<PAGE>
N-30D Table of Contents
Seven Seas Series Fund Name N-30D page
- --------------------------- ----------
Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . 2
US Government Money Market Fund . . . . . . . . . . . . . . . . . 20
Matrix Equity Fund . . . . . . . . . . . . . . . . . . . . . . . 34
S&P 500 Index Fund . . . . . . . . . . . . . . . . . . . . . . . 48
Small Cap Fund . . . . . . . . . . . . . . . . . . . . . . . . . 70
Active International Fund . . . . . . . . . . . . . . . . . . . . 88
Yield Plus Fund . . . . . . . . . . . . . . . . . . . . . . . . . 110
US Treasury Money Market and Prime Money Market Funds . . . . . . 128
Growth and Income Fund . . . . . . . . . . . . . . . . . . . . . 150
Intermediate Fund . . . . . . . . . . . . . . . . . . . . . . . . 164
Emerging Markets Fund . . . . . . . . . . . . . . . . . . . . . . 178
Tax Free Money Market Fund . . . . . . . . . . . . . . . . . . . 200
Bond Market Fund . . . . . . . . . . . . . . . . . . . . . . . . 218
<PAGE>
SEVEN SEAS INVESTMENT PORTFOLIOS
[LOGO]
SEMIANNUAL REPORT
MONEY MARKET FUND
FEBRUARY 29, 1996
<PAGE>
THE SEVEN SEAS SERIES FUND-Registered Trademark-
FEBRUARY 29, 1996
(UNAUDITED)
TABLE OF CONTENTS
Page
Money Market Fund Financial Statements . . . . . . . . . . . . . . . . . . 3
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . 12
Fund Management and Service Providers. . . . . . . . . . . . . . . . . . . 15
"THE SEVEN SEAS SERIES FUND-Registered Trademark" IS A REGISTERED TRADEMARK AND
SERVICE MARK OF THE SEVEN SEAS SERIES FUND.
THIS REPORT IS PREPARED FROM THE BOOKS AND RECORDS OF THE FUND AND IT IS
SUBMITTED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. THIS INFORMATION IS FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A
SEVEN SEAS SERIES FUND PROSPECTUS CONTAINING MORE COMPLETE INFORMATION
CONCERNING THE INVESTMENT OBJECTIVE AND OPERATIONS OF THE FUND, CHARGES AND
EXPENSES. THE PROSPECTUS SHOULD BE READ CAREFULLY BEFORE AN INVESTMENT IS MADE.
PERFORMANCE IS HISTORICAL AND ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL
GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN WHEN PURCHASED.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. AN INVESTMENT IN A MONEY
MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY THE US GOVERNMENT. THERE CAN BE
NO ASSURANCE THAT A MONEY MARKET FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE. RUSSELL FUND DISTRIBUTORS, INC. IS THE
DISTRIBUTOR OF THE SEVEN SEAS SERIES FUND.
<PAGE>
THE SEVEN SEAS SERIES
MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
February 29, 1996 (Unaudited)
PRINCIPAL DATE
AMOUNT OF VALUE
(000) RATE MATURITY (000)
-------------------------------------------------------
<S> <C> <C> <C> <C>
CERTIFICATES OF DEPOSIT - 9.1%
Bayerische Landesbank (a). . . . . . . . . . . . . . . . . . . . $ 65,000 5.182% 01/15/97 $ 64,960
First National Bank of Boston (a). . . . . . . . . . . . . . . . 20,000 5.520 01/29/97 20,000
PNC Bank, Pittsburgh (a) . . . . . . . . . . . . . . . . . . . . 75,000 5.252 08/12/96 74,980
PNC Bank, Pittsburgh (a) . . . . . . . . . . . . . . . . . . . . 50,000 5.200 09/03/96 49,972
PNC Bank, Pittsburgh (a) . . . . . . . . . . . . . . . . . . . . 15,000 5.262 12/20/96 14,995
Wachovia Bank (a). . . . . . . . . . . . . . . . . . . . . . . . 25,000 5.312 05/31/96 24,999
Wachovia Bank (a). . . . . . . . . . . . . . . . . . . . . . . . 50,000 5.187 01/17/97 49,959
Wachovia Bank (a). . . . . . . . . . . . . . . . . . . . . . . . 25,000 6.562 03/03/97 24,982
----------
TOTAL CERTIFICATES OF DEPOSIT (cost $324,847). . . . . . . . . . 324,847
----------
EURODOLLAR CERTIFICATES OF DEPOSIT - 5.0%
Abbey National PLC, London . . . . . . . . . . . . . . . . . . . 29,000 5.310 05/28/96 29,003
Bayerische Vereinsbank . . . . . . . . . . . . . . . . . . . . . 25,000 5.360 05/20/96 25,001
Bayerische Vereinsbank . . . . . . . . . . . . . . . . . . . . . 50,000 5.370 06/05/96 50,001
Hessische Landesbank . . . . . . . . . . . . . . . . . . . . . . 50,000 5.250 05/02/96 50,002
Westdeutsche Landesbank. . . . . . . . . . . . . . . . . . . . . 25,000 5.260 05/01/96 25,002
----------
TOTAL EURODOLLAR CERTIFICATES OF DEPOSIT (cost $179,009) . . . . 179,009
----------
YANKEE CERTIFICATES OF DEPOSIT - 4.1%
Canadian Imperial Bank . . . . . . . . . . . . . . . . . . . . . 22,000 5.280 03/04/96 22,000
Canadian Imperial Bank . . . . . . . . . . . . . . . . . . . . . 100,000 5.500 03/12/96 100,000
Canadian Imperial Bank . . . . . . . . . . . . . . . . . . . . . 25,000 5.350 04/01/96 25,002
----------
TOTAL YANKEE CERTIFICATES OF DEPOSIT (cost $147,002) . . . . . . 147,002
----------
CORPORATE BONDS AND NOTES - 33.2%
ABN AMRO Bank (Canada)(MTN). . . . . . . . . . . . . . . . . . . 14,000 5.560 06/05/96 13,987
American General Finance Corp. . . . . . . . . . . . . . . . . . 15,940 5.000 06/15/96 15,894
Bank of America, Chicago (MTN) . . . . . . . . . . . . . . . . . 25,000 5.875 08/15/96 24,986
Bank of New York . . . . . . . . . . . . . . . . . . . . . . . . 20,000 6.670 03/07/96 19,999
BankAmerica Corp. (MTN). . . . . . . . . . . . . . . . . . . . . 9,500 4.950 03/18/96 9,496
BankAmerica Corp. (MTN). . . . . . . . . . . . . . . . . . . . . 24,000 5.000 06/01/96 23,939
</TABLE>
Semiannual Report 3
<PAGE>
THE SEVEN SEAS SERIES
MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
PRINCIPAL DATE
AMOUNT OF VALUE
(000) RATE MATURITY (000)
-------------------------------------------------------
<S> <C> <C> <C> <C>
BankAmerica National Trust & Savings Association . . . . . . . . $ 25,000 5.070% 01/29/97 $ 24,986
Beneficial Corp. (a) . . . . . . . . . . . . . . . . . . . . . . 50,000 5.539 01/16/97 49,982
Beneficial Corp. (MTN)(a). . . . . . . . . . . . . . . . . . . . 45,000 6.430 11/22/96 45,030
Boatmens National Bank (a) . . . . . . . . . . . . . . . . . . . 18,000 5.323 06/12/96 18,000
Caterpillar Financial Services (MTN)(a). . . . . . . . . . . . . 30,000 5.312 06/14/96 30,000
Caterpillar Financial Services (MTN)(a). . . . . . . . . . . . . 20,000 5.779 06/28/96 20,006
CIT Group Holdings, Inc. (MTN)(a). . . . . . . . . . . . . . . . 45,000 5.300 10/30/96 44,968
Citicorp (MTN)(a). . . . . . . . . . . . . . . . . . . . . . . . 15,250 6.012 06/10/96 15,258
Comerica Bank, Detroit (MTN) . . . . . . . . . . . . . . . . . . 14,000 6.180 05/28/96 14,008
Comerica Bank, Detroit (MTN)(a). . . . . . . . . . . . . . . . . 25,000 5.292 02/14/97 25,000
FCC National Bank, Wilmington. . . . . . . . . . . . . . . . . . 60,000 5.200 04/04/96 59,998
FCC National Bank, Wilmington. . . . . . . . . . . . . . . . . . 25,000 5.900 08/21/96 24,988
FCC National Bank, Wilmington. . . . . . . . . . . . . . . . . . 25,000 5.700 10/02/96 24,975
FCC National Bank, Wilmington. . . . . . . . . . . . . . . . . . 15,000 4.940 02/26/97 14,961
FCC National Bank, Wilmington (a). . . . . . . . . . . . . . . . 6,000 5.600 03/04/96 6,000
First Fidelity Bancorp. (a). . . . . . . . . . . . . . . . . . . 44,100 5.475 08/02/96 44,115
Fleet Financial Group, Inc. (MTN)(a) . . . . . . . . . . . . . . 50,000 6.260 08/19/96 49,991
Fleet National Bank (MTN)(a) . . . . . . . . . . . . . . . . . . 25,000 5.875 10/30/96 24,997
Ford Motor Credit Co. (MTN)(a) . . . . . . . . . . . . . . . . . 15,000 6.300 06/17/96 15,038
Ford Motor Credit Co. (MTN)(a) . . . . . . . . . . . . . . . . . 24,625 5.400 02/18/97 24,671
General Electric Capital Corp. (MTN) . . . . . . . . . . . . . . 8,000 5.970 08/28/96 7,999
General Electric Capital Corp. (MTN)(a). . . . . . . . . . . . . 44,320 5.190 05/06/96 44,320
General Motors Acceptance Corp. (a) . . . . . . . . . . . . . . 10,000 6.082 12/06/96 10,010
General Motors Acceptance Corp. (MTN). . . . . . . . . . . . . . 5,000 8.750 04/09/96 5,013
General Motors Acceptance Corp. (MTN). . . . . . . . . . . . . . 5,000 8.850 07/18/96 5,054
General Motors Acceptance Corp. (MTN). . . . . . . . . . . . . . 15,000 8.000 12/05/96 15,244
Household Finance Corp. (MTN)(a) . . . . . . . . . . . . . . . . 27,000 5.330 11/22/96 26,982
Household Finance Corp. (MTN)(a) . . . . . . . . . . . . . . . . 25,000 5.212 02/24/97 24,990
IBM Credit Corp. (MTN) . . . . . . . . . . . . . . . . . . . . . 20,000 6.100 05/15/96 19,995
IBM Credit Corp. (MTN) . . . . . . . . . . . . . . . . . . . . . 25,000 6.150 05/31/96 25,019
Merrill Lynch & Co., Inc.. . . . . . . . . . . . . . . . . . . . 27,000 6.050 08/19/96 27,093
Morgan (J.P.) & Co., Inc.. . . . . . . . . . . . . . . . . . . . 20,000 5.970 08/21/96 19,997
Morgan Guaranty Trust Co.. . . . . . . . . . . . . . . . . . . . 25,000 4.900 02/13/97 24,975
Norwest Corp. (MTN). . . . . . . . . . . . . . . . . . . . . . . 25,000 4.960 02/20/97 25,000
</TABLE>
4 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
PRINCIPAL DATE
AMOUNT OF VALUE
(000) RATE MATURITY (000)
-------------------------------------------------------
<S> <C> <C> <C> <C>
Old Kent Bank & Trust Co.. . . . . . . . . . . . . . . . . . . . $ 16,000 7.100% 03/07/97 $ 16,329
PNC Bank, Pittsburgh (MTN) . . . . . . . . . . . . . . . . . . . 15,000 5.650 09/18/96 15,021
Sears Roebuck & Co. (MTN). . . . . . . . . . . . . . . . . . . . 10,000 5.250 02/24/97 9,996
Shawmut Bank (MTN)(a). . . . . . . . . . . . . . . . . . . . . . 25,000 5.530 06/07/96 25,000
Shawmut Bank (MTN)(a). . . . . . . . . . . . . . . . . . . . . . 30,000 5.679 06/24/96 29,995
SMM Trust Co. (MTN)(a) . . . . . . . . . . . . . . . . . . . . . 75,000 5.312 12/16/96 74,995
Society National Bank. . . . . . . . . . . . . . . . . . . . . . 46,000 6.875 10/15/96 46,362
----------
TOTAL CORPORATE BONDS AND NOTES (cost $1,184,662). . . . . . . . 1,184,662
----------
COMMERCIAL PAPER - 15.3%
Aristar, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 5.630 03/04/96 19,991
Cheltenham & Glouster PLC. . . . . . . . . . . . . . . . . . . . 25,000 5.580 03/07/96 24,977
Colgate Palmolive Co.. . . . . . . . . . . . . . . . . . . . . . 15,000 5.460 03/04/96 14,993
Colgate Palmolive Co.. . . . . . . . . . . . . . . . . . . . . . 20,000 5.340 09/13/96 19,419
Daimler Benz of North America. . . . . . . . . . . . . . . . . . 45,000 5.050 05/24/96 44,470
General Electric Capital Corp. . . . . . . . . . . . . . . . . . 35,000 5.600 04/02/96 34,826
GLAXO PLC . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 5.600 03/22/96 19,935
GTE Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,790 5.570 03/04/96 24,778
GTE Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,760 5.570 03/05/96 26,743
GTE North, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . 50,000 5.450 03/29/96 49,788
Ontario Hydro. . . . . . . . . . . . . . . . . . . . . . . . . . 26,500 5.090 05/30/96 26,163
Prudential Funding Corp. . . . . . . . . . . . . . . . . . . . . 110,000 5.470 03/01/96 110,000
Svenska Handelsbanken. . . . . . . . . . . . . . . . . . . . . . 79,500 5.600 03/01/96 79,500
Woolwich . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 5.375 04/09/96 49,709
----------
TOTAL COMMERCIAL PAPER (cost $545,292) . . . . . . . . . . . . . 545,292
----------
TIME DEPOSITS - 7.0%
Chemical BankCorp. . . . . . . . . . . . . . . . . . . . . . . . 125,000 5.500 03/01/96 125,000
Dresdner Bank, Grand Cayman. . . . . . . . . . . . . . . . . . . 100,000 5.875 03/01/96 100,000
Svenska Handelsbanken. . . . . . . . . . . . . . . . . . . . . . 22,701 6.250 03/01/96 22,701
----------
TOTAL TIME DEPOSITS (cost $247,701). . . . . . . . . . . . . . . 247,701
----------
</TABLE>
Semiannual Report 5
<PAGE>
THE SEVEN SEAS SERIES
MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
PRINCIPAL DATE
AMOUNT OF VALUE
(000) RATE MATURITY (000)
-------------------------------------------------------
<S> <C> <C> <C> <C>
UNITED STATES GOVERNMENT AGENCIES - 18.1%
Federal Farm Credit Bank . . . . . . . . . . . . . . . . . . . . $ 20,000 6.070% 06/03/96 $ 19,996
Federal Home Loan Bank . . . . . . . . . . . . . . . . . . . . . 25,000 5.190 04/24/96 24,805
Federal Home Loan Bank (a) . . . . . . . . . . . . . . . . . . . 25,000 5.125 09/26/96 24,987
Federal Home Loan Bank (a) . . . . . . . . . . . . . . . . . . . 50,000 5.125 09/27/96 49,970
Federal National Mortgage Association. . . . . . . . . . . . . . 25,000 5.250 04/11/96 24,851
Federal National Mortgage Association. . . . . . . . . . . . . . 20,000 5.150 05/03/96 19,820
Federal National Mortgage Association. . . . . . . . . . . . . . 25,000 5.160 05/03/96 24,774
Federal National Mortgage Association (MTN). . . . . . . . . . . 10,000 5.500 06/12/96 9,988
Federal National Mortgage Association (MTN). . . . . . . . . . . 16,000 5.630 06/28/96 16,018
Federal National Mortgage Association (MTN). . . . . . . . . . . 56,950 4.780 02/14/97 56,906
Federal National Mortgage Association (MTN)(a) . . . . . . . . . 50,000 5.580 08/13/96 50,028
Federal National Mortgage Association (MTN)(a) . . . . . . . . . 75,000 5.190 08/16/96 74,964
Federal National Mortgage Association (MTN)(a) . . . . . . . . . 62,000 6.180 09/03/96 61,984
Federal National Mortgage Association (MTN)(a) . . . . . . . . . 75,000 6.180 02/21/97 74,949
Student Loan Marketing Association (a) . . . . . . . . . . . . . 25,000 5.340 03/20/96 25,002
Student Loan Marketing Association (a) . . . . . . . . . . . . . 26,000 5.210 04/11/96 25,998
Student Loan Marketing Association (a) . . . . . . . . . . . . . 61,580 5.140 07/19/96 61,585
----------
TOTAL UNITED STATES GOVERNMENT AGENCIES (cost $646,625). . . . . 646,625
----------
UNITED STATES GOVERNMENT TREASURIES - 4.4%
United States Treasury Bills . . . . . . . . . . . . . . . . . . 15,000 4.850 11/14/96 14,479
United States Treasury Notes . . . . . . . . . . . . . . . . . . 25,000 6.875 02/28/97 25,421
United States Treasury Notes . . . . . . . . . . . . . . . . . . 115,000 7.500 01/31/97 117,611
----------
TOTAL UNITED STATES GOVERNMENT TREASURIES (cost $157,511). . . . 157,511
----------
TOTAL INVESTMENTS (amortized cost $3,432,649) - 96.2%. . . . . . 3,432,649
----------
</TABLE>
6 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
VALUE
(000)
------------
<S> <C>
REPURCHASE AGREEMENTS - 3.6%
Agreement with Dresdner Bank AG of $130,000
acquired February 29, 1996 at 5.470% to be repurchased
at $130,020 on March 1, 1996, collateralized by:
$50,000 United States Treasury Notes,
5.875% due 03/31/99 valued at $51,697, and by
$67,000 United States Treasury Notes,
8.500% due 07/15/97 valued at $70,415, and by
$7,000 United States Treasury Notes,
5.750% due 09/30/97 valued at $7,198, and by
$3,124 United States Treasury Notes,
6.875% due 08/31/99 valued at $3,248. . . . . . . . . . . . $ 130,000
----------
TOTAL REPURCHASE AGREEMENTS (cost $130,000). . . . . . . . . . . 130,000
----------
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS
(cost $3,562,649)(b) - 99.8% . . . . . . . . . . . . . . . . . . 3,562,649
OTHER ASSETS AND LIABILITIES, NET - 0.2% . . . . . . . . . . . . 5,870
----------
NET ASSETS - 100.0%. . . . . . . . . . . . . . . . . . . . . . . $3,568,519
----------
----------
</TABLE>
(a) Adjustable or floating rate security.
(b) The identified cost for federal income tax purposes is the same as shown
above.
(MTN) represents Medium Term Note.
The accompanying notes are an integral part of the financial statements.
Semiannual Report 7
<PAGE>
THE SEVEN SEAS SERIES
MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (Unaudited)
<S> <C> <C>
ASSETS
Investments at amortized cost which approximates market (Note 2). . . . . $3,432,648,560
Repurchase agreements (cost $130,000,000)(Note 2) . . . . . . . . . . . . 130,000,000
Interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,895,975
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,308
--------------
3,585,588,843
LIABILITIES
Payables (Note 4):
Bank overdraft. . . . . . . . . . . . . . . . . . . . . . $ 687,186
Dividends . . . . . . . . . . . . . . . . . . . . . . . . 14,354,930
Accrued administrative fees . . . . . . . . . . . . . . . 81,659
Accrued advisory fees . . . . . . . . . . . . . . . . . . 1,440,069
Accrued custodian fees. . . . . . . . . . . . . . . . . . 106,292
Accrued distribution fees . . . . . . . . . . . . . . . . 16,017
Accrued shareholder servicing fees. . . . . . . . . . . . 189,268
Accrued transfer agent fees . . . . . . . . . . . . . . . 60,560
Other accrued expenses. . . . . . . . . . . . . . . . . . 133,690 17,069,671
----------- --------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,568,519,172
--------------
--------------
NET ASSETS CONSIST OF:
Accumulated net realized gain (loss). . . . . . . . . . . . . . . . . . . (3,272,800)
Shares of beneficial interest . . . . . . . . . . . . . . . . . . . . . . 3,571,792
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . 3,568,220,180
--------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,568,519,172
--------------
--------------
Net asset value, offering and redemption price per share
($3,568,519,172 divided by 3,571,791,972 shares of $.001
par value shares of beneficial interest outstanding). . . . . . . . . . . $1.00
--------------
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 1996 (Unaudited)
<S> <C> <C>
INVESTMENT INCOME
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $89,028,841
Expenses (Notes 2 and 4):
Advisory fees . . . . . . . . . . . . . . . . . . . . . . $3,837,361
Administrative fees . . . . . . . . . . . . . . . . . . . 455,758
Custodian fees. . . . . . . . . . . . . . . . . . . . . . 295,862
Distribution fees . . . . . . . . . . . . . . . . . . . . 472,416
Professional fees . . . . . . . . . . . . . . . . . . . . 24,503
Registration fees . . . . . . . . . . . . . . . . . . . . 113,204
Shareholder servicing fees. . . . . . . . . . . . . . . . 714,869
Transfer agent fees . . . . . . . . . . . . . . . . . . . 172,557
Trustees' fees. . . . . . . . . . . . . . . . . . . . . . 88,083
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 55,087 6,229,700
---------- ----------
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . 82,799,141
-----------
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from investments (Notes 2 and 3). . . . . . . . . 762,477
-----------
Net increase in net assets resulting from operations . . . . . . . . . . . $83,561,618
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 9
<PAGE>
THE SEVEN SEAS SERIES
MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE
MONTHS ENDED FISCAL YEAR
FEBRUARY 29, 1996 ENDED
(UNAUDITED) AUGUST 31, 1995
------------------ ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income. . . . . . . . . . . . . . . . . . . . . . $ 82,799,141 $ 149,922,892
Net realized gain (loss) from investments. . . . . . . . . . . . 762,477 576,551
------------------ ---------------
Net increase (decrease) in net assets resulting from operations. . 83,561,618 150,499,443
Distributions to shareholders from net investment income . . . . . (82,871,145) (149,922,892)
Increase (decrease) in net assets from Fund share transactions . . 814,933,857 (268,477,535)
------------------ ---------------
INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . . 815,624,330 (267,900,984)
Net assets at beginning of period. . . . . . . . . . . . . . . . . 2,752,894,842 3,020,795,826
------------------ ---------------
NET ASSETS AT END OF PERIOD. . . . . . . . . . . . . . . . . . . . $ 3,568,519,172 $ 2,752,894,842
------------------ ---------------
------------------ ---------------
FUND SHARE TRANSACTIONS
(ON A CONSTANT DOLLAR BASIS):
Fund shares sold . . . . . . . . . . . . . . . . . . . . . . . . . 21,842,804,504 31,138,940,091
Fund shares issued to shareholders in reinvestments of
distributions. . . . . . . . . . . . . . . . . . . . . . . . . . 76,642,692 137,268,575
Fund shares redeemed . . . . . . . . . . . . . . . . . . . . . . . (21,104,513,339) (31,544,686,201)
------------------ ---------------
Net increase (decrease). . . . . . . . . . . . . . . . . . . . . . 814,933,857 (268,477,535)
------------------ ---------------
------------------ ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
MONEY MARKET FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout each fiscal
year or period and other performance information derived from the financial statements.
1996+ 1995 1994 1993 1992 1991 1990 1989 1988++
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
BEGINNING OF PERIOD . . . . . $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income . . . . . .0269 .0538 .0330 .0320 .0458 .0686 .0817 .0883 .0239
------- ------- ------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Net investment income . . . . . (.0269) (.0538) (.0330) (.0320) (.0458) (.0686) (.0817) (.0883) (.0239)
------- ------- ------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE
END OF PERIOD . . . . . . . . . $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL RETURN (%)(a). . . . . . . 2.72 5.52 3.35 3.24 4.68 7.08 8.48 9.19 2.41
RATIOS (%)/SUPPLEMENTAL
DATA:
Operating expenses, net,
to average daily
net assets (b). . . . . . . . .40 .39 .36 .33 .35 .37 .37 .43 .44
Operating expenses, gross,
to average daily
net assets (b). . . . . . . . .40 .39 .36 .38 .35 .38 .43 .51 .63
Net investment income to
average daily net assets (b). 5.38 5.37 3.33 3.20 4.40 6.59 8.13 8.97 7.30
Net assets, end of
period ($000 omitted) . . . . 3,568,519 2,752,895 3,020,796 2,502,483 4,263,057 1,645,428 650,598 442,614 193,777
Per share amount of fees
waived ($ omitted). . . . . . -- -- -- .0005 -- .0000 .0005 .0004 .0010
</TABLE>
+ For the six months ended February 29, 1996 (Unaudited).
++ For the period May 2, 1988 (commencement of operations) to August 31, 1988.
(a) Periods less than one year are not annualized.
(b) The ratios for the periods ended February 29, 1996 and August 31, 1988 are
annualized.
Semiannual Report 11
<PAGE>
THE SEVEN SEAS SERIES
MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996 (Unaudited)
1. ORGANIZATION
The Seven Seas Series Fund (the "Investment Company") is a series mutual
fund, currently comprising 14 investment portfolios which are in operation
as of February 29, 1996. These financial statements report on one
portfolio, The Seven Seas Series Money Market Fund (the "Fund"). The
Investment Company is a registered and diversified open-end investment
company, as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), that was organized as a Massachusetts business trust on
October 3, 1987 and operates under a First Amended and Restated Master
Trust Agreement, dated October 13, 1993, as amended. The Investment
Company's master trust agreement permits the Board of Trustees to issue an
unlimited number of full and fractional shares of beneficial interest at a
$.001 par value. The Investment Company has available Class B and Class C
shares of the Fund as of August 15, 1994; however, shares have not been
offered on these classes as of the date of these financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management
estimates. The following is a summary of the significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements.
SECURITY VALUATION: The Fund's portfolio investments are valued on the
basis of amortized cost, a method by which each portfolio instrument is
initially valued at cost, and thereafter a constant accretion/amortization
to maturity of any discount or premium is assumed. The Fund utilizes the
amortized cost valuation method in accordance with Rule 2a-7 of the 1940
Act.
SECURITIES TRANSACTIONS: Securities transactions are recorded on the trade
date, which in most instances is the same as the settlement date. Realized
gains and losses from the securities transactions, if any, are recorded on
the basis of identified cost.
INVESTMENT INCOME: Interest income is recorded on the accrual basis.
FEDERAL INCOME TAXES: As the Investment Company is a Massachusetts
business trust, each sub-trust is a separate corporate taxpayer and
determines its net investment income and capital gains (or losses) and the
amounts to be distributed to each fund's shareholders without regard to the
income and capital gains (or losses) of the other funds.
It is the Fund's intention to qualify as a regulated investment company and
distribute all of its taxable income. The Fund, accordingly, paid no
federal income taxes and no federal income tax provision was required. At
August 31, 1995, the Fund had a net tax basis capital loss carryover of
$4,159,322, which may be applied against any realized net taxable gains in
each succeeding year or until its expiration date of August 31, 2003. In
addition, as permitted by tax regulations, the Fund intends to defer a net
realized capital loss of $5,844 incurred from November 1, 1994 to August
31, 1995, and treat it as arising in fiscal year 1996.
12 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Fund declares and records
dividends on net investment income daily and pays them monthly. Capital
gain distributions, if any, are generally declared and paid annually. An
additional distribution may be paid by the Fund to avoid imposition of
federal income tax on any remaining undistributed net investment income and
capital gains. The fund may periodically make reclassifications among
certain of its capital accounts without impacting net asset value for
differences between federal tax regulations and generally accepted
accounting principles.
EXPENSES: Expenses such as advisory, custodian, transfer agent, shareholder
servicing, printing, and registration fees are charged directly to the
individual funds, while indirect expenses, such as administrative,
insurance, and professional fees are generally allocated among all funds
principally based on their relative net assets.
REPURCHASE AGREEMENTS: The Fund may engage in repurchase and tri-party
repurchase agreements with several financial institutions whereby the Fund,
through its custodian or third-party custodian, receives delivery of the
underlying securities. The market value of these securities (including
accrued interest) on acquisition date is required to be an amount equal to
at least 102% of the repurchase price. The Fund's Adviser will monitor
repurchase agreements daily to determine that the market value (including
accrued interest) at Fedwire closing time of the underlying securities
remains at least equal to 100% of the repurchase price. The Adviser or
third-party custodian will notify the seller to immediately increase the
collateral on the repurchase agreement to 102% of the repurchase price if
collateral falls below 100%.
3. SECURITIES TRANSACTIONS
INVESTMENT TRANSACTIONS: For the six months ended February 29, 1996,
purchases, sales, and maturities of investment securities, excluding US
Government and Agency obligations and repurchase agreements, for the Fund
aggregated to $26,114,429,825, $224,247,151 and $25,536,005,000,
respectively.
For the six months ended February 29, 1996, purchases, sales, and
maturities of US Government and Agency obligations, excluding repurchase
agreements aggregated to $950,861,225, $367,886,627 and $254,526,000,
respectively.
4. RELATED PARTIES
ADVISER: The Investment Company has an investment advisory agreement with
State Street Bank and Trust Company (the "Adviser") under which the Adviser
directs the investments of the Fund in accordance with its investment
objectives, policies, and limitations. For these services, the Fund pays a
fee to the Adviser, calculated daily and paid monthly, at the annual rate
of .25% of its average daily net assets. The Investment Company has
contracts with the Adviser to provide custody, shareholder servicing and
transfer agent services to the Fund.
ADMINISTRATOR, DISTRIBUTOR AND SHAREHOLDER SERVICING: Frank Russell
Investment Management Company (the "Administrator") serves as administrator
of the Investment Company. The Administrator is also required, pursuant to
the Administration Agreement, to arrange and pay certain promotional and
sales costs of Investment
Semiannual Report 13
<PAGE>
THE SEVEN SEAS SERIES
MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
Company shares. Russell Fund Distributors, Inc. (the "Distributor"), a
subsidiary of the Administrator, is the distributor of the Investment
Company shares. The Fund has adopted a distribution plan pursuant to Rule
12b-1 (the "Plan") under the 1940 Act. Under the Plan, the Fund may also
enter into service agreements with financial institutions, including the
Adviser, State Street Brokerage Services, Inc. ("SSBSI"), a wholly-owned
subsidiary of the Adviser, and Adviser's Metropolitan Division of
Commercial Banking ("Commercial Banking" collectively the "Agents"). The
Commercial Banking service agreement became effective November 8, 1995.
Under these service agreements, the Agents are to provide shareholder
servicing for Investment Company shareholders, including services related
to the purchase and redemption of Investment Company shares.
For these services, the Fund pays fees to the Agents in an amount that per
annum is equal to .025%, .175% and .175% of the average daily value of all
Fund shares held by or for customers of the Adviser, SSBSI and Commercial
Banking, respectively. These fees, in conjunction with other
distribution-related expenses, may not exceed .25% of the average daily
value of net assets on an annual basis, which includes a limit of .20% in
shareholder servicing fees for all providers. Any payments that are
required to be made by the Plan and any service agreement, but could not be
made because they exceed the maximum amount of allowable reimbursement, may
be carried forward for subsequent reimbursement from the Investment Company
so long as the Plan is in effect. The Fund's liability for any such
expenses carried forward shall terminate at the end of two years following
the year in which the expenditure was incurred. The Trustees or a majority
of the Fund's shareholders have the right, however, to terminate the
Distribution Plan and all payments thereunder at any time. The Fund will
not be obligated to reimburse the Distributor for carryover expenses
subsequent to the Distribution Plan's termination or noncontinuance. There
were no carryover expenses as of February 29, 1996.
For shareholder servicing, the Fund incurred expenses of $586,352, $51,634
and $76,883 from the Adviser, SSBSI and Commercial Banking, respectively.
The amounts related to distribution and shareholder servicing fees are
included in the accompanying Statement of Operations.
Pursuant to the Administration Agreement with the Investment Company, the
Administrator supervises all non-portfolio investment aspects of the
Investment Company's operations and provides adequate office space and all
necessary office equipment and services, including telephone service,
utilities, stationery supplies, and similar items. The Investment Company
pays the Administrator the following fees for the services supplied by the
Administrator pursuant to the Administration Agreement: (i) an annual fee,
payable monthly on a pro rata basis, based on the following percentages of
the average daily net assets of all domestic funds: $0 up to $500 million
- .06%; over $500 million to and including $1 billion - .05%; over $1
billion - .03%; (ii) less an amount equal to the sum of certain
distribution-related expenses incurred by the Investment Company's
Distributor on behalf of the Fund (up to a maximum of 15% of the
asset-based fee determined in (i)); (iii) out-of-pocket expenses; and (iv)
start-up costs for new funds.
BOARD OF TRUSTEES: The Investment Company pays each of its Trustees not
affiliated with the Investment Company a retainer of $44,000 annually,
$1,000 for each of the board meetings attended, an additional $1,000 for
attending the annual audit committee meeting, and reimbursement for
out-of-pocket expenses.
14 Semiannual Report
<PAGE>
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<PAGE>
(This page has been left blank intentially.)
<PAGE>
(This page has been left blank intentially.)
<PAGE>
THE SEVEN SEAS SERIES FUND
Two International Place, 35th Floor [LOGO]
Boston, Massachusetts 02110
(617) 654-6089
- --------------------------------------------------------------------------------
TRUSTEES
Lynn L. Anderson, Chairman
William L. Marshall
Steven J. Mastrovich
Patrick J. Riley
Richard D. Shirk
Bruce D. Taber
Henry W. Todd
OFFICERS
Lynn L. Anderson, President
George W. Weber, Senior Vice President
and Treasurer
J. David Griswold, Vice President
and Secretary
INVESTMENT ADVISER
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
CUSTODIAN, TRANSFER AGENT AND
OFFICE OF SHAREHOLDERS INQUIRIES
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
(800) 64-7SEAS (77327)
DISTRIBUTOR
Russell Fund Distributors, Inc.
Two International Place, 35th Floor
Boston, Massachusetts 02110
(617) 654-6089
ADMINISTRATOR
Frank Russell Investment Management Company
909 A Street
Tacoma, Washington 98402
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
Semiannual Report 15
<PAGE>
SEVEN SEAS INVESTMENT PORTFOLIOS
[LOGO]
SEMIANNUAL REPORT
US GOVERNMENT MONEY MARKET FUND
FEBRUARY 29, 1996
<PAGE>
THE SEVEN SEAS SERIES FUND-Registered Trademark-
FEBRUARY 29, 1996
(UNAUDITED)
TABLE OF CONTENTS
Page
US Government Money Market Fund Financial Statements . . . . . . . . . . 3
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . 10
Fund Management and Service Providers. . . . . . . . . . . . . . . . . . 13
"THE SEVEN SEAS SERIES FUND-Registered Trademark-" IS A REGISTERED TRADEMARK AND
SERVICE MARK OF THE SEVEN SEAS SERIES FUND.
THIS REPORT IS PREPARED FROM THE BOOKS AND RECORDS OF THE FUND AND IT IS
SUBMITTED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. THIS INFORMATION IS FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A
SEVEN SEAS SERIES FUND PROSPECTUS CONTAINING MORE COMPLETE INFORMATION
CONCERNING THE INVESTMENT OBJECTIVE AND OPERATIONS OF THE FUND, CHARGES AND
EXPENSES. THE PROSPECTUS SHOULD BE READ CAREFULLY BEFORE AN INVESTMENT IS MADE.
PERFORMANCE IS HISTORICAL AND ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL
GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN WHEN PURCHASED.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. AN INVESTMENT IN A MONEY
MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY THE US GOVERNMENT. THERE CAN BE
NO ASSURANCE THAT A MONEY MARKET FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE. RUSSELL FUND DISTRIBUTORS, INC. IS THE
DISTRIBUTOR OF THE SEVEN SEAS SERIES FUND.
<PAGE>
THE SEVEN SEAS SERIES
US GOVERNMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
February 29, 1996 (Unaudited)
PRINCIPAL DATE
AMOUNT OF VALUE
(000) RATE MATURITY (000)
------------------------------------------------------
<S> <C> <C> <C> <C>
UNITED STATES GOVERNMENT AGENCIES - 65.8%
Federal Farm Credit Bank . . . . . . . . . . . . . . . . . . $ 5,000 6.390% 04/17/96 $ 5,001
Federal Farm Credit Bank . . . . . . . . . . . . . . . . . . 30,000 5.400 11/08/96 29,968
Federal Farm Credit Bank (a) . . . . . . . . . . . . . . . . 20,000 5.450 09/16/96 19,998
Federal Home Loan Bank (a) . . . . . . . . . . . . . . . . . 20,000 5.470 03/08/96 19,999
Federal Home Loan Bank (a) . . . . . . . . . . . . . . . . . 10,000 5.550 03/14/96 10,000
Federal Home Loan Bank (a) . . . . . . . . . . . . . . . . . 5,000 5.530 05/06/96 5,000
Federal Home Loan Bank (a) . . . . . . . . . . . . . . . . . 30,000 5.112 09/20/96 29,983
Federal Home Loan Bank (a) . . . . . . . . . . . . . . . . . 20,000 5.125 09/27/96 19,988
Federal Home Loan Bank (a) . . . . . . . . . . . . . . . . . 10,000 5.418 10/02/96 9,993
Federal Home Loan Bank Discount Notes. . . . . . . . . . . . 5,000 6.210 03/28/96 4,977
Federal Home Loan Bank Discount Notes. . . . . . . . . . . . 5,000 5.200 04/24/96 4,961
Federal Home Loan Mortgage Corp. . . . . . . . . . . . . . . 10,000 6.005 05/13/96 9,997
Federal Home Loan Mortgage Corp. Discount Notes. . . . . . . 15,000 5.135 03/20/96 14,959
Federal Home Loan Mortgage Corp. Discount Notes. . . . . . . 4,500 5.220 04/24/96 4,465
Federal Home Loan Mortgage Corp. Discount Notes. . . . . . . 10,000 5.200 04/25/96 9,921
Federal Home Loan Mortgage Corp. Discount Notes. . . . . . . 3,825 5.220 04/26/96 3,794
Federal Home Loan Mortgage Corp. Discount Notes. . . . . . . 8,000 5.090 05/01/96 7,931
Federal National Mortgage Association (MTN). . . . . . . . . 5,000 6.460 03/27/96 5,001
Federal National Mortgage Association (MTN). . . . . . . . . 8,000 5.500 06/12/96 7,991
Federal National Mortgage Association (MTN). . . . . . . . . 15,000 5.590 06/21/96 14,989
Federal National Mortgage Association (MTN). . . . . . . . . 10,000 4.780 02/14/97 9,992
Federal National Mortgage Association (MTN)(a) . . . . . . . 15,000 5.162 08/16/96 14,996
Federal National Mortgage Association (MTN)(a) . . . . . . . 15,000 5.190 08/16/96 39,985
Federal National Mortgage Association (MTN)(a) . . . . . . . 15,000 5.170 10/15/96 14,995
Federal National Mortgage Association (MTN)(a) . . . . . . . 20,000 6.180 11/20/96 19,990
Federal National Mortgage Association (MTN)(a) . . . . . . . 20,000 6.180 02/21/97 19,987
Federal National Mortgage Association Discount Notes . . . . 10,000 5.220 04/12/96 9,939
Federal National Mortgage Association Discount Notes . . . . 20,000 5.250 04/12/96 19,878
Federal National Mortgage Association Discount Notes . . . . 5,000 5.150 05/02/96 4,956
Federal National Mortgage Association Discount Notes . . . . 5,000 5.160 05/03/96 4,955
Student Loan Marketing Association (a) . . . . . . . . . . . 10,250 5.140 07/19/96 10,251
Student Loan Marketing Association (a) . . . . . . . . . . . 11,000 5.360 11/27/96 11,020
Student Loan Marketing Association (MTN)(a). . . . . . . . . 5,000 5.306 07/01/96 4,998
---------
TOTAL UNITED STATES GOVERNMENT AGENCIES (cost $424,858). . . 424,858
---------
</TABLE>
Semiannual Report 3
<PAGE>
THE SEVEN SEAS SERIES
US GOVERNMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
PRINCIPAL DATE
AMOUNT OF VALUE
(000) RATE MATURITY (000)
------------------------------------------------------
<S> <C> <C> <C> <C>
UNITED STATES GOVERNMENT TREASURIES - 8.6%
United States Treasury Notes . . . . . . . . . . . . . . . . . . $ 20,000 4.375% 08/15/96 $ 19,946
United States Treasury Notes . . . . . . . . . . . . . . . . . . 25,000 7.500 01/31/97 25,558
United States Treasury Notes . . . . . . . . . . . . . . . . . . 10,000 6.875 02/28/97 10,163
---------
TOTAL UNITED STATES GOVERNMENT TREASURIES (cost $55,667) . . . . 55,667
---------
TOTAL INVESTMENTS (amortized cost $480,525) - 74.4%. . . . . . . 480,525
---------
REPURCHASE AGREEMENTS - 25.7%
Agreement with Dresdner Bank AG of $60,000
acquired February 29, 1996 at 5.420% to be repurchased at $60,009
on March 1, 1996, collateralized by:
$24,885 United States Treasury Notes,
5.500% due 02/28/99 valued at $24,846, and by
$18,000 United States Treasury Notes,
7.750% due 12/31/99 valued at $19,518, and by
$16,000 United States Treasury Notes,
7.125% due 02/29/00 valued at $16,815. . . . . . . . . . . 60,000
Agreement with Dresdner Bank AG of $56,313
acquired February 29, 1996 at 5.625% to be repurchased at $56,322
on March 1, 1996, collateralized by:
$5,628 United States Treasury Notes,
6.500% due 05/15/97 valued at $5,808, and by
$48,196 United States Treasury Notes,
6.875% due 03/31/00 valued at $51,658. . . . . . . . . . . 56,313
Agreement with HSBC Securities, Inc. of $50,000
acquired February 29, 1996 at 5.440% to be repurchased at $50,008
on March 1, 1996, collateralized by:
$44,000 Federal Farm Credit Bank Discount Notes,
5.600% due 11/01/96 valued at $44,945, and by
$4,710 United States Treasury Bonds,
10.750% due 05/15/03 valued at $6,145. . . . . . . . . . . 50,000
---------
TOTAL REPURCHASE AGREEMENTS (cost $166,313). . . . . . . . . . . 166,313
---------
</TABLE>
4 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
US GOVERNMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
<S> <C>
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS
(cost $646,838)(b) - 100.1%. . . . . . . . . . . . . . . . . $ 646,838
OTHER ASSETS AND LIABILITIES, NET - (0.1%) . . . . . . . . . (375)
----------
NET ASSETS - 100.0%. . . . . . . . . . . . . . . . . . . . . $ 646,463
----------
----------
</TABLE>
(a) Adjustable or floating rate security.
(b) The identified cost for federal income tax purposes is
the same as shown above.
(MTN) represents Medium Term Note.
The accompanying notes are an integral part of the financial statements.
Semiannual Report 5
<PAGE>
THE SEVEN SEAS SERIES
US GOVERNMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (Unaudited)
<S> <C> <C>
ASSETS
Investments at amortized cost which approximates market (Note 2) . . . . . . $ 480,525,499
Repurchase agreements (cost $166,313,000)(Note 2). . . . . . . . . . . . . . 166,313,000
Interest receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,636,217
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,442
--------------
649,481,158
LIABILITIES
Payables (Note 4):
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,582,550
Accrued administrative fees. . . . . . . . . . . . . . . . . 14,866
Accrued advisory fees. . . . . . . . . . . . . . . . . . . . 257,130
Accrued custodian fees . . . . . . . . . . . . . . . . . . . 26,726
Accrued shareholder servicing fees . . . . . . . . . . . . . 51,608
Accrued transfer agent fees. . . . . . . . . . . . . . . . . 5,227
Other accrued expenses . . . . . . . . . . . . . . . . . . . 80,069 3,018,176
------------ --------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 646,462,982
--------------
--------------
NET ASSETS CONSIST OF:
Accumulated net realized gain (loss) . . . . . . . . . . . . . . . . . . . . $ (38,008)
Shares of beneficial interest. . . . . . . . . . . . . . . . . . . . . . . . 646,501
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . 645,854,489
--------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 646,462,982
--------------
--------------
Net asset value, offering and redemption price per share
($646,462,982 divided by 646,500,990 shares of $.001
par value shares of beneficial interest outstanding) . . . . . . . . . . . . $1.00
--------------
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
US GOVERNMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 1996 (Unaudited)
<S> <C> <C>
INVESTMENT INCOME
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,307,042
Expenses (Notes 2 and 4):
Advisory fees. . . . . . . . . . . . . . . . . . . . . . . . $ 713,893
Administrative fees. . . . . . . . . . . . . . . . . . . . . 84,711
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . 75,670
Distribution fees. . . . . . . . . . . . . . . . . . . . . . 42,661
Professional fees. . . . . . . . . . . . . . . . . . . . . . 12,205
Registration fees. . . . . . . . . . . . . . . . . . . . . . 55,880
Transfer agent fees. . . . . . . . . . . . . . . . . . . . . 23,351
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . 15,679
Shareholder servicing fees . . . . . . . . . . . . . . . . . 126,655
Amortization of deferred organization expenses . . . . . . . 732
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . 49,398 1,200,835
----------- -------------
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,106,207
-------------
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from investments (Notes 2 and 3). . . . . . . . . . 120,325
-------------
Net increase in net assets resulting from operations . . . . . . . . . . . . $ 15,226,532
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 7
<PAGE>
THE SEVEN SEAS SERIES
US GOVERNMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE
MONTHS ENDED FISCAL YEAR
FEBRUARY 29, 1996 ENDED
(UNAUDITED) AUGUST 31, 1995
----------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . $ 15,106,207 $ 20,841,782
Net realized gain (loss) from investments. . . . . . . . . . . . . . 120,325 101,628
------------- -------------
Net increase (decrease) in net assets resulting from operations. . . . 15,226,532 20,943,410
Distributions to shareholders from net investment income . . . . . . . (15,105,721) (20,841,782)
Increase (decrease) in net assets from Fund share transactions . . . . 156,204,623 238,870,688
------------- -------------
INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . . . . 156,325,434 238,972,316
Net assets at beginning of period. . . . . . . . . . . . . . . . . . . 490,137,548 251,165,232
------------ ------------
NET ASSETS AT END OF PERIOD. . . . . . . . . . . . . . . . . . . . . . $ 646,462,982 $ 490,137,548
------------- -------------
------------- -------------
FUND SHARE TRANSACTIONS
(ON A CONSTANT DOLLAR BASIS):
Fund shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,046,727,748 5,109,979,137
Fund shares issued to shareholders in reinvestments of distributions 12,169,593 13,741,104
Fund shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . (3,902,692,718) (4,884,849,553)
------------- -------------
Net increase (decrease). . . . . . . . . . . . . . . . . . . . . . . . 156,204,623 238,870,688
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
US GOVERNMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout each fiscal
year or period and other performance information derived from the financial statements.
1996+ 1995 1994 1993 1992 1991++
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD. . . . . . . . . . . . . . . . . . $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . .0264 .0528 .0324 .0304 .0441 .0302
--------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Net investment income. . . . . . . . . . . . . . . . . (.0264) (.0528) (.0324) (.0304) (.0441) (.0302)
--------- -------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD. . . . . . . . . . . . . . . . . . . . . $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- -------- -------- -------- -------- --------
--------- -------- -------- -------- -------- --------
TOTAL RETURN (%)(a). . . . . . . . . . . . . . . . . . . 2.67 5.38 3.30 3.08 4.49 3.06
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to
average daily net assets (b) . . . . . . . . . . . . .42 .42 .38 .39 .41 .23
Operating expenses, gross, to
average daily net assets (b) . . . . . . . . . . . . .42 .42 .39 .46 .42 .43
Net investment income to
average daily net assets (b) . . . . . . . . . . . . 5.28 5.37 3.27 3.04 4.26 5.94
Net assets, end of
period ($000 omitted). . . . . . . . . . . . . . . . 646,463 490,138 251,165 137,136 156,707 94,646
Per share amount of fees
waived ($ omitted) . . . . . . . . . . . . . . . . . -- -- -- -- .0001 .0011
Per share amount of fees
reimbursed ($ omitted) . . . . . . . . . . . . . . . -- -- .0001 .0007 -- --
</TABLE>
+ For the six months ended February 29, 1996 (Unaudited).
++ For the period March 1, 1991 (commencement of operations)
to August 31, 1991.
(a) Periods less than one year are not annualized.
(b) The ratios for the periods ended February 29, 1996
and August 31, 1991 are annualized.
Semiannual Report 9
<PAGE>
THE SEVEN SEAS SERIES
US GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996 (Unaudited)
1. ORGANIZATION
The Seven Seas Series Fund (the "Investment Company") is a series mutual
fund, currently comprising 14 investment portfolios which are in operation as
of February 29, 1996. These financial statements report on one portfolio The
Seven Seas Series US Government Money Market Fund (the "Fund"). The
Investment Company is a registered and diversified open-end investment
company, as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), that was organized as a Massachusetts business trust on October
3, 1987 and operates under a First Amended and Restated Master Trust
Agreement, dated October 13, 1993, as amended. The Investment Company's
master trust agreement permits the Board of Trustees to issue an unlimited
number of full and fractional shares of beneficial interest at a $.001 par
value. The Investment Company has available Class B and Class C shares of the
Fund as of August 15, 1994; however, shares have not been offered on these
classes as of the date of these financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The following is a summary of the significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements.
SECURITY VALUATION: The Fund's portfolio investments are valued on the basis
of amortized cost, a method by which each portfolio instrument is initially
valued at cost, and thereafter a constant accretion/amortization to maturity
of any discount or premium is assumed. The Fund utilizes the amortized cost
valuation method in accordance with Rule 2a-7 of the 1940 Act.
SECURITIES TRANSACTIONS: Securities transactions are recorded on the trade
date, which in most instances is the same as the settlement date. Realized
gains and losses from the securities transactions, if any, are recorded on
the basis of identified cost.
INVESTMENT INCOME: Interest income is recorded on the accrual basis.
FEDERAL INCOME TAXES: As the Investment Company is a Massachusetts business
trust, each sub-trust is a separate corporate taxpayer and determines its net
investment income and capital gains (or losses) and the amounts to be
distributed to each fund's shareholders without regard to the income and
capital gains (or losses) of the other funds.
It is the Fund's intention to qualify as a regulated investment company and
distribute all of its taxable income. The Fund, accordingly, paid no federal
income taxes and no federal income tax provision was required. At August 31,
1995, the Fund had a net tax basis capital loss carryover of $157,456, which
may be applied against any realized net taxable gains in each succeeding year
or until its expiration date of August 31, 2003.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Fund declares and records
dividends on net investment income daily and pays them monthly. Capital gain
distributions, if any, are generally declared and paid
10 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
US GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
annually. An additional distribution may be paid by the Fund to avoid
imposition of federal income tax on any remaining undistributed net
investment income and capital gains. The fund may periodically make
reclassifications among certain of its capital accounts without impacting net
asset value for differences between federal tax regulations and generally
accepted accounting principles.
EXPENSES: Expenses such as advisory, custodian, transfer agent, shareholder
servicing, printing, and registration fees are charged directly to the
individual funds, while indirect expenses, such as administrative, insurance,
and professional fees are generally allocated among all funds principally
based on their relative net assets.
DEFERRED ORGANIZATION EXPENSES: The Fund has incurred expenses in connection
with its organization and initial registration. These costs have been
deferred and were being amortized over 60 months on a straight-line basis.
REPURCHASE AGREEMENTS: The Fund may engage in repurchase and tri-party
repurchase agreements with several financial institutions whereby the Fund,
through its custodian or third-party custodian, receives delivery of the
underlying securities. The market value of these securities (including
accrued interest) on acquisition date is required to be an amount equal to at
least 102% of the repurchase price. The Fund's Adviser will monitor
repurchase agreements daily to determine that the market value (including
accrued interest) at Fedwire closing time of the underlying securities
remains at least equal to 100% of the repurchase price. The Adviser or
third-party custodian will notify the seller to immediately increase the
collateral on the repurchase agreement to 102% of the repurchase price if
collateral falls below 100%.
3. SECURITIES TRANSACTIONS
INVESTMENT TRANSACTIONS: For the six months ended February 29, 1996,
purchases, sales, and maturities of US Government and Agency obligations,
excluding repurchase agreements aggregated to $492,012,279, $49,667,087 and
$314,565,000, respectively.
4. RELATED PARTIES
ADVISER: The Investment Company has an investment advisory agreement with
State Street Bank and Trust Company (the "Adviser") under which the Adviser
directs the investments of the Fund in accordance with its investment
objectives, policies, and limitations. For these services, the Fund pays a
fee to the Adviser, calculated daily and paid monthly, at the annual rate of
.25% of its average daily net assets. The Investment Company has contracts
with the Adviser to provide custody, shareholder servicing and transfer agent
services to the Fund.
