SELECT ASSET FUND, SERIES 2, INC.
Statement of Assets and Liabilities
June 30, 1998
(Unaudited)
Assets
Investments, at value (@ cost $160,849,908) $ 338,131,381
Dividends receivable 265,059
Income receivable 12,718
Prepaid expenses 9,479
Receivable for securities sold - unsettled trades 264,860
Total Assets 338,683,497
Liabilities
Cash 1,155
Accrued expenses 85,428
Notes payable 111,400
Accrued interest expense 2,637
Payable for securities purchased - unsettled trades 888,905
Total Liabilities 1,089,525
Net Assets $ 337,593,972
Net assets are represented by:
Common stock at par value, $.01 per share, 199,992,400 shares
authorized, 71,071,001.64 shares issued and outstanding 710,710
Additional paid-in capital 159,601,789
Net unrealized appreciation of investments 177,281,473
Net Assets $ 337,593,972
Net asset value per common shares outstanding $ 4.75
See accompanying notes to the financial statements.
SELECT ASSET FUND, SERIES 2, INC.
Statement of Operations
For the period from January 1, 1998 to June 30, 1998
(Unaudited)
Investment income:
Dividend income $ 4,006,913
Interest income 178,647
Total investment income 4,185,560
Expenses:
Administration fees (Note 2) 51,813
Investment management fee (Note 2) 14,735
Rating agencies fees 9,833
Independent auditors 20,340
Legal fees 1,488
Insurance 4,462
Directors fees and expenses 3,570
Interest expense 4,817
Other expenses 625
Total expenses 111,683
Net investment income 4,073,877
Net realized and unrealized gains on investments:
Net realized gain on investments:
Proceeds from sales $ 639,008,372
Cost of securities sold (285,228,831)
353,779,541
Unrealized appreciation of investments:
Beginning of period 405,331,835
End of period 177,281,472
Increase in net unrealized appreciation of investments (228,050,363)
Net increase in net assets resulting
from operations $ 129,803,055
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, 1998 to June 30, 1998
and for the year ended December 31, 1997
(Unaudited)
For the six
months ended For the
June 30, 1998 year ended
(UNAUDITED) December 31, 1997
From operations:
Net investment income $ 4,073,877 15,610,280
Net realized gain on investments 353,779,541 138,593,661
Net change in unrealized appreciation
on investments (228,050,363) 114,877,968
Increase in net assets resulting from
operations 129,803,055 269,081,909
Dividends from net investment income:
Auction market preferred stock 0 (13,419,520)
Common stock (4,073,877) (2,190,760)
(4,073,877) (15,610,280)
Distributions from net realized gains:
Common stock (353,779,541) (138,719,277)
Decrease in net assets resulting from
distibutions to stockholders (357,853,418) (154,329,557)
Increase (decrease) from capital transactions:
Issuance of auction market preferred stock 0 50,000,000
Capital contribution from common
stockholder 139,040,278 364,000,000
Redemption of auction market preferred
stock 0 (360,000,000)
Distribution of capital to common
stockholder (251,436,587) (285,896,935)
(112,396,309) (231,896,935)
Total increase (decrease) in net assets (340,446,672) (117,144,583)
Net assets:
Beginning of period 678,040,644 795,185,226
End of period $ 337,593,972 678,040,643
See accompanying notes to the financial statements.
SELECT ASSET FUND, SERIES 2, INC.
Notes to the Financial Statements
June 30, 1998
(UNAUDITED)
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 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. 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 shareholders.
Therefore, no provision for Federal income tax is required.
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 generally distributed annually.
The character of income and gains to be 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
gains, if any, are considered a return of capital.
1. Organization and Significant Accounting Policies
(continued)
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 period ended June 30, 1998 and the year ended December
31, 1997, dividend and capital gain distributions to the
common stockholder were $357,853,418 and $140,910,037
respectively.
During the six months ended June 30, 1998 and the year ended
December 31, 1997, return of capital distributions to the
common stockholder amounted to approximately $251,400,000 and
approximately $285,900,000, respectively.
During the six months ended June 30, 1998 and the year ended
December 31, 1997, the common stockholder made a capital
contribution to the Fund in the amount of $139,040,278 and
$364,000,000, respectively.
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 and accrued on a monthly basis and generally paid
on a quarterly basis.
