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 811-2168
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ACTIVA MUTUAL FUND TRUST
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(Exact name of registrant as specified in charter)
2905 Lucerne Dr. SE, Suite 200
Grand Rapids, Michigan 49546-7116
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(Address of principal executive offices) (Zip code)
Allan D. Engel, President, Secretary, and Treasurer Activa Mutual Fund
2905 Lucerne Dr SE, Suite 200
Grand Rapids, Michigan 49546-7116
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(Name and address of agent for service)
Registrant's telephone number, including area code: (616) 787-6288
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Date of fiscal year end: December 31
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Date of reporting period: June 30, 2005
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not 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 Investment 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, DC 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 SHAREHOLDERS.
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The attached Semiannual Report to Shareholders was mailed on August 29, 2005.
Activa
Semiannual Report
June 30, 2005
ACTIVA INTERMEDIATE BOND FUND
Sub-Adviser: McDonnell Investment Management, LLC
ACTIVA VALUE FUND
Sub-Adviser: Wellington Management, Co. LLP
ACTIVA GROWTH FUND
Sub-Adviser: BlackRock Advisors, Inc.
ACTIVA INTERNATIONAL FUND
Sub-Adviser: NWQ Investment Management Company, LLC
ACTIVA Mutual Funds
A selection of stock and bond funds, managed by professional advisers, which are
designed to help investors meet their financial goals.
ACTIVA Mutual Funds Annual Report
Contents
Page
SHAREHOLDER LETTER 1
ACTIVA INTERMEDIATE BOND FUND 2
ACTIVA VALUE FUND 3
ACTIVA GROWTH FUND 4
ACTIVA INTERNATIONAL FUND 5
ACTIVA PORTFOLIO HIGHLIGHTS 6
ACTIVA ADDITIONAL INFORMATION 8
ACTIVA OFFICERS AND TRUSTEES OF THE FUND 13
SCHEDULE OF INVESTMENTS
Activa Intermediate Bond Fund 15
Activa Value Fund 19
Activa Growth Fund 24
Activa International Fund 28
Page
STATEMENT OF ASSETS AND LIABILITIES 31
STATEMENT OF OPERATIONS 32
STATEMENT OF CHANGES IN NET ASSETS 33
NOTES TO FINANCIAL STATEMENTS 35
FINANCIAL HIGHLIGHTS 40
Activa Mutual Funds
2905 Lucerne SE, Suite 200
Grand Rapids, Michigan 49546
(616) 787-6288 (800) 346-2670
WWW.ACTIVAFUNDS.COM
SEMIANNUAL REPORT
Dear Shareholder:
I am pleased to provide you with the Semi-Annual Report to Shareholders for the
Activa Mutual Funds for the six-month period ended June 30, 2005. Following the
positive stock market performances from last year, the first six months of 2005
have not been as uplifting in the broad markets. The following pages include the
sub-advisers' management discussions and performance reviews for the Funds.
Persistent investor worries over oil prices, slowing economic growth, even
though growth remained solid in the U.S. and globally, and the Federal Reserve's
raising of interest rates have helped to keep stock prices down for most of the
period. The Dow Jones Industrial Average finished the period down 4.7%. Although
the Standard & Poor's 500 Index was slightly positive for the second quarter, it
remained down 1.7% for the first six-months of 2005. International stocks, as
measured by the MSCI EAFE Index, also experienced a retreat from last year
finishing the period down 1.2%.
At the Board of Trustees Meeting in February, Activa Asset Management, LLC
("Adviser"), as Investment Adviser to the Funds, recommended a Sub-Adviser
change for the Activa International Fund ("Fund"). As the Investment Adviser,
Activa continually monitors each sub-adviser's performance relative to a fund's
investment objective, market conditions and total returns against its peer
groups and benchmark. After careful review of the Fund's performance over the
last few years and recognizing that the international markets have a tendency to
favor value investing, the Adviser sought to recommend a new Sub-Adviser. The
Fund's Board approved a new Sub-Advisory Agreement with NWQ Investment
Management Company, LLC ("NWQ"), effective April 1, 2005. NWQ is a wholly owned
subsidiary of Nuveen Investments, Inc. Although the management style of NWQ may
differ from the previous sub-adviser there will be no change in the Fund's
investment objective, policies or restrictions. NWQ's strategy for the Fund will
be to continue to invest in foreign stocks. However, the Fund's strategy will be
to invest in stocks believed to be undervalued by the marketplace and to have an
above average potential for capital appreciation. NWQ's management discussion is
contained in this report.
Investors are often anxious regarding investment choices especially how and when
to invest. Dollar cost averaging along with an automatic investment plan can
help to relieve the anxiousness. Dollar cost averaging involves investing a
certain amount of money in the same fund at the same time each month or quarter.
By investing the same dollar amount on a periodic basis in the same fund you may
pay a lower average cost per share. Although dollar cost averaging does not
guarantee a profit, it does encourage discipline, eliminate the need to decide
when to invest, and avoid the temptation to time the market. Activa Mutual Funds
can help you maintain an investment program by establishing an automatic
investment program from your bank account. You choose the dollar amount (minimum
$50), time periods, and Activa Funds you want to invest in. Call our Funds
Shareholder Representatives (1-800-346-2670) to further discuss dollar cost
averaging and how to establish an automatic investment program.
We are pleased to announce that our web-site will be updated with a new feature,
My Accounts. My Accounts will allow shareholders, through a secure password
protected site, to view their current market value, share balance and
transaction history on-line. To activate your account for on-line viewing you
will be asked to complete a new Activa Account Application.
To help investors determine their personal asset allocation and investment needs
the Activa Funds web-site offers a variety of financial calculators to help
investors develop a plan. Please visit our web site at www.activafunds.com to
access the financial calculators, and learn how you can develop a diversified
portfolio using the Activa Funds.
We here at Activa Funds thank you for your support of our Fund family and we
will continue to make it our priority to bring you the highest level of quality
and service.
Sincerely,
/s/ Allan D. Engel
Allan D. Engel
President
ACTIVA Mutual Funds Semiannual Report 1
ACTIVA Intermediate Bond Fund -- McDonnell Investment Management, LLC
ECONOMIC REVIEW
The economic environment for the first half of 2005 was characterized by solid
global and US economic growth (with US real Gross Domestic Product expanding at
approximately 3.5%). Federal Reserve tightening and commodity price pressures
continued to be a focus. In spite of the commodity price pressures, Consumer
Price Index remained relatively benign at a 2.5% annual rate.
MARKET OVERVIEW
During the first 6 months of 2005, as a result of the underlying economic
strength, the Federal Reserve increased the Fed Funds target rate, in four 25
basis point increments, to 3.25% from 2.25%. The increase in the short term Fed
Funds rate contributed to an overall flatter yield curve at the end of the
period as short term interest rates moved higher in anticipation of tighter
monetary policy while long term rates actually declined. The yield difference
from 2 year treasuries to 30 year treasuries decreased from 1.76% as of December
31, 2004 to .51% as of June 30, 2005. Overall, the 2-year treasury yield
increased from 3.07% on December 31, 2004 to 3.96% on June 30, 2005, while the
30-year treasury yield decreased from 4.83% to 4.47% over the same period.
FUND RETURN AND STRATEGY OVERVIEW
The Fund generated a total return of 1.96% for the six months ended June 30,
2005, while the Fund's benchmark, the Lehman Brothers Aggregate Bond Index,
total return was 2.51%. Overall returns were helped by the Fund's overweight
position in asset and mortgage backed securities. In addition the fund benefited
from underweighting the middle of the yield curve (3 to 10 year maturity range).
The Fund's relative performance was negatively impacted by an overweight in the
credit sector. As of June 30, 2005, the Fund had a duration of approximately 4.2
years, which was comparable to the 4.2 year duration of the Fund's benchmark.
With respect to sector weightings, the Fund held overweight positions in the
corporate and asset- and mortgage-backed sectors. We believe the relative yield
premiums offered by these sectors remain attractive and present positive total
return opportunities. In addition, we remain underweight the middle of the yield
curve relative to the benchmark in anticipation of a less steep or flatter yield
curve in a rising rate environment. We anticipate moving to a neutral posture in
the corporate sector as value is realized.
OUTLOOK AND SUMMARY
We believe the prospects for continued economic growth and concerns about
underlying price pressures will cause the Fed to continue to firm monetary
policy leading to additional increases in the Fed Funds rate. The challenge for
the Fund management will be to identify the key sectors, yield curve posture and
securities that best fit this environment. We expect to continue to meet these
challenges through appropriate risk management and our disciplined investment
style. The balance of the report provides additional details about the Fund.
2 ACTIVA Mutual Funds Semiannual Report
ACTIVA Value Fund -- Wellington Management Co., LLP
MARKET COMMENT
There were notable headwinds during the first six months of 2005, including
surging oil prices and slowing earnings growth. The threat of inflation appears
to be waning, although the Federal Reserve maintains its measured approach to
raising rates.
Mid-cap stocks led large caps and small caps for the first half of the year when
measured using the S&P MidCap 400, Russell 1000 and Russell 2000 Indexes. During
the first six months of 2005, value outperformed growth as the Russell 1000
Value Index advanced 1.76% versus a -1.72% for the Russell 1000 Growth Index.
