-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M7YqUKTxoyMMEcV4sxIV8h8l1GOn+sB7qd4Q845P7g4xhVZ+ODOBzV81/MolZwvD 4/Roo1HxTV7DPY83OhdFmA== 0000950129-97-003030.txt : 19970814 0000950129-97-003030.hdr.sgml : 19970814 ACCESSION NUMBER: 0000950129-97-003030 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 23 FILED AS OF DATE: 19970731 EFFECTIVENESS DATE: 19970731 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN GENERAL SERIES PORTFOLIO CO /TX CENTRAL INDEX KEY: 0000719423 STANDARD INDUSTRIAL CLASSIFICATION: 0000 IRS NUMBER: 720029692 STATE OF INCORPORATION: TX FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1933 Act SEC FILE NUMBER: 002-83631 FILM NUMBER: 97649486 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-03738 FILM NUMBER: 97649487 BUSINESS ADDRESS: STREET 1: 2929 ALLEN PARKWAY L7-01 STREET 2: C/O VARIABLE ANNUITY LIFE INSURANCE CO CITY: HOUSTON STATE: TX ZIP: 77019 BUSINESS PHONE: 7135265251 FORMER COMPANY: FORMER CONFORMED NAME: VALIC TIMED OPPORTUNITY FUND INC DATE OF NAME CHANGE: 19920329 485BPOS 1 AMERICAN GENERAL SERIES PORTFOLIO COMPANY 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON: JULY 31, 1997 REGISTRATION NO. 2-83631/811-3738 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------ FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X] Pre-Effective Amendment No. ------------------------ [ ] Post-Effective Amendment No. 25 [X] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X] Amendment No. 26 [X] ------------------------ AMERICAN GENERAL SERIES PORTFOLIO COMPANY (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) 2929 ALLEN PARKWAY, HOUSTON, TEXAS 77019 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (713) 526-5251 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) ------------------------ CYNTHIA A. TOLES, ESQ. THE VARIABLE ANNUITY LIFE INSURANCE COMPANY P.O. BOX 3206, HOUSTON, TEXAS 77253 (NAME AND ADDRESS OF AGENT FOR SERVICE) ------------------------ Copy to: JOHN A. DUDLEY, ESQ. SULLIVAN & WORCESTER, LLP 1025 CONNECTICUT AVENUE, N.W. WASHINGTON, D.C. 20036 ------------------------ It is proposed that this filing will become effective: ---- immediately upon filing pursuant to paragraph (b) on August 1, 1997 pursuant to paragraph (b) ---- ---- 60 days after filing pursuant to paragraph (a)(1) X on October 1, 1997 pursuant to paragraph (a)(1) ---- ---- 75 days after filing pursuant to paragraph (a)(2) ---- on (date) pursuant to paragraph (a)(2) of Rule 485
------------------------ PURSUANT TO RULE 24F-2(a)(1) UNDER THE INVESTMENT COMPANY ACT OF 1940, THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF SHARES OF ITS COMMON STOCK. THE REGISTRANT FILED A RULE 24F-2 NOTICE ON JULY 29, 1997 FOR ITS MOST RECENT FISCAL YEAR ENDED MAY 31, 1997. Sequential Numbering System: Page 1 of __ Pages Exhibit Index on Sequential Page Number --- ================================================================================ 2 AMERICAN GENERAL SERIES PORTFOLIO COMPANY ------------------------ FORM N-1A UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940 ------------------------ CROSS REFERENCE SHEET (PURSUANT TO RULE 481(a)) PART A ITEM NO. PROSPECTUS CAPTION 1. Cover Page......................................... Cover Page 2. Synopsis........................................... Inapplicable 3. Condensed Financial Information.................... Financial Highlights 4. General Description of Registrant.................. Welcome 5. Management of the Fund............................. About the Funds Management, About the Funds, Types of Investments 6. Capital Stock and Other Securities................. About the Series Company, Voting Rights 7. Purchase of Securities Being Offered............... Series Company Shares 8. Redemption and Repurchase.......................... Series Company Shares 9. Pending Legal Proceedings.......................... Inapplicable PART B STATEMENT OF ADDITIONAL ITEM NO. INFORMATION CAPTION 10. Cover Page......................................... Cover Page 11. Table of Contents.................................. Table of Contents 12. General Information and History.................... General Information and History 13. Investment Objectives and Policies................. Additional Information Regarding Certain Funds; Fundamental Investment Restrictions; Investment Practices 14. Management of the Registrant....................... Directors and Officers; Investment Adviser; Investment Sub-Advisers 15. Control Persons and Principal Holders of Securities......................................... Voting and Other Rights 16. Investment Advisory and Other Services............. Investment Adviser; Investment Sub-Advisers; Other Information 17. Brokerage Allocation............................... Portfolio Transactions and Brokerage 18. Capital Stock and Other Securities................. Other Information 19. Purchase, Redemption and Pricing of Securities Being Offered...................................... Offering, Purchase and Redemption of Fund Shares 20. Tax Status......................................... Accounting and Tax Treatment 21. Underwriters....................................... Offering, Purchase and Redemption of Fund Shares 22. Calculation of Performance Data.................... Calculation of Yield for Money Market Fund 23. Financial Statements............................... Financial Statements PART C Information required to be set forth in Part C is set forth under the appropriate item, so numbered, in Part C of the Registration Statement.
3 AMERICAN GENERAL SERIES PORTFOLIO COMPANY 2929 ALLEN PARKWAY HOUSTON, TEXAS 77019 PROSPECTUS OCTOBER 1, 1997 The American General Series Portfolio Company (the "Series Company") is a mutual fund made up of 13 separate Funds (the "Funds"). Each of the Funds has a different investment objective. Each Fund is explained in more detail on its Fact Sheet contained in this prospectus. Here is a summary of the goals of the 13 Funds: INDEX EQUITY FUNDS: INTERNATIONAL EQUITIES FUND Growth through investments tracking the EAFE Index. MIDCAP INDEX FUND Growth through investments tracking the S&P MidCap 400 Index. SMALL CAP INDEX FUND Growth through investments tracking the Russell 2000 Index. STOCK INDEX FUND Growth through investments tracking the S&P 500 Index. ACTIVELY MANAGED EQUITY FUNDS: GROWTH FUND Growth through investments in service sector companies. GROWTH & INCOME FUND Growth and income through investments in stocks (or securities convertible into stocks). INCOME FUNDS: CAPITAL CONSERVATION FUND Income and possible growth through investments in high quality debt securities. GOVERNMENT SECURITIES FUND Income and possible growth through investments in intermediate and long-term government debt securities. INTERNATIONAL GOVERNMENT BOND FUND Income and possible growth through investments in high quality foreign government debt securities. SPECIALTY EQUITY FUNDS: SCIENCE & TECHNOLOGY FUND Growth through investments in stocks of companies which benefit from development of science and technology. SOCIAL AWARENESS FUND Growth through investments in stocks of companies meeting social criteria of the Fund. MONEY MARKET FUND: MONEY MARKET FUND Income through investments in short-term money market securities. ASSET ALLOCATION FUND: ASSET ALLOCATION FUND Maximum return through investments in a mix of stocks, bonds and money market securities. SHARES OF THE MONEY MARKET FUND ARE NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT. THERE IS NO ASSURANCE THAT THIS FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE. These Funds are available to you only through a variable annuity contract you or your employer bought from The Variable Annuity Life Insurance Company ("VALIC") or one of its affiliates, or employee thrift plans maintained by VALIC or American General Corporation. VALIC is a member of the American General Corporation group of companies. Because different contracts contain different combinations of Funds, all of the Funds in this prospectus may not be available to you. And, there may be some Funds that are available to you that don't appear in this prospectus. See the separate prospectus that describes your, or your employer's, annuity contract for a complete list of Funds in which you may invest. BE SURE TO READ BOTH PROSPECTUSES IN FULL BEFORE YOU START PARTICIPATING AND KEEP THEM FOR FUTURE REFERENCE. VALIC has filed a Statement of Additional Information, dated October 1, 1997, with the Securities and Exchange Commission. This Statement contains additional information about these Funds and is part of this prospectus. For a free copy, write to the American General Series Portfolio Company at the address above or call 1-800-44VALIC. THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE FUNDS. ALSO, IT HAS NOT PASSED ON WHETHER THIS PROSPECTUS IS ADEQUATE OR ACCURATE. IT IS A CRIMINAL OFFENSE TO STATE OTHERWISE. 4 TABLE OF CONTENTS
PAGE ---- COVER PAGE WELCOME....................................... 1 FINANCIAL HIGHLIGHTS.......................... 2 ABOUT THE FUND'S MANAGEMENT................... 12 Investment Adviser....................... 12 Investment Sub-advisers.................. 12 Portfolio Manager........................ 13 How Advisers Are Paid for Their Services............................... 13 About the Board of Directors............. 14 ABOUT THE FUNDS............................... 15 Growth, Income and Stability Categories............................. 15 About Level of Risk...................... 15 About Portfolio Turnover................. 15 About Fund Performance................... 16 HOW TO READ A FUND FACT SHEET................. 17 THE INDEX EQUITY FUNDS........................ 18 International Equities Fund.............. 20 MidCap Index Fund........................ 22 Small Cap Index Fund..................... 24 Stock Index Fund......................... 26 ACTIVELY MANAGED EQUITY FUNDS Growth Fund.............................. 28 Growth & Income Fund..................... 30 INCOME FUNDS Capital Conservation Fund................ 32 Government Securities Fund............... 34 International Government Bond Fund....... 36 SPECIALTY EQUITY FUNDS Science & Technology Fund................ 38 Social Awareness Fund.................... 40
PAGE ---- MONEY MARKET FUND............................. 42 ASSET ALLOCATION FUND......................... 43 Asset Allocation Fund.................... 44 TYPES OF INVESTMENTS.......................... 45 Stocks................................... 45 Bonds.................................... 45 Asset-Backed Securities............. 45 Loan Participations................. 45 Illiquid and Restricted Securities....... 46 ADRs..................................... 46 Foreign Currency......................... 46 When-Issued Securities................... 46 Money Market Securities.................. 46 Derivatives.............................. 47 Options............................. 47 Futures Contracts................... 47 Repurchase Agreements.................... 48 A Word About Risk........................ 48 Investment Practices..................... 49 Limitations......................... 49 Lending Portfolio Securities........ 49 ABOUT THE SERIES COMPANY...................... 50 Series Company Shares.................... 50 Net Asset Value of the Series Company Shares................................. 50 Dividends and Capital Gains.............. 51 Diversification.......................... 51 Taxes.................................... 52 Voting Rights............................ 52 Reports.................................. 52 Legal Matters............................ 52
(i) 5 WELCOME - - -------------------------------------------------------------------------------- Unless otherwise specified in this prospectus, the words we, our, and VALIC mean The Variable Annuity Life Insurance Company. The words you and your mean the participant. American General Series Portfolio Company (the "Series Company") was incorporated under the laws of Maryland on December 7, 1984. The Series Company is an open-end management investment company and currently consists of 13 different Funds, each of which is described in detail in this prospectus. We serve as each Fund's Investment Adviser and, in this role, report directly to the Series Company's Board of Directors. As Investment Adviser, we make investment decisions for the Funds and are responsible for their day to day management. For more information, see "About the Funds' Management" in this prospectus. Individuals can't invest in these Funds directly. Instead, they participate through an annuity contract or employer plan with VALIC or one of its affiliates, or employee thrift plans maintained by VALIC or American General Corporation. Most often employers set up these annuity contracts so they can offer their employees a way to save for retirement. Retirement plans through employers may be entitled to tax benefits that individual retirement plans may not be entitled to. These tax benefits are fully explained in your contract prospectus. After you invest in a Fund you participate in Fund earnings or losses, in proportion to the amount of money you invest. Depending on your contract, if you withdraw your money before retirement, you may incur charges and additional tax liabilities. However, to save for retirement, you generally should let your investments and their earnings build. At retirement, you may withdraw all or a portion of your money, leave it in the account until you need it, or start receiving annuity payments. At a certain age you may be required to begin withdrawals. All inquiries regarding this prospectus and annuity contracts issued by VALIC should be directed, in writing, to VALIC Customer Service, A3-01, 2929 Allen Parkway, Houston, Texas 77019, or by calling 1-800-633-8960. All inquiries regarding annuity contracts issued by American General Life Insurance Company (AGL) should be directed to AGL's Annuity Administration Department, 2727-A Allen Parkway, Houston, Texas 77019-2191 or call 713-831-3505. AGL is a member of the American General Corporation group of companies, as is VALIC. OPEN-END means shares of the FUNDS can be bought or sold by the Series Company at any time. Also, there is no limit on the 1 number of investors who may buy shares. 6 FINANCIAL HIGHLIGHTS A FUND'S FISCAL YEAR ends every May 31st. Financial highlights are provided below for each of the Funds. The financial highlights are for the last 10 years of the Funds or if the Fund has been in operation a shorter period of time, since the date the Fund began operation. Ernst & Young LLP, Independent Auditors for the Series Company, has audited the Series Company's financial statements which include the information presented here. Their unqualified report appears in those audited financial statements, which are included in the Statement of Additional Information. Per share data assumes that you held each share from the beginning to the end of each fiscal year. Total return assumes that you bought additional shares with dividends paid by the Fund. Total returns for periods of less than one year are not annualized. The average commission rate paid on investment equity securities (on a per share basis) is presented for the period beginning June 1, 1996. INTERNATIONAL EQUITIES FUND - - --------------------------------------------------------------------------------
FISCAL YEAR ENDED MAY 31, ------------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 1992 1991 ---------- ---------- ---------- ---------- --------- --------- --------- PER SHARE DATA SHARE VALUE AT BEGINNING OF PERIOD $11.15 $10.42 $10.14 $8.99 $8.03 $8.58 $9.17 -------- -------- -------- -------- ------- ------- ------- + INCOME (LOSS) from net investment income 0.20 0.17 0.15 0.11 0.18 0.15 0.23 from net realized & unrealized gain (loss) on securities 0.63 0.97 0.34 1.17 0.93 (0.55) (0.59) -------- -------- -------- -------- ------- ------- ------- total income (loss) from investment operations 0.83 1.14 0.49 1.28 1.11 (0.40) (0.36) -------- -------- -------- -------- ------- ------- ------- - - - DISTRIBUTIONS from net investment income (0.19) (0.17) (0.15) (0.11) (0.15) (0.15) (0.23) from net realized gain on securities (0.35) (0.24) (0.06) (0.02) -------- -------- -------- -------- ------- ------- ------- total distributions (0.54) (0.41) (0.21) (0.13) (0.15) (0.15) (0.23) -------- -------- -------- -------- ------- ------- ------- = SHARE VALUE AT END OF PERIOD $11.44 $11.15 $10.42 $10.14 $8.99 $8.03 $8.58 ======== ======== ======== ======== ======= ======= ======= TOTAL RETURN 7.74% 11.14% 4.92% 14.31% 14.18% (4.69)% (3.71)% ======== ======== ======== ======== ======= ======= ======= RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.42% 0.42% 0.45% 0.47% 0.53% 0.65% 0.37% Ratio of net investment income to average net assets 1.75% 1.65% 1.47% 1.43% 2.33% 1.84% 2.67% Portfolio turnover rate 12% 20% 14% 7% 9% 5% 3% Number of shares outstanding at end of year (000's) 15,857 18,497 20,074 17,273 7,429 4,256 2,451 Net assets at end of year (000's) $181,437 $206,259 $209,091 $175,183 $66,809 $34,182 $21,036 Average net assets during the year (000's) $191,117 $204,792 $199,235 $117,264 $45,509 $26,542 $15,693 Average commission rate paid $0.0236 N/A N/A N/A N/A N/A N/A PERIOD FROM OCTOBER 2, 1989 TO MAY 31, 1990 ----------- PER SHARE DATA SHARE VALUE AT BEGINNING OF PERIOD $10.00(1) -------- + INCOME (LOSS) from net investment income 0.10 from net realized & unrealized gain (loss) on securities (0.83) -------- total income (loss) from investment operations (0.73) -------- - - - DISTRIBUTIONS from net investment income (0.10) from net realized gain on securities -------- total distributions (0.10) -------- = SHARE VALUE AT END OF PERIOD $9.17 ======== TOTAL RETURN (7.42)% ======== RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.19% Ratio of net investment income to average net assets 1.10% Portfolio turnover rate 0% Number of shares outstanding at end of year (000's) 1,310 Net assets at end of year (000's) $12,005 Average net assets during the year (000's) $ 7,853 Average commission rate paid N/A
- - ------------ (1) The net asset value at the beginning of the period is as of commencement of operations on October 2, 1989. 2 7 FINANCIAL HIGHLIGHTS -- CONTINUED MIDCAP INDEX FUND(1) - - --------------------------------------------------------------------------------
FISCAL YEAR ENDED MAY 31, -------------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 1992 1991 ---------- ---------- ---------- ---------- ---------- --------- --------- PER SHARE DATA SHARE VALUE AT BEGINNING OF YEAR $19.09 $15.68 $14.54 $14.38 $12.86 $12.51 $12.92 -------- -------- -------- -------- -------- ------- ------- + INCOME (LOSS) from net investment income 0.24 0.24 0.26 0.23 0.24 0.23 0.28 from net realized & unrealized gain (loss) on securities 2.95 4.06 1.59 0.28 1.93 0.39 (0.30) -------- -------- -------- -------- -------- ------- ------- total income (loss) from investment operations 3.19 4.30 1.85 0.51 2.17 0.62 (0.02) -------- -------- -------- -------- -------- ------- ------- - - - DISTRIBUTIONS from net investment income (0.24) (0.24) (0.26) (0.23) (0.24) (0.23) (0.28) from net realized gain on securities (1.21) (0.65) (0.45) (0.12) (0.41) (0.04) (0.11) -------- -------- -------- -------- -------- ------- ------- total distributions (1.45) (0.89) (0.71) (0.35) (0.65) (0.27) (0.39) -------- -------- -------- -------- -------- ------- ------- = SHARE VALUE AT END OF YEAR $20.83 $19.09 $15.68 $14.54 $14.38 $12.86 $12.51 ======== ======== ======== ======== ======== ======= ======= TOTAL RETURN 17.48% 28.10% 13.26% 3.52% 17.21% 5.01% 0.20% ======== ======== ======== ======== ======== ======= ======= RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.40% 0.41% 0.44% 0.46% 0.47% 0.54% 0.67% Ratio of net investment income to average net assets 1.24% 1.36% 1.73% 1.62% 1.79% 1.82% 2.41% Portfolio turnover rate 19% 21% 23% 17% 5% 112% 101% Number of shares outstanding at end of year (000's) 29,137 28,322 25,988 24,001 14,673 8,862 6,168 Net assets at end of year (000's) $607,061 $540,688 $407,557 $349,041 $210,931 $113,992 $77,146 Average net assets during the year (000's) $554,397 $477,372 $376,486 $285,247 $154,979 $88,456 $69,696 Average commission rate paid $0.0277 N/A N/A N/A N/A N/A N/A FISCAL YEAR ENDED MAY 31, --------------------------------- 1990 1989 1988 --------- --------- --------- PER SHARE DATA SHARE VALUE AT BEGINNING OF YEAR $12.25 $10.86 $13.87 ------- ------- ------- + INCOME (LOSS) from net investment income 0.28 0.30 0.17 from net realized & unrealized gain (loss) on securities 0.71 1.51 (1.41) ------- ------- ------- total income (loss) from investment operations 0.99 1.81 (1.24) ------- ------- ------- - - - DISTRIBUTIONS from net investment income (0.32) (0.27) (0.18) from net realized gain on securities (0.15) (1.59) ------- ------- ------- total distributions (0.32) (0.42) (1.77) ------- ------- ------- = SHARE VALUE AT END OF YEAR $12.92 $12.25 $10.86 ======= ======= ======= TOTAL RETURN 8.22% 17.06% (7.30)% ======= ======= ======= RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.68% 0.74% 0.79% Ratio of net investment income to average net assets 2.29% 2.72% 1.51% Portfolio turnover rate 131% 67% 108% Number of shares outstanding at end of year (000's) 5,712 5,354 4,827 Net assets at end of year (000's) $73,815 $65,586 $52,435 Average net assets during the year (000's) $67,421 $57,398 $49,877 Average commission rate paid N/A N/A N/A
- - ------------ (1) Effective October 1, 1991 the Fund's name was changed from the Capital Accumulation Fund to the MidCap Index Fund. Additionally, on October 1, 1991 the investment objectives and investment program for the Fund were changed. Bankers Trust has been the Fund's Sub-adviser since May 1, 1992. 3 8 FINANCIAL HIGHLIGHTS -- CONTINUED SMALL CAP INDEX FUND - - --------------------------------------------------------------------------------
FISCAL YEAR ENDED MAY 31, PERIOD FROM -------------------------------------------------------------- MAY 1, 1992 1997 1996 1995 1994 1993 TO MAY 31, 1992 ---------- ---------- ---------- ---------- ---------- --------------- PER SHARE DATA SHARE VALUE AT BEGINNING OF PERIOD $16.25 $12.49 $11.52 $11.28 $ 9.93 $10.00(1) -------- -------- -------- -------- -------- -------- + INCOME (LOSS) from net investment income 0.19 0.20 0.17 0.13 0.15 0.02 from net realized & unrealized gain (loss) on securities 0.93 4.04 0.97 0.58 1.48 (0.07) -------- -------- -------- -------- -------- -------- total income (loss) from investment operations 1.12 4.24 1.14 0.71 1.63 (0.05) -------- -------- -------- -------- -------- -------- - - - DISTRIBUTIONS from net investment income (0.19) (0.20) (0.17) (0.13) (0.15) (0.02) from net realized gain on securities (1.00) (0.28) (0.34) (0.13) -------- -------- -------- -------- -------- -------- total distributions (1.19) (0.48) (0.17) (0.47) (0.28) (0.02) -------- -------- -------- -------- -------- -------- = SHARE VALUE AT END OF PERIOD $16.18 $16.25 $12.49 $11.52 $11.28 $ 9.93 ======== ======== ======== ======== ======== ======== TOTAL RETURN 7.51% 34.50% 9.98% 6.18% 16.64% (0.50)% ======== ======== ======== ======== ======== ======== RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.41% 0.41% 0.44% 0.47% 0.47% 0.04% Ratio of net investment income to average net assets 1.34% 1.36% 1.44% 1.10% 1.40% 0.21% Portfolio turnover rate 42% 31% 34% 16% 20% 0% Number of shares outstanding at end of year (000's) 11,893 11,129 10,136 9,381 3,687 1,107 Net assets at end of year (000's) $192,459 $180,785 $126,567 $108,050 $ 41,581 $10,989 Average net assets during the year (000's) $178,368 $150,448 $120,298 $70,690 $ 22,142 $10,989 Average commission rate paid $0.0297 N/A N/A N/A N/A N/A
- - ------------ (1) The net asset value at the beginning of the period is as of commencement of operations on May 1, 1992. Bankers Trust has been the Fund's Sub-adviser since May 1, 1992. STOCK INDEX FUND(1) - - --------------------------------------------------------------------------------
FISCAL YEAR ENDED MAY 31, ----------------------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 1992 1991 ------------ ------------ ------------ ------------ ---------- ---------- --------- PER SHARE DATA SHARE VALUE AT BEGINNING OF YEAR $20.69 $16.81 $14.39 $14.36 $13.34 $12.60 $11.86 ---------- ---------- ---------- ---------- -------- -------- ------- + INCOME (LOSS) from net investment income 0.39 0.39 0.37 0.35 0.34 0.32 0.31 from net realized & unrealized gain (loss) on securities 5.57 4.26 2.45 0.12 1.20 0.74 0.81 ---------- ---------- ---------- ---------- -------- -------- ------- total income (loss) from investment operations 5.96 4.65 2.82 0.47 1.54 1.06 1.12 ---------- ---------- ---------- ---------- -------- -------- ------- - - - DISTRIBUTIONS from net investment income (0.39) (0.38) (0.37) (0.35) (0.34) (0.32) (0.31) from net realized gain on securities (0.17) (0.39) (0.03) (0.09) (0.18) (0.07) ---------- ---------- ---------- ---------- -------- -------- ------- total distributions (0.56) (0.77) (0.40) (0.44) (0.52) (0.32) (0.38) ---------- ---------- ---------- ---------- -------- -------- ------- = SHARE VALUE AT END OF YEAR $26.09 $20.69 $16.81 $14.39 $14.36 $13.34 $12.60 ========== ========== ========== ========== ======== ======== ======= TOTAL RETURN 29.24% 28.17% 19.98% 3.29% 11.74% 8.57% 9.98% ========== ========== ========== ========== ======== ======== ======= RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.34% 0.35% 0.38% 0.39% 0.43% 0.50% 0.67% Ratio of net investment income to average net assets 1.76% 2.05% 2.44% 2.44% 2.52% 3.12% 2.82% Portfolio turnover rate 3% 3% 14% 3% 1% 45% 6% Number of shares outstanding at end of year (000's) 93,687 85,117 75,451 75,494 66,224 55,598 6,662 Net assets at end of year (000's) $2,444,200 $1,760,786 $1,267,992 $1,086,459 $951,200 $741,667 $83,970 Average net assets during the year (000's) $2,019,826 $1,498,398 $1,140,085 $1,030,581 $836,510 $167,262 $55,147 Average commission rate paid $0.0281 N/A N/A N/A N/A N/A N/A FISCAL YEAR ENDED MAY 31, ---------------------------------- 1990 1989 1988 --------- --------- ---------- PER SHARE DATA SHARE VALUE AT BEGINNING OF YEAR $10.69 $8.90 $9.88 ------- ------- -------- + INCOME (LOSS) from net investment income 0.33 0.27 0.19 from net realized & unrealized gain (loss) on securities 1.32 1.86 (0.92) ------- ------- -------- total income (loss) from investment operations 1.65 2.13 (0.73) ------- ------- -------- - - - DISTRIBUTIONS from net investment income (0.35) (0.25) (0.21) from net realized gain on securities (0.13) (0.09) ------- ------- -------- total distributions (0.48) (0.34) (0.25) ------- ------- -------- = SHARE VALUE AT END OF YEAR $11.86 $10.69 $8.90 ======= ======= ======== TOTAL RETURN 15.78% 24.40% (7.48)% ======= ======= ======== RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.61% 0.78% 1.29% Ratio of net investment income to average net assets 3.05% 3.05% 2.23% Portfolio turnover rate 8% 14% 16% Number of shares outstanding at end of year (000's) 3,456 1,924 1,174 Net assets at end of year (000's) $40,969 $20,572 $10,443 Average net assets during the year (000's) $29,824 $14,060 $7,933 Average commission rate paid N/A N/A N/A
- - ------------ (1) Bankers Trust has been the Fund's Sub-adviser since May 1, 1992. 4 9 FINANCIAL HIGHLIGHTS -- CONTINUED GROWTH FUND - - --------------------------------------------------------------------------------
FISCAL YEAR ENDED MAY 31, PERIOD FROM ---------------------------------------------------- APRIL 29, 1994 1997 1996 1995 TO MAY 31, 1994 ---------- ---------- ---------- --------------- PER SHARE DATA SHARE VALUE AT BEGINNING OF PERIOD $16.49 $11.43 $9.87 $10.00(1) -------- -------- -------- ------- + INCOME (LOSS) from net investment income 0.02 0.11 0.04 0.01 from net realized & unrealized gain (loss) on securities 1.45 5.27 1.56 (0.13) -------- -------- -------- ------- total income (loss) from investment operations 1.47 5.38 1.60 (0.12) -------- -------- -------- ------- - - - DISTRIBUTIONS from net investment income (0.01) (0.09) (0.04) (0.01) from net realized gain on securities (0.33) (0.23) -------- -------- -------- ------- total distributions (0.34) (0.32) (0.04) (0.01) -------- -------- -------- ------- = SHARE VALUE AT END OF PERIOD $17.62 $16.49 $11.43 $9.87 ======== ======== ======== ======= TOTAL RETURN 9.00% 47.46% 16.25% (1.19)% ======== ======== ======== ======= RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.86% 0.83% 0.91% 0.08% Ratio of net investment income to average net assets 0.09% 0.89% 0.41% 0.11% Portfolio turnover rate 40% 36% 61% 0% Number of shares outstanding at end of year (000's) 42,422 25,826 8,800 1,001 Net assets at end of year (000's) $747,654 $425,787 $100,614 $9,885 Average net assets during the year (000's) $588,056 $238,228 $ 42,232 $9,944 Average commission rate paid $0.0499 N/A N/A N/A
- - ------------ (1) The net asset value at the beginning of the period is as of commencement of operations on April 29, 1994. GROWTH & INCOME FUND - - --------------------------------------------------------------------------------
PERIOD FROM FISCAL YEAR ENDED MAY 31, APRIL 29, 1994 --------------------------------------------------- TO 1997 1996 1995 MAY 31, 1994 ---------- ---------- --------- -------------- PER SHARE DATA SHARE VALUE AT BEGINNING OF PERIOD $14.78 $11.09 $9.87 $10.00(1) -------- -------- ------- ------- + INCOME (LOSS) from net investment income 0.10 0.08 0.09 0.02 from net realized & unrealized gain (loss) on securities 2.38 3.77 1.22 (0.13) -------- -------- ------- ------- total income (loss) from investment operations 2.48 3.85 1.31 (0.11) -------- -------- ------- ------- - - - DISTRIBUTIONS from net investment income (0.10) (0.07) (0.09) (0.02) from net realized gain on securities (0.29) (0.09) -------- -------- ------- ------- total distributions (0.39) (0.16) (0.09) (0.02) -------- -------- ------- ------- = SHARE VALUE AT END OF PERIOD $16.87 $14.78 $11.09 $9.87 ======== ======== ======= ======= TOTAL RETURN 17.08% 34.85% 13.35% (1.11)% ======== ======== ======= ======= RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.81% 0.79% 0.86% 0.07% Ratio of net investment income to average net assets 0.70% 0.63% 0.93% 0.22% Portfolio turnover rate 45% 64% 97% 11% Number of shares outstanding at end of year (000's) 12,422 7,685 3,867 1,002 Net assets at end of year (000's) $209,545 $113,546 $42,867 $9,890 Average net assets during the year (000's) $161,226 $75,158 $21,910 $9,946 Average commission rate paid $0.0500 N/A N/A N/A
- - ------------ (1) The net asset value at the beginning of the period is as of commencement of operations on April 29, 1994. 5 10 FINANCIAL HIGHLIGHTS -- CONTINUED CAPITAL CONSERVATION FUND - - --------------------------------------------------------------------------------
FISCAL YEAR ENDED MAY 31, --------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 1992 1991 --------- --------- --------- --------- --------- --------- --------- PER SHARE DATA SHARE VALUE AT BEGINNING OF YEAR $9.23 $9.52 $9.13 $9.87 $9.29 $8.81 $9.08 ------- -------- ------- ------- ------- ------- ------- + INCOME (LOSS) from net investment income 0.62 0.62 0.63 0.61 0.65 0.69 0.73 from net realized & unrealized gain (loss) on securities 0.08 (0.29) 0.39 (0.69) 0.58 0.48 (0.27) ------- -------- ------- ------- ------- ------- ------- total income (loss) from investment operations 0.70 0.33 1.02 (0.08) 1.23 1.17 0.46 ------- -------- ------- ------- ------- ------- ------- - - - DISTRIBUTIONS from net investment income (0.62) (0.62) (0.63) (0.61) (0.65) (0.69) (0.73) from net realized gain on securities (0.05) ------- -------- ------- ------- ------- ------- ------- total distributions (0.62) (0.62) (0.63) (0.66) (0.65) (0.69) (0.73) ------- -------- ------- ------- ------- ------- ------- = SHARE VALUE AT END OF YEAR $9.31 $9.23 $9.52 $9.13 $9.87 $9.29 $8.81 ======= ======== ======= ======= ======= ======= ======= TOTAL RETURN 7.75% 3.41% 11.80% (1.13)% 13.60% 13.72% 5.40% ======= ======== ======= ======= ======= ======= ======= RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.57% 0.57% 0.58% 0.59% 0.67% 0.77% 0.83% Ratio of net investment income to average net assets 6.59% 6.47% 6.88% 6.24% 6.77% 7.80% 8.25% Portfolio turnover rate 45% 80% 100% 55% 58% 121% 142% Number of shares outstanding at end of period (000's) 7,168 7,604 6,935 6,712 5,095 3,939 2,333 Net assets at end of period (000's) $66,747 $70,212 $66,031 $61,305 $50,290 $36,609 $20,541 Average net assets during the period (000's) $69,352 $70,271 $61,568 $59,210 $43,316 $29,793 $19,105 FISCAL YEAR ENDED MAY 31, --------------------------------- 1990 1989 1988 --------- --------- --------- PER SHARE DATA SHARE VALUE AT BEGINNING OF YEAR $9.48 $9.29 $9.51 ------- ------- -------- + INCOME (LOSS) from net investment income 0.80 0.75 0.63 from net realized & unrealized gain (loss) on securities (0.36) 0.17 (0.24) ------- ------- -------- total income (loss) from investment operations 0.44 0.92 0.39 ------- ------- -------- - - - DISTRIBUTIONS from net investment income (0.84) (0.73) (0.61) from net realized gain on securities ------- ------- -------- total distributions (0.84) (0.73) (0.61) ------- ------- -------- = SHARE VALUE AT END OF YEAR $9.08 $9.48 $9.29 ======= ======= ======== TOTAL RETURN 4.73% 10.45% 4.16% ======= ======= ======== RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.83% 0.88% 1.66% Ratio of net investment income to average net assets 8.64% 8.82% 6.73% Portfolio turnover rate 125% 55% 27% Number of shares outstanding at end of period (000's) 1,983 1,429 563 Net assets at end of period (000's) $18,006 $13,544 $5,226 Average net assets during the period (000's) $16,278 $9,562 $4,584
6 11 FINANCIAL HIGHLIGHTS -- CONTINUED GOVERNMENT SECURITIES FUND - - --------------------------------------------------------------------------------
FISCAL YEAR ENDED MAY 31, -------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 1992 1991 --------- --------- --------- --------- --------- --------- -------- PER SHARE DATA SHARE VALUE AT BEGINNING OF YEAR $9.61 $9.89 $9.55 $10.30 $9.84 $9.34 $9.20 ------- -------- ------- ------- ------- ------- ------ + INCOME (LOSS) from investment income 0.59 0.61 0.60 0.55 0.61 0.65 0.66 from net realized & unrealized gain (loss) on securities 0.06 (0.28) 0.35 (0.59) 0.59 0.49 0.14 ------- -------- ------- ------- ------- ------- ------ total income (loss) from investment operations 0.65 0.33 0.95 (0.04) 1.20 1.14 0.80 ------- -------- ------- ------- ------- ------- ------ - - - DISTRIBUTIONS from net investment income (0.59) (0.61) (0.61) (0.55) (0.61) (0.64) (0.66) from net realized gain on securities (0.16) (0.13) ------- -------- ------- ------- ------- ------- ------ total distributions (0.59) (0.61) (0.61) (0.71) (0.74) (0.64) (0.66) ------- -------- ------- ------- ------- ------- ------ = SHARE VALUE AT END OF YEAR $9.67 $9.61 $9.89 $9.55 $10.30 $9.84 $9.34 ======= ======== ======= ======= ======= ======= ====== TOTAL RETURN 6.94% 3.32% 10.43% (0.66)% 12.56% 12.60% 9.28% ======= ======== ======= ======= ======= ======= ====== RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.56% 0.56% 0.58% 0.59% 0.67% 0.76% 0.87% Ratio of net investment income to average net assets 6.11% 6.21% 6.36% 5.44% 6.08% 6.77% 7.25% Portfolio turnover rate 38% 36% 229% 85% 105% 78% 87% Number of shares outstanding at end of year (000's) 8,672 8,164 5,478 4,544 3,110 2,090 1,468 Net assets at end of year (000's) $83,827 $78,423 $54,174 $43,401 $32,023 $20,559 $13,711 Average net assets during the year (000's) $83,293 $68,017 $45,200 $41,596 $26,145 $17,069 $11,393 FISCAL YEAR ENDED MAY 31, ------------------------------ 1990 1989 1988 -------- -------- -------- PER SHARE DATA SHARE VALUE AT BEGINNING OF YEAR $9.42 $9.24 $9.51 ------ ------ ------ + INCOME (LOSS) from investment income 0.70 0.71 0.61 from net realized & unrealized gain (loss) on securities (0.17) 0.15 (0.28) ------ ------ ------ total income (loss) from investment operations 0.53 0.86 0.33 ------ ------ ------ - - - DISTRIBUTIONS from net investment income (0.75) (0.68) (0.60) from net realized gain on securities ------ ------ ------ total distributions (0.75) (0.68) (0.60) ------ ------ ------ = SHARE VALUE AT END OF YEAR $9.20 $9.42 $9.24 ====== ====== ====== TOTAL RETURN 5.76% 9.57% 3.45% ====== ====== ====== RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.86% 0.85% 1.66% Ratio of net investment income to average net assets 7.77% 7.89% 6.48% Portfolio turnover rate 85% 38% 36% Number of shares outstanding at end of year (000's) 978 570 405 Net assets at end of year (000's) $8,997 $5,374 $3,747 Average net assets during the year (000's) $7,233 $4,565 $3,257
INTERNATIONAL GOVERNMENT BOND FUND - - --------------------------------------------------------------------------------
PERIOD FROM OCTOBER 1, FISCAL YEAR ENDED MAY 31, 1991 TO ----------------------------------------------------------- MAY 31, 1997 1996 1995 1994 1993 1992 ---------- ---------- --------- --------- --------- ----------- PER SHARE DATA SHARE VALUE AT BEGINNING OF PERIOD $11.79 $12.72 $10.97 $11.16 $10.43 $10.00(1) -------- -------- ------- ------- ------- ------- + INCOME (LOSS) from net investment income 0.63 0.65 0.65 0.62 0.76 0.48 from net realized & unrealized gain (loss) on securities and foreign currencies (0.49) (0.89) 1.80 (0.20) 0.70 0.42 -------- -------- ------- ------- ------- ------- total income (loss) from investment operations 0.14 (0.24) 2.45 0.42 1.46 0.90 -------- -------- ------- ------- ------- ------- - - - DISTRIBUTIONS from net investment income (0.58) (0.68) (0.70) (0.60) (0.73) (0.47) from net realized gain on securities (0.02) (0.01) (0.01) -------- -------- ------- ------- ------- ------- total distributions (0.60) (0.69) (0.70) (0.61) (0.73) (0.47) -------- -------- ------- ------- ------- ------- = SHARE VALUE AT END OF PERIOD $11.33 $11.79 $12.72 $10.97 $11.16 $10.43 ======== ======== ======= ======= ======= ======= TOTAL RETURN 1.13% (1.91)% 23.23% 3.87% 14.50% 9.18% ======== ======== ======= ======= ======= ======= RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.56% 0.56% 0.59% 0.48% 0.14% 0.08% Ratio of net investment income to average net assets 5.13% 5.45% 5.83% 5.87% 7.02% 4.62% Portfolio turnover rate 4% 11% 6% 3% 26% 12% Number of shares outstanding at end of year (000's) 15,680 12,073 6,111 3,741 2,062 1,259 Net assets at end of year (000's) $177,709 $142,383 $77,734 $41,028 $23,009 $13,126 Average net assets during the year (000's) $166,147 $114,693 $51,451 $33,561 $18,135 $11,938
- - ------------ (1) The net asset value at the beginning of the period is as of commencement of operations on October 1, 1991. 7 12 FINANCIAL HIGHLIGHTS -- CONTINUED SCIENCE & TECHNOLOGY FUND - - --------------------------------------------------------------------------------
PERIOD FROM FISCAL YEAR ENDED MAY 31, APRIL 29, 1994 ---------------------------------------------------- TO 1997 1996 1995 MAY 31, 1994 ---- ---- ---- -------------- PER SHARE DATA SHARE VALUE AT BEGINNING OF PERIOD $20.48 $14.43 $9.83 $10.00(1) -------- -------- -------- ------- + INCOME (LOSS) from net investment income 0.00 0.00 0.03 0.00 from realized & unrealized gain (loss) on securities 0.33 8.08 4.72 (0.17) -------- -------- -------- ------- total income (loss) from investment operations 0.33 8.08 4.75 (0.17) -------- -------- -------- ------- - - - DISTRIBUTIONS from net investment income (0.00) (0.00) (0.02) 0.00 from net realized gain on securities (0.93) (2.03) (0.13) 0.00 -------- -------- -------- ------- total distributions (0.93) (2.03) (0.15) 0.00 -------- -------- -------- ------- = SHARE VALUE AT END OF PERIOD $19.88 $20.48 $14.43 $9.83 ======== ======== ======== ======= TOTAL RETURN 1.81% 58.28% 48.61% (1.66)% ======== ======== ======== ======= RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.96% 0.94% 1.00% 0.08% Ratio of net investment income (loss) to average net assets (0.29)% (0.07)% 0.36% 0.04% Portfolio turnover rate 122% 116% 121% 0% Number of shares outstanding at end of year (000's) 40,484 27,696 11,550 1,001 Net assets at end of year (000's) $804,982 $567,187 $166,683 $ 9,834 Average net assets during the year (000's) $664,608 $363,087 $ 64,974 $ 9,918 Average commission rate paid $0.0393 N/A N/A N/A
- - ------------ (1) The net asset value at the beginning of the period is as of commencement of operations on April 29, 1994. SOCIAL AWARENESS FUND - - --------------------------------------------------------------------------------
FISCAL YEAR ENDED MAY 31, ----------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 1992 1991 ----------- --------- --------- --------- --------- --------- --------- PER SHARE DATA SHARE VALUE AT BEGINNING OF PERIOD $15.49 $13.02 $11.98 $12.12 $11.43 $11.13 $10.59 --------- ------- ------- ------- ------- ------- ------- + INCOME (LOSS) from net investment income 0.24 0.26 0.27 0.26 0.24 0.26 0.26 from net realized & unrealized gain (loss) on securities 4.19 3.37 1.75 (0.02) 1.22 0.30 0.54 --------- ------- ------- ------- ------- ------- ------- total income from investment operations 4.43 3.63 2.02 0.24 1.46 0.56 0.80 --------- ------- ------- ------- ------- ------- ------- - - - DISTRIBUTIONS from net investment income (0.24) (0.25) (0.27) (0.26) (0.24) (0.26) (0.26) from net realized gain on securities (1.78) (0.91) (0.71) (0.12) (0.53) --------- ------- ------- ------- ------- ------- ------- total distributions (2.02) (1.16) (0.98) (0.38) (0.77) (0.26) (0.26) --------- ------- ------- ------- ------- ------- ------- = SHARE VALUE AT END OF PERIOD $17.90 $15.49 $13.02 $11.98 $12.12 $11.43 $11.13 ========= ======= ======= ======= ======= ======= ======= TOTAL RETURN 30.48% 28.85% 18.19% 1.97% 13.08% 5.08% 7.89% ========= ======= ======= ======= ======= ======= ======= RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.56% 0.56% 0.58% 0.60% 0.63% 0.16% 0.44% Ratio of net investment income to average net assets 1.53% 1.80% 2.22% 2.19% 2.14% 2.34% 2.66% Portfolio turnover rate 109% 117% 148% 83% 106% 203% 100% Number of shares outstanding at end of year (000's) 8,677 5,220 4,143 3,817 2,819 1,799 973 Net assets at end of year (000's) $155,349 $80,887 $53,927 $45,729 $34,166 $20,570 $10,835 Average net assets during the year (000's) $106,139 $66,888 $47,942 $41,002 $26,920 $15,365 $ 7,959 Average commission rate paid $0.0400 N/A N/A N/A N/A N/A N/A PERIOD FROM OCTOBER 2, 1989 TO MAY 31, 1990 --------------- PER SHARE DATA SHARE VALUE AT BEGINNING OF PERIOD $10.00(1) -------- + INCOME (LOSS) from net investment income 0.20 from net realized & unrealized gain (loss) on securities 0.59 -------- total income from investment operations 0.79 -------- - - - DISTRIBUTIONS from net investment income (0.20) from net realized gain on securities -------- total distributions (0.20) -------- = SHARE VALUE AT END OF PERIOD $10.59 ======== TOTAL RETURN 8.09% ======== RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.23% Ratio of net investment income to average net assets 2.04% Portfolio turnover rate 95% Number of shares outstanding at end of year (000's) 612 Net assets at end of year (000's) $ 6,485 Average net assets during the year (000's) $ 5,358 Average commission rate paid N/A
- - ------------ (1) The net asset value at the beginning of the period is as of commencement of operations on October 2, 1989. 8 13 FINANCIAL HIGHLIGHTS -- CONTINUED MONEY MARKET FUND - - --------------------------------------------------------------------------------
FISCAL YEAR ENDED MAY 31, ---------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 1992 1991 ---------- --------- --------- --------- --------- --------- --------- PER SHARE DATA SHARE VALUE AT BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 -------- ------- -------- -------- ------- ------- ------- + INCOME from net investment income 0.05 0.05 0.05 0.03 0.03 0.05 0.07 -------- ------- -------- -------- ------- ------- ------- - - - DISTRIBUTIONS from net investment income (0.05) (0.05) (0.05) (0.03) (0.03) (0.05) (0.07) -------- ------- -------- -------- ------- ------- ------- = SHARE VALUE AT END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 ======== ======= ======== ======== ======= ======= ======= TOTAL RETURN 5.02% 5.26% 4.90% 2.83% 2.85% 4.47% 7.11% ======== ======= ======== ======== ======= ======= ======= RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.57% 0.57% 0.57% 0.58% 0.63% 0.67% 0.68% Ratio of net investment income to average net assets 4.95% 5.14% 4.75% 2.78% 2.81% 4.42% 6.86% Number of shares outstanding at end of year (000's) 128,125 83,618 82,256 50,534 45,323 48,355 38,572 Total net assets at end of year (000's) $128,125 $83,618 $82,254 $50,533 $45,322 $48,353 $38,570 Average net assets during the year (000's) $113,882 $84,271 $67,021 $46,222 $45,562 $46,305 $34,733 FISCAL YEAR ENDED MAY 31, -------------------------------- 1990 1989 1988 --------- -------- --------- PER SHARE DATA SHARE VALUE AT BEGINNING OF YEAR $1.00 $1.00 $1.00 ------- ------ ------- + INCOME from net investment income 0.08 0.08 0.05 ------- ------ ------- - - - DISTRIBUTIONS from net investment income (0.08) (0.08) (0.05) ------- ------ ------- = SHARE VALUE AT END OF YEAR $1.00 $1.00 $1.00 ======= ====== ======= TOTAL RETURN 8.31% 8.63% 6.02% ======= ====== ======= RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.74% 0.46% 1.77% Ratio of net investment income to average net assets 7.93% 8.39% 5.30% Number of shares outstanding at end of year (000's) 27,628 21,445 7,336 Total net assets at end of year (000's) $27,628 $21,445 $7,341 Average net assets during the year (000's) $22,563 $13,385 $5,390
ASSET ALLOCATION FUND(1) - - --------------------------------------------------------------------------------
FISCAL YEAR ENDED MAY 31, ---------------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 1992 1991 ---------- ---------- ---------- ---------- ---------- ---------- ---------- PER SHARE DATA SHARE VALUE AT BEGINNING OF YEAR $12.55 $11.24 $10.84 $11.18 $10.66 $11.05 $10.48 -------- -------- -------- -------- -------- -------- -------- + INCOME (LOSS) from net investment income 0.77 0.44 0.44 0.37 0.35 0.30 0.40 from net realized & unrealized gain (loss) on securities 1.44 1.53 0.82 (0.15) 0.61 (0.19) 0.57 -------- -------- -------- -------- -------- -------- -------- total income from investment operations 2.21 1.97 1.26 0.22 0.96 0.11 0.97 -------- -------- -------- -------- -------- -------- -------- - - - DISTRIBUTIONS from net investment income (0.78) (0.44) (0.44) (0.37) (0.35) (0.30) (0.40) from net realized gain on securities (1.41) (0.22) (0.42) (0.19) (0.09) (0.20) -------- -------- -------- -------- -------- -------- -------- total distributions (2.19) (0.66) (0.86) (0.56) (0.44) (0.50) (0.40) -------- -------- -------- -------- -------- -------- -------- = SHARE VALUE AT END OF YEAR $12.57 $12.55 $11.24 $10.84 $11.18 $10.66 $11.05 ======== ======== ======== ======== ======== ======== ======== TOTAL RETURN 15.89% 17.90% 12.43% 1.86% 9.17% 0.87% 9.75% ======== ======== ======== ======== ======== ======== ======== RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.57% 0.57% 0.58% 0.59% 0.70% 0.90% 0.92% Ratio of net investment income to average net assets 3.26% 3.62% 4.03% 3.24% 3.28% 2.72% 3.94% Portfolio turnover rate 103% 119% 133% 76% 78% 111% 55% Number of shares outstanding at end of year (000's) 14,107 15,142 16,319 17,956 14,758 13,341 11,891 Net assets at end of year (000's) $177,347 $190,024 $183,393 $194,576 $165,002 $142,213 $131,416 Average net assets during the year (000's) $179,615 $187,576 $186,487 $185,036 $151,450 $137,179 $116,266 Average commission rate paid $0.0401 N/A N/A N/A N/A N/A N/A FISCAL YEAR ENDED MAY 31, ----------------------------------- 1990 1989 1988 ---------- ---------- --------- PER SHARE DATA SHARE VALUE AT BEGINNING OF YEAR $10.06 $9.40 $11.07 -------- -------- ------- + INCOME (LOSS) from net investment income 0.55 0.62 0.35 from net realized & unrealized gain (loss) on securities 0.44 0.65 (0.31) -------- -------- ------- total income from investment operations 0.99 1.27 0.04 -------- -------- ------- - - - DISTRIBUTIONS from net investment income (0.57) (0.61) (0.35) from net realized gain on securities (1.36) -------- -------- ------- total distributions (0.57) (0.61) (1.71) -------- -------- ------- = SHARE VALUE AT END OF YEAR $10.48 $10.06 $9.40 ======== ======== ======= TOTAL RETURN 10.06% 14.00% 0.88% ======== ======== ======= RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.92% 1.00% 1.01% Ratio of net investment income to average net assets 5.38% 6.43% 3.56% Portfolio turnover rate 51% 93% 162% Number of shares outstanding at end of year (000's) 11,158 9,969 9,196 Net assets at end of year (000's) $116,966 $100,248 $86,476 Average net assets during the year (000's) $107,626 $ 92,364 $77,192 Average commission rate paid N/A N/A N/A
(1) The Asset Allocation Fund was formerly known as the Timed Opportunity Fund. 9 14 ABOUT THE FUND'S MANAGEMENT - - -------------------------------------------------------------------------------- VALIC'S ADDRESS is 2929 Allen Parkway, Houston, Texas 77019. INVESTMENT ADVISER VALIC, a stock life insurance company, has been in the investment advisory business since 1960. Since May 30, 1985, VALIC has been the Investment Adviser for the Funds that comprise the Series Company. VALIC is a member of the American General Corporation group of companies. Members of the American General Corporation group of companies operate in each of the 50 states and Canada and collectively provide financial services with activities heavily weighted toward insurance. BANKERS TRUST'S PRINCIPAL OFFICES are located at 130 Liberty St., New York, New York 10006. As Investment Adviser, VALIC is responsible for each Fund's day to day operations. Also, VALIC develops Fund investment strategy and buys and sells Fund investments. VALIC serves as Investment Adviser through an Investment Advisory Agreement it enters into with each Fund. These agreements are renewed once each year, by the Series Company Board of Directors. One Investment Advisory Agreement covers these Funds: T. ROWE PRICE'S PRINCIPAL OFFICES are located at 100 East Pratt Street, Baltimore, Maryland 21202.
Effective Date of Fund Name Agreement --------- ----------------- Asset Allocation Fund Money Market Fund Capital Conservation Fund September 7, 1990 Government Securities Fund International Equities Fund Social Awareness Fund International Government Bond October 1, 1991 Fund
Another Investment Advisory Agreement covers these Funds:
Effective Date of Fund Name Agreement --------- ----------------- MidCap Index Fund Stock Index Fund May 1, 1992 Small Cap Index Fund Growth Fund Growth & Income Fund May 1, 1994 Science & Technology Fund
VALUE LINE'S PRINCIPAL OFFICES are located at 220 East 42nd Street, New York, New York 10017-5981. For more information on these agreements, see the "Investment Adviser" section in the Statement of Additional Information. INVESTMENT SUB-ADVISERS For some of the Funds, VALIC works with Investment Sub-advisers, financial service companies that specialize in certain types of investing. However, VALIC still retains ultimate responsibility for managing the Funds. The Sub-adviser's role is to make investment decisions for the Funds according to each Fund's investment objectives and restrictions. The Sub-advisers are: BANKERS TRUST COMPANY ("BANKERS TRUST") Since May 1, 1992, Bankers Trust has been the Sub-adviser for the MidCap Index Fund, the Stock Index Fund, and the Small Cap Index Fund. Bankers Trust first offered investment management services in 1938 and began managing index funds in 1977. As of March 31, 1997, Bankers Trust managed $233 billion in assets. Bankers Trust is entirely owned by the Bankers Trust New York Corporation, a bank holding company. Bankers Trust is the seventh largest U.S. financial services institution as of December 31, 1996. T. ROWE PRICE ASSOCIATES, INC. ("T. ROWE PRICE") Since May 1, 1994, T. Rowe Price has been the Sub-adviser for the Growth Fund and the Science & Technology Fund. T. Rowe Price was incorporated in Maryland in 1947. The firm, which was founded by Thomas Rowe Price Jr. in 1937, is one of the pioneers of the growth stock theory of investing. T. Rowe Price, one of the nation's leading no-load fund managers, and its affiliates manage over $95 billion of assets as of December 31, 1996. Its approach to managing money is based on proprietary research and a strict investment discipline developed over six decades. VALUE LINE, INC. ("VALUE LINE") Since May 1, 1994, Value Line has been the Sub-adviser for the Growth & Income Fund. Value Line, with assets under management in excess of $5 billion as of June 30, 1997, provides investment counseling services to companies and others. Investment selection is based on the Value Line Ranking System for TimelinessTM, which has evolved over many years of research. Value Line also publishes the Value Line Investment Survey, one of the best known U.S. investment advisory services covering about 1,700 stocks, organized into 90 industries. The majority of Value Line's outstanding stock is owned by Arnold Bernhard & Co., Inc. Value Line is a New York corporation. 10 15 - - -------------------------------------------------------------------------------- These financial service companies act as Investment Sub-advisers through an agreement each entered into with VALIC. For more information on these agreements and on these Sub-advisers, see the "Investment Sub-Advisers" section in the Statement of Additional Information. PORTFOLIO MANAGER A portfolio manager is a person or team of persons VALIC, or one of its Sub-advisers, has assigned to be primarily responsible for the day to day management of a Fund's investments. A Fund's investments are called its portfolio. HOW ADVISERS ARE PAID FOR THEIR SERVICES VALIC Each Fund pays VALIC a fee based on its average daily net asset value. A Fund's net asset value is the total value of the Fund's assets minus any money it owes for operating expenses, such as the fee paid to its Custodian to safeguard the Fund's investments. Here is a list of the percentages each Fund pays VALIC.
Advisory Fee Fund Name (Annual Rate) --------- ------------- Index Equity Funds International Equities ) 0.35% on the first Fund ) $500 million; MidCap Index Fund ) 0.25% on assets Small Cap Index Fund ) over Stock Index Fund ) $500 million Growth Fund 0.80% Growth & Income Fund 0.75% Capital Conservation Fund 0.50% Government Securities Fund 0.50% International Government Bond Fund 0.50% Science & Technology Fund 0.90% Social Awareness Fund 0.50% Money Market Fund 0.50% Asset Allocation Fund* 0.50%
The Investment Advisory Agreements we entered into with each Fund do not limit how much the Funds pay in monthly expenses each year. However, we voluntarily limit the Funds' monthly expenses as follows: If a Fund's average monthly expenses, when annualized, are more than 2% of the Fund's estimated average daily net assets, we will pay the difference. As a result the Fund's yield or total return will increase. If VALIC decides to stop voluntarily reducing a Fund's expenses, it may do so by giving 30 days' notice, in writing, to the Series Company. To date, VALIC has not had to reduce expenses of any Fund as a result of this 2% voluntary reduction. For the fiscal year ended May 31, 1997, the total expenses paid by the Series Company of each Fund's average net assets were, as a percentage, as follows:
Total Expenses Fund Name Ratio --------- -------- International Equities Fund 0.42% MidCap Index Fund 0.40% Small Cap Index Fund 0.41% Stock Index Fund 0.34% Growth Fund 0.86% Growth & Income Fund 0.81% Capital Conservation Fund 0.57% Government Securities Fund 0.56% International Government Bond Fund 0.56% Science & Technology Fund 0.96% Social Awareness Fund 0.56% Money Market Fund 0.57% Asset Allocation Fund* 0.57%
* The Asset Allocation Fund was formerly known as the Timed Opportunity Fund. 11 16 - - -------------------------------------------------------------------------------- For more information on WHAT THE SUB-ADVISERS ARE PAID, see the "Investment Sub-Advisers" section in the Statement of Additional Information. The Sub-advisers According to the agreements we have with the Sub-advisers, we pay them directly out of the fee we receive from the Funds. The Funds do not pay the Sub-advisers directly. We pay them a percentage of what is paid to us by the Funds. We and the Sub-advisers may agree to change the amount of money we pay them when their agreements are renewed each year. Any such change increasing the charge would have to be approved by the Series Company Board of Directors and by the shareholders of the Fund. Under the Investment Sub-Advisory Agreement we have with Bankers Trust, we pay to Bankers Trust a monthly fee based on the respective average daily net asset values of the MidCap Index Fund, the Stock Index Fund and the Small Cap Index Fund at the annual rate of .05% on the first $500 million and .03% on assets over $500 million. Under the Investment Sub-Advisory Agreement we have with T. Rowe Price, we pay T. Rowe Price a monthly fee based on the average daily net asset values of the Growth Fund at an annual rate of .50% and the Science & Technology Fund at the annual rate of .60%. Under the Investment Sub-Advisory Agreement we have with Value Line, we pay Value Line a monthly fee based on the average daily net asset value of the Growth & Income Fund at an annual rate of .45%. VALIC is required to pay a minimum yearly sub-advisory fee of $50,000 for the Small Cap Index Fund. There are no minimum yearly sub-advisory fees for the Stock Index Fund, MidCap Index Fund, Growth Fund, Growth & Income Fund and the Science & Technology Fund. According to the agreements we have with the Sub-advisers, we will receive investment advice for each sub-advised Fund. Under these agreements we give the Sub-advisers the authority to manage these Funds and to buy and sell securities for these Funds. We retain the responsibility for the overall management of these Funds. The Sub-advisers may buy and sell securities for each Fund with broker-dealers and other financial intermediaries that they select. The Sub-advisers may place orders to buy and sell securities of these Funds with a broker-dealer affiliated with the Sub-adviser as allowed by law. This could include any affiliated futures commission merchants. Further, in the case of T. Rowe Price, it may include any indirectly related broker. The Investment Company Act of 1940 ("1940 Act") permits Sub-advisers under certain conditions to place an order to buy or sell securities with an affiliated broker. One of these conditions is that the commission received by the affiliated broker can not be greater than the usual and customary broker's commission if the sale was completed on a securities exchange. The Series Company has adopted procedures, as required by the 1940 Act, which provide that any commissions received by a Sub-adviser's affiliated broker are reasonable and fair if compared to the commission received by other brokers for the same type of securities transaction. The Securities Exchange Act of 1934 prohibits members of national securities exchanges from effecting exchange transactions for accounts that they or their affiliates manage, except as allowed under rules adopted by the Securities and Exchange Commission ("SEC"). The Series Company and the Sub-advisers have entered into a written contract, as required by the 1940 Act, to allow the Sub-adviser's affiliate to effect these type of transactions for commissions. The 1940 Act generally prohibits a Sub-adviser or a Sub-adviser's affiliate, acting as principal, from engaging in securities transactions with a Fund, without an exemptive order from the SEC. We and the Sub-advisers may enter into simultaneous purchase and sale transactions for the Funds or affiliates of the Funds. ABOUT THE BOARD OF DIRECTORS The Series Company Board of Directors currently consists of nine members: five are independent directors, three are VALIC employees, and one is an employee of American General Corporation. The Board of Directors may change each Fund's investment objective, investment policies and non-fundamental investment restrictions without shareholder approval. The Board may not change any fundamental restrictions placed on the types of investments each Fund may buy. The fundamental restrictions appear in the Statement of Additional Information. Changes to these restrictions may be made with shareholder approval only. 12 17 ABOUT THE FUNDS - - -------------------------------------------------------------------------------- GROWTH, INCOME AND STABILITY CATEGORIES The Funds offered in this prospectus fall into three general investment categories: growth, income and stability. Growth Category The goal of a Fund in the growth category is to increase the value of your investment over the long term by investing mostly in stocks. Stocks are a type of investment that can increase in value over a period of years. Companies sell stock to get the money they need to grow. These companies often keep some of their profits to reinvest in their business. As they grow, the value of their stock may increase. This is how the value of your investment may increase. Series Company Growth Category includes: Asset Allocation Fund Growth Fund Growth & Income Fund International Equities Fund MidCap Index Fund Science & Technology Fund Small Cap Index Fund Social Awareness Fund Stock Index Fund Income Category Unlike Funds in the growth category, where the objective is to make the Fund's investments increase in value, Funds in the income category try to keep the value of their investments from falling, while providing an increase in the value of your investment through the income earned on the Fund's investments. To meet this objective, Funds in the income category buy investments that are expected to pay interest to the Fund on a regular basis. Series Company Income Category includes: Capital Conservation Fund Government Securities Fund International Government Bond Fund Stability Category Funds in the stability category provide liquidity, protection of capital and current income through investments in high quality securities. Series Company Stability Category includes: Money Market Fund ABOUT LEVEL OF RISK The risks involved in each Fund are described in each Fund's Fact Sheet. These risks include market risk, credit risk, interest rate risk and risk associated with foreign securities. These risks are described in the "Types of Investments" section in this prospectus. The money you invest in the Series Company is not insured. And, we can't guarantee that any of the Funds will meet their investment objectives. There's a chance you may lose money and end up with less than you invested. ABOUT PORTFOLIO TURNOVER Portfolio turnover occurs when a Fund sells its investments and buys new ones. In some Funds, high portfolio turnover occurs when these Funds sell and buy investments as part of their investment strategy. In other Funds, like the Index Funds discussed below, portfolio turnover is lower because the make up of the index stays fairly constant. High portfolio turnover may cause a fund's expenses to increase. For example, a fund may have to pay brokerage fees and other related expenses. 13 18 - - -------------------------------------------------------------------------------- For each of the last two fiscal years the portfolio turnover rates for each of the Funds except the Money Market Fund were as follows:
Fiscal Year Ending ----------------------- May 31, May 31, 1996 1997 ------- ------- International Equities Fund 20% 12% MidCap Index Fund 21% 19% Small Cap Index Fund 31% 42% Stock Index Fund 3% 3% Growth Fund 36% 40% Growth & Income Fund 64% 45% Capital Conservation Fund 80% 45% Government Securities Fund 36% 38% International Government Bond Fund 11% 4% Science & Technology Fund 116% 122% Social Awareness Fund 117% 109% Asset Allocation Fund 119% 103%
A portfolio turnover rate over 100% a year is higher than the rates of many other mutual fund companies. A high rate increases a Fund's transaction costs and expenses. Excessive short-term trading may result in excessive "short-short income" under the Internal Revenue Code ("Code"). Excessive "short-short income" in a Fund could affect a Fund's status as a regulated investment company (RIC) under the Code. Failure of a Fund to qualify as a RIC could cause the separate accounts investing in the Fund to be nondiversified under Section 817[h] of the Code. See "Dividends and Capital Gains," "Diversification" and "Taxes" in this prospectus for a fuller discussion of certain of these tax provisions. ABOUT FUND PERFORMANCE From time to time the Series Company may advertise Fund performance information such as Fund average total return and index total return. Current Fund performance and information as to how this Fund performance information is calculated appears in the Statement of Additional Information. Additionally, information on separate account performance appears in your contract prospectus. 14 19 HOW TO READ A FUND FACT SHEET - - -------------------------------------------------------------------------------- [CHART] 15 20 THE INDEX EQUITY FUNDS - - -------------------------------------------------------------------------------- INDEX FUNDS have outperformed most mutual funds over consecutive ten year periods. However, because they are managed to track an index they will rise and fall with the market. Four of the 13 Funds in the Series Company are Index Equity Funds investing mostly in stocks. Their investment strategy is to track the performance of a specific index. This strategy is followed whether markets go up or down. As part of this investment strategy, each Fund may also invest in futures contracts and options. Because these Funds do not have a defensive investment strategy, when the market goes down, you will bear the risk of such market decline. Index Funds perform best over the long term. This means you should plan to keep your money in an Index Fund for a period of years. WHAT IS AN INDEX? An index reflects the average performance of a particular class of securities. Examples of indexes include large company stocks (S&P 500 Index), mid-size company stocks (S&P MidCap 400 Index), the bond market, or stocks of companies in specific industries. Indexes are not managed funds, and cannot be bought. Investment advisers compare the results of the funds they manage to indexes that are close to the investment style of the fund. Information about the Series Company's use of Standard & Poor's Indexes is in the Statement of Additional Information. WHICH INDEXES DO THESE FUNDS TRY TO TRACK? While there are more than a hundred different indexes, the Index Funds in this prospectus try to track four very prominent stock indexes: The Stock Index Fund tracks the Standard & Poor's 500 Stock Index(R)* The Standard & Poor's 500 Stock Index(R) (S&P 500) tracks the common stock performance of large U.S. companies in the manufacturing, utilities, transportation, and financial industries. These companies are usually listed on the New York Stock Exchange. It also tracks performance of common stocks sold by foreign and smaller U.S. companies in similar industries. The smaller U.S. companies are usually listed on the American Stock Exchange. In total, this index tracks 500 common stocks. This index may periodically change some of the stocks it tracks. And, different indexes sometimes track some of the same stocks. For example, as of May 31, 1997, this Index was tracking 24 of the same stocks tracked by the Russell 2000 Index. The MidCap Index Fund tracks the Standard & Poor's MidCap 400(R) Index* The Standard & Poor's MidCap 400(R) Index (S&P MidCap 400) tracks the common stock performance of 400 medium capitalized U.S. and foreign companies that are in the manufacturing, utilities, transportation, and financial industries. Medium capitalized means the market value of these companies' stock is around $600 million. Standard & Poor's created this Index in 1991 to give investors an idea of how the stocks of medium capitalized companies generally perform. Standard & Poor's may periodically change some of the stocks in the index. And, different indexes sometimes include some of the same stocks. For example, as of May 31, 1997, this Index was tracking 139 of the same stocks tracked by the Russell 2000 Index. This Index does not track the same stocks as the S&P 500 Index. The Small Cap Index Fund tracks The Russell 2000(R) Index** The Russell 2000 Index is provided by The Frank Russell Company. This Index tracks the common stock performance of 2,000 small capitalized U.S. companies in various industries. Small capitalized means these companies have a market value below $1 billion. The Frank Russell Company created this Index in 1979 to give investors an idea of how the stocks of small capitalized companies generally perform. The median market capitalization for the Index was $380 million. The stocks tracked by this Index are updated annually because many small capitalized companies eventually become medium capitalized companies and some fail. - - ------------ * "Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "S&P MidCap 400(R)" are trademarks of Standard & Poor's ("S&P"). Neither the MidCap Index Fund nor the Stock Index Fund is sponsored, endorsed, sold or promoted by S&P, and S&P makes no representation regarding the advisability of investment in these Funds. ** The Russell 2000(R) Index is a trademark/service mark of the Frank Russell Trust Company. The Small Cap Index Fund is not promoted, sponsored or endorsed by, nor in any way affiliated with Frank Russell Company. Frank Russell Company is not responsible for and has not reviewed the Fund or any associated literature or publications and makes no representation or warranty, express or implied, as to their accuracy, or completeness, or otherwise. 16 21 - - -------------------------------------------------------------------------------- The International Equities Fund tracks The Morgan Stanley Capital International, Europe, Australia and the Far East (EAFE) Index. The EAFE Index tracks the performance of about 1,000 common stocks of companies in 20 foreign countries. This index provides a measure of the performance of companies in the more developed countries in Europe, Australia and the Far East. Morgan Stanley publishes the EAFE Index daily and, at times, may change some of the stocks in the index. HOW CLOSELY CAN INDEX FUNDS TRACK THE PERFORMANCE OF THEIR INDEX? The factors that cause a Fund to perform differently from the Index it tries to track are called tracking differences. There is no assurance that an Index Fund can track its index. The coefficient of correlation (r) is an index number which shows how closely two variables are related. If r=0 there is no tendency for one variable to change with the other. A value of +1 means that one variable will vary exactly with the other. Index funds try to keep their coefficient of correlation as close to 1 as possible. As a practical matter, any coefficient above 0.95, when measured against the comparison index, shows good tracking. The index may remove one stock and substitute another requiring the sub-adviser of the Fund to do the same. When a stock is sold and the new stock purchased, the Fund incurs transaction costs. The index incurs no transaction costs. Therefore, the portfolio manager cannot match exactly the performance of an index. Also, it may not be possible for a Fund to buy every stock in its index or in the same proportions. Fund portfolio managers may rely on a statistical selection technique to figure out, of the stocks tracked by their index, how many and which ones to buy. Stocks are bought and sold when they are added to or dropped from the Index. This keeps brokerage fees and other transaction costs low. For more information, see the "Investment Strategy" sections on each Fund's Fact Sheet. 17 22 INTERNATIONAL EQUITIES FUND Fact Sheet - - ------------------------------------------------- Investment Goal GROWTH THROUGH INVESTMENTS TRACKING THE EAFE INDEX - - ------------------------------------------------- Investment Category GROWTH - - -------------------------------------------------------------------------------- INVESTMENT ADVISER VALIC Additional information about THE FUND'S INVESTMENTS is provided under "Types of Investments". - - -------------------------------------------------- PORTFOLIO MANAGER: While this Fund attempts to track the performance of the EAFE Index, it is actively managed. William Trimbur, Jr. has been this Fund's Portfolio Manager since the Fund was started in 1989. He has been Vice President and Investment Officer for the Series Company since 1987. Mr. Trimbur is also the portfolio manager for the International Government Bond Fund. INVESTMENT OBJECTIVE Seeks to provide long-term growth of capital through investments primarily in a diversified portfolio of equity and equity related securities of foreign issuers that, as a group, are expected to provide investment results closely corresponding to the performance of the EAFE Index. INVESTMENT RISK As described in the Investment Strategy section below, this Fund invests almost all its assets in foreign securities, which have risks that U.S. investments don't have. For a further explanation of the risks associated with foreign securities and market risk, see "A Word About Risk" in this prospectus. INVESTMENT STRATEGY The Fund invests in a sampling of about 100 foreign stocks of companies that are either in the EAFE Index or are similar to stocks in the EAFE Index. These stocks, as a group, should reflect EAFE's performance. Since it may not be possible for this Fund to buy every stock included in this index or in the same proportions, we buy as many stocks as are needed to closely track the performance of the EAFE Index. We follow the guidelines listed below for making the primary investments for the Fund.
Percent of Fund Investments Fund's Assets* - - ------------------------------------------------- Stocks in the EAFE Index at least 65%** - - ------------------------------------------------- Other investments not in no more than 35% EAFE Index Foreign equity and related securities including common stocks, convertible stocks, preferred stocks and warrants - - ------------------------------------------------- Futures and options no more than 33% Covered put and call options on foreign currencies Listed and unlisted put and call options on currency futures Listed and unlisted foreign currency contracts - - ------------------------------------------------- High quality foreign and up to 100% domestic money market securities** - - ------------------------------------------------- Illiquid and restricted no more than 10% securities - - ------------------------------------------------- *At time of purchase. **It is possible we may invest up to 100% of the Fund's assets in short term, high quality, foreign and domestic money market securities when we think economic, political and market conditions in foreign countries make it too risky to follow our general guidelines.
18 23 INTERNATIONAL EQUITIES FUND Fact Sheet - - -------------------------------------------------------------------------------- For the fiscal year ended May 31, 1997, the Fund had a return of 8.16% before subtracting expenses of 0.42%. This return represented a positive tracking difference of 0.62% compared to the EAFE Index. The outperformance was a result of good representation in certain sectors of the European markets and avoidance of some issues in Asia which performed poorly. COMPARISON OF A CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE INTERNATIONAL EQUITIES FUND AND THE EAFE INDEX AVERAGE ANNUAL TOTAL RETURN -- FUND [CHART] FISCAL YEAR ENDED MAY 31 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. The Fund returns reflect investment management fees and other Fund expenses. The Fund returns do not reflect charges included in the annuity contract for mortality and expense guarantees, administrative fees or surrender charges. 19 24 MIDCAP INDEX FUND Fact Sheet - - ------------------------------------------------- Investment Goal GROWTH THROUGH INVESTMENTS TRACKING THE S&P 400 MIDCAP INDEX - - ------------------------------------------------- Investment Category GROWTH - - -------------------------------------------------------------------------------- Additional information about THE FUND'S INVESTMENTS is provided under "Types of Investments". INVESTMENT ADVISER VALIC INVESTMENT SUB-ADVISER Bankers Trust INVESTMENT OBJECTIVE Seeks to provide growth of capital through investments primarily in a diversified portfolio of common stocks that, as a group, are expected to provide investment results closely corresponding to the performance of the S&P MidCap 400 Index. INVESTMENT RISK The S&P MidCap 400 Index includes the stocks of many medium sized companies. These companies usually do not have as much financial strength as very large companies and so may not be able to do as well in difficult times. However, because they are medium sized, they have more potential to grow, which means the value of their stock may increase. The S&P MidCap 400 Index also includes stocks of certain medium sized foreign companies. These stocks can be more risky than large company stocks. An index fund holding nearly all of the 400 stocks in the S&P MidCap 400 Index avoids the risk of individual stock selection and seeks to provide the return of the medium-sized company sector of the market. On average that return has been positive over many years but can be negative at certain times. There is no assurance that a positive return will occur in the future. Because this Fund invests in many of the stocks tracked by this Index, your investment will experience similar changes in value and share similar risks such as market risk and risk associated with foreign securities. For more information about market risk and risk associated with foreign securities, see "A Word About Risk" in this prospectus. INVESTMENT STRATEGY The Fund invests in most of the stocks in the S&P MidCap 400 Index that, as a group, should reflect its performance. Since it may not be possible for this Fund to buy every stock included in this index or in the same proportions, we buy as many stocks as we need to closely track the performance of the S&P MidCap 400 Index. We follow the guidelines listed below for making the primary investments for the Fund.
Percent of Fund Investments Fund's Assets* - - ------------------------------------------------- Stocks in the S&P MidCap at least 65% 400 Index - - ------------------------------------------------- Foreign stocks (listed and no more than 20% over-the-counter) in the S&P MidCap 400 Index - - ------------------------------------------------- Futures and options no more than 33% - - ------------------------------------------------- Investments not in the S&P no more than 35% MidCap 400 Index Common stock and related securities High quality money market securities Illiquid and restricted securities - - ------------------------------------------------- *At time of purchase.
20 25 MIDCAP INDEX FUND Fact Sheet - - -------------------------------------------------------------------------------- For the fiscal year ended May 31, 1997, the Fund had a return of 17.88%, before subtracting expenses of 0.40%. This represented a negative tracking difference of 0.33% compared to the S&P MidCap 400 Index. The close tracking was the result of low cost trading techniques, and the use of futures to maintain a fully invested position. COMPARISON OF A CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE MIDCAP INDEX FUND AND THE S&P MIDCAP 400 INDEX AVERAGE ANNUAL TOTAL RETURN -- FUND [CHART] FISCAL YEAR ENDED MAY 31 COMPARISON OF A CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE MIDCAP INDEX FUND AND THE S&P MIDCAP 400 INDEX AVERAGE ANNUAL TOTAL RETURN -- FUND [CHART] FISCAL YEAR ENDED MAY 31 * Effective October 1, 1991, the Fund's name was changed from the Capital Accumulation Fund to the MidCap Index Fund. Additionally, the investment objectives and investment program for the Fund were changed. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. The Fund returns reflect investment management fees and other Fund expenses. The Fund returns do not reflect charges included in the annuity contract for mortality and expense guarantees, administrative fees or surrender charges. 21 26 SMALL CAP INDEX FUND Fact Sheet - - ------------------------------------------------- Investment Goal GROWTH THROUGH INVESTMENTS TRACKING THE RUSSELL 2000 INDEX - - ------------------------------------------------- Investment Category GROWTH - - -------------------------------------------------------------------------------- Additional information about THE FUND'S INVESTMENTS is provided under "Types of Investments". INVESTMENT ADVISER VALIC INVESTMENT SUB-ADVISER Bankers Trust INVESTMENT OBJECTIVE Seeks to provide growth of capital through investment primarily in a diversified portfolio of common stocks that, as a group, are expected to provide investment results closely corresponding to the performance of the Russell 2000 Index. INVESTMENT RISK The Russell 2000 Index includes many small U.S. companies. Some of these companies often do not have the financial strength needed to do well in difficult times. Also, they often sell limited numbers of products, which can make it harder for them to compete with medium and large companies. However, because they are small, their stock prices may fluctuate more over the short-term, but they have more potential to grow. This means their stock value may offer greater potential for appreciation. An index fund holding a large sampling of the 2,000 stocks in the Russell 2000 Index avoids the risks of individual stock selection and seeks to provide the return of the smaller-sized company sector of the market. On average that return has been positive over the years but has been negative at certain times. There is no assurance that a positive return will occur in the future. Because this Fund invests in many of the stocks tracked by this Index, your investment will experience similar changes in value and share similar risks such as market risk and risk associated with foreign securities. For more information about market risk and risk associated with foreign securities, see "A Word About Risk" in this prospectus. INVESTMENT STRATEGY The Fund invests in a sampling of stocks in the Russell 2000 Index that, as a group, should reflect its performance. Since it may not be possible for this Fund to buy every stock included in this index or in the same proportions, we buy as many stocks as we need to closely track the performance of the Russell 2000 Index. We follow the guidelines listed below for making the primary investments for the Fund.
Percent of Fund Investments Fund's Assets* - - ------------------------------------------------- Stocks in the Russell 2000 at least 65% Index - - ------------------------------------------------- Foreign stocks (listed and no more than 20% over-the-counter) in the Russell 2000 Index - - ------------------------------------------------- Futures and options no more than 33% - - ------------------------------------------------- Investments not in the no more than 35% Russell 2000 Index Common stock and related securities High quality money market securities Illiquid and restricted securities - - ------------------------------------------------- *At time of purchase.
22 27 SMALL CAP INDEX FUND Fact Sheet - - -------------------------------------------------------------------------------- For the fiscal year ended May 31, 1997, the Fund had a return of 7.92%, before subtracting expenses of 0.41%. This represented a positive tracking difference of .95% compared to the Russell 2000 Index. The Fund uses futures to maintain a fully invested position to track its index but incurs fees and charges to acquire securities which created a variance from the index. COMPARISON OF A CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE SMALL CAP INDEX FUND AND THE RUSSELL 2000 INDEX AVERAGE ANNUAL TOTAL RETURN -- FUND [CHART] FISCAL YEAR ENDED MAY 31 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. The Fund returns reflect investment management fees and other Fund expenses. The Fund returns do not reflect charges included in the annuity contract for mortality and expense guarantees, administrative fees or surrender charges. 23 28 STOCK INDEX FUND Fact Sheet - - ------------------------------------------------- Investment Goal GROWTH THROUGH INVESTMENTS TRACKING THE S&P 500 INDEX - - ------------------------------------------------- Investment Category GROWTH - - -------------------------------------------------------------------------------- INVESTMENT ADVISER Additional information about THE FUND'S INVESTMENTS is provided under "Types of Investments". VALIC INVESTMENT SUB-ADVISER Bankers Trust INVESTMENT OBJECTIVE Seeks long-term capital growth through investment in common stocks that, as a group, are expected to provide investment results closely corresponding to the performance of the S&P 500 Index. INVESTMENT RISK The S&P 500 Index includes the stocks of many large, well-established companies. These companies usually have the financial strength to weather difficult financial times. However, the value of any stock can rise and fall over short and long periods of time. This Fund which holds nearly all of the 500 stocks in the S&P 500 Index avoids the risk of individual stock selection and seeks to provide the return of the large company sector of the market. In the past that return has been positive over many years but can be negative at certain times. There is no assurance that a positive return will occur in the future. Because the Fund invests in many of the stocks tracked by this Index, your investment will experience similar changes in value and share similar risks, such as market risk and risk associated with foreign securities. For more information about market risk and risk associated with foreign securities, see "A Word About Risk" in this prospectus. INVESTMENT STRATEGY The Fund invests in most of the stocks in the S&P 500 Index that, as a group, should reflect its performance. Since it may not be possible for this Fund to buy every stock included in this Index or in the same proportions, we buy as many stocks as we need to closely track the performance of the S&P 500 Index. We follow the guidelines listed below for making the primary investments for the Fund.
Percent of Fund Investments Fund's Assets* - - ------------------------------------------------- Stocks in the S&P 500 at least 65% Index - - ------------------------------------------------- Foreign stocks (listed and no more than 20% over-the-counter) in the S&P 500 Index - - ------------------------------------------------- Futures and options no more than 33% - - ------------------------------------------------- Investments not in the S&P no more than 35% 500 Index Common stock and related securities High quality money market securities Illiquid and restricted securities - - ------------------------------------------------- *At time of purchase.
24 29 STOCK INDEX FUND Fact Sheet - - -------------------------------------------------------------------------------- For the fiscal year ended May 31, 1997, the Fund had a return of 29.58%, before subtracting expenses of 0.34%. This return represented a positive tracking difference of 0.15% compared to the S&P 500 Index(C). A combination of careful purchasing of securities, low cost trading techniques, and the use of futures to maintain a fully invested position resulted in the close tracking of the Index. COMPARISON OF A CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE STOCK INDEX FUND AND THE S&P 500 INDEX AVERAGE ANNUAL TOTAL RETURN -- FUND [CHART] FISCAL YEAR ENDED MAY 31 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. The Fund returns reflect investment management fees and other Fund expenses. The Fund returns do not reflect charges included in the annuity contract for mortality and expense guarantees, administrative fees or surrender charges. 25 30 GROWTH FUND Fact Sheet - - ------------------------------------------------- Investment Goal GROWTH THROUGH INVESTMENTS IN SERVICE SECTOR COMPANIES - - ------------------------------------------------- Investment Category GROWTH - - -------------------------------------------------------------------------------- INVESTMENT ADVISER Additional information about THE FUND'S INVESTMENTS is provided under "Types of Investments". VALIC INVESTMENT SUB-ADVISER T. Rowe Price - - -------------------------------------------------- PORTFOLIO MANAGER: This Fund is managed by an Investment Advisory Committee chaired by John H. Laporte. He has been chairman of this committee since it was started in 1994. Mr. Laporte joined T. Rowe Price in 1976 and has been managing investments since 1984. INVESTMENT OBJECTIVE Seeks to provide long-term growth of capital through investment primarily in common stocks of U.S. growth companies engaged in service-related activities. INVESTMENT RISK This Fund invests in many companies that are small and/or new. These companies face special risks because they may not have the financial strength to do well during difficult times. The securities that the Fund invests in involve certain risks, such as market risk, and risk associated with foreign securities. For a discussion of these risks, see "A Word About Risk" in this prospectus. INVESTMENT STRATEGY The Fund invests primarily in U.S. companies that are in the services industry. Examples include: consumer services (retailing, entertainment/leisure, media communications, restaurants/food distribution) business services (healthcare, computer services), and financial services (insurance, investment service). We believe if service companies outpace overall economic growth, their stocks could generate above-average returns. Currently, over 50% of the U.S. economy is made up of service companies. We follow the guidelines listed below for making the primary investments for the Fund.
Percent of Fund Investments Fund's Assets* - - ------------------------------------------------- Common stocks and at least 75% related securities, bonds, preferred stock, convertible stock of service industry companies - - ------------------------------------------------- Foreign securities up to 15% - - ------------------------------------------------- Equity securities sold by up to 25% non-service related companies - - ------------------------------------------------- Illiquid and restricted up to 15% securities** - - ------------------------------------------------- Futures and options up to 25% - - ------------------------------------------------- High quality money market up to 100% securities*** - - ------------------------------------------------- *At time of purchase. **We may invest up to 15% of the Fund's assets in illiquid securities. Restricted securities are explained under "Types of Investments". ***If, for temporary defensive reasons, we invest 35% or more of the Fund's assets in money market securities, it is likely 25% or more of the Fund's assets will be invested in securities of the banking industry. This type of concentration in a single industry may increase the general level of risk to the Fund.
26 31 GROWTH FUND Fact Sheet - - -------------------------------------------------------------------------------- For the fiscal year ended May 31, 1997, the Fund had a return of 9.86% before subtracting expenses of 0.86%. This return represented a negative tracking difference of 19.57% compared to the Fund's benchmark, the S&P 500 Index. The Fund's focus on non-cyclical growth companies in service businesses, a strategy that performs well in a slow growth economy, was not in favor as a surprisingly strong economy drove favorable earnings reports in most industries. COMPARISON OF A CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE GROWTH FUND AND THE S&P 500 INDEX AVERAGE ANNUAL TOTAL RETURN -- FUND [CHART] FISCAL YEAR ENDED MAY 31 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. The Fund returns reflect investment management fees and other Fund expenses. The Fund returns do not reflect charges included in the annuity contract for mortality and expense guarantees, administrative fees or surrender charges. 27 32 GROWTH & INCOME FUND Fact Sheet - - ------------------------------------------------- Investment Goal GROWTH AND INCOME THROUGH INVESTMENTS IN STOCKS OR SECURITIES CONVERTIBLE INTO STOCKS - - ------------------------------------------------- Investment Category GROWTH - - -------------------------------------------------------------------------------- INVESTMENT ADVISER Additional information about THE FUND'S INVESTMENTS is provided under "Types of Investments". VALIC INVESTMENT SUB-ADVISER Value Line - - -------------------------------------------------- PORTFOLIO MANAGER: This Fund is managed by an Investment Committee comprised of Value Line employees. INVESTMENT OBJECTIVE Seeks to provide long-term growth of capital and, secondarily, current income through investment in common stocks and equity-related securities. INVESTMENT RISK This Fund invests almost entirely in stocks. Stock values can rise and fall over both short and long periods of time. However, we believe that our investment strategy helps us to manage the risks the Fund is subject to such as market risk, credit risk, interest rate risk and risk associated with foreign securities. The Value Line Ranking System (the Ranking System) (discussed below) does not eliminate these risks. The Sub-adviser believes that the Ranking System provides objective standards for determining whether the market is undervaluing or overvaluing a particular security. Using these rankings provides no assurance that the Fund will perform better than the general market over any particular period. For a discussion of market risk, credit risk, interest rate risk and risk associated with foreign securities, see "A Word About Risk" in this prospectus. INVESTMENT STRATEGY The Fund invests in stocks that provide long-term growth potential. As a secondary goal, the Fund invests in securities that will provide current income. We make investments which, according to the Value Line Ranking System, are timely. Timely means that, in Value Line's opinion, on a ranking scale of 1 (highest) to 5 (lowest), certain stocks in the Ranking System are more likely to outperform the others over the coming year. The Value Line Investment Survey covers about 1,700 stocks that are ranked for Timeliness by the Ranking System. These rankings are updated weekly. Stocks ranked 1 or 2 are expected to comprise the majority of the Fund's investments. However, the Fund may invest in stocks ranked below 2 or hold stocks that have fallen below 3, when the Sub-adviser decides it is appropriate. We follow the guidelines listed below for making the primary investments for the Fund.
Percent of Fund Investments Fund's Assets* - - ------------------------------------------------- Common stocks and equity generally 90-95% related securities bonds, preferred stock, convertible stock and warrants - - ------------------------------------------------- Futures and options up to 25% - - ------------------------------------------------- Foreign securities up to 20% - - ------------------------------------------------- Illiquid and restricted up to 15% securities** - - ------------------------------------------------- High quality money market up to 100% securities*** - - ------------------------------------------------- *At time of purchase. **We may invest up to 15% of the Fund's assets in illiquid securities, as long as no more than 5% of the Fund's total assets are invested in restricted securities that are also considered illiquid. Restricted investments are explained under "Types of Investments". ***For temporary defensive reasons, we may invest up to 100% of the Fund's assets in fixed income securities such as U.S. Government securities, bonds, commercial paper, repurchase agreements and cash equivalents. We may do this when we think economic and market conditions make it too risky for us to follow our general guidelines.
28 33 GROWTH & INCOME FUND Fact Sheet - - -------------------------------------------------------------------------------- For the fiscal year ended May 31, 1997, the Fund had a return of 17.89% before subtracting expenses of 0.81%. This return represented a negative tracking difference of 11.54% compared to the Fund's benchmark, the S&P 500 Index. Large capitalization stocks have led this market advance, with small and midcap stocks lagging. This disparate performance impacted the Fund negatively as the small and midcap stocks are well represented in the Value Line Timeliness Ranking System. The Fund is managed using that system. COMPARISON OF A CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE GROWTH & INCOME FUND AND THE S&P 500 INDEX AVERAGE ANNUAL TOTAL RETURN -- FUND [CHART] FISCAL YEAR ENDED MAY 31 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. The Fund returns reflect investment management fees and other Fund expenses. The Fund returns do not reflect charges included in the annuity contract for mortality and expense guarantees, administrative fees or surrender charges. 29 34 CAPITAL CONSERVATION FUND Fact Sheet - - ------------------------------------------------- Investment Goal INCOME AND POSSIBLE GROWTH THROUGH INVESTMENTS IN HIGH QUALITY DEBT SECURITIES - - ------------------------------------------------- Investment Category INCOME - - -------------------------------------------------------------------------------- INVESTMENT ADVISER Additional information about THE FUND'S INVESTMENTS is provided under "Types of Investments". VALIC - - -------------------------------------------------- PORTFOLIO MANAGER: Leon A. Olver, Vice President and Investment Officer for the Series Company is this Fund's Portfolio Manager. Mr. Olver was an Assistant Vice President for Pulte Financial Companies, Denver, Colorado, from 1984 to 1991. From 1991 to 1995 Mr. Olver worked for First Heights Bank, Houston, Texas; he was Vice President, Assistant Treasurer 1991-1994, and Vice President, Treasurer from 1994 to 1995. He is also the Portfolio Manager for the Government Securities Fund. INVESTMENT OBJECTIVE Seeks the highest possible total return consistent with preservation of capital through current income and capital gains on investments in intermediate and long-term debt instruments and other income producing securities. Investment Risk The securities the Fund invests in involve certain risks, such as interest rate risk, credit risk, market risk and risk associated with foreign securities. This may cause the debt instruments that the Fund owns to be worth less than what the Fund paid. For a discussion of these risks see "A Word About Risk" in this prospectus. INVESTMENT STRATEGY The Fund invests in high quality bonds to provide you with the highest possible total return from current income and capital gains while preserving your investment. To increase the Fund's earning potential, we may use a small part of the Fund's assets to make some higher risk investments. We follow the guidelines listed below for making the primary investments for the Fund.
Percent of Fund Investments Fund's Assets* - - ------------------------------------------------- Investment grade at least 75% intermediate and long-term corporate bonds rated at least Baa by Moody's or another rating organiza- tion**, securities issued or guaranteed by the U.S. Government***, mortgage backed securities, asset- backed securities, collateralized mortgage obligations and high quality money market securities - - ------------------------------------------------- Debt securities up to 25% rated at least B by Moody's or another rating organization**** Preferred or convertible preferred stock, Convertible debt securities - - ------------------------------------------------- Foreign securities, mostly up to 20% foreign bonds that are of the same quality as other bonds purchased by this Fund - - ------------------------------------------------- Common stocks***** up to 10% - - ------------------------------------------------- Futures and options up to 33% - - ------------------------------------------------- Illiquid and restricted up to 10% securities - - ------------------------------------------------- *At time of purchase. **For more information concerning ratings see "Description of Corporate Bond Ratings" and "Description of Commercial Paper Ratings" in the Statement of Additional Information. ***U.S. Government securities are securities issued or guaranteed by the U.S. Government which are supported by (i) the full faith and credit of the U.S. Government, (ii) the right of the issuer to borrow from the U.S. Treasury, (iii) the credit of the issuing government agency or (iv) the discretionary authority of the U.S. Government or GNMA to purchase certain obligations of the agency. For more information see "Government Securities Fund" in the Statement of Additional Information. ****The Fund currently intends to limit these investments to no more than 5% of its total assets. For the fiscal year ended May 31, 1997 approximately 3% of the Fund's average monthly assets were invested in securities rated below Baa determined on a dollar-weighted basis. *****Only stocks acquired by conversion of income-bearing securities or by exercising warrants attached to income-bearing securities.
30 35 CAPITAL CONSERVATION FUND Fact Sheet - - -------------------------------------------------------------------------------- For the fiscal year ended May 31, 1997, the Fund had a return of 8.32% before subtracting expenses of 0.57%. This represents a negative tracking difference of 0.53% from the Fund's benchmark; the Merrill Lynch Corporate Master Bond Index. An increase in credit quality with an accompanying lower yield on those issues exerted a negative effect. As credit concerns diminish higher yields may be obtainable. COMPARISON OF A CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE CAPITAL CONSERVATION FUND AND THE MERRILL LYNCH CORPORATE MASTER INDEX AVERAGE ANNUAL TOTAL RETURN -- FUND [CHART] FISCAL YEAR ENDED MAY 31 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. The Fund returns reflect investment management fees and other Fund expenses. The Fund returns do not reflect charges included in the annuity contract for mortality and expense guarantees, administrative fees or surrender charges. 31 36 GOVERNMENT SECURITIES FUND Fact Sheet - - ------------------------------------------------- Investment Goal INCOME AND POSSIBLE GROWTH THROUGH INVESTMENTS IN INTERMEDIATE & LONG- TERM GOVERNMENT DEBT SECURITIES - - ------------------------------------------------- Investment Category INCOME - - -------------------------------------------------------------------------------- INVESTMENT ADVISER Additional information about THE FUND'S INVESTMENTS is provided under "Types of Investments". VALIC - - -------------------------------------------------- PORTFOLIO MANAGER: Leon A. Olver, Vice President and Investment Officer for the Series Company, is this Fund's Portfolio Manager. Mr. Olver was an Assistant Vice President for Pulte Financial Companies, Denver, Colorado from 1984 to 1991. From 1991 to 1995 Mr. Olver worked for First Heights Bank, Houston, Texas; he was Vice President, Assistant Treasurer 1991-1994; and Vice President, Treasurer from 1994 to 1995. He is also the Portfolio Manager for the Capital Conservation Fund. INVESTMENT OBJECTIVE Seeks high current income and protection of capital through investments in intermediate and long-term U.S. Government debt securities. INVESTMENT RISK The securities the Fund invests in involve certain risks, including interest rate risk, credit risk and risk associated with foreign securities. This may cause the debt instruments that the Fund owns to be worth less than what the Fund paid. For a discussion of these risks see "A Word About Risk" in this prospectus. INVESTMENT STRATEGY The Fund primarily invests in intermediate and long term U.S. Government and government sponsored investments. The Fund may also use up to 20% of its assets to make high quality foreign investments payable in U.S. dollars. We follow the guidelines listed below for making the primary investments for the Fund.
Percent of Fund Investments Fund's Assets* - - ------------------------------------------------- Debt securities issued or at least 80% guaranteed by the U.S. Government**, asset- backed securities, high quality domestic money market securities - - ------------------------------------------------- Mortgage-backed securities up to 25% - - ------------------------------------------------- High quality foreign up to 20% government securities and high quality foreign money market securities payable in U.S. dollars - - ------------------------------------------------- Futures and options up to 33% Listed and unlisted call and put options on securities, stock indices and currencies - - ------------------------------------------------- Illiquid and restricted up to 10% securities - - ------------------------------------------------- *At time of purchase. **U.S. Government securities are securities issued or guaranteed by the U.S. Government and which are supported by (i) the full faith and credit of the U.S. Government, (ii) the right of the issuer to borrow from the U.S. Treasury, (iii) the credit of the issuing government agency, or (iv) the discretionary authority of the U.S. Government or GNMA to purchase certain obligations of the agency. For more information see "Government Securities Fund" in the Statement of Additional Information.
32 37 GOVERNMENT SECURITIES FUND Fact Sheet - - -------------------------------------------------------------------------------- For the fiscal year ended May 31, 1997, the Fund had a return of 7.50% before subtracting expenses of 0.56%. This represents a positive tracking difference of 0.12% from the Fund's benchmark, the Lehman Brothers U.S. Treasury Composite Index. Positions in callable agency notes and collateralized mortgage obligations allowed the Fund to achieve an enhanced yield. COMPARISON OF A CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE GOVERNMENT SECURITIES FUND AND THE LEHMAN BROTHERS U.S. TREASURY COMPOSITE INDEX AVERAGE ANNUAL TOTAL RETURN -- FUND [CHART] FISCAL YEAR ENDED MAY 31 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. The Fund returns reflect investment management fees and other Fund expenses. The Fund returns do not reflect charges included in the annuity contract for mortality and expense guarantees, administrative fees or surrender charges. 33 38 INTERNATIONAL GOVERNMENT BOND Additional information about THE FUND'S INVESTMENTS is provided under "Types of Investments". FUND Fact Sheet - - ------------------------------------------------- Investment Goal INCOME AND POSSIBLE GROWTH THROUGH INVESTMENTS IN HIGH QUALITY FOREIGN GOVERNMENT DEBT SECURITIES - - ------------------------------------------------- Investment Category INCOME - - -------------------------------------------------------------------------------- INVESTMENT ADVISER VALIC - - -------------------------------------------------- PORTFOLIO MANAGER: William Trimbur, Jr. has been this Fund's Portfolio Manager since the Fund was started in 1991. He has been Vice President and Investment Officer for the American General Series Portfolio Company since 1987. Mr. Trimbur is also the Portfolio Manager for the International Equities Fund. INVESTMENT OBJECTIVE Seeks high current income through investments primarily in high quality debt securities issued or guaranteed by foreign governments. INVESTMENT RISK This Fund invests mostly in bonds that are issued by foreign governments. Although these governments promise to pay the principal and interest due on their bonds, it is still possible you may not get back all the money you invest. For a discussion of the risks associated with foreign securities, credit risk, and interest rate risk see "A Word About Risk" in this prospectus. INVESTMENT STRATEGY The Fund aims to give you foreign investment opportunities primarily in high quality government and government sponsored debt securities. Since the Fund expects to concentrate in certain foreign government securities, it is classified as a "non-diversified" investment company. Also, the Fund attempts to have all of its investments payable in foreign currencies. The Fund may also convert its cash to foreign currency. To help us choose which countries to invest in we rely, in part, on the Salomon Brothers Non-U.S. Dollar World Government Bond Index (Salomon Index). The Salomon Index is a widely used, international government bond index. It tracks the performance of government bonds sold in Austria, Australia, Belgium, Canada, Denmark, France, Germany, Italy, Japan, the Netherlands, Spain, Sweden, and the United Kingdom. In addition, the Fund may invest in securities in other countries, provided such securities are payable in the currencies of the countries in the Salomon Index. We do not try to copy this index's performance. Rather, we use it as a guide. We follow the guidelines listed below for making the primary investments for the Fund.