3. Investment Transactions
The aggregate cost of securities purchased and the aggregate
proceeds of securities sold excluding short-term securities,
for the six months ended June 30, 1998 were $30,017,447 and
$622,404,661, respectively.
As of June 30, 1998, the aggregate gross unrealized
appreciation and depreciation of investments for Federal
income tax purposes, were $181,696,226 and $4,414,753,
respectively.
4. Auction Market Preferred Stock ("AMPS")
In February 1997 the Fund issued $50 million of AMPS.
During 1997, the Fund redeemed 1000 shares of Series A, 1000
shares of Series B, 600 shares of Series C, 500 shares of
Series D and 500 shares of Series E AMPS.
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. Dividends are cumulative
from the date of original issue and are paid every 49 days at
a rate set through Dutch Auction. 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, 1998, the Fund had $111,400 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, 1998, the Fund was paying
interest at 8.54% 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 2, INC.
Financial Highlights
For the six
months ended Year ended December 31,
June 30, 1998 1997 1996 1995 1994
For a share of common stock outstanding
throughout the period:
Net asset value,
beginning of period 9.54 6.83 14.41 10.97 11.42
Net investment income 0.06 0.21 0.20 0.52 0.46
Net realized and unrealized gains
(losses) on investments 1.77 3.57 1.77 6.00 (0.24)
Total from investment
operations 1.83 3.78 1.97 6.52 0.22
Capital contribution 1.96 5.12 0.00 0.00 0.00
Less distributions from net investment income:
Common stock equivalent of dividends
paid to AMPS holders 0.00 (0.19) (0.14) (0.45) (0.23)
Dividends paid to common
shareholders (0.06) (0.03) (0.06) (0.05) (0.38)
Less distributions from net net realized gains:
Common stock equivalent of dividend 0.00 0.00 0.00 0.00 (0.03)
paid to AMPS holders
Dividends paid to common
shareholders (4.98) (1.95) (1.80) (0.54) (0.03)
Less distributions from paid-in capital:
Return of capital to common
stockholders (3.54) (4.02) (7.55) (2.04) 0.00
Total distributions (8.58) (6.19) (9.55) (3.08) (0.67)
Net asset value, end of period 4.75 $9.54 $6.83 $14.41 $10.97
Total investment return 19.14% 33.84% 13.67% 59.43% 1.93%(1)
Ratios/supplemental data:
Net assets at end of period (000s) $337594 $678041 $795185 $936359 $886412
Average net assets (000s) $511446 $926937 $860368 $901872 $846485
Ratio of expenses to average net assets
applicable to common stock (3) 0.02% 0.14% 0.23% 0.13% 0.15%(2)
Ratio of net investment income to
average net assets applicable to
common stockholder 0.80% 1.68% 1.64% 2.64% 2.45%(2)
Portfolio turnover 5.87% 5.37% 17.51% 16.27% 3.52%
Average commissions paid on equity
securities transactions (4) 0.0025 $0.0497 $0.0200 0.00 0.00
Asset coverage per AMPS share
end of period 0 0 $256511 0 $221603
AMPS shares outstanding 0 0 3,100 0 4,000
Asset coverage for notes payable,
end of period 303047% 598019% 674557% 794298% 751934%
Notes payable, end of period $111400 $113400 $117900 $117900 $117900
(1)Total investment return for the period; not annualized.
(2)Annualized.
(3)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.
(4)For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its aveage commission rate per share for trades on
which commissions are charged.
See accompanying notes to financial statements.
SELECT ASSET FUND, SERIES 2, INC.
