<PAGE>
HOMESTEAD FUNDS
SEMI-ANNUAL REPORT
JUNE 30, 1999
o Daily Income
o Short-Term Government Securities
o Short-Term Bond
o Value
o Small Company Stock
HOMESTEAD FUNDS, INC.
[LOGO]
<PAGE>
Table of Contents
PERFORMANCE EVALUATION
Daily Income 4-5
Short-Term Government Securities 6-7
Short-Term Bond 8-9
Value 10-12
Small Company Stock 13-14
PORTFOLIO OF INVESTMENTS
Daily Income 16-19
Short-Term Government Securities 20-21
Short-Term Bond 22-31
Value 32-34
Small Company Stock 35-37
FINANCIAL STATEMENTS 38-41
FINANCIAL HIGHLIGHTS 42-46
NOTES TO FINANCIAL STATEMENTS 47-49
2
<PAGE>
Letter from the Investment Manager
Dear Shareholder:
This report details economic conditions, the investment landscape and Homestead
Funds' performance for the first six months of 1999. During this period, the
economy showed continued signs of strength. Labor markets were tight,
characterized by low unemployment and rising wages. Housing sales and
construction spending remained robust, in spite of rising interest rates. The
economy has in fact lost some of the moderating influences, such as a strong
dollar and declining commodity prices, that have helped to keep inflation down
in the past. However, there were no clear signs of a broad based pickup in
consumer price inflation.
Despite the lack of any strong evidence of an increase in inflation, the Federal
Reserve announced a one-quarter percent (.25%) increase in the federal funds
rate, a key bank overnight lending rate.
Money market and bond yields trended higher during the first half of the year.
Stocks, as measured by the Standard & Poor's 500 Stock Index, posted positive
returns in both quarters. But, as you'll read in the reports following this
letter, market leadership changed dramatically in the second quarter.
The economic conditions that underpin the financial markets in the U.S. still
look to be favorable. However, data released since the close of the quarter show
the economy to be expanding at a pace that is not likely to be sustainable. The
Fed may be prompted to rethink its neutral stance and raise rates again to slow
growth and ward off inflation. We expect the stock market's protracted advance
and the possibility of additional increases in rates will cause continued market
volatility. We remind investors to establish clear financial objectives and
invest in vehicles appropriate for their risk tolerance and time horizons.
Thank you for your investment in the Homestead Funds.
Sincerely,
/s/ Peter R. Morris
Peter R. Morris
Director of Investments
July 30, 1999
3
<PAGE>
DAILY INCOME FUND
MARKET CONDITIONS
Interest rates trended higher during the six months ended June 30, 1999, on
expectations that the strong economy would trigger higher inflation and prompt
the Federal Reserve to act. A rising rate environment is good news for money
market investors. Money market securities have very short maturities, so Fund
managers are able to reinvest quickly in higher yielding securities.
The Fed maintained a tightening bias but did not step in to nudge rates higher
until June 30. Since prices at the consumer level did not appear to be out of
control, the Fed at that time indicated a change in its stance from tightening
to neutral.
FUND PERFORMANCE AND STRATEGY
Your Fund's seven-day simple yield declined from 4.83% at the start of this
period to 4.31% at the close. The decline was due in part to the Fund's
unusually high yield on December 31, 1998, and in part to our feeling the full
impact of the Fed's rate cuts from the fall of 1998. By taking advantage of the
strong demand for funding that typically occurs at year-end, we were able to add
about .30% to our seven-day yield.
We kept the Fund's weighted average maturity short during this period, moving
from 48 days at the start to 44 days at the close. The Fund's six-month total
return was 2.14%. Annualized returns appear on page five.
OUTLOOK
We expect the Fed will remain a vigilant watchdog and be quick to raise rates
again if the economy shows signs of overheating. We plan to keep the Fund's
maturity short so we can take the fullest advantage of any rise in rates.
4
<PAGE>
DAILY INCOME FUND
PORTFOLIO COMPOSITION
SECURITY DIVERSIFICATION
on 12/31/98 on 6/30/99
- --------------------------------------------------------------------------------
Commercial paper 64.6% 66.7%
- --------------------------------------------------------------------------------
Corporate bonds 33.6% 27.6%
- --------------------------------------------------------------------------------
U.S. Government obligations 1.7% 5.4%
- --------------------------------------------------------------------------------
Cash equivalents .1% .3%
- --------------------------------------------------------------------------------
Total 100% 100%
================================================================================
on 12/31/98 on 6/30/99
- --------------------------------------------------------------------------------
AVERAGE WEIGHTED MATURITY 48 days 44 days
- --------------------------------------------------------------------------------
YIELD
Annualized 7-day compound yield (quoted 6/30/99) 4.31%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
periods ended 6/30/99
Since
Inception
1 Year 5 Year (11/90)
- --------------------------------------------------------------------------------
Daily Income Fund 4.6% 4.9% 4.4%
- --------------------------------------------------------------------------------
Past performance is not predictive of future performance.
5
<PAGE>
SHORT-TERM GOVERNMENT SECURITIES FUND
MARKET CONDITIONS
The threat of Federal Reserve intervention hung over the bond market and caused
interest rates to trend higher during the first half of 1999. While there were
no clear signs of a build-up in pricing pressures, the tight labor market,
robust housing market and growth in GDP caused investors to reason that
inflation must be lurking somewhere and that the Fed would soon step in to take
a pre-emptive strike. In addition, the global financial crisis that stymied
investors in 1998 was resolved and could no longer be counted on as a sufficient
drag on the domestic economy.
On June 30, the Fed did in fact intervene and announced a .25% increase in the
federal funds rate, the rate banks charge each other on overnight loans to meet
reserve requirements.
FUND PERFORMANCE AND STRATEGY
Your Fund returned 1.06% for the six months ended June 30. The Fund's 30-day
annualized yield rose from 4.41% on December 31, 1998 to 4.93% at the close of
this reporting period, reflecting the rise in rates.
We adjusted the Fund's security diversification during the period as a way of
enhancing yield. In 1998, especially the fourth quarter, investors flocked to
Treasuries, driving prices higher. We bucked the trend and bought lower priced
government agency issues. In the first half of 1999, the extreme credit
sensitivity that had plagued the market in 1998 came to an end and Treasuries'
luster dimmed. As supply conditions improved and prices fell to more reasonable
levels, we were able to move back into this sector.
OUTLOOK
The bond market's poor performance in the first half reflects investors'
continued uncertainty over how far the Fed will need to go to thwart inflation.
Given the economy's strong second quarter showing, further rate hikes are
likely. This Fund's short maturity will reduce the negative effect of rising
rates on principal value.
6
<PAGE>
SHORT-TERM GOVERNMENT SECURITIES FUND
PORTFOLIO COMPOSITION
SECURITY DIVERSIFICATION
on 12/31/98 on 6/30/99
- --------------------------------------------------------------------------------
Government-guaranteed agencies 49.3% 32.7%
- --------------------------------------------------------------------------------
U.S. Treasuries 34.6% 57.2%
- --------------------------------------------------------------------------------
Mortgage-backed securities 12.0% 9.1%
- --------------------------------------------------------------------------------
Cash equivalents 4.1% 1.0%
- --------------------------------------------------------------------------------
Total 100% 100%
================================================================================
on 12/31/98 on 6/30/99
- --------------------------------------------------------------------------------
Average Weighted Maturity 2.06 years 2.29 years
- --------------------------------------------------------------------------------
YIELD
Annualized 30-day SEC yield (quoted 6/30/99) 4.93%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
periods ended 6/30/99
Since
Inception
1 Year (5/95)
- --------------------------------------------------------------------------------
Short-Term Government Securities Fund 3.9% 5.3%
- --------------------------------------------------------------------------------
Merrill Lynch 1-4.99 Year U.S. Treasury Index 4.9% 6.3%
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON
[performance comparison graph here]
The above graph reflects:
Comparison of the change in value of a $10,000 investment in the Fund at
inception and the Merrill Lynch 1-4.99 Year U.S. Treasury Index. Past
performance is not predictive of future performance. The Short-Term Government
Securities Fund average annual total returns are net of any fee waivers and
reimbursements.
7
<PAGE>
SHORT-TERM BOND FUND
MARKET CONDITIONS
An economic slowdown did not materialize during the first half of 1999. While
inflation looked to be tame, the labor and housing markets surged, leaving
investors to wonder if the Federal Reserve would step in to tighten the money
supply and slow the economy. On June 30, the Fed did intervene. The Fed's .25%
increase in the federal funds rate, a bank lending rate, effectively took back
one of the agency's three fall 1998 easings.
Interest rates were also propped up by a resolution of the currency crisis
touched off in Asia and return of stability to global markets. These troubling
conditions had created a flight to quality, with investors rushing for the
safety of U.S. Treasury securities. The strong demand had kept a lid on yields.
Problems abroad were also acting as a natural brake on the pace of the domestic
economy's expansion. With weak markets abroad, investors reasoned, there would
be reduced demand for goods and services.
FUND PERFORMANCE AND STRATEGY
Higher interest income offset declining bond prices and allowed your Fund to
post a 1.33% six-month return. Annualized returns appear on page nine. The
Fund's 30-day annualized yield rose from 5.38% at the start of the period to
5.80% at the close.
As the credit crisis subsided, better opportunities came to light in non-
Treasury sectors. To capitalize on the higher yields, we added to our holdings
of corporate bonds and asset-backed securities.
OUTLOOK
We expect rates will continue to trend higher. This Fund's short maturity will
continue to give investors some protection against rising rates and the
resulting decline in bond prices.
8
<PAGE>
SHORT-TERM BOND FUND
PORTFOLIO COMPOSITION
SECURITY DIVERSIFICATION
on 12/31/98 on 6/30/99
- --------------------------------------------------------------------------------
Corporate bonds 39.6% 45.0%
- --------------------------------------------------------------------------------
Mortgage-backed securities 25.5% 23.4%
- --------------------------------------------------------------------------------
Asset-backed securities 15.8% 19.1%
- --------------------------------------------------------------------------------
U.S. Government obligations 13.6% 10.3%
- --------------------------------------------------------------------------------
Commercial paper 5.4% 2.1%
- --------------------------------------------------------------------------------
Cash equivalents .1% .1%
- --------------------------------------------------------------------------------
Total 100% 100%
================================================================================
on 12/31/98 on 6/30/99
- --------------------------------------------------------------------------------
Average Weighted Maturity 2.86 years 2.82 years
- --------------------------------------------------------------------------------
YIELD
Annualized 30-day SEC yield (quoted 6/30/99) 5.80%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
periods ended 6/30/99
Since
Inception
1 Year 5 Year (11/90)
- --------------------------------------------------------------------------------
Short-Term Bond Fund 4.6% 6.2% 5.9%
- --------------------------------------------------------------------------------
Merrill Lynch 1-4.99 Year Corp./Gov. Index 5.0% 6.7% 6.4%
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON
[performance comparison graph here]
The above graph reflects:
Comparison of the change in value of a $10,000 investment in the Fund at
inception and the Merrill Lynch 1-4.99 Year Corp./Gov. Index. Past performance
is not predictive of future performance. The Short-Term Bond Fund average annual
total returns are net of any fee waivers and reimbursements.
9
<PAGE>
VALUE FUND
MARKET CONDITIONS
The bull market in stocks continued through the six months ended June 30, 1999,
against a backdrop of sustained economic growth, low inflation and rising
corporate profits. Higher interest rates did not dampen investors' enthusiasm
for stocks as a group, but may have caused investors to reevaluate their
exposure to certain companies and market sectors.
Your Fund's management team and other value investors had come to feel like
farmers awaiting rain. For the last five consecutive quarters through the first
quarter of 1999, our approach had been overlooked by investors seeking
fast-growing companies in select industries. In the second quarter of 1999, we
enjoyed a reversal of fortune. Here, market leadership broadened and bargain
hunters were rewarded as investors refocused on company fundamentals.
FUND PERFORMANCE AND STRATEGY
For the six-month period ending June 30, the Standard & Poor's 500 Stock Index,
the most recognizable gauge of broad market performance, posted a gain of
12.39%. Your Fund's six-month return was 15.27%.
A number of factors were responsible for our better relative performance. First,
rising interest rates prompted investors to recalculate their valuation models
and abandon stocks that were overpriced. Money flowed into stocks that offered
better value--exactly the types of businesses in which your portfolio is
invested. Our strongest performers during this period included Maytag, Sonat (a
gas and pipeline business), Nalco (chemicals manufacturer) and Halliburton
(petroleum services).
Second, the market's advance was more broadly based, not powered exclusively by
technology and Internet companies. We had added to our positions in down-
trodden financial services and capital goods businesses and realized good gains
when these industries returned to favor.
Additionally, a number of the Fund's holdings, including Aeroquip-Vickers
(manufacturers of industrial machinery), Rubbermaid, Sonat, Transamerica
(insurance) and Sundstrand (designs systems and components for aerospace and
industrial use), were recently acquired in corporate buyouts. We eliminated our
positions shortly after the close of this period, as these stocks had reached
levels that met or exceeded our price targets. Proceeds were reinvested in some
of our most promising holdings, including Allstate, Bemis (packaging and
containers), Dillard's (department stores) and RR Donnelley (a commercial
printer), and the recent additions, Baker Hughes (oil and gas machinery) and
Tenneco (makers of packaging materials and auto parts).
10
<PAGE>
VALUE FUND
OUTLOOK
The market's foundation is solid. The economy is expanding at a reasonably
strong annualized rate of about 3%. Prices at the consumer level don't look to
be out of control; however, the Fed will be quick to act if signs of inflation
emerge. The likelihood, if not the reality, of Fed intervention will keep upward
pressure on interest rates.
We also look for investors to gain confidence once we cross over to the new
millennium. The uncertainty surrounding the Y2K computer bug is currently
weighing down a number of industries, and once solutions are in place the
outlook should improve.
