41% 57.54% 51.43%
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF THE PORTICO BALANCED FUND, THE
PORTICO GROWTH AND INCOME FUND, THE PORTICO EQUITY INDEX FUND, THE PORTICO
GROWTH FUND, THE PORTICO SPECIAL GROWTH FUND AND THE PORTICO INTERNATIONAL
EQUITY FUND
In our opinion, the accompanying statement of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Portico Balanced Fund, the
Portico Growth and Income Fund, the Portico Equity Index Fund, the Portico
Growth Fund (formerly the Portico MidCore Growth Fund), the Portico Special
Growth Fund and the Portico International Equity Fund (six of the portfolios of
Portico Funds, Inc. (the "Funds")) at October 31, 1997, the results of each of
their operations for the year then ended, the changes in each of their net
assets for each of the two years in the period then ended and each of their
financial highlights for the year ended October 31, 1997, and for each of the
other periods indicated, all in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Funds'
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 1997 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
/s/Price Waterhouse LLP
Milwaukee, Wisconsin
December 9, 1997
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- -PORTICO FUNDS ARE AVAILABLE THROUGH:
- the Portico Funds Center,
- Investment Specialists who are registered representatives of Firstar
Investment Services, Inc., a registered broker/dealer, NASD and SIPC member,
- and through selected shareholder organizations.
This report is authorized for distribution only when pre ceded or accompanied by
a current prospectus.
TO OPEN AN ACCOUNT OR
REQUEST INFORMATION
1-800-982-8909
1-414-287-3710
FOR ACCOUNT BALANCES AND
INVESTOR SERVICES
1-800-228-1024
1-414-287-3808
PORTICO FUNDS CENTER
615 EAST MICHIGAN STREET
P.O. Box 3011
Milwaukee, WI 53201-3011
FORM #40-0200 12/97
