STRATUS FUND, INC.
Equity Income Portfolio
Government Securities Portfolio
Capital Appreciation Portfolio
Intermediate Government Bond Portfolio
Semi-Annual Report
December 31, 1995
<PAGE>
TABLE OF CONTENTS
Schedule of Investments
Equity Income Portfolio.................... 1
Government Securities Portfolio............ 5
Capital Appreciation Portfolio............. 6
Intermediate Government Bond Portfolio..... 9
Statement of Assets and Liabilities............ 10
Statement of Operations........................ 11
Statements of Changes in Net Assets
Equity Income Portfolio.................... 12
Government Securities Portfolio............ 12
Capital Appreciation Portfolio............. 13
Intermediate Government Bond Portfolio..... 13
Financial Highlights
Equity Income Portfolio.................... 14
Government Securities Portfolio............ 15
Capital Appreciation Portfolio............. 16
Intermediate Government Bond Portfolio..... 17
Notes to Financial Statements.................. 18
<PAGE>
STRATUS FUND, INC.
Schedule of Investments
December 31, 1995
(Unaudited)
EQUITY INCOME PORTFOLIO
Percent
of Net Market
Shares Common Stock 94.86% Assets Value
------ -------------------------------- ------ -----
Broadcasting/Media 1.46%
------------------ -----
2,200 Capital Cities/ABC, Inc. $ 271,425
-----------
Chemicals 3.81%
--------- -----
5,000 Dupont (E.I.) De Nemours & Company 349,375
12,000 Nalco Chemical Company 361,500
-----------
710,875
-----------
Commercial Services 0.05%
------------------- -----
400 Schweitzer-Mauduit International, Inc.* 9,250
------------
Computers 4.73%
--------- -----
4,000 Automatic Data Processing 297,000
3,500 International Business Machines Corporation 321,125
3,000 Microsoft Corporation* 263,250
----------
881,375
-----------
Cosmetics/Personal Care 1.96%
----------------------- -----
7,000 Gillette Company 364,875
----------
Electrical Equipment 2.63%
-------------------- -----
6,000 Emerson Electric Company 490,500
----------
Electronics 8.26%
----------- -----
10,000 General Electric Company 720,000
3,000 Hewlett-Packard, Inc. 251,250
5,000 Intel Corporation 283,750
5,000 Motorola, Inc. 285,000
----------
$1,540,000
-----------
* Indicates nonincome-producing security.
<PAGE>
STRATUS FUND, INC.
Schedule of Investments (Continued)
EQUITY INCOME PORTFOLIO
Percent
of Net Market
Shares Common Stock (Continued) Assets Value
------ -------------------------------- ------ -----
Entertainment/Leisure 2.46%
--------------------- -----
12,000 Carnival Corporation Class A $ 292,500
2,800 The Walt Disney Company 165,200
----------
457,700
----------
Environmental Control 1.28%
--------------------- -----
8,000 Wmx Technologies, Inc. 239,000
-----------
Financial Services 6.28%
------------------ -----
7,000 Barnett Bank, Inc. 413,000
5,000 Federal Home Loan Mortgage Corporation 417,500
12,780 Hawkeye Bancorporation 340,268
----------
1,170,768
----------
Food/Beverage/Tabacco 4.29%
--------------------- -----
7,000 Coca Cola Company 519,750
5,000 Pepsico, Inc. 279,375
----------
799,125
----------
Food Processing 2.39%
--------------- -----
14,000 Sara Lee Corporation 446,250
----------
Forest Products/Paper 3.62%
--------------------- -----
5,000 Georgia Pacific Corporation 343,125
4,000 Kimberly-Clark Corporation 331,000
----------
674,125
----------
Household Products/Ware 2.26%
----------------------- -----
6,000 Colegate-Palmolive Company 421,500
----------
Industrial Services 2.40%
------------------- -----
14,000 Corning, Inc. $ 448,000
----------
<PAGE>
STRATUS FUND, INC.
Schedule of Investments (Continued)
EQUITY INCOME PORTFOLIO
Percent
of Net Market
Shares Common Stock (Continued) Assets Value
------ -------------------------------- ------ -----
Insurance 6.34%
--------- -----
3,000 American International Group, Inc. $ 277,500
3,000 General Re Corporation 465,000
7,000 Travelers Group, Inc. 440,125
----------
1,182,625
----------
Machine/Tools 1.38%
------------- -----
7,000 Dover Corporation 258,125
----------
Manufacturing 1.91%
------------- -----
10,000 Tyco International, Ltd. 356,250
----------
Oil/Gas 9.56%
------- -----
6,300 Exxon Corporation 504,787
4,000 Mobil Corporation 448,000
10,000 Questar Corporation 335,000
3,500 Royal Dutch Petroleum Company-NY SHR ADR 493,938
----------
1,781,725
----------
Pharmaceutical/Medical 10.84%
---------------------- ------
11,000 Abbott Laboratories 459,250
3,000 American Home Products Corporation 291,000
5,000 Bristol-Myers Squibb Company 429,375
8,000 Merck & Company, Inc. 526,000
5,000 Pfizer, Inc. 315,000
----------
2,020,625
----------
Publishing/Printing 2.07%
------------------- -----
7,000 Reuters Holdings PLC (ADR) 385,875
----------
Retail Store 1.80%
------------ -----
15,000 Wal-Mart Stores, Inc. $ 335,625
----------
<PAGE>
STRATUS FUND, INC.
