Annual Report
For yield, price, last transaction,
and current balance, 24 hours,
7 days a week, call:
1-800-638-2587 toll free
625-7676 Baltimore area
For assistance with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price Personal
Strategy Funds.
T. Rowe Price
Personal Strategy
Funds
May 31, 1995
T. Rowe Price
Invest with Confidence
PSF
Fellow Shareholders
This is our first annual report since the inception of the Personal Strategy
Funds on July 29, 1994, and it covers the most recent fiscal quarter as well
as the entire period of operation.
The U.S. stock market continued to move higher because of soaring
corporate profits, and bonds rallied in anticipation of slower, sustainable
economic growth. Returns for the three Personal Strategy Funds were positive
for both the fourth fiscal quarter and the since-inception period ended May
31. Since stocks have outperformed bonds, results for the Growth Fund were
strongest, followed by the Balanced and Income Funds.
The funds' investment committee meets monthly to adjust the weightings
of stocks, bonds, and money market securities within the appropriate ranges
for each fund, based on market conditions and economic fundamentals. The
committee has maintained a strategy since inception of overweighting bonds and
underweighting stocks within the allowable parameters, while keeping cash
equivalents close to minimum levels. Actual allocations on May 31 are shown in
the Performance and Strategy Review section of this report.
Market Review
After vigorous fourth quarter growth at an annualized rate of 5.1%, the
economy slowed to 2.7% in the first quarter of 1995. In contrast to 1994, when
the economy strengthened and interest rates soared, this year the economy has
lost strength and rates have fallen sharply. The civilian unemployment rate
remains in a favorable zone between 5.5% and 6%, but the much ballyhooed soft
landing has hit some bumps.
Because a softening economy means weaker credit demands and lower
inflationary pressures, interest rates dropped steadily during the quarter.
The yield on the 30-year Treasury bond fell by almost a percentage point to
just over 6.5% from 7.46%. Shorter-term yields also benefited from the bond
rally. The yield on one-year Treasuries fell to 5.79% on May 31 from 6.41%
three months ago. Also encouraging for bond investors in particular were early
signs of progress toward eventually balancing the federal budget.
Chart1 - Interest Rate Levels
Stocks returned 10.2% in the quarter, measured by the unmanaged Standard
& Poor's 500 Stock Index. The Nasdaq Composite Index, which tracks smaller
company stocks primarily, rose 8.9%. International stocks also enjoyed a good
quarter as most European and Asian markets (except for Japan) returned between
9% and 11%.
Bonds were extremely strong as well, with the Lehman Brothers Aggregate
Bond Index registering a whopping 6% three-month gain. The U.S. dollar appears
to have stabilized against both the Japanese yen and German mark, although
stronger foreign currencies throughout most of the quarter increased returns
for investors in unhedged nondollar bond portfolios.
Your funds' holdings in various sectors of the fixed income and equities
markets are shown in the tables following this letter.
Performance and Strategy Review
Personal Strategy Income Fund
This fund's investment goal is to generate the highest total return consistent
with an emphasis on income first and capital appreciation second. The typical
mix of securities for the fund is 40% bonds, 40% stocks, and 20% money market
securities, although percentages can vary by as much as 10% above or below
these levels.
Chart2 - Asset Allocation - Income Fund
As of May 31, your fund was overweighted in bonds relative to equities,
with 50% in bonds, 38% in stocks, and the balance in cash equivalents. In the
fixed income component of the portfolio, we increased our holdings of
high-quality bonds, which outperformed higher-yielding, lower-quality
securities. We also extended durations to take advantage of rising prices and
Performance Comparison
Periods Ended 5/31/95
Since
Inception
3 Months (7/29/94)
________________________
Personal Strategy
Income Fund 7.02% 12.90%
Combined Index Portfolio* 7.66 13.42
*An unmanaged portfolio composed of 40% stocks (S&P 500)
and 60% bonds (Lehman Brothers Aggregate Bond Index).
falling yields, and lowered exposure to non-U.S. dollar issues as the dollar
has been strengthening somewhat against key foreign currencies. Among
equities, we have been favoring growth over value stocks since the former
usually do better when the economy is slowing, as at present.
Your fund turned in outstanding results for the quarter and 10 months
since inception, although performance trailed the benchmark portfolio
slightly.
Personal Strategy Balanced Fund
The objective of this fund is to provide the highest total return consistent
with an emphasis on both income and capital appreciation. The typical asset
mix is 60% stocks, 30% bonds, and 10% cash - with 10% variations permitted for
each asset class. This asset allocation structure offers higher risk but also
a higher return potential than the Income Fund.
On May 31, your fund had 57% of its assets in stocks, 39% in bonds, and a
scant 4% in cash reserves. As in the Income Fund, we were overweighted in
bonds relative to stocks and have been maintaining low cash reserves. While
the stock market has been rallying robustly, continued strong earnings will be
necessary to sustain valuations at current levels. Fixed income securities, on
the other hand, not only do well when interest rates decline but also offer
protection
Chart3 - Asset Allocation - Balanced Fund
in a slowing economy. We lengthened durations as yields fell and moderated our
exposure to foreign, unhedged bonds.
We currently prefer growth to value stocks by a margin of approximately
60% to 40%, since slowing economic growth usually favors companies able to
sustain earnings momentum even during an economic slowdown. Our strategy
resulted in strong returns for both the 3- and 10-month (since inception)
periods ended May 31, although they lagged the benchmark portfolio slightly
because of the fund's lower exposure to stocks.
Performance Comparison
Periods Ended 5/31/95
Since
Inception
3 Months (7/29/94)
________________________
Personal Strategy
Balanced Fund 7.39% 14.35%
Combined Index Portfolio* 8.51 15.37
*An unmanaged portfolio composed of 60% stocks (S&P 500)
and 40% bonds (Lehman Brothers Aggregate Bond Index).
Personal Strategy Growth Fund
Your fund seeks capital appreciation by investing primarily in common stocks.
The typical asset mix is 80% stocks and 20% bonds with 10% variations
permitted. As of May 31, we were slightly underweighted in stocks at 76% of
assets, with bonds representing 21% and short-term securities and cash
reserves 3% of the portfolio. This asset mix reflected our belief that stock
valuations are beginning to look high and will require continuing strong
corporate earnings to sustain them.
We appear to be at a stage in the economic cycle where growth stocks
outperform value stocks, which accounts for our preference for the former over
the latter by a margin of about 60% to 40%. The bond market has also been
generating strong returns, providing an excellent opportunity for capital
appreciation as interest rates plummeted from their peaks. As in the other
funds, we extended the duration of domestic bonds to take advantage of rising
prices and declining yields, and lightened exposure to foreign, unhedged bonds
as the dollar regained strength.
Chart4 - Asset Allocation - Growth Fund
Your fund generated strong returns for the fourth fiscal quarter ended
May 31 and its 10 months of operation since inception, even though performance
trailed the benchmark portfolio because of our lighter weighting in stocks.
Performance Comparison
Periods Ended 5/31/95
Since
Inception
3 Months (7/29/94)
________________________
Personal Strategy
Growth Fund 7.52% 15.65%
Combined Index Portfolio* 9.36 17.32
*An unmanaged portfolio composed of 80% stocks (S&P 500)
and 20% bonds (Lehman Brothers Aggregate Bond Index).
Outlook
The slowing economy and early signs of progress in reducing the size of the
federal budget deficit have provided the impetus for rising bond prices and
falling interest rates. Meanwhile, soaring corporate earnings along with
declining interest rates have propelled stock prices to record levels. The
weakening economy has prompted speculation that the Federal Reserve might
reverse course from a tighter to a less restrictive monetary policy. Lower
interest rates should help the economy regain its momentum, but growth is
likely to remain modest in the second half of 1995.
We anticipate a period of stability following the recent sharp decline in
interest rates, which would be favorable for stocks and bonds. Both have
gotten off to powerful starts since the beginning of the year, generating
substantial gains for investors. It is unlikely that this pace can be
sustained for the balance of the year, but the present environment offers
prospects for continuing good performance in the months ahead.
Respectfully submitted,
Peter Van Dyke
President and Chairman of the
Investment Advisory Committee
June 16, 1995
Total Return Components
Period Ended 5/31/95 (Since inception on 7/29/94)
Income + Principal Change = Total Return
__________________________________________
Personal Strategy
Income Fund 3.50% 9.40% 12.90%
Personal Strategy
Balanced Fund 2.85 11.50 14.35
Personal Strategy
Growth Fund 1.25 14.40 15.65
Personal Strategy
Income Fund
Portfolio Overview
Percent of Net Assets
as of 5/31/95
__________________
Money Market Securities 11.8%
Commercial Paper 9.7
Other Assets Less Liabilities 2.1
Bonds 49.7
Foreign Government
Obligations/Agencies 7.9
Mortgage-Backed 15.7
Corporate 20.9
U.S. Government
Obligations/Agencies 5.2
Stocks 38.5
Ten Largest Holdings:
General Electric 1.1
Fannie Mae 1.0
Freddie Mac 1.0
Schlumberger 1.0
Pfizer 0.9
PepsiCo 0.8
Abbott Laboratories 0.8
Coca-Cola 0.7
Johnson & Johnson 0.7
Philip Morris 0.6
Personal Strategy Balanced Fund
Portfolio Overview
Percent of Net Assets
as of 5/31/95
__________________
Money Market Securities 3.9%
Commercial Paper 1.8
Other Assets Less Liabilities 2.1
Bonds 39.2
Foreign Government
Obligations/Agencies 4.5
Mortgage-Backed 11.6
Corporate 19.8
U.S. Government
Obligations/Agencies 3.3
Stocks 56.9
Ten Largest Holdings:
Fannie Mae 1.5
Freddie Mac 1.5
General Electric 1.5
Schlumberger 1.4
PepsiCo 1.4
Abbott Laboratories 1.2
Pfizer 1.1
Coca-Cola 1.1
Johnson & Johnson 1.0
Philip Morris 1.0
Portfolio Highlights
Net Asset Value Dividends Per Share Dividend Yield*
Per Share 3 Months Ended As of
________________ __________________ ________________
2/28/95 5/31/95 2/28/95 5/31/95 2/28/95 5/31/95
Personal
Strategy
Income
Fund $10.34 $10.94 $0.12 $0.12 1.93% 2.93%
Personal
Strategy
Balanced
Fund 10.48 11.15 0.09 0.10 1.53 2.33
Personal
Strategy
Growth
Fund 10.64 11.44 0.11 - 1.03 0.96
* Based on dividends paid since the funds' inception on 7/29/94.