Portfolio of Investments
June 30, 1998
(Unaudited)
No. of
Shares Market Value
COMMON STOCK
BUILDING AND CONSTRUCTION 1.32%
BUILDING MATERIALS
2,900 GEORGIA PACIFIC CORP 170,918.75
33,200 HOME DEPOT 2,757,675.00
700 MASCO CORP 42,350.00
7,900 OWENS CORNING 322,418.75
PAINT AND FLAT GLASS
800 PPG INDUS INC 55,650.00
20,000 SHERWIN WILLIAMS CO 662,500.00
MISCELLANEOUS
1,400 FLUOR CORP 71,400.00
8,800 FOSTER WHEELER CORP 188,650.00
5,800 KAUFMAN & BROAD HOME CORP 184,150.00
TOTAL BUILDING AND CONSTRUCTION $4,455,712.50
CHEMICALS AND DRUGS 9.34%
CHEMICALS
1,800 AIR PRODS & CHEMS INC 72,000.00
4,800 AMGEN INC 313,800.00
31,600 BOSTON SCIENTIFIC CORP 2,263,350.00
6,900 DOW CHEMICAL CO 667,143.75
4,300 DUPONT DENEMOURS & CO 320,887.50
500 EASTMAN CHEMICAL CO 31,125.00
15,225 ENGLEHARD CORP 308,306.25
4,100 FMC CORP-NEW 279,568.75
22,300 HERCULES INC 917,087.50
30,700 MONSANTO CO 1,715,362.50
13,100 MORTON INTERNATIONAL INC 327,500.00
8,700 NALCO CHEM CO 305,587.50
23,100 PRAXIAIR INC 1,081,368.75
10,000 SIGMA-ALDRICH CORP 351,250.00
16,800 UNION CARBIDE CORP 896,700.00
7,300 WR GRACE & CO NEW 124,556.25
DRUGS
4,400 ABBOT LABS 179,850.00
22,400 AMERICAN HOME PRODUCTS 1,159,200.00
21,200 BRISTOL MYERS SQUIBB CO 2,436,675.00
9,700 JOHNSON & JOHNSON 715,375.00
20,400 LILLY ELI & CO 1,347,675.00
29,400 MERCK & CO., INC 3,932,250.00
38,700 PFIZER INC 4,206,206.25
44,590 PHARMACIA & UPJOHN INC 2,056,713.75
1,200 SCHERING PLOUGH 109,950.00
15,800 WALGREEN CO 652,737.50
COSMETICS
1,300 ALBERTO CULVER CO CL B 37,700.00
2,600 AVON PRODUCTS INC 201,500.00
HEALTH PRODUCTS/CARE
12,300 BARD CR INC 468,168.75
5,200 BAXTER INTL INC. 279,825.00
16,400 BECTON DICKINSON & CO 1,273,050.00
24,505 COLUMBIA/HCA HEALTHCARE 713,708.13
10,600 GUIDANT CORP 755,912.50
11,500 TENET HEALTHCARE CORP 359,375.00
11,700 U S SURGICAL 533,812.50
3,000 UTD HEALTHCARE CORP 190,500.00
TOTAL CHEMICALS AND DRUGS $31,585,778.13
CONSUMER PRODUCTS 11.95%
CONFECTIONS AND BEVERAGES
15,600 ANHEUSER-BUSCH COS 736,125.00
10,000 BROWN FORMAN INC CL B 642,500.00
13,200 COCA COLA CO 1,128,600.00
6,900 PEPSICO INC 284,193.75
CONTAINERS
18,300 AVERY DENNISON CORP 983,625.00
6,200 BALL CORP 249,162.50
21,900 CROWN CORK & SEAL INC 1,040,250.00
2,100 OWENS - ILLINOIS INC 93,975.00
6,875 SEALED AIR CORP 252,648.90
21,900 STONE CONTAINER 342,187.50
9,700 TEMPLE INLAND INC 522,587.50
PACKAGED FOOD
35,800 BESTFOODS 2,078,637.50
2,200 CAMPBELL SOUP CO 116,875.00
2,000 CONAGRA 63,375.00
5,200 COORS ADOLPH CO CL B 176,800.00
700 GENERAL MILLS INC 47,862.50
2,050 HEINZ H J CO 115,056.25
15,000 HERSHEY FOODS CORP 1,035,000.00
1,200 KELLOGG CO 45,075.00
7,200 PIONEER HI BRED INTL INC 297,900.00