Schedule of Investments (Continued)
EQUITY INCOME PORTFOLIO
Percent
of Net Market
Shares Common Stock (Continued) Assets Value
------ -------------------------------- ------ -----
Textiles 1.98%
-------- -----
7,000 VF Corporation $ 369,250
------------
Transportation 1.77%
-------------- -----
5,000 Union Pacific Corporation 330,000
------------
Utilities 4.58%
--------- -----
15,000 Allegheny Power System, Inc. 429,375
20,000 PacifiCorp 425,000
------------
854,375
------------
Utilities - Telecommunications 2.08%
------------------------------ -----
6,000 American Telephone & Telegraph Corporation 388,500
------------
Principal
Amount U.S. Government Securities 2.67%
------ ------------------------------------------------
500,000 Treasury Bill 0%, due 2/8/96 497,600
------------
Total Investments 94.86% 17,685,343
Cash Equivalents 4.62% 860,379
Net Receivables/(Payables) 0.52% 97,288
-------- -----------
TOTAL NET ASSETS 100.00% $18,643,010
======= ==========
<PAGE>
STRATUS FUND, INC.
Schedule of Investments
December 31, 1995
(Unaudited)
GOVERNMENT SECURITIES PORTFOLIO
Percent of
Principal Net Assets Market
Amount U.S. Government Securities 93.89% Value
------ ------------------------------------------- -----
300,000 Federal Home Loan Bank, 7.70%, due 8/26/96 $ 304,561
405,000 Federal National Mortgage Assn., 8.50%, due 6/10/96 410,360
250,000 Federal National Mortgage Assn., 6.05%, due 1/12/98 253,359
1,000,000 Federal National Mortgage Assn., 6.20%, due 6/06/00 1,024,688
250,000 Federal National Mortgage Assn., 7.55%, due 4/22/02 273,133
500,000 Federal National Mortgage Assn., 6.38%, due 6/25/03 502,945
700,000 United States Treasury Note, 7.25%, due 11/15/96 711,594
100,000 United States Treasury Note, 8.00%, due 1/15/97 102,719
250,000 United States Treasury Note, 6.375%, due 6/30/97 254,258
50,000 United States Treasury Note, 5.50%, due 9/30/97 50,265
500,000 United States Treasury Note, 8.75%, due 10/15/97 530,000
1,500,000 United States Treasury Note, 5.625%, due 10/31/97 1,511,250
2,100,000 United States Treasury Note, 7.125%, due 10/15/98 2,201,063
400,000 United States Treasury Note, 6.375%, due 7/15/99 413,500
1,050,000 United States Treasury Note, 6.00%, due 10/15/99 1,074,609
1,000,000 United States Treasury Note, 7.75%, due 11/30/99 1,083,750
1,900,000 United States Treasury Note, 6.375%, due 1/15/00 1,970,359
500,000 United States Treasury Note, 7.75%, due 1/31/00 543,125
2,000,000 United States Treasury Note, 5.75%, due 10/31/00 2,030,000
1,000,000 United States Treasury Note, 5.50%, due 12/31/00 1,005,000
250,000 United States Treasury Note, 7.75%, due 2/15/01 276,094
750,000 United States Treasury Note, 7.50%, due 11/15/01 826,406
250,000 United States Treasury Note, 6.375%, due 8/15/02 262,265
------------
17,615,303
------------
Total Investments 93.89% 17,615,303
Cash Equivalents 10.06% 1,886,746
Net Receivables/(Payables) (3.95)% (739,794)
-------- -----------
TOTAL NET ASSETS 100.00% $18,762,255
======= ==========
<PAGE>
STRATUS FUND, INC.
Schedule of Investments
December 31, 1995
(Unaudited)
CAPITAL APPRECIATION PORTFOLIO
Percent
of Net Market
Shares Common Stock 90.19% Assets Value
------ -------------------------------- ------ -----
Auto/Truck/Parts 1.20%
---------------- -----
500 Stewart & Stevenson Services, Inc. $ 12,625
--------
Broadcasting/Media 3.35%
------------------ -----
800 Clear Channel Communications* 35,300
--------
Chemicals 6.01%
--------- -----
450 Goodrich (B.F.) Company 30,656
800 IMC Global, Inc.* 32,700
--------
63,356
--------
Commercial Services 8.34%
------------------- -----
1,100 Corrections Corporation of America* 40,837
700 Manpower, Inc.* 19,688
500 Wallace Computer Servicing, Inc.* 27,313
--------
87,838
--------
Computers 11.75%
--------- ------
500 Apple Computer, Inc. 15,937
1,050 Cadence Design Systems, Inc. * 44,100
550 Digital Equipment Corporation* 35,269
600 Seagate Technology, Inc.* 28,500
-------
123,806
--------
Electrical Equipment 3.51%
-------------------- -----
650 Raychem Corporation 36,969
--------
Electronics 3.72%
----------- -----
700 Philips Electronics N.V. 25,113
1,000 X-Rite, Inc. * 14,125
--------
$ 39,238
--------
* Indicates nonincome-producing security.
