Strategist Growth and Income Fund, Inc.
1998 Semiannual Report
Strategist Balanced Fund
Strategist Equity Fund
Strategist Equity Income Fund
Strategist Total Return Fund
<PAGE>
Table of contents
Financial statements (Strategist Growth and Income Fund, Inc.) 4
Notes to financial statements (Strategist Growth and Income Fund, Inc.) 12
Financial statements (Balanced Portfolio) 18
Notes to financial statements (Balanced Portfolio) 21
Investments in securities (Balanced Portfolio) 26
Financial statements (Equity Portfolio) 46
Notes to financial statements (Equity Portfolio) 49
Investments in securities (Equity Portfolio) 54
Financial statements (Equity Income Portfolio) 66
Notes to financial statements (Equity Income Portfolio) 69
Investments in securities (Equity Income Portfolio) 74
Financial statements (Total Return Portfolio) 85
Notes to financial statements (Total Return Portfolio) 88
Investments in securities (Total Return Portfolio) 94
Strategist Growth and Income Fund, Inc.
<PAGE>
Financial statements
Statements of assets and liabilities
Strategist Growth and Income Fund, Inc.
March 31, 1998 (Unaudited)
Strategist Strategist
Balanced Fund Equity Fund
Assets
Investment in corresponding Portfolio (Note 1) $1,162,395 $905,241
Organizational costs (Note 1) 1,596 1,596
Expense receivable from AEFC -- 7,755
------ -----
Total assets 1,163,991 914,592
--------- -------
Liabilities
Accrued distribution fee 8 6
Accrued transfer agency fee 2 1
Accrued administrative services fee 1 1
Other accrued expenses 47,719 16,505
------ ------
Total liabilities 47,730 16,513
------ ------
Net assets applicable to outstanding capital stock $1,116,261 $898,079
---------- --------
Represented by
Capital stock-- $.01 par value (Note 1) $ 669 $ 284
Additional paid-in capital 941,696 626,305
Undistributed net investment income 1,521 2,633
Accumulated net realized gain (loss) 47,499 40,980
Unrealized appreciation (depreciation) on
investments and on translation of assets
and liabilities in foreign currencies 124,876 227,877
------- -------
Total -- representing net assets applicable to
outstanding capital stock $1,116,261 $898,079
---------- --------
Shares outstanding 66,908 28,398
------ ------
Net asset value per share of outstanding capital stock $16.68 $ 31.62
------ --------
See accompanying notes to financial statements.
<PAGE>
Financial statements
Statements of assets and liabilities
Strategist Growth and Income Fund, Inc.
March 31, 1998 (Unaudited)
Strategist Equity Strategist Total
Income Fund Return Fund
Assets
Investment in corresponding Portfolio (Note 1) $986,152 $793,620
Expense receivable from AEFC 8 5
Organizational costs (Note 1) 1,596 1,596
----- -----
Total assets 987,756 795,221
------- -------
Liabilities
Dividends payable to shareholders 196 --
Accrued distribution fee 7 5
Accrued transfer agency fee 2 1
Accrued administrative services fee 1 1
Other accrued expenses 22,997 21,748
------ ------
Total liabilities 23,203 21,755
------ ------
Net assets applicable to outstanding capital stock $964,553 $773,466
-------- --------
Represented by
Capital stock-- $.01 par value (Note 1) $ 842 $ 542
Additional paid-in capital 755,502 646,415
Undistributed (excess of distributions over)
net investment income 570 (179)
Accumulated net realized gain (loss) 47,653 25,669
Unrealized appreciation (depreciation) on
investments and on translation of assets and
liabilities in foreign currencies 159,986 101,019
------- -------
Total -- representing net assets applicable to
outstanding capital stock $964,553 $773,466
-------- --------
Shares outstanding 84,248 54,209
------ ------
Net asset value per share of outstanding capital stock 11.45 $ 14.27
----- --------
See accompanying notes to financial statements.
<PAGE>
Strategist Growth and Income Fund, Inc.
Statements of operations
Strategist Growth and Income Fund, Inc.
Six months ended March 31, 1998 (Unaudited)
Strategist Strategist Equity
Balanced Fund Fund
Investment income
Income:
Dividends $ 7,102 $ 6,563
Interest 14,363 1,150
Less foreign taxes withheld (12) (80)
--- ---
Total income 21,453 7,633
------ -----
Expenses (Note 2):
Expenses allocated from corresponding Portfolio 1,765 1,912
Distribution fee 898 1,000
Transfer agency fee 236 231
Administrative services fees and expenses 143 160
Compensation of board members 268 --
Postage 268 1,700
Registration fees 647 4,425
Reports to shareholders -- 1,360
Audit fees 1,600 1,600
Other -- 404
---
Total expenses 5,825 12,792
Less expenses reimbursed by AEFC (20) (7,792)
--- ------
Total net expenses 5,805 5,000
----- -----
Investment income (loss)-- net 15,648 2,633
------ -----
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions 46,323 44,676
Foreign currency transactions (1,016) 184
Financial futures contracts 5,100 --
----- -----
Net realized gain (loss) on investments 50,407 44,860
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilities in foreign currencies 27,160 59,759
------ ------
Net gain (loss) on investments and foreign currencies 77,567 104,619
------ -------
Net increase (decrease) in net assets
resulting from operations $93,215 $107,252
------- --------
See accompanying notes to financial statements.
<PAGE>
Statements of operations
Strategist Growth and Income Fund, Inc.
Six months ended March 31, 1998 (Unaudited)
Strategist Equity Strategist Total
Income Fund Return Fund
Investment income
Income:
Dividends $ 10,285 $ 2,768
Interest 4,657 9,360
Less foreign taxes withheld (13) (46)
--- ---
Total income 14,929 12,082
------ ------
Expenses (Note 2):
Expenses allocated from corresponding Portfolio 2,195 1,704
Distribution fee 1,056 864
Transfer agency fee 346 138
Administrative services fees and expenses 169 138
Registration fees 1,546 6,305
Audit fees 1,600 1,600
----- -----
Total expenses 6,912 10,749
Less expenses reimbursed by AEFC (1,691) (6,251)
------ ------
Total net expenses 5,221 4,498
----- -----
Investment income (loss)-- net 9,708 7,584
----- -----
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions 48,326 33,021
Financial futures contracts 4,740 (2,179)
Foreign currency transactions 9 579
Option contracts written -- (334)
----- ----
Net realized gain (loss) on investments 53,075 31,087
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilities in foreign currencies 40,794 24,055
------ ------
Net gain (loss) on investments and foreign currencies 93,869 55,142
------ ------
Net increase (decrease) in net assets resulting
from operations $103,577 $62,726
-------- -------
See accompanying notes to financial statements.
<PAGE>
Strategist Growth and Income Fund, Inc.
Statements of changes in net assets
Strategist Growth and Income Fund, Inc.
Strategist Balanced Fund
Six months ended Year ended
March 31, 1998 Sept. 30, 1997
(Unaudited)
Operations and distributions
Investment income (loss) -- net $ 15,648 $ 33,047
Net realized gain (loss) on investments 50,407 62,709
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilities in foreign currencies 27,160 74,606
------ ------
Net increase (decrease) in net assets resulting
from operations 93,215 170,362
------ -------
Distributions to shareholders from:
Net investment income (15,549) (32,085)
Net realized gain (59,803) --
------- ------
Total distributions (75,352) (32,085)
------- -------
Capital share transactions (Note 3)
Proceeds from sales 149,551 225,783
Reinvestment of distributions at net asset value 75,352 32,085
Payments for redemptions (21,550) (25,917)
------- -------
Increase (decrease) in net assets from capital
share transactions 203,353 231,951
------- -------
Total increase (decrease) in net assets 221,216 370,228
Net assets at beginning of period 895,045 524,817
------- -------
Net assets at end of period $1,116,261 $895,045
---------- --------
Undistributed net investment income $ 1,521 $ 1,422
---------- --------
See accompanying notes to financial statements.
<PAGE>
Statements of changes in net assets
Strategist Growth and Income Fund, Inc.
Strategist Equity Fund
Six months ended Year ended
March 31, 1998 Sept. 30, 1997
(Unaudited)
Operations and distributions
Investment income (loss) -- net $ 2,633 $ 14,159
Net realized gain (loss) on investments 44,860 55,053
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilities in foreign currencies 59,759 114,216
------ -------
Net increase (decrease) in net assets resulting
from operations 107,252 183,428
------- -------
Distributions to shareholders from:
Net investment income (2,610) (12,677)
Net realized gain (30,218) --
------- ------
Total distributions (32,828) (12,677)
------- -------
Capital share transactions (Note 3)
Proceeds from sales 24,420 72,008
Reinvestment of distributions at net asset value 32,828 12,677
Payments for redemption (11,912) (11,233)
------- -------
Increase (decrease) in net assets from capital
share transactions 45,336 73,452
------ ------
Total increase (decrease) in net assets 119,760 244,203
Net assets at beginning of period 778,319 534,116
------- -------
Net assets at end of period $898,079 $778,319
-------- --------
Undistributed net investment income $ 2,633 $ 2,610
-------- --------
See accompanying notes to financial statements.
<PAGE>
Strategist Growth and Income Fund, Inc.
Statements of changes in net assets
Strategist Growth and Income Fund, Inc.
Strategist Equity Income Fund
Six months ended Year ended
March 31, 1998 Sept. 30, 1997
(Unaudited)
Operations and distributions
Investment income (loss) -- net $ 9,708 $ 25,154
Net realized gain (loss) on investments 53,075 64,629
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilities in foreign currencies 40,794 85,635
------ ------
Net increase (decrease) in net assets resulting
from operations 103,577 175,418
------- -------
Distributions to shareholders from:
Net investment income (10,463) (24,199)
Net realized gain (61,081) --
------- ------
Total distributions (71,544) (24,199)
------- -------
Capital share transactions (Note 3)
Proceeds from sales 54,691 144,070
Reinvestment of distributions at net asset value 71,472 24,145
Payments for redemptions (20,702) (25,885)
------- -------
Increase (decrease) in net assets from
capital share transactions 105,461 142,330
------- -------
Total increase (decrease) in net assets 137,494 293,549
Net assets at beginning of period 827,059 533,510
------- -------
Net assets at end of period $964,553 $827,059
-------- --------
Undistributed net investment income $ 570 $ 1,325
-------- --------
See accompanying notes to financial statements.
<PAGE>
Statements of changes in net assets
Strategist Growth and Income Fund, Inc.
Strategist Total Return Fund
Six months ended Year ended
March 31, 1998 Sept. 30, 1997
(Unaudited)
Operations and distributions
Investment income (loss) -- net $ 7,584 $ 14,122
Net realized gain (loss) on investments 31,087 68,331
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilites in foreign currencies 24,055 36,821
------ ------
Net increase (decrease) in net assets resulting
from operations 62,726 119,274
------ -------
Distributions to shareholders from:
Net investment income (8,818) (13,416)
Net realized gain (58,828) --
------- ------
Total distributions (67,646) (13,416)
------- -------
Capital share transactions (Note 3)
Proceeds from sales 29,210 55,803
Reinvestment of distributions at net asset value 67,641 13,416
Payments for redemptions (4,893) (17,370)
------ -------
Increase (decrease) in net assets from capital
share transactions 91,958 51,849
------ ------
Total increase (decrease) in net assets 87,038 157,707
Net assets at beginning of period 686,428 528,721
------- -------
Net assets at end of period $773,466 $686,428
-------- --------
Undistributed (excess of distributions over)
net investment income $ (179) $ 1,055
-------- --------
See accompanying notes to financial statements.
<PAGE>
Strategist Growth and Income Fund, Inc.
Notes to financial statements
Strategist Growth and Income Fund, Inc.
(Unaudited as to March 31, 1998)
1. Summary of significant accounting policies
Strategist Balanced Fund (Balanced Fund), Strategist Equity Fund (Equity
Fund), Strategist Equity Income Fund (Equity Income Fund), and Strategist
Total Return Fund (Total Return Fund) are series of capital stock within
Strategist Growth and Income Fund, Inc. Each Fund is registered under the
Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. Strategist Growth and Income, Inc. has 3
billion authorized shares of capital stock that can be allocated among the
separate series as designated by the board.
Investments in Portfolios
Each of the Funds seeks to achieve its investment objectives by investing
all of its net investable assets in a corresponding series of Growth and
Income Trust (the Trust).
Balanced Fund invests all of its assets in Balanced Portfolio, an open-end
investment company that has the same objectives as the Fund. Balanced
Portfolio balances its investments between common stocks and senior
securities (preferred stocks and debt securities) issued by U.S. and
foreign companies.
Equity Fund invests all of its assets in Equity Portfolio, an open-end
investment company that has the same objectives as the Fund. Equity
Portfolio invests primarily in common stocks and securities convertible
into common stocks.
Equity Income Fund invests all of its assets in Equity Income Portfolio,
an open-end investment company that has the same objectives as the Fund.
Equity Income Portfolio seeks to provide a high level of current income
and, as a secondary goal, steady growth of capital by investing primarily
in dividend-paying stocks.
Total Return Fund invests all of its assets in Total Return Portfolio, an
open-end investment company that has the same objectives as the Fund.
Total Return Portfolio invests primarily in U.S. equity securities, U.S.
and foreign debt securities, foreign equity securities, and money market
instruments.
Each Fund records daily its share of the corresponding Portfolio's income,
expenses and realized and unrealized gains and losses. The financial
statements of the Portfolios are included elsewhere in this report and
should be read in conjunction with the Funds' financial statements. Each
Fund records its investment in the corresponding Portfolio at the value
that is equal to the Fund's proportionate ownership interest in the net
assets of the Portfolio. As of March 31, 1998, the percentages of the
corresponding Portfolio owned by Balanced Fund, Equity Fund, Equity Income
Fund, and Total Return Fund were 0.02%, 0.02%, 0.04%, and 0.03%,
respectively. Valuation of securities held by the Portfolios is discussed
in Note 1 of the Portfolios' "Notes to financial statements," which are
included elsewhere in this report.
Organizational costs
Each Fund incurred organizational expenses in connection with the start-up
and initial registration of the Fund. These costs will be amortized over
60 months on a straight-line basis beginning with the commencement of
operations. If any or all of the shares held by AEFC representing initial
capital of the Fund are redeemed during the amortization period, the
redemption proceeds will be reduced by the pro rata portion of the
unamortized organizational cost balance.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
Federal taxes
Since each Fund's policy is to comply with all sections of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to the shareholders, no provision for
income or excise taxes is required.
Net investment income (loss) and net realized gains (losses) allocated
from the Portfolios may differ for financial statement and tax purposes
primarily because of the deferral of losses on certain futures contracts,
the recognition of certain foreign currency gains (losses) as ordinary
income (loss) for tax purposes, and losses deferred due to "wash sale"
transactions. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing
of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gains
(losses) were recorded by the Funds.
Dividends to shareholders
Dividends from net investment income, declared quarterly and paid at the
end of each calendar quarter for Balanced Fund, Equity Fund and Total
Return Fund, and declared daily and paid each calendar quarter for Equity
Income Fund, are reinvested in additional shares of the Funds at net asset
value or payable in cash. Capital gains, when available, are distributed
along with the last income dividend of the calendar year.
Other
At March 31, 1998, AEFC owned 41,399 shares for Balanced Fund, 25,086
shares for Equity Fund, 66,981 shares for Equity Income Fund and 48,652
shares for Total Return Fund.
2. Expenses and sales charges
In addition to the expenses allocated from the Portfolio, each Fund
accrues its own expenses as follows:
Each Fund entered into an agreement with AEFC for providing administrative
services. Under its Administrative Services Agreement, each Fund pays AEFC
a fee for administration and accounting services at a percentage of the
Fund's average daily net assets in reducing percentages from 0.04% to
0.02% annually.
Under a separate Transfer Agency Agreement, American Express Client
Service Corporation (AECSC) maintains shareholder accounts and records.
Each Fund pays AECSC an annual fee per shareholder account of $20.
Under a Plan and Agreement of Distribution, each Fund pays American
Express Service Corporation (the Distributor) a distribution fee at an
annual rate of 0.25% of the Fund's average daily net assets for
distribution related services.
AEFC and the Distributor have agreed to waive certain fees and to absorb
certain other of Fund expenses through Dec. 31, 1998. Under this
agreement, each Fund's total expenses will not exceed 1.25% (1.30% for
Total Return Fund) of each of the Fund's average daily net assets. In
addition, for the six months ended March 31, 1998, AEFC further
voluntarily agreed to waive certain fees and expenses to 1.23% for
Balanced Fund and 1.24% for Equity Income Fund.
3. Capital share transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended March 31, 1998
Equity Total
Balanced Equity Income Return
Fund Fund Fund Fund
Sold 9,361 865 5,022 2,133
Issued for reinvested
distributions 4,857 1,180 7,006 5,204
Redeemed (1,318) (404) (1,893) (360)
------ ---- ------ ----
Net increase (decrease) 12,900 1,641 10,135 6,977
------ ----- ------ -----
Year ended Sept. 30, 1997
Equity Total
Balanced Equity Income Return
Fund Fund Fund Fund
Sold 15,132 2,872 15,615 4,254
Issued for reinvested
distributions 2,072 477 2,319 981
Redeemed (1,859) (437) (3,659) (1,262)
------ ---- ------ ------
Net increase (decrease) 15,345 2,912 14,275 3,973
------ ----- ------ -----
<PAGE>
<TABLE>
<CAPTION>
4. Financial highlights
The tables below show certain important financial information for
evaluating each Fund's results.
Fiscal period ended Sept. 30,
Per share income and capital changes(a)
Balanced Fund Equity Fund
1998(c) 1997 1996(b) 1998(c) 1997 1996(b)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $16.57 $13.57 $13.36 $29.09 $22.40 $21.73
beginning of period
Income from investment operations:
Net investment income (loss) .26 .66 .18 (.18) .54 .21
Net gains (losses) (both 1.23 2.99 .17 3.91 6.64 .62
realized and unrealized)
Total from investment 1.49 3.65 .35 3.73 7.18 .83
operations
Less Distributions:
Dividends from net (.26) (.65) (.14) (.09) (.49) (.16)
investment income
Distributions from (1.12) -- -- (1.11) -- --
realized gains
Total distributions (1.38) (.65) (.14) (1.20) (.49) (.16)
Net asset value, $16.68 $16.57 $13.57 $31.62 $29.09 $22.40
end of period
Ratios/supplemental data:
Net assets, end of $1,116 $895 $525 $898 $778 $534
period (in thousands)
Ratio of expenses to 1.23%(d) .62% 1.25%d 1.25%d .58% 1.25%d
average daily net assetse
Ratio of net income (loss) 3.32%(d) 4.60% 3.91%d .66%d 2.17% 3.06%d
to average daily net assets
Total return 9.7% 27.4% 2.6% 12.4% 28.3% 3.8%
Portfolio turnover rate (excluding 44% 49% 14% 41% 82% 21%
short-term securities)
Average brokerage commission ratef $.0456 $.0465 $.0483 $.0447 $.0320 $.0488
a For a share outstanding throughout the period. Rounded to the nearest
cent.
b Inception date was May 13, 1996.
c Six months ended March 31,1998 (Unaudited).
d Adjusted to an annual basis.
e The Advisor and Distributor voluntarily limited total operating expenses.