Within the Russell 1000 Value, four out of ten broad economic sectors posted
positive returns. Energy, Utilities, Health Care and Consumer Staples were the
best performing sectors, while Information Technology, Materials,
Telecommunication Services and Consumer Discretionary posted the weakest
results.
FUND REVIEW
The Activa Value Fund recorded positive performance of 3.47% net of expenses for
the six-month period outperforming both the 1.76% return of the Russell 1000
Value Index and the S&P 500 Index, -0.81%.
Wellington Management, the Sub-Adviser, uses fundamental, or "bottom-up,"
security analysis to focus on stock selection within industries; rather than
making significant sector bets, industry weights are kept in line with those of
the Russell 1000 Value Index. In addition, the Sub-Adviser uses an
internally-developed, quantitative analytical approach to complement the
fundamental research.
For the first half of the year, the Fund's bottom-up investment approach
produced positive benchmark-relative results in seven of the ten broad market
sectors. Strong stock selection within Consumer Discretionary, Energy and
Materials contributed most to relative performance, while Information Technology
detracted.
Consumer Discretionary holdings performed well due to positive performance from
Abercrombie and Fitch, Standard Pacific, and D.R. Horton. Specialty-retailer
Abercrombie & Fitch rose on very strong and broad-based same-store sales
results. Homebuilders D.R. Horton and Standard Pacific benefited from continued
strength in the housing market.
Soaring energy prices lent support to Energy stocks as the price of oil reached
record highs, eclipsing $60. ConocoPhillips, as the largest player in the US
downstream market, benefited from the robust refining margin environment.
Occidental Petroleum benefited from strong production growth, as well as the
economics from their recent Permian Basin acquisition. Valero Energy, the
leading independent refiner in the US, has performed particularly strongly
thanks to its ability to process heavy crude, also known as "sour" crude, which
trades at a significant discount to "sweeter" varieties. As a result, margins
have been driven higher. In the latter half of the period, shares of Valero
surged following the announcement that the company would acquire Premcor.
Stock selection within Materials was also positive. Cement and concrete
manufacturer Lafarge North America advanced due to sustainable sales growth
trends and strong fundamentals.
On the negative side, our Information Technology holdings underperformed with
shares of IBM and Accenture falling. IBM failed to keep pace with its peers due
to the uncertain and weak macro economic development. While IBM does have a
strong pipeline that should support continued growth in services, it lost share
to Intel as Apple decided to convert its platform to Intel processors.
Accenture's shares fell due to contract loses. In addition, our underweight
position in strong performing Exxon Mobil also detracted from relative
performance.
ACTIVA Mutual Funds Semiannual Report 3
ACTIVA Growth Fund -- BlackRock Advisors, Inc.
PERFORMANCE SUMMARY
Equities were mostly positive for the second quarter of 2005, but markets have
been choppy over the last six months, resulting in relatively flat returns for
the year to date period. Investors continued to exhibit caution, as worries over
oil prices, interest rates and economic growth remained in the spotlight.
In this environment, the Fund's -2.30% total return for the first six months of
2005 underperformed its benchmark, the Russell 1000 Growth Index which had a
total return of -1.72%. The Fund benefited from stock selection across several
sectors including information technology, energy and financials. This was offset
by weaker selection in consumer discretionary, consumer staples and industrials.
Additionally, our overweight to the energy sector aided returns, while an
overweight to consumer discretionary and underweight to consumer staples
somewhat dampened return comparisons.
PORTFOLIO REVIEW
Although total returns in the financials sector were flat, stock selection
proved to be the single largest contributor to relative returns in the portfolio
as our holdings tended to outperform those in the benchmark. Our position in
Chicago Mercantile Exchange boosted portfolio returns. The futures exchange
operator is capitalizing on demand for futures and derivatives contract trading
as the use of risk management techniques increases among investors.
Additionally, our decision to avoid Fannie Mae helped returns relative to the
index. Shares of the mortgage giant declined during the period as concerns over
the firm's accounting practices continued to draw attention.
Energy proved to be the best performing sector in the benchmark during the
period. Strong relative gains in the portfolio were the result of good stock
selection and our overweight to the sector. Despite patches of weakness in March
and April, energy related commodity prices remained elevated over the six month
period, with crude oil prices finishing the second quarter just below $57/bbl.
Oil and gas producers EOG Resources and Newfield Exploration both posted
double-digit gains. Coal producer Consol Energy also made a meaningful
contribution to returns, as demand for coal has remained strong.
Weakness among select names in both consumer discretionary and industrials
negatively impacted returns. The major source of underperformance in the
consumer discretionary sector was audio equipment maker Harman International.
Competitive threats in the car navigation, audio and information systems market
put downward pressure on the stock price. Conglomerate Tyco International was
the primary detractor from industrials returns. Tyco's business has been
negatively impacted by the increasing pressure of higher commodity costs.
PORTFOLIO POSITIONING AND OUTLOOK
Given our focus on adding value through bottom up fundamental research, sector
weightings are driven primarily by stock selection. That being said, we have
made some adjustments within the consumer sectors over the last several months,
consistent with our investment process. We have reduced or eliminated a number
of consumer discretionary names, and while we remain underweight in consumer
staples, we increased our exposure to what we perceive are some of the high
quality names. Specifically in the consumer discretionary area, we began to lose
confidence in Ebay's ability to maintain its growth rate, and in turn eliminated
our position. In the consumer staples area, we began building a position in
stable growth-oriented PepsiCo, while also initiating a position in CVS Corp.
which we believe is poised to accelerate earnings. At the close of the second
quarter, the portfolio's largest overweights were in energy and health care,
while the largest underweights were in industrials and consumer staples.
Despite the choppy market conditions, we continue to uncover both stable and
accelerating growth opportunities based on company-specific fundamentals. As
companies continue to face difficult year-over-year earnings comparisons, we
feel that solid bottom-up stock selection will be critical in producing
above-benchmark returns.
4 ACTIVA Mutual Funds Semiannual Report
ACTIVA International Fund -- NWQ Investment Management Company, LLC
MARKET OVERVIEW
While many foreign markets posted strong returns for the second quarter in their
own local currencies, dollar strength (i.e., Euro, Great British Pound, and Yen
weakness) offset those gains, resulting in a nearly 1% fall in the MSCI EAFE
benchmark index. In the first six months of the year the US dollar has
strengthened nearly 7% on a trade weighted basis and by over 10% versus the
euro. Much of the euro weakness has been attributed to the rejection of the EU
constitution by both France and the Netherlands, however, additional factors
also had an impact, including the continued weakness of the European economy
which has prompted calls for an eurozone rate cut. This has made the US a more
attractive alternative from an interest rate perspective, yet global imbalances
still exist which could have an impact on currency trends going forward.
Oil continued to impact markets around the world, with prices reaching $60 a
barrel toward the end of June. The energy sector again benefited, rising more
than 3% during the second quarter of 2005 and for the year it is up over 10%.
Other strong sectors in the quarter include health care, which benefited from
the weaker euro, and the information technology sector. Weakness was led by the
telecommunications sector which fell over 4% in US dollar terms, primarily
driven by large declines in the stocks of European providers.
PORTFOLIO PERFORMANCE
The Fund's six month return was -0.74% marginally outperforming the MSCI EAFE
Index return, -0.85% for the same period. Following the transition from the
previous Sub-Adviser at the beginning of the second quarter, the Fund benefited
greatly from being overweight in the aforementioned strong energy sector. We
also benefited from our exposure to the industrials sector, especially through
our position in Metso Corp., a Finnish industrial equipment maker which gained
more than 20% over the quarter. Finally, exposure in the Utilities sector, in
particular through Korea Electric Power, also aided returns. Our overweight
position in the telecommunications sector, in particular Telecom Italia,
detracted from returns as regulators in certain markets imposed greater
restrictions on incumbent providers than had previously been anticipated. This
hurt returns across the sector, although we still believe that the companies we
own are attractively valued relative to the strong free cash flows they are
generating which are being returned to shareholders via dividends.
Overall there were few transactions in the portfolio following the transition
from the previous Sub-Adviser, however, the Fund did add to the materials
exposure during the second quarter through the purchase of Placer Dome, a
Canadian gold producer with mining activities across the globe. This further
diversified exposure to a sector in which the Fund continues to find significant
value. The Fund also made some minor adjustment to our existing holdings.
OUTLOOK
We continue to emphasize that the returns of all overseas equity investments are
made up of two components, stock price returns and currency returns. While a
weaker dollar provided a strong tailwind for the past three years, clearly this
trend has reversed in the first half of 2005.
That said we continue to believe that overall valuations of international firms
remain low compared to the US market and selective interesting opportunities
remain. We also continue to find more opportunities in Japan and emerging Asia
than in developed Europe, and are therefore overweight in Japan and have
exposure to Korea and Taiwan. In addition, Asian markets stand to benefit from
currency appreciation should the Chinese Renminbi revalue, an event we believe
is likely although we cannot say when it will occur.
