STRATUS FUND, INC.
GROWTH
GOVERNMENT SECURITIES
INTERNATIONAL
ANNUAL REPORT
JUNE 30, 2000
STRATUS FUND, INC.
Dear Fellow Shareholders:
The red hot economy is showing signs of cooling. This is a favorable development
as real Gross Domestic Product has been exceeding the Federal Reserve Board's
3.5% - 4.0% speed limit considered the maximum for sustainable non-inflationary
growth. The Fed's tight monetary policy is starting to show results helping to
slow the economy from 7.3% growth during the fourth quarter of 1999 to around
the 4% level at mid year 2000. The Fed has had to raise short-term interest
rates six times over the past year raising Fed Funds from 4.75% to 6.50%.
Despite the strong economy, and the length of the current economic cycle, which
began in 1992, inflation has been fairly well behaved. The notable exception has
been gasoline prices on the demand side of the economy. The record low
unemployment rate of 3.9% earlier this year has inflation watchers concerned
that the cost side of the economy could cause inflation to worsen.
The stock market, confronted with a strong headwind in the form of higher
interest rates, has performed unevenly over the past several quarters. After a
very strong showing at year-end 1999, the stock market has receded from all time
highs established earlier in the year. Stock market volatility has been
extraordinarily high as of late, particularly those stocks trading on the
NASDAQ. The NASDAQ dropped 25% in one week, the week of April 14th.
If the stock market experienced unusual volatility and excitement, the bond
market was near the opposite extreme. Rates moved somewhat higher, but bond
markets discounted the Fed's rate hikes well in advance. Adding to the confusion
was the fact that one governmental body, the Fed, was raising rates while the US
Treasury began buying back Treasury bonds. This activity forced yields down for
longer-term bonds. The end result at mid year was a relatively flat yield curve,
at least for US Treasury securities. Government agencies and corporate bonds did
not benefit from the treasury buy back and continued to rise in yield.
The move to higher rates produced slim returns for nearly all bond funds. The
Stratus Government Securities Portfolio had positive returns that was only
slightly less than its benchmark index, the Merrill Lynch US Treasury
Intermediate term index. Last year this fund ranked in the upper 5% of its peer
group. Correctly forecasting higher interest rates in 1999 and positioning the
fund on the short end of the yield curve was the right combination for very good
relative returns versus the fund's peer group.
The strategy for the Government Securities Portfolio is to emphasize high
quality securities with a high percentage in US Treasuries and government
agencies. Corporate bonds of trust quality may also be used. Maturities may be
as long as ten years, but average maturities have run generally less than five
years. Emphasis will be on total return as opposed to income generation, and the
average maturity will vary with existing and anticipated interest rates.
1
<PAGE>
The Stratus Growth Portfolio completed a successful fiscal year, which ended
June 30, 2000. The fund achieved a total rate of return of 7.5% slightly
exceeding its benchmark, the Standard & Poor's 500 Index, for the twelve-month
period. Technology stocks performed well and the fund tried to have a heavy
representation in that sector.
The strategy employed by the Stratus Growth Portfolio is to invest primarily in
growth stocks selling at reasonable prices. The fund emphasizes large
capitalization stocks. Quarter to quarter earnings for stocks held in the fund
are monitored very closely. Risk control is used in the form of varying cash
reserves in relation to the assessment of risk versus reward for individual
stocks or for the stock market in general. Growth at a reasonable price
(G.A.R.P.) has not been easy to find over the past year with price earnings
ratios at record highs. However, this approach has produced very favorable
results over the past five years, certainly better than funds emphasizing a
value approach.
International markets were strong over the past fiscal year. The Stratus
International Portfolio, managed by Murray Johnstone International, participated
in the upward move, returning 6.8% for the year. While the results were less
than the EAFE benchmark index for the fiscal year, the International Portfolio
was slightly ahead of the index on a calendar year to date basis for the year
2000.
The Stratus Family of Funds underwent a degree of consolidation in May of 2000,
with two of the smaller portfolios being merged into the two largest funds. On
May 26, as a result of a positive shareholder vote, the Stratus Capital
Appreciation Portfolio was merged into the Stratus Growth Portfolio, and the
Stratus Intermediate Government Bond Portfolio was merged into the Stratus
Government Securities Portfolio. Both mergers were treated as a tax-free
exchange.
Once again, Stratus Funds greatly values the continued relationship and
confidence our shareholders have placed in us. Please feel free to contact us
with any questions or comments you may have.
July 28, 2000
2
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
GROWTH RETAILPORTFOLIO AND S&P 500 INDEX
[GRAPHIC OMITTED]
AVERAGE ANNUAL RETURN 6/30/00 VALUES
1 Year 7.18% Growth Retail $14,544.35
5 Year N/A S&P 500 $15,519.12
Inception 16.32%
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
GROWTH INSTITUTIONAL PORTFOLIO AND S&P 500 INDEX
[GRAPHIC OMITTED]
AVERAGE ANNUAL RETURN 6/30/00 VALUES
1 Year 7.52% Growth Institutional $29,935.07
5 Year 20.00% S&P 500 $36,186.59
Inception 17.70%
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 June 30, 2000
Growth Portfolio Retail Shares for the period January 7, 1998 (inception)
through June 30, 2000
3
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
GOVERNMENT SECURITIES INSTITUTIONAL PORTFOLIO AND
MERRILL LYNCH U.S. TREASURY INTER-TERM BOND INDEX
[GRAPHIC OMITTED]
AVERAGE ANNUAL RETURN 6/30/00 VALUES
1 Year 3.89% Government Securities Institutional $13,459.14
5 Year 5.03% Merrill Lynch U.S.Treasury Inter-Term $13,886.64
Inception 4.52%
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
GOVERNMENT SECURITIES RETAIL PORTFOLIO AND
MERRILL LYNCH U.S. TREASURY INTER-TERM BOND INDEX
[GRAPHIC OMITTED]
AVERAGE ANNUAL RETURN 6/30/00 VALUES
1 Year 3.58% Government Securities Retail $10,938.21
5 Year N/A Merrill Lynch U.S. Treasury Inter-Term $11,081.49
Inception 3.71%
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 June 30, 2000.
