STRATUS FUND, INC.
GROWTH
GOVERNMENT SECURITIES
CAPITAL APPRECIATION
INTERMEDIATE GOVERNMENT BOND
INTERNATIONAL
SEMI-ANNUAL REPORT
DECEMBER 31, 1999
<PAGE>
GROWTH INSTITUTIONAL PORTFOLIO
[GRAPHIC OMITTED]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
GROWTH INSTITUTIONAL PORTFOLIO AND THE S&P 500 INDEX
AVG. ANNUAL RETURN 12/31/99 VALUE
- ----------------- ---------------------------
1 YEAR 22.41% GROWTH INSTITUTIONAL $30,831.07
5 YEAR 24.36% S&P 500 $36,315.63
INCEPTION 19.80%
- --------------------------------------------------------------------------------
GROWTH RETAIL PORTFOLIO
GRAPHIC OMITTED]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
GROWTH RETAIL PORTFOLIO AND THE S&P 500 INDEX
RETURN * 12/31/99 VALUE
- ----------------- ---------------------------
1 YEAR 22.04% GROWTH RETAIL $14,323.68
5 YEAR - S&P 500 $15,584.65
INCEPTION 22.71%
- --------------------------------------------------------------------------------
Results for the Retail Shares reflect payment of a maximum sales charge of 4.5%
on the $10,000 investment with dividends and capital gains reinvested.
Average annual return does not include payment of a sales charge and assumes
reinvestment of dividends and capital gains.
Past performance is not predictive of future performance.
Growth Portfolio Institutional Shares for the period October 8, 1993 (inception)
through December 31, 1999
Growth Portfolio Retail Shares for the period January 7, 1998 (inception)
through December 31, 1999
1
<PAGE>
GOVERNMENT SECURITIES INSTITUTIONAL PORTFOLIO
[GRAPHIC OMITTED]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
GOVERNMENT SECURITIES INSTITUTIONAL PORTFOLIO AND THE
MERRILL LYNCH U.S. TREASURY INTER-TERM INDEX
AVG. ANNUAL RETURN 12/31/99 VALUE
- ------------------ -------------------------------------
1 YEAR 1.77% GOVERNMENT SECURITIES INSTITUTIONAL $13,124.12
5 YEAR 6.33% MERRILL LYNCH U.S. TREASURY
INCEPTION 4.46% INTER-TERM BOND $13,464.74
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES RETAIL PORTFOLIO
[GRAPHIC OMITTED]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
GOVERNMENT SECURITIES RETAIL PORTFOLIO AND THE
MERRILL LYNCH U.S. TREASURY INTER-TERM INDEX
RETURN * 12/31/99 VALUE
- ------------------ -------------------------------------
1 YEAR 1.49% GOVERNMENT SECURITIES RETAIL $10,364.48
5 YEAR - MERRILL LYNCH U.S. TREASURY
INCEPTION 3.43% INTER-TERM BOND $10,723.63
Results for the Retail Shares reflect payment of a maximum sales charge of
3% on the $10,000 investment with dividends and capital gains reinvested.
Average annual return does not include payment of a sales charge and assumes
reinvestment of dividends and capital gains.
Past performance is not predictive of future performance.
Government Securities Portfolio Institutional Shares for the period
October 8, 1993 (inception) through December 31, 1999.
Government Securities Portfolio Retail Shares for the period
January 13, 1998 (inception) through December 31, 1999.
2
<PAGE>
CAPITAL APPRECIATION INSTITUTIONAL PORTFOLIO
[GRAPHIC OMITTED]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
CAPITAL APPRECIATION INSTITUTIONAL PORTFOLIO AND THE RUSSELL 2000
AVG. ANNUAL RETURN 12/31/99 VALUE
- ------------------ ------------------------------------
1 YEAR 4.34%
5 YEAR 13.07% CAPITAL APPRECIATION INSTITUTIONAL $16,934.45
INCEPTION 7.83% RUSSELL 2000 $25,339.22
- --------------------------------------------------------------------------------
CAPITAL APPRECIATION RETAIL PORTFOLIO
[GRAPHIC OMITTED]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
CAPITAL APPRECIATION RETAIL PORTFOLIO AND THE RUSSELL 2000
RETURN * 12/31/99 VALUE
- ------------------ ------------------------------------
1 YEAR 3.97%
5 YEAR CAPITAL APPRECIATION RETAIL $10,061.97
INCEPTION 2.67% RUSSELL 2000 $11,863.08
Results for Retail Shares reflect payment of a maximum sales charge of 4.5%
on the $10,000 investment with dividends and capital gains reinvested.
Average annual return does not include payment of a sales charge and assumes
reinvestment of dividends and capital gains.
Past performance is not predictive of future performance.
Capital Appreciation Portfolio Institutional Shares for the period
January 4, 1993 (inception) through December 31, 1999.
Capital Appreciation Portfolio Retail Shares for the period
January 7, 1998 (inception) through December 31, 1999.
3
<PAGE>
INTERMEDIATE GOVERNMENT BOND INSTITUTIONAL PORTFOLIO
[GRAPHIC OMITTED]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
INTERMEDIATE GOVERNMENT BOND INSTITUTIONAL PORTFOLIO AND THE
MERRILL LYNCH U.S. TREASURY INTER-TERM INDEX
AVG. ANNUAL RETURN 12/31/99 VALUE
- ------------------ ------------------------------------------
1 YEAR 2.03% INTERMEDIATE GOVERNMENT BOND INSTIT. $16,008.97
5 YEAR 5.89% MERRILL LYNCH U.S. TREASURY
INCEPTION 5.60% INTER-TERM BOND $17,286.83
- --------------------------------------------------------------------------------
INTERMEDIATE GOVERNMENT BOND RETAIL PORTFOLIO
[GRAPHIC OMITTED]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
INTERMEDIATE GOVERNMENT BOND RETAIL PORTFOLIO AND THE
MERRILL LYNCH U.S. TREASURY INTER-TERM INDEX
RETURN * 12/31/99 VALUE
- ------------------ ------------------------------------------
1 YEAR 1.74% INTERMEDIATE GOVERNMENT BOND RETAIL $10,362.08
5 YEAR MERRILL LYNCH U.S. TREASURY
INCEPTION 3.49% INTER-TERM BOND $10,723.63
Results for Retail Shares reflect payment of a maximum sales charge of 3% on
the $10,000 investment with dividends and capital gains reinvested.
Average annual return does not include payment of a sales charge and assumes
reinvestment of dividends and capital gains.
Past performance is not predictive of future performance.
Intermediate Government Bond Portfolio Institutional Shares for the period
May 15, 1991 (inception) through December 31, 1999.
Intermediate Government Bond Portfolio Retail Shares for the period
January 27, 1998 (inception) through December 31, 1999.
4
<PAGE>
INTERNATIONAL INSTITUTIONAL PORTFOLIO
[GRAPHIC OMITTED]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
INTERNATIONAL INSTITUTIONAL PORTFOLIO AND THE MORGAN STANLEY INTERNATIONAL
AVG. ANNUAL RETURN 12/31/99 VALUE
- ------------------ ------------------------------------------
1 YEAR 17.38% INTERNATIONAL INSTITUTIONAL PORTFOLIO $13,698.40
5 YEAR - MORGAN STANLEY INTERNATIONAL $15,106.39
INCEPTION 10.17%
- --------------------------------------------------------------------------------
INTERNATIONAL RETAIL PORTFOLIO
[GRAPHIC OMITTED]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
INTERNATIONAL RETAIL PORTFOLIO AND THE MORGAN STANLEY INTERNATIONAL
RETURN* 12/31/99 VALUE
- ------------------ ------------------------------------------
1 YEAR 17.11% INTERNATIONAL RETAIL PORTFOLIO $12,292.02
5 YEAR MORGAN STANLEY INTERNATIONAL $14,892.70
INCEPTION 13.59%
Results for Retail Shares reflect payment of a maximum sales charge of 4.5%
on the $10,000 investment with dividends and capital gains reinvested.
Average annual return does not include payment of a sales charge and
assumes reinvestment of dividends and capital gains.
Past performance is not predictive of future performance.
International Portfolio Institutional Shares for the period October 1, 1996
(inception) through December 31, 1999.
International Portfolio Retail Shares for the period January 7, 1998 (inception)
through December 31, 1999.
5
<PAGE>
STRATUS FUND, INC.