ACTIVA Mutual Funds Semiannual Report 5
ACTIVA Portfolio Highlights
Activa Intermediate Bond Fund
Pie Charts:
Quality Diversification
as of 6/30/05
U.S. Government and U.S. Government Agency Obligations 57%
BBB 12%
A 16%
AA 3%
AAA 12%
Maturity Schedule
as of 6/30/05
Over 20 Years 39%
11-20 Years 17%
6-10 Years 11%
1-5 Years 29%
Less than 1 Year 4%
ACTIVA Value Fund
Pie Chart:
INDUSTRY SECTOR HOLDINGS AS OF 6/30/05
Telecommunications Services 4%
Materials 3%
Information Technology 6%
Industrials 8%
Health Care 6%
Financials 36%
Energy 15%
Consumer Staples 6%
Consumer Discretionary 11%
Utilities 5%
TOP TEN HOLDINGS AS OF 6/30/05
EXXON MOBIL CORP. COM 5.3%
BANK OF AMERICA CORP. 5.1%
CITIGROUP, INC. 4.9%
CONOCOPHILLIPS 3.4%
ALTRIA GROUP, INC. 2.8%
OCCIDENTAL PETROLEUM CORP. 2.6%
UNITED TECHNOLOGIES 2.6%
CANADIAN NATIONAL RAILWAY 2.2%
TIME WARNER 2.2%
SPRINT 2.0%
6 ACTIVA Mutual Funds Semiannual Report
ACTIVA Portfolio Highlights continued
ACTIVA Growth Fund
Pie Charts:
Industry Sector Holdings as of 6/30/05
Telecommunications Services 1%
Cash 4%
Information Technology 24%
Industrials 7%
Health Care 24%
Financials 8%
Energy 7%
Consumer Staples 6%
Consumer Discretionary 17%
Top Ten Holdings as of 6/30/05
MICROSOFT 4.1%
GENERAL ELECTRIC CO. 3.6%
JOHNSON & JOHNSON 3.5%
UNITEDHEALTH GROUP, INC. 3.2%
YAHOO!, INC. 3.2%
INTEL CORPORATION 3.1%
AMERICAN EXPRESS CO. 2.5%
EOG RESOURCES, INC. 2.4%
NOVARTIS AG - ADR 2.3%
PEPSICO, INC. 2.2%
ACTIVA International Fund
Pie Charts:
Country Breakdown
as of 6/30/05
Other 18%
Hong Kong 3%
Taiwan 3%
Italy 4%
South Africa 4%
Republic of Korea 6%
France 6%
Canada 6%
United Kingdom 15%
Japan 35%
Industry Sector Holdings as of 6/30/05
Consumer Discretionary 13%
Consumer Staples 11%
Energy 7%
Finance 9%
Health 3%
Industrials 17%
Information Technology 3%
Materials and Processing 12%
Telecommunications 14%
Utilities 11%
Top Ten Holdings as of 6/30/05
TAKEFIUJI CORP. - JAPAN 3.8%
SHISEIDO LTD. ORD - JAPAN 3.1%
BARRICK GOLD CORP. - CANADA 3.0%
AREVA - CI - FRANCE 3.0%
UNITED UTILITIES ORD - UNITED KINGDOM 2.9%
CHUNGHWA TELECOM ADR - TAIWAN 2.9%
KT CORP. ADR - KOREA 2.9%
CLP HOLDINGS - HONG KONG 2.9%
FUJI PHOTO FILM - JAPAN 2.9%
SEKISUI HOUSE LTD. - JAPAN 2.9%
ACTIVA Mutual Funds Semiannual Report 7
ACTIVA Additional Information
EXPENSE EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs (none for Activa Funds) and (2) ongoing costs, including management fees;
distribution 12b-1 fees; service fees; and other Fund expenses. This example is
intended to help you understand your ongoing costs (in dollars) of investing in
the Funds and to compare these costs with the ongoing costs of investing in
other mutual funds.
This Example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period from January 1, 2005 to June 30, 2005.
ACTUAL EXPENSES
The first line of the table for each Fund below provides information about
actual account values and actual expenses. You may use the information in this
line, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the first line under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table for each Fund below provides information, as
required by applicable regulations of the Securities and Exchange Commission,
about hypothetical account values and hypothetical expenses based on the Fund's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not the Fund's actual return. The hypothetical account values
and expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other Funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the second line
of the table is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. Unlike some mutual
funds, the Activa Funds do not charge transactional fees such as sales charges,
redemption fees, or exchange fees.
EXPENSES PAID DURING THE PERIOD
Beginning Ending Expenses
Account Account Paid Annualized
Value, Value, During Expense
1/1/05 6/30/05 Period* Ratio
--------- --------- ------- ------
Activa Intermediate Bond Actual $1,000.00 $1,019.60 $3.36 0.67%
Hypothetical $1,000.00 $1,021.68 $3.36 0.67%
Activa Value Fund Class A Actual $1,000.00 $1,034.70 $6.15 1.22%
Hypothetical $1,000.00 $1,018.95 $6.13 1.22%
Activa Value Fund Class R Actual $1,000.00 $1,034.60 $5.60 1.11%
Hypothetical $1,000.00 $1,019.50 $5.57 1.11%
Activa Growth Fund Actual $1,000.00 $977.00 $6.47 1.32%
Hypothetical $1,000.00 $1,018.45 $6.63 1.32%
Activa International Fund Actual $1,000.00 $992.60 $8.05 1.63%
Hypothetical $1,000.00 $1,016.92 $8.18 1.63%
*Expenses are equal to the Fund's annualized expense ratio, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
OTHER INFORMATION
Proxy Voting Guidelines
The Funds exercise the voting rights associated with the securities held by the
Funds under the proxy voting policy of the Funds. A description of those
policies and procedures of the Fund and a record of the Fund's proxy votes for
the year ended June 30, 2005 are available without charge, upon request, by
calling 800-346-2670. It is also available on the Securities and Exchange
Commission's (SEC) website at http://www.sec.gov.
Quarterly Filing of Portfolio Holdings
The Funds will file their complete schedule of investments with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q
will be available on the SEC's website at http://www.sec.gov. The Fund's Form
N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington,
DC, and information on the operation of the Public Reference Room may be
obtained by calling 800-SEC-0330. Information included in the Fund's Forms N-Q
will also be available upon request, by calling 800-346-2670.
8 ACTIVA Mutual Funds Semiannual Report
ACTIVA Additional Information continued
ADVISORY AGREEMENT APPROVALS
Investment Advisory Agreement Approval
In considering the Investment Advisory Agreement the Board of Trustees reviewed
the nature, extent and quality of the services provided to the Fund by the
Investment Adviser. As part of its review, the Board considered the performance
of the Investment Adviser in setting the overall investment strategies for the
Fund, monitoring and evaluating the investment performance of the Fund's
Sub-Advisers, and monitoring compliance with the investment objectives, policies
and restrictions of the Fund. As part of its review, the Board considered
financial information provided by the Investment Adviser, as well as information
about its management structure and professional staff. In addition, the Board
received a report from the Fund's Chief Compliance Officer regarding the
Investment Advisers compliance programs, code of ethics, and record of
compliance with federal securities regulations. The Board concluded that the
Investment Adviser had provided satisfactory services to the Fund, and that it
could be expected to continue to provide satisfactory services in the future.
As part of its review, the Board considered information provided by the
Investment Adviser and Sub-Adviser regarding the Fund's performance, as well as
information regarding the investment performance of other Fund's with similar
investment objectives. The Board concluded that the Fund's historical investment
performance was similar to that of other funds with similar investment
objectives.
In considering the Investment Advisory Agreement the Board of Trustees also
reviewed the compensation paid under the agreement. As part of its review, the
Board considered information provided by the Investment Adviser and Sub-Adviser
with respect to the amounts being paid for investment advisory services by other
funds that have similar investment objectives. The Board also considered the
fact that the Investment Advisory Agreement provides for reduced payments (as a
percentage of Fund assets) as the size of the Fund increases, so that Fund
investors will benefit from economies of scale. The Board concluded that the
compensation paid under the Investment Advisory Agreement is comparable to the
amounts being paid for investment advisory services by other funds that are
similarly sized and have similar investment objectives.
As part of its review of compensation, the Board considered other benefits that
might accrue to the Investment Adviser and its affiliated organizations by
virtue of their relationships with the Fund. The Board also considered
information provided by the Investment Adviser as to the profitability of the
Investment Advisory Agreement. It was noted that, in addition to receiving
compensation for serving as the Fund's investment adviser, the Investment
Adviser also receives compensation for serving as the Fundadministrator and
transfer agent, and also receives Rule 12b-1 payments under the Fund's
distribution agreement.
Following its review, the Board of Trustees concluded that the terms and
conditions of the Investment Advisory Agreement, including the compensation
payable thereunder, were fair and reasonable, and that the agreement should be
continued until March 31, 2006. In reaching this decision, the Board did not
identify any single factor as all-important or controlling. Nor does the
foregoing summary detail all the matters considered by the Board.
