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
james P. shanahan
Senior Vice President,
Pension Division, AUL
leslie Lenkowsky Director,
Hudson Institute,
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
Semi-Annual Report
as of
June 30, 1997<PAGE>
A Message
From
The Chairman of the Board
of Managers
To All Participants in Fund B
The U.S. economy continued to astound investors during the first half of 1997.
After more than
six years of steady expansion, economic growth was still healthy and strong.
Although the rate
of economic growth during the first quarter was more robust than expected,
economic activity
moderated during the second quarter to a more sustainable pace. The
unemployment rate
declined to a 24 year low, yet inflation remained calm. As a result, the Federal
Reserve Board
tightened monetary policy only one time during the six months by raising short
term rates.
Since then, the Fed has been waiting patiently on the sidelines always on the
lookout for signs
of inflationary pressures.
Despite a short term correction during March and April, the stock market
produced remarkable investment
results for the first half of 1997. Stocks benefitted from this moderate
economic growth and benign inflationary
environment. Other major factors included above average profit growth, improved
consumer confidence, and the
continued flow of money into equity mutual funds.
However, major stock indices were still dominated by the returns of large
capitalization companies, just like in
1996. As a result, valuations of many of these large companies appeared
excessive by mid-year. Although small
stock performance improved during the second quarter, a divergence in investment
returns between large
companies and small companies still existed.
Fund B benefitted from the sustained strength in the stock market by achieving
an investment performance of
17.6% for the first half of 1997.
Although economic fundamentals are still positive as we begin the second half of
1997, the speed and magnitude
of the current stock market advance is worrisome. Whenever the stock market
experiences above average returns,
it becomes much more susceptible to negative surprises. Potential red flags on
the horizon include a slowdown in
earnings momentum, a resurgence of inflation, a decline in liquidity, and
Federal Reserve intervention. All of
these could cause a disruption to the market's advance. As a result, equity
investors should be prepared for
increased volatility during the remainder of 1997.
The performance for Fund B is net of investment advisory fees but does not
reflect mortality and expense risk charges.
James W. Murphy
Chairman of the Board of Managers
Indianapolis, Indiana
July 23, 1997<PAGE>
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American United Life Pooled Equity Fund B
statement of net assets
June 30, 1997
(unaudited)
Assets:
Investments at value (cost: $8,430,058)
Common stock $ 12,038,489
Money market mutual funds 1,050,815
Short-term notes 247,679
13,336,983
Cash 37,105
Dividends and interest receivable 17,183
Total assets 13,391,271
Liabilities: 13,395
Net Assets: $13,377,876
Units outstanding 970,050
Accumulation Unit Value $ 13.79
The accompanying notes are an integral part of the financial statements.<PAGE>
American United Life Pooled Equity Fund B
statement of operations
for the six months ended June 30, 1997
(unaudited)
Net Investment Income:
Income
Dividends $ 125,832
Interest 8,338
134,170
Expenses
Investment management services 18,993
Mortality and expense risks charges 56,977
75,970
Net investment income 58,200
Gain on Investments:
Net realized gain 589,600
Net change in unrealized gain 1,372,237
Net gain 1,961,837
Increase in Net Assets from Operations $ 2,020,037
The accompanying notes are an integral part of the financial statements.<PAGE>
American United Life Pooled Equity Fund B
statementS of changes IN net assets
for the six months ended June 30, 1997 and 1996
(unaudited)
1997 1996
Operations:
Net investment income $ 58,200 $ 79,177
Net realized gain 589,600 208,701
Net change in unrealized gain 1,372,237 734,766
Increase in assets from operations 2,020,037 1,022,644
Changes from Contract Owner Transactions:
Proceeds from units sold 77,638 416,756
Payments for units withdrawn (1,289,714) (1,142,953)
Payments for units redeemed (1,474) (1,252)
Decrease (1,213,550) (727,449)
Net increase in Net Assets 806,487 295,195
Net Assets at beginning of year 12,571,389 12,526,283
Net Assets at end of period $ 13,377,876 $12,821,478
Units sold 6,222 40,822
Units withdrawn (103,697) (109,695)
Units redeemed (117) (121)
Net decrease in units outstanding (97,592) (68,994)
Units outstanding at beginning of year 1,067,642 1,264,043
Units outstanding at end of period 970,050 1,195,049
The accompanying notes are an integral part of the financial statements.<PAGE>
American United Life Pooled Equity Fund B
schedule of investments
June 30, 1997
(unaudited)
Market
Description Shares Value
Common Stock (90.2%)
Aerospace (2.4%)
Boeing Co. 3,600 $ 191,250
Precision Castparts Corporation 2,200 131,175
322,425
Banks & Financial (11.5%)
American Express Company 4,500 337,219
Banc One Corporation 5,420 262,531