<PAGE>
STRATUS FUND, INC.
Schedule of Investments (Continued)
CAPITAL APPRECIATION PORTFOLIO
Percent
of Net Market
Shares Common Stock (Continued) Assets Value
------ -------------------------------- ------ -----
Electronics/Semiconductors 2.85%
-------------------------- -----
1,200 International Rectifier Corporation * $ 30,000
--------
Environmental Control 1.96%
--------------------- -----
700 Browning Ferris Industries, Inc. 20,650
--------
Financial Services 4.89%
------------------ -----
1,000 First Financial Corporation - Wisconsin 23,000
600 Sunamerica, Inc. 28,500
--------
51,500
--------
Forest Products/Paper 2.95%
--------------------- -----
600 Federal Paper Board Company 31,125
--------
Insurance 11.95%
--------- ------
900 Ace Limited, Ltd. 35,775
750 Allstate Corporation 30,844
300 Cigna Corporation 30,975
250 CNA Financial Corporation* 28,375
--------
125,969
--------
Lodging 4.27%
------- -----
550 HFS, Inc. 44,962
--------
Medical Supplies/Services 6.43%
------------------------- -----
1,000 Healthsouth Corporation 29,125
500 Thermo Cardiosystems, Inc.* 38,625
--------
$ 67,750
--------
* Indicates nonincome-producing security.
<PAGE>
STRATUS FUND, INC.
Schedule of Investments (Continued)
CAPITAL APPRECIATION PORTFOLIO
Percent
of Net Market
Shares Common Stock (Continued) Assets Value
------ -------------------------------- ------ -----
Retail/Apparel 11.89%
-------------- ------
900 Barnes & Noble, Inc. * $ 26,100
500 Home Depot, Inc. 23,937
500 Nike, Inc. Class B 34,813
600 Tommy Hilfiger Corporation* 25,425
1,500 Trend-Lines, Inc. Class A* 15,000
-----------
125,275
-----------
Transportation 5.12%
-------------- -----
350 Burlington Northern Santa Fe 27,300
150 Ual Corporation* 26,775
-----------
54,075
-----------
Total Investments 90.19% 950,438
Cash Equivalents 9.42% 99,261
Net Receivables/(Payables) 0.39% 4,105
------- ----------
TOTAL NET ASSETS 100.00% $1,053,804
======= =========
* Indicates nonincome-producing security.
<PAGE>
STRATUS FUND, INC.
Schedule of Investments
December 31, 1995
(Unaudited)
INTERMEDIATE GOVERNMENT BOND PORTFOLIO
Percent of
Principal Net Assets Market
Amount U.S. Government Securities 92.52% Value
------ ------------------------------------------- -----
100,000 United States Treasury Note, 4.375%, due 8/15/96 $ 99,453
400,000 United States Treasury Note, 7.00%, due 9/30/96 404,813
100,000 United States Treasury Note, 7.25%, due 11/15/96 101,656
300,000 United States Treasury Note, 6.125%, due 12/31/96 302,672
600,000 United States Treasury Note, 8.00%, due 1/15/97 616,312
100,000 United States Treasury Note, 6.25%, due 1/31/97 101,031
500,000 United States Treasury Note, 6.00%, due 8/31/97 506,172
250,000 United States Treasury Note, 7.375%, due 11/15/97 259,453
200,000 United States Treasury Note, 7.875%, due 4/15/98 211,281
950,000 United States Treasury Note, 7.125%, due 10/15/98 995,719
700,000 United States Treasury Note, 6.375%, due 1/15/99 721,656
550,000 United States Treasury Note, 6.00%, due 10/15/99 562,891
400,000 United States Treasury Note, 6.375%, due 1/15/00 414,812
500,000 United States Treasury Note, 7.125%, due 2/29/00 532,422
750,000 United States Treasury Note, 6.125%, due 7/31/00 772,266
----------
6,602,609
Total Investments 92.52% 6,602,609
Cash Equivalents 5.56% 396,971
Net Receivables/(Payables) 1.92% 136,744
-------- ----------
TOTAL NET ASSETS 100.00% $7,136,324
======= =========
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Statements of Assets and
Liabilities
December 31, 1995
(Unaudited)
Intermediate
Equity Government Capital Government
Income Securities Appreciation Bond
Portfolio Portfolio Portfolio Portfolio
------------ ------------ ---------- ----------
<S> <C> <C> <C> <C>
Assets:
Investments in securities,
at market value (note 4) $17,685,343 17,615,303 950,438 6,602,609
Cash equivalents 860,379 1,886,746 99,261 396,971
Accrued interest and dividends receivable 44,248 249,524 2,063 145,969
Receivable for fund shares sold 65,856 27,132 4,200 82
------------ ------------ ---------- ----------
Total assets 18,655,826 19,778,705 1,055,962 7,145,631
------------ ------------ ---------- ----------
Liabilities:
Accrued expenses, including investment
management and service fees payable to
adviser and administrator (note 3) 12,743 12,425 2,158 7,297
Payable for securities purchased - 997,850 - -
Payable for fund shares redeemed 73 6,175 - 2,010
------------ ------------ ---------- ----------
Total liabilities 12,816 1,016,450 2,158 9,307