800 QUAKER OATS CO 43,950.00
17,000 RALSTON-PURINA GROUP 1,985,812.50
6,400 SARA LEE CORP 358,000.00
38,400 SYSCO CORP 984,000.00
PAPER
12,600 AMERICAN GREETINGS CL A 641,812.50
9,800 BEMIS CO 400,575.00
10,700 BOISE CASCADE CORP 350,425.00
12,500 FORT JAMES CORPORATION 556,250.00
5,836 INTERNATIONAL PAPER CO 250,948.00
5,968 KIMBERLY CLARK CORP 273,782.00
4,400 POTLATCH CORP 184,800.00
15,900 UNION CAMP CORP 789,037.50
42,400 WILLIAMETTE INDUSTRIAL 1,356,800.00
PRINTING AND PUBLISHING
7,700 JOSTENS INC 185,762.50
800 MCGRAW-HILL COMPANIES INC 65,250.00
23,100 TIME WARNER INC 1,973,606.25
14,650 WESTVACO CORP 413,862.50
RECREATIONAL EQUIPMENT
11,300 BRUNSWICK CORP 279,675.00
29,800 HARRAH'S ENTERTAINMENT 692,850.00
24,500 HASBRO INC 963,156.25
31,581 MATTEL INC 1,336,271.06
SOAPS
17,800 CLOROX CO 1,697,675.00
OTHER CONSUMER PRODUCTS
1,500 COLGATE PALMOLIVE CO 132,000.00
26,600 FORTUNE BRANDS INC 1,022,437.50
38,300 GILLETTE CO 2,171,131.25
9,200 PROCTER & GAMBLE CO 837,775.00
43,400 RUBBERMAID INC 1,440,337.50
2,200 SPRINGS INDUS INC 101,475.00
1,800 TUPPERWARE CORPORATION 50,625.00
15,300 UST INC 413,100.00
PHOTOGRAPHY
700 EASTMAN KODAK CO 51,143.75
7,700 POLAROID CORP 273,831.25
HOUSEHOLD FURN/APPLIANCES
5,800 ARMSTRONG WORLD IND 390,775.00
11,000 MAYTAG CO 543,125.00
RETAIL
72,800 FEDERATED DEPT STORES NEW 3,917,550.00
APPAREL
2,600 NIKE INC CL B 126,587.50
19,700 V F CORP 1,013,318.75
34,900 VENATOR GROUP INC 667,462.50
BROADCASTING
4,553 DISNEY WALT CO 478,349.56
10,100 KING WORLD INC 257,550.00
MISCELLANEOUS
23,900 PALL CORP 489,950.00
TOTAL CONSUMER PRODUCTS $40,415,262.02
DURABLE GOODS 30.44%
AEROSPACE-AIRCRAFT
11,444 BOEING CO 509,973.25
18,600 GENERAL DYNAMICS CORP 864,900.00
7,861 LOCKHEED MARTIN CORP 832,283.38
10,700 NORTHROP GRUMMAN CORP 1,103,437.50
100 TEXTRON INC 7,168.75
700 UNITED TECHNOLOGIES CORP 64,750.00
AGRICULTURAL MACHINERY
1,100 CATERPILLAR INC 58,162.50
2,400 DEERE & CO 126,900.00
AUTOMOBILE AND PARTS
9,000 AUTOZONE INC 287,437.50
4,600 CUMMINS ENGINE INC 235,750.00
13,700 DANA CORP 732,950.00
53,800 FORD MTR CO 3,174,200.00
4,600 GENERAL MTRS CORP 307,337.50
6,850 GENUINE PARTS CO 236,753.13
5,900 TENNECO INC (NEW) 224,568.75
200 TRW INC 10,925.00
ELECTRICAL
1,500 EMERSON ELEC CO 90,468.75
2,000 HONEYWELL INC 167,125.00
14,200 RAYCHEM CORP 419,787.50
ELECTRONICS
13,400 ADVANCED MICRO-DEVICES 228,637.50
36,200 APPLIED MATLS INC 1,067,900.00
7,150 CISCO SYS INC 658,246.88
75,600 GENERAL ELECTRIC CO 6,879,600.00
28,200 GENERAL INSTRUMENT CORP 766,687.50
3,200 GENERAL SIGNAL CORP 115,200.00
6,200 HEWLETT PACKARD CO 371,225.00
500 KLA-TENCOR CORPORATION 13,843.75
