-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, YTsCI2dvV3jZNxbjlImDHSWl0K+zl94/ys6uYOkWI6Fwfml8L3gNb3YP+jIjwOVO HsyU/mjP+HQjiRxFJqwWSA== 0000912057-95-001273.txt : 19950614 0000912057-95-001273.hdr.sgml : 19950614 ACCESSION NUMBER: 0000912057-95-001273 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950309 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRUDENTIAL SERIES FUND INC CENTRAL INDEX KEY: 0000711175 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 860446842 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-03623 FILM NUMBER: 95519524 BUSINESS ADDRESS: STREET 1: 213 WASHINGTON STREET CITY: NEWARK STATE: NJ ZIP: 07102-2992 BUSINESS PHONE: 9084124032 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRUDENTIAL VARIABLE APPRECIABLE ACCOUNT CENTRAL INDEX KEY: 0000828972 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 221121670 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05466 FILM NUMBER: 95519525 BUSINESS ADDRESS: STREET 1: PRUDENTIAL INSURANCE CO OF AMERICA STREET 2: 213 WASHINGTON STREET CITY: NEWARK STATE: NJ ZIP: 07102 BUSINESS PHONE: 201-802-5780 MAIL ADDRESS: STREET 1: PRUDENTIAL INSURANCE CO OF AMERICA STREET 2: 751 BROAD STREET CITY: NEWARK STATE: NJ ZIP: 07102 FORMER COMPANY: FORMER CONFORMED NAME: PRUDENTIAL VARIABLE LIFE INSURANCE ACCOUNT DATE OF NAME CHANGE: 19880606 N-30D 1 N-30D THE PRUDENTIAL [Logo] Annual Report to Contract Owners December 31, 1994 PRUDENTIAL'S VARIABLE APPRECIABLE LIFE-Registered Trademark- INSURANCE [Logo] The Prudential Series Fund, Inc. and The Prudential Variable Appreciable Account THE PRUDENTIAL INSURANCE COMPANY OF AMERICA [Logo] TABLE OF CONTENTS NOTE: **The back inside cover provides important toll-free telephone numbers for customer service. PAGE I. LETTER TO CONTRACT OWNERS Summarizes the results of The Prudential Series Fund, Inc. and provides an economic overview..................................... 4 II. THE PRUDENTIAL SERIES FUND, INC. The Prudential Variable Appreciable Account is one of several Accounts investing in The Prudential Series Fund, Inc. 1. FINANCIAL STATEMENTS............................................ A1 2. INVESTMENT OBJECTIVES........................................... B1 3. SCHEDULE OF INVESTMENTS Lists the holdings in each of the investment options of The Prudential Series Fund, Inc. ................................... B2 4. NOTES TO THE FINANCIAL STATEMENTS............................... B42 5. INDEPENDENT AUDITOR'S REPORT.................................... B55 III. THE PRUDENTIAL VARIABLE APPRECIABLE ACCOUNT 1. FINANCIAL STATEMENTS Provides financial data at the product level including investment results net of certain product related charges....... C1 2. NOTES TO FINANCIAL STATEMENTS................................... C10 3. INDEPENDENT AUDITOR'S REPORT.................................... C12 IV. APPENDIX 1. REPORT OF MANAGEMENT............................................ i 2. GLOSSARY........................................................ ii 3. BOARDS OF DIRECTORS............................................. iv 3 THE PRUDENTIAL SERIES FUND, INC. Year Ended December 31, 1994 DEAR CONTRACT OWNER: AS A POLICYHOLDER OF THE PRUDENTIAL OR ONE OF ITS SUBSIDIARIES, YOU'VE ENTRUSTED THE PRUDENTIAL SERIES FUND, INC. WITH YOUR VARIABLE LIFE OR ANNUITY ASSETS. WE APPRECIATE THE CONFIDENCE YOU HAVE SHOWN IN US. AS YOU MAY KNOW, DRAMATICALLY RISING INTEREST RATES MADE 1994 A DIFFICULT YEAR IN THE FINANCIAL MARKETS. FOR THE FIRST TIME IN FOUR YEARS, SHORT-TERM MONEY MARKET INVESTMENTS EARNED MORE THAN U.S. STOCKS OR BONDS LAST YEAR. IN OUR VIEW, 1995 WON'T BE A YEAR FOR TAKING RISKS, EITHER. BE PREPARED FOR A YEAR OF MODEST RETURNS. THAT'S WHY WE'VE WRITTEN THIS REPORT. WE WANT TO REVIEW WITH YOU WHAT HAS HAPPENED IN THE STOCK AND BOND MARKETS OVER THE LAST YEAR, INCLUDING A PORTFOLIO-BY-PORTFOLIO DESCRIPTION OF INVESTMENT ACTIVITY. WE CONCLUDE THIS LETTER WITH OUR OUTLOOK FOR THE FINANCIAL MARKETS IN 1995 -- WE LOOK FOR STABLE LONG-TERM INTEREST RATES AND RETURNS IN THE STOCK MARKET THAT ARE CLOSER TO LONG-TERM, HISTORICAL AVERAGES. U.S. FINANCIAL MARKETS REVIEW THE BEST OF TIMES. THE WORST OF TIMES. For the economy, 1994 was the best of times. Employment surged, manufacturing output rose and consumer confidence was at its highest in years. It was a good year to look for a job. INTEREST RATES ROSE HIGHER AND HIGHER. For the U.S. stock and bond markets, though, it felt like the worst of times. The Standard & Poor's 500 Stock Index gained only 1.3% on a total return basis. The Lehman Brothers Aggregate Bond Index fell 2.9%. The investment of choice was a short-term money market fund. U.S. Treasury bills topped both stocks and bonds, earning 3.9%. What happened? While optimists thought the economy was soaring like a rocket, the Federal Reserve saw an unguided missile. As commodity prices began to climb in late 1993 and early 1994, the nation's central bank feared higher inflation. So the Federal Reserve raised short-term interest rates in 1994: not once, but six times, from 3% to 5.5%. Ironically, it was the fear of inflation, not real inflation, that drove the markets, since actual reported inflation never rose above 3% in 1994. Inflation not only erodes our purchasing power, it also reduces the value of financial assets: stock prices sag because corporate costs climb and bond prices fall as interest rates rise. Let's look a little closer at the stock and bond markets: STOCKS: A TUG-OF-WAR. In the stock market, simultaneously rising corporate earnings and higher interest rates puzzled investors throughout the year. As corporate earnings improved, so did the price of stocks. As the Federal Reserve pushed interest rates higher, though, stock prices declined. Despite this volatility, your portfolio managers were able to find some opportunities: - INDUSTRIAL company stocks benefited from increasing economic activity around the world. Demand for steel, paper and chemicals surged, and as their prices rose, so did the stock prices of companies that produced them. - TECHNOLOGY stocks performed well as foreign companies tried to catch up to the U.S.'s prowess in technology. - FINANCIAL stocks, including banks and insurance companies, fell because of fears of rising interest rates and did not recover as much as we had hoped once rates stabilized. Real estate investment trusts performed well as real estate prices came out of a prolonged recession. - ENERGY stock prices dipped as winter got off to a warm start in the Northeast. Believing that winter would eventually arrive, we added to natural gas holdings as they fell, although prices have not yet improved. BONDS: SHORTER WAS BETTER. 1994 was the worst year for the bond market since 1927. After several years of double-digit total returns, long-term U.S. government bonds lost 7.7% on a total return basis, while one- to three-year government notes gained 0.5%, as measured by Lehman Brothers. Short-term maturities fared better because their prices fall less than those of longer-term bonds as interest rates rise. FOREIGN STOCK MARKET REVIEW THE WORLD: REAWAKENING FROM RECESSION. ONCE AGAIN, FOREIGN STOCKS FARED BETTER THAN U.S. STOCKS. While the U.S. stock and bond markets were grappling with rising interest rates, the rest of the world was beginning to shrug off the effects of a global recession. This helped foreign stock markets outperform U.S. stocks for the second year in a row. For the year, the Morgan Stanley Capital International (MSCI) World Index gained 5.6% in U.S. dollars. While rising interest rates prompted inflation worries in the U.S. stock market, the concern worldwide was more that these rising rates could stifle the global economic recovery. In Japan and Asia, which are heavily dependent on U.S. growth and spending, stocks fell late in the year after rising in the first half. It was just the opposite in Europe, where the four-year long recession is officially over. Stocks there rose in the second half after a tough first half. - -------------------------------------------------------------------------------- THE RATES OF RETURN QUOTED ON THE FOLLOWING PAGES REFLECT DEDUCTION OF INVESTMENT MANAGEMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES. THEY REFLECT THE REINVESTMENT OF DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS. THEY ARE NOT AN ESTIMATE OR A GUARANTEE OF FUTURE PERFORMANCE. CONTRACT UNIT VALUES INCREASE OR DECREASE BASED ON THE PERFORMANCE OF THE PORTFOLIO. CHANGES IN CONTRACT VALUES DEPEND NOT ONLY ON THE INVESTMENT PERFORMANCE OF THE PORTFOLIO, BUT ALSO ON THE INSURANCE AND ADMINISTRATIVE CHARGES, APPLICABLE SALES CHARGES, AND THE MORTALITY AND EXPENSE RISK CHARGE APPLICABLE UNDER A CONTRACT. THESE CONTRACT CHARGES EFFECTIVELY REDUCE THE DOLLAR AMOUNT OF ANY NET GAINS AND INCREASE THE DOLLAR AMOUNT OF ANY NET LOSSES. NEITHER THE MONEY MARKET PORTFOLIO NOR THE GOVERNMENT SECURITIES PORTFOLIO IS GUARANTEED BY THE U.S. GOVERNMENT. 4 Investment Review MONEY MARKET PORTFOLIO PORTFOLIO MANAGER Gail Schlifer [Photo] Propelled by higher short-term interest rates, the Money Market Portfolio outperformed all other Portfolios in the Series Fund during 1994. The Portfolio provided a total return of 4.1%, according to Lipper Analytical Services. At December 31, its 7-day yield had risen to 5.5%, up from 4.0% on June 30 and 3.0% at year-end 1993. (SOURCE: IBC-DONOGHUE ALL TAXABLE FUNDS AVERAGE.) Portfolio Manager Gail Schlifer reduced the Portfolio's weighted average maturity to take advantage of rising short-term interest rates. At year end, the weighted average maturity was 33 days, down from 43 days at the beginning of the year. The securities in the Portfolio were all of the highest quality. The Portfolio does not invest in any risky derivatives that the SEC has suggested are inappropriate for money market funds, such as inverse floaters, dual index floaters or cost of funds index floaters. We emphasize a conservative, quality-oriented investment approach. PORTFOLIO MANAGER Q&A: GAIL SCHLIFER Since derivatives have been in the news in recent months, we talked to Money Market Portfolio Manager Gail Schlifer about them: Q: WHAT IS A DERIVATIVE? A: A derivative is a financial instrument whose value is derived from the value of an underlying asset, like a stock, bond, commodity, currency, or from an index. That covers just about all financial instruments except plain stocks or bonds. Q: WHAT DERIVATIVES ARE USED BY THE MONEY MARKET PORTFOLIO? A: We use adjustable rate securities and occasionally liquidity puts, which are considered derivatives. Liquidity puts simply allow us to resell a security for cash to the issuer or a third party on a specified date. The adjustable rate securities we purchase for the Portfolio have interest rates which are pegged to a money market index, such as LIBOR (London Interbank Offered Rate), the three-month U.S. Treasury Bill or the federal funds rate. We do not invest in those derivative-related securities that the SEC has suggested are inappropriate for money market funds, such as inverse floaters, dual index floaters or cost of funds index floaters. Q: IS THERE A DANGER OF THE MONEY MARKET PORTFOLIO BREAKING THE $10.00 PER SHARE NET ASSET VALUE? A: While there is never a guarantee that the Portfolio will maintain its $10.00 share value, the Money Market Portfolio emphasizes a conservative, quality oriented investment approach. We continue to believe that preservation of capital and liquidity can not be sacrificed for additional yield. RISING INTEREST RATES PUSH MONEY MARKET RATES HIGHER - ---------------------------------------------------- HISTORICAL YIELD CURVE [Graph] #1 Source: Bloomberg, L.P. HOW MONEY MARKETS FARED COMPARED WITH OTHER ASSET CLASSES - --------------------------------------------------------- 1994 INVESTMENT TOTAL RETURNS [Graph] #2 Source: Prudential Investment Corporation. For purposes of comparison only. Bonds as measured by the Lehman Brothers Government/Corporate Aggregate. U.S. stocks as measured by the S&P 500 Index. Global stocks as measured by the Morgan Stanley Capital International-World Index. U.S. money markets as measured by IBC-Donoghue's All Taxable Funds Average. 5 Investment Review BOND PORTFOLIO PORTFOLIO MANAGER Barbara Kenworthy [Photo] THE BOND PORTFOLIO declined 3.2% in total return in 1994 as interest rates rose, placing 14 in a field of 39 BBB-rated corporate bond funds in variable life/annuity products. (SOURCE: LIPPER ANALYTICAL SERVICES) The Portfolio has a new manager: Barbara Kenworthy. Barbara has more than 20 years experience in portfolio management, and joined the Prudential last year from the Dreyfus Corp. where she managed several bond funds rated four and five stars by Morningstar. She also manages the Prudential Government Income Fund and the Prudential Diversified Bond Fund. The Bond Portfolio outperformed the average fund by holding an intermediate-term effective maturity of roughly six years. Bonds in this maturity range hold their value better than long-term bonds as interest rates rise. On December 31, the Portfolio held 49% of assets in corporate bonds, 35% in U.S. government bonds, and 13% in mortgage-backed securities. The Portfolio maintained an overall "AA" credit quality. In the last six months, the Portfolio increased its investments in corporate bonds from 40% to 49% to take advantage of their higher coupons. The cash position was more than halved, from 7% to 3%, to lock in today's higher yields. VALUE OF $10,000 INVESTED IN BOND PORTFOLIO VS. LEHMAN AGGREGATE INDEX AND LIPPER VIP CORPORATE BOND AVERAGE OVER TEN YEARS PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER PRODUCT CHARGES. [Graph] #3 AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
ONE RANK THREE RANK FIVE RANK TEN RANK YEAR YEARS YEARS YEARS - ----------------------------------------------------------------------------------------------------------- Bond Portfolio -3.2% 14 4.5% 20 7.6% 12 9.2% 7 - ----------------------------------------------------------------------------------------------------------- Lipper VIP Corp BBB* -3.8 39 4.7 31 7.5 27 9.4 9 - ----------------------------------------------------------------------------------------------------------- Lehman Aggregate Index -2.9 4.6 7.7 10.0 - ----------------------------------------------------------------------------------------------------------- * LIPPER PROVIDES DATA ON A MONTHLY BASIS, SO FOR COMPARATIVE PURPOSES, THE LIPPER AVERAGE AND INDEX INCEPTION RETURNS REFLECT THE FUND'S FIRST FULL CALENDAR MONTH OF PERFORMANCE.
- -------------------------------------------------------------------------------- PORTFOLIO MANAGER Q&A: BARBARA KENWORTHY We talked to Bond Portfolio Manager Barbara Kenworthy about her investment philosophy: Q: DO YOU CONCENTRATE ON ANY ONE AREA OF THE GOVERNMENT BOND MARKET? A: I like to have the flexibility to explore all the sectors in the government bond market and I think you'd call me an active trader. In a typical day, I'll evaluate market conditions and look for opportunities at what I consider a fair risk level. For instance, before the Fed's last rate hike I shifted as much money out of short-term Treasurys as possible because they were losing value fast in the face of higher expected short-term rates. I found value instead in some discounted mortgages and in longer maturity Treasury bonds. Q: HOW ABOUT MATURITIES? WILL YOU STAY IN THE INTERMEDIATE-TERM RANGE? A: I certainly believe intermediate-term bonds offer good value for investors right now, but I also like longer-term securities because they'll appreciate the most if a rally materializes. I know investors don't want to see their net asset value fall, so I'm cautious. I might consider moving the Portfolio's effective maturity out as far as 10 years, for instance. On the other hand, I won't hesitate to pull those maturities in if the market turns more bearish. You might see an effective maturity as low as six years if bond prices start falling again. Q: DO YOU PLAN TO INVEST IN DERIVATIVES? A: Derivatives can be a good way to defend a portfolio's net asset value against extreme price swings, but I would only consider using traditional derivatives, like put and call options, which can help me improve total return without too much risk to principal. These products have been around long enough to be tested in many different market environments; they shouldn't result in unpleasant surprises. I'm more cautious about the more exotic securities that are largely untested and could lead to big price swings if the markets become more turbulent. I'd put both IOs and POs (interest only and principal only mortgage-backed securities) in this category. But I never say never. When used prudently as part of an overall portfolio strategy, even these securities can add value. - -------------------------------------------------------------------------------- THE LEHMAN AGGREGATE INDEX (LAI) IS COMPRISED OF 4,842 GOVERNMENT AND CORPORATE BONDS. THE LAI IS AN UNMANAGED INDEX AND INCLUDES THE REINVESTMENT OF ALL DIVIDENDS, BUT DOES NOT REFLECT THE PAYMENT OF TRANSACTION COSTS AND ADVISORY FEES ASSOCIATED WITH AN INVESTMENT IN THE PORTFOLIO. THE SECURITIES THAT COMPRISE THE LAI MAY DIFFER SUBSTANTIALLY FROM THE SECURITIES IN THE PORTFOLIO. THE LAI IS NOT THE ONLY INDEX THAT MAY BE USED TO CHARACTERIZE PERFORMANCE OF INCOME FUNDS AND OTHER INDICES MAY PORTRAY DIFFERENT COMPARATIVE PERFORMANCE. THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) AVERAGE IS CALCULATED BY LIPPER ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT RETURN OF PORTFOLIOS UNDERLYING VARIABLE LIFE AND INSURANCE PRODUCTS. THESE RETURNS ARE NET OF INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES. 6 Investment Review GOVERNMENT SECURITIES PORTFOLIO PORTFOLIO MANAGER David Graham [Photo] THE GOVERNMENT SECURITIES PORTFOLIO held a long-term maturity in 1994, so it lost ground as interest rates rose. Its 5.5% decline in total return ranked 20 of 25 variable life/annuity U.S. Government portfolios. (SOURCE: LIPPER ANALYTICAL SERVICES) Effective in January, the Portfolio has a new manager: David Graham. David also manages four mutual funds for Prudential: the GNMA Fund, the Adjustable Rate Securities Fund, the Government Securities Trust: Intermediate Term Series and the U.S. Government Fund. The Government Securities Portfolio invests in intermediate- and long-term bonds issued by the U.S. government and its agencies. (Neither the market value of U.S. government securities nor the Portfolio's shares are guaranteed by the U.S. government.) At year end, 37% of assets were invested in agencies, 33% in U.S. Treasurys, 14% in mortgages, 8% in asset-backed securities and 8% was in cash. The Portfolio should fare better now that long term bond yields appear to be near their peak for this market cycle. VALUE OF $10,000 INVESTED IN GOVERNMENT SECURITIES PORTFOLIO vs. LEHMAN GOVERNMENT INDEX AND LIPPER VIP U.S. GOVERNMENT AVERAGE SINCE INCEPTION PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER PRODUCT CHARGES. [Graph] #4 AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
ONE RANK THREE RANK FIVE RANK SINCE YEAR YEARS YEARS INCEPTION - ----------------------------------------------------------------------------------------------------------- Gov't Sec. Portfolio -5.2% 20 4.2% 10 7.0% 10 8.1% - ----------------------------------------------------------------------------------------------------------- Lipper VIP US Gov't* -4.0 25 4.0 17 7.1 14 7.5 - ----------------------------------------------------------------------------------------------------------- Lehman Gov't Index -3.4 4.7 7.5 8.5 - ----------------------------------------------------------------------------------------------------------- INCEPTION DATE: 5/1/89 * LIPPER PROVIDES DATA ON A MONTHLY BASIS, SO FOR COMPARATIVE PURPOSES, THE LIPPER AVERAGE AND INDEX INCEPTION RETURNS REFLECT THE FUND'S FIRST CALENDAR MONTH OF PERFORMANCE.
THE PORTFOLIO IS WELL DIVERSIFIED. - ---------------------------------- How It Looked as of 12/31/94 [Pie Chart] Agency 37% Treasury 33% Mortgage 12% Asset-backed 8% CMO 2% Cash 8% AGENCY: Issued by U.S. government agencies, with implied guarantee TREASURY: Backed by the full faith and credit of the U.S. government MORTGAGE: Bonds backed by pools of mortgages ASSET-BACKED: Bonds backed by pools of collateralized loan receivables CMO: Collateralized mortgage obligations, parts of MBS pools THE PORTFOLIO IS HIGH QUALITY. - ------------------------------ How It Rated as of 12/31/94 AAA. . . . . . . . . . . 91.0% AA . . . . . . . . . . . 1.4 Non-Rated. . . . . . . . 0.0 Cash . . . . . . . . . . 7.6 SOME U.S. GOVERNMENT SECURITIES ARE GUARANTEED AS TO TIMELY PAYMENT OF PRINCIPAL AND INTEREST. THE UNDERLYING SECURITIES IN THE PORTFOLIO CARRY THIS GUARANTY; NOT THE PORTFOLIO ITSELF. MORTGAGE-BACKED SECURITIES ENTAIL ADDITIONAL PREPAYMENT AND EXTENSION RISK. - -------------------------------------------------------------------------------- THE LEHMAN GOVERNMENT INDEX IS A WEIGHTED INDEX COMPRISED OF SECURITIES ISSUED OR BACKED BY THE U.S. GOVERNMENT, ITS AGENCIES AND INSTRUMENTALITIES WITH A REMAINING MATURITY OF ONE TO 30 YEARS. THE LGI IS AN UNMANAGED INDEX AND INCLUDES THE REINVESTMENT OF ALL DIVIDENDS, BUT DOES NOT REFLECT THE PAYMENT OF TRANSACTION COSTS AND ADVISORY FEES ASSOCIATED WITH AN INVESTMENT IN THE PORTFOLIO. THE SECURITIES THAT COMPRISE THE LGI MAY DIFFER SUBSTANTIALLY FROM THE SECURITIES IN THE PORTFOLIO. THE LGI IS NOT THE ONLY INDEX THAT MAY BE USED TO CHARACTERIZE PERFORMANCE OF INCOME FUNDS AND OTHER INDICES MAY PORTRAY DIFFERENT COMPARATIVE PERFORMANCE. THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) AVERAGE IS CALCULATED BY LIPPER ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT RETURN OF PORTFOLIOS UNDERLYING VARIABLE LIFE AND INSURANCE PRODUCTS. THESE RETURNS ARE NET OF INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES. 7 Investment Review ZERO COUPON BOND PORTFOLIO PORTFOLIO MANAGER May Ngai [Photo] (CURRENTLY ONLY AVAILABLE IN DISCOVERY LIFE PLUS AND PRUDENTIAL VARIABLE APPRECIABLE LIFE POLICIES) Rising interest rates in 1994 sharply reduced the market value of zero coupon bonds (and these Portfolios), just as falling rates in 1993 led to rising prices. As rates stabilize, the prices in this sector of the market should stabilize, as well. Zero coupon bonds do not pay current income, but instead are issued at a deep discount to their face value. They mature at face value, so the difference is their return to the investor. Prior to maturity, they tend to be more sensitive to interest rate movements than bonds with periodic coupon payments. As of January 1995, the Portfolios have a new manager: May Ngai. May has been with Prudential since 1991, most recently as a mortgage strategist. She holds an MBA from the University of California at Davis. ZERO COUPON BOND 1995 PORTFOLIO The ZERO COUPON BOND 1995 PORTFOLIO was flat in 1994. The relatively short maturity of the Portfolio helped it outperform the other two zero coupon bond Portfolios. Short- and intermediate-term bonds are less sensitive to interest rate movements than long-term bonds. This Portfolio currently has an average maturity of less than one year. It matures on November 15, 1995. BY THIS MATURITY DATE, POLICYHOLDERS SHOULD SELECT ANOTHER PORTFOLIO INTO WHICH THE PRUDENTIAL CAN REINVEST THEIR PROCEEDS. SHOULD WE NOT RECEIVE INSTRUCTIONS, WE WILL AUTOMATICALLY TRANSFER THESE FUNDS TO THE MONEY MARKET PORTFOLIO. ZERO COUPON BOND 2000 PORTFOLIO The ZERO COUPON BOND 2000 PORTFOLIO declined 7.2% in total return in 1994. This Portfolio currently has an average maturity of approximately six years, maturing on November 15, 2000. This Portfolio has an intermediate-term maturity and thus held its value better than the 2005 Portfolio but not as well as the 1995 Portfolio. ZERO COUPON BOND 2005 PORTFOLIO The ZERO COUPON BOND 2005 PORTFOLIO declined 9.6% in total return in 1994. This Portfolio currently has an average maturity of approximately 11 years, maturing on November 15, 2005. Its relatively longer maturity caused it to underperform the other two Zero Coupon Portfolios in 1994 as interest rates rose. Conversely, it outperformed the other Portfolios in 1993 when interest rates fell. VALUE OF $10,000 INVESTED IN ZERO COUPON BOND 1995 PORTFOLIO vs. LEHMAN GOVERNMENT INDEX AND LIPPER VIP TARGET MATURITY AVERAGE OVER TEN YEARS PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER PRODUCT CHARGES. [Graph] #5 AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
ONE RANK THREE RANK FIVE RANK SINCE YEAR YEARS YEARS INCEPTION - ----------------------------------------------------------------------------------------------------------- Zero Coupon 1995 Port 0.0% 3 5.0% 9 7.9% 8 9.2% - ----------------------------------------------------------------------------------------------------------- Lipper VIP Target Mat* -5.6 11 5.8 10 8.3 9 8.8 - ----------------------------------------------------------------------------------------------------------- Lehman Gov't Index -3.4 4.7 7.5 8.0 - ----------------------------------------------------------------------------------------------------------- INCEPTION DATE: 2/12/86
VALUE OF $10,000 INVESTED IN ZERO COUPON BOND 2000 PORTFOLIO VS. LEHMAN GOVERNMENT INDEX AND LIPPER VIP TARGET MATURITY AVERAGE OVER TEN YEARS PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER PRODUCT CHARGES. [Graph] #6 AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
ONE RANK THREE RANK FIVE RANK SINCE YEAR YEARS YEARS INCEPTION - ----------------------------------------------------------------------------------------------------------- Zero Coupon 2000 Port -7.2% 8 5.4% 6 8.2% 7 10.5% - ----------------------------------------------------------------------------------------------------------- Lipper VIP Target Mat* -5.2 11 5.8 10 8.7 9 8.8 - ----------------------------------------------------------------------------------------------------------- Lehman Gov't Index -3.4 4.7 7.5 8.0 - ----------------------------------------------------------------------------------------------------------- INCEPTION DATE: 2/12/86
VALUE OF $10,000 INVESTED IN ZERO COUPON BOND 2005 PORTFOLIO vs. LEHMAN GOVERNMENT INDEX AND LIPPER VIP TARGET MATURITY AVERAGE SINCE INCEPTION PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER PRODUCT CHARGES. [Graph] #7 AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
ONE RANK THREE RANK FIVE RANK SINCE YEAR YEARS YEARS INCEPTION - ----------------------------------------------------------------------------------------------------------- Zero Coupon 2005 Port -9.6% 10 6.5% 3 8.5% 2 9.6% - ----------------------------------------------------------------------------------------------------------- Lipper VIP Target Mat* -5.2 11 5.8 10 8.3 9 9.1 - ----------------------------------------------------------------------------------------------------------- Lehman Gov't Index -3.4 4.7 7.5 8.5 - ----------------------------------------------------------------------------------------------------------- INCEPTION DATE: 5/1/89 * LIPPER PROVIDES DATA ON A MONTHLY BASIS, SO FOR COMPARATIVE PURPOSES, THE LIPPER AVERAGE AND INDEX INCEPTION RETURNS REFLECT THE FUND'S FIRST FULL CALENDAR MONTH OF PERFORMANCE.
- -------------------------------------------------------------------------------- THE LEHMAN GOVERNMENT INDEX IS A WEIGHTED INDEX COMPRISED OF SECURITIES ISSUED OR BACKED BY THE U.S. GOVERNMENT, ITS AGENCIES AND INSTRUMENTALITIES WITH A REMAINING MATURITY OF ONE TO 30 YEARS. THE LGI IS AN UNMANAGED INDEX AND INCLUDES THE REINVESTMENT OF ALL DIVIDENDS, BUT DOES NOT REFLECT THE PAYMENT OF TRANSACTION COSTS AND ADVISORY FEES ASSOCIATED WITH AN INVESTMENT IN THE PORTFOLIO. THE SECURITIES THAT COMPRISE THE LGI MAY DIFFER SUBSTANTIALLY FROM THE SECURITIES IN THE PORTFOLIO. THE LGI IS NOT THE ONLY INDEX THAT MAY BE USED TO CHARACTERIZE PERFORMANCE OF INCOME FUNDS AND OTHER INDICES MAY PORTRAY DIFFERENT COMPARATIVE PERFORMANCE. THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) AVERAGE IS CALCULATED BY LIPPER ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT RETURN OF PORTFOLIOS UNDERLYING VARIABLE LIFE AND INSURANCE PRODUCTS. THESE RETURNS ARE NET OF INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES. 8 Investment Review CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO PORTFOLIO MANAGER Mark Stumpp [Photo] The CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO declined 1.0% in 1994, ranking 22 of 57 variable life/annuity flexible portfolios. (SOURCE: LIPPER ANALYTICAL SERVICES) The Conservatively Managed Flexible Portfolio invests in a mix of stocks, bonds and money market securities, adjusting the blend as market conditions change. It generally holds a greater cash position than its aggressive counterpart, has no small company stocks, and its bond portion generally has an intermediate-term maturity. At December 31, it held 36% of assets in large company stocks, 31% in bonds and 33% in cash. Mark Stumpp became Portfolio Manager of the Conservatively Managed Flexible Portfolio in November 1994. Previously, he was the Portfolio's managing director of research. Stumpp holds a Ph.D. in economics from Brown University. VALUE OF $10,000 INVESTED IN CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO VS. S&P 500, LEHMAN AGGREGATE INDEX, AND LIPPER VIP FLEX AVERAGE OVER TEN YEARS PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER PRODUCT CHARGES. [Graph] #8 AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
ONE RANK THREE RANK FIVE RANK TEN RANK YEAR YEARS YEARS YEARS - ----------------------------------------------------------------------------------------------------------- Conserv. Man. Flex Port -1.0% 22 5.9% 23 8.3% 19 10.4% 8 Lipper VIP Flex* -1.9 57 5.8 50 8.6 41 11.4 10 S & P 500 1.3 6.3 8.7 14.4 Lehman Aggregate Index -2.9 4.6 7.7 10.0
- -------------------------------------------------------------------------------- AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO PORTFOLIO MANAGER Mark Stumpp The AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO declined 3.2% in 1994, ranking 41 of 57 variable life/annuity flexible portfolios. (SOURCE: LIPPER ANALYTICAL SERVICES) The Portfolio invests in a mix of stocks, bonds and money market securities, and adjusts its allocations among the sectors to benefit from changing market conditions. At December 31, it held 51% of assets in large company stocks, 11% in small company stocks, 31% in bonds and 7% in cash. Mark Stumpp became Portfolio Manager of the Aggressively Managed Flexible Portfolio in November 1994. Previously, he was the Portfolio's managing director of research. Stumpp holds a Ph.D. in economics from Brown University. The Aggressively Managed Flexible Portfolio generally holds more assets in stocks, including small company stocks, and less in cash than the Conservatively Managed Flexible Portfolio. The Portfolio emphasized stocks and cash during 1994, and reduced the average maturity of its holdings in bonds when it became apparent that interest rates would rise. Toward year end, Stumpp sold some stocks to buy bonds when it appeared that interest rates were near their highs. VALUE OF $10,000 INVESTED IN AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO VS. S&P 500, LEHMAN AGGREGATE INDEX, AND LIPPER VIP FLEX AVERAGE OVER TEN YEARS PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER PRODUCT CHARGES. [Graph] #9 AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
ONE RANK THREE RANK FIVE RANK TEN RANK YEAR YEARS YEARS YEARS - ----------------------------------------------------------------------------------------------------------- Agress. Man. Flex Port -3.2% 41 6.4% 19 9.0% 12 11.7% 6 - ----------------------------------------------------------------------------------------------------------- Lipper VIP Flex* -1.9 57 5.8 50 8.6 41 11.4 10 - ----------------------------------------------------------------------------------------------------------- S & P 500 1.3 6.3 8.7 14.4 - ----------------------------------------------------------------------------------------------------------- Lehman Aggregate Index -2.9 4.6 7.7 10.0 - ----------------------------------------------------------------------------------------------------------- * LIPPER PROVIDES DATA ON A MONTHLY BASIS, SO FOR COMPARATIVE PURPOSES, THE LIPPER AVERAGE AND INDEX INCEPTION RETURNS REFLECT THE FUND'S FIRST CALENDAR MONTH OF PERFORMANCE.
- -------------------------------------------------------------------------------- THE S&P 500 IS A CAPITAL WEIGHTED INDEX, REPRESENTING THE AGGREGATE MARKET VALUE OF THE COMMON EQUITY OF 500 STOCKS PRIMARILY TRADED ON THE NEW YORK STOCK EXCHANGE. THE S&P 500 IS AN UNMANAGED INDEX AND INCLUDES THE REINVESTMENT OF ALL DIVIDENDS, BUT DOES NOT REFLECT THE PAYMENT OF TRANSACTION COSTS AND ADVISORY FEES ASSOCIATED WITH AN INVESTMENT IN THE PORTFOLIO. THE SECURITIES THAT COMPRISE THE S&P 500 MAY DIFFER SUBSTANTIALLY FROM THE SECURITIES IN THE PORTFOLIO. THE S&P 500 IS NOT THE ONLY INDEX THAT MAY BE USED TO CHARACTERIZE PERFORMANCE OF THIS PORTFOLIO AND OTHER INDEXES MAY PORTRAY DIFFERENT COMPARATIVE PERFORMANCE. THE LEHMAN AGGREGATE INDEX (LAI) IS COMPRISED OF 4,842 GOVERNMENT AND CORPORATE BONDS. THE LAI IS AN UNMANAGED INDEX AND INCLUDES THE REINVESTMENT OF ALL DIVIDENDS, BUT DOES NOT REFLECT THE PAYMENT OF TRANSACTION COSTS AND ADVISORY FEES ASSOCIATED WITH AN INVESTMENT IN THE PORTFOLIO. THE SECURITIES THAT COMPRISE THE LAI MAY DIFFER SUBSTANTIALLY FROM THE SECURITIES IN THE PORTFOLIO. THE LAI IS NOT THE ONLY INDEX THAT MAY BE USED TO CHARACTERIZE PERFORMANCE OF INCOME AND OTHER INDICES MAY PORTRAY DIFFERENT COMPARATIVE PERFORMANCE. THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) AVERAGE IS CALCULATED BY LIPPER ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT RETURN OF PORTFOLIOS UNDERLYING VARIABLE LIFE AND INSURANCE PRODUCTS. THESE RETURNS ARE NET OF INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES. 9 Investment Review HIGH YIELD BOND PORTFOLIO PORTFOLIO CO-MANAGERS Lars Berkman and Mike Snyder [Photos] The HIGH YIELD BOND PORTFOLIO declined 2.7% in 1994, ranking 14 in a field of 27 high yield portfolios in variable life/annuity products. (SOURCE: LIPPER ANALYTICAL SERVICES) This Portfolio has two new co-managers: Lars Berkman and Mike Snyder. Since 1991, Lars has managed the $3.6 billion Prudential High Yield Fund, the largest high yield bond mutual fund in the country. Mike is co-manager of the High Yield Income Fund and has managed several institutional high yield funds. This Portfolio invests primarily in non-investment grade bonds rated below Baa. These bonds have higher coupons than better quality bonds, which help cushion the decline in prices that come from rising rates. In return for these higher yields, these bonds have significantly more credit risk than higher quality bonds. We manage that risk by keeping the Portfolio diversified across industries and issuers, and by focusing on B-rated bonds of companies that have improving earnings and the prospect of a credit rating upgrade over the next several years. Late in the year, the managers took advantage of the attractive yields available on newly issued high yield bonds. They added several B-rated new issues with coupons of 12% to 13%. Last fall, bonds of similar quality were offered at much lower yields, in the 9% to 9.5% range. VALUE OF $10,000 INVESTED IN HIGH YIELD BOND PORTFOLIO VS. LEHMAN HIGH YIELD INDEX AND LIPPER VIP HIGH YIELD AVERAGE SINCE INCEPTION PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER PRODUCT CHARGES. [Graph] #10 AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
- ---------------------------------------------------------------------------------------------------- ONE RANK THREE RANK FIVE RANK SINCE YEAR YEARS YEARS INCEPTION - ---------------------------------------------------------------------------------------------------- High Yield Bond Port -2.7% 14 11.0% 10 10.8% 11 7.5% - ---------------------------------------------------------------------------------------------------- Lipper VIP High Yield* -3.3 27 9.8 25 10.6 24 8.9 - ---------------------------------------------------------------------------------------------------- Lehman High Yield -1.0 10.3 12.1 9.2 - ---------------------------------------------------------------------------------------------------- INCEPTION DATE: 2/23/87 * LIPPER PROVIDES DATA ON A MONTHLY BASIS, SO FOR COMPARATIVE PURPOSES, THE LIPPER AVERAGE AND INDEX INCEPTION RETURNS REFLECT THE FUND'S FIRST CALENDAR MONTH OF PERFORMANCE.
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- STOCK INDEX PORTFOLIO PORTFOLIO MANAGER John Moschberger [Photo] The Stock Index Portfolio gained 1.0% in 1994, in line with the 1.3% gain of the S&P 500, the unmanaged stock market index this Portfolio is designed to track. Investment management fees account for the slight difference in returns. The Portfolio holds all 500 stocks included in the S&P 500 Index, and attempts to duplicate its performance. Portfolio Manager John Moschberger manages the Portfolio by investing funds received daily while trying to minimize commissions and transaction costs. * LIPPER PROVIDES DATA ON A MONTHLY BASIS, SO FOR COMPARATIVE PURPOSES, THE LIPPER AVERAGE AND INDEX INCEPTION RETURNS REFLECT THE FUND'S FIRST CALENDAR MONTH OF PERFORMANCE. ** LIPPER LISTS THE STOCK INDEX PORTFOLIO IN ITS S&P 500 INDEX UNIVERSE. FOR PURPOSES OF THE CONTRACT OWNER LETTER, WE COMPARED THE PORTFOLIO TO LIPPER'S GROWTH & INCOME UNIVERSE; THEREFORE, NO RANKS ARE GIVEN. VALUE OF $10,000 INVESTED IN STOCK INDEX PORTFOLIO VS. S&P 500 AND LIPPER VIP GROWTH AND INCOME AVERAGE SINCE INCEPTION PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER PRODUCT CHARGES. [Graph] #11 AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
- ---------------------------------------------------------------------- ONE THREE FIVE SINCE YEAR YEARS YEARS INCEPTION - ---------------------------------------------------------------------- Stock Index Port** 1.0% 5.9% 8.2% 13.0% - ---------------------------------------------------------------------- Lipper VIP Growth & Income* -0.4 7.1 8.8 11.9 - ---------------------------------------------------------------------- S&P 500 1.3 6.3 8.7 12.3 - ---------------------------------------------------------------------- INCEPTION DATE: 10/19/87
- -------------------------------------------------------------------------------- THE S&P 500 IS A CAPITAL WEIGHTED INDEX, REPRESENTING THE AGGREGATE MARKET VALUE OF THE COMMON EQUITY OF 500 STOCKS PRIMARILY TRADED ON THE NEW YORK STOCK EXCHANGE. THE S&P 500 IS AN UNMANAGED INDEX AND INCLUDES THE REINVESTMENT OF ALL DIVIDENDS, BUT DOES NOT REFLECT THE PAYMENT OF TRANSACTION COSTS AND ADVISORY FEES ASSOCIATED WITH AN INVESTMENT IN THE PORTFOLIO. THE SECURITIES THAT COMPRISE THE S&P 500 MAY DIFFER SUBSTANTIALLY FROM THE SECURITIES IN THE PORTFOLIO. THE S&P 500 IS NOT THE ONLY INDEX THAT MAY BE USED TO CHARACTERIZE PERFORMANCE OF THIS PORTFOLIO AND OTHER INDEXES MAY PORTRAY DIFFERENT COMPARATIVE PERFORMANCE. THE LEHMAN HIGH YIELD INDEX (LHYI) IS COMPRISED OF 766 NONINVESTMENT GRADE BONDS. THE LHYI IS AN UNMANAGED INDEX AND INCLUDES THE REINVESTMENT OF ALL DIVIDENDS, BUT DOES NOT REFLECT THE PAYMENT OF TRANSACTION COSTS AND ADVISORY FEES ASSOCIATED WITH AN INVESTMENT IN THE PORTFOLIO. THE SECURITIES THAT COMPRISE THE LHYI MAY DIFFER SUBSTANTIALLY FROM THE SECURITIES IN THE PORTFOLIO. THE LHYI IS NOT THE ONLY INDEX THAT MAY BE USED TO CHARACTERIZE PERFORMANCE OF INCOME FUNDS AND OTHER INDICES MAY PORTRAY DIFFERENT COMPARATIVE PERFORMANCE. THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) AVERAGE IS CALCULATED BY LIPPER ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT RETURN OF PORTFOLIOS UNDERLYING VARIABLE LIFE AND INSURANCE PRODUCTS. THESE RETURNS ARE NET OF INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES. 10 Investment Review HIGH DIVIDEND STOCK PORTFOLIO PORTFOLIO MANAGER Warren Spitz [Photo] The HIGH DIVIDEND STOCK PORTFOLIO performed better than the broad stock market in 1994. It advanced 1.4% for the year, ranking second of six equity income variable life/annuity portfolios. (SOURCE: LIPPER ANALYTICAL SERVICES) This Portfolio invests primarily in stocks that tend to pay higher-than-average dividends. These are theoretically less volatile than other stocks because their generous dividend payments can help cushion price losses. Energy and utility stocks are traditionally considered high dividend stocks. Since rising interest rates can slice the earnings potential of high dividend stocks, Portfolio Manager Warren Spitz last year looked to non-traditional high yield stocks that should benefit from an improving economy, such as industrial stocks. Spitz also had substantial holdings in the finance sector, including real estate investment trusts, financial services and insurance, where rising interest rates may have produced value opportunities. The Portfolio's return was held back by its large positions in natural gas companies, which did not perform well. Since supplies of natural gas have not grown in recent years, though, Spitz believes these stocks should benefit as worldwide demand for gas increases. VALUE OF $10,000 INVESTED IN HIGH DIVIDEND STOCK PORTFOLIO VS. S&P 500 AND LIPPER VIP EQUITY INCOME AVERAGE SINCE INCEPTION PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER PRODUCT CHARGES. [Graph] #12 AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
- ---------------------------------------------------------------------------------------------------- ONE RANK THREE RANK FIVE RANK SINCE YEAR YEARS YEARS INCEPTION - ---------------------------------------------------------------------------------------------------- High Divid Stock Port 1.4% 2 11.0% 2 10.9% 1 12.8% - ---------------------------------------------------------------------------------------------------- Lipper VIP Equity Inc* -0.3 6 7.9 5 8.6 5 10.7 - ---------------------------------------------------------------------------------------------------- S&P 500 1.3 6.3 8.7 11.7 - ---------------------------------------------------------------------------------------------------- INCEPTION DATE: 2/23/87 * LIPPER PROVIDES DATA ON A MONTHLY BASIS, SO FOR COMPARATIVE PURPOSES, THE LIPPER AVERAGE AND INDEX INCEPTION RETURNS REFLECT THE FUND'S FIRST CALENDAR MONTH OF PERFORMANCE.
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PORTFOLIO MANAGER Q&A: WARREN SPITZ We talked with High Divided Stock Portfolio Manager Warren Spitz about his favorite areas of the stock market. Q: WHY DO YOU EXPECT INDUSTRIAL STOCKS TO CONTINUE TO OUTPERFORM CONSUMER STOCKS? A: Many industrial companies manufactured goods at levels far below their maximum output potential--known as capacity utilization--during the 1980s. Now that the economy is expanding at a healthy clip, that situation has reversed itself and many are reaching their peak capacity. That gives them pricing power, or the ability to charge higher prices because their goods are becoming more valuable, and higher prices should translate to higher stock prices. As long as the U.S. economy keeps expanding this way, I expect companies in the industrial sector, particularly in the chemicals, paper and steel industries, to benefit. At the same time, consumer-oriented companies are still feeling the pricing pressure that will keep their stock prices in check for the near future. Q: WHAT OPPORTUNITIES DO YOU SEE IN REAL ESTATE INVESTMENT TRUSTS (REITS)? A: In the current market environment, where rising interest rates have put pressure on traditional high dividend sectors, REITs offer some of the best opportunities for above-average dividend and price appreciation. Rising interest rates have also reduced prices in this sector, which has created some good opportunities to buy securities that are undervalued. We also expect that any increase in the amount of REITs issued will be readily absorbed by pension funds and insurers. Traditionally, these companies bought real estate directly, but after being burned by falling prices in the 1980s and early 1990s, they're beginning to prefer this more-liquid real estate investment option. Q: WHAT'S YOUR OUTLOOK FOR ENERGY STOCKS? A: For the past five or ten years, energy companies have drastically reduced their budgets for research and development, especially in oil exploration and production. Now, there's growing demand and stagnant supply of oil, mostly as a result of this underinvestment, and that may put upward pressure on energy prices. The most direct beneficiaries? I believe it will be oil exploration and oil services stocks; consequently, I continue to explore opportunities in these industries. - -------------------------------------------------------------------------------- THE S&P 500 IS A CAPITAL WEIGHTED INDEX, REPRESENTING THE AGGREGATE MARKET VALUE OF THE COMMON EQUITY OF 500 STOCKS PRIMARILY TRADED ON THE NEW YORK STOCK EXCHANGE. THE S&P 500 IS AN UNMANAGED INDEX AND INCLUDES THE REINVESTMENT OF ALL DIVIDENDS, BUT DOES NOT REFLECT THE PAYMENT OF TRANSACTION COSTS AND ADVISORY FEES ASSOCIATED WITH AN INVESTMENT IN THE PORTFOLIO. THE SECURITIES THAT COMPRISE THE S&P 500 MAY DIFFER SUBSTANTIALLY FROM THE SECURITIES IN THE PORTFOLIO. THE S&P 500 IS NOT THE ONLY INDEX THAT MAY BE USED TO CHARACTERIZE PERFORMANCE OF THIS PORTFOLIO AND OTHER INDEXES MAY PORTRAY DIFFERENT COMPARATIVE PERFORMANCE. THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) AVERAGE IS CALCULATED BY LIPPER ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT RETURN OF PORTFOLIOS UNDERLYING VARIABLE LIFE AND INSURANCE PRODUCTS. THESE RETURNS ARE NET OF INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES. *EQUITY INCOME FUNDS: SEEKS RELATIVELY HIGH CURRENT INCOME AND GROWTH OF INCOME THROUGH INVESTING 60% OR MORE OF ITS PORTFOLIO IN EQUITIES. 11 Investment Review COMMON STOCK PORTFOLIO PORTFOLIO MANAGER Tom Jackson The COMMON STOCK PORTFOLIO outperformed the S&P 500 Index and the average variable life/annuity growth portfolio in 1994. The Portfolio rose 2.8% over the year, ranking 10 among 71 similar funds. (SOURCE: LIPPER ANALYTICAL SERVICES) Portfolio Manager Tom Jackson adheres to a value investment style: he looks for stocks with prices that are low when compared with potential earnings, cash flow and book value. That led him to selectively add to positions in finance stocks whose prices had fallen as interest rates rose. He also continued to hold large positions in industrial and consumer-oriented cyclical stocks in the auto and retail industries to reap the benefit of a growing economy. Jackson had built up a relatively large 20% cash position before stocks tumbled earlier in the year. He then spent much of the end of the year taking advantage of low prices, buying selectively to bring cash down to 11%. Major purchases toward year-end included Chrysler, Dean Witter Discover, JP Morgan, and Lehman Brothers. VALUE OF $10,000 INVESTED IN COMMON STOCK PORTFOLIO VS. S&P 500 AND LIPPER GROWTH AVERAGE OVER TEN YEARS PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER PRODUCT CHARGES. [Graph] #13 AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
ONE RANK THREE RANK FIVE RANK TEN RANK YEAR YEARS YEARS YEARS - ----------------------------------------------------------------------------------------------------------- Common Stock Port 2.8% 10 12.7% 2 11.3% 8 15.0% 4 - ----------------------------------------------------------------------------------------------------------- Lipper VIP Growth Avg. -1.0 71 6.5 48 9.1 43 13.5 21 - ----------------------------------------------------------------------------------------------------------- S&P 500 1.3 6.3 8.7 14.4 - ----------------------------------------------------------------------------------------------------------- * LIPPER PROVIDES DATA ON A MONTHLY BASIS, SO FOR COMPARATIVE PURPOSES, THE LIPPER AVERAGE AND INDEX INCEPTION RETURNS REFLECT THE FUND'S FIRST CALENDAR MONTH OF PERFORMANCE.
- -------------------------------------------------------------------------------- PORTFOLIO MANAGER Q&A: TOM JACKSON We talked with Common Stock Portfolio Manager Tom Jackson about the mood of the stock market. Q: WHY HAVE YOU DECIDED IT'S A GOOD TIME TO PUT YOUR CASH TO WORK IN THE STOCK MARKET? A: I see many attractively priced stocks out there right now. In the current market, there is an inordinate amount of stocks selling at price-to-earnings multiples that I think make them bargains. Q: WHY DO YOU THINK SO MANY OF THOSE BARGAINS ARE FOUND IN THE FINANCE SECTOR? A: Money and credit are the raw materials for financial service products and rising interest rates are viewed by the market as rising costs that may negatively impact the profitability of the companies in these businesses. At current prices, I believe that these rates are largely discounted. In the meantime, an aging population with increased savings needs, combined with the globalization of finance, provides attractive opportunities for growth in a broad array of financial services. Q: WHAT DO YOU LOOK FOR AS SIGNS A COMPANY IS TAKING STEPS TO IMPROVE ITS STOCK PRICE? A: There are many clues that a company with sound fundamentals may be taking steps to get back on track: replacing poor management, restructuring to increase competitiveness, selling an unprofitable old business or acquiring a profitable new one, or introducing an exciting new product. Q: HOW LONG DOES IT TAKE FOR A STOCK TO REACH ITS TRUE VALUE? A: Patience is a virtue. A stock's price may be down temporarily for legitimate reasons, while I feel the company is taking steps necessary to turn things around. It's important to be patient and disciplined in the meantime and to stick to your strategy while you wait for the price to appreciate. If the market provides the opportunity to buy the business at a significant discount to its true worth, the buyer can afford to be a patient holder. I think high portfolio turnover is a negative for the investor. Trading involves commissions, which are a cost, and to the degree that gains are realized, taxes must be paid. - -------------------------------------------------------------------------------- THE S&P 500 IS A CAPITAL WEIGHTED INDEX, REPRESENTING THE AGGREGATE MARKET VALUE OF THE COMMON EQUITY OF 500 STOCKS PRIMARILY TRADED ON THE NEW YORK STOCK EXCHANGE. THE S&P 500 IS AN UNMANAGED INDEX AND INCLUDES THE REINVESTMENT OF ALL DIVIDENDS, BUT DOES NOT REFLECT THE PAYMENT OF TRANSACTION COSTS AND ADVISORY FEES ASSOCIATED WITH AN INVESTMENT IN THE PORTFOLIO. THE SECURITIES THAT COMPRISE THE S&P 500 MAY DIFFER SUBSTANTIALLY FROM THE SECURITIES IN THE PORTFOLIO. THE S&P 500 IS NOT THE ONLY INDEX THAT MAY BE USED TO CHARACTERIZE PERFORMANCE OF THIS PORTFOLIO AND OTHER INDEXES MAY PORTRAY DIFFERENT COMPARATIVE PERFORMANCE. THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) AVERAGE IS CALCULATED BY LIPPER ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT RETURN OF PORTFOLIOS UNDERLYING VARIABLE LIFE AND INSURANCE PRODUCTS. THESE RETURNS ARE NET OF INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES. *GROWTH FUNDS: INVESTS IN COMPANIES WHOSE LONG-TERM EARNINGS ARE EXPECTED TO GROW SIGNIFICANTLY FASTER THAN THE EARNINGS OF THE STOCKS REPRESENTED IN THE MAJOR UNMANAGED INDICES. 12 Investment Review GLOBAL EQUITY PORTFOLIO PORTFOLIO MANAGER Dan Duane [Photo] In 1994 the GLOBAL EQUITY PORTFOLIO declined 4.9%, ranking 21 of 26 variable life/annuity global equity portfolios. (SOURCE: LIPPER ANALYTICAL SERVICES.) The Portfolio's performance trailed the Morgan Stanley World Index because it held fewer assets in Japan, which led the world in total return measured in U.S. dollars. The Portfolio holds 17% of assets in Japan, while the World Index allocation is 28%. In addition, the Portfolio holds more assets in other smaller Pacific Basin countries than the index, and stocks there fell more than elsewhere in the world. By region, the Portfolio held 20% of assets in the Pacific Basin (excluding Japan), 19% in Europe, 17% in Japan and 17% in the U.S. as of December 31. The Portfolio did profit from its performance in Europe, where the economy is coming out of a long and deep recession, and in Korea, because of the growth of the electronics industry. In continental Europe, we held positions in discount retailers, technology firms and parts and equipment suppliers. In Korea, our holdings in Samsung Electronics have benefited from the PC-led boom in demand for semiconductor memories. VALUE OF $10,000 INVESTED IN GLOBAL EQUITY PORTFOLIO VS. MORGAN STANLEY WORLD INDEX AND LIPPER VIP GLOBAL AVERAGE SINCE INCEPTION [Graph] #14 PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER PRODUCT CHARGES. AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
ONE RANK THREE RANK FIVE RANK SINCE YEAR YEARS YEARS INCEPTION - ---------------------------------------------------------------------------------------------------- Global Equity Port -4.9% 21 9.6% 7 5.0% 7 8.3% - ---------------------------------------------------------------------------------------------------- Lipper VIP Global Avg* -0.7 26 8.8 15 7.4 8 9.7 - ---------------------------------------------------------------------------------------------------- MSCI World Index 5.6 7.4 4.2 7.9 - ---------------------------------------------------------------------------------------------------- INCEPTION DATE: 9/19/88 * LIPPER PROVIDES DATA ON A MONTHLY BASIS, SO FOR COMPARATIVE PURPOSES, THE LIPPER AVERAGE AND INDEX INCEPTION RETURNS REFLECT THE FUND'S FIRST CALENDAR MONTH OF PERFORMANCE.
