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Previous: AT&T CORP, SC TO-T, 2000-02-22 |
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ACTIVA
(LOGO: ACTIVA LOGO)
ANNUAL REPORT
DECEMBER 31, 1999
ACTIVA MONEY MARKET FUND
Sub-Adviser: JP Morgan Investment
Management, Inc.
ACTIVA INTERMEDIATE BOND FUND
Sub-Adviser: Van Kampen Management, Inc.
ACTIVA VALUE FUND
Sub-Adviser: Wellington Asset Management, LLP
ACTIVA GROWTH FUND
Sub-Adviser: State Street Research &
Management Company
ACTIVA INTERNATIONAL FUND
Sub-Adviser: Nicholas-Applegate
Capital Management
A selection of stock, bond, and money market funds, managed by professional
advisers, which are designed to help investors meet their financial goals.
<PAGE>
ACTIVA Mutual Funds Annual Report
Contents
Page
SHAREHOLDER LETTER 1
ACTIVA MONEY MARKET FUND 2
ACTIVA INTERMEDIATE BOND FUND 3
ACTIVA VALUE FUND 4
ACTIVA GROWTH FUND 6
ACTIVA INTERNATIONAL FUND 7
SCHEDULE OF INVESTMENTS
Activa Money Market Fund 8
Activa Intermediate Bond Fund 10
Activa Value Fund 13
Activa Growth Fund 19
Activa International Fund 22
Page
STATEMENT OF ASSETS AND LIABILITIES 27
STATEMENT OF OPERATIONS 28
STATEMENT OF CHANGES IN NET ASSETS 29
NOTES TO FINANCIAL STATEMENTS 30
FINANCIAL HIGHLIGHTS 34
INDEPENDENT AUDITORS' REPORT 36
ACTIVA Mutual Funds
2905 Lucerne SE, Suite 200
Grand Rapids, Michigan 49546
(616) 787-6288 (800) 346-2670
WWW.ACTIVAFUNDS.COM
<PAGE>
ANNUAL REPORT
Dear Shareholder
I am pleased to provide you with the Annual Report to Shareholders for the
Activa Mutual Funds for the period ending December 31, 1999. Please review the
following pages which include the sub-advisers' management discussion and
performance review of the funds.
The second half of 1999 brought many changes to the Activa Funds. The launch of
our new funds was very successful, and we are excited about our new investment
managers. One of the reasons we were eager to bring you a new family of funds
was to give our shareholders the opportunity to diversify their investments, a
strategy known as asset allocation.
Asset allocation is an investment strategy that involves combining different
asset classes such as stocks, bonds, international investments and cash into one
portfolio. This is a strategy used by major pension funds to obtain their
investment objectives. Individual investors can also use this same strategy by
investing in a variety of mutual funds. Diversifying among different types of
mutual funds alleviates the risk of having all your eggs in one basket.
The reason diversification reduces risk is because different asset classes, such
as stocks and bonds, rise and fall independent of each other. In addition to
different asset classes, your portfolio can be further diversified over
different equity investment "styles". Managers use different strategies or
styles to manage their equity funds. Management styles such as growth and value
give you another dimension of diversification, as various styles fall in and out
of favor periodically and performance between styles can vary dramatically.
An asset allocation strategy works best when the investments are held over
longer periods of time. Over longer time periods, the gains in one asset class
tend to offset losses in another asset class, reducing the volatility in your
portfolio. Keep in mind that the asset allocation decision is one of the most
important decisions you will make as an investor, as a portfolio's asset
allocation typically drives over 90% of a portfolio's performance.
As we have communicated to you recently, we have enhanced our services to
provide you with more information on your investment in the Activa Funds, such
as our web site and quarterly statements. We have also provided you with greater
ease to communicate with us by expanding our phone hours and adding e-mail. We
hope you have found our new services helpful. We here at the Activa Funds
continue to explore ways to make investing with us convenient. Be sure to look
for our new telephone exchange options coming later this year.
As markets continue to be volatile into the Year 2000, we believe an asset
allocation strategy will be your best defense in reducing the risk of your
portfolio. Be sure to visit our web site at www.activafunds.com, or call our
toll-free number to see how using the Activa Mutual Funds can help you achieve
an asset allocation strategy suited to your investment goals.
Sincerely,
/s/ James J. Rosloniec
James J. Rosloniec
ACTIVA Mutual Funds Annual Report
1
<PAGE>
ACTIVA Money Market Fund-- JP Morgan Investment Management, Inc.
The Activa Money Market Fund returned 1.83% for the period since inception on
August 19, 1999 through December 31, 1999.
Although inflation has remained benign and wage pressures are still subdued, the
Federal Reserve has embarked on a path of incremental tightening in a proactive
attempt to keep inflation at bay. At mid-year, when the Fed began tightening,
credit and swap spreads both widened and the equity market tumbled. Since
October, however, spreads have narrowed and the equity market has rebounded
largely due to the vigilance of the Federal Reserve, and its adoption of a
neutral stance. As expected, we finished the year with higher yields due to the
lingering probability of additional Fed action, global synchronized growth, and
uncertainty about when the previous moves will begin to slow U.S. growth.
Over the past four months, the Fund maintained a barbell strategy, meaning we
invested at the very short end of the yield curve for liquidity while at the
same time invested farther out on the yield curve (though still less than
1-year), to capture higher yields. In addition, our significant allocation to
floating-rate notes added to performance. These securities reset regularly
(usually quarterly), therefore we benefit in a rising rate environment. Because
of the barbell structure and the floating-rate note allocation, the Fund has
performed very well versus its peer group.
Conversely, the need to maintain liquidity by investing a large percentage of
the Fund in overnight maturing securities to prepare for the unforeseen Y2K
events, detracted from performance. Investor caution and the accommodative
measures of the Federal Reserve resulted in a flood of cash into money market
instruments, which drove short-term yields down dramatically in the last week of
December. Money market rates into early January traded as low as 2% for Fed
funds and below 1.5% for agency issuance.
We expect the rising rate environment to continue, with a quarter percentage
point hike from the Federal Reserve at its February meeting. Eventually, these
incremental steps will bring about the desired slow down and "soft landing." We
think that the current strength in oil prices will translate into increasing
headline inflation, noticeable as early as the first quarter of 2000. Global
synchronized growth and central bank activity in response will be a significant
theme for 2000. As such, we will keep the fund barbelled to maintain liquidity,
yet opportunistically capture higher yields along the yield curve.
ACTIVA Mutual Funds Annual Report
2
<PAGE>
ACTIVA Intermediate Bond Fund-- Van Kampen Management, Inc.
Unfortunately for bond market participants, 1999 proved to be a difficult year
for the U.S. fixed-income market. At year-end, the 30-year U.S. Treasury yield
stood at 6.48% versus 5.09% at year-end 1998.
During the fourth quarter, the U.S. economy continued to be characterized by
solid growth and modest inflation. U.S. consumer demand remained strong despite
concerns about rising trade deficits and rising interest rates. The higher
interest rate environment will increase the financial cost of doing business and
may contribute to a slowing in economic growth.
The Lehman Brothers Aggregate Bond Index returned 1.04% for the four months
ended December 31, 1999 or since inception of the Activa Intermediate Bond Fund.
For the same four-month period, U.S. Treasuries returned .01%.
Non-Treasuries outperformed U.S. Treasuries as higher
yields contributed to higher returns. The best performing sector was the
mortgage-backed sector, which returned 2.01%, while asset-backed securities
followed with a 1.29% total return. Finally, investment-grade corporate bonds
returned 1.12% and U.S. government agency securities returned .83%.
As of December 31, 1999, the Activa Intermediate Bond Fund had a duration of 4.9
years, which was comparable to the 4.9-year duration of the Fund's benchmark,
the Lehman Brothers Aggregate Bond Index. With respect to relative sector
weightings, the Fund held overweight positions in the asset-backed sector and an
underweight position in the U.S. Treasury sector. We anticipate maintaining the
current posture as we enter the new year. Yield premiums in the non-treasury
sector remain attractive and present attractive total return opportunities. The
Fund generated total returns of .63% since inception.
We expect economic expansion to continue despite the higher interest rate
environment. Looking ahead, the market appears to be anticipating at least
another .50% federal funds rate increase, as the Fed attempts to maintain a
balance between economic growth and low inflation.
We believe the Year 2000 will continue to present challenges for fixed-income
portfolios. We expect to continue to meet these challenges through appropriate
risk management and our disciplined investment style.
ACTIVA Mutual Funds Annual Report
3
<PAGE>
ACTIVA Value Fund-- Wellington Asset Management, LLP
1999 was another difficult year for value stocks. Growth stocks, especially
technology stocks, continued to dominate the markets returns. Uncertainty
surrounding Y2K as well as rising energy prices and gold prices caused fears of
higher interest rates. Investors gravitated towards a narrow list of large cap
names led by technology. While the S&P 500 returned 21.04% in 1999, only eight
stocks contributed more than 50% of the return.
Your fund underperformed its benchmark, the Russell 1000 Value Index, for the
year ended December 31, 1999 with a return of minus 6.70% versus 7.35%. During
the first half of 1999, value stocks had an advantage over growth stocks as
gains in the equity markets broadened beyond technology stocks. The Value Fund
was up 12.1% at the end of June 1999 versus 12.8% for the Russell 1000 Value.
Towards the end of the third quarter of 1999, growth stocks once again took the
lead in the market and the Fund's performance began to deteriorate relative to
its benchmark. Most of the Fund's underperformance occurred in the fourth
quarter, leading to the negative return for 1999. This led to the Fund replacing
the sub-advisor in December, as discussed in more detail below.
The bulk of the Value Fund's underperformance occurred in four sectors: Capital
Goods, Consumer Cyclicals, Financial Services and Technology. Within the Capital
Goods sector, underperformance was compounded by the poor performance of
Lockheed Martin, whose shares lost half their value in the second half of the
year due to several profit warnings issued by the company.
The Value Fund, compared to its benchmark, was underweight in technology, which
negatively impacted relative performance. Most of the gains in the technology
sector were in high growth stocks with high P/Es multiples, too high for the
Fund's value discipline. Technology stocks held in the fund included Compaq,
Raytheon and Seagate, which did not participate in the huge gains of the sector.
However, we believe these stocks have attractive relative valuations along with
strong return potential.
The Consumer Cyclical sector had strong performance in the fourth quarter,
however, the Fund underperformed in this sector. Performance was negatively
impacted by Dana Corporation, which was severely penalized after announcing
earnings despite meeting consumer's estimates. In the Financial Services sector,
the Fund's overweighting in insurance companies hurt performance. Fund holdings
Aetna and Chubb had large negative returns due to potential class action
lawsuits against HMOs. Allstate, another insurance holding, also had a negative
return due to several large natural catastrophes posing a threat to earnings.