Personal Strategy Growth Fund
Portfolio Overview
Percent of Net Assets
as of 5/31/95
__________________
Money Market Securities 2.6%
Commercial Paper 1.9
Other Assets Less Liabilities 0.7
Bonds 21.6
Foreign Government
Obligations/Agencies 2.5
Mortgage-Backed 6.3
Corporate 11.8
U.S. Government
Obligations/Agencies 1.0
Stocks 75.8
Ten Largest Holdings:
General Electric 2.0
Fannie Mae 2.0
Freddie Mac 2.0
Schlumberger 1.8
PepsiCo 1.8
Abbott Laboratories 1.6
Pfizer 1.4
Coca-Cola 1.4
Johnson & Johnson 1.2
Philip Morris 1.2
Chart5 - Fiscal Year Perf. Comparison - Income Fund
Chart6 - Fiscal Year Perf. Comparison - Growth Fund
Chart7 - Fiscal Year Perf. Comparison - Balanced Fund
Statement of Net Assets
T. Rowe Price Personal Strategy Funds / May 31, 1995
Income Fund
Common Stocks - 38.5%
FINANCIAL - 5.4%
Value
______
BANK & TRUST - 1.2%
1,500 shs. Chemical Banking . . . . . . . . . . . . $ 69,187
1,530 J. P. Morgan . . . . . . . . . . . . . . 108,439
1,250 KeyCorp. . . . . . . . . . . . . . . . . 38,281
750 Mellon Bank. . . . . . . . . . . . . . . 32,063
247,970
INSURANCE - 1.5%
600 American International
Group. . . . . . . . . . . . . . . . . 68,250
2,100 PartnerRe Holdings . . . . . . . . . . . 47,775
2,000 PMI Group. . . . . . . . . . . . . . . . 81,750
2,300 UNUM . . . . . . . . . . . . . . . . . . 98,325
2,100 Willis-Corroon ADR . . . . . . . . . . . 28,088
324,188
FINANCIAL SERVICES - 2.7%
1,800 American Express . . . . . . . . . . . . 64,125
2,300 Fannie Mae . . . . . . . . . . . . . . . 213,900
3,100 Freddie Mac. . . . . . . . . . . . . . . 211,187
800 H&R Block. . . . . . . . . . . . . . . . 28,900
750 Sallie Mae . . . . . . . . . . . . . . . 35,625
553,737
Total Financial 1,125,895
UTILITIES - 1.9%
TELEPHONE - 1.0%
2,300 ALLTEL . . . . . . . . . . . . . . . . . 56,637
950 AT&T . . . . . . . . . . . . . . . . . . 48,213
900 SBC Communications . . . . . . . . . . . 40,500
1,700 Sprint . . . . . . . . . . . . . . . . . 56,950
202,300
ELECTRIC UTILITIES - 0.9%
3,000 Centerior Energy . . . . . . . . . . . . 28,500
1,400 Entergy. . . . . . . . . . . . . . . . . 34,650
1,700 Niagara Mohawk . . . . . . . . . . . . . 25,075
1,500 PacifiCorp . . . . . . . . . . . . . . . 29,625
700 Texas Utilities. . . . . . . . . . . . . 25,287
1,700 Unicom . . . . . . . . . . . . . . . . . 46,325
189,462
Total Utilities 391,762
CONSUMER NONDURABLES - 12.3%
BEVERAGES - 1.8%
700 shs. Anheuser-Busch . . . . . . . . . . . . . $ 41,388
2,500 Coke . . . . . . . . . . . . . . . . . . 154,687
3,500 PepsiCo. . . . . . . . . . . . . . . . . 171,500
367,575
FOOD PROCESSING - 1.7%
900 Campbell . . . . . . . . . . . . . . . . 44,213
760 CPC International. . . . . . . . . . . . 46,170
960 General Mills. . . . . . . . . . . . . . 49,800
800 Pioneer Hi-Bred. . . . . . . . . . . . . 31,400
1,300 Ralston Purina . . . . . . . . . . . . . 65,325
4,100 Sara Lee . . . . . . . . . . . . . . . . 114,287
351,195
HOSPITAL SUPPLIES/HOSPITAL
MANAGEMENT - 1.7%
4,200 Abbott Laboratories. . . . . . . . . . . 168,000
1,900 Baxter International . . . . . . . . . . 66,262
1,366 * Boston Scientific. . . . . . . . . . . . 39,273
2,000 Columbia/HCA Healthcare. . . . . . . . . 81,750
355,285
PHARMACEUTICALS - 4.0%
1,800 * ALZA . . . . . . . . . . . . . . . . . . 37,575
840 American Home Products . . . . . . . . . 61,845
500 Bristol-Myers Squibb . . . . . . . . . . 33,187
600 Eli Lilly. . . . . . . . . . . . . . . . 44,775
2,200 Johnson & Johnson. . . . . . . . . . . . 145,750
1,400 Merck. . . . . . . . . . . . . . . . . . 65,975
2,030 Pfizer . . . . . . . . . . . . . . . . . 178,894
800 Schering-Plough. . . . . . . . . . . . . 63,000
2,300 SmithKline Beecham ADR . . . . . . . . . 90,850
900 Upjohn . . . . . . . . . . . . . . . . . 32,737
800 Warner-Lambert . . . . . . . . . . . . . 66,300
820,888
MISCELLANEOUS CONSUMER PRODUCTS - 3.1%
2,400 American Greetings
(Class A). . . . . . . . . . . . . . . 67,800
1,500 Brunswick. . . . . . . . . . . . . . . . 27,563
750 Colgate-Palmolive. . . . . . . . . . . . 57,750
1,500 * CUC International. . . . . . . . . . . . 55,125
1,600 Harcourt General . . . . . . . . . . . . 67,400
1,900 Hasbro . . . . . . . . . . . . . . . . . 66,975
1,800 Newell . . . . . . . . . . . . . . . . . 44,775
1,750 Philip Morris. . . . . . . . . . . . . . 127,531
740 Tambrands. . . . . . . . . . . . . . . . 31,728
3,500 shs. UST. . . . . . . . . . . . . . . . . . . $ 104,562
651,209
Total Consumer Nondurables 2,546,152
CONSUMER SERVICES - 5.0%
GENERAL MERCHANDISERS - 0.6%
862 * Carson Pirie Scott . . . . . . . . . . . 14,439
400 Dayton Hudson. . . . . . . . . . . . . . 28,350
500 Sears. . . . . . . . . . . . . . . . . . 28,188
3,500 TJX. . . . . . . . . . . . . . . . . . . 46,812
117,789
SPECIALTY MERCHANDISERS - 0.4%
1,200 * Federated Department
Stores . . . . . . . . . . . . . . . . 27,600
2,000 * Toys "R" Us. . . . . . . . . . . . . . . 50,500
78,100
ENTERTAINMENT & LEISURE - 1.3%
1,800 Disney . . . . . . . . . . . . . . . . . 100,125
100 * GC Companies . . . . . . . . . . . . . . 3,375
1,500 McDonald's . . . . . . . . . . . . . . . 56,812
640 Reader's Digest (Class B). . . . . . . . 24,240
3,700 rts. * Viacom . . . . . . . . . . . . . . . . . 4,856
324 shs. * Viacom (Class A) . . . . . . . . . . . . 15,269
1,381 * Viacom (Class B) . . . . . . . . . . . . 64,389
269,066
MEDIA & COMMUNICATIONS - 2.6%
640 Dun & Bradstreet . . . . . . . . . . . . 33,920
1,575 Gaylord Entertainment. . . . . . . . . . 35,044
1,800 * Multimedia . . . . . . . . . . . . . . . 68,850
1,600 Reuters ADR. . . . . . . . . . . . . . . 71,800
2,400 Time Warner. . . . . . . . . . . . . . . 95,100
911 Times Mirror . . . . . . . . . . . . . . 21,181
2,200 Turner Broadcasting
Systems (Class B). . . . . . . . . . . 43,725
3,300 Vodafone ADR . . . . . . . . . . . . . . 110,962
240 Washington Post (Class B). . . . . . . . 63,540
544,122
RESTAURANTS - 0.1%
960 * Darden Restaurants . . . . . . . . . . . 10,560
Total Consumer Services 1,019,637
CONSUMER CYCLICALS - 0.7%
MISCELLANEOUS CONSUMER DURABLES - 0.7%
2,000 Corning. . . . . . . . . . . . . . . . . 64,000
1,500 Eastman Kodak. . . . . . . . . . . . . . 90,563
Total Consumer Cyclicals 154,563
TECHNOLOGY - 2.1%
ELECTRONIC SYSTEMS - 0.4%
600 shs. Hewlett-Packard. . . . . . . . . . . . . $ 39,675
1,250 Honeywell. . . . . . . . . . . . . . . . 49,531
89,206
INFORMATION PROCESSING - 0.4%
830 IBM. . . . . . . . . . . . . . . . . . . 77,397
TELECOMMUNICATIONS - 0.7%
799 * Cox Communications
(Class A). . . . . . . . . . . . . . . 12,984
1,000 * DSC Communications . . . . . . . . . . . 37,000
1,700 MCI. . . . . . . . . . . . . . . . . . . 34,425
1,400 Northern Telecom . . . . . . . . . . . . 53,725
138,134
AEROSPACE & DEFENSE - 0.6%
640 AlliedSignal . . . . . . . . . . . . . . 25,840
1,800 Boeing . . . . . . . . . . . . . . . . . 105,975
131,815
Total Technology 436,552
CAPITAL EQUIPMENT - 1.8%
ELECTRICAL EQUIPMENT - 1.1%
3,900 GE . . . . . . . . . . . . . . . . . . . 226,200
MACHINERY - 0.7%
500 Caterpillar. . . . . . . . . . . . . . . 30,125
4,600 * Coltec Industries. . . . . . . . . . . . 81,650
380 Deere. . . . . . . . . . . . . . . . . . 32,870
144,645
Total Capital Equipment 370,845
BUSINESS SERVICES & TRANSPORTATION - 3.1%
COMPUTER SERVICES/SOFTWARE - 1.2%
1,100 Automatic Data Processing. . . . . . . . 68,475
400 * Intuit . . . . . . . . . . . . . . . . . 25,300
1,700 * Lotus Development. . . . . . . . . . . . 51,850
400 * Microsoft. . . . . . . . . . . . . . . . 33,875
1,200 * Oracle Systems . . . . . . . . . . . . . 41,700
1,200 * Sybase . . . . . . . . . . . . . . . . . 25,200
246,400
DISTRIBUTION SERVICES - 0.8%
1,000 Alco Standard. . . . . . . . . . . . . . 71,625
2,200 Cardinal Health. . . . . . . . . . . . . 100,375
172,000
MISCELLANEOUS BUSINESS SERVICES - 0.8%
1,260 Browning-Ferris. . . . . . . . . . . . . 44,888
1,000 shs. Deluxe Corp. . . . . . . . . . . . . . . $ 31,875
3,360 WMX Technologies . . . . . . . . . . . . 91,560
168,323
AIRLINES - 0.3%
840 * AMR. . . . . . . . . . . . . . . . . . . 57,330
Total Business Services & Transportation 644,053
ENERGY - 3.1%
ENERGY SERVICES - 1.5%
2,700 Halliburton. . . . . . . . . . . . . . . 105,300
3,230 Schlumberger . . . . . . . . . . . . . . 209,950
315,250
INTEGRATED PETROLEUM - DOMESTIC - 0.9%
500 Atlantic Richfield . . . . . . . . . . . 58,062
740 British Petroleum ADR. . . . . . . . . . 63,177
1,300 Unocal . . . . . . . . . . . . . . . . . 38,513
1,400 USX-Marathon . . . . . . . . . . . . . . 27,825
187,577
INTEGRATED PETROLEUM -
INTERNATIONAL - 0.7%
830 Exxon. . . . . . . . . . . . . . . . . . 59,241