11
<PAGE>
VALUE FUND
PORTFOLIO COMPOSITION
Top Holdings on 6/30/99
% of total
Industry market value
- --------------------------------------------------------------------------------
Maytag Corp. Household appliances 3.4%
- --------------------------------------------------------------------------------
Southwest Airlines Co. Air travel 3.4%
- --------------------------------------------------------------------------------
Nalco Chemical Co. Chemical 3.3%
- --------------------------------------------------------------------------------
Dillard's, Inc. Retail 3.1%
- --------------------------------------------------------------------------------
Bemis, Inc. Packaging/Containers 3.0%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
periods ended 6/30/99
Since
Inception
1 Year 5 Year (11/90)
- --------------------------------------------------------------------------------
Value Fund 14.1% 20.3% 17.5%
- --------------------------------------------------------------------------------
S&P 500 Index 22.8% 27.8% 21.1%
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON
[performance comparison graph here]
The above graph reflects:
Comparison of the change in value of a $10,000 investment in the Fund at
inception and the S&P 500 Index. Past performance is not predictive of future
performance. The Value Fund average annual total returns are net of any fee
waivers and reimbursements.
12
<PAGE>
SMALL COMPANY STOCK FUND
MARKET CONDITIONS
This Fund celebrated its one-year anniversary in March of 1999, a date that also
marked the ushering in of a better climate for small-company and value
investors. Finally, investors looked beyond the handful of large-capitalization
growth stocks that had powered the market's advance and recognized a fuller
universe of investment possibilities.
This sea-change in the investment landscape was brought about, in part, by
rising interest rates. This caused investors to reconsider whether the very high
prices they were paying for the market's leaders were justified by the
companies' earnings prospects. In many cases, the answer was no, and investors
sought better values elsewhere.
FUND PERFORMANCE AND STRATEGY
The first quarter of 1999 was a continuation of 1998, with the Standard & Poor's
500 Stock Index posting a solid 5.0% gain and the Small Company Stock Fund
retreating by as much with a -5.1% return. We gained ground in the second
quarter, with a whopping 21.9% quarterly return compared to the S&P's 7.1%
advance.
For the year-to-date, the Fund is up 15.71%, compared to a 9.2% return on the
Russell 2000, an index of small-company stocks that serves as this Fund's
performance yardstick.
As this is a relatively new Fund, it may be helpful to recap our investment
objective and strategy. Your portfolio is comprised of small companies selling
at attractive prices. Investors stand to benefit from capital appreciation as
others realize the value inherent in these companies and bid their stock prices
higher. Value investing requires patience. It may take some time for the market
to recognize our companies' inherent value, as those who joined the Fund in 1998
witnessed. It's also possible that the anticipated turnaround will never
materialize.
For this six-month period, our top performers included American Freightways,
Claire's Stores and Juno Lighting. Corporate buyouts helped to push share prices
higher at Juno Lighting and Oneida.
OUTLOOK
Interest rates are likely to trend higher, as the economy does not look to be
slowing on its own and the Fed has indicated its concern for higher inflation.
Measures of consumer prices don't indicate soaring inflation, but the Fed will
be quick to act on any sign.
Rising rates are generally negative for stocks, but as we saw earlier this year,
stocks already selling at or near their lows tend not to be as affected as
higher priced growth stocks. Our long-term outlook for equities is favorable,
but investors should be prepared for the same high level of volatility we
experienced in 1998.
13
<PAGE>
SMALL COMPANY STOCK FUND
PORTFOLIO COMPOSITION
TOP HOLDINGS ON 6/30/99
% of total
Industry market value
- --------------------------------------------------------------------------------
Manitowoc Co., Inc. Industrial machinery 4.6%
- --------------------------------------------------------------------------------
Ruddick Corp. Retail 4.4%
- --------------------------------------------------------------------------------
Oneida Ltd. Housewares 4.4%
- --------------------------------------------------------------------------------
American Freightways, Inc. Trucking 4.2%
- --------------------------------------------------------------------------------
CLARCOR, Inc. Manufacturing - diverse 4.1%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
periods ended 6/30/99
Since
Inception
1 Year (3/98)
- --------------------------------------------------------------------------------
Small Company Stock Fund 8.2% 2.2%
- --------------------------------------------------------------------------------
Russell 2000 Index 1.5% .6%
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON
[performance comparison graph here]
The above graph reflects:
Comparison of the change in value of a $10,000 investment in the Fund at
inception and the Russell 2000 Index. Past performance is not predictive of
future performance. The Small Company Stock Fund average annual total returns
are net of any fee waivers and reimbursements.
14
<PAGE>
FINANCIALS
15
<PAGE>
DAILY INCOME FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Interest Maturity Face
Rate Date Amount Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER (66.7% of portfolio)
A.I. Credit Corp. .......................................... 4.98% 07/23/99 $1,000,000 $ 996,957
American Express Credit Corp. .............................. 5.20 07/01/99 590,000 590,000
American Express Credit Corp. .............................. 4.95 07/02/99 493,000 492,932
American Express Credit Corp. .............................. 5.00 07/06/99 400,000 399,722
American Express Credit Corp. .............................. 5.25 07/09/99 820,000 819,043
American Express Credit Corp. .............................. 4.94 07/14/99 350,000 349,376
American Express Credit Corp. .............................. 5.20 07/23/99 300,000 299,047
American General Finance Corp. ............................. 4.92 07/26/99 1,440,000 1,435,080
American General Finance Corp. ............................. 4.90 07/22/99 405,000 403,842
Baltimore Gas & Electric Co. ............................... 5.02 07/13/99 545,000 544,088
Baltimore Gas & Electric Co. ............................... 5.10 07/13/99 793,000 791,652
Campbell Soup Co. .......................................... 4.98 07/01/99 1,000,000 1,000,000
Chevron USA. Inc. .......................................... 5.03 07/14/99 1,000,000 998,184
Chevron USA. Inc. .......................................... 5.20 07/14/99 1,000,000 998,122
CIT Group, Inc. ............................................ 5.06 07/02/99 840,000 839,882
Coca-Cola Co. .............................................. 4.85 07/21/99 1,900,000 1,894,881
Coca-Cola Co. .............................................. 4.83 08/13/99 450,000 447,404
Coca-Cola Co. .............................................. 4.82 08/16/99 500,000 496,921
Commercial Credit Co. ...................................... 5.20 07/14/99 1,000,000 998,122
Consolidated Natural Gas Co. ............................... 5.02 07/28/99 648,000 645,560
Consolidated Natural Gas Co. ............................... 5.00 07/29/99 1,000,000 996,111
Consolidated Natural Gas Co. ............................... 5.25 08/20/99 410,000 407,010
Consolidated Natural Gas Co. ............................... 5.20 08/31/99 900,000 892,070
Deere & Co. ................................................ 5.18 07/06/99 658,000 657,527
Deere & Co. ................................................ 4.84 07/09/99 1,000,000 998,924
Exxon Asset Management Co. ................................. 5.75 07/01/99 1,000,000 1,000,000
Exxon Asset Management Co. ................................. 5.26 07/08/99 1,650,000 1,648,312
Ford Motor Credit Co. ...................................... 5.50 07/08/99 155,000 154,834
Ford Motor Credit Co. ...................................... 5.20 07/26/99 300,000 298,917
Ford Motor Credit Co. ...................................... 5.40 07/12/99 300,000 299,505
General Electric Capital Corp. ............................. 4.96 07/16/99 700,000 698,553
General Electric Capital Corp. ............................. 4.89 07/22/99 1,000,000 997,147
General Electric Capital Corp. ............................. 4.87 08/02/99 250,000 248,918
General Motors Acceptance Corp. ............................ 4.95 07/14/99 695,000 693,758
General Motors Acceptance Corp. ............................ 5.01 07/23/99 100,000 99,694
IBM Credit Corp. ........................................... 5.03 07/06/99 1,200,000 1,199,162
IBM Credit Corp. ........................................... 4.93 07/21/99 690,000 688,110
IBM Credit Corp. ........................................... 4.78 07/28/99 525,000 523,118
IBM Credit Corp. ........................................... 4.80 07/30/99 650,000 647,487
JC Penney Funding Corp. .................................... 4.91 07/06/99 395,000 394,731
Johnson & Johnson .......................................... 5.20 08/18/99 300,000 297,920
Johnson & Johnson .......................................... 4.83 10/20/99 695,000 684,650
Merrill Lynch & Co., Inc. .................................. 5.00 07/30/99 1,240,000 1,235,006
Mobil Corp. ................................................ 5.30 07/01/99 500,000 500,000
</TABLE>
16
<PAGE>
DAILY INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Interest Maturity Face
Rate Date Amount Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER - continued
Mobil Corp. ................................................ 5.10% 07/08/99 $ 415,000 $ 414,588
Morgan Stanley Dean Witter & Co. ........................... 5.00 07/02/99 1,000,000 999,861
Morgan Stanley Dean Witter & Co. ........................... 4.84 08/16/99 600,000 596,289
Morgan Stanley Dean Witter & Co. ........................... 5.00 08/16/99 1,500,000 1,490,417
Norwest Financial, Inc. .................................... 4.95 07/12/99 1,600,000 1,597,580
Prudential Funding Corp. ................................... 5.15 07/01/99 200,000 200,000
Prudential Funding Corp. ................................... 5.20 07/07/99 800,000 799,307
Prudential Funding Corp. ................................... 5.26 07/07/99 650,000 649,430
Prudential Funding Corp. ................................... 5.03 07/15/99 100,000 99,804
Prudential Funding Corp. ................................... 4.88 07/20/99 630,000 628,377
Prudential Funding Corp. ................................... 4.95 07/21/99 572,000 570,427
Schering Corp. ............................................. 4.87 07/27/99 1,540,000 1,534,583
Transamerica Finance Corp. ................................. 4.85 07/13/99 1,000,000 998,383
- -------------------------------------------------------------------------------------------------------------------------
Total Commercial Paper (Cost $42,281,325) ................................................................ 42,281,325
- -------------------------------------------------------------------------------------------------------------------------
CORPORATE NOTES (27.6% of portfolio)
American General Finance Corp. ............................. 6.88 07/01/99 305,000 305,000
American General Finance Corp. ............................. 7.20 07/08/99 105,000 105,038
American General Finance Corp. ............................. 7.13 12/01/99 305,000 307,178
American General Finance Corp. ............................. 7.00 12/30/99 300,000 302,690
Associates Corp. of North America .......................... 6.63 07/15/99 300,000 300,099
Associates Corp. of North America .......................... 6.82 08/11/99 35,000 35,052
Associates Corp. of North America .......................... 7.25 09/01/99 510,000 511,628
Associates Corp. of North America .......................... 6.68 09/17/99 100,000 100,296
Associates Corp. of North America .......................... 6.75 10/15/99 280,000 281,103
Associates Corp. of North America .......................... 8.25 12/01/99 342,000 346,110
Baltimore Gas & Electric Co. ............................... 8.40 10/15/99 342,000 344,926
Beneficial Corp. ........................................... 6.65 09/24/99 50,000 50,144
Beneficial Corp. ........................................... 6.65 10/11/99 30,000 30,113
CIT Group, Inc. ............................................ 6.63 09/13/99 25,000 25,066
CIT Group, Inc. ............................................ 6.25 09/30/99 60,000 60,090
CIT Group, Inc. ............................................ 6.25 10/25/99 20,000 20,058
CIT Group, Inc. ............................................ 5.88 12/09/99 725,000 726,898
Commercial Credit Co. ...................................... 6.70 08/01/99 50,000 50,035
E.I. Dupont de Nemours & Co. ............................... 6.90 11/12/99 500,000 502,777
Eli Lilly & Co. ............................................ 6.75 11/15/99 165,000 165,884
Exxon Capital Corp. ........................................ 6.50 07/15/99 70,000 70,032
Credit Co. ................................................. 7.45 07/12/99 40,000 40,026
Ford Motor Credit Co. ...................................... 7.55 07/19/99 120,000 120,134
Ford Motor Credit Co. ...................................... 6.38 09/15/99 708,000 709,482
Ford Motor Credit Co. ...................................... 5.30 09/21/99 10,000 10,003
Ford Motor Credit Co. ...................................... 7.75 10/01/99 623,000 626,750
Ford Motor Credit Co. ...................................... 7.50 11/15/99 35,000 35,287
</TABLE>
17
<PAGE>
DAILY INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Interest Maturity Face
Rate Date Amount Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CORPORATE NOTES - continued
General Electric Capital Corp. ............................. 6.60% 07/23/99 $ 20,000 $ 20,009
General Electric Capital Corp. ............................. 7.38 09/15/99 4,000 4,012
General Electric Capital Corp. ............................. 6.93 11/19/99 100,000 100,618
General Motors Acceptance Corp. ............................ 5.88 07/15/99 20,000 20,004
General Motors Acceptance Corp. ............................ 6.00 07/15/99 10,000 10,003
General Motors Acceptance Corp. ............................ 6.15 09/20/99 125,000 125,235
General Motors Acceptance Corp. ............................ 8.00 10/01/99 204,000 205,321
General Motors Acceptance Corp. ............................ 6.05 10/04/99 200,000 200,424
General Motors Acceptance Corp. ............................ 5.80 10/15/99 10,000 10,013
General Motors Acceptance Corp. ............................ 8.40 10/15/99 135,000 136,104
General Motors Acceptance Corp. ............................ 6.00 11/15/99 48,000 48,132
Household Finance Corp. .................................... 6.75 07/15/99 5,000 5,001
Household Finance Corp. .................................... 6.85 07/15/99 10,000 10,006
Household Finance Corp. .................................... 7.50 11/15/99 25,000 25,177
Household Finance Corp. .................................... 8.95 09/15/99 245,000 246,722
John Deere Capital Corp. ................................... 6.50 09/20/99 100,000 100,293
John Deere Capital Corp. ................................... 8.08 12/22/99 20,000 20,259
Merrill Lynch & Co., Inc. .................................. 8.25 11/15/99 311,000 314,336
Merrill Lynch & Co., Inc. .................................. 6.38 12/15/99 440,000 442,147
Norwest Financial Inc. ..................................... 6.20 09/15/99 350,000 350,672
Norwest Financial Inc. ..................................... 6.68 09/15/99 30,000 30,084
Norwest Financial Inc. ..................................... 7.45 09/15/99 185,000 185,796
Norwest Financial Inc. ..................................... 6.38 10/01/99 20,000 20,053
Norwest Financial Inc. ..................................... 6.05 11/19/99 125,000 125,340
Norwest Financial Inc. ..................................... 6.88 12/15/99 255,000 256,808
Pacific Gas & Electric Co. ................................. 5.37 10/06/99 30,000 30,009
Pacific Gas & Electric Co. ................................. 6.88 12/01/99 10,000 10,000
PepsiCo, Inc. .............................................. 6.25 09/01/99 1,522,000 1,524,242
Phillip Morris Cos., Inc. .................................. 6.00 11/15/99 558,000 558,000
Phillip Morris Cos., Inc. .................................. 7.13 12/01/99 1,736,000 1,748,216
Shell Oil Co. .............................................. 6.63 07/01/99 38,000 38,000
Texaco Capital Inc. ........................................ 6.88 07/15/99 795,000 795,422
Texaco Capital Inc. ........................................ 9.00 12/15/99 989,000 1,005,150
Transamerica Finance Corp. ................................. 8.75 10/01/99 820,000 826,386
Wal-Mart Stores, Inc. ...................................... 6.13 10/01/99 1,778,000 1,781,455
- -------------------------------------------------------------------------------------------------------------------------
Total Corporate Notes (Cost $17,511,348) ........................................................ 17,511,348
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
DAILY INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Interest Maturity Face
Rate Date Amount Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (5.4% of portfolio)
Federal Home Loan Bank ..................................... 6.26% 08/09/99 $ 15,000 $ 15,012
Federal Home Loan Bank ..................................... 8.60 08/25/99 10,000 10,048
Federal Home Loan Bank ..................................... 5.54 07/13/99 1,000,000 1,000,160
Federal Home Loan Mortgage Corp. ........................... 7.13 07/21/99 115,000 115,111
Federal National Mortgage Association ...................... 8.45 07/12/99 300,000 300,285
Federal National Mortgage Association ...................... 8.55 08/30/99 230,000 231,236
Federal National Mortgage Association ...................... 8.35 11/10/99 20,000 20,216
Federal National Mortgage Association ...................... 7.68 11/22/99 10,000 10,094
Federal National Mortgage Association ...................... 6.03 07/07/99 1,200,000 1,200,191
Federal National Mortgage Association ...................... 5.82 08/25/99 500,000 500,482
Tennessee Valley Authority ................................. 8.38 10/01/99 30,000 30,227
- -------------------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency Obligations (Cost $3,433,062) ...................................... 3,433,062
- -------------------------------------------------------------------------------------------------------------------------
CORPORATE MASTER NOTE (0.3% of portfolio)
Associates Corp. of North America .......................... 4.60(a) 165,000 165,000
- -------------------------------------------------------------------------------------------------------------------------
Total Corporate Master Note (Cost $165,000) ..................................................... 165,000
- -------------------------------------------------------------------------------------------------------------------------
MONEY MARKET ACCOUNT
State Street Bank and Trust SSgA Fund ...................... 4.63(b) 8,182
- -------------------------------------------------------------------------------------------------------------------------
Total Money Market Account (Cost $8,182) ........................................................ 8,182
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (Cost $63,398,917) - 100% ............................................... $63,398,917
=========================================================================================================================
</TABLE>
(a) Variable coupon rate at June 30, 1999.