Percent of Fund Investments Fund's Assets* - - ------------------------------------------------- High quality debt securities at least 65% issued or guaranteed by foreign governments - - ------------------------------------------------- Other high quality debt no more than 35% securities, including Foreign corporate debt and foreign money market securities sold in the countries listed above High quality domestic money market securities and debt obligations issued or guaranteed by the U.S. Government Foreign currency exchange transactions - - ------------------------------------------------- Futures and options no more than 33% Covered put and call options on foreign currencies Listed put and call options on currencies Listed and unlisted foreign currency futures contracts - - ------------------------------------------------- Illiquid and restricted up to 10% securities - - ------------------------------------------------- *At time of purchase.
34 39 INTERNATIONAL GOVERNMENT BOND FUND Fact Sheet - - -------------------------------------------------------------------------------- For temporary defensive reasons, we may invest up to 100% of the Fund's assets in short term, high quality US money market securities, and US Government debt securities. We may do this when we think economic, political or market conditions in foreign countries make it too risky to follow our general guidelines. For the fiscal year ended May 31, 1997, the Fund had a return of 1.69% before subtracting expenses of 0.56%. This represents a positive tracking difference of 0.44% compared to its benchmark, the Salomon Brothers Non-U.S. Dollar World Government Bond Index. The yield was reduced by the strong dollar versus all currencies in which the Fund is invested. COMPARISON OF A CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE INTERNATIONAL GOVERNMENT BOND FUND AND THE SALOMON INDEX AVERAGE ANNUAL TOTAL RETURN -- FUND [CHART] FISCAL YEAR ENDED MAY 31 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. The Fund returns reflect investment management fees and other Fund expenses. The Fund returns do not reflect charges included in the annuity contract for mortality and expense guarantees, administrative fees or surrender charges. 35 40 SCIENCE & TECHNOLOGY FUND Fact Sheet - - ------------------------------------------------- Investment Goal GROWTH THROUGH INVESTMENTS IN STOCKS OF COMPANIES WHICH BENEFIT FROM DEVELOPMENT OF SCIENCE AND TECHNOLOGY - - ------------------------------------------------- Investment Category GROWTH - - -------------------------------------------------------------------------------- Additional information about THE FUND'S INVESTMENTS is provided under "Types of Investments". INVESTMENT ADVISER VALIC INVESTMENT SUB-ADVISER T. Rowe Price - - -------------------------------------------------- PORTFOLIO MANAGER: This Fund is managed by an Investment Advisory Committee chaired by Charles A. Morris. He has been chairman of this committee since it was started in 1994. Mr. Morris joined T. Rowe Price in 1987 as an investment analyst. He has been managing investments since 1991. INVESTMENT OBJECTIVE Seeks long-term growth of capital through investment primarily in the common stocks and equity-related securities of companies that are expected to benefit from the development, advancement and use of science and technology. INVESTMENT RISK The Science & Technology Fund invests in many small and/or new companies that develop and sell new products or services. These products or services may fail or become quickly outdated. Also, small and new companies have limited product lines and do not always have the financial strength to do well in difficult times. Because these companies are small, their stock prices will go up and down over the short-term, but may have greater growth potential. The securities the Fund invests in involve certain risks, including market risk and risk associated with foreign securities. For a discussion of these risks, see "A Word About Risk" in this prospectus. INVESTMENT STRATEGY The Fund invests in companies that are expected to benefit from scientific breakthroughs and advancements in technology. We believe that stocks of companies that develop products using new technology or benefit from this technology may greatly increase in value. These companies are in the following industries: computer, pharmaceutical, defense, telecommunications and electronics. We follow the guidelines listed below for making the primary investments for the Fund.
Percent of Fund Investments Fund's Assets* - - ------------------------------------------------- Common stocks of science at least 65% and technology companies - - ------------------------------------------------- Other equity-related up to 25% securities of science and technology companies including convertible debt securities, convertible preferred stock - - ------------------------------------------------- Foreign securities up to 30% - - ------------------------------------------------- Illiquid and restricted up to 15% securities** - - ------------------------------------------------- Futures and options up to 25% - - ------------------------------------------------- High quality money market up to 100% securities*** - - -------------------------------------------------
* At time of purchase. ** We may invest up to 15% of the Fund's assets in illiquid securities. Restricted securities are explained under "Types of Investments". *** For temporary defensive reasons, we may invest up to 100% of the Fund's assets in cash and cash equivalents. We may do this when we think economic and market conditions make it too risky for us to follow our general guidelines. 36 41 SCIENCE & TECHNOLOGY FUND Fact Sheet - - -------------------------------------------------------------------------------- For the fiscal year ended May 31, 1997, the Fund had a return of 2.77% before subtracting expenses of 0.96%. This represents a negative tracking difference of 26.66% compared to the Fund's benchmark, the S&P 500 Index. The market performance for large capitalization stocks caused much of the negative tracking as the Fund tends to hold significant amounts of small and midcap stocks. A number of valuation compressions due to volatile market conditions, also weighed on results. COMPARISON OF A CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE SCIENCE & TECHNOLOGY FUND AND THE S&P 500 INDEX AVERAGE ANNUAL TOTAL RETURN -- FUND [CHART] FISCAL YEAR ENDED MAY 31 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. The Fund returns reflect investment management fees and other Fund expenses. The Fund returns do not reflect charges included in the annuity contract for mortality and expense guarantees, administrative fees or surrender charges. 37 42 SOCIAL AWARENESS FUND Fact Sheet - - ------------------------------------------------- Investment Goal GROWTH THROUGH INVESTMENTS IN STOCKS OF COMPANIES MEETING SOCIAL CRITERIA OF THE FUND - - ------------------------------------------------- Investment Category GROWTH - - -------------------------------------------------------------------------------- INVESTMENT ADVISER Additional information about THE FUND'S INVESTMENTS is provided under "Types of Investments". VALIC - - -------------------------------------------------- PORTFOLIO MANAGER: Since 1992, John W. Mossbarger has been this Fund's Portfolio Manager and Vice President and Investment Officer for the Series Company. From 1988 to 1992, Mr. Mossbarger worked for American General Corporation: he was Managing Director, Common Stocks from 1989 to 1992, and Senior Vice President, Equity Investments from 1988 to 1989. INVESTMENT OBJECTIVE Seeks to obtain growth of capital through investment, primarily in common stocks, in companies which meet the social criteria established for the Fund. The Fund invests only in companies which meet its social criteria. The Fund does not invest in companies that: M produce nuclear energy; M make military weapons or delivery systems; or M engage continuously in practices or produce products that significantly pollute the environment (such products include tobacco products). INVESTMENT RISK Most of the companies this Fund invests in are included in the S&P 500 Index. This Fund's degree of market risk is slightly greater than the Stock Index Fund's degree of risk. This is because its investments are more limited by its investment objective. This Fund may also experience market risk, and risks associated with foreign securities. For a discussion of these risks see the Stock Index Fund's Fact Sheet and "A Word About Risk" in this prospectus. If a company stops meeting the Fund's social criteria after the Fund invested in it, the Fund will sell these investments even if this means the Fund loses money. Also, if the Fund changes its social criteria and the companies the Fund has already invested in no longer qualify, the Fund will sell these investments even if this means the Fund loses money. Social criteria screening will limit the availability of investment opportunities for the Fund more than for funds having no such criteria. INVESTMENT STRATEGY We follow the guidelines listed below for making the primary investments for the Fund.
Percent of Fund Investments Fund's Assets* - - ------------------------------------------------- Common stocks of companies at least 80% meeting Fund's social criteria - - ------------------------------------------------- Other types of securities of up to 20% companies meeting social criteria including Foreign securities Preferred stock Convertible securities High quality money market securities and warrants - - ------------------------------------------------- Futures and options up to 33% - - ------------------------------------------------- Illiquid and restricted up to 10% securities - - ------------------------------------------------- *At time of purchase.
To find out which companies meet the Fund's social criteria, we rely on industry classifications, research services such as the Investor Responsibility Research Center (IRRC), and special magazines and papers that publish this type of information. Since our definition of social criteria is not "fundamental," the Series Company's Board of Directors may change it without shareholder approval. When deciding to make changes to the criteria, the Board will consider, among other things, new or revised state laws that govern or affect the investments of public funds. At least once a year, we survey state laws on this issue to look for any new developments. If our survey shows that at least 20 states have adopted laws that restrict public funds from being invested in a clearly definable category of investments, this category is automatically added to our social criteria list. 38 43 SOCIAL AWARENESS FUND Fact Sheet - - -------------------------------------------------------------------------------- For the fiscal year ended May 31, 1997, the Fund had a return of 31.04% before subtracting expenses of 0.56%. This resulted in a positive tracking difference of 1.61% compared to the Fund's benchmark, the S&P 500 Index. Concentration on the larger capitalization growth sectors and avoidance of the volatile tobacco industry aided performance. COMPARISON OF A CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE SOCIAL AWARENESS FUND AND THE S&P 500 INDEX AVERAGE ANNUAL TOTAL RETURN -- FUND [CHART] FISCAL YEAR ENDED MAY 31 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. The Fund returns reflect investment management fees and other Fund expenses. The Fund returns do not reflect charges included in the annuity contract for mortality and expense guarantees, administrative fees or surrender charges. 39 44 MONEY MARKET FUND Fact Sheet - - ------------------------------------------------- Investment Goal INCOME THROUGH INVESTMENT IN SHORT- TERM MONEY MARKET SECURITIES - - ------------------------------------------------- Investment Category STABILITY - - -------------------------------------------------------------------------------- Additional information about THE FUND'S INVESTMENTS is provided under "Types of Investments". INVESTMENT ADVISER VALIC - - -------------------------------------------------- PORTFOLIO MANAGER: Teresa Moro has been this Fund's Portfolio Manager and Vice President and Investment Officer for the Series Company since 1991. From 1986 to 1991, Ms. Moro was an Assistant Vice President and Money Market Trader for the Fund. INVESTMENT OBJECTIVE Seeks liquidity, protection of capital and current income through investments in short-term money market instruments. INVESTMENT RISK The short-term money market securities that this Fund invests in are high quality investments, posing low credit and interest rate risk. The current yield of the Fund will generally go up or down with changes in the level of interest rates. The Fund uses the amortized cost method to value its portfolio securities and tries to keep its net asset value at $1.00 per share. There can be no assurance that the net asset value will be $1.00 per share at all times. Because the risk to the money you invest is low, the potential for profit is also low. The Fund may experience risks including interest rate risk, market risk, credit risk and risk associated with foreign securities. For a discussion of these risks, see "A Word About Risk" in this prospectus. INVESTMENT STRATEGY The Fund invests in short-term money market securities to provide you with liquidity, protection of your investment and current income. We use 95% of the Fund's assets to buy short-term securities that are rated within the highest rating category for short term debt obligations by at least two nationally recognized rating services or unrated securities of comparable investment quality. These eligible securities must mature in 13 months or less and the Fund must have a dollar-weighted average portfolio maturity of 90 days or less. These practices are designed to minimize any fluctuation in the value of the Fund's portfolio. The investments this Fund may buy include: M Securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities M Certificates of deposit and other obligations of domestic banks that have total assets in excess of $1 billion M Commercial paper sold by corporations and finance companies M Corporate debt obligations with remaining maturities of 13 months or less M Repurchase agreements M Money market instruments of foreign issuers payable in U.S. dollars (limited to no more than 20% of the Fund's net assets) M Asset-backed securities M Loan participations M Adjustable rate securities M Illiquid and restricted securities (except for Rule 144A Securities)* - - ------------ *limited to 10% of the Fund's net assets 40 45 ASSET ALLOCATION FUND Fact Sheet - - ------------------------------------------------- Investment Goal MAXIMUM RETURN THROUGH INVESTMENT IN A MIX OF STOCKS, BONDS AND MONEY MARKET SECURITIES - - ------------------------------------------------- Investment Category GROWTH - - -------------------------------------------------------------------------------- INVESTMENT ADVISER VALIC - - -------------------------------------------------- PORTFOLIO MANAGER: Norman Jaskol who is Vice President and Managing Director of Investments for VALIC is the Portfolio Manager of this Fund. Mr. Jaskol has been Vice President and Senior Investment Officer for the Series Company since 1988. INVESTMENT OBJECTIVE Seeks maximum aggregate rate of return over the long-term through controlled investment risk by adjusting its investment mix among stocks, long-term debt securities and short-term money market securities. INVESTMENT RISK The Fund uses the Bankers Trust Tactical Asset Allocation Model (Model) which allocates the Fund's assets. The Model tries to get the best return from three types of securities. A part of that program also tries to reduce risk. The mix of securities the Fund invests in involves market risk, credit risk, interest rate risk and risk associated with foreign securities. For a discussion of these risks, see "A Word About Risk" in this prospectus. INVESTMENT STRATEGY The Fund is an asset allocation fund that attempts to maximize returns with a mix of stocks, bonds and money market securities. We buy and sell securities for the Fund by changing its investment mix among stocks, intermediate and long-term bonds and money market securities. As a result, the Fund's investments may change often. Also, the Fund can invest 100% in just one of these market sectors. Unlike an index fund, which tries to increase the money you invest by matching a specific index's performance, the Asset Allocation Fund tries to perform better than a blend of three market sectors measured by: M the S&P 500 Index; M the Merrill Lynch Corporate and Government Master Index; and For additional information about THE FUND'S INVESTMENTS see "Types of Investments" in the prospectus. M the Certificate of Deposit Primary Offering by New York City Banks, 30-Day Rate To help us decide how to allocate the Fund's assets, we rely on the Model. The Model analyzes many factors that affect the performance of securities that comprise certain indexes. Based on the Model, we intend to allocate the Fund's assets around the following benchmarks: stocks (common stock, preferred 55% stock and convertible preferred stock) intermediate and long-term bonds 35% high quality money market securities 10%
The Fund has established separate sub-objectives for investments in each of the three market sectors. Within the stock sector, the Fund seeks appreciation of capital by selecting investments that it expects will participate in the growth of the nation's economy. Within the bond sector, the Fund will generally seek high current income consistent with reasonable investment risk. Within the money market sector, the Fund seeks the highest level of current income consistent with liquidity, stability, and preservation of capital. As of May 31, 1997, the Fund's assets were invested as follows: stocks 61.32% intermediate and long-term bonds 31.81% high quality money market securities 6.87%*
- - ------------ * After taking the contract value of futures positions into consideration. See "Types of Investments". Because there is no limit as to how often we may buy and sell securities for this Fund, this can increase what is called the "portfolio turnover" rate. A higher rate of portfolio turnover will also increase the brokerage fees and expenses payable out of the Fund's assets. For more information about portfolio turnover, see "About the Funds" in this prospectus. 41 46 ASSET ALLOCATION FUND Fact Sheet - - -------------------------------------------------------------------------------- For the fiscal year ended May 31, 1997, the Fund had a return of 16.46% before subtracting expenses of 0.57%. This represents a negative tracking difference of 2.67% compared to the Fund's benchmark, a blended Index of the S&P 500 Index, the Merrill Lynch Corporate and Government Master Index and the Certificate of Deposit Primary Offering to New York City Banks, 30 Day Rate. An over weighting of some midcap stocks during the first half of the year caused the equity portion of the Fund to underperform. That strategy was changed and subsequent performance has more closely paralleled the relevant index. COMPARISON OF A CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE ASSET ALLOCATION FUND* AND THE S&P 500 INDEX AVERAGE ANNUAL TOTAL RETURN -- FUND [CHART] FISCAL YEAR ENDED MAY 31 * The Asset Allocation Fund was formerly known as the Timed Opportunity Fund. COMPARISON OF A CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE ASSET ALLOCATION FUND* AND THE MODEL BENCHMARK AVERAGE ANNUAL TOTAL RETURN -- FUND [CHART] FISCAL YEAR ENDED MAY 31 * Beginning September 1, 1992 we began to use the Bankers Trust Tactical Asset Allocation Model to manage this Fund. The performance of the Fund may be compared to a benchmark comprised of a weighted average of three market sectors in which the Fund invests. This benchmark is described above. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. The Fund returns reflect investment management fees and other Fund expenses. The Fund returns do not reflect charges included in the annuity contract for mortality and expense guarantees, administrative fees or surrender charges. 42 47 TYPES OF INVESTMENTS - - -------------------------------------------------------------------------------- STOCKS -- also called equity securities If you own a share of stock, you own a part of the company that issued it. Companies sell stock to get the money they need to grow. There are three types of stocks: Common stock -- Each share of common stock represents a part of the ownership of the company. The holder of common stock participates in the growth of the company through increasing stock price and receipt of dividends. If the company runs into difficulty, the stock price can decline and dividends may not be paid. Preferred stock -- Each share of preferred stock allows the holder to get a set dividend before the common stock shareholders receive any dividends on their shares. Convertible preferred stock -- A stock with a set dividend which the holder may exchange for a certain amount of common stock. All of the Funds except the Money Market Fund in this prospectus may invest in common, preferred, and convertible preferred stock in accordance with their investment strategies. BONDS -- also called debt securities Bonds are sold by governments on the local, state, and federal levels, and by companies. There are many different kinds of bonds. For example, each bond issue has specific terms. U.S. Government bonds are guaranteed to pay interest and principal by the federal government. Revenue bonds are usually only paid from the revenue of the issuer. An example of that would be an airport revenue bond. Debentures are a very common type of corporate bond (a bond sold by a company). Payment of interest and return of principal is subject to the company's ability to pay. Convertible bonds are corporate bonds that can be exchanged for stock. The types of bonds the Funds may invest in are as follows: U.S. Government bonds and investment grade corporate bonds (the Capital Conservation Fund may also invest in below investment grade bonds). For a description of investment grade bonds see "A Word about Risk -- Market Risk" in this prospectus. Investing in a bond is like making a loan for a fixed period of time at a fixed interest rate. During the fixed period, the bond pays interest on a regular basis. At the end of the fixed period, the bond matures and the investor usually gets back the principal amount of the bond. Fixed periods to maturity are categorized as short term (generally less than 12 months), intermediate (one to 10 years), and long term (10 years or more). ISSUED means the Company (ISSUER) sold it originally to the public. Commercial paper is a specific type of corporate or short term note. In fact, it's very short term, being paid in less than 270 days. Most commercial paper matures in 50 days or less. Bonds rated Ba or B by Moody's Investors Services, Inc. (generally known as lower-medium and lower-quality bonds) are regarded, on balance, as predominantly speculative with respect to the issuer's capacity to pay interest and principal in accordance with the terms of the obligation. While such bonds will likely have some quality and protective characteristics, these are outweighed by uncertainties or risk exposures to adverse conditions. Lower-medium and lower-quality bonds may be more susceptible to real or perceived adverse economic and individual corporate developments than would investment grade bonds. For more information about BONDS AND RATINGS OF BONDS, see the Statement of Additional Information. For example, a projected economic downturn or the possibility of an increase in interest rates could cause a decline in high-yield, high-risk bond prices because such an event might lessen the ability of highly leveraged high yield issuers to meet their principal and interest payment obligations, meet projected business goals, or obtain additional financing. In addition, the secondary trading market for lower-medium and lower-quality bonds may be less liquid than the market for investment grade bonds. This potential lack of liquidity may make it more difficult to accurately value certain of these lower-grade portfolio securities. For more information about ASSET-BACKED SECURITIES see the Statement of Additional Information. Asset-Backed Securities Asset-backed securities are bonds or notes that are normally supported by a specific property. If the issuer fails to pay the interest or return the principal when the bond matures, then the issuer must give the property to the bondholders or noteholders. All of the Funds in this prospectus may invest in asset-backed securities. Examples of assets supporting asset-backed securities include credit card receivables, retail installment loans, home equity loans, auto loans, and manufactured housing loans. 43 48 - - -------------------------------------------------------------------------------- For more information about LOAN PARTICIPATIONS see the Statement of Additional Information. Loan Participations A loan participation is an investment in a loan made to a U.S. company that is secured by the company's assets. The assets must be, at all times, worth enough money to cover the balance due on the loan. Major national and regional banks make loans to companies and then sell the loans to investors. These banks don't guarantee the companies will pay the principal and interest due on the loans. For more information about WHEN-ISSUED SECURITIES, see the Statement of Additional Information. All the Funds in this prospectus may invest in loan participations. ILLIQUID AND RESTRICTED SECURITIES An illiquid security is one that may not be frequently traded. If it must be sold quickly, it may have to be sold at a loss. For example, if a fund owns a stock that is not sold very often and the fund needs to sell this stock quickly, it may have to offer the investment at a low price for someone to buy it. For more information about ILLIQUID AND RESTRICTED SECURITIES see the Statement of Additional Information. A restricted security is one that has not been registered with the SEC and therefore can't be sold in the public market. Restricted securities do include securities eligible for resale under Rule 144A of the Securities Act of 1933. Some Rule 144A securities may be liquid as determined by VALIC. For more information about Rule 144A securities see the Statement of Additional Information. These investments can be very risky because the Fund's ability to sell a restricted stock is very limited. For more information about MONEY MARKET SECURITIES OF FOREIGN ISSUERS the Funds may purchase, see the Statement of Additional Information. All the Funds may buy illiquid and restricted securities, but are restricted as to how much money they may invest in them. See "Limitations" below. ADRS ADRs are certificates issued by a United States bank or trust company and represent the right to receive securities of a foreign issuer deposited in a domestic bank or foreign branch of a United States bank. We consider ADRs foreign securities. FOREIGN CURRENCY For more information about FOREIGN CURRENCY EXCHANGE TRANSACTIONS, see the Statement of Additional Information. All of the Funds, except the Government Securities Fund and the Money Market Fund, may buy and sell foreign currencies the same way they buy and sell other investments. Funds buy foreign currencies when they believe the value of the currency will increase. If it does increase, they sell the currency for a profit. If it decreases they will experience a loss. Funds may also buy foreign currencies to pay for foreign securities bought for the Fund. The Funds, except the Money Market Fund and the Government Securities Fund, may purchase forward foreign currency exchange contracts to protect against a decline in the value of the U.S. dollar. WHEN-ISSUED SECURITIES When-issued securities are those investments that have been announced by the issuer and will be on the market soon. The Funds negotiate the price with a broker before it goes on the market. If the security ends up selling on the market at a lower price than negotiated, the Funds may have a loss. If it sells at a higher price, the Funds may have a profit. All of the Funds may buy when-issued securities in accordance with their investment strategy. MONEY MARKET SECURITIES All of the Funds may invest part of their assets in high quality money market securities payable in U.S. dollars. A listing of the types of money market securities in which the Money Market Fund may invest in is in that Fund's Fact Sheet. A money market security is high quality when it is rated in one of the two highest credit categories by Moody's or Standard & Poor's or another nationally recognized rating service or if unrated, deemed high quality by VALIC. These high quality money market securities include: M Securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities M Certificates of deposit and other obligations of domestic banks having total assets in excess of $1 billion M Commercial paper sold by corporations and finance companies M Corporate debt obligations with remaining maturities of 13 months or less M Repurchase agreements, money market securities of foreign issuers if payable in U.S. dollars, asset-backed securities, loan participations, and adjustable rate securities 44 49 - - -------------------------------------------------------------------------------- DERIVATIVES Unlike stocks and bonds that represent actual ownership of that stock or bond, derivatives are investments which "derive" their value from securities issued by a company, government, or government agency. Derivatives are bought to protect ("hedge") against a change in the price of the underlying security. There are some investors who take higher risk ("speculate") and buy derivatives to profit from a change in price of the underlying security. We buy derivatives to hedge the investment portfolios and to earn additional income in order to help achieve the Funds' objectives. We do not buy derivatives to speculate. The Funds, except the Money Market Fund, may buy two types of derivatives: futures and options. Options An option is the right to buy or sell any type of investment for a preset price over a specific period of time. Call Option For example, you can buy an option from Mr. Smith that gives you the right to buy 10 shares of stock X at $25.00 per share anytime between now and six weeks from now. You believe stock X will be selling for more than $25.00 per share between now and then. Mr. Smith believes it won't be. If you exercise this option before it expires, Mr. Smith must sell you 10 shares of stock X at $25.00 per share. On the other hand, you can sell an option to Mr. Smith that gives him the right to buy 10 shares of stock X at $25.00 per share anytime between now and six weeks from now. You believe stock X will be selling for less than $25.00 per share between now and then. Mr. Smith believes it won't be. If he exercises this option before it expires, you must sell to Mr. Smith 10 shares of stock X at $25.00 per share. Put Option Or, you can buy an option from Mr. Smith that gives you the right to sell him 10 shares of X stock at $25.00 per share anytime between now and six weeks from now. In this example, you believe stock X will be selling for less than $25.00 per share between now and then. Mr. Smith thinks it will be selling for more. Or, you can sell an option to Mr. Smith that gives him the right to sell to you 10 shares of X stock at $25.00 per share anytime between now and six weeks from now. In this example, he believes stock X will be selling for less than $25.00 per share between now and then. For more information on put and call OPTIONS AND FINANCIAL FUTURES CONTRACTS AND OPTIONS, see the Statement of Additional information. Futures Contracts A futures contract is an agreement between a buyer and a seller to buy or sell an investment on a future date at a price the buyer and seller set today. The buyer thinks the price will go up between now and then, and the seller thinks the price will go down or they may just want to receive today's price because they do not know which way prices are going to go. All of the Funds, except the Money Market Fund, may enter into certain types of futures contracts. The Funds use futures contracts as a tool to earn more money, and to protect against rising or falling prices in the stock and bond markets. The Funds use stock and bond futures to invest cash and cash equivalents. When certain levels are reached the Fund will sell the futures and buy stocks or bonds. All of the Funds, except the Money Market Fund can invest in these types of futures and options: M Write exchange traded covered put and call options on securities and stock indices. M Purchase exchange traded put and call options on securities and stock indices. M Purchase and sell exchange traded financial futures contracts. M Write covered call options and purchase exchange traded put and call options on financial futures contracts. M Write covered call options and purchase non-exchange traded call and put options on financial futures contracts. The Capital Conservation Fund, the Government Securities Fund, the International Equities Fund, the International Government Bond Fund and the Science & Technology Fund may write and purchase put and call options on securities and stock indices that are not traded on an exchange. 45 50 - - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS A repurchase agreement requires the seller of the security to buy it back at a set price at a certain time. If a Fund enters into a repurchase agreement, it is really making a short term loan (usually for one day to one week). The Funds may enter into repurchase agreements only with well-established securities dealers or banks that are members of the Federal Reserve System. All the Funds in this prospectus may invest in repurchase agreements. The risk in a repurchase agreement is the failure of the seller to be able to buy the security back. If the value of the security declines, the Fund may have to sell at a loss. A repurchase agreement of more than 7 days duration is illiquid. A discussion of repurchase agreements, illiquid securities and Fund limitations is contained in the Statement of Additional Information. A WORD ABOUT RISK There are four basic types of investment risk you may be subject to: M Market Risk M Credit (Financial) Risk M Interest Rate Risk M Risk Associated with Foreign Securities Generally stocks are considered to be subject to market risk, while debt securities, such as U.S. government bonds and money market securities are subject to interest rate risk. Other debt securities, such as corporate bonds, involve both interest rate and credit (financial) risk. Lastly, risks associated with foreign securities can involve political, currency and limited information risks. Each of these four basic types of investment risks is discussed below. Market Risk Market risk refers to the loss of capital resulting from changes in the prices of investments. For example, market risk occurs when expectations of lower corporate profits in general cause the broad market of stocks to fall in price. When this happens, even though a company is experiencing growth in profits, the price of its stock could fall. Credit (Financial) Risk Credit risk refers to the risk that the issuer of a bond may default or be unable to pay interest or principal due on a bond. To help the Funds' Investment Adviser or Sub-advisers decide which U.S. corporate and foreign bonds to buy, they rely on Moody's and Standard & Poor's (two nationally recognized bond rating services), and on VALIC's own research. This research lowers the risk of buying a bond of a company that may not pay the interest and principal on the bond. All of the Funds in this prospectus may buy bonds that are rated as investment grade. There are four different levels of investment grade, from AAA to BBB; see Description of Corporate Bond Ratings in the Statement of Additional Information. All bonds with these ratings are considered to have adequate ability to pay interest and principal. All of the Funds in this prospectus may buy bonds issued by the U.S. Government. The U.S. Government guarantees it will always pay principal and interest. Interest Rate Risk Interest rate risk refers to the risk that fluctuations in interest rates may affect the value of interest paying securities in a Fund. If a fund sells a bond before it matures, it may lose money, even if the bond is guaranteed by the U.S. Government. Say, for example, a fund bought an intermediate government bond last year that was paying interest at a fixed rate of 6%. Now, intermediate government bonds are paying interest at a rate of 7%. If the fund wants to sell the bond paying 6%, it will have to sell it at a discount (and realize a loss) to attract buyers because they can buy new bonds paying 7% interest. 46 51 - - -------------------------------------------------------------------------------- Risk Associated with Foreign Securities Each of the Funds may, subject to limits stated in each Fund's Fact Sheet, invest in foreign securities including ADRs. A foreign security is a security issued by an entity domiciled or incorporated outside of the U.S. There are three principal risks of owning foreign securities: Political risk -- the chance of a change in government and the assets of the company being taken away. Currency risk -- a change in the value of the foreign currency compared to the dollar. If the foreign currency declines in value, your investment valued in U.S. dollars will decline even if the value of the foreign stock or bond is unchanged. Limited information -- foreign companies generally are not regulated to the degree U.S. companies are and may not report all of the information we are used to getting. To minimize taxes they may not report some income or they may report higher expenses. INVESTMENT PRACTICES Limitations Each Fund has limitations on the percentage of its assets that it may allocate to certain investments. These limits are determined by the Fund's investment objectives and risk level. For example, the Stock Index Fund's investment goal is growth through investments tracking the S&P 500 Index, an index that includes stocks of domestic and foreign companies. As a result, this Fund may invest no more than 35% of its assets in stocks that are not part of the S&P 500 Index. Some Funds are restricted from buying certain types of investments altogether. For example, the Money Market Fund may not invest in futures and options. Each Fund's limitations are shown in the Investment Strategy section of its Fact Sheet. Lending Portfolio Securities For more information about LENDING PORTFOLIO SECURITIES, see the Statement of Additional Information. Each Fund except the Growth Fund and the Science & Technology Fund may lend up to 30% of its total assets to broker-dealers and other financial institutions to earn more money for the Fund. The Growth Fund and the Science & Technology Fund may lend up to 33 1/3% of their net assets. Assets are placed in a special account by the borrower to cover the market value of the securities on loan. The assets serving as collateral for the loan are valued daily. For more information about FOREIGN SECURITIES, see the Statement of Additional Information. A risk of lending portfolio investments is that there may be a delay in the Fund getting its investments back when a loaned security is sold. The Funds will only make loans to broker-dealers and other financial institutions that VALIC considers to be creditworthy. For more information about INVESTMENT LIMITATIONS, see the Statement of Additional Information. 47 52 ABOUT THE SERIES COMPANY - - -------------------------------------------------------------------------------- SERIES COMPANY SHARES The Series Company is an open-end mutual fund and may offer shares of the Funds for sale at any time. However, the Series Company offers shares of the Funds only to registered and unregistered separate accounts of VALIC and its affiliates, or employee thrift plans maintained by VALIC or American General Corporation. As a participant, you do not directly buy shares of the Funds that make up the Series Company. Instead, you buy units in either a registered or unregistered separate account of VALIC or of its affiliates. When you buy these units, you specify which Funds you want the separate account to invest your money in. The separate account, in turn, buys the shares of the Funds according to your instructions. See your contract prospectus for more information on the separate account associated with your contract. When the separate accounts buy, sell, or transfer shares of the Funds, they do not pay any charges related to these transactions. THE VARIABLE ANNUITY MARKETING COMPANY (VAMCO) acts as the Series Company's distributor. As distributor, VAMCO sells shares of the Funds to the separate accounts. VAMCO is a wholly owned subsidiary of VALIC and acts as a distributor under an agreement it has with the Series Company. VAMCO does not charge the Series Company or the separate accounts for its services. Also, VAMCO is not required to sell a minimum number of shares to the separate accounts. VAMCO sends orders to buy, sell or transfer shares to the Series Company's transfer agent daily. The price of any share affected by the request is the next net asset value calculated after order is received. For more information on how to participate, see your contract prospectus. NET ASSET VALUE OF THE SERIES COMPANY SHARES How Net Asset Value is Calculated Here is how the Series Company calculates the net asset value of each Fund's shares: Step 1: Total value of the Fund's assets* (including money owed to the fund but not yet The Fund's collected) = Total - - -- The Fund's liabilities Net Asset Value (including money owed by the Fund but not yet paid) Step 2: The Fund's total net asset value (from Step 1) NET ASSET VALUE / The total number of the = PER SHARE Fund's shares that are outstanding.
* The Series Company uses the fair market value of Fund's investments to calculate the Fund's total value. However, it uses the amortized cost method to determine the values of all the Money Market Fund's investments and of any other Fund's short-term securities maturing within 60 days. The amortized cost method approximates fair market value. If a Fund's portfolio includes investments that are not sold often or are not sold on any exchanges, the Series Company's Board of Directors or its delegate will, in good faith, estimate fair market value of these investments. When Net Asset Value is Calculated The Series Company calculates the net asset value of each Fund's shares at approximately 4pm EST each day the New York Stock Exchange is open, with a few exceptions. (The New York Stock Exchange is open Monday through Friday but is closed on certain federal and other holidays.) In addition, the Series Company will not calculate net asset values on the following days even when the New York Stock Exchange is open: M the Friday after Thanksgiving; or M when Christmas falls on a Thursday, the Friday after Christmas; and M when Christmas falls on a Tuesday, the Monday before Christmas. 48 53 - - -------------------------------------------------------------------------------- The separate accounts can buy, sell, and transfer shares in the Funds only on days that the Series Company calculates the net asset value of each Fund's shares. Through VAMCO, the separate accounts send orders to the Series Company to buy, sell, or transfer shares based on requests they receive from participants. DIVIDENDS AND CAPITAL GAINS Dividends from Net Investment Income Net investment income generally includes stock dividends received and bond interest earned less expenses paid by the Fund. Each Fund pays dividends from net investment income occasionally. Dividends from net investment income are automatically reinvested for you into additional shares of the Fund. The Money Market Fund pays dividends daily and all other Funds pay dividends once a month. Distributions from Capital Gains When a Fund sells a security for more than it paid for that security, a capital gain results. Once a year, each Fund pays distributions from capital gains, as long as total capital gains exceed total capital losses. Distributions from capital gains are automatically reinvested for you into additional shares of the Fund. DIVERSIFICATION Each Fund's diversification policy limits the amount that the Fund may invest in certain securities. Each Fund's diversification policy is also designed to comply with the diversification requirements of the Internal Revenue Code (the "Code") as well as the Investment Company Act of 1940 ("the 1940 Act"). All of the Funds except International Government Bond Fund, Growth Fund and Science & Technology Fund may invest up to 5% of their total assets in a single issuer. An issuer, or "company" does not include the U.S. Government or agencies of the U.S. Government according to the Code and the 1940 Act. For diversification purposes, repurchase agreements are considered to be issued by the U.S. Government if backed by U.S. Government securities. Also, these Funds may not own more than 10% of the voting securities of a company. The Growth Fund and the Science & Technology Fund may invest more than 5% of their total assets in one company and more than 10% of their total assets in the voting securities of one company as long as the total of these investments does not exceed 25% of total assets. The International Government Bond Fund is "non-diversified" under the 1940 Act. This means it can invest more of its assets in fewer issuers and for this reason may be riskier than the other Funds. This Fund may invest up to 25% of its total assets in a single issuer as long as those investments representing over 5% of total assets in one issuer do not exceed 50% of total assets of the Fund. The remaining 50% of total assets may not include more than 5% of total assets in one issuer. Also, the Money Market Fund may not invest more than 5% of its total assets in any company rated as "second tier" by a national rating service (as described in Types of Investments). 49 54 - - -------------------------------------------------------------------------------- See the Statement of Additional information and your contract prospectus for further tax discussions. You should also CONSULT YOUR TAX ADVISOR before investing. TAXES By paying out all earnings as described in the Dividends and Capital Gains section above and by complying with the diversification requirements under the Code, each Fund expects to qualify as a Registered Investment Company (RIC) under Subchapter M of the Code. By qualifying as a RIC the Fund will not have to pay federal income taxes. VOTING RIGHTS One Vote Per Share Each outstanding share has one vote on all matters that shareholders vote on. As a participant, you vote on these matters indirectly by voting your units. The way you vote your units as a participant depends on your contract. See your contract prospectus for specific details. When a matter comes up for vote, the separate account will vote its shares in the same proportion as the unit votes it actually receives. If VALIC determines that it may, under the current interpretation of the 1940 Act, vote shares directly instead of voting through its units, it may decide to vote that way. Shareholder Meetings Maryland law does not require the Series Company to hold regular, annual shareholder meetings. But, the Series Company must hold shareholder meetings on the following matters: M to approve certain agreements as required by the 1940 Act; M to change fundamental investment objectives in the Diversification section and to change fundamental investment restrictions, above; M to fill vacancies on the Series Company's Board of Directors if the shareholders have elected less than a majority of the Directors. Shareholders may call a meeting to remove a Director from the Board if at least 10% of the outstanding shares vote to have this meeting. Then, at the meeting, at least 2/3 of all the outstanding shares of all the Funds must vote in favor of removing the Director. Shareholder Communications The Series Company will assist in shareholder communications. REPORTS The Series Company sends Annual Reports containing audited financial statements, Semi-Annual Reports containing unaudited financial statements, and proxy materials to Contract owners or participants. Also, the Series Company includes an Annual Report with each Statement of Additional Information it sends out. If you have any questions about the Annual or Semi-Annual Reports, call or write to the Series Company at the phone number/address found on the cover page of this prospectus. LEGAL MATTERS Cynthia A. Toles, Senior Associate General Counsel and Secretary of VALIC, reviews the legal matters regarding the investments offered in this prospectus and the federal laws and regulations related to their issue and sale. 50 55 Please tear off, complete and return the form below to Suite A3-01, Communications Unit, The Variable Annuity Life Insurance Company, 2929 Allen Parkway, Houston, Texas 77019 to order a Statement of Additional Information for the Company. A Statement of Additional Information may also be ordered by calling 1-800-44VALIC. Please send me a free copy of the Statement of Additional Information for American General Series Portfolio Company. Name: --------------------------------------------------- GA. #: --------------------------------------------------- Address: ------------------------------------------------- Policy #: ------------------------------------------------- Social Security Number: ----------------------------------
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
PAGE ---- General Information and History..................... 2 Additional Information Regarding Certain Funds...... 3 International Equities Fund..................... 3 Government Securities Fund...................... 3 Asset Allocation Fund........................... 4 Performance and Yield Information................... 5 Fundamental Investment Restrictions................. 8 Fundamental Investment Restrictions Applicable to All Funds....................... 8 MMF Investment Restrictions..................... 9 AAF, CCF, GSF, SIF, IEF MIF and SCIF Investment Restrictions.................................. 9 GIF Investment Restrictions..................... 9 GF and STF Investment Restrictions.............. 9 SAF Investment Restrictions..................... 10 IGBF Investment Restrictions.................... 10 Investment Practices................................ 11 Repurchase Agreements........................... 11 Lending Portfolio Securities.................... 11 Foreign Securities.............................. 12 Foreign Currency Exchange Transactions.......... 13 When Issued Securities.......................... 13 Debt Securities................................. 13 Warrants........................................ 13 Eurodollar Obligations.......................... 14 Asset-Backed Securities......................... 14 Mortgage-Backed Securities...................... 15 Loan Participations............................. 15 Adjustable Rate Securities...................... 15 Illiquid Securities............................. 16 Rule 144A Securities............................ 16
PAGE ---- Options on Securities and Securities Indices.... 16 Writing Covered Call and Put Options and Purchasing Call and Put Options............... 18 Financial Futures Contracts..................... 20 Options on Financial Futures Contracts.......... 22 Certain Additional Risks of Options and Financial Futures Contracts................... 22 Limitations..................................... 23 Money Market Securities of Foreign Issuers...... 24 Investment Adviser.................................. 25 Investment Sub-Advisers............................. 27 Portfolio Transactions and Brokerage................ 29 Offering, Purchase, and Redemption of Fund Shares... 32 Determination of Net Asset Value.................... 33 Calculation of Yield for the Money Market Fund...... 34 Accounting and Tax Treatment........................ 35 Calls and Puts.................................. 35 Financial Futures Contracts..................... 35 Subchapter M of the Internal Revenue Code of 1986....................................... 35 Section 817(h) of the Code...................... 36 Other Information................................... 37 Shareholder Reports............................. 37 Voting and Other Rights......................... 37 Custody of Assets............................... 38 Index Funds..................................... 38 Description of Corporate Bond Ratings........... 39 Description of Commercial Paper Ratings......... 40 Independent Auditors............................ 41 Directors and Officers.............................. 42 Financial Statements................................ 45
51 56 INVESTMENT ADVISER: The Variable Annuity Life Insurance Company 2929 Allen Parkway Houston, Texas 77019 INVESTMENT SUB-ADVISERS: Bankers Trust Company 130 Liberty St. New York, New York 10006 T. Rowe Price Associates, Inc. 100 East Pratt Street Baltimore, Maryland 21202 Value Line, Inc. 220 East 42nd Street New York, New York 10017-5981 DISTRIBUTOR: The Variable Annuity Marketing Company 2929 Allen Parkway Houston, Texas 77019 CUSTODIAN: State Street Bank and Trust Company 225 Franklin Street Boston, Massachusetts 02110 INDEPENDENT AUDITORS: Ernst & Young LLP 1221 McKinney Houston, Texas 77010 TRANSFER AND SHAREHOLDER SERVICE AGENT: The Variable Annuity Life Insurance Company 2929 Allen Parkway Houston, Texas 77019 SCHWAB PCRA AVAILABLE THROUGH: VALIC Investment Services Company 2929 Allen Parkway Houston, Texas 77019 DIRECTORS AND OFFICERS DIRECTORS OFFICERS Stephen D. Bickel Stephen D. Bickel Chairman and President Thomas L. West, Jr. Thomas L. West, Jr. Executive Vice President Joe C. Osborne Norman Jaskol Vice President and Senior Peter V. Tuters Investment Officer Norman Hackerman Teresa S. Moro Vice President and John William Lancaster Investment Officer F. Robert Paulsen John W. Mossbarger Vice President and R. Miller Upton Investment Officer Ben H. Love Leon A. Olver Vice President and Investment Officer William Trimbur, Jr. Vice President and Investment Officer Brent C. Nelson Vice President Cynthia A. Toles General Counsel and Secretary Gregory R. Seward Treasurer Kathryn A. Pearce Controller David H. den Boer Assistant Secretary
PRINTED MATTER PRINTED IN U.S.A. RECYCLED PAPER VA 9017 VER 10/97 LOGO 57 AMERICAN GENERAL SERIES PORTFOLIO COMPANY INTERNATIONAL EQUITIES FUND MIDCAP INDEX FUND SMALL CAP INDEX FUND STOCK INDEX FUND GROWTH FUND GROWTH & INCOME FUND CAPITAL CONSERVATION FUND GOVERNMENT SECURITIES FUND INTERNATIONAL GOVERNMENT SECURITIES FUND SCIENCE & TECHNOLOGY FUND SOCIAL AWARENESS FUND MONEY MARKET FUND ASSET ALLOCATION FUND ----------------------------------------------------------------------- STATEMENT OF ADDITIONAL INFORMATION ----------------------------------------------------------------------- FORM N-1A PART B OCTOBER 1, 1997 This Statement of Additional Information is not a prospectus and contains information in addition to that in the Prospectus for American General Series Portfolio Company (the "Company"). It should be read in conjunction with the Prospectus. The Statement of Additional Information and the related Prospectus are both dated October 1, 1997. For an individual interested in a variable annuity contract issued by The Variable Annuity Life Insurance Company ("VALIC"), a Prospectus may be obtained by calling 1-800-44VALIC or writing the Company or The Variable Annuity Marketing Company ("VAMCO") at 2929 Allen Parkway, Houston, Texas 77019. All inquiries regarding variable annuity contracts issued by American General Life Insurance Company ("AGL"), the successor to California-Western States Life Insurance Company ("Cal-West"), should be directed in writing to AGL's Annuity Administration Department, 2727-A Allen Parkway, Houston, Texas 77019-2191 or by calling 713-831-3505. Shares in the Company are available to the public only through the purchase of certain variable annuity contracts issued and employee thrift plans maintained by VALIC and its affiliates. TABLE OF CONTENTS
Page ---- General Information and History.................. 2 Additional Information Regarding Certain Funds... 3 International Equities Fund.................... 3 Government Securities Fund..................... 3 Asset Allocation Fund.......................... 4 Performance and Yield Information................ 5 Fundamental Investment Restrictions.............. 8 Fundamental Investment Restrictions Applicable to All Funds................................. 8 MMF Investment Restrictions.................... 9 AAF, CCF, GSF, SIF, IEF, MIF and SCIF Investment Restrictions...................... 9 GIF Investment Restrictions.................... 9 GF and STF Investment Restrictions............. 9 SAF Investment Restrictions.................... 10 IGBF Investment Restrictions................... 10 Investment Practices............................. 11 Repurchase Agreements.......................... 11 Lending Portfolio Securities................... 11 Foreign Securities............................. 12 Foreign Currency Exchange Transactions......... 13 When Issued Securities......................... 13 Debt Securities................................ 13 Warrants....................................... 13 Eurodollar Obligations......................... 14 Asset-Backed Securities........................ 14 Mortgage-Backed Securities..................... 15 Loan Participations............................ 15 Adjustable Rate Securities..................... 15 Illiquid Securities............................ 16 Rule 144A Securities........................... 16
Page ---- Options on Securities and Securities Indices... 16 Writing Covered Call and Put Options and Purchasing Call and Put Options.............. 18 Financial Futures Contracts.................... 20 Options on Financial Futures Contracts......... 22 Certain Additional Risks of Options and Financial Futures Contracts.................. 22 Limitations.................................... 23 Money Market Securities of Foreign Issuers..... 24 Investment Adviser............................... 25 Investment Sub-Advisers.......................... 27 Portfolio Transactions and Brokerage............. 29 Offering, Purchase, and Redemption of Fund Shares......................................... 32 Determination of Net Asset Value................. 33 Calculation of Yield for the Money Market Fund... 34 Accounting and Tax Treatment..................... 35 Calls and Puts................................. 35 Financial Futures Contracts.................... 35 Subchapter M of the Internal Revenue Code of 1986......................................... 35 Section 817(h) of the Code..................... 36 Other Information................................ 37 Shareholder Reports............................ 37 Voting and Other Rights........................ 37 Custody of Assets.............................. 38 Index Funds.................................... 38 Description of Corporate Bond Ratings.......... 39 Description of Commercial Paper Ratings........ 40 Independent Auditors........................... 41 Directors and Officers........................... 42 Financial Statements............................. 45
VA 9017-1, REV. 10/97 58 GENERAL INFORMATION AND HISTORY American General Series Portfolio Company (the "Company") was incorporated in Maryland on December 7, 1984, by VALIC and is registered under the Investment Company Act of 1940, as amended, (the "1940 Act") as an open-end, management investment company. Pursuant to Investment Advisory Agreements with the Company and subject to the authority of the Company's Board of Directors, VALIC serves as the Company's investment adviser and conducts the business and affairs of the Company. Additionally, VALIC has engaged an investment sub-adviser to provide investment sub-advisory services for the Stock Index Fund, the MidCap Index Fund, the Small Cap Index Fund, the Growth Fund, the Growth & Income Fund, and the Science & Technology Fund, subject to VALIC's control, direction and supervision. The Company consists of thirteen separate investment portfolios (hereinafter collectively referred to as the "Funds" or individually as a "Fund"), each of which is, in effect, a separate mutual fund issuing its own separate class of common stock. The Company issues shares of common stock of each Fund to registered and unregistered separate accounts of VALIC and its affiliates to fund variable annuity contracts (the "Contracts"). Currently the Company acts as an investment vehicle for assets of VALIC's Separate Account A, and AGL Separate Account A and Separate Account D, each of which is a unit investment trust registered as an investment company under the 1940 Act, and AGL Separate Account B, a unit investment trust that is exempt from registration as an investment company under the 1940 Act. Additionally, retirement plans maintained by VALIC and American General Corporation may own shares of certain of the Funds. The Company and VALIC have Codes of Ethics which establish for their officers, directors and certain employees procedures and restrictions as to those individual's personal investment trading activities.
DATE OPERATIONS DATE OF DATE SEED COMMENCED INCORPORATION OR MONEY WAS (BY ISSUANCE OR BOARD APPROVAL FIRST PROVIDED AVAILABILITY NAME OF FUND FOR ORGANIZATION TO THE COMPANY OF SHARES) ------------ ---------------- -------------- --------------- International Equities Fund ("IEF")... 7-18-89 9-29-89 10-02-89 MidCap Index Fund ("MIF")............. 3-16-82 8-30-82 10-13-82 Small Cap Index Fund ("SCIF")......... 10-28-91 5-01-92 5-01-92 Stock Index Fund ("SIF").............. 2-02-87 4-20-87 4-20-87 Growth Fund ("GF").................... 1-25-94 4-29-94 4-29-94 Growth & Income Fund ("GIF").......... 1-25-94 4-29-94 4-29-94 Capital Conservation Fund ("CCF")..... 12-07-84 12-16-85 01-16-86 Government Securities Fund ("GSF").... 12-07-84 12-16-85 01-16-86 International Government Bond Fund ("IGBF")............................ 7-30-91 10-01-91 10-01-91 Science & Technology Fund ("ST,,,0F")......................... 12-17-93 4-29-94 4-29-94 Social Awareness Fund ("SAF")......... 7-18-89 9-29-89 10-02-89 Money Market Fund ("MMF")............. 12-07-84 12-16-85 01-16-86 Asset Allocation Fund ("AAF")*........ 2-22-83 8-08-83 9-06-83
- - --------------- *The Asset Allocation Fund was formerly known as the Timed Opportunity Fund. The MidCap Index Fund and the Asset Allocation Fund are the successors to Capital Accumulation Fund, Inc. and Timed Opportunity Fund, Inc., respectively, which were separately registered open-end diversified management investment companies under the 1940 Act, pursuant to a reorganization entered into on September 25, 1985. The MidCap Index Fund effected a change in its name and investment objective, investment program and one of its restrictions as of October 1, 1991. The Asset Allocation Fund effected a change in its name from the Timed Opportunity Fund, effective as of October 1, 1997. In addition, the Quality Growth Fund was combined into the Stock Index Fund, by means of a reclassification of its shares, effective May 1, 1992. 2 59 ADDITIONAL INFORMATION REGARDING CERTAIN FUNDS The following disclosures supplement disclosures set forth in the Prospectus and do not, standing alone, present a complete explanation of the matters disclosed. Please refer also to the Prospectus for a complete presentation of these matters. INTERNATIONAL EQUITIES FUND The International Equities Fund intends to provide long-term growth of capital through investments primarily in a diversified portfolio of equity and equity-related securities of foreign issuers that, as a group, are expected to provide investment results closely corresponding to the Morgan Stanley's Capital International, Europe, Australia and Far East Index ("EAFE Index"). The EAFE Index, which commenced in 1969, is an unmanaged capitalization weighted stock index consisting of more than 1000 companies operating in 20 countries in Europe, Australia, and the Far East. The EAFE Index is a well known measure for international stock performance. The EAFE Index does not reflect charges, fees, and commissions applicable to the Fund. The weighted breakdown by country of the EAFE Index (as of May 31, 1997) is set forth below: EAFE INDEX BREAKDOWN BY COUNTRY
COUNTRY WEIGHT ------- ------ 1 AUSTRALIA................................................... 2.86 2 AUSTRIA..................................................... 0.39 3 BELGIUM..................................................... 1.21 4 DENMARK..................................................... 0.92 5 FINLAND..................................................... 0.68 6 FRANCE...................................................... 6.56 7 GERMANY..................................................... 8.56 8 HONG KONG................................................... 3.78 9 IRELAND..................................................... 0.32 10 ITALY....................................................... 2.92 11 JAPAN....................................................... 32.62 12 MALAYSIA.................................................... 2.24 13 NETHERLANDS................................................. 4.90 14 NEW ZEALAND................................................. 0.37 15 NORWAY...................................................... 0.54 16 SINGAPORE................................................... 1.18 17 SPAIN....................................................... 2.35 18 SWEDEN...................................................... 2.38 19 SWITZERLAND................................................. 6.30 20 UNITED KINGDOM.............................................. 18.92
GOVERNMENT SECURITIES FUND The Government Securities Fund may invest in intermediate and long-term debt instruments issued or guaranteed by the U.S. Government, its agencies or instrumentalities. U.S. Government securities in which the Fund may invest include: (1) U.S. Treasury bills, notes, and bonds; (2) obligations issued or guaranteed by U.S. Government agencies and instrumentalities which are supported by any of the following: (a) the full faith and credit of the U.S. Government (e.g., Government National Mortgage Association ("GNMA") Certificates); (b) the right of the issuer to borrow an amount limited to a specific line of credit from the U.S. Treasury (e.g., debt of each of the Federal Home Loan banks); (c) the discretionary authority of the U.S. Government or GNMA to purchase certain financial obligations of the agency or instrumentality (e.g., Federal National Mortgage Association); or (d) the credit of the issuing agency or instrumentality (e.g., Federal Land Banks, Farmers, Farmers Home Administration or Student Loan Marketing Association); and (3) collateralized mortgage obligations ("CMOs") that are issued by governmental or non-governmental entities and collateralized by U.S. Treasury Obligations or by U.S. Government agency or instrumentality securities. No assurance can be 3 60 given that the U.S. Government will provide support to such U.S. Government sponsored agencies or instrumentalities in the future, since it is not required to do so by law. ASSET ALLOCATION FUND In addition to its overall investment objective, the Fund has established separate sub-objectives for investments in each of the three market sectors. The following is a statement of the sub-objectives of each sector, which are designed to maximize the unique investment return characteristics inherent in that market sector: 1. Within the stock sector, the Fund seeks appreciation of capital by selecting investments that it expects will participate in the growth of the nation's economy. 2. Within the bond sector, the Fund will generally seek high current income consistent with reasonable investment risk. The Fund will pursue the above objective by investing only in (a) investment grade corporate debt obligations rated e.g. at least Baa by Moody's Investor Services, Inc. ("Moody's") or by any other NRSRO or unrated debt obligations which VALIC believes are of comparable investment quality, and (b) obligations of, or debts guaranteed by, the U.S. Government, its agencies, or instrumentalities. See "Government Securities Portfolio" for an explanation of U.S. Government obligation and "Debt Securities" in this Prospectus and the Appendix for an explanation of corporate debt ratings. 3. Within the money market sector, the Fund seeks the highest level of current income consistent with liquidity, stability, and preservation of capital. The chart below indicates the historic allocations, from June 1983 through June 1997, based on the investment benchmarks of 55% in equity securities, 35% in intermediate or long-term debt securities and 10% in money market or short term debt instruments, as recommended by the Bankers Trust Company Tactical Asset Allocation Model. The Bankers Trust Company Tactical Asset Allocation Model is currently used in connection with the management of over $3.96 billion of assets. [CHART] 4 61 PERFORMANCE AND YIELD INFORMATION The Series Company may compute the total return of a Fund ("Average Annual Total Return"), total return of a Fund before expenses ("Portfolio Total Return"), and compare Portfolio Total Return to the total return of the Fund's benchmark index ("Index Total Return"). The difference between Portfolio Total Return and Index Total Return is referred to as "tracking difference." Tracking difference represents the amount that the return on the investment portfolio (which results from the Adviser's investment selection) deviates from its benchmark's Index Total Return. Fund performance does not reflect contract charges or separate account charges which will reduce Fund values which are available to Participants. Information about Separate Account performance is available in the applicable contract prospectus. AVERAGE ANNUAL TOTAL RETURN Average Annual Total Return quotations for periods of 1, 3, 5, and 10 years, or, since inception of the Fund, are calculated according to the following formula: P (1+T)n = ERV Where: P = A hypothetical initial Purchase Payment of $1,000. T = Average annual total return. n = Number of years. ERV = Ending redeemable value of a hypothetical $1,000 Purchase Payment made at the beginning of the first period.
Average Annual Total Return reflects the deduction of Fund expenses and assumes that all dividends and distributions are reinvested when paid. PORTFOLIO TOTAL RETURN Portfolio Total Return quotations for periods of 1, 3, 5, and 10 years, or, since inception are calculated by adding to the Average Total Annual Return (described above) the expenses of the Fund. Expenses of the Fund are calculated at the end of each Fund's fiscal year and are expressed as a percentage of average net assets. Expenses as a percentage of average net assets are prorated equally over the months in the fiscal year in which the ratio was calculated when determining expenses for periods crossing over fiscal years. INDEX TOTAL RETURN Index Total Return quotations for periods 1, 3, 5, and 10 years, or, since inception, are calculated by determining the percentage change in value of the benchmark index over the applicable period including reinvestment of dividends and interest as applicable. Index Total Return is calculated according to the formula described above for Average Annual Total Return, however it does not include an expense component; if an expense component were included the return would be lower. SEVEN DAY YIELDS The Money Market Fund may quote a Seven Day Current Yield and a Seven Day Effective Yield. The Seven Day Current Yield is calculated by determining the total return for the current seven day period ("based period return") and annualizing the base period return by dividing by seven days, then multiplying the result by 365 days. The Seven Day Effective Yield annualizes the base period return while compounding weekly the base period return according to the following formula: Seven Day Effective Yield = [(Base Period Return + 1)365/7 - 1] 5 62 30 DAY CURRENT YIELD The Capital Conservation Fund, Government Securities Fund, and the International Government Bond Fund may quote a 30 Day Current Yield which is determined based on the current 30 day period, according to the following standardized formula: Yield = 2[(1 + NII )6 - 1] S x NAV Where: NII = Net investment income (interest income, plus dividend income, plus other income, less fund expenses. S = Average daily shares outstanding. NAV = Net asset value per share on the last day of the period.
6 63 PERFORMANCE RETURNS MAY 31, 1997
10 YEAR INCEPTION OR SINCE DATE 1 YEAR 3 YEAR 5 YEAR INCEPTION (A) --------- ------ ------ ------ ------------- INTERNATIONAL EQUITIES FUND: 10/02/89 Average Annual Total Return 7.74% 7.89% 10.39% 4.42% Portfolio Total Return 8.16% 8.32% 10.85% 4.88% Morgan Stanley Capital International EAFE 7.54% 7.69% 10.55% 4.50% MIDCAP INDEX FUND: 10/13/82 Average Annual Total Return 17.48% 19.43% 15.63% 9.83% Portfolio Total Return 17.88% 19.85% 16.07% 10.49% S & P MidCap 400 18.21% 19.88% 16.28% 15.33% SMALL CAP INDEX FUND: 05/01/92 Average Annual Total Return 7.51% 16.71% 14.51% 14.14% Portfolio Total Return 7.92% 17.13% 14.95% 14.58% Russell 2000 6.97% 17.05% 15.76% 15.79% STOCK INDEX FUND: 04/20/87 Average Annual Total Return 29.24% 25.70% 18.05% 13.81% Portfolio Total Return 29.58% 26.06% 18.43% 14.40% S & P 500 29.43% 25.92% 18.37% 14.71% GROWTH FUND: 04/29/94 Average Annual Total Return 9.00% 23.15% N/A 21.92% Portfolio Total Return 9.86% 24.02% N/A 22.79% S & P 500 29.43% 25.92% N/A 26.25% GROWTH & INCOME FUND: 04/29/94 Average Annual Total Return 17.08% 21.39% N/A 20.27% Portfolio Total Return 17.89% 22.21% N/A 21.09% S & P 500 29.43% 25.92% N/A 26.25% CAPITAL CONSERVATION FUND: 01/16/86 Average Annual Total Return 7.75% 7.59% 6.94% 7.28% Portfolio Total Return 8.32% 8.16% 7.54% 8.20% Merrill Lynch Corporate Master Index 8.85% 8.87% 8.22% 9.61% GOVERNMENT SECURITIES FUND: 01/16/86 Average Annual Total Return 6.94% 6.85% 6.41% 7.24% Portfolio Total Return 7.50% 7.42% 7.00% 8.16% Lehman Brothers U.S. Treasury Index 7.38% 7.36% 7.05% 8.45% INTERNATIONAL GOVERNMENT BOND FUND: 10/01/91 Average Annual Total Return 1.13% 6.92% 7.77% 8.49% Portfolio Total Return 1.69% 7.49% 8.24% 8.92% Salomon Brothers Non-U.S. Government Bond Index 1.25% 7.34% 8.46% 9.32% SCIENCE & TECHNOLOGY FUND: 04/29/94 Average Annual Total Return 1.81% 33.75% N/A 31.91% Portfolio Total Return 2.77% 34.72% N/A 32.87% S & P 500 29.43% 25.92% N/A 26.25% SOCIAL AWARENESS FUND: 10/02/89 Average Annual Total Return 30.48% 25.69% 18.03% 14.41% Portfolio Total Return 31.04% 26.26% 18.62% 14.90% S & P 500 29.43% 25.92% 18.37% 15.54% MONEY MARKET FUND: 01/16/86 Average Annual Total Return 5.02% 5.06% 4.16% 5.52% Portfolio Total Return 5.59% 5.63% 4.74% 6.36% 30-Day Certificate of Deposit Primary Offering Rate by New York City Banks 4.62% 4.59% 3.86% 5.38% ASSET ALLOCATION FUND:* 09/06/83 Average Annual Total Return 15.89% 15.37% 11.30% 9.11% Portfolio Total Return 16.46% 15.94% 11.90% 10.01% Benchmark (B) 19.13% 17.23% 13.02% 11.92%
- - ------------ * The Asset Allocation Fund was formerly known as the Timed Opportunity Fund. (A) Amounts shown are returns for ten years or since inception if the fund has been in existence for less than ten years. (B) Benchmark consists of 55% S&P 500 Index, 35% Merrill Lynch Corporate & Government Master Index, and 10% of NYC 30 Day Primary CD Rate. 7 64 FUNDAMENTAL INVESTMENT RESTRICTIONS The Funds have each adopted certain fundamental investment restrictions which, unlike the other investment objective(s), policies, and investment program of each Fund, may only be changed for each Fund with the consent of a majority of the outstanding voting securities of the particular Fund. The 1940 Act defines such a majority as the lesser of (1) 67% or more of the voting securities present in person or by proxy at a shareholders' meeting, if the holders of more than 50% of the outstanding voting securities of a Fund are present or represented by proxy, or (2) more than 50% of a Fund's outstanding voting securities. FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE TO ALL FUNDS All the Funds, except the International Government Bond Fund, the Growth Fund and the Science & Technology Fund have adopted each of the following fundamental investment restrictions. The percentage limitations referenced in some of the following fundamental investment restrictions are to be determined at the time of purchase. The International Government Bond Fund has adopted fundamental investment restrictions 2-10 below. (The Growth Fund and the Science & Technology Fund have adopted investment restrictions 3, 6 and 7 as non-fundamental operating policies. In addition, as a non-fundamental operating policy, the Growth Fund and the Science & Technology Fund will not invest in oil, gas or mineral exploration programs if, as a result, more than 5% of the value of the total assets would be invested in such programs.) Such restrictions provide that no Fund may: 1. Invest more than 5% of the value of its total assets in the securities of any one issuer or purchase more than 10% of the outstanding voting securities, or any other class of securities, of any one issuer. For purposes of this restriction, all outstanding debt securities of an issuer are considered as one class, and all preferred stock of an issuer is considered as one class. This restriction does not apply to obligations issued or guaranteed by the U.S. Government, its agencies, or instrumentalities. As a matter of operating policy, the Company will not consider repurchase agreements subject to the 5% limitation if the collateral underlying the repurchase agreements are U.S. Government securities. 2. (a) Issue senior securities except in connection with investments in options and futures contracts; or (b) borrow money except as a temporary measure for extraordinary or emergency purposes (such as to meet redemption requests which might otherwise require the disadvantageous sale of portfolio securities) and then not in excess of 5% of the Fund's total assets. No Fund may mortgage, pledge or hypothecate more than 5% of the value of its total assets, and then only to secure borrowings made under this restriction. 3. Acquire more than 3% of the voting securities of any single other investment company or invest more than 10% of (the value of) the Fund's assets in the securities of other investment companies (5% in the case of each such other company). Additionally, investment company securities will only be purchased on the open market or from brokers or dealers receiving customary commissions. 4. Acquire real estate or real estate contracts, although a Fund may acquire obligations that are secured by real estate or securities issued by companies investing in real estate, such as real estate investment trusts. 5. Underwrite securities of other issuers except where the sale of restricted portfolio securities constitutes an underwriting under the federal securities laws. 6. Acquire securities for the purpose of influencing the management of, or exercising control over, the issuer. 7. Effect short sales of securities or purchase securities on margin, except in connection with investment in options and futures contracts. Each Fund may use short-term credits when necessary to clear transactions. 8. Lend money, except by purchasing debt obligations in which a Fund may invest consistent with its investment objective(s) 8 65 and policies or by purchasing securities subject to repurchase agreements. 9. Purchase or sell commodities (except in connection with investments in options and futures contracts) or invest in oil, gas or mineral exploration programs. 10. Make loans to other persons, except that a Fund may lend its portfolio securities to broker-dealers and other financial institutions in an amount up to 30% of the value of the Fund's total assets. MMF INVESTMENT RESTRICTIONS MMF may not: 1. Purchase any security which matures more than 13 months from the date of purchase. 2. Purchase or sell commodity contracts. 3. Invest in warrants, or write, purchase or sell puts, calls, straddles, spreads or combinations thereof. 4. Invest more than 25% of the value of its total assets in the securities of issuers primarily engaged in any one industry, except investments in obligations issued or guaranteed by the U.S. Government, its agencies, or instrumentalities. AAF, CCF, GSF, SIF, IEF, MIF, AND SCIF INVESTMENT RESTRICTIONS AAF, CCF, GSF, SIF, IEF, MIF, and SCIF may not: 1. Enter into a financial futures contract (by exercise of any option or otherwise) or acquire any options thereon, if, immediately thereafter, the total of the initial margin deposits required with respect to all open futures positions, at the time such positions were established, plus the sum of the premiums paid for all unexpired options on futures contracts would exceed 5% of the value of its total assets. 2. Invest more than 25% of the value of its total assets in the securities of issuers primarily engaged in any one industry. GIF INVESTMENT RESTRICTIONS GIF may not: 1. Invest 25% or more of its assets in securities of issuers in any one industry. GF AND STF INVESTMENT RESTRICTIONS GF and STF may not: 1. Borrow money except that the Funds may (i) borrow for non-leveraging, temporary or emergency purposes and (ii) engage in reverse repurchase agreements and make other investments or engage in other transactions, which may involve a borrowing, in a manner consistent with the Funds' investment objective and program, provided that the combination of (i) and (ii) shall not exceed 33 1/3% of the value of the Funds' total assets (including the amount borrowed) less liabilities (other than borrowings) or such other percentage permitted by law. Any borrowings which come to exceed this amount will be reduced in accordance with applicable law. The Funds may borrow from banks, other T. Rowe Price Funds or other persons to the extent permitted by law. 2. Purchase the securities of any issuer if, as a result, more than 25% of the value of the Funds' total assets would be invested in the securities of issuers having their principal business activities in the same industry; provided, however, the Growth Fund will normally concentrate 25% or more of its assets in the securities of the banking industry when the Growth Fund's position in issues maturing in one year or less equals 35% or more of the Growth Fund's total assets. 3. Make loans, although the Funds may (i) lend portfolio securities; provided that no such loan may be made if, as a result, the aggregate of such loans would exceed 33 1/3% of the value of the Funds' total assets; (ii) purchase money market securities and enter into repurchase agreements; and (iii) acquire publicly-distributed or privately-placed debt securities and purchase debt. 4. Purchase a security if, as a result, with respect to 75% of the Funds' total assets, more than 5% of the value of its total assets would be invested in the securities of 9 66 a single issuer or more than 10% of the outstanding voting securities of any issuer would be held by the Funds, except securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities. 5. Purchase or sell physical commodities; except that it may enter into futures contracts and options thereon. 6. Purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Funds from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business). 7. Issue senior securities except in compliance with the Investment Company Act of 1940. 8. Underwrite securities issued by other persons, except to the extent that the Funds may be deemed to be an underwriter within the meaning of the Securities Act of 1933 in connection with the purchase and sale of its portfolio securities in the ordinary course of pursuing its investment program. With respect to investment restriction (5), the Fund does not consider forward foreign currency contracts or hybrid investments to be commodities. For purposes of investment restriction (2), U.S., state or local governments, or related agencies or instrumentalities, are not considered an industry. Notwithstanding anything in the above fundamental and operating restrictions to the contrary, subject to any regulatory requirements, GF and STF may each invest all of its assets in a single investment company or a series thereof in connection with a "master-feeder" arrangement. Such an investment would be made where the Fund (a "Feeder"), and one or more other funds with the same investment objective and program as the Fund, sought to accomplish its investment objective and program by investing all of its assets in the shares of another investment company (the "Master"). The Master would, in turn, have the same investment objective and program as the Fund. The Funds would invest in this manner in an effort to achieve the economies of scale associated with having a Master fund make investments in portfolio companies on behalf of a number of Feeder funds. SAF INVESTMENT RESTRICTIONS SAF may not: 1. Enter into financial futures contracts (by exercise of any option or otherwise) or acquire any options thereon, if, immediately thereafter, the total of the initial margin deposits required with respect to all open futures positions at the time such positions were established plus the sum of the premiums paid for all unexpired options on futures contracts would exceed 5% of the value of its total assets. 2. Invest more than 25% of the value of its total assets in the securities of issuers primarily engaged in any one industry. IGBF INVESTMENT RESTRICTIONS IGBF may not: 1. With respect to 50% of its total assets, invest more than 5% of its total assets in securities of any one issuer or purchase more than 10% of the outstanding voting securities of any one issuer. With respect to the remaining 50% of its total assets, invest more than 25% of its total assets in the securities of any one issuer. This restriction does not apply to obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities. 2. Enter into a financial futures contract (by exercise of any option or otherwise) or acquire any options thereon, if, immediately thereafter, the total of the initial margin deposits required with respect to all open futures positions, at the time such positions were established, plus the sum of the premiums paid for all unexpired options on futures contracts would exceed 5% of the value of its total assets. 3. Invest more than 25% of the value of its total assets in the securities of issuers primarily engaged in any one industry. 10 67 INVESTMENT PRACTICES REPURCHASE AGREEMENTS Each Fund may hold commercial paper, certificates of deposits, and government obligations (including government guaranteed obligations) subject to repurchase agreements with certain well established domestic banks and certain broker-dealers, including primary government securities dealers, approved as creditworthy by the Board of Directors. The underlying security must be a high-quality domestic money market security (except for the International Equities Fund and International Government Bond Fund which utilize foreign money market securities) and the seller must be a well-established securities dealer or bank that is a member of the Federal Reserve System. For the Money Market Fund, the underlying security must be a U.S. Government security or a security rated in the highest rating category by the Requisite NRSROs (Nationally Recognized Statistical Rating Organization) and must be determined to present minimal credit risk. Repurchase agreements are generally for short periods, often less than a week. Repurchase agreements typically obligate a seller, at the time it sells securities to a Fund, to repurchase the securities at a specific future time and price. The price for which the Fund resells the securities is calculated to exceed the price the Fund initially paid for the same securities, thereby determining the yield during the Fund's holding period. This results in a fixed market rate of interest, agreed upon by that Fund and the seller, which is accrued as ordinary income. Most repurchase agreements mature within seven days although some may have a longer duration. The underlying securities constitute collateral for these repurchase agreements, which are considered loans under the 1940 Act. The Funds do not intend to sell the underlying securities subject to a repurchase agreement (except to the seller upon maturity of the agreement). During the term of the repurchase agreement, the Funds (i) retain the securities subject to the repurchase agreement as collateral securing the seller's obligation to repurchase the securities, (ii) monitor on a daily basis the market value of the securities subject to the repurchase agreement, and (iii) require the seller to deposit with the Company's custodian collateral equal to any amount by which the market value of the securities subject to the repurchase agreement falls below the resale amount provided under the repurchase agreement. In the event that a seller defaults on its obligation to repurchase the securities, the Funds must hold the securities until they mature or may sell them on the open market, either of which may result in a loss to a Fund if, and to the extent that, the values of the securities decline. Additionally, the Funds may incur disposition expenses when selling the securities. Bankruptcy proceedings by the seller may also limit or delay realization and liquidation of the collateral by a Fund and may result in a loss to that Fund. The Board of Directors of the Company will evaluate the creditworthiness of all banks and broker-dealers with which the Company proposes to enter into repurchase agreements. The Funds will not invest in repurchase agreements that do not mature within seven days if any such investment, together with any illiquid assets held by a Fund, exceeds 10% of the value of that Fund's total assets (15% in the case of Growth Fund, Growth & Income Fund and Science & Technology Fund). LENDING PORTFOLIO SECURITIES For purposes of realizing additional income, each Fund may make secured loans of its portfolio securities amounting to no more than 30% of the value of each Fund's total assets (33 1/3% in the case of Growth Fund and Science & Technology Fund). This policy is a fundamental policy of each of the Funds. Securities loans are made to broker-dealers and other financial institutions approved by State Street Bank and Trust Company ("State Street"), custodian to the Funds and pursuant to agreements requiring that the loans be continuously secured by collateral at least equal at all times to the loaned securities marked to market on a daily basis. The collateral received will consist of cash, U.S. government securities, letters of credit or such other collateral as permitted by interpretations or rules of the Securities and Exchange Commission ("SEC"). While the securities are on loan, the Funds will continue to receive the equivalent of the interest or dividends paid by the issuer on the securities, as well as interest on the investment of the collateral or a fee from the borrower. 11 68 Any loan of portfolio securities by any Fund will be callable at any time by the lending Fund upon notice of five business days. When voting or consent rights which accompany loaned securities pass to the borrower, the lending Fund will call the loan, in whole or in part as appropriate, to permit the exercise of such rights if the matters involved would have a material effect on that Fund's investment in the securities being loaned. If the borrower fails to maintain the requisite amount of collateral, the loan will automatically terminate, and the lending Fund will be permitted to use the collateral to replace the securities while holding the borrower liable for any excess of replacement cost over collateral. As with any extensions of credit, there are risks of delay in receiving additional collateral or in the recovery of the securities or, in some cases, even loss of rights in the collateral should the borrower of the securities fail financially. However, these loans of portfolio securities will be made only when State Street considers the borrowing broker-dealers or financial institutions to be creditworthy and of good standing and the interest earned from such loans to justify the attendant risks. On termination of the loan, the borrower will be required to return the securities to the lending Fund. Any gain or loss in the market price during the loan would inure to the lending Fund. The lending Fund may pay reasonable finders', administrative, and custodial fees in connection with a loan of its securities. FOREIGN SECURITIES A foreign security is a security issued by an entity domiciled or incorporated outside of the United States. Included within the definition of foreign securities are American Depository Receipts (ADRs). ADRs are certificates issued by a United States bank or trust company and represent the right to receive securities of a foreign issuer deposited in a domestic bank or foreign branch of a United States bank and traded on a United States exchange or in an over-the-counter market. Generally, ADRs are in registered form. Investment in ADRs has certain advantages over direct investment in the underlying foreign securities since: (i) ADRs are U.S. dollar-denominated investments that are easily transferable and for which market quotations are readily available, and (ii) issuers whose securities are represented by ADRs are generally subject to auditing, accounting and financial reporting standards similar to those applied to domestic issuers. Each Fund may also, in accordance with its specific investment objective(s) and investment program, policies and restrictions purchase U.S. dollar-denominated money market securities of foreign issuers. Such money market securities may be registered domestically and traded on domestic exchanges or in the over-the-counter market (e.g., Yankee securities) or may be (1) registered abroad and traded exclusively in foreign markets or (2) registered domestically and issued in foreign markets (e.g., Eurodollar securities). In addition, all the Funds, except the Government Securities Fund and the Money Market Fund, may invest in non-U.S. dollar-denominated foreign securities, in accordance with their specific investment objective(s), investment programs, policies, and restrictions. Investing in foreign securities may involve advantages and disadvantages not present in domestic investments. There may be less publicly available information about securities not registered domestically, or their issuers, than is available about domestic issuers or their domestically registered securities. Stock markets outside the U.S. may not be as developed as domestic markets, and there may also be less government supervision of foreign exchanges and brokers. Foreign securities may be less liquid or more volatile than U.S. securities. Trade settlements may be slower and could possibly be subject to failure. In addition, brokerage commissions and custodial costs with respect to foreign securities may be higher than those for domestic investments. Accounting, auditing, financial reporting and disclosure standards for foreign issuers may be different than those applicable to domestic issuers. Non-U.S. dollar-denominated foreign securities may be affected favorably or unfavorably by changes in currency exchange rates and exchange control regulations (including currency blockage) and a Fund may incur costs in connection with conversions between various currencies. Foreign securities may also involve risks due to changes in the political or economic conditions of such foreign countries, the possibility of expropriation of assets or nationalization, and possible difficulty in obtaining and enforcing judgments against foreign entities. 12 69 FOREIGN CURRENCY EXCHANGE TRANSACTIONS Foreign currency transactions used by the Funds may be either: (i) on the spot (i.e., cash) basis at the spot rate prevailing in the foreign exchange market, or (ii) conducted through the use of forward foreign currency exchange contracts. A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date. In general, forward foreign currency exchange contracts are not guaranteed by a third party and, accordingly, each party to a forward foreign currency exchange contract is dependent upon the creditworthiness and good faith of the other party. A Fund will enter into forward foreign currency exchange contracts only under two circumstances. First, a Fund may enter into a forward foreign currency exchange contract to purchase an amount of foreign currency to protect itself against a possible loss that might occur between trade and settlement dates for a particular security, resulting from a decline in the U.S. dollar against the foreign currency in which such security is denominated. This practice may limit the potential gains that might result from a positive change in such currency relationships. Second, when VALIC or a Sub-adviser believes that the currency of a particular foreign country may suffer or enjoy a substantial movement against the U.S. dollar, a Fund may enter into a forward foreign currency exchange contract to purchase or sell an amount of foreign currency approximating the value of some or all of that Fund's portfolio securities denominated in such foreign currency. The forecasting of short-term currency market movements is extremely difficult and it is uncertain whether such short-term hedging strategies will be successful. WHEN-ISSUED SECURITIES Each of the Funds except the Money Market Fund may purchase securities on a when-issued or delayed delivery basis. When such transactions are negotiated, the price of such securities is fixed at the time of commitment, but delivery and payment for the securities may take place a month or more after the date of the commitment to purchase. The securities so purchased are subject to market fluctuation, and no interest accrues to the purchaser during this period. Forward commitments involve a risk of loss if the value of the security to be purchased declines prior to the settlement date. VALIC does not believe that a Fund's net asset value or income will be adversely affected by the purchase of securities on a when-issued basis. DEBT SECURITIES Debt securities are considered high-quality if they are rated at least Aa by Moody's or its equivalent by any other NRSRO or, if unrated, are determined to be of equivalent investment quality. High-quality debt securities are considered to have a very strong capacity to pay principal and interest. Debt securities are considered investment grade if they are rated, for example, at least Baa by Moody's or its equivalent by any other NRSRO or, if not rated, are determined to be of equivalent investment quality. Investment grade debt securities are regarded as having an adequate capacity to pay principal and interest. Lower-medium and lower-quality securities rated, for example, Ba and B by Moody's or its equivalent by any other NRSRO are regarded on balance as high risk and predominantly speculative with respect to the issuer's continuing ability to meet principal and interest payments. See the Section regarding "Description of Corporate Bond Ratings" for a description of each rating category in this Statement of Additional Information for a more complete description of lower-medium and lower-quality debt securities and their risks. The maturity of debt securities may be considered long (ten plus years), intermediate (one to ten years), or short-term (thirteen months or less). In general, the principal values of longer-term securities fluctuate more widely in response to changes in interest rates than those of shorter-term securities, providing greater opportunity for capital gain or risk of capital loss. A decline in interest rates usually produces an increase in the value of debt securities, while an increase in interest rates generally reduces their value. WARRANTS Each Fund, except the Money Market Fund, Government Securities Fund, Capital Conservation Fund, International Government Bond Fund, Science & Technology Fund and the Growth Fund may invest in warrants limited to no more than 5% of the value (10% in the case of the Science 13 70 & Technology Fund and the Growth Fund) of the total assets of each Fund. Warrants are securities that give the Funds the right to purchase equity securities from the issuer at a specific price (the "strike price") for a limited period of time. Warrants do not entitle a holder to dividends or voting rights with respect to the underlying securities and do not represent any rights in the assets of the issuing company. In addition, the value of warrants does not, necessarily, in all cases change to the same extent as the value of the underlying securities to which they relate. Warrants cease to have value if they are not exercised prior to the expiration date. These factors can make warrants more speculative than other types of investments. EURODOLLAR OBLIGATIONS Each Fund in accordance with its investment objective(s), policies, and investment program may invest in Eurodollar obligations, including Eurodollar bonds and Eurodollar certificates of deposit. A Eurodollar obligation is a security denominated in U.S. dollars and originated principally in Europe, giving rise to the term Eurodollar. Such securities are not registered with the SEC and generally may only be sold to U.S. investors after the initial offering and cooling-off periods. The market for Eurodollar securities is dominated by foreign-based investors and the primary trading market for these securities is London. Eurodollar obligations, including Eurodollar bonds and Eurodollar certificates of deposit, are principally obligations of foreign branches of U.S. banks. These instruments represent the loan of funds actually on deposit in the U.S. The Company believes that the U.S. bank would be liable in the event that its foreign branch failed to pay on its U.S. dollar denominated obligations. Nevertheless, the assets supporting the liability could be expropriated or otherwise restricted if located outside the U.S. Exchange controls, taxes, or political and economic developments also could affect liquidity or repayment. Due to possibly conflicting laws or regulations, the foreign branch of the U.S. bank could maintain and prevail that the liability is solely its own, thus exposing a Fund to a possible loss. Such U.S. dollar denominated obligations of foreign branches of Federal Deposit Insurance Corporation ("FDIC") member U.S. banks are not covered by the usual $100,000 of FDIC insurance if they are payable only at an office of such a bank located outside the U.S., Puerto Rico, Guam, American Samoa, and the Virgin Islands. Moreover, there may be less publicly available information about foreign issuers whose securities are not registered with the SEC and such foreign issuers may not be subject to the accounting, auditing, and financial reporting standards applicable to issuers registered domestically. In addition, foreign issuers, stock exchanges, and brokers generally are subject to less government regulation. There are, however, no risks of currency fluctuation since the obligations are U.S. dollar denominated. ASSET-BACKED SECURITIES Each of the Funds may invest in asset-backed securities (unrelated to first mortgage loans) that represent fractional interests in pools of retail installment loans, both secured (such as certificates for automobile receivables) and unsecured, and leases, or revolving credit receivables both secured and unsecured (such as credit card receivable securities). These assets are generally held by a trust and payments of principal and interest, or interest only are passed through monthly or quarterly to certificate holders and may be guaranteed up to certain amounts by letters of credit issued by a financial institution affiliated or unaffiliated with the trustee or originator of the trust. Underlying automobile sales contracts, leases or credit card receivables are subject to prepayment, which may reduce the overall return to certificate holders. Nevertheless, principal repayment rates tend not to vary much with interest rates and the short-term nature of the underlying loans, leases, or receivables tends to dampen the impact of any change in the prepayment level. Certificate holders may also experience delays in payment on the certificates if the full amounts due on underlying loans, leases or receivables are not realized by the trust because of unanticipated legal or administrative costs of enforcing the contracts or because of depreciation or damage to the collateral (usually automobiles) securing certain contracts, or other factors. If consistent with its investment objective(s) and policies, a Fund 14 71 may invest in other asset-backed securities that may be developed in the future. MORTGAGE-BACKED SECURITIES Certain of the Funds may invest in Government National Mortgage Association ("GNMA") Certificates. GNMA Certificates are securities representing part ownership of a pool of mortgage loans. These loans, issued by lenders such as mortgage bankers, commercial banks, and savings and loan associations, are either insured by the Federal Housing Administration or guaranteed by the Veterans Administration. Each pool of mortgage loans is assembled and, after being approved by GNMA, is offered to investors through securities dealers in the form of certificates representing participations in the pool. Once approved by GNMA, the timely payment of interest and principal of each mortgage is guaranteed by GNMA and backed by the full faith and credit of the U.S. Government. GNMA Certificates differ from bonds in that principal is paid monthly by the borrower over the term of the loan rather than returned in a lump sum at maturity. GNMA Certificates are called "pass-through" certificates because both principal and interest payments (including prepayments) are passed through to the holder of the certificate. The average life of GNMA Certificates varies with the maturities of the underlying mortgage instruments. Upon receipt, principal payments may be used by the Funds to purchase additional GNMA Certificates or other U.S. Government Securities. In addition, prepayments of the mortgages included in the underlying mortgage pool will usually result in the return of the greatest part of principal invested well before the maturity of the mortgages in the pool. The volume of such prepayments of principal in a given pool of mortgages will influence the actual yield of the GNMA Certificate, and principal returned to the Funds may be reinvested in instruments whose yield may be higher or lower than that which might have been obtained had such prepayments not occurred. In quoting yields of GNMA Certificates, the standard practice is to assume that the certificates will have a 12 year life. As previously noted, however, the actual life of an individual pool may differ widely and actual yield may differ significantly from estimated yields based on the 12 year life assumption. Certain Funds may also invest in collateralized mortgage obligations ("CMOs") issued by governmental or non-governmental entities, such as banks and other mortgage lenders. Non-governmental securities may offer a higher yield but may be subject to greater price fluctuation and risk than governmental securities. CMOs are obligations fully collateralized directly or indirectly by a pool of mortgages on which payments of principal and interest are passed through to the holders of the CMOs on the same schedule as they are received, although not necessarily on a pro rata basis. In reliance on an SEC interpretation, the Funds' investments in certain qualifying CMOs are not subject to legal limitations on acquiring interests in other investment companies. In order to be able to rely on the SEC's interpretation, the CMOs must be unmanaged, fixed-asset issuers that (i) invest primarily in mortgage-backed securities, (ii) do not issue redeemable securities, (iii) operate under general exemptive orders exempting them from all provisions of the Investment Company Act, and (iv) are not registered or regulated under the Investment Company Act as investment companies. To the extent that a Fund selects CMOs that do not meet the above requirements, the Fund may not invest more than 10% of its assets in all such entities and may not acquire more than 3% of the voting securities of any single such entity. LOAN PARTICIPATIONS Loan Participations are debt obligations of corporations and are usually purchased from major money center banks, selected regional banks, and major foreign banks with branches in the U.S. which are regulated by the Federal Reserve System or appropriate state regulatory authorities. VALIC and the Sub-advisers believe that the credit standards imposed by such banks are comparable to the standards such banks use in connection with loans originated by them and in which they intend to maintain a full interest. The financial institutions offering loan participations do not guarantee principal or interest on the loan participations which they offer. VALIC and the Sub-advisers will not purchase such securities for the Funds unless they believe that the collateral underlying the corporate loans is adequate and the corporation will be able, in a timely fashion, to pay scheduled interest and principal amounts. 15 72 ADJUSTABLE RATE SECURITIES Each of the Funds may invest in adjustable rate money market securities. Adjustable rate securities (i.e., variable rate and floating rate instruments) are securities that have interest rates that are adjusted periodically, according to a set formula. The maturity of some adjustable rate securities may be shortened under certain special conditions described more fully below. Variable rate instruments are obligations (usually certificates of deposit) that provide for the adjustment of their interest rates on predetermined dates or whenever a specific interest rate changes. A variable rate instrument whose principal amount is scheduled to be paid in 13 months or less is considered to have a maturity equal to the period remaining until the next readjustment of the interest rate. Many variable rate instruments are subject to demand features which entitle the purchaser to resell such securities to the issuer or another designated party, either (1) at any time upon notice of usually 30 days or less, or (2) at specified intervals, not exceeding 13 months, and upon 30 days notice. A variable rate instrument subject to a demand feature is considered to have a maturity equal to the longer of the period remaining until the next readjustment of the interest rate or the period remaining until the principal amount can be recovered through demand. Floating rate instruments (generally corporate notes, bank notes, or Eurodollar certificates of deposit) have interest rate reset provisions similar to those for variable rate instruments and may be subject to demand features like those for variable rate instruments. The maturity of a floating rate instrument is considered to be the period remaining until the principal amount can be recovered through demand. ILLIQUID SECURITIES The Funds will not invest more than 10% (15% in the case of Growth Fund, Growth & Income Fund and Science & Technology Fund) of the value of their assets in securities or other investments that are illiquid or not readily marketable (including repurchase agreements with maturities exceeding seven days). Securities received as a result of a corporate reorganization or similar transaction affecting readily-marketable securities already held in the portfolio of a Fund will not be considered securities or other investments that are not readily marketable. However, the Funds will attempt, in an orderly fashion, to dispose of any securities received under these circumstances, to the extent that such securities are considered not readily marketable, and together with other illiquid securities, exceed 10% of the value of a Fund's net assets. RULE 144A SECURITIES Each Fund, other than the Money Market Fund, may purchase securities which, while privately placed, are eligible for purchase and sale pursuant to Rule 144A under the Securities Act of 1933 (the "1933 Act"). This Rule permits certain qualified institutional buyers, such as the Funds, to trade in privately placed securities even though such securities are not registered under the 1933 Act. The Company, under the supervision of the Board of Directors, will consider whether securities purchased under Rule 144A are illiquid and thus subject to the Funds' restriction on investing more than 10% (15% in the case of the Growth Fund, Growth & Income Fund and Science & Technology Fund) of its assets in illiquid securities. Determination of whether a Rule 144A security is liquid or not is a question of fact. In making this determination the Company will consider the trading markets for the specific security taking into account the unregistered nature of a Rule 144A security. In addition the Company could consider (i) frequency of trades and quotes, (ii) number of dealers and potential purchasers, (iii) dealer undertakings to make a market, and (iv) nature of the security and market place trades (for example, the time needed to dispose of the security, the method of soliciting offers and the mechanics of transfer). The liquidity of Rule 144A securities will also be monitored by the Company and, if, as a result of changed conditions, it is determined that a Rule 144A security is no longer liquid, the Funds' holding of illiquid securities will be reviewed to determine what, if any, action is required to assume that the Funds do not invest more than 10% of their assets in illiquid securities (15% in the case of the Growth Fund, Growth & Income Fund and Science & Technology Fund). Investing in Rule 144A securities could have the effect of increasing the amount of the Funds' investments in illiquid securities if qualified institutional buyers are unwilling to purchase such securities. 