Sub-Advisory Agreement Approvals - Intermediate Bond Fund and Value Fund
In considering the Sub-Advisory Agreement the Board of Trustees reviewed the
nature, extent and quality of the services provided to the Fund by the
Sub-Adviser. As part of its review, the Board considered the performance of the
Sub-Adviser in furnishing investment advice, managing the Fund's investment
portfolio, and complying with the Fund's investment objectives, policies and
restrictions. As part of its review, the Board considered financial information
provided by the Sub-Adviser, as well as information about its management
structure and professional staff and, in particular, the qualifications of the
portfolio managers assigned to the Fund. In addition, the Board received a
report from the Fund's Chief Compliance Officer regarding the Sub-Advisers
compliance programs, code of ethics, and record of compliance with federal
securities regulations. The Board concluded that the Sub-Adviser had provided
satisfactory
ACTIVA Mutual Funds Semiannual Report 9
ACTIVA Additional Information continued
services to the Fund, and that it could be expected to continue to provide
satisfactory services in the future.
As part of its review, the Board considered information provided by the
Investment Adviser and Sub-Adviser regarding the Fund's performance, as well as
information regarding the investment performance of other Fund's with similar
investment objectives. The Board concluded that the Fund's historical investment
performance was similar to that of other funds with similar investment
objectives.
In considering the Sub-Advisory Agreement the Board of Trustees also reviewed
the compensation paid under the agreement. As part of its review, the Board
considered information provided by the Investment Adviser and Sub-Adviser with
respect to the amounts being paid for investment advisory services by other
funds that have similar investment objectives. The Board also considered the
fact that the Sub-Advisory Agreement provides for reduced payments (as a
percentage of Fund assets) as the size of the Fund increases, so that Fund
investors will benefit from economies of scale. The Board concluded that the
compensation paid under the Investment Advisory and Sub-Advisory Agreements is
comparable to the amounts being paid for investment advisory services by other
funds that are similarly sized and have similar investment objectives.
As part of its review of compensation, the Board considered other benefits that
might accrue to the Sub-Adviser and its affiliated organizations by virtue of
their relationships with the Fund. The Board did not consider a profit analysis
from the Sub-Adviser because the sub-advisory fees resulted from arms-length
negotiations between the Investment Adviser and the Sub-Adviser and because the
fees under the Sub-Advisory Agreement constitute a very small percentage of the
Sub-Adviser's total income from providing investment management services.
Following its review, the Board of Trustees concluded that the terms and
conditions of the Sub-Advisory Agreement, including the compensation payable
thereunder, were fair and reasonable, and that the agreement should be continued
until March 31, 2006. In reaching this decision, the Board did not identify any
single factor as all-important or controlling. Nor does the foregoing summary
detail all the matters considered by the Board.
Sub-Advisory Agreement Approval - Growth Fund
In considering the Sub-Advisory Agreement the Board of Trustees reviewed the
nature, extent and quality of the services previously provided to the Fund by
State Street Research & Management Company ("State Street"). The Board also
considered the nature, extent and expected quality of the services that would be
provided to the Fund by BlackRock Advisors, Inc. ("BlackRock") following the
merger of State Street and BlackRock. It was noted that there would be no change
in the Fund's portfolio managers as a result of the merger. As part of its
review, the Board considered the performance of the State Street in furnishing
investment advice, managing the Fund's investment portfolio, and complying with
the Fund's investment objectives, policies and restrictions. As part of its
review, the Board considered financial information provided by BlackRock, as
well as information about its management structure and professional staff and,
in particular, the qualifications of the portfolio managers assigned to the
Fund. In addition, the Board received a report from the Fund's Chief Compliance
Officer regarding BlackRock's compliance programs, code of ethics, and record of
compliance with federal securities regulations. The Board concluded that State
Street had provided satisfactory services to the Fund, and that BlackRock could
be expected to continue to provide satisfactory services in the future.
As part of its review, the Board considered information provided by the
Investment Adviser and Sub-Adviser regarding the Fund's performance, as well as
information regarding the investment performance of other Fund's with similar
investment objectives. The Board concluded that the Fund's historical investment
performance was similar to that of other funds with similar investment
objectives.
In considering the Sub-Advisory Agreement the Board of Trustees also reviewed
the compensation paid under the agreement. As part of its review, the Board
considered information provided by the Investment Adviser and Sub-
10 ACTIVA Mutual Funds Semiannual Report
ACTIVA Additional Information continued
Adviser with respect to the amounts being paid for investment advisory services
by other funds that have similar investment objectives. The Board also
considered the fact that the Sub-Advisory Agreement provides for reduced
payments (as a percentage of Fund assets) as the size of the Fund increases, so
that Fund investors will benefit from economies of scale. The Board concluded
that the compensation paid under the Investment Advisory and Sub-Advisory
Agreements is comparable to the amounts being paid for investment advisory
services by other funds that are similarly sized and have similar investment
objectives.
As part of its review of compensation, the Board considered other benefits that
might accrue to the Sub-Adviser and its affiliated organizations by virtue of
their relationships with the Fund. The Board did not request a profit analysis
from Black/Rock because BlackRock is a new Sub-Adviser. In addition, the Board
noted that the sub-advisory fees resulted from arms-length negotiations with the
Investment Adviser, and that the fees under the Sub-Advisory Agreement would
constitute a very small percentage of the Sub-Adviser's total income from
providing investment management services.
Following its review, the Board of Trustees concluded that the terms and
conditions of the Sub-Advisory Agreement, including the compensation payable
thereunder, were fair and reasonable, and that the agreement should be continued
until March 31, 2006. In reaching this decision, the Board did not identify any
single factor as all-important or controlling. Nor does the foregoing summary
detail all the matters considered by the Board.
Sub-Advisory Agreement Approval - International Fund
In considering the new Sub-Advisory Agreement the Board of Trustees considered
the nature, extent and expected quality of the services that would be provided
to the Fund by NWQ Investment Management Company, LLC ("NWQ"). As part of its
review, the Board considered financial information provided by NWQ, as well as
information about its management structure and professional staff and, in
particular, the qualifications of the portfolio managers that would be assigned
to the Fund. In addition, the Board received a report from the Fund's Chief
Compliance Officer regarding NWQ's compliance programs, code of ethics, and
record of compliance with federal securities regulations. The Board concluded
that NWQ could be expected to provide satisfactory services in the future.
As part of its review, the Board considered information provided by the
Investment Adviser regarding the Fund's performance, as well as information
regarding the investment performance of other Fund's with similar investment
objectives. The Board also considered the investment results achieved by the
managers that would be assigned to the Fund. The Board concluded that it was
reasonable to expect that the Fund's investment performance would improve under
the management of the new Sub-Advisor.
In considering the Sub-Advisory Agreement the Board of Trustees also reviewed
the compensation paid under the agreement. As part of its review, the Board
considered information provided by the Investment Adviser and Sub-Adviser with
respect to the amounts being paid for investment advisory services by other
funds that have similar investment objectives. The Board also considered the
fact that the Sub-Advisory Agreement provides for reduced payments (as a
percentage of Fund assets) as the size of the Fund increases, so that Fund
investors will benefit from economies of scale. The Board concluded that the
compensation paid under the Investment Advisory and Sub-Advisory Agreements is
comparable to the amounts being paid for investment advisory services by other
funds that are similarly sized and have similar investment objectives.
As part of its review of compensation, the Board considered other benefits that
might accrue to the Sub-Adviser and its affiliated organizations by virtue of
their relationships with the Fund. The Board did not request a profit analysis
from NWQ because NWQ is a new Sub-Adviser. In addition, the Board noted that the
sub-advisory fees resulted from arms-length negotiations between the Investment
Adviser and NWQ, and that the fees under the Sub-Advisory Agreement would
constitute a very small percentage of NWQ's total income from providing
investment management services.
ACTIVA Mutual Funds Semiannual Report 11
ACTIVA Additional Information continued
Following its review, the Board of Trustees concluded that the terms and
conditions of the Sub-Advisory Agreement, including the compensation payable
thereunder, were fair and reasonable, and that the agreement should be effective
April 1, 2005 and continued until March 31, 2006. In reaching this decision, the
Board did not identify any single factor as all-important or controlling. Nor
does the foregoing summary detail all the matters considered by the Board.
12 ACTIVA Mutual Funds Semiannual Report
ACTIVA Officers and Trustees of the Fund
The business affairs of the Fund are managed under the direction of the Board of
Trustees ("Board"). The following information as of June 30, 2005 pertains to
the Officers and Trustees of the Fund or the Advisor or both, and includes their
principal occupation during the past five years and their compensation as
Trustee:
NUMBER OF
PORTFOLIOS OTHER
IN FUND DIRECTOR-
TERM OF COMPLEX SHIPS
NAME AND OFFICE/LENGTH PRINCIPAL OCCUPATION OVERSEEN BY HELD BY
ADDRESS AGE OFFICE HELD OF TIME SERVED LAST FIVE YEARS DIRECTOR DIRECTOR
INTERESTED TRUSTEE
James J. Rosloniec* 60 Trustee of the Fund Perpetual / 24 President & Chief Operating 4 None
2905 Lucerne SE Officer, JVA Enterprises I,
Suite 200 LLC. President, Chief
Grand Rapids, Michigan Executive Officer and Director,
49546 Activa Holdings Corp. Formerly,
Vice President-Audit and
Control, Amway Corporation
(1991-2000); Director, Vice
President and Treasurer of
Amway Management Company
(1984-1999); Trustee,
President and Treasurer,
Amway Mutual Fund,
(1981-1999); President and
Treasurer, Activa Mutual
Fund Trust (1999-2002).
