STRATUS FUND, INC.
Equity Income Portfolio
Government Securities Portfolio
Capital Appreciation Portfolio
Intermediate Government Bond Portfolio
International Portfolio
Semi-Annual Report
December 31, 1996
<PAGE>
[GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
GROWTH PORTFOLIO........................... 1
GOVERNMENT SECURITIES PORTFOLIO............ 5
CAPITAL APPRECIATION PORTFOLIO............. 6
INTERMEDIATE GOVERNMENT BOND PORTFOLIO..... 9
INTERNATIONAL PORTFOLIO.................... 10
STATEMENT OF ASSETS AND LIABILITIES............
GROWTH PORTFOLIO........................... 14
GOVERNMENT SECURITIES PORTFOLIO............ 14
CAPITAL APPRECIATION PORTFOLIO............. 14
INTERMEDIATE GOVERNMENT BOND PORTFOLIO..... 15
INTERNATIONAL PORTFOLIO.................... 15
STATEMENT OF OPERATIONS........................ 16
STATEMENTS OF CHANGES IN NET ASSETS
GROWTH PORTFOLIO........................... 17
GOVERNMENT SECURITIES PORTFOLIO............ 17
CAPITAL APPRECIATION PORTFOLIO............. 18
INTERMEDIATE GOVERNMENT BOND PORTFOLIO..... 18
INTERNATIONAL PORTFOLIO.................... 19
FINANCIAL HIGHLIGHTS
GROWTH PORTFOLIO........................... 20
GOVERNMENT SECURITIES PORTFOLIO............ 21
CAPITAL APPRECIATION PORTFOLIO............. 22
INTERMEDIATE GOVERNMENT BOND PORTFOLIO..... 23
INTERNATIONAL PORTFOLIO.................... 24
NOTES TO FINANCIAL STATEMENTS.................. 25
<PAGE>
STRATUS FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
(UNAUDITED)
GROWTH PORTFOLIO
PERCENT
OF NET MARKET
SHARES COMMON STOCK 89.43% ASSETS VALUE
--------- --------------------------------- ----------- ---------
AUTO/TRUCK/PARTS 1.64%
------------------------------------------------
20,000 AUTOZONE, INC.* $ 550,000
---------
BUILDING MATERIALS/CONSTRUCTION 4.81%
------------------------------------------------
12,000 GENERAL ELECTRIC COMPANY 1,186,500
7,000 VULCAN MATERIALS COMPANY 426,125
---------
1,612,625
---------
CHEMICALS 1.29%
------------------------------------------------
12,000 NALCO CHEMICAL COMPANY 433,500
---------
COMPUTERS 9.07%
------------------------------------------------
8,000 CISCO SYSTEMS, INC.* 509,000
14,000 ELECTRONIC DATA SYSTEMS 605,500
4,000 INTERNATIONAL BUSINESS MACHINES CORPORATION 604,000
11,000 MICROSOFT CORPORATION* 908,875
10,000 ORACLE CORPORATION* 417,500
---------
3,044,875
---------
COSMETICS/PERSONAL CARE 1.97%
------------------------------------------------
10,000 GILLETTE COMPANY 777,500
---------
ELECTRICAL EQUIPMENT 2.60%
------------------------------------------------
9,000 EMERSON ELECTRIC COMPANY 870,750
---------
ELECTRONICS 5.97%
------------------------------------------------
13,000 HEWLETT-PACKARD COMPANY 653,250
7,000 INTEL CORPORATION 916,563
7,000 MOTOROLA, INC. 429,625
---------
1,999,438
---------
* INDICATES NONINCOME-PRODUCING SECURITY.
<PAGE>
STRATUS FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
GROWTH PORTFOLIO
PERCENT
OF NET MARKET
SHARES COMMON STOCK (CONTINUED) ASSETS VALUE
--------- --------------------------------- ----------- ---------
ENTERTAINMENT/LEISURE 1.48%
------------------------------------------------
15,000 CARNIVAL CORPORATION CLASS A $ 495,000
---------
FINANCIAL SERVICES 7.14%
------------------------------------------------
24,000 BARNETT BANK, INC 987,000
8,000 DEAN WITTER DISCOVER 530,000
17,010 MERCANTILE BANCORPORATION 873,888
---------
2,390,888
---------
FOOD/BEVERAGE/TABACCO 4.62%
------------------------------------------------
10,000 COCA COLA COMPANY 526,250
16,000 PEPSICO, INC. 468,000
17,000 SYSCO CORPORATION 554,625
---------
1,548,875
---------
FOOD PROCESSING 2.52%
------------------------------------------------
17,000 CONAGRA, INC. 845,750
---------
GAS - DISTRIBUTION 1.64%
------------------------------------------------
15,000 QUESTAR CORPORATION 551,250
---------
HOUSEHOLD PRODUCTS/WARE 2.20%
------------------------------------------------
8,000 COLGATE-PALMOLIVE COMPANY 738,000
---------