Without this agreement, the ratio of expenses to average daily net assets
would have been 1.24%, 6.35% and 34.04% for Balanced Fund for periods ended
1998, 1997 and 1996, respectively, 3.20%, 1.13% and 34.21% for Equity Fund
for the periods ended 1998, 1997 and 1996, respectively.
f Effective fiscal year 1996, the Fund is required to disclose an average
brokerage commission rate per share for security trades on which commissions
are charged. The comparability of this information may be affected by the
fact that commission rates per share vary significantly among foreign
countries.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial highlights (continued)
Fiscal period ended Sept. 30,
Per share income and capital changes(a)
Equity Income Fund Total Return Fund
<S> <C> <C> <C> <C> <C> <C>
1998(b) 1997 1996(c) 1998(b) 1997 1996(c)
Net asset value, $11.16 $8.92 $8.68 $14.53 $12.22 $11.89
beginning of period
Income from investment operations:
Net investment income (loss) .12 .37 .13 .15 .31 .06
Net gains (losses) (both 1.13 2.22 .23 1.01 2.29 .31
realized and unrealized)
Total from investment 1.25 2.59 .36 1.16 2.60 .37
operations
Less distributions:
Dividends from net (.14) (.35) (.12) (.18) (.29) (.04)
investment income
Distributions from (.82) -- -- (1.24) -- --
realized gains
Total distributions (.96) (.35) (.12) (1.42) (.29) (.04)
Net asset value, $11.45 $11.16 $8.92 $14.27 $14.53 $12.22
end of period
Ratios/supplemental data:
Net assets, end of $965 $827 $534 $773 $686 $529
period (in thousands)
Ratio of expenses to 1.24%e 1.07% 1.25%e 1.30%e 1.26% 1.30%e
average daily net assets(d)
Ratio of net income (loss) 2.30%e 3.65% 3.51%e 2.19%e 2.29% .96%e
to average daily net assets
Total return 12.3% 29.4% 4.1% 9.0% 21.4% 3.2%
Portfolio turnover rate (excluding 43% 81% 17% 59% 99% 35%
short-term securities)
Average brokerage commission rate(f) $.0480 $.0482 $.0324 $.0115 $.0339 $.0384
a For a share outstanding throughout the period. Rounded to the
nearest cent.
b Six months ended March 31, 1998 (Unaudited).
c Inception date was May 13, 1996.
d The Advisor and Distributor voluntarily limited total operating expenses.
Without this agreement, the ratio of expenses to average daily net assets
would have been 1.64%, 4.53% and 24.26% for Equity Income Fund for periods
ended 1998, 1997 and 1996, respectively, and 3.11%, 2.79% and 31.60% for
Total Return Fund for the periods ended 1998, 1997 and 1996, respectively.
e Adjusted to an annual basis.
f Effective fiscal year 1996, the Fund is required to disclose an average
brokerage commission rate per share for security trades on which commissions
are charged. The comparability of this information may be affected by the
fact that commission rates per share vary significantly among foreign
countries.
</TABLE>
<PAGE>
Strategist Growth and Income Fund, Inc.
Financial statements
Statement of assets and liabilities
Balanced Portfolio
March 31, 1998
Assets (Unaudited)
Investments in securities, at value (Note 1)
(identified cost $4,638,329,753) $5,318,291,809
Dividends and accrued interest receivable 31,344,689
Receivable for investment securities sold 39,556,553
U.S. government securities held as collateral (Note 6) 101,889,084
-----------
Total assets 5,491,082,135
-------------
Liabilities
Disbursements in excess of cash on demand deposit 2,476,181
Payable for investment securities purchased 33,171,591
Payable upon return of securities loaned (Note 6) 105,365,284
Accrued investment management services fee 4,647
Option contracts written, at value
(premium received $809,749) (Note 4) 408,431
Other accrued expenses 82,182
------
Total liabilities 141,508,316
-----------
Net assets $5,349,573,819
--------------
See accompanying notes to financial statements.
<PAGE>
Statement of operations
Balanced Portfolio
Six months ended March 31, 1998
Investment income (Unaudited)
Income:
Dividends $ 35,603,287
Interest 72,064,059
Less foreign taxes withheld (48,363)
-------
Total income 107,618,983
-----------
Expenses (Note 2):
Investment management services fee 11,934,850
Compensation of board members 13,417
Custodian fees 192,524
Audit fees 14,813
------
Total expenses 12,155,604
Earnings credits on cash balances (Note 2) (7,755)
------
Total net expenses 12,147,849
----------
Investment income (loss) -- net 95,471,134
----------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (Note 3) 298,030,947
Financial futures contracts (Note 5) 28,559,979
Foreign currency transactions (4,873,363)
----------
Net realized gain (loss) on investments 321,717,563
-----------
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilities in foreign currencies 50,523,616
----------
Net gain (loss) on investments and foreign currencies 372,241,179
-----------
Net increase (decrease) in net assets resulting from operations $467,712,313
------------
See accompanying notes to financial statements.
<PAGE>
Strategist Growth and Income Fund, Inc.
Statements of changes in net assets
Balanced Portfolio
March 31, 1998 Sept. 30, 1997
Six months ended Year ended
(Unaudited)
Operations
Investment income (loss)-- net $ 95,471,134 $ 191,274,275
Net realized gain (loss) on investments 321,717,563 535,161,611
Net change in unrealized appreciation
(depreciation) on investments and on
translation of assets and liabilities in
foreign currencies 50,523,616 270,752,151
---------- -----------
Net increase (decrease) in net assets
resulting from operations 467,712,313 997,188,037
Net contributions (withdrawals) from partners 28,541,608 (161,960,911)
---------- ------------
Total increase (decrease) in net assets 496,253,921 835,227,126
Net assets at beginning of period 4,853,319,898 4,018,092,772
------------- -------------
Net assets at end of period $5,349,573,819 $4,853,319,898
-------------- --------------
See accompanying notes to financial statements.
<PAGE>
Notes to financial statements
Balanced Portfolio
(Unaudited as to March 31, 1998)
1. Summary of significant accounting policies
Balanced Portfolio (the Portfolio) is a series of Growth and Income Trust
(the Trust) and is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company.
Balanced Portfolio seeks to provide a balance of growth of capital and
current income by investing in common stocks and senior securities
(preferred stocks and debt securities) issued by U.S. and foreign
companies. The Portfolio also may invest in derivative instruments and
money market instruments. The Declaration of Trust permits the Trustees to
issue non-transferable interests in the Portfolio.
Significant accounting polices followed by the Portfolio are summarized
below:
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities
traded on national securities exchanges or included in national market
systems are valued at the last quoted sales price. Debt securities are
generally traded in the over-the-counter market and are valued at a price
deemed best to reflect fair value as quoted by dealers who make markets in
these securities or by an independent pricing service. Securities for
which market quotations are not readily available are valued at fair value
according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current
interest rates; those maturing in 60 days or less are valued at amortized
cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate
buying and selling of securities for investment purposes, the Portfolio
may buy and write options traded on any U.S. or foreign exchange or in the
over-the-counter market where the completion of the obligation is
dependent upon the credit standing of the other party. The Portfolio also
may buy and sell put and call options and write covered call options on
portfolio securities and may write cash-secured put options. The risk in
writing a call option is that the Portfolio gives up the opportunity of
profit if the market price of the security increases. The risk in writing
a put option is that the Portfolio may incur a loss if the market price of
the security decreases and the option is exercised. The risk in buying an
option is that the Portfolio pays a premium whether or not the option is
exercised. The Portfolio also has the additional risk of not being able to
enter into a closing transaction if a liquid secondary market does not
exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The
Portfolio will realize a gain or loss upon expiration or closing of the
option transaction. When an option is exercised, the proceeds on sales for
a written call option, the purchase cost for a written put option or the
cost of a security for a purchased put or call option is adjusted by the
amount of premium received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market,
the Portfolio may buy and sell financial futures contracts traded on any
U.S. or foreign exchange. The Portfolio also may buy and write put and
call options on these futures contracts. Risks of entering into futures
contracts and related options include the possibility that there may be an
illiquid market and that a change in the value of the contract or option
may not correlate with changes in the value of the underlying securities.
Upon entering into a futures contract, the Portfolio is required to
deposit either cash or securities in an amount (initial margin) equal to a
certain percentage of the contract value. Subsequent payments (variation
margin) are made or received by the Portfolio each day. The variation
margin payments are equal to the daily changes in the contract value and
are recorded as unrealized gains and losses. The Portfolio recognizes a
realized gain or loss when the contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign
currencies are translated daily into U.S. dollars at the closing rate of
exchange. Foreign currency amounts related to the purchase or sale of
securities and income and expenses are translated at the exchange rate on
the transaction date. The effect of changes in foreign exchange rates on
realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net
realized gains or losses from foreign currency transactions may arise from
sales of foreign currency, closed forward contracts, exchange gains or
losses realized between the trade date and settlement dates on securities
transactions, and other translation gains or losses on dividends, interest
income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts
for operational purposes and to protect against adverse exchange rate
fluctuation. The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Portfolio and the resulting unrealized
appreciation or depreciation are determined using foreign currency
exchange rates from an independent pricing service. The Portfolio is
subject to the credit risk that the other party will not complete the
obligations of the contract.
Illiquid securities
At March 31, 1998, investments in securities included issues that are
illiquid. The Portfolio currently limits investments in illiquid
securities to 10% of net assets, at market value, at the time of purchase.
The aggregate value of such securities at March 31, 1998 was $4,116,280
representing 0.08% of net assets. Pursuant to guidelines adopted by the
board, certain unregistered securities are determined to be liquid and are
not included within the 10% limitation specified above.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership
and each investor in the Portfolio is treated as the owner of its
proportionate share of the net assets, income, expenses and realized and
unrealized gains and losses of the Portfolio. Accordingly, as a
"pass-through" entity, the Portfolio does not pay any income dividends or
capital gain distributions.
Other
Security transactions are accounted for on the date securities are
purchased or sold. Dividend income is recognized on the ex-dividend date
and interest income, including level-yield amortization of premium and
discount, is accrued daily.
2. Fees and expenses
The Trust, on behalf of the Portfolio, has entered into an Investment
Management Services Agreement with AEFC for managing its portfolio. Under
this agreement, AEFC determines which securities will be purchased, held
or sold. The management fee is a percentage of the Portfolio's average
daily net assets in reducing percentages from 0.53% to 0.43% annually. The
fees may be increased or decreased by a performance adjustment based on a
comparison of the performance of Class A shares of IDS Mutual to the
Lipper Balanced Fund Index. The maximum adjustment is 0.08% of the
Portfolio's average daily net assets on an annual basis. The adjustment
decreased the fee by $136,964 for the six months ended March 31, 1998.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain
legal fees, fidelity bond premiums, registration fees for units, office
expenses, consultants' fees, compensation of trustees, corporate filing
fees, expenses incurred in connection with lending securities of the
Portfolio, and any other expenses properly payable by the Trust or
Portfolio and approved by the board.
During the six months ended March 31, 1998, the Portfolio's custodian fees
were reduced by $7,755 as a result of earnings credits from overnight cash
balances.
Pursuant to a Placement Agency Agreement, American Express Financial
Advisors Inc. acts as placement agent of the units of the Trust.
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $2,287,386,523 and $1,968,617,188,
respectively, for the six months ended March 31, 1998. For the same
period, the portfolio turnover rate was 44%. Realized gains and losses are
determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $10,422
during this period.
4. Option contracts written
The number of contracts and premium amounts associated with option
contracts written is as follows:
Six months ended March 31, 1998
Calls
Contracts Premium
Balance Sept. 30, 1997 -- $ --
Opened 1,233 809,749
----- -------
Balance March 31, 1998 1,233 $809,749
----- --------
See "Summary of significant accounting policies."
5. Stock index futures contracts
At March 31, 1998, cash was pledged as collateral to cover initial margin
deposits on 1,150 open purchase contracts. The market value of the open
purchase contracts at March 31, 1998 was $319,268,750 with a net
unrealized gain of $4,307,546. See "Summary of significant accounting
policies."
6. Lending of portfolio securities
At March 31, 1998, securities valued at $105,362,825 were on loan to
brokers. For collateral, the Portfolio received $3,476,200 in cash and
U.S. government securities valued at $101,889,084. Income from securities
lending amounted to $150,665 for the six months ended March 31, 1998. The
risks to the Portfolio of securities lending are that the borrower may not
provide additional collateral when required or return the securities when
due.
<PAGE>
Strategist Growth and Income Fund, Inc.