16 73 OPTIONS ON SECURITIES AND SECURITIES INDICES Each Fund, other than the Money Market Fund, may write covered call and put options on securities and securities indices. As a matter of operating policy, the Growth & Income Fund will only write covered call options on securities. The International Equities Fund and the International Government Bond Fund may also write covered call and put options on foreign currencies that correlate with the Fund's portfolio of foreign securities. A call option is a contract that gives to the holder the right to buy a specified amount of the underlying security or currency at a fixed or determinable price (called the exercise or "strike" price) upon exercise of the option. A put option is a contract that gives the holder the right to sell a specified amount of the underlying security or currency at a fixed or determinable price upon exercise of the option. To "cover" a call option written, a Fund may, for example, identify and have available for sale the specific portfolio security, group of securities, or foreign currency to which the option relates. To cover a put option written, a Fund may, for example, establish a segregated asset account with its custodian containing cash or liquid assets that, when added to amounts deposited with its broker or futures commission merchant ("FCM") as margin, equals the market value of the instruments underlying the put option written. Each of these Funds may write options on securities and securities indices and the International Equities Fund and the International Government Bond Fund may write options on currencies for the purpose of increasing the Funds' return on such securities or its entire portfolio of securities or to protect the value of the entire portfolio. Such investment strategies will not be used for speculation. If a Fund writes an option which expires unexercised or is closed out by the Fund at a profit, it will retain the premium received for the option, which will increase its gross income. If the price of the underlying security or currency moves adversely to the Fund's position, the option may be exercised and the Fund, as the writer of the option, will be required to sell or purchase the underlying security or currency at a disadvantageous price, which may only be partially offset by the amount of premium received. Options on stock indices are similar to options on stock, except that all settlements are made in cash rather than by delivery of stock, and gains or losses depend on price movements in the stock market generally (or in a particular industry or segment of the market represented by the index) rather than price movements of individual stocks. When a Fund writes an option on a securities index, and the underlying index moves adversely to the Fund's position, the option may be exercised. Upon such exercise, the Fund, as the writer of the option, will be required to pay in cash an amount equal to the difference between the exercise settlement value of the underlying index and the exercise price of the option, multiplied by a specified index "multiplier." Call or put options on a stock index may be written at an exercise or "strike" price which is either below or above the current value of the index. If the exercise price at the time of writing the option is below the current value of the index for a call option or above the current value of the index for a put option the option is considered to be "in the money." In such a case, the Fund will cover such options written by segregating with its custodian or pledging to its commodity broker as collateral cash, U.S. Government or other high-grade, short-term debt obligations equal in value to the amount by which the option written is in the money, times the multiplier, times the number of contracts. Stock indices for which options are currently traded include the S&P 500 Index, Value Line Index, National OTC Index, Major Market Index, Computer Technology Index, Oil Index, NYSE Options Index, Technology Index, Gold/Silver Index, Institutional Index and NYSE Beta Index. The Funds may also use options on such other indices as may now or in the future be available. Each Fund, except the Money Market Fund, may also purchase put or call options on securities and securities indices in order to (i) hedge against anticipated changes in interest rates or stock prices that may adversely affect the prices of securities that the Fund intends to purchase at a later date, (ii) hedge its investments against an anticipated decline in value, or (iii) attempt to reduce the risk of missing a market or industry segment advance. As a matter of operating policy, the Growth & Income Fund will only purchase call options on securities to close out open positions for covered call options it has written. The International Equities Fund and the International 17 74 Government Bond Fund also may purchase put options on foreign currencies that correlate with the Fund's portfolio securities in order to minimize or hedge against anticipated declines in the exchange rate of the currencies in which the Fund's securities are denominated and may purchase call options on foreign currencies that correlate with its portfolio securities to take advantage of anticipated increases in exchange rates. In the event that the anticipated changes in interest rates, stock prices, or exchange rates occur, the Fund may be able to offset the resulting adverse effect on the Fund, in whole or in part, through the options purchased. The premium paid for a put or call option plus any transaction costs will reduce the benefit, if any, realized by the Fund upon exercise or liquidation of the option, and, unless the price of the underlying security, securities index, or currency changes sufficiently, the option may expire without value to the Fund. To close option positions purchased by the Funds, the Funds may sell put or call options identical to options previously purchased, which could result in a net gain or loss depending on whether the amount received on the sale is more or less than the premium and other transaction costs paid on the put or call option purchased. Options used by the Funds may be traded on the national securities exchanges or in the over-the-counter market. Only the Capital Conservation Fund, the Government Securities Fund, the International Equities Fund and the International Government Bond Fund may use over-the-counter options. Options traded in the over-the-counter market may not be as actively traded as those on an exchange. Accordingly, it may be more difficult to value such options. In addition, it may be more difficult to enter into closing transactions with respect to options traded over-the-counter. In this regard, the Funds may enter into contracts with the primary dealers with whom they write over-the-counter options. The contracts will provide that each Fund has the absolute right to repurchase an option it writes at any time at a repurchase price which represents the fair market value of such option, as determined in good faith through negotiations between the parties, but which in no event will exceed a price determined pursuant to a formula contained in the contract. Although the specific details of the formula may vary between contracts with different primary dealers, the formula will generally be based on a multiple of the premium received by each Fund for writing the option, plus the amount, if any, of the option's intrinsic value (i.e., the amount the option is "in-the-money"). The formula will also include a factor to account for the difference between the price of the security and the strike price of the option if the option is written "out-of-the-money." Although the specific details of the formula may vary with different primary dealers, each contract will provide a formula to determine the maximum price at which each Fund can repurchase the option at any time. The Funds have established standards of creditworthiness for these primary dealers. WRITING COVERED CALL AND PUT OPTIONS AND PURCHASING CALL AND PUT OPTIONS All of the Funds, except the Money Market Fund, may write exchange-traded covered call and put options on or relating to specific securities in order to earn additional income or, in the case of a call written, to minimize or hedge against anticipated declines in the value of the Fund's securities. As a matter of operating policy, the Growth Fund and the Science & Technology Fund will not write a covered option if, as a result, the aggregate market value of all portfolio securities or currencies covering put or call options exceeds 25% of the market value of that Fund's net assets. As a matter of operating policy, the Growth & Income Fund will only write covered call options on securities. The International Equities Fund and the International Government Bond Fund may also write covered call and put options on foreign currencies that correlate with its portfolio securities in order to earn additional income or in the case of call options written to minimize or hedge against anticipated declines in the exchange rate of the currencies in which the Fund's securities are denominated. To "cover" an option means, for example, to identify and make available for sale the specific portfolio security or foreign currency to which the option relates. Through the writing of a covered call option a Fund receives premium income but obligates itself to sell to the purchaser of such an option the particular security or foreign currency underlying the option at a specified price at any time prior to the expiration of the option period, regardless of the market value of the security or the exchange rate for the 18 75 foreign currency during this period. Through the writing of a covered put option a Fund receives premium income but obligates itself to purchase a particular security or foreign currency underlying the option at a specified price at any time prior to the expiration of the option period, regardless of market value or exchange rate during the option period. Certain Funds, in accordance with their investment objective(s) and investment programs, may also write exchange-traded covered call and put options on stock indices and may purchase call and put options on stock indices that correlate with the Fund's portfolio securities. These Funds may engage in such transactions for the same purposes as they may engage in such transactions with respect to individual portfolio securities or foreign currencies, that is, to generate additional income or as a hedging technique to minimize anticipated declines in the value of the Fund's portfolio securities or the exchange rate of the securities in which the Fund invested. In economic effect, a stock index call or put option is similar to an option on a particular security, except that the value of the option depends on the weighted value of the group of securities comprising the index, rather than a particular security, and settlements are made in cash rather than by delivery of a particular security. Each Fund, other than the Money Market Fund, may also purchase exchange-traded call and put options with respect to securities and stock indices that correlate with that Fund's particular portfolio securities. As a matter of operating policy, the Growth & Income Fund will only purchase call options on securities to close out open positions for covered call options written by it. The International Equities Fund and the International Government Bond Fund may also purchase call and put options on foreign currencies that correlate with the currencies in which the Fund's securities are denominated. A Fund may purchase put options for defensive purposes in order to protect against an anticipated decline in the value of its portfolio securities or currencies. As the holder of a put option with respect to individual securities or currencies, the Fund has the right to sell the securities or currencies underlying the options and to receive a cash payment at the exercise price at any time during the option period. As the holder of a put option on an index, a Fund has the right to receive, upon exercise of the option, a cash payment equal to a multiple of any excess of the strike price specified by the option over the value of the index. A Fund may purchase call options on individual securities, currencies or stock indices in order to take advantage of anticipated increases in the price of those securities or currencies by purchasing the right to acquire the securities or currencies underlying the option or, with respect to options on indices, to receive income equal to the value of such index over the strike price. As the holder of a call option with respect to individual securities or currencies, a Fund obtains the right to purchase the underlying securities or currencies at the exercise price at any time during the option period. As the holder of a call option on a stock index, a Fund obtains the right to receive, upon exercise of the option, a cash payment equal to the multiple of any excess of the value of the index on the exercise date over the strike price specified in the option. Unlisted options may be used by the Capital Conservation Fund, the Government Securities Fund, the International Equities Fund and the International Government Bond Fund. Such options are not traded on an exchange and may not be as actively traded as listed securities, making the valuation of these securities more difficult. In addition, an unlisted option entails a risk not found in connection with listed options -- that the party on the other side of the option transaction will default. This may make it impossible to close out an unlisted option position in some cases, and profits may be lost thereby. Such unlisted, over-the-counter options, unless otherwise indicated, will be considered illiquid securities. The Funds will engage in such transactions only with firms of sufficient credit to minimize these risks. In instances in which a Fund has entered into agreements with primary dealers with respect to the unlisted, over-the-counter options it has written, and such agreements would enable the Fund to have an absolute right to repurchase, at a pre-established formula price, the over-the-counter options written by it, the Fund will treat as illiquid only the amount equal to the formula price described above less the amount by which the option is "in-the-money." 19 76 Although these investment practices will be used to generate additional income and to attempt to reduce the effect of any adverse price movement in the securities or currencies subject to the option, they do involve certain risks that are different in some respects from investment risks associated with similar funds which do not engage in such activities. These risks include the following: writing covered call options -- the inability to effect closing transactions at favorable prices and the inability to participate in the appreciation of the underlying securities or currencies above the exercise price; writing covered put options -- the inability to effect closing transactions at favorable prices and the obligation to purchase the specified securities or currencies or to make a cash settlement on the stock index at prices which may not reflect current market values or exchange rates; and purchasing put and call options -- possible loss of the entire premium paid. In addition, the effectiveness of hedging through the purchase or sale (writing) of stock index options will depend upon the extent to which price movements in the portion of a Fund's portfolio being hedged correlate with price movements in the selected stock index. Perfect correlation may not be possible because the securities held or to be acquired by a Fund may not exactly match the composition of the stock index on which options are purchased or written. If the forecasts of VALIC regarding movements in securities prices, currencies or interest rates are incorrect, a Fund's investment results may have been better without the hedge. FINANCIAL FUTURES CONTRACTS Each Fund, except the Money Market Fund, in accordance with its investment objective(s), investment program, policies, and restrictions may purchase and sell exchange-traded financial futures contracts as a hedge to protect against anticipated changes in prevailing interest rates, overall stock prices or currency rates, or to efficiently and in a less costly manner implement either increases or decreases in exposure to the equity or bond markets. The Funds may also write covered call options and purchase put and call options on financial futures contracts for the same purposes or to earn additional income. The Growth Fund, the Growth & Income Fund and the Science & Technology Fund may also write covered put options on stock index futures contracts. Only the International Equities Fund and the International Government Bond Fund may utilize currency futures contracts and both listed and unlisted financial futures contracts and options thereon. Financial futures contracts consist of interest rate futures contracts, stock index futures contracts, and currency futures contracts. An interest rate futures contract is a contract to buy or sell specified debt securities at a future time for a fixed price. A stock index futures contract is similar in economic effect, except that rather than being based on specific securities, it is based on a specified index of stocks and not the stocks themselves. A currency futures contract is a contract to buy or sell a specific foreign currency at a future time for a fixed price. An interest rate futures contract binds the seller to deliver to the purchaser on a specified future date a specified quantity of one of several listed financial instruments, against payment of a settlement price specified in the contract. A public market currently exists for futures contracts on GNMA Certificates, long-term U.S. Treasury Bonds, three-month U.S. Treasury Bills, short-term U.S. Treasury Notes, and bank certificates of deposit. Stock index futures contracts bind purchaser and seller to deliver, at a future date specified in the contract, a cash amount equal to a multiple of the difference between the value of a specified stock index on that date and the settlement price specified by the contract. That is, the seller of the futures contract must pay and the purchaser would receive a multiple of any excess of the value of the index over the settlement price, and conversely, the purchaser must pay and the seller would receive a multiple of any excess of the settlement price over the value of the index. A public market currently exists for stock index futures contracts based on the S&P 500 Index, the New York Stock Exchange Composite Index, the Value Line Stock Index, and the Major Market Index. It is expected that financial instruments related to broad-based indices, in addition to those for which futures contracts are currently traded, will in the future be the subject of publicly-traded futures contracts, and the Funds may use any of these, which are appropriate, in its hedging strategies. 20 77 A financial futures contract is an agreement to buy or sell a security (or deliver a final cash settlement price, in the case of a contract relating to an index or otherwise not calling for physical delivery of a specified security) for a set price in the future. Exchange-traded futures contracts are designated by boards of trade which have been designated "contracts markets" by the Commodity Futures Trading Commission ("CFTC"). Positions taken in the futures markets are not normally held until delivery or cash settlement is required, but instead are liquidated through offsetting transactions which may result in a gain or a loss. While futures positions taken by a Fund will usually be liquidated in this manner, the Fund may instead make or take delivery of underlying securities whenever it appears economically advantageous to the Fund to do so. A clearing organization associated with the relevant exchange assumes responsibility for closing out transactions and guarantees that, as between the clearing members of an exchange, the sale and purchase obligations will be performed with regard to all positions that remain open at the termination of the contract. Unlisted financial futures contracts, which may be purchased or sold only by the International Equities Fund and the International Government Bond Fund, like unlisted options, are not traded on an exchange and, generally, are not as actively traded as listed futures contracts or listed securities. Such financial futures contracts generally do not have the following elements: standardized contract terms, margin requirements relating to price movements, clearing organizations that guarantee counter-party performance, open and competitive trading in centralized markets, and public price dissemination. These elements in listed instruments serve to facilitate their trading and accurate valuation. As a result, the accurate valuation of unlisted financial futures contracts may be difficult. In addition, it may be difficult or even impossible, in some cases, to close out an unlisted financial futures contract, which may, in turn, result in significant losses to the Fund. Such unlisted financial futures contracts will be considered by the Fund to be illiquid securities and together with other illiquid securities will be limited to no more than 10% (15% in the case of the Growth Fund, the Growth & Income Fund and the Science & Technology Fund) of the value of such Fund's total assets. In making such determination, the value of unlisted financial futures contracts will be based upon the "face amount" of such contracts. The International Equities Fund and the International Government Bond Fund will engage in such transactions only with securities firms having sufficient credit or other resources to minimize certain of these risks. When financial futures contracts are entered into by a Fund, either as the purchaser or the seller of such contracts, the Fund is required to deposit with its custodian in a segregated account in the name of the FCM an initial margin of cash or U.S. Treasury bills equalling as much as 5% to 10% or more of the contract settlement price. The nature of initial margin requirements in futures transactions differs from traditional margin payments made in securities transactions in that initial margins for financial futures contracts do not involve the borrowing of funds by the customer to finance the transaction. Instead, a customer's initial margin on a financial futures contract represents a good faith deposit securing the customer's contractual obligations under the financial futures contract. The initial margin deposit is returned, assuming these obligations have been met, when the financial futures contract is terminated. In addition, subsequent payments to and from the FCM, called "variation margin," are made on a daily basis as the price of the underlying security, stock index, or currency fluctuates, reflecting the change in value in the long (purchase) or short (sale) positions in the financial futures contract, a process known as "marking to market." The Fund, as an internal operating policy may not hold financial futures contracts in an amount greater than 33% of the Fund's net assets. A Fund may not adhere to this internal operating policy in circumstances where the Fund is required to invest a large cash infusion. In this circumstance the Fund's total invested position, including the security value of the financial futures contracts may not exceed 100% of the Fund's net assets. Financial futures contracts generally are not entered into to acquire the underlying asset and generally are not held to term. Prior to the contract settlement date, the Funds will normally close all futures positions by entering into an offsetting transaction which operates to cancel 21 78 the position held, and which usually results in a profit or loss. OPTIONS ON FINANCIAL FUTURES CONTRACTS For bona fide hedging purposes, each Fund, except the Money Market Fund, may also purchase call and put options on financial futures contracts and write call options on financial futures contracts of the type which the particular Fund is authorized to enter into. Except for options on currency futures contracts used by the International Equities Fund and the International Government Bond Fund, options on financial future contracts used by the Funds are traded on exchanges that are licensed and regulated by the CFTC. A call option on a financial futures contract gives the purchaser the right in return for the premium paid, to purchase a financial futures contract (assume a "long" position) at a specified exercise price at any time before the option expires. A put option gives the purchaser the right, in return for the premium paid, to sell a financial futures contract (assume a "short" position), for a specified exercise price, at any time before the option expires. Unlike entering into financial futures contracts, purchasing options on financial futures contracts allows a Fund to decline to exercise the option, thereby avoiding any loss beyond foregoing the purchase price (or "premium") paid for the options. Therefore, the purchase of options on financial futures contracts may be a preferable hedging strategy when a Fund desires maximum flexibility. Whether, in order to achieve a particular objective, a Fund enters into a financial futures contract, on the one hand, or an option contract, on the other, will depend on all the circumstances, including the relative costs, liquidity, availability and capital requirements of such financial futures and options contracts. Also, the Funds will consider the relative risks involved, which may be quite different. These factors, among others, will be considered in light of market conditions and the particular objective to be achieved. CERTAIN ADDITIONAL RISKS OF OPTIONS AND FINANCIAL FUTURES CONTRACTS In addition to the risks described in the Company's Prospectus, the use of options and financial futures contracts may entail the following risks. First, although such instruments when used by the Funds are intended to correlate with the Funds' portfolio securities or currencies, in many cases the options or financial futures contracts used may be based on securities, currencies, or stock indices the components of which are not identical to the portfolio securities owned or intended to be acquired by the Funds. Second, due to supply and demand imbalances and other market factors, the price movements of financial futures contracts, options thereon, currency options, and stock index options may not necessarily correspond exactly to the price movements of the securities, currencies, or stock indices on which such instruments are based. Accordingly, there is a risk that a Fund's transactions in those instruments will not in fact offset the impact on the Fund of adverse market developments in the manner or to the extent contemplated or that such transactions will result in losses to the Fund which are not offset by gains with respect to corresponding portfolio securities owned or to be purchased by that Fund. To some extent, these risks can be minimized by careful management of hedging activities. For example, where price movements in a financial futures or option contract are expected to be less volatile than price movements in the related portfolio securities owned or intended to be acquired by a Fund, it may, in order to compensate for this difference, use an amount of financial futures or option contracts which is greater than the amount of such portfolio securities. Similarly, where the price movement of a financial futures or option contract is anticipated to be more volatile, a Fund may use an amount of such contracts which is smaller than the amount of portfolio securities to which such contracts relate. The risk that the hedging technique used will not actually or entirely offset an adverse change in a Fund's portfolio securities is particularly relevant to financial futures contracts and options written on stock indices and currencies. A Fund, in entering into a futures purchase contract, potentially could lose any or all of the contract's settlement price. In entering into a futures sale contract, a Fund could potentially lose a sum equal to the excess of the contract's value (marked to market daily) over the contract's settlement price. In writing options on stock indices or currencies a Fund could potentially lose a sum equal to the excess of the value of the index or currency 22 79 (marked to market daily) over the exercise price. In addition, because financial futures contracts require delivery at a future date of either a specified security or currency, or an amount of cash equal to a multiple of the difference between the value of a specified stock index on that date and the settlement price, an algebraic relationship exists between any price movement in the underlying security or currency or index and the potential cost of settlement to a Fund. A small increase or decrease in the value of the underlying security or currency or stock index can, therefore, result in a much greater increase or decrease in the cost to the Fund. Stock index call options written also pose another risk as hedging tools. Because exercises of stock index options are settled in cash, there is an inherent timing risk that the value of a Fund's portfolio securities "covering" a stock index call option written by it may decline during the time between exercise of the option by the option holder and notice to the Fund of such exercise (usually one day or more) thereby requiring the Fund to use additional assets to settle the transaction. This risk is not present in the case of covered call options on individual securities, which are settled by delivery of the actual securities. There are also special risks in using currency options including the following: (i) settlement of such options must occur in the country issuing the currency in conformity with foreign regulations for such delivery, including the possible imposition of additional costs and taxes, (ii) no systematic reporting of "last sale" information for foreign currencies, and (iii) the need to use "odd lot" transactions for underlying currencies at prices less favorable than those for "round lot" transactions. Although the Funds intend to establish positions in these instruments only when there appears to be an active market, there is no assurance that a liquid market for such instruments will exist when a Fund seeks to "close out" (i.e. terminate) a particular financial futures contract or option position. This is particularly relevant for over-the-counter options and financial futures contracts, as previously noted. Trading in such instruments could be interrupted, for example, because of a lack of either buyers or sellers. In addition, the futures and options exchanges may suspend trading after the price of such instruments has risen or fallen more than the maximum amount specified by the exchange. Exercise of options could also be restricted or delayed because of regulatory restrictions or other factors. A Fund may be able, by adjusting investment strategy in the cash or other contract markets, to offset to some extent any adverse effects of being unable to liquidate a hedge position. Nevertheless, in some cases, a Fund may experience losses as a result of such inability. Therefore it may have to liquidate other more advantageous investments to meet its cash needs. In addition, FCMs or brokers in certain circumstances will have access to a Fund's assets posted as margin in connection with these transactions as permitted under the 1940 Act. See "Other Information Custody of Assets" in this Statement of Additional Information. The Funds will use only FCMs or brokers in whose reliability and financial soundness they have full confidence and have adopted certain other procedures and limitations to reduce the risk of loss with respect to any assets which brokers hold or to which they may have access. Nevertheless, in the event of a broker's insolvency or bankruptcy, it is possible that a Fund could experience a delay or incur costs in recovering such assets or might recover less than the full amount due. Also the value of such assets could decline by the time a Fund could effect such recovery. The success of a Fund in using hedging techniques depends, among other things, on VALIC's ability to predict the direction and volatility of price movements in both the futures and options markets as well as the securities markets and on VALIC's ability to select the proper type, time, and duration of hedges. There can be no assurance that these techniques will produce their intended results. In any event, VALIC will use financial future contracts, options thereon, currency options and stock index options only when it believes the overall effect is to reduce, rather than increase, the risks to which a Fund is exposed. Hedging transactions also, of course, may be more, rather than less, favorable to a Fund than originally anticipated. LIMITATIONS No Fund will enter into any financial futures contract or purchase any option thereon if imme- 23 80 diately thereafter the total amount of its assets required to be on deposit as initial margin to secure its obligations under financial futures contracts, plus the amount of premiums paid by it for outstanding options to purchase futures contracts, exceeds 5% of the market value of its total assets. (Net assets in the case of Growth & Income Fund); provided however, that in the case of an option that is in-the-money at the time of purchase, the in-the-money amount may be excluded in calculating the 5% limitation. This is a fundamental policy of each Fund that is permitted to use options and financial futures contracts. In addition, each Fund has an operating policy which provides that it will not enter into financial futures contracts or write put or call options with respect to financial futures contracts unless such transactions are either "covered" or subject to segregation requirements considered appropriate by the SEC staff. Further, each Fund has an operating policy which provides that it will not enter into custodial arrangements with respect to initial or variation margin deposits or marked-to-market amounts unless the custody of such initial and variation margin deposits and marked-to-market amounts are in compliance with current SEC staff interpretive positions or no-action letters or rules adopted by the SEC. MONEY MARKET SECURITIES OF FOREIGN ISSUERS Foreign money market instruments utilized by the Funds will be limited to: (i) obligations of, or guaranteed by, a foreign government, its agencies or instrumentalities; (ii) certificates of deposit, bankers' acceptances, short-term notes, negotiable time deposits and other obligations of the ten largest banks in each foreign country, measured in terms of net assets; and (iii) other short-term unsecured corporate obligations (usually 1 to 270 day commercial paper) of foreign companies. For temporary purposes or in light of adverse foreign political or economic conditions, the Funds may invest in short-term high quality foreign money market securities without limitation. 24 81 INVESTMENT ADVISER VALIC serves as the investment adviser to Asset Allocation Fund, Money Market Fund, Capital Conservation Fund, Government Securities Fund, International Equities Fund and Social Awareness Fund pursuant to an Investment Advisory Agreement dated September 30, 1987, approved by shareholders at a meeting held on September 7, 1990. This Investment Advisory Agreement was also made applicable to the International Government Bond Fund effective October 1, 1991. The Investment Advisory Agreement was approved by the shareholders of the International Government Bond Fund on September 15, 1992. VALIC also serves as investment adviser to the MidCap Index Fund, the Stock Index Fund, the Small Cap Index Fund pursuant to an Investment Advisory Agreement effective May 1, 1992 that was approved by shareholders of the MidCap Index Fund and Stock Index Fund on April 28, 1992 and approved by shareholders of the Small Cap Index Fund on September 15, 1992. This Investment Advisory Agreement was also made applicable to the Growth Fund, the Growth & Income Fund and the Science & Technology Fund effective May 1, 1994. Prior to May 1, 1992, VALIC served as investment adviser to the MidCap Index Fund and Stock Index Fund pursuant to the Investment Advisory Agreement dated September 30, 1987. VALIC is a stock life insurance company organized on May 1, 1969 under the Texas Insurance Code as a successor to The Variable Annuity Life Insurance Company of America, a District of Columbia insurance company organized in 1955. VALIC's sole business consists of offering fixed and variable (and combinations thereof) retirement annuity contracts. VALIC is an indirect wholly-owned subsidiary of American General Corporation, Houston, Texas. Members of the American General Corporation group of companies operate in each of the 50 states, the District of Columbia, and Canada and collectively engage in substantially all forms of financial services, with activities heavily weighted toward insurance. American General Corporation was incorporated as a Texas business corporation on February 26, 1980 as the successor to American General Life Insurance Company (organized in 1926) as the result of a corporate reorganization completed on July 1, 1980. Pursuant to the Investment Advisory Agreements, the Company retains VALIC to manage the investment of the assets of each Fund, maintain a trading desk, and place orders for the purchase and sale of portfolio securities. As investment adviser, VALIC obtains and evaluates as appropriate economic, statistical, and financial information in order to formulate and implement investment programs in furtherance of each Fund's investment objective(s) and investment program. Pursuant to the Investment Advisory Agreements, VALIC provides other services including furnishing the services of the President and such other executives and clerical personnel as the Company requires to conduct its day-to-day operations, to prepare the various reports and statements required by law, and to conduct any other recurring or nonrecurring activity which the Company may need to continue operations. The Investment Advisory Agreement provides that the Company pay all expenses not specifically assumed by VALIC under the Agreements. Examples of the expenses paid by the Company include transfer agency fees, custodial fees, the fees of outside legal and auditing firms, the costs of reports to shareholders, expenses of servicing shareholder accounts (e.g., daily calculation of the net asset value). The Investment Advisory Agreements require that VALIC's advisory fee be reduced by any commissions, tender and exchange offer solicitation fees and other fees, or similar payments (less any direct expenses incurred) received by VALIC or its affiliates in connection with the purchase and sale of portfolio investments of the Funds. In this regard, the Investment Advisory Agreements require VALIC to use its best efforts to recapture tender and exchange solicitation offer fees for each Fund's benefits, and to advise the Company's Board of Directors of any other fees, or similar payments that it (or any of its affiliates) may receive in connection with each Fund's portfolio transactions or of other arrangements that may benefit any of the Funds or the Company. The Company, by action of its Board of Directors determined to transfer the function of providing accounting services from the Company's custodian State Street Bank and Trust Company to VALIC. This transfer was effective October 31, 1996. Pursuant to this determination the Com- 25 82 pany entered into an Accounting Services Agreement with VALIC ("Agreement"). The Agreement provides that the Company will pay to VALIC an annual fee payable monthly based on average daily net assets for providing the accounting services. For the fiscal year ended, May 31, 1997, the Company paid VALIC $177,948 for accounting services provided by VALIC. For the fiscal year ended May 31, 1995, the investment advisory fees paid by the Company for the Stock Index Fund, the MidCap Index Fund, the Small Cap Index Fund, the International Equities Fund, the Growth Fund, the Growth & Income Fund, the Science & Technology Fund, the Social Awareness Fund, the Asset Allocation Fund, the Capital Conservation Fund, the Government Securities Fund, the International Government Bond Fund, and the Money Market Fund were $3,339,165, $1,314,837, $420,925, $697,990, $323,295, $159,996, $558,564, $238,741, $931,720, $307,082, $224,415, $252,782, and $321,207, respectively. For the fiscal year ended May 31, 1996, the investment advisory fees paid by the Company for the Stock Index Fund, the MidCap Index Fund, the Small Cap Index Fund, the International Equities Fund, the Growth Fund, the Growth & Income Fund, the Science & Technology Fund, the Social Awareness Fund, the Asset Allocation Fund, the Capital Conservation Fund, the Government Securities Fund, the International Government Bond Fund, and the Money Market Fund were $4,242,848, $1,666,107, $523,833, $715,452, $1,871,756, $557,628, $3,228,500, $333,783, $939,313, $352,058, $340,148, $573,962, and $421,853, respectively. For the fiscal year ended May 31, 1997, the investment advisory fees paid by the Company for the Stock Index Fund, the MidCap Index Fund, the Small Cap Index Fund, the International Equities Fund, the Growth Fund, the Growth & Income Fund, the Science & Technology Fund, the Social Awareness Fund, the Asset Allocation Fund, the Capital Conservation Fund, the Government Securities Fund, the International Government Bond Fund, and the Money Market Fund were $5,543,535, $1,880,085, $622,719, $668,871, $4,704,380, $1,211,524, $5,973,280, $525,440, $900,822, $347,154, $417,356, $833,117, and $572,063, respectively. The Investment Advisory Agreements may be continued with respect to any Fund if specifically approved at least annually by (a)(i) the Company's Board of Directors or (ii) a majority of that Fund's outstanding voting securities (as defined by the 1940 Act), and (b) the affirmative vote of a majority of the directors who are not parties to the agreement or "interested persons" of any such party (as defined by the 1940 Act) by votes cast in person at a meeting called for this purpose. The Investment Advisory Agreements also provide that they shall terminate automatically if assigned. The Investment Advisory Agreements may be terminated as to any Fund at any time by the Company's Board of Directors, by vote of a majority of the Fund's outstanding voting securities, or by VALIC, on not more than 60 days' written notice, nor less than 30 days' written notice, or upon such shorter notice as may be mutually agreed upon, without the payment of any penalty. Additionally either Investment Advisory Agreement that VALIC shall not be liable to the Company, or any shareholder in the Company, for any act or omission in rendering services under the Agreement, or for any losses sustained in the purchase, holding, or sale of any portfolio security, so long as there has been no willful misfeasance, bad faith, negligence, or reckless disregard of obligations or duties on the part of VALIC. 26 83 INVESTMENT SUB-ADVISERS Pursuant to an Investment Sub-Advisory Agreement which was approved by shareholders of the Stock Index Fund and the MidCap Index Fund on April 28, 1992 and by shareholders of the Small Cap Index Fund on September 15, 1992, VALIC has engaged Bankers Trust Company ("Bankers Trust") to provide investment Sub-Advisory services for the Stock Index Fund, the MidCap Index Fund and the Small Cap Index Fund. T. Rowe Price Associates, Inc. ("T. Rowe Price") provides Sub-Advisory services for the Growth Fund and the Science & Technology Fund pursuant to a Sub-Advisory Agreement. Value Line, Inc. ("Value Line") provides Sub-Advisory services for the Growth & Income Fund pursuant to a Sub-Advisory Agreement. Bankers Trust, T. Rowe Price and Value Line (collectively the "Sub- Advisers") will be subject to the control, supervision and direction of VALIC, which will retain responsibility for the overall management of the Stock Index Fund, the MidCap Index Fund, the Small Cap Index Fund, the Growth Fund, the Growth & Income Fund and the Science & Technology Fund, respectively (collectively the "Sub-Advised Funds"). In addition to acting as Sub-adviser to the MidCap Index Fund, the Stock Index Fund and Small Cap Index Fund as of September 30, 1995, Bankers Trust and Bankers Trust Australia collectively are the money managers to the following registered investment companies: Accessor Funds, Inc. Short Intermediate Fixed Income Portfolio; Asset Management Portfolio; Asset Management Portfolio II; Asset Management Portfolio III; The Bank Fiduciary Fund -- Equity Portfolio and Fixed Income Portfolio; Capital Appreciation Portfolio; Cash Management Portfolio; Equity 500 Index Portfolio; Small Cap Index Portfolio; EAFE Equity Index Portfolio; U.S. Bond Index Portfolio; Retirement Plus Portfolio; AARP U.S. Stock Index Fund; USAA S&P100 Index Fund; AAS&P 100 Index Fund; Liquid Asset Series and Emerging Market Series; Global High Yield Portfolio; Hercules Latin American Value Fund; International Equity Portfolio; Intermediate Tax Free Portfolio; Latin American Equity Portfolio; Liquid Assets Portfolio; NY Tax Free Money Portfolio; Pacific Basin Equity Portfolio; Pacific Select Fund -- Equity Index Series; Short Intermediate Government Securities Portfolio; Small Cap Portfolio; Tax Free Money Portfolio and Treasury Money Portfolio and Utility Portfolio. In addition to acting as Sub-adviser to the Growth Fund and the Science & Technology Fund, T. Rowe Price manages the following funds with which it is affiliated: T. Rowe Price Growth Stock Fund, Inc.; T. Rowe Price New Horizons Fund, Inc.; T. Rowe Price New Era Fund, Inc.; T. Rowe Price New Income Fund, Inc.; T. Rowe Price Growth & Income Fund, Inc.; T. Rowe Price Prime Reserve Fund, Inc.; T. Rowe Price Tax-Free Income Fund, Inc.; T. Rowe Price Tax-Exempt Money Fund, Inc.; T. Rowe Price Short-Term Bond Fund, Inc.; T. Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc.; T. Rowe Price Tax-Free Short-Intermediate, Inc.; T. Rowe Price High Yield Fund, Inc.; T. Rowe Price Tax-Free High Yield Fund, Inc.; T. Rowe Price GNMA Fund; T. Rowe Price Equity Income Fund; T. Rowe Price New America Growth Fund; T. Rowe Price Capital Appreciation Fund; T. Rowe Price Science & Technology Fund, Inc.; T. Rowe Price Small-Cap Value Fund, Inc.; T. Rowe Price U.S. Treasury Funds, Inc. (which includes U.S. Treasury Money Fund, U.S. Treasury Intermediate Fund and U.S. Treasury Long-Term Fund); T. Rowe Price State Tax-Free Income Trust (which includes Maryland Tax-Free Bond Fund, New York Tax-Free Bond Fund, New York Tax-Free Money Fund, Virginia Short-Term Tax-Free Bond Fund, Virginia Tax-Free Bond Fund, New Jersey Tax-Free Bond Fund, Georgia Tax-Free Bond Fund, Florida Insured Intermediate Tax-Free Fund, and Maryland Short-Term Tax-Free Bond Fund); T. Rowe Price California Tax-Free Income Trust (which includes California Tax-Free Bond Fund and California Tax-Free Money Fund); T. Rowe Price Index Trust, Inc. (which includes the T. Rowe Price Equity Index Fund); T. Rowe Price Spectrum Fund, Inc. (which includes the Spectrum Growth Fund, Spectrum Income Fund and Spectrum International Fund); T. Rowe Price Short Term U.S. Government Fund Inc. (formerly T. Rowe Price Adjustable Rate U.S. Government Fund, Inc.); T. Rowe Price Balanced Fund, Inc.; T. Rowe Price Mid-Cap Value Fund, Inc.; T. Rowe Price Small-Cap Stock Fund, Inc. (formerly known as T. Rowe Price OTC Fund, Inc.), T. Rowe Price Blue Chip Growth Fund, Inc., T. Rowe Price Dividend Growth Fund, Inc., T. Rowe Price Capital Oppor- 27 84 tunity Fund, Inc., T. Rowe Price Financial Services Fund, Inc., T. Rowe Price Health Sciences Fund, Inc., T. Rowe Price Mid-Cap Growth Fund, Inc., T. Rowe Price Value Fund, Inc., T. Rowe Price Corporate Income Fund, Inc., T. Rowe Price Summit Funds, Inc. (which includes Summit Cash Reserves Fund, Summit Limited-Term Bond Fund and Summit GNMA Fund), T. Rowe Price Summit Municipal Funds, Inc. (which includes Summit Municipal Money Market Fund, Summit Municipal Intermediate Fund, Summit Municipal Income Fund. T. Rowe Price also serves as investment adviser to the following unaffiliated funds: the Security First Trust (which includes the Growth and Income Series and Bond Series) and the Penn Series Funds, Inc. (which includes the Flexibly Managed Fund and High Yield Bond Fund), T. Rowe Price Equity Series, Inc. (which includes T. Rowe Price Equity Income Portfolio, T. Rowe Price New America Growth Portfolio, T. Rowe Price Mid-Cap Growth Portfolio, and T. Rowe Price Personal Strategy Balanced Portfolio), T. Rowe Price Fixed Income Series, Inc. (which includes T. Rowe Price Limited-Term Bond Portfolio and T. Rowe Price Prime Reserve Portfolio), T. Rowe Price International Series, Inc. (which includes T. Rowe Price International Stock Portfolio); T. Rowe Price Personal Strategy Funds, Inc. (which includes T. Rowe Price Personal Strategy Income Fund, T. Rowe Price Strategy Balanced Fund and Personal Strategy Growth Fund). In addition, an affiliate of T. Rowe Price, Rowe Price-Fleming International, Inc., acts as investment adviser to the T. Rowe Price International Funds, Inc. (which includes the T. Rowe Price International Stock Fund, T. Rowe Price International Bond Fund, T. Rowe Price International Discovery Fund, T. Rowe Price Emerging Markets Fund, T. Rowe Price Emerging Markets Bond Fund, T. Rowe Price European Stock Fund, T. Rowe Price New Asia Fund, T. Rowe Price Global Government Bond Fund, T. Rowe Price Japan Fund; T. Rowe Price Global Stock Fund, T. Rowe Price Short-Term Global Income Fund, and T. Rowe Price Latin America Fund; the RPF International Bond Fund; the Institutional International Funds, Inc. (which includes the Foreign Equity Fund) and Institutional Equity Fund, Inc. (which includes Mid-Cap Equity Growth Fund). In addition to acting as Sub-adviser to the Growth & Income Fund, Value Line manages the following funds with which it is affiliated: The Value Line Fund, Inc.; The Value Line Income Fund, Inc.; The Value Line Special Situations Fund, Inc.; Value Line Leveraged Growth Investors, Inc.; The Value Line Cash Fund, Inc.; Value Line Government Securities Fund, Inc.; Value Line Centurion Fund, Inc.; The Value Line Tax Exempt Fund, Inc.; Value Line Convertible Fund, Inc.; Value Line Aggressive Income Trust; Value Line New York Tax Exempt Trust; Value Line Strategic Asset Management Trust; The Value Line Intermediate Bond Fund, Inc.; Value Line Small-Cap Growth Fund, Inc.; Value Line Asset Allocation Fund, Inc.; and Value Line U.S. Multi-National Fund, Inc. Pursuant to the Investment Sub-Advisory Agreements and subject to VALIC's control, supervision and direction, the Sub-Advisers will manage the investment and reinvestment of the assets of the Sub-Advised Funds, including the evaluation of pertinent economic, statistical, financial and other data, and the determination of industries and companies to be represented in the Sub-Advised Funds. Further, the Sub-Advisers will maintain a trading desk and place orders for the purchase and sale of portfolio investments for the Sub-Advised Funds, accounts with brokers and dealers selected by the Sub-Advisers, or arrange for any other entity to provide a trading desk and to place orders with brokers and dealers selected by the Sub-Advisers and VALIC. The Investment Sub-Advisory Agreements provide that the Sub-Advisers will bear the expense of discharging their responsibilities. VALIC shall, from the compensation VALIC receives from the Company for acting as investment adviser, pay to BTC, for the services rendered and expenses paid by BTC, a monthly fee computed at the annual rate of .05% of the first $500 million and .03% of average daily net asset values on the excess over $500 million based on the Stock Index Fund, the MidCap Index Fund and Small Cap Index Fund respectively. VALIC shall, from the compensation VALIC receives from the Company for acting as investment adviser, pay to T. Rowe Price, for the services rendered and expenses paid by T. Rowe Price, a monthly fee based on average daily net asset values of the Growth Fund at an annual rate of .50% and the 28 85 Science & Technology Fund at the annual rate of .60%. VALIC shall, from the compensation VALIC receives from the Company for acting as investment adviser, pay to Value Line, for services rendered and expenses paid by Value Line, a monthly fee based on average daily net asset values of the Growth & Income Fund at an annual rate of .45%. Notwithstanding the above provision, VALIC is required to pay a minimum annual sub-advisory fee of $50,000 to BTC for the Small Cap Index Fund. There are no minimum sub-advisory fees for the Stock Index Fund, MidCap Index Fund, the Growth Fund, the Growth & Income Fund or the Science & Technology Fund. The Investment Sub-Advisory Agreements require that each Sub-Adviser promptly reduce its monthly fee by the amount of any commission, tender and exchange offer solicitation fees, other fees or similar payments received by the Sub-Adviser, or any affiliated person of the Sub-Adviser, in connection with Sub-Advised Fund portfolio transactions. Such "commissions" or "other fees" exclude those charged by brokers or dealers affiliated with a Sub-Adviser, as referred to below. Such "tender and exchange offer solicitation fees" exclude those received by a Sub-Adviser acting in the capacity of manager for any such offer. In this regard, the Sub-Advisory Agreements require the Sub-Advisers to use their best efforts to obtain tender and exchange solicitation offer fees for each Fund's benefit, and to advise VALIC of any other fees or similar payments that they (or any of their affiliates) may receive in connection with any Fund's portfolio transactions or of other arrangements that may benefit any of the Funds. The Investment Sub-Advisory Agreements may be continued with respect to any of the Funds if approved at least annually by the vote of the Company's Board of Directors who are not parties to the Investment Sub-Advisory Agreements or interested persons of any such parties, cast in person at a meeting called for the purpose of voting on such approval and by a vote of a majority of the Company's Board of Directors or a majority of the relevant Fund's outstanding voting securities. The Investment Sub-Advisory Agreements will automatically terminate in the event of assignment or in the event of termination of the Investment Advisory Agreement between VALIC and the Company as it relates to the relevant Sub- Advised Fund. The Investment Sub-Advisory Agreements may be terminated at any time by VALIC, the relevant Sub-Adviser, the Company's Board of Directors, or by vote of a majority of the outstanding voting securities of the relevant Sub- Advised Fund, on not more than 60 days' nor less than 30 days' written notice to the other entities, or upon such shorter notice as may be mutually agreed upon. Such termination shall be without the payment of any penalty. The Investment Sub-Advisory Agreements provide that the Sub-Advisers shall not be liable to VALIC, the Company or to any shareholder of the Company for any act or omission in rendering services under the Investment Sub-Advisory Agreements or for any losses sustained in the purchase, holding or sale of any portfolio security, so long as there has been no willful misfeasance, bad faith, negligence or reckless disregard of obligations or duties on the part of the Sub-Advisers. PORTFOLIO TRANSACTIONS AND BROKERAGE As investment adviser to the Company, VALIC has responsibility for placing (and deciding when to place) orders for the purchase and sale of investments for the portfolio of each Fund, selecting brokers or dealers to handle these transactions, and negotiating commissions on these transactions. VALIC utilizes the assistance of Sub-Advisers in selecting brokers or dealers to handle transactions for the Stock Index Fund, the MidCap Index Fund, the Small Cap Index Fund, the Growth Fund, the Growth & Income Fund and the Science & Technology Fund. The Sub-Advisers may employ affiliated brokers or, in the case of T. Rowe Price, indirectly related brokers for portfolio transactions under circumstances described in the Prospectus under the heading "Investment Management." Virtually all of the over-the-counter transactions by the Asset Allocation Fund, the Money Market Fund, the Capital Conservation Fund, the Government Securities Fund, the International Government Bond Fund and the Growth & Income Fund are principal transactions with issuers 29 86 and dealers at net prices which entail no brokerage commissions. The MidCap Index Fund, the Stock Index Fund, the International Equities Fund, the Small Cap Index Fund, and the Social Awareness Fund, each purchase and sell most of their portfolio securities on a national securities exchange on an agency basis. The Growth Fund and the Science & Technology Fund engage in over-the-counter transactions with principals and transactions with national securities exchanges on an agency basis. The Company normally enters into principal transactions directly with the issuer or the market-maker. When the Company purchases or sells securities or financial futures contracts on an exchange, it pays a commission to any FCM or broker executing the transaction. When the Company purchases securities from the issuer, an underwriter usually receives a commission or "concession" paid by the issuer. When the Company purchases securities from a market-maker, it pays no commission, but the price includes a "spread" or "mark-up" (between the bid and asked price) earned by the market-making dealer on the transaction. In purchasing and selling each Fund's portfolio securities, it is the policy of VALIC and the Sub-Advisers (collectively, the "Advisers") to seek the best execution at the most favorable price through responsible broker-dealers and, in the case of agency transactions, at competitive commission rates. When selecting brokers or dealers, and in negotiating prices and commissions, the Advisers consider such factors as: the broker or dealer's reliability; the quality of the broker or dealer's execution services on a continuing basis; the rate of the commission; the size and difficulty of the order and the timeliness of execution; the reliability, integrity, financial condition, general execution, and operational capabilities of that firm and competing broker-dealers. In over-the-counter transactions, the Advisers place orders directly with the principal market-maker unless they believe the Company can obtain a better price (or receive better execution of orders) from a broker on an agency basis. In transactions executed on securities or commodities exchanges, the Advisers seek the best overall price and execution at the most favorable commission rate (except when higher brokerage commissions are paid to obtain brokerage and research services, as explained below). When the Advisers believe that more than one firm meets these criteria the Advisers may prefer brokers who provide the Advisers or the Company with brokerage and research services, described below. The Advisers may cause a Fund to pay a broker-dealer a commission (for executing a securities transaction) that is greater than the commission another broker-dealer would have received for executing the same transaction, if the Advisers determine in good faith that the greater commission paid to the first broker-dealer is reasonable in relation to the value of brokerage and research services provided to the Advisers viewed in terms of either that particular transaction or the overall responsibilities of the Advisers. The Advisers receive a wide range of research services from broker-dealers, including: information on securities markets, the economy and individual companies; statistical information; accounting and tax law interpretations; technical market action; pricing and appraisal services; and credit analyses. Research services are received by the Advisers primarily in the form of written reports, telephone contacts, personal meetings with securities analysts, corporate and industry spokespersons, and access to various computer-generated data. The Advisers have no agreements or understandings with broker-dealers by which specific amounts of transactions or commissions are directed to specific broker-dealers. The Advisers evaluate whether such research services provide lawful and appropriate assistance to them in the performance of their investment decision-making responsibilities, for the Company. The Advisers will not cause the Company to pay higher commissions without first determining, in good faith, that the cost is reasonable considering the brokerage and research services provided, with respect to either the particular transaction or the Advisers' overall responsibilities with respect to accounts for which they exercise investment discretion. The Advisers receive research services at no cost and cannot assign any specific monetary value to them; nevertheless, the Advisers believe these supplemental investment research services are essential to the Advisers' ability to provide high quality portfolio management to the Funds. Research services furnished by broker-dealers through whom a Fund effects securities transactions may be used by the Advisers in ser- 30 87 vicing all of the Funds, and the Advisers may not use all such services in managing the Funds. The amount of brokerage commissions paid, the quality of execution, the nature and quality of research services provided, and the amount of commissions paid to firms providing research services are reviewed quarterly by the Company's Board of Directors. Brokerage commissions paid by the Stock Index Fund on portfolio transactions for the fiscal years ended May 31, 1997, 1996, and 1995, totalled $122,723, $84,226 and $95,461, respectively. For the fiscal year ended May 31, 1997 the Stock Index Fund paid no brokerage commissions to brokers. Brokerage commissions paid by the MidCap Index Fund on portfolio transactions for the fiscal years ended May 31, 1997, 1996, and 1995, totalled $80,089, $93,068 and $118,210, respectively. For the fiscal year ended May 31, 1997, the MidCap Index Fund paid no brokerage commissions to brokers. Brokerage commissions paid by the Small Cap Index Fund on portfolio transactions for the fiscal year ended May 31, 1997, 1996 and 1995, totalled $90,498, $37,454 and $36,808, respectively. For the fiscal year ended May 31, 1997, the Small Cap Index Fund paid $153 in brokerage commissions on transactions totalling $68,697 to brokers selected on the basis of the quality of execution together with research services provided to the Advisers. Brokerage commissions paid by the International Equities Fund on portfolio transactions for the fiscal years ended May 31, 1997, 1996, and 1995 totalled $153,793, $250,882 and $187,369, respectively. For the fiscal year ended May 31, 1997, the International Equities Fund paid no brokerage commissions to brokers. Brokerage commissions paid by the Growth Fund on portfolio transactions for the fiscal years ended May 31, 1997, 1996 and 1995, totalled $757,865, $486,285 and $204,382, respectively. For the fiscal year ended May 31, 1997, the Growth Fund paid $94,434 in brokerage commissions, on transactions totalling $41,627,478, to brokers selected on the basis of the quality of the execution together with research services provided to VALIC. Brokerage commissions paid by the Growth & Income Fund on portfolio transactions for the fiscal year ended May 31, 1997, 1996 and 1995, totalled $159,571, $112,767 and $81,155, respectively. For the fiscal year ended May 31, 1997, the Growth & Income Fund paid $60,422 in brokerage commissions, on transactions totalling $49,455,843, to brokers selected on the basis of the quality of the execution together with research services provided to VALIC. Brokerage commissions paid by the Social Awareness Fund on portfolio transactions for the fiscal years ended May 31, 1997, 1996, and 1995, totalled $221,028, $99,297 and $134,591, respectively. For the fiscal year ended May 31, 1997 the Social Awareness Fund paid no brokerage commissions to brokers. Brokerage commissions paid by the Science & Technology Fund on portfolio transactions for the fiscal year ended May 31, 1997, 1996 and 1995, totalled $1,143,004, $664,932 and $182,202, respectively. For the fiscal year ended May 31, 1997, the Science & Technology Fund paid $75,790 in brokerage commissions, on transactions totalling $43,440,066, to brokers selected on the basis of the quality of the execution together with research services provided to VALIC. Brokerage commissions paid by the Asset Allocation Fund on portfolio transactions for the fiscal years ended May 31, 1997, 1996 and 1995, totalled $239,365, $235,223 and $155,506, respectively. For the fiscal year ended May 31, 1997, the Asset Allocation Fund paid no brokerage commissions to brokers. No brokerage commissions were paid by the Capital Conservation Fund, Government Securities Fund, International Government Bond Fund and Money Market Fund for fiscal years ended May 31, 1997, 1996 and 1995. Occasions may arise when one or more of the Funds or other accounts that may be considered affiliated persons of the Funds under the 1940 Act desire to purchase or sell the same portfolio security at approximately the same time. On those occasions when such simultaneous purchase and sale transactions are made such transaction will be allocated in an equitable manner according to written procedures approved by the Company's Board of Directors. Specifically, 31 88 such written procedures provide that in allocating purchase and sale transactions made on a combined basis the parties will seek to achieve the same net unit price of securities for each Fund or other account and to allocate as nearly as practicable, such transactions on a pro-rata basis substantially in proportion to the amounts ordered to be purchased and sold by each Fund or other account. In some cases, this procedure could have an adverse effect on the price or quantity of securities available to the Funds. However, the Funds may, alternatively, benefit from lower broker's commissions and/or correspondingly lower costs for brokerage and research services by engaging in such combined transactions. In the Advisers' opinion, the results of this procedure will, on the whole, be in the best interest of each Fund. OFFERING, PURCHASE, AND REDEMPTION OF FUND SHARES Pursuant to a distribution agreement, the Variable Annuity Marketing Company ("VAMCO") acts without remuneration as the Company's agent in the distribution of Fund shares to the VALIC, AG Life and AGNY separate accounts. VAMCO's address is the same as that of VALIC. The distribution agreement between VAMCO and the Company provides that it shall continue in force from year to year, provided that such continuance is approved at least annually (a)(i) by the Board of Directors of the Company, or (ii) by vote of a majority of the Company's outstanding voting securities (as defined in the 1940 Act) and (b) by the affirmative vote of a majority of the Company's Directors who are not 'interested persons' (as defined in the 1940 Act) of the Company by votes cast in person at a meeting called for such purpose. The distribution agreement may be terminated at any time, without penalty, by a vote of the Board of Directors of the Company or by a vote of a majority of the outstanding voting securities of the Company, or by VAMCO, on sixty days' written notice to the other party. The distribution agreement also provides that it shall automatically terminate in the event of its assignment. Pursuant to the distribution agreement, VAMCO pays promotional and advertising expenses and the cost of printing prospectuses used to offer and sell shares of the Company (after typesetting and printing the copies required for regulatory filings by the Company). Promotional and advertising expenses include any expense related to distribution of shares of the Funds or attributable to any activity primarily intended to result in the sale of shares, including, for example, the preparation, printing, and distribution of advertising and sales literature (including reports to shareholders used as sales literature). VALIC reimburses VAMCO for these expenses. Thus all such expenses incurred by VAMCO are passed directly on to VALIC, its parent. The Company pays all expenses related to the registration of Fund shares under federal and state laws, including registration and filing fees, the cost of preparing the prospectus for such purpose, and related expenses of outside legal and auditing firms. As explained in the prospectus for the Contracts, payments of surrender values, as well as lump sum payments available under the annuity options of the Contracts, may be suspended or postponed at any time when redemption of shares is suspended. Normally, the Company redeems Fund shares within seven days of receipt of request therefor, but may postpone redemptions beyond seven days when: (1) the New York Stock Exchange is closed for other than weekends and customary holidays, or trading on the New York Stock Exchange becomes restricted; (2) an emergency exists making disposal or valuation of a Fund's assets not reasonably practicable; or (3) the Securities and Exchange Commission has so permitted by order for the protection of the Company's shareholders. The Company normally redeems Fund shares for cash. Although the Company, with respect to each Fund, may make full or partial payment by assigning to the separate accounts investing in the Company portfolio securities at their value used in determining the redemption price (i.e. by redemption-in-kind), the Company, pursuant to Rule 18f-1 under the 1940 Act, has filed a notification of election on Form 18f-1. Pursuant to this election, the Company has committed itself to pay the separate accounts, in cash, all redemptions made during any 90 day period, up to the lesser of $250,000 or 1% of the Company's net asset value. The securities to be paid in-kind to the separate accounts will be selected in such man- 32 89 ner as the Board of Directors deems fair and equitable. In such cases, the separate accounts would incur brokerage expenses should they wish to liquidate these portfolio securities. All shares are offered for sale and redeemed at net asset value. Net asset value per share is determined by dividing the net assets of a Fund by the number of that Fund's outstanding shares at such time. DETERMINATION OF NET ASSET VALUE Equity investments (including common stocks, preferred stocks, convertible securities, and warrants) and call options written on all portfolio investments listed or traded on a national exchange are valued at their last sale price on that exchange prior to the time when assets are valued. In the absence of any exchange sales on that day and for unlisted equity securities, such securities and call options written on portfolio securities are valued at the last sale price on the NASDAQ (National Association of Securities Dealers Automated Quotations) National Market System. In the absence of any National Market System sales on that day, equity securities are valued at the last reported bid price and call options written on all portfolio securities for which other over-the- counter market quotations are readily available are valued at the last reported asked price. U.S. Treasury securities and other obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities, are valued at representative quoted prices. Such quotations generally are obtained from government securities pricing services; however, in circumstances where it is deemed appropriate to do so, quotations may be obtained from dealers in government securities. Publicly-traded corporate bonds are valued at prices obtained from State Street Bank and Trust Company. Short-term debt securities for which market quotations are readily available are valued at the last reported bid price, except for those with a remaining maturity of 60 days or less which are valued by the amortized cost method (unless, due to special circumstances, the use of such a method with respect to any security would result in a valuation which does not approximate fair market value). Convertible bonds are valued at prices obtained from one or more of the major dealers in such bonds. Where there is a discrepancy between dealers or when no quotes are readily available, values may be adjusted based on a combination of yields and premium spreads to the underlying common stock. Portfolio securities that are primarily traded on foreign securities exchanges are generally valued at the last sale price on the exchange where such security is primarily traded. All foreign securities traded on the over-the-counter market are valued at the last sale quote, if market quotations are available, or the last closing bid price, if there is no active trading in a particular security for a given day. Where market quotations are not readily available for such foreign over-the-counter securities, then such securities will be valued in good faith by a method that the Company's Board of Directors, or its delegates, believes accurately reflects fair value. Quotations of foreign securities in foreign currencies are converted, at current exchange rates, to their U.S. dollar equivalents in order to determine their current value. In addition, because of the need to value foreign securities (other than ADRs) as of the close of trading on various exchanges and over-the-counter markets throughout the world, the calculation of the net asset value of Funds investing in such foreign securities may not take place contemporaneously with the valuation of such foreign securities in those Funds' portfolios. Options purchased by the Funds (including options on financial futures contracts, stock indices, foreign currencies, and securities) listed on national securities exchanges are valued on the exchange where such security is primarily traded. Over-the-counter options purchased or sold by the Funds are valued based upon prices provided by market-makers in such securities or dealers in such currencies. Exchange-traded financial futures contracts (including interest rate futures contracts, stock index futures contracts, and currency futures con- 33 90 tracts) are valued at the settlement price for such contracts established each day by the board of trade or exchange on which such contracts are traded. Unlisted financial futures contracts are valued based upon prices provided by market-makers in such financial futures contracts. All of the assets of the Money Market Fund are valued on the basis of amortized cost. Under the amortized cost method of valuation, securities are valued at a price on a given date, and thereafter a constant accretion of any discount or amortization of any premium to maturity is assumed, regardless of the impact of fluctuating interest rates on the market value of the security. While this method provides certainty in valuation it may result in periods in which value as determined by amortized cost is higher or lower than the price a Fund would receive if it sold the security. During such periods, the yield to investors may differ somewhat from that obtained by a similar fund or portfolio which uses available market quotations to value all of its portfolio securities. The Company's Board of Directors has established procedures reasonably designed, taking into account current market conditions and Money Market Fund's investment objective, to stabilize the net asset value per share for purposes of sales and redemptions at $1.00. These procedures include review by the Board, at such intervals as it deems appropriate, to determine the extent, if any, to which the net asset value per share calculated by using available market quotations deviates from $1.00 per share. In the event such deviation should exceed one half of one percent, the Board will promptly consider initiating corrective action. If the Board believes that the extent of any deviation from a $1.00 amortized cost price per share may result in material dilution or other unfair results to new or existing shareholders, it will take such steps as it considers appropriate to eliminate or reduce these consequences to the extent reasonably practicable. Such steps may include: selling portfolio securities prior to maturity; shortening the average maturity of the portfolio; withholding or reducing dividends; or utilizing a net asset value per share determined from available market quotations. Even if these steps were taken, the Money Market Fund's net asset value might still decline. CALCULATION OF YIELD FOR THE MONEY MARKET FUND The yield of the Money Market Fund is its net income expressed as a percentage of assets on an annualized basis for a seven day period. Rule 482 under the Securities Act of 1933 requires that a yield quotation set forth in an advertisement for a money market fund be computed by a standardized method based on an historical seven calendar day period. The current yield is computed by determining the net change (exclusive of realized gains and losses from the sale of securities and unrealized appreciation and depreciation) in the value of a hypothetical pre-existing account having a balance of one share at the beginning of the period, and then dividing the net change in account value by the value of the account at the beginning of the base period to obtain the base period return. The base period return is then multiplied by (365/7) to annualize the yield figure. The determination of net change in account value reflects the value of additional shares purchased with dividends from the original share, dividends declared on both the original share and such additional shares, and any fees that are charged to all shareholder accounts, in proportion to the length of the base period and the Money Market Fund's average account size. The Money Market Fund may also calculate its compound effective yield by compounding the unannualized base period return (calculated as described above) by adding one to the base period return, raising the sum to a power equal to 365 divided by 7, and subtracting one. The yield quoted by the Money Market Fund at any time represents the amount being earned on a current basis for the indicated period and is a function of the types of instruments in the Money Market Fund's portfolio, their quality and length of maturity, and the Money Market Fund's operating expenses. The length of maturity for the portfolio is the average dollar weighted maturity of the portfolio. In other words, the portfolio has an average maturity for all of its issues, stated in numbers of days and weighted according to the relative value of each investment. The yield fluctuates daily as the income earned on the investments of the Money Market Fund fluctuates. Accordingly, neither the Company nor VALIC can assure the yield quoted on any given occasion will remain constant for any 34 91 period of time. For example, the Money Market Fund's yield will change if it experiences a net inflow of new assets which it then invests in securities whose yield is higher or lower than that being currently earned on investments. Investments in the Money Market Fund are not insured and investors comparing results of the Money Market Fund with investment results and yields from other sources such as banks or savings and loan associations should understand this distinction. In addition, other money market funds as well as banks and savings and loan associations may calculate their yields on a different basis and the yield quoted by the Money Market Fund from time-to-time could vary upwards or downwards if another method of calculation or base period were used. ACCOUNTING AND TAX TREATMENT CALL AND PUTS When a Fund writes a call or put option, an amount equal to the premium received by it is included in that Fund's Statement of Assets and Liabilities as an asset and as an equivalent liability. The amount of the liability is subsequently "marked to market" to reflect the current market value of the option written. The current market value of a written option is the last sale price on the principal Exchange on which such option is traded. If a call option which a Fund has written either expires on its stipulated expiration date, or if a Fund enters into a closing purchase transaction, it realizes a gain (or loss if the cost of the closing transaction exceeds the premium received when the option was sold) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a call option which a Fund has written is exercised, the Fund realizes a capital gain or loss from the sale of the underlying security and proceeds from such sale are increased by the premium originally received. The premium paid by a Fund for the purchase of a put option is included in the asset section of its Statement of Assets and Liabilities as an investment and subsequently adjusted daily to the current market value of the option. For example, if the current market value of the option exceeds the premium paid, the excess would be unrealized appreciation and, conversely, if the premium exceeds the current market value, such excess would be unrealized depreciation. The current market value of a purchased option is the last sale price on the principal Exchange on which such option is traded. If a put option which a Fund has purchased expires unexercised it realizes a capital loss equal to the cost of the option. If a Fund exercises a put option, it realizes a capital gain or loss from the sale of the underlying security and the proceeds from such sale will be decreased by the premium originally paid. FINANCIAL FUTURES CONTRACTS Accounting for financial futures contracts will be in accordance with generally accepted accounting principles. Initial margin deposits made upon entering into financial futures contracts will be recognized as assets due from the FCM (the Fund's agent in acquiring the futures position). During the period the financial futures contract is open, changes in the value of the contract will be recognized as unrealized gains or losses by "marking-to-market" on a daily basis to reflect the market value of the contract at the end of each day's trading. Variation (or maintenance) margin payments will be made or received, depending upon whether gains or losses are incurred. Financial futures contracts held by a Fund at the end of each fiscal year will be required to be "marked to market" for federal income tax purposes (that is, treated as having been sold at market value). SUBCHAPTER M OF THE INTERNAL REVENUE CODE OF 1986 Each Fund of the Company intends to qualify annually as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). A Fund must meet several requirements to obtain and maintain its status as a regulated investment company. Among these requirements are that: (i) at least 90% of a Fund's gross income be derived from dividends, interest, payments with respect to securities loans and gains from the sale or disposition of securities; (ii) less than 30% of a Fund's gross income be derived from gains (without deduction for losses) from sales of securities held for less than three months (legisla- 35 92 tion has been introduced in Congress, in each of the past several years, which, if adopted, would repeal the requirement that less than 30% of a Fund's gross income be derived from gains from the sale or other disposition of securities held for less than three months); (iii) at the close of each quarter of a Fund's taxable year (a) at least 50% of the value of the Fund's assets consist of cash, government securities, securities of other regulated investment companies and other securities (such other securities of any one issuer being not greater than 5% of the value of a Fund and the Fund holding not more than 10% of the outstanding voting securities of any such issuer) and (b) not more than 25% of the value of a Fund's assets be invested in the securities of any one issuer (other than United States government securities or securities of other regulated investment companies). Each Fund of the Company is treated as a separate entity for federal income tax purposes. The Internal Revenue Service ("Service") has ruled publicly that an exchange-traded call option is a security for purposes of the 50% of assets test and that its issuer is the issuer of the underlying security, not the writer of the option, for purposes of the diversification requirements. It has ruled privately (at the request of a taxpayer other than the Company) that income from closing financial futures contracts is considered gain from a disposition of securities for purposes of the 90% of gross income test, and that all of the gain taken into income as a result of the mark-to-market rule will be treated as gain from a sale of a security held for at least three months, regardless of when the contract was acquired, for purposes of the 30% limitation on less-than-three-month gains. However, since taxpayers other than the taxpayer requesting a particular private ruling are not entitled to rely on such ruling, the Company intends to keep its Funds' activity in futures contracts and options at a low enough volume such that gains from closing futures contracts will not exceed 10% of a Fund's gross income until the Service rules publicly on the issues or the Company is otherwise satisfied that those gains are qualifying income. The requirement that less than 30% of a Fund's gross income be derived from gains from the sale or other disposition of securities held for less than three months may restrict a Fund's ability to write covered call options on securities which it has held less than three months and on stock indices based on such securities, to write options which expire in less than three months, and to effect closing purchase transactions with respect to options which have been written less than three months prior to such transactions. Consequently, in order to avoid realizing a gain within the three month period, a Fund may be required to defer the closing out of a contract beyond the time when it might otherwise be advantageous to do so. A Fund may also be restricted in the purchasing of put options for the purpose of hedging underlying securities because of the application of short sale holding period rules with respect to such underlying securities. SECTION 817(H) OF THE CODE Each of the Funds intends to comply with Section 817(h) of the Code and the regulations issued thereunder. Section 817(h) of the Code and Treasury Department regulations thereunder impose certain diversification requirements on variable annuity contracts based upon segregated asset accounts. These requirements are in addition to the diversification requirements of Subchapter M and the 1940 Act and may affect the securities in which a Fund may invest. Failure to meet the requirements of Section 817(h) could result in immediate taxation of the Contract Owner to the extent of appreciation on investment under the Contract. The Section 817(h) diversification requirements do not apply to pension plan contracts. "Pension plan contracts" for these purposes generally means annuity contracts issued with respect to plans qualified under Section 401(a) or 403(a) of the Code, Section 403(b) annuities, Individual Retirement Accounts, Individual Retirement Annuities and annuities issued with respect to Section 457 plans. The Secretary of the Treasury may, in the future, issue additional regulations that will prescribe the circumstances in which a Contract Owner's control of the investments of the separate accounts investing in the Company may cause the Contract Owner, rather than VALIC, to be treated as the owner of the assets of that separate account. In order to comply with the requirements of Section 817(h) and the regulations thereunder, the Company may find it necessary to take action 36 93 to ensure that a Contract funded by the Company continues to qualify as such under federal tax laws. The Company, for example, may be required to alter the investment objectives of a Fund or Funds, or substitute the shares of one Fund for those of another. No such change of investment objectives or substitution of securities will take place without notice to the shareholders of the affected Fund, and the approval of a majority of such shareholders (as defined in the 1940 Act) and without prior approval of the Securities and Exchange Commission, to the extent legally required. It is not feasible to comment on all of the federal income tax consequences concerning the Funds. Each owner of a Contract funded by the Company should consult a qualified tax adviser for more complete information. The reader should refer to the appropriate prospectus related to his or her Contracts for a more complete description of the taxation of the separate account and of the owner of the particular Contract. OTHER INFORMATION SHAREHOLDER REPORTS Annual Reports containing audited financial statements of the Company and Semiannual Reports containing unaudited financial statements, as well as proxy materials, are sent to Contract Owners, annuitants, or beneficiaries as appropriate. VOTING AND OTHER RIGHTS The Company has an authorized capitalization of 13 billion shares of common stock, $0.01 par value per share, 13 billion of which are authorized to be issued in thirteen classes comprising 1 billion shares each. Each of the thirteen classes of stock corresponds to one of the Funds and represents an ownership interest in that Fund. See "Voting and Other Rights" in the Prospectus for a full discussion of the manner in which shares of the Fund are voted. VALIC has made initial organization investments in each of the following Funds, and, as of May 31, 1997, owned of record the following percentage of the outstanding shares of these Funds: 0% of the Stock Index Fund, 0% of the MidCap Index Fund, 0% of the Small Cap Index Fund, 0% of the International Equities Fund, 0% of the Growth Fund, 0% of the Growth & Income Fund, 11.71% of the Capital Conservation Fund, 0% of the Government Securities Fund, 0% of the International Government Bond Fund, 0% of the Social Awareness Fund, 0% of the Science & Technology Fund, 0% of the Money Market Fund, and 0% of the Asset Allocation Fund. VALIC's ownership of more than 25% of the outstanding shares may result in VALIC's being deemed a controlling entity of each of those Funds as that term is defined in the 1940 Act. Such control will dilute the effect of the votes of other shareholders and contract owners. As of May 31, 1997, VALIC Separate Account A owned of record the following percentage of the outstanding shares of each Fund: 96.88% of the Stock Index Fund, 99.99% of the MidCap Index Fund, 100% of the Small Cap Index Fund, 99.85% of the International Equities Fund, 99.65% of the Growth Fund, 100% of the Growth & Income Fund, 88.28% of the Capital Conservation Fund, 99.99% of the Government Securities Fund, 100% of the International Government Bond Fund, 99.92% of the Social Awareness Fund, 100% of the Science & Technology Fund, 99.99% of the Money Market Fund, and 99.95% of the Asset Allocation Fund. As of May 31, 1997, the other shareholders of the Funds included AGL Separate Account A, AGL Separate Account B, AGL Separate Account D, American General Corporation Thrift Plan and VALIC Agents' and Managers' Thrift Plan. None of these other shareholders owned of record more than 5% of any Fund's outstanding shares. CUSTODY OF ASSETS Pursuant to a Custodian Contract with the Company, State Street Bank and Trust Company ("State Street"), 225 Franklin Street, Boston, Massachusetts 02110, holds the cash and portfolio securities of the Company as custodian. State Street is responsible for holding all securities and cash of each Fund, receiving and paying for securities purchased, delivering against payment securities sold, receiving and collecting 37 94 income from investments, making all payments covering expenses of the Company, and performing other administrative duties, all as directed by persons authorized by the Company. State Street does not exercise any supervisory function in such matters as the purchase and sale of portfolio securities, payment of dividends, or payment of expenses of the Funds or the Company. Portfolio securities of the Funds purchased domestically are maintained in the custody of State Street and may be entered into the book entry systems of securities depositories approved by the Board of Directors. Pursuant to the Custodian Contract, portfolio securities purchased outside the United States will be maintained in the custody of various foreign branches of State Street and such other custodians, including foreign banks and foreign securities depositories, as are approved by the Board of Directors, in accordance with regulations under the 1940 Act. State Street holds securities of the Funds on which call options have been written and certain assets of the Funds constituting margin deposits with respect to financial futures contracts at the disposal of the FCMs through which such transactions are effected. The Funds may also be required to post margin deposits with respect to covered call and put options written on stock indices and for this purpose certain assets of those Funds may be held by the custodian pursuant to similar arrangements with the brokers involved. This arrangement regarding margin deposits essentially consists of State Street creating a separate segregated account into which it transfers (upon the Company's instructions) assets from a Fund's general (regular) custodial account. The custody agreement for such arrangement provides that FCMs or brokers will have access to the funds in the segregated accounts when and if the FCMs or brokers represent that the Company has defaulted on its obligation to the FCMs or brokers and that the FCMs or brokers have met all the conditions precedent to their right to receive such funds under the agreement between the Company and the FCMs or brokers. The Company has an agreement with each FCM or broker which provides (1) that the assets of any Fund held by the FCM or broker will be in the possession of State Street until released or sold or otherwise disposed of in accordance with or under the terms of such agreement, (2) that such assets would not otherwise be pledged or encumbered by the FCM or broker, (3) that when requested by the Company the FCM or broker will cause State Street to release to its general custodial account any assets to which a Fund is entitled under the terms of such agreement, and (4) that the assets in the segregated account shall otherwise be used only to satisfy the Company's obligations to the FCM or broker under the terms of such agreement. If on any day a Fund experiences net realized or unrealized gains with respect to financial futures contracts or covered options on stock indices held through a given FCM or broker, it is entitled immediately to receive from the FCM or broker, and usually will receive by the next business day, the net amount of such gains. Thereupon, such assets will be deposited in its general or segregated account with State Street, as appropriate. INDEX FUNDS The Small Cap Index Fund is not promoted, sponsored or endorsed by, nor in any way affiliated with Frank Russell Company. Frank Russell Company is not responsible for and has not reviewed the Fund nor any associated literature or publications and Frank Russell Company makes no representation or warranty, express or implied, as to their accuracy, or completeness, or otherwise. Frank Russell Company reserves the right, at any time and without notice, to alter, amend, terminate or in any way change its Index(es). Frank Russell Company has no obligation to take the needs of any particular fund or its participants or any product or person into consideration in determining, comprising or calculating the Index(es). Frank Russell Company's publication of the Index(es) in no way suggests or implies an opinion by Frank Russell Company as to the attractiveness or appropriateness of investment in any or all securities upon which the Index(es) is (are) based. FRANK RUSSELL COMPANY MAKES NO REPRESENTATION, WARRANTY, OR GUARANTEE AS TO THE ACCURACY, COMPLETENESS, RELIABILITY, OR OTHERWISE OF THE INDEX(ES) OR ANY DATA INCLUDED IN THE INDEX(ES). FRANK RUSSELL COMPANY MAKES NO REPRESENTATION OR WARRANTY 38 95 REGARDING THE USE, OR THE RESULTS OF USE, OF THE INDEX(ES) OR ANY DATA INCLUDED THEREIN, OR ANY SECURITY (OR COMBINATION THEREOF) COMPRISING THE INDEX(ES). FRANK RUSSELL COMPANY MAKES NO OTHER EXPRESS OR IMPLIED WARRANTY, AND EXPRESSLY DISCLAIMS ANY WARRANTY, OF ANY KIND, INCLUDING WITHOUT MEANS OR LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE INDEX(ES) OR ANY DATA OR ANY SECURITY (OR COMBINATION THEREOF) INCLUDED THEREIN. The Stock Index Fund and the MidCap Index Fund are not sponsored, endorsed, sold or promoted by Standard & Poor's Corporation ("S&P"). S&P makes no representation or warranty, express or implied, to the Company or its participants regarding the advisability of investing in securities generally or in the Stock Index Fund or MidCap Index Fund particularly or the ability of the S&P Index or the S&P MidCap 400 Index Fund to track general stock market performance. S&P has no obligation to take the need of the Company or the Company's participants into consideration in determining, composing or calculating the S&P 500 Index or S&P MidCap 400 Index. S&P is not responsible for and has not participated in the determination of the prices and amount of the Stock Index Fund or MidCap Index Fund or the timing of the issuance or sale of such Funds or in the determination or calculation of the equation by which such Funds are to be converted into cash. S&P has no obligation or liability in connection with the administration, marketing or trading of the Funds. S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 INDEX OR S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE COMPANY FROM THE USE OF THE S&P 500 INDEX OR S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX OR S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. DESCRIPTION OF CORPORATE BOND RATINGS Moody's Investors Service, Inc.'s corporate bond ratings are as follows: Aaa -- Bonds which are rated Aaa are judged to be of the best quality and carry the smallest degree of investment risk. Interest payments are protected by a large or by an exceptionally stable margin, and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa -- Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. A -- Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment some time in the future. Baa -- Bonds which are rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. Ba -- Bonds which are rated Ba are judged to have speculative elements and their future cannot be considered as well assured. Often the 39 96 protection of interest and principal payments may be very moderate and thereby not well safe-guarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. B -- Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. Caa -- Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest. Ca -- Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings. Standard & Poor's Corporation classifications are as follows: AAA -- This is the highest rating assigned by Standard & Poor's to a financial obligation and indicates an extremely strong capacity to meet its financial commitment. AA -- An obligation rated "AA" differs from the highest rated obligations only in small degree. The obligor's capacity to meet its financial commitment on the obligation is strong. A -- An obligation rated "A" is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rated categories. However, the obligor's capacity to meet its financial commitment on the obligation is still strong. BBB -- Obligations rated "BBB" exhibit adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. BB-B-CCC-CC -- Obligations rated "BB", "B", "CCC" and "CC" are regarded as having significant speculative characteristics. "BB" indicates the least degree of speculation and "CC" a higher degree of speculation. While such obligations will likely have some quality and protective characteristics, they may be outweighed by large uncertainties or major exposures to adverse conditions. DESCRIPTION OF COMMERCIAL PAPER RATINGS A and Prime Commercial Paper Ratings. Commercial paper rated A by S&P has the following characteristics: Liquidity ratios are adequate to meet cash requirements. Long-term senior debt is rated "A" or better, although, in some cases "BBB" credits may be allowed. The issuer has access to at least two additional channels of borrowing. Basic earnings and cash flow have an upward trend with allowance made for unusual circumstances. Typically, the issuer's industry is well established and the issuer has a strong position within the industry. The reliability and quality of management are unquestioned. The rating is described by S&P as the investment grade category, the highest rating classification. Relative strength or weakness of the above factors determine whether the issuer's commercial paper is rated A-1, A-2 or A-3. Among the factors considered by Moody's in assigning commercial paper ratings are the following: (1) evaluation of the management of the issuer; (2) economic evaluation of the issuer's industry or industries and an appraisal of speculative-type risks which may be inherent in certain areas; (3) evaluation of the issuer's products in relation to competition and customer acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over a period of ten years; (7) financial strength of a parent company and the relationships which exist with the issuer; and (8) recognition by the management of obligations which may be present or may arise as a result of public interest questions and preparations to meet such obligations. Relative differences in strengths and weaknesses in respect of these criteria establish a rating in one of three classifications. The rating Prime-1 is the highest commercial paper rating assigned by Moody's. Its other two ratings, Prime-2 and Prime-3 are designated Higher Quality and High Quality, respectively. INDEPENDENT AUDITORS Ernst & Young LLP, One Houston Center, 1221 McKinney, Suite 2400, Houston, Texas 77010, serve as independent auditors of the Company. 40 97 DIRECTORS AND OFFICERS
POSITION(S) HELD PRINCIPAL OCCUPATION(S) NAME AND ADDRESS WITH REGISTRANT DURING PAST 5 YEARS ---------------- --------------- ------------------- Stephen D. Bickel*................ President and Chairman Chairman, Chief Executive Officer and 2929 Allen Parkway since 1988 Director, VALIC; Chairman of the Houston, Texas 77019 Board of Directors, VAMCO. Formerly, President, Chief Executive Officer, and Director, VALIC (1988-1994); Executive Vice President -- Actuarial & Tax, American General Corporation (1987-1988); Senior Vice President & Actuary, American General Corporation (1983-1987). Thomas L. West, Jr.*.............. Director and Executive Vice President and Director, VALIC; 2929 Allen Parkway President since 1994 Director, VAMCO. Formerly Senior Vice Houston, Texas 77019 President Annuity Business Unit -- Aetna Life Insurance & Annuity Co. (1987-1994). Joe C. Osborne*................... Director since 1992 Senior Vice President -- Marketing 2929 Allen Parkway and Director, VALIC; President and Houston, Texas 77019 Director, VAMCO; Formerly, Executive Vice President -- Marketing, VALIC (1987-1989); Senior Vice President -- Marketing, VALIC (1983-1987). Peter V. Tuters*.................. Director since 1992 Vice President, Chief Investment 2929 Allen Parkway Officer and Director, VALIC; Senior Houston, Texas 77019 Vice President, Chief Investment Officer, American General Corporation; Vice President -- Bonds, Crown Life Insurance Company (1977-1992). Dr. Norman Hackerman.............. Director since 1984 Chairman -- Scientific Advisory Board 5555 San Felipe for The Robert A. Welch Foundation Suite 1900 (1983-Present); Director, Electro- Houston, Texas 77056-2727 source, Inc.; Director, Radian Corporation; Director, Scientific Measurement Systems, Inc.; President Emeritus, Rice University, Houston, Texas. Formerly, President, Rice University, Houston, Texas (1970-1985).(1)(2)(4) Dr. John W. Lancaster............. Director since 1984 Retired. Pastor Emeritus and Director 5300 Main of Planned Giving, First Presbyterian Houston, Texas 77004 Church, Houston, Texas. Formerly, Pastor, First Presbyterian Church, Houston, Texas.(4) Dr. F. Robert Paulsen............. Director since 1985 Dean Emeritus and Professor Emeritus, 2801 N. Indian Ruins College of Higher Education, Tucson, Arizona 85715 University of Arizona, Tucson, Arizona.(1)(2)(4)
- - ------------ * Interested persons of the Company as defined in the 1940 Act specifically because of their capacity as officers, directors or consultants of the Company, VALIC or American General Corporation. (1) Retired Managing General Partner of Van Kampen American Capital Exchange Fund. (2) Retired Trustee of Van Kampen American Capital Bond Fund, Inc., Van Kampen American Capital Income Trust, Van Kampen American Capital Convertible Securities Fund, Inc. and the Common Sense Trust. (3) Retired Trustee of Van Kampen American Capital Income Trust and Common Sense Trust and retired Director of Van Kampen American Capital Bond Fund and Van Kampen American Capital Convertible Securities Fund. (4) Directors who are not interested persons of the Company receive an annual retainer of $18,000. In addition, such directors are paid a per meeting fee of $1,500 plus expenses incurred. 41 98
POSITION(S) HELD PRINCIPAL OCCUPATION(S) NAME AND ADDRESS WITH REGISTRANT DURING PAST 5 YEARS ---------------- --------------- ------------------- Dr. R. Miller Upton............... Director since 1984 Consultant. Formerly, Director, Home 914 Tarrant Dr. Life Insurance Company of New York Fontana, Wisconsin 53125 (1965-1988) and Director, Household International, Inc. (1965-1989).(1) (3)(4) Ben H. Love....................... Director since 1991 Retired Formerly, Chief Executive, 4407 Eaton Circle Boy Scouts of America. (1985-1993)(4) Colleyville, Texas 76034
Listed below are the Company's officers and their principal occupations. All are affiliates of VALIC and are located at 2929 Allen Parkway, Houston, Texas 77019. Each officer serves until his or her successor is elected and shall qualify.
POSITION(S) HELD PRINCIPAL OCCUPATION(S) NAME WITH REGISTRANT DURING PAST 5 YEARS ---- --------------- ------------------- Norman Jaskol..................... Vice President and Senior Vice President and Managing Investment Officer since 1988 Director -- Investments, VALIC. Formerly, Senior Vice President -- Portfolio Manager, Lo- mas Capital Management Company (1987-1988); Deputy Executive Direc- tor -- Investments, Colorado Public Employees Retirement Association (1978-1987). Teresa S. Moro.................... Vice President and Investment Trader -- VALIC. Formerly, Money Mar- Officer since 1990 ket Trader, VALIC (1986-1990); AIM Management Group Inc. (1983-1986). John W. Mossbarger................ Vice President and Investment Portfolio Manager, VALIC. Formerly Officer since 1992 Managing Director -- Common Stocks, American General Corporation (1989- 1992); Senior Vice President -- Equity Investments, American General Corporation (1988-1989); Vice President and Trust Officer Texas Commerce Bank N.A. (1982-1988). Leon A. Olver..................... Vice President and Investment Portfolio Manager, VALIC. Formerly Officer since 1995 Vice President and Treasurer, First Heights Bank (1994-1995); Vice President and Assistant Treasurer, First Heights Bank (1991-1994); Assistant Vice President, Pulte Financial Companies (1984-1991). William Trimbur, Jr............... Vice President and Investment Portfolio Manager, VALIC. Formerly, Officer since 1987 Second Vice President, VALIC (1985- 1990); Controller, VALIC (1985-1986); Assistant Controller, VALIC (1982-1985) and Assistant Treasurer, VALIC (1982-1986).
42 99
POSITION(S) HELD PRINCIPAL OCCUPATION(S) NAME WITH REGISTRANT DURING PAST 5 YEARS ---- --------------- ------------------- Brent C. Nelson................... Vice President since 1987 Senior Vice President and Controller, Director, VALIC. Formerly, Vice President and Controller, VALIC (1990-1994); Controller, VALIC (1987-1990); Second Vice President and Controller, VALIC (1986-1987); Second Vice President -- Fund Operations, VALIC (1985-1986); Assistant Vice President -- Controller, Lomas Financial Security Insurance Co. (1982-1985). Cynthia A. Toles.................. General Counsel and Secretary Senior Associate General Counsel and since 1985 Secretary, VALIC. Secretary and Assistant Treasurer, VAMCO. Formerly, Vice President, Associate General Counsel & Assistant Secretary (1988- 1989); Second Vice President, Associate General Counsel and Assistant Secretary, VALIC (1986-1988); Assistant Vice President, Assistant General Counsel and Assistant Secretary, VALIC (1983- 1986). Gregory R. Seward................. Treasurer since 1991 Director of Fund Operations and Assistant Controller, VALIC. Formerly, Controller, Avanti Health Systems, Inc. (1988-1991); Reports Manager, American Capital Asset Management, Inc. (1986-1988); Senior Auditor, Price Waterhouse (1982-1986). Kathryn A. Pearce................. Controller since 1996 Associate Director of Fund Operations, VALIC. Formerly, Supervisor -- Mutual Fund Accounting, Van Kampen American Capital (1977-1996). David H. den Boer................. Assistant Secretary since 1991 Senior Associate General Counsel, VALIC. Formerly, Senior Counsel, VALIC (1989-1990); Private Law Practice (1981-1989).