ADVISORY TRUSTEE
Joseph E. Victor, Jr. 57 Advisory Trustee of Perpetual / 4 President and Chief 4 None
2905 Lucerne SE, the Fund Executive Officer,
Suite 200 Marker Net, Inc. (Crown
Grand Rapids, Independent Business
Michigan 49546 Owner affiliated
with Quixtar, Inc.)
DISINTERESTED TRUSTEES 74 Trustee of the Fund Perpetual / 12 Retired, Former Vice 4 None
Donald H. Johnson President-Treasurer,
2905 Lucerne SE, SPX Corporation.
Suite 200
Grand Rapids,
Michigan 49546
Walter T. Jones 63 Trustee of the Fund Perpetual / 13 Retired, Former Senior 4 None
936 Sycamore Ave. Vice President-Chief
Holland, Michigan Financial Officer,
49424 Prince Corporation.
Richard E. Wayman 70 Trustee of the Fund Perpetual / 7 Retired, Former Finance 4 None
24578 Rutherford Director, Amway
Ramona, California Corporation.
92065
OFFICER
Allan D. Engel 53 President, Secretary Perpetual / 24 Vice President, Real Estate N/A N/A
2905 Lucerne SE, and Treasurer of the Operations and Secretary-Activa
Suite 200 Fund; President, and Holdings Corp. Formerly, Sr.
Grand Rapids, Secretary of the Manager, Investments and Real
Michigan Investment Adviser. Estate, Amway Corporation;
49546 Director, President and
Secretary of Amway Management
Company (1981-1999); Trustee,
Activa Mutual Fund Trust
(1999-2004); Trustee, Vice
President and Secretary, Amway
Mutual Fund (1981-1999);
Vice President and Assistant
Treasurer, Activa Mutual Fund
Trust (1999-2002).
ACTIVA Mutual Funds Semiannual Report 13
ACTIVA Officers and Trustees of the Fund continued
The following table contains information about the compensation that the
Trustees received during the six month period ended June 30, 2005:
PENSION OR
RETIREMENT
BENEFITS
ACCRUED AS ESTIMATED ANNUAL TOTAL
NAME OF PERSON, TRUSTEE PART OF BENEFITS COMPENSATION
POSITION COMPENSATION FUND EXPENSES UPON RETIREMENT PAID TO TRUSTEES
INTERESTED TRUSTEE
James J. Rosloniec* $8,000 -0- -0- $8,000
Trustee
ADVISORY TRUSTEE
Joseph E. Victor, Jr. $8,000 -0- -0- $8,000
Advisory Trustee
DISINTERESTED TRUSTEES
Donald H. Johnson $8,000 -0- -0- $8,000
Trustee
Walter T. Jones $8,000 -0- -0- $8,000
Trustee
Richard E. Wayman $8,000 -0- -0- $8,000
Trustee
*Mr. Rosloniec is an interested person of the Fund inasmuch as he is an officer
of Activa Holdings Corp., which controls the Investment Adviser. He is also an
officer of JVA Enterprises I, LLC , which may be deemed to control Activa
Holdings Corp.
Fees paid to all Trustees during the six month period ended June 30, 2005,
amounted to $40,000. Effective June 3, 2004 under the Administrative Agreement,
the Investment Adviser pays the fees of the Interested Trustees of the Fund and
the Fund pays the fees of the Disinterested and Advisory Trustees of the Fund.
In addition, the Investment Adviser pays the salaries and fees of all of the
Fund's officers who devote all or part of their time to the affairs of the
Investment Adviser.
The Fund's Statement of Additional Information contains additional information
about the Fund's Trustees. It is available, without charge, by writing or
telephoning the Fund.
14 ACTIVA Mutual Funds Semiannual Report
ACTIVA Schedule of Investments
INTERMEDIATE BOND FUND - 6/30/05 (Unaudited)
% OF SHARES OR VALUE
SECURITY DESCRIPTION INVESTMENTS PAR VALUE (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------------------
US TREASURY NOTES 6.2%
U.S. TREASURY NOTES, 3.0%, 11/15/07 7,180,000 $ 7,077,900
U.S. TREASURY NOTES, 1.5%, 7/31/05 3,000,000 2,996,189
U.S. TREASURY NOTES, 3.125%, 5/15/07 1,000,000 991,250
-------------
11,065,339
-------------
US TREASURY BONDS 7.0%
U.S. TREASURY BONDS, 6.25%, 8/15/23 5,670,000 7,067,768
US TREASURY INFLATION INDEX BOND (TIP), 3.875%, 4/15/29 900,000 1,497,683
US TREASURY INFLATION INDEX BOND (TIP), 3.875%, 1/15/09 1,500,000 1,937,209
U.S. TREASURY INFLATION INDEX BOND (TIP), 2.0%, 1/15/14 1,720,000 1,865,814
-------------
12,368,474
-------------
US TREASURY STRIPS - PRINCIPAL ONLY 0.5%
STRIP PRINC, 5/15/18 1,570,000 918,308
-------------
FEDERAL HOME LOAN BANK 1.5%
FEDERAL HOME LOAN BANK, 3.625%, 11/14/08 2,750,000 2,725,937
-------------
FEDERAL HOME LOAN MORTGAGE 16.7%
FREDDIE MAC GOLD, 5.5%, 12/1/32 1,060,905 1,077,327
FREDDIE MAC, 4.5%, 4/1/35 1,496,793 1,463,703
FEDERAL GOVT LOAN MORTG. CORP. PL G18010, 5.5%, 9/1/19 1,745,926 1,793,553
FREDDIE MAC, 8.0%, 3/1/30 472,744 509,231
FEDERAL GOVT LOAN MORTG. CORP. PL B19064, 4.5%, 4/1/20 3,484,200 3,472,092
FREDDIE MAC, 5.0%, 7/1/34 3,099,856 3,104,752
FREDDIE MAC, 5.5%, 5/1/35 4,994,889 5,069,359
FEDERAL HOME LOAN MORTG. CORPORATION, 5.75%, 4/15/08 5,000,000 5,252,100
FREDDIE MAC, 5.5%, 5/15/28 3,000,000 3,073,562
FREDDIE MAC, 5.0%, 4/15/18 2,250,000 2,318,002
FREDDIE MAC, 4.5%, 4/15/26 2,500,000 2,526,360
-------------
29,660,041
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION 22.6%
FANNIE MAE, 7.125%, 1/15/30 1,360,000 1,865,677
FANNIE MAE, 5.25%, 4/15/07 4,250,000 4,356,250
FANNIE MAE, 6.5%, 9/1/29 232,309 241,311
FNMA PL 255630, 5.0%, 2/1/35 3,443,591 3,448,555
FANNIE MAE, 4.5%, 9/1/18 3,194,825 3,183,595
FANNIE MAE, 5.0%, 12/1/33 2,292,075 2,296,007
FANNIE MAE, 6.0%, 1/1/29 419,010 430,792
FANNIE MAE, 6.5%, 3/1/29 345,911 359,315
FANNIE MAE, 6.5%, 3/1/29 375,511 390,062
FANNIE MAE, 6.5%, 7/1/32 2,536,996 2,630,749
FANNIE MAE, 6.5%, 9/1/18 1,782,510 1,856,862
FANNIE MAE, 6.5%, 5/1/32 1,103,220 1,143,989
FANNIE MAE, 5.5%, 2/1/33 1,093,832 1,110,141
FANNIE MAE, 5.5%, 4/1/33 808,042 820,089
FANNIE MAE, 4.5%, 8/1/19 3,008,338 2,997,939
The accompanying notes are an integral part of these financial statements.
