[LOGO] LIFE USA FUNDS
SEMI-ANNUAL REPORT
JUNE 30, 1997
(UNAUDITED)
<PAGE>
TABLE OF CONTENTS
LIFEUSA FUNDS, INC.
SEMI-ANNUAL REPORT
JUNE 30, 1997
(UNAUDITED)
Chairman's Letter...............................2
Portfolio Reviews
LifeUSA Aggressive Growth Fund...............3
LifeUSA Growth Fund..........................4
LifeUSA Global Fund..........................5
LifeUSA Balanced Fund........................6
LifeUSA Current Income Fund..................7
LifeUSA Principal Preservation Fund..........8
Fund Portfolios
LifeUSA Aggressive Growth Fund...............9
LifeUSA Growth Fund..........................9
LifeUSA Global Fund..........................9
LifeUSA Balanced Fund.......................10
LifeUSA Current Income Fund.................10
LifeUSA Principal Preservation Fund.........10
Notes to Fund Portfolios.......................11
Statements of Assets and Liabilities...........12
Statements of Operations.......................14
Statements of Changes in Net Assets............16
Financial Highlights
LifeUSA Aggressive Growth Fund..............18
LifeUSA Growth Fund.........................18
LifeUSA Global Fund.........................18
LifeUSA Balanced Fund.......................19
LifeUSA Current Income Fund.................19
LifeUSA Principal Preservation Fund.........19
Notes to Financial Statements..................20
Distributor, Adviser, Custodian,
Legal Counsel, Independent Auditors,
Directors..............................Back Cover
<PAGE>
CHAIRMAN'S LETTER
LIFEUSA FUNDS, INC.
THE DOW LEADS THE WORLD
The U.S. stock market continues to offer pleasant surprises, with the Dow Jones
Industrial Average up more than 60% during the past two years--breaking through
7000 on February 13 and 8000 on July 16. As we move through 1997, most of the
conditions which led to that runup are still intact: low inflation, relatively
low interest rates, moderate economic growth and strong corporate productivity.
In contrast, global stock markets continue to lag the United States, as Japan's
economy continues to struggle and Europe grapples with the upcoming unification
of its currency. Throughout much of the 1990s, the U.S. stock market has
outperformed international markets. However, the reverse was generally true in
the 1980s. We continue to see international markets as an excellent
diversification strategy.
For much of 1996, the U.S. bond market endured a bumpy ride, as interest rates
rose steadily, ignited by a spring quarter that was one of the strongest
economic periods in years. Indeed, for much of the spring and summer, the
benchmark 30-year Treasury bond traded at about 7% as investors feared inflation
and action by the Federal Reserve Board to slow the economy. However, by the
fall, the economy slowed down and the Fed chose not to tighten credit. Even when
the economy rebounded in the fourth quarter, the Fed didn't act because there
was still no sign of inflation.
The Fed, however, is a vigilant observer of the economy and is very sensitive to
potential inflation. Since the economy is at full employment, it wouldn't be
surprising to see an uptick in inflation in the months ahead. This could cause
interest rates to rise and put the brakes on the stock and bond markets.
If you're a long-term investor, then you should be concerned that you've
properly diversified your portfolio among stocks and bonds, perhaps increasing
your focus on bonds as you approach retirement and require income. If you're a
young investor just starting your investment program, international equities are
a good place to be for growth. Wherever you are in life, you should make sure
that your investment portfolio generally reflects your long-term investment
goals for 1997 and beyond.
Please read the Portfolio Managers' Reviews which follow this letter for a
detailed perspective on the Portfolios' performance and our strategy going
forward. We appreciate your continued trust and confidence in LifeUSA. If there
is any way we can serve you better, please let us know by calling our toll-free
Investor Services Hotline at 1-800-945-3863.
Sincerely,
/s/ Noel P. Rahn
Noel P. Rahn
Chairman
<PAGE>
PORTFOLIO REVIEW
LIFEUSA AGGRESSIVE GROWTH FUND
LIFEUSA AGGRESSIVE GROWTH FUND
HOW HAS THE FUND PERFORMED?
It has been a turbulent year for small cap stocks. After rising earlier in the
year, small company stocks sold off early in spring. May and June saw small cap
stocks bounce back strongly.
The LifeUSA Aggressive Growth Fund has had a total return of 9.60% since
inception. The Russell 2500 Index has returned 8.26% over the same time period.
WHAT IS YOUR OUTLOOK FOR THE FUND?
Over the long term we are very bullish about the prospects for the Fund. We
believe that attractive long-term returns can be achieved by owning a
diversified group of high quality small- to mid-cap companies that are able to
sustain growth.
In constructing such a portfolio, we rely on thorough internally generated
fundamental research and analysis, and ascertain that each holding demonstrates
four key attributes. By strictly adhering to this time-tested investment
philosophy, we believe the Fund should provide attractive long-term returns.
Over the short term, the factors which have driven the recent rally in the small
cap market should remain in place. Corporate earnings should be strong,
inflation should remain low, and the tidal wave of money flowing into the stock
market shows no sign of slowing.