(b) One day yield at June 30, 1999.
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
SHORT-TERM GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Interest Maturity Face
Rate Date Amount Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSET BACKED SECURITIES (11.3% of portfolio)
Government Export Trust 93-1 ............................... 6.00% 03/15/05 $ 479,167 $ 479,497
Guaranteed Export Certificates 93-C ........................ 5.20 10/15/04 1,199,244 1,165,926
Guaranteed Export Certificates 93-D ........................ 5.23 05/15/05 459,574 445,506
Guaranteed Export Certificates 95-B ........................ 6.13 06/15/04 176,470 173,116
Guaranteed Trade Trust 92-A A .............................. 7.02 09/01/04 160,417 164,474
Small Business Administration 92-10 A ...................... 6.70 01/01/02 61,524 61,725
Small Business Administration 92-10 C ...................... 7.15 09/01/02 129,577 130,273
Small Business Investment Companies 99-10 A ................ 6.24 03/01/09 1,000,000 974,890
- -------------------------------------------------------------------------------------------------------------------------
Total Asset Backed Securities (Cost $3,620,445) ................................................. 3,595,407
- -------------------------------------------------------------------------------------------------------------------------
MORTGAGE BACKED SECURITIES (9.1% of portfolio)
GNMA 94-1 .................................................. 7.63 08/16/23 99,000 98,514
GNMA 96-6 .................................................. 6.50 10/16/08 112,918 113,661
GNMA 97-4 B ................................................ 7.00 08/20/26 143,418 140,972
GNMA 97-4 N ................................................ 7.50 02/16/27 20,917 21,009
GNMA 97-8 .................................................. 7.00 05/16/23 500,000 505,274
GNMA 98-1 .................................................. 7.00 05/20/25 253,055 252,874
GNMA #1928 ................................................. 7.00 11/20/09 93,897 93,779
Vendee Mortgage Trust 92-2 ................................. 7.00 05/15/08 1,000,000 1,007,550
Vendee Mortgage Trust 97-1 ................................. 7.50 09/15/17 500,000 506,010
Vendee Mortgage Trust 97-2 ................................. 7.50 01/15/13 179,153 180,144
- -------------------------------------------------------------------------------------------------------------------------
Total Mortgage Backed Securities (Cost $2,942,340) .............................................. 2,919,787
- -------------------------------------------------------------------------------------------------------------------------
U. S. GOVERNMENT AND AGENCY OBLIGATIONS (78.6% of portfolio)
Banco Centroamericano Promissory Note ...................... 5.78 05/30/01 226,887 226,433
Interlake Steamship Co. .................................... 5.45 07/15/01 371,000 371,152
PEFCO Finance Corp. (a) .................................... 5.31 11/15/03 1,000,000 965,410
Private Export Funding Corp. ............................... 9.45 12/31/99 5,000,000 5,093,750
Private Export Funding Corp. ............................... 8.35 01/31/01 25,000 25,906
Private Export Funding Corp. ............................... 5.48 09/15/03 135,000 134,325
U.S. Department of Housing and Urban Development ........... 6.36 08/01/04 30,000 30,068
U.S. Treasury Note ......................................... 6.00 08/15/99 800,000 801,110
U.S. Treasury Note ......................................... 5.88 11/15/99 1,200,000 1,203,496
U.S. Treasury Note ......................................... 5.63 11/30/99 300,000 300,684
U.S. Treasury Note ......................................... 6.38 05/15/00 5,300,000 5,349,780
U.S. Treasury Note ......................................... 5.50 05/31/00 500,000 500,989
U.S. Treasury Note ......................................... 5.75 10/31/00 2,350,000 2,360,830
U.S. Treasury Note ......................................... 6.38 03/31/01 50,000 50,715
U.S. Treasury Note ......................................... 4.88 03/31/01 1,250,000 1,237,300
U.S. Treasury Note ......................................... 5.88 11/30/01 2,600,000 2,612,887
U.S. Treasury Note ......................................... 6.63 04/30/02 3,000,000 3,072,100
U.S. Treasury Note ......................................... 6.00 07/31/02 100,000 101,000
U.S. Treasury Note ......................................... 5.50 01/31/03 500,000 495,659
Victoria Steamship Corp. ................................... 6.85 11/15/03 181,464 181,438
- -------------------------------------------------------------------------------------------------------------------------
Total U.S. Government and Agency Obligations (Cost $25,253,584) ............................. 25,115,032
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
SHORT-TERM GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Interest
Rate Value
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
MONEY MARKET ACCOUNT (1.0% of portfolio)
Vanguard Money Market Reserves U.S. Treasury ............... 4.34%(b) $ 314,455
- ------------------------------------------------------------------------------------------------
Total Money Market Account (Cost $314,455) ......................... 314,455
- ------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $32,130,824) - 100% ...................... $ 31,944,681
================================================================================================
</TABLE>
(a) 144A security.
(b) One day yield at June 30, 1999.
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Interest Maturity Face
Rate Date Amount Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CORPORATE BONDS (45.0% of portfolio)
BASIC INDUSTRIES - 8.9%
Allied Corp. ...................................... 0.00%(a) 08/01/99 $ 109,000 $ 108,556
Allied Corp. ...................................... 0.00(a) 08/15/00 1,189,000 1,107,149
Allied Corp. ...................................... 0.00(a) 08/01/01 490,000 430,587
Allied Signal, Inc. ............................... 9.88 06/01/02 150,000 163,500
Archer Daniels Midland Co. ........................ 0.00(a) 05/01/02 225,000 188,438
Armstrong World Industries, Inc. .................. 6.35 08/15/03 500,000 487,500
Caterpillar, Inc. ................................. 7.98 01/14/02 800,000 827,000
Corning Glassworks, Inc. .......................... 7.10 08/14/00 100,000 101,125
Corning, Inc. ..................................... 8.25 03/15/02 250,000 260,700
Corning, Inc. ..................................... 6.00 08/15/03 500,000 489,375
Dow Chemical Co. .................................. 9.35 03/15/02 1,063,000 1,080,198
Dow Chemical Co. .................................. 8.63 04/01/06 150,000 165,108
Eastman Kodak Co. ................................. 9.38 03/15/03 250,000 272,030
General Foods Corp. ............................... 6.00 06/15/01 154,000 152,075
General Motors Corp. .............................. 9.13 07/15/01 200,000 210,250
McKesson Corp. .................................... 4.50 03/01/04 345,000 312,979
Monsanto Co. (b) .................................. 5.38 12/01/01 500,000 489,375
Nabisco, Inc. ..................................... 8.00 01/15/00 338,000 341,380
Occidental Petroleum Corp. ........................ 6.75 11/15/02 1,000,000 991,380
Occidental Petroleum Corp. ........................ 6.50 04/01/05 500,000 482,580
PHH Corp. ......................................... 7.02 11/09/01 1,250,000 1,256,849
Phillip Morris, Inc. .............................. 6.00 11/15/99 175,000 175,000
Phillip Morris, Inc. .............................. 6.00 07/15/01 2,265,000 2,233,856
Rhom & Haas Co. ................................... 9.88 09/01/00 195,000 202,800
Ryder System, Inc. ................................ 7.56 08/15/00 85,000 85,956
TRW Inc. .......................................... 6.50 06/01/02 1,000,000 995,560
Xerox Corp. ....................................... 5.67(c) 10/23/01 1,250,000 1,250,125
- -------------------------------------------------------------------------------------------------------------------------
Total Basic Industries ...................................................................... 14,861,431
- -------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLE GOODS - 2.7%
Beverages
Anheuser-Busch Cos., Inc. ......................... 6.90 10/01/02 1,550,000 1,551,565
Processed Foods
McDonald's Corp. .................................. 7.38 07/15/02 755,000 755,000
Recreation
Walt Disney Co. ................................... 1.50 10/20/99 50,000 49,353
Walt Disney Co. (b) ............................... 4.20 03/15/01 1,250,000 1,213,681
Retail
Sears Roebuck Acceptance Corp. .................... 6.80 10/09/02 900,000 906,750
- -------------------------------------------------------------------------------------------------------------------------
Total Consumer Non-Durable Goods ............................................................ 4,476,349
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Interest Maturity Face
Rate Date Amount Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONSUMER SERVICES - 0.5%
Healthcare
American Hospital Supply Finance Corp. ............. 0.00%(a) 08/15/00 $1,000,000 $ 924,304
- -------------------------------------------------------------------------------------------------------------------------
Total Consumer Services ..................................................................... 924,304
- -------------------------------------------------------------------------------------------------------------------------
FINANCE - 21.2%
Banks
BankAmerica Corp. .................................. 8.13 08/15/04 462,000 463,155
BankAmerica Corp. .................................. 8.95 11/15/04 1,775,000 1,787,906
Barclays N.A. Capital Corp. ........................ 9.75 05/15/21 306,000 337,365
Chase Manhattan Corp. .............................. 0.00(a) 02/16/00 100,000 95,892
Chase Manhattan Corp. .............................. 7.88 08/01/04 1,800,000 1,803,510
CITICORP ........................................... 6.50 09/16/01 75,000 75,122
CITICORP ........................................... 8.63 11/01/04 465,000 469,069
Deutsche Bank Financial ............................ 0.00(a) 02/01/00 449,000 433,846
First Chicago Corp. ................................ 5.12(c) 07/28/03 175,000 175,104
First Union Corp. .................................. 8.77 11/15/04 1,495,000 1,504,285
International Bank for Recon. & Dev. ............... 0.00(a) 08/15/99 525,000 521,719
Irving Bank Corp. .................................. 8.50 06/01/02 60,000 60,051
National City Bank of Cleveland .................... 7.10 09/25/12 800,000 770,074
Financial Services
ACC Consumer Finance ............................... 10.25 12/01/03 1,835,000 1,949,687
American Express Credit Corp. ...................... 0.00(a) 12/12/00 465,000 426,145
American Express Credit Corp., ..................... 6.25 08/10/05 200,000 199,646
Associates Corp. of North America .................. 6.00 06/15/01 1,995,000 1,995,000
AT&T Capital Corp. ................................. 7.50 11/15/00 1,000,000 1,018,526
AVCO Financial Services, Inc. ...................... 8.50 10/15/99 50,000 50,409
Bell Atlantic Financial Services, Inc. ............. 6.53 02/22/00 1,250,000 1,255,053
Beneficial Corp. ................................... 9.50 03/08/01 450,000 472,500
CIT Group, Inc. .................................... 5.50 10/15/01 1,250,000 1,228,927
CM International ................................... 0.00(a) 09/11/00 1,675,000 1,565,371
Capital One Bank ................................... 7.00 04/30/01 200,000 200,500
First Interstate Bancorp. .......................... 10.83 03/19/01 725,000 774,235
GATX Capital Corp. ................................. 6.36 12/16/02 450,000 441,562
General Electric Capital Corp. ..................... 5.50 11/01/01 153,000 150,896
General Motors Acceptance Corp. .................... 5.44(c) 12/03/01 1,250,000 1,253,742
General Motors Acceptance Corp. .................... 5.50 01/14/02 500,000 489,375
Goldman Sachs Group ................................ 5.90 01/15/03 1,000,000 976,250
Heller Financial, Inc. ............................. 5.55(c) 09/25/00 1,000,000 1,000,274
Household Finance Corp. ............................ 8.95 09/15/99 110,000 110,701
Household Finance Corp. ............................ 5.15(c) 08/01/01 1,000,000 1,000,157
Household Finance Corp. ............................ 6.13 07/15/12 315,000 312,285
Household Finance Corp. ............................ 8.00 08/15/04 490,000 491,468
Household Finance Corp. ............................ 8.55 10/15/04 180,000 181,509
Household Finance Corp. ............................ 6.08 03/08/06 455,000 445,299
</TABLE>
23
<PAGE>
SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Interest Maturity Face
Rate Date Amount Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial Services - continued
Lincoln National Corp. ............................. 7.13% 07/15/99 $ 150,000 $ 150,055
Merrill Lynch & Co. ................................ 5.71 01/15/02 1,250,000 1,232,812
NationsBank Corp. .................................. 7.23 08/15/12 200,000 192,531
Norwest Financial Inc. ............................. 5.50 03/19/01 1,000,000 991,339
Salomon, Inc. ...................................... 7.30 05/15/02 400,000 409,500
Transamerica Financial Corp. ....................... 8.75 10/01/99 50,000 50,376
Transamerica Financial Corp. ....................... 7.85 10/21/99 1,000,000 1,006,010
Transamerica Financial Corp. ....................... 7.68 03/16/00 500,000 505,354
Transamerica Financial Corp. ....................... 6.60 03/20/01 250,000 250,809
Transamerica Financial Corp. ....................... 7.15 09/13/01 1,000,000 1,011,110
Transamerica Financial Corp. ....................... 6.13 11/01/01 750,000 745,770
Insurance
Liberty Mutual Capital Corp. (b) ................... 7.98 12/01/02 500,000 519,620
Liberty Mutual Capital Corp. (b) ................... 8.10 01/14/05 1,250,000 1,303,125
Security & Commodity Brokers
Lehman Brothers, Inc. .............................. 6.00 02/26/01 500,000 494,375
- -------------------------------------------------------------------------------------------------------------------------
