Report of Independent Auditors
Board of Directors and Stockholder
Select Asset Fund, Series 1, Inc.
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Select Asset Fund, Series 1, Inc.
as of December 31, 1998, the related statement of operations for the year then
ended, and the statement of changes in net assets and financial highlights for
each of the two years in the period then ended. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for each
of the three years in the period ended December 31, 1996 were audited by other
auditors whose report dated February 14, 1997, expressed an unqualified
opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included verification of investments
owned as of December 31, 1998, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the 1998 financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Select Asset Fund, Series 1, Inc. at December 31, 1998, the
results of its operations for the year then ended, and the changes in net
assets and financial highlights for each of the two years in the period then
ended, in conformity with generally accepted accounting principles.
Select Asset Fund, Series 1, Inc.
Statement of Assets and Liabilities
December 31, 1998
Assets
Investments, at fair value (cost $175,538,463) 373,572,255
Dividends receivable 323,390
Interest receivable 8,733
Receivable for securities sold 271,977
Total assets 374,176,355
Liabilities
Accrued expenses 76,867
Notes payable (Note 5) 94,900
Payable for securities purchased 1,402,650
Accrued interest expense 2,096
Total liabilities 1,576,513
Net assets 372,599,842
Net assets are represented by:
Common stock at par value, $.01 per share, 199,991,500 shares
authorized, 50,169,191.77 shares issued and outstanding 501,692
Additional paid-in capital 174,064,358
Net unrealized appreciation of investments 198,033,792
Net assets 372,599,842
Net asset value per common shares outstanding 7.43
See accompanying notes.
Select Asset Fund, Series 1, Inc.
Statement of Operations
For the year ended December 31, 1998
Investment income:
Dividend income 6,259,329
Interest income 122,484
Total investment income 6,381,813
Expenses:
Administration fee (Note 2) 282,905
Investment management fee (Note 2) 23,787
Rating agencies fees 5,667
Legal fees 30,082
Independent accountants 32,221
Insurance 6,889
Directors fees and expenses 7,454
Interest expense 7,736
Other expenses 850
Total expenses 397,591
Net investment income 5,984,222
Net realized and unrealized gains (losses)
on investments:
Net realized gain on investments 9,127,600
Change in net unrealized appreciation of investments (222,410,881)
Net decrease in net assets resulting from
operations $ (207,299,059)
See accompanying notes.
Select Asset Fund, Series 1, Inc.
Statement of Changes in Net Assets
For the years ended December 31, 1998 and 1997
1998 1997
From operations:
Net investment income 5,984,222 16,686,552
Net realized gain on investments 9,127,600 142,877,298
Net change in unrealized appreciation
of investments (222,410,881) 105,149,064
Increase (decrease) in net assets resulting from
operations (207,299,059) 264,712,914
Dividends from net investment income:
Auction market preferred stock - (15,743,802)
Common stock (5,984,222) (942,750)
(5,984,222) (16,686,552)
Distributions from net realized gains:
Common stock (9,127,600) (144,682,320)
Decrease in net assets resulting from
distributions to stockholders (15,111,822) (161,368,872)
Increase (decrease) from capital transactions:
Issuance of auction market preferred stock - 100,000,000
Issuance of common stock - 421,000,071
Capital contribution from common
stockholder 144,682,320 -
Redemption of auction market preferred
stock - (400,000,000)
Distribution of capital to common
stockholder (305,012,730) (280,010,783)
(160,330,410) (159,010,712)
Total decease in net assets (382,741,291) (55,666,670)
Net assets:
Beginning of year 755,341,133 811,007,803
End of year 372,599,842 755,341,133
See accompanying notes.
Select Asset Fund, Series 1, Inc.
Notes to Financial Statements
December 31, 1998
1. Organization and Significant Accounting Policies
On January 7, 1999 the Board of Directors approved a Plan of Liquidation and
Dissolution for the Fund. Management is in the process of liquidating and
winding-up the Fund.
The Select Asset Fund, Series 1, Inc. (the "Fund") is registered as a
diversified, closed-end management investment company under the Investment
Company Act of 1940, as amended.
The Fund's objective is long-term capital appreciation with income as a
secondary objective. The Fund's investments consist primarily of common stocks
of large and medium capitalization U.S. companies. The Fund's investment
portfolio must conform to certain rating agency asset coverage tests so long
as the Fund has preferred stock outstanding.
The following is a summary of significant accounting policies consistently
followed by the Fund in preparation of its financial statements.
Security Valuation
Investments in securities traded on a national securities exchange (or
reported on the Nasdaq National Market) are valued at the last reported sales
price on the primary exchange on which the securities are traded. Temporary
investments are valued at amortized cost which approximates fair value.
Security Transactions
Security transactions are accounted for on a trade date plus one business day
basis which does not differ materially from a trade date basis. The cost of
securities sold is determined using the identified cost method. Dividend
income is recorded on ex-dividend date and interest income is recorded on the
accrual basis.
Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and distribute its
taxable income to stockholders. Therefore, no provision for Federal income
tax is required.