- -------------------------------------------------------------------------------- PORTFOLIO MANAGER Q&A: DAN DUANE Since the value of the U.S. dollar versus other currencies affects returns of foreign stocks to U.S. investors, we talked with Global Equity Portfolio Manager Dan Duane about how the foreign markets are reacting to the weak U.S. dollar. Q: HOW DOES THE WEAK U.S. DOLLAR IMPACT RETURNS? A: Generally, investors believe the dollar's movements have more impact on total returns than they actually do. It's true that when the U.S. dollar is weak, returns from stocks denominated in a foreign currency are enhanced when translated back into U.S. dollars. One French franc, for instance, buys more dollars. When we value our holdings every day, or when they pay dividends or we take profits in them, we translate the value of our holdings into U.S. dollars. Since one unit of foreign money now buys more dollars, our dollar value automatically rises. Q: WHAT HAPPENS IF THE DOLLAR STARTS RISING? A: We are looking for companies that will benefit from a rising dollar. These are generally companies that have their assets or revenues denominated in dollars and their costs denominated in a foreign currency. That steers us to producers of commodities, since most enjoy revenues that are priced in dollars (metals, oil, gold, timber). In addition, most technology and telecommunications company revenues are priced in dollars. So companies from all these sectors are important in our Portfolio for two reasons--because the global recovery should stimulate demand for their products and because their stocks are a good hedge against a rising dollar. - -------------------------------------------------------------------------------- THE MORGAN STANLEY INDEX IS A WEIGHTED INDEX COMPRISED OF APPROXIMATELY 1500 COMPANIES LISTED ON THE STOCK EXCHANGES OF THE U.S.A., EUROPE, CANADA, AUSTRALIA, NEW ZEALAND AND THE FAR EAST. THE COMBINED MARKET CAPITALIZATION OF THESE COMPANIES REPRESENTS APPROXIMATELY 60% OF THE AGGREGATE MARKET VALUE OF THE STOCK EXCHANGES IN THE COUNTRIES COMPRISING THE WORLD INDEX. THE WORLD INDEX IS AN UNMANAGED INDEX AND INCLUDES THE REINVESTMENT OF ALL DIVIDENDS, BUT DOES NOT REFLECT THE PAYMENT OF TRANSACTION COSTS AND ADVISORY FEES ASSOCIATED WITH AN INVESTMENT IN THE PORTFOLIO. THE SECURITIES THAT COMPRISE THE WORLD INDEX MAY DIFFER SUBSTANTIALLY FROM THE SECURITIES IN THE PORTFOLIO. THE WORLD INDEX IS NOT THE ONLY INDEX THAT MAY BE USED TO CHARACTERIZE PERFORMANCE OF GLOBAL FUNDS AND OTHER INDEXES MAY PORTRAY DIFFERENT COMPARATIVE PERFORMANCE. THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) AVERAGE IS CALCULATED BY LIPPER ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT RETURN OF PORTFOLIOS UNDERLYING VARIABLE LIFE AND INSURANCE PRODUCTS. THESE RETURNS ARE NET OF INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES. 13 Investment Review NATURAL RESOURCES PORTFOLIO PORTFOLIO MANAGER Leigh Goehring [Photo] The NATURAL RESOURCES PORTFOLIO declined 4.3% in 1994. The Portfolio ranked fifth of six variable life/annuity natural resources portfolios. (SOURCE: LIPPER ANALYTICAL SERVICES.) Portfolio Manager Leigh Goehring held a 44% concentration in energy stocks that included natural gas companies and oil producers that did not perform as well as the broader market. These holdings are expected to perform well if worldwide demand and prices for oil and gas rise. The Portfolio was also invested in diversified resources stocks such as fertilizer companies, in base and precious metal stocks, and in forest and paper stocks. As commodity and product prices rise, so should the stocks. TOP FIVE HOLDINGS Potash Corp. . . . . . . . . . . . . . . . . . . . .4.8 (fertilizer) IMC Global Inc. . . . . . . . . . . . . . . . . . .3.0 (fertilizer) ELF Aquitaine . . . . . . . . . . . . . . . . . . .2.9 (oil production) Santa Fe Pacific . . . . . . . . . . . . . . . . .2.5 (gold) American Barrick . . . . . . . . . . . . . . . . . .2.5 (gold) VALUE OF $10,000 INVESTED IN NATURAL RESOURCES PORTFOLIO VS. S&P 500 AND LIPPER VIP NATURAL RESOURCES AVERAGE SINCE INCEPTION PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER PRODUCT CHARGES. [Graph] #15 AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
ONE RANK THREE RANK FIVE RANK SINCE YEAR YEARS YEARS INCEPTION - ---------------------------------------------------------------------------------------------------- Natural Resources Port -4.3% 5 8.7% 4 6.0% 1 10.2% - ---------------------------------------------------------------------------------------------------- Lipper VIP Natl Res* -2.8 6 8.7 6 3.0 6 1.7 - ---------------------------------------------------------------------------------------------------- S&P 500 1.3 6.3 8.7 12.4 - ---------------------------------------------------------------------------------------------------- INCEPTION DATE: 5/01/88 * LIPPER PROVIDES DATA ON A MONTHLY BASIS, SO FOR COMPARATIVE PURPOSES, THE LIPPER AVERAGE AND INDEX INCEPTION RETURNS REFLECT THE FUND'S FIRST CALENDAR MONTH OF PERFORMANCE.
- -------------------------------------------------------------------------------- THE PORTFOLIO IS DIVERSIFIED. - ----------------------------- How It Looked as of 12/31/94 [Pie Chart] / / Energy (oil, natural gas) 44% / / Precious Metals (gold, silver) 18% / / Base Metal (aluminum, nickel) 18% / / Diversified Resources (fertilizer) 12% / / Forest Products (paper) 5% / / Cash 3% - -------------------------------------------------------------------------------- THE S&P 500 IS A CAPITAL WEIGHTED INDEX, REPRESENTING THE AGGREGATE MARKET VALUE OF THE COMMON EQUITY OF 500 STOCKS PRIMARILY TRADED ON THE NEW YORK STOCK EXCHANGE. THE S&P 500 IS AN UNMANAGED INDEX AND INCLUDES THE REINVESTMENT OF ALL DIVIDENDS, BUT DOES NOT REFLECT THE PAYMENT OF TRANSACTION COSTS AND ADVISORY FEES ASSOCIATED WITH AN INVESTMENT IN THE PORTFOLIO. THE SECURITIES THAT COMPRISE THE S&P 500 MAY DIFFER SUBSTANTIALLY FROM THE SECURITIES IN THE PORTFOLIO. THE S&P 500 IS NOT THE ONLY INDEX THAT MAY BE USED TO CHARACTERIZE PERFORMANCE OF THIS PORTFOLIO AND OTHER INDEXES MAY PORTRAY DIFFERENT COMPARATIVE PERFORMANCE. THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) AVERAGE IS CALCULATED BY LIPPER ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT RETURN OF PORTFOLIOS UNDERLYING VARIABLE LIFE AND INSURANCE PRODUCTS. THESE RETURNS ARE NET OF INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES. 14 Investment Advisor's Outlook 1995 MAY BE A BETTER YEAR FOR INVESTORS THAN 1994. BUT IT WON'T BE A YEAR FOR TAKING BIG RISKS. IN OUR VIEW, BONDS ARE THE DOMESTIC ASSET CLASS OF CHOICE. U.S. STOCKS AND BONDS ARE LIKELY TO PRODUCE SIMILAR RETURNS, AND THAT MAKES BONDS MORE ATTRACTIVE ON A RISK-ADJUSTED BASIS. SO LOOK FOR BARGAINS, CONSIDER FOREIGN SECURITIES AND BE PREPARED FOR A YEAR OF AVERAGE RETURNS. GROWTH AND INFLATION / / In 1995, we're looking for more moderate growth from the U.S. economy. This means Gross Domestic Product should slow from the 4.0% range--a manageable rate and one that shouldn't cause concern in either the bond or stock markets. / / Inflation, 1994's big concern, will likely creep up next year. Much of that increase has already been discounted by the markets and shouldn't have a significant impact on long-term interest rates. THE BIGGEST RISK TO OUR OUTLOOK? THE FEDERAL RESERVE'S INTEREST RATE HIKES COULD CHOKE OFF GROWTH, OR THERE COULD BE A BIG CHANGE IN THE AVAILABILITY OF CERTAIN COMMODITIES (POSSIBLY BECAUSE OF A WAR OR NATURAL DISASTER) THAT COULD RAISE THE INFLATION ANTE. THE U.S. STOCK MARKET / / The U.S. stock market appears headed for an average year in 1995. That means total returns possibly in the high single digits. Of course, we haven't thought for awhile that the handsome double-digit returns we enjoyed in the 1980s would materialize again any time soon, so anything in excess of inflation looks pretty fair. And if inflation remains relatively benign as we expect, market returns after inflation will be close to historic averages. / / Corporate earnings growth and investor demand should play a big role in stock performance in 1995. If either is tepid, expect our return forecast to fall accordingly. Stock values are still a bit ahead of earnings, as well, which could indicate some type of correction is likely. This is a year when stock selection is crucial. / / We anticipate the demand for bonds will be another factor affecting stock prices. If rates rise higher, stocks will be vulnerable. ON THE OTHER HAND? IF ECONOMIC GROWTH STALLS OUT, EXPECT STOCK PRICES TO FALL. THE GLOBAL MARKET / / Foreign economies should fare better than the U.S. Most countries climbed out of the world-wide recession after the U.S. did -- and they have farther to go since the recession was worse overseas than it was in the U.S. / / That means respectable foreign stock returns, possibly in excess of U.S. returns. And if U.S. interest rates stabilize, European stock prices should benefit. / / We really like the stronger companies that produce commodities. Not only should they benefit from a surge in demand, but their goods are usually priced in dollars. That means they won't be hurt if the dollar starts to gain ground against foreign currencies. / / Our favorite regions are Europe, where the economies are really revving up, and the Pacific Basin. Even though valuations tend to be high there, this area is in transition to a more developed one; we see healthier, growing economies on the horizon as a result. WHAT COULD HOLD BACK RETURNS? IF THE U.S. ECONOMY REVERSES COURSE AND HEADS INTO NEGATIVE TERRITORY, THE WORLD'S OTHER ECONOMIES WOULD PROBABLY FOLLOW. AND ALL STOCK MARKETS COULD BE LACKLUSTER PERFORMERS EVEN IF THIS SCENARIO REMAINS ONLY A THREAT. THE BOND MARKET / / After being beaten down badly in 1994, bonds are beginning to look attractive. With long-term U.S. Treasury yields in the 8% range, bonds will be a tough competitor for all domestic asset classes. We expect bonds to earn their coupon and deliver modest capital gains. / / Bond returns will continue to be driven by the strength of the economy and the Federal Reserve's response, at least until mid-year. We anticipate at least one more Fed move before it quits and considers its anti-inflationary campaign of 1994 a success. / / Due to the Fed's aggressive actions in 1994, we believe yields on long-term bonds are near their peaks for this market cycle, and will begin to decline as the economy slows in the second half of 1995. Thus, while we anticipate some volatility during the first half of 1995, long-term Treasury yields are likely to end the year at 7.5% or lower. / / In that kind of market, the best performing bond sectors can change from day to day. Diversification will help keep returns competitive while limiting risk. OUR WORRIES? CREDIT QUALITY MAY BEGIN TO DETERIORATE IF THE ECONOMY SLOWS DOWN, WHICH MAY NOT BODE WELL FOR THE STOCK MARKET. IF THE STOCK MARKET CORRECTS SHARPLY AS A RESULT, HIGH YIELD BONDS MIGHT NOT FARE WELL. IN ADDITION, IF THE ECONOMY CONTINUES TO RACE AHEAD AT A 4.0% CLIP, INTEREST RATES WILL LIKELY CONTINUE TO CLIMB. / / / / / / THAT COMPLETES OUR REVIEW OF 1994 AND OUR OUTLOOK FOR 1995. WE HOPE YOU FOUND IT HELPFUL. YOUR PRUDENTIAL/PRUCO SECURITIES REPRESENTATIVE STANDS READY TO DISCUSS THESE ISSUES AND TO ASSIST YOU IN ANY WAY HE OR SHE CAN. WE BELIEVE THAT YOUR PERSONAL FINANCIAL REPRESENTATIVE -- THE ONE WHO UNDERSTANDS YOU AND YOUR LONG-TERM INVESTMENT NEEDS -- IS A VERY VALUABLE RESOURCE GIVEN TODAY'S TURBULENT FINANCIAL MARKETS. WE URGE YOU TO TAKE ADVANTAGE OF YOUR REPRESENTATIVE'S TRAINING AND EXPERTISE TO HELP YOU MANAGE YOUR INVESTMENTS IN A MANNER MOST BENEFICIAL TO YOU AND YOUR FAMILY. ALL OF US AT THE PRUDENTIAL THANK YOU FOR YOUR BUSINESS AND LOOK FORWARD TO HELPING YOU PROVIDE FOR YOUR FUTURE FINANCIAL SECURITY. ROBERT P. HILL E. MICHAEL CAULFIELD CHAIRMAN PRESIDENT THE PRUDENTIAL SERIES FUND, INC. THE PRUDENTIAL SERIES FUND, INC. 15 FINANCIAL STATEMENTS OF THE PRUDENTIAL SERIES FUND, INC. MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994 ASSETS Investments................................ $ 581,582,129 Cash....................................... 892 Interest receivable........................ 2,410,515 -------------- Total Assets............................. 583,993,536 -------------- LIABILITIES Accrued expenses........................... 130,371 Payable to investment adviser.............. 581,688 -------------- Total Liabilities........................ 712,059 -------------- NET ASSETS................................... $ 583,281,477 -------------- -------------- Net assets were comprised of: Common stock, at $0.01 par value......... $ 583,281 Paid-in capital, in excess of par........ 582,698,196 -------------- Net assets, December 31, 1994.............. $ 583,281,477 -------------- -------------- Net asset value per share of 58,328,148 outstanding shares of common stock (authorized 200,000,000 shares).......... $ 10.0000 -------------- --------------
STATEMENT OF OPERATIONS Year Ended December 31, 1994 INVESTMENT INCOME Interest................................... $ 24,040,312 --------------- EXPENSES Investment management fee.................. 2,145,819 Shareholders' reports...................... 160,709 Accounting fees............................ 72,868 Custodian expense -- net................... 39,561 S.E.C. fees................................ 36,474 Professional fees.......................... 33,486 Directors' expense......................... 2,034 Miscellaneous expenses..................... 28 --------------- 2,490,979 --------------- NET INVESTMENT INCOME........................ 21,549,333 --------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... $ 21,549,333 --------------- ---------------
STATEMENTS OF CHANGES IN NET ASSETS YEARS ENDED DECEMBER 31 --------------------------------------- 1994 1993 ------------------ ------------------- OPERATIONS: Net investment income.................................................................. $ 21,549,333 $ 14,815,991 ------------------ ------------------- DIVIDENDS TO SHAREHOLDERS FROM: Net investment income.................................................................. (21,549,333) (14,815,991) ------------------ ------------------- CAPITAL TRANSACTIONS: Capital stock sold [18,862,200 and 9,104,900 shares, respectively]..................... 188,622,000 91,049,000 Reinvestment of dividend distributions [2,154,934 and 1,481,599 shares, respectively]......................................................................... 21,549,333 14,815,991 Capital stock repurchased [(10,162,500) and (15,984,800) shares, respectively]......... (101,625,000) (159,848,000) ------------------ ------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS.............. 108,546,333 (53,983,009) ------------------ ------------------- TOTAL INCREASE (DECREASE) IN NET ASSETS............................................................................ 108,546,333 (53,983,009) NET ASSETS: Beginning of year...................................................................... 474,735,144 528,718,153 ------------------ ------------------- End of year............................................................................ $ 583,281,477 $ 474,735,144 ------------------ ------------------- ------------------ -------------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. A1 FINANCIAL STATEMENTS OF THE PRUDENTIAL SERIES FUND, INC. BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994 ASSETS Investments, at value (cost: $563,227,825)............................ $ 531,295,677 Cash....................................... 702 Interest receivable........................ 11,014,524 -------------- Total Assets............................. 542,310,903 -------------- LIABILITIES Accrued expenses........................... 39,255 Payable to investment adviser.............. 579,489 Payable for portfolio shares redeemed...... 43,560 -------------- Total Liabilities........................ 662,304 -------------- NET ASSETS................................... $ 541,648,599 -------------- -------------- Net assets were comprised of: Common stock, at $0.01 par value......... $ 539,579 Paid-in capital, in excess of par........ 583,467,451 -------------- 584,007,030 Undistributed net investment income........ 381,010 Accumulated net realized losses............ (10,807,293) Net unrealized depreciation................ (31,932,148) -------------- Net assets, December 31, 1994.............. $ 541,648,599 -------------- -------------- Net asset value per share of 53,957,906 outstanding shares of common stock (authorized 200,000,000 shares).......... $ 10.0384 -------------- --------------
STATEMENT OF OPERATIONS Year Ended December 31, 1994 INVESTMENT INCOME Interest................................... $ 38,674,225 --------------- EXPENSES Investment management fee.................. 2,251,096 Shareholders' reports...................... 180,661 Accounting fees............................ 77,978 Custodian expense -- net................... 28,771 Professional fees.......................... 21,380 Directors' expense......................... 2,086 Miscellaneous expenses..................... 98 --------------- 2,562,070 --------------- NET INVESTMENT INCOME........................ 36,112,155 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on investments........... (4,246,256) Net unrealized loss on investments......... (50,839,016) --------------- NET LOSS ON INVESTMENTS...................... (55,085,272) --------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... ($ 18,973,117) --------------- ---------------
STATEMENTS OF CHANGES IN NET ASSETS YEARS ENDED DECEMBER 31 --------------------------------------- 1994 1993 ------------------ ------------------- OPERATIONS: Net investment income.................................................................. $ 36,112,155 $ 31,295,792 Net realized gain (loss) on investments................................................ (4,246,256) 8,958,204 Net unrealized gain(loss) on investments............................................... (50,839,016) 7,179,211 ------------------ ------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (18,973,117) 47,433,207 ------------------ ------------------- DIVIDENDS TO SHAREHOLDERS FROM: Net investment income.................................................................. (35,627,999) (31,001,007) Net realized gain from investment transactions......................................... (1,267,553) (7,690,651) ------------------ ------------------- TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (36,895,552) (38,691,658) ------------------ ------------------- CAPITAL TRANSACTIONS: Capital stock sold [3,414,897 and 9,888,368 shares, respectively]...................... 36,662,212 111,911,952 Reinvestment of dividend distributions [3,610,015 and 3,457,814 shares, respectively]......................................................................... 36,895,552 38,691,658 Capital stock repurchased [(4,963,909) and (1,044,056) shares, respectively]........... (52,266,357) (11,890,355) ------------------ ------------------- NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 21,291,407 138,713,255 ------------------ ------------------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (34,577,262) 147,454,804 NET ASSETS: Beginning of year...................................................................... 576,225,861 428,771,057 ------------------ ------------------- End of year............................................................................ $ 541,648,599 $ 576,225,861 ------------------ ------------------- ------------------ -------------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. A2 FINANCIAL STATEMENTS OF THE PRUDENTIAL SERIES FUND, INC. COMMON STOCK PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994 ASSETS Investments, at value (cost: $2,419,493,392).......................... $2,665,964,937 Cash....................................... 155 Interest and dividends receivable.......... 5,114,347 Receivable for securities sold............. 391,399 -------------- Total Assets............................. 2,671,470,838 -------------- LIABILITIES Accrued expenses........................... 239,413 Payable for securities purchased........... 50,317,741 Payable to investment adviser.............. 2,947,775 Payable for portfolio shares redeemed...... 193,892 -------------- Total Liabilities........................ 53,698,821 -------------- NET ASSETS................................... $2,617,772,017 -------------- -------------- Net assets were comprised of: Common stock, at $0.01 par value......... $ 1,266,927 Paid-in capital, in excess of par........ 2,372,417,930 -------------- 2,373,684,857 Accumulated distributions in excess of net investment income........................ (5,718,849) Accumulated net realized gains............. 3,334,464 Net unrealized appreciation................ 246,471,545 -------------- Net assets, December 31, 1994.............. $2,617,772,017 -------------- -------------- Net asset value per share of 126,692,657 outstanding shares of common stock (authorized 200,000,000 shares).......... $ 20.6624 -------------- --------------
STATEMENT OF OPERATIONS Year Ended December 31, 1994 INVESTMENT INCOME Dividends.................................. $ 50,216,245 Interest................................... 20,648,244 --------------- 70,864,489 --------------- EXPENSES Investment management fee.................. 10,874,059 Foreign withholding tax.................... 1,200,006 Shareholders' reports...................... 651,725 S.E.C. fees................................ 144,182 Accounting fees............................ 143,460 Custodian expense -- net................... 77,177 Professional fees.......................... 71,071 Directors' expense......................... 2,913 Miscellaneous expenses..................... 127 --------------- 13,164,720 --------------- NET INVESTMENT INCOME........................ 57,699,769 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investments........... 84,713,465 Net unrealized loss on investments......... (76,779,978) --------------- NET GAIN ON INVESTMENTS...................... 7,933,487 --------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... $ 65,633,256 --------------- ---------------
STATEMENTS OF CHANGES IN NET ASSETS YEARS ENDED DECEMBER 31 --------------------------------------- 1994 1993 ------------------ ------------------- OPERATIONS: Net investment income.................................................................. $ 57,699,769 $ 36,054,825 Net realized gain on investments....................................................... 84,713,465 124,861,589 Net unrealized gain (loss) on investments.............................................. (76,779,978) 185,462,685 ------------------ ------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... 65,633,256 346,379,099 ------------------ ------------------- DIVIDENDS TO SHAREHOLDERS FROM: Net investment income.................................................................. (56,757,732) (36,692,128) Net realized gain from investment transactions......................................... (106,046,594) (103,435,491) ------------------ ------------------- TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (162,804,326) (140,127,619) ------------------ ------------------- CAPITAL TRANSACTIONS: Capital stock sold [19,167,446 and 21,331,255 shares, respectively].................... 412,393,503 447,667,281 Reinvestment of dividend distributions [7,934,974 and 6,632,819 shares, respectively]......................................................................... 162,804,326 140,127,619 Capital stock repurchased [(2,170,186) and (1,143,204) shares, respectively]........... (46,752,467) (24,126,373) ------------------ ------------------- NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 528,445,362 563,668,527 ------------------ ------------------- TOTAL INCREASE IN NET ASSETS............................................................. 431,274,292 769,920,007 NET ASSETS: Beginning of year...................................................................... 2,186,497,725 1,416,577,718 ------------------ ------------------- End of year............................................................................ $ 2,617,772,017 $ 2,186,497,725 ------------------ ------------------- ------------------ -------------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. A3 FINANCIAL STATEMENTS OF THE PRUDENTIAL SERIES FUND, INC. AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994 ASSETS Investments, at value (cost: $3,347,362,272).......................... $3,478,056,152 Cash....................................... 1,392 Interest and dividends receivable.......... 23,489,135 Receivable for securities sold............. 35,026,977 -------------- Total Assets............................. 3,536,573,656 -------------- LIABILITIES Accrued expenses........................... 323,207 Payable for securities purchased........... 49,250,851 Payable to investment adviser.............. 5,363,453 Payable for portfolio shares redeemed...... 95,846 -------------- Total Liabilities........................ 55,033,357 -------------- NET ASSETS................................... $3,481,540,299 -------------- -------------- Net assets were comprised of: Common stock, at $0.01 par value......... $ 2,246,733 Paid-in capital, in excess of par........ 3,405,640,023 -------------- 3,407,886,756 Accumulated distributions in excess of net investment income........................ (7,770,622) Accumulated distributions in excess of net realized gains........................... (49,268,078) Net unrealized appreciation (depreciation) Securities............................... 130,693,880 Foreign currency translations............ (1,637) -------------- Net assets, December 31, 1994.............. $3,481,540,299 -------------- -------------- Net asset value per share of 224,673,289 outstanding shares of common stock (authorized 300,000,000 shares).......... $ 15.4960 -------------- --------------
STATEMENT OF OPERATIONS Year Ended December 31, 1994 INVESTMENT INCOME Dividends.................................. $ 40,972,935 Interest................................... 80,410,745 --------------- 121,383,680 --------------- EXPENSES Investment management fee.................. 20,399,604 Shareholders' reports...................... 895,362 Foreign withholding tax.................... 571,581 Accounting fees............................ 231,918 Custodian expense -- net................... 153,924 S.E.C. fees................................ 129,279 Professional fees.......................... 120,289 Directors' expense......................... 3,420 Miscellaneous expenses..................... 189 --------------- 22,505,566 --------------- NET INVESTMENT INCOME........................ 98,878,114 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES Net realized gain (loss) on investments -- Securities transactions.................. 23,860,613 Futures contracts........................ (22,340) --------------- Net realized gain on investments........... 23,838,273 --------------- Net unrealized loss on investments and foreign currencies-- Securities............................... (230,569,722) Foreign currency translations............ (1,637) --------------- Net unrealized loss on investments and foreign currencies....................... (230,571,359) --------------- NET LOSS ON INVESTMENTS AND FOREIGN CURRENCIES................................... (206,733,086) --------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... ($ 107,854,972) --------------- ---------------
STATEMENTS OF CHANGES IN NET ASSETS YEARS ENDED DECEMBER 31 --------------------------------------- 1994 1993 ------------------ ------------------- OPERATIONS: Net investment income.................................................................. $ 98,878,114 $ 94,441,961 Net realized gain on investments....................................................... 23,838,273 202,429,143 Net unrealized gain(loss) on investments and foreign currency translations............. (230,571,359) 106,972,046 ------------------ ------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (107,854,972) 403,843,150 ------------------ ------------------- DIVIDENDS TO SHAREHOLDERS FROM: Net investment income.................................................................. (96,126,295) (96,961,144) Net realized gain from investment transactions......................................... (98,311,584) (167,511,713) ------------------ ------------------- TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (194,437,879) (264,472,857) ------------------ ------------------- CAPITAL TRANSACTIONS: Capital stock sold [22,611,559 and 28,416,647 shares, respectively].................... 370,947,414 490,167,019 Reinvestment of dividend distributions [12,531,550 and 15,710,066 shares, respectively]......................................................................... 194,437,879 264,472,857 Capital stock repurchased [(4,617,224) and (2,154,837) shares, respectively]........... (73,719,278) (37,398,394) ------------------ ------------------- NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 491,666,015 717,241,482 ------------------ ------------------- TOTAL INCREASE IN NET ASSETS............................................................. 189,373,164 856,611,775 NET ASSETS: Beginning of year...................................................................... 3,292,167,135 2,435,555,360 ------------------ ------------------- End of year............................................................................ $ 3,481,540,299 $ 3,292,167,135 ------------------ ------------------- ------------------ -------------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. A4 FINANCIAL STATEMENTS OF THE PRUDENTIAL SERIES FUND, INC. CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994 ASSETS Investments, at value (cost: $3,443,877,594).......................... $3,468,953,719 Cash....................................... 2,043 Interest and dividends receivable.......... 24,063,629 Receivable for securities sold............. 20,886,513 -------------- Total Assets............................. 3,513,905,904 -------------- LIABILITIES Accrued expenses........................... 304,995 Payable for securities purchased........... 7,467,333 Payable to investment adviser.............. 4,963,479 Payable for portfolio shares redeemed...... 65,811 -------------- Total Liabilities........................ 12,801,618 -------------- NET ASSETS................................... $3,501,104,286 -------------- -------------- Net assets were comprised of: Common stock, at $0.01 par value......... $ 2,483,940 Paid-in capital, in excess of par........ 3,488,749,211 -------------- 3,491,233,151 Distributions in excess of net investment income................................... (2,593,413) Accumulated distributions in excess of net realized gains........................... (12,611,577) Net unrealized appreciation................ 25,076,125 -------------- Net assets, December 31, 1994.............. $3,501,104,286 -------------- -------------- Net asset value per share of 248,394,018 outstanding shares of common stock (authorized 300,000,000 shares).......... $ 14.0950 -------------- --------------
STATEMENT OF OPERATIONS Year Ended December 31, 1994 INVESTMENT INCOME Dividends.................................. $ 21,577,417 Interest................................... 121,932,781 --------------- 143,510,198 --------------- EXPENSES Investment management fee.................. 18,730,421 Shareholders' reports...................... 982,095 Foreign withholding tax.................... 524,162 Accounting fees............................ 216,958 S.E.C. fees................................ 165,214 Custodian expense -- net................... 114,541 Professional fees.......................... 102,549 Directors' expense......................... 3,365 Miscellaneous expenses..................... 182 --------------- 20,839,487 --------------- NET INVESTMENT INCOME........................ 122,670,711 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investments -- Securities transactions.................. 30,566,616 Futures contracts........................ 184,405 --------------- Net realized gain on investments........... 30,751,021 Net unrealized loss on investments......... (184,854,002) --------------- NET LOSS ON INVESTMENTS...................... (154,102,981) --------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... ($ 31,432,270) --------------- ---------------
STATEMENTS OF CHANGES IN NET ASSETS YEARS ENDED DECEMBER 31 --------------------------------------- 1994 1993 ------------------ ------------------- OPERATIONS: Net investment income.................................................................. $ 122,670,711 $ 83,594,970 Net realized gain on investments....................................................... 30,751,021 116,251,058 Net unrealized gain(loss) on investments............................................... (184,854,002) 86,497,365 ------------------ ------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (31,432,270) 286,343,393 ------------------ ------------------- DIVIDENDS TO SHAREHOLDERS FROM: Net investment income.................................................................. (120,740,360) (84,057,597) Net realized gain from investment transactions......................................... (37,214,012) (113,728,724) ------------------ ------------------- TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (157,954,372) (197,786,321) ------------------ ------------------- CAPITAL TRANSACTIONS: Capital stock sold [34,889,459 and 48,698,296 shares, respectively].................... 514,344,688 736,447,769 Reinvestment of dividend distributions [11,198,868 and 13,291,624 shares, respectively]......................................................................... 157,954,372 197,786,321 Capital stock repurchased [(5,887,371) and (2,225,762) shares, respectively]........... (84,977,146) (33,653,303) ------------------ ------------------- NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 587,321,914 900,580,787 ------------------ ------------------- TOTAL INCREASE IN NET ASSETS............................................................. 397,935,272 989,137,859 NET ASSETS: Beginning of year...................................................................... 3,103,169,014 2,114,031,155 ------------------ ------------------- End of year............................................................................ $ 3,501,104,286 $ 3,103,169,014 ------------------ ------------------- ------------------ -------------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. A5 FINANCIAL STATEMENTS OF THE PRUDENTIAL SERIES FUND, INC. ZERO COUPON BOND 1995 PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994 ASSETS Investments, at value (cost: $17,721,753)............................. $ 17,758,646 Cash....................................... 5,351 -------------- Total Assets............................. 17,763,997 -------------- LIABILITIES Accrued expenses........................... 5,142 Payable to investment adviser.............. 25,223 -------------- Total Liabilities........................ 30,365 -------------- NET ASSETS................................... $ 17,733,632 -------------- -------------- Net assets were comprised of: Common stock, at $0.01 par value......... $ 16,741 Paid-in capital, in excess of par........ 17,695,936 -------------- 17,712,677 Distributions in excess of net investment income................................... (15,516) Distributions in excess of net realized gains.................................... (422) Net unrealized appreciation................ 36,893 -------------- Net assets, December 31, 1994.............. $ 17,733,632 -------------- -------------- Net asset value per share of 1,674,113 outstanding shares of common stock (authorized 25,000,000 shares)........... $ 10.5929 -------------- --------------
STATEMENT OF OPERATIONS Year Ended December 31, 1994 INVESTMENT INCOME Interest................................... $ 1,119,611 --------------- EXPENSES Investment management fee.................. 60,662 Accounting fees............................ 18,250 Custodian expense -- net................... 5,694 Shareholders' reports...................... 4,264 Directors' expense......................... 1,816 S.E.C. fees................................ 1,006 Professional fees.......................... 493 --------------- 92,185 --------------- NET INVESTMENT INCOME........................ 1,027,426 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investments........... 1,948 Net unrealized loss on investments......... (1,029,896) --------------- NET LOSS ON INVESTMENTS...................... (1,027,948) --------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... ($ 522) --------------- ---------------
STATEMENTS OF CHANGES IN NET ASSETS YEARS ENDED DECEMBER 31 --------------------------------------- 1994 1993 ------------------ ------------------- OPERATIONS: Net investment income.................................................................. $ 1,027,426 $ 965,547 Net realized gain on investments....................................................... 1,948 7,307 Net unrealized gain(loss) on investments............................................... (1,029,896) 111,542 ------------------ ------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (522) 1,084,396 ------------------ ------------------- DIVIDENDS TO SHAREHOLDERS FROM: Net investment income.................................................................. (1,001,231) (972,442) Net realized gain from investment transactions......................................... (3,573) 0 ------------------ ------------------- TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (1,004,804) (972,442) ------------------ ------------------- CAPITAL TRANSACTIONS: Capital stock sold [301,289 and 111,174 shares, respectively].......................... 3,295,000 1,287,000 Reinvestment of dividend distributions [94,042 and 85,653 shares, respectively]........ 1,004,804 972,442 Capital stock repurchased [(52,950) and (31,181) shares, respectively]................. (592,000) (360,000) Initial capitalization repurchased [(18,027) and (35,953) shares, respectively]........ (197,000) (416,000) ------------------ ------------------- NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 3,510,804 1,483,442 ------------------ ------------------- TOTAL INCREASE IN NET ASSETS............................................................. 2,505,478 1,595,396 NET ASSETS: Beginning of year...................................................................... 15,228,154 13,632,758 ------------------ ------------------- End of year............................................................................ $ 17,733,632 $ 15,228,154 ------------------ ------------------- ------------------ -------------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. A6 FINANCIAL STATEMENTS OF THE PRUDENTIAL SERIES FUND, INC. ZERO COUPON BOND 2000 PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994 ASSETS Investments, at value (cost: $20,000,846)............................. $ 20,665,896 Cash....................................... 2,106 -------------- Total Assets............................. 20,668,002 -------------- LIABILITIES Accrued expenses........................... 3,844 Payable to investment adviser.............. 29,162 -------------- Total Liabilities........................ 33,006 -------------- NET ASSETS................................... $ 20,634,996 -------------- -------------- Net assets were comprised of: Common stock, at $0.01 par value......... $ 17,396 Paid-in capital, in excess of par........ 19,986,241 -------------- 20,003,637 Distributions in excess of net investment income................................... (34,092) Accumulated net realized gains............. 401 Net unrealized appreciation................ 665,050 -------------- Net assets, December 31, 1994.............. $ 20,634,996 -------------- -------------- Net asset value per share of 1,739,587 outstanding shares of common stock (authorized 25,000,000 shares)........... $ 11.8620 -------------- --------------
STATEMENT OF OPERATIONS Year Ended December 31, 1994 INVESTMENT INCOME Interest................................... $ 1,521,379 --------------- EXPENSES Investment management fee.................. 84,265 Accounting fees............................ 18,250 Shareholders' reports...................... 5,206 Directors' expense......................... 1,819 Miscellaneous expenses..................... 535 Custodian expense -- net................... (3,054) --------------- 107,021 --------------- NET INVESTMENT INCOME........................ 1,414,358 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investments........... 38,776 Net unrealized loss on investments......... (3,049,221) --------------- NET LOSS ON INVESTMENTS...................... (3,010,445) --------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... ($ 1,596,087) --------------- ---------------
STATEMENTS OF CHANGES IN NET ASSETS YEARS ENDED DECEMBER 31 --------------------------------------- 1994 1993 ------------------ ------------------- OPERATIONS: Net investment income.................................................................. $ 1,414,358 $ 1,247,229 Net realized gain on investments....................................................... 38,776 8,483 Net unrealized gain(loss) on investments............................................... (3,049,221) 1,576,324 ------------------ ------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (1,596,087) 2,832,036 ------------------ ------------------- DIVIDENDS TO SHAREHOLDERS FROM: Net investment income.................................................................. (1,398,377) (1,258,808) Net realized gain from investment transactions......................................... (38,912) (7,940) ------------------ ------------------- TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (1,437,289) (1,266,748) ------------------ ------------------- CAPITAL TRANSACTIONS: Capital stock sold [102,167 and 397,878 shares, respectively].......................... 1,340,000 5,460,000 Reinvestment of dividend distributions [118,462 and 92,723 shares, respectively]....... 1,437,289 1,266,748 Capital stock repurchased [(60,345) and (121,421) shares, respectively]................ (787,000) (1,675,000) Initial capitalization repurchased [(38,338) and (80,105) shares, respectively]........ (507,000) (1,105,000) ------------------ ------------------- NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 1,483,289 3,946,748 ------------------ ------------------- TOTAL INCREASE (DECREASE) IN NET ASSETS............................................................................ (1,550,087) 5,512,036 NET ASSETS: Beginning of year...................................................................... 22,185,083 16,673,047 ------------------ ------------------- End of year............................................................................ $ 20,634,996 $ 22,185,083 ------------------ ------------------- ------------------ -------------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. A7 FINANCIAL STATEMENTS OF THE PRUDENTIAL SERIES FUND, INC. HIGH YIELD BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994 ASSETS Investments, at value (cost: $326,056,650)............................ $ 299,082,997 Cash....................................... 219 Interest and dividends receivable.......... 7,505,266 Receivable for securities sold............. 1,590,651 -------------- Total Assets............................. 308,179,133 -------------- LIABILITIES Accrued expenses........................... 38,417 Payable for securities purchased........... 1,457,852 Payable to investment adviser.............. 458,151 -------------- Total Liabilities........................ 1,954,420 -------------- NET ASSETS................................... $ 306,224,713 -------------- -------------- Net assets were comprised of: Common stock, at $0.01 par value......... $ 415,757 Paid-in capital, in excess of par........ 340,891,135 -------------- 341,306,892 Accumulated distributions in excess of net investment income........................ (1,410,346) Accumulated net realized losses............ (6,698,180) Net unrealized depreciation................ (26,973,653) -------------- Net assets, December 31, 1994.............. $ 306,224,713 -------------- -------------- Net asset value per share of 41,575,673 outstanding shares of common stock (authorized 100,000,000 shares).......... $ 7.3655 -------------- --------------
STATEMENT OF OPERATIONS Year Ended December 31, 1994 INVESTMENT INCOME Dividends.................................. $ 1,451,223 Interest................................... 30,539,834 --------------- 31,991,057 --------------- EXPENSES Investment management fee.................. 1,683,950 Accounting fees............................ 140,525 Shareholders' reports...................... 108,517 Custodian expense -- net................... 25,191 S.E.C. fees................................ 14,855 Professional fees.......................... 6,374 Directors' expense......................... 1,962 Miscellaneous expenses..................... 17 --------------- 1,981,391 --------------- NET INVESTMENT INCOME........................ 30,009,666 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on investments........... (4,761,509) Net unrealized loss on investments......... (34,417,342) --------------- NET LOSS ON INVESTMENTS...................... (39,178,851) --------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... ($ 9,169,185) --------------- ---------------
STATEMENTS OF CHANGES IN NET ASSETS YEARS ENDED DECEMBER 31 --------------------------------------- 1994 1993 ------------------ ------------------- (AS RESTATED) OPERATIONS: Net investment income.................................................................. $ 30,009,666 $ 21,969,043 Net realized gain (loss) on investments................................................ (4,761,509) 9,902,123 Net unrealized gain (loss) on investments.............................................. (34,417,342) 6,056,112 ------------------ ------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (9,169,185) 37,927,278 ------------------ ------------------- DIVIDENDS TO SHAREHOLDERS FROM: Net investment income.................................................................. (30,650,298) (22,294,669) Net realized gain from investment transactions......................................... (228) (156) ------------------ ------------------- TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (30,650,526) (22,294,825) ------------------ ------------------- CAPITAL TRANSACTIONS: Capital stock sold [7,836,280 and 12,700,848 shares, respectively]..................... 64,526,000 105,011,000 Reinvestment of dividend distributions [4,067,658 and 2,686,600 shares, respectively]......................................................................... 30,650,526 22,294,825 Capital stock repurchased [(3,976,156) and (1,650,203) shares, respectively]........... (31,985,000) (13,774,000) ------------------ ------------------- NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 63,191,526 113,531,825 ------------------ ------------------- TOTAL INCREASE IN NET ASSETS............................................................. 23,371,815 129,164,278 NET ASSETS: Beginning of year...................................................................... 282,852,898 153,688,620 ------------------ ------------------- End of year............................................................................ $ 306,224,713 $ 282,852,898 ------------------ ------------------- ------------------ -------------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. A8 FINANCIAL STATEMENTS OF THE PRUDENTIAL SERIES FUND, INC. STOCK INDEX PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994 ASSETS Investments, at value (cost: $584,600,736)............................ $ 665,573,026 Cash....................................... 125 Interest and dividends receivable.......... 1,826,860 -------------- Total Assets............................. 667,400,011 -------------- LIABILITIES Accrued expenses........................... 43,939 Payable for securities purchased........... 1,961,738 Payable to investment adviser.............. 594,419 Payable for daily variation margin on open futures contracts (see Note 2)........... 178,025 Payable for portfolio shares redeemed...... 87,683 -------------- Total Liabilities........................ 2,865,804 -------------- NET ASSETS................................... $ 664,534,207 -------------- -------------- Net assets were comprised of: Common stock, at $0.01 par value......... $ 444,295 Paid-in capital, in excess of par........ 584,354,669 -------------- 584,798,964 Accumulated distributions in excess of net investment income........................ (448,482) Distributions in excess of net realized gains.................................... (1,303,715) Net unrealized appreciation Securities............................... 80,972,290 Futures contracts........................ 515,150 -------------- Net assets, December 31, 1994.............. $ 664,534,207 -------------- -------------- Net asset value per share of 44,429,452 outstanding shares of common stock (authorized 100,000,000 shares).......... $ 14.9571 -------------- --------------
STATEMENT OF OPERATIONS Year Ended December 31, 1994 INVESTMENT INCOME Dividends.................................. $ 17,703,412 Interest................................... 848,482 --------------- 18,551,894 --------------- EXPENSES Investment management fee.................. 2,223,022 Shareholders' reports...................... 169,859 Foreign withholding tax.................... 104,365 Accounting fees............................ 92,457 Custodian expense -- net................... 25,969 Professional fees.......................... 17,287 S.E.C. fees................................ 17,213 Directors' expense......................... 2,108 Miscellaneous expenses..................... 35 --------------- 2,652,315 --------------- NET INVESTMENT INCOME........................ 15,899,579 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments -- Securities transactions.................. 225,124 Futures contracts........................ (1,036,890) --------------- Net realized loss on investments........... (811,766) --------------- Net unrealized gain (loss) on investments -- Securities............................... (8,921,232) Futures contracts........................ 486,200 --------------- Net unrealized loss on investments......... (8,435,032) --------------- NET LOSS ON INVESTMENTS...................... (9,246,798) --------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... $ 6,652,781 --------------- ---------------
STATEMENTS OF CHANGES IN NET ASSETS YEARS ENDED DECEMBER 31 --------------------------------------- 1994 1993 ------------------ ------------------- OPERATIONS: Net investment income.................................................................. $ 15,899,579 $ 12,982,334 Net realized gain (loss) on investments................................................ (811,766) 2,033,345 Net unrealized gain (loss) on investments.............................................. (8,435,032) 33,892,763 ------------------ ------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... 6,652,781 48,908,442 ------------------ ------------------- DIVIDENDS TO SHAREHOLDERS FROM: Net investment income.................................................................. (15,754,398) (13,030,262) Net realized gain from investment transactions......................................... (958,203) (1,280,819) ------------------ ------------------- TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (16,712,601) (14,311,081) ------------------ ------------------- CAPITAL TRANSACTIONS: Capital stock sold [4,553,644 and 10,331,253 shares, respectively]..................... 68,598,345 152,405,579 Reinvestment of dividend distributions [1,130,115 and 959,900 shares, respectively].... 16,712,601 14,311,081 Capital stock repurchased [(1,718,830) and (1,313,029) shares, respectively]........... (25,854,984) (19,639,158) ------------------ ------------------- NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 59,455,962 147,077,502 ------------------ ------------------- TOTAL INCREASE IN NET ASSETS............................................................. 49,396,142 181,674,863 NET ASSETS: Beginning of year...................................................................... 615,138,065 433,463,202 ------------------ ------------------- End of year............................................................................ $ 664,534,207 $ 615,138,065 ------------------ ------------------- ------------------ -------------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. A9 FINANCIAL STATEMENTS OF THE PRUDENTIAL SERIES FUND, INC. HIGH DIVIDEND STOCK PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994 ASSETS Investments, at value (cost: $873,043,522)............................ $ 859,427,250 Cash....................................... 763 Interest and dividends receivable.......... 4,068,061 -------------- Total Assets............................. 863,496,074 -------------- LIABILITIES Accrued expenses........................... 94,060 Payable for securities purchased........... 2,875,386 Payable to investment adviser.............. 855,376 -------------- Total Liabilities........................ 3,824,822 -------------- NET ASSETS................................... $ 859,671,252 -------------- -------------- Net assets were comprised of: Common stock, at $0.01 par value......... $ 593,526 Paid-in capital, in excess of par........ 873,328,334 -------------- 873,921,860 Undistributed net investment income........ 145,759 Distributions in excess of net realized gains.................................... (780,095) Net unrealized depreciation................ (13,616,272) -------------- Net assets, December 31, 1994.............. $ 859,671,252 -------------- -------------- Net asset value per share of 59,352,571 outstanding shares of common stock (authorized 100,000,000 shares).......... $ 14.4842 -------------- --------------
STATEMENT OF OPERATIONS Year Ended December 31, 1994 INVESTMENT INCOME Dividends.................................. $ 28,264,031 Interest................................... 5,609,616 --------------- 33,873,647 --------------- EXPENSES Investment management fee.................. 3,061,395 Foreign withholding tax.................... 442,666 Shareholders' reports...................... 222,968 S.E.C. fees................................ 90,342 Accounting fees............................ 75,849 Custodian expense -- net................... 39,777 Professional fees.......................... 8,495 Directors' expense......................... 2,142 Miscellaneous expenses..................... 37 --------------- 3,943,671 --------------- NET INVESTMENT INCOME........................ 29,929,976 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investments........... 41,343,251 Net unrealized loss on investments......... (64,632,006) --------------- NET LOSS ON INVESTMENTS...................... (23,288,755) --------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... $ 6,641,221 --------------- ---------------