43 100 The officers conduct and supervise the daily business operations of the Company, while the directors, in addition to their functions set forth under "Investment Adviser," review such actions and decide on general policy. The Company has an Audit Committee. The Company's Audit Committee consists of Messrs. Lancaster, Hackerman, Paulsen, Upton, and Love. The Audit Committee recommends to the Board the selection of independent auditors for the Company and reviews with such independent auditors the scope and results of the annual audit, reviews the performance of the accounts, and considers any comments of the independent auditors regarding the Company's financial statements or books of account. The Company does not have a standing nominating or compensation committee. The five directors of the Company who are not affiliated with VALIC are each paid annual directors' fees and are reimbursed for certain out-of-pocket expenses by the Company. The directors and officers of the Company and members of their families as a group, beneficially owned less than 1% of the common stock of each Fund outstanding as of May 31, 1997. FINANCIAL STATEMENTS The financial statements for the year ended May 31, 1997 and the report of independent auditors for that period are included in the American General Series Portfolio Company Annual Report for that period. The Annual Report to shareholders as of May 31, 1997 is incorporated by reference in this Statement of Additional Information. The financial statements included in the Annual Report and incorporated by reference in this Statement of Additional Information have been audited by Ernst & Young LLP, Independent Auditors, as set forth in their report thereon which appears in the Annual Report and have been incorporated by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. 44 101 ================================================================================ AMERICAN GENERAL SERIES PORTFOLIO COMPANY - ANNUAL REPORT MAY 31, 1997 ================================================================================ TABLE OF CONTENTS President's Letter . . . . . . . . . . . . . . . . . . . . . . . . . 1 Stock Index Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 4 MidCap Index Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Small Cap Index Fund . . . . . . . . . . . . . . . . . . . . . . . . 19 International Equities Fund . . . . . . . . . . . . . . . . . . . . . 36 Growth Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Growth & Income Fund . . . . . . . . . . . . . . . . . . . . . . . . 45 Science & Technology Fund . . . . . . . . . . . . . . . . . . . . . . 49 Social Awareness Fund . . . . . . . . . . . . . . . . . . . . . . . . 52 Timed Opportunity Fund . . . . . . . . . . . . . . . . . . . . . . . 57 Capital Conservation Fund . . . . . . . . . . . . . . . . . . . . . . 65 Government Securities Fund . . . . . . . . . . . . . . . . . . . . . 68 International Government Bond Fund . . . . . . . . . . . . . . . . . 70 Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 77 Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . 80 Report of Independent Auditors . . . . . . . . . . . . . . . . . . . 86
102 ================================================================================ AGSPC PRESIDENT'S LETTER 1 ================================================================================ We are pleased to provide the May 31, 1997 Annual Report of the American General Series Portfolio Company. This report details the investments of each of the thirteen funds that comprise the American General Series Portfolio Company and provides financial and performance information for each fund for the fiscal year ended May 31, 1997. Your variable annuity contract permits you to invest in one or more of the funds described in this report. The funds that are available under your contract are shown on the chart on page 2. MARKET CONDITIONS Domestic large capitalization equity returns exceeded 20% for the third consecutive year. The Standard & Poor's 500 Stock Index (S&P 500) provided a total return of 29.43%. An unusual aspect of the market this year, was the wide divergence in performance of market sectors by market value of company. In contrast to the return of the S&P, the Standard & Poor's MidCap 400 Index (MidCap 400) returned 18.21%, an 11.22% difference. The performance of smaller companies, as measured by the Russell 2000, was even greater with that index returning 6.97%, a 22.46% difference. The bond markets also presented a wide range of performance. As the economy continued to grow at a moderate pace with very low levels of inflation, high quality corporate bonds earned 8.85%. Less than investment grade bonds, reflecting investor confidence, produced a return of 13.2%. International returns, as measured by the Morgan Stanley Capital International Index of Europe, Australia, and Far East (EAFE) were 7.54%. Stock market rallies in Europe and Japan were offset somewhat by currency weakness. FUND RETURNS INDEXED FUNDS The Stock Index Fund achieved a total return of 29.58%, 0.15% above its index. The MidCap Index Fund returned 17.88%, 0.33% below its index. The Small Cap Index Fund surpassed its index by 0.95% with a return of 7.92%. The International Equities Fund achieved a return of 8.16%, 0.62% above its index. MANAGED FUNDS The managed funds' returns varied widely as concentration in different market sectors produced the results consistent with the indexes discussed above. The AGSPC Growth Fund returned 9.86%, under performing the S&P 500 by 19.57%. The fund's focus on non-cyclical growth companies in service industries was not in favor as a strong economy permitted better earnings performance among more cyclical sectors. Continuing to emphasize higher growth, medium capitalization issues should result in better performance if the economy slows or the market leadership broadens. The AGSPC Growth & Income Fund returned 17.89%, 11.54% less than the S&P 500. The performance was closer to the MidCap 400 as mid-sized and smaller capitalization stocks are heavily represented in the 1,700 issues that constitute the Value Line Timeliness Ranking System. It is that system that drives the investment selections for the AGSPC Growth & Income Fund. The AGSPC Science & Technology Fund delivered a modest gain of 2.77% before expenses. The principal deterrents to performance were a valuation compression across all sectors of technology stocks, concern over the level of business activity overseas and the general health of the personal computer industry. Although the near term outlook is somewhat clouded, key industry product cycles should positively impact the all important PC industry in 1988. The Social Awareness Fund reported a gain of 31.04% for the fiscal year. This was 1.61% above its index. Concentration on the larger capitalization growth sectors and avoidance of the volatile tobacco industry aided performance. The Timed Opportunity Fund earned 16.46% before expenses, 2.67% less than its benchmark. An over weighting of some mid-cap stocks during the first half of the year caused the equity portion of the fund to underperform. That strategy was changed and subsequent performance has more closely paralleled the relevant index. BOND FUNDS The Capital Conservation Fund yielded 8.32%, under performing its index by 0.53%. The shortfall was the result of an increase in credit quality with an attendant lower yield on those issues. As credit concerns diminish higher yields may be obtainable. The Government Securities Fund achieved a return of 7.50%, 0.12% above its index. Positions in callable agency notes and collateralized mortgage obligations allowed the fund to achieve an enhanced yield. The International Government Bond Fund recorded a return of 1.69%, 0.44% above its index. The yield was reduced by the strong dollar versus all currencies in which the fund is invested. FUTURE OUTLOOK The U.S. economic performance has been extremely favorable for investors. Growth has proceeded at modest levels with Gross Domestic Product averaging 3.7% over the past five quarters. Inflation has been well contained with the Consumer Price Index approximating 3% or less. Expectations of leading economists are for Gross Domestic Product to rise at 2.4% in the second half of 1997 and to proceed at 2.2% in the first six months of 1988. Inflation is projected at 2.7% for the second half of this year with an increase to 3.1% for the first half of next year. Those conditions should result in long term interest rates remaining in the current range of 6.3% to 7.2%. With relatively stable interest rates, the stock market could improve from current levels. Respectfully, /s/ STEPHEN D. BICKEL Stephen D. Bickel, President American General Series Portfolio Company July 10, 1997 103 =============================================================================== 2 AGSPC PRESIDENT'S LETTER CONTINUED =============================================================================== FUND RETURNS AND TRACKING DIFFERENCES For the period ended May 31, 1997
(1) (2) (3) (4) (5) FUND TOTAL PERFORMANCE INDEX BEFORE RETURN SUBTRACTING INCLUDING TRACKING FUND FUND EXPENSES REINVESTED DIFFERENCE AGSPC FUND/RELEVANT MARKET INDEX RETURN(A) EXPENSES (1) + (2) DIVIDENDS (3) - (4) - - -------------------------------------------------------------------------------------------------------------- Indexed Funds: Stock Index Fund / S&P 500 ...................... 29.24% 0.34% 29.58% 29.43% 0.15% MidCap Index Fund / Standard & Poor's MidCap 400 .................. 17.48 0.40 17.88 18.21 (0.33) Small Cap Index Fund / Russell 2000 ............. 7.51 0.41 7.92 6.97 0.95 International Equities Fund / EAFE .............. 7.74 0.42 8.16 7.54 0.62 Managed Funds: Growth Fund / S&P 500 ........................... 9.00 0.86 9.86 29.43 (19.57) Growth & Income Fund / S&P 500 .................. 17.08 0.81 17.89 29.43 (11.54) Science & Technology Fund / S&P 500 ............. 1.81 0.96 2.77 29.43 (26.66) Social Awareness Fund / S&P 500 ................. 30.48 0.56 31.04 29.43 1.61 Timed Opportunity Fund / Benchmark(b)............ 15.89 0.57 16.46 19.13 (2.67) Capital Conservation Fund / Merrill Lynch Corporate Master Bond ........... 7.75 0.57 8.32 8.85 (0.53) Government Securities Fund / Lehman Brothers U.S. Treasury ................. 6.94 0.56 7.50 7.38 0.12 Int'l Gov't Bond Fund / Salomon Non U.S. Gov't Bond ................... 1.13 0.56 1.69 1.25 0.44 Money Market Fund / 30 Day Certificate of Deposit Primary Offering Rate by New York City Banks (NYC 30 Day CD Rate) .......................... 5.02 0.57 5.59 4.62 0.97
(a) Fund level returns are net of investment management fees and other fund expenses, but do not reflect charges specified in annuity contracts for mortality and expense guarantees, administrative fees, or surrender charges. (b) Benchmark consists of 55% S&P 500 Index, 35% Merrill Lynch Corporate and Government Master Index, and 10% NYC 30 Day CD Rate. SUMMARY OF NET ASSET VALUES PER SHARE AND PER SHARE DISTRIBUTIONS
DISTRIBUTIONS FROM NET INVESTMENT INCOME AND NET REALIZED GAINS NET ASSET VALUES ON SECURITIES - - ----------------------------------------------------------------------------------------------------------- (UNAUDITED) MAY 31, NOVEMBER 27, MAY 31, 6/1/96 TO 11/28/96 TO FUND 1996 1996 1997 11/27/96 5/31/97 - - ----------------------------------------------------------------------------------------------------------- Stock Index (emulate S&P 500) .................. $ 20.69 $ 23.37 $ 26.09 $ 0.19 $ 0.37 MidCap Index (emulate MidCap 400) .............. 19.09 20.33 20.83 0.12 1.33 Small Cap Index (emulate Russell 2000).......... 16.25 15.94 16.18 0.11 1.08 International Equities (foreign long term growth stocks) ............ 11.15 11.43 11.44 0.11 0.43 Growth Fund (long term growth of capital) ...... 16.49 17.51 17.62 0.00 0.34 Growth & Income Fund (long term growth of capital and current income) ............... 14.78 16.13 16.87 0.04 0.35 Science & Technology Fund (long term growth of capital) .................................. 20.48 21.28 19.88 0.00 0.93 Social Awareness (social criteria growth stocks)....................................... 15.49 17.72 17.90 0.12 1.90 Timed Opportunity (asset allocation) ........... 12.55 13.23 12.57 0.21 1.98 Capital Conservation (quality corporate bonds) ....................................... 9.23 9.59 9.31 0.30 0.32 Government Securities (intermediate and long term government bonds) .................. 9.61 9.91 9.67 0.29 0.30 International Government Bond (high quality foreign government debt securities) .......... 11.79 12.27 11.33 0.31 0.29 Money Market (money market instruments) ........ 1.00 1.00 1.00 0.02 0.03
The change in net asset value of the funds will not be the same as the change in the accumulation unit value of your annuity contract because (1) the change in net asset value does not reflect the reinvestment of income and capital gain distributions and (2) the mortality and expense charges described in your annuity contract are not included. 104 =============================================================================== AGSPC PRESIDENT'S LETTER CONTINUED 3 =============================================================================== FUNDS AVAILABLE UNDER VARIABLE ANNUITY CONTRACTS
VALIC SEPARATE ACCOUNT A ----------------------------------------------------- CONTRACT FORM ----------------------------------------------------- AG LIFE SEPARATE ACCOUNT A -------------------- AG LIFE AG LIFE PORTFOLIO PORTFOLIO INDEPEN- GROUP SEPARATE SEPARATE DIRECTOR DIRECTOR DENCE PLUS IMPACT UNIT PUR- NON ACCOUNT ACCOUNT FUND 2* 1* UIT(G)-585 UIT-981 CHASE** QUALIFIED QUALIFIED B D - - ----------------------------------------------------------------------------------------------------------------------------------- Stock Index (emulate S&P 500) ................... Yes Yes Yes Yes Yes Yes Yes Yes Yes MidCap Index (emulate MidCap 400) ................ No Yes Yes Yes No Yes Yes Yes No Small Cap Index (emulate Russell 2000) .............. No Yes Yes No No No No No No International Equities (foreign long term growth stocks) ... No Yes Yes No No No No No Yes Growth Fund (long term growth of capital)........ Yes Yes No No No No No No No Growth & Income Fund (long term growth of capital and current income) No Yes No No No No No No No Science & Technology Fund (long term growth of capital)........ Yes Yes No No No No No No No Social Awareness (social criteria growth stocks) ..... Yes Yes Yes No No No No No Yes Timed Opportunity (asset allocation) .................. No Yes Yes Yes No Yes Yes Yes No Capital Conservation (quality corporate bonds) ........... No Yes Yes Yes No Yes Yes Yes No Government Securities (intermediate and long term government bonds) ..... No Yes Yes No No Yes Yes Yes No Int'l Government Bond (high quality foreign government debt securities) . Yes Yes Yes No No No No No No Money Market (money market instruments) .......... Yes Yes Yes Yes No Yes Yes Yes No
*UIT(G)194, UITN-194, UIT-IRA-194, UIT-SEP-194 **GUP, IVA, GVA SA-1, GVA SA-2 105 ================================================================================ 4 STOCK INDEX FUND - STATEMENT OF NET ASSETS May 31, 1997 ================================================================================
NUMBER MARKET OF SHARES VALUE - - -------------------------------------------------------- COMMON STOCKS - 98.75% ADVERTISING - 0.08% 28,900 Interpublic Group Cos., Inc....$ 1,730,388 ------------- AEROSPACE/DEFENSE - 1.82% 130,279 Boeing Co...................... 13,711,865 29,000 EG & G, Inc.................... 565,500 27,980 General Dynamics Corp.......... 2,095,003 75,076 Lockheed Martin Corp........... 7,028,991 80,500 McDonnell Douglas Corp......... 5,182,188 22,800 Northrop Grumman Corp.......... 1,932,300 91,200 Raytheon Co.................... 4,354,800 44,000 TRW Inc........................ 2,354,000 91,100 United Technologies Corp....... 7,322,163 ------------- 44,546,810 ------------- AIRLINES - 0.38% 35,700 *AMR Corp....................... 3,547,687 31,600 Delta Air Lines, Inc........... 2,962,500 55,200 Southwest Airlines Co.......... 1,421,400 41,400 *US Airways Group, Inc.......... 1,438,649 ------------- 9,370,236 ------------- APPAREL & PRODUCTS - 0.10% 27,000 *Fruit of the Loom, Inc. Class A 941,624 32,900 Liz Claiborne, Inc............. 1,501,062 ------------- 2,442,686 ------------- APPLIANCES/FURNISHINGS - 0.10% 35,000 Maytag Corp.................... 936,250 30,200 Whirlpool Corp................. 1,506,225 ------------- 2,442,475 ------------- AUTO - CARS - 1.67% 270,274 Chrysler Corp.................. 8,581,199 437,300 Ford Motor Co.................. 16,398,750 278,200 General Motors Corp............ 15,926,949 ------------- 40,906,898 ------------- AUTO - REPLACEMENT PARTS - 0.36% 44,200 *AutoZone, Inc.................. 1,033,175 18,700 Cooper Tire & Rubber Co........ 418,412 14,300 Echlin Inc..................... 477,263 AUTO - REPLACEMENT PARTS - Continued 74,400 Genuine Parts Co...............$ 2,492,399 65,800 Goodyear Tire & Rubber Co...... 3,849,300 15,800 Pep Boys-Manny, Moe & Jack..... 493,749 ------------- 8,764,298 ------------- BANKS - NEW YORK CITY - 2.04% 148,600 Bank of New York Co., Inc...... 6,334,075 162,782 Chase Manhattan Corp........... 15,382,899 175,700 CitiCorp....................... 20,095,687 74,300 J. P. Morgan & Co. Inc......... 7,987,250 ------------- 49,799,911 ------------- BANKS - OTHER - 2.70% 133,368 BankAmerica Corp............... 15,587,384 60,400 BankBoston Corp................ 4,409,200 121,923 First Chicago Corp............. 7,223,938 104,497 First Union Corp............... 8,973,679 105,393 *Fleet Financial Group, Inc..... 6,442,147 54,500 Mellon Bank Corp............... 4,768,750 73,200 National City Corp............. 3,769,799 14,000 Republic of New York Corp...... 1,396,500 66,000 US Bancorp..................... 4,050,750 35,233 Wells Fargo & Co............... 9,283,896 ------------- 65,906,043 ------------- BANKS - REGIONAL - 2.71% 165,472 BANC ONE CORP.................. 7,156,664 75,000 Barnett Banks, Inc............. 3,946,874 32,700 Comerica Inc................... 2,043,750 81,400 CoreStates Financial Corp...... 4,304,025 45,100 Fifth Third Bancorp............ 3,483,974 53,500 First Bank System, Inc......... 4,387,000 85,170 KeyCorp........................ 4,631,119 287,792 NationsBank Corp............... 16,943,753 139,100 Norwest Corp................... 7,441,850 110,100 PNC Bank Corp.................. 4,610,437 72,200 SunTrust Banks, Inc............ 3,853,675 55,513 Wachovia Corp.................. 3,379,354 ------------- 66,182,475 ------------- BEVERAGE - BREWERS/ DISTRIBUTORS - 0.58% 11,900 Adolph Coors Class B...........$ 290,063 186,100 Anheuser-Busch Companies, Inc.. 7,979,037 18,915 Brown-Forman Corp Class B...... 967,029 124,600 Seagram Co. Ltd................ 5,015,150 ------------- 14,251,279 ------------- BEVERAGE - SOFT DRINKS - 3.44% 923,100 Coca-Cola Co................... 63,001,575 571,200 PepsiCo, Inc................... 20,991,600 ------------- 83,993,175 ------------- BROADCASTING - 0.85% 78,550 Comcast Corp. Class A Special.. 1,364,806 45,300 *General Instrument Corp........ 1,098,525 229,000 *Tele-Communications, Inc. Class A ...................... 3,463,625 191,300 U S West Communications Group.. 7,006,363 210,600 *U S West Media Group........... 4,185,675 122,700 *Viacom, Inc. Class B........... 3,642,656 ------------- 20,761,650 ------------- BUILDING MATERIALS - 0.32% 8,900 Armstrong World Industries, Inc. ......................... 605,200 67,100 Lowe's Companies, Inc.......... 2,642,063 70,100 Masco Corp..................... 2,725,138 60,700 Sherwin-Williams Co............ 1,821,000 ------------- 7,793,401 ------------- CHEMICAL - MAJOR - 2.13% 95,500 Dow Chemical Co................ 7,962,313 206,300 E.I. du Pont de Nemours and Co. 22,460,913 15,400 Goodrich (B.F.) Co............. 662,200 39,300 Hercules, Inc.................. 1,842,188 218,500 Monsanto Co.................... 9,614,000 54,900 Morton International, Inc...... 1,770,525 66,500 PPG Industries, Inc............ 3,865,313 18,300 Rohm and Haas Co............... 1,578,375 51,600 Union Carbide Corp............. 2,412,300 ------------- 52,168,127 -------------
106 ================================================================================ May 31, 1997 STOCK INDEX FUND - STATEMENT OF NET ASSETS CONTINUED 5 ================================================================================
NUMBER MARKET OF SHARES VALUE - - -------------------------------------------------------- CHEMICAL - MISCELLANEOUS - 0.59% 41,100 Air Products and Chemicals, Inc. .........................$ 3,195,525 30,637 Eastman Chemical Co............ 1,822,902 8,550 Ecolab Inc..................... 355,894 8,200 FMC Corp....................... 590,400 26,500 Great Lakes Chemical Corp...... 1,295,187 9,328 Millipore Corp................. 402,270 20,300 Nalco Chemical Co.............. 753,638 59,200 Praxair, Inc................... 3,115,400 32,400 Sigma Aldrich Corp............. 992,250 37,800 W. R. Grace & Co............... 1,975,050 ------------ 14,498,516 ------------ CONGLOMERATES - 1.00% 105,800 Allied Signal Inc.............. 8,120,150 38,800 ITT Industries, Inc............ 960,300 36,500 Loews Corp..................... 3,549,625 65,200 Tenneco Inc.................... 2,917,700 27,600 Textron Inc.................... 3,270,600 69,600 Tyco International Ltd......... 4,419,600 53,900 Whitman Corp................... 1,300,337 ------------ 24,538,312 ------------ CONSUMER FINANCE - 0.21% 20,400 Beneficial Corp................ 1,310,700 112,650 MBNA Corp...................... 3,816,019 ------------ 5,126,719 ------------ CONTAINERS - METAL/ GLASS - 0.35% 4,700 Ball Corp...................... 136,887 93,500 Corning Inc.................... 4,710,063 55,700 Crown Cork & Seal Co., Inc..... 3,244,525 12,100 Owens Corning.................. 505,175 ------------ 8,596,650 ------------ CONTAINERS - PAPER - 0.05% 6,500 Bemis Co., Inc................. 260,000 17,700 Temple-Inland Inc.............. 1,070,850 ------------ 1,330,850 ------------ COSMETICS/TOILETRIES - 0.98% 6,800 Alberto-Culver Co. Class B.....$ 193,800 57,800 Avon Products, Inc............. 3,684,750 204,100 Gillette Co.................... 18,139,387 45,300 International Flavors & Fragrances, Inc............... 2,010,188 ------------ 24,028,125 ------------ DRUGS - 7.01% 14,200 Allergan, Inc.................. 420,675 31,600 *ALZA Corp...................... 932,200 235,600 American Home Products Corp.... 17,964,500 104,400 *Amgen Inc...................... 6,981,750 23,900 Bausch & Lomb Inc.............. 961,975 367,000 Bristol Myers Squibb Co........ 26,928,625 48,200 CVS Corp....................... 2,307,575 203,100 Eli Lilly and Co............... 18,888,300 444,300 Merck & Co., Inc............... 39,931,463 205,570 Pharmacia & Upjohn, Inc........ 7,117,861 250,900 Pfizer, Inc.................... 25,811,337 142,700 Schering-Plough Corp........... 12,950,025 101,600 Warner-Lambert Co.............. 10,236,200 ------------ 171,432,486 ------------ ELECTRICAL EQUIPMENT - 4.00% 93,700 AMP Inc........................ 3,853,413 62,000 *Cabletron Systems, Inc......... 2,728,000 175,000 Emerson Electric Co............ 9,450,000 1,208,000 General Electric Co............ 72,933,000 28,400 *Intergraph Corp................ 200,575 30,500 National Service Industries, Inc. ......................... 1,338,187 21,600 Raychem Corp................... 1,601,100 6,800 Thomas & Betts Corp............ 345,950 199,258 Westinghouse Electric Corp..... 4,034,975 14,200 W. W. Grainger Inc............. 1,139,550 ------------ 97,624,750 ------------ ELECTRONIC INSTRUMENTS - 0.20% 28,100 General Signal Corp............ 1,183,713 19,400 Perkin-Elmer Corp.............. 1,474,400 3,600 Tektronix, Inc................. 206,550 58,700 *Thermo Electron Corp........... 2,025,150 ------------ 4,889,813 ------------ ENTERTAINMENT - 1.51% 39,400 *Harrah's Entertainment, Inc....$ 733,825 62,475 Hasbro, Inc.................... 1,811,775 16,200 *King World Productions, Inc.... 609,525 117,787 Mattel, Inc.................... 3,518,887 210,200 Time Warner Inc................ 9,774,300 248,552 Walt Disney Co................. 20,350,195 ------------ 36,798,507 ------------ FINANCE COMPANIES - 0.23% 59,300 Green Tree Financial Corp...... 2,075,500 36,800 Household International, Inc... 3,615,600 ------------ 5,691,100 ------------ FOODS - 2.33% 204,945 Archer Daniels Midland Co...... 4,098,899 173,900 Campbell Soup Co............... 7,999,400 89,350 ConAgra, Inc................... 5,372,169 54,200 CPC International Inc.......... 4,661,200 60,000 General Mills, Inc............. 3,795,000 136,650 H J Heinz Co................... 5,875,950 47,000 Hershey Foods Corp............. 2,637,875 77,700 Kellogg Co..................... 5,730,375 24,100 Pioneer Hi-Bred International, Inc. ......................... 1,680,975 57,400 Quaker Oats Co................. 2,367,750 37,700 Ralston Purina Co.............. 3,213,925 181,200 Sara Lee Corp.................. 7,406,550 37,100 Wm. Wrigley Jr. Co............. 2,198,175 ------------ 57,038,243 ------------ FOOTWEAR - 0.20% 71,400 NIKE, Inc. Class B............ 4,069,800 18,900 *Reebok International Ltd....... 774,900 3,800 Stride Rite Corp............... 57,950 ------------ 4,902,650 ------------ FREIGHT - 0.14% 41,200 *Federal Express Corp........... 2,157,850 37,200 Ryder System, Inc.............. 1,232,250 ------------ 3,390,100 ------------ FUNERAL SERVICES - 0.10% 72,700 Service Corp. International.... 2,562,675 ------------
107 ================================================================================ 6 STOCK INDEX FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ================================================================================
NUMBER MARKET OF SHARES VALUE - - -------------------------------------------------------- GOLD MINING - 0.27% 151,700 Barrick Gold Corp..............$ 3,830,425 52,100 Battle Mountain Gold Co........ 312,599 21,800 *Echo Bay Mines Ltd............. 133,525 53,900 Homestake Mining Co............ 747,863 88,900 Placer Dome Inc................ 1,622,425 ------------ 6,646,837 ------------ GOVERNMENT SPONSORED - 1.08% 266,000 Federal Home Loan Mortgage Corp. ........................ 8,778,000 402,000 Federal National Mortgage Association................... 17,537,250 ------------ 26,315,250 ------------ HARDWARE & TOOLS - 0.13% 31,300 Black & Decker Corp............ 1,087,675 11,550 Snap-on Inc.................... 460,556 42,600 Stanley Works.................. 1,746,600 ------------ 3,294,831 ------------ HEALTHCARE - 0.42% 41,300 Cardinal Health, Inc........... 2,405,725 114,400 *HealthSouth Corp............... 2,616,900 45,800 *Humana Inc..................... 1,036,225 72,700 United HealthCare Corp......... 4,107,550 ------------ 10,166,400 ------------ HEAVY DUTY TRUCKS/PARTS - 0.29% 19,700 Cummins Engine Co., Inc........ 1,255,875 27,100 Dana Corp...................... 978,988 31,300 Eaton Corp..................... 2,496,175 39,010 *Navistar International Corp.... 648,541 32,710 PACCAR Inc..................... 1,480,128 ------------ 6,859,707 ------------ HOME BUILDERS - 0.05% 16,600 Centex Corp.................... 661,925 14,456 Kaufman & Broad Home Corp...... 216,840 7,900 Pulte Corp..................... 249,838 ------------ 1,128,603 ------------ HOSPITAL MANAGEMENT - 0.53% 8,000 *Beverly Enterprises, Inc....... 113,000 249,584 Columbia/HCA Healthcare Corp... 9,141,014 HOSPITAL MANAGEMENT - Continued 13,000 Manor Care, Inc................$ 372,125 13,100 Shared Medical Systems Corp.... 694,300 94,700 *Tenet Healthcare Corp.......... 2,604,250 ------------ 12,924,689 ------------ HOSPITAL SUPPLIES - 2.93% 291,900 Abbott Laboratories............ 18,389,700 8,400 Bard (C. R.), Inc.............. 268,800 109,700 Baxter International Inc....... 5,786,675 55,200 Becton, Dickinson and Co....... 2,718,600 64,100 Biomet, Inc.................... 1,197,869 67,677 *Boston Scientific Corp......... 3,612,260 487,200 Johnson & Johnson.............. 29,171,100 37,900 Mallinckrodt, Inc.............. 1,416,513 90,700 Medtronic, Inc................. 6,711,800 40,650 *St. Jude Medical, Inc.......... 1,377,019 25,700 United States Surgical Corp.... 867,375 ------------ 71,517,711 ------------ HOUSEHOLD PRODUCTS - 3.06% 19,200 Clorox Co...................... 2,424,000 118,800 Colgate-Palmolive Co........... 7,365,600 154,600 Minnesota Mining & Manufacturing Co.............. 14,184,550 59,000 Newell Co...................... 2,256,750 249,226 Procter & Gamble Co............ 34,362,035 63,100 Rubbermaid, Inc................ 1,758,913 27,600 Tupperware Corp................ 1,000,500 59,300 Unilever N V - ADR............. 11,489,375 ------------ 74,841,723 ------------ INFORMATION PROCESSING - 9.21% 1 ACNielson...................... 17 58,400 Adobe Systems Inc.............. 2,606,100 53,500 *Amdahl Corp.................... 535,000 53,700 *Apple Computer, Inc............ 892,763 22,200 Autodesk, Inc.................. 863,025 105,200 Automatic Data Processing, Inc. 5,167,950 78,400 *Bay Networks, Inc.............. 1,920,800 27,452 *Ceridian Corp.................. 1,008,861 241,600 *Cisco Systems, Inc............. 16,368,400 68,600 Cognizant Corp................. 2,538,200 101,400 *Compaq Computer Corp........... 10,976,550 INFORMATION PROCESSING - Continued 137,687 Computer Associates International, Inc............$ 7,538,363 24,700 *Computer Sciences Corp......... 1,911,163 67,400 *Dell Computer Corp............. 7,582,500 62,800 *Digital Equipment Corp......... 2,252,950 91,900 *E M C Corp..................... 3,664,513 166,754 First Data Corp................ 6,670,160 40,100 H & R Block Inc................ 1,323,300 373,000 Hewlett Packard Co............. 19,209,500 51,900 Honeywell Inc.................. 3,775,725 377,800 International Business Machines Corp................. 32,679,700 444,000 *Microsoft Corp................. 55,056,000 142,500 *Novell, Inc ................... 1,122,188 244,125 *Oracle Corp.................... 11,382,328 49,900 *Parametric Technology Corp..... 2,239,263 52,800 Pitney Bowes Inc............... 3,709,200 96,300 *Seagate Technology............. 3,912,188 58,100 *Silicon Graphics, Inc.......... 1,096,638 142,100 *Sun Microsystems, Inc.......... 4,582,725 26,800 *Tandem Computers Inc........... 381,900 66,400 *3Com Corp...................... 3,220,400 37,700 Unisys Corp.................... 259,188 7 Wang Laboratories, Inc. (Warrants) ................... 43 128,800 Xerox Corp..................... 8,726,200 ------------ 225,173,801 ------------ INSURANCE - CASUALTY - 0.34% 67,800 Chubb Corp..................... 4,135,800 47,400 SAFECO Corp.................... 2,061,900 24,300 St. Paul Companies, Inc........ 1,740,488 13,900 USF & G Corp................... 298,850 ------------ 8,237,038 ------------ INSURANCE - LIFE - 0.76% 60,292 Aetna Inc...................... 6,089,492 72,400 Conseco Inc.................... 2,896,000 30,375 Jefferson-Pilot Corp........... 1,932,609 47,800 Lincoln National Corp.......... 2,909,825 20,200 Torchmark Corp................. 1,325,625 21,109 Transamerica Corp.............. 1,918,280 30,150 USLIFE Corp.................... 1,469,813 ------------ 18,541,644 ------------
108 ================================================================================ May 31, 1997 STOCK INDEX FUND - STATEMENT OF NET ASSETS CONTINUED 7 ================================================================================
NUMBER MARKET OF SHARES VALUE - - -------------------------------------------------------- INSURANCE - MISCELLANEOUS - 0.49% 31,600 General Reinsurance Corp.......$ 5,537,900 15,800 MBIA, Inc...................... 1,696,525 21,800 MGIC Investment Corp........... 1,940,200 33,700 UNUM Corp...................... 2,666,513 ------------ 11,841,138 ------------ INSURANCE - MULTILINE - 2.80% 165,520 Allstate Corp.................. 12,186,409 172,418 American International Group, Inc. ......................... 23,341,087 49,500 Aon Corp....................... 2,413,125 33,600 CIGNA Corp..................... 5,838,000 55,200 Hartford Financial Services Group ........................ 4,305,600 35,600 Marsh & McLennan Companies, Inc........................... 4,690,300 44,500 Providian Corp................. 2,664,437 236,810 Travelers Group, Inc........... 12,994,949 ------------ 68,433,907 ------------ LEISURE TIME - 0.02% 17,900 Brunswick Corp................. 545,950 ------------ LODGING - 0.46% 58,600 *HFS, Inc....................... 3,157,075 100,400 Hilton Hotels Corp............. 2,836,300 47,700 *ITT Corp....................... 2,844,113 43,700 Marriott International, Inc.... 2,523,675 ------------ 11,361,163 ------------ MACHINE TOOLS - 0.02% 4,700 Cincinnati Milacron Inc........ 108,688 22,800 Giddings & Lewis, Inc.......... 432,131 ------------ 540,819 ------------ MACHINERY - AGRICULTURE - 0.29% 32,300 Case Corp...................... 1,905,700 100,200 Deere & Co..................... 5,122,725 ------------ 7,028,425 ------------ MACHINERY - CONSTRUCTION & CONTRACTS - 0.39% 73,000 Caterpillar Inc................ 7,126,625 34,200 Fluor Corp..................... 1,808,325 2,600 Foster Wheeler Corp............ 100,750 MACHINERY - CONSTRUCTION & CONTRACTS - Continued 10,800 Harnischfeger Industries Inc...$ 463,050 ------------ 9,498,750 ------------ MACHINERY - INDUSTRIAL/ SPECIALTY - 0.60% 1,600 Aeroquip-Vickers, Inc.......... 69,400 14,600 Briggs & Stratton Corp......... 753,725 42,700 Cooper Industries, Inc......... 2,177,700 32,400 Dover Corp..................... 1,854,900 79,200 Illinois Tool Works Inc........ 3,930,300 33,200 Ingersoll-Rand Co.............. 1,809,400 32,000 Johnson Controls, Inc.......... 1,356,000 51,733 Pall Corp...................... 1,222,192 19,050 Parker Hannifin Corp........... 1,002,506 6,400 Timken Co...................... 439,200 ------------ 14,615,323 ------------ MEDICAL TECHNOLOGY - 0.10% 32,500 Guidant Corp................... 2,522,813 ------------ MERCHANDISE - DRUG - 0.27% 16,600 Longs Drug Stores Corp......... 394,250 49,000 Rite Aid Corp.................. 2,278,500 82,400 Walgreen Co.................... 3,852,200 ------------ 6,524,950 ------------ MERCHANDISE - SPECIALTY - 1.28% 41,000 American Greetings Corp. Class A ...................... 1,404,250 29,500 Charming Shoppes, Inc.......... 154,875 27,100 Circuit City Stores, Inc....... 1,070,450 90,722 *CostCo Companies, Inc.......... 3,061,868 109,800 Gap, Inc....................... 3,760,650 186,400 Home Depot, Inc................ 11,743,200 49,600 Ikon Office Solutions Inc...... 1,438,400 973 Jostens, Inc................... 23,960 79,398 Limited, Inc................... 1,607,810 34,000 Nordstrom, Inc................. 1,632,000 16,800 Tandy Corp..................... 907,200 21,800 TJX Companies, Inc............. 1,046,400 106,625 *Toys "R" Us, Inc............... 3,318,703 ------------ 31,169,766 ------------ MERCHANDISING - DEPARTMENT - 0.55% 81,000 Dayton Hudson Corp.............$ 3,898,125 30,800 Dillards, Inc. Class A......... 1,039,500 87,300 *Federated Department Stores, Inc . ........................ 3,230,100 94,300 May Department Stores Co....... 4,443,888 16,000 Mercantile Stores Co., Inc..... 860,000 ------------ 13,471,613 ------------ MERCHANDISING - FOOD - 0.60% 108,100 Albertsons, Inc................ 3,621,350 56,700 American Stores Co............. 2,579,850 6,900 Fleming Companies, Inc......... 131,100 15,500 Giant Food Inc. Class A........ 510,531 15,300 Great Atlantic & Pacific Tea Co., Inc. .................... 422,663 95,600 *Kroger Co...................... 2,449,750 16,700 Supervalu Inc.................. 557,363 71,900 SYSCO Corp..................... 2,507,513 52,000 Winn-Dixie Stores, Inc......... 1,989,000 ------------ 14,769,120 ------------ MERCHANDISING - MASS - 1.83% 149,100 *CUC International Inc.......... 3,429,300 107,000 J.C. Penney Co., Inc........... 5,510,500 190,300 KMart Corp..................... 2,664,200 147,200 Sears Roebuck and Co........... 7,231,200 841,600 Wal-Mart Stores, Inc........... 25,037,600 35,000 *Woolworth Corp................. 844,375 ------------ 44,717,175 ------------ METALS - ALUMINUM - 0.39% 68,000 Alcan Aluminium Ltd............ 2,439,500 66,600 Aluminum Co. of America........ 4,903,425 33,100 Reynolds Metals Co............. 2,246,663 ------------ 9,589,588 ------------ METALS - COPPER - 0.21% 19,300 ASARCO Inc..................... 600,713 58,732 Newmont Mining Corp............ 2,297,884 27,200 Phelps Dodge Corp.............. 2,274,600 ------------ 5,173,197 ------------ METALS - MISCELLANEOUS - 0.21% 31,350 Cyprus Amax Minerals Co........ 764,156 57,075 Engelhard Corp................. 1,234,247
109 ================================================================================ 8 STOCK INDEX FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ================================================================================
NUMBER MARKET OF SHARES VALUE - - -------------------------------------------------------- METALS - MISCELLANEOUS - Continued 47,000 Freeport-McMoran Copper & Gold Inc. Class B..................$ 1,368,875 52,400 Inco Limited................... 1,729,200 ------------ 5,096,478 ------------ METALS - STEEL - 0.25% 51,125 Allegheny Teldyne Inc.......... 1,316,469 22,300 Armco Inc...................... 83,625 21,900 *Bethlehem Steel Corp........... 219,000 20,200 Inland Steel Industries, Inc... 497,425 31,100 Nucor Corp..................... 1,834,900 38,620 USX-US Steel Group, Inc........ 1,245,495 53,625 Worthington Industries, Inc.... 992,063 ------------ 6,188,977 ------------ MISCELLANEOUS - 0.50% 176,200 American Express Co............ 12,245,900 ------------ MOBILE HOMES - 0.02% 14,600 Fleetwood Enterprises, Inc..... 394,200 ------------ NATURAL GAS - DIVERSIFIED - 0.30% 37,900 Coastal Corp................... 1,899,738 11,200 ENSEARCH Corp.................. 239,400 55,200 NorAm Energy Corp.............. 841,800 65,829 PanEnergy Corp................. 3,077,506 23,700 Sonat Inc...................... 1,362,750 ------------ 7,421,194 ------------ OIL - INTEGRATED DOMESTIC - 2.02% 35,700 Amerada Hess Corp.............. 1,909,950 183,100 Amoco Corp..................... 16,364,562 26,900 Ashland Oil, Inc............... 1,287,837 60,100 Atlantic Richfield Co.......... 8,744,550 49,200 Burlington Resources, Inc..... 2,287,800 11,100 Kerr-McGee Corp................ 718,725 117,700 Occidental Petroleum Corp...... 2,736,525 40,800 *Oryx Energy Co................. 943,500 18,500 Pennzoil Co.................... 1,024,437 96,300 Phillips Petroleum Co.......... 4,092,749 40,202 *Santa Fe Energy Resources, Inc. 608,055 40,916 Sun Co., Inc................... 1,222,366 96,000 Unocal Corp.................... 4,092,000 114,000 USX-Marathon Group............. 3,391,500 ------------ 49,424,556 ------------ OIL - INTEGRATED INTERNATIONAL - 5.79% 240,000 Chevron Corp...................$ 16,800,000 912,000 Exxon Corp..................... 54,036,000 150,900 Mobil Corp..................... 21,107,138 195,500 Royal Dutch Petroleum Co. - ADR ................... 38,171,375 104,500 Texaco Inc..................... 11,403,563 ------------ 141,518,076 ------------ OIL - SERVICE - PRODUCTS - 0.45% 91,500 Schlumberger Ltd............... 10,899,938 ------------ OIL - SERVICES - 0.48% 58,800 Baker Hughes Inc............... 2,205,000 70,900 Dresser Industries, Inc........ 2,428,325 49,500 Halliburton Co................. 3,830,063 34,300 McDermott International, Inc... 951,825 25,500 *Rowan Companies, Inc........... 589,688 26,800 *Western Atlas Inc.............. 1,819,050 ------------ 11,823,951 ------------ OIL/GAS PRODUCERS - 0.14% 3,000 Helmerich & Payne, Inc......... 168,375 8,700 Louisiana Land & Exploration Co. .......................... 448,050 98,842 Union Pacific Resources Group Inc. ......................... 2,854,063 ------------ 3,470,488 ------------ PAPER/FOREST PRODUCTS - 1.43% 48,200 Avery Dennison Corp............ 1,813,525 8,366 Boise Cascade Corp............. 317,908 37,900 Champion International Corp.... 1,871,313 39,200 Georgia-Pacific Corp........... 3,459,400 114,918 International Paper Co......... 5,516,064 42,400 James River Corp. of Virginia.. 1,489,300 209,732 Kimberly-Clark Corp............ 10,512,817 41,600 Louisiana Pacific Corp......... 811,200 16,000 Mead Corp...................... 1,020,000 4,900 Potlatch Corp.................. 210,088 23,364 *Stone Container Corp........... 321,255 35,450 Union Camp Corp................ 1,861,125 26,850 Westvaco Corp.................. 839,063 74,300 Weyerhaeuser Co................ 3,705,713 17,500 Willamette Industries, Inc..... 1,303,750 ------------ 35,052,521 ------------ PHOTOGRAPHY - 0.46% 123,850 Eastman Kodak Co...............$ 10,264,069 18,100 Polaroid Corp.................. 923,100 ------------ 11,187,169 ------------ POLLUTION CONTROL - 0.39% 82,500 Browning-Ferris Industries Inc. 2,701,875 71,800 Laidlaw Inc. Class B........... 969,300 50 Safety-Kleen Corp.............. 781 183,700 Waste Management, Inc.......... 5,832,475 ------------ 9,504,431 ------------ PUBLISHING - NEWS - 0.53% 35,100 Dow Jones & Co., Inc........... 1,364,513 53,900 Gannett Co., Inc............... 4,985,750 42,400 Knight-Ridder, Inc............. 1,828,500 24,800 New York Times Co. Class A..... 1,142,350 39,732 Times Mirror Co................ 2,229,959 31,200 Tribune Co..................... 1,349,400 ------------ 12,900,472 ------------ PUBLISHING/PRINTING - 0.35% 44,800 Deluxe Corp.................... 1,456,000 64,500 Dun & Bradstreet Corp.......... 1,685,063 19,217 Harcourt General, Inc.......... 910,405 24,000 McGraw-Hill, Inc............... 1,311,000 21,600 Moore Corp. Ltd................ 480,600 71,800 RR Donnelley & Sons Co......... 2,665,575 ------------ 8,508,643 ------------ RAILROAD - 0.80% 57,317 Burlington Northern Santa Fe... 4,757,310 73,600 CSX Corp...................... 3,900,800 48,300 Norfolk Southern Corp.......... 4,691,138 90,000 Union Pacific Corp............. 6,097,500 ------------ 19,446,748 ------------ RESTAURANTS - 0.58% 55,800 Darden Restaurants, Inc........ 467,325 258,500 McDonald's Corp................ 12,989,624 30,000 Wendy's International, Inc..... 701,250 ------------ 14,158,199 ------------
110 ================================================================================ May 31, 1997 STOCK INDEX FUND - STATEMENT OF NET ASSETS CONTINUED 9 ================================================================================
NUMBER MARKET OF SHARES VALUE - - -------------------------------------------------------- SAVINGS & LOAN - 0.22% 25,100 Golden West Financial Corp.....$ 1,700,525 53,250 Great Western Financial Corp... 2,582,625 24,900 H.F. Ahmanson & Co............. 1,014,675 ------------ 5,297,825 ------------ SECURITIES RELATED - 0.85% 65,100 Charles Schwab Corp............ 2,644,688 125,496 Dean Witter, Discover & Co..... 5,176,711 63,700 Merrill Lynch & Co., Inc....... 6,752,200 57,700 Morgan Stanley Group Inc....... 3,894,749 41,500 Salomon Inc.................... 2,225,438 ------------ 20,693,786 ------------ SEMICONDUCTORS - 3.52% 57,700 *Advanced Micro Devices, Inc.... 2,308,000 72,500 *Applied Materials, Inc......... 4,730,625 302,000 Intel Corp..................... 45,753,000 55,500 *LSI Logic Corp................. 2,317,125 84,100 *Micron Technology, Inc......... 3,574,250 218,900 Motorola, Inc.................. 14,529,488 46,700 *National Semiconductor Corp.... 1,313,438 76,900 Rockwell International Corp.... 4,960,050 72,800 Texas Instruments Inc.......... 6,542,900 ------------ 86,028,876 ------------ TELECOMMUNICATIONS - 2.02% 202,100 *Airtouch Communications, Inc... 5,633,537 56,300 ALLTEL Corp.................... 1,850,862 32,335 *Andrew Corp.................... 881,129 57,000 *DSC Communications Corp........ 1,457,063 47,300 Frontier Corp.................. 869,138 20,100 Harris Corp.................... 1,781,363 236,090 Lucent Technologies, Inc....... 15,021,226 89,300 Northern Telecom Ltd........... 7,501,200 29,500 Scientific-Atlanta, Inc........ 534,688 70,800 *Tellabs, Inc................... 3,557,699 345,800 *WorldCom, Inc.................. 10,244,324 ------------ 49,332,229 ------------ TEXTILE - PRODUCTS - 0.10% 26,100 Russell Corp................... 799,313 19,700 V F Corp....................... 1,539,063 ------------ 2,338,376 ------------ TOBACCO - 1.85% 74,400 Fortune Brands, Inc............$ 3,645,600 891,000 Philip Morris Cos Inc.......... 39,204,000 85,600 UST Inc........................ 2,439,600 ------------ 45,289,200 ------------ TRUCKERS - 0.02% 14,200 Caliber System, Inc............ 454,400 ------------ UTILITIES - COMMUNICATION - 5.07% 593,226 AT & T Corp.................... 21,875,209 201,900 Ameritech Corp................. 13,224,449 161,200 Bell Atlantic Corp............. 11,284,000 365,100 BellSouth Corp................. 16,566,412 355,200 GTE Corp....................... 15,673,199 269,100 MCI Communications Corp........ 10,326,712 164,200 NYNEX Corp..................... 8,825,750 339,279 SBC Communications, Inc........ 19,847,822 130,600 Sprint Corp.................... 6,383,075 ------------ 124,006,628 ------------ UTILITIES - ELECTRIC - 2.35% 58,900 American Electric Power, Inc... 2,400,175 35,200 Baltimore Gas and Electric Co.. 923,999 60,100 Carolina Power & Light Co...... 2,088,474 105,700 Central & South West Corp...... 2,246,125 41,164 Cinergy Corp................... 1,440,740 89,400 Consolidated Edison Co. of New York, Inc................. 2,603,775 42,300 DTE Energy Co.................. 1,126,238 57,650 Dominion Resources, Inc........ 1,996,130 78,700 Duke Power Co.................. 3,541,499 170,200 Edison International........... 3,978,425 110,500 Entergy Corp................... 2,914,438 68,900 FPL Group, Inc................. 3,203,850 32,600 GPU Inc........................ 1,141,000 127,600 Houston Industries, Inc........ 2,647,699 37,500 *Niagara Mohawk Power Corp...... 328,124 26,000 Northern States Power Co....... 1,274,000 35,900 Ohio Edison Co................. 762,875 161,400 P G & E Corp................... 3,732,375 44,500 P P & L Resources Inc.......... 895,563 83,900 PacifiCorp..................... 1,667,513 109,300 Peco Energy Co................. 2,076,700 112,550 Public Service Enterprise Group ........................ 2,785,613 UTILITIES - ELECTRIC - Continued 254,700 Southern Co....................$ 5,412,374 100,400 Texas Utilities Co............. 3,451,249 81,400 Unicom Corp.................... 1,851,850 28,800 Union Electric Co.............. 1,054,800 ------------ 57,545,603 ------------ UTILITIES - GAS, DISTRIBUTION - 0.03% 23,700 NICOR Inc...................... 814,688 ------------ UTILITIES - GAS, PIPELINE - 0.47% 22,000 Columbia Gas System, Inc....... 1,416,250 44,100 Consolidated Natural Gas Co.... 2,342,812 98,000 Enron Corp..................... 3,993,499 18,300 ONEOK Inc...................... 553,575 15,000 Pacific Enterprises............ 491,249 2,200 Peoples Energy Corp............ 78,100 60,150 Williams Companies, Inc........ 2,654,119 ------------ 11,529,604 ------------ TOTAL COMMON STOCKS (Cost $1,341,383,385).........2,413,534,435 ------------- PAR VALUE - - ----------- CORPORATE SHORT TERM COMMERCIAL PAPER - 1.00% CONSUMER FINANCE - 0.20% $5,000,000 Beneficial Corp., 5.48% due 06/03/97............ 4,998,477 ------------ FINANCE COMPANIES - 0.69% 7,223,000 Ford Motor Credit Co., 5.55% due 06/05/97............ 7,218,543 9,682,000 General Motors Acceptance Corp., 5.53% due 06/03/97..... 9,679,023 ------------ 16,897,566 ------------ SECURITIES RELATED - 0.11% 2,688,000 Merrill Lynch & Co., Inc., 5.65% due 06/02/97............ 2,687,578 ------------ TOTAL CORPORATE SHORT TERM COMMERCIAL PAPER (Cost $24,583,621)............. 24,583,621 ------------
111 ================================================================================ 10 STOCK INDEX FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ================================================================================
PAR MARKET VALUE VALUE - - -------------------------------------------------------- UNITED STATES GOVERNMENT - SHORT TERM - 0.05% U.S. TREASURY BILLS - 0.05% United States Treasury Bills: $1,000,000 4.99% due 08/21/97.......... $ 988,756 200,000 4.81% due 08/21/97.......... 197,835 -------------- TOTAL UNITED STATES GOVERNMENT - SHORT TERM (Cost $1,186,591)........... 1,186,591 -------------- TOTAL INVESTMENTS (Cost $1,367,153,597) - 99.80% .................... 2,439,304,647 Other assets and liabilities, net - 0.20%................. 4,894,878 -------------- NET ASSETS (equivalent to $26.09 per share on 93,687,435 shares outstanding) - 100%......... $2,444,199,525 ============== *Non-income producing UNREALIZED CONTRACTS APPRECIATION - - --------- ------------ FUTURES CONTRACTS PURCHASED(1) (Delivery month/Value at 5/31/97) 57(2) S&P 500 Index Futures (June/$850.60)...............$ 323,500 ============== (1)U.S.Treasury Bills with a market value of approximately $1,200,000 were maintained in a segregated account with a portion placed as collateral for futures contracts. (2)Per 500 MARKET VALUE ------ NET ASSETS REPRESENTED BY: Capital stock, $.01 par value per share, 1,000,000,000 shares authorized, 93,687,435 shares outstanding.......... $ 936,874 Additional paid in capital............... 1,357,087,077 Undistributed net realized gain on securities ............................. 13,320,453 Undistributed net investment income...... 380,571 Unrealized appreciation of: Investments........... $1,072,151,050 Futures .............. 323,500 1,072,474,550 -------------- -------------- NET ASSETS APPLICABLE TO SHARES OUTSTANDING............................ $2,444,199,525 ==============
SEE NOTES TO FINANCIAL STATEMENTS. 112 ================================================================================ STOCK INDEX FUND - FINANCIAL STATEMENTS 11 ================================================================================ STATEMENT OF OPERATIONS For the fiscal year ended May 31, 1997 INVESTMENT INCOME: Dividends ....................................................................... $ 40,617,795 Interest ........................................................................ 1,650,621 ------------- Total investment income ....................................................... 42,268,416 ------------- EXPENSES: Advisory fees ................................................................... 5,543,535 Custodian and accounting services ............................................... 712,922 Reports to shareholders ......................................................... 278,292 Audit fees and tax services ..................................................... 74,760 Directors' fees and expenses .................................................... 47,386 Miscellaneous ................................................................... 118,984 ------------- Total expenses ................................................................ 6,775,879 NET INVESTMENT INCOME ........................................................... 35,492,537 ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES: Net realized gain on: Investments ................................................... $ 9,929,103 Futures contracts ............................................. 4,849,795 14,778,898 ------------- ------------- Net unrealized appreciation (depreciation) of securities during the year: Investments ................................................... 489,223,396 ------------- Futures contracts ............................................. (95,175) 489,128,221 ------------- ------------- Net realized and unrealized gain on securities during the year................ 503,907,119 ------------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................ $ 539,399,656 =============
STATEMENT OF CHANGES IN NET ASSETS For the fiscal year ended May 31:
1997 1996 --------------- --------------- OPERATIONS: Net investment income ............................... $ 35,492,537 $ 30,725,263 --------------- --------------- Net realized gain on securities ..................... 14,778,898 14,548,606 Net unrealized appreciation of securities during the year .................................... 489,128,221 322,971,346 --------------- --------------- Increase in net assets resulting from operations .. 539,399,656 368,245,215 --------------- --------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ............................... (35,484,625) (30,481,712) Net realized gain on securities ..................... (14,806,928) (30,841,988) --------------- --------------- Decrease in net assets resulting from distributions to shareholders .................................. (50,291,553) (61,323,700) --------------- --------------- CAPITAL STOCK TRANSACTIONS: Proceeds from capital stock sold .................... 241,746,270 195,841,204 Proceeds from capital stock issued for distributions reinvested ........................................ 50,291,553 61,323,700 --------------- --------------- 292,037,823 257,164,904 Cost of capital stock repurchased ................... (97,732,690) (71,292,243) --------------- --------------- Increase in net assets resulting from capital stock transactions ..................................... 194,305,133 185,872,661 --------------- --------------- TOTAL INCREASE IN NET ASSETS ........................ 683,413,236 492,794,176 NET ASSETS: Beginning of year ................................... 1,760,786,289 1,267,992,113 --------------- --------------- End of year (including undistributed net investment income of $380,571 and $372,659) ....... $ 2,444,199,525 $ 1,760,786,289 =============== =============== CHANGE IN SHARES OUTSTANDING: Shares of capital stock sold ........................ 10,718,393 10,230,862 Shares issued for distributions reinvested .......... 2,200,590 3,223,528 Shares of capital stock repurchased ................. (4,348,853) (3,788,544) --------------- --------------- Increase in shares outstanding .................... 8,570,130 9,665,846 Shares outstanding: Beginning of year ................................. 85,117,305 75,451,459 --------------- --------------- End of year ....................................... 93,687,435 85,117,305 =============== ===============
SEE NOTES TO FINANCIAL STATEMENTS. 113 ================================================================================ 12 MIDCAP INDEX FUND - STATEMENT OF NET ASSETS May 31, 1997 ================================================================================
NUMBER MARKET OF SHARES VALUE - - -------------------------------------------------------- COMMON STOCKS - 98.92% ADVERTISING - 0.60% 62,764 Omnicom Group, Inc.............$ 3,640,312 ------------ AEROSPACE/DEFENSE - 1.03% 21,780 Gencorp Inc.................... 460,102 19,371 OEA, Inc....................... 731,254 18,155 *Rohr, Inc...................... 383,523 5,900 Sequa Corp. Class A............ 287,624 48,674 Sunstrand Corp................. 2,421,531 12,210 Teleflex Inc................... 752,440 16,661 Thiokol Corp................... 1,197,508 ------------ 6,233,982 ------------ AIRLINES - 0.15% 11,721 *Alaska Air Group, Inc.......... 291,560 24,274 ASA Holdings, Inc.............. 634,158 ------------ 925,718 ------------ APPAREL & PRODUCTS - 0.95% 20,900 *Ann Taylor Stores Corp......... 485,924 38,553 Cintas Corp.................... 2,390,285 39,271 Claire's Stores, Inc........... 755,966 25,424 Land's End, Inc................ 765,897 42,700 Warnaco Group Inc. Class A..... 1,398,424 ------------ 5,796,496 ------------ APPLIANCES/FURNISHINGS - 1.04% 39,859 Heilig-Meyers Co............... 657,673 41,528 Herman Miller, Inc............. 1,484,625 27,501 Lancaster Colony Corp.......... 1,237,545 72,076 Leggett & Platt, Inc........... 2,720,868 6,104 National Presto Industries, Inc. ......................... 230,425 ------------ 6,331,136 ------------ AUTO - ORIGINAL EQUIPMENT - 1.23% 16,925 Arvin Industries, Inc.......... 469,668 20,400 Carlisle Cos Inc............... 622,199 46,542 Danaher Corp................... 2,257,286 17,418 Donaldson Co., Inc............. 637,933 31,470 Federal-Mogul Corp............. 916,563 50,245 Mark IV Industries, Inc........ 1,174,476 26,928 Modine Manufacturing Co........ 787,643 23,200 Superior Industries International, Inc. ......... 591,599 ------------ 7,457,367 ------------ AUTO - OTHER - 0.45% 61,070 Harley-Davidson, Inc...........$ 2,732,883 ------------ AUTO - REPLACEMENT PARTS - 0.13% 16,121 Kaydon Corp.................... 800,005 ------------ BANKS - OTHER - 1.38% 54,302 First Tennessee National Corp.. 2,450,377 117,200 Firstar Corp................... 3,501,349 50,800 Union Planters Corp............ 2,400,299 ------------ 8,352,025 ------------ BANKS - REGIONAL - 7.54% 46,428 Central Fidelity Banks, Inc.... 1,358,018 40,955 City National Corp............. 988,038 86,972 Crestar Financial Corp......... 3,304,935 22,018 Dauphin Deposit Corp........... 971,543 48,643 First of America Bank Corp..... 3,350,286 92,341 First Security Corp............ 2,262,354 26,575 First Virginia Banks, Inc...... 1,488,199 106,200 Hibernia Corp. Class A......... 1,407,149 74,048 Marshall & Ilsley Corp......... 2,952,663 58,334 Mercantile Bankcorporation Inc. 3,441,705 35,756 Mercantile Bankshares Corp..... 1,421,301 90,306 Northern Trust Corp............ 4,436,282 32,834 Pacific Century Financial Corp. 1,510,364 49,909 Regions Financial Corp......... 2,982,063 76,487 SouthTrust Corp................ 2,973,432 130,344 State Street Corp.............. 5,816,601 75,403 Summit Bancorporation.......... 3,723,023 31,878 Wilmington Trust Corp.......... 1,422,556 ------------ 45,810,512 ------------ BEVERAGE - SOFT DRINKS - 1.39% 309,309 Coca Cola Enterprises, Inc..... 6,534,153 61,200 *Starbucks Corp................. 1,927,800 ------------ 8,461,953 ------------ BROADCASTING - 0.65% 52,428 A.H. Belo Corp. ............... 2,018,478 25,130 *Chris-Craft Industries, Inc.... 1,074,308 24,416 TCA Cable TV, Inc.............. 824,040 ------------ 3,916,826 ------------ BUILDING MATERIALS - 1.14% 12,766 CalMat Co......................$ 253,724 33,600 Fastenal Co.................... 1,570,800 23,125 HON INDUSTRIES, Inc............ 1,121,563 72,465 RPM, Inc....................... 1,376,835 15,200 Southdown, Inc................. 613,700 27,000 Vulcan Materials Co............ 1,971,000 ------------ 6,907,622 ------------ CHEMICAL - MAJOR - 0.15% 49,625 Albemarle Corp................. 930,469 ------------ CHEMICAL - MISCELLANEOUS - 2.85% 30,373 A. Schulman Inc................ 675,799 51,800 *Airgas, Inc.................... 880,600 22,580 Betz Laboratories, Inc......... 1,439,475 64,637 Crompton & Knowles Corp........ 1,510,890 35,900 *Cytec Industries, Inc.......... 1,404,588 19,068 Dexter Corp.................... 574,424 95,700 Ethyl Corp..................... 897,188 22,547 Ferro Corp..................... 842,694 28,233 Georgia Gulf Corp.............. 779,937 11,364 H.B. Fuller Co................. 627,861 41,836 M.A. Hanna Co.................. 967,458 28,193 Lawter International, Inc...... 324,220 48,119 Lubrizol Corp.................. 1,714,239 67,278 Lyondell Petrochemical Co...... 1,480,116 18,700 Minerals Technologies Inc...... 738,650 4,355 NCH Corp....................... 283,619 40,342 Olin Corp...................... 1,654,022 26,525 Rollins, Inc................... 517,238 ------------ 17,313,018 ------------ CONGLOMERATES - 1.05% 43,398 Alexander & Baldwin, Inc....... 1,177,171 71,200 Dial Corp...................... 1,192,600 37,600 *Litton Industries, Inc......... 1,701,400 5,100 *MAXXAM, Inc.................... 224,400 40,200 Ogden Corp..................... 783,900 75,300 Viad Corp...................... 1,308,338 ------------ 6,387,809 ------------ CONSUMER FINANCE - 0.36% 68,700 Capital One Financial.......... 2,206,988 ------------
114 =============================================================================== May 31, 1997 MIDCAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED 13 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - -------------------------------------------------------- CONTAINERS - PAPER - 0.71% 19,814 Chesapeake Utilities Corp......$ 663,769 34,122 *Sealed Air Corp................ 1,565,347 71,536 Sonoco Products Co............. 2,083,486 ------------ 4,312,602 ------------ COSMETICS/TOILETRIES - 0.25% 31,188 Tambrands Inc.................. 1,504,821 ------------ DRUGS - 3.35% 29,904 Bergen Brunswig Corp. Class A.. 1,136,352 58,652 *Biogen, Inc.................... 1,946,513 42,046 Carter-Wallace Inc............. 693,759 55,788 *Centocor, Inc.................. 1,966,527 137,580 Chiron Corp.................... 2,596,823 41,125 *Covance Inc.................... 765,953 47,658 CVS Corp....................... 2,281,645 34,141 *Forest Laboratories, Inc....... 1,442,457 55,442 *Genzyme Corp................... 1,323,678 97,736 *IVAX Corp...................... 1,050,662 34,100 McKesson Corp.................. 2,561,763 104,734 Mylan Laboratories Inc......... 1,584,102 18,900 R.P. Scherer Corp.............. 992,250 ------------ 20,342,484 ------------ ELECTRICAL EQUIPMENT - 2.27% 75,186 *American Power Conversion Corp. 1,748,075 32,431 AMETEK, Inc.................... 758,075 55,270 Hubbell Inc. Class B........... 2,514,785 101,666 Molex Inc...................... 3,964,974 50,396 *Quantum Corp................... 1,959,145 68,446 *Teradyne, Inc.................. 2,806,286 ------------ 13,751,340 ------------ ELECTRONIC INSTRUMENTS - 1.92% 40,676 *Arrow Electronics, Inc......... 2,323,618 17,966 *Exabyte Corp................... 253,770 38,750 *Imation Corp................... 930,000 63,000 *Integrated Device Technology, Inc. ......................... 885,938 25,521 *MagnaTek, Inc.................. 446,618 31,300 Pittston Brink's Group......... 978,125 59,779 Sensormatic Electronics Corp... 934,047 31,909 Symbol Technologies, Inc....... 1,001,145 25,116 Varian Associates, Inc......... 1,331,148 20,273 *VeriFone, Inc.................. 1,036,457 ELECTRONIC INSTRUMENTS - Continued 51,928 *Vishay Intertechnology, Inc...$ 1,525,378 ------------ 11,646,244 ------------ ENTERTAINMENT - 0.19% 34,800 *GTECH Holdings Corp............ 1,144,050 ------------ FERTILIZERS - 0.48% 74,746 IMC Global, Inc................ 2,924,437 ------------ FINANCE COMPANIES - 0.76% 97,100 SunAmerica, Inc................ 4,587,975 ------------ FOODS - 3.01% 32,182 Dean Foods Co.................. 1,222,916 48,509 Dole Food Co., Inc............. 2,061,633 14,118 Dreyer's Grand Ice Cream, Inc.. 518,837 78,504 Flowers Industries, Inc........ 1,383,633 57,900 Hormel Foods Corp.............. 1,461,975 77,500 IBP, Inc....................... 1,821,250 10,312 International Multifoods Corp.. 291,314 28,200 Interstate Bakeries Corp....... 1,515,750 18,171 J.M. Smucker Co. Class A....... 352,063 23,271 Lance, Inc..................... 459,602 63,778 McCormick & Co., Inc........... 1,666,200 34,721 Trinity Industries, Inc........ 1,041,630 174,486 Tyson Foods, Inc. Class A...... 3,576,963 25,229 Universal Foods Corp........... 905,090 ------------ 18,278,856 ------------ FOOTWEAR - 0.44% 28,900 *Nine West Group, Inc........... 1,112,650 33,100 *Payless ShoeSource, Inc........ 1,568,113 ------------ 2,680,763 ------------ FREIGHT - 0.40% 17,573 Airborne Freight Corp.......... 672,167 20,160 APL Ltd........................ 609,840 37,300 J.B. Hunt Transport Services, Inc. ......................... 568,825 30,371 Overseas Shipholding Group Inc. ......................... 573,253 ------------ 2,424,085 ------------ HARDWARE & TOOLS - 0.03% 7,355 Lawson Products, Inc........... 183,875 HEALTHCARE - 2.62% 46,400 Allegiance Corp................$ 1,258,600 40,800 *Apria Healthcare Group, Inc.... 734,400 96,949 *Foundation Health Systems Class A ...................... 2,896,351 27,186 Healthcare COMPARE Corp........ 1,342,309 42,100 *Horizon/CMS Healthcare Corp.... 768,325 111,880 Laboratory Corp. of America Holdings...................... 321,654 51,191 *NovaCare, Inc.................. 646,286 62,600 *Oxford Health Plans, Inc....... 4,413,300 32,874 *PacifiCare Health System, Inc. Class B....................... 2,605,265 44,185 *Value Health, Inc.............. 894,746 ------------ 15,881,236 ------------ HEAVY DUTY TRUCKS/PARTS - 0.15% 36,704 Federal Signal Corp............ 935,952 ------------ HOME BUILDERS - 0.24% 96,825 Clayton Homes, Inc............. 1,464,478 ------------ HOSPITAL MANAGEMENT - 0.87% 40,400 *Health Care & Retirement Corp.. 1,373,600 50,500 *Healthsource, Inc.............. 1,085,750 67,100 *Medaphis Corp.................. 532,606 55,900 *Vencor, Inc.................... 2,277,925 ------------ 5,269,881 ------------ HOSPITAL SUPPLIES - 1.66% 19,835 *Acuson Corp.................... 515,710 14,510 *Advanced Technology Laboratories, Inc............. 562,263 20,833 Beckman Instruments, Inc....... 971,339 17,568 *Datascope Corp................. 333,792 21,900 DENTSPLY International Inc..... 1,100,475 9,309 Diagnostic Products Corp....... 278,106 54,000 Hillenbrand Industries, Inc.... 2,544,750 48,636 *Nellcor Puritan Bennett, Inc... 1,039,595 78,182 Stryker Corp................... 2,726,597 ------------ 10,072,627 ------------ HOUSEHOLD PRODUCTS - 0.55% 58,400 *Bed Bath & Beyond, Inc......... 1,657,100 12,914 Church & Dwight Co., Inc....... 342,221 31,646 First Brands Corp.............. 830,708
115 ================================================================================ 14 MIDCAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ================================================================================
NUMBER MARKET OF SHARES VALUE - - -------------------------------------------------------- HOUSEHOLD PRODUCTS - Continued 15,764 Stanhome Inc...................$ 494,596 ------------ 3,324,625 ------------ HUMAN RESOURCES - 1.19% 30,303 Kelly Services Inc. Class A.... 890,151 66,300 Manpower Inc................... 2,966,925 61,750 Olsten Corp.................... 1,211,844 49,700 *Robert Half International, Inc. 2,130,888 ------------ 7,199,808 ------------ INFORMATION PROCESSING - 8.14% 48,373 ACNielson...................... 816,294 76,400 *America Online, Inc............ 4,221,100 35,262 *AST Research, Inc.............. 185,126 81,504 *BMC Software, Inc.............. 4,411,404 65,878 *Cadence Design Systems, Inc.... 2,190,444 39,439 Comdisco, Inc.................. 1,454,313 69,600 *Compuware Corp................. 3,227,700 59,251 Diebold, Inc................... 2,221,913 43,300 *Electronic Arts................ 1,385,600 36,764 *FIserv, Inc.................... 1,511,920 29,268 *Information Resources, Inc..... 439,020 121,200 *Informix Corp.................. 1,090,800 52,707 *Mentor Graphics Corp........... 401,891 82,173 *NCR Corp....................... 2,670,623 91,257 Paychex, Inc................... 3,353,696 17,018 *Policy Management Systems Corp. 808,355 71,608 Reynolds and Reynolds Co. Class A ...................... 1,673,837 27,525 Sequent Computer Systems, Inc.. 464,484 44,300 *Solectron Corp................. 2,768,750 74,752 *Sterling Commerce Inc.......... 2,485,504 47,890 *Storage Technology Corp........ 1,951,518 19,025 *Stratus Computer, Inc.......... 870,394 26,773 *Structural Dynamics Research Corp. ........................ 655,939 31,800 *SunGard Data Systems, Inc...... 1,351,500 44,712 *Symantec Corp.................. 852,323 71,100 *U.S. Robotics Corp............. 5,972,400 ------------ 49,436,848 ------------ INSURANCE - CASUALTY - 1.32% 49,333 American Financial Group, Inc.. 1,874,654 58,062 Progressive Corp............... 4,594,156 17,218 Transatlantic Holdings, Inc.... 1,543,163 ------------ 8,011,973 ------------ INSURANCE - MISCELLANEOUS - 0.72% 25,700 AMBAC Inc.....................$ 1,927,500 17,766 Hartford Steam Boiler Inspection & Insurance Co................ 906,066 28,100 PMI Group Inc.................. 1,541,988 ------------ 4,375,554 ------------ INSURANCE - MULTILINE - 1.39% 111,325 AFLAC Inc...................... 5,677,575 51,586 Provident Companies Inc........ 2,772,748 ------------ 8,450,323 ------------ LEISURE TIME - 1.51% 57,100 Callaway Golf Co............... 1,841,475 79,425 *Circus Circus Enterprises, Inc. 2,065,050 101,402 International Game Technology.. 1,799,886 146,190 *Mirage Resorts, Inc............ 3,490,286 ------------ 9,196,697 ------------ LODGING - 0.24% 1 Deltic Timber Corp............. 12 39,900 *Promus Hotel Corp.............. 1,441,388 ------------ 1,441,400 ------------ MACHINERY - AGRICULTURE - 0.25% 47,500 Agco Corp...................... 1,514,063 ------------ MACHINERY - CONSTRUCTION & CONTRACTS - 0.14% 17,271 Granite Construction, Inc...... 345,420 18,168 *Jacobs Engineering Group, Inc.. 488,265 ------------ 833,685 ------------ MACHINERY - INDUSTRIAL/ SPECIALTY - 1.15% 24,573 Albany International Corp. Class A ...................... 559,036 23,818 Durco International, Inc....... 672,859 29,576 Keystone International, Inc.... 964,917 28,000 Newport News Shipbuilding...... 465,500 12,714 Nordson Corp................... 686,556 27,133 Stewart & Stevenson Services, Inc. ......................... 725,808 17,500 Tecumseh Products Co. Class A.. 990,938 32,500 *Watson Pharmaceuticals, Inc.... 1,271,563 26,324 Watts Industries, Inc. Class A ............................ 654,810 ------------ 6,991,987 ------------ MERCHANDISE - DRUG - 0.13% 66,600 *Perrigo Co.....................$ 799,200 ------------ MERCHANDISE - SPECIALTY - 3.74% 34,900 *Best Buy Co., Inc.............. 475,513 53,875 *Consolidated Stores Corp....... 2,060,719 74,182 Dollar General Corp............ 2,494,369 17,723 Duty Free International, Inc... 276,922 38,100 Fingerhut Companies, Inc....... 671,513 16,171 *Gibson Greetings, Inc.......... 351,719 10,157 Hancock Fabrics, Inc........... 124,423 29,027 *Intelligent Electronics, Inc... 78,010 62,000 *Kohl's Corp.................... 3,340,250 23,821 *Mac Frugal's Bargains Close-outs Inc. .............. 708,675 28,400 *Micro Warehouse, Inc........... 489,900 128,337 *Office Depot, Inc.............. 2,213,813 97,700 *OfficeMax, Inc................. 1,355,588 53,711 Sotheby's Holdings, Inc. Class A ...................... 832,521 130,050 *Staples, Inc................... 2,861,100 28,236 Tiffany & Co................... 1,309,445 54,716 Unisource Worldwide, Inc....... 950,691 67,500 *Viking Office Products, inc.... 1,274,063 26,786 *Waban Inc...................... 813,625 ------------ 22,682,859 ------------ MERCHANDISING - FOOD - 0.29% 31,300 Hannaford Bros. Co............. 1,091,588 30,400 Ruddick Corp................... 459,800 15,268 Savannah Foods & Industries, Inc. ......................... 238,563 ------------ 1,789,951 ------------ MERCHANDISING - MASS - 0.41% 45,707 Family Dollar Stores, Inc...... 1,176,955 22,300 Fred Meyer, Inc................ 1,023,013 81,724 *Service Merchandise Co., Inc... 265,603 ------------ 2,465,571 ------------ METALS - ALUMINUM - 0.26% 40,667 *Alumax Inc..................... 1,570,763 ------------ METALS - MISCELLANEOUS - 0.39% 13,700 Brush Wellman Inc.............. 291,125 21,606 Kennametal, Inc................ 858,839 19,450 Precision Castparts Corp....... 1,215,625 ------------ 2,365,589 ------------
116 =============================================================================== May 31, 1997 MIDCAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED 15 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - -------------------------------------------------------- METALS - STEEL - 0.55% 12,610 Carpenter Technology Corp......$ 545,383 13,457 Cleveland-Cliffs Inc........... 568,558 39,742 Harsco Corp.................... 1,549,938 15,516 Lukens Inc..................... 304,502 18,323 Oregon Steel Mills, Inc........ 343,556 ------------ 3,311,937 ------------ MISCELLANEOUS - 0.64% 124,500 Equifax Inc.................... 3,890,625 ------------ NATURAL GAS - DIVERSIFIED - 1.03% 44,100 El Paso Natural Gas Co......... 2,612,925 37,743 Questar Corp................... 1,481,413 48,832 *Seagull Energy Corp............ 878,976 34,991 Valero Energy Corp............. 1,250,928 ------------ 6,224,242 ------------ OIL - INTEGRATED DOMESTIC - 0.29% 45,160 MAPCO Inc...................... 1,433,830 22,414 Quaker State Corp.............. 339,012 ------------ 1,772,842 ------------ OIL - INTEGRATED INTERNATIONAL - 0.28% 36,046 Murphy Oil Corp................ 1,671,633 ------------ OIL - SERVICE - PRODUCTS - 1.07% 30,021 *BJ Services Co................. 1,658,660 102,300 *Noble Drilling Corp............ 2,225,025 55,625 *Parker Drilling Co............. 535,391 22,586 *Varco International, Inc....... 621,115 42,082 *Weatherford Enterra, Inc....... 1,436,049 ------------ 6,476,240 ------------ OIL - SERVICES - 2.93% 58,800 *ENSCO International, Inc....... 2,932,650 139,115 *Global Marine Inc.............. 3,130,088 71,639 *Nabors Industries, Inc......... 1,607,400 33,346 *Smith International, Inc....... 1,746,497 50,492 Tidewater, Inc................. 2,126,976 41,800 Transocean Offshore, Inc....... 2,884,200 46,146 Witco Corp..................... 1,707,402 33,900 York International Corp........ 1,644,150 ------------ 17,779,363 ------------ OIL/GAS PRODUCERS - 2.09% 49,555 Anadarko Petroleum Corp........$ 3,121,965 72,798 Apache Corp.................... 2,493,332 57,680 Cabot Corp..................... 1,478,050 44,435 Noble Affiliates, Inc.......... 1,871,824 29,500 Parker & Parsley Petroleum Co.. 1,003,000 70,866 Ranger Oil Ltd................. 744,093 60,280 Ultramar Diamond Shamrock Corp. 1,989,240 ------------ 12,701,504 ------------ PAPER/FOREST PRODUCTS - 1.29% 30,639 Bowater Inc.................... 1,512,801 35,135 Consolidated Papers, Inc....... 1,914,858 36,739 Longview Fibre Co.............. 619,971 29,200 P. H. Glatfelter Co............ 511,000 32,376 Pentair Inc.................... 1,064,361 24,900 Rayonier Inc................... 1,067,588 19,770 Standard Register Co........... 689,479 25,561 Wausau Paper Mills Co.......... 479,269 ------------ 7,859,327 ------------ PHOTOGRAPHY - 0.02% 6,453 CPI Corp....................... 120,994 ------------ POLLUTION CONTROL - 1.05% 25,533 Calgon Carbon Corp............. 357,462 57,600 *United States Filter Corp...... 1,814,400 115,900 *USA Waste Services, Inc........ 4,201,375 ------------ 6,373,237 ------------ PUBLISHING - NEWS - 0.79% 33,600 Lee Enterprises, Inc........... 848,400 18,868 Media General, Inc. Class A.... 576,653 8,761 Washington Post Co. Class B.... 3,378,461 ------------ 4,803,514 ------------ PUBLISHING/PRINTING - 0.55% 29,886 Banta Corp..................... 829,337 24,625 *Golden Books Family Entertainment, Inc............ 280,109 14,616 Houghton Mifflin Co............ 865,998 12,900 *Scholastic Corp................ 383,775 35,428 Wallace Computer Services, Inc. ......................... 991,984 ------------ 3,351,203 ------------ RAILROAD - 0.72% 16,212 GATX Corp......................$ 920,031 49,577 Illinois Central Corp.......... 1,790,969 30,332 Kansas City Southern Industries, Inc. ............. 1,664,469 ------------ 4,375,469 ------------ RESTAURANTS - 0.94% 38,533 Bob Evans Farms, Inc........... 544,279 58,955 *Brinker International, Inc..... 818,001 37,432 *Buffets, Inc................... 332,209 49,266 Cracker Barrel Old Country Store, Inc.................... 1,428,714 12,880 *International Dairy Queen, Inc. Class A.................. 299,460 34,200 *Lone Star Steakhouse & Saloon.. 786,600 39,100 *Outback Steakhouse Inc......... 909,075 19,788 Sbarro, Inc.................... 578,799 ------------ 5,697,137 ------------ SECURITIES RELATED - 2.53% 66,476 A.G. Edwards, Inc.............. 2,467,922 98,484 Bear Stearns Co. Inc........... 3,200,729 103,602 Franklin Resources, Inc........ 6,708,230 83,600 Paine Webber Group Inc......... 2,967,800 ------------ 15,344,681 ------------ SEMICONDUCTORS - 3.66% 71,440 *Altera Corp.................... 3,786,320 126,038 *Analog Devices, Inc............ 3,371,508 80,400 *Atmel Corp..................... 2,311,500 35,088 Avnet, Inc..................... 2,210,544 53,836 *Cirrus Logic, Inc.............. 646,032 65,582 *Cypress Semiconductor Corp..... 934,544 62,254 Linear Technology Corp......... 3,120,482 49,600 *Maxim Integrated Products...... 2,666,000 58,881 *Xilinx, Inc.................... 3,157,494 ------------ 22,204,424 ------------ TELECOMMUNICATIONS - 1.99% 107,228 ADC Communications, Inc........ 3,672,559 39,242 COMSAT Corp.................... 882,945 63,200 *LCI International, Inc......... 1,532,600 187,900 *Nextel Communications, Inc. Class A ...................... 2,771,525
117 =============================================================================== 16 MIDCAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - -------------------------------------------------------- TELECOMMUNICATIONS - Continued 41,640 *Octel Communications Corp......$ 801,570 99,601 *360 Communications Co.......... 1,879,969 40,740 *Vanguard Cellular Systems, Inc. Class A....................... 534,713 ------------ 12,075,881 ------------ TEXTILE - PRODUCTS - 0.99% 49,900 *Burlington Industries, Inc..... 548,900 43,500 *Jones Apparel Group, Inc....... 2,039,063 108,510 Shaw Industries Inc............ 1,356,375 49,429 Unifi, Inc..................... 1,594,085 25,184 Wellman, Inc................... 450,164 ------------ 5,988,587 ------------ TOBACCO - 0.18% 30,635 Universal Corp................. 1,114,348 ------------ TRUCKERS - 0.24% 17,614 Arnold Industries, Inc......... 295,035 35,600 CNF Transportation, Inc........ 1,148,100 ------------ 1,443,135 ------------ UTILITIES - COMMUNICATION - 0.97% 23,318 Aliant Communications, Inc..... 478,019 48,050 Century Telephone Enterprises, Inc. ......................... 1,453,513 52,964 Southern New England Telecommunications Corp....... 2,065,596 49,291 Telephone and Data Systems, Inc. ......................... 1,913,107 ------------ 5,910,235 ------------ UTILITIES - ELECTRIC - 9.13 % 61,336 *AES Corp....................... 4,400,858 97,514 Allegheny Power System, Inc.... 2,547,553 44,235 Atlantic Energy, Inc........... 729,878 5,253 Black Hills Corp............... 151,024 50,100 *Calenergy, Inc................. 2,066,625 16,159 Central Louisiana Electric Co.. 408,015 30,416 Central Maine Power Co......... 338,378 74,264 CMS Energy Corp................ 2,497,127 48,537 Delmarva Power & Light Co...... 843,330 77,862 Florida Progress Corp.......... 2,287,196 18,866 Hawaiian Electric Industries, Inc. ......................... 653,235 26,223 Idaho Power Co................. 786,690 61,100 Illinova Corp.................. 1,336,563 UTILITIES - ELECTRIC - Continued 13,859 Indiana Energy, Inc............$ 330,884 45,764 IPALCO Enterprises, Inc........ 1,424,405 58,419 Kansas City Power & Light Co... 1,628,430 62,542 LG&E Energy Corp............... 1,438,466 75,334 MidAmerican Energy Co.......... 1,271,261 18,718 Minnesota Power & Light Co..... 542,822 43,857 Montana Power Co............... 997,747 28,833 Nevada Power Co................ 594,681 52,017 New England Electrical System.. 1,801,089 56,621 New York State Electric & Gas Corp...................... 1,231,507 47,972 NIPSCO Industries, Inc......... 1,942,866 117,333 *Northeast Utilities............ 1,070,664 32,446 OGE Energy Corp................ 1,395,178 70,123 Pinnacle West Capital Corp..... 2,059,863 41,591 Portland General Corp.......... 1,663,640 96,364 Potomac Electric Power Co...... 2,216,372 51,912 Public Service Co. of Colorado. 2,095,947 37,837 Public Service Co. of New Mexico ....................... 666,877 69,562 Puget Sound Energy Inc......... 1,730,355 84,688 SCANA Corp..................... 2,117,200 39,848 Southwestern Public Service Co. 1,494,300 94,220 TECO Energy, Inc............... 2,343,723 35,188 UtiliCorp United Inc........... 950,076 29,424 Washington Gas Light Co........ 724,566 89,252 Wisconsin Energy Corp.......... 2,153,205 18,416 WPL Holdings, Inc.............. 508,742 ------------ 55,441,338 ------------ UTILITIES - GAS, DISTRIBUTION - 1.52% 46,436 AGL Resources, Inc............. 888,089 38,505 Brooklyn Union Gas Co.......... 1,073,327 60,168 MCN Energy Group Inc........... 1,782,477 31,578 National Fuel Gas Co........... 1,306,540 127,246 Tosco Corp..................... 4,151,401 ------------ 9,201,834 ------------ WATER SERVICES - 0.21% 58,800 American Water Works Co., Inc.. 1,264,200 ------------ TOTAL COMMON STOCKS (Cost $439,854,680)............ 600,459,653 ------------ CORPORATE SHORT TERM COMMERCIAL PAPER - 0.96% FINANCE COMPANIES - 0.18% $1,086,000 Ford Motor Credit Co., 5.60% due 06/03/97............$ 1,085,662 ------------ SECURITIES RELATED - 0.78% 4,744,000 Merrill Lynch & Co., Inc., 5.50% 06/02/97................ 4,743,275 ------------ TOTAL CORPORATE SHORT TERM COMMERCIAL PAPER (Cost $5,828,937).............. 5,828,937 ------------ UNITED STATES GOVERNMENT - SHORT TERM - 0.02% U.S. TREASURY BILLS - 0.02% 150,000 United States Treasury Bills, 4.99% due 08/21/97 (Cost $148,313)............... 148,313 ------------ TOTAL INVESTMENTS (Cost $445,831,930) - 99.90%... 606,436,903 Other assets and liabilities, net - 0.10% .................. 624,443 ------------ NET ASSETS (equivalent to $20.83 per share on 29,137,334 shares outstanding) - 100%...........$607,061,346 ============
*Non-income producing 118 =============================================================================== May 31, 1997 MIDCAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED 17 ===============================================================================
UNREALIZED CONTRACTS APPRECIATION - - ------------------------------------------------------- FUTURES CONTRACTS PURCHASED(1) (Delivery month/Value at 5/31/97) 43(2) S&P MidCap 400 Index Futures (June/$279.65).................$ 119,855 ============ NET ASSETS REPRESENTED BY: Capital stock, $.01 par value per share, 1,000,000,000 shares authorized, 29,137,334 shares outstanding........... $ 291,373 Additional paid in capital................ 406,838,519 Undistributed net realized gain on securities ............................. 39,149,762 Undistributed net investment income....... 56,864 Unrealized appreciation of: Investments........... $160,604,973 Futures............... 119,855 160,724,828 ------------ NET ASSETS APPLICABLE TO SHARES OUTSTANDING............................. $607,061,346 ============
(1) U.S.Treasury Bills with a market value of approximately $150,000 were maintained in a segregated account with a portion placed as collateral for futures contracts. (2) Per 500 SEE NOTES TO FINANCIAL STATEMENTS. 119 ================================================================================ 18 MIDCAP INDEX FUND - FINANCIAL STATEMENTS ================================================================================ STATEMENT OF OPERATIONS For the fiscal year ended May 31, 1997 INVESTMENT INCOME: Dividends ...................................................................... $ 8,574,566 Interest ....................................................................... 557,965 ------------- Total investment income ...................................................... 9,132,531 ------------- EXPENSES: Advisory fees .................................................................. 1,880,085 Custodian and accounting services .............................................. 203,871 Reports to shareholders ........................................................ 76,689 Audit fees and tax services .................................................... 19,667 Directors' fees and expenses ................................................... 13,603 Miscellaneous .................................................................. 43,796 ------------- Total expenses ............................................................... 2,237,711 NET INVESTMENT INCOME .......................................................... $ 6,894,820 ------------- REALIZED AND UNREALIZED GAIN ON SECURITIES: Net realized gain on: Investments ................................................... $ 38,698,502 Futures contracts ............................................. 1,010,640 39,709,142 ------------- ------------- Net unrealized appreciation during the year: Investments ................................................... 45,539,487 Futures contracts ............................................. 64,180 45,603,667 ------------- ------------- Net realized and unrealized gain on securities during the year............... 85,312,809 ------------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................... $ 92,207,629 =============
STATEMENT OF CHANGES IN NET ASSETS For the fiscal year ended May 31:
1997 1996 ------------- ------------- OPERATIONS: Net investment income ............................................ $ 6,894,820 $ 6,480,259 Net realized gain on securities .................................. 39,709,142 33,442,786 Net unrealized appreciation of securities during the year ........ 45,603,667 76,393,023 ------------- ------------- Increase in net assets resulting from operations ............... 92,207,629 116,316,068 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ............................................ (6,892,259) (6,584,543) Net realized gain on securities .................................. (33,690,297) (17,378,059) ------------- ------------- Decrease in net assets resulting from distributions to shareholders ............................................... (40,582,556) (23,962,602) ------------- ------------- CAPITAL STOCK TRANSACTIONS: Proceeds from capital stock sold ................................. 33,601,532 43,226,671 Proceeds from capital stock issued for distributions reinvested .. 40,582,556 23,962,602 ------------- ------------- 74,184,088 67,189,273 Cost of capital stock repurchased ................................ (59,435,374) (26,411,830) ------------- ------------- Increase in net assets resulting from capital stock transactions .................................... 14,748,714 40,777,443 ------------- ------------- TOTAL INCREASE IN NET ASSETS ..................................... 66,373,787 133,130,909 NET ASSETS: Beginning of year ................................................ 540,687,559 407,556,650 ------------- ------------- End of year (including undistributed net investment income of $56,864 and $54,303) ........................................ $ 607,061,346 $ 540,687,559 ============= ============= CHANGE IN SHARES OUTSTANDING: Shares of capital stock sold ..................................... 1,775,391 2,455,783 Shares issued for distributions reinvested ....................... 2,124,784 1,381,367 Shares of capital stock repurchased .............................. (3,084,568) (1,503,393) ------------- ------------- Increase in shares outstanding ................................. 815,607 2,333,757 Shares outstanding: Beginning of year .............................................. 28,321,727 25,987,970 ------------- ------------- End of year .................................................... 29,137,334 28,321,727 ============= =============
SEE NOTES TO FINANCIAL STATEMENTS. 120 ================================================================================ May 31, 1997 SMALL CAP INDEX FUND - STATEMENT OF NET ASSETS 19 ================================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- COMMON STOCKS - 96.66% ADVERTISING - 0.62% 13,800 *Acxiom Corp. .................. $ 234,600 5,025 *ADVO, Inc. .................... 69,722 2,700 *American Business Information, Inc. ......................... 55,350 5,200 *Catalina Marketing Corp. ...... 191,750 400 Grey Advertising, Inc. ........ 116,800 1,625 *HA-LO Industries, Inc. ........ 37,984 2,650 Harte-Hanks Communications..... 79,169 4,700 *National Media Corp. .......... 34,663 1,300 *Robert Mondavi Corp. Class A .. 57,850 4,900 True North Communications Inc. ......................... 97,387 8,100 *Westwood One, Inc. ............ 220,725 ----------- 1,196,000 ----------- AEROSPACE/DEFENSE - 1.29% 3,400 *Alliant Techsystems Inc. ...... 163,625 6,700 *Aviall, Inc. .................. 98,825 4,600 *BE Aerospace, Inc. ............ 111,550 11,100 *Coltec Industries, Inc. ....... 217,837 600 Cubic Corp. ................... 14,100 5,200 *Fairchild Corp. Class A ....... 85,150 6,900 Gencorp Inc. .................. 145,762 14,500 *Geotek Communications, Inc. ... 64,797 3,200 *GRC International, Inc. ....... 16,800 4,400 Logicon, Inc. ................. 221,100 5,200 OEA, Inc. ..................... 196,300 6,200 *Orbital Sciences Corp. ........ 103,075 7,500 *Rohr, Inc. .................... 158,437 2,800 *Sequa Corp. Class A ........... 136,500 1,700 *Tech-Sym Corp. ................ 54,188 3,800 Teleflex Inc. ................. 234,175 4,800 Thiokol Corp. ................. 345,000 6,600 *Trimble Navigation Ltd. ....... 101,475 700 *Whittaker Corp. ............... 7,788 ----------- 2,476,484 ----------- AIRLINES - 0.72% 3,800 *Alaska Air Group, Inc. ........ 94,525 12,300 America West Airlines, Inc. Class B ...................... 189,112 4,900 ASA Holdings, Inc. ............ 128,013 3,500 Circle International Group Inc. 97,125 13,000 *Continental Airlines, Inc. Class B ...................... 455,000 6,300 Expeditors International of Washington, Inc. ............. 181,912 AIRLINES - Continued 6,700 *Mesa Airlines, Inc. ........... $ 33,500 4,200 Pittston Burlington Group ..... 108,150 1,800 SkyWest, Inc. ................. 27,225 7,900 *ValuJet, Inc. ................. 54,313 2,000 *Western Pacific Airlines, Inc. ............... 11,500 ----------- 1,380,375 ----------- APPAREL & PRODUCTS - 1.35% 1,000 *American Eagle Outfitters...... 11,313 3,400 Angelica Corp. ................ 61,200 5,100 *Ann Taylor Stores Corp. ....... 118,575 5,600 Authentic Fitness Corp. ....... 81,900 2,200 Blair Corp. ................... 35,475 1,000 *Buckle, Inc. .................. 21,250 5,950 Cato Corp. .................... 29,750 11,925 Claire's Stores, Inc. ......... 229,556 8,700 CML Group, Inc. ............... 20,663 2,100 *Donnkenny, Inc. ............... 8,663 6,500 *Dress Barn, Inc. .............. 112,125 1,200 Fab Industries, Inc. .......... 37,500 2,900 *Gadzooks, Inc. ................ 96,244 6,700 *Gymboree Corp. ................ 167,500 2,700 *Hartmarx Corp. ................ 26,662 5,550 Kellwood Co. .................. 145,687 5,700 *Land's End, Inc. .............. 171,712 3,700 *Men's Wearhouse, Inc. ......... 123,487 10,800 *Nautica Enterprises, Inc. ..... 253,800 5,000 OshKosh B'Gosh, Inc. Class A .. 84,375 5,700 Phillips-Van Heusen Corp. ..... 79,800 13,000 Ross Stores, Inc. ............. 365,625 3,600 St. John Knits, Inc. .......... 153,000 6,600 UniFirst Corp. ................ 129,525 2,000 *Urban Outfitters, Inc. ........ 32,500 ----------- 2,597,887 ----------- APPLIANCES/FURNISHINGS - 1.29% 4,100 Aaron Rents, Inc. Class A ..... 50,225 3,750 Bassett Furniture Industries, Inc. ......................... 93,574 4,100 *CORT Business Services Corp. .. 113,775 3,800 Ethan Allen Interiors Inc. .... 198,550 1,600 *Falcon Building Products, Inc. Class A ...................... 28,000 18,100 *Furniture Brands International, Inc. ......................... 282,813 11,097 *Griffon Corp. ................. 151,197 8,000 Hechinger Co. Class A ......... 10,000 APPLIANCES/FURNISHINGS - Continued 11,200 Heilig-Meyers Co. ............. $ 184,800 2,900 *Helen of Troy Ltd. ............ 77,575 12,600 Herman Miller, Inc. ........... 450,450 4,100 Hunt Manufacturing Co. ........ 76,875 4,700 Kimball International, Inc. Class B ...................... 185,650 2,200 La-Z-Boy Chair Co. ............ 75,625 7,385 *Metromedia International Group. 80,773 1,500 National Presto Industries, Inc. ......................... 56,625 3,600 Oneida Ltd. ................... 85,950 3,600 *Renters Choice, Inc. .......... 69,300 4,400 Rival Co. ..................... 61,600 4,900 Windmere Corp. ................ 72,275 6,623 *Zenith Electronics Corp. ...... 72,853 ----------- 2,478,485 ----------- AUTO - ORIGINAL EQUIPMENT - 0.72% 8,000 Arvin Industries, Inc. ........ 222,000 2,900 BREED Technologies, Inc. ...... 56,913 9,200 Carlisle Cos. Inc. ............ 280,600 6,600 Donaldson Co., Inc. ........... 241,725 7,900 Federal-Mogul Corp. ........... 230,087 3,150 *Miller Industries, Inc. ....... 51,581 5,800 Modine Manufacturing Co. ...... 169,650 4,000 Superior Industries International, Inc. .......... 102,000 1,000 *Tower Automotive Inc. ......... 39,625 ----------- 1,394,181 ----------- AUTO - REPLACEMENT PARTS - 0.86% 3,300 A.O. Smith Corp. .............. 121,275 4,900 *APS Holding Corp. Class A ..... 49,000 15,700 *Collins & Aikman Corp. ........ 182,512 975 Dart Group Corp. Class A ...... 99,450 3,900 *Discount Auto Parts, Inc. ..... 72,638 2,700 Furon Co. ..................... 68,850 5,400 Handy & Harman................. 89,775 4,800 Kaydon Corp. .................. 238,200 1,343 Myers Industries, Inc. ........ 23,503 5,350 Simpson Industries, Inc. ...... 54,503 3,100 *SPX Corp. ..................... 184,837 4,400 Standard Motor Products, Inc. Class A ...................... 60,500 5,050 Standard Products Co. Class A ...................... 125,619 9,600 *TBC Corp. ..................... 73,200 3,300 Walbro Corp. .................. 66,000