500 Mobil. . . . . . . . . . . . . . . . . . 50,188
400 Texaco . . . . . . . . . . . . . . . . . 27,400
136,829
Total Energy 639,656
PROCESS INDUSTRIES - 1.8%
DIVERSIFIED CHEMICALS - 0.1%
370 Monsanto . . . . . . . . . . . . . . . . 30,803
SPECIALTY CHEMICALS - 1.4%
1,200 3M . . . . . . . . . . . . . . . . . . . 71,850
1,340 Great Lakes Chemical . . . . . . . . . . 81,740
1,700 Pall . . . . . . . . . . . . . . . . . . 37,400
900 Rohm & Haas. . . . . . . . . . . . . . . 52,987
1,000 Sigma Aldrich. . . . . . . . . . . . . . 44,000
287,977
PAPER & PAPER PRODUCTS - 0.2%
600 Mead . . . . . . . . . . . . . . . . . . 32,325
FOREST PRODUCTS - 0.1%
400 Georgia-Pacific. . . . . . . . . . . . . 31,100
Total Process Industries 382,205
BASIC MATERIALS - 1.1%
METALS - 0.9%
1,000 Alcoa. . . . . . . . . . . . . . . . . . 46,500
2,300 * Alumax . . . . . . . . . . . . . . . . . 66,988
700 shs. Cyprus Amax Minerals . . . . . . . . . . $ 18,550
1,900 De Beers ADR . . . . . . . . . . . . . . 47,500
179,538
MINING - 0.2%
1,997 Barrick Gold . . . . . . . . . . . . . . 50,424
Total Basic Material 229,962
MISCELLANEOUS - 0.2%
600 SPDR Trust . . . . . . . . . . . . . . . 32,184
Total Miscellaneous 32,184
Total Common Stocks (Cost $7,040,635) 7,973,466
Corporate Bonds - 20.9%
$ 50,000 Agriculture Minerals,
10.75%, 9/30/03. . . . . . . . . . . . 52,125
100,000 Ahmanson H F,
7.875%, 9/1/04 . . . . . . . . . . . . 103,840
100,000 American Express,
7.60%, 8/15/02 . . . . . . . . . . . . 105,125
90,000 American Media,
11.625%, 11/15/04. . . . . . . . . . . 96,750
100,000 American Standard,
9.875%, 6/1/01 . . . . . . . . . . . . 103,000
10,000 Ametek, 9.75%, 3/15/04 . . . . . . . . . 10,600
90,000 Arcadian, Series B,
10.75%, 5/1/05 . . . . . . . . . . . . 91,800
60,000 Associates Corporation North
America, 5.25%, 3/30/00. . . . . . . . 56,737
100,000 Ballys Park Place Funding,
9.25%, 3/15/04 . . . . . . . . . . . . 91,500
80,000 Bank Nova Scotia New York
Agency, 6.25%, 9/15/08 . . . . . . . . 74,021
10,222 Carson Pirie Scott,
13.00%, 3/28/05. . . . . . . . . . . . 10,247
100,000 Citicorp, 7.75%, 6/15/06 . . . . . . . . 104,185
90,000 Coca-Cola Bottling Group,
9.00%, 11/15/03. . . . . . . . . . . . 87,975
150,000 Coltec Industries,
10.25%, 4/1/02 . . . . . . . . . . . . 154,500
90,000 Container Corporation of
America, 9.75%, 4/1/03 . . . . . . . . 91,125
150,000 Continental Cablevision,
9.00%, 9/1/08. . . . . . . . . . . . . 150,000
80,000 Crown Central Petroleum,
10.875%, 2/1/05. . . . . . . . . . . . 84,000
21,834 Daimler-Benz Auto Grantor
Trust, 3.90%, 10/15/98 . . . . . . . . 21,452
90,000 Dime Bancorp,
10.50%, 11/15/05 . . . . . . . . . . . 96,750
90,000 Embassy Suites,
10.875%, 4/15/02 . . . . . . . . . . . 98,100
$ 50,000 Exide, (144a),
10.00%, 4/15/05. . . . . . . . . . . . $ 51,000
90,000 Exide, 10.75%, 12/15/02. . . . . . . . . 95,175
90,000 Ferrellgas, 10.00%, 8/1/01 . . . . . . . 94,275
65,000 Firstfed Financial,
11.75%, 10/1/04. . . . . . . . . . . . 66,462
90,000 Hillhaven, 10.125%, 9/1/01 . . . . . . . 93,600
75,000 IMC Fertilizer Group,
9.45%, 12/15/11. . . . . . . . . . . . 76,594
35,000 Imo Industries,
12.00%, 11/1/01. . . . . . . . . . . . 36,050
20,000 Long Island Lighting,
8.75%, 2/15/97 . . . . . . . . . . . . 20,653
10,000 Methanex, 8.875%, 11/15/01 . . . . . . . 10,747
90,000 National Medical Enterprises,
10.125%, 3/1/05. . . . . . . . . . . . 94,950
100,000 Niagara Mohawk,
6.625%, 7/1/05 . . . . . . . . . . . . 95,292
50,000 Overhead Door,
12.25%, 2/1/00 . . . . . . . . . . . . 51,500
90,000 Owens-Illinois,
11.00%, 12/1/03. . . . . . . . . . . . 99,675
100,000 Penn Traffic Company,
8.625%, 12/15/03 . . . . . . . . . . . 93,375
100,000 PNC Bank N.A.,
7.875%, 4/15/05. . . . . . . . . . . . 105,138
110,000 Principal Mutual Life
Insurance, (144a),
8.00%, 3/1/44. . . . . . . . . . . . . 101,475
90,000 Quorum Health Group,
11.875%, 12/15/02. . . . . . . . . . . 98,550
100,000 Repap New Brunswick,
9.875%, 7/15/00. . . . . . . . . . . . 104,205
40,000 Riverwood International,
10.75%, 6/15/00. . . . . . . . . . . . 43,400
90,000 Rogers Cablesystems, (144a)
10.00%, 3/15/05. . . . . . . . . . . . 91,350
60,000 Rouse, 8.50%, 1/15/03. . . . . . . . . . 63,272
90,000 Safeway, 9.875%, 3/15/07 . . . . . . . . 99,900
60,000 Shawmut National,
7.20%, 4/15/03 . . . . . . . . . . . . 60,369
90,000 Silgan, 11.75%, 6/15/02. . . . . . . . . 95,850
90,000 Stone Container,
10.75%, 10/1/02. . . . . . . . . . . . 95,400
60,000 Tenneco, 8.00%, 11/15/99 . . . . . . . . 62,792
200,000 Texas New Mexico Power,
12.50%, 1/15/99. . . . . . . . . . . . 219,666
120,000 Texas Utilities,
7.375%, 10/1/25. . . . . . . . . . . . 111,987
$ 80,000 UCAR Global Enterprises,
12.00%, 1/15/05. . . . . . . . . . . . $ 86,600
20,000 WalMart Stores,
7.25%, 6/1/13. . . . . . . . . . . . . 20,007
100,000 Westinghouse Electric,
8.875%, 6/1/01 . . . . . . . . . . . . 106,933
90,000 Westpoint Stevens,
8.75%, 12/15/01. . . . . . . . . . . . 88,875
Total Corporate Bonds (Cost $4,132,937) 4,318,949
Foreign Government
Obligations/Agencies - 7.9%
10,000 (AUD) Australia Commonwealth
Government Bonds,
9.50%, 8/15/03 . . . . . . . . . . . . 7,466
2,900,000 (BEL) Belgian Government
Bonds, 7.25%, 4/29/04. . . . . . . . . 99,849
30,000 (CAD) Canadian Government
Bonds, 6.50%, 6/1/04 . . . . . . . . . 19,927
70,000 (CAD) Canadian Government
Bonds, 9.75%, 6/1/21 . . . . . . . . . 58,854
270,000 (FRF) French Government
Bonds, 8.25%, 2/27/04 . . . . . . . . 57,327
425,000 (DEM) German Federal
Government Bonds,
6.50%, 7/15/03 . . . . . . . . . . . . 298,366
145,000 (DEM) German Federal
Government Bonds,
8.50%, 8/21/00 . . . . . . . . . . . . 113,338
6,000,000 (JPY) Int'l Bank for
Reconstruction &
Development,
6.75%, 3/15/00 . . . . . . . . . . . . 85,216
275,000,000(ITL) Italian Government Bonds,
8.50%, 8/1/04. . . . . . . . . . . . . 135,632
40,500,000 (JPY) Japanese Government
Bonds, 4.50%, 6/20/03 . . . . . . . . 533,906
120,000 (DKK) Kingdom of Denmark,
7.00%, 12/15/04. . . . . . . . . . . . 20,206
8,000,000 (ESP) Spanish Government
Bonds, 8.00%, 5/30/04 . . . . . . . . 53,048
100,000 (SEK) Swedish Government
Bonds, 6.00%, 2/9/05. . . . . . . . . 9,847
65,000 (GBP) United Kingdom Treasury
Notes, 8.50%, 12/7/05. . . . . . . . . 107,578
25,000 (GBP) United Kingdom Treasury
Notes, 9.00%, 3/3/00 . . . . . . . . . 41,711
Total Foreign Government Obligations/Agencies
(Cost $1,425,449) 1,642,271
U.S. Government Mortgage-Backed
Securities - 15.7%
Government National
Mortgage Association I,
$1,065,391 6.50%, 7/15/23 - 4/15/24 . . . . . . . $1,022,839
796,493 7.50%, 9/15 - 12/15/22 . . . . . . . . 801,837
849,466 8.00%, 1/15/22 - 11/15/24. . . . . . . 873,905
507,907 8.50%, 9/15/24 . . . . . . . . . . . . 527,553
23,103 10.50%, 2/15 - 10/15/13. . . . . . . . 25,320
Total U.S. Government Mortgage-Backed Securities
(Cost $3,036,250) 3,251,454
U.S. Government
Obligations/Agencies - 5.2%
1,000,000 Tennessee Valley Authority,
8.25%, 4/15/42 . . . . . . . . . . . . 1,081,410
Total U.S. Government Obligations/Agencies
(Cost $964,382) 1,081,410
Short-Term Investments - 9.7%
COMMERCIAL PAPER - 9.7%
$ 500,000 Ciba-Geigy, 6.00%, 7/10/95 . . . . . . . $ 493,833
500,000 Hewlett Packard,
5.98%, 8/1/95. . . . . . . . . . . . . 491,778
150,000 Metlife Funding,
5.93%, 7/28/95 . . . . . . . . . . . . 148,419
381,000 President & Fellows Harvard
College, 6.15%, 6/1/95 . . . . . . . . 380,935
500,000 Yale University,
6.05%, 6/19/95 . . . . . . . . . . . . 492,353
Total Short-Term Investments
(Cost $2,007,318) 2,007,318
Total Investments in Securities - 97.9% of
Net Assets (Cost $18,606,971) $20,274,868
Other Assets Less Liabilities . . . . . . . . . . . . . . . 429,987
_________
Net Assets Consist of: Value
_________
Accumulated net investment income -
net of distributions . . . . . . . . . . . $127,910
Accumulated net realized gain/loss -
net of distributions . . . . . . . . . . . 50,942
Net unrealized gain. . . . . . . . . . . . . 1,677,355
Paid-in-capital applicable to
1,892,153 shares of $0.0001 par
value capital stock outstanding;
1,000,000,000 shares of the
Corporation authorized . . . . . . . . . .18,848,648
___________
NET ASSETS . . . . . . . . . . . . . . . . . $20,704,855
___________
___________
NET ASSET VALUE PER SHARE. . . . . . . . . . $10.94
______
______
* Non-income producing
144a Security was purchased pursuant to Rule 144a under
the Securities Act of 1933 and may not be resold
subject to that rule except to qualified institutional
buyers - total of such securities at period-end amounts
to 1.18% of net assets.
