American United Life Pooled Equity Fund B
Board of Managers
James W. Murphy, Chairman
Senior Vice President, Corporate Finance, AUL
Ronald D. Anderson
Professor, Kelley School of Business,
Indiana University, Indianapolis, Indiana
Leslie Lenkowsky
Indiana University Center of Philanthropy,
Indianapolis, Indiana
R. Stephen Radcliffe
Executive Vice President, AUL
James P. Shanahan
Former Senior Vice President,bPension Division, AUL
Richard A. Wacker
Secretary to the Board, Associate General Counsel, AUL
Custodian
National City Bank
Indianapolis, 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 for the general
information of the partici-pants. The report is not to be distributed to
pro-spective investors as sales literature unless preceded or accompanied by an
effective Prospectus which contains further information concerning the sales
charge, expenses and other pertinent information.
American United Life Pooled Equity Fund B Semi-Annual Report
as of
June 30, 1998
<PAGE>
A Message From The Chairman of the Board of Managers
To All Participants in Fund B
The U.S. economy is exhibiting surprising strength despite the opposing forces
that exist. The Asian crisis worsened during the first half of 1998 resulting in
a decline in U.S. exports and an increase in inexpensive imports. This created a
great deal of pressure on U.S. corporate earnings and resulted in an inventory
build-up during the first quarter.
In contrast, we continue to experience the positive effects of low inflation and
low nominal interest rates. Another favorable development has been the amazing
strength in consumer spending right here at home. Consumers are benefiting from
inexpensive imports, low inflation, low mortgage rates and the wealth effect of
a rising stock market.
The stock market provided impressive returns during the first half of 1998, with
the average equity fund earning most of this return during the first quarter.
Second quarter returns were much more volatile as Asian concerns resurfaced.
Large capitalization companies continued to dominate the market as investors
searched for stability of earnings and liquidity.
Investment performance for Fund B for the first half of 1998 was 9.7%. However,
past performance is no guarantee of future results.
As we enter the second half of 1998, commonly used valuation measures suggest
that stocks (especially large capitalization stocks) are expensive at current
levels. It is expected that market volatility will continue through the
remainder of 1998 as investors closely monitor economic and corporate earnings
growth as well as the level of interest rates.
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 31, 1998
1
<PAGE>
(This page is intentionally blank.)
2
<PAGE>
American United Life Pooled Equity Fund B
Statement of Net Assets
June 30, 1998
(unaudited)
Assets:
Investments at value (cost: $9,265,875)
Common stock $13,632,536
Money market mutual funds 881,517
Short-term notes 554,852
15,068,905
Cash 26,386
Dividends and interest receivable 15,782
Due from AUL 1,240
Total assets 15,112,313
Liabilities:
Payables for investments purchased 48,438
Due to AUL 72,298
Total liabilities 120,736
Net Assets: $14,991,577
Units outstanding 896,267
Accumulation Unit Value $ 16.72
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
American United Life Pooled Equity Fund B
Statement of Operations
for the six months ended June 30, 1998
(unaudited)
Net Investment Income:
Income
Dividends $ 137,077
Interest 13,158
150,235
Expenses
Investment management services 22,284
Mortality and expense risks charges 66,850
89,134
Net investment income 61,101
Gain on Investments:
Net realized gain 1,166,997
Net change in unrealized gain 91,036
Net gain 1,258,033
Increase in Net Assets from Operations $ 1,319,134
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
American United Life Pooled Equity Fund B
Statements of Changes in Net Assets
for the six months ended June 30, 1998 and 1997
(unaudited)
1998 1997
Operations:
Net investment income $ 61,101 $ 58,200
Net realized gain 1,166,997 589,600
Net change in unrealized gain 91,036 1,372,237
Increase in assets from operations 1,319,134 2,020,037
Changes from Contract Owner Transactions:
Proceeds from units sold 165,377 77,638
Payments for units withdrawn (770,565) (1,289,714)
Payments for units redeemed (1,905) (1,474)
Decrease (607,093) (1,213,550)
Net increase in Net Assets 712,041 806,487
Net Assets at beginning of year 14,279,536 12,571,389
Net Assets at end of period $14,991,577 $13,377,876
Units sold 9,970 6,222
Units withdrawn (46,268) (103,697)
Units redeemed (116) (117)
Net decrease in units outstanding (36,414) (97,592)
Units outstanding at beginning of year 932,681 1,067,642
Units outstanding at end of period 896,267 970,050
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