Total Finance ............................................................................... 35,349,401
- -------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.2%
Airlines
Delta Airlines, Inc. ............................... 9.60 05/26/00 50,000 51,225
Railroad
Atchison Topeka & Santa Fe RR Co. .................. 5.37 09/15/99 228,000 227,569
Burlington Northern & Santa Fe Railway ............. 5.51 05/01/01 1,000,000 983,620
Consolidated Rail Corp. ............................ 6.89 07/01/00 100,000 100,875
CSX Corp. .......................................... 9.50 08/01/00 500,000 516,250
CSX Corp. .......................................... 5.45 04/15/01 1,250,000 1,229,220
Norfolk & Western Railway .......................... 8.13 11/15/00 100,000 102,109
Norfolk Southern Corp. ............................. 6.40 06/15/01 500,000 499,290
TTX Co. (b) ........................................ 5.98 07/15/27 570,000 572,750
Union Pacific Co. .................................. 9.95 11/01/00 291,000 304,095
Union Tank Car Co. ................................. 6.00 03/15/02 1,500,000 1,471,007
Union Tank Car Co. ................................. 6.63 10/03/04 1,000,000 982,702
- -------------------------------------------------------------------------------------------------------------------------
Total Transportation ........................................................................ 7,040,712
- -------------------------------------------------------------------------------------------------------------------------
UTILITIES - 7.5%
Electric & Gas
Cleveland Electric Illuminating Co. ................ 7.63 08/01/02 100,000 101,947
Connecticut Light & Power Co. ...................... 7.25 07/01/99 187,000 187,000
DTE Capital Corp. (b) .............................. 6.17 06/15/38 500,000 487,874
Duquesne Light Co. ................................. 6.63 06/15/04 150,000 152,438
Energy Acquisition Corp. ........................... 6.15 03/01/02 1,000,000 1,000,000
Florida Power and Light Co. ........................ 6.63 02/01/03 200,000 198,785
</TABLE>
24
<PAGE>
SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Interest Maturity Face
Rate Date Amount Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITIES - continued
Idaho Power Co. .................................... 8.65% 01/01/00 $ 300,000 $ 304,125
Michigan Consolidated Gas Co. ...................... 5.75 05/01/01 234,000 232,361
New Orleans Public Service Co. ..................... 7.00 03/01/03 500,000 510,000
Northern Indiana Public Service Co. ................ 7.50 04/01/02 869,000 875,361
Northern Indiana Public Service Co. ................ 7.53 07/08/15 500,000 491,431
Pacific Gas & Electric Co. ......................... 6.88 12/01/99 181,000 181,679
Pacific Gas & Electric Co. ......................... 6.63 06/01/00 310,000 310,132
Pacific Gas & Electric Co. ......................... 6.75 12/01/00 526,000 528,630
Potomac Electric Power Co. ......................... 6.00 04/01/04 1,500,000 1,459,496
Public Service Electric & Gas Co. .................. 6.00 05/01/00 682,000 682,000
Texas Utilities Co. ................................ 9.50 08/01/99 300,000 300,750
Telephone
AT&T Corp. ......................................... 8.25 01/11/00 100,000 100,619
AT&T Corp. ......................................... 8.20 02/15/05 1,037,000 1,051,259
NYNEX Corp. ........................................ 9.55 05/01/10 159,372 177,620
Pacific Telephone & Telegraph Co. .................. 4.63 05/01/00 228,000 225,435
Pacific Telephone & Telegraph Co. .................. 6.00 11/01/02 676,000 665,860
Pacific Telephone & Telegraph Co. .................. 6.50 07/01/03 1,414,000 1,403,395
Southwestern Bell Telephone Co. .................... 5.88 06/01/03 500,000 488,125
Southwestern Bell Telephone Co. .................... 5.75 09/01/04 500,000 483,485
- -------------------------------------------------------------------------------------------------------------------------
Total Utilities ............................................................................. 12,599,807
- -------------------------------------------------------------------------------------------------------------------------
Total Corporate Bonds (Cost $75,720,071) .................................................... 75,252,004
- -------------------------------------------------------------------------------------------------------------------------
FOREIGN BONDS (0.2% of portfolio)
Hydro-Quebec ............................................... 6.50 07/16/03 100,000 99,712
Hydro-Quebec ............................................... 6.27 01/03/26 80,000 74,700
Trans-Canada Pipelines ..................................... 6.77 04/30/01 150,000 150,582
- -------------------------------------------------------------------------------------------------------------------------
Total Foreign Bonds (Cost $324,932) ......................................................... 324,994
- -------------------------------------------------------------------------------------------------------------------------
ASSET BACKED SECURITIES (19.0% of portfolio)
American Express Master Trust 93-1 ......................... 5.38 07/15/01 570,000 567,847
Americredit Automobile Receivables Trust 96-B .............. 6.50 01/12/02 20,468 20,528
Americredit Automobile Receivables Trust 98-B .............. 6.06 12/12/02 500,000 496,034
Americredit Automobile Receivables Trust 99-A .............. 5.88 12/05/05 1,700,000 1,680,518
Arcadia Automobile Receivables Trust 97-C A3 ............... 5.95 11/15/02 200,000 200,372
Arcadia Automobile Receivables Trust 98-B A4 ............... 6.00 11/15/03 1,250,000 1,243,775
Arcadia Automobile Receivables Trust 99-A A5 ............... 6.12 12/15/06 1,500,000 1,479,672
Auto Leasing Investors 97-A5 (b) ........................... 6.08 02/13/04 725,000 708,006
Banc One Auto Grantor Trust 97-A ........................... 6.27 11/20/03 196,891 198,051
Capital Auto Receivables Asset Trust 99-1 .................. 5.58 06/15/02 275,000 272,301
Case Equipment Loan Trust 96-A ............................. 5.50 02/15/03 40,223 40,213
Centerior Energy Receivables Master Trust 96-1 ............. 7.20 04/15/02 90,000 91,779
Chase Manhattan Auto Owner Trust 97-B ...................... 6.35 02/15/01 62,717 63,133
</TABLE>
25
<PAGE>
SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Interest Maturity Face
Rate Date Amount Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSET BACKED SECURITIES - continued
Chase Manhattan Grantor Trust 95-B ......................... 5.80% 02/17/03 $ 100,000 $ 99,307
CIT RV Trust 94-A .......................................... 4.90 07/15/09 84,596 82,962
Citibank Credit Card Master Trust 96-1 ..................... 0.00(a) 02/07/03 340,000 306,137
Citibank Credit Card Master Trust 97-3 ..................... 6.84 02/10/04 750,000 751,208
Citibank Credit Card Master Trust 97-7 ..................... 6.35 08/15/02 110,000 109,755
Copelco Capital Funding Corp. 96-A ......................... 6.34 07/20/04 111,185 111,496
CPS Auto Trust 97-2 ........................................ 6.65 10/15/02 139,236 140,143
CPS Auto Trust 98-1 ........................................ 6.00 08/15/03 1,654,000 1,650,993
CTB Auto Grantor Trust 97-A (b) ............................ 6.50 09/15/03 108,287 108,675
Discover Card Trust 97-2 ................................... 6.79 04/16/10 1,250,000 1,253,938
Discover Card Trust 99-2 ................................... 5.90 10/15/04 1,500,000 1,484,550
Felco Funding II LLC 98-1 A1 (b) ........................... 5.97 10/15/00 383,396 383,963
Felco Funding II LLC 98-1 A2 (b) ........................... 5.98 09/15/01 300,000 299,625
First Bank Corporate Card Master Trust 97-1 ................ 6.40 02/15/03 70,000 70,204
First Chicago Master Trust 97-T ............................ 5.25(c) 10/15/02 260,000 259,841
First Merchants Auto Trust 96-C ............................ 6.15 07/15/01 129,000 129,057
First Security Auto Grantor Trust 97-B ..................... 6.10 04/15/03 283,017 284,087
First Security Auto Grantor Trust 98-A ..................... 5.97 04/15/04 879,847 885,170
Fleetwood Credit Corp. 93-A ................................ 6.00 01/15/08 178,241 177,228
Ford Credit Auto Owner Trust 98-A .......................... 5.65 10/15/01 90,000 90,050
Franklin Auto Trust 98-1 ................................... 5.65 01/17/06 1,000,000 986,200
Green Tree Lease Finance 97-1 .............................. 6.17 09/20/05 709,915 712,392
Heller Equipment Asset Recievables Trust 97-1 .............. 6.39 05/25/05 323,930 325,850
Honda Auto Receivables Grantor Trust 97-A .................. 5.85 02/15/03 462,601 462,037
Honda Auto Receivables Grantor Trust 97-B .................. 5.95 05/15/03 561,073 560,409
Household Affinity Credit Card Master Trust 93-2 ........... 5.60 05/15/02 100,000 99,015
J.C. Penney Master Credit Card Trust C ..................... 9.63 06/15/00 250,000 259,636
John Deere Owner Trust 99-A ................................ 5.94 10/15/02 2,500,000 2,487,500
Metlife Capital Equipment Loan Trust 97-A .................. 6.85 05/20/08 1,775,000 1,808,388
Metris Master Trust 97-1 ................................... 6.87 10/20/05 1,505,000 1,530,118
Navistar Financial Corp. Owner Trust 96-A .................. 6.35 11/15/02 136,207 136,632
New Court Equipment Trust Securities 98-1 .................. 5.24 12/20/02 465,000 456,546
Nissan Auto Receivables Grantor Trust 95-A ................. 6.10 08/15/01 23,896 23,968
Nissan Auto Receivables Grantor Trust 97-A ................. 6.15 02/15/03 170,000 171,961
Olympic Automobile Receivables Trust 95-C .................. 6.20 01/15/02 69,505 69,668
Olympic Automobile Receivables Trust 95-D .................. 6.15 07/15/01 188,391 188,775
Olympic Automobile Receivables Trust 95-E .................. 5.85 03/15/01 179,708 179,785
Olympic Automobile Receivables Trust 96-A .................. 5.85 07/15/01 534,122 534,595
Olympic Automobile Receivables Trust 96-C .................. 6.80 03/15/02 804,359 809,692
Onyx Acceptance Grantor Trust 96-1 ......................... 5.40 05/15/01 59,186 59,178
Onyx Acceptance Grantor Trust 98-A ......................... 5.85 08/15/02 750,000 750,038
Onyx Acceptance Auto Trust Ser. 97-4 ....................... 6.30 05/15/04 127,000 127,697
PNC Student Loan Trust I 97-2 .............................. 6.45 01/25/02 135,000 135,640
Pemex Finance LTD (b) ...................................... 6.13 11/15/03 500,000 492,465
</TABLE>
26
<PAGE>
SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Interest Maturity Face
Rate Date Amount Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSET BACKED SECURITIES - continued
Premier Auto Trust 96-2 .................................... 6.58% 10/06/00 $ 63,781 $ 63,969
Premier Auto Trust 97-2 .................................... 6.13 09/06/00 140,295 140,496
Railcar Trust 92-1 ......................................... 7.75 06/01/04 71,449 73,821
Sears Credit Account Master Trust 98-1 ..................... 5.80 08/15/05 450,000 442,828
Spiegel Master Trust 94-B .................................. 8.15 06/15/04 200,000 202,421
Union Acceptance Corp. 95-C ................................ 6.40 10/10/02 169,462 169,838
Union Acceptance Corp. 95-D ................................ 5.97 01/07/03 139,277 139,343
Union Acceptance Corp. 98-D A3 ............................. 5.75 06/09/03 100,000 98,702
Union Acceptance Corp. 98-D A4 ............................. 5.81 03/08/04 450,000 444,713
Western Financial Grantor Trust 95-2 ....................... 7.10 07/01/00 25,780 25,818
Western Financial Grantor Trust 95-4 ....................... 6.20 02/01/02 241,730 242,137
Western Financial Grantor Trust 97-A ....................... 6.50 09/20/01 24,361 24,433
WFS Financial Owner Trust 97-D ............................. 6.25 03/20/02 264,776 265,493
World Omni Automobile Lease Securitization Trust 96-A ...... 6.55 06/25/02 250,739 251,032
- -------------------------------------------------------------------------------------------------------------------------
Total Asset Backed Securities (Cost $31,786,791) ............................................ 31,693,847
- -------------------------------------------------------------------------------------------------------------------------
MORTGAGE BACKED SECURITIES (23.4% of portfolio)
Aames Mortgage Trust 98-A .................................. 5.37(c) 03/15/28 772,631 773,635
Advanta Home Equity Loan Trust 92-3 ........................ 6.05 09/25/08 110,200 108,777
Advanta Home Equity Loan Trust 92-4 ........................ 7.20 11/25/08 68,780 69,124
Advanta Home Equity Loan Trust 93-2 ........................ 6.15 10/25/09 65,485 65,343
Advanta Mortgage Loan Trust 93-3 A1 ........................ 4.90 01/25/10 68,312 67,165
Advanta Mortgage Loan Trust 93-3 A3 ........................ 4.75 02/25/10 179,926 178,363
Advanta Mortgage Loan Trust 93-4 ........................... 5.70 03/25/25 184,518 179,088
Advanta Mortgage Loan Trust 94-1 A1 ........................ 6.30 07/25/25 360,218 357,384
Advanta Mortgage Loan Trust 94-1 A2 ........................ 6.30 07/25/25 601,042 597,322
AFC Home Equity Loan Trust 92-4 ............................ 6.20 10/11/07 42,689 42,600
American Financial Home Equity Loan 91-1 ................... 8.00 07/25/06 48,363 49,251
Amresco Residential Securities Mortgage Loan Trust 96-3 .... 7.55 02/25/23 110,000 112,233
Bear Stearns Secured Investors Trust 87-2 .................. 9.95 10/20/18 101,351 108,830
Chase Mortgage Finance Corp. 93-G .......................... 7.00 04/25/01 29,944 29,972
Chase Mortgage Finance Corp. 93-N .......................... 6.75 11/25/24 300,961 300,305
Chase Mortgage Finance Corp. 94-B .......................... 6.75 02/25/25 323,269 322,350
Chase Mortgage Finance Corp. 94-L .......................... 7.50 11/25/10 250,000 253,461
Chase Mortgage Finance Corp. 98-S4 ......................... 6.90 08/25/28 710,346 661,290
Chemical Mortgage Acceptance Corp. 88-2 .................... 6.64(c) 05/25/18 248,332 249,269
Citibank N.A. 86-4 ......................................... 10.00 11/25/16 83,504 84,082
CITICORP Mortgage Securities, Inc. 88-11 ................... 6.44(c) 08/25/18 568,199 556,210
CITICORP Mortgage Securities, Inc. 88-17 ................... 6.75(c) 11/25/18 617,452 620,619