VALUE OF $10,000 INVESTMENT+
[PLOT POINTS GRAPH]
LifeUSA Aggressive Growth
Fund (Inception 2/3/97) Russell 2500 Index*
2/3/97 $ 10,000 $ 10,000
2/28/97 11,259 9,851
3/31/97 11,332 9,405
4/30/97 10,750 9,524
5/31/97 10,459 10,401
6/30/97 10,959 10,827
TOTAL RETURNS+
THROUGH 6/30/97
Since Inception
2/03/97**
================================================================================
LIFEUSA AGGRESSIVE GROWTH FUND 9.60%
Russell 2500 Index 8.26%*
- --------------------------------------------------------------------------------
+ PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
* SINCE 2/01/97
** NOT ANNUALIZED
<PAGE>
PORTFOLIO REVIEW
LIFEUSA GROWTH FUND
LIFEUSA GROWTH FUND
HOW HAS THE FUND PERFORMED?
Large Cap Stocks continued to outperform all other domestic asset classes in the
first half of 1997. While we are concerned with the overall valuations of the
market, we continue to believe the companies in our portfolio are good
investments for the long term.
The LifeUSA Growth Fund has had a total return of 3.60% since inception. The S&P
500 Index has returned 13.47% over the same time period.
WHAT IS YOUR OUTLOOK FOR THE FUND?
While the market continues to focus its attention on Alan Greenspan and the
actions of the Federal Reserve Board, we continue to monitor earnings risk
carefully. Overall, we continue to maintain a broad based, diversified portfolio
with our buy and sell decisions based on our fundamental analysis of the
underlying business. It is our core belief that companies with superior
management, high returns on capital, solid and sustainable cash flow, in
industries with strong fundamental growth will outperform over the long term
when compared to companies lacking these same characteristics.
VALUE OF $10,000 INVESTMENT+
[PLOT POINTS GRAPH]
LifeUSA Growth Fund
(Inception 2/3/97) S&P 500 Index*
2/3/97 $ 10,000 $ 10,000
2/28/97 10,877 10,081
3/31/97 10,830 9,662
4/30/97 10,245 10,236
5/31/97 10,051 10,864
6/30/97 10,360 11,347
TOTAL RETURNS+
THROUGH 6/30/97
Since Inception
2/03/97**
================================================================================
LIFEUSA GROWTH FUND 3.60%
S&P500 Index 13.47%*
- --------------------------------------------------------------------------------
+ PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
* SINCE 2/01/97
** NOT ANNUALIZED
<PAGE>
PORTFOLIO REVIEW
LIFEUSA GLOBAL FUND
LIFEUSA GLOBAL FUND
HOW HAS THE FUND PERFORMED?
The U.S. market continued to outperform global markets during the first half of
1997.
The LifeUSA Global Fund has had a total return of 10.10% since inception. The
S&P 500 Index has returned 13.47%, and the EAFE Index has returned 15.38% over
the same time period.
WHAT IS YOUR OUTLOOK FOR THE FUND?
Although we believe economic activity in Japan is slowly recovering and
companies' profits are improving steadily, we continue to be cautious in light
of severe problems that exist in the Japanese financial sector. We are
maintaining a strong presence in France and the United Kingdom, markets which we
believe offer superior value, although we reduced our French position modestly
following the Socialist victory which may increase policy risk. Latin American
markets continue to be favored by other international investors relative to
other emerging markets. We are not as certain. We believe emerging markets offer
select opportunities on a long-term basis, as many of these markets will
generate average economic growth rates in excess of 5% over the next five years.
We expect this growth to be driven by a combination of a rise in per-capita
income, export opportunities and capital investments.
VALUE OF $10,000 INVESTMENT+
[PLOT POINTS GRAPH]
LifeUSA Global Fund
(Inception 2/3/97) S&P 500 Index* EAFE Index*
2/3/97 $ 10,000 $ 10,000 $ 10,000
2/28/97 10,588 10,081 10,166
3/31/97 10,652 9,662 10,206
4/30/97 10,432 10,236 10,262
5/31/97 10,620 10,864 10,932
6/30/97 11,010 11,347 11,537
TOTAL RETURNS+
THROUGH 6/30/97
Since Inception
2/03/97**
================================================================================
LIFEUSA GLOBAL FUND 10.10%
- --------------------------------------------------------------------------------
S&P 500 Index 13.47%*
- --------------------------------------------------------------------------------
EAFE Index 15.38%*
- --------------------------------------------------------------------------------
+ PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
* SINCE 2/01/97
** NOT ANNUALIZED
<PAGE>
PORTFOLIO REVIEW
LIFEUSA BALANCED FUND
LIFEUSA BALANCED FUND
HOW HAS THE FUND PERFORMED?
The LifeUSA Balanced Fund seeks to optimize stocks versus bonds within the
portfolio. During the first half of 1997 the U.S. stock market significantly
outperformed the U.S. Bond market.
The LifeUSA Balanced Fund has had a total return of 5.80% since inception. The
S&P 500 Index has returned 13.47%, the Lehman Brothers Aggregate Bond Index has
returned 2.78%, and the EAFE Index has returned 15.38% over the same time
period.
WHAT IS YOUR OUTLOOK FOR THE FUND?
While equity valuations in the U.S. are rich, international equity markets are
beginning to reflect the acceleration of economic and earnings growth. The
weighting in international stocks and the emphasis (both in the U.S. and abroad)
on reasonable valuations should help the Fund continue to generate superior
long-term performance.
VALUE OF $10,000 INVESTMENT+
[PLOT POINTS GRAPH]
Lehman Bros.