(AUD) Australian dollar
(BEL) Belgian franc
(CAD) Canadian dollar
(DEM) German deutschemark
(DKK) Danish krone
(ESP) Spanish peseta
(FRF) French franc
(GBP) British sterling
(ITL) Italian lira
(JPY) Japanese yen
(SEK) Swedish krona
The accompanying notes are an integral part of these financial statements.
Balanced Fund / Statement of Net Assets
Common Stocks - 56.9%
FINANCIAL - 7.9%
Value
______
BANK & TRUST - 1.7%
1,200 shs. Chemical Banking . . . . . . . . . . . . $ 55,350
1,430 J. P. Morgan . . . . . . . . . . . . . . 101,351
1,150 KeyCorp. . . . . . . . . . . . . . . . . 35,219
650 Mellon Bank. . . . . . . . . . . . . . . 27,788
219,708
INSURANCE - 2.4%
700 American International
Group. . . . . . . . . . . . . . . . . 79,625
2,000 PartnerRe Holdings . . . . . . . . . . . 45,500
2,000 PMI Group. . . . . . . . . . . . . . . . 81,750
2,100 UNUM . . . . . . . . . . . . . . . . . . 89,775
1,900 Willis-Corroon ADR . . . . . . . . . . . 25,412
322,062
FINANCIAL SERVICES - 3.8%
1,600 American Express . . . . . . . . . . . . 57,000
2,200 Fannie Mae . . . . . . . . . . . . . . . 204,600
2,900 Freddie Mac. . . . . . . . . . . . . . . 197,562
600 H&R Block. . . . . . . . . . . . . . . . 21,675
650 Sallie Mae . . . . . . . . . . . . . . . 30,875
511,712
Total Financial 1,053,482
UTILITIES - 2.7%
ELECTRIC UTILITIES - 1.3%
2,600 Centerior Energy . . . . . . . . . . . . 24,700
1,400 Entergy. . . . . . . . . . . . . . . . . 34,650
1,500 Niagara Mohawk . . . . . . . . . . . . . 22,125
1,300 PacifiCorp . . . . . . . . . . . . . . . 25,675
800 Texas Utilities. . . . . . . . . . . . . 28,900
1,500 Unicom . . . . . . . . . . . . . . . . . 40,875
176,925
TELEPHONE - 1.4%
2,200 ALLTEL . . . . . . . . . . . . . . . . . 54,175
650 AT&T . . . . . . . . . . . . . . . . . . 32,987
1,100 SBC Communications . . . . . . . . . . . 49,500
1,500 Sprint . . . . . . . . . . . . . . . . . 50,250
186,912
Total Utilities 363,837
CONSUMER NONDURABLES - 18.0%
BEVERAGES - 2.8%
700 Anheuser-Busch . . . . . . . . . . . . . 41,388
2,300 shs. Coke . . . . . . . . . . . . . . . . . . $ 142,312
3,800 PepsiCo. . . . . . . . . . . . . . . . . 186,200
369,900
FOOD PROCESSING - 2.6%
1,100 Campbell . . . . . . . . . . . . . . . . 54,038
860 CPC International. . . . . . . . . . . . 52,245
760 General Mills. . . . . . . . . . . . . . 39,425
700 Pioneer Hi-Bred. . . . . . . . . . . . . 27,475
1,300 Ralston Purina . . . . . . . . . . . . . 65,325
4,000 Sara Lee . . . . . . . . . . . . . . . . 111,500
350,008
HOSPITAL SUPPLIES & MANAGEMENT - 2.5%
3,900 Abbott Laboratories. . . . . . . . . . . 156,000
1,400 Baxter International . . . . . . . . . . 48,825
1,366 * Boston Scientific. . . . . . . . . . . . 39,273
2,100 Columbia/HCA Healthcare. . . . . . . . . 85,837
329,935
PHARMACEUTICALS - 5.3%
1,800 * ALZA . . . . . . . . . . . . . . . . . . 37,575
640 American Home Products . . . . . . . . . 47,120
600 Bristol-Myers Squibb . . . . . . . . . . 39,825
500 Eli Lilly. . . . . . . . . . . . . . . . 37,312
2,100 Johnson & Johnson. . . . . . . . . . . . 139,125
700 Merck. . . . . . . . . . . . . . . . . . 32,988
1,630 Pfizer . . . . . . . . . . . . . . . . . 143,644
800 Schering-Plough. . . . . . . . . . . . . 63,000
2,100 SmithKline Beecham ADR . . . . . . . . . 82,950
800 Upjohn . . . . . . . . . . . . . . . . . 29,100
700 Warner-Lambert . . . . . . . . . . . . . 58,012
710,651
MISCELLANEOUS CONSUMER PRODUCTS - 4.8%
2,400 American Greetings
(Class A). . . . . . . . . . . . . . . 67,800
1,400 Brunswick. . . . . . . . . . . . . . . . 25,725
850 Colgate-Palmolive. . . . . . . . . . . . 65,450
1,400 * CUC International. . . . . . . . . . . . 51,450
1,800 Harcourt General . . . . . . . . . . . . 75,825
1,400 Hasbro . . . . . . . . . . . . . . . . . 49,350
1,800 Newell . . . . . . . . . . . . . . . . . 44,775
1,750 Philip Morris. . . . . . . . . . . . . . 127,531
640 Tambrands. . . . . . . . . . . . . . . . 27,440
3,600 UST. . . . . . . . . . . . . . . . . . . 107,550
642,896
Total Consumer Nondurables 2,403,390
CONSUMER SERVICES - 7.7%
GENERAL MERCHANDISERS - 0.9%
1,577 * Carson Pirie Scott . . . . . . . . . . . 26,415
300 Dayton Hudson. . . . . . . . . . . . . . 21,263
500 Sears. . . . . . . . . . . . . . . . . . 28,187
3,200 shs. TJX. . . . . . . . . . . . . . . . . . . $ 42,800
118,665
SPECIALTY MERCHANDISERS - 0.6%
1,200 * Federated Department
Stores . . . . . . . . . . . . . . . . 27,600
2,000 * Toys "R" Us. . . . . . . . . . . . . . . 50,500
78,100
ENTERTAINMENT & LEISURE - 1.9%
1,700 Disney . . . . . . . . . . . . . . . . . 94,562
100 * GC Companies . . . . . . . . . . . . . . 3,375
1,400 McDonald's . . . . . . . . . . . . . . . 53,025
840 Reader's Digest (Class B). . . . . . . . 31,815
1,800 rts. * Viacom . . . . . . . . . . . . . . . . . 2,363
348 shs. * Viacom (Class A) . . . . . . . . . . . . 16,400
1,063 * Viacom (Class B) . . . . . . . . . . . . 49,562
251,102
MEDIA & COMMUNICATIONS - 4.3%
640 Dun & Bradstreet . . . . . . . . . . . . 33,920
1,575 Gaylord Entertainment. . . . . . . . . . 35,044
2,000 * Multimedia . . . . . . . . . . . . . . . 76,500
1,700 Reuters ADR. . . . . . . . . . . . . . . 76,287
2,500 Time Warner. . . . . . . . . . . . . . . 99,062
1,471 Times Mirror . . . . . . . . . . . . . . 34,201
2,200 Turner Broadcasting Systems
(Class B). . . . . . . . . . . . . . . 43,725
3,200 Vodafone ADR . . . . . . . . . . . . . . 107,600
240 Washington Post (Class B). . . . . . . . 63,540
569,879
RESTAURANTS - 0.0%
760 * Darden Restaurants . . . . . . . . . . . 8,360
Total Consumer Services 1,026,106
CONSUMER CYCLICALS - 1.1%
MISCELLANEOUS CONSUMER DURABLES - 1.1%
1,900 Corning. . . . . . . . . . . . . . . . . 60,800
1,400 Eastman Kodak. . . . . . . . . . . . . . 84,525
145,325
Total Consumer Cyclicals 145,325
TECHNOLOGY - 3.2%
ELECTRONIC SYSTEMS - 0.8%
600 Hewlett-Packard. . . . . . . . . . . . . 39,675
1,650 Honeywell. . . . . . . . . . . . . . . . 65,381
105,056
INFORMATION PROCESSING - 0.4%
630 IBM. . . . . . . . . . . . . . . . . . . 58,748
TELECOMMUNICATIONS - 0.9%
676 shs. * Cox Communications
(Class A). . . . . . . . . . . . . . . $ 10,985
700 * DSC Communications . . . . . . . . . . . 25,900
1,600 MCI. . . . . . . . . . . . . . . . . . . 32,400
1,400 Northern Telecom . . . . . . . . . . . . 53,725
123,010
AEROSPACE & DEFENSE - 1.1%
540 AlliedSignal . . . . . . . . . . . . . . 21,803
2,100 Boeing . . . . . . . . . . . . . . . . . 123,637
145,440
Total Technology 432,254
CAPITAL EQUIPMENT - 2.6%
ELECTRICAL EQUIPMENT - 1.5%
3,400 GE . . . . . . . . . . . . . . . . . . . 197,200
MACHINERY - 1.1%
400 Caterpillar. . . . . . . . . . . . . . . 24,100
4,900 * Coltec Industries. . . . . . . . . . . . 86,975
380 Deere. . . . . . . . . . . . . . . . . . 32,870
143,945
Total Capital Equipment 341,145
BUSINESS SERVICES & TRANSPORTATION - 4.6%
COMPUTER SERVICE & SOFTWARE - 1.8%
900 Automatic Data Processing. . . . . . . . 56,025
400 * Intuit . . . . . . . . . . . . . . . . . 25,300
1,600 * Lotus Development. . . . . . . . . . . . 48,800
500 * Microsoft. . . . . . . . . . . . . . . . 42,344
1,250 * Oracle Systems . . . . . . . . . . . . . 43,437
1,000 * Sybase . . . . . . . . . . . . . . . . . 21,000
236,906
DISTRIBUTION SERVICES - 1.2%
900 Alco Standard. . . . . . . . . . . . . . 64,463
2,200 Cardinal Health. . . . . . . . . . . . . 100,375
164,838
MISCELLANEOUS BUSINESS SERVICES - 1.3%
1,460 Browning-Ferris. . . . . . . . . . . . . 52,012
900 Deluxe Corp. . . . . . . . . . . . . . . 28,688
3,160 WMX Technologies . . . . . . . . . . . . 86,110
166,810
AIRLINES - 0.3%
640 * AMR. . . . . . . . . . . . . . . . . . . 43,680
Total Business Services & Transportation 612,234
ENERGY - 4.5%
ENERGY SERVICES - 2.1%
2,200 shs. Halliburton. . . . . . . . . . . . . . . $ 85,800
