<PAGE> 1
EQUI-SELECT
SERIES TRUST
SEMI
ANNUAL
REPORT
[Watch Graphic]
SEMI ANNUAL REPORT
JUNE 30, 1998
<PAGE> 2
Equi-Select Series Trust
Semi Annual Report
For the Period Ending June 30, 1998
Table of Contents
<TABLE>
<S> <C>
Letter of Contract Owners................................... 1
Management's Discussion and Analysis........................ 2
Equi-Select Series Trust Financial Statements
Portfolios of Investments............................. 11
Statements of Assets and Liabilities.................. 30
Statements of Operations.............................. 32
Statements of Changes in Net Assets................... 34
Financial Highlights.................................. 36
Notes to Financial Statements......................... 45
</TABLE>
The information contained in this report is intended for general informational
purposes only. This report is not authorized for distribution to prospective
investors unless preceded or accompanied by current Trust and Separate Account
prospectuses which contain important information concerning the Trust, the
Company, and its current public offering of variable contracts. Investment
return and principal value will vary, and shares may be worth more or less at
redemption than at original purchase.
<PAGE> 3
August 14, 1998
LETTER TO CONTRACT HOLDERS
Dear Contract Holders:
We are pleased to present the 1998 Semi-Annual Report of the Equi-Select Series
Trust (the "Trust"). The following report provides information about the
performance and financial position of the portfolios in the Trust.
During the first six months of 1998, the net assets of the Trust increased 71%
to end the period at $1.4 billion. This increase can be attributed to new
investment by contract holders and strong investment returns.
The U.S. stock market continued to generate strong returns during the first half
of 1998. However, performance varied significantly across different sectors of
the market:
- Large company stocks provided the highest returns during the six-month
period. The Standard & Poors 500 Index (an index of large-cap stocks) had
a total return of 17.71%. The Russell 2000 Index (an index of small-cap
stocks) had a total return of only 4.93% over the same period.
- Aggressive, growth-oriented stocks had significantly higher returns than
more conservative, value-oriented stocks. During the first half of the
year, the Standard & Poors 500/Barra Growth Index had a total return of
23.07%. The Standard & Poors 500/Barra Value Index returned only 12.13%.
Over short periods of time, different sectors of the market can produce
significantly different returns. Consequently, investment portfolios can also
produce substantially different returns. When you evaluate the performance of a
portfolio, it is important to understand its investment strategy. It is also
important to focus on performance over longer periods.
Through your variable annuity contract, you have access to many portfolio
managers with extensive investment experience. We believe that these managers
can provide superior investment results over time.
On August 14, 1998, the Trust was consolidated into The GCG Trust. Your
investment options will not change significantly as a result of this action. For
most portfolios, a very similar portfolio will be available in the GCG Trust.
For additional information about the portfolios in the GCG Trust, please refer
to the current prospectus for your contract and the GCG Trust.
We are committed to providing quality products and services to contract owners,
and we look forward to helping you meet your financial objectives. Thank you for
your continued support.
Sincerely,
/s/ Fred S. Hubbell
Fred S. Hubbell
President and Chairman
Equi-Select Series Trust
1
<PAGE> 4
MONEY MARKET PORTFOLIO
JUNE 30, 1998
The Money Market Portfolio (the "Portfolio") seeks to achieve maximum current
income, consistent with the preservation of capital and the maintenance of
liquidity. The Portfolio had a total return of 2.52% for the six months ended
June 30, 1998.
Over the past six months, there have been many conflicting signals regarding the
direction of interest rates. This has created interesting challenges for money
market managers.
In the first week of January, short-term interest rates declined by
approximately 0.25%. This occurred because investors thought the Asian financial
crisis would cause the U.S. economy to slow down. They expected the Federal
Reserve Board (the "Fed") to maintain or lower the discount rate.
During the first quarter, economic growth appeared to be much stronger than
expected. Many investors feared the Fed would increase the discount rate, and
short-term interest rates increased by more than 0.30% in late-January and
February.
At its meeting in March, the Fed signaled a bias toward increasing the discount
rate. However, the Fed said that continuing financial problems in Asia have kept
the Fed from doing so.
Since the beginning of March, short-term interest rates have been very stable.
They have varied within a 0.10% to 0.15% range, as investors reacted to the
latest information about the economy, inflation, or the financial crisis in
Asia.
At the beginning of the year, the Portfolio had an average maturity of
approximately 45 days. For a short time, the Portfolio Manager extended the
average maturity of the Portfolio. However, this strategy was reversed as
interest rates appeared to be heading upward.
For most of the six-month period, the Portfolio Manager has been reducing the
average maturity. He thought this strategy was prudent, given the uncertain
interest rate environment. At the end of June, the Portfolio had an average
maturity of approximately 35 days.
ING INVESTMENT MANAGEMENT LLC
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
1 YEAR 5.12%
SINCE INCEPTION* 5.08%
</TABLE>
* The Portfolio commenced operations on October 4, 1994.
INVESTMENT IN THE MONEY MARKET PORTFOLIO (OR IN ANY OTHER PORTFOLIO) IS NEITHER
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE
MONEY MARKET PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE.
TOP TEN ISSUERS
AS A PERCENTAGE OF INVESTMENTS
<TABLE>
<S> <C>
Daimler-Benz Aktieng 5.1%
Eastman Kodak Inc. 4.8%
Bell South Telephone Company 4.8%
Du Pont (E.I.) de Nemours & Company 4.8%
International Business Machines Credit Corp. 4.6%
Household Financial Corporation 4.6%
Caterpillar Financial Services Corporation 4.6%
Sweden (Kingdom of) 4.2%
Eksportsfinans A/S 4.1%
Toys-R-Us Inc. 3.9%
</TABLE>
2
<PAGE> 5
MORTGAGE-BACKED SECURITIES PORTFOLIO
JUNE 30, 1998
The Mortgage-Backed Securities Portfolio (the "Portfolio") seeks to obtain a
high current return, consistent with the safety of principal. For the six months
ended June 30, 1998, the Portfolio generated a total return of 2.95%. Over the
same period, the Lehman Brothers Mortgage-Backed Securities Index (the
"benchmark") had a total return of 3.38%.
During the first six months of 1998, interest rates were very low. The average
yield on 10-year U.S. Treasury securities was 5.55%, the lowest six-month
average since the early 1960's.
When interest rates are low, many consumers have an incentive to re-finance
their mortgages. The original mortgage is prepaid, and a new loan is issued. In
1998, mortgage pre-payments have been at an all-time high.
Pre-payments hurt the performance of mortgage-backed securities. The Portfolio
Manager is forced to re-invest the proceeds. Because interest rates have
declined, the new investment will have a lower yield than the instrument that
was prepaid.
For this reason, returns on mortgage-backed securities were very weak relative
to other sectors of the fixed income market. Over the six-month period, the
Lehman Brothers Treasury and Corporate indices produced returns of 4.20% and
4.15%, respectively.
Prepayments continue to be very high. During the period, a significant
percentage of the Portfolio was invested in higher-coupon mortgage-backed
securities. When interest rates are low, higher-coupon instruments tend to
pre-pay at faster rates.
Diversification requirements preclude the Portfolio from investing entirely in
mortgage-backed securities. As a result, approximately 25-30% of the portfolio
is normally invested in U.S. Treasury and/or corporate debt securities. This
exposure had a positive impact on performance, as both of these sectors provided
higher returns than mortgages.
ING INVESTMENT MANAGEMENT LLC
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
1 YEAR 7.28%
SINCE INCEPTION* 7.91%
</TABLE>
* The Portfolio commenced operations on October 4, 1994.
DISTRIBUTION BY ISSUER
AS A PERCENTAGE OF INVESTMENTS
[PIE CHART]
<TABLE>
<S> <C>
Corporate Bonds and Notes 2.4%
Country Wide Funding Corp. 3.4%
U.S. Treasury Notes 10.2%
Short Term Investments 10.8%
Govt. National Mortgage Assoc. 19.7%
Federal National Mortgage Assoc. 25.0%
Federal Home Loan Mortgage Corp. 28.5%
</TABLE>
3
<PAGE> 6
INTERNATIONAL FIXED INCOME PORTFOLIO
JUNE 30, 1998
The International Fixed Income Portfolio (the "Portfolio") seeks to provide a
high total return. During the six months ended June 30, 1998, the Portfolio had
a total return of 2.98%. Over the same period, the Merrill Lynch Global
Government Bond Index II (the "benchmark") had a total return of 2.88%.
In local currency terms, bond market returns were strong during the first half
of the year. Returns are significantly lower when they are translated into U.S.
dollars, because the U.S. dollar strengthened against most major currencies.
The United Kingdom was the best performing market this year. Monetary and fiscal
policies have been tight, new bond issues have been infrequent, and
institutional funds in the United Kingdom have shifted a greater percentage of
their assets into the bond market. The Merrill Lynch U.K. Gilt Index gained
5.89% in local currency terms, and 7.36% in U.S. dollar terms.
Returns in Japan were poor, primarily due to the devaluation of the Yen. The
Merrill Lynch Japanese Government Index returned 2.73% in local currency terms,
but lost 3.76% in U.S. dollar terms.
During the first six months of the year, the Portfolio was overweighted in
Europe and underweighted in Japan. In the United Kingdom, the average duration
of the Portfolio was longer than that of the benchmark. All of these decisions
have helped performance.
At the end of June, the Portfolio was focused on Europe, with 59% of its
investments located there. Growth in Europe is modest, inflation is declining,
fiscal policy is tight, and real yields are high.
In terms of currency exposure, the Portfolio is overweighted in the U.S. dollar
and underweighted in the Japanese Yen. We believe that the Yen will weaken
significantly over the next few months.
As of June 30, the Portfolio had an average duration of approximately 5.4 years,
and its average credit quality was AA+. The benchmark has very similar
characteristics.
The case for global bonds remains the same as it has for the last few years. It
becomes harder and harder to forecast more than moderate world economic growth.
Since inflation is declining, real yields are consequently very high for bonds.
Supply/demand trends are also very favorable. With budget surpluses developing
and debt repayment possible, the net new issuance of high quality government
bonds has lessened. At the same time, demand is increasing as individuals
increase their rate of savings. This trend is supported by the aging world
population.
BARING INTERNATIONAL INVESTMENT LIMITED
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
1 YEAR 4.02%
SINCE INCEPTION* 6.81%
</TABLE>
* The Portfolio commenced operations on October 4, 1994.
DISTRIBUTION BY COUNTRY
AS A PERCENTAGE OF INVESTMENTS
[PIE CHART]
<TABLE>
<S> <C>
Australia 5.3%
Sweden 5.5%
Netherlands 12.5%
Other Countries 15.0%
United Kingdom 15.0%
Germany 17.0%
United States 29.7%
</TABLE>
4
<PAGE> 7
OTC PORTFOLIO
JUNE 30, 1998
The primary objective of the OTC Portfolio (the "Portfolio") is to obtain
long-term growth of capital. For the six months ended June 30, 1998, the
Portfolio provided a total return of 17.13%. This compares to a 9.13% return for
the Russell Midcap Index and a 4.93% return for the Russell 2000 Index.
The Portfolio was again the beneficiary of gains by some of its largest
holdings. Gemstar International Group Ltd., which creates navigational software
for consumer electronics and Ascend Communications Inc., a data networking
company, are approaching 80% -- 100% returns for the year to date.
Another top performer was a newly established position. Computer Learning Center
Inc., an educational services company, posted a return of over 100% in the
second quarter. Synopsis Inc., an electronic design company, posted a return of
40% in the second quarter. Together, these four holdings resulted in a 4% gain
to the portfolio during the second quarter.
The Portfolio also benefited from buyouts of several companies: Viking Office
Products was purchased by Office Depot, Inc., Mariner Health Group, Inc., was
purchased by Paragon Health Network, Inc., and Giant Food Inc. was purchased by
a French company during the period.
Smaller technology and healthcare holdings underperformed for the period. The
decline in energy prices also impacted holdings in the oil services area, but
this is viewed as an opportunistic time to add to this sector.
During the period a number of changes were made to the Portfolio. Weightings
were decreased in a number of the larger technology and leisure holdings, due
mostly to extremely strong performance. The Portfolio benefited from the above
mentioned buyouts and these positions were sold.
The net result of these changes has been a reduction in the technology and
retail weightings during the period. Weightings have been increased in the
energy sector with the belief that oil prices will rise and that the valuation
of the oil service stocks will significantly increase over the next six to
twelve months.
Our outlook for the rest of the year is mixed. The recent divergence in the
performance of large and mid-cap markets suggest tremendous opportunities in the
mid-cap arena. However, liquidity and capitalization are clearly important to
the investors of today, so the closure of the "gap" cannot be taken for granted.
MASSACHUSETTS FINANCIAL SERVICES COMPANY
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
1 YEAR 29.06%
SINCE INCEPTION* 24.50%
</TABLE>
* The Portfolio commenced operations on October 4, 1994.
DISTRIBUTION BY INDUSTRY
AS A PERCENTAGE OF INVESTMENTS
[PIE CHART]
<TABLE>
<S> <C>
Medical Supplies 5.6%
Short Term Investments 6.0%
Retail 6.5%
Media 8.1%
Technology 8.2%
Communication 11.6%
Computer Industry 22.6%
Other Equity Securities 31.4%
</TABLE>
5
<PAGE> 8
RESEARCH PORTFOLIO
JUNE 30, 1998
The Research Portfolio (the "Portfolio") seeks long-term growth of capital and
future income. For the six months ended June 30, 1998, the Portfolio provided a
total return of 17.50%. This compares to a return of 17.71% for the Standard &
Poors 500 Index (the "S&P 500") and 9.13% for the Russell Midcap Index.
The Portfolio's performance relative to the S&P 500 over the past six months can
be attributed to its relative overweighting in the technology, retailing and
business services sectors.
The Portfolio's weighting in the energy sector was increased over the past six
months. As Asian economies fell in the latter part of 1997, demand for oil
dropped, and oil prices plummeted. During 1998, oil-related stocks have
underperformed the market by a significant margin.
When oil prices recover, oil companies with internal catalysts should benefit
greatly. The Portfolio invested in blue chip oil companies such as Chevron
Corporation, Texaco Inc., and British Petroleum Corporation where the
risk/reward trade-off has become very attractive recently, and where all methods
of valuation appear favorable relative to the market.
Over the past six months the weighting in the healthcare sector was also
increased. Within this sector, the Portfolio is overweighted in medical
services, managed care and pharmaceutical companies. In the managed care
industry, the Portfolio Manager believes that the cycle has finally turned after
years of poor pricing. This should translate into substantial margin expansion
for these companies over the next two to three years.
The Portfolio remained significantly overweighted in the technology sector. The
concentration in this sector shifted toward those companies that participate in
the high-end product market, where demand has remained strong, and where strong
secular growth opportunities are evident.
Positions were trimmed in more commodity-type technology names that are more
likely to be impacted by the continuing turmoil in Southeast Asia. Microsoft
Corporation continued to be the top holding in the Portfolio and performed
exceptionally well over the first half of 1998 as the company introduced new
products and posted strong earnings.
The Portfolio continued to overweight retailing, where companies such as Rite
Aid Corporation, Home Depot Inc., and Safeway Inc. enhanced returns. The
financial services sector remained overweighted as well. Companies in this
industry continued to benefit from corporate cost cutting, consolidation, slow
growth and low inflation.
MASSACHUSETTS FINANCIAL SERVICES COMPANY
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
1 YEAR 25.16%
SINCE INCEPTION* 24.98%
</TABLE>
* The Portfolio commenced operations on October 4, 1994.
TOP TEN INDUSTRIES
AS A PERCENTAGE OF INVESTMENTS
[PIE CHART]
<TABLE>
<S> <C>
Electronics..................... 4.5%
Banking and Finance............. 4.3%
Health Care and Services........ 4.3%
Aerospace and Defense........... 3.9%
Computer Industry............... 10.5%
Retail.......................... 7.4%
Insurance....................... 6.8%
Oil and Gas..................... 6.7%
Chemicals and Allied Products... 6.0%
Financial Services.............. 5.7%
</TABLE>
6
<PAGE> 9
TOTAL RETURN PORTFOLIO
JUNE 30, 1998
The Total Return Portfolio (the "Portfolio") seeks above-average income
(compared to a portfolio entirely invested in equity securities) consistent with
the prudent employment of capital.
For the six months ended June 30, 1998 the Portfolio provided a total return of
8.01%. Over the same period, the Standard and Poor's 500 Index ("S&P 500") had a
total return of 17.71%, and the Lehman Brothers Government/Corporate Bond Index
("Lehman") had a total return of 4.17%. The benchmark for the Portfolio (60% S&P
500, 40% Lehman) had a six month return of 12.22%.
The Portfolio's allocation between stock, bonds and convertibles remained
conservative relative to the balanced fund peer group. For most of the period,
the Portfolio's equity weighting remained at about 54%.
In selecting stocks, the Portfolio Manager looks for large companies that he
believes are incorrectly priced by the market. Holdings are believed to have the
potential for double-digit returns over time with less downside risk than the
average stock in the S&P 500. The Portfolio seeks to provide above-average
income and to give investors a reasonable opportunity for capital appreciation
while maintaining a low level of volatility and consistency of returns.
Financial services companies possess many of these traits. Their valuations
relative to the S&P 500 are low, but their earnings are higher than that of the
average company. Earnings growth is in double digits, and their yields are good.
With the consolidation that is occurring in the industry, the Portfolio Manager
believes this is an attractive sector.
Attractive valuations have been identified in the utilities and
telecommunications sectors as well. In telecommunications, there is the added
benefit of consolidation and attractive long-term growth rates.
While many stock picks have helped performance in the aforementioned sectors,
energy stocks have not performed that well over the last six months as prices
have slipped. Due to fears of over-supply, utility stocks have also been out of
favor.
On the bond side, the Portfolio's allocation is overweighted in the corporate
sector. Going forward, the Portfolio Manager believes interest rates will remain
low. Therefore, the duration, or sensitivity to changes in interest rates, is
slightly longer than that of the benchmark.
Looking ahead, we think that long-term fundamentals look fine and that corporate
America is in good shape. However, there has been a deceleration in the growth
in the S&P 500 over the last several months. Still, stock prices continued to go
up. At these levels, stocks can not afford negative surprises.
MASSACHUSETTS FINANCIAL SERVICES COMPANY
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
1 YEAR 17.52%
SINCE INCEPTION* 17.40%
</TABLE>
* The Portfolio commenced operations on October 4, 1994.
DISTRIBUTION BY ASSET TYPE
AS A PERCENTAGE OF INVESTMENTS
[PIE CHART]
<TABLE>
<S> <C>
U.S. Treasury Securities 12.5%
Short Term Investments 10.7%
Mortgage-Backed Securities 3.3%
Other Investments 1.7%
Common Stock 52.3%
Corporate Bonds and Notes 19.5%
</TABLE>
7
<PAGE> 10
ADVANTAGE PORTFOLIO
JUNE 30, 1998
The Advantage Portfolio (the "Portfolio") seeks current income with a very low
degree of share-price fluctuation. For the six months ended June 30, 1998, the
Portfolio had a total return of 2.85%. The Salomon Brothers 1-Year Treasury
Index (the "benchmark") had a return of 2.84%.
The benchmark is comprised of U.S. Treasury Securities. In comparison, the
Portfolio is comprised of corporate and mortgage-backed holdings as well as
treasury securities. During the first six months of 1998, short-term and
intermediate treasury rates fell slightly. Corresponding interest rates on
corporate and mortgage-backed securities markets fell also, but not as much as
the treasuries. Thus, all sectors under performed relative to treasuries during
this time period.
The Portfolio reduced its exposure to the below-investment-grade sector during
the first six months of 1998. This was accomplished by selling one
below-investment-grade position. The Portfolio also reduced its effective
maturity to approximately 150 days on average during the first half of the year.
The average credit rating of the Portfolio was also increased by purchasing a
larger than normal percentage of first tier commercial paper. This allowed the
Portfolio to have upside potential for corporate securities in the event the
market had improved. In addition, the Portfolio was able to maintain a safety
net with the shorter maturity structure.
ING INVESTMENT MANAGEMENT LLC
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
1 YEAR 5.68%
SINCE INCEPTION* 6.64%
</TABLE>
* The Portfolio commenced operations on October 4, 1994.
DISTRIBUTION BY ASSET TYPE
AS A PERCENTAGE OF INVESTMENTS
[PIE CHART]
<TABLE>
<S> <C>
U.S. Treasury Securities 10.8%
Govt. Agency Securities 6.0%
Other Investments 4.3%
Commercial Paper 50.3%
Corporate Debt 28.6%
</TABLE>
8
<PAGE> 11
VALUE + GROWTH PORTFOLIO
JUNE 30, 1998
The objective of the Value + Growth Portfolio (the "Portfolio") is capital
appreciation. The Portfolio's strategy is to buy securities that exhibit
favorable relationships between growth rates and price to earnings ratios in
sectors offering above average growth potential.
For the six months ended June 30, 1998, the Portfolio produced a return of
17.47%. Over the same period, the Standard & Poors 500 Index and Russell Midcap
Index had returns of 17.71% and 9.13%, respectively.
The first half of 1998 was very positive for the Portfolio. Many of the same
market trends apparent in late 1997 carried over into the first half of 1998.
After a brief respite, Asia's economic woes became front-page news again,
driving investors toward the perceived stability of blue-chip companies. As a
result, large-cap stocks generally outperformed small-cap shares.
The Portfolio Manager believes that the aging of the baby boomers will increase
demand for several goods and services well into the next decade. Americans in
the 45 to 54 age range, now the fastest-growing segment of the U.S. population,
are in their peak income and discretionary spending period. This should bode
well for the retail sector over the next several years.
Aging boomers will place increasing emphasis on quality entertainment,
positioning companies such as Time Warner Inc. and Comcast Corporation for
continuing profit improvements well into the next decade. Financial services
companies such as Merrill Lynch and Company Inc. should also benefit as baby
boomers save for retirement and college educations for their children.
Finally, the healthcare industry stands to be the most direct beneficiary of an
aging U.S. population. Stocks in these areas -- healthcare, retailing,
entertainment and financial services -- collectively make up the bulk of the
Portfolio's assets.
After a strong first quarter, many of the Portfolio's technology companies
weakened in May and early June. Investors have been concerned about the slowing
demand for personal computers and semiconductors in Asia.
Several technology companies were challenged by inventory reductions at many of
their customers over the first six months of 1998. However, the Portfolio
Manager believes most of this burdensome inventory has been depleted with the
end of the June quarter.
Inventory cycles are typical of the technology industry. The Portfolio Manager
believes that the technology sector is ready to surge with several new products
coming to market in the last half of 1998 -- just as it did in the last half of
1996.
We have a very positive outlook for the stock market in the months ahead.
Assuming the current trends of low inflation and interest rates remain in place,
the macroeconomic environment should remain favorable for equities. We will
continue to seek reasonably valued growth companies that are in the best
position to profit from current and expected investment trends.
ROBERTSON, STEPHENS & COMPANY
INVESTMENT MANAGEMENT, L.P.
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
1 YEAR 17.87%
SINCE INCEPTION* 22.21%
</TABLE>
* The Portfolio commenced operations on April 1, 1996.
DISTRIBUTION BY INDUSTRY
AS A PERCENTAGE OF INVESTMENTS
[PIE CHART]
<TABLE>
<S> <C>
Drugs and Health Care Services........ 18.8%
Financial Services..................... 16.9%
Computer Components, Software
and Services......................... 16.1%
Consumer Specialty Retail.............. 15.1%
Electronics............................ 6.4%
Other Equity Securities................ 26.7%
</TABLE>
9
<PAGE> 12
GROWTH & INCOME PORTFOLIO
JUNE 30, 1998
The Growth & Income Portfolio (the "Portfolio") seeks high long-term total
returns. The Portfolio invests primarily in small and mid-cap companies.
However, the Portfolio Manager tries to reduce risk by investing in convertible
bonds and other income-producing securities.
For the six months ended June 30, 1998, the Portfolio provided a total return of
9.88%. The Russell Midcap Index and Russell 2000 Index had total returns of
9.13% and 4.93%, respectively.
The flexible, bottom-up approach is based on value recognition and trend
analysis. The Portfolio Manager looks for well-managed companies with improving
fundamentals that are positioned for growth. The formula for long-term success
also includes a disciplined approach to risk.
Holdings will be broadly diversified among many sectors and stocks. The
Portfolio will typically maintain a 10-25 percent income producing component to
moderate volatility and provide income.
Although cash flows into the U.S. stock market remained heavy, small-cap money
managers were penalized as investors rushed from small-cap to large-cap stocks
and liquidity poured into the market. However, the Portfolio Manager still
believes that the environment for small to mid-cap stocks remains attractive.
The Portfolio remains overweighted in the cable, communication and technology
industries. Among the strongest performers during the first half were the
cable-television stocks, which benefited from increased merger-and-acquisition
activity and other trends.
Tele-Communication International, Inc., (a majority-owned subsidiary of TCI
Group) performed well as AT&T Corporation announced plans to acquire TCI. The
proposed deal has fueled TCI's shares and propelled many other cable stocks.
The Portfolio Manager also believes that selective internet stocks are
attractive. Such is the case with Egghead.com (formerly Egghead, Inc.).
Egghead.com, previously a retailer of PC hardware, software, peripherals and
accessories, recently announced plans to close all 80 retail stores to become an
Internet-only commerce company. This should help the company meet its objective
of reducing headquarter personnel and distribution costs.
Healthcare also comprises a substantial portion of the Portfolio. Although
healthcare and biotech stocks did not perform as well as expected during the
second quarter, the Portfolio Manager believes that these holdings, including
Sunrise Assisted Living Inc. and United Healthcare Corporation, look promising.
We remain optimistic about the growth and valuation prospects of many smaller
and mid-size companies. However, we watch the market's attraction with large-cap
stocks and look for opportunities to add some of these larger, more liquid names
to the portfolio. Recent additions include: Monsanto Company, GTE Corporation,
and Merrill Lynch and Company Inc.
ROBERTSON, STEPHENS & COMPANY
INVESTMENT MANAGEMENT, L.P.
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
1 YEAR 25.92%
SINCE INCEPTION* 27.82%
</TABLE>
* The Portfolio commenced operations on April 1, 1996.
DISTRIBUTION BY INDUSTRY
AS A PERCENTAGE OF INVESTMENTS
[PIE CHART]
<TABLE>
<S> <C>
Banking and Finance.................... 10.2%
Retail................................. 9.2%
Telecommunications..................... 9.1%
Communications......................... 7.5%
Other Investments...................... 7.1%
Health Care Services................... 5.7%
Computer Industry...................... 5.3%
Other Securities....................... 45.9%
</TABLE>
10
<PAGE> 13
EQUI-SELECT SERIES TRUST
MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
---------- -----------
<S> <C> <C>
COMMERCIAL PAPER - 97.3%
AUTOMOTIVE - 6.2%
Daimler-Benz Aktieng,
5.638%+ due 09/10/1998............. $2,000,000 $ 1,978,306
Toyota Motor Corporation,
5.605%+ due 07/23/1998............. 481,000 479,380
-----------
2,457,686
BANKING & FINANCE - 6.1%
Eksportsfinans A/S,
5.631%+ due 08/10/1998............. 1,606,000 1,596,150
Toyota Motor Credit Corporation,
5.576%+ due 07/24/1998............. 830,000 827,094
-----------
2,423,244
BEVERAGES - 4.3%
Coca-Cola Company:
5.558%+ due 07/16/1998............. 1,000,000 997,118
5.552%+ due 07/20/1998............. 734,000 732,327
-----------
1,729,445
CHEMICALS - 11.7%
Cargill Inc.,
5.620%+ due 07/28/1998............. 1,500,000 1,493,790
Du Pont (E.I.) de Nemours & Company,
4.633%+ due 08/15/1998............. 1,864,000 1,853,414
Monsanto Corporation,
5.594%+ due 08/14/1998............. 1,330,000 1,321,092
-----------
4,668,296
COMMERCIAL IMAGING & PROCESSING - 6.5%
Eastman Kodak Inc.,
5.630%+ due 08/20/1998............. 1,900,000 1,885,460
Xerox Corporation,
5.614%+ due 08/14/1998............. 726,000 721,120
-----------
2,606,580
COMPUTERS & COMPUTER PRODUCTS - 4.5%
International Business Machines
Credit Corporation,
5.556%+ due 07/01/1998............. 1,800,000 1,800,000
-----------
FINANCIAL SERVICES - 20.4%
Caterpillar Financial Services
Corporation,
5.587%+ due 08/06/1998............. 1,800,000 1,790,136
General Electric Capital Corporation:
5.567%+ due 07/14/1998............. 589,000 587,834
5.602%+ due 07/31/1998............. 1,200,000 1,194,500
Household Finance Corporation,
5.574%+ due 07/10/1998............. 1,800,000 1,797,529
Nestle Capital Corporation,
5.553%+ due 07/09/1998............. 1,291,000 1,289,431
PHH Corporation,
5.709%+ due 07/02/1998............. 702,000 701,890
Trans America Finance Corporation,
5.633%+ due 08/24/1998............. 790,000 783,471
-----------
8,144,791
FOODS - 6.6%
General Mills Inc.,
5.562%+ due 07/08/1998............. 1,350,000 1,348,562
Hershey Foods Corporation,
5.566%+ due 07/13/1998............. 1,295,000 1,292,634
-----------
2,641,196
FOREIGN BANKS - 2.5%
Societe Generale de Paris,
5.833%+ due 08/04/1998............. $1,000,000 $ 999,426
-----------
FOREIGN GOVERNMENT - 4.0%
Sweden (Kingdom of),
5.509%+ due 07/06/1998............. 1,616,000 1,614,781
-----------
METALS - 3.0%
Alcoa Corporation,
5.615%+ due 08/03/1998............. 1,195,000 1,188,964
-----------
MULTIMEDIA - 3.8%
Disney (Walt) Company:
5.540%+ due 07/06/1998............. 203,000 202,846
5.556%+ due 08/18/1998............. 558,000 553,953
5.557%+ due 08/19/1998............. 780,000 774,224
-----------
1,531,023
OIL & GAS - 0.4%
Consolidated Gas Inc.,
5.637%+ due 07/24/1998............. 162,000 161,424
-----------
RETAIL - 3.8%
Toys-R-Us Inc.,
5.567%+ due 07/02/1998............. 1,500,000 1,499,771
-----------
SECURITIES BROKERAGE - 4.1%
Merrill Lynch, Pierce,
Fenner & Smith Inc.:
5.781%+ due 07/02/1998............. 556,000 555,912
5.613%+ due 07/09/1998............. 175,000 174,785
5.620%+ due 07/17/1998............. 929,000 926,717
-----------
1,657,414
TELECOMMUNICATIONS - 9.4%
AT&T Corporation,
5.451%+ due 07/21/1998............. 1,287,000 1,283,168
Bell South Telephone Company,
5.586%+ due 08/17/1998............. 1,875,000 1,861,610
Motorola Inc.,
5.643%+ due 08/11/1998............. 600,000 596,221
-----------
3,740,999
TOTAL COMMERCIAL PAPER (Cost $38,865,040) 38,865,040
-----------
U.S. GOVERNMENT AGENCY DISCOUNT NOTES - 0.2%
(COST $79,858)
FEDERAL HOME LOAN MORTGAGE CORPORATION
FHLMC,
5.402%+ due 07/13/1998............. 80,000 79,858
-----------
TOTAL INVESTMENTS
(COST $38,944,898*) - 97.5% $38,944,898
OTHER ASSETS AND LIABILITIES - 2.5% 995,480
-----------
NET ASSETS - 100.0% $39,940,378
===========
</TABLE>
*Aggregate cost for Federal tax purposes.
+Annualized yield at date of purchase.
See accompanying notes.
11
<PAGE> 14
EQUI-SELECT SERIES TRUST
MORTGAGE-BACKED SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
---------- -----------
<S> <C> <C>
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 72.8%
FEDERAL HOME LOAN MORTGAGE
CORPORATION (FHLMC) - 28.3%
FHLMC:
Pool #E20197, 7.000% due
10/01/2010...................... $ 678,744 $ 691,891
Pool #E61721, 6.500% due
11/01/2010...................... 718,899 724,290
Pool #E65976, 6.500% due
04/01/2011...................... 366,172 368,918
Pool #E65441, 7.500% due
04/01/2011...................... 378,157 389,146
Gold, Pool #G10555, 6.000% due
06/01/2011...................... 701,535 695,397
Pool #E70543, 6.000% due
03/01/2013...................... 501,313 496,927
Pool #E00538, 6.500% due
03/01/2013...................... 487,527 491,184
Pool #E70003, 6.000% due
04/01/2013...................... 993,378 984,686
Pool #C00374, 9.000% due
09/01/2024...................... 361,146 382,363
Pool #D58465, 9.000% due
01/01/2025...................... 379,704 402,011
Pool #C80428, 8.000% due
09/01/2026...................... 343,826 355,750
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (FNMA) - 24.8%
FNMA:
Pool #341094, 6.500% due
04/01/2011...................... 307,190 309,300
Pool #344243, 6.500% due
04/01/2011...................... 381,997 384,622
Pool #414154, 6.000% due
02/01/2013...................... 727,700 719,739
Pool #425895, 6.000% due
04/01/2013...................... 983,035 973,205
Pool #379881, 6.500% due
04/01/2013...................... 740,910 745,770
Pool #419878, 6.500% due
04/01/2013...................... 744,101 748,982
Pool #299481, 8.000% due
04/01/2025...................... 351,628 364,484
Pool #332150, 8.500% due
12/01/2025...................... 379,818 396,670
Pool #397498, 7.500% due
08/01/2027...................... 585,847 601,588
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (GNMA) - 19.7%
GNMA:
Pool #351992, 6.000% due
12/15/2008...................... 194,974 193,877
Pool #368358, 6.000% due
01/15/2009...................... 197,847 196,733
Pool #430587, 6.000% due
02/15/2013...................... 489,739 494,940
Pool #456797, 6.000% due
04/15/2013...................... 992,970 987,380
Pool #192568, 8.000% due
05/15/2017...................... 474,744 492,248
Pool #223830, 8.000% due
06/15/2017...................... 162,715 168,715
Pool #229269, 8.000% due
07/15/2017...................... 84,822 87,949
Pool #388581, 7.500% due
01/15/2024...................... 327,587 336,799
Pool #398795, 8.500% due
07/15/2026...................... 225,890 238,384
Pool #399003, 9.000% due
12/15/2026...................... 242,240 259,422
Pool #452930, 7.500% due
07/15/2027...................... 673,795 692,742
-----------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS
(Cost $15,199,438) 15,376,112
-----------
U.S. GOVERNMENT TREASURY
OBLIGATIONS - 10.1%
U.S. TREASURY NOTES:
5.625%+ due 05/15/2001............ 1,000,000 1,003,720
6.500%+ due 08/15/2005............ 600,000 633,102
5.625%+ due 02/15/2006............ 500,000 501,960
-----------
TOTAL U.S. TREASURY
OBLIGATIONS - (Cost $2,090,665) 2,138,782
-----------
COLLATERALIZED MORTGAGE OBLIGATION - 3.4%
(COST $702,297)
ASSET-BACKED SECURITY
Countrywide Funding Corporation,
#1995-4, 7.500% due
09/25/2025...................... 700,000 705,390
-----------
CORPORATE BONDS AND NOTES - 2.4%
(COST $499,844)
SECURITIES BROKERAGE
Lehman Brothers Holdings, 6.625%
due 12/27/2002.................. 500,000 508,125
-----------
SHORT TERM INVESTMENTS - 10.7%
FINANCIAL SERVICES - 4.7%
Chrysler Financial Corporation,
5.931%+ due 01/26/2001.......... 500,000 498,750
Union Planters National Bank,
6.145%+ due 08/20/1998.......... 500,000 500,158
-----------
998,908
FEDERAL AGENCY OBLIGATIONS - 6.0%
Federal Farm Credit Bank, 5.457%+
due 09/30/1998.................. 500,000 493,170
Federal Home Loan Bank, 5.475%+
due 07/01/1998.................. 777,000 777,000
-----------
1,270,170
TOTAL SHORT TERM INVESTMENTS
(Cost $2,270,447) 2,269,078
-----------
TOTAL INVESTMENTS
(COST $20,762,691*) - 99.4%
$20,997,487
OTHER ASSETS AND LIABILITIES - 0.6% 132,560
----------
NET ASSETS - 100.0% $21,130,047
===========
</TABLE>
*Aggregate cost for Federal tax purposes.
+Annualized yield at date of purchase.
See accompanying notes.
12
<PAGE> 15
EQUI-SELECT SERIES TRUST
INTERNATIONAL FIXED INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------------ -----------
<S> <C> <C>
GOVERNMENT BONDS - 92.8%
AUSTRALIA - 5.0% (AUD)
Federal National Mortgage
Association, 6.375% due
08/15/2007...................... $ 410,000 $ 262,779
New South Wales Treasury
Corporation, 6.500% due
05/01/2006...................... 750,000 485,755
-----------
748,534
CANADA - 1.8% (CAD)
Government of Canada, 7.000% due
12/01/2006...................... 350,000 264,055
-----------
DENMARK - 3.7% (DKK)
Kingdom of Denmark, 7.000% due
12/15/2004...................... 3,400,000 554,334
-----------
FRANCE - 3.4% (FRF)
Government of France, 7.000% due
10/12/2000...................... 2,000,000 351,241
Obligation Assimilable du Tresor,
5.500% due 04/25/2004........... 900,000 156,414
-----------
507,655
GERMANY - 15.8% (DEM)
Bundesobligation, 4.500% due
05/17/2002...................... 1,030,000 575,466
Bundesrepublik, 6.000% due
01/04/2007...................... 1,250,000 751,900
German Federal Republic:
5.125% due 11/21/2000........... 875,000 496,534
5.250% due 02/21/2001........... 150,000 85,469
6.750% due 07/15/2004........... 500,000 309,245
6.000% due 01/05/2006........... 300,000 179,807
-----------
2,398,421
ITALY - 3.3% (ITL)
Republic of Italy:
10.500% due 04/01/2000.......... 300,000,000 185,293
6.250% due 03/01/2002........... 250,000,000 148,473
10.000% due 08/01/2003.......... 250,000,000 173,674
-----------
507,440
NETHERLANDS - 11.6% (NLG)
Dutch Government, 6.000% due
01/15/2006...................... 1,000,000 531,917
Netherlands Government, 5.500% due
01/15/2028...................... 2,460,000 1,231,664
-----------
1,763,581
SPAIN - 1.7% (ESP)
Government of Spain,
7.900% due 02/28/2002........... 37,000,000 259,012
-----------
SWEDEN - 5.1% (SEK)
Kingdom of Sweden:
6.000% due 02/09/2005........... 2,700,000 361,362
6.500% due 10/25/2006........... 3,000,000 416,210
-----------
777,572
UNITED KINGDOM - 13.9% (GBP)
U.K. Treasury:
7.000% due 06/07/2002........... 440,000 746,951
7.500% due 12/07/2006........... 300,000 550,844
8.000% due 09/27/2013........... 400,000 816,692
-----------
2,114,487
UNITED STATES - 27.5% (USD)
U.S. Treasury Bill,
5.480%+ due 09/03/1998.......... 1,440,000 1,427,501
U.S. Treasury Notes:
5.500% due 12/31/2000........... 350,000 349,916
7.250% due 08/15/2004........... 1,000,000 1,087,670
7.000% due 07/15/2006........... 1,200,000 1,310,760
-----------
4,175,847
TOTAL GOVERNMENT BONDS 14,070,938
(Cost $14,044,301) -----------
TOTAL INVESTMENTS
(COST $14,044,301*) - 92.8% $14,070,938
OTHER ASSETS AND LIABILITIES - 7.2% 1,089,911
----------
NET ASSETS - 100.0% $15,160,849
===========
</TABLE>
*Aggregate cost for Federal tax purposes.
+Annualized yield at date of purchase.
GLOSSARY OF TERMS
<TABLE>
<S> <C>
AUD - Australian Dollar
CAD - Canadian Dollar
DEM - German Deutche Mark
DKK - Danish Krona
ESP - Spanish Peseta
FRF - French Franc
GBP - Great British Pound Sterling
ITL - Italian Lira
NLG - Netherland Guilder
SEK - Swedish Krona
USD - United States Dollar
</TABLE>
See accompanying notes.
