American United Life
Pooled Equity Fund B
board of managers
james w. murphy, Chairman
Senior Vice President,
Corporate Finance, AUL
ronald D. anderson Professor,
School of Business,
Indiana University, Indianapolis, Indiana
jerry D. semler, Vice Chairman
Chairman, President, and
Chief Executive Officer, AUL
james P. shanahan
Senior Vice President,
Pension Division, AUL
H. Raymond Swenson Professor,
College of Business,
Butler University, Indianapolis, Indiana
richard A. wacker Secretary to the Board, Associate General
Counsel, AUL
custodian
National City BankIndianapolis, Indiana
legal counsel
Ice Miller Donadio
& Ryan Indianapolis, Indiana
investment Manager
American United Life
Insurance Company Indianapolis, Indiana
G. David Sapp,
Senior Vice President, Investments
This Report and the financial statements contained herein are
submitted for the general information of
the participants in the Fund. The report is not authorized for
distribution to prospective investors in the
Fund as sales literature unless preceded or accompanied by an
effective Prospectus which contains
further information concerning the sales charge and other pertinent
information.
<PAGE>
American
United
Life
Pooled
Equity
Fund B
Annual Report
as of
December 31, 1995<PAGE>
A Message
From
The Chairman of the Board
of Managers
To All Participants in Fund B<PAGE>
Last year was a spectacular year for the equity
market. Domestic stocks were driven by modest economic growth, low inflation,
declining interest rates and profit expansion. Meanwhile, baby boomers
helped contribute to the market surge by investing in retirement products.
Near the end of 1995, the stock market cheered as the Federal Reserve lowered
short-term interest rates, thereby providing an extra boost to the
economy during 1996.
Although 1995 was an impressive year for stocks, the stock market
became highly
rotational as investors shifted rapidly from one sector to another
during the year. This
meant that if an investor did not keep rotating from sector to sector
with perfect timing, his
or her performance would have lagged the overall market.
Now in the fifth year of an economic expansion, economists are
projecting this trend will
continue into 1996. The Federal Reserve has been successful at
keeping inflationary
pressures in check during this prolonged expansion. Interest rates
could decline during
1996, but the move will be much smaller than in 1995. Corporate
profits should continue to
expand, but the rate of earnings growth is expected to decline.
After experiencing such a phenomenal year in 1995, equity
investors have become
complacent with above average returns. However, it is not likely
that 1996 will be a repeat
of 1995's banner year. Equity Fund B continues to search out
fundamentally strong
companies which are undervalued yet still provide growth potential
over the long run.
Investment performance for Equity Fund B for calendar year 1995
was 21.1%. We suggest
your careful review of the Portfolio Manager comments found in
the following pages
comparing this return to other indices.
The performance number for Equity Fund B is net of investment
advisory fees but does not
reflect mortality and expense risks charges and other charges that
may be incurred when
investing in a variable annuity contract.
<PAGE>
James W. Murphy
Chairman of the Board of Managers
<PAGE>
Indianapolis, Indiana
January 19, 1996
<PAGE>
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<PAGE>
A Message
From
Kathryn Hudspeth,
Portfolio Manager
of Equity Fund B
<PAGE>
Equity Fund B invests primarily in equity securities selected on the
basis of fundamental
investment research for their long-term growth prospects. Using a
bottom-up approach,
Equity Fund B concentrates on companies which appear
undervalued compared to the
market and their own historic valuation levels. Other important
considerations include
management ability, free cash flow, insider ownership and
dominance within its industry.
The stock market exhibited an impressive upward advance during
1995 with major stock
indices establishing new all-time highs repeatedly as the year
progressed. It appeared that
"all news was good news" to the equity market and nothing was
able to dampen the
enthusiasm. However, the phenomenal returns of the S&P 500 (a
commonly used stock
benchmark) masked the underlying volatility of the marketplace.
During the first quarter of 1995, large growth companies easily
outperformed the rest of the
market. This trend eased during the second quarter as investors
rotated into smaller
companies and technology names. As investors shifted into financial
stocks in July, the
technology sector began to falter. Beginning in September,
investors shifted their focus
again by moving out of small capitalization stocks, causing this area
to vastly underperform
the rest of the market.
