SELECT ASSET FUND, SERIES 2, INC.
Statement of Assets and Liabilities
June 30, 1996
(Unaudited)
Assets
Investments, at value (@ cost $506,583,219.74) $727,899,516
Cash 5,640
Dividends receivable 1,153,914
Interest receivable 25,605
Prepaid expenses 81,171
Total Assets 729,165,846
Liabilities
AMPS dividends payable (note 4) 1,102,790
Payable for Securities Purchased -
Unsettled Trades 205,013
Accrued expenses 224,766
Notes payable (note 5) 117,900
Accrued interest expense 3,020
Total Liabilities 1,653,488
Net Assets $727,512,358
Net assets are represented by:
Series A Auction Market Preferred Stock, $.01 par value at liquidation
preference $100,000 per share, 1,000 shares authorized, issued and
outstanding 100,000,000
Series B Auction Market Preferred Stock, $.01 par value at liquidation
preference $100,000 per share, 1,000 shares authorized, issued and
outstanding 100,000,000
Series C Auction Market Preferred Stock, $.01 par value at liquidation
preference $100,000 per share, 600 shares authorized, issued and
outstanding 60,000,000
Series D Auction Market Preferred Stock, $.01 par value at liquidation
preference $100,000 per share, 500 shares authorized, issued and
outstanding 50,000,000
Common stock at par value, $.01 per share, 199,996,900 shares authorized,
71,071,001.64 shares issued and outstandi 710,710
Additional paid-in capital 193,212,618
Undistributed Net Investment Income 2,272,734
Net unrealized appreciation of investments 221,316,296
Net Assets $727,512,358
Net asset value per common shares outstanding $5.87
See accompanying notes to the financial statements.
SELECT ASSET FUND, SERIES 2, INC.
Statement of Operations
For the period from January 1, 1996 to June 30, 1996
(Unaudited)
Investment income:
Dividend income $7,167,602
Interest income 322,753
Total investment income 7,490,355
Expenses:
Broker dealer fee 306,165
Legal fees 25,177
Rating agencies fees 64,345
Independent accountants 15,913
Auction agent fee 10,691
Custody / administration fees (note 2) 56,813
Directors fees and expenses 5,370
Interest expense 5,208
Insurance 8,497
Investment management fee (note 2) 29,090
Other expenses 1,166
Total expenses 528,435
Net investment income 6,961,920
Net realized and unrealized gains on investments:
Net realized gain on investments:
Proceeds from sales $421,482,209
Cost of securities (301,073,740)
120,408,469
Unrealized appreciation of investments:
Beginning of period 287,089,347
End of period 221,316,296
Increase in net unrealized appreciation
of investments (65,773,051)
Net increase in net assets
resulting from operations $61,597,338
See accompanying notes to the financial statements.
SELECT ASSET FUND, SERIES 2, INC.
Statement of Changes in Net Assets
For the period from January 1, 1996 to June 30, 1996
and for the year-ended December 31, 1995
(Unaudited)
For the six For the
months ended year ended
June 30, 1996 December 31,
(UNAUDITED) 1995
From operations:
Net investment income $6,961,920 $23,803,440
Net realized gain on investments 120,408,469 17,708,880
Net change in unrealized appreciation
on investments (65,773,051) 255,614,594
Increase in net assets
resulting from operations 61,597,338 41,512,320
Dividends to stockholders from net investment income:
Auction market preferred stock (4,689,186) (20,646,886)
Common stock 0 (3,156,554)
(4,689,186) (23,803,440)
Dividends to stockholders from net realized gains
Auction market preferred stock 0 0
Common stock (120,408,469) (35,488,273)
Decrease in net assets resulting
from dividends to stockholder (125,097,655) (59,291,713)
Increase (decrease) from capital share transactions:
Issuance of Common stock 36,154,530 212,112,129
Issuance of Auction market preferred stock 310,000,000 0
Return of capital dividend (491,501,344) (400,000,000)
(145,346,814) (187,887,871)
Total increase in net assets (208,847,131) (205,667,264)
Net assets:
Beginning of period 936,359,489 886,412,160
End of period $727,512,358 $936,359,489
See accompanying notes to the financial statements.
SELECT ASSET FUND, SERIES 2, INC.