LifeUSA Balanced Fund Aggregate
(Inception 2/3/97) S&P 500 Index* Bond Index* EAFE Index*
2/3/97 $ 10,000 $ 10,000 $ 10,000 $ 10,000
2/28/97 10,404 10,081 10,025 10,166
3/31/97 10,500 9,662 9,914 10,206
4/30/97 10,259 10,236 10,062 10,262
5/31/97 10,290 10,864 10,158 10,932
6/30/97 10,580 11,347 10,279 11,537
TOTAL RETURNS+
THROUGH 6/30/97
Since Inception
2/03/97**
================================================================================
LIFEUSA BALANCED FUND 5.80%
- --------------------------------------------------------------------------------
S&P 500 Index 13.47%*
- --------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index 2.78%*
- --------------------------------------------------------------------------------
EAFE Index 15.38%*
- --------------------------------------------------------------------------------
+ PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
* SINCE 2/01/97
** NOT ANNUALIZED
<PAGE>
PORTFOLIO REVIEW
LIFEUSA CURRENT INCOME FUND
LIFEUSA CURRENT INCOME FUND
HOW HAS THE FUND PERFORMED?
During the first quarter of 1997, interest rates rose each month resulting in
negative returns for most longer term bonds. The second quarter of the year saw
the bond market rebound nicely as pressure on interest rates eased.
The LifeUSA Current Income Fund has had a total return of 2.10% since inception.
The Lehman Brothers Aggregate Bond Index has returned 2.78% over the same time
period.
WHAT IS YOUR OUTLOOK FOR THE FUND?
Recent economic reports mark a significant slowdown during the second quarter of
1997. Inflation reports have remained very constructive. However, we expect
growth to accelerate in the second half of 1997, resulting in cyclical pressures
that will push the inflation rate 0.5% to 1% higher. Market expectations do not
reflect this scenario. The Fund is structured to participate in the current
rally but with an eye toward preserving value when signs of capacity constraints
or accelerating inflation become visible.
VALUE OF $10,000 INVESTMENT+
[PLOT POINTS GRAPH]
LifeUSA Current Income Fund Lehman Brothers Aggregate
(Inception 2/3/97) Bond Index*
2/3/97 $ 10,000 $ 10,000
2/28/97 10,090 10,025
3/31/97 10,202 9,914
4/30/97 10,069 10,062
5/31/97 10,069 10,158
6/30/97 10,209 10,279
TOTAL RETURNS+
THROUGH 6/30/97
Since Inception
2/03/97**
================================================================================
LIFEUSA CURRENT INCOME FUND 2.10%
- --------------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index 2.78%*
- --------------------------------------------------------------------------------
+ PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
* SINCE 2/01/97
** NOT ANNUALIZED
<PAGE>
PORTFOLIO REVIEW
LIFEUSA PRINCIPAL PRESERVATION FUND
LIFEUSA PRINCIPAL PRESERVATION FUND
HOW HAS THE FUND PERFORMED?
During the first quarter of 1997, interest rates rose each month resulting in
negative returns for most longer term bonds. The second quarter of the year saw
the bond market rebound nicely as pressure on interest rates eased.
The LifeUSA Principal Preservation Fund has had a total return of 1.79% since
inception. The Lipper Money Market Fund Average has returned 1.79% over the same
time period.
WHAT IS YOUR OUTLOOK FOR THE FUND?
Recent economic reports mark a significant slowdown during the second quarter of
1997. Inflation reports have remained very constructive. However, we expect
growth to accelerate in the second half of 1997, resulting in cyclical pressures
that will push the inflation rate 0.5% to 1% higher. Market expectations do not
reflect this scenario. The Fund is structured to participate in the current
rally but with an eye toward preserving value when signs of capacity constraints
or accelerating inflation become visible.
VALUE OF $10,000 INVESTMENT+
[PLOT POINTS GRAPH]
LifeUSA Principal Preservation Lipper Money Market Instrument
Fund (Inception 2/3/97) Fund Average*
2/3/97 $ 10,000 $ 10,000
2/28/97 10,039 10,033
3/31/97 10,076 10,065
4/30/97 10,110 10,103
5/31/97 10,142 10,142
6/30/97 10,179 10,177
TOTAL RETURNS+
THROUGH 6/30/97
Since Inception
2/03/97**
================================================================================
LIFEUSA PRINCIPAL PRESERVATION FUND 1.79%
Lipper Money Market Fund Average 1.79%*
- --------------------------------------------------------------------------------
+ PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
* SINCE 2/01/94
** NOT ANNUALIZED
<PAGE>
F U N D P O R T F O L I O S
LIFEUSA FUNDS, INC.