------------ ------------ ---------- ----------
Net assets applicable to outstanding
capital stock $18,643,010 18,762,255 1,053,804 7,136,324
============ ============ ========== ==========
Net assets are represented by:
Capital stock outstanding, at par
(note 6) 1,470 1,888 91 667
Additional paid-in capital 15,533,061 18,697,761 942,692 7,116,538
Accumulated undistributed net
investment income (loss) 6,446 9,717 (29,891) 3,787
Accumulated undistributed net realized
gain (loss) 181,424 (310,929) 25,616 (118,219)
Unrealized appreciation (note 5) 2,920,609 363,818 115,296 133,551
------------ ------------ ---------- ----------
Total amount representing net
assets applicable to
shares outstanding $18,643,010 18,762,255 1,053,804 7,136,324
============ ============ ========== ==========
Net asset value per share of
outstanding capital stock $12.68 9.94 11.55 10.70
============ ============ ========== ==========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Statements of
Operations
Six Months Ended December 31, 1995
(Unaudited)
Intermediate
Equity Government Capital Government
Income Securities Appreciation Bond
Portfolio Portfolio Portfolio Portfolio
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Investment income:
Dividends $172,307 - 2,555 -
Interest 30,864 455,704 2,883 185,492
---------- ---------- ---------- ------------
Total investment income 203,171 455,704 5,438 185,492
---------- ---------- ---------- ------------
Expenses (note 3):
Investment advisory fees 38,155 39,495 6,171 20,050
Administration fees 12,001 12,485 687 4,818
Accounting 2,870 3,270 3,570 3,570
Custodial fees - - 1,120 3,196
Securities pricing 1,495 320 1,116 -
Other operating expenses (894) (3,708) 431 243
---------- ---------- ---------- ------------
Total expenses 53,627 51,862 13,095 31,877
---------- ---------- ---------- ------------
Net investment income (loss) 149,544 403,842 (7,657) 153,615
---------- ---------- ---------- ------------
Realized and unrealized gain on
investments (note 5):
Net realized gain (loss) 548,370 (1,456) 148,014 (388)
Net unrealized appreciation
(depreciation):
Beginning of period 1,751,333 66,202 171,190 46,232
End of period 2,920,609 363,818 115,296 133,551
---------- ---------- ---------- ------------
Net unrealized
appreciation (depreciation) 1,169,276 297,616 (55,894) 87,319
---------- ---------- ---------- ------------
Net realized and unrealized gain
on investments 1,717,646 296,160 92,120 86,931
---------- ---------- ---------- ------------
Net increase in net assets
resulting from operations $1,867,190 700,002 84,463 240,546
========== ========== ========== ============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Statements of Changes in Net Assets
Six Months Ended December 31, 1995 and Year ended June 30, 1995
Equity Government
Income Securities
Portfolio Portfolio
------------------------ -------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
Dec. 31, 1995 June 30, 1995 Dec. 31, 1995 June 30, 1995
------------ ----------- ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Operations:
Net investment income $149,544 253,851 403,842 622,736
Net realized gain (loss)
on investments 548,370 (17,840) (1,456) (295,308)
Unrealized appreciation 1,169,276 1,965,572 297,616 814,214
------------ ----------- ------------ ------------
Net increase in net assets
resulting from operations 1,867,190 2,201,583 700,002 1,141,642
------------ ----------- ------------ ------------
Distributions to shareholders from:
Net investment income 149,291 250,201 403,492 619,027
Net realized gains 242,886 118,377 - -
------------ ----------- ------------ ------------
Total distributions 392,177 368,578 403,492 619,027
------------ ----------- ------------ ------------
Capital share transactions:
Proceeds from sales 4,626,583 2,041,506 5,266,740 2,059,923
Payment for redemptions (640,036) (4,313,318) (1,038,823) (1,782,550)
Reinvestment of net investment
income and net realized gain
distributions at
net asset value 368,098 359,998 352,624 607,699
------------ ----------- ------------ ------------
Total increase (decrease)
from capital
share transactions 4,354,645 (1,911,814) 4,580,541 885,072
------------ ----------- ------------ ------------
Total increase (decrease)
in net assets 5,829,658 (78,809) 4,877,051 1,407,687
Net assets:
Beginning of period 12,813,352 12,892,161 13,885,204 12,477,517
------------ ----------- ------------ ------------
End of period $18,643,010 12,813,352 18,762,255 13,885,204