INSURANCE 9.23%
------------------------------------------------
8,000 AMERICAN INTERNATIONAL GROUP, INC. 866,000
11,000 ALLSTATE CORPORATION 636,625
5,500 GENERAL RE CORPORATION 67,625
16,000 TRAVELERS GROUP, INC. 726,000
---------
3,096,250
---------
MACHINE/TOOLS 2.40%
------------------------------------------------
16,000 DOVER CORPORATION 804,000
---------
<PAGE>
STRATUS FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
GROWTH PORTFOLIO
PERCENT
OF NET MARKET
SHARES COMMON STOCK (CONTINUED) ASSETS VALUE
--------- --------------------------------- ----------- ---------
MANUFACTURING 2.36%
------------------------------------------------
15,000 TYCO INTERNATIONAL, LTD. $ 793,125
---------
MEDICAL SUPPLIES/SERVICES 1.35%
------------------------------------------------
30,000 OLSTEN CORPORATION 453,750
---------
OFFICE/BUSINESS 1.88%
------------------------------------------------
12,000 XEROX CORPORATION 631,500
---------
OIL - FIELD SERVICES 1.54%
------------------------------------------------
12,000 ENRON CORPORATION 517,500
---------
OIL COMPANY - INTEGRATED 6.54%
------------------------------------------------
9,000 EXXON CORPORATION 882,000
6,500 MOBIL CORPORATION 794,625
3,000 ROYAL DUTCH PETROLEUM COMPANY-NY SHR ADR* 512,250
---------
2,188,875
---------
PACKAGING/CONTAINER 1.69%
------------------------------------------------
16,000 AVERY DENNISON CORPORATION 566,000
---------
PHARMACEUTICAL/MEDICAL 5.71%
------------------------------------------------
2,000 BRISTOL MYERS 217,500
16,000 JOHNSON & JOHNSON 746,250
8,000 MERCK & COMPANY, INC. 951,000
---------
1,914,750
---------
PUBLISHING/PRINTING 1.37%
------------------------------------------------
6,000 REUTERS HOLDINGS PLC (ADR) 459,000
---------
RETAIL/RETAIL STORE 3.30%
------------------------------------------------
15,000 PEP BOYS-MANNY MOE & JACK 461,250
14,000 SEARS ROEBUCK & COMPANY 645,750
---------
1,107,000
---------
<PAGE>
STRATUS FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
GROWTH PORTFOLIO
PERCENT
OF NET MARKET
SHARES COMMON STOCK (CONTINUED) ASSETS VALUE
--------- --------------------------------- ----------- ---------
UTILITIES 5.11%
------------------------------------------------
24,000 ALLEGHENY POWER SYSTEM, INC. $ 729,000
20,000 KANSAS CITY POWER & LIGHT COMPANY 570,000
20,000 PACIFICORP 410,000
---------
1,709,000
---------
TOTAL INVESTMENT (COST $22,950,494) 89.43% 30,099,201
CASH EQUIVALENTS 10.71% 3,606,254
OTHER ASSETS, LESS LIABILITIES (0.14)% (48,127)
------- -----------
TOTAL NET ASSETS 100.00% $33,657,328
======= ===========
<PAGE>
STRATUS FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
(UNAUDITED)
GOVERNMENT SECURITIES PORTFOLIO
PRINCIPAL PERCENT OF MARKET
AMOUNT NET ASSETS VALUE
- ------------------ ------------- ----------
U.S. GOVERNMENT SECURITIES 87.84%
-----------------------------------
2,000,000 FEDERAL NATIONAL MORTGAGE ASSN., 6.05%, DUE 1/12/98 $2,000,625
1,000,000 FEDERAL NATIONAL MORTGAGE ASSN., 6.20%, DUE 6/06/00 998,438
2,000,000 FEDERAL NATIONAL MORTGAGE ASSN., 6.35%, DUE 6/10/05 1,959,063
1,500,000 UNITED STATES TREASURY NOTE, 5.625%, DUE 10/31/97 1,500,702
2,000,000 UNITED STATES TREASURY NOTE, 7.125%, DUE 10/15/98 2,042,500
2,000,000 UNITED STATES TREASURY NOTE, 6.375%, DUE 7/15/99 2,018,125
1,000,000 UNITED STATES TREASURY NOTE, 7.75%, DUE 11/30/99 1,044,844
2,000,000 UNITED STATES TREASURY NOTE, 6.375%, DUE 1/15/00 2,017,500
2,000,000 UNITED STATES TREASURY NOTE, 5.75%, DUE 10/31/00 1,973,438
2,000,000 UNITED STATES TREASURY NOTE, 5.50%, DUE 12/31/00 1,953,750
2,000,000 UNITED STATES TREASURY NOTE, 6.50%, DUE 5/31/01 2,022,187
2,000,000 UNITED STATES TREASURY NOTE, 5.75%, DUE 8/15/03 1,940,000
-----------
21,471,172
TOTAL INVESTMENT IN SECURITIES (COST $21,492,075) 87.84% 21,471,172
CASH EQUIVALENTS 12.31% 3,008,751
OTHER ASSETS, LESS LIABILITIES (0.15)% (35,444)
-------- ----------
TOTAL NET ASSETS 100.00% $24,444,479
======= ==========
<PAGE>
STRATUS FUND, INC.