Overall, 1995 was an impressive year for stocks with the S&P 500
advancing 37.5%. No
single investment theme prevailed throughout the year due to rapid
sector rotation.
However, big growth companies with high price/earnings ratios
tended to outperform
smaller value companies trading at lower price/earnings ratios.
Equity Fund B utilizes a value approach which was out of favor in
1995. Even though
absolute performance of 21.1% was attractive versus historic
market averages, relative
returns lagged in 1995.
Equity Fund B benefitted from its concentration in technology and
pharmaceutical
companies. However, exposure to the technology sector was
reduced during the second half
of 1995 as many of these stocks became expensive compared to the
rest of the market. The
consumer cyclical sector was the worst performing sector during
1995. As this area
appeared the most undervalued versus the rest of the market,
additional investments were
made in this area throughout the year.
After experiencing such phenomenal returns during 1995, one has
to wonder what lies
ahead for the stock market during 1996. Investors are concerned
about the longevity of the
current economic expansion and the likelihood of another dramatic
decline in interest rates.
Corporations have been extremely active in cutting costs and
improving productivity.
However, corporations may be at the peak of the profit cycle.
Considering these factors, it
is unlikely that 1996 market performance will be a repeat of 1995.
Pooled Equity Fund B
The graph for Pooled Equity Fund B shows the portfolio's total
returns,
which include changes in share price and reinvestment of dividends
and
capital gains. The graph reflects ten years worth of data, and
depicts how a
$10,000 investment made on December 31, 1985 would have
performed
through December 31, 1995. The vertical axis of the graph is
labeled with
the cumulative dollar amount (in thousands), and the horizontal axis
of the
graph is labeled with calendar quarter-end time periods. The
cumulative
dollar value of the original $10,000 investment is plotted for each
quarter-end date, and the graph is drawn through these points. The
cumulative
value of a $10,000 investment made on December 31, 1985 would
be
$35,948, indicating a 13.7% return for Fund B.
Performance numbers are net of all portfolio operating expenses,
but do not
include mortality and expense charges of 0.9%. If performance
information
included the effect of these additional charges, it would be lower.
Fund B is compared against the performance of the S&P 500, an
unmanaged index of common stocks. Figures for this index include
reinvestment of income and capital gains, and are calculated
similarly to
Fund B, with a hypothetical $10,000 investment made on December
31,
1985 taken out to December 31,1995. The cumulative value of this
hypothetical investment Pooled Equity Fund B
The graph for Pooled Equity Fund B shows the portfolio's total
returns,
which include changes in share price and reinvestment of dividends
and
capital gains. The graph reflects ten years worth of data, and
depicts how a
$10,000 investment made on December 31, 1985 would have
performed
through December 31, 1995. The vertical axis of the graph is
labeled with
the cumulative dollar amount (in thousands), and the horizontal axis
of the
graph is labeled with calendar quarter-end time periods. The
cumulative
dollar value of the original $10,000 investment is plotted for each
quarter-end date, and the graph is drawn through these points. The
cumulative
value of a $10,000 investment made on December 31, 1985 would
be
$35,948, indicating a 13.7% return for Fund B.
Performance numbers are net of all portfolio operating expenses,
but do not
include mortality and expense charges of 0.9%. If performance
information
included the effect of these additional charges, it would be lower.
Fund B is compared against the performance of the S&P 500, an
unmanaged index of common stocks. Figures for this index include
reinvestment of income and capital gains, and are calculated
similarly to
Fund B, with a hypothetical $10,000 investment made on December
31,
1985 taken out to December 31,1995. The cumulative value of this
hypothetical investment made on this date would be $39,870.
The charts above show Equity Fund B's Portfolio's total returns,
which include changes in
unit price and reinvestment of dividends and capital gains. Figures
for the S&P 500, an
unmanaged index of common stocks, includes reinvestment of
dividend and capital gains.