Schedule of Investments
December 31, 1999
GROWTH PORTFOLIO
Percent
of Net Market
Shares COMMON STOCK - 97.30% Assets Value
------ --------------------- ------ -----
Aerospace/Defense 2.00%
-----------------
24,000 Honeywell International, Inc. $1,384,500
Broadcasting/Media 1.19%
------------------
15,000 Tribune Company 825,938
Chemicals 1.38%
---------
25,000 Great Lakes Chemical Corp 954,688
Computer Related 10.38%
----------------
7,000 Analog Devices, Inc.* 651,000
9,000 Cisco Systems, Inc.* 964,125
10,000 International Business Machine Corp. 1,080,000
22,000 Microsoft Corp.* 2,568,500
20,000 Parametric Technology, Inc.* 541,250
18,000 Sun Microsystems, Inc.* 1,393,875
---------
7,198,750
Electronics 9.10%
-----------
18,000 Intel Corp. 1,481,625
25,000 JD Edwards & Co.* 746,875
11,000 Phillips Electric 1,485,000
9,000 Solectron Corp.* 856,125
18,000 Texas Instruments, Inc. 1,743,750
---------
6,313,375
Entertainment/Leisure 2.07%
---------------------
30,000 Carnival Corp. Class A 1,434,375
Financial Services 6.71%
------------------
11,000 American Express, Co. 1,828,750
28,000 Citigroup, Inc. 1,555,750
30,000 SLM Holding Corp. 1,267,500
---------
4,652,000
6
<PAGE>
STRATUS FUND, INC.
Schedule of Investments (Continued)
December 31, 1999
GROWTH PORTFOLIO
Percent
of Net Market
Shares Assets Value
- -------- ------- ------
Forest Products/Paper 1.69%
---------------------
18,000 Kimberly Clark Corp $1,174,500
Industrial Services 2.06%
-------------------
20,000 Ecolab, Inc. 782,500
5,000 Corning, Inc. 644,688
-------
1,427,188
Insurance 4.31%
---------
18,000 American General Corp. 1,365,750
15,000 American International Group 1,621,875
---------
2,987,625
Iron/Steel 1.98%
----------
25,000 Nucor Corp. 1,370,313
Machine/Tools 4.70%
-------------
30,000 Dover Corp 1,361,250
15,000 Applied Materials, Inc.* 1,900,313
---------
3,261,563
Multimedia 0.84%
----------
8,000 Time Warner, Inc. 579,500
Manufacturing 4.31%
-------------
11,000 General Electric Co. 1,702,250
33,000 Tyco International Ltd. 1,282,875
---------
2,985,125
Medical Supplies/Service 3.09%
------------------------
20,000 Baxter International, Inc. 1,256,250
12,000 Cardinal Health, Inc. 574,500
6,000 Visx, Inc. 310,500
-------
2,141,250
7
<PAGE>
STRATUS FUND, INC.
Schedule of Investments (Continued)
December 31, 1999
GROWTH PORTFOLIO
Percent
of Net Market
Shares Assets Value
- -------- ------- ------
Metals/Mining 2.63%
-------------
22,000 Alcoa, Inc. $1,826,000
Oil Company-Integrated 4.30%
----------------------
37,000 Exxon Corp. 2,980,809
Packaging/Container 2.10%
-------------------
20,000 Avery Dennison 1,457,500
Paper/Related Products 1.13%
----------------------
14,000 International Paper 790,125
Pharmaceutical/Medical 4.37%
----------------------
18,000 Bristol-Myers Squibb, Co. 1,155,375
8,000 Eli Lilly, Co. 532,000
20,000 Merck & Company, Inc. 1,341,250
---------
3,028,625
Retail Store/Apparel 1.59%
--------------------
15,000 Dayton Hudson 1,101,563
Retail Store 6.10%
------------
26,000 Circuit City Stores-Circuit City Group* 1,171,625
16,000 Costo Companies, Inc. 1,460,000
40,000 CVS Corp. 1,597,500
---------
4,229,125
Telecommunications 8.35%
------------------
14,000 GTE Corp. 987,875
22,000 Nortel Networks Corp. 2,222,000
20,000 Vodapone Airtough PLC 990,000
30,000 MCI Worldcom, Inc.* 1,591,875
---------
5,791,750
8
<PAGE>
STRATUS FUND, INC.
Schedule of Investments (Continued)
December 31, 1999
GROWTH PORTFOLIO
Percent
of Net Market
Shares Assets Value
- -------- ------- ------
Telecommunications Equipment 8.92%
----------------------------
14,000 Nokia Corp. $2,660,000
20,000 Qualcomm, Inc. 3,522,500
---------
6,182,500
Transportation 1.17%
--------------
50,000 Southwest Airlines Co. 809,375
Utilities/Telecommunication 0.83%
---------------------------
7,000 Alltel Corp 578,813
-------
Total investment in securities
(cost $46,584,224) 97.30% $67,466,875
Cash equivalents 3.54% 2,478,798
Other assets, less liabilities (0.84%) (605,106)
------- -----------
NET ASSETS 100.00% $69,340,567
======= ===========
*Indicates nonincome-producing security
9
<PAGE>
STRATUS FUND
SCHEDULE OF INVESTMENTS
December 31, 1999
GOVERNMENT SECURITIES PORTFOLIO
Percent
Principal of Net Market
Amount U.S. Government Securities Assets Value
- ---------- --------------------------------- --------- ----------
$1,000,000 Federal Home Loan Bond 6.90% due 8/23/04 78.42% $989,787
2,000,000 Federal Home Loan Bond 6.055% due 10/15/02 1,969,672
2,000,000 Federal Home Loan Bond 5.80% due 8/24/01 1,976,198
1,000,000 Federal National Mtg. Assn. 6.2% due 6/6/00 1,000,070
2,000,000 Federal National Mtg. Assn. 6.35% due 6/10/05 1,952,790
1,000,000 Federal National Mtg. Assn. 5.10% due 11/29/00 988,791
3,000,000 U.S. Treasury Note 6.50% due 5/31/01 3,013,594
2,000,000 U.S. Treasury Bond 6.625% due 3/31/02 2,014,063
3,000,000 U.S. Treasury Bond 6.375% due 1/15/00 3,000,000
3,000,000 U.S. Treasury Bond 5.75% due 8/15/03 2,941,406
3,000,000 U.S. Treasury Bond 5.75% due 10/31/00 2,993,906
2,000,000 U.S. Treasury Bond 5.50% due 12/31/00 1,988,750
---------
24,829,027
Corporate Bonds 17.02%
---------------
1,000,000 Ford Motor Credit 6.70% due 7/16/04 979,345
1,000,000 Northern Trust Company 6.625% due 10/01/02 980,429
1,500,000 Wachovia 6.7% due 6/21/04 1,478,042
1,000,000 Walmart 6.55% due 8/10/04 984,408
1,000,000 Xerox Europe 5.75% due 5/15/02 965,076
-------
5,387,300
Total investment in securities
(cost $30,438,481) 95.44% $30,216,327
Cash equivalents 3.14% 993,119
Other assets, less liabilities 1.42% 452,153
------- -------
TOTAL NET ASSETS 100.00% $31,661,599
======= ===========
10
<PAGE>
STRATUS FUND
Schedule of Investments
December 31, 1999
CAPITAL APPRECIATION PORTFOLIO
Percent
of Net Market
Shares COMMON STOCK - 93.88% Assets Value
------ --------------------- ------ -----
Aerospace/Defense 1.70%
-----------------
5,000 Primex Technologies, Inc. $103,750
Airlines 2.39%
--------
5,200 SkyWest, Inc. 145,600
Broadcasting/Media 1.19%
------------------
4,000 Ackerley Group, Inc. 72,500
Commercial Services 2.21%
-------------------
10,000 Mail-Well, Inc.* 135,000
Computer Related 30.56%
----------------
1,500 Advent Software* 96,656
4,000 Affiliated Computer, Inc.* 184,000
6,000 Complete Business Solutions, Inc.* 150,750
7,000 Ciber, Inc.* 192,500
9,000 Dianon Systems, Inc.* 123,750
2,600 Micros Systems, Inc.* 192,400
1,300 Mercury Interactive Corp* 140,319
2,500 PSINet, Inc.* 154,375
5,500 Symantec Corp.* 322,438
4,000 Transaction Systems* 112,000
5,000 Veritas DGC, Inc.* 70,000
3,500 Wind River Systems, Inc.* 128,188
-------
1,867,373
Cosmetics/Personal Care 0.98%
-----------------------
5,000 Orthodontic Centers of America, Inc.* 59,688
Electrical Equipment 4.18%
--------------------
6,000 C & D Tech, Inc. 255,000
11
<PAGE>
STRATUS FUND
Schedule of Investments (continued)
December 31, 1999
CAPITAL APPRECIATION PORTFOLIO
Percent
of Net Market
Shares Assets Value
- -------- ------- ------
Electronics 2.55%