1. Organization and Significant Accounting Policies (continued)
Distribution of Income and Gains
The Fund distributes substantially all of its taxable income in excess of the
dividends paid to the preferred stockholders to the common stockholder.
Dividends to the common stockholder are declared and paid at least annually.
Net realized capital gains, if any, are generally distributed annually.
The character of income and gains distributed is determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. Amounts distributed in excess of taxable income and net realized
capital gains, if any, are considered a return of capital.
Use of Estimates
Estimates and assumptions are required to be made regarding assets,
liabilities and changes in net assets resulting from operations when financial
statements are prepared. Changes in the economic environment, financial
markets and any other parameters used in determining these estimates could
cause actual results to differ from these amounts.
2. Related Party Transactions
A collective trust fund for employee benefit plans is the sole common
stockholder of the Fund. Certain officers and directors of the Fund are
affiliated with the common stockholder. No fees or expenses were paid to the
affiliated officers and directors.
For the years ended December 31, 1998 and 1997, dividend and capital gain
distributions to the common stockholder were $15,111,822 and $145,625,070,
respectively.
During the years ended December 31, 1998 and 1997, return of capital
distributions to the common stockholder amounted to approximately $305,012,730
and approximately $280,010,783, respectively.
During 1998 the common stockholder made capital contributions to the Fund in
the amount of $144,682,320.
2. Related Party Transactions (continued)
Comerica Bank serves as both custodian and administrator for the Fund and
receives a fee based on 0.06% of net assets outstanding at the end of the
fiscal year. An affiliate of Comerica Bank serves as investment advisor to the
Fund. The annual investment management fee is 0.01% of average equity
investments. The administration and management fees are calculated, accrued
and paid on a monthly basis.
3. Investment Transactions
The aggregate cost of securities purchased and the aggregate proceeds of
securities sold excluding short-term securities, for the year ended December
31, 1998 were $32,049,666 and $340,314,018, respectively.
As of December 31, 1998, the net unrealized appreciation of $198,033,792 is
comprised of aggregate gross unrealized appreciation and depreciation of
investments of $208,586,981 and $10,553,189, respectively.
4. Auction Market Preferred Stock ("AMPS")
In 1997 the Fund issued $100 million and redeemed $400 million of AMPS. No
AMPS were outstanding at December 31, 1998.
Each series of AMPS was redeemable at the option of the Fund in whole, but not
in part, at a price of $100,000 per share plus accumulated and unpaid
dividends. Dividends were cumulative from the date of original issue and were
paid every 49 days at a rate set through Dutch Auction. The Fund was subject
to certain asset coverage tests, and the AMPS were subject to mandatory
redemption if the tests were not met.
5. Notes Payable
As of December 31, 1998, the Fund had $94,900 of principal notes outstanding
to investors. The notes are due on March 4, 2018 and bear interest at a
floating rate. The interest rate, which resets annually, is set at the one-
year U.S. Treasury bill rate plus 2.50%. As of December 31, 1998, the Fund was
paying interest at 7.90% per annum.
6. Year 2000 (Unaudited)
Like other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by the advisor/administrator and other service providers do not properly
process and calculate date-related information and data from and after
January 1, 2000. This is commonly known as the "Year 2000 Problem". The
advisor/administrator is taking steps that it believes are reasonably designed
to address the Year 2000 Problem with respect to computer systems that it uses
and to obtain reasonable assurances that comparable steps are being taken by
the Fund's other major service providers. At this time, however, there can be
no assurance that these steps will be sufficient to avoid any adverse impact
to the Fund.
Select Asset Fund, Series 1, Inc.
Financial Highlights
Year ended December 31,
1998 1997 1996 1995 1994
For a share of common stock outstanding
throughout the period:
Net asset value, beginning
of period $15.06 $10.46 $13.16 $10.07 $10.66
Net investment income 0.12 0.33 0.31 0.45 0.49
Net realized and unrealized gains
(losses) on investments (4.25) 4.67 2.77 5.58 (0.36)
Total from investment operations (4.13) 5.00 3.08 6.03 0.13
Capital contribution 2.88 8.39 - - -
Less distributions from net investment income:
Common stock equivalent of dividends
paid to AMPS holders - (0.31) (0.21) (0.37) (0.25)
Dividends paid to common
stockholder (0.12) (0.02) (0.10) (0.08) (0.37)
Less distributions from net realized gains:
Common stock equivalent of distribution
to AMPS holders - - - - (0.05)
Dividends paid to common
stockholder (0.18) (2.88) (0.03) (0.43) (0.05)
Less distributions from paid-in capital:
Distribution of capital to common
stockholder (6.08) (5.58) (5.44) (2.06) -
Total distributions (6.38) (8.79) (5.78) (2.94) (0.72)
Net asset value, end of period $7.43 $15.06 $10.46 $13.16 $10.07
Total investment return -27.44% 32.64% 23.40% 59.88% 1.22%
Ratios/supplemental data:
Net assets at end of
period (000s) $372600 $755341 $811008 $643340 $556056
Average net assets (000s) $435777 $1010072 $722492 $603102 $692062
Ratio of expenses to average
net assets applicable to
common stock (1) 0.09% 0.17% 0.21% 0.16% 0.15%
Ratio of net investment income
to average net assets applicable
to common stock (1) 1.37% 1.65% 2.11% 2.39% 2.17%
Portfolio turnover 7.35% 12.02% 3.34% 16.36% 9.83%
Asset coverage per AMPS share,
end of period - - $270336 - $222422
AMPS shares outstanding - - 3,000 - 2,500
Asset coverage for notes payable,
end of period 392624% 796034% 837053% 65740% 568084%
Notes payable, end of period 94,900 94,900 96,900 97,900 97,900
(1)Ratios are calculated on the basis of income and expenses applicable to
both the common and preferred stock relative to the average net assets
of the common stockholder. Ratios do not reflect the effect of dividend
payments to AMPS holders. Ratios from 1996 and years prior have been
restated to exclude the effect of dividend payments to AMPS holders.