ADMINISTRATOR, DISTRIBUTOR AND SHAREHOLDER SERVICING: Frank Russell
Investment Management Company (the "Administrator") serves as administrator
of the Investment Company. The Administrator is also required, pursuant to
the Administration Agreement, to arrange and pay certain promotional and
sales costs of
Semiannual Report 11
<PAGE>
THE SEVEN SEAS SERIES
US GOVERNMENT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
Investment Company shares. Russell Fund Distributors, Inc. (the
"Distributor"), a subsidiary of the Administrator, is the distributor of the
Investment Company shares. The Fund has adopted a distribution plan pursuant
to Rule 12b-1 (the "Plan") under the 1940 Act. Under the Plan, the Fund may
also enter into service agreements with financial institutions, including the
Adviser, State Street Brokerage Services, Inc. ("SSBSI"), a wholly-owned
subsidiary of the Adviser, and Adviser's Metropolitan Division of Commercial
Banking ("Commercial Banking" collectively the "Agents"). The Commercial
Banking service agreement became effective November 8, 1995. Under these
service agreements, the Agents are to provide shareholder servicing for
Investment Company shareholders, including services related to the purchase
and redemption of Investment Company shares.
For these services, the Fund pays fees to the Agents in an amount that per
annum is equal to .025%, .175% and .175% of the average daily value of all
Fund shares held by or for customers of the Adviser, SSBSI and Commercial
Banking, respectively. These fees, in conjunction with other
distribution-related expenses, may not exceed .25% of the average daily value
of net assets on an annual basis, which includes a limit of .20% in
shareholder servicing fees for all providers. Any payments that are required
to be made by the Plan and any service agreement, but could not be made
because they exceed the maximum amount of allowable reimbursement, may be
carried forward for subsequent reimbursement from the Investment Company so
long as the Plan is in effect. The Fund's liability for any such expenses
carried forward shall terminate at the end of two years following the year in
which the expenditure was incurred. The Trustees or a majority of the Fund's
shareholders have the right, however, to terminate the Distribution Plan and
all payments thereunder at any time. The Fund will not be obligated to
reimburse the Distributor for carryover expenses subsequent to the
Distribution Plan's termination or noncontinuance. There were no carryover
expenses as of February 29, 1996.
For shareholder servicing, the Fund incurred expenses of $87,827 and $38,828
from the Adviser and Commercial Banking, respectively. The amounts related to
distribution and shareholder servicing fees are included in the accompanying
Statement of Operations.
Pursuant to the Administration Agreement with the Investment Company, the
Administrator supervises all non-portfolio investment aspects of the
Investment Company's operations and provides adequate office space and all
necessary office equipment and services, including telephone service,
utilities, stationery supplies, and similar items. The Investment Company
pays the Administrator the following fees for the services supplied by the
Administrator pursuant to the Administration Agreement: (i) an annual fee,
payable monthly on a pro rata basis, based on the following percentages of
the average daily net assets of all domestic funds: $0 up to $500 million -
.06%; over $500 million to and including $1 billion - .05%; over $1 billion -
.03%; (ii) less an amount equal to the sum of certain distribution-related
expenses incurred by the Investment Company's Distributor on behalf of the
funds (up to a maximum of 15% of the asset-based fee determined in (i));
(iii) out-of-pocket expenses; and (iv) start-up costs for new funds.
BOARD OF TRUSTEES: The Investment Company pays each of its Trustees not
affiliated with the Investment Company a retainer of $44,000 annually, $1,000
for each of the board meetings attended, an additional $1,000 for attending
the annual audit committee meeting, and reimbursement for out-of-pocket
expenses.
12 Semiannual Report
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
THE SEVEN SEAS SERIES FUND [LOGO]
Two International Place, 35th Floor
Boston, Massachusetts 02110
(617) 654-6089
- --------------------------------------------------------------------------------
TRUSTEES
Lynn L. Anderson, Chairman
William L. Marshall
Steven J. Mastrovich
Patrick J. Riley
Richard D. Shirk
Bruce D. Taber
Henry W. Todd
OFFICERS
Lynn L. Anderson, President
George W. Weber, Senior Vice President
and Treasurer
J. David Griswold, Vice President
and Secretary
INVESTMENT ADVISER
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
CUSTODIAN, TRANSFER AGENT AND
OFFICE OF SHAREHOLDERS INQUIRIES
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
(800) 64-7SEAS (77327)
DISTRIBUTOR
Russell Fund Distributors, Inc.
Two International Place, 35th Floor
Boston, Massachusetts 02110
(617) 654-6089
ADMINISTRATOR
Frank Russell Investment Management Company
909 A Street
Tacoma, Washington 98402
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
Semiannual Report 13
<PAGE>
SEVEN SEAS INVESTMENT PORTFOLIOS
[LOGO]
SEMIANNUAL REPORT
MATRIX EQUITY FUND
FEBRUARY 29, 1996
<PAGE>
THE SEVEN SEAS SERIES FUND-Registered Trademark-
FEBRUARY 29, 1996
(UNAUDITED)
TABLE OF CONTENTS
Page
Matrix Equity Fund Financial Statements. . . . . . . . . . . . . . . . . 3
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . 10
Fund Management and Service Providers. . . . . . . . . . . . . . . . . . 14
"THE SEVEN SEAS SERIES FUND-Registered Trademark-" IS A REGISTERED TRADEMARK AND
SERVICE MARK OF THE SEVEN SEAS SERIES FUND.
THIS REPORT IS PREPARED FROM THE BOOKS AND RECORDS OF THE FUND AND IT IS
SUBMITTED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. THIS INFORMATION IS FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A
SEVEN SEAS SERIES FUND PROSPECTUS CONTAINING MORE COMPLETE INFORMATION
CONCERNING THE INVESTMENT OBJECTIVE AND OPERATIONS OF THE FUND, CHARGES AND
EXPENSES. THE PROSPECTUS SHOULD BE READ CAREFULLY BEFORE AN INVESTMENT IS MADE.
PERFORMANCE IS HISTORICAL AND ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL
GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN WHEN PURCHASED.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. RUSSELL FUND DISTRIBUTORS,
INC., IS THE DISTRIBUTOR OF THE SEVEN SEAS SERIES FUND.
<PAGE>
THE SEVEN SEAS SERIES
MATRIX EQUITY FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
----------- -----------
<S> <C> <C>
COMMON STOCKS - 96.8%
BASIC INDUSTRIES - 3.6%
du Pont (E.I.) de Nemours & Co. 10,900 $ 834
Eastman Chemical Co. 64,600 4,651
IMC Fertilizer Group, Inc. 20,500 846
Kimberly-Clark Corp. 8,200 626
NL Industries, Inc. 700 10
Terra Industries, Inc. 135,900 1,665
Union Carbide Corp. 3,300 149
--------
8,781
--------
CAPITAL GOODS - 4.5%
AGCO Corp. 14,200 385
Atmel Corp. (a) 25,000 666
Case Corp. 58,500 3,108
Harnischfeger Industries, Inc. 9,100 345
Millipore Corp. 58,700 2,605
Novellus Systems, Inc. (a) 58,400 3,051
Silicon Valley Group, Inc. (a) 35,000 827
--------
10,987
--------
CONSUMER BASICS - 18.5%
Archer-Daniels-Midland Co. 18,873 363
Becton, Dickinson & Co. 60,400 4,953
Bergen Brunswig Corp. Class A 13,000 314
Bristol-Myers Squibb Co. 81,600 6,946
Clorox Co. 53,400 4,526
Eckerd Corp. (a) 19,400 871
Hershey Foods Corp. 2,200 166
Hormel Foods Corp. 39,200 985
IBP, Inc. 143,000 3,575
Johnson & Johnson 3,100 290
Kroger Co. (a) 62,100 2,305
Merck & Co., Inc. 52,100 3,452
PepsiCo, Inc. 111,200 7,033
Pfizer, Inc. 2,800 184
Philip Morris Cos., Inc. 37,800 3,742
Safeway, Inc. (a) 1,900 57
Schering-Plough Corp. 93,100 5,225
Tenet Healthcare Corp. (a) 500 11
Vons Cos., Inc. (a) 4,200 121
Whitman Corp. 600 14
--------
45,133
--------
CONSUMER DURABLES - 2.3%
Chrysler Corp. 97,300 5,485
--------
5,485
--------
CONSUMER NON-DURABLES - 0.6%
Ross Stores, Inc. 1,800 44
TJX Cos., Inc. 61,300 1,364
--------
1,408
--------
CONSUMER SERVICES - 6.4%
Callaway Golf Co. 41,700 990
Delta Air Lines, Inc. 7,800 608
Hilton Hotels Corp. 56,200 5,269
King World Productions, Inc. (a) 78,600 3,291
Luby's Cafeterias, Inc. 14,100 293
Northwest Airlines Corp. Class A (a) 29,800 1,367
UAL Corp. (a) 19,600 3,501
Wendy's International, Inc. 8,100 147
--------
15,466
--------
ENERGY - 7.6%
Atlantic Richfield Co. 27,810 3,045
Exxon Corp. 94,800 7,537
Halliburton Co. 1,100 60
Lyondell Petrochemical Co. 6,400 172
Mobil Corp. 40,600 4,451
</TABLE>
Semiannual Report 3
<PAGE>
THE SEVEN SEAS SERIES
MATRIX EQUITY FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
----------- -----------
<S> <C> <C>
Smith International, Inc. (a) 7,100 $ 145
Sonat Offshore Drilling, Inc. 69,100 3,006
Tosco Corp. 2,500 112
--------
18,528
--------
FINANCE - 15.7%
Allstate Corp. 35,601 1,526
American Re Corp. (a) 119,700 4,593
BankAmerica Corp. 78,400 5,586
Bear Stearns Cos., Inc. 189,300 4,591
Chemical Banking Corp. 62,100 4,448
CIGNA Corp. 14,200 1,683
Edwards (A.G.), Inc. 185,900 4,508
First Bank System, Inc. 36,000 2,074
First Security Corp. 7,500 202
First Union Corp. 5,200 315
Lehman Brothers Holdings, Inc. 2,400 59
Marsh & McLennan Cos., Inc. 5,400 524
Merrill Lynch & Co., Inc. 3,900 225
NationsBank Corp. 52,200 3,850
Old Republic International Corp. 11,900 408
PNC Bank Corp. 82,500 2,527
Student Loan Marketing Association 12,400 1,024
--------
38,143
--------
GENERAL BUSINESS - 3.7%
Pittston Brink's Group 4,300 101
SBC Communications, Inc. 94,200 5,169
Tribune Co. 23,700 1,582
Washington Post Co. Class B 7,600 2,189
--------
9,041
--------
SHELTER - 0.6%
Owens-Corning (a) 5,200 211
USG Corp. (a) 47,600 1,261
--------
1,472
--------
TECHNOLOGY - 17.1%
Applied Materials, Inc. (a) 103,900 3,701
Avnet, Inc. 52,400 2,613
Cadence Design Systems, Inc. (a) 50,900 2,271
Computer Associates International, Inc. 73,800 5,074
Cypress Semiconductor Corp. (a) 35,200 449
Dell Computer Corp. (a) 1,700 58
EMC Corp. (a) 81,900 1,802
Gateway 2000, Inc. (a) 30,400 897
General Dynamics Corp. 12,900 769
International Business Machines Corp. 66,100 8,106
KLA Instruments Corp. (a) 69,400 1,666
Komag, Inc. (a) 72,500 2,266
Lam Research Corp. (a) 17,200 632
Litton Industries, Inc. (a) 34,900 1,762
Read-Rite Corp. (a) 68,300 1,272
Seagate Technology (a) 72,700 4,744
Solectron Corp. (a) 53,300 2,585
Storage Technology Corp. (a) 11,200 339
Western Digital Corp. (a) 29,100 607
--------
41,613
--------
TRANSPORTATION - 3.1%
CSX Corp. 102,200 4,586
Tidewater, Inc. 89,300 3,047
--------
7,633
--------
UTILITIES - 13.1%
Ameritech Corp. 102,700 5,918
AT&T Corp. 12,100 770
Bell Atlantic Corp. 4,600 304
</TABLE>
4 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
MATRIX EQUITY FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
----------- -----------
<S> <C> <C>
BellSouth Corp. 28,600 $ 1,140
Boston Edison Co. 10,100 279
Central & Southwest Corp. 9,100 253
Century Telephone Enterprises, Inc. 45,700 1,537
Coastal Corp. 3,600 132
Consolidated Edison Co.
of New York, Inc. 90,000 2,936
Consolidated Natural Gas Co. 12,200 525
DQE, Inc. 50,300 1,471
GTE Corp. 22,600 969
Long Island Lighting Co. 112,400 1,967
National Fuel & Gas Co. 72,500 2,329
Ohio Edison Co. 47,700 1,133
Panhandle Eastern Corp. 42,300 1,211
Sprint Corp. 119,100 5,121
Unicom Corp. 12,800 409
Williams Cos. (The) 71,200 3,381
--------
31,785
--------
TOTAL COMMON STOCKS
(cost $203,929) 235,475
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) (000)
--------- ---------
<S> <C> <C>
SHORT-TERM INVESTMENTS - 4.7%
Dreyfus Cash Management Plus, Inc.
Money Market Fund (b) $ 8,047 $ 8,047
Valiant Money Market Fund
Class A (b) 3,436 3,436
---------
TOTAL SHORT-TERM INVESTMENTS
(cost $11,483) 11,483
---------
TOTAL INVESTMENTS
(identified cost $215,412)(c) - 101.5% 246,958
OTHER ASSETS AND LIABILITIES,
NET - (1.5%) (3,722)
---------
NET ASSETS - 100.0% $ 243,236
---------
---------
</TABLE>
(a) Nonincome-producing security.
(b) At cost, which approximates market.
(c) At February 29, 1996, the cost for federal income tax
purposes was $215,434 and net unrealized appreciation
for all securities was $31,524. This consisted of
aggregate gross unrealized appreciation for all securities
in which there was an excess of market value over tax
cost of $36,967 and aggregate gross unrealized
depreciation for all securities in which there was an
excess of tax cost over market value of $5,443.
The accompanying notes are an integral part of the financial statements.
Semiannual Report 5
<PAGE>
THE SEVEN SEAS SERIES
MATRIX EQUITY FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (Unaudited)
<S> <C> <C>
ASSETS
Investments at market (identified cost $215,412,256)(Note 2) . . . . . . . . $ 246,957,881
Receivables:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455,690
Investments sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,935,456
Fund shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203,899
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,934
Deferred organization expenses (Note 2). . . . . . . . . . . . . . . . . . . 4,699
-------------
251,560,559
LIABILITIES
Payables (Note 4):
Investments purchased. . . . . . . . . . . . . . . . . . . . $ 7,887,998
Fund shares redeemed . . . . . . . . . . . . . . . . . . . . 174,867
Accrued administrative fees. . . . . . . . . . . . . . . . . 5,717
Accrued advisory fees. . . . . . . . . . . . . . . . . . . . 143,864
Accrued custodian fees . . . . . . . . . . . . . . . . . . . 10,441
Accrued shareholder servicing fees . . . . . . . . . . . . . 25,306
Accrued transfer agent fees. . . . . . . . . . . . . . . . . 61,679
Other accrued expenses and payables. . . . . . . . . . . . . 14,533 8,324,405
------------ -------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 243,236,154
-------------
-------------
NET ASSETS CONSIST OF:
Undistributed net investment income. . . . . . . . . . . . . . . . . . . . $ 564,096
Accumulated net realized gain (loss) . . . . . . . . . . . . . . . . . . . 3,875,701
Unrealized appreciation (depreciation) on investments. . . . . . . . . . . 31,545,625
Shares of beneficial interest. . . . . . . . . . . . . . . . . . . . . . . 17,493
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . 207,233,239
-------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 243,236,154
-------------
-------------
Net asset value, offering and redemption price per share
($243,236,154 divided by 17,493,242 shares of $.001
par value shares of beneficial interest outstanding) . . . . . . . . . . . $13.90
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
MATRIX EQUITY FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 1996 (Unaudited)
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,417,582
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,728
------------
2,428,310
Expenses (Notes 2 and 4):
Advisory fees. . . . . . . . . . . . . . . . . . . . . . . $ 804,000
Administrative fees. . . . . . . . . . . . . . . . . . . . 32,076
Custodian fees . . . . . . . . . . . . . . . . . . . . . . 34,284
Distribution fees. . . . . . . . . . . . . . . . . . . . . 35,118
Professional fees. . . . . . . . . . . . . . . . . . . . . 12,149
Registration fees. . . . . . . . . . . . . . . . . . . . . 10,180
Shareholder servicing fees . . . . . . . . . . . . . . . . 64,488
Transfer agent fees. . . . . . . . . . . . . . . . . . . . 139,909
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . 5,923
Amortization of deferred organization expenses . . . . . . 1,995
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . 37,851
-----------
Expenses before waiver . . . . . . . . . . . . . . . . . . 1,177,973
Expenses waived by Adviser . . . . . . . . . . . . . . . . (402,000) 775,973
------------ ------------
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,652,337
------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (Notes 2 and 3)
Net realized gain (loss) from investments. . . . . . . . . . . . . . . . . 12,000,582
Net change in unrealized appreciation or depreciation of investments . . . 11,660,549
------------
Net gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . 23,661,131
------------
Net increase (decrease) in net assets resulting from operations. . . . . . $ 25,313,468
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 7
<PAGE>
THE SEVEN SEAS SERIES
MATRIX EQUITY FUND
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE
MONTHS ENDED FISCAL YEAR
FEBRUARY 29, 1996 ENDED
(UNAUDITED) AUGUST 31, 1995
----------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . $ 1,652,337 $ 3,591,635
Net realized gain (loss) from investments. . . . . . . . . . . . . . 12,000,582 14,350,812
Net change in unrealized appreciation
or depreciation of investments . . . . . . . . . . . . . . . . . . 11,660,549 12,642,981
------------ ------------
Net increase (decrease) in net assets resulting from operations. . . . 25,313,468 30,585,428
Distributions to shareholders:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . (1,965,435) (3,400,221)
Net realized gain on investments . . . . . . . . . . . . . . . . . . (21,256,519) (672,007)
Increase (decrease) in net assets from Fund share transactions . . . . 42,804,028 41,062,973
------------ ------------
INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . . . . 44,895,542 67,576,173
Net assets at beginning of period. . . . . . . . . . . . . . . . . . . 198,340,612 130,764,439
------------ ------------
NET ASSETS AT END OF PERIOD
(including undistributed net investment income of
$564,096 and $877,194, respectively) . . . . . . . . . . . . . . . . $ 243,236,154 $ 198,340,612
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
FUND SHARE TRANSACTIONS FOR THE SIX MONTHS ENDED FOR THE FISCAL YEAR
FEBRUARY 29, 1996 (UNAUDITED) ENDED AUGUST 31, 1995
------------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Fund shares sold . . . . . . . . . . . . 4,940,931 $ 65,800,220 6,774,979 $ 84,324,212
Fund shares issued to shareholders
in reinvestments of distributions. . . 1,656,448 21,956,199 306,609 3,699,510
Fund shares redeemed . . . . . . . . . . (3,338,039) (44,952,391) (3,687,136) (46,960,749)
----------- ------------ ----------- ------------
Net increase (decrease). . . . . . . . . 3,259,340 $ 42,804,028 3,394,452 $ 41,062,973
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
MATRIX EQUITY FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share
outstanding throughout each fiscal year or period and other
performance information derived from the financial statements.
1996+ 1995 1994 1993 1992++
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . $ 13.93 $ 12.06 $ 11.95 $ 9.78 $ 10.00
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . . .10 .28 .24 .18 .05
Net realized and unrealized gain (loss) on investments . 1.44 1.93 .28 2.17 (.27)
-------- -------- -------- -------- --------
Total Income From Investment Operations. . . . . . . . . 1.54 2.21 .52 2.35 (.22)
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Net investment income. . . . . . . . . . . . . . . . . . (.13) (.28) (.23) (.18) --
Net realized gain on investments . . . . . . . . . . . . (1.44) (.06) (.09) -- --
In excess of net realized gain on investments. . . . . . -- -- (.09) -- --
-------- -------- -------- -------- --------
Total Distributions. . . . . . . . . . . . . . . . . . . (1.57) (.34) (.41) (.18) --
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . . $ 13.90 $ 13.93 $ 12.06 $ 11.95 $ 9.78
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
TOTAL RETURN (%)(a). . . . . . . . . . . . . . . . . . . . 11.97 18.81 4.41 24.24 (2.20)
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average
daily net assets (b)(c). . . . . . . . . . . . . . . . .72 .68 .58 .60 .18
Operating expenses, gross, to average
daily net assets (b)(c). . . . . . . . . . . . . . . . 1.10 1.06 .96 1.25 1.90
Net investment income to average
daily net assets (b) . . . . . . . . . . . . . . . . . 1.54 2.25 2.16 2.13 2.69
Portfolio turnover (b) . . . . . . . . . . . . . . . . . 176.16 129.98 127.20 57.65 None
Net assets, end of period ($000 omitted) . . . . . . . . 243,236 198,341 130,764 62,549 12,408
Per share amount of fees waived ($ omitted)(c) . . . . . .0249 .0466 .0410 .0314 .0112
Per share amount of fees reimbursed ($ omitted). . . . . -- -- -- .0225 .0202
Average commission rate paid per share
of security ($ omitted). . . . . . . . . . . . . . . . .0403 N/A N/A N/A N/A
</TABLE>
+ For the six months ended February 29, 1996 (Unaudited).
++ For the period May 4, 1992 (commencement of operations)
to August 31, 1992.
(a) Periods less than one year are not annualized.
(b) The ratios for the period ended February 29, 1996
and August 31, 1992 are annualized.
(c) See Note 4 for current period amounts.
Semiannual Report 9
<PAGE>
THE SEVEN SEAS SERIES
MATRIX EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996 (Unaudited)
1. ORGANIZATION
The Seven Seas Series Fund (the "Investment Company") is a series mutual
fund, currently comprising 14 investment portfolios which are in operation as
of February 29, 1996. These financial statements report on one portfolio, The
Seven Seas Series Matrix Equity Fund (the "Fund"). The Investment Company is
a registered and diversified open-end investment company, as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), that was
organized as a Massachusetts business trust on October 3, 1987 and operates
under a First Amended and Restated Master Trust Agreement, dated October 13,
1993, as amended. The Investment Company's master trust agreement permits the
Board of Trustees to issue an unlimited number of full and fractional shares
of beneficial interest at a $.001 par value.
2. SIGNIFICANT ACCOUNTING POLICIES
The Fund's Financial Statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
THE following is a summary of the significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements.
SECURITY VALUATION: United States equity securities listed and traded
principally on any national securities exchange are valued on the basis of
the last sale price or, lacking any sale, at the closing bid price, on the
primary exchange on which the security is traded. United States
over-the-counter equities are valued on the basis of the closing bid price.
International securities traded on a national securities exchange are valued
on the basis of the last sale price. International securities traded over the
counter are valued on the basis of the mean of bid prices. In the absence of
a last sale or mean bid price, respectively, such securities may be valued on
the basis of prices provided by a pricing service if those prices are
believed to reflect the fair market value of such securities.
Money market instruments maturing within 60 days of the valuation date are
valued at "amortized cost," a method by which each portfolio instrument is
initially valued at cost, and thereafter a constant accretion/amortization to
maturity of any discount or premium is assumed, unless the Board of Trustees
determines that amortized cost does not represent fair value.
The Fund may value securities for which market quotations are not readily
available at "fair value," as determined in good faith pursuant to procedures
established by the Board of Trustees.
SECURITIES TRANSACTIONS: Securities transactions are recorded on a trade
date basis. Realized gains and losses from securities transactions are
recorded on the basis of identified cost.
INVESTMENT INCOME: Dividend income is recorded on the ex-dividend date and
interest income is recorded on the accrual basis.
10 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
MATRIX EQUITY FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
AMORTIZATION AND ACCRETION: All zero-coupon bond discounts and original
issue discounts are accreted for both tax and financial reporting purposes.
All short- and long-term market premiums/discounts are amortized/accreted for
both tax and financial reporting purposes.
FEDERAL INCOME TAXES: As the Investment Company is a Massachusetts business
trust, each sub-trust is a separate corporate taxpayer and determines its net
investment income and capital gains (or losses) and the amounts to be
distributed to each fund's shareholders without regard to the income and
capital gains (or losses) of the other funds.
It is the Fund's intention to qualify as a regulated investment company and
distribute all of its taxable income. The Fund, accordingly, paid no federal
income taxes and no federal income tax provision was required.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Income dividends and
capital gain distributions, if any, are recorded on the ex-dividend date.
Dividends are generally declared and paid quarterly. Capital gain
distributions are generally declared and paid annually. An additional
distribution may be paid by the Fund to avoid imposition of federal income
tax on any remaining undistributed net investment income and capital gains.
The timing and characterization of certain income and capital gain
distributions are determined in accordance with federal tax regulations which
may differ from generally accepted accounting principles ("GAAP"). As a
result, net investment income and net realized gain (or loss) on investment
and foreign currency-related transactions for a reporting period may differ
significantly from distributions during such period. The differences between
tax regulations and GAAP primarily relate to investments in
foreign-denominated investments, and certain securities sold at a loss.
Accordingly, the Fund may periodically make reclassifications among certain
of its capital accounts without impacting its net asset value.
EXPENSES: Expenses such as advisory, custodian, transfer agent, shareholder
servicing, printing, and registration fees are charged directly to the
individual funds, while indirect expenses, such as administrative, insurance,
and professional fees are generally allocated among all funds principally
based on their relative net assets.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred expenses in connection
with its organization and initial registration. These costs have been
deferred and are being amortized over 60 months on a straight-line basis.
REPURCHASE AGREEMENTS: The Fund may engage in repurchase and tri-party
repurchase agreements with several financial institutions whereby the Fund,
through its custodian or third-party custodian, receives delivery of the
underlying securities. The market value of these securities (including
accrued interest) on acquisition date is required to be an amount equal to at
least 102% of the repurchase price. The Fund's Adviser will monitor
repurchase agreements daily to determine that the market value (including
accrued interest) at Fedwire closing time of the underlying securities
remains at least equal to 100% of the repurchase
Semiannual Report 11
<PAGE>
THE SEVEN SEAS SERIES
MATRIX EQUITY FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
price. The Adviser or third-party custodian will notify the seller to
immediately increase the collateral on the repurchase agreement to 102% of
the repurchase price if collateral falls below 100%.
3. SECURITIES TRANSACTIONS
INVESTMENT TRANSACTIONS: For the six months ended February 29, 1996,
purchases and sales of investment securities, excluding short-term
investments, aggregated to $203,425,686 and $182,992,993 respectively.
4. RELATED PARTIES
ADVISER: The Investment Company has an investment advisory agreement with
State Street Bank and Trust Company (the "Adviser") under which the Adviser
directs the investment of the Fund in accordance with its investment
objective, policies, and limitations. For these services, the Fund pays a fee
to the Adviser, calculated daily and paid monthly, at the annual rate of .75%
of its average daily net assets. For the six months ended February 29, 1996,
the Adviser voluntarily agreed to waive one-half of its advisory fee to the
Fund. The Investment Company has contracts with the Adviser to provide
custody, shareholder servicing and transfer agent services to the Fund.
ADMINISTRATOR, DISTRIBUTOR AND SHAREHOLDER SERVICING: Frank Russell
Investment Management Company (the "Administrator") serves as administrator
of the Investment Company. The Administrator is also required, pursuant to
the Administration Agreement, to arrange and pay certain promotional and
sales costs of Investment Company shares. Russell Fund Distributors, Inc.
(the "Distributor"), a subsidiary of the Administrator, is the distributor of
the Investment Company shares. The Fund has adopted a distribution plan
pursuant to Rule 12b-1 (the "Plan") under the 1940 Act. Under the Plan, the
Fund may also enter into service agreements with financial institutions,
including the Adviser, State Street Brokerage Services, Inc. ("SSBSI"), a
wholly-owned subsidiary of the Adviser, and Adviser's Metropolitan Division
of Commercial Banking ("Commercial Banking" collectively the "Agents"). The
Commercial Banking service agreement became effective November 8, 1995. Under
these service agreements, the Agents are to provide shareholder servicing for
Investment Company shareholders, including services related to the purchase
and redemption of Investment Company shares.
For these services, the Fund pays fees to the Agents in an amount that per
annum is equal to .025%, .175% and .175% of the average daily value of all
Fund shares held by or for customers of the Adviser, SSBSI and Commercial
Banking, respectively. These fees, in conjunction with other
distribution-related expenses, may not exceed .25% of the average daily
value of net assets on an annual basis, which includes a limit of .20% in
shareholder servicing fees for all providers. Any payments that are
required to be made by the Plan and any service agreement, but could not
be made because they exceed the maximum amount of allowable reimbursement,
may be carried forward for subsequent reimbursement from the Investment
Company so long as the Plan is in effect. The Fund's liability for any
such expenses carried forward shall terminate at the end of two years
following the year in which the expenditure was incurred. The Trustees or
a majority of the Fund's shareholders have the right, however, to
terminate the Distribution Plan and all payments thereunder
12 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
MATRIX EQUITY FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
at any time. The Fund will not be obligated to reimburse the Distributor for
carryover expenses subsequent to the Distribution Plan's termination or
noncontinuance. There were no carryover expenses as of February 29, 1996.
For shareholder servicing, the Fund incurred expenses of $43,958 and $1,042
from the Adviser and SSBSI, respectively. The amounts related to distribution
and shareholder servicing fees are included in the accompanying Statement of
Operations.
Pursuant to the Administration Agreement with the Investment Company, the
Administrator supervises all non-portfolio investment aspects of the
Investment Company's operations and provides adequate office space and all
necessary office equipment and services, including telephone service,
utilities, stationery supplies, and similar items. The Investment Company
pays the Administrator the following fees for the services supplied by the
Administrator pursuant to the Administration Agreement: (i) an annual fee,
payable monthly on a pro rata basis, based on the following percentages of
the average daily net assets of all domestic funds: $0 up to $500 million -
.06%; over $500 million to and including $1 billion - .05%; over $1 billion -
.03%; (ii) less an amount equal to the sum of certain distribution-related
expenses incurred by the Investment Company's Distributor on behalf of the
funds (up to a maximum of 15% of the asset-based fee determined in (i));
(iii) out-of-pocket expenses; and (iv) start-up costs for new funds.
AFFILIATED BROKERAGE: The Fund placed a portion of its portfolio
transactions with SSBSI, an affiliated brokerage dealer of the Fund's
Adviser. The commissions paid to SSBSI were $123,130 for the six months ended
February 29, 1996.
BOARD OF TRUSTEES: The Investment Company pays each of its Trustees not
affiliated with the Investment Company a retainer of $44,000 annually, $1,000
for each of the board meetings attended, an additional $1,000 for attending
the annual audit committee meeting, and reimbursement for out-of-pocket
expenses.
5. DIVIDENDS
On March 1, 1996, the Board of Trustees declared a dividend of $.0321 from
net investment income, payable on March 11, 1996 to shareholders of record
March 4, 1996.
Semiannual Report 13
<PAGE>
THE SEVEN SEAS SERIES FUND
Two International Place, 35th Floor
Boston, Massachusetts 02110
(617) 654-6089 [LOGO]
- --------------------------------------------------------------------------------
TRUSTEES
Lynn L. Anderson, Chairman
William L. Marshall
Steven J. Mastrovich
Patrick J. Riley
Richard D. Shirk
Bruce D. Taber
Henry W. Todd
OFFICERS
Lynn L. Anderson, President
George W. Weber, Senior Vice President
and Treasurer
J. David Griswold, Vice President
and Secretary
INVESTMENT ADVISER
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
CUSTODIAN, TRANSFER AGENT AND
OFFICE OF SHAREHOLDERS INQUIRIES
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
(800) 64-7SEAS (77327)
DISTRIBUTOR
Russell Fund Distributors, Inc.
Two International Place, 35th Floor
Boston, Massachusetts 02110
(617) 654-6089
ADMINISTRATOR
Frank Russell Investment Management Company
909 A Street
Tacoma, Washington 98402
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
14 Semiannual Report
<PAGE>
SEVEN SEAS INVESTMENT PORTFOLIOS
[LOGO]
SEMIANNUAL REPORT
S&P 500 INDEX FUND
FEBRUARY 29, 1996
<PAGE>
THE SEVEN SEAS SERIES FUND-Registered Trademark-
FEBRUARY 29, 1996
(UNAUDITED)
TABLE OF CONTENTS
Page
S&P 500 Index Fund Financial Statements................................. 3
Notes to Financial Statements........................................... 16
Fund Management and Service Providers................................... 21
"THE SEVEN SEAS SERIES FUND"-Registered Trademark- IS A REGISTERED TRADEMARK
AND SERVICE MARK OF THE SEVEN SEAS SERIES FUND.
THIS REPORT IS PREPARED FROM THE BOOKS AND RECORDS OF THE FUND AND IT IS
SUBMITTED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. THIS INFORMATION IS FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A
SEVEN SEAS SERIES FUND PROSPECTUS CONTAINING MORE COMPLETE INFORMATION
CONCERNING THE INVESTMENT OBJECTIVE AND OPERATIONS OF THE FUND, CHARGES AND
EXPENSES. THE PROSPECTUS SHOULD BE READ CAREFULLY BEFORE AN INVESTMENT IS MADE.
PERFORMANCE IS HISTORICAL AND ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL
GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN WHEN PURCHASED.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. RUSSELL FUND DISTRIBUTORS,
INC., IS THE DISTRIBUTOR OF THE SEVEN SEAS SERIES FUND.
<PAGE>
THE SEVEN SEAS SERIES
S&P 500 INDEX FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
-------- -------
<S> <C> <C>
COMMON STOCKS - 94.9%
BASIC INDUSTRIES - 6.9%
Air Products & Chemicals, Inc. 12,900 $ 687
Alcan Aluminum, Ltd. 26,300 802
Alco Standard Corp. 12,800 607
Aluminum Co. of America 20,800 1,180
ARMCO, Inc. (a) 13,200 74
ASARCO, Inc. 4,900 146
Barrick Gold Corp. 41,400 1,252
Bemis Co., Inc. 7,000 214
Bethlehem Steel Corp. (a) 12,600 173
Boise Cascade Corp. 6,100 215
Champion International Corp. 11,300 452
Cincinnati Milacron, Inc. 3,800 109
Crown Cork & Seal Co., Inc. (a) 15,100 712
Cyprus Amax Minerals Co. 11,700 303
Dow Chemical Co. 30,400 2,440
du Pont (E.I.) de Nemours & Co. 64,600 4,942
Eastern Enterprises, Inc. 2,300 81
Eastman Chemical Co. 9,525 686
Echo Bay Mines, Ltd. 12,800 176
Engelhard Corp. 16,725 341
Federal Paper Board, Inc. 5,600 299
FMC Corp. New (a) 4,200 307
Freeport McMoRan Copper
& Gold, Inc. Class B 23,700 773
Goodrich (B.F.) Co. 3,000 228
Grace (W.R.) & Co. 11,100 766
Great Lakes Chemical Corp. 7,400 529
Hercules, Inc. 13,200 792
Homestake Mining Co. 17,500 339
Illinois Tool Works, Inc. 13,800 909
Inco, Ltd. 14,000 446
Inland Steel Industries, Inc. 6,600 161
International Paper Co. 29,800 1,062
James River Corp. of Virginia 9,700 256
Kimberly-Clark Corp. 32,418 2,476
Mallinckrodt Group, Inc. 9,600 377
Mead Corp. 6,600 330
Minnesota Mining
& Manufacturing Co. 48,500 3,159
Monsanto Co. 13,400 1,804
Morton International, Inc. 17,200 651
Nalco Chemical Co. 7,700 244
Newmont Mining Corp. 10,612 604
Nucor Corp. 10,100 544
Phelps Dodge Corp. 8,100 495
Placer Dome, Inc. 27,900 788
Potlatch Corp. 3,400 140
PPG Industries, Inc. 22,800 1,057
Praxair, Inc. 16,900 583
Premark International, Inc. 7,300 382
Reynolds Metals Co. 7,400 382
Rohm & Haas Co. 7,800 543
Santa Fe Pacific Gold Corp. 15,460 242
Sigma Aldrich Corp. 5,800 331
Stone Container Corp. 11,900 164
Temple-Inland, Inc. 7,000 282
Union Camp Corp. 7,500 350
Union Carbide Corp. 15,800 711
USX-U.S. Steel Group 9,600 314
Westvaco Corp. 11,600 336
Willamette Industries, Inc. 6,400 333
Worthington Industries, Inc. 10,200 219
-------
40,300
-------
CAPITAL GOODS - 5.4%
Ball Corp. 3,400 102
Boston Scientific Corp. (a) 20,200 969
Briggs & Stratton Corp. 3,400 145
Browning-Ferris Industries, Inc. 24,800 734
Case Corp. 8,800 468
Caterpillar, Inc. 23,000 1,538
Cooper Industries, Inc. 11,700 452
Crane Co. 4,000 162
</TABLE>
Semiannual Report 3
<PAGE>
THE SEVEN SEAS SERIES
S&P 500 INDEX FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
------- -------
<S> <C> <C>
Cummins Engine Co., Inc. 5,100$ 215
Deere & Co. 30,200 1,182
Dover Corp. 13,100 583
DSC Communications Corp. (a) 12,500 380
Emerson Electric Co. 26,100 2,033
Fluor Corp. 9,800 658
Foster Wheeler Corp. 5,200 229
General Electric Co. 194,200 14,662
General Signal Corp. 5,400 196
Giddings & Lewis, Inc. 3,900 65
Grainger (W.W.), Inc. 6,000 410
Harnischfeger Industries, Inc. 5,700 216
Ingersoll-Rand Co. 13,000 531
ITT Industries, Inc. 13,600 357
Johnson Controls, Inc. 5,000 359
Millipore Corp. 5,300 235
NACCO Industries, Inc. Class A 1,000 56
National Service Industries, Inc. 6,300 220
Outboard Marine Corp. 3,500 71
Pall Corp. 13,000 354
Parker-Hannifin Corp. 9,300 327
Raychem Corp. 5,000 324
Timken Co. 3,800 171
TRINOVA Corp. 3,500 105
Tyco International, Ltd. 17,500 632
Varity Corp. (a) 5,000 189
Westinghouse Electric Corp. 48,300 894
WMX Technologies, Inc. 56,400 1,607
-------- --------
31,831
--------
CONSUMER BASICS - 20.8%
Abbott Laboratories NPV 91,300 3,812
Albertson's, Inc. 29,600 1,095
Allergan, Inc. 7,300 272
ALZA Corp. (a) 9,500 316
American Brands, Inc. 20,200 917
American Home Products Corp. 36,100 3,556
American Stores Co. 17,900 521
Amgen, Inc. (a) 30,900 1,842
Archer-Daniels-Midland Co. 61,675 1,187
Bard (C.R.), Inc. 7,300 262
Bausch & Lomb, Inc. 6,700 260
Baxter International, Inc. 32,200 1,473
Becton, Dickinson & Co. 7,200 590
Beverly Enterprises, Inc. (a) 11,300 137
Biomet, Inc. (a) 13,300 251
Black & Decker Corp. 9,100 307
Bristol-Myers Squibb Co. 59,000 5,022
Campbell Soup Co. 28,800 1,778
Clorox Co. 5,600 475
Coca-Cola Co. (The) 145,800 11,773
Colgate-Palmolive Co. 17,000 1,330
Columbia/HCA Healthcare Corp. 51,355 2,812
Community Psychiatric Centers (a) 7,300 68
ConAgra, Inc. 26,700 1,125
Corning, Inc. 25,400 826
CPC International, Inc. 17,000 1,177
Dial Corp. (The) 11,700 351
Fleming Cos., Inc. 5,400 108
General Mills, Inc. 18,600 1,070
Giant Food, Inc. Class A 7,000 230
Gillette Co. 51,200 2,771
Great Atlantic & Pacific Tea Co., Inc. 4,200 95
Heinz (H.J.) Co. 42,650 1,450
Hershey Foods Corp. 9,000 678
Humana, Inc. (a) 19,400 475
Johnson & Johnson 75,300 7,041
Kellogg Co. 25,300 1,910
Kroger Co. (a) 14,900 553
Lilly (Eli) & Co. 64,100 3,878
Manor Care, Inc. 7,300 280
Medtronic, Inc. 26,900 1,543
Merck & Co., Inc. 143,600 9,514
PepsiCo, Inc. 91,600 5,794
Pfizer, Inc. 73,700 4,855
</TABLE>
Semiannual Report 4
<PAGE>
THE SEVEN SEAS SERIES
S&P 500 INDEX FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
------- -------
<S> <C> <C>
Pharmacia & Upjohn, Inc. 58,125 $2,434
Philip Morris Cos., Inc. 97,700 9,672
Pioneer Hi-Bred International, Inc. 9,800 528
Procter & Gamble Co. 79,800 6,544
Quaker Oats Co. 15,700 540
Ralston Purina Co. 12,200 817
Rubbermaid, Inc. 18,100 509
Sara Lee Corp. 55,800 1,807
Schering-Plough Corp. 42,400 2,380
Snap-On Tools Corp. 5,200 233
St. Jude Medical, Inc. 8,450 316
Stanley Works 5,200 294
SYSCO Corp. 21,000 690
Tenet Healthcare Corp. (a) 23,400 524
U.S. Healthcare, Inc. 18,900 919
U.S. Surgical Corp. 7,500 213
Unilever NV 18,500 2,488
United Healthcare Corp. 20,600 1,344
UST Corp. 22,600 802
Warner-Lambert Co. 15,700 1,552
Whitman Corp. 12,200 284
Winn-Dixie Stores, Inc. 16,500 565
Wrigley (Wm.), Jr. Co. 13,600 799
--------
122,034
--------
CONSUMER DURABLES - 2.5%
Chrysler Corp. 44,200 2,491
Cooper Tire & Rubber Co. 9,700 246
Dana Corp. 12,300 372
Eaton Corp. 9,200 532
Echlin, Inc. 7,400 251
Fleetwood Enterprises, Inc. 4,300 116
Ford Motor Co. 124,000 3,875
General Motors Corp. 86,300 4,423
Genuine Parts Co. 13,400 573
Goodyear Tire & Rubber Co. 17,800 846
Maytag Corp. 13,400 263
PACCAR, Inc. 4,795 225
Whirlpool Corp. 8,700 484
--------
14,697
--------
CONSUMER NON-DURABLES - 5.9%
Alberto Culver Co. Class B 3,500 123
Anheuser-Busch Cos., Inc. 29,400 1,980
Avon Products, Inc. 7,400 595
Brown Group, Inc. 1,800 22
Brown-Forman Distillers, Inc.
Class B 7,200 282
Brunswick Corp. 12,300 281
Charming Shoppes, Inc. (a) 11,300 47
Circuit City Stores, Inc. 12,100 358
Coors (Adolph) Co. Class B 3,200 62
Dayton Hudson Corp. 8,400 625
Dillard Department Stores, Inc.
Class A 12,100 378
Eastman Kodak Co. 39,500 2,824
Federated Department Stores, Inc. (a) 22,100 669
Fruit of the Loom, Inc. Class A (a) 7,600 193
Gap, Inc. 15,900 853
Handleman Co. 3,300 17
Hasbro, Inc. 10,200 352
Home Depot, Inc. (The) 55,066 2,382
International Flavors
& Fragrances, Inc. 12,900 647
Jostens, Inc. 4,514 103
Kmart Corp. 56,300 394
Limited, Inc. (The) 41,600 728
Liz Claiborne, Inc. 8,800 276
Longs Drug Stores Corp. 2,600 117
Lowe's Cos., Inc. 18,600 577
Mattel, Inc. 24,406 811
May Department Stores Co. 29,000 1,352
Melville Corp. 12,300 392
Mercantile Stores, Inc. 4,300 225
</TABLE>
Semiannual Report 5
<PAGE>
THE SEVEN SEAS SERIES
S&P 500 INDEX FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
------- -------
<S> <C> <C>
Newell Co. 17,200 $ 477
NIKE, Inc. Class B 16,700 1,083
Nordstrom, Inc. 9,400 422
Penney (J.C.) Co., Inc. 26,200 1,245
Pep Boys-Manny, Moe & Jack 8,100 243
Polaroid Corp. 4,700 207
Price Costco, Inc. (a) 22,300 382
Reebok International, Ltd. 9,100 240
Rite Aid Corp. 8,800 277
Russell Corp. 4,500 126
Seagram Co., Ltd. 43,400 1,492
Sears Roebuck & Co. 45,300 2,055
Springs Industries, Inc. 2,200 95
Stride Rite Corp. 5,300 43
SuperValu, Inc. 8,200 264
TJX Cos., Inc. 8,400 187
Toys "R" Us, Inc. (a) 31,700 757
V.F. Corp. 7,400 398
Wal-Mart Stores, Inc. 266,900 5,672
Walgreen Co. 28,700 947
Woolworth Corp. (a) 15,100 181
--------
34,458
--------
CONSUMER SERVICES - 2.2%
AMR Corp. (a) 8,800 772
Bally Entertainment Group (a) 5,100 79
Darden Restaurants, Inc. 17,800 218
Delta Air Lines, Inc. 5,900 460
Disney (Walt) Co. 60,100 3,936
Harrah's Entertainment, Inc. (a) 11,800 320
Hilton Hotels Corp. 5,500 516
ITT Corp. New (a) 13,600 821
King World Productions, Inc. (a) 4,200 176
Luby's Cafeterias, Inc. 2,500 52
Marriot International, Inc. 14,700 722
McDonald's Corp. 80,700 4,035
Ryan's Family Steak Houses, Inc. (a) 9,800 64
Shoney's, Inc. (a) 4,600 39
Southwest Airlines Co. 16,500 507
USAir Group, Inc. (a) 7,300 123
Wendy's International, Inc. 11,800 214
--------
13,054
--------
ENERGY - 8.4%
Amerada Hess Corp. NPV 10,700 551
Amoco Corp. 57,400 3,989
Ashland, Inc. 8,100 296
Atlantic Richfield Co. 18,675 2,044
Baker Hughes, Inc. 16,900 446
Burlington Resources, Inc. 13,900 506
Chevron Corp. 75,300 4,189
Dresser Industries, Inc. 19,800 557
Exxon Corp. 144,400 11,480
Halliburton Co. 13,300 730
Helmerich & Payne, Inc. 3,800 127
Kerr-McGee Corp. 5,500 328
Louisiana Land & Exploration Co. 3,900 163
McDermott International, Inc. 7,500 144
Mobil Corp. 46,000 5,043
NorAm Energy Corp. 14,000 126
Occidental Petroleum Corp. 35,200 810
Oryx Energy Co. (a) 13,900 179
Pennzoil Co. 4,700 180
Phillips Petroleum Co. 30,700 1,075
Rowan Cos., Inc. (a) 12,600 137
Royal Dutch Petroleum Co. - ADR 62,300 8,582
Santa Fe Energy Resources, Inc. (a) 10,100 93
Schlumberger, Ltd. 28,100 2,048
Sun Company 8,855 258
Tenneco, Inc. 20,900 1,168
Texaco, Inc. 30,200 2,408
Unocal Corp. 28,500 855
USX-Marathon Group 34,200 633
Western Atlas, Inc. (a) 6,600 347
--------
49,492
--------
</TABLE>
6 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
S&P 500 INDEX FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
------- -------
<S> <C> <C>
FINANCE - 13.0%
Aetna Life & Casualty Co. 13,200 $ 999
Ahmanson (H.F.) & Co. 14,500 330
Alexander & Alexander Services, Inc. 5,300 99
Allstate Corp. 51,794 2,221
American Express Co. 55,900 2,571
American General Corp. 24,100 877
American International Group, Inc. 55,150 5,329
Banc One Corp. 51,873 1,848
Bank of Boston Corp. 14,700 715
Bank of New York Co., Inc. 24,650 1,279
BankAmerica Corp. 42,900 3,057
Bankers Trust New York Corp. 9,600 620
Barnett Banks, Inc. 11,700 731
Beneficial Corp. 6,600 343
Boatmen's BancShares, Inc. 18,100 706
Chase Manhattan Corp. 21,600 1,609
Chemical Banking Corp. 30,100 2,156
Chubb Corp. (The) 10,000 971
CIGNA Corp. 8,500 1,007
Citicorp 52,200 4,072
Comerica, Inc. 12,400 482
CoreStates Financial Corp. 17,700 761
Dean Witter, Discover & Co. 19,493 1,048
Federal Home Loan Mortgage Corp. 21,000 1,733
Federal National Mortgage
Association 126,900 4,013
First Bank System, Inc. 16,962 977
First Chicago NBD Corp. 39,148 1,698
First Interstate Bancorp 9,100 1,487
First Union Corp. 32,975 1,995
Fleet Financial Group, Inc. 32,575 1,340
General Re Corp. 9,500 1,367
Golden West Financial Corp. 7,000 354
Great Western Financial Corp. 16,100 368
Household International Corp. 11,400 767
ITT Hartford Group, Inc. 13,600 700
Jefferson-Pilot Corp. 8,350 464
KeyCorp 27,199 1,023
Lincoln National Corp. 12,200 671
Loews Corp. 13,700 1,165
Marsh & McLennan Cos., Inc. 8,500 826
MBNA Corp. 28,125 795
Mellon Bank Corp. 17,700 989
Merrill Lynch & Co., Inc. 20,400 1,176
Morgan (J.P.) & Co., Inc. 21,900 1,793
Morgan Stanley Group, Inc. 19,500 914
National City Corp. 16,100 559
NationsBank Corp. 33,900 2,500
Norwest Corp. 41,100 1,500
PNC Bank Corp. 41,700 1,277
Republic New York Corp. 7,000 419
SAFECO Corp. 14,700 533
Salomon, Inc. 12,100 461
St. Paul Cos., Inc. 10,000 566
SunTrust Banks, Inc. 13,500 970
Torchmark Corp. 7,600 352
Transamerica Financial Corp. 7,900 595
Travelers, Inc. 36,892 2,467
U.S. Bancorp of Oregon 19,800 609
UNUM Corp. 7,800 459
USF&G Corp. 12,700 191
USLIFE Corp. 4,700 142
Wachovia Corp. 19,900 925
Wells Fargo & Co. 5,700 1,406
--------
76,377
--------
GENERAL BUSINESS - 3.9%
American Greetings Corp. Class A 9,600 262
Automatic Data Processing, Inc. 33,500 1,298
Block (H&R) Co., Inc. 11,300 400
Capital Cities/ABC, Inc. 3,300 443
Comcast Corp. Special Class A 26,100 512
Computer Sciences Corp. (a) 6,700 489
CUC International, Inc. (a) 20,400 660
Deluxe Corp. 9,500 305
</TABLE>
Semiannual Report 7
<PAGE>
THE SEVEN SEAS SERIES
S&P 500 INDEX FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
------- -------
<S> <C> <C>
Donnelley (R.R.) & Sons Co. 16,900 $ 608
Dow Jones & Co., Inc. 11,400 445
Dun & Bradstreet Corp. 19,700 1,246
Ecolab, Inc. 8,300 252
First Data Corp. 25,900 1,794
Gannett Co., Inc. 16,400 1,115
Harcourt General, Inc. 8,600 373
Harland (John H.) Co. 3,300 74
Interpublic Group Cos., Inc. 9,100 383
Knight-Ridder, Inc. 5,600 388
McGraw-Hill, Inc. 5,800 507
Meredith Corp. 3,100 136
Moore Corp., Ltd. 11,300 222
New York Times Co. Class A 11,400 314
Ogden Corp. 5,900 126
Safety-Kleen Corp. 7,100 103
SBC Communications, Inc. 70,400 3,863
Service Corp. International 13,200 599
Tele-Communications, Inc.