CITICORP Mortgage Securities, Inc. 92-16 ................... 7.50 09/25/22 32,018 32,224
CITICORP Mortgage Securities, Inc. 96-1 .................... 7.50 12/25/26 503,570 504,280
CITICORP Mortgage Securities, Inc. 98-6 .................... 6.80 07/25/28 184,144 178,746
CITICORP Mortgage Trust 3 .................................. 9.00 01/25/20 100,000 99,623
</TABLE>
27
<PAGE>
SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Interest Maturity Face
Rate Date Amount Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MORTGAGE BACKED SECURITIES - continued
CMC Securities Corp. 92-D .................................. 6.43%(c) 12/25/23 $ 13,232 $ 13,386
CMC Securities Corp. 93-E .................................. 6.50 11/25/08 903,683 891,551
CMO Trust 15 ............................................... 5.00 03/20/18 48,159 45,539
CMO Trust 17 ............................................... 7.25 04/20/18 39,070 39,430
CMO Trust 27 ............................................... 7.25 04/23/17 188,628 188,389
Corestates Home Equity Trust 94-1 .......................... 6.65 05/15/09 261,015 260,779
Countrywide Asset-Backed Certificates 96-1 ................. 6.53 02/25/14 63,371 63,314
Countrywide Asset-Backed Certificates 97-3 ................. 6.58 10/25/15 40,473 40,327
Countrywide Funding Corp. 87-2 ............................. 6.96(c) 02/25/18 199,486 199,413
Countrywide Home Loans 97-1 ................................ 7.50 03/25/27 3,000,000 3,024,175
CS First Boston Mortgage Securities Corp. 96-2 ............. 6.62 02/25/18 200,000 198,251
DLJ Mortgage Acceptance Corp. 91-3 ......................... 6.62(c) 02/20/21 751,814 743,213
DLJ Mortgage Acceptance Corp. 95-8 ......................... 7.25 11/25/25 391,401 391,073
Empire Funding Home Loan Owner Trust 97-2 .................. 7.78 09/25/23 82,008 81,774
Equicon Home Equity Loan Trust 92-7 ........................ 5.90 09/18/05 3,056 3,047
Equivantage Home Equity Loan Trust 95-2 .................... 6.85 05/25/22 385,584 387,805
FDIC REMIC Trust 96-C1 ..................................... 6.75 05/25/26 521,625 519,695
FHLMC 135 .................................................. 8.75 05/15/00 8,815 8,872
FHLMC 144 .................................................. 8.75 06/15/00 4,858 4,889
FHLMC 1547 ................................................. 6.50 09/15/22 57,605 57,083
FHLMC 1662 ................................................. 6.25 01/15/09 55,754 55,952
FHLMC 1663 ................................................. 7.00 07/15/23 40,799 40,367
FHLMC 1714 ................................................. 7.00 10/15/22 103,487 103,078
FHLMC 2023 ................................................. 6.50 01/15/13 32,481 32,456
FHLMC 2035 ................................................. 6.85 12/25/27 271,163 268,758
FHLMC 218209 ............................................... 8.50 06/01/02 42,429 43,569
FNMA REMIC 92-203 .......................................... 6.50 11/25/07 54,202 53,866
FNMA REMIC 93-140 .......................................... 7.00 07/25/12 56,952 56,613
FNMA REMIC 93-68 ........................................... 6.00 05/25/08 55,001 52,023
FNMA REMIC 94-4 ............................................ 6.50 12/25/06 179,884 180,416
Federal National Mortgage Association 99-8 ................. 6.50 11/25/19 694,539 663,880
First Alliance Mortgage Loan Trust 94-1 .................... 5.85 04/25/25 161,661 156,251
First Alliance Mortgage Loan Trust 94-3 .................... 7.83 10/25/25 64,706 65,858
First Greensboro Home Equity Loan Trust 98-1 ............... 6.55 12/25/29 1,176,970 1,172,051
First Plus Home Loan Trust 97-1 ............................ 6.60 07/10/10 110,000 110,236
First Plus Home Loan Trust 97-2 ............................ 6.82 04/10/23 220,000 220,717
First Plus Home Loan Trust 97-3 ............................ 7.22 11/10/20 1,000,000 1,014,970
First Plus Home Loan Trust 98-1 ............................ 6.04 10/10/13 475,000 475,124
First Plus Home Loan Trust 98-2 ............................ 6.32 11/10/13 610,000 612,159
First Plus Home Loan Trust 98-4 ............................ 4.99(c) 01/10/11 106,388 106,346
Fremont Home Loan Owners Trust 99-2 ........................ 7.28 06/25/30 1,000,000 1,010,780
GE Capital Mortgage Services, Inc. 94-1 .................... 6.50 03/25/24 125,000 124,293
GE Capital Mortgage Services, Inc. 94-13 ................... 6.50 04/25/24 691,010 683,690
GE Capital Mortgage Services, Inc. 97-4 .................... 7.50 05/25/27 500,000 504,605
GE Capital Mortgage Services, Inc. 98-8 .................... 6.20 04/25/28 1,000,000 951,180
</TABLE>
28
<PAGE>
SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Interest Maturity Face
Rate Date Amount Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MORTGAGE BACKED SECURITIES - continued
GMBS Certificates 89-1 ..................................... 9.50% 12/25/19 $ 83,479 $ 83,165
Green Tree Financial Corp. 95-7 ............................ 6.70 11/15/26 145,000 145,713
Green Tree Home Equity Loan Trust 98-C ..................... 6.03 07/15/29 250,000 250,463
Headlands Mortgage Securities, Inc. 97-3 ................... 7.25 07/25/27 266,846 266,795
Housing Securities Inc. 92-EA .............................. 7.50 10/25/07 451,000 455,110
Housing Securities Inc. 94-2 ............................... 6.50 07/25/09 151,351 148,852
ICI Funding Secured Assets Corp. 97-2 ...................... 7.85 07/25/28 577,218 577,940
Independent National Mortgage Corp. 96-E ................... 6.93 05/25/26 305,379 306,041
Master Financial Asset Securitization Trust 97-1 ........... 6.63 11/20/10 262,648 262,107
Master Financial Asset Securitization Trust 98-2 ........... 6.34 10/20/12 1,000,000 1,000,010
Mego Mortgage Home Loan Trust 97-4 ......................... 6.77 09/25/23 1,250,000 1,255,584
Merrill Lynch Mortgage Investors, Inc. 94-A ................ 6.40(c) 02/15/09 116,341 114,896
Mid State Trust 3 A ........................................ 7.63 04/01/22 91,373 92,700
Morgan Stanley Capital I 97-ALIC A1A ....................... 6.30 10/15/00 455,063 455,140
Morgan Stanley Capital I 97-ALIC A1B ....................... 6.44 11/15/02 420,000 418,807
Morgan Stanley Capital I 97-ALIC A2 ........................ 5.99 03/15/05 311,819 302,898
Mortgage Obligation Structured Trust 93-1 .................. 6.85 10/25/18 313,151 313,145
New Century Home Equity Loan Trust 97-NC6 .................. 7.01 05/25/26 165,000 166,109
Nomura Asset Securities Corp. 94-4 ......................... 8.30 09/25/24 23,111 23,527
PNC Mortgage Securities Corp. 97-8 ......................... 7.00 12/25/27 32,749 32,812
Prudential Home Mortgage Securities 91-9 ................... 7.43(c) 08/25/21 27,875 27,820
Prudential Home Mortgage Securities 93-9 ................... 7.05 03/25/08 227,865 229,588
Prudential Home Mortgage Securities 93-29 .................. 6.75 08/25/08 21,182 21,198
Prudential Home Mortgage Securities 93-41 .................. 6.00 10/25/00 19,979 19,888
Prudential Home Mortgage Securities 93-51 .................. 6.10 12/25/23 9,214 9,181
Prudential Securities 18 ................................... 7.00 06/25/19 3,306 3,299
Residential Asset Securities Corp. 98-KS2 .................. 6.24 02/25/17 325,000 322,670
Residential Funding Mortgage Securities I 93-S25 ........... 6.50 07/25/08 22,495 22,533
Residential Funding Mortgage Securities I 97-S13 ........... 7.25 09/25/27 280,755 282,269
Resolution Trust Corp. 92-2 ................................ 7.90(c) 08/25/21 156,504 155,933
Ryland Acceptance Corp. 26-C ............................... 9.00 12/01/16 159,333 166,929
Ryland Mortgage Securities Corp. 93-4 ...................... 7.50 08/25/24 86,506 87,181
Salomon Brothers Mortgage Securities 96-LB2 ................ 7.25 12/25/01 130,745 131,068
Salomon Brothers Mortgage Securities 97-LB2 ................ 6.82 12/25/27 165,000 165,318
Saxon Asset Securities Trust 96-2 .......................... 6.48 11/25/20 38,992 38,928
Securitized Asset Sales, Inc. 93-8 ......................... 7.43(c) 12/26/23 293,733 296,294
Southern Pacific Secured Assets Corp. 98-1 ................. 6.27 02/25/18 450,000 449,433
Southern Pacific Secured Assets Corp. 98-H1 ................ 6.41 01/25/29 1,250,000 1,250,138
Structured Mortgage Asset Residential Trust 93-5 ........... 6.58(c) 06/25/24 44,896 42,748
TMS Home Equity Trust 93-B ................................. 5.40 08/15/05 11,883 11,912
TMS Home Equity Trust 93-C ................................. 5.75 10/15/22 71,677 71,225
TMS Home Equity Trust 93-D ................................. 5.68 02/15/09 62,361 61,022
TMS Home Equity Trust 94-D ................................. 8.93 06/15/22 393,000 406,712
TMS Home Equity Trust 96-B A7 .............................. 7.55 02/15/20 360,000 367,101
</TABLE>
29
<PAGE>
SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Interest Maturity Face
Rate Date Amount Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MORTGAGE BACKED SECURITIES - continued
TMS Home Equity Trust 96-B A10 ............................. 5.31%(c) 10/15/27 $ 226,209 $ 226,397
TMS Home Equity Trust 96-C ................................. 7.69 05/15/24 394,000 397,215
TMS Home Equity Trust 97-A ................................. 7.24 05/15/28 263,000 261,685
TMS Home Equity Trust 97-C ................................. 6.59 02/15/15 541,000 542,026
UCFC Home Equity Loan 95-A1 ................................ 8.55 01/10/20 550,000 563,041
UCFC Home Equity Loan 96-C1 ................................ 7.15 12/15/13 773,000 782,634
UCFC Home Equity Loan 97-C ................................. 6.48 05/15/12 290,203 290,261
UCFC Home Equity Loan 98-A ................................. 6.49 04/15/24 484,000 481,875
UCFC Home Equity Loan 98-B ................................. 6.27 11/15/24 500,000 488,680
UCFC Manufactured Housing Contract 98-2 .................... 6.16 08/15/19 1,000,000 985,030
Vanderbilt Mortgage Finance 95-B ........................... 6.68 05/07/06 190,009 189,628
Zions Home Refinance Loan Trust 93-1 ....................... 5.15 09/25/03 28,846 28,289
- -------------------------------------------------------------------------------------------------------------------------
Total Mortgage Backed Securities (Cost $39,140,719) ......................................... 39,071,752
- -------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (10.1% of portfolio)
Banco Centroamericano Promissory Note ...................... 5.78 05/30/01 774,277 772,725
Chattanooga Valley Corp. ................................... 0.00(a) 01/01/01 256,000 233,920
Chattanooga Valley Corp. ................................... 0.00(a) 07/01/01 204,000 180,285
Federal Farm Credit Bank ................................... 5.90 08/06/01 1,000,000 997,988
Federal Home Loan Mortgage Corp. ........................... 5.87 07/16/01 2,000,000 1,997,090
Federal Home Loan Mortgage Corp. ........................... 6.00 01/12/04 1,250,000 1,232,492
Federal National Mortgage Assn. ............................ 5.95 03/13/02 1,500,000 1,485,417
Federal National Mortgage Assn. ............................ 6.20 07/07/03 1,250,000 1,230,275
Federal National Mortgage Assn. ............................ 6.07 05/05/04 1,750,000 1,708,856
Government Export Trust 93-1 ............................... 6.00 03/15/05 335,417 335,648
Small Business Administration 92-10 ........................ 7.15 09/01/02 215,962 217,122
U.S. Treasury Note ......................................... 6.00 08/15/99 500,000 500,694
U.S. Treasury Note ......................................... 7.13 02/29/00 250,000 253,248
U.S. Treasury Note ......................................... 6.38 05/15/00 800,000 807,514
U.S. Treasury Note ......................................... 5.75 10/31/00 2,250,000 2,260,369
U.S. Treasury Note ......................................... 6.38 03/31/01 500,000 507,146
U.S. Treasury Note ......................................... 5.88 11/30/01 1,750,000 1,758,674
U.S. Treasury Note ......................................... 6.00 07/31/02 500,000 505,000
- -------------------------------------------------------------------------------------------------------------------------
Total U.S. Government and Agency Obligations (Cost $17,015,253) ............................. 16,984,463
- -------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (0.1% of portfolio)
Rhode Island Housing & Mortgage Finance Corp. .............. 6.62 04/01/02 85,000 85,744
- -------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost $84,557) ........................................................ 85,744
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Interest Maturity Face
Rate Date Amount Value
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER (2.1% of portfolio)
Exxon Asset Management ..................................... 5.75% 07/01/99 $3,593,000 $3,593,000
- -------------------------------------------------------------------------------------------------------------------------
Total Commercial Paper (Cost $3,593,000) .................................................... 3,593,000
- -------------------------------------------------------------------------------------------------------------------------
CORPORATE MASTER NOTE (0.1% of portfolio)
Associates Corp. of North America .......................... 4.60(c) 100,000 100,000
- -------------------------------------------------------------------------------------------------------------------------
Total Corporate Master Note (Cost $100,000) ................................................. 100,000
- -------------------------------------------------------------------------------------------------------------------------
MONEY MARKET ACCOUNT
State Street Bank & Trust SSgA Fund ........................ 4.63(d) 592
- -------------------------------------------------------------------------------------------------------------------------
Total Money Market Account (Cost $592) ...................................................... 592
- -------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (Cost $167,765,915) - 100% .............................................. $167,106,396
=========================================================================================================================
</TABLE>
(a) Zero coupon security, purchased at a discount.