Government Securities Portfolio Retail Shares for the period January 13, 1998
(inception) through June 30, 2000.
4
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
INTERNATIONAL INSTITUTIONAL PORTFOLIO AND MORGAN STANLEY INTERNATIONAL INDEX
[GRAPHIC OMITTED]
AVERAGE ANNUAL RETURN 6/30/00 VALUES
1 Year 6.84% International Institutional $13,077.00
5 Year N/A Morgan Stanley International $14,406.92
Inception 7.43%
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
INTERNATIONAL RETAIL PORTFOLIO AND MORGAN STANLEY INTERNATIONAL INDEX
[GRAPHIC OMITTED]
AVERAGE ANNUAL RETURN 6/30/00 VALUES
1 Year 6.63% International Retial $12,274.16
5 Year N/A Morgan Stanley International $14,203.13
Inception 8.62%
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 June 30, 2000. International Portfolio Retail Shares for the
period January 7, 1998 (inception) through June 30, 2000.
5
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors of
Stratus Fund, Inc.
We have audited the accompanying statements of assets and liabilities, including
the schedule of investments, of Stratus Fund, Inc. (the "Fund"), including the
Growth, Government Securities, and International Portfolios as of June 30, 2000,
the related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of June 30, 2000, by correspondence with the Fund's
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting Stratus Fund, Inc. as of June 30,
2000, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended, and their
financial highlights for each of the periods presented, in conformity with the
accounting principals generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Lincoln, Nebraska
July 28, 2000
6
<PAGE>
STRATUS FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
GROWTH PORTFOLIO
PERCENT
OF NET
SHARES COMMON STOCK - 94.30% ASSETS VALUE
------ --------------------- ------ -----
ADVERTISING AGENCIES 1.76%
--------------------
30,000 Interpublic Group of Companies, Inc. $1,290,000
AUDIO/VIDEO TECHNOLOGY 0.84%
----------------------
10,000 Gemstar International Group Ltd* 614,531
BUILDING MATERIALS 0.74%
------------------
30,000 Masco Corp 541,875
COMPUTER PRODUCTS 5.68%
-----------------
40,000 Emc Corp. 3,077,500
10,000 International Business Machine Corp. 1,095,625
---------
4,173,125
COMPUTER SOFTWARE 5.43%
-----------------
18,000 Computer Associates International, Inc. 921,375
4,000 Exodus Communication, Inc.* 184,250
2,000 Inktomi Corp.* 236,500
25,000 JD Edwards & Co.* 376,563
22,000 Microsoft Corp.* 1,760,000
8,000 Nvidia Corp* 508,500
---------
3,987,188
DIVERSIFIED OPERATIONS 1.47%
----------------------
20 Berkshire Hathaway, Inc.* 1,076,000
ELECTRONICS 17.49%
-----------
14,000 Analog Devices, Inc.* 1,064,000
27,000 Applied Materials, Inc.* 2,446,875
20,000 BMC Software, Inc.* 729,688
16,000 Intel Corp. 2,139,000
10,000 Molex, Inc. 481,250
48,000 Koninklijke Phillips Electronics 2,280,000
11,000 Sanmina, Corp.* 940,500
25,000 Solectron Corp.* 1,046,875
25,000 Texas Instruments, Inc. 1,717,188
----------
12,845,376
7
<PAGE>
STRATUS FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
GROWTH PORTFOLIO
PERCENT
OF NET
SHARES ASSETS VALUE
------ ------ -----
ENTERTAINMENT/LEISURE 0.53%
---------------------
20,000 Carnival Corp. Class A $390,000
FINANCIAL SERVICES 10.23%
------------------
24,000 American Express, Co. 1,251,000
30,000 Franklin Resources, Inc. 911,250
25,000 Citigroup, Inc. 1,506,250
30,000 Freddie Mac 1,215,000
60,000 SLM Holding Corp. 2,246,250
20,000 U.S. Bancorp 385,000
---------
7,514,750
FOOD PROCESSING 0.78%
---------------
30,000 ConAgra, Inc. 571,875
MACHINE/TOOLS 1.99%
-------------
36,000 Dover Corp 1,460,250
MULTIMEDIA 1.12%
----------
12,000 Viacom, Inc.* 820,500
MANUFACTURING 7.37%