============ =========== ============ ============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Statements of Changes in Net Assets
Six Months Ended December 31, 1995 and Year ended June 30, 1995
Intermediate
Capital Government
Appreciation Bond
Portfolio Portfolio
---------------------- ------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
Dec. 31, 1995 June 30, 1995 Dec. 31, 1995 June 30, 1995
------------ ----------- ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss) ($7,657) (10,660) 153,615 298,292
Net realized gain (loss)
on investments 148,014 (13,631) (388) (125,724)
Unrealized appreciation
(depreciation) (55,894) 198,191 87,319 251,507
----------- ---------- ----------- -----------
Net increase in net assets
resulting from operations 84,463 173,900 240,546 424,075
----------- ---------- ----------- -----------
Distributions to shareholders from:
Net investment income - - 153,750 301,006
Net realized gains 72,180 15,412 - -
----------- ---------- ----------- -----------
Total distributions 72,180 15,412 153,750 301,006
----------- ---------- ----------- -----------
Capital share transactions:
Proceeds from sales 241,289 3,759 2,151,262 400,683
Payment for redemptions (4,417) (82,828) (744,326) (3,045,991)
Reinvestment of net investment
income and net realized gain
distributions at
net asset value 56,061 15,412 124,161 265,902
----------- ---------- ----------- -----------
Total increase (decrease)
from capital
share transactions 292,933 (63,657) 1,531,097 (2,379,406)
----------- ---------- ----------- -----------
Total increase (decrease)
in net assets 305,216 94,831 1,617,893 (2,256,337)
Net assets:
Beginning of period 748,588 653,757 5,518,431 7,774,768
----------- ---------- ----------- -----------
End of period $1,053,804 748,588 7,136,324 5,518,431
=========== ========= =========== ===========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
STRATUS FUND, INC.
Financial Highlights
Six Months ended December 31, 1995 and
Year ended June 30, 1995 and the period from October 8, 1993
(commencement of operations) to June 30, 1994
Equity Income
Portfolio
----------------------------------
Six
Months
Ended
Dec. 31, 1995 1995 1994
--------------- ---- ----
(Unaudited)
Net asset value:
Beginning of period $11.47 9.84 10.00
------ ---- -----
Income from investment operations:
Net investment income 0.12 0.22 0.19
Net realized and unrealized gain (loss)
on investments 1.38 1.72 (0.16)
---- ---- ------
Total income from
investment operations 1.50 1.94 0.03
---- ---- ----
Less distributions
Dividends from net investment income (0.12) (0.22) (0.19)
Distributions from capital gains (0.17) (0.09) -
------ ------ -------
Total distributions (0.29) (0.31) (0.19)
------ ------ ------
End of period $12.68 11.47 9.84
=========== ========== ========
Total return 12.9% * 20.3% (.03%)*
=========== ========== ========
Ratios/Supplemental data:
Net assets, end of period $18,643,010 12,813,352 12,892,161
Ratio of expenses to average net assets 0.70% ** 0.82% 0.76% **
Ratio of net income to average net assets 1.96% ** 2.14% 2.38% **
Portfolio turnover rate 34.75% 19.89% 10.05%
*Total return is not annualized.
**Annualized for those periods less than twelve months in duration.
See accompanying notes to financial statements.
<PAGE>
STRATUS FUND, INC.
Financial Highlights
Six Months ended December 31, 1995 and
Year ended June 30, 1995 and the period from October 8, 1993
(commencement of operations) to June 30, 1994
Government Securities
Portfolio
----------------------------------
Six Months Ended
Dec. 31, 1995 1995 1994
------------- ---- ----
(Unaudited)
Net asset value:
Beginning of period $9.77 9.40 10.00
----- ---- -----
Income (loss) from investment operations:
Net investment income 0.25 0.45 0.27
Net realized and unrealized gain (loss)
on investments 0.17 0.37 (0.60)
---- ---- ------
Total income (loss) from
investment operations 0.42 0.82 (0.33)
---- ---- ------
Less distributions:
Dividends from net investment income (0.25) (0.45) (0.27)
Distributions from capital gains - - -
------- -------- -------
Total distributions (0.25) (0.45) (0.27)
------ ------ ------
End of period $9.94 9.77 9.40
=========== ========== ========
Total return 4.3% * 9.0% (3.4%)*
=========== ========== =========
Ratios/Supplemental data:
Net assets, end of period $18,762,255 13,885,204 12,477,517
Ratio of expenses to average net assets 0.66% ** 0.80% 0.74% **
Ratio of net income to average net assets 5.11% ** 4.82% 3.89% **
Portfolio turnover rate 6.90% 33.88% 17.36%
*Total return is not annualized.