ACTIVA Mutual Funds Semiannual Report 15
ACTIVA Schedule of Investments continued
INTERMEDIATE BOND FUND - 6/30/05 (Unaudited)
% OF SHARES OR VALUE
SECURITY DESCRIPTION INVESTMENTS PAR VALUE (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (CONTINUED)
FANNIE MAE, 4.5%, 9/1/34 1,729,297 $ 1,692,706
FANNIE MAE, 5.0%, 8/1/33 795,634 796,999
FANNIE MAE, 7.0%, 5/1/35 1,370,380 1,445,595
FANNIE MAE, 5.0%, 6/1/34 752,836 753,884
FANNIE MAE, 5.0%, 8/1/19 1,736,451 1,757,549
FANNIE MAE, 6.0%, 10/1/34 5,227,303 5,362,611
FANNIE MAE PL 807595, 4.5%, 12/1/34 1,271,651 1,244,732
-------------
40,185,409
-------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION 3.4%
GOVERNMENT NATIONAL MORTGAGE ASSOC., 7.0%, 11/15/31 413,173 437,771
GOVERNMENT NATIONAL MORTGAGE ASSOC., 7.0%, 12/15/28 172,691 183,150
GOVERNMENT NATIONAL MORTGAGE ASSOC., 7.0%, 9/15/29 97,928 103,804
GOVERNMENT NATIONAL SINGLE FAMILY, 7.0%, 12/15/29 647,122 686,064
GOVERNMENT NATIONAL MORTGAGE ASSOC., 4.5%, 4/15/18 2,098,500 2,105,841
GOVERNMENT NATIONAL SINGLE FAMILY, 7.0%, 9/15/34 488,524 517,763
GOVERNMENT NATIONAL MORTGAGE ASSOC., 3.407%, 7/16/21 2,000,000 1,953,150
-------------
5,987,543
-------------
CORPORATE BONDS - 42.1%
ASSET BACKED SECURITIES 1.0%
GE CAPITAL COMMERCIAL MORTGAGE CORP., 4.353%, 6/10/48 1,750,000 1,753,098
-------------
AUTOMOTIVE 1.6%
BEAR STEARNS COMMERCIAL MORTG. SEC., 4.212%, 6/11/41 2,000,000 2,003,523
DAIMLERCHRYSLER, 7.2%, 9/1/09 775,000 844,750
-------------
2,848,273
-------------
BANKING 2.3%
NB CAPITAL TRUST IV, 8.25%, 4/15/27 1,660,000 1,816,032
NATIONAL WESTMINSTER BANK, 7.375%, 10/1/09 1,250,000 1,404,475
USA INTERACTIVE, 7.0%, 1/15/13 800,000 854,270
-------------
4,074,777
-------------
BANKING AND FINANCIAL SERVICES 13.4%
AMERICAN GENERAL FINANCE, 4.5%, 11/15/07 1,800,000 1,804,808
CITIGROUP, INC., 7.375%, 4/2/07 1,800,000 1,897,164
CAPITAL ONE BANK, 6.5%, 6/13/13 1,000,000 1,101,957
DETROIT EDISON SECURITIZATION FUNDING LLC, 6.19%, 3/1/13 500,000 541,826
FIRST DATA CORP., 4.7%, 11/1/06 1,750,000 1,768,853
GOLDMAN SACHS CAPITAL I, 6.345%, 2/15/34 900,000 978,507
GREENWICH CAP. COMMER. FUNDING CORP., 4.305%, 8/10/42 1,500,000 1,500,491
INTERNATIONAL LEASE FIN., 5.875%, 5/1/13 1,500,000 1,594,901
JP MORGAN CHASE COMMER. MORTG. SEC., 4.223%, 1/15/42 1,500,000 1,498,856
LB UBS COMMERCIAL MORTGAGE TRUST, 4.394%, 7/15/30 2,000,000 2,009,818
LEHMAN BROTHERS HOLDINGS, INC., 8.25%, 6/15/07 1,750,000 1,885,763
MELLON CAP II, 7.995%, 1/15/27 2,040,000 2,208,490
MERRILL LYNCH MORTGAGE TRUST, 4.218%, 5/12/43 2,000,000 2,002,839
PSE&G TRANSITION FUNDING LLC, 6.45%, 3/15/13 1,450,000 1,596,247
The accompanying notes are an integral part of these financial statements.
16 ACTIVA Mutual Funds Semiannual Report
ACTIVA Schedule of Investments continued
INTERMEDIATE BOND FUND - 6/30/05 (Unaudited)
% OF SHARES OR VALUE
SECURITY DESCRIPTION INVESTMENTS PAR VALUE (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------------------
BANKING AND FINANCIAL SERVICES (CONTINUED)
RESIDENTIAL CAPITAL CORP., 6.375%, 6/30/10 690,000 $ 694,313
VANDERBILT MORTGAGE FINANCE, 7.82%, 11/7/17 707,399 716,182
-------------
23,801,015
-------------
COMMERCIAL SERVICES 1.4%
ARAMARK SERVICES, INC., 7.0%, 7/15/06 1,550,000 1,584,875
CENDANT CORP., 6.25%, 1/15/08 840,000 876,730
-------------
2,461,605
-------------
DEFENSE 0.5%
UNITED TECHNOLOGIES CORPORATION, 5.4%, 5/1/35 880,000 928,067
-------------
ELECTRIC UTILITY 4.6%
ALABAMA POWER CO., 5.6%, 3/15/33 1,225,000 1,325,941
AMERICA MOVIL SA DE CV, 5.5%, 3/1/14 900,000 902,179
AMERICAN ELECTRIC POWER, 5.375%, 3/15/10 1,150,000 1,194,665
PACIFIC GAS & ELEC., 6.05%, 3/1/34 845,000 934,587
PECO ENERGY TRANSITION TRUST, 6.52%, 12/31/10 3,385,000 3,737,841
-------------
8,095,213
-------------
FINANCIAL SERVICES 5.4%
CITIGROUP COMMERCIAL MORTGAGE TRUST, 4.733%, 10/15/41 1,500,000 1,519,493
CITIGROUP COMMERCIAL MORTGAGE TRUST, 4.391%, 5/15/43 1,900,000 1,910,786
GENERAL ELECTRIC CAP. CORP., 6.75%, 3/15/32 730,000 904,288
HOUSEHOLD FINANCE, 6.4%, 6/17/08 1,150,000 1,218,818
ISTAR FINANCIAL, INC., 4.875%, 1/15/09 880,000 878,503
MORGAN STANLEY CAPITAL, 4.3%, 7/15/56 1,500,000 1,504,128
MORGAN STANLEY CAPITAL, 4.517%, 1/14/42 1,716,672 1,735,217
-------------
9,671,233
-------------
HEALTH CARE 0.9%
AETNA, INC., 7.375%, 3/1/06 1,500,000 1,531,875
-------------
HOTELS AND LODGING 0.5%
HARRAHS OPERATING CO., INC., 5.375%, 12/15/13 875,000 889,209
-------------
OIL & EXPLOR PROD & SER 1.1%
ENCANA CORP., 4.75%, 10/15/13 1,000,000 998,644
TYCO INTERNATIONAL GROUP SA, 5.8%, 8/1/06 875,000 890,901
-------------
1,889,545
-------------
PRINTING & PUBLISHING 0.6%
NEWS AMERICA HOLDINGS, 8.15%, 10/17/36 850,000 1,101,819
The accompanying notes are an integral part of these financial statements.
ACTIVA Mutual Funds Semiannual Report 17
ACTIVA Schedule of Investments continued
INTERMEDIATE BOND FUND - 6/30/05 (Unaudited)
% OF SHARES OR VALUE
SECURITY DESCRIPTION INVESTMENTS PAR VALUE (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------------------
RAILROADS 1.2%
BRIT SKY BROADCA BSY., 8.2%, 7/15/09 1,000,000 $ 1,132,969
BURLINGTON/SANTA, 4.30%, 1/1/13 925,000 908,742
-------------
2,041,711
-------------
RETAIL STORES 0.8%
WAL-MART STORES, 6.875%, 8/10/09 1,350,000 1,488,375
-------------
REAL ESTATE 1.0%
ERP OPERATING LP, 5.25%, 9/15/14 900,000 920,250
SAN DIEGO GAS & ELECTRIC, 5.35%, 5/15/35 875,000 910,000
-------------
1,830,250
-------------
TRANSPORTATION & SHIPPING 1.4%
BELLSOUTH CORPORATION, 5.2%, 9/15/14 1,000,000 1,032,453
FEDEX CORP., 6.875%, 2/15/06 1,500,000 1,525,745
-------------
2,558,198
-------------
TELECOMMUNICATIONS 4.4%
AT&T WIRELESS, 8.125%, 5/1/12 900,000 1,079,786
ALLSTATE CORP., 5.35%, 6/1/33 1,250,000 1,262,153
DEUTSCHE TELEKOM INT FIN., 8.0%, 6/15/10 1,000,000 1,160,136
MARATHON OIL CORP., 5.375%, 6/1/07 855,000 872,100
MOTOROLA, INC., 7.625%, 11/15/10 1,000,000 1,145,503
SPRINT CAPITAL CORP., 6.125%, 11/15/08 850,000 896,153
VERIZON GLOBAL FUNDING CORP., 7.75%, 6/15/32 1,000,000 1,301,568
-------------
7,717,399
-------------
TOTAL CORPORATE BONDS 74,681,662
-------------
TOTAL FIXED INCOME - 100% (Cost $175,303,344) $ 177,592,713
=============
The accompanying notes are an integral part of these financial statements.