121 ================================================================================ 20 SMALL CAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ================================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- AUTO - REPLACEMENT PARTS - Continued 5,512 Wynn's International, Inc. .... $ 136,422 ----------- 1,646,284 ----------- BANKS - NEW YORK CITY - 0.09% 5,450 New York Bancorp Inc. ......... 178,488 ----------- BANKS - OTHER - 0.02% 1 BankBoston Corp. .............. 73 1,120 *Fleet Financial Group, Inc. (Warrants) ................... 25,480 800 Irwin Financial Corp. ......... 21,600 ----------- 47,153 ----------- BANKS - REGIONAL - 6.47% 3,100 AMCORE Financial, Inc. ........ 88,350 2,425 Anchor BanCorp Wisconsin Inc. ......................... 103,214 4,701 Associated Banc-Corp. ......... 178,638 7,000 BancorpSouth, Inc. ............ 203,875 985 Bank of Granite Corp. ......... 28,319 1,000 Banknorth Group, Inc. ......... 43,500 2,472 *BOK Financial Corp. ........... 83,121 4,012 CCB Financial Corp. ........... 281,843 6,200 Centura Banks, Inc. ........... 268,150 2,415 Chemical Financial Corp. ...... 86,336 4,700 Citizens Banking Corp. ........ 151,575 10,800 City National Corp. ........... 260,550 5,152 CNB Bancshares, Inc. .......... 226,044 5,349 Collective Bancorp, Inc. ...... 230,007 6,600 Colonial BancGroup, Inc. ...... 159,225 2,952 Commerce Bancorp, Inc. ........ 101,106 7,350 Commercial Federal Corp. ...... 256,331 2,000 Commonwealth Bancorp, Inc. .... 30,000 4,900 Community First Bankshares, Inc. ......................... 169,050 660 Community Trust Bancorp, Inc. . 16,500 3,250 Corus Bankshares, Inc. ........ 83,281 7,540 Cullen/Frost Bankers, Inc. .... 296,887 6,800 Dauphin Deposit Corp. ......... 300,050 12,100 Deposit Guaranty Corp. ........ 379,637 2,542 F & M National Corp. .......... 60,055 3,124 First American Financial Corp. 111,293 3,250 First Citizens BancShares, Inc. ......................... 269,750 1,125 First Commerce Bancshares, Inc. ......................... 28,125 5,697 First Commercial Corp. ........ 233,577 7,400 First Commonwealth Financial Corp. Pennsylvania ........... 143,375 BANKS - REGIONAL - Continued 3,520 First Financial BanCorp. ...... $ 132,880 220 First Financial Corp. of Indiana ...................... 7,700 12,375 First Financial Corp. of Wisconsin .................... 344,953 4,200 First Hawaiian, Inc. .......... 148,838 8,167 First Michigan Bank Corp. ..... 234,798 3,875 First Midwest Bancorp, Inc. ... 126,906 3,972 First Western Bancorp, Inc. ... 140,013 937 Firstbank of Illinois Co. ..... 35,255 1,300 FirstBank Puerto Rico. ........ 32,013 7,500 FirstMerit Corp. .............. 344,062 4,687 Fort Wayne National Corp. ..... 209,743 9,378 Fulton Financial Corp. ........ 246,159 5,000 Great Financial Corp. ......... 165,000 330 Harleysville National Corp. ... 9,983 3,500 Heritage Financial Services, Inc. ......................... 93,625 5,175 HUBCO, Inc. ................... 135,197 6,793 *Imperial BanCorp. ............. 168,976 3,230 Jefferson Bankshares, Inc. .... 94,478 2,500 Liberty Bancorp, Inc. ......... 124,688 7,900 Magna Group, Inc. ............. 254,775 3,141 Mercantile Bancorporation Inc. ......................... 185,319 5,199 Mid-Am, Inc. .................. 92,282 1,025 National Bancorp of Alaska, Inc. ......................... 80,463 830 National City Bancshares, Inc. ......................... 30,918 12,574 National Commerce Bancorporation ............... 298,632 3,516 National Penn Bancshares, Inc. ......................... 107,238 16,416 North Fork Bancorporation, Inc. ......................... 344,736 5,135 Old National Bancorp Indiana .. 206,042 4,660 ONBANCorp, Inc. ............... 219,602 6,467 One Valley Bancorp of West Virginia, Inc. ............... 261,105 331 Peoples First Corp. ........... 8,854 6,068 Provident Bancorp Inc. ........ 244,237 5,200 Riggs National Corp. .......... 96,200 9,018 Roosevelt Financial Group, Inc. ......................... 209,668 1,200 S&T Bancorp, Inc. ............. 43,500 1,300 *Silicon Valley Bancshares ..... 51,350 5,900 St. Paul Bancorp, Inc. ........ 187,325 1,400 Sumitomo Bank of California ... 38,850 4,075 Susquehanna Bancshares, Inc. .. 159,944 2,800 Trans Financial, Inc. ......... 69,650 4,900 Trust Co. of New Jersey........ 90,650 5,211 Trustco Bank Corp. of New York ..................... 107,477 8,350 Trustmark Corp. ............... 227,537 4,293 UMB Financial Corp. ........... 171,720 BANKS - REGIONAL - Continued 3,500 United Bankshares Inc. West Virginia ................ $ 131,250 6,387 United Carolina Bancshares Corp. ........................ 287,415 6,600 UST Corp. ..................... 138,600 3,087 Westamerica Bankcorporation ... 210,688 694 WestCorp. ..................... 11,625 5,500 Whitney Holding Corp. ......... 211,750 ----------- 12,446,433 ----------- BEVERAGE - BREWERS/ DISTRIBUTORS - 0.22% 9,900 Adolph Coors Class B .......... 241,313 3,200 *Boston Beer Co., Inc. Class A ...................... 28,800 4,300 *Canandaigua Wine, Inc. Class B ...................... 153,725 ----------- 423,838 ----------- BEVERAGE - SOFT DRINKS - 0.07% 2,200 Coca-Cola Bottling Co. ........ 99,000 7,100 *Pepsi-Cola Puerto Rico Bottling Co. Class B ......... 35,500 ----------- 134,500 ----------- BROADCASTING - 1.52% 3,200 Ackerley Inc. ................. 39,600 3,300 *Adelphia Communications Corp. Class A ...................... 18,975 5,300 *American Mobile Satellite Corp. 47,700 6,570 *American Radio Systems, Corp. Class A ...................... 244,732 7,300 *American Telecasting, Inc. .... 7,984 5,700 *ANTEC Corp. ................... 70,537 2,000 *Argyle Television, Inc. ....... 46,750 5,900 *CAI Wireless Systems, Inc. .... 8,666 1,300 *Cellularvision USA, Inc. ...... 9,263 4,800 *Century Communications Corp. Class A ...................... 26,400 3,900 *Chancellor Corp. Class A ...... 134,550 4,300 *Cyrix Corp. ................... 108,575 8,900 *Data Broadcasting Corp. ....... 43,387 2,000 *Emmis Broadcasting Corp. Class A ...................... 76,750 5,550 *Evergreen Media Corp. ......... 215,756 2,200 *Heartland Wireless Communications, Inc. ......... 6,463 1,300 *Heftel Broadcasting Corp. Class A ...................... 64,350 7,200 *Heritage Media Corp. Class A .. 131,400
122 ================================================================================ May 31, 1997 SMALL CAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED 21 ================================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- BROADCASTING - Continued 11,876 *HSN, Inc. ..................... $ 363,702 8,250 *International Family Entertainment, Inc. Class B .. 229,969 1,700 *Jacor Communications, Inc. .... 58,650 3,500 *Jones Intercable Inc. ......... 37,188 4,500 *Lin Television Corp. .......... 195,187 2,500 *Paxson Communications Corp. ... 25,313 2,900 *People's Choice TV Corp. ...... 3,988 4,375 *SAGA Communications, Inc. Class A ...................... 80,391 2,500 *SFX Broadcasting, Inc. Class A ...................... 80,625 4,200 TCA Cable TV, Inc. ............ 141,750 8,700 *United International Holdings, Inc. Class A ................. 87,000 1,700 United Television, Inc. ....... 151,300 4,400 *United Video Satellite Group, Inc. Class A ................. 74,800 3,600 *Young Broadcasting Inc. Class A ...................... 96,750 ----------- 2,928,451 ----------- BUILDING MATERIALS - 1.17% 3,100 *ABT Building Products Corp. ... 77,500 1,500 Ameron, Inc. .................. 83,250 9,100 Apogee Enterprises, Inc. ...... 168,350 2,450 Butler Manufacturing Co. ...... 87,894 5,000 CalMat Co. .................... 99,375 3,000 Centex Construction Productions, Inc. ............ 60,375 2,300 Elcor Corp. ................... 64,400 15,200 Fedders USA Inc. .............. 96,900 1,500 *Fibreboard Corp. .............. 81,563 1,700 Florida Rock Industries, Inc. ......................... 56,950 5,300 HON INDUSTRIES, Inc. .......... 257,050 5,000 Interface, Inc. Class A ....... 116,250 3,200 Lone Star Industries, Inc. .... 127,200 1,900 LSI Industries, Inc. .......... 28,975 4,200 Medusa Corp. .................. 162,225 700 *NCI Building Systems, Inc. .... 20,388 13,800 *Payless Cashways Inc. ......... 22,425 1,000 Puerto Rican Cement Co. Inc. .. 32,750 5,900 Southdown, Inc. ............... 238,212 6,000 Texas Industries, Inc. ........ 144,000 5,500 *Triangle Pacific Corp. ........ 164,312 2,200 Watsco, Inc. .................. 63,800 ----------- 2,254,144 ----------- CHEMICAL - MAJOR - 0.36% 4,800 Borg-Warner Automotive, Inc. .. $ 234,000 4,000 Chemed Corp. .................. 146,000 8,409 *Hexcel Corp. .................. 151,362 4,100 *Synetic, Inc. ................. 159,388 ----------- 690,750 ----------- CHEMICAL - MISCELLANEOUS - 1.97% 8,300 A. Schulman Inc. .............. 184,675 3,600 *Buckeye Cellulose Corp. ....... 113,400 1,950 Cambrex Corp. ................. 70,444 6,900 ChemFirst Inc. ................ 178,537 18,167 Crompton & Knowles Corp. ...... 424,654 6,200 Dexter Corp. .................. 186,775 5,300 Ferro Corp. ................... 198,087 5,300 Fisher Scientific International Inc. ........... 192,125 3,700 *Foamex International Inc. ..... 55,962 5,600 Geon Co. ...................... 121,800 3,600 H.B. Fuller Co. ............... 198,900 3,800 *Landec Corp. .................. 20,900 10,400 Lawter International, Inc. .... 119,600 3,400 LeaRonal, Inc. ................ 91,800 2,500 MacDermid, Inc. ............... 113,125 3,700 *McWhorter Technologies, Inc. .. 81,400 4,900 Minerals Technologies Inc. .... 193,550 4,800 *Mycogen Corp. ................. 112,800 1,200 NCH Corp. ..................... 78,150 8,700 *NL Industries, Inc. ........... 110,925 6,700 Om Group Inc. ................. 211,050 2,600 O'Sullivan Corp. .............. 23,400 925 Petrolite Corp. ............... 55,616 3,200 Rollins, Inc. ................. 62,400 2,000 Stepan Co. .................... 39,250 6,200 Valspar Corp. ................. 173,600 4,450 VWR Scientific Products Corp. ........................ 68,975 6,150 W.H. Brady Co. Class A ........ 175,275 2,500 WD-40 Co. ..................... 141,875 ----------- 3,799,050 ----------- COAL - 0.14% 3,200 Ashland Coal, Inc. ............ 85,600 2,534 NACCO Industries, Inc. Class A ...................... 128,917 2,600 Zeigler Coal Holding Co. ...... 60,450 ----------- 274,967 ----------- CONGLOMERATES - 0.27% 1,500 *MAXXAM, Inc. .................. $ 66,000 12,900 Ogden Corp. ................... 251,550 2,600 *PEC Israel Economic Corp. ..... 59,150 10,600 *Walter Industries, Inc. ....... 151,050 ----------- 527,750 ----------- CONSUMER FINANCE - 0.42% 7,900 *AmeriCredit Corp. ............. 148,125 8,200 *Arcadia Financial Limited ..... 85,075 200 Chittenden Corp. .............. 5,950 6,200 Eaton Vance Corp. ............. 152,675 1,500 Fund American Enterprises, Inc. ......................... 152,250 7,800 *Jayhawk Acceptance Corp. ...... 12,675 6,430 *National Auto Credit, Inc. .... 62,693 5,100 SEI Corp. ..................... 114,750 700 WesBanco, Inc. ................ 25,725 9,000 *World Acceptance Corp. ........ 55,125 ----------- 815,043 ----------- CONTAINERS - METAL/GLASS - 0.47% 3,600 *Alltrista Corp. ............... 86,400 4,700 AptarGroup, Inc. .............. 208,563 7,900 Ball Corp. .................... 230,087 2,800 CLARCOR Inc. .................. 65,800 600 *CSS Industries, Inc. .......... 18,075 6,500 Greif Brothers Corp. Class A .. 182,000 1,125 Liqui-Box Corp. ............... 37,406 473 *Omega Environmental, Inc. ..... 207 4,900 *U. S. Can Corp. ............... 79,625 ----------- 908,163 ----------- CONTAINERS - PAPER - 0.26% 5,400 Chesapeake Utilities Corp. .... 180,900 12,600 *Gaylord Container Corp. Class A ...................... 103,163 8,890 Rock-Tenn Co. Class A ......... 134,461 3,600 *Shorewood Packaging Corp. ..... 72,900 ----------- 491,424 ----------- COSMETICS/TOILETRIES - 0.10% 4,050 *INBRAND Corp. ................. 106,819 9,100 *Playtex Products, Inc. ........ 87,587 ----------- 194,406 -----------
123 ================================================================================ 22 SMALL CAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ================================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- DRUGS - 2.98% 3,500 A.L. Pharma Inc. Class A ...... $ 58,625 3,400 *Agouron Pharmaceuticals, Inc. ......................... 272,425 3,100 Alkermes, Inc. ................ 51,150 8,700 *Alliance Pharmaceutical Corp. ........................ 88,087 267 *Alpha 1 Biomedicals, Inc. ..... 28 2,100 *Alteon, Inc. .................. 8,400 5,700 *AmeriSource Health Corp. Class A ...................... 242,962 6,300 *Amylin Pharmaceuticals, Inc. .. 81,900 2,500 *Aphton Corp. .................. 36,250 444 *Aquila Biopharmaceuticals, Inc. ......................... 2,109 4,100 Bindley Western Industries, Inc. ......................... 90,200 1,200 *Carrington Laboratories, Inc. ......................... 9,150 3,700 Carter-Wallace Inc. ........... 61,050 3,500 *CellPro, Inc. ................. 22,750 7,400 *Cephalon, Inc. ................ 92,500 4,017 *Chad Therapeutics, Inc. ....... 32,387 2,000 *Chronimed, Inc. ............... 19,750 4,000 *CNS, Inc. ..................... 35,000 7,500 *Cocensys, Inc. ................ 30,000 5,500 *Columbia Laboratories, Inc. ... 107,250 3,598 *Copley Pharmaceutical, Inc. ... 22,937 3,000 *COR Therapeutics, Inc. ........ 26,813 5,300 *Cygnus, Inc. .................. 87,450 8,200 *Cytel Corp. ................... 16,913 1,900 *DepoTech Corp. ................ 26,600 10,900 *Dura Pharmaceuticals, Inc. .... 433,275 2,600 *GelTex Pharmaceuticals, Inc. .. 49,400 10,400 *Genelabs Technologies, Inc. ... 24,700 10,900 *Gensia, Inc. .................. 50,413 7,200 *Gilead Sciences, Inc. ......... 195,300 2,700 Herbalife International, Inc. ......................... 56,025 4,900 *Human Genome Sciences, Inc. ... 189,875 9,265 ICN Pharmaceuticals, Inc. ..... 200,356 7,400 *ICOS Corp. .................... 59,662 4,100 *IDEC Pharmaceuticals Corp. .... 92,250 7,100 *ImmuLogic Pharmaceutical Corp. ........................ 28,400 5,900 *Immune Response Corp. ......... 50,150 5,700 *Immunex Corp. ................. 178,837 2,300 *Incyte Pharmacuticals, Inc. ... 150,650 3,900 *Inhale Therapeutic Systems..... 78,975 1,500 *Intercardia, Inc. ............. 28,500 5,700 Jones Medical Industries, Inc. ......................... 204,487 4,050 Life Technologies, Inc. ....... 109,350 4,358 *Ligand Pharmaceuticals Inc. Class B ...................... 51,751 DRUGS - Continued 4,400 *Martek Biosciences Corp. ...... $ 74,800 3,100 *Matrix Pharmaceuticals, Inc. .. 21,700 5,130 Natures Sunshine Products, Inc. ......................... 86,569 4,300 *Neoprobe Corp. ................ 65,037 3,700 *Neose Technologies, Inc. ...... 48,100 2,600 *Neurogen Corp. ................ 49,725 7,100 *NeXstar Pharmaceuticals, Inc. ......................... 77,212 5,900 *Noven Pharmaceuticals, Inc. ... 46,463 3,400 *Parexel International Corp. ... 111,775 3,800 *PathoGensis Corp. ............. 104,975 2,400 *PDT Inc. ...................... 67,200 5,300 *R.P. Scherer Corp. ............ 278,250 6,600 *Regeneron Pharmaceuticals Inc. ......................... 70,125 2,700 *Roberts Pharmaceutical Corp. .. 33,413 4,300 *SangStat Medical Corp. ........ 107,500 7,100 *Sepracor Inc. ................. 173,950 9,300 *SEQUUS Pharmaceuticals, Inc. .. 65,681 6,500 *Somatogen, Inc. ............... 35,750 4,500 *Vertex Pharmaceuticals Inc. ... 182,250 2,150 *Vitalink Pharmacy Services, Inc. ......................... 41,119 4,600 *Vivus Inc. .................... 188,025 9,100 *Xoma Corp. .................... 46,638 ----------- 5,731,299 ----------- ELECTRICAL EQUIPMENT - 2.05% 10,800 AMETEK, Inc. .................. 252,450 12,300 *Anixter International, Inc. ... 209,100 1,200 *Applied Digital Access, Inc. .. 7,500 2,400 *Applied Innovation Inc. ....... 14,400 7,157 *BancTec, Inc. ................. 180,714 7,000 Belden Inc. ................... 254,625 1,200 *Brite Voice Systems, Inc. ..... 10,050 3,950 *C-COR Electronics, Inc. ....... 38,513 4,600 *Cable Design Technologies Corp. ........................ 126,500 4,300 *California Microwave, Inc. .... 52,675 7,233 *Chyron Corp. .................. 33,453 5,000 *Computer Products, Inc. ....... 111,250 4,900 *Digital Microwave Corp. ....... 151,900 3,475 *Electro Rent Corp. ............ 79,925 3,400 *Energy Conversion Devices, Inc. 51,850 3,600 *Esterline Technologies Corp. .. 108,450 5,300 *Executive Telecard Ltd. ....... 38,425 700 *Franklin Electronic Publishers, Inc. ............. 7,088 1,500 *Galileo Corp. ................. 10,500 6,900 *GenRad, Inc. .................. 128,512 ELECTRICAL EQUIPMENT - Continued 2,800 *Holophane Corp. ............... $ 59,500 4,400 *Hutchinson Technology Inc. .... 121,000 2,800 *Identix, Inc. ................. 28,350 5,400 *Integrated Silicon Solution, Inc. ......................... 52,650 10,500 *Intergraph Corp. .............. 74,156 1,200 *Jabil Circuit, Inc. ........... 70,275 4,800 Juno Lighting, Inc. ........... 76,800 9,100 *Kemet Corp. ................... 230,912 5,500 *Kent Electronics Corp. ........ 178,750 2,000 Kuhlman Corporation ........... 55,250 3,100 *Littelfuse, Inc. .............. 160,425 3,500 *Semitool, Inc. ................ 43,312 9,200 *Sierra Semiconductor Corp. .... 221,950 4,800 Standex International Corp. ... 130,800 593 *Sulcus Computer Corp. ......... 1,038 5,200 *TCSI Corp. .................... 33,800 1,200 *Thermo Ecotek Corp. ........... 19,200 1,100 Thomas Industries Inc. ........ 30,938 4,200 *Uniphase Corp. ................ 220,500 7,000 *Vicor Corp. ................... 138,250 5,100 X-Rite, Inc. .................. 94,987 1,800 *Zytec Corp. ................... 31,950 ----------- 3,942,673 ----------- ELECTRONIC INSTRUMENTS - 2.68% 10,000 *Ampex Corp. ................... 64,375 3,150 Analogic Corp. ................ 102,769 6,200 *Applied Magnetics Corp. ....... 154,225 2,700 *Berg Electronics Corp. ........ 93,825 6,400 BMC Industries, Inc. .......... 210,400 8,500 *Cognex Corp. .................. 221,531 2,000 CTS Corp. ..................... 138,000 5,400 Daniel Industries, Inc. ....... 72,225 3,300 *Dionex Corp. .................. 174,900 4,600 *Dynatech Corp. ................ 172,500 2,400 *Eltron International, Inc. .... 65,400 4,000 *Evans & Sutherland Computer Corp. ........................ 105,000 4,600 *Exabyte Corp. ................. 64,975 1,600 Fluke Corp. ................... 79,800 7,800 *Gentex Corp. .................. 156,975 5,500 *Genus, Inc. ................... 31,625 6,300 Gerber Scientific, Inc. ....... 118,912 2,200 *HADCO Corp. ................... 132,137 4,575 Harman International Industries, Inc. ............. 191,006
124 ================================================================================ May 31, 1997 SMALL CAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED 23 ================================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- ELECTRONIC INSTRUMENTS - Continued 3,600 *Harmonic Lightwaves, Inc. ..... $ 59,400 5,300 *IMP, Inc. ..................... 9,275 18,400 *Integrated Device Technology, Inc. ......................... 258,750 12,000 *InterDigital Communications Corp. ........................ 79,500 1,400 *ITI Technologies, Inc. ........ 22,400 5,850 *Lattice Semiconductor Corp. ... 339,300 8,300 *LoJack Corp. .................. 96,487 10,200 *LTX Corp. ..................... 62,475 7,700 *MagneTek, Inc. ................ 134,750 4,400 *Marshall Industries ........... 160,050 9,850 Methode Electronics, Inc. Class A ...................... 166,219 5,100 National Computer Systems, Inc. ......................... 128,775 5,400 *Nimbus CD International, Inc. ......................... 60,750 3,300 Park Electrochemical Corp. .... 82,913 4,200 *Performance Food Group Co. .... 87,150 8,237 Pioneer-Standard Electronics, Inc. ......................... 101,933 5,100 *Robotic Vision Systems, Inc. .. 59,288 5,700 *Standard Microsystems Corp. ... 51,300 400 Technitrol, Inc. .............. 10,000 6,200 Telxon Corp. .................. 114,894 6,400 *3DO Co. ....................... 28,800 4,200 *Tracor, Inc. .................. 106,575 5,800 *Waters Corp. .................. 187,050 2,900 Watkins-Johnson Co. ........... 91,713 4,000 Wyle Electronics .............. 148,000 5,100 ZERO Corp. .................... 117,300 1,600 *Zygo Corp. .................... 46,400 ----------- 5,162,027 ----------- ENTERTAINMENT - 0.56% 800 *AMC Entertainment, Inc. ....... 18,400 3,800 *Argosy Gaming Co. ............. 11,875 79 *Autotote Corp. Class A ........ 89 11,000 *Aztar Corp. ................... 77,000 2,200 *BET Holdings, Inc. Class A .... 70,675 1,800 *Carmike Cinemas, Inc. ......... 62,550 2,300 *GC Companies, Inc. ............ 97,750 3,000 Harveys Casino Resorts ........ 50,625 6,700 *Hollywood Entertainment Corp. . 134,837 3,900 NN Ball & Roller, Inc. ........ 45,338 3,000 *Penn National Gaming, Inc. .... 54,000 3,300 *Playboy Enterprises Inc. Class B ...................... 38,775 3,300 *Primadonna Resorts, Inc. ...... 72,600 2,100 *Recoton Corp. ................. 26,775 5,925 *Regal Cinemas, Inc. ........... 194,784 ENTERTAINMENT - Continued 1,150 *Shuffle Master, Inc. .......... $ 9,631 3,400 *Sodak Gaming, Inc. ............ 49,938 5,900 *Toy Biz, Inc. Class A ......... 52,362 ----------- 1,068,004 ----------- FERTILIZERS - 0.20% 8,065 Delta & Pine Land Co. ......... 244,974 6,504 Mississippi Chemical Corp. .... 147,966 ----------- 392,940 ----------- FINANCE COMPANIES - 0.62% 5,300 Aames Financial Corp. ......... 68,238 3,400 *Amresco, Inc. ................. 59,925 1,300 *Cityscape Financial Corp. ..... 18,850 5,400 *Credit Acceptance Corp. ....... 76,275 2,000 *FIRSTPLUS Financial Group, Inc. ......................... 51,000 5,734 *Imperial Credit Industries, Inc. ......................... 108,229 9,150 Keystone Financial, Inc. ...... 272,212 7,300 Phoenix Duff & Phelps Corp. ... 54,750 140 Phoenix Duff & Phelps Corp. (Preferred) .................. 3,570 3,100 Reliance Acceptance Group, Inc. ......................... 17,825 1,900 Sirrom Capital Corp. .......... 73,863 2,000 Student Loan Corp. ............ 76,500 5,000 U. S. Trust Corp. ............. 235,000 2,530 *WFS Financial, Inc. ........... 32,890 1,200 Winthrop Resources Corp. ...... 38,250 ----------- 1,187,377 ----------- FOODS - 1.28% 7,400 Chiquita Brands International . 113,775 9,200 Dean Foods Co. ................ 349,600 3,200 Dreyer's Grand Ice Cream, Inc. ......................... 117,600 2,000 Earthgrains Co. ............... 114,000 22,275 Flowers Industries, Inc. ...... 392,597 5,550 Hudson Foods, Inc. Class A .... 88,106 4,100 International Multifoods Corp. 115,825 9,800 J.M. Smucker Co. Class A ...... 189,875 2,300 *JP Foodservice, Inc. .......... 66,700 4,200 Lance, Inc. ................... 82,950 8,400 M & F Worldwide Corp. ......... 65,100 3,200 Michael Foods, Inc. ........... 45,400 3,700 *Morningstar Group Inc. ........ 97,125 3,400 *NBTY, Inc. .................... 79,900 2,000 Northland Cranberries, Inc. ... 26,000 FOODS - Continued 1,100 Pilgrims Pride Corp. .......... $ 13,750 8,000 *Ralcorp Holdings, Inc. ........ 97,000 4,667 Tootsie Roll Industries, Inc. ......................... 225,183 5,300 Universal Foods Corp. ......... 190,137 ----------- 2,470,623 ----------- FOOTWEAR - 0.52% 4,400 Brown Group, Inc. ............. 79,200 6,150 *Just For Feet Inc. ............ 120,694 8,000 Justin Industries, Inc. ....... 95,000 3,400 *Kenneth Cole Productions, Inc. Class A ...................... 53,975 13,000 Stride Rite Corp. ............. 198,250 2,100 *Timberland Co. Class A ........ 123,112 12,488 Wolverine World Wide, Inc. .... 323,114 ----------- 993,345 ----------- FREIGHT - 0.68% 4,100 Air Express International Corp. 149,650 3,900 Airborne Freight Corp. ........ 149,175 8,200 APL Ltd. ...................... 248,050 2,500 *Eagle USA Airfreight, Inc. .... 50,625 10,200 *Greyhound Lines, Inc. ......... 42,713 5,400 Interpool, Inc. ............... 75,600 5,500 J.B. Hunt Transport Services, Inc. ......................... 83,875 6,300 *Kirby Corp. ................... 118,912 10,700 *OMI Corp. ..................... 102,988 9,700 Overseas Shipholding Group Inc. ......................... 183,087 2,100 *SEACOR Holdings, Inc. ......... 108,675 ----------- 1,313,350 ----------- GOLD MINING - 0.45% 12,800 *Amax Gold Inc. ................ 84,800 64,700 Battle Mountain Gold Co. ...... 396,288 5,600 Coeur d'Alene Mines Corp. ..... 76,300 6,630 *Getchell Gold Corp. ........... 264,371 65,500 *Sunshine Mining Co. ........... 53,219 ----------- 874,978 ----------- HARDWARE & TOOLS - 0.08% 600 Barnes Group, Inc. ............ 16,125 2,500 *Barnett, Inc. ................. 55,625 3,200 Lawson Products, Inc. ......... 80,000 ----------- 151,750 -----------
125 ================================================================================ 24 SMALL CAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ================================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- HEALTHCARE - 2.60% 4,300 *Access Health, Inc. ........... $ 94,600 11,300 *Advanced Tissue Sciences, Inc. ......................... 145,488 10,700 *American Oncology Resources, Inc. ......................... 151,137 2,400 *Arbor Health Care Co. ......... 68,400 2,536 Block Drug Co., Inc. Class A .. 112,535 4,100 Collagen Corp. ................ 69,700 8,300 *Coram Healthcare Corp. ........ 22,825 2,800 *Curative Technologies, Inc. ... 77,875 8,902 *CYTOGEN Corp. ................. 50,074 8,300 *Genesis Health Ventures, Inc. ......................... 272,862 4,500 *GranCare, Inc. ................ 41,625 12,462 *Horizon/CMS Healthcare Corp. .. 227,431 5,800 Integrated Health Services, Inc. ......................... 208,800 6,600 Invacare Corp. ................ 141,900 2,300 Kinetic Concepts, Inc. ........ 37,950 17,000 *Laboratory Corp. of America Holdings ..................... 48,875 1,383 *Laboratory Corp. of America Holdings (Rights) ............ 11,062 3,400 *LCA-Vision, Inc. .............. 14,025 3,600 *Living Centers of America, Inc. ......................... 137,250 7,400 *Mariner Health Group, Inc. .... 88,800 5,500 *Matria Healthcare, Inc. ....... 24,063 5,500 *Maxicare Health Plans Inc. .... 132,000 7,300 Mentor Corp. .................. 192,537 5,100 *Multicare Companies, Inc. ..... 126,863 1,500 *National Surgery Centers, Inc. ......................... 57,750 16,500 *NovaCare, Inc. ................ 208,312 3,750 *Patterson Dental Co. .......... 129,375 4,499 *Pharmaceutical Product Development, Inc. ............ 86,043 3,000 *PHP Healthcare Corp. .......... 45,375 8,300 *Physician Corp. of America .... 59,138 3,000 *Physicians Health Services, Inc. Class A ................. 79,125 4,300 *Regency Health Services, Inc. ......................... 52,675 6,600 *Renal Treatment Centers Inc. .. 189,750 1,800 *ReSound Corp. ................. 8,775 3,300 *Respironics Inc. .............. 66,825 1,000 *RightCHOICE Managed Care, Inc. Class A ...................... 11,750 6,600 *RoTech Medical Corp. .......... 111,375 2,300 *Rural/Metro Corp. ............. 73,600 5,000 *Sierra Health Services, Inc. .. 155,625 4,400 *SpaceLabs Medical, Inc. ....... 98,450 HEALTHCARE - Continued 1,000 *Summit Care Corp. ............. $ 12,000 10,488 *Sun Healthcare Group, Inc. .... 175,674 5,500 *Sunrise Medical Inc. .......... 70,813 3,850 *TECNOL Medical Products, Inc. ......................... 74,113 11,493 *Transitional Hospitals Corp. .. 182,451 8,700 *Universal Health Services, Inc. Class B ...................... 352,350 5,000 *Veterinary Centers of America, Inc. ......................... 61,250 3,500 *VISX, Inc. .................... 103,250 2,300 Vital Signs, Inc. ............. 45,713 ----------- 5,010,234 ----------- HEAVY DUTY TRUCKS/PARTS - 0.25% 800 Cascade Corp. ................. 13,500 4,000 *Detroit Diesel Corp. .......... 88,000 16,600 *Navistar International Corp. .. 275,975 4,450 Wabash National Corp. ......... 98,456 ----------- 475,931 ----------- HOME BUILDERS - 0.76% 1,250 Cavalier Homes, Inc. .......... 14,063 7,600 Centex Corp. .................. 303,050 3,300 Continental Homes Holding Corp. ........................ 54,037 7,905 D R Horton Inc. ............... 76,086 6,600 Del Webb Corp. ................ 100,650 10,200 Kaufman & Broad Home Corp. .... 153,000 5,300 *NVR Inc. ...................... 81,819 3,500 *Palm Harbor Homes, Inc. ....... 98,875 5,900 Pulte Corp. ................... 186,587 4,200 Ryland Group, Inc. ............ 54,600 10,200 Standard Pacific Corp. ........ 104,550 6,200 *Toll Brothers, Inc. ........... 113,150 4,370 *U. S. Home Corp. .............. 115,259 ----------- 1,455,726 ----------- HOSPITAL MANAGEMENT - 0.65% 4,500 *ABR Information Services, Inc. ......................... 144,562 1,700 *Coastal Physician Group Inc. .. 1,594 7,500 *Coventry Corp. ................ 109,219 2,900 *EmCare Holdings Inc. .......... 87,000 1,900 *Enterprise Systems, Inc. ...... 55,219 3,700 *Equimed, Inc. ................. 12,141 5,000 *Health Management Systems, Inc. ......................... 28,125 52 *Hospital Staffing Services, Inc. ......................... 123 4,100 *Inphynet Medical Management, Inc. ......................... 89,175 HOSPITAL MANAGEMENT - Continued 7,100 *Magellan Health Services, Inc. ......................... $ 193,475 2,000 *MedCath Inc. .................. 30,250 6,600 *OccuSystems, Inc. ............. 173,250 5,500 *Orthodontic Centers of America Inc. ......................... 92,125 3,000 *Pediatrix Medical Group ....... 119,250 4,400 *Physicians Resource Group, Inc. ......................... 51,700 3,800 *Prime Medical Services, Inc. .. 42,275 6,400 *Transcend Services, Inc. ...... 25,600 ----------- 1,255,083 ----------- HOSPITAL SUPPLIES - 1.32% 5,700 *Acuson Corp. .................. 148,200 3,400 *Advanced Technology Laboratories, Inc. ........... 131,750 2,100 Arrow International, Inc. ..... 67,725 1,400 *ArthroCare Corp. .............. 10,675 7,000 Ballard Medical Products ...... 134,750 11,200 *Bio-Technology General Corp. .. 162,400 3,531 *Boston Scientific Corp. ....... 188,467 3,500 *Coherent, Inc. ................ 153,125 2,700 *CONMED Corp. .................. 50,625 5,200 *Datascope Corp. ............... 98,800 3,600 Diagnostic Products Corp. ..... 107,550 3,700 *Gulf South Medical Supply, Inc. ......................... 73,075 3,250 *Healthdyne Technologies Inc. .. 47,937 3,600 *ICU Medical, Inc. ............. 31,950 7,800 *Immunomedics, Inc. ............ 41,437 8,100 *Isis Pharmaceuticals, Inc. .... 127,575 600 Landauer, Inc. ................ 13,650 4,900 *Marquette Medical Systems ..... 112,700 4,400 Meridian Diagnostics, Inc. .... 37,400 2,100 *MiniMed, Inc. ................. 52,500 3,900 *OrthoLogic Corp. .............. 22,913 2,000 *Ostex International, Inc. ..... 4,000 9,750 Owens & Minor, Inc. ........... 123,094 165 *PerSeptive Biosystems Inc. .... 1,052 93 *PerSeptive Biosystems Inc. (Warrants) ................... 105 3,200 *Physio-Control International Corp. ........................ 40,800 2,800 *Protocol Systems, Inc. ........ 21,350 3,400 *Safeskin Corp. ................ 85,425 3,000 *St. Jude Medical, Inc. ........ 101,625 9,500 *Summit Technology, Inc. ....... 73,031 1,800 *TECHNE Corp. .................. 49,725 3,600 *Theragenics Corp. ............. 80,100
126 ================================================================================ May 31, 1997 SMALL CAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED 25 ================================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- HOSPITAL SUPPLIES - Continued 8,000 *Uromed Corp. .................. $ 38,000 3,800 West Co., Inc. ................ 112,100 ----------- 2,545,611 ----------- HOUSEHOLD PRODUCTS - 0.71% 3,100 Church & Dwight Co., Inc. ..... 82,150 3,900 *Culligan Water Technologies, Inc. ......................... 173,550 5,300 Libbey Inc. ................... 176,887 4,050 Pittway Corp. Class A ......... 214,650 13,900 Premark International Inc. .... 378,775 9,750 Rykoff-Sexton, Inc. ........... 186,469 4,700 Stanhome Inc. ................. 147,463 1,100 *USA Detergents, Inc. .......... 14,300 ----------- 1,374,244 ----------- HUMAN RESOURCES - 0.18% 2,400 *COREStaff, Inc. ............... 57,000 5,800 *Employee Solutions, Inc. ...... 30,813 4,200 *Interim Services Inc. ......... 163,800 3,300 *Personal Group of America, Inc. ......................... 100,238 ----------- 351,851 ----------- INFORMATION PROCESSING - 7.56% 2,100 *ACT Networks, Inc. ............ 37,013 3,200 *Activision, Inc. .............. 41,600 4,333 *ADAC Laboratories ............. 112,658 5,400 *Affiliated Computer Services, Inc. Class A ................. 143,100 3,400 *Amisys Managed Care Systems Inc. ......................... 74,800 3,800 Analysts International Corp. .. 137,750 3,100 *Applix, Inc. .................. 13,950 2,500 *Arbor Software Corp. .......... 74,375 4,400 *Aspen Technologies, Inc. ...... 168,300 11,503 *AST Research, Inc. ............ 60,391 4,600 *Astea International, Inc. ..... 14,950 7,900 *Auspex Systems, Inc. .......... 81,962 4,308 *Avant! Corp. .................. 99,084 2,000 *Barra, Inc. ................... 59,000 6,600 *BBN Corp. ..................... 190,575 6,800 *BDM International.............. 176,800 2,400 *Bell & Howell Co. ............. 64,200 5,800 *BISYS Group, Inc. ............. 221,125 5,400 *Black Box Corp. ............... 190,350 6,025 *Boole & Babbage, Inc. ......... 125,019 10,100 *Borland International, Inc. ... 73,225 INFORMATION PROCESSING - Continued 7,100 *Boston Technology, Inc. ....... $ 204,125 1,300 *BRC Holdings, Inc. ............ 48,750 5,400 *Broderbund Software Inc. ...... 135,675 3,300 *Brooktrout Technology, Inc. ... 44,550 2,295 *Cadence Design Systems, Inc. .. 76,309 3,300 *Caere Corp. ................... 27,225 4,200 *Centennial Technologies, Inc. ......................... 12,075 340 *Centura Software Corp. ........ 510 4,900 *Cerner Corp. .................. 95,550 6,700 *Checkfree Corp. ............... 117,250 2,600 *Ciber, Inc. ................... 107,575 6,800 *Citrix Systems, Inc. .......... 255,850 2,200 *Clarify, Inc. ................. 26,675 1,100 *COMFORCE Corp. ................ 6,463 4,750 *Computer Horizons Corp. ....... 264,812 800 Computer Language Research, Inc. ......................... 8,750 1,150 *Computer Management Sciences, Inc. ......................... 23,000 7,000 *Computer Network Technology Corp. ........................ 33,688 1,100 Computer Task Group, Inc. ..... 67,237 14,900 *Computervision Corp. .......... 72,637 1,600 *ComShare, Inc. ................ 22,000 5,600 *Comverse Technology, Inc. ..... 256,200 3,700 *Control Data Systems, Inc. .... 54,112 15,900 *CopyTele, Inc. ................ 82,481 800 *CSG Systems International, Inc. ......................... 19,000 1,000 *Cybercash, Inc. ............... 13,000 11,400 *Data General Corp. ............ 243,675 800 *Data Translation, Inc. ........ 3,000 2,700 *Dialogic Corp. ................ 78,975 6,900 *Diamond Multimedia Systems, Inc. ......................... 55,200 1,900 *Documentum, Inc. .............. 37,288 7,100 *Egghead, Inc. ................. 33,281 4,200 *Envoy Corp. ................... 126,525 3,600 *Excalibur Technologies Corp. .. 15,750 1,300 Fair Issac & Co., Inc. ........ 51,350 4,000 *FileNet Corp. ................. 66,500 202 First Data Corp. .............. 8,080 6,500 *FTP Software, Inc. ............ 36,563 6,800 *General DataComm Industries, Inc. ......................... 61,200 3,900 *Geoworks ...................... 24,375 2,700 *Harbinger Corp. ............... 83,700 800 *HCIA, Inc. .................... 19,800 4,350 Henry Jack & Associates ....... 97,331 3,700 *HMT Technology Corp. .......... 49,487 INFORMATION PROCESSING - Continued 4,800 *HNC Software, Inc. ............ $ 158,400 5,700 *Hyperion Software Corp. ....... 102,600 2,000 *IDX Systems Corp. ............. 64,500 3,000 *IKOS Systems, Inc. ............ 74,250 3,300 *Imnet Systems, Inc. ........... 82,500 3,100 *In Focus Systems, Inc. ........ 80,600 1,200 *Individual, Inc. .............. 6,675 10,000 *Information Resources, Inc. ... 150,000 2,600 *Inso Corp. .................... 73,125 700 *Integrated Measurment Systems, Inc. ......................... 11,725 3,200 *Integrated Systems, Inc. Class A ...................... 46,400 7,200 *INTERSOLV, Inc. ............... 71,100 700 *JDA Software Group, Inc. ...... 19,425 8,600 *Keane, Inc. ................... 484,825 1,300 *Kronos, Inc. .................. 33,800 3,000 *Learning Tree International, Inc. ......................... 117,000 4,900 *Legato Systems, Inc. .......... 98,000 2,500 *Manugistics Group, Inc. ....... 162,500 3,200 *Media 100 Inc. ................ 18,400 5,800 *Mercury Interactive Corp. ..... 101,500 1,300 MetaCreations, Inc. ........... 15,600 14,200 *Microchip Technology, Inc. .... 504,100 1,400 *MICROS Systems Inc. ........... 55,650 1,600 *Microware Systems Corp. ....... 12,400 4,200 MTS Systems Corp. ............. 108,675 3,800 *Mylex Corp. ................... 37,525 6,650 National Data Corp. ........... 291,769 3,600 *National Instruments Corp. .... 119,250 2,300 *NETCOM On-Line Communication Services, Inc. ............... 32,631 9,900 *NetManage, Inc. ............... 34,031 4,500 *Network Appliance, Inc. ....... 182,531 4,100 *Network Peripherals, Inc. ..... 39,463 9,200 *Oak Technology, Inc. .......... 86,250 3,100 *ODS Networks Inc. ............. 50,181 4,316 *Paxar Corp. ................... 83,083 2,600 *Perceptron, Inc. .............. 73,450 1,900 *Periphonics Corp. ............. 35,388 4,700 *Phoenix Technologies Ltd. ..... 65,212 6,200 *Physician Computer Network, Inc. ......................... 35,650 1,100 *Pinnacle Systems, Inc. ........ 20,075 800 *Planar Systems, Inc. .......... 9,500 333 *Platinum Software Corp. ....... 3,018 11,600 *PLATINUM technology, Inc. ..... 168,200
127 ================================================================================ 26 SMALL CAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ================================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- INFORMATION PROCESSING - Continued 6,400 *PMT Services, Inc. ............ $ 102,400 3,400 *Policy Management Systems Corp. ........................ 161,500 2,900 *Premenos Technology Corp. ..... 19,575 5,800 *Primark Corp. ................. 137,750 1,200 *Prism Solutions, Inc. ......... 8,400 4,400 *Progress Software Corp. ....... 77,000 2,300 *Project Software & Development, Inc. ............ 44,562 7,800 *PsiNet, Inc. .................. 58,987 7,470 *Pure Atria Corp. .............. 119,520 6,600 *Quarterdeck Corp. ............. 17,738 1,900 *RadiSys Corp. ................. 69,825 2,300 *Red Brick Systems, Inc. ....... 20,269 3,600 *Remedy Corp. .................. 145,350 1,400 *Renaissance Solutions, Inc. ... 51,800 12,300 *S3, Inc. ...................... 150,675 2,700 *Sandisk Corp. ................. 38,813 1,900 *Santa Cruz Operation, Inc. .... 8,550 400 *Sapient Corp. ................. 17,900 2,700 *Scopus Technology, Inc. ....... 81,506 9,700 *Sequent Computer Systems, Inc. ......................... 163,687 3,800 *SMART Modular Technologies, Inc. ......................... 128,250 4,900 *Smith Micro Software, Inc. .... 15,925 5,100 *Spectrum HoloByte, Inc. ....... 32,513 2,700 *SPSS, Inc. .................... 87,075 8,100 *Stac, Inc. .................... 33,413 1,000 *Storage Computer Corp. ........ 13,625 3,700 *StorMedia, Inc. Class A ....... 43,937 5,800 *Stratus Computer, Inc. ........ 265,350 10,100 *Structural Dynamics Research Corp. ........................ 247,450 13,100 *Symantec Corp. ................ 249,719 5,000 *Sync Research, Inc. ........... 20,938 7,350 *System Software Associates, Inc. ......................... 67,987 3,600 *Systems & Computer Technology Corp. ............. 86,400 4,000 *Systemsoft Corp. .............. 48,000 9,400 *Tech Data Corp. ............... 278,475 5,300 *Technology Solutions Co. ...... 192,125 6,200 *Transaction Systems Architects, Inc. Class A ................. 260,400 4,200 *Trident Microsystems, Inc. .... 60,375 5,100 *Tseng Labs, Inc. .............. 19,763 1,600 *USDATA Corp., Inc. ............ 7,800 5,000 *Vanstar Corp. ................. 50,000 3,200 *Vantive Corp. ................. 86,000 INFORMATION PROCESSING - Continued 3,200 *Veritas Software Corp. ........ $ 159,200 4,600 *Viasoft, Inc. ................. 243,800 4,100 *VideoServer, Inc. ............. 71,237 6,300 *Viewlogic Systems, Inc. ....... 94,500 1,600 *Visio Corp. ................... 92,000 5,800 *Visioneer Communications Inc. . 20,300 3,100 *Wall Data, Inc. ............... 77,500 8,500 *Wang Laboratories, Inc. ....... 174,250 3,150 *Wind River Systems Inc. ....... 107,100 3,200 *Wonderware Corp. .............. 43,800 6,600 *Workgroup Technology Corp. .... 28,875 5,500 *Xircom, Inc. .................. 79,664 1,800 *Yahoo!, Inc. .................. 58,050 5,000 *Zebra Technologies Corp. Class A ...................... 153,750 ----------- 14,544,116 ----------- INSURANCE - CASUALTY - 1.27% 3,000 *Acceptance Insurance Companies, Inc. .............. 63,000 900 Baldwin & Lyons, Inc. Class B ...................... 15,750 4,000 *Capsure Holdings Corp. ........ 50,000 3,500 Citizens Corp. ................ 88,813 6,600 Commerce Group, Inc. .......... 148,500 2,600 E.W. Blanch Holdings, Inc. .... 64,350 3,485 Frontier Insurance Group, Inc. ......................... 191,239 4,473 Gainsco, Inc. ................. 36,902 6,400 HCC Insurance Holdings, Inc. .. 167,200 1,700 *Highlands Insurance Group, Inc. ......................... 34,000 3,900 NAC Re Corp. .................. 155,512 200 Nymagic, Inc. ................. 3,875 3,181 Orion Capital Corp. ........... 212,729 16,100 Reliance Group Holdings Inc. .. 197,225 7,600 *RISCORP, Inc. ................. 27,550 5,800 *Risk Capital Holdings, Inc. ... 110,200 900 RLI Corp. ..................... 28,688 3,800 Selective Insurance Group, Inc. ......................... 168,150 3,150 Trenwick Group Inc. ........... 106,313 10,200 20th Century Industries ....... 196,350 1,405 United Fire & Casualty Co. .... 50,580 5,700 Vesta Insurance Group, Inc. ... 261,487 1,600 Zurich Reinsurance Centre Holdings, Inc. ............... 62,200 ----------- 2,440,613 ----------- INSURANCE - LIFE - 0.58% 450 American Heritage Life Investment Corp. ........................ $ 13,050 2,000 *Compdent Corp. ................ 36,250 300 Kansas City Life Insurance Co. 21,750 7,100 *Life USA Holding, Inc. ........ 85,644 500 *National Western Life Insurance Co. Class A ........ 43,500 6,500 Presidential Life Corp. ....... 93,437 3,700 Reinsurance Group of America Inc. ................. 199,800 435 Seafield Capital Corp. ........ 14,029 2,200 Security-Connecticut Corp. .... 106,975 7,600 *UICI........................... 204,250 6,870 United Companies Financial Corp. ........................ 157,151 2,800 W.R. Berkley Corp. ............ 145,250 ----------- 1,121,086 ----------- INSURANCE - MISCELLANEOUS - 1.42% 3,600 Acordia, Inc. ................. 127,800 5,175 ALLIED Group, Inc. ............ 205,706 6,800 *Amerin Corp. .................. 159,800 3,600 Arthur J. Gallagher & Co. ..... 114,300 3,700 Capital Re Corp. .............. 162,338 6,800 CMAC Investment Corp. ......... 283,050 10,300 Crawford & Co. Class B ........ 169,950 3,600 Executive Risk Inc. ........... 187,650 3,877 Fidelity National Financial, Inc. ......................... 49,916 2,900 Foremost Corp. of America ..... 163,850 5,512 Fremont General Corp. ......... 193,609 1,770 Guaranty National Corp. ....... 38,055 3,300 Harleysville Group ............ 120,450 4,300 Hartford Steam Boiler Inspection & Insurance Co. ... 219,300 2,250 Hilb, Rogal & Hamilton Co. .... 33,188 4,200 Integon Corp. ................. 52,500 3,900 Liberty Corp. ................. 155,025 9,200 *Mid Atlantic Medical Services, Inc. ............... 118,450 2,200 MMI Companies, Inc. ........... 52,250 525 Poe & Brown Inc. .............. 15,750 4,100 Zenith National Insurance Corp. ........................ 102,500 ----------- 2,725,437 ----------- INSURANCE - MULTILINE - 0.98% 2,450 Alfa Corp. .................... 30,625 4,678 American Annuity Group, Inc. .. 87,128
128 ================================================================================ May 31, 1997 SMALL CAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED 27 ================================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- INSURANCE - MULTILINE - Continued 5,500 American Bankers Insurance Group, Inc. .................. $ 312,125 5,700 AmVestors Financial Corp. ..... 100,462 3,300 Argonaut Group, Inc. .......... 97,350 3,427 *Delphi Financial Group, Inc. .. 130,234 5,400 Horace Mann Educators Corp. ... 260,550 5,300 John Alden Financial Corp. .... 112,625 3,700 Life Re Corp. ................. 159,100 550 *Markel Corp. .................. 68,200 2,000 Meadowbrook Insurance Group, Inc. ......................... 49,000 2,272 Medican Assum Inc. ............ 86,336 5,900 PennCorp Financial Group, Inc. ......................... 201,337 1,700 United Wisconsin Services, Inc. ......................... 60,563 4,900 *Washington National Corp. ..... 137,200 ----------- 1,892,835 ----------- LEISURE TIME - 0.73% 6,500 *Acclaim Entertainment, Inc. ... 26,813 3,300 *Action Performance Companies, Inc. ......................... 79,406 4,800 *Ameristar Casinos ............. 25,800 2,300 *Anchor Gaming ................. 97,750 400 *Bally's Grand, Inc. ........... 15,700 4,100 *Boyd Gaming Corp. ............. 24,088 2,682 *Casino America, Inc. .......... 6,286 10,700 *Casino Magic Corp. ............ 15,047 12,500 *Handleman Co. ................. 82,812 6,400 *Hollywood Park, Inc. .......... 89,600 5,000 Huffy Corp. ................... 65,000 3,100 Lewis Galoob Toys, Inc. ....... 55,800 5,200 *Outboard Marine Corp. ......... 76,700 7,500 *Players International, Inc. ... 29,062 5,600 Polaris Industries, Inc. ...... 165,900 5,600 *Rio Hotel & Casino Inc. ....... 81,900 4,800 *Scotts Co. Class A ............ 140,400 5,600 Showboat Inc. ................. 110,600 2,200 *Station Casinos, Inc. ......... 19,525 4,900 *Trump Hotels & Casino Resorts, Inc. ................ 47,775 1,900 Winnebago Industries, Inc. .... 13,063 6,500 *WMS Industries Inc. ........... 134,875 ----------- 1,403,902 ----------- LODGING - 0.52% 4,400 *Bristol Hotel Co. ............. 161,700 9,542 *Doubletree Corp. .............. 427,004 7,400 *Extended Stay America, Inc. ... 102,675 LODGING - Continued 3,900 *Host Marriott Services Corp. .. $ 39,000 2,993 Marcus Corp. .................. 73,329 10,100 *Prime Hospitality Corp. ....... 188,112 1,625 *WHG Resorts & Casinos Inc. .... 17,063 ----------- 1,008,883 ----------- MACHINE TOOLS - 0.54% 10,400 Cincinnati Milacron Inc. ...... 240,500 7,000 Giddings & Lewis, Inc. ........ 132,672 2,000 Gleason Corp. ................. 74,250 5,000 Greenfield Industries ......... 130,000 5,600 Lincoln Electric Co. .......... 219,100 2,200 *PRI Automation Inc. ........... 83,875 3,400 Roper Industries, Inc. ........ 167,025 ----------- 1,047,422 ----------- MACHINERY - AGRICULTURE - 0.16% 1,500 Allied Products Corp. ......... 48,750 2,700 Lindsay Manufacturing Co. ..... 97,200 4,100 Toro Co. ...................... 153,750 ----------- 299,700 ----------- MACHINERY - CONSTRUCTION & CONTRACTS - 0.62% 1,100 *American Buildings Co. ........ 31,075 1,900 Blount, Inc. Class A .......... 78,375 3,700 CDI Corp. ..................... 149,387 4,400 Granite Construction, Inc. .... 88,000 5,345 *Insituform Technologies Class A ...................... 32,070 3,900 *J. Ray McDermott, S.A ......... 106,275 5,500 *Jacobs Engineering Group, Inc. ......................... 147,813 8,200 Kaman Corp. Class A ........... 112,238 7,100 Lennar Corp. .................. 186,375 3,522 *Morrison Knudsen Corp. ........ 44,465 6 *Morrison Knudsen Corp. (Warrants).................... 38 3,000 Stone & Webster, Inc. ......... 128,625 3,900 TJ International Inc. ......... 91,163 ----------- 1,195,899 ----------- MACHINERY - INDUSTRIAL/ SPECIALTY - 2.38% 4,900 AAR Corp. ..................... 151,900 3,700 *ABC Rail Products Corp. ....... 61,050 6,100 Aeroquip-Vickers, Inc. ........ 264,587 MACHINERY - INDUSTRIAL/ SPECIALTY - Continued 8,800 Albany International Corp. Class A ...................... $ 200,200 3,225 Applied Power Inc. Class A .... 141,900 7,480 Baldor Electric Co. ........... 209,440 3,300 *Burlington Coat Factory Warehouse .................... 58,988 9,000 BW/IP, Inc. Class A ........... 172,125 3,000 *DII Group, Inc. ............... 95,250 6,350 Durco International, Inc. ..... 179,387 4,600 Exide Corp. ................... 100,625 3,000 *GaSonics International Corp. .. 35,625 475 General Binding Corp. ......... 14,013 2,000 Graco Inc. .................... 56,000 2,400 Greenwich Air Services, Inc. .. 69,300 2,700 Helix Technology Corp. ........ 109,350 2,200 Hughes Supply Inc. ............ 84,150 6,750 IDEX Corp. .................... 191,531 3,300 *Insilco Corp. ................. 124,162 4,300 *Integrated Process Equipment Corp. .............. 79,013 3,200 *International Imaging Materials, Inc. .............. 56,000 3,700 *Ionics, Inc. .................. 176,675 7,900 Keystone International, Inc. .. 257,737 6,300 *Kulicke & Soffa Industries Inc. .............. 212,625 5,050 Lilly Industries, Inc. Class A ...................... 106,050 4,250 Manitowoc Co., Inc. ........... 190,187 4,040 *Oak Industries Inc. ........... 99,990 1,500 *Ortel Corp. ................... 20,438 900 *Osmonics, Inc. ................ 14,738 5,100 Pacific Scientific Co. ........ 68,213 3,500 *Park-Ohio Industries Inc. ..... 45,500 7,300 Regal-Beloit Corp. ............ 194,362 800 Robbins & Myers, Inc. ......... 27,500 1,300 Scotsman Industries Inc. ...... 34,613 4,700 *Specialty Equipment Companies, Inc. ......................... 64,625 2,200 *SPS Technologies, Inc. ........ 161,700 6,800 Stewart & Stevenson Services, Inc. ......................... 181,900 3,500 Tennant Co. ................... 105,000 1,200 *Thermo Power Corp. ............ 7,200 3,300 Watts Industries, Inc. Class A ...................... 82,087 2,300 *Zoltek Companies, Inc. ........ 71,875 ----------- 4,577,611 ----------- MEDICAL TECHNOLOGY - 1.55% 2,100 *ATS Medical, Inc. ............. 12,830 3,600 *Bio-Rad Laboratories, Inc. Class A ...................... 91,800
129 ================================================================================ 28 SMALL CAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ================================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- MEDICAL TECHNOLOGY - Continued 3,100 *Biomatrix, Inc. ............... $ 53,475 5,400 *Capstone Pharmacy Services .... 54,000 5,600 *Creative BioMolecules, Inc. ... 56,700 3,200 Dekalb Genetics Corp. Class B ...................... 227,600 4,900 *Endosonics Corp. .............. 54,512 6,300 *Enzo Biochem, Inc. ............ 94,500 4,800 *Epitope, Inc. ................. 42,000 7,500 *Haemonetics Corp. ............. 128,437 3,500 *Hologic, Inc. ................. 84,000 4,400 *i- STAT Corp. ................. 78,100 16,600 *Imatron, Inc. ................. 46,687 5,000 *InControl, Inc. ............... 46,875 7,700 *KLA-Tencor Corp. .............. 366,231 8,700 *Liposome Co., Inc. ............ 221,850 2,300 *Lunar Corp. ................... 46,000 3,000 *Myriad Genetics, Inc. ......... 79,500 8,400 *NABI Inc. ..................... 58,800 4,500 *NeoPath, Inc. ................. 88,875 4,600 *Neurex Corp. .................. 67,275 6,300 *Neuromedical Systems, Inc. .... 41,737 3,100 *Northfield Laboratories Inc. .. 30,613 6,000 *Organogenesis Inc. ............ 112,500 3,800 *Protein Design Labs, Inc. ..... 120,175 5,500 *SciClone Pharmaceuticals, Inc. ......................... 37,813 12,924 *Scios Nova Inc. ............... 81,583 1,950 *Serologicals Corp. ............ 37,294 5,100 *Sofamor Danek Group, Inc. ..... 234,600 3,600 *Spine-Tech, Inc. .............. 124,425 3,400 *ThermoTrex Corp. .............. 98,175 2,100 *Thoratec Laboratories Corp. ... 12,075 4,300 US Bioscience, Inc. ........... 45,150 ----------- 2,976,187 ----------- MERCHANDISE - DRUG - 0.41% 9,225 Arbor Drugs, Inc. ............. 181,040 4,439 *Avatex Corp. .................. 4,994 4,400 *Express Scripts, Inc. Class A ...................... 200,750 6,800 Longs Drug Stores Corp. ....... 161,500 4,200 *MedImmune, Inc. ............... 65,100 14,500 *Perrigo Co. ................... 174,000 ----------- 787,384 ----------- MERCHANDISE - SPECIALTY - 2.67% 4,500 *Alliance Entertainment Corp. .. 3,938 6,818 Arctic Cat, Inc. .............. 71,589 MERCHANDISE - SPECIALTY - Continued 10,700 *Aura Systems, Inc. ............ $ 19,728 5,100 *Avid Technology, Inc. ......... 119,850 7,200 *Best Buy Co., Inc. ............ 98,100 2,550 *BMC West Corp. ................ 33,788 9,600 *Bombay Co., Inc. .............. 43,200 2,700 *Books-A-Million, Inc. ......... 13,838 3,000 *Bush Boake Allen Inc. ......... 87,375 6,100 Casey's General Stores, Inc. .. 122,000 7,667 Cash America International, Inc. ......................... 74,753 24,700 *Charming Shoppes, Inc. ........ 129,675 2,100 *Cole National Corp. Class A ... 79,537 3,700 *Compucom Systems, Inc. ........ 26,825 1,000 *Copart, Inc. .................. 15,500 3,300 Cross (A.T.) Co. Class A ...... 36,712 1,800 *Daisytek International Corp. .. 56,700 4,500 *Department 56, Inc. ........... 95,062 600 *DH Technology, Inc. ........... 9,750 3,400 Duty Free International, Inc. ......................... 53,125 4,900 *Eagle Hardware & Garden, Inc. ......................... 117,906 15,100 Fingerhut Companies, Inc. ..... 266,137 1,300 *Fossil, Inc. .................. 21,938 5,500 Franklin Covey................. 132,000 4,900 *Friedman's Inc. Class A ....... 91,569 6,350 *Garden Ridge Corp. ............ 76,994 4,100 *Gibson Greetings, Inc. ........ 89,175 7,100 Hancock Fabrics, Inc. ......... 86,975 3,105 Hancock Holding Co. ........... 129,634 13,000 *HEARx, Ltd. ................... 22,750 1,800 *Inacom Corp. .................. 58,275 10,000 *Intelligent Electronics, Inc. ......................... 26,875 1,848 *Jenny Craig, Inc. ............. 11,319 7,800 Jostens, Inc. ................. 192,075 4,500 *Jumbosports, Inc. ............. 19,688 3,178 K2, Inc. ...................... 91,765 1,800 *L.L. Knickerbocker Co. ........ 9,338 600 LabOne, Inc. .................. 10,500 6,700 *Mac Frugal's Bargains Close-outs Inc. .............. 199,325 4,700 *Michaels Stores Inc. .......... 92,825 2,900 *MicroAge Inc. ................. 52,562 1,300 *Movie Gallery, Inc. ........... 8,938 3,800 *Paragon Trade Brands, Inc. .... 61,275 3,000 *Petco Animal Supplies, Inc. ... 80,250 10,800 Petroleum Heat & Power Co., Inc. Class A ................. 39,150 MERCHANDISE - SPECIALTY - Continued 6,200 Price Enterprises Inc. ........ $ 113,925 3,400 *Rexall Sundown, Inc. .......... 90,950 4,000 Russ Berrie and Co. Inc. ...... 83,000 72 *Score Board, Inc. ............. 81 3,200 *Seitel, Inc. .................. 118,800 4,400 *Sitel Corp. ................... 72,600 8,700 Sotheby's Holdings, Inc. Class A ...................... 134,850 8,450 *Sports Authority, Inc. ........ 152,100 5,200 Sturm, Ruger & Co. Inc. ....... 98,150 1,100 *Tractor Supply Co. ............ 22,550 5,100 *United Stationers Inc. ........ 110,287 3,900 Unitog Co. .................... 91,650 9,900 US Office Products, Co. ....... 245,025 7,700 *Waban Inc. .................... 233,887 1,300 *West Marine, Inc. ............. 34,125 4,900 *Williams-Sonoma, Inc. ......... 180,687 8,600 *Zale Corp. .................... 173,075 ----------- 5,136,025 ----------- MERCHANDISING - DEPARTMENT - 0.41% 1,300 *Alexander's, Inc. ............. 85,150 4,300 *Carson Pirie Scott & Co. ...... 138,675 11,715 Pier 1 Imports, Inc. .......... 262,123 4,246 *Proffitt's Inc. ............... 169,309 3,750 *Stein Mart, Inc. .............. 113,437 1,812 Strawbridge & Clothier ........ 29,672 ----------- 798,366 ----------- MERCHANDISING - FOOD - 0.76% 2,000 Delchamps, Inc. ............... 54,500 75 Farmer Bros. Co. .............. 9,525 7,800 Fleming Companies, Inc. ....... 148,200 3,100 *IHOP Corp. .................... 86,800 1,800 Ingles Markets, Inc. .......... 25,988 3,375 Nash Finch Co. ................ 67,500 1,334 *Quality Food Centers Inc. ..... 50,692 4,400 Ruddick Corp. ................. 66,550 4,500 Sanderson Farms, Inc. ......... 66,375 7,800 Savannah Foods & Industries, Inc. ............. 121,875 4,100 *ShowBiz Pizza Time, Inc. ...... 92,250 3,700 Smart & Final Inc. ............ 79,088 4,300 *Smithfield Foods, Inc. ........ 235,962 3,098 *Smith's Food & Drug Centers, Inc. Class B ........ 146,380 4,300 *Whole Foods Market, Inc. ...... 134,913
130 ================================================================================ May 31, 1997 SMALL CAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED 29 ================================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- MERCHANDISING - FOOD - Continued 7,073 WLR Foods, Inc. ............... $ 70,730 ----------- 1,457,328 ----------- MERCHANDISING - MASS - 0.37% 9,300 Family Dollar Stores, Inc. .... 239,475 6,300 Fred Meyer, Inc. .............. 289,012 26,400 *Service Merchandise Co., Inc. ......................... 85,800 4,500 ShopKo Stores, Inc. ........... 106,313 ----------- 720,600 ----------- METALS - ALUMINUM - 0.22% 5,600 *ACX Technologies, Inc. ........ 119,000 400 Commonwealth Industries Inc. .. 7,550 4,400 IMCO Recycling Inc. ........... 78,100 6,000 *Kaiser Aluminum Corp. ......... 69,000 2,706 Tredegar Industries, Inc. ..... 147,815 ----------- 421,465 ----------- METALS - COPPER - 0.12% 3,900 *Chase Industries Inc. ......... 87,750 4,900 *Wolverine Tube, Inc. .......... 143,938 ----------- 231,688 ----------- METALS - MISCELLANEOUS - 0.82% 4,337 A.M. Castle & Co. ............. 94,330 4,050 Applied Industrial Technology, Inc. ............. 142,256 4,000 Brush Wellman Inc. ............ 85,000 4,033 Commercial Metals Co. ......... 119,478 3,500 *Dravo Corp. ................... 38,500 5,900 Freeport McMoRan, Inc. ........ 166,675 1,400 Greenbrier Companies, Inc. .... 15,750 12,600 *Hecla Mining Co. .............. 72,450 1,530 *Intermagnetics General Corp. .. 21,420 5,900 Kennametal, Inc. .............. 234,525 4,050 *Material Sciences Corp. ....... 56,700 5,400 Precision Castparts Corp. ..... 337,500 2,400 *RMI Titanium Co. .............. 55,800 2,800 *Stillwater Mining Co. ......... 65,100 2,000 *Tremont Corporation Delaware .. 82,000 ----------- 1,587,484 ----------- METALS - STEEL - 1.15% 4,700 *Acme Metals, Inc. ............. 71,675 4,000 Amcast Industrial Corp. ....... 98,000 22,400 *Armco Inc. .................... 84,000 METALS - STEEL - Continued 9,600 Birmingham Steel Corp. ........ $ 153,600 4,100 Carpenter Technology Corp. .... 177,325 800 Chaparral Steel Co. ........... 12,000 1,900 *Citation Corp. ................ 28,262 2,800 Cleveland-Cliffs Inc. ......... 118,300 1,850 Commercial Intertech Corp. .... 24,050 10,700 *Geneva Steel Co. Class A ...... 25,413 800 *Gibraltar Steel Corp. ......... 17,400 1,500 Huntco Inc. Class A ........... 20,063 3,400 *Intermedia Communications Inc. 102,425 6,700 Intermet Corp. ................ 93,800 4,500 J & L Specialty Steel, Inc. ... 57,375 2,600 Lukens Inc. ................... 51,025 5,200 *Mueller Industries, Inc. ...... 207,350 3,100 *National Steel Corp. Class B .. 41,850 5,900 Oregon Steel Mills, Inc. ...... 110,625 3,400 Quanex Corp. .................. 92,650 1,200 Reliance Steel & Aluminum Co. ................. 43,500 3,300 *Shiloh Industries, Inc. ....... 54,450 2,250 Steel Technologies Inc. ....... 23,625 5,900 TriMas Corp. .................. 167,412 6,000 UNR Industries, Inc. .......... 37,500 3,400 Valmont Industries, Inc. ...... 142,800 5,700 *WHX Corp. ..................... 37,762 4,800 *Wyman-Gordon Co. .............. 109,200 ----------- 2,203,437 ----------- MISCELLANEOUS - 1.96% 4,800 *Alternative Resources Corp. ... 88,800 6,000 AMCOL International Corp. ..... 110,250 5,300 *AMERCO Inc. ................... 145,750 900 *Associated Group, Inc. Class A ...................... 36,900 1,600 *Avondale Industries, Inc. ..... 30,400 800 *Bacou U.S.A., Inc. ............ 11,800 1,271 Barnett Banks, Inc. ........... 66,886 4,900 *Billing Information Concepts .. 142,100 5,800 *Borg-Warner Security Corp. .... 89,900 3,475 *Brightpoint, Inc. ............. 107,725 2,100 Central Parking Corp. ......... 65,625 1,500 *ClinTrials Inc. ............... 14,813 1,500 *CRA Managed Care, Inc. ........ 68,625 5,000 CTG Resources Inc. ............ 108,125 7,000 DeVry, Inc. ................... 193,375 3,000 *Encad, Inc. ................... 111,750 MISCELLANEOUS - Continued 2,100 *Equity Corp. International .... $ 50,400 4,800 *Figgie International Inc. Class A ...................... 59,400 3,758 Gemstar Group Ltd. ............ 78,918 8,580 *HFS, Inc. ..................... 462,247 2,775 *ITT Educational Services, Inc. ......................... 62,784 1,800 Mathews International Corp. Class A ...................... 61,650 4,056 Mattel, Inc. .................. 121,164 9,600 *National Education Corp. ...... 201,600 3,300 Norrell Corp. ................. 106,425 2,600 *Pinkerton's, Inc. ............. 76,375 5,700 *Prepaid Legal Services, Inc. .. 115,069 4,000 Regis Corp. ................... 86,000 5,600 *Rexel, Inc. ................... 102,200 2,000 *RTW, Inc. ..................... 16,750 3,000 *Samsonite Corp. ............... 134,625 5,600 *Sola International, Inc. ...... 160,300 5,400 *Solv-Ex Corp. ................. 35,775 2,600 *Strategic Distribution, Inc. .. 10,075 5,950 *Sylvan Learning Systems, Inc. ......................... 213,456 2,900 *The Profit Recovery Group International, Inc. .......... 35,525 3,400 *Veritas DGC Inc. .............. 70,550 1,400 Wackenhut Corp. Class A ....... 24,675 2,800 *Wackenhut Corrections Corp. ... 54,950 2,900 *Youth Services International, Inc. ......................... 40,238 ----------- 3,773,975 ----------- MOBILE HOMES - 0.22% 12,752 *Champion Enterprises, Inc. .... 234,318 2,800 Coachmen Industries, Inc. ..... 47,600 800 McGrath RentCorp. ............. 15,000 4,200 Skyline Corp. ................. 103,425 750 Thor Industries, Inc. ......... 17,906 ----------- 418,249 ----------- NATURAL GAS - DIVERSIFIED - 1.05% 3,750 Atmos Energy Corp. ............ 86,719 3,400 Bay State Gas Co. ............. 90,525 5,300 Eastern Enterprises ........... 182,850 5,204 K N Energy, Inc. .............. 219,218 5,800 Laclede Gas Co. ............... 125,425 4,600 New Jersey Resources Corp. .... 143,175 14,068 *Seagull Energy Corp. .......... 253,224 1,996 *Southern Union Co. ............ 47,156
131 ================================================================================ 30 SMALL CAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ================================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- NATURAL GAS - DIVERSIFIED - Continued 6,400 Southwest Gas Corp. ........... $ 109,600 3,772 *Tejas Gas Corp. ............... 176,812 11,300 UGI Corp. ..................... 254,250 5,600 United Cities Gas Co. ......... 126,700 2,300 Western Gas Resources, Inc. ... 45,425 4,400 WICOR, Inc. ................... 161,700 ----------- 2,022,779 ----------- OIL - INTEGRATED DOMESTIC - 0.22% 3,750 Cross Timbers Oil Co. ......... 72,656 3,800 *Crown Central Petroleum Corp. Class A ...................... 50,825 2,500 *Hondo Oil & Gas Co. ........... 22,813 12,700 Quaker State Corp. ............ 192,087 6,200 *Tesoro Petroleum Corp. ........ 81,375 ----------- 419,756 ----------- OIL - SERVICE - PRODUCTS - 0.94% 9,800 *BJ Services Co. ............... 541,450 6,750 *EVI Inc. ...................... 253,969 3,600 Getty Petroleum Corp. ......... 60,300 3,600 *Getty Petroleum Marketing Inc. ......................... 17,100 7,800 *Global Industrial Technologies, Inc. ........... 144,300 7,400 *Global Industries Inc. ........ 162,800 14,500 *Kelley Oil & Gas Corp. ........ 35,344 7,100 *Lone Star Technologies, Inc. .. 167,737 18,300 *Parker Drilling Co. ........... 176,137 6,500 *Pride Petroleum Services, Inc. ............... 144,625 4,163 *Varco International, Inc. ..... 114,483 ----------- 1,818,245 ----------- OIL - SERVICES - 0.80% 6,300 Camco International, Inc. ..... 322,875 2,400 Lomak Petroleum, Inc. ......... 42,600 10,800 *Marine Drilling Companies, Inc. .............. 217,350 7,200 Mascotech, Inc. ............... 161,100 7,900 *Oceaneering International Inc. ......................... 134,300 4,900 *Offshore Logistics, Inc. ...... 88,813 6,150 Pennsylvania Enterprises Inc. . 152,212 3,600 *Pool Energy Services Co. ...... 59,850 3,000 Production Operators Corp. .... 200,625 9,300 *Tuboscope Vetco International Corp. .......... 151,125 ----------- 1,530,850 ----------- OIL/GAS PRODUCERS - 2.07% 800 *Atwood Oceanics, Inc. ......... $ 53,600 160 *Aztec Energy Corp. ............ 5 8,050 *Barrett Resources Corp. ....... 269,675 2,100 *Belden & Blake Corp. .......... 56,044 8,300 *Benton Oil and Gas Co. ........ 128,650 3,400 Berry Petroleum Co. Class A ... 51,000 7,800 *Box Energy Corp. Class B ...... 58,500 5,900 Cabot Oil & Gas Corp. Class A ...................... 109,150 2,400 *Cliffs Drilling Co. ........... 167,700 5,000 Devon Energy Corp. ............ 186,250 2,600 *Falcon Drilling Co., Inc. ..... 119,275 3,700 *Flores & Rucks, Inc. .......... 181,300 1,400 *Forcenergy, Inc. .............. 49,000 4,600 *Forest Oil Corp. .............. 64,400 16,700 *Harken Energy Corp. ........... 79,325 6,500 Helmerich & Payne, Inc. ....... 364,812 500 Holly Corp. ................... 12,500 3,400 KCS Energy, Inc. .............. 141,525 2,600 *Louis Dreyfus Natural Gas Corp. .................... 41,275 20,700 *MESA Inc. ..................... 113,850 7,700 Mitchell Energy & Development Corp. Class A ................ 170,362 11,000 *Newfield Exploration Co. ...... 236,500 2,600 *Nuevo Energy Co. .............. 113,425 9,200 Parker & Parsley Petroleum Co. ................ 312,800 3,100 *Plains Resources, Inc. ........ 44,175 9,400 Snyder Oil Corp. .............. 171,550 3,600 *Stone Energy Corp. ............ 100,800 3,500 *Swift Energy Co. .............. 93,625 6,100 *Tom Brown, Inc. ............... 122,763 7,700 *United Meridian Corp. ......... 277,200 2,500 Vintage Petroleum, Inc. ....... 85,000 ----------- 3,976,036 ----------- PAPER/FOREST PRODUCTS - 0.77% 6,500 Caraustar Industries, Inc. .... 187,687 10,800 Longview Fibre Co. ............ 182,250 3,440 Mosinee Paper Corp. ........... 93,296 4,500 P. H. Glatfelter Co. .......... 78,750 8,400 Pentair Inc. .................. 276,150 2,900 Ply Gem Industries Inc. ....... 48,575 4,700 Pope & Talbot, Inc. ........... 77,550 5,700 Schweitzer-Mauduit International, Inc. .......... 195,937 5,100 Standard Register Co. ......... 177,863 PAPER/FOREST PRODUCTS - Continued 1,700 Universal Forest Products, Inc. ............... $ 23,588 7,400 Wausau Paper Mills Co. ........ 138,750 ----------- 1,480,396 ----------- PHOTOGRAPHY - 0.15% 3,800 CPI Corp. ..................... 71,250 1,950 *Photronics Inc. ............... 87,019 1,800 *Seattle Filmworks, Inc. ....... 21,150 5,800 *Ultratech Stepper, Inc. ....... 118,175 ----------- 297,594 ----------- POLLUTION CONTROL - 1.30% 9,600 *Air & Water Technologies Corp. Class A ...................... 45,600 20,500 *Allied Waste Industries, Inc. ............. 302,375 5,700 *Allwaste, Inc. ................ 47,737 7,800 Calgon Carbon Corp. ........... 109,200 2,050 *Cuno Inc. ..................... 33,825 7,700 Dames & Moore, Inc. ........... 90,475 546 Heidemij NV.................... 5,665 2,700 *KFX, Inc. ..................... 10,463 15,800 Laidlaw Environmental Services Inc. ................ 45,425 1,725 Mine Safety Appliances Co. .... 104,794 3,900 *Molten Metal Technology, Inc. ......................... 27,787 3,850 *Newpark Resources, Inc. ....... 202,125 5,200 *OHM Corp. ..................... 41,600 12,000 Safety-Kleen Corp. ............ 187,500 1,000 *Superior Services, Inc. ....... 21,500 5,000 *Tetra Tech, Inc. .............. 100,000 4,700 *Tetra Technologies, Inc. ...... 114,562 5,700 Thermo Remediation Inc. ....... 39,900 900 *Thermo TerraTech, Inc. ........ 9,844 14,900 *United States Filter Corp. .... 469,350 10,600 *United Waste Systems, Inc. .... 406,775 3,200 Zurn Industries, Inc. ......... 84,800 ----------- 2,501,302 ----------- PUBLISHING - NEWS - 0.30% 3,200 Hollinger International, Inc. Class A ................. 35,600 8,075 McClatchy Newspapers, Inc. Class A ...................... 225,090 1,900 Media General, Inc. Class A ... 58,069 6,500 *Network Equipment Technologies, Inc. ........... 112,125
132 ================================================================================ May 31, 1997 SMALL CAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED 31 ================================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- PUBLISHING - NEWS - Continued 2,933 Pulitzer Publishing Co. ....... $ 142,617 18 *Radius, Inc. .................. 6 ----------- 573,507 ----------- PUBLISHING/PRINTING - 1.16% 1,400 American Business Products, Inc. ............... 34,475 5,900 *ATC Communications, Inc. ...... 23,600 7,950 Banta Corp. ................... 220,612 800 *Berlitz International, Inc. ... 19,100 2,600 *Big Flower Press Holdings, Inc. ............... 55,575 3,000 Bowne & Co., Inc. ............. 89,625 2,700 *Devon Group, Inc. ............. 83,025 7,600 Ennis Business Forms, Inc. .... 75,050 6,700 *Golden Books Family Entertainment, Inc. .......... 76,213 3,800 Houghton Mifflin Co. .......... 225,150 8,000 John H. Harland Co. ........... 183,000 4,300 John Wiley & Sons Inc. Class A ...................... 136,525 3,100 Merrill Corp. ................. 101,137 3,300 New England Business Service, Inc. ................ 96,113 5,700 *Nu-kote Holding, Inc. Class A ...................... 14,250 2,700 *Scholastic Corp. .............. 80,325 4,400 *Scientific Games Holdings Corp. ............... 107,800 700 *Steck-Vaughn Publishing Corp. ............. 9,100 5,509 Thomas Nelson, Inc. ........... 57,156 17,600 *Topps Co. Inc. ................ 67,100 7,500 *Valassis Communications, Inc. ......................... 208,125 9,000 *ValueVision International, Inc. Class A ................. 34,875 900 Waverly, Inc. ................. 19,350 7,900 *World Color Press, Inc. ....... 207,375 ----------- 2,224,656 ----------- RAILROAD - 0.24% 1,500 Florida East Coast Industries, Inc. ............. 162,375 4,100 GATX Corp. .................... 232,675 3,700 *RailTex, Inc. ................. 68,450 ----------- 463,500 ----------- REAL ESTATE - 0.67% 2,400 *Avatar Holdings Inc. .......... 78,600 2,500 *Castle & Cooke, Inc. .......... 38,125 19,800 *Catellus Development Corp. .... 334,125 6,075 Cousins Properties Inc. ....... 162,506 2,100 Forest City Enterprises, Inc. ............ 92,663 REAL ESTATE - Continued 7,600 *Insignia Financial Group, Inc. Class A ...................... $ 134,900 3,200 Mercer International Inc. ..... 36,600 8,800 Merry Land & Investment Co., Inc. ......... 184,800 5,000 North American Mortgage Co. ... 100,625 8,289 Republic Bancorp Inc. ......... 108,793 500 Tejon Ranch Co. ............... 8,500 ----------- 1,280,237 ----------- REAL ESTATE INVESTMENT TRUSTS - 7.27% 3,600 Allied Capital Commercial Corp. ............. 85,050 7,800 American Health Properties, Inc. ............. 195,000 1,500 Apartment Investment & Management Co. ............... 41,813 2,600 Associated Estates Realty Corp. ................. 58,500 8,800 Avalon Properties, Inc. ....... 242,000 4,200 Bay Apartment Communities, Inc. ............ 148,050 8,500 Beacon Properties Corp. ....... 263,500 12,500 Berkshire Realty Co., Inc. .... 134,375 5,373 Bradley Real Estate, Inc. ..... 101,415 9,730 BRE Properties, Inc. .......... 239,601 2,300 Burnham Pacific Properties, Inc. ............. 30,475 4,800 Cali Realty Corp. ............. 142,200 7,228 Camden Property Trust ......... 212,322 9,450 Capstead Mortgage Corp. ....... 226,800 6,500 CarrAmerica Realty Corp. ...... 184,437 8,200 CBL & Associates Properties, Inc. ............. 194,750 2,800 CenterPoint Properties Corp. .. 84,000 500 Charles E. Smith Residential Realty, Inc. ................. 13,688 2,400 Chelsea GCA Properties ........ 87,300 7,000 Colonial Properties Trust ..... 204,750 3,000 Columbus Realty Trust ......... 66,000 5,900 Commercial Net Lease Realty, Inc. ................. 88,500 17,400 Crescent Real Estate Equities, Inc. ............... 474,150 4,600 Criimi Mae, Inc. .............. 75,325 6,100 Crown American Realty Trust.... 48,800 12,000 CWM Mortgage Holdings, Inc. ... 250,500 5,500 Developers Diversified Realty Corp. ................. 204,875 7,400 Duke Realty Investments, Inc. ......................... 282,125 10,800 Dynex Capital Inc. ............ 148,500 6,000 Equity Inns Inc. .............. 78,750 1,800 Evans Withycombe Residential, Inc. ............ 36,900 3,900 Excel Realty Trust, Inc. ...... 100,913 REAL ESTATE INVESTMENT TRUSTS - Continued 7,200 Federal Realty Investment Trust ............. $ 188,100 6,100 FelCor Suite Hotels, Inc. ..... 227,225 6,100 First Industrial Realty Trust, Inc. .................. 179,950 8,100 Franchise Finance Corp. of America ................... 195,412 6,700 Gables Residential Trust....... 167,500 6,800 General Growth Properties, Inc. ............. 219,300 7,300 Glimcher Realty Trust.......... 146,000 6,100 Health Care Property Investors, Inc. .............. 205,875 1,800 Health Care REIT, Inc. ........ 43,200 1,400 Healthcare Realty Trust, Inc. .................. 36,400 6,700 Highwoods Properties, Inc. .... 202,675 3,392 Horizon Group, Inc. ........... 44,096 4,700 Hospitality Properties Trust... 149,225 7,300 IRT Property Co. .............. 84,863 4,900 Irvine Apartment Communities, Inc. ............ 137,813 3,200 JDN Realty Corp. .............. 92,400 3,300 JP Realty, Inc. ............... 85,388 5,100 Kimco Realty Corp. ............ 160,650 6,400 *Koger Equity, Inc. ............ 106,400 6,100 Liberty Property Trust......... 146,400 4,600 LTC Properties, Inc. .......... 81,650 3,500 Macerich Co. .................. 94,500 8,700 Manufactured Home Communities, Inc. ............ 191,400 6,200 MGI Properties ................ 130,200 2,800 Mid-America Apartment Communities, Inc. ............ 74,550 6,300 Mills Corp. ................... 159,862 5,100 National Golf Properties, Inc. ............. 165,750 6,700 National Health Investors, Inc. .............. 252,925 10,900 Nationwide Health Properties, Inc. ............. 234,350 3,200 Oasis Residential, Inc. ....... 73,600 4,586 Omega Healthcare Investors, Inc. .............. 150,191 8,800 Patriot American Hospitality, Inc. ............ 190,300 4,700 Pennsylvania Real Estate Investment Trust ............. 103,400 4,800 Post Properties, Inc. ......... 190,800 500 Price REIT, Inc. .............. 19,063 18,200 Public Storage, Inc. .......... 484,575 8,600 Realty Income Corp. ........... 220,375 2,400 Reckson Associates Realty Corp. ................. 54,000 1,600 Redwood Trust, Inc. ........... 91,400 2,300 Regency Realty Corp. .......... 60,663 9,000 RFS Hotel Investors, Inc. ..... 167,625
133 ================================================================================ 32 SMALL CAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ================================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- REAL ESTATE INVESTMENT TRUSTS - Continued 6,300 Saul Centers, Inc. ............ $ 103,163 6,400 Shurgard Storage Centers, Inc. Class A ...................... 179,200 108 *SLH Corp. ..................... 5,886 500 Sovran Self Storage, Inc. ..... 14,500 6,500 Spieker Properties, Inc. ...... 239,687 2,200 Storage Trust Realty........... 55,000 5,100 Storage USA, Inc. ............. 194,437 7,100 Summit Properties, Inc. ....... 142,887 5,100 Sun Communities, Inc. ......... 166,387 4,600 Taubman Centers, Inc. ......... 59,800 3,900 Thornburg Mortgage Asset Corp. .................. 78,488 1,600 Town and Country Trust ........ 23,800 5,000 TriNet Corporate Realty Trust, Inc. .................. 163,750 20,241 United Dominion Realty Trust, Inc. .................. 298,555 4,000 Universal Health Realty Income Trust ........................ 77,000 1,600 Urban Shopping Centers, Inc. .. 46,400 6,300 Vornado Realty Trust........... 431,550 2,800 Walden Residential Properties, Inc. ............. 66,500 11,700 Washington Real Estate Investment Trust ............. 198,900 5,100 Weeks Corp. ................... 160,650 6,100 Weingarten Realty Investors ... 261,537 6,200 Wellsford Residential Property Trust ........................ 200,725 4,300 Western Investment Real Estate Trust ........................ 58,050 ----------- 13,982,267 ----------- RESTAURANTS - 1.16% 6,562 Apple South, Inc. ............. 99,250 8,650 Applebee's International, Inc. ......................... 215,169 11,100 Bob Evans Farms, Inc. ......... 156,787 12,180 *Buffets, Inc. ................. 108,098 7,750 CKE Restaurants, Inc. ......... 185,031 2,200 *Daka International, Inc. ...... 27,775 7,600 *Foodmaker, Inc. ............... 106,400 3,200 *International Dairy Queen, Inc. Class A ...................... 74,400 4,700 *Landry's Seafood Restaurants, Inc. ............ 86,950 8,300 Luby's Cafeterias, Inc. ....... 160,812 3,400 *Manhattan Bagel Inc. .......... 23,800 4,800 Morrison Health Care, Inc. .... 78,000 RESTAURANTS - Continued 7,400 *NPC International Inc. ........ $ 87,875 4,425 *Papa John's International, Inc. .......... 141,047 500 *Quality Dining, Inc. .......... 2,906 3,200 *Rainforest Cafe, Inc. ......... 78,400 4,900 *Ruby Tuesday, Inc. ............ 105,350 18,600 *Ryan's Family Steak Houses, Inc. ................. 169,725 2,700 Sbarro, Inc. .................. 78,975 12,200 *Shoney's, Inc. ................ 68,625 4,750 *Sonic Corp. ................... 83,125 3,900 *Triarc Companies Inc. Class A ...................... 89,213 ----------- 2,227,713 ----------- SAVINGS & LOAN - 1.95% 5,220 ALBANK Financial Corp. ........ 200,318 4,800 American Federal Bank of Greenville ................ 147,600 4,500 Astoria Financial Corp. ....... 185,625 3,612 Bankers Corp. ................. 91,655 1,600 Bay View Capital Corp. ........ 80,400 3,000 CitFed Bancorp, Inc. .......... 111,750 4,900 *Coast Savings Financial Inc. .. 208,862 2,810 Downey Financial Corp. ........ 56,200 1,910 Financial Trust Corp. ......... 92,874 3,700 *FirstFed Financial Corp. ...... 100,825 11,292 *Glendale Federal Bank FSB ..... 287,946 2,900 JSB Financial, Inc. ........... 127,600 5,100 Klamath First BanCorp. ........ 94,350 6,000 Long Island Bancorp, Inc. ..... 209,250 2,855 MAF Bancorp, Inc. ............. 119,196 1,800 Magna Bancorp, Inc. ........... 42,750 800 ML Bancorp, Inc. .............. 13,900 3,000 Peoples Bank of Bridgeport Connecticut .................. 70,875 5,324 Peoples Heritage Financial Group, Inc. .................. 176,358 3,631 Provident Bankshares Corp. .... 137,070 2,199 Queens County Bancorp, Inc. ... 90,159 3,100 RCSB Financial, Inc. .......... 126,906 3,300 Security Capital Corp. ........ 303,600 14,400 Sovereign Bancorp, Inc. ....... 189,000 3,500 Standard Financial, Inc. ...... 81,594 4,400 TR Financial Corp. ............ 89,100 11,660 Washington Federal, Inc. ...... 307,532 ----------- 3,743,295 ----------- SECURITIES RELATED - 1.01% 5,050 Alex Brown Inc. ............... $ 338,350 3,700 Enhance Financial Services Group Inc. ................... 154,475 7,917 Financial Security Assurance Holdings Ltd. ................ 286,002 3,300 Interra Financial, Inc. ....... 143,550 199 Investors Financial Services Corp. Class A ................ 5,871 2,600 Jefferies Group, Inc. ......... 140,075 3,250 Legg Mason, Inc. .............. 149,906 1,206 Liberty Financial Companies, Inc. .............. 54,119 1,400 Mc Donald & Co. Investments, Inc. ............ 53,725 3,900 Morgan Keegan, Inc. ........... 70,200 5,600 Pioneer Group, Inc. ........... 140,700 5,200 Piper Jaffray Companies, Inc. ......................... 102,050 4,231 Quick & Reilly Group Inc. ..... 97,313 5,400 Raymond James Financial Inc. .. 148,500 1,000 *White River Corp. ............. 64,000 ----------- 1,948,836 ----------- SEMICONDUCTORS - 2.07% 6,100 *Actel Corp. ................... 128,100 8,100 *Alliance Semiconductor Corp. .. 67,838 4,800 *Altron, Inc. .................. 79,800 6,300 *Burr Brown Corp. .............. 197,662 5,800 *Chips & Technologies, Inc. .... 64,525 3,800 Cohu, Inc. .................... 130,625 6,950 *Credence Systems Corp. ........ 205,025 3,300 *Cree Research, Inc. ........... 41,250 7,300 Dallas Semiconductor Corp. .... 281,962 6,200 *Electroglas, Inc. ............. 155,969 5,600 *ESS Technology, Inc. .......... 86,800 4,600 *Etec Systems, Inc. ............ 204,700 5,600 *FSI International, Inc. ....... 78,400 1,900 *Fusion Systems Corp. .......... 58,663 2,400 *Integrated Packaging Assembly Corp. ........................ 9,600 4,400 *Level One Communications, Inc. ......... 166,100 4,300 *Mattson Technology, Inc. ...... 45,150 4,400 *MRV Communications Inc. ....... 108,900 4,300 *Novellus Systems, Inc. ........ 352,062 2,200 *OnTrak Systems, Inc. .......... 63,250 5,200 *Quickturn Design System, Inc. ................. 53,300 6,900 *Ramtron International Corp. ... 34,500
134 ================================================================================ May 31, 1997 SMALL CAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED 33 ================================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- SEMICONDUCTORS - Continued 1,850 *SDL, Inc. ..................... $ 37,000 6,900 *Silicon Valley Group Inc. ..... 165,169 3,200 *Siliconix, Inc. ............... 80,000 1,900 *Speedfam International, Inc. .. 69,231 2,900 *Triquint Semiconductor, Inc. .. 114,913 3,900 *Unitrode Corp. ................ 193,538 8,100 *Vitesse Semiconductor Corp. ... 290,587 11,000 *VLSIi Technology, Inc. ........ 267,437 6,450 *Zilog, Inc. ................... 143,513 ----------- 3,975,569 ----------- TELECOMMUNICATIONS - 1.93% 6,000 ABM Industries Inc. ........... 116,250 3,000 *ACC Corp. ..................... 77,250 7,100 *Allen Telecom Inc. ............ 165,075 7,600 *American Paging, Inc. ......... 17,100 2,500 *Ancor Communications, Inc. .... 14,688 4,600 *Arch Communications Group, Inc. .................. 35,650 1,000 *Atlantic Tele-Network, Inc. ... 12,500 3,600 *BroadBand Technologies, Inc. .. 33,525 4,900 *California Amplifier, Inc. .... 19,600 3,400 *CellStar Corp. ................ 121,975 3,500 *Cellular Communications International, Inc. .......... 93,187 6,580 *Cellular Technical Services Inc. ................ 89,652 4,800 *Centennial Cellular Corp. Class A ...................... 67,200 3,800 *Cidco, Inc. ................... 55,100 700 *CKS Group, Inc. ............... 20,213 3,500 *Coherent Communications Systems Corp. ................ 76,125 4,900 *CommNet Cellular Inc. ......... 167,825 3,800 *Diana Corp. ................... 8,550 4,200 *Digi International Inc. ....... 38,325 12,700 *DSP Communications, Inc. ...... 141,287 4,900 *HighwayMaster Communications, Inc. ......................... 67,375 4,600 *InteliData Technologies Corp. ........... 23,575 1,100 *Inter-Tel, Inc. ............... 17,188 5,400 *InterVoice, Inc. .............. 59,400 1,000 *IPC Information Systems, Inc. ................ 12,500 3,400 *Itron, Inc. ................... 91,375 2,250 *MasTec, Inc. .................. 91,406 3,400 *Metricom, Inc. ................ 27,413 8,815 *Metrocall, Inc. ............... 44,075 TELECOMMUNICATIONS - Continued 4,715 *Metrocall, Inc. (Rights)....... $ 23,575 2,794 *Millicom International Cellular S.A. ................ 126,778 16,100 *Mobile Telecommunications Technologies Corp. ........... 196,219 9,200 *MobileMedia Corp. Class A ..... 4,600 1,600 *Mosaix Inc. ................... 22,600 7,866 NTL Inc. ...................... 179,935 5,100 *P-COM, Inc. ................... 164,475 2,700 *Plantronics, Inc. ............. 118,800 6,640 *PriCellular Corp. Class A ..... 60,590 2,900 *ProNet, Inc. .................. 9,425 3,500 *Proxim, Inc. .................. 89,687 1,200 *Quintel Entertainment, Inc. ... 11,850 4,400 *Sanmina Corp. ................. 254,925 6,000 *Symmetricom, Inc. ............. 96,000 4,500 *Tel-Save Holdings, Inc. ....... 69,750 2,600 *Teltrend, Inc. ................ 43,550 4,100 *Transaction Network Services, Inc. ............... 60,475 3,200 *TresCom International, Inc. ... 23,200 5,300 *U. S. Long Distance Corp. ..... 82,150 7,600 *Vanguard Cellular Systems, Inc. Class A ...................... 99,750 3,200 *VideoLan Technologies, Inc. ... 1,700 6,400 *WinStar Communications, Inc. .. 90,000 3,900 *Wireless One, Inc. ............ 11,456 1,700 Wireless Telecom Group ........ 18,700 2,300 *Xpedite Systems, Inc. ......... 43,700 ----------- 3,709,274 ----------- TEXTILE - PRODUCTS - 0.67% 14,200 *Burlington Industries, Inc. ... 156,200 5,000 *Cone Mills Corp. .............. 43,125 2,200 *Fabri-Centers of America, Inc. Class A ...................... 51,700 4,000 *Fieldcrest Cannon, Inc. ....... 75,000 4,950 G&K Services, Inc. Class A .... 162,113 4,350 Guilford Mills, Inc. .......... 85,369 3,000 *Lydall, Inc. .................. 68,625 600 *Marisa Christina, Inc. ........ 5,850 5,600 *Mohawk Industries, Inc. ....... 119,000 3,600 Springs Industries, Inc. ...... 182,250 9,700 Wellman, Inc. ................. 173,387 4,500 *WestPoint Stevens Inc. Class A ...................... 170,437 ----------- 1,293,056 ----------- TOBACCO - 0.41% 1,100 *Culbro Corp. .................. $ 140,663 10,400 DIMON Inc. .................... 240,500 2,200 *Mafco Consolidated Group Inc. ................... 72,875 8,400 *Mafco Consolidated Group Inc. (Rights) ..................... 7,350 9,100 Universal Corp. ............... 331,012 ----------- 792,400 ----------- TRUCKERS - 0.68% 6,200 *American Freightways Corp. .... 85,250 4,950 Arnold Industries, Inc. ....... 82,913 2,421 Frozen Food Express Industries, Inc. ............. 21,486 3,432 *Heartland Express, Inc. ....... 74,646 500 *Knight Transportation, Inc. ... 11,875 4,200 *Landstar System Inc. .......... 112,875 3,200 *M.S. Carriers, Inc. ........... 67,200 2,300 Roadway Express Inc. .......... 43,700 12,575 Rollins Truck Leasing Corp. ... 172,906 4,600 *Swift Transportation Co., Inc. .................... 148,350 7,500 USFreightways Corp. ........... 181,875 3,150 Werner Enterprises, Inc. ...... 61,425 3,100 Xtra Corp. .................... 132,912 5,900 *Yellow Corp. .................. 112,838 ----------- 1,310,251 ----------- UTILITIES - COMMUNICATION - 0.27% 9,500 Aliant Communications, Inc. ... 194,750 3,100 *C-Tec Corp. ................... 94,550 1,400 CFW Communications Co. ........ 26,075 3,700 *CoreComm Inc. ................. 59,200 5,378 PXRE Corp. .................... 145,206 ----------- 519,781 ----------- UTILITIES - ELECTRIC - 1.63% 10,200 Atlantic Energy, Inc. ......... 168,300 3,600 Black Hills Corp. ............. 103,500 5,800 Central Louisiana Electric Co., Inc. ........... 146,450 8,000 Central Maine Power Co. ....... 89,000 5,100 CILCORP, Inc. ................. 197,625 6,500 Commonwealth Energy System Companies .................... 141,375 2,300 *Destec Energy, Inc. ........... 48,875 5,200 Eastern Utilities Associates .. 91,650 12,200 *El Paso Electric Co. .......... 86,925 2,100 Empire District Electric Co. .. 36,488
135 ================================================================================ 34 SMALL CAP INDEX FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ================================================================================
NUMBER MARKET OF SHARES VALUE - - -------------------------------------------------------- UTILITIES - ELECTRIC - Continued 5,900 Indiana Energy, Inc. .......... $ 140,863 3,200 Interstate Power Co. .......... 90,400 5,025 Madison Gas & Electric Co. .... 100,500 5,800 Minnesota Power & Light Co. ... 168,200 9,300 Nevada Power Co. .............. 191,812 2,875 Otter Tail Power Co. .......... 88,406 9,700 Public Service Co. of New Mexico ................ 170,962 6,800 Rochester Gas & Electric Corp. ............... 136,000 9,450 SIG Corp, Inc. ................ 238,612 2,700 TNP Enterprises, Inc. ......... 59,400 11,020 *Tuscon Electric Power Co. ..... 162,545 3,700 United Illuminating Co. ....... 105,913 8,800 Washington Gas Light Co. ...... 216,700 5,900 WPL Holdings, Inc. ............ 162,988 ------------ 3,143,489 ------------ UTILITIES - GAS, DISTRIBUTION - 0.58% 11,600 AGL Resources, Inc. ........... 221,850 4,100 Colonial Gas Co. .............. 84,050 1,800 Connecticut Energy Corp. ...... 40,500 2,600 Energen Corp. ................. 85,800 234 NGC Corp. ..................... 4,212 8,300 Northwest Natural Gas Co. ..... 202,312 1,200 NUI Corp. ..................... 26,250 7,400 Piedmont Natural Gas Co., Inc. ................ 180,375 4,800 Public Service Co. of North Carolina, Inc. ......... 90,600 1,514 South Jersey Industries, Inc. ............. 33,876 7,800 Southwestern Energy Co. ....... 103,350 9 World Fuel Services Corp. ..... 181 2,150 Yankee Energy System, Inc. .... 49,719 ------------ 1,123,075 ------------ UTILITIES - GAS, PIPELINE - 0.10% 400 North Carolina Natural Gas Corp. .................... 12,350 6,100 ONEOK Inc. .................... 184,525 ------------ 196,875 ------------ UTILITIES - MISCELLANEOUS - 0.68% 5,100 Central Hudson Gas & Electric Corp. ............... 164,475 16,559 *Citizens Utilities Co. Class B ...................... 155,238 6,800 IES Industries Inc. ........... 198,050 7,450 MDU Resources Group, Inc. ..... 180,663 2,000 Northwestern Public Service Co. .................. 39,250 UTILITIES - MISCELLANEOUS - Continued 3,600 Orange and Rockland Utilities, Inc. .............. $ 114,300 8,000 Sierra Pacific Resources ...... 237,000 2,900 Trigen Energy Corp. ........... 68,875 5,400 WPS Resources Corp. ........... 143,100 ------------ 1,300,951 ------------ WATER SERVICES - 0.19% 3,000 Aquarion Co. .................. 77,250 400 California Water Service Co. .. 18,250 1,300 E'Town Corp. .................. 43,063 3,150 Philadelphia Suburban Corp. ... 59,062 2,150 Southern California Water Co. .................... 49,988 6,200 United Water Resources ........ 111,600 ------------ 359,213 ------------ TOTAL COMMON STOCKS (Cost $152,348,063) ........... 186,025,897 ------------ PAR VALUE - - ----------- CORPORATE SHORT TERM COMMERCIAL PAPER - 3.27% CONSUMER FINANCE - 1.74% $1,790,000 Beneficial Corp., 5.48% due 6/2/97 ............. 1,789,726 1,559,000 Sears Roebuck Acceptance Corp., 5.59% due 6/6/97 ............. 1,557,789 ------------ 3,347,515 ------------ SECURITIES RELATED - 1.53% 2,948,000 Merrill Lynch & Co., Inc., 5.55% due 6/4/97 ............. 2,946,637 ------------ TOTAL CORPORATE SHORT TERM COMMERCIAL PAPER (Cost $6,294,152) ............. 6,294,152 ------------ UNITED STATES GOVERNMENT - SHORT TERM - 0.10% U.S. TREASURY BILLS - 0.10% 200,000 United States Treasury Bills, 4.99% due 8/21/97 (Cost $197,756) .............. 197,756 ------------ TOTAL INVESTMENTS (Cost $158,839,971) - 100.03%.. $192,517,805 Other assets and liabilities, net - (0.03%) ................ (59,062) ------------ NET ASSETS (equivalent to $16.18 per share on 11,893,324 shares outstanding) - 100% ......... $192,458,743 ============ *Non-income producing UNREALIZED CONTRACTS APPRECIATION - - --------- ------------ FUTURES CONTRACTS PURCHASED(1) (Delivery month/Value at 5/31/97) 35(2) Russell 2000 Index Futures (June/$380.60) ............... $ 312,000 ============ (1) U.S.Treasury Bills with a market value of approximately $200,000 were maintained in a segregated account with a portion placed as collateral for futures contracts. (2) Per 500 - - -------------------------------------------------------------------------------- NET ASSETS REPRESENTED BY: Capital stock, $.01 par value per share, 1,000,000,000 shares authorized, 11,893,324 shares outstanding ............ $ 118,933 Additional paid in capital ................ 141,230,121 Undistributed net realized gain on securities ............................ 17,101,210 Undistributed net investment income ....... 18,645 Unrealized appreciation of: Investments ........... $33,677,834 Futures ............... 312,000 33,989,834 ----------- ------------ NET ASSETS APPLICABLE TO SHARES OUTSTANDING............................. $192,458,743 ============
SEE NOTES TO FINANCIAL STATEMENTS. 136 =============================================================================== SMALL CAP INDEX FUND - FINANCIAL STATEMENTS 35 =============================================================================== STATEMENT OF OPERATIONS For the fiscal year ended May 31, 1997 INVESTMENT INCOME: Dividends............................................................ $ 2,740,363 Interest............................................................. 385,073 ----------- Total investment income............................................ 3,125,436 ----------- EXPENSES: Advisory fees........................................................ 622,719 Custodian and accounting services.................................... 65,793 Reports to shareholders.............................................. 24,512 Audit fees and tax services.......................................... 6,366 Directors' fees and expenses......................................... 4,388 Miscellaneous........................................................ 13,184 ----------- Total expenses..................................................... 736,962 ----------- NET INVESTMENT INCOME................................................ 2,388,474 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES: Net realized gain (loss) on: Investments.......................................... $17,599,392 Futures contracts.................................... (76,255) 17,523,137 ----------- Net unrealized depreciation during the year: Investments.......................................... (6,354,278) Futures contracts.................................... (27,775) (6,382,053) ----------- ----------- Net realized and unrealized gain on securities during the year................................................. 11,141,084 ----------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $13,529,558 ===========
STATEMENT OF CHANGES IN NET ASSETS For the fiscal year ended May 31:
1997 1996 ------------- ------------- OPERATIONS: Net investment income ....................................... $ 2,388,474 $ 2,051,245 Net realized gain on securities ............................. 17,523,137 10,949,662 Net unrealized appreciation (depreciation) of securities during the year ........................................... (6,382,053) 31,694,970 ------------- ------------- Increase in net assets resulting from operations .......... 13,529,558 44,695,877 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ....................................... (2,385,945) (2,050,531) Net realized gain on securities ............................. (11,216,991) (2,945,819) ------------- ------------- Decrease in net assets resulting from distributions to shareholders .......................................... (13,602,936) (4,996,350) ------------- ------------- CAPITAL STOCK TRANSACTIONS: Proceeds from capital stock sold ............................ 20,665,121 26,328,751 Proceeds from capital stock issued for distributions reinvested ............................................... 13,602,936 4,996,350 ------------- ------------- 34,268,057 31,325,101 Cost of capital stock repurchased ........................... (22,521,418) (16,806,251) ------------- ------------- Increase in net assets resulting from capital stock transactions ........................................ 11,746,639 14,518,850 ------------- ------------- TOTAL INCREASE IN NET ASSETS ................................ 11,673,261 54,218,377 ------------- ------------- NET ASSETS: Beginning of year ........................................... 180,785,482 126,567,105 ------------- ------------- End of year (including undistributed net investment income of $18,645 and $16,116) ............................ $ 192,458,743 $ 180,785,482 ============= ============= CHANGE IN SHARES OUTSTANDING: Shares of capital stock sold ................................ 1,339,448 1,827,343 Shares issued for distributions reinvested .................. 890,371 350,648 Shares of capital stock repurchased ......................... (1,465,127) (1,185,615) ------------- ------------- Increase in shares outstanding ............................ 764,692 992,376 Shares outstanding: Beginning of year ......................................... 11,128,632 10,136,256 ------------- ------------- End of year ............................................... 11,893,324 11,128,632 ============= =============