See accompanying notes.
SELECT ASSET FUND, SERIES 1, INC.
Portfolio of Investments
December 31, 1998
No. of
Shares Market Value
COMMON STOCK
BUILDING AND CONSTRUCTION 2.23%
BUILDING MATERIALS
21,700 CHAMPION INTL CORP 878,850.00
1,400 GEORGIA PACIFIC CORP 81,987.50
48,600 HOME DEPOT 2,973,712.50
31,400 LOUISIANA PAC CORP 575,012.50
18,000 MASCO CORP 517,500.00
3,800 OWENS CORNING 134,662.50
PAINT AND FLAT GLASS
4,700 PPG INDUS INC 273,775.00
10,700 SHERWIN WILLIAMS CO 314,312.50
INDUSTRIAL CHEMICALS
20,400 GREAT LAKES CHEM CRP 816,000.00
26,700 ROHM & HAAS CO 804,337.50
MISCELLANEOUS
20,300 FLUOR CORP 864,018.75
2,500 FOSTER WHEELER CORP 32,968.75
1,700 KAUFMAN & BROAD HOME CORP 48,875.00
TOTAL BUILDING AND CONSTRUCTION $8,316,012.50
CHEMICALS AND DRUGS 10.68%
CHEMICALS
41,100 AIR PRODS & CHEMS INC 1,644,000.00
36,900 AMGEN INC 3,858,356.25
39,400 BOSTON SCIENTIFIC CORP 1,056,412.50
2,700 DOW CHEMICAL CO 245,531.25
2,900 DUPONT DENEMOURS & CO 153,881.25
1,950 EASTMAN CHEMICAL CO 87,262.50
9,200 ENGLEHARD CORP 179,400.00
1,700 FMC CORP-NEW 95,200.00
700 HERCULES INC 19,162.50
82,200 MONSANTO CO 3,904,500.00
5,900 MORTON INTERNATIONAL INC 144,550.00
3,300 NALCO CHEM CO 102,300.00
8,900 PRAXIAIR INC 313,725.00
5,100 SIGMA-ALDRICH CORP 149,812.50
6,600 UNION CARBIDE CORP 280,500.00
6,400 WR GRACE & CO NEW 100,400.00
DRUGS
14,800 ABBOT LABS 725,200.00
9,000 ALZA CORP CL A 470,250.00
12,200 AMERICAN HOME PRODUCTS 687,012.50
9,800 BRISTOL MYERS SQUIBB CO 1,311,362.50
17,250 DOLLAR GENERAL CORP 407,531.25
20,400 JOHNSON & JOHNSON 1,711,050.00
10,900 LILLY ELI & CO 968,737.50
18,600 MERCK & CO., INC 2,746,987.50
18,800 PFIZER INC 2,358,225.00
28,070 PHARMACIA & UPJOHN INC 1,589,463.75
14,600 SCHERING PLOUGH 806,650.00
73,100 WALGREEN CO 4,280,918.75
COSMETICS
8,700 ALBERTO CULVER CO CL B 232,181.25
2,200 AVON PRODUCTS INC 97,350.00
9,900 INTL FLAVORS & FRAGRANCES 437,456.25
HEALTH PRODUCTS/CARE
16,100 ALLERGAN INC 1,042,475.00
3,900 BARD CR INC 193,050.00
12,800 BAUSCH & LOMB 768,000.00
2,600 BAXTER INTL INC. 167,212.50
9,800 BECTON DICKINSON & CO 418,337.50
51,250 COLUMBIA/HCA HEALTHCARE 1,268,437.50
18,600 GUIDANT CORP 2,050,650.00
4,400 HCR MANOR CARE 129,250.00
13,300 TENET HEALTHCARE CORP 349,125.00
54,100 UTD HEALTHCARE CORP 2,329,681.25
TOTAL CHEMICALS AND DRUGS $39,881,588.75
CONSUMER PRODUCTS 11.67%
CONFECTIONS AND BEVERAGES
7,200 ANHEUSER-BUSCH COS 472,500.00
3,700 BROWN FORMAN INC CL B 280,043.75
81,800 COCA COLA CO 5,470,375.00
29,400 NEWELL CO. 1,212,750.00
6,300 PEPSICO INC 257,906.25
CONTAINERS
6,100 AVERY DENNISON CORP 274,881.25
2,100 BALL CORP 96,075.00
16,400 CROWN CORK & SEAL INC 505,325.00
2,100 OWENS - ILLINOIS INC 64,312.50
5,863 SEALED AIR CORP 299,379.44
2,600 TEMPLE INLAND INC 154,212.50
PACKAGED FOOD
104,184 ARCHER DANIELS MIDLAND CO 1,790,662.50
13,400 BESTFOODS 713,550.00
5,400 CAMPBELL SOUP CO 297,000.00
6,500 CONAGRA 204,750.00
1,700 COORS ADOLPH CO CL B 95,943.75
6,800 GENERAL MILLS INC 528,700.00