13
<PAGE> 16
EQUI-SELECT SERIES TRUST
OTC PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- ------------
<S> <C> <C>
COMMON STOCKS - 96.8%
BANKING AND FINANCE - 2.4%
Compass Bancshares Inc. ........... 27,100 $ 1,222,888
Finova Group Inc. ................. 10,000 566,250
First Securities Corporation....... 95,100 2,035,734
Regions Financial Corporation...... 10,200 418,837
Union Planters Corporation......... 4,500 264,656
------------
4,508,365
BROADCASTING - 2.0%
Cox Radio Inc., Class A............ 2,500 108,125
Heftel Broadcasting Corporation.... 63,350 2,834,913
Jacor Communications Inc.+......... 15,800 932,200
------------
3,875,238
CHEMICALS AND ALLIED PRODUCTS - 2.8%
Cambrex Corporation................ 19,000 498,750
Sigma Aldrich Corporation.......... 137,100 4,815,638
------------
5,314,388
COMMERCIAL SERVICES - 0.7%
Paymentech Inc.+................... 62,000 1,274,875
------------
COMMUNICATION - 11.9%
Aerial Communications+............. 161,800 1,011,250
Ascend Communications Inc.+........ 227,410 11,271,008
Aspect Telecommunications+......... 105,900 2,899,012
Cisco Systems+..................... 12,700 1,169,194
COM21 Inc. ........................ 100 2,125
Cox Communication, New Class+...... 15,200 736,250
DST System+........................ 16,400 918,400
MediaOne Group Inc. ............... 50,700 2,227,631
Qwest Communications............... 71,592 2,496,754
------------
22,731,624
COMPUTER INDUSTRY - 23.3%
Affiliated Computer Services,
Class A.......................... 44,600 1,717,100
Answerthink Consulting Group
Inc. ............................ 500 10,750
Autodesk Inc. ..................... 30,900 1,193,512
BMC Software Inc.+................. 34,600 1,797,038
Computer Learning Center Inc. ..... 187,000 4,651,625
Computer Sciences Corporation...... 36,200 2,316,800
Corsair Communication Inc. ........ 31,900 297,069
Edify Corporation+................. 397,700 4,026,712
Fiserv Inc.+....................... 54,000 2,293,313
HCIA Inc.+......................... 42,000 540,750
International Integration Inc. .... 400 6,900
Intuit Inc. ....................... 17,300 1,059,625
Microsoft Corporation+............. 88,600 9,602,025
Oracle Systems+.................... 230,000 5,649,375
Rational Software+................. 22,500 343,125
Security Dynamics Technology
Inc.+............................ 81,600 1,509,600
Siebel Systems Inc.+............... 1 43
Sun Microsystems Inc. ............. 12,600 547,312
Synopsys Inc.+..................... 100,792 4,611,234
Technology Solutions............... 60,500 1,917,094
Transition Systems+................ 24,697 262,406
------------
44,353,408
CONSUMER DURABLES - 0.4%
Compuware Corporation+............. 13,500 690,188
------------
ELECTRONICS - 5.6%
Analog Devices Inc.+............... 26,000 638,625
Cable Design Technologies+......... 298,490 6,156,356
Teradyne Inc.+..................... 106,600 2,851,550
Tyco International Ltd. ........... 16,068 1,012,284
------------
10,658,815
FINANCIAL SERVICES - 1.1%
Enhance Financial Services Group
Inc.............................. 22,000 742,500
Washington Mutual Inc. ............ 28,800 1,251,000
------------
1,993,500
FOOD AND BEVERAGES - 1.0%
McCormick & Company Inc. .......... 40,200 1,435,894
Tootsie Roll Industries............ 6,767 519,367
------------
1,955,261
HEALTH CARE AND SERVICES - 2.4%
Advanced Health Corporation........ 1,800 9,900
Beverly Enterprises Inc. .......... 38,200 527,637
Healthsouth Corporation+........... 42,300 1,128,881
MedPartners Inc. .................. 66,100 528,800
Mid Atlantic Medical Services
Inc. ............................ 67,300 773,950
Total Renal Care Holdings Inc. .... 43,405 1,497,472
------------
4,466,640
HOTELS AND RESTAURANTS - 0.6%
Promus Hotel Corporation........... 31,000 1,193,500
------------
INFORMATION PROCESSING - 0.6%
Bisys Group Inc. .................. 16,200 664,200
HBO & Company...................... 14,120 497,730
------------
1,161,930
INSURANCE - 2.7%
Ace Ltd. .......................... 44,800 1,747,200
Esg Re Ltd.+....................... 41,900 906,088
Healthcare Recoveries Inc. ........ 38,300 756,425
Life Re Corporation................ 4,400 364,650
Mid Ocean Ltd. .................... 7,900 620,150
Mutual Risk Management Ltd. ....... 18,200 663,163
------------
5,057,676
MEDIA - 8.3%
Discreet Logic Inc. ............... 152,000 1,767,000
E.W. Scripps Company............... 17,600 964,700
Gemstar International Group
Ltd.+............................ 350,000 13,103,125
------------
15,834,825
MEDICAL SUPPLIES - 5.8%
Biomet Inc. ....................... 15,300 505,856
Cytoclonal Pharmaceutical Inc. .... 14,200 99,400
Cytyc Corporation.................. 373,600 6,094,350
Datascope Corporation.............. 6,700 177,969
Idexx Laboratories Inc.+........... 42,500 1,057,187
Mentor Corporation................. 18,300 443,775
Microprose Inc.+................... 54,620 242,376
PSS World Medical Inc. ............ 117,800 1,722,825
Uromed Corporation+................ 108,300 602,419
------------
10,946,157
OFFICE SUPPLIES - 0.3%
Viking Office Products+............ 20,500 643,188
------------
OIL AND GAS - EQUIPMENT & SERVICES - 5.4%
Apache Corporation................. 19,800 623,700
B.J. Services Company.............. 17,000 494,063
Cooper Cameron Corporation+........ 32,900 1,677,900
Diamond Offshore Drilling.......... 16,300 652,000
Global Industries Ltd.+............ 74,700 1,260,562
Houston Exploration Corporation.... 26,200 600,962
New Field Exploration Company...... 117,900 2,932,762
National-Oilwell Inc. ............. 10,000 268,125
Noble Drilling Corporation+........ 35,100 844,594
Southern Africa Minerals
Corporation+..................... 366,400 255,214
Transocean Offshore Inc. .......... 14,300 636,350
------------
10,246,232
OTHER - 2.3%
Learning Tree International Inc.... 110,300 2,219,788
Scholastic Corporation............. 54,800 2,185,150
------------
4,404,938
PHARMACEUTICAL - 0.0%#
Professional Detailing Inc......... 300 7,463
------------
</TABLE>
See accompanying notes.
14
<PAGE> 17
EQUI-SELECT SERIES TRUST
OTC PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
RETAIL - 6.7%
ARM Financial Group Inc............ 5,400 $ 119,475
BJ'S Wholesale Club Inc............ 109,400 4,444,375
Fred Meyer Inc.+................... 50,400 2,142,000
Lo-Jack Corporation................ 111,600 1,388,025
Rite Aid Corporation............... 99,900 3,752,494
SportsLine USA Inc................. 27,300 998,156
------------
12,844,525
TECHNOLOGY - 8.4%
Cadence Design Systems Inc.+....... 48,940 1,529,375
Comverse Technology Inc.+.......... 31,600 1,639,250
Concentra Managed Care+............ 237,765 6,181,890
Elsag Bailey Process Automation
NV............................... 78,000 1,876,875
K.L.A. Tencor Corporation.......... 16,700 462,381
Linear Technology Corporation...... 4,800 289,500
Sipex Corporation.................. 191,000 4,106,500
------------
16,085,771
TELECOMMUNICATIONS - 2.1%
Cellular Communications
International Inc. .............. 7,350 366,581
Intermedia Communications Inc. .... 34,800 1,459,425
Lightbridge Inc. .................. 110,600 940,100
Natural Microsystems Corporation... 79,700 1,275,200
U. S. West Inc. ................... 598 28,106
------------
4,069,412
TOTAL COMMON STOCKS
(Cost $173,862,824) 184,317,919
------------
</TABLE>
EQUI-SELECT SERIES TRUST
OTC PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
---------- ------------
<S> <C> <C>
SHORT TERM INVESTMENTS - 6.2%
FEDERAL HOME LOAN BANK (FHLB) - 2.6%
FHLB,
5.532%++ due 07/08/1998.......... $5,000,000 $ 4,994,701
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(FHLMC) - 1.8%
FHLMC, 5.683%++ due 07/08/1998..... 3,400,000 3,396,827
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) - 1.8%
FNMA, 5.642%++ due 07/07/1998...... 3,400,000 3,397,374
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $11,788,902) 11,788,902
------------
TOTAL INVESTMENTS
(COST $185,651,726*) - 103.0% $196,106,821
OTHER ASSETS AND LIABILITIES - 3.0% (5,626,082)
------------
NET ASSETS - 100.0% $190,480,739
============
</TABLE>
*Aggregate cost for Federal tax purposes.
+Non-income producing security.
++Annualized yield at date of purchase.
#Amount represents less than 0.1%.
See accompanying notes.
15
<PAGE> 18
EQUI-SELECT SERIES TRUST
RESEARCH PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
----------- ------------
<S> <C> <C>
COMMON STOCKS - 92.9%
AEROSPACE AND DEFENSE - 3.9%
AMR Corporation................... 16,700 $ 1,390,275
Lockheed Martin Corporation....... 32,000 3,388,000
Newport News Shipbuilding......... 75,300 2,014,275
US Airways Group, Inc. ........... 16,300 1,291,775
United Technologies Corporation... 92,100 8,519,250
------------
16,603,575
APPLICATIONS SOFTWARE - 0.5%
Siebel Systems Inc.+.............. 1 22
Synopsys Inc. .................... 42,300 1,935,225
------------
1,935,247
AUTOMOBILES - 0.1%
Ford Motor Company................ 5,200 306,800
------------
AUTO REPAIR AND AUTO PARTS - 0.3%
Lear Corporation.................. 27,100 1,390,569
------------
BANKING AND FINANCE - 4.3%
BankBoston Corporation............ 47,480 2,641,075
C.I.T. Group Inc., Class A........ 12,300 461,250
Chase Manhattan Corporation....... 70,352 5,311,576
First Union Corporation........... 68,998 4,019,134
National City Corporation......... 47,700 3,386,700
PNC Bank Corporation.............. 43,400 2,335,463
------------
18,155,198
BROADCASTING - 2.7%
CBS Corporation................... 76,500 2,428,875
HBO & Company..................... 188,600 6,648,150
Jacor Communications Inc.+........ 40,800 2,407,200
------------
11,484,225
BROKERAGE - 2.0%
Chubb Corporation................. 35,100 2,812,388
Merrill Lynch & Company Inc. ..... 16,400 1,512,900
Morgan Stanley, Dean Witter
Discover........................ 44,600 4,075,325
------------
8,400,613
BUSINESS SERVICES - 0.7%
Cendant Corporation............... 147,200 3,072,800
------------
CHEMICALS & ALLIED PRODUCTS - 6.0%
Air Products & Chemicals Inc. .... 72,800 2,912,000
Akzo Nobel N.V.................... 6,100 1,357,056
Bristol Myers Squibb Company...... 107,700 12,378,768
Cambrex Corporation............... 32,400 850,500
Cytec Industries Inc.+............ 47,600 2,106,300
Du Pont (E. I.) De Nemours &
Company......................... 13,700 1,022,363
Henkel KGaA-Vorzug................ 9,900 980,062
Minerals Technologies............. 29,700 1,510,988
Sigma-Aldrich Corporation......... 63,000 2,212,875
------------
25,330,912
COMMERCIAL SERVICES - 0.5%
Accustaff Inc.+................... 66,600 2,081,250
------------
COMPUTER INDUSTRY - 10.4%
Adobe Systems Inc................. 32,300 1,370,731
BMC Software, Inc.+............... 109,400 5,681,962
Cisco Systems+.................... 67,400 6,205,013
EMC Corporation................... 48,100 2,155,481
Electronic Arts Inc.+............. 57,500 3,105,000
Microsoft Corporation+............ 151,100 16,375,462
Oracle Systems+................... 200,300 4,919,869
Sun Microsystems Inc.+............ 98,800 4,291,625
------------
44,105,143
CONSUMER SERVICES - 3.9%
Compuware Corporation+............ 87,600 4,478,550
Gillette Company.................. 123,200 6,983,900
Proctor & Gamble Company.......... 55,000 5,008,438
------------
16,470,888
COSMETICS AND TOILETRIES - 0.5%
Revlon Companies Inc.+............ 43,700 2,245,088
------------
ELECTRONICS - 4.5%
Analog Devices Inc. .............. 44,300 1,088,118
Cooper Industries Inc. ........... 10,200 560,363
Sony Corporation.................. 39,300 3,396,506
Teradyne Inc.+.................... 83,800 2,241,650
Tyco International Ltd. .......... 186,734 11,764,242
------------
19,050,879
ENVIRONMENTAL CONTROL - 0.5%
Browning Ferris Industries Inc.... 54,300 1,886,925
------------
FINANCIAL SERVICES - 5.6%
Allstate Corporation.............. 33,400 3,058,187
Associates First Capital
Corporation..................... 26,657 2,049,256
Comerica Inc...................... 63,750 4,223,438
Federal National Mortgage
Association..................... 60,100 3,651,075
Fleet Financial Group Inc. ....... 48,800 4,074,800
Green Tree Financial
Corporation..................... 7,100 303,969
Hutchinson Whampoa Ltd............ 287,000 1,515,010
ReliaStar Financial Corporation... 65,254 3,132,192
Union Planters Corporation........ 30,962 1,820,953
------------
23,828,880
FOOD AND BEVERAGES - 1.5%
Archer-Daniels-Midland Company.... 102,200 1,980,125
Corn Products International
Inc. ........................... 54,900 1,873,463
McCormick & Company Inc........... 62,300 2,225,278
Nabisco Holdings Corporation,
Class A......................... 5,000 180,313
------------
6,259,179
HEALTH CARE AND SERVICES - 4.3%
Cardinal Health Corporation....... 24,500 2,296,875
Columbia/HCA Healthcare
Corporation+.................... 121,100 3,527,037
HEALTHSOUTH Corporation+.......... 149,534 3,990,688
United Healthcare Corporation..... 130,400 8,280,400
------------
18,095,000
HOTELS AND RESTAURANTS - 0.8%
Jarvis Hotels Plc**............... 315,400 897,892
McDonald's Corporation............ 33,600 2,318,400
Promus Hotel Corporation+......... 6,116 235,466
------------
3,451,758
HOUSEHOLD PRODUCTS - 3.5%
Black & Decker Corporation........ 52,600 3,208,600
Clorox Company.................... 32,600 3,109,225
Colgate Palmolive Company......... 75,700 6,661,600
Dial Corporation.................. 69,500 1,802,656
------------
14,782,081
INSURANCE - 6.8%
Ace Ltd. ......................... 50,400 1,965,600
Cigna Corporation................. 58,200 4,015,800
Conseco Inc. ..................... 140,500 6,568,375
Excel Ltd. ....................... 12,300 957,094
FPIC Insurance Group Inc.+........ 10,300 346,338
Hartford Financial Services
Group........................... 37,000 4,231,875
Life Re Corporation............... 10,500 870,187
Lincoln National Corporation
Ltd. ........................... 56,500 5,162,687
Mid Ocean Ltd. ................... 800 62,800
Nationwide Financial Services
Inc. ........................... 26,200 1,336,200
</TABLE>
See accompanying notes.
16
<PAGE> 19
EQUI-SELECT SERIES TRUST
RESEARCH PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
----------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
INSURANCE - (CONTINUED)
Travelers Group Inc. ............. 35,100 $ 2,127,937
Skandia Forsakrings AB............ 81,700 1,167,875
------------
28,812,768
MACHINERY - 1.5%
American Standard Company+........ 49,000 2,189,688
Cooper Cameron Corporation........ 30,600 1,560,600
Eaton Corporation................. 9,400 730,850
EVI Weatherford Inc. ............. 55,680 2,067,120
------------
6,548,258
MEDICAL PRODUCTS AND SUPPLIES - 2.2%
American Home Products
Corporation..................... 126,000 6,520,500
Boston Scientific Corporation+.... 41,400 2,965,275
------------
9,485,775
OFFICE EQUIPMENT - 0.4%
Xerox Corporation................. 16,400 1,666,650
------------
OIL AND GAS - 6.7%
British Petroleum Corporation,
ADR............................. 75,193 6,635,782
Chevron Corporation............... 32,900 2,732,756
Columbia Energy Group............. 17,700 984,562
Diamond Offshore Drilling......... 42,600 1,704,000
KN Energy Inc. ................... 53,600 2,904,450
Mobil Corporation................. 26,400 2,022,900
Texaco Inc. ...................... 105,300 6,285,093
USX Marathon Group Inc., New...... 143,000 4,906,688
------------
28,176,231
OTHER - 1.5%
Alcatel Alsthom CGE, Sponsored
ADR............................. 138,400 5,631,150
Cia Cervejaria Brahma, ADR........ 62,400 780,000
------------
6,411,150
PAPER AND PAPER PRODUCTS - 1.9%
Kimberly Clark Corporation........ 110,700 5,078,363
Stone Container Corporation....... 197,200 3,081,250
------------
8,159,613
RAILROADS - 0.5%
Wisconsin Central Transportation
Corporation+.................... 93,500 2,045,312
------------
RETAIL - 7.3%
CVS Corporation................... 101,800 3,963,838
CKE Restaurants Inc. ............. 41,600 1,716,000
Fred Meyer Inc.+.................. 72,000 3,060,000
Home Depot Inc. .................. 54,800 4,551,825
Nordstrom Inc. ................... 36,300 2,804,175
Office Depot Inc.+................ 74,900 2,364,031
Rite Aid Corporation.............. 183,100 6,877,694
Safeway Inc.+..................... 142,000 5,777,625
------------
31,115,188
TECHNOLOGY - 3.2%
Cadence Design System Inc.+....... 122,600 3,831,250
Computer Association International
Inc............................. 66,425 3,690,739
General Electric Company.......... 64,700 5,887,700
------------
13,409,689
TELECOMMUNICATIONS - 3.7%
Aspect Telecommunication+......... 108,600 2,972,925
Intermedia Communications+........ 43,800 1,836,863
MCI Communications Corporation.... 43,500 2,528,438
Sprint Corporation................ 41,500 2,925,750
Worldcom Inc.+.................... 113,700 5,507,343
------------
15,771,319
UTILITIES - 0.5%
California Energy Inc. ........... 74,500 2,239,656
------------
WASTE DISPOSAL - 0.2%
Waste Management Inc. ............ 18,600 651,000
------------
TOTAL COMMON STOCK
(Cost $335,705,547) 393,429,619
------------
</TABLE>
EQUI-SELECT SERIES TRUST
RESEARCH PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
----------- ------------
<S> <C> <C>
FEDERAL AGENCY OBLIGATIONS - 6.5%
FEDERAL HOME LOAN BANKS (FHLB) - 2.5%
FHLB,
5.532%++ due 07/08/1998......... $10,600,000 10,588,767
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) - 4.0%
FNMA:
5.516%++ due 07/01/1998......... 8,400,000 8,400,000
5.642%++ due 07/06/1998......... 8,500,000 8,493,436
------------
16,893,436
TOTAL FEDERAL AGENCY OBLIGATIONS
(Cost $27,482,203) 27,482,203
------------
TOTAL INVESTMENTS
(COST $363,187,750*) - 99.4% $420,911,822
OTHER ASSETS AND LIABILITIES - 0.6% 2,646,543
------------
NET ASSETS - 100.0% $423,558,365
============
</TABLE>
*Aggregate cost for Federal tax purposes.
**Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from registrations
to qualified institutional buyers.
+Non-income producing security.
++Annualized yield at date of purchase.
GLOSSARY OF TERMS
ADR - American Depository Receipt
See accompanying notes.
17
<PAGE> 20
EQUI-SELECT SERIES TRUST
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
----------- ------------
<S> <C> <C>
COMMON STOCKS - 53.5%
AEROSPACE AND DEFENSE - 1.7%
General Dynamics Corporation....... 33,500 $ 1,557,750
Lockheed Martin Corporation........ 14,300 1,514,013
Raytheon Company, Class A.......... 11,259 648,800
Raytheon Company, Class B.......... 20,100 1,188,413
United Technologies Corporation.... 3,900 360,750
------------
5,269,726
ALUMINUM - 0.4%
Aluminum Company of America........ 18,300 1,206,656
------------
AUTOMOBILES - 0.9%
Ford Motor Company................. 18,500 1,091,500
Volvo AB - ADR..................... 65,700 1,942,256
------------
3,033,756
AUTO PARTS - 0.2%
Lear Corporation+.................. 11,800 605,487
------------
BANKING AND FINANCE - 4.4%
Bank of New York Inc. ............. 27,400 1,662,837
First Union Corporation............ 16,522 962,406
Fleet Financial Group Inc. ........ 5,700 475,950
Morgan (J.P.) & Co. ............... 7,200 843,300
Nationsbank Corporation............ 21,200 1,621,800
PNC Bank Corporation............... 52,100 2,803,631
National City Corporation.......... 48,200 3,422,200
Northern Trust Corporation......... 12,400 945,500
Norwest Financial Corporation...... 33,800 1,263,275
------------
14,000,899
CHEMICALS - 2.3%
Air Products & Chemicals Inc. ..... 29,000 1,160,000
Akzo Nobel......................... 14,650 3,259,159
Dow Chemical Company............... 2,100 203,044
Hoechst AG......................... 20,700 1,041,831
Philip Morris Companies Inc. ...... 45,350 1,785,656
------------
7,449,690
COMPUTERS & BUSINESS EQUIPMENT - 1.4%
Compaq Computer Corporation........ 5,481 155,523
International Business Machines
Corporation...................... 29,300 3,364,006
Xerox Corporation.................. 10,000 1,016,250
------------
4,535,779
CONGLOMERATES - 0.0%#
Eastern Enterprises Inc. .......... 4,000 171,500
------------
CONSUMER GOODS & SERVICES - 0.3%
Service Corporation
International.................... 20,641 884,983
------------
DRUGS & HEALTH CARE SERVICES - 0.8%
American Home Products
Corporation...................... 47,300 2,447,775
Astra AB, ADR...................... 1 20
------------
2,447,795
ELECTRICAL EQUIPMENT - 1.8%
Emerson Electric Company........... 15,000 904,687
General Electric Company........... 40,800 3,712,800
Hubbell Inc., Class B.............. 25,700 1,069,762
------------
5,687,249
ELECTRONICS - 0.3%
Tyco International Ltd. ........... 15,800 995,400
------------
ENVIRONMENTAL CONTROL - 0.5%
Browning Ferris Industries Inc. ... 43,500 1,511,625
------------
FINANCIAL SERVICES - 2.4%
American Express Company........... 8,200 934,800
Associates First Capital
Corporation...................... 14,932 1,147,897
Beneficial Corporation............. 3,300 505,519
Edwards A.G. Incorporated.......... 20,200 862,287
Federal Home Loan Mortgage
Corporation...................... 34,800 1,637,775
Federal National Mortgage
Association...................... 15,700 953,775
Federated Investors Inc. .......... 3,500 64,750
Morgan Stanley Dean Witter
Discover......................... 9,400 858,925
Salomon Smith Barney............... 14,000 783,125
------------
7,748,853
FOOD AND BEVERAGES - 2.1%
Archer Daniels Midland Company..... 88,200 1,708,875
Diageo Plc......................... 38,707 458,866
Diageo Plc, Class B................ 6,093 52,139
General Mills Inc. ................ 11,900 813,662
Hormel Foods Corporation........... 30,000 1,036,875
McCormack & Company Inc. .......... 25,300 903,684
Nestle SA.......................... 850 1,822,030
------------
6,796,131
FOREST PRODUCTS - 1.0%
Champion International............. 28,300 1,392,006
Weyerhaeuser Company............... 37,400 1,727,413
------------
3,119,419
GAS EXPLORATION - 2.2%
Coastal Corporation................ 42,300 2,953,069
New Century Energies Inc. ......... 25,000 1,135,938
Occidental Petroleum Corporation... 33,000 891,000
USX-Marathon Group Inc. ........... 57,400 1,969,538
Williams Companies Inc. ........... 6,080 205,200
------------
7,154,745
GROCERY - 0.4%
Safeway Inc.+...................... 31,000 1,261,313
------------
HEALTH MAINTENANCE ORGANIZATIONS - 0.9%
Columbia/HCA Healthcare
Corporation...................... 62,400 1,817,400
United Healthcare Corporation...... 16,200 1,028,700
------------
2,846,100
HOUSEHOLD PRODUCTS - 0.4%
Colgate Palmolive Company.......... 2,300 202,400
Rubbermaid Inc. ................... 31,500 1,045,406
------------
1,247,806
INSURANCE - 5.5%
Chubb Corporation.................. 36,700 2,940,587
Cigna Corporation.................. 33,500 2,311,500
Equitable Companies Inc. .......... 27,800 2,081,525
Jefferson-Pilot Corporation........ 27,250 1,578,797
Lincoln National Corporation....... 35,600 3,252,950
Provident Companies Inc. .......... 33,000 1,138,500
Torchmark Corporation.............. 50,600 2,314,950
Transamerica Corporation........... 15,300 1,759,500
------------
17,378,309
MACHINE DIVERSIFIED - 0.1%
Deere & Company.................... 8,800 465,300
------------
MANUFACTURING - 2.4%
Allied Signal Inc. ................ 75,900 3,368,062
Analog Devices Inc. ............... 19,000 466,687
Cooper Industries Inc. ............ 26,100 1,433,869
TRW, Inc. ......................... 42,700 2,332,488
------------
7,601,106
MEDICAL SUPPLIES - 0.1%
Baxter International Inc. ......... 5,400 290,587
------------
OIL AND GAS - 5.2%
Amoco Corporation.................. 22,900 953,212
Atlantic Richfield Company......... 20,500 1,601,562
British Petroleum Plc, ADR......... 59,961 5,291,529
Exxon Corporation.................. 24,000 1,711,500
Marketspan Corporation............. 33,500 1,002,906
Mobil Corporation.................. 10,000 766,250
</TABLE>
See accompanying notes.
18
<PAGE> 21
EQUI-SELECT SERIES TRUST
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
----------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
OIL AND GAS - (CONTINUED)
Royal Dutch Petroleum Company...... 21,600 $ 1,183,950
Schlumberger Ltd. ................. 7,500 512,344
Texaco Inc. ....................... 39,600 2,363,625
Unocal Corporation................. 33,600 1,201,200
------------
16,588,078
PAPER AND PAPER PRODUCTS - 0.3%
Kimberly Clark Corporation......... 22,500 1,032,187
------------
PHARMACEUTICALS - 2.4%
Bristol Myers Squibb Company....... 44,100 5,068,744
Glaxo Wellcome Plc, ADR............ 27,000 1,614,937
Smithkline Beecham Plc, ADR........ 13,900 840,950
------------
7,524,631
PHOTOGRAPHY - 0.2%
Eastman Kodak Company.............. 8,400 613,725
------------
RAILROADS AND EQUIPMENT - 0.5%
Canadian National Railway
Company.......................... 15,000 796,875
Norfolk Southern Corporation....... 23,400 697,613
------------
1,494,488
REAL ESTATE - 1.0%
Arden Realty Group Inc. ........... 17,000 439,875
Boston Properties Inc., Class A.... 22,800 786,600
Hospitalities Properties Trust..... 17,200 552,550
Prime Group Realty Trust........... 25,000 428,125
TriNet Corporate Realty Trust
Inc. ............................ 29,000 986,000
------------
3,193,150
RETAIL - 2.9%
CVS Corporation.................... 13,400 1,022,587
Fred Meyer Inc.+................... 18,200 773,500
J.C. Penney Company Inc. .......... 28,800 2,082,600
Rite Aid Corporation............... 75,200 2,824,700
Sears, Roebuck & Company........... 37,300 2,277,631
York International Corporation..... 4,000 174,250
------------
9,155,268
TELECOMMUNICATIONS - 4.6%
AT&T Corporation................... 29,600 1,690,900
Alcatel Alsthom, ADR............... 32,603 1,326,535
Bell Atlantic Corporation.......... 28,400 1,295,750
Bellsouth Corporation.............. 4,200 281,925
GTE Corporation.................... 56,200 3,126,125
SBC Communications Inc. ........... 47,166 1,886,640
Sprint Corporation................. 30,900 2,178,450
Telephone & Data Systems Inc. ..... 13,400 527,625
Viacom Inc., Class B+.............. 37,800 2,201,850
------------
14,515,800
TIRES & RUBBER - 0.3%
BF Goodrich Company................ 18,800 932,950
------------
UTILITY - 3.6%
Baker Hughes Inc. ................. 14,300 494,244
Carolina Power & Light Company..... 46,200 2,003,925
CMS Energy Corporation............. 19,000 837,187
Cinergy Corporation................ 34,000 1,190,000
Columbia Energy Group.............. 28,050 1,560,281
FPL Group Inc. .................... 6,000 378,000
GPU Inc. .......................... 16,800 635,250
PacifiCorp......................... 32,400 733,050
Pinnacle West Capital
Corporation...................... 26,300 1,183,500
UGI Corporation.................... 30,600 761,175
Southern Company................... 55,500 1,536,656
------------
11,313,268
TOTAL COMMON STOCKS (Cost $151,129,534) 170,073,759
------------
PREFERRED STOCKS - 1.4%
CHEMICALS - 0.7%
Henkel KGAA........................ 23,500 $ 2,326,410
------------
FINANCIAL SERVICES - 0.7%
McKesson Financing Trust**......... 5,500 617,375
NB Capital Corporation**........... 200 216,200
Newell Financial**................. 24,600 1,439,100
WBK Strypes Trust.................. 2,100 63,394
------------
2,336,069
TOTAL PREFERRED STOCKS
(Cost $3,482,879) 4,662,479
------------
</TABLE>
EQUI-SELECT SERIES TRUST
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
----------- ------------
<S> <C> <C>
CORPORATE BONDS AND NOTES - 20.0%
AEROSPACE - 0.3%
BE Aerospace Inc., 8.000% due
03/01/2008**..................... $ 600,000 600,000
Jet Equipment Trust:
9.410% due 06/15/2010............ 50,000 60,528
8.640% due 11/01/2012............ 46,916 53,085
10.690% due 11/01/2013........... 10,000 13,413
Northrop Grumman Corporation,
9.375% due 10/15/2024............ 100,000 121,125
------------
848,151
AIRLINES - 0.4%
Continental Airlines Inc.:
9.500% due 12/15/2001............ 350,000 372,750
9.500% due 10/15/2013............ 96,110 113,578
10.220% due 07/02/2014........... 23,723 28,895
6.648% due 03/15/2019............ 250,000 255,095
Northwest Airlines:
7.625% due 03/15/2005............ 312,000 315,120
8.700% due 03/15/2007............ 150,000 159,375
United Air Lines Corporation:
7.270% due 01/30/2013............ 38,713 39,874
------------
1,284,687
AUTOMOBILES - 0.2%
Ford Motor Company, 8.900% due
01/15/2032....................... 490,000 632,713
------------
BANKING AND FINANCE - 2.3%
Banco Commercial SA, 8.250% due
02/05/2007....................... 220,000 217,184
Beaver Valley II Funding
Corporation:
8.250% due 06/01/2003............ 19,000 19,534
9.000% due 06/01/2017............ 1,280,000 1,476,800
Capital One Bank, 6.700% due
05/15/2008....................... 680,000 688,500
Capital One Financial Corporation,
7.250% due 12/01/2003............ 100,000 100,219
Cerro Negro Finance Ltd., 7.900%
due 12/01/2020**................. 1,100,000 1,075,250
Colonial Capital II, 8.920% due
01/15/2027....................... 100,000 112,625
Comed Financing II, 8.500% due
01/15/2027....................... 300,000 321,174
Deutsche Bank Finance BV, Zero
coupon due 02/12/2017**.......... 580,000 321,175
First Empire Capital Trust I,
8.234% due 02/01/2027............ 300,000 334,875
First PV Funding Corporation:
10.300% due 01/15/2014........... 201,000 211,804
10.150% due 01/15/2016........... 13,000 13,731
GG1B Funding Corp., 7.43% due
01/15/2011....................... 1,001,676 1,046,751
</TABLE>
See accompanying notes.
19
<PAGE> 22
EQUI-SELECT SERIES TRUST
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
----------- ------------
<S> <C> <C>
CORPORATE BONDS AND NOTES (CONTINUED)
BANKING AND FINANCE - (CONTINUED)
MBNA Capital I, 8.278% due
12/01/2026....................... $ 600,000 $ 642,750
Midland Funding Corporation II,
11.750% due 07/23/2005........... 31,000 36,813
Providian National Bank, 6.700% due
06/04/2003....................... 300,000 302,625
Riggs Capital Trust II, 8.875% due
03/15/2027....................... 260,000 291,200
Riggs National Corporation,
8.500% due 02/01/2006............ 100,000 105,625
------------
7,318,635
BROADCASTING - 0.6%
Chancellor Media Corporation,
8.750% due 06/15/2007............ 250,000 260,625
Control Cablevision Inc., 11.000%
due 06/01/2007................... 775,000 847,656
Frontiervision Operating Partners,
L.P., 11.000% due 10/15/2006..... 300,000 333,000
Tele-Communications Inc., 6.340%
due 02/01/2002................... 340,000 340,850
Turner Broadcasting Inc., 8.375%
due 07/01/2013................... 25,000 28,750
------------
1,810,881
BUILDING AND CONSTRUCTION - 0.7%
American Standard Companies Inc.,
7.625% due 02/15/2010............ 86,000 85,570
Interface Inc., 7.300% due
04/01/2008....................... 500,000 505,000
McDermott Inc., 9.375% due
03/15/2002....................... 1,405,000 1,487,544
Owens Corning Fiberglass
Corporation, 8.875% due
06/01/2002....................... 10,000 10,688
------------
2,088,802
COMPUTERS & BUSINESS EQUIPMENT - 0.2%
Xerox Corporation, 0.570% due
04/21/2018**..................... 1,020,000 577,012
------------
CONSUMER GOODS & SERVICES - 0.1%
Tommy Hilfiger USA, Inc.:
6.500% due 06/01/2003............ 252,000 251,370
6.850% due 06/01/2008............ 190,000 190,950
------------
442,320
DRUGS & HEALTH CARE SERVICES - 0.5%
Columbia/HCA Healthcare
Corporation:
6.500% due 03/15/1999............ 150,000 149,250
6.875% due 07/15/2001............ 93,000 91,838
6.910% due 06/15/2005............ 170,000 166,600
7.690% due 06/15/2025............ 750,000 716,250
Healthsouth Corporation, 6.875% due
06/15/2005**..................... 440,000 441,650
Tenet Healthcare Company:
8.625% due 01/15/2007............ 15,000 15,600
7.625% due 06/01/2008**.......... 100,000 100,750
------------
1,681,938
ENTERTAINMENT - 1.4%
Circus Circus Entertainment:
6.450% due 02/01/2006............ 300,000 294,000
7.000% due 11/15/2036............ 350,000 350,875
6.700% due 11/15/2096............ 100,000 101,750
Time Warner Company:
6.100% due 12/30/2001**.......... 250,000 249,063
9.125% due 01/15/2013............ 295,000 362,850
9.150% due 02/01/2023............ 1,745,000 2,216,150
8.300% due 01/15/2036............ 854,000 265,808
Viacom Inc., 6.750% due
01/15/2003....................... 650,000 662,188
------------
4,502,684
FINANCIAL SERVICES - 2.6%
Bear Stearns Company Inc., 6.200%
due 03/30/2003................... $ 260,000 $ 259,675
Conseco Inc., 6.400% due
06/15/2001....................... 430,000 430,538
ContiFinancial Corporation, 7.500%
due 03/15/2002................... 530,000 529,746
Criimi Mae Commercial Mortgage
Trust, 7.000% due 03/02/2011**... 1,250,000 1,227,500
Donaldson, Lufkin & Jenrette Inc.,
6.500% due 06/01/2008............ 220,000 220,550
Goldman Sachs Group, L.P., 5.900%
due 01/15/2003................... 3,000,000 2,955,000
Lehman Brothers Holdings Inc.:
6.500% due 04/15/2008............ 830,000 834,150
7.500% due 08/01/2026............ 90,000 99,000
Natexis Ambs Company LLC, 8.440%
due 12/29/2049**................. 520,000 520,000
Paine Webber Group Inc., 6.550% due
04/15/2008....................... 110,000 110,825
Providian Capital I, 9.525% due
02/01/2027**..................... 100,000 114,500
Safeco Capital Trust Company,
8.072% due 07/15/2037............ 615,000 665,738
Salton Sea Funding Corporation,
7.370% due 05/30/2005............ 18,043 18,810
State Street Institutional Capital,
Class A, 7.940% due
12/30/2026**..................... 100,000 110,511
Washington Mutual Capital I, 8.375%
due 06/01/2027................... 250,000 280,938
------------
8,377,481
FOOD AND BEVERAGES - 0.1%
Nabisco Inc, 6.375% due
02/01/2035....................... 165,000 164,175
------------
FOREST PRODUCTS - 0.6%
Boise Cascade Corporation, 7.430%
due 10/10/2005................... 100,000 105,000
Georgia Pacific Corporation:
9.875% due 11/01/2021............ 10,000 11,363
9.500% due 05/15/2022............ 1,000,000 1,141,250
7.250% due 06/01/2028............ 545,000 551,131
U.S. Timberlands Company, L.P.,
9.625% due 11/15/2007............ 250,000 259,688
------------
2,068,432
GAS EXPLORATION - 0.0%#
Transocean Offshore Inc., 8.000%
due 04/15/2027................... 100,000 115,750
------------
GROCERY - 0.1%
Marsh Supermarket Inc., 8.875% due
08/01/2007....................... 250,000 256,250
------------
HOTELS AND RESTAURANTS - 0.0%#
Hilton Hotels Corporation, 7.950%
due 04/15/2007................... 25,000 26,156
------------
INDUSTRIAL - 3.4%
Burlington Industries Inc., 7.250%
due 08/01/2027................... 120,000 124,200
Federal-Mogul Corporation:
7.500% due 07/01/2004............ 375,000 376,406
7.750% due 07/01/2006............ 130,000 131,788
</TABLE>
See accompanying notes.
20
<PAGE> 23
EQUI-SELECT SERIES TRUST
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
----------- ------------
<S> <C> <C>
CORPORATE BONDS AND NOTES (CONTINUED)
INDUSTRIAL - (CONTINUED)
Fox/Liberty Network Company, 8.875%
due 08/15/2007**................. $ 100,000 $ 101,500
Hearst-Argyle TV Inc.:
7.000% due 01/15/2018............ 115,000 116,725
7.500% due 11/15/2027............ 1,224,000 1,306,620
Honeywell Inc., 6.625% due
06/15/2028....................... 130,000 130,325
News America Holdings:
8.000% due 10/17/2016............ 300,000 329,625
8.875% due 04/26/2023............ 1,050,000 1,265,250
7.750% due 12/01/2045............ 100,000 106,500
News America Inc., 6.625% due
01/09/2008....................... 255,000 254,016
Nortek Inc., 9.250% due
03/15/2007....................... 300,000 309,750
Owens Illinois Inc.:
7.350% due 05/15/2008............ 2,500,000 2,521,875
7.500% due 05/15/2010............ 2,500,000 2,521,875
Seacor Smit Inc., 7.840% due
05/30/2010....................... 800,000 856,000
Solutia Inc., 7.375 due
10/15/2027....................... 100,000 104,875
UPM-Kymmene Corporation, 7.450% due
11/12/2027**..................... 270,000 283,500
------------
10,840,830
INSURANCE - 0.4%
Atlantic Mutual Insurance Company,
8.150% due 02/15/2028**.......... 529,000 546,854
Equitable Life Assurance Society,
7.700% due 12/01/2015**.......... 80,000 88,100
Fairfax Financial Holdings Ltd.,
7.375% due 04/15/2018............ 225,000 229,781
Nationwide Mutual Life Insurance
Company, 7.500% due 02/15/2024... 100,000 100,875
Travelers Capital II, 7.750% due
12/01/2036....................... 150,000 160,688
------------
1,126,298
OIL AND GAS - 2.8%
Belco Oil & Gas Corporation, 8.875%
due 09/15/2007................... 100,000 98,000
Clark Refining & Marketing Inc.,
8.375% due 11/15/2007............ 100,000 100,750
Cliffs Drilling Company, 10.250%
due 05/15/2003................... 100,000 106,000
Coastal Corporation:
6.950% due 06/02/2028............ 1,130,000 1,138,475
7.420% due 02/15/2037............ 1,410,000 1,536,900
KCS Energy Inc., 8.875% due
01/15/2008....................... 100,000 95,125
Louis Dreyfus Natural Gas Company,
6.875% due 12/01/2007**.......... 230,000 231,286
Niantic Bay Fuel, 8.590% due
06/04/2003....................... 1,000,000 1,000,000
Oryx Energy Company, 8.375% due
07/15/2004....................... 100,000 108,500
Petroleum Geo-Services, 7.125% due
03/30/2028....................... 385,000 398,475
Snyder Oil Corporation, 8.750% due
06/15/2007....................... 50,000 50,375
Sun Company Inc., 9.000% due
11/01/2024....................... 2,000,000 2,462,500
Tennessee Gas Pipeline Company,
7.625% due 04/01/2037............ 1,000,000 1,116,250
Texas Gas Transmission Inc., 7.250%
due 07/15/2027................... 100,000 105,375
Vintage Petroleum, 8.625% due
02/01/2009....................... $ 100,000 $ 101,750
Wiser Oil Company, 9.500% due
05/15/2007....................... 100,000 93,500
------------
8,743,261
OTHER - 0.4%
Corp Andina de Fomento, 7.100% due
02/01/2003....................... 120,000 122,250
Lasmo (USA) Inc., 7.300% due
11/15/2027....................... 180,000 189,900
Outdoor Systems Inc., 8.875% due
06/15/2007....................... 250,000 260,000
Polymer Group Inc., 9.000% due
07/01/2007....................... 250,000 255,000
Williams Scotsman Inc., 9.875% due
06/01/2007....................... 300,000 313,500
------------
1,140,650
PRECIOUS METALS AND MINING - 0.1%
Ultramar Diamond Company, 7.200%
due 10/15/2017................... 205,000 215,763
------------
REAL ESTATE - 0.1%
Socgen Real Estate Company, 7.640%
due 12/29/2049**................. 400,000 408,500
------------
RETAIL - 0.0%#
Lowe's Companies Inc., 6.875% due
02/15/2028....................... 105,000 109,200
------------
TELECOMMUNICATIONS - 0.5%
Airtouch Communications Inc.,
6.650% due 05/01/2008............ 450,000 457,313
Century Communications Corporation,
Zero coupon due 01/15/2008**..... 1,000,000 453,750
Jasmine Submarine
Telecommunications Ltd., 8.483%
due 05/30/2011................... 100,000 83,000
TCI Communications Inc.:
6.375% due 05/01/2003............ 223,000 225,788
8.000% due 08/01/2005............ 140,000 153,650
9.650% due 03/31/2027............ 100,000 115,250
Worldcom Inc., 8.875% due
01/15/2006....................... 200,000 216,500
------------
1,705,251
TRANSPORTATION - 0.1%
Federal Express Corporation, 7.650%
due 01/15/2014................... 298,524 315,316
------------
UTILITIES - 2.1%
California Energy Incorporated,
7.630% due 10/15/2007............ 130,000 131,625
Cleveland Electric Illuminating
Company:
7.430% due 11/01/2009............ 236,000 248,390
7.880% due 11/01/2017............ 300,000 325,500
9.000% due 07/01/2023............ 100,000 109,375
Commonwealth Edison Company, 7.625%
due 01/15/2007................... 100,000 107,500
Connecticut Light & Power Company,
7.875% due 10/01/2024............ 415,000 432,119
Consumers Energy Company, 6.375%
due 02/01/2008**................. 140,000 138,250
El Paso Electric Company, 8.900%
due 02/01/2006................... 50,000 55,500
Empresa Nacional de Electricidad,
7.325% due 02/01/2037............ 100,000 100,875
Hidroelectrica Alicura SA, 8.375%
due 03/15/1999**................. 1,405,000 1,403,244
</TABLE>
See accompanying notes.