JUNE 30, 1997
(PERCENTAGE FIGURES INDICATE PERCENTAGE OF TOTAL NET ASSETS)
(UNAUDITED)
<TABLE>
<CAPTION>
LIFEUSA AGGRESSIVE GROWTH FUND
MUTUAL FUNDS - 100.1%
Market
Quantity Value (a)
- --------------------------------------------------------------------------------------
<S> <C> <C>
IAI Value Fund - 29.9% 1,361 $ 17,555
IAI Capital Appreciation Fund - 50.1% 1,781 29,460
IAI Regional Fund - 20.1% 476 11,803
-----------
58,818
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST: $55,847) (b)................................................... $ 58,818
======================================================================================
OTHER ASSETS AND LIABILITIES - (0.1%)
...................................................................... $ (62)
======================================================================================
NET ASSETS
...................................................................... $ 58,756
======================================================================================
LIFEUSA GROWTH FUND
MUTUAL FUNDS - 100.1%
Market
Quantity Value (a)
- --------------------------------------------------------------------------------------
IAI Midcap Growth Fund - 48.7% 916 $ 15,010
IAI Growth Fund - 30.4% 889 9,383
IAI Growth and Income Fund - 21.0% 384 6,491
-----------
30,884
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST: $31, 555) (b).................................................. $ 30,884
======================================================================================
OTHER ASSETS AND LIABILITIES - (0.1%)
...................................................................... $ (46)
======================================================================================
NET ASSETS
...................................................................... $ 30,838
======================================================================================
LIFEUSA GLOBAL FUND
MUTUAL FUNDS - 100.1%
Market
Quantity Value (a)
- --------------------------------------------------------------------------------------
IAI Growth Fund - 29.1% 1,531 $ 16,161
IAI International Fund - 55.8% 2,346 30,996
IAI Developing Countries Fund -9.9% 482 5,513
IAI Latin America Fund -5.3% 215 2,955
-----------
55,625
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST: $52,921) (b)................................................... $ 55,625
======================================================================================
OTHER ASSETS AND LIABILITIES - (0.1%)
...................................................................... $ (93)
======================================================================================
NET ASSETS
...................................................................... $ 55,532
======================================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO FUND PORTFOLIOS ON PAGE 11
<PAGE>
F U N D P O R T F O L I O S
LIFEUSA FUNDS, INC.
JUNE 30, 1997
(PERCENTAGE FIGURES INDICATE PERCENTAGE OF TOTAL NET ASSETS)
(UNAUDITED)
<TABLE>
<CAPTION>
LIFEUSA BALANCED FUND
MUTUAL FUNDS - 100.1%
Market
Quantity Value (a)
- --------------------------------------------------------------------------------------
<S> <C> <C>
IAI Government Fund - 19.2% 773 $ 7,520
IAI Midcap Growth Fund - 4.8% 115 1,896
IAI Value Fund - 7.3% 220 2,838
IAI Growth Fund -5.0% 186 1,971
IAI Bond Fund - 29.1% 1,230 11,390
IAI International Fund -15.6% 462 6,113
IAI Developing Countries Fund - 3.1% 105 1,200
IAI Latin America Fund - 3.3% 93 1,283
IAI Regional Fund - 5.3% 84 2,081
IAI Growth and Income Fund - 7.4% 170 2,878
-----------
39,170
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST: $38,099) (b).................................................. $ 39,170
======================================================================================
OTHER ASSETS AND LIABILITIES - (0.1%)
..................................................................... $ (61)
======================================================================================
NET ASSETS
..................................................................... $ 39,109
======================================================================================
LIFEUSA CURRENT INCOME FUND
MUTUAL FUNDS - 100.1%
Market
Quantity Value (a)
- --------------------------------------------------------------------------------------
IAI Government Fund - 19.9% 383 $ 3,728
IAI Bond Fund - 70.3% 1,422 13,173
IAI Reserve Fund - 9.9% 189 1,862
-----------
18,763
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST: $18,767) (b).................................................. $ 18,763
======================================================================================
OTHER ASSETS AND LIABILITIES - (0.1%)
..................................................................... $ (37)
======================================================================================
NET ASSETS
..................................................................... $ 18,726
======================================================================================
LIFEUSA PRINCIPAL PRESERVATION FUND
MUTUAL FUNDS - 99.8%
Market
Quantity Value (a)
- --------------------------------------------------------------------------------------
IAI Money Market Fund - 99.8% 21,155 $ 21,155
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST: $21,155) (b).................................................. $ 21,155
======================================================================================
OTHER ASSETS AND LIABILITIES - 0.2%
..................................................................... $ 41
======================================================================================
NET ASSETS
..................................................................... $ 21,196
======================================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO FUND PORTFOLIOS ON PAGE 11
<PAGE>
N O T E S T O F U N D P O R T F O L I O S
LIFEUSA FUNDS, INC.
JUNE 30, 1997
(UNAUDITED)
(a)
Market value of securities is determined as described in Note 1 to the financial
statements, under "Security Valuation".
(b)
At June 30, 1997, the cost of securities for federal income tax purposes and the
aggregate gross unrealized appreciation and depreciation based on that cost
were as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
LIFEUSA AGGRESSIVE LIFEUSA LIFEUSA
GROWTH FUND GROWTH FUND GLOBAL FUND
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cost for federal income tax purposes $ 55,847 $ 31,555 $ 52,921
=====================================================================
Gross unrealized appreciation $ 2,971 $ 456 $ 2,838
Gross unrealized depreciation - (1,127) (134)
---------------------------------------------------------------------
Net unrealized appreciation (depreciation) $ 2,971 $ (671) $ 2,704
=====================================================================
- -----------------------------------------------------------------------------------------------------------------------
LIFEUSA LIFEUSA CURRENT LIFEUSA PRINCIPAL
BALANCED FUND INCOME FUND PRESERVATION FUND
- -----------------------------------------------------------------------------------------------------------------------
Cost for federal income tax purposes $ 38,099 $ 18,767 $ 21,155
=====================================================================
Gross unrealized appreciation $ 1,223 $ 31 $ -
Gross unrealized depreciation (152) (35) -
---------------------------------------------------------------------
Net unrealized appreciation (depreciation) $ 1,071 $ (4) $ -
=====================================================================
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
S T A T E M E N T S O F A S S E T S A N D L I A B I L I T I E S
LIFEUSA FUNDS, INC.