Financial Highlights
For the period from January 1, 1996 to June 30, 1996
and for the year-ended December 31, 1995
(Unaudited)
For the six For the
months ended year ended
June 30, 1996 December 31,
(UNAUDITED) 1995
For a share of common stock outstanding throughout the period:
Net asset value, beginning of period $14.41 $10.97
Net investment income 0.10 0.52
Net gains on investments
realized and unrealized 0.84 6.00
Total from investment operation 0.94 6.52
Less distributions from net investment income and net realized gains:
Common share equivalent of dividends paid
to AMPS holders (0.07) (0.45)
Dividends paid to common shareholders (1.85) (0.59)
Return of capital (7.56) (2.04)
Total distributions (9.48) (3.08)
Net asset value, end of period $5.87 $14.41
Total investment return 10.44% 59.43%
Net assets at end of period (000s) $417,512 $936,359
Ratio of expenses to average net assets applicable to common
shares 0.06% 0.13%
Ratio of net investment income to average net assets applicable
to common shares + 0.41% 0.35%
Portfolio turnover 13.14% 16.27%
+Net investment income is adjusted for distributions paid to AMPS holders.
*Total investment return for the period; not annualized.
See accompanying notes to financial statements.
SELECT ASSET FUND, SERIES 2, INC.
Notes to Financial Statements
June 30, 1996
(1) Organization and Significant Accounting Policies
The Select Asset Fund, Series 2, Inc. (the "Fund") is registered as a
diversified, closed-end management investment company under the
Investment Company Act of 1940, as amended. The Fund commenced
investment operations on April 28, 1993.
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 following is a summary of significant accounting policies
consistently followed by the Fund in preparation of its financial
statements.
(a) 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.
Temporary investments are valued at amortized cost which
approximates fair value.
(b) Security Transactions
Security transactions are accounted for on a trade date basis.
The cost of securities sold is determined using the identified
cost method. Dividend income is recorded on ex-dividend date.
(c) 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 shareholders.
Therefore, no provision for Federal income tax is required.
(d) 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 capital gains, if
any, are distributed annually.
(e) Reclassification Policy
It is the Fund's policy to reclassify certain amounts to
conform to the current year's presentation when necessary.
(f) 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.
During the period, the Fund issued 6,098,042.8 in shares of common
stock with a fair value of $36,154,530.
During the six months ended June 30, 1996, and the year ended
December 31, 1995, dividends to the common stockholder amounted to
$120,408,469 and $38,644,827, respectively.
During the period ended June 30, 1996 and the year ended December 31,
1995, the Fund made a return of capital distribution to the common
stockholder in the amount of $490,818,932 and $90,287,871,
respectively. Approximately $39,500,000 of the 1995 return of
capital distribution is considered taxable for IRS purposes.
Comerica Bank serves as both custodian and administrator for the
Fund. 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 management fee is calculated and accrued on
a monthly basis.
(3) Investment Transactions
The aggregate cost of securities purchased and the aggregate proceeds
of securities sold, for the six months ended June 30, 1996 were
$109,354,498 and $421,482,209, respectively.
As of June 30, 1996 based on cost for Federal income tax purposes,
the aggregate gross unrealized appreciation and depreciation for all
securities were $225,604,415 and $4,288,119, respectively.
(4) Auction Market Preferred Stock
In January 1996, the Fund sold $260 million of Auction Market
Preferred Stock ("AMPS"). In June 1996, the Fund sold an additional
$50 million of AMPS and issued 6,098,042.8 shares of common stock.
The Fund has outstanding at June 30, 1996, 1000 shares each of Series
A and Series B, 600 shares of Series C, and 500 shares of Series D
AMPS at a liquidation value of $100,000 per share. Dividends are
cumulative from the date of original issue and are paid every 49 days
at a rate set through a Dutch Auction. The AMPS rates in effect on
June 30, 1996 were 4.04%, 4.06%, 4.02% and 4.075% for Series A,
Series B, Series C and Series D, respectively.
Each series of AMPS is 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. The Fund is subject to certain asset coverage
tests, and the AMPS are subject to mandatory redemption if the tests
are not met.
In addition, the AMPS are subject to mandatory redemption if the Fund
ceases to qualify as a regulated investment company or if Merrill
Lynch, Pierce, Fenner & Smith Incorporated ceases to be the broker
dealer. The liquidation value under mandatory redemption of the
AMPS is $100,000 per share plus accumulated and unpaid dividends.
(5) Notes Payable
As of June 30, 1996, the Fund had $117,900 of principal notes
outstanding to investors. The notes due on April 28, 2018, 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 June 30, 1996, the Fund was paying interest at 8.04% per annum.
SELECT ASSET FUND, SERIES 2, INC.
