American United Life
Pooled Equity Fund B
BOARD OF MANAGERS
R. Stephen Radcliffe..................Chairman,
Executive Vice President, AUL
Ronald D. Anderson...................Professor,
Kelley School of Business,
Indiana University, Indianapolis, Indiana
Leslie Lenkowsky.....................Professor,
Indiana University Center of Philanthropy,
Indianapolis, Indiana
James W. Murphy,...............................
Former Senior Vice President,
Corporate Finance, 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.........Indianapolis, Indiana
G. David Sapp,
Senior Vice President, Investments
This report and the financial statements contained herein are for the general
information of the Participants. 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, 2000
<PAGE>
A Message
From
The Chairman of the Board
of Managers
To All Participants in Fund B
Recent evidence suggests the growth rate of the U.S. economy is finally
moderating as consumer spending and residential real estate activity slowed
during the second quarter. Although second quarter GDP rose at a 5.2% annualized
rate, many economists believe economic growth during the second half of this
year will slow to a more moderate 3.5% to 4.0% rate, well within the Federal
Reserve's estimate of the non-inflationary growth potential for our economy.
Federal Reserve intervention is a primary factor contributing to this slowdown.
Fearing that inflationary pressures were mounting, Fed officials raised the
Federal Funds rate by 175 basis points during the past twelve months. As of June
2000, the Fed Funds rate was 6.5%, the highest level since 1991. The goal was to
orchestrate a "soft landing" by slowing growth just enough to cut off
inflationary pressures while keeping unemployment stable.
During the first half of 2000, the equity market resembled a roller coaster ride
as investors rotated repeatedly between "New Economy" stocks (primarily
technology and growth companies) and "Old Economy" stocks (economically
sensitive, value companies). The NASDAQ Composite, an index that is heavily
weighted in technology companies, experienced extremely volatile returns during
the first half of the year. Investors poured a great deal of money into
technology stocks, pushing this index up 24% from the beginning of the year to
its peak on March 10. The NASDAQ subsequently experienced a dramatic sell-off
during April and May and although a recovery occurred in late May, this index
still reported negative investment returns for the first six months of the year.
The S&P 500 and the Dow Jones Industrial Average, two other commonly quoted
equity benchmarks, also experienced negative returns during the first half of
the year.
The late 1990s handsomely rewarded equity investors. Based on this experience,
many investors now consider 20% annual returns to be "normal." Since major
equity indices were still in negative territory for the first half of the year,
the equity market may have trouble repeating this remarkable performance in the
current year.
Investment performance for Fund B for the first six months of 2000 was -3.5%.
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.
In closing, American United Life remains committed to serving your investment
needs. We appreciate your continued confidence and support.
/s/R. Stephen Radcliffe
R. Stephen Radcliffe
Chairman of the Board of Managers
Indianapolis, Indiana
July 31, 2000
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American United Life Pooled Equity Fund B
STATEMENT OF NET ASSETS
June 30, 2000
(unaudited)
Assets:
Investments at value (cost: $6,006,024)
Common stock $ 5,481,385
Money market mutual funds 624,415
Dividends and interest receivable 9,187
Total assets 6,114,987
Liabilities: -
Net assets: $ 6,114,987
Units outstanding 396,700
Accumulation unit value $ 15.41
The accompanying notes are an integral part of the financial statements.
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American United Life Pooled Equity Fund B
STATEMENT OF OPERATIONS
for the six months ended June 30, 2000
(unaudited)
Net investment income:
Income
Dividends $ 104,317
Interest -
104,317
Expenses
Investment management services 12,188
Mortality and expense charges 36,564
48,752
Net investment income 55,565
Gain on investments:
Net realized gain 347,408
Net change in unrealized appreciation (773,790)
Net Loss (426,382)
Increase in net assets from operations $ (370,817)
The accompanying notes are an integral part of the financial statements.
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American United Life Pooled Equity Fund B
STATEMENTS OF CHANGES IN NET ASSETS
Six months
ended
June 30, 2000 Year ended
(unaudited) Dec. 31, 1999
Operations:
Net investment income $ 55,565 $ 123,235
Net realized gain 347,408 2,865,670
Net change in unrealized appreciation (773,790) (3,109,795)
Decrease in net assets from operations (370,817) (120,890)
Changes from contract owner transactions:
Proceeds from units sold 25,960 101,771
Payments for units withdrawn (4,010,223) (3,241,387)
Payments for units redeemed (732) (1,601)
Decrease (3,984,995) (3,141,217)
Net decrease in net assets (4,355,812) (3,262,107)
Net assets at beginning year 10,470,799 13,732,906
Net assets at end of year $ 6,114,987 $10,470,799
Units sold 2,058 5,977
Units withdrawn (257,913) (194,455)
Units redeemed (29) (60)
Net decrease in units outstanding (255,884) (188,538)
Units outstanding at beginning of year 652,584 841,122
Units outstanding at end of year 396,700 652,584
The accompanying notes are an integral part of the financial statements.