4,300 HEINZ H J CO 243,487.50
6,300 HERSHEY FOODS CORP 391,781.25
2,300 KELLOGG CO 78,487.50
40,200 PIONEER HI BRED INTL INC 1,085,400.00
2,200 QUAKER OATS CO 130,900.00
16,500 RALSTON-PURINA GROUP 534,187.50
4,600 SARA LEE CORP 129,662.50
15,200 SYSCO CORP 417,050.00
18,300 WRIGLEY WM JR CO 1,638,993.75
PAPER
4,000 AMERICAN GREETINGS CL A 164,250.00
2,400 BEMIS CO 91,050.00
6,900 BOISE CASCADE CORP 213,900.00
9,800 FORT JAMES CORPORATION 392,000.00
4,379 INTERNATIONAL PAPER CO 196,233.94
4,680 KIMBERLY CLARK CORP 255,060.00
20,000 MEAD CORP 586,250.00
1,100 POTLATCH CORP 40,562.50
3,600 UNION CAMP CORP 243,000.00
9,500 WEYERHAEUSER CO 482,718.75
PRINTING AND PUBLISHING
1,600 JOSTENS INC 41,900.00
14,300 KNIGHT-RIDDER INC 731,087.50
2,400 MCGRAW-HILL COMPANIES INC 244,500.00
9,300 MEREDITH CORP 352,237.50
35,600 NEW YORK TIMES CO CL A 1,234,875.00
52,800 TIME WARNER INC 3,276,900.00
16,200 TIMES MIRROR CO CL A NEW 907,200.00
20,100 TRIBUNE CO 1,326,600.00
4,850 WESTVACO CORP 130,040.63
RECREATIONAL EQUIPMENT
6,600 BRUNSWICK CORP 163,350.00
5,450 HARRAH'S ENTERTAINMENT 85,496.88
4,850 HASBRO INC 175,206.25
29,656 MATTEL INC 676,527.50
SOAPS
4,000 CLOROX CO 467,250.00
OTHER CONSUMER PRODUCTS
4,500 COLGATE PALMOLIVE CO 417,937.50
8,000 FORTUNE BRANDS INC 253,000.00
31,100 GILLETTE CO 1,502,518.75
24,000 PROCTER & GAMBLE CO 2,191,500.00
4,500 RUBBERMAID INC 141,468.75
1,700 SPRINGS INDUS INC 70,443.75
14,900 TUPPERWARE CORPORATION 244,918.75
4,800 UST INC 167,400.00
PHOTOGRAPHY
900 EASTMAN KODAK CO 64,800.00
2,100 POLAROID CORP 39,243.75
HOUSEHOLD FURN/APPLIANCES
3,200 ARMSTRONG WORLD IND 193,000.00
4,000 MAYTAG CO 249,000.00
RETAIL
5,100 FEDERATED DEPT STORES NEW 222,168.75
12,000 KOHLS CORP 737,250.00
72,400 TJX COS INC (NEW) 2,099,600.00
APPAREL
40,043 LIMITED INC 1,166,252.38
14,500 LIZ CLAIBORNE INC 457,656.25
7,900 NIKE INC CL B 320,443.75
6,500 V F CORP 304,687.50
BROADCASTING
24,972 DISNEY WALT CO 749,160.00
2,800 KING WORLD INC 82,425.00
MISCELLANEOUS
9,900 PALL CORP 250,593.75
62,000 RJR NABISCO HLDGS CORP 1,840,625.00
TOTAL CONSUMER PRODUCTS $43,612,607.02
DURABLE GOODS 30.59%
AEROSPACE-AIRCRAFT
18,168 BOEING CO 592,731.00
6,400 GENERAL DYNAMICS CORP 375,200.00
2,820 LOCKHEED MARTIN CORP 238,995.00
3,500 NORTHROP GRUMMAN CORP 255,937.50
1,600 TEXTRON INC 121,500.00
600 UNITED TECHNOLOGIES CORP 65,250.00
AGRICULTURAL MACHINERY
2,400 CATERPILLAR INC 110,400.00
4,600 DEERE & CO 152,375.00
AUTOMOBILE AND PARTS
13,000 AUTOZONE INC 428,187.50
26,500 COOPER TIRE & RUBBER 541,593.75
3,000 CUMMINS ENGINE INC 106,500.00
20,518 DANA CORP 838,673.25
200 EATON CORP 14,137.50
26,100 FORD MTR CO 1,531,743.75
4,700 GENERAL MTRS CORP 336,343.75
2,950 GENUINE PARTS CO 98,640.63
10,160 NAVISTAR INTL CORP (NEW) 289,560.00
3,500 TENNECO INC (NEW) 119,218.75
600 TRW INC 33,712.50
ELECTRICAL
20 AMP INC 1,041.25
6,000 EMERSON ELEC CO 363,000.00
3,700 HONEYWELL INC 278,656.25
5,000 RAYCHEM CORP 161,562.50
ELECTRONICS