Portfolio of Investments
June 30, 1996
No. of Market
shares Value
Common Stocks
BUILDING AND CONSTRUCTION 1.34%
BUILDING MATERIALS
3,300 CHAMPION INTERNATIONAL CORPORATION 137,775
22,100 GEORGIA PACIFIC CORP 1,569,100
105,300 HOME DEPOT 5,686,200
9,200 OWENS CORNING 395,600
CONSTRUCTION EQUIPMENT
7,200 GIDDINGS & LEWIS 117,000
PAINT AND FLAT GLASS
5,100 PPG INDUSTRIES INC 248,625
19,000 SHERWIN WILLIAMS CO 883,500
INDUSTRIAL CHEMICALS
1,500 ROHM & HAAS CO 94,125
MISCELLANEOUS
1,200 FLUOR CORP 78,450
9,500 FOSTER WHEELER CORP 426,312
9,400 KAUFMAN & BROAD HOME CORP 136,300
TOTAL BUILDING AND CONSTRUCTION $9,772,987
CHEMICALS AND DRUGS 14.29%
CHEMICALS
4,200 AIR PRODUCTS & CHEMICALS INC 242,550
8,200 AMGEN INC 442,800
43,800 BOSTON SCIENTIFIC CORP 1,971,000
71,300 DOW CHEMICAL CO 5,418,800
117,800 DUPONT DENEMOURS & CO 9,320,925
1,800 EASTMAN CHEMICAL CO 109,575
20,725 ENGLEHARD CORP 476,675
8,500 FMC CORP-NEW 554,625
23,300 GRACE WR & CO 1,651,388
25,900 HERCULES INC 1,430,975
14,000 MONSANTO CO 455,000
31,300 MORTON INTERNATIONAL 1,165,925
14,900 NALCO CHEM CO 469,350
36,100 PRAXIAIR INC 1,525,225
9,300 SIGMA-ALDRICH CORP 497,550
29,500 UNION CARBIDE CORP 1,172,625
DRUGS
17,900 ABBOT LABS 778,650
4,800 ALZA CORP CLASS A 131,400
142,500 AMERICAN HOME PRODUCTS 8,567,813
119,700 BRISTOL MYERS SQUIBB CO 10,773,000
57,600 JOHNSON & JOHNSON 2,851,200
127,500 LILLY ELI & CO 8,287,500
278,000 MERCK & CO., INC 17,965,750
125,090 PHARMACIA & UPJOHN INC 5,550,868
157,300 PFIZER INC 11,227,287
11,200 SCHERING PLOUGH 702,800
9,800 WALGREEN CO 328,300
COSMETICS
600 ALBERTO CULVER CO CLASS B 27,825
31,600 AVON PRODUCTS INC 1,425,950
2,600 INTL FLAVORS & FRAGRANCES 123,825
HEALTH PRODUCTS/CARE
2,200 ALLERGAN INC 86,350
13,300 BARD CR INC 452,200
800 BAUSCH & LOMB 34,000
61,000 BAXTER INTL INC. 2,882,250
15,400 BECTON DICKINSON & CO 1,235,850
800 BEVERLY ENTERPRISES INC 9,600
27,270 COLUMBIA/HCA HEALTHCARE 1,455,535
9,800 COMMUNITY PSYCHIATRIC CENTERS 93,100
800 MALLINCKRODT GROUP INC 31,100
49,800 TENET HEALTHCARE CORP 1,064,475
10,700 UNITED HEALTHCARE CORPORATION 540,350
15,300 U S SURGICAL 474,300
TOTAL CHEMICALS AND DRUGS $104,006,266
CONSUMER PRODUCTS 10.36%
CONFECTIONS AND BEVERAGES
65,700 ANHEUSER-BUSCH COS 4,927,500
16,100 BROWN FORMAN INC CLASS B 644,000
80,000 COCA COLA CO 3,910,000
5,400 NEWELL CO. 165,375
41,800 PEPSICO INC 1,478,675
CONTAINERS
14,000 AVERY DENNISON CORP 768,250
7,000 BALL CORP 201,250
28,700 CROWN CORK & SEAL INC 1,291,500
23,900 STONE CONTAINER 328,625
PACKAGED FOOD
14,100 659,174
18,315 ARCHER DANIELS MIDLAND CO 350,275
30,800 CPC INTL INC 2,217,600
8,100 CAMPBELL SOUP CO 571,050
6,700 CONAGRA 304,013
9,100 COORS ADOLPH CO CL B 162,663
3,700 GENERAL MILLS INC 201,650
10,850 HEINZ H J CO 329,569
16,100 HERSHEY FOODS CORP 1,181,337
3,000 KELLOGG CO 219,750