Investments in securities
Balanced Portfolio
March 31, 1998 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks - 58.7%
Issuer Shares Value (a)
Aerospace & defense - 1.7%
AlliedSignal 800,000 $33,600,000
Litton Inds 205,200(b) 11,837,475
Rockwell Intl 815,000 46,760,625
-----------
Total 92,198,100
Airlines - 0.7%
AMR 251,100(b) 35,954,381
Automotive & related - 2.4%
Ford Motor 725,000 46,989,063
Genuine Parts 1,218,000 46,436,250
Meritor Automotive 208,333 5,533,845
TRW 577,000 31,807,125
-----------
Total 130,766,283
Banks and savings & loans - 5.0%
BankAmerica 525,000 43,378,125
First Chicago NBD 500,000 44,062,500
First Union 875,000 49,656,250
Morgan (JP) 350,000 47,009,375
NationsBank 600,000 43,762,500
Washington Mutual 575,000 41,238,281
-----------
Total 269,107,031
Beverages & tobacco - 1.8%
Fortune Brands 860,000 34,292,500
Philip Morris 1,439,000 59,988,313
-----------
Total 94,280,813
Building materials & construction - 1.4%
American Standard 800,000(b) 36,700,000
Weyerhaeuser 700,000 39,550,000
-----------
Total 76,250,000
Chemicals - 1.4%
Air Products & Chemicals 420,000 34,807,500
Du Pont (EI) de Nemours 560,000 38,080,000
-----------
Total 72,887,500
Communications equipment & services - 0.9%
Motorola 815,000 49,409,375
Computers & office equipment - 0.9%
Xerox 445,000 47,364,688
Electronics - 1.5%
AMP 390,000 17,086,875
Applied Materials 620,000(b) 21,893,750
Texas Instruments 450,000 24,356,250
Thomas & Betts 289,400 18,521,600
-----------
Total 81,858,475
Energy - 2.9%
Amoco 1,040,000 89,830,000
Mobil 876,500 67,161,813
-----------
Total 156,991,813
Energy equipment & services - 0.3%
Santa Fe Intl 478,500 18,153,094
Financial services - 0.9%
Boston Properties 314,250(b) 11,057,672
Travelers Group 650,000 39,000,000
-----------
Total 50,057,672
Food - 1.2%
General Mills 400,000 30,400,000
Sara Lee 580,000 35,742,500
-----------
Total 66,142,500
Foreign - 5.8%(c)
B.A.T. Inds 3,750,000 37,649,276
BCE 1,040,000 43,420,000
Elf Aquitaine ADR 1,400,000(g) 90,650,000
KLM Royal Dutch Air Lines 214,600 8,718,125
Royal Dutch Petroleum 2,200,000 124,987,499
-----------
Total 305,424,900
Health care - 5.6%
American Home Products 689,000 65,713,374
Amgen 930,000(b) 56,613,750
Baxter Intl 1,006,000 55,455,750
Johnson & Johnson 765,000 56,084,063
Merck & Co 475,000 60,978,125
-----------
Total 294,845,062
Health care services - 1.1%
Columbia/HCA Healthcare 1,771,000 57,114,750
Household products - 1.1%
Kimberly-Clark 1,123,700 56,325,463
Industrial equipment & services - 1.2%
Browning-Ferris Inds 835,000 27,241,875
Case 554,000 37,741,250
-----------
Total 64,983,125
Insurance - 2.4%
Allstate 490,000 45,049,375
Marsh & McLennan 320,000 27,940,000
Provident Cos 307,800 10,561,388
St. Paul Cos 525,000(g) 46,790,625
-----------
Total 130,341,388
Media - 1.6%
Gannett 955,400 68,669,375
Tribune 255,000 17,977,500
-----------
Total 86,646,875
Metals - 1.3%
Aluminum Co of America 482,500 33,202,031
Reynolds Metals 555,000 34,097,813
-----------
Total 67,299,844
Multi-industry conglomerates - 1.0%
Emerson Electric 850,000 55,409,375
Paper & packaging - 1.6%
Tenneco 1,272,000 54,298,500
Union Camp 546,000 32,623,500
-----------
Total 86,922,000
Real estate investment trust - 1.5%
Equity Office Properties Trust 405,000 12,403,125
Meditrust 300,000 9,262,500
Nationwide Health Properties 354,000 8,850,000
Security Capital Industrial Trust 700,000 17,937,500
Simon DeBartolo Group 700,000 23,975,000
Spieker Properties 129,300 5,333,625
-----------
Total 77,761,750
Retail - 2.8%
American Stores 2,400,000 62,400,000
Circuit City Stores 480,000(m) 20,520,000
Penney (JC) 915,000 69,254,063
-----------
Total 152,174,063
Transportation - 0.3%
Burlington Northern Santa Fe 170,000 17,680,000
Utilities -- electric - 3.2%
CMS Energy 1,100,000 51,631,250
Duke Energy 416,800 24,825,650
GPU 353,400 15,637,950
New Century Energies 900,000 45,337,500
Northern States Power 550,000 32,450,000
-------------
Total 169,882,350
Utilities -- gas - 0.1%
Consolidated Natural Gas 100,000 5,768,750
Utilities -- telephone - 5.1%
Ameritech 1,200,000 59,325,000
BellSouth 850,000 57,428,125
GTE 630,000 37,721,250
SBC Communications 960,000 41,880,000
U S WEST Communications 1,335,000 73,091,249
-------------
Total 269,445,624
Total common stocks
(Cost: $2,544,777,193) $3,139,447,044
Bonds - 32.3%
Issuer Coupon Principal Value(a)
rate amount
U.S. government obligations - 10.5%
Govt Trust Certs Israel
11-15-01 9.25% $7,458,030 $7,715,556
Overseas Private Investment
U.S. Govt Guaranty Series 1996A
01-15-09 6.99 17,500,000 18,149,948
Resolution Funding
10-15-19 8.125 50,000,000 61,492,000
Zero Coupon
01-15-19 6.50 53,000,000(k) 14,783,285
10-15-19 6.32 50,000,000(k) 13,314,500
U.S. Treasury
09-30-99 7.125 62,650,000(g) 64,012,637
11-15-99 5.875 25,000,000 25,107,000
01-31-00 7.75 25,000,000 25,921,250
03-31-00 6.875 20,000,000 20,479,800
04-30-00 6.75 15,000,000 15,330,450
08-31-00 6.25 30,000,000 30,385,800
07-31-01 6.625 25,000,000 25,721,000
11-15-01 7.50 50,000,000 52,953,500
05-31-02 6.50 25,000,000 25,739,250
09-30-02 5.875 25,000,000(g) 25,181,000
08-15-19 8.125 90,000,000 112,600,799
08-15-23 6.25 25,000,000 25,773,750
-----------
Total 564,661,525
Mortgage-backed securities - 8.0%
Collateralized Mtge Obligation Trust
12-20-14 9.95 3,582,274 3,864,629
Federal Home Loan Mtge Corp
10-01-03 7.00 5,365,541 5,443,341
07-01-07 6.50 490,980 494,383
07-01-08 6.75 1,855,116 1,869,994
06-01-09 5.50 4,387,248 4,296,213
01-01-11 6.50 16,786,807 16,871,412
10-01-11 6.50 21,360,364 21,461,398
03-01-13 5.50 14,850,015 14,320,983
08-01-24 8.00 6,975,948 7,249,405
10-01-26 8.50 9,792,977 10,246,392
Collateralized Mtge Obligation
01-15-03 7.50 7,527,343 7,750,905
04-15-22 8.50 7,000,000 7,719,810
Trust Series Z
05-15-23 6.50 12,311,618(i) 11,800,686
10-15-23 6.50 10,472,800(i) 10,069,283
04-25-24 8.25 6,902,804(i) 7,511,769
Federal Natl Mtge Assn
10-01-02 7.50 661,459 678,339
02-15-08 5.75 40,000,000(g) 39,406,249
01-01-09 5.50 6,597,453 6,437,860
12-01-11 7.00 21,137,981 21,514,448
02-01-14 7.50 1,638,168 1,672,258
10-25-16 7.00 11,444,548 11,524,660
05-01-23 6.50 5,260,153 5,250,580
09-01-23 6.50 8,039,252 8,014,572
01-01-24 6.50 14,992,196 14,946,170
06-01-24 9.00 6,133,253 6,582,084
08-01-25 7.50 20,034,215 20,614,006
10-01-25 8.50 376,987 395,501
05-01-26 8.50 4,845,298 5,074,190
06-01-26 8.50 74,895 78,433
06-01-26 8.50 3,340,260 3,498,054
07-01-26 8.50 1,319,348 1,381,674
Collateralized Mtge Obligation
11-25-07 4.50 11,900,000 11,065,929
01-25-24 5.00 5,880,738 5,738,953
05-18-26 5.00 15,000,000 13,570,313
Trust Series Z
12-25-06 8.00 10,698,921(i) 11,275,914
12-15-14 7.50 9,338,340(i) 9,807,895
01-01-20 8.00 11,971,290(i) 12,876,580
07-25-22 7.00 15,518,128(i) 15,924,296
10-25-22 7.00 14,594,586(i) 14,920,083
10-25-23 6.50 7,323,268(i) 7,018,767
12-25-23 6.50 11,597,902(i) 10,735,797
02-25-24 6.00 7,661,050(i) 6,802,016
Govt Natl Mtge Assn
07-20-27 6.50 23,464,595(j) 23,911,595
Standard Credit Card Trust
10-07-04 5.95 8,550,000 8,487,671
-----------
Total 430,175,490
Aerospace & defense - 0.2%
United Techonologies
11-15-19 8.875 9,500,000 11,714,545
Automotive & related - 0.2%
Ford Motor Credit
Medium-term Nts Series 1
03-29-01 6.55 13,000,000 13,175,110
Banks and savings & loans - 1.5%
ABN-Amro Bank
Sub Nts Series B
10-15-93 7.125 7,000,000 7,238,070
BankAmerica
Series B
12-31-26 7.70 10,000,000(h) 10,244,700
First Bank System
Sub Nts
09-15-07 6.875 5,750,000 5,937,048
Fleet Financial Group
Sub Deb
01-15-28 6.875 1,500,000 1,496,940
Mellon Capital
Company Guaranty Series A
12-01-26 7.72 8,000,000 8,330,960
Swiss Bank
Sub Deb
07-15-25 7.50 4,700,000 5,068,104
09-01-26 7.75 11,000,000 12,245,860
Union Planters Capital
Company Guaranty
12-15-26 8.20 10,000,000 10,633,700
US Capital
02-01-27 8.41 10,000,000(h) 10,882,200
Washington Mutual Capital
Company Guaranty
06-01-27 8.375 5,800,000(h) 6,308,718
-----------
Total 78,386,300
Building materials & construction - 0.1%
Owens-Corning Fiberglass
06-01-12 9.375 3,500,000 4,113,235
Chemicals - 0.2%
USA Waste Services
Sr Nts
10-01-07 7.125 11,000,000 11,457,600
Communications equipment & services - 0.4%
BellSouth Telecommunications
06-15-05 6.50 9,000,000 9,216,720
12-01-95 7.00 10,000,000 10,383,800
-----------
Total 19,600,520
Computers & office equipment - 0.1%
Intl Business Machines
06-15-00 6.375 5,100,000 5,154,978
Electronics - 0.1%
Harris
12-01-18 10.375 4,000,000 4,304,960
Energy - 0.1%
Occidental Petroleum
Medium-term Nts Series B
04-10-00 6.25 6,500,000 6,525,545
Energy equipment & services - 0.7%
Baker Hughes
Zero Coupon Cv Nts
05-05-08 2.23 26,250,000(k) 21,787,500
Diamond Offshore Drilling
Cv Sr Sub Nts
09-15-07 3.125 3,780,000 3,723,300
Global Marine
09-01-07 7.125 10,000,000(h) 10,320,400
-----------
Total 35,831,200
Financial services - 0.9%
Associates Corp of North America
Sr Nts
03-15-00 6.00 6,000,000 6,005,160
Avco Financial Services
Sr Nts
07-15-99 7.25 6,500,000 6,614,075
Bat-Crave-800
08-12-00 6.68 7,000,000(h) 7,056,700
Intl Lease Finance
Medium-term Nts Series F
04-01-98 5.99 5,000,000 5,000,000
KFW Intl Finance
02-15-10 8.00 6,750,000 7,684,133
Liberty Mutual Insurance
10-15-97 7.70 10,000,000 10,571,900
Salomon
Sr Nts
01-15-06 6.75 7,000,000 7,134,540
-----------
Total 50,066,508
Foreign - 3.2%(c)
Canadian Natl Railroad
(U.S. Dollar)
05-15-23 7.625 6,000,000 6,373,320
Dao Heng Bank
(U.S. Dollar) Sub Nts
01-24-07 7.75 10,000,000(h) 9,111,400
EES Coke Battery
(U.S. Dollar) Sr Nts
04-15-02 7.125 8,529,625(h) 8,602,383
Hyundai Semiconductor
(U.S. Dollar) Sr Nts
05-15-04 8.25 10,000,000(h) 8,370,700
Inter-American Development Bank
(U.S. Dollar) Sr Deb
04-11-00 9.50 5,000,000 5,328,655
Israel Electric
(U.S. Dollar) Sr Nts
12-15-06 7.25 10,000,000 10,180,200
MGM Grand
(U.S. Dollar)
02-01-05 6.95 10,000,000 9,823,400
Morgan (JP)
(U.S. Dollar) Sr Sub Nts Series A
02-15-12 4.00 15,000,000 13,925,249
Nationwide CSN Trust
(U.S. Dollar)
02-15-25 9.875 15,500,000(h) 18,549,934
New York Life Insurance
(U.S. Dollar)
12-15-23 7.50 11,500,000(h) 11,642,715
Petronas
(U.S. Dollar)
08-15-15 7.75 10,000,000 9,199,500
Railcar Leasing
(U.S. Dollar)
01-15-13 7.125 15,000,000(h) 15,737,850
Ras Laffan
(U.S. Dollar)
03-15-14 8.29 10,000,000(h) 10,232,500
Republic of Slovenia
(U.S. Dollar)
08-06-01 7.00 7,200,000(h) 7,345,656
Telecom NewZeal Finance
(U.S. Dollar)
02-10-08 6.50 10,000,000(h) 9,849,260
TU Electric Capital
(U.S. Dollar) Company Guaranty
01-30-37 8.175 10,000,000 10,306,000
Zurich Capital
(U.S. Dollar) Company Guaranty
06-01-37 8.38 7,500,000(h) 8,192,925
-----------
Total 172,771,647
Health care - 0.1%
Lilly (Eli)
01-01-36 6.77 5,000,000 5,131,150
Health care services - 0.1%
Kaiser Permanente
07-15-05 9.55 6,000,000 7,112,820
Household products - 0.1%
Procter & Gamble
09-01-24 8.00 3,000,000 3,568,500
Insurance - 0.6%
American United Life Insurance
03-30-26 7.75 4,000,000(e,h) 4,116,280
Equitable Life Assurance Society
US Cl B1 Series 174
05-15-09 7.33 5,500,000 5,810,750
Principal Mutual
03-01-44 8.00 7,150,000(h) 7,619,398
SAFECO Capital
Company Guaranty
07-15-37 8.07 10,000,000 10,520,799
SunAmerica
04-28-23 8.125 5,150,000 5,789,991
-----------
Total 33,857,218
Media - 0.3%
Belo (AH)
Sr Nts
06-01-07 7.125 15,000,000 15,658,650
Miscellaneous - 0.5%
American General Institute Capital
Company Guaranty Series A
12-01-45 7.57 15,000,000(h) 15,493,350
M & I Capital
Company Guaranty
12-01-26 7.65 10,000,000 10,355,000
-----------
Total 25,848,350
Municipal bonds - 0.7%(l)
Denver Colorado City & County School
District 1 Taxable-Pension-School
Facilities Lease (AMBAC Insured)
12-15-12 6.94 10,000,000 10,192,800
Los Angeles County California Pension Obligation
Taxable Revenue Bonds Series 1994C
Zero Coupon (MBIA Insured)
06-30-08 7.05 9,440,000(k) 4,852,160
Los Angeles County California Pension Obligation
Taxable Revenue Bonds Series 1995D
(MBIA Insured)
06-30-08 6.97 10,500,000 11,040,120
Orange County California Pension Obligation
Taxable Revenue Bonds (MBIA Insured)
09-01-09 7.31 5,000,000 5,388,600
Yale University
04-15-96 7.375 4,000,000 4,305,960
-----------
Total 35,779,640
Paper & packaging - 0.3%
Crown Cork & Seal
04-15-23 8.00 6,000,000 6,357,540
Intl Paper
11-15-12 5.125 13,400,000 11,586,042
-----------
Total 17,943,582
Real estate investment trust - 0.1%
Property Trust of America
02-15-14 7.50 5,000,000 5,144,600
Retail - 0.3%
Wal-Mart CRAVE Trust
07-17-06 7.00 13,442,258(h) 13,789,337
Transportation - 0.7%
Atlas Air
01-02-10 8.01 15,000,000 14,956,350
Burlington Northern Santa Fe
12-15-25 7.00 10,200,000 10,387,272
CSX
05-01-27 7.25 10,000,000 10,664,100
-----------
Total 36,007,722
Utilities -- electric - 1.1%
Arizona Public Service
12-30-15 8.00 5,400,000 5,934,060
Cleveland Electric Illuminating
07-01-00 7.19 5,000,000 5,081,700
07-01-04 7.67 10,000,000 10,300,000
Entergy Louisiana
1st Mtge
03-01-08 6.50 5,535,000 5,486,846
Pacific Gas & Electric
1st Mtge Series 1992D
11-01-22 8.25 4,600,000 4,989,666
Public Services Electric & Gas
1st & Ref Mtge
01-01-16 6.75 13,000,000 13,145,990
Wisconsin Electric Power
01-15-23 7.75 5,500,000 5,819,990
12-01-95 6.875 8,000,000 8,098,960
-----------
Total 58,857,212
Utilities -- telephone - 1.2%
Bell Atlantic
Series P
01-01-06 4.875 13,000,000 11,899,420
Bell Telephone of Pennsylvania
03-15-33 7.375 5,000,000 5,117,450
GTE
12-01-00 9.375 4,600,000 4,950,336
11-01-21 8.75 5,000,000 5,963,250
Illinois Bell Telephone
1st Mtge Series H
07-01-03 4.375 4,600,000 4,259,692
Pacific Bell
10-15-34 6.625 6,100,000 5,861,368
07-15-43 7.375 7,500,000 7,840,125
U S WEST Communications
09-15-05 6.625 7,000,000 7,170,800
Worldcom
04-01-07 7.75 10,000,000 10,820,000
-----------
Total 63,882,441
Total bonds
(Cost: $1,645,210,285) $1,730,520,385
Short-term securities - 8.4%(d)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies - 0.3%
Federal Home Loan Bank Disc Nt
04-13-98 5.46% $5,000,000 $4,990,900
Federal Home Loan Mtge Corp Disc Nts
04-13-98 5.45 10,000,000 9,981,850
04-17-98 5.46 1,200,000 1,197,088
-----------
Total 16,169,838
Commercial paper - 7.9%
AIG Funding
04-03-98 5.56 10,200,000 10,196,848
Alabama Power
04-14-98 5.62 10,031,000 10,010,679
American General Finance
05-13-98 5.57 10,000,000 9,932,292
BBV Finance (Delaware)
04-08-98 5.54 3,800,000 3,795,921
Bell Atlantic
04-20-98 5.54 1,700,000 1,695,047
04-20-98 5.55 4,900,000 4,885,699
BellSouth Capital Funding
04-06-98 5.56 12,000,000 11,990,767
Beneficial
05-18-98 5.57 7,000,000 6,949,462
BHP Finance
04-16-98 5.57 1,700,000 1,696,076
CAFCO
04-22-98 5.56 14,000,000(f) 13,954,920
05-19-98 5.56 12,500,000(f) 12,408,000
Ciesco LP
04-27-98 5.56 15,900,000 15,836,383
05-14-98 5.54 5,900,000(f) 5,861,240
CIT Group Holdings
05-26-98 5.58 12,500,000 12,391,079
Commerzbank U.S. Finance
04-22-98 5.55 5,000,000 4,983,871
04-27-98 5.57 9,600,000 9,561,520
Consolidated Natural Gas
04-21-98 5.54 10,700,000 10,667,187
Daimler-Benz
04-13-98 5.55 18,000,000 17,966,880
04-23-98 5.52 11,500,000 11,461,488
Delaware Funding
05-01-98 5.57 10,300,000(f) 10,252,449
Dresdner US Finance
04-02-98 5.59 10,500,000 10,498,375
Fleet Funding
04-14-98 5.59 13,600,000(f) 13,572,693
Glaxo Wellcome
04-06-98 5.55 3,600,000(f) 3,597,235
Heinz (HJ)
04-28-98 5.54 8,900,000 8,863,288
Intl Lease Finance
04-22-98 5.55 13,000,000 12,958,064
Kellogg
04-27-98 5.57 7,900,000 7,868,334
Kredietbank North America Finance
05-04-98 5.55 12,500,000 12,433,341
05-08-98 5.55 10,000,000 9,943,472
Natl Rural Utilities
04-23-98 5.55 11,000,000 10,962,826
New Center Asset Trust
05-08-98 5.56 10,000,000 9,937,992
Novartis Finance
04-08-98 5.55 8,500,000 8,490,861
04-09-98 5.52 7,700,000 7,688,882
05-08-98 5.56 8,200,000(f) 8,153,394
05-11-98 5.56 6,800,000(f) 6,758,218
Paccar Financial
04-02-98 5.57 3,200,000 3,199,507
04-22-98 5.56 6,300,000 6,279,640
04-23-98 5.55 11,700,000 11,660,460
Pacific Life Insurance
04-23-98 5.55 8,400,000 8,371,613
04-24-98 5.56 8,300,000 8,270,623
04-30-98 5.57 9,500,000 9,457,527
Pfizer
04-06-98 5.55 6,395,000(f) 6,390,088
SBC Communications Capital
04-14-98 5.54 7,800,000(f) 7,784,424
04-21-98 5.53 13,500,000(f) 13,458,825
Toyota Motor Credit
04-16-98 5.56 15,000,000 14,965,437
USAA Capital
04-22-98 5.55 7,600,000 7,575,572
Westpac Capital
04-07-98 5.57 7,300,000 7,293,260
-----------
Total 422,931,759
Letter of credit - 0.2%
Bank of America -
AES Hawaii
04-23-98 5.54 9,254,000 9,222,783
Total short-term securities
(Cost: $448,342,275) $448,324,380
Total investments in securities
(Cost: $4,638,329,753)(n) $5,318,291,809
See accompanying notes to investments in securities.
Strategist Growth and Income Fund, Inc.
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(d) At March 31, 1998, cash or short-term securities were pledged as initial
margin deposit on the following open stock index futures purchase contracts
(see Note 5 to the financial statements):
Type of security Contracts
Standard & Poor's 500 Stock Index, June 1998 1,150
(e) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at March 31, 1998, is as follows:
Security Acquisition Cost
date
American United Life Insurance*
7.75% 2026 02-13-96 $4,000,000
*Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended.
(f) Commercial paper sold within terms of a private placement memorandum, exempt
under Section 4(2) of the Securities Act of 1933, as amended, and may be sold
only to dealers in that program or other "accredited investors." This security
has been determined to be liquid under guidelines established by the board.
(g) Security is partially or fully on loan. See Note 6 to the financial
statements.