-------------
30,000 Avon Products, Inc. 1,335,000
12,000 General Electric Co. 636,000
12,000 Illinios Tool Works, Inc. 684,000
4,000 JDS Uniphase Corp.* 479,500
48,000 Tyco International Ltd. 2,274,000
---------
5,408,500
MEDICAL SUPPLIES/SERVICE 4.05%
------------------------
18,000 Baxter International, Inc. 1,265,625
20,000 Cardinal Health, Inc. 1,480,000
9,000 Dianon Systems, Inc.* 227,250
---------
2,972,875
METALS/MINING 1.58%
-------------
40,000 Alcoa, Inc. 1,160,000
OIL COMPANY-INTEGRATED 3.96%
----------------------
37,000 Exxon Corp. 2,904,500
OIL COMPANY EXPLORATION & PRODUCTION 2.31%
------------------------------------
30,000 BP Amoco PLC 1,696,875
8
<PAGE>
STRATUS FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
GROWTH PORTFOLIO
PERCENT
OF NET
SHARES ASSETS VALUE
------ ------ -----
OFFICE/BUSINESS 1.55%
---------------
17,000 Avery Dennison Corp. $1,141,125
PHARMACUETICAL/MEDICAL 5.64%
----------------------
20,000 Biogen, Inc.* 1,290,000
14,000 Bristol Meyers Squibb, Co. 815,500
20,000 Johnson & Johnson 2,037,500
---------
4,143,000
RETAIL STORE 6.08%
------------
27,000 Circuit City Stores-Circuit City Group* 896,063
30,000 Costo Companies, Inc. 990,000
35,000 CVS Corp. 1,400,000
25,000 Lowe's Companies, Inc. 1,026,563
4,200 Zale Corp* 153,300
---------
4,465,926
SCHOOLS 1.14%
-------
30,000 Apollo Group, Inc.* 840,000
TELECOMMUNICATIONS 8.07%
------------------
4,000 Corning, Inc. 1,079,500
60,000 Motorola, Inc. 1,743,750
15,000 Nortel Networks Corp. 1,023,750
4,000 Nextel Communications, Inc.* 244,750
40,000 MCI Worldcom, Inc.* 1,835,000
---------
5,926,750
TELECOMMUNICATIONS EQUIPMENT 2.94%
----------------------------
20,000 Telefonaktiebolaget LM Ericsson 400,000
30,000 Nokia Corp. 1,498,125
4,000 Terayon Communication Systems* 256,936
---------
2,155,061
TRANSPORTATION 1.55%
--------------
60,000 Southwest Airlines Co. 1,136,250
Total investment in securities
(cost $56,719,043) 94.30% $69,236,332
Cash equivalents 3.91% 2,871,230
Other assets, less liabilities 1.79% 1,317,527
------ -----------
NET ASSETS 100.00% $73,425,089
====== ===========
*Indicates nonincome-producing security
9
<PAGE>
STRATUS FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
GOVERNMENT SECURITIES PORTFOLIO
PERCENT
Principal OF NET
AMOUNT U.S. GOVERNMENT SECURITIES ASSETS VALUE
------ -------------------------- ------ -----
Government Agency Bonds 23.88%
$1,000,000 Federal National Mtg. Assn. 5.10% due 11/29/00 $993,480
2,000,000 Federal Home Loan Bond 5.80% due 8/24/01 1,975,072
2,000,000 Federal Home Loan Bond 6.055% due 10/15/02 1,959,376
1,000,000 Federal Home Loan Bond 6.90% due 8/23/04 982,813
2,000,000 Federal National Mtg. Assn. 6.35% due 6/10/05 1,943,914
---------
7,854,655
TREASURY NOTES/BONDS 53.88%
--------------------
500,000 U.S. Treasury Note 6.125% due 7/31/00 500,157
300,000 U.S. Treasury Bill due 9/14/00 296,551
3,000,000 U.S. Treasury Note 5.75% due 10/31/00 2,995,314
2,000,000 U.S. Treasury Note 5.50% due 12/31/00 1,990,626
3,000,000 U.S. Treasury Note 6.50% due 5/31/01 3,000,939
500,000 U.S. Treasury Note 6.25% due 10/31/01 498,282
500,000 U.S. Treasury Note 6.25% due 1/31/02 498,125
2,000,000 U.S. Treasury Note 6.625% due 3/31/02 2,003,750
3,000,000 U.S. Treasury Note 6.25% due 2/15/03 2,991,564
3,000,000 U.S. Treasury Note 5.75% due 8/15/03 2,948,439
----------
17,723,747
CORPORATE BONDS 16.45%
---------------
1,000,000 Ford Motor Credit 6.70% due 7/16/04 966,326
1,000,000 Northern Trust Company 6.625% due 10/01/03 978,583
1,500,000 Wachovia 6.70% due 6/21/04 1,464,864
1,000,000 Worldcom 8.00% due 5/15/06 1,012,238
1,000,000 Walmart 6.55% due 8/10/04 987,713
---------
5,409,724
Total investment in securities
(cost $31,217,413) 94.21% $30,988,126