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
LIFEUSA LIFEUSA LIFEUSA
AGGRESSIVE GROWTH GROWTH GLOBAL
FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at market
(Cost: $55,847; $31,555; and $52,921, respectively) $ 58,818 $ 30,884 $ 55,625
Organization costs 6,670 6,670 6,670
----------------------------------------------------
TOTAL ASSETS 65,488 37,554 62,295
----------------------------------------------------
LIABILITIES
Accrued distribution fee 62 46 93
Other accrued expenses 6,670 6,670 6,670
----------------------------------------------------
TOTAL LIABILITIES 6,732 6,716 6,763
----------------------------------------------------
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK $ 58,756 $ 30,838 $ 55,532
====================================================
REPRESENTED BY:
Capital stock $ 54 $ 30 $ 50
Additional paid-in capital 54,256 29,328 51,216
Undistributed net investment income 1,449 2,155 1,562
Accumulated net realized gains (losses) on investments 26 (4) -
Unrealized appreciation or depreciation on investments 2,971 (671) 2,704
----------------------------------------------------
TOTAL - REPRESENTING NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK $ 58,756 $ 30,838 $ 55,532
====================================================
Shares of common stock outstanding; authorized 10 billion shares
of $.01 par value stock of each Portfolio 5,360 2,977 5,043
----------------------------------------------------
NET ASSET VALUE PER SHARE OF OUTSTANDING CAPITAL STOCK $ 10.96 $ 10.36 $ 11.01
====================================================
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ON PAGE 20
<PAGE>
S T A T E M E N T S O F A S S E T S A N D L I A B I L I T I E S
LIFEUSA FUNDS, INC.
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
LIFEUSA
LIFEUSA LIFEUSA PRINCIPAL
BALANCED CURRENT INCOME PRESERVATION
FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at market
(Cost: $38,099; $18,767; and $21,155, respectively) $ 39,170 $ 18,763 $ 21,155
Cash in bank on demand deposit - - 82
Organization costs 6,670 6,670 6,670
----------------------------------------------------
TOTAL ASSETS 45,840 25,433 27,907
----------------------------------------------------
LIABILITIES
Accrued distribution fee 61 37 41
Other accrued expenses 6,670 6,670 6,670
----------------------------------------------------
TOTAL LIABILITIES 6,731 6,707 6,711
----------------------------------------------------
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK $ 39,109 $ 18,726 $ 21,196
====================================================
REPRESENTED BY:
Capital stock $ 37 $ 18 $ 21
Additional paid-in capital 36,896 18,315 21,156
Undistributed net investment income 1,105 397 19
Accumulated net realized gains on investments - - -
Unrealized appreciation or depreciation on investments 1,071 (4) -
----------------------------------------------------
TOTAL - REPRESENTING NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK $ 39,109 $ 18,726 $ 21,196
====================================================
Shares of common stock outstanding; authorized 10 billion shares
of $.01 par value stock of each Portfolio 3,695 1,834 2,118
----------------------------------------------------
NET ASSET VALUE PER SHARE OF OUTSTANDING CAPITAL STOCK $ 10.58 $ 10.21 $ 10.01
====================================================
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ON PAGE 20
<PAGE>
S T A T E M E N T S O F O P E R A T I O N S
LIFEUSA FUNDS, INC.
PERIOD FROM FEBRUARY 3, 1997* TO JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
LIFEUSA LIFEUSA LIFEUSA
AGGRESSIVE GROWTH GROWTH GLOBAL
FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET INVESTMENT INCOME
Income:
Dividends $ 1,511 $ 2,201 $ 1,655
--------------------------------------------------
TOTAL INCOME 1,511 2,201 1,655
--------------------------------------------------
Expenses:
Distribution fees 93 69 140
Legal fees 413 413 413
Amortization of organization costs 530 530 530
Registration fees 6,257 6,257 6,257
--------------------------------------------------
TOTAL EXPENSES 7,293 7,269 7,340
Less fees reimbursed or waived by Distributor (7,231) (7,223) (7,247)
--------------------------------------------------
NET EXPENSES 62 46 93
--------------------------------------------------
NET INVESTMENT INCOME 1,449 2,155 1,562
--------------------------------------------------
NET REALIZED AND UNREALIZED GAINS (LOSSES)
Net realized gains (lossses) on investments 26 (4) -
Net change in unrealized appreciation or depreciation on
investment securities 2,971 (671) 2,704
--------------------------------------------------
NET GAIN (LOSS) ON INVESTMENTS 2,997 (675) 2,704
--------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 4,446 $ 1,480 $ 4,266
==================================================
*COMMENCEMENT OF OPERATIONS
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ON PAGE 20
<PAGE>
S T A T E M E N T S O F O P E R A T I O N S
LIFEUSA FUNDS, INC.