Class A (a) 75,900 1,584
Time Warner, Inc. 44,900 1,919
Times Mirror Co. Series A 12,100 411
Tribune Co. 6,900 461
Viacom, Inc. Class B (a) 42,011 1,649
--------
22,941
--------
MISCELLANEOUS - 0.1%
Providian Corp. 11,000 509
--------
509
--------
SHELTER - 0.6%
Armstrong World Industries, Inc. 4,600 269
Centex Corp. 3,500 101
Georgia Pacific Corp. 10,700 675
Kaufman & Broad Home Corp. 3,400 52
Louisiana Pacific Corp. 11,400 264
Masco Corp. 18,100 516
Owens-Corning Fiberglas Corp. (a) 6,000 244
Pulte Corp. 3,200 96
Sherwin-Williams Co. 9,100 386
Weyerhaeuser Co. 23,600 1,000
--------
3,603
--------
TECHNOLOGY - 12.7%
3Com Corp. (a) 19,800 966
Advanced Micro Devices, Inc. (a) 13,600 264
AlliedSignal, Inc. 32,900 1,830
Amdahl Corp. (a) 13,500 113
AMP, Inc. 25,432 1,084
Andrew Corp. 5,075 260
Apple Computer, Inc. 14,200 391
Applied Materials, Inc. (a) 20,700 738
Autodesk, Inc. 5,400 190
Avery Dennison Corp. 5,600 302
Bay Networks, Inc. (a) 22,200 910
Boeing Co. 39,600 3,213
Cabletron Systems, Inc. (a) 8,200 616
Ceridian Corp. (a) 7,000 301
Cisco Systems, Inc. (a) 63,200 2,994
COMPAQ Computer Corp. (a) 30,900 1,564
Computer Associates
International, Inc. 28,050 1,928
Cray Research, Inc. (a) 4,100 116
Data General Corp. (a) 6,300 106
Digital Equipment Corp. (a) 17,100 1,231
EG&G, Inc. 6,000 143
General Dynamics Corp. 6,800 405
Harris Corp. 4,700 313
Hewlett-Packard Co. 59,500 5,995
Honeywell, Inc. 14,000 742
Intel Corp. 95,700 5,622
Intergraph Corp. (a) 6,900 127
International Business Machines Corp. 66,100 8,106
Lockheed Martin Corp. 23,291 1,776
</TABLE>
8 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
S&P 500 INDEX FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
------- -------
<S> <C> <C>
Loral Corp. 20,000 $ 943
LSI Logic Corp. 15,100 417
McDonnell Douglas Corp. 13,000 1,147
Micron Technology, Inc. 24,200 774
Microsoft Corp. (a) 68,900 6,795
Motorola, Inc. 68,100 3,694
National Semiconductor Corp. (a) 15,800 247
Northern Telecom, Ltd. 29,500 1,401
Northrop Grumman Corp. 5,900 364
Novell, Inc. (a) 42,700 523
Oracle Systems Corp. (a) 50,150 2,608
Perkin-Elmer Corp. 5,000 230
Pitney Bowes, Inc. 17,600 849
Raytheon Co. 28,200 1,414
Rockwell International Corp. 25,300 1,442
Scientific-Atlanta, Inc. 8,800 147
Shared Medical Systems 2,800 155
Silicon Graphics, Inc. (a) 18,400 460
Sun Microsystems, Inc. (a) 22,300 1,171
Tandem Computers, Inc. (a) 14,400 139
Tandy Corp. 7,400 324
Tektronix, Inc. 4,300 195
Teledyne, Inc. 6,500 183
Tellabs, Inc. (a) 9,400 444
Texas Instruments, Inc. 22,000 1,097
Textron, Inc. 10,000 788
Thomas & Betts Corp. 2,600 187
TRW, Inc. 7,600 658
Unisys Corp. (a) 19,400 119
United Technologies Corp. 14,200 1,527
Xerox Corp. 12,200 1,589
--------
74,377
--------
TRANSPORTATION - 1.3%
Burlington Northern, Inc. 15,969 1,278
Caliber Systems, Inc. 5,000 212
Conrail, Inc. 9,100 656
Consolidated Freightways, Inc. 6,100 149
CSX Corp. 24,500 1,099
Federal Express Corp. (a) 6,700 496
Laidlaw, Inc. Class B 34,400 335
Navistar International Corp. (a) 9,150 93
Norfolk Southern Corp. 15,200 1,239
Ryder System, Inc. 9,900 249
Union Pacific Corp. 23,900 1,577
Yellow Corp. (a) 5,400 59
--------
7,442
--------
UTILITIES - 11.2%
Airtouch Communications, Inc. (a) 57,500 1,782
Alltel Corp. 22,200 738
American Electric Power Co., Inc. 21,700 930
Ameritech Corp. 63,700 3,670
AT&T Corp. 185,100 11,776
Baltimore Gas & Electric Co. 17,300 491
Bell Atlantic Corp. 50,300 3,326
BellSouth Corp. 115,500 4,606
Carolina Power & Light Co. 17,800 650
Central & Southwest Corp. 23,900 663
CINergy Corp. 17,126 512
Coastal Corp. 11,300 415
Columbia Gas System, Inc. 5,900 258
Consolidated Edison Co. 27,100 884
Consolidated Natural Gas Co. 10,200 439
Dominion Resources, Inc. 20,400 806
DTE Energy Co. 17,100 609
Duke Power Co. 23,700 1,158
Edison International 52,100 912
Enron Corp. 29,300 1,073
ENSERCH Corp. 9,500 144
Entergy Corp. 26,600 755
FPL Group, Inc. 21,400 955
General Public Utilities Corp. 13,900 464
GTE Corp. 112,600 4,828
</TABLE>
Semiannual Report 9
<PAGE>
THE SEVEN SEAS SERIES
S&P 500 INDEX FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
------- -------
<S> <C> <C>
Houston Industries, Inc. 30,200 $ 683
MCI Communications Corp. 78,300 2,280
Niagara Mohawk Power Corp. 16,400 123
NICOR, Inc. 6,000 161
Northern States Power Co. 7,200 355
NYNEX Corp. 49,300 2,539
Ohio Edison Co. 17,800 423
ONEOK, Inc. 4,300 94
Pacific Enterprises 9,600 257
Pacific Gas & Electric Co. 49,300 1,263
Pacific Telesis Group 49,800 1,407
PacifiCorp. 33,200 689
Panhandle Eastern Corp. 17,700 507
Peco Energy Co. 25,900 732
Peoples Energy Corp. 4,800 148
PP&L Resources, Inc. 19,100 475
Public Service Enterprise Group, Inc. 28,600 804
Sonat, Inc. 9,100 305
Southern Co. 77,400 1,848
Sprint Corp. 40,500 1,742
Texas Utilities Co. 26,300 1,062
U.S. West Communications Group 54,700 1,791
U.S. West Media Group (a) 55,100 1,150
Unicom Corp. 25,000 800
Union Electric Co. 11,900 503
Williams Cos. (The) 11,027 524
--------
65,509
--------
TOTAL COMMON STOCKS
(cost $452,313) 556,624
--------
PREFERRED STOCKS - 0.0%
Teledyne, Inc. Series E 65 1
--------
TOTAL PREFERRED STOCKS
(cost $1) 1
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000) (000)
--------- --------
<S> <C> <C>
SHORT-TERM INVESTMENTS - 4.8%
Dreyfus Cash Management Plus, Inc.
Money Market Fund (b) $13,766 $ 13,766
United States Treasury Bills (c)(d)
4.685% due 04/11/96 (b) 60 60
4.850% due 04/11/96 (b) 50 50
4.960% due 04/11/96 (b) 80 79
5.144% due 04/11/96 (b) 1,680 1,670
4.750% due 06/13/96 215 212
Valiant Money Market Fund
Class A (b) 12,160 12,160
--------
TOTAL SHORT-TERM INVESTMENTS
(cost $27,997) 27,997
--------
TOTAL INVESTMENTS
(identified cost $480,311)(e) - 99.7% 584,622
OTHER ASSETS AND LIABILITIES,
Net - 0.3% 1,909
--------
NET ASSETS - 100.0% $586,531
--------
--------
</TABLE>
(a) Nonincome-producing security.
(b) At cost, which approximates market.
(c) Rate noted is yield-to-maturity.
(d) Collateral for open futures contracts.
(e) At February 29, 1996, the cost for federal income tax
purposes was $481,190 and net unrealized appreciation
for all securities was $103,432. This consisted
of aggregate gross unrealized appreciation for all securities in which
there was an excess of market value over tax cost of
$110,514 and aggregate gross unrealized depreciation for
all securities in which there was an excess of tax cost
over market value of $7,082.
The accompanying notes are an integral part of the financial
statements.
10 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
S&P 500 INDEX FUND
<TABLE>
<CAPTION>
FUTURES CONTRACTS February 29, 1996 (Unaudited)
NUMBER UNREALIZED
OF APPRECIATION
CONTRACTS (000)
------------ ------------
<S> <C> <C>
FUTURES CONTRACTS (NOTES 2 AND 3)
S&P 500 Financial Futures Contract
Expiration date 06/96 90 $ 443
------------
Total Unrealized Appreciation on
Open Futures Contracts Purchased (*) $ 443
------------
------------
</TABLE>
(*) At February 29, 1996, United States Treasury Bills
valued at $2,071 were held as collateral by the custodian
in connection with open futures contracts held by the Fund.
The accompanying notes are an integral part of the financial statements.
Semiannual Report 11
<PAGE>
THE SEVEN SEAS SERIES
S&P 500 INDEX FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (Unaudited)
<S> <C> <C>
ASSETS
Investments at market
(identified cost $480,310,607)
(Note 2) . . . . . . . . . . . . . . . . . . . . . . . . $ 584,621,965
Receivables:
Dividends. . . . . . . . . . . . . . . . . . . . . . . 1,502,243
Fund shares sold . . . . . . . . . . . . . . . . . . . 1,062,406
Prepaid expenses . . . . . . . . . . . . . . . . . . . . 7,229
Deferred organization expenses (Note 2). . . . . . . . . 12,771
-------------
587,206,614
LIABILITIES
Payables (Note 4):
Investments purchased. . . . . . . . . . $ 213,498
Fund shares redeemed . . . . . . . . . . 89,426
Accrued administrative fees. . . . . . . 13,582
Accrued custodian fees . . . . . . . . . 27,372
Acrued shareholder servicing fees. . . . 23,684
Accrued transfer agent fees. . . . . . . 18,915
Other accrued expenses . . . . . . . . . 46,495
Daily variation margin on futures
contracts (Notes 2 and 3). . . . . . . . 243,001 675,973
------------- -------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . $ 586,530,641
-------------
-------------
NET ASSETS CONSIST OF:
Undistributed net investment income. . . . . . . . . . . $ 2,106,647
Accumulated net realized gain (loss) . . . . . . . . . . 26,253,706
Unrealized appreciation (depreciation) on:
Investments. . . . . . . . . . . . . . . . . . . . . . 104,311,358
Futures contracts. . . . . . . . . . . . . . . . . . . 442,725
Shares of beneficial interest. . . . . . . . . . . . . . 41,486
Additional paid-in capital . . . . . . . . . . . . . . . 453,374,719
-------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . $ 586,530,641
-------------
-------------
Net asset value, offering and redemption
price per share ($586,530,641 divided
by 41,486,464 shares of $.001 par value
shares of beneficial interest outstanding) . . . . . . . $14.14
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
S&P 500 INDEX FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 1996 (Unaudited)
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends (net of foreign taxes
withheld of $33,554) . . . . . . . . . . . . . . . . . . $ 7,037,967
Interest . . . . . . . . . . . . . . . . . . . . . . . . 55,579
-------------
7,093,546
Expenses (Notes 2 and 4):
Advisory fees. . . . . . . . . . . . . . . $ 276,414
Administrative fees. . . . . . . . . . . . 83,008
Custodian fees . . . . . . . . . . . . . . 114,233
Distribution fees. . . . . . . . . . . . . 49,803
Professional fees. . . . . . . . . . . . . 16,711
Registration fees. . . . . . . . . . . . . 36,942
Shareholder servicing fees . . . . . . . . 122,578
Transfer agent fees. . . . . . . . . . . . 52,781
Trustees' fees . . . . . . . . . . . . . . 18,255
Amortization of deferred
organization expenses. . . . . . . . . . . 3,474
Miscellaneous. . . . . . . . . . . . . . . 104,749
-------------
Expenses before waivers. . . . . . . . . . 878,948
Expenses waived by Adviser . . . . . . . . (276,414) 602,534
------------- -------------
Net investment income. . . . . . . . . . . . . . . . . . . 6,491,012
-------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (Notes 2 and 3)
Net realized gain (loss) from:
Investments. . . . . . . . . . . . . . . . . . . . . . . 29,210,720
Futures Contracts. . . . . . . . . . . . . . . . . . . . 5,041,750
Net change in unrealized appreciation
or depreciation of:
Investments. . . . . . . . . . . . . . . . . . . . . . . 37,756,229
Futures contracts. . . . . . . . . . . . . . . . . . . . (723,300)
-------------
Net gain (loss) on investments . . . . . . . . . . . . . . 71,285,399
-------------
Net increase (decrease) in net assets
resulting from operations. . . . . . . . . . . . . . . . . $ 77,776,411
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 13
<PAGE>
THE SEVEN SEAS SERIES
S&P 500 INDEX FUND
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE
MONTHS ENDED FISCAL YEAR
FEBRUARY 29 1996 ENDED
(UNAUDITED) AUGUST 31, 1995
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,491,012 $ 10,818,404
Net realized gain (loss) from:
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,210,720 6,220,503
Futures contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,041,750 4,235,443
Net change in unrealized appreciation or depreciation of:
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,756,229 50,483,111
Futures Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (723,300) 580,200
---------------- ----------------
Net increase (decrease) in net assets resulting from operations. . . . . . . . . . . . . . 77,776,411 72,337,661
Distributions to shareholders:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,515,832) (9,950,577)
Net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,876,026) (1,022,577)
Increase (decrease) in net assets from fund share transactions . . . . . . . . . . . . . . (13,053,438) 122,123,121
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,331,115 183,487,628
Net assets at beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545,199,526 361,711,898
---------------- ----------------
NET ASSETS AT END OF PERIOD
(Including undistributed net investment income of
$2,106,647 and $3,131,469, respectively) . . . . . . . . . . . . . . . . . . . . . . . . $ 586,530,641 $ 545,199,526
---------------- ----------------
---------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE FISCAL YEAR
FUND SHARE TRANSACTIONS FEBRUARY 29, 1996 (UNAUDITED) ENDED AUGUST 31, 1995
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Fund shares sold . . . . . . . . . . . . . . . . . . 12,188,670 165,121,562 29,817,446 $ 349,805,925
Fund shares issued to shareholders
in reinvestments of distributions. . . . . . . . . 1,670,187 22,095,316 978,683 10,716,644
Fund shares redeemed . . . . . . . . . . . . . . . . (14,918,500) (200,270,316) (21,450,886) (238,399,448)
-------------- -------------- -------------- --------------
Net increase (decrease). . . . . . . . . . . (1,059,643) $ (13,053,438) 9,345,243 $ 122,123,121
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
The accompanying notes are an integral part of the financial Statements.
14 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
S&P 500 INDEX FUND
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout
each fiscal year or period and other performance information derived from the
financial statements.
<TABLE>
<CAPTION>
1996+ 1995 1994 1993++
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . $ 12.81 10.89 $ 10.72 10.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . .16 .29 .26 .15
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . 1.74 1.95 .29 .65
------- ------- ------- -------
Total Income From Investment Operations. . . 1.90 2.24 .55 .80
------- ------- ------- -------
LESS DISTRIBUTIONS:
Net investment income. . . . . . . . . . . . (.18) (.29) (.26) (.08)
Net realized gain on investments . . . . . . (.39) (.03) (.07) --
In excess of net realized gain
on investments . . . . . . . . . . . . . . -- -- (.05) --
------- ------- ------- -------
Total Distributions. . . . . . . . . . . . . (.57) (.32) (.38) (.08)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD . . . . . . . . $ 14.14 $ 12.81 $ 10.89 $ 10.72
------- ------- ------- -------
------- ------- ------- -------
TOTAL RETURN (%)(a). . . . . . . . . . . . . . 15.22 21.11 5.29 8.06
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average
daily net assets (b)(c). . . . . . . . . . .22 .19 .15 .15
Operating expenses, gross, to average
daily net assets (b)(c). . . . . . . . . . .32 .29 .25 .35
Net investment income to average
daily net assets (b) . . . . . . . . . . . 2.34 2.76 2.69 3.02
Portfolio turnover (b) . . . . . . . . . . . 40.26 38.56 7.97 48.10
Net assets, end of period
($000 omitted) . . . . . . . . . . . . . . . 586,531 545,200 361,712 238,666
Per share amount of fees waived
($ omitted)(c) . . . . . . . . . . . . . . . .0066 .0107 .0030 .0027
Per share amount of fees reimbursed
($ omitted). . . . . . . . . . . . . . . . . -- -- .0067 .0071
Average commission rate paid per share
of security ($ omitted). . . . . . . . . . .0142 N/A N/A N/A
</TABLE>
+ For the six months ended February 29, 1996 (unaudited).
++ For the period December 30, 1992 (commencement of Operations) to
August 31, 1993.
(a) Periods less than one year are not annualized.
(b) The ratios for the periods February 29, 1996 and ended August 31, 1993 are
annualized.
(c) See Note 4 for current period amounts.
Semiannual Report 15
<PAGE>
THE SEVEN SEAS SERIES
S&P 500 INDEX FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996 (Unaudited)
1. ORGANIZATION
The Seven Seas Series Fund (the "Investment Company") is a series mutual
fund, currently comprising 14 investment portfolios which are in operation
as of February 29, 1996. These financial statements report on one
portfolio, The Seven Seas Series S&P 500 Index Fund (the "Fund"). The
Investment Company is a registered and diversified open-end investment
company, as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), that was organized as a Massachusetts business trust on
October 3, 1987 and operates under a First Amended and Restated Master
Trust Agreement, dated October 13, 1993, as amended. The Investment
Company's master trust agreement permits the Board of Trustees to issue an
unlimited number of full and fractional shares of beneficial interest at a
$.001 par value.
2. SIGNIFICANT ACCOUNTING POLICIES
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management
estimates. The following is a summary of the significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements.
SECURITY VALUATION: United States equity securities listed and traded
principally on any national securities exchange are valued on the basis of
the last sale price or, lacking any sale, at the closing bid price, on the
primary exchange on which the security is traded. United States
over-the-counter equities, fixed-income securities and options are valued
on the basis of the closing bid price. Futures contracts are valued on the
basis of the last sale price.
International securities traded on a national securities exchange are
valued on the basis of the last sale price. International securities traded
over the counter are valued on the basis of the mean of bid prices. In the
absence of a last sale or mean bid price, respectively, such securities may
be valued on the basis of prices provided by a pricing service if those
prices are believed to reflect the fair market value of such securities.
Money market instruments maturing within 60 days of the valuation date are
valued at "amortized cost," a method by which each portfolio instrument is
initially valued at cost, and thereafter a constant accretion/amortization
to maturity of any discount or premium is assumed, unless the Board of
Trustees determines that amortized cost does not represent fair value.
The Fund may value securities for which market quotations are not readily
available at "fair value," as determined in good faith pursuant to
procedures established by the Board of Trustees.
SECURITIES TRANSACTIONS: Securities transactions are recorded on a trade
date basis. Realized gains and losses from securities transactions are
recorded on the basis of identified cost.
INVESTMENT INCOME: Dividend income is recorded on the ex-dividend date and
interest income is recorded on the accrual basis.
16 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
S&P 500 INDEX FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
FEDERAL INCOME TAXES: As the Investment Company is a Massachusetts
business trust, each sub-trust is a separate corporate taxpayer and
determines its net investment income and capital gains (or losses) and the
amounts to be distributed to each fund's shareholders without regard to the
income and capital gains (or losses) of the other funds.
It is the Fund's intention to qualify as a regulated investment company and
distribute all of its taxable income. The Fund, accordingly, paid no
federal taxes and no federal income tax provision was required.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Income dividends and capital
gain distributions, if any, are recorded on the ex-dividend date. Dividends
are generally declared and paid quarterly. Capital gain distributions are
generally declared and paid annually. An additional distribution may be
paid by the Fund to avoid imposition of federal income tax on any remaining
undistributed net investment income and capital gains.
The timing and characterization of certain income and capital gain
distributions are determined in accordance with federal tax regulations
which may differ from generally accepted accounting principles ("GAAP"). As
a result, net investment income and net realized gain (or loss) from
investment transactions for a reporting period may differ significantly
from distributions during such period. The differences between tax
regulations and GAAP primarily relate to investments in options, futures
and certain securities sold at a loss. Accordingly, the Fund may
periodically make reclassifications among certain of its capital accounts
without impacting its net asset value.
EXPENSES: Expenses such as advisory, custodian, transfer agent,
shareholder servicing, printing, and registration fees are charged directly
to the individual funds, while indirect expenses, such as administrative,
insurance, and professional fees are generally allocated among all funds
principally based on their relative net assets.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred expenses in connection
with its organization and initial registration. These costs have been
deferred and are being amortized over 60 months on a straight-line basis.
REPURCHASE AGREEMENTS: The Fund may engage in repurchase and tri-party
repurchase agreements with several financial institutions whereby the Fund,
through its custodian or third-party custodian, receives delivery of the
underlying securities. The market value of these securities (including
accrued interest) on acquisition date is required to be an amount equal to
at least 102% of the repurchase price. The Fund's Adviser will monitor
repurchase agreements daily to determine that the market value (including
accrued interest) at Fedwire closing time of the underlying securities
remains at least equal to 100% of the repurchase price. The Adviser or
third-party custodian will notify the seller to immediately increase the
collateral on the repurchase agreement to 102% of the repurchase price if
collateral falls below 100%.
DERIVATIVES: To the extent permitted by the investment objectives,
restrictions and policies set forth in the Fund's Prospectus and Statement
of Additional Information, the Fund may participate in various
Semiannual Report 17
<PAGE>
THE SEVEN SEAS SERIES
S&P 500 INDEX FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
derivative-based transactions. Derivative securities are instruments or
agreements whose value is derived from an underlying security or index.
These instruments offer unique characteristics and risks that assist the
Fund to meet its investment objective.
The Fund typically uses derivatives for cash equitization. Cash
equitization is a technique that is used by the Fund through the use of
options and futures to earn "market-like" returns with the Fund's excess
and liquidity reserve cash balances. By purchasing certain instruments, a
fund may more effectively achieve the desired portfolio characteristics
that allow the fund to meet its investment objective. The Fund uses futures
and options contracts solely for the purpose of cash management. The
primary risks associated with the use of derivatives are generally
categorized as market risk.
FUTURES: The Fund is currently utilizing exchange-traded futures
contracts. The primary risks associated with the use of futures contracts
are an imperfect correlation between the change in market value of the
securities held by the Fund and the prices of futures contracts and the
possibility of an illiquid market. 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.
3. SECURITIES TRANSACTIONS
INVESTMENT TRANSACTIONS: For the six months ended February 29, 1996,
purchases and sales of investment securities, excluding short-term
investments, futures contracts and repurchase agreements, aggregated to
$106,001,893 and $148,257,362, respectively.
FUTURES TRANSACTIONS: The Fund's transactions in futures contracts for the
six months ended February 29, 1996, were as follows:
<TABLE>
<CAPTION>
FUTURES CONTRACTS
-------------------------------
AGGREGATE
NUMBER OF FACE VALUE OF
CONTRACTS CONTRACTS (1)
------------- -------------
<S> <C> <C>
Outstanding at August 31, 1995 96 $ 26,071,575
Contracts opened 254 78,648,550
Contracts closed (260) (76,171,600)
------------- -------------
Outstanding at February 29, 1996 90 $ 28,548,525
------------- -------------
------------- -------------
</TABLE>
(1) The aggregate face value of contracts is computed on the date each contract
was opened.
18 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
S&P 500 INDEX FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
4. RELATED PARTIES
ADVISER: The Investment Company has an investment advisory agreement with
State Street Bank and Trust Company (the "Adviser") under which the Adviser
directs the investment of the Fund in accordance with its investment
objectives, policies, and limitations. For these services, the Fund pays a
fee to the Adviser, calculated daily and paid monthly, at the annual rate
of .10% of its average daily net assets. For the six months ended February
29, 1996, the Adviser voluntarily agreed to waive up to the full amount of
its advisory fee to the extent that total expenses exceed .15% of its
average daily net assets on an annual basis. The Investment Company has
contracts with the Adviser to provide custody, shareholder servicing and
transfer agent services to the Fund.
ADMINISTRATOR, DISTRIBUTOR AND SHAREHOLDER SERVICING: Frank Russell
Investment Management Company (the "Administrator") serves as administrator
of the Investment Company. The Administrator is also required, pursuant to
the Administration Agreement, to arrange and pay certain promotional and
sales costs of Investment Company shares. Russell Fund Distributors, Inc.
(the "Distributor"), a subsidiary of the Administrator, is the distributor
of the Investment Company shares. The Fund has adopted a distribution plan
pursuant to Rule 12b-1 (the "Plan") under the 1940 Act. Under the Plan, the
Fund may also enter into service agreements with financial institutions,
including the Adviser, State Street Brokerage Services, Inc. ("SSBSI"), a
wholly-owned subsidiary of the Adviser, and Adviser's Metropolitan Division
of Commercial Banking ("Commercial Banking" collectively the "Agents").
The Commercial Banking service agreement became effective November 8, 1995.
Under these service agreements, the Agents are to provide shareholder
servicing for Investment Company shareholders, including services related
to the purchase and redemption of Investment Company shares.
For these services, the Fund pays fees to the Agents in an amount that per
annum is equal to .025%, .175% and .175% of the average daily value of all
Fund shares held by or for customers of the Adviser, SSBSI and Commercial
Banking, respectively. These fees, in conjunction with other
distribution-related expenses, may not exceed .25% of the average daily
value of net assets on an annual basis, which includes a limit of .20% in
shareholder servicing fees for all providers. Any payments that are
required to be made by the Plan and any service agreement, but could not be
made because they exceed the maximum amount of allowable reimbursement, may
be carried forward for subsequent reimbursement from the Investment Company
so long as the Plan is in effect. The Fund's liability for any such
expenses carried forward shall terminate at the end of two years following
the year in which the expenditure was incurred. The Trustees or a majority
of the Fund's shareholders have the right, however, to terminate the
Distribution Plan and all payments thereunder at any time. The Fund will
not be obligated to reimburse the Distributor for carryover expenses
subsequent to the Distribution Plan's termination or noncontinuance. There
were no carryover expenses as of February 29, 1996.
For shareholder servicing, the Fund incurred expenses of $110,300 from the
Adviser. The amounts related to distribution and shareholder servicing fees
are included in the accompanying Statement of Operations.
Semiannual Report 19
<PAGE>
THE SEVEN SEAS SERIES
S&P 500 INDEX FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
Pursuant to the Administration Agreement with the Investment Company, the
Administrator supervises all non-portfolio investment aspects of the
Investment Company's operations and provides adequate office space and all
necessary office equipment and services, including telephone service,
utilities, stationery supplies, and similar items. The Investment Company
pays the Administrator the following fees for the services supplied by the
Administrator pursuant to the Administration Agreement: (i) an annual fee,
payable monthly on a pro rata basis, based on the following percentages of
the average daily net assets of all domestic funds: $0 up to $500 million -
.06%; over $500 million to and including $1 billion - .05%; over $1 billion
- .03%; (ii) less an amount equal to the sum of certain distribution-
related expenses incurred by the Investment Company's Distributor on behalf
of the Fund (up to a maximum of 15% of the asset-based fee determined in
(i)); (iii) out-of-pocket expenses; and (iv) start-up costs for new funds.
AFFILIATED BROKERAGE: The Fund placed a portion of its portfolio
transactions with SSBSI, an affiliated broker dealer of the Fund's Adviser.
The commissions paid to SSBSI were $9,410 for the six months ended February
29, 1996.
BOARD OF TRUSTEES: The Investment Company pays each of its Trustees not
affiliated with the Investment Company a retainer of $44,000 annually,
$1,000 for each of the board meetings attended, an additional $1,000 for
attending the annual audit committee meeting, and reimbursement for
out-of-pocket expenses.
5. DIVIDENDS
On March 1, 1996, the Board of Trustees declared a dividend of $.0474 from
net investment income, payable on March 11, 1996, to shareholders of record
March 4, 1996.
20 Semiannual Report
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
THE SEVEN SEAS SERIES FUND
Two International Place, 35th Floor
Boston, Massachusetts 02110 [LOGO]
(617) 654-6089
- -------------------------------------------------------------------------------
TRUSTEES
Lynn L. Anderson, Chairman
William L. Marshall
Steven J. Mastrovich
Patrick J. Riley
Richard D. Shirk
Bruce D. Taber
Henry W. Todd
OFFICERS
Lynn L. Anderson, President
George W. Weber, Senior Vice
President and Treasurer
J. David Griswold, Vice President
and Secretary
INVESTMENT ADVISER
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
CUSTODIAN, TRANSFER AGENT AND
OFFICE OF SHAREHOLDER INQUIRIES
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
(800) 64-7SEAS (77327)
DISTRIBUTOR
Russell Fund Distributors, Inc.
Two International Place, 35th Floor
Boston, Massachusetts 02110
(617) 654-6089
ADMINISTRATOR
Frank Russell Investment Management Company
909 A Street
Tacoma, Washington 98402
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
Semiannual Report 21
<PAGE>
SEVEN SEAS INVESTMENT PORTFOLIOS
[LOGO]
SEMIANNUAL REPORT
SMALL CAP FUND
FEBRUARY 29, 1996
<PAGE>
THE SEVEN SEAS SERIES FUND-Registered Trademark-
FEBRUARY 29, 1996
(UNAUDITED)
TABLE OF CONTENTS
Page
Small Cap Fund Financial Statements. . . . . . . . . . . . . . . . . . . 3
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . 10
Fund Management and Service Providers. . . . . . . . . . . . . . . . . . 15
"THE SEVEN SEAS SERIES FUND"-Registered Trademark- IS A REGISTERED TRADEMARK AND
SERVICE MARK OF THE SEVEN SEAS SERIES FUND.
THIS REPORT IS PREPARED FROM THE BOOKS AND RECORDS OF THE FUND AND IT IS
SUBMITTED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. THIS INFORMATION IS FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A
SEVEN SEAS SERIES FUND PROSPECTUS CONTAINING MORE COMPLETE INFORMATION
CONCERNING THE INVESTMENT OBJECTIVE AND OPERATIONS OF THE FUND, CHARGES AND
EXPENSES. THE PROSPECTUS SHOULD BE READ CAREFULLY BEFORE AN INVESTMENT IS MADE.
PERFORMANCE IS HISTORICAL AND ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL
GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN WHEN PURCHASED.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. RUSSELL FUND DISTRIBUTORS,
INC., IS THE DISTRIBUTOR OF THE SEVEN SEAS SERIES FUND.
<PAGE>
THE SEVEN SEAS SERIES
SMALL CAP FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
February 29, 1996 (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
(000) (000)
----------- -----------
<S> <C> <C>
COMMON STOCKS - 96.9%
BASIC INDUSTRIES - 4.6%
Amcast Industrial Corp. $ 4,100 $ 74
Cleveland-Cliffs, Inc. 10,900 485
Rouge Steel Co. Class A 4,500 105
Sterling Chemicals, Inc. (a) 18,900 224
Texas Industries, Inc. 12,100 747
-----------
1,635
-----------
CAPITAL GOODS - 8.3%
Allied Products Corp. 5,400 130
Barnes Group, Inc. 2,400 106
Belden, Inc. 3,900 115
Global Industrial Technologies, Inc. (a) 19,900 465
Harnischfeger Industries, Inc. 1,300 49
Kaydon Corp. 5,900 195
Manitowoc Co., Inc. 3,100 99
Measurex Corp. 12,500 358
Sanifill, Inc. (a) 5,400 211
Sanmina Corp. (a) 9,900 522
Tennant Co. 400 9
TransPro, Inc. 2,375 24
United Waste Systems, Inc. (a) 14,500 667
-----------
2,950
-----------
CONSUMER BASICS - 13.1%
Alpharma, Inc. Class A 7,200 184
Bindley Western Industries, Inc. 800 14
Cardinal Health, Inc. 1,492 90
Casey's General Stores, Inc. 11,900 268
Chemed Corp. 100 4
Church and Dwight Co., Inc. 4,500 91
International Multifoods Corp. 6,000 112
Invacare Corp. 8,700 211
National Health Investors, Inc. 9,900 323
Nellcor Puritan Bennett, Inc. (a) 14,000 938
OrNda Healthcorp (a) 24,400 625
PhyCor, Inc. (a) 8,000 360
Richfood Holdings, Inc. Class A 2,000 55
Smith's Food & Drug Centers, Inc. Class B 20,900 507
Ultratech Stepper, Inc. (a) 2,200 52
Universal Health Services, Inc. Class B (a) 6,800 348
Watson Pharmaceuticals, Inc. (a) 10,600 453
-----------
4,635
-----------
CONSUMER DURABLES - 2.6%
Arctco, Inc. 3,500 36
Borg Warner Automotive, Inc. 5,300 174
Carlisle Cos., Inc. 2,500 109
Coachmen Industries, Inc. 6,600 181
Ethan Allen Interiors, Inc. (a) 7,800 178
La-Z-Boy Chair Co. 900 25
Toro Co. 5,800 194
Winnebago Industries, Inc. 3,400 27
-----------
924
-----------
Consumer Non-Durables - 8.0%
Carson Pirie Scott & Co. (a) 1,200 24
CompUSA, Inc. (a) 27,300 1,092
Coors (Adolph) Co. Class B 10,800 208
Guilford Mills, Inc. 3,600 76
Oshkosh B' Gosh, Inc. Class A 2,500 38
PeopleSoft, Inc. (a) 3,800 205
Ross Stores, Inc. 39,400 955
Tiffany & Co. 4,400 237
-----------
2,835
-----------
CONSUMER SERVICES - 1.6%
Alaska Air Group, Inc. (a) 1,300 29
Bally Entertainment Group (a) 8,400 130
Bally Total Fitness Holding Corp. (a) 2,100 9
</TABLE>
Semiannual Report 3
<PAGE>
THE SEVEN SEAS SERIES
SMALL CAP FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
(000) (000)
----------- -----------
<S> <C> <C>
GC Companies, Inc. (a) $ 3,100 $ 102
Grand Casinos, Inc. (a) 2,300 73
Marcus Corp. (a) 2,850 74
Regis Corp. 4,800 133
-----------
550
-----------
ENERGY - 5.5%
Barrett Resources Corp. (a) 18,490 444
Camco International, Inc. 12,400 352
KCS Energy, Inc. 800 11
Marine Drilling Co, Inc. (a) 10,400 73
Newfield Exploration Co. (a) 300 9
Reading & Bates Corp. (a) 25,000 478
Smith International, Inc. (a) 28,800 587
-----------
1,954
-----------
FINANCE - 20.1%
Allied Group, Inc. 3,500 148
American Bankers Insurance Group, Inc. 11,700 417
California Federal Bancorp, Inc. (a) 42,000 635
Capital RE Corp. 1,800 62
CCB Financial Corp. 6,000 299
Charter One Financial, Inc. 33,600 1,142
City National Corp. 6,100 84
CMAC Investment Corp. 14,300 785
Coastal Bancorp, Inc. 400 7
Horace Mann Educators Corp. 9,000 296
MAF Bancorp, Inc. 660 16
Money Store, Inc. 27,000 601
Norwest Corp. 75 3
Orion Capital Corp. 7,500 354
Peoples Heritage Financial Group 20,900 444
Protective Life Corp. 3,900 137
Provident Bancorp, Inc. 1,100 54
Quick & Reilly Group, Inc. (The) 1,875 49
Resource Bancshares Mortgage Group (a) 2,425 36
Security Capital Corp. 3,400 197
Summit Bancorporation 1,600 55
TCF Financial Corp. 16,800 632
Zions Bancorp 9,100 671
-----------
7,124
-----------
GENERAL BUSINESS - 6.7%
AccuStaff, Inc. (a) 8,400 445
American Business Products, Inc. 2,700 63
Career Horizons, Inc. (a) 9,800 235
Logicon, Inc. 11,400 362
Miller (Herman), Inc. 3,800 122
National Data Corp. 17,100 599
New England Business Service, Inc. 6,600 119
PHH Group, Inc. 4,700 236
SunGard Data Systems 5,000 171
-----------
2,352
-----------
MISCELLANEOUS - 0.3%
Federal Realty Investment Trust 4,400 99
-----------
99
-----------
SHELTER - 7.3%
Champion Enterprises, Inc. (a) 18,300 553
Continental Homes Holding Corp. 18,200 375
Kaufman & Broad Home Corp. 10,700 164
Lennar Corp. 31,400 754
Redman Industries, Inc. (a) 2,500 91
Republic Group, Inc. 5,400 74
U.S. Home Corp. New (a) 21,500 562
-----------
2,573
-----------
</TABLE>
4 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
SMALL CAP FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
(000) (000)
----------- -----------
<S> <C> <C>
TECHNOLOGY - 10.6%
Altera Corp. (a) $ 3,100 $ 202
Cadence Design Systems, Inc. (a) 21,000 937
GaSonics International Corp. (a) 1,400 15
Hadco Corp. (a) 5,700 187
In Focus Systems, Inc. (a) 3,400 127
KEMET Corp. (a) 18,200 421
Picturetel Corp. (a) 10,500 371
SCI Systems, Inc. (a) 26,200 969
Seagate Technology (a) 3,892 254
Stratus Computer, Inc. (a) 6,500 189
Wyle Laboratories 2,500 82
-----------
3,754
-----------
TRANSPORTATION - 1.7%
Airborne Freight Corp. 20,600 574
American President Cos., Ltd. 1,900 40
-----------
614
-----------
UTILITIES - 6.5%
California Energy, Inc. (a) 12,300 274
Central Hudson Gas & Electric Corp. 5,400 158
CILCORP, Inc. 4,800 206
Eastern Enterprises, Inc. 13,200 467
Eastern Utilities Associates 16,600 361
Lincoln Telecommunications Co. 4,200 80
New Jersey Resources Corp. 3,000 87
Northwestern Public Service Co. 1,900 57
ONEOK, Inc. 2,100 46
Sierra Pacific Resources 22,300 541
-----------
2,277
-----------
TOTAL COMMON STOCKS
(cost $29,156) 34,276
-----------
SHORT-TERM INVESTMENTS - 3.0%
Dreyfus Cash Management Plus, Inc.
Money Market Fund (b) 1,082 1,082
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $1,082) 1,082
-----------
TOTAL INVESTMENTS
(identified cost $30,238)(c) - 99.9% 35,358
OTHER ASSETS AND LIABILITIES,
NET - 0.1% 28
-----------
Net Assets - 100.0% $ 35,386
-----------
-----------
</TABLE>
(a) Nonincome-producing security.
(b) At cost, which approximates market.
(c) At February 29, 1996, the cost for federal income tax purposes was $30,247
net unrealized appreciation for all securities was $5,111. This consisted of
aggregate gross unrealized appreciation for all securities in which there
was an excess of market value over tax cost of $5,563 and aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over market value of $452.
The accompanying notes are an integral part of the financial
statements.
Semiannual Report 5
<PAGE>
THE SEVEN SEAS SERIES
SMALL CAP FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (Unaudited)
<S> <C> <C>
ASSETS
Investments at market (identified cost $30,237,976)(Note 2). . . . . . . . $ 35,357,891
Receivables:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,115
Investments sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,763
Fund shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237,082
From Adviser (Note 4). . . . . . . . . . . . . . . . . . . . . . . . . . 37,603
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413
Deferred organization expenses (Note 2). . . . . . . . . . . . . . . . . . 4,975
-------------
35,872,842
LIABILITIES
Payables (Note 4):
Investments purchased. . . . . . . . . . . . . . . . . . $ 419,201
Fund shares redeemed . . . . . . . . . . . . . . . . . . 20,929
Accrued administrative fees. . . . . . . . . . . . . . . 791
Accrued advisory fees. . . . . . . . . . . . . . . . . . 38,646
Accrued custodian fees . . . . . . . . . . . . . . . . . 3,908
Accrued shareholder servicing fees . . . . . . . . . . . 958
Accrued transfer agent fees. . . . . . . . . . . . . . . 1,158
Other accrued expenses . . . . . . . . . . . . . . . . . 1,546 487,137
------------- -------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,385,705
-------------
-------------
NET ASSETS CONSIST OF:
Undistributed net investment income. . . . . . . . . . . . . . . . . . . . $ 42,310
Accumulated net realized gain (loss) . . . . . . . . . . . . . . . . . . . 712,240
Unrealized appreciation (depreciation) on investments. . . . . . . . . . . 5,119,915
Shares of beneficial interest. . . . . . . . . . . . . . . . . . . . . . . 2,231
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . 29,509,009
-------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,385,705
-------------
-------------
Net asset value, offering and redemption price per share
($35,385,705 divided by 2,230,604 shares of $.001,
par value shares of beneficial interest outstanding) . . . . . . . . . . $15.86
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
SMALL CAP FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 1996 (Unaudited)
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 198,046
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,267
-------------
201,313
Expenses (Notes 2 and 4):
Advisory fees. . . . . . . . . . . . . . . . . . . . . . $ 103,095
Administrative fees. . . . . . . . . . . . . . . . . . . 4,063
Custodian fees . . . . . . . . . . . . . . . . . . . . . 11,440
Distribution fees. . . . . . . . . . . . . . . . . . . . 16,807
Professional fees. . . . . . . . . . . . . . . . . . . . 5,427
Registration fees. . . . . . . . . . . . . . . . . . . . 10,595
Shareholder servicing fees . . . . . . . . . . . . . . . 5,166
Transfer agent fees. . . . . . . . . . . . . . . . . . . 11,467
Trustees' fees . . . . . . . . . . . . . . . . . . . . . 678
Amortization of deferred organization expenses . . . . . 1,858
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 4,466
-------------
Expenses before reimbursement. . . . . . . . . . . . . . 175,062
Expenses reimbursed by Adviser . . . . . . . . . . . . . (37,603) 137,459
------------- -------------
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,854
-------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (Notes 2 and 3)
Net realized gain (loss) from investments. . . . . . . . . . . . . . . . . . 1,182,032
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,928,435
-------------
Net gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . . 3,110,467
-------------
Net increase (decrease) in net assets resulting from operations. . . . . . . $ 3,174,321
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 7
<PAGE>
THE SEVEN SEAS SERIES
SMALL CAP FUND
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE
MONTHS ENDED FISCAL YEAR
FEBRUARY 29, 1996 ENDED
(UNAUDITED) AUGUST 31, 1995
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . $ 63,854 $ 104,606
Net realized gain (loss) from:
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,182,032 46,859
Futures contracts. . . . . . . . . . . . . . . . . . . . . . . . . -- (24,880)
Net change in unrealized appreciation
or depreciation of investments . . . . . . . . . . . . . . . . . . 1,928,435 3,176,878
----------------- -----------------
Net increase (decrease) in net assets resulting from operations. . . . 3,174,321 3,303,463
Distributions to shareholders:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . (84,199) (156,946)
Net realized gain on investments . . . . . . . . . . . . . . . . . . (357,586) (1,255,304)
In excess of net realized gain on investments. . . . . . . . . . . . -- (112,206)
Increase (decrease) in net assets from Fund share transactions . . . . 9,351,727 (4,193,484)
----------------- -----------------
INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . . . . 12,084,263 (2,414,477)
Net assets at beginning of period. . . . . . . . . . . . . . . . . . . 23,301,442 25,715,919
----------------- -----------------
NET ASSETS AT END OF PERIOD
(including undistributed net investment income of
$42,310 and $62,655, respectively) . . . . . . . . . . . . . . . . . $ 35,385,705 $ 23,301,442
----------------- -----------------
----------------- -----------------
</TABLE>
<TABLE>
<CAPTION>
FUND SHARE TRANSACTIONS FOR THE SIX MONTHS ENDED FOR THE FISCAL YEAR
FEBRUARY 29, 1996 (UNAUDITED) ENDED AUGUST 31, 1995
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Fund shares sold . . . . . . . . . . . . 964,526 $ 14,503,445 1,602,127 $ 20,263,993
Fund shares issued to shareholders
in reinvestments of distributions. . . 27,966 416,924 137,019 1,512,935
Fund shares redeemed . . . . . . . . . . (377,910) (5,568,642) (2,287,103) (25,970,412)
------------- ------------- ------------- -------------
Net increase (decrease). . . . . . . . . 614,582 $ 9,351,727 (547,957) $ (4,193,484)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
SMALL CAP FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout each fiscal
year or period and other performance information derived from the financial statements.
1996* 1995+ 1994 1993 1992++
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . . $ 14.42 $ 11.88 $ 12.24 $ 10.09 $ 10.00
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . . .03 .13 .21 .22 .04
Net realized and unrealized gain on investments. . . . . 1.66 3.19 .24 2.14 .05
-------- -------- -------- -------- --------
Total Income From Investment Operations. . . . . . . . . 1.69 3.32 .45 2.36 .09
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Net investment income. . . . . . . . . . . . . . . . . . (.05) (.15) (.21) (.21) --
Net realized gain on investments . . . . . . . . . . . . (.20) (.58) (.60) -- --
In excess of net realized gain on investments. . . . . . -- (.05) -- -- --
-------- -------- -------- -------- --------
Total Distributions. . . . . . . . . . . . . . . . . . . (.25) (.78) (.81) (.21) --
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . . . $ 15.86 $ 14.42 $ 11.88 $ 12.24 $ 10.09
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
TOTAL RETURN (%)(a). . . . . . . . . . . . . . . . . . . . 11.81 30.04 3.90 23.66 .90
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average
daily net assets (b)(c). . . . . . . . . . . . . . . . 1.00 .97 .30 .25 .25
Operating expenses, gross, to average
daily net assets (b)(c). . . . . . . . . . . . . . . . . 1.27 1.58 .81 1.18 1.71
Net investment income to average daily net assets (b). . . .46 .81 1.73 1.85 2.55
Portfolio turnover (b) . . . . . . . . . . . . . . . . . 90.01 192.88 44.86 81.14 4.59
Net assets, end of period ($000 omitted) . . . . . . . . 35,386 23,301 25,716 34,815 9,392
Per share amount of fees waived ($ omitted)(c) . . . . . -- .0261 .0046 .0083 .0021
Per share amount of fees reimbursed ($ omitted)(c) . . . .0171 .0730 .0582 .1040 .0226
Average commission rate paid per share
of security ($ omitted). . . . . . . . . . . . . . . . .0369 N/A N/A N/A N/A
</TABLE>
* For the Six Months Ended February 29, 1996 (Unaudited).
+ Prior to November 22, 1994, the Fund was passively managed as the S&P
Midcap Index Fund.
++ For the period July 1, 1992 (commencement of operations) to
August 31, 1992.
(a) Periods less than one year are not annualized.
(b) The ratios for the periods ended February 29, 1996 and August 31, 1992 are
annualized.
(c) See Note 4 for currrent period amounts.
Semiannual Report 9
<PAGE>
THE SEVEN SEAS SERIES
SMALL CAP FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996 (Unaudited)
1. ORGANIZATION
The Seven Seas Series Fund (the "Investment Company") is a series mutual
fund, currently comprising 14 investment portfolios which are in operation
as of February 29, 1996. These financial statements report on one
portfolio, The Seven Seas Series Small Cap Fund (the "Fund"). Prior to
November 22, 1994, the Fund was passively managed under the name of The
Seven Seas Series S&P Midcap Index Fund. Effective November 23, 1994, the
name and investment objective of the Fund was changed pursuant to a
shareholder vote. The Investment Company is a registered and diversified
open-end investment company, as defined in the Investment Company Act of
1940, as amended (the "1940 Act"), that was organized as a Massachusetts
business trust on October 3, 1987 and operates under a First Amended and
Restated Master Trust Agreement, dated October 13, 1993, as amended. The
Investment Company's master trust agreement permits the Board of Trustees
to issue an unlimited number of full and fractional shares of beneficial
interest at a $.001 par value.
2. SIGNIFICANT ACCOUNTING POLICIES
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management
estimates. The following is a summary of the significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements.
SECURITY VALUATION: United States equity securities listed and traded
principally on any national securities exchange are valued on the basis of
the last sale price or, lacking any sale, at the closing bid price, on the
primary exchange on which the security is traded. United States
over-the-counter equities are valued on the basis of the closing bid price.
Futures contracts are valued on the basis of last sale price.
International securities traded on a national securities exchange are
valued on the basis of the last sale price. International securities traded
over the counter are valued on the basis of the mean of bid prices. In the
absence of a last sale or mean bid price, respectively, such securities may
be valued on the basis of prices provided by a pricing service if those
prices are believed to reflect the fair market value of such securities.
Money market instruments maturing within 60 days of the valuation date are
valued at "amortized cost", a method by which each portfolio instrument is
initially valued at cost, and thereafter a constant accretion/amortization
to maturity of any discount or premium is assumed, unless the Board of
Trustees determines that amortized cost does not represent fair value.
The Fund may value securities for which market quotations are not readily
available at "fair value," as determined in good faith pursuant to
procedures established by the Board of Trustees.
SECURITIES TRANSACTIONS: Securities transactions are recorded on a trade
date basis. Realized gains and losses from securities transactions are
recorded on the basis of identified cost.
10 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
SMALL CAP FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
INVESTMENT INCOME: Dividend income is recorded on the ex-dividend date and
interest income is recorded on the accrual basis.
AMORTIZATION AND ACCRETION: All zero-coupon bond discounts and original
issue discounts are accreted for both tax and financial reporting purposes.
All short- and long-term market premiums/discounts are amortized/accreted
for both tax and financial reporting purposes.
FEDERAL INCOME TAXES: As the Investment Company is a Massachusetts
business trust, each sub-trust is a separate corporate taxpayer and
determines its net investment income and capital gains (or losses) and the
amounts to be distributed to each fund's shareholders without regard to the
income and capital gains (or losses) of the other funds.
It is the Fund's intention to qualify as a regulated investment company and
distribute all of its taxable income. The Fund, accordingly, paid no
federal income taxes and no federal income tax provision was required. As
permitted by tax regulations, the Fund intends to defer a net realized
capital loss of $111,161, incurred from November 1, 1994 to August 31, 1995
and treat it as arising in fiscal year 1996.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Income dividends and capital
gain distributions, if any, are recorded on the ex-dividend date. Dividends
are generally declared and paid quarterly. Capital gain distributions are
generally declared and paid annually. An additional distribution may be
paid by the Fund to avoid imposition of federal income tax on any remaining
undistributed net investment income and capital gains.
The timing and characterization of certain income and capital gain
distributions are determined in accordance with federal tax regulations
which may differ from generally accepted accounting principles ("GAAP"). As
a result, net investment income and net realized gain (or loss) on
investment and foreign currency-related transactions for a reporting period
may differ significantly from distributions during such period. The
differences between tax regulations and GAAP primarily relate to
investments in foreign denominated investments, redemptions in kind, and
certain securities sold at a loss. Accordingly, the Fund may periodically
make reclassifications among certain of its capital accounts without
impacting its net asset value.
EXPENSES: Expenses such as advisory, custodian, transfer agent,
shareholder servicing, printing, and registration fees are charged directly
to the individual funds, while indirect expenses, such as administrative,
insurance, and professional fees are generally allocated among all funds
principally based on their relative net assets.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred expenses in connection
with its organization and initial registration. These costs have been
deferred and are being amortized over 60 months on a straight-line basis.
Semiannual Report 11
<PAGE>
THE SEVEN SEAS SERIES
SMALL CAP FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
REPURCHASE AGREEMENTS: The Fund may engage in repurchase and tri-party
repurchase agreements with several financial institutions whereby the Fund,
through its custodian or third-party custodian, receives delivery of the
underlying securities. The market value of these securities (including
accrued interest) on acquisition date is required to be an amount equal to
at least 102% of the repurchase price. The Fund's Adviser will monitor
repurchase agreements daily to determine that the market value (including
accrued interest) at Fedwire closing time of the underlying securities
remains at least equal to 100% of the repurchase price. The Adviser or
third-party custodian will notify the seller to immediately increase the
collateral on the repurchase agreement to 102% of the repurchase price if
collateral falls below 100%.
DERIVATIVES: To the extent permitted by the investment objective,
restrictions and policies set forth in the Fund's Prospectus and Statement
of Additional Information, the Fund may participate in various
derivative-based transactions. Derivative securities are instruments or
agreements whose value is derived from an underlying security or index. The
Fund's use of derivatives includes exchange-traded futures and options on
futures. These instruments offer unique characteristics and risks that
assist the Fund in meeting its investment objective.
FUTURES: The Fund may utilize futures contracts to a limited extent. The
primary risks associated with the use of futures contracts are an imperfect
correlation between the change in market value of the securities held by
the Fund and the prices of futures contracts, and the possibility of an
illiquid market. 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.
3. SECURITIES TRANSACTIONS
INVESTMENT TRANSACTIONS: For for the six months ended February 29, 1996,
purchases and sales of investment securities, excluding short-term
investments and futures contracts, aggregated to $21,100,508 and
$12,209,402, respectively.
4. RELATED PARTIES
ADVISER: The Investment Company has an investment advisory agreement with
State Street Bank and Trust Company ("The Adviser") under which the Adviser
directs the investments of the Fund in accordance with its investment
objective, policies, and limitations. From the inception date of the Fund
to November 22, 1994, the Fund paid a fee to the Adviser at the annual rate
of .20% of its average daily net assets. Effective November 23, 1994,
pursuant to a shareholder vote, the Fund pays a fee to the Adviser
calculated daily and paid monthly, at an annual rate of .75% of its average
daily net assets. For the six months ended February 29, 1996, the Adviser
voluntarily agreed to reimburse the Fund for all expenses in excess of
1.00%
12 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
SMALL CAP FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
of average daily net assets on an annual basis. The Investment Company has
contracts with the Adviser to provide custody, shareholder servicing and
transfer agent services to the Fund.
ADMINISTRATOR, DISTRIBUTOR AND SHAREHOLDER SERVICING: Frank Russell
Investment Management Company (the "Administrator") serves as administrator
of the Investment Company. The Administrator is also required, pursuant to
the Administration Agreement, to arrange and pay certain promotional and
sales costs of Investment Company shares. Russell Fund Distributors, Inc.
(the "Distributor"), a subsidiary of the Administrator, is the distributor
of the Investment Company shares. The Fund has adopted a distribution plan
pursuant to Rule 12b-1 (the "Plan") under the 1940 Act. Under the Plan, the
Fund may also enter into service agreements with financial institutions,
including the Adviser, State Street Brokerage Services, Inc. ("SSBSI"), a
wholly-owned subsidiary of the Adviser, and Adviser's Metropolitan Division
of Commercial Banking ("Commercial Banking" collectively the "Agents"). The
Commercial Banking service agreement became effective November 8, 1995.
Under these service agreements, the Agents are to provide shareholder
servicing for Investment Company shareholders, including services related
to the purchase and redemption of Investment Company shares.
For these services, the Fund pays fees to the Agents in an amount that per
annum is equal to .025%, .175% and .175% of the average daily value of all
Fund shares held by or for customers of the Adviser, SSBSI and Commercial
Banking, respectively. These fees, in conjunction with other distribution-
related expenses, may not exceed .25% of the average daily value of net
assets on an annual basis, which includes a limit of .20% in shareholder
servicing fees for all providers. Any payments that are required to be made
by the Plan and any service agreement, but could not be made because they
exceed the maximum amount of allowable reimbursement, may be carried
forward for subsequent reimbursement from the Investment Company so long as
the Plan is in effect. The Fund's liability for any such expenses carried
forward shall terminate at the end of two years following the year in which
the expenditure was incurred. The Trustees or a majority of the Fund's
shareholders have the right, however, to terminate the Distribution Plan
and all payments thereunder at any time. The Fund will not be obligated to
reimburse the Distributor for carryover expenses subsequent to the
Distribution Plan's termination or noncontinuance. There were no carryover
expenses as of February 29, 1996.