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<PAGE>
American United Life Pooled Equity Fund B
SCHEDULE OF INVESTMENTS
June 30, 2000
(unaudited)
Market
Description Shares Value
Common Stock (89.8%)
Aerospace (3.0%)
Precision Castparts Corporation 4,100 $ 185,525
185,525
Automotive & Auto Parts (10.0%)
Bandag Inc. 6,200 150,350
Carlisle Companies 4,700 211,500
Ford Motor Co. 2,600 111,800
TBC Corporation* 28,100 129,963
Visteon Corporation 340 4,128
607,741
Banks & Financial (10.0%)
Associates First Capital 3,898 86,974
Bank One Corporation 3,332 88,506
Citigroup, Inc. 1,716 103,389
Ohio Casualty Corporation 13,200 140,250
Washington Mutual 6,555 188,866
607,985
Broadcasting & Publishing (2.8%)
Chris-Craft Industries, Inc.* 1,354 89,448
Meredith Corporation 2,400 81,000
170,448
Building (2.9%)
Fleetwood Enterprises 7,700 109,725
Toll Brothers, Inc. 3,300 67,650
177,375
Computer Hardware & Software (3.9%)
Autodesk Software 5,200 180,374
International Business Machines 500 54,781
235,155
Diversified Manufacturing (2.9%)
Crane Co. 4,700 114,269
Trinity Industries 3,500 64,750
179,019
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
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American United Life Pooled Equity Fund B
SCHEDULE OF INVESTMENTS (continued)
June 30, 2000
(unaudited)
Market
Description Shares Value
Common Stock (89.8%), continued
Electrical Equipment (3.2%)
Baldor Electric 10,540 $ 196,308
196,308
Furniture & Apparel (18.4%)
Hillenbrand Industries, Inc. 4,500 140,625
Kellwood Corporation 8,700 183,788
Kimball International 6,900 101,775
La Z Boy Chair Company 10,200 142,800
Liz Claiborne, Inc. 6,800 239,700
Reebok International* 19,800 315,562
1,124,250
Health Care (2.8%)
Acuson Corporation* 5,800 78,300
McKesson HBOC, Inc. 4,400 92,125
170,425
Merchandising (4.5%)
Lands' End, Inc. 3,300 110,138
Longs Drug Stores, Inc. 7,700 167,475
277,613
Metals & Mining (5.5%)
Aluminum Company of America 4,400 127,600
Cleveland Cliffs, Inc. 5,100 131,644
Phelps Dodge Corporation 2,000 74,375
333,619
Oil & Oil Services (10.0%)
Royal Dutch Petroleum Company 2,600 160,062
Tidewater, Inc. 5,800 208,800
Valero Energy Corporation 7,700 242,550
611,412
Paper & Forest Products (1.0%)
Wausau-Mosinee Paper Company 3,300 28,255
Willamette Industries 1,200 32,700
60,955
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
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American United Life Pooled Equity Fund B
SCHEDULE OF INVESTMENTS (continued)
June 30, 2000
(unaudited)
Market
Description Shares Value
Common Stock (89.8%), continued
Transportation (3.2%)
Alexander & Baldwin, Inc. 5,400 $ 119,137
Norfolk Southern Corporation 5,300 78,838
197,975
Miscellaneous (5.7%)
Brunswick Corporation 1,500 24,844
Kelly Services 6,100 141,063
LaFarge Corporation 1,200 25,200
PG & E Corporation 6,273 154,473
345,580
Total common stock (cost: $5,381,609) 5,481,385
Money Market Mutual Funds (10.2%)
Armada Money Market Fund...............................155,159 155,159
Dreyfus Cash Management................................232,548 232,548
Merrill Lynch Institutional Fund.......................236,708 236,708
Total money market mutual funds (cost: $624,415) 624,415
Total investments (cost: $6,006,024) $ 6,105,800
*does not pay cash dividends
All investments are in United States enterprises.
The accompanying notes are an integral part of the financial statements.
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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 gain and unrealized appreciation on investments is summarized
below.
Common
Stock
Net Realized Gain:
Proceeds from securities sold $ 5,402,538
Cost of securities sold 5,055,130
$ 347,408
Net change in Unrealized Appreciation:
Market value at end of period $ 5,481,385
Less: investments purchased (1,504,311)
Add: investments sold at cost 5,055,130
Less: market value at beginning of year (9,805,994)
$ (773,790)
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<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 charges.
The expenses incurred during the six months ended June 30, 2000 and year ended
December 31, 1999 were $48,752 and $152,927, 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, 2000 and year ended December 31, 1999 were $731 and $3,709, respectively.
4. Net Assets
Net assets as of June 30, 2000
Proceeds from units sold less payments
for units withdrawn and redeemed $ (16,533,478)
Net investment income 4,405,327
Net realized gains 18,143,362
Unrealized appreciation 99,776
$ 6,114,987
The unrealized appreciation of $99,776 consists of common stock appreciation and
depreciation of $910,059 and $810,283, respectively.
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American United Life Insurance Company
Pooled Equity Fund B
P.O. Box 1995
Indianapolis, IN 46206-9101
FIRST CLASS MAIL
P-13960C(6/00)