18 ACTIVA Mutual Funds Semiannual Report
ACTIVA Schedule of Investments
VALUE FUND - 6/30/05 (Unaudited)
% OF SHARES OR VALUE
SECURITY DESCRIPTION INVESTMENTS PAR VALUE (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------------------
US TREASURY BILLS - 0.1% 0.1%
U.S. TREASURY BILLS, DN, 9/22/05 100,000 $ 99,309
-------------
TOTAL US TREASURY BILLS (Cost $99,309) 99,309
-------------
COMMON STOCKS - 99.9%
AEROSPACE 2.6%
UNITED TECHNOLOGIES 61,672 3,166,857
-------------
AUTOMOTIVE 0.1%
DELPHI AUTOMOTIVE SYSTEMS 17,200 79,980
-------------
BANKING 18.3%
BANK OF AMERICA CORP. 135,730 6,190,645
CITIGROUP, INC. 127,872 5,911,523
COMERICA, INC. 37,860 2,188,308
HIBERNIA CORP. 16,819 558,054
INDYMAC BANCORP, INC. 25,400 1,034,542
KEYCORP 32,700 1,084,005
MBNA CORPORATION 36,100 944,376
NATIONAL CITY CORP. 18,800 641,456
UNIONBANCAL CORPORATION 13,109 877,254
UBS AG-REGISTERED 30,772 2,395,600
-------------
21,825,763
-------------
BIOTECHNOLOGY 0.6%
MILLENNIUM PHARMACEUTICALS *74,900 694,323
-------------
BROADCASTING 0.5%
LIBERTY MEDIA- A 57,000 580,830
-------------
BUILDING PRODUCTS 0.5%
SHERWIN-WILLIAMS & CO. 12,700 598,043
-------------
BUSINESS SERVICES 1.1%
FIRST DATA CORP. 32,500 1,304,550
-------------
COMMERCIAL SERVICES 0.4%
CENDANT CORP. 22,912 512,541
-------------
COMPUTER SOFTWARE 1.5%
MICROSOFT CORP. 48,900 1,214,676
ORACLE CORP. *41,800 551,760
-------------
1,766,436
-------------
The accompanying notes are an integral part of these financial statements.
ACTIVA Mutual Funds Semiannual Report 19
ACTIVA Schedule of Investments continued
VALUE FUND - 6/30/05 (Unaudited)
% OF SHARES OR VALUE
SECURITY DESCRIPTION INVESTMENTS PAR VALUE (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION - DOMESTIC 2.3%
CENTEX CORPORATION 4,000 $ 282,680
HOVNANIAN ENTERPRISES *12,700 828,040
LAFARGE NORTH AMERICA, INC. 25,600 1,598,464
-------------
2,709,184
-------------
CONSTRUCTION - FOREIGN 0.7%
ACCENTURE LTD. *35,700 809,319
-------------
COSMETICS 1.0%
KIMBERLY-CLARK CORP. 18,600 1,164,174
-------------
ELECTRIC UTILITY 3.0%
AMEREN CORPORATION 11,600 641,480
AMERICAN ELECTRIC POWER 43,700 1,611,219
EXELON CORP. 21,560 1,106,675
WESTAR ENERGY, INC. 10,500 252,315
-------------
3,611,689
-------------
ELECTRONICS 1.1%
MOTOROLA, INC. 71,164 1,299,455
-------------
ENERGY 1.3%
PUGET ENERGY, INC. 16,400 383,432
XCEL ENERGY, INC. 63,700 1,243,424
-------------
1,626,856
-------------
ENTERTAINMENT 1.4%
VIACOM, INC. CL B 53,200 1,703,464
-------------
ENVIRONMENTAL SERVICES 0.8%
WASTE MANAGEMENT, INC. 33,000 935,220
-------------
FINANCIAL SERVICES 7.7%
AMBAC FINANCIAL GROUP, INC. 10,700 746,432
AMERICAN CAPITAL STRATIGIES 14,200 512,762
CAPITAL ONE FINANCIAL 25,438 2,035,294
COUNTRYWIDE CREDIT IND., INC. 39,320 1,518,145
FREDDIE MAC 16,757 1,093,059
GOLDEN WEST FINANCIAL CORP. 15,746 1,013,728
GOLDMAN SACH GROUP, INC. 11,300 1,152,826
ISTAR FINANCIAL, INC. 27,600 1,147,884
-------------
9,220,130
-------------
FOOD PROCESSING 0.9%
ARCHER-DANIELS MIDLAND CO. 50,800 1,086,104
-------------
The accompanying notes are an integral part of these financial statements.
20 ACTIVA Mutual Funds Semiannual Report
ACTIVA Schedule of Investments continued
VALUE FUND - 6/30/05 (Unaudited)
% OF SHARES OR VALUE
SECURITY DESCRIPTION INVESTMENTS PAR VALUE (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------------------
HEALTH CARE 2.8%
HCA, INC. 21,200 $ 1,201,404
HEALTH NET, INC. *20,400 778,464
HUMANA, INC. *16,600 659,684
MCKESSON HBOC, INC. 16,800 752,472
-------------
3,392,024
-------------
HOME BUILDERS 2.2%
D.R. HORTON, INC. 35,733 1,343,918
STANDARD-PACIFIC CORP. 15,200 1,336,840
-------------
2,680,758
-------------
INDUSTRIAL GOODS & SERVICES 0.3%
YELLOW ROADWAY CORP. *7,500 381,000
-------------
INSTRUMENTATION 0.7%
PARKER HANNIFIN CORP. 13,300 824,733
-------------
INSURANCE 7.5%
HARTFORD FINANCIAL SERVICES GROUP 17,300 1,293,694
MBIA, INC. 12,012 712,432
REINSURANCE GROUP OF AMERICA 16,200 753,462
ST. PAUL COMPANIES 42,901 1,695,876
UNUMPROVIDENT CORP. 32,700 599,064
ACE LIMITED 38,900 1,744,665
EVEREST REINSURANCE HOLDINGS 7,900 734,700
MONTPELIER RE HOLDINGS LTD. 23,900 826,462
XL CAPITAL LIMITED 8,090 602,058
-------------
8,962,413
-------------
MACHINERY & EQUIPMENT 0.2%
GRACO, INC. 8,500 289,595
-------------
MANUFACTURING - MISCELLANEOUS 0.4%
INGERSOLL-RAND CO. CL A 6,500 463,775
-------------
MERCHANDISING 0.4%
OMNICOM GROUP COM 6,200 495,132
-------------
MEDICAL SERVICES 0.5%
PACIFICARE HEALTH SYSTEMS, INC. *7,700 550,165
-------------
OFFICE/BUSINESS EQUIPMENT & SUPPLIES 2.6%
I.B.M. 24,420 1,811,964
PITNEY BOWES, INC. 13,500 587,925
XEROX CORP. *50,230 692,672
-------------
3,092,561
-------------
The accompanying notes are an integral part of these financial statements.
ACTIVA Mutual Funds Semiannual Report 21
ACTIVA Schedule of Investments continued
VALUE FUND - 6/30/05 (Unaudited)
% OF SHARES OR VALUE
SECURITY DESCRIPTION INVESTMENTS PAR VALUE (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------------------
OIL/GAS - EQUIPMENT & SVCS 4.5%
CONOCOPHILLIPS 71,400 $ 4,104,786
VALERO ENERGY CORP. 15,800 1,249,938
-------------
5,354,724
-------------
OIL & GAS EXPLOR PROD & SER 12.0%
CHEVRON CORPORATION 13,056 730,092
DEVON ENERGY CORP. 9,684 490,785
EXXON MOBIL CORP 111,664 6,417,330
OCCIDENTAL PETROLEUM CORP. 40,600 3,123,358
PETRO-CANADA 30,000 1,954,200
UGI CORP. 32,200 898,380
UNOCAL CORP. 10,900 709,045
-------------
14,323,190
-------------
PAPER PRODUCTS 1.4%
WEYERHAEUSER 25,771 1,640,324
-------------
PHARMACEUTICALS 2.3%
ICOS CORPORATION *20,400 431,868
KING PHARMACEUTICALS, INC. *88,897 926,307
PFIZER, INC. 49,000 1,351,420
-------------
2,709,595
-------------
RAILROADS 2.2%
CANADIAN NATIONAL RAILWAY 45,271 2,609,873
-------------
RESTAURANTS 0.8%
MCDONALDS CORP. 34,900 968,475
-------------
RETAIL STORES 1.3%
ABERCROMBIE & FITCH CO. - CL A 22,300 1,532,010
-------------
TOBACCO 4.1%
ALTRIA GROUP, INC. 52,825 3,415,665
CAROLINA GROUP 20,300 676,396
UST, INC. 17,200 785,352
-------------
4,877,413
-------------
TELECOMMUNICATIONS 7.0%
COMCAST CORP. NEW CL A *40,500 1,243,350
LIBERTY GLOBAL, INC. NEW *8,921 416,343
NEXTEL COMMUNICATIONS, INC. CL A *19,000 613,890
SPRINT CORP. 97,643 2,449,863
TIME WARNER *156,123 2,608,815
VERIZON COMMUNICATIONS 29,100 1,005,405
-------------
8,337,666
-------------
The accompanying notes are an integral part of these financial statements.
22 ACTIVA Mutual Funds Semiannual Report
ACTIVA Schedule of Investments continued
VALUE FUND - 6/30/05 (Unaudited)
% OF SHARES OR VALUE
SECURITY DESCRIPTION INVESTMENTS PAR VALUE (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-SERVICES AND EQUIPMENT 0.9%
CENTURYTEL, INC. 31,500 $ 1,090,845
-------------
TOTAL COMMON STOCKS (Cost $102,543,507) 119,271,189
-------------
TOTAL INVESTMENTS - 100% (Cost $102,642,816) $ 119,370,498
=============
*Non-dividend producing as of June 30, 2005
At June 30, 2005, the Fund's open future contracts were as follows:
Number of Opening Face Market
Contracts Contract Type Amount Value
- ---------------------------------------------------------------------------------------------------------------------------
29 Standard & Poor's 500, 9/16/05 $1,758,688 $1,733,475
The accompanying notes are an integral part of these financial statements.