STATEMENTS OF CHANGES IN NET ASSETS YEARS ENDED DECEMBER 31 --------------------------------------- 1994 1993 ------------------ ------------------- OPERATIONS: Net investment income.................................................................. $ 29,929,976 $ 14,507,277 Net realized gain on investments....................................................... 41,343,251 21,045,993 Net unrealized gain(loss) on investments............................................... (64,632,006) 35,871,500 ------------------ ------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... 6,641,221 71,424,770 ------------------ ------------------- DIVIDENDS TO SHAREHOLDERS FROM: Net investment income.................................................................. (29,421,933) (14,844,865) Net realized gain from investment transactions......................................... (44,325,396) (18,679,382) ------------------ ------------------- TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (73,747,329) (33,524,247) ------------------ ------------------- CAPITAL TRANSACTIONS: Capital stock sold [16,514,586 and 19,384,187 shares, respectively].................... 261,909,000 300,016,000 Reinvestment of dividend distributions [5,080,100 and 2,176,775 shares, respectively]......................................................................... 73,747,329 33,524,247 Capital stock repurchased [(746,813) and (196,958) shares, respectively]............... (11,659,000) (3,017,000) ------------------ ------------------- NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 323,997,329 330,523,247 ------------------ ------------------- TOTAL INCREASE IN NET ASSETS............................................................. 256,891,221 368,423,770 NET ASSETS: Beginning of year...................................................................... 602,780,031 234,356,261 ------------------ ------------------- End of year............................................................................ $ 859,671,252 $ 602,780,031 ------------------ ------------------- ------------------ -------------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. A10 FINANCIAL STATEMENTS OF THE PRUDENTIAL SERIES FUND, INC. NATURAL RESOURCES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994 ASSETS Investments, at value (cost: $227,082,786)............................ $ 230,156,734 Cash....................................... 204 Interest and dividends receivable.......... 455,179 -------------- Total Assets............................. 230,612,117 -------------- LIABILITIES Accrued expenses........................... 37,673 Payable for securities purchased........... 3,040,439 Payable to investment adviser.............. 260,076 -------------- Total Liabilities........................ 3,338,188 -------------- NET ASSETS................................... $ 227,273,929 -------------- -------------- Net assets were comprised of: Common stock, at $0.01 par value......... $ 157,357 Paid-in capital, in excess of par........ 222,958,907 -------------- 223,116,264 Undistributed net investment income........ 36,877 Accumulated net realized gains............. 1,046,840 Net unrealized appreciation................ 3,073,948 -------------- Net assets, December 31, 1994.............. $ 227,273,929 -------------- -------------- Net asset value per share of 15,735,726 outstanding shares of common stock (authorized 100,000,000 shares).......... $ 14.4432 -------------- --------------
STATEMENT OF OPERATIONS Year Ended December 31, 1994 INVESTMENT INCOME Dividends.................................. $ 2,919,308 Interest................................... 547,273 --------------- 3,466,581 --------------- EXPENSES Investment management fee.................. 917,600 Foreign withholding tax.................... 155,276 Shareholders' reports...................... 56,649 Accounting fees............................ 45,569 Custodian expense -- net................... 28,357 S.E.C. fees................................ 27,962 Professional fees.......................... 4,165 Directors' expense......................... 1,894 Miscellaneous expenses..................... 10 --------------- 1,237,482 --------------- NET INVESTMENT INCOME........................ 2,229,099 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investments -- Securities transactions.................. 4,039,297 Options written.......................... 32,757 --------------- Net realized gain on investments........... 4,072,054 Net unrealized loss on investments......... (16,859,455) --------------- NET LOSS ON INVESTMENTS...................... (12,787,401) --------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... ($ 10,558,302) --------------- ---------------
STATEMENTS OF CHANGES IN NET ASSETS YEARS ENDED DECEMBER 31 --------------------------------------- 1994 1993 ------------------ ------------------- OPERATIONS: Net investment income.................................................................. $ 2,229,099 $ 1,708,004 Net realized gain on investments....................................................... 4,072,054 4,531,550 Net unrealized gain (loss) on investments.............................................. (16,859,455) 15,555,589 ------------------ ------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (10,558,302) 21,795,143 ------------------ ------------------- DIVIDENDS TO SHAREHOLDERS FROM: Net investment income.................................................................. (2,145,214) (1,727,285) Net realized gain from investment transactions......................................... (4,370,759) (3,710,814) ------------------ ------------------- TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (6,515,973) (5,438,099) ------------------ ------------------- CAPITAL TRANSACTIONS: Capital stock sold [5,475,055 and 4,020,200 shares, respectively]...................... 85,097,000 61,876,000 Reinvestment of dividend distributions [446,624 and 360,819 shares, respectively]...... 6,515,973 5,438,099 Capital stock repurchased [(393,177) and (161,277) shares, respectively]............... (6,107,000) (2,363,000) ------------------ ------------------- NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 85,505,973 64,951,099 ------------------ ------------------- TOTAL INCREASE IN NET ASSETS............................................................. 68,431,698 81,308,143 NET ASSETS: Beginning of year...................................................................... 158,842,231 77,534,088 ------------------ ------------------- End of year............................................................................ $ 227,273,929 $ 158,842,231 ------------------ ------------------- ------------------ -------------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. A11 FINANCIAL STATEMENTS OF THE PRUDENTIAL SERIES FUND, INC. GLOBAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994 ASSETS Investments, at value (cost: $333,259,423)............................ $ 340,065,997 Foreign currency, at value (cost: $7,107,458).............................. 7,169,111 Dividends and interest receivable.......... 240,756 Receivable for securities sold............. 2,036,391 Receivable for portfolio shares sold....... 5,435 Other assets............................... 163,813 -------------- Total Assets............................. 349,681,503 -------------- LIABILITIES Bank overdraft............................. 151,478 Accrued expenses........................... 507,759 Payable for securities purchased........... 2,689,594 Payable to investment adviser.............. 598,694 -------------- Total Liabilities........................ 3,947,525 -------------- NET ASSETS................................... $ 345,733,978 -------------- -------------- Net assets were comprised of: Common stock, at $0.01 par value......... $ 249,106 Paid-in capital, in excess of par........ 339,734,079 -------------- 339,983,185 Distributions in excess of net investment income................................... (306,676) Accumulated net realized losses............ (830,366) Net unrealized appreciation on securities and foreign currency translations........ 6,887,835 -------------- Net assets, December 31, 1994.............. $ 345,733,978 -------------- -------------- Net asset value per share of 24,910,615 outstanding shares of common stock (authorized 100,000,000 shares).......... $ 13.8790 -------------- --------------
STATEMENT OF OPERATIONS Year Ended December 31, 1994 INVESTMENT INCOME Dividends.................................. $ 2,857,120 Interest................................... 602,579 --------------- 3,459,699 --------------- EXPENSES Investment management fee.................. 1,798,467 Custodian expense -- net................... 695,706 Income taxes -- foreign.................... 284,990 Accounting fees............................ 101,774 S.E.C. fees................................ 82,504 Shareholders' reports...................... 17,205 Professional fees.......................... 2,375 Directors' expense......................... 1,886 Miscellaneous expenses..................... 70 --------------- 2,984,977 --------------- NET INVESTMENT INCOME........................ 474,722 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES AND FOREIGN CURRENCIES Net realized loss on securities and foreign currency transactions.................... (578,250) Net unrealized loss on securities and foreign currency translations............ (16,334,560) --------------- NET LOSS ON SECURITIES AND FOREIGN CURRENCIES................................... (16,912,810) --------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... $ (16,438,088) --------------- ---------------
STATEMENTS OF CHANGES IN NET ASSETS YEARS ENDED DECEMBER 31 --------------------------------------- 1994 1993 ------------------ ------------------- OPERATIONS: Net investment income.................................................................. $ 474,722 $ 113,317 Net realized gain (loss) on securities and foreign currency transactions............... (578,250) 2,342,360 Net unrealized gain (loss) on securities and foreign currency translations............. (16,334,560) 21,161,913 ------------------ ------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (16,438,088) 23,617,590 ------------------ ------------------- DIVIDENDS TO SHAREHOLDERS FROM: Net investment income.................................................................. (499,141) (403,351) Net realized gain from investment transactions......................................... (394,438) (839,910) ------------------ ------------------- TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (893,579) (1,243,261) ------------------ ------------------- CAPITAL TRANSACTIONS: Capital stock sold [17,513,960 and 5,977,164 shares, respectively]..................... 254,421,899 78,356,145 Reinvestment of dividend distributions [64,991 and 90,677 shares, respectively]........ 893,579 1,243,261 Capital stock repurchased [(751,122) and (141,366) shares, respectively]............... (10,781,034) (1,761,681) Initial capitalization repurchased [(735,674) and (391,272) shares, respectively]...... (10,558,000) (5,164,000) ------------------ ------------------- NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 233,976,444 72,673,725 ------------------ ------------------- TOTAL INCREASE IN NET ASSETS............................................................. 216,644,777 95,048,054 NET ASSETS: Beginning of year...................................................................... 129,089,201 34,041,147 ------------------ ------------------- End of year............................................................................ $ 345,733,978 $ 129,089,201 ------------------ ------------------- ------------------ -------------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. A12 FINANCIAL STATEMENTS OF THE PRUDENTIAL SERIES FUND, INC. GOVERNMENT SECURITIES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994 ASSETS Investments, at value (cost: $507,031,047)............................ $ 478,087,478 Cash....................................... 329 Interest receivable........................ 8,947,544 Receivable for portfolio shares sold....... 1,059,634 -------------- Total Assets............................. 488,094,985 -------------- LIABILITIES Accrued expenses........................... 5,192 Payable to investment adviser.............. 515,488 -------------- Total Liabilities........................ 520,680 -------------- NET ASSETS................................... $ 487,574,305 -------------- -------------- Net assets were comprised of: Common stock, at $0.01 par value......... $ 466,072 Paid-in capital, in excess of par........ 526,044,120 -------------- 526,510,192 Undistributed net investment income........ 931,495 Accumulated net realized losses............ (10,923,813) Net unrealized depreciation................ (28,943,569) -------------- Net assets, December 31, 1994.............. $ 487,574,305 -------------- -------------- Net asset value per share of 46,607,219 outstanding shares of common stock (authorized 100,000,000 shares).......... $ 10.4614 -------------- --------------
STATEMENT OF OPERATIONS Year Ended December 31, 1994 INVESTMENT INCOME Interest................................... $ 35,819,887 --------------- EXPENSES Investment management fee.................. 2,125,130 Shareholders' reports...................... 168,609 Accounting fees............................ 73,159 Custodian expense -- net................... 13,387 Professional fees.......................... 9,127 Directors' expense......................... 2,077 Miscellaneous expenses..................... 31 S.E.C. fees................................ (3,561) --------------- 2,387,959 --------------- NET INVESTMENT INCOME........................ 33,431,928 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on investments........... (10,380,614) Net unrealized loss on investments......... (52,690,952) --------------- NET LOSS ON INVESTMENTS...................... (63,071,566) --------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... ($ 29,639,638) --------------- ---------------
STATEMENTS OF CHANGES IN NET ASSETS YEARS ENDED DECEMBER 31 --------------------------------------- 1994 1993 ------------------ ------------------- OPERATIONS: Net investment income.................................................................. $ 33,431,928 $ 25,803,560 Net realized gain (loss) on investments................................................ (10,380,614) 884,434 Net unrealized gain(loss) on investments............................................... (52,690,952) 19,594,824 ------------------ ------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (29,639,638) 46,282,818 ------------------ ------------------- DIVIDENDS TO SHAREHOLDERS FROM: Net investment income.................................................................. (32,955,665) (25,487,269) Net realized gain from investment transactions......................................... 0 (1,904,203) ------------------ ------------------- TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (32,955,665) (27,391,472) ------------------ ------------------- CAPITAL TRANSACTIONS: Capital stock sold [3,591,224 and 15,693,270 shares, respectively]..................... 41,656,912 185,551,898 Reinvestment of dividend distributions [3,094,061 and 2,328,874 shares, respectively]......................................................................... 32,955,665 27,391,472 Capital stock repurchased [(5,912,961) and (449,498) shares, respectively]............. (64,569,681) (5,251,752) ------------------ ------------------- NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 10,042,896 207,691,618 ------------------ ------------------- TOTAL INCREASE (DECREASE) IN NET ASSETS............................................................................ (52,552,407) 226,582,964 NET ASSETS: Beginning of year...................................................................... 540,126,712 313,543,748 ------------------ ------------------- End of year............................................................................ $ 487,574,305 $ 540,126,712 ------------------ ------------------- ------------------ -------------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. A13 FINANCIAL STATEMENTS OF THE PRUDENTIAL SERIES FUND, INC. ZERO COUPON BOND 2005 PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES December 31, 1994 ASSETS Investments, at value (cost: $16,718,218)............................. $ 16,531,317 Cash....................................... 971 Interest receivable........................ 404 -------------- Total Assets............................. 16,532,692 -------------- LIABILITIES Accrued expenses........................... 3,464 Payable to investment adviser.............. 23,530 -------------- Total Liabilities........................ 26,994 -------------- NET ASSETS................................... $ 16,505,698 -------------- -------------- Net assets were comprised of: Common stock, at $0.01 par value......... $ 15,363 Paid-in capital, in excess of par........ 16,654,038 -------------- 16,669,401 Undistributed net investment income........ 23,198 Net unrealized depreciation................ (186,901) -------------- Net assets, December 31, 1994.............. $ 16,505,698 -------------- -------------- Net asset value per share of 1,536,257 outstanding shares of common stock (authorized 50,000,000 shares)........... $ 10.7441 -------------- --------------
STATEMENT OF OPERATIONS Year Ended December 31, 1994 INVESTMENT INCOME Interest................................... $ 1,042,827 --------------- EXPENSES Investment management fee.................. 57,716 Accounting fees............................ 18,250 Custodian expense -- net................... 4,522 Shareholders' reports...................... 3,767 Directors' expense......................... 1,816 S.E.C. fees................................ 1,318 Miscellaneous expenses..................... 262 --------------- 87,651 --------------- NET INVESTMENT INCOME........................ 955,176 --------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net unrealized loss on investments......... (2,370,041) --------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... ($ 1,414,865) --------------- ---------------
STATEMENTS OF CHANGES IN NET ASSETS YEARS ENDED DECEMBER 31 --------------------------------------- 1994 1993 ------------------ ------------------- OPERATIONS: Net investment income.................................................................. $ 955,176 $ 751,943 Net realized gain on investments....................................................... 0 6,214 Net unrealized gain(loss) on investments............................................... (2,370,041) 1,440,496 ------------------ ------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (1,414,865) 2,198,653 ------------------ ------------------- DIVIDENDS TO SHAREHOLDERS FROM: Net investment income.................................................................. (938,283) (751,577) Net realized gain from investment transactions......................................... (3,855) (2,358) ------------------ ------------------- TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (942,138) (753,935) ------------------ ------------------- CAPITAL TRANSACTIONS: Capital stock sold [461,883 and 442,819 shares, respectively].......................... 5,262,071 5,590,000 Reinvestment of dividend distributions [86,081 and 60,299 shares, respectively]........ 942,138 753,935 Capital stock repurchased [(31,239) and (169,578) shares, respectively]................ (366,000) (2,099,000) Initial capitalization repurchased [(122,127) and (82,494) shares, respectively]....... (1,448,071) (1,040,000) ------------------ ------------------- NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 4,390,138 3,204,935 ------------------ ------------------- TOTAL INCREASE IN NET ASSETS............................................................. 2,033,135 4,649,653 NET ASSETS: Beginning of year...................................................................... 14,472,563 9,822,910 ------------------ ------------------- End of year............................................................................ $ 16,505,698 $ 14,472,563 ------------------ ------------------- ------------------ -------------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. A14 THE PRUDENTIAL SERIES FUND, INC. INVESTMENT OBJECTIVES (Schedule of Investments appear on the following pages) - -------------------------------------------------------------------------------- FIXED INCOME PORTFOLIOS MONEY MARKET Maximum current income, stability of capital and maintenance of liquidity through investment in high quality short-term debt instruments. BOND A high level of income over the longer term, providing reasonable safety of capital through investment in readily marketable intermediate and long-term fixed income securities. GOVERNMENT High level of income, over the longer term, through SECURITIES investment primarily in U.S. Government securities, including intermediate and long-term Treasury bonds, and other debt obligations issued by U.S. Government agencies and instrumentalities. Any investment in the portfolio is neither guaranteed, nor insured, by the U.S. Government. ZERO COUPON BONDS Highest predictable compound investment return consistent with safety of capital, if held to maturity, through investment primarily in debt obligations of the U.S. Treasury and investment grade corporations. - -------------------------------------------------------------------------------- BALANCED PORTFOLIOS CONSERVATIVELY A favorable total return through investment in a blend of MANAGED FLEXIBLE money market instruments, fixed income securities and common stocks managed towards a lower potential risk of loss than the Aggressively Managed Flexible Portfolio and correspondingly lower potential for appreciation. AGGRESSIVELY MANAGED Higher total return through investment in a blend of money FLEXIBLE market instruments, fixed income securities and common stocks managed with a higher degree of risk of loss in order to attain potentially higher results than the Conservatively Managed Flexible Portfolio. - -------------------------------------------------------------------------------- HIGH YIELD BOND PORTFOLIOS HIGH YIELD BONDS Seeks a high total return through investment in a diversified portfolio of low to medium quality (high yield) fixed income securities. Such securities have speculative characteristics, and generally involve greater risks of loss than higher quality securities. - -------------------------------------------------------------------------------- DIVERSIFIED STOCK PORTFOLIOS STOCK INDEX Seeks results that correspond to the price and yield performance of the broad, publicly-traded stock market by trying to duplicate the performance of the Standard and Poor's 500 Composite Stock Price Index. HIGH DIVIDEND STOCK Seeks both current income and capital appreciation by investing primarily in stocks and convertible securities with prospects for income returns above those of the S&P 500 Index or New York Stock Exchange indices. COMMON STOCK The portfolio seeks capital appreciation through investment primarily in stocks and convertible securities of major, established corporations as well as stocks of smaller companies. Income from dividends from the portfolio's investments will be incidental. GLOBAL EQUITY Seeks long-term capital growth through investment primarily in common stock and common stock equivalents of foreign and domestic corporations. - -------------------------------------------------------------------------------- SPECIALIZED PORTFOLIOS NATURAL RESOURCES Seeks long term growth of capital by investing primarily in stocks and convertible securities of companies that operate within the natural resources sector of the economy. B1 THE PRUDENTIAL SERIES FUND, INC. SCHEDULE OF INVESTMENTS MONEY MARKET PORTFOLIO DECEMBER 31, 1994
PRINCIPAL SHORT-TERM INVESTMENTS -- 99.7% AMOUNT VALUE ------------- -------------- BANK-RELATED INSTRUMENTS -- 17.0% Bank of Montreal, C.D., 5.800%, 01/30/95.............................. $ 25,000,000 $ 25,000,000 Bank of Tokyo, Ltd., C.D., 6.460%, 03/30/95.............................. 10,000,000 10,000,000 Fuji Bank, Ltd, C.D., 5.906%, 01/20/95.............................. 10,000,000 10,000,000 Industrial Bank of Japan, Ltd., T.D., 6.375%, 03/28/95.............................. 10,000,000 10,000,000 Mitsubishi Bank, Ltd, T.D., 7.000%, 01/03/95.............................. 4,047,000 4,047,000 Republic National Bank of New York, C.D., 4.300%, 03/08/95.............................. 10,000,000 9,994,761 Sanwa Bank, Ltd., C.D., 5.950%, 01/30/95.............................. 11,000,000 11,000,000 6.040%, 02/02/95.............................. 6,000,000 6,000,000 Societe Generale, C.D., 5.650%, 02/07/95.............................. 5,000,000 5,000,000 Sumitomo Bank, Ltd., C.D., 5.960%, 01/30/95.............................. 5,000,000 5,000,000 Sumitomo Bank, Ltd., T.D., 6.060%, 02/01/95.............................. 3,000,000 3,000,000 -------------- 99,041,761 -------------- COMMERCIAL PAPER -- 68.9% American Express Centurion Bank, %4.500%, 08/04/95, Tranche #TR00037........... 2,000,000 1,999,883 %4.813%, 08/18/95, Tranche #TR00039........... 3,000,000 2,999,813 American Home Products Corp., 5.900%, 01/31/95.............................. 28,000,000 27,871,511 American Honda Finance Corp., 5.980%, 01/31/95.............................. 4,000,000 3,981,396 6.150%, 01/30/95.............................. 2,000,000 1,990,775 Aristar, Inc., 5.540%, 01/23/95.............................. 1,000,000 996,922 5.940%, 02/01/95.............................. 1,700,000 1,691,866 6.040%, 02/01/95.............................. 1,000,000 995,134 Asset Securitization Cooperative Corp., 5.500%, 01/17/95-01/23/95..................... 14,000,000 13,965,472 5.520%, 01/23/95.............................. 6,000,000 5,981,600 5.970%, 02/01/95.............................. 6,000,000 5,971,145 Associates Corp. of North America, 5.770%, 01/31/95.............................. 8,000,000 7,964,098 %Avco Financial Services, Inc., 4.677%, 09/13/95.............................. 4,000,000 4,000,000 Bankers Trust New York Corp., 5.440%, 01/24/95.............................. 20,000,000 19,936,533 Chrysler Financial Corp., 5.750%, 01/18/95.............................. 11,000,000 10,973,646 CIT Group Holdings, Inc., 6.270%, 03/13/95.............................. 9,000,000 8,891,843 Coca-Cola Enterprises, Inc., 6.015%, 02/01/95.............................. 10,000,000 9,951,546 6.170%, 03/07/95.............................. 5,000,000 4,946,013 Commercial Credit Co., 5.750%, 01/31/95.............................. 2,000,000 1,991,056
DECEMBER 31, 1994
PRINCIPAL SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE ------------- -------------- Corporate Asset Funding Co., Inc., 5.500%, 01/11/95.............................. $ 1,000,000 $ 998,778 Dean Witter, Discover & Co., 5.780%, 01/23/95.............................. 373,000 371,802 5.970%, 02/01/95.............................. 1,397,000 1,390,282 Duracell, Inc., 6.300%, 02/10/95.............................. 1,000,000 993,350 Falcon Asset Securitization Corp., 6.170%, 02/06/95-03/07/95..................... 15,725,000 15,608,336 First National Bank of Chicago, 5.688%, 02/22/95, Tranche #TR00087............ 2,000,000 2,000,000 Ford Motor Credit Co., 5.780%, 02/01/95.............................. 8,000,000 7,962,751 6.000%, 01/23/95.............................. 1,423,000 1,418,257 6.050%, 01/17/95.............................. 1,000,000 997,647 Fuji Bank, Ltd., 6.200%, 02/10/95.............................. 3,000,000 2,980,367 General Electric Capital Corp., 5.430%, 01/11/95.............................. 2,000,000 1,997,587 5.850%, 01/30/95.............................. 5,000,000 4,978,063 6.450%, 04/13/95.............................. 9,650,000 9,477,104 General Mills, Inc., 5.600%, 02/03/95.............................. 2,870,000 2,856,160 General Motors Acceptance Corp., 5.740%, 01/17/95.............................. 27,400,000 27,338,837 Golden Peanut Co., 5.600%, 02/01/95.............................. 3,000,000 2,986,467 Greyhound Financial Corp., 6.200%, 01/13/95.............................. 1,000,000 998,278 6.290%, 02/08/95.............................. 3,000,000 2,981,130 6.300%, 01/27/95.............................. 5,000,000 4,979,000 Hanson Finance, PLC, 5.470%, 01/17/95.............................. 1,000,000 997,873 6.260%, 03/03/95.............................. 2,000,000 1,979,481 6.280%, 03/01/95.............................. 2,000,000 1,980,113 Heller Financial, Inc., 6.300%, 03/13/95-03/14/95..................... 5,000,000 4,939,275 Household Finance Corp., 5.500%, 01/12/95.............................. 4,000,000 3,994,500 International Lease Finance Corp., 5.750%, 01/18/95.............................. 2,000,000 1,995,208 ITT Financial Corp., 6.200%, 01/20/95.............................. 14,000,000 13,959,011 Maguire/Thomas Partners, 6.125%, 01/13/95.............................. 1,715,000 1,712,082 6.360%, 03/21/95.............................. 5,000,000 5,000,000 MCA Funding Corp., 5.100%, 01/09/95.............................. 7,800,000 7,793,370 McKenna Triangle National Corp., 6.250%, 03/08/95.............................. 4,000,000 3,955,556 Merrill Lynch & Co., Inc., 5.750%, 01/17/95.............................. 15,000,000 14,966,458 5.870%, 01/31/95.............................. 3,000,000 2,986,303 Money Market Auto Loan Trust 1990-1, %3.325%, 11/30/95............................. 2,300,000 2,300,000 %3.375%, 11/30/95............................. 5,000,000 5,000,000
B2 MONEY MARKET PORTFOLIO (CONTINUED) DECEMBER 31, 1994
PRINCIPAL SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE ------------- -------------- Money Market Credit Card Trust 1989-1, %3.720%, 06/10/96............................. $ 2,368,182 $ 2,368,070 %3.830%, 06/10/96............................. 1,090,909 1,090,909 %4.420%, 06/10/96............................. 986,364 986,364 Morgan Stanley Group, Inc., %3.530%, 12/15/95, Tranche #TR00102........... 5,000,000 5,000,000 %3.593%, 12/15/95, Tranche #TR00102........... 2,000,000 2,000,000 6.270%, 03/01/95.............................. 2,500,000 2,475,181 National Australia Funding, Inc., 5.600%, 02/01/95.............................. 3,330,000 3,314,978 NationsBank Corp. of North Carolina, 5.400%, 01/23/95.............................. 1,560,000 1,555,320 PNC Bank N.A., 5.520%, 01/06/95, Tranche #TR00010............ 19,000,000 18,999,874 PNC Bank of Ohio, 3.500%, 01/31/95, Tranche #TR00002............ 2,000,000 1,999,805 Preferred Receivables Funding Corp., 5.650%, 01/11/95.............................. 4,000,000 3,994,978 Republic National Bank of New York, 5.750%, 02/01/95.............................. 2,000,000 1,999,994 Sears, Roebuck Acceptance Corp., 5.870%, 01/27/95.............................. 3,000,000 2,988,260 6.050%, 02/06/95.............................. 14,000,000 13,920,006 Sumitomo Corp. of America, 5.125%, 01/09/95.............................. 4,000,000 3,996,583 WCP Funding, Inc., 6.280%, 03/06/95.............................. 2,000,000 1,978,369 Westpac Capital Corp., 5.500%, 01/17/95.............................. 2,000,000 1,995,721 6.280%, 03/14/95.............................. 3,000,000 2,963,367 Whirlpool Corp., 5.570%, 01/09/95.............................. 3,500,000 3,496,750 5.660%, 02/02/95.............................. 1,000,000 995,283 Whirlpool Financial Corp., 5.500%, 01/12/95.............................. 13,000,000 12,982,125 5.600%, 02/06/95-02/09/95..................... 2,000,000 1,988,956 5.610%, 02/10/95.............................. 2,000,000 1,988,156 WMX Technologies, 5.225%, 02/07/95.............................. 3,000,000 2,984,760 -------------- 402,037,487 -------------- MEDIUM TERM NOTES -- 10.7% %American Express Centurion Bank, M.T.N., 4.813%, 09/19/95, Tranche #TR00080............ 2,000,000 1,999,861 %Beneficial Corp., M.T.N., 4.487%, 07/19/95, Tranche #TR00768............ 7,000,000 6,997,412 Fifth Third Bank, M.T.N., 6.200%, 02/07/95, Tranche #TR00075............ 4,000,000 4,000,188 Ford Motor Credit Co., 9.300%, 03/15/95.............................. 2,000,000 2,017,850 General Motors Acceptance Corp., M.T.N., 6.900%, 05/08/95, Tranche #TR00347............ 500,000 501,829
DECEMBER 31, 1994
PRINCIPAL SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE ------------- -------------- **Goldman Sachs Group L.P., M.T.N., 5.375%, 01/11/96, Series A.................... $ 28,000,000 $ 28,000,000 Merrill Lynch & Co., Inc., M.T.N., %4.823%, 09/22/95, Tranche #TR00106........... 3,000,000 2,999,580 4.885%, 10/02/95, Tranche #TR00110............ 6,500,000 6,499,055 %Morgan Stanley Group, Inc., M.T.N., 3.405%, 01/16/96, Tranche #TR00010............ 4,000,000 4,000,000 Society Bank of North America, M.T.N., 3.550%, 01/20/95, Tranche #TR00005............ 2,500,000 2,499,810 Toyota Motor Credit Corp., M.T.N., 5.700%, 01/23/95, Tranche #TR00029............ 3,000,000 2,998,996 -------------- 62,514,581 -------------- PROMISSORY NOTES -- 3.1% Lehman Brothers Holdings, Inc., 5.028%, 05/23/95.............................. 15,000,000 15,000,000 Orix America, Inc., 5.850%, 01/27/95.............................. 3,000,000 2,988,300 -------------- 17,988,300 -------------- TOTAL SHORT-TERM INVESTMENTS..................................... 581,582,129 -------------- OTHER ASSETS -- 0.3% (net of liabilities)........................................... 1,699,348 -------------- TOTAL NET ASSETS -- 100.0%....................................... $ 583,281,477 -------------- -------------- The following abbreviations are used in portfolio descriptions: C.D. Certificates of Deposit L.P. Limited Partnership M.T.N. Medium Term Note PLC Public Limited Company (British Corporation) T.D. Time Deposit **Indicates a restricted security; the aggregate cost of the restricted securities is $28,000,000. The aggregate value, $28,000,000 is approximately 4.8% of net assets. (See Note 2) %Indicates a variable rate security.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. B3 BOND PORTFOLIO DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS -- 95.3% VALUE VALUE ------------- -------------- FINANCIAL -- 14.4% Abbey National First Capital, 8.200%, 10/15/04.............................. $ 3,000,000 $ 2,928,630 Aristar, Inc., 5.750%, 07/15/98.............................. 2,000,000 1,837,600 7.500%, 07/01/99.............................. 2,000,000 1,919,440 Associates Corp. of North America, 8.375%, 01/15/98.............................. 500,000 499,995 8.800%, 01/14/95.............................. 1,000,000 1,000,380 Chase Manhattan Corp., 8.000%, 06/15/99.............................. 2,000,000 1,964,800 Chemical Bank, 6.625%, 08/15/05.............................. 2,000,000 1,713,160 Chrysler Finance Corp., M.T.N., 5.260%, 07/06/95, Tranche #TR00029............ 900,000 890,334 5.340%, 07/05/95, Tranche #TR00028............ 2,300,000 2,276,356 Chrysler Financial Corp., 9.500%, 12/15/99.............................. 5,000,000 5,187,800 Citicorp, M.T.N., 8.500%, 02/24/97, Tranche #TR00128............ 3,000,000 3,018,390 Coles Myer Finance USA, Ltd., M.T.N., 5.560%, 02/15/99, Tranche #TR00018............ 6,000,000 5,413,140 Countrywide Funding Corp., M.T.N., 6.880%, 08/03/98, Tranche #TR00025............ 4,000,000 3,811,040 Equicredit Home Equity Loan Trust, CMO, 7.850%, 08/15/07, Series 1994-3, Class A-3.... 5,000,000 4,823,438 First Fidelity Bancorp, 9.750%, 05/25/95.............................. 5,000,000 5,049,300 Ford Motor Credit Co., 6.250%, 02/26/98.............................. 3,000,000 2,826,090 General Motors Acceptance Corp., 8.400%, 10/15/99.............................. 3,700,000 3,698,483 General Motors Acceptance Corp., M.T.N., 7.500%, 11/04/97, Tranche #TR00598............ 2,000,000 1,946,940 Goldman Sachs Group, L.P., 6.100%, 04/15/98.............................. 2,000,000 1,856,980 **John Hancock Mutual Life Insurance Co., 7.375%, 02/15/24.............................. 3,000,000 2,414,670 Mellon Financial Co., 6.500%, 12/01/97.............................. 2,000,000 1,912,200 NationsBank Corp. of North Carolina, 6.625%, 01/15/98.............................. 3,000,000 2,859,210 %Nomura Asset Securities Corp., CMO, 8.026%, 12/15/06, 1994 MDA, Class A-3......... 3,000,000 2,821,875 **Potomac Capital Investment Corp., M.T.N., 6.190%, 04/28/97, Series B.................... 3,500,000 3,466,627 Republic New York Corp., 9.125%, 05/15/21.............................. 2,850,000 2,978,591
DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- Sovereign Bancorp, Inc. 6.750%, 09/01/00.............................. $ 5,000,000 $ 4,475,000 Union Bank Finland, Ltd., 5.250%, 06/15/96.............................. 3,000,000 2,872,530 Zurich Reinsurance Centre Holdings, Inc., 7.125%, 10/15/23.............................. 2,000,000 1,587,680 -------------- 78,050,679 -------------- FOREIGN -- 15.7% Australia & New Zealand Banking Group, Ltd., 6.250%, 02/01/04.............................. 3,000,000 2,566,560 **Banco Del Estado-Chile, 8.390%, 08/01/01.............................. 2,100,000 1,979,250 **Banco Ganadero, SA, M.T.N., 9.750%, 08/26/99, Tranche #TR00001............ 4,100,000 3,977,000 Canadian Pacific Forest Products Ltd., 10.250%, 01/15/03............................. 4,000,000 3,963,390 Carter Holt Harvey, Ltd., 8.875%, 12/01/04.............................. 2,500,000 2,524,150 **Cemex, SA, 8.875%, 06/10/98.............................. 6,000,000 5,265,000 Central Puerto and Cent Negue, SA, 10.750%, 11/02/97............................. 3,000,000 2,872,500 **Compania Sud Americana de Vapores, SA, 7.375%, 12/08/03.............................. 4,000,000 3,275,000 %Hydro-Quebec, 3.438%, 09/30/49, Series G-1E4................ 3,000,000 2,507,813 **Kansallis-Osake Pankki, N.Y., 8.650%, 12/29/49.............................. 5,000,000 4,837,500 Korea Development Bank, 8.090%, 10/06/04.............................. 5,400,000 5,284,940 National Australia Bank, Ltd., 9.700%, 10/15/98.............................. 1,700,000 1,774,970 Nippon Telegraph & Telephone Corp., 9.500%, 07/27/98.............................. 1,800,000 1,869,588 Noranda, Inc., 8.125%, 06/15/04.............................. 2,000,000 1,912,380 Nova Scotia, Province of Canada, 8.875%, 07/01/19.............................. 3,000,000 2,900,460 Ontario, Province of Canada, 15.750%, 03/15/12............................. 3,475,000 4,139,280 **%Petroleos Mexicanos, 5.563%, 03/08/99.............................. 2,500,000 2,375,000 Republic of Argentina, 8.375%, 12/20/03.............................. 4,000,000 2,850,000 Republic of Columbia, 7.250%, 02/23/04.............................. 2,500,000 2,059,375 8.750%, 10/06/99.............................. 3,500,000 3,338,125 Republic of Italy, 6.875%, 09/27/23.............................. 4,000,000 3,150,880 Republic of South Africa, 9.625%, 12/15/99.............................. 4,000,000 3,961,250 **Republic of Trinidad and Tobago, 11.750%, 10/03/04............................. 4,000,000 4,050,000 Saskatchewan, Province of Canada, 8.000%, 07/15/04.............................. 4,000,000 3,872,560 Svenska Handelsbanken, 8.125%, 08/15/07.............................. 2,500,000 2,350,225
B4 BOND PORTFOLIO (CONTINUED) DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- **Tenaga Nasional Berhad, 7.875%, 06/15/04.............................. $ 3,000,000 $ 2,856,570 United States of Mexico with Rights, 6.250%, 12/31/19, Class B..................... 4,000,000 2,175,000 -------------- 84,688,766 -------------- INDUSTRIAL -- 17.2% Arkla, Inc., M.T.N., 9.320%, 12/18/00, Tranche #TR00043............ 2,000,000 1,962,460 9.380%, 03/15/96, Tranche #TR00018............ 1,300,000 1,308,567 Boise Cascade Corp., 9.875%, 02/15/01.............................. 1,000,000 1,002,040 Borden, Inc., 7.875%, 02/15/23.............................. 2,000,000 1,463,680 Carnival Cruise Lines, Inc., 5.750%, 03/15/98.............................. 3,000,000 2,766,810 Comsat Corp., 8.125%, 04/01/04.............................. 4,000,000 3,898,480 Crane Co., 7.250%, 06/15/99.............................. 3,000,000 2,842,020 Delta Air Lines, Inc., M.T.N., 7.790%, 12/01/98.............................. 1,000,000 928,400 8.380%, 06/12/98, Tranche #TR00017............ 2,000,000 1,897,680 Enterprise Rent A Car, M.T.N., 8.750%, 12/15/99 Tranche #TR00001............. 3,000,000 2,989,650 Federal Express Corp., 9.650%, 06/15/12.............................. 3,000,000 3,164,610 Fleming Companies, Inc., C.D., 10.625%, 12/15/01............................. 4,000,000 4,000,000 Georgia-Pacific Corp., 9.625%, 03/15/22.............................. 1,500,000 1,515,075 J.C. Penney Co., Inc., 9.750%, 06/15/21.............................. 6,400,000 6,902,144 Laidlaw, Inc., 8.250%, 05/15/23.............................. 2,500,000 2,177,225 News America Holdings, Inc., 7.450%, 06/01/00.............................. 3,000,000 2,796,330 7.750%, 02/01/24.............................. 3,300,000 2,684,352 Noble Affiliates, Inc., 7.250%, 10/15/23.............................. 2,000,000 1,596,200 Oryx Energy Co., M.T.N., 6.050%, 02/01/96, Tranche #TR00013............ 3,000,000 2,887,500 Philip Morris Companies, Inc., 7.500%, 01/15/02.............................. 2,500,000 2,343,100 9.000%, 01/01/01.............................. 4,800,000 4,858,032 Procter & Gamble Co., ESOP, 9.360%, 01/01/21, Series A.................... 4,900,000 5,286,120 PT Alatief Freeport Financial Co., 9.750%, 04/15/01.............................. 5,750,000 5,606,250 Royal Caribbean Cruises Ltd., 11.375%, 05/15/02............................. 4,000,000 4,250,000 Sears, Roebuck & Co., 9.375%, 11/01/11.............................. 2,000,000 2,090,040 **Shurgard Securities Trust, CMO, 8.240%, 06/15/04.............................. 3,000,000 2,882,813 Tele-Communications, Inc., 10.125%, 04/15/22............................. 5,000,000 5,015,400 Time Warner, Inc., **6.050%, 07/01/95............................ 2,500,000 2,479,075 7.450%, 02/01/98.............................. 2,200,000 2,096,885
DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- Transco Energy Co., 11.250%, 07/01/99............................. $ 2,500,000 $ 2,659,375 Westinghouse Electric Corp., 8.375%, 06/15/02.............................. 2,000,000 1,858,260 Whitman Corp., 7.500%, 08/15/01.............................. 3,000,000 2,852,100 -------------- 93,060,673 -------------- U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 45.5% Federal Farm Credit Bank, 8.650%, 10/01/99, Series A.................... 150,000 153,375 Federal Farm Credit Bank, M.T.N., 7.900%, 03/01/96.............................. 2,800,000 2,816,744 Federal Home Loan Mortgage Corporation, 9.800%, 03/25/96.............................. 4,000,000 4,095,000 Federal Home Loan Mortgage Corporation, CMO, 6.800%, 08/15/05, Series 1224, Class 1224-F... 5,000,000 4,757,800 Federal Home Loan Mortgage Corporation, REMIC, 6.500%, 10/15/06, Series 1194, Class 1194-G... 5,000,000 4,428,100 7.500%, 09/15/05, Series 1295, Class 1295-G... 8,300,000 7,934,219 Federal National Mortgage Association, 7.000%, 10/01/13-01/01/24..................... 33,044,696 30,002,267 9.000%, 10/01/16-09/01/21..................... 792,613 797,724 11.000%, 11/01/20............................. 6,159,127 6,647,977 Federal National Mortgage Association, REMIC, Zero Coupon, 09/25/15, Tranche #TR1989-102, Class 102A.................................. 1,387,991 1,027,113 6.500%, 07/25/20, Tranche #TR1992-138, Class D........................................... 5,000,000 4,492,150 8.600%, 04/25/03, Series 1989-92, Class 92-D........................................ 1,086,155 1,087,849 9.000%, 03/25/20, Series 1990-24, Class 24-E........................................ 2,000,000 2,028,120 Government National Mortgage Association, 7.500%, 05/20/02.............................. 690,383 649,823 International Bank for Reconstruction and Development, 12.375%, 10/15/02............................. 750,000 923,213 Resolution Funding Corp., Zero Coupon, 10/15/15......................... 17,100,000 3,219,075 8.125%, 10/15/19, Class A..................... 700,000 703,283 8.625%, 01/15/21.............................. 200,000 211,562 United States Treasury Bonds, 6.250%, 08/15/23.............................. 4,800,000 3,902,256 8.125%, 08/15/19.............................. 8,250,000 8,359,560 10.750%, 08/15/05............................. 10,800,000 12,973,500 11.250%, 02/15/15............................. 6,400,000 8,456,000 11.625%, 11/15/04............................. 15,130,000 18,950,325 12.000%, 08/15/13............................. 6,000,000 7,978,140 United States Treasury Notes, 3.875%, 09/30/95.............................. 7,000,000 6,837,040 6.250%, 02/15/03.............................. 6,000,000 5,426,220 6.375%, 08/15/02, Series 2002................. 4,200,000 3,845,604 6.875%, 03/31/97, Series 1997................. 1,500,000 1,472,805 7.250%, 08/15/04.............................. 1,100,000 1,055,824 7.500%, 02/29/96, Series 1996................. 9,300,000 9,310,137
B5 BOND PORTFOLIO (CONTINUED) DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- 7.875%, 02/15/96-07/31/96, Series 1996........ $ 36,000,000 $ 36,151,740 8.875%, 11/15/97, Series 1997................. 20,370,000 20,907,972 9.000%, 05/15/98, Series B-1998............... 3,000,000 3,100,770 9.250%, 01/15/96, Series 1996................. 12,000,000 12,228,720 9.250%, 08/15/98, Series D-1998............... 9,300,000 9,703,992 -------------- 246,635,999 -------------- UTILITIES -- 2.5% %Central Maine Power Co., M.T.N., 5.978%, 08/03/95, Tranche #TR00036............ 4,000,000 4,000,000 Consolidated Edison of New York, Inc., 9.700%, 12/01/25.............................. 2,100,000 2,273,922 Pennsylvania Power & Light Co., 9.375%, 07/01/21.............................. 1,150,000 1,179,268 Southern Union Co., 7.600%, 02/01/24.............................. 3,000,000 2,511,450 Texas Utilities Electric Co., 5.875%, 04/01/98.............................. 4,000,000 3,702,920 -------------- 13,667,560 -------------- TOTAL LONG-TERM BONDS (Cost $548,035,825)............................................ 516,103,677 -------------- PRINCIPAL SHORT-TERM INVESTMENTS -- 2.8% AMOUNT VALUE ------------- -------------- REPURCHASE AGREEMENTS Joint Repurchase Agreement Account, 5.720%, 01/03/95, (see Note 4)................ 15,192,000 15,192,000 -------------- OTHER ASSETS -- 1.9% (net of liabilities)........................................... 10,352,922 -------------- TOTAL NET ASSETS -- 100.0%....................................... $ 541,648,599 -------------- -------------- The following abbreviations are used in portfolio descriptions: C.D. Certificates of Deposit CMO Collateralized Mortgage Obligations ESOP Employee Stock Ownership Plan L.P. Limited Partnership M.T.N. Medium Term Note REMIC Real Estate Mortgage Investment Conduit SA Sociedad Anonima (Spanish Corporation) or Societe Anonyme (French Corporation) **Indicates a restricted security; the aggregate cost of the restricted securities is $42,727,259. The aggregate value, $39,858,505 is approximately 7.4% of net assets. (See Note 2) %Indicates a variable rate security.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. B6 COMMON STOCK PORTFOLIO DECEMBER 31, 1994
MARKET COMMON STOCKS -- 87.3% SHARES VALUE ------------- -------------- AEROSPACE -- 3.4% AAR Corp........................................ 650,000 $ 8,693,750 Lockheed Corp................................... 207,900 15,098,738 Loral Corp...................................... 900,000 34,087,500 United Technologies Corp........................ 500,000 31,437,500 -------------- 89,317,488 -------------- ALUMINUM -- 1.3% +Alumax, Inc.................................... 267,500 7,590,313 Aluminum Co. of America......................... 300,000 25,987,500 -------------- 33,577,813 -------------- AUTOS - CARS & TRUCKS -- 4.0% Chrysler Corp................................... 975,000 47,775,000 Ford Motor Co................................... 800,000 22,400,000 General Motors Corp............................. 700,000 29,575,000 +Navistar International Corp.................... 395,200 5,977,400 -------------- 105,727,400 -------------- BANKS AND SAVINGS & LOANS -- 5.9% Bank of New York Company, Inc................... 900,000 26,100,000 BankAmerica Corp................................ 550,000 21,725,000 Chase Manhattan Corp............................ 600,000 20,625,000 Comerica, Inc................................... 700,000 17,062,500 First of America Bank Corp...................... 187,000 5,610,000 Great Western Financial Corp.................... 1,000,000 16,000,000 J.P. Morgan & Co., Inc.......................... 300,000 16,800,000 Mellon Bank Corp................................ 276,398 8,464,689 Mercantile Bankshares Corp...................... 279,600 5,487,150 NationsBank Corp................................ 350,000 15,793,750 -------------- 153,668,089 -------------- CHEMICALS -- 0.9% Eastman Chemical Co............................. 466,550 23,560,774 -------------- CHEMICALS - SPECIALTY -- 1.5% +ESSEF Corp..................................... 110,000 1,677,500 IMC Global, Inc................................. 705,500 30,512,875 Witco Corp...................................... 268,800 6,619,200 -------------- 38,809,575 -------------- COMMERCIAL SERVICES -- 0.6% Wellman, Inc.................................... 550,000 15,537,500 -------------- COMPUTER SERVICES -- 1.0% Comdisco, Inc................................... 900,000 20,812,500 Gerber Scientific, Inc.......................... 419,800 5,457,400 +Harris Computer Systems Corp................... 15,000 183,750 -------------- 26,453,650 -------------- CONSTRUCTION -- 0.0% +Willcox & Gibbs, Inc........................... 107,199 629,793 -------------- DIVERSIFIED OFFICE EQUIPMENT -- 0.8% International Business Machines Corp............ 300,000 22,050,000 -------------- DRUGS AND HOSPITAL SUPPLIES -- 2.8% Baxter International, Inc....................... 2,100,000 59,325,000 Upjohn Co....................................... 450,000 13,837,500 -------------- 73,162,500 -------------- ELECTRONICS -- 7.7% Amdahl Corp..................................... 850,000 9,350,000 +Digital Equipment Corp......................... 2,500,000 83,125,000 Harris Corp..................................... 300,000 12,750,000 Hewlett-Packard Co.............................. 175,000 17,478,125 Tandy Corp...................................... 1,418,000 71,077,250
DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- Varian Associates, Inc.......................... 145,000 $ 5,075,000 Zero Corp....................................... 120,500 1,687,000 -------------- 200,542,375 -------------- FINANCIAL SERVICES -- 6.8% American Express Co............................. 2,100,000 61,950,000 Dean Witter, Discover & Co...................... 1,200,000 40,650,000 Lehman Brothers Holdings, Inc................... 900,000 13,275,000 Republic New York Corp.......................... 225,000 10,181,250 Salomon, Inc.................................... 700,000 26,250,000 Travelers, Inc.................................. 800,000 26,000,000 -------------- 178,306,250 -------------- FOREST PRODUCTS -- 6.1% International Paper Co.......................... 415,000 31,280,625 James River Corp. of Virginia................... 560,000 11,340,000 Rayonier, Inc................................... 125,000 3,812,500 Scott Paper Co.................................. 1,650,000 114,056,250 -------------- 160,489,375 -------------- GAS PIPELINES -- 0.3% NorAm Energy Corp............................... 1,300,000 6,987,500 -------------- HEALTHCARE -- 1.1% +Foundation Health Corp......................... 950,000 29,450,000 -------------- HOSPITAL MANAGEMENT -- 3.2% +American Medical Holdings, Inc................. 649,600 15,671,600 +Beverly Enterprises, Inc....................... 39,300 564,938 Columbia / HCA Healthcare Corp.................. 400,000 14,600,000 +Hillhaven Corp................................. 459,400 9,762,250 National Medical Enterprises, Inc............... 2,965,000 41,880,625 -------------- 82,479,413 -------------- HOUSING RELATED -- 0.5% Centex Corp..................................... 600,000 13,650,000 -------------- INSURANCE -- 13.0% Alexander & Alexander Services, Inc............. 1,050,000 19,425,000 American General Corp........................... 1,000,000 28,250,000 Chubb Corp...................................... 700,000 54,162,500 Citizens Corp................................... 500,000 8,500,000 Continental Corp................................ 2,300,000 43,700,000 Emphesys Financial Group, Inc................... 441,400 14,014,450 Equitable Companies, Inc........................ 1,518,700 27,526,438 First Colony Corp............................... 1,253,600 28,049,300 John Alden Financial Corp....................... 141,000 4,053,750 Old Republic International Corp................. 1,000,590 21,262,538 Providian Corp.................................. 340,500 10,512,937 SAFECO Corp..................................... 800,000 41,600,000 SCOR U.S. Corp.................................. 195,600 1,638,150 St. Paul Companies, Inc......................... 400,000 17,900,000 Western National Corp........................... 1,528,200 19,675,575 -------------- 340,270,638 -------------- LODGING -- 2.0% Loews Corp...................................... 600,000 52,125,000 -------------- MINERAL RESOURCES -- 1.6% Amax Gold, Inc.................................. 131,342 788,052 Cyprus Amax Minerals Co......................... 1,533,200 40,054,850 +Nord Resources Corp............................ 130,500 831,938 -------------- 41,674,840 -------------- MISCELLANEOUS - BASIC INDUSTRY -- 1.8% American Water Works Co., Inc................... 135,000 3,645,000 ITT Corp........................................ 500,000 44,312,500 +Worldtex, Inc.................................. 107,199 388,596 -------------- 48,346,096 --------------