(h) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(i) This security is a collateralized mortgage obligation that pays no
interest or principal during its initial accrual period until payment of a
previous series within the trust have been paid off. Interest is accrued at an
effective yield.
(j) Adjustable rate mortgage; interest rate varies to reflect current market
conditions; rate shown is the effective rate on March 31, 1998. (k) For zero
coupon bonds, the interest rate disclosed represents the annualized effective
yield on the date of acquisition. (l) The following abbreviations are used in
portfolio descriptions to identify the insurer of the issue:
AMBAC -- American Municipal Bond Association Corporation
MBIA -- Municipal Bond Investors Assurance
(m) At March 31, 1998, securities valued at $5,271,075 were held to cover open
call options written as follows:
Issuer Shares Exercise Expiration Value(a)
price date
Circuit City Stores 123,300 $40 April 1998 $408,431
(n) At March 31, 1998, the cost of securities for federal income tax purposes
was approximately $4,638,345,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $696,414,000
Unrealized depreciation (16,467,000)
Net unrealized appreciation $679,947,000
See accompanying notes to investments in securities.
Strategist Growth and Income Fund, Inc.
<PAGE>
Strategist Growth and Income Fund, Inc.
Financial statements
Statement of assets and liabilities
Equity Portfolio
March 31, 1998
Assets (Unaudited)
Investments in securities, at value (Note 1):
Investments in securities of unaffiliated
issuers (identified cost $3,295,427,197) $4,571,456,107
Investments in securities of affiliated issuers
(identified cost $40,790,575) 80,629,082
----------
Total investments in securities
(identified cost $3,336,217,772) 4,652,085,189
Cash in bank on demand deposit 612,033
Dividends and accrued interest receivable 6,229,476
Receivable for investment securities sold 25,374,094
Unrealized appreciation on foreign currency
contracts held, at value (Notes 1 and 5) 7,055
U.S. government securities held as collateral (Note 4) 34,819,670
----------
Total assets 4,719,127,517
Liabilities
Payable for investment securities purchased 32,707,055
Payable upon return of securities loaned (Note 4) 43,645,870
Accrued investment management services fee 40,222
Other accrued expenses 63,192
Option contracts written, at value
(premium received $266,176) (Note 6) 225,000
-------
Total liabilities 76,681,339
----------
Net assets $4,642,446,178
--------------
See accompanying notes to financial statements.
<PAGE>
Statement of operations
Equity Portfolio
Six months ended March 31, 1998
Investment income (Unaudited)
Income:
Dividends (including $200,000 earned from affiliates) $ 33,955,945
Interest 5,946,633
Less foreign taxes withheld (414,814)
--------
Total income 39,487,764
Expenses (Note 2):
Investment management services fee 9,674,266
Compensation of directors 12,083
Custodian fees 185,130
Audit fees 14,438
Other 15,473
------
Total expenses 9,901,390
Earnings credit on cash balances (Note 2) (821)
----
Total net expenses 9,900,569
---------
Investment income (loss) -- net 29,587,195
----------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (Note 3) 291,530,307
Foreign currency transactions 1,120,772
---------
Net realized gain (loss) on investments 292,651,079
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilities in foreign currencies 241,096,482
-----------
Net gain (loss) on investments and foreign currencies 533,747,561
-----------
Net increase (decrease) in net assets resulting from operations $563,334,756
------------
See accompanying notes to financial statements.
<PAGE>
Strategist Growth and Income Fund, Inc.
Statements of changes in net assets
Equity Portfolio
March 31, 1998 Sept. 30, 1997
Six months ended Year ended
(Unaudited)
Operations and distributions
Investment income (loss)-- net $ 29,587,195 $ 69,424,362
Net realized gain (loss) on investments 292,651,079 490,586,825
Net change in unrealized appreciation
(depreciation) on investments and on
translation of assets and liabilities in
foreign currencies 241,096,482 427,383,679
----------- -----------
Net increase (decrease) in net assets
resulting from operations 563,334,756 987,394,866
Net contributions (withdrawals) from partners (84,689,343) (108,642,196)
----------- ------------
Total increase (decrease) in net assets 478,645,413 878,752,670
Net assets at beginning of period 4,163,800,765 3,285,048,095
------------- -------------
Net assets at end of period $4,642,446,178 $4,163,800,765
-------------- --------------
See accompanying notes to financial statements.
<PAGE>
Notes to financial statements
Equity Portfolio
(Unaudited as to March 31, 1998)
1. Summary of significant accounting policies
Equity Portfolio (the Portfolio) is a series of Growth and Income Trust
(the Trust) and is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company. Equity
Portfolio invests primarily in common stocks and securities convertible
into common stocks. The Declaration of Trust permits the Trustees to issue
non-transferable interests in the Portfolio.
Significant accounting policies followed by the Portfolio are summarized
below:
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities
traded on national securities exchanges or included in national market
systems are valued at the last quoted sales price. Debt securities are
generally traded in the over-the-counter market and are valued at a price
deemed best to reflect fair value as quoted by dealers who make markets in
these securities or by an independent pricing service. Securities for
which market quotations are not readily available are valued at fair value
according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current
interest rates; those maturing in 60 days or less are valued at amortized
cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate
buying and selling of securities for investment purposes, the Portfolio
may buy and write options traded on any U.S. or foreign exchange or in the
over-the-counter market where the completion of the obligation is
dependent upon the credit standing of the other party. The Portfolio also
may buy and sell put and call options and write covered call options on
portfolio securities and may write cash-secured put options. The risk in
writing a call option is that the Portfolio gives up the opportunity of
profit if the market price of the security increases. The risk in writing
a put option is that the Portfolio may incur a loss if the market price of
the security decreases and the option is exercised. The risk in buying an
option is that the Portfolio pays a premium whether or not the option is
exercised. The Portfolio also has the additional risk of not being able to
enter into a closing transaction if a liquid secondary market does not
exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The
Portfolio will realize a gain or loss upon expiration or closing of the
option transaction. When an option is exercised, the proceeds on sales for
a written call option, the purchase cost for a written put option or the
cost of a security for a purchased put or call option is adjusted by the
amount of premium received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market,
the Portfolio may buy and sell financial futures contracts traded on any
U.S. or foreign exchange. The Portfolio also may buy and write put and
call options on these futures contracts. Risks of entering into futures
contracts and related options include the possibility that there may be an
illiquid market and that a change in the value of the contract or option
may not correlate with changes in the value of the underlying securities.
Upon entering into a futures contract, the Portfolio is required to
deposit either cash or securities in an amount (initial margin) equal to a
certain percentage of the contract value. Subsequent payments (variation
margin) are made or received by the Portfolio each day. The variation
margin payments are equal to the daily changes in the contract value and
are recorded as unrealized gains and losses. The Portfolio recognizes a
realized gain or loss when the contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign
currencies are translated daily into U.S. dollars at the closing rate of
exchange. Foreign currency amounts related to the purchase or sale of
securities and income and expenses are translated at the exchange rate on
the transaction date. The effect of changes in foreign exchange rates on
realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net
realized gains or losses from foreign currency transactions may arise from
sales of foreign currency, closed forward contracts, exchange gains or
losses realized between the trade date and settlement dates on securities
transactions, and other translation gains or losses on dividends, interest
income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts
for operational purposes and to protect against adverse exchange rate
fluctuation. The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Portfolio and the resulting unrealized
appreciation or depreciation are determined using foreign currency
exchange rates from an independent pricing service. The Portfolio is
subject to the credit risk that the other party will not complete the
obligations of the contract.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership
and each investor in the Portfolio is treated as the owner of its
proportionate share of the net assets, income, expenses and realized and
unrealized gains and losses of the Portfolio. Accordingly, as a
"pass-through" entity, the Portfolio does not pay any income dividends or
capital gain distributions.
Other
Security transactions are accounted for on the date securities are
purchased or sold. Dividend income is recognized on the ex-dividend date
and interest income, including level-yield amortization of premium and
discount, is accrued daily.
2. Fees and expenses
The Trust, on behalf of the Portfolio, has entered into an Investment
Management Services Agreement with AEFC for managing its portfolio. Under
this agreement, AEFC determines which securities will be purchased, held
or sold. The management fee is a percentage of the portfolio's average
daily net assets in reducing percentages from 0.53% to 0.4% annually. The
fees may be increased or decreased by a performance adjustment based on a
comparison of the performance of Class A shares of IDS Stock Fund to the
Lipper Growth and Income Fund Index. The maximum adjustment is 0.08% of
the Portfolio's average daily net assets on an annual basis. The
adjustment decreased the fee by $275,747 for the six months ended March
31, 1998.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain
legal fees, fidelity bond premiums, registration fees for units, office
expenses, consultants' fees, compensation of trustees, corporate filing
fees, expenses incurred in connection with lending securities of the
Portfolio and any other expenses properly payable by the Trust or
Portfolio and approved by the board.
During the six months ended March 31, 1998, the Portfolio's custodian fees
were reduced by $821 as a result of earnings credits from overnight cash
balances.
Pursuant to a Placement Agency Agreement, American Express Financial
Advisors Inc. acts as placement agent of the units of the Trust.
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $1,670,887,676 and $1,749,217,547,
respectively, for the six months ended March 31, 1998. For the same
period, the portfolio turnover rate was 41%. Realized gains and losses are
determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $116,703
for the six months ended March 31, 1998.
4. Lending of portfolio securities
At March 31, 1998, securities valued at $43,645,870 were on loan to
brokers. For collateral, the Portfolio received $8,826,200 in cash and
U.S. government securities valued at $34,819,670. Income from securities
lending amounted to $154,939 for the six months ended March 31, 1998. The
risks to the portfolio of securities lending are that the borrower may not
provide additional collateral when required or return the securities when
due.
5. Foreign currency contracts
At March 31, 1998, the Portfolio had entered into a foreign currency
exchange contract that obligates the Portfolio to deliver currency at a
specified future date. The unrealized appreciation and/or depreciation on
this contract is included in the accompanying financial statements. See
"Summary of significant accounting policies." The terms of the open
contract are as follows:
Currency to be Currency to be Unrealized Unrealized
Exchange date delivered received appreciation depreciation
March 25, 1998 5,511,383 9,229,252 $7,055 $--
British Pound U.S. Dollar
6. Options contracts written
The number of contracts and premium amounts associated with option
contracts written is as follows:
Six months ended March 31, 1998
Calls
Contracts Premium
Balance March 31, 1997 -- $ --
Opened 2,000 266,176
Balance March 31, 1998 2,000 $266,176
See "Summary of significant accounting policies."
<PAGE>
Investments in securities
Equity Portfolio
March 31, 1998 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks - 85.0%
Issuer Shares Value (a)
Aerospace & defense - 1.2%
General Motors Cl H 450,000 $20,362,500
Lockheed Martin 306,084 34,434,450
-----------
Total 54,796,950
Airlines - 1.6%
AMR 300,000(b) 42,956,250
Northwest Airlines Cl A 500,000(b) 30,843,750
-----------
Total 73,800,000
Automotive & related - 1.0%
Ford Motor 700,000 45,368,750
Banks and savings & loans - 6.4%
BankAmerica 500,000 41,312,500
BankBoston 300,000 33,075,000
First Chicago NBD 500,000 44,062,500
First Union 1,000,000 56,750,000
Norwest 800,000 33,250,000
Wachovia 620,000 52,583,750
Washington Mutual 500,000 35,859,375
-----------
Total 296,893,125
Beverages & tobacco - 1.4%
Coca-Cola 525,000 40,654,687
Philip Morris 575,000 23,970,313
-----------
Total 64,625,000
Building materials & construction - 2.1%
American Standard 1,000,000(b) 45,875,000
Martin Marietta Materials 1,148,500 49,600,844
-----------
Total 95,475,844
Computers & office equipment - 5.6%
Bay Networks 1,300,000(b) 35,262,500
Compaq Computer 1,500,000 38,812,500
Hewlett-Packard 300,000 19,012,500
Microsoft 300,000(b) 26,850,000
Network Associates 500,000(b) 33,125,000
PeopleSoft 1,000,000(b) 52,687,500
Xerox 500,000 53,218,750
-----------
Total 258,968,750
Electronics - 1.2%
Harris 600,000 31,275,000
Intel 300,000 23,418,750
-----------
Total 54,693,750
Energy - 0.6%
Exxon 400,000 27,050,000
Energy equipment & services - 0.4%
Cooper Cameron 300,000(b) 18,112,500
Financial services - 2.1%
Associates First Capital Cl A 180,000 14,220,000
CIT Group Cl A 1,000,000 32,625,000
Providian Financial 250,000 14,359,375
Travelers Group 600,000(d) 36,000,000
-----------
Total 97,204,375
Food - 2.1%
Bestfoods 250,000 29,218,750
General Mills 500,000 38,000,000
Sara Lee 500,000 30,812,500
-----------
Total 98,031,250
Foreign - 12.8%(c)
Bayerische Vereinsbank 300,000(b) 21,894,259
Dresdner Bank 450,000 20,483,295
Elf Aquitaine ADR 600,000(d) 38,850,000
Ericsson (LM) ADR 5,000,000 33,125,000
EXEL 1,000,000 77,499,999
General Electric 4,100,000(b) 32,484,632
Meridian Gold 3,800,000(f) 12,879,082
Mid Ocean 444,000 34,410,000
Mutual Risk Management 2,000,000(d,f) 67,750,000
Rhone-Poulenc Cl A 699,893(b) 35,563,565
Royal Dutch Petroleum 1,100,000 62,493,750
Schlumberger 525,000 39,768,750
SmithKline Beecham ADR 625,000 39,101,563
Unilever 775,000 53,184,375
Union Bank of Switzerland 15,000 24,499,836
-----------
Total 593,988,106
Furniture & appliances - 2.0%
Maytag 1,000,000 47,812,500
Sunbeam 1,000,000 44,062,500
-----------
Total 91,875,000
Health care - 10.7%
American Home Products 300,000 28,612,500
Baxter Intl 750,000 41,343,750
Bristol-Myers Squibb 600,000 62,587,500
Guidant 775,000 56,865,625
Johnson & Johnson 625,000 45,820,313
Medtronic 500,000 25,937,500
Merck & Co 700,892 89,977,010
Pfizer 800,000 79,750,000
Schering-Plough 800,000 65,350,000
-----------
Total 496,244,198
Health care services - 0.5%
Tenet Healthcare 700,000(b) 25,418,750
Household products - 4.0%
Colgate-Palmolive 1,000,000 86,625,000
Gillette 400,000 47,475,000
Procter & Gamble 600,000 50,625,000
-----------
Total 184,725,000
Industrial equipment & services - 2.4%
Deere & Co 950,000 58,840,625
Illinois Tool Works 800,000 51,800,000
-----------
Total 110,640,625
Insurance - 2.1%
American Intl Group 375,000 47,226,562
Provident Cos 439,750 15,088,922
SunAmerica 750,000 35,906,250
-----------
Total 98,221,734
Leisure time & entertainment - 0.5%
Disney (Walt) 200,000 21,350,000
Media - 2.5%
CBS 1,000,000 33,937,500
Chancellor Media 500,000(b) 22,937,500
Clear Channel Communications 600,000(b) 58,800,000
-----------
Total 115,675,000
Metals - 1.1%
Getchell Gold 1,025,000(b) 21,396,875
Stillwater Mining 1,170,000(b) 29,615,625
-----------
Total 51,012,500
Multi-industry conglomerates - 3.8%
Cendant 1,000,000(b) 39,625,000
Emerson Electric 400,000 26,075,000
General Electric 1,300,000 112,043,750
-----------
Total 177,743,750
Paper & packaging - 0.5%
Longview Fibre 1,636,300(g) 25,464,919
Retail - 7.7%
American Stores 1,100,000 28,600,000
Dayton Hudson 500,000 44,000,000
Home Depot 600,000 40,462,500
Penney (JC) 550,000 41,628,125
Rite Aid 2,000,000 68,500,000
Safeway 2,000,000(b) 73,875,000
Wal-Mart Stores 1,200,000 60,975,000
-------------
Total 358,040,625
Utilities -- electric - 1.9%
Carolina Power & Light 600,000 27,150,000
FPL Group 600,000 38,550,000
Northern States Power 400,000 23,600,000
-------------
Total 89,300,000
Utilities -- telephone - 6.8%
Ameritech 800,000 39,550,000
AT&T 700,000 45,937,500
Bell Atlantic 300,000 30,750,000
BellSouth 700,000 47,293,750
Century Telephone Enterprises 300,000 18,337,500
Cincinnati Bell 500,000 17,812,500
SBC Communications 600,000 26,175,000
Southern New England Telecommunications 250,000 18,078,125
Teleport Communications Group Cl A 425,000(b) 24,968,750
U S WEST Communications Group 900,000 49,275,000
-------------
Total 318,178,125
Total common stocks
(Cost: $2,686,712,007) $3,942,898,626
Preferred stocks & other - 10.4%
Issuer Shares Value (a)
AirTouch Communications
4.00% Cv 525,000 21,787,500
Altera
Cv 347,826(e) 15,638,257
Cendant
7.50% Cv PRIDES 920,000(l) 47,955,000
Emerson Electric
5.00% Cv PERCS 615,380(k) 36,935,723
Finova Finance Trust
5.50% Cv 213,900 17,005,050
Gillette
3.00% Cv Series G 195,000 17,501,250
Glenborough Realty Trust
7.75% Cv Series A 402,105 10,504,993
Host Marriott Financial Trust
6.75% Cv 300,000 17,175,000
Houston Inds
7.00% Cv ACES 325,000(j) 21,064,063
Intel
5.00% Cv PERCS 206,000(k) 31,697,220
McKesson
5.00% Cv 200,000(e) 16,275,000
Medtronic
5.00% Cv 884,250 38,234,970
Newell Financial Trust
5.25% Cm Cv 250,000 14,218,750
PLC Capital
6.50% Cv PRIDES 80,000(l) 4,940,000
Premier Parks
7.50% Cv 175,000 10,150,000
Rhone-Poulenc
Warrants 699,893 3,941,468
Service Corp Intl
5.00% Cv 1,100,000 24,585,000
Sprint
8.25% Cv 154,325 9,896,091
SunAmerica
$3.19 Cv PERCS 500,000(k) $24,218,750
Union Pacific Capital
6.25% Cv 465,000 23,250,000
UNUM
3.25% Cv 1,217,092(b) 65,038,354
WorldCom
8.00% Cv 73,625 10,988,531
Total preferred stocks & other
(Cost: $420,529,521) $483,000,970
Bonds -- 1.8%
Issuer Coupon Principal Value(a)
rate amount
Costco
Zero Coupon Cv Sub Nts
08-01-17 3.51% $21,000,000(e,h) $14,096,250
Diamond Offshore Drilling
Cv Sr Sub Nts
09-15-07 3.13 7,050,000 6,944,250
Learning
Cv Sr Nts
11-01-00 5.50 15,000,000 13,800,000
Network Associates
Zero Coupon Cv Sub Deb
02-13-18 4.09 20,000,000(h) 9,125,000
Office Depot
Zero Coupon Cv Nt
11-01-08 3.70 7,300,000(h) 5,392,875
PLATINUM Technology
Cv Sub Nts
12-15-02 6.25 15,000,000(e) 15,600,000
Solectron
Cv Sub Nts
03-01-06 6.00 6,700,000 9,220,875
Xilinx
Cv Sub Nts
11-01-02 5.25 10,000,000 9,975,000
Total bonds
(Cost: $79,299,999) $84,154,250
Options purchased - 0.0%
Issuer Shares Exercise Expiration Value(a)
price date
Put
S&P 500 400,000$15 April 1998 $1,300,000
Total options purchased
(Cost: $8,941,000) $1,300,000
Short-term securities - 3.0%
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies - 0.5%
Federal Home Loan Bank Disc Nt
04-01-98 5.46% $2,900,000 $2,900,000
Federal Home Loan Mtge Corp Disc Nt
04-23-98 5.47 600,000 598,002
Federal Natl Mtge Assn Disc Nt
04-13-98 5.54 20,000,000 19,963,132
-----------
Total 23,461,134
Commercial paper - 2.5%
BOC Group
04-01-98 6.09 4,300,000(i) 4,300,000
Clorox
05-13-98 5.59 2,100,000 2,086,378
Commerzbank U.S. Finance
04-27-98 5.57 8,000,000 7,967,933
Fleet Funding
04-16-98 5.56 3,900,000(i) 3,891,014
Glaxo Wellcome
04-24-98 5.63 10,300,000(i) 10,263,083
Heinz (HJ)
04-22-98 5.54 5,800,000 5,781,392
Kellogg
05-01-98 5.57 10,600,000 10,550,975
Kredietbank North America Finance
04-27-98 5.52 15,100,000 15,036,391
Natl Australia Funding (Delaware)
05-11-98 5.54 1,300,000 1,292,056
New Center Asset Trust
04-14-98 5.52 15,000,000 14,970,317
Novartis Finance
05-01-98 5.55 8,500,000 8,460,900
Pacific Life Insurance
04-30-98 5.57 13,900,000 13,837,855
Toyota Motor Credit
05-01-98 5.58 10,000,000 9,953,750
Westpac Capital
04-17-98 5.54 8,900,000 8,878,165
------------
Total 117,270,209
Total short-term securities
(Cost: $140,735,245) $140,731,343
Total investments in securities
(Cost $3,336,217,772)(m) $4,652,085,189
See accompanying notes to investments in securities.