-----------
3,500 Technitrol, Inc. $155,750
Educational Services 1.06%
--------------------
5,000 Sylvan Learning Systems* 65,000
Financial Services 8.59%
------------------
4,000 Cullen/Frost Bankers, Inc.* 103,000
6,000 Oriental Financial Group 132,375
1,500 SEI Investments, Co. 178,523
4,000 Southwest Securities Group, Inc.* 109,500
-------
523,398
Food/Berverage/Tobacco 2.47%
----------------------
9,000 U.S. Foodservice* 150,750
Food Processing 1.11%
---------------
5,600 Pilgrims Pride Corp 46,550
3,300 Pilgrims Pride Corp-Class A 21,244
------
67,794
Household Products/Wares 3.22%
------------------------
3,250 Ethan Allen Interiors, Inc. 104,203
6,000 Shaw Industries, Inc.* 92,625
------
196,828
Human Resources 2.43%
---------------
6,000 Interim Services* 148,500
Iron/Steel 1.24%
----------
4,000 Ak Steel Holding Corp. 75,500
12
<PAGE>
STRATUS FUND
Schedule of Investments (continued)
December 31, 1999
CAPITAL APPRECIATION PORTFOLIO
Percent
of Net Market
Shares Assets Value
- -------- ------- ------
Manufacturing 3.90%
-------------
6,000 Ispat International 96,750
3,000 USG Corp. 141,375
-------
238,125
Medical Supplies/Services 2.68%
-------------------------
7,000 Renal Care Group, Inc.* $163,625
Oil Refining & Marketing 1.14%
------------------------
6,000 Tesoro Petroleum Corp* 69,375
Pharmaceutical/Medical 6.16%
----------------------
5,000 Advance Paradigm, Inc.* 107,813
1,400 IDEC Pharmaceuticals Corp* 137,550
3,000 Jones Pharma, Inc. 130,313
-------
375,676
Publishing/Printing 0.71%
-------------------
2,900 Consolidated Graphics* 43,319
Retail Store 11.37%
------------
4,000 Ann Taylor Stores* 137,750
7,000 BJ's Wholesale Club* 255,500
6,200 Zale Corp.* 299,925
-------
693,175
Utilities-Electric 2.04%
------------------
5,500 Empire District Electric Co 124,438
-------
Total investment in securities
(cost $4,520,765) 93.88% $5,730,164
Cash equivalents 6.15% 375,452
Other assets, less liabilities (0.03%) (2,207)
------- -------
NET ASSETS 100.00% $6,103,409
======= ==========
*Indicates nonincome-producing security
13
<PAGE>
STRATUS FUND
Schedule of Investments
December 31, 1999
INTERMEDIATE GOVERNMENT BOND PORTFOLIO
Percent
Principal of Net Market
Amount Government Agency Bonds Assets Value
- --------- ------------------------------ ------- -------
$100,000 U.S. Treasury Bill 4.84% due 1/13/00 93.88% $99,840
500,000 U.S. Treasury Bond 6.25% due 1/31/02 499,922
500,000 U.S. Treasury Bond 7.125% due 2/29/00 501,484
500,000 U.S. Treasury Bond 6.125% due 7/31/00 500,859
500,000 U.S. Treasury Bond 6.25% due 10/31/01 500,079
---------
2,102,184
Total investment in securities
(cost $2,101,268) 93.88% $2,102,184
Cash equivalents 4.25% 95,091
Other assets, less liabilities 1.87% 42,066
----- ----------
TOTAL NET ASSETS 100.00% $2,239,341
======= ==========
14
<PAGE>
STRATUS FUND
Schedule of Investments
December 31, 1999
INTERNATIONAL PORTFOLIO
Percent
of Net Market
Shares Common Stock - 98.83% Assets Value
------ --------------------- ------ -----
Auto/Truck/Parts 3.11%
----------------
950 Bridgestone Corp. ADR $208,832
4,300 Hino Motors Ltd ADR* 142,836
-------
351,668
Chemicals 2.67%
---------
4,200 Imperial Chemical 178,763
3,900 Quimica Minera Chili SA ADR 123,094
-------
301,857
Comercial Services 5.05%
------------------
2,600 Secom Limited ADR 571,540
Computer Related 11.32%
----------------
2,000 Equant NV* 224,000
2,000 Fujitsu Limited ADR 455,278
6,100 Sap Ag* 317,581
2,100 TDK Corp 284,156
-------
1,281,015
Diversified Operations 6.43%
----------------------
7,919 Barlow Ltd ADR 56,972
15,600 Vivendi Sp ADR 280,352
20,800 Kawasaki Industries Ltd ADR 110,548
2,000 Telecom Italia ADR 280,000
-------
727,872
Electronics 5.16%
-----------
1,100 Matsushita Electric Industry Co., Ltd ADR 306,900
1,200 Omron Corp ADR 276,684
-------
583,584
15
<PAGE>
STRATUS FUND
Schedule of Investments (Continued)
December 31, 1999
INTERNATIONAL PORTFOLIO
Percent
of Net Market
Shares Assets Value
- -------- ------ -----
Financial Services 21.45%
------------------
6,000 Allied Irish Banks ADR $126,750
2,500 Barclays Plc ADR 287,813
10,485 Banco Frances Del Rio De La Plata S.A. ADR 248,363
4,000 Banque National Paris ADR 367,245
2,800 Deutsche Bank ADR 235,321
8,000 San Paolo IMI Spa 219,000
3,050 National Australia Bank Ltd ADR 232,563
7,000 Societe Generale ADR 324,146
1,500 Sumitomo Bank ADR 205,022
6,000 Uniao De Bancos S.A. 180,750
-------
2,426,973
Holding Company 1.15%
---------------
12,805 South Africa Brewing ADR 130,181
Index Series 1.67%
------------
4,600 Webs-Italy Index Series 115,000
8,000 Webs-Singapore Index Series 73,500
------
188,500
Insurance 5.51%
---------
5,596 Allied Zurich Plc ADR 132,401
2,024 Aegon N.V. ADR 193,292
3,300 Axa Spon ADR* 234,300
5,500 Liberty Life Association of Africa ADR 63,418
------
623,411
Machinery/Equipment 2.12%
-------------------
1,000 Mannesmann Ag Spon ADR 240,052
16
<PAGE>
STRATUS FUND
Schedule of Investments (Continued)
December 31, 1999
INTERNATIONAL PORTFOLIO
Percent
of Net Market
Shares Assets Value
- -------- ------- ------
Manufacturing 1.77%
-------------
14,200 Olympus Opitcal ADR 200,469
Medical Supplies/Services 4.94%
-------------------------
700 Banyu Pharmacuetical Ltd ADR $216,794
2,000 Roche Holdings Ltd ADR* 236,142
1,650 Smithkline Beecham ADR 106,322
-------
559,258
Metals/Mining 1.09%
-------------
5,000 SKF AB Spon ADR 123,750
Oil-Field Services 1.20%
------------------
7,600 Petroleum Geo Services ADR* 135,375
Oil Exploration/Production 1.22%
--------------------------
2,000 Total SA Sponsor ADR 138,500
Oil/Gas Drilling 2.93%
----------------
2,000 Eni Spa ADR 110,250
4,500 Shell Transport & Trading Company ADR 221,625
-------
331,875
Oil Company-Integrated 2.70%
----------------------
11,900 Petrolio Brasileiro ADR 305,211
Pharmaceutical/Medical 2.97%
----------------------
4,600 Novartis AG ADR 335,934
17
<PAGE>
STRATUS FUND
Schedule of Investments (Continued)
December 31, 1999
INTERNATIONAL PORTFOLIO
Percent
of Net Market
Shares Assets Value
- -------- ------- ------
Publishing/Printing 2.15%
-------------------
10,200 Elsevier NV Spon ADR 243,525
Real Estate 3.02%
-----------
24,958 City Developments Ltd ADR 146,062
15,400 Chueng Kong Holdings Ltd ADR 195,632
-------
341,694
Retail Store 3.60%
------------
12,884 Cifra SA ADR $258,222
5,000 Mauri Co. Ltd ADR* 149,089
-------
407,311
Telecommunications 4.14%
------------------
5,900 Cia de Telecommunications de Chile Sa ADR 107,675
3,600 Telecom Corporation of New Zealand 138,600
3,000 Swisscom Spon ADR 121,500
2,000 Vodafone Airtouch Plc Sponsored Adr 99,000
------
466,775
Utlities-Electric 1.46%
-----------------
5,900 Scottishpower Plc ADR 165,200
-------
Total investment in securities (cost $9,587,060) 98.83% $11,181,530
Cash equivalents 1.44% 141,548
Other Assets, less liabilities (0.27%) (8,815)
------- -----------
TOTAL NET ASSETS 100.00% $11,314,263
======= ===========
* Indicates non-income producing security.