SCHEDULE OF INVESTMENTS
(UNAUDITED)
CAPITAL APPRECIATION PORTFOLIO
PERCENT
OF NET MARKET
SHARES COMMON STOCK 90.71% ASSETS VALUE
- ------------ --------------------------------- -------------- ------------
CHEMICALS 1.49%
------------------------------------------------
3,000 MISSISSIPPI CHEMICAL CORPORATION $ 72,000
----------
COMMERCIAL SERVICES 1.74%
------------------------------------------------
2,600 MANPOWER, INC. 84,500
----------
COMPUTERS 9.02%
------------------------------------------------
3,000 ORACLE CORPORATION * 125,250
3,200 STORAGE TECHNOLOGY CORPORATION * 152,400
2,800 WESTERN DIGITAL CORPORATION* 159,250
----------
436,900
----------
FINANCIAL SERVICES 1.83%
------------------------------------------------
1,200 FIRST UNION CORPORATION 88,800
----------
FOOD PROCESSING 2.84%
------------------------------------------------
2,800 INTERSTATE BAKERIES 137,550
----------
INSURANCE 5.69%
------------------------------------------------
1,900 ALLSTATE CORPORATION 109,963
2,600 CONSECO INC. 165,750
----------
275,712
----------
MACHINARY/EQUIPMENT 1.57%
------------------------------------------------
1,400 CASE CORPORATION 76,300
----------
MANUFACTURING 6.62%
------------------------------------------------
4,700 USG CORPORATION* 159,213
4,700 U.S. INDUSTRIES, INC.* 161,563
----------
320,776
----------
MEDICAL SUPPLIES/SERVICES 1.48%
------------------------------------------------
2,600 INVACARE CORPORATION 71,500
----------
* 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
- ------------ --------------------------------- -------------- ------------
METALS/MINING 2.63%
------------------------------------------------
1,500 POTASH CORPORATION OF SASKATCHEWAN, INC. $ 127,500
----------
OIL COMPANY EXPLORATION & PRODUCTION 9.62%
------------------------------------------------
3,250 NOBLE AFFILIATES, INC. 155,594
4,500 PARKER & PARSLEY PETROLEUM 165,375
2,800 UNITED MERIDIAN CORPORATION* 144,900
----------
465,869
----------
OIL & GAS DRILLING 7.65%
------------------------------------------------
3,500 ENSCO INTERNATIONAL, INC.* 169,750
5,700 ROWAN COMPANIES, INC.* 128,963
1,150 TRANSOCEAN 72,019
----------
370,732
----------
OIL FIELD MACHINARY & EQUIPMENT 6.23%
------------------------------------------------
2,300 COOPER CAMERON CORPORATION* 175,950
2,800 SMITH INTERNATIONAL, INC.* 125,650
----------
301,600
----------
OIL COMPANY - INTEGRATE 2.33%
------------------------------------------------
2,000 PENNZOIL COMPANY 113,000
----------
PUBLISHING/PRINTING 3.31%
------------------------------------------------
7,600 VALASSIS COMMUNICATION, INC.* 160,550
----------
REAL ESTATE 11.77%
------------------------------------------------
6,300 CAPSTEAD MORTGAGE CORPORATION 151,200
2,300 DEVELOPERS DIVERSIFIED REALTY CORPORATION 85,387
5,000 GENERAL GROWTH PROPERTIES 161,250
4,000 PATRIOT AMERICAN HOSPITAL 172,500
----------
570,337
----------
* 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 14.89%
------------------------------------------------
2,200 BARNES & NOBLE, INC. * $ 59,400
1,200 HOME DEPOT, INC. 60,150
5,500 LANDS' END* 145,750
4,800 REVCO D.S., INC.* 177,600
3,400 TJX COMPANIES, INC. 161,075
1,200 TOMMY HILFIGER CORPORATION* 57,600
2,600 WAL-MART STORES, INC. 59,474
----------
721,049
----------
TOTAL INVESTMENT IN SECURITIES (COST $3,780,853) 90.71% 4,394,675
CASH EQUIVALENTS 7.97% 386,328
OTHER ASSETS, LESS LIABILITIES 1.32% 63,808
------- ---------
NET ASSETS 100.00% $4,844,811
======= =========
* INDICATES NONINCOME-PRODUCING SECURITY.
<PAGE>
STRATUS FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
(UNAUDITED)
INTERMEDIATE GOVERNMENT BOND PORTFOLIO
PRINCIPAL PERCENT OF MARKET
AMOUNT NET ASSETS VALUE
------------- ------------ ---------
U.S. GOVERNMENT SECURITIES 92.77%
--------------------------------------
600,000 UNITED STATES TREASURY NOTE, 8.00%, DUE 1/15/97 $ 600,468
250,000 UNITED STATES TREASURY NOTE, 7.375%, DUE 11/15/97 253,594
200,000 UNITED STATES TREASURY NOTE, 7.875%, DUE 4/15/98 205,219
950,000 UNITED STATES TREASURY NOTE, 7.125%, DUE 10/15/98 970,187
700,000 UNITED STATES TREASURY NOTE, 6.375%, DUE 1/15/99 706,563
300,000 UNITED STATES TREASURY NOTE, 6.375%, DUE 5/15/99 302,578
400,000 UNITED STATES TREASURY NOTE, 6.00%, DUE 10/15/99 400,125
400,000 UNITED STATES TREASURY NOTE, 6.375%, DUE 1/15/00 403,500
500,000 UNITED STATES TREASURY NOTE, 7.125%, DUE 2/29/00 514,765
750,000 UNITED STATES TREASURY NOTE, 6.125%, DUE 7/31/00 750,117
500,000 UNITED STATES TREASURY NOTE, 6.25%, DUE 10/31/01 500,469
----------
5,607,585
TOTAL INVESTMENT IN SECURITIES (COST $5,587,200) 92.77% 5,607,586
CASH EQUIVALENTS 5.37% 324,862
OTHER ASSETS, LESS LIABILITIES 1.86% 111,841
------- ----------
NET ASSETS 100.00% $6,044,289
======= =========
<PAGE>
STRATUS FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
(UNAUDITED)
INTERNATIONAL PORTFOLIO
PRINCIPAL PERCENT OF MARKET
AMOUNT COMMON STOCK 100.54% NET ASSETS VALUE
- ------------ --------------------------------- -------------- ------------
AUTO/TRUCK PARTS 4.18%
------------------------------------------------
10,300 NISSAN MOTOR CO. ADR $ 122,312
5,700 PSA PEUGEOT ADR 160,077
--------
282,389
--------
BROADCASTING/MEDIA 4.47%
------------------------------------------------
4,300 CARLTON COMMUNICATIONS PLC 191,350
5,300 NEWS CORP LTD ADR 110,638
--------
301,988
--------
BUILDING MATERIALS/CONSTRUCTION 1.67%
------------------------------------------------
6,400 WILLIAMS HOLDINGS ADR 112,863
--------
CHEMICALS 6.65%
------------------------------------------------
3,700 BASF AG ADR 142,323
3,400 NORSK HYDRO ADR 182,325
2,300 QUIMICA MIN CHILI SA 124,488
--------
449,136
--------
DIVERSIFIED OPERATIONS 2.99%
------------------------------------------------
2,600 CIE GENERALE ADR 64,315
3,100 STET SOCIETAL ADR 137,562
--------
201,877
--------
ELECTRONICS 1.92%
------------------------------------------------
1,400 HITACHI LTD ADR 129,500
--------
* INDICATES NONINCOME-PRODUCING SECURITY.