B7 COMMON STOCK PORTFOLIO (CONTINUED) DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 1.8% Avnet, Inc...................................... 310,000 $ 11,470,000 Eastman Kodak Co................................ 500,000 23,875,000 Gibson Greetings, Inc........................... 750,000 11,062,500 -------------- 46,407,500 -------------- PETROLEUM -- 4.8% Amerada Hess Corp............................... 325,000 14,828,125 Atlantic Richfield Co........................... 250,000 25,437,500 Elf Aquitaine, ADR.............................. 1,836,033 64,720,163 Occidental Petroleum Corp....................... 1,100,000 21,175,000 -------------- 126,160,788 -------------- PETROLEUM SERVICES -- 2.3% +B.J. Services Co............................... 500,000 8,437,500 Oryx Energy Co.................................. 1,600,000 19,000,000 Total SA, ADR................................... 717,640 21,170,380 Union Texas Petroleum Holdings, Inc............. 504,500 10,468,375 -------------- 59,076,255 -------------- RAILROADS -- 0.9% +Southern Pacific Rail Corp..................... 1,300,000 23,562,500 -------------- RETAIL -- 5.7% Dayton-Hudson Corp.............................. 119,600 8,461,700 Dillard Department Stores, Inc. (Class 'A' Stock)........................................ 1,300,000 34,775,000 +Federated Department Stores, Inc............... 700,000 13,475,000 K mart Corp..................................... 2,300,000 29,900,000 Petrie Stores Corp.............................. 540,000 12,082,500 U.S. Shoe Corp.................................. 1,491,600 27,967,500 +Waban, Inc..................................... 1,300,000 23,075,000 -------------- 149,736,700 -------------- STEEL -- 0.5% +Bethlehem Steel................................ 500,000 9,000,000 Carpenter Technology Corp....................... 50,000 2,800,000 -------------- 11,800,000 -------------- TELECOMMUNICATIONS -- 3.5% Sprint Corp..................................... 1,700,000 46,962,500 Telefonica de Espana, SA, ADR................... 1,300,000 45,662,500 -------------- 92,625,000 -------------- TRUCKING/SHIPPING -- 0.8% OMI Corp........................................ 1,000,000 6,625,000 Overseas Shipholding Group, Inc................. 600,000 13,800,000 -------------- 20,425,000 -------------- UTILITY - ELECTRIC -- 0.7% American Electric Power Co., Inc................ 180,000 5,917,500 General Public Utilities Corp................... 500,000 13,125,000 -------------- 19,042,500 -------------- TOTAL COMMON STOCKS (Cost $2,039,308,682).......................................... 2,285,652,312 -------------- MARKET PREFERRED STOCKS -- 1.4% SHARES VALUE ------------- -------------- AUTOS - CARS & TRUCKS -- 0.5% **Chrysler Corp. (Conv. Pfd.)................... 95,000 13,050,625 --------------
DECEMBER 31, 1994
MARKET PREFERRED STOCKS (CONTINUED) SHARES VALUE ------------- -------------- TOBACCO -- 0.9% RJR Nabisco Holdings Corp. (Conv. Pfd.)......... 4,000,000 $ 24,000,000 -------------- TOTAL PREFERRED STOCKS (Cost $36,922,710)............................................. 37,050,625 -------------- PRINCIPAL SHORT-TERM INVESTMENTS -- 13.1% AMOUNT VALUE ------------- -------------- REPURCHASE AGREEMENTS Joint Repurchase Agreement Account, 5.720%, 01/03/95 (see Note 4)................. 343,262,000 343,262,000 -------------- LIABILITIES -- (1.8%) (net of other assets).......................................... (48,192,920) -------------- TOTAL NET ASSETS -- 100.0%....................................... $2,617,772,017 -------------- -------------- The following abbreviations are used in portfolio descriptions: ADR American Depository Receipt SA Sociedad Anonima (Spanish Corporation) or Societe Anonyme (French Corporation) **Indicates a restricted security; the aggregate cost of the restricted securities is $10,923,100. The aggregate value, $13,050,625 is approximately 0.5% of net assets. (See Note 2) +No dividend was paid on this security during the 12 months ending December 31, 1994.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. B8 AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO DECEMBER 31, 1994
MARKET COMMON STOCKS -- 58.8% SHARES VALUE ------------- -------------- AEROSPACE -- 0.8% Boeing Co....................................... 287,200 $ 13,426,600 Loral Corp...................................... 392,000 14,847,000 -------------- 28,273,600 -------------- ALUMINUM -- 1.1% Aluminum Co. of America......................... 426,700 36,962,888 -------------- AUTOS - CARS & TRUCKS -- 1.2% Ford Motor Co................................... 442,900 12,401,200 General Motors Corp. (Class 'E' Stock).......... 814,600 31,362,100 -------------- 43,763,300 -------------- BANKS AND SAVINGS & LOANS -- 1.9% Bank of New York Company, Inc................... 1,549,400 44,932,600 Norwest Corp.................................... 597,800 13,973,575 Washington Mutual, Inc.......................... 407,800 6,881,625 -------------- 65,787,800 -------------- BEVERAGES -- 0.3% +Dr. Pepper/Seven-Up Cos., Inc.................. 467,300 11,974,563 -------------- CHEMICALS -- 2.4% A. Schulman, Inc................................ 189,400 5,208,500 Air Products & Chemicals, Inc................... 470,900 21,013,913 Dow Chemical Co................................. 316,800 21,304,800 Eastman Chemical Co............................. 326,500 16,488,250 Imperial Chemical Industries, PLC, ADR.......... 275,400 12,806,100 +McWhorter Technologies, Inc.................... 243,950 3,628,756 OM Group, Inc................................... 183,700 4,408,800 -------------- 84,859,119 -------------- CHEMICALS - SPECIALTY -- 0.9% IMC Global, Inc................................. 699,100 30,236,075 -------------- COMMERCIAL SERVICES -- 1.0% First Financial Management Corp................. 156,700 9,656,638 ServiceMaster, L.P.............................. 443,550 10,811,531 Southeby's Holdings, Inc. (Class 'A' Stock)..... 465,100 5,348,650 Wellman, Inc.................................... 355,300 10,037,225 -------------- 35,854,044 -------------- COMPUTER SERVICES -- 2.7% +American Management Systems, Inc............... 673,100 12,957,175 Automatic Data Processing, Inc.................. 690,400 40,388,400 First Data Corp................................. 509,800 24,151,775 +Microsoft Corp................................. 161,300 9,859,463 National Data Corp.............................. 232,200 5,979,150 -------------- 93,335,963 -------------- COSMETICS & SOAPS -- 0.3% Gillette Co..................................... 125,700 9,396,075 -------------- DIVERSIFIED GAS -- 0.4% +Basin Exploration, Inc......................... 281,700 3,098,700 Cross Timbers Oil Co............................ 810,000 12,150,000 -------------- 15,248,700 -------------- DIVERSIFIED OFFICE EQUIPMENT -- 0.8% International Business Machines Corp............ 381,000 28,003,500 -------------- DRUGS AND HOSPITAL SUPPLIES -- 2.6% Abbott Laboratories............................. 580,700 18,945,338 Baxter International, Inc....................... 725,000 20,481,250
DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- Pfizer, Inc..................................... 285,300 $ 22,039,425 Schering-Plough Corp............................ 350,100 25,907,400 +Thermotrex Corp................................ 354,100 4,780,350 -------------- 92,153,763 -------------- ELECTRICAL EQUIPMENT -- 1.2% Baldor Electric Co.............................. 489,440 13,214,880 Belden, Inc..................................... 409,700 9,115,825 W.W. Grainger, Inc.............................. 177,600 10,256,400 Westinghouse Electric Corp...................... 674,200 8,258,950 -------------- 40,846,055 -------------- ELECTRONICS -- 2.0% +ADT Ltd........................................ 1,314,400 14,129,800 Emerson Electric Co............................. 883,800 55,237,500 -------------- 69,367,300 -------------- FINANCIAL SERVICES -- 2.2% Dean Witter, Discover & Co...................... 903,400 30,602,675 Federal Home Loan Mortgage Corp................. 403,700 20,386,850 GFC Financial Corp.............................. 232,400 7,378,700 Manufactured Home Communities, Inc.............. 717,900 14,268,262 T. Rowe Price & Associates...................... 170,200 5,106,000 -------------- 77,742,487 -------------- FOODS -- 2.4% Archer-Daniels-Midland Co....................... 3,512,040 72,435,825 Pioneer Hi-Bred International, Inc.............. 301,500 10,401,750 -------------- 82,837,575 -------------- FOREST PRODUCTS -- 1.8% Caraustar Industries, Inc....................... 419,500 9,333,875 International Paper Co.......................... 134,800 10,160,550 Willamette Industries, Inc...................... 881,200 41,857,000 -------------- 61,351,425 -------------- GAS PIPELINES -- 0.3% +Seagull Energy Corp............................ 535,400 10,239,525 -------------- HEALTHCARE -- 0.2% +Sybron International Corp...................... 205,100 7,075,950 -------------- HOSPITAL MANAGEMENT -- 2.1% Columbia / HCA Healthcare Corp.................. 840,442 30,676,132 +Health Care and Retirement Corp................ 576,400 17,364,050 +Healthtrust, Inc.-The Hospital Co.............. 374,700 11,896,725 +Homedco Group, Inc............................. 111,500 4,195,188 National Medical Enterprises, Inc............... 583,600 8,243,350 -------------- 72,375,445 -------------- INSURANCE -- 3.4% American International Group, Inc............... 411,800 40,356,400 CCP Insurance, Inc.............................. 74,800 1,524,050 Chubb Corp...................................... 302,000 23,367,250 General Re Corp................................. 323,900 40,082,625 NAC Re Corp..................................... 277,400 9,292,900 PennCorp Financial Group, Inc................... 256,100 3,361,313 -------------- 117,984,538 -------------- LEISURE -- 1.3% Carnival Corp. (Class 'A' Stock)................ 1,755,500 37,304,375 Royal Caribbean Cruise, Ltd..................... 233,600 6,657,600 -------------- 43,961,975 -------------- MACHINERY -- 0.1% +Thermo Fibertek, Inc........................... 219,800 3,489,325 --------------
B9 AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED) DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- MEDIA -- 3.4% American Media, Inc. (Class 'A' Stock).......... 408,600 $ 6,639,750 Capital Cities/ABC, Inc......................... 347,400 29,615,850 Comcast Corp. (Class 'A' Stock)................. 276,000 4,243,500 Gannett Co., Inc................................ 400,000 21,300,000 +Rogers Communications, Inc. (Class 'B' Stock)........................................ 350,100 4,679,441 Shaw Communications, Inc. (Class 'B' Stock)..... 703,700 5,016,572 +Tele-Communications, Inc. (Class 'A' Stock).... 1,107,200 24,081,600 Tribune Co...................................... 420,400 23,016,900 -------------- 118,593,613 -------------- MINERAL RESOURCES -- 1.8% Placer Dome, Inc................................ 912,000 19,836,000 Potash Corp. of Saskatchewan, Inc............... 876,500 29,801,000 +Sante Fe Pacific Gold Corp..................... 950,300 12,235,112 -------------- 61,872,112 -------------- MISCELLANEOUS - BASIC INDUSTRY -- 6.1% +American Business Information, Inc............. 624,500 11,553,250 Danaher Corp.................................... 110,300 5,763,175 Expeditors International of Washington, Inc..... 359,000 7,808,250 General Electric Co............................. 660,800 33,700,800 Illinois Tool Works, Inc........................ 936,600 40,976,250 Libbey, Inc..................................... 323,600 5,663,000 Martin Marietta Materials, Inc.................. 631,800 11,214,450 Modine Manufacturing Co......................... 308,900 8,880,875 Pentair, Inc.................................... 258,200 10,908,950 +Scholastic Corp................................ 139,800 7,129,800 The Rival Co.................................... 181,700 3,179,750 +Thermo Electron Corp........................... 563,100 25,269,113 Tyco International Ltd.......................... 881,600 41,876,000 -------------- 213,923,663 -------------- MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 0.7% +DeVRY, Inc..................................... 380,100 11,783,100 Kellwood Co..................................... 533,900 11,211,900 -------------- 22,995,000 -------------- PETROLEUM -- 2.5% Amoco Corp...................................... 401,000 23,709,125 Royal Dutch Petroleum Co., ADR.................. 586,300 63,027,250 -------------- 86,736,375 -------------- PETROLEUM SERVICES -- 0.8% +Mesa, Inc...................................... 1,037,800 5,059,275 Total SA, ADR................................... 739,100 21,803,450 -------------- 26,862,725 -------------- RAILROADS -- 0.3% Illinois Central Corp........................... 372,700 11,460,525 -------------- REAL ESTATE DEVELOPMENT -- 1.6% Crescent Real Estate Equities, Inc.............. 480,600 13,036,275 Duke Realty Investments, Inc.................... 434,000 12,260,500 Equity Residential Properties Trust............. 451,100 13,533,000 Federal Realty Investment Trust................. 285,200 5,882,250 Weingarten Realty Investors..................... 306,800 11,620,050 -------------- 56,332,075 -------------- RESTAURANTS -- 0.2% Sbarro, Inc..................................... 342,900 8,915,400 --------------
DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- RETAIL -- 2.0% Dayton-Hudson Corp.............................. 307,400 $ 21,748,550 Edison Brothers Stores.......................... 143,400 2,652,900 Harcourt General, Inc........................... 468,800 16,525,200 Tiffany & Co.................................... 203,300 7,928,700 +Toys 'R' Us, Inc............................... 707,400 21,575,700 -------------- 70,431,050 -------------- STEEL -- 2.1% Broken Hill Proprietary Co., Ltd., ADR.......... 539,050 33,218,955 +LTV Corp....................................... 933,000 15,161,250 Worthington Industries, Inc..................... 1,206,100 24,122,000 -------------- 72,502,205 -------------- TELECOMMUNICATIONS -- 2.4% +Airtouch Communications, Inc................... 527,900 15,375,088 AT&T Corp....................................... 846,200 42,521,550 TCA Cable TV, Inc............................... 482,300 10,490,025 Telecomunicacoes Brasileiras, SA, ADR........... 39,700 1,776,455 Telefonos de Mexico (Class 'L' Stock), ADR...... 290,000 11,890,000 -------------- 82,053,118 -------------- TEXTILES -- 0.4% Russell Corp.................................... 168,900 5,299,237 Unifi, Inc...................................... 272,500 6,948,750 -------------- 12,247,987 -------------- TOBACCO -- 1.1% Philip Morris Companies, Inc.................... 438,900 25,236,750 UST, Inc........................................ 463,400 12,859,350 -------------- 38,096,100 -------------- TOTAL COMMON STOCKS (Cost $1,884,990,437).......................................... 2,046,142,938 -------------- PAR MARKET LONG-TERM BONDS -- 24.6% VALUE VALUE ------------- -------------- FINANCIAL -- 3.1% Associates Corp. of North America, 8.250%, 12/01/99.............................. $ 33,900,000 $ 33,701,685 Banc One Credit Card Master Trust, CMO, 7.750%, 12/15/99, Series 1994-B, Class B...... 5,000,000 4,937,500 Chase Manhattan Credit Card Trust, 7.400%, 05/15/00, Series 1992-1............... 5,000,000 4,921,850 Ford Credit Grantor Trust, CMO, 7.300%, 10/15/99, TR 1994-8, Class A.......... 13,614,932 13,449,000 Ford Motor Credit Co., 7.750%, 11/15/02.............................. 2,815,000 2,684,468 General Motors Acceptance Corp., M.T.N., 6.500%, 06/10/96.............................. 10,000,000 9,789,200 7.000%, 05/19/97, Tranche #TR00401............ 10,000,000 9,683,700 7.000%, 06/02/97, Tranche #TR00476............ 6,000,000 5,806,980 7.375%, 07/20/98, Tranche #TR00667............ 4,500,000 4,329,855 7.850%, 03/05/97, Tranche #TR00187............ 3,200,000 3,161,153
B10 AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED) DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- %MBNA Master Credit Card Trust, CMO, 5.495%, 01/15/02, Series 1994-1, Class A...... $ 7,500,000 $ 7,480,313 Standard Credit Card Master Trust, CMO, 7.250%, 04/07/08, Series 1994-2A, Class A..... 4,500,000 4,100,625 Westinghouse Credit Corp., M.T.N., 8.750%, 06/03/96, Tranche #TR00248............ 3,330,000 3,338,924 -------------- 107,385,253 -------------- FOREIGN -- 4.4% **Banco Del Estado-Chile, 8.390%, 08/01/01.............................. 3,500,000 3,298,750 Banco Ganadero, SA, M.T.N., 9.750%, 08/26/99, Tranche #TR00001............ 7,300,000 7,081,000 **Cemex, SA, 8.875%, 06/10/98.............................. 5,000,000 4,387,500 **Cemex, SA, M.T.N., 9.500%, 09/20/01, Tranche #TR00010............ 12,500,000 10,625,000 **Compania Sud Americana de Vapores, SA, 7.375%, 12/08/03.............................. 7,250,000 5,935,938 Controladora Commercial Mexicana, SA, 8.750%, 04/21/98.............................. 15,100,000 12,835,000 Empresa Columbia de Petroleos, 7.250%, 07/08/98.............................. 8,250,000 7,342,500 Empresas La Moderna, SA, 10.250%, 11/12/97............................. 2,000,000 1,750,000 Financiera Energetic Nacional, 6.625%, 12/13/96.............................. 5,100,000 4,896,000 **Financiera Energetic Nacional, M.T.N., 9.000%, 11/08/99.............................. 9,900,000 9,420,432 Fomento Economico Mexicano, SA, 9.500%, 07/22/97.............................. 3,700,000 3,669,359 **Grupo Embotellador Mexicana, 10.750%, 11/19/97............................. 8,020,000 7,137,800 Grupo Televisa, SA, 10.000%, 11/09/97............................. 4,000,000 3,620,000 **Kansallis-Osake Pankki, N.Y., 8.650%, 12/29/49.............................. 9,000,000 8,707,500 Korea Development Bank, 5.875%, 12/01/98.............................. 1,900,000 1,727,290 6.750%, 12/01/05.............................. 8,000,000 6,778,080 9.250%, 06/15/98.............................. 10,400,000 10,565,672 Korea Electric Power Corp., 7.750%, 04/01/13.............................. 2,225,000 1,929,921 New Zealand Government, 9.875%, 01/15/11.............................. 7,300,000 8,225,713 Republic of Columbia, 7.125%, 05/11/98.............................. 2,700,000 2,479,782 7.250%, 02/23/04.............................. 4,100,000 3,377,375 8.750%, 10/06/99.............................. 900,000 858,375 Republic of South Africa, 9.625%, 12/15/99.............................. 8,300,000 8,219,593 **Republic of Trinidad and Tobago, 11.750%, 10/03/04............................. 9,000,000 9,112,500
DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- United Mexican States, 5.820%, 06/28/01.............................. $ 1,375,000 $ 976,250 6.970%, 08/12/00.............................. 2,300,000 1,771,000 8.500%, 09/15/02.............................. 6,925,000 5,574,625 -------------- 152,302,955 -------------- INDUSTRIAL -- 5.3% Avenor, Inc., 9.375%, 02/15/04.............................. 11,100,000 10,472,156 Columbia/HCA Healthcare Corp., M.T.N., 8.850%, 01/01/07, Tranche #TR00009............ 15,400,000 15,369,200 Delta Air Lines, Inc., 7.710%, 05/14/97.............................. 1,300,000 1,238,328 9.750%, 05/15/21.............................. 10,790,000 9,918,384 9.875%, 01/01/98.............................. 27,650,000 27,964,381 10.375%, 02/01/11............................. 6,950,000 6,794,807 Enterprise Rent A Car, M.T.N., 8.750%, 12/15/99, Tranche #TR00001............ 13,750,000 13,702,563 Fleming Companies, Inc., C.D., 10.625%, 12/15/01............................. 28,000,000 28,000,000 Ford Motor Co., 9.000%, 09/15/01.............................. 3,000,000 3,061,140 News America Holdings, Inc., 7.750%, 01/20/24.............................. 4,650,000 3,797,981 %Occidental Petroleum Corp., M.T.N., 6.312%, 11/04/99.............................. 5,000,000 4,960,460 Oryx Energy Co., 9.300%, 05/01/96.............................. 2,350,000 2,330,355 Oryx Energy Co., M.T.N., 6.050%, 02/01/96, Tranche #TR00013............ 10,500,000 10,106,250 PT Alatief Freeport Financial Co., 9.750%, 04/15/01.............................. 7,600,000 7,410,000 RJR Nabisco, Inc., 8.625%, 12/01/02.............................. 14,080,000 13,059,621 8.750%, 08/15/05.............................. 2,500,000 2,279,300 Tele-Communications, Inc., 7.875%, 08/01/13.............................. 7,000,000 5,830,650 9.875%, 06/15/22.............................. 4,700,000 4,606,657 Transco Energy, 9.125%, 05/01/98.............................. 14,000,000 14,017,500 -------------- 184,919,733 -------------- U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 11.8% Federal National Mortgage Association, Zero Coupon, 07/05/14......................... 10,000,000 2,035,200 Government National Mortgage Association, 8.950%, 10/15/28, Pool #222286................ 4,024,004 4,000,514 United States Treasury Bonds, 6.250%, 08/15/23.............................. 21,510,000 17,486,985 8.875%, 08/15/17.............................. 53,900,000 58,717,043 8.875%, 02/15/19, Series 2019................. 29,800,000 32,537,726 9.250%, 02/15/16, Series 2016................. 16,200,000 18,227,592 11.250%, 02/15/15............................. 119,750,000 158,219,688 12.000%, 08/15/13............................. 17,250,000 22,937,153 United States Treasury Notes, 6.500%, 08/15/97.............................. 15,000,000 14,545,350 7.500%, 10/31/99, Series 1999................. 42,250,000 41,642,445
B11 AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED) DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- 7.750%, 11/30/99.............................. $ 16,125,000 $ 16,064,530 7.875%, 11/15/04.............................. 24,750,000 24,819,547 -------------- 411,233,773 -------------- TOTAL LONG-TERM BONDS (Cost $886,300,335)............................................ 855,841,714 -------------- PRINCIPAL SHORT-TERM INVESTMENTS -- 16.5% AMOUNT VALUE ------------- -------------- BANK-RELATED INSTRUMENTS -- 1.1% Bank of Tokyo, Ltd., C.D., 6.460%, 03/30/95.............................. 5,000,000 5,000,000 Banque Nationale De Paris, C.D., 6.010%, 02/01/95.............................. 15,000,000 15,000,000 Fuji Bank, Ltd, C.D., 5.906%, 01/20/95.............................. 14,000,000 14,000,000 Sanwa Bank, Ltd., C.D., 6.040%, 02/02/95.............................. 4,000,000 4,000,000 -------------- 38,000,000 -------------- COMMERCIAL PAPER -- 5.2% American Home Products Corp., 5.900%, 01/31/95.............................. 16,000,000 15,926,578 American Honda Finance Corp., 5.980%, 01/31/95.............................. 2,000,000 1,990,698 American Telephone & Telegraph Co., 6.300%, 03/24/95.............................. 500,000 493,000 Asset Securitization Cooperative Corp., 5.970%, 02/02/95.............................. 4,000,000 3,980,100 6.050%, 02/01/95.............................. 3,100,000 3,084,892 Bankers Trust New York Corp., 5.150%, 04/03/95.............................. 5,000,000 4,935,625 5.440%, 01/24/95.............................. 7,800,000 7,775,248 Chemical Bank, 6.000%, 01/23/95.............................. 250,000 249,167 6.250%, 01/03/95.............................. 656,000 656,000 CIT Group Holdings, Inc., 5.500%, 01/17/95.............................. 11,000,000 10,976,472 Coca-Cola Enterprises, Inc., 6.170%, 03/07/95.............................. 16,000,000 15,827,240 Corporate Asset Funding Co., Inc., 5.500%, 01/11/95.............................. 3,000,000 2,996,333 Dean Witter, Discover & Co., 5.970%, 02/01/95.............................. 16,000,000 15,923,053 First National Bank of Chicago, 5.180%, 02/27/95, Tranche #TR00072............ 1,000,000 999,143 5.688%, 02/22/95, Tranche #TR00087............ 5,000,000 5,000,000 Ford Motor Credit Co., 6.070%, 01/31/95.............................. 4,335,000 4,314,534 Gateway Fuel Corp., 5.800%, 01/20/95.............................. 1,082,000 1,079,037 General Electric Capital Corp., 5.500%, 01/12/95.............................. 4,000,000 3,994,500
DECEMBER 31, 1994
PRINCIPAL SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE ------------- -------------- General Motors Acceptance Corp., 5.740%, 01/17/95.............................. $ 16,100,000 $ 16,064,061 Greyhound Financial Corp., 6.300%, 01/27/95.............................. 2,000,000 1,991,600 Hanson Finance, PLC, 6.280%, 03/01/95.............................. 1,000,000 990,057 Household Finance Corp., 5.500%, 01/12/95.............................. 5,000,000 4,993,125 International Lease Finance Corp., 6.200%, 03/20/95.............................. 5,000,000 4,934,556 ITT Corp., 5.820%, 01/17/95.............................. 2,000,000 1,995,473 ITT Financial Corp., 6.200%, 01/23/95.............................. 6,000,000 5,979,333 Konica Finance USA Corp., 6.200%, 01/10/95.............................. 1,000,000 998,794 McKenna Triangle National Corp., 6.150%, 01/17/95.............................. 100,000 99,761 Merrill Lynch & Co., Inc., 5.750%, 01/17/95.............................. 5,000,000 4,988,819 Morgan Guaranty Trust Co., 6.500%, 05/18/95.............................. 259,200 252,882 NationsBank Corp. of North Carolina, 5.400%, 01/23/95.............................. 11,000,000 10,967,000 Newell Co., 6.000%, 01/05/95.............................. 8,946,000 8,943,018 Public Service Electric & Gas Co., 6.020%, 01/10/95.............................. 8,700,000 8,689,816 Sears, Roebuck Acceptance Corp., 6.050%, 02/06/95.............................. 10,000,000 9,942,861 Transamerica Corp., 6.150%, 01/20/95.............................. 350,000 348,984 -------------- 182,381,760 -------------- MEDIUM TERM NOTES -- 0.6% NationsBank Corp. of Texas, M.T.N., 6.030%, 01/31/95, Tranche #TR00023............ 5,000,000 5,000,000 PNC Bank N.A., M.T.N., 5.150%, 02/22/95, Tranche #TR00005............ 5,000,000 5,000,033 %Xerox Credit Corp., M.T.N., 6.800%, 06/02/95, Tranche #TR00016............ 10,000,000 10,002,050 -------------- 20,002,083 -------------- PROMISSORY NOTES -- 0.1% SRD Finance, Inc., 6.150%, 01/12/95.............................. 3,000,000 2,995,388 Sumitomo Electric Finance U.S.A., Inc., 6.050%, 01/26/95.............................. 2,000,000 1,992,269 -------------- 4,987,657 --------------
B12 AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED) DECEMBER 31, 1994
PRINCIPAL SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE ------------- -------------- REPURCHASE AGREEMENTS -- 9.5% Joint Repurchase Agreement Account, 5.720%, 01/03/95 (see Note 4)................. $ 330,700,000 $ 330,700,000 -------------- TOTAL SHORT-TERM INVESTMENTS..................................... 576,071,500 -------------- OTHER ASSETS -- 0.1% (net of liabilities)........................................... 3,484,147 -------------- TOTAL NET ASSETS -- 100.0%....................................... $3,481,540,299 -------------- -------------- The following abbreviations are used in portfolio descriptions: ADR American Depository Receipt C.D. Certificates of Deposit CMO Collateralized Mortgage Obligations L.P. Limited Partnership M.T.N. Medium Term Note PLC Public Limited Company (British Corporation) SA Sociedad Anonima (Spanish Corporation) or Societe Anonyme (French Corporation) **Indicates a restricted security; the aggregate cost of the restricted securities is $63,175,092. The aggregate value, $58,625,420 is approximately 1.7% of net assets. (See Note 2) +No dividend was paid on this security during the 12 months ending December 31, 1994. %Indicates a variable rate security.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. B13 CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO DECEMBER 31, 1994
MARKET COMMON STOCKS -- 34.8% SHARES VALUE ------------- -------------- AEROSPACE -- 1.1% +Coltec Industries, Inc......................... 311,000 $ 5,325,875 GenCorp, Inc.................................... 676,800 8,037,000 Loral Corp...................................... 338,100 12,805,538 Rockwell International Corp..................... 253,100 9,048,325 +UNC, Inc....................................... 289,100 1,734,600 -------------- 36,951,338 -------------- AUTOS - CARS & TRUCKS -- 1.9% A.O. Smith Corp................................. 466,800 11,436,600 Ford Motor Co................................... 318,300 8,912,400 General Motors Corp............................. 192,800 8,145,800 General Motors Corp. (Class 'E' Stock).......... 325,600 12,535,600 General Motors Corp. (Class 'H' Stock).......... 465,900 16,248,263 Titan Wheel International, Inc.................. 332,600 9,229,650 -------------- 66,508,313 -------------- BANKS AND SAVINGS & LOANS -- 2.4% First Bank System, Inc.......................... 490,900 16,322,425 First Interstate Bancorp........................ 300,000 20,287,500 KeyCorp......................................... 937,400 23,435,000 Norwest Corp.................................... 1,060,200 24,782,175 -------------- 84,827,100 -------------- CHEMICALS -- 1.1% Imperial Chemical Industries, PLC, ADR.......... 371,300 17,265,450 OM Group, Inc................................... 308,400 7,401,600 W.R. Grace & Co................................. 318,800 12,313,650 -------------- 36,980,700 -------------- CHEMICALS - SPECIALTY -- 0.8% Ferro Corp...................................... 655,200 15,642,900 M.A. Hanna Co................................... 464,000 11,020,000 -------------- 26,662,900 -------------- COMMERCIAL SERVICES -- 0.2% +Welbilt Corp................................... 168,600 5,627,025 -------------- COMPUTER SERVICES -- 0.5% National Data Corp.............................. 413,400 10,645,050 +Paxar Corp..................................... 818,343 8,183,430 -------------- 18,828,480 -------------- CONSTRUCTION -- 0.2% Ply-Gem Industries.............................. 400,000 7,650,000 -------------- CONTAINERS -- 0.5% Ball Corp....................................... 363,600 11,453,400 +Sealed Air Corp................................ 167,800 6,082,750 -------------- 17,536,150 -------------- DIVERSIFIED GAS -- 0.1% +Basin Exploration, Inc......................... 148,000 1,628,000 -------------- DRUGS AND HOSPITAL SUPPLIES -- 1.1% Schering-Plough Corp............................ 289,000 21,386,000 Warner-Lambert Co............................... 210,600 16,216,200 -------------- 37,602,200 -------------- ELECTRICAL EQUIPMENT -- 0.3% Belden Corp..................................... 524,300 11,665,675 -------------- ELECTRONICS -- 0.4% +ADT Ltd........................................ 620,000 6,665,000 +IMO Industries, Inc............................ 477,900 5,973,750 -------------- 12,638,750 --------------
DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- FINANCIAL SERVICES -- 1.3% American Express Co............................. 319,000 $ 9,410,500 Dean Witter, Discover & Co...................... 736,500 24,948,938 Reinsurance Group of America, Inc............... 487,800 12,012,075 -------------- 46,371,513 -------------- FOODS -- 0.4% Universal Foods Corp............................ 542,000 14,905,000 -------------- FOREST PRODUCTS -- 0.6% Mead Corp....................................... 455,900 22,168,137 -------------- FURNITURE -- 0.1% Leggett & Platt, Inc............................ 128,700 4,504,500 -------------- GAS PIPELINES -- 0.4% Enron Oil & Gas Co.............................. 332,700 6,238,125 +Seagull Energy Corp............................ 387,200 7,405,200 -------------- 13,643,325 -------------- HOSPITAL MANAGEMENT -- 1.3% +Healthtrust, Inc.-The Hospital Co.............. 735,700 23,358,475 National Medical Enterprises, Inc............... 1,650,000 23,306,250 -------------- 46,664,725 -------------- HOUSING RELATED -- 0.8% +Giant Cement Holdings, Inc..................... 415,200 4,930,500 +Owens-Corning Fiberglas Corp................... 662,800 21,209,600 -------------- 26,140,100 -------------- INSURANCE -- 2.4% Emphesys Financial Group, Inc................... 314,600 9,988,550 Equitable of Iowa Companies..................... 372,700 10,528,775 Financial Security Assurance Holdings, Ltd...... 226,200 4,750,200 National Re Corp................................ 207,600 5,449,500 PennCorp Financial Group, Inc................... 638,400 8,379,000 Provident Life & Accident Insurance Co. (Class 'B' Stock).................................... 177,200 3,854,100 TIG Holdings, Inc............................... 588,300 11,030,625 Trenwick Group, Inc............................. 276,200 11,703,975 W.R. Berkley Corp............................... 192,800 7,230,000 Western National Corp........................... 900,000 11,587,500 -------------- 84,502,225 -------------- LEISURE -- 0.4% +Caesars World, Inc............................. 213,100 14,224,424 -------------- MACHINERY -- 0.6% DT Industries, Inc.............................. 234,500 2,520,875 +INDRESCO, Inc.................................. 390,700 5,567,475 Kaydon Corp..................................... 229,700 5,512,800 Parker-Hannifin Corp............................ 136,500 6,210,750 -------------- 19,811,900 -------------- MEDIA -- 2.2% Central Newspapers (Class 'A' Stock)............ 331,700 9,329,063 Comcast Corp. (Class 'A' Stock)................. 362,500 5,573,438 Comcast Corp. (Special Class 'A' Stock)......... 9,600 150,600 Lee Enterprises, Inc............................ 168,700 5,820,150 Media General, Inc. (Class 'A' Stock)........... 123,600 3,507,150 +Tele-Communications, Inc. (Class 'A' Stock).... 848,200 18,448,350 Time Warner, Inc................................ 599,500 21,057,437 Times Mirror Co. (Class 'A' Stock).............. 400,000 12,550,000 -------------- 76,436,188 --------------
B14 CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED) DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- MISCELLANEOUS - BASIC INDUSTRY -- 4.8% American Publishing Co. (Class 'A' Stock)....... 161,400 $ 1,775,400 BW/IP, Inc. (Class 'A' Stock)................... 379,200 6,493,800 Danaher Corp.................................... 227,800 11,902,550 Diebold, Inc.................................... 421,400 17,330,075 Donaldson Company, Inc.......................... 400,400 9,609,600 +Enterra Corp................................... 280,300 5,325,700 +FMC Corp....................................... 110,800 6,398,700 +IDEX Corp...................................... 190,400 8,044,400 +Itel Corp...................................... 168,700 5,841,238 ITT Corp........................................ 144,000 12,762,000 +Litton Industries, Inc......................... 259,700 9,608,900 Mark IV Industries, Inc......................... 545,300 10,769,675 Mascotech, Inc.................................. 607,300 7,818,988 Pentair, Inc.................................... 472,950 19,982,137 +SPS Transaction Services, Inc.................. 192,800 5,061,000 Textron, Inc.................................... 96,400 4,856,150 Trinity Industries, Inc......................... 385,500 12,143,250 +Wolverine Tube, Inc............................ 279,500 6,638,125 York International Corp......................... 199,000 7,338,125 -------------- 169,699,813 -------------- MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 1.0% Eastman Kodak Co................................ 372,300 17,777,325 Whitman Corp.................................... 913,400 15,756,150 -------------- 33,533,475 -------------- PETROLEUM -- 0.9% Cabot Oil & Gas Corp. (Class 'A' Stock)......... 594,400 8,618,800 Elf Aquitaine, ADR.............................. 530,100 18,686,025 Parker & Parsley Petroleum Co................... 257,800 5,284,900 -------------- 32,589,725 -------------- PETROLEUM SERVICES -- 0.7% +Mesa, Inc...................................... 1,008,400 4,915,950 Murphy Oil Corp................................. 190,800 8,109,000 Oryx Energy Co.................................. 849,400 10,086,625 -------------- 23,111,575 -------------- RAILROADS -- 1.1% Burlington Northern, Inc........................ 259,000 12,464,375 +Chicago & North Western Transportation Co...... 671,600 12,928,300 Illinois Central Corp........................... 440,000 13,530,000 -------------- 38,922,675 -------------- REAL ESTATE DEVELOPMENT -- 0.7% Zeneca Group, PLC, ADR.......................... 607,200 24,971,100 -------------- RESTAURANTS -- 0.4% Morrison Restaurants, Inc....................... 350,300 8,582,350 +Shoney's, Inc.................................. 530,100 6,758,775 -------------- 15,341,125 -------------- RETAIL -- 1.3% +Best Products Corp., Inc....................... 1,081,600 7,030,400 +Caldor Corp.................................... 382,100 8,501,725 Harcourt General, Inc........................... 277,500 9,781,875 K mart Corp..................................... 621,400 8,078,200 Rite Aid Corp................................... 258,200 6,035,425 Sears, Roebuck & Co............................. 139,800 6,430,800 -------------- 45,858,425 -------------- RUBBER -- 0.3% Goodyear Tire & Rubber Co....................... 269,800 9,072,024 --------------
DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- STEEL -- 0.3% +Material Sciences Corp......................... 675,000 $ 10,715,624 -------------- TELECOMMUNICATIONS -- 1.6% +Airtouch Communications, Inc................... 385,500 11,227,688 Century Telephone Enterprises, Inc.............. 337,300 9,950,350 MCI Communications Corp......................... 661,100 12,147,713 +Nextel Communications, Inc. (Class 'A' Stock)........................................ 495,400 7,121,375 Rochester Telephone Corp........................ 797,700 16,851,412 -------------- 57,298,538 -------------- TEXTILES -- 0.4% +Owens-Illinois, Inc............................ 552,700 6,079,700 V.F. Corp....................................... 181,900 8,844,888 -------------- 14,924,588 -------------- TRUCKING/SHIPPING -- 0.2% Ryder System, Inc............................... 385,500 8,481,000 -------------- TOTAL COMMON STOCKS (Cost $1,152,952,120).......................................... 1,218,998,355 -------------- PAR MARKET LONG-TERM BONDS -- 27.3% VALUE VALUE ------------- -------------- FINANCIAL -- 5.2% Associates Corp. of North America, 6.875%, 01/15/97.............................. $ 5,250,000 $ 5,117,018 8.250%, 12/01/99.............................. 34,100,000 33,900,515 8.375%, 01/15/98.............................. 1,100,000 1,099,989 Banc One Credit Card Master Trust, CMO, 7.750%, 12/15/99, Series 1994-B, Class B...... 5,100,000 5,036,250 %Chrysler Financial Corp., 3.813%, 11/15/96.............................. 13,200,000 13,264,415 Chrysler Financial Corp., M.T.N., 5.390%, 08/27/96, Tranche #TR00041............ 7,300,000 7,005,810 CIGNA Mortgage Securities, Inc., 9.400%, 01/15/02, Series 1988-1, Class A2..... 3,362,186 3,329,614 Citicorp, M.T.N., 8.500%, 02/24/97, Tranche #TR00128............ 5,100,000 5,131,263 Dean Witter, Discover & Co., 6.000%, 03/01/98.............................. 2,500,000 2,334,275 Discover Card Trust, 7.875%, 04/16/98, Series #1991-C, Class B..... 10,000,000 9,959,300 Federal Express Corp., M.T.N., 10.010%, 06/01/98, Tranche #SR00067........... 3,000,000 3,101,790 10.050%, 06/15/99, Tranche #SR00068........... 500,000 521,055 First Union Corp., 9.450%, 06/15/99.............................. 4,000,000 4,112,080 Ford Credit Grantor Trust, CMO, 7.300%, 10/15/99, Series 1994-8, Class A...... 11,669,941 11,527,714 Ford Motor Credit Co., 7.750%, 11/15/02.............................. 3,300,000 3,146,979 General Motors Acceptance Corp., 8.250%, 08/01/96.............................. 5,000,000 4,985,950
B15 CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED) DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- General Motors Acceptance Corp., M.T.N., 6.300%, 09/10/97, Tranche #TR00532............ $ 5,000,000 $ 4,735,700 6.500%, 06/10/96.............................. 13,000,000 12,725,960 7.375%, 07/20/98, Tranche #TR00667............ 4,650,000 4,474,184 7.500%, 11/04/97, Tranche #TR00598............ 15,000,000 14,602,050 7.850%, 03/05/97, Tranche #TR00187............ 3,300,000 3,259,938 Mellon Financial Co., 6.500%, 12/01/97.............................. 1,650,000 1,577,565 Standard Credit Card Master Trust, 7.250%, 04/07/08, Series 1994-2A, Class A..... 4,650,000 4,237,313 Standard Credit Card Trust, 9.375%, 03/10/96, Series 1990-1............... 7,000,000 7,028,420 Union Bank Finland, Ltd., 5.250%, 06/15/96.............................. 16,650,000 15,942,542 Westinghouse Credit Corp., M.T.N., 8.750%, 06/03/96, Tranche #00248.............. 2,600,000 2,606,968 -------------- 184,764,657 -------------- FOREIGN -- 4.5% **Banco Del Estado-Chile, 8.390%, 08/01/01.............................. 3,700,000 3,487,250 **Banco Ganadero, SA, M.T.N., 9.750%, 08/26/99, Tranche #TR00001............ 7,300,000 7,081,000 **%Cemex, SA, 6.250%, 10/25/95, Series B.................... 4,250,000 4,165,000 **Cemex, SA, M.T.N., 9.500%, 09/20/01, Tranche #TR00010............ 12,500,000 10,625,000 **Compania Sud Americana de Vapores, SA, 7.375%, 12/08/03.............................. 10,000,000 8,187,500 Controladora Commercial Mexicana, SA, 8.750%, 04/21/98.............................. 5,190,000 4,411,500 Empresa Columbia de Petroleos, 7.250%, 07/08/98.............................. 8,250,000 7,342,500 Financiera Energetic Nacional, 6.625%, 12/13/96.............................. 5,000,000 4,800,000 **Financiera Energetic Nacional, M.T.N., 9.000%, 11/08/99.............................. 9,900,000 9,420,432 Fomento Economico Mexicano, SA, 9.500%, 07/22/97.............................. 5,150,000 5,107,352 **Grupo Condumex, SA, M.T.N., 6.250%, 07/27/96.............................. 4,300,000 3,827,000 **Grupo Embotellador Mexicana, 10.750%, 11/19/97............................. 8,015,000 7,133,350 Grupo Televisa, SA, 10.000%, 11/09/97............................. 7,250,000 6,561,250 %Hydro-Quebec, 3.438%, 09/30/49.............................. 3,500,000 2,925,780 **Kansallis-Osake Pankki, N.Y., 8.650%, 12/29/49.............................. 10,000,000 9,675,000 Kansallis-Osake Pankki, N.Y., C.D., 6.125%, 05/15/98.............................. 6,160,000 5,715,494
DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- Korea Development Bank, 5.875%, 12/01/98.............................. $ 1,900,000 $ 1,727,290 6.750%, 12/01/05.............................. 10,400,000 8,811,504 9.250%, 06/15/98.............................. 10,000,000 10,159,300 Korea Electric Power Corp., 7.750%, 04/01/13.............................. 2,350,000 2,038,343 Republic of Columbia, 7.125%, 05/11/98.............................. 2,775,000 2,548,664 7.250%, 02/23/04.............................. 5,400,000 4,448,250 8.750%, 10/06/99.............................. 925,000 882,219 Republic of South Africa, 9.625%, 12/15/99.............................. 8,200,000 8,120,563 **Republic of Trinidad and Tobago, 11.750%, 10/03/04............................. 9,300,000 9,416,250 United Mexican States, 5.820%, 06/28/01.............................. 1,375,000 976,250 6.970%, 08/12/00.............................. 2,300,000 1,771,000 8.500%, 09/15/02.............................. 6,850,000 5,514,250 -------------- 156,879,291 -------------- INDUSTRIAL -- 4.3% Arkla, Inc., M.T.N., 9.250%, 12/18/97, Tranche #TR00027............ 3,000,000 2,988,840 Avenor, Inc., 9.375%, 02/15/04.............................. 11,225,000 10,590,086 Coca-Cola Enterprises, Inc., 6.500%, 11/15/97.............................. 3,750,000 3,582,975 Columbia/HCA Healthcare Corp., M.T.N., 8.850%, 01/01/07, Tranche #TR00009............ 12,700,000 12,674,600 Comdisco, Inc., 8.950%, 05/15/95.............................. 19,420,000 19,533,800 Delta Air Lines, Inc., 9.750%, 05/15/21.............................. 10,800,000 9,927,575 10.375%, 02/01/11............................. 6,850,000 6,697,040 **Enterprise Rent A Car, M.T.N., 8.750%, 12/15/99.............................. 13,750,000 13,702,563 Ford Motor Co., 9.000%, 09/15/01.............................. 3,900,000 3,979,482 Hanson Overseas Corp., 5.500%, 01/15/96.............................. 2,000,000 1,953,980 News America Holdings, Inc., 7.750%, 01/20/24.............................. 4,550,000 3,716,304 Oryx Energy Co., M.T.N., 6.050%, 02/01/96, Tranche #TR00013............ 12,000,000 11,550,000 PT Alatief Freeport Financial Co., 9.750%, 04/15/01.............................. 8,950,000 8,726,250 RJR Nabisco, Inc., 8.625%, 12/01/02.............................. 14,350,000 13,310,056 8.750%, 08/15/05.............................. 2,550,000 2,324,886 Sears, Roebuck & Co., M.T.N., 9.420%, 04/01/96, Series IV................... 1,000,000 1,018,625 Sears, Roebuck Acceptance Corp., 9.000%, 09/15/96.............................. 2,000,000 2,024,140 Tele-Communications, Inc., 7.875%, 08/01/13.............................. 6,800,000 5,664,060 9.875%, 06/15/22.............................. 4,700,000 4,606,658 **Time Warner, Inc., 6.050%, 07/01/95.............................. 8,000,000 7,933,040
B16 CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED) DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- Westinghouse Electric Corp., M.T.N., 8.700%, 06/20/96, Tranche #TR00029............ $ 2,950,000 $ 2,956,136 -------------- 149,461,096 -------------- U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 13.3% Federal National Mortgage Association, 9.050%, 04/10/00.............................. 14,000,000 14,647,500 United States Treasury Bonds, 6.250%, 08/15/23.............................. 29,585,000 24,051,717 11.250%, 02/15/15............................. 168,850,000 223,093,063 12.000%, 08/15/13............................. 50,450,000 67,082,861 United States Treasury Notes, 6.000%, 11/30/97.............................. 87,600,000 83,534,484 7.250%, 11/15/96.............................. 21,000,000 20,835,990 7.500%, 10/31/99.............................. 8,550,000 8,427,050 7.750%, 11/30/99.............................. 4,525,000 4,508,031 7.875%, 11/15/04.............................. 19,075,000 19,128,601 -------------- 465,309,297 -------------- TOTAL LONG-TERM BONDS (Cost $997,384,451)............................................ 956,414,341 -------------- PRINCIPAL SHORT-TERM INVESTMENTS -- 36.9% AMOUNT VALUE ------------- -------------- BANK-RELATED INSTRUMENTS -- 5.9% Bank of Tokyo, Ltd., C.D., 6.460%, 03/30/95.............................. 25,000,000 25,000,000 Banque Nationale De Paris, C.D., 6.010%, 02/01/95.............................. 35,000,000 35,000,000 Chemical Bank, N.Y., T.D., 6.250%, 01/03/95.............................. 7,393,000 7,393,000 Fuji Bank, Ltd., C.D., 5.906%, 01/20/95.............................. 7,000,000 7,000,000 6.360%, 03/21/95.............................. 15,000,000 15,000,000 Fuji Bank, Ltd., T.D., 6.400%, 01/03/95.............................. 25,000,000 25,000,000 National Westminister Bank, PLC, C.D., 5.800%, 01/23/95.............................. 1,000,000 999,870 Republic National Bank of New York, C.D., 4.300%, 03/08/95.............................. 21,000,000 20,988,906 Sanwa Bank, Ltd., C.D., 6.040%, 02/02/95.............................. 50,000,000 50,000,000 Sumitomo Bank, Ltd., C.D., 5.960%, 01/30/95.............................. 10,000,000 10,000,000 Sumitomo Bank, Ltd., T.D., 6.060%, 02/01/95.............................. 10,000,000 10,000,000 -------------- 206,381,776 -------------- COMMERCIAL PAPER -- 23.8% %American Express Centurion Bank, 4.500%, 08/04/95, Tranche #TR00037............ 4,000,000 3,999,765 American Home Products Corp., 5.900%, 01/31/95.............................. 61,440,000 61,158,059 American Honda Finance Corp., 5.980%, 01/31/95.............................. 13,000,000 12,939,535 Aristar, Inc., 5.540%, 01/23/95.............................. 1,000,000 996,922 6.300%, 03/20/95.............................. 2,000,000 1,973,400
DECEMBER 31, 1994
PRINCIPAL SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE ------------- -------------- Asset Securitization Cooperative Corp., 5.500%, 01/23/95.............................. $ 9,000,000 $ 8,972,500 5.970%, 02/02/95.............................. 6,000,000 5,970,150 6.050%, 02/01/95.............................. 12,800,000 12,737,618 Bankers Trust New York Corp., 5.150%, 04/03/95.............................. 25,637,000 25,306,924 5.440%, 01/24/95.............................. 17,200,000 17,145,419 Barclays Bank, PLC, 6.100%, 02/17/95.............................. 500,000 496,188 Chrysler Financial Corp., 5.750%, 01/17/95.............................. 23,000,000 22,948,569 CIESCO, 5.500%, 01/11/95.............................. 5,000,000 4,993,889 CIT Group Holdings, Inc., 5.500%, 01/17/95.............................. 13,000,000 12,972,194 5.970%, 02/01/95.............................. 14,000,000 13,932,672 Coca-Cola Enterprises, Inc., 6.015%, 02/01/95.............................. 23,000,000 22,888,555 6.120%, 01/31/95.............................. 31,970,000 31,817,823 6.170%, 03/07/95.............................. 4,900,000 4,847,092 Corporate Receivables Corp., 6.170%, 03/07/95.............................. 47,000,000 46,492,518 6.570%, 05/23/95.............................. 11,100,000 10,816,395 Dean Witter, Discover & Co., 5.970%, 02/01/95.............................. 7,344,000 7,308,680 Deerfield Capital, 6.090%, 01/17/95.............................. 19,900,000 19,852,870 Duracell, Inc., 6.300%, 02/10/95.............................. 2,000,000 1,986,700 Falcon Asset Securitization Corp., 6.100%, 01/13/95.............................. 11,000,000 10,981,360 6.170%, 03/07/95.............................. 8,975,000 8,878,092 General Electric Capital Corp., 6.430%, 04/13/95.............................. 6,150,000 6,040,154 6.450%, 04/13/95-04/18/95..................... 36,350,000 35,684,396 General Motors Acceptance Corp., 5.740%, 01/17/95.............................. 60,500,000 60,364,951 Golden Peanut Co., 5.600%, 02/01/95-02/03/95..................... 9,500,000 9,455,589 Greyhound Financial Corp., 6.180%, 02/16/95.............................. 7,649,000 7,591,225 6.290%, 02/08/95.............................. 5,000,000 4,968,550 6.300%, 01/27/95.............................. 7,000,000 6,970,600 6.330%, 02/07/95.............................. 2,000,000 1,987,692 Hanson Finance, PLC, 5.470%, 01/17/95.............................. 2,000,000 1,995,746 6.260%, 03/03/95.............................. 5,000,000 4,948,703 6.270%, 03/09/95.............................. 13,000,000 12,852,829 6.280%, 03/01/95.............................. 4,000,000 3,960,227 Heller Financial, Inc., 6.300%, 03/14/95.............................. 6,000,000 5,926,500 International Lease Finance Corp., 6.200%, 03/20/95.............................. 10,000,000 9,869,111 ITT Corp., 5.820%, 01/17/95.............................. 7,000,000 6,984,157 ITT Financial Corp., 6.200%, 01/20/95.............................. 28,000,000 27,918,022 Maguire/Thomas Partners, 6.100%, 01/18/95.............................. 5,000,000 4,987,292 MCA Funding Corp., 5.100%, 01/09/95.............................. 5,000,000 4,995,750 5.120%, 01/17/95.............................. 22,000,000 21,956,196
B17 CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED) DECEMBER 31, 1994
PRINCIPAL SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE ------------- -------------- McKenna Triangle National Corp., 6.100%, 01/23/95.............................. $ 1,000,000 $ 996,611 Merrill Lynch & Co., Inc., 5.750%, 01/17/95.............................. 15,000,000 14,966,458 Morgan Stanley Group, Inc., 6.270%, 03/01/95.............................. 8,500,000 8,415,616 National Australia Funding, Inc., 5.600%, 02/01/95.............................. 2,000,000 1,990,978 NationsBank Corp. of North Carolina, 5.400%, 01/23/95.............................. 19,000,000 18,943,000 Newell Co., 6.000%, 01/05/95.............................. 21,054,000 21,046,982 Preferred Receivables Funding Corp., 5.650%, 01/11/95.............................. 13,000,000 12,983,678 Public Service Electric & Gas Co., 6.020%, 01/17/95.............................. 11,000,000 10,974,248 Republic National Bank of New York, 5.750%, 02/01/95.............................. 5,000,000 4,999,985 Sears Roebuck Acceptance Corp., 6.050%, 02/07/95.............................. 37,000,000 36,782,368 State Street Bank & Trust, 5.950%, 01/17/95.............................. 33,377,000 33,299,769 WCP Funding, Inc., 6.280%, 03/06/95.............................. 4,000,000 3,956,738 Westpac Capital Corp., 6.280%, 03/14/95.............................. 6,000,000 5,926,733 Whirlpool Corp., 5.660%, 02/02/95.............................. 2,000,000 1,990,567 Whirlpool Financial Corp., 5.600%, 02/06/95-02/09/95..................... 3,000,000 2,983,667 5.610%, 02/10/95.............................. 5,000,000 4,970,392 WMX Technologies, 5.200%, 05/12/95.............................. 4,000,000 3,925,467 5.225%, 02/07/95.............................. 3,000,000 2,984,760 Xerox Credit Corp., 5.970%, 02/01/95.............................. 32,000,000 31,846,107 -------------- 835,855,703 -------------- MEDIUM TERM NOTES -- 2.4% PNC Bank N.A., M.T.N., 5.150%, 02/22/95, Tranche #TR00005............ 10,000,000 10,000,066 %Corestates Capital Corp., M.T.N., 6.020%, 07/19/95, Tranche #TR00076............ 10,000,000 10,002,084 **%Goldman Sachs Group, L.P., M.T.N., 3.875%, 04/13/95.............................. 48,000,000 48,000,000 %Xerox Credit Corp., M.T.N., 6.800%, 06/02/95, Tranche #TR00016............ 15,000,000 15,003,075 -------------- 83,005,225 -------------- PROMISSORY NOTES -- 1.3% Diamond Lease USA, Inc., 6.100%, 01/18/95.............................. 1,000,000 997,458 Lehman Brothers Holdings, Inc., 5.028%, 05/23/95.............................. 32,000,000 32,000,000 Seiko Corporation of America, 6.100%, 01/20/95.............................. 3,000,000 2,991,358 SRD Finance, Inc., 6.100%, 01/12/95.............................. 3,000,000 2,995,425
DECEMBER 31, 1994
PRINCIPAL SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE ------------- -------------- Sumitomo Electric Finance U.S.A., Inc., 6.050%, 01/26/95.............................. $ 8,000,000 $ 7,969,078 -------------- 46,953,319 -------------- REPURCHASE AGREEMENTS -- 3.5% Joint Repurchase Agreement Account, 5.720%, 01/03/95 (see Note 4)................. 121,345,000 121,345,000 -------------- TOTAL SHORT-TERM INVESTMENTS..................................... 1,293,541,023 -------------- OTHER ASSETS -- 1.0% (net of liabilities)........................................... 32,150,567 -------------- TOTAL NET ASSETS -- 100.0%....................................... $3,501,104,286 -------------- -------------- The following abbreviations are used in portfolio descriptions: ADR American Depository Receipt C.D. Certificates of Deposit CMO Collateralized Mortgage Obligations M.T.N. Medium Term Note PLC Public Limited Company (British Corporation) SA Sociedad Anonima (Spanish Corporation) or Societe Anonyme (French Corporation) T.D. Time Deposit **Indicates a restricted security; the aggregate cost of the restricted securities is $148,547,029. The aggregate value, $142,653,385 is approximately 4.1% of net assets. (See Note 2) +No dividend was paid on this security during the 12 months ending December 31, 1994. %Indicates a variable rate security.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. B18 ZERO COUPON BOND 1995 PORTFOLIO DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS -- 100.1% VALUE VALUE ------------- -------------- INDUSTRIAL -- 4.1% Schering-Plough Corp., Zero Coupon, 12/02/96......................... $ 850,000 $ 731,400 -------------- U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 96.0% Certificate of Accrual on Treasury Securities, Zero Coupon, 02/15/97......................... 1,003,000 855,027 Coupon Treasury Receipts, Zero Coupon, 05/15/95-02/15/97................ 13,002,145 11,928,682 Treasury Investment Growth Receipts, Zero Coupon, 11/15/95......................... 236,000 222,494 United States Treasury Bills, Zero Coupon, 11/16/95......................... 3,000,000 2,822,490 United States Treasury Bonds, Stripped, Zero Coupon, 02/15/97......................... 1,407,000 1,198,553 -------------- 17,027,246 -------------- TOTAL LONG-TERM BONDS (Cost $17,721,753)............................................. 17,758,646 -------------- LIABILITIES -- (0.1%) (net of other assets).......................................... (25,014) -------------- TOTAL NET ASSETS -- 100.0%....................................... $ 17,733,632 -------------- --------------