51,300 LSI LOGIC CORP 1,183,106.25
35,900 MICRON TECH 890,768.75
13,200 NATIONAL SEMICONDUCTOR 174,075.00
900 NATIONAL SVC INDS 45,787.50
140,275 ORACLE CORPORATION 3,445,504.69
6,500 PERKIN ELMER CORP 404,218.75
1 RAYTHEON CO CL A 47.54
3,900 SEAGATE TECHNOLOGY INC 92,868.75
3,950 TEKTRONIX INC 139,731.25
33,600 TEXAS INSTRUMENTS 1,959,300.00
6,500 THOMAS & BETTS CORP 320,125.00
INDUSTRIAL MACHINERY
3,400 BRIGGS & STRATTON CORP 127,287.50
23,600 CASE CORPORATION 1,138,700.00
6,600 CINCINNATI MILACRON INC 160,462.50
900 COOPER INDUS INC 49,443.75
32,700 DOVER CORP 1,119,975.00
1,400 HARNISCHFEGER INDUS INC 39,637.50
3,950 INGERSOLL RAND CO 174,046.88
1,200 NACCO INDUS INC CL A 155,100.00
3,300 ROCKWELL INTL CORP W/I 158,606.25
OFFICE EQUIPMENT AND SUPPLIES
5,900 IKON OFFICE SOLUTIONS 85,918.75
4,400 XEROX CORP. 447,150.00
RUBBER
9,400 GOODRICH B F CO 466,475.00
1,600 GOODYEAR TIRE & RUBBER 103,100.00
OTHER DURABLE GOODS
12,400 CORNING INCORPORATED 430,900.00
4,700 CRANE CO 228,243.75
34,000 ILLINOIS TOOL WORKS 2,267,375.00
1,000 MILLIPORE CORP 27,250.00
5,300 MINNESOTA MNG & MFR 435,593.75
COMPUTERS AND SOFTWARE
72,800 BAY NETWORKS INC 2,347,800.00
15,000 CERIDIAN CORP 881,250.00
26,626 COMPAQ COMPUTER CORP 755,498.56
71,137 COMPUTER ASSOC INTL INC 3,952,549.56
2,600 DATA GENL CORP 38,837.50
66,300 DELL COMPUTER CORP 6,153,468.75
26,500 GATEWAY 2000 1,341,562.50
12,700 HBO AND CO 447,675.00
236,900 MICROSOFT CORP 25,674,037.50
3,200 NOVELL INC 40,800.00
2,500 PARAMETRIC TECNOLOGY 67,812.50
25,200 SILICON GRAPHICS 305,550.00
33,900 SUN MICROSYSTEMS 1,472,531.25
8,400 UNISYS CORP 237,300.00
HOUSEHOLD FURN/APPLIANCES
11,100 WHIRLPOOL CORP 763,125.00
TELECOMMUNICATIONS
77,000 AIRTOUCH COMMUNICATIONS 4,499,687.50
662 ANDREW CORP 11,957.38
17,100 ASCEND COMMUNICATIONS 847,518.75
3,100 CLEAR CHANNEL COMMUNICATI 338,287.50
16,000 DSC COMMUNICATIONS 480,000.00
50,988 LUCENT TECHNOLOGIES INC 4,241,564.25
13,200 MEDIAONE GROUP INC (NEW) 579,975.00
180,390 WORLDCOM INC 8,737,640.63
MISCELLANEOUS
4,600 ALLIED-SIGNAL INC 204,125.00
5,400 BLACK & DECKER CORP 329,400.00
5,900 ITT INDUSTRIES INC 220,512.50
10,200 JOHNSON CTLS INC 582,037.50
9,775 PARKER HANNIFIN CORP 372,671.88
9,550 SNAP ON TOOLS CORP 346,187.50
24,500 THERMO ELECTRON CORP 837,593.75
TOTAL DURABLE GOODS $102,935,975.51
FINANCIAL 14.99%
BANKS
9,425 BANC ONE CORP 526,032.81
8,800 BANK NEW YORK INC 534,050.00
5,800 BANKAMERICA CORP 501,337.50
1,100 BB&T CORP 74,387.50
2,924 CHASE MANHATTAN CORP NEW 220,762.00
4,500 CITICORP 671,625.00
80,325 FIFTH THIRD BANCORP COM 5,060,475.00
32,933 FIRST UNION CORP 1,918,328.61
5,283 FLEET FINANCIAL GROUP INC 441,130.50
