UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-1571
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American United Life Pooled Equity Fund B
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(Exact name of registrant as specified in charter)
One American Square
Indianapolis, IN 46282-8216
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(Address of principal executive offices) (Zip Code)
Constance E. Lund
American United Life Insurance Company
One American Square
Indianapolis, IN 46282-8216
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(Name and address of agent for service)
Registrant's telephone number, including area code: 317-285-1877
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Date of fiscal year end: December 31, 2003
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Date of reporting period: June 30, 2003
Form N-CSR is to be used by management investment companies to file reports with
the Commission no later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Invesment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, D.C. 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS
American United Life
Pooled Equity Fund B
Semi-Annual Report
June 30, 2003
American United Life Insurance Company
P.O. Box 6148
Indianapolis, Indiana 46206-6148
American United Life Pooled Equity Fund B
R. STEPHEN RADCLIFFE
Chairman of the Board of Managers;
President, AUL
RONALD D. ANDERSON
Director, Board of Managers;
Professor, Kelley School of Business,
Indiana University, Indianapolis, Indiana
DONALD J. STUHLDREHER
Director, Board of Managers;
Former President, The Huntington Company
JAMES W. MURPHY
Director, Board of Managers;
Former Senior Vice President, Corporate Finance, AUL
ALPHA C. BLACKBURN
Director, Board of Managers;
President and Chief Executive Officer,
Blackburn Architects, Inc.
THOMAS M. ZUREK
Secretary to the Board; General Counsel, AUL
JOHN C. SWHEAR
` Assistant Secretary to the Board; Assistant General Counsel, AUL
CUSTODIAN
National City Bank Indianapolis, Indiana
LEGAL COUNSEL
Dechert, LLP Washington, D.C.
INVESTMENT MANAGER
American United Life Insurance Company Indianapolis, Indiana
G. David Sapp, Senior Vice President, Investments
This Report and the financial statements contained herein are for the general
information of the Participants.
A Message From The Chairman of the Board of Managers
To All Participants in American United Life
Pooled Equity Fund B
The investment environment has changed dramatically since the beginning of the
year, primarily in response to geo-political and economic issues. As 2003
commenced, investors were faced with a myriad of concerns, including the war
with Iraq, higher energy prices, fear of terrorist retaliation, SARS, and the
weakening dollar relative to the euro. The Federal Reserve, acknowledging that
the long-awaited economic recovery remained sluggish, lowered the federal funds
rate in June by 25 basis points to 1.0%, the lowest level since 1958. As a
result of these concerns, the stock market drifted lower during the first
quarter, while bonds continued to post strong returns. To many investors, it
seemed like a painful continuation of the past three years.
Fortunately, equity investors assumed a more bullish posture during the second
quarter. U.S. stock mutual funds advanced on average more than 17% during the
quarter, the strongest performance in years, according to Lipper Inc. As a
result, major equity indices posted handsome, positive returns during the first
half of the year, a welcome respite for equity investors.
The attractive equity returns in the first half ended a three-year run during
which investment grade bond funds significantly outperformed the vast majority
of stock funds. Although overshadowed by stock returns, the 3.9% earned by the
Lehman Aggregate Bond Index provided a respectable advantage over the meager
money market returns available in the first half of 2003.
There has been some concern the stock market has advanced too rapidly without
any clear indication of an economic or earnings improvement. However, it is
hoped that the current level of liquidity, expansionary fiscal and monetary
policies, and a more competitive currency will provide the necessary stimulus to
prevent deflation and boost economic activity. And although short-term prospects
for stocks may be dampened due to the recent rapid advance in stock prices,
further upside potential is still possible during the remainder of the year.
Although the Federal Reserve Bank is expected to keep short-term interest rates
at historically low levels for as long as it takes to boost economic growth,
interest rates on bonds with intermediate and longer-term maturities have
recently moved higher. Prospects for faster economic growth, continued deficit
spending by the Federal government, and a weaker dollar are weighing heavily on
investor sentiment in the bond market.