ZERO COUPON BOND 2000 PORTFOLIO DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS -- 100.1% VALUE VALUE ------------- -------------- U.S. GOVERNMENT & AGENCY OBLIGATIONS Certificate of Accrual on Treasury Securities, Zero Coupon, 05/15/01......................... $ 1,088,000 $ 666,117 Coupon Treasury Receipts, Zero Coupon, 11/15/00-08/15/01................ 3,622,026 2,208,859 Treasury Investment Growth Receipts, Zero Coupon, 02/15/02......................... 9,831,000 5,669,144 United States Treasury Bonds, Stripped, Zero Coupon, 02/15/00-05/15/02................ 19,368,000 12,121,776 -------------- TOTAL LONG-TERM BONDS (Cost $20,000,846)............................................. 20,665,896 -------------- LIABILITIES -- (0.1%) (net of other assets).......................................... (30,900) -------------- TOTAL NET ASSETS -- 100.0%....................................... $ 20,634,996 -------------- --------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. B19 HIGH YIELD BOND PORTFOLIO DECEMBER 31, 1994
MARKET COMMON STOCKS -- 0.7% SHARES VALUE ------------- -------------- BEVERAGES -- 0.0% **+Dr. Pepper Bottling Holdings, Inc. (Class 'B' Stock)........................................ 5,807 $ 20,325 -------------- CHEMICALS - SPECIALTY -- 0.1% **+Thermadyne Holdings Corp. (Class 'B' Stock)........................................ 3,787 45,444 -------------- CONTAINERS -- 0.0% +Gaylord Container Corp. (Class 'A' Stock)...... 1,738 15,859 -------------- ELECTRONICS -- 0.2% **+Berg Electronics Holding Corp................ 154,080 693,360 -------------- FINANCIAL SERVICES -- 0.0% **+PM Holdings Corp............................. 1,103 0 -------------- FOODS -- 0.0% **+Specialty Foods Acquisition Corp............. 30,000 22,500 -------------- HOUSING RELATED -- 0.0% +U.S. Home Corp................................. 1,290 20,800 -------------- MISCELLANEOUS - BASIC INDUSTRY -- 0.0% +Total Renal Care, Inc. (Class 'B' Stock)....... 4,500 0 -------------- MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 0.0% **+Acme Boot, Inc............................... 1,250 0 -------------- PETROLEUM SERVICES -- 0.0% +Mesa, Inc...................................... 6,417 31,283 -------------- RETAIL -- 0.0% **+Loehmann's Holdings, Inc..................... 19,708 19,708 -------------- TOBACCO -- 0.4% +RJR Nabisco Holdings Corp...................... 204,501 1,124,756 -------------- TOTAL COMMON STOCKS (Cost $2,424,049).............................................. 1,994,035 -------------- MARKET PREFERRED STOCKS -- 4.2% SHARES VALUE ------------- -------------- AIRLINES -- 0.0% USAir Group, Inc. (Conv. Pfd.; Class 'B' Stock)........................................ 5,000 75,625 -------------- BANKS AND SAVINGS & LOANS -- 0.4% **Riggs National Corp., Series B................ 47,500 1,163,750 -------------- ELECTRONICS -- 0.6% [Berg Electronics Holding Corp. (Class 'E' Stock)........................................ 73,345 1,870,298 -------------- FINANCIAL SERVICES -- 0.2% [SD Warren Co................................... 20,000 520,000 -------------- FOODS -- 0.1% Pantry Pride, Inc. (Ex. Pfd.; Class 'B' Stock)........................................ 2,950 281,725 -------------- MISCELLANEOUS - BASIC INDUSTRY -- 1.3% [FoxMeyer Health Corp. (Ex. Pfd.; Class 'A' Stock)........................................ 7,533 241,056 [Harvard Industries, Inc. (Ex. Pfd.)............ 98,161 2,564,456 [Supermarkets General Holdings Corp. (Ex. Pfd.)......................................... 56,670 1,246,740 -------------- 4,052,252 -------------- MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 0.0% [+Pay 'n Pak Stores (Cum. Ex. Pfd.)............. 82,384 0 -------------- PETROLEUM-CANADIAN -- 0.1% %+Gulf Canada Resources Ltd., Series 1...................................... 122,000 305,000 -------------- REAL ESTATE DEVELOPMENT -- 0.1% [UDC Homes, Inc. (Ex. Pfd.)..................... 107,789 296,420 --------------
DECEMBER 31, 1994
MARKET PREFERRED STOCKS (CONTINUED) SHARES VALUE ------------- -------------- RETAIL -- 0.9% Color Tile, Inc................................. 10,000 $ 1,680,000 **Color Tile, Inc. (Class 'A' Stock)............ 47,500 1,187,500 Grand Union Holdings Corp. (Cum. Conv. Pfd.; Class 'C' Stock).............................. 9,000 1,125 -------------- 2,868,625 -------------- STEEL -- 0.3% **Republic Engineered Steels, Inc............... 76,167 856,883 -------------- TELECOMMUNICATIONS -- 0.2% Tele Communications, Inc. (Ex. Pfd.; Class 'B' Stock)........................................ 9,900 559,350 -------------- TOTAL PREFERRED STOCKS (Cost $16,088,791)............................................. 12,849,928 -------------- MARKET RIGHTS AND WARRANTS -- 0.1% SHARES VALUE ------------- -------------- COMMUNICATIONS -- 0.0% ++Dial Call Communications, Inc. (Warrant)...... 3,793 4,741 -------------- CONTAINERS -- 0.1% ++Gaylord Container Corp. (Warrant)............. 21,259 154,128 -------------- ENVIRONMENTAL SERVICES -- 0.0% ++ICF Kaiser International, Inc. (Warrant)...... 7,200 7,200 -------------- FINANCIAL SERVICES -- 0.0% ++SD Warren Co. (Warrant)....................... 20,000 0 -------------- HEALTHCARE -- 0.0% ++Eye Care Centers of America, Inc. (Warrant)... 1,250 0 -------------- HOUSING RELATED -- 0.0% **++J.M. Peters Co., Inc. (Warrant)............. 9,875 0 ++Miles Homes, Inc. (Warrant)................... 15,000 0 ++U.S. Home Corp. (Class 'B' Warrant)........... 1,056 6,072 -------------- 6,072 -------------- INDUSTRIAL -- 0.0% ++United International Holdings, Inc. (Warrant)..................................... 6,000 0 -------------- LEISURE -- 0.0% ++Casino America, Inc. (Warrant)................ 6,526 1,000 ++Casino Magic Finance Corp. (Warrant).......... 10,500 525 **++Louisiana Casino Cruise, Inc. (Warrant)..... 4,200 0 **++President Riverboat Casinos, Inc. (Warrant)..................................... 15,000 7,500 ++President Riverboat Casinos, Inc. (Warrant)... 22,075 11,038 -------------- 20,063 -------------- LODGING -- 0.0% ++Santa Fe Hotel, Inc. (Warrant)................ 50 0 -------------- MISCELLANEOUS - BASIC INDUSTRY -- 0.0% ++Berry Plastics Corp. (Warrant)................ 1,000 15,000 **++Fitzgerald's Gaming Corp. (Warrant)......... 500 0 ++Foamex - JPS Automotive, L.P. (Warrant)....... 2,000 0 ++Health O Meter, Inc. (Warrant)................ 1,000 0 **++Purity Supreme (Warrant).................... 5,198 104 **++Sam Houston Race Park (Warrant)............. 4,000 100 **++Southdown, Inc. (Warrant)................... 5,000 20,000 ++Uniroyal Technology Corp.(Warrant)............ 12,500 6,250 -------------- 41,454 --------------
B20 HIGH YIELD BOND PORTFOLIO (CONTINUED) DECEMBER 31, 1994
MARKET RIGHTS AND WARRANTS (CONTINUED) SHARES VALUE ------------- -------------- RETAIL -- 0.0% **++Apparel Ventures (Warrant).................. 500 $ 0 -------------- TELECOMMUNICATIONS -- 0.0% **++Pagemart, Inc. (Warrant).................... 9,200 0 -------------- TOTAL RIGHTS AND WARRANTS (Cost $130,633)................................................ 233,658 -------------- PAR MARKET LONG-TERM BONDS -- 87.9% VALUE VALUE ------------- -------------- FINANCIAL -- 5.6% American Financial Corp., 12.000%, 09/03/99............................. $ 1,000,000 $ 1,002,500 12.000%, 09/03/99, Series A................... 500,000 501,250 GB Property Funding Corp., 10.875%, 01/15/04............................. 1,000,000 810,000 Indah Kiat International Finance Co., 12.500%, 06/15/06............................. 3,000,000 2,917,500 Lomas Mortgage USA, Inc., 10.250%, 10/01/02............................. 1,250,000 1,037,500 *Mesa Capital Corp., Zero Coupon, 06/30/96-06/30/98................ 3,017,000 2,602,970 *PM Holdings Corp., Zero Coupon, 09/01/05, Series B............... 3,281,000 1,464,146 **PSF Finance, L.P., 12.250%, 06/15/04............................. 1,000,000 1,005,000 Reliance Group Holdings, Inc., 9.750%, 11/15/03.............................. 1,500,000 1,312,500 SD Warren Co., 12.000%, 12/15/04............................. 1,750,000 1,789,375 Tiphook Finance Corp., 7.125%, 05/01/98.............................. 593,000 432,890 8.000%, 03/15/00.............................. 1,940,000 1,358,000 *Transtar Holdings, L.P., Zero Coupon, 12/15/03, Series B............... 2,000,000 1,035,000 -------------- 17,268,631 -------------- FOREIGN -- 1.1% *Bell Cablemedia, PLC, Zero Coupon, 07/15/04......................... 1,500,000 802,500 *Diamond Cable Communication, PLC, Zero Coupon, 09/30/04......................... 2,000,000 980,000 **Tubos De Acero De Mexico, SA, M.T.N., 13.750%, 12/08/99, Tranche #TR00001........... 1,000,000 955,000 *Videotron Holdings, PLC, Zero Coupon, 07/01/04......................... 1,000,000 525,000 -------------- 3,262,500 -------------- INDUSTRIAL -- 81.2% Acme Boot, Inc., 11.500%, 12/15/00, Series B................... 1,250,000 500,000 ACME Holdings, Inc., 11.750%, 06/01/00............................. 2,500,000 1,050,000 Adelphia Communications Corp., &9.500%, 02/15/04, Series B................... 2,092,220 1,506,398 12.500%, 05/15/02............................. 1,500,000 1,402,500 Affinity Group, Inc., 11.500%, 10/15/03............................. 1,500,000 1,432,500 American Media Operations, Inc., 11.625%, 11/15/04............................. 1,000,000 1,025,000 *American Standard, Inc., Zero Coupon, 06/01/05......................... 1,250,000 803,125 Americold Corp., 11.500%, 03/01/05, Series B................... 750,000 675,000
DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- *Apparel Retailers, Inc., Zero Coupon, 08/15/05, Series B............... $ 5,500,000 $ 3,080,000 Apparel Ventures, Inc., 12.250%, 12/31/00, Series B................... 500,000 447,500 Applied Extrusion Technologies, Inc., 11.500%, 04/01/02, Series B................... 1,000,000 990,000 Arcadian Partners, L.P., 10.750%, 05/01/05, Series B................... 2,500,000 2,350,000 Astrum International Corp., 11.500%, 06/08/03............................. 389,000 390,945 Aztar Corp., 11.000%, 10/01/02............................. 1,000,000 910,000 13.750%, 10/01/04............................. 1,500,000 1,522,500 Baldwin Co., 10.375%, 08/01/03, Series B................... 1,750,000 945,000 Bally's Park Place Funding, Inc., 9.250%, 03/15/04.............................. 2,000,000 1,720,000 *Bell & Howell Holdings Co., Zero Coupon, 03/01/05......................... 3,250,000 1,584,375 Berg Electronics, Inc., 11.375%, 05/01/03............................. 1,000,000 992,500 Berry Plastics Corp., 12.250%, 04/15/04............................. 1,000,000 965,000 Big Flower Press, Inc., 10.750%, 08/01/03............................. 2,000,000 1,860,000 *Building Materials Corp. of America, Zero Coupon, 07/01/04, Series B............... 3,000,000 1,530,000 Cablevision Industries Corp., 9.250%, 04/01/08, Series B.................... 750,000 671,250 10.750%, 01/30/02............................. 1,000,000 995,000 Cablevision Systems Corp., 9.875%, 02/15/13.............................. 1,000,000 900,000 *Call-Net Enterprises, Inc., Zero Coupon, 12/01/04......................... 2,000,000 1,045,000 Carrols Corp., 11.500%, 08/15/03............................. 2,250,000 2,070,000 Casino America, Inc., 11.500%, 11/15/01............................. 2,000,000 1,690,000 Casino Magic Finance Corp., 11.500%, 10/15/01, Series B................... 1,750,000 1,120,000 *Cencall Communications Corp., Zero Coupon, 01/15/04......................... 500,000 175,000 Chancellor Broadcasting Co., 12.500%, 10/01/04............................. 2,000,000 2,000,000 Charter Medical Corp., 11.250%, 04/15/04, Series A................... 1,000,000 1,030,000 Chiquita Brands International, Inc., 10.500%, 08/01/04............................. 327,000 320,460 11.500%, 06/01/01............................. 250,000 243,750 Clark R&M Holdings, Inc., Zero Coupon, 02/15/00, Series A............... 1,500,000 855,000 Clean Harbors, Inc., 12.500%, 05/15/01............................. 1,000,000 957,500 CMI Industries, Inc., 9.500%, 10/01/03.............................. 750,000 622,500 Cole National Group, Inc., 11.250%, 10/01/01............................. 875,000 822,500 Color Tile, Inc., 10.750%, 12/15/01............................. 2,000,000 1,760,000 Computervision Corp., 10.875%, 08/15/97............................. 1,500,000 1,380,000 Container Corp. of America, 11.250%, 05/01/04, Series A................... 1,000,000 1,025,000 Continental Cablevision, Inc., 9.500%, 08/01/13.............................. 1,000,000 915,000 Continental Homes Holding Corp., 12.000%, 08/01/99............................. 1,000,000 940,000
B21 HIGH YIELD BOND PORTFOLIO (CONTINUED) DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- Dairy Mart Convenience Stores, Inc., 10.250%, 03/15/04............................. $ 750,000 $ 555,000 Dan River, Inc., 10.125%, 12/15/03............................. 1,000,000 900,000 **&Del Monte Corp., 12.250%, 09/01/02............................. 2,388,000 2,220,840 Di Giorgio Corp., 12.000%, 02/15/03............................. 1,500,000 1,440,000 *Dial Call Communications, Inc., Zero Coupon, 04/15/04-12/15/05................ 3,250,000 1,077,500 Doehler-Jarvis, Inc., 11.875%, 06/01/02............................. 3,000,000 2,940,000 Domtar, Inc., 11.750%, 03/15/99............................. 1,000,000 1,027,500 12.000%, 04/15/01............................. 1,000,000 1,040,000 Engle Homes, Inc, 11.750%, 12/15/00............................. 1,000,000 920,000 Eye Care Centers of America, Inc., 12.000%, 10/01/03............................. 1,250,000 975,000 Fairchild Corp., 13.125%, 03/15/06............................. 655,000 563,300 Fairchild Industries, Inc., 12.250%, 02/01/99............................. 2,480,000 2,380,800 Family Restaurants, Inc., *Zero Coupon, 02/01/04........................ 1,800,000 954,000 9.750%, 02/01/02.............................. 1,250,000 981,250 Farm Fresh, Inc., 12.250%, 10/01/00............................. 1,500,000 1,300,000 Federated Department Stores, 11.290%, 06/30/02, Series B................... 250,000 252,188 ***Fitzgerald's Gaming Corp., Zero Coupon, 03/15/96......................... 500,000 270,000 Flagstar Corp., 10.750%, 09/15/01............................. 1,250,000 1,171,875 11.250%, 11/01/04............................. 2,567,000 2,117,775 Florida Steel Corp., 11.500%, 12/15/00............................. 500,000 490,000 Florsheim Shoe Co., 12.750%, 09/01/02............................. 1,000,000 970,000 Foamex, L.P., 11.250%, 10/01/02............................. 1,500,000 1,425,000 *Foamex - JPS Automotive, L.P., Zero Coupon, 07/01/04, Series B............... 2,000,000 1,050,000 Food 4 Less Supermarkets, Inc., *Zero Coupon, 12/15/04, Series B.............. 2,500,000 1,850,000 13.750%, 06/15/01............................. 1,000,000 1,085,000 Forecast Group, L.P., 11.375%, 12/15/00............................. 1,000,000 670,000 Forest Oil Corp., 11.250%, 09/01/03............................. 1,500,000 1,327,500 Forstmann & Co., Inc., **14.750%, 04/15/99........................... 500,000 515,000 14.750%, 04/15/99............................. 1,330,000 1,383,200 Fort Howard Corp., 14.125%, 11/01/04............................. 3,500,000 3,526,250 12.625%, 11/01/00............................. 500,000 515,000 Fresh Del Monte Produce, 10.000%, 05/01/03, Series B................... 500,000 340,000 G-I Holdings, Inc., Zero Coupon, 10/01/98......................... 500,000 305,000 G.U. Acquisition Corp., 13.000%, 03/02/98............................. 1,000,000 300,000 Garden State Newspapers, Inc., 12.000%, 07/01/04............................. 2,250,000 2,250,000 Gaylord Container Corp., 11.500%, 05/15/01............................. 500,000 515,000 Geneva Steel, Inc., 11.125%, 03/15/01............................. 1,000,000 940,000
DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- Georgia Gulf Corp., 15.000%, 04/15/00............................. $ 500,000 $ 510,000 Gillett Holdings, Inc., 12.250%, 06/30/02, Series A................... 1,000,000 1,057,500 Grand Casinos Resorts, Inc., 12.500%, 02/01/00, Series B................... 1,000,000 940,000 Great Dane Holdings, Inc., 12.750%, 08/01/01............................. 1,925,000 1,905,750 GS Technologies Operating Co., 12.000%, 09/01/04............................. 1,750,000 1,728,125 Gulf Canada Resources Ltd., 9.250%, 01/15/04.............................. 500,000 458,750 Harvard Industries, Inc., 12.000%, 07/15/04............................. 1,250,000 1,259,375 Health O Meter, Inc., 13.000%, 08/15/02............................. 1,000,000 900,000 Hills Stores Co., 10.250%, 09/30/03............................. 500,000 465,000 Hollywood Casino Corp., 14.000%, 04/01/98............................. 1,750,000 1,732,500 Horsehead Industries, Inc., 14.000%, 06/01/99............................. 2,000,000 1,980,000 15.750%, 06/01/97............................. 296,000 304,880 Host Marriott Hospitality, Inc., 9.875%, 05/01/01, Series D.................... 938,000 938,000 10.500%, 05/01/06, Series M................... 253,000 251,735 10.875%, 11/01/01, Series E................... 220,000 223,300 ICF Kaiser International, Inc., 12.000%, 12/31/03............................. 1,500,000 1,305,000 *Imax Corp., 7.000%, 03/01/01.............................. 1,500,000 1,252,500 Imo Industries, Inc., 12.000%, 11/01/01............................. 1,500,000 1,513,125 12.250%, 08/15/97............................. 750,000 750,000 *Indspec Chemical Corp., Zero Coupon, 12/01/03, Class B................ 1,249,000 711,930 Inter-City Products Corp., 9.750%, 03/01/00.............................. 1,750,000 1,631,875 Interlake Corp., 12.125%, 03/01/02............................. 2,500,000 2,325,000 *Ivex Holdings Corp., Zero Coupon, 03/15/05, Series B............... 2,000,000 800,000 Ivex Packaging Corp., 12.500%, 12/15/02............................. 1,250,000 1,243,750 **J B Williams Holdings, Inc., 12.000%, 03/01/04............................. 1,000,000 935,000 J.B. Poindexter & Co., 12.500%, 05/15/04............................. 3,250,000 3,055,000 J.M. Peters Co., 12.750%, 05/01/02............................. 1,250,000 1,037,500 Jones Intercable, Inc., 10.500%, 03/01/08............................. 1,250,000 1,225,000 Jordan Industries, Inc., *Zero Coupon, 08/01/05........................ 500,000 250,000 10.375%, 08/01/03............................. 500,000 445,000 JPS Automotive Products Corp., 11.125%, 06/15/01............................. 500,000 480,000 JPS Textile Group, Inc., 7.000%, 05/15/00.............................. 1,000,000 410,000 9.850%, 06/01/99.............................. 1,049,000 645,135 K & F Industries, Inc., 11.875%, 12/01/03............................. 1,500,000 1,458,750 13.750%, 08/01/01............................. 500,000 450,000 K. Hovnanian Enterprises, Inc., 11.250%, 04/15/02............................. 1,000,000 835,000 Kaiser Aluminum & Chemical Corp., 12.750%, 02/01/03............................. 1,375,000 1,385,313
B22 HIGH YIELD BOND PORTFOLIO (CONTINUED) DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- Kloster Cruise Ltd., 13.000%, 05/01/03............................. $ 1,500,000 $ 1,350,000 Lady Luck Gaming Corp., 10.500%, 03/01/01, Series B................... 1,000,000 390,000 Lamson & Sessions Co., 14.000%, 06/01/97............................. 500,000 505,000 Laroche Industries, Inc., 13.000%, 08/15/04............................. 1,000,000 920,000 Loehmann's Holdings, Inc., 10.250%, 10/01/97............................. 300,000 289,500 13.750%, 02/15/99............................. 1,600,000 1,584,000 Louisiana Casino Cruises, Inc., 11.500%, 12/01/98............................. 1,400,000 1,190,000 MacAndrews & Forbes Group, Inc., 12.250%, 07/01/96............................. 750,000 742,500 13.000%, 03/01/99............................. 1,250,000 1,225,000 Mail-Well Corp., 10.500%, 02/15/04............................. 2,500,000 2,175,000 Malette, Inc., 12.250%, 07/15/04............................. 2,500,000 2,525,000 *Marcus Cable Operating Co., L.P., Zero Coupon, 08/01/04......................... 3,000,000 1,590,000 Marvel Holdings, Inc., Zero Coupon, 04/15/98, Series B............... 2,000,000 1,230,000 Maxxam Group, Inc., *Zero Coupon, 08/01/03........................ 2,500,000 1,425,000 11.250%, 08/01/03............................. 1,000,000 937,500 Miles Homes, Inc., 12.000%, 04/01/01............................. 1,250,000 862,500 Moran Transportation Co., 11.750%, 07/15/04, Series B................... 1,000,000 945,000 Motor Wheel Corp., 11.500%, 03/01/00, Series B................... 2,500,000 2,312,500 *Neodata Services, Inc., Zero Coupon, 05/01/03, Series B............... 2,000,000 1,560,000 NewCity Communications, Inc., 11.375%, 11/01/03............................. 1,500,000 1,380,000 Newflo Corp., 13.250%, 11/15/02............................. 1,000,000 985,000 *Nextel Communications, Inc., Zero Coupon, 09/01/03-08/15/04................ 2,000,000 760,000 NL Industries, Inc., *Zero Coupon, 10/15/05........................ 2,250,000 1,395,000 11.750%, 10/15/03............................. 1,250,000 1,250,000 Nortek, Inc., 9.875%, 03/01/04.............................. 1,750,000 1,557,500 **%Northwest Airlines, Inc, 12.092%, 12/31/00............................. 1,976,884 1,907,693 NVR, Inc., 11.000%, 04/15/03............................. 2,000,000 1,670,000 NWCG Holdings Corp., Zero Coupon, 06/15/99, Series B............... 3,000,000 1,530,000 OrNda Healthcorp, 11.375%, 08/15/04............................. 1,000,000 1,025,000 12.250%, 05/15/02............................. 1,500,000 1,605,000 Outdoor Systems, Inc., 10.750%, 08/15/03............................. 1,250,000 1,125,000 Overhead Door Co., 12.250%, 02/01/00............................. 1,000,000 1,012,500 PA Holdings Corp., 13.750%, 07/15/99............................. 224,000 235,200 Pagemart, Inc., 12.250%, 11/01/03............................. 2,000,000 1,200,000 Pamida, Inc., 11.750%, 03/15/03............................. 1,500,000 1,402,500
DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- Pathmark Stores, Inc., *Zero Coupon, 11/01/03........................ $ 2,500,000 $ 1,275,000 9.625%, 05/01/03.............................. 500,000 445,000 11.625%, 06/15/02............................. 1,000,000 960,000 Petroleum Heat & Power Company, Inc., 9.375%, 02/01/06.............................. 500,000 425,000 10.125%, 04/01/03............................. 1,240,000 1,128,400 **PF Acquisition Corp., 12.250%, 02/01/05............................. 1,500,000 1,500,000 Pier 1 Imports, Inc., 11.500%, 07/15/03............................. 347,000 357,410 Pilgrim's Pride Corp., 10.875%, 08/01/03............................. 1,750,000 1,649,375 **Polymer Group, Inc., 12.250%, 07/15/02............................. 1,250,000 1,193,750 **President Riverboat Casinos, Inc., 13.000%, 09/15/01............................. 2,500,000 2,200,000 Presidio Oil Co., 11.500%, 09/15/00, Series B................... 800,000 580,000 %14.050%, 07/15/02, Series B.................. 400,000 248,000 Presley Cos., 12.500%, 07/01/01............................. 1,750,000 1,505,000 ***Pricellular Wireless Corp., Zero Coupon, 11/15/01......................... 1,000,000 660,000 Pueblo Xtra International, Inc., 9.500%, 08/01/03.............................. 500,000 420,000 Purity Supreme, Inc., 11.750%, 08/01/99, Series B................... 1,250,000 1,037,500 Ralphs Grocery Co., 9.000%, 04/01/03, Series B.................... 1,250,000 1,212,500 ***Remington Arms Co., 9.500%, 12/01/03.............................. 1,000,000 840,000 Republic Engineered Steel, Inc., 9.875%, 12/15/01.............................. 1,000,000 905,000 Rexene Corp., 11.750%, 12/01/04............................. 1,000,000 1,025,000 Robin Media Group, Inc., 11.125%, 04/01/97............................. 1,250,000 1,187,500 Rohr, Inc., 11.625%, 05/15/03............................. 1,000,000 995,000 Ryland Group, Inc., 9.625%, 06/01/04.............................. 1,000,000 840,000 **Sam Houston Race Park, Ltd., 11.750%, 07/15/99............................. 1,000,000 350,000 Santa Fe Hotel, Inc., 11.000%, 12/15/00............................. 500,000 440,000 Scott Cable Communications, Inc., 12.250%, 04/15/01............................. 250,000 200,000 Seminole Kraft Corp., 13.500%, 10/15/96............................. 287,000 287,000 Seven-Up/RC Bottling Co., 11.500%, 08/01/99............................. 1,250,000 1,050,000 Showboat, Inc., 13.000%, 08/01/09............................. 1,500,000 1,425,000 Silgan Corp., 11.750%, 06/15/02............................. 1,000,000 1,035,000 *Silgan Holdings, Inc., Zero Coupon, 12/15/02......................... 2,000,000 1,680,000 Southdown, Inc., 14.000%, 10/15/01, Series B................... 500,000 556,250 Southland Corp., 12.000%, 06/15/09, Series C................... 500,000 490,000 Specialty Foods Acquisition Corp., *Zero Coupon, 08/15/05, Series B.............. 2,000,000 805,000 10.250%, 08/15/01, Series B................... 1,000,000 890,000 11.250%, 08/15/03, Series B................... 1,250,000 1,087,500
B23 HIGH YIELD BOND PORTFOLIO (CONTINUED) DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- SPX Corp., 11.750%, 06/01/02............................. $ 2,500,000 $ 2,487,500 **Star Markets, Inc., 13.000%, 11/01/04............................. 1,000,000 1,017,500 Station Casinos, Inc., 9.625%, 06/01/03.............................. 2,000,000 1,680,000 Stone Consolidated Corp., 10.250%, 12/15/00............................. 650,000 640,250 Stone Container Corp., 9.875%, 02/01/01.............................. 1,500,000 1,410,000 12.625%, 07/15/98............................. 1,500,000 1,571,250 Surgical Health Corp., 11.500%, 07/15/04............................. 600,000 600,000 *Talley Industries, Inc., Zero Coupon, 10/15/05......................... 2,750,000 1,375,000 Talley Manufacturing & Technology, Inc., 10.750%, 10/15/03............................. 500,000 450,000 Thrifty Payless, Inc., 11.750%, 04/15/03............................. 3,000,000 2,940,000 *Total Renal Care, Inc., Zero Coupon, 08/15/04......................... 500,000 375,000 Triangle Pacific Corp., 10.500%, 08/01/03............................. 2,000,000 1,915,000 Trism, Inc., 10.750%, 12/15/00............................. 500,000 475,000 *Triton Energy Corp., Zero Coupon, 12/15/00......................... 2,000,000 1,492,500 Trump Plaza Funding, 10.875%, 06/15/01............................. 800,000 608,000 Trump Taj Mahal Funding, Inc., 11.350%, 11/15/99, Series A................... 2,000,000 1,330,000 Uniroyal Technology Corp., 11.750%, 06/01/03............................. 2,000,000 1,620,000 %Unisys Corp., 13.500%, 07/01/97............................. 750,000 802,500 United Artists Theatre Circuit, Inc., 11.500%, 05/01/02, Series B................... 1,000,000 1,032,500 United International Holdings, Inc., Zero Coupon, 11/15/99......................... 6,000,000 3,030,000 US Air, Inc., 9.625%, 02/01/01.............................. 2,000,000 1,100,000 10.375%, 03/01/13, Series 93-A3............... 1,000,000 815,000 12.875%, 04/01/00............................. 950,000 762,375 Valcor, Inc., 9.625%, 11/01/03.............................. 750,000 690,000 Wainoco Oil Corp., 12.000%, 08/01/02............................. 1,500,000 1,530,000 Waters Corp., 12.750%, 09/30/04, Series B................... 1,250,000 1,256,250 Webb Corp., 9.000%, 02/15/06.............................. 375,000 285,000 Webcraft Technologies, Inc., 9.375%, 02/15/02.............................. 1,500,000 1,297,500 Wheeling-Pittsburgh Corp., 9.375%, 11/15/03.............................. 1,400,000 1,190,000 Wherehouse Entertainment, Inc., 13.000%, 08/01/02, Series B................... 150,000 75,000 White Rose Foods, Inc., Zero Coupon, 11/01/98......................... 1,750,000 945,000 Wickes Lumber Co., 11.625%, 12/15/03............................. 2,500,000 2,425,000 Williamhouse Regency, Inc., 11.500%, 06/15/05............................. 2,000,000 1,840,000
DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- Young Broadcasting Corp., 11.750%, 11/15/04............................. $ 500,000 $ 505,000 -------------- 248,816,277 -------------- TOTAL LONG-TERM BONDS (Cost $293,001,887)............................................ 269,347,408 -------------- MARKET OTHER LONG-TERM INVESTMENTS -- 0.1% SHARES VALUE ------------- -------------- **+PG Partners L.P.............................. 7,541 361,968 (Cost $115,290) PRINCIPAL SHORT-TERM INVESTMENTS -- 4.7% AMOUNT VALUE ------------- -------------- REPURCHASE AGREEMENTS Joint Repurchase Agreement Account, 5.720%, 01/03/95 (see Note 4)................. 14,296,000 14,296,000 -------------- OTHER ASSETS -- 2.3% (net of liabilities)........................................... 7,141,716 -------------- TOTAL NET ASSETS -- 100.0%....................................... $ 306,224,713 -------------- -------------- The following abbreviations are used in portfolio descriptions: L.P. Limited Partnership M.T.N. Medium Term Note PLC Public Limited Company (British Corporation) SA Sociedad Anonima (Spanish Corporation) or Societe Anonyme (French Corporation) *Denotes deferred interest security that accrues no interest until a predetermined date at which time a specified coupon rate becomes effective. **Indicates a restricted security; the aggregate cost of the restricted securities is $21,440,552. The aggregate value, $19,903,619 is approximately 6.5% of net assets. (See Note 2) +No dividend was paid on this security during the 12 months ending December 31, 1994. ++Non-income producing. %Indicates a variable rate security. [Payment-in-kind preferred stock--dividend is paid in additional preferred shares in lieu of cash. &Payment-in-kind bonds--interest is paid in additional bonds in lieu of cash.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. B24 STOCK INDEX PORTFOLIO DECEMBER 31, 1994
MARKET COMMON STOCKS -- 96.1% SHARES VALUE ------------- -------------- AEROSPACE -- 2.1% AlliedSignal, Inc............................... 54,100 $ 1,839,400 Boeing Co....................................... 64,850 3,031,737 E-Systems, Inc.................................. 6,200 258,075 General Dynamics Corp........................... 12,100 526,350 Lockheed Corp................................... 11,900 864,237 Loral Corp...................................... 16,300 617,362 Martin Marietta Corp............................ 18,400 816,500 McDonnell Douglas Corp.......................... 7,500 1,065,000 Northrop Grumman Corp........................... 9,300 390,600 Raytheon Co..................................... 25,800 1,647,975 Rockwell International Corp..................... 41,800 1,494,350 United Technologies Corp........................ 24,200 1,521,575 -------------- 14,073,161 -------------- AIRLINES -- 0.3% +AMR Corp....................................... 14,600 777,450 Delta Air Lines, Inc............................ 9,900 499,950 Southwest Airlines Co........................... 27,100 453,925 +USAir Group, Inc............................... 10,500 45,938 -------------- 1,777,263 -------------- ALUMINUM -- 0.5% Alcan Aluminum, Ltd............................. 42,450 1,077,169 Aluminum Co. of America......................... 16,900 1,463,962 Reynolds Metals Co.............................. 12,100 592,900 -------------- 3,134,031 -------------- AUTOS - CARS & TRUCKS -- 2.6% Chrysler Corp................................... 67,800 3,322,200 Cummins Engine Co., Inc......................... 8,300 375,575 Dana Corp....................................... 18,800 439,450 Echlin, Inc..................................... 10,900 327,000 Ford Motor Co................................... 191,800 5,370,400 General Motors Corp............................. 142,700 6,029,075 Genuine Parts Co................................ 23,650 851,400 Johnson Controls, Inc........................... 7,500 367,500 +Navistar International Corp.................... 14,500 219,312 Safety Kleen Corp............................... 11,050 162,987 -------------- 17,464,899 -------------- BANKS AND SAVINGS & LOANS -- 5.1% Banc One Corp................................... 77,622 1,969,658 Bank of Boston Corp............................. 20,300 525,262 BankAmerica Corp................................ 70,548 2,786,646 Bankers Trust NY Corp........................... 15,300 847,237 Barnett Banks, Inc.............................. 18,700 717,612 Boatmen's Bancshares, Inc....................... 19,500 528,937 Chase Manhattan Corp............................ 36,501 1,254,722 Chemical Banking Corp........................... 48,382 1,735,704 Citicorp........................................ 74,100 3,065,887 CoreStates Financial Corp....................... 28,000 728,000 First Chicago Corp.............................. 17,800 849,950 First Fidelity Bancorp.......................... 15,600 700,050 First Interstate Bancorp........................ 15,500 1,048,187 First Union Corp................................ 32,500 1,344,688 Fleet Financial Group, Inc...................... 26,700 867,750 Golden West Financial Corp...................... 12,200 430,050 Great Western Financial Corp.................... 24,500 392,000 H.F. Ahmanson & Co.............................. 22,200 357,975 J.P. Morgan & Co., Inc.......................... 36,650 2,052,400 KeyCorp......................................... 47,100 1,177,500 Mellon Bank Corp................................ 27,850 852,906 NationsBank Corp................................ 52,239 2,357,285 NBD Bancorp, Inc................................ 30,425 832,884
DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- Norwest Corp.................................... 60,800 $ 1,421,200 PNC Bank Corp................................... 44,300 935,838 Shawmut National Corp........................... 22,300 365,163 Suntrust Banks, Inc............................. 23,100 1,103,025 U.S. Bancorp.................................... 18,900 427,613 Wachovia Corp................................... 32,400 1,044,900 Wells Fargo & Co................................ 10,400 1,508,000 -------------- 34,229,029 -------------- BEVERAGES -- 3.5% Adolph Coors Co. (Class 'B' Stock).............. 7,100 118,925 Anheuser-Busch Companies, Inc................... 49,900 2,538,663 Brown-Forman Corp. (Class 'B' Stock)............ 15,300 466,650 Coca-Cola Co.................................... 246,100 12,674,150 PepsiCo, Inc.................................... 150,800 5,466,500 Seagram Co., Ltd................................ 70,300 2,073,850 -------------- 23,338,738 -------------- CHEMICALS -- 2.8% Air Products & Chemicals, Inc................... 21,700 968,362 Dow Chemical Co................................. 52,500 3,530,625 E.I. du Pont de Nemours & Co.................... 129,700 7,295,625 Eastman Chemical Co............................. 15,900 802,950 Hercules, Inc................................... 7,800 899,925 Mallinckrodt Group, Inc......................... 14,800 442,150 Monsanto Co..................................... 22,500 1,586,250 Nalco Chemical Co............................... 12,900 432,150 Rohm & Haas Co.................................. 13,100 748,337 Sigma-Aldrich Corp.............................. 9,000 297,000 Union Carbide Corp.............................. 28,600 840,125 W.R. Grace & Co................................. 17,900 691,388 -------------- 18,534,887 -------------- CHEMICALS - SPECIALTY -- 0.4% Engelhard Corp.................................. 18,850 419,413 First Mississippi Corp.......................... 3,700 92,500 Great Lakes Chemical Corp....................... 13,700 780,900 Morton International, Inc....................... 28,100 800,850 Praxair, Inc.................................... 25,100 514,550 Raychem Corp.................................... 7,800 277,875 -------------- 2,886,088 -------------- COMMERCIAL SERVICES -- 0.2% Deluxe Corp..................................... 15,300 405,450 John H. Harland Co.............................. 5,900 118,000 Moore Corp., Ltd................................ 18,300 345,413 Ogden Corp...................................... 7,600 142,500 -------------- 1,011,363 -------------- COMPUTER SERVICES -- 2.8% Autodesk, Inc................................... 8,800 348,700 Automatic Data Processing, Inc.................. 26,700 1,561,950 +Ceridian Corp.................................. 8,200 220,375 +Cisco Systems.................................. 50,000 1,756,250 Computer Associates International, Inc.......... 31,350 1,520,475 +Computer Sciences Corp......................... 9,900 504,900 First Data Corp................................. 20,600 975,925 +Harris Computer Systems Corp................... 370 4,532 +Intergraph Corp................................ 7,600 61,750 +Lotus Development Corp......................... 9,000 369,000 +Microsoft Corp................................. 109,900 6,717,638 +Novell, Inc.................................... 70,000 1,198,750 +Oracle Systems Corp............................ 54,400 2,400,400
B25 STOCK INDEX PORTFOLIO (CONTINUED) DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- +Sun Microsystems, Inc.......................... 19,300 $ 685,150 +Tandem Computers, Inc.......................... 21,100 361,338 -------------- 18,687,133 -------------- CONSTRUCTION -- 0.2% Fluor Corp...................................... 15,600 672,750 Foster Wheeler Corp............................. 6,800 202,300 Kaufman & Broad Home Corp....................... 6,366 81,962 Pulte Corp...................................... 5,100 117,300 -------------- 1,074,312 -------------- CONTAINERS -- 0.2% Ball Corp....................................... 5,400 170,100 Bemis Co., Inc.................................. 10,000 240,000 +Crown Cork & Seal, Inc......................... 17,300 653,075 -------------- 1,063,175 -------------- COSMETICS & SOAPS -- 2.3% Alberto Culver Co. (Class 'B' Stock)............ 5,000 136,250 Avon Products, Inc.............................. 13,400 800,650 Clorox Co....................................... 9,900 582,862 Colgate Palmolive Co............................ 28,500 1,806,188 Gillette Co..................................... 41,900 3,132,025 International Flavors & Fragrances, Inc......... 21,000 971,250 Procter & Gamble Co............................. 130,552 8,094,224 -------------- 15,523,449 -------------- DIVERSIFIED GAS -- 0.2% Coastal Corp.................................... 19,900 512,425 Eastern Enterprises............................. 4,100 107,625 ENSERCH Corp.................................... 12,200 160,125 NICOR, Inc...................................... 10,300 234,325 ONEOK, Inc...................................... 4,600 82,800 -------------- 1,097,300 -------------- DIVERSIFIED OFFICE EQUIPMENT -- 2.3% Alco Standard Corp.............................. 10,388 651,847 Avery Dennison Corp............................. 10,500 372,750 +COMPAQ Computer Corp........................... 49,400 1,951,300 Honeywell, Inc.................................. 24,900 784,350 International Business Machines Corp............ 111,100 8,165,850 Pitney-Bowes, Inc............................... 29,600 939,800 +Unisys Corp.................................... 31,100 268,238 Xerox Corp...................................... 20,182 1,998,018 -------------- 15,132,153 -------------- DRUGS AND HOSPITAL SUPPLIES -- 7.7% Abbott Laboratories............................. 155,000 5,056,875 Allergan, Inc................................... 12,100 341,825 +ALZA Corp...................................... 15,200 273,600 American Home Products Corp..................... 58,200 3,652,050 +Amgen, Inc..................................... 25,600 1,510,400 Bausch & Lomb, Inc.............................. 11,300 382,787 Baxter International, Inc....................... 53,600 1,514,200 Becton, Dickinson & Co.......................... 14,000 672,000 +Biomet, Inc.................................... 21,600 302,400 Bristol-Myers Squibb Co......................... 97,140 5,621,978 C.R. Bard, Inc.................................. 9,900 267,300 Eli Lilly & Co.................................. 55,800 3,661,875 Johnson & Johnson............................... 122,600 6,712,350 Medtronic, Inc.................................. 22,000 1,223,750 Merck & Co., Inc................................ 240,050 9,151,906 Pfizer, Inc..................................... 58,300 4,503,675 Schering-Plough Corp............................ 36,700 2,715,800 St. Jude Medical, Inc........................... 8,500 337,875
DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- United States Surgical Corp..................... 10,500 $ 199,500 Upjohn Co....................................... 32,700 1,005,525 Warner-Lambert Co............................... 25,500 1,963,500 -------------- 51,071,171 -------------- ELECTRICAL EQUIPMENT -- 0.1% Westinghouse Electric Corp...................... 66,800 818,300 -------------- ELECTRONICS -- 4.1% +Advanced Micro Devices, Inc.................... 17,700 440,288 Amdahl Corp..................................... 23,300 256,300 AMP, Inc........................................ 20,200 1,469,550 Apple Computer, Inc............................. 22,400 873,600 +Cray Research, Inc............................. 4,700 74,025 +Data General Corp.............................. 5,400 54,000 +Digital Equipment Corp......................... 26,400 877,800 EG&G, Inc....................................... 9,700 137,012 Emerson Electric Co............................. 42,700 2,668,750 Harris Corp..................................... 7,400 314,500 Hewlett-Packard Co.............................. 48,500 4,843,937 Intel Corp...................................... 79,800 5,097,225 Micron Technology, Inc.......................... 19,800 873,675 Motorola, Inc................................... 107,800 6,238,925 +National Semiconductor Corp.................... 23,900 466,050 Perkin-Elmer Corp............................... 8,100 207,562 Tandy Corp...................................... 12,265 614,783 Tektronix, Inc.................................. 5,600 191,800 Texas Instruments, Inc.......................... 17,500 1,310,312 Thomas & Betts Corp............................. 3,500 234,938 +Zenith Electronics Corp........................ 8,300 96,488 -------------- 27,341,520 -------------- FINANCIAL SERVICES -- 2.6% American Express Co............................. 94,200 2,778,900 Beneficial Corp................................. 9,700 378,300 Dean Witter, Discover & Co...................... 32,245 1,092,299 Federal Home Loan Mortgage Corporation.......... 34,150 1,724,575 Federal National Mortgage Association........... 51,700 3,767,637 H & R Block, Inc................................ 19,800 735,075 Household International , Inc................... 17,500 649,688 MBNA Corp....................................... 27,800 649,825 Merrill Lynch & Co., Inc........................ 39,200 1,401,400 National City Corp.............................. 28,200 729,675 Salomon, Inc.................................... 20,600 772,500 Transamerica Corp............................... 14,200 706,450 Travelers, Inc.................................. 62,031 2,016,008 -------------- 17,402,332 -------------- FOODS -- 3.2% Archer-Daniels-Midland Co....................... 98,764 2,037,007 Campbell Soup Co................................ 47,900 2,113,587 ConAgra, Inc.................................... 47,600 1,487,500 CPC International, Inc.......................... 28,200 1,501,650 Fleming Companies, Inc.......................... 6,700 155,775 General Mills, Inc.............................. 30,000 1,710,000 Giant Food, Inc. (Class 'A' Stock).............. 10,900 237,075 H.J. Heinz & Co................................. 47,100 1,730,925 Hershey Foods Corp.............................. 16,300 788,513 Kellogg Co...................................... 42,500 2,470,313 Pet, Inc........................................ 19,900 393,025 Pioneer Hi-Bred International, Inc.............. 16,600 572,700 Quaker Oats Co.................................. 26,000 799,500 Ralston-Ralston Purina Group.................... 19,240 858,585 Sara Lee Corp................................... 91,000 2,297,750
B26 STOCK INDEX PORTFOLIO (CONTINUED) DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- Sysco Corp...................................... 34,800 $ 896,100 W. M. Wrigley, Jr. Co........................... 22,300 1,101,063 -------------- 21,151,068 -------------- FOREST PRODUCTS -- 1.8% Boise Cascade Corp.............................. 7,686 205,600 Champion International Corp..................... 17,900 653,350 Federal Paper Board Co., Inc.................... 8,500 246,500 Georgia-Pacific Corp............................ 17,200 1,229,800 International Paper Co.......................... 23,600 1,778,850 James River Corp. of Virginia................... 15,900 321,975 Kimberly-Clark Corp............................. 31,000 1,565,500 Louisiana Pacific Corp.......................... 21,000 572,250 Mead Corp....................................... 11,100 539,737 Potlatch Corp................................... 5,800 216,050 Scott Paper Co.................................. 14,100 974,663 Stone Container Corp............................ 17,066 294,388 Temple Inland, Inc.............................. 10,500 473,813 Union Camp Corp................................. 13,100 617,338 Westvaco Corp................................... 12,400 486,700 Weyerhaeuser Co................................. 39,300 1,473,750 -------------- 11,650,264 -------------- GAS PIPELINES -- 0.6% +Columbia Gas System, Inc....................... 9,500 223,250 Consolidated Natural Gas Co..................... 17,900 635,450 Enron Corp...................................... 47,400 1,445,700 NorAm Energy Corp............................... 21,100 113,413 Panhandle Eastern Corp.......................... 22,990 454,053 Peoples Energy Corp............................. 6,400 167,200 Transco Energy Co............................... 7,600 126,350 Williams Companies, Inc......................... 19,900 499,987 -------------- 3,665,403 -------------- HOSPITAL MANAGEMENT -- 0.6% +Beverly Enterprises, Inc....................... 17,000 244,375 Columbia / HCA Healthcare Corp.................. 68,132 2,486,818 Community Psychiatric Centers................... 6,900 75,900 Manor Care, Inc................................. 11,850 324,394 National Medical Enterprises, Inc............... 30,600 432,225 Service Corp. International..................... 17,800 493,950 Shared Medical Systems Corp..................... 4,700 153,925 -------------- 4,211,587 -------------- HOUSING RELATED -- 0.6% Armstrong World Industries, Inc................. 7,100 273,350 Centex Corp..................................... 6,000 136,500 Fleetwood Enterprises, Inc...................... 8,700 163,125 Lowe's Companies, Inc........................... 30,000 1,042,500 Masco Corp...................................... 29,300 662,913 Maytag Corp..................................... 19,500 292,500 +Owens-Corning Fiberglas Corp................... 8,600 275,200 Skyline Corp.................................... 1,000 19,250 Stanley Works................................... 9,000 321,750 Whirlpool Corp.................................. 14,200 713,550 -------------- 3,900,638 -------------- INSURANCE -- 3.1% Aetna Life & Casualty Co........................ 21,500 1,013,187 Alexander & Alexander Services, Inc............. 8,500 157,250 American General Corp........................... 40,400 1,141,300 American International Group, Inc............... 60,225 5,902,050 Chubb Corp...................................... 16,800 1,299,900 CIGNA Corp...................................... 13,700 871,662 Continental Corp................................ 10,600 201,400 General Re Corp................................. 15,750 1,949,062
DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- Jefferson-Pilot Corp............................ 9,650 $ 500,594 Lincoln National Corp........................... 17,800 623,000 Marsh & McLennan Companies, Inc................. 13,800 1,093,650 Providian Corp.................................. 18,500 571,188 SAFECO Corp..................................... 11,700 608,400 St. Paul Companies, Inc......................... 16,000 716,000 Torchmark Corp.................................. 13,900 484,763 U.S. Healthcare, Inc............................ 30,500 1,258,125 United Healthcare Corp.......................... 32,700 1,475,587 UNUM Corp....................................... 14,500 547,375 USF&G Corp...................................... 14,900 203,013 USLIFE Corp..................................... 4,100 142,987 -------------- 20,760,493 -------------- LEISURE -- 1.0% +Bally Entertainment Corp....................... 7,200 44,100 Brunswick Corp.................................. 18,300 345,412 Handleman Co.................................... 5,850 66,544 Hasbro, Inc..................................... 16,500 482,625 +King World Productions, Inc.................... 6,650 229,425 Mattel, Inc..................................... 34,356 863,195 Outboard Marine Corp............................ 3,900 76,537 Walt Disney Co.................................. 102,200 4,713,975 -------------- 6,821,813 -------------- LODGING -- 0.3% Hilton Hotels Corp.............................. 9,400 633,325 Marriott International, Inc..................... 23,700 666,563 +Promus Companies, Inc.......................... 19,950 618,450 -------------- 1,918,338 -------------- MACHINERY -- 1.2% Briggs & Stratton Corp.......................... 5,200 170,300 Caterpillar, Inc................................ 38,500 2,122,312 Cincinnati Milacron, Inc........................ 6,900 163,013 +Clark Equipment Co............................. 3,200 173,600 Cooper Industries, Inc.......................... 22,100 754,162 Deere & Co...................................... 16,500 1,093,125 Dover Corp...................................... 10,700 552,387 Eaton Corp...................................... 14,900 737,550 Giddings & Lewis, Inc........................... 6,900 101,775 +Giddings & Lewis, Inc. (Contingent Payment Right)........................................ 1,000 0 Harnischfeger Industries, Inc................... 8,400 236,250 Ingersoll-Rand Co............................... 19,700 620,550 PACCAR, Inc..................................... 7,130 315,503 Parker-Hannifin Corp............................ 9,300 423,150 Snap-On Inc..................................... 8,000 266,000 SPX Corp........................................ 1,500 24,938 Timken Co....................................... 6,400 225,600 +Varity Corp.................................... 8,810 319,363 -------------- 8,299,578 -------------- MEDIA -- 3.0% Capital Cities/ABC, Inc......................... 29,800 2,540,450 CBS, Inc........................................ 12,150 672,806 Comcast Corp. (Special Class 'A' Stock)......... 44,400 696,525 Dow Jones & Co., Inc............................ 18,300 567,300 Dun & Bradstreet Corp........................... 32,760 1,801,800 Gannett Co., Inc................................ 27,800 1,480,350 Interpublic Group of Companies, Inc............. 14,400 462,600 Knight-Ridder, Inc.............................. 9,900 499,950 McGraw-Hill, Inc................................ 9,400 628,625 Meredith Corp................................... 2,900 135,213
B27 STOCK INDEX PORTFOLIO (CONTINUED) DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- New York Times Co. (Class 'A' Stock)............ 19,800 $ 438,075 R. R. Donnelley & Sons Co....................... 29,500 870,250 +Tele-Communications, Inc. (Class 'A' Stock).... 109,900 2,390,325 Time Warner, Inc................................ 71,940 2,526,893 Times Mirror Co. (Class 'A' Stock).............. 24,000 753,000 Tribune Co...................................... 12,500 684,375 +Viacom, Inc. (Class 'B' Stock)................. 66,367 2,696,159 -------------- 19,844,696 -------------- MINERAL RESOURCES -- 1.1% American Barrick Resources Corp................. 67,100 1,492,975 ASARCO, Inc..................................... 8,700 247,950 Burlington Resources, Inc....................... 24,600 861,000 Cyprus Amax Minerals Co......................... 17,600 459,800 Echo Bay Mines, Ltd............................. 21,800 231,625 Homestake Mining Co............................. 26,300 450,388 Inco, Ltd....................................... 22,200 635,475 Newmont Mining Corp............................. 16,100 579,600 Phelps Dodge Corp............................... 13,300 822,937 Pittston Services Group......................... 7,300 193,450 Placer Dome, Inc................................ 45,800 996,150 +Sante Fe Pacific Gold Corp..................... 46,916 604,044 -------------- 7,575,394 -------------- MISCELLANEOUS - BASIC INDUSTRY -- 4.5% Bassett Furniture Industries, Inc............... 2,612 74,442 Browning-Ferris Industries, Inc................. 37,400 1,061,225 Crane Co........................................ 5,500 147,813 Ecolab, Inc..................................... 12,000 252,000 +FMC Corp....................................... 6,900 398,475 General Electric Co............................. 326,400 16,646,400 General Signal Corp............................. 9,262 295,226 Illinois Tool Works, Inc........................ 21,400 936,250 ITT Corp........................................ 22,400 1,985,200 +JWP, Inc....................................... 4,200 0 Millipore Corp.................................. 5,500 266,062 Morrison Knudsen Corp........................... 5,800 73,950 NACCO Industries, Inc. (Class 'A' Stock)........ 1,600 77,400 Pall Corp....................................... 21,900 410,625 PPG Industries, Inc............................. 40,400 1,499,850 Rollins Environmental Services, Inc............. 9,400 45,825 Teledyne, Inc................................... 10,300 207,287 Textron, Inc.................................... 17,100 861,412 Trinova Corp.................................... 5,600 164,500 TRW, Inc........................................ 12,300 811,800 Tyco International, Ltd......................... 14,300 679,250 W.W. Grainger, Inc.............................. 9,500 548,625 WMX Technologies, Inc........................... 91,700 2,407,125 Zurn Industries, Inc............................ 2,000 36,000 -------------- 29,886,742 -------------- MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 2.3% American Greetings Corp. (Class 'A' Stock)...... 13,800 372,600 Black & Decker Corp............................. 16,500 391,875 Corning, Inc.................................... 42,400 1,266,700 Dial Corp....................................... 17,600 374,000 Eastman Kodak Co................................ 63,300 3,022,575 Jostens, Inc.................................... 8,100 150,863 Minnesota Mining & Manufacturing Co............. 80,500 4,296,687 +National Education Corp........................ 2,700 11,138 Polaroid Corp................................... 9,500 308,750
DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- Premark International, Inc...................... 12,300 $ 538,125 Rubbermaid, Inc................................. 30,800 885,500 Unilever N.V., ADR.............................. 30,400 3,541,600 Whitman Corp.................................... 19,700 339,825 -------------- 15,500,238 -------------- PETROLEUM -- 8.8% Amerada Hess Corp............................... 17,500 798,438 Amoco Corp...................................... 94,730 5,600,911 Ashland Oil, Inc................................ 11,600 400,200 Atlantic Richfield Co........................... 30,485 3,101,848 Chevron Corp.................................... 123,900 5,529,037 Exxon Corp...................................... 236,800 14,385,600 Kerr-McGee Corp................................. 9,900 455,400 Louisiana Land & Exploration Co................. 6,500 236,438 +Maxus Energy Corp.............................. 23,000 77,625 Mobil Corp...................................... 75,800 6,386,150 Occidental Petroleum Corp....................... 59,700 1,149,225 Pennzoil Co..................................... 9,100 401,538 Phillips Petroleum Co........................... 49,700 1,627,675 Royal Dutch Petroleum Co........................ 102,000 10,965,000 Santa Fe Energy Resources, Inc.................. 15,970 127,760 Sun Co., Inc.................................... 21,000 603,750 Tenneco, Inc.................................... 32,700 1,389,750 Texaco, Inc..................................... 49,600 2,969,800 Unocal Corp..................................... 46,300 1,261,675 USX-Marathon Group.............................. 54,800 897,350 -------------- 58,365,170 -------------- PETROLEUM SERVICES -- 0.9% Baker Hughes, Inc............................... 26,700 487,275 Dresser Industries, Inc......................... 35,000 660,625 Halliburton Co.................................. 21,800 722,125 Helmerich & Payne, Inc.......................... 5,100 130,687 McDermott International, Inc.................... 9,700 240,075 Oryx Energy Co.................................. 18,600 220,875 +Rowan Companies, Inc........................... 15,200 93,100 Schlumberger, Ltd............................... 46,600 2,347,475 Sonat, Inc...................................... 16,000 448,000 +Western Atlas, Inc............................. 9,700 364,963 -------------- 5,715,200 -------------- RAILROADS -- 1.0% Burlington Northern, Inc........................ 17,300 832,562 Conrail Inc..................................... 15,100 762,550 CSX Corp........................................ 19,856 1,382,474 Norfolk Southern Corp........................... 25,800 1,564,125 Santa Fe Pacific Corp........................... 36,260 634,550 Union Pacific Corp.............................. 39,300 1,793,063 -------------- 6,969,324 -------------- RESTAURANTS -- 0.7% Luby's Cafeterias, Inc.......................... 4,550 101,806 McDonald's Corp................................. 133,800 3,913,650 +Ryan's Family Steak Houses, Inc................ 8,500 63,750 +Shoney's, Inc.................................. 7,900 100,725 Wendy's International, Inc...................... 19,700 283,188 -------------- 4,463,119 -------------- RETAIL -- 5.9% Albertson's, Inc................................ 48,300 1,400,700 American Stores Co.............................. 27,600 741,750 Brown Group, Inc................................ 3,000 96,000 Bruno's, Inc.................................... 13,700 114,737 Charming Shoppes, Inc........................... 18,300 121,237 Circuit City Stores, Inc........................ 18,700 416,075
B28 STOCK INDEX PORTFOLIO (CONTINUED) DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- Dayton Hudson Corp.............................. 13,614 $ 963,190 Dillard Department Stores, Inc. (Class 'A' Stock)........................................ 21,950 587,163 Great Atlantic & Pacific Tea Co., Inc........... 7,000 126,875 Hartcourt General, Inc.......................... 15,406 543,062 +Hartmarx Corp.................................. 2,600 15,275 Home Depot, Inc................................. 85,749 3,944,454 J.C. Penney Co., Inc............................ 44,700 1,994,737 K mart Corp..................................... 85,700 1,114,100 +Kroger Co...................................... 22,100 533,163 Liz Claiborne, Inc.............................. 15,600 263,250 Longs Drug Stores, Inc.......................... 3,600 114,300 May Department Stores Co........................ 47,300 1,596,375 Melville Corp................................... 20,200 623,675 Mercantile Stores Co., Inc...................... 7,100 280,450 Newell Co....................................... 30,000 630,000 Nike, Inc. (Class 'B' Stock).................... 14,100 1,052,212 Nordstrom, Inc.................................. 15,400 646,800 Oshkosh B' Gosh, Inc. (Class 'A' Stock)......... 1,900 26,600 Pep Boys-Manny, Moe & Jack...................... 11,700 362,700 +Price/Costco, Inc.............................. 42,566 548,037 Reebok International, Ltd....................... 15,600 616,200 Rite Aid Corp................................... 17,100 399,713 Sears, Roebuck & Co............................. 66,900 3,077,400 Sherwin-Williams Co............................. 16,200 536,625 Stride Rite Corp................................ 9,400 104,575 Supervalu, Inc.................................. 13,700 335,650 The Gap, Inc.................................... 27,300 832,650 The Limited, Inc................................ 68,700 1,245,187 TJX Companies, Inc.............................. 14,300 223,438 +Toys 'R' Us, Inc............................... 54,850 1,672,925 Wal-Mart Stores, Inc............................ 438,600 9,320,250 Walgreen Co..................................... 23,700 1,036,875 Winn Dixie Stores, Inc.......................... 14,300 734,663 Woolworth Corp.................................. 24,400 366,000 -------------- 39,359,068 -------------- RUBBER -- 0.2% B.F. Goodrich Co................................ 4,700 203,863 Cooper Tire & Rubber Co......................... 16,200 382,725 Goodyear Tire & Rubber Co....................... 28,900 971,762 -------------- 1,558,350 -------------- STEEL -- 0.4% +Armco, Inc..................................... 19,500 129,188 +Bethlehem Steel Corp........................... 21,000 378,000 +Inland Steel Industries, Inc................... 8,900 312,612 Nucor Corp...................................... 16,600 921,300 USX-U.S. Steel Group............................ 14,140 501,970 Worthington Industries, Inc..................... 17,300 346,000 -------------- 2,589,070 -------------- TELECOMMUNICATIONS -- 4.5% +Airtouch Communications........................ 94,200 2,743,575 Alltel Corp..................................... 30,000 903,750 Ameritech Corp.................................. 104,600 4,223,225 +Andrew Corp.................................... 4,900 256,025 AT&T Corporation................................ 299,173 15,033,443 +DSC Communications Corp........................ 21,200 760,550 +M/A-Com, Inc................................... 2,300 16,675 MCI Communications Corp......................... 123,300 2,265,638 Northern Telecom, Ltd........................... 48,000 1,602,000
DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- Scientific-Atlanta, Inc......................... 14,500 $ 304,500 Sprint Corp..................................... 65,400 1,806,675 -------------- 29,916,056 -------------- TEXTILES -- 0.2% National Service Industries, Inc................ 9,500 243,438 Russell Corp.................................... 7,200 225,900 Springs Industries, Inc......................... 3,700 136,900 V.F. Corp....................................... 12,018 584,375 -------------- 1,190,613 -------------- TOBACCO -- 1.9% American Brands, Inc............................ 39,000 1,462,500 Philip Morris Companies, Inc.................... 166,100 9,550,750 +RJR Nabisco Holdings Corp...................... 62,557 344,063 UST, Inc........................................ 38,600 1,071,150 -------------- 12,428,463 -------------- TRUCKING/SHIPPING -- 0.3% Consolidated Freightways, Inc................... 6,500 145,438 +Federal Express Corp........................... 10,400 626,600 Roadway Services, Inc........................... 7,600 431,300 Ryder System, Inc............................... 14,600 321,200 Yellow Corp..................................... 6,000 143,250 -------------- 1,667,788 -------------- UTILITY - COMMUNICATIONS -- 4.2% Bell Atlantic Corp.............................. 83,100 4,134,225 BellSouth Corp.................................. 94,400 5,109,400 GTE Corp........................................ 182,620 5,547,083 NYNEX Corp...................................... 79,800 2,932,650 Pacific Telesis Group........................... 80,500 2,294,250 Southwestern Bell Corp.......................... 115,000 4,643,125 U S West, Inc................................... 86,800 3,092,250 -------------- 27,752,983 -------------- UTILITY - ELECTRIC -- 3.8% American Electric Power Co., Inc................ 35,300 1,160,487 Baltimore Gas & Electric Co..................... 27,650 611,756 Carolina Power & Light Co....................... 30,500 812,062 Central & South West Corp....................... 36,400 823,550 CINergy Corp.................................... 27,739 648,399 Consolidated Edison Co. of NY, Inc.............. 44,900 1,156,175 Detroit Edison Co............................... 28,300 739,337 Dominion Resources, Inc......................... 32,050 1,145,788 Duke Power Co................................... 39,200 1,494,500 Entergy Corp.................................... 42,900 938,438 FPL Group, Inc.................................. 35,900 1,260,987 Houston Industries, Inc......................... 24,700 879,938 Niagara Mohawk Power Corp....................... 26,200 373,350 Northern States Power Co........................ 12,900 567,600 Ohio Edison Co.................................. 28,200 521,700 Pacific Enterprises............................. 15,700 333,625 Pacific Gas & Electric Co....................... 82,600 2,013,375 PacifiCorp...................................... 54,200 982,375 PECO Energy Co.................................. 42,500 1,041,250 Public Service Enterprise Group, Inc............ 47,100 1,248,150 SCEcorp......................................... 84,800 1,240,200 Southern Co..................................... 124,300 2,486,000 Texas Utilities Co.............................. 42,829 1,370,528 Unicom Corp..................................... 41,000 984,000 Union Electric Company.......................... 19,600 693,350 -------------- 25,526,920 -------------- TOTAL COMMON STOCKS (Cost $557,376,390)............................................ 638,348,680 --------------
B29 STOCK INDEX PORTFOLIO (CONTINUED) DECEMBER 31, 1994
PRINCIPAL SHORT-TERM INVESTMENTS -- 4.1% AMOUNT VALUE ------------- -------------- REPURCHASE AGREEMENTS -- 3.9% Joint Repurchase Agreement Account, 5.720%, 01/03/95 (see Note 4)................. $ 25,939,000 $ 25,939,000 -------------- U. S. GOVERNMENT & AGENCY OBLIGATIONS -- 0.2% United States Treasury Bills, /5.590%, 03/16/95............................ 100,000 98,882 /5.640%, 03/16/95............................ 1,200,000 1,186,464 -------------- 1,285,346 -------------- TOTAL SHORT-TERM INVESTMENTS..................................... 27,224,346 -------------- ##VARIATION MARGIN ON OPEN FUTURES CONTRACTS -- 0.0%............... (178,025) -------------- LIABILITIES -- (0.2%) (net of other assets).......................................... (860,794) -------------- TOTAL NET ASSETS -- 100.0%....................................... $ 664,534,207 -------------- -------------- The following abbreviations are used in portfolio descriptions: ADR American Depository Receipt +No dividend was paid on this security during the 12 months ending December 31, 1994. /Entire amount pledged as collateral for futures transactions (See Note 2). ##Open futures contracts as of December 31, 1994 are as follows: PAR VALUE COVERED BY CONTRACT TYPE EXPIRATION DATE VALUE OF CONTRACTS $24,628,425 S&P 500 Index Futures Mar 95 $25,143,575
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. B30 HIGH DIVIDEND STOCK PORTFOLIO DECEMBER 31, 1994
MARKET COMMON STOCKS -- 67.8% SHARES VALUE ------------- -------------- AEROSPACE -- 5.1% E-Systems, Inc.................................. 78,900 $ 3,284,212 Northrop Grumman Corp........................... 379,200 15,926,400 Rockwell International Corp..................... 127,400 4,554,550 Thiokol Corp.................................... 706,600 19,696,475 -------------- 43,461,637 -------------- AUTOS - CARS & TRUCKS -- 1.1% Chrysler Corp................................... 106,100 5,198,900 General Motors Corp............................. 106,100 4,482,725 -------------- 9,681,625 -------------- BANKS AND SAVINGS & LOANS -- 0.1% First Fidelity Bancorp.......................... 12,300 551,963 -------------- COMPUTER SERVICES -- 0.7% +Intergraph Corp................................ 760,900 6,182,313 -------------- DIVERSIFIED GAS -- 2.3% British Gas, PLC, ADR........................... 225,600 10,998,000 Equitable Resources, Inc........................ 83,550 2,266,293 Sonat Offshore Drilling, Inc.................... 311,200 5,523,800 Yankee Energy Systems, Inc...................... 30,400 661,200 -------------- 19,449,293 -------------- DIVERSIFIED OFFICE EQUIPMENT -- 3.1% International Business Machines Corp............ 279,600 20,550,600 United Stationers, Inc.......................... 429,800 5,694,850 -------------- 26,245,450 -------------- DRUGS AND HOSPITAL SUPPLIES -- 0.8% Baxter International, Inc....................... 254,000 7,175,500 -------------- ELECTRICAL EQUIPMENT -- 1.6% Westinghouse Electric Corp...................... 1,105,600 13,543,600 -------------- ELECTRONICS -- 1.6% +Digital Equipment Corp......................... 62,600 2,081,450 +IMO Industries, Inc............................ 411,200 5,140,000 Kollmorgen Corp................................. 4,600 26,450 Newport Corp.................................... 316,400 2,452,100 Pacific Scientific Co........................... 101,500 4,110,750 -------------- 13,810,750 -------------- FINANCIAL SERVICES -- 5.5% A.G. Edwards, Inc............................... 425,100 7,651,800 Alex Brown, Inc................................. 118,700 3,605,513 Bear Stearns Companies, Inc..................... 560,000 8,610,000 Carr Realty Corp................................ 22,100 397,800 Legg Mason, Inc................................. 89,300 1,897,625 Lehman Brothers Holdings, Inc................... 1,124,100 16,580,475 Manufactured Home Communities, Inc.............. 137,100 2,724,863 Property Trust of America....................... 347,771 6,259,877 -------------- 47,727,953 -------------- GAS PIPELINES -- 2.1% Panhandle Eastern Corp.......................... 421,700 8,328,575 TransCanada Pipelines, Ltd...................... 442,700 5,367,738 Transco Energy Co............................... 183,500 3,050,687 Williams Companies, Inc......................... 42,000 1,055,250 -------------- 17,802,250 -------------- HOUSING RELATED -- 0.8% Irvine Apartment Communities, Inc............... 400,000 6,550,000 -------------- INSURANCE -- 7.3% Aetna Life & Casualty Co........................ 161,600 7,615,400 Alexander & Alexander Services, Inc............. 812,000 15,022,000
DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- Continental Corp................................ 822,300 $ 15,623,700 Jefferson-Pilot Corp............................ 51,600 2,676,750 Lincoln National Corp........................... 168,800 5,908,000 Ohio Casualty Corp.............................. 97,600 2,757,200 SAFECO Corp..................................... 159,200 8,278,400 Selective Insurance Group, Inc.................. 208,400 5,262,100 -------------- 63,143,550 -------------- MACHINERY -- 0.7% +Esterline Technologies Corp.................... 298,800 4,108,500 +Terex Corp..................................... 278,600 1,950,200 -------------- 6,058,700 -------------- MINERAL RESOURCES -- 0.4% Potash Corp. of Saskatchewan, Inc............... 113,300 3,852,200 -------------- MISCELLANEOUS - BASIC INDUSTRY -- 0.9% +Moog, Inc. (Class 'A' Stock)................... 7,700 71,225 Morrison Knudsen Corp........................... 546,000 6,961,500 +Tubos De Acero De Mexico, ADR.................. 59,500 278,906 -------------- 7,311,631 -------------- MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 0.6% Pulitzer Publishing Co.......................... 132,800 5,328,600 -------------- PETROLEUM -- 7.8% Elf Aquitaine, ADR.............................. 385,979 13,605,760 KN Energy, Inc.................................. 261,900 6,220,125 Mobil Corp...................................... 36,700 3,091,975 Occidental Petroleum Corp....................... 445,100 8,568,175 Petroleum Heat and Power Co., Inc. (Class 'A' Stock)........................................ 49,800 460,650 Quaker State Corp............................... 652,800 9,139,200 Sun Co., Inc.................................... 150,100 4,315,375 Tenneco, Inc.................................... 258,700 10,994,750 Texaco, Inc..................................... 47,200 2,826,100 USX-Marathon Group.............................. 498,600 8,164,575 -------------- 67,386,685 -------------- PETROLEUM SERVICES -- 8.3% Baker Hughes, Inc............................... 601,300 10,973,725 **+Crestar Energy, Inc.......................... 200,000 2,067,367 Dresser Industries, Inc......................... 576,400 10,879,550 Halliburton Co.................................. 480,000 15,900,000 McDermott International, Inc.................... 782,400 19,364,400 +Smith International Inc........................ 102,300 1,278,750 Sonat, Inc...................................... 144,400 4,043,200 +Varco International, Inc....................... 1,056,300 6,601,875 -------------- 71,108,867 -------------- REAL ESTATE DEVELOPMENT -- 8.7% Amli Residential Properties Trust............... 208,300 3,905,625 Avalon Properties, Inc.......................... 265,000 6,095,000 Beacon Properties Corp.......................... 184,800 3,511,200 Crescent Real Estate Equities, Inc.............. 251,000 6,808,375 Equity Residential Properties Trust............. 686,000 20,580,000 First Union Real Estate Investments............. 130,500 864,563 Gables Residential Trust........................ 345,800 7,434,700 Glimcher Realty Trust........................... 300,000 6,562,500 JP Realty, Inc.................................. 84,000 1,764,000 Kimco Realty Corp............................... 37,500 1,420,312 Malan Realty Investors, Inc..................... 140,000 1,872,500 Simon Property Group, Inc....................... 214,300 5,196,775 Vornado Realty Trust............................ 175,400 6,292,475 Weingarten Realty Investors..................... 62,500 2,367,187 -------------- 74,675,212 --------------
B31 HIGH DIVIDEND STOCK PORTFOLIO (CONTINUED) DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- RETAIL -- 0.8% Bradlees, Inc................................... 900 $ 10,463 K mart Corp..................................... 160,000 2,080,000 May Department Stores Co........................ 150,000 5,062,500 -------------- 7,152,963 -------------- STEEL -- 0.8% USX-U.S. Steel Group............................ 187,600 6,659,800 -------------- TELECOMMUNICATIONS -- 3.3% Ameritech Corp.................................. 12,800 516,800 Telefonos de Mexico (Class 'L' Stock), ADR...... 682,200 27,970,200 -------------- 28,487,000 -------------- UTILITY - COMMUNICATIONS -- 0.9% BellSouth Corp.................................. 80,000 4,330,000 NYNEX Corp...................................... 73,300 2,693,775 U S West, Inc................................... 14,800 527,250 -------------- 7,551,025 -------------- UTILITY - ELECTRIC -- 2.5% Central & South West Corp....................... 63,000 1,425,375 Central Hudson Gas & Electric Corp., Inc........ 34,400 911,600 Central Louisiana Electric Co................... 54,500 1,287,563 CINergy Corp.................................... 343,728 8,034,642 Entergy Corp.................................... 217,200 4,751,250 NIPSCO Industries, Inc.......................... 91,000 2,707,250 SCEcorp......................................... 182,000 2,661,750 -------------- 21,779,430 -------------- TOTAL COMMON STOCKS (Cost $583,122,780)............................................ 582,677,997 -------------- MARKET PREFERRED STOCKS -- 16.4% SHARES VALUE ------------- -------------- ALUMINUM -- 1.3% Kaiser Aluminum Corp. (Conv. Pfd.).............. 363,500 3,862,187 Reynolds Metals Co. (Conv. Pfd.)................ 147,700 7,144,988 -------------- 11,007,175 -------------- AUTOS - CARS & TRUCKS -- 1.4% Ford Motor Co. (Cum. Conv. Pfd.), Series A...... 127,000 11,684,000 -------------- DRUGS & HOSPITAL SUPPLIES -- 0.6% U.S. Surgical Corp. (Conv. Pfd.)................ 224,400 5,161,200 -------------- ELECTRICAL EQUIPMENT -- 2.3% **Westinghouse Electric Corp. (Conv. Pfd.)...... 1,457,000 19,487,375 -------------- ELECTRONICS -- 2.0% Advanced Micro Devices, Inc. (Conv. Ex. Pfd.)... 160,000 8,400,000 National Semiconductor Corp. (Conv. Pfd.)....... 125,000 9,062,500 -------------- 17,462,500 -------------- FINANCIAL SERVICES -- 0.8% **Parker & Parsley Capital, LLC (Conv. Pfd.).... 135,000 6,210,000 Property Trust of America (Conv. Pfd.), Series A............................................. 54,500 1,199,000 -------------- 7,409,000 --------------
DECEMBER 31, 1994
MARKET PREFERRED STOCKS (CONTINUED) SHARES VALUE ------------- -------------- FOREST PRODUCTS -- 1.1% Bowater, Inc. (Conv. Pfd.), Series B............ 161,100 $ 3,967,088 James River Corp. of Virginia (Cum. Conv. Ex. Pfd.), Series P............................... 268,300 5,433,075 -------------- 9,400,163 -------------- INSURANCE -- 0.7% **Alexander & Alexander Services, Inc. (Conv Pfd.), Series A............................... 100,000 4,000,000 **Unocal Corp. (Conv. Pfd.)..................... 35,000 1,754,375 USF&G Corp. (Conv. Ex. Pfd.), Series A.......... 10,900 493,225 -------------- 6,247,600 -------------- MISCELLANEOUS - BASIC INDUSTRY -- 0.7% Echo Bay Finance Corp. (Conv. Pfd.), Series A... 100,000 3,287,500 Hecla Mining Co. (Conv. Pfd.), Series B......... 60,000 2,805,000 -------------- 6,092,500 -------------- PETROLEUM SERVICES -- 1.0% McDermott International, Inc. (Conv. Pfd.), Series C...................................... 100,000 4,137,500 Noble Drilling Corp. (Conv. Pfd.)............... 90,000 1,822,500 Reading & Bates Corp. (Conv. Pfd.).............. 134,800 2,780,250 -------------- 8,740,250 -------------- STEEL -- 2.3% **Bethlehem Steel Corp. (Cum. Conv. Pfd.)....... 300,000 14,700,000 USX Corp. (Cum. Conv. Pfd.)..................... 114,600 5,128,350 -------------- 19,828,350 -------------- TOBACCO -- 2.1% RJR Nabisco Holdings Corp. (Conv. Pfd.), Series C............................................. 2,955,000 17,730,000 -------------- UTILITY - ELECTRIC -- 0.1% Gulf States Utilities Co........................ 900 51,075 Gulf States Utilities Co. (Preferred Series A)............................................ 4,392 432,612 -------------- 483,687 -------------- TOTAL PREFERRED STOCKS (Cost $151,254,542)............................................ 140,733,800 -------------- MARKET RIGHTS AND WARRANTS -- 0.0% SHARES VALUE ------------- -------------- MACHINERY **++Terex Corp. (Rights)........................ 16,950 0 -------------- (Cost $0) PAR MARKET CONVERTIBLE BONDS -- 4.5% VALUE VALUE ------------- -------------- INDUSTRIAL Coeur D'Alene Mines, Corp., 7.000%, 11/30/02.............................. $ 3,000,000 $ 3,375,000 Conner Peripherals, Inc., 6.750%, 03/01/01.............................. 1,980,000 1,366,200 Cross Timbers Oil Co., 5.250%, 11/01/03.............................. 2,583,000 2,095,459 **Cypress Semiconductor Corp., 3.150%, 03/15/01.............................. 1,335,000 1,229,869
B32 HIGH DIVIDEND STOCK PORTFOLIO (CONTINUED) DECEMBER 31, 1994
PAR MARKET CONVERTIBLE BONDS (CONTINUED) VALUE VALUE ------------- -------------- IMC Global, Inc., 6.250%, 12/01/01.............................. $ 4,500,000 $ 4,162,500 Malan Realty Investors, Inc., 9.500%, 07/15/04.............................. 3,000,000 2,576,250 Noble Affiliates, Inc., 4.250%, 11/01/03.............................. 11,701,000 9,945,850 Oryx Energy Co., 7.500%, 05/15/14.............................. 2,000,000 1,385,000 Quantum Corp., 6.375%, 04/01/02.............................. 5,250,000 5,118,750 Seagate Technology, **5.000%, 11/01/03............................ 4,200,000 4,326,000 6.750%, 05/01/12.............................. 3,070,000 2,548,100 VLSI Technology, Inc., 7.000%, 05/01/12.............................. 1,054,000 901,170 -------------- TOTAL CONVERTIBLE BONDS (Cost $41,994,290)............................................. 39,030,148 -------------- PAR MARKET LONG-TERM BONDS -- 2.5% VALUE VALUE ------------- -------------- INDUSTRIAL -- 0.5% **Terex Corp., 13.000%, 08/01/96............................. 4,583,000 4,376,765 -------------- U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 2.0% United States Treasury Notes, 7.500%, 10/31/99, Series 1999................. 17,000,000 16,755,540 -------------- TOTAL LONG-TERM BONDS (Cost $20,818,910)............................................. 21,132,305 -------------- PRINCIPAL SHORT-TERM INVESTMENTS -- 8.8% AMOUNT VALUE ------------- -------------- REPURCHASE AGREEMENTS Joint Repurchase Agreement Account, 5.720%, 01/03/95 (see Note 4)................. 75,853,000 75,853,000 -------------- OTHER ASSETS -- 0.0% (net of liabilities)........................................... 244,002 -------------- TOTAL NET ASSETS -- 100.0%....................................... $ 859,671,252 -------------- -------------- The following abbreviations are used in portfolio descriptions: ADR American Depository Receipt PLC Public Limited Company (British Corporation) **Indicates a restricted security; the aggregate cost of the restricted securities is $63,176,231. The aggregate value, $58,151,751 is approximately 6.8% of net assets. (See Note 2) +No dividend was paid on this security during the 12 months ending December 31, 1994. ++Non-income producing.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. B33 NATURAL RESOURCES PORTFOLIO DECEMBER 31, 1994
MARKET COMMON STOCKS -- 88.3% SHARES VALUE ------------- -------------- ALUMINUM -- 6.0% +Alumax, Inc.................................... 100,000 $ 2,837,500 Aluminum Co. of America......................... 40,000 3,465,000 Comalco, Ltd., ADR.............................. 142,000 2,753,579 +Kaiser Aluminum Corp........................... 91,000 989,625 Reynolds Metals Co.............................. 75,050 3,677,450 -------------- 13,723,154 -------------- CHEMICALS -- 0.8% Calgon Carbon Corp.............................. 180,000 1,867,499 -------------- CHEMICALS - SPECIALTY -- 3.0% IMC Global, Inc................................. 154,800 6,695,099 -------------- DIVERSIFIED GAS -- 7.1% +Basin Exploration, Inc......................... 130,000 1,413,750 Cross Timbers Oil Co............................ 224,900 3,373,500 +Rigel Energy Corp.............................. 294,500 2,945,000 Sonat Offshore Drilling, Inc.................... 127,000 2,254,250 USX-Delhi Group................................. 106,500 1,065,000 Western Gas Resources, Inc...................... 257,600 4,958,800 -------------- 16,010,300 -------------- FOREST PRODUCTS -- 4.7% Champion International Corp..................... 99,500 3,631,750 Fletcher Challenge, Ltd., ADR................... 312,900 3,559,238 Rayonier, Inc................................... 116,100 3,541,050 -------------- 10,732,038 -------------- GAS PIPELINES -- 4.3% Aquila Gas Pipeline Corp........................ 113,700 895,388 +Global Marine, Inc............................. 206,500 748,563 +Reading & Bates Offshore Drilling Co........... 232,600 1,395,600 +Seagull Energy Corp............................ 170,400 3,258,900 +Tejas Gas Corp................................. 70,450 3,355,180 -------------- 9,653,631 -------------- METALS - DIVERSIFIED -- 1.4% +Stillwater Mining Co........................... 242,900 3,263,969 -------------- MINERAL RESOURCES -- 30.9% Agnico-Eagle Mines, Ltd......................... 425,000 4,515,625 American Barrick Resources Corp................. 254,653 5,666,029 Battle Mountain Gold Co......................... 162,300 1,785,300 +Cominco, Ltd................................... 144,000 2,556,000 CRA, Ltd., ADR.................................. 69,200 3,821,688 Freeport-McMoRan Copper & Gold, Inc. (Class 'A' Stock)........................................ 162,300 3,448,875 Inco, Ltd....................................... 168,600 4,826,175 M.I.M. Holdings, Ltd., ADR...................... 840,000 2,801,652 Newmont Mining Corp............................. 126,307 4,547,052 Pegasus Gold, Inc............................... 172,000 1,956,500 Placer Dome, Inc................................ 199,700 4,343,475 Potash Corp. of Saskatchewan, Inc............... 320,400 10,893,600 +Sante Fe Pacific Gold Corp..................... 437,700 5,635,388 +TVX Gold, Inc.................................. 600,000 4,050,000 Vigoro Corp..................................... 169,000 5,070,000 Western Mining Corp. Holdings, Ltd., ADR........ 187,500 4,382,812 -------------- 70,300,171 -------------- MISCELLANEOUS - BASIC INDUSTRY -- 0.8% +Enterra Corp................................... 98,500 1,871,500 -------------- PETROLEUM -- 6.9% Amerada Hess Corp............................... 47,900 2,185,438 Cabot Oil & Gas Corp. (Class 'A' Stock)......... 129,900 1,883,550
DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- Elf Aquitaine, ADR.............................. 189,783 $ 6,689,850 Parker & Parsley Petroleum Co................... 145,000 2,972,500 USX-Marathon Group.............................. 117,100 1,917,513 -------------- 15,648,851 -------------- PETROLEUM CANADIAN -- 2.7% Beau Canada Exploration, Ltd. (Class 'A' Stock)........................................ 831,900 1,186,099 +Talisman Energy, Inc........................... 290,000 4,858,314 -------------- 6,044,413 -------------- PETROLEUM SERVICES -- 19.7% +American Oilfield Divers, Inc.................. 59,900 374,375 Baker Hughes, Inc............................... 126,700 2,312,275 +Cairn Energy USA, Inc.......................... 250,000 1,968,750 Camco International, Inc........................ 100,000 1,887,500 +Coflexip, ADR.................................. 172,000 3,999,000 **+Crestar Energy, Inc.......................... 240,000 2,480,841 +Dreco Energy Services, Ltd. (Class 'A' Stock)........................................ 88,100 644,231 +Hornbeck Offshore Services, Inc................ 127,200 1,605,900 +ICO, Inc....................................... 192,300 769,200 +Marine Drilling Co., Inc....................... 820,400 2,307,375 +Mesa, Inc...................................... 440,900 2,149,388 +Newfield Exploration Co........................ 204,000 4,029,000 Noble Affiliates, Inc........................... 156,700 3,878,325 +Noble Drilling Corp............................ 140,600 826,025 +Offshore Pipelines, Inc........................ 150,000 3,393,750 Oryx Energy Co.................................. 117,100 1,390,563 +PetroCorp, Inc................................. 217,500 2,324,531 +Pride Petroleum Services, Inc.................. 260,000 1,348,750 +Stolt Comex Seaway, SA......................... 220,000 1,567,500 Trident NGL Holding, Inc........................ 200,000 2,100,000 +Varco International, Inc....................... 115,800 723,750 +Western Co. of North America................... 162,200 2,737,125 -------------- 44,818,154 -------------- TOTAL COMMON STOCKS (Cost $195,869,708)............................................ 200,628,779 -------------- MARKET PREFERRED STOCKS -- 5.5% SHARES VALUE ------------- -------------- ALUMINUM -- 0.7% Kaiser Aluminum Corp. (Conv. Pfd.).............. 150,000 1,593,750 -------------- MINERAL RESOURCES -- 1.3% Amax Gold, Inc. (Conv. Pfd), Series B........... 22,400 1,086,400 Battle Mountain Gold Co. (Conv. Pfd.)........... 12,000 732,000 Freeport - McMoRan Copper & Gold, Inc........... 60,000 1,177,500 -------------- 2,995,900 -------------- MISCELLANEOUS - BASIC INDUSTRY -- 1.8% Hecla Mining Co. (Conv. Pfd.), Series B......... 87,000 4,067,250 -------------- PETROLEUM SERVICES -- 1.7% Noble Drilling Corp. (Conv. Pfd.)............... 150,000 3,037,500 Reading & Bates Corp. (Cum. Conv. Pfd.)......... 39,900 822,938 -------------- 3,860,438 -------------- TOTAL PREFERRED STOCKS (Cost $13,791,225)............................................. 12,517,338 --------------
B34 NATURAL RESOURCES PORTFOLIO (CONTINUED) DECEMBER 31, 1994
PAR MARKET CONVERTIBLE BONDS -- 3.0% VALUE VALUE ------------- -------------- INDUSTRIAL Coeur d'Alene Mines Corp., 6.375%, 01/31/04.............................. $ 4,319,000 $ 3,584,770 7.000%, 11/30/02.............................. 1,465,000 1,648,125 **Homestake Mining Co., 5.500%, 06/23/00.............................. 1,519,000 1,486,722 -------------- TOTAL CONVERTIBLE BONDS (Cost $7,130,853).............................................. 6,719,617 -------------- PRINCIPAL SHORT-TERM INVESTMENTS -- 4.5% AMOUNT VALUE ------------- -------------- REPURCHASE AGREEMENTS Joint Repurchase Agreement Account, 5.720%, 01/03/95 (see Note 4)................. 10,291,000 10,291,000 -------------- LIABILITIES -- (1.3%) (net of other assets).......................................... (2,882,805) -------------- TOTAL NET ASSETS -- 100.0%....................................... $ 227,273,929 -------------- -------------- The following abbreviations are used in portfolio descriptions: ADR American Depository Receipt SA Sociedad Anonima (Spanish Corporation) or Societe Anonyme (French Corporation) **Indicates a restricted security; the aggregate cost of the restricted securities is $4,570,797. The aggregate value, $3,967,563 is approximately 1.7% of net assets. (See Note 2) +No dividend was paid on this security during the 12 months ending December 31, 1994.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. B35 GLOBAL EQUITY PORTFOLIO DECEMBER 31, 1994
MARKET COMMON STOCKS -- 87.0% SHARES VALUE ------------- -------------- AUSTRALIA -- 6.7% Brambles Industries, Ltd. (Miscellaneous - Basic Industry).............. 314,800 $ 3,006,681 Broken Hill Proprietary Co., Ltd. (Metals - Diversified)........................ 303,900 4,617,732 BTR Nylex, Ltd. (Miscellaneous - Basic Industry).............. 1,391,344 2,588,736 Coca-Cola Amatil, Ltd. (Foods)....................................... 817,705 5,198,194 Publishing and Broadcasting, Ltd. (Media)....................................... 50,000 139,933 Western Mining Corp. Holdings, Ltd. (Metals - Diversified)........................ 1,336,312 7,728,382 -------------- 23,279,658 -------------- BELGIUM -- 0.9% Bekaert, NPV (Miscellaneous - Basic Industry).............. 4,500 3,194,107 -------------- FEDERAL REPUBLIC OF GERMANY -- 2.5% BASF, AG (Chemicals)................................... 18,900 3,896,719 Bilfinger & Berger Bau, AG (Construction)................................ 3,744 1,908,663 Preussag, AG (Miscellaneous - Basic Industry).............. 9,270 2,691,898 -------------- 8,497,280 -------------- FINLAND -- 0.7% Kymmene Corp. (Forest Products)............................. 85,200 2,320,066 -------------- FRANCE -- 4.6% Guyenne et Gascogne (Retail)...................................... 3,100 783,561 Imetal (Mineral Resources)........................... 32,880 3,176,574 Lafarge Coppee (Construction)................................ 47,510 3,380,228 **Lafarge Coppee (Construction)................................ 1,100 78,263 Legrand (Electrical Equipment)........................ 2,700 3,275,791 Plastic Omnium (Autos - Cars & Trucks)....................... 6,765 729,571 Valeo, SA (Autos - Cars & Trucks)....................... 88,885 4,425,112 -------------- 15,849,100 -------------- HONG KONG -- 4.4% Cdl Hotels International, Ltd. (Real Estate Development)..................... 3,908,174 1,540,540 Citic Pacific, Ltd. (Miscellaneous - Basic Industry).............. 1,387,000 3,343,141 Guoco Group, Ltd. (Financial Services).......................... 1,243,000 5,317,389 Hung Hing Printing Group, Ltd. (Miscellaneous - Basic Industry).............. 3,452,000 709,361 Hutchison Whampoa, Ltd. (Miscellaneous - Basic Industry).............. 1,097,000 4,480,155 -------------- 15,390,586 -------------- INDONESIA -- 0.4% PT Kabelmetal Indonesia (Foreign) (Telecommunications).......................... 1,047,400 1,429,572 --------------
DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- JAPAN -- 17.0% Aiwa (Electronics)................................. 122,000 $ 2,999,498 Autobacs Seven (Retail)...................................... 41,700 4,979,729 DDI Corp. (Telecommunications).......................... 370 3,193,176 Japan Associated Finance (Financial Services).......................... 26,000 4,044,155 Kamigumi Co. (Trucking/Shipping)........................... 302,000 3,212,444 Keyence Corp. (Electrical Equipment)........................ 37,000 4,195,685 Kyocera Corp. (Electrical Equipment)........................ 59,000 4,375,414 Minebea Co., Ltd. (Miscellaneous - Basic Industry).............. 434,000 3,658,404 Murata Manufacturing Co., Ltd. (Electronics)................................. 55,500 2,144,255 Nichiei Co., Ltd. (Financial Services).......................... 77,300 4,964,576 Nissen Co., Ltd. (Retail)...................................... 68,520 2,117,828 Nisshin Steel Co., Ltd. (Steel)....................................... 578,000 2,911,751 Rohm Co. (Electronics)................................. 102,000 4,319,518 Shin-Etsu Chemical Co. (Chemicals)................................... 176,000 3,497,040 Sony Music Entertainment (Leisure)..................................... 65,600 3,686,503 Tokyo Electron, Ltd. (Electrical Equipment)........................ 141,000 4,386,352 -------------- 58,686,328 -------------- MALAYSIA -- 3.9% Hong Leong Industries Berhad (Construction)................................ 3,000 15,508 I.J.M. Corp. Berhad (Loan Stock) (Construction)................................ 810,000 1,887,409 Malaysian Airline Systems Berhad (Airlines).................................... 421,000 1,261,269 Renong Berhad (Miscellaneous - Basic Industry).............. 2,181,000 2,699,025 Resorts World Berhad (Leisure)..................................... 804,000 4,722,929 Technology Resources Industries Berhad (Miscellaneous - Basic Industry).............. 904,000 2,885,295 United Merchant Group Berhad (Financial Services).......................... 666 1,226 -------------- 13,472,661 -------------- MEXICO -- 2.2% Cementos Apasco, SA (Class 'A' Stock) (Housing Related)............................. 426,400 2,125,573 Cifra, SA (Class 'B' Stock) (Retail)...................................... 1,259,800 2,562,648 Femsa (Class 'B' Stock) (Miscellaneous - Basic Industry).............. 604,900 1,549,030 Grupo Financiero Banamex (Class 'L' Stock) (Banks and Savings & Loans)................... 5,720 16,556
B36 GLOBAL EQUITY PORTFOLIO (CONTINUED) DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- Grupo Financiero Banamex Accival, SA (Class 'C' Stock) (Banks and Savings & Loans)................... 414,100 $ 1,223,572 -------------- 7,477,379 -------------- NETHERLANDS -- 0.5% Boskalis Westminster, CVA (Construction)................................ 91,050 1,857,002 -------------- NEW ZEALAND -- 1.1% Fletcher Challenge, Ltd. (Forest Products)............................. 1,574,000 3,697,877 -------------- REPUBLIC OF KOREA -- 1.4% Pohang Iron & Steel Co., Ltd. (Steel)....................................... 3,800 306,988 Samsung Electronics Co. (Electronics)................................. 27,390 3,786,316 Samsung Electronics Co. (New) (Electronics)................................. 1,309 178,462 Shinsegae Department Store (Retail)...................................... 4,200 434,115 -------------- 4,705,881 -------------- SINGAPORE -- 6.5% Fraser & Neave, Ltd. (Beverages)................................... 303,000 3,139,142 Overseas Union Bank, Ltd. (Foreign) (Banks and Savings & Loans)................... 740,000 4,315,609 Sembawang Maritime, Ltd. (Trucking/Shipping)........................... 706,500 3,417,376 Singapore Airlines, Ltd. (Foreign) (Airlines).................................... 508,000 4,670,463 United Overseas Bank, Ltd. (Foreign) (Banks and Savings & Loans)................... 527,000 5,568,302 Wing Tai Holdings, Ltd. (Miscellaneous - Basic Industry).............. 856,250 1,515,695 -------------- 22,626,587 -------------- SPAIN -- 2.7% Acerinox, SA (Steel)....................................... 30,760 3,212,862 Centros Commerciales Pryca, SA (Retail)...................................... 93,362 1,407,776 Dragados Y Construcciones, SA (Construction)................................ 118,900 1,670,924 Vallehermoso, SA (Real Estate Development)..................... 167,233 2,902,760 -------------- 9,194,322 -------------- SWEDEN -- 4.2% Astra, AB (Series 'B' Free) (Drugs and Hospital Supplies)................. 145,150 3,701,724 Hennes & Mauritz (Series 'B' Free) (Retail)...................................... 90,200 4,624,974 Mo Och Domsjo, AB (Series 'B' Free) (Forest Products)............................. 57,000 2,654,170 Volvo, AB (Series 'B' Free) (Autos - Cars & Trucks)....................... 190,200 3,583,573 -------------- 14,564,441 --------------
DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- THAILAND -- 0.9% Land & House Public Co., Ltd. (Foreign) (Construction)................................ 25,700 $ 458,618 Sahaviriya Steel Industry (Metals - Diversified)........................ 764,800 1,949,699 Sahaviriya Steel Industry (Foreign) (Metals - Diversified)........................ 322,000 820,872 -------------- 3,229,189 -------------- UNITED KINGDOM -- 8.9% Barclays, PLC (Banks and Savings & Loans)................... 246,900 2,360,517 British Sky Broadcasting Group, PLC (Media)....................................... 620,600 2,490,829 Carlton Communications (Communications).............................. 192,600 2,703,295 Guest Kean & Nettlefolds, PLC (Autos - Cars & Trucks)....................... 446,570 4,105,274 **Guest Kean & Nettlefolds, PLC (Autos - Cars & Trucks)....................... 22,870 210,242 J. Sainsbury, PLC (Retail)...................................... 299,500 1,928,464 Powergen, PLC (Utility - Electric).......................... 294,000 2,465,795 S.G. Warburg Group, PLC (Financial Services).......................... 171,900 1,861,344 Siebe, PLC (Machinery)................................... 500,840 4,369,066 TeleWest Communications, PLC (Media)....................................... 1,200,000 3,192,089 Vodafone Group, PLC (Telecommunications).......................... 1,503,900 4,988,840 -------------- 30,675,755 -------------- UNITED STATES -- 17.5% +Adaptec, Inc. (Computer Services)........................... 206,600 4,880,925 +Applied Materials, Inc. (Electrical Equipment)........................ 81,000 3,422,250 +Cirrus Logic, Inc. (Electronics)................................. 106,500 2,396,250 +Electronic Arts, Inc. (Computer Services)........................... 139,700 2,689,225 Exide Corp. (Autos - Cars & Trucks)....................... 61,000 3,431,250 Mattel, Inc. (Leisure)..................................... 171,050 4,297,631 MCI Communications Corp. (Telecommunications).......................... 162,300 2,982,263 +Microsoft Corp. (Computer Services)........................... 72,800 4,449,900 Mobil Corp. (Petroleum)................................... 48,500 4,086,125 Motorola, Inc. (Electronics)................................. 105,900 6,128,962 +Nextel Communications, Inc. (Class 'A' Stock) (Telecommunications).......................... 186,600 2,682,375 Norwest Corp. (Banks and Savings & Loans)................... 155,000 3,623,125 +Oracle Systems Corp. (Computer Services)........................... 115,900 5,114,087 Pohang Iron & Steel Co., Ltd., ADR (Steel)....................................... 60,800 1,778,400
B37 GLOBAL EQUITY PORTFOLIO (CONTINUED) DECEMBER 31, 1994
MARKET COMMON STOCKS (CONTINUED) SHARES VALUE ------------- -------------- +Silicon Graphics, Inc. (Computer Services)........................... 157,800 $ 4,891,800 Time Warner, Inc. (Media)....................................... 103,300 3,628,413 -------------- 60,482,981 -------------- TOTAL COMMON STOCKS (Cost $296,456,732)............................................ 300,630,772 -------------- MARKET PREFERRED STOCKS -- 3.2% SHARES VALUE ------------- -------------- FEDERAL REPUBLIC OF GERMANY -- 0.7% Krones, AG (Machinery)................................... 4,368 2,452,270 -------------- FINLAND -- 2.4% Nokia, AB (Miscellaneous - Basic Industry).............. 55,900 8,236,414 -------------- REPUBLIC OF KOREA -- 0.1% Samsung Electronics Co. (Electronics)................................. 5,213 394,033 -------------- TOTAL PREFERRED STOCKS (Cost $7,891,492).............................................. 11,082,717 -------------- MARKET RIGHTS AND WARRANTS -- 0.4% SHARES VALUE ------------- -------------- FEDERAL REPUBLIC OF GERMANY -- 0.2% )Kamigumi Co. (Warrants), (Trucking/Shipping)........................... 1,000 164,553 )Nissen Co., Ltd. (Warrants), (Retail)...................................... 316 397,638 -------------- 562,191 -------------- FRANCE -- 0.0% **Lafarge Coppee (Warrants), (Construction)................................ 1,000 5,074 -------------- SWITZERLAND -- 0.1% \Nitori Co., Ltd. (Warrants), (Furniture)................................... 2,950 507,066 -------------- UNITED STATES -- 0.1% #Autobacs Seven Warrants 95 #1, (Retail)...................................... 35 130,813 #Autobacs Seven Warrants 96 #2, (Retail)...................................... 35 127,313 -------------- 258,126 -------------- TOTAL RIGHTS AND WARRANTS (Cost $1,517,852).............................................. 1,332,457 -------------- PAR MARKET CONVERTIBLE BONDS -- 0.3% VALUE VALUE ------------- -------------- SINGAPORE -- 0.1% Sembawang Maritime, Ltd., (1.500%, 10/25/98 (Trucking/Shipping)........................... $ 154,000 $ 240,906 --------------
DECEMBER 31, 1994
PAR MARKET CONVERTIBLE BONDS (CONTINUED) VALUE VALUE ------------- -------------- UNITED STATES -- 0.2% MDX Public Co., Ltd., (4.750%, 9/17/03 (Real Estate Development)..................... $ 1,227,000 $ 779,145 -------------- TOTAL CONVERTIBLE BONDS (Cost $1,393,348).............................................. 1,020,051 -------------- PRINCIPAL SHORT-TERM INVESTMENTS -- 7.5% AMOUNT VALUE ------------- -------------- UNITED STATES REPURCHASE AGREEMENTS (Sanawa, 5.750%, entered 12/30/94; maturing 01/03/95 in the amount of $26,000,000 (collateralized by $25,575,000 United States Treasury Notes, 7.875%, 01/15/98)........... 26,000,000 26,000,000 -------------- - -C-UNREALIZED APPRECIATION ON FORWARD FOREIGN EXCHANGE CONTRACTS - 0.0%......................................................... 17,247 -------------- OTHER ASSETS -- 1.6% (net of liabilities)........................................... 5,650,734 -------------- TOTAL NET ASSETS -- 100.0%....................................... $ 345,733,978 -------------- -------------- The following abbreviations are used in portfolio descriptions: AB Aktiebolag (Swedish Stock Company) ADR American Depository Receipt AG Aktiengesellschaft (West German Stock Company) CVA Certificaten Van Affecton (Guaranteed) NPV Net Present Value PLC Public Limited Company (British Corporation) SA Sociedad Anonima (Spanish Corporation) or Societe Anonyme (French Corporation) #These are American warrants with an underlying Japanese security. )These are German warrants with an underlying Japanese security. \These are Swiss warrants with an underlying Japanese security. **Indicates a restricted security; the aggregate cost of the restricted securities is $216,115. The aggregate value, $293,578 is approximately .1% of net assets. (See Note 2) +No dividend was paid on this security during the 12 months ending December 31, 1994. - -C- Forward Foreign Exchange Contracts as of December 31, 1994: FOREIGN CURRENCY SOLD EXPIRATION DATE UNREALIZED APPRECIATION Australian Dollar 171,259 January 1995 $17,247
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. B38 GOVERNMENT SECURITIES PORTFOLIO DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS -- 90.5% VALUE VALUE ------------- -------------- FINANCIAL -- 8.0% Collateralized Mortgage Obligation, Trust 63 (Class E), 9.000%, 09/20/99.............................. $ 1,000,000 $ 995,310 ContiMortgage Home Equity Loan Trust, CMO, 7.960%, 09/15/09, Series 1994-4, Class A2..... 5,000,000 4,900,000 Equicon Home Equity Loan Trust, CMO, 7.850%, 03/18/14, Series 1994-2, Class A2..... 3,000,000 2,949,375 Equicredit Home Equity Loan Trust, CMO, 7.440%, 10/15/05, Series 1994-3, Class A2..... 5,000,000 4,871,875 European Investment Bank, 9.125%, 06/01/02.............................. 3,500,000 3,672,515 Green Tree Financial Corp., CMO, 7.250%, 11/15/19, Series 1994-6, Class A2..... 5,000,000 4,880,469 Olympic Automobile Receivables Trust, CMO, 6.850%, 06/15/01, Series 1994-B, Class A2..... 3,000,000 2,914,687 %People's Bank Credit Card Master Trust, CMO, 5.525%, 03/15/01, Series 1994-2, Class A...... 4,000,000 3,730,562 Vanderbilt Mortgage Finance, CMO, 7.600%, 07/10/19, Series 1994-A, Class A2..... 4,000,000 3,856,250 Western Financial Grantor Trust, CMO, 6.650%, 12/01/99, Series 1994-3, Class A...... 3,570,339 3,489,449 World Omni Automobile Lease Securitization Trust, CMO, 6.450%, 09/25/00, Series 1994-A, Class A...... 3,000,000 2,907,188 -------------- 39,167,680 -------------- INDUSTRIAL -- 0.6% %Aircraft Lease Portfolio Securitization, Ltd., CMO, 7.800%, 09/15/04, Series 1994-1, Class A4..... 3,000,000 2,918,906 -------------- U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 81.9% Federal Farm Credit Bank, M.T.N., 5.930%, 08/18/03.............................. 3,859,000 3,330,819 7.900%, 03/01/96.............................. 7,000,000 7,041,860 8.600%, 05/30/06.............................. 1,250,000 1,286,913 Federal Home Loan Bank, 5.000%, 10/25/95.............................. 5,000,000 4,903,100 Federal Home Loan Mortgage Corporation, Gold Fixed Participation, 6.095%, 02/23/01.............................. 12,000,000 11,032,440 6.130%, 08/19/99.............................. 7,000,000 6,492,500 6.270%, 01/27/04.............................. 5,000,000 4,326,550 6.485%, 02/18/04.............................. 10,000,000 8,734,400 6.550%, 04/02/03.............................. 4,000,000 3,558,760 6.600%, 11/12/99.............................. 4,000,000 3,820,000 7.500%, 01/01/00-07/23/07..................... 28,463,802 26,902,313
DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- Federal Home Loan Mortgage Corporation, REMIC, 7.500%, 09/15/05, Series 1295, Class 1295-G... $ 2,100,000 $ 2,007,453 Federal National Mortgage Association, Zero Coupon, 10/09/19......................... 22,500,000 3,009,375 7.600%, 04/14/04.............................. 7,000,000 6,573,420 7.850%, 09/10/98.............................. 3,000,000 3,010,320 8.200%, 12/23/96, Series K.................... 5,000,000 5,026,550 8.200%, 08/10/98, Series F.................... 2,000,000 1,996,240 8.500%, 06/10/96, Series G.................... 5,500,000 5,549,830 11.000%, 11/01/20............................. 7,527,510 8,124,968 Federal National Mortgage Association, M.T.N., 5.930%, 09/26/03.............................. 5,000,000 4,309,000 5.990%, 10/01/03.............................. 5,000,000 4,327,100 7.800%, 02/21/07.............................. 5,000,000 4,701,563 8.625%, 06/30/04.............................. 3,000,000 3,087,330 Federal National Mortgage Association, REMIC, 6.500%, 07/25/20, Trust 1992-138, Class D..... 4,000,000 3,593,720 8.950%, 12/25/18, Trust 1990-45, Class 45-G... 2,000,000 1,993,750 Financing Corp., 9.400%, 02/08/18.............................. 9,850,000 10,955,072 Government National Mortgage Association, 7.000%, 09/15/22-01/15/24..................... 33,750,027 30,290,650 8.500%, 07/15/08-08/15/24..................... 7,292,192 7,165,689 International Bank for Reconstruction and Development, 7.625%, 01/19/23.............................. 5,000,000 4,662,300 8.375%, 10/01/99.............................. 7,900,000 8,102,398 Private Export Funding Corp., 8.750%, 06/30/03, Series KK................... 9,950,000 10,294,867 Resolution Funding Corp., 8.125%, 10/15/19, Principle Only Class A...... 4,200,000 4,219,698 Student Loan Marketing Association, 7.300%, 08/01/12.............................. 19,850,000 18,255,648 Tennessee Valley Authority Power, 8.375%, 10/01/99, Power 1989, Series D........ 6,300,000 6,402,375 8.625%, 11/15/29, Power 1989, Series G........ 3,100,000 3,076,037 United States Treasury Bonds, 6.250%, 08/15/23.............................. 1,600,000 1,300,752 7.625%, 11/15/22.............................. 3,200,000 3,088,512 7.875%, 02/15/21.............................. 500,000 493,750 8.000%, 11/15/21.............................. 11,400,000 11,444,574 8.125%, 08/15/19-08/15/21..................... 18,605,000 18,887,658 8.750%, 08/15/20.............................. 11,300,000 12,219,933 8.875%, 08/15/17-02/15/19..................... 11,850,000 12,917,785 9.250%, 02/15/16.............................. 800,000 900,128 10.375%, 11/15/12............................. 4,000,000 4,760,000 10.750%, 08/15/05............................. 7,300,000 8,769,125 11.250%, 02/15/15............................. 3,400,000 4,492,250 11.625%, 11/15/04............................. 3,750,000 4,696,875 United States Treasury Bonds, Stripped, Zero Coupon, 02/15/05-02/15/12................ 4,750,000 1,756,783
B39 GOVERNMENT SECURITIES PORTFOLIO (CONTINUED) DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS (CONTINUED) VALUE VALUE ------------- -------------- United States Treasury Notes, 4.625%, 08/15/95.............................. $ 4,700,000 $ 4,633,918 5.875%, 05/15/95.............................. 2,300,000 2,294,963 6.875%, 08/31/99.............................. 2,400,000 2,310,000 7.000%, 04/15/99.............................. 13,000,000 12,597,780 7.125%, 09/30/99.............................. 11,700,000 11,363,625 7.750%, 03/31/96-11/30/99..................... 7,000,000 6,995,320 8.000%, 08/15/99.............................. 10,100,000 10,158,378 8.500%, 11/15/00.............................. 2,000,000 2,061,560 8.625%, 08/15/97.............................. 7,600,000 7,743,715 8.875%, 02/15/99.............................. 10,700,000 11,074,500 -------------- 399,126,892 -------------- TOTAL LONG-TERM BONDS (Cost $470,157,047)............................................ 441,213,478 -------------- PRINCIPAL SHORT-TERM INVESTMENTS -- 7.6% AMOUNT VALUE ------------- -------------- REPURCHASE AGREEMENTS Joint Repurchase Agreement Account, 5.720%, 01/03/95 (see Note 4)................. 36,874,000 36,874,000 -------------- OTHER ASSETS -- 1.9% (net of liabilities)........................................... 9,486,827 -------------- TOTAL NET ASSETS -- 100.0%....................................... $ 487,574,305 -------------- -------------- The following abbreviations are used in portfolio descriptions: CMO Collateralized Mortgage Obligations M.T.N. Medium Term Note REMIC Real Estate Mortgage Investment Conduit %Indicates a variable rate security.