(b) 144A security.
(c) Variable coupon rate as of June 30, 1999.
(d) One day yield at June 30, 1999.
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
VALUE FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (94.5% of portfolio)
BASIC INDUSTRIES - 15.0%
Aluminum
Alcan Aluminum Ltd. ................................ 231,200 $ 7,383,950
Chemicals
Avery Dennison Corp. ............................... 187,600 11,326,350
Nalco Chemical Co. ................................. 316,600 16,423,625
Conglomerates
Tenneco, Inc. ...................................... 87,500 2,089,063
Forest Products
Pope & Talbot, Inc. ................................ 140,500 1,694,781
Weyerhaeuser Co. ................................... 96,500 6,634,375
Packaging/Containers
Bemis Co., Inc. .................................... 374,800 14,898,300
Paper
Champion International Corp. ....................... 114,000 5,457,750
International Paper Co. ............................ 142,000 7,171,000
- -----------------------------------------------------------------------------------------------------------
Total Basic Industries........................................................ 73,079,194
- -----------------------------------------------------------------------------------------------------------
CAPITAL GOODS - 5.5%
Construction Supplies & Fixtures
Hughes Supply, Inc. ................................ 356,800 10,592,500
Industrial Machinery
Applied Industrial Technologies, Inc. .............. 541,700 10,292,300
Parker-Hannifin Corp. .............................. 132,975 6,083,606
- -----------------------------------------------------------------------------------------------------------
Total Capital Goods........................................................... 26,968,406
- -----------------------------------------------------------------------------------------------------------
CONSUMER DURABLE GOODS - 6.4%
Household Appliances & Furnishings
Juno Lighting, Inc. (W/I)........................... 21,436 407,282
Maytag Corp. ....................................... 241,400 16,822,562
Housewares
Oneida Ltd. ........................................ 491,700 13,829,062
- -----------------------------------------------------------------------------------------------------------
Total Consumer Durable Goods.................................................. 31,058,906
- -----------------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLE GOODS - 23.3%
Auto Parts
Cooper Tire & Rubber Co. ........................... 507,000 11,977,875
Genuine Parts Co. .................................. 278,500 9,747,500
Drugs & Health Care
American Home Products Corp. ....................... 120,000 6,900,000
Pharmacia & Upjohn, Inc. ........................... 145,000 8,237,812
SmithKline Beecham Plc. ............................ 86,000 5,681,375
</TABLE>
32
<PAGE>
VALUE FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER NON-DURABLE GOODS - continued
Food Processing
J.M. Smucker Co. (Class B) ......................... 472,700 $ 8,981,300
Photography
Eastman Kodak Co. .................................. 104,500 7,079,875
Retail
Dillards, Inc. ..................................... 438,000 15,384,750
K Mart Corp. (a) ................................... 355,700 5,846,819
Longs Drug Stores Corp. ............................ 276,700 9,563,444
May Department Stores Co. .......................... 216,250 8,839,219
Rite Aid Corp. ..................................... 113,900 2,804,787
Ruddick Corp. ...................................... 609,200 12,184,000
- -----------------------------------------------------------------------------------------------------------
Total Consumer Non-Durable Goods.............................................. 113,228,756
- -----------------------------------------------------------------------------------------------------------
CONSUMER SERVICES - 4.5%
Restaurants
Brinker International, Inc. (a) .................... 317,800 8,640,188
Wendy's International, Inc. ........................ 470,200 13,312,537
- -----------------------------------------------------------------------------------------------------------
Total Consumer Services ...................................................... 21,952,725
- -----------------------------------------------------------------------------------------------------------
ENERGY - 7.1%
Domestic Oil
Atlantic Richfield Co. ............................. 61,800 5,164,163
International Oil
Chevron Corp. ...................................... 55,000 5,235,313
Texaco, Inc. ....................................... 83,400 5,212,500
Oil Well Services & Equipment
Baker Hughes, Inc. ................................. 140,000 4,690,000
Halliburton Co. .................................... 314,000 14,208,500
- -----------------------------------------------------------------------------------------------------------
Total Energy.................................................................. 34,510,476
- -----------------------------------------------------------------------------------------------------------
FINANCE - 16.3%
Banks
Banc One Corp. ..................................... 204,180 12,161,471
BankAmerica Corp. .................................. 95,054 6,968,646
BB&T Corp. ......................................... 124,800 4,578,600
Chase Manhattan Corp. .............................. 128,400 11,122,650
Citigroup, Inc. .................................... 226,875 10,776,563
Commerce Bancshares, Inc. .......................... 271,999 10,947,960
Insurance
Allstate Corp. ..................................... 312,000 11,193,000
Chubb Corp. ........................................ 111,000 7,714,500
Ohio Casualty Corp. ................................ 115,200 4,161,600
- -----------------------------------------------------------------------------------------------------------
Total Finance................................................................. 79,624,990
- -----------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
VALUE FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Shares/
Face Amount Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
GENERAL BUSINESS - 4.4%
Business Services
Deluxe Corp. ...................................... 196,100 shs. $ 7,635,644
Donnelley, R.R. & Sons Co. ........................ 371,800 13,779,838
- -----------------------------------------------------------------------------------------------------------
Total General Business ....................................................... 21,415,482
- -----------------------------------------------------------------------------------------------------------
TECHNOLOGY - 2.1%
Xerox Corp. ....................................... 171,000 10,099,687
- -----------------------------------------------------------------------------------------------------------
Total Technology ............................................................. 10,099,687
- -----------------------------------------------------------------------------------------------------------
TRANSPORTATION - 3.4%
Air Travel
Southwest Airlines Co. ............................ 538,400 16,757,700
- -----------------------------------------------------------------------------------------------------------
Total Transportation ......................................................... 16,757,700
- -----------------------------------------------------------------------------------------------------------
UTILITIES - 6.5%
Gas & Pipeline
Questar Corp. ..................................... 516,600 9,879,975
Sonat, Inc. ....................................... 303,000 10,036,875
Telephone
BellSouth Corp. ................................... 252,000 11,812,500
- -----------------------------------------------------------------------------------------------------------
Total Utilities .............................................................. 31,729,350
- -----------------------------------------------------------------------------------------------------------
Total Common Stock (Cost $296,375,299) ....................................... 460,425,672
- -----------------------------------------------------------------------------------------------------------
PREFERRED STOCKS (0.3% of portfolio)
K Mart Corp., 7.75% Convertible Preferred ................. 25,200 1,474,200
- -----------------------------------------------------------------------------------------------------------
Total Preferred Stocks (Cost $1,281,750) ..................................... 1,474,200
- -----------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (4.5% of portfolio)
Exxon Asset Management, 5.75%, due 07/01/99 .............. $ 22,050,000 22,050,000
- -----------------------------------------------------------------------------------------------------------
Total Commercial Paper (Cost $22,050,000) .................................... 22,050,000
- -----------------------------------------------------------------------------------------------------------
CORPORATE MASTER NOTE (0.7% of portfolio)
Associates Corp. of North America, 4.60% (b) .............. 3,500,000 3,500,000
- -----------------------------------------------------------------------------------------------------------
Total Corporate Master Note (Cost $3,500,000) ................................ 3,500,000
- -----------------------------------------------------------------------------------------------------------
MONEY MARKET ACCOUNT
State Street Bank and Trust SSgA Fund, 4.63% (c) .......... 3,204 3,204
- -----------------------------------------------------------------------------------------------------------
Total Money Market Account (Cost $3,204) ..................................... 3,204
- -----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (Cost $323,210,253) ...................................... $487,453,076
===========================================================================================================
</TABLE>
(a) Non-income producing.
(b) Variable coupon rate at June 30, 1999.
(c) One day yield at June 30, 1999.
The accompanying notes are an integral part of these financial statements.
34
<PAGE>
SMALL COMPANY STOCK FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (94.3% of portfolio)
BASIC INDUSTRIES - 3.0%
Chemicals
Nalco Chemical Co. ................................ 4,000 $ 207,500
Forest Products
Pope & Talbot, Inc. ............................... 8,500 102,531
- -----------------------------------------------------------------------------------------------------------
Total Basic Industries ....................................................... 310,031
- -----------------------------------------------------------------------------------------------------------
CAPITAL GOODS - 33.5%
Construction Supplies & Fixtures
Chicago Bridge & Iron Co. ......................... 24,200 337,287
Hughes Supply, Inc. ............................... 11,200 332,500
Industrial Machinery
Applied Industrial Technologies, Inc. ............. 22,200 421,800
Flowserve Corp. ................................... 17,500 331,406
Manitowoc Co., Inc. ............................... 12,000 499,500
Regal-Beloit Corp. ................................ 18,000 425,250
Manufacturing-Diverse
CLARCOR, Inc. ..................................... 23,000 441,313
Lydall, Inc. (a) .................................. 32,700 376,050
Standex International Corp. ....................... 12,800 350,400
- -----------------------------------------------------------------------------------------------------------
Total Capital Goods .......................................................... 3,515,506
- -----------------------------------------------------------------------------------------------------------
CONSUMER DURABLE GOODS - 4.7%
Household Appliances & Furnishings
Juno Lighting, Inc. (W/I) ......................... 887 16,844
Housewares
Oneida Ltd. ....................................... 16,900 475,313
- -----------------------------------------------------------------------------------------------------------
Total Consumer Durable Goods ................................................. 492,157
- -----------------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLE GOODS - 22.8%
Auto Parts
Cooper Tire & Rubber Co. .......................... 12,800 302,400
Cosmetics & Toiletries
Alberto Culver Co. (Class A) ...................... 11,000 250,938
Food Processing
J.M. Smucker Co. (Class B) ........................ 19,600 372,400
Retail
Charming Shoppes, Inc. (a) ........................ 64,000 390,000
Claire's Stores, Inc. ............................. 12,500 320,312
Longs Drug Stores, Corp. .......................... 7,900 273,044
Ruddick Corp. ..................................... 23,900 478,000
- -----------------------------------------------------------------------------------------------------------
Total Consumer Non-Durable Goods ............................................. 2,387,094
- -----------------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE>
SMALL COMPANY STOCK FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER SERVICES - 3.9%
Restaurants
CBRL Group, Inc. .................................. 23,500 $ 406,844
- -----------------------------------------------------------------------------------------------------------
Total Consumer Services ...................................................... 406,844
- -----------------------------------------------------------------------------------------------------------
ENERGY - 3.8%
Oil Well Services & Equipment
Helmerich & Payne, Inc. ........................... 16,700 397,669
- -----------------------------------------------------------------------------------------------------------
Total Energy ................................................................. 397,669
- -----------------------------------------------------------------------------------------------------------
FINANCE - 9.1%
Banks
CNB Bancshares, Inc. .............................. 6,100 347,700
UMB Financial Corp. ............................... 7,800 334,425
Insurance
Ohio Casualty Corp. ............................... 7,600 274,550
- -----------------------------------------------------------------------------------------------------------
Total Finance ................................................................ 956,675
- -----------------------------------------------------------------------------------------------------------
GENERAL BUSINESS - 5.9%
Commercial Printing
Banta Corp. ....................................... 16,700 350,700
Linen Supply
Superior Uniform Group, Inc. ...................... 22,000 275,000
- -----------------------------------------------------------------------------------------------------------
Total General Business ....................................................... 625,700
- -----------------------------------------------------------------------------------------------------------
TRANSPORTATION - 4.4%
Trucking
American Freightways Inc. ......................... 23,500 459,719
- -----------------------------------------------------------------------------------------------------------
Total Technology ............................................................. 459,719
- -----------------------------------------------------------------------------------------------------------
UTILITIES - 3.2%
Gas & Pipeline
Questar Corp. ..................................... 17,700 338,512
- -----------------------------------------------------------------------------------------------------------
Total Utilities .............................................................. 338,512
- -----------------------------------------------------------------------------------------------------------
Total Common Stock (Cost $9,217,235) ......................................... 9,889,907
- -----------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE>
SMALL COMPANY STOCK FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER (3.8% of portfolio)
Exxon Corp., 5.75%, due 07/01/99 .......................... $ 401,000 $ 401,000
- -----------------------------------------------------------------------------------------------------------
Total Commercial Paper (Cost $401,000) ....................................... 401,000
- -----------------------------------------------------------------------------------------------------------
CORPORATE MASTER NOTE (1.9% of portfolio)
Associates Corp. of North America, 4.60% (b) .............. 200,000 200,000
- -----------------------------------------------------------------------------------------------------------
Total Corporate Master Note (Cost $200,000) .................................. 200,000
- -----------------------------------------------------------------------------------------------------------
MONEY MARKET ACCOUNT
State Street Bank & Trust SSgA Fund, 4.63% (c) ........................................... 61
- -----------------------------------------------------------------------------------------------------------
Total Money Market Account (Cost $61) ........................................ 61
- -----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (Cost $9,818,296) - 100% ................................. $10,490,968
===========================================================================================================
</TABLE>
(a) Non-income producing.