18
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Statement of Assets and Liabilities
December 31, 1999
(Unaudited)
Government Capital
Growth Securities Appreciation
Assets: Portfolio Portfolio Portfolio
------------- ------------- --------------
<S> <C> <C> <C>
Investments in securities, at market value
(cost $46,584,224, $30,438,481 and $4,520,765) $67,466,875 $30,216,327 $5,730,164
Cash equivalents 2,478,798 993,119 375,452
Accrued interest and dividends receivable 52,283 485,487 3,151
Receivable for securities sold 1,074,538 - -
Receivable for fund shares sold 58,987 46,615 16,225
------- ------- ------
Total assets 71,131,481 31,741,548 6,124,992
=========== =========== =========
Liabilities:
Accrued expenses, including investment
management and distribution expense payable to
adviser, administrator and distributor 58,925 21,821 9,025
Payable for securities purchased 1,599,333 - -
Commissions payable for fund shares sold 134 - 33
Payable for fund shares redeemed 132,522 58,128 12,525
Total liabilities 1,790,914 79,949 21,583
---------- ------- ------
Net assets applicable to outstanding capital stock $69,340,567 $31,661,599 $6,103,409
============ ============ ==========
Net assets are represented by:
Capital stock outstanding $3,742 $3,277 $438
Additional paid-in capital 49,264,985 32,315,250 6,013,146
Accumulated undistributed net investment income(loss) (17,698) 128 (49,095)
Accumulated net realized gain/(loss) on investments (793,111) (434,902) (1,070,479)
Unrealized appreciation (depreciation) 20,882,649 (222,154) 1,209,399
----------- --------- ---------
Total net assets applicable to shares outstanding $69,340,567 $31,661,599 $6,103,409
============ ============ ==========
Shares outstanding and net asset value per share
Institutional Shares of Capital Stock Outstanding 3,660,223 3,254,961 424,020
Net Asset Value per share - Institutional Shares $18.53 $9.66 $13.94
====== ===== ======
Retail Shares of Capital Stock Outstanding 81,490 21,741 13,873
Net Asset Value per share - Retail Shares $18.49 $9.66 $13.87
====== ===== ======
See accompanying notes to financial statements.
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Statement of Assets and Liabilities
December 31, 1999
(Unaudited)
Intermediate
Government
Bond International
Assets: Portfolio Portfolio
------------- ---------------
<S> <C> <C>
Investments in securities, at market value
(cost $2,101,268 and $9,587,060 respectively) $2,102,184 $11,181,530
Cash equivalents 95,091 141,548
Accrued interest and dividends receivable 44,495 8,878
Receivable for fund shares sold - 8,834
----------- -----------
Total assets $2,241,770 $11,340,790
=========== ===========
Liabilities:
Accrued expenses, including investment
management and distribution expense payable to
adviser, administrator and distributor 2,429 14,123
Payable for commissions on shares sold - 7
Payable for fund shares redeemed - 12,397
------ ------
Total liabilities 2,429 26,527
Net assets applicable to outstanding capital stock $2,239,341 $11,314,263
Net assets are represented by:
Capital stock outstanding, at par $215 $941
Additional paid-in capital 2,343,547 9,575,782
Accumulated undistributed net investment income 25 116
Accumulated net realized gain/(loss) on investments (105,362) 142,955
Unrealized appreciation 916 1,594,469
---- ---------
Total net assets applicable to
shares outstanding $2,239,341 $11,314,263
Shares outstanding and net asset value per share
Institutional Shares of Capital Stock Outstanding 214,113 926,601
Net Asset Value per share - Institutional Shares $10.39 $12.03
====== ======
Retail Shares of Capital Stock Outstanding 1,378 13,918
Net Asset Value per share - Retail Shares $10.39 $12.03
====== ======
See accompanying notes to financial statements.
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Statement of Operations
Six Months Ended December 31, 1999
(Unaudited)
Intermediate
Government Capital Government
Growth Securities Appreciation Bond International
Portfolio Portfolio Portfolio Portfolio Portfolio
----------- ----------------------- ---------- -----------
Investment income:
<S> <C> <C> <C> <C> <C>
Dividends $227,759 $ - $11,240 $ - $98,504
Interest 114,926 983,563 8,510 77,446 5,342
-------- -------- ------ ------- -----
Total investment income 342,685 983,563 19,750 77,446 103,846
-------- -------- ------- ------- -------
Expenses:
Investment advisory fees 244,366 80,971 13,461 8,280 65,040
Administration Fees 81,410 40,475 7,362 3,186 14,124
Distribution Expenses - Retail Class 2,007 289 323 22 249
Accounting 6,306 5,307 4,513 4,732 4,957
Custodial fees - - 4,941 1,519 -
Securities Pricing 3,593 - 3,446 - 4,541
Other operating expenses 22,887 9,366 367 182 4,413
------- ------ ---- ---- -----
Total expenses 360,569 136,408 34,413 17,921 93,324
-------- -------- ------- ------- ------
Net investment income (loss) ($17,883) $847,155 ($14,663) $59,525 $10,522
========= ========= ========= ======== =======
Realized and unrealized gain (loss) on
investments:
Net realized gain (loss) $1,283,090 $ - ($209,035) $10,310 $511,136
Net unrealized appreciation
(depreciation)
Beginning of period 15,373,853 195,132 628,426 34,475 859,319
End of period 20,882,649 (222,154) 1,209,399 916 1,594,470
----------- --------- ---------- ---- ---------
Net unrealized appreciation
(depreciation) 5,508,796 (417,286) 580,973 (33,559) 735,151
--------- --------- -------- -------- -------
Net realized and unrealized
gain on investments 6,791,886 (417,286) 371,938 (23,249) 1,246,287
---------- --------- -------- -------- ----------
Net increase in net assets
resulting from operations $6,774,003 $429,869 $357,275 $36,276 $1,256,809
========== ======== ========= ======= ==========
See accompanying notes to financial statements.
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Statements of Changes in Net Assets
Six Months Ended December 31, 1999 and
the Year Ended June 30, 1999
Government
Growth Securities
Portfolio Portfolio
-------------------------- ------------------------
Period Ended Year Ended Period Ended Year Ended
Dec. 31, 1999 June 30, 1999 Dec. 31, 1999 June 30, 1999
----------- ------------ ----------- -----------
Operations:
<S> <C> <C> <C> <C>
Net investment income ($17,883) $191,951 $847,155 $1,539,461
Net realized gain (loss)
on investm 1,283,090 7,751,958 - 4,501
Unrealized appreciation
(depreciati 5,508,796 1,126,687 (417,286) (241,357)
---------- ------------ ----------- -----------
Net increase in net assets
resulting from operations 6,774,003 9,070,596 429,869 1,302,605
----------- ------------ ----------- -----------
Distributions to shareholders from:
Net investment income
Institutional Class - 192,811 842,429 1,533,764
Retail Class - 201 4,866 8,326
----------- ------------ ----------- -----------
- 193,012 847,296 1,542,090
Net realized gains
Institutional Class 9,343,864 5,324,844 - -
Retail Class 197,369 85,354 - -
----------- ------------ ----------- -----------
9,541,233 5,410,198 - -
----------- ------------ ----------- -----------
Total Distribution 9,541,233 5,603,210 847,296 1,542,090
Capital share transactions:
Proceeds from sales 3,894,107 11,447,294 5,898,945 10,167,190
Payment for redemptions (5,827,767) (17,142,994) (4,060,895) (12,344,733)
Reinvestment of net investment
income and net realized
gain distributions
at net asset value 7,737,525 4,651,155 752,471 1,398,687
----------- ------------ ----------- -----------
Total increase from capital
share transactions 5,803,865 (1,044,545) 2,590,520 (778,856)
----------- ------------ ----------- -----------
Total increase (decrease)
in net assets 3,036,636 2,422,841 2,173,093 (1,018,341)
Net Assets:
Beginning of period 66,303,931 63,881,090 29,488,505 30,506,846
----------- ------------ ----------- -----------
End of period $69,340,567 $66,303,931 $31,661,598 $29,488,505
=========== ============ =========== ===========
See accompanying notes to financial statements.