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. B40 ZERO COUPON BOND 2005 PORTFOLIO DECEMBER 31, 1994
PAR MARKET LONG-TERM BONDS -- 96.3% VALUE VALUE ------------- -------------- U.S. GOVERNMENT & AGENCY OBLIGATIONS Certificate of Accrual on Treasury Securities, Zero Coupon, 08/15/04-05/15/11................ $ 4,605,000 $ 1,873,840 Principal Treasury Receipts, Zero Coupon, 05/15/03......................... 1,590,000 829,360 Treasury Investment Growth Receipts, Zero Coupon, 05/15/04-11/15/11................ 13,113,500 4,451,632 United States Treasury Bonds, Stripped, Zero Coupon, 05/15/04-11/15/07................ 21,221,000 8,740,485 -------------- TOTAL LONG-TERM BONDS (Cost $16,082,218)............................................. 15,895,317 -------------- PRINCIPAL SHORT-TERM INVESTMENTS -- 3.9% AMOUNT VALUE ------------- -------------- REPURCHASE AGREEMENTS Joint Repurchase Agreement Account, 5.720%, 01/03/95 (see Note 4)................. 636,000 636,000 -------------- LIABILITIES -- (0.2%) (net of other assets).......................................... (25,619) -------------- TOTAL NET ASSETS -- 100.0%....................................... $ 16,505,698 -------------- --------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54. B41 NOTES TO THE FINANCIAL STATEMENTS OF THE PRUDENTIAL SERIES FUND, INC. FOR THE YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993 (AS RESTATED) NOTE 1: GENERAL The Prudential Series Fund, Inc. ("Series Fund"), a Maryland corporation, organized on November 15, 1982, is a diversified open-end management investment company registered under the Investment Company Act of 1940, as amended. The Series Fund is composed of fourteen Portfolios, each with a separate series of capital stock. Shares in the Series Fund are currently sold only to certain separate accounts of The Prudential Insurance Company of America ("The Prudential"), Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey (together referred to as the "Companies") to fund benefits under certain variable life insurance and variable annuity contracts issued by the Companies. The shareholders of Pruco Life Series Fund, Inc. ("Pruco Fund") and the Series Fund approved the merger of the Pruco Fund into the Series Fund as of November 1, 1986. The merger combined five portfolios with identical investment strategies (Money Market, Bond, Common Stock, Aggressively Managed Flexible and Conservatively Managed Flexible) of the Pruco Fund with their counterpart in the Series Fund. The merger was effected by converting the net assets of the Pruco Fund at the merger date into shares of the Series Fund at the share price of that day and was accounted for as a pooling of interest. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SECURITIES VALUATION: Equity securities are valued at market. Securities traded on a national securities exchange are valued at the last sales price on such exchange as of the close of the New York Stock Exchange or, in the absence of recorded sales, at the mean between the most recently quoted bid and asked prices. For any securities not traded on a national securities exchange but traded in the over-the-counter market, the securities are valued at the mean between the most recently quoted bid and asked prices, except that securities for which quotations are furnished through a nationwide automated quotation system approved by the National Association of Securities Dealers, Inc. ("NASDAQ") are valued at the last sales price or if there was no sale on such day, at the mean between the most recently quoted bid and asked prices. Convertible debt securities are valued at the mean between the most recently quoted bid and asked prices provided by principal market makers. High yield bonds are valued either by quotes received from principal market makers or by an independent pricing service which determines prices by analysis of quality, coupon, maturity and other adjustment factors. Long-term bonds are valued at market, based on valuation prices by an independent pricing service which determines prices by analysis of quality, coupon, maturity and other adjustment factors. Short-term investments are valued at amortized cost, which with accrued interest approximates market value. Amortized cost is computed using the cost on the date of purchase adjusted for constant amortization of discount or premium to maturity. The interest rates shown for Commercial Paper, Promissory Notes, and certain U.S. Government Agency Obligations on the Schedules of Investments are the discount rates paid at the time of purchase. Any security for which a quotation is unavailable is valued at fair value as determined in good faith by or under the direction of the Series Fund's Board of Directors. The ability of issuers of debt securities held by specific Portfolios of the Series Fund to meet their obligations may be affected by economic developments in a specific country or industry. Each portfolio, other than the Money Market Portfolio, may invest up to 15% of its net assets in securities which are subject to legal or contractual restrictions on resale or for which no readily available market exists ("restricted securities"). The Money Market Portfolio may invest up to 10% of its net assets in restricted securities. Restricted securities are valued pursuant to the valuation procedures noted above. DERIVATIVE FINANCIAL INSTRUMENTS: The Series Fund may engage in various portfolio strategies to seek increased returns by hedging the portfolios against adverse movements in the equity, debt, and currency markets. Losses may arise due to changes in the value of the contract or if the counterparty does not perform under the contract. OPTION WRITING: When the Series Fund sells an option, an amount equal to the premium received is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options which expire unexercised are treated on the expiration date as gains from the sale of securities. As to options which are closed, the difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a gain, or if the B42 premium received is less than the amount paid for the closing purchase transaction, as a loss. If a call option is exercised, the premium is added to the proceeds from the sale in determining whether a gain or loss has been realized. The Series Fund's use of written options involves, to varying degrees, elements of market risk in excess of the amount recognized in the statement of assets and liabilities. The contract or notional amounts reflect the extent of the Series Fund's involvement in these financial instruments. Risks arise from the possible movements in foreign exchange rates and securities values underlying these instruments. STOCK INDEX FUTURES: Portfolios of the Fund may attempt to reduce the risk of investment in equity securities by hedging a portion of their equity portfolios through the use of stock index futures traded on a commodities exchange or board of trade. A stock index futures contract is an agreement in which the seller of the contract agrees to deliver to the buyer an amount of cash equal to a specific dollar amount times the difference between the value of a specific stock index at the close of the last trading day of the contract and the price at which the agreement was made. Upon entering into a futures contract, a Portfolio is required to pledge to the broker liquid assets equal to the minimum "initial margin," approximately 5% of the contract amount. The Portfolio further agrees to receive or pay to the broker an amount of cash equal to the futures contract's daily fluctuation in value. These receipts or payments are known as the "variation margin" and are recorded as unrealized gains or losses. When a futures contract is closed, the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. FOREIGN CURRENCY TRANSACTIONS: The books and records of the Series Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis: (i) market value of investment securities, other assets and liabilities at the mid daily rate of exchange as reported by a major New York City bank; (ii) purchases and sales of investment securities, income and expenses at the rate of exchange prevailing on the respective dates of such transactions. Since the net assets of the Series Fund are presented at the foreign exchange rates and market values at the close of the fiscal period, it is not practical to isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from change in the market prices of securities held at the end of the fiscal period. Similarly, it is not practical to isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of equities sold during the fiscal year. Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the possibility of political and economic instability and the level of government supervision and regulation of foreign security markets. The Global Equity Portfolio may invest up to 100% of its total assets in common stock and convertible securities denominated in a foreign currency and issued by foreign or domestic issuers. The Bond and High Yield Bond Portfolios may each invest up to 20% of their assets in United States currency denominated debt securities issued outside the United States by foreign or domestic issuers. In addition, the bond components of the Conservatively Managed Flexible and Aggressively Managed Flexible Portfolios may each invest up to 20% of their assets in such securities. Further, the High Dividend Stock and Aggressively Managed Flexible Portfolios may invest up to 30% of their total assets in debt and equity securities denominated in a foreign currency and issued by foreign or domestic issuers. In addition, Common Stock and Natural Resources Portfolios may invest up to 30% of their total assets in non-United States currency denominated common stock and fixed-income securities convertible into common stock of foreign and U.S. issuers. Net realized gains and losses on foreign currency transactions represent net foreign exchange gains and losses from holding of foreign currencies; currency gains or losses realized between the trade and settlement dates on security transactions; and the difference between the amounts of the dividends and foreign taxes recorded on the Series Fund's books and the U.S. dollar equivalent amounts actually received or paid. Net currency gains and losses from valuing foreign currency denominated assets and liabilities at fiscal period end exchange rates are reflected as a component of unrealized loss on foreign currencies. FORWARD FOREIGN EXCHANGE CONTRACTS: The Series Fund is authorized to enter into forward foreign exchange contracts as a hedge against either specific transactions or portfolio positions. Such contracts are not entered on the Series Fund's records. However, the effect on operations is recorded from the date the Series Fund enters into such contracts. Premium or discount is amortized over the life of the contracts. B43 SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Dividend income is recorded on the ex-dividend date. Interest income is accrued daily on both long-term bonds and short-term investments. Interest income also includes net amortization from the purchase of fixed-income securities. Long-term security and option transactions are recorded on the first business day following the trade date, except that transactions on the last business day of the reporting cycle are recorded on that date. Short-term security and futures transactions are recorded on trade date. Realized gains and losses from security transactions are determined and accounted for on the basis of identified cost. DISTRIBUTIONS AND TAXES: The Portfolios of the Series Fund intend to continue to qualify for and elect the special tax treatment afforded regulated investment companies under Subchapter M of the Internal Revenue Code, thereby relieving the Series Fund of Federal income taxes. To so qualify, the Series Fund intends to distribute substantially all of its net investment income and net realized capital gains, if any, less any available capital loss carry forward. As of December 31, 1994, (based on an October 31 measurement period) the Bond Portfolio had a net capital loss carry forward of $643,550 (expiring in 2002). The High Yield Bond Portfolio had a net capital loss carry forward of $5,141,222 ($3,756,791 expiring in 1999 and $1,384,431 expiring in 2002). The Global Equity Portfolio had a net capital loss carry forward of $6,265,350 (expiring in 2002). Finally, the Zero Coupon Bond 2005 Portfolio had a net capital loss carry forward of $123,179 (expiring in 2002). These amounts will be available to offset any future taxable gains. The Money Market Portfolio declares dividends of net investment income (including realized and unrealized gains and losses on Portfolio securities) on each business day. These dividends are reinvested in additional full and fractional shares of the Portfolio. This policy enables the Money Market Portfolio to maintain a net asset value of $10.00 per share. Dividends from investment income of the other Portfolios will normally be declared and reinvested in additional full and fractional shares four times annually. Dividends from net realized capital gains are declared and reinvested in additional full and fractional shares twice a year. EXPENSES: Each Portfolio pays for certain expenses incurred in its individual operation, and also pays a portion of the Series Fund's general administrative expenses allocated on the basis of the asset size of the respective Portfolios. The Series Fund has an arrangement with Chemical Banking Corporation, a custodian bank. On a daily basis, cash funds which are not invested earn a credit which is used to offset custody charges on a Portfolio basis, exclusive of the Global Equity Portfolio, for which Brown Brothers Harriman & Co. is the custodian bank. For the year ended December 31, 1994, the total of the credits used was: Conservatively Managed Flexible Portfolio..................... $ 91,232 Aggressively Managed Flexible Portfolio....................... 41,492 Government Securities Portfolio............................... 15,374 Money Market Portfolio........................................ 14,851 High Yield Bond Portfolio..................................... 7,469 Bond Portfolio................................................ 4,838 Zero Coupon Bond 2005 Portfolio............................... 2,531 Zero Coupon Bond 2000 Portfolio............................... 1,447 Zero Coupon Bond 1995 Portfolio............................... 517
NOTE 3: INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT MANAGEMENT AND ACCOUNTING FEES: Pursuant to an investment advisory agreement (the "Agreement"), The Prudential receives an investment management fee, calculated daily, at an effective annual rate of 0.35% of the average daily net assets of the Stock Index Portfolio: 0.40% of the average daily net assets of the Money Market, Bond, Zero Coupon Bond 1995, Zero Coupon Bond 2000, Zero Coupon Bond 2005, High Dividend Stock and Government Securities Portfolios; 0.45% of average daily net assets of the Common Stock and Natural Resources Portfolios; 0.55% of the average daily net assets of the Conservatively Managed Flexible and the High Yield Bond Portfolios; 0.60% of the average daily net assets of the Aggressively Managed Flexible Portfolio; and 0.75% of the average daily net assets of the Global Equity Portfolio. Under the Agreement, The Prudential has agreed to refund to a portfolio (other than the Global Equity Portfolio), the portion of the management fee for that Portfolio equal to the amount that the aggregate annual ordinary operating expenses (excluding interest, taxes and brokerage commissions) exceeds 0.75% of the Portfolio's B44 average daily net assets. The Agreement also requires the Series Fund to reimburse The Prudential for the cost of maintaining staff and personnel who provide daily accounting services for the operation of the Series Fund with the exception of the Global Equity Portfolio. DIRECTORS' EXPENSES: The Series Fund pays for the fees and expenses of those members of the Series Fund's Board of Directors who are not officers or employees of The Prudential or its affiliates. BROKERAGE COMMISSIONS: For the year ended December 31, 1994, Prudential Securities Inc., an indirect, wholly-owned subsidiary of The Prudential, earned $560,155 in brokerage commissions from Portfolio transactions executed on behalf of the Series Fund. OTHER TRANSACTIONS WITH AFFILIATES: As of December 31, 1994, The Prudential had investments of $7,208,297 in the Zero Coupon Bond 1995 Portfolio; $105,934 in the Zero Coupon Bond 2000 Portfolio; and $1,158,347 in the Global Equity Portfolio. NOTE 4: JOINT REPURCHASE AGREEMENT ACCOUNT The Portfolios of the Series Fund transfer uninvested cash balances into a single joint account, the daily aggregate balance of which is invested in one or more repurchase agreements collateralized by U.S. Government obligations. The Series Fund's undivided investment in the joint repurchase agreement account represented, in principal, $974,388,000 as of December 31, 1994. The Portfolios of the Series Fund with cash invested in the joint account had the following percentage participation in the account: Common Stock Portfolio........................................ 35.23% Aggressively Managed Flexible Portfolio....................... 33.94% Conservatively Managed Flexible Portfolio..................... 12.45% High Dividend Stock Portfolio................................. 7.78% Government Securities Portfolio............................... 3.78% Stock Index Portfolio......................................... 2.66% Bond Portfolio................................................ 1.56% High Yield Bond Portfolio..................................... 1.47% Natural Resources Portfolio................................... 1.06% Zero Coupon Bond 2005 Portfolio............................... .07% ---------- 100.00%
Banker's Trust Securities Repurchase Agreement, dated 12/30/94, in the principal amount of $225,000,000, repurchase price $225,143,746, due 1/3/95; collateralized by $225,555,000 U.S. Treasury Notes, 8%, due 5/15/01. Goldman Sachs Repurchase Agreement, dated 12/30/94, in the principal amount of $67,388,000, repurchase price $67,427,309, due 1/3/95; collateralized by $61,265,000 U.S. Treasury Bonds, 8.875%, due 2/15/19. Morgan Stanley Repurchase Agreement, dated 12/30/94, in the principal amount of $278,000,000, repurchase price $278,171,508, due 1/3/95; collateralized by $143,865,000 U.S. Treasury Notes, 5.125%, due 3/31/98; $142,980,000 U.S. Treasury Notes, 8.75%, due 10/15/97. Nomura Securities Repurchase Agreement, dated 12/30/94, in the principal amount of $179,000,000, repurchase price $179,119,333, due 1/3/95; collateralized by $26,435,000 U.S. Treasury Bonds, 7.125%, due 2/15/23; $33,240,000 U.S. Treasury Bonds, 7.875%, due 2/15/21; $118,360,000 U.S. Treasury Bonds, 8.125%, due 8/15/19. Smith Barney Repurchase Agreement, dated 12/30/94, in the principal amount of $100,000,000, repurchase price $100,065,552, due 1/3/95; collateralized by $4,805,000 U.S. Treasury Bonds, 12.0%, due 8/15/13; $17,000,000 U.S. Treasury Bonds, 7.125%, due 2/15/23; $15,000,000 U.S. Treasury Bonds, 8.875%, due 2/15/19; $17,000,000 U.S. Treasury Bonds, 11.875%, due 11/15/03; $33,000,000 U.S. Treasury Bonds, 11.125%, due 8/15/03. UBS Securities Repurchase Agreement, dated 12/30/94, in the principal amount of $125,000,000, repurchase price $125,079,860, due 1/3/95; collateralized by $45,000,000 U.S. Treasury Bonds, 14.0%, due 11/15/11; $62,000,000 U.S. Treasury Notes, 5.125%, due 3/31/96. B45 NOTE 5: PURCHASE AND SALE OF SECURITIES The aggregate cost of purchase and the proceeds from the sales of securities (excluding short-term issues) for the year ended December 31, 1994 were as follows: Cost of Purchases:
AGGRESSIVELY CONSERVATIVELY ZERO ZERO HIGH COMMON MANAGED MANAGED COUPON COUPON YIELD BOND STOCK FLEXIBLE FLEXIBLE 1995 2000 BOND ------------ ------------ -------------- -------------- ------------ ------------ ------------ Debt Securities.......... $230,427,085 $ 0 $2,110,107,294 $2,264,216,698 $ 3,088,318 $ 2,167,569 $245,231,365 Equity Securities........ $ 0 $798,167,933 $1,463,207,489 $ 587,491,444 $ 0 $ 0 $ 15,834,213
HIGH ZERO STOCK DIVIDEND NATURAL GLOBAL GOVERNMENT COUPON INDEX STOCK RESOURCES EQUITY SECURITIES 2005 ------------ ------------ -------------- -------------- ------------ ------------ Debt Securities.......... $ 0 $ 59,651,560 $ 4,138,265 $ 2,014,070 $170,067,390 $ 3,833,265 Equity Securities........ $ 59,347,016 $672,161,860 $ 115,627,163 $ 298,502,390 $ 0 $ 0
Proceeds From Sales:
AGGRESSIVELY CONSERVATIVELY ZERO ZERO HIGH COMMON MANAGED MANAGED COUPON COUPON YIELD BOND STOCK FLEXIBLE FLEXIBLE 1995 2000 BOND ------------ ------------ -------------- -------------- ------------ ------------ ------------ Debt Securities.......... $161,141,232 $ 0 $1,985,428,664 $2,265,817,380 $ 670,613 $ 1,988,360 $184,820,098 Equity Securities........ $ 0 $133,822,827 $1,492,407,199 $ 430,107,759 $ 0 $ 0 $ 13,401,205
HIGH ZERO STOCK DIVIDEND NATURAL GLOBAL GOVERNMENT COUPON INDEX STOCK RESOURCES EQUITY SECURITIES 2005 ------------ ------------ -------------- -------------- ------------ ------------ Debt Securities.......... $ 0 $ 14,057,405 $ 2,019,170 $ 3,180,314 $192,629,378 $ 854,514 Equity Securities........ $ 10,703,691 $440,060,612 $ 34,073,194 $ 80,485,320 $ 0 $ 0
Transactions in call options written during the year ended December 31, 1994 were as follows:
NATURAL RESOURCES ---------------------- NUMBER OF PREMIUMS CONTRACTS RECEIVED --------- ----------- Options outstanding at December 31, 1993....... 0 $ 0 Options written........... 300 66,832 Options terminated in closing purchase transactions............ (300) (66,832) Options expired........... 0 0 Options exercised......... 0 0 --------- ----------- Options outstanding at December 31, 1994....... 0 $ 0 --------- ----------- --------- -----------
The federal income tax basis and unrealized appreciation/depreciation of the Fund's investments as of December 31, 1994 were as follows:
AGGRESSIVELY CONSERVATIVELY ZERO ZERO HIGH COMMON MANAGED MANAGED COUPON COUPON YIELD BOND STOCK FLEXIBLE FLEXIBLE 1995 2000 BOND ----------- ------------- ------------ ------------ ----------- ----------- ----------- Gross Unrealized Appreciation... $ 1,403,760 376,581,396 224,521,828 147,865,296 147,086 839,286 3,272,256 Gross Unrealized Depreciation... 33,335,908 130,109,851 93,827,948 122,789,171 110,193 174,236 32,262,000 Total Net Unrealized............ (31,932,148) 246,471,545 130,693,880 25,076,125 36,893 665,050 (28,989,744) Tax Basis....................... 563,227,825 2,419,493,392 3,347,362,272 3,443,877,594 17,721,753 20,000,846 328,072,741 HIGH ZERO STOCK DIVIDEND NATURAL GLOBAL GOVERNMENT COUPON MONEY INDEX STOCK RESOURCES EQUITY SECURITIES 2005 MARKET ----------- ------------- ------------ ------------ ----------- ----------- ----------- Gross Unrealized Appreciation... $105,889,895 41,940,476 23,326,212 29,685,605 947,221 381,531 0 Gross Unrealized Depreciation... 24,917,605 55,556,748 20,252,264 22,797,770 29,890,790 568,432 0 Total Net Unrealized............ 80,972,290 (13,616,272) 3,073,948 6,887,835 (28,943,569) (186,901) 0 Tax Basis....................... 584,600,736 873,043,522 227,082,786 340,366,881 507,031,047 16,718,218 581,582,129
B46 NOTE 6: FINANCIAL HIGHLIGHTS The following average per share data, ratios and supplemental information by Portfolio have been derived from information provided in the financial statements.
MONEY MARKET ------------------------------------------------------------------------------------------------------- 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 01/01/87 01/01/86 01/01/85 TO TO TO TO TO TO TO TO TO TO 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86* 12/31/85* -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Net Asset Value at beginning of period.... $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $ 1.000 $ 1.000 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Income From Investment Operations: Net investment income.... 0.402 0.290 0.372 0.596 0.778 0.877 0.717 0.630 0.062 0.079 Net realized and unrealized gains (losses) on investments............ 0 0 0 0 0 0 0 0 0 0 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Total from investment operations........... 0.402 0.290 0.372 0.596 0.778 0.877 0.717 0.630 0.062 0.079 Distributions to Shareholders: Distributions from net investment income...... (0.402) (0.290) (0.372) (0.596) (0.778) (0.877) (0.717) (0.630) (0.062) (0.079) Distributions from net realized gains......... 0 0 0 0 0 0 0 0 0 0 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Total distributions........ (0.402) (0.290) (0.372) (0.596) (0.778) (0.877) (0.717) (0.630) (0.062) (0.079) Reverse stock split (10 to 1).................. -- -- -- -- -- -- -- -- 9.000 -- Net increase (decrease) in Net Asset Value..... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 9.000 0.000 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Net Asset Value at end of period................. $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $ 10.000 $ 1.000 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Total Investment Rate of Return:**.............. 4.05 % 2.95 % 3.79 % 6.16 % 8.16 % 9.25 % 7.35 % 6.52 % 6.54 % 7.91 % Ratios/Supplemental Data: Net assets at end of period (in millions)... $583.3 $474.7 $528.7 $529.6 $434.2 $236.1 $155.9 $107.2 $52.5 $50.5 Ratio of expenses net of reimbursement to average net assets..... 0.47 % 0.45 % 0.47 % 0.46 % 0.50 % 0.55 % 0.57 % 0.53 % 0.55 % 0.68 % Ratio of net investment income to average net assets................. 4.02 % 2.90 % 3.72 % 5.96 % 7.80 % 8.77 % 7.17 % 6.30 % 6.16 % 7.60 % Portfolio turnover rate................... -- -- -- -- -- -- -- -- -- -- Number of shares outstanding at end of period (in millions)... 58.3 47.5 52.9 53.0 43.4 23.6 15.6 10.7 5.2 20.3
BOND ------------------------------------------------------------------------------------------------------- 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 01/01/87 01/01/86 01/01/85 TO TO TO TO TO TO TO TO TO TO 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86* 12/31/85* -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Net Asset Value at beginning of period.... $11.103 $10.829 $11.002 $10.332 $10.321 $ 9.942 $10.038 $11.048 $ 10.967 $ 9.998 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Income From Investment Operations: Net investment income.... 0.682 0.686 0.761 0.797 0.825 0.886 0.875 0.859 0.904 1.073 Net realized and unrealized gains (losses) on investments............ (1.040) 0.398 0.013 0.842 (0.004) 0.424 (0.069) (0.821) 0.607 0.739 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Total from investment operations........... (0.358) 1.084 0.774 1.639 0.821 1.310 0.806 0.038 1.511 1.812 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Distributions to Shareholders: Distributions from net investment income...... (0.683) (0.657) (0.728) (0.779) (0.810) (0.854) (0.902) (0.990) (0.909) (0.843) Distributions from net realized gains......... (0.024) (0.153) (0.219) (0.190) 0 (0.077) 0 (0.058) (0.521) 0 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Total distributions........ (0.707) (0.810) (0.947) (0.969) (0.810) (0.931) (0.902) (1.048) (1.430) (0.843) -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Net increase (decrease) in Net Asset Value..... (1.065) 0.274 (0.173) 0.670 0.011 0.379 (0.096) (1.010) 0.081 0.969 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Net Asset Value at end of period................. $10.038 $11.103 $10.829 $11.002 $10.332 $10.321 $ 9.942 $10.038 $ 11.048 $ 10.967 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Total Investment Rate of Return:**.............. (3.23 %) 10.13 % 7.19 % 16.44 % 8.32 % 13.49 % 8.19 % 0.29 % 14.45 % 18.65 % Ratios/Supplemental Data: Net assets at end of period (in millions)... $541.6 $576.2 $428.8 $318.7 $227.7 $191.1 $148.8 $139.5 $110.1 $40.9 Ratio of expenses net of reimbursement to average net assets..... 0.45 % 0.46 % 0.47 % 0.49 % 0.47 % 0.53 % 0.53 % 0.53 % 0.51 % 0.68 % Ratio of net investment income to average net assets................. 6.41 % 6.05 % 6.89 % 7.43 % 8.06 % 8.56 % 8.52 % 8.15 % 8.11 % 9.85 % Portfolio turnover rate................... 31.57 % 41.12 % 60.53 % 131.01 % 42.10 % 272.85 % 222.20 % 238.41 % 246.82 % 92.56 % Number of shares outstanding at end of period (in millions)... 54.0 51.9 39.6 29.0 22.0 18.5 15.0 13.9 10.0 2.5
All calculations are based on average month-end shares outstanding, where applicable. *The per share information of the Portfolios of The Prudential Series Fund, Inc. has not been restated to reflect the operations of the Pruco Life Series Fund, Inc. prior to the November 1, 1986 merger. **Total investment returns are at the portfolio level and exclude contract specific charges which would reduce returns. B47 NOTE 6: FINANCIAL HIGHLIGHTS (CONTINUED)
COMMON STOCK ------------------------------------------------------------------------------------------------------- 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 01/01/87 01/01/86 01/01/85 TO TO TO TO TO TO TO TO TO TO 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86* 12/31/85* -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Net Asset Value at beginning of period.... $21.487 $18.903 $17.905 $15.449 $18.539 $15.463 $13.620 $14.815 $ 14.634 $ 11.160 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Income From Investment Operations: Net investment income.... 0.512 0.417 0.444 0.482 0.577 0.474 0.402 0.393 0.448 0.340 Net realized and unrealized gains (losses) on investments............ 0.054 3.666 2.050 3.414 (1.573) 4.064 1.909 (0.065) 1.765 3.306 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Total from investment operations........... 0.566 4.083 2.494 3.896 (0.996) 4.538 2.311 0.328 2.213 3.646 Distributions to Shareholders: Distributions from net investment income...... (0.487) (0.404) (0.439) (0.478) (0.563) (0.503) (0.468) (0.496) (0.275) (0.172) Distributions from net realized gains......... (0.904) (1.095) (1.057) (0.962) (1.531) (0.959) 0 (1.027) (1.757) 0 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Total distributions........ (1.391) (1.499) (1.496) (1.440) (2.094) (1.462) (0.468) (1.523) (2.032) (0.172) -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Net increase (decrease) in Net Asset Value..... (0.825) 2.584 0.998 2.456 (3.090) 3.076 1.843 (1.195) 0.181 3.474 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Net Asset Value at end of period................. $20.662 $21.487 $18.903 $17.905 $15.449 $18.539 $15.463 $13.620 $ 14.815 $ 14.634 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Total Investment Rate of Return:**.............. 2.78 % 21.87 % 14.17 % 26.01 % (5.21 %) 29.73 % 17.05 % 1.67 % 15.10 % 32.84 % Ratios/Supplemental Data: Net assets at end of period (in millions)... $2,617.8 $2,186.5 $1,416.6 $1,032.8 $700.5 $675.5 $500.1 $451.0 $247.9 $68.8 Ratio of expenses net of reimbursement to average net assets..... 0.55 % 0.53 % 0.53 % 0.51 % 0.56 % 0.56 % 0.57 % 0.51 % 0.52 % 0.88 % Ratio of net investment income to average net assets................. 2.39 % 1.99 % 2.33 % 2.66 % 3.37 % 2.66 % 2.67 % 2.34 % 2.90 % 2.44 % Portfolio turnover rate................... 6.90 % 12.95 % 15.70 % 20.85 % 84.84 % 73.54 % 62.35 % 79.91 % 117.15 % 91.70 % Number of shares outstanding at end of period (in millions)... 126.7 101.8 74.9 57.7 45.3 36.4 32.3 33.1 16.7 2.0 AGGRESSIVELY MANAGED FLEXIBLE ------------------------------------------------------------------------------------------------------- 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 01/01/87 01/01/86 01/01/85 TO TO TO TO TO TO TO TO TO TO 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86* 12/31/85* -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Net Asset Value at beginning of period.... $16.957 $16.005 $16.288 $13.996 $14.446 $13.123 $12.326 $13.555 $ 12.810 $ 10.469 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Income From Investment Operations: Net investment income.... 0.473 0.566 0.583 0.650 0.715 0.813 0.724 0.577 0.611 0.584 Net realized and unrealized gains (losses) on investments............ (1.021) 1.882 0.607 2.809 (0.466) 1.989 0.840 (0.753) 1.342 2.095 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Total from investment operations........... (0.548) 2.448 1.190 3.459 0.249 2.802 1.564 (0.176) 1.953 2.679 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Distributions to Shareholders: Distributions from net investment income...... (0.451) (0.567) (0.559) (0.654) (0.699) (0.813) (0.767) (0.673) (0.456) (0.338) Distributions from net realized gains......... (0.462) (0.929) (0.914) (0.513) 0 (0.666) 0 (0.380) (0.752) 0 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Total distributions........ (0.913) (1.496) (1.473) (1.167) (0.699) (1.479) (0.767) (1.053) (1.208) (0.338) -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Net increase (decrease) in Net Asset Value..... (1.461) 0.952 (0.283) 2.292 (0.450) 1.323 0.797 (1.229) 0.745 2.341 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Net Asset Value at end of period................. $15.496 $16.957 $16.005 $16.288 $13.996 $14.446 $13.123 $12.326 $ 13.555 $ 12.810 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Total Investment Rate of Return:**.............. (3.16 %) 15.58 % 7.61 % 25.43 % 1.91 % 21.77 % 12.83 % (1.83 %) 15.48 % 25.87 % Ratios/Supplemental Data: Net assets at end of period (in millions)... $3,481.5 $3,292.2 $2,435.6 $1,990.7 $1,507.8 $1,386.5 $1,103.9 $1,062.4 $593.6 $138.7 Ratio of expenses net of reimbursement to average net assets..... 0.66 % 0.66 % 0.67 % 0.67 % 0.69 % 0.69 % 0.70 % 0.71 % 0.67 % 0.93 % Ratio of net investment income to average net assets................. 2.90 % 3.30 % 3.63 % 4.23 % 5.13 % 5.66 % 5.52 % 4.09 % 4.43 % 4.65 % Portfolio turnover rate................... 123.63 % 62.99 % 59.03 % 93.13 % 51.87 % 141.04 % 128.45 % 123.83 % 133.76 % 56.46 % Number of shares outstanding at end of period (in millions)... 224.7 194.1 152.2 122.2 107.7 96.0 84.1 86.2 43.8 6.1
All calculations are based on average month-end shares outstanding, where applicable. *The per share information of the Portfolios of The Prudential Series Fund, Inc. has not been restated to reflect the operations of the Pruco Life Series Fund, Inc. prior to the November 1, 1986 merger. **Total investment returns are at the portfolio level and exclude contract specific charges which would reduce returns. B48 NOTE 6: FINANCIAL HIGHLIGHTS (CONTINUED)
CONSERVATIVELY MANAGED FLEXIBLE ----------------------------------------------------------------------------------------------------- 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 01/01/87 01/01/86 01/01/85 TO TO TO TO TO TO TO TO TO TO 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86* 12/31/85* -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Net Asset Value at beginning of period.... $14.905 $14.243 $14.318 $13.060 $13.361 $12.295 $11.889 $12.571 $ 12.173 $ 10.469 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Income From Investment Operations: Net investment income.... 0.528 0.486 0.558 0.687 0.821 0.891 0.773 0.656 0.652 0.725 Net realized and unrealized gains (losses) on investments............ (0.679) 1.229 0.410 1.738 (0.143) 1.155 0.424 (0.399) 1.046 1.443 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Total from investment operations........... (0.151) 1.715 0.968 2.425 0.678 2.046 1.197 0.257 1.698 2.168 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Distributions to Shareholders: Distributions from net investment income...... (0.505) (0.468) (0.533) (0.668) (0.812) (0.887) (0.791) (0.709) (0.517) (0.464) Distributions from net realized gains......... (0.154) (0.585) (0.510) (0.499) (0.167) (0.093) 0 (0.230) (0.783) 0 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Total distributions........ (0.659) (1.053) (1.043) (1.167) (0.979) (0.980) (0.791) (0.939) (1.300) (0.464) -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Net increase (decrease) in Net Asset Value..... (0.810) 0.662 (0.075) 1.258 (0.301) 1.066 0.406 (0.682) 0.398 1.704 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Net Asset Value at end of period................. $14.095 $14.905 $14.243 $14.318 $13.060 $13.361 $12.295 $11.889 $ 12.571 $ 12.173 -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- -------- -------- -------- -------- -------- -------- -------- -------- --------- --------- Total Investment Rate of Return:**.............. (0.97 %) 12.20 % 6.95 % 19.07 % 5.27 % 16.99 % 10.19 % 1.54 % 14.17 % 21.11 % Ratios/Supplemental Data: Net assets at end of period (in millions)... $3,501.1 $3,103.2 $2,114.0 $1,500.0 $1,100.2 $976.0 $815.6 $803.9 $375.4 $75.9 Ratio of expenses net of reimbursement to average net assets..... 0.61 % 0.60 % 0.62 % 0.63 % 0.65 % 0.64 % 0.65 % 0.66 % 0.64 % 0.86 % Ratio of net investment income to average net assets................. 3.61 % 3.22 % 3.88 % 4.89 % 6.21 % 6.81 % 6.22 % 5.05 % 5.10 % 5.99 % Portfolio turnover rate................... 125.18 % 79.46 % 62.07 % 115.35 % 44.04 % 153.92 % 110.67 % 140.69 % 207.78 % 54.89 % Number of shares outstanding at end of period (in millions)... 248.4 208.2 148.4 104.8 84.2 73.0 66.3 67.6 29.9 4.2
ZERO COUPON BOND 1995 ------------------------------------------------------------------------------------------- 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 01/01/87 02/12/86 TO TO TO TO TO TO TO TO TO 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86 -------- -------- -------- -------- -------- -------- -------- -------- --------- Net Asset Value at beginning of period.... $11.282 $11.174 $11.250 $10.380 $11.094 $10.331 $10.270 $11.724 $ 10.156 -------- -------- -------- -------- -------- -------- -------- -------- --------- Income From Investment Operations: Net investment income.... 0.800 0.761 0.802 0.844 1.447 0.889 0.888 0.893 0.791 Net realized and unrealized gains (losses) on investments............ (0.808) 0.107 (0.010) 0.874 (0.670) 0.766 0.027 (1.263) 1.437 -------- -------- -------- -------- -------- -------- -------- -------- --------- Total from investment operations........... (0.008) 0.868 0.792 1.718 0.777 1.655 0.915 (0.370) 2.228 -------- -------- -------- -------- -------- -------- -------- -------- --------- Distributions to Shareholders: Distributions from net investment income...... (0.679) (0.760) (0.798) (0.845) (1.491) (0.892) (0.854) (1.084) (0.660) Distributions from net realized gains......... (0.002) 0 (0.070) (0.003) 0 0 0 0 0 -------- -------- -------- -------- -------- -------- -------- -------- --------- Total distributions........ (0.681) (0.760) (0.868) (0.848) (1.491) (0.892) (0.854) (1.084) (0.660) -------- -------- -------- -------- -------- -------- -------- -------- --------- Net increase (decrease) in Net Asset Value..... (0.689) 0.108 (0.076) 0.870 (0.714) 0.763 0.061 (1.454) 1.568 -------- -------- -------- -------- -------- -------- -------- -------- --------- Net Asset Value at end of period................. $10.593 $11.282 $11.174 $11.250 $10.380 $11.094 $10.331 $10.270 $ 11.724 -------- -------- -------- -------- -------- -------- -------- -------- --------- -------- -------- -------- -------- -------- -------- -------- -------- --------- Total Investment Rate of Return:**.............. (0.03 %) 7.87 % 7.19 % 17.20 % 7.95 % 16.41 % 9.01 % (3.25 %) 21.96 % Ratios/Supplemental Data: Net assets at end of period (in millions)... $17.7 $15.2 $13.6 $13.0 $11.0 $10.0 $9.0 $7.5 $7.2 Ratio of expenses net of reimbursement to average net assets..... 0.60 % 0.63 % 0.69 % 0.71 % 0.75 % 0.75 % 0.75 % 0.69 % 0.42 % Ratio of net investment income to average net assets................. 6.72 % 6.61 % 7.12 % 7.86 % 13.80 % 8.13 % 8.34 % 8.17 % 6.89 % Portfolio turnover rate................... 4.38 % 5.84 % 34.80 % 0.77 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % Number of shares outstanding at end of period (in millions)... 1.7 1.3 1.2 1.2 1.1 0.9 0.9 0.7 0.6
All calculations are based on average month-end shares outstanding, where applicable. *The per share information of the Portfolios of The Prudential Series Fund, Inc. has not been restated to reflect the operations of the Pruco Life Series Fund, Inc. prior to the November 1, 1986 merger. **Total investment returns are at the portfolio level and exclude contract specific charges which would reduce returns. B49 NOTE 6: FINANCIAL HIGHLIGHTS (CONTINUED)
ZERO COUPON BOND 2000 ------------------------------------------------------------------------------------------- 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 01/01/87 02/12/86 TO TO TO TO TO TO TO TO TO 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86 -------- -------- -------- -------- -------- -------- -------- -------- --------- Net Asset Value at beginning of period.... $13.715 $12.550 $12.402 $11.279 $11.883 $11.004 $10.685 $12.476 $ 10.267 -------- -------- -------- -------- -------- -------- -------- -------- --------- Income From Investment Operations: Net investment income.... 0.927 0.850 0.892 0.908 1.114 0.919 0.919 0.934 0.807 Net realized and unrealized gains (losses) on investments............ (1.907) 1.157 0.140 1.308 (0.593) 1.277 0.292 (1.623) 2.087 -------- -------- -------- -------- -------- -------- -------- -------- --------- Total from investment operations........... (0.980) 2.007 1.032 2.216 0.521 2.196 1.211 (0.689) 2.894 -------- -------- -------- -------- -------- -------- -------- -------- --------- Distributions to Shareholders: Distributions from net investment income...... (0.850) (0.837) (0.884) (0.944) (1.125) (0.915) (0.892) (1.102) (0.685) Distributions from net realized gains......... (0.023) (0.005) 0 (0.149) 0 (0.402) 0 0 0 -------- -------- -------- -------- -------- -------- -------- -------- --------- Total distributions........ (0.873) (0.842) (0.884) (1.093) (1.125) (1.317) (0.892) (1.102) (0.685) -------- -------- -------- -------- -------- -------- -------- -------- --------- Net increase (decrease) in Net Asset Value..... (1.853) 1.165 0.148 1.123 (0.604) 0.879 0.319 (1.791) 2.209 -------- -------- -------- -------- -------- -------- -------- -------- --------- Net Asset Value at end of period................. $11.862 $13.715 $12.550 $12.402 $11.279 $11.883 $11.004 $10.685 $ 12.476 -------- -------- -------- -------- -------- -------- -------- -------- --------- -------- -------- -------- -------- -------- -------- -------- -------- --------- Total Investment Rate of Return:**.............. (7.18 %) 16.15 % 8.59 % 20.71 % 5.11 % 20.38 % 11.56 % (5.51 %) 28.62 % Ratios/Supplemental Data: Net assets at end of period (in millions)... $20.6 $22.2 $16.7 $14.6 $13.9 $13.1 $10.9 $9.0 $8.1 Ratio of expenses net of reimbursement to average net assets..... 0.51 % 0.62 % 0.66 % 0.68 % 0.75 % 0.75 % 0.75 % 0.64 % 0.40 % Ratio of net investment income to average net assets................. 6.69 % 6.21 % 7.24 % 7.77 % 9.99 % 7.73 % 8.24 % 8.19 % 6.61 % Portfolio turnover rate................... 9.41 % 0.53 % 0.00 % 0.00 % 0.00 % 38.62 % 0.00 % 0.00 % 0.00 % Number of shares outstanding at end of period (in millions)... 1.7 1.6 1.3 1.2 1.2 1.1 1.0 0.8 0.7
HIGH YIELD BOND --------------------------------------------------------------------------------- 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 02/23/87 TO TO TO TO TO TO TO TO 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 -------- -------- -------- -------- -------- -------- -------- -------- (AS RESTATED) Net Asset Value at beginning of period.... $ 8.406 $ 7.719 $ 7.212 $ 5.838 $ 7.673 $ 8.904 $ 8.742 $10.000 -------- -------- -------- -------- -------- -------- -------- -------- Income From Investment Operations: Net investment income.... 0.869 0.822 0.824 0.836 0.936 1.071 1.066 0.968 Net realized and unrealized gains (losses) on investments............ (1.102) 0.632 0.415 1.397 (1.792) (1.223) 0.065 (1.428) -------- -------- -------- -------- -------- -------- -------- -------- Total from investment operations........... (0.233) 1.454 1.239 2.233 (0.856) (0.152) 1.131 (0.460) -------- -------- -------- -------- -------- -------- -------- -------- Distributions to Shareholders: Distributions from net investment income...... (0.807) (0.767) (0.732) (0.859) (0.979) (1.079) (0.969) (0.798) Distributions from net realized gains......... 0 0 0 0 0 0 0 0 -------- -------- -------- -------- -------- -------- -------- -------- Total distributions........ (0.807) (0.767) (0.732) (0.859) (0.979) (1.079) (0.969) (0.798) -------- -------- -------- -------- -------- -------- -------- -------- Net increase (decrease) in Net Asset Value..... (1.040) 0.687 0.507 1.374 (1.835) (1.231) 0.162 (1.258) -------- -------- -------- -------- -------- -------- -------- -------- Net Asset Value at end of period................. $ 7.366 $ 8.406 $ 7.719 $ 7.212 $ 5.838 $ 7.673 $ 8.904 $ 8.742 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Total Investment Rate of Return:**.............. (2.72 %) 19.27 % 17.54 % 39.71 % (11.84 %) (2.05 %) 13.17 % (4.91 %) Ratios/Supplemental Data: Net assets at end of period (in millions)... $306.2 $282.9 $153.7 $78.7 $49.8 $60.0 $65.8 $40.4 Ratio of expenses net of reimbursement to average net assets..... 0.65 % 0.65 % 0.70 % 0.75 % 0.75 % 0.71 % 0.75 % 0.73 % Ratio of net investment income to average net assets................. 9.82 % 9.91 % 10.67 % 12.05 % 13.42 % 12.29 % 11.60 % 10.13 % Portfolio turnover rate................... 68.67 % 95.52 % 75.04 % 57.21 % 34.66 % 60.59 % 70.73 % 16.58 % Number of shares outstanding at end of period (in millions)... 41.6 33.6 19.9 10.9 8.5 7.8 7.4 4.6
All calculations are based on average month-end shares outstanding, where applicable. *The per share information of the Portfolios of The Prudential Series Fund, Inc. has not been restated to reflect the operations of the Pruco Life Series Fund, Inc. prior to the November 1, 1986 merger. **Total investment returns are at the portfolio level and exclude contract specific charges which would reduce returns. B50 NOTE 6: FINANCIAL HIGHLIGHTS (CONTINUED)
STOCK INDEX --------------------------------------------------------------------------------- 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 10/19/87 TO TO TO TO TO TO TO TO 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 -------- -------- -------- -------- -------- -------- -------- -------- Net Asset Value at beginning of period.... $15.202 $14.218 $13.605 $10.760 $11.732 $ 9.454 $ 8.531 $ 8.071 -------- -------- -------- -------- -------- -------- -------- -------- Income From Investment Operations: Net investment income.... 0.377 0.361 0.350 0.351 0.357 0.326 0.357 0.047 Net realized and unrealized gains (losses) on investments............ (0.231) 1.002 0.600 2.814 (0.792) 2.570 0.951 0.548 -------- -------- -------- -------- -------- -------- -------- -------- Total from investment operations........... 0.146 1.363 0.950 3.165 (0.435) 2.896 1.308 0.595 -------- -------- -------- -------- -------- -------- -------- -------- Distributions to Shareholders: Distributions from net investment income...... (0.368) (0.346) (0.329) (0.307) (0.309) (0.354) (0.385) (0.135) Distributions from net realized gains......... (0.023) (0.033) (0.008) (0.013) (0.228) (0.264) 0 0 -------- -------- -------- -------- -------- -------- -------- -------- Total distributions........ (0.391) (0.379) (0.337) (0.320) (0.537) (0.618) (0.385) (0.135) -------- -------- -------- -------- -------- -------- -------- -------- Net increase (decrease) in Net Asset Value..... (0.245) 0.984 0.613 2.845 (0.972) 2.278 0.923 0.460 -------- -------- -------- -------- -------- -------- -------- -------- Net Asset Value at end of period................. $14.957 $15.202 $14.218 $13.605 $10.760 $11.732 $ 9.454 $ 8.531 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Total Investment Rate of Return:**.............. 1.01 % 9.66 % 7.13 % 29.72 % (3.63 %) 30.93 % 15.44 % 7.35 % Ratios/Supplemental Data: Net assets at end of period (in millions)... $664.5 $615.1 $433.5 $236.9 $104.5 $53.8 $36.0 $24.5 Ratio of expenses net of reimbursement to average net assets..... 0.42 % 0.42 % 0.46 % 0.47 % 0.60 % 0.69 % 0.78 % 0.45 % Ratio of net investment income to average net assets................. 2.50 % 2.43 % 2.56 % 2.82 % 3.23 % 2.95 % 3.87 % 0.53 % Portfolio turnover rate................... 1.74 % 0.60 % 0.43 % 1.10 % 17.80 % 14.54 % 15.62 % 0.47 % Number of shares outstanding at end of period (in millions)... 44.4 40.5 30.5 17.4 9.7 4.6 3.8 2.9
HIGH DIVIDEND STOCK ----------------------------------------------------------------------- 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 02/19/88 TO TO TO TO TO TO TO 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 -------- -------- -------- -------- -------- -------- -------- Net Asset Value at beginning of period $15.655 $13.673 $13.209 $11.241 $12.254 $10.621 $10.132 -------- -------- -------- -------- -------- -------- -------- Income From Investment Operations: Net investment income.... 0.664 0.551 0.582 0.578 0.509 0.539 0.452 Net realized and unrealized gains (losses) on investments............ (0.453) 2.459 0.723 2.430 (0.980) 1.841 0.684 -------- -------- -------- -------- -------- -------- -------- Total from investment operations 0.211 3.010 1.305 3.008 (0.471) 2.380 1.136 -------- -------- -------- -------- -------- -------- -------- Distributions to Shareholders: Distributions from net investment income...... (0.562) (0.501) (0.515) (0.542) (0.461) (0.462) (0.420) Distributions from net realized gains......... (0.820) (0.527) (0.326) (0.498) (0.081) (0.285) (0.227) -------- -------- -------- -------- -------- -------- -------- Total distributions........ (1.382) (1.028) (0.841) (1.040) (0.542) (0.747) (0.647) -------- -------- -------- -------- -------- -------- -------- Net increase (decrease) in Net Asset Value..... (1.171) 1.982 0.464 1.968 (1.013) 1.633 0.489 -------- -------- -------- -------- -------- -------- -------- Net Asset Value at end of period................. $14.484 $15.655 $13.673 $13.209 $11.241 $12.254 $10.621 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Total Investment Rate of Return:**.............. 1.44 % 22.28 % 10.14 % 27.50 % (3.73 %) 22.67 % 11.31 % Ratios/Supplemental Data: Net assets at end of period (in millions)... $859.7 $602.8 $234.4 $106.9 $55.5 $34.9 $11.3 Ratio of expenses net of reimbursement to average net assets..... 0.52 % 0.54 % 0.57 % 0.57 % 0.60 % 0.74 % 0.64 % Ratio of net investment income to average net assets................. 3.92 % 3.56 % 4.32 % 4.53 % 4.53 % 4.48 % 4.08 % Portfolio turnover rate................... 62.66 % 41.43 % 39.98 % 60.12 % 54.79 % 56.65 % 61.31 % Number of shares outstanding at end of period (in millions)... 59.4 38.5 17.1 8.1 4.9 2.9 1.1
All calculations are based on average month-end shares outstanding, where applicable. **Total investment returns are at the portfolio level and exclude contract specific charges which would reduce returns. B51 NOTE 6: FINANCIAL HIGHLIGHTS (CONTINUED)
NATURAL RESOURCES ----------------------------------------------------------------------- 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 05/01/88 TO TO TO TO TO TO TO 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 -------- -------- -------- -------- -------- -------- -------- Net Asset Value at beginning of period.... $15.562 $12.949 $12.450 $11.622 $12.705 $10.141 $ 9.910 -------- -------- -------- -------- -------- -------- -------- Income From Investment Operations: Net investment income.... 0.183 0.227 0.319 0.368 0.417 0.364 0.254 Net realized and unrealized gains (losses) on investments............ (0.850) 3.004 0.588 0.821 (1.143) 3.216 0.274 -------- -------- -------- -------- -------- -------- -------- Total from investment operations........... (0.667) 3.231 0.907 1.189 (0.726) 3.580 0.528 -------- -------- -------- -------- -------- -------- -------- Distributions to Shareholders: Distributions from net investment income...... (0.150) (0.207) (0.309) (0.361) (0.336) (0.358) (0.252) Distributions from net realized gains......... (0.302) (0.411) (0.099) 0 (0.021) (0.658) (0.045) -------- -------- -------- -------- -------- -------- -------- Total distributions........ (0.452) (0.618) (0.408) (0.361) (0.357) (1.016) (0.297) -------- -------- -------- -------- -------- -------- -------- Net increase (decrease) in Net Asset Value..... (1.119) 2.613 0.499 0.828 (1.083) 2.564 0.231 -------- -------- -------- -------- -------- -------- -------- Net Asset Value at end of period................. $14.443 $15.562 $12.949 $12.450 $11.622 $12.705 $10.141 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Total Investment Rate of Return:**.............. (4.30 %) 25.15 % 7.30 % 10.30 % (5.76 %) 35.64 % 5.42 % Ratios/Supplemental Data: Net assets at end of period (in millions)... $227.3 $158.8 $77.5 $62.6 $50.6 $17.9 $9.5 Ratio of expenses net of reimbursement to average net assets..... 0.61 % 0.60 % 0.72 % 0.68 % 0.75 % 0.86 % 0.58 % Ratio of net investment income to average net assets................. 1.09 % 1.50 % 2.44 % 2.97 % 3.45 % 3.04 % 2.46 % Portfolio turnover rate................... 18.10 % 19.64 % 29.20 % 21.33 % 42.18 % 49.17 % 59.33 % Number of shares outstanding at end of period (in millions)... 15.7 10.2 6.0 5.0 4.4 1.4 0.9 GLOBAL EQUITY ----------------------------------------------------------------------- 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 09/19/88 TO TO TO TO TO TO TO 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 -------- -------- -------- -------- -------- -------- -------- Net Asset Value at beginning of period $14.639 $10.368 $10.792 $ 9.866 $11.547 $10.508 $ 9.818 -------- -------- -------- -------- -------- -------- -------- Income From Investment Operations: Net investment income.... 0.028 0.023 0.051 0.096 0.203 0.079 0.052 Net realized and unrealized gains (losses) on investments............ (0.744) 4.433 (0.419) 1.020 (1.802) 1.806 0.787 -------- -------- -------- -------- -------- -------- -------- Total from investment operations........... (0.716) 4.456 (0.368) 1.116 (1.599) 1.885 0.839 -------- -------- -------- -------- -------- -------- -------- Distributions to Shareholders: Distributions from net investment income...... (0.019) (0.079) (0.056) (0.100) (0.067) (0.073) (0.149) Distributions from net realized gains......... (0.025) (0.106) 0 (0.090) (0.015) (0.773) 0 -------- -------- -------- -------- -------- -------- -------- Total distributions........ (0.044) (0.185) (0.056) (0.190) (0.082) (0.846) (0.149) -------- -------- -------- -------- -------- -------- -------- Net increase (decrease) in Net Asset Value..... (0.760) 4.271 (0.424) 0.926 (1.681) 1.039 0.690 -------- -------- -------- -------- -------- -------- -------- Net Asset Value at end of period................. $13.879 $14.639 $10.368 $10.792 $ 9.866 $11.547 $10.508 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Total Investment Rate of Return:**.............. (4.89 %) 43.14 % (3.42 %) 11.39 % (12.91 %) 18.82 % 8.57 % Ratios/Supplemental Data: Net assets at end of period (in millions)... $345.7 $129.1 $34.0 $34.3 $26.2 $29.4 $26.9 Ratio of expenses net of reimbursement to average net assets..... 1.23 % 1.44 % 1.87 % 1.62 % 1.67 % 1.47 % 0.42 % Ratio of net investment income to average net assets................. 0.20 % 0.18 % 0.49 % 0.92 % 1.92 % 0.70 % 0.51 % Portfolio turnover rate................... 37.46 % 54.54 % 78.16 % 136.21 % 43.12 % 47.95 % 6.40 % Number of shares outstanding at end of period (in millions)... 24.9 8.8 3.3 3.2 2.7 2.5 2.6