Strategist Growth and Income Fund, Inc.
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(d) Security is partially or fully on loan. See Note 4 to the financial
statements.
(e) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(f) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that are or were affiliates during the
six months ended March 31, 1998 are as follows:
Beginning Purchase Sales Ending Dividend Value(a)
Issuer cost cost cost cost income
Meridian Gold $14,110,518 $-- $-- $14,110,518 $-- $12,879,082
Mutual Risk
Management 26,680,057 -- -- 26,680,057 200,000 67,750,000
---------- --- --- ---------- ------- ----------
Total $40,790,575 $-- $-- $40,790,575 $200,000 $80,629,082
(g) At March 31, 1998, securities valued at $3,112,500 were held to cover open
call options written as follows:
Issuer Shares Exercise Expiration Value(a)
price date
Longview Fibre 200,000 $15 June 1998 $225,000
(h) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(i) Commercial paper sold within terms of a private placement memorandum, exempt
under Section 4(2) of the Securities Act of 1933, as amended, and may be sold
only to dealers in that program or other "accredited investors." This security
has been determined to be liquid under guidelines established by the board.
(j) ACES are automatically convertible to the underlying equity securities.
(k) PERCS (Preferred-Equity Redeemable Cumulative Securities) are convertible
preferred securities. PERCS are like buying an underlying common stock and
selling a call option against the position.
(l) PRIDES (Preferred Redeemable Increased Dividend Equity Securities) are
structured as convertible preferred securities. Investors receive an enhanced
yield but based upon a specific formula, potential appreciation is limited.
PRIDES pay dividends, have voting rights, are noncallable for three years and
upon maturity, convert into shares of common stock.
(m) At March 31, 1998, the cost of securities for federal income tax purposes
was approximately $3,336,218,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $1,364,487,000
Unrealized depreciation (48,620,000)
Net unrealized appreciation $1,315,867,000
See accompanying notes to investments in securities.
<PAGE>
Strategist Growth and Income Fund, Inc.
Financial statements
Statement of assets and liabilities
Equity Income Portfolio
March 31, 1998
Assets (Unaudited)
Investments in securities, at value (Note 1)
(identified cost $2,270,094,758) $2,703,847,669
Cash in bank on demand deposit 87,855
Dividends and accrued interest receivable 5,782,491
Receivable for investment securities sold 848,400
U.S. government securities held as collateral (Note 4) 27,764,650
----------
Total assets 2,738,331,065
-------------
Liabilities
Payable for investment securities purchased 27,110,138
Payable upon return of securities loaned (Note 4) 27,764,650
Accrued investment management services fee 35,682
Other accrued expenses 106
Option contracts written, at value
(premium received $204,781) (Note 5) 103,019
-------
Total liabilities 55,013,595
----------
Net assets $2,683,317,470
--------------
See accompanying notes to financial statements.
<PAGE>
Statement of operations
Equity Income Portfolio
Six months ended March 31, 1998
Investment income (Unaudited)
Income:
Dividends (including $2,067,903 earned from affiliates) $ 27,705,401
Interest 12,409,364
Less foreign taxes withheld (67,787)
-------
Total income 40,046,978
----------
Expenses (Note 2):
Investment management services fee 5,788,714
Compensation of board members 7,668
Custodian fees 93,640
Audit fees 10,875
Other 1,834
-----
Total expenses 5,902,731
Earnings credits on cash balances (Note 2) (6,565)
------
Total net expenses 5,896,166
---------
Investment income (loss) -- net 34,150,812
----------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (Note 3) 133,152,208
Financial futures contracts (Note 6) 12,978,169
Foreign currency transactions 24,153
------
Net realized gain (loss) on investments 146,154,530
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilities in foreign currencies 111,016,377
-----------
Net gain (loss) on investments and foreign currencies 257,170,907
-----------
Net increase (decrease) in net assets resulting from operations $291,321,719
------------
See accompanying notes to financial statements.
<PAGE>
Strategist Growth and Income Fund, Inc.
Statements of changes in net assets
Equity Income Portfolio
Six months ended Year ended
March 31, 1998 Sept. 30, 1997
(Unaudited)
Operations
Investment income (loss)-- net $ 34,150,812 $ 71,670,175
Net realized gain (loss) on investments 146,154,530 210,870,724
Net change in unrealized appreciation
(depreciation ) on investments and on
translation of assets and liabilities
in foreign currencies 111,016,377 167,694,853
----------- -----------
Net increase (decrease) in net assets
resulting from operations 291,321,719 450,235,752
Net contributions (withdrawals) from partners 171,410,987 314,194,640
----------- -----------
Total increase (decrease) in net assets 462,732,706 764,430,392
Net assets at beginning of period 2,220,584,764 1,456,154,372
------------- -------------
Net assets at end of period $2,683,317,470 $2,220,584,764
-------------- --------------
See accompanying notes to financial statements.
<PAGE>
Notes to financial statements
Equity Income Portfolio
(Unaudited as to March 31, 1998)
1. Summary of significant accounting policies
Equity Income Portfolio (the Portfolio) is a series of Growth and Income
Trust (the Trust) and is registered under the Investment Company Act of
1940 (as amended) as a diversified, open-end management investment
company. Equity Income Portfolio seeks to provide a high level of current
income and, as a secondary goal, steady growth of capital by investing
primarily in dividend-paying stocks. The Declaration of Trust permits the
Trustees to issue non-transferable interests in the Portfolio.
Significant accounting policies followed by the Portfolio are summarized
below:
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities
traded on national securities exchanges or included in national market
systems are valued at the last quoted sales price. Debt securities are
generally traded in the over-the counter market and are valued at a price
deemed best to reflect fair value as quoted by dealers who make markets in
these securities or by an independent pricing service. Securities for
which market quotations are not readily available are valued at fair value
according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current
interest rates; those maturing in 60 days or less are valued at amortized
cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate
buying and selling of securities for investment purposes, the Portfolio
may buy and write options traded on any U.S. or foreign exchange or in the
over-the-counter market where the completion of the obligation is
dependent upon the credit standing of the other party. The Portfolio also
may buy and sell put and call options and write covered call options on
portfolio securities and may write cash-secured put options. The risk in
writing a call option is that the Portfolio gives up the opportunity of
profit if the market price of the security increases. The risk in writing
a put option is that the Portfolio may incur a loss if the market price of
the security decreases and the option is exercised. The risk in buying an
option is that the Portfolio pays a premium whether or not the option is
exercised. The Portfolio also has the additional risk of not being able to
enter into a closing transaction if a liquid secondary market does not
exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The
Portfolio will realize a gain or loss upon expiration or closing of the
option transaction. When an option is exercised, the proceeds on sales for
a written call option, the purchase cost for a written put option or the
cost of a security for a purchased put or call option is adjusted by the
amount of premium received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market,
the Portfolio may buy and sell financial futures contracts traded on any
U.S. or foreign exchange. The Portfolio also may buy and write put and
call options on these futures contracts. Risks of entering into futures
contracts and related options include the possibility that there may be an
illiquid market and that a change in the value of the contract or option
may not correlate with changes in the value of the underlying securities.
Upon entering into a futures contract, the Portfolio is required to
deposit either cash or securities in an amount (initial margin) equal to a
certain percentage of the contract value. Subsequent payments (variation
margin) are made or received by the Portfolio each day. The variation
margin payments are equal to the daily changes in the contract value and
are recorded as unrealized gains and losses. The Portfolio recognizes a
realized gain or loss when the contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign
currencies are translated daily into U.S. dollars at the closing rate of
exchange. Foreign currency amounts related to the purchase or sale of
securities and income and expenses are translated at the exchange rate on
the transaction date. The effect of changes in foreign exchange rates on
realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net
realized gains or losses from foreign currency transactions may arise from
sales of foreign currency, closed forward contracts, exchange gains or
losses realized between the trade date and settlement dates on securities
transactions, and other translation gains or losses on dividends, interest
income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts
for operational purposes and to protect against adverse exchange rate
fluctuation. The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Portfolio and the resulting unrealized
appreciation or depreciation are determined using foreign currency
exchange rates from an independent pricing service. The Portfolio is
subject to the credit risk that the other party will not complete the
obligations of the contracts.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership
and each investor in the Portfolio is treated as the owner of its
proportionate share of the net assets, income, expenses and realized and
unrealized gains and losses of the Portfolio. Accordingly, as a
"pass-through" entity, the Portfolio does not pay any income dividends or
capital gain distributions.
Other
Security transactions are accounted for on the date securities are
purchased or sold. Dividend income is recognized on the ex-dividend date
and interest income, including level-yield amortization of premium and
discount, is accrued daily.
2. Fees and expenses
The Trust, on behalf of the Portfolio, has entered into an Investment
Management Services Agreement with AEFC for managing its portfolio. Under
this agreement, AEFC determines which securities will be purchased, held
or sold. The management fee is a percentage of the Portfolio's average
daily net assets in reducing percentages from 0.53% to 0.4% annually.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain
legal fees, fidelity bond premiums, registration fees for units, office
expenses, consultants' fees, compensation of trustees, corporate filing
fees, expenses incurred in connection with lending securities of the
Portfolio and any other expenses properly payable by the Trust or
Portfolio and approved by the board.
During the six months ended March 31, 1998, the Portfolio's custodian fees
were reduced by $6,565 as a result of earnings credits from overnight cash
balances.
Pursuant to a Placement Agency Agreement, American Express Financial
Advisors Inc. acts as placement agent of the units of the Trust.
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $1,437,714,543 and $861,244,683,
respectively, for the six months ended March 31, 1998. For the same
period, the portfolio turnover rate was 43%. Realized gains and losses are
determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $21,849
for the six months ended March 31, 1998.
4. Lending of portfolio securities
At March 31, 1998, securities valued at $27,811,677 were on loan to
brokers. For collateral, the Portfolio received U.S. government securities
valued at $27,764,650. Income from securities lending amounted to $47,027
for the six months ended March 31, 1998. The risks to the Portfolio of
securities lending are that the borrower may not provide additional
collateral when required or return the securities when due.
5. Option contracts written
The number of contracts and premium amounts associated with option
contracts written is as follows:
Six months ended March 31, 1998
Calls
Contracts Premium
Balance Sept. 30, 1997 -- $ --
Opened 311 204,781
Balance March 31, 1998 311 $204,781
See "Summary of significant accounting policies."
6. Stock index futures contracts
At March 31, 1998, cash was pledged as collateral to cover initial margin
deposits on 707 open purchase contracts. The market value of the open purchase
contracts at March 31, 1998, was $196,280,875 with a net unrealized gain of
$3,599,732. See "Summary of significant accounting policies."
Strategist Growth and Income Fund, Inc.
<PAGE>
Strategist Growth and Income Fund, Inc.
Investments in securities
Equity Income Portfolio
March 31, 1998 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks - 82.3%
Issuer Shares Value (a)
Aerospace & defense - 1.9%
Goodrich (BF) 550,000 $28,084,375
Rockwell Intl 400,000 22,950,000
-----------
Total 51,034,375
Automotive & related - 2.9%
Chrysler 493,000 20,490,313
Ford Motor 530,000 34,350,625
TRW 430,000 23,703,750
-----------
Total 78,544,688
Banks and savings & loans - 7.4%
BankBoston 250,000 27,562,500
First Chicago NBD 275,000 24,234,375
First Union 610,000 34,617,499
Morgan (JP) 200,000 26,862,500
NationsBank 450,000 32,821,875
Norwest 560,000 23,275,000
Washington Mutual 375,000 26,894,531
-----------
Total 196,268,280
Beverages & tobacco - 2.5%
Fortune Brands 640,000 25,520,000
Philip Morris 1,017,000 42,396,188
-----------
Total 67,916,188
Building materials & construction - 1.7%
Masco 520,000 30,940,000
Weyerhaeuser 270,000 15,255,000
-----------
Total 46,195,000
Chemicals - 2.3%
ARCO Chemical 716,500 $33,944,188
Du Pont (EI) de Nemours 390,000 26,520,000
-----------
Total 60,464,188
Communications equipment & services - 0.5%
Motorola 215,000 13,034,375
Computers & office equipment - 1.3%
Xerox 330,000 35,124,375
Electronics - 2.3%
AMP 285,000 12,486,563
Applied Materials 475,000(b) 16,773,438
Harris 360,000 18,764,999
Thomas & Betts 223,900 14,329,600
-----------
Total 62,354,600
Energy - 3.6%
Amoco 635,000 54,848,125
Unocal 1,100,000 42,556,250
-----------
Total 97,404,375
Energy equipment & services - 1.0%
BJ Services 749,900 27,324,481
Financial services - 1.2%
Fannie Mae 300,000 18,975,000
Household Intl 100,000 13,775,000
-----------
Total 32,750,000
Food - 2.8%
Bestfoods 232,000 27,115,000
General Mills 300,000 22,800,000
Sara Lee 430,000 26,498,750
-----------
Total 76,413,750
Foreign - 12.0%(d)
B.A.T. Inds 2,500,000 $25,099,518
BCE 775,000 32,356,250
Elf Aquitaine ADR 900,000(c) 58,275,000
EXEL 320,000 24,800,000
Imperial Chemical Inds 360,000(c) 25,875,000
Mid Ocean 540,000 41,850,000
Royal Dutch Petroleum 1,950,000 110,784,374
-----------
Total 319,040,142
Health care - 8.1%
American Home Products 495,000 47,210,624
Amgen 690,000(b) 42,003,750
Baxter Intl 741,000 40,847,625
Johnson & Johnson 555,000 40,688,438
Merck & Co 345,000 44,289,375
-----------
Total 215,039,812
Health care services - 1.5%
Columbia/HCA Healthcare 1,264,000 40,764,000
Household products - 1.4%
Kimberly-Clark 756,000 37,894,500
Industrial equipment & services - 0.9%
Browning-Ferris Inds 700,000 22,837,500
Insurance - 1.3%
Lincoln Natl 425,000 36,071,875
Leisure time & entertainment - 1.0%
Brunswick 800,000 27,900,000
Media - 1.8%
Dun & Bradstreet 850,000 29,059,375
McGraw-Hill Cos 265,000 20,156,563
-----------
Total 49,215,938
Metals - 0.8%
Reynolds Metals 360,000 22,117,500
Multi-industry conglomerates - 1.9%
General Signal 560,000 $26,180,000
Minnesota Mining & Mfg 275,000 25,076,563
-----------
Total 51,256,563
Paper & packaging - 1.9%
Tenneco 580,000 24,758,750
Union Camp 429,000 25,632,750
-----------
Total 50,391,500
Real estate investment trust - 2.2%
FelCor Suite Hotels 500,000 18,531,250
Highwoods Properties 300,000 10,593,750
Patriot American Hospitality 280,004 7,560,117
Prentiss Properties Trust 270,000 7,053,750
Security Capital Industrial Trust 400,000 10,250,000
Simon DeBartolo Group 140,000 4,795,000
-----------
Total 58,783,867
Retail - 3.0%
American Stores 1,150,000 29,900,000
Circuit City Stores 119,143(g) 5,093,363
Penney (JC) 605,000 45,790,938
-----------
Total 80,784,301
Utilities -- electric - 4.9%
CMS Energy 700,000 32,856,250
DPL 1,050,000 20,475,000
Duke Energy 301,100 17,934,269
FPL Group 220,000 14,135,000
New Century Energies 500,000 25,187,500
Northern States Power 315,000 18,585,000
-----------
Total 129,173,019
Utilities -- gas - 1.2%
Consolidated Natural Gas 500,000 $28,843,750
Enron 100,000 4,637,500
-------------
Total 33,481,250
Utilities -- telephone - 7.0%
Ameritech 620,000 30,651,250
Bell Atlantic 345,000 35,362,500
BellSouth 490,000 33,105,625
GTE 290,000 17,363,750
SBC Communications 650,000 28,356,250
U S WEST Communications 740,000 40,514,999
-------------
Total 185,354,374
Total common stocks
(Cost: $1,796,668,824) $2,204,934,816
Preferred stocks & other - 6.9%
Issuer Shares Value (a)
AirTouch Communications
4% Cv 450,000(h) $18,675,000
AirTouch Communications
6% Cv Series B 375,000 15,468,750
AutoZone
5.50% Cv 715,100 20,530,521
Crown Cork & Seal
4.50% Cv 700,000 35,000,000
IKON Office Solutions
$5.04 Cv Series BB ACES 475,000(h,j) 36,871,875
Intel
5% Cv PERCS 128,000(k) 19,695,360
Service Corp Intl
5% 475,000 10,616,250
SunAmerica
$3.19 Cv PERCS 300,000(k) 14,531,250
Union Pacific Capital
6.25% Cv 271,000 13,550,000
Total preferred stocks & other
(Cost: $169,502,198) $184,939,006
Bonds - 3.2%
Issuer Coupon Principal Value(a)
rate amount
U.S. government obligations - 1.2%
U.S. Treasury
08-15-19 8.125% $25,000,000 $31,278,000
Chemicals - 0.5%
USA Waste Services
Cv Sub Nts
02-01-02 4.00 12,000,000 14,190,000
Electronics - 0.6%
Salomon Brothers UTX
Cv
12-04-98 5.00 18,600,000(f) 15,417,912
Energy equipment & services - 0.1%
Diamond Offshore Drilling
Cv Sr Sub Nts
09-15-07 3.125 3,780,000 3,723,300
Financial services - 0.8%
Salomon Brothers Emerson Electric
Cv
02-27-99 5.00 33,970,000(f) 20,389,134
Total bonds
(Cost: $74,944,595) $84,998,346
Short-term securities - 8.5%
Issuer Annualized Amount Value (a)
yield on date payable at
of purchase maturity
U.S. government agency - 0.9%
Federal Home Loan Mtge Corp Disc Nts
04-21-98 5.48% $10,100,000 $10,069,363
04-23-98 5.47 13,900,000 13,853,705
-----------
Total 23,923,068
Commercial paper - 7.2%
ABB Treasury Center USA
04-21-98 5.55 5,500,000(e) 5,483,103
BBV Finance (Delaware)
04-01-98 5.53 3,100,000 3,100,000
BellSouth Telecommunications
04-08-98 5.58 12,600,000 12,586,402
BOC Group
04-01-98 6.09 7,700,000(e) 7,700,000
04-03-98 5.58 12,000,000 11,996,300
CAFCO
04-29-98 5.57 10,000,000(e) 9,956,911
Ciesco LP
04-15-98 5.56 6,000,000 5,987,097
04-27-98 5.56 5,400,000 5,378,394
04-28-98 5.56 1,200,000(e) 1,195,032
Commerzbank U.S. Finance
04-22-98 5.55 10,000,000 9,967,742
Dresdner US Finance
04-02-98 5.58 15,000,000 14,997,682
Emerson Electric
04-13-98 5.56 5,700,000 5,689,493
Fleet Funding
04-16-98 5.56 2,300,000(e) 2,294,700
05-05-98 5.55 10,000,000(e) 9,947,867
Kredietbank North America Finance
05-04-98 5.55 12,500,000 12,433,341
Michigan Consolidated Gas
04-06-98 5.58 600,000 599,538
Natl Australia Funding (Delaware)
04-02-98 5.51% $10,000,000 $9,998,478
Novartis Finance
04-08-98 5.58 10,300,000 10,288,885
Pacific Life Insurance
04-23-98 5.55 9,900,000 9,866,543
SBC Communications Capital
04-14-98 5.54 7,200,000(e) 7,185,622
Toyota Motor Credit
05-01-98 5.56 3,800,000 3,782,488
USAA Capital
04-22-98 5.55 13,500,000 13,456,451
Westpac Capital
04-07-98 5.57 10,200,000 10,190,582
04-20-98 5.55 9,300,000 9,272,857
-------------
Total 193,355,508
Letters of credit - 0.4%
Bank of America -
AES Hawaii
04-03-98 5.51 10,100,000 10,096,925
Student Loan Marketing Assn -
Nebraska Higher Education
04-01-98 6.10 1,600,000 1,600,000
-------------
Total 11,696,925
Total short-term securities
(Cost: $228,979,141) $228,975,501
Total investments in securities
(Cost $2,270,094,758)(l) $2,703,847,669
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Security is partially or fully on loan. See Note 4 to financial statements.