Cash equivalents 4.33% 1,423,734
Other assets, less liabilities 1.46% 480,896
----- -----------
TOTAL NET ASSETS 100.00% $32,892,756
======= ===========
10
<PAGE>
STRATUS FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
INTERNATIONAL PORTFOLIO
PERCENT
OF NET
SHARES COMMON STOCK - 95.52% ASSETS VALUE
------ --------------------- ------ -----
CHEMICALS 2.67%
---------
5,100 Bayer Ag $199,463
3,900 Socquimica Minera de Chili SA ADR 86,775
-------
286,238
COMERCIAL SERVICES 2.19%
------------------
1,600 Secom Limited ADR 234,401
COMPUTER RELATED 6.85%
----------------
2,000 Equant NV* 86,000
2,000 Fujitsu Limited ADR 346,876
2,100 TDK Corp 300,825
-------
733,701
DIVERSIFIED OPERATIONS 8.18%
----------------------
7,919 Barlow Ltd ADR 47,656
8,100 Vivendi Sp ADR 143,567
7,900 Fortis 230,896
30,400 Invensys 228,040
1,500 Siemens Ag ADR 226,467
-------
876,626
ELECTRONICS 5.07%
-----------
2,200 Epocs Ag 216,700
1,200 Omron Corp ADR 326,649
-------
543,349
FINANCIAL SERVICES 13.30%
------------------
6,000 Allied Irish Banks ADR 106,500
2,500 Barclays Plc ADR 250,000
10,485 Banco Frances Del Rio De La Plata S.A. ADR 226,738
2,800 Deutsche Bank ADR 231,902
3,050 National Australia Bank Ltd ADR 252,388
1,500 Sumitomo Bank ADR 184,307
6,000 Uniao De Bancos Brasileiros S.A. 172,500
---------
1,424,335
11
<PAGE>
STRATUS FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
INTERNATIONAL PORTFOLIO
PERCENT
OF NET
SHARES ASSETS VALUE
------ ------ -----
FOOD PROCESSING 1.85%
---------------
4,600 Unilever N.V. $197,800
INDEX SERIES 1.12%
------------
4,600 Webs-Italy Index Series* 119,600
INSURANCE 2.45%
---------
3,300 Axa Spon ADR* 262,556
MANUFACTURING 2.29%
-------------
5,800 Fuji Photo Film 245,775
MEDICAL SUPPLIES/SERVICES 5.03%
-------------------------
700 Banyu Pharmacuetical Ltd ADR 343,379
2,000 Roche Holdings Ltd ADR* 195,318
-------
538,697
METALS/MINING 3.34%
-------------
3,450 Rio Tinto PLC 225,113
8,000 SKF AB Spon ADR 133,000
-------
358,113
OIL EXPLORATION/PRODUCTION 6.57%
--------------------------
4,000 Eni Spa ADR 232,750
4,500 Shell Transport & Trading Company ADR 224,719
3,200 Total SA Fina ADR 245,800
-------
703,269
OIL COMPANY-INTEGRATED 3.36%
----------------------
11,900 Petroleo Brasileiro ADR 359,517
PHARMACEUTICAL/MEDICAL 3.44%
----------------------
9,200 Novartis AG ADR 368,000
PUBLISHING/PRINTING 2.35%
-------------------
10,200 Elsevier NV Spon ADR 251,813
12
<PAGE>
STRATUS FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
INTERNATIONAL PORTFOLIO
PERCENT
OF NET
SHARES ASSETS VALUE
------ ------ -----
REAL ESTATE 2.49%
-----------
24,958 City Developments Ltd ADR $96,715
15,400 Chueng Kong Group Ltd ADR 170,396
-------
267,111
RETAIL STORE
9,884 Wal-Mart De Mexico* 3.96% 231,958
5,000 Mauri Co. Ltd ADR* 191,869
-------
423,827
TELECOMMUNICATIONS 13.63%
------------------
5,900 Cia de Telecommunications de Chile Sa ADR* 106,938
8,000 Ericsson Tel ADR 160,000
2,600 Magyar Tavkozlesi Rt. 89,538
2,000 Nokia Oyj 99,875
800 NTT Mobile Communications Network, Inc. 108,505
6,400 Telecom Corporation of New Zealand Ltd. 180,000
3,000 Swisscom AG 105,750
4,100 Sonera 188,600
2,000 Telecom Italia ADR 275,125
3,500 Vodaphone Airtouch PLC 145,031
---------
1,459,362
TRANSPORTATION 1.45%
--------------
9,100 Peninsular & Orient Steam Navagation Co. 155,122
UTLITIES-ELECTRIC 1.84%
-----------------
5,900 Scottishpower Plc ADR 197,281
UTILITIES-TELECOM 2.09%
-----------------
3,500 Telefonica S.A.* 224,216
Total investment in securities
(cost $9,549,294) 95.52% $10,230,709
Cash equivalents 4.27% 457,430
Other Assets, less liabilities 0.21% 22,351
----- -----------
TOTAL NET ASSETS 100.00% $10,710,490
======= ===========
* Indicates non-income producing security.