21
<PAGE> 24
EQUI-SELECT SERIES TRUST
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
----------- ------------
<S> <C> <C>
CORPORATE BONDS AND NOTES (CONTINUED)
UTILITIES - (CONTINUED)
Long Island Lighting Company,
9.000% due 11/01/2022............ $ 75,000 $ 86,156
Niagara Mohawk Power Corporation:
7.750% due 05/15/2006............ 373,000 397,245
8.770% due 01/01/2018............ 372,000 396,645
8.750% due 04/01/2022............ 150,000 163,125
8.500% due 07/01/2023............ 90,000 96,638
North Atlantic Energy Corporation,
9.050% due 06/01/2002............ 135,000 136,519
Seabrook Station - Unit 1, 7.830%
due 01/02/2019................... 915,890 961,684
Texas-New Mexico Power Company,
12.500% due 01/15/1999........... 100,000 104,875
Texas Utility Electric Company,
6.375% due 01/01/2008**.......... 380,000 377,625
Toledo Edison Company, 7.875% due
08/01/2004....................... 238,000 252,578
United Illuminating Company, 6.250%
due 12/15/2002................... 100,000 99,875
Utilicorp United Incorporated,
8.450% due 11/15/1999............ 10,000 10,288
Waterford 3 Funding Corporation,
8.090% due 01/02/2017............ 545,000 566,800
------------
6,702,431
TOTAL CORPORATE BONDS AND
NOTES - (Cost $62,722,249) 63,503,567
------------
FOREIGN GOVERNMENT BONDS - 0.3%
Republic of Panama, 8.250% due
04/22/2008....................... 200,000 195,750
Republic of Korea, 8.875% due
04/15/2008....................... 900,000 815,625
------------
TOTAL FOREIGN GOVERNMENT BONDS
(Cost $1,040,079) 1,011,375
------------
U.S. GOVERNMENT AND AGENCY SECURITIES - 16.2%
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.3%
Beneficial Mortgage Corporation,
5.768% due 09/28/2037............ 835,932 835,146
BCF LLC, 7.750% due 09/25/2026..... 97,193 97,284
------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost $928,964) 932,430
------------
MORTGAGE-BACKED OBLIGATIONS - 3.1%
Federal National Mortgage
Association,
6.500% due 03/01/2013............ 2,359,565 2,372,825
------------
Government National Mortgage
Association:
8.000% due 06/20/2025............ 284,109 291,754
7.500% due 07/15/2026............ 236,405 243,053
8.000% due 07/15/2026............ 31,241 32,392
8.000% due 07/15/2026............ 32,016 33,196
8.000% due 07/15/2026............ 535,341 555,079
8.000% due 07/15/2026............ 833,092 863,808
7.500% due 09/15/2026............ 273,168 280,850
8.000% due 12/15/2026............ 842,384 873,442
7.500% due 04/15/2027............ 45,860 47,150
7.500% due 05/15/2027............ 959,384 986,361
8.000% due 07/15/2027............ $ 849,480 $ 880,801
7.500% due 09/15/2027............ 185,751 190,974
7.500% due 11/15/2027............ 446,794 459,358
7.000% due 01/15/2028............ 32,606 33,146
7.500% due 02/15/2028............ 719,781 740,021
7.000% due 04/15/2028............ 869,616 884,017
------------
7,395,402
U.S. TREASURIES - 12.8%
United States Treasury Bonds:
9.125% due 05/15/1999............ 6,000,000 6,183,600
6.625% due 03/31/2002............ 220,000 227,880
6.250% due 08/31/2002............ 12,975,000 13,312,220
9.875% due 11/15/2015............ 120,000 174,770
6.125% due 11/15/2027............ 5,226,000 5,602,951
United States Treasury Notes:
8.500% due 02/15/2000............ 175,000 182,994
5.750% due 11/15/2000............ 4,850,000 4,873,872
5.500% due 01/31/2003............ 8,300,000 8,292,779
7.875% due 11/15/2004............ 460,000 516,695
7.000% due 07/15/2006............ 370,000 404,151
6.500% due 10/15/2006............ 35,000 37,157
5.500% due 02/15/2008............ 185,000 184,848
5.625% due 05/15/2008............ 652,000 661,063
------------
40,654,980
TOTAL U.S. GOVERNMENT AND AGENCY
SECURITIES - (Cost $50,138,796) 51,355,637
------------
SHORT TERM INVESTMENTS - 11.0%
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 8.1%
FNMA:
5.516%++ due 07/01/1998.......... 6,500,000 6,500,000
5.516%++ due 07/01/1998.......... 8,000,000 8,000,000
5.591%++ due 07/06/1998.......... 11,200,000 11,191,459
------------
25,691,459
GENERAL ELECTRIC CORPORATION - 2.9%
5.642%++ due 07/07/1998.......... 9,200,000 9,191,475
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $34,882,934) 34,882,934
------------
TOTAL INVESTMENTS
(COST $304,325,435*) - 102.4% $325,489,751
OTHER ASSETS AND LIABILITIES - (2.4%) (7,598,597)
------------
NET ASSETS - 100.0% $317,891,154
============
</TABLE>
*Aggregate cost for Federal tax purposes.
**Securities exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration to qualified institutional
buyers.
+Non-income producing security.
++Annualized yield at date of purchase.
#Amount represents less than 0.1%.
GLOSSARY OF TERMS
ADR - American Depository Receipt
See accompanying notes.
22
<PAGE> 25
EQUI-SELECT SERIES TRUST
ADVANTAGE PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
---------- -----------
<S> <C> <C>
CORPORATE DEBT SECURITIES - 28.4%
BANKS - 2.3%
Union Planters National Bank, 6.290%
due 08/20/1998..................... $ 500,000 $ 500,160
-----------
BROKERAGE - 1.7%
Paine Webber Group Inc., 6.344% due
07/24/2003......................... 350,000 356,608
-----------
COMMUNICATION - 2.5%
Worldcom Inc., 9.375% due
01/15/2004......................... 500,000 533,125
-----------
ENTERTAINMENT AND LEISURE - 1.9%
Caesars World Inc., 8.875% due
08/15/2002......................... 400,000 412,000
-----------
FINANCIAL SERVICES - 16.3%
AT&T Capital Corporation, 6.520% due
05/14/1999......................... 500,000 501,510
Chrysler Financial Corporation,
6.440% due 10/06/1998.............. 500,000 500,650
Figgie International Inc., 9.875% due
10/01/1999......................... 500,000 522,500
Lehman Brothers Holdings Inc., 6.150%
due 03/15/2000..................... 1,000,000 1,002,500
MBNA Global Capital Securities,
6.550%+++ due 02/01/2027........... 500,000 474,990
NTC Capital I,
6.278%+++ due 01/15/2027........... 500,000 493,300
-----------
3,495,450
REAL ESTATE - 1.4%
Taubman Realty Group Ltd., MTN,
6.489% due 07/30/1998.............. 300,000 300,000
-----------
TOBACCO - 2.3%
Philip Morris Companies Inc., 6.000%
due 11/15/1999..................... 500,000 500,000
-----------
TOTAL CORPORATE DEBT SECURITIES
(Cost $6,086,230) 6,097,343
-----------
MORTGAGE PASS-THROUGHS - 4.3%
COLLATERALIZED MORTGAGE OBLIGATIONS
MBNA Master Credit Card Trust, 5.931%
due 11/15/2001..................... 750,000 749,760
Morgan Stanley Capital I Inc.,
9.000%+ due 05/01/2016............. 161,106 161,428
-----------
TOTAL MORTGAGE
PASS-THROUGHS - (Cost $915,803) 911,188
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 6.0%
FEDERAL HOME LOAN MORTGAGE CORPORATION
(FHLMC) - 0.7%
FHLMC:
Pool #846224, 7.341% due
07/01/2024......................... 138,079 140,840
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) - 0.7%
FNMA,
Conventional, Pool #103363, 7.693%
due 12/01/2017..................... 137,391 142,328
-----------
FEDERAL FARM CREDIT BANK (FFCB) - 4.6%
FFCB,
5.675%++ due 08/14/1998............ 1,000,000 993,424
-----------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS
(Cost $1,277,308) 1,276,592
-----------
U.S. TREASURY OBLIGATIONS - 10.7%
U.S. TREASURY NOTES:
5.875% due 07/31/1999.............. $ 800,000 $ 802,976
5.375% due 01/31/2000.............. 500,000 498,955
5.500% due 03/31/2000.............. 1,000,000 1,000,060
-----------
TOTAL U.S. TREASURY
OBLIGATIONS - (Cost $2,297,063) 2,301,991
-----------
COMMERCIAL PAPER-DISCOUNT NOTES - 50.0%
AGRICULTURAL SERVICES - 1.8%
Cargill Inc., 5.584%++ due
07/09/1998......................... 384,000 383,531
-----------
AUTOMOTIVE - 2.3%
Hertz Corporation, 5.640%++ due
07/16/1998......................... 500,000 498,844
-----------
BANKS - 3.7%
ABN Amro Bank, 5.557%++ due
07/02/1998......................... 798,000 797,879
-----------
COMMERCIAL SERVICES - 2.7%
PHH Corporation, 5.766%++ due
07/20/1998......................... 572,000 570,288
-----------
COMMUNICATIONS - 11.7%
GTE Corporation, 5.704%++ due
07/08/1998......................... 975,000 973,935
Lucent Technologies Inc., 5.590%++
due 07/17/1998..................... 566,000 564,616
Motorola Inc., 5.645%++ due
07/21/1998......................... 974,000 970,997
-----------
2,509,548
ELECTRIC - 1.4%
Emerson Electric Company, 5.608%++
due 07/14/1998..................... 309,000 308,384
-----------
ENTERTAINMENT & LEISURE - 2.3%
Walt Disney Corporation, 5.586%++ due
07/13/1998......................... 494,000 493,094
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(FHLMC) - 1.9%
5.435%++ due 07/13/1998............ 413,000 412,264
-----------
FINANCIAL SERVICES - 14.6%
General Electric Capital Corporation,
5.635%++ due 07/22/1998............ 796,000 793,427
General Motors Acceptance
Corporation, 5.591%++ due
07/06/1998......................... 960,000 959,265
Household Finance Corporation,
5.604%++ due 07/10/1998............ 750,000 748,965
Reliastar Mortgage Corporation,
5.690%++ due 07/15/1998............ 626,000 624,637
-----------
3,126,294
FOOD - 4.6%
General Mills Inc., 5.582%++ due
07/07/1998......................... 975,000 974,106
-----------
</TABLE>
See accompanying notes.
23
<PAGE> 26
EQUI-SELECT SERIES TRUST
ADVANTAGE PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
---------- -----------
<S> <C> <C>
COMMERCIAL PAPER-DISCOUNT NOTES (CONTINUED)
TRANSPORTATION - 3.0%
United Parcel Services of America
Inc., 5.454%++ due 07/01/1998...... $ 640,000 $ 640,000
-----------
TOTAL COMMERCIAL PAPER
-DISCOUNT NOTES
(Cost $10,714,232) 10,714,232
-----------
TOTAL INVESTMENTS
(COST $21,290,636*) - 99.4% $21,301,346
OTHER ASSETS AND LIABILITIES - 0.6% 137,858
-----------
NET ASSETS - 100.0% $21,439,204
===========
</TABLE>
*Aggregate cost for Federal tax purposes.
++Annualized yield at date of purchase.
+++Floating rate security. Rate shown is rate in effect at 06/30/1998.
GLOSSARY OF TERMS
MTN - Medium Term Note
See accompanying notes.
24
<PAGE> 27
EQUI-SELECT SERIES TRUST
VALUE + GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
-------- ------------
<S> <C> <C>
COMMON STOCKS - 97.7%
APPAREL - 3.1%
GAP, Inc. ............................ 74,750 $ 4,606,469
------------
COMMUNICATION - 2.3%
Cox Communication Inc., Class A....... 32,600 1,579,062
3COM Corporation...................... 59,600 1,828,975
------------
3,408,037
COMPUTER COMPONENTS, SOFTWARE AND
SERVICES - 15.7%
Cadence Design Systems, Inc.+......... 31,400 981,250
Compaq Computer Corporation........... 139,800 3,966,825
Electronic Arts Inc. ................. 34,700 1,873,800
Ingram Micro Inc., Class A............ 33,600 1,484,700
Intel Corporation..................... 75,900 5,626,087
Microsoft Corporation................. 50,100 5,429,588
PeopleSoft Inc. ...................... 31,400 1,475,800
Seagate Technology Inc. .............. 117,400 2,795,588
------------
23,633,638
CONSUMER SPECIALTY RETAIL - 14.7%
Bed, Bath, & Beyond Inc. ............. 12,000 621,750
CompUSA Inc.+......................... 125,032 2,258,391
Costco Companies, Inc.+............... 60,100 3,790,056
CVS Corporation....................... 103,400 4,026,137
Dayton Hudson Corporation............. 83,700 4,059,450
Starbucks Corporation+................ 60,000 3,206,250
Walgreen Company...................... 59,600 2,462,225
Wal Mart Stores Inc. ................. 28,900 1,755,675
------------
22,179,934
DRUGS AND HEALTH CARE SERVICES - 18.4%
Cardinal Health, Inc. ................ 37,600 3,525,000
Health Management Associates Inc. .... 65,400 2,186,812
Lilly Eli and Company................. 67,700 4,472,431
McKesson Corporation.................. 59,800 4,858,750
Merck & Co. Inc. ..................... 38,400 5,136,000
Omnicare Inc. ........................ 47,200 1,799,500
Universal Health Services Inc. ....... 40,100 2,340,837
Wellpoint Health Networks Inc. ....... 46,300 3,426,200
------------
27,745,530
ELECTRONICS - 6.3%
General Electric Company.............. 53,000 4,823,000
Texas Instruments Inc. ............... 79,500 4,635,844
------------
9,458,844
FINANCIAL SERVICES - 16.6%
Ahmanson HF and Company............... 62,900 4,465,900
Chase Manhattan Corporation........... 45,700 3,450,350
Equitable Companies, Inc. ............ 37,000 2,770,375
Franklin Resources Inc. .............. 52,500 2,835,000
Household International, Inc. ........ 77,600 3,860,600
Merrill Lynch and Company Inc. ....... 62,560 5,771,160
Providian Financial Corporation....... 24,800 1,948,350
------------
25,101,735
FOOD CHAINS - 2.6%
Kroger Company........................ 16,500 $ 707,438
Safeway, Inc.+........................ 78,100 3,177,694
------------
3,885,132
HEALTH MAINTENANCE ORGANIZATION - 2.3%
United Healthcare Corporation......... 55,800 3,543,300
------------
INFORMATION PROCESSING - 3.7%
HBO and Company....................... 157,200 5,541,300
------------
INSURANCE - 2.3%
Travelers Group, Inc. ................ 56,400 3,419,250
------------
MEDIA & ENTERTAINMENT - 2.0%
Time Warner Inc. ..................... 35,800 3,058,663
------------
OFFICE SUPPLIES - 1.7%
Staples, Inc.+........................ 87,600 2,534,925
------------
PERSONEL PLACEMENT - 1.6%
Robert Half International Inc.+....... 43,300 2,419,388
------------
SEMICONDUCTORS AND EQUIPMENT - 2.4%
Applied Materials Inc.+............... 122,500 3,613,750
------------
TELECOMMUNICATIONS - 2.0%
ADC Telecommunication Inc. ........... 41,900 1,530,659
Comcast Corporation, Class A.......... 38,100 1,546,622
------------
3,077,281
TOTAL COMMON STOCKS
(Cost $125,766,101) 147,227,176
------------
TOTAL INVESTMENTS
(COST $125,766,101*) - 97.7% $147,227,176
OTHER ASSETS AND LIABILITIES - 2.3% 3,433,697
------------
NET ASSETS - 100.0% $150,660,873
============
</TABLE>
*Aggregate cost for Federal tax purposes.
+Non-income producing security.
See accompanying notes.
25
<PAGE> 28
EQUI-SELECT SERIES TRUST
GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- ------------
<S> <C> <C>
COMMON STOCKS - 78.0%
AEROSPACE AND DEFENSE - 0.5%
EVI Inc.+........................... 32,500 $ 1,206,562
------------
AIRLINES - 0.8%
Northwest Airlines Corporation...... 45,000 1,735,313
------------
AUTOMOTIVE - 1.2%
Ford Motor Company.................. 45,000 2,655,000
------------
BANKING AND FINANCE - 9.6%
American General Corporation+....... 30,000 2,135,625
AmSouth Bancorporation.............. 41,250 1,621,641
Australia & New Zealand Banking
Group Ltd. ....................... 131,000 905,886
Bear Stearns Companies Inc. ........ 40,000 2,275,000
Compass Bancshares Inc. ............ 45,000 2,030,625
Finova Group Inc. .................. 20,000 1,132,500
Healthcare Financial Partners
Inc. ............................. 100,000 4,900,000
Independence Community Bank
Corporation....................... 50,000 850,000
Mellon Bank Corporation............. 32,500 2,262,813
Merrill Lynch and Company Inc....... 23,000 2,121,750
Southern Pacific Funding
Corporation....................... 115,000 1,804,063
------------
22,039,903
BIOPHARMACEUTICALS - 0.7%
Millenium Pharmaceuticals+.......... 118,000 1,666,750
------------
BROADCASTING - 0.6%
King World Productions Inc. ........ 54,000 1,377,000
------------
BUSINESS SERVICES - 1.4%
Cendant Corporation................. 85,000 1,774,375
EMC Corporation..................... 32,000 1,434,000
------------
3,208,375
CHEMICALS AND ALLIED PRODUCTS - 1.6%
Crompton & Knowles Corporation...... 35,000 881,562
E. I. du Pont de Nemours and
Company........................... 22,500 1,679,063
W.R. Grace & Company................ 62,500 1,066,406
------------
3,627,031
COMMUNICATION - 7.1%
Communications Satellite
Corporation....................... 70,000 1,981,875
Frontier Corporation................ 65,000 2,047,500
GTE Corporation..................... 20,000 1,112,500
MediaOne Group Inc. ................ 70,000 3,075,625
Metrocall Inc. ..................... 75,000 454,688
Metromedia Fiber Network Inc. ...... 40,000 1,865,000
Nextel Communications Inc. ......... 65,000 1,616,875
Paging Network Inc. ................ 120,000 1,680,000
Sprint Corporation.................. 35,000 2,467,500
------------
16,301,563
COMPUTER INDUSTRY - 5.0%
Computer Associates International
Inc. ............................. 25,000 1,389,063
Filenet Corporation+................ 76,000 2,194,500
Intel Corporation................... 30,000 2,223,750
Intersolv+.......................... 125,000 2,007,813
MicroStrategy Inc. ................. 37,300 1,053,725
SunGard Data Systems Inc. .......... 49,500 1,899,562
System Software Associates Inc.+.... 90,000 641,250
------------
11,409,663
CONSUMER DURABLES - 2.7%
Compuware Corporation+.............. 20,000 1,022,500
Oakwood Homes Corporation........... 85,000 2,550,000
Shaw Industries Inc. ............... 150,000 2,643,750
------------
6,216,250
CONSUMER PRODUCTS - 1.4%
Fruit of the Loom Inc. ............. 50,000 $ 1,662,500
Ocular Sciences Inc................. 50,000 1,625,000
------------
3,287,500
ENERGY - 0.9%
Williams Companies Inc.+............ 57,500 1,940,625
------------
FISHING AND HUNTING - 1.4%
Alliant Techsystems Inc.+........... 34,000 2,150,500
Zapata Corporation.................. 115,000 1,135,625
------------
3,286,125
FOOD AND BEVERAGES - 0.9%
Cadbury Schweppes Plc............... 71,500 1,107,282
US Foodservice+..................... 30,000 1,051,875
------------
2,159,157
HEALTH CARE SERVICES - 5.4%
Beverly Enterprises Inc.+........... 112,500 1,553,906
Columbia/HCA Healthcare
Corporation....................... 65,000 1,893,125
Genzyme Corporation+................ 40,000 1,022,500
PhyCor Inc. ........................ 105,000 1,739,063
Sunrise Assisted Living Inc. ....... 95,000 3,265,625
United Healthcare Corporation....... 45,000 2,857,500
------------
12,331,719
HOTELS AND RESTAURANTS - 0.6%
Canadian Hotel Income Properties.... 175,000 1,427,067
------------
INSURANCE - 1.0%
Hartford Life, Class A.............. 20,000 1,138,750
Marsh & McLennan Companies Inc...... 18,750 1,133,203
------------
2,271,953
MEDICAL PRODUCTS AND SERVICES - 1.2%
BMJ Medical Management Inc. ........ 100,000 450,000
Sabratek Corporation................ 102,000 2,320,500
------------
2,770,500
NETWORK SOFTWARE - 2.2%
FORE Systems Inc. .................. 120,000 3,180,000
Macromedia Inc. .................... 100,000 1,868,750
------------
5,048,750
OIL AND GAS - 4.6%
BJ Services Company................. 60,000 1,743,750
Burlington Resources Inc. .......... 50,000 2,153,125
Input/Output Inc. .................. 90,000 1,603,125
Nordic American Tanker Shipping..... 90,000 1,355,625
Pioneer Natural Resources Company... 90,000 2,148,750
Superior Energy Services Inc. ...... 305,000 1,544,063
------------
10,548,438
OTHER - 0.7%
Walter Industries Inc.+............. 85,000 1,609,687
------------
PHARMACEUTICALS - 2.3%
ALZA Corporation+................... 40,000 1,730,000
Dusa Pharmaceuticals Inc.+.......... 65,600 446,900
Incyte Pharmaceuticals Inc. ........ 45,000 1,535,625
Monsanto Company.................... 27,500 1,536,563
------------
5,249,088
POLLUTION CONTROL - 1.0%
Waste Management Inc. .............. 62,000 2,170,000
------------
REAL ESTATE - 1.3%
Capital Automotive REIT............. 130,000 1,844,375
Equity One Inc. .................... 70,000 717,500
FBR Asset Investment Corporation+... 25,000 450,000
------------
3,011,875
</TABLE>
See accompanying notes.
26
<PAGE> 29
EQUI-SELECT SERIES TRUST
GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
RETAIL - 8.6%
BJ's Wholesale Club Inc. ........... 50,000 $ 2,031,250
CompUSA Inc. ....................... 64,000 1,156,000
Dayton Hudson Corporation........... 45,000 2,182,500
Dress Barn Inc.+.................... 85,900 2,136,762
Egghead Inc.+....................... 145,000 1,223,437
Genesis Direct Inc. ................ 95,000 1,056,875
Kmart Corporation................... 100,000 1,912,500
Nike Inc. .......................... 57,500 2,799,531
PETsMart Inc. ...................... 135,000 1,350,000
Pier 1 Imports Inc. ................ 80,000 1,910,000
Value City Department Store Inc. ... 100,000 2,100,000
------------
19,858,855
TECHNOLOGY - 3.0%
Electronics for Imaging Inc. ....... 105,000 2,218,125
General Electric Company............ 22,000 2,002,000
Xylan Corporation................... 91,000 2,712,938
------------
6,933,063
TELECOMMUNICATIONS - 8.6%
Ascend Communications Inc. ......... 47,500 2,354,219
Cincinatti Bell Inc. ............... 50,000 1,431,250
Comcast Corporation................. 65,000 2,638,594
Cox Communications Inc. ............ 55,000 2,664,062
IDT Corporation..................... 60,000 1,803,750
Tele-Communications International
Inc. ............................. 80,000 1,607,500
Tele-Communications TCI Group,
Class A+.......................... 80,000 3,074,983
Tele-Communications TCI Venture
Group, Class B+................... 90,000 1,805,642
Worldcom Inc. ...................... 50,000 2,421,875
------------
19,801,875
TRANSPORTATION - 1.1%
Genesee & Wyoming Inc., Class A+.... 40,000 760,000
Kansas City Southern Industries
Inc. ............................. 37,500 1,860,937
------------
2,620,937
UTILITY - 0.6%
Southern Company.................... 50,000 1,384,375
------------
TOTAL COMMON STOCKS 179,154,999
(Cost $163,415,932) -------------
PREFERRED STOCKS - 9.5%
AIRLINES - 1.5%
Trans World Airlines+............... 22,000 1,683,000
Trans World Airlines**.............. 37,000 1,452,250
Trans World Airlines+**............. 5,000 196,250
------------
3,331,500
BANKING AND FINANCE - 3.0%
Fleetwood Capital Trust Inc.**...... 45,000 2,407,500
Servico Inc.**...................... 50,000 2,375,000
United Companies Financial
Corporation....................... 60,000 1,920,000
------------
6,702,500
COMMUNICATIONS - 2.1%
CellNet Data Systems, Inc. ......... 91,800 2,134,350
IXC Communications Inc.+**.......... 8,000 1,720,000
Metromedia International Group
Inc.+............................. 20,000 1,030,000
------------
4,884,350
CONSUMER GOODS - 0.3%
Suiza Foods Corporation............. 15,000 731,250
------------
INDUSTRIAL - 1.8%
Freeport-McMoran Corporation,
Series A.......................... 65,000 1,267,500
Houston Industries Inc.+............ 16,500 1,229,250
Pioneer Standard Electric Company... 38,000 1,686,250
------------
4,183,000
METALS AND MINING - 0.4%
WHX Corporation, Series A........... 20,000 $ 970,000
------------
PET FOOD - 0.4%
Ralston Purina Company+............. 15,250 968,375
------------
TOTAL PREFERRED STOCKS
(Cost $19,715,117) 21,770,975
------------
</TABLE>
EQUI-SELECT SERIES TRUST
GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
---------- ------------
<S> <C> <C>
CONVERTIBLE BONDS - 4.9%
COMPUTER INDUSTRY - 1.8%
Amkor Technology Inc., 5.750% due
05/01/2003........................ $ 500,000 463,125
Quantum Corporation, 7.000% due
08/01/2004........................ 1,000,000 950,000
System Software Company, 7.000% due
09/15/2002........................ 3,500,000 2,786,875
------------
4,200,000
HEALTH CARE SERVICES - 0.0%#
Sunrise Assisted Living Inc., 5.500%
due 06/15/2002.................... 100,000 110,500
------------
INDUSTRIAL - 1.0%
AMF Bowling Inc., 0.000% due
05/13/2018........................ 2,500,000 634,375
Halter Marine Group Inc., 4.500% due
09/15/2004........................ 2,000,000 1,617,500
------------
2,251,875
MEDICAL PRODUCTS AND SERVICES - 0.9%
Hybridon Inc., 9.000% due
04/01/2004........................ 500,000 275,000
Sabratek Corporation, 6.000% due
04/15/2005**...................... 2,250,000 1,856,250
------------
2,131,250
OIL AND GAS - 0.2%
Key Energy Group Inc., 5.000% due
09/15/2004........................ 500,000 395,625
------------
TELECOMMUNICATIONS - 1.0%
Tele-Communications International,
Inc., 4.500% due 02/15/2006....... 2,500,000 2,246,875
------------
TOTAL CONVERTIBLE BONDS (Cost
$12,362,154) 11,336,125
------------
CORPORATE BONDS - 1.8%
CONSUMER GOODS - 0.2%
Assisted Living Concepts, 6.000% due
11/01/2002........................ 375,000 389,063
------------
FINANCIAL SERVICES - 0.3%
Alternative Living Services, 5.250%
due 12/15/2002.................... 600,000 666,750
------------
HUMAN SERVICES - 0.4%
American Retirement Corporation,
5.750% due 10/01/2002............. 1,000,000 945,000
------------
OIL AND GAS - 0.4%
Key Energy Group Inc., 5.000% due
09/15/2004........................ 1,250,000 989,063
------------
PERSONEL SERVICES - 0.3%
Metamor Worldwide Inc., 2.940% due
08/15/2004........................ 700,000 668,500
------------
</TABLE>
See accompanying notes.
27
<PAGE> 30
EQUI-SELECT SERIES TRUST
GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
---------- ------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
TELECOMMUNICATIONS - 0.2%
P-Communications Inc., Series 144A,
4.250% due 11/01/2002**........... $ 500,000 $ 371,875
------------
TOTAL CORPORATE BONDS
(Cost $4,045,122) 4,030,251
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- ------------
<S> <C> <C>
WARRANTS - 0.3%
(COST $232,318)
BANKING AND FINANCE
Healthcare Financial Partners
Inc. ............................. 20,000 709,200
------------
TOTAL INVESTMENTS
(Cost $199,770,643*) - 94.5% $217,001,550
OTHER ASSETS AND LIABILITIES - 5.5% 12,591,734
------------
NET ASSETS - 100.0% $229,593,284
============
</TABLE>
*Aggregate cost for Federal tax purposes.
**Securities exempt from registration under Rule 144A of the Securities Act of
1993. These securities may be resold in transactions exempt from registrations
to qualified institutional buyers.
#Amount represents less than 0.1%.
+Non-income producing securities.
GLOSSARY OF TERMS
ADR - American Depository Receipt
See accompanying notes.
28
<PAGE> 31
[This page intentionally left blank]
29
<PAGE> 32
EQUI-SELECT SERIES TRUST
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MORTGAGE-
MONEY BACKED INTERNATIONAL
MARKET SECURITIES FIXED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at value(a).................. $38,944,898 $20,997,487 $14,070,938
Cash, including foreign currency, at value.............. 388 247 888,636
Receivable for securities sold.......................... -- -- 127,311
Net unrealized appreciation of foreign currency
contracts (Note 6).................................... -- -- 16,310
Interest receivable..................................... 53,507 152,673 328,371
Dividends receivable.................................... -- -- --
Receivable for fund shares sold......................... 985,025 18,504 --
Receivable from Investment Adviser (Note 3)............. 664 5,129 5,628
Prepaid insurance....................................... 882 882 882
Deferred organization costs............................. 3,093 3,093 3,093
Other assets............................................ -- -- 3,241
---------------------------------------------------
TOTAL ASSETS.......................................... 39,988,457 21,178,015 15,444,410
LIABILITIES
Payable due to custodian................................ -- -- --
Payable for securities purchased........................ -- -- 232,883
Payable for fund shares repurchased..................... -- -- --
Payable for audit fees.................................. 3,610 3,610 4,610
Payable for legal fees.................................. 5,996 5,994 3,328
Payable for custody fees................................ 11,224 4,478 10,899
Payable for organizational expense...................... -- 4,317 4,317
Payable to Investment Adviser (Note 3).................. 12,896 15,879 12,939
Accounts payable and accrued expenses................... 14,353 13,690 14,585
---------------------------------------------------
TOTAL LIABILITIES..................................... 48,079 47,968 283,561
---------------------------------------------------
NET ASSETS............................................ $39,940,378 $21,130,047 $15,160,849
===================================================
NET ASSETS CONSIST OF:
Paid-in Capital (Note 5)................................ $39,946,571 $20,227,123 $14,932,261
Undistributed net investment income (accumulated net
investment loss) (Note 2)............................. -- 561,327 232,534
Accumulated net realized gain (loss) on investments and
foreign currency transactions......................... (6,193) 106,801 (130,098)
Net unrealized appreciation (depreciation) of:
Investments........................................... -- 234,796 26,637
Foreign currency transactions......................... -- -- 99,515
---------------------------------------------------
NET ASSETS............................................ $39,940,378 $21,130,047 $15,160,849
===================================================
NET ASSET VALUE PER SHARE
Offering and redemption price per share (based on shares
of beneficial interest outstanding)................... $ 1.00 $ 11.17 $ 10.71
Total share outstanding at end of period................ 39,946,571 1,891,861 1,415,270
(a) Investments in securities, at cost.................. $38,944,898 $20,762,691 $14,044,301
</TABLE>
See accompanying notes.
30
<PAGE> 33
<TABLE>
<CAPTION>
TOTAL VALUE + GROWTH &
OTC RESEARCH RETURN ADVANTAGE GROWTH INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$196,106,821 $420,911,822 $325,489,751 $21,301,346 $147,227,176 $217,001,550
62,288 119,840 382,400 -- 3,910,443 16,231,915
244,581 1,771,349 199,622 173,893 4,690,630 765,790
-- -- -- -- -- --
-- -- 1,867,807 -- 48,381 449,898
31,079 346,394 386,281 -- 41,774 156,479
558,231 1,771,924 1,693,861 -- 661,817 1,084,155
-- -- -- 14,677 -- --
882 882 796 882 882 882
3,093 3,093 3,032 3,093 4,196 4,197
-- -- -- 7,615 -- --
--------------------------------------------------------------------------------------
197,006,975 424,925,304 330,023,550 21,501,506 156,585,299 235,694,866
-- -- -- 7,787 -- --
6,312,175 888,834 11,684,844 -- 5,756,001 5,809,562
-- -- 116,705 4,189 8 6
9,610 19,610 10,767 3,610 7,125 11,125
7,995 7,328 7,417 5,995 7,001 5,335
6,114 18,723 9,932 10,176 7,837 9,969
-- 4,317 -- 4,317 6,479 4,459
115,944 239,193 210,646 14,056 106,879 166,392
74,398 188,934 92,085 12,172 33,096 94,734
--------------------------------------------------------------------------------------
6,526,236 1,366,939 12,132,396 62,302 5,924,426 6,101,582
--------------------------------------------------------------------------------------
$190,480,739 $423,558,365 $317,891,154 $21,439,204 $150,660,873 $229,593,284
======================================================================================
$159,363,885 $349,899,342 $282,035,183 $20,688,158 $129,648,030 $203,440,897
(452,232) 422,585 4,640,514 758,149 (240,338) 968,827
21,113,991 15,488,528 10,054,567 (17,813) (207,894) 7,841,630
10,455,095 57,724,072 21,164,316 10,710 21,461,075 17,230,907
-- 23,838 (3,426) -- -- 111,023
--------------------------------------------------------------------------------------
$190,480,739 $423,558,365 $317,891,154 $21,439,204 $150,660,873 $229,593,284
======================================================================================
$ 18.53 $ 21.08 $ 16.59 $ 10.82 $ 15.53 $ 15.90
10,278,119 20,095,911 19,161,094 1,982,013 9,699,906 14,439,303
$185,651,726 $363,187,750 $304,325,435 $21,290,636 $125,766,101 $199,770,643
</TABLE>
31
<PAGE> 34
EQUI-SELECT SERIES TRUST
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MORTGAGE-
MONEY BACKED INTERNATIONAL
MARKET SECURITIES FIXED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
INVESTMENT INCOME ---------------------------------------------------------
<S> <C> <C> <C>
Interest income......................................... $1,045,672 $664,252 $ 352,941
Dividend income......................................... -- -- --
Foreign taxes withheld.................................. -- -- (2,240)
---------------------------------------------------------
TOTAL INVESTMENT INCOME................................. 1,045,672 664,252 350,701
EXPENSES
Investment Adviser fee (Note 3)......................... 69,933 75,303 55,807
Administration fee...................................... 9,292 4,966 6,246
Audit fee............................................... 5,441 5,441 6,442
Custodian fees and expenses............................. 7,127 8,759 19,597
Trustee's fees (Note 3)................................. 1,305 1,305 4,205
Legal fee............................................... 2,847 2,847 2,847
Insurance expenses...................................... 1,734 1,734 1,734
Transfer agent expense.................................. 2,121 1,727 2,579
Amortization of organization expense.................... 1,225 1,225 1,225
Miscellaneous expense................................... 850 850 2,590
---------------------------------------------------------
TOTAL EXPENSES.......................................... 101,875 104,157 103,272
---------------------------------------------------------
NET INVESTMENT INCOME (LOSS).......................... 943,797 560,095 247,429
NET REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on:
Investments........................................... (1,435) 124,767 39,393
Foreign currency transactions......................... -- -- (163,048)
Change in unrealized appreciation (depreciation) of:
Investments........................................... -- (102,922) 148,384
Foreign currency translations......................... -- -- 107,398
---------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)................. (1,435) 21,845 132,127
---------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS............................... $ 942,362 $581,940 $ 379,556
=========================================================
</TABLE>
See accompanying notes.
32
<PAGE> 35
<TABLE>
<CAPTION>
TOTAL VALUE + GROWTH &
OTC RESEARCH RETURN ADVANTAGE GROWTH INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 139,545 $ 401,718 $ 3,521,686 $611,295 $ 129,105 $ 838,941
124,977 1,516,775 1,420,936 -- 246,839 1,155,406
-- (10,942) -- -- -- (3,389)
-------------------------------------------------------------------------------
264,522 1,907,551 4,942,622 611,295 375,944 1,990,958
587,014 1,245,852 956,940 50,305 531,830 852,636
36,358 80,158 59,280 4,977 27,750 44,710
11,441 21,441 17,441 5,441 8,956 12,956
14,678 23,678 29,678 8,759 12,678 21,678
6,305 9,305 9,303 1,305 4,518 5,518
4,847 6,847 4,847 2,847 3,854 4,854
1,734 1,734 1,734 1,734 2,233 1,734
4,601 4,733 4,733 2,067 5,452 5,890
1,225 1,225 1,225 1,225 757 757
48,551 146,588 54,550 850 18,254 71,398
-------------------------------------------------------------------------------
716,754 1,541,561 1,139,731 79,510 616,282 1,022,131
-------------------------------------------------------------------------------
(452,232) 365,990 3,802,891 531,785 (240,338) 968,827
18,905,474 13,216,408 7,968,767 (11,967) 1,388,291 6,913,833
-- (24,784) (540) -- -- (77)
2,307,700 34,779,754 5,442,759 23,079 16,716,661 7,104,816
-- 51,080 (4,370) -- -- 49,340
-------------------------------------------------------------------------------
21,213,174 48,022,458 13,406,616 11,112 18,104,952 14,067,912
-------------------------------------------------------------------------------
$20,760,942 $48,388,448 $17,209,507 $542,897 $17,864,614 $15,036,739
===============================================================================
</TABLE>
33
<PAGE> 36
EQUI-SELECT SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
MORTGAGE-
MONEY BACKED INTERNATIONAL
MARKET SECURITIES FIXED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (Unaudited)
Net investment income (loss)............................ $ 943,797 $ 560,095 $ 247,429
Net realized gain (loss) on:
Investments........................................... (1,435) 124,767 39,393
Foreign currency transaction.......................... -- -- (163,048)
Change in unrealized appreciation (depreciation) of:
Investments........................................... -- (102,922) 148,384
Foreign currency translations......................... -- -- 107,398
---------------------------------------------------------
Net increase in net assets resulting from
operations....................................... 942,362 581,940 379,556
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................... (943,797) -- --
FUND SHARE TRANSACTIONS (Note 5).......................... 4,347,446 2,980,630 2,648,265
---------------------------------------------------------
TOTAL INCREASE IN NET ASSETS.............................. 4,346,011 3,562,570 3,027,821
NET ASSETS:
Beginning of year....................................... 35,594,367 17,567,477 12,133,028
---------------------------------------------------------
END OF PERIOD(a)........................................ $39,940,378 $21,130,047 $15,160,849
=========================================================
(a) Including undistributed net investment income (loss).... $ -- $ 561,327 $ 232,534
=========================================================
INCREASE IN NET ASSETS FROM OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
Net investment income (loss)............................ $ 1,634,516 $ 783,992 $ 491,341
Net realized gain (loss) on:
Investments........................................... (4,758) (17,042) (43,206)
Foreign currency transaction.......................... -- -- 38,612
Change in unrealized appreciation (depreciation) of:
Investments........................................... -- 218,071 (399,604)
Foreign currency translations......................... -- -- 3,144
---------------------------------------------------------
Net increase in net assets resulting from
operations....................................... 1,629,758 985,021 90,287
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................... (1,634,516) (783,416) (527,603)
Distributions from net realized gain on investments..... -- -- (18,155)
Distributions in excess of net realized gain on
investments and foreign currency transactions......... -- -- (65,902)
FUND SHARE TRANSACTIONS (Note 5).......................... 16,446,793 6,228,184 1,907,620
---------------------------------------------------------
TOTAL INCREASE IN NET ASSETS.............................. 16,442,035 6,429,789 1,386,247
NET ASSETS:
Beginning of period..................................... 19,152,332 11,137,688 10,746,781
---------------------------------------------------------
END OF YEAR(a).......................................... $35,594,367 $17,567,477 $12,133,028
=========================================================
(a) Including undistributed net investment income
(distributions in excess of net investment income)...... $ -- $ 1,232 $ (14,895)
=========================================================
</TABLE>
See accompanying notes.
34
<PAGE> 37
<TABLE>
<CAPTION>
TOTAL VALUE + GROWTH &
OTC RESEARCH RETURN ADVANTAGE GROWTH INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ (452,232) $ 365,990 $ 3,802,891 $ 531,785 $ (240,338) $ 968,827
18,905,474 13,216,408 7,968,767 (11,967) 1,388,291 6,913,833
-- (24,784) (540) -- -- (77)
2,307,700 34,779,754 5,442,759 23,079 16,716,661 7,104,816
-- 51,080 (4,370) -- -- 49,340
--------------------------------------------------------------------------------------
20,760,942 48,388,448 17,209,507 542,897 17,864,614 15,036,739
-- -- -- -- -- --
59,439,632 135,055,388 124,785,108 3,038,497 52,740,023 80,695,426
--------------------------------------------------------------------------------------
80,200,574 183,443,836 141,994,615 3,581,394 70,604,637 95,732,165
110,280,165 240,114,529 175,896,539 17,857,810 80,056,236 133,861,119
--------------------------------------------------------------------------------------
$190,480,739 $423,558,365 $317,891,154 $21,439,204 $150,660,873 $229,593,284
======================================================================================
$ (452,232) $ 422,585 $ 4,640,514 $ 758,149 $ (240,338) $ 968,827
======================================================================================
$ (339,931) $ 387,816 $ 3,600,021 $ 1,005,173 $ (231,357) $ 1,030,474
6,780,268 8,560,438 4,883,900 (8,561) (1,483,576) 10,048,777
(222) (5,156) (4,468) -- -- --
7,014,867 15,925,334 11,534,974 (11,335) 2,941,921 6,532,632
-- (27,765) 991 -- -- 61,683
--------------------------------------------------------------------------------------
13,454,982 24,840,667 20,015,418 985,277 1,226,988 17,673,566
-- (325,992) (2,759,357) (780,582) -- (954,239)
(4,604,698) (7,116,667) (3,063,811) (2,783) (17,323) (9,673,157)
-- -- -- -- -- --
58,108,301 147,537,679 104,402,326 3,167,308 59,124,707 84,414,141
--------------------------------------------------------------------------------------
66,958,585 164,935,687 118,594,576 3,369,220 60,334,372 91,460,311
43,321,580 75,178,842 57,301,963 14,488,590 19,721,864 42,400,808
--------------------------------------------------------------------------------------
$110,280,165 $240,114,529 $175,896,539 $17,857,810 $ 80,056,236 $133,861,119
======================================================================================
$ -- $ 56,595 $ 837,623 $ 226,364 $ --
======================================================================================
</TABLE>
35
<PAGE> 38
EQUI-SELECT SERIES TRUST
FINANCIAL HIGHLIGHTS
MONEY MARKET PORTFOLIO**
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
06/30/98 Year Ended Year Ended Year Ended Period Ended
(Unaudited) 12/31/97 12/31/96 12/31/95 12/31/94*
----------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................... $1.00 $1.00 $1.00 $1.00 $1.00
----------- ----------- ----------- ---------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(1)............................... 0.02 0.05 0.05 0.05 0.01
Net realized and unrealized gain on investments........ -- -- -- -- --
----------- ----------- ----------- ---------- --------
Total from investment operations....................... 0.02 0.05 0.05 0.05 0.01
----------- ----------- ----------- ---------- --------
LESS DISTRIBUTIONS:
Distributions from net investment income............... (0.02) (0.05) (0.05) (0.05) (0.01)
Net capital gains distributions........................ -- -- -- -- --
----------- ----------- ----------- ---------- --------
Total distributions.................................... (0.02) (0.05) (0.05) (0.05) (0.01)
----------- ----------- ----------- ---------- --------
Net asset value, end of period......................... $1.00 $1.00 $1.00 $1.00 $1.00
=========== =========== =========== ========== ========
Total Return(2)........................................ 2.52% 5.02% 4.84% 5.19% 1.06%
=========== =========== =========== ========== ========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period.............................. $39,940,378 $35,594,367 $19,152,332 $5,742,264 $446,684
Ratio of operating expenses (with reimbursement) to
average net assets(1)(3)............................. 0.55% 0.68% 0.68% 0.72% 0.75%
Ratio of operating expenses (without reimbursement) to
average net assets(1)(3)............................. 0.55% 0.71% 1.11% 2.59% 23.22%
Ratio of net investment income to average net
assets(3)............................................ 5.06% 5.06% 4.76% 5.11% 4.66%
Net investment income (loss) (without
reimbursement)(1)(3)................................. $0.02 $0.05 $0.04 $0.04 ($0.03)
</TABLE>
- ---------------
(1) Prior to January 1, 1998, net investment income is after reimbursement of
certain fees and expenses by the Advisor (See Note 3 to the financial
statements). Had the Advisor not undertaken to reimburse expenses related to
the Portfolio, net investment income (loss) per share and ratio of operating
expenses to average net assets would have been as noted above.
(2) Total return figures are not annualized for periods less than one year.
Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the period shown.
(3) Annualized for periods less than one year.
* For the period October 4, 1994 (commencement of investment operations)
through December 31, 1994.
** On January 2, 1998, ING Investment Management, LLC assumed the investment
management duties of the Portfolio.
See accompanying notes.