**Annualized for those periods less than twelve months in duration.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Financial Highlights
Six Months Ended December 31, 1995 and Years ended June
30, 1995 and 1994 and for the period from
January 4, 1993 (commencement of operations) to June 30, 1993
Capital Appreciation
Portfolio
---------------------------------------------
Six
Months
Ended
Dec. 31, 1995 1995 1994 1993
--------------- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
Net asset value:
Beginning of period $11.23 8.95 9.40 10.00
------ ---- ---- -----
Income (loss) from investment operations:
Net investment loss (0.10) (0.15) (0.12) (0.04)
Net realized and unrealized
gain (loss) on investments 1.26 2.62 (0.33) (0.56)
---- ---- ------ ------
Total Income (loss) from
investment operations 1.16 2.47 (0.45) (0.60)
---- ---- ------ ------
Less distributions from capital gains (0.84) (0.19) - -
---------- --------- --------- ---------
End of period $11.55 11.23 8.95 9.40
========== ========= ========= =========
Total return 10.4% * 28.6% (4.8%) (6.0%) *
========== ========= ========= =========
Ratios/Supplemental data:
Net assets, end of period $1,053,804 748,588 653,757 583,403
Ratio of expenses to average net assets 2.93% ** 2.69% 2.13% 2.41% **
Ratio of net loss to average net assets (1.72%) ** (1.59%) (1.27%) (1.04%) **
Portfolio turnover rate 98.24% 214.47% 9.09% 4.42%
<FN>
*Total return is not annualized.
**Annualized for those periods less than twelve months in duration.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Financial Highlights
Six Months Ended December 31, 1995 and Years ended
June 30, 1995, 1994, 1993, and 1992 and for the
period from May 15, 1991 (commencement of operations) to June 30, 1991
Intermediate Government Bond
Portfolio
-----------------------------------------------------------------
Six
Months Ended
Dec. 31,1995 1995 1994 1993 1992 1991
------------- ---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period $10.56 10.29 10.84 10.72 10.02 10.00
------ ----- ----- ----- ----- -----
Income (loss) from investment operations:
Net investment income 0.27 0.50 0.47 0.38 0.94 0.07
Net realized and
unrealized gain (loss)
on investments 0.14 0.27 (0.55) 0.34 0.70 (0.05)
---- ---- ------ ---- ---- ------
Total income (loss)
from investment operations 0.41 0.77 (0.08) 0.72 1.64 0.02
---- ---- ------ ---- ---- ----
Less distributions:
Dividends from net
investment income (0.27) (0.50) (0.47) (0.38) (0.94) -
Distributions from
capital gains - - - (0.22) - -
----- ---- ---- ------ ----- -----
Total distributions (0.27) (0.50) (0.47) (0.60) (0.94) -
------ ------ ------ ------ ------- ------
End of period $10.70 10.56 10.29 10.84 10.72 10.02
========== ======== ========= ========= ========= =========
Total return 3.9% * 7.9% (0.8%) 8.9% 11.4% 1.6% *
========== ======== ========= ========= ========= =========
Ratios/Supplemental data:
Net assets, end of period $7,136,324 5,518,431 7,774,768 6,747,719 4,680,585 2,230,413
Ratio of expenses to
average net assets 1.03% ** 1.11% 1.05% 1.12% 1.04% 1.46% **
Ratio of net income to
average net assets 4.96% ** 4.84% 4.41% 4.58% 5.31% 7.41% **
Portfolio turnover rate 4.33% 27.67% 21.02% 32.39% 205.89% -
<FN>
*Total return is not annualized.
**Annualized for those periods less than twelve months in duration.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
STRATUS FUND, INC.
Notes to Financial Statements
December 31, 1995
(Unaudited)
1. Organization
Stratus Fund, Inc. (the Fund) is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end management investment
company. The Fund issues its shares in series, each series representing a
distinct portfolio with its own investment objectives and policies. At
December 31, 1995, the following series are presently authorized and have
shares outstanding.
Equity Income Portfolio Capital Appreciation Portfolio
Government Securities Intermediate Government
Portfolio Bond Portfolio
2. Summary of Significant Account Policies
The following is a summary of significant accounting policies employed by
the Fund in preparing its financial statements.
Valuation of Investments
Investment securities are carried at market determined using the following
valuation methods:
o Securities traded on a national or regional stock exchange or included
in the NASDAQ National Market System are valued at the last quoted
sales price.
Securities not listed on an exchange or securities for which the latest
quoted sales price is not readily available and securities traded
over-the-counter but not included in the NASDAQ National Market System
are valued at the mean of the closing bid and asked prices.
o Securities including bonds or other assets for which reliable recent
market quotations are not readily available are valued at fair market
value as determined in good faith or under the direction of the Board
of Directors. Determination of fair value involves, among other things,
reference to market indices, matrices and data from independent brokers
and pricing services.
All securities are valued in accordance with the above noted policies at
the close of each business day.
The Equity Income and Capital Appreciation Portfolios are authorized to
engage in the purchase of exchange-traded put and call options. When a call
option is purchased, an amount equal to the premium received by the
Portfolio is included by the Portfolio in the Portfolio's statement of
assets and liabilities as a liability.
<PAGE>
STRATUS FUND, INC.