2,930 Schlumberger . . . . . . . . . . . . . . 190,450
276,250
INTEGRATED PETROLEUM - DOMESTIC - 1.4%
500 Atlantic Richfield . . . . . . . . . . . 58,062
840 British Petroleum ADR. . . . . . . . . . 71,715
1,300 Unocal . . . . . . . . . . . . . . . . . 38,513
1,200 USX-Marathon . . . . . . . . . . . . . . 23,850
192,140
INTEGRATED PETROLEUM -
INTERNATIONAL - 1.0%
630 Exxon. . . . . . . . . . . . . . . . . . 44,966
600 Mobil. . . . . . . . . . . . . . . . . . 60,225
400 Texaco . . . . . . . . . . . . . . . . . 27,400
132,591
Total Energy 600,981
PROCESS INDUSTRIES - 2.6%
DIVERSIFIED CHEMICALS - 0.2%
270 Monsanto . . . . . . . . . . . . . . . . 22,478
SPECIALTY CHEMICALS - 2.0%
1,100 3M . . . . . . . . . . . . . . . . . . . 65,862
1,340 Great Lakes Chemical . . . . . . . . . . 81,740
1,400 Pall . . . . . . . . . . . . . . . . . . 30,800
800 Rohm & Haas. . . . . . . . . . . . . . . 47,100
800 Sigma Aldrich. . . . . . . . . . . . . . 35,200
260,702
PAPER & PAPER PRODUCTS - 0.2%
500 Mead . . . . . . . . . . . . . . . . . . 26,938
FOREST PRODUCTS - 0.2%
400 Georgia-Pacific. . . . . . . . . . . . . 31,100
Total Process Industries 341,218
BASIC MATERIALS - 1.7%
METALS - 1.3%
1,000 Alcoa. . . . . . . . . . . . . . . . . . 46,500
2,300 * Alumax . . . . . . . . . . . . . . . . . 66,988
800 Cyprus Amax Minerals . . . . . . . . . . 21,200
1,800 De Beers ADR . . . . . . . . . . . . . . 45,000
179,688
MINING - 0.4%
2,029 Barrick Gold . . . . . . . . . . . . . . 51,232
Total Basic Materials 230,920
MISCELLANEOUS - 0.3%
800 shs. SPDR Trust . . . . . . . . . . . . . . . $ 42,913
Total Miscellaneous 42,913
Total Common Stocks (Cost $6,762,584) 7,593,805
Corporate Bonds - 19.8%
$ 100,000 Agriculture Minerals,
10.75%, 9/30/03. . . . . . . . . . . . 104,250
20,000 Ametek, 9.75%, 3/15/04 . . . . . . . . . 21,200
25,000 Associates Corporation
North America,
5.25%, 3/30/00 . . . . . . . . . . . . 23,640
50,000 Ballys Park Place Funding,
9.25%, 3/15/04 . . . . . . . . . . . . 45,750
37,000 Bank Nova Scotia New York
Agency, 6.25%, 9/15/08 . . . . . . . . 34,235
150,000 Bear Stearns, 8.25%, 2/1/02. . . . . . . 157,044
8,037 Carson Pirie Scott,
13.00%, 3/28/05. . . . . . . . . . . . 8,057
50,000 Citicorp, 7.75%, 6/15/06 . . . . . . . . 52,092
75,000 Coltec Industries,
10.25%, 4/1/02 . . . . . . . . . . . . 77,250
100,000 Container Corporation of
America, 9.75%, 4/1/03 . . . . . . . . 101,250
75,000 Continental Cablevision,
9.00%, 9/1/08. . . . . . . . . . . . . 75,000
27,919 Daimler-Benz Auto Grantor
Trust, 3.90%, 10/15/98 . . . . . . . . 27,430
100,000 Dime Bancorp,
10.50%, 11/15/05 . . . . . . . . . . . 107,500
100,000 Embassy Suites,
10.875%, 4/15/02 . . . . . . . . . . . 109,000
50,000 Exide, (144a),
10.00%, 4/15/05. . . . . . . . . . . . 51,000
100,000 Firstfed Financial,
11.75%, 10/1/04. . . . . . . . . . . . 102,250
210,000 Florida Power,
6.125%, 3/1/03 . . . . . . . . . . . . 202,131
50,000 Ford Motor Credit MTN,
5.80%, 5/11/98 . . . . . . . . . . . . 49,151
20,000 Imo Industries,
12.00%, 11/1/01. . . . . . . . . . . . 20,600
50,000 Long Island Lighting,
8.75%, 2/15/97 . . . . . . . . . . . . 51,631
90,000 Methanex, 8.875%, 11/15/01 . . . . . . . 96,719
100,000 Owens-Illinois,
11.00%, 12/1/03. . . . . . . . . . . . 110,750
150,000 Paine Webber Group,
8.25%, 5/1/02. . . . . . . . . . . . . 155,841
$ 100,000 Principal Mutual Life
Insurance, (144a)
8.00%, 3/1/44. . . . . . . . . . . . . $ 92,250
100,000 Rogers Cablesystems, (144a)
10.00%, 3/15/05. . . . . . . . . . . . 101,500
25,000 Rouse, 8.50%, 1/15/03. . . . . . . . . . 26,364
25,000 Shawmut National,
7.20%, 4/15/03 . . . . . . . . . . . . 25,154
50,000 Silgan, 11.75%, 6/15/02. . . . . . . . . 53,250
100,000 Stone Container,
10.75%, 10/1/02. . . . . . . . . . . . 106,000
25,000 Tenneco, 8.00%, 11/15/99 . . . . . . . . 26,163
120,000 Texas New Mexico Power,
12.50%, 1/15/99. . . . . . . . . . . . 131,800
50,000 Texas Utilities,
7.375%, 10/1/25. . . . . . . . . . . . 46,662
30,000 Texas Utilities,
7.875%, 4/1/24 . . . . . . . . . . . . 29,741
60,000 WalMart, 7.25%, 6/1/13 . . . . . . . . . 60,021
100,000 Westinghouse,
8.875%, 6/1/01 . . . . . . . . . . . . 106,933
50,000 Westpoint Stevens,
8.75%, 12/15/01. . . . . . . . . . . . 49,375
Total Corporate Bonds (Cost $2,535,078) 2,638,984
Foreign Government
Obligations/Agencies - 4.5%
10,000 (AUD) Australia Commonwealth
Government Bonds,
9.50%, 8/15/03 . . . . . . . . . . . . 7,466
750,000 (BEL) Belgian Government
Bonds, 7.25%, 4/29/04. . . . . . . . . 25,823
9,000 (CAD) Canadian Government
Bonds, 6.50%, 6/1/04 . . . . . . . . . 5,978
30,000 (CAD) Canadian Government
Bonds, 9.75%, 6/1/21 . . . . . . . . . 25,223
324,000 (FRF) French Government
Bonds, 8.25%, 2/27/04. . . . . . . . . 68,793
80,000 (DEM) German Federal
Government Bonds,
6.50%, 7/15/03 . . . . . . . . . . . . 56,163
65,000 (DEM) German Federal
Government Bonds,
8.50%, 8/21/00 . . . . . . . . . . . . 50,806
2,000,000 (JPY) Int'l Bank for
Reconstruction &
Development,
6.75%, 3/15/00 . . . . . . . . . . . . 28,405
100,000,000(ITL) Italian Government Bonds,
8.50%, 8/1/04. . . . . . . . . . . . . 49,321
15,700,000 (JPY) Japanese Government
Bonds, 4.50%, 6/20/03. . . . . . . . . $ 206,971
55,000 (DKK) Kingdom of Denmark,
7.00%, 12/15/04. . . . . . . . . . . . 9,261
100,000 (ESP) Spanish Government Bonds,
8.00%, 5/30/04 . . . . . . . . . . . . 663
100,000 (SEK) Swedish Government Bonds,
6.00%, 2/9/05. . . . . . . . . . . . . 9,847
10,000 (GBP) United Kingdom Treasury
Notes, 8.50%, 12/7/05. . . . . . . . . 16,551
24,000 (GBP) United Kingdom Treasury
Notes, 9.00%, 3/3/00 . . . . . . . . . 40,043
Total Foreign Government Obligations/Agencies
(Cost $513,858) 601,314
U.S. Government Mortgage-Backed
Securities - 11.6%
$ 332,857 Government National
Mortgage Association, I,
6.50%, 12/15/23 - 3/15/24. . . . . . . 319,562
198,266 7.50%, 12/15/22. . . . . . . . . . . . 199,596
1,004,866 8.00%, 3/15/22 - 11/15/24. . . . . . . 1,030,765
Total U.S. Government Mortgage-Backed Securities
(Cost $1,462,765) 1,549,923
U.S. Government
Obligations/Agencies - 3.3%
400,000 Tennessee Valley Authority,
8.25%, 4/15/42 . . . . . . . . . . . . 432,564
Total U.S. Government Obligations/Agencies
(Cost $386,626) 432,564
Short-Term Investments - 1.8%
COMMERCIAL PAPER - 1.8%
243,000 President & Fellows Harvard
College, 6.15%, 6/1/95 . . . . . . . . 242,958
Total Short-Term Investments (Cost $242,958) 242,958
Total Investments in Securities - 97.9% of Net Assets
(Cost $11,903,869) $13,059,548
Other Assets Less Liabilities. . . . . . . . . . . . . . . . 276,668
___________
Net Assets Consist of: Value
_________
Accumulated net investment income -
net of distributions . . . . . . . . . . . $ 47,182
Accumulated net realized gain/loss -
net of distributions . . . . . . . . . . . 1,402
Net unrealized gain (loss) . . . . . . . . 1,161,787
Paid-in-capital applicable to 1,196,099
shares of $0.0001 par value capital
stock outstanding; 1,000,000,000
shares of the Corporation
authorized . . . . . . . . . . . . . . . 12,125,845
__________
NET ASSETS . . . . . . . . . . . . . . . . $13,336,216
___________
___________
NET ASSET VALUE PER SHARE. . . . . . . . . $11.15
______
______
* Non-income producing
144a Security was purchased pursuant to Rule 144a
under the Securities Act of 1933 and may not
be resold subject to that rule except to qualified
institutional buyers - total of such securities at
period-end amounts to 1.84% of net assets.
MTN Medium Term Note
(AUD) Australian dollar
(BEL) Belgian franc
(CAD) Canadian dollar
(DEM) German deutschemark
(DKK) Danish krone
(ESP) Spanish peseta
(FRF) French franc
(GBP) British sterling
(ITL) Italian lira
(JPY) Japanese yen
(SEK) Swedish krona
The accompanying notes are an integral part of these financial statements.