Overweight positions in the energy and transportation sectors, which sectors
lagged the market, also negatively impacted performance.
The Fund outperformed its benchmark in the Communications sector, with strong
fourth quarter returns from holdings AT&T and US West, Inc. These holdings were
buoyed by strong sales of wireless telephone service and high speed internet
connections.
The Value Fund changed sub-advisers on December 30th, replacing Ark Asset
Management Co., Inc. with Wellington Asset Management, LLP. This report has been
prepared by Activa Asset Management, LLC. As a result of the change in
sub-advisers, 95% of the portfolio's holdings were sold and replaced in the last
week of December. Wellington Asset Management, LLP uses a sector-neutral style.
A sector-neutral strategy keeps the Fund's portfolio sector weightings within 2%
of the sector weightings in the Russell 1000 Value Index, allowing the Fund's
sub-adviser to add value through stock selection.
Although value stocks have been out of favor during the past few years, they
tend to move in and out of favor over different market cycles. Because of their
style rotation with growth stocks over long periods of time, we believe value
stocks are an important part of an overall asset allocation strategy.
ACTIVA Mutual Funds Annual Report
4
<PAGE>
ACTIVA Value Fund continued
Average Annual Total Return*
Period Ended December 31, 1999*
- --------------------------------------------------------------------------------
1 YEAR 5 YEAR 10 YEAR
ACTIVA VALUE FUND** -6.70% 15.15% 11.90%
RUSSELL 1000 VALUE*** 7.35% 23.07% 15.60%
S&P 500**** 21.04% 28.54% 18.20%
Year-by-Year Performance
AVERAGE ANNUAL RETURN OF THE ACTIVA VALUE FUND
Growth of an assumed $10,000 investment in Activa Value Fund from 12/31/89
through 12/31/99: includes all fees
Date RUSSELL 1000 VALUE S&P 500 ACTIVA VALUE FUND
12/89 10000 10000 10000
12/90 9191 9688 10100
12/91 11454 12640 14323
12/92 13035 13604 14576
12/93 15398 14972 16157
12/94 15091 15170 15209
12/95 20879 20863 19857
12/96 25391 25654 24459
12/97 34332 34212 31813
12/98 39698 43997 36685
12/99 42616 53254 34232
* The illustrations include recurring expenses incurred by all shareholder
accounts, and all ordinary income dividends and capital gain distributions
reinvested at net asset value (without sales charge). Prior to 1991 and
1998, the Fund had a maximum sales charge of 6% and 3% respectively, based
upon amount of shares purchased. Performance prior to April 22, 1998 does
not reflect the Fund's 12b-1 fee of 0.25% which was reduced to 0.15% on
September 1, 1999. No adjustments have been made for any income taxes
payable by shareholders on ordinary income dividends and capital gain
distributions accepted in shares which are payable by shareholders in the
tax year received. Past performance is not predictive of future
performance. Returns and net asset value fluctuate and an investor's
shares, when redeemed, may be worth more or less than their original
investment. For additional information, see the Prospectus, Statement of
Additional Information, and the Financial Highlights at the end of this
report.
** Wellington Asset Management, LLP became the Fund's sub-adviser on December
30, 1999. Ark Asset Management Co., Inc. was the Fund's sub-adviser from
May 1, 1995 until December 30, 1999.
*** The Russell 1000 Value Index represents a composite of value stocks
representative of the Fund's investment objectives and strategies which is
compiled independently by the Frank Russell Company, and is not impacted by
the Fund's operating expenses.
**** The Standard and Poor's 500 Stock Index represents an unmanaged index
generally representative of the U.S. stock market and is not impacted by
the Fund's operating expenses.
ACTIVA Mutual Funds Annual Report
5
<PAGE>
ACTIVA Growth Fund -- State Street Research & Management Company
During the fourth quarter the stock market staged a powerful rally which brought
the annual total return performance for the S&P 500 above 20% for the fifth year
in a row. Your portfolio outperformed the S&P 500 since inception with a return
of 13.8% versus 9.4%. Far and away the biggest contributor to both the quarter's
and the year's return was the stellar performance of the Technology sector. The
three other sectors which outperformed the index in the quarter were Basic
Materials, Capital Goods and Consumer Discretionary. Your fund, compared to the
S&P 500, held overweighted positions in Consumer Discretionary, Capital Goods
and Technology. The Fund held underweighted positions in Health Care and
Consumer Staples which underperformed the index during the quarter. There were
several individual stock holdings that negatively affected performance and those
will be addressed below.
Technology contributed a large portion of the gain seen in the quarter due to
both our overweighted position versus the S&P 500 and also due to our individual
stock selection. Outstanding performers included CISCO Systems, Microsoft, EMC
Corp., Sun Microsystems and Teradyne. The participation across industries in
technology was broad as evidenced by the above-mentioned companies: networking,
software, storage, enterprise hardware and semiconductor capital equipment.
The Consumer Discretionary sector's strong showing was bolstered by the ongoing
consolidation in media and entertainment as well as healthy advertising spending
and a healthy environment for consumer spending. We had several winners in this
category including Omnicom, CBS, America Online and Wal-Mart and also several
underperformers including Best Buy and Staples.
The Capital Goods (or Other category) turned in a strong return primarily due to
the strength of General Electric. We also owned Tyco International that had a
negative return in the fourth quarter due to the company being the subject of
what we believe to be unfounded allegations of accounting irregularities. We
continue to hold both our positions in General Electric and Tyco International.
On the Health Care front several names, which we believe have strong
fundamentals, performed well below the market including Bristol Myers, Pfizer
and Guidant. We underweighted the sector consistently throughout 1999 and will
continue with that posture heading into the new year. One company's stock that
did particularly well in the quarter was Amgen and we continue to hold that
position as well as a position in Biogen, another biotechnology company where we
see opportunity for growth going forward.
The Consumer Staples sector continued its record of underperformance relative to
the S&P 500 for the year in the fourth quarter. Your fund's exposure to this
sector had been underweight which helped performance, as did the fact that
several individual stocks in the Fund's portfolio had strong upside performance
in the last three months of the year. More indicative of the overall sector's
performance was that of drugstore operator CVS, which negatively affected
returns.
Given the powerful finish for the stock market at the end of December, many
stocks, particularly those in technology and related industries, are up very
sharply for the quarter and the year. Valuations among the market leaders are
stretched and overall stock returns for 2000 are more likely to mirror profit
returns which we believe should be in the 8%-10% range. It seems unlikely that
we will see any meaningful valuation or price earnings multiple expansion as
long as the trend in interest rates is up and the rate increases are at the top
of investors' minds. We will be monitoring market and economic developments
closely and will continue to focus our efforts on investing in companies with
above-average earnings growth prospects and real competitive advantages.
ACTIVA Mutual Funds Annual Report
6
<PAGE>
ACTIVA International Fund -- Nicholas Applegate Capital Management
Around the world, stocks soared in the fourth quarter of 1999. Among the factors
contributing to 1999's worldwide equity market surge were stronger economies in
Japan, Europe, and emerging markets, exceptional returns for technology stocks,
and a heightened focus by corporate management on enhancing shareholder value.
Developed non-U.S. markets benefited from improving economies and an increased
focus among corporate management on enhancing shareholder value. As a result,
restructuring and record levels of merger and acquisition activity characterized
European markets. Japan's economic rebound catalyzed global growth, and its
expectation for increased imports improved prospects for neighboring Asian
emerging countries.
Since inception, the Fund's portfolio advanced 42.14% versus 18.23% for its
benchmark, the MSCI EAFE Index. Stock selection in Japan, France, the UK and the
Netherlands boosted the portfolio's performance during this period, as did
holdings in the Technology and Business Services sectors. Strong companies
posting robust gains during this quarter include UK-based ARM Holdings PLC, a
designer of reduced instruction set computing (RISC) microprocessors. In the
Netherlands, KPNQwest, a telecommunications services company posted excellent
gains. Another strong contributor was Softbank Corporation, who invests in
Internet, software, finance and networking companies such as Yahoo! Inc.,
E-Trade Group Inc. and Softbank Commerce Corporation.
Also contributing to the performance of the portfolio was an overweighted
position in Japan and France relative to the benchmark. During the fourth
quarter, we increased our exposure in emerging Asia, as well as Europe and Latin
America. Economic recoveries, as many emerging countries moved to speed up the
pace of reform and pick-up in economic growth in many parts of the world,
resulted in renewed investor interest for emerging market stocks. Also, we are
finding excellent opportunities on a stock-by-stock basis in the Technology
sector. As in the United States, technology stocks overseas delivered impressive
gains and we increased our weighting in the semiconductor/electronic component
industry.
Looking ahead, ongoing deregulation, privatization, stronger competition and
merger and acquisition activity inspire optimism for additional gains. Applying
our bottom-up approach, we continue to find exceptional companies meeting our
strict investment criteria around the world.