1,000 KEYCORP NEW 35,625.00
6,030 MBNA CORP 198,990.00
6,500 MELLON BANK CORP 452,562.50
26,000 MERCANTILE BANCORP INC 1,309,750.00
16,500 NATIONAL CITY CORP 1,171,500.00
33,822 NATIONSBANK CORP 2,587,402.13
21,000 NORTHERN TRUST CO 1,601,250.00
13,400 NORWEST CORP 500,825.00
7,200 PNC FINANCIAL 387,450.00
26,800 SUMMIT BANCORP 1,273,000.00
5,100 SUNTRUST BANKS INC 414,693.75
115,282 U.S. BANCORP 4,957,126.00
2,400 WACHOVIA CORP 202,800.00
500 WELLS FARGO & CO 184,500.00
FINANCE COMPANIES
700 AMERICAN EXPRESS CO 79,800.00
18,440 ASSOCIATES 1ST CAPITAL A 1,417,575.00
7,100 BENEFICIAL CORP 1,087,631.25
50,800 GREEN TREE FINANCIAL 2,174,875.00
9,000 HOUSEHOLD INTL CORP 447,750.00
HOLDING COMPANY
2,700 EASTERN ENTERPRISES 115,762.50
40,470 MS, DW, DISCOVER & CO 3,697,946.25
FIRE AND CASUALTY INSURANCE
700 CHUBB CORP 56,262.50
200 SAFECO CORP 9,087.50
INSURANCE
15,300 AETNA INC 1,164,712.50
17,625 AMERICAN INTL GROUP 2,573,250.00
28,600 AON CORP 2,009,150.00
1,200 CIGNA CORP 82,800.00
15,300 CINCINNATI FINANCIAL CORP 587,137.50
18,900 CONSECO INC 883,575.00
500 HARTFORD FINANCIAL SVCS 57,187.50
10,600 MBIA INC 793,675.00
2,370 ST PAUL COS INC 99,688.13
13,291 TRAVELERS GROUP INC 805,766.88
3,500 UNUM CORP. 194,250.00
LIFE INSURANCE
8,487 AMERICAN GENERAL CORP 604,168.31
18,000 JEFFERSON PILOT CORP 1,042,875.00
4,500 LINCOLN NATL CORP IND 411,187.50
REAL ESTATE
300 FEDERAL NATL MTGE ASSN 18,225.00
SAVINGS & LOANS
5,600 GOLDEN WEST FINL CORP 595,350.00
BROKERAGE
10,000 BEAR STEARNS COS INC 568,750.00
32,400 FRANKLIN RESOURCES 1,749,600.00
22,500 LEHMAN BROS HLDGS INC 1,745,156.25
2,400 MERRILL LYNCH & CO 221,400.00
MISCELLANEOUS
3,955 WASHINGTON MUTUAL 171,795.31
TOTAL FINANCIAL $50,691,993.18
METALS AND MINING 1.33%
ALUMINUM
1,200 ALUMINUM CO AMER 79,125.00
10,100 REYNOLDS METALS CO 564,968.75
MINING
46,600 HOMESTAKE MNG CO 483,475.00
1,800 PLACER DOME INC 21,150.00
STEEL
21,367 ALLEGHENY TELEDYNE 488,770.13
23,600 ARMCO, INC. 150,450.00
7,800 BETHLEHEM STEEL CORP 97,012.50
23,400 NUCOR CORP 1,076,400.00
6,300 TIMKEN CO 194,118.75
2,000 USX-US STEEL GROUP 66,000.00
2,300 WORTHINGTON INDS INC 34,643.75
OTHER METALS
7,900 ASARCO INC 175,775.00
17,787 NEWMONT MNG CORP 420,217.88
8,900 PHELPS DODGE CORP 508,968.75
MINERALS
10,750 CYPRUS AMAX MINERALS CO 142,437.50
TOTAL METALS AND MINING $4,503,513.01
COLLECTIBLES & PRECIOUS MATERIALS 0.13%
GOLD-DIAMOND-GEMS
28,800 FREEPORT-MCMORAN COPPER-B 437,400.00
TOTAL COLLECTIBLES & PRECIOUS MATERIALS $437,400.00
OIL-ENERGY 3.48%
OIL & GAS PRODUCERS
1,700 AMERADA HESS CORP 92,331.25
9,500 AMOCO CORP 395,437.50
1,300 APACHE CORP 40,950.00
13,400 COASTAL CORP 935,487.50