For shareholder servicing, the Fund incurred expenses of $4,870 and $296
from the Adviser and SSBSI, respectively. The amounts related to
distribution and shareholder servicing fees are included in the
accompanying Statement of Operations.
Pursuant to the Administration Agreement with the Investment Company, the
Administrator supervises all non-portfolio investment aspects of the
Investment Company's operations and provides adequate office space and all
necessary office equipment and services, including telephone service,
utilities, stationery supplies, and similar items. The Investment Company
pays the Administrator the following fees for the services supplied by the
Administrator pursuant to the Administration Agreement: (i) an annual fee,
payable monthly on a pro
Semiannual Report 13
<PAGE>
THE SEVEN SEAS SERIES
SMALL CAP FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
rata basis, based on the following percentages of the average daily net
assets of all domestic funds: $0 up to $500 million - .06%; over $500
million to and including $1 billion - .05%; over $1 billion - .03%; (ii)
less an amount equal to the sum of certain distribution-related expenses
incurred by the Investment Company's Distributor on behalf of the funds (up
to a maximum of 15% of the asset-based fee determined in (i)); (iii)
out-of-pocket expenses; and (iv) start-up costs for new funds.
AFFILIATED BROKERAGE: The Fund placed a portion of its portfolio
transactions with SSBSI, an affiliated broker dealer of the Fund's Adviser.
The commissions paid to SSBSI were $25,495 for the six months ended
February 29, 1996.
BOARD OF TRUSTEES: The Investment Company pays each of its Trustees not
affiliated with the Investment Company a retainer of $44,000 annually,
$1,000 for each of the board meetings attended, an additional $1,000 for
attending the annual audit committee meeting, and reimbursement for
out-of-pocket expenses.
5. DIVIDENDS
On March 1, 1996, the Board of Trustees declared a dividend of $.0189 from
net investment income payable on March 11, 1996, to shareholders of record
on March 4, 1996.
14 Semiannual Report
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
THE SEVEN SEAS SERIES FUND
Two International Place, 35th Floor
Boston, Massachusetts 02110 [LOGO]
(617) 654-6089
- --------------------------------------------------------------------------------
TRUSTEES
Lynn L. Anderson, Chairman
William L. Marshall
Steven J. Mastrovich
Patrick J. Riley
Richard D. Shirk
Bruce D. Taber
Henry W. Todd
OFFICERS
Lynn L. Anderson, President
George W. Weber, Senior Vice President
and Fund Treasurer
J. David Griswold, Vice President
and Secretary
INVESTMENT ADVISER
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
CUSTODIAN, TRANSFER AGENT AND
OFFICE OF SHAREHOLDERS INQUIRIES
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
(800) 64-7SEAS (77327)
DISTRIBUTOR
Russell Fund Distributors, Inc.
Two International Place, 35th Floor
Boston, Massachusetts 02110
(617) 654-6089
ADMINISTRATOR
Frank Russell Investment Management Company
909 A Street
Tacoma, Washington 98402
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
Semiannual Report 15
<PAGE>
SEVEN SEAS INVESTMENT PORTFOLIOS
[LOGO]
SEMIANNUAL REPORT
ACTIVE INTERNATIONAL FUND
FEBRUARY 29, 1996
<PAGE>
THE SEVEN SEAS SERIES FUND-Registered Trademark-
FEBRUARY 29, 1996
(UNAUDITED)
TABLE OF CONTENTS
Page
Active International Fund Financial Statements . . . . . . . . . . . . . 3
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . 14
Fund Management and Service Providers. . . . . . . . . . . . . . . . . . 19
"THE SEVEN SEAS SERIES FUND-Registered Trademark-" IS A REGISTERED TRADEMARK AND
SERVICE MARK OF THE SEVEN SEAS SERIES FUND.
THIS REPORT IS PREPARED FROM THE BOOKS AND RECORDS OF THE FUND AND IT IS
SUBMITTED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. THIS INFORMATION IS FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A
SEVEN SEAS SERIES FUND PROSPECTUS CONTAINING MORE COMPLETE INFORMATION
CONCERNING THE INVESTMENT OBJECTIVE AND OPERATIONS OF THE FUND, CHARGES AND
EXPENSES. THE PROSPECTUS SHOULD BE READ CAREFULLY BEFORE AN INVESTMENT IS MADE.
PERFORMANCE IS HISTORICAL AND ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL
GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN WHEN PURCHASED.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. INTERNATIONAL MARKETS
ENTAIL DIFFERENT RISKS THAN THOSE TYPICALLY ASSOCIATED WITH DOMESTIC MARKETS,
INCLUDING CURRENCY FLUCTUATIONS, POLITICAL AND ECONOMIC INSTABILITY, ACCOUNTING
CHANGES AND FOREIGN TAXATION. SECURITIES MAY BE LESS LIQUID AND MORE VOLATILE.
PLEASE SEE THE PROSPECTUS FOR FURTHER DETAILS. RUSSELL FUND DISTRIBUTORS, INC.,
IS THE DISTRIBUTOR OF THE SEVEN SEAS SERIES FUND.
<PAGE>
THE SEVEN SEAS SERIES
ACTIVE INTERNATIONAL FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
----------- -----------
<S> <C> <C>
COMMON STOCKS - 89.4%
ARGENTINA - 1.5%
Acindar Industria Argentina
de Aceros SA Class B (a) 56,871 $ 34
Alpargatas (a) 78,752 37
Banco de Galicia 9,786 55
Dalmine Siderca SA 62,707 62
Juan Minetti SA 5,000 19
Ledesma 41,805 56
Naviera Perez Companc Class B 11,139 55
Telefonica de Argentina Class B 43,668 114
YPF SA Class D 9,198 180
--------
612
--------
AUSTRIA - 0.7%
Fotex (Regd) (a) 22,000 19
Oester Elektrizita Class A 1,100 72
OMV AG (a) 920 86
Perlmooser Zementwerke AG 970 66
Steyr-Daimler-Puch (a) 3,100 47
--------
290
--------
BRAZIL - 1.7%
Brazil Fund, Inc. 25,600 579
Sider Nacional Cia NPV 1,152,000 31
Telecomunicacoes Brasileiras NPV 1,680,000 71
--------
681
--------
CZECH REPUBLIC - 1.5%
CEZ (a) 6,600 237
Chemopetrol Group AS (a) 1,500 61
Cokoladovny AS (a) 300 31
Inzenyrske a Prumyslove Stavby AS (a) 100 10
SPT Telecom AS (a) 2,800 289
--------
628
--------
FINLAND - 0.8%
America Group Class A (a) 2,200 37
Enso Gutzeit OY Series A 5,200 36
Kesko 3,800 48
Nokia AB Series A (a) 3,700 127
Rautaruukki OY 4,700 32
Repola OY 1,400 28
Unitas Series A (a) 9,700 23
--------
331
--------
FRANCE - 10.4%
Alcatel Alsthom 361 32
Banque Nationale Paris 809 31
Casino Guich-Perr 3,200 111
CGIP 1,369 340
Christian Dior 3,150 379
Cie de St. Gobain 2,898 374
Credit Lyonnais Cert d'Invest. (a) 900 44
Credit National 3,790 297
De Dietrich et Compagnie SA (a) 2,000 107
Eurafrance 735 282
Galeries Lafayette 200 60
Gascogne 1,523 153
Groupe Andre SA (a) 2,150 201
GTM - Entrepose 2,210 142
Guyenne et Gascogne 100 33
IDIA 5,500 224
La Rochette (a) 15,100 103
Peugeot SA 2,150 322
Rhone-Poulenc SA Class A - ADR 1,687 42
Sanofi SA 3,346 232
Societe Eurafrance SA New Rights (a) 735 14
Societe Nationale Elf d'Aquitaine 4,219 291
UFB Locabail (a) 3,500 343
Usinor Sacilor (a) 3,362 52
--------
4,209
--------
</TABLE>
Semiannual Report 3
<PAGE>
THE SEVEN SEAS SERIES
ACTIVE INTERNATIONAL FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
----------- -----------
<S> <C> <C>
GERMANY - 10.3%
Allianz AG Holdings 100 $ 192
Allianz AG Holding 1996 Warrants (a) 50 53
AMB - Aachener & Muenchener
Beteiligung (Regd) 400 267
Bankgesell Berlin 350 95
BASF AG 1,800 450
Bayerische Hypotheken &
Wechsell Bank AG 2,500 64
BHF - Bank AG 5,250 145
Commerzbank AG 900 206
Continental AG (a) 16,700 285
Daimler-Benz AG 200 110
DBV Holding AG (Regd) 550 175
Degussa AG 300 108
Gerresheimer Glas 1,000 186
Holsten Brauere AG 1,000 216
IKB Deutsche Industriebank AG 900 180
Kolbenschmidt AG (a) 1,400 191
RWE AG 1996 Warrants (a) 850 156
Siemens AG 700 399
Thyssen AG (a) 900 172
VEBA AG 2,100 99
Viag AG 800 343
Victoria Holding AG (Regd) 150 108
--------
4,200
--------
HONG KONG - 5.4%
Cathay Pacific Airways 133,000 243
Cheung Kong Holdings, Ltd. 49,000 341
Great Eagle Holdings 69,000 193
Guoco Group, Ltd. 15,000 80
Hong Kong Electric 41,500 141
Hong Kong Realty & Trust Class A 33,000 97
Hong Kong Telecommunications 132,400 259
Jardine International Motor 200,000 277
Lai Sun Garment International 60,000 73
Sun Hung Kai Properties, Ltd. 15,000 134
Wing Lung Bank (a) 31,500 220
Yue Yuen Industrial 586,000 149
--------
2,207
--------
HUNGARY - 0.6%
Danubius Hotel (Regd) (a) 3,323 36
Egis (a) 3,392 115
Fotex (Regd) (a) 27,803 24
Pick Szeged Rt (a) 1,144 55
Skala Coop (a) 1,945 24
--------
254
--------
ITALY - 3.8%
Assicurazioni Generali SPA 4,000 98
Banca Commerciale Italiana 39,000 86
Banco Ambrosiano Veneto
di Risp 43,300 66
Danieli & Co. di Risp 14,000 50
Fiat SPA di Risp 98,000 179
Fidis 54,000 151
I.M.I. 19,000 134
Montefibre di Risp (a) 44,300 24
R.A.S. di Risp 40,500 222
Recordati di Risp (a) 36,000 180
Stet di Risp 50,000 114
Telecom Italia di Risp 152,000 209
Telecom Italia Mobile S.P.A.
- di Risp (a) 20,000 21
--------
1,534
--------
</TABLE>
4 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
ACTIVE INTERNATIONAL FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
----------- -----------
<S> <C> <C>
JAPAN - 35.4%
Aichi Machine Industries (a) 23,000 $ 138
Amada Co., Ltd. 21,000 226
Amada Sonoike Co. 37,000 264
Aoyama Trading Co. (a) 7,000 197
Aplus Co., Ltd. 35,000 197
Asahi Bank 34,000 398
Brother Industries 21,000 117
Bunka Shutter Co. (a) 54,000 378
Chugoku Electric Power 5,700 130
Chuo Trust & Banking 11,000 91
Citizen Watch Co., Ltd. (a) 28,000 219
Dai-Ichi Katei Denki (a) 35,000 153
Daidoh, Ltd. (a) 17,000 131
Daikyo, Inc. 44,000 288
Daishinku Corp. 17,000 175
Daiwa Bank 30,000 203
Fuji Photo Film Co. (a) 11,000 312
Fujita Corp. 51,000 235
Gunze Limited 29,000 170
Hitachi, Ltd. 46,000 464
Hokkaido Takushoku Bank, Ltd. 96,000 237
Hokuriku Electric Power 6,100 140
Ines Corp. (a) 23,000 355
Intec, Inc. 14,000 202
Joshin Denki Co. 12,000 144
Keiyo Bank, Ltd. 6,000 32
Kinseki 6,000 90
Kumagai Gumi Co. 59,000 241
Kyosan Electric Manufacturing Co. 18,000 137
Life Co., Ltd. 20,000 90
Marudai Food Co. 48,000 338
Matsushita Electric Industrial Co., Ltd. 28,000 448
Mitsui Real Estate Sales Co. 14,000 228
Nichiei Construction (a) 19,000 208
Nichimo Co. (a) 12,000 50
Nippon Shinpan Co. 32,000 219
Nippon Valqua Industries (a) 34,000 169
Nissan Motor Co., Ltd. 45,000 349
Nisshinbo Industries, Inc. 22,000 209
Nissho Corp. 15,000 171
Okabe Co. 21,000 179
Orient Corp. (a) 45,000 236
Pioneer Electronics Corp. 13,000 261
Renown, Inc. (a) 105,000 359
Ryosan Co. (a) 9,000 241
Sakura Bank 43,000 466
Sanwa Bank 12,000 220
Sanyo Special Steel Co. 78,000 331
Seino Transportation 14,000 233
Settsu Corp. (a) 109,000 365
Shin Meiwa Industries 24,000 222
Shiseido Co., Ltd. 18,000 204
Sogo Co. (a) 29,000 124
Sumisho Computer Systems Corp. (a) 15,000 184
Sumitomo Realty & Development 42,000 286
Suntelephone Co. 2,000 13
SXL Corp. 12,000 123
Taka Q Co. (a) 21,000 94
Takiron Co., Ltd. 32,000 210
Tanabe Seiyaku Co. 29,000 209
Tokai Bank 31,000 413
Tokimec, Inc. (a) 31,000 155
Toyo Trust & Banking 15,000 135
Toyota Motor Corp. 2,000 43
Uchida Yoko Co. 42,000 286
Yamato Kogyo Co. (a) 12,000 120
Yasuda Trust & Banking 25,000 136
--------
14,391
--------
NETHERLANDS - 0.5%
ABN AMRO Holdings NV 1,123 52
Pirelli Tyre Holding NV (a) 6,618 63
Stad Rotterdam 1,511 47
</TABLE>
Semiannual Report 5
<PAGE>
THE SEVEN SEAS SERIES
ACTIVE INTERNATIONAL FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
----------- -----------
<S> <C> <C>
Van Ommeren (Kon) CVA 1,394 $ 48
--------
210
--------
NORWAY - 2.4%
Aker AS Series B 9,400 147
Bergesen DY AS Series B 1,400 25
Den Norske Creditbank AS 30,700 100
Det Norske Luftsfartsverk AS
Series B 1,300 60
Hafslund Nycomed AS
Series B Free 3,889 104
Kvaerner Industries AS
Series B Free 900 26
Leif Hoegh & Co. AS 1,200 17
Norsk Hydro AS 7,400 316
Norske Skogindustrier AS Class A 3,900 118
Saga Petroleum AS 3,700 44
--------
957
--------
PORTUGAL - 1.4%
Banco Chemical SA 3,900 43
Banco Comercial Portuguese (Regd) 4,300 60
Banif Banco International do Funchal 6,600 63
Corticeira Amorim SGPS 4,600 61
Investimentos Participacoes
e Gestao SA (a) 2,400 42
Jeronimo Martins 700 47
Mague Gestao E Partipacoes 1,700 30
Modelo Contin SGPS 3,200 84
Portucel Industrial SA (a) 2,300 13
Portugal Telecom (a) 2,100 49
Soja de Portugal 4,000 42
Soporcel SA (a) 900 18
--------
552
--------
SINGAPORE - 6.1%
Development Bank (Alien Market) 37,000 527
Far East Levingston 37,000 220
Hong Kong Land Holdings, Ltd. 107,000 232
Keppel Bank 54,000 184
Keppel Bank 2000 Warrants (a) 7,250 10
Keppel Corp. 2,000 20
Mandarin Oriental International, Ltd. 105,000 138
Metro Holdings, Ltd. 56,400 224
Neptune Orient Lines, Ltd. 163,000 188
Singapore Airlines, Ltd.
(Alien Market) 28,000 282
Singapore Land 16,000 121
United Engineers 35,000 75
United Industrial Corp., Ltd. 255,000 281
--------
2,502
--------
SOUTH KOREA - 2.2%
Korea International Trust - IDR 18* 909
--------
909
--------
SPAIN - 0.3%
Banco Central Hispano Americano
SA (Regd) 950 21
Dragados Y Construcciones SA 1,300 18
Repsol SA 400 15
Telefonica de Espana 1,100 18
Union Electrica Fenosa 6,750 38
--------
110
--------
SWITZERLAND - 1.8%
Baloise Holdings (Regd) 10 19
Bobst AG (BR) 20 32
Ciba Geigy AG (BR) 75 67
CS Holdings (Regd) 470 45
Gotthard Bank 55 30
Hero (BR) 55 24
</TABLE>
6 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
ACTIVE INTERNATIONAL FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
----------- -----------
<S> <C> <C>
Nestle SA (Regd) 65 $ 71
Pargesa Holdings SA (BR) 25 30
Rieter Holdings, Ltd. (Regd) (a) 95 28
Roche Holdings Genusscheine AG NPV 20 155
Sandoz AG (Regd) 140 131
Schweiz Bankverein (Regd) 380 71
Winterthur (Regd) 45 30
--------
733
--------
UNITED KINGDOM - 2.6%
Abbey National PLC 5,200 46
ASDA-MFI Group PLC 30,800 49
Associated British Foods PLC 7,600 46
Barclays Bank PLC 1,722 20
British Telecommunications PLC 2,400 14
Burton Group PLC 46,400 95
Cable & Wireless PLC 12,280 84
General Accident PLC 3,500 34
Glaxo Holdings PLC 2,600 36
Greenalls Group PLC 5,400 47
Hammerson Property PLC (a) 7,600 40
Lonrho PLC 15,100 45
Mirror Group News PLC 13,000 43
North West Water PLC 4,800 43
Northumbrian Water PLC 2,500 44
Royal Bank of Scotland Group PLC 5,800 49
Royal Insurance Co., Ltd. PLC 8,217 48
Sevren Trent Water PLC 4,737 45
Smith & Nephew PLC 14,776 42
Welsh Water PLC 3,600 41
Wimpey (George), Ltd. PLC 20,700 45
Yorkshire Water PLC 8,983 86
--------
1,042
--------
TOTAL COMMON STOCKS
(cost $34,324) 36,352
--------
PREFERRED STOCKS - 3.2%
AUSTRIA - 0.8%
Creditanstalt Bankverein 2,120 125
EA Generali AG 500 87
Z Landerbank Bank Austria 2,700 121
--------
333
--------
BRAZIL - 0.4%
Banco Nacional SA NPV 871,000 16
Electrobras Series B NPV 224,000 62
Petroleo Brasileiro SA NPV 255,000 28
Sider Riograndense NPV 765,000 13
Vale do Rio Doce (Cia) NPV 193,000 31
--------
150
--------
GERMANY - 1.8%
Dyckerhoff AG 200 47
RWE AG (a) 8,000 248
Volkswagen AG 1,550 431
--------
726
--------
ITALY - 0.2%
Unipol (PTG) 19,000 91
--------
91
--------
TOTAL PREFERRED STOCKS
(cost $1,257) 1,300
--------
<CAPTION>
PRINCIPAL
AMOUNT
(000)
-----------
<S> <C> <C>
SHORT-TERM INVESTMENTS - 5.7%
GERMANY - 0.3%
Chemical Bank Time Deposit
3.650% due 03/18/96 DM 168 114
--------
</TABLE>
Semiannual Report 7
<PAGE>
THE SEVEN SEAS SERIES
ACTIVE INTERNATIONAL FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
(000) (000)
----------- -----------
<S> <C> <C>
UNITED STATES - 5.4%
Dreyfus Cash Management Plus, Inc.
Money Market Fund (b) $ 695 $ 695
Federal Home Loan Mortgage Corp.
Discount Note
5.330% due 03/01/96 (b)(c) 1,495 1,495
--------
2,190
--------
TOTAL SHORT-TERM INVESTMENTS
(cost $2,305) 2,304
--------
TOTAL INVESTMENTS
(identified cost $37,886)(d) - 98.3% 39,956
OTHER ASSETS AND LIABILITIES,
NET - 1.7% 704
--------
NET ASSETS - 100.0% $40,660
--------
--------
</TABLE>
(a) Nonincome-producing security.
(b) At cost, which approximates market.
(c) Rate noted is yield-to-maturity.
(d) At February 29, 1996, the cost for federal income tax purposes was $37,889
and net unrealized appreciation for all securities was $2,067. This
consisted of aggregate gross unrealized appreciation for all securities in
which there was an excess of market value over tax cost of $3,004 and
aggregate gross unrealized depreciation for all securities in which there
was an excess of tax cost over market value of $937.
* Reflected in units. 1 IDR Unit = 1000 Shares.
The accompanying notes are an integral part of the financial statements.
8 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
ACTIVE INTERNATIONAL FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
% OF MARKET
NET VALUE
INDUSTRY DIVERSIFICATION ASSETS (000)
------------------------ ----------- -----------
<S> <C> <C>
Basic Industries 9.2% $ 3,751
Capital Goods 9.3 3,762
Consumer Basics 5.5 2,243
Consumer Durable Goods 7.5 3,044
Consumer Non-Durables 9.9 4,041
Consumer Services 1.9 758
Energy 3.6 1,472
Finance 23.3 9,492
General Business 2.6 1,058
Miscellaneous 8.9 3,603
Shelter 2.6 1,066
Technology 3.0 1,209
Transportation 1.3 512
Utilities 4.0 1,641
Short-Term Investments 5.7 2,304
-------- --------
Total Investments 98.3 39,956
Other Assets and Liabilities, Net 1.7 704
-------- --------
NET ASSETS 100.0% $40,660
-------- --------
-------- --------
<CAPTION>
% OF MARKET
NET VALUE
GEOGRAPHIC DIVERSIFICATION ASSETS (000)
-------------------------- ----------- -----------
<S> <C> <C>
Europe 39.9% $16,200
Japan 35.4 14,391
Latin America 3.6 1,443
Pacific Basin 13.7 5,618
Short-Term Investments 5.7 2,304
-------- --------
Total Investments 98.3 39,956
Other Assets and Liabilities, Net 1.7 704
-------- --------
NET ASSETS 100.0% $40,660
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 9
<PAGE>
THE SEVEN SEAS SERIES
ACTIVE INTERNATIONAL FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (Unaudited)
<S> <C> <C>
ASSETS
Investments at market (identified cost $37,885,993)(Note 2) . . . . . . . $ 39,955,998
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,291
Foreign currency holdings (identified cost $385,629). . . . . . . . . . . 383,787
Forward foreign currency exchange contracts
(identified cost $5,138,244)(Notes 2 and 5) . . . . . . . . . . . . . . 5,138,244
Receivables:
Dividends and interest. . . . . . . . . . . . . . . . . . . . . . . . . 21,894
Investments sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,028
Fund shares sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . 181,964
Foreign taxes recoverable . . . . . . . . . . . . . . . . . . . . . . . 11,229
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,404
Deferred organization expenses (Note 2) . . . . . . . . . . . . . . . . . 34,361
-------------
45,779,200
LIABILITIES
Payables (Note 4):
Investments purchased . . . . . . . . . . . . . . . . . . $ 100,038
Fund shares redeemed. . . . . . . . . . . . . . . . . . . 5,012
Accrued administrative fees . . . . . . . . . . . . . . . 1,925
Accrued advisory fees . . . . . . . . . . . . . . . . . . 21,871
Accrued custodian fees. . . . . . . . . . . . . . . . . . 18,160
Accrued shareholder servicing fees. . . . . . . . . . . . 871
Accrued transfer agent fees . . . . . . . . . . . . . . . 927
Other accrued expenses. . . . . . . . . . . . . . . . . . 17,295
Forward foreign currency exchange contracts
(cost $5,138,244)(Notes 2 and 5). . . . . . . . . . . . . 4,952,933 5,119,032
----------- -------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,660,168
-------------
-------------
NET ASSETS CONSIST OF:
Accumulated distributions in excess of net investment income. . . . . . . $ (1,346,616)
Accumulated net realized gain (loss). . . . . . . . . . . . . . . . . . . 1,053,152
Unrealized appreciation (depreciation) on:
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,070,005
Foreign currency-related transactions . . . . . . . . . . . . . . . . . . 183,497
Shares of beneficial interest . . . . . . . . . . . . . . . . . . . . . . 3,687
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . 38,696,443
-------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,660,168
-------------
-------------
Net asset value, offering and redemption price per share
($40,660,168 divided by 3,687,391 shares of $.001 par value
shares of beneficial interest outstanding). . . . . . . . . . . . . . . . $11.03
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
ACTIVE INTERNATIONAL FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Six Months ended February 29, 1996 (Unaudited)
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends (net of foreign taxes withheld of $11,469). . . . . . . . . . $ 137,302
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,859
----------
198,161
Expenses (Notes 2 and 4):
Advisory fees . . . . . . . . . . . . . . . . . . . . . . $ 114,709
Administrative fees. . . . . . . . . . . . . . . . . . . . 9,303
Custodian fees . . . . . . . . . . . . . . . . . . . . . . 57,504
Distribution fees. . . . . . . . . . . . . . . . . . . . . 5,706
Professional fees. . . . . . . . . . . . . . . . . . . . . 14,990
Registration fees. . . . . . . . . . . . . . . . . . . . . 13,403
Shareholder servicing fees . . . . . . . . . . . . . . . . 3,910
Transfer agent fees. . . . . . . . . . . . . . . . . . . . 1,497
Trustee fees . . . . . . . . . . . . . . . . . . . . . . . 964
Amortization of deferred organization expenses . . . . . . 5,391
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . 4,598
---------
Expenses before waivers. . . . . . . . . . . . . . . . . . 231,975
Expenses waived by Adviser . . . . . . . . . . . . . . . . (79,030) 152,945
---------- ----------
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . 45,216
----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (Notes 2 and 3)
Net realized gain (loss) from:
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (42,611)
Foreign currency-related transactions. . . . . . . . . . . . . . . . . . 1,104,871
Net change in unrealized appreciation or depreciation of:
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,947,968
Foreign currency-related transactions. . . . . . . . . . . . . . . . . . (774,216)
----------
Net gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . 2,236,012
----------
Net increase (decrease) in net assets resulting from operations. . . . . . $2,281,228
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 11
<PAGE>
THE SEVEN SEAS SERIES
ACTIVE INTERNATIONAL FUND
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE PERIOD
MONTHS ENDED MARCH 7, 1995++
FEBRUARY 29, 1996 TO
(UNAUDITED) AUGUST 31, 1995
------------------ ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income . . . . . . . . . . . . . . . . . . . . . $ 45,216 $ 69,067
Net realized gain (loss) from:
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . (42,611) (9,108)
Foreign currency-related transactions. . . . . . . . . . . . . 1,104,871 (21,718)
Net change in unrealized appreciation or depreciation of:
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 1,947,968 122,037
Foreign currency-related transactions. . . . . . . . . . . . . (774,216) 957,713
------------------ ---------------
Net increase (decrease) in net assets resulting from operations. . 2,281,228 1,117,991
Distributions to shareholders:
Net investment income. . . . . . . . . . . . . . . . . . . . . . (95,026) --
In excess of net investment income . . . . . . . . . . . . . . . (1,346,616) --
Increase (decrease) in net assets from Fund share transactions . . 14,635,080 24,067,511
------------------ ---------------
INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . . 15,474,666 25,185,502
Net assets at beginning of period. . . . . . . . . . . . . . . . . 25,185,502 --
------------------ ---------------
NET ASSETS AT END OF PERIOD
(including accumulated distributions in excess of net
investment income of $1,346,616 and undistributed net
investment income of $49,810, respectively). . . . . . . . . . . $ 40,660,168 $ 25,185,502
------------------ ---------------
------------------ ---------------
</TABLE>
<TABLE>
<CAPTION>
FUND SHARE TRANSACTIONS FOR THE SIX MONTHS ENDED FOR THE PERIOD MARCH 7, 1995++
FEBRUARY 29, 1996 (UNAUDITED) to AUGUST 31, 1995
----------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
Fund shares sold . . . . . . . . . . . 1,648,444 $17,656,353 2,340,535 $24,359,411
Fund shares issued to shareholders
in reinvestments of distributions. . 129,404 1,336,576 -- --
Fund shares redeemed . . . . . . . . . (404,027) (4,357,849) (26,965) (291,900)
-------------- ------------- ------------ -----------
Net increase (decrease). . . . . . . . 1,373,821 $14,635,080 2,313,570 $24,067,511
-------------- ------------- ------------ -----------
-------------- ------------- ------------ -----------
</TABLE>
++ Commencement of operations.
The accompanying notes are an integral part of the financial statements.
12 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
ACTIVE INTERNATIONAL FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table includes selected data for
a share outstanding throughout each fiscal
year or period and other performance information
derived from the financial statements.
1996+ 1995++
----------- -----------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . . $ 10.89 $ 10.00
----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . . . .48(d) .03
Net realized and unrealized gain (loss) on investments . . .22 .86
----------- -----------
Total Income From Investment Operations. . . . . . . . . . .70 .89
----------- -----------
LESS DISTRIBUTIONS:
Net investment income. . . . . . . . . . . . . . . . . . . (.04) --
In excess of net investment income . . . . . . . . . . . . (.52) --
----------- -----------
Total Distributions. . . . . . . . . . . . . . . . . . . . (.56) --
----------- -----------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . . . $ 11.03 $ 10.89
----------- -----------
----------- -----------
TOTAL RETURN (%)(a). . . . . . . . . . . . . . . . . . . . . 6.90 8.90
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average daily net assets
(b)(c) . . . . . . . . . . . . . . . . . . . . . . . . . 1.00 1.79
Operating expenses, gross, to average daily net assets
(b)(c) . . . . . . . . . . . . . . . . . . . . . . . . . 1.51 2.56
Net investment income to average daily net assets (b). . . .29 1.11
Portfolio turnover (b) . . . . . . . . . . . . . . . . . . 24.18 7.17
Net assets, end of period ($000 omitted) . . . . . . . . . 40,660 25,186
Per share amount of fees waived ($ omitted)(c) . . . . . . .0273(d) .0207
Average commission rate paid per share of security
($ omitted)(e) . . . . . . . . . . . . . . . . . . . . . .0111 N/A
</TABLE>
+ For the six months ended February 29, 1996 (Unaudited).
++ For the period March 7, 1995 (commencement of operations) to August 31,
1995.
(a) Periods less than one year are not annualized.
(b) Annualized.
(c) See Note 4 for current period amounts.
(d) Average month-end shares outstanding for the period were used for this
calculation.
(e) In certain foreign markets the relationship between the translated U.S.
dollar price per share and commission paid per share may vary from that of
domestic markets.
Semiannual Report 13
<PAGE>
THE SEVEN SEAS SERIES
ACTIVE INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996 (Unaudited)
1. ORGANIZATION
The Seven Seas Series Fund (the "Investment Company") is a series mutual
fund, currently comprising 14 investment portfolios which are in operation
as of February 29, 1996. These financial statements report on one
portfolio, the Seven Seas Series Active International Fund (the "Fund").
The Investment Company is a registered and diversified open-end investment
company, as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), that was organized as a Massachusetts business trust on
October 3, 1987 and operates under a First Amended and Restated Master
Trust Agreement, dated October 13, 1993, as amended. The Investment
Company's master trust agreement permits the Board of Trustees to issue an
unlimited number of full and fractional shares of beneficial interest at a
$.001 par value.
2. SIGNIFICANT ACCOUNTING POLICIES
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management
estimates. The following is a summary of the significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements.
SECURITY VALUATION: International equity and fixed-income securities traded
on a national securities exchange are valued on the basis of the last sale
price. International securities traded over the counter are valued on the
basis of the mean of bid prices. In the absence of a last sale or mean bid
price, respectively, such securities may be valued on the basis of prices
provided by a pricing service if those prices are believed to reflect the
fair market value of such securities.
The Fund may value certain securities for which market quotations are not
readily available at "fair value," as determined in good faith pursuant to
procedures established by the Board of Trustees.
SECURITIES TRANSACTIONS: Securities transactions are recorded on the trade
date basis. Realized gains and losses from the securities transactions are
recorded on the basis of identified cost.
INVESTMENT INCOME: Dividend income is recorded on the ex-dividend date and
interest income is recorded on the accrual basis.
FEDERAL INCOME TAXES: As the Investment Company is a Massachusetts
business trust, each sub-trust is a separate corporate taxpayer and
determines its net investment income and capital gains (or losses) and the
amounts to be distributed to each fund's shareholders without regard to the
income and capital gains (or losses) of the other funds.
It is the Fund's intention to qualify as a regulated investment company and
distribute all of its taxable income. The Fund, accordingly, paid no
federal income taxes and no federal income tax provision was required. As
permitted by tax regulations, the Fund intends to defer a net realized
capital loss of $30,278 incurred from March 7, 1995 to August 31, 1995 and
treat it as arising in fiscal year 1996.
14 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
ACTIVE INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Income dividends and capital
gain distributions, if any, are recorded on the ex-dividend date. The Fund
declares and pays dividends annually. Capital gain distributions, if any,
are generally declared and paid annually. An additional distribution may be
paid by the Fund to avoid imposition of federal income tax on any remaining
undistributed net investment income and capital gains.
The timing and characterization of certain income and capital gain
distributions are determined in accordance with federal tax regulations
which may differ from generally accepted accounting principles ("GAAP"). As
a result, net investment income and net realized gain (or loss) on
investment and foreign currency-related transactions for a reporting period
may differ significantly from distributions during such period. The
differences between tax regulations and GAAP primarily relate to
investments in options, futures, forward contracts, passive foreign
investment companies, foreign-denominated investments, and certain
securities sold at a loss. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting
its net asset value.
EXPENSES: Expenses such as advisory, custodian, transfer agent,
shareholder servicing, printing, and registration fees are charged directly
to the individual funds, while indirect expenses, such as administrative,
insurance, and professional fees are generally allocated among all funds
principally based on their relative net assets.
DEFERRED ORGANIZATION EXPENSES: The Fund has incurred expenses in
connection with its organization and initial registration. These costs have
been deferred and are being amortized over 60 months on a straight-line
basis.
FOREIGN CURRENCY TRANSLATIONS: The books and records of the Fund are
maintained in US dollars. Foreign currency amounts and transactions of the
Fund are translated into US dollars on the following basis:
(a) Market value of investment securities, other assets and liabilities at
the closing rate of exchange on the valuation date.
(b) Purchases and sales of investment securities and income at the closing
rate of exchange prevailing on the respective trade dates of such
transactions.
Reported net realized gains or losses from foreign currency-related
transactions arise from sales and maturities of short-term securities;
sales of foreign currencies; currency gains or losses realized between the
trade and settlement dates on securities transactions; the difference
between the amounts of dividends, interest, and foreign withholding taxes
recorded on the Fund's books; and the US dollar equivalent of the amounts
actually received or paid. Net unrealized gains or losses from foreign
currency-related transactions arise from changes in the value of assets and
liabilities, other than investments in securities, at fiscal year-end,
resulting from changes in the exchange rates.
Semiannual Report 15
<PAGE>
THE SEVEN SEAS SERIES
ACTIVE INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
It is not practical to isolate that portion of the results of operations of
the Fund that arises as a result of changes in exchange rates from that
portion that arises from changes in market prices of investments during the
year. Such fluctuations are included with the net realized and unrealized
gain or loss from investments. However, for federal income tax purposes the
Fund does isolate the effects of changes in foreign exchange rates from the
fluctuations arising from changes in market prices for realized gain (or
loss) on debt obligations.
REPURCHASE AGREEMENTS: The Fund may engage in repurchase and tri-party
repurchase agreements with several financial institutions whereby the Fund,
through its custodian or third-party custodian, receives delivery of the
underlying securities. The market value of these securities (including
accrued interest) on acquisition date is required to be an amount equal to
at least 102% of the repurchase price. The Fund's Adviser will monitor
repurchase agreements daily to determine that the market value (including
accrued interest) at Fedwire closing time of the underlying securities
remains at least equal to 100% of the repurchase price. The Adviser or
third-party custodian will notify the seller to immediately increase the
collateral on the repurchase agreement to 102% of the repurchase price if
collateral falls below 100%.
INVESTMENT IN INTERNATIONAL MARKETS: Investing in international markets
may involve special risks and considerations not typically associated with
investing in the United States. These risks include revaluation of
currencies, future adverse political and economic developments and
liquidity concerns resulting from thinner markets. Moreover, securities
issued in these markets may be less liquid and their prices more volatile
than those of comparable securities in the United States. The Prospectus
contains further information and details regarding these risks.
3. SECURITIES TRANSACTIONS
INVESTMENT TRANSACTIONS: For the for the six months ended February 29,
1996, purchases and sales of investment securities, excluding short-term
investments, aggregated to $18,683,780 and $3,424,362, respectively.
4. RELATED PARTIES
ADVISER: The Investment Company has an investment advisory agreement with
State Street Bank and Trust Company (the "Adviser") under which the Adviser
directs the investments of the Fund in accordance with its investment
objective, policies, and limitations. For these services, the Fund pays a
fee to the Adviser, calculated daily and paid monthly, at the annual rate
of .75% of its average daily net assets. For the six months ended February
29, 1996, the Adviser voluntarily agreed to waive up to the full amount of
its advisory fee to the extent that total expenses exceeded 1.00% on an
annual basis. The Investment Company has contracts with the adviser to
provide custody, shareholder servicing and transfer agent services to the
Fund.
16 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
ACTIVE INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
ADMINISTRATOR, DISTRIBUTOR AND SHAREHOLDER SERVICING: Frank Russell
Investment Management Company (the "Administrator") serves as administrator
of the Investment Company. The Administrator is also required, pursuant to
the Administration Agreement, to arrange and pay certain promotional and
sales costs of Investment Company shares. Russell Fund Distributors, Inc.
(the "Distributor"), a subsidiary of the Administrator, is the distributor
of the Investment Company shares. The Fund has adopted a distribution plan
pursuant to Rule 12b-1 (the "Plan") under the 1940 Act. Under the Plan, the
Fund may also enter into service agreements with financial institutions,
including the Adviser, State Street Brokerage Services, Inc. ("SSBSI"), a
wholly-owned subsidiary of the Adviser, and Adviser's Metropolitan Division
of Commercial Banking ("Commercial Banking" collectively the "Agents"). The
Commercial Banking service agreement became effective November 8, 1995.
Under these service agreements, the Agents are to provide shareholder
servicing for Investment Company shareholders, including services related
to the purchase and redemption of Investment Company shares.
For these services, the Fund pays fees to the Agents in an amount that per
annum is equal to .025%, .175% and .175% of the average daily value of all
Fund shares held by or for customers of the Adviser, SSBSI and Commercial
Banking, respectively. These fees, in conjunction with other
distribution-related expenses, may not exceed .25% of the average daily
value of net assets on an annual basis, which includes a limit of .20% in
shareholder servicing fees for all providers. Any payments that are
required to be made by the Plan and any service agreement, but could not be
made because they exceed the maximum amount of allowable reimbursement, may
be carried forward for subsequent reimbursement from the Investment Company
so long as the Plan is in effect. The Fund's liability for any such
expenses carried forward shall terminate at the end of two years following
the year in which the expenditure was incurred. The Trustees or a majority
of the Fund's shareholders have the right, however, to terminate the
Distribution Plan and all payments thereunder at any time. The Fund will
not be obligated to reimburse the Distributor for carryover expenses
subsequent to the Distribution Plan's termination or noncontinuance. There
were no carryover expenses as of February 29, 1996.
For shareholder servicing, the Fund incurred expenses of $3,824 and $86
from the Adviser and SSBSI, respectively. The amounts related to
distribution and shareholder servicing fees are included in the
accompanying Statement of Operations.
Pursuant to the Administration Agreement with the Investment Company, the
Administrator supervises all non-portfolio investment aspects of the
Investment Company's operations and provides adequate office space and all
necessary office equipment and services, including telephone service,
utilities, stationery supplies, and similar items. The Investment Company
pays the Administrator the following fees for the services supplied by the
Administrator pursuant to the Administration Agreement: (i) an annual fee,
payable monthly on a pro rata basis, based on the following percentages of
the average daily net assets of the Fund: $0 up to
Semiannual Report 17
<PAGE>
THE SEVEN SEAS SERIES
ACTIVE INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
$500 million - .07%; over $500 million to and including $1 billion - .06%;
over $1 billion up to $1.5 billion - .04%; over $1.5 billion - .03%; (ii)
less an amount equal to the sum of certain distribution-related expenses
incurred by the Investment Company's Distributor on behalf of the Fund (up
to a maximum of 15% of the asset-based fee determined in (i)); (iii)
out-of-pocket expenses; and (iv) start-up costs for new funds.
BOARD OF TRUSTEES: The Investment Company pays each of its Trustees not
affiliated with the Investment Company a retainer of $44,000 annually,
$1,000 for each of the board meetings attended, an additional $1,000 for
attending the annual audit committee meeting, and reimbursement for
out-of-pocket expenses.
5. COMMITMENTS
As of February 29, 1996, the Fund has entered into various forward foreign
currency exchange contracts which contractually obligate the Fund to
deliver or receive currencies at specified future dates. Open contracts
were as follows:
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
UNREALIZED
APPRECIATION
CONTRACTS TO DELIVER IN EXCHANGE FOR SETTLEMENT DATE (DEPRECIATION)
- -------------------- --------------- --------------- --------------
JPY 520,000,000 USD 4,952,933 03/08/96 $ 185,311
The related net unrealized appreciation (depreciation) is reflected in the
Fund's financial statements.
18 Semiannual Report
<PAGE>
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<PAGE>
(This page has been left blank intentionally.)
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
THE SEVEN SEAS SERIES FUND
Two International Place, 35th Floor [LOGO]
Boston, Massachusetts 02110
(617) 654-6089
- --------------------------------------------------------------------------------
TRUSTEES
Lynn L. Anderson, Chairman
William L. Marshall
Steven J. Mastrovich
Patrick J. Riley
Richard D. Shirk
Bruce D. Taber
Henry W. Todd
OFFICERS
Lynn L. Anderson, President
George W. Weber, Senior Vice President
and Treasurer
J. David Griswold, Vice President
and Secretary
INVESTMENT ADVISER
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
CUSTODIAN, TRANSFER AGENT AND
OFFICE OF SHAREHOLDERS INQUIRES
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
(800) 64-7SEAS (77327)
DISTRIBUTOR
Russell Fund Distributors, Inc.
Two International Place, 35th Floor
Boston, Massachusetts 02110
(617) 654-6089
ADMINISTRATOR
Frank Russell Investment Management Company
909 A Street
Tacoma, Washington 98402
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
Semiannual Report 19
<PAGE>
SEVEN SEAS INVESTMENT PORTFOLIOS
[LOGO]
SEMIANNUAL REPORT
YIELD PLUS FUND
FEBRUARY 29, 1996
<PAGE>
THE SEVEN SEAS SERIES FUND-Registered Trademark-
FEBRUARY 29, 1996
(UNAUDITED)
TABLE OF CONTENTS
Page
Yield Plus Fund Financial Statements . . . . . . . . . . . . . . . . . . 3
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . 12
Fund Management and Service Providers. . . . . . . . . . . . . . . . . . 18
"THE SEVEN SEAS SERIES FUND-Registered Trademark-" IS A REGISTERED TRADEMARK AND
SERVICE MARK OF THE SEVEN SEAS SERIES FUND.
THIS REPORT IS PREPARED FROM THE BOOKS AND RECORDS OF THE FUND AND IT IS
SUBMITTED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. THIS INFORMATION IS FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A
SEVEN SEAS SERIES FUND PROSPECTUS CONTAINING MORE COMPLETE INFORMATION
CONCERNING THE INVESTMENT OBJECTIVE AND OPERATIONS OF THE FUND, CHARGES AND
EXPENSES. THE PROSPECTUS SHOULD BE READ CAREFULLY BEFORE AN INVESTMENT IS MADE.
PERFORMANCE IS HISTORICAL AND ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL
GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN WHEN PURCHASED.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. RUSSELL FUND DISTRIBUTORS,
INC., IS THE DISTRIBUTOR OF THE SEVEN SEAS SERIES FUND.
<PAGE>
THE SEVEN SEAS SERIES
YIELD PLUS FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
February 29, 1996 (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
(000) (000)
----------- -----------
<S> <C> <C>
LONG-TERM INVESTMENTS - 95.0%
ASSET-BACKED SECURITIES - 48.1%
Advanta Credit Card Master Trust
Series 1993-4 Class A
5.563% due 12/31/00 (b) $ 5,000 $ 5,013
Series 1994-B Class A
5.593% due 10/01/01 (b) 23,375 23,463
Series 1995-F Class A2
5.503% due 08/01/03 (b) 15,000 15,000
Advanta Credit Card Master Trust II
Series 1995-D Class A1
5.503% due 02/01/04 (b) 25,000 25,000
Carco Auto Loan Master Trust
Series 1992-2 Class A
5.663% due 09/15/99 (b) 12,150 12,192
Series 1993-1 Class A
5.593% due 01/18/00 (b) 10,000 10,031
Series 1995-1 Class A
5.473% due 06/15/00 (b) 35,000 35,033
Case Equipment Loan Trust
Series 1993-B1 Class A
4.300% due 05/15/99 1,845 1,824
Series 1994-A Class A2
4.650% due 08/15/99 7,036 6,987
Series 1996-A Class A2
5.500% due 02/15/03 7,500 7,454
Deere, (John) Owner Trust
Series 1993-A Class A2
5.813% due 04/29/00 (b) 10,346 10,352
First Chicago Master Trust II
Series 1994-J Class A
5.533% due 01/16/01 (b) 43,000 43,094
Ford Credit Auto Loan Master Trust
Series 1992-1 Class A
6.875% due 01/15/99 48,695 49,212
Series 1992-2 Class A
7.375% due 04/15/99 13,300 13,545
Household Affinity Credit Card
Master Trust I
Series 1994-1 Class A
5.463% due 05/15/01 (b) 57,400 57,400
Main Place Funding Corp.
Series 1995-1
5.523% due 07/17/98 (b) 25,000 25,016
MBNA Master Credit Card Trust
Series 1994-D Class A
5.510% due 03/15/00 (b) 12,000 12,015
MBNA Master Credit Card Trust II
Series 1995-I Class A
5.483% due 03/15/03 (b) 35,000 35,000
Series 1994-2 Class A
5.523% due 06/15/01 (b) 49,000 49,092
Nationsbank Auto Grantor Trust
Series 1995-A Class A
5.850% due 06/15/02 6,706 6,714
Premier Auto Trust
Series 1993-6 Class A2
4.650% due 11/02/99 7,996 7,911
Series 1993-6 Class A3
5.638% due 11/02/99 (b) 19,106 19,118
Series 1994-3 Class A3
5.563% due 04/02/97 (b) 8,510 8,510
Series 1994-4 Class A3
6.200% due 10/27/97 11,372 11,400
Series 1995-1 Class A3
7.700% due 01/04/98 23,000 23,208
Series 1995-4 Class A2
5.445% due 04/06/98 (b) 30,000 29,990
Standard Credit Card Master Trust I
Series 1995-11 Class A
5.340% due 11/15/00 (b) 34,000 34,000
Series 1995-5 Class A
6.470% due 05/08/00 (b) 21,000 21,013
Superior Wholesale Inventory
Financing Trust
Series 1995-A Class A
5.443% due 08/15/00 (b) 67,400 67,420
---------
666,007
---------
</TABLE>
Semiannual Report 3
<PAGE>
THE SEVEN SEAS SERIES
YIELD PLUS FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
(000) (000)
----------- -----------
<S> <C> <C>
CORPORATE BONDS AND
NOTES - 40.5%
Associates Corp. of North America
7.750% due 11/01/97 $ 5,020 $ 5,160
8.125% due 01/15/98 20,000 20,809
Associates Corp.
of North America (MTN)
6.800% due 06/02/97 20,000 20,259
Barnett Banks, Inc. (MTN)
6.105% due 06/01/96 (b) 6,000 5,999
Beneficial Corp. (MTN)
6.030% due 06/17/97 17,000 17,065
Caterpillar Financial Services (MTN)
5.501% due 05/09/97 (b) 10,000 10,001
CIT Group Holdings, Inc.
5.625% due 04/01/98 10,000 9,938
CIT Group Holdings, Inc. (MTN)
5.240% due 05/19/97 (b) 5,650 5,636
Comerica Bank (MTN)
6.875% due 04/18/97 22,400 22,710
Commercial Credit Group, Inc.
5.500% due 05/15/98 5,000 4,946
CoreStates Capital Corp. (MTN)
5.293% due 09/17/97 (b) 15,000 14,966
Dean Witter Discover & Co. (MTN)
5.493% due 03/03/97 (b) 10,000 10,015
5.513% due 09/29/97 (b) 20,000 19,987
Discover Credit Corp.
Series III (MTN)
7.810% due 03/18/97 10,000 10,195
First Bank Systems, Inc. (MTN)
5.363% due 03/19/97 (b) 6,000 5,998
First Chicago Corp. (MTN)
5.923% due 03/31/97 (b) 30,000 30,017
First Union Corp.
5.457% due 02/24/98 (b) 25,000 24,950
Ford Motor Credit Co.
5.727% due 10/21/97 (b) 10,000 10,001
Ford Motor Credit Co. (MTN)
5.606% due 11/01/97 (b) 40,000 40,060
6.580% due 02/03/98 (b) 5,000 5,013
6.420% due 02/04/98 10,000 10,105
5.500% due 02/22/99 (b) 5,000 4,994
General Electric Capital Corp. (MTN)
5.570% due 05/02/97 (b) 10,000 9,995
5.580% due 07/07/97 (b) 15,000 15,009
5.240% due 08/11/97 (b) 4,000 3,995
General Motors Acceptance Corp.
7.750% due 04/15/97 18,815 19,210
General Motors Acceptance
Corp. (MTN)
7.875% due 02/28/97 5,400 5,527
7.125% due 03/27/97 20,000 20,318
General Motors Corp.
9.750% due 05/15/99 10,000 10,073
Household Finance Co. (MTN)
5.290% due 08/04/97 (b) 5,000 4,975
5.475% due 08/11/97 (b) 30,000 29,984
7.910% due 02/06/98 10,000 10,354
5.525% due 07/06/98 (b) 10,000 9,997
Household International, Inc.
5.438% due 05/27/97 6,000 5,999
Merrill Lynch & Co., Inc. (MTN)
5.513% due 02/05/99 (b) 15,000 14,993
Merrill Lynch & Co. Inc. (MTN)
Series B
5.746% due 01/22/99 (b) 15,000 14,994
Morgan (J. P.) & Co., Inc. (MTN)
5.350% due 03/21/97 (b) 10,000 10,003
Nationsbank Corp. (MTN)
5.350% due 08/25/98 (b) 37,500 37,500
5.470% due 11/18/99 (b) 5,000 4,986
Sears Roebuck & Co. (MTN)
6.750% due 05/27/97 23,900 24,180
---------
560,916
---------
</TABLE>
4 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
YIELD PLUS FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
(000) (000)
----------- -----------
<S> <C> <C>
EURODOLLAR BONDS - 1.3%
Associates Corp. of North America
10.500% due 03/12/96 $ 3,000 $ 3,004
BankAmerica Corp.
5.656% due 02/19/97 (b) 5,000 5,015
PepsiCo, Inc. (MTN)
7.750% due 02/28/97 5,000 5,103
8.000% due 12/28/97 5,000 5,204
---------
18,326
---------
MORTGAGE-BACKED SECURITIES - 0.9%
Federal Home Loan Mortgage Corp.
Participation Certificate Groups
# G5-0215 8.000% due 08/01/97 3,477 3,469
# G5-0236 5.500% due 10/01/98 9,022 8,912
---------
12,381
---------
UNITED STATES GOVERNMENT
AGENCIES - 4.2%
Federal Farm Credit Bank (MTN)
5.910% due 06/24/96 5,000 5,000
Federal National Mortgage Association
8.700% due 06/11/01 18,000 18,172
Federal National Mortgage Association
Principal Only Strip
Zero Coupon due 10/10/01 15,000 14,494
Student Loan Marketing Association
Series 1995-1 Class A1
5.565% due 04/26/04 (b) 4,700 4,698
Series 1996-1 Class A1
7.000% due 07/26/04 (b) 15,000 15,000
---------
57,364
---------
UNITED STATES GOVERNMENT
TREASURIES - 0.0%
United States Treasury Note
5.625% due 06/30/97 500 502
---------
502
---------
TOTAL LONG-TERM INVESTMENTS
(cost $1,312,855) 1,315,496
---------
OPTIONS - 0.0%
Eurodollar Futures Mar 94.5 Put 50* 1
---------
TOTAL OPTIONS
(cost $3) 1
---------
SHORT-TERM INVESTMENTS - 3.0%
Society National Bank
5.500% due 04/03/96 (a)(e) 40,000 40,000
United States Treasury Bills
5.535% due 07/25/96 (a)(c) 1,000 980
---------
TOTAL SHORT-TERM INVESTMENTS
(cost $40,978) 40,980
---------
REPURCHASE AGREEMENTS - 1.4%
Agreement with HSBC of $19,166
acquired 02/29/96 at 5.440%
to be repurchased at $19,169
on 03/01/96 collateralized by:
$19,080 United States
Treasury Note, 5.460% due
01/31/97 valued at $19,561 19,166
---------
TOTAL REPURCHASE AGREEMENTS
(cost $19,166) 19,166
---------
</TABLE>
Semiannual Report 5
<PAGE>
THE SEVEN SEAS SERIES
YIELD PLUS FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
MARKET
VALUE
(000)
------------
<S> <C>
TOTAL INVESTMENTS AND
REPURCHASE AGREEMENTS
(identified cost $1,373,002)(d) - 99.4% $ 1,375,643
OTHER ASSETS AND LIABILITIES
NET - 0.6% 9,298
------------
NET ASSETS - 100.0% $ 1,384,941
------------
------------
</TABLE>
(a) Rate noted is yield-to-maturity.