ACTIVA Mutual Funds Annual Report
7
<PAGE>
ACTIVA Schedule of Investments
MONEY MARKET FUND 12/31/99
<TABLE>
<CAPTION>
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
<S> <C> <C> <C>
CERTIFICATES OF DEPOSIT 17.20%
5TH 3RD BK 5.98% 1/28/00 3,500,000 3,500,114
BANC ONE CD 5.93% 10/2/00 2,500,000 2,498,726
BYRSCHE YCD 5.93% 10/2/00 1,000,000 998,683
DETCHBK YCD 6.19% 12/1/00 5,000,000 4,996,938
DRSDNR YCD 5.85% 2/2/00 2,500,000 2,500,000
BYRSCHE YCD MTHY 6.45% 12/15/00 3,000,000 2,997,569
UNION BK YANKEE 6.34% 12/4/00 2,000,000 1,998,677
UNION BK YANKEE 6.39% 12/21/00 1,500,000 1,499,306
--------------
20,990,013
--------------
COMMERCIAL PAPER 59.00%
ALPINE SEC. DCP 5.96% 2/29/00 1,500,000 1,485,348
ASPEN FDING 5.95% 1/19/00 1,000,000 997,025
ASPEN FUNDING 5.95% 1/14/00 3,000,000 2,993,554
ASSET SECUR 5.93% 1/28/00 2,000,000 1,991,105
ASSOCIATES 4.0% 1/3/00 5,000,000 4,998,889
BANK AMER 5.87% 1/24/00 2,500,000 2,500,000
BANK AMERICA 5.99% 3/13/00 1,000,000 988,020
BANK OF NY DCP 5.75% 2/22/00 2,000,000 1,983,389
BELLSOUTH FDG CP 5.68% 2/10/00 2,000,000 1,987,378
BRITISH TELE.PLC 5.85% 2/16/00 3,000,000 2,977,575
CITIBANK CAP MKT 5.88% 2/9/00 3,000,000 2,980,890
CREGEM N. AMERICA 5.88% 1/21/00 3,000,000 2,990,200
CXC INC. 5.85% 2/2/00 3,000,000 2,984,400
ENTERPRISE FDG 6.55% 1/18/00 3,000,000 2,990,721
FHLB 1.5% 1/3/00 6,667,000 6,666,444
FLEET FIN. VRN 6.24% 10/13/00 2,000,000 1,999,069
FRANCE TCOM 5.9% 2/7/00 3,500,000 3,478,776
GENERAL ELEC DCP 5.76% 2/18/00 3,000,000 2,976,960
GMAC D/C/P 5.72% 3/17/00 2,000,000 1,975,849
NAT'L AUSTRL DCP 5.77% 1/19/00 3,000,000 2,991,345
NEWPORT FUNDING 5.69% 1/20/00 1,000,000 996,996
NEWPORT FUNDING 6.01% 1/14/00 3,500,000 3,492,404
PARTHENON REC. 6.55% 1/18/00 1,000,000 996,907
REC CAP CORP 5.95% 1/26/00 1,000,000 995,868
RECEIVABLES CAP. 6.12% 1/14/00 2,500,000 2,494,475
SALOMON SMITH 6.49% 1/27/00 1,000,000 995,313
SOUTHERN CO. C/P 5.75% 2/9/00 3,000,000 2,981,313
UBS FIN. 4.25% 1/3/00 1,000,000 999,764
WINDMILL FUNDING 6.11% 1/18/00 3,500,000 3,489,894
--------------
72,379,871
--------------
US TREASURY BILLS 4.90%
U.S. T-BILL 3.0% 1/6/00 6,000,000 5,997,500
--------------
FEDERAL HOME LOAN BANK 8.60%
FHLB VRN 5.92% 10/4/00 5,000,000 4,997,398
FHLB DN 1.95% 1/3/00 5,500,000 5,499,404
--------------
10,496,802
--------------
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
ACTIVA Schedule of Investments continued
MONEY MARKET FUND 12/31/99
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
CORPORATE BONDS 7.80%
AM. EXP. FLOATER 5.72% 7/12/00 2,500,000 2,499,238
KEY BANK VRN 6.38% 4/28/00 2,000,000 2,000,619
KEY CORP QTY FLT 6.31% 8/7/00 2,000,000 2,001,719
MORGAN STAN. DW 5.51% 1/19/00 3,000,000 3,000,000
--------------
9,501,576
--------------
MEDIUM TERM NOTE 2.50%
AT&T QTLY 7.77% 6/14/00 3,000,000 3,018,716
--------------
TOTAL SHORT TERM OBLIGATIONS - 100% (Cost $121,810,975) 122,384,478
==============
</TABLE>
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
ACTIVA Schedule of Investments
INTERMEDIATE BOND FUND - 12/31/99
<TABLE>
<CAPTION>
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
<S> <C> <C> <C>
BANKERS ACCEPTANCES 0.90%
CANADA-GOV 6.375% 11/30/04 1,480,000 1,446,700
--------------
US TREASURY NOTES 7.30%
US T-NOTES 6.25% 2/15/03 9,000,000 8,976,597
US T-NOTES 6.25% 4/30/01 2,500,000 2,502,225
--------------
11,478,822
--------------
US TREASURY STRIPS 0.50%
UST-STRIP PO 9.13% 5/15/18 2,500,000 720,500
--------------
FEDERAL HOME LOAN MORTGAGE 12.50%
FHLMC GOLD 6.5% 6/1/29 6,975,650 6,583,270
FHLMC GOLD 6.00% 6/1/29 4,984,186 4,568,305
FHLMC GOLD 6.50% 6/1/29 4,974,250 4,694,449
FHLMC 6.5% 8/15/24 4,000,000 3,832,640
--------------
19,678,664
--------------
FEDERAL NATL MORTGAGE ASSOC 27.40%
FNMA D/N 5/18/00 5,000,000 4,892,100
FNMA 6.00% 5/15/08 4,500,000 4,212,765
FNMA 4.625% 10/15/01 2,500,000 2,422,425
FNMA NT 5.125% 2/13/04 2,270,000 2,134,640
FNMA 6.625% 9/15/09 5,500,000 5,348,750
FNMA CMO 6.50% 9/25/23 5,000,000 4,818,025
FNMA 6.5% 9/18/24 2,800,000 2,681,980
FNMA #252715 6.5% 9/1/29 2,493,366 2,350,771
FNMA 6% #481427 1/1/29 4,946,473 4,529,090
FNMA #481473 6.0% 2/1/29 3,478,551 3,185,031
FNMA #490080 6.5% 3/1/29 2,396,971 2,259,888
FNMA #490179 6.5% 3/1/29 2,365,746 2,230,449
FNMA #496567 6.0% 4/1/14 2,511,975 2,385,573
--------------
43,451,487
--------------
GOVERNMENT NATL MORTGAGE ASSOC 6.00%
GNMA 6.5% 470387 5/15/29 4,985,125 4,682,877
GNMA 7% #490240 9/15/29 4,946,153 4,779,220
--------------
9,462,097
--------------
AIRLINES 0.70%
DELTA 10.125% 5/15/10 925,000 1,032,531
--------------
AUTOMOTIVE 4.00%
BWA 8% 10/1/19 1,810,000 1,760,225
DAIMLER 7.20% 9/1/09 2,000,000 1,967,500
DANA CORP 7% 3/15/28 1,743,000 1,522,946
DELPHI 7.125% 5/1/29 1,250,000 1,096,875
--------------
6,347,546
--------------
</TABLE>
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
ACTIVA Schedule of Investments continued
INTERMEDIATE BOND FUND - 12/31/99
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
<S> <C> <C> <C>
BANKING 7.60%
BSCH ISS 7.625% 11/3/09 1,000,000 991,250
BANK ONE 6.00% 2/17/09 1,000,000 891,250
BAC 6.25% 4/1/08 2,000,000 1,862,500
CHASE 6.66% 1/15/07 5,000,000 4,918,125
CHASE 7.125% 6/15/09 1,400,000 1,366,750
FIRST UNION 6.4% 4/1/08 1,400,000 1,288,000
NATL WEST 7.375% 10/1/09 650,000 636,188
--------------
11,954,063
--------------
BEVERAGES 0.60%
J SEAGRAM 7.6% 12/15/28 1,000,000 941,250
--------------
CHEMICALS 0.90%
DUPONT 6.875% 10/15/09 1,500,000 1,460,625
--------------
ELECTRIC UTILITY 7.30%
PP&L TRANS 6.60% 3/25/05 4,000,000 3,975,300
PECO 1999-A 5.80% 3/1/07 5,500,000 5,208,500
S.CAR E&G 6.125% 3/1/09 1,500,000 1,366,875
WPS RESOURCES 7% 11/1/09 1,000,000 963,750
--------------
11,514,425
--------------
ENTERTAINMENT 0.70%
DISNEY 5.8% 10/27/08 200,000 179,750
VIACOM 7.75% 6/1/05 950,000 958,313
--------------
1,138,063
--------------
FINANCIAL SERVICES 17.30%
ASSOCIATES CORP 4/20/04 3,500,000 3,320,625
CCIMT 6.65% 11/15/06 4,450,000 4,366,563
FINOVA 7.25% 11/8/04 560,000 553,700
FNCC 6.15% 9/15/04 1,250,000 1,224,950
FORD 6.4% 10/15/02 5,250,000 5,222,569
GMAC NT 5.75% 11/10/03 1,500,000 1,426,875
HALT 6.65% 7/15/05 5,000,000 4,964,650
SCAMT 6.35% 2/16/07 5,000,000 4,929,100
US WEST 6.375% 7/15/08 1,400,000 1,282,750
--------------
27,291,782
--------------
FOOD SERVICE 2.00%
KROGER 8% 9/15/29 1,650,000 1,608,750
SAFEWAY 7.5% 9/15/09 1,550,000 1,528,688
--------------
3,137,438
--------------
GAS UTILITY 0.70%
SOUTH UNION 8.25% 11/15/29 1,025,000 1,027,563
--------------
</TABLE>
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
ACTIVA Schedule of Investments continued
INTERMEDIATE BOND FUND - 12/31/99
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
<S> <C> <C> <C>
OIL & EXPLOR PROD & SER 2.00%
CHEVRON 6.625% 10/1/04 2,000,000 1,972,500
CONOCO INC. 6.95% 4/15/29 1,250,000 1,132,813
--------------
3,105,313
--------------
TELECOMMUNICATIONS 1.60%
MCI CORP. 6.50% 4/15/10 1,500,000 1,395,000
SPRINT CAP 6.875% 11/15/28 1,250,000 1,114,063
--------------
2,509,063
--------------
TOTAL FIXED INCOME - 100% (Cost $159,263,177) 157,697,931
==============
</TABLE>
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
ACTIVA Schedule of Investments
VALUE FUND - 12/31/99
<TABLE>
<CAPTION>
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
<S> <C> <C> <C>
AEROSPACE 2.10%
NORTHROP GRUMMAN CORP. 5,300 286,531
UNITED TECHNOLOGIES 34,000 2,210,000
--------------
2,496,531
--------------
AIRCRAFT ENGINES & ENGINE PARTS 1.10%
HONEYWELL INTERNATIONAL 23,400 1,349,888
--------------
AIRLINES 0.90%
AMR CORP/DEL 1,800 120,600
MESABA HOLDINGS, INC. *31,500 360,281
SKYWEST INC. 20,100 562,800
--------------
1,043,681
--------------
AUTOMOTIVE 2.10%
DELPHI AUTOMOTIVE SYSTEMS 35,300 555,975
FORD MOTOR CO DEL 20,500 1,095,469
GENERAL MOTORS CORP. 11,200 814,100
TRW INC. 1,900 98,681
--------------
2,564,225
--------------
AUTOMOTIVE PARTS & EQUIPMENT 0.60%
FEDERAL- MOGUL CORP. 34,100 686,263
--------------
BANKING 12.00%
BANK ONE CORP. 93,100 2,985,019
CITIGROUP INC. 158,200 8,789,977
MERCANTILE BANKSHARES 14,300 456,706
PACIFIC CENTURY FINANCIAL 8,500 158,844
PEOPLE'S BANK 30,500 644,313
US BANCORP 17,600 419,100
UNIONBANCAL CORPORATION 40,900 1,612,994
WACHOVIA CORP. 2,200 149,600
--------------
15,216,553
--------------
BEVERAGES - DOMESTIC 0.90%
PEPSICO INC. 29,600 1,043,400
--------------
BROADCASTING 3.10%
AT&T CORP.- LIBERTY MEDIA *40,300 2,287,025
CLEAR CHANNEL COMM. 6,200 553,350
SCRIPPS CO. CL-A 20,400 914,175
--------------
3,754,550
--------------
BUSINESS SERVICES 1.60%
FIRST DATA CORP. 38,300 1,888,669
--------------
</TABLE>
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
<TABLE>
<CAPTION>
ACTIVA Schedule of Investments continued
VALUE FUND - 12/31/99
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
<S> <C> <C> <C>
CHEMICALS 2.10%
AIR PRODUCTS & CHEMICALS 18,800 630,975
CABOT CORP. 5,100 103,913