6,100 HELMERICH & PAYNE INC. 135,725.00
700 MCDERMOTT INTL INC 24,106.25
8,500 OCCIDENTAL PETROLEUM 229,500.00
8,400 ROWAN COS INC 163,275.00
26,487 UNION PACIFIC RESOURCES 465,177.94
NATURAL RESOURCES
1,000 DRESSER INDUS INC 44,062.50
5,400 KERR MCGEE CORP 312,525.00
25,800 WILLIAMS COS INC-DEL 870,750.00
OIL EQUIPMENT, WELLS & SVCS
9,000 ASHLAND, INC 464,625.00
31,400 HALLIBURTON CO 1,399,262.50
6,200 WESTERN ATLAS INC 526,225.00
OIL - DOMESTIC
2,412 BURLINGTON RESOURCES INC 103,866.75
8,600 PHILLIPS PETE CO 414,412.50
1,900 UNOCAL CORP 67,925.00
OIL - INTERNATIONAL
1,800 CHEVRON CORP 149,512.50
34,100 EXXON CORP. 2,431,756.25
13,200 MOBIL CORP 1,011,450.00
8,300 ORYX ENERGY COMPANY 183,637.50
14,500 SUN CO INC 562,781.25
12,700 TEXACO INC 758,031.25
TOTAL OIL-ENERGY $11,782,813.44
RETAIL 8.50%
DEPARTMENT STORES
12,500 CVS CORP 486,718.75
25,800 DAYTON HUDSON CORP 1,251,300.00
20,900 DILLARDS INCORPORATED 866,043.75
11,400 HARCOURT GENERAL INC 678,300.00
38,500 K MART 741,125.00
14,200 PENNEY JC INC 1,026,837.50
4,000 SEARS ROEBUCK & CO 244,250.00
146,100 WAL MART STORES INC 8,875,575.00
GROCERY
900 ALBERTSON'S INC 46,631.25
9,800 GIANT FOOD INC 422,012.50
4,300 GREAT ATLANTIC & PAC TEA 142,168.75
42,700 KROGER CO 1,830,762.50
OTHER RETAIL
8,567 COSTCO COMPANIES INC 540,256.44
6,100 LONGS DRUG STORES CORP 176,137.50
68,800 LOWES COS INC 2,790,700.00
17,800 PEP BOYS-MAN, MO, JACK 337,087.50
5,200 RITE AID CORP 195,325.00
SPORTING GOODS
5,500 RUSSELL CORP 166,031.25
APPAREL
73,600 GAP INC 4,535,600.00
12,800 NORDSTROM INC 988,800.00
MISCELLANEOUS
38,300 TYCO INTERNATIONAL LTD 2,412,900.00
TOTAL RETAIL $28,754,562.69
UTILITIES 5.27%
ELECTRIC
5,200 AMEREN CORP 206,700.00
1,500 AMERICAN ELEC PWR INC 68,062.50
4,600 BALTIMORE GAS & ELEC 142,887.50
400 CENTRAL & SOUTH WEST CORP 10,750.00
7,621 CINERGY CORP 266,735.00
2,800 DOMINION RES INC-VA 114,100.00
6,309 DUKE POWER CO 373,808.25
800 ENTERGY CORP NEW 23,000.00
4,400 FPL GROUP INC 277,200.00
5,300 GPU INC 200,406.25
4,245 HOUSTON INDS INC 131,064.38
900 NIAGARA MOHAWK PWR 13,443.75
2,800 NORTHERN STS PWR CO 80,150.00
10,400 PACIFICORP 235,300.00
5,100 PECO ENERGY 148,856.25
37,000 PG&E CORP 1,167,812.50
35,900 PP&L RESOURCES INC 814,481.25
22,674 SBC COMMUNICATIONS INC 906,960.00
7,100 SOUTHERN CO 196,581.25
700 UNICOM CORP 24,543.75
GAS
1,800 COLUMBIA GAS SYS INC 100,125.00
10,500 ENRON CORP 567,656.25
19,800 SONAT INC 764,775.00
7,190 TEXAS UTILITIES CO 299,283.75
TELEPHONE
65,700 A T & T 3,753,112.50
12,100 ALLTEL CORP 562,650.00
2,590 BELL ATLANTIC CORP 118,168.75
9,400 BELLSOUTH CORP 630,975.00
13,800 FRONTIER CORP 434,700.00
32,300 GTE CORP 1,796,687.50