24,500 ADVANCED MICRO-DEVICES 708,968.75
24,100 APPLIED MATLS INC 1,028,768.75
209,475 CISCO SYS INC 19,441,898.44
10,600 E G & G INC 294,812.50
35,700 GENERAL ELECTRIC CO 3,643,631.25
20,600 GENERAL INSTRUMENT CORP 699,112.50
4,500 HEWLETT PACKARD CO 307,406.25
500 KLA-TENCOR CORPORATION 21,687.50
3,300 LSI LOGIC CORP 53,212.50
15,000 MICRON TECH 758,437.50
11,400 NATIONAL SEMICONDUCTOR 153,900.00
5,600 NATIONAL SVC INDS 212,800.00
61,612 ORACLE CORPORATION 2,657,017.50
2,700 PERKIN ELMER CORP 263,418.75
77,100 RAYTHEON CO CL B 4,105,575.00
80,200 SEAGATE TECHNOLOGY INC 2,426,050.00
1,450 TEKTRONIX INC 43,590.63
22,100 TEXAS INSTRUMENTS 1,890,931.25
6,900 THOMAS & BETTS CORP 298,856.25
INDUSTRIAL MACHINERY
3,900 AEROQUIP-VICKERS INC 116,756.25
1,000 BRIGGS & STRATTON CORP 49,875.00
4,400 CASE CORPORATION 95,975.00
6,200 COOPER INDUS INC 295,662.50
9,600 DOVER CORP 351,600.00
12,700 HARNISCHFEGER INDUS INC 129,381.25
24,700 INGERSOLL RAND CO 1,159,356.25
2,000 MILACRON 38,500.00
300 NACCO INDUS INC CL A 27,600.00
22,600 ROCKWELL INTL CORP W/I 1,097,512.50
OFFICE EQUIPMENT AND SUPPLIES
13,400 DELUXE CORP 489,937.50
25,900 IKON OFFICE SOLUTIONS 221,768.75
2,900 XEROX CORP. 342,200.00
RUBBER
6,202 GOODRICH B F CO 222,496.75
4,500 GOODYEAR TIRE & RUBBER 226,968.75
OTHER DURABLE GOODS
5,300 CORNING INCORPORATED 238,500.00
3,150 CRANE CO 95,090.63
11,700 ILLINOIS TOOL WORKS 678,600.00
7,200 MILLIPORE CORP 204,750.00
7,000 MINNESOTA MNG & MFR 497,875.00
13,900 STANLEY WORKS 385,725.00
COMPUTERS AND SOFTWARE
32,500 APPLE COMPUTER INC 1,330,468.75
100 CABLETRON SYSTEMS INC 837.50
5,200 CERIDIAN CORP 363,025.00
37,069 COMPAQ COMPUTER CORP 1,554,581.19
21,862 COMPUTER ASSOC INTL INC 931,867.75
5,300 DATA GENL CORP 87,118.75
175,200 DELL COMPUTER CORP 12,822,450.00
15,000 ELECTRONIC DATA SYSTEMS 753,750.00
3,000 GATEWAY 2000 153,562.50
1,100 HBO AND CO 31,556.25
35,700 IMS HEALTH INC 2,693,118.75
135,000 MICROSOFT CORP 18,722,812.50
74,600 NOVELL INC 1,352,125.00
2,500 PARAMETRIC TECNOLOGY 40,937.50
18,300 SILICON GRAPHICS 235,612.50
23,200 SUN MICROSYSTEMS 1,986,500.00
8,500 UNISYS CORP 292,718.75
HOUSEHOLD FURN/APPLIANCES
4,500 WHIRLPOOL CORP 249,187.50
TELECOMMUNICATIONS
51,800 AIRTOUCH COMMUNICATIONS 3,736,075.00
10,487 ANDREW CORP 173,035.50
17,100 ASCEND COMMUNICATIONS 1,124,325.00
6,200 CLEAR CHANNEL COMMUNICATI 337,900.00
33,448 LUCENT TECHNOLOGIES INC 3,679,280.00
89,400 MEDIAONE GROUP INC (NEW) 4,201,800.00
4,000 SPRINT CORP PCS GROUP 92,500.00
MISCELLANEOUS
15,100 ALLIED-SIGNAL INC 669,118.75
13,600 BLACK & DECKER CORP 762,450.00
13,300 ITT INDUSTRIES INC 528,675.00
4,200 JOHNSON CTLS INC 247,800.00
5,775 PARKER HANNIFIN CORP 189,131.25
3,350 SNAP ON TOOLS CORP 116,621.88
15,000 SOLECTRON CORP 1,394,062.50
22,700 THERMO ELECTRON CORP 384,481.25
TOTAL DURABLE GOODS $114,270,652.65
FINANCIAL 9.96%
BANKS
14,800 BANK NEW YORK INC 595,700.00
2,200 BB&T CORP 88,687.50
3,660 CHASE MANHATTAN CORP NEW 249,108.75