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
Statements of Changes in Net Assets
Six Months Ended December 31, 1999 and
the Year Ended June 30, 1999
Intermediate
Capital Government
Appreciation Bond
Portfolio Portfolio
----------------------- -----------------------
Period Ended Year Ended Period Ended Year Ended
Dec. 31, 1999 June 30, 1999 Dec. 31, 1999 June 30, 1999
------------- ------------ ------------- -----------
Operations:
<S> <C> <C> <C> <C>
Net investment income (loss) (14,663) ($34,679) $59,525 $170,460
Net realized gain (loss)
on investments (209,035) (860,212) 10,310 205
Unrealized appreciation
(depreciation) 580,973 (85,765) (33,559) (19,797)
---------- ----------- ---------- ----------
Net increase (decrease) in
net assets
resulting from operations 357,275 (980,656) 36,276 150,868
---------- ----------- ---------- ----------
Distributions to shareholders from:
Net investment income
Institutional Class - - 59,193 169,995
Retail Class - - 330 1,170
----------------------- ---------- ----------
- - 59,523 171,165
Net realized gains
Institutional Class - 23,255 - -
Retail Class - 860 - -
---------- ----------- ---------- ----------
- 24,115 - -
---------- ----------- ---------- ----------
Total Distribution - 24,115 59,523 171,165
Capital share transactions:
Proceeds from sales 565,495 2,166,995 8,577 34,934
Payment for redemptions (1,048,959) (4,351,054) (875,024) (1,141,218)
Reinvestment of net investment
income and net realized gain
distributions
at net asset value - 23,641 57,560 160,117
---------- ----------- ---------- ----------
Total increase from capital
share transactions (483,464) (2,160,418) (808,887) (946,167)
---------- ----------- ---------- ----------
Total decrease in net assets (126,189) (3,165,189) (832,135) (966,464)
Net Assets:
Beginning of period 6,229,598 9,394,787 3,071,476 4,037,940
---------- ----------- ---------- ----------
End of period $6,103,409 $6,229,598 $2,239,341 $3,071,476
========== =========== ========== ==========
See accompanying notes to financial statements.
</TABLE>
23
<PAGE>
STRATUS FUND, INC.
Statements of Changes in Net Assets
Six Months Ended December 31, 1999 and
the Year Ended June 30, 1999
International
Portfolio
----------------------------
Period Ended Year Ended
Dec. 31, 1999 June 30, 1999
------------ --------------
Operations:
Net investment income $10,522 $51,643
Net realized gain on investments 511,136 689,531
Unrealized appreciation (depreciation) 735,151 (682,947)
------------ ------------
Net increase in net assets
resulting from operations 1,256,809 58,226
------------ ------------
Distributions to shareholders from:
Net investment income
Institutional Class 10,558 51,751
Retail Class - 237
------------ ------------
10,558 51,988
Net realized gains
Institutional Class 838,671 204,146
Retail Class 12,343 3,025
------------ ------------
851,014 207,171
------------ ------------
Total Distribution 861,572 259,159
Capital share transactions:
Proceeds from sales 860,990 2,843,478
Payment for redemptions (2,042,306) (3,136,480)
Reinvestment of net investment
income and net realized
gain distributions
at net asset value 745,580 249,768
------------ ------------
Total increase from capital
share transactions (435,736) (43,234)
------------ ------------
Total increase (decrease)
in net assets (40,499) (244,167)
Net Assets:
Beginning of period 11,354,762 11,598,929
------------ ------------
End of period $11,314,263 $11,354,762
============ ============
See accompanying notes to financial statements.
24
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
FINANCIAL HIGHLIGHTS
Six Months Ended December 31, 1999 and the
Years Ended June 30, 1999, 1998, 1997, 1996 and 1995
Growth Portfolio- Institutional Class
-------------------------------------
Period Ended
Dec. 31, 1999 1999 1998 1997 1996 1995
----------------- ------ ---- ----- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Beginning of period $19.51 $18.53 $17.07 $13.67 $11.47 $9.84
------ ------ ------ ------ ------ -----
Income from investment operations:
Net investment income 0.00 0.06 0.11 0.22 0.23 0.22
Net realized and unrealized
gain (loss)
on investments 1.77 2.53 3.45 3.99 2.36 1.72
----- ----- ----- ----- ----- ----
Total income from investment operations 1.77 2.59 3.56 4.21 2.59 1.94
----- ----- ----- ----- ----- ----
Less distributions:
Dividends from net investment income 0.00 (0.06) (0.11) (0.22) (0.22) (0.22)
Distribution from capital gains (2.75) (1.55) (1.99) (0.59) (0.17) (0.09)
------ ------ ------ ------ ------ ------
Total distributions (2.75) (1.61) (2.10) (0.81) (0.39) (0.31)
------ ------ ------ ------ ------ ------
End of period $18.53 $19.51 $18.53 $17.07 (a) $13.67 $11.47
------ ------ ------ ------ ------ ------
21.28% (b) 16.34% 22.29% 32.6% (a) 22.6% 20.3%
------ ------ ------ ----- ----- -----
Net assets, end of period $67,833,437 $65,011,189 $63,096,914 $46,189,099 $24,627,983 $12,813,352
Ratio of expenses to average
net assets 1.10% (b) 1.05% 0.76% 0.72% 0.71% 0.82%
Ratio of net income to average
net assets (0.05%)(b) 0.31% 0.18% 1.46% 1.78% 2.14%
Portfolio turnover rate 64.53% 194.23% 137.03% 88.53% 92.72% 19.89%
Excludes maximum sales load of 4%
Annualized for those periods less than twelve months in duration.
See accompanying notes to financial statements.
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
FINANCIAL HIGHLIGHTS
Six Months Ended December 31, 1999, the Year Ended June 30, 1999
and the Period from January 7, 1998 (commencement of class shares) to
June 30, 1998
Growth Portfolio- Retail Class
------------------------------
Period Ended Period Ended
Dec. 31, 1999 1999 June 30, 1998
-------------- ------- -------------
Net asset value:
<S> <C> <C> <C>
Beginning of period $19.51 $18.52 $15.86
------- ------- ------
Income from investment operations:
Net investment income (loss) (0.03) 0.00 0.04
Net realized and unrealized gain
on investments 1.77 2.47 2.66
----- ----- ----
Total income from investment operations 1.74 2.47 2.70
----- ----- ----
Less distributions:
Dividends from net investment income 0.00 0.00 (0.04)
Distribution from capital gains (2.76) (1.48) 0.00
------ ------ ----
Total distributions (2.76) (1.48) (0.04)
------ ------ ------
End of period $18.49 (a) $19.51 (a) $18.52 (a)
------ ------ ------
Total return: 20.90% (a)(c) 16.09% (a) 16.89% (a)(b)
------ ------ ------
Ratios/Supplemental data:
Net assets, end of period $1,507,130 $1,292,742 $784,176
Ratio of expenses to average net assets 1.40% (c) 1.35% 1.50% (c )
Ratio of net income (loss) to
average net assets (0.35%)(c) 0.01% 0.13% (c )
Portfolio turnover rate 64.53% 194.23% 137.03%
(a) Excludes maximum sales load of 4%
(b) Total return is not annualized, as it may not be representative of the
total return for the year.
(c) Annualized for those periods less than twelve months in duration.
See accompanying notes to financial statements.
