<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
President's Letter..................................................... 1
CAPITAL APPRECIATION FUNDS:
Investment Review...................................................... 3
Portfolios of Investments:
Aetna Growth Fund.....................................................17
Aetna International Fund..............................................19
Aetna Mid Cap Fund....................................................22
Aetna Small Company Fund..............................................24
Aetna Value Opportunity Fund..........................................26
Statements of Assets and Liabilities...................................28
Statements of Operations...............................................30
Statements of Changes in Net Assets....................................32
Notes to Financial Statements..........................................41
Additional Information.................................................47
Financial Highlights...................................................48
</TABLE>
<PAGE>
PRESIDENT'S LETTER
Dear Valued Shareholder,
Thank you for investing in the Aetna Series Funds. We are pleased to provide you
with this Semi-Annual Report on the funds you have chosen to help pursue your
investment goals. Please note that the format has been changed from two reports
that combined all of our different investment categories to five individual
reports: Capital Appreciation, Growth & Income, Income, Index Plus and
Generations. These reports will provide detailed information on the performance
of your funds.
The financial market environment has changed dramatically since you received the
last Aetna Series Fund Annual Report. At October 31, 1998, there prevailed an
atmosphere of deep anxiety as the immediately preceding 12-month period had been
marked by high market volatility, default on Russian debts and the collapse of a
prominent U.S. hedge fund. Confidence in the global economic outlook was shaken,
which culminated in a sharp sell-off in U.S. and global stock markets.
Today, those fears seem misplaced. With the U.S. economy contributing its
remarkable combination of robust growth and negligible inflation, the global
economic and financial picture is on the mend. U.S. and foreign stock markets
have rebounded, risk premiums are shrinking and capital is once again flowing to
emerging markets. Within the U.S., small- and mid-cap stocks have begun to
participate more meaningfully in the ongoing bull market as improvement in
corporate earnings has broadened out to more cyclically sensitive businesses.
Credit spreads have diminished for lower-rated debt securities and the REIT
sector has shown signs of improvement. The S&P 500 Index and the Dow Jones
Industrial Average ("the Dow") both finished 1998 with double-digit returns -
the fourth year in a row. The Dow, which has a more cyclical bias than the S&P
500 Index, managed to reach an unprecedented 10,000 by the end of March and
closed at 10,789 on April 30, 1999! Of course, there is no guaranty that the
markets will continue to reflect this trend.
I am pleased to report that at Aetna Series Fund, Inc. and Aeltus Investment
Management, Inc., we have continued to work to further improve our products and
services:
CLASS "B" SHARES WERE INTRODUCED on March 1. This new class of shares has a
back-end load contingent on redemption rather than a front-end load. It was
designed for the mid- to longer-term investor, making it particularly
attractive for investing in our enhanced index funds.
AETNA INDEX PLUS LARGE CAP FUND AND AETNA INDEX PLUS MID CAP FUND
outperformed their benchmarks for the one-year period ending April 30,
1999.
NEW SIMPLIFIED PROSPECTUSES were introduced on March 1. Plain English
wording and clear graphics make them truly "user-friendly." We recommend
that you keep them with your other Aetna Series Fund records.
COMPUTER SYSTEMS INITIATIVES, specifically year 2000 dating issues, have
remained a high priority. We have completed remediation and plan to
complete testing all of Aeltus' relevant computer systems by mid-1999. In
addition, on January 1, we successfully converted our operating systems to
accept the new Euro currency, the new standard monetary unit of the eleven
countries that comprise the European Monetary Union.
With more than $50 billion in assets under management, Aeltus Investment
Management, Inc., investment adviser to the Aetna Series Funds, continues to
rank among the largest of investment management firms. This kind of size and
market presence is important to you as an investor as it gives us the ability to
continue to bring you competitive product offerings as well as quality customer
service.
We appreciate the continued confidence you have placed in us and look forward to
an ongoing and mutually prosperous relationship.
Sincerely,
/s/ J. Scott Fox
J. Scott Fox
President
Aetna Series Fund, Inc.
1
<PAGE>
Aetna Growth Fund
Growth of $10,000
- ------------------------------[MOUNTAIN CHART]----------------------------------
<TABLE>
<CAPTION>
Aetna Growth Fund S&P 500
Class I Index
----------------- -------
<S> <C> <C>
Jan-94 10000 10000
10250 9621
9900 9661
10552 10134
Dec-94 10559 10132
11343 11119
12682 12180
13883 13149
Dec-95 14181 13940
15048 14689
15638 15349
16322 15823
Oct-96 16622 16260
18613 18214
17845 18653
22177 22320
Oct-97 21434 21483
21612 23118
25876 26317
26171 26628
Oct-98 24601 26210
31137 30629
Apr-99 31455 32059
</TABLE>
- ----------------------------[END MOUNTAIN CHART]--------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns
for the period ended April 30, 1999*
- ------------------------------------------
1 Year 5 Years Inception
- ------------------------------------------
<S> <C> <C> <C>
Class I 21.56% 25.14% 24.05%
- ------------------------------------------
Class A:
POP (1) 14.23% 22.91% 21.92%
NAV (2) 21.20% 24.38% 23.29%
- ------------------------------------------
Class B:
w/CDSC (3) 15.37% 23.73% 22.74%
NAV 20.37% 23.90% 22.82%
- ------------------------------------------
Class C:
w/CDSC (4) 19.36% 23.89% 22.81%
NAV 20.36% 23.89% 22.81%
- ------------------------------------------
</TABLE>
*Total Return is calculated including reinvestment of income and capital gain
distributions. For periods prior to the inception of Class A, Class B and Class
C, the performance of each class is calculated by using the performance of Class
I since its inception date (01/04/94), adjusted for fees and expenses charged to
the appropriate class. Class I, Class A, Class B and Class C shares participate
in the same portfolio of securities. Past performance is no guarantee of future
results. Investment return and principal of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than the original
cost.
AETNA GROWTH FUND
HOW DID THE FUND PERFORM DURING THE PERIOD?
The Aetna Growth Fund Class I shares generated a 27.85% total return, net of
fund expenses, for the six month period ended April 30, 1999. The benchmark,
Standard & Poor's (S&P) 500 Index(a), returned 22.32% for the same period.
WHAT ECONOMIC OR FINANCIAL MARKET CONDITIONS IMPACTED THE FUND?
In the first half of 1999, the financial crisis in Asia and Latin America
bottomed, easing the fears of a large global economic recession. Equity markets
responded to the bottoming of the crisis with a bull rally for most of the
period, despite an increase in interest rates from 5.1% to 5.7%. Inflation
continued to remain historically low, assisting valuation levels.
Throughout the period, the price of oil dramatically increased due to
acceleration in demand and OPEC production cutbacks, buoying energy stock
valuations whose earnings are dependant on the price of oil. Cyclical stocks
also started to perform well,
See Definition of Terms. 3
<PAGE>
as investors anticipated the earnings impact of an accelerating economy. Toward
the latter half of the period, the market slightly broadened, helping our more
diversified portfolio relative to the S&P 500 Index.
WHAT INVESTMENTS INFLUENCED THE FUND'S PERFORMANCE OVER THE PAST SIX MONTHS?
Domestic economic growth continued unfettered, as the financial crises in Asia
and Latin American bottomed and showed signs of recovery. Throughout the period,
companies with significant international exposure were added to the portfolio to
capture the acceleration of global growth. Stocks such as Tyco International
Ltd., United Technologies Corp. and General Electric Co. had increasing weights
n the first half of the year.
Technology was our best performing sector for the first half of the fiscal year.
Our ownership in stocks such as America Online, Inc., Sun Microsystems, Inc. and
Cisco Systems, Inc., returned double that of the S&P 500 Index due to the
increased proliferation of the internet. Telephone equipment manufacturers
Tellabs, Inc. and Ascend Communications, Inc. outperformed the market due to
strong demand for equipment to offer improved data services.
Our investment in Enron Corp. continued to do quite well as wholesale energy
volumes rose and its retail energy service division continued to run ahead of
plan. Additionally, our investments in MCI Worldcom, Inc. outperformed the
market, as the growth in data and internet services continued to be robust.
The finance sector slightly detracted from performance in the period. Fannie
Mae, Firstar Corp. and American General Corp. all underperformed the market
throughout the period, due to the fear that interest rates would rise and slow
earnings growth.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The outlook for equity markets looks relatively benign in the intermediate term.
The uncertainty of economic growth due to the Asian financial crisis has abated
and has been discounted, evidenced by the recent bull market run. As Asia
recovers, and global growth becomes more prolific, equity markets may shift
their focus to valuation and inflation. We believe that our focus of owning
reasonably priced companies with strong earnings growth will benefit us
throughout this period.
PORTFOLIO SECTOR BREAKDOWN:
<TABLE>
<CAPTION>
% OF
COMMON % OF OVER/(UNDER)
SECTOR STOCKS S&P 500 WEIGHTING
<S> <C> <C> <C>
Basic Materials -- 3.5% (3.5)%
Commercial Services 3.6% 1.9% 1.7%
Consumer Discretionary 21.4% 12.1% 9.3%
Consumer Non-Discretionary -- 7.9% (7.9)%
Energy 7.9% 6.9% 1.0%
Finance 14.3% 16.4% (2.1)%
Healthcare 8.0% 11.2% (3.2)%
Manufacturing 14.1% 10.0% 4.1%
Technology 20.7% 19.5% 1.2%
Utilities 10.0% 10.6% (0.6)%
</TABLE>
4 See Definition of Terms.
<PAGE>
<TABLE>
<CAPTION>
% OF NET
TOP TEN EQUITY HOLDINGS ASSETS
<S> <C>
Tyco International, Ltd. 4.1%
Microsoft Corp. 3.4%
Safeway, Inc. 3.2%
General Electric Co. 3.2%
CBS Corp. 3.2%
Enron Corp. 2.9%
Texaco, Inc. 2.8%
International Business Machines Corp. 2.7%
Wal-Mart Stores, Inc. 2.7%
Tellabs, Inc. 2.4%
</TABLE>
The opinions expressed reflect those of the portfolio manager only through April
30, 1999. The manager's opinions are subject to change at any time based on
market and other conditions. The composition, industries and holdings of the
Fund are subject to change.
See Definition of Terms. 5
<PAGE>
Aetna International Fund
Growth of $10,000
- ------------------------------[MOUNTAIN CHART]----------------------------------
<TABLE>
<CAPTION>
Aetna International Fund MSCI EAFE
(Class I) Index
------------------------ ---------
<S> <C> <C>
Jan-92 10000 10000
9311 8821
9521 9016
9171 9161
Dec-92 8921 8816
9401 9881
10011 10883
10821 11612
Dec-93 11620 11720
11460 12137
11571 12766
11829 12786
Dec-94 11627 12665
11347 12910
11484 13015
12384 13568
Dec-95 12437 14128
13104 14547
13806 14788
13856 14781
Oct-96 13927 14633
15790 14504
16098 14884
18503 17008
Oct-97 17552 15353
18270 16042
21350 17748
22215 17989
Oct-98 19347 16883
21493 18406
Apr-99 22806 19488
</TABLE>
- ----------------------------[END MOUNTAIN CHART]--------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns
for the period ended April 30, 1999*
- ------------------------------------------
1 Year 5 Years Inception
- ------------------------------------------
<S> <C> <C> <C>
Class I 6.81% 14.13% 11.92%
- ------------------------------------------
Class A:
POP (1) 0.35% 12.06% 10.26%
NAV (2) 6.47% 13.39% 11.15%
- ------------------------------------------
Class B:
w/CDSC (3) 0.96% 12.79% 10.84%
NAV 5.96% 13.04% 10.84%
- ------------------------------------------
Class C:
w/CDSC (4) 5.09% 13.06% 10.85%
NAV 6.06% 13.06% 10.85%
- ------------------------------------------
</TABLE>
*Total Return is calculated including reinvestment of income and capital gain
distributions. For periods prior to the inception of Class A, Class B and Class
C, the performance of each class is calculated by using the performance of Class
I since its inception date (01/03/92), adjusted for fees and expenses charged to
the appropriate class. Class I, Class A, Class B and Class C shares participate
in the same portfolio of securities. Past performance is no guarantee of future
results. Investment return and principal of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than the original
cost.
AETNA INTERNATIONAL FUND
HOW DID THE FUND PERFORM DURING THE PERIOD?
The Aetna International Fund Class I shares generated a 17.87% total return, net
of fund expenses, for the six month period ended April 30, 1999. The benchmark,
Morgan Stanley Capital International-Europe, Australia and Far East (MSCI EAFE)
Index(b), returned 15.44% for the same period.
WHAT ECONOMIC OR FINANCIAL MARKET CONDITIONS IMPACTED THE FUND?
Economic factors around the world were strong during the last six months and by
April month end, many economists were raising economic growth rates for the
world economies.
In mid-October, world stock markets began an amazing rebound from a dismal
summer performance caused by partial defaults by Russia on its debt, the
continuance of the Asian currency crisis and, in August, the bail out of a large
U.S. hedge
6 See Definition of Terms.
<PAGE>
fund by U.S. investment firms. By early October, investors priced in extreme
pessimism. Then on October 15, the U.S. Federal Reserve surprised the investment
world by cutting interest rates. Soon, over 100 countries saw their interest
rates slashed and excess liquidity helped propel equities markets upward. By
January 1999, much of the excess leverage that existed in the Asian currencies
had evaporated. Even the currency devaluation by Brazil had little negative
impact since investors had anticipated the event. By April month end, emerging
markets had posted big six-month gains.
WHAT INVESTMENTS INFLUENCED THE FUND'S PERFORMANCE OVER THE PAST SIX MONTHS?
The Fund continued to be invested in growth-oriented securities which provided
positive performance. Communication stocks such as Nokia Corp. in Finland and
cellular operator Vodafone Group Plc in the United Kingdom helped performance.
Oil stocks in the Fund also assisted in investment performance as oil prices
rebounded over 50% in 1999.
The Japanese yen and the new Euro weakened during this time period which allowed
our currency hedging policy to provide positive performance for the Fund.
WHAT IS YOUR OUTLOOK GOING FORWARD?
With much fanfare, the European markets' single currency (the Euro) began on
January 1. The Euro provides more possibilities of long-term benefits in goods
and services. The Euro is a long-term positive for European stocks that can
adapt well in this changing regulatory environment.
Though the Asian currency crisis appears to be over, the recent economic
forecasts for global growth will be moderate going forward. In October, the
relief rally began. In May, equity markets will begin to focus on corporate
earnings and corporate finance involving mergers and restructuring. The global
investment environment remains bright as both Europe and Japan are favorably
rated in our measurement criteria.
International investments involve risks not present in U.S. securities,
including currency fluctuation, less public information and political and
economic uncertainty.
<TABLE>
<CAPTION>
% OF TOTAL % OF OVER/(UNDER)
COUNTRY WEIGHTINGS INVESTMENTS MSCI EAFE WEIGHTING
<S> <C> <C> <C>
United Kingdom 21.0% 22.7% (1.7)%
Japan 15.2% 23.1% (7.9)%
France 12.0% 9.2% 2.8%
Germany 8.3% 9.7% (1.4)%
Netherlands 8.3% 6.0% 2.3%
Switzerland 4.3% 7.0% (2.7)%
Sweden 4.3% 2.3% 2.0%
Norway 3.9% 0.4% 3.5%
Italy 3.6% 4.7% (1.1)%
Denmark 3.5% 0.8% 2.7%
Other 15.6% 14.1% 1.5%
</TABLE>
See Definition of Terms. 7
<PAGE>
<TABLE>
<CAPTION>
% OF NET
TOP TEN EQUITY HOLDINGS ASSETS
<S> <C>
Vodafone Group Plc 1.7%
NTT Mobile Communications Network, Inc. 1.6%
British Telecom Plc 1.6%
WPP Group Plc 1.5%
General Electric Co. Plc 1.5%
Mannesmann AG 1.4%
Vivendi 1.4%
Elf Aquitaine SA 1.4%
CRH Plc 1.3%
ING Groep NV 1.3%
</TABLE>
The opinions expressed reflect those of the portfolio manager only through April
30, 1999. The manager's opinions are subject to change at any time based on
market and other conditions. The composition, industries and holdings of the
Fund are subject to change.
8 See Definition of Terms.
<PAGE>
Aetna Mid Cap Fund
Growth of $10,000
- ------------------------------[MOUNTAIN CHART]----------------------------------
<TABLE>
<CAPTION>
Aetna Mid Cap Fund S&P Midcap 400
(Class I) Index
------------------ --------------
<S> <C> <C>
Feb-98 10000 10000
11410 11229
10530 10372
Oct-98 9290 10055
11200 11371
Apr-99 11719 11951
</TABLE>
- ----------------------------[END MOUNTAIN CHART]--------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns
for the period ended April 30, 1999*
- ----------------------------------------
1 Year Inception
- ----------------------------------------
<S> <C> <C>
Class I 2.72% 13.74%
- ----------------------------------------
Class A:
POP (1) -3.52% 8.10%
NAV (2) 2.37% 13.42%
- ----------------------------------------
Class B:
w/CDSC (3) -3.39% 9.37%
NAV 1.61% 12.53%
- ----------------------------------------
Class C:
w/CDSC (4) 0.67% 11.80%
NAV 1.67% 12.58%
- ----------------------------------------
</TABLE>
*Total Return is calculated including reinvestment of income and capital gain
distributions. For the period prior to the inception of Class B and Class C, the
performance is calculated by using the performance of Class I since its
inception date (02/04/98), adjusted for fees and expenses. Class I, Class A,
Class B and Class C shares participate in the same portfolio of securities. Past
performance is no guarantee of future results. Investment return and principal
of an investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than the original cost.
AETNA MID CAP FUND
HOW DID THE FUND PERFORM DURING THE PERIOD?
The Aetna Mid Cap Fund Class I shares generated a 26.16% total return, net of
fund expenses, for the six month period ended April 30, 1999. The benchmark,
Standard & Poor's (S&P) Midcap 400 Index(c), returned 18.86% for the same
period.
WHAT ECONOMIC OR FINANCIAL MARKET CONDITIONS IMPACTED THE FUND?