(b) Variable coupon rate at June 30, 1999.
(c) One day yield at June 30, 1999.
The accompanying notes are an integral part of these financial statements.
37
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SHORT-TERM SMALL
DAILY INCOME GOVERNMENT SHORT-TERM VALUE COMPANY
FUND SECURITIES FUND BOND FUND FUND STOCK FUND
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost: $63,398,917; $32,130,824;
$167,765,915; $323,210,253;
$9,818,296).............................. $63,398,917 $31,944,681 $167,106,396 $487,453,076 $10,490,968
Receivables
Investment securities sold............... - - - 11,881,987 406,770
Dividends and interest................... 373,927 263,051 1,819,660 462,074 8,050
Capital shares sold...................... 260,556 285 215,559 192,883 101,781
Prepaid expenses................................. 20,384 21,790 26,098 46,682 17,583
- ------------------------------------------------------------------------------------------------------------------------------
Total assets..................................... 64,053,784 32,229,807 169,167,713 500,036,702 11,025,152
- ------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payables
Investment securities purchased.......... 234,255 - - - -
Accrued expenses................................. 68,173 39,747 118,618 211,035 39,710
Due to Manager........................... 26,518 10,675 80,482 238,676 3,338
Capital shares redeemed.......................... 150,004 18,145 168,655 609,260 -
Dividends........................................ 8,461 7,145 44,169 69,845 -
- ------------------------------------------------------------------------------------------------------------------------------
Total liabilities................................ 487,411 75,712 411,924 1,128,816 43,048
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS....................................... $63,566,373 $32,154,095 $168,755,789 $498,907,886 $10,982,104
==============================================================================================================================
NET ASSETS CONSIST OF:
Unrealized appreciation (depreciation)
of investments........................... - $ (186,143) $ (659,519) $164,242,823 $ 672,672
Undistributed net income......................... - - - - 28,070
Undistributed net realized gain.................. - 2,502 32,479 25,315,716 185,342
Paid-in-capital applicable to outstanding
shares of 63,566,373 of Daily Income Fund,
6,391,483 of Short-Term Government
Securities Fund, 32,818,454 of Short-Term
Bond Fund, 16,436,469 of Value Fund, and
1,072,616 of Small Company Stock Fund.... 63,566,373 32,337,736 169,382,829 309,349,347 10,096,020
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS....................................... $63,566,373 $32,154,095 $168,755,789 $498,907,886 $10,982,104
==============================================================================================================================
NET ASSET VALUE PER SHARE........................ $ 1.00 $ 5.03 $ 5.14 $ 30.35 $ 10.24
==============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
38
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SHORT-TERM SMALL
DAILY INCOME GOVERNMENT SHORT-TERM VALUE COMPANY
FUND SECURITIES FUND BOND FUND FUND STOCK FUND
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest................................. $ 1,595,730 $ 755,048 $ 4,876,071 $ 624,346 $ 14,045
Dividends................................ - - - 4,247,235 78,213
- ------------------------------------------------------------------------------------------------------------------------------
Total income......................... 1,595,730 755,048 4,876,071 4,871,581 92,258
- ------------------------------------------------------------------------------------------------------------------------------
Expenses
Management fees.......................... 157,219 63,886 475,523 1,260,439 35,732
Custodian and accounting fees............ 56,921 29,933 79,562 103,854 30,750
Shareholder servicing.................... 25,696 16,790 39,014 153,165 18,029
Registration expense..................... 11,904 10,147 19,824 26,071 6,517
Communication............................ 5,822 2,571 9,411 51,696 3,224
Legal and audit fees..................... 3,269 1,566 8,657 25,957 384
Printing................................. 2,848 1,273 6,549 19,739 729
Insurance................................ 1,769 789 4,624 14,154 213
Directors fees........................... 1,329 555 3,178 9,718 148
Other expenses........................... 2,386 1,401 4,059 10,934 1,119
- ------------------------------------------------------------------------------------------------------------------------------
Total expenses................................... 269,163 128,911 650,401 1,675,727 96,845
Less fees waived and expenses
reimbursed by Manager.................... (17,613) (22,664) (56,677) - (32,656)
- ------------------------------------------------------------------------------------------------------------------------------
Net expenses..................................... 251,550 106,247 593,724 1,675,727 64,189
- ------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME............................ 1,344,180 648,801 4,282,347 3,195,854 28,069
- ------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on investments................. - 2,502 32,479 25,315,716 187,052
Net change in unrealized appreciation
(depreciation)........................... - (345,705) (2,072,075) 38,452,290 1,214,788
- ------------------------------------------------------------------------------------------------------------------------------
NET GAIN (LOSS) ON INVESTMENTS................... - (343,203) (2,039,596) 63,768,006 1,401,840
- ------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS.......................... $ 1,344,180 $ 305,598 $ 2,242,751 $ 66,963,860 $ 1,429,909
==============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
39
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SHORT-TERM
DAILY INCOME FUND GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------------------------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, 1999 December 31, June 30, 1999 December 31,
(Unaudited) 1998 (Unaudited) 1998
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net investment income.................................. $ 1,344,180 $ 2,657,794 $ 648,801 $ 1,000,283
Net realized gain (loss) on investments................ - - 2,502 7,472
Net change in unrealized appreciation
(depreciation)................................. - - (345,705) 86,126
- ---------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations........................................ 1,344,180 2,657,794 305,598 1,093,881
- ---------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income.................................. (1,344,180) (2,657,794) (648,801) (1,000,283)
Net realized gain on investments....................... - - - (7,472)
- ---------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders.................... (1,344,180) (2,657,794) (648,801) (1,007,755)
- ---------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS, NET........................ 4,989,225 5,543,754 8,567,173 7,657,272
- ---------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS........................... 4,989,225 5,543,754 8,223,970 7,743,398
NET ASSETS
Beginning of Year...................................... 58,577,148 53,033,394 23,930,125 16,186,727
- ---------------------------------------------------------------------------------------------------------------------
END OF PERIOD.......................................... $63,566,373 $58,577,148 $32,154,095 $23,930,125
=====================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
40
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SMALL COMPANY
SHORT-TERM BOND FUND VALUE FUND STOCK FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Six Months Six Months
Ended Year Ended Ended Year Ended Ended Period Ended
June 30, 1999 December 31, June 30, 1999 December 31, June 30, 1999 December 31,
(Unaudited) 1998 (Unaudited) 1998 (Unaudited) 1998*
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net investment income................. $ 4,282,347 $ 7,117,514 $ 3,195,854 $ 6,538,859 $ 28,069 $ 39,002
Net realized gain (loss) on investments 32,479 141,690 25,315,716 11,857,449 187,052 (1,709)
Net change in unrealized appreciation.
(depreciation)................ (2,072,075) 603,728 38,452,290 12,942,414 1,214,788 (542,116)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
from operations....................... 2,242,751 7,862,932 66,963,860 31,338,722 1,429,909 (504,823)
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income................. (4,282,347) (7,117,514) (3,195,854) (6,538,859) - (39,002)
Net realized gain on investments...... - (141,690) - (11,857,449) - -
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders... (4,282,347) (7,259,204) (3,195,854) (18,396,308) - (39,002)
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS, NET....... 24,445,015 36,848,869 (13,862,066) 57,438,372 1,990,166 8,105,854
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS.......... 22,405,419 37,452,597 49,905,940 70,380,786 3,420,075 7,562,029
NET ASSETS
Beginning of Year..................... 146,350,370 108,897,773 449,001,946 378,621,160 7,562,029 -
- ------------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD......................... $168,755,789 $146,350,370 $498,907,886 $449,001,946 $ 10,982,104 $ 7,562,029
====================================================================================================================================
</TABLE>
* For the period beginning March 4, 1998 (inception date) to December 31, 1998.
The accompanying notes are an integral part of these financial statements.
41
<PAGE>
DAILY INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Six Months Year Ended December 31,
Ended June 30, 1999 ---------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income (a).............. 0.02 0.05 0.05 0.05 0.05 0.04
- ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations....... 0.02 0.05 0.05 0.05 0.05 0.04
- ----------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income.................. (0.02) (0.05) (0.05) (0.05) (0.05) (0.04)
- ----------------------------------------------------------------------------------------------------------------------------
Total distributions.................... (0.02) (0.05) (0.05) (0.05) (0.05) (0.04)
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============================================================================================================================
TOTAL RETURN................................... 2.14%(b) 4.91% 4.92% 4.81% 5.38% 3.63%
============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands).......... $ 63,566 $ 58,577 $ 53,033 $ 57,871 $ 52,699 $ 36,668
Ratio of gross expenses before voluntary expense
limitation to average net assets....... 0.85%(c) 0.87% 0.83% 0.81% 0.87% 0.99%
Ratio of net investment income to
average net assets (a)................. 4.24%(c) 4.80% 4.80% 4.71% 5.25% 3.66%
Ratio of expenses to average net assets (a).... 0.80%(c) 0.80% 0.80% 0.76% 0.75% 0.75%
- -----------------------------------------------
</TABLE>
(a) Excludes excess investment management fees and other expenses in accordance
with the Expense Limitation Agreement with the Manager.
(b) Aggregate total return for the period.
(c) Annualized.
The accompanying notes are an integral part of these financial statements.
42
<PAGE>
SHORT-TERM GOVERNMENT SECURITIES
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
May 1, 1995
Six Months Year Ended December 31, (Inception Date)
Ended June 30, 1999 ------------------------------ to December 31,
(Unaudited) 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR................ $5.09 $5.07 $5.05 $5.09 $5.00
- -------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income (a)................. 0.11 0.25 0.26 0.26 0.18
Net realized and unrealized gain (loss)
on investments.................... (0.06) 0.02 0.02 (0.04) 0.09
- -------------------------------------------------------------------------------------------------------------------------
Total from investment operations.......... 0.05 0.27 0.28 0.22 0.27
- -------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income..................... (0.11) (0.25) (0.26) (0.26) (0.18)
- -------------------------------------------------------------------------------------------------------------------------
Total distributions....................... (0.11) (0.25) (0.26) (0.26) (0.18)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD.................... $5.03 $5.09 $5.07 $5.05 $5.09
=========================================================================================================================
TOTAL RETURN...................................... 1.06%(b) 5.51% 5.73% 4.46% 5.44%(b)
=========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)............. $32,154 $23,930 $16,187 $7,692 $2,658
Ratio of gross expenses before voluntary expense
limitation to average net assets.......... 0.90%(c) 1.03% 1.27% 2.30% 6.21%(c)
Ratio of net investment income to
average net assets (a).................... 4.53%(c) 5.00% 5.19% 5.16% 5.18%(c)
Ratio of expenses to average net assets (a)....... 0.75%(c) 0.75% 0.75% 0.75% 0.75%(c)
Portfolio turnover rate........................... 9%(c) 57% 12% 21% 11%(c)
- --------------------------------------------------
</TABLE>
(a) Excludes excess investment management fees and other expenses in accordance
with the Expense Limitation Agreement with the Manager.
(b) Aggregate total return for the period.
(c) Annualized.
The accompanying notes are an integral part of these financial statements.
43
<PAGE>
SHORT-TERM BOND FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Six Months Year Ended December 31,
Ended June 30, 1999 ---------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR............ $5.21 $5.18 $5.15 $5.19 $4.95 $5.19
- ----------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income (a)............. 0.14 0.29 0.30 0.29 0.28 0.24
Net realized and unrealized gain (loss)
on investments................ (0.07) 0.03 0.03 (0.04) 0.24 (0.24)
- ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations...... 0.07 0.32 0.33 0.25 0.52 0.00
- ----------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income................. (0.14) (0.29) (0.30) (0.29) (0.28) (0.24)
- ----------------------------------------------------------------------------------------------------------------------------
Total distributions................ (0.14) (0.29) (0.30) (0.29) (0.28) (0.24)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD................ $5.14 $5.21 $5.18 $5.15 $5.19 $4.95
=============================================================================================================================
TOTAL RETURN.................................. 1.33%(b) 6.40% 6.62% 5.16% 10.81% 0.09%
=============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)......... $168,756 $146,350 $108,898 $81,470 $62,125 $52,257
Ratio of gross expenses before voluntary expense
limitation to average net assets...... 0.81%(c) 0.84% 0.87% 0.76% 0.86% 0.98%
Ratio of net investment income to
average net assets (a)................ 5.36%(c) 5.53% 5.75% 5.72% 5.49% 4.84%
Ratio of expenses to average net assets (a)... 0.75%(c) 0.75% 0.75% 0.75% 0.75% 0.75%
Portfolio turnover rate....................... 41%(c) 62% 55% 49% 35% 13%
- ----------------------------------------------
</TABLE>
(a) Excludes excess investment management fees and other expenses in accordance
with the Expense Limitation Agreement with the Manager.