DU PONT E I DE NEMOURS 25,400 1,673,225
GREAT LAKES CHEM CORP. 3,700 141,294
--------------
2,549,407
--------------
COMMUNICATIONS EQUIPMENT 1.30%
AMERICAN TOWER CORP. 49,200 1,503,675
GENERAL CABLE CORP. 4,900 37,056
--------------
1,540,731
--------------
COMMERCIAL SERVICES 0.20%
CONVERGYS CORP. *9,200 282,900
--------------
COMPUTERS 1.80%
ADAPTEC, INC. *16,100 802,988
COMPAQ COMPUTER CORP. 25,700 695,506
QUANTUM CORPORATION *12,000 181,500
UNISYS CORP. *14,300 456,706
--------------
2,136,700
--------------
CONTAINERS & PACKAGING 0.70%
SMURFIT-STONE CONTAINER *36,800 901,600
--------------
DIVERSIFIED 0.30%
SPIEKER PROPERTIES 10,200 371,663
--------------
ELECTRIC UTILITY 4.10%
CALPINE CORP. *10,000 640,000
DUKE ENERGY CORP. 10,700 536,338
EDISON INTERNATIONAL 9,000 235,688
MONTANA POWER CO. 14,700 530,119
PECO ENERGY CO. 17,200 597,700
PINNACLE WEST CAP 39,800 1,216,388
UNICOM CORPORATION 34,900 1,169,150
--------------
4,925,383
--------------
ELECTRICAL & ELECTRONIC 0.10%
ENDESA 4,300 86,806
--------------
ELECTRONICS 3.20%
ANALOG DEVICES INC. *5,200 483,600
MOTOROLA, INC. 18,600 2,738,850
3COM CORP. *15,000 705,000
--------------
3,927,450
--------------
</TABLE>
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
<TABLE>
<CAPTION>
ACTIVA Schedule of Investments continued
VALUE FUND - 12/31/99
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
<S> <C> <C> <C>
ENERGY 0.20%
DQE INC. 5,600 193,900
SUNCOR ENERGY INC. 800 33,400
--------------
227,300
--------------
ENTERTAINMENT 0.20%
VIACOM INC. - CLASS B *3,000 181,313
--------------
FINANCIAL SERVICES 0.70%
EDWARDS (A.G.), INC. 3,100 99,394
FANNIE MAE 12,300 767,981
--------------
867,375
--------------
FOOD & BEVERAGE 0.10%
SARA LEE COMMON STOCK 5,500 121,344
--------------
FOOD PRODUCTS 0.10%
MCCORMICK & CO., INC. 4,900 145,775
--------------
GAS UTILITY 0.40%
COLUMBIA GAS SYSTEM 7,300 461,725
--------------
HOTELS & LODGING 0.20%
STARWOOD HOTELS & RESORTS 8,100 190,350
--------------
INDUSTRIAL GOODS & SERVICES 1.40%
CLOROX COMPANY 20,000 1,007,500
WERNER ENTERPRISES, INC. 44,800 630,000
--------------
1,637,500
--------------
INFORMATIONAL SERVICES 0.10%
AFFILIATED COMPUTER SVCS *1,800 82,800
--------------
INSURANCE 5.00%
XL CAPITAL LTD. CLASS-A 2,000 103,750
AMER INT'L GROUP 31,200 3,373,500
CIGNA CORP. 19,900 1,603,194
CONSECO 29,000 518,375
MARSH MCLENNAN COS COM 4,600 440,163
--------------
6,038,982
--------------
INTERNET CONTENT 0.60%
REDBACK NETWORKS, INC. *4,000 710,000
--------------
INVESTMENT COMPANY 0.30%
LEGG MASON, INC. 8,400 304,500
--------------
</TABLE>
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
<TABLE>
<CAPTION>
ACTIVA Schedule of Investments continued
VALUE FUND - 12/31/99
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
<S> <C> <C> <C>
MACHINERY & EQUIPMENT 1.10%
CATERPILLAR, INC. 6,600 310,613
INGERSOLL - RAND CO. 17,900 985,619
--------------
1,296,232
--------------
MANUFACTURING-CAPITAL GOODS 1.10%
EATON CORP. 17,900 1,299,988
--------------
MANUFACTURING-CONSUMER GOODS 2.10%
MATTEL INC. 96,500 1,266,563
MINN. MINING & MANUFACTURING 13,000 1,272,375
--------------
2,538,938
--------------
MANUFACTURING - MISCELLANEOUS 1.60%
EASTMAN KODAK CO. 10,400 689,000
KIMBERLY-CLARK CORP. 18,400 1,200,600
--------------
1,889,600
--------------
MEDICAL EQUIPMENT & SUPPLIES 1.00%
BAXTER INTERNATIONAL 18,500 1,162,031
--------------
MEDICAL SERVICES 0.50%
COLUMBIA HCA HEALTHCARE 20,100 589,181
--------------
METALS & MINING 1.80%
ALCOA INC. 25,600 2,124,800
--------------
OFFICE/BUSINESS EQUIP & SUPPLIES 1.90%
DANKA BUSINESS SYSTEMS *27,000 342,563
I B M 18,200 1,965,600
--------------
2,308,163
--------------
OIL & GAS EQUIPMENT/SERVICES 0.30%
SANTA FE INTERNATIONAL 1,500 38,813
ENRON CORP. 6,000 266,250
--------------
305,063
--------------
OIL & GAS EXPLOR PROD & SER 10.20%
TRANSOCEAN OFFSHR *49,500 1,630,406
CHEVRON CORP. 25,800 2,234,925
CONOCO INC. 152,600 3,795,925
QUAKER STATE CO. 216,600 2,206,613
REPSOL S.A. ADR 106,900 2,485,425
--------------
12,353,294
==============
</TABLE>
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
<TABLE>
<CAPTION>
ACTIVA Schedule of Investments continued
VALUE FUND - 12/31/99
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
<S> <C> <C> <C>
OIL & GAS TRANSMISSION 1.00%
EL PASO ENERY CORP. 32,000 1,242,000
--------------
PAPER PRODUCTS 1.80%
BOWATER, INC. 2,500 135,781
TEMPLE - INLAND INC. 9,900 652,781
WEYERHAUESER 18,600 1,335,713
--------------
2,124,275
--------------
PHARMACEUTICALS 2.80%
ABBOTT LABS 27,400 994,963
AMERICAN HOME PRODUCTS 24,400 962,275
PHARMACIA & UPJOHN 32,100 1,444,500
--------------
3,401,738
--------------
PRINTING & PUBLISHING 1.00%
GANNETT COMPANY, INC. 15,100 1,231,594
--------------
PUBLISHING 0.10%
A.H. BELO CORPORATION 3,500 66,719
--------------
RAILROADS 0.00%
CANADIAN NATIONAL RAILWAY 1,900 50,350
--------------
RESTAURANTS 1.20%
MCDONALD'S CORP. 36,200 1,459,313
--------------
RETAIL STORES 2.20%
DAYTON-HUDSON CORP. 31,500 2,313,281
INTIMATE BRANDS INC. 8,000 345,000
--------------
2,658,281
--------------
TOBACCO 0.70%
PHILIP MORRIS COS., INC. 38,200 885,763
--------------
TELECOMMUNICATIONS 15.50%
AT&T CORP. 123,100 6,247,325
ASSOCIATES FIRST CAPITAL 54,400 1,492,600
MCI WORLDCOM INC. *53,850 2,857,416
SBC COMMUNICATIONS INC. 82,800 4,036,500
SPRINT CORP. 44,500 2,995,406
SPRINT CORP. PCS *14,300 1,465,750
--------------
19,094,997
--------------
</TABLE>
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
<TABLE>
<CAPTION>
ACTIVA Schedule of Investments continued
VALUE FUND - 12/31/99
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
<S> <C> <C> <C>
TELECOMMUNICATIONS-SRVS & EQUIP 2.50%
ECHOSTAR COMMUNICATIONS *30,500 2,973,750
--------------
UTILITIES - TELECOMMUNICATIONS 1.90%
BELL ATLANTIC 36,400 2,240,875
--------------
WASTE MANAGEMENT 0.20%
REPUBLIC SERVICES, INC. *14,000 201,250
--------------
TOTAL COMMON STOCK - 100% (Cost $120,425,644) 121,233,559
==============
</TABLE>
* Non-dividend producing as of December 31, 1999
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
ACTIVA Schedule of Investments
GROWTH FUND - 12/31/99
<TABLE>
<CAPTION>
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
<S> <C> <C> <C>
COMMERCIAL PAPER - 2.70%
FINANCIAL SERVICES 2.70%
AMER EXP 3.25% 01/06/00 900,000 900,000
--------------
TOTAL COMMERCIAL PAPER (Cost $900,000) 900,000
--------------
COMMON STOCK - 97.30%
AIRCRAFT ENGINES & ENGINE PARTS 2.20%
HONEYWELL INTERNATIONAL 12,900 744,169
--------------
BANKING 5.10%
CHASE MANHATTAN CORP. 8,600 668,113
CITIGROUP INC. 19,000 1,055,688
--------------
1,723,801
--------------
BEVERAGES - DOMESTIC 1.10%
COCA-COLA CO. 5,600 326,200
COCA-COLA ENTERPRISES 1,600 32,200
--------------
358,400
--------------
BREWERY 1.30%
ANHEUSER-BUSCH 6,200 439,425
--------------
BROADCASTING 3.40%
CBS CORPORATION *17,800 1,138,088
--------------
BUSINESS SERVICES 1.00%
FIRST DATA CORP. 6,500 320,531
--------------
CHEMICALS 1.80%
DOW CHEMICAL COMPANY 4,600 614,675
--------------
COMPUTER SOFTWARE 7.90%
CITRIX SYSTEMS INC. *1,300 159,900
ELECTRONIC DATA SERVICES 10,400 696,150
MICROSOFT *13,500 1,576,125
ORACLE CORP. *2,000 224,125
--------------
2,656,300
--------------
COMPUTERS 10.10%
CISCO SYSTEMS *14,900 1,596,155
DELL COMPUTER CORP. *9,300 474,300
INTEL CORPORATION 8,500 699,656
SUN MICROSYSTEMS *5,200 402,675
VERITAS SOFTWARE *1,900 271,938
--------------
3,444,724
--------------
</TABLE>
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
<TABLE>
<CAPTION>
ACTIVA Schedule of Investments continued
GROWTH FUND - 12/31/99
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
<S> <C> <C> <C>
CONSUMER GOODS & SERVICES 3.50%
BLACK & DECKER 7,700 402,325
COLGATE-PALMOLIVE CO. 14,000 910,000
--------------
1,312,325
--------------
DRUGS 1.40%
BIOGEN, INC. *5,400 456,300
--------------
ELECTRICAL & ELECTRONIC 2.60%
TERADYNE INC. *13,300 877,800
--------------
ELECTRICAL EQUIPMENT 4.00%
GENERAL ELECTRIC CO. 8,700 1,346,325
--------------
ELECTRONICS 6.60%
EMC CORP/MASS 8,500 928,625
SOLECTRON CORP. *4,700 447,088
TEXAS INSTRUMENTS INC. 8,500 823,438
--------------
2,199,151
--------------
ENTERTAINMENT 2.90%
DISNEY WALT COMPANY 10,300 301,275
USA NETWORKS INC. *5,600 309,400
VIACOM INC - CLASS B *5,700 344,494
--------------
955,169
--------------
FINANCIAL SERVICES 1.10%
MORGAN ST DEAN WITTER 2,500 356,875
--------------
FOOD PRODUCTS 0.90%
PROCTER & GAMBLE CO. 2,800 306,775
--------------
INFORMATIONAL SERVICES 1.00%
AMERICA ONLINE, INC. 4,300 324,381
--------------
INSURANCE 4.30%
ACE LIMITED 18,900 315,394
AMER INT'L. GROUP 7,900 854,188
MARSH MCLENNAN COS COM 3,000 287,063
--------------
1,456,645
--------------
LEISURE & TOURISM 0.90%
HARLEY-DAVIDSON INC. 5,400 345,938
--------------
MANUFACTURING-CAPITAL GOODS 0.80%
DANAHER CORP. 5,600 270,200
--------------
</TABLE>
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