36
<PAGE> 39
EQUI-SELECT SERIES TRUST
FINANCIAL HIGHLIGHTS
MORTGAGE-BACKED SECURITIES PORTFOLIO**
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
06/30/98 Year Ended Year Ended Year Ended Period Ended
(Unaudited) 12/31/97 12/31/96 12/31/95 12/31/94*
----------- ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................. $10.85 $10.59 $10.84 $9.90 $10.00
----------- ----------- ----------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(1).............................. 0.30 0.51 0.58 0.52 0.15
Net realized and unrealized gain (loss) on
investments......................................... 0.02 0.26 (0.22) 1.05 (0.10)
----------- ----------- ----------- ---------- ----------
Total from investment operations...................... 0.32 0.77 0.36 1.57 0.05
----------- ----------- ----------- ---------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income.................. -- (0.51) (0.58) (0.52) (0.15)
Net capital gains distributions....................... -- -- (0.03) (0.11) --
----------- ----------- ----------- ---------- ----------
Total distributions................................... -- (0.51) (0.61) (0.63) (0.15)
----------- ----------- ----------- ---------- ----------
Net asset value, end of period........................ $11.17 $10.85 $10.59 $10.84 $9.90
=========== =========== =========== ========== ==========
Total Return(2)....................................... 2.95% 7.25% 3.39% 15.92% 0.50%
=========== =========== =========== ========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period............................. $21,130,047 $17,567,477 $11,137,688 $8,655,378 $4,976,609
Ratio of operating expenses (with reimbursement) to
average net assets(1)(3)............................ 1.04% 1.25% 1.25% 0.90% 0.75%
Ratio of operating expenses (without reimbursement) to
average net assets(1)(3)............................ 1.04% 1.49% 1.67% 1.99% 2.43%
Ratio of net investment income to average net
assets(3)........................................... 5.57% 5.66% 5.69% 6.26% 6.33%
Net investment income (without reimbursement)(1)(3)... $0.30 $0.49 $0.54 $0.43 $0.11
Portfolio turnover rate(4)............................ 28% 27% 19% 34% 52%
</TABLE>
- ---------------
(1) Prior to January 1, 1998, net investment income is after reimbursement of
certain fees and expenses by the Advisor (See Note 3 to the financial
statements). Had the Advisor not undertaken to reimburse expenses related to
the Portfolio, net investment income (loss) per share and ratio of operating
expenses to average net assets would have been as noted above.
(2) Total return figures are not annualized for periods less than one year.
Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the period shown.
(3) Annualized for periods less than one year.
(4) Portfolio turnover rates are not annualized.
* For the period October 4, 1994 (commencement of investment operations)
through December 31, 1994.
** On January 2, 1998, ING Investment Management, LLC assumed the investment
management duties of the Portfolio.
See accompanying notes.
37
<PAGE> 40
EQUI-SELECT SERIES TRUST
FINANCIAL HIGHLIGHTS
INTERNATIONAL FIXED INCOME PORTFOLIO**
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
06/30/98 Year Ended Year Ended Year Ended Period Ended
(Unaudited) 12/31/97 12/31/96 12/31/95 12/31/94*
----------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................... $10.41 $10.88 $11.09 $10.02 $10.00
----------- ----------- ----------- ---------- ----------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income(1)............................... 0.17 0.43 0.53 0.41 0.15
Net realized and unrealized gain (loss) on
investments.......................................... 0.13 (0.35) 0.02 1.24 (0.05)
----------- ----------- ----------- ---------- ----------
Total from investment operations....................... 0.30 0.08 0.55 1.65 0.10
----------- ----------- ----------- ---------- ----------
LESS DISTRIBUTIONS:
Distributions from net investment income............... -- (0.47) (0.58) (0.47) (0.08)
Net capital gains distributions........................ -- (0.02) (0.18) (0.11) --
Distributions in excess of net capital gains........... -- (0.06) -- -- --
----------- ----------- ----------- ---------- ----------
Total distributions.................................... -- (0.55) (0.76) (0.58) (0.08)
----------- ----------- ----------- ---------- ----------
Net asset value, end of period......................... $10.71 $10.41 $10.88 $11.09 $10.02
=========== =========== =========== ========== ==========
Total Return(2)........................................ 2.98% 0.64% 5.05% 15.81% 1.01%
=========== =========== =========== ========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period.............................. $15,160,849 $12,133,028 $10,746,781 $8,556,253 $5,062,830
Ratio of operating expenses (with reimbursement) to
average net assets(1)(3)............................. 1.57% 1.60% 1.60% 1.00% 0.75%
Ratio of operating expenses (without reimbursement) to
average net assets(1)(3)............................. 1.57% 1.83% 1.94% 2.13% 2.53%
Ratio of net investment income to average net
assets(3)............................................ 3.76% 4.22% 4.73% 5.94% 5.93%
Net investment income (without reimbursement)(1)(3).... $0.17 $0.41 $0.49 $0.31 $0.10
Portfolio turnover rate(4)............................. 32% 69% 113% 89% 6%
</TABLE>
- ---------------
(1) Prior to January 1, 1998, net investment income is after reimbursement of
certain fees and expenses by the Advisor (See Note 3 to the financial
statements). Had the Advisor not undertaken to reimburse expenses related to
the Portfolio, net investment income (loss) per share and ratio of operating
expenses to average net assets would have been as noted above.
(2) Total return figures are not annualized for periods less than one year.
Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the period shown.
(3) Annualized for periods less than one year.
(4) Portfolio turnover rates are not annualized.
* For the period October 4, 1994 (commencement of investment operations)
through December 31, 1994.
** Baring International Investment Limited became the sub-advisor to the
Portfolio on May 1, 1998.
See accompanying notes.
38
<PAGE> 41
EQUI-SELECT SERIES TRUST
FINANCIAL HIGHLIGHTS
OTC PORTFOLIO
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
06/30/98 Year Ended Year Ended Year Ended Period Ended
(Unaudited) 12/31/97 12/31/96 12/31/95 12/31/94*
------------ ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................. $15.82 $13.82 $12.08 $10.36 $10.00
------------ ------------ ----------- ---------- ----------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment (loss)(1).............................. (0.04) (0.05) (0.03) (0.02) --
Net realized and unrealized gain on investments....... 2.75 2.76 2.52 3.07 0.36
------------ ------------ ----------- ---------- ----------
Total from investment operations...................... 2.71 2.71 2.49 3.05 0.36
------------ ------------ ----------- ---------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income.................. -- -- -- -- --
Net capital gains distributions....................... -- (0.71) (0.75) (1.33) --
------------ ------------ ----------- ---------- ----------
Total distributions................................... -- (0.71) (0.75) (1.33) --
------------ ------------ ----------- ---------- ----------
Net asset value, end of period........................ $18.53 $15.82 $13.82 $12.08 $10.36
============ ============ =========== ========== ==========
Total Return(2)....................................... 17.13% 19.67% 20.68% 29.23% 3.59%
============ ============ =========== ========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period............................. $190,480,739 $110,280,165 $43,321,580 $9,054,622 $1,695,685
Ratio of operating expenses (with reimbursement) to
average net assets(1)(3)............................ 0.97% 0.99% 1.35% 1.07% 0.75%
Ratio of operating expenses (without reimbursement) to
average net assets(1)(3)............................ 0.97% 0.99% 1.35% 2.52% 7.10%
Ratio of net investment income (loss) to average net
assets(3)........................................... (0.61)% (0.44)% (0.63)% (0.22)% 0.16%
Net investment (loss) (without reimbursement)(1)(3)... $(0.04) $(0.05) $(0.03) $(0.10) $(0.12)
Portfolio turnover rate(4)............................ 88% 141% 122% 111% 6%
</TABLE>
- ---------------
(1) Prior to January 1, 1998, net investment income is after reimbursement of
certain fees and expenses by the Advisor (See Note 3 to the financial
statements). Had the Advisor not undertaken to reimburse expenses related to
the Portfolio, net investment income (loss) per share and ratio of operating
expenses to average net assets would have been as noted above. There was no
reimbursement of fees for the years ended 1996 and 1997.
(2) Total return figures are not annualized for periods less than one year.
Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the period shown.
(3) Annualized for periods less than one year.
(4) Portfolio turnover rates are not annualized.
* For the period October 4, 1994 (commencement of investment operations)
through December 31, 1994.
See accompanying notes.
39
<PAGE> 42
EQUI-SELECT SERIES TRUST
FINANCIAL HIGHLIGHTS
RESEARCH PORTFOLIO
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
06/30/98 Year Ended Year Ended Year Ended Period Ended
(Unaudited) 12/31/97 12/31/96 12/31/95 12/31/94*
------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................. $17.94 $15.43 $12.88 $9.59 $10.00
------------ ------------ ----------- ----------- ----------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income(1).............................. 0.02 0.03 -- 0.03 0.09
Net realized and unrealized gain (loss) on
investments......................................... 3.12 3.08 3.00 3.48 (0.41)
------------ ------------ ----------- ----------- ----------
Total from investment operations...................... 3.14 3.11 3.00 3.51 (0.32)
------------ ------------ ----------- ----------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income.................. -- (0.03) 0.00# (0.03) (0.09)
Net capital gains distributions....................... -- (0.57) (0.45) (0.19) --
------------ ------------ ----------- ----------- ----------
Total distributions................................... -- (0.60) (0.45) (0.22) (0.09)
------------ ------------ ----------- ----------- ----------
Net asset value, end of period........................ $21.08 $17.94 $15.43 $12.88 $9.59
============ ============ =========== =========== ==========
Total Return(2)....................................... 17.50% 20.12% 23.37% 36.58% (3.22)%
============ ============ =========== =========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period............................. $423,558,365 $240,114,529 $75,178,842 $16,185,802 $1,626,521
Ratio of operating expenses (with reimbursement) to
average net assets(1)(3)............................ 0.95% 0.96% 1.31% 1.12% 0.75%
Ratio of operating expenses (without reimbursement) to
average net assets(1)(3)............................ 0.95% 0.96% 1.31% 2.48% 7.48%
Ratio of net investment income to average net
assets(3)........................................... 0.23% 0.26% 0.05% 0.58% 4.65%
Net investment income (loss) (without
reimbursement)(1)(3)................................ $0.02 $0.03 -- $(0.04) $(0.04)
Portfolio turnover rate(4)............................ 35% 80% 68% 83% 85%
</TABLE>
- ---------------
(1) Prior to January 1, 1998, net investment income is after reimbursement of
certain fees and expenses by the Advisor (See Note 3 to the financial
statements). Had the Advisor not undertaken to reimburse expenses related to
the Portfolio, net investment income (loss) per share and ratio of operating
expenses to average net assets would have been as noted above. There was no
reimbursement of fees for the years ended 1996 and 1997.
(2) Total return figures are not annualized for periods less than one year.
Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the period shown.
(3) Annualized for periods less than one year.
(4) Portfolio turnover rates are not annualized.
* For the period October 4, 1994 (commencement of investment operations)
through December 31, 1994.
# Amount is less than $0.003 per share.
See accompanying notes.
40
<PAGE> 43
EQUI-SELECT SERIES TRUST
FINANCIAL HIGHLIGHTS
TOTAL RETURN PORTFOLIO
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
06/30/98 Year Ended Year Ended Year Ended Period Ended
(Unaudited) 12/31/97 12/31/96 12/31/95 12/31/94*
------------ ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $15.36 $13.15 $11.90 $9.76 $10.00
------------ ------------ ----------- ----------- ----------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income(1)........................... 0.17 0.32 0.26 0.21 0.09
Net realized and unrealized gain (loss) on
investments...................................... 1.06 2.42 1.37 2.19 (0.24)
------------ ------------ ----------- ----------- ----------
Total from investment operations................... 1.23 2.74 1.63 2.40 (0.15)
------------ ------------ ----------- ----------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income............... -- (0.25) (0.26) (0.21) (0.09)
Net capital gains distributions.................... -- (0.28) (0.12) (0.05) --
------------ ------------ ----------- ----------- ----------
Total distributions................................ -- (0.53) (0.38) (0.26) (0.09)
------------ ------------ ----------- ----------- ----------
Net asset value, end of year....................... $16.59 $15.36 $13.15 $11.90 $9.76
============ ============ =========== =========== ==========
Total return(2).................................... 8.01% 20.89% 13.70% 24.51% (1.47)%
============ ============ =========== =========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period.......................... $317,891,154 $175,896,539 $57,301,963 $15,502,907 $1,298,365
Ratio of operating expenses (with reimbursement) to
average net assets(1)(3)......................... 0.95% 0.97% 1.25% 1.11% 0.75%
Ratio of operating expenses (without reimbursement)
to average net assets(1)(3)...................... 0.95% 0.97% 1.25% 2.36% 8.31%
Ratio of net investment income to average net
assets(3)........................................ 3.17% 3.31% 3.29% 3.88% 4.58%
Net investment income (loss)
(without reimbursement)(3)....................... $0.17 $0.32 $0.26 $0.14 $(0.06)
Portfolio turnover rate(4)......................... 51% 98% 131% 89% 45%
</TABLE>
- ---------------
(1) Prior to January 1, 1998, net investment income is after reimbursement of
certain fees and expenses by the Advisor (See Note 3 to the financial
statements). Had the Advisor not undertaken to reimburse expenses related to
the Portfolio, net investment income (loss) per share and ratio of operating
expenses to average net assets would have been as noted above. There was no
reimbursement of fees for the years ended 1996 and 1997.
(2) Total return figures are not annualized for periods less than one year.
Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the period shown.
(3) Annualized for periods less than one year.
(4) Portfolio turnover rates are not annualized.
* For the period October 4, 1994 (commencement of investment operations)
through December 31, 1994.
See accompanying notes.
41
<PAGE> 44
EQUI-SELECT SERIES TRUST
FINANCIAL HIGHLIGHTS
ADVANTAGE PORTFOLIO**
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
06/30/98 Year Ended Year Ended Year Ended Period Ended
(Unaudited) 12/31/97 12/31/96 12/31/95 12/31/94*
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................. $10.53 $10.41 $10.18 $9.98 $10.00
----------- ----------- ----------- ---------- ----------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income(1)............................. 0.25 0.61 0.40 0.71 0.12
Net realized and unrealized gain (loss) on
investments........................................ 0.04 (0.01) 0.22 0.20 (0.02)
----------- ----------- ----------- ---------- ----------
Total from investment operations..................... 0.29 0.60 0.62 0.91 0.10
----------- ----------- ----------- ---------- ----------
LESS DISTRIBUTIONS:
Distributions from net investment income............. -- (0.48) (0.38) (0.71) (0.12)
Net capital gains distributions...................... -- -- (0.01) -- --
----------- ----------- ----------- ---------- ----------
Total distributions.................................. -- (0.48) (0.39) (0.71) (0.12)
----------- ----------- ----------- ---------- ----------
Net asset value, end of period....................... $10.82 $10.53 $10.41 $10.18 $9.98
=========== =========== =========== ========== ==========
Total Return(2)...................................... 2.85% 5.71% 6.06% 9.18% 0.99%
=========== =========== =========== ========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period............................ $21,439,204 $17,857,810 $14,488,590 $5,990,065 $3,449,166
Ratio of operating expenses (with reimbursement) to
average net assets(1)(3)........................... 0.79% 0.80% 0.80% 0.77% 0.75%
Ratio of operating expenses (without reimbursement)
to average net assets(1)(3)........................ 0.79% 1.11% 1.55% 2.13% 3.06%
Ratio of net investment income to average net
assets(3).......................................... 5.28% 5.79% 5.86% 8.56% 5.32%
Net investment income (without
reimbursement)(1)(3)............................... $0.25 $0.58 $0.35 $0.60 $0.07
Portfolio turnover rate(4)........................... 13% 116% 85% 166% 94%
</TABLE>
- ---------------
(1) Prior to January 1, 1998, net investment income is after reimbursement of
certain fees and expenses by the Advisor (See Note 3 to the financial
statements). Had the Advisor not undertaken to reimburse expenses related to
the Portfolio, net investment income (loss) per share and ratio of operating
expenses to average net assets would have been as noted above.
(2) Total return figures are not annualized for periods less than one year.
Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the period shown.
(3) Annualized for periods less than one year.
(4) Portfolio turnover rates are not annualized.
* For the period October 4, 1994 (commencement of investment operations)
through December 31, 1994.
** On January 2, 1998, ING Investment Management, LLC assumed the investment
management duties of the Portfolio.
See accompanying notes.
42
<PAGE> 45
EQUI-SELECT SERIES TRUST
FINANCIAL HIGHLIGHTS
VALUE + GROWTH
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
06/30/98 Year Ended Period Ended
(Unaudited) 12/31/97 12/31/96*
------------ ----------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $13.22 $11.43 $10.00
------------ ----------- -----------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment (loss)(1).................................... (0.02) (0.04) (0.04)
Net realized and unrealized gain on investments............. 2.33 1.83 1.59
------------ ----------- -----------
Total from investment operations............................ 2.31 1.79 1.55
------------ ----------- -----------
LESS DISTRIBUTIONS:
Dividends from net investment income........................ -- -- --
Net capital gains distributions............................. -- -- (0.12)
------------ ----------- -----------
Total distributions......................................... -- -- (0.12)
------------ ----------- -----------
Net asset value, end of period.............................. $15.53 $13.22 $11.43
============ =========== ===========
Total Return(2)............................................. 17.47% 15.69% 15.49%
============ =========== ===========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period................................... $150,660,873 $80,056,236 $19,721,864
Ratio of operating expenses (with reimbursement) to average
net assets(1)(3).......................................... 1.10% 1.20% 1.70%
Ratio of operating expenses (without reimbursement) to
average net assets(1)(3).................................. 1.10% 1.20% 1.90%
Ratio of net investment (loss) to average net assets(3)..... (0.43)% (0.50)% (0.90)%
Net investment (loss) (without reimbursement)(1)(3)......... $(0.02) $(0.04) $(0.05)
Portfolio turnover rate(4).................................. 91% 224% 143%
</TABLE>
- ---------------
(1) Prior to January 1, 1998, net investment income is after reimbursement of
certain fees and expenses by the Advisor (See Note 3 to the financial
statements). Had the Advisor not undertaken to reimburse expenses related to
the Portfolio, net investment income (loss) per share and ratio of operating
expenses to average net assets would have been as noted above. There was no
reimbursement of fees for the year ended 1997.
(2) Total return figures are not annualized for periods less than one year.
Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the period shown.
(3) Annualized for periods less than one year.
(4) Portfolio turnover rates are not annualized.
* For the period April 1, 1996 (commencement of investment operations) through
December 31, 1996.
See accompanying notes.
43
<PAGE> 46
EQUI-SELECT SERIES TRUST
FINANCIAL HIGHLIGHTS
GROWTH & INCOME PORTFOLIO
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
06/30/98 Year Ended Period Ended
(Unaudited) 12/31/97 12/31/96*
------------ ------------ -------------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $14.47 $12.59 $10.00
------------ ------------ -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(1).................................... 0.07 0.13 0.02
Net realized and unrealized gain on investments............. 1.36 3.02 2.61
------------ ------------ -----------
Total from investment operations............................ 1.43 3.15 2.63
------------ ------------ -----------
LESS DISTRIBUTIONS:
Dividends from net investment income........................ -- (0.11) (0.02)
Net capital gains distributions............................. -- (1.16) (0.02)
------------ ------------ -----------
Total distributions......................................... -- (1.27) (0.04)
------------ ------------ -----------
Net asset value, end of period.............................. $15.90 $14.47 $12.59
============ ============ ===========
Total Return(2)............................................. 9.88% 25.15% 26.19%
============ ============ ===========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period................................... $229,593,284 $133,861,119 $42,400,808
Ratio of operating expenses (with reimbursement) to average
net assets(1)(3).......................................... 1.13% 1.12% 1.64%
Ratio of operating expenses (without reimbursement) to
average net assets(1)(3).................................. 1.13% 1.12% 1.64%
Ratio of net investment income to average net assets(3)..... 1.07% 1.23% 0.38%
Net investment income (without reimbursement)(1)(3)......... $0.07 $0.13 $0.02
Portfolio turnover rate(4).................................. 104% 227% 115%
</TABLE>
- ---------------
(1) Prior to January 1, 1998, net investment income is after reimbursement of
certain fees and expenses by the Advisor (See Note 3 to the financial
statements). Had the Advisor not undertaken to reimburse expenses related to
the Portfolio, net investment income (loss) per share and ratio of operating
expenses to average net assets would have been as noted above. There was no
reimbursement of fees for the years ended 1996 and 1997.
(2) Total return figures are not annualized for periods less than one year.
Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the period shown.
(3) Annualized for periods less than one year.
(4) Portfolio turnover rates are not annualized.
* For the period April 1, 1996 (commencement of investment operations) through
December 31, 1996.
See accompanying notes.
44
<PAGE> 47
EQUI-SELECT SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 (UNAUDITED)
NOTE 1 - ORGANIZATION
Equi-Select Series Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
The Trust is managed by Directed Services, Inc. ("DSI"), which is a wholly owned
subsidiary of Equitable of Iowa Companies, Inc. ("Equitable of Iowa"). Equitable
of Iowa became a wholly owned subsidiary of ING Groep, N.V. ("ING") on October
24, 1997. The Trust was organized as a Massachusetts business trust on May 11,
1994, and offers nine portfolios, each having differing investment objectives
and policies: Money Market Portfolio, Mortgage-Backed Securities Portfolio,
International Fixed Income Portfolio, OTC Portfolio, Research Portfolio, Total
Return Portfolio, Advantage Portfolio, Value + Growth Portfolio and Growth &
Income Portfolio (each a "Portfolio" or, collectively, "the Portfolios"). On
September 15, 1994, Equitable Life Insurance Company of Iowa made the initial
purchase of shares of beneficial interest in the amount of 10,000 shares for the
Money Market Portfolio and 1,000 shares for each of the other Portfolios other
than the Value + Growth Portfolio and the Growth & Income Portfolio. On March
28, 1996, Equitable Life Insurance Company of Iowa made the initial purchase of
shares of beneficial interest in the amount of 1,000 shares for the Value +
Growth Portfolio and 1,000 shares for the Growth & Income Portfolio. The shares
of the Trust are sold to certain life insurance companies' separate accounts to
fund the benefits under variable annuity and variable life contracts issued by
such life insurance companies, including Equitable Life Insurance Company of
Iowa and Golden American Life Insurance Company. All Portfolios (except the
Value + Growth and the Growth & Income Portfolios) began investment operations
on October 4, 1994 and the Value + Growth and the Growth & Income Portfolios
began investment operations on April 1, 1996.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements.
ESTIMATES - The preparation of the financial statements in conformity with
generally accepted accounting principles may require management to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of these financial statements and the reported amounts
of income and expenses during the reporting period. Actual results could differ
from those estimates.
VALUATION OF INVESTMENTS - For all Portfolios except the Money Market Portfolio,
portfolio securities traded on a national securities exchange or quoted on the
NASDAQ National Market System are valued at the last reported sale price on the
principle exchange or reported by NASDAQ or, if there is no reported sale, and
in the case of over-the-counter securities not included on NASDAQ, at a bid
price. Debt securities, including zero-coupon securities, and certain foreign
securities are valued by a pricing service. Securities for which current market
quotations are not readily available are valued at fair value as determined in
good faith by the Trustees, or by an individual acting under the direction of
the Trustees. Prices for securities primarily traded in foreign markets are
expressed in the local currency's value and are translated into U.S. dollars at
the current rate of exchange. Short-term securities, including all securities in
the Money Market Portfolio and debt securities with a remaining maturity of 60
days or less, are valued at their amortized cost, which approximates market
value.
REPURCHASE AGREEMENTS - In connection with transactions in repurchase
agreements, the Trust's custodian takes possession of the underlying collateral
securities, the value of which is at least equal to the principal amount,
including interest, of the repurchase agreement. To the extent that the term of
any repurchase agreement exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to ensure the adequacy of the collateral.
In the event of default of the obligation to repurchase, the Trust has the right
to liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral or proceeds may be subject to legal proceedings.
INVESTMENT TRANSACTIONS - Investment security transactions are recorded on a
trade date basis. Realized gains and losses from security transactions are
determined on the basis of identified cost.
INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date, except
certain dividends from foreign securities where the ex-dividend date may have
passed, which are reported as income when the Trust identifies the dividend.
Interest income, which includes certain accretion of original discount, is
accrued as earned. Investment income is recorded net of foreign taxes withheld
where recovery of such taxes is uncertain.
FOREIGN CURRENCY TRANSLATIONS - The records of the Trust are maintained in U.S.
dollars. Foreign currency amounts are translated into U.S. dollars at a current
rate of exchange of such currency to determine the value of investments, other
assets and liabilities. Purchases and sales of securities and income and
expenses are converted at the prevailing rate of exchange on the respective
dates of such transactions.
45
<PAGE> 48
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A Portfolio may realize currency gains or losses between the trade and
settlement dates on security transactions. To minimize such currency gains or
losses, the Portfolio may, consistent with its investment objective and
policies, enter into a foreign currency exchange contract for the purchase or
sale (for a fixed amount of U.S. dollars) of an amount of the foreign currency
required to settle the security transaction.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by a Portfolio on each day and the resulting net unrealized
appreciation, depreciation and related net receivable or payment amounts are
determined by using forward currency exchange rates supplied by a quotation
service.
Reported net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses realized
between the trade and settlement dates on security transactions, and the
difference between the amount of net investment income accrued and the U.S.
dollar amount actually received.
FORWARD FOREIGN CURRENCY CONTRACTS - A forward foreign currency contract
("Forward") is an agreement between two parties to buy and sell a currency at a
set price on a future date. The market value of the Forward fluctuates with
changes in currency exchange rates. The Forward is marked-to-market daily and
the change in the market value is recorded by a Portfolio as an unrealized gain
or loss. When the Forward is closed, the Portfolio records a gain or loss equal
to the difference between the value at the time it was opened and the value at
the time it was closed. The Portfolio could be exposed to risk if a counterparty
is unable to meet the terms of the contract or if the value of the currency
changes unfavorably. The Portfolio may enter into Forwards in connection with
planned purchases and sales of securities, to hedge specific receivables or
payables against changes in future exchange rates or to hedge the U.S. dollar
value of Portfolio securities denominated in a foreign currency.
CURRENCY CALL AND PUT OPTIONS - A call option written by a Portfolio obligates
the Portfolio to sell specified currency to the option holder at a specified
price at any time before the expiration date. A put option written by a
Portfolio obligates the Portfolio to purchase specified currency from the option
holder at a specified price at any time before the expiration date. These
transactions involve a risk that a Portfolio may, upon exercise of the option,
be required to sell currency at a price that is less than its market value or be
required to purchase currency at a price that exceeds its market value. A
Portfolio may also realize gains or losses by entering into closing purchase
transactions identical to call or put options that have been written by the
Portfolio in order to terminate its obligation under a call or put option. In
determining the amount of gain or loss realized, the option premium paid and
related transactions costs are added to the exercise price.
DOLLAR ROLL TRANSACTIONS - A Portfolio may enter into dollar roll transactions,
in which a Portfolio sells securities for delivery in the current month and
simultaneously contracts to repurchase substantially similar (same type, same or
similar interest rate and maturity) securities on a specified future date.
During the roll period the Portfolio forgoes principal and interest paid on the
securities. The Portfolios account for such dollar rolls as financing
transactions, and are compensated by the interest earned on the cash proceeds of
the initial sale and by the lower repurchase price at a future date. To the
extent that a Portfolio has commitments under dollar roll transactions, liquid,
high grade debt securities are segregated in an amount equivalent to these
obligations. There were no dollar roll commitments outstanding at June 30, 1998.
EXPENSES - Expenses directly attributable to a Portfolio are charged to the
Portfolio. Expenses not directly attributable to a Portfolio are allocated among
the affected Portfolios. Certain costs incurred in connection with the
organization of the Trust and each Portfolio have been deferred and are being
amortized on a straight line basis over a five year period.
DISTRIBUTIONS TO SHAREHOLDERS - Each of the Portfolios (except the Money Market
Portfolio) declares and distributes dividends from net investment income and
distributes its net realized capital gains, if any, at least annually. The Money
Market Portfolio declares dividends daily and distributes monthly. All
distributions are paid in shares of the relevant Portfolio at net asset value.
Income and capital gains distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for market discount,
foreign currency transactions, losses deferred due to wash sales, "post October
31 losses" and excise tax regulations. Distributions are recorded on the
ex-dividend date.
FEDERAL INCOME TAXES - Each Portfolio is treated as a separate entity for
Federal income tax purposes. Each Portfolio intends to qualify each year as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986. By so qualifying, the Portfolios will not be subject to Federal income
taxes to the extent that they distribute all of their taxable income, including
realized capital gains, for the fiscal year. In addition, by distributing
substantially all of their net investment income, capital gains and certain
other amounts during the calendar year, the Portfolios will not be subject to a
Federal excise tax.
46
<PAGE> 49
NOTE 3 - AGREEMENTS AND FEES
As of October 24, 1997, the Trust entered into an Investment Advisory Agreement
(the "Agreement") with Equitable Investment Services, Inc. ("EISI") which was
assumed by DSI, under which DSI manages the business and affairs of the
Portfolios and the Trust. Under the Agreement, each Portfolio pays DSI a monthly
fee at the annual rate based on the average daily net assets of each Portfolio
as follows:
<TABLE>
<CAPTION>
ADVISORY FEES
-------------
<S> <C> <C>
Money Market Portfolio 0.375% of first $50 million
0.35% in excess of $50 million
Mortgage-Backed Securities Portfolio 0.75% of first $200 million
0.65% of next $300 million
0.55% of next $500 million
0.50% of next $1 billion
0.40% in excess of $2 billion
International Fixed Income Portfolio 0.85% of first $200 million
0.75% of next $300 million
0.60% of next $500 million
0.55% of next $1 billion
0.40% in excess of $2 billion
OTC, Research & Total Return Portfolios 0.80% of first $300 million
0.55% in excess of $300 million
Advantage Portfolio 0.50% of first $100 million
0.35% in excess of $100 million
Value + Growth Portfolio 0.95% of first $500 million
0.75% in excess of $500 million
Growth & Income Portfolio 0.95% of first $200 million
0.75% in excess of $200 million
</TABLE>
DSI has assumed the management responsibility under the Sub-Advisory Agreements
with Massachusetts Financial Services Company with respect to the OTC, Research
and Total Return Portfolios and Robertson, Stephens & Company Investment
Management, L.P., with respect to the Value + Growth and Growth & Income
Portfolios and DSI has entered into a Sub-Advisory Agreement with Baring
International Investment Limited with respect to the International Fixed Income
Portfolio; each of whom, under the supervision of DSI, is responsible for the
day-to-day investment management of each of the Portfolios. Effective January 2,
1998, ING Investment Management, LLC an affiliate of EISI assumed the portfolio
management responsibilities of EISI for the Money Market Portfolio, the
Mortgage-Backed Securities Portfolio and the Advantage Portfolio. The fees
payable to the sub-advisors under the Sub-Advisory Agreements are borne by DSI,
and the Trust does not bear the direct cost of the sub-advisory activities.
Each Trustee of the Trust who is not an interested person of the Trust or
Advisor or Sub-Advisor receives an annual fee of $6,000 and an additional fee of
$1,500 for each Trustees' meeting attended.
NOTE 4 - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding the
Money Market Portfolio and all short-term securities for the Trust, for the six
months ended June 30, 1998, were as follows:
<TABLE>
<CAPTION>
Non-U.S. U.S. Non-U.S. U.S.
Government Government Government Government
Purchases Purchases Sales Sales
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage-Backed Securities....... $ -- $ 8,462,136 $ 466,076 $ 4,509,204
International Fixed Income....... 4,898,656 -- 2,770,459 734,235
OTC.............................. 186,370,709 -- 126,662,287 --
Research......................... 221,124,597 -- 110,090,328 --
Total Return..................... 172,105,696 62,130,952 62,854,422 46,140,052
Advantage........................ -- 1,497,891 1,740,700 49,221
Value + Growth................... 152,147,642 -- 99,282,336 --
Growth & Income.................. 255,429,413 -- 173,324,961 --
</TABLE>
47
<PAGE> 50
]NOTE 4 - INVESTMENT TRANSACTIONS (CONTINUED)
The identified cost of investments in securities and repurchase agreements owned
by the Trust for federal income tax purposes and their respective gross
unrealized appreciation and depreciation at June 30, 1998 were as follows:
<TABLE>
<CAPTION>
Gross Gross Net
Identified Unrealized Unrealized Unrealized
Cost Appreciation Depreciation Appreciation
---------------------------------------------------------
<S> <C> <C> <C> <C>
Money Market....................... $ 38,944,898 $ -- $ -- $ --
Mortgage-Backed Securities......... 20,762,691 237,734 2,938 234,796
International Fixed Income......... 14,044,301 329,944 303,307 26,637
OTC................................ 185,651,726 26,132,832 15,677,737 10,455,095
Research........................... 363,187,750 69,468,235 11,744,163 57,724,072
Total Return....................... 304,325,435 24,818,887 3,654,571 21,164,316
Advantage.......................... 21,290,636 37,022 26,312 10,710
Value + Growth..................... 125,766,101 23,502,531 2,041,456 21,461,075
Growth & Income.................... 199,770,643 26,756,331 9,525,424 17,230,907
</TABLE>
NOTE 5 - SHAREHOLDER TRANSACTIONS
Transactions in shares and dollars were as follows:
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
--------------------------- ---------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold..................................... 64,725,828 $ 64,725,828 102,433,107 $102,433,107
Shares issued to shareholders in reinvestment of
dividends..................................... 943,797 943,797 1,634,516 1,634,516
Shares redeemed................................. (61,322,179) (61,322,179) (87,620,830) (87,620,830)
----------- ------------ ----------- ------------
Net increase.................................... 4,347,446 $ 4,347,446 16,446,793 $ 16,446,793
=========== ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
MORTGAGE-BACKED SECURITIES PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
--------------------------- ---------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold..................................... 604,853 $ 6,668,031 673,451 $ 7,363,783
Shares issued to shareholders in reinvestment of
dividends..................................... -- -- 132,084 1,419,276
Shares redeemed................................. (332,434) (3,687,401) (237,370) (2,554,875)
----------- ------------ ----------- ------------
Net increase.................................... 272,419 $ 2,980,630 568,165 $ 6,228,184
=========== ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL FIXED INCOME PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
-------------------------- -------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold........................................ 424,886 $ 4,509,286 574,229 $ 6,192,469
Shares issued to shareholders in reinvestment of
dividends........................................ -- -- 123,463 1,314,326
Shares redeemed.................................... (175,524) (1,861,021) (519,578) (5,599,175)
---------- ------------ --------- ------------
Net increase....................................... 249,362 $ 2,648,265 178,114 $ 1,907,620
========== ============ ========= ============
</TABLE>
<TABLE>
<CAPTION>
OTC PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
-------------------------- --------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold....................................... 3,700,352 $ 66,535,786 4,441,443 $ 67,796,730
Shares issued to shareholders in reinvestment of
dividends....................................... -- -- 453,828 6,811,842
Shares redeemed................................... (392,702) (7,096,154) (1,059,015) (16,500,271)
---------- ------------ ---------- ------------
Net increase...................................... 3,307,650 $ 59,439,632 3,836,256 $ 58,108,301
========== ============ ========== ============
</TABLE>
48
<PAGE> 51
NOTE 5 - SHAREHOLDER TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
RESEARCH PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
-------------------------- --------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold....................................... 7,830,982 $157,200,236 8,748,698 $151,457,707
Shares issued to shareholders in reinvestment of
dividends....................................... -- -- 547,082 9,454,599
Shares redeemed................................... (1,116,611) (22,144,848) (786,315) (13,374,627)
---------- ------------ ---------- ------------
Net increase...................................... 6,714,371 $135,055,388 8,509,465 $147,537,679
========== ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
-------------------------- -------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold........................................ 7,746,415 $125,388,267 6,753,656 $ 99,379,611
Shares issued to shareholders in reinvestment of
dividends........................................ -- -- 498,505 7,367,301
Shares redeemed.................................... (37,873) (603,159) (157,164) (2,344,586)
---------- ------------ --------- ------------
Net increase....................................... 7,708,542 $124,785,108 7,094,997 $104,402,326
========== ============ ========= ============
</TABLE>
<TABLE>
<CAPTION>
ADVANTAGE PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
-------------------------- -------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold........................................ 624,174 $ 6,649,105 1,027,871 $ 10,963,172
Shares issued to shareholders in reinvestment of
dividends........................................ -- -- 126,816 1,328,534
Shares redeemed.................................... (338,142) (3,610,608) (850,644) (9,124,398)
---------- ------------ --------- ------------
Net increase....................................... 286,032 $ 3,038,497 304,043 $ 3,167,308
========== ============ ========= ============
</TABLE>
<TABLE>
<CAPTION>
VALUE + GROWTH PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
-------------------------- --------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold....................................... 4,247,220 $ 61,309,471 5,752,136 $ 78,025,275
Shares issued to shareholders in reinvestment of
dividends....................................... -- -- 19,194 218,281
Shares redeemed................................... (604,904) (8,569,448) (1,439,264) (19,118,849)
---------- ------------ ---------- ------------
Net increase...................................... 3,642,316 $ 52,740,023 4,332,066 $ 59,124,707
========== ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
GROWTH & INCOME PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
------------------------- --------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold........................................ 5,461,268 $84,839,515 6,421,112 $ 91,268,138
Shares issued to shareholders in reinvestment of
dividends........................................ -- -- 746,751 10,730,642
Shares redeemed.................................... (275,530) (4,144,089) (1,282,562) (17,584,639)
---------- ----------- ---------- ------------
Net increase....................................... 5,185,738 $80,695,426 5,885,301 $ 84,414,141
========== =========== ========== ============
</TABLE>
49
<PAGE> 52
NOTE 6 - FORWARD FOREIGN CURRENCY CONTRACTS
At June 30, 1998, the outstanding forward exchange currency contracts, which
contractually obligate the Trust to deliver currencies at a specified date, were
as follows:
INTERNATIONAL FIXED INCOME PORTFOLIO
<TABLE>
<CAPTION>
U.S. DOLLAR
COST ON UNREALIZED
CURRENCY CURRENCY SETTLEMENT ORIGINATION U.S. DOLLAR APPRECIATION/
PURCHASED SOLD DATE DATE CURRENT VALUE (DEPRECIATION)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GBP USD 07/17/1998 $ 524,067 $ 534,708 $10,641
SEK USD 07/22/1998 236,000 235,211 (789)
DKK USD 08/14/1998 295,000 293,872 (1,128)
NLG USD 09/14/1998 690,000 689,911 (89)
AUD USD 09/17/1998 205,059 209,611 4,552
---------- ---------- -------
$1,950,126 $1,963,313 $13,187
</TABLE>
<TABLE>
<CAPTION>
U.S. DOLLAR
COST ON
CURRENCY CURRENCY SETTLEMENT ORIGINATION U.S. DOLLAR UNREALIZED
SOLD PURCHASED DATE DATE CURRENT VALUE APPRECIATION
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
USD GBP 07/17/1998 $ 973,000 $ 972,277 $ 723
USD CAD 07/30/1998 130,054 128,417 1,637
USD AUD 09/17/1998 210,374 209,611 763
---------- ---------- -------
$1,313,428 $1,310,305 $ 3,123
Net Unrealized Appreciation of Forward Foreign Currency
Contracts.................................................... $16,310
-------
</TABLE>
GLOSSARY OF TERMS
AUD - Australian Dollar
CAD - Canadian Dollar
DKK - Danish Kroner
GBP - Great British Pound
NLG - Dutch Guilder
SEK - Swedish Krona
USD - United States Dollar
NOTE 7 - CAPITAL LOSS CARRYFORWARDS
For Federal income tax purposes, the Portfolios indicated below have capital
loss carryforwards as of December 31, 1997 which are available to offset future
capital gains, if any:
<TABLE>
<CAPTION>
EXPIRING
IN 2005
--------
<S> <C>
Money Market Portfolio.................... $ 3,127
Mortgage-Backed Securities Portfolio...... 17,966
Value + Growth Portfolio.................. 171,187
</TABLE>
50
<PAGE> 53
NOTE 8 - SUBSEQUENT EVENT
On August 14, 1998, the consolidation of the Equi-Select Series Trust into The
GCG Trust took place at no cost to contract holders. The separate accounts
investing in the Equi-Select Series Trust Portfolios substituted shares of
similar GCG Trust series for shares of the Equi-Select Series Trust Portfolios
as described in the current prospectuses for your variable contract and the
Trusts.
The following substitutions have occurred:
<TABLE>
<CAPTION>
EQUI-SELECT SERIES TRUST PORTFOLIO REPLACED GCG SUBSTITUTED SERIES
------------------------------------------- ----------------------
<S> <C>
Growth & Income Portfolio Growth & Income Series
Research Portfolio Research Series
Total Return Portfolio Total Return Series
Value + Growth Portfolio Value + Growth Series
International Fixed Income Portfolio Global Fixed Income Series
OTC Portfolio Mid-Cap Growth Series
Money Market Portfolio Liquid Asset Series
Mortgage-Backed Securities Portfolio Limited Maturity Bond Series
Advantage Portfolio Limited Maturity Bond Series
</TABLE>
As of August 14, 1998, none of the Portfolios of the Equi-Select Series Trust
are available as an investment option, but additional Series of the GCG Trust
similar to the Portfolios of the Equi-Select Series Trust are now available as
investment options.
51
<PAGE> 54
EQUI-SELECT SERIES TRUST
SPECIAL MEETING OF SHAREHOLDERS
At a Special Meeting of Shareholders of the International Fixed Income Portfolio
(the "Portfolio") held on April 28, 1998, the following actions were taken:
(1) The new Portfolio Management Agreement with the Portfolio, DSI and Baring
International Investment Limited was approved by the shareholders of the Series
as follows:
<TABLE>
<CAPTION>
AGAINST OR
FOR WITHHELD ABSTAINED TOTAL
----------------------------------------------------
<S> <C> <C> <C> <C>
1,139,273 9,677 68,122 1,217,072
</TABLE>
52
<PAGE> 55
EQUI-SELECT SERIES TRUST
------------------------
TRUSTEES AND EXECUTIVE OFFICERS
Frederick S. Hubbell, President and Chair
J. Michael Earley, Trustee
R. Barbara Gitenstein, Trustee
Elizabeth J. Newell, Trustee
Stanley B. Seidler, Trustee
Myles R. Tashman, Secretary
------------------------
Sutherland, Asbill & Brennan LLP, Legal Counsel
Directed Services, Inc., Investment Adviser
Ernst & Young, LLP, Independent Auditors
The information contained in this report is intended for general informational
purposes only. This report is not authorized for distribution to prospective
investors unless preceded or accompanied by current Trust and Separate Account
prospectuses which contain important information concerning the Trust, the
Company, and its current public offering of variable contracts.