(b) Aggregate total return for the period.
(c) Annualized.
The accompanying notes are an integral part of these financial statements.
44
<PAGE>
VALUE FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Six Months Year Ended December 31,
Ended June 30, 1999 ---------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR............ $26.50 $25.50 $20.99 $18.44 $14.50 $14.54
- ----------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income (a)............. 0.20 0.40 0.37 0.39 0.41 0.29
Net realized and unrealized gain
on investments................ 3.85 1.72 5.22 2.91 4.47 0.07
- ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations...... 4.05 2.12 5.59 3.30 4.88 0.36
- ----------------------------------------------------------------------------------------------------------------------------
Distributions
Net investment income................. (0.20) (0.40) (0.37) (0.39) (0.41) (0.29)
Net realized gain..................... - (0.72) (0.71) (0.36) (0.53) (0.11)
- ----------------------------------------------------------------------------------------------------------------------------
Total distributions................... (0.20) (1.12) (1.08) (0.75) (0.94) (0.40)
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD................ $30.35 $26.50 $25.50 $20.99 $18.44 $14.50
============================================================================================================================
TOTAL RETURN.................................. 15.27%(b) 8.31% 26.70% 17.94% 33.78% 2.50%
============================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)......... $498,908 $449,002 $378,621 $238,550 $147,506 $91,612
Ratio of gross expenses before voluntary expense
limitation to average net assets...... n/a n/a n/a n/a n/a 1.15%
Ratio of net investment income to
average net assets (a)................ 1.38%(c) 1.52% 1.59% 2.08% 2.50% 2.19%
Ratio of expenses to average net assets (a)... 0.73%(c) 0.72% 0.79% 0.73% 0.84% 1.15%
Portfolio turnover rate....................... 17%(c) 10% 6% 5% 10% 4%
- ----------------------------------------------
</TABLE>
(a) Excludes excess investment management fees and other expenses in accordance
with the Expense Limitation Agreement with the Manager.
(b) Aggregate total return for the period.
(c) Annualized.
The accompanying notes are an integral part of these financial statements
45
<PAGE>
SMALL COMPANY STOCK FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
March 4, 1998
Six Months Ended (Inception Date)
June 30, 1999 to December 31,
(Unaudited) 1998
- -------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............. $8.85 $10.00
- -------------------------------------------------------------------------------------
Income from investment operations
Net investment income (a)................. 0.03 0.05
Net realized and unrealized gain (loss)
on investments.................... 1.36 (1.15)
- -------------------------------------------------------------------------------------
Total from investment operations.......... 1.39 (1.10)
- -------------------------------------------------------------------------------------
Distributions
Net investment income..................... - (0.05)
- -------------------------------------------------------------------------------------
Total distributions....................... 0.00 (0.05)
- -------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD.................... $10.24 $8.85
=====================================================================================
TOTAL RETURN...................................... 15.71%(b) (11.02%)(b)
=====================================================================================
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands)............. $10,982 $7,562
Ratio of gross expenses before voluntary expense
limitation to average net assets.......... 2.24%(c) 3.11%(c)
Ratio of net investment income to
average net assets (a).................... 0.65%(c) 1.04%(c)
Ratio of expenses to average net assets (a)....... 1.50%(c) 1.50%(c)
Portfolio turnover rate................... 18%(c) 20%(c)
- --------------------------------------------------
</TABLE>
(a) Excludes excess investment management fees and other expenses in accordance
with the Expense Limitation Agreement with the Manager.
(b) Aggregate total return for the period.
(c) Annualized.
The accompanying notes are an integral part of these financial statements.
46
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION
Homestead Funds, Inc. (Homestead Funds) is a Maryland corporation registered
with the Securities and Exchange Commission under the Investment Company Act of
1940 as a no-load, open-end diversified management investment company. Homestead
Funds (the Fund) currently consists of five funds: Daily Income Fund, Short-Term
Government Securities Fund, Short-Term Bond Fund, Value Fund, and Small Company
Stock Fund.
Each Fund is a separate investment portfolio with distinct investment
objectives, investment programs, policies and restrictions. The investment
objectives of the Fund as well as the nature and risks of the investment
activities of each Fund are set forth more fully in the Homestead Funds'
Prospectus and Statement of Additional Information.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION: The Daily Income Fund values all money market instruments on
an amortized cost basis, which approximates market value. Under the amortized
cost method, discounts and premiums on securities purchased are amortized over
the life of the respective securities.
The Short-Term Government Securities Fund, the Short-Term Bond Fund, the Value
Fund and the Small Company Stock Fund value investments in common stocks,
preferred stocks, and convertible preferred stocks traded on national securities
exchanges and certain over-the-counter securities at the last quoted sale price
at the close of the New York Stock Exchange. Short-term debt instruments with a
remaining maturity of more than 60 days, intermediate and long-term bonds,
convertible bonds, and other debt securities are generally valued at market
prices furnished by an independent pricing service. Over-the-counter issues not
quoted on the NASDAQ system, other equity securities and debt instruments for
which a sale price is not available are valued at the mean of the closing bid
and asked prices, or the last available sale price may be used for
exchange-traded debt securities. Securities with a maturity of 60 days or less
are valued on an amortized cost basis, which approximates market value.
DISTRIBUTIONS TO SHAREHOLDERS: Dividends to shareholders are recorded on the ex-
dividend date. Income dividends for the Daily Income Fund, the Short-Term
Government Securities Fund and the Short-Term Bond Fund are declared daily and
paid monthly. Income dividends for the Value Fund are declared and paid
semi-annually. Income dividends for the Small Company Stock Fund are declared
and paid annually. Capital gains dividends, if any, are declared and paid at the
end of each fiscal year.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS: The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
OTHER: The financial statements reflect all adjustments, which are of a normal
recurring nature, and which, in the opinion of management, are necessary to a
fair statement of results for the six months ended June 30, 1999. Dividend
income is recorded on the ex-dividend date. Interest income and expenses are
recorded on the accrual basis. Investment transactions are recorded on the trade
date. Realized gains and losses from investment transactions are reported on the
identified cost basis.
3. FEDERAL INCOME TAXES
The Homestead Funds comply with the provisions of the Internal Revenue Code that
are applicable to regulated investment companies and distribute all of their
taxable income to their shareholders. Therefore, no provision for federal income
or excise tax is required.
At June 30, 1999, the aggregate costs of investments for the Daily Income Fund,
the Short-Term Government Securities Fund, the Short-Term Bond Fund, the Value
Fund and the Small Company Stock Fund for federal income tax is the same as for
financial reporting purposes.
At June 30, 1999, the Small Company Stock Fund has a capital loss carryforward
of $1,709, which expires on December 31, 2006.
At June 30, 1999, net unrealized appreciation (depreciation) consisted of the
following:
Short-Term Small
Government Company
Securities Short-Term Stock
Fund Bond Fund Value Fund Fund
---------- ---------- -------------- -----------
Gross unrealized
appreciation $ 22,133 $ 446,963 $ 165,263,854 $1,162,285
Gross unrealized
depreciation 208,276 1,106,482 1,021,031 489,613
---------- ---------- -------------- -----------
Net unrealized
appreciation
(depreciation) ($186,143) ($659,519) $ 164,242,823 $ 672,672
========== ========== ============== ===========
47
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
4. INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term and U.S.
Government securities, for the six months ended June 30, 1999, were as follows:
Short-Term Small
Government Company
Securities Short-Term Stock
Fund Bond Fund Value Fund Fund
---------- ----------- ----------- ----------
Purchases $5,539,687 $63,024,883 $37,099,945 $2,895,243
Proceeds from
sales $ 65,017 $27,541,798 $60,382,289 $1,088,276
Purchases and proceeds from sales of long-term U.S. Government securities, for
the six months ended June 30, 1999, were as follows:
Short-Term
Government
Securities Short-Term
Fund Bond Fund
---------- ----------
Purchases $9,205,484 $3,250,000
Proceeds from
sales $1,116,966 $3,314,746
5. INVESTMENT MANAGER
The investment management agreements between Homestead Funds, with respect to
each Fund, and RE Advisers Corporation (Manager), an indirect, wholly-owned
subsidiary of National Rural Electric Cooperative Association (NRECA), provide
for an annual investment management fee, computed daily and paid monthly, based
on each Fund's average daily net assets. The annualized management fee rates
are: with respect to the Daily Income Fund, .50% of average daily net assets;
with respect to the Short-Term Government Securities Fund, .45% of average daily
net assets; with respect to the Short- Term Bond Fund, .60% of average daily net
assets; with respect to the Value Fund, .65% of average daily net assets up to
$200 million, .50% of average daily net assets up to the next $200 million, .40%
of average daily net assets in excess of $400 million; with respect to the Small
Company Stock Fund, .85% of average daily net assets up to $200 million and .75%
of average daily net assets in excess of $200 million.
The Manager has agreed, as part of the Expense Limitation Agreements entered
into with Homestead Funds, with respect to each Fund, to waive its management
fee and/or reimburse for all Fund operating expenses, excluding certain
non-recurring expenses, which in any year exceed .80% of the average daily net
assets of the Daily Income Fund, .75% of the average daily net assets of the
Short-Term Government Securities Fund and the Short-Term Bond Fund, 1.25% of the
average daily net assets of the Value Fund and 1.50% of the average daily net
assets of the Small Company Stock Fund.
Pursuant to the Expense Limitation Agreements, $17,613 of management fees for
the Daily Income Fund were waived, $22,664 of management fees were waived for
the Short-Term Government Securities Fund, $56,677 of management fees for the
Short-Term Bond Fund were waived, and $32,656 of management fees for the Small
Company Stock Fund were waived by the Manager for the six months ended June 30,
1999.
At June 30, 1999 certain officers and directors of the Homestead Funds, and
NRECA and its affiliates owned 5% of the Daily Income Fund shares outstanding,
5% of the Small Company Stock Fund shares outstanding, and less than 1% of the
Short-Term Government Securities Fund, the Short-Term Bond Fund and the Value
Fund shares outstanding.
48
<PAGE>
NOTES TO FINANCIAL STATEMENT
(Unaudited)
6. CAPITAL SHARE TRANSACTIONS
As of June 30, 1999, 300 million shares of $.01 par value capital shares are
authorized for the Daily Income Fund, 100 million shares for the Short-Term
Government Securities Fund and 200 million shares for the Short-Term Bond Fund,
the Value Fund and the Small Company Stock Fund. Transactions in capital shares
were as follows:
<TABLE>
<CAPTION>
Shares Total Total Net
Shares In Reinvestment Shares Shares Increase
Sold of Dividends Issued Redeemed (Decrease)
------------- --------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
PERIOD ENDED JUNE 30, 1999
In Dollars
Daily Income Fund.............................. $72,034,047 $1,273,173 $73,307,220 ($68,317,995) $4,989,225
Short-Term Government Securities Fund.......... $11,243,655 $604,758 $11,848,413 ($3,281,240) $8,567,173
Short-Term Bond Fund........................... $45,469,728 $3,970,941 $49,440,669 ($24,995,654) $24,445,015
Value Fund..................................... $99,535,939 $3,134,152 $102,670,091 ($116,532,157) ($13,862,066)
Small Company Stock Fund....................... $3,676,171 - $3,676,171 ($1,686,005) $1,990,166
In Shares
Daily Income Fund.............................. 72,034,047 1,273,173 73,307,220 (68,317,995) 4,989,225
Short-Term Government Securities Fund.......... 2,220,596 119,631 2,340,227 (649,265) 1,690,962
Short-Term Bond Fund........................... 8,771,461 767,481 9,538,942 (4,825,788) 4,713,154
Value Fund..................................... 3,586,639 103,267 3,689,906 (4,194,400) (504,494)
Small Company Stock Fund....................... 409,107 - 409,107 (191,148) 217,959
YEAR ENDED DECEMBER 31, 1998
In Dollars
Daily Income Fund.............................. $50,754,909 $2,545,721 $53,300,630 ($47,756,876) $5,543,754
Short-Term Government Securities Fund.......... $13,125,555 $936,286 $14,061,841 ($6,404,569) $7,657,272
Short-Term Bond Fund........................... $63,541,739 $6,831,113 $70,372,852 ($33,523,983) $36,848,869
Value Fund..................................... $136,947,678 $18,005,072 $154,952,750 ($97,514,378) $57,438,372
Small Company Stock Fund *..................... $8,897,919 $39,024 $8,936,943 ($831,089) $8,105,854
In Shares
Daily Income Fund.............................. 50,754,909 2,545,721 53,300,630 (47,756,876) 5,543,754
Short-Term Government Securities Fund.......... 2,582,187 184,187 2,766,374 (1,259,834) 1,506,540
Short-Term Bond Fund........................... 12,219,972 1,313,728 13,533,700 (6,449,494) 7,084,206
Value Fund..................................... 5,106,585 674,375 5,780,960 (3,686,922) 2,094,038
Small Company Stock Fund *..................... 941,021 4,410 945,431 (90,774) 854,657
- -------------------------
</TABLE>
* For the period beginning March 4, 1998 (inception date) to December 31, 1998.
49
<PAGE>
Homestead Funds, Inc.
c/o PFPC, Inc.
P.O. box 8987
Wilmington, DE 19899
1-800-258-3030