(b) Adjustable or floating-rate securities.
(c) Collateral for open futures contracts.
(d) At February 29, 1996, the cost for federal income
tax purposes was the same as shown above and net
unrealized appreciation for all securities was $2,641.
This consisted of aggregate gross unrealized
appreciation for all securities in which there was an
excess of market value over tax cost of $3,368 and
aggregate gross unrealized depreciation for all securities
in which there was an excess of tax cost over market
value of $727.
(e) At cost, which appoximates market.
(MTN) represents Medium Term Note.
* Number of contracts.
The accompanying notes are an integral part of the financial statements.
6 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
YIELD PLUS FUND
FUTURES CONTRACTS February 29, 1996 (Unaudited)
<TABLE>
<CAPTION>
UNREALIZED
NUMBER APPRECIATION
OF (DEPRECIATION)
CONTRACTS (000)
---------- --------------
<S> <C> <C>
FUTURES CONTRACTS
SOLD SHORT (NOTES 2 AND 3)
Eurodollar Financial Futures Contract
Expiration date 03/96 8 $ 1
Eurodollar Financial Futures Contract
Expiration date 06/96 182 135
Eurodollar Financial Futures Contract
Expiration date 09/96 177 55
Eurodollar Financial Futures Contract
Expiration date 12/96 159 146
Eurodollar Financial Futures Contract
Expiration date 03/97 85 (167)
Eurodollar Financial Futures Contract
Expiration date 09/97 15 22
Eurodollar Financial Futures Contract
Expiration date 12/97 15 22
------
214
------
FUTURES CONTRACTS
PURCHASED (NOTES 2 AND 3)
Eurodollar Financial Futures Contract
Expiration date 06/97 165 (245)
------
(245)
------
Total Unrealized Appreciation (Depreciation)
on Open Futures Contracts (*) $ (31)
------
------
</TABLE>
(*) At February 29, 1996, United States Treasury Bills
valued at $980 with a par of $1,000 were held as
collateral by the custodian in connection with open
futures contracts of the Fund.
The accompanying notes are an integral part of the financial statements.
Semiannual Report 7
<PAGE>
THE SEVEN SEAS SERIES
YIELD PLUS FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (Unaudited)
<S> <C> <C>
ASSETS
Investments at market (identified cost $1,353,835,683)(Note 2) . . . . . . $1,356,476,972
Repurchase agreements (cost $19,166,000)(Note 2) . . . . . . . . . . . . . 19,166,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,068
Receivables:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,810,398
Investments sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,146,946
Fund shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,995
Daily variation margin on futures contracts (Notes 2 and 3). . . . . . . 4,650
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,054
Deferred organization expenses (Note 2). . . . . . . . . . . . . . . . . . 14,464
--------------
1,400,828,547
LIABILITIES
Payables (Note 4):
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . $ 30,918
Investments purchased. . . . . . . . . . . . . . . . . . . 15,000,000
Accrued administrative fees. . . . . . . . . . . . . . . . 31,965
Accrued advisory fees. . . . . . . . . . . . . . . . . . . 572,613
Accrued custodian fees . . . . . . . . . . . . . . . . . . 44,403
Accrued distribution fees. . . . . . . . . . . . . . . . . 21,330
Accrued shareholder servicing fees . . . . . . . . . . . . 28,372
Accrued transfer agent fees. . . . . . . . . . . . . . . . 8,129
Other accrued expenses . . . . . . . . . . . . . . . . . . 149,688 15,887,418
------------ --------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . $1,384,941,129
--------------
--------------
NET ASSETS CONSIST OF:
Accumulated distributions in excess of net investment income $ (28,290)
Accumulated net realized gain (loss) . . . . . . . . . . . . (3,840,989)
Unrealized appreciation (depreciation) on:
Investments. . . . . . . . . . . . . . . . . . . . . . . . 2,641,289
Futures contracts. . . . . . . . . . . . . . . . . . . . . (30,900)
Shares of beneficial interest. . . . . . . . . . . . . . . . 138,435
Additional paid-in capital . . . . . . . . . . . . . . . . . 1,386,061,584
--------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . $1,384,941,129
--------------
--------------
Net asset value, offering and redemption price per share
($1,384,941,129 divided by 138,434,622 shares of $.001
par value shares of beneficial interest outstanding) . . . . $10.00
--------------
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
YIELD PLUS FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 1996 (Unaudited)
<S> <C> <C>
INVESTMENT INCOME
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 43,781,000
Expenses (Notes 2 and 4):
Advisory fees. . . . . . . . . . . . . . . . . . . . . . . . $ 1,788,467
Administrative fees. . . . . . . . . . . . . . . . . . . . . 214,613
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . 140,411
Distribution fees. . . . . . . . . . . . . . . . . . . . . . 142,915
Professional fees. . . . . . . . . . . . . . . . . . . . . . 26,213
Registration fees. . . . . . . . . . . . . . . . . . . . . . 16,597
Shareholder servicing fees . . . . . . . . . . . . . . . . . 172,940
Transfer agent fees. . . . . . . . . . . . . . . . . . . . . 51,226
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . 37,252
Amortization of deferred organization expenses . . . . . . . 4,261
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . 150,629 2,745,524
------------ ------------
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,035,476
-------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (Notes 2 and 3)
Net realized gain (loss) from:,
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,675,749
Futures contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,158,860)
Options written. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,400
Net change in unrealized appreciation or depreciation of:
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274,372
Futures contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 952,875
Options written. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24,400)
-------------
Net gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . . 759,136
-------------
Net increase (decrease) in net assets resulting from
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 41,794,612
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 9
<PAGE>
THE SEVEN SEAS SERIES
YIELD PLUS FUND
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE
MONTHS ENDED FISCAL YEAR
FEBRUARY 29, 1996 ENDED
(UNAUDITED) AUGUST 31, 1995
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . $ 41,035,476 $ 73,436,453
Net realized gain (loss) from:
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,675,749 (1,862,940)
Futures contracts. . . . . . . . . . . . . . . . . . . . . . . . . (2,158,860) (451,766)
Options written. . . . . . . . . . . . . . . . . . . . . . . . . . 39,400 (49,325)
Net change in unrealized appreciation or depreciation of:
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 274,372 5,828,065
Futures contracts. . . . . . . . . . . . . . . . . . . . . . . . . 952,875 (1,937,250)
Options written. . . . . . . . . . . . . . . . . . . . . . . . . . (24,400) 24,400
---------------- ----------------
Net increase (decrease) in net assets resulting from operations. . . . 41,794,612 74,987,637
Distributions to shareholders:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . (40,989,082) (73,436,453)
In excess of net investment income . . . . . . . . . . . . . . . . (28,290) (46,394)
In excess of net realized gain on investments. . . . . . . . . . . -- (1,122,354)
Increase (decrease) in net assets from Fund share transactions . . . (62,933,400) 88,251,273
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . . . (62,156,160) 88,633,709
Net assets at beginning of period. . . . . . . . . . . . . . . . . . 1,447,097,289 1,358,463,580
---------------- ----------------
NET ASSETS AT END OF PERIOD
(including accumulated distributions in excess of net
investment income of $28,290 and $46,394, respectively). . . . . . . $ 1,384,941,129 $ 1,447,097,289
---------------- ----------------
---------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
FUND SHARE TRANSACTIONS FOR THE SIX MONTHS ENDED FOR THE FISCAL YEAR
FEBRUARY 29, 1996 (UNAUDITED) ENDED AUGUST 31, 1995
------------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Fund shares sold . . . . . . . . . . . . 51,342,610 $ 513,547,210 144,902,377 $1,447,298,600
Fund shares issued to shareholders
in reinvestments of distributions . . 4,078,075 40,797,049 7,206,031 71,958,014
Fund shares redeemed . . . . . . . . . . (61,715,002) (617,277,659) (143,360,605) (1,431,005,341)
----------- ------------ ------------- --------------
Net increase (decrease). . . . . . . . . (6,294,317) $ (62,933,400) 8,747,803 $ 88,251,273
----------- ------------ ------------- --------------
----------- ------------ ------------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
YIELD PLUS FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout each fiscal
year or period and other performance information derived from the financial statements.
1996+ 1995 1994 1993++
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . $ 10.00 $ 9.99 $ 10.01 $ 10.00
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . . .29 .56 .38 .27
Net realized and unrealized
gain (loss) on investments . . . . . . . . . . . . . . .00 .02 (.02) .01
-------- -------- -------- --------
Total Income From Investment Operations. . . . . . . . . .29 .58 .36 .28
-------- -------- -------- --------
LESS DISTRIBUTIONS:
Net investment income. . . . . . . . . . . . . . . . . . (.29) (.56) (.38) (.27)
In excess of net realized gain on investments. . . . . . .00 (.01) -- --
-------- -------- -------- --------
Total Distributions. . . . . . . . . . . . . . . . . . . (.29) (.57) (.38) (.27)
-------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . . $ 10.00 $ 10.00 $ 9.99 $ 10.01
-------- -------- -------- --------
-------- -------- -------- --------
TOTAL RETURN (%)(a). . . . . . . . . . . . . . . . . . . . 2.89 6.01 3.65 2.85
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses gross, and net to
average daily net assets (b) . . . . . . . . . . . . . .38 .38 .35 .38
Net investment income to
average daily net assets (b) . . . . . . . . . . . . . 5.72 5.64 3.82 3.54
Portfolio turnover (b) . . . . . . . . . . . . . . . . . 141.38 199.69 142.68 137.86
Net assets, end of period ($000 omitted) . . . . . . . . 1,384,941 1,447,097 1,358,464 589,594
Per share amount of fees waived ($ omitted). . . . . . . -- -- -- .00042
</TABLE>
+ For the six months ended February 29, 1996 (Unaudited).
++ For the period November 9, 1992 (commencement of
operations) to August 31, 1993.
(a) Periods less than one year are not annualized.
(b) The ratios for the periods ended February 29, 1996 and
August 31, 1993 are annualized.
Semiannual Report 11
<PAGE>
THE SEVEN SEAS SERIES
YIELD PLUS FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996 (Unaudited)
1. ORGANIZATION
The Seven Seas Series Fund (the "Investment Company") is a series mutual
fund, currently comprising 14 investment portfolios which are in operation as
of February 29, 1996. These financial statements report on one portfolio, The
Seven Seas Series Yield Plus Fund (the "Fund"). The Investment Company is a
registered and diversified open-end investment company, as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), that was
organized as a Massachusetts business trust on October 3, 1987 and operates
under a First Amended and Restated Master Trust Agreement, dated October 13,
1993, as amended. The Investment Company's master trust agreement permits the
Board of Trustees to issue an unlimited number of full and fractional shares
of beneficial interest at a $.001 par value.
2. SIGNIFICANT ACCOUNTING POLICIES
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The following is a summary of the significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements.
SECURITY VALUATION: United States fixed-income securities listed and traded
principally on any national securities exchange are valued on the basis of
the last sale price or, lacking any sale, at the closing bid price, on the
primary exchange on which the security is traded. United States
over-the-counter, fixed-income securities and options are valued on the basis
of the closing bid price. Futures contracts are valued on the basis of the
last sale price.
Many fixed-income securities do not trade each day, and thus last sale or bid
prices are frequently not available. Fixed-income securities may be valued
using prices provided by a pricing service when such prices are believed to
reflect the fair market value of such securities.
Money market instruments maturing within 60 days of the valuation date are
valued at "amortized cost," a method by which each portfolio instrument is
initially valued at cost, and thereafter a constant accretion/amortization to
maturity of any discount or premium is assumed, unless the Board of Trustees
determines that amortized cost does not represent fair value.
The Fund may value securities for which market quotations are not readily
available at "fair value," as determined in good faith pursuant to procedures
established by the Board of Trustees.
SECURITIES TRANSACTIONS: Securities transactions are recorded on a trade
date basis. Realized gains and losses from securities transactions are
recorded on the basis of identified cost.
INVESTMENT INCOME: Interest income is recorded on the accrual basis.
AMORTIZATION AND ACCRETION: All zero-coupon bond discounts and original
issue discounts are accreted for both tax and financial reporting purposes.
All short- and long-term market premiums/discounts are amortized/accreted for
both tax and financial reporting purposes.
12 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
YIELD PLUS FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
FEDERAL INCOME TAXES: As the Investment Company is a Massachusetts business
trust, each sub-trust is a separate corporate taxpayer and determines its net
investment income and capital gains (or losses) and the amounts to be
distributed to each fund's shareholders without regard to the income and
capital gains (or losses) of the other funds.
It is the Fund's intention to qualify as a regulated investment company and
distribute all of its taxable income. The Fund, accordingly, paid no federal
income taxes and no federal income tax provision was required. As permitted
by tax regulations, the Fund intends to defer a net realized capital loss of
$4,190,043 incurred from November 1, 1994 to August 31, 1995, and treat it as
arising in fiscal year 1996.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Fund declares and records
dividends on net investment income daily and pays them monthly. Capital gain
distributions, if any, are generally declared and paid annually. An
additional distribution may be paid by the Fund to avoid imposition of
federal income tax on any remaining undistributed net investment income and
capital gains.
The timing and characterization of certain income and capital gain
distributions are determined in accordance with federal tax regulations which
may differ from generally accepted accounting principles ("GAAP"). As a
result, net investment income and net realized gain (or loss) from investment
transactions for a reporting period may differ significantly from
distributions during such period. The differences between tax regulations and
GAAP primarily relate to investments in options, futures, mortgage-backed
securities, and certain securities sold at a loss. Accordingly, the Fund may
periodically make reclassifications among certain of its capital accounts
without impacting its net asset value.
EXPENSES: Expenses such as advisory, custodian, transfer agent, shareholder
servicing, printing, and registration fees are charged directly to the
individual funds, while indirect expenses, such as administrative, insurance,
and professional fees are generally allocated among all funds principally
based on their relative net assets.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred expenses in connection
with its organization and initial registration. These costs have been
deferred and are being amortized over 60 months on a straight-line basis.
REPURCHASE AGREEMENTS: The Fund may engage in repurchase and tri-party
repurchase agreements with several financial institutions whereby the Fund,
through its custodian or third-party custodian, receives delivery of the
underlying securities. The market value of these securities (including
accrued interest) on acquisition date is required to be an amount equal to at
least 102% of the repurchase price. The Fund's Adviser will monitor
repurchase agreements daily to determine that the market value (including
accrued interest) at Fedwire closing time of the underlying securities
remains at least equal to 100% of the repurchase price. The Adviser or
third-party custodian will notify the seller to immediately increase the
collateral on the repurchase agreement to 102% of the repurchase price if
collateral falls below 100%.
DERIVATIVES: To the extent permitted by the investment objective,
restrictions and policies set forth in the Fund's Prospectus and Statement of
Additional Information, the Fund may participate in various
Semiannual Report 13
<PAGE>
THE SEVEN SEAS SERIES
YIELD PLUS FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
derivative-based transactions. Derivative securities are instruments or
agreements whose value is derived from an underlying security or index. The
Fund's use of derivatives includes exchange-traded futures and options on
futures. These instruments offer unique characteristics and risks that assist
the Fund in meeting its investment objective.
The Fund typically uses derivatives for hedging purposes. Hedging techniques
are utilized by the Fund to limit or control risks, such as adverse movements
in interest rates. The primary risk associated with options and futures is
generally categorized as market risk.
OPTIONS: The Fund may purchase and sell (write) call and put options on
securities, securities indexes, and futures, provided such options are traded
on a national securities exchange or in an over-the-counter market. The Fund
may also purchase and sell put and call options on foreign currencies.
When the Fund writes a covered call or put option, an amount equal to the
premium received by the Fund is included in the Fund's Statement of Assets
and Liabilities as an asset and as an equivalent liability. The amount of the
liability is subsequently marked-to-market to reflect the current market
value of the option written. The Fund receives a premium on the sale of an
option but gives up the opportunity to profit from any increase in stock
value above the exercise price of the option, and when the Fund writes a put
option it is exposed to a decline in the price of the underlying security. If
an option which the Fund has written either expires on its stipulated
expiration date or the Fund enters into a closing purchase transaction, the
Fund realizes a gain (or loss, if the cost of a closing purchase transaction
exceeds the premium received when the option was sold) without regard to any
unrealized gain or loss on the underlying security, and the liability related
to such option is extinguished. If a call option which the Fund has written
is exercised, the Fund realizes a capital gain or loss from the sale of the
underlying security, and the proceeds from such sale are increased by the
premium originally received. When a put option which a Fund has written is
exercised, the amount of the premium originally received will reduce the cost
of the security which a Fund purchases upon exercise of the option.
The Fund's use of written options involves, to varying degrees, elements of
market risk in excess of the amount recognized in the Statement of Assets and
Liabilities. The face or contract amounts of those instruments reflect the
extent of the Fund exposure to off-balance-sheet risk. The risks may be
caused by an imperfect correlation between movements in the price of the
instrument and the price of the underlying securities and interest rates.
FUTURES: The Fund is currently utilizing exchange-traded futures contracts.
The primary risks associated with the use of futures contracts are an
imperfect correlation between the change in market value of the securities
held by the Funds and the prices of futures contracts and the possibility of
an illiquid market. 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.
14 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
YIELD PLUS FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
3. SECURITIES TRANSACTIONS
INVESTMENT TRANSACTIONS: For the six months ended February 29, 1996,
purchases and sales of investment securities, excluding US Government and
Agency obligations, short-term investments, futures contracts, options and
repurchase agreements aggregated to $685,979,090 and $772,143,878,
respectively.
For the six months ended February 29, 1996, purchases and sales of US
Government and Agency obligations, excluding short-term investments, futures
and option contracts, and repurchase agreements aggregated to $273,133,114
and $240,958,424, respectively.
OPTIONS: Fund transactions in written options for the six months ended
February 29, 1996 were as follows:
<TABLE>
<CAPTION>
CALL OPTIONS
------------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
---------- ---------
<S> <C> <C>
Outstanding at August 31, 1995 100 $ 39,400
Written -- --
Terminated (100) (39,400)
---------- ---------
Outstanding at February 29, 1996 -- $ --
---------- ---------
---------- ---------
</TABLE>
FUTURES TRANSACTIONS: Fund transactions in futures contracts during the six
months ended February 29, 1996 were as follows:
<TABLE>
<CAPTION>
FUTURES CONTRACTS FUTURES CONTRACTS
SOLD SHORT PURCHASED
---------------------------------------- -----------------------------------
AGGREGATE AGGREGATE
NUMBER OF FACE VALUE OF NUMBER OF FACE VALUE OF
CONTRACTS CONTRACTS (1) CONTRACTS CONTRACTS (1)
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Outstanding at August 31, 1995 1,027 $ 963,425,600 -- $ --
Contracts opened 2,424 2,299,320,500 329 312,506,800
Contracts closed (2,810) (2,655,085,500) (164) (155,800,300)
--------------- --------------- --------------- ---------------
Outstanding at February 29, 1996 641 $ 607,660,600 165 $ 156,706,500
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
</TABLE>
(1) The aggregate face value of contracts is computed on the date each contract
was opened. Three month Eurodollar financial futures contracts have a notional
face amount of $1,000,000 and an equivalent duration of 13 weeks or .25 years.
Semiannual Report 15
<PAGE>
THE SEVEN SEAS SERIES
YIELD PLUS FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
4. RELATED PARTIES
ADVISER: The Investment Company has an investment advisory agreement with
State Street Bank and Trust Company (the "Adviser") under which the Adviser
directs the investment of the Fund in accordance with its investment
objectives, policies, and limitations. For these services, the Fund pays a
fee to the Adviser, calculated daily and paid monthly, at the annual rate of
.25% of its average daily net assets. The Investment Company has contracts
with the Adviser to provide custody, shareholder servicing, and transfer
agent services to the Fund.
ADMINISTRATOR, DISTRIBUTOR AND SHAREHOLDER SERVICING: Frank Russell
Investment Management Company (the "Administrator") serves as administrator
of the Investment Company. The Administrator is also required, pursuant to
the Administration Agreement, to arrange and pay certain promotional and
sales costs of Investment Company shares. Russell Fund Distributors, Inc.
(the "Distributor"), a subsidiary of the Administrator, is the distributor of
the Investment Company shares. The Fund has adopted a distribution plan
pursuant to Rule 12b-1 (the "Plan") under the 1940 Act. Under the Plan, the
Fund may also enter into service agreements with financial institutions,
including the Adviser, State Street Brokerage Services, Inc. ("SSBSI"), a
wholly-owned subsidiary of the Adviser, and Adviser's Metropolitan Division
of Commercial Banking ("Commercial Banking" collectively the "Agents"). The
Commercial Banking service agreement became effective November 8, 1995. Under
these service agreements, the Agents are to provide shareholder servicing for
Investment Company shareholders, including services related to the purchase
and redemption of Investment Company shares.
For these services, the Fund pays fees to the Agents in an amount that per
annum is equal to .025%, .175% and .175% of the average daily value of
all Fund shares held by or for customers of the Adviser, SSBSI and
Commercial Banking, respectively. These fees, in conjunction with other
distribution-related expenses, may not exceed .25% of the average daily
value of net assets on an annual basis, which includes a limit of .20% in
shareholder servicing fees for all providers. Any payments that are
required to be made by the Plan and any service agreement, but could not
be made because they exceed the maximum amount of allowable
reimbursement, may be carried forward for subsequent reimbursement from
the Investment Company so long as the Plan is in effect. The Fund's
liability for any such expenses carried forward shall terminate at the
end of two years following the year in which the expenditure was
incurred. The Trustees or a majority of the Fund's shareholders have the
right, however, to terminate the Distribution Plan and all payments
thereunder at any time. The Fund will not be obligated to reimburse the
Distributor for carryover expenses subsequent to the Distribution Plan's
termination or noncontinuance. There were no carryover expenses as of
February 29, 1996.
For shareholder servicing, the Fund incurred expenses of $172,367 and $573
from the Adviser and SSBSI, respectively. The amounts related to distribution
and shareholder servicing fees are included in the accompanying Statement of
Operations.
16 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
YIELD PLUS FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
Pursuant to the Administration Agreement with the Investment Company, the
Administrator supervises all non-portfolio investment aspects of the
Investment Company's operations and provides adequate office space and all
necessary office equipment and services, including telephone service,
utilities, stationery supplies, and similar items. The Investment Company
pays the Administrator the following fees for the services supplied by the
Administrator pursuant to the Administration Agreement: (i) an annual fee,
payable monthly on a pro rata basis, based on the following percentages of
the average daily net assets of all domestic funds: $0 up to $500 million -
.06%; over $500 million to and including $1 billion - .05%; over $1 billion -
.03%; (ii) less an amount equal to the sum of certain distribution-related
expenses incurred by the Investment Company's Distributor on behalf of the
Fund (up to a maximum of 15% of the asset-based fee determined in (i); (iii)
out-of-pocket expenses; and (iv) start-up costs for new funds.
BOARD OF TRUSTEES: The Investment Company pays each of its Trustees not
affiliated with the Investment Company a retainer of $44,000 annually, $1,000
for each of the board meetings attended, an additional $1,000 for attending
the annual audit committee meeting, and reimbursement for out-of-pocket
expenses.
Semiannual Report 17
<PAGE>
THE SEVEN SEAS SERIES FUND
Two International Place, 35th Floor [LOGO]
Boston, Massachusetts 02110
(617) 654-6089
- --------------------------------------------------------------------------------
TRUSTEES
Lynn L. Anderson, Chairman
William L. Marshall
Steven J. Mastrovich
Patrick J. Riley
Richard D. Shirk
Bruce D. Taber
Henry W. Todd
OFFICERS
Lynn L. Anderson, President
George W. Weber, Senior Vice President
and Treasurer
J. David Griswold, Vice President
and Secretary
INVESTMENT ADVISER
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
CUSTODIAN, TRANSFER AGENT AND
OFFICE OF SHAREHOLDERS INQUIRIES
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
(800) 64-7SEAS (77327)
DISTRIBUTOR
Russell Fund Distributors, Inc.
Two International Place, 35th Floor
Boston, Massachusetts 02110
(617) 654-6089
ADMINISTRATOR
Frank Russell Investment Management Company
909 A Street
Tacoma, Washington 98402
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
18 Semiannual Report
<PAGE>
SEVEN SEAS INVESTMENT PORTFOLIOS
[LOGO]
SEMIANNUAL REPORT
US TREASURY MONEY MARKET FUND
PRIME MONEY MARKET FUND
FEBRUARY 29, 1996
<PAGE>
THE SEVEN SEAS SERIES FUND-Registered Trademark-
FEBRUARY 29, 1996
(UNAUDITED)
TABLE OF CONTENTS
Page
US Treasury Money Market Fund Financial Statements . . . . . . . . . . . 3
Prime Money Market Fund Financial Statements . . . . . . . . . . . . . . 9
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . 17
Fund Management and Service Providers. . . . . . . . . . . . . . . . . . 21
"THE SEVEN SEAS SERIES FUND-Registered Trademark-" IS A REGISTERED TRADEMARK AND
SERVICE MARK OF THE SEVEN SEAS SERIES FUND.
THIS REPORT IS PREPARED FROM THE BOOKS AND RECORDS OF THE FUNDS AND IT IS
SUBMITTED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. THIS INFORMATION IS FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A
SEVEN SEAS SERIES FUND PROSPECTUS CONTAINING MORE COMPLETE INFORMATION
CONCERNING THE INVESTMENT OBJECTIVES AND OPERATIONS OF THE FUNDS, CHARGES AND
EXPENSES. THE PROSPECTUS SHOULD BE READ CAREFULLY BEFORE AN INVESTMENT IS MADE.
PERFORMANCE IS HISTORICAL AND ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL
GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN WHEN PURCHASED.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. AN INVESTMENT IN A MONEY
MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY THE US GOVERNMENT. THERE CAN BE
NO ASSURANCE THAT A MONEY MARKET FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE. RUSSELL FUND DISTRIBUTORS, INC. IS THE
DISTRIBUTOR OF THE SEVEN SEAS SERIES FUND.
<PAGE>
THE SEVEN SEAS SERIES
US TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
February 29, 1996 (Unaudited)
PRINCIPAL DATE
AMOUNT OF VALUE
(000) RATE MATURITY (000)
-------------------------------------------------
<S> <C> <C> <C> <C>
UNITED STATES GOVERNMENT TREASURIES - 37.4%
United States Treasury Notes . . . . . . . . . . . . . . . . . . . . . . . $ 10,000 7.750% 03/31/96 $ 10,017
United States Treasury Notes . . . . . . . . . . . . . . . . . . . . . . . 20,000 4.250 05/15/96 19,959
United States Treasury Notes . . . . . . . . . . . . . . . . . . . . . . . 10,000 7.375 05/15/96 10,036
United States Treasury Notes . . . . . . . . . . . . . . . . . . . . . . . 15,000 7.625 05/31/96 15,088
United States Treasury Notes . . . . . . . . . . . . . . . . . . . . . . . 8,000 4.375 08/15/96 7,979
United States Treasury Notes . . . . . . . . . . . . . . . . . . . . . . . 5,000 6.875 10/31/96 5,044
United States Treasury Notes . . . . . . . . . . . . . . . . . . . . . . . 5,000 7.500 01/31/97 5,117
---------
TOTAL UNITED STATES GOVERNMENT TREASURIES (cost $73,240) . . . . . . . . . 73,240
---------
TOTAL INVESTMENTS (amortized cost $73,240) - 37.4% . . . . . . . . . . . . 73,240
---------
REPURCHASE AGREEMENTS - 62.3%
Agreement with Aubrey Lanston & Co., Inc. of $40,000
acquired February 29, 1996 at 5.420% to be repurchased at $40,006
on March 1, 1996, collateralized by:
$24,935 United States Treasury Bonds,
14.000% due 11/15/11 valued at $40,796 . . . . . . . . . . . . . . . 40,000
Agreement with Donaldson, Lufkin & Jenrette Securities Corp. of $25,000
acquired February 29, 1996 at 5.600% to be repurchased at $25,004
on March 1, 1996, collateralized by:
$23,415 United States Treasury Notes,
9.250% due 08/15/98 valued at $25,481. . . . . . . . . . . . . . . . 25,000
Agreement with Dresdner Bank AG of $40,000
acquired February 29, 1996 at 5.420% to be repurchased at $40,006
on March 1, 1996, collateralized by:
$3,851 United States Treasury Bonds,
8.750% due 05/15/17 valued at $4,876, and by
$35,000 United States Treasury Notes,
6.375% due 08/15/02 valued at $35,917. . . . . . . . . . . . . . . . 40,000
</TABLE>
Semiannual Report 3
<PAGE>
THE SEVEN SEAS SERIES
US TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
VALUE
(000)
---------
<S> <C>
Tri-Party Agreement with UBS Securities, Inc. of $16,968
acquired February 29, 1996 at 5.500% to be repurchased at $16,971
on March 1, 1996, collateralized by:
$17,115 United States Treasury Notes,
5.375% due 11/30/97 valued at $17,314. . . . . . . . . . . . . . . . $ 16,968
---------
TOTAL REPURCHASE AGREEMENTS (cost $121,968). . . . . . . . . . . . . . . . 121,968
---------
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS
(cost $195,208)(a) - 99.7% . . . . . . . . . . . . . . . . . . . . . . . . 195,208
OTHER ASSETS AND LIABILITIES, NET - 0.3% . . . . . . . . . . . . . . . . . 580
---------
NET ASSETS - 100.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 195,788
---------
---------
</TABLE>
(a) The identified cost for federal income tax purposes is the same as shown
above.
The accompanying notes are an integral part of the financial statements.
4 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
US TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (Unaudited)
<S> <C> <C>
ASSETS
Investments at amortized cost which approximates market (Note 2) . . . . . $ 73,240,116
Repurchase agreements (cost $121,968,000)(Note 2). . . . . . . . . . . . . 121,968,000
Receivables:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,257,418
From Adviser (Note 4). . . . . . . . . . . . . . . . . . . . . . . . . . 125,279
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,149
Deferred organization expenses (Note 2). . . . . . . . . . . . . . . . . . 29,108
-------------
196,625,070
LIABILITIES
Payables (Note 4):
Dividends. . . . . . . . . . . . . . . . . . . . . . . $ 734,710
Accrued administrative fees. . . . . . . . . . . . . . 4,192
Accrued advisory fees. . . . . . . . . . . . . . . . . 72,933
Accrued custodian fees . . . . . . . . . . . . . . . . 11,131
Accrued distribution fees. . . . . . . . . . . . . . . 3,270
Accrued shareholder servicing fees . . . . . . . . . . 3,598
Other accrued expenses . . . . . . . . . . . . . . . . 7,606 837,440
------------- -------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 195,787,630
-------------
-------------
NET ASSETS CONSIST OF:
Accumulated net realized gain (loss) . . . . . . . . . . . . . . . . . . . $ (122,235)
Shares of beneficial interest. . . . . . . . . . . . . . . . . . . . . . . 195,910
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . 195,713,955
-------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 195,787,630
-------------
-------------
Net asset value, offering and redemption price per share
($195,787,630 divided by 195,909,865 shares of $.001
par value shares of beneficial interest outstanding) . . . . . . . . . . . $1.00
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 5
<PAGE>
THE SEVEN SEAS SERIES
US TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 1996 (Unaudited)
<S> <C> <C>
INVESTMENT INCOME
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,725,403
Expenses (Notes 2 and 4):
Advisory fees. . . . . . . . . . . . . . . . . . . . . . $ 207,913
Administrative fees. . . . . . . . . . . . . . . . . . . 23,503
Custodian fees . . . . . . . . . . . . . . . . . . . . . 32,636
Distribution fees. . . . . . . . . . . . . . . . . . . . 2,275
Professional fees. . . . . . . . . . . . . . . . . . . . 9,401
Shareholder servicing fees . . . . . . . . . . . . . . . 21,160
Trustees' fees . . . . . . . . . . . . . . . . . . . . . 3,800
Amortization of deferred organization expenses . . . . . 5,773
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 1,236
-------------
Expenses before expense reductions . . . . . . . . . . . 307,697
Expense reductions (Note 4). . . . . . . . . . . . . . . (141,410) 166,287
------------- -------------
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,559,116
-------------
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from investments (Notes 2 and 3). . . . . . . . . . 63,136
-------------
Net increase in net assets resulting from operations . . . . . . . . . . . . $ 4,622,252
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
US TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE
MONTHS ENDED FISCAL YEAR
FEBRUARY 29, 1996 ENDED
(UNAUDITED) AUGUST 31, 1995
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,559,116 $ 9,954,307
Net realized gain (loss) from investments. . . . . . . . . . . . . . . . . . 63,136 89,724
----------------- -----------------
Net increase (decrease) in net assets resulting from operations. . . . . . . . 4,622,252 10,044,031
Distributions to shareholders from net investment income . . . . . . . . . . . (4,559,008) (9,954,307)
Increase (decrease) in net assets from Fund share transactions . . . . . . . . 34,831,708 5,945,016
----------------- -----------------
INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . . . . . . . . 34,894,952 6,034,740
Net assets at beginning of period. . . . . . . . . . . . . . . . . . . . . . . 160,892,678 154,857,938
----------------- -----------------
NET ASSETS AT END OF PERIOD. . . . . . . . . . . . . . . . . . . . . . . . . . $ 195,787,630 $ 160,892,678
----------------- -----------------
----------------- -----------------
FUND SHARE TRANSACTIONS
(ON A CONSTANT DOLLAR BASIS):
Fund shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,342,226 775,196,955
Fund shares issued to shareholders in reinvestments of distributions . . . . . 1,110,850 2,433,268
Fund shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (49,621,368) (771,685,207)
----------------- -----------------
Net increase (decrease). . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,831,708 5,945,016
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 7
<PAGE>
THE SEVEN SEAS SERIES
US TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout each fiscal
year or period and other performance information derived from the financial statements.
1996+ 1995 1994++
---------- ---------- ----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . $ 1.0000 $ 1.0000 $ 1.0000
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . .0273 .0536 .0249
LESS DISTRIBUTIONS:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . (.0273) (.0536) (.0249)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . $ 1.0000 $ 1.0000 $ 1.0000
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (%)(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.76 5.48 2.51
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average daily net assets (b)(c). . . . . . . . .20 .13 .13
Operating expenses, gross, to average daily net assets (b)(c). . . . . . . .37 .39 .38
Net investment income to average daily net assets (b). . . . . . . . . . . 5.47 5.38 3.28
Net assets, end of period ($000 omitted) . . . . . . . . . . . . . . . . . 195,788 160,893 154,858
Per share amount of fees reimbursed ($ omitted)(c) . . . . . . . . . . . . .0007 .0018 .0019
</TABLE>
+ For the six months ended February 29, 1996 (Unaudited).
++ For the period December 1, 1993 (commencement of operations)
to August 31, 1994.
(a) Periods less than one year are not annualized.
(b) The ratios for the periods ended February 29, 1996 and August 31, 1994 are
annualized.
(c) See Note 4 for current period amounts.
8 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
PRIME MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
February 29, 1996 (Unaudited)
PRINCIPAL DATE
AMOUNT OF VALUE
(000) RATE MATURITY* (000)
------------------------------------------------------
<S> <C> <C> <C> <C>
CERTIFICATES OF DEPOSIT - 9.8%
Bayerische Landesbank (New York)(a). . . . . . . . . . . . . $ 50,000 5.182% 01/15/97 $ 49,969
Comerica Bank, Illinois (a) . . . . . . . . . . . . . . . . 35,000 5.528 10/02/96 34,979
Comerica Bank, Michigan (a). . . . . . . . . . . . . . . . . 50,000 5.292 02/14/97 50,000
Key Bank of New York (a) . . . . . . . . . . . . . . . . . . 25,000 5.240 09/06/96 24,987
PNC Bank (a) . . . . . . . . . . . . . . . . . . . . . . . . 40,000 5.232 02/20/97 39,969
---------
TOTAL CERTIFICATES OF DEPOSIT (cost $199,904). . . . . . . . 199,904
---------
EURODOLLAR CERTIFICATES OF DEPOSIT - 10.8%
ABN AMRO . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 5.530 05/15/96 10,003
Bayerische Hypotheken Wechsel . . . . . . . . . . . . . . . 50,000 5.280 03/05/96 50,000
Bayerische Vereinsbank . . . . . . . . . . . . . . . . . . . 50,000 5.200 06/03/96 50,001
Citibank . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 6.820 03/07/96 10,000
Morgan Guaranty. . . . . . . . . . . . . . . . . . . . . . . 75,000 5.230 04/04/96 75,001
Westdeutsche Landesbank. . . . . . . . . . . . . . . . . . . 25,000 5.250 05/01/96 25,001
---------
TOTAL EURODOLLAR CERTIFICATES OF DEPOSIT (cost $220,006) . . 220,006
---------
YANKEE CERTIFICATES OF DEPOSIT - 4.7%
Bank of Montreal (Chicago) . . . . . . . . . . . . . . . . . 50,000 5.250 03/04/96 50,000
Bayerische Hypotheken UND. . . . . . . . . . . . . . . . . . 20,000 5.270 05/02/96 20,002
Canadian Imperial Bank . . . . . . . . . . . . . . . . . . . 25,000 5.500 03/12/96 25,000
---------
TOTAL YANKEE CERTIFICATES OF DEPOSIT (cost $95,002). . . . . 95,002
---------
CORPORATE BONDS AND NOTES - 35.5%
Associates Corp. of North America (MTN). . . . . . . . . . . 5,000 4.500 09/30/96 4,966
Avco Financial Services, Inc. (MTN). . . . . . . . . . . . . 8,500 7.500 11/15/96 8,627
Bank America National Trust & Savings Association. . . . . . 10,000 5.070 01/29/97 9,994
Bank of New York . . . . . . . . . . . . . . . . . . . . . . 20,000 6.850 03/11/96 20,000
Caterpillar Financial Services (MTN)(a). . . . . . . . . . . 20,000 5.779 06/28/96 20,006
Chemical Banking Corp. (MTN) . . . . . . . . . . . . . . . . 25,000 5.000 06/04/96 24,949
Chemical Banking Corp. (MTN)(a). . . . . . . . . . . . . . . 15,000 6.000 07/15/96 15,011
CIT Group Holdings, Inc. (MTN) . . . . . . . . . . . . . . . 5,000 7.050 03/04/96 5,000
CIT Group Holdings, Inc. (MTN)(a). . . . . . . . . . . . . . 25,000 5.300 10/30/96 24,982
Citicorp (MTN)(a). . . . . . . . . . . . . . . . . . . . . . 5,000 6.042 12/09/96 5,009
</TABLE>
Semiannual Report 9
<PAGE>
THE SEVEN SEAS SERIES
PRIME MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
PRINCIPAL DATE
AMOUNT OF VALUE
(000) RATE MATURITY* (000)
------------------------------------------------------
<S> <C> <C> <C> <C>
Dean Witter, Discover & Co. (MTN)(a) . . . . . . . . . . . . $ 5,000 5.570% 11/15/96 $ 5,007
Dean Witter, Discover & Co. (MTN)(a) . . . . . . . . . . . . 10,000 5.992 11/22/96 10,012
FCC National Bank of Wilmington. . . . . . . . . . . . . . . 40,000 5.200 04/04/96 39,999
FCC National Bank of Wilmington (MTN)(a) . . . . . . . . . . 20,000 6.240 11/06/96 19,989
FCC National Bank of Wilmington (MTN)(a) . . . . . . . . . . 25,000 5.360 11/21/96 24,989
Fifth Third Bank, Cincinnati . . . . . . . . . . . . . . . . 25,000 5.220 03/27/96 25,000
First Bank System, Inc. (MTN)(a) . . . . . . . . . . . . . . 8,500 5.362 06/19/96 8,501
First Chicago Corp. (MTN)(a) . . . . . . . . . . . . . . . . 5,000 6.000 12/10/96 5,003
First Fidelity Bancorp (MTN)(a). . . . . . . . . . . . . . . 20,000 5.475 08/02/96 20,007
First National Bank of Boston Corp. (MTN)(a) . . . . . . . . 10,000 6.082 06/20/96 10,007
First National Bank of Chicago (MTN)(a). . . . . . . . . . . 6,200 5.190 05/10/96 6,199
First Union National Bank (MTN)(a) . . . . . . . . . . . . . 10,000 6.240 05/15/96 9,999
First Union National Bank, Charlotte . . . . . . . . . . . . 25,000 5.220 05/01/96 25,000
Ford Motor Credit Co.. . . . . . . . . . . . . . . . . . . . 1,000 8.875 03/15/96 1,001
Ford Motor Credit Co.. . . . . . . . . . . . . . . . . . . . 5,500 8.875 08/01/96 5,565
Ford Motor Credit Co. (MTN)(a) . . . . . . . . . . . . . . . 6,000 5.604 05/10/96 6,004
Ford Motor Credit Co. (MTN)(a) . . . . . . . . . . . . . . . 5,950 6.082 06/17/96 5,955
Ford Motor Credit Co. (MTN)(a) . . . . . . . . . . . . . . . 4,000 5.808 07/19/96 4,004
General Electric Capital Corp. (MTN)(a). . . . . . . . . . . 25,000 5.519 01/17/97 25,000
General Motors Acceptance Corp.. . . . . . . . . . . . . . . 5,000 8.625 07/15/96 5,048
General Motors Acceptance Corp. (MTN). . . . . . . . . . . . 11,000 5.500 04/22/96 10,979
General Motors Acceptance Corp. (MTN). . . . . . . . . . . . 7,650 5.650 06/18/96 7,641
General Motors Acceptance Corp. (MTN). . . . . . . . . . . . 5,000 8.750 08/01/96 5,060
General Motors Acceptance Corp. (MTN)(a) . . . . . . . . . . 4,000 6.025 03/01/96 4,000
General Motors Acceptance Corp. (MTN)(a) . . . . . . . . . . 5,000 5.562 05/06/96 5,001
Household Finance Corp. (MTN). . . . . . . . . . . . . . . . 9,465 10.125 06/15/96 9,574
IBM Credit Corp. (MTN) . . . . . . . . . . . . . . . . . . . 15,000 6.150 05/31/96 15,011
IBM Credit Corp. (MTN) . . . . . . . . . . . . . . . . . . . 5,000 4.860 08/30/96 4,975
IBM Credit Corp. (MTN) . . . . . . . . . . . . . . . . . . . 25,000 5.750 10/28/96 24,990
Morgan (J. P.) & Co., Inc. . . . . . . . . . . . . . . . . . 10,000 6.200 05/13/96 10,000
National City Corp.. . . . . . . . . . . . . . . . . . . . . 5,000 8.375 03/15/96 5,004
NationsBank Corp.. . . . . . . . . . . . . . . . . . . . . . 5,800 4.750 08/15/96 5,772
Norwest Corp. (MTN). . . . . . . . . . . . . . . . . . . . . 25,000 4.960 02/20/97 25,000
Old Kent Bank & Trust Co. (MTN). . . . . . . . . . . . . . . 7,500 7.500 01/31/97 7,658
PNC Bank . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 6.625 03/29/96 14,999
PNC Bank . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 5.650 09/18/96 20,028
PNC Bank (MTN)(a). . . . . . . . . . . . . . . . . . . . . . 25,000 5.252 08/12/96 24,993
</TABLE>
10 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
PRIME MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
PRINCIPAL DATE
AMOUNT OF VALUE
(000) RATE MATURITY* (000)
------------------------------------------------------
<S> <C> <C> <C> <C>
Society National Bank Cleveland Ohio (MTN)(a). . . . . . . . $ 20,000 5.140% 04/24/96 $ 19,997
Sears Roebuck & Co.. . . . . . . . . . . . . . . . . . . . . 10,000 8.550 08/01/96 10,102
Transamerica Financial Corp. (MTN)(a). . . . . . . . . . . . 25,000 6.450 05/16/96 25,006
United States Leasing International, Inc. (MTN). . . . . . . 10,000 8.750 05/01/96 10,034
Wachovia Bank (MTN)(a) . . . . . . . . . . . . . . . . . . . 25,000 5.312 05/31/96 24,999
Wachovia Bank (MTN)(a) . . . . . . . . . . . . . . . . . . . 25,000 5.187 01/17/97 24,979
Wells Fargo & Co. (MTN)(a) . . . . . . . . . . . . . . . . . 5,000 5.862 10/11/96 5,004
---------
TOTAL CORPORATE BONDS AND NOTES (cost $721,639). . . . . . . 721,639
---------
DOMESTIC COMMERCIAL PAPER - 16.0%
Ameritech Corp.. . . . . . . . . . . . . . . . . . . . . . . 20,950 5.250 03/04/96 20,941
Aristar, Inc.. . . . . . . . . . . . . . . . . . . . . . . . 17,000 5.630 03/06/96 16,987
Ford Motor Credit Co.. . . . . . . . . . . . . . . . . . . . 50,000 5.200 04/10/96 49,711
General Electric Capital Corp. . . . . . . . . . . . . . . . 15,000 5.600 04/02/96 14,925
General Electric Capital Corp. . . . . . . . . . . . . . . . 20,000 5.160 07/12/96 19,619
Household Financial Corp.. . . . . . . . . . . . . . . . . . 50,000 5.470 03/01/96 50,000
Household International, Inc.. . . . . . . . . . . . . . . . 21,000 5.730 03/01/96 21,000
Prudential Funding Corp. . . . . . . . . . . . . . . . . . . 90,000 5.470 03/01/96 90,000
Xerox Corp.. . . . . . . . . . . . . . . . . . . . . . . . . 42,000 5.350 03/04/96 41,981
---------
TOTAL DOMESTIC COMMERCIAL PAPER (cost $325,164). . . . . . . 325,164
---------
FOREIGN COMMERCIAL PAPER - 2.0%
Kreditbank of North America. . . . . . . . . . . . . . . . . 40,000 5.220 03/13/96 39,930
---------
TOTAL FOREIGN COMMERCIAL PAPER (cost $39,930). . . . . . . . 39,930
---------
TIME DEPOSITS - 3.5%
Branch Bank & Trust Co.. . . . . . . . . . . . . . . . . . . 20,627 5.750 03/01/96 20,627
Chemical Banking Corp. . . . . . . . . . . . . . . . . . . . 50,000 5.500 03/01/96 50,000
---------
TOTAL TIME DEPOSITS (cost $70,627) . . . . . . . . . . . . . 70,627
---------
</TABLE>
Semiannual Report 11
<PAGE>
THE SEVEN SEAS SERIES
PRIME MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
PRINCIPAL DATE
AMOUNT OF VALUE
(000) RATE MATURITY* (000)
------------------------------------------------------
<S> <C> <C> <C> <C>
UNITED STATES GOVERNMENT AGENCIES - 17.4%
Federal Farm Credit Bank Discount Notes. . . . . . . . . . . $ 1,800 5.130% 03/18/96 $ 1,796
Federal Farm Credit Bank Discount Notes (a). . . . . . . . . 20,000 5.450 09/16/96 19,998
Federal Home Loan Bank (a) . . . . . . . . . . . . . . . . . 25,000 5.418 10/02/96 24,983
Federal National Mortgage Association (MTN). . . . . . . . . 20,000 5.680 10/07/96 19,994
Federal National Mortgage Association (MTN). . . . . . . . . 35,000 5.390 12/04/96 34,963
Federal National Mortgage Association (MTN). . . . . . . . . 25,000 4.780 02/14/97 24,981
Federal National Mortgage Association (MTN)(a) . . . . . . . 28,000 5.580 08/13/96 28,016
Federal National Mortgage Association (MTN)(a) . . . . . . . 50,000 6.180 09/03/96 49,987
Federal National Mortgage Association (MTN)(a) . . . . . . . 50,000 6.180 11/20/96 49,976
Federal National Mortgage Association (MTN)(a) . . . . . . . 15,000 5.277 12/03/96 14,989
Federal National Mortgage Association Discount Notes . . . . 15,000 5.250 04/12/96 14,908
Student Loan Marketing Association (a) . . . . . . . . . . . 5,000 5.340 03/20/96 5,000
Student Loan Marketing Association (a) . . . . . . . . . . . 5,000 5.240 05/09/96 5,000
Student Loan Marketing Association (a) . . . . . . . . . . . 19,980 5.140 07/19/96 19,980
Student Loan Marketing Association (a) . . . . . . . . . . . 17,190 5.365 11/27/96 17,221
Tennessee Valley Authority Discount Notes. . . . . . . . . . 24,120 5.200 04/26/96 23,925
----------
TOTAL UNITED STATES GOVERNMENT AGENCIES (cost $355,717). . . 355,717
----------
UNITED STATES GOVERNMENT TREASURY - 0.5%
United States Treasury Notes . . . . . . . . . . . . . . . . 10,000 6.875 02/28/97 10,170
----------
TOTAL UNITED STATES GOVERNMENT TREASURY (cost $10,170) . . . 10,170
----------
TOTAL INVESTMENTS (amortized cost $2,038,159)(b) - 100.2%. . 2,038,159
OTHER ASSETS AND LIABILITIES, NET - (0.2%) . . . . . . . . . (3,178)
----------
NET ASSETS - 100.0%. . . . . . . . . . . . . . . . . . . . . $2,034,981
----------
----------
</TABLE>
* The interest rate for all securities with a maturity greater than 13 months
has an automatic reset feature resulting in an effective maturity of 13
months or less.
(a) Adjustable or floating rate security.
(b) The identified cost for federal income tax purposes is the same as shown
above.
(MTN) represents Medium Term Note.
The accompanying notes are an integral part of the financial statements.
12 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
PRIME MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (Unaudited)
<S> <C> <C>
ASSETS
Investments at amortized cost which approximates market (Note 2) . . . . . . . . . . $2,038,158,787
Receivables:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,271,973
From Adviser (Note 4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507,861
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,591
Deferred organization expenses (Note 2). . . . . . . . . . . . . . . . . . . . . . . 18,385
--------------
2,052,975,597
LIABILITIES
Payables (Note 4):
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,420,058
Investments purchased. . . . . . . . . . . . . . . . . . . . . . . 8,814,953
Accrued administrative fees. . . . . . . . . . . . . . . . . . . . 46,853
Accrued advisory fees. . . . . . . . . . . . . . . . . . . . . . . 422,533
Accrued custodian fees . . . . . . . . . . . . . . . . . . . . . . 55,245
Accrued distribution fees. . . . . . . . . . . . . . . . . . . . . 68,051
Accrued shareholder servicing fees . . . . . . . . . . . . . . . . 39,371
Accrued transfer agent fees. . . . . . . . . . . . . . . . . . . . 831
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . 126,552 17,994,447
-------------- --------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,034,981,150
--------------
--------------
NET ASSETS CONSIST OF:
Accumulated net realized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . $ 56,971
Shares of beneficial interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,034,927
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,032,889,252
--------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,034,981,150
--------------
--------------
Net asset value, offering and redemption price per share
($2,034,981,150 divided by 2,034,927,351 shares of $.001
par value shares of beneficial interest outstanding) . . . . . . . . . . . . . . . . $1.00
--------------
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 13
<PAGE>
THE SEVEN SEAS SERIES
PRIME MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 1996 (Unaudited)
<S> <C> <C>
INVESTMENT INCOME
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 39,968,918
Expenses (Notes 2 and 4):
Advisory fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,026,105
Administrative fees. . . . . . . . . . . . . . . . . . . . . . . . . 203,061
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 144,520
Distribution fees. . . . . . . . . . . . . . . . . . . . . . . . . . 158,810
Professional fees. . . . . . . . . . . . . . . . . . . . . . . . . . 13,086
Registration fees. . . . . . . . . . . . . . . . . . . . . . . . . . 92,615
Shareholder servicing fees . . . . . . . . . . . . . . . . . . . . . 170,658
Transfer agent fees. . . . . . . . . . . . . . . . . . . . . . . . . 2,919
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,709
Amortization of deferred organization expenses . . . . . . . . . . . 4,018
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,501
--------------
Expenses before reimbursements . . . . . . . . . . . . . . . . . . . 1,876,002
Expenses reimbursed by Adviser . . . . . . . . . . . . . . . . . . . (507,861) 1,368,141
-------------- --------------
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,600,777
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from investments (Notes 2 and 3). . . . . . . . . . . . . . . 15,597
--------------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . . . . $ 38,616,374
--------------
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
PRIME MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE
MONTHS ENDED FISCAL YEAR
FEBRUARY 29, 1996 ENDED
(UNAUDITED) AUGUST 31, 1995
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38,600,777 $ 50,679,037
Net realized gain (loss) from investments. . . . . . . . . . . . . . . . . . 15,597 57,767
----------------- -----------------
Net increase (decrease) in net assets resulting from operations. . . . . . . . 38,616,374 50,736,804
Distributions to shareholders from net investment income . . . . . . . . . . . (38,603,949) (50,679,037)
Increase (decrease) in net assets from Fund share transactions . . . . . . . . 958,338,627 644,348,603
----------------- -----------------
INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . . . . . . . . 958,351,052 644,406,370
Net assets at beginning of period. . . . . . . . . . . . . . . . . . . . . . . 1,076,630,098 432,223,728
----------------- -----------------
NET ASSETS AT END OF PERIOD. . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,034,981,150 $ 1,076,630,098
----------------- -----------------
----------------- -----------------
FUND SHARE TRANSACTIONS
(ON A CONSTANT DOLLAR BASIS):
Fund shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,976,790,160 4,335,495,297
Fund shares issued to shareholders in reinvestments of distributions . . . . . 5,439,740 2,419,607
Fund shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,023,891,273) (3,693,566,301)
----------------- -----------------
Net increase (decrease). . . . . . . . . . . . . . . . . . . . . . . . . . . . 958,338,627 644,348,603
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 15
<PAGE>
THE SEVEN SEAS SERIES
PRIME MONEY MARKET FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout each fiscal
year or period and other performance information derived from the financial statements.