S&P 500 is a registered trademark of Standard & Poor's
Corporation.
Performance numbers are net of all portfolio operating expenses,
but do not include any
separate account or contract charges. If performance data included
the effect of these
charges, the returns would be lower. Past performance is no
guarantee of future results.
Principal and investment return will vary so units may be worth
more or less than their
original cost when redeemed.
Report of Independent Accountants
Board of Managers and Contract Owners
American United Life Pooled Equity Fund B
Indianapolis, Indiana
We have audited the accompanying statement of net assets of
American United Life Pooled
Equity
Fund B, including the schedule of investments, as of December 31,
1995, and the related
statement of operations for the year then ended, the statement of
changes in net assets for
each of the two years in the period then ended, and the
supplementary per unit data and
ratios for each of the five years in the period then ended. These
financial statements and per
unit data and ratios are the responsibility of the Fund's management.
Our responsibility is to
express an opinion on these financial statements and per unit data
and ratios based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about
whether the financial statements and per unit data and ratios 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 investments and cash held by the custodian as of December 31,
1995, confirmation by
correspondence with brokers as to securities purchased but not
received at that date, or
other auditing procedures where confirmations from brokers were
not received. An audit
also includes assessing the accounting principles used and
significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and supplementary per unit
data and ratios referred
to above present fairly, in all material respects, the financial position
of American United
Life Pooled Equity
Fund B as of December 31, 1995, the results of its operations for
the year then ended, the
changes in its net assets for each of the two years in the period then
ended, and the
supplementary per unit data and ratios for each of the five years in
the period then ended, in
conformity with generally accepted accounting principles.
Indianapolis, Indiana
January 27, 1996
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American United Life Pooled Equity Fund B
statement of net assets
December 31, 1995
<PAGE>
Assets:
Investments at market value (cost: $10,602,679)
Common stock $ 11,302,514
Money market mutual funds 602,586
Short-term notes 594,550
12,499,650
Cash 26,344
Dividends and interest receivable 14,712
Total assets 12,540,706
Liabilities 14,423
Net Assets: $ 12,526,283
Units outstanding 1,264,043
Net Asset Value per unit $ 9.91
<PAGE>
The accompanying notes are an integral part of the financial statements.
American United Life Pooled Equity Fund B
statement of operations
for the year ended December 31, 1995
Net Investment Income:
Income
Dividends $ 234,559
Interest 82,010
316,569
Expense
Investment management services 36,619
Mortality and expense risks charges 109,858
146,477
Net investment income 170,092
Gain on Investments:
Net realized gain 868,191
Net unrealized gain 1,181,274
Net gain 2,049,465
Increase in Net Assets from Operations $ 2,219,557
<PAGE>
The accompanying notes are an integral part of the financial statements.<PAGE>
American United Life Pooled Equity Fund B
statement of changes IN net assets
for the years ended December 31, 1995 and 1994
1995 1994
Operations:
Net investment income $ 170,092 $ 141,796
Net realized gain 868,191 1,449,484
Net unrealized gain (loss) 1,181,274 (1,333,232)
Increase 2,219,557 258,048
Contract Owner Transactions:
Proceeds from units sold 399,714 724,027
Payments for units withdrawn (1,775,378)
(1,562,315)
Payments for units redeemed (23,881) (10,179)
Decrease (1,399,545) (848,467)
Net increase (decrease) 820,012 (590,419)
Net Assets at beginning year 11,706,271 12,296,691
Net Assets at end of year $ 12,526,283 $11,706,272
Units sold 43,713 88,492
Units withdrawn (194,201) (188,809)
Units redeemed (2,212) (1,198)
Net decrease (152,700) (101,515)
Units outstanding at beginning of year 1,416,743 1,518,258
Units outstanding at end of year 1,264,043 1,416,743
The accompanying notes are an integral part of the financial statements.