3,100 QUAKER OATS CO 105,787
26,200 RALSTON-PURINA GROUP 1,680,075
55,200 SARA LEE CORP 1,787,100
39,300 SYSCO CORP 1,346,025
2,300 WRIGLEY WM JR CO 116,150
PAPER
20,000 AMERICAN GREETINGS CL A 547,500
14,300 BEMIS CO 500,500
12,500 BOISE CASCADE CORP 457,812
59,436 INTERNATIONAL PAPER CO 2,191,702
19,100 JAMES RIVER CORP 503,762
64,080 KIMBERLY CLARK CORP 4,950,180
2,100 MEAD CORP 108,938
7,000 POTLATCH CORP 273,875
17,900 UNION CAMP CORP 872,625
27,100 WILLIAMETTE INDUSTRIAL 1,612,450
PRINTING AND PUBLISHING
11,100 JOSTENS INC 219,225
1,800 KNIGHT-RIDDER INC 130,500
1,400 MCGRAW-HILL COMPANIES INC 64,050
700 MEREDITH CORP 29,225
3,200 NEW YORK TIMES CO CL A 104,400
105,500 TIME WARNER INC 4,140,875
1,300 TRIBUNE CO 94,412
23,750 WESTVACO CORP 709,531
RECREATIONAL EQUIPMENT
1,600 BALLY ENTRTAINMENT CORP 44,000
21,100 BRUNSWICK CORP 422,000
31,100 HARRAH'S ENTERTAINMENT 878,575
25,400 HASBRO INC 908,050
48,281 MATTEL INC 1,382,044
300 OUTBOARD MARINE CORP 5,437
SOAPS
13,700 CLOROX CO 1,214,163
OTHER CONSUMER PRODUCTS
49,900 AMERICAN BRANDS INC 2,264,212
2,000 COLGATE PALMOLIVE CO 169,500
24,600 DIAL CORP ARIZONA 704,175
110,000 GILLETTE CO 6,861,250
21,000 PROCTER & GAMBLE CO 1,903,125
46,000 RUBBERMAID INC 1,253,500
3,800 SPRINGS INDUSTRIES INC 191,900
2,800 TUPPERWARE CORPORATION 118,300
61,200 UST INC 2,096,100
27,000 WHITMAN CORP 651,375
PHOTOGRAPHY
8,500 EASTMAN KODAK CO 660,875
11,600 POLAROID CORP 529,250
HOUSEHOLD FURN/APPLIANCES
9,200 ARMSTRONG WORLD IND 530,150
24,100 MAYTAG CO 503,088
RETAIL
100,800 FEDERATED DEPT STORES NEW 3,439,800
APPAREL
500 BROWN GROUP INC 8,687
4,000 LIMITED INC 86,000
2,900 NIKE INC CLASS B 297,975
13,100 STRIDE RITE CORP 108,075
16,600 V F CORP 989,775
BROADCASTING
60,653 DISNEY WALT CO 3,813,557
8,700 KING WORLD INC 316,463
MISCELLANEOUS
25,200 PALL CORP 607,950
TOTAL CONSUMER PRODUCTS $75,418,306
DURABLE GOODS 23.62%
AEROSPACE-AIRCRAFT
13,300 BOEING CO 1,158,763
15,200 GENERAL DYNAMICS CORP 942,400
52,861 LOCKHEED MARTIN CORP 4,440,324
48,000 MCDONNELL DOUGLAS CORP 2,328,000
12,800 NORTHROP GRUMMAN CORP 872,000
5,700 RAYTHEON CO 294,262
4,700 ROCKWELL INTERNATIONAL 269,075
2,200 TEXTRON INC 175,725
1,500 UNITED TECHNOLOGIES CORP 172,500
AGRICULTURAL MACHINERY
44,400 CATERPILLAR INC 3,008,100
10,400 DEERE & CO 416,000
AUTOMOBILE AND PARTS
15,600 CHRYSLER CORP 967,200
8,000 CUMMINS ENGINE INC 323,000
21,500 DANA CORP 666,500
16,900 EATON CORP 990,763
1,600 ECHLIN INC 60,600
303,300 FORD MOTOR COMPANY 9,819,337
189,400 GENERAL MOTOR COMPANY 9,919,825
30,900 GENUINE PARTS CO 1,413,675
1,300 TRW INC 116,838
8,100 VARITY CORP. (NEW) 389,812
ELECTRICAL
5,628 AMP INC 225,824
67 EMCOR GROUP INC SER Z WTS 0
4,200 EMERSON ELECTRIC CO 379,575
29,500 GENERAL INSTRUMENTS CORP. 851,812
12,600 HONEYWELL INC 686,700
12,200 RAYCHEM CORP 876,875