<PAGE> 56
EQUI-SELECT SERIES TRUST
909 LOCUST STREET - DES MOINES, IOWA - 50309-2899
EQUI-SELECT Bulk Rate
SERIES TRUST U.S. Postage
909 LOCUST STREET PAID
DES MOINES, IA 50309-2899 Des Moines, IA
Permit No. 3361
<PAGE> 57
EQUI-SELECT SERIES TRUST
SEMI
ANNUAL
REPORT
JUNE 30, 1998
[Watch Graphic]
PrimeElite
VARIABLE ANNUITY
<PAGE> 58
Equi-Select Series Trust
Semi Annual Report
For the Period Ending June 30, 1998
Table of Contents
<TABLE>
<S> <C>
Letter of Contract Owners................................... 1
Management's Discussion and Analysis........................ 2
Equi-Select Series Trust Financial Statements
Portfolios of Investments............................. 11
Statements of Assets and Liabilities.................. 30
Statements of Operations.............................. 32
Statements of Changes in Net Assets................... 34
Financial Highlights.................................. 36
Notes to Financial Statements......................... 45
</TABLE>
The information contained in this report is intended for general informational
purposes only. This report is not authorized for distribution to prospective
investors unless preceded or accompanied by current Trust and Separate Account
prospectuses which contain important information concerning the Trust, the
Company, and its current public offering of variable contracts. Investment
return and principal value will vary, and shares may be worth more or less at
redemption than at original purchase.
<PAGE> 59
August 14, 1998
LETTER TO CONTRACT HOLDERS
Dear Contract Holders:
We are pleased to present the 1998 Semi-Annual Report of the Equi-Select Series
Trust (the "Trust"). The following report provides information about the
performance and financial position of the portfolios in the Trust.
During the first six months of 1998, the net assets of the Trust increased 71%
to end the period at $1.4 billion. This increase can be attributed to new
investment by contract holders and strong investment returns.
The U.S. stock market continued to generate strong returns during the first half
of 1998. However, performance varied significantly across different sectors of
the market:
- Large company stocks provided the highest returns during the six-month
period. The Standard & Poors 500 Index (an index of large-cap stocks) had
a total return of 17.71%. The Russell 2000 Index (an index of small-cap
stocks) had a total return of only 4.93% over the same period.
- Aggressive, growth-oriented stocks had significantly higher returns than
more conservative, value-oriented stocks. During the first half of the
year, the Standard & Poors 500/Barra Growth Index had a total return of
23.07%. The Standard & Poors 500/Barra Value Index returned only 12.13%.
Over short periods of time, different sectors of the market can produce
significantly different returns. Consequently, investment portfolios can also
produce substantially different returns. When you evaluate the performance of a
portfolio, it is important to understand its investment strategy. It is also
important to focus on performance over longer periods.
Through your variable annuity contract, you have access to many portfolio
managers with extensive investment experience. We believe that these managers
can provide superior investment results over time.
On August 14, 1998, the Trust was consolidated into The GCG Trust. Your
investment options will not change significantly as a result of this action. For
most portfolios, a very similar portfolio will be available in the GCG Trust.
For additional information about the portfolios in the GCG Trust, please refer
to the current prospectus for your contract and the GCG Trust.
We are committed to providing quality products and services to contract owners,
and we look forward to helping you meet your financial objectives. Thank you for
your continued support.
Sincerely,
/s/ Fred S. Hubbell
Fred S. Hubbell
President and Chairman
Equi-Select Series Trust
1
<PAGE> 60
MONEY MARKET PORTFOLIO
JUNE 30, 1998
The Money Market Portfolio (the "Portfolio") seeks to achieve maximum current
income, consistent with the preservation of capital and the maintenance of
liquidity. The Portfolio had a total return of 2.52% for the six months ended
June 30, 1998.
Over the past six months, there have been many conflicting signals regarding the
direction of interest rates. This has created interesting challenges for money
market managers.
In the first week of January, short-term interest rates declined by
approximately 0.25%. This occurred because investors thought the Asian financial
crisis would cause the U.S. economy to slow down. They expected the Federal
Reserve Board (the "Fed") to maintain or lower the discount rate.
During the first quarter, economic growth appeared to be much stronger than
expected. Many investors feared the Fed would increase the discount rate, and
short-term interest rates increased by more than 0.30% in late-January and
February.
At its meeting in March, the Fed signaled a bias toward increasing the discount
rate. However, the Fed said that continuing financial problems in Asia have kept
the Fed from doing so.
Since the beginning of March, short-term interest rates have been very stable.
They have varied within a 0.10% to 0.15% range, as investors reacted to the
latest information about the economy, inflation, or the financial crisis in
Asia.
At the beginning of the year, the Portfolio had an average maturity of
approximately 45 days. For a short time, the Portfolio Manager extended the
average maturity of the Portfolio. However, this strategy was reversed as
interest rates appeared to be heading upward.
For most of the six-month period, the Portfolio Manager has been reducing the
average maturity. He thought this strategy was prudent, given the uncertain
interest rate environment. At the end of June, the Portfolio had an average
maturity of approximately 35 days.
ING INVESTMENT MANAGEMENT LLC
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
1 YEAR 5.12%
SINCE INCEPTION* 5.08%
</TABLE>
* The Portfolio commenced operations on October 4, 1994.
INVESTMENT IN THE MONEY MARKET PORTFOLIO (OR IN ANY OTHER PORTFOLIO) IS NEITHER
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE
MONEY MARKET PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE.
TOP TEN ISSUERS
AS A PERCENTAGE OF INVESTMENTS
<TABLE>
<S> <C>
Daimler-Benz Aktieng 5.1%
Eastman Kodak Inc. 4.8%
Bell South Telephone Company 4.8%
Du Pont (E.I.) de Nemours & Company 4.8%
International Business Machines Credit Corp. 4.6%
Household Financial Corporation 4.6%
Caterpillar Financial Services Corporation 4.6%
Sweden (Kingdom of) 4.2%
Eksportsfinans A/S 4.1%
Toys-R-Us Inc. 3.9%
</TABLE>
2
<PAGE> 61
MORTGAGE-BACKED SECURITIES PORTFOLIO
JUNE 30, 1998
The Mortgage-Backed Securities Portfolio (the "Portfolio") seeks to obtain a
high current return, consistent with the safety of principal. For the six months
ended June 30, 1998, the Portfolio generated a total return of 2.95%. Over the
same period, the Lehman Brothers Mortgage-Backed Securities Index (the
"benchmark") had a total return of 3.38%.
During the first six months of 1998, interest rates were very low. The average
yield on 10-year U.S. Treasury securities was 5.55%, the lowest six-month
average since the early 1960's.
When interest rates are low, many consumers have an incentive to re-finance
their mortgages. The original mortgage is prepaid, and a new loan is issued. In
1998, mortgage pre-payments have been at an all-time high.
Pre-payments hurt the performance of mortgage-backed securities. The Portfolio
Manager is forced to re-invest the proceeds. Because interest rates have
declined, the new investment will have a lower yield than the instrument that
was prepaid.
For this reason, returns on mortgage-backed securities were very weak relative
to other sectors of the fixed income market. Over the six-month period, the
Lehman Brothers Treasury and Corporate indices produced returns of 4.20% and
4.15%, respectively.
Prepayments continue to be very high. During the period, a significant
percentage of the Portfolio was invested in higher-coupon mortgage-backed
securities. When interest rates are low, higher-coupon instruments tend to
pre-pay at faster rates.
Diversification requirements preclude the Portfolio from investing entirely in
mortgage-backed securities. As a result, approximately 25-30% of the portfolio
is normally invested in U.S. Treasury and/or corporate debt securities. This
exposure had a positive impact on performance, as both of these sectors provided
higher returns than mortgages.
ING INVESTMENT MANAGEMENT LLC
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
1 YEAR 7.28%
SINCE INCEPTION* 7.91%
</TABLE>
* The Portfolio commenced operations on October 4, 1994.
DISTRIBUTION BY ISSUER
AS A PERCENTAGE OF INVESTMENTS
[PIE CHART]
<TABLE>
<S> <C>
Corporate Bonds and Notes 2.4%
Country Wide Funding Corp. 3.4%
U.S. Treasury Notes 10.2%
Short Term Investments 10.8%
Govt. National Mortgage Assoc. 19.7%
Federal National Mortgage Assoc. 25.0%
Federal Home Loan Mortgage Corp. 28.5%
</TABLE>
3
<PAGE> 62
INTERNATIONAL FIXED INCOME PORTFOLIO
JUNE 30, 1998
The International Fixed Income Portfolio (the "Portfolio") seeks to provide a
high total return. During the six months ended June 30, 1998, the Portfolio had
a total return of 2.98%. Over the same period, the Merrill Lynch Global
Government Bond Index II (the "benchmark") had a total return of 2.88%.
In local currency terms, bond market returns were strong during the first half
of the year. Returns are significantly lower when they are translated into U.S.
dollars, because the U.S. dollar strengthened against most major currencies.
The United Kingdom was the best performing market this year. Monetary and fiscal
policies have been tight, new bond issues have been infrequent, and
institutional funds in the United Kingdom have shifted a greater percentage of
their assets into the bond market. The Merrill Lynch U.K. Gilt Index gained
5.89% in local currency terms, and 7.36% in U.S. dollar terms.
Returns in Japan were poor, primarily due to the devaluation of the Yen. The
Merrill Lynch Japanese Government Index returned 2.73% in local currency terms,
but lost 3.76% in U.S. dollar terms.
During the first six months of the year, the Portfolio was overweighted in
Europe and underweighted in Japan. In the United Kingdom, the average duration
of the Portfolio was longer than that of the benchmark. All of these decisions
have helped performance.
At the end of June, the Portfolio was focused on Europe, with 59% of its
investments located there. Growth in Europe is modest, inflation is declining,
fiscal policy is tight, and real yields are high.
In terms of currency exposure, the Portfolio is overweighted in the U.S. dollar
and underweighted in the Japanese Yen. We believe that the Yen will weaken
significantly over the next few months.
As of June 30, the Portfolio had an average duration of approximately 5.4 years,
and its average credit quality was AA+. The benchmark has very similar
characteristics.
The case for global bonds remains the same as it has for the last few years. It
becomes harder and harder to forecast more than moderate world economic growth.
Since inflation is declining, real yields are consequently very high for bonds.
Supply/demand trends are also very favorable. With budget surpluses developing
and debt repayment possible, the net new issuance of high quality government
bonds has lessened. At the same time, demand is increasing as individuals
increase their rate of savings. This trend is supported by the aging world
population.
BARING INTERNATIONAL INVESTMENT LIMITED
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
1 YEAR 4.02%
SINCE INCEPTION* 6.81%
</TABLE>
* The Portfolio commenced operations on October 4, 1994.
DISTRIBUTION BY COUNTRY
AS A PERCENTAGE OF INVESTMENTS
[PIE CHART]
<TABLE>
<S> <C>
Australia 5.3%
Sweden 5.5%
Netherlands 12.5%
Other Countries 15.0%
United Kingdom 15.0%
Germany 17.0%
United States 29.7%
</TABLE>
4
<PAGE> 63
OTC PORTFOLIO
JUNE 30, 1998
The primary objective of the OTC Portfolio (the "Portfolio") is to obtain
long-term growth of capital. For the six months ended June 30, 1998, the
Portfolio provided a total return of 17.13%. This compares to a 9.13% return for
the Russell Midcap Index and a 4.93% return for the Russell 2000 Index.
The Portfolio was again the beneficiary of gains by some of its largest
holdings. Gemstar International Group Ltd., which creates navigational software
for consumer electronics and Ascend Communications Inc., a data networking
company, are approaching 80% -- 100% returns for the year to date.
Another top performer was a newly established position. Computer Learning Center
Inc., an educational services company, posted a return of over 100% in the
second quarter. Synopsis Inc., an electronic design company, posted a return of
40% in the second quarter. Together, these four holdings resulted in a 4% gain
to the portfolio during the second quarter.
The Portfolio also benefited from buyouts of several companies: Viking Office
Products was purchased by Office Depot, Inc., Mariner Health Group, Inc., was
purchased by Paragon Health Network, Inc., and Giant Food Inc. was purchased by
a French company during the period.
Smaller technology and healthcare holdings underperformed for the period. The
decline in energy prices also impacted holdings in the oil services area, but
this is viewed as an opportunistic time to add to this sector.
During the period a number of changes were made to the Portfolio. Weightings
were decreased in a number of the larger technology and leisure holdings, due
mostly to extremely strong performance. The Portfolio benefited from the above
mentioned buyouts and these positions were sold.
The net result of these changes has been a reduction in the technology and
retail weightings during the period. Weightings have been increased in the
energy sector with the belief that oil prices will rise and that the valuation
of the oil service stocks will significantly increase over the next six to
twelve months.
Our outlook for the rest of the year is mixed. The recent divergence in the
performance of large and mid-cap markets suggest tremendous opportunities in the
mid-cap arena. However, liquidity and capitalization are clearly important to
the investors of today, so the closure of the "gap" cannot be taken for granted.
MASSACHUSETTS FINANCIAL SERVICES COMPANY
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
1 YEAR 29.06%
SINCE INCEPTION* 24.50%
</TABLE>
* The Portfolio commenced operations on October 4, 1994.
DISTRIBUTION BY INDUSTRY
AS A PERCENTAGE OF INVESTMENTS
[PIE CHART]
<TABLE>
<S> <C>
Medical Supplies 5.6%
Short Term Investments 6.0%
Retail 6.5%
Media 8.1%
Technology 8.2%
Communication 11.6%
Computer Industry 22.6%
Other Equity Securities 31.4%
</TABLE>
5
<PAGE> 64
RESEARCH PORTFOLIO
JUNE 30, 1998
The Research Portfolio (the "Portfolio") seeks long-term growth of capital and
future income. For the six months ended June 30, 1998, the Portfolio provided a
total return of 17.50%. This compares to a return of 17.71% for the Standard &
Poors 500 Index (the "S&P 500") and 9.13% for the Russell Midcap Index.
The Portfolio's performance relative to the S&P 500 over the past six months can
be attributed to its relative overweighting in the technology, retailing and
business services sectors.
The Portfolio's weighting in the energy sector was increased over the past six
months. As Asian economies fell in the latter part of 1997, demand for oil
dropped, and oil prices plummeted. During 1998, oil-related stocks have
underperformed the market by a significant margin.
When oil prices recover, oil companies with internal catalysts should benefit
greatly. The Portfolio invested in blue chip oil companies such as Chevron
Corporation, Texaco Inc., and British Petroleum Corporation where the
risk/reward trade-off has become very attractive recently, and where all methods
of valuation appear favorable relative to the market.
Over the past six months the weighting in the healthcare sector was also
increased. Within this sector, the Portfolio is overweighted in medical
services, managed care and pharmaceutical companies. In the managed care
industry, the Portfolio Manager believes that the cycle has finally turned after
years of poor pricing. This should translate into substantial margin expansion
for these companies over the next two to three years.
The Portfolio remained significantly overweighted in the technology sector. The
concentration in this sector shifted toward those companies that participate in
the high-end product market, where demand has remained strong, and where strong
secular growth opportunities are evident.
Positions were trimmed in more commodity-type technology names that are more
likely to be impacted by the continuing turmoil in Southeast Asia. Microsoft
Corporation continued to be the top holding in the Portfolio and performed
exceptionally well over the first half of 1998 as the company introduced new
products and posted strong earnings.
The Portfolio continued to overweight retailing, where companies such as Rite
Aid Corporation, Home Depot Inc., and Safeway Inc. enhanced returns. The
financial services sector remained overweighted as well. Companies in this
industry continued to benefit from corporate cost cutting, consolidation, slow
growth and low inflation.
MASSACHUSETTS FINANCIAL SERVICES COMPANY
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
1 YEAR 25.16%
SINCE INCEPTION* 24.98%
</TABLE>
* The Portfolio commenced operations on October 4, 1994.
TOP TEN INDUSTRIES
AS A PERCENTAGE OF INVESTMENTS
[PIE CHART]
<TABLE>
<S> <C>
Electronics..................... 4.5%
Banking and Finance............. 4.3%
Health Care and Services........ 4.3%
Aerospace and Defense........... 3.9%
Computer Industry............... 10.5%
Retail.......................... 7.4%
Insurance....................... 6.8%
Oil and Gas..................... 6.7%
Chemicals and Allied Products... 6.0%
Financial Services.............. 5.7%
</TABLE>
6
<PAGE> 65
TOTAL RETURN PORTFOLIO
JUNE 30, 1998
The Total Return Portfolio (the "Portfolio") seeks above-average income
(compared to a portfolio entirely invested in equity securities) consistent with
the prudent employment of capital.
For the six months ended June 30, 1998 the Portfolio provided a total return of
8.01%. Over the same period, the Standard and Poor's 500 Index ("S&P 500") had a
total return of 17.71%, and the Lehman Brothers Government/Corporate Bond Index
("Lehman") had a total return of 4.17%. The benchmark for the Portfolio (60% S&P
500, 40% Lehman) had a six month return of 12.22%.
The Portfolio's allocation between stock, bonds and convertibles remained
conservative relative to the balanced fund peer group. For most of the period,
the Portfolio's equity weighting remained at about 54%.
In selecting stocks, the Portfolio Manager looks for large companies that he
believes are incorrectly priced by the market. Holdings are believed to have the
potential for double-digit returns over time with less downside risk than the
average stock in the S&P 500. The Portfolio seeks to provide above-average
income and to give investors a reasonable opportunity for capital appreciation
while maintaining a low level of volatility and consistency of returns.
Financial services companies possess many of these traits. Their valuations
relative to the S&P 500 are low, but their earnings are higher than that of the
average company. Earnings growth is in double digits, and their yields are good.
With the consolidation that is occurring in the industry, the Portfolio Manager
believes this is an attractive sector.
Attractive valuations have been identified in the utilities and
telecommunications sectors as well. In telecommunications, there is the added
benefit of consolidation and attractive long-term growth rates.
While many stock picks have helped performance in the aforementioned sectors,
energy stocks have not performed that well over the last six months as prices
have slipped. Due to fears of over-supply, utility stocks have also been out of
favor.
On the bond side, the Portfolio's allocation is overweighted in the corporate
sector. Going forward, the Portfolio Manager believes interest rates will remain
low. Therefore, the duration, or sensitivity to changes in interest rates, is
slightly longer than that of the benchmark.
Looking ahead, we think that long-term fundamentals look fine and that corporate
America is in good shape. However, there has been a deceleration in the growth
in the S&P 500 over the last several months. Still, stock prices continued to go
up. At these levels, stocks can not afford negative surprises.
MASSACHUSETTS FINANCIAL SERVICES COMPANY
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
1 YEAR 17.52%
SINCE INCEPTION* 17.40%
</TABLE>
* The Portfolio commenced operations on October 4, 1994.
DISTRIBUTION BY ASSET TYPE
AS A PERCENTAGE OF INVESTMENTS
[PIE CHART]
<TABLE>
<S> <C>
U.S. Treasury Securities 12.5%
Short Term Investments 10.7%
Mortgage-Backed Securities 3.3%
Other Investments 1.7%
Common Stock 52.3%
Corporate Bonds and Notes 19.5%
</TABLE>
7
<PAGE> 66
ADVANTAGE PORTFOLIO
JUNE 30, 1998
The Advantage Portfolio (the "Portfolio") seeks current income with a very low
degree of share-price fluctuation. For the six months ended June 30, 1998, the
Portfolio had a total return of 2.85%. The Salomon Brothers 1-Year Treasury
Index (the "benchmark") had a return of 2.84%.
The benchmark is comprised of U.S. Treasury Securities. In comparison, the
Portfolio is comprised of corporate and mortgage-backed holdings as well as
treasury securities. During the first six months of 1998, short-term and
intermediate treasury rates fell slightly. Corresponding interest rates on
corporate and mortgage-backed securities markets fell also, but not as much as
the treasuries. Thus, all sectors under performed relative to treasuries during
this time period.
The Portfolio reduced its exposure to the below-investment-grade sector during
the first six months of 1998. This was accomplished by selling one
below-investment-grade position. The Portfolio also reduced its effective
maturity to approximately 150 days on average during the first half of the year.
The average credit rating of the Portfolio was also increased by purchasing a
larger than normal percentage of first tier commercial paper. This allowed the
Portfolio to have upside potential for corporate securities in the event the
market had improved. In addition, the Portfolio was able to maintain a safety
net with the shorter maturity structure.
ING INVESTMENT MANAGEMENT LLC
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
1 YEAR 5.68%
SINCE INCEPTION* 6.64%
</TABLE>
* The Portfolio commenced operations on October 4, 1994.
DISTRIBUTION BY ASSET TYPE
AS A PERCENTAGE OF INVESTMENTS
[PIE CHART]
<TABLE>
<S> <C>
U.S. Treasury Securities 10.8%
Govt. Agency Securities 6.0%
Other Investments 4.3%
Commercial Paper 50.3%
Corporate Debt 28.6%
</TABLE>
8
<PAGE> 67
VALUE + GROWTH PORTFOLIO
JUNE 30, 1998
The objective of the Value + Growth Portfolio (the "Portfolio") is capital
appreciation. The Portfolio's strategy is to buy securities that exhibit
favorable relationships between growth rates and price to earnings ratios in
sectors offering above average growth potential.
For the six months ended June 30, 1998, the Portfolio produced a return of
17.47%. Over the same period, the Standard & Poors 500 Index and Russell Midcap
Index had returns of 17.71% and 9.13%, respectively.
The first half of 1998 was very positive for the Portfolio. Many of the same
market trends apparent in late 1997 carried over into the first half of 1998.
After a brief respite, Asia's economic woes became front-page news again,
driving investors toward the perceived stability of blue-chip companies. As a
result, large-cap stocks generally outperformed small-cap shares.
The Portfolio Manager believes that the aging of the baby boomers will increase
demand for several goods and services well into the next decade. Americans in
the 45 to 54 age range, now the fastest-growing segment of the U.S. population,
are in their peak income and discretionary spending period. This should bode
well for the retail sector over the next several years.
Aging boomers will place increasing emphasis on quality entertainment,
positioning companies such as Time Warner Inc. and Comcast Corporation for
continuing profit improvements well into the next decade. Financial services
companies such as Merrill Lynch and Company Inc. should also benefit as baby
boomers save for retirement and college educations for their children.
Finally, the healthcare industry stands to be the most direct beneficiary of an
aging U.S. population. Stocks in these areas -- healthcare, retailing,
entertainment and financial services -- collectively make up the bulk of the
Portfolio's assets.
After a strong first quarter, many of the Portfolio's technology companies
weakened in May and early June. Investors have been concerned about the slowing
demand for personal computers and semiconductors in Asia.
Several technology companies were challenged by inventory reductions at many of
their customers over the first six months of 1998. However, the Portfolio
Manager believes most of this burdensome inventory has been depleted with the
end of the June quarter.
Inventory cycles are typical of the technology industry. The Portfolio Manager
believes that the technology sector is ready to surge with several new products
coming to market in the last half of 1998 -- just as it did in the last half of
1996.
We have a very positive outlook for the stock market in the months ahead.
Assuming the current trends of low inflation and interest rates remain in place,
the macroeconomic environment should remain favorable for equities. We will
continue to seek reasonably valued growth companies that are in the best
position to profit from current and expected investment trends.
ROBERTSON, STEPHENS & COMPANY
INVESTMENT MANAGEMENT, L.P.
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
1 YEAR 17.87%
SINCE INCEPTION* 22.21%
</TABLE>
* The Portfolio commenced operations on April 1, 1996.
DISTRIBUTION BY INDUSTRY
AS A PERCENTAGE OF INVESTMENTS
[PIE CHART]
<TABLE>
<S> <C>
Drugs and Health Care Services........ 18.8%
Financial Services..................... 16.9%
Computer Components, Software
and Services......................... 16.1%
Consumer Specialty Retail.............. 15.1%
Electronics............................ 6.4%
Other Equity Securities................ 26.7%
</TABLE>
9
<PAGE> 68
GROWTH & INCOME PORTFOLIO
JUNE 30, 1998
The Growth & Income Portfolio (the "Portfolio") seeks high long-term total
returns. The Portfolio invests primarily in small and mid-cap companies.
However, the Portfolio Manager tries to reduce risk by investing in convertible
bonds and other income-producing securities.
For the six months ended June 30, 1998, the Portfolio provided a total return of
9.88%. The Russell Midcap Index and Russell 2000 Index had total returns of
9.13% and 4.93%, respectively.
The flexible, bottom-up approach is based on value recognition and trend
analysis. The Portfolio Manager looks for well-managed companies with improving
fundamentals that are positioned for growth. The formula for long-term success
also includes a disciplined approach to risk.
Holdings will be broadly diversified among many sectors and stocks. The
Portfolio will typically maintain a 10-25 percent income producing component to
moderate volatility and provide income.
Although cash flows into the U.S. stock market remained heavy, small-cap money
managers were penalized as investors rushed from small-cap to large-cap stocks
and liquidity poured into the market. However, the Portfolio Manager still
believes that the environment for small to mid-cap stocks remains attractive.
The Portfolio remains overweighted in the cable, communication and technology
industries. Among the strongest performers during the first half were the
cable-television stocks, which benefited from increased merger-and-acquisition
activity and other trends.
Tele-Communication International, Inc., (a majority-owned subsidiary of TCI
Group) performed well as AT&T Corporation announced plans to acquire TCI. The
proposed deal has fueled TCI's shares and propelled many other cable stocks.
The Portfolio Manager also believes that selective internet stocks are
attractive. Such is the case with Egghead.com (formerly Egghead, Inc.).
Egghead.com, previously a retailer of PC hardware, software, peripherals and
accessories, recently announced plans to close all 80 retail stores to become an
Internet-only commerce company. This should help the company meet its objective
of reducing headquarter personnel and distribution costs.
Healthcare also comprises a substantial portion of the Portfolio. Although
healthcare and biotech stocks did not perform as well as expected during the
second quarter, the Portfolio Manager believes that these holdings, including
Sunrise Assisted Living Inc. and United Healthcare Corporation, look promising.
We remain optimistic about the growth and valuation prospects of many smaller
and mid-size companies. However, we watch the market's attraction with large-cap
stocks and look for opportunities to add some of these larger, more liquid names
to the portfolio. Recent additions include: Monsanto Company, GTE Corporation,
and Merrill Lynch and Company Inc.
ROBERTSON, STEPHENS & COMPANY
INVESTMENT MANAGEMENT, L.P.
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<S> <C>
1 YEAR 25.92%
SINCE INCEPTION* 27.82%
</TABLE>
* The Portfolio commenced operations on April 1, 1996.
DISTRIBUTION BY INDUSTRY
AS A PERCENTAGE OF INVESTMENTS
[PIE CHART]
<TABLE>
<S> <C>
Banking and Finance.................... 10.2%
Retail................................. 9.2%
Telecommunications..................... 9.1%
Communications......................... 7.5%
Other Investments...................... 7.1%
Health Care Services................... 5.7%
Computer Industry...................... 5.3%
Other Securities....................... 45.9%
</TABLE>
10
<PAGE> 69
EQUI-SELECT SERIES TRUST
MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
---------- -----------
<S> <C> <C>
COMMERCIAL PAPER - 97.3%
AUTOMOTIVE - 6.2%
Daimler-Benz Aktieng,
5.638%+ due 09/10/1998............. $2,000,000 $ 1,978,306
Toyota Motor Corporation,
5.605%+ due 07/23/1998............. 481,000 479,380
-----------
2,457,686
BANKING & FINANCE - 6.1%
Eksportsfinans A/S,
5.631%+ due 08/10/1998............. 1,606,000 1,596,150
Toyota Motor Credit Corporation,
5.576%+ due 07/24/1998............. 830,000 827,094
-----------
2,423,244
BEVERAGES - 4.3%
Coca-Cola Company:
5.558%+ due 07/16/1998............. 1,000,000 997,118
5.552%+ due 07/20/1998............. 734,000 732,327
-----------
1,729,445
CHEMICALS - 11.7%
Cargill Inc.,
5.620%+ due 07/28/1998............. 1,500,000 1,493,790
Du Pont (E.I.) de Nemours & Company,
4.633%+ due 08/15/1998............. 1,864,000 1,853,414
Monsanto Corporation,
5.594%+ due 08/14/1998............. 1,330,000 1,321,092
-----------
4,668,296
COMMERCIAL IMAGING & PROCESSING - 6.5%
Eastman Kodak Inc.,
5.630%+ due 08/20/1998............. 1,900,000 1,885,460
Xerox Corporation,
5.614%+ due 08/14/1998............. 726,000 721,120
-----------
2,606,580
COMPUTERS & COMPUTER PRODUCTS - 4.5%
International Business Machines
Credit Corporation,
5.556%+ due 07/01/1998............. 1,800,000 1,800,000
-----------
FINANCIAL SERVICES - 20.4%
Caterpillar Financial Services
Corporation,
5.587%+ due 08/06/1998............. 1,800,000 1,790,136
General Electric Capital Corporation:
5.567%+ due 07/14/1998............. 589,000 587,834
5.602%+ due 07/31/1998............. 1,200,000 1,194,500
Household Finance Corporation,
5.574%+ due 07/10/1998............. 1,800,000 1,797,529
Nestle Capital Corporation,
5.553%+ due 07/09/1998............. 1,291,000 1,289,431
PHH Corporation,
5.709%+ due 07/02/1998............. 702,000 701,890
Trans America Finance Corporation,
5.633%+ due 08/24/1998............. 790,000 783,471
-----------
8,144,791
FOODS - 6.6%
General Mills Inc.,
5.562%+ due 07/08/1998............. 1,350,000 1,348,562
Hershey Foods Corporation,
5.566%+ due 07/13/1998............. 1,295,000 1,292,634
-----------
2,641,196
FOREIGN BANKS - 2.5%
Societe Generale de Paris,
5.833%+ due 08/04/1998............. $1,000,000 $ 999,426
-----------
FOREIGN GOVERNMENT - 4.0%
Sweden (Kingdom of),
5.509%+ due 07/06/1998............. 1,616,000 1,614,781
-----------
METALS - 3.0%
Alcoa Corporation,
5.615%+ due 08/03/1998............. 1,195,000 1,188,964
-----------
MULTIMEDIA - 3.8%
Disney (Walt) Company:
5.540%+ due 07/06/1998............. 203,000 202,846
5.556%+ due 08/18/1998............. 558,000 553,953
5.557%+ due 08/19/1998............. 780,000 774,224
-----------
1,531,023
OIL & GAS - 0.4%
Consolidated Gas Inc.,
5.637%+ due 07/24/1998............. 162,000 161,424
-----------
RETAIL - 3.8%
Toys-R-Us Inc.,
5.567%+ due 07/02/1998............. 1,500,000 1,499,771
-----------
SECURITIES BROKERAGE - 4.1%
Merrill Lynch, Pierce,
Fenner & Smith Inc.:
5.781%+ due 07/02/1998............. 556,000 555,912
5.613%+ due 07/09/1998............. 175,000 174,785
5.620%+ due 07/17/1998............. 929,000 926,717
-----------
1,657,414
TELECOMMUNICATIONS - 9.4%
AT&T Corporation,
5.451%+ due 07/21/1998............. 1,287,000 1,283,168
Bell South Telephone Company,
5.586%+ due 08/17/1998............. 1,875,000 1,861,610
Motorola Inc.,
5.643%+ due 08/11/1998............. 600,000 596,221
-----------
3,740,999
TOTAL COMMERCIAL PAPER (Cost $38,865,040) 38,865,040
-----------
U.S. GOVERNMENT AGENCY DISCOUNT NOTES - 0.2%
(COST $79,858)
FEDERAL HOME LOAN MORTGAGE CORPORATION
FHLMC,
5.402%+ due 07/13/1998............. 80,000 79,858
-----------
TOTAL INVESTMENTS
(COST $38,944,898*) - 97.5% $38,944,898
OTHER ASSETS AND LIABILITIES - 2.5% 995,480
-----------
NET ASSETS - 100.0% $39,940,378
===========
</TABLE>
*Aggregate cost for Federal tax purposes.
+Annualized yield at date of purchase.
See accompanying notes.
11
<PAGE> 70
EQUI-SELECT SERIES TRUST
MORTGAGE-BACKED SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
---------- -----------
<S> <C> <C>
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 72.8%
FEDERAL HOME LOAN MORTGAGE
CORPORATION (FHLMC) - 28.3%
FHLMC:
Pool #E20197, 7.000% due
10/01/2010...................... $ 678,744 $ 691,891
Pool #E61721, 6.500% due
11/01/2010...................... 718,899 724,290
Pool #E65976, 6.500% due
04/01/2011...................... 366,172 368,918
Pool #E65441, 7.500% due
04/01/2011...................... 378,157 389,146
Gold, Pool #G10555, 6.000% due
06/01/2011...................... 701,535 695,397
Pool #E70543, 6.000% due
03/01/2013...................... 501,313 496,927
Pool #E00538, 6.500% due
03/01/2013...................... 487,527 491,184
Pool #E70003, 6.000% due
04/01/2013...................... 993,378 984,686
Pool #C00374, 9.000% due
09/01/2024...................... 361,146 382,363
Pool #D58465, 9.000% due
01/01/2025...................... 379,704 402,011
Pool #C80428, 8.000% due
09/01/2026...................... 343,826 355,750
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (FNMA) - 24.8%
FNMA:
Pool #341094, 6.500% due
04/01/2011...................... 307,190 309,300
Pool #344243, 6.500% due
04/01/2011...................... 381,997 384,622
Pool #414154, 6.000% due
02/01/2013...................... 727,700 719,739
Pool #425895, 6.000% due
04/01/2013...................... 983,035 973,205
Pool #379881, 6.500% due
04/01/2013...................... 740,910 745,770
Pool #419878, 6.500% due
04/01/2013...................... 744,101 748,982
Pool #299481, 8.000% due
04/01/2025...................... 351,628 364,484
Pool #332150, 8.500% due
12/01/2025...................... 379,818 396,670
Pool #397498, 7.500% due
08/01/2027...................... 585,847 601,588
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (GNMA) - 19.7%
GNMA:
Pool #351992, 6.000% due
12/15/2008...................... 194,974 193,877
Pool #368358, 6.000% due
01/15/2009...................... 197,847 196,733
Pool #430587, 6.000% due
02/15/2013...................... 489,739 494,940
Pool #456797, 6.000% due
04/15/2013...................... 992,970 987,380
Pool #192568, 8.000% due
05/15/2017...................... 474,744 492,248
Pool #223830, 8.000% due
06/15/2017...................... 162,715 168,715
Pool #229269, 8.000% due
07/15/2017...................... 84,822 87,949
Pool #388581, 7.500% due
01/15/2024...................... 327,587 336,799
Pool #398795, 8.500% due
07/15/2026...................... 225,890 238,384
Pool #399003, 9.000% due
12/15/2026...................... 242,240 259,422
Pool #452930, 7.500% due
07/15/2027...................... 673,795 692,742
-----------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS
(Cost $15,199,438) 15,376,112
-----------
U.S. GOVERNMENT TREASURY
OBLIGATIONS - 10.1%
U.S. TREASURY NOTES:
5.625%+ due 05/15/2001............ 1,000,000 1,003,720
6.500%+ due 08/15/2005............ 600,000 633,102
5.625%+ due 02/15/2006............ 500,000 501,960
-----------
TOTAL U.S. TREASURY
OBLIGATIONS - (Cost $2,090,665) 2,138,782
-----------
COLLATERALIZED MORTGAGE OBLIGATION - 3.4%
(COST $702,297)
ASSET-BACKED SECURITY
Countrywide Funding Corporation,
#1995-4, 7.500% due
09/25/2025...................... 700,000 705,390
-----------
CORPORATE BONDS AND NOTES - 2.4%
(COST $499,844)
SECURITIES BROKERAGE
Lehman Brothers Holdings, 6.625%
due 12/27/2002.................. 500,000 508,125
-----------
SHORT TERM INVESTMENTS - 10.7%
FINANCIAL SERVICES - 4.7%
Chrysler Financial Corporation,
5.931%+ due 01/26/2001.......... 500,000 498,750
Union Planters National Bank,
6.145%+ due 08/20/1998.......... 500,000 500,158
-----------
998,908
FEDERAL AGENCY OBLIGATIONS - 6.0%
Federal Farm Credit Bank, 5.457%+
due 09/30/1998.................. 500,000 493,170
Federal Home Loan Bank, 5.475%+
due 07/01/1998.................. 777,000 777,000
-----------
1,270,170
TOTAL SHORT TERM INVESTMENTS
(Cost $2,270,447) 2,269,078
-----------
TOTAL INVESTMENTS
(COST $20,762,691*) - 99.4%
$20,997,487
OTHER ASSETS AND LIABILITIES - 0.6% 132,560
----------
NET ASSETS - 100.0% $21,130,047
===========
</TABLE>
*Aggregate cost for Federal tax purposes.
+Annualized yield at date of purchase.
See accompanying notes.
12
<PAGE> 71
EQUI-SELECT SERIES TRUST
INTERNATIONAL FIXED INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------------ -----------
<S> <C> <C>
GOVERNMENT BONDS - 92.8%
AUSTRALIA - 5.0% (AUD)
Federal National Mortgage
Association, 6.375% due
08/15/2007...................... $ 410,000 $ 262,779
New South Wales Treasury
Corporation, 6.500% due
05/01/2006...................... 750,000 485,755
-----------
748,534
CANADA - 1.8% (CAD)
Government of Canada, 7.000% due
12/01/2006...................... 350,000 264,055
-----------
DENMARK - 3.7% (DKK)
Kingdom of Denmark, 7.000% due
12/15/2004...................... 3,400,000 554,334
-----------
FRANCE - 3.4% (FRF)
Government of France, 7.000% due
10/12/2000...................... 2,000,000 351,241
Obligation Assimilable du Tresor,
5.500% due 04/25/2004........... 900,000 156,414
-----------
507,655
GERMANY - 15.8% (DEM)
Bundesobligation, 4.500% due
05/17/2002...................... 1,030,000 575,466
Bundesrepublik, 6.000% due
01/04/2007...................... 1,250,000 751,900
German Federal Republic:
5.125% due 11/21/2000........... 875,000 496,534
5.250% due 02/21/2001........... 150,000 85,469
6.750% due 07/15/2004........... 500,000 309,245
6.000% due 01/05/2006........... 300,000 179,807
-----------
2,398,421
ITALY - 3.3% (ITL)
Republic of Italy:
10.500% due 04/01/2000.......... 300,000,000 185,293
6.250% due 03/01/2002........... 250,000,000 148,473
10.000% due 08/01/2003.......... 250,000,000 173,674
-----------
507,440
NETHERLANDS - 11.6% (NLG)
Dutch Government, 6.000% due
01/15/2006...................... 1,000,000 531,917
Netherlands Government, 5.500% due
01/15/2028...................... 2,460,000 1,231,664
-----------
1,763,581
SPAIN - 1.7% (ESP)
Government of Spain,
7.900% due 02/28/2002........... 37,000,000 259,012
-----------
SWEDEN - 5.1% (SEK)
Kingdom of Sweden:
6.000% due 02/09/2005........... 2,700,000 361,362
6.500% due 10/25/2006........... 3,000,000 416,210
-----------
777,572
UNITED KINGDOM - 13.9% (GBP)
U.K. Treasury:
7.000% due 06/07/2002........... 440,000 746,951
7.500% due 12/07/2006........... 300,000 550,844
8.000% due 09/27/2013........... 400,000 816,692
-----------
2,114,487
UNITED STATES - 27.5% (USD)
U.S. Treasury Bill,
5.480%+ due 09/03/1998.......... 1,440,000 1,427,501
U.S. Treasury Notes:
5.500% due 12/31/2000........... 350,000 349,916
7.250% due 08/15/2004........... 1,000,000 1,087,670
7.000% due 07/15/2006........... 1,200,000 1,310,760
-----------
4,175,847
TOTAL GOVERNMENT BONDS 14,070,938
(Cost $14,044,301) -----------
TOTAL INVESTMENTS
(COST $14,044,301*) - 92.8% $14,070,938
OTHER ASSETS AND LIABILITIES - 7.2% 1,089,911
----------
NET ASSETS - 100.0% $15,160,849
===========
</TABLE>
*Aggregate cost for Federal tax purposes.
+Annualized yield at date of purchase.
GLOSSARY OF TERMS
<TABLE>
<S> <C>
AUD - Australian Dollar
CAD - Canadian Dollar
DEM - German Deutche Mark
DKK - Danish Krona
ESP - Spanish Peseta
FRF - French Franc
GBP - Great British Pound Sterling
ITL - Italian Lira
NLG - Netherland Guilder
SEK - Swedish Krona
USD - United States Dollar
</TABLE>
See accompanying notes.