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
FINANCIAL HIGHLIGHTS
Six Months Ended December 31, 1999 and the
Years Ended June 30, 1999, 1998, 1997, 1996, and 1995
Government Securities Portfolio - Institutional Class
------------------------------------------------------
Period Ended
Dec. 31, 1999 1999 1998 1997 1996 1995
--------------- ----- ---- ---- ---- ----
Net asset value:
<S> <C> <C> <C> <C> <C> <C>
Beginning of period $9.79 $9.88 $9.72 $9.64 $9.77 $9.40
----- ----- ----- ----- ----- -----
Income (loss) from investment
operations:
Net investment income 0.26 0.51 0.51 0.51 0.49 0.45
Net realized and unrealized
gain (loss)
on investments (0.13) (0.09) 0.16 0.08 (0.13) 0.37
------ ------ ----- ----- ------ ----
Total income (loss) from investment
operations 0.13 0.42 0.67 0.59 0.36 0.82
---- ----- ----- ----- ----- ----
Less distributions from
net investment income (0.26) (0.51) (0.51) (0.51) (0.49) (0.45)
------ ------ ------ ------ ------ ------
End of period $9.66 $9.79 $9.88 $9.72 (a) $9.64 $9.77
----- ----- ----- ----- ----- -----
Total return: 2.61% (b) 4.33% 7.04% 6.3% (a) 3.7% 9.0%
----- ----- ----- ---- ---- ----
Ratios/Supplemental data:
Net assets, end of period $31,451,572 $29,321,012 $30,367,682 $26,533,869 $23,043,163 $13,885,204
Ratio of expenses to average
net assets 0.84% (b) 0.80% 0.82% 0.71% 0.69% 0.80%
Ratio of net income to average
net assets 5.23% (b) 5.13% 5.17% 5.21% 5.04% 4.82%
Portfolio turnover rate 8.89% 18.66% 2.07% 27.20% 40.61% 33.88%
(a) Excludes maximum sales load of 3%
(c) Annualized for those periods less than twelve months in duration.
See accompanying notes to financial statements.
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
FINANCIAL HIGHLIGHTS
Six Months Ended December 31, 1999, the Year Ended June 30, 1999 and
the Period from January 13, 1998 (commencement of class shares) to
June 30, 1998
Government Securities- Retail Class
-----------------------------------
Period Ended Period Ended
Dec. 31, 1999 1999 June 1998
------------- ---- ----------
Net asset value:
<S> <C> <C> <C>
Beginning of period $9.79 $9.89 $9.97
------ ------ -----
Income from investment operations:
Net investment income 0.24 0.48 0.25
Net realized and unrealized gain (loss)
on investments (0.13) (0.09) (0.08)
------ ------ ------
Total income from investment operations 0.11 0.39 0.17
----- ----- ----
Less distributions:
Dividends from net investment income (0.24) (0.49) (0.25)
Distribution from capital gains 0.00 0.00 0.00
----- ----- ----
Total distributions (0.24) (0.49) (0.25)
------ ------ ------
End of period $9.66 (a) $9.79 (a) $9.89 (a)
----- ----- -----
Total return: 2.33% (a)(c) 3.96% (a) 1.58% (a)(b)
----- ----- -----
Ratios/Supplemental data:
Net assets, end of period $210,027 $167,494 $139,164
Ratio of expenses to average net assets 1.14% (c ) 1.10% 1.21% (c )
Ratio of net income to average net assets 4.93% (c ) 4.83% 5.49% (c )
Portfolio turnover rate 8.89% 18.66% 2.07%
(a) Excludes maximum sales load of 4%
(b) Total return is not annualized, as it may not be representative of the
total return for the year.
(c) Annualized for those periods less than twelve months in duration.
See accompanying notes to financial statements.
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
FINANCIAL HIGHLIGHTS
Six Months Ended December 31, 1999 and the
Years Ended June 30, 1999, 1998, 1997, 1996, and 1995
Capital Appreciation Portfolio-Institutional Class
---------------------------------------------------
Period Ended
Dec. 31, 1999 1999 1998 1997 1996 1995
-------------- ---- ------ ---- ---- ----
Net asset value:
<S> <C> <C> <C> <C> <C> <C>
Beginning of period $13.08 $14.39 $14.25 $13.19 $11.23 $8.95
------ ------ ------ ------ ------ -----
Income (loss) from
investment operations:
Net investment income (loss) (0.02) (0.06) 0.03 0.18 (0.19) (0.15)
Net realized and unrealized
gain (loss)
on investments 0.88 (1.21) 0.86 1.48 2.88 2.62
----- ------ ----- ----- ----- ----
Total income (loss) from investment
operations 0.86 (1.27) 0.89 1.66 2.69 2.47
----- ------ ----- ----- ----- ----
Less distributions from
net investment income 0.00 0.00 (0.03) (0.12) 0.00 0.00
Less distributions from
capital gain 0.00 (0.04) (0.72) (0.48) (0.73) (0.19)
----- ------ ------ ------ ------ ------
Total Distributions 0.00 (0.04) (0.75) (0.60) (0.73) (0.19)
----- ------ ------ ------ ------ ------
End of period $13.94 $13.08 $14.39 $14.25 (a) $13.19 $11.23
------ ------ ------ ------ ------ ------
Total return: 26.65% (b ) (8.79%) 7.47% 11.7% (a) 26.0% 28.6%
------ ------- ----- ----- ----- -----
Ratios/Supplemental data:
Net assets, end of period $5,910,952 $5,985,704 $9,174,664 $6,732,540 $2,474,470 $748,588
Ratio of expenses to average
net assets 1.15% ( b ) 1.11% 0.76% 0.91% 2.84% 2.69%
Ratio of net income to
average net assets (0.49%)( b ) (0.49%) 0.18% 1.31% (1.54%) (1.59%)
Portfolio turnover rate 32.58% 109.49% 277.31% 322.07% 179.06% 214.47%
(a) Excludes maximum sales load of 4%
(b) Annualized for those periods less than twelve months in duration.
See accompanying notes to financial statements.
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
FINANCIAL HIGHLIGHTS
Six Months Ended December 31, 1999, the Year Ended June 30, 1999 and the
Period from January 7, 1998 (commencement of class shares) to June 30, 1998
Capital Appreciation- Retail Class
-----------------------------------
Period Ended Period Ended
Dec. 31, 1999 1999 June 30, 1998
-------------- ----- -------------
Net asset value:
<S> <C> <C> <C>
Beginning of period $13.04 $14.39 $13.21
------ ------- ------
Income from investment operations:
Net investment income (0.05) (0.10) (0.03)
Net realized and unrealized gain (loss)
on investments 0.88 (1.21) 1.21
----- ------ ----
Total income from investment operations 0.83 (1.31) 1.18
----- ------ ----
Less distributions:
Dividends from net investment income 0.00 0.00 0.00
----- ----- ----
Distribution from capital gains 0.00 (0.04) 0.00
----- ------ ----
Total distributions 0.00 (0.04) 0.00
----- ------ ----
End of period $13.87 (a) $13.04 (a) $14.39 (a)
------ ------ ------
Total return: 26.11% (a)(c)(9.07%)(a) 8.93% (a)(b)
------- -----
Ratios/Supplemental data:
Net assets, end of period $192,457 $243,894 $220,123
Ratio of expenses to average net assets 1.45% (c) 1.41% 1.25% (c)
Ratio of net income (loss) to average net (0.78%)(c) (0.79%) (0.18%)(c)
Portfolio turnover rate 32.58% 109.49% 277.31%
(a) Excludes maximum sales load of 4%
(b) Total return is not annualized, as it may not be representative of the
total return for the year.
(c) Annualized for those periods less than twelve months in duration.
See accompanying notes to financial statements.
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
FINANCIAL HIGHLIGHTS
Six Months Ended December 31, 1999 and the
Years Ended June 30, 1999, 1998, 1997, 1996, and 1995
Intermediate Government Bond Portfolio-Institutional Class
----------------------------------------------------------
Period Ended
Dec. 31, 1999 1999 1998 1997 1996 1995
-------------- ---- ------ ---- ---- ----
Net asset value:
<S> <C> <C> <C> <C> <C> <C>
Beginning of period $10.50 $10.60 $10.48 $10.47 $10.56 $10.29
------ ------ ------ ------ ------ ------
Income (loss) from
investment operations:
Net investment income 0.25 0.51 0.52 0.54 0.52 0.50
Net realized and unrealized
gain (loss)
on investments (0.11) (0.10) 0.12 0.02 (0.09) 0.27
------ ------ ----- ----- ------ ----
Total income (loss) from investment
operations 0.14 0.41 0.64 0.56 0.43 0.77
----- ----- ----- ----- ----- ----
Less distributions:
Dividends from net
investment income (0.25) (0.51) (0.52) (0.55) (0.52) (0.50)
Distributions from
capital gains 0.00 0.00 0.00 0.00 0.00 0.00
----- ----- ----- ----- ----- ----
Total distributions (0.25) (0.51) (0.52) (0.55) (0.52) (0.50)
End of period $10.39 $10.50 $10.60 $10.48 (a) $10.47 $10.56
------ ------ ------ ------ ------ ------
Total return: 2.79% (b) 3.96% 6.27% 5.6% (a) 4.1% 7.9%
----- ----- ----- ---- ---- ----
Ratios/Supplemental data:
Net assets, end of period $2,225,025 $3,058,068 $4,008,700 $4,605,718 $7,224,506 $5,518,431
Ratio of expenses to
average net 1.41%s(b) 1.16% 1.17% 1.02% 1.03% 1.11%
Ratio of net income to average ne 4.68%e(b) 4.75% 4.93% 5.14% 4.95% 4.84%
Portfolio turnover rate 8.55% 0.00% 0.00% 26.88% 4.05% 27.67%
(a) Excludes maximum sales load of 3%
(b) Annualized for those periods less than twelve months in duration.