105,100 WESTINGHOUSE ELECTRIC CORP 1,970,625
ELECTRONICS
15,200 ADVANCED MICRO-DEVICES 207,100
34,800 APPLIED MATERIALS INC 1,061,400
3,500 CISCO SYSTEMS INC 198,188
406,200 GENERAL ELECTRIC CO 35,136,300
9,600 GENERAL SIGNAL CORP 363,600
75,400 HEWLETT PACKARD CO 7,511,725
11,700 INTEL CORP 859,219
62,800 LSI LOGIC CORP 1,632,800
43,600 MICRON TECH 1,128,150
21,700 NATIONAL SEMICONDUCTOR 336,350
800 NATIONAL SERVICE INDUSTRIES 31,300
172,050 ORACLE CORPORATION 6,785,222
9,400 PERKIN ELMER CORP 453,550
5,800 TEKTRONIX INC 259,550
15,100 TELEDYNE INC 545,487
31,600 TEXAS INSTRUMENTS 1,576,050
9,800 THOMAS & BETTS CORP 367,500
INDUSTRIAL MACHINERY
7,400 BRIGGS & STRATTON CORP 304,325
29,600 CASE CORPORATION 1,420,800
8,100 CINCINNATI MILACRON INC 194,400
3,200 COOPER INDUSTRIES INC 132,800
27,100 DOVER CORP 1,249,987
3,700 HARNISCHFEGER INDUS INC 123,025
2,600 INGERSOLL RAND CO 113,750
2,100 NACCO INDUSTRIES INC CLASS A 116,287
OFFICE EQUIPMENT AND SUPPLIES
6,800 ALCO STANDARD CORP 307,700
7,300 HARLAND JOHN H CO 179,763
3,500 PITNEY BOWES INC 167,125
64,500 XEROX CORP. 3,450,750
RUBBER
11,400 GOODRICH B F CO 426,075
4,000 GOODYEAR TIRE & RUBBER 193,000
2,800 PREMARK INTERNATL INC 51,800
OTHER DURABLE GOODS
62,500 CORNING INCORPORATED 2,398,437
5,800 CRANE CO 237,800
27,800 ILLINOIS TOOL WORKS 1,879,975
1,200 MILLIPORE CORP 50,250
84,500 MINNESOTA MINING & MANUFACTURING 5,830,500
1,600 STANLEY WORKS 47,600
COMPUTERS AND SOFTWARE
90,800 BAY NETWORKS INC 2,338,100
2,000 CUC INTERNATIONAL 71,000
21,700 CERIDIAN CORP 1,095,850
11,800 COMPAQ COMPUTER CORP 581,150
54,350 COMPUTER ASSOC INTL INC 3,872,438
1,500 DATA GENERAL CORPORATION 19,500
23,800 DIGITAL EQUIPMENT CORP 1,071,000
12,700 INTERGRAPH CORP 153,987
111,100 IBM COMMON 10,998,900
123,100 MICROSOFT CORP 14,787,388
3,500 NOVELL INC 48,562
28,500 SILICON GRAPHICS 684,000
34,400 SUN MICROSYSTEMS 2,025,300
38,300 TANDEM COMPUTERS INC 473,963
35,700 UNISYS CORP 254,362
HOUSEHOLD FURN/APPLIANCES
17,200 WHIRLPOOL CORP 853,550
TELECOMMUNICATIONS
108,900 AIRTOUCH COMMUNICATIONS 3,076,425
75 ANDREW CORP 4,031
18,700 DSC COMMUNICATIONS 563,338
1,500 NORTHERN TELECOM LTD 81,563
84,900 WORLDCOM INC 4,701,337
MISCELLANEOUS
7,300 ALLIED-SIGNAL INC 417,013
2,700 BLACK & DECKER CORP 104,287
7,500 ITT INDUSTRIES INC 188,438
8,600 JOHNSON CTLS INC 597,700
12,850 PARKER HANNIFIN CORP 544,519
9,900 SNAP ON TOOLS CORP 469,012
18,800 TYCO LABS INC 766,100
TOTAL DURABLE GOODS $171,908,563
FINANCIAL 13.56%
BANKS
25,969 BANC ONE CORP 882,946
16,400 BANK OF BOSTON CORP 811,800
33,300 BANK NEW YORK INC 1,706,625
16,500 BANKAMERICA CORP 1,249,875
2,100 BANKERS TR NY CORP 155,137
21,800 BARNETT BANKS INC 1,329,800
39,400 BOATMEN'S BANCSHARES 1,580,925
42,412 CHASE MANHATTAN CORP NEW 2,995,348
55,000 CITICORP 4,544,375