13
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
GOVERNMENT
GROWTH SECURITIES INTERNATIONAL
Assets: PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------- -----------
<S> <C> <C> <C>
Investments in securities, at market value
(cost $56,719,043, $31,217,413 and $9,549,294) $69,236,332 $30,988,126 $10,230,709
Cash equivalents 2,871,230 1,423,734 457,430
Accrued interest and dividends receivable 31,010 489,468 24,573
Receivable for securities sold 1,843,850 - -
Receivable for fund shares sold 34,156 19,967 16,204
----------- ----------- -----------
Total assets 74,016,578 32,921,295 $10,728,916
=========== =========== ===========
LIABILITIES:
Accrued expenses, including investment
management and distribution expense payable to
adviser, administrator and distributor (note 3) 63,547 20,986 16,329
Payable for securities purchased 521,434 - 17
Commissions payable for fund shares sold 128 - -
Payable for fund shares redeemed 6,380 7,553 2,080
-------- ------- ------
Total liabilities 591,489 28,539 18,426
-------- ------- ------
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK $73,425,089 $32,892,756 $10,710,490
============ ============ ===========
NET ASSETS ARE REPRESENTED BY:
Capital stock outstanding, at par (note 5) $4,081 $3,411 $937
Additional paid-in capital 54,895,190 33,701,472 9,532,157
Accumulated undistributed net investment income (loss) 1,883 - 372
Accumulated net realized gain/(loss) on investments 6,006,646 (582,840) 495,609
Unrealized appreciation (depreciation) (note 4) 12,517,289 (229,287) 681,415
----------- ----------- ---------
Total net assets applicable to shares outstanding $73,425,089 $32,892,756 $10,710,490
============ ============ ===========
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
Institutional Shares of Capital Stock Outstanding 3,979,872 3,387,022 923,250
Net Asset Value and offering price per share - Institutional Shares $17.99 $9.64 $11.43
====== ===== ======
Retail Shares of Capital Stock Outstanding 101,352 24,182 13,551
Net Asset Value per share - Retail Shares $17.93 $9.64 $11.44
====== ===== ======
Maximum sales charge (note 3) 4.5% 3.0% 4.5%
Maximum offering price per share $18.77 $9.94 $11.98
====== ===== ======
See accompanying notes to financial statements.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 2000
GOVERNMENT
GROWTH SECURITIES INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO
---------- ----------- ------------
<S> <C> <C> <C>
Investment income:
Dividends $432,941 $ - $211,172
Interest 322,912 1,981,907 29,126
-------- ---------- --------
Total investment income 755,853 1,981,907 240,298
-------- ---------- --------
EXPENSES (NOTE 3):
Investment advisory fees 504,459 160,122 126,705
Administration Fees 168,122 80,040 27,525
Distribution Expenses 4,447 619 495
Accounting 11,812 7,992 6,139
Securities Pricing 7,286 184 8,416
Other operating expenses 52,063 22,260 10,145
------- ------- -------
Total expenses 748,189 271,217 179,425
------- -------- -------
Net investment income 7,664 1,710,690 60,873
====== ========== ======
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 4):
Net realized gain (loss) 8,413,170 (42,576) 863,790
Net unrealized appreciation (depreciation)
Beginning of period 15,273,353 195,132 (859,319)
Unrealized appreciation (depreciation) of
securities received in tax-free
exchange (note 6) 650,369 (8,220) -
End of period 12,517,289 (229,287) 681,415
---------- --------- --------
Net unrealized depreciation (3,406,433) (416,199) (177,904)
----------- --------- --------
Net realized and unrealized gain (loss)
on investments 5,006,737 (458,775) 685,886
---------- --------- -------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $5,014,401 $1,251,915 $746,759
=========== ========== ========
See accompanying notes to financial statements.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED JUNE 30, 2000 AND 1999
GOVERNMENT
GROWTH SECURITIES
PORTFOLIO PORTFOLIO
----------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 2000 JUNE 30, 1999 JUNE 30, 2000 JUNE 30, 1999
--------------------------------------------------------
<S> <C> <C> <C> <C>
Operations:
Net investment income $7,664 $191,951 $1,710,690 $1,539,461
Net realized gain on investments 8,413,170 7,852,458 (42,576) 4,501
Unrealized appreciation (depreciation) (3,406,433) 1,026,187 (416,199) (241,357)
------------ ------------- ----------- -----------
Net increase in net assets
resulting from operations 5,014,401 9,070,596 1,251,915 1,302,605
------------- ------------- ------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Institutional Class 5,966 192,811 1,700,612 1,533,764
Retail Class - 201 10,454 8,326
------------ -------------- ------------ ------------
5,966 193,012 1,711,066 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 Distributions 9,547,199 5,603,210 1,711,066 1,542,090
------------ -------------- ------------ ------------
CAPITAL SHARE TRANSACTIONS (NOTE 5):
Proceeds from sales 8,937,426 11,447,294 8,998,648 10,167,190
Net assets from tax-free exchange (note 6) 5,346,056 - 1,879,575 -
Payment for redemptions (10,371,944) (17,142,994) (8,538,126) (12,344,732)
Reinvestment of net investment
income and net realized gain distributions
at net asset value 7,742,418 4,651,155 1,523,304 1,398,687
------------ -------------- ------------ ------------
Total increase (decrease) from capital
share transactions 11,653,956 (1,044,545) 3,863,401 (778,855)
------------ -------------- ------------ ------------
Total increase (decrease) in net assets 7,121,158 2,422,841 3,404,250 (1,018,340)
NET ASSETS:
Beginning of period 66,303,931 63,881,090 29,488,506 30,506,846
------------- -------------- ------------ ------------
End of period $73,425,089 $66,303,931 $32,892,756 $29,488,506
============= ============== ============ ============
See accompanying notes to financial statements.
</TABLE>
16
<PAGE>
STRATUS FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED JUNE 30, 2000 AND 1999
INTERNATIONAL
PORTFOLIO
-------------------------------
YEAR ENDED YEAR ENDED
JUNE 30, 2000 JUNE 30, 1999
-------------------------------
Operations:
Net investment income $60,873 $51,642
Net realized gain on investments 863,790 689,531
Unrealized depreciation (177,904) (682,947)
------------- ---------------
Net increase in net assets
resulting from operations 746,759 58,226
------------- ---------------
Distributions to shareholders from:
Net investment income:
Institutional Class 60,225 51,751
Retail Class 428 237
------------- ---------------
60,653 51,988
Net realized gains
Institutional Class 838,671 204,146
Retail Class 12,343 3,025
------------- ---------------
851,014 207,171
------------- ---------------
Total Distributions 911,667 259,159
------------- ---------------
Capital share transactions (note 5):
Proceeds from sales 1,654,005 2,843,478
Payment for redemptions (2,922,406) (3,136,480)
Reinvestment of net investment
income and net realized gain distributions
at net asset value 789,037 249,768
------------- ---------------
Total decrease from capital
share transactions (479,364) (43,234)
------------- ---------------
Total decrease in net assets (644,272) (244,167)
Net Assets:
Beginning of period 11,354,762 11,598,929
------------- ---------------
End of period $10,710,490 $11,354,762
============= ===============
See accompanying notes to financial statements.