<TABLE>
<CAPTION>
ACTIVA Schedule of Investments continued
GROWTH FUND - 12/31/99
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
<S> <C> <C> <C>
MEDICAL EQUIPMENT & SUPPLIES 4.90%
BAXTER INTERNATIONAL 5,900 370,594
GUIDANT CORP COMMON STOCK *6,900 324,300
TYCO INTERNATIONAL 24,300 944,663
--------------
1,639,557
--------------
MERCHANDISING 1.90%
OMNICOM GROUP COM 6,200 620,000
--------------
OIL & GAS EQUIPMENT/SERVICES 1.30%
HALLIBURTON CO. 10,800 434,700
--------------
OIL & GAS EXPLOR PROD & SER 5.00%
CONOCO INC. 24,800 616,900
EXXON MOBIL CORP. COM 3,900 314,194
TOTAL FINA SA - SPON ADR 13,000 900,250
--------------
1,831,344
--------------
PHARMACEUTICALS 5.20%
AMGEN INC. 8,400 504,525
BRISTOL MYERS SQUIBB CO. 8,200 526,338
PFIZER INC. 10,900 353,569
WARNER LAMBERT CO. 4,400 360,525
--------------
1,744,957
--------------
RETAIL STORES 6.10%
BEST BUY COMPANY, INC. *8,900 446,669
CVS CORP. 11,000 439,313
HOME DEPOT INC. 1,500 102,844
STAPLES, INC. *21,000 435,750
WAL-MART STORES, INC. 8,800 608,300
--------------
2,032,876
--------------
TELECOMMUNICATIONS 7.40%
MCI WORLDCOM INC. *16,050 851,653
NOKIA CORP ADR 6,900 1,311,000
VOICESTREAM WIRELESS CORP. *3,600 512,325
--------------
2,674,978
--------------
TELECOMMUNICATIONS-SRVS & EQUIP 1.80%
LUCENT TECHNOLGIES 4,400 329,175
NORTEL NETWORKS CORP. 2,600 262,600
--------------
591,775
--------------
TOTAL COMMON STOCK (Cost $28,605,806) 33,218,184
--------------
--------------
TOTAL INVESTMENTS - 100% (Cost $29,505,806) 34,118,184
==============
</TABLE>
*Non-dividend producing as of December 31, 1999
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
ACTIVA Schedule of Investments
INTERNATIONAL FUND - 12/31/99
<TABLE>
<CAPTION>
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
<S> <C> <C> <C>
ADVERTISING 1.50%
SAATCHI & SAATCHI PLC 40,800 245,463
ASATSU, INC. 5,200 350,596
--------------
596,059
--------------
AEROSPACE 0.20%
BPS BRITISH AEROSPACE PLC 10,291 68,146
--------------
AUTOMOTIVE 0.90%
BAYERISCHE MOTOREN WERKE 11,700 357,293
--------------
BANKING 3.00%
DEM BAYER HYPO VEREINS 4,700 321,162
ESP BANCO SANTANDER 30,000 339,847
FFR CREDIT LYONNAIS 6,100 279,114
DEM DEUTSCHE BANK AG-REG 3,200 270,426
--------------
1,210,549
--------------
BANKING & FINANCIAL SERVICES 0.60%
YEN - DAI-ICHI BANK 18,000 167,970
SAKURA BANK LTD. 15,000 86,770
--------------
254,740
--------------
BROADCASTING 3.60%
ADR GRUPO TELEVISA SA 1,800 122,850
FFR TV FRANCAISE 1,500 786,123
ITL MEDIA SET 17,000 264,541
EM.TV & MERCHANDISING AG 4,200 277,260
--------------
1,450,774
--------------
BUILDING PRODUCTS 0.50%
BPS HANSON PLC 22,100 185,250
--------------
BUSINESS SERVICES 0.70%
FFR VIVENDI 3,200 289,132
--------------
CHEMICALS 0.20%
HKD YIZHENG CHEMICAL 342,000 95,680
--------------
COMMERCIAL SERVICES 0.60%
FFR BOUYGUES 400 254,381
--------------
COMPUTER SOFTWARE 2.50%
BPS - EIDOS PLC 3,400 299,278
SAP AG 500 305,127
INTERSHOP COMMUNICATIONS 900 257,607
YEN - FUJI SOFT ABC CORP. 1,700 132,890
--------------
994,902
--------------
</TABLE>
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
<TABLE>
<CAPTION>
ACTIVA Schedule of Investments continued
INTERNATIONAL FUND - 12/31/99
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
<S> <C> <C> <C>
COMPUTERS 4.70%
ASM LITHOGRAPHY - ADR *6,000 682,500
CMG PLC 4,400 325,901
EQUANT NV-NY REG. SHRS *1,600 179,200
NLG EQUANT N.V. 3,800 431,622
YEN - FUJITSU LTD. 5,800 264,100
--------------
1,883,323
--------------
DIVERSIFIED 2.90%
BILLITON PLC 62,800 367,170
BPS INVENSYS PLC 71,700 390,255
YEN - RYOHIN KEIKAKU CO. 2,100 420,862
--------------
1,178,287
--------------
ELECTRICAL & ELECTRONIC 2.80%
BPS MARCONIN PLC 24,000 424,060
YEN HITACHI 12,000 192,300
OMRON CORP. 7,000 161,081
TAIWAN SEMICONDUCTOR-ADR *7,600 342,000
--------------
1,119,441
--------------
ELECTRICAL EQUIPMENT 1.20%
KEYENCE CORP. 1,200 486,613
--------------
ELECTRONICS 16.60%
BPS ARM HOLDINGS 15,000 1,002,973
SAMSUNG ELEC. GDR - 144A 1,900 232,275
ROYAL PHILIPS ELECTRNICS 4,000 540,000
EPCOS AG 4,200 313,240
SGD CHARTERED SEMI 50,000 273,216
FANUC, LTD. 6,100 775,464
YEN KYOCERA CORPORATION 3,100 802,716
MURATA MANUFACTURING CO. 4,000 938,050
YEN SONY CORP. 3,200 947,430
YEN TOKYO ELECTRON 2,000 273,598
STMICROELECTRONICS NV-NY 4,000 605,750
--------------
6,704,712
--------------
ENERGY 1.00%
BPS SHELL TRNSPORT/TRADNG 49,400 410,299
--------------
FINANCIAL SERVICES 2.80%
FORTIS (B) 9,400 339,351
YEN NOMURA SECURITIES 21,000 378,591
ADR ORIX CORP. 3,700 419,719
--------------
1,137,661
--------------
</TABLE>
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
<TABLE>
<CAPTION>
ACTIVA Schedule of Investments continued
INTERNATIONAL FUND - 12/31/99
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
<S> <C> <C> <C>
FOREST PRODUCTS 0.50%
STORA ENSO OYJ R SHARES 11,500 200,628
--------------
HEALTH CARE 0.90%
FFR RHODIA 15,800 357,335
--------------
INSURANCE 2.50%
FFR AXA 2,500 348,716
SKANDIA FORSAKRINGS AB 10,900 329,735
AEGON NV 3,500 338,285
--------------
1,016,736
--------------
LEISURE TIME 0.40%
YEN ROUND ONE CORP. 11 148,329
--------------
MACHINERY & EQUIPMENT 2.70%
DEM MANNESMANN AG 3,600 868,968
THK CO. LTD. 5,400 217,921
--------------
1,086,889
--------------
MANUFACTURING - MISCELLANEOUS 1.20%
FLEXTRONICS *6,000 276,000
DEM THYSSEN KRUPP AG 6,200 189,022
--------------
465,022
--------------
MEDICAL EQUIPMENT & SUPPLIES 2.50%
BPS SMITH & NEPHEW 63,000 211,643
BIOVAIL CORP INT'L. *4,100 384,375
FRESENIUS MEDICAL CARE AG 4,600 393,606
--------------
989,624
--------------
METAL-ALUMINUM 0.90%
PECHINEY SA 5,000 357,535
--------------
METALS & MINING 0.50%
CAD FALCONBRIDGE LTD. 10,100 179,810
--------------
OIL & GAS EQUIPMENT/SERVICES 0.90%
SCHLUMBERGER LTD. ADR 6,600 371,250
--------------
OIL & GAS EXPLOR PROD & SERVICES 2.20%
TRANSOCEAN SEDCO FOREX 1,278 43,045
ANDERSON EXPLORATION LTD. *15,000 178,547
ITL ENTE NAZ IDROC 24,700 135,921
FFR TOTAL S.A. 'B' 2,748 366,968
PRECISION DRILLING CORP. *7,000 179,813
--------------
904,294
--------------
</TABLE>
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
<TABLE>
<CAPTION>
ACTIVA Schedule of Investments continued
INTERNATIONAL FUND - 12/31/99
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
<S> <C> <C> <C>
PAPER PRODUCTS 0.30%
ARACRUZ CELULOSE S.A. 3,800 99,750
--------------
PETROLEUM-RETAIL 0.60%
PETROLEO BRASILEIRO - ADR 9,600 246,221
--------------
PHARMACEUTICALS 0.40%
SHIRE PHARMACEUTICALS *5,000 145,625
--------------
RETAIL STORES - GROCERY 2.70%
FFR CARREFOUR SA 2,400 442,890
YEN - SEVEN ELEVEN JAPAN 4,000 633,184
--------------
1,076,074
--------------
STEEL 1.20%
CORUS GROUP PLC 178,200 464,814
--------------
TRANSPORTATION & SHIPPING 2.20%
TNT POST GROUP NV 12,000 344,080
CHINA SHIPPING DEV. CO. 540,000 106,967
YAMATO TRANSPORT CO., LTD. 11,000 425,640
--------------
876,687
--------------
TELECOMMUNICATIONS 20.20%
BPS BRIT TELECOM 10,300 249,533
COLT TELECOM GROUP PLC 5,900 304,454
BPS VODAFONE 34,900 172,060
CHINA TELECOM - ADR *2,000 257,125
USD GLOBAL TELESYSTEMS 13,600 470,900
ITL TELECOM ITALIA 41,000 458,259
KOREA TELECOM CORP. 4,200 313,950
DEM DEUTSCHE TELEKOM 6,000 427,530
EUR - SONERA GROUP PLC 7,200 493,806
MAGYAR TAVKOZLESI RT, ADR 5,400 194,400
DAK TELE DANMANK 'B' 5,000 371,858
NTT DATA CORPORATION 28 642,955
YEN NTT MOBILE COMM. 18 691,225
NTL INCORPORATED *1,700 212,075
YEN HIKARI TSUSHIN, INC. 100 200,313
KDD CORP.- TOKYO SHRS. 4,100 567,286
NOKIA CORP.- ADR 4,800 912,000
YEN NIPPON TELEGRAPH TELE 35 598,495
OKI ELECTRIC INDUSTRY CO. 28,000 164,706
PARTNER COMM. CO. - ADR *3,600 93,150
TELE NORTE LESTE - ADR 4,500 114,750
TELEFONOS DE MEXICO 3,500 393,750
--------------
8,304,580
--------------
</TABLE>
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
<TABLE>
<CAPTION>
ACTIVA Schedule of Investments continued
INTERNATIONAL FUND - 12/31/99
% OF SHARES OR MARKET
SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE
------------ ----------- --------------
<S> <C> <C> <C>
TELECOMMUNICATIONS-SERVICES & EQUIPMENT 7.60%
THUS PLC 22,400 140,372
ERICSSON TEL-SP ADR 14,200 932,763
KONINKLIJKE KPN NV 4,300 419,941
UNITED PAN-EUROPE COMM. 1,900 243,194
KPNQWEST NV 3,600 239,828
NORTEL NETWORKS CORP. 6,000 606,000
MATSUSHITA COMM. IND. 1,800 474,888
--------------
3,056,986
--------------
WHOLESALE DISTRIBUTION 3.30%
YEN - SOFTBANK CORP. 1,400 1,337,893
--------------
TOTAL COMMON STOCK - 100% (Cost $27,677,077) 40,363,324
==============
</TABLE>
* Non-dividend producing as of December 31, 1999
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
ACTIVA Statement of Assets and Liabilities
<TABLE>
<CAPTION>
MONEY MARKET INTERMEDIATE INTERNATIONAL
As of December 31, 1999 FUND BOND FUND VALUE FUND GROWTH FUND FUND
------------- ------------- ------------- ------------- -------------
ASSETS
<S> <C> <C> <C> <C> <C>