Growth Fund / Statement of Net Assets
Common Stocks - 75.8%
FINANCIAL - 10.4%
Value
______
BANK & TRUST - 2.1%
1,300 shs. Chemical Banking . . . . . . . . . . . . $ 59,962
1,430 J. P. Morgan . . . . . . . . . . . . . . 101,351
1,150 KeyCorp. . . . . . . . . . . . . . . . . 35,219
650 Mellon Bank. . . . . . . . . . . . . . . 27,788
224,320
INSURANCE - 3.3%
700 American International
Group. . . . . . . . . . . . . . . . . 79,625
2,000 PartnerRe Holdings . . . . . . . . . . . 45,500
2,600 PMI Group. . . . . . . . . . . . . . . . 106,275
2,200 UNUM . . . . . . . . . . . . . . . . . . 94,050
1,900 Willis-Corroon ADR . . . . . . . . . . . 25,413
350,863
FINANCIAL SERVICES - 5.0%
1,800 American Express . . . . . . . . . . . . 64,125
2,300 Fannie Mae . . . . . . . . . . . . . . . 213,900
3,100 Freddie Mac. . . . . . . . . . . . . . . 211,187
600 H&R Block. . . . . . . . . . . . . . . . 21,675
650 Sallie Mae . . . . . . . . . . . . . . . 30,875
541,762
Total Financial 1,116,945
UTILITIES - 3.6%
TELEPHONE - 1.8%
2,200 ALLTEL . . . . . . . . . . . . . . . . . 54,175
650 AT&T . . . . . . . . . . . . . . . . . . 32,988
1,100 SBC Communications . . . . . . . . . . . 49,500
1,500 Sprint . . . . . . . . . . . . . . . . . 50,250
186,913
ELECTRIC UTILITIES - 1.8%
3,500 Centerior Energy . . . . . . . . . . . . 33,250
1,300 Entergy. . . . . . . . . . . . . . . . . 32,175
1,500 Niagara Mohawk . . . . . . . . . . . . . 22,125
1,300 PacifiCorp . . . . . . . . . . . . . . . 25,675
800 Texas Utilities. . . . . . . . . . . . . 28,900
2,000 Unicom . . . . . . . . . . . . . . . . . 54,500
196,625
Total Utilities 383,538
CONSUMER NONDURABLES - 23.4%
BEVERAGES - 3.7%
900 shs. Anheuser-Busch . . . . . . . . . . . . . $ 53,212
2,400 Coke . . . . . . . . . . . . . . . . . . 148,500
3,900 PepsiCo. . . . . . . . . . . . . . . . . 191,100
392,812
FOOD PROCESSING - 3.2%
900 Campbell . . . . . . . . . . . . . . . . 44,213
960 CPC International. . . . . . . . . . . . 58,320
960 General Mills. . . . . . . . . . . . . . 49,800
700 Pioneer Hi-Bred. . . . . . . . . . . . . 27,475
1,200 Ralston Purina . . . . . . . . . . . . . 60,300
3,900 Sara Lee . . . . . . . . . . . . . . . . 108,712
348,820
HOSPITAL SUPPLIES/HOSPITAL
MANAGEMENT - 3.3%
4,200 Abbott Laboratories. . . . . . . . . . . 168,000
1,700 Baxter International . . . . . . . . . . 59,287
1,366 * Boston Scientific. . . . . . . . . . . . 39,273
2,200 Columbia/HCA Healthcare. . . . . . . . . 89,925
356,485
PHARMACEUTICALS - 7.2%
1,600 * ALZA . . . . . . . . . . . . . . . . . . 33,400
840 American Home Products . . . . . . . . . 61,845
600 Bristol-Myers Squibb . . . . . . . . . . 39,825
500 Eli Lilly. . . . . . . . . . . . . . . . 37,313
2,000 Johnson & Johnson. . . . . . . . . . . . 132,500
1,300 Merck. . . . . . . . . . . . . . . . . . 61,263
1,730 Pfizer . . . . . . . . . . . . . . . . . 152,456
800 Schering-Plough. . . . . . . . . . . . . 63,000
2,300 SmithKline Beecham ADR . . . . . . . . . 90,850
800 Upjohn . . . . . . . . . . . . . . . . . 29,100
900 Warner-Lambert . . . . . . . . . . . . . 74,587
776,139
MISCELLANEOUS CONSUMER
PRODUCTS - 6.0%
2,000 American Greetings
(Class A). . . . . . . . . . . . . . . 56,500
1,400 Brunswick. . . . . . . . . . . . . . . . 25,725
850 Colgate-Palmolive. . . . . . . . . . . . 65,450
1,700 * CUC International. . . . . . . . . . . . 62,475
1,800 Harcourt General . . . . . . . . . . . . 75,825
1,800 Hasbro . . . . . . . . . . . . . . . . . 63,450
1,700 Newell . . . . . . . . . . . . . . . . . 42,288
1,750 Philip Morris. . . . . . . . . . . . . . 127,531
640 Tambrands. . . . . . . . . . . . . . . . 27,440
3,300 UST. . . . . . . . . . . . . . . . . . . 98,587
645,271
Total Consumer Nondurables 2,519,527
CONSUMER SERVICES - 9.8%
GENERAL MERCHANDISERS - 1.3%
1,739 shs. * Carson Pirie Scott . . . . . . . . . . . $ 29,128
500 Dayton Hudson. . . . . . . . . . . . . . 35,437
500 Sears. . . . . . . . . . . . . . . . . . 28,188
3,200 TJX. . . . . . . . . . . . . . . . . . . 42,800
135,553
SPECIALTY MERCHANDISERS - 0.7%
1,200 * Federated Department
Stores . . . . . . . . . . . . . . . . 27,600
2,000 * Toys "R" Us. . . . . . . . . . . . . . . 50,500
78,100
ENTERTAINMENT & LEISURE - 2.4%
1,700 Disney . . . . . . . . . . . . . . . . . 94,562
100 * GC Companies . . . . . . . . . . . . . . 3,375
1,800 McDonald's . . . . . . . . . . . . . . . 68,175
540 Reader's Digest (Class B). . . . . . . . 20,452
1,800 rts. * Viacom . . . . . . . . . . . . . . . . . 2,363
348 shs. * Viacom (Class A) . . . . . . . . . . . . 16,400
1,063 * Viacom (Class B) . . . . . . . . . . . . 49,562
254,889
MEDIA & COMMUNICATIONS - 5.3%
640 Dun & Bradstreet . . . . . . . . . . . . 33,920
1,470 Gaylord Entertainment. . . . . . . . . . 32,708
1,600 * Multimedia . . . . . . . . . . . . . . . 61,200
1,500 Reuters ADR. . . . . . . . . . . . . . . 67,312
2,500 Time Warner. . . . . . . . . . . . . . . 99,062
1,571 Times Mirror . . . . . . . . . . . . . . 36,526
2,100 Turner Broadcasting
Systems (Class B). . . . . . . . . . . 41,738
3,200 Vodafone ADR . . . . . . . . . . . . . . 107,600
340 Washington Post (Class B). . . . . . . . 90,015
570,081
RESTAURANTS - 0.1%
960 * Darden Restaurants . . . . . . . . . . . 10,560
Total Consumer Services 1,049,183
CONSUMER CYCLICALS - 1.4%
MISCELLANEOUS CONSUMER DURABLES - 1.4%
1,800 Corning. . . . . . . . . . . . . . . . . 57,600
1,500 Eastman Kodak. . . . . . . . . . . . . . 90,563
Total Consumer Cyclicals 148,163
TECHNOLOGY - 4.3%
ELECTRONIC SYSTEMS - 1.1%
900 Hewlett-Packard. . . . . . . . . . . . . 59,512
1,550 shs. Honeywell. . . . . . . . . . . . . . . . $ 61,419
120,931
INFORMATION PROCESSING - 0.6%
730 IBM. . . . . . . . . . . . . . . . . . . 68,073
AEROSPACE & DEFENSE - 1.3%
540 AlliedSignal . . . . . . . . . . . . . . 21,802
2,000 Boeing . . . . . . . . . . . . . . . . . 117,750
139,552
TELECOMMUNICATIONS - 1.3%
676 * Cox Communications
(Class A). . . . . . . . . . . . . . . 10,985
800 * DSC Communications . . . . . . . . . . . 29,600
1,700 MCI. . . . . . . . . . . . . . . . . . . 34,425
1,500 Northern Telecom . . . . . . . . . . . . 57,563
132,573
Total Technology 461,129
CAPITAL EQUIPMENT - 4.0%
ELECTRICAL EQUIPMENT - 2.6%
1,900 Exide. . . . . . . . . . . . . . . . . . 68,400
3,700 GE . . . . . . . . . . . . . . . . . . . 214,600
283,000
MACHINERY - 1.4%
400 Caterpillar. . . . . . . . . . . . . . . 24,100
5,100 * Coltec Industries. . . . . . . . . . . . 90,525
380 Deere. . . . . . . . . . . . . . . . . . 32,870
147,495
Total Capital Equipment 430,495
BUSINESS SERVICES & TRANSPORTATION - 6.3%
COMPUTER SERVICE & SOFTWARE - 2.5%
1,100 Automatic Data Processing. . . . . . . . 68,475
400 * Intuit . . . . . . . . . . . . . . . . . 25,300
2,000 * Lotus Development. . . . . . . . . . . . 61,000
500 * Microsoft. . . . . . . . . . . . . . . . 42,344
1,200 * Oracle Systems . . . . . . . . . . . . . 41,700
1,700 * Sybase . . . . . . . . . . . . . . . . . 35,700
274,519
DISTRIBUTION SERVICES - 1.6%
1,100 Alco Standard. . . . . . . . . . . . . . 78,787
2,000 Cardinal Health. . . . . . . . . . . . . 91,250
170,037
MISCELLANEOUS BUSINESS SERVICES - 1.7%
1,460 Browning-Ferris. . . . . . . . . . . . . 52,012
1,300 Deluxe Corp. . . . . . . . . . . . . . . 41,438
3,160 shs. WMX Technologies . . . . . . . . . . . . $ 86,110
179,560
AIRLINES - 0.5%
840 * AMR. . . . . . . . . . . . . . . . . . . 57,330
Total Business Services & Transportation 681,446
ENERGY - 5.8%
ENERGY SERVICES - 2.6%
2,200 Halliburton. . . . . . . . . . . . . . . 85,800
3,030 Schlumberger . . . . . . . . . . . . . . 196,950
282,750
INTEGRATED PETROLEUM - DOMESTIC - 1.8%
500 Atlantic Richfield . . . . . . . . . . . 58,062
840 British Petroleum ADR. . . . . . . . . . 71,715
1,300 Unocal . . . . . . . . . . . . . . . . . 38,513
1,200 USX-Marathon . . . . . . . . . . . . . . 23,850
192,140
INTEGRATED PETROLEUM -
INTERNATIONAL - 1.4%
830 Exxon. . . . . . . . . . . . . . . . . . 59,241
600 Mobil. . . . . . . . . . . . . . . . . . 60,225
400 Texaco . . . . . . . . . . . . . . . . . 27,400
146,866
Total Energy 621,756
PROCESS INDUSTRIES - 3.5%
DIVERSIFIED CHEMICALS - 0.2%
270 Monsanto . . . . . . . . . . . . . . . . 22,478
SPECIALTY CHEMICALS - 2.8%
1,100 3M . . . . . . . . . . . . . . . . . . . 65,862
1,640 Great Lakes Chemical . . . . . . . . . . 100,040