See accompanying notes to financial statements.
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
FINANCIAL HIGHLIGHTS
Six Months Ended December 31, 1999, the Year Ended June, 30 1999 and
the Period from January 27, 1998 (commencement of class shares) to
June 30, 1998
Intermediate Government Bond Portfolio Retail Class
---------------------------------------------------
Period Ended Period Ended
Dec. 31, 1999 1999 June 30, 1998
--------------- ----------- ----------------
Net asset value:
<S> <C> <C> <C>
Beginning of period $10.50 $10.59 $10.63
------- ------- ------
Income from investment operations:
Net investment income 0.25 0.47 0.29
Net realized and unrealized loss
on investments (0.12) (0.09) (0.04)
------ ------ ------
Total income from investment operations 0.13 0.38 0.25
----- ----- -----
Less distributions:
Dividends from net investment income (0.23) (0.47) 0.29
Distribution from capital gains 0.00 0.00 0.00
---- ----- ----
Total distributions (0.24) (0.47) 0.29
------ ------ ----
End of period $10.39 (a) $10.50 (a) $10.59 (a)
------ ------ ------
Total return: 2.53% (a)(c) 3.73% (a) 1.69% (a)(b)
----- ----- -----
Ratios/Supplemental data:
Net assets, end of period $14,316 $13,408 $29,240
Ratio of expenses to average net assets 1.71% (c) 1.46% 1.63% (c )
Ratio of net income to average net assets 4.37% (c) 4.45% 5.18% (c )
Portfolio turnover rate 8.55% 0.00% 0.00%
(a) Excludes maximum sales load of 4%
(b) Total return is not annualized, as it may not be representative of the
total return for the year.
(c) Annualized for those periods less than twelve months in duration.
See accompanying notes to financial statements.
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
FINANCIAL HIGHLIGHTS
Six Months Ended December 31, 1999, the Years Ended June 30, 1999 and 1998
and the Period from October 1, 1996 (commencement of class shares) to
June 30, 1997
International Portfolio - Institutional Class
-----------------------------------------------
Period Ended Period Ended
Dec. 31, 1999 1999 1998 June 30, 1997
------------- ------- ------ -------------
Net asset value:
<S> <C> <C> <C> <C>
Beginning of period $11.62 $11.75 $11.22 $10.00
------ ------ ------ ------
Income from investment operations:
Net investment income 0.01 0.05 0.02 0.15
Net realized and unrealized gain
on investments 1.29 0.09 0.64 1.22
----- ----- ----- ----
Total income from investment
operations 1.30 0.14 0.66 1.37
----- ----- ----- ----
Less distributions:
Dividends from net
investment inco (0.01) (0.05) (0.02) (0.15)
Distributions from capital gains (0.88) (0.22) (0.11) 0.00
------ ------ ------ ----
Total Distributions (0.89) (0.27) (0.13) (0.15)
------ ------ ------ ------
End of period $12.03 $11.62 $11.75 $11.22 (a)
------ ------ ------ ------
Total return: 23.6% (b) 1.4% 6.27% 18.20% (a) (b)
----- ---- ----- ------
Ratios/Supplemental data:
Net assets, end of period $11,146,855 $11,182,332 $11,473,772 $10,431,107
Ratio of expenses to average
net assets 1.64% (b) 1.53% 1.65% 1.48% (b)
Ratio of net income to average
net assets 0.19% (b) 0.49% 0.21% 1.89% (b)
Portfolio turnover rate 15.49% 40.00% 52.92% 33.77%
(a) Excludes maximum sales load of 4%
(b) Annualized for those periods less than twelve months in duration.
See accompanying notes to financial statements.
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
FINANCIAL HIGHLIGHTS
Six Months Ended December 31, 1999, the Year Ended June 30, 1999 and
the Period from January 7, 1998 (commencement of class shares) to
June 30, 1998
International Portfolio - Retail Class
--------------------------------------
Period Ended Period Ended
Dec. 31, 1999 1999 June 30, 1998
-------------- -------- -------------
Net asset value:
<S> <C> <C> <C>
Beginning of period $11.62 $11.75 $10.33
------- ------- ------
Income from investment operations:
Net investment income (0.01) 0.02 0.03
Net realized and unrealized gain (loss)
on investments 1.29 0.09 1.42
----- ----- ----
Total income from investment operations 1.28 0.11 1.45
----- ----- ----
Less distributions:
Dividends from net investment income 0.00 (0.02) (0.03)
Distribution from capital gains (0.87) (0.22) 0.00
------ ------ ----
Total distributions (0.87) (0.24) (0.03)
------ ------ ------
End of period $12.03 (a) $11.62 (a) $11.75 (a)
------ ------ ------
Total return: 23.43% (a)(c ) 1.07% (a) 13.88% (a)(b)
------ ----- ------
Ratios/Supplemental data:
Net assets, end of period $167,408 $172,430 $125,157
Ratio of expenses to average net assets 1.94% (c ) 1.83% 1.94% (c )
Ratio of net income to average net assets (0.11%)(c ) 0.19% 0.27% (c )
Portfolio turnover rate 15.49% 40.00% 52.92%
(a) Excludes maximum sales load of 4%
(b) Total return is not annualized, as it may not be representative of the
total return for the year.
(c) Annualized for those periods less than twelve months in duration.
See accompanying notes to financial statements.
</TABLE>
34
<PAGE>
STRATUS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
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, 1999, the following series are presently authorized and have
shares outstanding.
Growth Portfolio Capital Appreciation Portfolio
Government Intermediate Government
Securities Portfolio Bond Portfolio
International Portfolio
Each portfolio has two classes of shares authorized and outstanding:
retail and institutional
2. SUMMARY OF SIGNIFICANT ACCOUNTING 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 in accordance with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent 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, restricted securities, 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.
35
<PAGE>
STRATUS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
All securities are valued in accordance with the above noted policies at
the close of each business day.
The Growth, Capital Appreciation, and International Portfolios are
authorized to purchase exchange-traded put and call options.
At December 31, 1999, the Growth, Capital Appreciation and International
Portfolios had no such exchange traded options nor were any purchased
during the year then ended.
The Portfolios may sell a security it does not own in anticipation of a
decline in the market value of that security (short-sale). When a Portfolio
makes a short-sale, it must borrow the security sold short and deliver it
to the buyer. The proceeds from the short-sale will be retained by the
broker-dealer through which it made the short-sale as collateral for its
obligation to deliver the security upon conclusion of the sale. The
Portfolio may have to pay a fee to borrow the security and may be obligated
to remit any interest received on such borrowed securities. A gain or loss
is recognized upon the termination of the short sale, if the market price
at termination is less than or greater than the proceeds originally
received.
At December 31, 1999, 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 (the 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. Internal Revenue Code requirements regarding distributions may
differ from amounts determined under generally accepted accounting
principles. These book/tax differences are either temporary or permanent in
nature. To the extent these differences are permanent, they are
36
<PAGE>
STRATUS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
charged or credited to paid-in-capital or accumulated net realized gain, as
appropriate in the period that the differences arise. 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. The Government
Securities, Intermediate Government Bond, and Capital Appreciation
Portfolios have unused capital loss carry forwards of approximately
$378,000, $124,000, and $455,000 respectively, available for federal income
tax purposes at December 31, 1999. The losses begin expiring in 2003 and
2005 for the Government Securities and Intermediate Government Bond
portfolios, respectively.
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, Capital Appreciation, and International
Portfolios declare dividends semi-annually. The dividends declared become
payable immediately.
CASH EQUIVALENTS
Cash equivalents consist of money market funds which declare dividends
daily. As of December 31, 1999, the average yield on such funds was
approximately 4.50%.
3. FEES, EXPENSES AND RELATED PARTY TRANSACTIONS
The Fund and each of its Portfolios have retained Union Bank & 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 of 1.40% per annum of
daily average net assets. The fee may be increased or decreased by up to
1.00% 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 Russell 2000 Index. For the six months ended December 31,
1999, the annualized fee was 0.46%.