1996+ 1995 1994++
---------- ---------- ----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . $ 1.0000 $ 1.0000 $ 1.0000
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . .0281 .0567 .0207
---------- ---------- ----------
LESS DISTRIBUTIONS:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . (.0281) (.0567) (.0207)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . 1.0000 1.0000 $1.0000
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (%)(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.84 5.82 2.09
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average daily net assets (b)(c). . . . . . . . .20 .14 .16
Operating expenses, gross, to average daily net assets (b)(c). . . . . . . .27 .27 .32
Net investment income to average daily net assets (b). . . . . . . . . . . 5.63 5.76 4.00
Net assets, end of period ($000 omitted) . . . . . . . . . . . . . . . . . 2,034,981 1,076,630 432,224
Per share amount of fees waived ($ omitted). . . . . . . . . . . . . . . . -- .0013 .0007
Per share amount of fees reimbursed ($ omitted)(c) . . . . . . . . . . . . .0004 -- .0001
</TABLE>
+ For the six months ended February 29, 1996 (Unaudited).
++ For the period February 22, 1994 (commencement of operations) to
August 31, 1994.
(a) Periods less than one year are not annualized.
(b) The ratios for the periods ended February 29, 1996 and August 31, 1994 are
annualized.
(c) See Note 4 for current period amounts.
16 Semiannual Reports
<PAGE>
THE SEVEN SEAS SERIES
US TREASURY MONEY MARKET AND
PRIME MONEY MARKET FUNDS
NOTES TO FINANCIAL STATEMENTS
February 29, 1996 (Unaudited)
1. ORGANIZATION
The Seven Seas Series Fund (the "Investment Company") is a series mutual
fund, currently comprising 14 investment portfolios which are in operation
as of February 29, 1996. These financial statements report on two
portfolios (collectively, the "Funds") The Seven Seas Series US Treasury
Money Market Fund (the "Treasury Money Market Fund") and The Seven Seas
Series Prime Money Market Fund (the "Prime Money Market Fund"). The
Investment Company is a registered and diversified open-end investment
company, as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), that was organized as a Massachusetts business trust on
October 3, 1987 and operates under a First Amended and Restated Master
Trust Agreement, dated October 13, 1993, as amended. The Investment
Company's master trust agreement permits the Board of Trustees to issue an
unlimited number of full and fractional shares of beneficial interest at a
$.001 par value.
2. SIGNIFICANT ACCOUNTING POLICIES
The Funds' financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management
estimates. The following is a summary of the significant accounting
policies consistently followed by the Funds in the preparation of their
financial statements.
SECURITY VALUATION: The Funds' portfolio investments are valued on the
basis of amortized cost, a method by which each portfolio instrument is
initially valued at cost, and thereafter a constant accretion/amortization
to maturity of any discount or premium is assumed. The Funds utilize the
amortized cost valuation method in accordance with Rule 2a-7 of the 1940
Act.
SECURITIES TRANSACTIONS: Securities transactions are recorded on the trade
date, which in most instances is the same as the settlement date. Realized
gains and losses from the securities transactions, if any, are recorded on
the basis of identified cost.
INVESTMENT INCOME: Interest income is recorded on the accrual basis.
FEDERAL INCOME TAXES: As the Investment Company is a Massachusetts business
trust, each sub-trust is a separate corporate taxpayer and determines its
net investment income and capital gains (or losses) and the amounts to be
distributed to each funds' shareholders without regard to the income and
capital gains (or losses) of the other funds.
It is each Fund's intention to qualify as a regulated investment company
and distribute all of its taxable income. The Funds, accordingly, paid no
federal income taxes and no federal income tax provision was required. At
August 31, 1995, the Treasury Money Market Fund had a net tax basis capital
loss carryover of $173,944, which may be applied against any realized net
taxable gains in each succeeding year or until its expiration date of
August 31, 2003.
Semiannual Report 17
<PAGE>
THE SEVEN SEAS SERIES
US TREASURY MONEY MARKET AND
PRIME MONEY MARKET FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Funds declare and record
dividends on net investment income daily and pay them monthly. Capital gain
distributions, if any, are generally declared and paid annually. An
additional distribution may be paid by the Funds to avoid imposition of
federal income tax on any remaining undistributed net investment income and
capital gains. The funds may periodically make reclassifications among
certain of their capital accounts without impacting net asset value for
differences between federal tax regulations and generally accepted
accounting principles.
EXPENSES: Expenses such as advisory, custodian, transfer agent, shareholder
servicing, printing, and registration fees are charged directly to the
individual funds, while indirect expenses, such as administrative,
insurance, and professional fees are generally allocated among all funds
principally based on their relative net assets.
DEFERRED ORGANIZATION EXPENSES: Each Fund has incurred expenses in
connection with its organization and initial registration. These costs have
been deferred and are being amortized over 60 months on a straight-line
basis.
REPURCHASE AGREEMENTS: The Funds may engage in repurchase and tri-party
repurchase agreements with several financial institutions whereby the
Funds, through their custodian or third-party custodian, receive delivery
of the underlying securities. The market value of these securities
(including accrued interest) on acquisition date is required to be an
amount equal to at least 102% of the repurchase price. The Funds' Adviser
will monitor repurchase agreements daily to determine that the market value
(including accrued interest) at Fedwire closing time of the underlying
securities remains at least equal to 100% of the repurchase price. The
Adviser or third-party custodian will notify the seller to immediately
increase the collateral on the repurchase agreement to 102% of the
repurchase price if collateral falls below 100%.
3. SECURITIES TRANSACTIONS
INVESTMENT TRANSACTIONS: For the six months ended February 29, 1996,
purchases, sales, and maturities of investment securities, excluding US
Government and Agency obligations and repurchase agreements, for the Prime
Money Market Fund aggregated to $13,717,635,628, $108,956,803, and
$12,826,491,000, respectively.
For the six months ended February 29, 1996, purchases, sales, and
maturities of US Government and Agency obligations, excluding repurchase
agreements, for the Funds aggregated to the following:
<TABLE>
<CAPTION>
PURCHASES SALES MATURITIES
--------------- --------------- ---------------
<S> <C> <C> <C>
Treasury Money Market Fund $ 347,897,499 $ 63,310,382 $ 251,365,000
Prime Money Market Fund 382,244,850 23,787,903 83,090,000
</TABLE>
18 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
US TREASURY MONEY MARKET AND
PRIME MONEY MARKET FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
4. RELATED PARTIES
ADVISER: The Investment Company has an investment advisory agreement with
State Street Bank and Trust Company (the "Adviser") under which the Adviser
directs the investments of the Funds in accordance with their investment
objectives, policies, and limitations. For these services, the Treasury
Money Market and Prime Money Market Funds pay a fee to the Adviser,
calculated daily and paid monthly, at the annual rate of .25% and .15%, of
their average daily net assets, respectively. The Adviser voluntarily
agreed to reimburse the Treasury Money Market and Prime Money Market Funds
for all expenses in excess of .20% of their average daily net assets on an
annual basis, respectively. Expense reductions for the Treasury Money
Market Fund include $125,279 of expenses reimbursed and other miscellaneous
expense revisions. Advisory fees reimbursed for the Prime Money Market Fund
amounted to $507,861. The Investment Company has contracts with the Adviser
to provide custody, shareholder servicing and transfer agent services to
the Funds.
ADMINISTRATOR, DISTRIBUTOR AND SHAREHOLDER SERVICING: Frank Russell
Investment Management Company (the "Administrator") serves as administrator
of the Investment Company. The Administrator is also required, pursuant to
the Administration Agreement, to arrange and pay certain promotional and
sales costs of Investment Company shares. Russell Fund Distributors, Inc.
(the "Distributor"), a subsidiary of the Administrator, is the distributor
of the Investment Company shares. The Funds have adopted a distribution
plan pursuant to Rule 12b-1 (the "Plan") under the 1940 Act. Under the
Plan, the Funds may also enter into service agreements with financial
institutions, including the Adviser, State Street Brokerage Services, Inc.
("SSBSI"), a wholly-owned subsidiary of the Adviser, and Adviser's
Metropolitan Division of Commercial Banking ("Commercial Banking"
collectively the "Agents"). The Commercial Banking service agreement became
effective November 8, 1995. Under these service agreements, the Agents are
to provide shareholder servicing for Investment Company shareholders,
including services related to the purchase and redemption of Investment
Company shares.
For these services, the Funds pay fees to the Agents in an amount that per
annum is equal to .025%, .175% and .175% of the average daily value of each
Fund's shares held by or for customers of the Adviser, SSBSI and Commercial
Banking, respectively. These fees, in conjunction with other distribution-
related expenses, may not exceed .25% of the average daily value of net
assets on an annual basis, which includes a limit of .20% in shareholder
servicing fees for all providers. Any payments that are required to be made
by the Plan and any service agreement, but could not be made because they
exceed the maximum amount of allowable reimbursement, may be carried
forward for subsequent reimbursement from the Investment Company so long as
the Plan is in effect. The Funds' liabilities for any such expenses carried
forward shall terminate at the end of two years following the year in which
the expenditure was incurred. The Trustees or a majority of each Fund's
shareholders have the right, however, to terminate the Distribution Plan
and all payments thereunder at any
Semiannual Report 19
<PAGE>
THE SEVEN SEAS SERIES
US TREASURY MONEY MARKET AND
PRIME MONEY MARKET FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
time. The Funds will not be obligated to reimburse the Distributor for
carryover expenses subsequent to the Distribution Plan's termination or
noncontinuance. There were no carryover expenses as of February 29, 1996.
For shareholder servicing, the Treasury Money Market Fund incurred expenses
of $21,160 from the Adviser, while the Prime Money Market Fund incurred
expenses of $170,658. The amounts related to distribution and shareholder
servicing fees are included in the accompanying Statement of Operations.
Pursuant to the Administration Agreement with the Investment Company, the
Administrator supervises all non-portfolio investment aspects of the
Investment Company's operations and provides adequate office space and all
necessary office equipment and services, including telephone service,
utilities, stationery supplies, and similar items. The Investment Company
pays the Administrator the following fees for the services supplied by the
Administrator pursuant to the Administration Agreement: (i) an annual fee,
payable monthly on a pro rata basis, based on the following percentages of
the average daily net assets of all domestic funds: $0 up to
$500 million - .06%; over $500 million to and including $1 billion - .05%;
over $1 billion - .03%; (ii) less an amount equal to the sum of certain
distribution-related expenses incurred by the Investment Company's
Distributor on behalf of the funds (up to a maximum of 15% of the
asset-based fee determined in (i)); (iii) out-of-pocket expenses; and (iv)
start-up costs for new funds.
BOARD OF TRUSTEES: The Investment Company pays each of its Trustees not
affiliated with the Investment Company a retainer of $44,000 annually,
$1,000 for each of the board meetings attended, an additional $1,000 for
attending the annual audit committee meeting, and reimbursement for
out-of-pocket expenses.
20 Semiannual Report
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
THE SEVEN SEAS SERIES FUND
Two International Place, 35th Floor
Boston, Massachusetts 02110 [LOGO]
(617) 654-6089
- --------------------------------------------------------------------------------
TRUSTEES
Lynn L. Anderson, Chairman
William L. Marshall
Steven J. Mastrovich
Patrick J. Riley
Richard D. Shirk
Bruce D. Taber
Henry W. Todd
OFFICERS
Lynn L. Anderson, President
George W. Weber, Senior Vice President
and Treasurer
J. David Griswold, Vice President
and Secretary
INVESTMENT ADVISER
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
CUSTODIAN, TRANSFER AGENT AND
OFFICE OF SHAREHOLDERS INQUIRIES
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
(800) 64-7SEAS (77327)
DISTRIBUTOR
Russell Fund Distributors, Inc.
Two International Place, 35th Floor
Boston, Massachusetts 02110
(617) 654-6089
ADMINISTRATOR
Frank Russell Investment Management Company
909 A Street
Tacoma, Washington 98402
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
Semiannual Report 21
<PAGE>
SEVEN SEAS INVESTMENT PORTFOLIOS
[LOGO]
SEMIANNUAL REPORT
GROWTH AND INCOME FUND
FEBRUARY 29, 1996
<PAGE>
THE SEVEN SEAS SERIES FUND-Registered Trademark-
FEBRUARY 29, 1996
(UNAUDITED)
TABLE OF CONTENTS
Page
Growth and Income Fund Financial Statements. . . . . . . . . . . . . . . 3
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . 9
Fund Management and Service Providers. . . . . . . . . . . . . . . . . . 13
"THE SEVEN SEAS SERIES FUND"-Registered Trademark- IS A REGISTERED TRADEMARK AND
SERVICE MARK OF THE SEVEN SEAS SERIES FUND.
THIS REPORT IS PREPARED FROM THE BOOKS AND RECORDS OF THE FUND AND IT IS
SUBMITTED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. THIS INFORMATION IS FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A
SEVEN SEAS SERIES FUND PROSPECTUS CONTAINING MORE COMPLETE INFORMATION
CONCERNING THE INVESTMENT OBJECTIVE AND OPERATIONS OF THE FUND, CHARGES AND
EXPENSES. THE PROSPECTUS SHOULD BE READ CAREFULLY BEFORE AN INVESTMENT IS MADE.
PERFORMANCE IS HISTORICAL AND ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL
GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN WHEN PURCHASED.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. RUSSELL FUND DISTRIBUTORS,
INC., IS THE DISTRIBUTOR OF THE SEVEN SEAS SERIES FUND.
<PAGE>
THE SEVEN SEAS SERIES
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
----------- -----------
<S> <C> <C>
COMMON STOCKS - 97.2%
BASIC INDUSTRIES - 10.0%
Brush Wellman, Inc. 70,000 $ 1,365
Ethyl Corp. 120,000 1,290
Mallinckrodt Group, Inc. 29,000 1,138
Schulman (A.), Inc. 70,000 1,593
--------
5,386
--------
CAPITAL GOODS - 2.5%
Caterpillar, Inc. 20,000 1,337
--------
1,337
--------
CONSUMER BASICS - 17.4%
Bristol-Myers Squibb Co. 17,000 1,447
CPC International, Inc. 20,000 1,385
Merck & Co., Inc. 25,000 1,656
Panamerican Beverages, Inc.
Class A 47,000 1,904
Procter & Gamble Co. 19,000 1,558
Warner-Lambert Co. 15,000 1,483
--------
9,433
--------
CONSUMER DURABLES - 2.1%
Ford Motor Co. 37,000 1,156
--------
1,156
--------
CONSUMER NON-DURABLES - 4.9%
Eastman Kodak Co. 19,000 1,358
Home Depot, Inc. (The) 30,000 1,298
--------
2,656
--------
CONSUMER SERVICES - 2.2%
Disney (Walt) Co. 18,000 1,179
--------
1,179
--------
ENERGY - 7.8%
Exxon Corp. 18,000 1,431
Halliburton Co. 26,000 1,427
Unocal Corp. 45,000 1,350
--------
4,208
--------
FINANCE - 14.5%
American Express Co. 32,000 1,472
American General Corp. 42,000 1,528
American International Group, Inc. 16,500 1,594
Fleet Financial Group, Inc. 35,000 1,439
Franklin Resources, Inc. 31,000 1,787
--------
7,820
--------
GENERAL BUSINESS - 8.3%
Comcast Corp. Special Class A 75,000 1,472
General Motors Corp. Class E 27,000 1,542
Reuters Holdings PLC
Class B - ADR 23,000 1,481
--------
4,495
--------
TECHNOLOGY - 17.2%
AlliedSignal, Inc. 25,000 1,391
Boeing Co. 15,000 1,217
Cisco Systems, Inc. (a) 15,000 711
Intel Corp. 24,000 1,410
International Business Machines Corp. 15,000 1,839
Microsoft Corp. (a) 15,000 1,479
Motorola, Inc. 23,000 1,248
--------
9,295
--------
UTILITIES - 10.3%
AT&T Corp. 18,000 1,145
GTE Corp. 40,000 1,715
</TABLE>
Semiannual Report 3
<PAGE>
THE SEVEN SEAS SERIES
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
----------- -----------
<S> <C> <C>
Texas Utilities Co. 35,000 $ 1,413
Vodafone Group PLC - ADR 37,000 1,309
--------
5,582
--------
TOTAL COMMON STOCKS
(cost $41,837) 52,547
--------
<CAPTION>
PRINCIPAL
AMOUNT
(000)
-----------
<S> <C> <C>
SHORT-TERM INVESTMENTS - 1.1%
Dreyfus Cash Management Plus, Inc.
Money Market Fund (b) $ 623 623
--------
TOTAL SHORT-TERM INVESTMENTS
(cost $623) 623
--------
TOTAL INVESTMENTS
(identified cost $42,460)(c) - 98.3% $53,170
OTHER ASSETS AND LIABILITIES,
NET - 1.7% 895
--------
NET ASSETS - 100.0% $54,065
--------
--------
</TABLE>
(a) Nonincome-producing security.
(b) At cost, which approximates market.
(c) At February 29, 1996, the cost for federal income tax purposes was $42,463
and net unrealized appreciation for all securities was $10,707. This
consisted of aggregate gross unrealized appreciation for all securities in
which there was an excess of market value over tax cost of $10,866 and
aggregate gross unrealized depreciation for all securities in which there
was an excess of tax cost over market value of $159.
The accompanying notes are an integral part of the financial statements.
4 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (Unaudited)
<S> <C> <C>
ASSETS
Investments at market (identified cost $42,459,673)(Note 2) . . . . . . . $ 53,170,246
Receivables:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,622
Investments sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . 949,168
Fund shares sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,187
From Adviser (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . 121,818
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,417
Deferred organization expenses (Note 2) . . . . . . . . . . . . . . . . . 23,004
-------------
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,469,462
LIABILITIES
Payables (Note 4):
Investments purchased . . . . . . . . . . . . . . . . . . $ 275,090
Fund shares redeemed. . . . . . . . . . . . . . . . . . . 21,804
Accrued administrative fees . . . . . . . . . . . . . . . 1,259
Accrued advisory fees . . . . . . . . . . . . . . . . . . 72,973
Accrued custodian fees. . . . . . . . . . . . . . . . . . 3,981
Accrued shareholder servicing fees. . . . . . . . . . . . 1,383
Accrued transfer agent fees . . . . . . . . . . . . . . . 17,482
Other accrued expenses. . . . . . . . . . . . . . . . . . 10,367 404,339
----------- -------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 54,065,123
-------------
-------------
NET ASSETS CONSIST OF:
Undistributed net investment income . . . . . . . . . . . . . . . . . . . $ 59,186
Accumulated net realized gain (loss). . . . . . . . . . . . . . . . . . . 476,620
Unrealized appreciation (depreciation) on investments . . . . . . . . . . 10,710,573
Shares of beneficial interest . . . . . . . . . . . . . . . . . . . . . . 4,118
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . 42,814,626
-------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 54,065,123
-------------
-------------
Net asset value, offering and redemption price per share
($54,065,123 divided by 4,117,558 shares of $.001
par value shares of beneficial interest outstanding). . . . . . . . . . . $13.13
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 5
<PAGE>
THE SEVEN SEAS SERIES
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 1996 (Unaudited)
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 505,139
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,497
----------
508,636
Expenses (Notes 2 and 4):
Advisory fees . . . . . . . . . . . . . . . . . . . . . . $ 206,891
Administrative fees . . . . . . . . . . . . . . . . . . . 7,217
Custodian fees. . . . . . . . . . . . . . . . . . . . . . 11,842
Distribution fees . . . . . . . . . . . . . . . . . . . . 15,624
Professional fees . . . . . . . . . . . . . . . . . . . . 10,112
Registration fees . . . . . . . . . . . . . . . . . . . . 9,667
Shareholder servicing fees. . . . . . . . . . . . . . . . 6,402
Transfer agent fees . . . . . . . . . . . . . . . . . . . 77,988
Trustees' fees. . . . . . . . . . . . . . . . . . . . . . 517
Amortization of deferred organization expenses. . . . . . 4,918
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 1,874
---------
Expenses before reimbursement. . . . . . . . . . . . . . 353,052
Expense reimbursement from Adviser . . . . . . . . . . . (121,818) 231,234
---------- ----------
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . 277,402
----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (Notes 2 and 3)
Net realized gain (loss) from investments. . . . . . . . . . . . . . . . . 489,648
Net change in unrealized appreciation or depreciation of investments . . . 4,480,478
----------
Net gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . 4,970,126
----------
Net increase (decrease) in net assets resulting from operations. . . . . . $5,247,528
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE
MONTHS ENDED FISCAL YEAR
FEBRUARY 29, 1996 ENDED
(UNAUDITED) AUGUST 31, 1995
------------------ ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income . . . . . . . . . . . . . . . . . . . . . $ 277,402 $ 567,186
Net realized gain (loss) from investments. . . . . . . . . . . . 489,648 444,901
Net change in unrealized appreciation
or depreciation of investments. . . . . . . . . . . . . . . . . 4,480,478 4,623,985
------------------ ---------------
Net increase (decrease) in net assets resulting from operations. . 5,247,528 5,636,072
Distributions to shareholders:
Net investment income. . . . . . . . . . . . . . . . . . . . . . (399,342) (509,390)
Net realized gain on investments . . . . . . . . . . . . . . . . (162,844) --
Increase (decrease) in net assets from Fund share transactions . . 5,495,629 12,010,923
------------------ ---------------
INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . . 10,180,971 17,137,605
Net assets at beginning of period. . . . . . . . . . . . . . . . . 43,884,152 26,746,547
------------------ ---------------
NET ASSETS AT END OF PERIOD
(including undistributed net investment income of
$59,186 and $181,126, respectively). . . . . . . . . . . . . . . $ 54,065,123 $ 43,884,152
------------------ ---------------
------------------ ---------------
</TABLE>
<TABLE>
<CAPTION>
FUND SHARE TRANSACTIONS FOR THE SIX MONTHS ENDED FOR THE FISCAL YEAR
FEBRUARY 29, 1996 (UNAUDITED) ENDED AUGUST 31, 1995
----------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- ------------- ---------- -----------
<S> <C> <C> <C> <C>
Fund shares sold . . . . . . . . . . . . . . 1,048,231 $13,054,996 2,456,856 $26,579,867
Fund shares issued to shareholders
in reinvestments of distributions. . . . . 47,339 578,328 48,392 505,648
Fund shares redeemed . . . . . . . . . . . . (649,142) (8,137,695) (1,379,737) (15,074,592)
-------------- ------------- ---------- -----------
Net increase (decrease). . . . . . . . . . . 446,428 $ 5,495,629 1,125,511 $12,010,923
-------------- ------------- ---------- -----------
-------------- ------------- ---------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 7
<PAGE>
THE SEVEN SEAS SERIES
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout each fiscal
year or period and other performance information derived from the financial statements.
1996+ 1995 1994++
----------- ----------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . . $ 11.95 $ 10.51 $ 10.00
----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . . . .07 .18 .15
Net realized and unrealized gain (loss) on investments . . 1.26 1.44 .47
----------- ----------- -----------
Total Income From Investment Operations. . . . . . . . . . 1.33 1.62 .62
----------- ----------- -----------
LESS DISTRIBUTIONS:
Net investment income. . . . . . . . . . . . . . . . . . . (.11) (.18) (.11)
Net realized gain on investments . . . . . . . . . . . . . (.04) -- --
----------- ----------- -----------
Total Distributions. . . . . . . . . . . . . . . . . . . . (.15) (.18) (.11)
----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . . . $ 13.13 $ 11.95 $ 10.51
----------- ----------- -----------
----------- ----------- -----------
TOTAL RETURN (%)(a). . . . . . . . . . . . . . . . . . . . . 11.19 15.66 6.23
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net
to average daily net assets (b)(c). . . . . . . . . . . . .95 .95 .95
Operating expenses, gross
to average daily net assets (b)(c). . . . . . . . . . . . 1.45 1.61 1.44
Net investment income to average daily net assets (b). . . 1.14 1.72 1.75
Portfolio turnover (b) . . . . . . . . . . . . . . . . . . 43.48 39.32 36.48
Net assets, end of period ($000 omitted) . . . . . . . . . 54,065 43,884 26,747
Per share amount of fees waived ($ omitted). . . . . . . . -- -- .0002
Per share amount of fees reimbursed ($ omitted)(c) . . . . .0299 .0685 .0418
Average commission rate paid per share
of security ($ omitted) . . . . . . . . . . . . . . . . . .0443 N/A N/A
</TABLE>
+ For the six months ended February 29, 1996 (Unaudited).
++ For the period September 1, 1993 (commencement of operations) to August 31,
1994.
(a) Periods less than one year are not annualized.
(b) The ratios for the period ended February 29, 1996 are annualized.
(c) See Note 4 for current period amounts.
8 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
GROWTH AND INCOME FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996 (Unaudited)
1. ORGANIZATION
The Seven Seas Series Fund (the "Investment Company") is a Series mutual
fund, currently comprising 14 investment portfolios, which are in operation
as of February 29, 1996. These financial statements report on one
portfolio, The Seven Seas Series Growth and Income Fund (the "Fund"). The
Investment Company is a registered and diversified open-end investment
company, as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), that was organized as a Massachusetts business trust on
October 3, 1987 and operates Under a First Amended and Restated Master
Trust Agreement, dated October 13, 1993, as amended. The Investment
Company's master trust agreement permits the Board of Trustees to issue an
unlimited number of full and fractional shares of beneficial interest at a
$.001 par value.
2. SIGNIFICANT ACCOUNTING POLICIES
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management
estimates. The following is a summary of the significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements.
SECURITY VALUATION: United States equity securities listed and traded
principally on any national securities exchange are valued on the basis of
the last sale price or, lacking any sale, at the closing bid price, on the
primary exchange on which the security is traded. United States
over-the-counter equities are valued on the basis of the closing bid price.
International securities traded on a national securities exchange are
valued on the basis of the last sale price. International securities traded
over the counter are valued on the basis of the mean of bid prices. In the
absence of a last sale or mean bid price, respectively, such securities may
be valued on the basis of prices provided by a pricing service if those
prices are believed to reflect the fair market value of such securities.
Money market instruments maturing within 60 days of the valuation date are
valued at "amortized cost," a method by which each portfolio instrument is
initially valued at cost, and thereafter a constant accretion/amortization
to maturity of any discount or premium is assumed, unless the Board of
Trustees determines that amortized cost does not represent fair value.
The Fund may value securities for which market quotations are not readily
available at "fair value," as determined in good faith pursuant to
procedures established by the Board of Trustees.
SECURITIES TRANSACTIONS: Securities transactions are recorded on a trade
date basis. Realized gains and losses from securities transactions are
recorded on the basis of identified cost.
INVESTMENT INCOME: Dividend income is recorded on the ex-dividend date and
interest income is recorded on the accrual basis.
Semiannual Report 9
<PAGE>
THE SEVEN SEAS SERIES
GROWTH AND INCOME FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
AMORTIZATION AND ACCRETION: All zero-coupon bond discounts and original
issue discounts are accreted for both tax and financial reporting purposes.
All short- and long-term market premiums/discounts are amortized/accreted
for both tax and financial reporting purposes.
FEDERAL INCOME TAXES: As the Investment Company is a Massachusetts
business trust, the sub-trust is a separate corporate taxpayer and
determines its net investment income and capital gains (or losses) and the
amounts to be distributed to each fund's shareholders without regard to the
income and capital gains (or losses) of the other funds.
It is the Fund's intention to qualify as a regulated investment company and
distribute all of its taxable income. The Fund, accordingly, paid no
federal income taxes and no federal income tax provision was required. At
August 31, 1995, the Fund has a net tax basis capital loss carryover of
$63,505, which may be applied against any realized net taxable gains in
each succeeding year until its expiration date of August 31, 2002.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Income dividends and capital
gain distributions, if any, are recorded on the ex-dividend date. Dividends
are generally declared and paid quarterly. Capital gain distributions are
generally declared and paid annually. An additional distribution may be
paid by the Fund to avoid imposition of federal income tax on any remaining
undistributed net investment income and capital gains.
The timing and characterization of certain income and capital gain
distributions are determined in accordance with federal tax regulations
which may differ from generally accepted accounting principles ("GAAP"). As
a result, net investment income and net realized gain (or loss) from
investment transactions for a reporting period may differ significantly
from distributions during such period. The differences between tax
regulations and GAAP primarily relate to investments in foreign-denominated
investments and certain securities sold at a loss. Accordingly, the Fund
may periodically make reclassifications among certain of its capital
accounts without impacting its net asset value.
EXPENSES: Expenses such as advisory, custodian, transfer agent,
shareholder servicing, printing, and registration fees are charged directly
to the individual funds, while indirect expenses, such as administrative,
insurance, and professional fees are generally allocated among all funds
principally based on their relative net assets.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred expenses in connection
with its organization and initial registration. These costs have been
deferred and are being amortized over 60 months on a straight-line basis.
REPURCHASE AGREEMENTS: The Fund may engage in repurchase and tri-party
repurchase agreements with several financial institutions whereby the Fund,
through its custodian or third-party custodian, receives delivery of the
underlying securities. The market value of these securities (including
accrued interest) on acquisition date is required to be an amount equal to
at least 102% of the repurchase price. The Fund's
10 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
GROWTH AND INCOME FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
Adviser will monitor repurchase agreements daily to determine that the
market value (including accrued interest) at Fedwire closing time of the
underlying securities remains at least equal to 100% of the repurchase
price. The Adviser or third-party custodian will notify the seller to
immediately increase the collateral on the repurchase agreement to 102% of
the repurchase price if collateral falls below 100%.
3. SECURITIES TRANSACTIONS
INVESTMENT TRANSACTIONS: For the six months ended February 29, 1996,
purchases and sales of investment securities, excluding short-term
investments aggregated to $15,410,236 and $10,245,049, respectively.
4. RELATED PARTIES
ADVISER: The Investment Company has an investment advisory agreement with
State Street Bank and Trust Company (the "Adviser") under which the Adviser
directs the investment of the Fund in accordance with its investment
objective, policies, and limitations. For these services, the Fund pays a
fee to the Adviser, calculated daily and paid monthly, at the annual rate
of .85% of its average daily net assets. For the six months ended February
29, 1996, the Adviser voluntarily agreed to reimburse the Fund for all
expenses in excess of .95% of average daily net assets on an annual basis.
The Investment Company has contracts with the Adviser to provide custody,
shareholder servicing and transfer agent services to the Fund.
ADMINISTRATOR, DISTRIBUTOR AND SHAREHOLDER SERVICING: Frank Russell
Investment Management Company (the "Administrator") serves as administrator
of the Investment Company. The Administrator is also required, pursuant to
the Administration Agreement, to arrange and pay certain promotional and
sales costs of Investment Company shares. Russell Fund Distributors, Inc.
(the "Distributor"), a subsidiary of the Administrator, is the distributor
of the Investment Company shares. The Fund has adopted a distribution plan
pursuant to Rule 12b-1 (the "Plan") under the 1940 Act. Under the Plan, the
Fund may also enter into service agreements with financial institutions,
including the Adviser, State Street Brokerage Services, Inc. ("SSBSI"), a
wholly-owned subsidiary of the Adviser, and Adviser's Metropolitan Division
of Commercial Banking ("Commercial Banking" collectively the "Agents"). The
Commercial Banking service agreement became effective November 8, 1995.
Under these service agreements, the Agents are to provide shareholder
servicing for Investment Company shareholders, including services related
to the purchase and redemption of Investment Company shares.
For these services, the Fund pays fees to the Agents in an amount that per
annum is equal to .025%, .175% and .175% of the average daily value of all
Fund shares held by or for customers of the Adviser, SSBSI and Commercial
Banking, respectively. These fees, in conjunction with other
distribution-related expenses, may not exceed .25% of the average daily
value of net assets on an annual basis, which includes a limit of .20% in
shareholder servicing fees for all providers. Any payments that are
required to be made by the Plan and any service agreement, but could not be
made because they exceed the maximum amount of allowable reimbursement, may
be carried forward for subsequent reimbursement from the Investment Company
so long as the Plan is in effect. The Fund's liability for any such
expenses carried forward shall terminate at the end
Semiannual Report 11
<PAGE>
THE SEVEN SEAS SERIES
GROWTH AND INCOME FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
of two years following the year in which the expenditure was incurred. The
Trustees or a majority of the Fund's shareholders have the right, however,
to terminate the Distribution Plan and all payments thereunder at any time.
The Fund will not be obligated to reimburse the Distributor for carryover
expenses subsequent to the Distribution Plan's termination or
noncontinuance. There were no carryover expenses as of February 29, 1996.
For shareholder servicing, the Fund incurred expenses of $6,094 and $308
from the Adviser and SSBSI, respectively. The amounts related to
distribution and shareholder servicing fees are included in the
accompanying Statement of Operations.
Pursuant to the Administration Agreement with the Investment Company, the
Administrator supervises all non-portfolio investment aspects of the
Investment Company's operations and provides adequate office space and all
necessary office equipment and services, including telephone service,
utilities, stationery supplies, and similar items. The Investment Company
pays the Administrator the following fees for the services supplied by the
Administrator pursuant to the Administration Agreement: (i) an annual fee,
payable monthly on a pro rata basis, based on the following percentages of
the average daily net assets of all domestic funds: $0 up to $500 million -
.06%; over $500 million to and including $1 billion - .05%; over $1 billion
- .03%; (ii) less an amount equal to the sum of certain
distribution-related expenses incurred by the Investment Company's
Distributor on behalf of the Fund (up to a maximum of 15% of the
asset-backed fee determined in (i)); (iii) out-of-pocket expenses; and (iv)
start-up costs for new funds.
AFFILIATED BROKERAGE: The Fund placed a portion of its portfolio
transactions with SSBSI, an affiliated broker dealer of the Fund's Adviser.
The commissions paid to SSBSI were $9,895 for the six months ended February
29, 1996.
BOARD OF TRUSTEES: The Investment Company pays each of its Trustees not
affiliated with the Investment Company a retainer of $44,000 annually,
$1,000 for each of the board meetings attended, an additional $1,000 for
attending the annual audit committee meeting, and reimbursement for
out-of-pocket expenses.
5. DIVIDENDS
On March 1, 1996 the Board of Trustees declared a dividend of $.0143 from
net investment income, payable on March 11, 1996 to shareholders of record
March 4, 1996.
12 Semiannual Report
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
THE SEVEN SEAS SERIES FUND
Two International Place, 35th Floor [LOGO]
Boston, Massachusetts 02110
(617) 654-6089
- --------------------------------------------------------------------------------
TRUSTEES
Lynn L. Anderson, Chairman
William L. Marshall
Steven J. Mastrovich
Patrick J. Riley
Richard D. Shirk
Bruce D. Taber
Henry W. Todd
OFFICERS
Lynn L. Anderson, President
George W. Weber, Senior Vice President
and Treasurer
J. David Griswold, Vice President
and Secretary
INVESTMENT ADVISER
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
CUSTODIAN, TRANSFER AGENT AND
OFFICE OF SHAREHOLDER INQUIRIES
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
(800) 64-7SEAS (77327)
DISTRIBUTOR
Russell Fund Distributors, Inc.
Two International Place, 35th Floor
Boston, Massachusetts 02110
(617) 654-6089
ADMINISTRATOR
Frank Russell Investment Management Company
909 A Street
Tacoma, Washington 98402
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
Semiannual Report 13
<PAGE>
SEVEN SEAS INVESTMENT PORTFOLIOS
[LOGO]
SEMIANNUAL REPORT
INTERMEDIATE FUND
FEBRUARY 29, 1996
<PAGE>
THE SEVEN SEAS SERIES FUND-Registered Trademark-
FEBRUARY 29, 1996
(UNAUDITED)
TABLE OF CONTENTS
Page
Intermediate Fund Financial Statements . . . . . . . . . . . . . . . . . . 3
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . 10
Fund Management and Service Providers. . . . . . . . . . . . . . . . . . . 14
"THE SEVEN SEAS SERIES FUND-Registered Trademark-" IS A REGISTERED TRADEMARK AND
SERVICE MARK OF THE SEVEN SEAS SERIES FUND.
THIS REPORT IS PREPARED FROM THE BOOKS AND RECORDS OF THE FUND AND IT IS
SUBMITTED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. THIS INFORMATION IS FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A
SEVEN SEAS SERIES FUND PROSPECTUS CONTAINING MORE COMPLETE INFORMATION
CONCERNING THE INVESTMENT OBJECTIVE AND OPERATIONS OF THE FUND, CHARGES AND
EXPENSES. THE PROSPECTUS SHOULD BE READ CAREFULLY BEFORE AN INVESTMENT IS MADE.
PERFORMANCE IS HISTORICAL AND ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL
GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN WHEN PURCHASED.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. RUSSELL FUND DISTRIBUTORS,
INC., IS THE DISTRIBUTOR OF THE SEVEN SEAS SERIES FUND.
<PAGE>
THE SEVEN SEAS SERIES
INTERMEDIATE FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
February 29, 1996 (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
(000) (000)
---------- ----------
<S> <C> <C>
LONG-TERM INVESTMENTS - 97.0%
ASSET-BACKED SECURITIES - 6.8%
Advanta Credit Card Master Trust II
Series 1995-F Class A1
6.050% due 08/01/03 $ 1,000 $ 999
Ford Credit Auto Loan Master Trust
Series 1996-1 Class A
5.500% due 02/15/03 370 360
MBNA Master Credit Card Trust
Series 1993-3 Class A
5.400% due 09/15/00 1,000 988
Premier Auto Trust
Series 1994-4 Class A-5
6.650% due 11/02/98 500 507
------
2,854
------
CORPORATE BONDS AND NOTES - 40.7%
Associates Corp. of North America
6.375% due 08/15/98 400 405
7.500% due 05/15/99 500 519
Banc One, Milwaukee, N.A.
6.625% due 04/15/03 500 501
BankAmerica Corp.
8.125% due 08/15/04 500 511
Beneficial Corp. (MTN)
6.030% due 06/17/97 500 502
9.400% due 06/30/97 300 314
6.790% due 11/21/97 200 203
Branch Banking & Trust Co.
5.700% due 02/01/01 250 245
Burlington Northern Santa Fe Corp.
6.375% due 12/15/05 200 193
CIT Group Holdings, Inc.
6.350% due 07/31/98 500 505
Comerica Bank (MTN)
6.875% due 04/18/97 500 507
Commercial Credit Group, Inc.
8.125% due 03/01/97 750 766
Dresdner Bank AG
6.625% due 09/15/05 200 199
Enron Corp.
9.650% due 05/15/01 150 171
Florida Power & Light Co.
6.625% due 02/01/03 500 497
Ford Motor Company
7.500% due 11/15/99 555 579
General Electric Capital Corp.
5.500% due 11/01/01 450 432
General Motors Acceptance Corp.
7.750% due 04/15/97 1,000 1,021
5.500% due 12/15/01 450 427
Georgia Power Co.
6.875% due 09/01/02 500 500
Household Finance, Co.
8.950% due 09/15/99 200 218
Integra Bank (MTN)
6.550% due 06/15/00 500 506
International Bank for Reconstruction
& Development
10.030% due 09/15/97 500 532
International Business Machines Corp.
6.375% due 06/15/00 750 760
Morgan (J. P.) & Co., Inc.
7.625% due 09/15/04 750 795
NationsBank Corp.
6.500% due 08/15/03 500 498
News America Holdings, Inc.
7.450% due 06/01/00 200 205
Norwest Financial, Inc.
6.750% due 06/01/05 750 752
</TABLE>
Semiannual Report 3
<PAGE>
THE SEVEN SEAS SERIES
INTERMEDIATE FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
February 29, 1996 (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
(000) (000)
---------- ----------
<S> <C> <C>
Old Kent Bank (MTN)
6.875% due 04/15/98 $ 500 $ 510
Penney (J.C.) Co., Inc. (MTN)
6.375% due 09/15/00 500 504
Southwestern Bell Telephone Co.
5.875% due 06/01/03 450 428
Toronto Dominion Bank
6.125% due 11/01/08 500 467
Transamerica Financial Corp.
6.750% due 08/15/97 1,000 1,012
Union Oil Co. of California
9.750% due 12/01/00 200 227
Wal Mart Stores, Inc.
7.500% due 05/15/04 500 529
-------
16,940
-------
MORTGAGE-BACKED SECURITIES - 1.2%
Federal Home Loan Mortgage Corp.
Participation Certificate
Group #G5-0236
5.500% due 10/01/98 516 510
-------
510
-------
NON-US BONDS - 0.6%
Finland, Republic of
7.875% due 07/28/04 215 236
-------
236
-------
UNITED STATES GOVERNMENT
AGENCIES - 8.9%
Federal National Mortgage Association
9.050% due 04/10/00 200 223
Federal National Mortgage
Association
5.450% due 10/10/03 500 475
Federal National Mortgage
Association (MTN)
5.200% due 04/30/98 600 591
Student Loan Marketing Association
6.050% due 09/14/00 1,000 1,004
Tennessee Valley Authority
6.125% due 07/15/03 400 395
Tennessee Valley Authority Series A
6.375% due 06/15/05 1,000 996
-------
3,684
-------
UNITED STATES GOVERNMENT
TREASURIES - 31.6%
United States Treasury Notes
5.750% due 09/30/97 3,235 3,252
5.625% due 10/31/97 625 627
5.250% due 12/31/97 2,000 1,994
6.125% due 05/15/98 500 507
5.875% due 08/15/98 1,100 1,109
5.500% due 11/15/98 600 599
6.375% due 01/15/99 1,000 1,022
8.000% due 08/15/99 100 107
6.750% due 04/30/00 1,000 1,038
6.125% due 09/30/00 150 152
5.750% due 10/31/00 750 750
5.625% due 11/30/00 500 497
6.250% due 02/15/03 550 558
5.750% due 08/15/03 500 492
6.500% due 05/15/05 425 435
-------
13,139
-------
</TABLE>
4 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
INTERMEDIATE FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
February 29, 1996 (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
(000) (000)
---------- ----------
<S> <C> <C>
YANKEE BONDS - 7.2%
Household International
Netherlands B.V.
6.000% due 03/15/99 $ 500 $ 498
Ireland, Republic of
7.125% due 07/15/02 500 518
Ontario, Province of
8.000% due 10/17/01 250 271
7.750% due 06/04/02 500 537
Victorian Public Authority
Financial Agency
8.450% due 10/01/01 500 551
Westpac Banking, Ltd.
7.875% due 10/15/02 600 645
--------
3,020
--------
TOTAL LONG-TERM INVESTMENTS
(cost $40,188) 40,383
--------
SHORT-TERM INVESTMENTS - 1.0%
Dreyfus Cash Management Plus, Inc.
Money Market Fund (a) 414 414
Franklin US Treasuries
Money Market Fund (a) 1 1
--------
TOTAL SHORT-TERM INVESTMENTS
(cost $415) 415
--------
TOTAL INVESTMENTS
(identified cost $40,603)(b) - 98.0% 40,798
OTHER ASSETS AND LIABILITIES,
NET - 2.0% 822
--------
NET ASSETS - 100.0% $ 41,620
--------
--------
</TABLE>
(a) At cost, which approximates market.
(b) At February 29, 1996, the cost for federal income tax purposes was the same
as shown above and net unrealized appreciation for all securities was $195.
This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over tax cost of
$435 and aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over market value of $240.
(MTN) represents Medium Term Note.
The accompanying notes are an integral part of the financial statements.
Semiannual Report 5
<PAGE>
THE SEVEN SEAS SERIES
INTERMEDIATE FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (Unaudited)
<S> <C> <C>
ASSETS
Investments at market (identified cost $40,602,883)(Note 2). . . . . . . . . . . . . . . . . . $ 40,797,534
Receivables:
Dividends and interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 692,736
Fund shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311,519
From Adviser (Note 4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159,599
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,415
Deferred organizational expenses (Note 2). . . . . . . . . . . . . . . . . . . . . . . . . . . 22,965
-------------
41,986,768
LIABILITIES
Payables (Note 4):
Fund shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . $ 279,034
Accrued administrative fees. . . . . . . . . . . . . . . . . . . . . . . 1,046
Accrued advisory fees. . . . . . . . . . . . . . . . . . . . . . . . . . 59,348
Accrued custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . 6,537
Accrued shareholder servicing fees . . . . . . . . . . . . . . . . . . . 1,039
Accrued transfer agent fees. . . . . . . . . . . . . . . . . . . . . . . 10,014
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . 10,010 367,028
---------- -------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 41,619,740
-------------
-------------
NET ASSETS CONSIST OF:
Undistributed net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 380,914
Accumulated net realized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . (121,956)
Unrealized appreciation (depreciation) on investments. . . . . . . . . . . . . . . . . . . . 194,651
Shares of beneficial interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,264
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,161,867
-------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 41,619,740
-------------
-------------
Net asset value, offering and redemption price per share
($41,619,740 divided by 4,263,798 shares of $.001
par value shares of beneficial interest outstanding) . . . . . . . . . . . . . . . . . . . . $9.76
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
INTERMEDIATE FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 1996 (Unaudited)
<S> <C> <C>
INVESTMENT INCOME
Income:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,232,967
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,657
------------
1,257,624
Expenses (Notes 2 and 4):
Advisory fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 162,031
Administrative fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,540
Distribution fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,961
Professional fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,085
Registration fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,560
Shareholder servicing fees . . . . . . . . . . . . . . . . . . . . . . . 5,212
Transfer agent fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 46,174
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 939
Amortization of deferred organization expenses . . . . . . . . . . . . . 4,940
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,679
----------
Expenses before reimbursement. . . . . . . . . . . . . . . . . . . . . . 281,121
Expense reimbursement from Adviser . . . . . . . . . . . . . . . . . . . (159,599) 121,522
---------- ------------
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,136,102
------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (NOTES 2 AND 3)
Net realized gain (loss) from investments. . . . . . . . . . . . . . . . . . . . . . . . . . . 300,441
Net change in unrealized appreciation or depreciation of investments . . . . . . . . . . . . . (16,074)
------------
Net gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284,367
------------
Net increase (decrease) in net assets resulting from operations. . . . . . . . . . . . . . . . $ 1,420,469
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 7
<PAGE>
THE SEVEN SEAS SERIES
INTERMEDIATE FUND
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE
MONTHS ENDED FISCAL YEAR
FEBRUARY 29, 1996 ENDED
(UNAUDITED) AUGUST 31, 1995
----------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,136,102 $ 1,557,497
Net realized gain (loss) from investments. . . . . . . . . . . . . . . . 300,441 (358,690)
Net change in unrealized appreciation
or depreciation of investments . . . . . . . . . . . . . . . . . . . . (16,074) 1,406,588
------------ ------------
Net increase (decrease) in net assets resulting from operations. . . . . . 1,420,469 2,605,395
Distributions to shareholders from net investment income . . . . . . . . . (1,267,309) (1,340,239)
Increase (decrease) in net assets from Fund share transactions . . . . . . 7,573,582 12,664,979
------------ ------------
INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . . . . . . 7,726,742 13,930,135
Net assets at beginning of period. . . . . . . . . . . . . . . . . . . . . 33,892,998 19,962,863
------------ ------------
NET ASSETS AT END OF PERIOD
(including undistributed net investment income of
$380,914 and $512,121, respectively) . . . . . . . . . . . . . . . . . . $ 41,619,740 $ 33,892,998
------------ ------------
------------ ------------
FUND SHARE TRANSACTIONS
FOR THE SIX MONTHS ENDED FOR THE FISCAL YEAR ENDED
FEBRUARY 29, 1996 (UNAUDITED) AUGUST 31, 1995
----------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ---------- ---------- -----------
Fund shares sold . . . . . . . . . . . . . . 2,025,126 $19,810,095 2,311,647 $21,578,927
Fund shares issued to shareholders
in reinvestments of distributions. . . . . 109,069 1,060,113 135,007 1,248,108
Fund shares redeemed . . . . . . . . . . . . (1,356,934) (13,296,626) (1,090,932) (10,162,056)
---------- ----------- ---------- -----------
Net increase (decrease). . . . . . . . . . . 777,261 $ 7,573,582 1,355,722 $12,664,979
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
INTERMEDIATE FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout each fiscal
year or period and other performance information derived from the financial statements.
1996+ 1995 1994++
--------- --------- ---------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . $ 9.72 $ 9.37 $ 10.00
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . .26 .56 .42
Net realized and unrealized gain (loss) on investments . . . . . . . . . .10 .34 (.76)
--------- --------- ---------
Total Income From Investment Operations. . . . . . . . . . . . . . . . . .36 .90 (.34)
--------- --------- ---------
LESS DISTRIBUTIONS:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . (.32) (.55) (.29)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . $ 9.76 $ 9.72 $ 9.37
--------- --------- ---------
--------- --------- ---------
TOTAL RETURN (%)(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.79 10.05 (3.42)
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average daily net assets (b)(c). . . . . . . .60 .60 .60
Operating expenses, gross, to average daily net assets (b)(c). . . . . . 1.38 1.67 1.51
Net investment income to average daily net assets (b). . . . . . . . . . 5.59 6.29 5.11
Portfolio turnover (b) . . . . . . . . . . . . . . . . . . . . . . . . . 226.19 26.31 15.70
Net assets, end of period ($000 omitted) . . . . . . . . . . . . . . . . 41,620 33,893 19,963
Per share amount of fees waived ($ omitted). . . . . . . . . . . . . . . -- -- .0002
Per share amount of fees reimbursed ($ omitted)(c) . . . . . . . . . . . .0374 .0946 .0753
</TABLE>
+ For the six months ended February 29, 1996 (Unaudited).
++ For the period September 1, 1993 (commencement of operations) to
August 31, 1994.
(a) Periods less than one year are not annualized.
(b) The ratios for the periods ended February 29, 1996 and August 31, 1994
are annualized.
(c) See Note 4 for current period amounts.
Semiannual Report 9
<PAGE>
THE SEVEN SEAS SERIES
INTERMEDIATE FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996 (Unaudited)
1. ORGANIZATION
The Seven Seas Series Fund (the "Investment Company") is a series mutual
fund, currently comprising 14 investment portfolios, which are in operation
as of February 29, 1996. These financial statements report on one
portfolio, The Seven Seas Series Intermediate Fund (the "Fund"). The
Investment Company is a registered and diversified open-end investment
company, as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), that was organized as a Massachusetts business trust on
October 3, 1987 and operates under a First Amended and Restated Master
Trust Agreement, dated October 13, 1993, as amended. The Investment
Company's master trust agreement permits the Board of Trustees to issue an
unlimited number of full and fractional shares of beneficial interest at a
$.001 Par value.
2. SIGNIFICANT ACCOUNTING POLICIES
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management
estimates. The following is a summary of the significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements.
SECURITY VALUATION: United States fixed-income securities listed and traded
principally on any national securities exchange are valued on the basis of
the last sale price or, lacking any sale, at the closing bid price, on the
primary exchange on which the security is traded. United States
over-the-counter, fixed-income securities and options are valued on the
basis of the closing bid price.
Many fixed-income securities do not trade each day, and thus last sale or
bid prices are frequently not available. Fixed-income securities may be
valued using prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities.
Money market instruments maturing within 60 days of the valuation date are
valued at "amortized cost," a method by which each portfolio instrument is
initially valued at cost, and thereafter a constant accretion/amortization
to maturity of any discount or premium is assumed, unless the Board of
Trustees determines that amortized cost does not represent fair value.
The Fund may value securities for which market quotations are not readily
available at "fair value," as determined in good faith pursuant to
procedures established by the Board of Trustees.
SECURITIES TRANSACTIONS: Securities transactions are recorded on a trade
date basis. Realized gains and losses from securities transactions are
recorded on the basis of identified cost.
INVESTMENT INCOME: Dividend income is recorded on the ex-dividend date and
interest income is recorded on the accrual basis.
AMORTIZATION AND ACCRETION: All zero-coupon bond discounts and original
issue discounts are accreted for both tax and financial reporting purposes.
All short-and long-term market premiums/discounts are amortized/accreted
for both tax and financial reporting purposes.
10 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
INTERMEDIATE FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
FEDERAL INCOME TAXES: As the Investment Company is a Massachusetts business
trust, each sub-trust is a separate corporate taxpayer and determines its
net investment income and capital gains (or losses) and the amounts to be
distributed to each fund's shareholders without regard to the income and
capital gains (or losses) of the other funds.
It is the Fund's intention to qualify as a regulated investment company and
distribute all of its taxable income. The Fund, accordingly, paid no
federal income taxes and no federal income tax provision was required. At
August 31, 1995, the Fund had a net tax basis capital loss carryover of
$103,098, which may be applied against any realized net taxable gains in
each succeeding year or until its expiration date of August 31, 2003. In
addition, as permitted by tax regulations, the Fund intends to defer a net
realized capital loss of $319,202 incurred from November 1, 1994 to August
31, 1995 and treat it as arising in year 1996.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Income dividends and capital
gain distributions, if any, are recorded on the ex-dividend date. Dividends
are generally declared and paid quarterly. Capital gain distributions are
generally declared and paid annually. An additional distribution may be
paid by the Fund to avoid imposition of federal income tax on any remaining
undistributed net investment income and capital gains.