(d) Foreign security values are stated in U.S. dollars.
(e) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(f) ELKS are equity-linked securities that are structured as an interest-bearing
debt security and linked to the common stock of another company. The terms of
ELKS differ from those of ordinary debt securities in that the principal amount
received at maturity is not fixed but is based on the price of the common stock
the ELK is linked to. The principal amount disclosed equals the current
estimated future value of the amount to be received upon maturity.
(g) At March 31, 1998, securities valued at $1,329,525 were held to cover open
call options written as follows:
Issuer Shares Exercise Expiration Value(a)
price date
Circuit City Stores 31,100 $40 April 1998 $103,019
(h) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that are or were affiliates during the
six months ended March 31, 1998 are as follows:
Issuer Beginning Purchase Sales Ending Dividend Value(a)
cost cost cost cost income
ConAgra* $14,218,750 $-- $14,218,750 $-- $314,589 $--
IKON Office
Solutions* 39,388,553 -- -- 39,388,553 1,197,000 36,871,875
Gannett* 13,225,000 -- 13,225,000 -- 297,564 --
Airtouch
Communications* 12,937,500 -- -- 12,937,500 258,750 18,675,000
---------- -- ---------- ---------- ------- ----------
Total $79,769,803 $-- $27,443,750 $52,326,053 $2,067,903 $55,546,875
*Issuer was not an affiliate for the entire period ended March 31, 1998.
(i) At March 31, 1998 cash or short-term securities were pledged as initial
margin deposit on the following open stock index futures purchase contracts (see
Note 6 to the financial statements):
Type of security Contracts
Standard & Poor's 500 Stock Index, June 1998 707
(j) ACES are automatically convertible to the underlying equity securities.
(k) PERCS (Preferred-Equity Redeemable Cumulative Securities) are convertible
preferred securities. PERCS are like buying an underlying common stock and
selling a call option against the position.
(l) At March 31, 1998, the cost of securities for federal income tax purposes
was approximately $2,270,095,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $445,438,000
Unrealized depreciation (11,685,000)
-----------
Net unrealized appreciation $433,753,000
<PAGE>
Financial statements
Statement of assets and liabilities
Total Return Portfolio
March 31, 1998
Assets (Unaudited)
Investments in securities, at value (Note 1):
Investments in securities of unaffiliated issuers
(identified cost $2,797,183,595) $3,214,824,045
Investments in securities of affiliated issuer
(identified cost $13,079,176) 3,877,500
---------
Total investments in securities
(identified cost $2,810,262,771) 3,218,701,545
Dividends and accrued interest receivable 17,023,012
Receivable for investment securities sold 5,798,286
Receivable from investment advisor 103,412
Unrealized appreciation on foreign currency
contracts held, at value (Notes 1 and 4) 6,320
-----
Total assets 3,241,632,575
-------------
Liabilities
Disbursements in excess of cash on demand deposit 2,031,195
Payable for investment securities purchased 5,672,798
Unrealized depreciation on foreign currency
contracts held, at value (Notes 1 and 4) 60,040
Payable upon return of securities loaned (Note 5) 133,307,096
Accrued investment management services fee 40,954
Option contracts written, at value
(premium received $12,524,889) (Note 6) 3,829,000
Other accrued expenses 58,033
------
Total liabilities 144,999,116
-----------
Net assets $3,096,633,459
--------------
See accompanying notes to financial statements.
Strategist Growth and Income Fund, Inc.
<PAGE>
Statement of operations
Total Return Portfolio
Six months ended March 31, 1998
Investment income (Unaudited)
Income:
Dividends $ 11,344,124
Interest 38,366,547
Less foreign taxes withheld (185,779)
--------
Total income 49,524,892
----------
Expenses (Note 2):
Investment management services fee 6,586,309
Compensation of board members 10,382
Custodian fees 353,533
Audit fees 15,375
Other 20,894
------
Total expenses 6,986,493
Earnings credits on cash balances (Note 2) (8,010)
------
Total net expenses 6,978,483
---------
Investment income (loss) -- net 42,546,409
----------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (Note 3) 150,146,106
Financial futures contracts (9,066,534)
Foreign currency transactions 3,000,746
Option contracts written (Note 6) (1,444,694)
----------
Net realized gain (loss) on investments 142,635,624
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilities in foreign currencies 74,565,496
----------
Net gain (loss) on investments and foreign currencies 217,201,120
-----------
Net increase (decrease) in net assets resulting from operations $259,747,529
------------
See accompanying notes to financial statements.
<PAGE>
Statements of changes in net assets
Total Return Portfolio
March 31, 1998 Sept. 30, 1997
Six months ended Year ended
(Unaudited)
Operations
Investment income (loss)-- net $ 42,546,409 $ 82,689,056
Net realized gain (loss) on investments 142,635,624 345,627,464
Net change in unrealized appreciation
(depreciation) on investments and on
translation of assets and liabilities in
foreign currencies 74,565,496 122,489,698
---------- -----------
Net increase (decrease) in net assets
resulting from operations 259,747,529 550,806,218
Net contributions (withdrawals) from partners (162,320,716) (350,789,437)
------------ ------------
Total increase (decrease) in net assets 97,426,813 200,016,781
Net assets at beginning of period 2,999,206,646 2,799,189,865
------------- -------------
Net assets at end of period $3,096,633,459 $2,999,206,646
-------------- --------------
See accompanying notes to financial statements.
Strategist Growth and Income Fund, Inc.
<PAGE>
Notes to financial statements
Total Return Portfolio
(Unaudited as to March 31, 1998)
1. Summary of significant accounting policies
Total Return Portfolio (the Portfolio) is a series of Growth and Income
Trust (the Trust) and is registered under the Investment Company Act of
1940 (as amended) as a diversified, open-end management investment
company. Total Return Portfolio seeks to provide maximum total return
through a combination of growth of capital and current income by investing
in U.S. equity securities, U.S. and foreign debt securities, foreign
equity securities and money market instruments. The Declaration of Trust
permits the Trustees to issue non-transferable interests in the Portfolio.
Significant accounting polices followed by the Portfolio are summarized
below:
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities
traded on national securities exchanges or included in national market
systems are valued at the last quoted sales price. Debt securities are
generally traded in the over-the-counter market and are valued at a price
deemed best to reflect fair value as quoted by dealers who make markets in
these securities or by an independent pricing service. Securities for
which market quotations are not readily available are valued at fair value
according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current
interest rates; those maturing in 60 days or less are valued at amortized
cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate
buying and selling of securities for investment purposes, the Portfolio
may buy and write options traded on any U.S. or foreign exchange or in the
over-the-counter market where the completion of the obligation is
dependent upon the credit standing of the other party. The Portfolio also
may buy and sell put and call options and write covered call options on
portfolio securities and may write cash-secured put options. The risk in
writing a call option is that the Portfolio gives up the opportunity of
profit if the market price of the security increases. The risk in writing
a put option is that the Portfolio may incur a loss if the market price of
the security decreases and the option is exercised. The risk in buying an
option is that the Portfolio pays a premium whether or not the option is
exercised. The Portfolio also has the additional risk of not being able to
enter into a closing transaction if a liquid secondary market does not
exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The
Portfolio will realize a gain or loss upon expiration or closing of the
option transaction. When an option is exercised, the proceeds on sales for
a written call option, the purchase cost for a written put option or the
cost of a security for a purchased put or call option is adjusted by the
amount of premium received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market,
the Portfolio may buy and sell financial futures contracts traded on any
U.S. or foreign exchange. The Portfolio also may buy and write put and
call options on these futures contracts. Risks of entering into futures
contracts and related options include the possibility that there may be an
illiquid market and that a change in the value of the contract or option
may not correlate with changes in the value of the underlying securities.
Upon entering into a futures contract, the Portfolio is required to
deposit either cash or securities in an amount (initial margin) equal to a
certain percentage of the contract value. Subsequent payments (variation
margin) are made or received by the Portfolio each day. The variation
margin payments are equal to the daily changes in the contract value and
are recorded as unrealized gains and losses. The Portfolio recognizes a
realized gain or loss when the contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign
currencies are translated daily into U.S. dollars at the closing rate of
exchange. Foreign currency amounts related to the purchase or sale of
securities and income and expenses are translated at the exchange rate on
the transaction date. The effect of changes in foreign exchange rates on
realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the statement of operations, net
realized gains or losses from foreign currency transactions may arise from
sales of foreign currency, closed forward contracts, exchange gains or
losses realized between the trade date and settlement dates on securities
transactions, and other translation gains or losses on dividends, interest
income and foreign withholding taxes.
The Portfolio may enter into forward foreign currency exchange contracts
for operational purposes and to protect against adverse exchange rate
fluctuation. The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Portfolio and the resulting unrealized
appreciation or depreciation are determined using foreign currency
exchange rates from an independent pricing service. The Portfolio is
subject to the credit risk that the other party will not complete the
obligations of the contract.
Illiquid securities
At March 31, 1998, investments in securities included issues that are
illiquid. The Portfolio currently limits investments in illiquid
securities to 10% of net assets, at market value, at the time of purchase.
The aggregate value of such securities at March 31, 1998 was $12,259,850
representing 0.40% of net assets. Pursuant to guidelines adopted by the
board, certain unregistered securities are determined to be liquid and are
not included within the 10% limitation specified above.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership
and each investor in the Portfolio is treated as the owner of its
proportionate share of the net assets, income, expenses and realized and
unrealized gains and losses of the Portfolio. Accordingly, as a
"pass-through" entity, the Portfolio does not pay any income dividends or
capital gain distributions.
Other
Security transactions are accounted for on the date securities are
purchased or sold. Dividend income is recognized on the ex-dividend date
and interest income, including level-yield amortization of premium and
discount, is accrued daily.
2. Fees and expenses
The Trust, on behalf of the Portfolio, has entered into an Investment
Management Services Agreement with AEFC for managing its portfolio. Under
this agreement, AEFC determines which securities will be purchased, held
or sold. The management fee is a percentage of the Portfolio's average
daily net assets in reducing percentages from 0.53% to 0.40% annually. The
fees may be increased or decreased by a performance adjustment based on a
comparison of the performance of Class A shares of IDS Managed Allocation
Fund to the Lipper Flexible Portfolio Fund Index. The maximum adjustment
is 0.08% of the Portfolio's average daily net assets on an annual basis.
The adjustment decreased the fee by $534,717 for the six months ended
March 31, 1998.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain
legal fees, fidelity bond premiums, registration fees for units, office
expenses, consultants' fees, compensation of trustees, corporate filing
fees, expenses incurred in connection with lending securities of the
Portfolio and any other expenses properly payable by the Trust or
Portfolio and approved by the board.
During the six months ended March 31, 1998, the Portfolio's custodian fees
were reduced by $8,010 as a result of earnings credits from overnight cash
balances.
Pursuant to a Placement Agency Agreement, American Express Financial
Advisors Inc. acts as placement agent of the units of the Trust.
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $1,804,281,817 and $1,498,809,376,
respectively, for the six months ended March 31, 1998. For the same
period, the portfolio turnover rate was 59%. Realized gains and losses are
determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $94,575
for the six months ended March 31, 1998.
4. Foreign currency contracts
At March 31, 1998, the Portfolio had entered into foreign currency
exchange contracts that obligate the Portfolio to deliver currencies at
specified future dates. The unrealized appreciation and/or depreciation on
these contracts is included in the accompanying financial statements. See
"Summary of significant accounting policies." The terms of the open
contracts are as follows:
Exchange Currency to Currency to Unrealized Unrealized
date be delivered be received appreciation depreciation
April 1, 1998 3,758,676 2,036,119 $4,183 $ --
Deutsche Mark U.S. Dollar
April 2, 1998 1,567,996 1,106,662 -- 485
Canadian Dollar U.S. Dollar
April 2, 1998 4,057,591 2,195,666 2,137 --
Deutsche Mark U.S. Dollar
April 3, 1998 1,710,029 64,450,987 -- 59,555
U.S. Dollar Thai Baht
-------- ---------
Total $6,320 $60,040
5. Lending of portfolio securities
At March 31, 1998, securities valued at $129,430,759 were on loan to
brokers. For collateral, the Portfolio received $133,307,096 in cash.
Income from securities lending amounted to $379,288 for the six months
ended March 31, 1998. The risks to the Portfolio of securities lending are
that the borrower may not provide additional collateral when required or
return the securities when due.
6. Option contracts written
The number of contracts and premium amounts associated with option
contracts written is as follows:
Six months ended March 31, 1998
Puts Calls
Contracts Premium Contracts Premium
Balance Sept. 30, 1997 -- $ -- -- $ --
Opened 8,750 14,423,300 3,800 811,073
Closed (1,450) (553,981) -- --
Exercised (2,500) (1,016,216) (2,800) (651,578)
Expired (1,300) (328,214) (1,000) (159,495)
Balance March 31, 1998 3,500 $12,524,889 -- $ --
See "Summary of significant accounting policies."
Strategist Growth and Income Fund, Inc.