56,514 CORESTATES FINANCIAL CORPORATION 2,175,789
2,920 DEAN WITTER DISCOVER & CO 167,170
46,900 FIFTH THIRD BANCORP COM 2,532,600
72,100 FIRST BANK SYS INC 4,181,800
43,232 FIRST CHICAGO NBD CORP 1,691,452
67,005 FIRST UNION CORP 4,078,929
36,714 FLEET FINANCIAL GROUP INC 1,597,059
22,925 MBNA CORP 653,363
16,300 MELLON BANK CORP 929,100
63,200 NATIONAL CITY CORP 2,219,900
80,200 NATIONSBANK CORP 6,626,525
84,700 NORWEST CORP 2,953,913
44,600 PNC FINANCIAL 1,326,850
58,000 SUNTRUST BANKS INC 2,146,000
49,900 U S BANCORP ORE 1,802,637
3,900 WACHOVIA CORP 170,625
12,433 WELLS FARGO & CO 2,969,933
FINANCE COMPANIES
12,500 AMERICAN EXPRESS CO 557,812
12,000 BENEFICIAL CORP 673,500
2,100 FEDERAL HOME LAND MTG CORP 179,550
65,700 GREEN TREE FINANCIAL 2,053,125
20,800 HOUSEHOLD INTL CORP 1,580,800
HOLDING COMPANY
4,600 EASTERN ENTERPRISES 152,950
FIRE AND CASUALTY INSURANCE
7,600 CHUBB CORP 379,050
1,600 GENERAL RE CORP 243,600
2,600 SAFECO CORP 91,975
INSURANCE
27,500 AETNA LIFE & CAS CO 1,966,250
600 ALEXANDER & ALEXANDER SVC 11,850
12,954 ALLSTATE CORPORATION 591,026
114,950 AMERICAN INTL GROUP 11,336,944
43,400 AON CORP 2,202,550
3,800 CIGNA CORP 447,925
7,500 ITT HARTFORD 399,375
2,300 ST PAUL COS INC 123,050
1,600 TRANSAMERICA CORP 130,800
84,871 TRAVELERS GROUP INC 3,872,239
4,900 UNUM CORPORATIOM 305,025
2,500 USF & G CORP 40,938
LIFE INSURANCE
51,700 AMERICAN GENERAL CORP 1,880,588
18,700 JEFFERSON PILOT CORP 965,387
27,500 LINCOLN NATL CORP IND 1,271,875
8,300 USLIFE CORP 272,862
REAL ESTATE
244,400 FEDERAL NATL MTGE ASSN 8,187,400
SAVINGS & LOANS
600 AHMANSON H F & CO 16,200
11,100 GOLDEN WEST FINANCIAL CORPORATION 621,600
25,300 GREAT WESTERN FINANCIAL 604,038
BROKERAGE
4,100 MERRILL LYNCH & CO 267,013
76,200 MORGAN STANLEY GRP INC 3,743,325
500 SALOMON INC 22,000
TOTAL FINANCIAL $98,673,098
METALS AND MINING 0.83%
ALUMINUM
2,800 ALUMINUM CO AMER 160,650
14,900 REYNOLDS METALS CO 776,663
MINING
39,000 HOMESTAKE MINING CO 667,875
STEEL
25,300 ARMCO, INC. 126,500
6,300 BETHLEHEM STEEL CORP 74,812
10,400 INLAND STEEL INDUSTRIES INC 204,100
25,600 NUCOR CORP 1,296,000
5,900 TIMKEN CO 228,625
5,700 USX-US STEEL GROUP 161,738
2,500 WORTHINGTON INDUSTRIES INC 52,187
OTHER METALS
10,200 ASARCO INC 281,775
1,500 ECHO BAY MINES LTD 16,125
9,937 NEWMONT MINING CORP 490,639
17,500 PHELPS DODGE CORP 1,091,563
MINERALS
2,000 BARRICK GOLD CORP 54,250
13,450 CYPRUS AMAX MINERALS CO 304,306
TOTAL METALS AND MINING $5,987,808
COLLECTIBLES & PRECIOUS MATER 0.33%
GOLD-DIAMONDS-GEMS
74,200 FREEPORT-MCMORAN COPPER-B 2,365,125
TOTAL COLLECTIBLES & PRECIOUS MATE $2,365,125
OIL-ENERGY 8.76%
OIL & GAS PRODUCERS
1,400 AMERADA HESS CORP 75,075
115,400 AMOCO CORP 8,352,075
22,400 COASTAL CORP 935,200
12,400 ENSERCH CORP 269,700
5,200 HELMERICH & PAYNE INC. 190,450
70,100 OCCIDENTAL PETROLEUM 1,734,975