37
<PAGE>
STRATUS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
3. FEES, EXPENSES AND RELATED PARTY TRANSACTIONS (CONTINUED)
The remaining Portfolios pay the following advisory fee rates per annum of
their average daily net asset values:
PORTFOLIO ANNUAL FEE RATE
--------- ---------------
Growth .75%
Government Securities .50%
Intermediate Government Bond .65%
International 1.15%
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 monthly. The fee calculation does not include cash equivalents.
The fee consists of an investment transaction charge of $12 for each
transaction, a 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. As of July 1, 1999 the Administrator is a related
party to 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.
The Fund has also retained SMITH HAYES Financial Services Corporation (the
Distributor) to act as the underwriter and distributor of the fund's
shares. Retail shares for the Growth, Capital Appreciation, and
International portfolios include a maximum sales charge of 4.5%. Retail
shares for the Government Securities and Intermediate Government Bond
portfolios include a maximum sales charge of 3.0%. For sales of all
Portfolios of $50,000 or more, the sales charge is reduced. Pursuant to the
shareholder approved distribution plan under Rule 12b-1, Retail shares of
each fund will reimburse the distributor for shareholder-related expenses
incurred in connection with the distribution of the fund's shares, however,
under no circumstances shall such reimbursement exceed .30% per annum of
the fund's average daily net assets. The Distributor received $3,094 and
paid out $2,264 of this amount as commissions and dealer reallowances.
Institutional shares for all portfolios are not charged sales charges or
12b-1 fees.
38
<PAGE>
STRATUS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
3. FEES, EXPENSES AND RELATED PARTY TRANSACTIONS (CONTINUED)
Under the terms of the advisory, custodian, administrative and distribution
agreements outlined above, the Portfolios collectively incurred $412,118;
$6,460; $146,557 and $2,890 for such services. Of the amount paid to the
Distributor, 100% was paid out to Union Bank & Trust Company under a Dealer
Service Agreement.
At December 31, 1999, the following accrued investment advisory and
administrative fees were payable to the Adviser and Administrator.
PAYABLE TO PAYABLE TO PAYABLE
ADVISER ADMINISTRATOR TO DISTRIBUTOR TOTAL
---------- ------------- -------------- -----
Growth Portfolio $42,165 $14,041 $354 $56,560
Government Securities Portfolio 13,571 6,768 50 20,389
Capital Appreciation Portfolio 7,002 1,243 46 8,291
Intermediate Government
Bond Portfolio 1,235 475 4 1,714
International Portfolio 10,777 2330 39 13,146
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, 1999, no expense
reimbursement was required.
In addition to the amounts paid by the Portfolios under advisory,
custodian, and administration agreements, the Portfolios used SMITH HAYES
Financial Services Corporation (SMITH HAYES), a company related through
common 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 transactions in selecting brokers to affect trades.
SMITH HAYES was paid commissions in the amount of $3,900 for their
brokerage services during the six months ended December 31, 1999.
At December 31, 1999, 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 Institutional Class 341,669 $6,331,125
Government Securities Portfolio Institutional Class 302,676 2,923,854
Capital Appreciation Portfolio Institutional Class 56,651 789,722
Intermediate Gov't Bond Portfolio Institutional Class - -
International Portfolio Institutional Class 89,302 1,074,308
39
<PAGE>
STRATUS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
3. FEES, EXPENSES AND RELATED PARTY TRANSACTIONS (CONTINUED)
At December 31, 1999, UBATCO held, in nominee name, the following in each
Portfolio:
SHARES VALUE
------ -----
Growth Portfolio Institutional Class 3,653,206 $67,693,915
Growth Portfolio Retail Class 68,578 1,268,002
Government Securities Portfolio Institutional Class 3,254,961 31,451,572
Government Securities Portfolio Retail Class 20,672 199,696
Capital Appreciation Portfolio Institutional Class 423,564 5,904,485
Capital Appreciation Portfolio Retail Class 13,757 190,809
Intermediate Gov't Bond Portfolio Institutional Class 209,108 2,172,637
Intermediate Gov't Bond Portfolio Retail Class 1,378 14,317
International Portfolio Institutional Class 925,986 11,139,607
International Portfolio Retail Class 13,883 167,016
4. SECURITIES TRANSACTIONS
Purchases of securities and proceeds from sales were as follows for each
Portfolio:
PURCHASES OF PROCEEDS
SECURITIES FROM SALES
------------ ----------
Growth Portfolio $38,798,749 $41,510,278
Government Securities Portfolio 3,994,600 2,200,000
Capital Appreciation Portfolio 1,800,731 2,381,380
Intermediate Government Bond Portfolio 98,792 810,313
International Portfolio 1,717,624 3,279,833
At December 31, 1999, 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 $21,811,011 $928,362
Government Securities Portfolio 39,974 262,128
Capital Appreciation Portfolio 1,545,744 336,345
Intermediate Government Bond Portfolio 2,045 1,129
International Portfolio 2,596,072 1,001,602
40
<PAGE>
STRATUS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
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 has
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 six months
ended December 31, 1999 were as follows:
GROWTH GROWTH
PORTFOLIO PORTFOLIO
INSTITUTIONAL SHARES RETAIL SHARES
-------------------- -------------
Transactions in shares:
Shares sold 197,293.147 12,694.957
Shares redeemed (305,396.191) (8,940.948)
Reinvested dividends 437,857.268 11,481.315
----------- ------------
Net increase/(decrease) 329,754.224 15,235.324
=========== ============
Transactions in dollars:
Dollars sold $3,657,156 $236,951
Dollars redeemed (5,662,252) (165,515)
Reinvested dividends 7,540,157 197,369
---------- --------
Net increase/(decrease) 5,535,061 268,805
========== ========
GOVERNMENT GOVERNMENT
SECURITIES PORTFOLIO SECURITIES PORTFOLIO
INSTITUTIONAL SHARES RETAIL SHARES
-------------------- --------------------
Transactions in shares:
Shares sold 599,182.591 4,428.599
Shares redeemed (416,291.926) (283.780)
Reinvested dividends 76,855.919 485.804
------------ ---------
Net increase/(decrease) 259,746.584 4,630.623
============ =========
Transactions in dollars:
Dollars sold $5,855,751 $43,193
Dollars redeemed (4,058,121) (2,774)
Reinvested dividends 747,746 4,725
------------ -------
Net increase/(decrease) 2,545,376 45,144
============ =======
41
<PAGE>
STRATUS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
5. CAPITAL SHARE TRANSACTIONS (CONTINUED)
CAPITAL APPRECIATION CAPITAL APPRECIATION
PORTFOLIO PORTFOLIO
INSTITUTIONAL SHARES RETAIL SHARES
--------------------- ----------------
Transactions in shares:
Shares sold 42,252.973 1,611.657
Shares redeemed (73,940.579) (6,496.455)
Reinvested dividends 0.000 0.000
------------ ------------
Net increase/(decrease) (31,687.606) (4,844.798)
============ ============
Transactions in dollars:
Dollars sold $ 545,423 $ 20,072
Dollars redeemed (966,044) (82,916)
Reinvested dividends 0 0
------------ ---------
Net increase/(decrease) (420,621) (62,844)
============ =========
INTERMEDIATE GOV'T INTERMEDIATE GOV'T
BOND PORTFOLIO BOND PORTFOLIO
INSTITUTIONAL SHARES RETAIL SHARES
-------------------- -------------
Transactions in shares:
Shares sold 673.786 142.139
Shares redeemed (83,292.986) (72.824)
Reinvested dividends 5,478.765 31.623
------------ ---------
Net increase/(decrease) (77,140.435) 100.938
============ =========
Transactions in dollars:
Dollars sold $ 7,081 $ 1,496
Dollars redeemed (874,258) (766)
Reinvested dividends 57,229 331
Net increase/(decrease) ----------- --------
(809,948) 1,061
=========== ========
INTERNATIONAL INTERNATIONAL
PORTFOLIO PORTFOLIO
INSTITUTIONAL SHARES RETAIL SHARES
-------------------- -------------
Transactions in shares:
Shares sold 74,010.916 531.483
Shares redeemed (175,622.750) (2,390.909)
Reinvested dividends 65,244.948 1,037.405
----------- -----------
Net increase/(decrease) (36,366.886) (822.021)
=========== ===========
Transactions in dollars:
Dollars sold $ 854,832 $ 6,158
Dollars redeemed (2,013,776) (28,530)
Reinvested dividends 733,931 11,650
---------- ----------
Net increase/(decrease) (425,013) (10,722)
========== ==========
42