In the first quarter of 1999, the equity markets continued the torrid pace they
set in the latter days of the fourth quarter of 1998. A slight market pullback
in February was quickly reversed in March, resulting in a strong second quarter
for equities as well. Rising confidence about economic recovery in recent
trouble spots such as Southeast Asia resulted in a broadening of the market
leadership into cyclical stocks and value stocks, as fears of growth scarcity
diminished. In particular, rising oil prices caused the oil and oil services
sectors to appreciate significantly in the second quarter.
See Definition of Terms. 9
<PAGE>
WHAT INVESTMENTS INFLUENCED THE FUND'S PERFORMANCE OVER THE PAST SIX MONTHS?
The Fund benefited from overweight positions in consumer discretionary and
technology stocks. Particularly helpful to Fund performance over the period were
positions in Abercrombie & Fitch Co. and America Online, Inc., which performed
well relative to both their own sectors and on an absolute basis. These stocks
and other successful investments helped the Fund to outperform its benchmark by
more than 7% for the six month period.
Our sector allocation decisions generally benefited the performance of the Fund.
However, several individual securities' performance did dampen the positive
impact of these decisions. For example, a position in Micro Warehouse, Inc.
helped the Fund through most of the first quarter until fears of loss of
management focus caused underperformance in the stock in mid-January.
WHAT IS YOUR OUTLOOK GOING FORWARD?
The yield curve is steepening, which we believe to be a positive signal for
value stocks. Recent trends toward a broadening of equity market leadership away
from large cap growth seems to support this outlook. Since the Fund is managed
to give core exposure to the mid cap asset class (neither extreme growth or
value) we believe this trend should benefit the Fund.
PORTFOLIO SECTOR BREAKDOWN:
<TABLE>
<CAPTION>
% OF
COMMON % OF S&P OVER/(UNDER)
SECTOR STOCKS MIDCAP 400 WEIGHTING
<S> <C> <C> <C>
Basic Materials 13.4% 6.5% 6.9%
Commercial Services 10.7% 5.6% 5.1%
Consumer Discretionary 18.0% 16.1% 1.9%
Consumer Non-Discretionary 5.6% 3.1% 2.5%
Energy 8.8% 6.3% 2.5%
Finance 6.7% 16.1% (9.4)%
Healthcare 8.0% 9.1% (1.1)%
Manufacturing 5.5% 10.3% (4.8)%
Technology 13.5% 16.9% (3.4)%
Utilities 9.8% 10.0% (0.2)%
</TABLE>
<TABLE>
<CAPTION>
% OF NET
TOP TEN EQUITY HOLDINGS ASSETS
<S> <C>
Abercrombie & Fitch Co. 6.2%
Century Telephone Enterprises, Inc. 3.7%
eBay Inc. 3.0%
Xilinx, Inc. 3.0%
Southdown, Inc. 2.6%
Georgia-Pacific Corp. 2.4%
Transocean Offshore Inc. 2.4%
Florida Progress Corp. 2.2%
Tidewater, Inc. 2.2%
Cleveland-Cliffs, Inc. 2.1%
</TABLE>
The opinions expressed reflect those of the portfolio manager only through April
30, 1999. The manager's opinions are subject to change at any time based on
market and other conditions. The composition, industries and holdings of the
Fund are subject to change.
10 See Definition of Terms.
<PAGE>
Aetna Small Company Fund
Growth of $10,000
- ------------------------------[MOUNTAIN CHART]----------------------------------
<TABLE>
<CAPTION>
Aetna Small Company Fund Russell 2000
(Class I) Index
------------------------ ------------
<S> <C> <C>
Jan-94 10000 10000
10070 9735
9650 9356
10320 10006
Dec-94 10130 9819
11162 10271
12525 11234
14138 12343
Dec-95 15010 12611
16227 13254
16459 13917
16448 13965
Oct-96 16228 13749
17415 14986
16710 13971
20924 16944
Oct-97 22362 17784
22554 17694
25924 19893
23132 17333
Oct-98 20691 15674
23141 17749
Apr-99 23481 18051
</TABLE>
- ----------------------------[END MOUNTAIN CHART]--------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns
for the period ended April 30, 1999*
- ----------------------------------------------
1 Year 5 Year Inception
- ----------------------------------------------
<S> <C> <C> <C>
Class I -9.42% 17.76% 17.41%
- ----------------------------------------------
Class A:
POP (1) -14.88% 15.66% 15.40%
NAV (2) -9.68% 17.04% 16.69%
- ----------------------------------------------
Class B:
w/CDSC (3) -14.86% 16.35% 16.13%
NAV -10.38% 16.57% 16.23%
- ----------------------------------------------
Class C:
w/CDSC (4) -11.24% 16.58% 16.24%
NAV -10.35% 16.58% 16.24%
- ----------------------------------------------
</TABLE>
*Total Return is calculated including reinvestment of income and capital gain
distributions. For periods prior to the inception of Class A, Class B and Class
C, the performance of each class is calculated by using the performance of Class
I since its inception date (01/04/94), adjusted for fees and expenses charged to
the appropriate class. Class I, Class A, Class B and Class C shares participate
in the same portfolio of securities. Past performance is no guarantee of future
results. Investment return and principal of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than the original
cost.
AETNA SMALL COMPANY FUND
HOW DID THE FUND PERFORM DURING THE PERIOD?
The Aetna Small Company Fund Class I shares generated a 13.48% total return, net
of fund expenses, for the six month period ended April 30, 1999. The benchmark,
Russell 2000 Index(d), returned 15.16% for the same period.
WHAT ECONOMIC OR FINANCIAL MARKET CONDITIONS IMPACTED THE FUND?
Three economic events affected the Fund in the first six months. First, the
stronger than expected U.S. economy helped portfolio holdings as strong consumer
confidence led to positive results in the consumer discretionary sector. We
have been overweight in this sector and most holdings helped returns. Second,
while Asian economies came back only slightly, this seemed to help demand in
basic materials and energy; two areas which performed well when demand
tightened. Again, we were overweight in both of these sectors. Finally, oil
prices which were dismal throughout most of the first six months showed some
life due to improving world economies and an attempt by OPEC to address the
issue.
See Definition of Terms. 11
<PAGE>
WHAT INVESTMENTS INFLUENCED THE FUND'S PERFORMANCE OVER THE PAST SIX MONTHS?
The Fund received strong performance from energy stocks as well as selected
technology and consumer discretionary stocks. Two consumer stocks (Kushner-Locke
Co. and Price Communications Corp.) were especially strong. In addition, two of
our holdings in the utility area (Calpine Corp. and Associated Group, Inc.) also
greatly advanced. On the negative side, performance was hurt by lack luster
returns in capital goods, finance and selected technology stocks.
During the period we moved money into the energy, consumer discretionary, basic
materials and utility sectors. We funded these moves by lowering our exposure in
consumer non-discretionary, machinery and healthcare holdings.
WHAT IS YOUR OUTLOOK GOING FORWARD?
Looking forward, we see a continued challenging market environment. While the
market still seems to favor larger cap growth stocks, we are encouraged by the
recent strong performance of the smaller, basic material stocks. We continue to
believe that even this market can recognize value, at the right price, in small
and large cap companies. Therefore, our focus will remain on stocks showing
strong business momentum and selling at reasonable prices.
The risks of investing in small company stocks may include low trading volumes,
a greater degree of change in earnings and greater short-term volatility.
PORTFOLIO SECTOR BREAKDOWN:
<TABLE>
<CAPTION>
% OF
COMMON % OF RUSSELL OVER/(UNDER)
SECTOR STOCKS 2000 WEIGHTING
<S> <C> <C> <C>
Basic Materials 12.4% 4.7% 7.7%
Commercial Services 8.5% 10.8% (2.3)%
Consumer Discretionary 25.8% 16.6% 9.2%
Consumer Non-Discretionary 1.7% 2.1% (0.4)%
Energy 5.9% 4.6% 1.3%
Finance 15.5% 16.4% (0.9)%
Healthcare 4.9% 8.7% (3.8)%
Manufacturing 6.1% 10.2% (4.1)%
Technology 12.1% 20.1% (8.0)%
Utilities 7.1% 5.8% 1.3%
</TABLE>
<TABLE>
<CAPTION>
% OF NET
TOP TEN EQUITY HOLDINGS ASSETS
<S> <C>
America West Holdings Corp. 2.0%
Genesco Inc. 1.8%
Elcor Corp. 1.7%
Citizens Banking Corp. 1.7%
Russ Berrie & Co., Inc. 1.6%
Prime Hospitality Corp. 1.6%
Atlantic Bank and Trust Co. 1.6%
Potlatch Corp. 1.6%
Stride Rite Corp. 1.5%
Insituform Technologies, Inc. 1.5%
</TABLE>
The opinions expressed reflect those of the portfolio manager only through April
30, 1999. The manager's opinions are subject to change at any time based on
market and other conditions. The composition, industries and holdings of the
Fund are subject to change.
12 See Definition of Terms.
<PAGE>
Aetna Value Opportunity Fund
Growth of $10,000
- ------------------------------[MOUNTAIN CHART]----------------------------------
<TABLE>
<CAPTION>
Aetna Value
Opportunity Fund S&P 500
(Class I) Index
---------------- -------
<S> <C> <C>
Feb-98 10000 10000
11330 11384
10560 11518
Oct-98 9989 11339
12110 13251
Apr-99 12651 13870
</TABLE>
- ----------------------------[END MOUNTAIN CHART]--------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns
for the period ended April 30, 1999*
- ----------------------------------------
1 Year Inception
- ----------------------------------------
<S> <C> <C>
Class I 11.67% 20.92%
- ----------------------------------------
Class A:
POP (1) 5.05% 15.01%
NAV (2) 11.45% 20.65%
- ----------------------------------------
Class B:
w/CDSC (3) 5.54% 16.60%
NAV 10.54% 19.70%
- ----------------------------------------
Class C:
w/CDSC (4) 9.49% 18.89%
NAV 10.49% 19.66%
- ----------------------------------------
</TABLE>
*Total Return is calculated including reinvestment of income and capital gain
distributions. For the period prior to the inception of Class B and Class C, the
performance is calculated by using the performance of Class I since its
inception date (02/02/98), adjusted for fees and expenses. Class I, Class A,
Class B and Class C shares participate in the same portfolio of securities. Past
performance is no guarantee of future results. Investment return and principal
of an investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than the original cost.
AETNA VALUE OPPORTUNITY FUND
HOW DID THE FUND PERFORM DURING THE PERIOD?
The Aetna Value Opportunity Fund Class I shares generated a 26.65% total return,
net of fund expenses, for the six month period ended April 30, 1999. The
benchmark, Standard & Poor's (S&P) 500 Index(a), returned 22.32% for the same
period.
WHAT ECONOMIC OR FINANCIAL MARKET CONDITIONS IMPACTED THE FUND?
While the investment environment in 1998 was dominated by global financial
turmoil, the year 1999 to date has witnessed a return to normalcy and then some.
Helped substantially by the Federal Reserve's triple easing of interest rate
policy in the fall of 1998, financial markets stabilized and began to return to
health. By the end of April 1999, the Dow Jones Industrial Average had powered
through the 10,000 mark on its way toward 11,000. This was in sharp contrast to
the mood in the early fall of 1998 when the Russian debt default and a collapse
of a large hedge fund caused Treasury Secretary Robert Rubin to state that we
were facing "the world's worst financial crisis in 50 years". Instead of
experiencing deflation, the U.S. economy
See Definition of Terms. 13
<PAGE>
surged ahead and the global economy showed budding evidence of a bottom. This
led to a dramatic change in the character of the U.S. stock market. Cyclical and
value issues have begun to close the wide valuation gap with large growth stocks
that have effectively dominated the market for more than three years.
WHAT INVESTMENTS INFLUENCED THE FUND'S PERFORMANCE OVER THE PAST SIX MONTHS?
During the stock market's weakness in the fall of 1998, we were able to
opportunistically purchase several quality companies at distressed prices, which
helped portfolio performance over the past six months. The most significant of
these was a position in American Online, Inc. Other less significant, but
important, contributors to performance included International Business Machines
Corp., Citigroup Inc., Amgen, Inc. and Kansas City Southern Industries, Inc. On
the negative side, Compaq Computer Corp., Network Associates, Inc. and
Albertson's, Inc. performed poorly and detracted from performance.
Near the end of the period, in response to the obvious strength of the U.S.
economy and reasonable valuation levels, we added weight to the manufacturing
sector with new positions in Sealed Air Corp., Ingersoll-Rand Co. and Xerox
Corp. A reduction in weighting in the technology sector largely funded this
portfolio shift. We reduced the profitable American Online, Inc. position, took
profits in Amgen, Inc., Monsanto Co. and Kansas City Southern Industries, Inc.
and sold positions in Compaq Computer Corp., Network Associates, Inc. and
Sterling Commerce, Inc. because of disappointing earnings prospects.
WHAT IS YOUR OUTLOOK GOING FORWARD?
Currently, the stock market appears richly valued and almost priced for perfect
conditions. With higher interest rates and oil prices, this could be a time for
caution and lowered expectations. A valuation correction could result from any
sudden, unexpected event. On a positive note, with inflation subdued and
economic and profit growth solid, the current rotation in leadership could
sustain the market's advance for months to come. There are certainly sectors of
the stock market that only have recently begun to participate and which appear
to be attractive long-term values. With our value opportunity approach, we will
continue to maintain a core portfolio of reasonably valued issues with good
earnings prospects, while opportunistically searching for quality growth issues
at distressed prices.
PORTFOLIO SECTOR BREAKDOWN:
<TABLE>
<CAPTION>
% OF
COMMON % OF S&P OVER/(UNDER)
SECTOR STOCKS 500 WEIGHTING
<S> <C> <C> <C>
Basic Materials 6.7% 3.5% 3.2%
Commercial Services -- 1.9% (1.9)%
Consumer Discretionary 4.3% 12.1% (7.8)%
Consumer Non-Discretionary -- 7.9% (7.9)%
Energy 3.2% 6.9% (3.7)%
Finance 19.0% 16.4% 2.6%
Healthcare 11.9% 11.2% 0.7%
Manufacturing 24.3% 10.0% 14.3%
Technology 23.7% 19.5% 4.2%
Utilities 6.9% 10.6% (3.7)%
</TABLE>
14 See Definition of Terms.
<PAGE>
<TABLE>
<CAPTION>
% OF NET
TOP TEN EQUITY HOLDINGS ASSETS
<S> <C>
Citigroup Inc. 5.6%
America Online, Inc. 5.4%
International Business Machines Corp. 4.7%
Ingersoll-Rand Co. 4.7%
Intel Corp. 4.1%
Bristol-Myers Squibb Co. 4.1%
AT&T Corp. 4.0%
Federal Home Loan Mortgage Corp. 4.0%
Xerox Corp. 3.7%
Sealed Air Corp. 3.7%
</TABLE>
The opinions expressed reflect those of the portfolio manager only through April
30, 1999. The manager's opinions are subject to change at any time based on
market and other conditions. The composition, industries and holdings of the
Fund are subject to change.
See Definition of Terms. 15
<PAGE>
DEFINITION OF TERMS
(1) On February 2, 1998, the Funds redesignated Adviser Class shares as Class A
shares. For periods prior to that date, Class A performance is calculated
by using the performance of Class I shares and deducting the Class A
front-end load and internal fees and expenses applicable to the Class A
shares. The maximum load for the Funds is 5.75%. The POP (public offering
price) returns reflect this maximum load.
(2) NAV (net asset value) returns are net of Fund expenses only and do not
reflect the deduction of a front-end load or contingent deferred sales
charges. This charge, if reflected, would reduce the performance results
shown.
(3) The Funds began offering Class B shares on March 1, 1999. For periods prior
to that date, Class B performance is calculated using the performance of
Class I shares and deducting the internal fees and expenses applicable to
the Class B shares. Class B share returns with CDSC (contingent deferred
sales charge) reflect the deduction of a maximum CDSC, assuming full
redemption at the end of the period. The CDSC applies for all shares
redeemed prior to the end of the first six years of ownership. The CDSC
charges are as follows: Year 1 - 5%, Year 2 - 4%, Year 3 - 3%, Year 4 - 3%,
Year 5 - 2%, Year 6 - 1%.
(4) The Funds began offering Class C shares on June 30, 1998. For periods prior
to that date, Class C performance is calculated using the performance of
Class I shares and deducting the internal fees and expenses applicable to
the Class C shares. Class C share returns for periods less than 18 months
reflect the deduction of the contingent deferred sales charge of 1%.
(a) The S&P 500 is the Standard & Poor's 500 Index. Performance is calculated
on a total return basis and dividends are reinvested, as reported by Frank
Russell Company.
(b) The MSCI EAFE Index (Morgan Stanley Capital International-Europe, Australia
and Far East) is a market value-weighted average of the performance of more
than 900 securities listed on the stock exchanges of countries in Europe,
Australia and the Far East. Performance is calculated on a total return
basis, as reported by Frank Russell Company.
(c) The Standard & Poor's Midcap 400 Index is an unmanaged index used to
measure stock market performance composed of companies with a weighted
average market value of $3.6 billion. Performance is calculated on a total
return basis and dividends are reinvested, as reported by Frank Russell
Company.
(d) The Russell 2000 Index consists of the smallest 2,000 of the 3,000 largest
companies, based on market capitalization.
These are unmanaged indices and are not available for individual investment.