13
<PAGE> 72
EQUI-SELECT SERIES TRUST
OTC PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- ------------
<S> <C> <C>
COMMON STOCKS - 96.8%
BANKING AND FINANCE - 2.4%
Compass Bancshares Inc. ........... 27,100 $ 1,222,888
Finova Group Inc. ................. 10,000 566,250
First Securities Corporation....... 95,100 2,035,734
Regions Financial Corporation...... 10,200 418,837
Union Planters Corporation......... 4,500 264,656
------------
4,508,365
BROADCASTING - 2.0%
Cox Radio Inc., Class A............ 2,500 108,125
Heftel Broadcasting Corporation.... 63,350 2,834,913
Jacor Communications Inc.+......... 15,800 932,200
------------
3,875,238
CHEMICALS AND ALLIED PRODUCTS - 2.8%
Cambrex Corporation................ 19,000 498,750
Sigma Aldrich Corporation.......... 137,100 4,815,638
------------
5,314,388
COMMERCIAL SERVICES - 0.7%
Paymentech Inc.+................... 62,000 1,274,875
------------
COMMUNICATION - 11.9%
Aerial Communications+............. 161,800 1,011,250
Ascend Communications Inc.+........ 227,410 11,271,008
Aspect Telecommunications+......... 105,900 2,899,012
Cisco Systems+..................... 12,700 1,169,194
COM21 Inc. ........................ 100 2,125
Cox Communication, New Class+...... 15,200 736,250
DST System+........................ 16,400 918,400
MediaOne Group Inc. ............... 50,700 2,227,631
Qwest Communications............... 71,592 2,496,754
------------
22,731,624
COMPUTER INDUSTRY - 23.3%
Affiliated Computer Services,
Class A.......................... 44,600 1,717,100
Answerthink Consulting Group
Inc. ............................ 500 10,750
Autodesk Inc. ..................... 30,900 1,193,512
BMC Software Inc.+................. 34,600 1,797,038
Computer Learning Center Inc. ..... 187,000 4,651,625
Computer Sciences Corporation...... 36,200 2,316,800
Corsair Communication Inc. ........ 31,900 297,069
Edify Corporation+................. 397,700 4,026,712
Fiserv Inc.+....................... 54,000 2,293,313
HCIA Inc.+......................... 42,000 540,750
International Integration Inc. .... 400 6,900
Intuit Inc. ....................... 17,300 1,059,625
Microsoft Corporation+............. 88,600 9,602,025
Oracle Systems+.................... 230,000 5,649,375
Rational Software+................. 22,500 343,125
Security Dynamics Technology
Inc.+............................ 81,600 1,509,600
Siebel Systems Inc.+............... 1 43
Sun Microsystems Inc. ............. 12,600 547,312
Synopsys Inc.+..................... 100,792 4,611,234
Technology Solutions............... 60,500 1,917,094
Transition Systems+................ 24,697 262,406
------------
44,353,408
CONSUMER DURABLES - 0.4%
Compuware Corporation+............. 13,500 690,188
------------
ELECTRONICS - 5.6%
Analog Devices Inc.+............... 26,000 638,625
Cable Design Technologies+......... 298,490 6,156,356
Teradyne Inc.+..................... 106,600 2,851,550
Tyco International Ltd. ........... 16,068 1,012,284
------------
10,658,815
FINANCIAL SERVICES - 1.1%
Enhance Financial Services Group
Inc.............................. 22,000 742,500
Washington Mutual Inc. ............ 28,800 1,251,000
------------
1,993,500
FOOD AND BEVERAGES - 1.0%
McCormick & Company Inc. .......... 40,200 1,435,894
Tootsie Roll Industries............ 6,767 519,367
------------
1,955,261
HEALTH CARE AND SERVICES - 2.4%
Advanced Health Corporation........ 1,800 9,900
Beverly Enterprises Inc. .......... 38,200 527,637
Healthsouth Corporation+........... 42,300 1,128,881
MedPartners Inc. .................. 66,100 528,800
Mid Atlantic Medical Services
Inc. ............................ 67,300 773,950
Total Renal Care Holdings Inc. .... 43,405 1,497,472
------------
4,466,640
HOTELS AND RESTAURANTS - 0.6%
Promus Hotel Corporation........... 31,000 1,193,500
------------
INFORMATION PROCESSING - 0.6%
Bisys Group Inc. .................. 16,200 664,200
HBO & Company...................... 14,120 497,730
------------
1,161,930
INSURANCE - 2.7%
Ace Ltd. .......................... 44,800 1,747,200
Esg Re Ltd.+....................... 41,900 906,088
Healthcare Recoveries Inc. ........ 38,300 756,425
Life Re Corporation................ 4,400 364,650
Mid Ocean Ltd. .................... 7,900 620,150
Mutual Risk Management Ltd. ....... 18,200 663,163
------------
5,057,676
MEDIA - 8.3%
Discreet Logic Inc. ............... 152,000 1,767,000
E.W. Scripps Company............... 17,600 964,700
Gemstar International Group
Ltd.+............................ 350,000 13,103,125
------------
15,834,825
MEDICAL SUPPLIES - 5.8%
Biomet Inc. ....................... 15,300 505,856
Cytoclonal Pharmaceutical Inc. .... 14,200 99,400
Cytyc Corporation.................. 373,600 6,094,350
Datascope Corporation.............. 6,700 177,969
Idexx Laboratories Inc.+........... 42,500 1,057,187
Mentor Corporation................. 18,300 443,775
Microprose Inc.+................... 54,620 242,376
PSS World Medical Inc. ............ 117,800 1,722,825
Uromed Corporation+................ 108,300 602,419
------------
10,946,157
OFFICE SUPPLIES - 0.3%
Viking Office Products+............ 20,500 643,188
------------
OIL AND GAS - EQUIPMENT & SERVICES - 5.4%
Apache Corporation................. 19,800 623,700
B.J. Services Company.............. 17,000 494,063
Cooper Cameron Corporation+........ 32,900 1,677,900
Diamond Offshore Drilling.......... 16,300 652,000
Global Industries Ltd.+............ 74,700 1,260,562
Houston Exploration Corporation.... 26,200 600,962
New Field Exploration Company...... 117,900 2,932,762
National-Oilwell Inc. ............. 10,000 268,125
Noble Drilling Corporation+........ 35,100 844,594
Southern Africa Minerals
Corporation+..................... 366,400 255,214
Transocean Offshore Inc. .......... 14,300 636,350
------------
10,246,232
OTHER - 2.3%
Learning Tree International Inc.... 110,300 2,219,788
Scholastic Corporation............. 54,800 2,185,150
------------
4,404,938
PHARMACEUTICAL - 0.0%#
Professional Detailing Inc......... 300 7,463
------------
</TABLE>
See accompanying notes.
14
<PAGE> 73
EQUI-SELECT SERIES TRUST
OTC PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
RETAIL - 6.7%
ARM Financial Group Inc............ 5,400 $ 119,475
BJ'S Wholesale Club Inc............ 109,400 4,444,375
Fred Meyer Inc.+................... 50,400 2,142,000
Lo-Jack Corporation................ 111,600 1,388,025
Rite Aid Corporation............... 99,900 3,752,494
SportsLine USA Inc................. 27,300 998,156
------------
12,844,525
TECHNOLOGY - 8.4%
Cadence Design Systems Inc.+....... 48,940 1,529,375
Comverse Technology Inc.+.......... 31,600 1,639,250
Concentra Managed Care+............ 237,765 6,181,890
Elsag Bailey Process Automation
NV............................... 78,000 1,876,875
K.L.A. Tencor Corporation.......... 16,700 462,381
Linear Technology Corporation...... 4,800 289,500
Sipex Corporation.................. 191,000 4,106,500
------------
16,085,771
TELECOMMUNICATIONS - 2.1%
Cellular Communications
International Inc. .............. 7,350 366,581
Intermedia Communications Inc. .... 34,800 1,459,425
Lightbridge Inc. .................. 110,600 940,100
Natural Microsystems Corporation... 79,700 1,275,200
U. S. West Inc. ................... 598 28,106
------------
4,069,412
TOTAL COMMON STOCKS
(Cost $173,862,824) 184,317,919
------------
</TABLE>
EQUI-SELECT SERIES TRUST
OTC PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
---------- ------------
<S> <C> <C>
SHORT TERM INVESTMENTS - 6.2%
FEDERAL HOME LOAN BANK (FHLB) - 2.6%
FHLB,
5.532%++ due 07/08/1998.......... $5,000,000 $ 4,994,701
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(FHLMC) - 1.8%
FHLMC, 5.683%++ due 07/08/1998..... 3,400,000 3,396,827
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) - 1.8%
FNMA, 5.642%++ due 07/07/1998...... 3,400,000 3,397,374
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $11,788,902) 11,788,902
------------
TOTAL INVESTMENTS
(COST $185,651,726*) - 103.0% $196,106,821
OTHER ASSETS AND LIABILITIES - 3.0% (5,626,082)
------------
NET ASSETS - 100.0% $190,480,739
============
</TABLE>
*Aggregate cost for Federal tax purposes.
+Non-income producing security.
++Annualized yield at date of purchase.
#Amount represents less than 0.1%.
See accompanying notes.
15
<PAGE> 74
EQUI-SELECT SERIES TRUST
RESEARCH PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
----------- ------------
<S> <C> <C>
COMMON STOCKS - 92.9%
AEROSPACE AND DEFENSE - 3.9%
AMR Corporation................... 16,700 $ 1,390,275
Lockheed Martin Corporation....... 32,000 3,388,000
Newport News Shipbuilding......... 75,300 2,014,275
US Airways Group, Inc. ........... 16,300 1,291,775
United Technologies Corporation... 92,100 8,519,250
------------
16,603,575
APPLICATIONS SOFTWARE - 0.5%
Siebel Systems Inc.+.............. 1 22
Synopsys Inc. .................... 42,300 1,935,225
------------
1,935,247
AUTOMOBILES - 0.1%
Ford Motor Company................ 5,200 306,800
------------
AUTO REPAIR AND AUTO PARTS - 0.3%
Lear Corporation.................. 27,100 1,390,569
------------
BANKING AND FINANCE - 4.3%
BankBoston Corporation............ 47,480 2,641,075
C.I.T. Group Inc., Class A........ 12,300 461,250
Chase Manhattan Corporation....... 70,352 5,311,576
First Union Corporation........... 68,998 4,019,134
National City Corporation......... 47,700 3,386,700
PNC Bank Corporation.............. 43,400 2,335,463
------------
18,155,198
BROADCASTING - 2.7%
CBS Corporation................... 76,500 2,428,875
HBO & Company..................... 188,600 6,648,150
Jacor Communications Inc.+........ 40,800 2,407,200
------------
11,484,225
BROKERAGE - 2.0%
Chubb Corporation................. 35,100 2,812,388
Merrill Lynch & Company Inc. ..... 16,400 1,512,900
Morgan Stanley, Dean Witter
Discover........................ 44,600 4,075,325
------------
8,400,613
BUSINESS SERVICES - 0.7%
Cendant Corporation............... 147,200 3,072,800
------------
CHEMICALS & ALLIED PRODUCTS - 6.0%
Air Products & Chemicals Inc. .... 72,800 2,912,000
Akzo Nobel N.V.................... 6,100 1,357,056
Bristol Myers Squibb Company...... 107,700 12,378,768
Cambrex Corporation............... 32,400 850,500
Cytec Industries Inc.+............ 47,600 2,106,300
Du Pont (E. I.) De Nemours &
Company......................... 13,700 1,022,363
Henkel KGaA-Vorzug................ 9,900 980,062
Minerals Technologies............. 29,700 1,510,988
Sigma-Aldrich Corporation......... 63,000 2,212,875
------------
25,330,912
COMMERCIAL SERVICES - 0.5%
Accustaff Inc.+................... 66,600 2,081,250
------------
COMPUTER INDUSTRY - 10.4%
Adobe Systems Inc................. 32,300 1,370,731
BMC Software, Inc.+............... 109,400 5,681,962
Cisco Systems+.................... 67,400 6,205,013
EMC Corporation................... 48,100 2,155,481
Electronic Arts Inc.+............. 57,500 3,105,000
Microsoft Corporation+............ 151,100 16,375,462
Oracle Systems+................... 200,300 4,919,869
Sun Microsystems Inc.+............ 98,800 4,291,625
------------
44,105,143
CONSUMER SERVICES - 3.9%
Compuware Corporation+............ 87,600 4,478,550
Gillette Company.................. 123,200 6,983,900
Proctor & Gamble Company.......... 55,000 5,008,438
------------
16,470,888
COSMETICS AND TOILETRIES - 0.5%
Revlon Companies Inc.+............ 43,700 2,245,088
------------
ELECTRONICS - 4.5%
Analog Devices Inc. .............. 44,300 1,088,118
Cooper Industries Inc. ........... 10,200 560,363
Sony Corporation.................. 39,300 3,396,506
Teradyne Inc.+.................... 83,800 2,241,650
Tyco International Ltd. .......... 186,734 11,764,242
------------
19,050,879
ENVIRONMENTAL CONTROL - 0.5%
Browning Ferris Industries Inc.... 54,300 1,886,925
------------
FINANCIAL SERVICES - 5.6%
Allstate Corporation.............. 33,400 3,058,187
Associates First Capital
Corporation..................... 26,657 2,049,256
Comerica Inc...................... 63,750 4,223,438
Federal National Mortgage
Association..................... 60,100 3,651,075
Fleet Financial Group Inc. ....... 48,800 4,074,800
Green Tree Financial
Corporation..................... 7,100 303,969
Hutchinson Whampoa Ltd............ 287,000 1,515,010
ReliaStar Financial Corporation... 65,254 3,132,192
Union Planters Corporation........ 30,962 1,820,953
------------
23,828,880
FOOD AND BEVERAGES - 1.5%
Archer-Daniels-Midland Company.... 102,200 1,980,125
Corn Products International
Inc. ........................... 54,900 1,873,463
McCormick & Company Inc........... 62,300 2,225,278
Nabisco Holdings Corporation,
Class A......................... 5,000 180,313
------------
6,259,179
HEALTH CARE AND SERVICES - 4.3%
Cardinal Health Corporation....... 24,500 2,296,875
Columbia/HCA Healthcare
Corporation+.................... 121,100 3,527,037
HEALTHSOUTH Corporation+.......... 149,534 3,990,688
United Healthcare Corporation..... 130,400 8,280,400
------------
18,095,000
HOTELS AND RESTAURANTS - 0.8%
Jarvis Hotels Plc**............... 315,400 897,892
McDonald's Corporation............ 33,600 2,318,400
Promus Hotel Corporation+......... 6,116 235,466
------------
3,451,758
HOUSEHOLD PRODUCTS - 3.5%
Black & Decker Corporation........ 52,600 3,208,600
Clorox Company.................... 32,600 3,109,225
Colgate Palmolive Company......... 75,700 6,661,600
Dial Corporation.................. 69,500 1,802,656
------------
14,782,081
INSURANCE - 6.8%
Ace Ltd. ......................... 50,400 1,965,600
Cigna Corporation................. 58,200 4,015,800
Conseco Inc. ..................... 140,500 6,568,375
Excel Ltd. ....................... 12,300 957,094
FPIC Insurance Group Inc.+........ 10,300 346,338
Hartford Financial Services
Group........................... 37,000 4,231,875
Life Re Corporation............... 10,500 870,187
Lincoln National Corporation
Ltd. ........................... 56,500 5,162,687
Mid Ocean Ltd. ................... 800 62,800
Nationwide Financial Services
Inc. ........................... 26,200 1,336,200
</TABLE>
See accompanying notes.
16
<PAGE> 75
EQUI-SELECT SERIES TRUST
RESEARCH PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
----------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
INSURANCE - (CONTINUED)
Travelers Group Inc. ............. 35,100 $ 2,127,937
Skandia Forsakrings AB............ 81,700 1,167,875
------------
28,812,768
MACHINERY - 1.5%
American Standard Company+........ 49,000 2,189,688
Cooper Cameron Corporation........ 30,600 1,560,600
Eaton Corporation................. 9,400 730,850
EVI Weatherford Inc. ............. 55,680 2,067,120
------------
6,548,258
MEDICAL PRODUCTS AND SUPPLIES - 2.2%
American Home Products
Corporation..................... 126,000 6,520,500
Boston Scientific Corporation+.... 41,400 2,965,275
------------
9,485,775
OFFICE EQUIPMENT - 0.4%
Xerox Corporation................. 16,400 1,666,650
------------
OIL AND GAS - 6.7%
British Petroleum Corporation,
ADR............................. 75,193 6,635,782
Chevron Corporation............... 32,900 2,732,756
Columbia Energy Group............. 17,700 984,562
Diamond Offshore Drilling......... 42,600 1,704,000
KN Energy Inc. ................... 53,600 2,904,450
Mobil Corporation................. 26,400 2,022,900
Texaco Inc. ...................... 105,300 6,285,093
USX Marathon Group Inc., New...... 143,000 4,906,688
------------
28,176,231
OTHER - 1.5%
Alcatel Alsthom CGE, Sponsored
ADR............................. 138,400 5,631,150
Cia Cervejaria Brahma, ADR........ 62,400 780,000
------------
6,411,150
PAPER AND PAPER PRODUCTS - 1.9%
Kimberly Clark Corporation........ 110,700 5,078,363
Stone Container Corporation....... 197,200 3,081,250
------------
8,159,613
RAILROADS - 0.5%
Wisconsin Central Transportation
Corporation+.................... 93,500 2,045,312
------------
RETAIL - 7.3%
CVS Corporation................... 101,800 3,963,838
CKE Restaurants Inc. ............. 41,600 1,716,000
Fred Meyer Inc.+.................. 72,000 3,060,000
Home Depot Inc. .................. 54,800 4,551,825
Nordstrom Inc. ................... 36,300 2,804,175
Office Depot Inc.+................ 74,900 2,364,031
Rite Aid Corporation.............. 183,100 6,877,694
Safeway Inc.+..................... 142,000 5,777,625
------------
31,115,188
TECHNOLOGY - 3.2%
Cadence Design System Inc.+....... 122,600 3,831,250
Computer Association International
Inc............................. 66,425 3,690,739
General Electric Company.......... 64,700 5,887,700
------------
13,409,689
TELECOMMUNICATIONS - 3.7%
Aspect Telecommunication+......... 108,600 2,972,925
Intermedia Communications+........ 43,800 1,836,863
MCI Communications Corporation.... 43,500 2,528,438
Sprint Corporation................ 41,500 2,925,750
Worldcom Inc.+.................... 113,700 5,507,343
------------
15,771,319
UTILITIES - 0.5%
California Energy Inc. ........... 74,500 2,239,656
------------
WASTE DISPOSAL - 0.2%
Waste Management Inc. ............ 18,600 651,000
------------
TOTAL COMMON STOCK
(Cost $335,705,547) 393,429,619
------------
</TABLE>
EQUI-SELECT SERIES TRUST
RESEARCH PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
----------- ------------
<S> <C> <C>
FEDERAL AGENCY OBLIGATIONS - 6.5%
FEDERAL HOME LOAN BANKS (FHLB) - 2.5%
FHLB,
5.532%++ due 07/08/1998......... $10,600,000 10,588,767
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) - 4.0%
FNMA:
5.516%++ due 07/01/1998......... 8,400,000 8,400,000
5.642%++ due 07/06/1998......... 8,500,000 8,493,436
------------
16,893,436
TOTAL FEDERAL AGENCY OBLIGATIONS
(Cost $27,482,203) 27,482,203
------------
TOTAL INVESTMENTS
(COST $363,187,750*) - 99.4% $420,911,822
OTHER ASSETS AND LIABILITIES - 0.6% 2,646,543
------------
NET ASSETS - 100.0% $423,558,365
============
</TABLE>
*Aggregate cost for Federal tax purposes.
**Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from registrations
to qualified institutional buyers.
+Non-income producing security.
++Annualized yield at date of purchase.
GLOSSARY OF TERMS
ADR - American Depository Receipt
See accompanying notes.
17
<PAGE> 76
EQUI-SELECT SERIES TRUST
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
----------- ------------
<S> <C> <C>
COMMON STOCKS - 53.5%
AEROSPACE AND DEFENSE - 1.7%
General Dynamics Corporation....... 33,500 $ 1,557,750
Lockheed Martin Corporation........ 14,300 1,514,013
Raytheon Company, Class A.......... 11,259 648,800
Raytheon Company, Class B.......... 20,100 1,188,413
United Technologies Corporation.... 3,900 360,750
------------
5,269,726
ALUMINUM - 0.4%
Aluminum Company of America........ 18,300 1,206,656
------------
AUTOMOBILES - 0.9%
Ford Motor Company................. 18,500 1,091,500
Volvo AB - ADR..................... 65,700 1,942,256
------------
3,033,756
AUTO PARTS - 0.2%
Lear Corporation+.................. 11,800 605,487
------------
BANKING AND FINANCE - 4.4%
Bank of New York Inc. ............. 27,400 1,662,837
First Union Corporation............ 16,522 962,406
Fleet Financial Group Inc. ........ 5,700 475,950
Morgan (J.P.) & Co. ............... 7,200 843,300
Nationsbank Corporation............ 21,200 1,621,800
PNC Bank Corporation............... 52,100 2,803,631
National City Corporation.......... 48,200 3,422,200
Northern Trust Corporation......... 12,400 945,500
Norwest Financial Corporation...... 33,800 1,263,275
------------
14,000,899
CHEMICALS - 2.3%
Air Products & Chemicals Inc. ..... 29,000 1,160,000
Akzo Nobel......................... 14,650 3,259,159
Dow Chemical Company............... 2,100 203,044
Hoechst AG......................... 20,700 1,041,831
Philip Morris Companies Inc. ...... 45,350 1,785,656
------------
7,449,690
COMPUTERS & BUSINESS EQUIPMENT - 1.4%
Compaq Computer Corporation........ 5,481 155,523
International Business Machines
Corporation...................... 29,300 3,364,006
Xerox Corporation.................. 10,000 1,016,250
------------
4,535,779
CONGLOMERATES - 0.0%#
Eastern Enterprises Inc. .......... 4,000 171,500
------------
CONSUMER GOODS & SERVICES - 0.3%
Service Corporation
International.................... 20,641 884,983
------------
DRUGS & HEALTH CARE SERVICES - 0.8%
American Home Products
Corporation...................... 47,300 2,447,775
Astra AB, ADR...................... 1 20
------------
2,447,795
ELECTRICAL EQUIPMENT - 1.8%
Emerson Electric Company........... 15,000 904,687
General Electric Company........... 40,800 3,712,800
Hubbell Inc., Class B.............. 25,700 1,069,762
------------
5,687,249
ELECTRONICS - 0.3%
Tyco International Ltd. ........... 15,800 995,400
------------
ENVIRONMENTAL CONTROL - 0.5%
Browning Ferris Industries Inc. ... 43,500 1,511,625
------------
FINANCIAL SERVICES - 2.4%
American Express Company........... 8,200 934,800
Associates First Capital
Corporation...................... 14,932 1,147,897
Beneficial Corporation............. 3,300 505,519
Edwards A.G. Incorporated.......... 20,200 862,287
Federal Home Loan Mortgage
Corporation...................... 34,800 1,637,775
Federal National Mortgage
Association...................... 15,700 953,775
Federated Investors Inc. .......... 3,500 64,750
Morgan Stanley Dean Witter
Discover......................... 9,400 858,925
Salomon Smith Barney............... 14,000 783,125
------------
7,748,853
FOOD AND BEVERAGES - 2.1%
Archer Daniels Midland Company..... 88,200 1,708,875
Diageo Plc......................... 38,707 458,866
Diageo Plc, Class B................ 6,093 52,139
General Mills Inc. ................ 11,900 813,662
Hormel Foods Corporation........... 30,000 1,036,875
McCormack & Company Inc. .......... 25,300 903,684
Nestle SA.......................... 850 1,822,030
------------
6,796,131
FOREST PRODUCTS - 1.0%
Champion International............. 28,300 1,392,006
Weyerhaeuser Company............... 37,400 1,727,413
------------
3,119,419
GAS EXPLORATION - 2.2%
Coastal Corporation................ 42,300 2,953,069
New Century Energies Inc. ......... 25,000 1,135,938
Occidental Petroleum Corporation... 33,000 891,000
USX-Marathon Group Inc. ........... 57,400 1,969,538
Williams Companies Inc. ........... 6,080 205,200
------------
7,154,745
GROCERY - 0.4%
Safeway Inc.+...................... 31,000 1,261,313
------------
HEALTH MAINTENANCE ORGANIZATIONS - 0.9%
Columbia/HCA Healthcare
Corporation...................... 62,400 1,817,400
United Healthcare Corporation...... 16,200 1,028,700
------------
2,846,100
HOUSEHOLD PRODUCTS - 0.4%
Colgate Palmolive Company.......... 2,300 202,400
Rubbermaid Inc. ................... 31,500 1,045,406
------------
1,247,806
INSURANCE - 5.5%
Chubb Corporation.................. 36,700 2,940,587
Cigna Corporation.................. 33,500 2,311,500
Equitable Companies Inc. .......... 27,800 2,081,525
Jefferson-Pilot Corporation........ 27,250 1,578,797
Lincoln National Corporation....... 35,600 3,252,950
Provident Companies Inc. .......... 33,000 1,138,500
Torchmark Corporation.............. 50,600 2,314,950
Transamerica Corporation........... 15,300 1,759,500
------------
17,378,309
MACHINE DIVERSIFIED - 0.1%
Deere & Company.................... 8,800 465,300
------------
MANUFACTURING - 2.4%
Allied Signal Inc. ................ 75,900 3,368,062
Analog Devices Inc. ............... 19,000 466,687
Cooper Industries Inc. ............ 26,100 1,433,869
TRW, Inc. ......................... 42,700 2,332,488
------------
7,601,106
MEDICAL SUPPLIES - 0.1%
Baxter International Inc. ......... 5,400 290,587
------------
OIL AND GAS - 5.2%
Amoco Corporation.................. 22,900 953,212
Atlantic Richfield Company......... 20,500 1,601,562
British Petroleum Plc, ADR......... 59,961 5,291,529
Exxon Corporation.................. 24,000 1,711,500
Marketspan Corporation............. 33,500 1,002,906
Mobil Corporation.................. 10,000 766,250
</TABLE>
See accompanying notes.
18
<PAGE> 77
EQUI-SELECT SERIES TRUST
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
----------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
OIL AND GAS - (CONTINUED)
Royal Dutch Petroleum Company...... 21,600 $ 1,183,950
Schlumberger Ltd. ................. 7,500 512,344
Texaco Inc. ....................... 39,600 2,363,625
Unocal Corporation................. 33,600 1,201,200
------------
16,588,078
PAPER AND PAPER PRODUCTS - 0.3%
Kimberly Clark Corporation......... 22,500 1,032,187
------------
PHARMACEUTICALS - 2.4%
Bristol Myers Squibb Company....... 44,100 5,068,744
Glaxo Wellcome Plc, ADR............ 27,000 1,614,937
Smithkline Beecham Plc, ADR........ 13,900 840,950
------------
7,524,631
PHOTOGRAPHY - 0.2%
Eastman Kodak Company.............. 8,400 613,725
------------
RAILROADS AND EQUIPMENT - 0.5%
Canadian National Railway
Company.......................... 15,000 796,875
Norfolk Southern Corporation....... 23,400 697,613
------------
1,494,488
REAL ESTATE - 1.0%
Arden Realty Group Inc. ........... 17,000 439,875
Boston Properties Inc., Class A.... 22,800 786,600
Hospitalities Properties Trust..... 17,200 552,550
Prime Group Realty Trust........... 25,000 428,125
TriNet Corporate Realty Trust
Inc. ............................ 29,000 986,000
------------
3,193,150
RETAIL - 2.9%
CVS Corporation.................... 13,400 1,022,587
Fred Meyer Inc.+................... 18,200 773,500
J.C. Penney Company Inc. .......... 28,800 2,082,600
Rite Aid Corporation............... 75,200 2,824,700
Sears, Roebuck & Company........... 37,300 2,277,631
York International Corporation..... 4,000 174,250
------------
9,155,268
TELECOMMUNICATIONS - 4.6%
AT&T Corporation................... 29,600 1,690,900
Alcatel Alsthom, ADR............... 32,603 1,326,535
Bell Atlantic Corporation.......... 28,400 1,295,750
Bellsouth Corporation.............. 4,200 281,925
GTE Corporation.................... 56,200 3,126,125
SBC Communications Inc. ........... 47,166 1,886,640
Sprint Corporation................. 30,900 2,178,450
Telephone & Data Systems Inc. ..... 13,400 527,625
Viacom Inc., Class B+.............. 37,800 2,201,850
------------
14,515,800
TIRES & RUBBER - 0.3%
BF Goodrich Company................ 18,800 932,950
------------
UTILITY - 3.6%
Baker Hughes Inc. ................. 14,300 494,244
Carolina Power & Light Company..... 46,200 2,003,925
CMS Energy Corporation............. 19,000 837,187
Cinergy Corporation................ 34,000 1,190,000
Columbia Energy Group.............. 28,050 1,560,281
FPL Group Inc. .................... 6,000 378,000
GPU Inc. .......................... 16,800 635,250
PacifiCorp......................... 32,400 733,050
Pinnacle West Capital
Corporation...................... 26,300 1,183,500
UGI Corporation.................... 30,600 761,175
Southern Company................... 55,500 1,536,656
------------
11,313,268
TOTAL COMMON STOCKS (Cost $151,129,534) 170,073,759
------------
PREFERRED STOCKS - 1.4%
CHEMICALS - 0.7%
Henkel KGAA........................ 23,500 $ 2,326,410
------------
FINANCIAL SERVICES - 0.7%
McKesson Financing Trust**......... 5,500 617,375
NB Capital Corporation**........... 200 216,200
Newell Financial**................. 24,600 1,439,100
WBK Strypes Trust.................. 2,100 63,394
------------
2,336,069
TOTAL PREFERRED STOCKS
(Cost $3,482,879) 4,662,479
------------
</TABLE>
EQUI-SELECT SERIES TRUST
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
----------- ------------
<S> <C> <C>
CORPORATE BONDS AND NOTES - 20.0%
AEROSPACE - 0.3%
BE Aerospace Inc., 8.000% due
03/01/2008**..................... $ 600,000 600,000
Jet Equipment Trust:
9.410% due 06/15/2010............ 50,000 60,528
8.640% due 11/01/2012............ 46,916 53,085
10.690% due 11/01/2013........... 10,000 13,413
Northrop Grumman Corporation,
9.375% due 10/15/2024............ 100,000 121,125
------------
848,151
AIRLINES - 0.4%
Continental Airlines Inc.:
9.500% due 12/15/2001............ 350,000 372,750
9.500% due 10/15/2013............ 96,110 113,578
10.220% due 07/02/2014........... 23,723 28,895
6.648% due 03/15/2019............ 250,000 255,095
Northwest Airlines:
7.625% due 03/15/2005............ 312,000 315,120
8.700% due 03/15/2007............ 150,000 159,375
United Air Lines Corporation:
7.270% due 01/30/2013............ 38,713 39,874
------------
1,284,687
AUTOMOBILES - 0.2%
Ford Motor Company, 8.900% due
01/15/2032....................... 490,000 632,713
------------
BANKING AND FINANCE - 2.3%
Banco Commercial SA, 8.250% due
02/05/2007....................... 220,000 217,184
Beaver Valley II Funding
Corporation:
8.250% due 06/01/2003............ 19,000 19,534
9.000% due 06/01/2017............ 1,280,000 1,476,800
Capital One Bank, 6.700% due
05/15/2008....................... 680,000 688,500
Capital One Financial Corporation,
7.250% due 12/01/2003............ 100,000 100,219
Cerro Negro Finance Ltd., 7.900%
due 12/01/2020**................. 1,100,000 1,075,250
Colonial Capital II, 8.920% due
01/15/2027....................... 100,000 112,625
Comed Financing II, 8.500% due
01/15/2027....................... 300,000 321,174
Deutsche Bank Finance BV, Zero
coupon due 02/12/2017**.......... 580,000 321,175
First Empire Capital Trust I,
8.234% due 02/01/2027............ 300,000 334,875
First PV Funding Corporation:
10.300% due 01/15/2014........... 201,000 211,804
10.150% due 01/15/2016........... 13,000 13,731
GG1B Funding Corp., 7.43% due
01/15/2011....................... 1,001,676 1,046,751
</TABLE>
See accompanying notes.
19
<PAGE> 78
EQUI-SELECT SERIES TRUST
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
----------- ------------
<S> <C> <C>
CORPORATE BONDS AND NOTES (CONTINUED)
BANKING AND FINANCE - (CONTINUED)
MBNA Capital I, 8.278% due
12/01/2026....................... $ 600,000 $ 642,750
Midland Funding Corporation II,
11.750% due 07/23/2005........... 31,000 36,813
Providian National Bank, 6.700% due
06/04/2003....................... 300,000 302,625
Riggs Capital Trust II, 8.875% due
03/15/2027....................... 260,000 291,200
Riggs National Corporation,
8.500% due 02/01/2006............ 100,000 105,625
------------
7,318,635
BROADCASTING - 0.6%
Chancellor Media Corporation,
8.750% due 06/15/2007............ 250,000 260,625
Control Cablevision Inc., 11.000%
due 06/01/2007................... 775,000 847,656
Frontiervision Operating Partners,
L.P., 11.000% due 10/15/2006..... 300,000 333,000
Tele-Communications Inc., 6.340%
due 02/01/2002................... 340,000 340,850
Turner Broadcasting Inc., 8.375%
due 07/01/2013................... 25,000 28,750
------------
1,810,881
BUILDING AND CONSTRUCTION - 0.7%
American Standard Companies Inc.,
7.625% due 02/15/2010............ 86,000 85,570
Interface Inc., 7.300% due
04/01/2008....................... 500,000 505,000
McDermott Inc., 9.375% due
03/15/2002....................... 1,405,000 1,487,544
Owens Corning Fiberglass
Corporation, 8.875% due
06/01/2002....................... 10,000 10,688
------------
2,088,802
COMPUTERS & BUSINESS EQUIPMENT - 0.2%
Xerox Corporation, 0.570% due
04/21/2018**..................... 1,020,000 577,012
------------
CONSUMER GOODS & SERVICES - 0.1%
Tommy Hilfiger USA, Inc.:
6.500% due 06/01/2003............ 252,000 251,370
6.850% due 06/01/2008............ 190,000 190,950
------------
442,320
DRUGS & HEALTH CARE SERVICES - 0.5%
Columbia/HCA Healthcare
Corporation:
6.500% due 03/15/1999............ 150,000 149,250
6.875% due 07/15/2001............ 93,000 91,838
6.910% due 06/15/2005............ 170,000 166,600
7.690% due 06/15/2025............ 750,000 716,250
Healthsouth Corporation, 6.875% due
06/15/2005**..................... 440,000 441,650
Tenet Healthcare Company:
8.625% due 01/15/2007............ 15,000 15,600
7.625% due 06/01/2008**.......... 100,000 100,750
------------
1,681,938
ENTERTAINMENT - 1.4%
Circus Circus Entertainment:
6.450% due 02/01/2006............ 300,000 294,000
7.000% due 11/15/2036............ 350,000 350,875
6.700% due 11/15/2096............ 100,000 101,750
Time Warner Company:
6.100% due 12/30/2001**.......... 250,000 249,063
9.125% due 01/15/2013............ 295,000 362,850
9.150% due 02/01/2023............ 1,745,000 2,216,150
8.300% due 01/15/2036............ 854,000 265,808
Viacom Inc., 6.750% due
01/15/2003....................... 650,000 662,188
------------
4,502,684
FINANCIAL SERVICES - 2.6%
Bear Stearns Company Inc., 6.200%
due 03/30/2003................... $ 260,000 $ 259,675
Conseco Inc., 6.400% due
06/15/2001....................... 430,000 430,538
ContiFinancial Corporation, 7.500%
due 03/15/2002................... 530,000 529,746
Criimi Mae Commercial Mortgage
Trust, 7.000% due 03/02/2011**... 1,250,000 1,227,500
Donaldson, Lufkin & Jenrette Inc.,
6.500% due 06/01/2008............ 220,000 220,550
Goldman Sachs Group, L.P., 5.900%
due 01/15/2003................... 3,000,000 2,955,000
Lehman Brothers Holdings Inc.:
6.500% due 04/15/2008............ 830,000 834,150
7.500% due 08/01/2026............ 90,000 99,000
Natexis Ambs Company LLC, 8.440%
due 12/29/2049**................. 520,000 520,000
Paine Webber Group Inc., 6.550% due
04/15/2008....................... 110,000 110,825
Providian Capital I, 9.525% due
02/01/2027**..................... 100,000 114,500
Safeco Capital Trust Company,
8.072% due 07/15/2037............ 615,000 665,738
Salton Sea Funding Corporation,
7.370% due 05/30/2005............ 18,043 18,810
State Street Institutional Capital,
Class A, 7.940% due
12/30/2026**..................... 100,000 110,511
Washington Mutual Capital I, 8.375%
due 06/01/2027................... 250,000 280,938
------------
8,377,481
FOOD AND BEVERAGES - 0.1%
Nabisco Inc, 6.375% due
02/01/2035....................... 165,000 164,175
------------
FOREST PRODUCTS - 0.6%
Boise Cascade Corporation, 7.430%
due 10/10/2005................... 100,000 105,000
Georgia Pacific Corporation:
9.875% due 11/01/2021............ 10,000 11,363
9.500% due 05/15/2022............ 1,000,000 1,141,250
7.250% due 06/01/2028............ 545,000 551,131
U.S. Timberlands Company, L.P.,
9.625% due 11/15/2007............ 250,000 259,688
------------
2,068,432
GAS EXPLORATION - 0.0%#
Transocean Offshore Inc., 8.000%
due 04/15/2027................... 100,000 115,750
------------
GROCERY - 0.1%
Marsh Supermarket Inc., 8.875% due
08/01/2007....................... 250,000 256,250
------------
HOTELS AND RESTAURANTS - 0.0%#
Hilton Hotels Corporation, 7.950%
due 04/15/2007................... 25,000 26,156
------------
INDUSTRIAL - 3.4%
Burlington Industries Inc., 7.250%
due 08/01/2027................... 120,000 124,200
Federal-Mogul Corporation:
7.500% due 07/01/2004............ 375,000 376,406
7.750% due 07/01/2006............ 130,000 131,788
</TABLE>
See accompanying notes.
20
<PAGE> 79
EQUI-SELECT SERIES TRUST
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
----------- ------------
<S> <C> <C>
CORPORATE BONDS AND NOTES (CONTINUED)
INDUSTRIAL - (CONTINUED)
Fox/Liberty Network Company, 8.875%
due 08/15/2007**................. $ 100,000 $ 101,500
Hearst-Argyle TV Inc.:
7.000% due 01/15/2018............ 115,000 116,725
7.500% due 11/15/2027............ 1,224,000 1,306,620
Honeywell Inc., 6.625% due
06/15/2028....................... 130,000 130,325
News America Holdings:
8.000% due 10/17/2016............ 300,000 329,625
8.875% due 04/26/2023............ 1,050,000 1,265,250
7.750% due 12/01/2045............ 100,000 106,500
News America Inc., 6.625% due
01/09/2008....................... 255,000 254,016
Nortek Inc., 9.250% due
03/15/2007....................... 300,000 309,750
Owens Illinois Inc.:
7.350% due 05/15/2008............ 2,500,000 2,521,875
7.500% due 05/15/2010............ 2,500,000 2,521,875
Seacor Smit Inc., 7.840% due
05/30/2010....................... 800,000 856,000
Solutia Inc., 7.375 due
10/15/2027....................... 100,000 104,875
UPM-Kymmene Corporation, 7.450% due
11/12/2027**..................... 270,000 283,500
------------
10,840,830
INSURANCE - 0.4%
Atlantic Mutual Insurance Company,
8.150% due 02/15/2028**.......... 529,000 546,854
Equitable Life Assurance Society,
7.700% due 12/01/2015**.......... 80,000 88,100
Fairfax Financial Holdings Ltd.,
7.375% due 04/15/2018............ 225,000 229,781
Nationwide Mutual Life Insurance
Company, 7.500% due 02/15/2024... 100,000 100,875
Travelers Capital II, 7.750% due
12/01/2036....................... 150,000 160,688
------------
1,126,298
OIL AND GAS - 2.8%
Belco Oil & Gas Corporation, 8.875%
due 09/15/2007................... 100,000 98,000
Clark Refining & Marketing Inc.,
8.375% due 11/15/2007............ 100,000 100,750
Cliffs Drilling Company, 10.250%
due 05/15/2003................... 100,000 106,000
Coastal Corporation:
6.950% due 06/02/2028............ 1,130,000 1,138,475
7.420% due 02/15/2037............ 1,410,000 1,536,900
KCS Energy Inc., 8.875% due
01/15/2008....................... 100,000 95,125
Louis Dreyfus Natural Gas Company,
6.875% due 12/01/2007**.......... 230,000 231,286
Niantic Bay Fuel, 8.590% due
06/04/2003....................... 1,000,000 1,000,000
Oryx Energy Company, 8.375% due
07/15/2004....................... 100,000 108,500
Petroleum Geo-Services, 7.125% due
03/30/2028....................... 385,000 398,475
Snyder Oil Corporation, 8.750% due
06/15/2007....................... 50,000 50,375
Sun Company Inc., 9.000% due
11/01/2024....................... 2,000,000 2,462,500
Tennessee Gas Pipeline Company,
7.625% due 04/01/2037............ 1,000,000 1,116,250
Texas Gas Transmission Inc., 7.250%
due 07/15/2027................... 100,000 105,375
Vintage Petroleum, 8.625% due
02/01/2009....................... $ 100,000 $ 101,750
Wiser Oil Company, 9.500% due
05/15/2007....................... 100,000 93,500
------------
8,743,261
OTHER - 0.4%
Corp Andina de Fomento, 7.100% due
02/01/2003....................... 120,000 122,250
Lasmo (USA) Inc., 7.300% due
11/15/2027....................... 180,000 189,900
Outdoor Systems Inc., 8.875% due
06/15/2007....................... 250,000 260,000
Polymer Group Inc., 9.000% due
07/01/2007....................... 250,000 255,000
Williams Scotsman Inc., 9.875% due
06/01/2007....................... 300,000 313,500
------------
1,140,650
PRECIOUS METALS AND MINING - 0.1%
Ultramar Diamond Company, 7.200%
due 10/15/2017................... 205,000 215,763
------------
REAL ESTATE - 0.1%
Socgen Real Estate Company, 7.640%
due 12/29/2049**................. 400,000 408,500
------------
RETAIL - 0.0%#
Lowe's Companies Inc., 6.875% due
02/15/2028....................... 105,000 109,200
------------
TELECOMMUNICATIONS - 0.5%
Airtouch Communications Inc.,
6.650% due 05/01/2008............ 450,000 457,313
Century Communications Corporation,
Zero coupon due 01/15/2008**..... 1,000,000 453,750
Jasmine Submarine
Telecommunications Ltd., 8.483%
due 05/30/2011................... 100,000 83,000
TCI Communications Inc.:
6.375% due 05/01/2003............ 223,000 225,788
8.000% due 08/01/2005............ 140,000 153,650
9.650% due 03/31/2027............ 100,000 115,250
Worldcom Inc., 8.875% due
01/15/2006....................... 200,000 216,500
------------
1,705,251
TRANSPORTATION - 0.1%
Federal Express Corporation, 7.650%
due 01/15/2014................... 298,524 315,316
------------
UTILITIES - 2.1%
California Energy Incorporated,
7.630% due 10/15/2007............ 130,000 131,625
Cleveland Electric Illuminating
Company:
7.430% due 11/01/2009............ 236,000 248,390
7.880% due 11/01/2017............ 300,000 325,500
9.000% due 07/01/2023............ 100,000 109,375
Commonwealth Edison Company, 7.625%
due 01/15/2007................... 100,000 107,500
Connecticut Light & Power Company,
7.875% due 10/01/2024............ 415,000 432,119
Consumers Energy Company, 6.375%
due 02/01/2008**................. 140,000 138,250
El Paso Electric Company, 8.900%
due 02/01/2006................... 50,000 55,500
Empresa Nacional de Electricidad,
7.325% due 02/01/2037............ 100,000 100,875
Hidroelectrica Alicura SA, 8.375%
due 03/15/1999**................. 1,405,000 1,403,244
</TABLE>
See accompanying notes.