PERIOD FROM FEBRUARY 3, 1997* TO JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
LIFEUSA
LIFEUSA LIFEUSA PRINCIPAL
BALANCED CURRENT INCOME PRESERVATION
FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET INVESTMENT INCOME
Income:
Dividends $ 1,166 $ 434 $ 405
---------------------------------------------------
TOTAL INCOME 1,166 434 405
---------------------------------------------------
Expenses:
Distribution fees 91 55 62
Legal fees 413 413 413
Amortization of organization costs 530 530 530
Registration fees 6,257 6,257 6,257
---------------------------------------------------
TOTAL EXPENSES 7,291 7,255 7,262
Less fees reimbursed or waived by Distributor (7,230) (7,218) (7,221)
---------------------------------------------------
NET EXPENSES 61 37 41
---------------------------------------------------
NET INVESTMENT INCOME 1,105 397 364
---------------------------------------------------
NET REALIZED AND UNREALIZED GAINS (LOSSES)
Net realized gains on investments - - -
Net change in unrealized appreciation or depreciation on
investment securities 1,071 (4) -
---------------------------------------------------
NET GAIN (LOSS) ON INVESTMENTS 1,071 (4) -
---------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,176 $ 393 $ 364
===================================================
*COMMENCEMENT OF OPERATIONS
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ON PAGE 20
<PAGE>
S T A T E M E N T S O F C H A N G E S I N N E T A S S E T S
LIFEUSA FUNDS, INC.
PERIOD FROM FEBRUARY 3, 1997* TO JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
LIFEUSA LIFEUSA LIFEUSA
AGGRESSIVE GROWTH GROWTH GLOBAL
FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS
Net investment income $ 1,449 $ 2,155 $ 1,562
Net realized gains (losses) 26 (4) -
Net change in unrealized appreciation or depreciation 2,971 (671) 2,704
---------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 4,446 1,480 4,266
---------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income - - -
---------------------------------------------------
TOTAL DISTRIBUTIONS - - -
---------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE 3)
Net proceeds from shares sold 54,810 29,409 51,266
Net asset value of shares issued to shareholders
in reinvestment of distributions - - -
Cost of shares redeemed (500) (51) -
---------------------------------------------------
INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS 54,310 29,358 51,266
---------------------------------------------------
TOTAL INCREASE IN NET ASSETS 58,756 30,838 55,532
NET ASSETS AT BEGINNING OF PERIOD - - -
---------------------------------------------------
NET ASSETS AT END OF PERIOD $ 58,756 $ 30,838 $ 55,532
===================================================
INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF: $ 1,449 $ 2,155 $ 1,562
===================================================
*COMMENCEMENT OF OPERATIONS
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ON PAGE 20
<PAGE>
S T A T E M E N T S O F C H A N G E S I N N E T A S S E T S
LIFEUSA FUNDS, INC.
PERIOD FROM FEBRUARY 3, 1997* TO JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
LIFEUSA
LIFEUSA LIFEUSA PRINCIPAL
BALANCED CURRENT INCOME PRESERVATION
FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS
Net investment income $ 1,105 $ 397 $ 364
Net realized gains - - -
Net change in unrealized appreciation or depreciation 1,071 (4) -
---------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,176 393 364
---------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income - - (345)
---------------------------------------------------
TOTAL DISTRIBUTIONS - - (345)
---------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE 3)
Net proceeds from shares sold 36,933 18,333 20,832
Net asset value of shares issued for reinvestment
of distributions - - 345
Cost of shares redeemed - - -
---------------------------------------------------
INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS 36,933 18,333 21,177
---------------------------------------------------
TOTAL INCREASE IN NET ASSETS 39,109 18,726 21,196
NET ASSETS AT BEGINNING OF PERIOD - - -
---------------------------------------------------
NET ASSETS AT END OF PERIOD $ 39,109 $ 18,726 $ 21,196
===================================================
INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF: $ 1,105 $ 397 $ 19
===================================================
*COMMENCEMENT OF OPERATIONS
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ON PAGE 20
<PAGE>
F I N A N C I A L H I G H L I G H T S
LIFEUSA FUNDS, INC.
PERIOD FROM FEBRUARY 3, 1997**** TO JUNE 30, 1997
(UNAUDITED)
PER SHARE DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD
AND SELECTED INFORMATION FOR THE PERIOD INDICATED IS AS FOLLOWS:
<TABLE>
<CAPTION>
LIFEUSA LIFEUSA LIFEUSA
AGGRESSIVE GROWTH GROWTH GLOBAL
FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 10.00 $ 10.00 $ 10.00
-----------------------------------------------------------
OPERATIONS
Net investment income 0.27 0.72 0.31
Net realized and unrealized gains (losses) 0.69 (0.36) 0.70
-----------------------------------------------------------
TOTAL FROM OPERATIONS 0.96 0.36 1.01
-----------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income - - -
-----------------------------------------------------------
TOTAL DISTRIBUTIONS - - -
-----------------------------------------------------------
NET ASSET VALUE
End of period $ 10.96 $ 10.36 $ 11.01
===========================================================
Total investment return* 9.60% 3.60% 10.10%
Net assets at end of period (000's omitted) $ 59 $ 31 $ 56
RATIOS:
Expenses to average daily net assets*** 0.50%** 0.50%** 0.50%**
Net investment income to average daily net assets*** 11.72%** 23.27%** 8.38%**
Porfolio turnover rate 1.4% 0.2% 0.0%
</TABLE>
* TOTAL INVESTMENT RETURN IS BASED ON THE CHANGE IN NET ASSET VALUE OF A
SHARE DURING THE PERIOD AND ASSUMES REINVESTMENT OF ALL DISTRIBUTIONS AT
NET ASSET VALUE.