16
<PAGE>
CAPITAL APPRECIATION FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1999 (UNAUDITED)
GROWTH
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------- ------------
<S> <C> <C>
COMMON STOCKS ( 91.4% )
AUTO PARTS AND HARDWARE ( 1.0% )
Black & Decker Corp. ................... 39,800 $ 2,258,650
------------
BANKS AND THRIFTS ( 2.1% )
Firstar Corp. .......................... 155,100 4,662,694
------------
BIOTECH AND MEDICAL PRODUCTS ( 5.4% )
Amgen, Inc. + .......................... 68,200 4,190,037
Biogen, Inc. + ......................... 27,400 2,604,713
Guidant Corp. .......................... 22,700 1,218,706
MedImmune, Inc. + ...................... 19,500 1,074,938
Watson Pharmaceuticals, Inc. + ......... 62,500 2,531,250
------------
11,619,644
------------
COMMERCIAL SERVICES ( 3.3% )
Omnicom Group, Inc. .................... 32,600 2,363,500
Young And Rubicam, Inc. + .............. 118,000 4,697,875
------------
7,061,375
------------
COMPUTERS ( 3.3% )
International Business Machines Corp. .. 28,300 5,920,006
Sun Microsystems, Inc. + ............... 22,000 1,315,875
------------
7,235,881
------------
CONGLOMERATE AND AEROSPACE ( 4.8% )
General Electric Co. ................... 65,200 6,878,600
United Technologies Corp. .............. 25,000 3,621,875
------------
10,500,475
------------
CONSUMER FINANCE ( 3.3% )
Capital One Financial Corp. ............ 24,000 4,168,500
Federal National Mortgage Association .. 43,500 3,085,781
------------
7,254,281
------------
DATA AND IMAGING SERVICES ( 8.3% )
America Online, Inc. ................... 29,600 4,225,400
Cisco Systems, Inc. + .................. 29,300 3,342,031
EMC Corp. + ............................ 20,000 2,178,750
Microsoft Corp. + ...................... 91,000 7,399,438
Yahoo! Inc. + .......................... 5,100 890,906
------------
18,036,525
------------
DISCRETIONARY RETAIL ( 9.4% )
Abercrombie & Fitch Co. + .............. 19,400 1,845,425
Circuit City Stores, Inc. .............. 29,200 1,795,800
Dayton Hudson Co. ...................... 14,600 982,763
Home Depot, Inc. ....................... 64,000 3,836,000
Lowe's Co., Inc. ....................... 39,300 2,073,075
TJX Companies, Inc. .................... 121,700 4,054,131
Wal-Mart Stores, Inc. .................. 125,400 5,768,400
------------
20,355,594
------------
DIVERSIFIED FINANCIAL SERVICES ( 3.0% )
Citigroup Inc. ......................... 59,800 4,499,950
Providian Financial Corp. .............. 16,400 2,116,625
------------
6,616,575
------------
DRUGS ( 2.0% )
Schering Plough ........................ 88,800 4,290,150
------------
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------- ------------
<S> <C> <C>
ELECTRICAL MACHINERY AND INSTRUMENTS ( 4.0% )
Lexmark International Group, Inc. + .... 37,800 $ 4,668,300
Waters Corp. + ......................... 38,500 4,047,312
------------
8,715,612
------------
ELECTRONIC MEDIA ( 3.2% )
CBS Corp. + ............................ 150,600 6,861,712
------------
FOOD AND BEVERAGE ( 1.1% )
Keebler Foods Co. + .................... 72,900 2,341,913
------------
FOOD AND DRUG RETAIL ( 3.2% )
Safeway, Inc. + ........................ 128,100 6,909,394
------------
GAS UTILITIES ( 2.9% )
Enron Corp. ............................ 84,300 6,343,575
------------
HOUSING AND FURNISHINGS ( 1.8% )
Maytag Corp. ........................... 58,200 3,979,425
------------
INSURANCE ( 3.1% )
American General Corp. ................. 44,900 3,322,600
American International Group, Inc. ..... 29,573 3,472,979
------------
6,795,579
------------
INVESTMENT SERVICES ( 1.4% )
Charles Schwab Corp. ................... 9,300 1,020,675
Morgan Stanley Dean Witter & Co. ....... 20,000 1,983,750
------------
3,004,425
------------
MAJOR TELECOMMUNICATIONS ( 5.8% )
Century Telephone Enterprises, Inc. .... 118,900 4,785,725
MCI Worldcom, Inc. + ................... 57,700 4,742,219
SBC Communications, Inc. ............... 55,600 3,113,600
------------
12,641,544
------------
OIL ( 2.8% )
Texaco, Inc. ........................... 96,000 6,024,000
------------
OIL SERVICES ( 1.5% )
Schlumberger, Ltd. ..................... 51,000 3,257,625
------------
PRODUCER GOODS ( 4.1% )
Tyco International Ltd. ................ 108,400 8,807,500
------------
SEMICONDUCTORS AND ELECTRONICS ( 10.6% )
Applied Materials, Inc. + .............. 17,700 949,163
Ascend Communications, Inc. + .......... 34,700 3,352,887
General Instrument Corp. + ............. 53,300 1,945,450
Intel Corp. ............................ 58,600 3,585,587
Nokia Corp., ADR ....................... 55,100 4,087,731
Tellabs, Inc. + ........................ 47,400 5,193,262
Texas Instruments, Inc. ................ 26,900 2,747,163
Vitesse Semiconductor Corp. + .......... 24,200 1,120,763
------------
22,982,006
------------
TOTAL COMMON STOCKS (COST $154,084,248) 198,556,154
------------
PRINCIPAL
AMOUNT
-------------
SHORT-TERM INVESTMENTS ( 8.6% )
Federal Home Loan Bank,4.80%,05/03/99 .. $17,681,000 17,681,000
</TABLE>
See Notes to Portfolio of Investments. 17
<PAGE>
CAPITAL APPRECIATION FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1999 (UNAUDITED)
GROWTH (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------- ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (CONTINUED)
U.S. Treasury Bill,4.43%,08/19/99 @ .... $ 1,000,000 $ 986,590
------------
TOTAL SHORT-TERM INVESTMENTS (COST $18,667,710) 18,667,590
------------
TOTAL INVESTMENTS (COST $172,751,958)(A) 217,223,744
OTHER ASSETS LESS LIABILITIES 103,857
------------
TOTAL NET ASSETS $217,327,601
============
</TABLE>
<TABLE>
<CAPTION>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) The cost of investments for federal income tax purposes amounts to
$176,485,487. Unrealized gains and losses, based on identified tax cost at
April 30, 1999, are as follows:
<S> <C>
Unrealized gains.............................. $43,706,218
Unrealized losses............................. (2,967,961)
-----------
Net unrealized gain.......................... $40,738,257
===========
</TABLE>
<TABLE>
Information concerning open futures contracts at April 30, 1999 is shown below:
NO. OF INITIAL EXPIRATION UNREALIZED
CONTRACTS VALUE DATE GAIN/(LOSS)
----------- ------------- ------------ ---------------
LONG CONTRACTS
- ----------------------
<S> <C> <C> <C> <C>
S&P 500 Index Futures. 42 $13,859,942 Jun 99 $172,930
============ ============
</TABLE>
+ Non-income producing security.
@ Security pledged to cover initial margin requirements on open futures
contracts at April 30, 1999.
Category percentages are based on net assets.
18 See Notes to Financial Statements.
<PAGE>
CAPITAL APPRECIATION FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1999 (UNAUDITED)
INTERNATIONAL
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------- --------------
<S> <C> <C>
COMMON STOCKS ( 92.6% )
AUSTRALIA ( 0.9% )
Telstra Corp. Ltd.
(Other Telecommunications) + .......... 101,600 $ 552,150
------------
BELGIUM ( 0.4% )
Delhaize-le Lion SA (Food and Drug
Retail)................................ 2,680 234,763
------------
BRAZIL ( 1.0% )
Telecomunicaciones Brasileiras SA
(Other Telecommunications) ............ 6,600 602,353
------------
CANADA ( 2.5% )
BCE Inc. (Other Telecommunications) .... 15,400 703,220
Canadian National Railway Co.
(Surface Transport) ................... 13,000 820,869
------------
TOTAL CANADA 1,524,089
------------
DENMARK ( 3.2% )
Carli Gry International A/S
(Textiles and Apparel) ................ 25,150 609,150
Novo-Nordisk A/S (Drugs) ............... 3,880 381,433
Tele Danmark A/S
(Other Telecommunications) ............ 6,300 650,752
Vestas Wind Systems AS (Producer Goods)
+...................................... 4,400 300,906
------------
TOTAL DENMARK 1,942,241
------------
FINLAND ( 2.0% )
Nokia Corp., ADR
(Semiconductors and Electronics) ...... 10,400 771,550
Tieto Corp. (Data and Imaging Services) 11,000 438,732
------------
TOTAL FINLAND 1,210,282
------------
FRANCE ( 12.2% )
Accor SA (Consumer Services) ........... 2,600 686,292
Alstom (Industrial Services) + ......... 9,750 319,765
Axa (Insurance) ........................ 4,000 517,126
Carrefour SA (Food and Drug Retail) .... 840 666,508
Elf Aquitaine SA (Oil) ................. 5,400 839,801
Galeries Lafayette (Discretionary
Retail)................................ 590 680,368
Gemini Sogeti SA (Data and Imaging
Services).............................. 2,950 451,602
Groupe Danone (Food and Beverage) ...... 2,830 757,482
Scor (Insurance) ....................... 11,000 549,288
Societe Generale (Banks and Thrifts) ... 2,530 453,418
STMicroelectronics
(Semiconductors and Electronics) + .... 6,000 625,883
Vivendi (Conglomerate and Aerospace) ... 3,660 856,121
------------
TOTAL FRANCE 7,403,654
------------
GERMANY ( 7.7% )
Adidas-Salomon AG (Textiles and Apparel) 3,700 364,823
Bayericshe Hypo-und Vereinsb
(Banks and Thrifts) + ................. 7,875 514,045
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------- --------------
<S> <C> <C>
GERMANY (CONTINUED)
Buderus AG
(Forest Products and Building
Materials)............................. 1,450 $ 492,423
DaimlerChrysler AG (Automotive) ........ 8,021 793,000
Deutsche Pfandbrief & Hypothekenbank AG
(Banks and Thrifts) ................... 6,700 559,973
Fresenius Medical Care AG
(Biotech and Medical Products) ........ 8,850 475,633
Gehe AG (Health Services) .............. 13,500 621,281
Mannesmann AG (Producer Goods) ......... 6,650 876,607
------------
TOTAL GERMANY 4,697,785
------------
HONG KONG ( 1.3% )
China Telecom Ltd.
(Other Telecommunications) + .......... 168,000 383,668
VTech Holdings Ltd.
(Electrical Machinery and Instruments) 125,300 428,420
------------
TOTAL HONG KONG 812,088
------------
IRELAND ( 2.6% )
Allied Irish Banks (Banks and Thrifts) . 19,312 312,596
CRH Plc
(Forest Products and Building
Materials)............................. 41,518 819,182
Waterford Wedgewood
(Housing and Furnishings) ............. 445,682 433,789
------------
TOTAL IRELAND 1,565,567
------------
ITALY ( 3.3% )
Banca Commerciale Italiana
(Banks and Thrifts) ................... 17,800 146,698
Banca del Nazionale Lavoro
(Banks and Thrifts) + ................. 184,300 629,786
Mediaset SpA (Electronic Media) ........ 54,100 469,328
Telecom Italia SpA
(Other Telecommunications) ............ 74,300 791,559
------------
TOTAL ITALY 2,037,371
------------
JAPAN ( 14.1% )
Asatsu-DK Inc. (Commercial Services) ... 21,000 526,913
Citizen Watch Co. (Consumer Specialties) 92,000 763,038
Fuji Heavy Industries Ltd. (Automotive) 111,000 743,937
Fujitec Co., Ltd.
(Forest Products and Building
Materials)............................. 61,000 562,141
Kita Kyushu Coca-Cola Bottling Co.
(Food and Beverage) ................... 4,500 219,411
Meitec Corp. (Commercial Services) ..... 19,300 627,353
Mizuno Corp. (Consumer Specialties) .... 110,000 340,050
NTT Mobile Communication Network, Inc.
(Other Telecommunications) + .......... 17 996,942
Orix Corp. (Consumer Finance) .......... 8,200 660,177
Seino Transportation Co. Ltd.
(Surface Transport) ................... 104,000 628,191
Shohkoh Fund & Co. (Consumer Finance) .. 680 398,777
SoftBank Corp.
(Semiconductors and Electronics) ...... 5,600 745,478
Sony Corp. (Housing and Furnishings) ... 7,600 709,923
Terumo Corp. (Biotech and Medical
Products).............................. 30,000 653,458
------------
TOTAL JAPAN 8,575,789
------------
</TABLE>
See Notes to Portfolio of Investments. 19
<PAGE>
CAPITAL APPRECIATION FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1999 (UNAUDITED)
INTERNATIONAL (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------- --------------
<S> <C> <C>
MEXICO ( 1.4% )
Cemex SA de CV
(Forest Products and Building
Materials)............................. 76,250 $ 354,018
Telefonos de Mexico SA, ADR
(Other Telecommunications) ............ 6,620 501,465
------------
TOTAL MEXICO 855,483
------------
NETHERLANDS ( 6.7% )
Akzo Nobel NV (Specialty Chemicals) .... 13,500 610,569
ING Groep NV
(Diversified Financial Services) ...... 12,969 799,908
Koninklijke Ahold NV (Food and Drug
Retail)................................ 20,311 755,304
Nutreco Holding NV (Food and Drug
Retail)................................ 19,500 791,162
United Pan-Europe Communications NVl
(Other Telecommunications) + .......... 11,500 595,547
VNU-Verenigde Nederlandes
Uitgeversbedrijven Verenigd Bezit
(Print Media) ......................... 12,800 518,649
------------
TOTAL NETHERLANDS 4,071,139
------------
NEW ZEALAND ( 0.7% )
Fernz Corp. Ltd. (Specialty Chemicals) . 122,360 410,799
------------
NORWAY ( 3.6% )
Christiania Bank Og Kredkasse
(Banks and Thrifts) ................... 74,500 287,035
Merkantildata ASA
(Data and Imaging Services) ........... 29,900 299,518
Ocean Rig ASA (Oil Services) + ......... 1,590,100 565,669
Petroleum Geo-Services (Oil Services) + 19,700 332,698
Tandberg Television ASA (Electronic
Media) + .............................. 22,900 217,633
Tomra Systems ASA (Producer Goods) ..... 11,600 461,825
------------
TOTAL NORWAY 2,164,378
------------
SINGAPORE ( 0.8% )
United Overseas Bank Ltd. (Banks and
Thrifts)............................... 59,800 462,580
------------
SPAIN ( 0.9% )
Telefonica de Espana
(Major Telecommunications) ............ 11,424 536,015
------------
SWEDEN ( 3.9% )
Autoliv, Inc. (Automotive) ............. 12,700 442,409
Electrolux AB (Housing and Furnishings) 10,000 203,305
Securitas AB (Commercial Services) ..... 46,400 689,573
Skandinaviska Enskilda Banken
(Banks and Thrifts) ................... 45,100 589,823
Svenska Cellulosa AB (Consumer Products) 18,300 468,868
------------
TOTAL SWEDEN 2,393,978
------------
SWITZERLAND ( 4.0% )
Fischer (Georg) AG (Producer Goods) .... 1,590 593,182
Novartis AG Registered Shares (Drugs) + 150 220,000
Roche Holding AG (Drugs) ............... 38 447,764
Sulzer AG (Conglomerate and Aerospace) + 730 464,611
UBS AG (Banks and Thrifts) ............. 2,050 697,471
------------
TOTAL SWITZERLAND 2,423,028
------------
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------- --------------
<S> <C> <C>
UNITED KINGDOM ( 18.2% )
Bank of Scotland (Banks and Thrifts) ... 48,685 $ 721,144
British Telecom Plc
(Other Telecommunications) ............ 58,246 979,052
Cable & Wireless Plc
(Other Telecommunications) + .......... 37,000 524,941
Dixons Group Plc (Discretionary Retail) 36,269 773,108
General Electric Co. Plc
(Conglomerate and Aerospace) .......... 83,600 886,342
Glaxo Wellcome Plc (Drugs) ............. 20,117 595,317
Granada Group Plc (Electronic Media) + . 35,799 768,317
Hanson Plc (Conglomerate and Aerospace) 63,100 627,852
Kingfisher Plc (Discretionary Retail) .. 42,780 640,565
MEPC Plc (Diversified Financial
Services).............................. 94,700 696,796
National Westminster Bank Plc
(Banks and Thrifts) ................... 25,700 619,433
Provident Financial Plc (Consumer
Finance)............................... 46,100 769,696
SmithKline Beecham Plc (Drugs) ......... 40,707 538,741
Vodafone Group Plc
(Other Telecommunications) ............ 55,761 1,027,958
WPP Group Plc (Commercial Services) .... 100,200 888,912
------------
TOTAL UNITED KINGDOM 11,058,174
------------
UNITED STATES ( 1.2% )
Shell Transport & Trading Co. (Oil) .... 98,800 742,871
------------
TOTAL COMMON STOCKS (COST $47,947,876) 56,276,577
------------
<CAPTION>
PRINCIPAL
AMOUNT
-------------
<S> <C> <C>
SHORT-TERM INVESTMENTS ( 3.5% )
Federal Home Loan Bank,Zero Coupon,
05/03/99 .............................. $ 1,916,000 1,916,000
U.S. Treasury Bill,Zero Coupon,08/19/99
@...................................... 200,000 196,554
------------
TOTAL SHORT-TERM INVESTMENTS (COST $2,113,342) 2,112,554
------------
TOTAL INVESTMENTS (COST $50,061,218)(A) 58,389,131
OTHER ASSETS LESS LIABILITIES 2,386,718
------------
TOTAL NET ASSETS $60,775,849
============
</TABLE>
<TABLE>
<CAPTION>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) The cost of investments for federal income tax purposes amounts to
$51,870,259. Unrealized gains and losses, based on identified tax cost at
April 30, 1999, are as follows:
<S> <C>
Unrealized gains.............................. $ 8,086,098
Unrealized losses............................ (1,567,226)
-----------
Net unrealized gain.......................... $ 6,518,872
===========
</TABLE>
20 See Notes to Financial Statements.
<PAGE>
Notes to Portfolio of Investments (continued)
<TABLE>
<CAPTION>
Information concerning open futures contracts at April 30, 1999 is shown below:
NO. OF INITIAL EXPIRATION UNREALIZED
CONTRACTS VALUE DATE GAIN/(LOSS)
----------- ------------- ------------ ---------------
LONG CONTRACTS
- ----------------------
<S> <C> <C> <C> <C>
TOPIX Index Futures..... 42 $222,595 Jun 99 $22,829
======== =======
</TABLE>
+ Non-income producing security.
@ Security pledged to cover initial margin requirements on open futures
contracts at April 30, 1999.
Category percentages are based on net assets.