<PAGE>
Investments in securities
Total Return Portfolio
March 31, 1998 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks - 63.4%
Issuer Shares Value (a)
Aerospace & defense - 1.7%
AlliedSignal 220,000 $9,240,000
Goodrich (BF) 120,000 6,127,500
Lockheed Martin 105,000 11,812,500
Raytheon Cl B 190,800 11,137,950
Rockwell Intl 242,500 13,913,438
-----------
Total 52,231,388
Airlines - 0.4%
AMR 77,000(b) 11,025,438
Automotive & related - 1.2%
Ford Motor 450,000 29,165,625
TRW 125,600 6,923,700
-----------
Total 36,089,325
Banks and savings & loans - 3.7%
BankAmerica 346,100 28,596,512
First Chicago NBD 250,000 22,031,250
First Union 450,928 25,590,164
Norwest 89,600 3,724,000
Toronto-Dominion Bank 3,257 141,272
Wachovia 265,100 22,483,794
Washington Mutual 179,700 12,887,859
-----------
Total 115,454,851
Beverages & tobacco - 2.4%
Coca-Cola 489,300 $37,890,169
Fortune Brands 330,000 13,158,750
Philip Morris 556,000 23,178,250
-----------
Total 74,227,169
Building materials & construction - 0.7%
Masco 115,000 6,842,500
Tyco Intl 258,300 14,109,638
-----------
Total 20,952,138
Chemicals - 1.4%
Air Products & Chemicals 175,000 14,503,125
Henkel KGaA 235,966(g) 17,144,464
Monsanto 200,000 10,400,000
-----------
Total 42,047,589
Communications equipment & services - 0.8%
Lucent Technologies 85,000 10,869,375
Motorola 155,000 9,396,875
Tellabs 50,000(b) 3,356,250
-----------
Total 23,622,500
Computers & office equipment - 3.1%
3Com 75,000(b) 2,695,313
Automatic Data Processing 231,300 15,742,855
Bay Networks 140,000(b) 3,797,500
Cisco Systems 152,850(b) 10,451,119
Compaq Computer 288,000 7,452,000
Computer Associates Intl 113,250 6,540,188
Computer Sciences 100,000 5,500,000
Hewlett-Packard 169,100 10,716,713
Microsoft 196,800(b) 17,613,599
Parametric Technology 100,000(b) 3,331,250
Xerox 104,800 11,154,650
-----------
Total 94,995,187
Electronics - 0.8%
Harris 50,000 $2,606,250
Intel 286,000 22,325,875
-----------
Total 24,932,125
Energy - 1.2%
Amoco 281,800 24,340,475
Unocal 350,000 13,540,625
-----------
Total 37,881,100
Energy equipment & services - 0.2%
Baker Hughes 180,800 7,277,200
Financial services - 1.3%
Fannie Mae 100,000 6,325,000
H&R Block 180,000 8,561,250
Travelers Group 419,500 25,170,000
-----------
Total 40,056,250
Food - 1.3%
Bestfoods 131,000 15,310,625
General Mills 173,000 13,148,000
Sara Lee 185,000 11,400,625
-----------
Total 39,859,250
Foreign - 24.7%(j)
Accor 61,732(b) 15,838,296
Adidas 33,049(b) 5,859,239
Air Canada 187,600(b) 1,702,143
Akbank T.A.S. ADR 120,000(b) 1,680,000
Anglogold ADR 987,950(b) 4,198,788
Argentaria 150,510(b) 12,462,214
Baan 108,253(b,g) 5,177,656
Banca Intesa 2,758,882(b) 17,250,434
Banque Natl de Paris 349,332(b) 27,141,611
Barclays 246,046(b) 7,357,241
Bayerische Vereinsbank 250,360(b,g) 18,271,489
BG 2,029,921(b) 10,495,709
Bombardier Cl B 130,000(b) $3,212,710
British Airways ADR 549,106(b) 5,558,859
Centrais Eletricas Brasileiras ADR 452,000(g) 10,534,264
Cheung Kong Holdings 807,000(b) 5,727,984
China Merchants Holdings Intl 6,594,000(b,g) 6,126,987
China North Inds 16,500,000(b,i) 3,877,500
China Resources Enterprises 1,190,000(b) 2,411,083
China Telecom (Hong Kong) 3,900,000(b) 7,901,868
Cia de Telecomunicaciones de Chile ADR 230,000 6,339,375
City Developments 243,000(b) 1,196,192
Compal Electronics 366,000(b) 1,464,000
Compania Anonima Nacional
Telefonos de Venezuela ADR 255,000(g) 10,662,188
Credit Suisse Group 66,069(b) 13,218,134
Credito Italiano 3,667,200(b,g) 18,112,583
EGIS 78,000(b) 4,204,852
Ericsson (LM) Cl B 124,490(b,g) 5,915,863
Fomento Economico Mexicano Cl B 1,442,000(b) 10,481,424
Fujikura 770,000(b) 4,738,639
General Electric 1,644,544(b) 13,029,855
Great Universal Stores 1,047,203(b) 13,037,008
Grupo Financiero Bancomer Cl B 5,309,900(b) 3,130,075
Grupo Televisa 120,600(b) 4,416,975
Hong Kong Telecommunications 1,300,000(b) 2,684,286
Imperial Chemical Inds 506,327(b) 8,963,774
ING Groep 362,790(b) 20,589,136
Instituto Bancario San Paolo di Torino 1,322,745(b) 18,536,560
Israel Chemical 1,600,000(b) 1,919,520
Johnson Matthey 445,179(b) 4,607,321
Koor Inds ADR 13,200(b) 326,700
Korea Electric Power 185,110(b,g) 2,405,762
Korea Electric Power 172,470(b) 1,713,921
Lukoil Holding ADR 93,500 6,572,490
Mannesmann 4,200(b) 3,074,278
Matav ADR 135,000(b) 4,201,875
Michelin Cl B 150,489(b,g) 8,982,352
Mosenergo ADR 260,000(b,g) 9,620,000
NEC 487,000(b) 4,897,594
Newbridge Networks 58,800(b) $1,567,308
Nordbanken Holding 820,996(b,g) 5,441,479
Northern Telecom 47,600 3,076,150
Novartis 11,340(b) 20,069,084
Otosan Otomobil Sanayii 6,160,000(b) 3,800,665
Oversea-Chinese Banking 555,440(b) 3,129,723
Panamerican Beverages Cl A 50,000 2,006,250
Perez Companc 1,200,000(b) 8,065,210
Petro-Canada 442,500 7,904,854
Petroleo Brasileiro ADR 290,000(b,g) 6,886,252
Philips Electronics 146,530(b) 10,755,140
Rhone-Poulenc Cl A 475,476(b) 24,160,294
Rohm 42,000(b) 3,845,548
Royal Dutch Petroleum 580,000 32,951,249
Sakura Bank 1,664,000(b,g) 5,906,952
Samsung Electronics GDR 125,000(b) 3,375,000
Schlumberger 165,000 12,498,750
Schweizer Bankgesellschaft 10,359(b) 16,919,587
Shanghai Industrial Holdings 1,558,000(b,g) 6,373,709
Shell Transport & Trading 922,593(b) 6,761,739
Singapore Technologies Engineering 1,026,000(b) 908,470
SmithKline Beecham 541,336(b) 6,775,520
Sony 100,000(b) 8,480,618
Sumitomo Realty & Development 1,325,000(b) 7,816,053
Synnex Technology Intl 164,000(b) 1,037,627
Telecom Italia 2,196,600(b,g) 13,457,558
Telecom Italia 2,885,666(b) 22,735,985
Telecomunicacoes Brasileiras-Telebras ADR200,000 25,962,499
Telefonica de Argentina ADR 364,000(g) 13,854,750
Telefonica del Peru ADR 75,000 1,617,188
Telefonos de Mexico ADR Cl L 262,000 14,770,250
Thai Farmers Bank 724,000(b) 1,807,682
Tokyo Electron 120,000(b) 4,043,679
Toronto-Dominion Bank 285,000 12,315,622
TOTAL Cl B 81,000(b) 9,724,313
Unilever 1,340,560(b) 12,595,347
United Overseas Bank 398,000(b) 2,205,634
Vendex Intl 193,000(b) 12,221,636
Vimpel-Communications ADR 57,000(b) $2,536,500
Vodafone 757,311 7,888,379
Westpac Banking 1,124,000(b) 7,522,775
Yapi Kredit Finance 175,000,000(b) 6,046,425
YPF Sociedad Anonima ADR 67,000 2,278,000
-----------
Total 765,926,260
Furniture & appliances - 0.3%
Maytag 225,000 10,757,813
Health care - 5.1%
ALZA 97,800(b) 4,382,663
American Home Products 147,000 14,020,125
Amgen 116,000(b) 7,061,500
Baxter Intl 190,000 10,473,750
Boston Scientific 91,400(b) 6,169,500
Bristol-Myers Squibb 215,500 22,479,344
Guidant 59,600 4,373,150
Johnson & Johnson 319,000 23,386,687
Merck & Co 233,600 29,988,399
Pfizer 229,600 22,888,250
Schering-Plough 160,000 13,070,000
-----------
Total 158,293,368
Health care services - 0.7%
HBO & Co 73,400 4,431,525
Service Corp Intl 136,400 5,788,475
Tenet Healthcare 162,000(b) 5,882,625
United Healthcare 100,000 6,475,000
-----------
Total 22,577,625
Household products - 1.9%
Colgate-Palmolive 117,000 10,135,125
Gillette 172,800 20,509,200
Procter & Gamble 320,100 27,008,438
-----------
Total 57,652,763
Industrial equipment & services - 0.1%
Deere & Co 69,300 $4,292,269
Insurance - 1.0%
Allstate 50,000 4,596,875
American Intl Group 70,000 8,815,625
SunAmerica 125,000 5,984,375
UNUM 185,670 10,246,663
-----------
Total 29,643,538
Media - 0.8%
CBS 398,000 13,507,125
Clear Channel Communications 105,000(b) 10,290,000
Gannett 27,000 1,940,625
-----------
Total 25,737,750
Metals - 0.6%
Aluminum Co of America 158,800 10,927,425
Reynolds Metals 133,300 8,189,619
-----------
Total 19,117,044
Multi-industry conglomerates - 1.8%
Cendant 230,000(b) 9,113,750
Emerson Electric 45,000 2,933,438
General Electric 505,600 43,576,400
-----------
Total 55,623,588
Paper & packaging - 0.3%
Tenneco 225,000 9,604,688
Retail - 2.1%
Consolidated Stores 50,000(b) 2,146,875
Dayton Hudson 110,000 9,680,000
Home Depot 145,000 9,778,438
Kroger 220,000(b) 10,161,250
Penney (JC) 30,000 2,270,625
Rite Aid 180,000 6,165,000
Wal-Mart Stores 505,200 25,670,475
-----------
Total 65,872,663
Textiles & apparel - 0.2%
Nike Cl B 130,000 $5,752,500
Transportation - 0.1%
Burlington Northern Santa Fe 30,000 3,120,000
Utilities -- electric - 0.2%
Edison Intl 110,000 3,231,250
Unicom 75,000 2,625,000
-----------
Total 5,856,250
Utilities -- gas - 0.6%
Enron 405,000 18,781,875
Utilities -- telephone - 2.7%
AirTouch Communications 300,000(b) 14,681,250
Ameritech 136,000 6,723,500
AT&T 255,000 16,734,375
BellSouth 111,000 7,499,438
MCI Communications 94,000 4,653,000
SBC Communications 154,600 6,744,425
U S WEST Communications 307,000 16,808,249
WorldCom 217,000(b) 9,344,563
-----------
Total 83,188,800
Total common stocks
(Cost: $1,586,959,596) $1,962,450,304
Preferred stocks & other - 0.4%
Issuer Shares Value (a)
Banca Intesa
Warrants 2,758,882 $4,070,495
Bar Technologies
Warrants 3,000 165,000
KMC Telecommunications Holdings
Warrants 3,000 1,762,500
Martin Media 20,000(k) 2,000,000
Paxson Communications
12.50% Pay-in-kind
Exchangeable 21,110(h) 2,216,550
Rhone-Poulenc
Warrants 125,360(c) 705,969
Unifi Communications
Warrants 3,000 30
Total preferred stocks & other
(Cost: $6,561,784) $10,920,544
Bonds - 27.5%
Issuer Coupon Principal Value(a)
rate amount
U.S. government obligations - 2.9%
U.S. Treasury
04-30-00 6.75% $32,000,000 $32,704,960
06-30-02 6.25 8,000,000 8,166,000
08-15-04 7.25 20,000,000 21,646,200
08-15-23 6.25 9,700,000 10,000,215
08-15-27 6.375 20,000,000(g) 21,142,600
-----------
Total 93,659,975
Mortgage-backed securities - 2.1%
Federal Home Loan Mtge Corp
03-01-13 5.50 10,890,011 10,502,054
12-01-25 7.50 22,816,746 23,441,469
10-01-26 8.50 3,627,029 3,794,960
01-01-27 8.50 1,911,700 2,000,211
Federal Natl Mtge Assn
05-01-24 7.50 15,605,908 16,091,720
Collateralized Mtge Obligation
05-18-26 5.00 9,593,000 8,678,667
-----------
Total 64,509,081
Aerospace & defense - 0.3%
K&F Inds
Sr Sub Nts Series B
10-15-07 9.25 1,000,000 1,047,500
L-3 Communications
Sr Sub Nts Series B
05-01-07 10.375 1,035,000 1,146,263
Newport News Shipbuilding
Sr Nts
12-01-06 8.625 800,000 853,000
Northrop-Grumman
03-01-16 7.75 5,000,000 5,443,500
-----------
Total 8,490,263
Airlines - 0.2%
Northwest Airlines
Company Guaranty 1st Series 1991
01-02-15 8.07% $3,934,345 $4,263,177
01-02-15 8.97 1,954,104 2,129,700
-----------
Total 6,392,877
Banks and savings & loans - 1.3%
CAF
02-01-03 7.10 6,500,000 6,687,785
First Nationwide Holdings
Sr Sub Nts
10-01-03 10.625 1,960,000 2,200,100
Greenpoint Capital
Company Guaranty
06-01-27 9.10 1,300,000 1,433,393
Provident Cos
03-15-38 7.41 11,000,000 11,034,540
Union Planters Bank
Sub Nts
03-15-18 6.50 10,000,000 9,934,600
US Trust Capital
02-01-27 8.41 1,500,000(c) 1,632,330
Washington Mutual Capital
Company Guaranty
06-01-27 8.375 1,500,000(c) 1,631,565
Wilshire Financial Services
Series B
08-15-04 13.00 4,000,000 4,360,000
-----------
Total 38,914,313
Building materials & construction - 0.2%
AAF-McQuay
Sr Nts
02-15-03 8.875 2,535,000 2,509,650
Southdown
Sr Sub Nts Series B
03-01-06 10.00 2,350,000 2,614,375
-----------
Total 5,124,025
Chemicals - 0.1%
Polymer Group
Sr Sub Nts
03-01-08 8.75% $4,000,000 $4,090,000
Communications equipment & services - 0.4%
Interamericas Communications
10-27-07 14.00 500,000(b) 505,000
NTL
Zero Coupon
04-01-08 11.48 6,000,000(c,f) 6,576,074
RCN
Zero Coupon Sr Disc Nts
02-15-08 9.80 4,800,000(c,f) 3,024,000
Unifi Communications
Sr Nts
03-01-04 14.00 3,000,000 2,013,750
-----------
Total 12,118,824
Electronics - 0.1%
Thomas & Betts
01-15-06 6.50 4,500,000 4,491,270
Energy - 0.4%
Forcenergy
Sr Sub Nts
11-01-06 9.50 1,000,000 1,055,000
Transamerica Energy
06-15-02 11.50 600,000 598,500
Zero Coupon
06-15-02 13.00 1,300,000(f) 1,105,000
USX
03-01-08 6.85 10,000,000 10,041,900
-----------
Total 12,800,400
Energy equipment & services - 0.2%
Cliffs Drilling
Company Guaranty Series D
05-15-03 10.25% $3,000,000 $3,255,000
DI Inds
Sr Nts
07-01-07 8.875 1,500,000 1,552,500
-----------
Total 4,807,500
Financial services - 0.9%
Arcadia Financial
Sr Nts
03-15-07 11.50 1,825,000 1,815,875
Beneficial
Medium-term Nts
02-18-13 6.25 10,000,000 9,875,300
DTI Holdings
03-01-08 12.50 6,120,000(c) 3,595,500
Providian Natl Bank
Sr Nts
03-15-03 6.70 10,000,000 10,028,600
Sasco
02-25-28 6.76 2,500,000 2,515,234
-----------
Total 27,830,509
Food - 0.1%
Ameriserve Food
Company Guaranty
07-15-07 10.125 1,750,000 1,887,813
Foreign - 8.2%(j)
Airplanes GPA Cl D
(U.S. Dollar) Series 1
03-15-19 10.875 2,750,000 3,067,735
Argentine Republic
(U.S. Dollar)
03-31-23 5.50 28,000,000 21,419,999
Australis Media
(U.S. Dollar)
11-01-00 14.00% $454,044 $321,869
(U.S. Dollar) Zero Coupon
05-15-03 5.30 5,000,000(f) 1,250,000
05-15-03 5.30 40,885(f) 10,272
City of Moscow
(Russian Ruble) Zero Coupon
07-01-98 22.80 5,018,918(e) 4,630,454
12-31-98 21.80 6,153,151(e) 5,146,496
(U.S. Dollar)
05-31-00 9.50 3,000,000(c) 2,955,000
Comp Paranaense De Energ
(U.S. Dollar)
05-02-05 9.75 2,000,000(c) 2,025,000
Dao Heng Bank
(U.S. Dollar) Sub Nts
01-24-07 7.75 2,500,000(c) 2,277,850
Daya Guna
(U.S. Dollar) Company Guaranty
06-01-07 10.00 2,400,000(c) 2,136,000
Delphes 2
(U.S. Dollar)
05-05-09 7.75 3,700,000 3,737,000
Doman Inds
(U.S. Dollar) Sr Nts Series B
11-15-07 9.25 2,300,000 2,317,250
Equador
(U.S. Dollar)
02-27-15 6.69 3,338,010 2,150,930
Espirito Santo Centrais
(U.S. Dollar) Sr Nts
07-15-07 10.00 3,000,000(c) 2,940,000
Globo Communicacoes Participacoes
(U.S. Dollar) Sr Nts
12-05-08 10.625 2,275,000(c) 2,320,500
Govt of Algeria
(U.S. Dollar) Zero Coupon
12-31-20 1.27 2,675,000(e) 1,693,623
Govt of Russia
(Russian Ruble)
09-27-00 14.00% 19,002,914 $2,391,725
(U.S. Dollar)
07-28-00 10.375 4,000,000 3,620,000
(U.S. Dollar) Zero Coupon
12-29-49 6.60 2,500,000(e) 1,767,200
Greater Beijing
(U.S. Dollar) Sr Nts
06-15-04 9.25 1,200,000(c) 979,488