The timing and characterization of certain income and capital gain
distributions are determined in accordance with federal tax regulations
which may differ from generally accepted accounting principles ("GAAP").
As a result, net investment income and net realized gain (or loss)
on investment transactions for a reporting period may differ significantly
from distributions during such period. The differences between tax
regulations and GAAP primarily relate to investments in mortgage-backed
securities and certain securities sold at a loss. Accordingly, the Fund may
periodically make reclassifications among certain of its capital accounts
without impacting its net asset value.
EXPENSES: Expenses such as advisory, custodian, transfer agent,
shareholder servicing, printing, and registration fees are charged directly
to the individual funds, while indirect expenses, such as administrative,
insurance, and professional fees are generally allocated among all funds
principally based on their relative net assets.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred expenses in connection
with its organization and initial registration. These costs have been
deferred and are being amortized over 60 months on a straight-line basis.
REPURCHASE AGREEMENTS: The Fund may engage in repurchase and tri-party
repurchase agreements with several financial institutions whereby the Fund,
through its custodian or third-party custodian, receives delivery of the
underlying securities. The market value of these securities (including
accrued interest) on
Semiannual Report 11
<PAGE>
THE SEVEN SEAS SERIES
INTERMEDIATE FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
acquisition date is required to be an amount equal to at least 102% of the
repurchase price. The Fund's Adviser will monitor repurchase agreements
daily to determine that the market value (including accrued interest) at
Fedwire closing time of the underlying securities remains at least equal to
100% of the repurchase price. The Adviser or third-party custodian will
notify the seller to immediately increase the collateral on the repurchase
agreement to 102% of the repurchase price if collateral falls below 100%.
3. SECURITIES TRANSACTIONS
INVESTMENT TRANSACTIONS: For the six months ended February 29, 1996,
purchases and sales of investment securities, excluding US Government and
Agency obligations and short-term investments, aggregated to $15,974,971,
and $7,773,569, respectively.
For the six months ended February 29, 1996, purchases and sales of US
Government and Agency obligations, excluding short-term investments,
aggregated to $33,546,835 and $34,582,203, respectively.
4. RELATED PARTIES
ADVISER: The Investment Company has an investment advisory agreement with
State Street Bank and Trust Company (the "Adviser") under which the Adviser
directs the investment of the Fund in accordance with its investment
objective, policies, and limitations. For these services, the Fund pays a
fee to the Adviser, calculated daily and paid monthly, at the annual rate
of .80% of its average daily net assets. For the six months ended February
29, 1996, the Adviser voluntarily agreed to reimburse the Fund for all
expenses in excess of .60% of average daily net assets on an annual basis.
The Investment Company has contracts with the Adviser to provide custody,
shareholder servicing and transfer agent services to the Fund.
ADMINISTRATOR, DISTRIBUTOR AND SHAREHOLDER SERVICING: Frank Russell
Investment Management Company (the "Administrator") serves as administrator
of the Investment Company. The Administrator is also required, pursuant to
the Administration Agreement, to arrange and pay certain promotional and
sales costs of Investment Company shares. Russell Fund Distributors, Inc.
(the "Distributor"), a subsidiary of the Administrator, is the distributor
of the Investment Company shares. The Fund has adopted a distribution plan
pursuant to Rule 12b-1 (the "Plan") under the 1940 Act. Under the Plan,
the Fund may also enter into service agreements with financial
institutions, including the Adviser, State Street Brokerage Services, Inc.
("SSBSI"), a wholly-owned subsidiary of the Adviser, and Adviser's
Metropolitan Division of Commercial Banking ("Commercial Banking"
collectively the "Agents"). The Commercial Banking service agreement
became effective November 8, 1995. Under these service agreements, the
Agents are to provide shareholder servicing for Investment Company
shareholders, including services related to the purchase and redemption of
Investment Company shares.
For these services, the Fund pays fees to the Agents in an amount that per
annum is equal to .025%, .175% and .175% of the average daily value of all
Fund shares held by or for customers of the Adviser, SSBSI and
12 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
INTERMEDIATE FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
Commercial Banking, respectively. These fees, in conjunction with other
distribution-related expenses, may not exceed .25% of the average daily
value of net assets on an annual basis, which includes a limit of .20% in
shareholder servicing fees for all providers. Any payments that are
required to be made by the Plan and any service agreement, but could not be
made because they exceed the maximum amount of allowable reimbursement, may
be carried forward for subsequent reimbursement from the Investment Company
so long as the Plan is in effect. The Fund's liability for any such
expenses carried forward shall terminate at the end of two years following
the year in which the expenditure was incurred. The Trustees or a majority
of the Fund's shareholders have the right, however, to terminate the
Distribution Plan and all payments thereunder at any time. The Fund will
not be obligated to reimburse the Distributor for carryover expenses
subsequent to the Distribution Plan's termination or noncontinuance. There
were no carryover expenses as of February 29, 1996.
For shareholder servicing, the Fund incurred expenses of $5,065 and $147
from the Adviser and SSBSI, respectively. The amounts related to
distribution and shareholder servicing fees are included in the
accompanying Statement of Operations.
Pursuant to the Administration Agreement with the Investment Company, the
Administrator supervises all non-portfolio investment aspects of the
Investment Company's operations and provides adequate office space and all
necessary office equipment and services, including telephone service,
utilities, stationery supplies, and similar items. The Investment Company
pays the Administrator the following fees for the services supplied by the
Administrator pursuant to the Administration Agreement: (i) an annual fee,
payable monthly on a pro rata basis, based on the following percentages of
the average daily net assets of all domestic funds: $0 up to $500 million
- .06%; over $500 million to and including $1 billion - .05%; over $1
billion - .03%; (ii) less an amount equal to the sum of certain
distribution-related expenses incurred by the Investment Company's
Distributor on behalf of the Fund (up to a maximum of 15% of the
asset-based fee determined in (i)); (iii) out-of-pocket expenses; and (iv)
start-up costs for new funds.
BOARD OF TRUSTEES: The Investment Company pays each of its Trustees not
affiliated with the Investment Company a retainer of $44,000 annually,
$1,000 for each of the board meetings attended, an additional $1,000 for
attending the annual audit committee meeting, and reimbursement for
out-of-pocket expenses.
5. DIVIDENDS
On March 1, 1996, the Board of Trustees declared a dividend of $.0892 From
net investment income, payable on March 11, 1996 to shareholders of record
March 4, 1996.
Semiannual Report 13
<PAGE>
THE SEVEN SEAS SERIES FUND
Two International Place, 35th Floor
Boston, Massachusetts 02110 [LOGO]
(617) 6543-6089
- --------------------------------------------------------------------------------
TRUSTEES
Lynn L. Anderson, Chairman
William L. Marshall
Steven J. Mastrovich
Patrick J. Riley
Richard D. Shirk
Bruce D. Taber
Henry W. Todd
OFFICERS
Lynn L. Anderson, President
George W. Weber, Senior Vice President
and Treasurer
J. David Griswold, Vice President
and Secretary
INVESTMENT ADVISER
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
CUSTODIAN, TRANSFER AGENT AND
OFFICE OF SHAREHOLDER INQUIRIES
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
(800) 64-7SEAS (77327)
DISTRIBUTOR
Russell Fund Distributors, Inc.
Two International Place, 35th Floor
Boston, Massachusetts 02110
(617) 654-6089
ADMINISTRATOR
Frank Russell Investment Management Company
909 A Street
Tacoma, Washington 98402
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
14 Semiannual Report
<PAGE>
SEVEN SEAS INVESTMENT PORTFOLIOS
[LOGO]
SEMIANNUAL REPORT
EMERGING MARKETS FUND
FEBRUARY 29, 1996
<PAGE>
THE SEVEN SEAS SERIES FUND-Registered Trademark-
FEBRUARY 29, 1996
(UNAUDITED)
TABLE OF CONTENTS
Page
Emerging Markets Fund Financial Statements . . . . . . . . . . . . . . . 3
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . 16
Fund Management and Service Providers. . . . . . . . . . . . . . . . . . 21
"THE SEVEN SEAS SERIES FUND-Registered Trademark-" IS A REGISTERED TRADEMARK AND
SERVICE MARK OF THE SEVEN SEAS SERIES FUND.
THIS REPORT IS PREPARED FROM THE BOOKS AND RECORDS OF THE FUND AND IT IS
SUBMITTED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. THIS INFORMATION IS FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A
SEVEN SEAS SERIES FUND PROSPECTUS CONTAINING MORE COMPLETE INFORMATION
CONCERNING THE INVESTMENT OBJECTIVE AND OPERATIONS OF THE FUND, CHARGES AND
EXPENSES. THE PROSPECTUS SHOULD BE READ CAREFULLY BEFORE AN INVESTMENT IS MADE.
PERFORMANCE IS HISTORICAL AND ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL
GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN WHEN PURCHASED.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. INTERNATIONAL MARKETS
ENTAIL DIFFERENT RISKS THAN THOSE TYPICALLY ASSOCIATED WITH DOMESTIC MARKETS,
INCLUDING CURRENCY FLUCTUATIONS, POLITICAL AND ECONOMIC INSTABILITY, ACCOUNTING
CHANGES AND FOREIGN TAXATION. SECURITIES MAY BE LESS LIQUID AND MORE VOLATILE.
INVESTMENTS IN EMERGING OR DEVELOPING MARKETS INVOLVE EXPOSURE TO ECONOMIC
STRUCTURES THAT ARE GENERALLY LESS DIVERSE AND MATURE, AND TO POLITICAL SYSTEMS
WHICH CAN BE EXPECTED TO HAVE LESS STABILITY THAN THOSE OF MORE DEVELOPED
COUNTRIES. PLEASE SEE THE PROSPECTUS FOR FURTHER DETAILS. RUSSELL FUND
DISTRIBUTORS, INC., IS THE DISTRIBUTOR OF THE SEVEN SEAS SERIES FUND.
<PAGE>
THE SEVEN SEAS SERIES
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
----------- -----------
<S> <C> <C>
COMMON STOCKS - 83.6%
ARGENTINA - 8.3%
Acindar Industria Argentina
de Aceros SA Class B (a) 718,702 $ 428
Alpargatas (a) 728,007 346
Astra Cia Argentina de Petro 241,170 415
Banco de Galicia Class B 136,935 774
Buenos Aires Embotelladora SA
Class B 92 77
Celulosa Argentina Class B (a) 930,877 242
Cementera Argentina Class B (a) 32,560 134
Dalmine Siderca SA 847,298 839
Garovaglio Zorraq (a) 11,548 42
Juan Minetti SA Class B 58,000 226
Ledesma 356,302 481
Naviera Perez Companc Class B 295,358 1,472
Polledo SA Class A (a) 32,863 18
Telecom Argentina Class B 114,329 492
Telefonica de Argentina Class B 296,816 766
YPF SA Class D 59,969 1,170
-----------
7,922
-----------
BRAZIL - 8.5%
Eletrobras (centrais) NPV 6,937,900 1,916
Sider Nacional Cia NPV 82,954,000 2,224
Telecomunicacoes
Brasileiras NPV 86,644,496 3,651
Telesp Telec San Paulo NPV 2,640,000 392
-----------
8,183
-----------
CHILE - 1.1%
Chile Fund, Inc. 10,200 247
Compania de Telefonos (Chile)
SA - ADR 2,400 199
Empresa Nacional de Electric - ADR 18,600 372
Enersis SA - ADR 6,200 176
Madeco SA - ADR 1,400 40
-----------
1,034
-----------
CHINA - 1.9%
Beiren Printing Series H 60,000 12
Dongfang Electric Machinery
Series H 64,000 19
Guangzhou Shipyard Series H 122,000 32
Harbin Power Equipment Class H 316,000 63
Huaneng Power International, Inc.
- ADR Seires N (a) 23,900 442
Jilin Chemical Industrial
Company, Ltd. Class H (a) 166,000 38
Luoyang Glasswork Class H 268,000 90
Maanshan Iron & Steel Class H 590,000 105
Quingling Motors Class H 474,000 147
Shandong Huaneng Power Co., Ltd.
Series N - ADR 16,500 159
Shanghai Hai Xing Shipping Co.
Class H 1,484,000 131
Shanghai Petrochemical Corp. - ADR 7,500 248
Tsingtao Brewery Series H 151,000 46
Yizheng Chemical Fibre Series H 946,000 263
Zhenhai Refining &
Chemical Co., Ltd. Series H 110,000 31
-----------
1,826
-----------
CZECH REPUBLIC - 1.6%
CEZ (a) 15,500 557
Chemopetrol Group AS (a) 3,400 138
</TABLE>
Semiannual Report 3
<PAGE>
THE SEVEN SEAS SERIES
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
----------- -----------
<S> <C> <C>
Cokoladovny AS (a) 700 $ 73
Inzenyrske a Prumyslove
Stavby AS (a) 300 29
SPT Telecom AS (a) 6,600 681
-----------
1,478
-----------
GREECE - 1.8%
Alcatel Cables Hellenic 6,500 50
Alpha Leasing SA (Regd) 1,200 30
Aluminum Co. of Greece
Industrial and Commercial (Regd) 2,400 103
Commercial Bank of Greece (Regd) 13,640 507
Elais Oleaginous 1,800 59
ETBA Leasing SA (Regd) 3,360 60
Heracles Cement Rights (a) 17,700 218
Klonatex 1,800 45
National Bank of Greece (Regd) 6,150 365
National Mortgage Bank (a) 4,610 160
Petzetakis SA (a) 22,281 116
-----------
1,713
-----------
HUNGARY - 3.4%
Agrimpex Series A (a) 300 38
Danubius Hotel (Regd) (a) 24,831 266
Domus Kereskedilmi 6,294 22
Egis (a) 26,501 901
Fotex (Regd) (a) 384,108 333
Magyar Olaj Es Gas (a) 15,000 179
Martfu Brewery (Regd) (a) 387 6
Mol Magyar Olay-Es Gazipari
- GDR (a) 16,700 198
Mol Magyar Olay-Es Gazipari
- GDS (a) 45,000 534
Pick Szeged Rt (a) 6,848 328
Richter Gedeon Rt. - GDR (a) 10,500 336
Skala Coop (a) 9,554 115
-----------
3,256
-----------
INDIA - 2.8%
Bombay Fund NPV (a) 147,223 1,381
Morgan Stanley India
Investment Fund, Inc. 60,900 639
The India Fund, Inc. 64,500 637
-----------
2,657
-----------
INDONESIA - 2.7%
Astra International (Alien Market) 56,000 93
Bank Dagang National Indonesia
(Alien Market) 90,125 78
Bank International Indonesia
(Alien Market) 40,500 170
Barito Pacific Timber
(Alien Market) 70,000 61
Dharmala Intiland (Alien Market) 143,500 87
Gadjah Tunggal (Alien Market) 65,000 44
Great River Industries
(Alien Market) 64,000 39
Great River Industries Rights (a) 128,000 11
Gudang Garam (Alien Market) 23,000 278
Hadtex Indosyntec (Alien Market) 125,500 74
HM Sampoerna (Alien Market) 77,500 846
Indah Kiat Pulp & Paper
(Alien Market) 198,116 158
</TABLE>
4 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
----------- -----------
<S> <C> <C>
Indosat (Alien Market) 32,000 $ 119
Inti Indorayon Utama
(Alien Market) 20,000 25
Jakarta International Hotel
& Development (Alien Market) 144,500 161
Japfa Comfeed Indonesia
(Alien Market) 82,500 45
Mayora Indah (Alien Market) (a) 171,600 135
Semen Gresik (Alien Market) 9,500 33
Telekomunikasi Indonesia
Series B (a) 95,500 153
-----------
2,610
-----------
MALAYSIA - 6.0%
Amsteel Corp. Berhad 276,000 216
Arab-Malaysian Development
Berhad 333,000 226
Berjaya Leisure Berhad 182,000 161
Cement Industries 56,000 180
Cold Storage 24,000 35
DCB Holdings Berhad 61,000 186
Faber Group Berhad (a) 58,000 57
Federal Flour Mills Berhad 30,000 74
Golden Hope Plantation 150,000 241
Highlands & Lowlands 122,000 194
IGB Corp. Berhad 219,000 183
IND Oxygen, Inc. 165,000 181
Jasa Megah Industries (a) 31,000 38
Kuala Lumpur Kepong 144,000 455
Kumpulan Guthrie 192,000 294
Malayan Banking Berhad 19,000 174
Malaysia Mining Corp. 58,000 92
Malaysian Airline System 77,000 257
Malaysian International
Shipping Corp. 50,000 131
Malaysian International
Shipping Corp. (Alien Market) 24,000 67
MBF Capital Berhad 184,000 215
Oriental Holdings Berhad 56,000 286
Pengkalen Holdings Berhad 60,000 73
Perlis Plantations 65,000 224
Public Bank Berhad 88,000 140
Rashid Hussain Berhad 38,000 119
Renong Berhad 253,000 403
Sime Darby Berhad
(Resident Shares) 28,800 77
Tan Chong Motor Holdings 171,000 239
Tenaga Nasional 83,000 335
Tractors Malaysia Holdings Berhad 37,000 55
UMW Holdings Berhad 34,000 99
UMW Holdings Berhad 2000
Warrants (a) 4,000 4
Wembley Industries Holdings (a) 28,000 40
-----------
5,751
-----------
MEXICO - 7.2%
Alfa SA de CV Class A 43,000 510
Cemex SA Class B NPV 36,737 137
Cifra SA de CV Class B NPV (a) 97,000 114
Controladora Commercial Mexicana
Series B NPV (a) 462,000 325
Cydsa SA Series A NPV (a) 96,000 211
Desc Sociedad de Fomento
Industrial SA de CV
Series B NPV (a) 30,000 116
</TABLE>
Semiannual Report 5
<PAGE>
THE SEVEN SEAS SERIES
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
----------- -----------
<S> <C> <C>
Formento Economico Series B NPV 167,000 $ 419
Grupo Carso Series A NPV (a) 66,000 416
Grupo Cementos Chihuahua
Series B NPV 200,000 159
Grupo Continental 19,000 60
Grupo Finance Serfin Series B NPV 20,000 12
Grupo Financiero Bancomer
Series B NPV (a) 1,574,000 590
Grupo Gigante SA Series B NPV (a) 750,000 144
Grupo Mexico SA B Shares NPV (a) 43,108 155
Grupo Posadas SA Series A NPV 100,000 41
Grupo Simec SA de CV
Series B NPV (a) 620,000 158
Grupo Synkro Series B NPV (a) 37,855 5
Industrias Penoles NPV 20,000 84
Ingenieros Civiles NPV (a) 34,000 393
Sears Roebuck de Mexico
Series B NPV (a) 44,000 110
Telefonos de Mexico SA
Series L - ADR 52,600 1,604
Telefonos de Mexico Series L NPV 192,900 294
Transportacion Maritima Mexica
Series A - ADR (a) 8,000 59
Tubos de Acero de Mexico NPV (a) 47,000 357
Vitro SA NPV 216,000 382
-----------
6,855
-----------
PAKISTAN - 1.0%
Bank of Punjab (a) 52,400 46
Crescent Textile Mills (a) 41,000 29
Dandot Cement Co. (a) 35,000 16
Dewan Salmon Fibre (a) 8,640 14
Engro Chemical 19,700 95
Fauji Fertilizer 31,200 67
Hub Power Co., Ltd. - GDR (a) 257,000 227
Karachi Electric (a) 80,520 76
Muslim Commercial (a) 25,300 28
Pakistan International Air (a) 228,000 65
Pakistan State Oil 16,120 164
Pioneer Cement (a) 61,300 25
Pioneer Cement Rights (a) 21,455 3
Sui Northern Gas 30,720 36
Sui Southern Gas Pipeline (a) 31,625 33
-----------
924
-----------
POLAND - 3.0%
Bank Inicjatyw Gospodarczych 382,080 258
Bank Slaski SA 7,625 575
Bre Bk Rozwoju Eks 18,310 401
Elektrim 55,995 352
Exbud SA (a) 12,205 174
Jelfa (a) 11,865 162
Mostostal Export SA (a) 9,430 29
Okocimskie Zaklady Piwowarskie
SA (a) 31,688 228
Polifarb 39,555 193
Sokolowskie Zaklady Miesne SA (a) 84,840 77
Universal SA 48,640 147
WBK (a) 21,500 72
Wolczanka SA 2,850 27
Zywiec 1,875 145
-----------
2,840
-----------
PORTUGAL - 6.3%
Banco Chemical SA 26,000 288
Banco Comercial Portuguese (Regd) 49,800 695
Banco Totta e Acores (Regd) 13,236 256
</TABLE>
6 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
----------- -----------
<S> <C> <C>
Banif Banco International
do Funchal 30,500 $ 290
BPI-SGPS SA (Regd) 23,200 295
BPI-SGPS SA New (Regd)(a) 12,730 162
Companhia de Celulose
do Caima SA (a) 7,100 136
Corticeira Amorim SGPS 34,700 461
Empresa Fabril de Maquinas
Electricas - Efacec 34,400 273
Jeronimo Martins 7,500 499
Lusotur Societe Finance
de Turismo (a) 11,800 217
Mague Gestao E Partipacoes 15,200 269
Modelo Contin SGPS 30,000 788
Portucel Industrial SA (a) 16,900 94
Portugal Telecom (a) 13,800 320
Portugal Telecom SA - ADR (a) 7,200 165
Salvador Caetano 2,464 28
Soja de Portugal 14,400 151
Sonae Investimento 13,300 299
Soporcel SA (a) 15,600 326
-----------
6,012
-----------
SOUTH AFRICA - 5.9%
AECI, Ltd. 28,602 172
Amalgamated Banks
of South Africa 87,052 489
Anglo America Corp. 7,773 508
Barlow, Ltd. 27,839 370
De Beers Centenary AG 16,144 513
Del Monte Royal Food, Ltd. 85,739 108
Free State Consolidated
Gold Mines, Ltd. 21,668 208
Gencor, Ltd. 96,950 361
ISCOR 248,443 210
Liberty Life Strategic 84,559 322
Malbak, Ltd. NPV 44,600 262
Polifin, Ltd. (a) 4,500 8
Rembrandt Group, Ltd. 43,894 428
Sappi, Ltd. 14,262 175
Sasol NPV 30,046 260
South African Breweries 4,300 150
Standard Bank Investment Corp., Ltd. 1,850 81
Tongaat-Hulett Group, Ltd. 12,900 210
Vaal Reefs Exploration & Mining, Ltd. 5,978 587
Western Deep Levels, Ltd. 4,191 206
-----------
5,628
-----------
SOUTH KOREA - 10.3%
Anam Electronics Co. (a) 5,170 70
Bank of Seoul (a) 46,080 396
Daewoo Corp. 52,050 579
Daewoo Electronics Co. 19,890 197
Daewoo Heavy Industries (a) 11,496 116
Daewoo Telecom Co. (a) 26,131 377
Dong Shin Housing
& Construction Co. (a) 38,780 315
Dongkuk Steel Mill 16,638 325
Hana Bank 8,632 174
Hanil Bank 21,680 264
Hanshin Construction Co. (a) 48,120 307
Hanshin Securities 8,851 169
Hanwha Machinery (a) 21,284 272
Inkel Corp. (a) 18,870 256
Kia Steel Co., Ltd. (a) 11,800 77
Korea Electric Power Corp. (a) 23,000 838
</TABLE>
Semiannual Report 7
<PAGE>
THE SEVEN SEAS SERIES
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
----------- -----------
<S> <C> <C>
Korea Equity Trust IDR (a) 15* $ 169
Korea Europe Fund (BR) - IDR (a) 105** 446
Korea First Securities Co. 2,472 31
Korea Fund, Inc. 10,252 227
Kumho Construction
& Engineering Co. (a) 23,100 245
Kwang Ju Bank 30,282 310
Kyong Nam Bank 20,920 268
Kyungki Bank 20,402 222
L.G. Information
& Communication 400 40
LG Merchant Bank (a) 4,220 151
Orion Electric Co. 14,420 245
Pohang Iron & Steel 4,230 281
Samhee Investment & Finance (a) 11,144 136
Samsung Electronics, Ltd. 2,835 467
Seoul Access Trust - IDR (a) 12* 195
Seoul Horizon Trust 5,000 85
Seoul Securities 2,678 34
Ssangyong Cement Co., Ltd. 12,160 322
STC Corp. 4,600 79
Sung Bo Chemical (a) 2,700 76
Tongyang Cement 6,000 179
Tongyang Investment
& Finance Corp. (a) 15,230 290
Tongyang Nylon Co. 9,310 266
Yukong, Ltd. 9,627 299
-----------
9,795
-----------
SRI LANKA - 1.4%
Aitken Spence & Co. (a) 10,900 38
Asian Hotel Corp. (a) 88,100 18
Blue Diamond Jewel NPV 225,105 68
Central Finance Co. (p) 12,800 56
Ceylon Grain Elevator (a) 22,100 15
Colombo Drydocks (a) 114,700 20
Commercial Bank of Ceylon 6,600 31
Development Finance Corp. (a) 61,100 374
Hayleys (a) 62,732 263
John Keells Holdings, Ltd. 44,571 146
Lanka Ceramic (a) 88,200 64
Lanka Milk Food 21,600 6
Merchant Bank of Sri Lanka (a) 162,800 68
National Development Bank (a) 24,000 107
Richard Pieris & Co. 9,900 12
United Motor (a) 26,800 15
-----------
1,301
-----------
TAIWAN - 3.9%
Acer, Inc. (a) 75,334 160
Ambassador Hotel 185,000 188
Cathay Life Insurance 100,400 435
Chang Hwa Bank 13,000 46
Cheng Loong (a) 13,080 10
Chia Hsin Flour (a) 24,196 12
China Development Corp. (a) 156,000 428
China Petrochemical
Development Corp. (a) 289,000 209
China Rebar (a) 22,425 11
China Steel Corp. 498,000 366
Ensure Co., Ltd. (a) 88,000 81
Far Eastern Textile 281,000 235
Hua Nan Bank 161,900 489
Hualon Teijran (a) 23,267 14
Kao Hsing Chang Iron & Steel (a) 15,000 11
Kwong Fong Industries (a) 14,950 9
Lealea Enterprise (a) 14,981 11
Pacific Construction (a) 288,052 194
Pacific Electrical Wire & Cable (a) 337,000 224
Prince Housing Development (a) 13,200 10
</TABLE>
8 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
----------- -----------
<S> <C> <C>
Taipei Business Bank (a) 50,000 $ 112
Tuntex Distinct (a) 357,000 219
Walsin Lihwa Wire 259,684 221
Wan Yu Paper (a) 20,160 10
Yieh Loong Co. 16,500 9
Yue Loong Motor (a) 19,000 14
Yuen Foong Yu Manufacturing 14,490 12
-----------
3,740
-----------
THAILAND - 1.5%
Advanced Information Services
(Alien Market) 5,700 106
Bangkok Rubber PLC
(Alien Market) 24,400 14
Bank of Ayudhya Public Co., Ltd.
(Alien Market) 28,600 196
Industrial Finance Corp.
of Thailand (Alien Market)(a) 42,400 148
International Cosmetics
(Alien Market) 9,800 86
Karat Sanitaryware PLC
(Alien Market) 26,100 103
NEP Realty & Industry Co. PLC
(Alien Market)(a) 14,700 6
Padaeng Industry Co., Ltd. PLC
(Alien Market)(a) 65,900 52
Saha Pathana Inter-Holding
Public Co., Ltd. (Alien Market)(a) 44,200 100
Saha Union Corp. (Alien Market) 52,500 80
Siam City Bank PLC (Alien Market) 129,200 177
Siam Commercial Bank
(Alien Market) 3,500 57
Tanayong (Alien Market)(a) 9,800 16
TelecomAsia (Alien Market)(a) 71,500 204
Unicord Public Co., Ltd.
(Alien Market) (a) 348,600 59
-----------
1,404
-----------
TURKEY - 3.6%
Akbank 986,000 281
Eczacibasi Ilac Sanayi
ve Ticaret AS (a) 2,063,000 166
Erciyas Biracilik Ve Malt Sanayi 364,000 238
Eregli Demir Ve Celik Fabrikalari 2,951,000 332
Izmir Demir Celik Sanayii AS 6,053,000 150
Kartonsan 545,000 211
Petrokimya Holdings 805,000 734
Raks Elektronik Sanayi
ve Ticaret AS 510,000 198
T Sise Cam 1,408,000 241
Tofas Turk Otomobil Fabrikasi 2,342,000 260
Turk Hava Yollari A.O. (a) 1,430,000 418
Yapi Kredi Bankasi 2,595,000 179
-----------
3,408
-----------
VENEZUELA - 0.2%
Ceramicas Carabobo CA
Class B - ADR 24,000 16
Corimon CA SA Class B - ADR (a) 8,000 10
Mantex CA SA - ADR (a) 5,934 22
Mavesa SA - ADR 11,788 38
Siderurgica Venezolana
Sivensa - ADR (a) 40,300 79
-----------
165
-----------
</TABLE>
Semiannual Report 9
<PAGE>
THE SEVEN SEAS SERIES
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
NUMBER MARKET
OF VALUE
SHARES (000)
----------- -----------
<S> <C> <C>
ZIMBABWE - 1.2%
Art Corp. (a) 393,428 $ 8
Barclays Bank (Zimbabwe) PLC 88,605 108
Delta Corp. 271,180 602
Hunyani (a) 1,311,418 43
Kadoma 337,224 21
Mashoaland Holdings 248,481 30
National Food Holdings 33,965 29
TA Holdings 442,603 65
Tabex (a) 737,677 35
Wankie Colliery Co., Ltd. 127,598 31
Whitehead (a) 754,815 34
Zimbabwe Finance Holdings 85,044 63
Zimbabwe Spinners & Weavers 452,419 57
Zimbabwe Sun 99,825 33
-----------
1,159
-----------
TOTAL COMMON STOCKS
(cost $75,456) 79,661
-----------
PREFERRED STOCKS - 12.8%
BRAZIL - 12.4%
Acos Villares SA NPV 1,100,000 447
Banco Bradesco SA (a) 2,938,637 33
Banco Bradesco SA NPV 125,679,408 1,423
Banco do Brasil SA NPV (a) 15,156,700 211
Banco do Estado
de Sao Paulo NPV (a) 66,086,600 326
Banco Nacional SA NPV 19,600,000 370
Caemi Mineracao e Metal
(BR)(a) 945,000 38
CEMIG SA 63,904,856 1,622
Ceval Alimentos SA NPV 61,288,800 809
Copene Petroquimica
do Nordestse
Series A (Regd) 780,000 422
Electrobras (centr) Series B NPV 5,223,000 1,453
Hering SA (cia) NPV 30,450,000 156
Metal Barbara (cia) NPV (a) 37,000,000 20
Petrol Brasileiros 4,770,000 530
Ripasa SA Celulose
Papel NPV (a) 236,000 31
Sider Riograndense NPV 18,040,580 293
Siderurgica Tubarao
Series B NPV 56,938,928 1,127
Telec SP Telesp NPV 487,020 81
Telecomunicacoes
Brasileiras NPV 8,769,400 458
UNIPAR SA Class B 464,181 443
Usiminas Uni Sd Mg NPV 112,600,000 122
Vale Rio Doce (cia) NPV 9,433,200 1,466
-----------
11,881
-----------
GREECE - 0.2%
Delta Dairy 11,924 158
-----------
158
-----------
SOUTH KOREA - 0.2%
Tong Yang Securities Co. 18,540 156
-----------
156
-----------
TOTAL PREFERRED STOCKS
(cost $11,846) 12,195
-----------
</TABLE>
10 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
(000) (000)
----------- -----------
<S> <C> <C>
SHORT-TERM INVESTMENTS - 3.1%
UNITED STATES - 3.1%
Dreyfus Cash Management Plus, Inc.
Money Market Fund (b) $ 1,614 $ 1,614
Federal Home Loan Mortgage Corp.
Discount Notes
5.330% due 03/01/96 (b)(c) 1,367 1,367
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $2,981) 2,981
-----------
TOTAL INVESTMENTS
(identified cost $90,283)(d) - 99.5% 94,837
OTHER ASSETS AND LIABILITIES,
NET - 0.5% 477
-----------
NET ASSETS - 100.0% $ 95,314
-----------
-----------
</TABLE>
(a) Nonincome-producing security.
(b) At cost, which approximates market.
(c) Rate noted is yield-to-maturity.
(d) At February 29, 1996, the cost for federal income tax purposes was $90,414
and net unrealized appreciation for all securities was $4,423. This
consisted of aggregate gross unrealized appreciation for all securities in
which there was an excess of market value over tax cost of $11,603 and
aggregate gross unrealized depreciation for all securities in which there
was an excess of tax cost over market value of $7,180.
* Reflected in units. 1 IDR unit = 1,000 Shares.
** Reflected in units. 1 IDR unit = 500 Shares.
<TABLE>
<CAPTION>
% OF MARKET
NET VALUE
INDUSTRY DIVERSIFICATION ASSETS (000)
------------------------ ----------- -----------
<S> <C> <C>
Basic Industries 14.2% $ 13,575
Capital Goods 6.6 6,304
Consumer Basics 7.5 7,136
Consumer Durable Goods 1.2 1,184
Consumer Non-Durables 5.4 5,157
Consumer Services 1.5 1,389
Energy 7.4 7,004
Finance 21.2 20,248
General Business 6.6 6,318
Miscellaneous 5.5 5,216
Shelter 0.8 714
Technology 4.3 4,051
Transportation 0.7 680
Utilities 13.5 12,880
Short-Term Investments 3.1 2,981
----------- -----------
Total Investments 99.5 94,837
Other Assets and Liabilities, Net 0.5 477
----------- -----------
NET ASSETS 100.0% $ 95,314
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
% OF MARKET
NET VALUE
GEOGRAPHIC DIVERSIFICATION ASSETS (000)
-------------------------- ---------- -----------
<S> <C> <C>
Pacific Basin 26.5% $ 25,282
Eurasia 24.9 23,747
Africa 7.1 6,787
Latin America 37.9 36,040
Short-Term Investments - U.S. 3.1 2,981
----------- -----------
Total Investments 99.5 94,837
Other Assets and Liabilities, Net 0.5 477
----------- -----------
NET ASSETS 100.0% $ 95,314
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 11
<PAGE>
THE SEVEN SEAS SERIES
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (Unaudited)
<S> <C> <C>
ASSETS
Investments at market (identified cost $90,283,475)(Note 2). . . . . . . . $ 94,836,642
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,975
Foreign currency holdings (identified cost $499,359) . . . . . . . . . . . 489,414
Foreign currency exchange spot contracts
(cost $53,200)(Notes 2 and 6). . . . . . . . . . . . . . . . . . . . . . 53,040
Receivables:
Dividends and interest . . . . . . . . . . . . . . . . . . . . . . . . . 107,679
Investments sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156,692
Fund shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 973,819
From Adviser (Note 4). . . . . . . . . . . . . . . . . . . . . . . . . . 158,317
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,529
Deferred organization expenses (Note 2). . . . . . . . . . . . . . . . . . 19,887
-------------
96,812,994
LIABILITIES
Payables (Note 4):
Investments purchased. . . . . . . . . . . . . . . . . . $ 921,143
Fund shares redeemed . . . . . . . . . . . . . . . . . . 337,579
Accrued administrative fees. . . . . . . . . . . . . . . 4,613
Accrued advisory fees. . . . . . . . . . . . . . . . . . 111,827
Accrued custodian fees . . . . . . . . . . . . . . . . . 63,748
Accrued shareholder servicing fees . . . . . . . . . . . 3,255
Accrued transfer agent fees. . . . . . . . . . . . . . . 2,774
Other accrued expenses . . . . . . . . . . . . . . . . . 978
Foreign currency exchange spot contracts
(cost $53,200)(Notes 2 and 6). . . . . . . . . . . . . . 53,200 1,499,117
------------- -------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 95,313,877
-------------
-------------
NET ASSETS CONSIST OF:
Accumulated distributions in excess of net investment income . . . . . . . $ (198,611)
Accumulated distributions in excess of net realized gain . . . . . . . . . (248,625)
Unrealized appreciation (depreciation) on:
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,553,167
Foreign currency-related transactions. . . . . . . . . . . . . . . . . . (10,445)
Shares of beneficial interest. . . . . . . . . . . . . . . . . . . . . . . 9,147
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . 91,209,244
-------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 95,313,877
-------------
-------------
Net asset value, offering and redemption price per share
($95,313,877 divided by 9,147,051 shares of $.001
par value shares of beneficial interest outstanding) . . . . . . . . . . . $10.42
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 1996 (Unaudited)
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends (net of foreign taxes withheld of $62,844) . . . . . . . . . . . $ 535,789
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,972
-------------
620,761
Expenses (Notes 2 and 4):
Advisory fees. . . . . . . . . . . . . . . . . . . . . . . $ 295,045
Administrative fees. . . . . . . . . . . . . . . . . . . . 23,987
Custodian fees . . . . . . . . . . . . . . . . . . . . . . 199,135
Distribution fees. . . . . . . . . . . . . . . . . . . . . 87,146
Professional fees. . . . . . . . . . . . . . . . . . . . . 18,123
Registration fees. . . . . . . . . . . . . . . . . . . . . 21,832
Shareholder servicing fees . . . . . . . . . . . . . . . . 11,203
Transfer agent fees. . . . . . . . . . . . . . . . . . . . 9,304
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . 1,912
Amortization of deferred organization expenses . . . . . . 4,577
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . 7,243
-------------
Expenses before reimbursement. . . . . . . . . . . . . . . 679,507
Expense reimbursement from Adviser . . . . . . . . . . . . (158,317) 521,190
------------- -------------
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,571
-------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (Notes 2 and 3)
Net realized gain (loss) from:
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (80,802)
Foreign currency-related transactions. . . . . . . . . . . . . . . . . . . (153,865)
Net change in unrealized appreciation or depreciation of:
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,292,759
Foreign currency-related transactions. . . . . . . . . . . . . . . . . . . (291)
-------------
Net gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . . 3,057,801
-------------
Net increase (decrease) in net assets resulting from operations. . . . . . . $ 3,157,372
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 13
<PAGE>
THE SEVEN SEAS SERIES
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE
MONTHS ENDED FISCAL YEAR
FEBRUARY 29, 1996 ENDED
(UNAUDITED) AUGUST 31, 1995
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . $ 99,571 $ 743,326
Net realized gain (loss) from:
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . (80,802) 686,174
Foreign currency-related transactions. . . . . . . . . . . . . . (153,865) (78,780)
Net change in unrealized appreciation or depreciation of:
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . 3,292,759 (2,620,901)
Foreign currency-related transactions. . . . . . . . . . . . . . (291) (9,528)
----------------- -----------------
Net increase (decrease) in net assets resulting from operations. . . 3,157,372 (1,279,709)
Distributions to shareholders:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . (633,320) (258,975)
In excess of net investment income . . . . . . . . . . . . . . . . (198,611) --
Net realized gain on investments . . . . . . . . . . . . . . . . . (451,507) --
In excess of net realized gain on investments. . . . . . . . . . . (248,625) --
Increase (decrease) in net assets from Fund share transactions . . . 25,303,464 42,444,718
----------------- -----------------
INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . . . 26,928,773 40,906,034
Net assets at beginning of period. . . . . . . . . . . . . . . . . . 68,385,104 27,479,070
----------------- -----------------
NET ASSETS AT END OF PERIOD
(including accumulated distributions in excess
of net investment income of $198,611 and undistributed net
investment income of $522,449, respectively) . . . . . . . . . . . $ 95,313,877 $ 68,385,104
----------------- -----------------
----------------- -----------------
</TABLE>
<TABLE>
<CAPTION>
FUND SHARE TRANSACTIONS FOR THE SIX MONTHS ENDED FOR THE FISCAL YEAR
FEBRUARY 29, 1996 (UNAUDITED) ENDED AUGUST 31, 1995
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Fund shares sold . . . . . . . . . . . . 3,064,758 $ 30,888,906 4,945,295 $ 49,529,291
Fund shares issued to shareholders
in reinvestments of distributions. . . 144,373 1,455,140 19,275 220,287
Fund shares redeemed . . . . . . . . . . (699,336) (7,040,582) (726,403) (7,304,860)
------------- ------------- ------------- -------------
Net increase (decrease). . . . . . . . . 2,509,795 $ 25,303,464 4,238,167 $ 42,444,718
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout each fiscal
year or period and other performance information derived from the financial statements.
1996+ 1995 1994++
-------- -------- --------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . . $ 10.30 $ 11.45 $ 10.00
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . . . .02 .14 .05
Net realized and unrealized gain (loss) on investments . . .32 (1.19) 1.40
-------- -------- --------
Total Income From Investment Operations. . . . . . . . . . .34 (1.05) 1.45
-------- -------- --------
LESS DISTRIBUTIONS:
Net investment income. . . . . . . . . . . . . . . . . . . (.09) (.10) --
In excess of net investment income . . . . . . . . . . . . (.03) -- --
Net realized gain on investments . . . . . . . . . . . . . (.06) -- --
In excess of net realized gain on investments income . . . (.04) -- --
-------- -------- --------
Total Distributions. . . . . . . . . . . . . . . . . . . . (.22) (.10) --
-------- -------- --------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . . . $ 10.42 $ 10.30 $ 11.45
-------- -------- --------
-------- -------- --------
TOTAL RETURN (%)(a). . . . . . . . . . . . . . . . . . . . . 3.37 (9.28) 14.50
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net
to average daily net assets (b)(c) . . . . . . . . . . . 1.32 1.50 1.50
Operating expenses, gross
to average daily net assets (b)(c) . . . . . . . . . . . 1.72 1.90 2.45
Net investment income to average daily net assets (b). . . .25 1.74 1.31
Portfolio turnover . . . . . . . . . . . . . . . . . . . . 1.35 19.77 --
Net assets, end of period ($000 omitted) . . . . . . . . . 95,314 68,385 27,479
Per share amount of fees waived ($ omitted). . . . . . . . -- -- .0130
Per share amount of fees reimbursed ($ omitted)(c) . . . . .0280 .0320 .0204
Average commission rate paid per share
of security ($ omitted)(d) . . . . . . . . . . . . . . . .0031 -- --
</TABLE>
+ For the six months ended February 29, 1996 (Unaudited).
++ For the period March 1, 1994 (commencement of operations) to
August 31, 1994.
(a) Periods less than one year are not annualized.
(b) The ratios for the periods ended February 29, 1996 and August 31, 1994 are
annualized.
(c) See Note 4 for current period amounts.
(d) In certain foreign markets the relationship between the converted U.S.
dollar price per share and commission paid per share may vary from that of
domestic markets.
Semiannual Report 15
<PAGE>
THE SEVEN SEAS SERIES
EMERGING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996 (Unaudited)
1. ORGANIZATION
The Seven Seas Series Fund (the "Investment Company") is a series mutual
fund, currently comprising 14 investment portfolios which are in operation
as of February 29, 1996. These financial statements report on one
portfolio, The Seven Seas Series Emerging Markets Fund (the "Fund"). The
Investment Company is a registered and diversified open-end investment
company, as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), that was organized as a Massachusetts business trust on
October 3, 1987 and operates under a First Amended and Restated Master
Trust Agreement, dated October 13, 1993, as amended. The Investment
Company's master trust agreement permits the Board of Trustees to issue
an unlimited number of full and fractional shares of beneficial interest
at a $.001 par value.
2. SIGNIFICANT ACCOUNTING POLICIES
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management
estimates. The following is a summary of the significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements.
SECURITY VALUATION: International equity and fixed-income securities
traded on a national securities exchange are valued on the basis of the
last sale price. International securities traded over the counter are
valued on the basis of the mean of bid prices. In the absence of a last
sale or mean bid price, respectively, such securities may be valued on the
basis of prices provided by a pricing service if those prices are believed
to reflect the fair market value of such securities.
The Fund may value certain securities for which market quotations are not
readily available at "fair value," as determined in good faith pursuant to
procedures established by the Board of Trustees.
SECURITIES TRANSACTIONS: Securities transactions are recorded on the trade
date basis. Realized gains and losses from the securities transactions are
recorded on the basis of identified cost.
INVESTMENT INCOME: Dividend income is recorded on the ex-dividend date and
interest income is recorded on the accrual basis.
FEDERAL INCOME TAXES: As the Investment Company is a Massachusetts
business trust, each sub-trust is a separate corporate taxpayer and
determines its net investment income and capital gains (or losses) and the
amounts to be distributed to each fund's shareholders without regard to the
income and capital gains (or losses) of the other funds.
It is the Fund's intention to qualify as a regulated investment company and
distribute all of its taxable income. The Fund, accordingly, paid no
federal income taxes and no federal income tax provision was required. As
permitted by tax regulations, the Fund intends to defer a net realized
capital loss of $89,080 incurred from November 1, 1994 to August 31, 1995,
and treat it as arising in fiscal year 1996.
16 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
EMERGING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Income dividends and capital
gain distributions, if any, are recorded on the ex-dividend date. The Fund
declares and pays dividends annually. Capital gain distributions, if any,
are generally declared and paid annually. An additional distribution may be
paid by the Fund to avoid imposition of federal income tax on any remaining
undistributed net investment income and capital gains.
The timing and characterization of certain income and capital gain
distributions are determined in accordance with federal tax regulations
which may differ from generally accepted accounting principles ("GAAP"). As
a result, net investment income and net realized gain (or loss) on
investment and foreign currency-related transactions for a reporting period
may differ significantly from distributions during such period. The
differences between tax regulations and GAAP primarily relate to
investments in options, futures, forward contracts, passive foreign
investment companies, foreign denominated investments, and certain
securities sold at a loss. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting
its net asset value.
The following reclassifications have been made as of February 29, 1996:
UNDISTRIBUTED ACCUMULATED ADDITIONAL
NET INVESTMENT NET REALIZED PAID-IN
INCOME GAIN (LOSS) ADDITIONAL
-------------- -------------- --------------
$ 11,300 $ 131 $ (11,431)
EXPENSES: Expenses such as advisory, custodian, transfer agent,
shareholder servicing, printing, and registration fees are charged directly
to the individual funds, while indirect expenses, such as administrative,
insurance, and professional fees are generally allocated among all funds
principally based on their relative net assets.
DEFERRED ORGANIZATION EXPENSES: The Fund has incurred expenses in
connection with its organization and initial registration. These costs have
been deferred and are being amortized over 60 months on a straight-line
basis.
FOREIGN CURRENCY TRANSLATIONS: The books and records of the Fund are
maintained in US dollars. Foreign currency amounts and transactions of the
Fund are translated into US dollars on the following basis:
(a) Market value of investment securities, other assets and liabilities at
the closing rate of exchange on the valuation date.
(b) Purchases and sales of investment securities and income at the closing
rate of exchange prevailing on the respective trade dates of such
transactions.
Semiannual Report 17
<PAGE>
THE SEVEN SEAS SERIES
EMERGING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
Reported net realized gains or losses from foreign currency-related
transactions arise from sales and maturities of short-term securities;
sales of foreign currencies; currency gains or losses realized between the
trade and settlement dates on securities transactions; the difference
between the amounts of dividends, interest, and foreign withholding taxes
recorded on the Fund's books; and the US dollar equivalent of the amounts
actually received or paid. Net unrealized gains or losses from foreign
currency-related transactions arise from changes in the value of assets and
liabilities, other than investments in securities, at fiscal year-end,
resulting from changes in the exchange rates.
It is not practical to isolate that portion of the results of operations of
the Fund that arises as a result of changes in exchange rates from that
portion that arises from changes in market prices of investments during the
year. Such fluctuations are included with the net realized and unrealized
gain or loss from investments. However, for federal income tax purposes the
Fund does isolate the effects of changes in foreign exchange rates from the
fluctuations arising from changes in market prices for realized gain (or
loss) on debt obligations.
REPURCHASE AGREEMENTS: The Fund may engage in repurchase and tri-party
repurchase agreements with several financial institutions whereby the Fund,
through its custodian or third-party custodian, receives delivery of the
underlying securities. The market value of these securities (including
accrued interest) on acquisition date is required to be an amount equal to
at least 102% of the repurchase price. The Fund's Adviser will monitor
repurchase agreements daily to determine that the market value (including
accrued interest) at Fedwire closing time of the underlying securities
remains at least equal to 100% of the repurchase price. The Adviser or
third-party custodian will notify the seller to immediately increase the
collateral on the repurchase agreement to 102% of the repurchase price if
collateral falls below 100%.
INVESTMENT IN EMERGING MARKETS: Investing in emerging markets may involve
special risks and considerations not typically associated with investing in
the United States. These risks include revaluation of currencies, future
adverse political and economic developments and liquidity concerns
resulting from thinner markets. Moreover, securities issued in these
markets may be less liquid and their prices more volatile than those of
comparable securities in the United States. The Prospectus contains further
information and details regarding these risks.
3. SECURITIES TRANSACTIONS
INVESTMENT TRANSACTIONS: For the six months ended February 29, 1996
purchases and sales of investment securities, excluding short-term
investments, aggregated to $25,635,246 and $499,198, respectively.
18 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
EMERGING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
4. RELATED PARTIES
ADVISER: The Investment Company has an investment advisory agreement with
State Street Bank and Trust Company (the "Adviser") under which the Adviser
directs the investments of the Fund in accordance with its investment
objective, policies, and limitations. For these services, the Fund pays a
fee to the Adviser, calculated daily and paid monthly, at the annual rate
of .75% of its average daily net assets. For the period September 1, 1995
to October 31, 1995, the Adviser voluntarily agreed to reimburse the Fund
for all expenses in excess of 1.50% of average daily net assets on an
annual basis. Effective November 1, 1995, the Adviser voluntarily agreed to
reimburse the Fund for all expenses in excess of 1.25% of average daily net
assets on an annual basis. The Investment Company has contracts with the
Adviser to provide custody, shareholder services and transfer agent
servicing to the Fund.
ADMINISTRATOR, DISTRIBUTOR AND SHAREHOLDER SERVICING: Frank Russell
Investment Management Company (the "Administrator") serves as administrator
of the Investment Company. The Administrator is also required, pursuant to
the Administration Agreement, to arrange and pay certain promotional and
sales costs of Investment Company shares. Russell Fund Distributors, Inc.
(the "Distributor"), a subsidiary of the Administrator, is the distributor
of the Investment Company shares. The Fund has adopted a distribution plan
pursuant to Rule 12b-1 (the "Plan") under the 1940 Act. Under the Plan, the
Fund may also enter into service agreements with financial institutions,
including the Adviser, State Street Brokerage Services, Inc. ("SSBSI"), a
wholly-owned subsidiary of the Adviser, and Adviser's Metropolitan Division
of Commercial Banking ("Commercial Banking" collectively the "Agents"). The
Commercial Banking service agreement became effective November 8, 1995.
Under these service agreements, the Agents are to provide shareholder
servicing for Investment Company shareholders, including services related
to the purchase and redemption of Investment Company shares.
For these services, the Fund pays fees to the Agents in an amount that per
annum is equal to .025%, .175% and .175% of the average daily value of all
Fund shares held by or for customers of the Adviser, SSBSI and Commercial
Banking, respectively. These fees, in conjunction with other
distribution-related expenses, may not exceed .25% of the average daily
value of net assets on an annual basis, which includes a limit of .20% in
shareholder servicing fees for all providers. Any payments that are
required to be made by the Plan and any service agreement, but could not be
made because they exceed the maximum amount of allowable reimbursement, may
be carried forward for subsequent reimbursement from the Investment Company
so long as the Plan is in effect. The Fund's liability for any such
expenses carried forward shall terminate at the end of two years following
the year in which the expenditure was incurred. The Trustees or a majority
of the Fund's shareholders have the right, however, to terminate the
Distribution Plan and all payments thereunder at any time. The Fund will
not be obligated to reimburse the Distributor for carryover expenses
subsequent to the Distribution Plan's termination or noncontinuance. The
amount of the carryover expenses outstanding for the Distribution Plan as
of February 29, 1996, for which the Distributor intends to seek repayment,
is approximately $315,000. The amounts related to distribution and
shareholder servicing fees are included in the accompanying Statement of
Operations.
Semiannual Report 19
<PAGE>
THE SEVEN SEAS SERIES
EMERGING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
For shareholder servicing, the Fund incurred expenses of $9,835 and $1,368
from the Adviser and SSBSI, respectively. The amounts related to
distribution and shareholder servicing fees are included in the
accompanying Statement of Operations.
Pursuant to the Administration Agreement with the Investment Company, the
Administrator supervises all non-portfolio investment aspects of the
Investment Company's operations and provides adequate office space and all
necessary office equipment and services, including telephone service,
utilities, stationery supplies, and similar items. The Investment Company
pays the Administrator the following fees for the services supplied by the
Administrator pursuant to the Administration Agreement: (i) an annual fee,
payable monthly on a pro rata basis, based on the following percentages of
the average daily net assets of the Fund: $0 up to $500 million - .07%;
over $500 million to and including $1 billion - .06%; over $1 billion up to
$1.5 billion - .04%; over $1.5 billion - .03%; (ii) less an amount equal to
the sum of certain distribution-related expenses incurred by the Investment
Company's Distributor on behalf of the Fund (up to a maximum of 15% of the
asset-based determined in (i)); (iii) out-of-pocket expenses; and (iv)
start-up costs for new funds.