American United Life Pooled Equity Fund B
schedule of investments
December 31, 1995
<PAGE>
Market
Description Shares Value
Common Stock (90.4%)
Banks & Financial (7.7%)
American Express Company 7,000 $ 289,625
Banc One Corporation 9,200 346,150
Ohio Casualty Corporation 6,000 232,500
Salomon, Inc. 2,800 99,050
967,325
Broadcasting & Publishing (10.7%)
Chris-Craft Industries, Inc.* 6,769 292,760
Deluxe Corporation 8,200 237,800
Gibson Greetings, Inc. 15,400 246,400
Harland (John H.) Company 7,700 160,737
Meredith Corporation 4,900 205,188
Moore Corporation, Ltd. 10,300 191,837
1,334,722
Chemicals (1.6%)
Carlisle Companies, Inc. 1,700 68,637
Quaker Chemical Corporation 9,900 133,650
202,287
Electrical Equipment & Electronics (5.5%)
Baldor Electric Company 11,130 223,991
Dynatech Corporation* 18,600 316,200
General Electric Company 2,100 151,200
691,391
Entertainment & Leisure (4.7%)
CPI Corporation 18,200 291,200
Huffy Corporation 5,800 58,725
Fleetwood Enterprises, Inc. 9,000 231,750
581,675
Furniture & Apparel (12.4%)
Blair Corporation 2,800 88,550
Kellwood Corporation 9,700 197,638
La Z Boy Chair Company 7,500 231,562
Liz Claiborne, Inc. 14,500 398,750
Oshkosh B'Gosh, Inc. Class A 11,800 206,500
Hillenbrand Industries, Inc. 8,400 284,550
Reebok International 5,000 141,250
1,548,800
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
American United Life Pooled Equity Fund B
schedule of investments (continued)
December 31, 1995
Market
Description Shares Value
Common Stock (90.4%), continued
Health Care (5.8%)
Acuson Corporation 9,900 $ 122,513
Community Psychiatric Centers, Inc. 3,300 40,425
Lilly (Eli) and Company 3,186 179,212
Guidant Corp. 2,816 118,976
Merck & Company, Inc. 4,000 262,500
723,626
Information Processing & Telecommunications (9.8%)
Apple Computer, Inc. 7,500 239,063
Cray Research, Inc.* 3,000 73,875
Hunt Manufacturing Company 3,300 57,338
International Business Machines Corporation 2,500 228,437
Software Publishing Corporation* 13,400 44,387
Sun Microsystems, Inc.* 10,400 474,500
Telxon Corporation 5,100 115,388
1,232,988
Machinery (2.6%)
Lawson Products, Inc. 8,000 196,000
Precision Castparts Corporation 3,500 139,125
335,125
Merchandising (5.8%)
Longs Drug Stores Corporation 7,000 335,125
Mac Frugal's Bargains Close-outs, Inc. 13,800 193,200
Mercantile Stores Co. 4,200 194,250
722,575
Metals & Mining (2.5%)
Aluminum Company of America 3,000 158,625
Oregon Steel Mills, Inc. 11,200 155,400
314,025
Oil & Oil Services (3.6%)
Royal Dutch Petroleum Company 1,300 183,463
Valero Energy Corporation 10,700 262,150
445,613
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
American United Life Pooled Equity Fund B
schedule of investments (continued)
December 31, 1995
Market
Description Shares Value
Common Stock (90.4%), continued
Paper Products & Containers (2.1%)
Sealright, Inc. 14,000 155,750
Zero Corporation 5,800 102,950
258,700
Transportation (3.3%)
Alexander & Baldwin, Inc. 10,500 241,500
Norfolk Southern Corporation 2,100 166,687
408,187
Miscellaneous (12.3%)
Boeing Company 3,100 242,963
Cross (A.T.) Company Class A 8,000 121,000
Groundwater Technology, Inc.* 16,000 224,000
Michael Foods, Inc. 16,800 195,300
Seagram Company, Ltd. 2,200 76,175
Ford Motor Co. 8,500 245,437
Kelly Services 8,800 244,200
Stanhome, Inc. 6,400 186,400
1,535,475
Total common stock (cost: $9,405,543) 11,302,514
Money Market Mutual Funds (4.8%)
Dreyfus Cash Management 280,921 280,921
Merrill Lynch Institutional Fund 321,665 321,665
Total money market mutual funds (cost: $602,586)
602,586
Interest Maturity Principal
Rate Date Amount
Short-term Notes (4.8%)
Associates Corporation of North America 5.45% 2/26/96
600,000 594,550
(cost: $594,550)
Total Investments (cost: $10,602,679)
$ 12,499,650
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
notes to financial statements<PAGE>
1. Significant Accounting Policies
American United Life Pooled Equity Fund B (Fund B) is registered
under the Investment
Company Act of 1940 as an open-end, diversified management
investment company. Fund
B was established and is managed by American United Life
Insurance Company (AUL)
for the purpose of issuing group and individual variable annuities.