<PAGE>
STRATUS FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
INTERNATIONAL PORTFOLIO
PERCENT
OF NET MARKET
SHARES COMMON STOCK (CONTINUED) ASSETS VALUE
- ------------ --------------------------------- -------------- ------------
INTERNATIONAL PORTFOLIO 1.97%
------------------------------------------------
3,400 ALLIED IRISH BANKS $ 133,450
--------
FINANCIAL SERVICES 17.58%
------------------------------------------------
4,200 AUSTRALIA & NEW ZEALAND BANK 130,725
6,785 BANCO FRANCES DEL RI 186,588
20,500 WEBS - JAPAN* 267,781
15,000 WEBS - SWITZERLAND* 180,000
2,500 NATIONAL WESTMINISTER 173,750
900 SANWA BANK LTD ADR 122,511
2,000 BANCO SANTANDER ADR* 127,000
--------
1,188,355
---------
HOLDING COMPANY 17.07%
------------------------------------------------
7,700 WEBS - MALAYSIA* 116,463
3,800 COUNTRYBASKETS - AUSTRALIA* 81,700
3,700 COUNTRYBASKETS - FRANCE* 153,087
5,500 COUNTRYBASKETS - GERMANY* 206,938
8,700 COUNTRYBASKETS - HONG KONG* 287,100
6,500 COUNTRYBASKETS - UNITED KINGDOM* 308,750
---------
1,154,038
---------
INSURANCE 1.72%
------------------------------------------------
2,100 ZURICH VERSI ADR* 116,550
---------
IRON/STEEL 2.08%
------------------------------------------------
4,900 KAWASAKI STEEL ADR 140,579
---------
MANUFACTURING 1.65%
------------------------------------------------
6,200 CONTINENTAL AG ADR 111,439
---------
MEDICAL SUPPLIES/SERVICES 1.95%
------------------------------------------------
6,700 EISAI COMPANY LTD ADR 131,610
---------
OFFICE/BUSINESS 3.73%
------------------------------------------------
4,400 RICOH CO LTD 252,089
---------
* INDICATES NONINCOME-PRODUCING SECURITY.
<PAGE>
STRATUS FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
INTERNATIONAL PORTFOLIO
PERCENT
OF NET MARKET
SHARES COMMON STOCK (CONTINUED) ASSETS VALUE
- ------------ --------------------------------- -------------- ------------
OIL/GAS 6.73%
------------------------------------------------
3,300 ENI S.P.A. ADR* $ 170,363
2,900 ELF AQUITAINE SA ADR 131,225
1,500 SHELL TRANSPORTATION & TRADING 153,563
---------
455,151
---------
PUBLISHING/PRINTING 6.17%
------------------------------------------------
6,300 ELSEVIER NV 212,625
9,800 VNU-VER NED BEZIT 204,528
---------
417,153
---------
REAL ESTATE 4.85%
------------------------------------------------
14,000 HONG KONG LAND HOLDINGS 194,600
---------
327,911
---------
RECREATION 1.75%
------------------------------------------------
5,200 RESORTS WORLD BHD ADR 118,392
---------
RETAIL STORE 2.09%
------------------------------------------------
115,400 CIFRA SA DE CV* 141,019
---------
TELECOMMUNICATIONS 3.39%
------------------------------------------------
1,400 TELECOM CORPORATION OF NEW ZEALAND 113,400
3,500 TELEFONOS DE MEXICO ADR 115,500
---------
228,900
---------
TRANSPORTATION 1.96%
------------------------------------------------
8,500 KEPPEL CORPORATION LTD ADR 132,468
---------
* INDICATES NONINCOME-PRODUCING SECURITY.
<PAGE>
STRATUS FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
INTERNATIONAL PORTFOLIO
PERCENT
OF NET MARKET
SHARES COMMON STOCK (CONTINUED) ASSETS VALUE
- ------------ --------------------------------- -------------- ------------
UTILITIES - TELECOMMUNICATIONS 2.46%
------------------------------------------------
2,400 TELEFONICA DE ESPANA ADR $ 166,200
---------
WHOLESALE SPECIAL LINE 1.51%
------------------------------------------------
1,900 ITOCHU CORPORATION 101,818
---------
TOTAL INVESTMENT IN SECURITIES (COST $6,731,372)100.54% 6,794,875
CASH EQUIVALENTS 0.08% 5,097
OTHER ASSETS, LESS LIABILITIES (0.62)% (41,651)
------- ---------
TOTAL NET ASSETS 100.00% $6,758,321
======= =========
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Statement of Assets and Liabilities
December 31, 1996
(Unaudited)
Government Capital
Growth Securities Appreciation
Assets: Portfolio Portfolio Portfolio
<S> <C> <C> <C>
------------- ------------- -------------
Investments in securities, at market
value (cost $22,950,494, 21,492,075,
and 3,780,852) $30,099,201 21,471,172 4,394,675
Cash equivalents 3,606,254 3,008,751 386,328
Accrued interest and dividends receivable 46,335 326,329 7,679
Receivable for securities sold - - 728,554
Receivable for fund shares sold 8,231 7,004 2,992
------------- ------------- -------------
Total assets 33,760,021 24,813,256 5,520,227
------------- ------------- -------------
Liabilities:
Accrued expenses, including investment
management and service fees payable
to adviser and administrator (note 3) 16,588 15,395 9,542
Distributions payable to shareholders - - 18,673
Payable for securities purchased - - 639,295
Payable for fund shares redeemed 86,105 353,382 7,906
------------- ------------- -------------
Total liabilities 102,693 368,777 675,416
------------- ------------- -------------
Net assets applicable to outstanding
capital stock $33,657,328 24,444,479 4,844,811
============= ============= =============
Net assets are represented by:
Capital stock outstanding, at par (note 5) 2,330 2,514 346
Additional paid-in capital 25,895,608 24,884,610 4,262,121
Accumulated undistributed net
investment income (loss) 4,045 13,388 (37,238)
Accumulated undistributed net realized
gain (loss) on investments 606,638 (435,130) 5,760
Unrealized appreciation
(depreciation) (note 4) 7,148,707 (20,903) 613,822
------------- ------------- -------------
Total net assets applicable
to shares outstanding $33,657,328 24,444,479 4,844,811
============= ============= =============
Shares outstanding and net asset value
per share
Shares of capital stock outstanding:
2,329,595, 2,513,720, and 345,797
respectively (note 5) $14.45 9.72 14.01
============= ============= =============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
STRATUS FUND, INC.