AFFILIATED BROKERAGE: The Fund placed a portion of its portfolio
transactions with SSBSI, an affiliated broker dealer of the Fund's Adviser.
The commissions paid to SSBSI were $2,276 for the six months ended February
29, 1996.
BOARD OF TRUSTEES: The Investment Company pays each of its Trustees not
affiliated with the Investment Company a retainer of $44,000 annually,
$1,000 for each of the board meetings attended, an additional $1,000 for
attending the annual audit committee meeting, and reimbursement for
out-of-pocket expenses.
5. COMMITMENTS
As of February 29, 1996, the Fund has entered into various foreign currency
exchange spot contracts which contractually obligate the Fund to deliver or
receive currencies at specified future dates. Open contracts were as
follows:
FOREIGN CURRENCY EXCHANGE SPOT CONTRACTS
UNREALIZED
APPRECIATION
CONTRACTS TO DELIVER IN EXCHANGE FOR SETTLEMENT DATE (DEPRECIATION)
- -------------------- --------------- --------------- --------------
USD 53,200 KRW 41,506,500 03/04/96 $ (160)
The related net unrealized appreciation (depreciation) is reflected in the
Fund's financial statements.
20 Semiannual Report
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
THE SEVEN SEAS SERIES FUND
Two International Place, 35th Floor
Boston, Massachusetts 02110 [LOGO]
(617) 654-6089
- --------------------------------------------------------------------------------
TRUSTEES
Lynn L. Anderson, Chairman
William L. Marshall
Steven J. Mastrovich
Patrick J. Riley
Richard D. Shirk
Bruce D. Taber
Henry W. Todd
OFFICERS
Lynn L. Anderson, President
George W. Weber, Senior Vice President
and Treasurer
J. David Griswold, Vice President
and Secretary
INVESTMENT ADVISER
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
CUSTODIAN, TRANSFER AGENT AND
OFFICE OF SHAREHOLDERS INQUIRIES
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
(800) 64-7SEAS (77327)
DISTRIBUTOR
Russell Fund Distributors, Inc.
Two International Place, 35th Floor
Boston, Massachusetts 02110
(617) 654-6089
ADMINISTRATOR
Frank Russell Investment Management Company
909 A Street
Tacoma, Washington 98402
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
Semiannual Report 21
<PAGE>
SEVEN SEAS INVESTMENT PORTFOLIOS
[LOGO]
SEMIANNUAL REPORT
TAX FREE MONEY MARKET FUND
FEBRUARY 29, 1996
<PAGE>
THE SEVEN SEAS SERIES FUND-Registered Trademark-
FEBRUARY 29, 1996
(UNAUDITED)
TABLE OF CONTENTS
Page
Tax Free Money Market Fund Financial Statements. . . . . . . . . . . . . . 3
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . 12
Fund Management and Service Providers. . . . . . . . . . . . . . . . . . . 15
"THE SEVEN SEAS SERIES FUND-Registered Trademark-" IS A REGISTERED TRADEMARK AND
SERVICE MARK OF THE SEVEN SEAS SERIES FUND.
THIS REPORT IS PREPARED FROM THE BOOKS AND RECORDS OF THE FUND AND IT IS
SUBMITTED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. THIS INFORMATION IS FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A
SEVEN SEAS SERIES FUND PROSPECTUS CONTAINING MORE COMPLETE INFORMATION
CONCERNING THE INVESTMENT OBJECTIVE AND OPERATIONS OF THE FUND, CHARGES AND
EXPENSES. THE PROSPECTUS SHOULD BE READ CAREFULLY BEFORE AN INVESTMENT IS MADE.
PERFORMANCE IS HISTORICAL AND ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL
GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN WHEN PURCHASED.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. AN INVESTMENT IN A MONEY
MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY THE US GOVERNMENT. THERE
CAN BE NO ASSURANCE THAT A MONEY MARKET FUND WILL BE ABLE TO MAINTAIN A STABLE
NET ASSET VALUE OF $1.00 PER SHARE. INCOME FROM TAX-FREE FUNDS MAY BE SUBJECT TO
AN ALTERNATIVE MINIMUM TAX OR STATE AND LOCAL TAXES. RUSSELL FUND DISTRIBUTORS,
INC. IS THE DISTRIBUTOR OF THE SEVEN SEAS SERIES FUND.
<PAGE>
THE SEVEN SEAS SERIES
TAX FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
February 29, 1996 (Unaudited)
PRINCIPAL DATE
AMOUNT OF VALUE
(000) RATE MATURITY* (000)
-------------------------------------------------
<S> <C> <C> <C> <C>
ARIZONA - 5.2%
Arizona State Transportation Board Highway Revenue . . . . . . . . . . . . $ 1,000 7.600% 07/01/96 $ 1,015
Maricopa County, Arizona Pollution Control,
Revenue Series F, daily demand . . . . . . . . . . . . . . . . . . . . . 2,000 3.400(1) 05/01/29 2,000
-------
3,015
-------
CALIFORNIA - 4.8%
Hercules, California Redevelopment Agency
Participation Certificates (pre-refunded 06/01/96)(b). . . . . . . . . . 1,500 8.250 06/01/15 1,547
San Jose, California Public Facilities Financing Corp.
Participation Certificates. . . . . . . . . . . . . . . . . . . . . . . . 1,210 6.800 05/01/96 1,218
-------
2,765
-------
CONNECTICUT - 0.1%
Connecticut, State of, General Obligation Series B, weekly demand. . . . . 100 3.300 06/01/96 100
-------
DISTRICT OF COLUMBIA - 1.8%
District of Columbia, General Obligation Series C
(pre-refunded 06/01/96)(a)(b). . . . . . . . . . . . . . . . . . . . . . 1,000 8.000 06/01/01 1,031
-------
FLORIDA - 5.7%
Dade County, Florida Industrial Development Revenue, weekly demand . . . . 1,300 3.400(2) 12/01/10 1,300
Manatee County, Florida Pollution Control Revenue, daily demand. . . . . . 2,000 3.450(1) 09/01/24 2,000
-------
3,300
-------
GEORGIA - 1.7%
Georgia Municipal Gas Authority Gas Revenue. . . . . . . . . . . . . . . . 1,000 3.100 04/08/96 1,000
-------
HAWAII - 1.7%
Hawaii, State of, General Obligation Series B-W. . . . . . . . . . . . . . 1,000 6.000 03/01/96 1,000
-------
</TABLE>
Semiannual Report 3
<PAGE>
THE SEVEN SEAS SERIES
TAX FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
PRINCIPAL DATE
AMOUNT OF VALUE
(000) RATE MATURITY* (000)
--------------------------------------------------
<S> <C> <C> <C> <C>
IDAHO - 2.1%
Idaho Health Facilities Hospital Authority Revenue, weekly
demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,200 3.300%(2) 12/01/23 $ 1,200
--------
ILLINOIS - 4.8%
Peoria, Moline & Freeport, Illinois Single Family Housing Revenue
Series B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 4.000(3) 04/01/27 1,000
Springfield, Illinois Electricity Revenue. . . . . . . . . . . . . . . . . 1,770 4.000 03/01/96 1,770
--------
2,770
--------
LOUISIANA - 10.1%
Ascension Parish, Louisiana Pollution Control Revenue, weekly demand . . . 700 3.300(2) 12/01/09 700
East Baton Rouge, Louisiana Pollution Control Revenue, daily demand. . . . 2,500 3.400(1) 03/01/22 2,500
Louisiana, State of, Recovery District Sales Tax Revenue (a) . . . . . . . 1,620 7.380 07/01/96 1,641
New Orleans, Louisiana Aviation Board Revenue, weekly demand . . . . . . . 1,000 3.600(2) 12/01/19 1,000
--------
5,841
--------
MAINE - 4.3%
Maine, State of, Tax Anticipation Notes. . . . . . . . . . . . . . . . . . 2,500 4.500 06/28/96 2,509
--------
MARYLAND - 6.9%
Howard County, Maryland Multi-Family Housing Revenue,
annual demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 4.250(4) 06/01/96 1,000
Montgomery County, Maryland General Obligation Series 1995 . . . . . . . . 2,000 3.150 03/05/96 2,000
Northeast Maryland Waste Disposal Authority Resolution Revenue,
weekly demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 3.050(2) 01/01/08 1,000
--------
4,000
--------
MINNESOTA - 2.4%
Becker, Minnesota Pollution Control Revenue, daily demand. . . . . . . . . 1,400 3.150(1) 03/04/96 1,400
--------
MISSISSIPPI - 1.3%
Tupelo, Mississippi Water & Sewer Revenue (a). . . . . . . . . . . . . . . 770 6.250 08/01/96 779
--------
</TABLE>
4 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
TAX FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
PRINCIPAL DATE
AMOUNT OF VALUE
(000) RATE MATURITY* (000)
--------------------------------------------------
<S> <C> <C> <C> <C>
MISSOURI - 1.7%
Missouri State Health & Educational Facilities Revenue, daily demand . . . $ 1,000 3.150%(1) 12/01/16 $ 1,000
--------
NEVADA - 3.0%
Nevada Housing Division Multi-Family Housing Unit Revenue. . . . . . . . . 1,710 8.500 04/01/96 1,717
--------
NEW HAMPSHIRE - 1.8%
New Hampshire, State of, General Obligation (pre-refunded 05/15/96)(b) . . 1,000 7.100 05/15/02 1,027
--------
NEW YORK - 6.3%
Buffalo, New York Sewer Authority Revenue
(pre-refunded 07/01/96)(a)(b). . . . . . . . . . . . . . . . . . . . . . 1,000 7.630 07/01/06 1,044
New York City Municipal Water Finance Authority Revenue Series B
(pre-refunded 06/15/96)(b) . . . . . . . . . . . . . . . . . . . . . . . 1,500 7.880 06/15/16 1,548
New York, New York General Obligation Series D
(pre-refunded 08/01/96)(b) . . . . . . . . . . . . . . . . . . . . . . . 1,000 8.500 08/01/13 1,040
--------
3,632
--------
NORTH CAROLINA - 3.1%
Charlotte, North Carolina Airport Revenue Series A, weekly demand (a). . . 800 3.050(2) 07/01/16 800
North Carolina Eastern Municipal Power Systems Revenue Series B. . . . . . 1,000 3.200 03/04/96 1,000
--------
1,800
--------
PENNSYLVANIA - 1.7%
Pennsylvania State Higher Education Revenue Series L (a) . . . . . . . . . 1,000 7.000 06/15/96 1,009
--------
SOUTH CAROLINA - 2.5%
Charleston County, South Carolina General Obligation
(pre-refunded 05/01/96)(b) . . . . . . . . . . . . . . . . . . . . . . . 450 6.800 05/01/99 461
Orangeburg County, South Carolina Solid Waste Disposal
Facilities Revenue, daily demand . . . . . . . . . . . . . . . . . . . . 1,000 3.550(1) 11/01/24 1,000
--------
1,461
--------
</TABLE>
Semiannual Report 5
<PAGE>
THE SEVEN SEAS SERIES
TAX FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
PRINCIPAL DATE
AMOUNT OF VALUE
(000) RATE MATURITY* (000)
--------------------------------------------------
<S> <C> <C> <C> <C>
TENNESSEE - 3.5%
Tennessee, State of, General Obligation (called 04/01/96). . . . . . . . . $ 2,000 6.700% 04/01/04 $ 2,036
--------
TEXAS - 19.7%
Dallas, Texas, General Obligation (pre-refunded 05/01/96)(b) . . . . . . . 1,000 6.750 05/01/98 1,005
Harris County, Texas Health Facilities Development Corp.
Hospital Revenue, daily demand . . . . . . . . . . . . . . . . . . . . . 1,500 3.450(1) 12/01/25 1,500
Houston, Texas Water Systems Revenue . . . . . . . . . . . . . . . . . . . 500 7.000 12/01/96 514
Houston, Texas General Obligation, weekly demand . . . . . . . . . . . . . 600 3.300(2) 04/01/98 600
Houston, Texas General Obligation (pre-refunded 03/01/96)(b) . . . . . . . 2,250 8.000 03/01/02 2,295
Panhandle Plains, Texas Higher Education Authority Revenue,
weekly demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 3.200(2) 06/01/21 1,500
San Antonio, Texas Sewer Revenue (pre-refunded 05/01/96)(b). . . . . . . . 1,000 7.000 05/01/00 1,025
South Texas Higher Education Student Loan Revenue, weekly demand . . . . . 1,000 3.200(2) 06/01/25 1,000
Texas A&M University General Obligation Series B . . . . . . . . . . . . . 2,000 3.200 03/13/96 2,000
--------
11,439
--------
WASHINGTON - 6.2%
Washington, State of, General Obligation (pre-refunded 04/01/96)(b). . . . 500 6.150 04/01/98 501
Washington, State of, General Obligation (pre-refunded 05/01/96)(b). . . . 2,500 9.100 05/01/99 2,522
Washington, State of, General Obligation Motor Vehicle Fuel Tax
(pre-refunded 09/01/96)(b) . . . . . . . . . . . . . . . . . . . . . . . 550 7.500 09/01/98 561
--------
3,584
--------
WISCONSIN - 0.8%
Milwaukee County, Wisconsin, General Obligation
(pre-refunded 10/01/96)(b) . . . . . . . . . . . . . . . . . . . . . . . 500 6.100 10/01/01 508
--------
TOTAL INVESTMENTS (amortized cost $59,923)(c)-103.2% 59,923
OTHER ASSETS AND LIABILITIES, NET - (3.2%) (1,834)
--------
NET ASSETS - 100.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 58,089
--------
--------
</TABLE>
6 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
TAX FREE MONEY MARKET FUND
STATEMENT OF NET ASSETS, CONTINUED
February 29, 1996 (Unaudited)
(a) Bond is insured by AMBAC, FGIC, or MBIA.
(b) Prerefunded: These bonds are collateralized by U.S. Treasury securities,
which are held in escrow by a trustee and used to pay principal and
interest in the tax-exempt issue and to retire the bonds in full at the
earliest refunding date.
(c) The identified cost for federal income tax purposes is the same as shown
above.
* All securities with a maturity greater than 13 months have a demand
feature, or an optional or mandatory put, resulting in an effective
maturity of 13 months or less. Additionally, all daily and weekly demand
securities are backed by direct payment letters of credit.
Variable Rate:
(1) Daily
(2) Weekly
(3) Semiannually
(4) Annually
QUALITY RATINGS AS A % OF MARKET VALUE
VMIG1 or SP-1 ++ 100%
ECONOMIC SECTOR EMPHASIS AS A % OF MARKET VALUE
Refunded and Special Obligation Revenue 36%
Pollution Control Revenue 15
General Obligation 13
Housing Revenue 8
Education Revenue 6
Healthcare Revenue 6
Utility Revenue 6
Airport Revenue 3
Solid Waste Revenue 3
Water and Sewer Revenue 2
Transportation Revenue 2
------
100%
------
------
++ VMIG1: The highest short-term municipal note credit rating given by Moody's
to notes with a demand feature which are of the "best quality."
++ SP-1: The highest short-term municipal note credit rating given by Standard
& Poor's to notes with a "very strong or strong capacity to pay
principal & interest."
The accompanying notes are an integral part of the financial statements.
Semiannual Report 7
<PAGE>
THE SEVEN SEAS SERIES
TAX FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS AND LIABILITIES
February 29, 1996 (Unaudited)
<S> <C> <C>
ASSETS
Investments at amortized cost which approximates market (Note 2) . . . . . . . . . . . . . . $ 59,923,380
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,792
Interest receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 820,278
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,496
Deferred organizational expenses (Note 2). . . . . . . . . . . . . . . . . . . . . . . . . . 37,292
------------
60,847,238
LIABILITIES
Payables (Note 4):
Investments purchased. . . . . . . . . . . . . . . . . . . . . . . . . $ 2,578,675
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,250
Accrued advisory fees. . . . . . . . . . . . . . . . . . . . . . . . . 23,159
Accrued administrative fees. . . . . . . . . . . . . . . . . . . . . . 1,347
Accrued custodian fees . . . . . . . . . . . . . . . . . . . . . . . . 4,555
Accrued shareholder servicing fees . . . . . . . . . . . . . . . . . . 8,634
Accrued transfer agent fees. . . . . . . . . . . . . . . . . . . . . . 189
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . 6,065 2,757,874
------------- ------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 58,089,364
------------
------------
NET ASSETS CONSIST OF:,
Accumulated net realized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 110
Shares of beneficial interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,091
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,031,163
------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 58,089,364
------------
------------
Net asset value, offering and redemption price per share,
($58,089,364 divided by 58,090,598 shares of $.001
par value shares of beneficial interest outstanding) . . . . . . . . . . . . . . . . . . . . $1.00
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
TAX FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 1996 (Unaudited)
<S> <C> <C>
INVESTMENT INCOME
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 926,930
Expenses (Notes 2 and 4):
Advisory fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 61,943
Administrative fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 7,281
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,089
Distribution fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,113
Professional fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,414
Registration fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,302
Shareholder servicing fees . . . . . . . . . . . . . . . . . . . . . . . 19,786
Transfer agent fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 599
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,207
Amortization of deferred organization expenses . . . . . . . . . . . . . 6,403 135,137
--------- ----------
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 791,793
----------
REALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from investment transactions (Notes 2 and 3). . . . . . . . . . . . . 3,633
----------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . . . . . . . . $ 795,426
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 9
<PAGE>
THE SEVEN SEAS SERIES
TAX FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE PERIOD
MONTHS ENDED DECEMBER 1, 1994++
FEBRUARY 29, 1996 TO
(UNAUDITED) AUGUST 31, 1995
----------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . $ 791,793 $ 862,550
Net realized gain (loss) from investments. . . . . . . . . . . . . . . . 3,633 (3,523)
------------ ------------
Net increase (decrease) in net assets resulting from operations. . . . . . 795,426 859,027
Distributions to shareholders from net investment income . . . . . . . . . (793,137) (862,550)
Increase (decrease) in net assets from Fund share transactions . . . . . . 15,479,856 42,610,742
------------ ------------
INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . . . . . . 15,482,145 42,607,219
Net assets at beginning of period. . . . . . . . . . . . . . . . . . . . . 42,607,219 --
------------ ------------
NET ASSETS AT END OF PERIOD. . . . . . . . . . . . . . . . . . . . . . . . $ 58,089,364 $ 42,607,219
------------ ------------
------------ ------------
FUND SHARE TRANSACTIONS
(ON A CONSTANT DOLLAR BASIS):
Fund shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,759,065 79,000,157
Fund shares issued to shareholders in reinvestments of distributions . . . 459,727 608,107
Fund shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . (70,738,936) (36,997,522)
------------ ------------
Net increase (decrease). . . . . . . . . . . . . . . . . . . . . . . . . . 15,479,856 42,610,742
------------ ------------
------------ ------------
</TABLE>
++ Commencement of operations.
The accompanying notes are an integral part of the financial
statements.
10 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
TAX FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout each fiscal
year or period and other performance information derived from the financial statements.
1996+ 1995++
--------- ---------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . $ 1.0000 $ 1.0000
--------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . .0160 .0251
--------- ---------
LESS DISTRIBUTIONS:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . (.0160) (.0251)
--------- ---------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . $ 1.0000 $ 1.0000
--------- ---------
--------- ---------
TOTAL RETURN (%)(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.61 2.54
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average daily net assets (b)(c). . . . . . . .54 .59
Operating expenses, gross, to average daily net assets (b)(c). . . . . . .54 .60
Net investment income to average daily net assets (b). . . . . . . . . . 3.19 3.40
Net assets, end of period ($000 omitted) . . . . . . . . . . . . . . . . 58,089 42,607
Per share amount of fees waived ($ omitted)(c) . . . . . . . . . . . . . -- .0001
</TABLE>
+ For the six months ended February 29, 1996 (Unaudited).
++ For the period December 1, 1994 (commencement of operations) to
August 31, 1995.
(a) Periods less than one year are not annualized.
(b) The ratios for the periods ended February 29, 1996 and August 31, 1995
are annualized.
(c) See Note 4 for current period amounts.
Semiannual Report 11
<PAGE>
THE SEVEN SEAS SERIES
TAX FREE MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996 (Unaudited)
1. ORGANIZATION
The Seven Seas Series Fund (the "Investment Company") is a series mutual
fund, currently comprising 14 investment portfolios which are in operation
as of February 29, 1996. These financial statements report on one
portfolio, The Seven Seas Series Tax Free Money Market Fund (the "Fund").
The Investment Company is a registered and diversified open-end investment
company, as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), that was organized as a Massachusetts business trust on
October 3, 1987 and operates under a First Amended and Restated Master
Trust Agreement, dated October 13, 1993, as amended. The Investment
Company's master trust agreement permits the Board of Trustees to issue an
unlimited number of full and fractional shares of beneficial interest at a
$.001 par value. The Investment Company has available Class B and Class C
shares of the Fund as of September 22, 1994; however, shares have not been
offered on these classes as of the date of these financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management
estimates. The following is a summary of the significant accounting
policies consistently followed by the Fund in the preparation of its
financial statements.
SECURITY VALUATION: The Fund's portfolio investments are valued on the
basis of amortized cost, a method by which each portfolio instrument is
initially valued at cost, and thereafter a constant accretion/amortization
to maturity of any discount or premium is assumed. The Fund utilizes the
amortized cost valuation method in accordance with Rule 2a-7 of the 1940
Act.
SECURITIES TRANSACTIONS: Securities transactions are recorded on the trade
date, which in most instances is the same as the settlement date. Realized
gains and losses from the securities transactions, if any, are recorded on
the basis of identified cost.
INVESTMENT INCOME: Interest income is recorded on the accrual basis.
FEDERAL INCOME TAXES: As the Investment Company is a Massachusetts
business trust, each sub-trust is a separate corporate taxpayer and
determines its net investment income and capital gains (or losses) and the
amounts to be distributed to each fund's shareholders without regard to the
income and capital gains (or losses) of the other funds.
It is the Fund's intention to qualify as a regulated investment company and
distribute all of its taxable income. The Fund, accordingly, paid no
federal income tax and no federal income tax provision was required. As
permitted by tax regulations, the Fund intends to defer a net realized
capital loss of $3,523, incurred from December 1, 1994 to August 31, 1995
and treat it as arising in fiscal year 1996.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Fund declares and records
dividends on net investment income daily and pays them monthly. Capital
gain distributions, if any, are generally declared and paid annually. An
additional distribution may be paid by the Fund to avoid imposition of
federal income tax on any remaining undistributed net investment income and
capital gains. The fund may periodically make
12 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
TAX FREE MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
reclassifications among certain of its capital accounts without impacting
net asset value for differences between federal tax regulations and
generally accepted accounting principles.
EXPENSES: Expenses such as advisory, custodian, transfer agent,
shareholder servicing, printing, and registration fees are charged directly
to the individual funds, while indirect expenses, such as administrative,
insurance, and professional fees are generally allocated among all funds
principally based on their relative net assets.
DEFERRED ORGANIZATION EXPENSES: The Fund has incurred expenses in
connection with its organization and initial registration. These costs
have been deferred and are being amortized over 60 months on a
straight-line basis.
3. SECURITIES TRANSACTIONS
INVESTMENT TRANSACTIONS: For the six months ended February 29, 1996,
purchases, sales and maturities of short-term tax-exempt obligations were
$150,454,261, $95,591,036, and $37,557,300, respectively.
4. RELATED PARTIES
ADVISER: The Investment Company has an investment advisory agreement with
State Street Bank and Trust Company (the "Adviser") under which the Adviser
directs the investments of the Fund in accordance with its investment
objectives, policies, and limitations. For these services, the Fund pays a
fee to the Adviser, calculated daily and paid monthly, at the annual rate
of .25% of its average daily net assets. The Investment Company has
contracts with the Adviser to provide custody, shareholder servicing and
transfer agent services to the Fund.
ADMINISTRATOR, DISTRIBUTOR AND SHAREHOLDER SERVICING: Frank Russell
Investment Management Company (the "Administrator") serves as administrator
of the Investment Company. The Administrator is also required, pursuant to
the Administration Agreement, to arrange and pay certain promotional and
sales costs of Investment Company shares. Russell Fund Distributors, Inc.
(the "Distributor"), a subsidiary of the Administrator, is the distributor
of the Investment Company shares. The Fund has adopted a distribution plan
pursuant to Rule 12b-1 (the "Plan") under the 1940 Act. Under the Plan, the
Fund may also enter into service agreements with financial institutions,
including the Adviser, State Street Brokerage Services, Inc. ("SSBSI"), a
wholly-owned subsidiary of the Adviser, and Adviser's Metropolitan Division
of Commercial Banking ("Commercial Banking" collectively the "Agents"). The
Commercial Banking servicing agreement became effective November 8, 1995.
Under these service agreements, the Agents are to provide shareholder
servicing for Investment Company shareholders, including services related
to the purchase and redemption of Investment Company shares.
For these services, the Fund pays fees to the Agents in an amount that per
annum is equal to .025%, .175% and .175% of the average daily value of all
Fund shares held by or for customers of the Adviser, SSBSI and Commercial
Banking, respectively. These fees, in conjunction with other
distribution-related expenses, may not
Semiannual Report 13
<PAGE>
THE SEVEN SEAS SERIES
TAX FREE MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
February 29, 1996 (Unaudited)
exceed .25% of the average daily value of net assets on an annual basis,
which includes a limit of .20% in shareholder servicing fees for all
providers. Any payments that are required to be made by the Plan and any
service agreement, but could not be made because they exceed the maximum
amount of allowable reimbursement, may be carried forward for subsequent
reimbursement from the Investment Company so long as the Plan is in effect.
The Fund's liability for any such expenses carried forward shall terminate
at the end of two years following the year in which the expenditure was
incurred. The Trustees or a majority of the Fund's shareholders have the
right, however, to terminate the Distribution Plan and all payments
thereunder at any time. The Fund will not be obligated to reimburse the
Distributor for carryover expenses subsequent to the Distribution Plan's
termination or noncontinuance. There were no carryover expenses as of
February 29, 1996.
For shareholder servicing, the Fund incurred expenses of $6,194 and $13,592
from the Adviser and Commercial Banking, respectively. The amounts related
to distribution and shareholder servicing fees are included in the
accompanying Statement of Operations.
Pursuant to the Administration Agreement with the Investment Company, the
Administrator supervises all non-portfolio investment aspects of the
Investment Company's operations and provides adequate office space and all
necessary office equipment and services, including telephone service,
utilities, stationery supplies, and similar items. The Investment Company
pays the Administrator the following fees for the services supplied by the
Administrator pursuant to the Administration Agreement: (i) an annual fee,
payable monthly on a pro rata basis, based on the following percentages of
the average daily net assets of all domestic funds: $0 up to $500 million
- .06%; over $500 million to and including $1 billion - .05%; over
$1 billion - .03%; (ii) less an amount equal to the sum of certain
distribution-related expenses incurred by the Investment Company's
Distributor on behalf of the Fund (up to a maximum of 15% of the
asset-based fee determined in (i)); (iii) out-of-pocket expenses; and
(iv) start-up costs for new funds.
BOARD OF TRUSTEES: The Investment Company pays each of its Trustees not
affiliated with the Investment Company a retainer of $44,000 annually,
$1,000 for each of the board meetings attended, an additional $1,000 for
attending the annual audit committee meeting, and reimbursement for
out-of-pocket expenses.
14 Semiannual Report
<PAGE>
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<PAGE>
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THE SEVEN SEAS SERIES FUND
Two International Place, 35th Floor
Boston, Massachusetts 02110 [LOGO]
(617) 654-6089
- --------------------------------------------------------------------------------
TRUSTEES
Lynn L. Anderson, Chairman
William L. Marshall
Steven J. Mastrovich
Patrick J. Riley
Richard D. Shirk
Bruce D. Taber
Henry W. Todd
OFFICERS
Lynn L. Anderson, President
George W. Weber, Senior Vice President
and Treasurer
J. David Griswold, Vice President
and Secretary
INVESTMENT ADVISER
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
CUSTODIAN, TRANSFER AGENT AND
OFFICE OF SHAREHOLDERS INQUIRIES
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
(800) 64-7SEAS (77327)
DISTRIBUTOR
Russell Fund Distributors, Inc.
Two International Place, 35th Floor
Boston, Massachusetts 02110
(617) 654-6089
ADMINISTRATOR
Frank Russell Investment Management Company
909 A Street
Tacoma, Washington 98402
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
Semiannual Report 15
<PAGE>
SEVEN SEAS INVESTMENT PORTFOLIOS
[LOGO]
SEMIANNUAL REPORT
BOND MARKET FUND
FEBRUARY 29, 1996
<PAGE>
THE SEVEN SEAS SERIES FUND-Registered Trademark-
FEBRUARY 29, 1996
(UNAUDITED)
TABLE OF CONTENTS
Page
Bond Market Fund Financial Statements. . . . . . . . . . . . . . . . . . 3
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . 10
Fund Management and Service Providers. . . . . . . . . . . . . . . . . . 14
"THE SEVEN SEAS SERIES FUND"-Registered Trademark- IS A REGISTERED TRADEMARK AND
SERVICE MARK OF THE SEVEN SEAS SERIES FUND.
THIS REPORT IS PREPARED FROM THE BOOKS AND RECORDS OF THE FUND AND IT IS
SUBMITTED FOR THE GENERAL INFORMATION OF SHAREHOLDERS. THIS INFORMATION IS FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN PRECEDED OR ACCOMPANIED BY A
SEVEN SEAS SERIES FUND PROSPECTUS CONTAINING MORE COMPLETE INFORMATION
CONCERNING THE INVESTMENT OBJECTIVE AND OPERATIONS OF THE FUND, CHARGES AND
EXPENSES. THE PROSPECTUS SHOULD BE READ CAREFULLY BEFORE AN INVESTMENT IS MADE.
PERFORMANCE IS HISTORICAL AND ASSUMES REINVESTMENT OF ALL DIVIDENDS AND CAPITAL
GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN WHEN PURCHASED.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. RUSSELL FUND DISTRIBUTORS,
INC., IS THE DISTRIBUTOR OF THE SEVEN SEAS SERIES FUND.
<PAGE>
THE SEVEN SEAS SERIES
BOND MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
February 29, 1996 (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
(000) (000)
----------- -----------
<S> <C> <C>
LONG-TERM INVESTMENTS - 91.7%
ASSET-BACKED SECURITIES - 4.0%
Chase Manhattan Grantor Trust
Pass-thru Certificate
Series 1996-A Class A
5.200% due 02/15/02 $ 200 $ 198
Discover Card Master Trust I
Series 1996-3 Class A
6.050% due 08/18/08 200 191
Ford Credit Auto Loan Master Trust
Series 1995-1 Class A
6.500% due 08/15/02 200 202
Household Affinity Credit Card
Participation Certificate
Series 1994-2 Class A
7.000% due 12/15/99 200 204
--------
795
--------
CORPORATE BONDS AND NOTES - 14.1%
Alltel Corp.
6.750% due 09/15/05 150 150
Applied Materials Inc. (MTN)
7.000% due 09/06/05 200 202
Associates Corp. of North America
6.375% due 08/15/98 150 152
Bayerische Landesbank Girozen (MTN)
7.500% due 06/15/04 150 159
Branch Banking & Trust Co.
5.700% due 02/01/01 250 245
CIT Group Holdings Inc.
5.625% due 04/01/98 200 199
Chase Manhattan Corp.
5.500% due 02/15/01 200 194
Commercial Credit Group Inc.
6.500% due 06/01/05 200 196
General Motors Acceptance Corp.
(MTN)
8.250% due 01/20/98 300 313
Norwest Financial Inc.
8.500% due 08/15/98 300 320
Penney J.C., Inc. (MTN)
6.375% due 09/15/00 200 201
Republic New York Corp.
9.125% due 05/15/21 200 244
US West Communications Inc.
7.250% due 09/15/25 200 200
Wendy's International Inc.
7.000% due 12/15/25 50 47
--------
2,822
--------
MORTGAGE-BACKED SECURITIES - 17.4%
Federal Home Loan Mortgage Corp.
Participation Certificate Group
#G5-0236 5.500% due 10/01/98 290 286
Federal National Mortgage
Association Pools
#050766 7.500% due 07/01/23 110 111
#201543 8.000% due 02/01/23 15 15
#221098 7.500% due 08/01/23 38 39
#233081 7.500% due 09/01/23 43 44
#237160 7.500% due 02/01/24 45 45
#270782 7.500% due 02/01/24 94 95
#292898 7.000% due 08/01/24 231 228
#296351 8.500% due 12/01/24 62 64
#303031 7.500% due 10/01/24 343 346
#304928 8.500% due 03/01/25 100 104
#316260 7.500% due 07/01/25 172 174
#319059 6.500% due 08/01/25 309 298
</TABLE>
Semiannual Report 3
<PAGE>
THE SEVEN SEAS SERIES
BOND MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS CONTINUED
February 29, 1996 (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
(000) (000)
----------- -----------
<S> <C> <C>
Government National Mortgage
Association Pools
#328956 7.500% due 12/15/22 $ 20 $ 20
#330416 7.500% due 01/15/23 41 42
#344955 7.500% due 08/15/23 71 72
#346374 7.500% due 01/15/23 116 118
#348101 7.000% due 06/15/23 312 308
#352079 7.000% due 09/15/23 282 278
#352521 7.500% due 11/15/23 59 60
#369662 7.500% due 10/15/23 84 85
#371259 7.000% due 01/15/24 139 137
#380248 7.500% due 02/15/24 284 287
#3845687.000% due 04/15/24 222 220
--------
3,476
--------
UNITED STATES GOVERNMENT
TREASURIES - 49.4%
United States Treasury Bonds
8.875% due 08/15/17 670 842
7.875% due 02/15/21 350 401
6.875% due 08/15/25 250 261
United States Treasury Notes
5.625% due 08/31/97 1,200 1,204
6.000% due 08/31/97 800 807
5.375% due 11/30/97 450 450
5.250% due 12/31/97 400 399
5.875% due 08/15/98 200 202
7.125% due 10/15/98 80 83
5.500% due 11/15/98 100 100
5.000% due 02/15/99 500 492
6.375% due 07/15/99 275 281
6.875% due 07/31/99 200 208
6.875% due 08/31/99 395 410
6.375% due 01/15/00 350 358
6.250% due 05/31/00 125 127
5.625% due 11/30/00 200 199
5.500% due 12/31/00 400 396
7.875% due 08/15/01 115 126
6.375% due 08/15/02 450 461
6.250% due 02/15/03 1,210 1,228
5.875% due 11/15/05 570 558
5.625% due 02/15/06 300 289
--------
9,882
--------
YANKEE BONDS - 6.8%
British Columbia Province of
6.500% due 01/15/26 200 187
Finland Republic of
6.950% due 02/15/26 200 199
Manitoba Province of
Series C-J
9.500% due 10/01/00 351 397
Ontario Province of
7.750% due 06/04/02 300 322
Quebec Province of
6.500% due 01/17/06 100 97
Westpac Banking Corp., Ltd.
7.875% due 10/15/02 150 161
--------
1,363
--------
TOTAL LONG-TERM INVESTMENTS
(cost $18,670) 18,338
--------
</TABLE>
4 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
BOND MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS CONTINUED
February 29, 1996 (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
(000) (000)
----------- -----------
<S> <C> <C>
SHORT-TERM INVESTMENTS - 2.5%
Institutional Fiduciary Trust
Money Market Fund (a) $ 513 $ 513
--------
TOTAL SHORT-TERM INVESTMENTS
(cost $513) 513
--------
REPURCHASE AGREEMENTS - 3.5%
Agreement with HSBC of $700
acquired 02/29/96 at 5.470%
to be repurchased at $700
on 03/01/96 collateralized by:
$730 Federal Home Loan Bank
Discount Note 5.216% due
07/18/96 valued at $716 700
--------
TOTAL REPURCHASE AGREEMENTS
(cost $700) 700
--------
TOTAL INVESTMENTS - 97.7%
(identified cost $19,883)(b) 19,551
OTHER ASSETS AND LIABILITIES
Net - 2.3% 453
--------
NET ASSETS - 100.0% $ 20,004
--------
--------
</TABLE>
(a) At cost which approximates market.
(b) At February 29, 1996, the cost for federal income tax purposes was the same
as shown above and net unrealized depreciation for all securities was $332.
This consisted of aggregate gross unrealized appreciation for all
securities in which there was an excess of market value over tax cost of $0
and aggregate gross unrealized depreciation for all securities in which
there was an excess of tax cost over market value of $332.
(MTN) represents Medium Term Note.
The accompanying notes are an integral part of the financial statements.
Semiannual Report 5
<PAGE>
THE SEVEN SEAS SERIES
BOND MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (Unaudited)
<S> <C> <C>
ASSETS
Investments at market (identified cost $19,182,822)(Note 2). . . . . . . . $ 18,851,108
Repurchase agreements (cost $700,000)(Note 2). . . . . . . . . . . . . . . 700,000
Receivables:
Dividends and interest . . . . . . . . . . . . . . . . . . . . . . . . . 157,689
Fund shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615,500
Deferred organization expenses (Note 2). . . . . . . . . . . . . . . . . . 54,367
-------------
20,378,664
LIABILITIES
Payables (Note 4):
Investments purchased. . . . . . . . . . . . . . . . . . . $ 315,521
Accrued administrative fees. . . . . . . . . . . . . . . . 140
Accrued custodian fees . . . . . . . . . . . . . . . . . . 1,234
Accrued distribution fees. . . . . . . . . . . . . . . . . 213
Accrued shareholder servicing fees . . . . . . . . . . . . 234
Accrued organization fees. . . . . . . . . . . . . . . . . 55,000
Other accrued expenses . . . . . . . . . . . . . . . . . . 2,219 374,561
----------- ------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,004,103
------------
------------
NET ASSETS CONSIST OF:
Undistributed net investment income. . . . . . . . . . . . . . . . . . . . $ 56,225
Accumulated net realized gain (loss) . . . . . . . . . . . . . . . . . . . 756
Unrealized appreciation (depreciation) on investments. . . . . . . . . . . (331,714)
Shares of beneficial interest. . . . . . . . . . . . . . . . . . . . . . . 2,034
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . 20,276,802
------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,004,103
------------
------------
Net asset value offering and redemption price per share
($20,004,103 divided by 2,034,049 shares of $.001
par value shares of beneficial interest outstanding) . . . . . . . . . . . $9.83
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
BOND MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Period February 7, 1996 (Commencement of Operations)
to February 29, 1996 (Unaudited)
<S> <C> <C>
INVESTMENT INCOME
Income:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 58,834
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,064
----------
60,898
Expenses (Notes 2 and 4):
Advisory fees. . . . . . . . . . . . . . . . . . . . . . . $ 2,804
Administrative fees. . . . . . . . . . . . . . . . . . . . 272
Custodian fees . . . . . . . . . . . . . . . . . . . . . . 1,234
Distribution fees. . . . . . . . . . . . . . . . . . . . . 213
Professional fees. . . . . . . . . . . . . . . . . . . . . 1,390
Registration fees. . . . . . . . . . . . . . . . . . . . . 778
Shareholder servicing fees . . . . . . . . . . . . . . . . 234
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . 51
Amortization of deferred organization expenses . . . . . . 633
---------
Expenses before waivers. . . . . . . . . . . . . . . . . . . 7,609
Expenses waived. . . . . . . . . . . . . . . . . . . . . . . (2,936) 4,673
---------- ----------
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . 56,225
----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (Notes 2 and 3)
Net realized gain (loss) from investments. . . . . . . . . . . . . . . . . 756
Net change in unrealized appreciation or depreciation of investments . . . (331,714)
----------
Net gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . . (330,958)
----------
Net increase (decrease) in net assets resulting from operations. . . . . . $ (274,733)
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Semiannual Report 7
<PAGE>
THE SEVEN SEAS SERIES
BOND MARKET FUND
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
For the Period February 7, 1996 (Commencement of Operations)
to February 29, 1996 (Unaudited)
1996
----------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income. . . . . . . . . . . . . . . . . . . . . . $ 56,225
Net realized gain (loss) from investments. . . . . . . . . . . . 756
Net change in unrealized appreciation
or depreciation of investments . . . . . . . . . . . . . . . . (331,714)
----------
Net increase (decrease) in net assets resulting from operations. . (274,733)
Distributions to shareholders from net investment income . . . . . --
Increase (decrease) in net assets from Fund share transactions . . 20,278,836
----------
INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . . 20,004,103
Net assets at beginning of period. . . . . . . . . . . . . . . . . --
----------
NET ASSETS AT END OF PERIOD
(including undistributed net investment income of $56,225) . . $ 20,004,103
----------
----------
</TABLE>
<TABLE>
<CAPTION>
FUND SHARE TRANSACTIONS
Shares Amount
------------ ------------
<S> <C> <C>
Fund shares sold . . . . . . . . . . . . . . . . . 2,034,049 20,278,836
Fund shares issued to shareholders
in reinvestments of distributions. . . . . . . . . -- --
Fund shares redeemed . . . . . . . . . . . . . . . -- --
------------ ------------
Net increase (decrease). . . . . . . . . . . . . . 2,034,049 20,278,836
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
BOND MARKET FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout the
period and other performance information derived from the financial statements.
1996++
--------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . $ 10.00
--------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income. . . . . . . . . . . . . . . . . . . . . . . . . . .03
Net Realized and unrealized gain (loss) on investments . . . . . . . . . (.20)
--------
Total From Investment Operations . . . . . . . . . . . . . . . . . . . . (.17)
--------
LESS DISTRIBUTIONS:
Net Investment Income. . . . . . . . . . . . . . . . . . . . . . . . . . --
--------
NET ASSET VALUE, END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . $ 9.83
--------
--------
TOTAL RETURN (%)(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.70)
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average daily net assets (b)(c). . . . . . . .50
Operating expenses, gross, to average daily net assets (b)(c). . . . . . .81
Net investment income to average daily net assets (b). . . . . . . . . . 6.02
Portfolio turnover (a) . . . . . . . . . . . . . . . . . . . . . . . . . 27.98
Net assets end of period ($000 omitted). . . . . . . . . . . . . . . . . 20,004
Per share amount of fees waived ($ omitted)(c) . . . . . . . . . . . . . .0014
</TABLE>
++ For the period february 7, 1996 (commencement of operations)
to February 29, 1996 (unaudited).
(a) Periods less than one year are not annualized.
(b) Annualized.
(c) See Note 4 for current period amounts.
Semiannual Report 9
<PAGE>
THE SEVEN SEAS SERIES
BOND MARKET FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996 (Unaudited)
1. ORGANIZATION
The Seven Seas Series Fund (the "Investment Company") is a series mutual
fund, currently comprising 14 investment portfolios, which are in operation
as of February 29, 1996. These financial statements report on one portfolio,
The Seven Seas Series Bond Market Fund (the "Fund"), which commenced
operations on February 7, 1996. The Investment Company is a registered and
diversified open-end investment company, as defined in the Investment Company
Act of 1940, as amended (the "1940 Act"), that was organized as a
Massachusetts business trust on OCTOBER 3, 1987 and operates under a First
Amended and Restated Master Trust Agreement, dated October 13, 1993, as
amended. The Investment Company's master trust agreement permits the Board of
Trustees to issue an unlimited number of full and fractional shares of
beneficial interest at a $.001 par value.
2. SIGNIFICANT ACCOUNTING POLICIES
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The following is a summary of the significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements.
SECURITY VALUATION: United States fixed-income securities listed and traded
principally on any national securities exchange are valued on the basis of
the last sale price or, lacking any sale, at the closing bid price, on the
primary exchange on which the security is traded. United States
over-the-counter, fixed-income securities and options are valued on the basis
of the closing bid price.
Many fixed-income securities do not trade each day, and thus last sale or bid
prices are frequently not available. Fixed-income securities may be valued
using prices provided by a pricing service when such prices are believed to
reflect the fair market value of such securities.
Money market instruments maturing within 60 days of the valuation date are
valued at "amortized cost," a method by which each portfolio instrument is
initially valued at cost, and thereafter a constant accretion/amortization to
maturity of any discount or premium is assumed, unless the Board of Trustees
determines that amortized cost does not represent fair value.
The Fund may value securities for which market quotations are not readily
available at "fair value," as determined in good faith pursuant to procedures
established by the Board of Trustees.
SECURITIES TRANSACTIONS: Securities transactions are recorded on a trade date
basis. Realized gains and losses from securities transactions are recorded on
the basis of identified cost.
INVESTMENT INCOME: Dividend income is recorded on the ex-dividend date and
interest income is recorded on the accrual basis.
AMORTIZATION AND ACCRETION: All zero-coupon bond discounts and original issue
discounts are accreted for both tax and financial reporting purposes. All
short-and long-term market premiums/discounts are amortized/accreted for both
tax and financial reporting purposes.
10 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
BOND MARKET FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996 (Unaudited)
FEDERAL INCOME TAXES: As the Investment Company is a Massachusetts business
trust, each sub-trust is a separate corporate taxpayer and determines its net
investment income and capital gains (or losses) and the amounts to be
distributed to each fund's shareholders without regard to the income and
capital gains (or losses) of the other funds.
It is the Fund's intention to qualify as a regulated investment company and
distribute all of its taxable income. No federal income tax provision was
required for the period ended February 29, 1996.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Income dividends and capital
gain distributions, if any, are recorded on the ex-dividend date. Dividends
are generally declared and paid quarterly. Capital gain distributions are
generally declared and paid annually. An additional distribution may be paid
by the Fund to avoid imposition of federal income tax on any remaining
undistributed net investment income and capital gains.
The timing and characterization of certain income and capital gain
distributions are determined in accordance with federal tax regulations which
may differ from generally accepted accounting principles ("GAAP"). As a
result, net investment income and net realized gain (or loss) on investment
transactions for a reporting period may differ significantly from
distributions during such period. The differences between tax regulations and
GAAP primarily relate to investments in mortgage-backed securities and
certain securities sold at a loss. Accordingly, the Fund may periodically
make reclassifications among certain of its capital accounts without
impacting its net asset value.
EXPENSES: Expenses such as advisory, custodian, transfer agent, shareholder
servicing, printing, and registration fees are charged directly to the
individual funds, while indirect expenses, such as administrative, insurance,
and professional fees are generally allocated among all funds principally
based on their relative net assets.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred expenses in connection with
its organization and initial registration. These costs have been deferred and
are being amortized over 60 months on a straight-line basis.
REPURCHASE AGREEMENTS: The Fund may engage in repurchase and tri-party
repurchase agreements with several financial institutions whereby the Fund,
through its custodian or third-party custodian, receives delivery of the
underlying securities. The market value of these securities (including
accrued interest) on acquisition date is required to be an amount equal to at
least 102% of the repurchase price. The Fund's Adviser will monitor
repurchase agreements daily to determine that the market value (including
accrued interest) at Fedwire closing time of the underlying securities
remains at least equal to 100% of the repurchase price. The Adviser or
third-party custodian will notify the seller to immediately increase the
collateral on the repurchase agreement to 102% of the repurchase price if
collateral falls below 100%.
Semiannual Report 11
<PAGE>
THE SEVEN SEAS SERIES
BOND MARKET FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996 (Unaudited)
3. SECURITIES TRANSACTIONS
INVESTMENT TRANSACTIONS: For the period February 7, 1996 (commencement of
operations) to February 29, 1996, purchases of investment securities,
excluding US Government and Agency obligations and short-term investments,
aggregated to $5,095,407. Included in this amount is $2,526,689 of securities
received in exchange for Fund shares.
For the period February 7, 1996 (commencement of operations) to February 29,
1996, purchases and sales of US Government and Agency obligations, excluding
short-term investments, aggregated to $18,709,356 and $5,130,944,
respectively. Included in these amounts are $13,382,000 of securities
received in exchange for Fund shares and consequently, $5,130,944 of such
securities were sold as a result of portfolio realignment.
4. RELATED PARTIES
ADVISER: The Investment Company has an investment advisory agreement with
State Street Bank and Trust Company (the "Adviser") under which the Adviser
directs the investment of the Fund in accordance with its investment
objective, policies, and limitations. For these services, the Fund pays a fee
to the Adviser, calculated daily and paid monthly, at the annual rate of .30%
of its average daily net assets. For the period February 7, 1996
(commencement of operations) to February 29, 1996, the Adviser voluntarily
agreed to waive one-half of its advisory fee to the Fund. Additionally, the
Adviser has agreed to waive up to the full amount of its remaining advisory
fee to the extent that total expenses exceed .50% of average daily net assets
on an annual basis. For this period, waivers by the Adviser amounted to
$2,804. The Investment Company has contracts with the Adviser to provide
custody, shareholder servicing and transfer agent services to the Fund.
ADMINISTRATOR, DISTRIBUTOR AND SHAREHOLDER SERVICING: Frank Russell
Investment Management Company (the "Administrator") serves as administrator
of the Investment Company. The Administrator is also required, pursuant to
the Administration Agreement, to arrange and pay certain promotional and
sales costs of Investment Company shares. Russell Fund Distributors, Inc.
(the "Distributor"), a subsidiary of the Administrator, is the distributor of
the Investment Company shares. The Fund has adopted a distribution plan
pursuant to Rule 12b-1 (the "Plan") under the 1940 Act. Under the Plan, the
Fund may also enter into service agreements with financial institutions,
including the Adviser, State Street Brokerage Services, Inc. ("SSBSI"), a
wholly-owned subsidiary of the Adviser, and Adviser's Metropolitan Division
of Commercial Banking ("Commercial Banking" collectively the "Agents"). The
Commercial Banking service agreement became effective November 8, 1995. Under
these service agreements, the Agents are to provide shareholder servicing for
Investment Company shareholders, including services related to the purchase
and redemption of Investment Company shares.
For these services, the Fund pays fees to the Agents in an amount that per
annum is equal to .025%, .175% and .175% of the average daily value of all
Fund shares held by or for customers of the Adviser, SSBSI and Commercial
Banking, respectively. These fees, in conjunction with other
distribution-related expenses, may
12 Semiannual Report
<PAGE>
THE SEVEN SEAS SERIES
BOND MARKET FUND
NOTES TO FINANCIAL STATEMENTS
February 29, 1996 (Unaudited)
not exceed .25% of the average daily value of net assets on an annual basis,
which includes a limit of .20% in shareholder servicing fees for all
providers. Any payments that are required to be made by the Plan and any
service agreement, but could not be made because they exceed the maximum
amount of allowable reimbursement, may be carried forward for subsequent
reimbursement from the Investment Company so long as the Plan is in effect.
The Fund's liability for any such expenses carried forward shall terminate at
the end of two years following the year in which the expenditure was
incurred. The Trustees or a majority of the Fund's shareholders have the
right, however, to terminate the Distribution Plan and all payments
thereunder at any time. The Fund will not be obligated to reimburse the
Distributor for carryover expenses subsequent to the Distribution Plan's
termination or noncontinuance.
For shareholder servicing, the Fund incurred expenses of $234 from the
Adviser. The amounts related to distribution and shareholder servicing fees
are included in the accompanying Statement of Operations.
Pursuant to the Administration Agreement with the Investment Company, the
Administrator supervises all non-portfolio investment aspects of the
Investment Company's operations and provides adequate office space and all
necessary office equipment and services, including telephone service,
utilities, stationery supplies, and similar items. The Investment Company
pays the Administrator the following fees for the services supplied by the
Administrator pursuant to the Administration Agreement: (i) an annual fee,
payable monthly on a pro rata basis, based on the following percentages of
the average daily net assets of all domestic funds: $0 up to $500 million -
.06%; over $500 million to and including $1 billion - .05%; over $1 billion -
.03%; (ii) less an amount equal to the sum of certain distribution-related
expenses incurred by the Investment Company's Distributor on behalf of the
Fund (up to a maximum of 15% of the asset-based fee determined in (i)); (iii)
out-of-pocket expenses; and (iv) start-up costs for new funds. For the period
February 7, 1996 (commencement of operations) to February 29, 1996, the
Administrator voluntarily waived a portion of its administrative fee to the
Fund which amounted to $132.
BOARD OF TRUSTEES: The Investment Company pays each of its Trustees not
affiliated with the Investment Company a retainer of $44,000 annually, $1,000
for each of the board meetings attended, an additional $1,000 for attending
the annual audit committee meeting, and reimbursement for out-of-pocket
expenses.
5. DIVIDENDS
On March 1, 1996, the Board of Trustees declared a dividend of $.0276 from
net investment income, payable on March 11, 1996 to shareholders of record
March 4, 1996.
Semiannual Report 13
<PAGE>
THE SEVEN SEAS SERIES FUND
Two International Place, 35th Floor
Boston, Massachusetts 02110 [LOGO]
(617) 654-6089
- -------------------------------------------------------------------------------
TRUSTEES
Lynn L. Anderson, Chairman
William L. Marshall
Steven J. Mastrovich
Patrick J. Riley
Richard D. Shirk
Bruce D. Taber
Henry W. Todd
OFFICERS
Lynn L. Anderson, President
George W. Weber, Senior Vice President
and Treasurer
J. David Griswold, Vice President
and Secretary
INVESTMENT ADVISER
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
CUSTODIAN, TRANSFER AGENT AND
OFFICE OF SHAREHOLDER INQUIRIES
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
(800) 64-7SEAS (77327)
DISTRIBUTOR
Russell Fund Distributors, Inc.
Two International Place, 35th Floor
Boston, Massachusetts 02110
(617) 654-6089
ADMINISTRATOR
Frank Russell Investment Management Company
909 A Street
Tacoma, Washington 98402
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
14 Semiannual Report