Equity Fund B provided an investment return of 12.0% during the first half of
2003. The performance for Fund B is net of investment advisory fees as well as
mortality and expense risk charges.
/s/ R. Stephen Radcliffe
R. Stephen Radcliffe
Chairman of the Board of Managers
Indianapolis, Indiana
August 15, 2003
1
2
American United Life Pooled Equity Fund B
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003
(unaudited)
Assets:
Investments at value (cost: $3,319,394)
Common stock $ 3,673,836
Money market mutual funds 207,237
Dividends and interest receivable 4,391
Total assets 3,885,464
Liabilities: 0
Net assets: $ 3,885,464
Units outstanding 188,162
Accumulation unit value $ 20.65
The accompanying notes are an integral part of the financial statements.
3
American United Life Pooled Equity Fund B
STATEMENT OF OPERATIONS
for the six months ended June 30, 2003
(unaudited)
Net investment income:
Income
Dividends and interest $ 29,683
29,683
Expenses
Investment management services 5,326
Mortality and expense charges 15,977
21,303
Net investment income 8,380
Gains (losses) on investments:
Net realized gains (losses) (107,830)
Net change in unrealized appreciation (depreciation) 512,793
Net gain (loss) 404,963
Increase (decrease) in net assets from operations $ 413,343
The accompanying notes are an integral part of the financial statements.
4
American United Life Pooled Equity Fund B
STATEMENTS OF CHANGES IN NET ASSETS
Six months
ended
June 30, 2003 Year ended
(unaudited) Dec. 31, 2002
<c> <c>
Operations:
Net investment income $ 8,380 $ 14,802
Net realized gain (loss) (107,830) 392,974
Net change in unrealized appreciation (depreciation) 512,793 (791,467)
Increase in net assets from operations 413,343 (383,691)
Changes from contract owner transactions:
Payments for units withdrawn (151,160) (933,568)
Decrease (151,160) (933,568)
Net increase (decrease) in net assets 262,183 (1,317,259)
Net assets at beginning of year 3,623,281 4,940,540
Net assets at end of year $ 3,885,464 $ 3,623,281
Units withdrawn (8,457) (45,638)
Net increase (decrease) in units outstanding (8,457) (45,638)
Units outstanding at beginning of year 196,619 242,257
Units outstanding at end of year 188,162 196,619
The accompanying notes are an integral part of the financial statements.
5
American United Life Pooled Equity Fund B
SCHEDULE OF INVESTMENTS
June 30, 2003
(unaudited)
<c> <c> <c>
Market
Description Shares Value
Common Stock (94.7%)
Aerospace/Defense (5.9%)
Boeing Co. 2,250 $ 77,220
General Dynamics 900 65,250
Precision Castparts Corp. 2,800 87,080
229,550
Apparel (9.8%)
Columbia Sportswear Co.* 400 20,560
Kellwood Co. 3,050 96,472
Liz Claiborne, Inc. 2,200 77,550
Reebok International* 3,150 105,935
Wolverine World Wide, Inc. 4,050 78,003
378,520
Automotive & Auto Parts (8.3%)
Carlisle Companies, Inc. 2,400 101,184
TBC Corp.* 11,600 220,863
322,047
Banks & Financial Services (8.0%)
Bank One Corp. 2,532 94,140
Citigroup, Inc. 2,136 91,421
Investment Technology Group* 700 13,020
Washington Mutual, Inc. 2,732 112,831
311,412
Cement & Aggregates (2.1%)
Lafarge North America, Inc. 2,600 80,340
80,340
Chemicals (1.4%)
Dow Chemical 1,800 55,727
55,727
Computer Hardware & Software (6.3%)
Autodesk, Inc. 7,200 116,424
Hewlett-Packard Co. 5,998 127,756
244,180
Consumer Products (0.6%)
Helen of Troy* 1,600 24,256
24,256
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