Statement of Assets and Liabilities
December 31, 1996
(Unaudited)
Intermediate
Government
Bond International
Assets: Portfolio Portfolio
------------- -------------
Investments in securities, at market
value (cost $5,587,200 and 6,731,372) $5,607,586 6,794,875
Cash equivalents 324,862 5,097
Accrued interest and dividends receivable 119,214 35,803
Receivable for fund shares sold - 450
------------- -------------
Total assets 6,051,662 6,836,225
------------- -------------
Liabilities:
Accrued expenses, including
investment management and service fees
payable to adviser and administrator (note 3) 5,667 8,577
Payable for fund shares redeemed 1,706 69,327
------------- -------------
Total liabilities 7,373 77,904
------------- -------------
Net assets applicable to outstanding
capital stock $6,044,289 6,758,321
============= =============
Net assets are represented by:
Capital stock outstanding, at par (note 5) 574 669
Additional paid-in capital 6,135,060 6,688,918
Accumulated undistributed net
investment income (loss) 5,040 (310)
Accumulated undistributed net
realized gain (loss) on investments (116,771) 5,541
Unrealized appreciation (note 4) 20,386 63,503
------------- -------------
Total net assets applicable
to shares outstanding $6,044,289 6,758,321
============= =============
Shares outstanding and net asset value per share
Shares of capital stock outstanding:
574,186 and 668,871 respectively (note 5) $10.53 10.10
============= =============
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Statement of Operations
Six Months Ended December 31, 1996
(Unaudited)
Intermediate
Government Capital Government
Growth Securities Appreciation Bond International
Portfolio Portfolio Portfolio Portfolio Portfolio
---------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Investment income:
Dividends $226,835 - 18,230 - 43,082
Interest 52,297 701,271 10,386 206,197 18,824
---------- -------- ---------- ---------- -----------
Total investment income 279,132 701,271 28,616 206,197 61,906
---------- -------- ---------- ---------- -----------
Expenses (note 3):
Investment advisory fees 63,615 60,105 10,785 21,877 18,467
Administration fees 31,808 30,073 5,048 8,425 4,015
Accounting 3,709 3,697 2,642 3,067 -
Custodial fees - - 3,711 3,728 -
Securities pricing 1,844 422 1,653 - 342
Other operating expenses 15,167 14,607 4,089 2,624 3,629
---------- -------- ---------- ---------- -----------
Total expenses 116,143 108,904 27,928 39,721 26,453
Less fee waiver (note 3) (19,086) (18,044) (3,028) (5,055) (2,409)
---------- -------- ---------- ---------- -----------
Net expenses 97,057 90,860 24,900 34,666 24,044
---------- -------- ---------- ---------- -----------
Net investment income 182,075 610,411 3,716 171,531 37,862
---------- -------- ---------- ---------- -----------
Realized and unrealized gain on
investments (note 4):
Net realized gain (loss) 704,415 (69,207) (99,400) 1,448 5,541
Net unrealized appreciation
(depreciation):
Beginning of period 3,519,739 (282,536) 188,036 (14,824) -
Unrealized appreciation of
securities received in tax-free
exchange (note 6) 1,862,355 - - - -
End of period 7,148,707 (20,903) 613,822 20,386 63,503
---------- -------- ---------- ---------- -----------
Net unrealized appreciation 1,766,613 261,633 425,786 35,210 63,503
---------- -------- ---------- ---------- -----------
Net realized and unrealized
gain on investments 2,471,028 192,426 326,386 36,658 69,044
---------- -------- ---------- ---------- -----------
Net increase in net assets
resulting from operations $2,653,103 802,837 330,102 208,189 106,906
========== ======== ========== ========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Statements of Changes in Net Assets
Six Months Ended December 31, 1996
and Year ended June 30, 1996
Government
Growth Securities
Portfolio Portfolio
Six Months Six
Ended Year Ended Months Ended Year Ended
Dec. 31, 1996 June 30, 1996 Dec. 31,1996 June 30,1996
-------------- -------------- --------------- --------------
(Unaudited) (Unaudited)
Operations:
<S> <C> <C> <C> <C>
Net investment income $182,075 $331,555 610,411 952,369
Net realized gain (loss) on
investments 704,415 1,539,268 (69,207) (56,450)
Unrealized appreciation
(depreciation) 1,766,613 1,768,406 261,633 (348,738)
--------- --------- -------- ---------
Net increase in net assets
resulting from operations 2,653,103 3,639,229 802,837 547,181
--------- --------- -------- ---------
Distributions to shareholders from:
Net investment income 187,981 327,797 609,553 949,207
Net realized gains 1,270,098 242,886 - -
--------- --------- -------- ---------
Total distributions 1,458,079 570,683 609,553 949,207
--------- --------- -------- ---------
Capital share transactions:
Proceeds from sales 4,515,602 11,764,925 3,847,335 14,607,453
Net assets from
Common Trust Fund (note 6) 6,102,448 - - -
Payment for redemptions (4,120,866) (3,553,648) (3,174,636) (5,841,352)