See Notes to Financial Statements. 21
<PAGE>
CAPITAL APPRECIATION FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1999 (UNAUDITED)
MID CAP
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------ -----------
<S> <C> <C>
COMMON STOCKS ( 96.2% )
AIR TRANSPORT ( 4.0% )
Alaska Air Group, Inc. + ............. 2,300 $ 101,344
Continental Airlines, Inc. + ......... 700 30,231
UAL Corp. + .......................... 1,400 113,050
-----------
244,625
-----------
BANKS AND THRIFTS ( 4.8% )
Astoria Financial Corp. .............. 1,000 50,125
Dime Bancorp, Inc. ................... 1,100 25,369
GreenPoint Financial Corp. ........... 3,400 119,000
UnionBanCal Corp. .................... 3,000 102,375
-----------
296,869
-----------
BIOTECH AND MEDICAL PRODUCTS ( 4.2% )
Biogen, Inc. + ....................... 400 38,025
Datascope Corp. + .................... 4,000 113,750
Genentech, Inc. + .................... 1,300 110,012
-----------
261,787
-----------
COMMERCIAL SERVICES ( 2.7% )
ACNielsen Corp. + .................... 2,200 61,325
Modis Professional Services + ........ 8,900 102,906
-----------
164,231
-----------
CONGLOMERATE AND AEROSPACE ( 1.8% )
Cordant Technologies, Inc. ........... 2,400 110,700
-----------
CONSUMER PRODUCTS ( 1.9% )
Blyth Industries, Inc. + ............. 2,300 52,325
Church & Dwight Co., Inc. ............ 1,500 64,219
-----------
116,544
-----------
CONSUMER SERVICES ( 2.9% )
Bob Evans Farms, Inc. ................ 3,900 71,419
Promus Hotel Corp. + ................. 3,000 108,000
-----------
179,419
-----------
DATA AND IMAGING SERVICES ( 10.5% )
America Online, Inc. ................. 800 114,200
Compuware Corp. + .................... 2,800 68,250
eBay Inc. + .......................... 900 187,312
Siebel Systems, Inc. + ............... 1,700 65,344
Sterling Software, Inc. + ............ 1,800 37,238
Symantec Corp. + ..................... 4,300 85,462
Yahoo! Inc. + ........................ 500 87,344
-----------
645,150
-----------
DISCRETIONARY RETAIL ( 9.7% )
Abercrombie & Fitch Co. + ............ 4,000 380,500
Best Buy Co., Inc. + ................. 1,800 85,950
CDW Computer Centers, Inc. + ......... 600 53,700
Micro Warehouse, Inc. + .............. 4,500 76,219
-----------
596,369
-----------
ELECTRIC UTILITIES ( 4.2% )
Allegheny Energy, Inc. ............... 800 27,250
Florida Progress Corp. ............... 3,600 138,600
OGE Energy Corp. ..................... 4,000 94,750
-----------
260,600
-----------
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------ -----------
<S> <C> <C>
ELECTRONIC MEDIA ( 0.3% )
Chris-Craft Industries, Inc. + ....... 206 $ 9,682
Pixar, Inc. + ........................ 300 12,450
-----------
22,132
-----------
FOOD AND BEVERAGE ( 3.5% )
Aurora Foods, Inc. + ................. 3,900 58,013
IBP, Inc. ............................ 6,000 121,500
Suiza Foods Corp. + .................. 900 33,806
-----------
213,319
-----------
FOOD AND DRUG RETAIL ( 0.3% )
Safeway, Inc. + ...................... 400 21,575
-----------
FOREST PRODUCTS AND BUILDING MATERIALS ( 9.0% )
Georgia-Pacific Corp. ................ 5,700 146,775
Lafarge Corp. ........................ 3,700 125,106
Southdown, Inc. ...................... 2,500 160,156
USG Corp. ............................ 2,100 122,588
-----------
554,625
-----------
GAS UTILITIES ( 2.0% )
KN Energy, Inc. ...................... 6,000 123,750
-----------
HEALTH SERVICES ( 3.4% )
Lincare Holdings Inc. + .............. 3,600 106,650
PacifiCare Health Systems, Inc. + .... 1,300 103,716
-----------
210,366
-----------
INDUSTRIAL SERVICES ( 1.5% )
Safety-Kleen Corp. + ................. 5,700 90,487
-----------
INVESTMENT SERVICES ( 1.6% )
Paine Webber Group Inc. .............. 2,100 98,569
-----------
MAJOR TELECOMMUNICATIONS ( 3.7% )
Century Telephone Enterprises, Inc. .. 5,625 226,406
-----------
OIL SERVICES ( 8.6% )
Cooper Cameron Corp. + ............... 3,200 123,600
Global Marine Inc. + ................. 300 4,462
Nabors Industries, Inc. + ............ 6,000 123,375
Tidewater, Inc. ...................... 5,000 132,500
Transocean Offshore Inc. ............. 4,900 145,469
-----------
529,406
-----------
OTHER TELECOMMUNICATIONS ( 1.2% )
Cincinnati Bell Inc. ................. 3,300 74,662
-----------
PRODUCER GOODS ( 3.5% )
Tecumseh Products Co. ................ 2,000 122,250
Trinity Industries, Inc. ............. 2,700 93,994
-----------
216,244
-----------
SEMICONDUCTORS AND ELECTRONICS ( 5.9% )
Altera Corp. + ....................... 1,100 79,475
Linear Technology Corp. .............. 1,400 79,625
QUALCOMM Inc. ........................ 100 20,000
Xilinx, Inc. + ....................... 4,000 182,500
-----------
361,600
-----------
SPECIALTY CHEMICALS ( 1.8% )
Albemarle Corp. ...................... 5,100 112,200
-----------
STEEL ( 2.1% )
Cleveland-Cliffs, Inc. ............... 3,200 127,400
-----------
</TABLE>
22 See Notes to Portfolio of Investments.
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------ -----------
<S> <C> <C>
TEXTILES AND APPAREL ( 1.1% )
Jones Apparel Group, Inc. + .......... 2,100 $ 69,300
-----------
TOTAL COMMON STOCKS (COST $5,071,034) 5,928,335
-----------
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
SHORT-TERM INVESTMENTS ( 1.8% )
Federal Home Loan Bank,4.80%,05/03/99 $109,000 109,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $109,000) 109,000
-----------
TOTAL INVESTMENTS (COST $5,180,034)(A) 6,037,335
OTHER ASSETS LESS LIABILITIES 123,331
-----------
TOTAL NET ASSETS $6,160,666
===========
</TABLE>
<TABLE>
<CAPTION>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) The cost of investments for federal income tax purposes amounts to
$5,259,237. Unrealized gains and losses, based on identified tax cost at
April 30, 1999, are as follows:
<S> <C>
Unrealized gains.............................. $1,063,425
Unrealized losses............................. (285,327)
----------
Net unrealized gain.......................... $ 778,098
==========
</TABLE>
+ Non-income producing security.
Category percentages are based on net assets.
See Notes to Financial Statements. 23
<PAGE>
CAPITAL APPRECIATION FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1999 (UNAUDITED)
SMALL COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------- --------------
<S> <C> <C>
COMMON STOCKS ( 76.0% )
AIR TRANSPORT ( 2.0% )
America West Holdings Corp. + .......... 55,500 $ 1,158,562
------------
BANKS AND THRIFTS ( 5.6% )
Atlantic Bank and Trust Co. + .......... 45,500 929,906
Citizens Banking Corp. ................. 30,200 983,388
Harbor Florida Bancshares, Inc. ........ 70,000 822,500
Republic Security Financial Corp. ...... 70,700 614,206
------------
3,350,000
------------
BIOTECH AND MEDICAL PRODUCTS ( 1.9% )
Bio-Technology General Corp. + ......... 69,700 494,434
i-STAT Corp. + ......................... 45,900 473,344
ICU Medical, Inc. + .................... 9,700 164,900
------------
1,132,678
------------
COMMERCIAL SERVICES ( 2.0% )
Ackerley Group, Inc. ................... 24,000 412,500
GP Strategies Corp. + .................. 49,900 767,212
------------
1,179,712
------------
CONSUMER FINANCE ( 3.1% )
American Capital Strategies, Ltd. ...... 33,500 594,625
Medallion Financial Corp. .............. 23,100 389,812
Rental Service Corp. + ................. 37,500 846,094
------------
1,830,531
------------
CONSUMER SERVICES ( 3.9% )
Activision, Inc. + ..................... 13,000 135,688
IHOP Corp. + ........................... 7,200 329,400
OroAmerica, Inc. + ..................... 37,100 317,669
Prime Hospitality Corp. + .............. 78,600 957,937
Ruby Tuesday, Inc. ..................... 9,400 171,550
Taco Cabana, Inc. + .................... 36,800 372,600
------------
2,284,844
------------
CONSUMER SPECIALTIES ( 1.6% )
Russ Berrie & Co., Inc. ................ 35,800 973,313
------------
DATA AND IMAGING SERVICES ( 4.4% )
Advanced Digital Information Corp. ..... 11,600 250,850
Brooktrout Technology, Inc. + .......... 17,000 253,938
Emulex Corp. + ......................... 4,900 216,213
Fundtech Ltd. + ........................ 10,600 365,037
Intergraph Corp. + ..................... 71,900 480,831
JDA Software Group, Inc. + ............. 46,000 365,125
SCB Computer Technology, Inc. + ........ 50,000 337,500
WorldGate Communications, Inc. + ....... 12,900 367,650
------------
2,637,144
------------
DISCRETIONARY RETAIL ( 4.2% )
Audio Book Club, Inc. + ................ 36,400 655,200
Central Garden & Pet Co. + ............. 17,100 239,400
Dress Barn, Inc. + ..................... 36,400 532,350
Genesco Inc. + ......................... 97,300 1,058,137
------------
2,485,087
------------
DRUGS ( 1.0% )
King Pharmaceuticals, Inc. + ........... 20,300 560,788
------------
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------- --------------
<S> <C> <C>
ELECTRIC UTILITIES ( 2.7% )
Calpine Corp. + ........................ 14,800 $ 630,850
Otter Tail Power Co. ................... 9,600 367,200
UniSource Energy Corp. + ............... 56,600 611,987
------------
1,610,037
------------
ELECTRICAL MACHINERY AND INSTRUMENTS ( 1.0% )
Nam Tai Electronics, Inc. .............. 60,900 605,194
------------
ELECTRONIC MEDIA ( 5.2% )
Ascent Entertainment Group, Inc. + ..... 59,100 627,938
Granite Broadcasting Corp. ............. 55,700 421,231
Kushner-Locke Co. (The) + .............. 65,600 758,500
Metro Networks, Inc. + ................. 5,600 252,000
SBS Broadcasting SA + .................. 21,500 677,250
TCI Music, Inc. + ...................... 8,000 366,000
------------
3,102,919
------------
FOOD AND BEVERAGE ( 1.3% )
Suprema Specialties, Inc. + ............ 65,300 375,475
Twinlab Corp. + ........................ 46,600 396,100
------------
771,575
------------
FOOD AND DRUG RETAIL ( 0.6% )
Casey's General Stores, Inc. ........... 25,600 339,200
------------
FOREST PRODUCTS AND BUILDING MATERIALS ( 4.4% )
Elcor Corp. ............................ 26,900 1,039,013
Potlatch Corp. ......................... 22,300 924,056
Texas Industries, Inc. ................. 20,400 629,850
------------
2,592,919
------------
HEALTH SERVICES ( 0.9% )
Apria Healthcare Group Inc. ............ 34,200 534,375
------------
HOUSING AND FURNISHINGS ( 2.0% )
Boston Acoustics, Inc. ................. 6,550 117,900
Salton, Inc. + ......................... 16,700 567,800
Webb (Del E) Corp. ..................... 21,600 499,500
------------
1,185,200
------------
INDUSTRIAL SERVICES ( 3.3% )
Insituform Technologies, Inc. + ........ 46,700 890,219
Kaneb Services, Inc. + ................. 134,100 620,212
Park-Ohio Holdings Corp. + ............. 28,300 428,038
------------
1,938,469
------------
INSURANCE ( 1.6% )
American Heritage Life Investment Corp. 24,900 577,369
Provident American Corp. + ............. 11,600 397,300
------------
974,669
------------
INVESTMENT SERVICES ( 1.4% )
Investment Technology Group, Inc. ...... 14,300 495,137
Jefferies Group, Inc. .................. 14,300 327,113
------------
822,250
------------
OIL ( 2.2% )
Devon Energy Corp. ..................... 13,800 458,850
Union Pacific Resources Group Inc. ..... 61,700 863,800
------------
1,322,650
------------
OIL SERVICES ( 2.5% )
McDermott International, Inc. .......... 27,100 785,900
</TABLE>
24 See Notes to Portfolio of Investments.
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------- --------------
<S> <C> <C>
OIL SERVICES (CONTINUED)
Seitel, Inc. + ......................... 41,000 $ 712,375
------------
1,498,275
------------
OTHER TELECOMMUNICATIONS ( 3.3% )
Associated Group, Inc. + ............... 13,100 746,700
Powertel, Inc. + ....................... 25,900 563,325
Price Communications Corp. + ........... 25,712 395,322
SkyTel Communications, Inc. + .......... 15,800 270,575
------------
1,975,922
------------
PRODUCER GOODS ( 2.7% )
Kafus Environmental Industries Ltd. + .. 115,600 693,600
MacDermid, Inc. ........................ 6,800 285,175
Precision Castparts Corp. .............. 14,900 636,975
------------
1,615,750
------------
SEMICONDUCTORS AND ELECTRONICS ( 4.8% )
Burr-Brown Corp. + ..................... 29,800 789,700
Cree Research, Inc. + .................. 9,600 403,200
CTS Corp. .............................. 13,100 699,212
FEI Co. ................................ 48,100 360,750
Terayon Communication Systems, Inc. + .. 14,300 577,363
------------
2,830,225
------------
SPECIALTY CHEMICALS ( 3.1% )
Alcide Corp. + ......................... 24,300 373,613
ChiRex Inc. + .......................... 11,400 296,400
Eco Soil Systems, Inc. + ............... 67,900 381,937
Geon Co. (The) ......................... 24,900 762,562
------------
1,814,512
------------
STEEL ( 0.8% )
Bethlehem Steel Corp. + ................ 51,900 473,588
------------
SURFACE TRANSPORT ( 1.0% )
Knightsbridge Tankers Ltd. ............. 32,900 618,931
------------
TEXTILES AND APPAREL ( 1.5% )
Stride Rite Corp. ...................... 77,700 908,119
------------
TOTAL COMMON STOCKS (COST $42,984,756) 45,127,438
------------
<CAPTION>
PRINCIPAL
AMOUNT
-------------
<S> <C> <C>
SHORT-TERM INVESTMENTS ( 23.5% )
Federal Home Loan Bank,4.80%,05/03/99 .. $13,532,000 13,532,000
U.S. Treasury Bill,4.42%,08/19/99 @ .... 100,000 98,659
U.S. Treasury Bill,4.43%,08/19/99 @ .... 300,000 295,977
------------
TOTAL SHORT-TERM INVESTMENTS (COST $13,926,687) 13,926,636
------------
TOTAL INVESTMENTS (COST $56,911,443)(A) 59,054,074
OTHER ASSETS LESS LIABILITIES 323,496
------------
TOTAL NET ASSETS $59,377,570
============
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) The cost of investments for federal income tax purposes amounts to
$57,690,624. Unrealized gains and losses, based on identified tax cost at
April 30, 1999, are as follows:
<TABLE>
<S> <C>
Unrealized gains.............................. $ 4,235,597
Unrealized losses............................ (2,872,147)
-----------
Net unrealized gain.......................... $ 1,363,450
===========
</TABLE>
<TABLE>
Information concerning open futures contracts at April 30, 1999 is shown below:
NO. OF INITIAL EXPIRATION UNREALIZED
CONTRACTS VALUE DATE GAIN/(LOSS)
----------- ------------- ------------ ---------------
LONG CONTRACTS
- ----------------------
<S> <C> <C> <C> <C>
Russell 2000
Index Futures .......... 37 $7,460,668 Jun 99 $550,424
========== =======
</TABLE>
+ Non-income producing security.
@ Security pledged to cover initial margin requirements on open futures
contracts at April 30, 1999.
Category percentages are based on net assets.
See Notes to Financial Statements. 25
<PAGE>
CAPITAL APPRECIATION FUNDS
PORTFOLIO OF INVESTMENTS - APRIL 30, 1999 (UNAUDITED)
VALUE OPPORTUNITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------ ------------
<S> <C> <C>
COMMON STOCKS ( 89.4% )
AUTOMOTIVE ( 5.5% )
DaimlerChrysler AG ................... 2,000 $ 196,375
Dana Corp. ........................... 3,600 169,650
----------
366,025
----------
BANKS AND THRIFTS ( 2.0% )
BankBoston Corp. ..................... 2,700 132,300
----------
COMPUTERS ( 7.9% )
International Business Machines Corp. 1,500 313,781
Sun Microsystems, Inc. + ............. 3,600 215,325
----------
529,106
----------
CONGLOMERATE AND AEROSPACE ( 7.4% )
General Dynamics Corp. ............... 1,500 105,375
General Electric Co. ................. 2,000 211,000
Loral Space & Commmunications Ltd. + . 9,000 175,500
----------
491,875
----------
CONSUMER FINANCE ( 4.0% )
Federal Home Loan Mortgage Corp. ..... 4,200 263,550
----------
DATA AND IMAGING SERVICES ( 8.7% )
America Online, Inc. ................. 2,500 356,875
Oracle Corp. + ....................... 8,200 221,912
----------
578,787
----------
DIVERSIFIED FINANCIAL SERVICES ( 5.6% )
Citigroup Inc. ....................... 5,000 376,250
----------
DRUGS ( 10.4% )
American Home Products Corp. ......... 3,000 183,000
Bristol-Myers Squibb Co. ............. 4,300 273,319
Warner Lambert Co. ................... 3,500 237,781
----------
694,100
----------
ELECTRICAL MACHINERY AND INSTRUMENTS ( 3.7% )
Xerox Corp. .......................... 4,200 246,750
----------
FOOD AND DRUG RETAIL ( 2.5% )
Albertson's, Inc. .................... 3,200 164,800
----------
FOREST PRODUCTS AND BUILDING MATERIALS ( 5.8% )
Owens-Illinois, Inc. + ............... 5,000 145,000
Sealed Air Corp. + ................... 4,000 243,250
----------
388,250
----------
HOUSING AND FURNISHINGS ( 1.4% )
Centex Corp. ......................... 2,500 91,406
----------
INSURANCE ( 1.6% )
Allstate Corp. (The) ................. 3,000 109,125
----------
INVESTMENT SERVICES ( 3.4% )
T. Rowe Price & Associates ........... 6,000 226,125
----------
MAJOR TELECOMMUNICATIONS ( 6.1% )
AT&T Corp. ........................... 5,250 265,125
Century Telephone Enterprises, Inc. .. 3,450 138,863
----------
403,988
----------
OIL SERVICES ( 2.8% )
McDermott International, Inc. ........ 6,500 188,500
----------
PRODUCER GOODS ( 4.7% )
Ingersoll-Rand Co. ................... 4,500 311,344
----------
<CAPTION>
NUMBER OF MARKET
SHARES VALUE
------------ -----------
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS ( 1.8% )
Duke Realty Investments, Inc. ........ 5,000 $ 117,500
----------
SEMICONDUCTORS AND ELECTRONICS ( 4.1% )
Intel Corp. .......................... 4,500 275,344
----------
TOTAL COMMON STOCKS (COST $4,835,641) 5,955,125
----------
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
SHORT-TERM INVESTMENTS ( 7.0% )
Federal Home Loan Bank,4.80%,05/03/99 $469,000 469,000
----------
TOTAL SHORT-TERM INVESTMENTS (COST $469,000) 469,000
----------
TOTAL INVESTMENTS (COST $5,304,641)(A) 6,424,125
OTHER ASSETS LESS LIABILITIES 238,443
----------
TOTAL NET ASSETS $6,662,568
==========
</TABLE>
<TABLE>
<CAPTION>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) The cost of investments for federal income tax purposes is identical.