Investments at value $122,384,478 $157,697,931 $121,233,559 $34,118,184 $40,363,324
Cash 1,077 3,059,828 164,087,156 29,695 994,219
Receivables:
Investments sold -- -- -- 69,469 300,030
Investment income 397,195 1,595,307 473,729 13,408 10,836
Other assets -- -- 107,288 -- 10
Foreign currency holdings -- -- -- -- 54
------------- ------------- ------------- ------------- -------------
Total Assets 122,782,750 162,353,066 285,901,732 34,230,756 41,668,473
------------- ------------- ------------- ------------- -------------
LIABILITIES
Payables:
Investments purchased -- -- 106,245,261 655,355 206,357
Income payable 566,380 -- -- -- --
Advisory fees 103,802 141,053 289,819 52,406 71,559
Transfer agent fees 264 41 63,471 198 100
12b-1 fees -- 61,393 72,211 11,367 12,628
Service fees 44,487 61,393 72,461 11,367 12,628
Accrued expenses 9,100 10,600 17,070 5,650 6,025
------------- ------------- ------------- ------------- -------------
Total Liabilities 724,033 274,480 106,760,293 736,343 309,297
------------- ------------- ------------- ------------- -------------
NET ASSETS $122,058,717 $162,078,586 $179,141,439 $33,494,413 $41,359,176
============= ============= ============= ============= =============
SHARES OUTSTANDING 122,060,187 16,418,415 27,085,682 2,941,725 2,911,935
============= ============= ============= ============= =============
NET ASSET VALUE PER SHARE $1.00 $9.87 $11.39 $14.20
Class A based on net assets of
$178,437,477 and 26,978,952
shares outstanding $6.61
Class R based on net assets of
$703,962 and 106,730
shares outstanding
$6.60
</TABLE>
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
ACTIVA Statement of Operations
For the year or period ended December 31, 1999
<TABLE>
<CAPTION>
MONEY MARKET INTERMEDIATE INTERNATIONAL
FUND** BOND FUND* VALUE FUND GROWTH FUND* FUND*
------------- ------------- ------------- ------------- ------------
INVESTMENT INCOME
<S> <C> <C> <C> <C> <C>
Interest $2,481,410 $3,528,866 $337,360 $21,388 $47,710
Dividends -- -- 4,131,443 71,774 24,054
Miscellaneous 251 9,774 5,698 291 300
------------- ------------- ------------- ------------- -------------
Total Investment Income 2,481,661 3,538,640 4,474,501 93,453 72,064
------------- ------------- ------------- ------------- -------------
EXPENSES
Advisory fees 156,807 188,433 1,062,092 69,526 92,574
12b-1 fees -- 82,010 428,188 15,073 16,337
Service fees 67,204 82,010 97,811 15,073 16,337
Shareholder report 628 633 73,048 633 633
Fund accounting fees 16,183 19,044 48,901 12,649 13,600
Audit fees 1,623 1,639 26,798 1,639 1,639
Custodian fees 4,914 6,480 35,388 2,152 2,310
Insurance 1,337 2,200 12,102 393 391
Legal fees 5,586 5,593 67,270 5,593 5,593
Organization expense 21,391 21,391 30,692 21,391 21,391
Registration fees 109 116 25,011 116 116
Transfer agent fees 312 46 256,331 203 105
Transfer agent fees - Class R -- -- 1,046 -- --
------------- ------------- ------------- ------------- ------------
Total Expenses 276,094 409,595 2,164,678 144,441 171,026
Fees paid indirectly -- -- (18,150) -- --
------------- ------------- ------------- ------------- ------------
Net Expenses 276,094 409,595 2,146,528 144,441 171,026
------------- ------------- ------------- ------------- ------------
Net Investment Income (Loss) 2,205,567 3,129,045 2,327,973 (50,988) (98,962)
------------- ------------- ------------- ------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) on
security transactions (1,470) (520,543) (16,305,655) (507,647) (422,122)
Net realized gain (loss) on
foreign currency transactions -- -- -- -- 48,032
Changes in net unrealized
appreciation or depreciation
of investments
and foreign currency -- (1,565,246) (1,651,637) 4,612,378 12,686,197
------------- ------------- ------------- ------------- ------------
Net Gain (Loss) on Investments (1,470) (2,085,789) (17,957,292) 4,104,731 12,312,107
------------- ------------- ------------- ------------- ------------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS $2,204,097 $1,043,256 ($15,629,319) $4,053,743 $12,213,145
============= ============= ============= ============= ============
</TABLE>
* Period from August 30, 1999 (inception) to December 31, 1999
** Period from August 19, 1999 (inception) to December 31, 1999
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
ACTIVA Statement of Changes in Net Assets
<TABLE>
<CAPTION>
MONEY MARKET INTERMEDIATE INTERNATIONAL
FUND** BOND FUND* VALUE FUND GROWTH FUND* FUND*
For the year or period ended December 31, 1999 1999 1999 1998 1999 1999
----------- ----------- -------------------------- ----------- -----------
NET ASSETS FROM OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
Net investment income $2,205,567 $3,129,045 $2,327,973 $1,665,189 ($50,988) ($98,962)
Net realized gain (loss) on investments (1,470) (520,543) (16,305,655) 25,406,792 (507,647) (374,090)
Net increase (decrease) in unrealized
appreciation -- (1,565,246) (1,651,637) (10,357,465) 4,612,378 12,686,197
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations 2,204,097 1,043,256 (15,629,319) 16,714,516 4,053,743 12,213,145
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income:
Class A (2,205,567) (3,135,031) (2,385,633) (1,662,878) -- --
Class R -- -- (9,561) (1,625) -- --
Net realized gain from investment transactions:
Class A -- -- -- (25,670,393) -- --
Class R -- -- -- (19,517) -- --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions to shareholders (2,205,567) (3,135,031) (2,395,194) (27,354,413) -- --
CAPITAL SHARE TRANSACTIONS
Net proceeds from sale of shares:
Class A 385,892,878 161,036,335 43,711,117 65,648,672 29,440,970 29,159,031
Class R -- -- 761,794 135,152 -- --
Net asset value of shares issued to shareholders in
reinvestment of investment income and realized gain
from security transactions:
Class A 1,640,409 3,135,026 2,333,242 25,976,297 -- --
Class R -- -- 9,566 21,142 -- --
Payment for shares redeemed:
Class A (265,473,100) (1,000) (29,493,812) (40,349,536) (300) (13,000)
Class R -- -- (111,360) -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets derived
from capital share transactions 122,060,187 164,170,361 17,210,547 51,431,727 29,440,670 29,146,031
----------- ----------- ----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets 122,058,717 162,078,586 (813,966) 40,791,830 33,494,413 41,359,176
Net Assets, beginning of year or period -- -- 179,955,405 139,163,575 -- --
----------- ----------- ----------- ----------- ----------- -----------
Net Assets, end of year or period $122,058,717 $162,078,586 $179,141,439 $179,955,405 $33,494,413 $41,359,176
=========== =========== =========== =========== =========== ===========
Net Assets Consist of:
Capital $122,060,187 $164,170,361 $195,278,066 $178,067,593 $29,440,670 $29,146,031
Undistributed net investment
income (loss) -- -- -- 6,548 (50,988) (98,962)
Return of capital -- (5,986) (60,670) -- -- --
Undistributed net realized
loss from investments (1,470) (520,543) (16,883,872) (578,288) (507,647) (374,090)
Unrealized appreciation (depreciation) of
investments and foreign currency -- (1,565,246) 807,915 2,459,552 4,612,378 12,686,197
----------- ----------- ----------- ----------- ----------- -----------
$122,058,717 $162,078,586 $179,141,439 $179,955,405 $33,494,413 $41,359,176
TRANSACTIONS IN FUND SHARES
Shares sold
Class A 385,892,878 16,103,631 5,644,826 8,659,484 2,941,753 2,912,903
Class R -- -- 101,720 15,908 -- --
Reinvested distributions -- -- -- -- -- --
Class A 1,640,409 314,884 352,454 3,684,581 -- --
Class R -- -- 1,449 3,008 -- --
Shares redeemed
Class A (265,473,100) (100) (4,054,442) (5,307,166) (28) (969)
Class R -- -- (15,356) -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net increase in fund shares 122,060,187 16,418,415 2,030,651 7,055,815 2,941,725 2,911,934
Shares outstanding, beginning of
year or period -- -- 25,055,031 17,999,216 -- --
----------- ----------- ----------- ----------- ----------- -----------
Shares outstanding, end of
year or period 122,060,187 16,418,415 27,085,682 25,055,031 2,941,725 2,911,934
</TABLE>
* Period from August 30, 1999 (inception) to December 31, 1999
** Period from August 19, 1999 (inception) to December 31, 1999
ACTIVA Mutual Funds Annual Report
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
ACTIVA Notes to Financial Statements
1. ORGANIZATION
Activa Mutual Fund Trust (Trust) was organized as a Delaware business trust on
February 2, 1998. The Trust consists of five funds, each open-end management
investment companies registered under the Investment Company Act of 1940. The
funds are: the Activa Money Market Fund (Money Market Fund), the Activa
Intermediate Bond Fund (Intermediate Bond Fund), the Activa Value Fund (Value
Fund), the Activa Growth Fund (Growth Fund) and the Activa International Fund
(International Fund) collectively referred to as the Funds. The Value Fund is
the successor to Amway Mutual Fund.