21
<PAGE> 80
EQUI-SELECT SERIES TRUST
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
----------- ------------
<S> <C> <C>
CORPORATE BONDS AND NOTES (CONTINUED)
UTILITIES - (CONTINUED)
Long Island Lighting Company,
9.000% due 11/01/2022............ $ 75,000 $ 86,156
Niagara Mohawk Power Corporation:
7.750% due 05/15/2006............ 373,000 397,245
8.770% due 01/01/2018............ 372,000 396,645
8.750% due 04/01/2022............ 150,000 163,125
8.500% due 07/01/2023............ 90,000 96,638
North Atlantic Energy Corporation,
9.050% due 06/01/2002............ 135,000 136,519
Seabrook Station - Unit 1, 7.830%
due 01/02/2019................... 915,890 961,684
Texas-New Mexico Power Company,
12.500% due 01/15/1999........... 100,000 104,875
Texas Utility Electric Company,
6.375% due 01/01/2008**.......... 380,000 377,625
Toledo Edison Company, 7.875% due
08/01/2004....................... 238,000 252,578
United Illuminating Company, 6.250%
due 12/15/2002................... 100,000 99,875
Utilicorp United Incorporated,
8.450% due 11/15/1999............ 10,000 10,288
Waterford 3 Funding Corporation,
8.090% due 01/02/2017............ 545,000 566,800
------------
6,702,431
TOTAL CORPORATE BONDS AND
NOTES - (Cost $62,722,249) 63,503,567
------------
FOREIGN GOVERNMENT BONDS - 0.3%
Republic of Panama, 8.250% due
04/22/2008....................... 200,000 195,750
Republic of Korea, 8.875% due
04/15/2008....................... 900,000 815,625
------------
TOTAL FOREIGN GOVERNMENT BONDS
(Cost $1,040,079) 1,011,375
------------
U.S. GOVERNMENT AND AGENCY SECURITIES - 16.2%
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.3%
Beneficial Mortgage Corporation,
5.768% due 09/28/2037............ 835,932 835,146
BCF LLC, 7.750% due 09/25/2026..... 97,193 97,284
------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost $928,964) 932,430
------------
MORTGAGE-BACKED OBLIGATIONS - 3.1%
Federal National Mortgage
Association,
6.500% due 03/01/2013............ 2,359,565 2,372,825
------------
Government National Mortgage
Association:
8.000% due 06/20/2025............ 284,109 291,754
7.500% due 07/15/2026............ 236,405 243,053
8.000% due 07/15/2026............ 31,241 32,392
8.000% due 07/15/2026............ 32,016 33,196
8.000% due 07/15/2026............ 535,341 555,079
8.000% due 07/15/2026............ 833,092 863,808
7.500% due 09/15/2026............ 273,168 280,850
8.000% due 12/15/2026............ 842,384 873,442
7.500% due 04/15/2027............ 45,860 47,150
7.500% due 05/15/2027............ 959,384 986,361
8.000% due 07/15/2027............ $ 849,480 $ 880,801
7.500% due 09/15/2027............ 185,751 190,974
7.500% due 11/15/2027............ 446,794 459,358
7.000% due 01/15/2028............ 32,606 33,146
7.500% due 02/15/2028............ 719,781 740,021
7.000% due 04/15/2028............ 869,616 884,017
------------
7,395,402
U.S. TREASURIES - 12.8%
United States Treasury Bonds:
9.125% due 05/15/1999............ 6,000,000 6,183,600
6.625% due 03/31/2002............ 220,000 227,880
6.250% due 08/31/2002............ 12,975,000 13,312,220
9.875% due 11/15/2015............ 120,000 174,770
6.125% due 11/15/2027............ 5,226,000 5,602,951
United States Treasury Notes:
8.500% due 02/15/2000............ 175,000 182,994
5.750% due 11/15/2000............ 4,850,000 4,873,872
5.500% due 01/31/2003............ 8,300,000 8,292,779
7.875% due 11/15/2004............ 460,000 516,695
7.000% due 07/15/2006............ 370,000 404,151
6.500% due 10/15/2006............ 35,000 37,157
5.500% due 02/15/2008............ 185,000 184,848
5.625% due 05/15/2008............ 652,000 661,063
------------
40,654,980
TOTAL U.S. GOVERNMENT AND AGENCY
SECURITIES - (Cost $50,138,796) 51,355,637
------------
SHORT TERM INVESTMENTS - 11.0%
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 8.1%
FNMA:
5.516%++ due 07/01/1998.......... 6,500,000 6,500,000
5.516%++ due 07/01/1998.......... 8,000,000 8,000,000
5.591%++ due 07/06/1998.......... 11,200,000 11,191,459
------------
25,691,459
GENERAL ELECTRIC CORPORATION - 2.9%
5.642%++ due 07/07/1998.......... 9,200,000 9,191,475
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $34,882,934) 34,882,934
------------
TOTAL INVESTMENTS
(COST $304,325,435*) - 102.4% $325,489,751
OTHER ASSETS AND LIABILITIES - (2.4%) (7,598,597)
------------
NET ASSETS - 100.0% $317,891,154
============
</TABLE>
*Aggregate cost for Federal tax purposes.
**Securities exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration to qualified institutional
buyers.
+Non-income producing security.
++Annualized yield at date of purchase.
#Amount represents less than 0.1%.
GLOSSARY OF TERMS
ADR - American Depository Receipt
See accompanying notes.
22
<PAGE> 81
EQUI-SELECT SERIES TRUST
ADVANTAGE PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
---------- -----------
<S> <C> <C>
CORPORATE DEBT SECURITIES - 28.4%
BANKS - 2.3%
Union Planters National Bank, 6.290%
due 08/20/1998..................... $ 500,000 $ 500,160
-----------
BROKERAGE - 1.7%
Paine Webber Group Inc., 6.344% due
07/24/2003......................... 350,000 356,608
-----------
COMMUNICATION - 2.5%
Worldcom Inc., 9.375% due
01/15/2004......................... 500,000 533,125
-----------
ENTERTAINMENT AND LEISURE - 1.9%
Caesars World Inc., 8.875% due
08/15/2002......................... 400,000 412,000
-----------
FINANCIAL SERVICES - 16.3%
AT&T Capital Corporation, 6.520% due
05/14/1999......................... 500,000 501,510
Chrysler Financial Corporation,
6.440% due 10/06/1998.............. 500,000 500,650
Figgie International Inc., 9.875% due
10/01/1999......................... 500,000 522,500
Lehman Brothers Holdings Inc., 6.150%
due 03/15/2000..................... 1,000,000 1,002,500
MBNA Global Capital Securities,
6.550%+++ due 02/01/2027........... 500,000 474,990
NTC Capital I,
6.278%+++ due 01/15/2027........... 500,000 493,300
-----------
3,495,450
REAL ESTATE - 1.4%
Taubman Realty Group Ltd., MTN,
6.489% due 07/30/1998.............. 300,000 300,000
-----------
TOBACCO - 2.3%
Philip Morris Companies Inc., 6.000%
due 11/15/1999..................... 500,000 500,000
-----------
TOTAL CORPORATE DEBT SECURITIES
(Cost $6,086,230) 6,097,343
-----------
MORTGAGE PASS-THROUGHS - 4.3%
COLLATERALIZED MORTGAGE OBLIGATIONS
MBNA Master Credit Card Trust, 5.931%
due 11/15/2001..................... 750,000 749,760
Morgan Stanley Capital I Inc.,
9.000%+ due 05/01/2016............. 161,106 161,428
-----------
TOTAL MORTGAGE
PASS-THROUGHS - (Cost $915,803) 911,188
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 6.0%
FEDERAL HOME LOAN MORTGAGE CORPORATION
(FHLMC) - 0.7%
FHLMC:
Pool #846224, 7.341% due
07/01/2024......................... 138,079 140,840
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) - 0.7%
FNMA,
Conventional, Pool #103363, 7.693%
due 12/01/2017..................... 137,391 142,328
-----------
FEDERAL FARM CREDIT BANK (FFCB) - 4.6%
FFCB,
5.675%++ due 08/14/1998............ 1,000,000 993,424
-----------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS
(Cost $1,277,308) 1,276,592
-----------
U.S. TREASURY OBLIGATIONS - 10.7%
U.S. TREASURY NOTES:
5.875% due 07/31/1999.............. $ 800,000 $ 802,976
5.375% due 01/31/2000.............. 500,000 498,955
5.500% due 03/31/2000.............. 1,000,000 1,000,060
-----------
TOTAL U.S. TREASURY
OBLIGATIONS - (Cost $2,297,063) 2,301,991
-----------
COMMERCIAL PAPER-DISCOUNT NOTES - 50.0%
AGRICULTURAL SERVICES - 1.8%
Cargill Inc., 5.584%++ due
07/09/1998......................... 384,000 383,531
-----------
AUTOMOTIVE - 2.3%
Hertz Corporation, 5.640%++ due
07/16/1998......................... 500,000 498,844
-----------
BANKS - 3.7%
ABN Amro Bank, 5.557%++ due
07/02/1998......................... 798,000 797,879
-----------
COMMERCIAL SERVICES - 2.7%
PHH Corporation, 5.766%++ due
07/20/1998......................... 572,000 570,288
-----------
COMMUNICATIONS - 11.7%
GTE Corporation, 5.704%++ due
07/08/1998......................... 975,000 973,935
Lucent Technologies Inc., 5.590%++
due 07/17/1998..................... 566,000 564,616
Motorola Inc., 5.645%++ due
07/21/1998......................... 974,000 970,997
-----------
2,509,548
ELECTRIC - 1.4%
Emerson Electric Company, 5.608%++
due 07/14/1998..................... 309,000 308,384
-----------
ENTERTAINMENT & LEISURE - 2.3%
Walt Disney Corporation, 5.586%++ due
07/13/1998......................... 494,000 493,094
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(FHLMC) - 1.9%
5.435%++ due 07/13/1998............ 413,000 412,264
-----------
FINANCIAL SERVICES - 14.6%
General Electric Capital Corporation,
5.635%++ due 07/22/1998............ 796,000 793,427
General Motors Acceptance
Corporation, 5.591%++ due
07/06/1998......................... 960,000 959,265
Household Finance Corporation,
5.604%++ due 07/10/1998............ 750,000 748,965
Reliastar Mortgage Corporation,
5.690%++ due 07/15/1998............ 626,000 624,637
-----------
3,126,294
FOOD - 4.6%
General Mills Inc., 5.582%++ due
07/07/1998......................... 975,000 974,106
-----------
</TABLE>
See accompanying notes.
23
<PAGE> 82
EQUI-SELECT SERIES TRUST
ADVANTAGE PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
---------- -----------
<S> <C> <C>
COMMERCIAL PAPER-DISCOUNT NOTES (CONTINUED)
TRANSPORTATION - 3.0%
United Parcel Services of America
Inc., 5.454%++ due 07/01/1998...... $ 640,000 $ 640,000
-----------
TOTAL COMMERCIAL PAPER
-DISCOUNT NOTES
(Cost $10,714,232) 10,714,232
-----------
TOTAL INVESTMENTS
(COST $21,290,636*) - 99.4% $21,301,346
OTHER ASSETS AND LIABILITIES - 0.6% 137,858
-----------
NET ASSETS - 100.0% $21,439,204
===========
</TABLE>
*Aggregate cost for Federal tax purposes.
++Annualized yield at date of purchase.
+++Floating rate security. Rate shown is rate in effect at 06/30/1998.
GLOSSARY OF TERMS
MTN - Medium Term Note
See accompanying notes.
24
<PAGE> 83
EQUI-SELECT SERIES TRUST
VALUE + GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
-------- ------------
<S> <C> <C>
COMMON STOCKS - 97.7%
APPAREL - 3.1%
GAP, Inc. ............................ 74,750 $ 4,606,469
------------
COMMUNICATION - 2.3%
Cox Communication Inc., Class A....... 32,600 1,579,062
3COM Corporation...................... 59,600 1,828,975
------------
3,408,037
COMPUTER COMPONENTS, SOFTWARE AND
SERVICES - 15.7%
Cadence Design Systems, Inc.+......... 31,400 981,250
Compaq Computer Corporation........... 139,800 3,966,825
Electronic Arts Inc. ................. 34,700 1,873,800
Ingram Micro Inc., Class A............ 33,600 1,484,700
Intel Corporation..................... 75,900 5,626,087
Microsoft Corporation................. 50,100 5,429,588
PeopleSoft Inc. ...................... 31,400 1,475,800
Seagate Technology Inc. .............. 117,400 2,795,588
------------
23,633,638
CONSUMER SPECIALTY RETAIL - 14.7%
Bed, Bath, & Beyond Inc. ............. 12,000 621,750
CompUSA Inc.+......................... 125,032 2,258,391
Costco Companies, Inc.+............... 60,100 3,790,056
CVS Corporation....................... 103,400 4,026,137
Dayton Hudson Corporation............. 83,700 4,059,450
Starbucks Corporation+................ 60,000 3,206,250
Walgreen Company...................... 59,600 2,462,225
Wal Mart Stores Inc. ................. 28,900 1,755,675
------------
22,179,934
DRUGS AND HEALTH CARE SERVICES - 18.4%
Cardinal Health, Inc. ................ 37,600 3,525,000
Health Management Associates Inc. .... 65,400 2,186,812
Lilly Eli and Company................. 67,700 4,472,431
McKesson Corporation.................. 59,800 4,858,750
Merck & Co. Inc. ..................... 38,400 5,136,000
Omnicare Inc. ........................ 47,200 1,799,500
Universal Health Services Inc. ....... 40,100 2,340,837
Wellpoint Health Networks Inc. ....... 46,300 3,426,200
------------
27,745,530
ELECTRONICS - 6.3%
General Electric Company.............. 53,000 4,823,000
Texas Instruments Inc. ............... 79,500 4,635,844
------------
9,458,844
FINANCIAL SERVICES - 16.6%
Ahmanson HF and Company............... 62,900 4,465,900
Chase Manhattan Corporation........... 45,700 3,450,350
Equitable Companies, Inc. ............ 37,000 2,770,375
Franklin Resources Inc. .............. 52,500 2,835,000
Household International, Inc. ........ 77,600 3,860,600
Merrill Lynch and Company Inc. ....... 62,560 5,771,160
Providian Financial Corporation....... 24,800 1,948,350
------------
25,101,735
FOOD CHAINS - 2.6%
Kroger Company........................ 16,500 $ 707,438
Safeway, Inc.+........................ 78,100 3,177,694
------------
3,885,132
HEALTH MAINTENANCE ORGANIZATION - 2.3%
United Healthcare Corporation......... 55,800 3,543,300
------------
INFORMATION PROCESSING - 3.7%
HBO and Company....................... 157,200 5,541,300
------------
INSURANCE - 2.3%
Travelers Group, Inc. ................ 56,400 3,419,250
------------
MEDIA & ENTERTAINMENT - 2.0%
Time Warner Inc. ..................... 35,800 3,058,663
------------
OFFICE SUPPLIES - 1.7%
Staples, Inc.+........................ 87,600 2,534,925
------------
PERSONEL PLACEMENT - 1.6%
Robert Half International Inc.+....... 43,300 2,419,388
------------
SEMICONDUCTORS AND EQUIPMENT - 2.4%
Applied Materials Inc.+............... 122,500 3,613,750
------------
TELECOMMUNICATIONS - 2.0%
ADC Telecommunication Inc. ........... 41,900 1,530,659
Comcast Corporation, Class A.......... 38,100 1,546,622
------------
3,077,281
TOTAL COMMON STOCKS
(Cost $125,766,101) 147,227,176
------------
TOTAL INVESTMENTS
(COST $125,766,101*) - 97.7% $147,227,176
OTHER ASSETS AND LIABILITIES - 2.3% 3,433,697
------------
NET ASSETS - 100.0% $150,660,873
============
</TABLE>
*Aggregate cost for Federal tax purposes.
+Non-income producing security.
See accompanying notes.
25
<PAGE> 84
EQUI-SELECT SERIES TRUST
GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- ------------
<S> <C> <C>
COMMON STOCKS - 78.0%
AEROSPACE AND DEFENSE - 0.5%
EVI Inc.+........................... 32,500 $ 1,206,562
------------
AIRLINES - 0.8%
Northwest Airlines Corporation...... 45,000 1,735,313
------------
AUTOMOTIVE - 1.2%
Ford Motor Company.................. 45,000 2,655,000
------------
BANKING AND FINANCE - 9.6%
American General Corporation+....... 30,000 2,135,625
AmSouth Bancorporation.............. 41,250 1,621,641
Australia & New Zealand Banking
Group Ltd. ....................... 131,000 905,886
Bear Stearns Companies Inc. ........ 40,000 2,275,000
Compass Bancshares Inc. ............ 45,000 2,030,625
Finova Group Inc. .................. 20,000 1,132,500
Healthcare Financial Partners
Inc. ............................. 100,000 4,900,000
Independence Community Bank
Corporation....................... 50,000 850,000
Mellon Bank Corporation............. 32,500 2,262,813
Merrill Lynch and Company Inc....... 23,000 2,121,750
Southern Pacific Funding
Corporation....................... 115,000 1,804,063
------------
22,039,903
BIOPHARMACEUTICALS - 0.7%
Millenium Pharmaceuticals+.......... 118,000 1,666,750
------------
BROADCASTING - 0.6%
King World Productions Inc. ........ 54,000 1,377,000
------------
BUSINESS SERVICES - 1.4%
Cendant Corporation................. 85,000 1,774,375
EMC Corporation..................... 32,000 1,434,000
------------
3,208,375
CHEMICALS AND ALLIED PRODUCTS - 1.6%
Crompton & Knowles Corporation...... 35,000 881,562
E. I. du Pont de Nemours and
Company........................... 22,500 1,679,063
W.R. Grace & Company................ 62,500 1,066,406
------------
3,627,031
COMMUNICATION - 7.1%
Communications Satellite
Corporation....................... 70,000 1,981,875
Frontier Corporation................ 65,000 2,047,500
GTE Corporation..................... 20,000 1,112,500
MediaOne Group Inc. ................ 70,000 3,075,625
Metrocall Inc. ..................... 75,000 454,688
Metromedia Fiber Network Inc. ...... 40,000 1,865,000
Nextel Communications Inc. ......... 65,000 1,616,875
Paging Network Inc. ................ 120,000 1,680,000
Sprint Corporation.................. 35,000 2,467,500
------------
16,301,563
COMPUTER INDUSTRY - 5.0%
Computer Associates International
Inc. ............................. 25,000 1,389,063
Filenet Corporation+................ 76,000 2,194,500
Intel Corporation................... 30,000 2,223,750
Intersolv+.......................... 125,000 2,007,813
MicroStrategy Inc. ................. 37,300 1,053,725
SunGard Data Systems Inc. .......... 49,500 1,899,562
System Software Associates Inc.+.... 90,000 641,250
------------
11,409,663
CONSUMER DURABLES - 2.7%
Compuware Corporation+.............. 20,000 1,022,500
Oakwood Homes Corporation........... 85,000 2,550,000
Shaw Industries Inc. ............... 150,000 2,643,750
------------
6,216,250
CONSUMER PRODUCTS - 1.4%
Fruit of the Loom Inc. ............. 50,000 $ 1,662,500
Ocular Sciences Inc................. 50,000 1,625,000
------------
3,287,500
ENERGY - 0.9%
Williams Companies Inc.+............ 57,500 1,940,625
------------
FISHING AND HUNTING - 1.4%
Alliant Techsystems Inc.+........... 34,000 2,150,500
Zapata Corporation.................. 115,000 1,135,625
------------
3,286,125
FOOD AND BEVERAGES - 0.9%
Cadbury Schweppes Plc............... 71,500 1,107,282
US Foodservice+..................... 30,000 1,051,875
------------
2,159,157
HEALTH CARE SERVICES - 5.4%
Beverly Enterprises Inc.+........... 112,500 1,553,906
Columbia/HCA Healthcare
Corporation....................... 65,000 1,893,125
Genzyme Corporation+................ 40,000 1,022,500
PhyCor Inc. ........................ 105,000 1,739,063
Sunrise Assisted Living Inc. ....... 95,000 3,265,625
United Healthcare Corporation....... 45,000 2,857,500
------------
12,331,719
HOTELS AND RESTAURANTS - 0.6%
Canadian Hotel Income Properties.... 175,000 1,427,067
------------
INSURANCE - 1.0%
Hartford Life, Class A.............. 20,000 1,138,750
Marsh & McLennan Companies Inc...... 18,750 1,133,203
------------
2,271,953
MEDICAL PRODUCTS AND SERVICES - 1.2%
BMJ Medical Management Inc. ........ 100,000 450,000
Sabratek Corporation................ 102,000 2,320,500
------------
2,770,500
NETWORK SOFTWARE - 2.2%
FORE Systems Inc. .................. 120,000 3,180,000
Macromedia Inc. .................... 100,000 1,868,750
------------
5,048,750
OIL AND GAS - 4.6%
BJ Services Company................. 60,000 1,743,750
Burlington Resources Inc. .......... 50,000 2,153,125
Input/Output Inc. .................. 90,000 1,603,125
Nordic American Tanker Shipping..... 90,000 1,355,625
Pioneer Natural Resources Company... 90,000 2,148,750
Superior Energy Services Inc. ...... 305,000 1,544,063
------------
10,548,438
OTHER - 0.7%
Walter Industries Inc.+............. 85,000 1,609,687
------------
PHARMACEUTICALS - 2.3%
ALZA Corporation+................... 40,000 1,730,000
Dusa Pharmaceuticals Inc.+.......... 65,600 446,900
Incyte Pharmaceuticals Inc. ........ 45,000 1,535,625
Monsanto Company.................... 27,500 1,536,563
------------
5,249,088
POLLUTION CONTROL - 1.0%
Waste Management Inc. .............. 62,000 2,170,000
------------
REAL ESTATE - 1.3%
Capital Automotive REIT............. 130,000 1,844,375
Equity One Inc. .................... 70,000 717,500
FBR Asset Investment Corporation+... 25,000 450,000
------------
3,011,875
</TABLE>
See accompanying notes.
26
<PAGE> 85
EQUI-SELECT SERIES TRUST
GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
RETAIL - 8.6%
BJ's Wholesale Club Inc. ........... 50,000 $ 2,031,250
CompUSA Inc. ....................... 64,000 1,156,000
Dayton Hudson Corporation........... 45,000 2,182,500
Dress Barn Inc.+.................... 85,900 2,136,762
Egghead Inc.+....................... 145,000 1,223,437
Genesis Direct Inc. ................ 95,000 1,056,875
Kmart Corporation................... 100,000 1,912,500
Nike Inc. .......................... 57,500 2,799,531
PETsMart Inc. ...................... 135,000 1,350,000
Pier 1 Imports Inc. ................ 80,000 1,910,000
Value City Department Store Inc. ... 100,000 2,100,000
------------
19,858,855
TECHNOLOGY - 3.0%
Electronics for Imaging Inc. ....... 105,000 2,218,125
General Electric Company............ 22,000 2,002,000
Xylan Corporation................... 91,000 2,712,938
------------
6,933,063
TELECOMMUNICATIONS - 8.6%
Ascend Communications Inc. ......... 47,500 2,354,219
Cincinatti Bell Inc. ............... 50,000 1,431,250
Comcast Corporation................. 65,000 2,638,594
Cox Communications Inc. ............ 55,000 2,664,062
IDT Corporation..................... 60,000 1,803,750
Tele-Communications International
Inc. ............................. 80,000 1,607,500
Tele-Communications TCI Group,
Class A+.......................... 80,000 3,074,983
Tele-Communications TCI Venture
Group, Class B+................... 90,000 1,805,642
Worldcom Inc. ...................... 50,000 2,421,875
------------
19,801,875
TRANSPORTATION - 1.1%
Genesee & Wyoming Inc., Class A+.... 40,000 760,000
Kansas City Southern Industries
Inc. ............................. 37,500 1,860,937
------------
2,620,937
UTILITY - 0.6%
Southern Company.................... 50,000 1,384,375
------------
TOTAL COMMON STOCKS 179,154,999
(Cost $163,415,932) -------------
PREFERRED STOCKS - 9.5%
AIRLINES - 1.5%
Trans World Airlines+............... 22,000 1,683,000
Trans World Airlines**.............. 37,000 1,452,250
Trans World Airlines+**............. 5,000 196,250
------------
3,331,500
BANKING AND FINANCE - 3.0%
Fleetwood Capital Trust Inc.**...... 45,000 2,407,500
Servico Inc.**...................... 50,000 2,375,000
United Companies Financial
Corporation....................... 60,000 1,920,000
------------
6,702,500
COMMUNICATIONS - 2.1%
CellNet Data Systems, Inc. ......... 91,800 2,134,350
IXC Communications Inc.+**.......... 8,000 1,720,000
Metromedia International Group
Inc.+............................. 20,000 1,030,000
------------
4,884,350
CONSUMER GOODS - 0.3%
Suiza Foods Corporation............. 15,000 731,250
------------
INDUSTRIAL - 1.8%
Freeport-McMoran Corporation,
Series A.......................... 65,000 1,267,500
Houston Industries Inc.+............ 16,500 1,229,250
Pioneer Standard Electric Company... 38,000 1,686,250
------------
4,183,000
METALS AND MINING - 0.4%
WHX Corporation, Series A........... 20,000 $ 970,000
------------
PET FOOD - 0.4%
Ralston Purina Company+............. 15,250 968,375
------------
TOTAL PREFERRED STOCKS
(Cost $19,715,117) 21,770,975
------------
</TABLE>
EQUI-SELECT SERIES TRUST
GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
---------- ------------
<S> <C> <C>
CONVERTIBLE BONDS - 4.9%
COMPUTER INDUSTRY - 1.8%
Amkor Technology Inc., 5.750% due
05/01/2003........................ $ 500,000 463,125
Quantum Corporation, 7.000% due
08/01/2004........................ 1,000,000 950,000
System Software Company, 7.000% due
09/15/2002........................ 3,500,000 2,786,875
------------
4,200,000
HEALTH CARE SERVICES - 0.0%#
Sunrise Assisted Living Inc., 5.500%
due 06/15/2002.................... 100,000 110,500
------------
INDUSTRIAL - 1.0%
AMF Bowling Inc., 0.000% due
05/13/2018........................ 2,500,000 634,375
Halter Marine Group Inc., 4.500% due
09/15/2004........................ 2,000,000 1,617,500
------------
2,251,875
MEDICAL PRODUCTS AND SERVICES - 0.9%
Hybridon Inc., 9.000% due
04/01/2004........................ 500,000 275,000
Sabratek Corporation, 6.000% due
04/15/2005**...................... 2,250,000 1,856,250
------------
2,131,250
OIL AND GAS - 0.2%
Key Energy Group Inc., 5.000% due
09/15/2004........................ 500,000 395,625
------------
TELECOMMUNICATIONS - 1.0%
Tele-Communications International,
Inc., 4.500% due 02/15/2006....... 2,500,000 2,246,875
------------
TOTAL CONVERTIBLE BONDS (Cost
$12,362,154) 11,336,125
------------
CORPORATE BONDS - 1.8%
CONSUMER GOODS - 0.2%
Assisted Living Concepts, 6.000% due
11/01/2002........................ 375,000 389,063
------------
FINANCIAL SERVICES - 0.3%
Alternative Living Services, 5.250%
due 12/15/2002.................... 600,000 666,750
------------
HUMAN SERVICES - 0.4%
American Retirement Corporation,
5.750% due 10/01/2002............. 1,000,000 945,000
------------
OIL AND GAS - 0.4%
Key Energy Group Inc., 5.000% due
09/15/2004........................ 1,250,000 989,063
------------
PERSONEL SERVICES - 0.3%
Metamor Worldwide Inc., 2.940% due
08/15/2004........................ 700,000 668,500
------------
</TABLE>
See accompanying notes.
27
<PAGE> 86
EQUI-SELECT SERIES TRUST
GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
---------- ------------
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
TELECOMMUNICATIONS - 0.2%
P-Communications Inc., Series 144A,
4.250% due 11/01/2002**........... $ 500,000 $ 371,875
------------
TOTAL CORPORATE BONDS
(Cost $4,045,122) 4,030,251
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- ------------
<S> <C> <C>
WARRANTS - 0.3%
(COST $232,318)
BANKING AND FINANCE
Healthcare Financial Partners
Inc. ............................. 20,000 709,200
------------
TOTAL INVESTMENTS
(Cost $199,770,643*) - 94.5% $217,001,550
OTHER ASSETS AND LIABILITIES - 5.5% 12,591,734
------------
NET ASSETS - 100.0% $229,593,284
============
</TABLE>
*Aggregate cost for Federal tax purposes.
**Securities exempt from registration under Rule 144A of the Securities Act of
1993. These securities may be resold in transactions exempt from registrations
to qualified institutional buyers.
#Amount represents less than 0.1%.
+Non-income producing securities.
GLOSSARY OF TERMS
ADR - American Depository Receipt
See accompanying notes.
28
<PAGE> 87
[This page intentionally left blank]
29
<PAGE> 88
EQUI-SELECT SERIES TRUST
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MORTGAGE-
MONEY BACKED INTERNATIONAL
MARKET SECURITIES FIXED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at value(a).................. $38,944,898 $20,997,487 $14,070,938
Cash, including foreign currency, at value.............. 388 247 888,636
Receivable for securities sold.......................... -- -- 127,311
Net unrealized appreciation of foreign currency
contracts (Note 6).................................... -- -- 16,310
Interest receivable..................................... 53,507 152,673 328,371
Dividends receivable.................................... -- -- --
Receivable for fund shares sold......................... 985,025 18,504 --
Receivable from Investment Adviser (Note 3)............. 664 5,129 5,628
Prepaid insurance....................................... 882 882 882
Deferred organization costs............................. 3,093 3,093 3,093
Other assets............................................ -- -- 3,241
---------------------------------------------------
TOTAL ASSETS.......................................... 39,988,457 21,178,015 15,444,410
LIABILITIES
Payable due to custodian................................ -- -- --
Payable for securities purchased........................ -- -- 232,883
Payable for fund shares repurchased..................... -- -- --
Payable for audit fees.................................. 3,610 3,610 4,610
Payable for legal fees.................................. 5,996 5,994 3,328
Payable for custody fees................................ 11,224 4,478 10,899
Payable for organizational expense...................... -- 4,317 4,317
Payable to Investment Adviser (Note 3).................. 12,896 15,879 12,939
Accounts payable and accrued expenses................... 14,353 13,690 14,585
---------------------------------------------------
TOTAL LIABILITIES..................................... 48,079 47,968 283,561
---------------------------------------------------
NET ASSETS............................................ $39,940,378 $21,130,047 $15,160,849
===================================================
NET ASSETS CONSIST OF:
Paid-in Capital (Note 5)................................ $39,946,571 $20,227,123 $14,932,261
Undistributed net investment income (accumulated net
investment loss) (Note 2)............................. -- 561,327 232,534
Accumulated net realized gain (loss) on investments and
foreign currency transactions......................... (6,193) 106,801 (130,098)
Net unrealized appreciation (depreciation) of:
Investments........................................... -- 234,796 26,637
Foreign currency transactions......................... -- -- 99,515
---------------------------------------------------
NET ASSETS............................................ $39,940,378 $21,130,047 $15,160,849
===================================================
NET ASSET VALUE PER SHARE
Offering and redemption price per share (based on shares
of beneficial interest outstanding)................... $ 1.00 $ 11.17 $ 10.71
Total share outstanding at end of period................ 39,946,571 1,891,861 1,415,270
(a) Investments in securities, at cost.................. $38,944,898 $20,762,691 $14,044,301
</TABLE>
See accompanying notes.
30
<PAGE> 89
<TABLE>
<CAPTION>
TOTAL VALUE + GROWTH &
OTC RESEARCH RETURN ADVANTAGE GROWTH INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$196,106,821 $420,911,822 $325,489,751 $21,301,346 $147,227,176 $217,001,550
62,288 119,840 382,400 -- 3,910,443 16,231,915
244,581 1,771,349 199,622 173,893 4,690,630 765,790
-- -- -- -- -- --
-- -- 1,867,807 -- 48,381 449,898
31,079 346,394 386,281 -- 41,774 156,479
558,231 1,771,924 1,693,861 -- 661,817 1,084,155
-- -- -- 14,677 -- --
882 882 796 882 882 882
3,093 3,093 3,032 3,093 4,196 4,197
-- -- -- 7,615 -- --
--------------------------------------------------------------------------------------
197,006,975 424,925,304 330,023,550 21,501,506 156,585,299 235,694,866
-- -- -- 7,787 -- --
6,312,175 888,834 11,684,844 -- 5,756,001 5,809,562
-- -- 116,705 4,189 8 6
9,610 19,610 10,767 3,610 7,125 11,125
7,995 7,328 7,417 5,995 7,001 5,335
6,114 18,723 9,932 10,176 7,837 9,969
-- 4,317 -- 4,317 6,479 4,459
115,944 239,193 210,646 14,056 106,879 166,392
74,398 188,934 92,085 12,172 33,096 94,734
--------------------------------------------------------------------------------------
6,526,236 1,366,939 12,132,396 62,302 5,924,426 6,101,582
--------------------------------------------------------------------------------------
$190,480,739 $423,558,365 $317,891,154 $21,439,204 $150,660,873 $229,593,284
======================================================================================
$159,363,885 $349,899,342 $282,035,183 $20,688,158 $129,648,030 $203,440,897
(452,232) 422,585 4,640,514 758,149 (240,338) 968,827
21,113,991 15,488,528 10,054,567 (17,813) (207,894) 7,841,630
10,455,095 57,724,072 21,164,316 10,710 21,461,075 17,230,907
-- 23,838 (3,426) -- -- 111,023
--------------------------------------------------------------------------------------
$190,480,739 $423,558,365 $317,891,154 $21,439,204 $150,660,873 $229,593,284
======================================================================================
$ 18.53 $ 21.08 $ 16.59 $ 10.82 $ 15.53 $ 15.90
10,278,119 20,095,911 19,161,094 1,982,013 9,699,906 14,439,303
$185,651,726 $363,187,750 $304,325,435 $21,290,636 $125,766,101 $199,770,643
</TABLE>
31
<PAGE> 90
EQUI-SELECT SERIES TRUST
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MORTGAGE-
MONEY BACKED INTERNATIONAL
MARKET SECURITIES FIXED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
INVESTMENT INCOME ---------------------------------------------------------
<S> <C> <C> <C>
Interest income......................................... $1,045,672 $664,252 $ 352,941
Dividend income......................................... -- -- --
Foreign taxes withheld.................................. -- -- (2,240)
---------------------------------------------------------
TOTAL INVESTMENT INCOME................................. 1,045,672 664,252 350,701
EXPENSES
Investment Adviser fee (Note 3)......................... 69,933 75,303 55,807
Administration fee...................................... 9,292 4,966 6,246
Audit fee............................................... 5,441 5,441 6,442
Custodian fees and expenses............................. 7,127 8,759 19,597
Trustee's fees (Note 3)................................. 1,305 1,305 4,205
Legal fee............................................... 2,847 2,847 2,847
Insurance expenses...................................... 1,734 1,734 1,734
Transfer agent expense.................................. 2,121 1,727 2,579
Amortization of organization expense.................... 1,225 1,225 1,225
Miscellaneous expense................................... 850 850 2,590
---------------------------------------------------------
TOTAL EXPENSES.......................................... 101,875 104,157 103,272
---------------------------------------------------------
NET INVESTMENT INCOME (LOSS).......................... 943,797 560,095 247,429
NET REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on:
Investments........................................... (1,435) 124,767 39,393
Foreign currency transactions......................... -- -- (163,048)
Change in unrealized appreciation (depreciation) of:
Investments........................................... -- (102,922) 148,384
Foreign currency translations......................... -- -- 107,398
---------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)................. (1,435) 21,845 132,127
---------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS............................... $ 942,362 $581,940 $ 379,556
=========================================================
</TABLE>
See accompanying notes.
32
<PAGE> 91
<TABLE>
<CAPTION>
TOTAL VALUE + GROWTH &
OTC RESEARCH RETURN ADVANTAGE GROWTH INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 139,545 $ 401,718 $ 3,521,686 $611,295 $ 129,105 $ 838,941
124,977 1,516,775 1,420,936 -- 246,839 1,155,406
-- (10,942) -- -- -- (3,389)
-------------------------------------------------------------------------------
264,522 1,907,551 4,942,622 611,295 375,944 1,990,958
587,014 1,245,852 956,940 50,305 531,830 852,636
36,358 80,158 59,280 4,977 27,750 44,710
11,441 21,441 17,441 5,441 8,956 12,956
14,678 23,678 29,678 8,759 12,678 21,678
6,305 9,305 9,303 1,305 4,518 5,518
4,847 6,847 4,847 2,847 3,854 4,854
1,734 1,734 1,734 1,734 2,233 1,734
4,601 4,733 4,733 2,067 5,452 5,890
1,225 1,225 1,225 1,225 757 757
48,551 146,588 54,550 850 18,254 71,398
-------------------------------------------------------------------------------
716,754 1,541,561 1,139,731 79,510 616,282 1,022,131
-------------------------------------------------------------------------------
(452,232) 365,990 3,802,891 531,785 (240,338) 968,827
18,905,474 13,216,408 7,968,767 (11,967) 1,388,291 6,913,833
-- (24,784) (540) -- -- (77)
2,307,700 34,779,754 5,442,759 23,079 16,716,661 7,104,816
-- 51,080 (4,370) -- -- 49,340
-------------------------------------------------------------------------------
21,213,174 48,022,458 13,406,616 11,112 18,104,952 14,067,912
-------------------------------------------------------------------------------
$20,760,942 $48,388,448 $17,209,507 $542,897 $17,864,614 $15,036,739
===============================================================================
</TABLE>
33
<PAGE> 92
EQUI-SELECT SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
MORTGAGE-
MONEY BACKED INTERNATIONAL
MARKET SECURITIES FIXED INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (Unaudited)
Net investment income (loss)............................ $ 943,797 $ 560,095 $ 247,429
Net realized gain (loss) on:
Investments........................................... (1,435) 124,767 39,393
Foreign currency transaction.......................... -- -- (163,048)
Change in unrealized appreciation (depreciation) of:
Investments........................................... -- (102,922) 148,384
Foreign currency translations......................... -- -- 107,398
---------------------------------------------------------
Net increase in net assets resulting from
operations....................................... 942,362 581,940 379,556
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................... (943,797) -- --
FUND SHARE TRANSACTIONS (Note 5).......................... 4,347,446 2,980,630 2,648,265
---------------------------------------------------------
TOTAL INCREASE IN NET ASSETS.............................. 4,346,011 3,562,570 3,027,821
NET ASSETS:
Beginning of year....................................... 35,594,367 17,567,477 12,133,028
---------------------------------------------------------
END OF PERIOD(a)........................................ $39,940,378 $21,130,047 $15,160,849
=========================================================
(a) Including undistributed net investment income (loss).... $ -- $ 561,327 $ 232,534
=========================================================
INCREASE IN NET ASSETS FROM OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
Net investment income (loss)............................ $ 1,634,516 $ 783,992 $ 491,341
Net realized gain (loss) on:
Investments........................................... (4,758) (17,042) (43,206)
Foreign currency transaction.......................... -- -- 38,612
Change in unrealized appreciation (depreciation) of:
Investments........................................... -- 218,071 (399,604)
Foreign currency translations......................... -- -- 3,144
---------------------------------------------------------
Net increase in net assets resulting from
operations....................................... 1,629,758 985,021 90,287
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................... (1,634,516) (783,416) (527,603)
Distributions from net realized gain on investments..... -- -- (18,155)
Distributions in excess of net realized gain on
investments and foreign currency transactions......... -- -- (65,902)
FUND SHARE TRANSACTIONS (Note 5).......................... 16,446,793 6,228,184 1,907,620
---------------------------------------------------------
TOTAL INCREASE IN NET ASSETS.............................. 16,442,035 6,429,789 1,386,247
NET ASSETS:
Beginning of period..................................... 19,152,332 11,137,688 10,746,781
---------------------------------------------------------
END OF YEAR(a).......................................... $35,594,367 $17,567,477 $12,133,028
=========================================================
(a) Including undistributed net investment income
(distributions in excess of net investment income)...... $ -- $ 1,232 $ (14,895)
=========================================================
</TABLE>
See accompanying notes.
34
<PAGE> 93
<TABLE>
<CAPTION>
TOTAL VALUE + GROWTH &
OTC RESEARCH RETURN ADVANTAGE GROWTH INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ (452,232) $ 365,990 $ 3,802,891 $ 531,785 $ (240,338) $ 968,827
18,905,474 13,216,408 7,968,767 (11,967) 1,388,291 6,913,833
-- (24,784) (540) -- -- (77)
2,307,700 34,779,754 5,442,759 23,079 16,716,661 7,104,816
-- 51,080 (4,370) -- -- 49,340
--------------------------------------------------------------------------------------
20,760,942 48,388,448 17,209,507 542,897 17,864,614 15,036,739
-- -- -- -- -- --
59,439,632 135,055,388 124,785,108 3,038,497 52,740,023 80,695,426
--------------------------------------------------------------------------------------
80,200,574 183,443,836 141,994,615 3,581,394 70,604,637 95,732,165
110,280,165 240,114,529 175,896,539 17,857,810 80,056,236 133,861,119
--------------------------------------------------------------------------------------
$190,480,739 $423,558,365 $317,891,154 $21,439,204 $150,660,873 $229,593,284
======================================================================================
$ (452,232) $ 422,585 $ 4,640,514 $ 758,149 $ (240,338) $ 968,827
======================================================================================
$ (339,931) $ 387,816 $ 3,600,021 $ 1,005,173 $ (231,357) $ 1,030,474
6,780,268 8,560,438 4,883,900 (8,561) (1,483,576) 10,048,777
(222) (5,156) (4,468) -- -- --
7,014,867 15,925,334 11,534,974 (11,335) 2,941,921 6,532,632
-- (27,765) 991 -- -- 61,683
--------------------------------------------------------------------------------------
13,454,982 24,840,667 20,015,418 985,277 1,226,988 17,673,566
-- (325,992) (2,759,357) (780,582) -- (954,239)
(4,604,698) (7,116,667) (3,063,811) (2,783) (17,323) (9,673,157)
-- -- -- -- -- --
58,108,301 147,537,679 104,402,326 3,167,308 59,124,707 84,414,141
--------------------------------------------------------------------------------------
66,958,585 164,935,687 118,594,576 3,369,220 60,334,372 91,460,311
43,321,580 75,178,842 57,301,963 14,488,590 19,721,864 42,400,808
--------------------------------------------------------------------------------------
$110,280,165 $240,114,529 $175,896,539 $17,857,810 $ 80,056,236 $133,861,119
======================================================================================
$ -- $ 56,595 $ 837,623 $ 226,364 $ --
======================================================================================
</TABLE>
35
<PAGE> 94
EQUI-SELECT SERIES TRUST
FINANCIAL HIGHLIGHTS
MONEY MARKET PORTFOLIO**
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
06/30/98 Year Ended Year Ended Year Ended Period Ended
(Unaudited) 12/31/97 12/31/96 12/31/95 12/31/94*
----------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................... $1.00 $1.00 $1.00 $1.00 $1.00
----------- ----------- ----------- ---------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(1)............................... 0.02 0.05 0.05 0.05 0.01
Net realized and unrealized gain on investments........ -- -- -- -- --
----------- ----------- ----------- ---------- --------
Total from investment operations....................... 0.02 0.05 0.05 0.05 0.01
----------- ----------- ----------- ---------- --------
LESS DISTRIBUTIONS:
Distributions from net investment income............... (0.02) (0.05) (0.05) (0.05) (0.01)
Net capital gains distributions........................ -- -- -- -- --
----------- ----------- ----------- ---------- --------
Total distributions.................................... (0.02) (0.05) (0.05) (0.05) (0.01)
----------- ----------- ----------- ---------- --------
Net asset value, end of period......................... $1.00 $1.00 $1.00 $1.00 $1.00
=========== =========== =========== ========== ========
Total Return(2)........................................ 2.52% 5.02% 4.84% 5.19% 1.06%
=========== =========== =========== ========== ========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period.............................. $39,940,378 $35,594,367 $19,152,332 $5,742,264 $446,684
Ratio of operating expenses (with reimbursement) to
average net assets(1)(3)............................. 0.55% 0.68% 0.68% 0.72% 0.75%
Ratio of operating expenses (without reimbursement) to
average net assets(1)(3)............................. 0.55% 0.71% 1.11% 2.59% 23.22%
Ratio of net investment income to average net
assets(3)............................................ 5.06% 5.06% 4.76% 5.11% 4.66%
Net investment income (loss) (without
reimbursement)(1)(3)................................. $0.02 $0.05 $0.04 $0.04 ($0.03)
</TABLE>
- ---------------
(1) Prior to January 1, 1998, net investment income is after reimbursement of
certain fees and expenses by the Advisor (See Note 3 to the financial
statements). Had the Advisor not undertaken to reimburse expenses related to
the Portfolio, net investment income (loss) per share and ratio of operating
expenses to average net assets would have been as noted above.
(2) Total return figures are not annualized for periods less than one year.
Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the period shown.
(3) Annualized for periods less than one year.
* For the period October 4, 1994 (commencement of investment operations)
through December 31, 1994.
** On January 2, 1998, ING Investment Management, LLC assumed the investment
management duties of the Portfolio.
See accompanying notes.