2,000 Pall . . . . . . . . . . . . . . . . . . 44,000
900 Rohm & Haas. . . . . . . . . . . . . . . 52,988
800 Sigma Aldrich. . . . . . . . . . . . . . 35,200
298,090
PAPER & PAPER PRODUCTS - 0.2%
500 Mead . . . . . . . . . . . . . . . . . . 26,937
FOREST PRODUCTS - 0.3%
400 Georgia-Pacific. . . . . . . . . . . . . 31,100
Total Process Industries 378,605
BASIC MATERIALS - 2.1%
METALS - 1.6%
1,000 Alcoa. . . . . . . . . . . . . . . . . . 46,500
2,200 shs. * Alumax . . . . . . . . . . . . . . . . . $ 64,075
800 Cyprus Amax Minerals . . . . . . . . . . 21,200
1,700 De Beers ADR . . . . . . . . . . . . . . 42,500
174,275
MINING - 0.5%
1,929 Barrick Gold . . . . . . . . . . . . . . 48,707
Total Basic Materials 222,982
MISCELLANEOUS - 1.2%
2,400 SPDR Trust . . . . . . . . . . . . . . . 128,738
Total Miscellaneous 128,738
Total Common Stocks (Cost $7,275,812) 8,142,507
Corporate Bonds - 11.8%
$ 50,000 Agriculture Minerals and
Chemicals,
10.75%, 9/30/03. . . . . . . . . . . . 52,125
100,000 Ahmanson H F ,
7.875%, 9/1/04 . . . . . . . . . . . . 103,840
10,000 Ametek, 9.75%, 3/15/04 . . . . . . . . . 10,600
15,000 Associates Corporation
North America,
5.25%, 3/30/00 . . . . . . . . . . . . 14,184
50,000 Ballys Park Place Funding,
9.25%, 3/15/04 . . . . . . . . . . . . 45,750
100,000 Baltimore Gas & Electric ,
5.50%, 4/15/04 . . . . . . . . . . . . 90,850
15,000 Bank Nova Scotia New York
Agency, 6.25%, 9/15/08 . . . . . . . . 13,879
8,759 Carson Pirie Scott ,
13.00%, 3/28/05. . . . . . . . . . . . 8,781
25,000 Coltec Industries,
10.25%, 4/1/02 . . . . . . . . . . . . 25,750
50,000 Continental Cablevision,
9.00%, 9/1/08. . . . . . . . . . . . . 50,000
30,782 Daimler-Benz Auto Grantor
Trust, 3.90%, 10/15/98 . . . . . . . . 30,243
50,000 Dime Bancorp,
10.50%, 11/15/05 . . . . . . . . . . . 53,750
50,000 Embassy Suites,
10.875%, 4/15/02 . . . . . . . . . . . 54,500
50,000 Exide, (144a),
10.00%, 4/15/05. . . . . . . . . . . . 51,000
50,000 Firstfed Financial,
11.75%, 10/1/04. . . . . . . . . . . . 51,125
10,000 Imo Industries,
12.00%, 11/1/01. . . . . . . . . . . . 10,300
Corporate Bonds (cont'd)
$ 30,000 Long Island Lighting,
8.75%, 2/15/97 . . . . . . . . . . . . $ 30,979
40,000 Methanex, 8.875%, 11/15/01 . . . . . . . 42,986
50,000 Owens-Illinois,
11.00%, 12/1/03. . . . . . . . . . . . 55,375
100,000 Paine Webber Group,
8.25%, 5/1/02. . . . . . . . . . . . . 103,894
90,000 Principal Mutual Life
Insurance, (144a),
8.00%, 3/1/44. . . . . . . . . . . . . 83,025
50,000 Rogers Cablesystems,
(144a), 10.00%, 3/15/05. . . . . . . . 50,750
15,000 Rouse, 8.50%, 1/15/03. . . . . . . . . . 15,818
15,000 Shawmut National,
7.20%, 4/15/03 . . . . . . . . . . . . 15,092
50,000 Silgan, 11.75%, 6/15/02. . . . . . . . . 53,250
15,000 Tenneco, 8.00%, 11/15/99 . . . . . . . . 15,698
50,000 Texas New Mexico Power,
12.50%, 1/15/99. . . . . . . . . . . . 54,916
30,000 Texas Utilities,
7.375%, 10/1/25. . . . . . . . . . . . 27,997
20,000 Texas Utilities,
7.875%, 4/1/24 . . . . . . . . . . . . 19,828
30,000 WalMart Stores,
7.25%, 6/1/13. . . . . . . . . . . . . 30,011
Total Corporate Bonds (Cost $1,222,670) 1,266,296
Foreign Government
Obligations/Agencies - 2.5%
300,000 (BEL) Belgian Government Bonds,
7.25%, 4/29/04 . . . . . . . . . . . . 10,329
3,000 (CAD) Canadian Government
Bonds, 6.50%, 6/1/04 . . . . . . . . . 1,993
5,000 (CAD) Canadian Government
Bonds, 9.75%, 6/1/21 . . . . . . . . . 4,204
142,000 (FRF) French Government Bonds,
8.25%, 2/27/04 . . . . . . . . . . . . 30,150
30,000 (DEM) German Federal Government
Bonds, 6.50%, 7/15/03. . . . . . . . . 21,061
23,000 (DEM) German Federal Government
Bonds, 8.50%, 8/21/00. . . . . . . . . 17,978
1,000,000 (JPY) Int'l Bank for Reconstruction
& Development,
6.75%, 3/15/00 . . . . . . . . . . . . 14,203
45,000,000 (ITL) Italian Government Bonds,
8.50%, 8/1/04. . . . . . . . . . . . . 22,194
8,400,000 (JPY) Japanese Government
Bonds, 4.50%, 6/20/03. . . . . . . . . $ 110,736
1,500,000 (ESP) Spanish Government
Bonds, 8.00%, 5/30/04. . . . . . . . . 9,946
100,000 (SEK) Swedish Government
Bonds, 6.00%, 2/9/05 . . . . . . . . . 9,847
8,000 (GBP) United Kingdom Treasury
Notes, 9.00%, 3/3/00 . . . . . . . . . 13,348
Total Foreign Government Obligations/Agencies
(Cost $234,893) 265,989
U.S. Government Mortgage-Backed
Securities - 6.3%
$ 149,252 Government National
Mortgage Association, I,
6.50%, 12/15/23 - 4/15/24. . . . . . . 143,291
67,763 7.50%, 10/15/22. . . . . . . . . . . . 68,217
455,216 8.00%, 1/15/22 - 9/15/24 . . . . . . . 467,576
Total U.S. Government Mortgage-Backed Securities
(Cost $639,416) 679,084
U.S. Government
Obligations/Agencies - 1.0%
100,000 Tennessee Valley Authority,
8.25%, 4/15/42 . . . . . . . . . . . . 108,141
Total U.S. Government Obligations/Agencies
(Cost $98,720) 108,141
Short-Term Investments - 1.9%
COMMERCIAL PAPER - 1.9%
210,000 President & Fellows Harvard
College, 6.15%, 6/1/95 . . . . . . . . 209,964
Total Short-Term Investments
(Cost $209,964) 209,964
Total Investments in Securities - 99.3% of Net Assets
(Cost $9,681,475) $10,671,981
Other Assets Less Liabilities 76,008
_________
Net Assets Consist of: Value
_________
Accumulated net investment income -
net of distributions . . . . . . . . . . $ 81,023
Accumulated net realized gain/loss -
net of distributions . . . . . . . . . . 10,512
Net unrealized gain. . . . . . . . . . . . 991,622
Paid-in-capital applicable to 939,414
shares of $0.0001 par value capital
stock outstanding; 1,000,000,000
shares of the Corporation
authorized . . . . . . . . . . . . . . . 9,664,832
_________
NET ASSETS . . . . . . . . . . . . . . . . $10,747,989
___________
___________
NET ASSET VALUE PER SHARE. . . . . . . . . $11.44
______
______
* Non-income producing
144a Security was purchased pursuant to Rule 144a
under the Securities Act of 1933 and may not
be resold subject to that rule except to
qualified institutional buyers - total of
such securities at period-end amounts to 1.72%
of net assets.
(BEL) Belgian franc
(CAD) Canadian dollar
(DEM) German deutschemark
(ESP) Spanish peseta
(FRF) French franc
(GBP) British sterling
(ITL) Italian lira
(JPY) Japanese yen
(SEK) Swedish krona
The accompanying notes are an integral part of these financial statements.
Statement of Operations
T. Rowe Price Personal Strategy Funds / From July 29, 1994
(Commencement of Operations) to May 31, 1995
Income Balanced Growth
Fund Fund Fund
______ ________ ______
INVESTMENT INCOME
Income
Interest . . . . . . . . $ 438,972 $ 229,609 $ 107,723
Dividend. . . . . . . . . 83,408 92,021 90,924
__________ __________ __________
Total income. . . . . . . 522,380 321,630 198,647
__________ __________ __________
Expenses
Custody and
accounting. . . . . . . 91,631 91,228 90,680
Shareholder
servicing . . . . . . . 55,480 46,206 45,142
Legal and audit . . . . . 10,278 10,673 11,389
Organization. . . . . . . 7,081 7,081 7,081
Directors . . . . . . . . 4,998 4,921 4,899
Prospectus and
shareholder
reports . . . . . . . . 3,223 5,415 7,185
Registration. . . . . . . 1,957 2,770 2,203
Miscellaneous . . . . . . 569 443 349
Reimbursed by
Manager . . . . . . . . (87,526) (98,292) (112,273)
__________ __________ __________
Total expenses. . . . . . 87,691 70,445 56,655
__________ __________ __________
Net investment
income. . . . . . . . . . 434,689 251,185 141,992
__________ __________ __________
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Securities. . . . . . . . 21,136 6,224 10,130
Foreign currency
transactions. . . . . . 29,806 (4,822) 382
__________ __________ __________
Net realized
gain. . . . . . . . . . 50,942 1,402 10,512
__________ __________ __________
Change in net unrealized
gain or loss on:
Securities. . . . . . . . 1,667,897 1,155,679 990,506
Other assets and
liabilities denominated
in foreign
currencies. . . . . . . 9,458 6,108 1,116
__________ __________ __________
Change in net unrealized
gain or loss. . . . . . 1,677,355 1,161,787 991,622
__________ __________ __________
Net realized and unrealized
gain. . . . . . . . . . . 1,728,297 1,163,189 1,002,134
__________ __________ __________
INCREASE IN NET ASSETS FROM
OPERATIONS . . . . . . . . . $2,162,986 $1,414,374 $1,144,126
__________ __________ __________
__________ __________ __________
The accompanying notes are an integral part of these financial statements.