Notes to Financial Statements
2. Continued
The amount of the liability is subsequently marked to market to reflect the
current value of the option written. The current market value of the traded
option is the last sales price on the principal exchange on which such
options are traded, or in the absence of such a sale, at the latest ask
quotation. When an option expires on its stipulated expiration date or the
Portfolio enters into a closing purchase transaction, the Portfolio
realizes a gain (or loss if the cost of a closing transaction exceeds the
premium received when the option was sold) without regard to any unrealized
gain or loss on the underlying security, and the liability related to such
option is extinguished. When an option is exercised, the Portfolio realizes
a gain or loss from the sale of the underlying security and the proceeds
from such sale are increased by the premium originally received.
When a put option is purchased, an amount equal to the premium paid by the
Portfolio is included by the Portfolio in the Portfolio's statement of
assets and liabilities as an asset. The amount of the asset is subsequently
marked to market to reflect the value of the option written. The current
market value of a traded option is the last sales price on the principal
exchange on which such options are traded, or in the absence of such a
sale, at the latest ask quotation. When an option expires on its stipulated
expiration date or the Portfolio enters into a closing sales transaction,
the Portfolio realized a gain (or loss if the cost of a closing transaction
is lower than the premium paid when the option was sold) without regard to
any unrealized gain or loss on the underlying security, and the asset
related to such option is extinguished. When an option is exercised, the
Portfolio realizes a gain or loss from the sale of the underlying security
and the proceeds from such sale are increased by the premium originally
paid.
At December 31, 1995, the Equity Income and Capital Appreciation Portfolios
had no such option contracts outstanding nor were any written during the
period.
At December 31, 1995, the cost of investment securities is identical for
financial reporting and income tax purposes.
Security Transactions
Security transactions are accounted for on the date securities are
purchased or sold (trade date). Dividend income is recognized on the
ex-dividend date and interest income, including amortization of premium and
discount, is accrued daily on the straight-line basis.
Realized investment gains and losses are determined by specifically
identifying the issue sold.
<PAGE>
STRATUS FUND, INC.
Notes to Financial Statements
2. Continued
Federal Income Taxes
It is the policy of each Portfolio to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute virtually all of the taxable income generated by the Portfolios
to their shareholders within the time period allowed by the Federal law.
Consequently, no liability for Federal income taxes is required. Each
Portfolio is treated as a separate entity for tax purposes, and on a
calendar basis, will distribute substantially all of its net investment
income and realized gains, if any, to avoid payment of any Federal excise
tax. There will be no net realized gain distributions until the net
realized loss carry forwards have been offset or expired. The losses will
expire in 8 years. Each Portfolio prepares its tax return on an accrual
basis.
Distribution to Shareholders
Dividends to shareholders are recorded on the ex-dividend date. In
accordance with resolutions enacted by the Board of Directors, the
Government Securities and Intermediate Government Bond Portfolios declare
dividends monthly and the Equity Income and Capital Appreciation Portfolios
declare dividends semi-annually. The dividends declared become payable
immediately.
Cash Equivalents
The Fund considers investments with an original maturity of three months or
less when purchased to be cash equivalents.
The Fund and each of its Portfolios have retained Union Bank and Trust
Company (UBATCO) as their exclusive investment adviser and custodian of the
Fund's assets (hereinafter, the Adviser). The agreement provides that the
Capital Appreciation Portfolio will compensate the Adviser on a performance
based scale, whereby the Portfolio will pay a fee which may be increased or
decreased by up to 1.40% of the average daily net assets during the latest
12 months (a rolling average method), depending upon the performance of
this Portfolio relative to the S&P 500. The performance based scale became
effective January 1, 1994. Prior to January 1, 1994, the fee was equal to
1.40%. For the six months ended December 31, 1995, the annualized fee
ranged from zero to .23%.
Equity Income and Government Securities Portfolios will pay the Adviser a
fee equal to .50% per annum of its average daily net assets. The
Intermediate Government Bond Portfolio will pay an advisory fee of .65% per
annum of its average daily net assets. These Portfolios do not participate
in performance based compensation scales.
<PAGE>
STRATUS FUND, INC.
Notes to Financial Statements
3. Continued
The Fund and each of its Portfolios have retained UBATCO as the custodian
of the Fund's investments. The agreement provides that the portfolios
(except Equity Income and Government Securities Portfolios, which pay no
fee), will pay the custodian an annual fee which is calculated and billed
quarterly. The fee calculation does not include cash equivalents. The fee
consists of an investment transaction charge of $12 for each transaction,
the fee of $100 per account, plus an additional fee calculated in
accordance with the following table.
Net assets of:
$0 - $10 million 11 basis points
$10 - $20 million 6 basis points
Over $20 million 2.5 basis points
The Fund and each of its Portfolios have retained Lancaster Administrative
Services, Inc. (the Administrator) to act as their transfer agent and
administrator to provide all necessary recordkeeping and share transfer
services for the Fund. The agreement provides that each Portfolio will pay
an administrative fee to the Administrator equal to .25% per annum of
average daily net assets. From January 1, 1992 until October 31, 1995 the
Administrator waived .15% of its .25% administrative fee. Commencing
November 1, 1995 the Administrator will not waive any portion of its fee
and will use the additional fees to enter into Sub-Administrative
Agreements with various banks who will provide subaccounting and other
shareholder services to their customers who invest in the Fund.