** ANNUALIZED
*** THE FUNDS' DISTRIBUTOR VOLUNTARILY WAIVED $7,231, $7,223 AND $7,247,
RESPECTIVELY, IN EXPENSES FOR THE PERIOD ENDED JUNE 30, 1997. IF THE FUNDS
HAD BEEN CHARGED THESE EXPENSES, THE RATIOS OF EXPENSES TO AVERAGE DAILY
NET ASSETS WOULD HAVE BEEN 59.00%, 78.49% AND 39.37%, RESPECTIVELY, AND THE
RATIOS OF NET INVESTMENT INCOME (LOSS) TO AVERAGE DAILY NET ASSETS WOULD
HAVE BEEN (46.78%), (54.72%) AND (30.49%), RESPECTIVELY. THESE EXPENSES
WILL BE VOLUNTARILY WAIVED THROUGH MAY 1, 1998.
**** COMMENCEMENT OF OPERATIONS
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ON PAGE 20
<PAGE>
F I N A N C I A L H I G H L I G H T S
LIFEUSA FUNDS, INC.
PERIOD FROM FEBRUARY 3, 1997**** TO JUNE 30, 1997
(UNAUDITED)
PER SHARE DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD
AND SELECTED INFORMATION FOR THE PERIOD INDICATED IS AS FOLLOWS:
<TABLE>
<CAPTION>
LIFEUSA
LIFEUSA LIFEUSA PRINCIPAL
BALANCED CURRENT INCOME PRESERVATION
FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 10.00 $ 10.00 $ 10.00
-----------------------------------------------------------
OPERATIONS
Net investment income 0.30 0.22 0.18
Net realized and unrealized gains 0.28 (0.01) -
-----------------------------------------------------------
TOTAL FROM OPERATIONS 0.58 0.21 0.18
-----------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income - - (0.17)
-----------------------------------------------------------
TOTAL DISTRIBUTIONS - - (0.17)
-----------------------------------------------------------
NET ASSET VALUE
End of period $ 10.58 $ 10.21 $ 10.01
===========================================================
Total investment return* 5.80% 2.10% 1.79%
Net assets at end of period (000's omitted) $ 39 $ 19 $ 21
RATIOS:
Expenses to average daily net assets*** 0.50%** 0.50%** 0.50%**
Net investment income to average daily net assets*** 9.09%** 5.40%** 4.42%**
Porfolio turnover rate 0.0% 0.0% 0.0%
</TABLE>
* TOTAL INVESTMENT RETURN IS BASED ON THE CHANGE IN NET ASSET VALUE OF A
SHARE DURING THE PERIOD AND ASSUMES REINVESTMENT OF ALL DISTRIBUTIONS AT
NET ASSET VALUE.
** ANNUALIZED
*** THE FUNDS' DISTRIBUTOR VOLUNTARILY WAIVED $7,230, $7,218 AND $7,221,
RESPECTIVELY, IN EXPENSES FOR THE PERIOD ENDED JUNE 30, 1997. IF THE FUNDS
HAD BEEN CHARGED THESE EXPENSES, THE RATIOS OF EXPENSES TO AVERAGE DAILY
NET ASSETS WOULD HAVE BEEN 59.95%, 98.72% AND 88.12%, RESPECTIVELY, AND THE
RATIOS OF NET INVESTMENT INCOME (LOSS) TO AVERAGE DAILY NET ASSETS WOULD
HAVE BEEN (50.36%), (92.82%) AND (83.20%), RESPECTIVELY. THESE EXPENSES
WILL BE VOLUNTARILY WAIVED THROUGH MAY 1, 1998.
**** COMMENCEMENT OF OPERATIONS
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ON PAGE 20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
LIFEUSA FUNDS, INC.
June 30, 1997
(unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
LifeUSA Funds, Inc. (the Company) was incorporated on April 26, 1996, and is
registered under the Investment Company Act of 1940 (as amended) as an open-end
management investment company consisting of the following six separate
diversified investment funds: LifeUSA Aggressive Growth Fund (Aggressive Growth
Fund), LifeUSA Growth Fund (Growth Fund), LifeUSA Global Fund (Global Fund),
LifeUSA Balanced Fund (Balanced Fund), LifeUSA Current Income Fund (Current
Income Fund) and LifeUSA Principal Preservation Fund (Principal Preservation
Fund) (collectively, the Funds). Each of the Funds was created as a separate
fund represented by a separate class of common stock of the Company and offer a
means of investing in shares of certain IAI Mutual Funds (the Underlying Funds)
within certain predetermined percentage ranges. The Company's articles of
incorporation permit the Board of Directors to create additional funds in the
future and each Fund is permitted to issue separate classes of stock. This
report covers only the Aggressive Growth Fund, Growth Fund, Global Fund,
Balanced Fund, Current Income Fund and Principal Preservation Fund, currently
the only Funds of the Company.
Significant accounting policies followed by the Funds are summarized below:
FUND VALUATION
The investments of the Funds consist primarily of mutual funds that are valued
daily at their respective net asset values in accordance with the 1940 Act.
FEDERAL TAXES
Since it is each Fund's policy to comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income to its shareholders, no provision for income taxes is
required. In order to avoid the payment of any federal excise taxes, the Funds
are required to distribute substantially all of their net investment income and
net realized gains on a calendar year basis.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the trade date. Realized gains and
losses from security transactions are reported on an identified-cost basis for
both financial statement and federal income tax purposes. Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Interest
income and expenses are recorded on an accrual basis.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded on the record date. Distributions
from net investment income are made semi-annually (monthly for the LifeUSA
Principal Preservation Fund). Capital gains, if any, are primarily distributed
at the end of the calendar year. Additional capital gains distributions as need
to comply with federal tax regulations are distributed during the year.