Unrealized gains and losses, based on identified tax cost at April 30, 1999,
are as follows:
<S> <C>
Unrealized gains............................. $1,191,215
Unrealized losses............................ (71,731)
----------
Net unrealized gain......................... $1,119,484
==========
</TABLE>
+ Non-income producing security.
Category percentages are based on net assets.
26 See Notes to Financial Statements.
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
CAPITAL APPRECIATION FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at market value ..........................................
Cash ..................................................................
Cash denominated in foreign currencies ................................
Receivable for:
Dividends and interest ...............................................
Investments sold .....................................................
Fund shares sold .....................................................
Recoverable foreign taxes ............................................
Reimbursement from Investment Adviser ................................
Prepaid expenses ......................................................
Other assets ..........................................................
Gross unrealized gain on forward foreign currency exchange contracts ..
Total assets .....................................................
LIABILITIES:
Payable for:
Investments purchased ................................................
Fund shares redeemed .................................................
Variation margin .....................................................
Other liabilities .....................................................
Gross unrealized loss on forward foreign currency exchange contracts ..
Total liabilities ................................................
NET ASSETS ...........................................................
NET ASSETS REPRESENTED BY:
Paid-in capital .......................................................
Net unrealized gain on investments, open futures contracts and foreign
currency related transactions ........................................
Undistributed (distributions in excess of) net investment income ......
Accumulated net realized gain on investments ..........................
NET ASSETS ...........................................................
CAPITAL SHARES, $.001 PAR VALUE:
Class I:
Outstanding ..........................................................
Net Assets ...........................................................
Net Asset Value, offering and redemption price per share (net assets
divided by shares outstanding) .......................................
Class A:
Outstanding ..........................................................
Net Assets ...........................................................
Net Asset Value and redemption price per share (net assets divided by
shares outstanding) ..................................................
Offering price (net asset value divided by 1 minus maximum sales load)
Class B:
Outstanding ..........................................................
Net Assets ...........................................................
Net Asset Value, offering and redemption price per share (net assets
divided by shares outstanding) .....................................
Class C:
Outstanding ..........................................................
Net Assets ...........................................................
Net Asset Value, offering and redemption price per share (net assets
divided by shares outstanding) .....................................
Cost of investments ...................................................
Cost of cash denominated in foreign currencies ........................
</TABLE>
28 See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH INTERNATIONAL MID CAP SMALL COMPANY VALUE OPPORTUNITY
--------------- -------------- -------------- --------------- -------------------
<S> <C> <C> <C> <C>
$217,223,744 $58,389,131 $6,037,335 $59,054,074 $6,424,125
381 -- 341 4 456
-- 1,661,284 -- -- --
47,637 162,450 373 29,808 4,410
757,027 3,185,540 119,981 1,710,323 343,867
1,138,742 138,599 157 17,674 763
-- 66,327 -- -- --
-- 8,181 12,551 11,477 11,621
1,467 1,115 50 493 49
-- 8,919 -- -- --
-- 134,367 -- -- --
------------ ----------- ---------- ----------- ----------
219,168,998 63,755,913 6,170,788 60,823,853 6,785,291
------------ ----------- ---------- ----------- ----------
1,460,170 2,845,278 -- 963,577 112,399
71,611 2,207 -- 392,792 1,000
115,500 2,978 -- 12,950 --
194,116 108,485 10,122 76,964 9,324
-- 21,116 -- -- --
------------ ----------- ---------- ----------- ----------
1,841,397 2,980,064 10,122 1,446,283 122,723
------------ ----------- ---------- ----------- ----------
$217,327,601 $60,775,849 $6,160,666 $59,377,570 $6,662,568
============ =========== ========== =========== ==========
$153,459,574 $50,030,766 $5,268,539 $53,032,864 $5,329,988
44,644,716 8,462,083 857,301 2,693,055 1,119,484
(96,988) (1,895,416) (4,609) 92,127 (2,870)
19,320,299 4,178,416 39,435 3,559,524 215,966
------------ ----------- ---------- ----------- ----------
$217,327,601 $60,775,849 $6,160,666 $59,377,570 $6,662,568
============ =========== ========== =========== ==========
8,958,433 3,407,208 484,085 3,827,713 440,193
$188,278,255 $43,204,177 $5,673,176 $44,893,925 $5,554,305
$ 21.02 $ 12.68 $ 11.72 $ 11.73 $ 12.62
1,338,524 1,312,918 22,028 1,142,701 62,951
$ 27,669,407 $16,619,230 $ 257,334 $13,050,699 $ 792,956
$ 20.67 $ 12.66 $ 11.68 $ 11.42 $ 12.60
$ 21.93 $ 13.43 $ 12.39 $ 12.12 $ 13.37
28,358 12,110 9,346 9,748 9,310
$ 595,115 $ 153,311 $ 109,323 $ 114,078 $ 117,237
$ 20.99 $ 12.66 $ 11.70 $ 11.70 $ 12.59
37,646 63,189 10,398 113,152 15,789
$ 784,824 $ 799,131 $ 120,833 $ 1,318,868 $ 198,070
$ 20.85 $ 12.65 $ 11.62 $ 11.66 $ 12.54
$172,751,958 $50,061,218 $5,180,034 $56,911,443 $5,304,641
$ -- $ 1,656,344 $ -- $ -- $ --
</TABLE>
See Notes to Financial Statements. 29
<PAGE>
CAPITAL APPRECIATION FUNDS
STATEMENTS OF OPERATIONS
SIX MONTH PERIOD ENDED APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends .............................................................
Interest ..............................................................
Foreign taxes withheld on dividends ...................................
Total investment income ..........................................
INVESTMENT EXPENSES:
Investment advisory fee ...............................................
Administrative services fees ..........................................
Distribution Plan and shareholder services fees .......................
Printing and postage fees .............................................
Custody fees ..........................................................
Transfer agent fees ...................................................
Audit fees ............................................................
Directors' fees .......................................................
Registration fees .....................................................
Miscellaneous expenses ................................................
Expenses before reimbursement and waiver from Investment Adviser ......
Expense reimbursement and waiver from Investment Adviser ..............
Net expenses .....................................................
Net investment income (loss) ..........................................
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments ..........................................................
Futures and forward foreign currency exchange contracts ..............
Foreign currency related transactions.................................
Net realized gain on investments .................................
Net change in unrealized gain or loss on:
Investments ..........................................................
Futures and forward foreign currency exchange contracts ..............
Foreign currency related transactions.................................
Net change in unrealized gain or loss on investments .............
Net realized and change in unrealized gain or loss on investments .....
Net increase in net assets resulting from operations ..................
</TABLE>
30 See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH INTERNATIONAL MID CAP SMALL COMPANY VALUE OPPORTUNITY
------ ------------- ------- ------------- -----------------
<S> <C> <C> <C> <C>
$ 379,357 $ 373,963 $ 25,107 $ 168,294 $ 25,215
405,977 33,426 2,982 273,164 6,597
----------- ---------- ---------- ---------- ----------
785,334 407,389 28,089 441,458 31,812
(1,877) (40,195) -- -- --
----------- ---------- ---------- ---------- ----------
783,457 367,194 28,089 441,458 31,812
----------- ---------- ---------- ---------- ----------
641,826 223,665 20,781 211,980 20,911
91,689 26,313 2,771 24,939 2,987
30,037 18,933 910 20,964 1,702
4,769 2,028 823 2,916 826
10,646 87,598 3,301 10,851 2,872
65,941 25,934 9,034 21,100 9,149
14,340 9,866 9,709 12,234 9,748
1,787 401 47 474 57
35,480 17,658 25,526 32,137 25,475
3,398 1,405 189 885 217
----------- ---------- ---------- ---------- ----------
899,913 413,801 73,091 338,480 73,944
-- (39,080) (40,393) (9,804) (39,421)
----------- ---------- ---------- ---------- ----------
899,913 374,721 32,698 328,676 34,523
----------- ---------- ---------- ---------- ----------
(116,456) (7,527) (4,609) 112,782 (2,711)
----------- ---------- ---------- ---------- ----------
18,457,871 5,168,412 382,852 3,523,281 468,206
1,295,901 (306,923) -- 429,361 --
-- (117,206) -- -- --
----------- ---------- ---------- ---------- ----------
19,753,772 4,744,283 382,852 3,952,642 468,206
----------- ---------- ---------- ---------- ----------
22,177,675 3,103,345 868,993 1,790,474 928,263
7,199 770,379 -- 244,269 --
-- 84,938 -- -- --
----------- ---------- ---------- ---------- ----------
22,184,874 3,958,662 868,993 2,034,743 928,263
----------- ---------- ---------- ---------- ----------
41,938,646 8,702,945 1,251,845 5,987,385 1,396,469
----------- ---------- ---------- ---------- ----------
$41,822,190 $8,695,418 $1,247,236 $6,100,167 $1,393,758
=========== ========== ========== ========== ==========
</TABLE>
See Notes to Financial Statements. 31
<PAGE>
CAPITAL APPRECIATION FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH
--------------------------------
SIX MONTH
PERIOD ENDED
APRIL 30, 1999 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1998
-------------- ----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income (loss)............... $ (116,456) $ 46,944
Net realized gain on investments........... 19,753,772 1,439,792
Net change in unrealized gain or loss on
investments............................... 22,184,874 11,302,825
------------ ------------
Net increase in net assets resulting from
operations............................... 41,822,190 12,789,561
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Class I:
From net investment income................ (27,476) --
From net realized gains on investments.... (1,603,819) (12,310,889)
Class A:
From net realized gains on investments.... (220,502) (1,306,575)
Class C:
From net realized gains on investments.... (5,280) --
------------ ------------
Decrease in net assets from distributions
to shareholders.......................... (1,857,077) (13,617,464)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Class I:
Proceeds from shares sold................. 37,745,323 56,817,825
Net asset value of shares issued upon
reinvestment of distributions............ 1,629,572 12,292,734
Payments for shares redeemed.............. (15,177,028) (21,664,296)
Class A:
Proceeds from shares sold................. 77,317,626 11,982,901
Net asset value of shares issued upon
reinvestment of distributions............ 212,135 1,299,155
Payments for shares redeemed.............. (67,171,399) (9,193,125)
Class B:
Proceeds from shares sold................. 705,159 --
Payments for shares redeemed.............. (110,149) --
Class C:
Proceeds from shares sold................. 432,004 358,367
Net asset value of shares issued upon
reinvestment of distributions............ 4,074 --
Payments for shares redeemed.............. (123,919) (157)
------------ ------------
Net increase in net assets from fund share
transactions............................. 35,463,398 51,893,404
------------ ------------
Net change in net assets................... 75,428,511 51,065,501
NET ASSETS:
Beginning of period........................ 141,899,090 90,833,589
------------ ------------
End of period.............................. $217,327,601 $141,899,090
============ ============
End of period net assets includes
undistributed (distributions in excess of)
net investment income..................... $ (96,988) $ 46,944
============ ============
</TABLE>
32 See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH
--------------------------------
SIX MONTH
PERIOD ENDED
APRIL 30, 1999 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1998
-------------- ----------------
SHARE TRANSACTIONS:
Class I:
<S> <C> <C>
Number of shares sold..................... 1,923,804 3,385,454
Number of shares issued upon reinvestment
of distributions......................... 85,273 863,254
Number of shares redeemed................. (794,177) (1,332,867)
------------ ------------
Net increase.............................. 1,214,900 2,915,841
============ ============
Class A:
Number of shares sold..................... 4,011,088 772,646
Number of shares issued upon reinvestment
of distributions......................... 11,278 92,401
Number of shares redeemed................. (3,470,647) (594,336)
------------ ------------
Net increase.............................. 551,719 270,711
============ ============
Class B:
Number of shares sold..................... 33,586 --
Number of shares redeemed................. (5,228) --
------------ ------------
Net increase.............................. 28,358 --
============ ============
Class C:
Number of shares sold..................... 22,026 21,497
Number of shares issued upon reinvestment
of distributions......................... 214 --
Number of shares redeemed................. (6,081) (10)
------------ ------------
Net increase.............................. 16,159 21,487
============ ============
</TABLE>
See Notes to Financial Statements. 33
<PAGE>
CAPITAL APPRECIATION FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
--------------------------------
SIX MONTH
PERIOD ENDED
APRIL 30, 1999 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1998
-------------- ----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income (loss)............... $ (7,527) $ 28,873
Net realized gain on investments........... 4,744,283 4,612,117
Net change in unrealized gain or loss on
investments............................... 3,958,662 739,680
------------ ------------
Net increase in net assets resulting from
operations............................... 8,695,418 5,380,670
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Class I:
From net investment income................ (1,770,159) (1,662,611)
From net realized gains on investments.... (1,806,974) (10,149,981)
Class A:
From net investment income................ (561,757) (440,511)
From net realized gains on investments.... (615,742) (3,463,760)
Class C:
From net investment income................ (8,737) --
From net realized gains on investments.... (9,514) --
------------ ------------
Decrease in net assets from distributions
to shareholders.......................... (4,772,883) (15,716,863)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Class I:
Proceeds from shares sold................. 10,209,029 7,518,675
Net asset value of shares issued upon
reinvestment of distributions............ 3,852,513 6,766,090
Payments for shares redeemed.............. (8,273,191) (27,933,953)
Class A:
Proceeds from shares sold................. 10,208,831 2,206,713
Net asset value of shares issued upon
reinvestment of distributions............ 790,785 918,001
Payments for shares redeemed.............. (10,453,576) (4,946,707)
Class B:
Proceeds from shares sold................. 142,999 --
Class C:
Proceeds from shares sold................. 702,551 166,506
Net asset value of shares issued upon
reinvestment of distributions............ 838 --
Payments for shares redeemed.............. (117,537) (114)
------------ ------------
Net increase (decrease) in net assets from
fund share transactions.................. 7,063,242 (15,304,789)
------------ ------------
Net change in net assets................... 10,985,777 (25,640,982)
NET ASSETS:
Beginning of period........................ 49,790,072 75,431,054
------------ ------------
End of period.............................. $ 60,775,849 $ 49,790,072
============ ============
End of period net assets includes
undistributed (distributions in excess of)
net investment income..................... $ (1,895,416) $ 452,764
============ ============
</TABLE>
34 See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
--------------------------------
SIX MONTH
PERIOD ENDED
APRIL 30, 1999 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1998
----------- ----------------
<S> <C> <C>
SHARE TRANSACTIONS:
Class I:
Number of shares sold..................... 871,614 656,589
Number of shares issued upon reinvestment
of distributions......................... 309,190 578,793
Number of shares redeemed................. (684,721) (2,454,649)
------------ ------------
Net increase (decrease)................... 496,083 (1,219,267)
============ ============
Class A:
Number of shares sold..................... 851,371 186,374
Number of shares issued upon reinvestment
of distributions......................... 63,398 78,529
Number of shares redeemed................. (875,947) (395,669)
------------ ------------
Net increase (decrease)................... 38,822 (130,766)
============ ============
Class B:
Number of shares sold..................... 12,110 --
------------ ------------
Net increase ............................. 12,110 --
============ ============
Class C:
Number of shares sold..................... 58,975 13,173
Number of shares issued upon reinvestment
of distributions......................... 838 --
Number of shares redeemed................. (9,787) (10)
------------ ------------
Net increase.............................. 50,026 13,163
============ ============
</TABLE>
See Notes to Financial Statements. 35
<PAGE>
CAPITAL APPRECIATION FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MID CAP
-----------------------------------
PERIOD FROM
SIX MONTH FEBRUARY 4, 1998
PERIOD ENDED (COMMENCEMENT OF
APRIL 30, 1999 OPERATIONS)
(UNAUDITED) TO OCTOBER 31, 1998
-------------- -------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment loss..................... $ (4,609) $ (8,761)
Net realized gain (loss) on investments. 382,852 (343,417)
Net change in unrealized gain or loss on
investments............................ 868,993 (11,692)
---------- ----------
Net increase (decrease) in net assets
resulting from operations............. 1,247,236 (363,870)
---------- ----------
FROM FUND SHARE TRANSACTIONS:
Class I:
Proceeds from shares sold.............. 60,685 4,950,432
Payments for shares redeemed........... (67,942) (111,022)
Class A:
Proceeds from shares sold.............. 114,888 125,364
Payments for shares redeemed........... (9,678) (81)
Class B:
Proceeds from shares sold.............. 100,000 --
Class C:
Proceeds from shares sold.............. 23,097 100,000
Payments for shares redeemed........... (8,443) --
---------- ----------
Net increase in net assets from fund
share transactions.................... 212,607 5,064,693
---------- ----------
Net change in net assets................ 1,459,843 4,700,823
NET ASSETS:
Beginning of period..................... 4,700,823 --
---------- ----------
End of period........................... $6,160,666 $4,700,823
========== ==========
End of period net assets includes
distributions in excess of net
investment income...................... $ (4,609) $ --
========== ==========
SHARE TRANSACTIONS:
Class I:
Number of shares sold.................. 5,772 494,694
Number of shares redeemed.............. (6,235) (10,146)
---------- ----------
Net increase (decrease)................ (463) 484,548
========== ==========
Class A:
Number of shares sold.................. 10,512 12,395
Number of shares redeemed.............. (870) (9)
---------- ----------
Net increase........................... 9,642 12,386
========== ==========
Class B:
Number of shares sold.................. 9,346 --
---------- ----------
Net increase........................... 9,346 --
========== ==========
Class C:
Number of shares sold.................. 2,158 8,993
Number of shares redeemed.............. (753) --
---------- ----------
Net increase........................... 1,405 8,993
========== ==========
</TABLE>
36 See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL COMPANY