2. SIGNIFICANT ACCOUNTING POLICIES
Investment Objectives
The Money Market Fund's investment objective is to seek a high level of current
income as is consistent with preservation of capital and liquidity. The Money
Market Fund invests in a broad spectrum of high quality U.S. dollar-denominated
money market securities, with the average weighted maturity of the securities
held not to exceed 90 days.
The Intermediate Bond Fund's investment objective is to seek a high level of
current income as is consistent with moderate risk of capital and maintenance of
liquidity. The Intermediate Bond Fund invests primarily in investment-grade debt
securities, with average maturity of three to ten years.
The Value Fund's investment objective is to maximize long-term capital
appreciation, and invests primarily in common stocks of large and medium size
U.S. companies which are considered by the investment manager to be undervalued.
The Growth Fund seeks long-term growth of capital, and invests primarily in
common stocks believed by the investment manager to have long-term growth
potential.
The International Fund seeks maximum long-term capital appreciation. The
International Fund invests primarily in common stocks of large and medium size
non-U.S. companies which are believed by the investment manager to have
potential for above-average growth of earnings.
Classes of Shares
The Value Fund offers two classes of shares (Class A and Class R). The Class R
shares are offered to tax-exempt retirement and benefit plans of Amway
Corporation and its affiliates, and are not subject to any sales charges or
12b-1 distribution fees. Each share of Class A and Class R represents an equal
proportionate interest in the Value Fund and, generally, will have identical
voting, dividend, liquidation, and other rights and the same terms and
conditions. Each class will have exclusive voting rights with respect to matters
affecting only that class. Each class bears different distribution, shareholder
servicing and transfer agent expenses. Income, non-class specific expenses, and
realized and unrealized gains or losses on investments are allocated to each
class of shares based upon its relative net assets.
Security Valuation
Investments in securities listed or admitted to trading on a national securities
exchange are valued at their last reported sale price before the time of
valuation. If a security is traded only in the over-the-counter market, or if no
sales have been reported for a listed security on that day, it is valued at the
mean between the current closing bid and ask prices. Short-term securities
maturing within 60 days are valued at amortized cost, which approximates fair
value. Portfolio debt securities with remaining maturities greater than 60 days
are valued by pricing agents approved by the Board of Trustees. Foreign
securities are converted to U.S. dollars using exchange rates at the close of
the New York Stock Exchange. Securities for which market quotations are not
readily available, including any restricted securities (none at December 31,
1999), and other assets of the Funds, are valued at fair market value as
determined by the Fund's Board of Trustees.
Derivative Transactions
The Funds (except the Money Market Fund) may trade in derivative contracts to
hedge portfolio holdings and for investment purposes. Hedging activities are
intended to reduce various risks associated with fluctuations in foreign
currency exchange rates. When entering into a forward currency contract, the
fund agrees to receive or deliver a fixed
ACTIVA Mutual Funds Annual Report
30
<PAGE>
ACTIVA Notes to Financial Statements continued
quantity of foreign currency for an agreed-upon price on an agreed future date.
These contracts are valued daily. The Fund's net equity in the contracts is
included as unrealized gains or losses in the statement of assets and
liabilities. This unrealized gain or loss is the difference between the forward
foreign exchange rates at the dates of entry into the contracts and the forward
rates at the reporting date. The current year change in unrealized gains and
losses and realized gains and losses are included in the statement of
operations.
Security Transactions
Security transactions are accounted for on the trade date. Dividend income is
recorded on the ex-dividend date. Interest income is recorded on the accrual
basis. Original issue discounts are accreted and premium is amortized on debt
securities to interest income over the life of a security with a corresponding
adjustment in the cost basis. Realized gains and losses from security
transactions and unrealized appreciation and depreciation of investments are
reported on a specific identification basis. Dividends and distributions to
shareholders are recorded by the Funds on the ex-dividend date.
Foreign Currency Translation
Investment securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollar amounts at date of valuation.
Purchases and sales of investment securities and income and expense items
denominated in foreign currencies are translated into U.S. dollar amounts on the
respective dates of such transactions.
Net realized gains and losses from foreign currency and investment transactions
disclosed in the Statement of Operations consist of net gains and losses on
disposition of foreign currency, currency gains and losses realized between
trade and settlement dates on security transactions, and the difference between
the amount of net investment income accrued and the amount actually received in
U.S. dollars. Net unrealized foreign exchange gains and losses arise from
changes in fair values of assets and liabilities other than investments in
securities at period-end, resulting from changes in exchange rates. The effects
of foreign currency exchange rates on foreign securities held are included in
net realized and unrealized gain or loss on investments.
Reorganization Costs
Reorganization costs incurred prior to June 30, 1998 in connection with the
reorganization of Amway Mutual Fund and the issuance of Class R shares are being
amortized over a period of 60 months using the straight-line method in the Value
Fund.
Federal Income Taxes
It is the Funds' policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to make distributions of
income and capital gains sufficient to relieve it from substantially all federal
income taxes.
Dividend Distributions
The Money Market Fund and Intermediate Bond Fund declare dividends daily and
monthly respectively, and distribute dividends monthly, and capital gains (if
any) are distributed annually. The Value Fund, Growth Fund and International
Fund declare and distribute dividends and capital gains (if any) annually.
Use of Estimates
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 increases and decreases in net
assets from operations during the reporting period. Actual results could differ
from those estimates.
3. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
The Funds have entered into investment advisory agreements with Activa Asset
Management LLC (the Adviser), effective June 11, 1999. The Funds employ the
investment adviser to provide investment advice and manage on a regular basis
the investment portfolios for the Funds. Except when otherwise specifically
directed by the Funds, the Adviser will make investment decisions on behalf of
the Funds and place all orders for the purchase and sale of portfolio securities
for the
ACTIVA Mutual Funds Annual Report
31
<PAGE>
ACTIVA Notes to Financial Statements continued
Funds' accounts. The Adviser shall be permitted to enter into an agreement with
another advisery organization (sub-adviser), whereby the sub-adviser will
provide all or part of the investment advice and services required to manage the
Funds' investment portfolios as provided for in these agreements. In return for
these services, the Funds pay the adviser an annual rate as follows:
FUND % OF AVERAGE NET ASSETS
- ---- -----------------------
MONEY MARKET .35% until assets total $500 million; when assets reach
$500 million, .35% on first $100 million; .325% on next
$100 million; .30% on assets in excess of $200 million
Intermediate Bond .40% on first $50 million; .32% on assets in excess of
$50 million
Value .65% on first $100 million; .60% on next $50 million, .55%
on next $50 million; when assets reach $200 million, .60%
on first $200 million, .55% on assets in excess of $200
million
Growth .70% on first $25 million; .65% on next $25 million; .60%
on assets in excess of $50 million
International .85% on first $50 million; .75% on assets in excess of $50
million
As permitted by the above agreements, the Adviser has retained the following
sub-advisers:
FUND SUB-ADVISER
- ---- -----------
Money Market JP Morgan Investment Management, Inc.
Intermediate Bond Van Kampen Management, Inc.
Value Ark Asset Management Co., Inc.*
Growth State Street Research & Management Company
International Nicholas-Applegate Capital
Management
* Wellington Management Company, LLP became sub-adviser for the Value Fund
effective December 30, 1999. Prior to that agreement, sub-advisery services
were provided by Ark Asset Management Co., Inc. as disclosed above.
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Value Fund,
Intermediate Bond Fund, Growth Fund and International Fund have entered into a
Plan and Agreement of Distribution with Activa Asset Management LLC. Under the
terms of the agreement, Activa Asset Management LLC provides services in
connection with distributing the Funds' shares (except the Money Market Fund and
Value Fund Class R). For these services rendered, the Funds compensate Activa
Asset Management LLC monthly at a maximum annual rate of .25 of 1% of the
average net assets of the Fund. For the year or period ended December 31, 1999,
the Board of Trustees approved an annual rate of .15 of 1%.