Reinvestment of net investment
income and net realized gain
distributions at
net asset value 1,337,137 534,808 535,333 793,884
--------- --------- -------- ---------
Total increase from capital
share transactions 7,834,321 8,746,085 1,208,032 9,559,985
--------- --------- -------- ---------
Total increase in net assets 9,029,345 11,814,631 1,401,316 9,157,959
Net assets:
Beginning of period 24,627,983 12,813,352 23,043,163 13,885,204
--------- --------- -------- ---------
End of period $33,657,328 24,627,983 24,444,479 23,043,163
========== ========== ========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Statements of Changes in Net Assets
Six Months Ended December 31, 1996
and Year ended June 30, 1996
Intermediate
Capital Government
Appreciation Bond
Portfolio Portfolio
Six Months Six Months
Ended Year Ended Ended Year Ended
Dec. 31, 1996 June 30, 1996 Dec. 31, 1996 June 30, 1996
(Unaudited) (Unaudited)
------------ ----------- -------------- ------------
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss) $3,716 ($18,720) 171,531 326,734
Net realized gain (loss) on
investments (99,400) 262,607 1,448 (388)
Unrealized appreciation
(depreciation) 425,786 16,846 35,210 (61,056)
--------- --------- -------- ---------
Net increase in net assets
resulting from operations 330,102 260,733 208,189 265,290
--------- --------- -------- ---------
Distributions to shareholders from:
Net investment income - - 171,551 325,597
Net realized gains 35,048 72,180 - -
--------- --------- -------- ---------
Total distributions 35,048 72,180 171,551 325,597
--------- --------- -------- ---------
Capital share transactions:
Proceeds from sales 2,328,964 1,536,363 94,651 3,719,234
Payment for redemptions (269,010) (55,095) (1,454,766) (2,213,866)
Reinvestment of net investment
income and net realized gain
distributions at net asset value 15,333 56,061 143,260 261,014
--------- --------- -------- ---------
Total increase (decrease)
from capital
share transactions 2,075,287 1,537,329 (1,216,855) 1,766,382
--------- --------- -------- ---------
Total increase (decrease) in
net assets 2,370,341 1,725,882 (1,180,217) 1,706,075
Net assets:
Beginning of period 2,474,470 748,588 7,224,506 5,518,431
--------- --------- -------- ---------
End of period $4,844,811 2,474,470 6,044,289 7,224,506
========= ========== ========= ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
STRATUS FUND, INC.
Statements of Changes in Net Assets
The Period from October 1, 1996 (commencement
of operations) to December 31, 1996
International
Portfolio
Period Ended
Dec. 31, 1996
(Unaudited)
--------------
Operations:
Net investment income $37,862
Net realized gain on investments 5,541
Unrealized appreciation 63,503
--------
Net increase in net assets
resulting from operations 106,906
--------
Distributions to shareholders from:
Net investment income 38,173
Net realized gains -
--------
Total distributions 38,173
--------
Capital share transactions:
Proceeds from sales 6,820,390
Payment for redemptions (168,216)
Reinvestment of net investment income
and net realized gain distributions at
net asset value 37,414
----------
Total increase from capital
share transactions 6,689,588
----------
Total increase in net assets 6,758,321
Net assets:
Beginning of period -
----------
End of period $6,758,321
==========
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Financial Highlights
Six Months ended December 31, 1996
Years ended June 30, 1996 and 1995 and the period from October 8,
1993 (commencement of operations) to June 30, 1994
Growth
Portfolio
-------------------------------------------------
Six Year Year Period
Months Ended Ended Ended Ended
Dec. 31, 1996 June 30,1996 June 30, 1995 June 30,1994
--------------- ------------ ------------- ---------------
(Unaudited)
Net asset value:
<S> <C> <C> <C> <C>
Beginning of period $13.67 11.47 9.84 10.00
------ ----- ---- -----
Income from investment operations:
Net investment income 0.10 0.23 0.22 0.19
Net realized and unrealized
gain (loss) on investments 1.39 2.36 1.72 (0.16)
---- ---- ---- ------
Total income from
investment operations 1.49 2.59 1.94 0.03
---- ---- ---- ----
Less distributions:
Dividends from net
investment income (0.11) (0.22) (0.22) (0.19)
Distributions from capital gains (0.60) (0.17) (0.09) -
------ ------ ------ ------
Total distributions (0.71) (0.39) (0.31) (0.19)
------ ------ ------ ------
End of period $14.45 13.67 11.47 9.84
=========== ========== ========== ============
Total return 23.0% ** 22.6% 20.3% (.03%) *
=========== ========== ========== ============
Ratios/Supplemental data:
Net assets, end of period $33,657,328 24,627,983 12,813,352 12,892,161
Ratio of expenses to average
net assets 0.76% ** 0.71% 0.82% 0.76% **
Ratio of net income to average
net assets 1.43% ** 1.78% 2.14% 2.38% **
Portfolio turnover rate 34.09% 92.72% 19.89% 10.05%
*Total return is not annualized.