Statement Of Changes In Net Assets
T. Rowe Price Personal Strategy Funds / From July 29, 1994
(Commencement of Operations) to May 31, 1995
Income Balanced Growth
Fund Fund Fund
______ ________ ______
INCREASE IN NET ASSETS FROM
Operations
Net investment
income. . . . . . . . . $ 434,689 $ 251,185 $ 141,992
Net realized gain . . . . 50,942 1,402 10,512
Change in net
unrealized gain
or loss . . . . . . . . 1,677,355 1,161,787 991,622
___________ ___________ ___________
Increase in net assets
from operations . . . . . 2,162,986 1,414,374 1,144,126
___________ ___________ ___________
Distributions to shareholders
Net investment
income. . . . . . . . . . (313,860) (211,084) (68,051)
___________ ___________ ___________
Capital share
transactions*
Shares sold . . . . . . . 19,162,556 12,675,142 10,577,407
Distributions
reinvested. . . . . . . 229,614 204,074 67,213
Shares redeemed . . . . . (618,753) (818,946) (1,060,543)
___________ ___________ ___________
Increase in net assets
from capital share
transactions. . . . . . 18,773,417 12,060,270 9,584,077
___________ ___________ ___________
Net equalization . . . . . . 42,312 42,656 57,837
___________ ___________ ___________
Increase in net
assets . . . . . . . . . . . 20,664,855 13,306,216 10,717,989
NET ASSETS
Beginning of period . . . 40,000 30,000 30,000
___________ ___________ ___________
End of period . . . . . . $20,704,855 $13,336,216 $10,747,989
___________ ___________ ___________
___________ ___________ ___________
*Share information
Shares sold . . . . . . . 1,926,215 1,251,088 1,029,202
Distributions
reinvested. . . . . . . 22,240 19,755 6,675
Shares redeemed . . . . . (60,302) (77,744) (99,463)
___________ ___________ ___________
Increase in shares
outstanding . . . . . . 1,888,153 1,193,099 936,414
___________ ___________ ___________
___________ ___________ ___________
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
T. Rowe Price Personal Strategy Funds / May 31, 1995
Note 1 - Significant Accounting Policies
T. Rowe Price Personal Strategy Funds, Inc. (the Corporation) is registered
under the Investment Company Act of 1940. The Personal Strategy Income Fund,
(the Income Fund), the Personal Strategy Balanced Fund (the Balanced Fund),
and Personal Strategy Growth Fund, (the Growth Fund), diversified, open-end
management investment companies, are three of the portfolios established by
the Corporation.
A) Valuation - Equity securities listed or regularly traded on a securities
exchange (including NASDAQ) are valued at the last quoted sales price at the
time the valuations are made. A security which is listed or traded on more
than one exchange is valued at the quotation on the exchange determined to be
the primary market for such security. Other equity securities and those listed
securities that are not traded on a particular day are valued at a price
within the limits of the latest bid and asked prices deemed by the Board of
Directors, or by persons delegated by the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter market and are
valued at a price deemed best to reflect fair value as quoted by dealers who
make markets in these securities or by an independent pricing service.
Short-term debt securities are valued at their cost which, when combined with
accrued interest, approximates fair value.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of
each fund, as authorized by the Board of Directors.
B) Currency Translation - Assets and liabilities are translated into U.S.
dollars at the prevailing exchange rate at the end of the reporting period.
Purchases and sales of securities and income and expenses are translated into
U.S. dollars at the prevailing exchange rate on the dates of such
transactions. The effect of changes in foreign exchange rates on realized and
unrealized security gains and losses is reflected as a component of such gains
and losses.
C) Premiums and Discounts - Premiums and discounts on debt securities are
amortized for both financial and tax reporting purposes.
D) Other - Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on an identified cost basis. Dividend income and distributions to
shareholders are recorded by each fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income
tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. The funds follow the practice of
equalization under which undistributed net investment income per share is
unaffected by fund shares sold or redeemed.
Note 2 - Organization
The Corporation was organized on May 21, 1994, and had no operations prior to
July 29, 1994 other than those related to organizational matters, including
the following sales of shares of the Funds' capital stock on July 25, 1994, to
T. Rowe Price Associates, Inc.:
Income Balanced Growth
Fund Fund Fund
______ ________ _______
Shares Sold 4,000 3,000 3,000
Net Asset Value
Per Share $10.00 $10.00 $10.00
Note 3 - Investment Transactions
Consistent with their investment objectives, the funds engage in the following
practices to manage exposure to certain risks and enhance performance. The
investment objective, policies, program, risk factors, and following practices
of each fund are described more fully in each fund's Prospectus and Statement
of Additional Information.
A) Securities Lending - To earn additional income, the Growth Fund lends its
securities to approved brokers. At May 31, 1995, the market value of
securities on loan was $1,063,194, for the Growth Fund, which was fully
collateralized by cash. Although the risk is mitigated by the collateral, the
fund could experience a delay in recovering its securities and a possible loss
of income or value if the borrower fails to return them.
B) Purchases and sales of U.S. government securities and portfolio securities,
other than short-term securities, for the period ended May 31, 1995, were as
follows:
Income Balanced Growth
Fund Fund Fund
______ ________ _______
U.S. Government
Purchases $6,359,868 $1,674,165 $571,047
Sales 3,145,349 621,266 457,304
Portfolio Securities
Purchases $14,493,469 $11,712,346 $10,275,318
Sales 1,129,772 1,110,056 926,980
Note 4 - Federal Income Taxes
No provision for federal income taxes is required since each fund intends to
qualify as a regulated investment company and distribute all of its taxable
income.
In order for each fund's capital accounts and distributions to
shareholders to reflect the tax character of certain transactions, the
following reclassifications were made during the period ended May 31, 1995.
The results of operations and net assets were not affected by the
reclassifications.
Income Balanced Growth
Fund Fund Fund
______ ________ _______
Undistributed Net
Investment Income $(35,231) $(35,575) $(50,755)
Paid-in-Capital 35,231 35,575 50,755
At May 31, 1995, the aggregate cost of investments for the Income Fund,
Balanced Fund and Growth Fund for federal income tax and financial reporting
purposes was $18,606,971, $11,903,869, and $9,681,475, respectively. Net
unrealized gain (loss) on investments was as follows:
Income Balanced Growth
Fund Fund Fund
______ ________ _______
Appreciated
Investments $1,754,796 $1,249,281 $1,087,265
Depreciated
Investments (86,899) (93,602) (96,759)
__________ __________ _________
Net Unrealized
Gain $1,667,897 $1,155,679 $ 990,506
__________ __________ _________
__________ __________ _________
Note 5 - Related Party Transactions
The investment management agreement between each fund and T. Rowe Price
Associates, Inc. (the Manager) provides for an annual investment management
fee, computed daily and paid monthly, consisting of an Individual Fund Fee
equal to 0.15% for the Income Fund, 0.25% for the Balanced Fund and 0.30% for
the Growth Fund, of average daily net assets and a Group Fee. The Group Fee is
based on the combined assets of certain mutual funds sponsored by the Manager
or Rowe-Price Fleming International, Inc. (the Group). The Group Fee rate
ranges from 0.48% for the first $1 billion of assets to 0.31% for assets in
excess of $34 billion. At May 31, 1995, and for the period then ended, the
effective annual Group Fee rate was 0.34%. Each fund pays a pro rata share of
the Group Fee based on the ratio of its net assets to those of the Group.
Under the terms of the investment management agreement, the Manager is
required to bear any expenses through May 31, 1996 for the funds which would
cause each fund's ratio of expenses to average net assets to exceed 0.95% for
the Income Fund, 1.05% for the Balanced Fund and 1.10% for the Growth Fund
respectively. Thereafter through May 31, 1998 each fund is required to
reimburse the Manager for these expenses, provided that average net assets
have grown or expenses have declined sufficiently to allow reimbursement
without causing each fund's ratio of expenses to average net assets to exceed
their respective ratios. Pursuant to these agreements, $45,149, $39,497 and
$32,870 of management fees were not accrued by the Income Fund, Balanced Fund
and Growth Fund, respectively, for the period ended May 31, 1995, and $87,526,
$98,292 and $112,273, respectively, of other expenses were borne by the
Manager in each fund.
In addition, each fund has entered into agreements with the Manager and
two wholly owned subsidiaries of the Manager, pursuant to which each fund
receives certain other services. The Manager computes the daily share price
and maintains the financial records of each fund. T. Rowe Price Services, Inc.
(TRPS) is each fund's transfer and dividend disbursing agent and provides
shareholder and administrative services to the funds. T. Rowe Price Retirement
Plan Services, Inc. provides subaccounting and recordkeeping services for
certain retirement accounts invested in each fund. The Income Fund, Balanced
Fund, and Growth Fund incurred expenses pursuant to these related party
agreements totaling approximately $97,111, $91,354 and $90,188, respectively,
for the period ended May 31, 1995, of which $14,571, $13,219 and $12,102,
respectively, were payable at period-end.
Financial Highlights
T. Rowe Price Personal Strategy Funds / From July 29, 1994
(Commencement of Operations) to May 31, 1995
For a share outstanding throughout the period
_______________________________________
Income Balanced Growth
Fund Fund Fund
______ ________ ______
NET ASSET VALUE,
BEGINNING OF PERIOD. . . . . $10.00 $10.00 $10.00
______ ______ ______
Investment Activities
Net investment
income. . . . . . . . . 0.41* 0.33* 0.25*
Net realized and
unrealized
gain. . . . . . . . . . 0.85 1.08 1.30
______ ______ ______
Total from Investment
Activities . . . . . . . . . 1.26 1.41 1.55
______ ______ ______
Distributions
Net investment
income. . . . . . . . . (0.32) (0.26) (0.11)
______ ______ ______
NET ASSET VALUE, END OF
PERIOD . . . . . . . . . . . $10.94 $11.15 $11.44
______ ______ ______
______ ______ ______
RATIOS/SUPPLEMENTAL DATA
Total Return . . . . . . . . 12.90%* 14.35%* 15.65%*
Ratio of Expenses to
Average Net
Assets. . . . . . . . . . 0.95%!* 1.05%!* 1.10%!*
Ratio of Net Investment
Income to Average Net
Assets. . . . . . . . . . 4.71%!* 3.74%!* 2.76%!*
Portfolio Turnover
Rate. . . . . . . . . . . 50.5%! 25.8%! 25.7%!
Net Assets, End of
Period . . . . . . . . . $20,704,855 $13,336,216 $10,747,989
! Annualized.
* Excludes expenses in excess of a 0.95%, 1.05%, and 1.10%
voluntary expense limitation in effect through May 31,1996.
Report of Independent Accountants
To the Shareholders and Board of Directors
of T. Rowe Price Personal Strategy Funds, Inc.
We have audited the accompanying statement of net assets of T. Rowe Price
Personal Strategy Income Fund, T. Rowe Price Personal Strategy Balanced Fund
and the T. Rowe Price Personal Strategy Growth Fund as of May 31, 1995, and
the related statement of operations, the statement of changes in net assets
and the financial highlights for the period then ended. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
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 confirmation of investments
owned as of May 31, 1995, by correspondence with the custodian and brokers. 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 financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of T. Rowe Price Personal Strategy Income Fund, T. Rowe Price
Personal Strategy Balanced Fund and the T. Rowe Price Personal Strategy Growth
Fund as of May 31, 1995, the results of their operations, the changes in their
net assets and financial highlights for the period then ended, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
June 19, 1995
Chart1 - Interest Rate Levels
A four line graph showing yields for May 31, 1994,
August 31, 1994, November 30, 1994, February 28, 1995,
and May 31, 1995
Chart2 - Asset Allocation - Income Fund
Pie chart showing the asset allocation breakdown for May 31, 1995
Chart3 - Asset Allocation - Balanced Fund
Pie chart showing the asset allocation breakdown for May 31, 1995
Chart4 - Asset Allocation - Growth Fund
Pie chart showing the asset allocation breakdown for May 31, 1995
Chart5 - Fiscal Year Performance Comparison - Income Fund
Line graph showing index return for period July 29, 1994 to May 31, 1995
Chart6 - Fiscal Year Performance Comparison - Growth Fund
Line graph showing index return for period July 29, 1994 to May 31, 1995
Chart7 - Fiscal Year Performance Comparison - Balanced Fund
Line graph showing index return for period July 29, 1994 to May 31, 1995