--------------------------------
SIX MONTH
PERIOD ENDED
APRIL 30, 1999 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1998
-------------- ----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income ..................... $ 112,782 $ 133,733
Net realized gain (loss) on investments.... 3,952,642 (132,827)
Net change in unrealized gain or loss on
investments............................... 2,034,743 (3,889,710)
----------- ------------
Net increase (decrease) in net assets
resulting from operations................ 6,100,167 (3,888,804)
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Class I:
From net investment income................ (133,800) --
From net realized gains on investments.... (180,597) (5,713,656)
Class A:
From net investment income................ (19,021) --
From net realized gains on investments.... (56,085) (2,110,367)
Class C:
From net investment income................ (1,567) --
From net realized gains on investments.... (7,096) --
----------- ------------
Decrease in net assets from distributions
to shareholders.......................... (398,166) (7,824,023)
----------- ------------
FROM FUND SHARE TRANSACTIONS:
Class I:
Proceeds from shares sold................. 17,235,225 21,312,922
Net asset value of shares issued upon
reinvestment of distributions............ 311,160 5,093,695
Payments for shares redeemed.............. (6,419,531) (10,817,779)
Class A:
Proceeds from shares sold................. 4,855,182 4,873,997
Net asset value of shares issued upon
reinvestment of distributions............ 72,343 2,020,035
Payments for shares redeemed.............. (2,307,188) (1,879,360)
Class B:
Proceeds from shares sold................. 104,357 --
Class C:
Proceeds from shares sold................. 742,729 1,196,494
Net asset value of shares issued upon
reinvestment of distributions............ 7,074 --
Payments for shares redeemed.............. (675,448) (75,405)
----------- ------------
Net increase in net assets from fund share
transactions............................. 13,925,903 21,724,599
----------- ------------
Net change in net assets................... 19,627,904 10,011,772
NET ASSETS:
Beginning of period........................ 39,749,666 29,737,894
----------- ------------
End of period.............................. $59,377,570 $ 39,749,666
=========== ============
End of period net assets includes
undistributed net investment income....... $ 92,127 $ 133,733
=========== ============
</TABLE>
See Notes to Financial Statements. 37
<PAGE>
CAPITAL APPRECIATION FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL COMPANY
--------------------------------
SIX MONTH
PERIOD ENDED
APRIL 30, 1999 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1998
-------------- ----------------
<S> <C> <C>
SHARE TRANSACTIONS:
Class I:
Number of shares sold..................... 1,538,725 1,756,205
Number of shares issued upon reinvestment
of distributions......................... 28,082 447,994
Number of shares redeemed................. (572,984) (827,622)
----------- ------------
Net increase.............................. 993,823 1,376,577
=========== ============
Class A:
Number of shares sold..................... 451,145 410,840
Number of shares issued upon reinvestment
of distributions......................... 6,698 182,314
Number of shares redeemed................. (210,920) (162,947)
----------- ------------
Net increase.............................. 246,923 430,207
=========== ============
Class B:
Number of shares sold..................... 9,748 --
----------- ------------
Net increase.............................. 9,748 --
=========== ============
Class C:
Number of shares sold..................... 65,889 115,726
Number of shares issued upon reinvestment
of distributions......................... 640 --
Number of shares redeemed................. (60,989) (8,114)
----------- ------------
Net increase.............................. 5,540 107,612
=========== ============
</TABLE>
38 See Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE OPPORTUNITY
-----------------------------------
PERIOD FROM
SIX MONTH FEBRUARY 2, 1998
PERIOD ENDED (COMMENCEMENT OF
APRIL 30, 1999 OPERATIONS)
(UNAUDITED) TO OCTOBER 31, 1998
-------------- -------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income (loss)............ $ (2,711) $ 14,246
Net realized gain (loss) on investments. 468,206 (252,240)
Net change in unrealized gain or loss on
investments............................ 928,263 191,221
---------- ----------
Net increase (decrease) in net assets
resulting from operations............. 1,393,758 (46,773)
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Class I:
From net investment income............. (13,616) --
Class A:
From net investment income............. (789) --
---------- ----------
Decrease in net assets from
distributions to shareholders......... (14,405) --
---------- ----------
FROM FUND SHARE TRANSACTIONS:
Class I:
Proceeds from shares sold.............. 60,730 5,002,155
Net asset value of shares issued upon
reinvestment of distributions......... 377 --
Payments for shares redeemed........... (323,025) (369,095)
Class A:
Proceeds from shares sold.............. 228,378 528,702
Net asset value of shares issued upon
reinvestment of distributions......... 535 --
Payments for shares redeemed........... (43,329) (35,490)
Class B:
Proceeds from shares sold.............. 105,388 --
Class C:
Proceeds from shares sold.............. 71,747 104,915
Payments for shares redeemed........... (2,000) --
---------- ----------
Net increase in net assets from fund
share transactions.................... 98,801 5,231,187
---------- ----------
Net change in net assets................ 1,478,154 5,184,414
NET ASSETS:
Beginning of period..................... 5,184,414 --
---------- ----------
End of period........................... $6,662,568 $5,184,414
========== ==========
End of period net assets includes
undistributed (distributions in excess
of) net investment income.............. $ (2,870) $ 14,246
========== ==========
</TABLE>
See Notes to Financial Statements. 39
<PAGE>
CAPITAL APPRECIATION FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE OPPORTUNITY
-----------------------------------
PERIOD FROM
SIX MONTH FEBRUARY 2, 1998
PERIOD ENDED (COMMENCEMENT OF
APRIL 30, 1999 OPERATIONS)
(UNAUDITED) TO OCTOBER 31, 1998
-------------- -------------------
<S> <C> <C>
SHARE TRANSACTIONS:
Class I:
Number of shares sold.................. 5,504 499,755
Number of shares issued upon
reinvestment of distributions......... 33 --
Number of shares redeemed.............. (28,374) (36,725)
---------- ----------
Net increase (decrease)................ (22,837) 463,030
========== ==========
Class A:
Number of shares sold.................. 20,008 50,077
Number of shares issued upon
reinvestment of distributions......... 47 --
Number of shares redeemed.............. (3,635) (3,546)
---------- ----------
Net increase........................... 16,420 46,531
========== ==========
Class B:
Number of shares sold.................. 9,310 --
---------- ----------
Net increase........................... 9,310 --
========== ==========
Class C:
Number of shares sold.................. 6,400 9,556
Number of shares redeemed.............. (167) --
---------- ----------
Net increase........................... 6,233 9,556
========== ==========
</TABLE>
40 See Notes to Financial Statements.
<PAGE>
CAPITAL APPRECIATION FUNDS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
Aetna Series Fund, Inc. (Company) is registered under the Investment Company Act
of 1940 (the Act) as an open-end management investment company. It was
incorporated under the laws of Maryland on June 17, 1991. The Articles of
Incorporation permit the Company to offer separate funds, each of which has its
own investment objective, policies and restrictions.
This report covers five funds, (each a Fund; collectively, the Funds), Aetna
Growth Fund (Growth), Aetna International Fund (International), Aetna Mid Cap
Fund (Mid Cap), Aetna Small Company Fund (Small Company) and Aetna Value
Opportunity Fund (Value Opportunity).
Shares of each Fund are available to all investors including employers and
employees who utilize the Funds as investment options under retirement plans.
The Funds are authorized to offer four classes of shares, Class I, Class A,
Class B and Class C. Class I is offered principally to institutions.
Shareholders not eligible to purchase Class I shares can purchase shares in any
other Class of the Funds. Information regarding sales charges and fees pursuant
to Rule 12b-1 of the Act are as follows:
CLASS I: No sales charges or distribution fees.
CLASS A: Generally subject to a front-end sales charge; distribution fees
of 0.25% (of average net assets of the class per year.)
CLASS B: No front-end sales charge; contingent deferred sales charge (CDSC)
applies if you sell your shares within six years of purchase;
distribution fees of 0.75%; service fees of 0.25%; automatic
conversion to Class A shares after eight years.
CLASS C: No front-end sales charge; CDSC on redemptions made within 18
months of purchase; distribution fees of 0.75%; service fees of
0.25%.
Shares in each Class were first made available to the public on the following
dates:
<TABLE>
<CAPTION>
CLASS I CLASS A CLASS B CLASS C
------- ------- ------- -------
<S> <C> <C> <C> <C>
GROWTH January 4, 1994 April 15, 1994 March 1, 1999 June 30, 1998
INTERNATIONAL December 27, 1991 April 15, 1994 March 1, 1999 June 30, 1998
MID CAP February 4, 1998 February 4, 1998 March 1, 1999 June 30, 1998
SMALL COMPANY January 4, 1994 April 15, 1994 March 1, 1999 June 30, 1998
VALUE OPPORTUNITY February 2, 1998 February 2, 1998 March 1, 1999 June 30, 1998
</TABLE>
The following is each Fund's investment objective:
GROWTH seeks growth of capital through investment in a diversified portfolio
consisting primarily of common stocks and securities convertible into common
stocks believed to offer growth potential.
INTERNATIONAL seeks long-term capital growth primarily through investment in a
diversified portfolio of common stocks principally traded in countries outside
of North America. International will not target any given level of current
income.
MID CAP seeks growth of capital primarily through investment in a diversified
portfolio of common stocks and securities convertible into common stocks of
companies having medium market capitalizations.
SMALL COMPANY seeks growth of capital primarily through investment in a
diversified portfolio of common stocks and securities convertible into common
stocks of companies with smaller market capitalizations.
VALUE OPPORTUNITY seeks growth of capital primarily through investment in a
diversified portfolio of common stocks and securities convertible into common
stock.
Aeltus Investment Management, Inc. (Aeltus) serves as the Investment Adviser to
each Fund. Bradley, Foster & Sargent, Inc. (Bradley) is the Sub-Adviser to Value
Opportunity. Aeltus Capital, Inc. (ACI) is each Fund's principal underwriter.
Aeltus and
41
<PAGE>
CAPITAL APPRECIATION FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
ACI are indirect wholly-owned subsidiaries of Aetna Inc. (Aetna).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements of the Funds have been prepared in
accordance with generally accepted accounting principles. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect amounts
reported therein. Although actual results could differ from these estimates, any
such differences are expected to be immaterial to the net assets of the Funds.
A. VALUATION OF INVESTMENTS
Investments are stated at market values based upon prices furnished by external
pricing sources as reported on national securities exchanges or, for
over-the-counter securities, at the mean of the bid and asked prices. Short-term
investments maturing in more than sixty days for which market quotations are
readily available are valued at current market value. Short-term investments
maturing in less than sixty days are valued at amortized cost, which when
combined with accrued interest, approximates market value. Securities and fixed
income investments for which market quotations are not considered to be readily
available are valued using methods approved by the Board of Directors.
The accounting records of the Funds are maintained in U.S. dollars. Investment
securities and other assets and liabilities denominated in foreign currencies
are translated into U.S. dollars at the prevailing rates of exchange at the end
of each day. Purchases and sales of securities, income receipts, and expense
payments are translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions. The Funds do not isolate the portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in their market prices.
Such fluctuations are included in net realized and unrealized gain or loss on
investments.
B. FUTURES AND FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
specific amount of a commodity, security or financial instrument, including an
index of stocks, at a set price on a future date. The Funds invest in financial
futures contracts as a hedge against its existing portfolio securities, to
manage the risk of changes in interest rates, equity prices, currency exchange
rates or in anticipation of future purchases and sales of portfolio securities.
Upon entering into a futures contract, the Funds are required to deposit with a
broker an amount (initial margin) equal to a percentage of the purchase price
indicated by the futures contract. Subsequent deposits (variation margin) are
received or paid each day by the Funds equal to the daily fluctuations in the
market value of the contract. These amounts are recorded by the Funds as
unrealized gains or losses. When a contract is closed, the Funds record a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. Generally,
futures contracts held by the Funds are closed prior to expiration.
A forward foreign currency exchange contract is an agreement to pay or receive
specific amounts of a currency at a future date in exchange for another currency
at an agreed upon exchange rate. The Funds, where authorized, may use forward
foreign currency exchange contracts to hedge against foreign currency exchange
rate risks on its non-U.S. dollar denominated portfolio securities. Contracts
are recorded at market value and marked-to-market daily.
The risks associated with financial futures and forward foreign currency
exchange contracts may arise from an imperfect correlation between the change in
market value of the securities held by the Funds and the price of the contracts.
Risks may also arise from an illiquid secondary market or from the inability of
counterparties to meet the terms of the contracts.
Realized and unrealized gains or losses on financial futures and forward foreign
currency exchange contracts are reflected in the accompanying financial
statements. The amounts at risk under such futures and forward foreign currency
exchange contracts may exceed the amounts reflected in the financial statements.
The notional amounts (economic exposure) of these contracts are disclosed in the
Portfolios of Investments and elsewhere in the Notes to Financial Statements.
For federal income tax purposes, any futures and forward foreign currency
exchange contracts which remain open at the end of the fiscal year are
marked-to-market and the resultant net gain or loss is reported to shareholders
as federal taxable income.
42
<PAGE>
- --------------------------------------------------------------------------------
C. ILLIQUID AND RESTRICTED SECURITIES
Illiquid securities are securities that are not readily marketable. Disposing of
illiquid investments may involve time-consuming negotiation and legal expenses,
and it may be difficult or impossible for the Funds to sell them promptly at an
acceptable price. Restricted securities are those sold under Rule 144A of the
Securities Act of 1933 (1933 Act) or are securities offered pursuant to Section
4(2) of the 1933 Act, and are subject to legal or contractual restrictions on
resale and may not be publicly sold without registration under the 1933 Act.
Illiquid and restricted securities are valued using market quotations when
readily available. In the absence of market quotations, the securities are
valued based upon their fair value determined under procedures approved by the
Board of Directors. The Funds will not pay the costs of disposition of
restricted securities other than ordinary brokerage fees, if any. As of April
30, 1999, the Funds did not hold any securities deemed to be illiquid.
D. DELAYED DELIVERY TRANSACTIONS
The Funds may purchase or sell securities on a when-issued or forward commitment
basis. The price of the underlying securities and date when the securities will
be delivered and paid for are fixed at the time the transaction is negotiated.
The market value of the securities purchased or sold are identified in the
Funds' Portfolio of Investments. Losses may arise due to changes in the market
value of the securities or from the inability of counterparties to meet the
terms of the contract. In connection with such purchases, the Funds are required
to hold liquid assets as collateral with the Funds' custodian sufficient to
cover the purchase price.
E. FEDERAL INCOME TAXES
Each Fund has met the requirements to be taxed as a regulated investment company
for the fiscal year ended October 31, 1998 and intends to meet the requirements
for the current year. As such, each Fund is relieved of federal income taxes by
distributing all of its net taxable investment income and capital gains, if any,
in compliance with the applicable provisions of the Internal Revenue Code.
Futhermore, by distributing substantially all of its net taxable investment
income and capital gains during the calendar year, each Fund will avoid federal
excise taxes in accordance with the applicable provisions of the Internal
Revenue Code. Thus, the financial statements contain no provision for federal
taxes.
F. DISTRIBUTIONS
Distributions are recorded on the ex-dividend date. Income and capital gain
distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These differences are
primarily due to differing treatments for foreign currency transactions, certain
futures contracts, certain investments in foreign equity securities and certain
losses deferred due to transactions characterized as "wash sales" by federal tax
regulations. In addition, distributions of realized gains from sales of
securities held one year or less are taxable to shareholders at ordinary income
tax rates rather than preferred capital gain tax rates in accordance with the
applicable provisions of the Internal Revenue Code.
G. OTHER
Investment transactions are accounted for on the day following trade date,
except same day settlements which are accounted for on the trade date. Interest
income is recorded on an accrual basis. Discounts and premiums on securities
purchased are accreted or amortized, respectively, using an effective yield
method over the life of the security. Dividend income and stock splits are
recorded on the ex-dividend date. Realized gains and losses from investment
transactions are determined on an identified cost basis.
43
<PAGE>
CAPITAL APPRECIATION FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
3. INVESTMENT ADVISORY, SHAREHOLDER SERVICES AND DISTRIBUTION FEES
Each Fund pays Aeltus a monthly fee expressed as a percentage of the average
daily net assets of each Fund. As each Fund's net assets exceed predetermined
thresholds, lower advisory fees are applied. Below are the Funds' annual
investment advisory fee ranges and the effective annual rates before waivers as
of April 30, 1999:
<TABLE>
<CAPTION>
FEE RANGE EFFECTIVE RATE
--------- --------------
<S> <C> <C>
Growth 0.70%-0.550% 0.70%
International 0.85%-0.700% 0.85%
Mid Cap 0.75%-0.600% 0.75%
Small Company 0.85%-0.725% 0.85%
Value Opportunity 0.70%-0.550% 0.70%
</TABLE>
Aeltus has entered into a subadvisory agreement with Bradley for Value
Opportunity. As Sub-Adviser, Bradley supervises the investment and reinvestment
of cash and equity securities. The Subadvisory Agreement provides that Aeltus
will pay Bradley a subadvisory fee at an annual rate of 0.15% of Value
Opportunity's average daily net assets on the first $250 million and 0.10% of
Value Opportunity's average daily net assets above $250 million. For the period
November 1, 1998 through April 30, 1999, Aeltus paid Bradley $4,448.
Aeltus has entered into a consulting agreement with Bradley for Value
Opportunity and Aetna Value Opportunity VP, a portfolio of Aetna Variable
Portfolios, Inc. under which Bradley will provide assistance with shareholder
communications, contribute to marketing efforts and other non-investment
advisory services for the Value Opportunity Fund in exchange for payment from
the Investment Adviser. For the period November 1, 1998 through April 30, 1999,
Aeltus paid Bradley $78,000.