Great Western Financial 8,300 446,125
Ohio Casualty Corporation 4,500 198,000
Salomon, Inc. 5,100 283,688
1,527,563
Broadcasting & Publishing (9.2%)
Chris-Craft Industries, Inc.* 4,821 232,613
Deluxe Corporation 6,900 235,463
Gibson Greetings, Inc. 8,000 180,000
Harland (John H.) Company 7,300 166,531
Meredith Corporation 6,300 182,700
Moore Corporation, Ltd. 11,800 231,575
1,228,882
Chemicals (1.6%)
Carlisle Companies, Inc. 4,200 146,475
Quaker Chemical Corporation 3,700 64,287
210,762
Electrical Equipment & Electronics (7.6%)
Baldor Electric Company 13,930 411,805
Dynatech Corporation* 11,600 414,700
General Electric Company 2,900 189,588
1,016,093
Entertainment & Leisure (4.7%)
CPI Corporation 13,600 285,600
Fleetwood Enterprises, Inc. 11,500 342,844
628,444
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.<PAGE>
American United Life Pooled Equity Fund B
schedule of investments (continued)
June 30, 1997
(unaudited)
Market
Description Shares Value
Common Stock (90.2%), continued
Furniture & Apparel (14.2%)
Hillenbrand Industries, Inc. 7,400 $ 351,500
Kellwood Corporation 9,500 263,625
La Z Boy Chair Company 9,300 334,800
Liz Claiborne, Inc. 8,400 391,650
Oshkosh B'Gosh, Inc. Class A 8,300 180,525
Reebok International 8,000 375,500
1,897,600
Health Care (7.1%)
Acuson Corporation* 7,400 170,200
Guidant Corporation 700 59,500
Lilly (Eli) and Company 1,286 140,576
Merck & Company, Inc. 2,100 217,350
McKesson Company 4,700 364,250
951,876
Information Processing & Telecommunications (8.6%)
AT&T Corporation 3,400 119,000
International Business Machines Corporation 2,900 261,725
Novell* 14,600 101,288
Sun Microsystems, Inc.* 10,000 372,187
Telxon Corporation 16,200 291,600
1,145,800
Merchandising (6.2%)
Longs Drug Stores Corporation 12,100 316,868
Mac Frugal's Bargains Close-outs, Inc. 2,100 57,225
Mercantile Stores Co. 3,800 239,163
Stanhome, Inc. 6,500 213,688
826,944
Metals & Mining (2.8%)
Aluminum Company of America 3,900 293,963
Oregon Steel Mills, Inc. 3,800 75,762
369,725
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.<PAGE>
American United Life Pooled Equity Fund B
schedule of investments (continued)
June 30, 1997
(unaudited)
Market
Description Shares Value
Common Stock (90.2%), continued
Oil & Oil Services (4.7%)
Royal Dutch Petroleum Company 5,200 $ 280,800
Valero Energy Corporation 9,700 351,625
632,425
Transportation (3.5%)
Alexander & Baldwin, Inc. 9,500 248,187
Norfolk Southern Corporation 2,200 221,650
469,837
Miscellaneous (6.1%)
Ford Motor Co. 7,800 294,450
Kelly Services 9,100 285,513
Michael Foods, Inc. 10,300 190,550
Sealright, Inc. 3,300 39,600
810,113
Total common stock (cost: $7,131,564) 12,038,489
Money Market Mutual Funds (7.9%)
Dreyfus Cash Management 550,519 550,519
Merrill Lynch Institutional Fund 500,296 500,296
Total money market mutual funds (cost: $1,050,815) 1,050,815
Interest Maturity Principal
Rate Date Amount
Notes (1.9%)
Short-term Notes
Beneficial Corporation (cost: $247,679) 5.57% 07/29/97 250,000 247,679
Total Investments (cost: $8,430,058) $ 13,336,983
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.<PAGE>
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\
notes to financial statements
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 by
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.
Investment transactions are accounted for on a trade date basis.
Dividends are included in income as of the ex-dividend date. Interest income is
accrued daily.
Operations of Fund B are part of, and are taxed with, the operations of AUL,
which is taxed as a "life insurance company"
under the Internal Revenue Code. Under current law, investment income, including
realized and unrealized capital gains of
Fund B, is not taxed to AUL to the extent it is applied to increase reserves
under the contracts. Fund B has not been charged
for federal and state income taxes since none have been imposed.
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
Stock
Net Realized Gain:
Proceeds from securities sold $ 2,143,031
Cost of securities sold 1,553,431
$ 589,600
Net change in Unrealized Gain:
Market value at end of period $ 12,038,489
Less: investments purchased (322,396)
Add: investments sold at cost 1,553,431
Less: market value at beginning of year (11,897,287)
$ 1,372,237
<PAGE>
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 risk charges. The expense incurred during the six months
ended June 30, 1997 and 1996 was $75,970
and $75,551, 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 six months ended June 30,
1997 and 1996 was $2,488 and $17,176, respectively.
4. Net Assets
Net assets as of June 30, 1997:
Proceeds from units sold less payments
for units withdrawn and redeemed $ (7,389,288)
Net investment income 4,037,190
Net realized gains 11,823,049
Unrealized gain 4,906,925
$ 13,377,876
The unrealized gain of $4,906,925 consists of common stock appreciation and
depreciation of $4,992,882 and $85,957,
respectively.
<PAGE>
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American United Life Insurance Company
American United Life Pooled Equity Fund B
P.O. Box 1995
Indianapolis, IN 46206-9101
first
class
mail
P-13960 7/97