1,800 FIFTH THIRD BANCORP COM 128,362.50
18,588 FIRST UNION CORP 1,130,382.75
12,668 FLEET FINANCIAL GROUP INC 566,101.25
17,084 KEYCORP NEW 546,688.00
11,943 MBNA CORP 297,828.56
9,800 MELLON BANK CORP 673,750.00
2,000 MORGAN J P & CO 210,125.00
9,800 NATIONAL CITY CORP 710,500.00
21,000 NORTHERN TRUST CO 1,833,562.50
9,200 PNC FINANCIAL 497,950.00
1,000 REGIONS FINANCIAL CORP 40,312.50
15,300 SUMMIT BANCORP 668,418.75
2,700 SUNTRUST BANKS INC 206,550.00
11,131 U.S. BANCORP 395,150.50
6,901 WACHOVIA CORP 603,406.19
22,130 WELLS FARGO COMPANY NEW 883,816.88
FINANCE COMPANIES
1,300 AMERICAN EXPRESS CO 132,925.00
22,508 ASSOCIATES 1ST CAPITAL A 953,776.50
500 COAST FEDERAL RTS 2,968.75
12,779 HOUSEHOLD INTL CORP 506,367.88
0 WADDELL & REED FIN CL A 0.71
1 WADDELL & REED FIN CL B 14.65
HOLDING COMPANY
9,771 BANK ONE CORP 498,916.37
27,638 BANKAMERICA CORP NEW 1,661,734.75
24,140 CITIGROUP INC 1,194,930.00
1,000 EASTERN ENTERPRISES 43,750.00
28,466 MS, DW, DISCOVER & CO 2,021,086.00
FIRE AND CASUALTY INSURANCE
900 CHUBB CORP 58,387.50
2,000 SAFECO CORP 85,875.00
INSURANCE
16,113 AETNA INC 1,266,884.63
128 ALLSTATE CORPORATION 4,944.00
11,850 AMERICAN INTL GROUP 1,145,006.25
8,900 AON CORP 492,837.50
2,400 CIGNA CORP 185,550.00
17,700 CINCINNATI FINANCIAL CORP 648,262.50
23,700 CONSECO INC 724,331.25
1,600 HARTFORD FINANCIAL SVCS 87,800.00
16,200 MARSH & MCLENNAN CO. 946,687.50
12,210 MBIA INC 800,518.13
34,900 MGIC INVT CROP 1,389,456.25
13,136 ST PAUL COS INC 456,476.00
28,700 TORCHMARK CORP 1,013,468.75
9,300 TRANSAMERICA CORP 1,074,150.00
20,800 UNUM CORP. 1,214,200.00
LIFE INSURANCE
3,997 AMERICAN GENERAL CORP 311,766.00
3,975 JEFFERSON PILOT CORP 298,125.00
2,100 LINCOLN NATL CORP IND 171,806.25
28,950 PROVIDIAN FINL CORP W/I 2,171,250.00
REAL ESTATE
5,100 FEDERAL NATL MTGE ASSN 377,400.00
SAVINGS & LOANS
2,200 GOLDEN WEST FINL CORP 201,712.50
BROKERAGE
13,700 BEAR STEARNS COS INC 512,037.50
32,400 FRANKLIN RESOURCES 1,036,800.00
21,800 LEHMAN BROS HLDGS INC 960,562.50
2,700 MERRILL LYNCH & CO 180,225.00
MISCELLANEOUS
12,700 DUN & BRADSTREET CORP NEW 400,843.75
43,429 WASHINGTON MUTUAL 1,658,444.94
TOTAL FINANCIAL $37,218,680.94
METALS AND MINING 0.94%
ALUMINUM
1,500 ALUMINUM CO AMER 111,843.75
5,300 REYNOLDS METALS CO 279,243.75
MINING
20,500 HOMESTAKE MNG CO 188,343.75
STEEL
23,482 ALLEGHENY TELEDYNE 479,913.38
31,300 BETHLEHEM STEEL CORP 262,137.50
5,000 NUCOR CORP 216,250.00
3,100 TIMKEN CO 58,512.50
21,900 USX-US STEEL GROUP 503,700.00
22,500 WORTHINGTON INDS INC 281,250.00
OTHER METALS
2,400 ASARCO INC 36,150.00
88,400 BATTLE MOUNTAIN GOLD CL A 364,650.00
26,123 NEWMONT MNG CORP 471,846.69
2,400 PHELPS DODGE CORP 122,100.00
MINERALS
13,900 CYPRUS AMAX MINERALS CO 139,000.00
TOTAL METALS AND MINING $3,514,941.32
COLLECTIBLES & PRECIOUS MATERIALS 0.02%
GOLD-DIAMOND-GEMS
6,500 FREEPORT-MCMORAN COPPER-B 67,843.75
TOTAL COLLECTIBLES & PRECIOUS MATERIALS $67,843.75
OIL-ENERGY 2.88%
OIL & GAS PRODUCERS