06-15-07 9.50 1,400,000(c) 1,127,742
Grupo Iusacell
(U.S. Dollar)
07-15-04 10.00 1,000,000 1,042,500
Grupo Televisa
(U.S. Dollar) Sr Nts Series A
05-15-03 11.375 2,750,000 3,031,875
Guangdong Enterprises
(U.S. Dollar) Sr Nts
05-22-07 8.875 2,200,000(c) 1,948,298
Hutchison Whampo Finance
(U.S. Dollar) Company Guaranty
08-01-17 7.45 1,000,000(c) 908,900
08-01-27 7.50 1,650,000(c) 1,489,571
Hyundai Semiconductor
(U.S. Dollar) Sr Nts
05-15-07 8.625 5,000,000(c) 4,165,450
Imexsa Export Trust
(U.S. Dollar)
05-31-03 10.125 3,000,000(c) 3,142,500
IPC Magazines Group
(British Pound)
03-15-08 15.90 1,875,000(c) 3,113,910
(British Pound) Zero Coupon
03-15-08 17.76 2,000,000(c,e) 1,982,860
Jasmine Submarine Telecom
(U.S. Dollar) Sr Nts
05-30-11 8.48 1,273,610(c) 1,087,816
Korea Electric Power
(U.S. Dollar)
02-01-27 7.00% $12,500,000 $10,731,375
MDC Communications
(U.S. Dollar) Sr Sub Nts
12-01-06 10.50 1,000,000 1,078,750
Mexican Cetes
(Mexican Peso) Zero Coupon
06-04-98 23.32 12,775,000(e) 1,541,176
Ministry Finance Russia
(U.S. Dollar)
11-27-01 9.25 850,000(c) 831,406
06-26-07 10.00 17,500,000(c) 16,657,812
Nationwide CSN Trust
(U.S. Dollar)
02-15-25 9.875 5,000,000(c) 5,983,850
Netia Holdings
(U.S. Dollar) Company Guaranty
11-01-07 10.25 6,000,000(c) 6,180,000
Philippine Long Distance Telephone
(U.S. Dollar)
03-06-07 7.85 1,250,000(c) 1,157,688
(U.S. Dollar) Medium-term Nts Series E
03-06-17 8.35 1,000,000(c) 899,080
Pindo Deli Finance Mauritius
(U.S. Dollar) Company Guaranty
10-01-07 10.75 1,300,000(c) 1,069,250
PLD Telekom
(U.S. Dollar) Zero Coupon
06-01-04 3.73 3,000,000(e) 3,000,000
Plitt Theatres
(U.S. Dollar) Sr Sub Nts
06-15-04 10.875 5,000,000 5,437,500
Poland Telecom Finance
(U.S. Dollar)
12-01-07 14.00 5,500,000(c) 6,118,750
Province of Mendoza
(U.S. Dollar)
09-04-07 10.00% $2,000,000(c) $1,946,520
PTC Intl Finance
(U.S. Dollar) Zero Coupon Company Guaranty
07-01-07 10.75 2,000,000(e) 1,370,000
Republic of Argentina
(Argentine Peso)
07-10-02 8.75 18,000,000(c) 16,667,999
02-12-07 11.75 13,000,000 13,503,749
(U.S. Dollar)
07-10-02 8.750 10,000,000 9,260,000
Republic of Brazil
(U.S. Dollar)
04-15-14 8.00 5,701,300 4,778,402
05-15-27 10.125 10,500,000 10,473,750
Republic of Panama
(U.S. Dollar)
02-13-02 7.875 1,000,000(c) 1,008,140
Rogers Cantel
(U.S. Dollar)
06-01-08 9.375 2,800,000 2,968,000
Southern Peru Copper
(U.S. Dollar)
05-30-07 7.90 1,000,000 1,022,020
Tatneft Finance
(U.S. Dollar) Company Guaranty
10-29-02 9.00 2,000,000(c) 1,852,980
Texon Intl
(Deutsche Mark) Sr Nts
02-01-08 3.09 4,000,000 2,248,880
Tjiwi Kimia FN Mauritius
(U.S. Dollar) Company Guaranty
08-01-04 10.00 2,900,000 2,392,500
United Mexican States
(U.S. Dollar)
12-31-19 6.25 25,000,000 21,156,250
Veninfotel
(U.S. Dollar) Cv Pay-in-kind
03-01-02 10.00% $2,000,000(h,k) $3,000,000
03-01-02 10.00 250,000(h,k) 375,000
Veritas Holdings
(U.S. Dollar) Sr Nts
12-15-03 9.625 1,273,000 1,366,884
Zhuhai Highway
(U.S. Dollar) Sub Nts
07-01-08 11.50 5,000,000(c) 4,752,850
Zurich Capital
(U.S. Dollar) Company Guaranty
06-01-37 8.38 1,875,000(c) 2,048,231
-----------
Total 255,078,605
Furniture & appliances - 0.2%
Interface
Sr Sub Nts Series B
11-15-05 9.50 2,500,000 2,687,500
Lifestyle Furnishings
Company Guaranty
08-01-06 10.875 3,250,000 3,644,063
-----------
Total 6,331,563
Health care - 0.5%
Baxter Intl
02-15-28 6.625 10,000,000 9,776,400
Lilly (Eli)
01-01-36 6.77 5,000,000 5,131,150
-----------
Total 14,907,550
Health care services - 1.0%
Magellan Health Services
Sr Sub Nts
02-15-08 9.00 2,500,000(c) 2,531,250
Manor Care
Sr Nts
06-15-06 7.50 7,000,000 7,433,930
Owens & Minor
Company Guaranty
06-01-06 10.875% $3,200,000 $3,580,000
Service Corp Intl
03-15-20 6.30 11,850,000 11,809,710
Vencor
Sr Sub Nts
07-15-07 8.625 4,000,000 4,500,000
-----------
Total 29,854,890
Household products - 0.2%
Revlon Consumer Products
Sr Nts
02-01-06 8.125 5,000,000(c) 5,075,000
Industrial equipment & services - 0.8%
AGCO
Sr Sub Nts
03-15-06 8.50 2,800,000 2,912,000
Alliance Imaging
Sr Sub Nts
12-15-05 9.625 5,000,000 5,225,000
Chattem
Sr Sub Nts
04-01-08 8.875 2,200,000(c) 2,233,000
Concentric Network
12-15-07 12.75 3,800,000 4,370,000
Imperial Holly
Company Guaranty
12-15-07 9.75 3,400,000 3,510,500
Jorgensen (Earle M)
Sr Nt
04-01-05 9.50 1,225,000(c) 1,240,313
Packaged Ice
Sr Nt
02-01-05 9.75 3,500,000(c) 3,578,750
Purina Mills
Sr Sub Nts
03-15-10 9.00 1,475,000(c) 1,526,625
-----------
Total 24,596,188
Insurance - 0.6%
American United Life Insurance
03-30-26 7.75% $5,000,000(c,k) $5,145,350
Executive Risk Capital
Company Guaranty Series B
02-01-27 8.675 1,500,000 1,660,620
Metropolitan Life Insurance
11-01-25 7.80 4,800,000(c) 5,209,872
Minnesota Mutual Life
09-15-25 8.25 4,500,000(c) 5,157,360
-----------
Total 17,173,202
Leisure time & entertainment - 1.3%
Icon Fitness
Zero Coupon Sr Disc Nts Series B
11-15-06 15.76 10,500,000(e) 6,168,750
Mirage Resorts
02-01-08 6.75 8,750,000 8,737,838
Speedway Motorsports
08-15-07 8.50 2,000,000 2,087,500
Time Warner
02-01-24 7.57 11,875,000 12,573,368
01-15-28 6.95 5,000,000 4,876,600
Venetian Casino/LV Sands
Mtge
11-15-04 12.25 3,940,000(c) 4,077,900
Sr Sub Nts
11-15-05 10.00 3,000,000(c) 2,846,250
-----------
Total 41,368,206
Media - 0.7%
CSC Holdings
Sr Sub Debs
05-15-16 10.50 3,000,000 3,510,000
Heritage Media
Sr Sub Nts
02-15-06 8.75 5,000,000 5,362,500
Lamar Advertising
Company Guaranty
12-01-06 9.625% $800,000 $872,000
Liberty Group
Sr Sub Nts
02-01-08 9.375 3,750,000 3,843,750
News America Holdings
10-15-12 10.125 2,175,000 2,531,809
TCI Communications
08-01-15 8.75 5,000,000 5,803,200
-----------
Total 21,923,259
Metals - 0.2%
Bar Technologies
Company Guaranty
04-01-01 13.50 3,000,000(c) 3,307,500
EnviroSource
Sr Nts
06-15-03 9.75 1,300,000(c) 1,329,250
06-15-03 9.75 530,000 541,925
-----------
Total 5,178,675
Miscellaneous - 0.8%
Adams Outdoor Advertising
Sr Nts
03-15-06 10.75 3,900,000 4,319,250
BTI Telecommunications
Sr Nts
09-15-07 10.50 1,150,000 1,170,125
FCB/NC Capital
Company Guaranty
03-01-28 8.05 4,625,000 4,681,748
Michael Petroleum
Sr Nts
04-01-05 11.50 1,250,000(c) 1,235,938
MSX Intl
Sr Sub Nts
01-15-08 11.375 2,450,000 2,548,000
NSM Steel
02-01-08 12.25% $4,300,000 $4,149,500
Company Guaranty
02-01-06 12.00 4,350,000 4,197,750
Outsourcing Solutions
Sr Sub Nts Series B
11-01-06 11.00 1,075,000 1,183,844
SFX Entertainment
Sr Sub Nts
02-01-08 9.125 2,400,000 2,376,000
-----------
Total 25,862,155
Multi-industry conglomerates - 0.2%
Pierce Leahy
Sr Sub Nts
07-15-06 11.125 488,000(c) 557,540
Prime Succession
Sr Sub Nts
08-15-04 10.75 1,275,000 1,402,500
USI American Holdings
Sr Nts Series B
12-01-06 7.25 3,000,000 3,030,240
-----------
Total 4,990,280
Municipal bonds - 0.1%
New Jersey Economic Development
Authority State Pension Funding
Revenue Bonds (MBIA Insured)
02-15-29 7.425 3,000,000 3,274,800
Paper & packaging - 0.5%
Gaylord Container
Sr Nts
06-15-07 9.375 9,000,000(c) 9,067,500
06-15-07 9.75 1,300,000 1,339,000
Owens-Illinois
Sr Nts
05-15-04 7.85 2,000,000 2,090,240
Silgan Holdings
06-01-09 9.00 2,050,000 2,147,375
Stone Container
Sr Sub Deb
04-01-02 12.25% $1,000,000 $1,030,000
-----------
Total 15,674,115
Restaurants & lodging - 0.3%
MGM Grand
02-06-08 6.875 10,000,000 9,820,500
Retail - 0.9%
Dayton Hudson
12-01-22 8.50 2,500,000 2,710,900
Great Atlantic & Pacific Tea
04-15-07 7.75 10,000,000 10,751,700
Kroger
Sr Nts
07-15-06 8.15 5,000,000 5,443,750
Wal-Mart CRAVE Trust
07-17-06 7.00 8,961,293(c) 9,192,673
-----------
Total 28,099,023
Textiles & apparel - 0.1%
Pillowtex
Sr Sub Nts
12-15-07 9.00 2,500,000(c) 2,615,625
Transportation - 0.4%
Enterprise Rent-A-Car USA Finance
02-15-08 6.80 10,000,000 9,957,000
Company Guaranty Medium-term Nts
01-15-06 6.95 3,000,000(c) 3,069,000
-----------
Total 13,026,000
Utilities -- electric - 0.7%
AES
Sr Sub Nts
11-01-07 8.50 3,200,000 3,312,000
Cleveland Electric Illuminating
07-01-00 7.19 3,000,000 3,049,020
CMS Energy
Sr Nts
05-15-02 8.125% $2,900,000 $2,982,331
El Paso Electric
1st Mtge Series B
05-01-01 7.75 5,000,000 5,137,850
Public Services Electric & Gas
1st & Ref Mtge
01-01-16 6.75 7,365,000 7,447,709
-----------
Total 21,928,910
Utilities -- gas - 0.2%
Columbia Gas System
Series E
11-28-10 7.32 5,043,000 5,199,837
Utilities -- telephone - 0.5%
Geotek Communications
Cv Sr Sub Nts
02-15-01 12.00 2,485,000(k) 1,739,500
Intermedia Communications
Sr Nts Series B
11-01-07 8.875 1,600,000 1,716,000
McLeod USA
Sr Nts
03-15-08 8.375 2,300,000(c) 2,386,250
Omnipoint
Sr Nts
08-15-06 11.625 5,000,000 5,525,000
Worldcom
04-01-07 7.75 3,000,000 3,246,000
-----------
Total 14,612,750
Total bonds
(Cost: $834,135,549) $851,707,983
Options purchased - 0.8%
Issuer Shares Exercise Expiration Value(a)
price date
Call
Russell 2000 350,000 $438 Dec. 1998 $23,548,000
Total options purchased
(Cost: $12,524,889) $23,548,000
Short-term securities - 12.0% (l)
Issuer Annualized Amount Value (a)
yield on date payable at
of purchase maturity
U.S. government agencies - 0.6%
Federal Home Loan Bank Disc Nt
04-13-98 5.48% $2,100,000 $2,096,178
Federal Home Loan Mtge Corp Disc Nts
04-16-98 5.47 1,100,000 1,097,502
04-20-98 5.49 1,100,000 1,096,824
04-21-98 5.48 7,000,000 6,978,767
Federal Natl Mtge Assn Disc Nt
04-20-98 5.49 6,900,000 6,880,044
-----------
Total 18,149,315
Commercial paper - 11.0%
ABB Treasury Center USA
04-28-98 5.56 10,000,000(d) 9,958,450
BBV Finance (Delaware)
04-08-98 5.54 4,200,000 4,195,492
Bell Atlantic
04-03-98 5.54 12,100,000 12,096,282
04-07-98 5.54 5,800,000 5,794,664
Beneficial
05-18-98 5.57 7,000,000 6,949,462
CAFCO
04-20-98 5.55 7,500,000(d) 7,478,110
04-29-98 5.57 5,900,000(d) 5,874,577
Ciesco LP
04-15-98 5.56% $11,400,000 $11,375,484
04-20-98 5.54 10,200,000 10,170,392
04-24-98 5.55 3,900,000 3,886,246
05-14-98 5.54 3,200,000(d) 3,178,978
CIT Group Holdings
04-24-98 5.56 10,000,000 9,964,733
Commercial Credit
04-16-98 5.53 10,000,000 9,977,125
Commerzbank U.S. Finance
05-01-98 5.58 4,400,000 4,379,613
Consolidated Natural Gas
04-27-98 5.56 10,000,000 9,959,989
Daimler-Benz
04-23-98 5.52 13,800,000 13,753,785
Delaware Funding
04-17-98 5.54 9,100,000(d) 9,076,264
Dresdner US Finance
04-02-98 5.59 9,000,000 8,998,607
Ford Motor Credit
04-09-98 5.57 15,000,000 14,981,534
Heinz (HJ)
04-22-98 5.54 10,000,000 9,967,917
Household Finance
04-20-98 5.56 7,500,000 7,478,110
04-24-98 5.57 8,300,000 8,270,676
05-13-98 5.56 15,000,000 14,903,400
Intl Lease Finance
04-08-98 5.54 4,400,000 4,395,277
Kredietbank North America Finance
05-04-98 5.55 12,500,000 12,433,341
05-08-98 5.50 10,000,000 9,943,472
Morgan Stanley, Dean Witter, Discover & Co
05-05-98 5.56 7,800,000 7,759,336
Natl Australia Funding (Delaware)
05-11-98 5.54 5,700,000 5,665,167
NBD Bank Canada
04-13-98 5.56% $2,100,000 $2,096,122
New Center Asset Trust
04-09-98 5.55 10,000,000 9,987,733
04-14-98 5.52 15,000,000 14,970,317
Novartis Finance
04-08-98 5.52 4,200,000 4,194,465
Paccar Financial
04-14-98 5.54 5,000,000 4,990,033
04-22-98 5.56 4,700,000 4,684,811
Reed Elsevier
05-11-98 5.54 3,600,000(d) 3,578,000
SBC Communications Capital
04-23-98 5.53 10,000,000(d) 9,966,450
Toyota Motor Credit
05-01-98 5.58 8,400,000 8,361,150
USAA Capital
04-22-98 5.55 8,000,000 7,974,287
Westpac Capital
04-07-98 5.57 16,700,000 16,684,581
Xerox Credit
04-01-98 5.51 9,000,000 9,000,000
-------------
Total 339,354,432
Letter of credit - 0.4%
Bank of America -
AES Hawaii
04-16-98 5.55 12,600,000 12,570,967
Total short-term securities
(Cost: $370,080,953) $370,074,714
Total investments in securities
(Cost $2,810,262,771)(m) $3,218,701,545
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the
financial statements.
(b) Non-income producing.
(c) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(d) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(e) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(f) For those zero coupon bonds that become coupon paying at a future date, the
interest rate disclosed represents the annualized effective yield from the date
of acquisition to interest reset date disclosed.
(g) Security is partially or fully on loan. See Note 5 to the financial
statements.
(h) Pay-in-kind securities are securities in which the issuer has the option to
make interest or dividend payments in cash or in additional securities. The
securities issued as interest or dividends usually have the same terms,
including maturity date, as the pay-in-kind securities.
(i) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that are or were affiliates during the
six months ended March 31, 1998 are as follows:
Beginning Purchase Sales Ending Dividend Value(a)
Issuer cost cost cost cost income
China North Inds $13,079,176 $ -- $ -- $13,079,176 $ -- $3,877,500
(j) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(k) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at March 31, 1998, is as follows:
Security Acquisition Cost
dates
American United Life*
7.75% 2026 2-13-96 $5,000,000
Geotek Communications
12.00% 2001 Cv Sr Sub Nts 3-4-96 2,485,000
Martin Media 12-22-97 2,000,000
Veninfotel
10.00% 2002
(U.S. Dollar) Cv Pay-in-kind 03-05-97 through 07-23-97 2,250,000
*Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended.
(l) At March 31, 1998, cash or short-term securities were designated to cover
open put options written as follows:
Issuer Shares Exercise Expiration Value(a)
price date
Russell 2000 350,000 $38 Dec. 1998 $3,829,000
(m) At March 31, 1998, the cost of securities for federal income tax purpose was
approximately $2,809,965,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $457,221,000
Unrealized depreciation (48,484,000)
Net unrealized appreciation $408,737,000
See accompanying notes to investments in securities.
<PAGE>
American Express Service Corporation, Distributor
S-6137 C (5/98)