Investments are valued at closing prices for those securities traded
on organized exchanges
and at bid prices for securities traded over-the-counter. Gains and
losses on the sale of
investments are determined on a first-in, first-out (FIFO) basis.
Dividends are included in income as of the ex-dividend date.
Interest income is accrued
daily.
No provision for federal income taxes is considered necessary
because generally no tax is
applicable to increases in net assets representing reserves for
qualified pension plans.
Operations of Fund B form a part of and are taxed with those of
AUL, which is taxed as a
life insurance company under the Internal Revenue Code.
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 at the date of the financial
statements and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ
from those estimates.
2. Investments
Net realized and unrealized gain on investments is summarized
below.
Common Short-Term
Stock Notes
Net Realized Gain:
Proceeds from securities sold $ 3,236,486 $ 999,074
Cost of securities sold 2,368,307 999,062
$ 868,179 $ 12
Net change in Unrealized Gain (Loss):
Market value at end of period $ 11,302,514
Less: investments purchased (2,149,743)
Add: investments sold at cost 2,368,307
Less: market value at beginning of year (10,339,804)
$ 1,181,274
notes to financial statements (continued)
3. Transactions With AUL
Fund B pays AUL an annual fee of 1.2% of its average daily net
assets for providing
investment management services and for mortality and expense
risks charges. The expense
incurred during the years ended December 31, 1995 and 1994 was
$146,477 and $146,648,
respectively.
AUL withholds a portion of the proceeds obtained from contract
owners to pay
commissions and certain expenses under a sales and administrative
services agreement with
Fund B. The amount AUL retained during the years ended
December 31, 1995 and 1994
was $17,995 and $30,045, respectively.
4. Net Assets
Proceeds from units sold less payments $(4,054,737)
for units withdrawn and redeemed
Net investment income 3,821,106
Net realized gains 10,862,943
Unrealized gain 1,896,971
$ 12,526,283
The unrealized gain of $1,896,971 consists of common stock
appreciation and depreciation
of $2,671,503 and $774,532, respectively.
<PAGE>
supplementary information
<PAGE>
The per unit amounts are based on average units outstanding during
the year.
Year Ended December 31
1995 1994 1993 1992 1991
Investment income $ 0.24 $ 0.19 $ 0.16 $ 0.18
$ 0.20
Expenses 0.11 0.10 0.09 0.08
0.07
Net investment income .13 0.09 0.07 0.10
0.13
Net gain 1.52 0.07 1.24 0.48
1.10
Net increase 1.65 0.16 1.31 0.58
1.23
Value per unit:
Beginning of year 8.26 8.10 6.79 6.21
4.98
End of year $ 9.91 $ 8.26 $ 8.10 $ 6.79
$ 6.21
Ratio to Average Net
Assets:
Expenses 1.20% 1.20% 1.19% 121%
1.20%
Net investment income 1.39% 1.16% 1.01%
1.64% 2.16%
Total Return 21.1% 2.94% 20.4% 10.3%
25.7%
Portfolio Turnover Rate 20% 23% 25% 12%
37%
Units outstanding 1,264 1,417 1,518 1,635
1,698
(in 000's)
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zxc
American United Life Insurance Company
Pooled Equity Fund B
P.O. Box 1995
Indianapolis, IN 46206-9101<PAGE>
first
class
mail<PAGE>
VA-9964U