17
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
FINANCIAL HIGHLIGHTS
YEAR ENDED JUNE 30, 2000 AND THE
YEARS ENDED JUNE 30, 1999, 1998, 1997 AND 1996
GROWTH PORTFOLIO- INSTITUTIONAL CLASS
----------------------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period $19.51 $18.53 $17.07 $13.67 $11.47
------ ------ ------ ------ ------
Income from investment operations:
Net investment income 0.00 0.06 0.11 0.22 0.23
Net realized and unrealized gain (loss)
on investments 1.31 2.53 3.45 3.99 2.36
----- ----- ----- ----- -----
Total income from investment operations 1.31 2.59 3.56 4.21 2.59
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income 0.00 (0.06) (0.11) (0.22) (0.22)
Distribution from capital gains (2.83) (1.55) (1.99) (0.59) (0.17)
------ ------ ------ ------ ------
Total distributions (2.83) (1.61) (2.10) (0.81) (0.39)
------ ------ ------ ------ ------
End of period $17.99 $19.51 $18.53 $17.07 (a) $13.67
------ ------ ------ ------ ------
TOTAL RETURN: 7.52% 16.34% 22.29% 32.6% (a) 22.6%
----- ------ ------ ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $71,607,938 $65,011,189 63,096,914 46,189,099 24,627,983
Ratio of expenses to average net assets 1.11% 1.05% 0.76% 0.72% 0.71%
Ratio of net income to average net assets 0.02% 0.31% 0.18% 1.46% 1.78%
Portfolio turnover rate 178.43% 194.23% 137.03% 88.53% 92.72%
(a) EXCLUDES MAXIMUM SALES LOAD OF 4%
(b) TOTAL RETURN IS NOT ANNUALIZED.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
FINANCIAL HIGHLIGHTS
YEAR ENDED JUNE 30, 2000 AND THE
JANUARY 7, 1998 (COMMENCEMENT OF CLASS SHARES) TO JUNE 30, 1998
Growth Portfolio- Retail Class
2000 1999 Period Ended June 30, 1998
---- ---- --------------------------
<S> <C> <C> <C>
Net asset value:
Beginning of period $19.51 $18.52 $15.86
Income from investment operations:
Net investment income (0.05) 0.00 0.04
Net realized and unrealized gain
on investments 1.31 2.47 2.66
Total income from investment operations 1.26 2.47 2.70
Less distributions:
Dividends from net investment income 0.00 0.00 (0.04)
Distribution from capital gains (2.84) (1.48) 0.00
Total distributions (2.84) (1.48) (0.04)
End of period $17.93 $19.51 (a) $18.52 (a)
Total return: 7.18% 16.09% (a) 16.89% (a)(b)
Ratios/Supplemental data:
Net assets, end of period $1,817,151 $1,292,742 $784,176
Ratio of expenses to average net assets 1.41% 1.35% 1.50% (c)
Ratio of net income to average net assets -0.28% 0.01% 0.13% (c)
Portfolio turnover rate 178.43% 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.
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
FINANCIAL HIGHLIGHTS
YEAR ENDED JUNE 30, 2000 AND THE
YEARS ENDED JUNE 30, 1999, 1998, 1997, AND 1996
GOVERNMENT SECURITIES PORTFOLIO- INSTITUTIONAL CLASS
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Beginning of period $9.79 $9.88 $9.72 $9.64 $9.77
----- ----- ----- ----- -----
Income (loss) from investment operations:
Net investment income 0.52 0.51 0.51 0.51 0.49
Net realized and unrealized gain (loss)
on investments (0.15) (0.09) 0.16 0.08 (0.13)
------ ----- ----- ----- ------
Total income (loss) from investment operations 0.37 0.42 0.67 0.59 0.36
---- ----- ----- ----- -----
Less distributions from
net investment income (0.52) (0.51) (0.51) (0.51) (0.49)
------ ------ ------ ------ ------
End of period $9.64 $9.79 $9.88 $9.72 (a) $9.64
----- ----- ----- ----- -----
3.89% 4.33% 7.04% 6.3% (a) 3.7%
----- ----- ----- ---- ----
Net assets, end of period $32,659,584 $29,321,012 30,367,682 26,533,869 23,043,163
Ratio of expenses to average net assets 0.85% 0.80% 0.82% 0.71% 0.69%
Ratio of net income to average net assets 5.35% 5.13% 5.17% 5.21% 5.04%
Portfolio turnover rate 30.55% 18.66% 2.07% 27.20% 40.61%
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
FINANCIAL HIGHLIGHTS
YEAR ENDED JUNE 30, 2000 AND THE JANUARY 13,
1998 (COMMENCEMENT OF CLASS SHARES) TO JUNE 30, 1998
GOVERNMENT SECURITIES- RETAIL CLASS
2000 1999 PERIOD ENDED JUNE 1998
---- ---- ----------------------
<S> <C> <C> <C>
NET ASSET VALUE:
Beginning of period $9.79 $9.89 $9.97
----- ------ -----
Income from investment operations:
Net investment income 0.49 0.48 0.25
Net realized and unrealized gain (loss)
on investments (0.15) (0.09) (0.08)
----- ----- -----
Total income from investment operations 0.34 0.39 0.17
----- ----- -----
Less distributions:
Dividends from net investment income (0.49) (0.49) (0.25)
Distribution from capital gains 0.00 0.00 0.00
----- ----- -----
Total distributions (0.49) (0.49) (0.25)
------ ------ ------
End of period $9.64 $9.79 $9.89
----- ----- -----
TOTAL RETURN: 3.58% 3.96% (a) 1.58% (a)(b)
----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $233,172 $167,494 $139,164
Ratio of expenses to average net assets 1.15% 1.10% 1.21% (c )
Ratio of net income to average net assets 5.05% 4.83% 5.49% (c )
Portfolio turnover rate 30.55% 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.