American United Life Pooled Equity Fund B
SCHEDULE OF INVESTMENTS (continued)
June 30, 2003
(unaudited)
<c> <c> <c>
Market
Description Shares Value
Common Stock (94.7%), continued
Electrical Equipment & Electronics (7.1%)
American Power Conversion* 5,450 $ 85,075
Baldor Electric Co. 5,240 107,944
General Electric Co. 1,500 43,020
Kemet Corp.* 3,750 37,875
273,914
Furniture (4.0%)
Furniture Brands International, Inc.* 2,850 74,385
Kimball International, Inc. Class "B" 300 4,668
La-Z-Boy, Inc. 3,350 74,973
154,026
Health Care & Pharmaceuticals (6.0%)
McKesson Corp. 2,550 91,137
Merck & Co., Inc. 250 15,138
Pfizer Inc. 2,150 73,423
Schering-Plough Corp. 2,900 53,940
233,638
Housing (1.8%)
Fleetwood Enterprises, Inc.* 2,600 19,240
Toll Brothers, Inc.* 1,800 50,958
70,198
Manufacturing (3.3%)
Crane Co. 2,100 47,523
Trinity Industries 4,300 79,593
127,116
Metals & Mining (3.7%)
ALCOA, Inc. 3,250 82,875
Phelps Dodge Corp.* 1,550 59,427
142,302
Oil & Oil Services (6.3%)
Royal Dutch Petroleum Co. 2,100 97,902
Tidewater, Inc. 3,000 88,110
Valero Energy Corp. 1,650 59,945
245,957
*does not pay cash dividends
The accompanying notes are an integral part of the financial statements.
7
American United Life Pooled Equity Fund B
SCHEDULE OF INVESTMENTS (continued)
June 30, 2003
(unaudited)
<c> <c> <c>
Market
Description Shares Value
Common Stock (94.7%), continued
Paper and Forest Products (2.2%)
Wausau-Mosinee Paper Corp. 7,600 $ 85,120
85,120
Restaurants (2.4%)
Outback Steakhouse, Inc. 1,300 50,700
Ryan's Family Steak Houses, Inc.* 3,000 41,070
91,770
Retail (3.8%)
BJ's Wholesale Club, Inc.* 5,400 81,324
Longs Drug Stores, Inc. 4,100 68,060
149,384
Telecommunication Services & Equipment (6.7%)
Scientific-Atlanta, Inc. 6,100 145,424
Sprint Corp. (FON Group) 3,050 43,920
Telefonos de Mexico Class L Sponsored ADR 2,250 70,695
260,039
Transportation (2.9%)
Alexander & Baldwin, Inc. 2,050 53,505
Norfolk Southern Corp. 3,100 59,520
113,025
Miscellaneous (2.1%)
Brunswick Corp. 3,250 81,315
81,315
Total common stock (cost: $3,112,157) 3,673,836
Money Market Mutual Funds (5.3%)
Armada Money Market Fund 82,683 82,683
Dreyfus Cash Management 62,108 62,108
Merrill Lynch Institutional Fund 62,446 62,446
Total money market mutual funds (cost: $207,237) 207,237
Total Investments (cost: $3,319,394) $ 3,881,077
*does not pay cash dividends
Percentages shown are based on total investments at market value.
The accompanying notes are an integral part of the financial statements.
8
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
American United Life Pooled Equity Fund B (Fund B) is registered under the
Investment Company Act of 1940 as an open-end, diversified management investment
company. Fund B was established by and is managed by American United Life
Insurance Company (AUL) for the purpose of issuing group and individual variable
annuities. As of May 1, 2000, AUL stopped accepting contributions or transfers
into Fund B. Investments are valued at closing prices for those securities
traded on organized exchanges or listed on the NASDAQ National Market System,
and at bid prices for securities traded over-the-counter. Gains and losses on
the sale of investments are determined on a first-in, first-out (FIFO) basis.
Investment transactions are accounted for on a trade date basis. Dividends are
included in income as of the ex-dividend date. Interest income is accrued daily.