36
<PAGE> 95
EQUI-SELECT SERIES TRUST
FINANCIAL HIGHLIGHTS
MORTGAGE-BACKED SECURITIES PORTFOLIO**
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
06/30/98 Year Ended Year Ended Year Ended Period Ended
(Unaudited) 12/31/97 12/31/96 12/31/95 12/31/94*
----------- ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................. $10.85 $10.59 $10.84 $9.90 $10.00
----------- ----------- ----------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(1).............................. 0.30 0.51 0.58 0.52 0.15
Net realized and unrealized gain (loss) on
investments......................................... 0.02 0.26 (0.22) 1.05 (0.10)
----------- ----------- ----------- ---------- ----------
Total from investment operations...................... 0.32 0.77 0.36 1.57 0.05
----------- ----------- ----------- ---------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income.................. -- (0.51) (0.58) (0.52) (0.15)
Net capital gains distributions....................... -- -- (0.03) (0.11) --
----------- ----------- ----------- ---------- ----------
Total distributions................................... -- (0.51) (0.61) (0.63) (0.15)
----------- ----------- ----------- ---------- ----------
Net asset value, end of period........................ $11.17 $10.85 $10.59 $10.84 $9.90
=========== =========== =========== ========== ==========
Total Return(2)....................................... 2.95% 7.25% 3.39% 15.92% 0.50%
=========== =========== =========== ========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period............................. $21,130,047 $17,567,477 $11,137,688 $8,655,378 $4,976,609
Ratio of operating expenses (with reimbursement) to
average net assets(1)(3)............................ 1.04% 1.25% 1.25% 0.90% 0.75%
Ratio of operating expenses (without reimbursement) to
average net assets(1)(3)............................ 1.04% 1.49% 1.67% 1.99% 2.43%
Ratio of net investment income to average net
assets(3)........................................... 5.57% 5.66% 5.69% 6.26% 6.33%
Net investment income (without reimbursement)(1)(3)... $0.30 $0.49 $0.54 $0.43 $0.11
Portfolio turnover rate(4)............................ 28% 27% 19% 34% 52%
</TABLE>
- ---------------
(1) Prior to January 1, 1998, net investment income is after reimbursement of
certain fees and expenses by the Advisor (See Note 3 to the financial
statements). Had the Advisor not undertaken to reimburse expenses related to
the Portfolio, net investment income (loss) per share and ratio of operating
expenses to average net assets would have been as noted above.
(2) Total return figures are not annualized for periods less than one year.
Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the period shown.
(3) Annualized for periods less than one year.
(4) Portfolio turnover rates are not annualized.
* For the period October 4, 1994 (commencement of investment operations)
through December 31, 1994.
** On January 2, 1998, ING Investment Management, LLC assumed the investment
management duties of the Portfolio.
See accompanying notes.
37
<PAGE> 96
EQUI-SELECT SERIES TRUST
FINANCIAL HIGHLIGHTS
INTERNATIONAL FIXED INCOME PORTFOLIO**
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
06/30/98 Year Ended Year Ended Year Ended Period Ended
(Unaudited) 12/31/97 12/31/96 12/31/95 12/31/94*
----------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................... $10.41 $10.88 $11.09 $10.02 $10.00
----------- ----------- ----------- ---------- ----------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income(1)............................... 0.17 0.43 0.53 0.41 0.15
Net realized and unrealized gain (loss) on
investments.......................................... 0.13 (0.35) 0.02 1.24 (0.05)
----------- ----------- ----------- ---------- ----------
Total from investment operations....................... 0.30 0.08 0.55 1.65 0.10
----------- ----------- ----------- ---------- ----------
LESS DISTRIBUTIONS:
Distributions from net investment income............... -- (0.47) (0.58) (0.47) (0.08)
Net capital gains distributions........................ -- (0.02) (0.18) (0.11) --
Distributions in excess of net capital gains........... -- (0.06) -- -- --
----------- ----------- ----------- ---------- ----------
Total distributions.................................... -- (0.55) (0.76) (0.58) (0.08)
----------- ----------- ----------- ---------- ----------
Net asset value, end of period......................... $10.71 $10.41 $10.88 $11.09 $10.02
=========== =========== =========== ========== ==========
Total Return(2)........................................ 2.98% 0.64% 5.05% 15.81% 1.01%
=========== =========== =========== ========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period.............................. $15,160,849 $12,133,028 $10,746,781 $8,556,253 $5,062,830
Ratio of operating expenses (with reimbursement) to
average net assets(1)(3)............................. 1.57% 1.60% 1.60% 1.00% 0.75%
Ratio of operating expenses (without reimbursement) to
average net assets(1)(3)............................. 1.57% 1.83% 1.94% 2.13% 2.53%
Ratio of net investment income to average net
assets(3)............................................ 3.76% 4.22% 4.73% 5.94% 5.93%
Net investment income (without reimbursement)(1)(3).... $0.17 $0.41 $0.49 $0.31 $0.10
Portfolio turnover rate(4)............................. 32% 69% 113% 89% 6%
</TABLE>
- ---------------
(1) Prior to January 1, 1998, net investment income is after reimbursement of
certain fees and expenses by the Advisor (See Note 3 to the financial
statements). Had the Advisor not undertaken to reimburse expenses related to
the Portfolio, net investment income (loss) per share and ratio of operating
expenses to average net assets would have been as noted above.
(2) Total return figures are not annualized for periods less than one year.
Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the period shown.
(3) Annualized for periods less than one year.
(4) Portfolio turnover rates are not annualized.
* For the period October 4, 1994 (commencement of investment operations)
through December 31, 1994.
** Baring International Investment Limited became the sub-advisor to the
Portfolio on May 1, 1998.
See accompanying notes.
38
<PAGE> 97
EQUI-SELECT SERIES TRUST
FINANCIAL HIGHLIGHTS
OTC PORTFOLIO
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
06/30/98 Year Ended Year Ended Year Ended Period Ended
(Unaudited) 12/31/97 12/31/96 12/31/95 12/31/94*
------------ ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................. $15.82 $13.82 $12.08 $10.36 $10.00
------------ ------------ ----------- ---------- ----------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment (loss)(1).............................. (0.04) (0.05) (0.03) (0.02) --
Net realized and unrealized gain on investments....... 2.75 2.76 2.52 3.07 0.36
------------ ------------ ----------- ---------- ----------
Total from investment operations...................... 2.71 2.71 2.49 3.05 0.36
------------ ------------ ----------- ---------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income.................. -- -- -- -- --
Net capital gains distributions....................... -- (0.71) (0.75) (1.33) --
------------ ------------ ----------- ---------- ----------
Total distributions................................... -- (0.71) (0.75) (1.33) --
------------ ------------ ----------- ---------- ----------
Net asset value, end of period........................ $18.53 $15.82 $13.82 $12.08 $10.36
============ ============ =========== ========== ==========
Total Return(2)....................................... 17.13% 19.67% 20.68% 29.23% 3.59%
============ ============ =========== ========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period............................. $190,480,739 $110,280,165 $43,321,580 $9,054,622 $1,695,685
Ratio of operating expenses (with reimbursement) to
average net assets(1)(3)............................ 0.97% 0.99% 1.35% 1.07% 0.75%
Ratio of operating expenses (without reimbursement) to
average net assets(1)(3)............................ 0.97% 0.99% 1.35% 2.52% 7.10%
Ratio of net investment income (loss) to average net
assets(3)........................................... (0.61)% (0.44)% (0.63)% (0.22)% 0.16%
Net investment (loss) (without reimbursement)(1)(3)... $(0.04) $(0.05) $(0.03) $(0.10) $(0.12)
Portfolio turnover rate(4)............................ 88% 141% 122% 111% 6%
</TABLE>
- ---------------
(1) Prior to January 1, 1998, net investment income is after reimbursement of
certain fees and expenses by the Advisor (See Note 3 to the financial
statements). Had the Advisor not undertaken to reimburse expenses related to
the Portfolio, net investment income (loss) per share and ratio of operating
expenses to average net assets would have been as noted above. There was no
reimbursement of fees for the years ended 1996 and 1997.
(2) Total return figures are not annualized for periods less than one year.
Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the period shown.
(3) Annualized for periods less than one year.
(4) Portfolio turnover rates are not annualized.
* For the period October 4, 1994 (commencement of investment operations)
through December 31, 1994.
See accompanying notes.
39
<PAGE> 98
EQUI-SELECT SERIES TRUST
FINANCIAL HIGHLIGHTS
RESEARCH PORTFOLIO
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
06/30/98 Year Ended Year Ended Year Ended Period Ended
(Unaudited) 12/31/97 12/31/96 12/31/95 12/31/94*
------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................. $17.94 $15.43 $12.88 $9.59 $10.00
------------ ------------ ----------- ----------- ----------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income(1).............................. 0.02 0.03 -- 0.03 0.09
Net realized and unrealized gain (loss) on
investments......................................... 3.12 3.08 3.00 3.48 (0.41)
------------ ------------ ----------- ----------- ----------
Total from investment operations...................... 3.14 3.11 3.00 3.51 (0.32)
------------ ------------ ----------- ----------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income.................. -- (0.03) 0.00# (0.03) (0.09)
Net capital gains distributions....................... -- (0.57) (0.45) (0.19) --
------------ ------------ ----------- ----------- ----------
Total distributions................................... -- (0.60) (0.45) (0.22) (0.09)
------------ ------------ ----------- ----------- ----------
Net asset value, end of period........................ $21.08 $17.94 $15.43 $12.88 $9.59
============ ============ =========== =========== ==========
Total Return(2)....................................... 17.50% 20.12% 23.37% 36.58% (3.22)%
============ ============ =========== =========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period............................. $423,558,365 $240,114,529 $75,178,842 $16,185,802 $1,626,521
Ratio of operating expenses (with reimbursement) to
average net assets(1)(3)............................ 0.95% 0.96% 1.31% 1.12% 0.75%
Ratio of operating expenses (without reimbursement) to
average net assets(1)(3)............................ 0.95% 0.96% 1.31% 2.48% 7.48%
Ratio of net investment income to average net
assets(3)........................................... 0.23% 0.26% 0.05% 0.58% 4.65%
Net investment income (loss) (without
reimbursement)(1)(3)................................ $0.02 $0.03 -- $(0.04) $(0.04)
Portfolio turnover rate(4)............................ 35% 80% 68% 83% 85%
</TABLE>
- ---------------
(1) Prior to January 1, 1998, net investment income is after reimbursement of
certain fees and expenses by the Advisor (See Note 3 to the financial
statements). Had the Advisor not undertaken to reimburse expenses related to
the Portfolio, net investment income (loss) per share and ratio of operating
expenses to average net assets would have been as noted above. There was no
reimbursement of fees for the years ended 1996 and 1997.
(2) Total return figures are not annualized for periods less than one year.
Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the period shown.
(3) Annualized for periods less than one year.
(4) Portfolio turnover rates are not annualized.
* For the period October 4, 1994 (commencement of investment operations)
through December 31, 1994.
# Amount is less than $0.003 per share.
See accompanying notes.
40
<PAGE> 99
EQUI-SELECT SERIES TRUST
FINANCIAL HIGHLIGHTS
TOTAL RETURN PORTFOLIO
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
06/30/98 Year Ended Year Ended Year Ended Period Ended
(Unaudited) 12/31/97 12/31/96 12/31/95 12/31/94*
------------ ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $15.36 $13.15 $11.90 $9.76 $10.00
------------ ------------ ----------- ----------- ----------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income(1)........................... 0.17 0.32 0.26 0.21 0.09
Net realized and unrealized gain (loss) on
investments...................................... 1.06 2.42 1.37 2.19 (0.24)
------------ ------------ ----------- ----------- ----------
Total from investment operations................... 1.23 2.74 1.63 2.40 (0.15)
------------ ------------ ----------- ----------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income............... -- (0.25) (0.26) (0.21) (0.09)
Net capital gains distributions.................... -- (0.28) (0.12) (0.05) --
------------ ------------ ----------- ----------- ----------
Total distributions................................ -- (0.53) (0.38) (0.26) (0.09)
------------ ------------ ----------- ----------- ----------
Net asset value, end of year....................... $16.59 $15.36 $13.15 $11.90 $9.76
============ ============ =========== =========== ==========
Total return(2).................................... 8.01% 20.89% 13.70% 24.51% (1.47)%
============ ============ =========== =========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period.......................... $317,891,154 $175,896,539 $57,301,963 $15,502,907 $1,298,365
Ratio of operating expenses (with reimbursement) to
average net assets(1)(3)......................... 0.95% 0.97% 1.25% 1.11% 0.75%
Ratio of operating expenses (without reimbursement)
to average net assets(1)(3)...................... 0.95% 0.97% 1.25% 2.36% 8.31%
Ratio of net investment income to average net
assets(3)........................................ 3.17% 3.31% 3.29% 3.88% 4.58%
Net investment income (loss)
(without reimbursement)(3)....................... $0.17 $0.32 $0.26 $0.14 $(0.06)
Portfolio turnover rate(4)......................... 51% 98% 131% 89% 45%
</TABLE>
- ---------------
(1) Prior to January 1, 1998, net investment income is after reimbursement of
certain fees and expenses by the Advisor (See Note 3 to the financial
statements). Had the Advisor not undertaken to reimburse expenses related to
the Portfolio, net investment income (loss) per share and ratio of operating
expenses to average net assets would have been as noted above. There was no
reimbursement of fees for the years ended 1996 and 1997.
(2) Total return figures are not annualized for periods less than one year.
Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the period shown.
(3) Annualized for periods less than one year.
(4) Portfolio turnover rates are not annualized.
* For the period October 4, 1994 (commencement of investment operations)
through December 31, 1994.
See accompanying notes.
41
<PAGE> 100
EQUI-SELECT SERIES TRUST
FINANCIAL HIGHLIGHTS
ADVANTAGE PORTFOLIO**
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
06/30/98 Year Ended Year Ended Year Ended Period Ended
(Unaudited) 12/31/97 12/31/96 12/31/95 12/31/94*
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................. $10.53 $10.41 $10.18 $9.98 $10.00
----------- ----------- ----------- ---------- ----------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income(1)............................. 0.25 0.61 0.40 0.71 0.12
Net realized and unrealized gain (loss) on
investments........................................ 0.04 (0.01) 0.22 0.20 (0.02)
----------- ----------- ----------- ---------- ----------
Total from investment operations..................... 0.29 0.60 0.62 0.91 0.10
----------- ----------- ----------- ---------- ----------
LESS DISTRIBUTIONS:
Distributions from net investment income............. -- (0.48) (0.38) (0.71) (0.12)
Net capital gains distributions...................... -- -- (0.01) -- --
----------- ----------- ----------- ---------- ----------
Total distributions.................................. -- (0.48) (0.39) (0.71) (0.12)
----------- ----------- ----------- ---------- ----------
Net asset value, end of period....................... $10.82 $10.53 $10.41 $10.18 $9.98
=========== =========== =========== ========== ==========
Total Return(2)...................................... 2.85% 5.71% 6.06% 9.18% 0.99%
=========== =========== =========== ========== ==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period............................ $21,439,204 $17,857,810 $14,488,590 $5,990,065 $3,449,166
Ratio of operating expenses (with reimbursement) to
average net assets(1)(3)........................... 0.79% 0.80% 0.80% 0.77% 0.75%
Ratio of operating expenses (without reimbursement)
to average net assets(1)(3)........................ 0.79% 1.11% 1.55% 2.13% 3.06%
Ratio of net investment income to average net
assets(3).......................................... 5.28% 5.79% 5.86% 8.56% 5.32%
Net investment income (without
reimbursement)(1)(3)............................... $0.25 $0.58 $0.35 $0.60 $0.07
Portfolio turnover rate(4)........................... 13% 116% 85% 166% 94%
</TABLE>
- ---------------
(1) Prior to January 1, 1998, net investment income is after reimbursement of
certain fees and expenses by the Advisor (See Note 3 to the financial
statements). Had the Advisor not undertaken to reimburse expenses related to
the Portfolio, net investment income (loss) per share and ratio of operating
expenses to average net assets would have been as noted above.
(2) Total return figures are not annualized for periods less than one year.
Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the period shown.
(3) Annualized for periods less than one year.
(4) Portfolio turnover rates are not annualized.
* For the period October 4, 1994 (commencement of investment operations)
through December 31, 1994.
** On January 2, 1998, ING Investment Management, LLC assumed the investment
management duties of the Portfolio.
See accompanying notes.
42
<PAGE> 101
EQUI-SELECT SERIES TRUST
FINANCIAL HIGHLIGHTS
VALUE + GROWTH
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
06/30/98 Year Ended Period Ended
(Unaudited) 12/31/97 12/31/96*
------------ ----------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $13.22 $11.43 $10.00
------------ ----------- -----------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment (loss)(1).................................... (0.02) (0.04) (0.04)
Net realized and unrealized gain on investments............. 2.33 1.83 1.59
------------ ----------- -----------
Total from investment operations............................ 2.31 1.79 1.55
------------ ----------- -----------
LESS DISTRIBUTIONS:
Dividends from net investment income........................ -- -- --
Net capital gains distributions............................. -- -- (0.12)
------------ ----------- -----------
Total distributions......................................... -- -- (0.12)
------------ ----------- -----------
Net asset value, end of period.............................. $15.53 $13.22 $11.43
============ =========== ===========
Total Return(2)............................................. 17.47% 15.69% 15.49%
============ =========== ===========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period................................... $150,660,873 $80,056,236 $19,721,864
Ratio of operating expenses (with reimbursement) to average
net assets(1)(3).......................................... 1.10% 1.20% 1.70%
Ratio of operating expenses (without reimbursement) to
average net assets(1)(3).................................. 1.10% 1.20% 1.90%
Ratio of net investment (loss) to average net assets(3)..... (0.43)% (0.50)% (0.90)%
Net investment (loss) (without reimbursement)(1)(3)......... $(0.02) $(0.04) $(0.05)
Portfolio turnover rate(4).................................. 91% 224% 143%
</TABLE>
- ---------------
(1) Prior to January 1, 1998, net investment income is after reimbursement of
certain fees and expenses by the Advisor (See Note 3 to the financial
statements). Had the Advisor not undertaken to reimburse expenses related to
the Portfolio, net investment income (loss) per share and ratio of operating
expenses to average net assets would have been as noted above. There was no
reimbursement of fees for the year ended 1997.
(2) Total return figures are not annualized for periods less than one year.
Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the period shown.
(3) Annualized for periods less than one year.
(4) Portfolio turnover rates are not annualized.
* For the period April 1, 1996 (commencement of investment operations) through
December 31, 1996.
See accompanying notes.
43
<PAGE> 102
EQUI-SELECT SERIES TRUST
FINANCIAL HIGHLIGHTS
GROWTH & INCOME PORTFOLIO
(For a share of beneficial interest outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
06/30/98 Year Ended Period Ended
(Unaudited) 12/31/97 12/31/96*
------------ ------------ -------------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $14.47 $12.59 $10.00
------------ ------------ -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(1).................................... 0.07 0.13 0.02
Net realized and unrealized gain on investments............. 1.36 3.02 2.61
------------ ------------ -----------
Total from investment operations............................ 1.43 3.15 2.63
------------ ------------ -----------
LESS DISTRIBUTIONS:
Dividends from net investment income........................ -- (0.11) (0.02)
Net capital gains distributions............................. -- (1.16) (0.02)
------------ ------------ -----------
Total distributions......................................... -- (1.27) (0.04)
------------ ------------ -----------
Net asset value, end of period.............................. $15.90 $14.47 $12.59
============ ============ ===========
Total Return(2)............................................. 9.88% 25.15% 26.19%
============ ============ ===========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period................................... $229,593,284 $133,861,119 $42,400,808
Ratio of operating expenses (with reimbursement) to average
net assets(1)(3).......................................... 1.13% 1.12% 1.64%
Ratio of operating expenses (without reimbursement) to
average net assets(1)(3).................................. 1.13% 1.12% 1.64%
Ratio of net investment income to average net assets(3)..... 1.07% 1.23% 0.38%
Net investment income (without reimbursement)(1)(3)......... $0.07 $0.13 $0.02
Portfolio turnover rate(4).................................. 104% 227% 115%
</TABLE>
- ---------------
(1) Prior to January 1, 1998, net investment income is after reimbursement of
certain fees and expenses by the Advisor (See Note 3 to the financial
statements). Had the Advisor not undertaken to reimburse expenses related to
the Portfolio, net investment income (loss) per share and ratio of operating
expenses to average net assets would have been as noted above. There was no
reimbursement of fees for the years ended 1996 and 1997.
(2) Total return figures are not annualized for periods less than one year.
Total returns do not reflect expenses that apply to the separate account or
related variable insurance contracts and inclusion of these charges would
result in reducing the total return figures for the period shown.
(3) Annualized for periods less than one year.
(4) Portfolio turnover rates are not annualized.
* For the period April 1, 1996 (commencement of investment operations) through
December 31, 1996.
See accompanying notes.
44
<PAGE> 103
EQUI-SELECT SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 (UNAUDITED)
NOTE 1 - ORGANIZATION
Equi-Select Series Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
The Trust is managed by Directed Services, Inc. ("DSI"), which is a wholly owned
subsidiary of Equitable of Iowa Companies, Inc. ("Equitable of Iowa"). Equitable
of Iowa became a wholly owned subsidiary of ING Groep, N.V. ("ING") on October
24, 1997. The Trust was organized as a Massachusetts business trust on May 11,
1994, and offers nine portfolios, each having differing investment objectives
and policies: Money Market Portfolio, Mortgage-Backed Securities Portfolio,
International Fixed Income Portfolio, OTC Portfolio, Research Portfolio, Total
Return Portfolio, Advantage Portfolio, Value + Growth Portfolio and Growth &
Income Portfolio (each a "Portfolio" or, collectively, "the Portfolios"). On
September 15, 1994, Equitable Life Insurance Company of Iowa made the initial
purchase of shares of beneficial interest in the amount of 10,000 shares for the
Money Market Portfolio and 1,000 shares for each of the other Portfolios other
than the Value + Growth Portfolio and the Growth & Income Portfolio. On March
28, 1996, Equitable Life Insurance Company of Iowa made the initial purchase of
shares of beneficial interest in the amount of 1,000 shares for the Value +
Growth Portfolio and 1,000 shares for the Growth & Income Portfolio. The shares
of the Trust are sold to certain life insurance companies' separate accounts to
fund the benefits under variable annuity and variable life contracts issued by
such life insurance companies, including Equitable Life Insurance Company of
Iowa and Golden American Life Insurance Company. All Portfolios (except the
Value + Growth and the Growth & Income Portfolios) began investment operations
on October 4, 1994 and the Value + Growth and the Growth & Income Portfolios
began investment operations on April 1, 1996.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements.
ESTIMATES - The preparation of the financial statements in conformity with
generally accepted accounting principles may require management to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of these financial statements and the reported amounts
of income and expenses during the reporting period. Actual results could differ
from those estimates.
VALUATION OF INVESTMENTS - For all Portfolios except the Money Market Portfolio,
portfolio securities traded on a national securities exchange or quoted on the
NASDAQ National Market System are valued at the last reported sale price on the
principle exchange or reported by NASDAQ or, if there is no reported sale, and
in the case of over-the-counter securities not included on NASDAQ, at a bid
price. Debt securities, including zero-coupon securities, and certain foreign
securities are valued by a pricing service. Securities for which current market
quotations are not readily available are valued at fair value as determined in
good faith by the Trustees, or by an individual acting under the direction of
the Trustees. Prices for securities primarily traded in foreign markets are
expressed in the local currency's value and are translated into U.S. dollars at
the current rate of exchange. Short-term securities, including all securities in
the Money Market Portfolio and debt securities with a remaining maturity of 60
days or less, are valued at their amortized cost, which approximates market
value.
REPURCHASE AGREEMENTS - In connection with transactions in repurchase
agreements, the Trust's custodian takes possession of the underlying collateral
securities, the value of which is at least equal to the principal amount,
including interest, of the repurchase agreement. To the extent that the term of
any repurchase agreement exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to ensure the adequacy of the collateral.
In the event of default of the obligation to repurchase, the Trust has the right
to liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral or proceeds may be subject to legal proceedings.
INVESTMENT TRANSACTIONS - Investment security transactions are recorded on a
trade date basis. Realized gains and losses from security transactions are
determined on the basis of identified cost.
INVESTMENT INCOME - Dividend income is recorded on the ex-dividend date, except
certain dividends from foreign securities where the ex-dividend date may have
passed, which are reported as income when the Trust identifies the dividend.
Interest income, which includes certain accretion of original discount, is
accrued as earned. Investment income is recorded net of foreign taxes withheld
where recovery of such taxes is uncertain.
FOREIGN CURRENCY TRANSLATIONS - The records of the Trust are maintained in U.S.
dollars. Foreign currency amounts are translated into U.S. dollars at a current
rate of exchange of such currency to determine the value of investments, other
assets and liabilities. Purchases and sales of securities and income and
expenses are converted at the prevailing rate of exchange on the respective
dates of such transactions.
45
<PAGE> 104
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A Portfolio may realize currency gains or losses between the trade and
settlement dates on security transactions. To minimize such currency gains or
losses, the Portfolio may, consistent with its investment objective and
policies, enter into a foreign currency exchange contract for the purchase or
sale (for a fixed amount of U.S. dollars) of an amount of the foreign currency
required to settle the security transaction.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by a Portfolio on each day and the resulting net unrealized
appreciation, depreciation and related net receivable or payment amounts are
determined by using forward currency exchange rates supplied by a quotation
service.
Reported net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses realized
between the trade and settlement dates on security transactions, and the
difference between the amount of net investment income accrued and the U.S.
dollar amount actually received.
FORWARD FOREIGN CURRENCY CONTRACTS - A forward foreign currency contract
("Forward") is an agreement between two parties to buy and sell a currency at a
set price on a future date. The market value of the Forward fluctuates with
changes in currency exchange rates. The Forward is marked-to-market daily and
the change in the market value is recorded by a Portfolio as an unrealized gain
or loss. When the Forward is closed, the Portfolio records a gain or loss equal
to the difference between the value at the time it was opened and the value at
the time it was closed. The Portfolio could be exposed to risk if a counterparty
is unable to meet the terms of the contract or if the value of the currency
changes unfavorably. The Portfolio may enter into Forwards in connection with
planned purchases and sales of securities, to hedge specific receivables or
payables against changes in future exchange rates or to hedge the U.S. dollar
value of Portfolio securities denominated in a foreign currency.
CURRENCY CALL AND PUT OPTIONS - A call option written by a Portfolio obligates
the Portfolio to sell specified currency to the option holder at a specified
price at any time before the expiration date. A put option written by a
Portfolio obligates the Portfolio to purchase specified currency from the option
holder at a specified price at any time before the expiration date. These
transactions involve a risk that a Portfolio may, upon exercise of the option,
be required to sell currency at a price that is less than its market value or be
required to purchase currency at a price that exceeds its market value. A
Portfolio may also realize gains or losses by entering into closing purchase
transactions identical to call or put options that have been written by the
Portfolio in order to terminate its obligation under a call or put option. In
determining the amount of gain or loss realized, the option premium paid and
related transactions costs are added to the exercise price.
DOLLAR ROLL TRANSACTIONS - A Portfolio may enter into dollar roll transactions,
in which a Portfolio sells securities for delivery in the current month and
simultaneously contracts to repurchase substantially similar (same type, same or
similar interest rate and maturity) securities on a specified future date.
During the roll period the Portfolio forgoes principal and interest paid on the
securities. The Portfolios account for such dollar rolls as financing
transactions, and are compensated by the interest earned on the cash proceeds of
the initial sale and by the lower repurchase price at a future date. To the
extent that a Portfolio has commitments under dollar roll transactions, liquid,
high grade debt securities are segregated in an amount equivalent to these
obligations. There were no dollar roll commitments outstanding at June 30, 1998.
EXPENSES - Expenses directly attributable to a Portfolio are charged to the
Portfolio. Expenses not directly attributable to a Portfolio are allocated among
the affected Portfolios. Certain costs incurred in connection with the
organization of the Trust and each Portfolio have been deferred and are being
amortized on a straight line basis over a five year period.
DISTRIBUTIONS TO SHAREHOLDERS - Each of the Portfolios (except the Money Market
Portfolio) declares and distributes dividends from net investment income and
distributes its net realized capital gains, if any, at least annually. The Money
Market Portfolio declares dividends daily and distributes monthly. All
distributions are paid in shares of the relevant Portfolio at net asset value.
Income and capital gains distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for market discount,
foreign currency transactions, losses deferred due to wash sales, "post October
31 losses" and excise tax regulations. Distributions are recorded on the
ex-dividend date.
FEDERAL INCOME TAXES - Each Portfolio is treated as a separate entity for
Federal income tax purposes. Each Portfolio intends to qualify each year as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986. By so qualifying, the Portfolios will not be subject to Federal income
taxes to the extent that they distribute all of their taxable income, including
realized capital gains, for the fiscal year. In addition, by distributing
substantially all of their net investment income, capital gains and certain
other amounts during the calendar year, the Portfolios will not be subject to a
Federal excise tax.
46
<PAGE> 105
NOTE 3 - AGREEMENTS AND FEES
As of October 24, 1997, the Trust entered into an Investment Advisory Agreement
(the "Agreement") with Equitable Investment Services, Inc. ("EISI") which was
assumed by DSI, under which DSI manages the business and affairs of the
Portfolios and the Trust. Under the Agreement, each Portfolio pays DSI a monthly
fee at the annual rate based on the average daily net assets of each Portfolio
as follows:
<TABLE>
<CAPTION>
ADVISORY FEES
-------------
<S> <C> <C>
Money Market Portfolio 0.375% of first $50 million
0.35% in excess of $50 million
Mortgage-Backed Securities Portfolio 0.75% of first $200 million
0.65% of next $300 million
0.55% of next $500 million
0.50% of next $1 billion
0.40% in excess of $2 billion
International Fixed Income Portfolio 0.85% of first $200 million
0.75% of next $300 million
0.60% of next $500 million
0.55% of next $1 billion
0.40% in excess of $2 billion
OTC, Research & Total Return Portfolios 0.80% of first $300 million
0.55% in excess of $300 million
Advantage Portfolio 0.50% of first $100 million
0.35% in excess of $100 million
Value + Growth Portfolio 0.95% of first $500 million
0.75% in excess of $500 million
Growth & Income Portfolio 0.95% of first $200 million
0.75% in excess of $200 million
</TABLE>
DSI has assumed the management responsibility under the Sub-Advisory Agreements
with Massachusetts Financial Services Company with respect to the OTC, Research
and Total Return Portfolios and Robertson, Stephens & Company Investment
Management, L.P., with respect to the Value + Growth and Growth & Income
Portfolios and DSI has entered into a Sub-Advisory Agreement with Baring
International Investment Limited with respect to the International Fixed Income
Portfolio; each of whom, under the supervision of DSI, is responsible for the
day-to-day investment management of each of the Portfolios. Effective January 2,
1998, ING Investment Management, LLC an affiliate of EISI assumed the portfolio
management responsibilities of EISI for the Money Market Portfolio, the
Mortgage-Backed Securities Portfolio and the Advantage Portfolio. The fees
payable to the sub-advisors under the Sub-Advisory Agreements are borne by DSI,
and the Trust does not bear the direct cost of the sub-advisory activities.
Each Trustee of the Trust who is not an interested person of the Trust or
Advisor or Sub-Advisor receives an annual fee of $6,000 and an additional fee of
$1,500 for each Trustees' meeting attended.
NOTE 4 - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding the
Money Market Portfolio and all short-term securities for the Trust, for the six
months ended June 30, 1998, were as follows:
<TABLE>
<CAPTION>
Non-U.S. U.S. Non-U.S. U.S.
Government Government Government Government
Purchases Purchases Sales Sales
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage-Backed Securities....... $ -- $ 8,462,136 $ 466,076 $ 4,509,204
International Fixed Income....... 4,898,656 -- 2,770,459 734,235
OTC.............................. 186,370,709 -- 126,662,287 --
Research......................... 221,124,597 -- 110,090,328 --
Total Return..................... 172,105,696 62,130,952 62,854,422 46,140,052
Advantage........................ -- 1,497,891 1,740,700 49,221
Value + Growth................... 152,147,642 -- 99,282,336 --
Growth & Income.................. 255,429,413 -- 173,324,961 --
</TABLE>
47
<PAGE> 106
]NOTE 4 - INVESTMENT TRANSACTIONS (CONTINUED)
The identified cost of investments in securities and repurchase agreements owned
by the Trust for federal income tax purposes and their respective gross
unrealized appreciation and depreciation at June 30, 1998 were as follows:
<TABLE>
<CAPTION>
Gross Gross Net
Identified Unrealized Unrealized Unrealized
Cost Appreciation Depreciation Appreciation
---------------------------------------------------------
<S> <C> <C> <C> <C>
Money Market....................... $ 38,944,898 $ -- $ -- $ --
Mortgage-Backed Securities......... 20,762,691 237,734 2,938 234,796
International Fixed Income......... 14,044,301 329,944 303,307 26,637
OTC................................ 185,651,726 26,132,832 15,677,737 10,455,095
Research........................... 363,187,750 69,468,235 11,744,163 57,724,072
Total Return....................... 304,325,435 24,818,887 3,654,571 21,164,316
Advantage.......................... 21,290,636 37,022 26,312 10,710
Value + Growth..................... 125,766,101 23,502,531 2,041,456 21,461,075
Growth & Income.................... 199,770,643 26,756,331 9,525,424 17,230,907
</TABLE>
NOTE 5 - SHAREHOLDER TRANSACTIONS
Transactions in shares and dollars were as follows:
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
--------------------------- ---------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold..................................... 64,725,828 $ 64,725,828 102,433,107 $102,433,107
Shares issued to shareholders in reinvestment of
dividends..................................... 943,797 943,797 1,634,516 1,634,516
Shares redeemed................................. (61,322,179) (61,322,179) (87,620,830) (87,620,830)
----------- ------------ ----------- ------------
Net increase.................................... 4,347,446 $ 4,347,446 16,446,793 $ 16,446,793
=========== ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
MORTGAGE-BACKED SECURITIES PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
--------------------------- ---------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold..................................... 604,853 $ 6,668,031 673,451 $ 7,363,783
Shares issued to shareholders in reinvestment of
dividends..................................... -- -- 132,084 1,419,276
Shares redeemed................................. (332,434) (3,687,401) (237,370) (2,554,875)
----------- ------------ ----------- ------------
Net increase.................................... 272,419 $ 2,980,630 568,165 $ 6,228,184
=========== ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL FIXED INCOME PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
-------------------------- -------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold........................................ 424,886 $ 4,509,286 574,229 $ 6,192,469
Shares issued to shareholders in reinvestment of
dividends........................................ -- -- 123,463 1,314,326
Shares redeemed.................................... (175,524) (1,861,021) (519,578) (5,599,175)
---------- ------------ --------- ------------
Net increase....................................... 249,362 $ 2,648,265 178,114 $ 1,907,620
========== ============ ========= ============
</TABLE>
<TABLE>
<CAPTION>
OTC PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
-------------------------- --------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold....................................... 3,700,352 $ 66,535,786 4,441,443 $ 67,796,730
Shares issued to shareholders in reinvestment of
dividends....................................... -- -- 453,828 6,811,842
Shares redeemed................................... (392,702) (7,096,154) (1,059,015) (16,500,271)
---------- ------------ ---------- ------------
Net increase...................................... 3,307,650 $ 59,439,632 3,836,256 $ 58,108,301
========== ============ ========== ============
</TABLE>
48
<PAGE> 107
NOTE 5 - SHAREHOLDER TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
RESEARCH PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
-------------------------- --------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold....................................... 7,830,982 $157,200,236 8,748,698 $151,457,707
Shares issued to shareholders in reinvestment of
dividends....................................... -- -- 547,082 9,454,599
Shares redeemed................................... (1,116,611) (22,144,848) (786,315) (13,374,627)
---------- ------------ ---------- ------------
Net increase...................................... 6,714,371 $135,055,388 8,509,465 $147,537,679
========== ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
-------------------------- -------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold........................................ 7,746,415 $125,388,267 6,753,656 $ 99,379,611
Shares issued to shareholders in reinvestment of
dividends........................................ -- -- 498,505 7,367,301
Shares redeemed.................................... (37,873) (603,159) (157,164) (2,344,586)
---------- ------------ --------- ------------
Net increase....................................... 7,708,542 $124,785,108 7,094,997 $104,402,326
========== ============ ========= ============
</TABLE>
<TABLE>
<CAPTION>
ADVANTAGE PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
-------------------------- -------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold........................................ 624,174 $ 6,649,105 1,027,871 $ 10,963,172
Shares issued to shareholders in reinvestment of
dividends........................................ -- -- 126,816 1,328,534
Shares redeemed.................................... (338,142) (3,610,608) (850,644) (9,124,398)
---------- ------------ --------- ------------
Net increase....................................... 286,032 $ 3,038,497 304,043 $ 3,167,308
========== ============ ========= ============
</TABLE>
<TABLE>
<CAPTION>
VALUE + GROWTH PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
-------------------------- --------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold....................................... 4,247,220 $ 61,309,471 5,752,136 $ 78,025,275
Shares issued to shareholders in reinvestment of
dividends....................................... -- -- 19,194 218,281
Shares redeemed................................... (604,904) (8,569,448) (1,439,264) (19,118,849)
---------- ------------ ---------- ------------
Net increase...................................... 3,642,316 $ 52,740,023 4,332,066 $ 59,124,707
========== ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
GROWTH & INCOME PORTFOLIO
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
------------------------- --------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Shares sold........................................ 5,461,268 $84,839,515 6,421,112 $ 91,268,138
Shares issued to shareholders in reinvestment of
dividends........................................ -- -- 746,751 10,730,642
Shares redeemed.................................... (275,530) (4,144,089) (1,282,562) (17,584,639)
---------- ----------- ---------- ------------
Net increase....................................... 5,185,738 $80,695,426 5,885,301 $ 84,414,141
========== =========== ========== ============
</TABLE>
49
<PAGE> 108
NOTE 6 - FORWARD FOREIGN CURRENCY CONTRACTS
At June 30, 1998, the outstanding forward exchange currency contracts, which
contractually obligate the Trust to deliver currencies at a specified date, were
as follows:
INTERNATIONAL FIXED INCOME PORTFOLIO
<TABLE>
<CAPTION>
U.S. DOLLAR
COST ON UNREALIZED
CURRENCY CURRENCY SETTLEMENT ORIGINATION U.S. DOLLAR APPRECIATION/
PURCHASED SOLD DATE DATE CURRENT VALUE (DEPRECIATION)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GBP USD 07/17/1998 $ 524,067 $ 534,708 $10,641
SEK USD 07/22/1998 236,000 235,211 (789)
DKK USD 08/14/1998 295,000 293,872 (1,128)
NLG USD 09/14/1998 690,000 689,911 (89)
AUD USD 09/17/1998 205,059 209,611 4,552
---------- ---------- -------
$1,950,126 $1,963,313 $13,187
</TABLE>
<TABLE>
<CAPTION>
U.S. DOLLAR
COST ON
CURRENCY CURRENCY SETTLEMENT ORIGINATION U.S. DOLLAR UNREALIZED
SOLD PURCHASED DATE DATE CURRENT VALUE APPRECIATION
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
USD GBP 07/17/1998 $ 973,000 $ 972,277 $ 723
USD CAD 07/30/1998 130,054 128,417 1,637
USD AUD 09/17/1998 210,374 209,611 763
---------- ---------- -------
$1,313,428 $1,310,305 $ 3,123
Net Unrealized Appreciation of Forward Foreign Currency
Contracts.................................................... $16,310
-------
</TABLE>
GLOSSARY OF TERMS
AUD - Australian Dollar
CAD - Canadian Dollar
DKK - Danish Kroner
GBP - Great British Pound
NLG - Dutch Guilder
SEK - Swedish Krona
USD - United States Dollar
NOTE 7 - CAPITAL LOSS CARRYFORWARDS
For Federal income tax purposes, the Portfolios indicated below have capital
loss carryforwards as of December 31, 1997 which are available to offset future
capital gains, if any:
<TABLE>
<CAPTION>
EXPIRING
IN 2005
--------
<S> <C>
Money Market Portfolio.................... $ 3,127
Mortgage-Backed Securities Portfolio...... 17,966
Value + Growth Portfolio.................. 171,187
</TABLE>
50
<PAGE> 109
NOTE 8 - SUBSEQUENT EVENT
On August 14, 1998, the consolidation of the Equi-Select Series Trust into The
GCG Trust took place at no cost to contract holders. The separate accounts
investing in the Equi-Select Series Trust Portfolios substituted shares of
similar GCG Trust series for shares of the Equi-Select Series Trust Portfolios
as described in the current prospectuses for your variable contract and the
Trusts.
The following substitutions have occurred:
<TABLE>
<CAPTION>
EQUI-SELECT SERIES TRUST PORTFOLIO REPLACED GCG SUBSTITUTED SERIES
------------------------------------------- ----------------------
<S> <C>
Growth & Income Portfolio Growth & Income Series
Research Portfolio Research Series
Total Return Portfolio Total Return Series
Value + Growth Portfolio Value + Growth Series
International Fixed Income Portfolio Global Fixed Income Series
OTC Portfolio Mid-Cap Growth Series
Money Market Portfolio Liquid Asset Series
Mortgage-Backed Securities Portfolio Limited Maturity Bond Series
Advantage Portfolio Limited Maturity Bond Series
</TABLE>
As of August 14, 1998, none of the Portfolios of the Equi-Select Series Trust
are available as an investment option, but additional Series of the GCG Trust
similar to the Portfolios of the Equi-Select Series Trust are now available as
investment options.
51
<PAGE> 110
EQUI-SELECT SERIES TRUST
SPECIAL MEETING OF SHAREHOLDERS
At a Special Meeting of Shareholders of the International Fixed Income Portfolio
(the "Portfolio") held on April 28, 1998, the following actions were taken:
(1) The new Portfolio Management Agreement with the Portfolio, DSI and Baring
International Investment Limited was approved by the shareholders of the Series
as follows:
<TABLE>
<CAPTION>
AGAINST OR
FOR WITHHELD ABSTAINED TOTAL
----------------------------------------------------
<S> <C> <C> <C> <C>
1,139,273 9,677 68,122 1,217,072
</TABLE>
52
<PAGE> 111
EQUI-SELECT SERIES TRUST
------------------------
TRUSTEES AND EXECUTIVE OFFICERS
Frederick S. Hubbell, President and Chair
J. Michael Earley, Trustee
R. Barbara Gitenstein, Trustee
Elizabeth J. Newell, Trustee
Stanley B. Seidler, Trustee
Myles R. Tashman, Secretary
------------------------
Sutherland, Asbill & Brennan LLP, Legal Counsel
Directed Services, Inc., Investment Adviser
Ernst & Young, LLP, Independent Auditors
The information contained in this report is intended for general informational
purposes only. This report is not authorized for distribution to prospective
investors unless preceded or accompanied by current Trust and Separate Account
prospectuses which contain important information concerning the Trust, the
Company, and its current public offering of variable contracts.
<PAGE> 112
The PrimeElite Variable Annuity is distributed by Equitable of
Iowa Securities Network, Inc.,
an affiliate of Equitable Life Insurance Company of Iowa.
EQUI-SELECT SERIES TRUST
909 LOCUST - DES MOINES, IA - 50309-2899
Bulk Rate
EQUI-SELECT SERIES TRUST U.S. Postage
909 LOCUST PAID
DES MOINES, IA 50309-2899 Des Moines, IA
Permit No. 3361