Under the terms of the advisory, custodian and administrative agreements
outlined above, the Portfolios collectively incurred $103,871, $4,316 and
$29,991, respectively for such services.
At December 31, 1995, the following accrued investment advisory, custodial
and administrative fees were payable to the Adviser and Administrator.
Payable to Payable to
Adviser Administrator Total
--------- -------------- -------
Equity Income Portfolio $7,672 $3,836 $11,508
Government Securities Portfolio 7,869 3,934 11,803
Capital Appreciation Portfolio 1,462 216 1,678
Intermediate Government
Bond Portfolio 3,964 1,525 5,489
===== ===== =====
<PAGE>
STRATUS FUND, INC.
Notes to Financial Statements
3. Continued
Under the terms of the advisory agreement, the Adviser may be obligated to
reimburse a Portfolio up to the amount of the Adviser's fee paid to the
Adviser if during any year the expenses of the Portfolio, including the
Adviser's fee, exceed certain limitations. At December 31, 1995, no expense
reimbursement was required.
In addition to the amounts paid by the Portfolios under advisory,
custodian, and administration agreements, the Portfolios primarily used
SMITH HAYES Financial Services Corporation (SMITH HAYES), a company related
through common ownership and management, to affect security trades on their
behalf. As is customary in the industry, the investment adviser evaluates
the pricing and ability to execute the transaction in selecting brokers to
affect trades. SMITH HAYES was paid commissions in the amount of $2,097 for
their brokerage services during the six months ended December 31, 1995.
4. Investments
Cost of investment securities held at December 31, 1995 was as follows for
each Portfolio:
Equity Income Portfolio $14,764,734
Government Securities Portfolio 17,251,485
Capital Appreciation Portfolio 835,142
Intermediate Government Bond Portfolio 6,469,058
5. Securities Transactions
Purchases of securities and proceeds from sales were as follows for each
Portfolio:
Purchases of Proceeds
Securities from Sales
------------ ------------
Equity Income Portfolio $8,741,858 $4,857,168
Government Securities Portfolio 5,506,100 1,000,000
Capital Appreciation Portfolio 1,028,006 810,502
Intermediate Government Bond Portfolio 1,510,635 248,795
========= ==========
<PAGE>
STRATUS FUND, INC.
Notes to Financial Statements
5. Continued
At December 31, 1995, the aggregate gross unrealized appreciation and the
aggregate gross unrealized depreciation of securities in each Portfolio
were as follows:
Aggregate Gross
Unrealized
Appreciation Depreciation
------------ -------------
Equity Income Portfolio $3,054,919 $134,310
Government Securities Portfolio 437,742 73,924
Capital Appreciation Portfolio 149,279 33,983
Intermediate Government Bond Portfolio 134,201 650
========== =========
6. Capital Share Transactions
The Fund is authorized to issue a total of 1 billion shares of common stock
in series with a par value of $.001 per share. The following summarizes the
shares of each Portfolio as of the close of business of the New York Stock
Exchange at December 31, 1995:
Authorized Outstanding
----------- --------------
Equity Income Portfolio 20,000,000 1,470,364.383
Government Securities Portfolio 10,000,000 1,887,620.255
Capital Appreciation Portfolio 10,000,000 91,249.715
Intermediate Government Bond Portfolio 10,000,000 666,967.813
========== ==============
Transactions in the capital stock of each Portfolio for the six months
ended December 31, 1995 were as follows:
Government
Equity Income Securities
Portfolio Portfolio
------------ -----------
Transactions in shares:
Shares sold 377,470.416 535,578.387
Shares redeemed (53,428.486) (105,805.975)
Reinvested dividends 29,167.854 36,004.909
------------ ------------
Net increase (decrease) 353,209.784 465,777.321
=========== ===========
<PAGE>
STRATUS FUND, INC.
Notes to Financial Statements
6. Continued
Intermediate
Capital Government
Appreciation Bond
Portfolio Portfolio
------------ --------------
Transactions in shares:
Shares sold 20,041.840 202,576.811
Shares redeemed (365.959) (70,110.687)
Reinvested dividends 4,926.296 11,739.369
--------- ------------
Net decrease 24,602.177 144,205.493
========== ===========
At December 31, 1995, directors, officers and employees of the Fund, the
Adviser and Administrator and their immediate families held the following
in each Portfolio:
Shares Value
---------- --------
Equity Income Portfolio 21,233.027 $269,235
Government Securities Portfolio 33,246.980 330,475
Capital Appreciation Portfolio 5,973.968 68,999
Intermediate Government Bond Portfolio12,435.483 133,060
At December 31, 1995, UBATCO held, in nominee name, the following in each
Portfolio:
Shares Value
---------- ---------
Equity Income Portfolio 1,463,854.957 $18,561,681
Government Securities Portfolio 1,887,620.255 18,762,255
Capital Appreciation Portfolio 91,249.715 1,053,804
Intermediate Government Bond Portfolio 663,179.884 7,096,025
============== ===========
