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 Professor,
Indiana University Center of Philanthropy,
Indianapolis, Indiana
R. STEPHEN RADCLIFFE
Executive Vice President, AUL
JAMES P. SHANAHAN
Former Senior Vice President,
Pension 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(R) 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, 1999
<PAGE>
A Message From The Chairman of the Board of Managers
To All Participants in Fund B
The current economic expansion continues to surprise investors with its
longevity. It has now endured for 100 months, making it the longest peacetime
expansion in U.S. history. If the economy can remain on its current track for
another six months, it will achieve the distinction of being the longest
expansion of all time.
One of the primary drivers of this remarkable growth has been the consumer.
Rising stock and real estate prices have boosted consumer spending, providing a
source of stimulus for the economy. Since consumer spending represents
approximately two-thirds of gross domestic product, the end result has been
economic growth which repeatedly surprises investors on the upside.
However, economic growth can represent a mixed blessing. The Federal Reserve has
been keeping a close eye on domestic growth watching for signs of inflationary
pressures. At its June 29-30 meeting, the Fed decided to take a pre-emptive step
by raising the Federal Funds rate by 25 basis points, representing the first
such increase since March 1997. The Fed is hoping that this modest move will
eliminate the need for more drastic action at some later date.
As we began 1999, stock market performance was driven by large growth and
technology companies, the same as in 1998. But in April, the stock market
experienced a dramatic change in leadership as investors began focusing on
industries that would benefit from stronger global growth. This rotation
resulted in a remarkable rebound in economically sensitive and small
capitalization companies.
Investment performance for Fund B for the first six months of 1999 was 11.1%.
As we enter the second half of 1999, the marketplace remains vulnerable to
external surprises. The Federal Reserve will be closely watching the growth rate
of the U.S. economy. Without some moderation, the Federal Reserve may feel
forced to take additional action. Y2K issues will also provide additional
uncertainty as we near the end of 1999.
For information regarding AUL's preparation for Y2K, please see AUL's website at
www.aul.com or call (800) 249-6269.
The performance for Fund B is net of investment advisory fees but does not
reflect mortality and expense risk charges. Past performance is no guarantee of
future results.
James W. Murphy
Chairman of the Board of Managers
Indianapolis, Indiana
July 15, 1999
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<TABLE>
<CAPTION>
American United Life Pooled Equity Fund B
STATEMENT OF NET ASSETS
June 30, 1999
(unaudited)
<S> <C>
Assets:
Investments at value (cost: $9,801,576)
Common stock $12,626,903
Money market mutual funds 767,700
13,394,603
Cash 35,818
Receivable for investments sold 190,907
Dividends and interest receivable 16,729
Total assets 13,638,057
Liabilities:
Payables for investments purchased 63,944
Due to AUL 14,479
Total liabilities 78,423
Net Assets: $13,559,634
Units outstanding 751,412
Accumulation Unit Value $ 18.05
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
American United Life Pooled Equity Fund B
STATEMENT OF OPERATIONS
for the six months ended June 30, 1999
(unaudited)
<S> <C>
Net Investment Income:
Income
Dividends $ 139,497
Interest 903
140,400
Expenses
Investment management services 20,129
Mortality and expense charges 60,390
80,519
Net investment income 59,881
Gain on Investments:
Net realized gain 1,703,553
Net change in unrealized appreciation (390,334)
Net gain 1,313,219
Increase in Net Assets from Operations $ 1,373,100
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<TABLE>
<CAPTION>
American United Life Pooled Equity Fund B
STATEMENTS OF CHANGES IN NET ASSETS
<S> <C> <C>
Six months
ended
June 30, 1999 Year ended
(unaudited) Dec. 31, 1998
Operations:
Net investment income $ 59,881 $ 127,096
Net realized gain 1,703,553 2,519,736
Net change in unrealized appreciation (390,334) (1,728,633)
Increase in assets from operations 1,373,100 918,199
Changes from Contract Owner Transactions:
Proceeds from units sold 53,673 273,438
Payments for units withdrawn (1,599,232) (1,735,807)
Payments for units redeemed (813) (2,460)
Decrease (1,546,372) (1,464,829)
Net decrease in Net Assets (173,272) (546,630)
Net Assets at beginning of year 13,732,906 14,279,536
Net Assets at end of period $13,559,634 $13,732,906
Units sold 2,591 17,400
Units withdrawn (92,270) (108,807)
Units redeemed (31) (153)
Net decrease in units outstanding (89,710) (91,560)
Units outstanding at beginning of year 841,122 932,682
Units outstanding at end of period 751,412 841,122