SEE NOTES TO FINANCIAL STATEMENTS. 137 =============================================================================== 36 INTERNATIONAL EQUITIES FUND - STATEMENT OF NET ASSETS May 31, 1997 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- COMMON STOCKS - 97.93% AEROSPACE/DEFENSE - 0.17% 15,089 British Aerospace..............$ 306,815 ------------ AIRLINES - 0.82% 4,100 British Airways plc - ADR...... 482,263 40,000 *Japan Air Lines Co. Ltd........ 169,687 25,000 Lufthansa AG................... 398,017 60,000 Malay Airline System Bhd....... 138,496 35,000 Singapore Airlines............. 298,539 ------------ 1,487,002 ------------ APPAREL & PRODUCTS - 0.59% 20,000 Onward Kashiyama Co., Ltd...... 302,276 163,039 Pacific Dunlop Ltd............. 455,749 140,000 Yue Yuen Industrial............ 307,156 ------------ 1,065,181 ------------ APPLIANCES/FURNISHINGS - 2.15% 50,000 Brother Industries............. 195,363 22,000 Matsushita Electric Industrial Co. Ltd. ..................... 413,740 4,200 Matsushita Electric Industrial Co. Ltd. - ADR ............... 798,000 10,000 Philips Electronics NV......... 546,684 133,000 Sanyo Electric Co. Ltd......... 560,781 3,400 Sanyo Electric Co. Ltd. - ADR.. 72,250 30,000 Sharp Corp..................... 386,432 10,970 Sony Corp - ADR................ 935,193 ------------ 3,908,443 ------------ AUTO - CARS - 4.36% 20,000 Daimler-Benz AG - ADR.......... 1,582,500 100,000 Fiat S.p.A..................... 327,835 15,000 Fiat S.p.A. - ADR.............. 253,125 12,500 Honda Motor Co., Ltd. - ADR.... 756,250 35,000 Nissan Motor Co., Ltd.......... 232,030 18,000 Nissan Motor Co., Ltd. - ADR... 240,750 500 Peugeot Citroen SA............. 49,441 98,000 Toyota Motor Corp.............. 2,810,820 13,519 Toyota Motor Corp. - ADR....... 777,343 500 Volkswagen Ag.................. 322,977 20,000 Volvo AB....................... 553,463 ------------ 7,906,534 ------------ AUTO - ORIGINAL EQUIPMENT - 0.08% 25,000 Calsonic Corp..................$ 138,471 ------------ AUTO - REPLACEMENT PARTS - 1.60% 36,000 Bridgestone Corp............... 813,053 1,600 Bridgestone Corp. - ADR........ 361,108 5,550 Denso Corp..................... 554,381 10,000 Michelin (CGDE) Class B........ 546,012 40,000 Phoenix AG..................... 633,082 ------------ 2,907,636 ------------ BANKS - OTHER - 13.64% 60,000 AMMB Holdings BHD.............. 379,671 50,000 Asahi Bank Ltd................. 326,750 3,190 Asahi Bank Ltd. - ADR.......... 208,323 10,000 Banco de Santander SA.......... 852,933 126,000 Bank of Tokyo - Mitsubishi..... 2,185,659 4,180 Bank of Tokyo Ltd. - ADR....... 580,067 68,000 Bank of Yokohama Ltd........... 337,518 2,296 Bank of Yokohama Ltd. - ADR.... 113,884 37,922 Barclays plc................... 737,596 10,840 Barclays plc - ADR............. 850,940 40,000 Chiba Bank Ltd................. 207,815 90,000 Commerce Asset Holding......... 261,472 250,000 DCB Holdings BHD............... 805,906 50,000 DCB Holdings BHD (Warrants).... 69,248 6,300 Den Danske Bank AF 1871 - ADR.. 600,398 32,500 Deutsche Bank AG - ADR......... 1,804,537 10,000 Development Bank of Singapore Ltd................. 125,149 13,625 Development Bank of Singapore Ltd. - ADR ......... 682,429 32,000 Dresdner Bank AG - ADR......... 1,121,974 60,000 Fuji Bank Ltd.................. 772,864 4,830 Fuji Bank Ltd. - ADR........... 621,728 25,000 Hang Seng Bank................. 300,058 6,180 HSBC Holdings plc - ADR........ 1,874,290 13,500 Istituto Mobiliare Italiano S.p.A. - ADR ................. 362,813 48,000 Joyo Bank...................... 234,951 164,322 Lloyds TSB Group plc........... 1,652,494 29,959 National Australia Bank Ltd.... 428,540 9,319 National Australia Bank Ltd. - ADR ................... 666,309 10,412 National Westminster Bank plc.. 127,233 4,600 National Westminster Bank plc - ADR..................... 339,825 BANKS - OTHER - Continued 20,000 Royal Bank Scot Group..........$ 196,957 98,000 Sakura Bank Ltd................ 586,569 2,000 Schweiz Bankverein............. 480,090 30,000 Shizuoka Bank.................. 288,536 74,000 Sumitomo Bank.................. 1,023,100 26,000 Tokai Bank..................... 213,894 2,225 Tokai Bank - ADR............... 365,837 25,000 Toyo Trust & Banking........... 177,544 1,300 Union Bank of Switzerland AG... 1,424,454 13,300 Westpac Banking Corp. Ltd. - ADR ................... 359,100 ------------ 24,749,455 ------------ BEVERAGE - BREWERS/ DISTRIBUTORS - 1.38% 38,800 Bass plc....................... 505,549 96,100 Guinness plc................... 894,502 16,000 Kirin Brewery Co., Ltd......... 158,008 12,000 LVMH (Moet Hennessy Louis Vuitton) - ADR ......... 583,500 45,000 Sapporo Breweries.............. 358,995 ------------ 2,500,554 ------------ BROADCASTING - 0.45% 50,000 British Sky Broadcasting Group plc .................... 470,309 750 Canal Plus..................... 127,022 100,000 *General Cable.................. 224,113 ------------ 821,444 ------------ BUILDING MATERIALS - 1.87% 20,000 Asahi Glass Co. Ltd............ 194,075 1,200 Cie De St Gobain............... 165,622 30,674 CRH plc........................ 302,068 2,505 Fletcher Challenge Building Division ..................... 67,635 2,700 Glaverbel SA................... 361,887 725 Holderbank Finance Glarus...... 635,731 40,000 Inax Corp...................... 278,575 4,116 Lafarge SA..................... 263,015 15,000 Tostem Corp.................... 400,601 26,400 Toto Ltd....................... 296,986 578 Toto Ltd. - ADR................ 64,921 38,000 Uralita, SA.................... 368,012 ------------ 3,399,128 ------------
138 =============================================================================== May 31,1997 INTERNATIONAL EQUITIES FUND - 37 STATEMENT OF NET ASSETS CONTINUED ===============================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- CHEMICAL - MAJOR - 1.36% 25,000 BASF AG........................$ 921,538 10,000 Bayer AG....................... 387,631 18,000 Bayer AG - ADR................. 699,182 41,821 Montedison S.p.A. - ADR........ 256,154 20,000 Sekisui Chemical............... 207,815 ------------ 2,472,320 ------------ CHEMICAL - MISCELLANEOUS - 2.03% 13,603 Air Liquide - ADR.............. 417,900 5,100 Akzo Nobel N V- ADR............ 342,975 8,500 Asahi Chemical Co. Ltd. - ADR.. 472,666 28,014 BOC Group plc.................. 470,643 7,500 Degussa Ag..................... 364,446 6,000 Imperial Chemical Industries plc - ADR .................... 327,000 23,100 Shin Etsu Chemical Co.......... 579,236 50,000 Toray Industries Inc........... 340,060 5,500 Toray Industries Inc. - ADR.... 373,809 ------------ 3,688,735 ------------ CONGLOMERATES - 2.95% 29,390 Broken Hill Proprietary Co. Ltd. - ADR ................... 848,636 43,006 BTR plc........................ 140,000 37,426 BTR plc - ADR.................. 486,156 30,000 Hutchison Whampoa.............. 249,726 3,300 Itochu Corp. - ADR............. 167,931 71,250 Keppel Corp. Ltd............... 325,789 26,875 Keppel Corp. Ltd. - ADR........ 248,156 8,000 Lagardere Groupe............... 235,237 70,000 Marubeni Corp.................. 297,553 3,200 Marubeni Corp. - ADR........... 135,931 42,000 Mitsubishi Corp................ 494,118 50,000 Mitsui & Co.................... 442,250 60,000 Sime Darby Holdings Ltd........ 195,805 194,400 Sime Darby Holdings Ltd. - ADR. 634,405 105,728 Tomkins plc.................... 459,196 ------------ 5,360,889 ------------ CONSUMER FINANCE - 0.07% 37,000 Nippon Shinpan Co.............. 127,729 ------------ COSMETICS/TOILETRIES - 1.11% 1,100 Loreal Co......................$ 399,075 15,400 Loreal Co. - ADR............... 1,119,951 34,490 Shiseido Ltd. - ADR............ 503,157 ------------ 2,022,183 ------------ DRUGS - 6.81% 26,667 Astra AB....................... 430,041 55,400 Glaxo Wellcome plc - ADR....... 2,229,850 7,700 Kissei Pharmaceutical Co....... 175,225 2,100 Novartis Ag.................... 2,846,653 5,000 Ono Pharmaceutical............. 171,318 250 Roche Holdings AG.............. 2,220,418 27,000 Sankyo Co. Ltd................. 855,560 78,564 SmithKline Beecham Plc......... 1,350,740 45,000 Takeda Chemical Industries Ltd. 1,139,974 10,300 Zeneca Group plc - ADR......... 943,738 ------------ 12,363,517 ------------ ELECTRICAL EQUIPMENT - 1.52% 1,000 Barco.......................... 178,521 58,000 Delta plc...................... 305,513 15,000 Fanuc.......................... 534,564 30,000 Fujikura....................... 262,774 84,000 General Electric plc........... 479,568 10,400 General Electric plc - ADR..... 59,294 10,000 Murata Manufacturing Co........ 395,878 3,400 Sumitomo Electric Industries Ltd. - ADR ................... 533,940 ------------ 2,750,052 ------------ ELECTRONIC INSTRUMENTS - 3.27% 50,000 Hitachi Ltd.................... 532,417 8,550 Hitachi Ltd. - ADR............. 927,675 6,000 Kyocera Corp................... 432,289 144,000 Mitsubishi Electric Corp....... 816,144 600 Mitsubishi Electric Corp. - ADR 33,983 25,000 NEC Corp....................... 347,789 5,100 NEC Corp. - ADR................ 353,813 50,000 Racal Electronics plc.......... 188,942 7,110 Schneider SA................... 341,427 8,000 *Siemens AG..................... 450,904 23,000 *Siemens AG - ADR............... 1,299,038 25,000 Yokogawa Electric.............. 207,170 ------------ 5,931,591 ------------ FINANCE COMPANIES - 2.05% 20,000 Abbey National.................$ 288,893 61,160 ABN Amro Holdings N V.......... 1,129,352 2,025 Compagnie Bancaire SA.......... 224,080 126 *Credit Local de France......... 11,761 7,992 Fortis Amev NV................. 327,994 19,664 ING Groep NV................... 868,387 7,758 Societe Generale............... 861,164 129 Societe Generale (Warrants).... 12,443 ------------ 3,724,074 ------------ FOODS - 2.92% 25,000 Ajinomoto Inc.................. 251,181 1,900 Ajinomoto Inc. - ADR........... 190,766 21,799 Cadbury Schweppes plc.......... 195,420 13,634 Cadbury Schweppes plc - ADR.... 494,233 31,532 Coca Cola Amatil Ltd........... 365,059 10,000 Daiei, Inc..................... 65,264 11,500 Daiei, Inc. - ADR.............. 143,750 106,875 Grand Metropolitan............. 993,048 38,000 Nestle S A - ADR............... 2,363,801 30,750 Tate & Lyle plc................ 226,613 ------------ 5,289,135 ------------ FOOTWEAR - 0.26% 4,500 Adidas AG...................... 472,617 ------------ FREIGHT - 0.59% 98,000 *Mitsui Osk Lines Ltd........... 218,806 40,000 Nippon Yusen Kabushiki Kaish... 164,878 8,570 Nippon Yusen Kabushiki Kaish - ADR........................... 353,008 31,683 P & O Steam Navigation......... 330,020 ------------ 1,066,712 ------------ HOME BUILDERS - 0.22% 15,000 Daiwa House Industry Co. Ltd... 176,471 214 *Sekisui Homes Ltd. - ADR....... 20,935 20,000 Sekisui House Hokuriku, Ltd.... 195,792 ------------ 393,198 ------------ HOSPITAL SUPPLIES - 0.51% 2,000 Novo-Nordisk A/S............... 214,155 12,800 Novo-Nordisk A/S - ADR......... 702,400 ------------ 916,555 ------------
139 =============================================================================== 38 INTERNATIONAL EQUITIES FUND - May 31, 1997 STATEMENT OF NET ASSETS CONTINUED ===============================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- HOUSEHOLD PRODUCTS - 0.88% 7,000 Katokichi Co...................$ 129,240 7,600 Unilever N V- ADR.............. 1,472,500 ------------ 1,601,740 ------------ INFORMATION PROCESSING - 0.70% 5,000 CSK Corp....................... 154,143 3,700 CSK Corp. - ADR................ 113,313 14,000 Fujitsu Ltd.................... 170,717 7,200 Fujitsu Ltd. - ADR............. 438,684 2,250 SAP AG......................... 401,264 ------------ 1,278,121 ------------ INSURANCE - CASUALTY - 0.46% 25,000 Mitsui Marine & Fire........... 167,454 50,000 Nippon Fire & Marine Insurance. 237,441 25,000 Sumitomo Marine & Fire......... 188,922 20,000 *Tokio Marine & Fire Insurance Co. ................ 235,294 ------------ 829,111 ------------ INSURANCE - LIFE - 0.61% 65,312 Irish Life plc................. 334,412 15,240 Prudential plc - ADR........... 765,432 ------------ 1,099,844 ------------ INSURANCE - MULTILINE - 2.11% 3,000 Allianz AG..................... 634,545 23,549 Assic Generali................. 403,034 15,962 AXA............................ 955,022 7,000 *Gan Group...................... 156,738 91,498 Royal Sun Alliance............. 690,014 154,095 Sedgwick Group plc............. 315,097 500 Swiss Reinsurance AG........... 670,714 ------------ 3,825,164 ------------ LEISURE TIME - 1.63% 8,000 Canon, Inc. - ADR.............. 1,015,000 20,000 Fuji Photo..................... 774,581 150,000 Ladbroke Group plc............. 564,371 85,000 Rank Group..................... 597,906 ------------ 2,951,858 ------------ LODGING - 0.43% 297,916 Hong Kong & Shanghai Hotels....$ 461,379 22,916 Hong Kong & Shanghai Hotels (Warrants) ................... 4,495 180,000 Hotel Properties............... 308,327 ------------ 774,201 ------------ MACHINE TOOLS - 0.51% 35,000 Amada Co., Ltd................. 296,050 16,000 Makita Corp. - ADR............. 232,000 40,000 Minebea Co. Ltd................ 391,584 ------------ 919,634 ------------ MACHINERY - CONSTRUCTION & CONTRACTS - 1.39% 200 BBC Brown Boveri Limited-AG.... 274,216 15,000 Bilfinger & Berger Bau AG...... 583,641 2,000 Jean Lefebvre SA............... 114,986 52,000 Kajima Corp.................... 290,700 2,340 Kajima Corp. - ADR............. 130,725 80,000 Kumagai Gumi Co................ 88,791 16,000 Kumagai Gumi Co. (Warrants).... 5,007 70,000 Shimizu Corp................... 416,574 5,324 Volker Stevin.................. 613,380 ------------ 2,518,020 ------------ MACHINERY - INDUSTRIAL/ SPECIALTY - 2.42% 10,000 Atlas Copco AB Series A........ 268,346 20,000 Atlas Copco AB Series B........ 527,660 125 Bobst SA....................... 207,392 8,000 Ebara Corp..................... 116,101 2,530 Ebara Corp. - ADR.............. 366,918 75,000 Halma plc...................... 217,160 50,000 Kawasaki Heavy Industries...... 216,402 34,000 Komatsu Ltd.................... 256,934 2,000 Komatsu Ltd. - ADR............. 60,414 70,000 Kubota Corp.................... 321,597 1,350 Kubota Corp. - ADR............. 128,250 750 Man AG......................... 214,587 1,000 Mannesmann AG.................. 406,062 612 Rauma Oy....................... 14,262 1,000 Rieter Holdings AG............. 324,767 80 Rieter Holdings AG (Warrants).. 26,320 78,595 Rolls Royce.................... 321,426 25,367 Siebe plc...................... 399,199 ------------ 4,393,797 ------------ MEDICAL TECHNOLOGY - 0.04% 20,000 *Instrumentation Laboratory S. p. A. ..................... 75,000 ------------ MERCHANDISE - SPECIALTY - 1.22% 41,490 BAA plc........................ 359,720 150,000 Dickson Concepts International Ltd. ........... 561,399 10,000 Esselte AB Series B............ 236,092 35,000 Great Universal Stores plc..... 369,295 10,000 Hennes and Mauritz............. 326,401 1,500 *Herlitz AG..................... 158,856 15,000 Takashimaya Co................. 195,792 ------------ 2,207,555 ------------ MERCHANDISING - DEPARTMENT - 1.17% 500 Karstadt AG.................... 176,409 15,000 Marks & Spencer plc............ 124,714 25,033 Marks & Spencer plc - ADR...... 1,249,505 16,000 Marui Co., Ltd................. 298,154 36,000 Mitsukoshi Ltd................. 253,190 200 Mitsukoshi Ltd. - ADR.......... 14,056 ------------ 2,116,028 ------------ MERCHANDISING - FOOD - 1.52% 2,550 Carrefour SA................... 1,673,622 10,000 Delhaize-Le Lion, S.A.......... 497,308 5,050 Koninklijke Ahold NV........... 383,248 15,000 Melco International Development Limited ...................... 5,033 10,000 Uny Co. Ltd.................... 196,651 ------------ 2,755,862 ------------ MERCHANDISING - MASS - 0.89% 32,666 Argos plc...................... 327,568 4,356 Familymart Co.................. 199,003 4,050 Ito-Yokado Co. Ltd. - ADR...... 925,425 20,000 Seiyu Ltd...................... 162,817 ------------ 1,614,813 ------------
140 =============================================================================== May 31, 1997 INTERNATIONAL EQUITIES FUND - STATEMENT OF NET ASSETS CONTINUED 39 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- METALS - COPPER - 0.61% 8,062 Rio Tinto Ltd. - ADR...........$ 528,558 6,432 Rio Tinto plc.................. 110,479 6,700 Rio Tinto plc - ADR............ 467,325 ------------ 1,106,362 ------------ METALS - MISCELLANEOUS - 0.69% 400 Alusuisse Lonza Holdings....... 377,012 106,151 North Ltd...................... 405,879 71,596 *Western Mining................. 462,983 ------------ 1,245,874 ------------ METALS - STEEL - 1.73% 500 Bekaert SA..................... 295,409 36,700 British Steel plc.............. 90,955 2,000 British Steel plc - ADR........ 51,750 50,000 Cockerill Sambre............... 189,855 60,000 Kawasaki Steel................. 176,213 15,420 Kawasaki Steel - ADR........... 452,555 200,000 Nippon Steel Co................ 585,659 155,000 NKK Corp....................... 304,809 178,000 Sumitomo Metal Industries Ltd.. 453,980 7,400 Sumitomo Metal Industries Ltd. - ADR .......................... 188,602 50,000 Sumitomo Metal Mining.......... 348,218 ------------ 3,138,005 ------------ MISCELLANEOUS - 0.32% 8,000 Secom Co....................... 575,698 ------------ OIL - INTEGRATED INTERNATIONAL - 4.41% 14,722 British Petroleum Co. plc - ADR 2,132,850 20,946 Elf Aquitaine SA - ADR......... 1,091,810 10,000 Repsol S A - ADR............... 421,250 17,098 Royal Dutch Petroleum Co. - ADR 3,338,385 11,207 Total.......................... 1,024,711 ------------ 8,009,006 ------------ OIL/GAS PRODUCERS - 1.50% 225,000 Eni S.p.A...................... 1,122,046 2,505 Fletcher Challenge Energy Division ..................... 80,160 13,500 Norsk Hydro A/S - ADR.......... 685,125 3,000 OMV AG......................... 380,590 OIL/GAS PRODUCERS - Continued 112,500 Santos Ltd.....................$ 461,383 ------------ 2,729,304 ------------ PAPER/FOREST PRODUCTS - 0.73% 149,394 Fletcher Challenge Forest Ltd.. 196,788 3,926 *Fletcher Challenge Ltd. - ADR.. 51,038 5,010 Fletcher Challenge Paper Division ..................... 115,230 22,000 New Oji Paper Co., Ltd......... 127,145 300 New Oji Paper Co., Ltd. - ADR.. 17,326 60,000 Nippon Paper Industries........ 319,966 22,000 UPM - Kymmene Corp............. 505,001 ------------ 1,332,494 ------------ PUBLISHING - NEWS - 0.87% 69,356 Independent Newspapers plc..... 348,297 22,500 News Corp Ltd. - ADR........... 399,375 50,000 Reuters Holdings plc........... 561,099 20,952 United News & Media plc........ 265,285 ------------ 1,574,056 ------------ PUBLISHING/PRINTING - 0.48% 30,000 Dai Nippon Printing Co. Ltd.... 600,258 100,000 *Seat S.p.A..................... 29,744 2,020 Wolters Kluwer NV.............. 242,820 ------------ 872,822 ------------ RAILROAD - 0.99% 30,000 Fukuyama Transporting Co....... 202,233 90,000 Nagoya Railroad Co. Ltd........ 341,606 9,218 Nagoya Railroad Co. Ltd. - ADR. 349,639 101,970 Odakyu Electric Railway Co. Ltd. ......................... 564,797 60,000 Tokyu Corp..................... 343,152 ------------ 1,801,427 ------------ REAL ESTATE - 2.45% 41,076 Hammerson plc.................. 325,223 240,000 Hang Lung Development Co....... 459,960 63,000 Mitsubishi Estate Co. Ltd...... 860,198 35,000 Mitsui Fudosan................. 441,821 25,000 New World Development Co....... 158,740 132,600 Sun Hung Kai Properties Ltd.... 1,630,012 128,000 Wharf (Holdings) Ltd........... 573,221 ------------ 4,449,175 ------------ SECURITIES RELATED - 1.19% 25,000 Daiwa Securities Co. Ltd.......$ 183,985 46,000 Mitsubishi Trust & Banking Corp. ........................ 659,682 35,000 Nomura Securities Co. Ltd...... 414,770 3,800 Nomura Securities Co. Ltd. - ADR ........................ 450,012 160,000 Peregrine Investment Holdings Ltd. ......................... 284,958 16,000 Peregrine Investment Holdings Ltd. (Warrants) .............. 4,440 6,000 *Yamaichi Securities Co. Ltd. - ADR ................... 169,913 ------------ 2,167,760 ------------ TELECOMMUNICATIONS - 6.23% 35,000 British Telecommunications plc. ......................... 253,640 16,379 British Telecommunications plc - ADR .................... 1,201,809 45,222 Cable & Wireless plc........... 369,144 15,000 Deutsche Telekom............... 332,631 48,204 Hong Kong Telecommunications Ltd.- ADR .................... 1,090,616 15,395 Kon Ptt Nederland.............. 538,124 9,000 Nokia AB OY.................... 588,138 100,000 Stet Societa' Finanziaria Telefonica S.p.A. ............ 504,589 5,600 Telecom Corp. of New Zealand Ltd. - ADR ................... 214,900 300,000 *Telecom Italia Mobile.......... 879,932 335,000 Telecom Italia S.p.A........... 922,290 40,200 Telefonaktiebolage & LM Ericsson Class B - ADR ....... 1,432,125 14,000 Telefonica de Espana........... 403,846 11,600 Telefonica de Espana - ADR..... 1,013,550 110,000 Telekom Malaysia Berhad........ 814,264 16,500 Vodafone Group plc - ADR....... 736,313 ------------ 11,295,911 ------------ TEXTILE - PRODUCTS - 0.33% 20,000 Courtaulds Textiles plc........ 91,935 4,000 DMC Dollfus Mieg............... 82,430 30,000 Marzotto & Figli S.p.A......... 247,248 15,000 Wacoal Corp.................... 182,911 ------------ 604,524 ------------
141 =============================================================================== 40 INTERNATIONAL EQUITIES FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- TOBACCO - 0.74% 75,977 B.A.T. Industries plc.........$ 680,475 30,100 B.A.T. Industries plc - ADR... 553,088 32,000 Swedish Match AB............... 104,036 ------------ 1,337,599 ------------ UTILITIES - ELECTRIC - 4.36% 155,000 China Light & Power............ 776,150 12,000 Empresa Nacional de Electridad SA - ADR ..................... 931,500 6,500 Hidroel Cantabrico............. 253,597 30,000 Iberdrola SA................... 368,359 16,600 Kansai Electric Power Co. Inc.. 312,185 80,000 National Power................. 723,704 4,000 Oesterreichisch Elektrizitatswirt Schafts - AG Class A ................. 287,635 20,000 RWE AG - ADR................... 853,676 48,488 Scottish Power plc............. 303,794 10,000 Sydkraft AB.................... 258,025 145,000 Tenaga Nasional Berhad......... 663,629 25,200 Tokyo Electric Power........... 480,412 30,000 VEBA AG........................ 1,695,629 ------------ 7,908,295 ------------ UTILITIES - GAS, DISTRIBUTION - 0.18% 127,000 Osaka Gas Co................... 333,723 ------------ WATER SERVICES - 1.36% 10,196 Eaux (Cie Generale)............ 1,253,621 10,196 Eaux (Cie Generale) (Warrants). 6,974 20,395 Hyder plc...................... 270,743 26,385 Thames Water plc............... 296,416 55,611 United Utilities plc........... 635,892 ------------ 2,463,646 ------------ TOTAL COMMON STOCKS (Cost $141,960,324)............ 177,676,399 ------------ UNITED STATES GOVERNMENT - SHORT TERM - 0.15% U.S. TREASURY BILLS - 0.15% $275,000 United States Treasury Bills, 4.99% due 8/21/97 (Cost $271,912)...............$ 271,912 ------------ TOTAL INVESTMENTS (Cost $142,232,236) - 98.08%... 177,948,311 Other assets and liabilities, net - 1.92% .................. 3,488,672 ------------ NET ASSETS (equivalent to $11.44 per share on 15,857,442 shares outstanding) - 100% ..........$181,436,983 ============ * Non-income producing
UNREALIZED CONTRACTS APPRECIATION - - --------------------------------------------------------- FUTURES CONTRACTS PURCHASED(1) (Delivery month/Value at 05/31/97) 30 (2) Nikkei 225 Futures (June/$172.99)................$ 302,018 ============ (1) U.S.Treasury Bills with a market value of approximately $275,000 were maintained in a segregated account with a portion placed as collateral for futures contracts. (2) Per 500
MARKET VALUE - - --------------------------------------------------------- NET ASSETS REPRESENTED BY: Capital stock, $.01 par value per share, 1,000,000,000 shares authorized, 15,857,442 shares outstanding........... $ 158,574 ------------- Additional paid in capital................ 140,297,784 Undistributed net realized gain on securities ............................. 4,489,559 Undistributed net investment income....... 448,887 Unrealized appreciation of: Investments................ $35,716,075 Futures ................... 302,018 Foreign currency translation 24,086 36,042,179 ----------- ------------- NET ASSETS APPLICABLE TO SHARES OUTSTANDING............................. $ 181,436,983 =============
SEE NOTES TO FINANCIAL STATEMENTS. 142 =============================================================================== INTERNATIONAL EQUITIES FUND - FINANCIAL STATEMENTS 41 =============================================================================== STATEMENT OF OPERATIONS For the fiscal year ended May 31, 1997 INVESTMENT INCOME: Dividends (net of foreign withholding taxes of $557,737)............. $ 3,666,126 Interest............................................................. 481,858 ----------- Total investment income............................................ 4,147,984 ----------- EXPENSES: Advisory fees........................................................ 668,871 Custodian and accounting services.................................... 76,611 Reports to shareholders.............................................. 25,220 Audit fees and tax services.......................................... 5,808 Directors' fees and expenses......................................... 4,916 Miscellaneous........................................................ 26,567 ----------- Total expenses..................................................... 807,993 ----------- NET INVESTMENT INCOME................................................ 3,339,991 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) on: Investments.......................................... $ 6,661,147 Foreign currency transactions........................ (182,088) Futures.............................................. (401,648) 6,077,411 ----------- Net unrealized appreciation during the year: Investments.......................................... 3,803,766 Foreign currency translation......................... 22,338 Futures.............................................. 130,782 3,956,886 ----------- ----------- Net realized and unrealized gain on securities and foreign currencies during the year.............................. 10,034,297 ----------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $13,374,288 ===========
STATEMENT OF CHANGES IN NET ASSETS For the fiscal year ended May 31:
1997 1996 ------------ ------------ OPERATIONS: Net investment income.................................. $ 3,339,991 $ 3,381,202 Net realized gain on securities and foreign currency transactions ....................................... 6,077,411 7,822,417 Net unrealized appreciation of securities and translation of foreign currencies during the year.... 3,956,886 10,529,705 ------------ ------------ Increase in net assets resulting from operations.... 13,374,288 21,733,324 ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income.................................. (3,206,176) (3,224,568) Net realized gain on securities........................ (6,030,686) (4,471,011) ------------ ------------ Decrease in net assets resulting from distributions to shareholders..................................... (9,236,862) (7,695,579) ------------ ------------ CAPITAL STOCK TRANSACTIONS: Proceeds from capital stock sold....................... 74,488,255 67,168,258 Proceeds from capital stock issued for distributions reinvested .......................................... 9,236,862 7,695,579 ------------ ------------ 83,725,117 74,863,837 Cost of capital stock repurchased...................... (112,684,896) (91,733,125) ------------ ------------ Decrease in net assets resulting from capital stock transactions....................................... (28,959,779) (16,869,288) TOTAL DECREASE IN NET ASSETS........................... (24,822,353) (2,831,543) NET ASSETS: Beginning of year...................................... 206,259,336 209,090,879 ------------ ------------ End of year (including undistributed net investment income of $448,887 and $262,279) ................. $181,436,983 $206,259,336 ------------ ------------ CHANGE IN SHARES OUTSTANDING: Shares of capital stock sold........................... 6,846,567 6,277,440 Shares issued for distributions reinvested............. 848,956 721,434 Shares of capital stock repurchased ................... (10,334,613) (8,576,096) ------------ ------------ Decrease in shares outstanding....................... (2,639,090) (1,577,222) Shares outstanding: Beginning of year.................................... 18,496,532 20,073,754 ------------ ------------ End of year.......................................... 15,857,442 18,496,532 ------------ ------------
SEE NOTES TO FINANCIAL STATEMENTS. 143 =============================================================================== 42 GROWTH FUND - STATEMENT OF NET ASSETS May 31, 1997 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - ---------------------------------------------------------------------------- COMMON STOCKS - 87.37% ADVERTISING - 3.07% 350,000 *ADVO, Inc.............................. $ 4,856,249 290,000 *Catalina Marketing Corp................ 10,693,750 222,500 *Outdoor Systems Inc.................... 7,370,313 22,920,312 ----------- APPAREL & PRODUCTS - 0.80% 134,500 *Tommy Hilfiger Corp.................... 5,985,250 ----------- AUTO - REPLACEMENT PARTS - 0.94% 300,000 *AutoZone, Inc.......................... 7,012,500 ----------- BANKS - REGIONAL - 1.54% 215,000 Norwest Corp........................... 11,502,500 ----------- BROADCASTING - 1.89% 625,000 Comcast Corp. Class A Special.......... 10,859,375 146,100 Gaylord Entertainment Co. Class A...... 3,250,725 ----------- 14,110,100 ----------- CONSUMER FINANCE - 0.18% 470,000 Mercury Finance Co..................... 1,233,750 ----------- ELECTRONIC INSTRUMENTS - 0.92% 236,000 *ADT Ltd................................ 6,873,500 ----------- ENTERTAINMENT - 3.01% 290,000 Carnival Corp. Class A................. 11,020,000 140,000 Walt Disney Co......................... 11,462,501 ----------- 22,482,501 ----------- FINANCE COMPANIES - 3.61% 325,000 Green Tree Financial Corp.............. 11,375,000 100,000 Household International, Inc........... 9,825,000 225,000 Money Store, Inc....................... 5,765,625 ----------- 26,965,625 FOODS - 1.06% 650,000 *Petsmart Inc........................... 7,962,500 ----------- FUNERAL SERVICES - 2.00% 425,000 Service Corp. International............ 14,981,250 ----------- GOVERNMENT SPONSORED - 2.93% 400,000 Federal Home Loan Mortgage Corp........ $13,200,000 200,000 Federal National Mortgage Association........................... 8,725,000 ----------- 21,925,000 ----------- HEALTHCARE - 6.97% 330,000 *Apria Healthcare Group, Inc............ 5,940,000 225,000 Cardinal Health, Inc................... 13,106,250 90,000 *PacifiCare Health System, Inc. Class B............................... 7,132,500 168,900 *Patterson Dental Co.................... 5,827,050 190,000 *Phycor, Inc............................ 5,438,750 415,000 *Quorum Health Group Inc................ 14,680,625 ----------- 52,125,175 ----------- HOSPITAL MANAGEMENT - 4.67% 250,000 Columbia/HCA Healthcare Corp........... 9,156,250 350,000 *Vencor, Inc............................ 14,262,500 325,000 *Vivra, Inc............................. 11,496,875 ----------- 34,915,625 ----------- HUMAN RESOURCES - 4.64% 550,000 Accustaff, Inc......................... 13,200,000 350,000 *COREStaff, Inc......................... 8,312,500 282,800 *Employee Solutions, Inc................ 1,502,375 300,000 Interim Services Inc................... 11,700,000 ----------- 34,714,875 ----------- INFORMATION PROCESSING - 6.59% 300,000 *BISYS Group, Inc....................... 11,437,500 485,000 First Data Corp........................ 19,400,000 225,000 Paychex, Inc........................... 8,268,750 240,000 *SunGard Data Systems, Inc.............. 10,200,000 ----------- 49,306,250 ----------- INSURANCE - LIFE - 0.05% 13,600 *UICI................................... 365,500 ----------- INSURANCE- MISCELLANEOUS - 6.18% 250,000 Ace Limited............................ 16,000,000 90,000 MGIC Investment Corp................... 8,010,000 130,000 PMI Group Inc.......................... 7,133,750 190,000 UNUM Corp.............................. 15,033,750 ----------- 46,177,500 ----------- LEISURE TIME - 0.93% 200,000 *Sabre Group Holdings, Inc.............. $ 5,575,000 59,000 *Vail Resorts Inc....................... 1,408,625 ----------- 6,983,625 ----------- LODGING - 4.83% 335,000 *Extended Stay America, Inc............. 4,648,125 275,000 *HFS, Inc............................... 14,815,625 725,000 La Quinta Inns, Inc.................... 16,675,000 ----------- 36,138,750 ----------- MERCHANDISE - SPECIALTY - 11.77% 250,000 Circuit City Stores, Inc............... 9,875,000 300,000 *Cole National Corp. Class A............ 11,362,500 744,600 *Corporate Express, Inc................. 10,238,250 370,000 *CostCo Companies, Inc.................. 12,487,500 650,000 *General Nutrition Cos., Inc............ 15,112,500 125,000 Home Depot, Inc........................ 7,875,000 475,000 Ikon Office Solutions Inc.............. 13,775,000 135,000 Kohl's Corp............................ 7,273,125 ----------- 87,998,875 ----------- MERCHANDISING - MASS - 2.50% 811,600 *CUC International Inc.................. 18,666,800 ----------- MISCELLANEOUS - 0.21% 44,800 *Sylvan Learning Systems, Inc........... 1,607,200 ----------- OIL - SERVICE - PRODUCTS - 1.53% 110,000 *BJ Services Co......................... 6,077,500 45,000 Schlumberger Ltd....................... 5,360,625 ----------- 11,438,125 ----------- OIL - SERVICES - 3.96% 175,000 Camco International, Inc............... 8,968,750 200,000 *Smith International, Inc............... 10,475,000 150,000 *Western Atlas Inc...................... 10,181,250 ----------- 29,625,000 ----------- POLLUTION CONTROL - 2.65% 370,000 *Republic Industries, Inc............... 8,903,125 300,000 *USA Waste Services, Inc................ 10,875,000 ----------- 19,778,125 -----------
144 =============================================================================== May 31, 1997 GROWTH FUND - STATEMENT OF NET ASSETS CONTINUED 43 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - ----------------------------------------------------------------------------- PUBLISHING - NEWS - 0.69% 120,000 Tribune Co............................. $ 5,190,000 ------------- RESTAURANTS - 2.81% 425,000 *Boston Chicken, Inc.................... 7,650,000 125,000 *Lone Star Steakhouse & Saloon.......... 2,875,000 450,000 *Outback Steakhouse Inc................. 10,462,500 ------------- 20,987,500 ------------- SECURITIES RELATED - 2.86% 330,000 Franklin Resources, Inc................ 21,367,500 ------------- TELECOMMUNICATIONS - 1.58% 425,000 *Airtouch Communications, Inc........... 11,846,875 ------------- TOTAL COMMON STOCKS (Cost $538,978,043).................... 653,188,088 ------------- PAR VALUE - - ------------ CORPORATE SHORT TERM COMMERCIAL PAPER - 11.69% CONSUMER FINANCE - 3.72% Sears Roebuck Acceptance Corp: $10,000,000 5.55% due 06/09/97 ................... 9,987,660 9,000,000 5.53% due 06/03/97.................... 8,997,231 8,903,000 5.53% due 06/05/97.................... 8,897,525 ------------- 27,882,416 ------------- FINANCE COMPANIES - 5.57% 9,814,000 Ford Motor Credit Co., 5.52 % due 06/10/97................... 9,800,450 15,972,000 General Electric Capital Services Inc., 5.50 % due 06/02/97................... 15,969,555 General Motors Acceptance Corp: 7,891,000 5.53% due 06/06/97.................... 7,884,935 7,979,000 5.48% due 06/04/97.................... 7,975,351 ------------- 41,630,291 ------------- SECURITIES RELATED - 2.40% 17,941,000 Merrill Lynch & Co. Inc., 5.62% due 06/11/97.................... 17,912,982 ------------- TOTAL CORPORATE SHORT TERM COMMERCIAL PAPER (Cost $ 87,425,689).................... $ 87,425,689 ------------- TOTAL INVESTMENTS (Cost $626,403,732) - 99.06%........... 740,613,777 Other assets less liabilities, net - 0.94%........................... 7,040,236 ------------- NET ASSETS (equivalent to $17.62 per share on 42,421,874 shares outstanding) - 100%................... $747,654,013 ============= *Non-income producing NET ASSETS REPRESENTED BY: Capital stock, $.01 par value per share, 1,000,000,000 shares authorized, 42,421,874 shares outstanding.................... $ 424,219 Additional paid in capital......................... 618,177,079 Undistributed net realized gain on securities 14,539,455 Undistributed net investment income................ 303,215 Unrealized appreciation of securities.............. 114,210,045 ------------- NET ASSETS APPLICABLE TO SHARES OUTSTANDING...................................... $747,654,013 =============
SEE NOTES TO FINANCIAL STATEMENTS. 145 =============================================================================== 44 GROWTH FUND - FINANCIAL STATEMENTS =============================================================================== STATEMENT OF OPERATIONS For the fiscal year ended May 31, 1997
INVESTMENT INCOME: Dividends ............................................................ $ 2,226,275 Interest ............................................................. 3,365,118 ----------- Total investment income ............................................ 5,591,393 ----------- EXPENSES: Advisory fees ........................................................ 4,704,380 Custodian and accounting services .................................... 182,315 Reports to shareholders .............................................. 85,619 Audit fees and tax services .......................................... 26,695 Directors' fees and expenses ......................................... 13,226 Miscellaneous ........................................................ 26,765 ----------- Total expenses ..................................................... 5,039,000 ----------- NET INVESTMENT INCOME ................................................ 552,393 ----------- REALIZED AND UNREALIZED GAINON SECURITIES: Net realized gain on securities ...................................... 16,994,556 Net unrealized appreciation of securities during the year ............ 39,599,901 ----------- Net realized and unrealized gain on securities during the year ..... 56,594,457 ----------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ..................... $57,146,850 ===========
STATEMENT OF CHANGES IN NET ASSETS For the fiscal year ended May 31:
1997 1996 -------------- -------------- OPERATIONS: Net investment income ................................................ $ 552,393 $ 2,125,410 Net realized gain on securities ...................................... 16,994,556 12,920,523 Net unrealized appreciation of securities during the year ............ 39,599,901 65,916,187 -------------- -------------- Increase in net assets resulting from operations ................... 57,146,850 80,962,120 -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ................................................ (503,196) (1,871,667) Net realized gain on securities ...................................... (11,891,551) (3,757,835) -------------- -------------- Decrease in net assets resulting from distributions to shareholders ................................................... (12,394,747) (5,629,502) -------------- -------------- CAPITAL STOCK TRANSACTIONS: Proceeds from capital stock sold ..................................... 268,628,198 258,993,562 Proceeds from capital stock issued for distributions reinvested ...... 12,394,747 5,629,502 -------------- -------------- 281,022,945 264,623,064 Cost of capital stock repurchased .................................... (3,908,102) (14,782,740) -------------- -------------- Increase in net assets resulting from capital stock transactions ... 277,114,843 249,840,324 -------------- -------------- TOTAL INCREASE IN NET ASSETS ......................................... 321,866,946 325,172,942 NET ASSETS: Beginning of year .................................................... 425,787,067 100,614,125 -------------- -------------- End of year (including undistributed net investment income of $303,215 and $254,018) .......................................... $ 747,654,013 $ 425,787,067 ============== ============== CHANGE IN SHARES OUTSTANDING: Shares of capital stock sold ......................................... 16,096,764 17,658,112 Shares issued for distributions reinvested ........................... 733,851 382,244 Shares of capital stock repurchased .................................. (234,388) (1,014,547) -------------- -------------- Increase in shares outstanding ..................................... 16,596,227 17,025,809 Shares outstanding: Beginning of year .................................................. 25,825,647 8,799,838 -------------- -------------- End of year ........................................................ 42,421,874 25,825,647 ============== ==============
SEE NOTES TO FINANCIAL STATEMENTS. 146 =============================================================================== May 31, 1997 GROWTH & INCOME FUND - STATEMENT OF NET ASSETS 45 ===============================================================================
NUMBER MARKET OF SHARES VALUE -------------------------------------------------------------------- COMMON STOCKS - 90.54% ADVERTISING - 1.05% 38,000 Omnicom Group, Inc. .................... $ 2,204,000 ----------- AEROSPACE/DEFENSE - 3.29% 9,000 Logicon, Inc. .......................... 452,250 50,200 McDonnell Douglas Corp. ................ 3,231,625 40,000 United Technologies Corp. .............. 3,215,000 ----------- 6,898,875 ----------- APPAREL & PRODUCTS - 0.75% 45,000* Fruit of the Loom, Inc. Class A ........ 1,569,375 ----------- AUTO - ORIGINAL EQUIPMENT - 0.97% 42,000 Danaher Corp. .......................... 2,037,000 ----------- BANKS - NEW YORK CITY - 1.26 % 23,000 CitiCorp ............................... 2,630,625 ----------- BANKS - OTHER - 2.93% 30,000 BankAmerica Corp. ...................... 3,506,250 30,000 Mellon Bank Corp. ...................... 2,625,000 ----------- 6,131,250 ----------- BANKS - REGIONAL - 2.21% 45,000 Norwest Corp. .......................... 2,407,500 54,000 Star Banc Corp. ........................ 2,227,500 ----------- 4,635,000 ----------- BEVERAGE - SOFT DRINKS - 1.79% 55,000 Coca-Cola Co. .......................... 3,753,750 ----------- CHEMICAL - MAJOR - 0.90% 17,000 E.I. du Pont de Nemours and Co. ........ 1,850,875 600 Hercules, Inc. ......................... 28,125 ----------- 1,879,000 ----------- CHEMICAL - MISCELLANEOUS - 1.21% 48,000 Pra air, Inc. .......................... 2,526,000 ----------- CONTAINERS - PAPER - 0.35% 16,000* Sealed Air Corp. ....................... 734,000 ----------- DRUGS - 2.57% 50,000* Dura Pharmaceuticals, Inc. ............. $1,987,500 33,000 Pfizer, Inc. ........................... 3,394,875 ----------- 5,382,375 ----------- ELECTRONIC INSTRUMENTS - 1.30% 50,000* Dynatech Corp. ......................... 1,875,000 27,000 Symbol Technologies, Inc. .............. 847,125 ----------- 2,722,125 ----------- FINANCE COMPANIES - 1.74% 15,000 Green Tree Financial Corp. ............. 525,000 7,000 Household International, Inc. .......... 687,750 21,000 Money Store, Inc. ...................... 538,125 40,000 SunAmerica, Inc. ....................... 1,890,000 ----------- 3,640,875 ----------- FOODS - 2.57% 56,000 Campbell Soup Co. ...................... 2,576,000 50,000 Hershey Foods Corp. .................... 2,806,250 ----------- 5,382,250 ----------- FOOTWEAR - 0.54% 20,000 NIKE, Inc. Class B ..................... 1,140,000 ----------- GOVERNMENT SPONSORED - 0.87% 15,000 Student Loan Marketing Association ............................ 1,824,375 ----------- HEALTHCARE - 3.55% 45,000 Cardinal Health, Inc. .................. 2,621,250 141,480* HealthSouth Corp. ...................... 3,236,355 55,000 Omnicare, Inc. ......................... 1,574,375 ----------- ...................................... 7,431,980 ----------- HOSPITAL SUPPLIES - 2.81% 43,200 Becton, Dickinson and Co. .............. 2,127,600 50,000 Johnson & Johnson ...................... 2,993,750 23,000 United States Surgical Corp. ........... 776,250 ----------- 5,897,600 ----------- HOUSEHOLD PRODUCTS - 1.32% 20,000 Procter & Gamble Co. ................... 2,757,500 ----------- INFORMATION PROCESSING - 9.15% 55,000* Adaptec, Inc............................ $ 2,021,250 50,000* Ascend Communications Inc. ............. 2,787,500 70,000* BMC Software, Inc. ..................... 3,788,750 35,000* Cisco Systems, Inc. .................... 2,371,250 50,000 Computer Associates International, Inc. .................... 2,737,500 35,000* Gateway 2000, Inc. ..................... 2,323,125 5,000 Microsoft Corp. (Preferred) ............ 430,625 60,000 Reynolds and Reynolds Co. .............. Class A ................................ 1,402,500 14,183* Storage Technology Corp. ............... 577,957 15,000* 3Com Corp. ............................. 727,500 ---------- $19,167,957 ----------- INSURANCE - CASUALTY - 1.70% ........... 65,000 Frontier Insurance Group, Inc. ......... 3,566,875 ----------- INSURANCE - LIFE - 2.10% ............... 110,000 Conseco Inc. ........................... 4,400,000 ----------- INSURANCE - MULTILINE - 4.25% .......... 50,000 Allstate Corp. ......................... 3,681,250 4,000* CNA Financial Corp. .................... 409,500 35,000 Reliastar Financial Corp. .............. 2,244,375 46,666 Travelers Group, Inc. .................. 2,560,795 ----------- 8,895,920 ----------- LODGING - 0.49% ........................ 19,000* HFS, Inc. .............................. 1,023,625 ----------- MACHINERY - INDUSTRIAL/ ................ SPECIALTY - 1.78% ...................... 36,000 Illinois Tool Works Inc. ............... 1,786,500 30,000* SCI Systems, Inc. ...................... 1,950,000 ----------- 3,736,500 ----------- MERCHANDISE - SPECIALTY - 3.68% ........ 44,250* Consolidated Stores Corp. .............. 1,692,563 70,000 Dollar General Corp. ................... 2,353,750 75,375* Staples, Inc. .......................... 1,658,250 42,000 TJX Companies, Inc. .................... 2,016,000 ----------- 7,720,563 -----------
147 =============================================================================== 46 GROWTH & INCOME FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - -------------------------------------------------------- MERCHANDISING - FOOD - 1.68% 32,000 *Kroger Co. .................... $ 820,000 60,000 *Safeway, Inc. ................. 2,700,000 ------------ 3,520,000 ------------ METALS - MISCELLANEOUS - 1.37% 45,900 Precision Castparts Corp. ..... 2,868,750 ------------ NATURAL GAS - DIVERSIFIED - 0.89% 40,000 PanEnergy Corp. ............... 1,870,000 ------------ OIL - INTEGRATED DOMESTIC - 2.44% 40,000 Occidental Petroleum Corp. .... 930,000 45,000 *Oryx Energy Co. ............... 1,040,625 25,000 Phillips Petroleum Co. ........ 1,062,500 70,000 USX-Marathon Group ............ 2,082,500 ------------ 5,115,625 ------------ OIL - INTEGRATED INTERNATIONAL - 1.04% 15,090 British Petroleum Co. plc - ADR .................... 2,186,164 ------------ OIL - SERVICE - PRODUCTS - 1.05% 40,000 *BJ Services Co. ............... 2,210,000 ------------ OIL - SERVICES - 6.93% 60,000 Baker Hughes Inc. ............. 2,250,000 45,000 *ENSCO International, Inc. ..... 2,244,375 80,000 *Rowan Companies, Inc. ......... 1,850,000 50,000 *Smith International, Inc. ..... 2,618,750 50,000 Tidewater, Inc. ............... 2,106,250 50,000 Transocean Offshore, Inc. ..... 3,450,000 ------------ 14,519,375 ------------ OIL/GAS PRODUCERS - 4.42% 45,000 *Falcon Drilling Co., Inc. ..... 2,064,375 48,000 Helmerich & Payne, Inc. ....... 2,694,000 65,000 Louisiana Land & Exploration Co. .............. 3,347,500 27,285 Noble Affiliates, Inc. ........ 1,149,381 ------------ 9,255,256 ------------ PAPER/FOREST PRODUCTS - 0.72% 40,000 Avery Dennison Corp. .......... 1,505,000 ------------ POLLUTION CONTROL - 0.46% 25,000 *United Waste Systems, Inc. .... 959,375 ------------ SEMICONDUCTORS - 2.09% 35,000 *Applied Materials, Inc. ....... $ 2,283,750 50,000 *LSI Logic Corp. ............... 2,087,500 ------------ 4,371,250 ------------ TELECOMMUNICATIONS - 4.73% 40,000 *ADC Communications, Inc. ...... 1,370,000 47,850 *Andrew Corp. .................. 1,303,913 125,000 *Pairgain Technologies Inc. .... 2,609,375 48,000 *Tellabs, Inc. ................. 2,412,000 75,000 *WorldCom, Inc. ................ 2,221,875 ------------ 9,917,163 ------------ TOBACCO - 1.89% 90,000 Philip Morris Cos Inc. ........ 3,960,000 ------------ UTILITIES - COMMUNICATION - 0.73% 25,000 Cincinnati Bell, Inc. ......... 1,537,500 ------------ UTILITIES - ELECTRIC - 1.71% 50,000 *AES Corp. ..................... 3,587,500 ------------ UTILITIES - GAS, PIPELINE - 1.26% 60,000 Williams Companies, Inc. ...... 2,647,500 ------------ TOTAL COMMON STOCKS (Cost $144,555,813) ........... 189,719,853 ------------ PAR VALUE - - ----------- CONVERTIBLE BONDS - 6.58% AEROSPACE/DEFENSE - 0.39% $ 500,000 Rohr, Inc., 7.75% due 05/15/04 ........... 825,000 ------------ AIRLINES - 0.30% 500,000 Alaska Air Group, Inc., 6.50% due 06/15/05 ........... 622,500 ------------ DRUGS - 0.77% 500,000 ALZA Corp., 5.00% due 05/01/06 ........... 500,000 1,000,000 ICN Pharmaceuticals, Inc., 8.50% due 11/15/99 ........... 1,105,000 ------------ 1,605,000 ------------ ELECTRONIC INSTRUMENTS - 0.12% $ 300,000 C-Cube Microsystems, Inc., 5.88% due 11/01/05 ........... $ 280,500 ------------ HEALTHCARE - 0.47% 1,000,000 Phycor, Inc., 4.50% due 02/15/03 ........... 985,000 ------------ INFORMATION PROCESSING - 1.68% 500,000 Adaptec, Inc., 4.75% due 02/01/04 .......... 498,750 Data General Corp: 1,000,000 7.75% due 06/01/01 ........... 1,150,000 300,000 6.00% due 05/15/04 ........... 322,500 1,500,000 National Data Corp., 5.00% due 11/01/03 ........... 1,545,000 ------------ 3,516,250 ------------ INSURANCE - LIFE - 0.58% 1,000,000 Equitable Cos., Inc. 6.13% due 12/15/24 ........... 1,207,500 ------------ LODGING - 0.52% 500,000 HFS, Inc., 4.75% due 03/01/03 ........... 552,500 500,000 Hilton Hotels Corp., 5.00% due 05/15/06 ........... 542,500 ------------ 1,095,000 ------------ MACHINERY - INDUSTRIAL/ SPECIALTY - 0.34% 500,000 SCI Systems, Inc., 5.00% due 05/01/06 ........... 708,750 ------------ MERCHANDISE - SPECIALTY - 0.26% 500,000 Home Depot, Inc., 3.25% due 10/01/01 ........... 535,000 ------------ OIL - INTEGRATED DOMESTIC - 0.59% 1,000,000 Pennzoil Co., 4.75% due 10/01/03 ........... 1,232,500 ------------ OIL - SERVICES - 0.30% 500,000 Nabors Industries, Inc., 5.00% due 05/15/06 ........... 635,000 ------------
148 =============================================================================== May 31, 1997 GROWTH & INCOME FUND - STATEMENT OF NET ASSETS CONTINUED 47 ===============================================================================
PAR MARKET VALUE VALUE - - -------------------------------------------------------- OIL/GAS PRODUCERS - 0.26% $ 500,000 Diamond Offshore Drilling, Inc., 3.75% due 02/15/07 ........... $ 548,750 ------------ TOTAL CONVERTIBLE BONDS (Cost $13,515,369) ............ 13,796,750 ------------ CORPORATE SHORT TERM COMMERCIAL PAPER - 2.92% CONSUMER FINANCE - 1.61% 3,371,000 Beneficial Corp., 5.48% due 06/02/97 ........... 3,370,486 ------------ FINANCE COMPANIES - 1.31% 2,746,000 Ford Motor Credit Co., 5.60% due 06/03/97 ........... 2,745,146 ------------ TOTAL CORPORATE SHORT TERM COMMERCIAL PAPER (Cost $6,115,632) ............. 6,115,632 ------------ TOTAL INVESTMENTS (Cost $164,186,814) - 100.04% . 209,632,235 Other assets less liabilities, net - (0.04%) ................ (87,111) ------------ NET ASSETS (equivalent to $16.87 per share on 12,422,162 shares outstanding) - 100% .......... $209,545,124 ============ *Non-income producing NET ASSETS REPRESENTED BY: Capital stock, $.01 par value per share, 1,000,000,000 shares authorized, 12,422,162 shares outstanding ........... $ 124,222 Additional paid in capital ............... 161,101,892 Accumulated net realized gain on securities ........................... 2,712,317 Undistributed net investment income ...... 161,272 Unrealized appreciation of securities .... 45,445,421 ------------ NET ASSETS APPLICABLE TO SHARES OUTSTANDING ............................. $209,545,124 ============
SEE NOTES TO FINANCIAL STATEMENTS. 149 ================================================================================ 48 GROWTH & INCOME FUND - FINANCIAL STATEMENTS ================================================================================ STATEMENT OF OPERATIONS For the fiscal year ended May 31, 1997 INVESTMENT INCOME: Dividends ....................................................... $ 1,272,521 Interest ........................................................ 1,167,033 ----------- Total investment income ....................................... 2,439,554 ----------- EXPENSES: Advisory fees ................................................... 1,211,524 Custodian and accounting fees ................................... 51,399 Reports to shareholders ......................................... 23,351 Audit fees and tax services ..................................... 7,005 Directors' fees and expenses .................................... 3,616 Miscellaneous ................................................... 8,014 ----------- Total expenses ................................................ 1,304,909 ----------- NET INVESTMENT INCOME ........................................... 1,134,645 ----------- REALIZED AND UNREALIZED GAIN ON SECURITIES: Net realized gain on securities ................................. 2,722,032 Net unrealized appreciation on securities during the year ....... 24,022,009 ----------- Net realized and unrealized gain on securities during the year.................................................... 26,744,041 ----------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................ $27,878,686 ===========
STATEMENT OF CHANGES IN NET ASSETS For the fiscal year ended May 31:
1997 1996 ------------- ------------- OPERATIONS: Net investment income ............................................... $ 1,134,645 $ 475,333 Net realized gain on securities ..................................... 2,722,032 4,151,221 Net unrealized appreciation of securities during the year ........... 24,022,009 17,414,828 ------------- ------------- Increase in net assets resulting from operations .................. 27,878,686 22,041,382 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ............................................... (1,058,649) (392,678) Net realized gain on securities ..................................... (3,131,642) (556,363) ------------- ------------- Decrease in net assets resulting from distributions to shareholders .................................................. (4,190,291) (949,041) ------------- ------------- CAPITAL STOCK TRANSACTIONS: Proceeds from capital stock sold .................................... 70,892,821 62,680,575 Proceeds from capital stock issued for distributions reinvested ..... 4,190,291 949,041 ------------- ------------- 75,083,112 63,629,616 Cost of capital stock repurchased ................................... (2,772,662) (14,042,186) ------------- ------------- Increase in net assets resulting from capital stock transactions .. 72,310,450 49,587,430 ------------- ------------- TOTAL INCREASE IN NET ASSETS ........................................ 95,998,845 70,679,771 NET ASSETS: Beginning of year ................................................... 113,546,279 42,866,508 ------------- ------------- End of year (including undistributed net investment income of $161,272 and $85,276) .......................................... $ 209,545,124 $ 113,546,279 ============= ============= CHANGE IN SHARES OUTSTANDING: Shares of capital stock sold ........................................ 4,647,143 4,772,881 Shares issued for distributions reinvested .......................... 268,315 73,503 Shares of capital stock repurchased ................................. (177,920) (1,028,347) ------------- ------------- Increase in shares outstanding .................................... 4,737,538 3,818,037 Shares outstanding: Beginning of year ................................................. 7,684,624 3,866,587 ------------- ------------- End of year ....................................................... 12,422,162 7,684,624 ============= =============
SEE NOTES TO FINANCIAL STATEMENTS. 150 =============================================================================== May 31, 1997 SCIENCE & TECHNOLOGY FUND - STATEMENT OF NET ASSETS 49 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- COMMON STOCKS - 82.74% AEROSPACE/DEFENSE - 0.94% 200,000 OEA, Inc.......................$ 7,550,000 ------------ ELECTRICAL EQUIPMENT - 1.37% 500,000 *Anixter International, Inc..... 8,500,000 152,000 *FORE Systems, Inc.............. 2,517,497 ------------ 11,017,497 ------------ ELECTRONIC INSTRUMENTS - 0.90% 200,000 *LAM Research Corp.............. 7,275,000 ------------ HOSPITAL SUPPLIES - 3.54% 250,000 *Boston Scientific Corp......... 13,343,750 450,000 United States Surgical Corp.... 15,187,500 ------------ 28,531,250 ------------ INFORMATION PROCESSING - BUSINESS SOFTWARE - 16.85% 750,000 *BMC Software, Inc.............. 40,593,750 100,000 *Citrix Systems, Inc............ 3,762,500 58,500 *Clarify, Inc................... 709,313 400,000 *Medic Computer Systems, Inc.... 6,925,000 125,000 *Microsoft Corp................. 15,500,000 700,000 *Oracle Corp.................... 32,637,500 800,000 *PLATINUM technology, inc....... 11,600,000 300,000 *Premenos Technology Corp....... 2,025,000 500,000 *Synopsys Inc................... 18,687,500 65,000 *Veritas Software Corp.......... 3,233,750 ------------ 135,674,313 ------------ INFORMATION PROCESSING - COMPUTER HARDWARE SYSTEMS - 3.99% 300,000 *Adaptec, Inc................... 11,025,000 80,000 *Dell Computer Corp............. 9,000,000 340,000 *Microchip Technology, Inc...... 12,070,000 ------------ 32,095,000 ------------ INFORMATION PROCESSING - COMPUTER SERVICES - 20.67% 440,000 *America Online, Inc............ 24,310,000 250,000 *Checkfree Corp................. 4,375,000 225,000 *Cognos Inc..................... 7,031,250 200,000 Electronic Data Systems Corp... 7,475,000 INFORMATION PROCESSING - COMPUTER SERVICES - Continued 800,000 First Data Corp................$ 32,000,000 550,000 *Gartner Group, Inc............. 16,018,750 300,000 National Data Corp............. 13,162,500 350,000 *Parametric Technology Corp..... 15,706,250 6,800 *Rationale Software Corp........ 128,350 250,000 *Security Dynamics Technology... 9,218,750 500,000 *Sterling Commerce Inc.......... 16,625,000 300,000 *SunGard Data Systems, Inc...... 12,750,000 285,000 *Vantive Corp................... 7,659,375 ------------ 166,460,225 ------------ INFORMATION PROCESSING - CONSUMER SOFTWARE - 0.99% 72,200 *CBT Group PLC.................. 3,934,900 250,000 *Pure Atria Corp................ 4,000,000 ------------ 7,934,900 ------------ INFORMATION PROCESSING - NETWORKING - 8.96% 125,000 *Ascend Communications Inc...... 6,968,750 250,000 *Cascade Communications Corp.... 9,562,500 250,000 *Cisco Systems, Inc............. 16,937,500 350,000 *Network Gen Corp............... 6,431,250 90,000 *Remedy Corp.................... 3,633,750 300,000 *Sync Research, Inc............. 1,256,250 325,000 *U.S. Robotics Corp............. 27,300,000 ------------ 72,090,000 ------------ MACHINERY - INDUSTRIAL/ SPECIALTY - 0.52% 80,000 *ASM Lithography Holding NV..... 4,180,000 ------------ MERCHANDISING - MASS - 2.43% 850,000 *CUC International Inc.......... 19,550,000 ------------ SEMICONDUCTORS - 15.59% 300,000 *Altera Corp.................... 15,900,000 1,000,000 *Analog Devices, Inc............ 26,750,000 60,000 *Applied Materials, Inc......... 3,915,000 55,000 Intel Corp..................... 8,332,500 75,000 *KLA-Tencor Corp................ 3,567,187 275,000 Linear Technology Corp......... 13,784,375 SEMICONDUCTORS - Continued 400,000 *Maxim Integrated Products......$ 21,500,000 60,000 *Novellus Systems, Inc.......... 4,912,500 500,000 *Xilinx, Inc.................... 26,812,500 ------------ 125,474,062 ------------ TELECOMMUNICATIONS - 5.99% 450,000 *ADC Communications, Inc........ 15,412,500 600,000 *Airtouch Communications, Inc... 16,725,000 250,000 *Omnipoint Corp................. 3,437,500 22,782 Panamsat....................... 652,135 160,700 Vodafone Group plc - ADR....... 7,171,237 162,700 *WorldCom, Inc.................. 4,819,987 ------------ 48,218,359 ------------ TOTAL COMMON STOCKS (Cost $538,754,380)............ 666,050,606 ------------
PAR VALUE - - ----------- CORPORATE SHORT TERM COMMERCIAL PAPER - 15.04% CONSUMER FINANCE - 11.76% 8,662,000 Ford Motor Credit Co., 5.52% due 06/12/97 ........... 8,647,383 General Electric Capital Corp: 15,973,000 5.50% due 06/06/97 ........... 15,960,779 15,391,000 5.47% due 06/09/97 ........... 15,372,265 General Motors Acceptance Corp: 5,186,000 5.62% due 06/11/97............ 5,177,901 17,462,000 5.53% due 06/10/97............ 17,437,839 9,772,000 Pactel Capital Resources., 5.52% due 06/11/97............ 9,757,007 Sears Roebuck Acceptance Corp: 7,279,000 5.63% due 06/04/97 .......... 7,276,763 15,000,000 5.57% due 06/02/97 .......... 14,996,489 ---------- 94,626,426 ---------- SECURITIES RELATED - 3.28% Merrill Lynch & Co: 10,000,000 5.62% due 06/03/97............ 9,996,872 16,482,000 5.52% due 06/05/97............ 16,471,873 ---------- 26,468,745 ----------
151 ================================================================================ 50 SCIENCE & TECHNOLOGY FUND - STATEMENT OF NET ASSETS CONTINUED May 31,1997 ================================================================================
MARKET VALUE - - -------------------------------------------------------- TOTAL SHORT TERM COMMERCIAL PAPER (Cost $121,095,171)............$121,095,171 ------------ TOTAL INVESTMENTS (Cost $659,849,551) - 97.78%... 787,145,777 Other assets and liabilities, net - 2.22%................... 17,836,170 ------------ NET ASSETS (equivalent to $19.88 per share on 40,484,129 shares outstanding) - 100%...........$804,981,947 ============ *Non-income producing NET ASSETS REPRESENTED BY: Capital stock, $.01 par value per share, 1,000,000,000 shares authorized, 40,484,129 shares outstanding........... $ 404,841 Additional paid in capital................ 691,474,318 Accumulated net realized loss on securities.............................. (12,258,083) Accumulated net investment loss........... (1,935,355) Unrealized appreciation of securities..... 127,296,226 ------------ NET ASSETS APPLICABLE TO SHARES OUTSTANDING............................. $804,981,947 ============
SEE NOTES TO FINANCIAL STATEMENTS. 152 =============================================================================== SCIENCE & TECHNOLOGY FUND - FINANCIAL STATEMENTS 51 =============================================================================== STATEMENT OF OPERATIONS For the fiscal year ended May 31, 1997 INVESTMENT INCOME: Dividends ...................................................... $ 764,508 Interest ....................................................... 3,692,989 ------------ Total investment income ...................................... 4,457,497 ------------ EXPENSES: Advisory fees .................................................. 5,973,280 Custodian and accounting services .............................. 212,011 Reports to shareholders ........................................ 97,009 Audit fees and tax services .................................... 28,366 Directors' fees and expenses ................................... 15,717 Miscellaneous .................................................. 50,905 ------------ Total expenses ............................................... 6,377,288 ------------ NET INVESTMENT LOSS ............................................ (1,919,791) ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) on: Investments ...................................... $(8,891,536) Foreign currency transactions .................... 1,633 ----------- (8,889,903) Net unrealized appreciation of securities during the year ...... 33,692,829 ------------ Net realized and unrealized gain on securities during the year ....................................................... 24,802,926 ------------ INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............... $ 22,883,135 ============
STATEMENT OF CHANGES IN NET ASSETS For the fiscal year ended May 31:
1997 1996 --------------------------- OPERATIONS: Net investment loss.................................... $ (1,919,791) $ (250,091) Net realized gain (loss) on securities................. (8,889,903) 59,379,986 Net unrealized appreciation of securities during the year ................................... 33,692,829 79,262,122 ------------ ------------ Increase in net assets resulting from operations..... 22,883,135 138,392,017 ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income.................................. - (30,219) Net realized gain on securities........................ (32,117,202) (39,016,725) ------------ ------------ Decrease in net assets resulting from distributions to shareholders..................................... (32,117,202) (39,046,944) ------------ ------------ CAPITAL STOCK TRANSACTIONS: Proceeds from capital stock sold....................... 286,682,331 310,357,765 Proceeds from capital stock issued for distributions reinvested............................. 32,117,202 39,046,944 ------------ ------------ 318,799,533 349,404,709 Cost of capital stock repurchased...................... (71,770,130) (48,246,211) ------------ ------------ Increase in net assets resulting from capital stock transactions......................... 247,029,403 301,158,498 ------------ ------------ TOTAL INCREASE IN NET ASSETS........................... 237,795,336 400,503,571 NET ASSETS: Beginning of year...................................... 567,186,611 166,683,040 ------------ ------------ End of year (including undistributed net investment income of ($1,935,355) and $0) ........... $804,981,947 $567,186,611 ============ ============ CHANGE IN SHARES OUTSTANDING: Shares of capital stock sold........................... 14,868,580 16,506,873 Shares issued for distributions reinvested............. 1,636,128 2,210,100 Shares of capital stock repurchased ................... (3,716,452) (2,571,296) ------------ ------------ Increase in shares outstanding....................... 12,788,256 16,145,677 Shares outstanding: Beginning of year.................................... 27,695,873 11,550,196 ------------ ------------ End of year.......................................... 40,484,129 27,695,873 ============ ============
SEE NOTES TO FINANCIAL STATEMENTS. 153 =============================================================================== 52 SOCIAL AWARENESS FUND - STATEMENT OF NET ASSETS May 31, 1997 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - -------------------------------------------------------- COMMON STOCKS - 95.43% ADVERTISING - 0.16% 4,060 Interpublic Group Cos., Inc.... $ 243,093 ---------- AIRLINES - 0.35% 3,193 *AMR Corp....................... 317,304 2,482 Delta Air Lines, Inc........... 232,687 ---------- 549,991 ---------- APPLIANCES/FURNISHINGS - 0.18% 5,674 Whirlpool Corp................. 282,991 ---------- AUTO - CARS - 1.01% 49,511 Chrysler Corp.................. 1,571,974 ---------- AUTO - REPLACEMENT PARTS - 0.86% 1,722 Echlin Inc..................... 57,472 10,961 Genuine Parts Co............... 367,194 15,555 Goodyear Tire & Rubber Co...... 909,967 ---------- 1,334,633 ---------- BANKS - NEW YORK CITY - 3.08% 7,006 Bank of New York Co., Inc...... 298,631 17,975 Chase Manhattan Corp........... 1,698,637 15,421 CitiCorp....................... 1,763,777 9,692 J. P. Morgan & Co. Inc......... 1,041,890 ---------- 4,802,935 ---------- BANKS - OTHER - 2.96% 9,850 BankAmerica Corp............... 1,151,219 1,062 BankBoston Corp................ 77,526 9,889 First Chicago Corp............. 585,923 11,193 First Union Corp............... 961,199 8,329 *Fleet Financial Group, Inc..... 509,110 272 Mellon Bank Corp............... 23,800 4,279 National City Corp............. 220,369 480 US Bancorp..................... 29,460 3,920 Wells Fargo & Co............... 1,032,920 ---------- 4,591,526 ---------- BANKS - REGIONAL - 2.68% 15,677 BANC ONE CORP.................. 678,030 3,358 Barnett Banks, Inc............. 176,715 5,846 CoreStates Financial Corp...... 309,107 318 Fifth Third Bancorp............ 24,566 253 First Bank System, Inc......... 20,746 BANKS - REGIONAL - Continued 6,971 KeyCorp........................ $ 379,047 25,343 NationsBank Corp............... 1,492,069 9,556 Norwest Corp................... 511,246 12,069 PNC Bank Corp.................. 505,389 1,125 Wachovia Corp.................. 68,484 ---------- 4,165,399 ---------- BEVERAGE - BREWERS/ DISTRIBUTORS - 0.88% 15,965 Anheuser-Busch Companies, Inc.. 684,499 16,991 Seagram Co. Ltd................ 683,887 ---------- 1,368,386 ---------- BEVERAGE - SOFT DRINKS - 4.14% 67,784 Coca-Cola Co................... 4,626,257 49,374 PepsiCo, Inc................... 1,814,495 ---------- 6,440,752 ---------- BROADCASTING - 1.13% 4,201 Comcast Corp. Class A Special.. 72,992 9,756 *Tele-Communications, Inc. Class A...................... 147,560 26,046 U S West Communications Group.. 953,935 9,997 *U S West Media Group........... 198,690 13,131 *Viacom, Inc. Class B........... 389,827 ---------- 1,763,004 ---------- BUILDING MATERIALS - 0.29% 1,982 Armstrong World Industries, Inc.......................... 134,776 424 Lowe's Companies, Inc.......... 16,695 7,703 Masco Corp..................... 299,454 ---------- 450,925 ---------- CHEMICAL - MAJOR - 1.44% 3,831 Goodrich (B.F.) Co............. 164,733 19,907 Morton International, Inc...... 642,001 14,522 PPG Industries, Inc............ 844,091 3,219 Rohm and Haas Co............... 277,639 6,446 Union Carbide Corp............. 301,351 ---------- 2,229,815 ---------- CHEMICAL - MISCELLANEOUS - 0.62% 5,445 Lubrizol Corp.................. 193,977 8,684 Lyondell Petrochemical Co...... 191,047 6,952 Nalco Chemical Co.............. 258,093 5,702 Praxair, Inc................... 300,067 CHEMICAL - MISCELLANEOUS - Continued 322 W. R. Grace & Co............... $ 16,825 ---------- 960,009 ---------- CONGLOMERATES - 0.20% 5,396 Ogden Corp..................... 105,222 3,319 Tyco International Ltd......... 210,757 ---------- 315,979 ---------- CONSUMER FINANCE - 0.22% 2,571 Beneficial Corp................ 165,187 5,169 MBNA Corp...................... 175,100 ---------- 340,287 ---------- CONTAINERS - METAL/GLASS - 0.44% 3,338 Corning Inc.................... 168,152 8,861 Crown Cork & Seal Co., Inc..... 516,153 ---------- 684,305 ---------- CONTAINERS - PAPER - 0.05% 2,586 Sonoco Products Co............. 75,317 ---------- COSMETICS/TOILETRIES - 1.21% 17,986 Gillette Co.................... 1,598,506 6,314 International Flavors & Fragrances, Inc............... 280,184 ---------- 1,878,690 ---------- DRUGS - 6.98% 22,720 American Home Products Corp.... 1,732,400 2,922 *Amgen Inc...................... 195,409 32,971 Bristol Myers Squibb Co........ 2,419,247 16,894 Eli Lilly and Co............... 1,571,142 35,741 Merck & Co., Inc............... 3,212,222 9,254 Schering-Plough Corp........... 839,801 8,804 Warner-Lambert Co.............. 887,003 ---------- 10,857,224 ---------- ELECTRICAL EQUIPMENT - 1.41% 15,056 AMP Inc........................ 619,177 25,264 Emerson Electric Co............ 1,364,256 2,674 Raychem Corp................... 198,210 191 W. W. Grainger Inc............. 15,327 ---------- 2,196,970 ----------
154 =============================================================================== May 31, 1997 SOCIAL AWARENESS FUND - STATEMENT OF NET ASSETS CONTINUED 53 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - -------------------------------------------------------- ENTERTAINMENT - 2.12% 10,232 Hasbro, Inc.................... $ 296,727 5,597 Mattel, Inc.................... 167,210 20,554 Time Warner Inc................ 955,761 22,797 Walt Disney Co................. 1,866,504 ---------- 3,286,202 ---------- FINANCE COMPANIES - 0.29% 4,509 Household International, Inc... 443,009 ---------- FOODS - 2.48% 16,570 Archer Daniels Midland Co...... 331,400 13,605 Campbell Soup Co............... 625,830 6,891 ConAgra, Inc................... 414,321 7,857 CPC International Inc.......... 675,702 5,972 General Mills, Inc............. 377,729 16,743 H J Heinz Co................... 719,949 329 Hershey Foods Corp............. 18,465 6,847 Kellogg Co..................... 504,966 1,469 Ralston Purina Co.............. 125,232 1,088 Wm. Wrigley Jr. Co............. 64,464 ---------- 3,858,058 ---------- FOOTWEAR - 0.38% 10,243 NIKE, Inc. Class B............ 583,851 ---------- FREIGHT - 0.24% 6,846 *Federal Express Corp........... 358,559 1,074 J.B. Hunt Transport Services, Inc.......................... 16,379 ---------- 374,938 ---------- FUNERAL SERVICES - 0.10% 4,408 Service Corp. International.... 155,382 ---------- GOLD MINING - 0.36% 17,000 Barrick Gold Corp.............. 429,250 6,884 Placer Dome Inc................ 125,633 ---------- 554,883 ---------- GOVERNMENT SPONSORED - 1.38% 15,723 Federal Home Loan Mortgage Corp......................... 518,859 37,072 Federal National Mortgage Association................... 1,617,266 ---------- 2,136,125 ---------- HARDWARE & TOOLS - 0.21% 318 Black & Decker Corp............ $ 11,051 2,082 Snap-on Inc.................... 83,020 5,492 Stanley Works.................. 225,172 ---------- 319,243 ---------- HEALTHCARE - 0.15% 4,034 United HealthCare Corp......... 227,921 ---------- HEAVY DUTY TRUCKS/PARTS - 0.22% 9,304 Dana Corp...................... 336,107 ---------- HOSPITAL MANAGEMENT - 0.50% 16,919 Columbia/HCA Healthcare Corp... 619,658 5,918 *Tenet Healthcare Corp.......... 162,745 ---------- 782,403 ---------- HOSPITAL SUPPLIES - 3.64% 25,272 Abbott Laboratories............ 1,592,136 12,903 Baxter International Inc....... 680,633 5,376 Becton, Dickinson and Co....... 264,767 4,213 *Boston Scientific Corp......... 224,869 41,402 Johnson & Johnson.............. 2,478,945 1,434 Mallinckrodt, Inc.............. 53,596 4,877 Medtronic, Inc................. 360,897 ---------- 5,655,843 ---------- HOUSEHOLD PRODUCTS - 3.64% 14,134 Colgate-Palmolive Co........... 876,308 23,807 Procter & Gamble Co............ 3,282,390 7,798 Unilever N V - ADR............. 1,510,863 ---------- 5,669,561 ---------- INFORMATION PROCESSING - 9.38% 1,768 *Apple Computer, Inc............ 29,393 5,315 Automatic Data Processing, Inc.......................... 261,099 14,652 *Cisco Systems, Inc............. 992,673 6,047 *Compaq Computer Corp........... 654,588 6,034 Computer Associates International, Inc............ 330,362 2,741 *Dell Computer Corp............. 308,363 228 *Digital Equipment Corp......... 8,180 4,839 *E M C Corp..................... 192,955 11,139 First Data Corp................ 445,560 36,600 Hewlett Packard Co............. 1,884,900 INFORMATION PROCESSING - Continued 29,736 International Business Machines Corp.......................... $2,572,164 28,639 *Microsoft Corp................. 3,551,236 3,059 *Novell, Inc ................... 24,090 16,567 *Oracle Corp.................... 772,436 5,997 Pitney Bowes Inc............... 421,289 6,087 *Seagate Technology............. 247,284 4,474 *Silicon Graphics, Inc.......... 84,447 9,349 Sun Microsystems, Inc.......... 301,505 2,579 *3Com Corp...................... 125,082 20,316 Xerox Corp..................... 1,376,409 ---------- 14,584,015 ---------- INSURANCE - CASUALTY - 0.21% 3,029 Chubb Corp..................... 184,769 1,718 SAFECO Corp.................... 74,733 863 St. Paul Companies, Inc........ 61,812 ---------- 321,314 ---------- INSURANCE - LIFE - 0.79% 4,755 Aetna Inc...................... 480,255 622 Conseco Inc.................... 24,880 2,595 Lincoln National Corp.......... 157,971 6,152 Transamerica Corp.............. 559,063 ---------- 1,222,169 ---------- INSURANCE - MISCELLANEOUS - 0.18% 1,571 General Reinsurance Corp....... 275,318 ---------- INSURANCE - MULTILINE - 3.38% 9,594 Allstate Corp.................. 706,358 15,549 American International Group, Inc.......................... 2,104,946 3,188 CIGNA Corp..................... 553,915 3,832 Hartford Financial Services Group........................ 298,896 4,434 Marsh & McLennan Companies, Inc.......................... 584,180 18,278 Travelers Group, Inc........... 1,003,005 ---------- 5,251,300 ---------- LEISURE TIME - 0.01% 272 Brunswick Corp................. 8,296 ---------- LODGING - 0.09% 520 *HFS, Inc....................... 28,015 1,758 *ITT Corp....................... 104,821 ---------- 132,836 ----------
155 =============================================================================== 54 SOCIAL AWARENESS FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - -------------------------------------------------------- MACHINERY - AGRICULTURE - 0.49% 14,879 Deere & Co..................... $ 760,689 ---------- MACHINERY - CONSTRUCTION & CONTRACTS - 0.60% 8,367 Caterpillar Inc................ 816,828 2,657 Harnischfeger Industries Inc... 113,919 ---------- 930,747 ---------- MACHINERY - INDUSTRIAL/ SPECIALTY - 1.30% 6,946 Cooper Industries, Inc......... 354,246 4,300 Dover Corp..................... 246,175 11,832 Illinois Tool Works Inc........ 587,163 2,700 Ingersoll-Rand Co.............. 147,150 9,035 Johnson Controls, Inc.......... 382,858 9,531 Pall Corp...................... 225,170 1,439 Tecumseh Products Co. Class A.. 81,483 ---------- 2,024,245 ---------- MERCHANDISE - SPECIALTY - 0.71% 5,321 Gap, Inc....................... 182,244 9,763 Home Depot, Inc................ 615,069 5,978 Ikon Office Solutions Inc...... 173,362 2,914 Limited, Inc................... 59,009 2,432 *Toys "R" Us, Inc............... 75,696 ---------- 1,105,380 ---------- MERCHANDISING - DEPARTMENT - 0.46% 5,025 Dayton Hudson Corp............. 241,828 9,947 May Department Stores Co....... 468,752 ---------- 710,580 ---------- MERCHANDISING - FOOD - 0.36% 8,554 Albertsons, Inc................ 286,559 2,891 American Stores Co............. 131,541 989 *Kroger Co...................... 25,343 3,430 SYSCO Corp..................... 119,621 ---------- 563,064 ---------- MERCHANDISING - MASS - 2.54% 4,131 *CUC International Inc.......... 95,013 15,209 J.C. Penney Co., Inc........... 783,264 125 KMart Corp..................... 1,750 18,604 Sears Roebuck and Co........... 913,922 70,609 Wal-Mart Stores, Inc........... 2,100,618 MERCHANDISING - MASS - Continued 1,823 *Woolworth Corp................. $ 43,980 ---------- 3,938,547 ---------- METALS - ALUMINUM - 0.51% 21,947 Alcan Aluminium Ltd............ 787,349 ---------- METALS - MISCELLANEOUS - 0.36% 12,938 Freeport-McMoran Copper & Gold Inc. Class B............. 376,819 5,627 Inco Limited................... 185,691 ---------- 562,510 ---------- METALS - STEEL - 0.08% 7,100 Worthington Industries, Inc.... 131,350 ---------- MISCELLANEOUS - 0.74% 16,446 American Express Co............ 1,142,997 ---------- NATURAL GAS - DIVERSIFIED - 0.25% 5,467 PanEnergy Corp................. 255,582 2,219 Sonat Inc...................... 127,593 ---------- 383,175 ---------- OIL - INTEGRATED DOMESTIC - 2.29% 8,222 Amerada Hess Corp.............. 439,877 4,660 Ashland Oil, Inc............... 223,098 6,055 Burlington Resources, Inc..... 281,558 4,252 MAPCO Inc...................... 135,001 11,379 *Oryx Energy Co................. 263,139 5,052 Pennzoil Co.................... 279,755 27,826 Phillips Petroleum Co.......... 1,182,605 3,802 Sun Co., Inc................... 113,585 21,609 USX-Marathon Group............. 642,868 ---------- 3,561,486 ---------- OIL - INTEGRATED INTERNATIONAL - 2.09% 2,528 Murphy Oil Corp................ 117,236 28,706 Texaco Inc..................... 3,132,542 ---------- 3,249,778 ---------- OIL - SERVICE - PRODUCTS - 0.87% 11,286 Schlumberger Ltd............... 1,344,445 ---------- OIL - SERVICES - 0.73% 6,003 Baker Hughes Inc............... $ 225,113 13,768 Dresser Industries, Inc........ 471,554 3,480 Halliburton Co................. 269,265 5,962 McDermott International, Inc... 165,446 ---------- 1,131,378 ---------- OIL/GAS PRODUCERS - 0.45% 1,733 Apache Corp.................... 59,355 8,086 Ultramar Diamond Shamrock...... 266,838 12,821 Union Pacific Resources Group Inc.......................... 370,206 ---------- 696,399 ---------- PAPER/FOREST PRODUCTS - 1.03% 7,049 Avery Dennison Corp............ 265,219 954 James River Corp. of Virginia.. 33,509 25,934 Kimberly-Clark Corp............ 1,299,942 ---------- 1,598,670 ---------- POLLUTION CONTROL - 0.57% 4,008 Browning-Ferris Industries, Inc.......................... 131,262 23,702 Waste Management, Inc.......... 752,539 ---------- 883,801 ---------- PUBLISHING - NEWS - 0.50% 6,920 Dow Jones & Co., Inc........... 269,015 5,152 Gannett Co., Inc............... 476,560 263 New York Times Co. Class A..... 12,114 363 Times Mirror Co................ 20,373 ---------- 778,062 ---------- PUBLISHING/PRINTING - 0.52% 6,116 Deluxe Corp.................... 198,770 13,817 Dun & Bradstreet Corp.......... 360,969 3,819 McGraw-Hill, Inc............... 208,613 1,980 Moore Corp. Ltd................ 44,055 ---------- 812,407 ---------- RAILROAD - 1.62% 5,481 Burlington Northern Santa Fe... 454,923 11,578 CSX Corp....................... 613,634 7,129 Norfolk Southern Corp.......... 692,404 11,105 Union Pacific Corp............. 752,364 ---------- 2,513,325 ----------
156 =============================================================================== May 31, 1997 SOCIAL AWARENESS FUND - STATEMENT OF NET ASSETS CONTINUED 55 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - -------------------------------------------------------- RESTAURANTS - 0.72% 22,407 McDonald's Corp................ $ 1,125,952 ----------- SAVINGS & LOAN - 0.09% 3,025 Great Western Financial Corp... 146,713 ----------- SECURITIES RELATED - 1.32% 7,081 Dean Witter, Discover & Co..... 292,091 6,878 Merrill Lynch & Co., Inc....... 729,068 7,417 Morgan Stanley Group Inc....... 500,648 9,819 Salomon Inc.................... 526,544 ----------- 2,048,351 ----------- SEMICONDUCTORS - 3.17% 2,697 *Advanced Micro Devices, Inc.... 107,880 4,141 *Applied Materials, Inc......... 270,200 21,374 Intel Corp..................... 3,238,161 264 *LSI Logic Corp................. 11,022 5,295 *Micron Technology, Inc......... 225,038 5,695 *National Semiconductor Corp.... 160,172 14,062 Rockwell International Corp.... 906,999 ----------- 4,919,472 ----------- TELECOMMUNICATIONS - 1.54% 8,243 ALLTEL Corp.................... 270,989 822 *Andrew Corp.................... 22,400 239 *DSC Communications Corp........ 6,109 14,686 Lucent Technologies, Inc....... 934,397 8,216 Northern Telecom Ltd........... 690,144 15,712 *WorldCom, Inc.................. 465,468 ----------- 2,389,507 ----------- UTILITIES - COMMUNICATION - 6.82% 77,098 AT & T Corp.................... 2,842,990 23,836 Ameritech Corp................. 1,561,258 14,288 Bell Atlantic Corp............. 1,000,160 33,532 BellSouth Corp................. 1,521,515 8,415 MCI Communications Corp........ 322,926 13,990 NYNEX Corp..................... 751,963 32,049 SBC Communications, Inc........ 1,874,867 14,806 Sprint Corp.................... 723,643 ----------- 10,599,322 ----------- UTILITIES - ELECTRIC - 1.58% 13,195 Allegheny Power System, Inc.... 344,719 UTILITIES - ELECTRIC - Continued 17,115 Cinergy Corp................... $ 599,025 173 Hawaiian Electric Industries, Inc.......................... 5,990 5,367 Montana Power Co............... 122,099 1,964 OGE Energy Corp................ 84,452 31,985 PacifiCorp..................... 635,702 12,863 Potomac Electric Power Co...... 295,849 2,756 Public Service Co. of Colorado. 111,274 9,169 Puget Sound Energy Inc......... 228,079 477 TECO Energy, Inc............... 11,865 521 UtiliCorp United Inc........... 14,067 ----------- 2,453,121 ----------- UTILITIES - GAS, DISTRIBUTION - 0.03% 1,320 Tosco Corp..................... 43,065 ----------- UTILITIES - GAS, PIPELINE - 1.05% 9,247 Consolidated Natural Gas Co.... 491,247 15,457 Enron Corp..................... 629,873 1,479 Pacific Enterprises............ 48,437 10,508 Williams Companies, Inc........ 463,666 ----------- 1,633,223 ----------- TOTAL COMMON STOCKS (Cost $121,517,004)............ 148,252,089 -----------
PAR VALUE ----- CORPORATE SHORT TERM COMMERCIAL PAPER - 4.19% MACHINERY - INDUSTRIAL/ SPECIALTY - 0.63% $ 980,000 Cooper Industries, Inc., 5.67% due 06/02/97............ 979,846 ----------- SECURITIES RELATED - 3.56% 5,530,000 Merrill Lynch & Co., Inc. 5.65% due 06/03/97............ 5,528,263 ----------- TOTAL CORPORATE SHORT TERM COMMERCIAL PAPER (Cost $6,508,109).............. 6,508,109 ----------- UNITED STATES GOVERNMENT - SHORT TERM - 0.19%
PAR MARKET VALUE VALUE - - --------------------------------------------------------- U.S. TREASURY BILLS - 0.19% United States Treasury Bills, $ 200,000 5.02% due 08/21/97............ $ 197,752 100,000 4.99% due 08/21/97 ........... 98,862 ------------ 296,614 ------------ TOTAL UNITED STATES GOVERNMENT - SHORT TERM (Cost $296,614)..... 296,614 ------------ TOTAL INVESTMENTS (Cost $128,321,727) - 99.81%... 155,056,812 Other assets less liabilities, net - 0.19%................... 292,242 ------------ NET ASSETS (equivalent to $17.90 per share on 8,677,411 shares outstanding) - 100 %.......... $155,349,054 ============
* Non-income producing
UNREALIZED CONTRACTS APPRECIATION - - --------------------------------------------------------- FUTURES CONTRACTS PURCHASED(1) (Delivery month/Value at 5/31/97) 13(2) S&P 500 Index Futures (June/$850.60)................ $ 90,650 ============
(1)U.S.Treasury Bills with a market value of approximately $300,000 were maintained in a segregated account with a portion placed as collateral for futures contracts. (2)Per 500 ========================================================= NET ASSETS REPRESENTED BY: Capital stock, $.01 par value per share, 1,000,000,000 shares authorized, 8,677,411 shares outstanding............ $ 86,774 Additional paid in capital................ 119,582,326 Undistributed net realized gain on securities.............................. 8,762,191 Undistributed net investment income....... 92,028 Unrealized appreciation of: Investments........... $26,735,085 Futures .............. 90,650 26,825,735 ----------- ------------ NET ASSETS APPLICABLE TO SHARES OUTSTANDING............................. $155,349,054 ============
SEE NOTES TO FINANCIAL STATEMENTS. 157 =============================================================================== 56 SOCIAL AWARENESS FUND - FINANCIAL STATEMENTS =============================================================================== STATEMENT OF OPERATIONS For the fiscal year ended May 31, 1997 INVESTMENT INCOME: Dividends ................................................. $ 2,079,690 Interest .................................................. 130,703 ----------- Total investment income ................................. 2,210,393 ----------- EXPENSES: Advisory fees ............................................. 525,440 Custodian and accounting services ......................... 35,707 Reports to shareholders ................................... 14,276 Audit fees and tax services ............................... 3,987 Directors' fees and expenses .............................. 2,322 Miscellaneous ............................................. 9,187 ----------- Total expenses .......................................... 590,919 ----------- NET INVESTMENT INCOME ..................................... 1,619,474 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES: Net realized gain (loss) on: Investments................................. 13,494,506 Futures Contracts.................... ...... (138,043) 13,356,463 ---------- Net unrealized appreciation of securities during the year: Investments................................. 14,605,162 Futures Contracts........................... 90,650 14,695,812 ---------- ----------- Net realized and unrealized gain on securities during the year:..................................... 28,052,275 ----------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........... $29,671,749 ===========
STATEMENT OF CHANGES IN NET ASSETS For the fiscal year ended May 31:
1997 1996 ------------- ------------- OPERATIONS: Net investment income ................................................ $ 1,619,474 $ 1,207,110 Net realized gain on securities ...................................... 13,356,463 9,289,840 Net unrealized appreciation of securities during the year ............ 14,695,812 6,259,077 ------------- ------------- Increase in net assets resulting from operations ................... 29,671,749 16,756,027 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ................................................ (1,578,118) (1,156,438) Net realized gain on securities ...................................... (10,727,011) (4,173,232) ------------- ------------- Decrease in net assets resulting from distributions to shareholders ................................................... (12,305,129) (5,329,670) ------------- ------------- CAPITAL STOCK TRANSACTIONS: Proceeds from capital stock sold ..................................... 52,814,227 17,740,343 Proceeds from capital stock issued for distributions reinvested ...... 12,305,129 5,329,670 ------------- ------------- 65,119,356 23,070,013 Cost of capital stock repurchased .................................... (8,024,362) (7,536,021) ------------- ------------- Increase in net assets resulting from capital stock transactions ... 57,094,994 15,533,992 ------------- ------------- TOTAL INCREASE IN NET ASSETS ......................................... 74,461,614 26,960,349 NET ASSETS: Beginning of year .................................................... 80,887,440 53,927,091 ------------- ------------- End of year (including undistributed net investment income of $92,028 and $50,672) ............................................ $ 155,349,054 $ 80,887,440 ------------- ------------- CHANGE IN SHARES OUTSTANDING: Shares of capital stock sold ......................................... 3,190,691 1,209,065 Shares issued for distributions reinvested ........................... 775,715 376,165 Shares of capital stock repurchased .................................. (509,440) (507,806) ------------- ------------- Increase in shares outstanding ..................................... 3,456,966 1,077,424 Shares outstanding: Beginning of year .................................................. 5,220,445 4,143,021 ------------- ------------- End of year ........................................................ 8,677,411 5,220,445 ============= =============
SEE NOTES TO FINANCIAL STATEMENTS. 158 =============================================================================== May 31, 1997 TIMED OPPORTUNITY FUND - STATEMENT OF NET ASSETS 57 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- COMMON STOCKS - 61.32% ADVERTISING - 0.05% 1,530 Interpublic Group Cos., Inc.... $ 91,609 ---------- AEROSPACE/DEFENSE - 1.09% 6,264 Boeing Co...................... 659,285 321 Crane Co....................... 13,160 858 EG & G, Inc.................... 16,730 227 General Dynamics Corp.......... 16,996 2,783 Lockheed Martin Corp........... 260,557 3,895 McDonnell Douglas Corp......... 250,740 432 Northrop Grumman Corp.......... 36,611 4,218 Raytheon Co.................... 201,409 2,278 TRW Inc........................ 121,872 4,334 United Technologies Corp....... 348,344 ---------- 1,925,704 ---------- AIRLINES - 0.19% 1,626 *AMR Corp....................... 161,584 1,307 Delta Air Lines, Inc........... 122,531 751 Southwest Airlines Co.......... 19,338 913 *US Airways Group, Inc.......... 31,727 ---------- 335,180 ---------- APPAREL & PRODUCTS - 0.05% 1,370 *Fruit of the Loom, Inc. Class A...................... 47,779 1,010 Liz Claiborne, Inc............. 46,081 ---------- 93,860 ---------- APPLIANCES/FURNISHINGS - 0.05% 729 Maytag Corp.................... 19,501 1,329 Whirlpool Corp................. 66,284 ---------- 85,785 ---------- AUTO - CARS - 1.05% 12,955 Chrysler Corp.................. 411,321 18,256 Ford Motor Co.................. 684,600 13,278 General Motors Corp............ 760,166 ---------- 1,856,087 ---------- AUTO - REPLACEMENT PARTS - 0.22% 1,708 *AutoZone, Inc.................. 39,924 1,115 Echlin Inc..................... 37,212 3,226 Genuine Parts Co............... 108,070 2,876 Goodyear Tire & Rubber Co...... 168,245 AUTO - REPLACEMENT PARTS - Continued 1,082 Pep Boys-Manny, Moe & Jack..... $ 33,812 ---------- 387,263 ---------- BANKS - NEW YORK CITY - 1.30% 5,908 Bank of New York Co., Inc...... 251,829 7,979 Chase Manhattan Corp........... 754,016 8,239 CitiCorp....................... 942,336 3,284 J. P. Morgan & Co. Inc......... 353,030 ---------- 2,301,211 ---------- BANKS - OTHER - 1.64% 5,188 BankAmerica Corp............... 606,348 2,533 BankBoston Corp................ 184,909 4,954 First Chicago Corp............. 293,525 5,131 First Union Corp............... 440,625 4,788 *Fleet Financial Group, Inc..... 292,667 1,894 Mellon Bank Corp............... 165,725 3,797 National City Corp............. 195,546 1,005 Republic of New York Corp...... 100,249 2,789 US Bancorp..................... 171,175 1,750 Wells Fargo & Co............... 461,125 ---------- 2,911,894 ---------- BANKS - REGIONAL - 1.72% 7,037 BANC ONE CORP.................. 304,350 3,830 Barnett Banks, Inc............. 201,554 2,020 Comerica Inc................... 126,250 4,118 CoreStates Financial Corp...... 217,739 1,992 Fifth Third Bancorp............ 153,882 2,404 First Bank System, Inc......... 197,128 3,940 KeyCorp........................ 214,238 12,250 NationsBank Corp............... 721,219 6,218 Norwest Corp................... 332,663 5,973 PNC Bank Corp.................. 250,119 3,185 SunTrust Banks, Inc............ 169,999 2,752 Wachovia Corp.................. 167,528 ---------- 3,056,669 ---------- BEVERAGE - BREWERS/ DISTRIBUTORS - 0.40% 478 Adolph Coors Class B........... 11,651 8,896 Anheuser-Busch Companies, Inc.. 381,416 833 Brown-Forman Corp Class B...... 42,587 BEVERAGE - BREWERS/ DISTRIBUTORS - Continued 6,625 Seagram Co. Ltd................ $ 266,656 ---------- 702,310 ---------- BEVERAGE - SOFT DRINKS - 2.12% 41,299 Coca-Cola Co................... 2,818,657 25,761 PepsiCo, Inc................... 946,717 ---------- 3,765,374 ---------- BROADCASTING - 0.57 5,984 Comcast Corp. Class A Special.. 103,972 2,347 *General Instrument Corp........ 56,915 9,367 Tele-Communications, Inc. Class A...................... 141,676 8,565 U S West Communications Group.. 313,693 10,363 *U S West Media Group........... 205,965 6,150 *Viacom, Inc. Class B........... 182,578 ---------- 1,004,799 ---------- BUILDING MATERIALS - 0.22% 805 Armstrong World Industries, Inc.......................... 54,740 3,192 Lowe's Companies, Inc.......... 125,685 2,967 Masco Corp..................... 115,342 2,868 Sherwin-Williams Co............ 86,040 ---------- 381,807 ---------- CHEMICAL - MAJOR - 1.32% 4,119 Dow Chemical Co................ 343,422 9,331 E.I. du Pont de Nemours and Co....................... 1,015,913 142 Goodrich (B.F.) Co............. 6,106 1,853 Hercules, Inc.................. 86,859 9,508 Monsanto Co.................... 418,352 2,610 Morton International, Inc...... 84,173 3,335 PPG Industries, Inc............ 193,847 1,043 Rohm and Haas Co............... 89,959 2,020 Union Carbide Corp............. 94,435 ---------- 2,333,066 ---------- CHEMICAL - MISCELLANEOUS - 0.38% 1,961 Air Products and Chemicals, Inc.......................... 152,468 1,388 Eastman Chemical Co............ 82,586 1,153 Ecolab Inc..................... 47,994 364 FMC Corp....................... 26,208 1,131 Great Lakes Chemical Corp...... 55,278 773 Millipore Corp................. 33,336