**Annualized for those periods less than twelve months in duration.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Financial Highlights
Six Months ended December 31, 1996 and
Years ended June 30, 1996 and 1995 and the period from October 8,
1993 (commencement of operations) to June 30, 1994
Government Securities
Portfolio
-----------------------------------------------
Period Year Year Period
Ended Ended Ended Ended
Dec. 31, 1996 June 30,1996 June 30,1995 June 30,1994
------------- ------------ ------------- ----------------
(Unaudited)
Net asset value:
<S> <C> <C> <C> <C>
Beginning of period $9.64 $9.77 9.40 10.00
----- ----- ---- -----
Income (loss) from investment operations:
Net investment income 0.25 0.49 0.45 0.27
Net realized and unrealized gain
(loss) on investments 0.08 (0.13) 0.37 (0.60)
---- ------ ---- ------
Total income (loss) from
investment operations 0.33 0.36 0.82 (0.33)
---- ---- ---- ------
Less distributions from net (0.25) (0.49) (0.45) (0.27)
investment income ------ ------ ------ ------
End of period $9.72 $9.64 9.77 9.40
=========== ========== ========== ==========
Total return 6.8% ** 3.7% 9.0% (3.4%) *
=========== ========== ========== ==========
Ratios/Supplemental data:
Net assets, end of period $24,444,479 23,043,163 13,885,204 12,477,517
Ratio of expenses to average net assets 0.76% ** 0.69% 0.80% 0.74% **
Ratio of net income to average net assets 5.09% ** 5.04% 4.82% 3.89% **
Portfolio turnover rate 11.66% 40.61% 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.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Financial Highlights
Six Months Ended December 31, 1996 and
Years ended June 30, 1996, 1995 and 1994 and the Period from January 4,
1993 (commencement of operations) to June 30, 1993
Capital Appreciation Portfolio
---------------------------------------------------
Six Year Year Year Period
Months Ended Ended Ended Ended Ended
Dec. 31, June 30, June 30, June 30, June 30,
1996 1996 1995 1994 1993
------------ ------- -------- ------- ---------
(Unaudited)
Net asset value:
<S> <C> <C> <C> <C> <C>
Beginning of period $13.19 11.23 8.95 9.40 10.00
------ ----- ---- ---- -----
Income (loss) from investment operations:
Net investment income (loss) 0.01 (0.19) (0.15) (0.12) (0.04)
Net realized and unrealized
gain (loss) on investments 1.08 2.88 2.62 (0.33) (0.56)
---- ---- ---- ------ ------
Total Income (loss) from
Investment Operations 1.09 2.69 2.47 (0.45) (0.60)
---- ---- ---- ------ ------
Less distributions from
capital gains (0.27) (0.73) (0.19) - -
----------- --------- -------- ------- ---------
End of period $14.01 13.19 11.23 8.95 9.40
=========== ========= ======== ======= =========
Total return 13.8% ** 26.0% 28.6% (4.8%) (6.0%) *
=========== ========= ======== ======= =========
Ratios/Supplemental data:
Net assets, end of period $4,844,811 2,474,470 748,588 653,757 583,403
Ratio of expenses to average
net assets 1.24% ** 2.84% 2.69% 2.13% 2.41% **
Ratio of net income (loss)
to average net assets 0.18% ** (1.54%) (1.59%) (1.27%) (1.04%) **
Portfolio turnover rate 129.15% 179.06% 214.47% 9.09% 4.42%
*Total return is not annualized.
**Annualized for those periods less than twelve months in duration.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Financial Highlights
Six Months Ended December 31, 1996 and
Years ended June 30, 1996, 1995, 1994 and 1993
Intermediate Government Bond
Portfolio
-------------------------------------------------------------
Six Year Year Year Year Year
Months Ended Ended Ended Ended Ended Ended
Dec. 31, June 30, June 30, June 30, June 30, June 30,
1996 1996 1995 1994 1993 1992
------------ -------- --------- -------- --------- --------
(Unaudited)
Net asset value:
<S> <C> <C> <C> <C> <C> <C>
Beginning of period $10.47 10.56 10.29 10.84 10.72 10.02
------ ----- ----- ----- ----- -----
Income (loss) from
investment operations:
Net investment income 0.27 0.52 0.50 0.47 0.38 0.94
Net realized and unrealized
gain (loss) on investments 0.06 (0.09) 0.27 (0.55) 0.34 0.70
---- ------ ---- ------ ---- ----
Total income (loss) from
investment operations 0.33 0.43 0.77 (0.08) 0.72 1.64
---- ---- ---- ------ ---- ----
Less distributions:
Dividends from net
investment income (0.27) (0.52) (0.50) (0.47) (0.38) (0.94)
Distributions from
capital gains - - - - (0.22) -
----- ----- ----- ----- ------ -----
Total distributions (0.27) (0.52) (0.50) (0.47) (0.60) (0.94)
------ ------ ------ ------ ------ ------
End of period $10.53 10.47 10.56 10.29 10.84 10.72
========== ======== ========= ========= ========= =========
Total return 6.4% * 4.1% 7.9% (0.8%) 8.9% 11.4%
========== ======== ========= ========= ========= =========
Ratios/Supplemental data:
Net assets, end of period $6,044,289 7,224,506 5,518,431 7,774,768 6,747,719 4,680,585
Ratio of expenses to
average net assets 1.03% * 1.03% 1.11% 1.05% 1.12% 1.04%
Ratio of net income to
average net assets 5.12% * 4.95% 4.84% 4.41% 4.58% 5.31%
Portfolio turnover rate 9.41% 4.05% 27.67% 21.02% 32.39% 205.89%
*Annualized for those periods less than twelve months in duration.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
STRATUS FUND, INC.
Financial Highlights
Period from October 1, 1996
(commencement of operations) to December 31, 1996
(Unaudited)
International
Portfolio
-----------------
Period Ended
Dec. 31, 1996
-----------
Net asset value:
Beginning of period $10.00
-----
Income from investment operations:
Net investment income 0.06
Net realized and unrealized gain
on investments 0.10
----
Total income from
investment operations 0.16
Less distributions from net investment income (0.06)
End of period $10.10
===========
Total return 6.6% *
===========
Ratios/Supplemental data:
Net assets, end of period $6,758,321
Ratio of expenses to average net assets 0.75% *
Ratio of net income to average net assets 1.18% *
Portfolio turnover rate 5.47%
*Annualized for those periods less than twelve months in duration.