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
American United Life Pooled Equity Fund B
SCHEDULE OF INVESTMENTS
June 30, 1999
(unaudited)
<S> <C> <C>
Market
Description Shares Value
Common Stock (94.3%)
Aerospace (4.6%)
Boeing Co. 7,400 $ 325,600
Precision Castparts Corporation 6,800 289,000
614,600
Automotive & Auto Parts (8.9%)
Bandag Inc. 8,600 298,313
Carlisle Companies 5,900 283,937
Ford Motor Co. 6,900 395,025
TBC Corporation* 28,100 198,456
1,175,731
Banks & Financial (10.5%)
American Express Company 900 117,113
Associates First Capital 3,498 154,348
Bank One Corporation 4,632 275,894
Citigroup, Inc. 6,716 319,010
Ohio Casualty Corporation 7,200 260,100
Washington Mutual 8,055 286,456
1,412,921
Broadcasting & Publishing (2.6%)
Chris-Craft Industries, Inc.* 4,286 201,978
Meredith Corporation 3,200 110,800
Moore Corporation, Ltd. 4,900 41,037
353,815
Electrical Equipment & Electronics (2.5%)
Baldor Electric Company 17,040 338,670
338,670
Entertainment & Leisure (2.5%)
Fleetwood Enterprises, Inc. 12,700 335,756
335,756
</TABLE>
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
6
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<TABLE>
<CAPTION>
American United Life Pooled Equity Fund B
SCHEDULE OF INVESTMENTS (continued)
June 30, 1999
(unaudited)
<S> <C> <C>
Market
Description Shares Value
Common Stock (94.3%), continued
Furniture & Apparel (13.8%)
Hillenbrand Industries, Inc. 5,800 $ 250,850
Kellwood Corporation 8,500 230,563
Kimball International 9,200 155,250
La Z Boy Chair Company 20,100 462,300
Liz Claiborne, Inc. 10,100 368,650
Reebok International* 19,800 368,775
1,836,388
Health Care (2.1%)
Acuson Corporation* 9,700 166,719
McKesson HBOC, Inc. 1,400 44,975
Merck & Company, Inc. 1,000 73,625
285,319
Information Processing & Telecommunications (6.7%)
AT&T Corporation 2,400 133,950
Autodesk Software 5,400 159,637
International Business Machines Corporation 1,100 142,450
Lucent Technologies 2,186 147,435
Sun Microsystems, Inc.* 4,400 303,050
Telxon Corporation 1,800 14,288
900,810
Merchandising (6.8%)
Gymboree Corporation* 21,800 228,900
Land's End, Inc.* 5,600 269,500
Longs Drug Stores Corporation 12,100 418,206
916,606
Metals & Mining (12.9%)
AK Steel Holding Corporation 16,100 362,250
Alcoa, Inc. 8,500 525,937
Cleveland Cliffs, Inc. 7,200 233,100
Oregon Steel Mills, Inc. 17,100 227,644
Phelps Dodge Corporation 6,000 371,625
1,720,556
</TABLE>
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
7
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<TABLE>
<CAPTION>
American United Life Pooled Equity Fund B
SCHEDULE OF INVESTMENTS (continued)
June 30, 1999
(unaudited)
<S> <C> <C>
Market
Description Shares Value
Common Stock (94.3%), continued
Oil & Oil Services (8.3%)
Royal Dutch Petroleum Company 5,800 $ 349,450
Tidewater, Inc. 12,100 369,050
Valero Energy Corporation 18,500 396,594
1,115,094
Transportation (4.6%)
Alexander & Baldwin, Inc. 13,200 293,700
Norfolk Southern Corporation 10,900 328,363
622,063
Miscellaneous (7.5%)
Kelly Services 10,300 330,887
Michael Foods, Inc. 1,500 270,250
PG & E Corporation 8,973 291,062
Park Electrochemical Corporation 3,700 106,375
998,574
Total common stock (cost: $9,033,876) 12,626,903
Money Market Mutual Funds (5.7%)
Dreyfus Cash Management 241,244 241,244
Merrill Lynch Institutional Fund 526,456 526,456
Total money market mutual funds (cost: $767,700) 767,700
Total investments (cost: $9,801,576) $13,394,603
</TABLE>
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
8
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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(R) (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 gain and unrealized appreciation on investments is summarized
below.
Common
Stock
Net Realized Gain:
Proceeds from securities sold $ 2,984,396
Cost of securities sold 1,280,843
$ 1,703,553
Net change in Unrealized Appreciation:
Market value at end of period $ 12,626,903
Less: investments purchased (1,495,458)
Add: investments sold at cost 1,280,843
Less: market value at beginning of year (12,802,622)
$ (390,334)
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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 charges.
The expense incurred during the six months ended June 30, 1999 was $80,519.
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, 1999 was $1,614.
4. Net Assets
Net assets as of June 30, 1999:
Proceeds from units sold less payments
for units withdrawn and redeemed $ (10,953,638)
Net investment income 4,286,408
Net realized gains 16,633,837
Unrealized appreciation 3,593,027
$ 13,559,634
The unrealized appreciation of $3,593,027 consists of common stock appreciation
and depreciation of $4,102,992 and $509,965, respectively.
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American United Life Insurance Company(R)
American United Life Pooled Equity Fund B
P.O. Box 1995
Indianapolis, IN 46206-9101
www.aul.com
FIRST CLASS MAIL
P-13960B 7/99