14,900 ROWAN COS INC 219,775
22,000 SANTA FE ENERGY RES INC 261,250
40,000 TENNECO INC 2,045,000
2,300 USX-MARTHON GROUP COM NEW 46,288
NATURAL RESOURCES
2,200 DRESSER INDUSTRIES INC 64,900
10,900 KERR MCGEE CORP 663,537
6,500 LOUISIANA LD & EXPL CO 374,563
1,700 WILLIAMS COS INC-DEL 84,150
OIL EQUIPMENT, WELLS & SVCS
14,200 ASHLAND, INC 562,675
24,400 HALLIBURTON CO 1,354,200
10,500 WESTERN ATLAS INC 611,625
OIL - DOMESTIC
67,400 PHILLIPS PETE CO 2,822,375
10,600 UNOCAL CORP 357,750
OIL - INTERNATIONAL
24,100 CHEVRON CORP 1,421,900
287,200 EXXON CORP. 24,950,500
91,500 MOBIL CORP 10,259,437
18,100 ORYX ENERGY COMPANY 294,125
18,100 SUN CO INC 549,788
62,200 TEXACO INC 5,217,025
TOTAL OIL-ENERGY $63,718,338
RETAIL 5.58%
DEPARTMENT STORES
20,000 DAYTON HUDSON CORP 2,062,500
34,300 DILLARD DEPT STORES 1,251,950
18,000 HARCOURT GENERAL INC 900,000
111,200 K MART 1,376,100
3,200 MELVILLE CORP 129,600
800 MERCANTILE STORES 46,900
59,800 PENNEY JC INC 3,139,500
13,900 SEARS ROEBUCK & CO 675,888
774,500 WAL MART STORES INC 19,652,937
3,600 WINN-DIXIE STORES INC 127,350
46,300 WOOLWORTH CORP 1,041,750
GROCERY
9,500 ALBERTSON'S INC 393,063
4,400 AMERICAN STORES CO 181,500
8,200 FLEMING COS 117,875
11,800 GIANT FOOD INC 423,325
7,800 GREAT ATLANTIC & PACIFIC TEA 256,425
35,300 KROGER CO 1,394,350
OTHER RETAIL
4,900 LONGS DRUG STORES CORP 218,662
48,700 LOWES COS INC 1,759,288
18,800 PEP BOYS-MAN, MO, JACK 639,200
18,667 PRICE/COSTCO INC 403,674
1,600 RITE AID CORP 47,600
2,000 TANDY CORP 94,750
SPORTING GOODS
4,100 REEBOK INTL LTD 137,862
9,600 RUSSELL CORP 265,200
APPAREL
25,100 CHARMING SHOPPES INC 177,269
84,000 GAP INC 2,698,500
21,600 NORDSTROM INC 961,200
TOTAL RETAIL $40,574,218
UTILITIES 10.86%
ELECTRIC
3,600 AMERICAN ELECTRIC POWER INC 153,450
35,200 BALTIMORE GAS & ELECTRIC 998,800
1,000 CENTRAL & SOUTH WEST CORP 29,000
32,021 CINERGY CORP 1,024,672
5,300 DOMINION RES INC-VA 212,000
48,400 DUKE POWER CO 2,480,500
99,100 EDISON INTERNATIONAL 1,746,638
41,700 FPL GROUP INC 1,918,200
29,600 GENERAL PUB UTILS CORP 1,043,400
8,800 HOUSTON INDS INC 216,700
3,100 NIAGARA MOHAWK POWER 24,025
1,500 NORTHERN STS POWER CO 74,062
3,300 OHIO EDISON CO 72,188
7,300 PECO ENERGY 189,800
78,100 PP&L RESOURCES INC 1,845,112
91,800 PACIFIC GAS & ELECTRIC 2,134,350
71,800 PACIFICORP 1,597,550
17,700 SBC COMMUNICATIONS INC 871,725
21,100 SOUTHERN CO 519,588
GAS
3,600 COLUMBIA GAS SYS INC 187,650
59,600 ENRON CORP 2,436,150
1,400 NICOR INC 39,725
2,500 NORAM ENERGY CORP 27,187
500 ONEOK INC 12,500
18,200 PACIFIC ENTERPRISES 539,175
29,500 PANENERGY CORPORATION 969,813
700 PEOPLES ENERGY CORP 23,450
20,100 SONAT INC 904,500
68,500 TEXAS UTILITIES CO 2,928,375
TELEPHONE
420,400 A T & T 26,064,800
51,500 ALLTEL CORP 1,583,625
15,500 BELL ATLANTIC CORP 988,125
35,200 BELLSOUTH CORP 1,491,600