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
FINANCIAL HIGHLIGHTS
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
AND THE PERIOD FROM OCTOBER 1, 1996 (COMMENCEMENT
OF CLASS SHARES) TO JUNE 30, 1997
INTERNATIONAL PORTFOLIO- INSTITUTIONAL CLASS
-----------------------------------------------------------
2000 1999 1998 PERIOD ENDED JUNE 30, 1997
---- ---- ---- --------------------------
<S> <C> <C> <C> <C>
Net asset value:
Beginning of period $11.62 $11.75 $11.22 $10.00
------ ------ ------ ------
Income from investment operations:
Net investment income 0.06 0.05 0.02 0.15
Net realized and unrealized gain
on investments 0.71 0.09 0.64 1.22
----- ----- ----- ----
Total income from investment
operations 0.77 0.14 0.66 1.37
----- ----- ----- ----
Less distributions:
Dividends from net investment income (0.06) (0.05) (0.02) (0.15)
Distributions from capital gains (0.90) (0.22) (0.11) 0.00
------ ------ ------ ----
Total Distributions (0.96) (0.27) (0.13) (0.15)
------ ------ ------ ------
End of period $11.43 $11.62 $11.75 $11.22 (a)
------ ------ ------ ------
TOTAL RETURN: 6.84% 1.40% 6.27% 18.20% (a) (b)
----- ----- ----- ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $10,555,525 $11,182,332 $11,473,772 $10,431,107
Ratio of expenses to average net assets 1.62% 1.53% 1.65% 1.48% (b)
Ratio of net income to average net assets 0.56% 0.49% 0.21% 1.89% (b)
Portfolio turnover rate 54.31% 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>
22
<PAGE>
<TABLE>
<CAPTION>
STRATUS FUND, INC.
FINANCIAL HIGHLIGHTS
YEAR ENDED JUNE 30, 2000, 1999 AND THE PERIOD FROM
JANUARY 7, 1998 (COMMENCEMENT OF CLASS SHARES) TO JUNE 30, 1998
INTERNATIONAL PORTFOLIO - RETAIL CLASS
------------------------------------------
2000 1999 PERIOD ENDED JUNE 30, 1998
---- ---- --------------------------
<S> <C> <C> <C>
NET ASSET VALUE:
Beginning of period $11.62 $11.75 $10.33
------ ------- ------
Income from investment operations:
Net investment income 0.03 0.02 0.03
Net realized and unrealized gain (loss)
on investments 0.70 0.09 1.42
----- ----- ----
Total income from investment operations 0.73 0.11 1.45
----- ----- ----
Less distributions:
Dividends from net investment income (0.03) (0.02) (0.03)
Distribution from capital gains (0.88) (0.22) 0.00
------ ------ ----
Total distributions (0.91) (0.24) (0.03)
------ ------ ------
End of period $11.44 (a) $11.62 (a) $11.75 (a)
------ ------ ------
TOTAL RETURN: 6.63% (a) 1.07% (a) 13.88% (a)(b)
----- ----- ------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $154,965 $172,430 $125,157
Ratio of expenses to average net assets 1.93% 1.83% 1.94% (c )
Ratio of net income to average net assets 0.25% 0.19% 0.27% (c )
Portfolio turnover rate 54.31% 40.00% 52.92%
(a) EXCLUDES MAXIMUM SALES LOAD OF 4.5%
(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>
23
<PAGE>
STRATUS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
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 June
30, 2000, the following series are presently authorized and have shares
outstanding.
Growth Portfolio
Government
Securities 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
accounting principles generally accepted in the United States of America,
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.
24
<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 and International Portfolios are authorized to purchase
exchange-traded put and call options. At June 30, 2000, the Growth 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.
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
25
<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 Portfolio has an unused capital loss carry forward of
approximately $534,000 available for federal income tax purposes at June
30, 2000. The losses begin expiring in 2003.
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 Portfolio declares dividends monthly and the Growth
and International Portfolios declare dividends semi-annually. The dividends
declared become payable immediately. Net realized gains, if any, are
distributed annually.
CASH EQUIVALENTS
Cash equivalents consist of money market funds which declare dividends
daily. As of June 30, 2000, the average yield on such funds was
approximately 5.6%.
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 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%
International 1.15%
26
<PAGE>
STRATUS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
3. FEES, EXPENSES AND RELATED PARTY TRANSACTIONS (CONTINUED)
The Fund and each of its Portfolios have retained UBATCO as the custodian
of the Fund's investments.
The Fund and each of its Portfolios have retained Adminisystems, Inc.