15,100 AMERADA HESS CORP 751,225.00
9,200 AMOCO INC 542,800.00
1,400 APACHE CORP 35,437.50
11,000 COASTAL CORP 384,312.50
2,000 HELMERICH & PAYNE INC. 38,750.00
7,300 OCCIDENTAL PETROLEUM 123,187.50
6,100 ROWAN COS INC 61,000.00
6,400 SUNOCO INC 230,800.00
39,806 UNION PACIFIC RESOURCES 360,741.88
NATURAL RESOURCES
2,500 KERR MCGEE CORP 95,625.00
5,100 ONEOK INC 184,237.50
8,600 WILLIAMS COS INC-DEL 268,212.50
OIL EQUIPMENT, WELLS & SVCS
5,400 ASHLAND, INC 261,225.00
40,450 BAKER HUGHES INC 715,459.38
51,100 HALLIBURTON CO 1,513,837.50
OIL - DOMESTIC
34,177 BURLINGTON RESOURCES INC 1,223,963.81
4,100 PHILLIPS PETE CO 174,762.50
7,100 UNOCAL CORP 207,231.25
OIL - INTERNATIONAL
2,400 ATLANTIC RICHFIELD CO 156,600.00
9,300 CHEVRON CORP 771,318.75
22,200 EXXON CORP. 1,623,375.00
7,300 MOBIL CORP 636,012.50
6,200 ORYX ENERGY COMPANY 83,312.50
5,658 TEXACO INC 299,166.75
TOTAL OIL-ENERGY $10,742,594.32
RETAIL 6.78%
DEPARTMENT STORES
42,800 CVS CORP 2,354,000.00
10,800 DAYTON HUDSON CORP 585,900.00
1,800 DILLARDS INCORPORATED 51,075.00
3,100 HARCOURT GENERAL INC 164,881.25
13,800 K MART 211,312.50
7,500 MAY DEPT STORES CO 452,812.50
7,000 PENNEY JC INC 328,125.00
11,800 SEARS ROEBUCK & CO 501,500.00
18,700 WAL MART STORES INC 1,522,881.25
22,200 WINN-DIXIE STORES INC 996,225.00
GROCERY
4,300 ALBERTSON'S INC 273,856.25
38,300 AMERICAN STORES CO 1,414,706.25
1,600 GREAT ATLANTIC & PAC TEA 47,400.00
17,800 KROGER CO 1,076,900.00
23,600 SUPERVALUE INC 660,800.00
OTHER RETAIL
19,900 CIRCUIT CITY STORES 993,756.25
20,326 CONSOLIDATED STORES INC 410,331.13
28,477 COSTCO COMPANIES INC 2,055,683.44
1,200 LONGS DRUG STORES CORP 45,000.00
24,400 LOWES COS INC 1,248,975.00
5,000 PEP BOYS-MAN, MO, JACK 78,437.50
30,300 RITE AID CORP 1,501,743.75
24,700 TANDY CORP 1,017,331.25
48,700 TOYS R US 821,812.50
SPORTING GOODS
11,900 REEBOK INTL LTD 177,012.50
1,800 RUSSELL CORP 36,562.50
APPAREL
22,690 FRED MEYER INC 1,367,072.50
21,375 GAP INC 1,202,343.75
6,200 NORDSTROM INC 215,062.50
MISCELLANEOUS
46,663 TYCO INTERNATIONAL LTD 3,520,140.06
TOTAL RETAIL $25,333,639.63
UTILITIES 12.35%
ELECTRIC
30,700 AMEREN CORP 1,310,506.25
4,700 AMERICAN ELEC PWR INC 221,193.75
2,400 BALTIMORE GAS & ELEC 74,100.00
13,900 CAROLINA PWR & LT CO 654,168.75
25,500 CENTRAL & SOUTH WEST CORP 699,656.25
6,585 CINERGY CORP 226,359.38
12,400 CONSOLIDATED EDISON INC 655,650.00
10,100 DOMINION RES INC-VA 472,175.00
4,200 DTE ENERGY COMPANY 180,075.00
3,377 DUKE POWER CO 216,339.06
16,800 ENTERGY CORP NEW 522,900.00
2,400 FPL GROUP INC 147,900.00
3,300 GPU INC 145,818.75
7,790 HOUSTON INDS INC 250,253.75
11,000 NIAGARA MOHAWK PWR 177,375.00
4,500 NORTHERN STS PWR CO 124,875.00
5,100 PACIFICORP 107,418.75
21,200 PECO ENERGY 882,450.00
14,100 PG&E CORP 444,150.00
2,500 PP&L RESOURCES INC 69,687.50
35,200 PUBLIC SVC ENTERPRISE GRP 1,408,000.00
33,974 SBC COMMUNICATIONS INC 1,821,855.75
17,900 SOUTHERN CO 520,218.75
5,600 UNICOM CORP 215,950.00
GAS
12,300 COLUMBIA GAS SYS INC 710,325.00