15,700 SPRINT CORP 1,106,850.00
3,860 US WEST INC (NEW) 181,443.12
WASTE DESPOSAL
4,400 BROWNING FERRIS IND 152,900.00
42,200 WASTE MANAGEMENT INC 1,477,000.00
MISCELLANEOUS
16,391 SEMPRA ENERGY 454,861.91
TOTAL UTILITIES $17,804,031.41
MISCELLANEOUS 12.86%
BROADCAST/COMMUNICATIONS
31,100 CBS CORP 987,425.00
28,400 COMCAST CORP CL A SPL 1,152,862.50
200 GANNETT CO., INC 14,212.50
9,100 MOTOROLA INC 478,318.75
46,330 TELE COMM. INC CL A 1,780,809.38
77,800 VIACOM INC CL B NON VTG 4,531,850.00
BUSINESS SERVICES
14,100 AUTODESK INC 544,612.50
3,700 AUTOMATIC DATA PROC 269,637.50
25,100 BLOCK H&R INC 1,057,337.50
13,018 CENDANT CORP 271,750.75
31,500 DONNELLEY RR & SONS 1,441,125.00
17,100 DOW JONES & CO 953,325.00
128,000 E M C CORP 5,736,000.00
77,400 FIRST DATA CORP 2,578,387.50
15,200 GRAINGER W W INC 757,150.00
19,250 INTERPUBLIC GROUP COS 1,168,234.38
16,500 OMNICOM GROUP INC 822,937.50
17,700 SCIENTIFIC-ATLANTA 449,137.50
35,700 SERVICE CORP INTL 1,530,637.50
61,900 THREE COM CORP 1,899,556.25
FOOD SERVICE
1,900 MCDONALDS CORP 131,100.00
56,300 PHILLIP MORRIS CO INC 2,216,812.50
1,790 TRICON GLOBAL RESTAURANTS 56,720.63
25,300 WENDYS INTL INC 594,550.00
HOTEL & MOTEL
26,700 HILTON HOTELS CORP 760,950.00
26,700 MARRIOTT INTL CL A 864,412.50
HOUSING
7,000 PULTE CORP 209,125.00
MED SERV & SUPPLIES
1,800 BIOMET INC 59,512.50
30,600 HEALTHSOUTH CORPORATION 816,637.50
34,400 HUMANA INC 1,072,850.00
9,200 MANOR CARE INC 353,625.00
8,600 MEDTRONIC INC 548,250.00
3,300 SHARED MEDICAL SYS CORP 242,343.75
12,650 ST. JUDE MED INC. 465,678.13
REAL ESTATE
9,700 CENTEX CORP 366,175.00
TRANSPORTATION
2,854 BURLINGTON NRTHN SANTA FE 280,227.13
300 CSX CORP 13,650.00
12,500 DELTA AIR LINES INC 1,615,625.00
16,940 FDX CORP 1,062,985.00
2,900 FLEETWOOD ENTERPRISES 116,000.00
11,900 NORFOLK SOUTHERN CORP 354,768.75
1,390 PACCAR INC 72,627.50
9,500 RYDER SYSTEMS INC 299,843.75
7,400 SOUTHWEST AIRLINES CO 219,225.00
3,500 U S AIR GROUP 277,375.00
3,700 UNION PACIFIC CORP 163,262.50
MISCELLANEOUS
1,300 MALLINCKRODT (NEW) 38,593.75
600 SCHLUMBERGER 40,987.50
8,300 WARNER-LAMBERT 575,812.50
TELECOMMUNICATIONS
10,000 360 COMMUNICATIONS CO 320,000.00
5,700 AMERITECH CORP NEW 255,787.50
13,400 HARRIS CORP-DEL 598,812.50
TOTAL MISCELLANEOUS $43,489,632.90
0.22%
20,800 CONSOLIDATED STORES INC 754,000.00
TOTAL $754,000.00
UTILITIES 0.02%
ELECTRIC
1,400 DTE ENERGY COMPANY 56,525.00
TOTAL UTILITIES $56,525.00
TOTAL COMMON STOCK $337,667,199.79
OTHER
0.14%
CASH EQUIVALENTS
464,181 AIM SHORT TERM INV SER 2 464,180.90
TOTAL $464,180.90
TOTAL OTHER $464,180.90
TOTAL INVESTMENTS - 100.00% $338,131,380.69
(cost $160,849,908)
See accompanying notes