American United Life Pooled Equity Fund B
Schedule of Investments
June 30, 1998
(unaudited)
Market
Description Shares Value
Common Stock (90.5%)
Aerospace (1.2%)
Boeing Co. 2,500 $ 111,406
Precision Castparts Corporation 1,300 69,388
180,794
Automotive & Auto Parts (5.5%)
Bandag Inc. 6,600 257,400
Ford Motor Co. 7,200 424,800
TBC Corporation 23,300 154,363
836,563
Banks & Financial (13.2%)
American Express Company 3,600 409,500
Associates First Capital 2,149 165,204
Banc One Corporation 5,632 314,336
Ohio Casualty Corporation 6,400 283,200
Travelers Group, Inc. 8,644 524,043
Washington Mutual 6,855 297,764
1,994,047
Broadcasting & Publishing (7.1%)
Chris-Craft Industries, Inc.* 4,356 238,219
Deluxe Corporation 6,400 228,800
Gibson Greetings, Inc. 6,500 162,500
Meredith Corporation 4,100 192,444
Moore Corporation, Ltd. 18,500 245,125
1,067,088
Electrical Equipment & Electronics (4.1%)
Baldor Electric Company 14,460 356,850
Dynatech Corporation* 3,300 10,312
General Electric Company 2,700 245,363
612,525
Entertainment & Leisure (4.2%)
CPI Corporation 9,100 216,694
Fleetwood Enterprises, Inc. 10,300 412,000
628,694
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
American United Life Pooled Equity Fund B
Schedule of Investments (continued)
June 30, 1998
(unaudited)
Market
Description Shares Value
Common Stock (90.5%), continued
Furniture & Apparel (11.6%)
Hillenbrand Industries, Inc. 5,200 $312,000
Kellwood Corporation 6,900 246,675
La Z Boy Chair Company 9,800 553,700
Liz Claiborne, Inc. 6,400 334,400
Reebok International 10,800 299,025
1,745,800
Health Care (6.7%)
Acuson Corporation* 8,000 145,500
Lilly (Eli) and Company 2,572 169,913
McKesson Company 5,400 440,100
Merck & Company, Inc. 1,900 254,125
1,009,638
Information Processing & Telecommunications (11.6%)
AT&T Corporation 4,300 245,369
International Business Machines Corporation 2,400 275,550
Kelly Services 9,600 339,600
Novell* 10,900 138,975
Stratus Computer, Inc. 2,000 48,338
Sun Microsystems, Inc.* 9,100 395,281
Telxon Corporation 9,500 307,563
1,750,676
Merchandising (5.9%)
Enesco Group, Inc. 3,300 101,475
Gymboree Corporation 10,300 156,109
Longs Drug Stores Corporation 12,100 349,388
Mercantile Stores Co. 3,500 276,281
883,253
Metals & Mining (8.2%)
AK Steel Holding Corporation 10,800 193,050
Aluminum Company of America 4,800 316,500
Cleveland Cliffs, Inc. 6,200 332,475
Oregon Steel Mills, Inc. 11,300 210,463
Phelps Dodge Corporation 3,100 177,281
1,229,769
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
American United Life Pooled Equity Fund B
Schedule of Investments (continued)
June 30, 1998
(unaudited)
Market
Description Shares Value
Common Stock (90.5%), continued
Oil & Oil Services (4.1%)
Royal Dutch Petroleum Company 5,500 $301,469
Valero Energy Corporation 9,700 322,525
623,994
Transportation (3.4%)
Alexander & Baldwin, Inc. 10,500 305,811
Norfolk Southern Corporation 7,000 208,688
514,499
Miscellaneous (3.7%)
Carlisle Companies 4,700 202,394
Michael Foods, Inc. 5,700 167,438
PG & E Corporation 5,875 185,364
555,196
Total common stock (cost: $7,829,506) 13,632,536
Money Market Mutual Funds (5.8%)
Dreyfus Cash Management 475,071 475,071
Merrill Lynch Institutional Fund 406,446 406,446
Total money market mutual funds (cost: $881,517) 881,517
Interest Maturity Principal
Rate Date Amount
Notes (3.7%)
Short-term Notes
Associates
Corporation NA 5.53% 8/25/98 300,000 297,235
John Deere Capital 5.50% 8/03/98 260,000 257,617
Total Short-term Notes (cost: $554,852) 554,852
Total Investments (cost: $9,265,875) $ 15,068,905
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
(This page is intentionally blank.)
9
<PAGE>
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 $ 2,428,514
Cost of securities sold 1,261,517
$ 1,166,997
Net change in Unrealized Gain:
Market value at end of period $13,632,536
Less: investments purchased (1,798,714)
Add: investments sold at cost 1,261,517
Less: market value at beginning of year (13,004,303)
$ 91,036
10
<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, 1998 and 1997
was $89,134 and $75,970, 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, 1998 and 1997 was $6,773 and $2,488, respectively.
4. Net Assets
Net assets as of June 30, 1998:
Proceeds from units sold less payments
for units withdrawn and redeemed $(8,549,531)
Net investment income 4,160,533
Net realized gains 13,577,545
Unrealized gain 5,803,030
$14,991,577
The unrealized gain of $5,803,030 consists of common stock appreciation and
depreciation of $6,028,517 and $225,487, respectively.
11
<PAGE>
(This page is intentionally blank.)
12
<PAGE>
American United Life Insurance Company
American United Life Pooled Equity Fund B
P.O. Box 1995
Indianapolis, IN 46206-9101
www.aul.com
first class mail
P-13960A 7/98