The Company and Aeltus have entered into an Administrative Services Agreement
under which Aeltus acts as administrator and provides certain administrative and
shareholder services and is responsible for the supervision of other service
providers for each Fund. Each Fund pays Aeltus an administrative services fee at
an annual rate of 0.10% of its average daily net assets.
Aeltus has entered into a Service Agreement with Aetna Life Insurance and
Annuity Company (ALIAC) under which ALIAC will provide various administrative
and shareholder services to certain shareholders that purchased their shares
through ALIAC. In exchange for these services, Aeltus pays ALIAC a fee of up to
0.425% of the average daily net assets associated with those shares. For the
period November 1, 1998 through April 30, 1999, Aeltus paid ALIAC $461,007.
The Company has adopted a Shareholder Services Plan for the Class B and Class C
shares. Under the Shareholder Services Plan, ACI is paid a service fee at an
annual rate of 0.25% of the average daily net assets of Class B and Class C
shares. This fee is used as compensation for expenses incurred in servicing
shareholders' accounts.
The Company has adopted a Distribution Plan pursuant to Rule 12b-1 under the Act
for the Class A, Class B and Class C shares. The Distribution Plan provides for
payments to the principal underwriter at an annual rate of 0.25% of the average
daily net assets of Class A shares of each Fund and 0.75% of the average daily
net assets of Class B and Class C shares of each Fund. Amounts paid by the Funds
are used to pay expenses incurred by the principal underwriter in promoting the
sale of Class A, Class B and Class C shares. The Distribution Plan may be
terminated as to each class of shares upon a majority vote of the Company's
independent directors.
Presently, the Funds' class-specific expenses are limited to distribution fees
incurred by Class A, Class B and Class C shares and service fees incurred by
Class B and Class C shares.
4. REIMBURSEMENT AND WAIVER FROM INVESTMENT ADVISER
Aeltus is contractually obligated through December 31, 1999 to reimburse each
Fund (except Growth) for some or all of its operating expenses or to waive fees
in order to maintain a certain expense ratio. Reimbursement and waiver
arrangements will increase a Fund's yield and total return.
44
<PAGE>
- --------------------------------------------------------------------------------
5. PURCHASES AND SALES OF INVESTMENT SECURITIES
Purchases and sales of investment securities, excluding short-term investments,
for the period ended April 30, 1999 were:
<TABLE>
<CAPTION>
COST OF PURCHASES PROCEEDS FROM SALES
----------------- -------------------
<S> <C> <C>
Growth $173,337,143 $140,686,332
International 51,304,459 50,419,899
Mid Cap 4,463,075 4,453,426
Small Company 53,497,802 43,991,701
Value Opportunity 3,706,661 4,064,156
</TABLE>
6. CAPITAL LOSS CARRYFORWARDS
As of April 30, 1999, Mid Cap and Value Opportunity incurred capital loss
carryforwards of $307,550 and $252,240, respectively. These capital loss
carryforwards may be used to offset future capital gains until October 31, 2006,
at which time the carryforwards will expire. It is the policy of each of the
Funds to reduce future distributions of realized gains to shareholders to the
extent of unexpired capital loss carryforwards.
7. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
As of April 30, 1999, International had the following open forward foreign
currency exchange contracts that obligate the Fund to deliver currencies at
specified future dates. The net unrealized gain of $113,251 on these contracts,
is included in the accompanying financial statements. The terms of the open
contracts are as follows:
<TABLE>
<CAPTION>
INTERNATIONAL
- -------------
EXCHANGE CURRENCY TO U.S. $ VALUE CURRENCY TO U.S. $ VALUE UNREALIZED
DATE BE DELIVERED APRIL 30, 1999 BE RECEIVED APRIL 30, 1999 GAIN (LOSS)
-------- ------------ -------------- ----------- -------------- -----------
CONTRACTS TO SELL
- -----------------
<S> <C> <C> <C> <C> <C>
5/12/99 536,011 $567,502 608,619 $608,619 $41,117
Euro U.S. Dollar
- ------------------------------------------------------------------------------------------
6/25/99 330,762 351,252 362,457 362,457 11,205
Euro U.S. Dollar
- ------------------------------------------------------------------------------------------
6/25/99 82,000 87,644 89,857 89,857 2,213
Euro U.S. Dollar
- ------------------------------------------------------------------------------------------
6/25/99 670,000 714,254 734,203 734,203 19,949
Euro U.S. Dollar
- ------------------------------------------------------------------------------------------
7/19/99 123,826 131,703 134,197 134,197 2,494
Euro U.S. Dollar
- ------------------------------------------------------------------------------------------
5/26/99 15,610,000 131,198 130,192 130,192 (1,006)
Japanese Yen U.S. Dollar
- ------------------------------------------------------------------------------------------
5/26/99 101,270,000 851,148 861,249 861,249 10,101
Japanese Yen U.S. Dollar
- ------------------------------------------------------------------------------------------
5/26/99 24,930,000 209,530 206,203 206,203 (3,327)
Japanese Yen U.S. Dollar
- ------------------------------------------------------------------------------------------
5/26/99 56,150,000 479,689 468,307 468,307 (11,382)
Japanese Yen U.S. Dollar
- ------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
CAPITAL APPRECIATION FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL (CONTINUED)
- --------------------------
EXCHANGE CURRENCY TO U.S. $ VALUE CURRENCY TO U.S. $ VALUE UNREALIZED
DATE BE DELIVERED APRIL 30, 1999 BE RECEIVED APRIL 30, 1999 GAIN (LOSS)
-------- ------------ -------------- ----------- -------------- -----------
CONTRACTS TO SELL (CONTINUED)
- -----------------------------
<S> <C> <C> <C> <C> <C>
5/26/99 55,260,000 $463,338 460,884 $460,884 ($2,454)
Japanese Yen U.S. Dollar
- ------------------------------------------------------------------------------------------
5/26/99 17,970,000 151,033 149,513 149,513 (1,520)
Japanese Yen U.S. Dollar
- ------------------------------------------------------------------------------------------
6/17/99 287,611,200 2,424,523 2,466,648 2,466,648 42,125
Japanese Yen U.S. Dollar
- ------------------------------------------------------------------------------------------
6/17/99 46,180,000 390,892 396,055 396,055 5,163
Japanese Yen U.S. Dollar
- ------------------------------------------------------------------------------------------
7/27/99 120,100,000 1,018,190 1,016,763 1,016,763 (1,427)
Japanese Yen U.S. Dollar
- ------------------------------------------------------------------------------------------
$113,251
==============
</TABLE>
8. AUTHORIZED CAPITAL SHARES
The Company is authorized to issue a total of 12.6 billion shares. Of those 12.6
billion shares, the following have been designated to the Funds described in
this report as follows: all of the Funds, except International, have been
allocated 100 million shares each of Class I, Class A, Class B and Class C
shares. International has been allocated 200 million shares each of Class I,
Class A, Class B and Class C shares. As of April 30, 1999, the following shares
of the Funds were owned by ALIAC and its affiliates:
<TABLE>
<CAPTION>
CLASS I CLASS A CLASS B CLASS C
------- ------- ------- -------
<S> <C> <C> <C> <C>
Growth 1,368,844 -- -- --
International 737,008 -- 8,547 --
Mid Cap 474,540 10,000 9,346 8,279
Small Company 2,118,313 -- 9,355 --
Value Opportunity 426,421 10,000 8,865 8,891
</TABLE>
46
<PAGE>
CAPITAL APPRECIATION FUNDS
ADDITIONAL INFORMATION
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
YEAR 2000 (UNAUDITED)
The Funds receive services from a number of providers which rely on the
effective functioning of their respective systems and the systems of others to
perform those services. It is generally recognized that certain systems in use
today may not be able to perform their intended functions adequately after 1999
because of the inability of computer systems and software to distinguish the
year 2000 from the year 1900. Aeltus is taking steps that it believes are
reasonably designed to address this potential "Year 2000" problem and to obtain
satisfactory information that comparable steps are being taken by each of the
Funds' other major service providers. There can be no assurance, however, that
these steps will be sufficient to avoid any adverse impact on the Funds from
this problem.
47
<PAGE>
CAPITAL APPRECIATION FUNDS
FINANCIAL HIGHLIGHTS
GROWTH
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTH JANUARY 4, 1994
PERIOD ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED (COMMENCEMENT OF
APRIL 30, 1999 OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OPERATIONS)
CLASS I (UNAUDITED) 1998 1997 1996 1995 TO OCTOBER 31, 1994
- ---------------------------------- -------------- ----------- ----------- ----------- ----------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 16.62 $ 17.02 $ 14.36 $ 13.75 $ 10.78 $ 10.00
-------- -------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........... (0.01) 0.01 0.01 0.03 0.04 0.09
Net realized and change in
unrealized gain or loss on
investments..................... 4.61 2.09 3.88 2.39 3.02 0.69
-------- -------- ------- ------- ------- -------
Total from investment
operations.................... 4.60 2.10 3.89 2.42 3.06 0.78
-------- -------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment income ...... -- -- (0.03) (0.05) (0.08) --
From net realized gains on
investments..................... (0.20) (2.50) (1.20) (1.76) (0.01) --
-------- -------- ------- ------- ------- -------
Total distributions ........... (0.20) (2.50) (1.23) (1.81) (0.09) --
-------- -------- ------- ------- ------- -------
Net asset value, end of period ... $ 21.02 $ 16.62 $ 17.02 $ 14.36 $ 13.75 $ 10.78
======== ======== ======= ======= ======= =======
Total return ..................... 27.85% 14.78% 28.95% 19.82% 28.79% 7.70%
Net assets, end of period (000's) $188,278 $128,667 $82,186 $45,473 $36,936 $27,188
Ratio of net expenses to average
net assets ...................... 0.95%(1) 1.00% 1.17% 1.28% 1.20% 0.92%(1)
Ratio of net investment income to
average net assets .............. (0.09)%(1) 0.07% 0.08% 0.20% 0.36% 1.10%(1)
Ratio of expenses before
reimbursement and waiver to
average net assets .............. 0.95%(1) 1.00% 1.17% 1.28% 1.30% 1.42%(1)
Portfolio turnover rate .......... 81.13% 170.46% 141.07% 144.19% 171.75% 120.32%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
48 See Notes to Financial Statements.
<PAGE>
GROWTH
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTH APRIL 15, 1994
PERIOD ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED (DATE OF INITIAL
APRIL 30, 1999 OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, PUBLIC OFFERING)
CLASS A (UNAUDITED) 1998 1997 1996 1995 TO OCTOBER 31, 1994
- ---------------------------------- -------------- ----------- ----------- ----------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .. $ 16.37 $ 16.76 $ 14.17 $ 13.63 $ 10.74 $10.26
------- ------- ------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................ (0.03) (0.04) (0.11) (0.08) (0.06) (0.02)
Net realized and change in unrealized
gain or loss on investments .......... 4.53 2.05 3.84 2.38 3.00 0.50
------- ------- ------- ------- ------- ------
Total from investment operations ... 4.50 2.01 3.73 2.30 2.94 0.48
------- ------- ------- ------- ------- ------
LESS DISTRIBUTIONS:
From net investment income ........... -- -- -- -- (0.05) --
From net realized gains on investments (0.20) (2.40) (1.14) (1.76) -- --
------- ------- ------- ------- ------- ------
Total distributions ................ (0.20) (2.40) (1.14) (1.76) (0.05) --
------- ------- ------- ------- ------- ------
Net asset value, end of period ........ $ 20.67 $ 16.37 $ 16.76 $ 14.17 $ 13.63 $10.74
======= ======= ======= ======= ======= ======
Total return .......................... 27.64% 14.34% 28.05% 18.97% 27.92% 4.58%
Net assets, end of period (000's) ..... $27,669 $12,877 $ 8,647 $ 4,615 $ 1,727 $417
Ratio of net expenses to average net
assets................................ 1.20%(1) 1.32% 1.92% 2.03% 2.03% 1.72%(1)
Ratio of net investment income to
average net assets ................... (0.34)%(1) (0.25)% (0.67)% (0.59)% (0.47)% (0.25)%(1)
Ratio of expenses before reimbursement
and waiver to average net assets ..... 1.20%(1) 1.32% 1.92% 2.03% 2.14% 2.17%(1)
Portfolio turnover rate ............... 81.13% 170.46% 141.07% 144.19% 171.75% 120.32%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
See Notes to Financial Statements. 49
<PAGE>
CAPITAL APPRECIATION FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
GROWTH
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 1, 1999
(DATE OF INITIAL
PUBLIC OFFERING)
TO APRIL 30, 1999
CLASS B (UNAUDITED)
- ---------------------------------------------------------- -----------------
<S> <C>
Net asset value, beginning of period ..................... $19.84
------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................... (0.04)
Net realized and change in unrealized gain or loss on
investments............................................. 1.19
------
Total from investment operations ...................... 1.15
------
Net asset value, end of period ........................... $20.99
======
Total return ............................................. 5.80%
Net assets, end of period (000's) ........................ $ 595
Ratio of net expenses to average net assets .............. 1.92% (1)
Ratio of net investment income to average net assets ..... (1.06)%(1)
Ratio of expenses before reimbursement and waiver to
average net assets ...................................... 1.92% (1)
Portfolio turnover rate .................................. 81.13%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
50 See Notes to Financial Statements.
<PAGE>
GROWTH
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTH JUNE 30, 1998
PERIOD ENDED (DATE OF INITIAL
APRIL 30, 1999 PUBLIC OFFERING)
CLASS C (UNAUDITED) TO OCTOBER 31, 1998
- ---------------------------------------- -------------- -------------------
<S> <C> <C>
Net asset value, beginning of period ... $16.56 $ 17.86
------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................. (0.11) (0.05)
Net realized and change in unrealized
gain or loss on investments .......... 4.60 (1.25)
------ -------
Total from investment operations .... 4.49 (1.30)
------ -------
LESS DISTRIBUTIONS:
From net realized gains on investments. (0.20) --
------ -------
Total distributions ................. (0.20) --
------ -------
Net asset value, end of period ......... $20.85 $ 16.56
====== =======
Total return ........................... 27.26% (7.28)%
Net assets, end of period (000's) ...... $ 785 $ 356
Ratio of net expenses to average net
assets................................. 1.94% (1) 1.99% (1)
Ratio of net investment income to
average net assets .................... (1.09)%(1) (0.92)%(1)
Ratio of expenses before reimbursement
and waiver to average net assets ...... 1.94% (1) 1.99% (1)
Portfolio turnover rate ................ 81.13% 170.46%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
See Notes to Financial Statements. 51
<PAGE>
CAPITAL APPRECIATION FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
INTERNATIONAL
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
SIX MONTH TEN MONTH
PERIOD ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
APRIL 30, 1999 OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, DECEMBER 31,
CLASS I (UNAUDITED) 1998 1997 1996 1995 1994 1993
- ------------------------------- -------------- ----------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $ 11.87 $ 13.65 $ 11.79 $ 10.62 $ 11.56 $11.17 $ 8.88
------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ........ -- 0.02 0.02 0.03 0.11 0.06 0.05
Net realized and change in
unrealized gain or loss on
investments.................. 2.00 1.06 2.89 1.59 (0.09) 0.33 2.65
------- ------- ------- ------- ------- ------- -------
Total from investment
operations................. 2.00 1.08 2.91 1.62 0.02 0.39 2.70
------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment income ... (0.59) (0.40) (0.16) (0.19) (0.40) -- (0.39)
From net realized gains on
investments.................. (0.60) (2.46) (0.89) (0.26) (0.56) -- (0.02)
------- ------- ------- ------- ------- ------- -------
Total distributions ........ (1.19) (2.86) (1.05) (0.45) (0.96) -- (0.41)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $ 12.68 $ 11.87 $ 13.65 $ 11.79 $ 10.62 $11.56 $ 11.17
======= ======= ======= ======= ======= ======= =======
Total return .................. 17.87% 10.22% 26.02% 15.61% (0.04)% 3.49% 30.37%
Net assets, end of period
(000's)....................... $43,204 $34,556 $56,369 $45,786 $25,102 $31,479 $39,847
Ratio of net expenses to
average net assets ........... 1.35%(1) 1.48% 1.72% 2.17% 1.37% 1.66%(1) 1.48%
Ratio of net investment income
to average net assets ........ 0.05%(1) 0.15% 0.18% 0.40% 1.02% 0.71%(1) 0.50%
Ratio of expenses before
reimbursement and waiver to
average net assets ........... 1.50%(1) 1.67% 1.72% 2.17% 1.50% 1.80%(1) 1.77%
Portfolio turnover rate ....... 97.14% 152.73% 194.41% 135.92% 32.91% 81.67% 110.38%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
52 See Notes to Financial Statements.
<PAGE>
INTERNATIONAL
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTH APRIL 15, 1994
PERIOD ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED (DATE OF INITIAL
APRIL 30, 1999 OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, PUBLIC OFFERING)
CLASS A (UNAUDITED) 1998 1997 1996 1995 TO OCTOBER 31, 1994
- --------------------------------------- -------------- ----------- ----------- ----------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .. $ 11.83 $ 13.57 $ 11.77 $ 10.59 $ 11.51 $11.24
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................ (0.01) (0.02) (0.07) (0.05) 0.03 0.01
Net realized and change in unrealized
gain or loss on investments ......... 1.99 1.05 2.88 1.57 (0.20) 0.26
------- ------- ------- ------- ------- -------
Total from investment operations ... 1.98 1.03 2.81 1.52 (0.17) 0.27
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment income ........... (0.55) (0.31) (0.12) (0.08) (0.27) --
From net realized gains on investments (0.60) (2.46) (0.89) (0.26) (0.48) --
------- ------- ------- ------- ------- -------
Total distributions ................ (1.15) (2.77) (1.01) (0.34) (0.75) --
------- ------- ------- ------- ------- -------
Net asset value, end of period ........ $ 12.66 $ 11.83 $ 13.57 $ 11.77 $ 10.59 $11.51
======= ======= ======= ======= ======= =======
Total return .......................... 17.72% 9.76% 25.07% 14.67% (0.81)% 2.40%
Net assets, end of period (000's) ..... $16,619 $15,078 $19,063 $22,893 $26,464 $26,647
Ratio of net expenses to average net
assets................................ 1.61% (1) 1.82% 2.47% 2.94% 2.12% 2.27%(1)
Ratio of net investment income to
average net assets ................... (0.21)% (1) (0.19)% (0.57)% (0.42)% 0.27% 0.17%(1)
Ratio of expenses before reimbursement
and waiver to average net assets ..... 1.76% (1) 2.01% 2.47% 2.94% 2.25% 2.41%(1)
Portfolio turnover rate ............... 97.14% 152.73% 194.41% 135.92% 32.91% 81.67%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
See Notes to Financial Statements. 53
<PAGE>
CAPITAL APPRECIATION FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
INTERNATIONAL
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 1, 1999
(DATE OF INITIAL
PUBLIC OFFERING)
TO APRIL 30, 1999
CLASS B (UNAUDITED)
- ---------------------------------------------------------- -----------------
<S> <C>
Net asset value, beginning of period ..................... $11.70
------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................... (0.02)
Net realized and change in unrealized gain or loss on
investments............................................. 0.98
------
Total from investment operations ...................... 0.96
------
Net asset value, end of period ........................... $12.66
======
Total return ............................................. 8.21%
Net assets, end of period (000's) ........................ $ 153
Ratio of net expenses to average net assets .............. 2.35% (1)
Ratio of net investment income to average net assets ..... (0.95)%(1)
Ratio of expenses before reimbursement and waiver to
average net assets ...................................... 2.50% (1)
Portfolio turnover rate .................................. 97.14%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