All calculations are based on average month-end shares outstanding, where applicable. **Total investment returns are at the portfolio level and exclude contract specific charges which would reduce returns. B52 NOTE 6: FINANCIAL HIGHLIGHTS (CONTINUED)
GOVERNMENT SECURITIES ------------------------------------------------------------- 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 05/01/89 TO TO TO TO TO TO 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 -------- -------- -------- -------- -------- -------- Net Asset Value at beginning of period.... $11.784 $11.094 $11.133 $10.146 $10.324 $10.017 -------- -------- -------- -------- -------- -------- Income From Investment Operations: Net investment income.... 0.703 0.700 0.731 0.736 0.791 0.545 Net realized and unrealized gains (losses) on investments............ (1.311) 0.678 (0.092) 0.847 (0.177) 0.613 -------- -------- -------- -------- -------- -------- Total from investment operations........... (0.608) 1.378 0.639 1.583 0.614 1.158 -------- -------- -------- -------- -------- -------- Distributions to Shareholders: Distributions from net investment income...... (0.723) (0.642) (0.593) (0.596) (0.769) (0.489) Distributions from net realized gains......... 0.008 (0.046) (0.085) 0 (0.023) (0.362) -------- -------- -------- -------- -------- -------- Total distributions........ (0.715) (0.688) (0.678) (0.596) (0.792) (0.851) -------- -------- -------- -------- -------- -------- Net increase (decrease) in Net Asset Value..... (1.323) 0.690 (0.039) 0.987 (0.178) 0.307 -------- -------- -------- -------- -------- -------- Net Asset Value at end of period................. $10.461 $11.784 $11.094 $11.133 $10.146 $10.324 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Total Investment Rate of Return:**.............. (5.16 %) 12.56 % 5.85 % 16.11 % 6.34 % 11.60 % Ratios/Supplemental Data: Net assets at end of period (in millions)... $487.6 $540.1 $315.5 $95.0 $23.7 $17.0 Ratio of expenses net of reimbursement to average net assets..... 0.45 % 0.46 % 0.53 % 0.58 % 0.74 % 0.50 % Ratio of net investment income to average net assets................. 6.30 % 5.91 % 6.58 % 6.97 % 7.86 % 5.06 % Portfolio turnover rate................... 34.19 % 18.59 % 80.71 % 127.18 % 379.45 % 208.86 % Number of shares outstanding at end of period (in millions)... 46.6 45.8 28.3 8.5 2.3 1.6 ZERO COUPON BOND 2005 ------------------------------------------------------------- 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 05/01/89 TO TO TO TO TO TO 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 -------- -------- -------- -------- -------- -------- Net Asset Value at beginning of period.... $12.677 $11.029 $10.874 $ 9.798 $10.457 $10.017 -------- -------- -------- -------- -------- -------- Income From Investment Operations: Net investment income.... 0.752 0.768 0.804 0.820 0.850 0.561 Net realized and unrealized gains (losses) on investments............ (1.967) 1.623 0.207 1.143 (0.649) 0.598 -------- -------- -------- -------- -------- -------- Total from investment operations........... (1.215) 2.391 1.011 1.963 0.201 1.159 -------- -------- -------- -------- -------- -------- Distributions to Shareholders: Distributions from net investment income...... (0.715) (0.741) (0.792) (0.827) (0.860) (0.531) Distributions from net realized gains......... (0.003) (0.002) (0.064) (0.060) 0 (0.188) -------- -------- -------- -------- -------- -------- Total distributions........ (0.718) (0.743) (0.856) (0.887) (0.860) (0.719) -------- -------- -------- -------- -------- -------- Net increase (decrease) in Net Asset Value..... (1.933) 1.648 0.155 1.076 (0.659) 0.440 -------- -------- -------- -------- -------- -------- Net Asset Value at end of period................. $10.744 $12.677 $11.029 $10.874 $ 9.798 $10.457 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Total Investment Rate of Return:**.............. (9.61 %) 21.94 % 9.66 % 21.16 % 2.56 % 11.67 % Ratios/Supplemental Data: Net assets at end of period (in millions)... $16.5 $14.5 $9.8 $8.7 $7.3 $7.2 Ratio of expenses net of reimbursement to average net assets..... 0.60 % 0.66 % 0.75 % 0.75 % 0.75 % 0.49 % Ratio of net investment income to average net assets................. 6.53 % 6.17 % 7.46 % 8.08 % 8.83 % 5.25 % Portfolio turnover rate................... 5.94 % 3.62 % 11.48 % 5.76 % 4.36 % 59.90 % Number of shares outstanding at end of period (in millions)... 1.5 1.1 0.9 0.8 0.7 0.7
All calculations are based on average month-end shares outstanding, where applicable. **Total investment returns are at the portfolio level and exclude contract specific charges which would reduce returns. B53 NOTE 7: RESTATEMENT Subsequent to the issuance of the 1993 financial statements of the High Yield Bond Portfolio ("the Portfolio"), Prudential management learned that distributions of $1,366,447 received by the Portfolio had been erroneously reported to the Series Fund and reflected in the Portfolio's 1993 financial statements as interest income. These distributions, in fact, represented payments for partial redemptions of the underlying security. This error resulted in the following overstatements in the originally issued 1993 financial statements: Investments $1,708,058 ---------- ---------- Interest Income $1,366,447 Net Unrealized Gain on Investments 341,611 ---------- Net Assets $1,708,058 ---------- ---------- Net Asset Value Per Share $.051 ---------- ----------
The comparative 1993 financial information included in the statements of changes in net assets of the Portfolio has been restated to correct for this error. B54 INDEPENDENT AUDITORS' REPORT The Shareholders and Board of Directors of The Prudential Series Fund, Inc.: We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of the Money Market, Bond, Common Stock, Aggressively Managed Flexible, Conservatively Managed Flexible, Zero Coupon Bond 1995, Zero Coupon Bond 2000, Zero Coupon Bond 2005, High Yield Bond, Stock Index, High Dividend Stock, Natural Resources, Government Securities and Global Equity Portfolios of The Prudential Series Fund, Inc. as of December 31, 1994, the related statements of operations for the year then ended and the statements of changes in net assets for each of the two years in the period then ended. These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements 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 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 December 31, 1994, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. 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, such financial statements present fairly, in all material respects, the financial position of each of the respective portfolios of The Prudential Series Fund, Inc. as of December 31, 1994, the results of their operations for the year then ended and the changes in their net assets for each of the two years in the period then ended in conformity with generally accepted accounting principles. As discussed in Note 7, the 1993 financial statements of the High Yield Bond Portfolio have been restated. Deloitte & Touche LLP Parsippany, New Jersey February 10, 1995 B55 (This page intentionally left blank.) B56 GRAPH DESCRIPTIONS GRAPH 1: (Money Market Portfolio) Rising Interest Rates Push Money Market Rates Higher. Historical Yield Curve: For year ended December 31, 1993, the 3 month yield was approximately 3%, curving upward to the 30 year yield at approximately 6.2%. For year ended December 31, 1994, the 3 month yield was approximately 5.7% curving upward to the 2 year yield at approximately 7.5%, then leveling out. GRAPH 2: (Money Market Portfolio) How Money Markets Fared Compared With Other Asset Classes. 1994 Investment Total Returns: U.S. Bonds-3.5%; U.S. Stocks 1.3%; Global Stocks 5.6%; U.S. Money Markets 3.8%. GRAPH 3: (Bond Portfolio) Graph represents the growth of $10,000 invested in the Bond Portfolio compared with Lehman Aggregate Index and Lipper VIP Corporate Bond Average. In the ten years ended December 31, 1994, an investment of $10,000 would have a value of $24,088, $25,848, and $24,353, respectively. GRAPH 4: (Government Securities Portfolio) Graph represents the growth of $10,000 invested in the Government Securities Portfolio compared with Lehman Government Index and Lipper VIP U.S. Government Average. In the seven years ended December 31, 1994, an investment of $10,000 would have a value of $15,567, $15,901, and $15,457, respectively. GRAPH 5: (Zero Coupon Bond 1995) Graph represents the growth of $10,000 invested in the Zero Coupon Bond 1995 Portfolio compared with Lehman Government Index and Lipper VIP Target Maturity Average. In the ten years ended December 31, 1994, an investment of $10,000 would have a value of $21,899, $19,801, and $21,133, respectively. Graph 6: (Zero Coupon Bond 2000) Graph represents the growth of $10,000 invested in the Zero Coupon Bond 2000 Portfolio compared with Lehman Government Index and Lipper VIP Target Maturity Average. In the ten years ended December 31, 1994, an investment of $10,000 would have a value of $24,251, $19,801, and $21,133, respectively. Graph 7: (Zero Coupon Bond 2005) Graph represents the growth of $10,000 invested in the Zero Coupon Bond 2005 Portfolio compared with Lehman Government Index and Lipper VIP Target Maturity Average. In the seven years ended December 31, 1994, an investment of $10,000 would have a value of $16,773, $15,901, and $17,069, respectively. Graph 8: (Conservatively Managed Flexible Portfolio) Graph represents the growth of $10,000 invested in the Conservatively Managed Flexible Portfolio compared with the S&P 500, Lehman Aggregate Index, and Lipper VIP Flex Average. In the ten years ended December 31, 1994, an investment of $10,000 would have a value of $26,961, $38,269, $25,848, and $29,766, respectively. Graph 9: (Aggressively Managed Flexible Portfolio) Graph represents the growth of $10,000 invested in the Aggressively Managed Flexible Portfolio compared with S&P 500, Lehman Aggregate Index, and Lipper VIP Flex Average. In the ten years ended December 31, 1994, an investment of $10,000 would have a value of $30,187, $38,269, $25,848, and $29,766, respectively. Graph 10: (High Yield) Graph represents the growth of $10,000 invested in the High Yield Bond Portfolio compared with Lehman High Yield Index and Lipper VIP High Yield Average. In the nine years ended December 31, 1994, an investment of $10,000 would have a value of $17,634, $19,867, and $19,065, respectively. Graph 11: (Stock Index Portfolio) Graph 11 represents the growth of $10,000 invested in the Stock Index Portfolio compared with the S&P 500 and Lipper VIP Growth and Income Average. In the nine years ended December 31, 1994, and investment of $10,000 would have a value of $24,066, $22,968, and $22,342, respectively. Graph 12: (High Dividend Stock Portfolio) Graph 12 represents the growth of $10,000 invested in the High Dividend Stock Portfolio compared with the S&P 500 and Lipper VIP Equity Income Average. In the eight years ended December 31, 1994, an investment of $10,000 would have a value of $22,896, $21,335 and $19,428, respectively. Graph 13: (Common Stock Portfolio) Graph 13 represents the growth of $10,000 invested in the Common Stock Portfolio compared with the S&P 500 and Lipper Growth Average. In the ten years ended December 31, 1994, an investment of $10,000 would have a value of $40,332, $38,269, and $34,760, respectively. Graph 14: (Global Equity Portfolio) Graph 14 represents the growth of $10,000 invested in the Global Equity Portfolio compared with Morgan Stanley World Index and Lipper VIP Global Average. In the eight years ended December 31, 1994, an investment of $10,000 would have a value of $16,452, $16,134, and $17,668, respectively. Graph 15: (Natural Resources Portfolio) Graph 15 represents the growth of $10,000 invested in the Natural Resources Portfolio compared with the S&P 500 and Lipper VIP Natural Resources Average. In the eight years ended December 31, 1994, an investment of $10,000 would have a value of $19,102, $21,773, and $14,631, respectively. FINANCIAL STATEMENTS OF THE PRUDENTIAL VARIABLE APPRECIABLE ACCOUNT STATEMENTS OF NET ASSETS December 31, 1994
SUBACCOUNTS -------------------------------------------------------------- AGGRESSIVELY MONEY COMMON MANAGED TOTAL MARKET BOND STOCK FLEXIBLE -------------- -------------- -------------- -------------- -------------- ASSETS Investment in shares of The Prudential Series Fund, Inc. Portfolios at net asset value [Note 2].......... $2,587,138,095 $ 78,169,861 $ 76,194,412 $ 500,113,200 $ 699,836,622 -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- NET ASSETS, representing: Equity of Contract owners....................... $2,568,337,051 $ 77,928,559 $ 76,018,846 $ 495,997,636 $ 695,664,623 Equity of The Prudential Insurance Company of America....................................... 18,801,044 241,302 175,566 4,115,564 4,171,999 -------------- -------------- -------------- -------------- -------------- $2,587,138,095 $ 78,169,861 $ 76,194,412 $ 500,113,200 $ 699,836,622 -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
STATEMENTS OF OPERATIONS For the year ended December 31, 1994
SUBACCOUNTS -------------------------------------------------------------- AGGRESSIVELY MONEY COMMON MANAGED TOTAL MARKET BOND STOCK FLEXIBLE -------------- -------------- -------------- -------------- -------------- INVESTMENT INCOME Dividend distributions received................. $ 79,801,099 $ 2,906,404 $ 4,745,723 $ 10,458,080 $ 18,588,518 EXPENSES Charges to Contract owners for assuming mortality risk and expense risk [Note 3A]..... 16,768,066 504,103 518,852 3,134,155 4,527,520 Reimbursement for excess expenses [Note 3D]..... (53,999) 0 0 0 0 -------------- -------------- -------------- -------------- -------------- NET EXPENSES...................................... 16,714,067 504,103 518,852 3,134,155 4,527,520 -------------- -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS)...................... 63,087,032 2,402,301 4,226,871 7,323,925 14,060,998 -------------- -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received............ 54,709,623 0 158,594 19,666,506 18,931,168 Realized gain (loss) on shares redeemed [average cost basis].......................... 167,179 0 4,403 86,672 0 Net unrealized loss on investments.............. (155,373,175) 0 (7,162,380) (18,362,891) (56,779,739) -------------- -------------- -------------- -------------- -------------- NET GAIN (LOSS) ON INVESTMENTS.................... (100,496,373) 0 (6,999,383) 1,390,287 (37,848,571) -------------- -------------- -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $ (37,409,341) $ 2,402,301 $ (2,772,512) $ 8,714,212 $ (23,787,573) -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES C10 AND C11. C1 STATEMENTS OF NET ASSETS (CONTINUED) December 31, 1994
SUBACCOUNTS (CONTINUED) ------------------------------------------------------------------------------ ZERO ZERO CONSERVATIVELY COUPON COUPON HIGH MANAGED BOND BOND YIELD STOCK FLEXIBLE 1995 2000 BOND INDEX -------------- -------------- -------------- -------------- -------------- ASSETS Investment in shares of The Prudential Series Fund, Inc. Portfolios at net asset value [Note 2].......... $ 637,504,119 $ 4,804,597 $ 16,786,627 $ 54,538,773 $ 190,760,024 -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- NET ASSETS, representing: Equity of Contract owners....................... $ 633,504,352 $ 4,788,369 $ 16,177,407 $ 54,364,432 $ 190,028,325 Equity of The Prudential Insurance Company of America....................................... 3,999,767 16,228 609,220 174,341 731,699 -------------- -------------- -------------- -------------- -------------- $ 637,504,119 $ 4,804,597 $ 16,786,627 $ 54,538,773 $ 190,760,024 -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- HIGH DIVIDEND NATURAL GLOBAL STOCK RESOURCES EQUITY -------------- -------------- -------------- ASSETS Investment in shares of The Prudential Series Fund, Inc. Portfolios at net asset value [Note 2].......... $ 150,687,304 $ 72,147,168 $ 29,938,696 -------------- -------------- -------------- -------------- -------------- -------------- NET ASSETS, representing: Equity of Contract owners....................... $ 149,277,865 $ 71,565,256 $ 27,782,691 Equity of The Prudential Insurance Company of America....................................... 1,409,439 581,912 2,156,005 -------------- -------------- -------------- $ 150,687,304 $ 72,147,168 $ 29,938,696 -------------- -------------- -------------- -------------- -------------- --------------
STATEMENTS OF OPERATIONS (CONTINUED) For the year ended December 31, 1994
SUBACCOUNTS (CONTINUED) ------------------------------------------------------------------------------ ZERO ZERO CONSERVATIVELY COUPON COUPON HIGH MANAGED BOND BOND YIELD STOCK FLEXIBLE 1995 2000 BOND INDEX -------------- -------------- -------------- -------------- -------------- INVESTMENT INCOME Dividend distributions received................. $ 21,289,808 $ 286,151 $ 1,133,170 $ 5,329,778 $ 4,465,133 EXPENSES Charges to Contract owners for assuming mortality risk and expense risk [Note 3A]..... 4,323,507 32,534 118,731 370,924 1,283,145 Reimbursement for excess expenses [Note 3D]..... 0 (9,637) (17,971) 0 0 -------------- -------------- -------------- -------------- -------------- NET EXPENSES...................................... 4,323,507 22,897 100,760 370,924 1,283,145 -------------- -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS)...................... 16,966,301 263,254 1,032,410 4,958,854 3,181,988 -------------- -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received............ 6,635,310 1,011 31,655 38 267,733 Realized gain (loss) on shares redeemed [average cost basis].......................... 31,649 586 1,031 5,625 58,302 Net unrealized loss on investments.............. (33,092,575) (288,227) (2,416,751) (6,827,471) (2,856,319) -------------- -------------- -------------- -------------- -------------- NET GAIN (LOSS) ON INVESTMENTS.................... (26,425,616) (286,630) (2,384,065) (6,821,808) (2,530,284) -------------- -------------- -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $ (9,459,315) $ (23,376) $ (1,351,655) $ (1,862,954) $ 651,704 -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- HIGH DIVIDEND NATURAL GLOBAL STOCK RESOURCES EQUITY* -------------- -------------- -------------- INVESTMENT INCOME Dividend distributions received................. $ 5,001,100 $ 674,356 $ 44,201 EXPENSES Charges to Contract owners for assuming mortality risk and expense risk [Note 3A]..... 893,008 470,895 55,679 Reimbursement for excess expenses [Note 3D]..... 0 (2) 0 -------------- -------------- -------------- NET EXPENSES...................................... 893,008 470,893 55,679 -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS)...................... 4,108,092 203,463 (11,478) -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received............ 7,633,088 1,375,424 5,622 Realized gain (loss) on shares redeemed [average cost basis].......................... 34,607 22,045 0 Net unrealized loss on investments.............. (11,478,198) (5,314,192) (1,421,127) -------------- -------------- -------------- NET GAIN (LOSS) ON INVESTMENTS.................... (3,810,503) (3,916,723) (1,415,505) -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $ 297,589 $ (3,713,260) $ (1,426,983) -------------- -------------- -------------- -------------- -------------- -------------- *Commenced Business on 5/1/94
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES C10 AND C11. C2 STATEMENTS OF NET ASSETS (CONTINUED) December 31, 1994
SUBACCOUNTS ------------------------------ ZERO COUPON GOVERNMENT BOND SECURITIES 2005 -------------- -------------- ASSETS Investment in shares of The Prudential Series Fund, Inc. Portfolios at net asset value [Note 2].......... $ 61,563,342 $ 14,093,350 -------------- -------------- -------------- -------------- NET ASSETS, representing: Equity of Contract owners....................... $ 61,256,996 $ 13,981,694 Equity of The Prudential Insurance Company of America....................................... 306,346 111,656 -------------- -------------- $ 61,563,342 $ 14,093,350 -------------- -------------- -------------- --------------
STATEMENTS OF OPERATIONS (CONTINUED) For the year ended December 31, 1994
SUBACCOUNTS ------------------------------ ZERO COUPON GOVERNMENT BOND SECURITIES 2005 -------------- -------------- INVESTMENT INCOME Dividend distributions received................. $ 4,032,941 $ 845,736 EXPENSES Charges to Contract owners for assuming mortality risk and expense risk [Note 3A]..... 445,508 89,505 Reimbursement for excess expenses [Note 3D]..... 0 (26,389) -------------- -------------- NET EXPENSES...................................... 445,508 63,116 -------------- -------------- NET INVESTMENT INCOME (LOSS)...................... 3,587,433 782,620 -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Capital gains distributions received............ 0 3,474 Realized gain (loss) on shares redeemed [average cost basis].......................... (74,828) (2,913) Net unrealized loss on investments.............. (7,299,824) (2,073,481) -------------- -------------- NET GAIN (LOSS) ON INVESTMENTS.................... (7,374,652) (2,072,920) -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $ (3,787,219) $ (1,290,300) -------------- -------------- -------------- --------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES C10 AND C11. C3 (This page intentionally left blank.) C4 FINANCIAL STATEMENTS OF THE PRUDENTIAL VARIABLE APPRECIABLE ACCOUNT STATEMENTS OF CHANGES IN NET ASSETS For the years ended December 31, 1994 and 1993
SUBACCOUNTS -------------------------------------------------------------- MONEY TOTAL MARKET BOND ------------------------------ ------------------------------ ------------------------------ 1993 1994 (AS RESTATED) 1994 1993 1994 1993 -------------- -------------- -------------- -------------- -------------- -------------- OPERATIONS: Net investment income (loss)..... $ 63,087,032 $ 44,057,142 $ 2,402,301 $ 1,562,897 $ 4,226,871 $ 3,075,764 Capital gains distributions received....................... 54,709,623 70,916,387 0 0 158,594 892,376 Realized gain (loss) on shares redeemed [average cost basis]........... 167,179 626,607 0 0 4,403 15,239 Net unrealized gain (loss) on investments.................... (155,373,175) 89,884,218 0 0 (7,162,380) 662,894 -------------- -------------- -------------- -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........ (37,409,341) 205,484,354 2,402,301 1,562,897 (2,772,512) 4,646,273 -------------- -------------- -------------- -------------- -------------- -------------- NET INCREASE IN NET ASSETS RESULTING FROM PREMIUM PAYMENTS AND OTHER OPERATING TRANSFERS.... 560,003,324 595,883,814 6,444,757 5,467,177 11,829,119 18,271,190 -------------- -------------- -------------- -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SURPLUS TRANSFERS........................ (942,487) 1,089,951 (213,654) (175,801) (532,267) (36,073) -------------- -------------- -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................... 521,651,496 802,458,119 8,633,404 6,854,273 8,524,340 22,881,390 NET ASSETS: Beginning of year................ 2,065,486,599 1,263,028,480 69,536,457 62,682,184 67,670,072 44,788,682 -------------- -------------- -------------- -------------- -------------- -------------- End of year...................... $2,587,138,095 $2,065,486,599 $ 78,169,861 $ 69,536,457 $ 76,194,412 $ 67,670,072 -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES C10 AND C11. C5 STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) For the years ended December 31, 1994 and 1993
SUBACCOUNTS (CONTINUED) -------------------------------------------------------------- AGGRESSIVELY COMMON MANAGED STOCK FLEXIBLE ------------------------------ ------------------------------ 1994 1993 1994 1993 -------------- -------------- -------------- -------------- OPERATIONS: Net investment income (loss)..... $ 7,323,925 $ 3,787,584 $ 14,060,998 $ 12,932,914 Capital gains distributions received....................... 19,666,506 16,988,695 18,931,168 29,168,105 Realized gain (loss) on shares redeemed [average cost basis]........... 86,672 167,532 0 122,764 Net unrealized gain (loss) on investments.................... (18,362,891) 30,362,343 (56,779,739) 18,927,854 -------------- -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........ 8,714,212 51,306,154 (23,787,573) 61,151,637 -------------- -------------- -------------- -------------- NET INCREASE IN NET ASSETS RESULTING FROM PREMIUM PAYMENTS AND OTHER OPERATING TRANSFERS.... 123,951,671 108,534,011 142,298,237 150,101,012 -------------- -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SURPLUS TRANSFERS........................ 452,486 1,171,594 (55,717) (111,711) -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................... 133,118,369 161,011,759 118,454,947 211,140,938 NET ASSETS: Beginning of year................ 366,994,831 205,983,072 581,381,675 370,240,737 -------------- -------------- -------------- -------------- End of year...................... $ 500,113,200 $ 366,994,831 $ 699,836,622 $ 581,381,675 -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- ZERO CONSERVATIVELY COUPON MANAGED BOND FLEXIBLE 1995 ------------------------------ ------------------------------ 1994 1993 1994 1993 -------------- -------------- -------------- -------------- OPERATIONS: Net investment income (loss)..... $ 16,966,301 $ 10,601,459 $ 263,254 $ 257,300 Capital gains distributions received....................... 6,635,310 18,959,118 1,011 0 Realized gain (loss) on shares redeemed [average cost basis]........... 31,649 120,806 586 0 Net unrealized gain (loss) on investments.................... (33,092,575) 12,220,568 (288,227) (1,749) -------------- -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........ (9,459,315) 41,901,951 (23,376) 255,551 -------------- -------------- -------------- -------------- NET INCREASE IN NET ASSETS RESULTING FROM PREMIUM PAYMENTS AND OTHER OPERATING TRANSFERS.... 127,164,401 163,207,517 338,277 1,203,358 -------------- -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SURPLUS TRANSFERS........................ (1,173,893) 816,842 (106,380) 8,524 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................... 116,531,193 205,926,310 208,521 1,467,433 NET ASSETS: Beginning of year................ 520,972,926 315,046,616 4,596,076 3,128,643 -------------- -------------- -------------- -------------- End of year...................... $ 637,504,119 $ 520,972,926 $ 4,804,597 $ 4,596,076 -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES C10 AND C11. C6 STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) For the years ended December 31, 1994 and 1993
SUBACCOUNTS ---------------------------------------------------------------------------------------------- ZERO COUPON HIGH BOND YIELD STOCK 2000 BOND INDEX ------------------------------ ------------------------------ ------------------------------ 1993 1994 1993 1994 (AS RESTATED) 1994 1993 -------------- -------------- -------------- -------------- -------------- -------------- OPERATIONS: Net investment income (loss)..... $ 1,032,410 $ 834,516 $ 4,958,854 $ 3,323,954 $ 3,181,988 $ 2,402,805 Capital gains distributions received....................... 31,655 5,978 38 23 267,733 339,359 Realized gain (loss) on shares redeemed [average cost basis]........... 1,031 1,154 5,625 48,986 58,302 63,772 Net unrealized gain (loss) on investments.................... (2,416,751) 919,475 (6,827,471) 2,255,362 (2,856,319) 8,649,699 -------------- -------------- -------------- -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........ (1,351,655) 1,761,123 (1,862,954) 5,628,325 651,704 11,455,635 -------------- -------------- -------------- -------------- -------------- -------------- NET INCREASE IN NET ASSETS RESULTING FROM PREMIUM PAYMENTS AND OTHER OPERATING TRANSFERS.... 900,334 5,163,860 9,774,435 17,361,907 26,983,569 43,311,756 -------------- -------------- -------------- -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SURPLUS TRANSFERS........................ 409,426 10,638 (576,511) (16,603) (298,727) (951,071) -------------- -------------- -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................... (41,895) 6,935,621 7,334,970 22,973,629 27,336,546 53,816,320 NET ASSETS: Beginning of year................ 16,828,522 9,892,901 47,203,803 24,230,174 163,423,478 109,607,158 -------------- -------------- -------------- -------------- -------------- -------------- End of year...................... $ 16,786,627 $ 16,828,522 $ 54,538,773 $ 47,203,803 $ 190,760,024 $ 163,423,478 -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES C10 AND C11. C7 STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) For the years ended December 31, 1994 and 1993
SUBACCOUNTS (CONTINUED) ---------------------------------------------------------------------------------------------- HIGH DIVIDEND NATURAL GLOBAL GOVERNMENT STOCK RESOURCES EQUITY* SECURITIES ------------------------------ ------------------------------ -------------- -------------- 1994 1993 1994 1993 1994 1994 -------------- -------------- -------------- -------------- -------------- -------------- OPERATIONS: Net investment income (loss)..... $ 4,108,092 $ 1,948,922 $ 203,463 $ 300,114 $ (11,478) $ 3,587,433 Capital gains distributions received....................... 7,633,088 3,057,447 1,375,424 1,290,124 5,622 0 Realized gain (loss) on shares redeemed [average cost basis]........... 34,607 68,504 22,045 8,953 0 (74,828) Net unrealized gain (loss) on investments.................... (11,478,198) 6,361,835 (5,314,192) 6,638,189 (1,421,127) (7,299,824) -------------- -------------- -------------- -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........ 297,589 11,436,708 (3,713,260) 8,237,380 (1,426,983) (3,787,219) -------------- -------------- -------------- -------------- -------------- -------------- NET INCREASE IN NET ASSETS RESULTING FROM PREMIUM PAYMENTS AND OTHER OPERATING TRANSFERS.... 51,018,498 44,298,031 22,317,372 13,476,759 29,174,840 4,183,444 -------------- -------------- -------------- -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SURPLUS TRANSFERS........................ (376,490) 886,003 (47,480) 173,903 2,190,839 (467,937) -------------- -------------- -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................... 50,939,597 56,620,742 18,556,632 21,888,042 29,938,696 (71,712) NET ASSETS: Beginning of year................ 99,747,707 43,126,965 53,590,536 31,702,494 0 61,635,054 -------------- -------------- -------------- -------------- -------------- -------------- End of year...................... $ 150,687,304 $ 99,747,707 $ 72,147,168 $ 53,590,536 $ 29,938,696 $ 61,563,342 -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- *Commenced Business on 5/1/94 1993 -------------- OPERATIONS: Net investment income (loss)..... $ 2,505,506 Capital gains distributions received....................... 213,250 Realized gain (loss) on shares redeemed [average cost basis]........... 6,004 Net unrealized gain (loss) on investments.................... 2,070,124 -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........ 4,794,884 -------------- NET INCREASE IN NET ASSETS RESULTING FROM PREMIUM PAYMENTS AND OTHER OPERATING TRANSFERS.... 20,135,848 -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SURPLUS TRANSFERS........................ (628,148) -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................... 24,302,584 NET ASSETS: Beginning of year................ 37,332,470 -------------- End of year...................... $ 61,635,054 -------------- --------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES C10 AND C11. C8 STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED) For the years ended December 31, 1994 and 1993
SUBACCOUNTS (CONTINUED) ------------------------------ ZERO COUPON BOND 2005 ------------------------------ 1994 1993 -------------- -------------- OPERATIONS: Net investment income (loss)..... $ 782,620 $ 523,407 Capital gains distributions received....................... 3,474 1,912 Realized gain (loss) on shares redeemed [average cost basis]........... (2,913) 2,893 Net unrealized gain (loss) on investments.................... (2,073,481) 817,624 -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........ (1,290,300) 1,345,836 -------------- -------------- NET INCREASE IN NET ASSETS RESULTING FROM PREMIUM PAYMENTS AND OTHER OPERATING TRANSFERS.... 3,624,370 5,351,388 -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SURPLUS TRANSFERS........................ (146,182) (58,146) -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS.................... 2,187,888 6,639,078 NET ASSETS: Beginning of year................ 11,905,462 5,266,384 -------------- -------------- End of year...................... $ 14,093,350 $ 11,905,462 -------------- -------------- -------------- --------------
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES C10 AND C11. C9 NOTES TO FINANCIAL STATEMENTS OF THE PRUDENTIAL VARIABLE APPRECIABLE ACCOUNT FOR THE YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993 NOTE 1: GENERAL The Prudential Variable Appreciable Account (the "Account") of The Prudential Insurance Company of America ("The Prudential") was established on August 11, 1987 by a resolution of The Prudential's Board of Directors in conformity with insurance laws of the State of New Jersey. The assets of the Account are segregated from The Prudential's other assets. The Account is registered under the Investment Company Act of 1940, as amended, as a unit investment trust. There are fourteen subaccounts within the Account, each of which invests only in a corresponding portfolio of The Prudential Series Fund, Inc. (the "Series Fund"). The Series Fund is a diversified open-end management investment company, and is managed by The Prudential. NOTE 2: INVESTMENT INFORMATION FOR THE PRUDENTIAL SERIES FUND, INC. PORTFOLIOS The net asset value per share for each portfolio of the Series Fund, the number of shares of each portfolio held by the subaccounts of the Account and the aggregate cost of investments in such shares at December 31, 1994 were as follows:
PORTFOLIOS ------------------------------------------------------------------------------- AGGRESSIVELY CONSERVATIVELY PORTFOLIO MONEY COMMON MANAGED MANAGED INFORMATION MARKET BOND STOCK FLEXIBLE FLEXIBLE - ---------------------------- -------------- -------------- -------------- -------------- --------------- Number of shares: 7,816,986 7,590,332 24,204,046 45,162,376 45,229,225 Net asset value per share: $ 10.0000 $ 10.0384 $ 20.6624 $ 15.4960 $ 14.0950 Cost: $ 78,169,861 $ 82,298,314 $ 479,554,451 $ 718,908,716 $ 652,751,738
PORTFOLIOS (CONTINUED) ------------------------------------------------------------------------------- ZERO ZERO COUPON COUPON HIGH HIGH PORTFOLIO BOND BOND YIELD STOCK DIVIDEND INFORMATION 1995 2000 BOND INDEX STOCK - ---------------------------- -------------- -------------- -------------- -------------- --------------- Number of shares: 453,570 1,415,159 7,400,245 12,753,836 10,403,600 Net asset value per share: $ 10.5929 $ 11.8620 $ 7.3655 $ 14.9571 $ 14.4842 Cost: $ 5,036,020 $ 17,707,975 $ 58,897,134 $ 172,505,026 $ 152,868,694
PORTFOLIOS (CONTINUED) -------------------------------------------------------------- ZERO COUPON PORTFOLIO NATURAL GLOBAL GOVERNMENT BOND INFORMATION RESOURCES EQUITY SECURITIES 2005 - ---------------------------- -------------- -------------- -------------- -------------- Number of shares: 4,995,241 2,157,138 5,884,837 1,311,729 Net asset value per share: $ 14.4432 $ 13.8789 $ 10.4614 $ 10.7441 Cost: $ 69,492,489 $ 31,359,823 $ 66,221,339 $ 15,136,391
NOTE 3: CHARGES AND EXPENSES A. Mortality Risk and Expense Risk Charges The mortality risk and expense risk charges at an effective annual rate of up to 0.90% may be applied daily against the net assets representing equity of the Contract owners held in each subaccount. For contracts with face amounts of $100,000 or more, the annual rate is 0.60%. B. Deferred Sales Charge A deferred sales charge is imposed upon the surrender of certain variable life insurance contracts to compensate The Prudential for sales and other marketing expenses. The amount of any sales charge will depend on the number of years that have elapsed since the Contract was issued. No sales charge will be imposed after the tenth year of the Contract. No sales charge will be imposed on death benefits. C10 C. Partial Withdrawal Charge The partial withdrawal of the cash surrender value from certain variable life insurance contracts invokes a charge equal to the lesser of $15 or 2% of the amount withdrawn. D. Expense Reimbursement The Account is reimbursed by The Prudential, on a non-guaranteed basis, for expenses incurred by the Series Fund in excess of the effective rate of 0.40% for all Zero Coupon Bond Portfolios, 0.45% for the Stock Index Portfolio, 0.50% for the High Dividend Stock Portfolio, 0.55% for the Natural Resources Portfolio, and 0.65% for the High Yield Bond Portfolio of the average daily net assets of these portfolios. NOTE 4: TAXES The operations of the subaccounts form a part of, and are taxed with, the operations of The Prudential. Under the Internal Revenue Code, all ordinary income and capital gains allocated to the Contract owners are not taxed to The Prudential. As a result, the net asset values of the subaccounts are not affected by federal income taxes on distributions received by the subaccounts. NOTE 5: NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SURPLUS TRANSFERS The increase (decrease) in net assets resulting from surplus transfers represents the net contributions of The Prudential to the Account. NOTE 6: RELATED PARTY TRANSACTIONS The Prudential has purchased multiple individual contracts of the Account insuring the lives of certain employees. The Prudential is the owner and beneficiary of the contracts. Net premium payments of approximately $23.0 million for each of the years ended December 31, 1994 and December 31, 1993, respectively, were directed to the Aggressively Managed Flexible subaccount. Equity of Contract owners in that subaccount at December 31, 1994 and December 31, 1993 includes approximately $136.7 million and $122.8 million, respectively, owned by The Prudential. NOTE 7: RESTATEMENT Subsequent to the issuance of the Account's previously issued December 31, 1993 financial statements, The Prudential determined that in the High Yield Bond subaccount, net assets and net increase in net assets resulting from operations were overstated by approximately $284,192 due to the overvaluation of a security held in the High Yield Bond Portfolio of the Series Fund at December 31, 1993. Accordingly, the comparative 1993 financial information included in the statements of changes in net assets of the Account has been restated. C11 INDEPENDENT AUDITORS' REPORT To the Contract Owners of The Prudential Variable Appreciable Account and the Board of Directors of The Prudential Insurance Company of America Newark, New Jersey We have audited the accompanying statements of net assets of The Prudential Variable Appreciable Account of The Prudential Insurance Company of America (comprising, respectively, the Money Market, Bond, Common Stock, Aggressively Managed Flexible, Conservatively Managed Flexible, Zero Coupon Bond 1995, Zero Coupon Bond 2000, High Yield Bond, Stock Index, High Dividend Stock, Natural Resources, Global Equity, Government Securities and Zero Coupon Bond 2005 subaccounts) as of December 31, 1994, the related statements of operations for the periods presented in the year then ended, and the statements of changes in net assets for each of the periods presented in the two years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements 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 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 December 31, 1994. 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, such financial statements present fairly, in all material respects, the financial position of each of the respective subaccounts constituting The Prudential Variable Appreciable Account as of December 31, 1994, the results of their operations, and the changes in their net assets for the respective stated periods in conformity with generally accepted accounting principles. As discussed in Note 7, the 1993 financial statements of The Prudential Variable Appreciable Account have been restated. Deloitte & Touche LLP Parsippany, New Jersey February 10, 1995 C12 REPORT OF MANAGEMENT The accompanying financial statements and all information in the annual report are the responsibility of management. They have been prepared in conformity with generally accepted accounting principles. The statements necessarily include amounts based on management's best estimates and judgments. Information presented in one section of the annual report is consistent with information dealing with the same or substantially similar subject matter presented elsewhere in the annual report. The systems of internal controls for The Prudential Series Fund, Inc. (the Series Fund) and The Prudential Variable Appreciable Account are integral parts of those for The Prudential Insurance Company of America (The Prudential). As such, management depends upon The Prudential's systems of internal controls in meeting its responsibilities for reliable financial statements. These systems are designed to provide reasonable assurance that assets are safeguarded and that transactions are properly recorded and executed in accordance with management's authorization. The concept of reasonable assurance is based on the premise that the cost of internal controls should not exceed the benefits derived. The control environment is enhanced by the selection and training of competent management, a business ethics policy demanding the highest standards of conduct by employees in carrying out the Account's affairs, organizational arrangements that provide for segregation of duties and delegation of authority, and the communication of accounting and operating policies and procedures throughout the organization. In addition, The Prudential maintains a professional staff of internal auditors who monitor the control structure through periodic reviews and tests of the control aspects of accounting, financial and operating activities. The internal auditors coordinate their program with that of the independent certified public accountants. The financial statements have been audited by Deloitte & Touche, independent auditors. The independent auditor's reports, which appear in this annual report, each express an independent professional opinion on the fairness of presentation of management's financial statements. The auditors review the financial and accounting controls and conduct such tests and procedures as they deem necessary under generally accepted auditing standards. The Prudential's Board of Directors, through its Auditing Committee, and the Series Fund's Board of Directors monitor management's fulfillment of its responsibilities for accurate accounting, statement preparation and protection of assets. The Prudential's Auditing Committee is composed solely of outside directors and the Series Fund's Board of Directors has a majority of outside directors. Both The Prudential's Auditing Committee and the outside directors of the Series Fund meet with the independent certified public accountants, management and internal auditors periodically to evaluate the discharge by each of their respective responsibilities. Each has free and separate access to the Auditing Committee and the Series Fund's Board of Directors to discuss accounting, financial reporting, internal control and auditing matters. Robert P. Hill Eugene M. O'Hara Chairman of the Board Chief Financial Officer The Prudential Series Fund, Inc. The Prudential Insurance Company of America
I GLOSSARY OF TERMS FOR THE REPORT TO CONTRACT OWNERS (NOTE: ADDITIONAL EXPLANATION WILL BE FOUND IN NOTES TO FINANCIAL STATEMENTS) ACCUMULATION UNIT -- The measure for determining the Contract owner's share in the separate account of a deferred variable annuity during the accumulation period before annuity benefits begin to be paid. Contract owner transactions such as purchase payments, transfers, and withdrawals result in changes to the number of accumulation units credited to the Contract owner. Investment results and daily charges affect the value of the accumulation unit. ANNUITY UNIT -- The measure of the fixed number of benefit units purchased by the accumulation units when annuitizing via a variable payout annuity. AMERICAN DEPOSITORY RECEIPT (ADR) -- A certificate issued by an American bank to evidence ownership of a block of foreign shares. The certificate can be traded like a share of stock. BOND -- A debt security which obligates the issuer to pay interest at specific intervals and to redeem the bond for a specified amount on the maturity date. A bond can be categorized based on the time interval between issue date and maturity date. Short-term bond: 2 years or less; medium-term bond: 2 - 10 years; long-term bond: 10 years or more. CERTIFICATE OF DEPOSIT (CD) -- A short-term, interest-bearing bond issued by a bank or a savings and loan. COMMERCIAL PAPER -- A short-term, unsecured promissory note issued by either a corporation or bank. COMMON STOCK -- The basic unit of ownership of a public corporation which entitles stockholders to dividend payments, although amount and frequency of dividends are not guaranteed. (see also Stock) CONVERTIBLE BOND -- A bond that is exchangeable for another type of security (usually common stock). COUPON RATE -- The annual rate of interest the issuer of a bond will pay bondholders. DEFAULTED SECURITY -- A bond which fails to make interest payments in a timely manner. FUTURES CONTRACT -- A contract calling for the delivery of a specified quantity of cash, a financial security or a commodity. The contract includes a specific price and future time at which the exchange may take place. LOAN PARTICIPATION -- A loan to a corporation which is sold by a bank in the form of a short-term, unsecured promissory note. NET ASSETS -- The term used to designate the total value of securities owned, cash, receivables, and other assets less any liabilities. MARKET VALUE -- The dollar value of a security on a given day, usually based on the last sales price of that given day. OPTION CONTRACT -- A contract giving the investor the right to buy or sell an underlying security at a fixed price before the expiration date. An option which grants the investor the right to buy the underlying security is a Call Option; a Put Option gives the investor the right to sell the underlying security. PIK BOND/STOCK (PAY IN KIND) -- A security which has the option to pay interest or dividends in the form of either additional bonds or shares of stock. PREFERRED STOCK -- A high quality unit of ownership of a public corporation which entitles the holder to preference over common stock holders in the payment of dividends. (see also Stock) PORTFOLIO TURNOVER -- A measure of portfolio trading activity. REALIZED GAIN/LOSS -- The amount of profit or loss from the sale of securities. Calculated as the sale price minus the purchase price. II REPURCHASE AGREEMENT -- An agreement where an investor loans cash to a bank in exchange for a Treasury security held as collateral and interest on the loan. The agreement indicates that the cash and collateral are exchanged back the following day. These securities are used to invest idle cash. RESTRICTED SECURITY -- A security which is sold privately because it is not registered with the SEC. RIGHT -- Privilege granted to stockholders of a company to buy shares of a new issue of common stock (at a price below the public offering price) before it is offered to the public. STOCK -- Unit of ownership in a public corporation. The value of a share of stock varies, according to how buyers and sellers of the stock view the corporation's future success. Shareholders generally receive dividend payments, which are their part of the corporation's earnings. (see also Common Stock; Preferred Stock) TIME DEPOSIT (TD) -- A non-negotiable short-term, interest bearing bond issued by a bank or savings & loan. The maturity period can be from 1 day to 6 months. UNREALIZED GAIN/LOSS -- The increase or decrease in the value of a security, based on its daily market price and its original purchase price. A gain or loss is "unrealized" until the sale of the security. VARIATION MARGIN -- A term used in the daily valuation of futures contracts. It refers to the difference between the current and previous day's settling price. WARRANT -- A security which entitles the holder to buy additional shares of common stock at a specified price (usually higher than the market price at the time of issuance), over a period of years. III BOARD OF DIRECTORS THE PRUDENTIAL SERIES FUND, INC. ROBERT P. HILL W. SCOTT McDONALD, JR., E. MICHAEL CAULFIELD CHAIRMAN AND CEO, PhD. PRESIDENT, PRUDENTIAL DIRECT; EXECUTIVE VICE PRUDENTIAL PREFERRED CHAIRMAN OF THE BOARD, PRESIDENT, FINANCIAL SERVICES; SERIES FUND FAIRLEIGH DICKINSON PRESIDENT, SERIES FUND UNIVERSITY SAUL K. FENSTER, PhD. JOSEPH WEBER, PhD. PRESIDENT, NEW JERSEY VICE PRESIDENT, INSTITUTE OF TECHNOLOGY INTERCLASS (INTERNATIONAL CORPORATE LEARNING) - -------------------------------------------------------------------------------- BOARD OF DIRECTORS THE PRUDENTIAL INSURANCE COMPANY OF AMERICA JAMES G. AFFLECK ROGER A. ENRICO DONALD E. PROCKNOW FORMER CHAIRMAN, CHAIRMAN AND CEO, FORMER VICE CHAIRMAN AMERICAN CYANAMID PEPSICO WORLDWIDE AND COMPANY RESTAURANTS CHIEF OPERATING FRANKLIN E. AGNEW WILLIAM H. GRAY III OFFICER, BUSINESS CONSULTANT PRESIDENT AND CEO, AT&T TECHNOLOGIES, INC. ROBERT A. BECK UNITED NEGRO COLLEGE ARTHUR F. RYAN CHAIRMAN-EMERITUS, FUND, INC. CHAIRMAN, CEO, THE PRUDENTIAL JON F. HANSON AND PRESIDENT, FREDERIC K. BECKER CHAIRMAN, HAMPSHIRE THE PRUDENTIAL PRESIDENT, MANAGEMENT COMPANY RICHARD M. THOMSON WILENTZ, GOLDMAN, & CONSTANCE J. HORNER CHAIRMAN AND CEO, SPITZER GUEST SCHOLAR, THE TORONTO-DOMINION WILLIAM W. BOESCHENSTEIN THE BROOKINGS BANK FORMER CHAIRMAN, INSTITUTION P. ROY VAGELOS, M.D. OWENS-CORNING ALLEN F. JACOBSON FORMERLY CHAIRMAN AND FIBERGLAS CORPORATION FORMER CHAIRMAN AND CEO, LISLE C. CARTER, JR. CEO, MERCK & CO., INC. FORMER SENIOR VICE MINNESOTA MINING AND STANLEY C. VAN NESS PRESIDENT MANUFACTURING (3M) COUNSELOR AT LAW AND GENERAL COUNSEL, GARNETT L. KEITH, JR. PICCO MACK HERBERT UNITED WAY OF AMERICA VICE CHAIRMAN, KENNEDY JAMES G. CULLEN THE PRUDENTIAL JAFFE PERRELLA & YOSKIN PRESIDENT, BURTON G. MALKIEL PAUL A. VOLCKER BELL ATLANTIC PROFESSOR, CHAIRMAN, CORPORATION PRINCETON UNIVERSITY JAMES D. WOLFENSOHN, CAROLYNE K. DAVIS, PhD. JOHN R. OPEL INC. NATIONAL AND RETIRED CHAIRMAN, JOSEPH H. WILLIAMS INTERNATIONAL IBM CORPORATION DIRECTOR, HEALTH CARE ADVISOR, THE WILLIAMS COMPANIES, ERNST & YOUNG INC. IV The toll-free numbers shown below can be used to make transfers and reallocations. Unit values for each investment option are available to all contract owners from the 800 number. However, you must be enrolled to allocate premiums, transfer funds or get the following information by telephone: - How your premiums are being allocated - Current investment option values in your contract. The phone lines are open each business day during the hours shown. Please be sure to have your contract number available when you call. [MAP] - 1-800-634-7879 8am-4pm Central Time - 1-800-356-4050 8am-4pm Eastern Time - 1-800-635-9587 8am-4pm Eastern Time - -------------------------------------------------------------------------------- In the past, contract owners who held several contracts of the same type, at the same address, received multiple copies of Annual Reports and Semi-Annual Reports. In an effort to lessen waste and to reduce your Fund's expense of postage and printing, we will now mail only one copy of each contract owner report for your related contracts at the same address. No action on your part is necessary. Upon request, we will furnish you with additional reports. The above toll-free numbers should be used to request any additional copies. Proxy material and tax information will continue to be sent to each account of record. This annual report is authorized for use with prospective investors only when preceded or accompanied by a current prospectus for The Prudential Series Fund, Inc. and for the applicable variable life insurance or annuity contract. These products are available through Pruco Securities Corp., Newark, NJ, a subsidiary of The Prudential. These prospectuses contain more information concerning charges and expenses and should be read carefully before you invest or send money. PEACE OF MIND. IT COMES WITH EVERY PIECE OF THE ROCK. Since 1875, The Prudential has been helping individuals and families meet their financial needs. Changing times mean changing needs. Whether providing superior insurance protection for home, family, and business, providing for future education and retirement expenses, or offering innovations like our Living Needs Benefit-Registered Trademark- and Critical Care Access, Prudential people have always been able to deliver something more: personal service, quality, attention to detail, and the financial strength of The Rock. If you have questions regarding your contract(s), please contact your Prudential/Pruco Securities representative or your local office. BULK RATE U.S. Postage PAID Jersey City, N.J. Permit No. 60 [Logo] Printed in the U.S.A. on recycled paper using soybean ink PRU VAL AR 12/94 SIMS Cat. No. 646683Q -----END PRIVACY-ENHANCED MESSAGE-----