7,900 CONSOLIDATED NATL GAS 426,600.00
7,400 ENRON CORP 422,262.50
7,800 NICOR INC 329,550.00
6,200 PEOPLES ENERGY CORP 247,225.00
4,900 SONAT INC 132,606.25
1,832 TEXAS UTILITIES CO 85,531.50
TELEPHONE
27,900 A T & T 2,099,475.00
14,400 ALLTEL CORP 861,300.00
27,176 BELL ATLANTIC CORP 1,440,328.00
56,000 BELLSOUTH CORP 2,793,000.00
13,700 FRONTIER CORP 465,800.00
14,300 GTE CORP 929,500.00
274,267 MCI WORLDCOM INC 19,678,657.25
8,000 SPRINT CORP 673,000.00
13,941 US WEST INC (NEW) 900,937.13
WASTE DESPOSAL
16,200 BROWNING FERRIS IND 460,687.50
12,252 WASTE MANAGEMENT INC 571,249.50
MISCELLANEOUS
52,973 SEMPRA ENERGY 1,344,189.88
TOTAL UTILITIES $46,121,301.20
MISCELLANEOUS 11.31%
BROADCAST/COMMUNICATIONS
24,900 CBS CORP 815,475.00
58,600 COMCAST CORP CL A SPL 3,439,087.50
1,200 GANNETT CO., INC 77,400.00
64,400 MOTOROLA INC 3,932,425.00
36,000 TELE COMM. INC CL A 1,991,250.00
17,600 VIACOM INC CL B NON VTG 1,302,400.00
BUSINESS SERVICES
3,700 AUTODESK INC 157,943.75
8,600 AUTOMATIC DATA PROC 689,612.50
5,500 BLOCK H&R INC 247,500.00
36,963 CENDANT CORP 704,607.19
16,300 COMPUTER SCIENCES CORP 1,050,331.25
6,700 DONNELLEY RR & SONS 293,543.75
4,100 DOW JONES & CO 197,312.50
37,600 E M C CORP 3,196,000.00
24,100 ECOLAB INC 872,118.75
10,000 FIRST DATA CORP 316,875.00
5,400 GRAINGER W W INC 224,775.00
6,900 INTERPUBLIC GROUP COS 550,275.00
18,300 OMNICOM GROUP INC 1,061,400.00
4,600 SCIENTIFIC-ATLANTA 104,937.50
18,900 SERVICE CORP INTL 719,381.25
9,100 THREE COM CORP 407,793.75
FOOD SERVICE
17,900 DARDEN RESTAURANTS INC 322,200.00
9,300 MCDONALDS CORP 712,612.50
23,800 PHILLIP MORRIS CO INC 1,273,300.00
24,360 TRICON GLOBAL RESTAURANTS 1,221,045.00
5,500 WENDYS INTL INC 119,968.75
HOTEL & MOTEL
18,500 HILTON HOTELS CORP 353,812.50
22,600 MARRIOTT INTL CL A 655,400.00
HOUSING
1,600 PULTE CORP 44,500.00
MED SERV & SUPPLIES
17,300 BIOMET INC 696,325.00
78,900 HEALTHSOUTH CORPORATION 1,218,018.75
2,400 HUMANA INC 42,750.00
60,400 MEDTRONIC INC 4,484,700.00
1,400 SHARED MEDICAL SYS CORP 69,825.00
6,750 ST. JUDE MED INC. 186,890.63
REAL ESTATE
3,500 CENTEX CORP 157,718.75
TRANSPORTATION
5,109 BURLINGTON NRTHN SANTA FE 172,428.75
1,600 CSX CORP 66,400.00
10,600 DELTA AIR LINES INC 551,200.00
11,540 FDX CORP 1,027,060.00
2,100 FLEETWOOD ENTERPRISES 72,975.00
5,600 NORFOLK SOUTHERN CORP 177,450.00
11,900 PACCAR INC 489,387.50
4,200 RYDER SYSTEMS INC 109,200.00
44,850 SOUTHWEST AIRLINES CO 1,006,321.88
19,100 U S AIR GROUP 993,200.00
7,800 UNION PACIFIC CORP 351,487.50
MISCELLANEOUS
11,700 MALLINCKRODT (NEW) 360,506.25
23,400 WARNER-LAMBERT 1,759,387.50
TELECOMMUNICATIONS
16,600 AMERITECH CORP NEW 1,052,025.00
3,600 HARRIS CORP-DEL 131,850.00
TOTAL MISCELLANEOUS $42,232,390.95
TOTAL COMMON STOCK $371,312,253.03
OTHER
0.60%
CASH EQUIVALENTS
2,260,002 AIM SHORT TERM INV SER 2 2,260,002.06
TOTAL $2,260,002.06
TOTAL OTHER $2,260,002.06
TOTAL INVESTMENTS - 100.00% $373,572,255.09
(cost $175,538,463)
See accompanying notes