Operations of Fund B are part of, and are taxed with, the operations of AUL,
which is taxed as a life insurance company under the Internal Revenue Code.
Under current law, investment income, including realized and unrealized capital
gains of Fund B, is not taxed to AUL to the extent it is applied to increase
reserves under the contracts. Fund B has not been charged for federal and state
income taxes since none have been imposed. The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
2. Investment Transactions
Purchases and sales of investment securities (excluding short-term securities
and U.S. government obligations) for the six months ended June 30, 2003 were
$345,327 and $498,682, respectively.
3. Transactions With AUL
Fund B pays AUL an annual fee of 1.2% of its average daily net assets for
providing investment management services (0.3%) and for mortality and expense
charges (0.9%). The expense incurred during the six months ended June 30, 2003
was $21,302.
4. Net Assets
Net assets as of June 30, 2003:
Proceeds from units sold less payments
for units withdrawn and redeemed $ (20,516,683)
Accumulated net investment income 4,502,062
Accumulated net realized gains 19,338,406
Unrealized appreciation 561,679
$ 3,885,464
The unrealized appreciation of $561,679 consists of common stock appreciation
and depreciation of $782,922 and $221,243, respectively.
9
FINANCIAL HIGHLIGHTS
Per Unit Operating Performance (for a unit outstanding for the entire year)
Year Ended December 31
Six months
ended
June 30, 2003
(unaudited) 2002 2001 2000 1999
<c> <c> <c> <c> <c> <c>
Net investment income $ 0.04 $ 0.07 $ 0.10 $ 0.23 $ 0.16
Net realized and unrealized
gain (loss) on investments 2.18 (2.03) 1.74 2.28 (0.44)
Net increase (decrease) 2.22 (1.96) 1.84 2.51 (0.28)
Accumulation unit value:
Beginning of year 18.43 20.39 18.55 16.04 16.32
End of year $ 20.65 $ 18.43 $ 20.39 $ 18.55 $ 16.04
Total Return 12.0% (9.6%) 10.0% 15.6% (1.7%)
Supplemental Data:
Net assets, end of period
(000) $ 3,885 $ 3,623 $ 4,941 $ 6,673 $ 10,471
Ratio to Average Net
Assets:*
Expenses 1.20% 1.20% 1.20% 1.20% 1.20%
Net investment income 0.47% 0.34% 0.54% 1.34% 0.97%
Portfolio Turnover Rate 10% 16% 12% 19% 37%
Units outstanding 188 197 242 360 653
(in 000's)
*Annualized
The accompanying notes are an integral part of the financial statements.
10
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
a) The Chairman of the Board of Managers and the Senior Vice President of
Corporate Finance have concluded that the AUL Pooled Equity Fund B's
(the "Fund") disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended) provide
reasonable assurances that material information relating to the Fund is
made known to them by the appropriate persons, based on their evaluations
of these controls and procedures as of a date within 90 days of the
filing date of this report.
b) There were no significant changes in the Fund's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act) that occurred during the Fund's last fiscal half-year that
has materially affected, or is reasonably likely to materially affect,
the Fund's internal control over financial reporting.
ITEM 10. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investmnent
Company Act of 1940 (17 CFR 270.30a-2(a)) are attached hereto.
(b) Certifications pursuant to Rule 30a-2(b) under the Investment
Company Act of 1940 (17 CFR 270.30A-2(b)) are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Invesment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) AUL Pooled Equity Fund B
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By (Signature and Title)* /s/ R. Stephen Radcliffe
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R. Stephen Radcliffe, Chairman of Board of Managers
(principal executive officer)
Date September 10, 2003
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ R. Stephen Radcliffe
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R. Stephen Radcliffe, Chairman of Board of Managers
(principal executive officer)
Date September 10, 2003
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By (Signature and Title)* /s/ Constance E. Lund
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Constance E. Lund, Sr. Vice President, Corp.Finance
American United Life Insurance Company
(principal financial officer)
Date September 10, 2003
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* Print the name and title of each signing officer under his or her signature.