See accompanying notes to financial statements.
<PAGE>
STRATUS FUND, INC.
Notes to Financial Statements
December 31, 1996
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, 1996, the following series are presently authorized and have
shares outstanding.
Growth Portfolio Capital Appreciation
Portfolio
Government Intermediate Government
Securities Portfolio Bond Portfolio
International 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.
Use of Estimates: In preparing the financial statements, management is
required to make estimates and assumptions that affect the reported amounts
of assets and liabilities as of the date of the financial statements and
changes in net assets for the period. Actual results could differ from
those estimates.
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.
o 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 Growth 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.
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, 1996, the Growth and Capital Appreciation Portfolios had no
such option contracts outstanding nor were any written during the year.
At December 31, 1996, 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 is accrued daily. Amortization of
premium and discount is accrued daily using both the constant yield and the
straight-line methods. Realized investment gains and losses are determined
by specifically identifying the issue sold.
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 Growth 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.
3. Fees, Expenses and Related Party Transactions
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, 1996, the annualized fee
ranged from 0.0% to 1.42%.
Growth 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. The International Portfolio will pay the Adviser
a fee equal to 1.15% per annum of its average daily net assets. These
Portfolios do not participate in performance based compensation scales.
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 the Growth, Government Securities, and International 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 record keeping 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 July 1, 1996 to December 31, 1996 the
Administrator waived .15% of its .25% administrative fee.
Under the terms of the advisory, custodian and administrative agreements
outlined above, the Portfolios collectively incurred $174,848.50, $7,438.83
and $31,747.24 for such services
At December 31, 1996, the following accrued investment advisory and
administrative fees were payable to the Adviser and Administrator.
Payable to Payable to
Adviser Administrator Total
---------- -------------- -------
Growth Portfolio 11,719 2,344 14,063
Government Securities Portfolio 10,475 2,103 12,578
Capital Appreciation Portfolio 5,619 401 6,020
Intermediate Government
Bond Portfolio 3,402 527 3,929
International Portfolio 6,583 572 7,155
======= ====== =======
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, 1996, 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 $20,449
for their brokerage services during the six months ended December 31, 1996.
The Portfolios also retained SMITH HAYES (the Distributor) to act as the
underwriter and distributor of the Fund's shares. The Distributor received
$55 and paid out 100% of this amount as commissions and dealer allowances.
4. Securities Transactions
Purchases of securities and proceeds from sales were as follows for each
Portfolio:
Purchases of Proceeds
Securities from Sales
--------- ---------
Growth Portfolio $8,859,078 $9,449,749
Government Securities Portfolio 4,638,488 3,877,534
Capital Appreciation Portfolio 6,454,862 4,542,305
Intermediate Government Bond Portfolio 598,098 1,753,367
International Portfolio 6,970,225 244,393
========= ==========
At December 31, 1996, the aggregate gross unrealized appreciation and the
aggregate gross unrealized depreciation of securities in each Portfolio
were as follows:
Aggregate Gross
Unrealized
Appreciation Depreciation
------------ ------------
Growth Portfolio $7,315,030 $166,323
Government Securities Portfolio 117,041 137,944
Capital Appreciation Portfolio 655,133 41,310
Intermediate Government Bond Portfolio 35,108 14,722
International Portfolio 307,419 243,916
========== ==========
5. 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 Board of Directors have
authorized twenty million shares to be issued in the Growth Portfolio and
ten million each in the Government Securities Portfolio, Capital
Appreciation Portfolio, Intermediate Government Bond Portfolio, and the
International Portfolio.
Transactions in the capital stock of each Portfolio for the period ended
December 31, 1996 were as follows:
Government
Growth Securities
Portfolio Portfolio
---------- -----------
Transactions in shares:
Shares sold 320,146.922 396,802.154
Shares issued in fund conversion 417,404.084 -
Shares redeemed (302,643.250) (328,080.074)
Reinvested dividends 92,471.442 55,223.009
------------ --------------
Net increase 527,379.198 123,945.089
=========== =============
Intermediate
Capital Government
Appreciation Bond
Portfolio Portfolio
------------ ------------
Transactions in shares:
Shares sold 177,603.109 9,018.242
Shares redeemed (20,456.683) (138,318.609)
Reinvested dividends 1,101.520 13,644.969
------------ ------------
Net increase (decrease) 158,247.946 (115,655.398)
=========== ============
International
Portfolio
-------------
Transactions in shares:
Shares sold 681,749.951
Shares redeemed (16,620.846)
Reinvested dividends 3,741.427
------------
Net increase 668,870.532
===========
At December 31, 1996, directors, officers and employees of the Fund, the
Adviser and Administrator and their immediate families held the following
in each Portfolio:
Shares Value
--------- ---------
Growth Portfolio 18,936.889 $273,638
Government Securities Portfolio 36,111.787 351,007
Capital Appreciation Portfolio 16,696.902 233,924
Intermediate Government Bond Portfolio 13,079.067 137,723
International Portfolio 3,982.307 40,221
At December, 1996, UBATCO held, in nominee name, the following in each
Portfolio:
Shares Value
--------- ---------
Growth Portfolio 2,324,108.979 $33,583,375
Government Securities Portfolio 2,515,642.777 24,452,048
Capital Appreciation Portfolio 347,101.490 4,862,892
Intermediate Government Bond Portfolio 570,201.746 6,004,224
International Portfolio 668,888.770 6,755,777
6. Business Changes
The International Portfolio commenced operations on October 1, 1996.
On December 27, 1996, the net assets of Union Bank's Common Trust Equity
Fund were transferred into the Growth Portfolio with a corresponding
purchase of shares for the Fund's shareholders. The transaction was
accounted for as a tax free exchange. The market value of the assets
transferred was $6,102,448 with unrealized appreciation of $1,862,355.