ORGANIZATION COSTS
Organization costs are being amortized over sixty months on a straight-line
basis. In the event LifeUSA Securities, Inc. (Distributor) redeems any or all of
its shares representing initial capital in the Funds prior to the date such
costs are fully amortized, it will bear such portion of the unamortized
organization costs as the number of shares redeemed bears to the initial
purchase of shares.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the Statement of Assets and
Liabilities. Actual amounts could differ from those estimates.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
LIFEUSA FUNDS, INC.
June 30, 1997
(unaudited)
(2) FEES AND EXPENSES
The Company has entered into an investment advisory and administrative services
agreement with Investment Advisers, Inc. (Advisers) who is also the adviser to
the Underlying Funds. Pursuant to the agreement, Advisers provides the Funds
with investment advisory services and is responsible for the overall management
of the Funds' business affairs subject to the authority of the Board of
Directors. Because the Underlying Funds pay Advisers a management fee, no
compensation is paid to Advisers under the Agreement. The Agreement also
provides that each Fund shall pay the fees and expenses of outside legal
counsel, independent public accountants, and custodians as well as certain
expenses incurred in connection with the registration of Fund shares for sale to
the public, interest and, in certain circumstances, taxes and extraordinary
expenses. Until May 1, 1998, the Underwriter has voluntarily agreed to reimburse
the Funds for all other expenses.
The Funds have adopted a plan of distribution under Rule 12b-1 of the Investment
Company Act of 1940. Under such Plan, the Funds have entered into an
Underwriting and Distribution Agreement (the "Agreement") with LifeUSA
Securities, Inc. (the "Underwriter") Under the Agreement, the Funds pay the
Underwriter a fee for the servicing of shareholder accounts and the distribution
of Fund shares. The fee is computed monthly based on average daily net assets
for each Fund at an annual rate of 0.75% (0.50% payable as distribution fee and
0.25% as a shareholder servicing fee). Until May 1, 1998, the Underwriter has
voluntarily agreed to waive that portion of the fee in excess of 0.50% of each
Fund's average daily net assets.
(3) CAPITAL STOCK
The Funds each have authorized 10 billion shares of $.01 par value stock.
Transactions in shares of capital stock during the period from February 3, 1997
to June 30, 1997 were as follows:
<TABLE>
<CAPTION>
- --------------------------------------- -------------------------- -------------------------- --------------------------
LIFEUSA LIFEUSA LIFEUSA
AGGRESSIVE GROWTH GROWTH GLOBAL
FUND FUND FUND
-------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
SOLD 5,406 2,982 5,043
ISSUED FOR REINVESTED DISTRIBUTIONS - - -
REDEEMED (46) (5) -
-------------------------- -------------------------- --------------------------
INCREASE IN SHARES OUTSTANDING 5,360 2,977 5,043
- --------------------------------------- -------------------------- -------------------------- --------------------------
- --------------------------------------- -------------------------- --------------------------- -------------------------
LIFEUSA LIFEUSA LIFEUSA
BALANCED CURRENT INCOME PRINCIPAL PRESERVATION
FUND FUND FUND
-------------------------- --------------------------- -------------------------
SOLD 3,695 1,834 2,083
ISSUED FOR REINVESTED DISTRIBUTIONS - - 35
REDEEMED - - -
-------------------------- --------------------------- -------------------------
INCREASE IN SHARES OUTSTANDING 3,695 1,834 2,118
- --------------------------------------- -------------------------- --------------------------- -------------------------
</TABLE>
(4) PURCHASES AND SALES OF SECURITIES
For the period from February 3, 1997 to June 30, 1997, purchases and sales
proceeds of the underlying Funds were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------- ------------------------------------ ---------------------------------------
PURCHASES SALES
- ------------------------------------------- ------------------------------------ ---------------------------------------
<S> <C> <C>
LIFEUSA AGGRESSIVE GROWTH FUND $ 56,321 $ 500
LIFEUSA GROWTH FUND $ 31,609 $ 50
LIFEUSA GLOBAL FUND $ 52,921 $ -
LIFEUSA BALANCED FUND $ 38,099 $ -
LIFEUSA CURRENT INCOME FUND $ 18,767 $ -
LIFEUSA PRINCIPAL PRESERVATION FUND $ 21,155 $ -
- ------------------------------------------- ------------------------------------ ---------------------------------------
</TABLE>
<PAGE>
DISTRIBUTOR
LifeUSA Securities, Inc.
INVESTMENT ADVISER
AND MANAGER
Investment Advisers, Inc.
P.O. Box 357
Minneapolis, MN 55440-0357 USA
800.945.3863
612.376.2700
http://www.iaifunds.com
CUSTODIAN
Norwest Bank Minnesota, N.A.
Sixth and Marquette
Minneapolis, MN 55479
LEGAL COUNSEL
Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, MN 55402
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
4200 Norwest Center
Minneapolis, MN 55402
DIRECTORS
Madeline Betsch
W. William Hodgson
George R. Long
Noel P. Rahn
J. Peter Thompson
Charles H. Withers
[LOGO]
LIFEUSA
SECURITIES
300 SOUTH HIGHWAY 169
MINNEAPOLIS, MINNESOTA 55426
888.446.5872 (PHONE)
612.513.7120 (FAX)