(formerly 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.
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 and International portfolios include a
maximum sales charge of 4.5%. Retail shares for the Government Securities
portfolio 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 .50% per annum of
the fund's average daily net assets. The Distributor received $4,839 and
paid out $3,275 of this amount as commissions and dealer reallowances.
Institutional shares for all portfolios are not charged sales charges or
12b-1 fees.
27
<PAGE>
STRATUS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
3. FEES, EXPENSES AND RELATED PARTY TRANSACTIONS (CONTINUED)
Under the terms of the advisory, administrative and distribution agreements
outlined above, the Portfolios collectively incurred $791,285; $275,687 and
$5,561 for such services. All of the amount paid to the Distributor was to
Union Bank & Trust Company under a Dealer Service Agreement.
At June 30, 2000, 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 $45,961 $15,320 $446 $61,727
Government Securities Portfolio 13,474 6,709 60 20,243
International Portfolio 10,094 2,178 41 12,313
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 June 30, 2000, 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.
At June 30, 2000, 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 378,678 $6,812,416
Government Securities Portfolio Institutional Class 328,034 3,162,245
International Portfolio Institutional Class 94,096 1,075,521
28
<PAGE>
STRATUS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
3. FEES, EXPENSES AND RELATED PARTY TRANSACTIONS (CONTINUED)
At June 30, 2000, UBATCO held, in nominee name, the following in each
Portfolio:
SHARES VALUE
------ -----
Growth Portfolio Institutional Class 3,967,346 $71,382,792
Growth Portfolio Retail Class 82,471 1,478,701
Government Securities Portfolio
Institutional Class 3,381,575 32,598,387
Government Securities Portfolio Retail Class 23,086 222,549
International Portfolio Institutional Class 922,294 10,541,824
International Portfolio Retail Class 13,516 154,625
4. SECURITIES TRANSACTIONS
Purchases of securities and proceeds from sales of investments, excluding
short-term investments, were as follows for each Portfolio:
PURCHASES OF PROCEEDS
SECURITIES FROM SALES
---------- ----------
Growth Portfolio $109,728,080 $110,944,075
Government Securities Portfolio 8,252,092 7,157,320
International Portfolio 5,833,988 7,786,617
At June 30, 2000, 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 $15,868,326 $3,351,037
Government Securities Portfolio 46,122 275,409
International Portfolio 1,674,630 993,215
At June 30, 2000, the cost of investment securities is identical for
financial reporting and income tax purposes.
29
<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 and the
International Portfolio.
Transactions in the capital stock of each Portfolio for the twelve months
ended June 30, 2000 were as follows:
GROWTH GROWTH
PORTFOLIO PORTFOLIO
INSTITUTIONAL SHARES RETAIL SHARES
-------------------- -------------
Transactions in shares:
Shares sold 459,558.375 27,001.529
Shares issued in exchage 302,353.320 10,377.575
Shares redeemed (551,626.179) (13,773.616)
Reinvested dividends 438,128.451 11,481.315
----------- ------------
Net increase/(decrease) 648,413.967 35,086.803
=========== ===========
Transactions in dollars:
Dollars sold $ 8,442,117 $495,309
Net asset transferred in exchange 5,170,242 175,814
Dollars redeemed (10,116,624) (255,320)
Reinvested dividends 7,545,048 197,369
----------- -------
Net increase/(decrease) 11,040,783 613,172
=========== =======
GOVERNMENT GOVERNMENT
SECURITIES SECURITIES
PORTFOLIO PORTFOLIO
INSTITUTIONAL SHARES RETAIL SHARES
-------------------- -------------
Transactions in shares:
Shares sold 921,868.962 4,895.135
Shares issued in exchange 194,626.321 1,505.077
Shares redeemed (881,084.993) (380.438)
Reinvested dividends 156,397.247 1,052.083
------------ ------------
Net increase/(decrease) 391,807.537 7,071.857
============ ============
Transactions in dollars:
Dollars sold $ 8,968,568 $30,080
Net assets transferred in exchange 1,864,520 15,055
Dollars redeemed (8,534,419) (3,706)
Reinvested dividends 1,513,130 10,173
--------- ------
Net increase/(decrease) 3,811,799 51,602
========== =======
30
<PAGE>
STRATUS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
5. CAPITAL SHARE TRANSACTIONS (CONTINUED)
INTERNATIONAL INTERNATIONAL
PORTFOLIO PORTFOLIO
INSTITUTIONAL SHARES RETAIL SHARES
-------------------- -------------
Transactions in shares:
Shares sold 142,411.157 1,726.764
Shares redeemed (250,633.107) (4,089.136)
Reinvested dividends 69,038.146 1,072.963
------------ -----------
Net decrease (39,183.804) (1,289.409)
============ ===========
Transactions in dollars:
Dollars sold $1,633,897 $20,108
Dollars redeemed (2,875,852) (46,554)
Reinvested dividends 776,983 12,054
--------- -------
Net decrease (464,972) (14,392)
========= =======
6. FUND MERGERS
On May 26, 2000 the net assets of the Capital Appreciation and Intermediate
Government Bond portfolios were reorganized into the Growth and Government
Securities portfolios respectively in transactions accounted for as tax
free exchanges. The fair value value of the net assets received by the
Growth portfolio was $5,346,056, including unrealized appreciation of
$650,369. The fair value value of the net assets received by the Government
Securities portfolio was $1,879,575, including unrealized depreciation of
$8,220.
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