159 =============================================================================== 58 TIMED OPPORTUNITY FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- CHEMICAL - MISCELLANEOUS - Continued 1,204 Nalco Chemical Co.............. $ 44,699 2,286 Praxair, Inc................... 120,301 1,836 Sigma Aldrich Corp............. 56,228 1,187 W. R. Grace & Co............... 62,021 ---------- 681,119 ---------- COAL - 0.01% 190 NACCO Industries, Inc. Class A. 9,666 ---------- CONGLOMERATES - 0.62% 4,980 Allied Signal Inc.............. 382,215 1,781 Loews Corp..................... 173,202 3,051 Tenneco Inc.................... 136,532 1,478 Textron Inc.................... 175,143 2,979 Tyco International Ltd......... 189,167 1,954 Whitman Corp................... 47,140 ---------- 1,103,399 ---------- CONSUMER FINANCE - 0.15% 966 Beneficial Corp................ 62,066 5,761 MBNA Corp...................... 195,154 ---------- 257,220 ---------- CONTAINERS - METAL/GLASS - 0.22% 545 Ball Corp...................... 15,873 3,892 Corning Inc.................... 196,060 2,393 Crown Cork & Seal Co., Inc..... 139,392 1,007 Owens Corning.................. 42,042 ---------- 393,367 ---------- CONTAINERS - PAPER - 0.04% 432 Bemis Co., Inc................. 17,280 990 Temple-Inland Inc.............. 59,895 ---------- 77,175 ---------- COSMETICS/TOILETRIES - 0.61% 999 Alberto-Culver Co. Class B..... 28,472 1,957 Avon Products, Inc............. 124,759 9,446 Gillette Co.................... 839,513 2,071 International Flavors & Fragrances, Inc............... 91,901 ---------- 1,084,645 ---------- DRUGS - 4.29% 1,175 Allergan, Inc.................. $ 34,809 1,414 *ALZA Corp...................... 41,713 10,378 American Home Products Corp.... 791,323 4,526 *Amgen Inc...................... 302,676 992 Bausch & Lomb Inc.............. 39,928 16,814 *Bristol Myers Squibb Co........ 1,233,727 1,889 CVS Corp....................... 90,436 9,380 Eli Lilly and Co............... 872,340 20,437 Merck & Co., Inc............... 1,836,775 10,171 Pfizer, Inc.................... 1,046,342 9,311 Pharmacia & Upjohn, Inc........ 322,393 5,927 Schering-Plough Corp........... 537,875 4,518 Warner-Lambert Co.............. 455,189 ---------- 7,605,526 ---------- ELECTRICAL EQUIPMENT - 2.44% 2,737 AMP Inc........................ 112,559 1,984 *Cabletron Systems, Inc......... 87,296 7,988 Emerson Electric Co............ 431,352 54,102 General Electric Co............ 3,266,408 850 *Intergraph Corp................ 6,003 810 National Service Industries, Inc.......................... 35,539 798 Raychem Corp................... 59,152 550 Thomas & Betts Corp............ 27,981 11,102 Westinghouse Electric Corp..... 224,816 948 W. W. Grainger Inc............. 76,077 ---------- 4,327,183 ---------- ELECTRONIC INSTRUMENTS - 0.12% 891 General Signal Corp............ 37,533 806 Perkin-Elmer Corp.............. 61,256 590 Tektronix, Inc................. 33,851 2,376 *Thermo Electron Corp........... 81,972 ---------- 214,612 ---------- ENTERTAINMENT - 0.92% 1,939 *Harrah's Entertainment, Inc.... 36,114 2,366 Hasbro, Inc.................... 68,614 668 *King World Productions, Inc.... 25,134 4,261 Mattel, Inc.................... 127,297 10,063 Time Warner Inc................ 467,930 11,104 Walt Disney Co................. 909,140 ---------- 1,634,229 ---------- FINANCE COMPANIES - 0.15% 2,556 Green Tree Financial Corp...... $ 89,460 1,778 Household International, Inc... 174,689 ---------- 264,149 ---------- FOODS - 1.52% 8,113 Archer Daniels Midland Co...... 162,260 8,350 Campbell Soup Co............... 384,100 4,291 Conagra, Inc................... 257,996 2,669 CPC International Inc.......... 229,534 2,934 General Mills, Inc............. 185,576 6,434 H J Heinz Co................... 276,662 2,744 Hershey Foods Corp............. 154,007 3,366 Kellogg Co..................... 248,243 972 Pioneer Hi-Bred International, Inc.......................... 67,797 2,419 Quaker Oats Co................. 99,784 2,000 Ralston Purina Co.............. 170,500 8,096 Sara Lee Corp.................. 330,924 2,076 Wm. Wrigley Jr. Co............. 123,003 ---------- 2,690,386 ---------- FOOTWEAR - 0.20% 5,331 NIKE, Inc. Class B............. 303,867 995 *Reebok International Ltd....... 40,795 887 Stride Rite Corp............... 13,527 ---------- 358,189 ---------- FREIGHT - 0.09% 2,074 *Federal Express Corp........... 108,626 1,363 Ryder System, Inc.............. 45,149 ---------- 153,775 ---------- FUNERAL SERVICES - 0.09% 4,345 Service Corp. International.... 153,161 ---------- GOLD MINING - 0.16% 6,383 Barrick Gold Corp.............. 161,171 1,600 Battle Mountain Gold Co........ 9,600 2,600 *Echo Bay Mines Ltd............. 15,925 1,971 Homestake Mining Co............ 27,348 4,279 Placer Dome Inc................ 78,092 ---------- 292,136 ----------
160 =============================================================================== May 31, 1997 TIMED OPPORTUNITY FUND - STATEMENT OF NET ASSETS CONTINUED 59 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- GOVERNMENT SPONSORED - 0.66% 12,080 Federal Home Loan Mortgage Corp......................... $ 398,640 17,625 Federal National Mortgage Association................... 768,891 ---------- 1,167,531 ---------- HARDWARE & TOOLS - 0.09% 1,684 Black & Decker Corp............ 58,519 1,084 Snap-on Inc.................... 43,225 1,588 Stanley Works.................. 65,108 ---------- 166,852 ---------- HEALTHCARE - 0.21% 5,168 *HealthSouth Corp............... 118,218 2,769 *Humana Inc..................... 62,649 3,405 United HealthCare Corp......... 192,383 ---------- 373,250 ---------- HEAVY DUTY TRUCKS/PARTS - 0.15% 506 Cummins Engine Co., Inc........ 32,258 1,824 Dana Corp...................... 65,892 1,378 Eaton Corp..................... 109,896 527 *Navistar International Corp.... 8,761 1,188 PACCAR Inc..................... 53,757 ---------- 270,564 ---------- HOME BUILDERS - 0.02% 516 Centex Corp.................... 20,576 695 Kaufman & Broad Home Corp...... 10,425 416 Pulte Corp..................... 13,156 ---------- 44,157 ---------- HOSPITAL MANAGEMENT - 0.35% 1,800 *Beverly Enterprises, Inc....... 25,425 10,936 Columbia/HCA Healthcare Corp... 400,531 1,122 Manor Care, Inc................ 32,117 420 Shared Medical Systems Corp.... 22,260 5,381 *Tenet Healthcare Corp.......... 147,978 ---------- 628,311 ---------- HOSPITAL SUPPLIES - 1.75% 12,924 Abbott Laboratories............ 814,212 119 Bard (C. R.), Inc.............. 3,808 4,110 Baxter International Inc....... 216,803 2,297 Becton, Dickinson and Co....... 113,127 HOSPITAL SUPPLIES - Continued 2,100 Biomet, Inc.................... $ 39,244 3,573 *Boston Scientific Corp......... 190,709 21,848 Johnson & Johnson.............. 1,308,149 1,322 Mallinckrodt, Inc.............. 49,410 3,816 Medtronic, Inc................. 282,384 1,447 *St. Jude Medical, Inc.......... 49,017 1,122 United States Surgical Corp.... 37,868 ---------- 3,104,731 ---------- HOUSEHOLD PRODUCTS - 1.90% 724 Clorox Co...................... 91,405 5,216 Colgate-Palmolive Co........... 323,392 7,143 Minnesota Mining & Manufacturing Co.............. 655,370 2,510 Newell Co...................... 96,008 11,369 Procter & Gamble Co............ 1,567,501 2,790 Rubbermaid, Inc................ 77,771 1,112 Tupperware Corp................ 40,310 2,708 Unilever N V - ADR............. 524,675 ---------- 3,376,432 ---------- INFORMATION PROCESSING - 5.77% 1,300 Adobe Systems Inc.............. 58,012 1,603 *Amdahl Corp.................... 16,029 2,328 *Apple Computer, Inc............ 38,702 735 Autodesk, Inc.................. 28,572 5,129 Automatic Data Processing, Inc.......................... 251,961 2,582 *Bay Networks, Inc.............. 63,258 1,432 *Ceridian Corp.................. 52,625 10,889 *Cisco Systems, Inc............. 737,729 3,001 Cognizant Corp................. 111,036 4,497 *Compaq Computer Corp........... 486,799 5,289 Computer Associates International, Inc............ 289,572 1,435 *Computer Sciences Corp......... 111,032 614 *Data General Corp.............. 13,123 3,007 *Dell Computer Corp............. 338,287 2,310 *Digital Equipment Corp......... 82,870 4,561 *E M C Corp..................... 181,869 8,198 First Data Corp................ 327,919 1,959 H & R Block Inc................ 64,646 17,365 Hewlett Packard Co............. 894,297 2,365 Honeywell Inc.................. 172,053 16,674 International Business Machines Corp................ 1,442,300 INFORMATION PROCESSING - Continued 1,002 Meredith Corp.................. $ 25,927 19,857 *Microsoft Corp................. 2,462,267 6,384 *Novell, Inc ................... 50,273 12,080 *Oracle Corp.................... 563,229 2,378 *Parametric Technology Corp..... 106,712 2,453 Pitney Bowes Inc............... 172,322 4,518 *Seagate Technology............. 183,543 3,199 *Silicon Graphics, Inc.......... 60,380 6,778 *Sun Microsystems, Inc.......... 218,590 1,710 *Tandem Computers Inc........... 24,367 3,244 *3Com Corp...................... 157,333 3,200 Unisys Corp.................... 21,999 5,983 Xerox Corp..................... 405,347 ---------- 10,214,980 ---------- INSURANCE - CASUALTY - 0.23% 2,584 Chubb Corp..................... 157,624 2,353 SAFECO Corp.................... 102,356 1,483 St. Paul Companies, Inc........ 106,220 2,079 USF & G Corp................... 44,699 ---------- 410,899 ---------- INSURANCE - LIFE - 0.46% 2,797 Aetna Inc...................... 282,497 3,098 Conseco Inc.................... 123,920 1,264 Jefferson-Pilot Corp........... 80,422 1,940 Lincoln National Corp.......... 118,098 735 Torchmark Corp................. 48,234 1,187 Transamerica Corp.............. 107,869 1,218 USLIFE Corp.................... 59,378 ---------- 820,418 ---------- INSURANCE - MISCELLANEOUS - 0.29% 1,397 General Reinsurance Corp....... 244,824 772 MBIA, Inc...................... 82,894 953 MGIC Investment Corp........... 84,817 1,307 UNUM Corp...................... 103,416 ---------- 515,951 ---------- INSURANCE - MULTILINE - 1.70% 7,946 Allstate Corp.................. 585,024 7,427 American International Group, Inc.......................... 1,005,430 2,753 Aon Corp....................... 134,184 1,343 CIGNA Corp..................... 233,346
161 =============================================================================== 60 TIMED OPPORTUNITY FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- INSURANCE - MULTILINE - Continued 2,203 Hartford Financial Services Group........................ $ 171,834 1,542 March & McLennan Companies, Inc........................... 203,159 1,674 Providian Corp................. 100,231 10,630 Travelers Group, Inc........... 583,321 ---------- 3,016,529 ---------- LEISURE TIME - 0.03% 1,843 Brunswick Corp................. 56,212 ---------- LODGING - 0.29% 2,899 *HFS, Inc....................... 156,184 3,710 Hilton Hotels Corp............. 104,808 2,093 *ITT Corp....................... 124,795 2,288 Marriott International, Inc.... 132,132 ---------- 517,919 ---------- MACHINE TOOLS - 0.01% 644 Cincinnati Milacron Inc........ 14,893 ---------- MACHINERY - AGRICULTURE - 0.18% 1,311 Case Corp...................... 77,349 4,670 Deere & Co..................... 238,754 ---------- 316,103 ---------- MACHINERY - CONSTRUCTION & CONTRACTS - 0.25% 3,020 Caterpillar Inc................ 294,828 1,503 Fluor Corp..................... 79,471 726 Foster Wheeler Corp............ 28,133 879 Harnischfeger Industries Inc... 37,687 ---------- 440,119 ---------- MACHINERY - INDUSTRIAL/ SPECIALTY - 0.41% 517 Briggs & Stratton Corp......... 26,690 1,407 Cooper Industries, Inc......... 71,757 2,110 Dover Corp..................... 120,798 4,560 Illinois Tool Works Inc........ 226,290 1,423 Ingersoll-Rand Co.............. 77,554 1,487 Johnson Controls, Inc.......... 63,012 2,295 Pall Corp...................... 54,219 803 Parker Hannifin Corp........... 42,258 559 Timken Co...................... 38,361 ---------- 720,939 ---------- MEDICAL TECHNOLOGY - 0.06% 1,403 Guidant Corp................... $ 108,908 ---------- MERCHANDISE - DRUG - 0.16% 697 Longs Drug Stores Corp......... 16,554 2,081 Rite Aid Corp.................. 96,767 3,502 Walgreen Co.................... 163,719 ---------- 277,040 ---------- MERCHANDISE - SPECIALTY - 0.77% 989 American Greetings Corp. Class A...................... 33,873 1,351 Circuit City Stores, Inc....... 53,365 3,866 *CostCo Companies, Inc.......... 130,478 5,165 Gap, Inc....................... 176,901 8,004 Home Depot, Inc................ 504,252 2,506 Ikon Office Solutions Inc...... 72,674 191 Jostens, Inc................... 4,703 4,844 Limited, Inc................... 98,091 933 Nordstrom, Inc................. 44,784 1,041 Tandy Corp..................... 56,214 1,289 TJX Companies, Inc............. 61,872 4,333 *Toys "R" Us, Inc............... 134,865 ---------- 1,372,072 ---------- MERCHANDISING - DEPARTMENT - 0.36% 3,876 Dayton Hudson Corp............. 186,533 2,030 Dillards, Inc. Class A......... 68,513 3,816 *Federated Deparment Stores, Inc.......................... 141,192 4,357 May Department Stores Co....... 205,324 658 Mercantile Stores Co., Inc..... 35,368 ---------- 636,930 ---------- MERCHANDISING - FOOD - 0.38% 4,603 Albertsons, Inc................ 154,201 2,621 American Stores Co............. 119,256 675 Fleming Companies, Inc......... 12,825 1,070 Giant Food Inc. Class A........ 35,243 683 Great Atlantic & Pacific Tea Co., Inc..................... 18,868 4,642 *Kroger Co...................... 118,951 1,196 Supervalu Inc.................. 39,917 3,257 SYSCO Corp..................... 113,588 1,579 Winn-Dixie Stores, Inc......... 60,397 ---------- 673,246 ---------- MERCHANDISING - MASS - 1.14% 7,272 *CUC International Inc..........$ 167,256 3,648 J.C. Penney Co., Inc........... 187,872 5,476 KMart Corp..................... 76,664 7,196 Sears Roebuck and Co........... 353,504 39,674 Wal-Mart Stores, Inc........... 1,180,302 2,461 *Woolworth Corp................. 59,372 ---------- 2,024,970 ---------- METALS - ALUMINUM - 0.26% 4,043 Alcan Aluminium Ltd............ 145,043 3,190 Aluminum Co. of America........ 234,864 1,142 Reynolds Metals Co............. 77,513 ---------- 457,420 ---------- METALS - COPPER - 0.11% 765 ASARCO Inc..................... 23,811 1,773 Newmont Mining Corp............ 69,369 1,159 Phelps Dodge Corp.............. 96,921 ---------- 190,101 ---------- METALS - MISCELLANEOUS - 0.15% 1,666 Cyprus Amax Minerals Co........ 40,609 1,574 Engelhard Corp................. 34,038 3,453 Freeport-Mcmoran Copper & Gold Inc. Class B............ 100,569 3,007 Inco Limited................... 99,231 ---------- 274,447 ---------- METALS - STEEL - 0.15% 3,179 Allegheny Teldyne Inc.......... 81,859 1,995 Bethlehem Steel Corp........... 19,950 1,467 Nucor Corp..................... 86,553 1,515 USX-US Steel Group, Inc........ 48,859 1,800 Worthington Industries, Inc.... 33,300 ---------- 270,521 ---------- MISCELLANEOUS - 0.31% 7,821 American Express Co............ 543,560 ---------- MOBILE HOMES - 0.01% 635 Fleetwood Enterprises, Inc..... 17,145 ---------- NATURAL GAS - DIVERSIFIED - 0.22% 1,781 Coastal Corp................... 89,273 363 Eastern Enterprises............ 12,524
162 =============================================================================== May 31, 1997 TIMED OPPORTUNITY FUND - STATEMENT OF NET ASSETS CONTINUED 61 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- NATURAL GAS - DIVERSIFIED - Continued 1,245 ENSEARCH Corp.................. $ 26,612 2,500 NorAm Energy Corp.............. 38,125 2,800 PanEnergy Corp................. 130,900 1,541 Sonat Inc...................... 88,608 ---------- 386,042 ---------- OIL - INTEGRATED DOMESTIC - 1.29% 1,664 Amerada Hess Corp.............. 89,024 8,944 Amoco Corp..................... 799,370 1,162 Ashland Oil, Inc............... 55,631 2,554 Atlantic Richfield Co.......... 371,607 2,232 Burlington Resources, Inc..... 103,788 867 Kerr-McGee Corp................ 56,138 6,007 Occidental Petroleum Corp...... 139,663 1,573 *Oryx Energy Co................. 36,376 832 Pennzoil Co.................... 46,072 4,784 Phillips Petroleum Co.......... 203,320 900 *Santa Fe Energy Resources, Inc.......................... 13,613 804 Sun Co., Inc................... 24,020 4,560 Unocal Corp.................... 194,370 5,111 USX-Marathon Group............. 152,052 ---------- 2,285,044 ---------- OIL - INTEGRATED INTERNATIONAL - 3.56% 11,359 Chevron Corp................... 795,130 39,828 Exxon Corp..................... 2,359,809 6,750 Mobil Corp..................... 944,156 8,648 Royal Dutch Petroleum Co. - ADR........................ 1,688,522 4,837 Texaco Inc..................... 527,838 ---------- 6,315,455 ---------- OIL - SERVICE - PRODUCTS - 0.27% 4,001 Schlumberger Ltd............... 476,619 ---------- OIL - SERVICES - 0.28% 2,660 Baker Hughes Inc............... 99,750 3,177 Dresser Industries, Inc........ 108,812 2,007 Halliburton Co................. 155,292 981 McDermott International, Inc... 27,223 1,529 *Rowan Companies, Inc........... 35,358 958 *Western Atlas Inc.............. 65,024 ---------- 491,459 ---------- OIL/GAS PRODUCERS - 0.08% 445 Helmerich & Payne, Inc......... $ 24,976 611 Louisiana Land & Exploration Co........................... 31,467 3,211 Union Pacific Resources Group Inc.......................... 92,718 ---------- 149,161 ---------- PAPER/FOREST PRODUCTS - 0.89% 1,963 Avery Dennison Corp............ 73,858 666 Boise Cascade Corp............. 25,308 1,207 Champion International Corp.... 59,596 1,533 Georgia-Pacific Corp........... 135,287 4,862 International Paper Co......... 233,376 1,538 James River Corp. of Virginia.. 54,022 10,334 Kimberly-Clark Corp............ 517,992 2,043 Louisiana Pacific Corp......... 39,839 634 Mead Corp...................... 40,418 515 Potlatch Corp.................. 22,081 1,872 *Stone Container Corp........... 25,740 1,044 Union Camp Corp................ 54,810 1,221 Westvaco Corp.................. 38,156 3,644 Weyerhaeuser Co................ 181,745 989 Willamette Industries, Inc..... 73,681 ---------- 1,575,909 ---------- PHOTOGRAPHY - 0.28% 5,834 Eastman Kodak Co............... 483,493 146 Polaroid Corp.................. 7,446 ---------- 490,939 ---------- POLLUTION CONTROL - 0.25% 2,659 Browning-Ferris Industries Inc. 87,082 5,700 Laidlaw Inc. Class B........... 76,950 941 Safety-Kleen Corp.............. 14,703 8,331 Waste Management, Inc.......... 264,509 ---------- 443,244 ---------- PUBLISHING - NEWS - 0.37% 1,727 Dow Jones & Co., Inc........... 67,137 2,619 Gannett Co., Inc............... 242,258 1,696 Knight-Ridder, Inc............. 73,140 1,729 New York Times Co. Class A..... 79,642 1,767 Times Mirror Co................ 99,173 2,201 Tribune Co..................... 95,193 ---------- 656,543 ---------- PUBLISHING/PRINTING - 0.23% 1,519 Deluxe Corp.................... $ 49,368 3,086 Dun & Bradstreet Corp.......... 80,622 1,271 Harcourt General, Inc.......... 60,214 526 John H. Harland Co............. 12,032 1,878 McGraw-Hill, Inc............... 102,586 1,796 Moore Corp. Ltd................ 39,961 1,696 RR Donnelley & Sons Co......... 62,964 ---------- 407,747 ---------- RAILROAD - 0.55% 2,833 Burlington Northern Santa Fe... 235,139 3,976 CSX Corp...................... 210,728 2,335 Norfolk Southern Corp.......... 226,787 4,346 Union Pacific Corp............. 294,442 ---------- 967,096 ---------- RESTAURANTS - 0.37% 2,957 Darden Restaurants, Inc........ 24,765 11,361 McDonald's Corp................ 570,890 2,400 Wendy's International, Inc..... 56,100 ---------- 651,755 ---------- SAVINGS & LOAN - 0.14% 625 Golden West Financial Corp..... 42,344 2,561 Great Western Financial Corp... 124,209 1,985 H.F. Ahmanson & Co............. 80,889 ---------- 247,442 ---------- SECURITES RELATED - 0.46% 5,518 Dean Witter, Discover & Co..... 227,618 2,815 Merrill Lynch & Co., Inc....... 298,390 2,724 Morgan Stanley Group Inc....... 183,870 2,038 Salomon Inc.................... 109,288 ---------- 819,166 ---------- SEMICONDUCTORS - 2.21% 2,557 *Advanced Micro Devices, Inc.... 102,280 3,133 *Applied Materials, Inc......... 204,428 13,901 Intel Corp..................... 2,106,002 2,210 *LSI Logic Corp................. 92,268 3,844 *Micron Technology, Inc......... 163,370 10,390 Motorola, Inc.................. 689,636 2,537 *National Semiconductor Corp.... 71,353 3,517 Rockwell International Corp.... 226,847
163 =============================================================================== 62 TIMED OPPORTUNITY FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ===============================================================================
NUMBER MARKET OF SHARES VALUE - - ------------------------------------------------------- SEMICONDUCTORS - Continued 2,914 Texas Instruments Inc.......... $ 261,896 ----------- 3,918,080 ----------- TELECOMMUNICATIONS - 1.16% 7,049 *Airtouch Communications, Inc... 196,491 3,484 ALLTEL Corp.................... 114,537 1,624 *Andrew Corp.................... 44,254 2,147 *DSC Communications Corp........ 54,883 2,978 Frontier Corp.................. 54,721 10,504 Lucent Technologies, Inc....... 668,317 3,917 Northern Telecom Ltd........... 329,028 1,381 Scientific-Atlanta, Inc........ 25,031 2,604 *Tellabs, Inc................... 130,851 14,968 *WorldCom, Inc.................. 443,427 ----------- 2,061,540 ----------- TEXTILE - PRODUCTS - 0.01% 683 Russell Corp................... 20,917 ----------- TOBACCO - 1.12% 2,757 Fortune Brands, Inc............ 135,093 39,929 Philip Morris Cos Inc.......... 1,756,876 3,427 UST Inc........................ 97,670 ----------- 1,989,639 ----------- TRUCKERS - 0.01% 700 Caliber System, Inc............ 22,400 ----------- UTILITIES - COMMUNICATION - 3.17% 29,854 AT & T Corp.................... 1,100,866 9,959 Ameritech Corp................. 652,315 5,506 Bell Atlantic Corp............. 385,420 16,527 BellSouth Corp................. 749,913 17,487 GTE Corp....................... 771,614 11,257 MCI Communications Corp........ 431,987 5,097 NYNEX Corp..................... 273,964 14,857 SBC Communications, Inc........ 869,135 7,920 Sprint Corp.................... 387,090 ----------- 5,622,304 ----------- UTILITIES - ELECTRIC - 1.47% 3,449 American Electric Power, Inc... 140,547 2,698 Baltimore Gas and Electric Co.. 70,823 2,806 Carolina Power & Light Co...... 97,509 3,792 Central & South West Corp...... 80,580 UTILITIES - ELECTRIC - Continued 2,918 Cinergy Corp................... $ 102,130 4,299 Consolidated Edison Co. of New York, Inc................. 125,208 3,308 Dominion Resources, Inc........ 114,540 2,593 DTE Energy Co.................. 69,039 3,602 Duke Power Co.................. 162,090 7,917 Edison International........... 185,060 4,227 Entergy Corp................... 111,487 2,670 FPL Group, Inc................. 124,155 2,154 GPU Inc........................ 75,390 4,315 Houston Industries, Inc........ 89,536 1,200 *Niagara Mohawk Power Corp...... 10,500 1,234 Northern States Power Co....... 60,466 2,826 Ohio Edison Co................. 60,053 4,835 P G & E Corp................... 111,809 3,000 P P & L Resources Inc.......... 60,375 5,445 PacifiCorp..................... 108,219 4,077 Peco Energy Co................. 77,463 4,381 Public Service Enterprise Group........................ 108,430 12,108 Southern Co.................... 257,295 4,014 Texas Utilities Co............. 137,981 1,925 Union Electric Co.............. 70,502 ----------- 2,611,187 ----------- UTILITIES - GAS, DISTRIBUTION - 0.02% 890 NICOR Inc...................... 30,594 ----------- UTILITIES - GAS, PIPELINE - 0.30% 987 Columbia Gas System, Inc....... 63,538 1,695 Consolidated Natural Gas Co.... 90,047 4,547 Enron Corp..................... 185,290 1,520 Pacific Enterprises............ 49,780 625 Peoples Energy Corp............ 22,188 2,913 Williams Companies, Inc........ 128,536 ----------- 539,379 ----------- TOTAL COMMON STOCKS (Cost $82,495,326)............. 108,735,366 -----------
PAR VALUE ----- CORPORATE BONDS - 18.33% AUTO - CARS - 1.12% $2,000,000 Ford Motor Co., 7.25% due 10/01/08............ 1,987,740 ----------- BANKS - OTHER - 2.98% $1,000,000 BankAmerica Corp., 6.63% due 05/30/01............ $ 991,160 3,000,000 Malayan Banking Berhad, 7.13% due 09/15/05............ 2,952,600 1,500,000 Santander Finance Issuance, 6.38% due 02/15/11............ 1,348,725 ----------- 5,292,485 ----------- BANKS - REGIONAL - 1.14% 2,000,000 NationsBank Corp., 7.75% due 08/15/15............ 2,014,300 ----------- ENTERTAINMENT - 1.78% 3,000,000 News America Holdings, Inc., 9.13% due 10/15/99............ 3,159,120 ----------- FINANCE COMPANIES - 5.89% 3,000,000 AT&T Capital Corp., 6.80% due 02/01/01............ 2,989,830 2,000,000 CIT Group Holdings, Inc., 6.63% due 06/28/99............ 2,005,300 1,000,000 Ford Motor Credit Co., 6.25% due 11/08/00............ 983,810 1,500,000 GE Capital Mortgage Services, 6.46% due 02/25/01............ 1,492,734 3,000,000 International Lease Finance, Corp., 6.45% due 09/11/00..... 2,972,520 ----------- 10,444,194 ----------- HOSPITAL MANAGEMENT - 0.88% 1,650,000 Columbia/HCA Healthcare Corp., 7.19% due 11/15/15............ 1,563,920 ----------- MERCHANDISING - MASS - 0.57% 1,000,000 Sears Roebuck, and Co., 7.35% due 03/23/00............ 1,015,550 ----------- OIL - INTEGRATED DOMESTIC - 1.12% 2,000,000 Union Oil California, 7.20% due 05/15/05............ 1,990,500 -----------
164 =============================================================================== May 31, 1997 TIMED OPPORTUNITY FUND - STATEMENT OF NET ASSETS CONTINUED 63 ===============================================================================
PAR MARKET VALUE VALUE - - -------------------------------------------------------- SECURITIES RELATED - 1.17% Bear Stearns Co. Inc: $1,000,000 9.38% due 06/01/01........... $ 1,084,150 1,000,000 6.75% due 05/01/01........... 994,120 ------------ 2,078,270 ------------ UTILITIES - COMMUNICATION - 1.07% 2,000,000 Bellsouth Telecommunications, Inc., 7.00% due 10/01/25...... 1,895,340 ------------ UTILITIES - GAS, PIPELINE - 0.61% 1,000,000 Williams Companies, Inc., 8.88% due 09/15/12............ 1,087,800 ------------ TOTAL CORPORATE BONDS (Cost $32,981,637)............. 32,529,219 ------------ UNITED STATES GOVERNMENT - LONG TERM - 13.48% GOVERNMENT SPONSORED - 3.68% Federal Home Loan Mortgage Corp (Pools/REMICS): 191,530 7.50% due 09/01/25........... 191,410 490,081 7.50% due 09/01/25........... 489,772 366,671 7.50% due 09/01/25........... 366,440 492,061 7.50% due 09/01/25........... 491,751 Federal National Mortgage Association: 2,000,000 7.00% due 05/10/01........... 2,005,320 3,000,000 6.90% due 10/09/01........... 2,986,860 ------------ 6,531,553 ------------ UNITED STATES NOTES - 9.80% United States Treasury Notes: 1,500,000 8.13% due 08/15/19........... 1,686,795 1,000,000 8.00% due 08/15/99........... 1,035,310 2,000,000 7.25% due 05/15/16........... 2,057,820 1,000,000 6.75% due 05/31/99........... 1,010,000 4,000,000 6.50% due 08/15/05........... 3,961,240 2,200,000 6.38% due 04/30/99........... 2,207,216 1,500,000 6.25% due 02/15/03........... 1,479,615 2,000,000 5.75% due 12/31/98........... 1,990,620 1,000,000 5.75% due 08/15/03........... 959,370 1,000,000 5.50% due 04/15/00........... 978,120 ------------ 17,366,106 ------------ TOTAL UNITED STATES GOVERNMENT - LONG TERM (Cost $23,964,578)............. $ 23,897,659 ------------ CORPORATE SHORT TERM COMMERCIAL PAPER - 6.30% BANKS - REGIONAL - 1.52% $2,701,000 BANC ONE CORP., 5.55% due 06/02/97............ 2,700,582 ------------ FINANCE COMPANIES - 2.02% General Motors Acceptance Corp: 2,204,000 5.63% due 06/05/97........... 2,202,618 1,382,000 5.62% due 06/09/97........... 1,380,273 ------------ 3,582,891 ------------ SECURITIES RELATED - 2.76% Merrill Lynch & Co., Inc: 1,691,000 5.58% due 06/04/97........... 1,690,212 2,255,000 5.52% due 06/06/97........... 2,253,269 952,000 5.50% due 06/03/97 .......... 951,710 ------------ 4,895,191 ------------ TOTAL CORPORATE SHORT TERM COMMERCIAL PAPER (Cost $11,178,664)............. 11,178,664 ------------ UNITED STATES GOVERNMENT - SHORT TERM - 0.11% U.S. TREASURY BILLS - 0.11% 200,000 United States Treasury Bills, 4.99% due 08/21/97 (Cost $197,751)............... 197,751 ------------ TOTAL INVESTMENTS (Cost $ 150,817,956) - 99.54%.. 176,538,659 Other assets less liabilities, net - 0.46%................... 808,024 ------------ NET ASSETS (equivalent to $ 12.57 per share on 14,106,892 shares outstanding) - 100%........... $177,346,683 ============
*Non-income producing
UNREALIZED CONTRACTS APPRECIATION - - --------------------------------------------------------- FUTURES CONTRACTS PURCHASED(1) (Delivery month/Value at 5/31/97) 3(2) S&P 500 Index Futures (June/$850.60)................ $ 102,600 ----------
(1)U.S.Treasury Bills with a market value of approximately $200,000 were maintained in a segregated account with a portion placed as collateral for futures contracts. (2)Per 500 =============================================================================== NET ASSETS REPRESENTED BY: Capital stock, $.01 par value per share, 1,000,000,000 shares authorized, 14,106,892 shares outstanding ............................ $ 141,069 Additional paid in capital ................................. 141,362,223 Undistributed net realized gain on securities .............. 9,979,602 Undistributed net investment income ........................ 40,486 Unrealized appreciation of: Investments............................ $25,720,703 Futures ............................... 102,600 25,823,303 ----------- ------------ NET ASSETS APPLICABLETOSHARES OUTSTANDING............................................... $177,346,683 ============
SEE NOTES TO FINANCIAL STATEMENTS. 165 =============================================================================== 64 TIMED OPPORTUNITY - FINANCIAL STATEMENTS =============================================================================== STATEMENT OF OPERATIONS For the fiscal year ended May 31, 1997 INVESTMENT INCOME: Dividends ................................................. $ 2,197,882 Interest .................................................. 4,673,462 ----------- Total investment income ................................. 6,871,344 ----------- EXPENSES: Advisory fees ............................................. 900,822 Custodian and accounting services ......................... 71,329 Reports to shareholders ................................... 23,470 Audit fees and tax services ............................... 5,439 Directors' fees and expenses .............................. 4,572 Miscellaneous ............................................. 19,103 ----------- Total expenses .......................................... 1,024,735 NET INVESTMENT INCOME ..................................... 5,846,609 ----------- REALIZED AND UNREALIZED GAIN ON SECURITIES: Net realized gain on: Investments............................... $10,326,981 Futures contracts......................... 201,568 10,528,549 ----------- Net unrealized appreciation during the year: Investments............................... 9,739,302 Futures contracts......................... 101,100 9,840,402 ----------- ----------- Net realized and unrealized gain during the year........ 20,368,951 ----------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........... $26,215,560 ===========
STATEMENT OF CHANGES IN NET ASSETS For the fiscal year ended May 31:
1997 1996 ------------- ------------- OPERATIONS: Net investment income ................................................ $ 5,846,609 $ 6,782,286 Net realized gain on securities ...................................... 10,528,549 20,179,137 Net unrealized appreciation of securities during the year ............ 9,840,402 3,925,617 ------------- ------------- Increase in net assets resulting from operations ................... 26,215,560 30,887,040 ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ................................................ (5,861,358) (6,883,971) Net realized gain on securities ...................................... (19,664,171) (3,314,027) ------------- ------------- Decrease in net assets resulting from distributions to shareholders ................................................... (25,525,529) (10,197,998) ------------- ------------- CAPITAL STOCK TRANSACTIONS: Proceeds from capital stock sold ..................................... 3,274,322 4,919,015 Proceeds from capital stock issued for distributions reinvested ...... 25,525,529 10,197,998 ------------- ------------- 28,799,851 15,117,013 Cost of capital stock repurchased .................................... (42,167,070) (29,175,524) ------------- ------------- Decrease in net assets resulting from capital stock transactions ... (13,367,219) (14,058,511) TOTAL INCREASE (DECREASE) IN NET ASSETS .............................. (12,677,188) 6,630,531 NET ASSETS: Beginning of year .................................................... 190,023,871 183,393,340 ------------- ------------- End of year (including undistributed net investment income of $40,486 and $55,235) ............................................ $ 177,346,683 $ 190,023,871 ============= ============= CHANGE IN SHARES OUTSTANDING: Shares of capital stock sold ......................................... 264,558 406,767 Shares issued for distributions reinvested ........................... 2,146,236 849,188 Shares of capital stock repurchased .................................. (3,446,167) (2,433,033) ------------- ------------- Decrease in shares outstanding ..................................... (1,035,373) (1,177,078) Shares outstanding: Beginning of year .................................................. 15,142,265 16,319,343 ------------- ------------- End of year ........................................................ 14,106,892 15,142,265 ============= =============
SEE NOTES TO FINANCIAL STATEMENTS. 166 =============================================================================== May 31, 1997 CAPITAL CONSERVATION FUND - STATEMENT OF NET ASSETS 65 ===============================================================================
PAR MARKET VALUE VALUE - - ------------------------------------------------------- CORPORATE BONDS - 83.99% AIRLINES - 5.89% $1,500,000 Delta Air Lines, Inc., 9.75% due 5/15/21............. $1,766,760 2,000,000 Southwest Airlines Co., 8.75% due 10/15/03............ 2,163,420 ---------- 3,930,180 ---------- BANKS - OTHER - 7.22% 1,500,000 Bank of Boston Corp., 8.25% due 12/15/26............ 1,495,635 1,000,000 BankAmerica Corp., 7.20% due 4/15/06............. 994,520 1,500,000 Santander Finance Issuances, 7.25% due 11/1/15............. 1,416,510 1,000,000 Toronto Dominion Bank Ont, 6.125% due 11/1/08............ 910,090 ---------- 4,816,755 ---------- BANKS - REGIONAL - 3.73% 1,500,000 Barnett Capital Inc., 8.06% due 12/1/26............. 1,470,900 1,000,000 SouthTrust Corp., 7.625% due 5/1/04............. 1,021,710 ---------- 2,492,610 ---------- BROADCASTING - 2.95% 2,000,000 Viacom Inc, 7.75% due 6/1/05.............. 1,967,560 ---------- BUILDING MATERIALS - 2.93% 2,000,000 CSR America Inc., 6.875% due 7/21/05............ 1,956,580 ---------- ENTERTAINMENT - 3.00% 2,000,000 News America Holdings Inc., 8.25% due 8/10/18............. 2,001,360 ---------- FINANCE COMPANIES - 13.09% 2,000,000 Capital One Bank, 8.125% due 3/1/00............. 2,062,040 1,000,000 CIT Group Holdings, Inc., 8.375% due 11/1/01............ 1,054,590 2,000,000 Finova Capital Corp., 9.125% due 2/27/02............ 2,169,900 FINANCE COMPANIES - Continued $ 500,000 Ford Motor Credit Co., 6.375% due 11/5/08............ $ 462,770 3,000,000 GE Capital Mortgage Services Inc., 6.46% due 2/25/01....... 2,985,703 ---------- 8,735,003 ---------- HOSPITAL MANAGEMENT - 2.18% 1,500,000 Columbia/HCA Healthcare Corp., 7.50% due 12/15/23..... 1,457,670 ---------- MERCHANDISE - DRUG - 0.71% 500,000 IMCERA Group Inc., 6.00% due 10/15/03............ 473,445 ---------- MERCHANDISING - DEPARTMENT - 3.31% 2,000,000 Associated Dry Goods Corp., 8.85% due 3/1/06.............. 2,209,200 ---------- MERCHANDISING - MASS - 4.63% 1,000,000 Sears Roebuck and Co., 6.25% due 1/15/04............. 956,600 2,000,000 Wal-Mart Stores, Inc., 9.10% due 7/15/00............. 2,136,040 ---------- 3,092,640 ---------- METALS - STEEL - 3.04% 2,000,000 Pohang Iron & Steel Limited, 7.50% due 8/1/02.............. 2,027,520 ---------- MISCELLANEOUS - 2.14% 1,500,000 Hertz Corp., 6.00% due 1/15/03............. 1,425,645 ---------- PAPER/FOREST PRODUCTS - 3.45% 2,000,000 Georgia-Pacific Corp., 9.50% due 12/1/11............. 2,304,760 ---------- SECURITIES RELATED - 5.15% Lehman Brothers Holdings Inc.: 1,500,000 7.125% due 9/15/03............ 1,487,385 2,000,000 6.125% due 2/1/01............. 1,951,540 ---------- 3,438,925 ---------- TELECOMMUNICATIONS - 3.02% 2,000,000 Airtouch Communications, Inc., 7.50% due 7/15/06....... 2,013,020 ---------- UTILITIES - COMMUNICATION - 5.56% $2,500,000 Century Telephone Enterprises, Inc., 7.20% due 12/1/25....... $2,349,775 1,500,000 GTE South, Inc., 6.00% due 2/15/08............. 1,362,045 ---------- 3,711,820 ---------- UTILITIES - ELECTRIC - 6.07% 1,000,000 Georgia Power Co., 6.125% due 9/1/99............. 991,090 1,000,000 PSI Energy Inc., 5.35% due 9/23/98............. 987,610 2,000,000 Tenaga Nasional Berhad, 7.875% due 6/15/04............ 2,075,800 ---------- 4,054,500 ---------- UTILITIES - GAS, PIPELINE - 5.92% 2,000,000 Columbia Gas System, Inc., 7.62% due 11/28/25............ 1,904,700 2,000,000 Enron Corp., 7.625% due 9/10/04............ 2,050,060 ---------- 3,954,760 ---------- TOTAL CORPORATE BONDS (Cost $57,231,956)............. 56,063,953 ---------- UNITED STATES GOVERNMENT - LONG TERM - 13.26% FEDERAL AGENCIES - 2.45% Government National Mortgage Association: 111,449 Pool #233862, 9.50% due 5/15/18............. 120,182 5,753 Pool #248341, 9.50% due 6/15/18............. 6,204 2,663 Pool #252064, 9.50% due 6/15/18............. 2,872 170,316 Pool #247397, 9.50% due 7/15/18............. 183,662 38,439 Pool #256190, 9.50% due 8/15/18............. 41,451 14,197 Pool #253172, 9.50% due 10/15/18............ 15,309 274,065 Pool #185210, 8.00% due 1/15/22............. 280,741
167 =============================================================================== 66 CAPITAL CONSERVATION FUND - STATEMENT OF NET ASSETS CONTINUED May 31, 1997 ===============================================================================
PAR MARKET VALUE VALUE - - ------------------------------------------------------- FEDERAL AGENCIES - Continued $ 968,491 Pool #421496, 8.00% due 9/15/26............. $ 985,439 ----------- 1,635,860 ----------- GOVERNMENT SPONSORED - 10.05% 1,000,000 Federal Home Loan Mortgage Corp. (Pools/REMICS), 5.75% due 12/15/16............ 979,060 2,000,000 Federal National Mortgage Association, 7.23% due 3/30/06................... 1,964,680 Federal National Mortgage Association (Pools/REMICS): 983,183 7.50% due 7/1/26.............. 980,725 945,033 7.00% due 5/1/11.............. 940,402 909,397 7.00% due 5/1/11.............. 904,941 941,209 7.00% due 6/1/11.............. 936,597 ----------- 6,706,405 ----------- UNITED STATES NOTES - 0.76% 500,000 United States Treasury Notes, 6.875% due 5/15/06............ 506,640 ----------- TOTAL UNITED STATES GOVERNMENT - LONG TERM (Cost $8,793,748).............. 8,848,905 ----------- FOREIGN GOVERNMENT BOND - 0.76% CANADA - 0.76% 500,000 New Brunswick Province, 7.125% due 10/1/02 (Cost $495,392)............... 505,635 ----------- TOTAL INVESTMENTS (Cost $66,521,096) - 98.01%.... 65,418,493 Other assets and liabilities, net - 1.99% .................. 1,328,963 ----------- NET ASSETS (equivalent to $9.31 per share on 7,168,057 shares outstanding) - 100% .......... $66,747,456 ===========
MARKET VALUE ------------ NET ASSETS REPRESENTED BY: Capital stock, $.01 par value per share, 1,000,000,000 shares authorized, 7,168,057 shares outstanding............ $ 71,681 Additional paid in capital................ 68,530,834 Accumulated net realized loss on securities.............................. (776,445) Undistributed net investment income....... 23,989 Unrealized depreciation of securities..... (1,102,603) ------------ NET ASSETS APPLICABLE TO SHARES OUTSTANDING............................. $ 66,747,456 ============
SEE NOTES TO FINANCIAL STATEMENTS. 168 =============================================================================== CAPITAL CONSERVATION FUND - FINANCIAL STATEMENTS 67 =============================================================================== STATEMENT OF OPERATIONS For the fiscal year ended May 31, 1997 INVESTMENT INCOME: Interest ................................................... $4,962,895 ---------- EXPENSES: Advisory fees .............................................. 347,154 Custodian and accounting services .......................... 27,014 Reports to shareholders .................................... 8,609 Audit fees and tax services ................................ 2,108 Directors' fees and expenses ............................... 1,787 Miscellaneous .............................................. 5,966 ---------- Total expenses ........................................... 392,638 NET INVESTMENT INCOME ...................................... 4,570,257 ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES: Net realized loss on: Investments......................................$(28,682) Futures contracts................................ (99,075) (127,757) -------- Net unrealized appreciation during the year: Investments...................................... 724,354 Futures contracts................................ 36,094 760,448 -------- ---------- Net realized and unrealized gain on securities during the year......................................... 632,691 ---------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ $5,202,948 ==========
STATEMENT OF CHANGES IN NET ASSETS For the fiscal year ended May 31:
1997 1996 ------------ ------------ OPERATIONS: Net investment income ...................................... $ 4,570,257 $ 4,543,523 Net realized gain (loss) on securities ..................... (127,757) 2,248,102 Net unrealized appreciation (depreciation) of securities during the year .......................................... 760,448 (4,541,924) ------------ ------------ Increase in net assets resulting from operations ........ 5,202,948 2,249,701 ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ...................................... (4,560,074) (4,530,909) ------------ ------------ CAPITAL STOCK TRANSACTIONS: Proceeds from capital stock sold ........................... 5,054,950 14,391,888 Proceeds from capital stock issued for distributions reinvested ................................................ 4,560,074 4,530,909 ------------ ------------ 9,615,024 18,922,797 Cost of capital stock repurchased .......................... (13,722,282) (12,460,655) ------------ ------------ Increase (decrease) in net assets resulting from capital stock transactions .............................. (4,107,258) 6,462,142 ------------ ------------ TOTAL INCREASE (DECREASE) IN NET ASSETS .................... (3,464,384) 4,180,934 NET ASSETS: Beginning of year .......................................... 70,211,840 66,030,906 ------------ ------------ End of year (including undistributed net investment income of $23,989 and $13,806) ........................... $ 66,747,456 $ 70,211,840 ============ ============ CHANGE IN SHARES OUTSTANDING: Shares of capital stock sold ............................... 540,826 1,491,047 Shares issued for distributions reinvested ................. 488,804 474,239 Shares of capital stock repurchased ........................ (1,466,062) (1,296,137) ------------ ------------ Increase (decrease) in shares outstanding ................ (436,432) 669,149 Shares outstanding: Beginning of year ........................................ 7,604,489 6,935,340 ------------ ------------ End of year .............................................. 7,168,057 7,604,489 ============ ============
SEE NOTES TO FINANCIAL STATEMENTS. 169 =============================================================================== 68 GOVERNMENT SECURITIES FUND - STATEMENT OF NET ASSETS May 31, 1997 ===============================================================================
PAR MARKET VALUE VALUE - - -------------------------------------------------------- UNITED STATES GOVERNMENT - LONG TERM - 97.33% FEDERAL AGENCIES - 5.46% $ 274,065 Government National Mortgage Association Pool #185210, 8.00% due 1/15/22.............$ 280,741 Tennessee Valley Authority: 2,500,000 6.75% due 11/1/25............. 2,354,300 2,000,000 6.375% due 6/15/05............ 1,941,240 ----------- 4,576,281 ----------- GOVERNMENT SPONSORED - 61.94% Federal Farm Credit Banks: 1,150,000 7.10% due 11/2/02............. 1,170,481 1,500,000 6.92% due 5/13/02............. 1,513,830 Federal Home Loan Banks: 1,155,000 7.26% due 9/6/01.............. 1,179,902 2,000,000 6.60% due 4/13/99............. 2,009,380 3,000,000 5.695% due 12/19/00........... 2,917,980 Federal Home Loan Mortgage Corp.: 3,000,000 7.125% due 7/21/99............ 3,045,930 1,500,000 7.09% due 6/1/05.............. 1,481,010 1,500,000 6.90% due 3/26/03............. 1,482,885 3,500,000 6.705% due 11/9/05............ 3,389,540 1,500,000 6.37% due 1/23/06............. 1,426,170 Federal Home Loan Mortgage Corp. (Pools/REMICS): 1,268,482 8.50% due 3/1/25.............. 1,315,048 1,016,815 8.00% due 2/1/25.............. 1,038,107 123,007 7.50% due 9/1/25.............. 122,929 442,173 7.50% due 9/1/25.............. 441,894 200,613 7.50% due 9/1/25.............. 200,486 2,000,000 7.00% due 9/15/23............. 1,980,000 175,000 5.50% due 2/25/19............. 166,359 Federal National Mortgage Association: 1,000,000 9.05% due 4/10/00............. 1,065,940 2,000,000 7.27% due 8/24/05............. 1,990,000 3,500,000 7.17% due 6/12/01............. 3,507,105 2,300,000 6.90% due 10/9/01............. 2,289,926 2,000,000 6.85% due 9/12/05............. 1,951,880 1,000,000 6.78% due 7/28/00............. 996,250 3,000,000 6.45% due 6/10/03............. 2,907,180 2,000,000 6.41% due 3/8/06.............. 1,929,380 GOVERNMENT SPONSORED - Continued Federal National Mortgage Association: $2,500,000 6.40% due 12/10/01............$ 2,454,300 5,000,000 6.00% due 3/26/99............. 4,978,900 Student Loan Marketing Association: 1,000,000 7.50% due 3/8/00.............. 1,025,310 2,000,000 5.88% due 2/6/01.............. 1,945,320 ----------- 51,923,422 ----------- UNITED STATES BONDS, NOTES & STRIPS - 29.93% United States Treasury Bonds: 1,800,000 9.00% due 11/15/18............ 2,196,288 4,000,000 8.75% due 8/15/20............. 4,793,120 3,500,000 8.50% due 2/15/20............. 4,087,895 United States Treasury Notes: 1,000,000 8.25% due 7/15/98............. 1,024,690 2,500,000 6.75% due 4/30/00............. 2,525,400 1,000,000 6.375% due 1/15/00............ 1,002,030 6,000,000 5.875% due 11/15/99........... 5,942,820 3,000,000 5.75% due 8/15/03............. 2,878,110 1,500,000 United States Treasury Strips, 0.00% due 11/15/09............ 634,560 ----------- 25,084,913 ----------- TOTAL UNITED STATES GOVERNMENT - LONG TERM (Cost $81,839,788)............. 81,584,616 ----------- CORPORATE SHORT TERM COMMERCIAL PAPER - 1.02% SECURITIES RELATED - 1.02% 858,000 Merrill Lynch & Co., Inc., 5.65% due 6/2/97 (Cost $857,865)............... 857,865 ----------- TOTAL INVESTMENTS (Cost $82,697,653) - 98.35%.... 82,442,481 Other assets and liabilities, net - 1.65% .................. 1,384,121 ----------- NET ASSETS (equivalent to $9.67 per share on 8,672,214 shares outstanding) - 100% .......... $83,826,602 ===========
MARKET VALUE - - ------------------------------------------------------- NET ASSETS REPRESENTED BY: Capital stock, $.01 par value per share, 1,000,000,000 shares authorized, 8,672,214 shares outstanding............ $ 86,722 Additional paid in capital................ 86,056,002 Accumulated net realized loss on securities (2,092,608) Undistributed net investment income....... 31,658 Unrealized depreciation of securities..... (255,172) ----------- NET ASSETS APPLICABLE TO SHARES OUTSTANDING...................... $83,826,602 ===========
SEE NOTES TO FINANCIAL STATEMENTS. 170 =============================================================================== GOVERNMENT SECURITIES FUND - FINANCIAL STATEMENTS 69 =============================================================================== STATEMENT OF OPERATIONS For the fiscal year ended May 31, 1997 INVESTMENT INCOME: Interest............................................................. $ 5,558,419 ----------- EXPENSES: Advisory fees........................................................ 417,356 Custodian and accounting services.................................... 29,457 Reports to shareholders.............................................. 11,112 Audit fees and tax services.......................................... 2,917 Directors' fees and expenses......................................... 2,072 Miscellaneous........................................................ 6,748 ----------- Total expenses..................................................... 469,662 NET INVESTMENT INCOME................................................ 5,088,757 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES: Net realized gain (loss) on: Investments.......................................... $ 92,038 Futures contracts.................................... (87,906) 4,132 ----------- Net unrealized appreciation during the year: Investments.......................................... 461,189 Futures contracts.................................... 18,218 479,407 ----------- ----------- Net realized and unrealized gain on securities during the year..... 483,539 ----------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $ 5,572,296 ===========
STATEMENT OF CHANGES IN NET ASSETS For the fiscal year ended May 31:
1997 1996 ------------ ------------ OPERATIONS: Net investment income ....................................... $ 5,088,757 $ 4,226,813 Net realized gain on securities ............................. 4,132 788,071 Net unrealized appreciation (depreciation) of securities during the year ........................................... 479,407 (3,244,466) ------------ ------------ Increase in net assets resulting from operations ......... 5,572,296 1,770,418 ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ....................................... (5,073,340) (4,221,098) ------------ ------------ CAPITAL STOCK TRANSACTIONS: Proceeds from capital stock sold ............................ 11,299,725 29,935,878 Proceeds from capital stock issued for distributions reinvested ............................................... 5,073,340 4,221,098 ------------ ------------ 16,373,065 34,156,976 Cost of capital stock repurchased ........................... (11,468,468) (7,457,426) ------------ ------------ Increase in net assets resulting from capital stock transactions ............................................. 4,904,597 26,699,550 ------------ ------------ TOTAL INCREASE IN NET ASSETS ................................ 5,403,553 24,248,870 NET ASSETS: Beginning of year ........................................... 78,423,049 54,174,179 ------------ ------------ End of year (including undistributed net investment income of $31,658 and $16,241) ............................ $ 83,826,602 $ 78,423,049 ============ ============ CHANGE IN SHARES OUTSTANDING: Shares of capital stock sold ................................ 1,165,828 3,005,467 Shares issued for distributions reinvested .................. 523,483 426,047 Shares of capital stock repurchased ......................... (1,180,771) (745,798) ------------ ------------ Increase in shares outstanding ............................ 508,540 2,685,716 Shares outstanding: Beginning of year ......................................... 8,163,674 5,477,958 ------------ ------------ End of year ............................................... 8,672,214 8,163,674 ============ ============
SEE NOTES TO FINANCIAL STATEMENTS. 171 ================================================================================ 70 INTERNATIONAL GOVERNMENT BOND FUND - STATEMENT OF NET ASSETS May 31, 1997 ================================================================================
PAR MARKET VALUE VALUE - - ------------------------------------------------------- GOVERNMENT BONDS - 86.35% AUSTRALIA - 2.62% Commonwealth: A$ 1,000,000 12.00% due 7/15/99........... $ 854,216 A$ 400,000 10.00% due 10/15/07.......... 356,950 A$ 500,000 9.75% due 3/15/02............ 424,614 A$ 500,000 9.00% due 9/15/04............ 417,777 A$ 500,000 8.75% due 1/15/01............ 408,778 A$ 750,000 7.50% due 7/15/05............ 576,356 A$ 500,000 7.50% due 9/15/09............ 379,641 A$ 500,000 7.00% due 4/15/00............ 389,066 A$ 300,000 South Australia Finance Authority, 12.50% due 5/8/01................... 270,632 A$ 400,000 South Australian Government, 7.75% due 4/15/98............ 309,810 A$ 200,000 State Bank of New South Wales, 7.00% due 6/30/99............ 154,524 A$ 150,000 State Bank of South Australia, 7.25% due 6/15/00............ 115,965 ----------- 4,658,329 ----------- AUSTRIA - 2.46% Republic of Austria: As 2,500,000 8.50% due 2/21/01............ 236,355 DM 1,000,000 7.25% due 5/3/07............. 638,055 As 2,000,000 7.125% due 7/12/04........... 181,818 As 1,500,000 7.00% due 2/14/00............ 134,109 As 2,200,000 7.00% due 1/20/03............ 199,265 As 2,000,000 7.00% due 5/16/05............ 180,232 As 2,000,000 6.875% due 4/19/02........... 180,829 As 2,000,000 6.50% due 11/17/05........... 174,719 As 6,000,000 6.25% due 5/31/06............ 514,406 As 1,000,000 5.75% due 3/22/99............ 86,239 As 1,500,000 5.375% due 11/23/98.......... 128,283 Y. 100MM 4.75% due 12/20/04........... 978,961 Y. 50MM 4.50% due 9/28/05............ 488,407 As 3,000,000 4.375% due 2/28/02........... 245,918 ----------- 4,367,596 ----------- BELGIUM - 3.61% Kingdom of Belgium: Bf10,000,000 10.00% due 8/2/00............ 330,575 Bf25,000,000 8.75% due 6/25/02............ 826,296 Bf10,000,000 8.00% due 12/24/12........... 324,398 Bf10,000,000 8.00% due 3/28/15............ 324,483 Bf10,000,000 7.75% due 12/22/00........... 313,403 Bf25,000,000 7.75% due 10/15/04........... 798,952 Bf20,000,000 7.50% due 7/29/08............ 627,203 Bf22,000,000 7.00% due 4/29/99............ 660,125 Bf15,000,000 7.00% due 5/15/06............ 457,183 Bf20,000,000 6.50% due 3/31/05............ 594,559 Bf20,000,000 6.25% due 3/28/07............ 576,141 Bf20,000,000 5.00% due 3/28/01............ 575,234 ----------- 6,408,552 ----------- CANADA - 4.85% C$ 800,000 British Columbia Province, 9.85% due 5/1/98............. 609,562 Government of Canada: C$ 550,000 9.50% due 6/1/10............. 490,967 C$ 500,000 9.00% due 12/1/04............ 420,171 C$ 500,000 9.00% due 6/1/25............. 447,543 C$ 1,000,000 8.75% due 12/1/05............ 834,254 C$ 500,000 8.50% due 3/1/00............. 392,907 C$ 1,000,000 8.50% due 4/1/02............. 803,771 C$ 1,000,000 8.00% due 6/1/23............. 806,977 C$ 1,000,000 7.75% due 9/1/99............. 767,598 C$ 500,000 7.50% due 9/1/00............. 384,932 C$ 1,000,000 7.50% due 3/1/01............. 770,891 C$ 1,000,000 7.25% due 6/1/03............. 766,143 C$ 1,000,000 7.00% due 12/1/06............ 750,524 C$ 500,000 6.50% due 6/1/04............. 367,503 ----------- 8,613,743 ----------- DENMARK - 3.21% Kingdom of Denmark: DK 2,500,000 9.00% due 11/15/98........... 409,837 DK 2,500,000 9.00% due 11/15/00........... 434,379 DK 5,000,000 8.00% due 11/15/01........... 853,932 DK 2,500,000 8.00% due 5/15/03............ 427,811 DK 3,000,000 8.00% due 3/15/06............ 509,041 DK 3,000,000 7.00% due 12/15/04........... 485,167 DK 1,250,000 7.00% due 11/10/24........... 183,526 L. 250,000 6.75% due 8/24/98............ 407,686 DK 2,000,000 6.00% due 12/10/99........... 318,007 DK 5,000,000 6.00% due 11/15/02........... 788,871 Ff 5,000,000 5.50% due 10/26/99........... 893,460 ----------- 5,711,717 ----------- FINLAND - 1.96% Republic of Finland: FIM 1,000,000 11.00% due 1/15/99........... $ 215,487 FIM 2,000,000 10.00% due 9/15/01........... 462,739 FIM 1,000,000 9.50% due 3/15/04............ 233,008 L. 250,000 8.00% due 4/7/03............. 417,911 FIM 1,000,000 7.25% due 4/18/06............ 206,510 Ff 5,000,000 7.00% due 6/15/04............ 936,212 Y. 100MM 6.00% due 1/29/02............ 1,006,870 ----------- 3,478,737 ----------- FRANCE - 4.56% Government of France: Ff 4,600,000 9.50% due 1/25/01............ 929,225 Ff 3,500,000 8.50% due 11/25/02........... 706,776 Ff 1,500,000 8.50% due 12/26/12........... 318,022 Ff 8,000,000 7.75% due 4/12/00............ 1,516,988 Ff 3,000,000 7.25% due 4/25/06............ 575,157 Ff 7,000,000 6.75% due 10/25/03........... 1,307,606 Ff 2,000,000 6.50% due 10/25/06........... 366,477 Ff 8,500,000 6.00% due 10/25/25........... 1,341,695 Ff 2,000,000 5.50% due 4/25/04............ 348,422 Ff 2,000,000 5.50% due 4/25/07............ 338,413 Ff 2,000,000 4.50% due 10/12/98........... 349,773 ----------- 8,098,554 ----------- GERMANY - 11.83% Federal Republic of Germany: DM 1,000,000 7.75% due 10/1/02............ 657,480 DM 2,000,000 7.50% due 9/9/04............. 1,301,972 DM 3,100,000 7.125% due 12/20/02.......... 1,987,584 DM 2,000,000 7.00% due 1/13/00............ 1,257,036 DM 3,000,000 6.875% due 2/24/99........... 1,849,219 DM 1,000,000 6.75% due 7/15/04............ 627,114 DM 3,000,000 6.50% due 3/15/00............ 1,866,596 DM 3,000,000 6.50% due 7/15/03............ 1,864,490 DM 2,000,000 6.50% due 10/14/05........... 1,224,153 DM 1,000,000 6.25% due 4/26/06............ 601,135 DM 2,000,000 6.25% due 1/4/24............. 1,100,111 DM 2,500,000 6.00% due 2/20/98............ 1,490,551 DM 1,000,000 6.00% due 11/12/03........... 606,495 DM 1,000,000 6.00% due 1/4/07............. 588,380 DM 4,000,000 6.00% due 6/20/16............ 2,207,478 DM 2,000,000 5.00% due 1/14/99............ 1,196,419
172 ================================================================================ May 31, 1997 INTERNATIONAL GOVERNMENT BOND FUND - 71 STATEMENT OF NET ASSETS CONTINUED ================================================================================
PAR MARKET VALUE VALUE - - ------------------------------------------------------- GERMANY - Continued DM 1,000,000 5.00% due 5/21/01............ $ 596,688 ----------- 21,022,901 ----------- IRELAND - 0.57% Republic of Ireland: IL. 100,000 8.25% due 8/18/15........... 169,507 IL. 100,000 8.00% due 8/18/06........... 163,776 IL. 150,000 6.50% due 10/18/01.......... 230,282 IL. 150,000 6.25% due 4/1/99............ 227,228 IL. 150,000 6.25% due 10/18/04.......... 224,175 ----------- 1,014,968 ----------- ITALY - 7.27% Republic of Italy: Lit 1,500MM 12.00% due 9/18/98........... 937,118 Lit 1,000MM 12.00% due 6/1/01............ 690,490 Lit 1,500MM 12.00% due 1/1/02............ 1,053,439 Lit 2,000MM 10.50% due 4/1/00............ 1,286,553 Lit 1,000MM 10.50% due 7/15/00........... 649,178 Lit 500MM 10.50% due 4/1/05............ 345,864 Lit 500MM 10.50% due 9/1/05............ 348,225 Lit 3,400MM 10.00% due 8/1/03............ 2,276,031 Lit 500MM 9.50% due 1/1/05............. 329,015 Lit 500MM 9.50% due 2/1/06............. 333,147 Lit 2,000MM 9.00% due 11/1/23............ 1,299,537 Lit 2,000MM 8.50% due 1/1/99............. 1,210,894 Lit 1,000MM 8.50% due 4/1/99............. 607,454 Lit 500MM 8.50% due 8/1/99............. 304,170 Lit 1,000MM 8.50% due 4/1/04............. 627,519 Lit 1,000MM 8.50% due 8/1/04............. 627,643 ----------- 12,926,277 ----------- JAPAN - 20.59% Government of Japan: Y. 250MM 6.60% due 6/20/01............ 2,551,739 Y. 320MM 6.40% due 3/20/00............ 3,127,454 Y. 105MM 6.00% due 12/20/01........... 1,062,263 Y. 365MM 5.50% due 3/20/02............ 3,640,597 Y. 120MM 5.00% due 12/20/02........... 1,184,749 Y. 100MM 5.00% due 9/21/09............ 1,037,355 Y. 100MM 5.00% due 3/20/15............ 1,053,156 Y. 250MM 4.90% due 9/20/99............ 2,325,032 Y. 130MM 4.80% due 6/21/99............ 1,198,858 Y. 170MM 4.60% due 6/22/98............ 1,518,102 JAPAN - Continued Y. 127MM 4.50% due 6/20/03............ $ 1,229,866 Y. 75MM 4.50% due 12/20/04........... 733,383 Y. 150MM 4.40% due 9/22/03............ 1,447,574 Y. 200MM 4.20% due 9/21/15............ 1,920,137 Y. 150MM 4.10% due 6/21/04............ 1,427,995 Y. 100MM 3.90% due 6/21/04............ 941,005 Y. 100MM 3.80% due 9/20/16............ 911,464 Y. 250MM 3.50% due 3/21/16............ 2,191,498 Y. 100MM 3.30% due 6/20/06............ 902,447 Y. 200MM 3.20% due 3/20/06............ 1,791,842 Y. 250MM 3.00% due 9/20/05............ 2,213,826 Y. 150MM 2.90% due 12/20/05........... 1,315,543 Y. 100MM 2.70% due 3/20/07............ 856,677 ----------- 36,582,562 ----------- NETHERLANDS - 4.39% Government of the Netherlands: NG 1,050,000 9.00% due 10/16/00........... 623,719 NG 1,000,000 8.75% due 9/15/01............ 600,780 NG 500,000 8.50% due 3/15/01............ 295,059 NG 500,000 8.25% due 2/15/02............ 296,749 NG 500,000 8.25% due 6/15/02............ 298,179 NG 500,000 8.25% due 2/15/07............ 306,372 NG 1,500,000 7.75% due 3/1/05............. 885,176 NG 500,000 7.50% due 6/15/99............ 278,414 NG 500,000 7.50% due 4/15/10............ 293,758 NG 750,000 7.50% due 1/15/23............ 436,151 NG 1,250,000 6.50% due 7/15/98............ 670,676 NG 1,250,000 6.50% due 4/15/03............ 694,083 NG 1,500,000 6.00% due 1/15/06............ 795,058 NG 2,000,000 5.75% due 1/15/04............ 1,062,159 NG 500,000 5.75% due 2/15/07............ 259,168 ----------- 7,795,501 ----------- PORTUGAL - 0.30% Ff 3,000,000 Republic of Portugal, 6.625% due 5/13/08........... 540,946 ----------- SPAIN - 4.38% Government of Spain: Pst 40MM 12.25% due 3/25/00........... 325,457 Pst 55MM 11.45% due 8/30/98........... 407,843 Pst 100MM 10.50% due 10/30/03.......... 846,154 Pst 100MM 10.30% due 6/15/02........... 822,842 SPAIN - Continued Pst 100MM 10.15% due 1/31/06........... $ 851,204 Pst 100MM 10.10% due 2/28/01........... 796,693 Pst 50MM 10.00% due 2/28/05........... 418,494 Pst 50MM 8.30% due 12/15/98........... 361,130 Pst 70MM 8.20% due 2/28/09............ 535,701 Pst 80MM 8.00% due 5/30/04............ 610,127 Pst 150MM 7.40% due 7/30/99............ 1,083,495 Pst 50MM 6.75% due 4/15/00............ 358,865 Ff 2,000,000 6.50% due 6/20/01............ 368,424 ----------- 7,786,429 ----------- SWEDEN - 2.97% Kingdom of Sweden: SK 4,000,000 13.00% due 6/15/01........... 643,890 SK 3,500,000 11.00% due 1/21/99........... 492,990 SK 3,000,000 10.25% due 5/5/00............ 435,150 SK 6,000,000 10.25% due 5/5/03............ 914,158 SK 5,000,000 9.00% due 4/20/09............ 736,389 SK 3,000,000 8.00% due 8/15/07............ 413,274 SK 6,000,000 6.00% due 2/9/05............. 734,983 Y. 100MM 3.875% due 6/21/99........... 903,821 ----------- 5,274,655 ----------- SWITZERLAND - 0.64% Government of Switzerland: Chf 500,000 4.50% due 7/8/02............. 387,144 Chf 500,000 4.50% due 4/8/06............. 385,661 Chf 500,000 4.00% due 3/10/99............ 368,363 ----------- 1,141,168 ----------- UNITED KINGDOM - 8.80% Government of United Kingdom: L. 250,000 10.00% due 2/26/01........... 447,049 L. 500,000 9.75% due 8/27/02............ 909,051 L. 325,000 9.00% due 3/3/00............. 557,406 L. 400,000 9.00% due 10/13/08........... 741,044 L. 250,000 9.00% due 7/12/11............ 469,542 L. 400,000 9.00% due 8/6/12............. 754,131 L. 750,000 8.75% due 8/25/17............ 1,410,161 L. 500,000 8.50% due 12/7/05............ 884,002 L. 500,000 8.00% due 12/7/00............ 842,211 L. 550,000 8.00% due 6/10/03............ 936,835 L. 500,000 8.00% due 9/25/09............ 862,148 L. 500,000 8.00% due 12/7/15............ 877,229
173 ================================================================================ 72 INTERNATIONAL GOVERNMENT BOND FUND May 31, 1997 STATEMENT OF NET ASSETS CONTINUED ================================================================================
PAR MARKET VALUE VALUE - - ---------------------------------------------------------- UNITED KINGDOM - Continued L. 750,000 8.00% due 6/7/21............. $ 1,330,220 L. 500,000 7.50% due 12/7/06............ 833,009 L. 100,000 7.25% due 3/30/98............ 164,301 L. 500,000 7.00% due 11/6/01............ 816,139 L. 750,000 6.75% due 11/26/04........... 1,200,822 L. 1,000,000 6.00% due 8/10/99............ 1,608,253 ------------ 15,643,553 ------------ UNITED STATES - 1.34% DM 4,000,000 Federal National Mortgage Association, 5.00% due 2/16/01............ 2,375,519 ------------ TOTAL GOVERNMENT BONDS (Cost $158,485,988)........... 153,441,707 ------------ SUPRANATIONAL - 6.72% Asian Development Bank: Y. 50MM 5.00% due 2/5/03............. 491,627 Y. 150MM 3.125% due 6/29/05........... 1,336,410 Eurofima: Ff 5,000,000 9.875% due 8/21/00........... 1,005,481 Ff 1,600,000 9.25% due 12/18/03........... 334,222 L. 250,000 7.50% due 2/5/98............. 410,242 European Investment Bank: Lit 400MM 10.50% due 4/30/98........... 243,737 Lit 1,100MM 10.50% due 2/7/02............ 770,088 L. 250,000 9.00% due 5/14/02............ 439,776 Ff 5,000,000 6.75% due 5/14/98............ 889,404 Y. 25MM 6.625% due 3/15/00........... 244,740 Ff 2,000,000 6.125% due 10/8/04........... 358,466 Y. 100MM 4.625% due 2/26/03........... 967,153 Y. 100MM 3.00% due 9/20/06............ 877,523 Y. 55MM Inter America Development Bank, 6.75% due 2/20/01............ 555,550 International Bank for Reconstruction & Development: Lit 150MM 10.80% due 11/13/01.......... 105,399 Lit 1,000MM 10.625% due 3/27/98.......... 608,604 Lit 200MM 9.45% due 8/11/03............ 131,957 L. 400,000 9.25% due 7/20/07............ 742,680 Y. 100MM 4.50% due 3/20/03............ 964,470 Y. 50MM 4.50% due 6/20/00............ 466,670 ------------ TOTAL SUPRANATIONAL (Cost $12,949,762)............ $ 11,944,199 ------------ CORPORATE BONDS - 4.03% FRANCE - 3.63% Credit Local de France: Ff 2,500,000 9.25% due 12/7/99............ 484,341 Lit 2,000MM 9.00% due 6/14/01............ 1,268,848 Ff 5,000,000 8.875% due 6/10/02........... 1,009,810 Ff 3,000,000 6.25% due 9/27/05............ 535,102 Ff 4,000,000 6.00% due 11/15/01........... 721,699 Ff10,000,000 Elf Aquitaine SA, 7.125% due 8/11/03........... 1,881,083 Ff 3,000,000 Toyota Motor Credit, 6.25% due 4/11/02............ 547,765 ------------ 6,448,648 ------------ NETHERLANDS - 0.23% NG 750,000 Aegon NV, 7.125% due 9/1/98............ 405,074 ------------ SWITZERLAND - 0.17% Lit 500MM Union Bank of Switzerland AG, 9.25% due 8/23/00............ 315,737 ------------ TOTAL CORPORATE BONDS (Cost $7,604,776)............. 7,169,459 ------------ TOTAL INVESTMENTS (Cost $179,040,526) - 97.10%.. 172,555,365 Other assets and liabilities, net - 2.90% ................. 5,153,432 ------------ NET ASSETS (equivalent to $11.33 per share on 15,679,563 shares outstanding) - 100% ......... $177,708,797 ============ NET ASSETS REPRESENTED BY: Capital stock, $.01 par value per share, 1,000,000,000 shares authorized, 15,679,563 shares outstanding........... $ 156,796 Additional paid in capital................ 183,937,011 Undistributed net realized gain on securities.............................. 136,607 Undistributed net investment income....... 84,875 Unrealized depreciation of securities and foreign currency translation............ (6,606,492) ------------ NET ASSETS APPLICABLE TO SHARES OUTSTANDING............................. $177,708,797 ============
SEE NOTES TO FINANCIAL STATEMENTS. 174 ================================================================================ INTERNATIONAL GOVERNMENT BOND FUND - FINANCIAL STATEMENTS 73 ================================================================================ STATEMENT OF OPERATIONS For the fiscal year ended May 31, 1997 INVESTMENT INCOME: Interest (net of foreign withholding taxes of $291,931).............. $ 9,457,681 ----------- EXPENSES: Advisory fees ....................................................... 833,117 Custodian and accounting services.................................... 55,093 Reports to shareholders.............................................. 23,033 Audit fees and tax services.......................................... 6,205 Directors' fees and expenses......................................... 3,967 Miscellaneous........................................................ 13,825 ----------- Total expenses..................................................... 935,240 ----------- NET INVESTMENT INCOME................................................ 8,522,441 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) on: Securities........................................... $ 229,409 Foreign currency transactions........................ (375,371) (145,962) ----------- ----------- Net unrealized depreciation during the year: Securities........................................... (7,142,937) Foreign currency translation......................... (67,518) (7,210,455) ----------- ----------- Net realized and unrealized loss on securities and foreign currencies during the year.............................. (7,356,417) ----------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $ 1,166,024 ===========
STATEMENT OF CHANGES IN NET ASSETS For the fiscal year ended May 31:
1997 1996 ---------------------------------- OPERATIONS: Net investment income ..................................................... $ 8,522,441 $ 6,255,004 Net realized gain (loss) on securities and foreign currency transactions ............................................................ (145,962) 795,235 Net unrealized depreciation of securities and translation of foreign currencies during the year ....................... (7,210,455) (8,649,971) ---------------------------------- Increase (decrease) in net assets resulting from operations ............ 1,166,024 (1,599,732) ---------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ..................................................... (8,295,746) (6,585,664) Net realized gain on securities ........................................... (295,588) (127,626) ---------------------------------- Decrease in net assets resulting from distributions to shareholders ........................................................ (8,591,334) (6,713,290) ---------------------------------- CAPITAL STOCK TRANSACTIONS: Proceeds from capital stock sold .......................................... 72,164,939 95,539,705 Proceeds from capital stock issued for distributions reinvested ........... 8,591,334 6,713,290 ---------------------------------- 80,756,273 102,252,995 Cost of capital stock repurchased ......................................... (38,005,431) (29,290,511) ---------------------------------- Increase in net assets resulting from capital stock transactions ........ 42,750,842 72,962,484 ---------------------------------- TOTAL INCREASE IN NET ASSETS .............................................. 35,325,532 64,649,462 NET ASSETS: Beginning of year ......................................................... 142,383,265 77,733,803 ---------------------------------- End of year (including undistributed net investment income of $84,875 and $151,884) ................................................ $ 177,708,797 $ 142,383,265 ================================== CHANGE IN SHARES OUTSTANDING: Shares of capital stock sold .............................................. 6,113,938 7,828,955 Shares issued for distributions reinvested ................................ 729,242 556,598 Shares of capital stock repurchased ....................................... (3,236,292) (2,423,786) ---------------------------------- Increase in shares outstanding .......................................... 3,606,888 5,961,767 Shares outstanding: Beginning of year ....................................................... 12,072,675 6,110,908 ---------------------------------- End of year ............................................................. 15,679,563 12,072,675 ==================================
SEE NOTES TO FINANCIAL STATEMENTS. 175 ================================================================================ 74 MONEY MARKET FUND - STATEMENT OF NET ASSETS May 31, 1997 ================================================================================
PAR MARKET VALUE VALUE - - ------------------------------------------------------- CORPORATE SHORT TERM COMMERCIAL PAPER - 89.25% BANKS - REGIONAL - 1.95% $ 2,500,000 BANC ONE CORP., 5.57% due 6/19/97............ $ 2,493,038 ----------- BEVERAGE - SOFT DRINKS - 3.00% Pepsico Inc.: 1,847,000 5.50% due 6/16/97............ 1,842,767 2,000,000 5.47% due 6/18/97............ 1,994,834 ----------- 3,837,601 ----------- CHEMICAL - MAJOR - 5.87% E.I. du Pont de Nemours and Co.: 855,000 5.52% due 7/9/97............. 850,018 1,600,000 5.32% due 7/16/97............ 1,589,360 2,100,000 5.27% due 7/8/97............. 2,088,626 3,000,000 PPG Industries, Inc., 5.52% due 6/12/97............ 2,994,940 ----------- 7,522,944 ----------- CONSUMER FINANCE - 15.49% Associates Corp. of North America: 1,700,000 5.61% due 7/21/97............ 1,686,754 1,250,000 5.61% due 7/28/97............ 1,238,897 950,000 5.36% due 6/18/97............ 947,595 Beneficial Corp.: 2,000,000 5.62% due 8/4/97............. 1,980,018 900,000 5.59% due 8/11/97............ 890,078 1,200,000 5.58% due 8/28/97............ 1,183,632 1,100,000 5.56% due 6/30/97............ 1,095,073 Commercial Credit Corp.: 610,000 5.70% due 3/1/98............. 609,558 1,800,000 5.61% due 7/14/97............ 1,787,938 957,000 5.61% due 8/1/97............. 947,903 1,800,000 5.54% due 6/19/97............ 1,795,014 Sears Roebuck Acceptance Corp.: 1,024,000 5.63% due 7/23/97............ 1,015,673 1,000,000 5.60% due 8/20/97............ 987,556 750,000 5.60% due 8/27/97............ 739,850 1,350,000 5.52% due 6/30/97............ 1,343,997 1,600,000 5.34% due 6/2/97............. 1,599,763 ----------- 19,849,299 ----------- DRUGS - 3.21% Schering Corp.: $ 1,200,000 5.70% due 10/21/97........... $ 1,173,020 1,000,000 5.50% due 7/1/97............. 995,416 1,950,000 5.42% due 6/10/97............ 1,947,358 ----------- 4,115,794 ----------- ELECTRICAL EQUIPMENT - 2.69% General Electric Co.: 2,000,000 5.67% due 10/20/97........... 1,955,585 1,500,000 5.61% due 7/31/97............ 1,485,975 ----------- 3,441,560 ----------- ENTERTAINMENT - 1.55% 1,000,000 Mattel, Inc., 5.72% due 7/17/97............ 992,691 1,000,000 Walt Disney Co., 5.60% due 8/8/97............. 989,422 ----------- 1,982,113 ----------- FINANCE COMPANIES - 20.07% CIESCO L P: 1,500,000 5.57% due 7/17/97............ 1,489,324 1,900,000 5.55% due 7/22/97............ 1,885,061 1,470,000 5.33% due 6/3/97............. 1,469,565 CIT Group Holdings, Inc.: 1,000,000 5.60% due 8/13/97............ 988,644 1,500,000 5.37% due 6/23/97............ 1,495,078 1,500,000 5.31% due 6/13/97............ 1,497,345 2,032,000 5.30% due 6/9/97............. 2,029,607 Ford Motor Credit Co.: 1,221,000 5.66% due 10/6/97............ 1,196,620 900,000 5.62% due 8/27/97............ 887,777 General Electric Capital Corp.: 1,000,000 5.68% due 11/28/97........... 971,600 450,000 5.43% due 7/18/97............ 446,810 824,000 5.35% due 6/16/97............ 822,163 General Motors Acceptance Corp.: 2,000,000 5.62% due 7/10/97............ 1,987,823 3,000,000 5.60% due 6/17/97............ 2,992,533 International Lease Finance Corp.: 1,000,000 5.65% due 9/12/97............ 983,835 1,205,000 5.60% due 7/30/97............ 1,193,941 2,000,000 5.30% due 6/4/97............. 1,999,117 $ 1,387,000 5.23% due 6/24/97............ $ 1,382,365 ----------- 25,719,208 ----------- FOODS - 1.16% 1,500,000 Kellogg Co, 5.48% due 7/16/97............ 1,489,725 ----------- HOSPITAL SUPPLIES - 1.17% 1,500,000 Abbott Laboratories, 5.48% due 6/3/97............. 1,499,543 ----------- INFORMATION PROCESSING - 3.42% International Business Machines Corp.: 1,000,000 5.65% due 1/22/98............ 999,382 1,200,000 5.56% due 6/26/97............ 1,195,367 2,200,000 5.54% due 7/7/97............. 2,187,812 ----------- 4,382,561 ----------- INSURANCE - MULTILINE - 2.86% Marsh & McLennan Companies, Inc.: 1,200,000 5.70% due 9/5/97............. 1,181,760 1,000,000 5.64% due 9/9/97............. 984,333 1,000,000 5.36% due 6/25/97............ 996,427 500,000 5.30% due 7/3/97............. 497,644 ----------- 3,660,164 ----------- MACHINERY - INDUSTRIAL/ SPECIALTY - 3.14% 4,020,000 Cooper Industries, Inc., 5.67% due 6/2/97............. 4,019,367 ----------- OIL - INTEGRATED DOMESTIC - 1.92% 2,500,000 Atlantic Richfield Co., 5.56% due 9/15/97............ 2,459,072 ----------- SECURITIES RELATED - 4.35% Merrill Lynch & Co., Inc.: 1,200,000 5.74% due 10/1/97............ 1,176,657 850,000 5.70% due 10/9/97............ 832,504 900,000 5.70% due 10/16/97........... 880,478 1,600,000 5.70% due 11/25/97........... 1,555,160 450,000 5.68% due 10/17/97........... 440,202 700,000 5.45% due 9/11/97............ 689,191 ----------- 5,574,192 -----------
176 ================================================================================ May 31, 1997 MONEY MARKET FUND - STATEMENT OF NET ASSETS 75 ================================================================================
PAR MARKET VALUE VALUE - - --------------------------------------------------------- TOBACCO - 4.41% Philip Morris Cos Inc.: $ 1,500,000 5.60% due 6/23/97............ $ 1,494,867 1,000,000 5.58% due 8/27/97............ 986,515 3,179,000 5.29% due 6/11/97............ 3,174,328 ------------ 5,655,710 ------------ UTILITIES - COMMUNICATION - 7.95% 1,600,000 Bellsouth Telecommunications, Inc., 5.30% due 6/4/97............. 1,599,293 GTE Corp.: 1,000,000 5.59% due 6/20/97............ 997,050 2,100,000 5.57% due 6/2/97............. 2,099,675 2,700,000 5.56% due 6/10/97............ 2,696,247 2,800,000 Pacific Bell, 5.52% due 6/5/97............. 2,798,283 ------------ 10,190,548 ------------ UTILITIES - ELECTRIC - 5.04% Pacific Gas & Electric Co.: 400,000 5.56% due 6/26/97............ 398,456 1,000,000 5.00% due 10/7/97............ 997,638 Southern California Edison Co.: 1,500,000 5.59% due 7/15/97............ 1,489,752 1,979,000 5.54% due 6/5/97............. 1,977,782 1,600,000 5.51% due 6/5/97............. 1,599,020 ------------ 6,462,648 ------------ TOTAL CORPORATE SHORT TERM COMMERCIAL PAPER (Cost $114,355,087)........... 114,355,087 ------------ FOREIGN GOVERNMENT BONDS - 2.54% CANADA - 2.54% British Columbia Province: 1,500,000 5.66% due 8/26/97............ 1,479,718 350,000 5.65% due 9/10/97............ 344,452 1,433,000 5.31% due 6/12/97............ 1,430,675 ------------ 3,254,845 ------------ TOTAL FOREIGN GOVERNMENT BONDS (Cost $3,254,845)............. 3,254,845 ------------ CORPORATE SHORT TERM OBLIGATIONS - 3.91% SECURITIES RELATED - 3.91% Bear Stearns Co. Inc.: $2,000,000 Floating rate note due 6/2/97, 5.72% at 5/31/97.............. $ 2,000,000 3,000,000 Floating rate note due 6/27/97, 5.6675% at 5/31/97............ 3,000,000 ------------ TOTAL CORPORATE SHORT TERM OBLIGATIONS (Cost $5,000,000)............. 5,000,000 ------------ UNITED STATES GOVERNMENT - SHORT TERM - 7.80% 1,000,000 Federal Farm Credit Banks, 5.51% due 1/2/98............. 999,178 Federal Home Loan Banks: 2,000,000 5.875% due 6/27/97........... 2,000,175 1,000,000 5.875% due 2/5/98............ 1,000,000 1,000,000 5.65% due 8/12/97............ 1,000,000 1,000,000 5.46% due 12/12/97........... 999,490 Federal National Mortgage Association: 1,000,000 5.765% due 6/20/97........... 1,000,065 1,000,000 5.60% due 1/16/98............ 999,278 1,000,000 5.42% due 12/16/97........... 998,830 1,000,000 5.40% due 12/5/97............ 999,508 ------------ 9,996,524 ------------ TOTAL UNITED STATES GOVERNMENT - SHORT TERM (Cost $9,996,524)............. 9,996,524 ------------ TOTAL INVESTMENTS (Cost $132,606,456) - 103.50%. 132,606,456 Other assets and liabilities, net - (3.50%) ............... (4,481,811) ------------ NET ASSETS (equivalent to $1.00 per share on 128,124,645 shares outstanding) - 100% ......... $128,124,645 ============ NET ASSETS REPRESENTED BY: Capital stock, $.01 par value per share, 1,000,000,000 shares authorized, 128,124,645 shares outstanding.......... $ 1,281,246 Additional paid in capital................ 126,843,399 ------------ NET ASSETS APPLICABLE TO SHARES OUTSTANDING............................. $128,124,645 ============
SEE NOTES TO FINANCIAL STATEMENTS. 177 ================================================================================ 76 MONEY MARKET FUND - FINANCIAL STATEMENTS ================================================================================ STATEMENT OF OPERATIONS For the fiscal year ended May 31, 1997 INVESTMENT INCOME: Interest ........................................................... $6,283,155 ---------- EXPENSES: Advisory fees ...................................................... 572,063 Custodian and accounting services .................................. 42,840 Reports to shareholders ............................................ 16,152 Audit fees and tax services ........................................ 4,285 Directors' fees and expenses ....................................... 2,622 Miscellaneous ...................................................... 7,550 ---------- Total expenses ................................................... 645,512 ---------- NET INVESTMENT INCOME .............................................. 5,637,643 ---------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................... $5,637,643 ==========
STATEMENT OF CHANGES IN NET ASSETS For the fiscal year ended May 31:
1997 1996 ---------------------------------- OPERATIONS: Net investment income ............................ $ 5,637,643 $ 4,331,892 Net realized gain on securities .................. -- 1,796 ---------------------------------- Increase in net assets resulting from operations................................... 5,637,643 4,333,688 ---------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ............................ (5,637,643) (4,331,892) ---------------------------------- CAPITAL STOCK TRANSACTIONS: Proceeds from capital stock sold ................. 294,478,892 150,153,912 Proceeds from capital stock issued for distributions reinvested ....................... 5,637,643 4,331,892 ---------------------------------- 300,116,535 154,485,804 Cost of capital stock repurchased ................ (255,609,535) (153,123,752) ---------------------------------- Increase in net assets resulting from capital stock transactions ................... 44,507,000 1,362,052 ---------------------------------- TOTAL INCREASE IN NET ASSETS ..................... 44,507,000 1,363,848 NET ASSETS: Beginning of year ................................ 83,617,645 82,253,797 ---------------------------------- End of year ...................................... $ 128,124,645 $ 83,617,645 ================================== CHANGE IN SHARES OUTSTANDING Shares of capital stock sold ..................... 294,478,892 150,153,912 Shares issued for distributions reinvested ....... 5,637,643 4,331,892 Shares of capital stock repurchased .............. (255,609,535) (153,123,752) ---------------------------------- Increase in shares outstanding ................. 44,507,000 1,362,052 Shares outstanding: Beginning of year .............................. 83,617,645 82,255,593 ---------------------------------- End of year .................................... 128,124,645 83,617,645 ==================================
SEE NOTES TO FINANCIAL STATEMENTS. 178 =============================================================================== NOTES TO FINANCIAL STATEMENTS 77 =============================================================================== NOTE 1 -- ORGANIZATION The American General Series Portfolio Company (the "Series") consists of thirteen separate investment portfolios (the "Funds"): Stock Index Fund MidCap Index Fund Small Cap Index Fund International Equities Fund Growth Fund Growth & Income Fund Science & Technology Fund Social Awareness Fund Timed Opportunity Fund Capital Conservation Fund Government Securities Fund International Government Bond Fund Money Market Fund The Series is registered under the Investment Company Act of 1940 (the "1940 Act"), as amended, as an open-end management investment company. Each Fund is diversified with the exception of International Government Bond Fund which is non-diversified as defined by the 1940 Act. NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES The financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP"). GAAP requires accruals which occasionally are based upon management estimates. The following is a summary of significant accounting policies consistently followed by each Fund in the preparation of its financial statements. A. INVESTMENT VALUATION Securities listed or traded on a national exchange are valued daily at their last reported sale price. In the absence of any exchange sales on that day and for unlisted issues, securities are valued at the last sale price on the NASDAQ National Market System. In the absence of any National Market System sales on that day, securities are valued at the last reported bid price. However, options written for which other over-the-counter market quotations are readily available are valued at the last reported asked price, in the absence of any National Market System sales on that day. Futures contracts, options thereon, and options on stock indexes are valued at the amount which would be received upon a current disposition of such investments (i.e., their fair market value), in the absence of any sales on that day. Short term debt securities for which market quotations are readily available are valued at the last reported bid price. However, any short term security with a remaining maturity of 60 days or less and all investments of the Money Market Fund are valued by the amortized cost method which approximates fair market value. Investments for which market quotations are not readily available are valued at fair value as determined in good faith by, or under authority delegated by, the Series' Board of Directors. B. OPTIONS AND FUTURES CALL AND PUT OPTIONS. When a Fund writes a call or a put option, an amount equal to the premium received is recorded as a liability. The liability is "marked to market" daily to reflect the current market value of the option written. When a written option expires, the Fund realizes a gain in the amount of the premium originally received. If the Fund enters into a closing purchase transaction, the Fund realizes a gain or loss in the amount of the original premium less the cost of the closing transaction. If a written call option is exercised, the Fund realizes a gain or loss from the sale of the underlying security, and the proceeds from such sale are increased by the premium originally received. If a written put option is exercised, the amount of the premium originally received reduces the cost of the security which the Fund purchases upon exercise of the option. Purchased options are recorded as investments. If a purchased option expires, the Fund realizes a loss in the amount of the cost of the option. If the Fund enters into a closing transaction, it realizes a gain (or loss), to the extent that the proceeds from the sale are greater (or less) than the cost of the option. If the Fund exercises a put option, it realizes a gain or loss from the sale of the underlying security by adjusting the proceeds from such sale by the amount of the premium originally paid. If the Fund exercises a call option, the cost of the security purchased upon exercise is increased by the premium originally paid. FUTURES CONTRACTS. The initial margin deposit made upon entering into a futures contract is held by the custodian, in a segregated account, in the name of the broker (the Fund's agent in acquiring the futures position). During the period the futures contract is open, changes in the value of the contract are recognized as unrealized gains or losses by "marking to market" on a daily basis to reflect the market value of the contract at the end of each day's trading. Variation margin payments are received or made daily, as unrealized gains or losses are incurred. When the contract is closed, the Fund realizes a gain or loss in the amount of the cost of or proceeds from the closing transaction less the Fund's basis in the contract. C. REPURCHASE AGREEMENTS The seller of a repurchase agreement collateralizes the agreement with securities delivered to the Fund's custodian bank. The Adviser determines, on a daily basis, that the seller maintains collateral of at least 100% of the repurchase proceeds due to the Fund at maturity. D. FOREIGN CURRENCY TRANSLATION The accounting records of each Fund are maintained in U.S. dollars. Transactions denominated in foreign currencies ("local currencies") are translated into U.S. dollars at prevailing exchange rates on transaction date. Net realized gains or losses on foreign currency transactions include exchange rate gains and losses from disposition of foreign currencies, currency gains and losses realized between trade and settlement dates of security transactions, and currency gains and losses realized on settlement of other assets and liabilities settled in local currencies. In determining realized and unrealized gains or losses on foreign securities for the period, the Funds do not isolate exchange rate fluctuations from local security price fluctuations. Foreign currencies and other assets and liabilities denominated in local currencies are marked-to-market daily to reflect fluctuations in foreign exchange rates. E. FEDERAL INCOME TAXES Each Fund intends to qualify as a "regulated investment company" under Subchapter M of the Internal Revenue Code and to distribute all of its taxable net investment income and taxable net realized capital gains, in excess of any available capital loss carryovers. Therefore no federal income tax provision is required. 179 =============================================================================== 78 NOTES TO FINANCIAL STATEMENTS continued =============================================================================== F. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME Investment transactions are accounted for on the trade date. Realized gains and losses are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date, except for dividend income on certain foreign securities which is recorded when the Fund becomes aware of the dividend. Interest income on investments is accrued daily. G. DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders are recorded on the record date. The Funds declare distributions from net investment income monthly, except for the Money Market Fund, which declares daily. Capital gains distributions are declared annually. Investment income and capital gains and losses are recognized in accordance with generally accepted accounting principles ("book"). Distributions from net investment income and realized capital gains are based on earnings as determined in accordance with federal tax regulations ("tax") which may differ from book basis earnings. At the end of the year, offsetting adjustments to undistributed net investment income and undistributed net realized gains (losses) are made to eliminate permanent book/tax differences arising in the current year. NOTE 3 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES VALIC (the "Adviser") serves as investment adviser to the Series. VALIC is an indirect wholly-owned subsidiary of American General Corporation, Houston, Texas. On May 1, 1992, the Adviser entered into a sub-advisory agreement with Bankers Trust Company ("Bankers Trust"), a wholly-owned subsidiary of Bankers Trust New York Corporation, to serve as investment sub-adviser to Stock Index Fund, MidCap Index Fund, and Small Cap Index Fund. On April 29, 1994, the Adviser entered into sub-advisory agreements with T. Rowe Price Associates, Inc. to serve as investment sub-adviser to Growth Fund and Science & Technology Fund, and with Value Line, Inc., to serve as investment sub-adviser to Growth & Income Fund. Sub-advisers are compensated for such services by the Adviser. The Adviser receives from the Series a monthly fee based on each Fund's average daily net asset value at the following annual rates: for Stock Index Fund, MidCap Index Fund, Small Cap Index Fund and International Equities Fund .35% on the first $500 million and .25% on the excess over $500 million; for Social Awareness Fund, Timed Opportunity Fund, Capital Conservation Fund, Government Securities Fund, International Government Bond Fund, and Money Market Fund, .50%; for Growth & Income Fund, .75%; for Growth Fund, .80%; for Science & Technology Fund, .90%. To the extent that any Fund's accrued expenses for a given month exceed, on an annualized basis, 2% of the Fund's average daily net assets, the Adviser will voluntarily reduce expenses of any such Fund by the amount of the excess. The Adviser may withdraw this voluntary undertaking upon 30 days written notice to the Series. On October 31, 1996, the Series entered into an accounting services agreement with VALIC which appointed VALIC as Accounting Services Agent. Under the agreement VALIC will provide, or cause to be provided, certain accounting and administrative services to the Series. During the year ended May 31, 1997, the Series paid VALIC $177,947 for such services provided directly by VALIC. VALIC provided to the Series, at cost, certain services associated with the printing of reports to shareholders. During the fiscal year ended May 31, 1997, the Series paid $14,185 for such services. During the fiscal year ended May 31, 1997, security transactions were affected between the following Funds at the then current market price with no brokerage commissions incurred:
SELLER PURCHASER COST TO PURCHASER NET GAIN TO SELLER - - -------------------- ---------------- ----------------- ------------------ MidCap Index Fund Stock Index Fund $18,552,714 $10,357,209 Stock Index Fund MidCap Index Fund 2,869,743 898,155 Small Cap Index Fund MidCap Index Fund 222,579 24,431
At May 31, 1997, VALIC Separate Account A (a registered separate account of VALIC) and VALIC owned over five percent of the outstanding shares of the following Funds:
VALIC SEPARATE ACCOUNT A VALIC ----------------------------- Stock Index Fund........................................96.88% MidCap Index Fund....................................... 99.99 Small Cap Index Fund....................................100.00 International Equities Fund............................. 99.85 Growth Fund............................................. 99.65 Growth & Income Fund....................................100.00 Science & Technology Fund...............................100.00 Social Awareness Fund................................... 99.92 Timed Opportunity Fund.................................. 99.95 Capital Conservation Fund............................... 88.28 11.71 Government Securities Fund.............................. 99.99 International Government Bond Fund......................100.00 Money Market Fund....................................... 99.99
Certain officers and directors of the Series are officers and directors of VALIC or American General Corporation. NOTE 4 - INVESTMENT ACTIVITY The information in the following table is presented on the basis of cost for federal income tax purposes at May 31,1997.
IDENTIFIED COST GROSS GROSS OF INVESTMENTS UNREALIZED UNREALIZED NET UNREALIZED OWNED APPRECIATION DEPRECIATION APPRECIATION --------------- -------------- ------------ ----------------- Stock Index Fund ...................... $1,369,004,299 $1,093,563,133 $22,939,285 $ 1,070,623,848 MidCap Index Fund ..................... 446,694,738 192,754,247 32,892,227 159,862,020 Small Cap Index Fund .................. 159,528,081 49,895,601 16,593,877 33,301,724 International Equities Fund ........... 142,338,365 49,620,737 14,010,791 35,609,946 Growth Fund ........................... 626,985,764 141,577,164 27,949,151 113,628,013 Growth & Income Fund .................. 164,338,119 47,553,041 2,258,925 45,294,116 Science & Technology Fund ............. 670,314,391 138,673,519 21,842,133 116,831,386 Social Awareness Fund ................. 129,212,877 26,488,788 554,203 25,934,585 Timed Opportunity Fund ................ 151,494,008 26,592,551 1,445,300 25,147,251 Capital Conservation Fund ............. 66,521,096 360,926 1,463,529 (1,102,603) Government Securities Fund ............ 82,703,670 824,489 1,085,678 (261,189) International Government Bond Fund .......................... 179,040,526 4,517,896 11,003,057 (6,485,161) Money Market Fund ..................... 132,606,456 - - -
The following net realized capital loss carryforwards at May 31, 1997, may be utilized to offset future capital gains.