54 See Notes to Financial Statements.
<PAGE>
INTERNATIONAL
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTH JUNE 30, 1998
PERIOD ENDED (DATE OF INITIAL
APRIL 30, 1999 PUBLIC OFFERING)
CLASS C (UNAUDITED) TO OCTOBER 31, 1998
- ---------------------------------------- -------------- -------------------
<S> <C> <C>
Net asset value, beginning of period ... $11.85 $ 13.29
------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................. (0.06) (0.03)
Net realized and change in unrealized
gain or loss on investments .......... 2.01 (1.41)
------ -------
Total from investment operations .... 1.95 (1.44)
------ -------
LESS DISTRIBUTIONS:
From net investment income ............ (0.55) --
From net realized gains on investments. (0.60) --
------ -------
Total distributions ................. (1.15) --
------ -------
Net asset value, end of period ......... $12.65 $ 11.85
====== =======
Total return ........................... 17.44% (10.84)%
Net assets, end of period (000's) ...... $ 799 $ 156
Ratio of net expenses to average net
assets................................. 2.35% (1) 2.36% (1)
Ratio of net investment income to
average net assets .................... (0.95)%(1) (0.73)%(1)
Ratio of expenses before reimbursement
and waiver to average net assets ...... 2.50% (1) 2.55% (1)
Portfolio turnover rate ................ 97.14% 152.73%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
See Notes to Financial Statements. 55
<PAGE>
CAPITAL APPRECIATION FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
MID CAP
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTH FEBRUARY 4, 1998
PERIOD ENDED (COMMENCEMENT OF
APRIL 30, 1999 OPERATIONS)
CLASS I (UNAUDITED) TO OCTOBER 31, 1998
- ---------------------------------------- -------------- -------------------
<S> <C> <C>
Net asset value, beginning of period ... $ 9.29 $ 10.00
------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................. (0.01) (0.02)
Net realized and change in unrealized
gain or loss on investments .......... 2.44 (0.69)
------ -------
Total from investment operations .... 2.43 (0.71)
------ -------
Net asset value, end of period ......... $11.72 $ 9.29
====== =======
Total return ........................... 26.16% (7.10)%
Net assets, end of period (000's) ...... $5,673 $ 4,503
Ratio of net expenses to average net
assets................................. 1.15% (1) 1.15% (1)
Ratio of net investment income to
average net assets .................... (0.13)%(1) (0.21)%(1)
Ratio of expenses before reimbursement
and waiver to average net assets ...... 2.61% (1) 3.59% (1)
Portfolio turnover rate ................ 80.35% 113.99%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
56 See Notes to Financial Statements.
<PAGE>
MID CAP
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTH FEBRUARY 4, 1998
PERIOD ENDED (COMMENCEMENT OF
APRIL 30, 1999 OPERATIONS)
CLASS A (UNAUDITED) TO OCTOBER 31, 1998
- ---------------------------------------- -------------- -------------------
<S> <C> <C>
Net asset value, beginning of period ... $ 9.28 $ 10.00
------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................. (0.02) (0.04)
Net realized and change in unrealized
gain or loss on investments ........... 2.42 (0.68)
------ -------
Total from investment operations .... 2.40 (0.72)
------ -------
Net asset value, end of period ......... $11.68 $ 9.28
====== =======
Total return ........................... 25.86% (7.20)%
Net assets, end of period (000's) ...... $ 257 $ 115
Ratio of net expenses to average net
assets................................. 1.40% (1) 1.40% (1)
Ratio of net investment income to
average net assets .................... (0.38)%(1) (0.46)%(1)
Ratio of expenses before reimbursement
and waiver to average net assets ...... 2.86% (1) 3.84% (1)
Portfolio turnover rate ................ 80.35% 113.99%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
See Notes to Financial Statements. 57
<PAGE>
CAPITAL APPRECIATION FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
MID CAP
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 1, 1999
(DATE OF INITIAL
PUBLIC OFFERING)
TO APRIL 30, 1999
CLASS B (UNAUDITED)
- ---------------------------------------------------------- -----------------
<S> <C>
Net asset value, beginning of period ..................... $10.70
------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................... (0.02)
Net realized and change in unrealized gain or loss on
investments............................................. 1.02
------
Total from investment operations ...................... 1.00
------
Net asset value, end of period ........................... $11.70
======
Total return ............................................. 9.35%
Net assets, end of period (000's) ........................ $ 109
Ratio of net expenses to average net assets .............. 2.15% (1)
Ratio of net investment income to average net assets ..... (1.13)%(1)
Ratio of expenses before reimbursement and waiver to
average net assets ...................................... 3.60% (1)
Portfolio turnover rate .................................. 80.35%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
58 See Notes to Financial Statements.
<PAGE>
MID CAP
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTH JUNE 30, 1998
PERIOD ENDED (DATE OF INITIAL
APRIL 30, 1999 PUBLIC OFFERING)
CLASS C (UNAUDITED) TO OCTOBER 31, 1998
- ---------------------------------------- -------------- -------------------
<S> <C> <C>
Net asset value, beginning of period ... $ 9.26 $ 11.12
------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................. (0.06) (0.04)
Net realized and change in unrealized
gain or loss on investments .......... 2.42 (1.82)
------ -------
Total from investment operations .... 2.36 (1.86)
------ -------
Net asset value, end of period ......... $11.62 $ 9.26
====== =======
Total return ........................... 25.49% (16.73)%
Net assets, end of period (000's) ...... $ 121 $ 83
Ratio of net expenses to average net
assets................................. 2.15% (1) 2.15% (1)
Ratio of net investment income to
average net assets .................... (1.13)%(1) (1.21)%(1)
Ratio of expenses before reimbursement
and waiver to average net assets ...... 3.60% (1) 4.59% (1)
Portfolio turnover rate ................ 80.35% 113.99%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
See Notes to Financial Statements. 59
<PAGE>
CAPITAL APPRECIATION FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
SMALL COMPANY
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTH JANUARY 4, 1994
PERIOD ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED (COMMENCEMENT OF
APRIL 30, 1999 OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OPERATIONS)
CLASS I (UNAUDITED) 1998 1997 1996 1995 TO OCTOBER 31, 1994
- ---------------------------------- -------------- ----------- ----------- ----------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 10.43 $ 15.55 $ 14.67 $ 13.52 $ 10.39 $ 10.00
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........... 0.03 0.09 (0.06) (0.08) -- 0.02
Net realized and change in
unrealized gain or loss on
investments..................... 1.37 (0.90) 4.45 2.64 3.15 0.37
------- ------- ------- ------- ------- -------
Total from investment
operations.................... 1.40 (0.81) 4.39 2.56 3.15 0.39
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment income ...... (0.04) -- -- -- (0.02) --
From net realized gains on
investments..................... (0.06) (4.31) (3.51) (1.41) -- --
------- ------- ------- ------- ------- -------
Total distributions ........... (0.10) (4.31) (3.51) (1.41) (0.02) --
------- ------- ------- ------- ------- -------
Net asset value, end of period ... $ 11.73 $ 10.43 $ 15.55 $ 14.67 $ 13.52 $ 10.39
======= ======= ======= ======= ======= =======
Total return ..................... 13.48% (7.47)% 37.80% 19.78% 30.39% 3.90%
Net assets, end of period (000's) $44,894 $29,543 $22,661 $32,125 $33,511 $25,879
Ratio of net expenses to average
net assets ...................... 1.23%(1) 1.32% 1.58% 1.44% 1.41% 1.15%(1)
Ratio of net investment income to
average net assets .............. 0.54%(1) 0.46% (0.42)% (0.53)% (0.01)% 0.21%(1)
Ratio of expenses before
reimbursement and waiver to
average net assets .............. 1.27%(1) 1.43% 1.58% 1.44% 1.49% 1.58%(1)
Portfolio turnover rate .......... 110.25% 211.87% 150.43% 163.21% 156.43% 116.28%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
60 See Notes to Financial Statements.
<PAGE>
SMALL COMPANY
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTH APRIL 15, 1994
PERIOD ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED (DATE OF INITIAL
APRIL 30, 1999 OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, PUBLIC OFFERING)
CLASS A (UNAUDITED) 1998 1997 1996 1995 TO OCTOBER 31, 1994
- --------------------------------------- -------------- ----------- ----------- ----------- ----------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .. $ 10.15 $ 15.20 $ 14.42 $ 13.39 $ 10.35 $10.24
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................ 0.02 0.01 (0.16) (0.18) (0.11) (0.04)
Net realized and change in unrealized
gain or loss on investments ......... 1.33 (0.84) 4.36 2.62 3.15 0.15
------- ------- ------- ------- ------- -------
Total from investment operations ... 1.35 (0.83) 4.20 2.44 3.04 0.11
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment income ........... (0.02) -- -- -- -- --
From net realized gains on investments (0.06) (4.22) (3.42) (1.41) -- --
------- ------- ------- ------- ------- -------
Total distributions ................ (0.08) (4.22) (3.42) (1.41) -- --
------- ------- ------- ------- ------- -------
Net asset value, end of period ........ $ 11.42 $ 10.15 $ 15.20 $ 14.42 $ 13.39 $10.35
======= ======= ======= ======= ======= =======
Total return .......................... 13.31% (7.77)% 36.73% 19.02% 29.44% 0.98%
Net assets, end of period (000's) ..... $13,051 $ 9,089 $ 7,077 $ 3,884 $ 1,285 $205
Ratio of net expenses to average net
assets................................ 1.48%(1) 1.63% 2.33% 2.20% 2.23% 1.78% (1)
Ratio of net investment income to
average net assets ................... 0.29%(1) 0.15% (1.17)% (1.26)% (0.89)% (0.72)%(1)
Ratio of expenses before reimbursement
and waiver to average net assets ..... 1.52%(1) 1.74% 2.33% 2.20% 2.30% 2.14% (1)
Portfolio turnover rate ............... 110.25% 211.87% 150.43% 163.21% 156.43% 116.28%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
See Notes to Financial Statements. 61
<PAGE>
CAPITAL APPRECIATION FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
SMALL COMPANY
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 1, 1999
(DATE OF INITIAL
PUBLIC OFFERING)
TO APRIL 30, 1999
CLASS B (UNAUDITED)
- ---------------------------------------------------------- -----------------
<S> <C>
Net asset value, beginning of period ..................... $ 10.69
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................... (0.01)
Net realized and change in unrealized gain or loss on
investments............................................. 1.02
-------
Total from investment operations ...................... 1.01
-------
Net asset value, end of period ........................... $ 11.70
=======
Total return ............................................. 9.45%
Net assets, end of period (000's) ........................ $ 114
Ratio of net expenses to average net assets .............. 2.23% (1)
Ratio of net investment income to average net assets ..... (0.46)%(1)
Ratio of expenses before reimbursement and waiver to
average net assets ...................................... 2.27% (1)
Portfolio turnover rate .................................. 110.25%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
62 See Notes to Financial Statements.
<PAGE>
SMALL COMPANY
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTH JUNE 30, 1998
PERIOD ENDED (DATE OF INITIAL
APRIL 30, 1999 PUBLIC OFFERING)
CLASS C (UNAUDITED) TO OCTOBER 31, 1998
- ---------------------------------------- -------------- -------------------
<S> <C> <C>
Net asset value, beginning of period ... $ 10.39 $ 12.11
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................. (0.03) (0.02)
Net realized and change in unrealized
gain or loss on investments .......... 1.37 (1.70)
------- -------
Total from investment operations .... 1.34 (1.72)
------- -------
LESS DISTRIBUTIONS:
From net investment income ............ (0.01) --
From net realized gains on investments (0.06) --
------- -------
Total distributions ................. (0.07) --
------- -------
Net asset value, end of period ......... $ 11.66 $ 10.39
======= =======
Total return ........................... 12.94% (14.21)%
Net assets, end of period (000's) ...... $ 1,319 $ 1,118
Ratio of net expenses to average net
assets................................. 2.23% (1) 2.30% (1)
Ratio of net investment income to
average net assets .................... (0.46)%(1) (0.52)%(1)
Ratio of expenses before reimbursement
and waiver to average net assets ...... 2.27% (1) 2.41% (1)
Portfolio turnover rate ................ 110.25% 211.87%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
See Notes to Financial Statements. 63
<PAGE>
CAPITAL APPRECIATION FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
VALUE OPPORTUNITY
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTH FEBRUARY 2, 1998
PERIOD ENDED (COMMENCEMENT OF
APRIL 30, 1999 OPERATIONS)
CLASS I (UNAUDITED) TO OCTOBER 31, 1998
- ---------------------------------------- -------------- -------------------
<S> <C> <C>
Net asset value, beginning of period ... $ 9.99 $ 10.00
------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................. -- 0.03
Net realized and change in unrealized
gain or loss on investments .......... 2.66 (0.04)
------ -------
Total from investment operations .... 2.66 (0.01)
------ -------
LESS DISTRIBUTIONS:
From net investment income ............ (0.03) --
------ -------
Total distributions ................. (0.03) --
------ -------
Net asset value, end of period ......... $12.62 $ 9.99
====== =======
Total return ........................... 26.65% (0.10)%
Net assets, end of period (000's) ...... $5,554 $ 4,625
Ratio of net expenses to average net
assets................................. 1.10% (1) 1.10%(1)
Ratio of net investment income to
average net assets .................... (0.03)%(1) 0.37%(1)
Ratio of expenses before reimbursement
and waiver to average net assets ...... 2.42% (1) 3.41%(1)
Portfolio turnover rate ................ 63.91% 132.45%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
64 See Notes to Financial Statements.
<PAGE>
VALUE OPPORTUNITY
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTH FEBRUARY 2, 1998
PERIOD ENDED (COMMENCEMENT OF
APRIL 30, 1999 OPERATIONS)
CLASS A (UNAUDITED) TO OCTOBER 31, 1998
- ---------------------------------------- -------------- -------------------
<S> <C> <C>
Net asset value, beginning of period ... $ 9.97 $ 10.00
------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................. (0.02) 0.01
Net realized and change in unrealized
gain or loss on investments .......... 2.67 (0.04)
------ -------
Total from investment operations .... 2.65 (0.03)
------ -------
LESS DISTRIBUTIONS:
From net investment income ............ (0.02) --
------ -------
Total distributions ................. (0.02) --
------ -------
Net asset value, end of period ......... $12.60 $ 9.97
====== =======
Total return ........................... 26.55% (0.30)%
Net assets, end of period (000's) ...... $ 793 $ 464
Ratio of net expenses to average net
assets................................. 1.35% (1) 1.35%(1)
Ratio of net investment income to
average net assets .................... (0.28)%(1) 0.12%(1)
Ratio of expenses before reimbursement
and waiver to average net assets ...... 2.67% (1) 3.66%(1)
Portfolio turnover rate ................ 63.91% 132.45%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
See Notes to Financial Statements. 65
<PAGE>
CAPITAL APPRECIATION FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
VALUE OPPORTUNITY
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 1, 1999
(DATE OF INITIAL
PUBLIC OFFERING)
TO APRIL 30, 1999
CLASS B (UNAUDITED)
- ---------------------------------------------------------- -----------------
<S> <C>
Net asset value, beginning of period ..................... $11.28
------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................... (0.02)
Net realized and change in unrealized gain or loss on
investments............................................. 1.33
------
Total from investment operations ...................... 1.31
------
Net asset value, end of period ........................... $12.59
======
Total return ............................................. 11.61%
Net assets, end of period (000's) ........................ $ 117
Ratio of net expenses to average net assets .............. 2.10% (1)
Ratio of net investment income to average net assets ..... (1.03)%(1)
Ratio of expenses before reimbursement and waiver to
average net assets ...................................... 3.42% (1)
Portfolio turnover rate .................................. 63.91%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
66 See Notes to Financial Statements.
<PAGE>
VALUE OPPORTUNITY
- --------------------------------------------------------------------------------
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTH JUNE 30, 1998
PERIOD ENDED (DATE OF INITIAL
APRIL 30, 1999 PUBLIC OFFERING)
CLASS C (UNAUDITED) TO OCTOBER 31, 1998
- ---------------------------------------- -------------- -------------------
<S> <C> <C>
Net asset value, beginning of period ... $ 9.95 $ 11.04
------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................. (0.06) (0.02)
Net realized and change in unrealized
gain or loss on investments .......... 2.65 (1.07)
------ -------
Total from investment operations .... 2.59 (1.09)
------ -------
Net asset value, end of period ......... $12.54 $ 9.95
====== =======
Total return ........................... 26.03% (9.88)%
Net assets, end of period (000's) ...... $ 198 $ 95
Ratio of net expenses to average net
assets................................. 2.10% (1) 2.10% (1)
Ratio of net investment income to
average net assets .................... (1.03)%(1) (0.63)%(1)
Ratio of expenses before reimbursement
and waiver to average net assets ...... 3.41% (1) 4.41% (1)
Portfolio turnover rate ................ 63.91% 132.45%
</TABLE>
(1) Annualized.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
See Notes to Financial Statements. 67
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