The Funds have a transfer agency and dividend disbursing agency agreement with
Activa Asset Management LLC. Under these agreements, Activa Asset Management LLC
is the agent for transfer of the Funds' shares and disbursement of the Funds'
distributions. For these services, the Money Market, Intermediate Bond, Value
(Class A), Growth and International Funds pay a monthly fee based upon $1.167
per account in existence during the month (less earnings in the redemption
liquidity account in excess of wire transfer fees). The transfer agent is
compensated by the Value Fund (Class R) at a monthly rate of 1/12 of .20% (.20%
annually) of average net assets.
On June 11, 1999, the Trust entered into an administrative agreement with Activa
Asset Management LLC. Under the terms of the agreement, Activa Asset Management
LLC will act as administrator for the Funds. As administrator of the Funds,
Activa Asset Management LLC will furnish office space and office facilities,
equipment and personnel, pay the fees of all Trustees of the Trust, as well as
providing services relating to compliance, tax and financial service
requirements. For these services, the administrator will be compensated
quarterly by each fund at an annual rate of .15% of average daily net assets.
On July 9, 1999, the Trust entered into a Fund Accounting Agreement with Bisys
Fund Services Ohio, Inc. (Fund Accountant). As stated in the agreement, the Fund
Accountant is responsible for the maintenance of books and records, performance
of daily accounting services, providing the Funds' management with monthly
financial statements and certain information necessary for meeting compliance
requirements. The Fund Accountant is compensated by each
ACTIVA Mutual Funds Annual Report
32
<PAGE>
ACTIVA Notes to Financial Statements continued
fund based upon an annual fee of $35,000 for assets up to $100 million; $50,000
for assets between $100 million and $1 billion; and $75,000 for assets in excess
of $1 billion. In addition, each fund will pay the Fund Accountant an annual fee
of $2,500 for portfolio accounting reports provided to investment adviser
personnel through internet access.
On August 28, 1999, the Trust entered into a Sub-Transfer Agency Agreement with
Bisys Fund Services Ohio, Inc. For certain sub-transfer agency services
provided, Bisys will be compensated by each fund an annual fee of $12,000 plus
additional fees based upon the number of accounts opened and closed during the
year.
Prior to June 11, 1999, the Value Fund had substantially the same agreements for
all of the above services provided by Amway Management Company, the former
Adviser, Transfer Agent, Distributor and Underwriter.
4. INVESTMENT TRANSACTIONS
At December 31, 1999, the cost of investments owned by the Value Fund was
$120,638,555 for federal income tax purposes. Aggregate gross unrealized gains
on securities in which there was an excess of market value over tax cost were
$1,402,343. Aggregate gross unrealized losses on securities in which there was
an excess of tax cost over market value were $807,338. Net unrealized gains for
tax purposes were $595,004, at December 31, 1999.
The unrealized appreciation (depreciation) based upon cost of both long-term and
short-term securities for the funds that have elected an October 31st year-end
for federal income tax purposes were as follows:
Cost for
Gross Gross Net federal
unrealized unrealized unrealized income tax
Fund appreciation depreciation appreciation purposes
----------- ----------- ----------- ----------
Growth 1,966,675 1,105,436 861,239 28,421,205
Intermediate
Bond 895,305 137,758 757,547 167,106,728
Money Market N/A N/A N/A 98,915,906
International 3,133,444 726,960 2,406,484 27,761,426
For the year or period ended December 31, 1999, cost of purchases and proceeds
from sales of investments, other than short term securities, were as follows:
Fund Gross Purchases Gross Sales
- ----- -------------- ----------
Money Market 12,491,535 --
Intermediate Bond 219,949,287 65,102,512
Value 267,192,171 301,011,480
Growth 34,899,910 6,376,226
International 47,801,654 19,238,777
5. SUBSEQUENT EVENTS
A certain class of Independent Business Owners of Amway Corporation and Amway
Canada, Ltd. (Corporations) received from each corporation part of its Emerald
profit-sharing bonus in common stock shares of the Value Fund. On January 13,
2000, the Corporations purchased 336,807 Value Fund shares valued at $2,222,925
(based upon the net asset value of $6.60 per share) and transferred the shares
to these Independent Business Owners.
On January 20, 2000, the Intermediate Bond Fund declared and paid a dividend of
$.031157 per share, to shareholders of record on January 19, 2000. The amount
distributed was $511,558.
ACTIVA Mutual Funds Annual Report
33
<PAGE>
ACTIVA Financial Highlights
<TABLE>
<CAPTION>
MONEY INTERMEDIATE
MARKET BOND
FUND** FUND* VALUE FUND - CLASS A
---------- ---------- --------------------------
Per share outstanding throughout the year or
period ended December 31, 1999 1999 1999*** 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period 1.00 10.00 7.18 7.73
Income from investment operations:
Net investment income (loss) 0.02 0.19 0.09 0.08
Net realized and unrealized gains (losses)
on securities -- (0.13) (0.57) 0.68
---------- ---------- ---------- ----------
Total from investment operations 0.02 0.06 (0.48) 0.76
Less Distributions:
Dividends from net investment income 0.02 0.19 0.09 0.08
Dividends in excess of net investment income -- -- -- --
Distributions from capital gains -- -- -- 1.23
---------- ---------- ---------- ----------
Total Distributions 0.02 0.19 0.09 1.31
---------- ---------- ---------- ----------
Net Asset Value, end of period 1.00 9.87 6.61 7.18
Total Return **** 1.83% 0.63% -6.70% 10.17%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period 122,058,717 162,078,588 178,437,477 179,820,020
Ratio of expenses to average net assets***** 0.6% 0.7% 1.1% 1.0%
Ratio of net income (loss) to average net assets 5.4% 5.7% 1.2% 1.0%
Portfolio turnover rate N/A 64.6% 144.5% 101.1%
Average commission rate paid per share for
portfolio transactions N/A N/A 0.0481 0.0521
</TABLE>
* Period from August 30, 1999 (inception) to December 31, 1999
** Period from August 19, 1999 (inception) to December 31, 1999
*** Effective December 30, 1999, Wellington Management Company, LLP entered
into a Sub-Advisory Agreement with the Fund.
**** Total return does not reflect the effect of the sales charge in the years
before 1998
***** Ratio includes fees paid with brokerage commissions for fiscal years
ending after September 1, 1995; 1999 ratio includes a one time organization
expense.
****** The inception date for Value Fund - Class R was 11/1/98
ACTIVA Mutual Funds Annual Report
34
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND - CLASS A
-------------------------------------------
Per share outstanding throughout the year or
period ended December 31, 1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Net Asset Value, beginning of period 7.62 7.43 6.88
Income from investment operations:
Net investment income (loss) 0.09 0.10 0.10
Net realized and unrealized gains (losses)
on securities 1.62 1.59 1.98
---------- ---------- ----------
Total from investment operations 1.71 1.69 2.08
Less Distributions:
Dividends from net investment income 0.10 0.09 0.11
Dividends in excess of net investment income -- -- --
Distributions from capital gains 1.50 1.41 1.42
---------- ---------- ----------
Total Distributions 1.60 1.50 1.53
---------- ---------- ----------
Net Asset Value, end of period 7.73 7.62 7.43
Total Return **** 22.50% 23.18% 30.55%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period 139,163,575 113,327,402 77,248,295
Ratio of expenses to average net assets***** 0.9% 1.0% 1.1%
Ratio of net income (loss) to average net assets 1.1% 1.2% 1.2%
Portfolio turnover rate 103.1% 100.4% 173.3%
Average commission rate paid per share for
portfolio transactions 0.0574 0.0600 0.0598
</TABLE>
<TABLE>
<CAPTION>
GROWTH INTERNATIONAL
VALUE FUND - CLASS R FUND* FUND*
------------------------- ---------- ----------
Per share outstanding throughout the year or
period ended December 31, 1999 1998****** 1999 1999
------- ------- ---------- ----------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period 7.16 8.42 10.00 10.00
Income from investment operations:
Net investment income (loss) 0.10 0.09 (0.02) (0.03)
Net realized and unrealized gains (losses)
on securities (0.56) (0.02) 1.41 4.23
------- ------- ---------- ----------
Total from investment operations (0.46) 0.07 1.39 4.20
Less Distributions:
Dividends from net investment income 0.10 0.10 -- --
Dividends in excess of net investment income -- -- -- --
Distributions from capital gains -- 1.23 -- --
------- ------- ---------- ----------
Total Distributions 0.10 1.33 -- --
------- ------- ---------- ----------
Net Asset Value, end of period 6.60 7.16 11.39 14.20
Total Return **** -6.43% 7.08% 13.80% 42.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period 703,962 135,385 33,494,414 41,359,176
Ratio of expenses to average net assets***** 1.1% 1.0% 1.3% 1.4%
Ratio of net income (loss) to average net assets 1.3% 1.8% -0.5% -0.9%
Portfolio turnover rate 144.5% 101.1% 32.1% 87.6%
Average commission rate paid per share for
portfolio transactions 0.0481 0.0521 0.0332 0.0258
</TABLE>
* Period from August 30, 1999 (inception) to December 31, 1999
** Period from August 19, 1999 (inception) to December 31, 1999
*** Effective December 30, 1999, Wellington Management Company, LLP entered
into a Sub-Advisory Agreement with the Fund.
**** Total return does not reflect the effect of the sales charge in the years
before 1998
***** Ratio includes fees paid with brokerage commissions for fiscal years
ending after September 1, 1995; 1999 ratio includes a one time organization
expense.
****** The inception date for Value Fund - Class R was 11/1/98
ACTIVA Mutual Funds Annual Report
35
<PAGE>
ACTIVA Independent Auditors' Report
To the Shareholders and Board of Trustees
Activa Mutual Fund Trust
Grand Rapids, Michigan
We have audited the statements of assets and liabilities, including the
schedules of investments, of Activa Mutual Fund Trust (comprising, respectively,
Money Market, Intermediate Bond, Value, Growth and International Funds) as of
December 31, 1999, and the related statements of operations, the statements of
changes in net assets, and the financial highlights for each of the periods
indicated. These financial statements and financials highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights 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 financial
highlights 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 securities owned as of
December 31, 1999, by correspondence with the custodian. 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 financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective funds constituting the Activa Mutual Fund Trust, as of
December 31, 1999, the results of their operations, the changes in their net
assets, and their financial highlights for each of the periods indicated, in
conformity with generally accepted accounting principles.
/s/ BDO SEIDMAN, LLP
Grand Rapids, Michigan
January 28, 2000
ACTIVA Mutual Funds Annual Report
36
<PAGE>
(LOGO: ACTIVA Mutual Funds)
Activa Mutual Funds
2905 Lucerne SE, Suite 200
Grand Rapids, Michigan 49546
(616) 787-6288 (800) 346-2670
WWW.ACTIVAFUNDS.COM
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