CAPITAL LOSS CARRYFORWARD EXPIRATION THROUGH ------------------------- ------------------ Science & Technology Fund.............. $ 698,127 May 31, 2005 Capital Conservation Fund.............. 574,958 May 31, 2003 Government Securities Fund............. 2,086,592 May 31, 2003 Money Market Fund...................... 3,017 May 31, 2005
180 =============================================================================== NOTES TO FINANCIAL STATEMENTS continued 79 =============================================================================== During the period, the cost of purchases and proceeds from sales of securities, excluding short term securities were:
COST OF PROCEEDS FROM SECURITIES SECURITIES SOLD PURCHASED OR MATURED ---------------- --------------- Stock Index Fund ......................... $253,120,990 $ 65,720,162 MidCap Index Fund ........................ 103,367,099 119,442,770 Small Cap Index Fund ..................... 74,891,949 72,465,201 International Equities Fund .............. 22,217,400 58,218,877 Growth Fund .............................. 409,714,720 215,956,220 Growth & Income Fund ..................... 143,618,700 66,343,852 Science & Technology Fund ................ 862,216,562 742,010,646 Social Awareness Fund .................... 152,531,401 112,152,443 Timed Opportunity Fund ................... 170,451,719 190,958,843 Capital Conservation Fund ................ 30,004,835 31,751,701 Government Securities Fund ............... 41,395,354 29,171,050 International Government Bond Fund ....... 46,210,209 6,470,536
NOTE 5 - PORTFOLIO SECURITIES LOANED To realize additional income, a Fund may lend portfolio securities with a value of up to 30% (331/3% in the case of Growth Fund and Science & Technology Fund) of its total assets. Any such loans will be continuously secured by collateral consisting of cash or U.S. Government securities, maintained in a segregated account, at least equal to the market value of the securities loaned. The risks in lending portfolio securities, as with other extensions of secured credit, consist of possible delays in receiving additional collateral or in the recovery of the securities or possible loss of rights in the collateral should the borrower fail financially. Loans by a Fund will only be made to broker-dealers deemed by the Custodian to be creditworthy and will not be made unless, in the judgment of the Adviser, the consideration to be earned from such loans would justify the risk. Each Fund receives income earned on the securities loaned during the lending period and a portion of the interest or rebate earned on the collateral received. Portfolio securities on loan at May 31, 1997 are summarized as follows:
MARKET VALUE COLLATERAL VALUE --------------------------------- Stock Index Fund ..................... $ 22,480,371 $ 22,988,564 MidCap Index Fund .................... 27,322,579 28,429,544 Small Cap Index Fund ................. 9,932,026 10,487,087 International Equities Fund .......... 10,934,014 11,385,475 Growth Fund .......................... 51,328,128 52,289,867 Growth & Income Fund ................. 5,811,079 6,020,652 Science & Technology Fund ............ 29,419,841 30,593,344 Social Awareness Fund ................ 1,680,752 1,732,462 Timed Opportunity Fund ............... 999,923 1,021,843 Capital Conservation Fund ............ 11,166 11,640 Government Securities Fund ........... 312,968 316,500 ------------ ------------ Total ............................. $160,232,847 $165,276,978 ============ ============
NOTE 6 - INVESTMENT CONCENTRATION A significant portion of Government Securities Fund's investments may be in U.S. Government sponsored securities. No assurance can be given that the U.S. Government will provide support to such U.S. Government sponsored agencies or instrumentalities in the future since it is not required to do so by law. As a result of the Fund's concentration in such investments, it may be subject to risks associated with U.S. Government sponsored securities. At May 31, 1997, Government Securities Fund had 62% of its net assets invested in such securities. At May 31, 1997, International Government Bond Fund had 21% of its net assets invested in securities issued by the Government of Japan and an additional 6% in issues of companies located in Japan and/or denominated in Japanese Yen. Future economic and political developments in a foreign country could adversely affect the liquidity and value of foreign securities or the currency exchange rates from which foreign currencies are translated. 181 =============================================================================== 80 FINANCIAL HIGHLIGHTS =============================================================================== Per share data is for a share of capital stock outstanding throughout the period. Total return includes reinvestment of dividends on the reinvestment date. Total returns and ratios for periods of less than one year are not annualized. The average commission rate paid on investment equity securities (on a per share basis) is presented for the period beginning June 1, 1996. STOCK INDEX FUND
Fiscal year ended May 31, ---------------------------------------------------------------- 1997 1996 1995 1994 1993 ---------------------------------------------------------------- PER SHARE DATA Net asset value at beginning of period ........ $ 20.69 $ 16.81 $ 14.39 $ 14.36 $ 13.34 ---------------------------------------------------------------- Income from investment operations: Net investment income ..................... 0.39 0.39 0.37 0.35 0.34 Net realized and unrealized gain on securities ............................ 5.57 4.26 2.45 0.12 1.20 ---------------------------------------------------------------- Total income from investment operations ... 5.96 4.65 2.82 0.47 1.54 ---------------------------------------------------------------- Distributions: Distributions from net investment income ................................... (0.39) (0.38) (0.37) (0.35) (0.34) Distributions from net realized gain on securities ............................ (0.17) (0.39) (0.03) (0.09) (0.18) ---------------------------------------------------------------- Total distributions ....................... (0.56) (0.77) (0.40) (0.44) (0.52) ---------------------------------------------------------------- Net asset value at end of period .............. $ 26.09 $ 20.69 $ 16.81 $ 14.39 $ 14.36 ================================================================ TOTAL RETURN .................................. 29.24% 28.17% 19.98% 3.29% 11.74% ================================================================ RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets ..... 0.34% 0.35% 0.38% 0.39% 0.43% Ratio of net investment income to average net assets ......................... 1.76% 2.05% 2.44% 2.44% 2.52% Portfolio turnover rate ..................... 3% 3% 14% 3% 1% Number of shares outstanding at end of period (000's) .......................... 93,687 85,117 75,451 75,494 66,224 Net assets at end of period (000's) ......... $2,444,200 $1,760,786 $1,267,992 $1,086,459 $951,200 Average net assets during the period (000's) ............................. $2,019,826 $1,498,398 $1,140,085 $1,030,581 $836,510 Average commission rate paid ................ $ 0.0281 n/a n/a n/a n/a
MIDCAP INDEX FUND
Fiscal year ended May 31, -------------------------------------------------------- 1997 1996 1995 1994 1993 -------------------------------------------------------- PER SHARE DATA Net asset value at beginning of period ........ $ 19.09 $ 15.68 $ 14.54 $ 14.38 $ 12.86 -------------------------------------------------------- Income from investment operations: Net investment income ..................... 0.24 0.24 0.26 0.23 0.24 Net realized and unrealized gain on securities ............................ 2.95 4.06 1.59 0.28 1.93 -------------------------------------------------------- Total income from investment operations ... 3.19 4.30 1.85 0.51 2.17 -------------------------------------------------------- Distributions: Distributions from net investment income ................................... (0.24) (0.24) (0.26) (0.23) (0.24) Distributions from net realized gain on securities ............................ (1.21) (0.65) (0.45) (0.12) (0.41) -------------------------------------------------------- Total distributions ....................... (1.45) (0.89) (0.71) (0.35) (0.65) -------------------------------------------------------- Net asset value at end of period .............. $ 20.83 $ 19.09 $ 15.68 $ 14.54 $ 14.38 -------------------------------------------------------- TOTAL RETURN .................................. 17.48% 28.10% 13.26% 3.52% 17.21% ======================================================== RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets ..... 0.40% 0.41% 0.44% 0.46% 0.47% Ratio of net investment income to average net assets ......................... 1.24% 1.36% 1.73% 1.62% 1.79% Portfolio turnover rate ..................... 19% 21% 23% 17% 5% Number of shares outstanding at end of period (000's) .......................... 29,137 28,322 25,988 24,001 14,673 Net assets at end of period (000's) ......... $607,061 $540,688 $407,557 $349,041 $210,931 Average net assets during the period (000's) ............................. $554,397 $477,372 $376,486 $285,247 $154,979 Average commission rate paid ................ $ 0.0277 n/a n/a n/a n/a
SEE NOTES TO FINANCIAL STATEMENTS. 182 =============================================================================== FINANCIAL HIGHLIGHTS CONTINUED 81 =============================================================================== Per share data is for a share of capital stock outstanding throughout the period. Total return includes reinvestment of dividends on the reinvestment date. Total returns and ratios for periods of less than one year are not annualized. The average commission rate paid on investment equity securities (on a per share basis) is presented for the period beginning June 1, 1996. SMALL CAP INDEX FUND
Fiscal year ended May 31, ------------------------------------------------------- 1997 1996 1995 1994 1993 ------------------------------------------------------- PER SHARE DATA Net asset value at beginning of period ........ $ 16.25 $ 12.49 $ 11.52 $ 11.28 $ 9.93 ------------------------------------------------------- Income from investment operations: Net investment income ...................... 0.19 0.20 0.17 0.13 0.15 Net realized and unrealized gain on securities ............................ 0.93 4.04 0.97 0.58 1.48 ------------------------------------------------------- Total income from investment operations ............................... 1.12 4.24 1.14 0.71 1.63 ------------------------------------------------------- Distributions: Distributions from net investment income ... (0.19) (0.20) (0.17) (0.13) (0.15) Distributions from net realized gain on securities ............................ (1.00) (0.28) -- (0.34) (0.13) ------------------------------------------------------- Total distributions ......................... (1.19) (0.48) (0.17) (0.47) (0.28) ------------------------------------------------------- Net asset value at end of period .............. $ 16.18 $ 16.25 $ 12.49 $ 11.52 $ 11.28 ======================================================= TOTAL RETURN .................................. 7.51% 34.50% 9.98% 6.18% 16.64% ======================================================= RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets ....... 0.41% 0.41% 0.44% 0.47% 0.47% Ratio of net investment income to average net assets .......................... 1.34% 1.36% 1.44% 1.10% 1.40% Portfolio turnover rate ....................... 42% 31% 34% 16% 20% Number of shares outstanding at end of period (000's) ....................... 11,893 11,129 10,136 9,381 3,687 Net assets at end of period (000's) .......... $192,459 $180,785 $126,567 $108,050 $41,581 Average net assets during the period (000's) .. $178,368 $150,448 $120,298 $ 70,690 $22,142 Average commission rate paid .................. $ 0.0297 n/a n/a n/a n/a
INTERNATIONAL EQUITIES FUND
Fiscal year ended May 31, ------------------------------------------------------- 1997 1996 1995 1994 1993 ------------------------------------------------------- PER SHARE DATA Net asset value at beginning of period ........ $ 11.15 $ 10.42 $ 10.14 $ 8.99 $ 8.03 ------------------------------------------------------- Income from investment operations: Net investment income ...................... 0.20 0.17 0.15 0.11 0.18 Net realized and unrealized gain on securities and foreign currencies ..... 0.63 0.97 0.34 1.17 0.93 ------------------------------------------------------- Total income from investment operations .............................. 0.83 1.14 0.49 1.28 1.11 ------------------------------------------------------- Distributions: Distributions from net investment income ... (0.19) (0.17) (0.15) (0.11) (0.15) Distributions from net realized gain on securities ............................ (0.35) (0.24) (0.06) (0.02) -- ------------------------------------------------------- Total distributions ........................ (0.54) (0.41) (0.21) (0.13) (0.15) ------------------------------------------------------- Net asset value at end of period .............. $ 11.44 $ 11.15 $ 10.42 $ 10.14 $ 8.99 ======================================================= TOTAL RETURN .................................. 7.74% 11.14% 4.92% 14.31% 14.18% ======================================================= RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets ....... 0.42% 0.42% 0.45% 0.47% 0.53% Ratio of net investment income to average net assets .......................... 1.75% 1.65% 1.47% 1.43% 2.33% Portfolio turnover rate ....................... 12% 20% 14% 7% 9% Number of shares outstanding at end of period (000's) ....................... 15,857 18,497 20,074 17,273 7,429 Net assets at end of period (000's) .......... $181,437 $206,259 $209,091 $175,183 $66,809 Average net assets during the period (000's) .. $191,117 $204,792 $199,235 $117,264 $45,509 Average commission rate paid .................. $ 0.0236 n/a n/a n/a n/a
SEE NOTES TO FINANCIAL STATEMENTS. 183 =============================================================================== 82 FINANCIAL HIGHLIGHTS CONTINUED =============================================================================== Per share data is for a share of capital stock outstanding throughout the period. Total return includes reinvestment of dividends on the reinvestment date. Total returns and ratios for periods of less than one year are not annualized. The average commission rate paid on investment equity securities (on a per share basis) is presented for the period beginning June 1, 1996. GROWTH FUND
PERIOD FROM FISCAL YEAR ENDED MAY 31, APRIL 29, 1994 ------------------------------- TO 1997 1996 1995 MAY 31, 1994 --------------------------------------------- PER SHARE DATA Net asset value at beginning of period ........ $ 16.49 $ 11.43 $ 9.87 $10.00(1) --------------------------------------------- Income (loss) from investment operations: Net investment income ..................... 0.02 0.11 0.04 0.01 Net realized and unrealized gain (loss) on securities ............................ 1.45 5.27 1.56 (0.13) --------------------------------------------- Total income (loss) from investment operations ............................... 1.47 5.38 1.60 (0.12) --------------------------------------------- Distributions: Distributions from net investment income .. (0.01) (0.09) (0.04) (0.01) Distributions from net realized gain (loss) on securities ............................ (0.33) (0.23) -- -- --------------------------------------------- Total distributions ....................... (0.34) (0.32) (0.04) (0.01) --------------------------------------------- Net asset value at end of period .............. $ 17.62 $ 16.49 $ 11.43 $ 9.87 ============================================= TOTAL RETURN .................................. 9.00% 47.46% 16.25% (1.19)% ============================================= RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets ..... 0.86% 0.83% 0.91% 0.08% Ratio of net investment income to average net assets ......................... 0.09% 0.89% 0.41% 0.11% Portfolio turnover rate ..................... 40% 36% 61% 0% Number of shares outstanding at end of period (000's) .......................... 42,422 25,826 8,800 1,001 Net assets at end of period (000's) ........ $747,654 $425,787 $100,614 $9,885 Average net assets during the period (000's) $588,056 $238,228 $ 42,232 $9,944 Average commission rate paid ................ $ 0.0499 n/a n/a n/a
(1) The net asset value at the beginning of the period is as of commencement of operations on April 29, 1994. GROWTH & INCOME FUND
PERIOD FROM FISCAL YEAR ENDED MAY 31, APRIL 29, 1994 ------------------------------- TO 1997 1996 1995 MAY 31, 1994 --------------------------------------------- PER SHARE DATA Net asset value at beginning of period ......... $ 14.78 $ 11.09 $ 9.87 $10.00(1) --------------------------------------------- Income (loss) from investment operations: Net investment income ...................... 0.10 0.08 0.09 0.02 Net realized and unrealized gain (loss) on securities ............................. 2.38 3.77 1.22 (0.13) --------------------------------------------- Total income (loss) from investment operations ................................ 2.48 3.85 1.31 (0.11) --------------------------------------------- Distributions: Distributions from net investment income ... (0.10) (0.07) (0.09) (0.02) Distributions from net realized gain (loss) on securities ............................. (0.29) (0.09) -- -- --------------------------------------------- Total distributions ........................ (0.39) (0.16) (0.09) (0.02) --------------------------------------------- Net asset value at end of period ............... $ 16.87 $ 14.78 $ 11.09 $ 9.87 ============================================= TOTAL RETURN ................................... 17.08% 34.85% 13.35% (1.11)% ============================================= RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets ...... 0.81% 0.79% 0.86% 0.07% Ratio of net investment income to average net assets .......................... 0.70% 0.63% 0.93% 0.22% Portfolio turnover rate ...................... 45% 64% 97% 11% Number of shares outstanding at end of period (000's) ........................... 12,422 7,685 3,867 1,002 Net assets at end of period (000's) ......... $209,545 $113,546 $42,867 $9,890 Average net assets during the period (000's) . $161,226 $ 75,158 $21,910 $9,946 Average commission rate paid ................. $ 0.0500 n/a n/a n/a
(1) The net asset value at the beginning of the period is as of commencement of operations on April 29, 1994. SEE NOTES TO FINANCIAL STATEMENTS. 184 =============================================================================== FINANCIAL HIGHLIGHTS CONTINUED 83 =============================================================================== Per share data is for a share of capital stock outstanding throughout the period. Total return includes reinvestment of dividends on the reinvestment date. Total returns and ratios for periods of less than one year are not annualized. The average commission rate paid on investment equity securities (on a per share basis) is presented for the period beginning June 1, 1996. SCIENCE & TECHNOLOGY FUND
PERIOD FROM FISCAL YEAR ENDED MAY 31, APRIL 29, 1994 ------------------------------- TO 1997 1996 1995 MAY 31, 1994 ---------------------------------------------- PER SHARE DATA Net asset value at beginning of period ........ $ 20.48 $ 14.43 $ 9.83 $ 10.00(1) ---------------------------------------------- Income (loss) from investment operations: Net investment income ..................... -- -- 0.03 -- Net realized and unrealized gain (loss) on securities and foreign currencies ..... 0.33 8.08 4.72 (0.17) ---------------------------------------------- Total income (loss) from investment operations ............................... 0.33 8.08 4.75 (0.17) ---------------------------------------------- Distributions: Distributions from net investment income .. -- -- (0.02) -- Distributions from net realized gain on securities ............................ (0.93) (2.03) (0.13) -- ---------------------------------------------- Total distributions ........................ (0.93) (2.03) (0.15) -- ---------------------------------------------- Net asset value at end of period .............. $ 19.88 $ 20.48 $ 14.43 $ 9.83 ============================================== TOTAL RETURN .................................. 1.81% 58.28% 48.61% (1.66)% ============================================== RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets ..... 0.96% 0.94% 1.00% 0.08% Ratio of net investment income to average net assets ......................... (0.29)% (0.07)% 0.36% 0.04% Portfolio turnover rate ..................... 122% 116% 121% 0% Number of shares outstanding at end of period (000's) .......................... 40,484 27,696 11,550 1,001 Net assets at end of period (000's) ........ $804,982 $567,187 $166,683 $ 9,834 Average net assets during the period (000's) $664,608 $363,087 $ 64,974 $ 9,918 Average commission rate paid ................ $ 0.0393 n/a n/a n/a
(1) The net asset value at the beginning of the period is as of commencement of operations on April 29, 1994. SOCIAL AWARENESS FUND
FISCAL YEAR ENDED MAY 31, ---------------------------------------------- 1997 1996 1995 1994 1993 ---------------------------------------------- PER SHARE DATA Net asset value at beginning of period....... $15.49 $13.02 $11.98 $12.12 $11.43 ---------------------------------------------- Income from investment operations: Net investment income.................... 0.24 0.26 0.27 0.26 0.24 Net realized and unrealized gain (loss) on securities........................... 4.19 3.37 1.75 (0.02) 1.22 ---------------------------------------------- Total income from investment operations.. 4.43 3.63 2.02 0.24 1.46 ---------------------------------------------- Distributions: Distributions from net investment income.................................. (0.24) (0.25) (0.27) (0.26) (0.24) Distributions from net realized gain on securities........................... (1.78) (0.91) (0.71) (0.12) (0.53) ---------------------------------------------- Total distributions...................... (2.02) (1.16) (0.98) (0.38) (0.77) ---------------------------------------------- Net asset value at end of period............. $17.90 $15.49 $13.02 $11.98 $12.12 ============================================== TOTAL RETURN................................. 30.48% 28.85% 18.19% 1.97% 13.08% ============================================== RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets.... 0.56% 0.56% 0.58% 0.60% 0.63% Ratio of net investment income to average net assets........................ 1.53% 1.80% 2.22% 2.19% 2.14% Portfolio turnover rate.................... 109% 117% 148% 83% 106% Number of shares outstanding at end of period (000's)......................... 8,677 5,220 4,143 3,817 2,819 Total net assets at end of period (000's).. $155,349 $80,887 $53,927 $45,729 $34,166 Average net assets during the period (000's)............................ $106,139 $66,888 $47,942 $41,002 $26,920 Average commission rate paid............... $0.0400 n/a n/a n/a n/a
SEE NOTES TO FINANCIAL STATEMENTS. 185 =============================================================================== 84 FINANCIAL HIGHLIGHTS CONTINUED =============================================================================== Per share data is for a share of capital stock outstanding throughout the period. Total return includes reinvestment of dividends on the reinvestment date. Total returns and ratios for periods of less than one year are not annualized. The average commission rate paid on investment equity securities (on a per share basis) is presented for the period beginning June 1, 1996. TIMED OPPORTUNITY FUND
Fiscal year ended May 31, -------------------------------------------------------- 1997 1996 1995 1994 1993 -------------------------------------------------------- PER SHARE DATA Net asset value at beginning of period ........ $ 12.55 $ 11.24 $ 10.84 $ 11.18 $ 10.66 -------------------------------------------------------- Income from investment operations: Net investment income ..................... 0.77 0.44 0.44 0.37 0.35 Net realized and unrealized gain (loss) on securities ............................ 1.44 1.53 0.82 (0.15) 0.61 -------------------------------------------------------- Total income from investment operations ... 2.21 1.97 1.26 0.22 0.96 -------------------------------------------------------- Distributions: Distributions from net investment income ................................... (0.78) (0.44) (0.44) (0.37) (0.35) Distributions from net realized gain on securities ............................ (1.41) (0.22) (0.42) (0.19) (0.09) -------------------------------------------------------- Total distributions ....................... (2.19) (0.66) (0.86) (0.56) (0.44) -------------------------------------------------------- Net asset value at end of period .............. $ 12.57 $ 12.55 $ 11.24 $ 10.84 $ 11.18 ======================================================== TOTAL RETURN .................................. 15.89% 17.90% 12.43% 1.86% 9.17% ======================================================== RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets ..... 0.57% 0.57% 0.58% 0.59% 0.70% Ratio of net investment income to average net assets ......................... 3.26% 3.62% 4.03% 3.24% 3.28% Portfolio turnover rate ..................... 103% 119% 133% 76% 78% Number of shares outstanding at end of period (000's) .......................... 14,107 15,142 16,319 17,956 14,758 Total net assets at end of period (000's) ... $177,347 $190,024 $183,393 $194,576 $165,002 Average net assets during the period (000's) ............................. $179,615 $187,576 $186,487 $185,036 $ 151,450 Average commission rate paid ................ $ 0.0401 n/a n/a n/a n/a
CAPITAL CONSERVATION FUND
Fiscal year ended May 31, --------------------------------------------------------- 1997 1996 1995 1994 1993 --------------------------------------------------------- PER SHARE DATA Net asset value at beginning of period $ 9.23 $9.52 $9.13 $9.87 $9.29 --------------------------------------------------------- Income (loss) from investment operations: Net investment income........... 0.62 0.62 0.63 0.61 0.65 Net realized and unrealized gain (loss) on securities.................. 0.08 (0.29) 0.39 (0.69) 0.58 --------------------------------------------------------- Total income (loss) from investment operations..................... 0.70 0.33 1.02 (0.08) 1.23 --------------------------------------------------------- Distributions: Distributions from net investment income......................... (0.62) (0.62) (0.63) (0.61) (0.65) --------------------------------------------------------- Distributions from net realized gain on securities.................. - - - (0.05) - Total distributions............. (0.62) (0.62) (0.63) (0.66) (0.65) --------------------------------------------------------- Net asset value at end of period.... $ 9.31 $9.23 $9.52 $9.13 $9.87 ========================================================= TOTAL RETURN........................ 7.75% 3.41% 11.80% (1.13)% 13.60% ========================================================= RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets 0.57% 0.57% 0.58% 0.59% 0.67% Ratio of net investment income to average net assets............... 6.59% 6.47% 6.88% 6.24% 6.77% Portfolio turnover rate........... 45% 80% 100% 55% 58% Number of shares outstanding at end of period (000's)................ 7,168 7,604 6,935 6,712 5,095 Total net assets at end of period (000's) $66,747 $70,212 $66,031 $61,305 $50,290 Average net assets during the period (000's)................... $69,352 $70,271 $61,568 $59,210 $43,316
SEE NOTES TO FINANCIAL STATEMENTS. 186 =============================================================================== FINANCIAL HIGHLIGHTS CONTINUED 85 =============================================================================== Per share data is for a share of capital stock outstanding throughout the period. Total return includes reinvestment of dividends on the reinvestment date. Total returns and ratios for periods of less than one year are not annualized. The average commission rate paid on investment equity securities (on a per share basis) is presented for the period beginning June 1, 1996. GOVERNMENT SECURITIES FUND
Fiscal year ended May 31, ----------------------------------------------------- 1997 1996 1995 1994 1993 ----------------------------------------------------- PER SHARE DATA Net asset value at beginning of period ........ $ 9.61 $ 9.89 $ 9.55 $ 10.30 $ 9.84 ----------------------------------------------------- Income (loss) from investment operations: Net investment income ..................... 0.59 0.61 0.60 0.55 0.61 Net realized and unrealized gain (loss) on securities ............................ 0.06 (0.28) 0.35 (0.59) 0.59 ----------------------------------------------------- Total income (loss) from investment operations ............................... 0.65 0.33 0.95 (0.04) 1.20 ----------------------------------------------------- Distributions: Distributions from net investment income ................................... (0.59) (0.61) (0.61) (0.55) (0.61) ----------------------------------------------------- Distributions from net realized gain on securities ............................ -- -- -- (0.16) (0.13) ----------------------------------------------------- Total distributions ....................... (0.59) (0.61) (0.61) (0.71) (0.74) Net asset value at end of period .............. $ 9.67 $ 9.61 $ 9.89 $ 9.55 $ 10.30 ===================================================== TOTAL RETURN .................................. 6.94% 3.32% 10.43% (0.66)% 12.56% ===================================================== RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets ..... 0.56% 0.56% 0.58% 0.59% 0.67% Ratio of net investment income to average net assets ......................... 6.11% 6.21% 6.36% 5.44% 6.08% Portfolio turnover rate ..................... 38% 36% 229% 85% 105% Number of shares outstanding at end of period (000's) .......................... 8,672 8,164 5,478 4,544 3,110 Total net assets at end of period (000's) ... $ 83,827 $ 78,423 $54,174 $43,401 $32,023 Average net assets during the period (000's) ............................. $ 83,293 $ 68,017 $45,200 $41,596 $26,145
INTERNATIONAL GOVERNMENT BOND FUND
Fiscal year ended May 31, ----------------------------------------------------- 1997 1996 1995 1994 1993 ----------------------------------------------------- PER SHARE DATA Net asset value at beginning of period ........ $ 11.79 $ 12.72 $ 10.97 $ 11.16 $ 10.43 ----------------------------------------------------- Income (loss) from investment operations: Net investment income ..................... 0.63 0.65 0.65 0.62 0.76 Net realized and unrealized gain (loss) on securities and foreign currencies ..... (0.49) (0.89) 1.80 (0.20) 0.70 ----------------------------------------------------- Total income (loss) from investment operations ............................... 0.14 (0.24) 2.45 0.42 1.46 ----------------------------------------------------- Distributions: Distributions from net investment income ................................... (0.58) (0.68) (0.70) (0.60) (0.73) Distributions from net realized gain on securities ............................ (0.02) (0.01) -- (0.01) -- ----------------------------------------------------- Total distributions ..................... (0.60) (0.69) (0.70) (0.61) (0.73) ----------------------------------------------------- Net asset value at end of period .............. $ 11.33 $ 11.79 $ 12.72 $ 10.97 $ 11.16 ===================================================== TOTAL RETURN .................................. 1.13% (1.91)% 23.23% 3.87% 14.50% ===================================================== RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets ..... 0.56% 0.56% 0.59% 0.48% 0.14% Ratio of net investment income to average net assets ......................... 5.13% 5.45% 5.83% 5.87% 7.02% Portfolio turnover rate ..................... 4% 11% 6% 3% 26% Number of shares outstanding at end of period (000's) .......................... 15,680 12,073 6,111 3,741 2,062 Total net assets at end of period (000's) ... $177,709 $142,383 $77,734 $41,028 $23,009 Average net assets during the period (000's) ............................. $166,147 $114,693 $51,451 $33,561 $18,135
SEE NOTES TO FINANCIAL STATEMENTS. 187 =============================================================================== 86 FINANCIAL HIGHLIGHTS CONTINUED =============================================================================== Per share data is for a share of capital stock outstanding throughout the period. Total return includes reinvestment of dividends on the reinvestment date. MONEY MARKET FUND
Fiscal year ended May 31, ---------------------------------------------------- 1997 1996 1995 1994 1993 ---------------------------------------------------- PER SHARE DATA Net asset value at beginning of period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ---------------------------------------------------- Income from investment operations: Net investment income ..................... 0.05 0.05 0.05 0.03 0.03 ---------------------------------------------------- Distributions: Distributions from net investment income .. (0.05) (0.05) (0.05) (0.03) (0.03) ---------------------------------------------------- Net asset value at end of period .............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ==================================================== TOTAL RETURN .................................. 5.02% 5.26% 4.90% 2.83% 2.85% ==================================================== RATIOS/SUPPLEMENTAL DATA Ratio of expenses to average net assets ..... 0.57% 0.57% 0.57% 0.58% 0.63% Ratio of net investment income to average net assets ......................... 4.95% 5.14% 4.75% 2.78% 2.81% Number of shares outstanding at end of period (000's) ............................. 128,125 83,618 82,256 50,534 45,323 Total net assets at end of period (000's) ... $128,125 $83,618 $82,254 $50,533 $45,322 Average net assets during the period (000's) ............................. $113,882 $84,271 $67,021 $46,222 $45,562
=============================================================================== REPORT OF INDEPENDENT AUDITORS =============================================================================== TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF AMERICAN GENERAL SERIES PORTFOLIO COMPANY We have audited the accompanying statements of net assets of Stock Index Fund, MidCap Index Fund, Small Cap Index Fund, International Equities Fund, Growth Fund, Growth & Income Fund, Science & Technology Fund, Social Awareness Fund, Timed Opportunity Fund, Capital Conservation Fund, Government Securities Fund, International Government Bond Fund, and Money Market Fund (such "Funds" comprising the American General Series Portfolio Company) as of May 31, 1997. We have also audited for each of the Funds the related statement of operations for the year ended May 31, 1997, the statement of changes in net assets for each of the two years in the period ended May 31, 1997, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 1997, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds comprising the American General Series Portfolio Company at May 31, 1997, the results of their operations and the changes in their net assets for the periods identified above, and the financial highlights for each of the periods indicated therein, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Houston, Texas July 10, 1997 SEE NOTES TO FINANCIAL STATEMENTS. 188 =============================================================================== REPORT OF INDEPENDENT AUDITORS 87 =============================================================================== TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF AMERICAN GENERAL SERIES PORTFOLIO COMPANY We have audited the accompanying statements of net assets of Stock Index Fund, MidCap Index Fund, Small Cap Index Fund, International Equities Fund, Growth Fund, Growth & Income Fund, Science & Technology Fund, Social Awareness Fund, Timed Opportunity Fund, Capital Conservation Fund, Government Securities Fund, International Government Bond Fund, and Money Market Fund (such "Funds" comprising the American General Series Portfolio Company) as of May 31, 1997. We have also audited for each of the Funds the related statement of operations for the year ended May 31, 1997, the statement of changes in net assets for each of the two years in the period ended May 31, 1997, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 1997, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds comprising the American General Series Portfolio Company at May 31, 1997, the results of their operations and the changes in their net assets for the periods identified above, and the financial highlights for each of the periods indicated therein, in conformity with generally accepted accounting principles. /s/ ERNST & YOUNG LLP ERNST & YOUNG LLP Houston, Texas July 10, 1997 189 =============================================================================== AMERICAN GENERAL SERIES PORTFOLIO COMPANY =============================================================================== BOARD OF DIRECTORS SHAREHOLDER SERVICE AGENT Stephen D. Bickel The Variable Annuity Life Norman Hackerman Insurance Company (VALIC) John W. Lancaster 2929 Allen Parkway Ben H. Love Houston, Texas 77019 Joe C. Osborne F. Robert Paulsen OFFICERS Peter V. Tuters Stephen D. Bickel, R. Miller Upton Chairman and President Thomas L. West, Jr. Thomas L. West, Jr., Executive Vice President DISTRIBUTOR Norman Jaskol, The Variable Annuity Marketing Vice President and Company (VAMCO) Senior Investment Officer 2929 Allen Parkway Brent C. Nelson, Houston, Texas 77019 Vice President Teresa S. Moro, CUSTODIAN Vice President and State Street Bank and Trust Company Investment Officer 225 Franklin Street John W. Mossbarger, Boston, Massachusetts 02110 Vice President and Investment Officer INVESTMENT ADVISER Leon A. Olver, The Variable Annuity Life Vice President and Insurance Company (VALIC) Investment Officer 2929 Allen Parkway William Trimbur, Jr., Houston, Texas 77019 Vice President and Investment Officer INVESTMENT SUB-ADVISERS Cynthia A. Toles, Bankers Trust Company General Counsel 1 Bankers Trust Plaza and Secretary New York, New York 10006 Gregory R. Seward, Treasurer T. Rowe Price Associates, Inc. Kathryn A. Pearce, 100 East Pratt Street Controller Baltimore, Maryland 21202 David H. den Boer, Assistant Secretary Value Line, Inc. Debra A. Yeang, 220 East 42nd Street Assistant Treasurer New York, New York 10017-5891 Kay Kramer, Assistant Controller INDEPENDENT AUDITORS Ernst & Young LLP 1221 McKinney Houston, Texas 77010 This report is for the information of the shareholders and variable contract owners participating in the American General Series Portfolio Company. It is authorized for distribution to other persons only when preceded or accompanied by an effective prospectus which contains information on how to purchase shares and other pertinent information. If you would like further information about this material or products issued by VALIC or American General Life Insurance Company, please contact your account representative. "Standard & Poor's(R)", "Standard & Poor's MidCap 400 Index" and "S&P 500(R)" are trademarks of Standard & Poor's Corporation. The Stock Index Fund and MidCap Index Fund are not sponsored, endorsed, sold or promoted by S&P and S&P makes no representation regarding the advisability of investing in the funds. The Russell 2000(R) Index is a trademark / service mark of the Frank Russell Company. Russell(TM) is a trademark of the Frank Russell Company. [VALIC LOGO] (C) 1997 The Variable Annuity Life Insurance Company, Houston Texas VALIC is a registered service mark of The Variable Annuity Life Insurance Company VA 9530 VER 5/97 190 AMERICAN GENERAL SERIES PORTFOLIO COMPANY PART C. OTHER INFORMATION ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements Included in the Prospectus: Financial Highlights for each of the fiscal periods through May 31, 1997 for each Fund (audited). Audited Financial Statements for each Fund, incorporated by reference into the Statement of Additional Information: Statements of Net Assets as of May 31, 1997 (Statement of Assets and Liabilities as of May 31, 1997 and Investment Portfolio as of May 31, 1997 in the case of International Government Bond Fund) Statements of Operations for the fiscal year ended May 31, 1997 Statements of Changes in Net Assets for each of the two fiscal years in the period ended May 31, 1997 Notes to Financial Statements Financial Highlights Report of Independent Auditors (b) Exhibits 1. (A) Articles of Incorporation(1) (B) Articles Supplementary to the Articles of Incorporation, effective April 10, 1990(2) (C) Articles Supplementary to the Articles of Incorporation, effective September 28, 1990(2) (D) Amendment One to the Articles of Incorporation, effective October 1, 1991(3) (E) Amendment Two to the Articles of Incorporation, effective May 1, 1992(4) (F) Articles Supplementary to the Articles of Incorporation, effective May 1, 1992(4) (G) Articles Supplementary to the Articles of Incorporation, effective January 20, 1994(5) (H) Articles Supplementary to the Articles of Incorporation, effective February 4, 1994(5) (I) Articles Supplementary to the Articles of Incorporation, effective February 4, 1994(5) (J) Articles Supplementary to the Articles of Incorporation, effective May 1, 1995(6) (K) Articles of Amendment to the Articles of Incorporation, effective October 1, 1997. 2. By-Laws of Registrant, as amended and restated October 29, 1991(3) 3. Not applicable 4. Not applicable 5. (A) Amended and Restated Investment Advisory Agreement between Registrant and The Variable Annuity Life Insurance Company (with revised fee schedule effective October 1, 1992)(4) (B) Investment Advisory Agreement (Form ii) between Registrant and VALIC (with revised fee Schedule A effective May 2, 1994(7) (C) Investment Sub-Advisory Agreement between VALIC and Bankers Trust Company(4)
C-1 191 (D) Investment Sub-Advisory Agreement between VALIC and T. Rowe Price Associates, Inc.(8) (E) Investment Sub-Advisory Agreement between VALIC and Value Line, Inc.(8) 6. (A) Distribution Agreement between the Registrant and The Variable Annuity Marketing Company(3) (B) Amended and Restated Distribution Agreement between Registrant and The Variable Annuity Marketing Company, effective June 1, 1996. 7. Not Applicable 8. (A)(1) Custodian Contract between Registrant and State Street Bank and Trust Company(9) (2) Custodian Fee Schedule between Registrant and State Street Bank and Trust Company. (3) Amendment to Custodian Contract between Registrant and State Street Bank and Trust Company. (4) Custodian Fee Schedule between Registrant and State Street Bank and Trust Company. (B) Securities Lending Authorization Agreement as Amended between Registrant and State Street Bank and Trust Company(6) (C)(1) Canada Sub-Custodial Agreement between State Street Bank and Trust Company and Canada Trust Company(9) (2) Sub-Custodial Agreements between State Street Bank and Trust Company and:(3) (i) Den Danske Bank -- Copenhagen (ii) Sumitomo Trust and Banking Co., Ltd. -- Tokyo (iii) State Street Bank and Trust Company -- London (3) Additional Sub-Custodial Agreements between State Street Bank and Trust Company and(10) (i) Westpac Banking Corporation -- Sydney (ii) GiroCredit Bank Aktiengesellschaft der Sparkassen -- Vienna (iii) Generale Bank -- Brussels (iv) Canada Trustco Mortgage Company -- Toronto (v) Merita Bank Limited (vi) Banque Paribas -- Paris (vii) Standard Chartered Bank -- Hong Kong (viii) Bank of Ireland -- Dublin (ix) Standard Chartered Bank Malaysia Berhad (x) MeesPierson N.V. -- Amsterdam (xi) ANZ Banking Group (New Zealand) Limited -- Wellington (xii) Christiania Bank of Kreditkasse -- Oslo (xiii) The Development Bank of Singapore Ltd. -- Singapore (xiv) Banco Santander, S.A. -- Madrid (xv) Skandinaviska Enskilda Banken -- Stockholm (xvi) Union Bank of Switzerland -- Zurich (4) Additional Sub-Custodial Agreement between State Street Bank and Trust Company and Citibank, N.A., Mexico -- Mexico City(11)
C-2 192 (5) Additional Sub-Custodial Agreements between State Street Bank and Trust Company and(13) (i) Dresdner Bank AG -- Frankfurt (ii) Banque Paribas -- Milan (iii) The Fuji Bank, Limited -- Tokyo (iv) The Daiwa Bank, Limited -- Tokyo 9. (A) Transfer Agency and Service Agreement between Registrant and The Variable Annuity Life Insurance Company(12) (B) Accounting Services Agreement between Registrant and The Variable Annuity Life Insurance Company, effective October 31, 1996. 10. Opinion and consent of Counsel(5) 11. Consent of Independent Auditors 12. Not Applicable 13. (A) Subscription Agreement between the Registrant and The Variable Annuity Life Insurance Company regarding the initial capitalization of Growth Fund(8) (B) Subscription Agreement between the Registrant and The Variable Annuity Life Insurance Company regarding the initial capitalization of Growth & Income Fund(8) (C) Subscription Agreement between the Registrant and The Variable Annuity Life Insurance Company regarding the initial capitalization of Science & Technology Fund.(8) 14. Not Applicable. 15. Not Applicable 16. Calculation of Performance Information. 17. Financial Data Schedule (Exhibit 27 for purposes of electronic filing). 18. Not Applicable 19. Specimen Price Make-Up Sheet dated May 31, 1997. 20. Copies of manually signed powers of attorney for American General Series Portfolio Company Directors Norman Hackerman, John Wm. Lancaster, R. Miller Upton, F. Robert Paulsen, Ben H. Love and Peter V. Tuters.(5)
- - --------------- 1. Incorporated herein by reference to Post-Effective Amendment Number 6 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on September 18, 1985 (File No. 2-83631/811-3738). 2. Incorporated herein by reference to Post-Effective Amendment Number 16 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on August 1, 1991 (File No. 2-83631/811-3738). 3. Incorporated herein by reference to the Company's Form N-14 registration statement filed with the Securities and Exchange Commission on January 27, 1992 (File No. 33-45217). 4. Incorporated herein by reference to Post-Effective Amendment Number 18 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on September 14, 1992 (File No. 2-83631/811-3738). 5. Incorporated herein by reference to Post-Effective Amendment Number 20 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on February 10, 1994 (File No. 2-83631/811-3738). 6. Incorporated herein by reference to Post-Effective Amendment Number 24 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on August 1, 1995 (File No. 2-83631/811-3738). C-3 193 7. Incorporated herein by reference to Post-Effective Amendment Number 23 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on August 2, 1994 (File No. 2-83631/811-3738). 8. Incorporated herein by reference to Post-Effective Amendment Number 21 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on April 8, 1994 (File No. 2-83631/811-3738). 9. Incorporated herein by reference to Post-Effective Amendment Number 15 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on August 2, 1990 (file No. 2-83631/811-3738). 10. Incorporated herein by reference to Post-Effective Amendment Number 19 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on July 30, 1993 (File No. 2-83631/811-3738). 11. Incorporated herein by reference to Post-Effective Amendment Number 23 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on August 2, 1994 (File No. 2-83631/811-3738). 12. Incorporated herein by reference to Post-Effective Amendment Number 7 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on September 25, 1986 (File No. 2-83631/811-3738). 13. Incorporated herein by reference to Post-Effective Amendment Number 24 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on September 17, 1996 (File No. 2-83631/811-3738). ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT. No person is controlled by or under common control with the Registrant. All of the outstanding common stock of the Registrant is, or will be, owned by The Variable Annuity Insurance Company ("VALIC"), a Texas life insurance corporation, VALIC Separate Account A, a separate account of VALIC which is registered as a unit investment trust under the Investment Company Act of 1940 (File No. 811-3240/33-75292); American General Life Insurance Company ("AGL") Separate Account A and Separate Account D, unit investment trusts registered as investment companies under the 1940 Act, affiliates of VALIC; AGL Separate Account B, a unit investment trust that is exempt from registering as an investment company under the 1940 Act; and two employee thrift plans maintained by VALIC and/or American General Corporation. Therefore, various companies affiliated with VALIC may be deemed to be under common control with the Registrant. These companies, together with their states of incorporation, and the identity of the owners of their common stock, are set forth in Exhibit 21 of the Form 10-K of American General Corporation filed for the year ended December 31, 1996 (File No. 1-7981), which is incorporated herein by this reference. ITEM 26. NUMBER OF HOLDERS OF SECURITIES. As of May 31, 1997, the number of record holders of each class of Registrant's securities was as follows:
(2) (1) NUMBER OF TITLE OF CLASS RECORD HOLDERS -------------- -------------- Stock Index Fund Seven (common stock, $0.01 par value) MidCap Index Fund Two (common stock, $0.01 par value) Small Cap Index Fund One (common stock, $0.01 par value) International Equities Fund Two (common stock, $0.01 par value) Growth Fund Four (common stock, $0.01 par value)
C-4 194
(2) (1) NUMBER OF TITLE OF CLASS RECORD HOLDERS -------------- -------------- Growth & Income Fund One (common stock, $0.01 par value) Science & Technology Fund One (common stock, $0.01 par value) Social Awareness Fund Two (common stock, $0.01 par value) Asset Allocation Fund Two (common stock, $0.01 par value) Capital Conservation Fund Three (common stock, $0.01 par value) Government Securities Fund Two (common stock, $0.01 par value) International Government Bond Fund One (common stock, $0.01 par value) Money Market Fund Three (common stock, $0.01 par value)
ITEM 27. INDEMNIFICATION Incorporated herein by reference to Post-Effective Amendment Number 20 to the Company's Form N-1A Registration Statement filed with the Securities and Exchange Commission on February 20, 1994 (File No. 2-83631/811-3738). ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER AND SUB-ADVISERS During the last two fiscal years, VALIC has not engaged in any business of a substantial nature other than that described below. VALIC is a stock life insurance company organized under the Texas Insurance Code. VALIC's principal business consists of issuing fixed and variable retirement annuity contracts. VALIC serves, and has served, during the past two fiscal years, as investment adviser to the Registrant. VALIC also is the depositor of VALIC Separate Account A, registered unit investment trust. Bankers Trust Company ("BTC") serves as the investment sub-adviser for the Stock Index Fund, the MidCap Index Fund, and the Small Cap Index Fund. BTC is a state bank that specializes in global merchant banking. Value Line, Inc. ("Value Line") serves as investment sub-adviser to the Growth and Income Fund. Value Line manages a number of affiliated mutual funds and acts as investment adviser for a number of individuals, trusts, corporations and institutions. T. Rowe Price Associates, Inc. ("T. Rowe Price") serves investment sub-adviser for the Science & Technology Fund. T. Rowe Price and its subsidiaries serve as investment advisers to individual and institutional investors (including mutual funds). Set out below is a list of each director and officer of VALIC and each sub-adviser, indicating each other business, profession, vocation, or employment of a substantial nature in which each such person has been, at any time during the past two fiscal years, engaged for his or her own account or in the capacity of director, officer, partner, or trustee. Unless otherwise specified, the principal business address of each organization listed in the table below is: (a) in the case of directors and officers of VALIC, 2929 Allen Parkway, Houston, Texas 77019; (b) in the case of directors and officers of BTC, 130 Liberty Street, New York, New York 10006; (c) in the case of directors and officers of Value Line, 220 East 42nd Street (6th floor), New, York, New York 10017; and (d) in the case of directors and officers of T. Rowe Price, 100 East Pratt Street, Baltimore, Maryland 21202. See also the information set out under the caption "Directors and Officers" in Part B of this Registration Statement, which is incorporated herein by reference to the extent applicable. C-5 195 VALIC
NAME COMPANY TITLE ---- ------- ----- Stephen D. Bickel.................... VALIC Chairman of the Board and Chief Executive Officer VAMCO Chairman of the Board AGSPC Chairman of the Board and President Robert M. Devlin..................... VALIC Senior Chairman of the Board American General Corporation Chairman of the Board and Chief Executive Officer James S. D'Agostino, Jr.............. VALIC Vice Chairman of the Board American General Corporation President Jon P. Newton........................ VALIC Vice Chairman of the Board Craig R. Rodby....................... VALIC Vice Chairman of the Board Thomas L. West, Jr. ................. VALIC Director and President VAMCO Director Peter V. Tuters...................... VALIC Director, Vice President and Chief Investment Officer American General Corporation Senior Vice President and Chief Investment Officer Joe C. Osborne....................... VALIC Director and Senior Vice President -- Marketing VAMCO Director and President AGSPC Director Brent C. Nelson...................... VALIC Director, Senior Vice President and Controller AGSPC Vice President Norman Jaskol........................ VALIC Vice President and Managing Director -- Investments AGSPC Vice President and Senior Investment Officer Ronald E. Kopke...................... VALIC Vice President -- Sales Operations VAMCO Senior Vice President Cynthia A. Toles..................... VALIC Secretary VAMCO Director, Secretary and Assistant Treasurer AGSPC General Counsel and Secretary Jane E. Bates........................ VALIC Chief Compliance Officer VAMCO Treasurer Julia S. Tucker...................... VALIC Investment Officer American General Corporation Vice President -- Investment Research Henry D. Adkins...................... VALIC Real Estate Investment Officer American General Realty Vice President Investment Corporation
C-6 196
NAME COMPANY TITLE ---- ------- ----- Lawrence Kupstas..................... VALIC Real Estate Investment Officer and Assistant Secretary American General Realty Vice President Investment Corporation Rembert R. Owen, Jr. ................ VALIC Real Estate Investment Officer and Assistant Secretary American General Realty Vice President Investment Corporation Jocelyn M. Sears..................... VALIC Real Estate Investment Officer and Assistant Secretary American General Realty Investment Corporation D. Lynne Walters..................... VALIC Tax Officer VAMCO Tax Officer American General Corporation Vice President -- Taxes Kimberly C. Sellers.................. VALIC Assistant Tax Officer American General Realty Assistant Tax Officer Investment Corporation James L. Gleaves..................... VALIC Assistant Treasurer American General Corporation Vice President and Treasurer Gregory R. Seward.................... VALIC Assistant Controller AGSPC Treasurer Kathryn A. Pearce.................... AGSPC Controller John R. Madsen....................... VALIC Assistant Secretary Otto B. Gerlach, III................. VALIC Assistant Secretary American General Corporation Assistant Secretary and Director -- Shareholder Services Patricia W. Neighbors................ VALIC Assistant Secretary American General Corporation Assistant Secretary
BANKERS TRUST
NAME COMPANY TITLE ---- ------- ----- George B. Beitzel.................... Bankers Trust New York Director Corporation Bankers Trust Company Director International Business Retired Senior Vice President Machines Corporation and Director Phillips Petroleum Company Director and Rohm and Haas Company Phillip A. Griffiths................. Bankers Trust New York Director Corporation Bankers Trust Company Director Institute for Advanced Study
C-7 197
NAME COMPANY TITLE ---- ------- ----- William R. Howell.................... Bankers Trust New York Director Corporation Bankers Trust Company Director J.C. Penney Company, Inc. Chairman Emeritus Exxon Corporation; Director Halliburton Company, and Warner-Lambert Corp. Vernon E. Jordan, Jr. ............... Bankers Trust New York Director Corporation Bankers Trust Company Director Akin, Gump, Straus Hauer & Senior Partner Feld, LLP American Express Company; Director Dow Jones, Inc.; J.C. Penney Company, Inc.; Revlon Group Incorporated; Ryder System, Inc.; Sara Lee Corporation; Union Carbide Corporation, and Xerox Corporation Hamish Maxwell....................... Bankers Trust New York Director Corporation Bankers Trust Company Director Philip Morris Companies, Inc. Retired Chairman and Chief Executive Officer The News Corporation Limited Director N. J. Nicholas Jr. .................. Bankers Trust New York Director Corporation Bankers Trust Company Director Time Warner Inc. Former President, Co-Chief Executive Officer and Director Xerox Corporation Director Donald L. Staheli.................... Bankers Trust New York Director Corporation Bankers Trust Company Director Continental Grain Company Chairman of the Board and Chief Executive Officer ContiFinancial Corporation Director National Committee on United Director States -- China Relations America-China Society Director U.S.-Russia Trade Council Director The Points of Light Director Foundation New York City Partnership Director US-China Business Council Director Council on Foreign Relations Member National Advisory Council of Member of the Executive Brigham Young University Committee Marriott School of Management American Graduate School of Trustee International Management
C-8 198
NAME COMPANY TITLE ---- ------- ----- Russell E. Palmer................... Bankers Trust New York Corporation Director Bankers Trust Company Director The Palmer Group Chairman and Chief Executive Officer Allied-Signal Inc.; Federal Home Loan Director Mortgage Corporation; GTE Corporation; May Department Stores Company, and Safeguard Scientifics, Inc. Radnor Venture Partners Advisory Member Board Frank N. Newman..................... Bankers Trust New York Corporation Chairman of the Board, Chief Executive Officer and President and Director Bankers Trust Company Chairman of the Board, Chief Executive Officer and President and Director Carnegie Hall Director Cornell University Medical College Member, Board of Overseers Cornell University Graduate School of Member, Board of Overseers Medical Sciences Dow Jones, Inc. Director Patricia Carry Stewart.............. Bankers Trust New York Corporation Director Bankers Trust Company Director The Edna McConnell Clark Foundation Former Vice President (Retired) Community Foundation for Palm Beach Board Member and Martin Counties George J. Vojta..................... Bankers Trust New York Corporation Vice Chairman of the Board and Director Bankers Trust Company Vice Chairman of the Board and Director Northwest Airlines and Private Export Director Funding Corp. New York State Banking Board Director St. Lukes Roosevelt Hospital Trustee New York City Partnership Partner Wharton Financial Services Center Chairman Richard H. Daniel................... Bankers Trust New York Corporation Vice Chairman, Chief Financial Officer and Controller Bankers Trust Company Senior Managing Director, Chief Financial Officer and Controller
C-9 199 VALUE LINE
NAME COMPANY TITLE ---- ------- ----- Jean Bernhard Buttner................ Value Line, Inc. Chairman of the Board, President and Chief Executive Officer Arnold Bernhard & Co., Inc. Chairman of the Board, President and Chief Executive Officer Value Line Funds and Value Chairman Line Securities, Inc. Samuel Eisenstadt.................... Value Line, Inc. Senior Vice President and Director David T. Henigson.................... Value Line, Inc.; Arnold Vice President, Treasurer and Bernhard & Co., Inc., and Director Value Line Securities, Inc. Value Line Funds Vice President, Secretary and Treasurer Howard A. Brecher.................... Value Line, Inc. Vice President, Secretary and Director Arnold Bernhard & Co., Inc. Secretary and Treasurer Harold Bernhard, Jr. ................ Value Line, Inc. Director Administrative Law Judge William S. Kanaga.................... Value Line, Inc. Director Advisory Board of Ernst & Retired Chairman Young W. Scott Thomas...................... Value Line, Inc. Director Brobeck, Phleger & Harrison, Partner attorneys
C-10 200 T. ROWE PRICE
NAME COMPANY TITLE ---- ------- ----- James E. Halbkat, Jr. ............... T. Rowe Price Director U.S. Monitor Corporation President Richard L. Menshel................... T. Rowe Price Director, The Goldman Sachs Group, Limited Partner L.P. John W. Rosenblum.................... T. Rowe Price Director The Jepson School of Dean Leadership Studies, University of Richmond Chesapeake Corporation; Director Cadmus Communications Corp., Comdial Corp. and Cone Mills Corp. Robert L. Strickland................. T. Rowe Price Director Lowe's Companies, Inc. Chairman Hannaford Bros., Co. Director Philip C. Walsh...................... T. Rowe Price Director Cyprus Amax Minerals Consultant Corporation Anne Marie Whittmore................. T. Rowe Price Director McGuire, Wood, Battle & Booth Partner Owens & Minor Inc. Director USF&G Corp & James River Corp. Albemarle Corp. George J. Collins.................... T. Rowe Price Director Price-Fleming Director George A. Roche...................... T. Rowe Price Chairman of the Board and President Price-Fleming Director M. David Testa....................... T. Rowe Price Managing Director Price-Fleming Chairman of the Board Henry H. Hopkins..................... T. Rowe Price Director and Managing Director Price-Fleming Vice President Charles P. Smith..................... T. Rowe Price Managing Director Price-Fleming Vice President Peter Van Dyke....................... T. Rowe Price Managing Director Price-Fleming Vice President Robert P. Campbell................... T. Rowe Price Vice President Price-Fleming Executive Vice President Roger L. Fiery III................... T. Rowe Price Vice President Price-Fleming Vice President Michael J. Conelius.................. T. Rowe Price Vice President Price-Fleming Vice President R. Aran Gordon....................... T. Rowe Price Vice President Price-Fleming Vice President
C-11 201
NAME COMPANY TITLE ---- ------- ----- Veena A. Kutler...................... T. Rowe Price Vice President Price-Fleming Vice President Heather R. Landon.................... T. Rowe Price Vice President Price-Fleming Vice President Nancy M. Morris...................... T. Rowe Price Vice President Price-Fleming Vice President Robert W. Smith...................... T. Rowe Price Vice President Price-Fleming Vice President George A. Murnaghan.................. T. Rowe Price Managing Director Price-Fleming Executive Vice President William F. Wendler, II............... T. Rowe Price Vice President Price-Fleming Vice President Edward A. Wiese...................... T. Rowe Price Vice President Price-Fleming Vice President Alvin M. Younger, Jr. ............... T. Rowe Price Chief Financial Officer, Managing Director, Secretary and Treasurer Price-Fleming Secretary and Treasurer Nolan L. North....................... T. Rowe Price Vice President and Assistant Treasurer Price-Fleming Assistant Treasurer Barbara A. Van Horn.................. T. Rowe Price Assistant Secretary Price-Fleming Assistant Secretary
ITEM 29. PRINCIPAL UNDERWRITERS. (a) The Variable Annuity Marketing Company ("VAMCO") acts as exclusive distributor and principal underwriter of the Registrant and as principal underwriter for VALIC Separate Account A. (b) The following information is furnished with respect to each officer and director of VAMCO.
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES BUSINESS ADDRESS WITH VAMCO WITH THE REGISTRANT ------------------ --------------------- --------------------- Stephen D. Bickel.................... Chairman of the Board Chairman and President (*) Thomas L. West Jr.................... Director Director and Executive Vice President (*) Joe C. Osborne....................... Director and President Director (*) Cynthia A. Toles..................... Director, Secretary and General Counsel and Secretary Assistant Treasurer (*) Ronald E. Kopke...................... Senior Vice President -- (*) Jane E. Bates........................ Treasurer -- (*) D. Lynne Walters..................... Tax Officer -- (*)
C-12 202
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES BUSINESS ADDRESS WITH VAMCO WITH THE REGISTRANT ------------------ --------------------- --------------------- Todd M. Adams........................ Vice President -- 8500 Normandale Lake Blvd. Suite 750 Bloomington, MN 55437 Bill Scott........................... Vice President -- Two Summit Park Dr. Suite 410 Independence, OH 44131 Ed Boero............................. Vice President -- 222 South Harbor Blvd. 10th Floor Anaheim, CA 92805 Steven P. Boero...................... Vice President -- 1900 O'Farrell Street Suite 390 San Mateo, CA 94403-1311 James J. Costello.................... Vice President -- 1767 Sentry Pkwy West 19 Suite 300 Blue Bell, PA 19422 Paige T. Davis....................... Vice President -- 7310 Ritchie Highway Suite 800 Glen Burnie, MD 21061 George E. Downing.................... Vice President -- 100 Ashford Center North Suite 100 Atlanta, GA 30338 Robert G. Fillmore................... Vice President -- 90 Woodbridge Center Dr. Suite 300 Woodbridge, NJ 07095 James K. Graham...................... Vice President -- 1301 West Long Lake Road Suite 340 Troy, MI 48098 Richard R. Gumpert................... Vice President -- 5400 LBJ Freeway Suite 1340 Dallas, TX 75240 Thomas N. Lange...................... Vice President -- 10006 N. Dale Mabry Hwy. Suite 113 Tampa, FL 33618 Alden D. Lewis....................... Vice President -- 1800 S.W. First Avenue Suite 505 Portland, OR 97201
C-13 203
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES BUSINESS ADDRESS WITH VAMCO WITH THE REGISTRANT ------------------ --------------------- --------------------- David R. Lyle........................ Vice President -- University Tower 3100 Tower Blvd. Suite 1601, Box 50 Durham, NC 27707 Sharon J. Novickas................... Vice President -- 230 West Monroe Suite 1900 Chicago, IL 60606 Robert A. Obester.................... Vice President -- 800 Gessner Suite 1280 Houston, TX 77024 Evan Cole............................ Vice President -- 410 Amherst Street Suite 250 Nashua, NH 03063 William G. Tubbs..................... Vice President -- 550 Congressional Blvd. Suite 280 Carmel, IN 46032 Donald R. Van Putten................. Vice President -- 165 South Union Blvd. Suite 1050 Lakewood, CO 80228 Joe H. Connell....................... Vice President -- 10851 N. Black Canyon Hwy. Suite 700 Phoenix, AZ 85029
- - --------------- (*) 2929 Allen Parkway, Houston, Texas 77019 (c) Not Applicable ITEM 30. LOCATION OF BOOKS AND RECORDS. The books or other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder will be in the physical possession of either: THE DEPOSITOR: The Variable Annuity Life Insurance Company 2929 Allen Parkway Houston, Texas 77019 THE PRINCIPAL UNDERWRITER: The Variable Annuity Marketing Company 2929 Allen Parkway Houston, Texas 77019 C-14 204 THE CUSTODIAN: The State Street Bank and Trust Company 225 Franklin Street Boston, Massachusetts 02110 INVESTMENT SUB-ADVISERS: Bankers Trust Company One Bankers Trust Plaza 130 Liberty Street, 36th Floor New York, New York 10006 T. Rowe Price Associates, Inc. 100 East Pratt Street Baltimore, Maryland 21202 Value Line, Inc. 220 East 42nd Street, 6th Floor New York, New York 10017-5981 ITEM 31. MANAGEMENT SERVICES. There is no management-related service contract not discussed in Parts A or B of this Form N-1A ITEM 32. UNDERTAKINGS. C-15 205 Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, American General Series Portfolio Company certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized, in the City of Houston, and State of Texas, on the 31st day of July, 1997. AMERICAN GENERAL SERIES PORTFOLIO COMPANY By: /s/ STEPHEN D. BICKEL -------------------------------- Stephen D. Bickel Chairman of the Board of Directors and President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated. Signature Title Date - - --------- ----- ---- /s/ STEPHEN D. BICKEL Chairman of the Board of July 31, 1997 - - ------------------------------ Directors and President Stephen D. Bickel /s/ THOMAS L. WEST, JR. Director and Executive July 31, 1997 - - ------------------------------ Vice President Thomas L. West, Jr. /s/ GREGORY R. SEWARD Treasurer July 31, 1997 - - ------------------------------ Gregory R. Seward /s/ JOE C. OSBORNE Director July 31, 1997 - - ------------------------------ Joe C. Osborne 206 Signature Title Date - - --------- ----- ---- * Director July 31, 1997 - - ------------------------------ Norman Hackerman * Director July 31, 1997 - - ------------------------------ John W. Lancaster * Director July 31, 1997 - - ------------------------------ Ben H. Love * Director July 31, 1997 - - ------------------------------ F. Robert Paulsen * Director July 31, 1997 - - ------------------------------ Peter V. Tuters * Director July 31, 1997 - - ------------------------------ R. Miller Upton By: /s/ David M. Leahy July 31, 1997 -------------------------- David M. Leahy Attorney-in-Fact 207 EXHIBIT INDEX
EXHIBIT NUMBER ------- 1.(K) -- Articles of Amendment to the Articles of Incorporation. 6.(B) -- Amended and Restated Distribution Agreement between Registrant and The Variable Annuity Marketing Company. 8.(A)(2) -- Custodian Fee Schedule between Registrant and State Street Bank and Trust Company. 8.(A)(3) -- Amendment to Custodian Contract between Registrant and State Street Bank and Trust Company. 8.(A)(4) -- Custodian Fee Schedule between Registrant and State Street Bank and Trust Company. 9.(B) -- Accounting Services Agreement between Registrant and The Variable Annuity Life Insurance Company. 11. -- Consent of Independent Auditors. 16. -- Calculation of Performance Information. 17. -- Financial Data Schedule. (Exhibit 27 for purposes of electronic filing). 19. -- Specimen Price Make-Up Sheet dated May 31, 1997.
- - --------------- * Page numbers inserted in manually signed copy only. EX-99.B1.K 2 ARTICLES OF AMENDMENT 1 EXHIBIT 1(K) AMERICAN GENERAL SERIES PORTFOLIO COMPANY ARTICLES OF AMENDMENT American General Series Portfolio Company, a Maryland corporation, registered as an open-end investment company under the Investment Company Act of 1940, as amended, having its principal office in Baltimore City, Maryland (hereinafter called the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: Pursuant to authority expressly vested in the Board of Directors of the Corporation by Article V of the Charter of the Corporation, the Board of Directors has approved the change of name of the existing series of the Corporation (the "Series") from "Timed Opportunity Portfolio" to "Asset Allocation Portfolio." Any reference to the Timed Opportunity Portfolio in the Charter shall be changed to Asset Allocation Portfolio. This Amendment is limited to a change of name expressly provided by Section 2-605 of the Maryland General Corporation Law, and is made without action by stockholders. SECOND: The amendment to the charter of the Corporation herein made was duly approved by vote of a majority of the entire Board of Directors at a meeting duly convened and held on July 16, 1997; and that at the time of the approval by the Directors, there were no shares of stock of the Corporation entitled to vote on the matter. THIRD: These Articles of Amendment shall become effective on the first day of October, 1997. IN WITNESS WHEREOF, American General Series Portfolio Company has caused these presents to be signed in its name and on its behalf by its President and witnessed by its Secretary on July 29, 1997. WITNESS: AMERICAN GENERAL SERIES PORTFOLIO COMPANY /s/ CYNTHIA A. TOLES By /s/ STEPHEN D. BICKEL - - ----------------------------- ------------------------------------ Cynthia A. Toles, Secretary Stephen D. Bickel, President 2 THE UNDERSIGNED, President of American General Series Portfolio Company, who executed on behalf of the Corporation Articles of Amendment of which this Certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles of Amendment to be the corporate act of said Corporation and hereby certifies that the matters and facts set forth herein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury. /s/ STEPHEN D. BICKEL ----------------------------------- Stephen D. Bickel, President EX-99.B6.A 3 DISTRIBUTION AGREEMENT 1 EXHIBIT 6(A) DISTRIBUTION AGREEMENT Between AMERICAN GENERAL SERIES PORTFOLIO COMPANY and THE VARIABLE ANNUITY MARKETING COMPANY Amended and Restated as of June 1, 1996 THIS AGREEMENT made this 1st day of June 1996 by and between AMERICAN GENERAL SERIES PORTFOLIO COMPANY, a Maryland Corporation, hereafter referred to as the "Fund" and THE VARIABLE ANNUITY MARKETING COMPANY, a Texas corporation hereafter referred to as the "Distributor." THE FUND AND THE ADVISER RECOGNIZE THE FOLLOWING: 1. The Fund consists of a number of investment portfolios and issues several series of common stock, each of which represents an interest in one of the portfolios. The Fund is registered as a diversified, open-end management investment company under the Investment Company Act of 1940 (the "1940 Act"). It is the FUND's affirmative interest to continuously offer the shares of its various Portfolios for sale to The Variable Annuity Life Insurance Company ("VALIC"), The Variable Annuity Life Insurance Company Separate Account A ("Account A"), to any other separate accounts of VALIC or any of VALIC's subsidiaries or affiliates, and to non-affiliated life insurance companies and separate accounts of such non-affiliated companies (all eligible purchasers of such shares being referred to collectively as the "Purchasers"). 2. The Distributor is registered as a broker-dealer under the Securities Exchange Act of 1934 and is currently a member of The National Association of Securities Dealers. The Distributor is also the principal underwriter and distributor of variable annuity contracts issuec by VALIC and funded by Account A. THE FUND AND THE DISTRIBUTOR AGREE AS FOLLOWS: 1. The Fund hereby appoints the Distributor as its principal underwriter and exclusive distributor to sell shares of its various Portfolios (hereinafter "its shares") to the Purchasers and the public through investment dealers throughout the world. The Fund may also sell its shares at their net asset value through the Distributor and to registered unit investment trusts which issue periodic payment plan certificates, the proceeds of which, these trusts invest in redeemable securities. The Fund may also sell its shares directly to the public. 2. The Distributor accepts such appointment. The Distributor shall offer shares of the Fund's various Portfolios only on the terms set forth in the current prospectus. 1 2 3. The Fund has no load or redemption charge and the Distributor will receive no compensation for acting in such capacity. Notwithstanding this, the Distributor assumes and will pay, from its own resources, all expenses related to distribution of the Fund's shares and will bear all other costs and expenses attributable to any activity primarily intended to result in the sale of shares. 4. Allocation of Expenses. The Fund will pay (or will enter into arrangements providing that persons other than the Fund will pay) for all expenses of the offering of its shares incurred in connection with: (a) The registration of the Fund or the registration or qualification of the Fund's shares for offer or sale under the federal securities laws and the securities laws of any state or other jurisdiction in which the Distributor may arrange for the sale of the shares. (b) The printing and distribution of the Fund's prospectuses to existing owners and participants of variable annuity contracts issued by VALIC and funded by Account A as may be required under the federal securities laws and the applicable securities laws of any state or other jurisdiction; and (c) The preparation, printing and distribution of any proxy statements, notices and reports, and the performance of any acts required to be performed by the Fund by and under the federal securities laws and the applicable securities laws of any state or other jurisdiction; and (d) The issuance of the Fund's shares, including any stock issue and transfer taxes. The Distributor will pay from its own resources (or will enter into arrangements providing that persons other than the Distributor or the Fund shall pay), or promptly reimburse the Fund, for all expenses in connection with: (a) The printing and distribution of the Fund's prospectuses utilized for the marketing of variable annuity contracts issued by VALIC; (b) The preparation, printing and distribution of advertising and sales literature for use in the offering of the Fund's shares and printing and distribution of reports to shareholders used as sales literature; (c) The qualification of the Distributor as a distributor or broker or dealer under any applicable federal or state securities laws; (d) Any investment program of the Fund, including the reinvestment of dividends and capital gains distributions, to the extent such expenses exceed the Fund's normal costs of issuing its shares; and 2 3 (e) All other expenses in connection with the offering for sale and the sale of the Fund's shares which have not been herein specifically allocated to the Fund. 5. Duties of the Distributor. (a) The Distributor shall devote reasonable time and effort to effect sales of shares of the Fund, but it shall not be obligated to sell any specific number of shares. (b) In selling the shares of the Fund, the Distributor shall use its best efforts in all respects duly to conform with the requirements of all federal and state laws and regulations and the regulations of the National Association of Securities Dealers, Inc. (the "NASD"), relating to the sale of such securities. Neither the Distributor nor any other person is authorized by the Fund to give any information or to make any representations, other than those contained in the registration statement or related Prospectus and any sales literature authorized by responsible officers of the Distributor. (c) The Distributor shall act as an independent contractor and nothing herein contained shall constitute the Distributor, its agents or representatives, or any employees thereof as employees of the Fund in connection with the sale of shares of the Fund. The Distributor is responsible for its own conduct and the employment, control and conduct of its agents and employees and for injury to such agents or employees or to others through its agents or employees. The Distributor assumes full responsibility for its agents and employees under applicable statutes and agrees to pay all employer taxes thereunder. 6. Sale and Redemption of Shares of the Fund. (a) Orders for the purchase and redemption of the Fund's shares (and payment for shares, in the case of a purchase) shall be transmitted directly from the Purchaser to the Fund or its agent. (b) The Fund shall have the right to suspend the redemption of shares pursuant to the conditions set forth in the registration statement. The Fund shall also have the right to suspend the sale of shares at any time when its is authorized to suspend redemption of such shares. (c) The Fund will give the Distributor prompt notice of any such suspension and shall promptly furnish such other information in connection with the sale and redemption of Fund shares as the Distributor reasonably requests. (d) The Fund (or its agent) will make appropriate book entries upon receipt by the Fund (or its agent) of orders and payments for shares or requests for redemption thereof, and will 3 4 issue and redeem shares and confirm such transactions in accordance with applicable laws and regulations. 7. Indemnification. The Distributor agrees to indemnify, defend and hold the Fund, its officers and directors (or former officers and directors) and any person who controls the Fund within the meaning of Section 15 of the 1934 Act, (collectively, "Indemnities") free and harmless from and against any and all claims, demands, liabilities and expenses (including the cost of investigating or defending such claims, demands or liabilities and any counsel fees incurred in connection therewith) incurred by any Indemnitee under the 1940 Act or under common law or otherwise, which arise out of or are based upon (1) any untrue or alleged untrue statement of a material fact contained in information furnished by the Distributor to the Fund's registration statement or prospectus, (2) any omission or alleged omission to state a material fact in connection with such information required to be stated in the registration statement or prospectus or necessary to make such information not misleading, (3) any misrepresentation or omission or alleged misrepresentation or omission to state a material fact on the part of the Distributor or any agent or employee of the Distributor or any other person for whose acts the Distributor is responsible or is alleged to be responsible, unless such misrepresentation or omission or alleged misrepresentation or omission was made in reliance on written information furnished by the Fund, or (4) the willful misconduct or failure to exercise reasonable care and diligence on the part of any such persons with respect to services rendered under this Agreement. The foregoing rights of indemnification shall be in addition to any other rights to which any Indemnitee may be entitled as a matter of law. The Fund agrees promptly to notify the Distributor of any action brought against any Indemnitee, such notification being given to the Distributor by letter or telegram addressed to the Distributor at its principal business office and the Distributor's agreement to indemnify the Indemnitees pursuant to this paragraph is expressly conditioned upon such notification. 8. This agreement is effective as of June 1, 1996 and shall continue in force from year-to-year thereafter, provided, that such continuance for more than two years is specifically approved at least annually (a)(i) by the Board of Directors of the Fund, or (ii) by vote of a majority of the Fund's outstanding voting securities (as defined in Section 2(a)(42) of the 1940 Act), and (b) by the affirmative vote of a majority of the Directors who are not interested persons (as defined in Section 2(a)(19) of the 1940 Act) of the Fund by votes cast in person at a meeting called for such purpose. 9. (A) This Agreement may be terminated at any time, without penalty, by a vote of the Board of Directors of the Fund or by a vote of a majority of the outstanding voting securities of the Fund, or by the Distributor, on sixty (60) days' written notice to the other party. (B) This agreement shall automatically terminate in the event of its assignment, as defined in Section 21(a)(4) of the 1940 Act. 4 5 10. Each party shall mail (postage paid) or deliver, in writing, all notices to the other party, at an address designated for this purpose by the other party. Until changed, this address for both parties is: 2929 Allen Parkway, Houston, Texas 77019. IN WITNESS WHEREOF, the parties hereto execute this agreement on the date above. AMERICAN GENERAL SERIES PORTFOLIO COMPANY By: /s/ Stephen D. Bickel --------------------------------- Stephen D. Bickel President ATTEST: /s/ Cynthia A. Toles - - ---------------------- Cynthia A. Toles Secretary THE VARIABLE ANNUITY MARKETING COMPANY By: /s/ Joe C. Osborne ---------------------------------- Joe C. Osborne President ATTEST: /s/ Cynthia A. Toles - - ---------------------- Cynthia A. Toles Secretary 5 EX-99.B8.A.2 4 CUSTODIAN FEE SCHEDULE - 11/92 - STATE STREET BK. 1 EXHIBIT 8(A)(2) [STATE STREET LOGO] STATE STREET BANK AND TRUST COMPANY AMERICAN GENERAL SERIES PORTFOLIO COMPANY CUSTODIAN FEE SCHEDULE ADMINISTRATION (DOMESTIC) Custody, Portfolio and Fund Accounting Service - Maintain custody of fund assets. Settle portfolio purchases and sales. Report buy and sell fails. Determine and collect portfolio income. Make cash disbursements and report cash transactions. Maintain investment ledgers, provide selected portfolio transactions, position and income reports. Maintain general ledger and capital stock accounts. Prepare daily trial balance. Calculate net asset value. Provide selected general ledger reports. Securities yield or market value quotations will be provided to State Street by the fund. The administration fee shown below is an annual charge, billed and payable monthly, based on average monthly net assets. ANNUAL FEES PER PORTFOLIO
Custody, Portfolio Fund Net Assets & Fund Accounting --------------- ------------------ First $20 Million Next $80 Million Excess
Portfolio Trades - For each line item processed ----------------------------------------------- State Street Bank Repos DTC or Fed Book Entry SSB Boston Commercial Paper Book Entry PTC Purchase, Sale, Deposit or Withdrawal AR Other Trades Maturity Collections Option charge for each option written or closing contract, per issue, per broker Option expiration/Option exercised Interest Rate Futures -- no security movement Monitoring for calls and processing coupons -- for each coupon issue held (monthly charge)
2 [STATE STREET LOGO] -2- Holdings Charge --------------- For each issue maintained (annual charge) Principal Reduction Payments ---------------------------- Per paydown Dividend Charges ---------------- (For items held at the request of traders over record date in street form)
ADMINISTRATION (FOREIGN) Custody - Maintain custody of fund assets. Settle portfolio purchases and sales. Report buy and sell fails. Determine and collect portfolio income. Make cash disbursements and report cash transactions. Monitor corporate actions. Withhold foreign taxes. File foreign tax reclaims. Annual fee in basis points per portfolio. Portfolio and Fund Accounting - Maintain multicurrency investment ledgers, provide selected multicurrency portfolio transactions, position and income reports. Maintain general ledger and capital stock accounts in compliance with GAAP (FAS 52). Prepare daily trial balance. Calculate net asset value daily. Provide selected general ledger reports. Securities yield or market value quotations will be provided to State Street by the fund or via State Street's pricing service (see section III). (Annual fee in basis points per portfolio).
GROUP I GROUP II GROUP III GROUP IV GROUP V GROUP VI - - ------- -------- --------- -------- ------- -------- Euroclear Australia Austria Denmark Mexico Greece Japan Canada Belgium Finland Portugal Malaysia Germany France Italy Spain Indonesia Hong Kong United Kingdom Thailand Sweden Turkey Netherlands New Zealand Philippines Norway Singapore Switzerland
GROUP I GROUP 11 GROUP III GROUP IV GROUP V GROUP VI ------- -------- --------- -------- ------- --------
3 [STATE STREET LOGO] -3- Transaction Charges
GROUP I GROUP II GROUP III GROUP IV GROUP V GROUP VI ------- -------- --------- -------- ------- --------
BALANCE CREDIT Balance credits for all funds will be applied against the custody fees based on the 90 Day T-Bill rate announced weekly and adjusted by the current Federal Reserve requirements. The rate announced weekly (every Monday) at the Fed T-Bill auction will be utilized against the average collected balance in the Demand Deposit Account maintained at State Street Bank. SPECIAL SERVICES Fees for activities of a non-recurring nature such as fund consolidation or reorganizations, extraordinary security shipments and the preparation of special reports will be subject to negotiation. Fees for automated pricing, yield calculation and other special items will be negotiated separately. OUT-OF-POCKET EXPENSES A billing for the recovery of applicable Out-of-Pocket expenses will be made as of the end of each month. Out-of-Pocket expenses include, but are not limited to, the following: Telephone Wire Charges Postage and Insurance Courier Service Duplicating Archiving Legal Fees Supplies Related to Fund Records Rush Transfer - Transfer Fees Sub-Custodian Charges (e.g., Stamp Duties, Registration, etc.) Price Waterhouse Audit Letter Federal Reserve Fee for Return Check items over $2,500 - GNMA Transfer - PTC Deposit/Withdrawal for same day turnarounds - 4 [STATE STREET LOGO] -4- STATE STREET BANK AND TRUST COMPANY FEE INFORMATION FOR AUTOMATED PRICING AMERICAN GENERAL SERIES PORTFOLIO COMPANY This service provides securities pricing on request. Services and fees are based on the schedule below. Reports can be generated at State Street or on a remote basis via PC. Reporting has both up load and down load capabilities. Customized reports may require programming fees. - - ------------------------------------------------------------------------------- Monthly charges for the State Street Bank Automated Pricing System are determined by: 1. Mix of security positions. 2. The number of positions that are priced during the month. Monthly Quote Charge: o Municipal Bonds via Muller Data o Municipal Bonds via Kenny Information System o Government, Corporate and Convertible Bonds via Merrill Lynch o Corporate and Government Bonds via Muller Data o Options, Futures and Private Placements o Foreign Equities and Bonds via Extel Ltd. o Listed Equities, DTC Equities, and Bonds o Corporate, Municipal, Convertible and Government Bonds, Adjustable Rate Preferred Stocks via IDSI
For billing purposes, the monthly quote charge will be based on the average number of positions in the portfolio. 5 [STATE STREET LOGO] -5- AMERICAN GENERAL SERIES STATE STREET BANK & TRUST COMPANY PORTFOLIO COMPANY By: /s/ ILLEGIBLE By: /s/ ILLEGIBLE ---------------------------- ------------------------------------ Title: Treasurer and Controller Title: Vice President and Division Head -------------------------- --------------------------------- Date: 11-9-92 Date: 11/3/92 --------------------------- ---------------------------------- EX-99.B8.A.3 5 AMENDMENT TO CUSTODIAN CONTRACT - STATE STREET BK 1 EXHIBIT 8(A)(3) AMENDMENT TO CUSTODIAN CONTRACT Agreement made by and between State Street Bank and Trust Company (the "Custodian" and American General Series Portfolio Company (the "Fund"). WHEREAS, the Custodian and the Fund are parties to a custodian contract dated May 24, 1990 (the "Custodian Contract") governing the terms and conditions under which the Custodian maintains custody of the securities and other assets of the Fund; and WHEREAS, the Custodian and the Fund desire to amend the terms and conditions under which the Custodian maintains the Fund's securities and other non-cash property in the custody of certain foreign sub-custodians in conformity with the requirements of Rule 17f-5 under the Investment Company Act of 1940, as amended; NOW THEREFORE, in consideration of the premises and covenants contained herein, the Custodian and the Fund hereby amend the Custodian Contract by the addition of the following terms and provisions; 1. Notwithstanding any provisions to the contrary set forth in the Custodian Contract, the Custodian may hold securities and other non-cash property for all of its customers, including the Fund, with a foreign sub-custodian in a single account that is identified as belonging to the Custodian for the benefit of its customers, provided however, that (i) the records of the Custodian with respect to securities and other non-cash property of the Fund which are maintained in such account shall identify by book-entry those securities and other non-cash property belonging to the Fund and (ii) the Custodian shall require that securities and other non-cash property so held by the foreign sub-custodian be held separately from any assets of the foreign sub-custodian or of others. 2. Except as specifically superseded or modified herein, the terms and provisions of the Custodian Contract shall continue to apply with full force and effect. IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed as a sealed instrument in its name and behalf by its duly authorized representative this 30th day of October, 1995. AMERICAN GENERAL SERIES PORTFOLIO COMPANY By: /s/ [ILLEGIBLE] ----------------------------------- Title: Treasurer & Controller -------------------------------- STATE STREET BANK AND TRUST COMPANY By: /s/ [ILLEGIBLE] ----------------------------------- Executive Vice President ----------------------------------- EX-99.B8.A.4 6 CUSTODIAN FEE SCHEDULE - 06/97 - STATE STREET BK. 1 EXHIBIT 8(A)(4) STATE STREET BANK AND TRUST COMPANY AMERICAN GENERAL SERIES PORTFOLIO COMPANY CUSTODIAN FEE SCHEDULE =============================================================================== ADMINISTRATION (DOMESTIC) Custody - Maintain custody of fund assets. Settle portfolio purchases and sales. Report buy and sell fails. Determine and collect portfolio income. Make cash disbursements and report cash transactions. Maintain investment ledgers, provide selected portfolio transactions, position and income reports. The administration fee shown below is an annual charge billed and payable monthly. ANNUAL FEES PER PORTFOLIO Custody Maintenance Fee Per Portfolio Per Month
PORTFOLIO TRADES - FOR EACH LINE ITEM PROCESSED - - ----------------------------------------------- - - -------------------------------------------------------------- State Street Repos - - -------------------------------------------------------------- DTC of Fed Book Entry - - -------------------------------------------------------------- SSB Boston Commercial Paper Book Entry - - -------------------------------------------------------------- PTC Purchase, Sale, Deposit & Withdrawal - - -------------------------------------------------------------- All Other Trades - - -------------------------------------------------------------- Maturity Collections - - -------------------------------------------------------------- Option charge for each option written or closing contract, per issue, per broker - - -------------------------------------------------------------- Option expiration/Option exercised - - -------------------------------------------------------------- Interest Rate Futures - no security movement - - -------------------------------------------------------------- Monitoring for calls and processing coupons - for each coupon issue held (monthly charge) - - -------------------------------------------------------------- - - -------------------------------------------------------------- Holding Charge: - - -------------- For each issue maintained (annual charge) Physical Issues - - -------------------------------------------------------------- - - -------------------------------------------------------------- Principal Reduction Payments Per paydown - - -------------------------------------------------------------- - - -------------------------------------------------------------- Dividend Charges (for items held at the request of traders over record date in street form) - - --------------------------------------------------------------
2 ADMINISTRATION (FOREIGN) Custody - Maintain custody of fund assets. Settle portfolio purchases and sales. Report buy and sale fails. Determine and collect portfolio income. Make cash disbursements and report cash transactions. Monitor corporate actions. Withhold foreign taxes. File foreign tax reclaims. Annual fee in basis points per portfolio.
- - ------------------------------------------------------------------------------------------------------------------------ GROUP I GROUP II GROUP III GROUP IV GROUP V GROUP VI - - ------------------------------------------------------------------------------------------------------------------------ Euroclear Australia Austria Denmark Mexico Greece - - ------------------------------------------------------------------------------------------------------------------------ Japan Canada Belgium Finland Portugal Malaysia - - ------------------------------------------------------------------------------------------------------------------------ Germany France Italy Spain Indonesia - - ------------------------------------------------------------------------------------------------------------------------ Hong Kong United Thailand Sweden Turkey Kingdom - - ------------------------------------------------------------------------------------------------------------------------ Netherlands New Zealand Philippines - - ------------------------------------------------------------------------------------------------------------------------ Norway - - ------------------------------------------------------------------------------------------------------------------------ Singapore - - ------------------------------------------------------------------------------------------------------------------------ Switzerland - - ------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------ GROUP I GROUP II GROUP III GROUP IV GROUP V GROUP VI - - ------------------------------------------------------------------------------------------------------------------------ - - ------------------------------------------------------------------------------------------------------------------------
TRANSACTION CHARGES
- - ------------------------------------------------------------------------------------------------------------------------ GROUP I GROUP II GROUP III GROUP IV GROUP V GROUP VI - - ------------------------------------------------------------------------------------------------------------------------ - - ------------------------------------------------------------------------------------------------------------------------
BALANCE CREDIT Balance credits for all funds will be applied against the custody fees based on the 90 Day T-Bill rate announced weekly and adjusted by the current Federal Reserve requirements. The rate announced weekly (every Monday) at the Fed T-Bill auction will be utilized against the average collected balance in the Demand Deposit Account maintained at State Street Bank. SPECIAL SERVICES Fees for activities of a non-recurring nature such as fund consolidation or reorganizations, extraordinary security shipments and the preparation of special reports will be subject to negotiation. Fees for automated pricing, yield calculation and other special items will be negotiated separately. 3 OUT OF POCKET EXPENSES - - ---------------------- A billing for the recovery of applicable out-of-pocket expenses will be made as of the end of each month. Out of Pocket expenses include, but are not limited to, the following: Telephone Wire Charges Postage and Insurance Courier Service Duplicating Archiving Legal Fees Supplies Related to Fund Records Rush Transfer - Transfer Fees Sub-custodian Charges (e.g., Stamp Duties, Registration, etc.) Price Waterhouse Audit Letter Federal Reserve Fee for Return Check items over $2,500 - GNMA Transfer - PTC Deposit / Withdrawal for same day turnarounds - APPROVED BY: AMERICAN GENERAL SERIES PORTFOLIO COMPANY By: /s/ ILLEGIBLE ------------------------------- Title: TREASURER: ---------------------------- Date: June 19, 1997 ------------------------------- STATE STREET BANK AND TRUST COMPANY By: /s/ ILLEGIBLE ------------------------------- Title: Vice President: ------------------------------- Date: May 27, 1997 ------------------------------- EX-99.B9.B 7 ACCOUNTING SERVICES AGREEMENT 1 EXHIBIT 9(B) ACCOUNTING SERVICES AGREEMENT THIS AGREEMENT, dated as of the 31st day of October, 1996, made by and between American General Series Portfolio Company (the "Company"), a corporation operating as an open end investment company, duly organized and existing under the laws of the State of Maryland, and The Variable Annuity Life Insurance Company ("VALIC"), a stock insurance company duly organized and existing under the laws of the State of Texas: WITNESSETH THAT: WHEREAS, The Company desires to appoint VALIC as its Accounting Services Agent to maintain and keep current the books, accounts, records, journals or other records of original entry relating to the business of the Company as set forth in Section 1 of this Agreement (the "Accounts and Records") and to perform certain daily functions in connection with such Accounts and Records; and WHEREAS, VALIC is authorized to contract on behalf of the Company with service providers for the purpose of daily valuation of the Company portfolios; and WHEREAS, VALIC is willing to perform such functions upon the terms and conditions set forth below; and NOW, THEREFORE, In consideration of the premises and mutual covenants herein contained, the parties hereto, intending to be legally bound, do hereby agree as follows: Section 1. - - ---------- VALIC, upon receipt of necessary information and written or verbal instructions from the Company, shall maintain and keep current the following books: Accounts and Records, journals or other records of original entry relating to the business of the Company, and necessary or advisable for compliance with applicable regulations, including Rules 31(a)-1 and 31(a)-2 of the Investment Company Act of 1940, as amended, in such form as may be mutually agreed to between the Company and VALIC: (a) Cash Receipts (b) Cash Disbursements (c) Dividend Record (d) Purchase and Sales of Portfolio Securities 2 (e) Subscription and Redemption Journals (f) Security Ledgers (g) Broker Ledger (h) General Ledger (i) Daily Expense Accruals (j) Securities and Monies borrowed or loaned and collateral therefor (k) Daily Trial Balances It shall be the responsibility of the Company to furnish or cause to be furnished to VALIC, the declaration, record, payment dates and amounts of any dividends or income and any other special actions required on or concerning each of its portfolio securities. Section 2. - - ---------- Upon receipt by VALIC of written or verbal instructions, VALIC shall make the proper accounting entries in accordance therewith and notify the Company of all cash and securities. VALIC, as Investment Adviser, shall direct that the broker-dealer, or other person through whom a transaction has occurred, send a confirmation to VALIC. VALIC shall verify this confirmation against the written or verbal instructions when received from the Company. Section 3. - - ---------- VALIC shall calculate the Company's net asset value in accordance with the Company's currently effective Registration Statement, once daily. VALIC shall calculate the daily dividend rate for the Money Market Fund in accordance with the prospectus of the Money Market Fund and with resolutions of the Company's Board of Directors. VALIC shall prepare and maintain a daily evaluation of securities and other investments for which market quotations are available by VALIC's approved pricing services; all other securities or investments shall be evaluated in accordance with the Company's written instructions. Section 4. - - ---------- For all purposes under this Agreement, VALIC is authorized to act upon receipt of any written or verbal instructions it receives from the Company. Section 5. - - ---------- VALIC shall supply daily and periodic reports to the Company as requested by the Company and agreed upon by VALIC. 3 Section 6. - - ---------- VALIC shall compile daily reports of share purchases, redemptions, and total shares outstanding. Reports of purchases and redemptions so received shall be deemed to be share orders to the Company and shall be deemed to be orders accepted by the Company when so received. Section 7. - - ---------- The accounts and records, in the agreed upon format, maintained by VALIC shall be the property of the Company, and shall be made available to the Company within a reasonable period of time, upon proper demand. VALIC shall assist the Company's independent auditors, or upon approval of the Company, or upon demand, any regulatory body, in any requested review of the Company's accounts and records but shall be reimbursed for all expenses and employee time invested in such review outside of routine and normal periodic reviews. Upon receipt from the Company of the necessary information VALIC shall supply the necessary data for the Company or accountant's completion of any necessary tax return, questionnaires, periodic reports to shareholders and such other reports and information requests as the Company and VALIC shall agree upon from time to time. Section 8. - - ---------- VALIC and the Company may from time to time adopt such procedures as they agree upon, and VALIC may conclusively assume that any procedure approved in writing by the Company or directed in writing by the Company, does not conflict with or violate any requirements of its prospectus, Articles of Incorporation, By-Laws, or any rule or regulation of any body or governmental agency. The Company shall be responsible for notifying VALIC of any changes in regulations or rules which might necessitate changes in VALIC's procedures. Section 9. - - ---------- VALIC may rely on information reasonably believed by it to be accurate and reliable. Except as may otherwise be required by the 1940 Act and the rules thereunder, neither VALIC nor its shareholders, officers, directors, employees, agents, control persons or affiliates of any thereof shall be subject to any liability for, or any damages, expenses or losses incurred by the Company in connection with, any error of judgment, mistake of law, any act or omission connected with or arising out of any services rendered under or payments made pursuant to this Agreement or any other matter to which this Agreement relates, except by reason of willful misfeasance, bad faith or gross negligence on the part of any of such persons in the performance of the duties of VALIC under the Agreement or by reason of reckless disregard by any of such persons of the obligations and duties of VALIC under this Agreement. Section 10. - - ----------- The Company agrees to pay VALIC compensation for its services and to reimburse it for expenses, as set forth in Schedule A, which is hereby attached and made a part of this Agreement. 4 Section 11. - - ----------- Nothing contained in this Agreement is intended to or shall require VALIC, in any capacity hereunder, to perform any functions or duties on any holiday, day of special observance or any other day on which VALIC or the New York Stock Exchange is closed. Functions or duties normally scheduled to be performed on such days shall be performed on the next succeeding business day on which both the New York Stock Exchange and VALIC are open. Section 12. - - ----------- VALIC may from time to time in its sole discretion delegate some or all of its duties hereunto to an entity designated by VALIC, which entity shall perform such functions as the agent of VALIC. To the extent of such delegation, the term "VALIC" in this Agreement shall be deemed to refer to both VALIC and to such entity designated by VALIC, or to either of them, as the context may indicate. Section 13. - - ----------- The following terms used in this Agreement, or in any amendment or supplement hereto, shall have the meanings herein specified unless the context otherwise requires. VALIC: The term "VALIC" shall mean The Variable Annuity Life Insurance Company and if used in connection with or relative to any act or omission involving an entity designated by VALIC, the term shall refer to The Variable Annuity Life Insurance Company and such designated entity. Verbal Instruction: The term "verbal instruction" shall mean an authorization, instruction, approval, item or set of data, or information of any kind transmitted to VALIC in person or by facsimile, telephone, telegram, telecopy, or other mechanical, electronic or documentary means lacking original signature, by a person or persons believed in good faith by VALIC to be a person or persons authorized by a resolution of the Board of Directors of the Company to give verbal instructions on behalf of the Company. Shares: The term "shares" shall mean the issued and outstanding shares of common stock of the Company. Written Instruction: The term "written instruction" shall mean an authorization, instruction, approval, item or set of data, or information of any kind transmitted to VALIC in original writing containing original signatures believed in good faith by VALIC to be the signature of a person authorized by a resolution of the Board of Directors of the Company to give written instructions on behalf of the Company. 5 Section 14. - - ----------- The Company shall from time to time file with VALIC a certified copy of each resolution of its Board of Directors authorizing the transmittal of verbal instructions and specifying the person or persons authorized to give verbal instructions in accordance with the Agreement. If the certifying officer is authorized to give verbal instructions, the certification also shall be signed by a second officer of the Company. Upon transmitting any verbal instruction, the Company shall promptly forward to VALIC a written instruction confirming the authorization, instruction or approval transmitted by such verbal instruction. Section 15. - - ----------- Either the Company or VALIC may give written notice to the other of the termination of this Agreement, such termination to take effect at the time specified in the notice not less than sixty (60) days after the giving of the notice. Section 16. - - ----------- This Agreement shall be governed by the laws of the State of Texas. WITNESS WHEREOF, The parties hereto have caused this Agreement to be signed by their duly authorized officers and their corporate seals hereunto duly affixed and attested, as of the day of year first above written. AMERICAN GENERAL SERIES PORTFOLIO COMPANY By: /s/ Gregory R. Seward ----------------------------- Title: Gregory R. Seward, Treasurer Witness: /s/ David den Boer -------------------- THE VARIABLE ANNUITY LIFE INSURANCE COMPANY By: /s/ Norman Jaskol ----------------------------- Title: Norman Jaskol, Vice President and Managing Director- Investments Witness: /s/ David den Boer --------------------- 6 SCHEDULE A Accounting Services Compensation Schedule (Effective October 31, 1996) The Accounting Services Fee shown below is an annual fee payable monthly based on average daily net assets. Average Daily Accounting Net Assets Services Fees ------------- ------------- on the first $20 million on the next $80 million over $100 million EX-99.B11 8 CONSENT OF INDEPENDENT AUDITORS 1 EXHIBIT 11 CONSENT OF INDEPENDENT AUDITORS We consent to the references made to our firm under the captions "Financial Highlights", "Independent Auditors", and "Financial Statements" and to the use of our report dated July 10, 1997, in Post-Effective Amendment No. 25 to the Registration Statement (Form N-1A No. 2-83631) and related Prospectus of Stock Index Fund, MidCap Index Fund, Small Cap Index Fund, International Equities Fund, Growth Fund, Growth & Income Fund, Science & Technology Fund, Social Awareness Fund, Asset Allocation Fund (formerly the Timed Opportunity Fund), Capital Conservation Fund, Government Securities Fund, International Government Bond Fund, and Money Market Fund of American General Series Portfolio Company. /s/ ERNST & YOUNG LLP ERNST & YOUNG LLP July 30, 1997 EX-99.B16 9 CALCULATION OF PERFORMANCE INFORMATION 1 C. Calculation of Index Total Return STANDARD & POOR'S 500 INDEX TOTAL RETURN WITH DIVIDENDS REINVESTED
(1) (2) (3) [(2b+1)*3a] Date S&P 500 S&P 500 Total $ 1,000 Return Investment ========= ======= ========== 31-May-96 -0.01022 1,000.00 30-Jun-96 0.03611 1,003.81 31-Jul-96 0.02810 959.48 31-Aug-96 0.03626 979.75 30-Sep-96 -0.01931 1,034.88 31-Oct-96 -0.23636 1,063.41 30-Nov-96 -0.04936 1,143.92 31-Dec-96 0.07732 1,121.26 31-Jan-97 0.04580 1,191.27 28-Feb-97 0.06347 1,200.62 31-Mar-97 0.01625 1,151.38 30-Apr-97 0.00505 1,220.06 31-May-97 -0.02089 1,294.29
Average Annual Total Return (T) 29.43% P = $1,000 P(1+T)"n = ERV n = 1 ERV = $1,294.29 Notes: a denotes previous month b denotes current month 2 CALCULATION OF PERFORMANCE INFORMATION A. Calculation of Average Annual Total Return Data for AGSPC Stock Index Fund
(1) (2) (3) (4) (5) (6) [(1b-1a)/1a] mo 1 = [6a/1a] [1b*5b] mos 2+ = [5a+(4b*5a)/2b] Date Net Asset Ex Date Reinvestment % Change Dividend Shares $1,000 Month Value Net Asset in Month & Capital Owned Investment "1" Month Value End Gains at Month indicates End (Ex Date) NAV Rate End 1st Month ==================================================================================================================================== 31-May-96 20.69 30-May-96 20.77 0.0496398 48.332528 1,000.00 1 30-Jun-96 20.73 27-Jun-96 20.67 0.001933 0.0321126 48.407616 1,003.49 31-Jul-96 19.79 30-Jul-96 19.64 -0.045345 0.0220116 48.461869 959.06 30-Aug-96 20.15 29-Aug-96 20.31 0.018191 0.0429475 48.564347 978.57 30-Sep-96 21.24 27-Sep-96 21.21 0.054094 0.0394786 48.654741 1,033.43 31-Oct-96 21.81 30-Oct-96 21.67 0.026836 0.0187281 48.696790 1,062.08 30-Nov-96 23.37 26-Nov-96 23.40 0.071527 0.0384967 48.776904 1,139.92 31-Dec-96 22.76 30-Dec-96 23.16 -0.026102 0.2054542 49.209608 1,120.01 31-Jan-97 24.17 30-Jan-97 24.11 0.061951 0.0199123 49.250250 1,190.38 28-Feb-97 24.30 27-Feb-97 24.43 0.005379 0.0381379 49.327135 1,198.65 31-Mar-97 23.27 27-Mar-97 23.78 -0.042387 0.0379191 49.405791 1,149.67 30-Apr-97 24.64 29-Apr-97 24.41 0.058874 0.0167014 49.439594 1,218.19 31-May-97 26.09 29-May-97 25.96 0.058847 0.0500210 49.534857 1,292.36 Average Annual Total Return (T) 29.24% Note: a denotes previous month P = $1,000 P(1+T)"n = ERV b denotes current month n = 1 ERV = $1,292.36
B. Calculation of Portfolio Total Return Average Annual Total Return (T) 29.24% Fund Expenses (fiscal year ended 5/31/97) (E) 0.34% ------ Portfolio Total Return (T) + (E) 29.58% ======
EX-99.B19 10 SPECIMEN PRICE MAKE-UP SHEET 1 SPECIMEN PRICE MAKE-UP SHEET MAY 31, 1997
Value of Total Registrant's Offering Total Shares Price Net Assets Outstanding Per Share ------------------------- ------------------------ --------------- STOCK INDEX FUND $2,444,199,525 93,687,435 $26.09 MIDCAP INDEX FUND 607,061,346 29,137,334 20.83 SMALL CAP INDEX FUND 192,458,743 11,893,324 16.18 INTERNATIONAL EQUITIES FUND 181,436,983 15,857,442 11.44 GROWTH FUND 747,654,013 42,421,874 17.62 GROWTH & INCOME FUND 209,545,124 12,422,162 16.87 SCIENCE & TECHNOLOGY FUND 804,981,947 40,484,129 19.88 SOCIAL AWARENESS FUND 155,349,054 8,677,411 17.90 TIMED OPPORTUNITY FUND 177,346,683 14,106,892 12.57 CAPITAL CONSERVATION FUND 66,747,456 7,168,057 9.31 GOVERNMENT SECURITIES FUND 83,826,602 8,672,214 9.67 INTERNATIONAL GOVERNMENT BOND FUND 177,708,797 15,679,563 11.33 MONEY MARKET FUND 128,124,645 128,124,645 1.00
EX-27.1 11 FINANCIAL DATA SCHEDULE
6 1 AGSPC Stock Index Fund YEAR MAY-31-1997 MAY-31-1997 1,367,153,597 2,439,304,647 8,282,386 296,467 0 2,477,883,500 2,557,883 0 1,126,092 3,683,975 0 1,358,023,951 93,687,435 85,117,305 380,571 0 13,320,453 0 1,072,474,550 2,444,199,525 40,617,795 1,650,621 0 6,775,879 35,492,537 14,778,898 489,128,221 539,399,656 0 35,484,625 14,806,928 0 10,718,393 4,348,853 2,200,590 8,570,130 372,659 13,348,483 0 0 5,543,535 0 6,775,879 2,019,826,157 20.69 0.39 5.57 0.39 0.17 0 26.09 0.34 0 0
EX-27.2 12 FINANCIAL DATA SCHEDULE
6 2 AGSPC MidCap Index Fund YEAR MAY-31-1997 MAY-31-1997 445,831,930 606,436,903 6,928,392 25,404 0 613,390,699 5,959,259 0 370,094 6,329,353 0 407,129,892 29,137,334 28,321,727 56,864 0 39,149,762 0 160,724,828 607,061,346 8,574,566 557,965 0 2,237,711 6,894,820 39,709,142 45,603,667 92,207,629 0 6,894,820 39,709,142 0 1,775,391 3,084,568 2,124,784 815,607 54,303 33,130,917 0 0 1,880,085 0 2,237,711 554,397,284 19.09 0.24 2.95 0.24 1.21 0 20.83 0.40 0 0
EX-27.3 13 FINANCIAL DATA SCHEDULE
6 3 AGSPC Small Cap Fund YEAR MAY-31-1997 MAY-31-1997 158,839,971 192,517,805 187,621 5,891 0 192,711,317 0 0 252,574 252,574 0 141,349,054 11,893,324 11,128,632 18,645 0 17,101,210 0 33,989,834 192,458,743 2,740,363 385,073 0 736,962 2,388,474 17,523,137 (6,382,053) 13,529,558 0 2,385,945 11,216,991 0 1,339,448 1,465,127 890,371 764,692 16,116 10,795,064 0 0 622,719 0 736,962 178,368,476 16.25 0.19 0.93 0.19 1 0 16.18 0.41 0 0
EX-27.4 14 FINANCIAL DATA SCHEDULE
6 4 AGSPC International Equities Fund YEAR MAY-31-1997 MAY-31-1997 142,232,236 177,948,311 1,713,459 2,506,013 0 182,167,783 494,666 0 236,134 730,800 0 140,456,358 15,857,442 18,496,532 448,887 0 4,489,559 0 36,042,179 181,436,983 3,666,126 481,858 0 807,993 3,339,991 6,077,411 3,956,886 13,374,288 0 3,206,176 6,030,686 0 6,846,567 10,334,613 848,956 (2,639,090) 262,279 4,495,627 0 0 668,871 0 807,993 191,116,867 11.15 0.2 0.63 0.19 0.35 0 11.44 0.42 0 0
EX-27.5 15 FINANCIAL DATA SCHEDULE
6 5 AGSPC Growth Fund YEAR MAY-31-1997 MAY-31-1997 626,403,732 740,613,777 7,995,566 14,557 0 748,623,900 323,229 0 646,658 969,887 0 618,601,298 42,421,874 25,825,647 303,215 0 14,539,455 0 114,210,045 747,654,013 2,226,275 3,365,118 0 5,039,000 552,393 16,994,556 39,599,901 57,146,850 0 503,196 11,891,551 0 16,096,764 234,388 733,851 16,596,227 254,018 9,436,450 0 0 4,704,380 0 5,039,000 588,055,656 16.49 0.02 1.45 0.01 0.33 0 17.62 0.86 0 0
EX-27.6 16 FINANCIAL DATA SCHEDULE
6 6 AGSPC Growth & Income Fund YEAR MAY-31-1997 MAY-31-1997 164,186,814 209,632,235 610,518 4,484 0 210,247,237 529,587 0 172,526 702,113 0 161,226,114 12,422,162 7,684,624 161,272 0 2,712,317 0 45,445,421 209,545,124 1,272,521 1,167,033 0 1,304,909 1,134,645 2,722,032 24,022,009 27,878,686 0 1,058,649 3,131,642 0 4,647,143 177,920 268,315 4,737,538 85,276 3,121,927 0 0 1,211,524 0 1,304,909 161,225,995 14.78 0.1 2.38 0.1 0.29 0 16.87 0.81 0 0
EX-27.7 17 FINANCIAL DATA SCHEDULE
6 7 AGSPC Science & Technology Fund YEAR MAY-31-1997 MAY-31-1997 659,849,551 787,145,777 24,119,350 15,317 0 811,280,444 5,535,774 0 762,723 6,298,497 0 691,879,159 40,484,129 27,695,873 (1,935,355) 0 (12,258,083) 0 127,296,226 804,981,947 764,508 3,692,989 0 6,377,288 (1,919,791) (8,889,903) 33,692,829 22,883,135 0 0 32,117,202 0 14,868,580 3,716,452 1,636,128 12,788,256 0 28,733,458 0 0 5,973,280 0 6,377,288 664,608,416 20.48 0 0.33 0 (0.93) 0 19.88 0.96 0 0
EX-27.8 18 FINANCIAL DATA SCHEDULE
6 8 AGSPC Social Awareness Fund YEAR MAY-31-1997 MAY-31-1997 128,321,727 155,056,812 381,255 5,549 0 155,443,616 0 0 94,562 94,562 0 119,669,100 8,677,411 5,220,445 92,028 0 8,762,191 0 26,825,735 155,349,054 2,079,690 130,703 0 590,919 1,619,474 13,356,463 14,695,812 29,671,749 0 1,578,118 10,727,011 0 3,190,691 509,440 775,715 3,456,966 50,672 6,132,739 0 0 525,440 0 590,919 106,139,272 15.49 0.24 4.19 0.24 1.78 0 17.90 0.56 0 0
EX-27.9 19 FINANCIAL DATA SCHEDULE
6 9 AGSPC Asset Allocation Fund YEAR MAY-31-1997 MAY-31-1997 150,817,956 176,538,659 1,034,578 19,442 0 177,592,679 0 0 245,996 245,996 0 141,503,292 14,106,892 15,142,265 40,486 0 9,979,602 0 25,823,303 177,346,683 2,197,882 4,673,462 0 1,024,735 5,846,609 10,528,549 9,840,402 26,215,560 0 5,861,358 19,664,171 0 264,558 3,446,167 2,146,236 (1,035,373) 55,235 19,115,224 0 0 900,822 0 1,024,735 179,615,482 12.55 0.77 1.44 0.78 1.41 0 12.57 0.57 0 0
EX-27.10 20 FINANCIAL DATA SCHEDULE
6 10 AGSPC Capital Conservation Fund YEAR MAY-31-1997 MAY-31-1997 66,521,096 65,418,493 1,292,878 102,012 0 66,813,383 0 0 65,927 65,927 0 68,602,515 7,168,057 7,604,489 23,989 0 (776,445) 0 (1,102,603) 66,747,456 0 4,962,895 0 392,638 4,570,257 (127,757) 760,448 5,202,948 0 4,560,074 0 0 540,826 1,466,062 488,804 (436,432) 13,806 (648,688) 0 0 347,154 0 392,638 69,352,396 9.23 0.62 0.08 0.62 0 0 9.31 0.57 0 0
EX-27.11 21 FINANCIAL DATA SCHEDULE
6 11 AGSPC Government Securities Fund YEAR MAY-31-1997 MAY-31-1997 82,697,653 82,442,481 1,435,771 4,747 0 83,882,999 0 0 56,397 56,397 0 86,142,724 8,672,214 8,163,674 31,658 0 (2,092,608) 0 (255,172) 83,826,602 0 5,558,419 0 469,662 5,088,757 4,132 479,407 5,572,296 0 5,073,340 0 0 1,165,828 1,180,771 523,483 508,540 16,241 (2,096,740) 0 0 417,356 0 469,662 83,293,190 9.61 0.59 0.06 0.59 0 0 9.67 0.56 0 0
EX-27.12 22 FINANCIAL DATA SCHEDULE
6 12 AGSPC International Governmemnt Bond Fund YEAR MAY-31-1997 MAY-31-1997 179,040,526 172,555,365 4,766,061 573,452 0 177,894,878 0 0 186,081 186,081 0 184,093,807 15,679,563 12,072,675 84,875 0 136,607 0 (6,606,492) 177,708,797 0 9,457,681 0 935,240 8,522,441 (145,962) (7,210,455) 1,166,024 0 8,295,746 295,588 0 6,113,938 3,236,292 729,242 3,606,888 151,884 284,453 0 0 833,117 0 935,240 166,147,253 11.79 0.63 (0.49) 0.58 0.02 0 11.33 0.56 0 0
EX-27.13 23 FINANCIAL DATA SCHEDULE
6 13 AGSPC Money Market Fund YEAR MAY-31-1997 MAY-31-1997 132,606,456 132,606,456 318,636 8,000 0 132,933,092 0 0 4,808,447 4,808,447 0 128,124,645 128,124,645 83,617,645 0 0 0 0 0 128,124,645 0 6,283,155 0 645,512 5,637,643 0 0 5,637,643 0 5,637,643 0 0 294,478,892 255,609,535 5,637,643 44,507,000 0 0 0 0 572,063 0 645,512 113,881,698 1.00 0.05 0 0.05 0 0 1.00 0.57 0 0
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