243,400 GTE CORP 10,892,150
105,500 PACIFIC TELESIS GROUP 3,560,625
104,100 SPRINT CORP 4,372,200
WASTE DISPOSAL
4,800 BROWNING FERRIS IND 139,200
55,300 LAIDLAW TRANS CL B NVTG 559,912
126,800 WMX TECHNOLOGIES INC 4,152,700
TOTAL UTILITIES $79,025,222
MISCELLANEOUS 9.86%
BROADCAST/COMMUNICATIONS
3,300 GANNETT CO., INC 233,475
2,200 MCI COMMUNICATIONS 56,375
6,600 MOTOROLA INC 414,975
166,400 TELE COMM. INC CL A 3,016,000
6,000 TELLABS INC 401,250
84,400 VIACOM INC CL B NON VTG 3,281,050
BUSINESS SERVICES
2,200 AMDAHL CORP 23,650
15,800 AUTODESK INC 472,025
9,400 AUTOMATIC DATA PROCESSING 363,075
26,600 BLOCK H&R INC 867,825
1,700 COMPUTER SCIENCES CORP 127,075
39,800 DONNELLEY RR & SONS 1,388,025
27,200 DOW JONES & CO 1,135,600
87,700 E M C CORP 1,633,413
2,600 ECOLAB INC 85,800
61,500 FIRST DATA CORP 4,896,937
13,300 GRAINGER W W INC 1,030,750
18,300 INTERPUBLIC GROUP COS 857,813
900 OGDEN CORP 16,312
14,800 SAFETY KLEEN CORP 259,000
18,900 SCIENTIFIC-ATLANTA 292,950
28,400 SERVICE CORP INTL 1,633,000
80,900 THREE COM CORP 3,701,175
FOOD SERVICE
3,600 DARDEN RESTAURANTS INC 38,700
7,100 LUBYS CAFETERIAS INC 166,850
25,600 MCDONALDS CORP 1,196,800
203,300 PHILLIP MORRIS CO INC 21,143,200
13,700 RYANS FAMILY STEAK HOUSE 126,725
35,900 WENDYS INTL INC 668,638
HOTEL & MOTEL
12,300 HILTON HOTELS CORP 1,383,750
7,500 ITT CORP NEW 496,875
23,100 MARRIOTT INTERNATIONAL CORPORATION 1,241,625
HOUSING
7,400 PULTE CORP 197,950
MED SERV & SUPPLIES
1,700 BIOMET INC 24,437
79,400 HUMANA INC 1,419,275
14,200 MANOR CARE INC 559,125
6,700 MEDTRONIC INC 375,200
21,550 ST. JUDE MEDICAL INC. 721,925
4,900 SHARED MEDICAL SYS CORP 314,825
REAL ESTATE
7,100 CENTEX CORP 220,988
TRANSPORTATION 3
17,800 AMR CORP 1,619,800
31,954 BURLINGTON NORTHERN SANTA FE 2,584,280
7,300 CSX CORP 352,225
800 CALIBER SYSTEMS INC 27,200
22,500 CONRAIL INC 1,493,437
2,000 CONSOLIDATED FREIGHTWAYS 42,250
15,000 DELTA AIRLINES INC 1,245,000
13,700 FEDERAL EXPRESS CORP 1,123,400
11,700 FLEETWOOD ENTERPRISES 362,700
32,200 NORFOLK SOUTHERN CORP 2,728,950
495 PACCAR INC 24,255
19,400 RYDER SYSTEMS INC 545,625
29,420 SANTA FE PACIFIC GOLD 415,557
8,600 UNION PACIFIC CORP 600,925
200 YELLOW CORPORATION 2,650
MISCELLANEOUS
9,600 WARNER-LAMBERT 528,000
TELECOMMUNICATIONS
16,500 AMERITECH CORP NEW 979,688
9,900 HARRIS CORP-DEL 603,900
TOTAL MISCELLANEOUS $71,764,283
UTILITIES 0.01%
ELECTRIC
2,800 DTE ENERGY COMPANY 86,450
TOTAL UTILITIES $86,450
TOTAL COMMON STOCK $723,300,664
OTHER PREFERRED STOCKS 0.00%
NON-CONVERTIBLES
972 TELEDYNE PFD SER E 14,944
$14,944
CASH EQUIVALENTS 0.60%
STIFS/MONEY MARKETS
4,376,408 AMERICAN AADVANTAGE MM 4,376,408
$4,376,408
TOTAL OTHER $4,391,352
INVESTMENTS $727,692,016
PURCHASE
2,500 DELTA AIRLINES INC 207,500
TOTAL INVESTMENTS -
(cost $506,583,219.74) 100.00% $727,899,516