ACTIVA Mutual Funds Semiannual Report 23
ACTIVA Schedule of Investments
GROWTH FUND - 6/30/05 (Unaudited)
% OF SHARES OR VALUE
SECURITY DESCRIPTION INVESTMENTS PAR VALUE (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 100%
APPAREL 1.3%
POLO RALPH LAUREN CORPORATION 9,200 $ 396,612
-------------
BEVERAGES - DOMESTIC 2.2%
PEPSICO, INC. 12,800 690,304
-------------
BIOTECHNOLOGY 1.6%
GENENTECH, INC. *6,000 481,680
-------------
COMMUNICATIONS EQUIPMENT 2.4%
COMCAST CORP. NEW CL A SPECIAL *17,000 509,150
QUALCOMM, INC. 6,900 227,769
-------------
736,919
-------------
COMPUTER SOFTWARE 6.5%
ADOBE SYSTEMS, INC. 5,200 148,824
MICROSOFT CORP. 52,820 1,312,049
ORACLE CORP. *39,400 520,080
-------------
1,980,953
-------------
COMPUTERS 6.4%
CISCO SYSTEMS, INC. *24,710 472,208
DELL, INC. *12,500 493,875
INTEL CORP. 38,480 1,002,789
-------------
1,968,872
-------------
COSMETICS 1.0%
AVON PRODUCTS, INC. 8,500 321,725
-------------
CRUISE LINES 0.6%
ROYAL CARIBBEAN CRUISES LTD. 4,000 193,440
-------------
DRUGS 2.4%
NOVARTIS AG - ADR 15,810 750,026
-------------
DATA PROCESSING & REPRODUCTION 1.0%
ALLIANCE DATA SYSTEMS CORP. *7,500 304,200
-------------
DEFENSE 1.0%
GENERAL DYNAMICS 2,900 317,666
-------------
ELECTRIC UTILITY 1.8%
CONSOL ENERGY, INC. 10,500 562,590
-------------
The accompanying notes are an integral part of these financial statements.
24 ACTIVA Mutual Funds Semiannual Report
ACTIVA Schedule of Investments continued
GROWTH FUND - 6/30/05 (Unaudited)
% OF SHARES OR VALUE
SECURITY DESCRIPTION INVESTMENTS PAR VALUE (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT 3.8%
GENERAL ELECTRIC & CO. 33,375 $ 1,156,444
-------------
ELECTRONICS 5.2%
EMC CORP/MASS *48,800 669,048
EOG RESOURCES, INC. 13,700 778,160
HARMAN INTERNATIONAL INDUSTRIES 1,900 154,584
-------------
1,601,792
-------------
ENTERTAINMENT 2.3%
HARRAH'S ENTERTAINMENT, INC. 7,400 533,318
XM SATTELITE RADIO HOLDING - CL A *4,700 158,202
-------------
691,520
-------------
FINANCIAL SERVICES 8.0%
AMERICAN EXPRESS COMPANY 14,940 795,256
CHICAGO MERCANTILE EXCHANGE 1,100 325,050
FRANKLIN RESOURCES, INC. 6,547 503,988
GOLDMAN SACH GROUP, INC. 2,200 224,444
J.P. MORGAN CHASE & CO. 7,900 279,028
SLM CORP. 6,300 320,040
-------------
2,447,806
-------------
HOTELS & LODGING 2.1%
MARRIOTT INTERNATIONAL CL A 4,800 327,456
STARWOOD HOTELS & RESORTS WORLDWIDE 5,600 327,992
-------------
655,448
-------------
INDUSTRIAL GOODS & SERVICES 0.9%
CLOROX COMPANY 4,900 273,028
-------------
INFORMATIONAL SERVICES 3.3%
YAHOO!, INC. *29,200 1,011,780
-------------
INTERNET CONTENT 1.9%
GOOGLE, INC. CL A *2,009 590,947
-------------
MANUFACTURING-CAPITAL GOODS 1.5%
DANAHER CORP. 9,000 471,060
-------------
MEDICAL EQUIPMENT & SUPPLIES 7.9%
ALLERGAN, INC. 4,000 340,960
JOHNSON & JOHNSON 17,410 1,131,650
ST. JUDE MEDICAL, INC. 14,800 645,428
TYCO INTERNATIONAL LTD. 10,700 312,440
-------------
2,430,478
-------------
The accompanying notes are an integral part of these financial statements.
ACTIVA Mutual Funds Semiannual Report 25
ACTIVA Schedule of Investments continued
GROWTH FUND - 6/30/05 (Unaudited)
% OF SHARES OR VALUE
SECURITY DESCRIPTION INVESTMENTS PAR VALUE (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------------------
MEDICAL LABS & TESTING SERV. 3.0%
CHARLES RIVER LABORATORIES INT'L., INC. *7,300 352,225
CYTYC CORPORATION *6,900 152,214
QUEST DIAGNOSTICS, INC. 7,800 415,506
-------------
919,945
-------------
MEDICAL SERVICES 3.9%
PACIFICARE HEALTH SYSTEMS, INC. *2,500 178,625
UNITEDHEALTH GROUP, INC. 19,400 1,011,516
-------------
1,190,141
-------------
METAL-ALUMINUM 0.6%
WELLPOINT, INC. 2,400 167,136
-------------
OFFICE/BUSINESS EQUIPMENT & SUPPLIES 0.7%
APPLE COMPUTER 5,600 206,136
-------------
OIL & GAS EXPLOR PROD & SER 2.9%
EXXON MOBIL CORP. 5,018 288,385
NEWFIELD EXPLORATION CO. 8,000 319,120
SCHLUMBERGER LTD. 3,700 280,978
-------------
888,483
-------------
PHARMACEUTICALS 8.3%
ABBOTT LABORATORIES 12,400 607,724
AMGEN, INC. *5,150 311,369
CAREMARK RX, INC. *10,100 449,652
GENZYME CORPORATION *2,600 156,234
MONSANTO COMPANY 7,600 477,812
SANOFI-SYNTHELABO SA ADR 8,500 348,415
TEVA PHARMACEUTICAL SP ADR 2,500 77,850
ZIMMER HOLDINGS, INC. *1,500 114,255
-------------
2,543,311
-------------
PUBLISHING 1.2%
NEWS CORPORATION, INC. Cl B 21,400 360,804
-------------
RETAIL STORES 8.0%
CVS CORP. 11,600 337,212
CHICO'S FAS, INC. 8,200 281,096
COACH, INC. 8,040 269,903
KOHL'S CORP. *10,600 592,646
STAPLES, INC. 13,350 284,622
TARGET CORP. 12,400 674,684
-------------
2,440,163
-------------
The accompanying notes are an integral part of these financial statements.
26 ACTIVA Mutual Funds Semiannual Report
ACTIVA Schedule of Investments continued
GROWTH FUND - 6/30/05 (Unaudited)
% OF SHARES OR VALUE
SECURITY DESCRIPTION INVESTMENTS PAR VALUE (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------------------
SHOES - LEATHER 0.9%
NIKE, INC. CL B 3,100 $ 268,460
-------------
TECHNOLOGY-SOFTWARE 1.2%
LINEAR TECHNOLOGY 7,900 289,851
SALESFORCE.COM, INC. *4,400 90,112
-------------
379,963
-------------
TELECOMMUNICATIONS 2.3%
SPRINT CORP. 10,200 255,918
VERISIGN, INC. *15,200 437,152
-------------
693,070
-------------
TELECOMMUNICATIONS-SERVICES AND EQUIPMENT 0.9%
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATIONS *5,500 259,215
-------------
WHOLESALE DISTRIBUTION 1.0%
SYSCO CORP. 8,600 311,234
-------------
TOTAL COMMON STOCKS - (Cost $26,798,999) 30,663,351
-------------
WARRANTS
LUCENT TECH WARRANT EXPIRES 12/10/07 0.0% *714 550
-------------
TOTAL WARRANTS - (Cost $0.00) 550
-------------
TOTAL INVESTMENTS - 100% (Cost $26,798,999) $ 30,663,901
=============
*Non-dividend producing as of June 30, 2005
The accompanying notes are an integral part of these financial statements.
ACTIVA Mutual Funds Semiannual Report 27
ACTIVA Schedule of Investments
INTERNATIONAL FUND - 6/30/05 (Unaudited)
% OF SHARES OR VALUE
SECURITY DESCRIPTION INVESTMENTS PAR VALUE (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 100%
AEROSPACE 2.0%
THALES SA 15,400 $ 626,178
-------------
APPAREL 2.0%
WACOAL CORPORATION 49,000 620,959
-------------
BANKING & FINANCIAL SERVICES 2.8%
DEUTSCHE BANK AG -REG 11,000 856,900
-------------
BREWERY 3.1%
KIRIN BREWERY CO. LTD. 97,000 940,320
-------------
COAL 1.6%
XSTRATA PLC 25,900 499,925
-------------
CONSTRUCTION - FOREIGN 1.2%
TECHNIP-COFLEXIP SA 7,600 352,906
-------------
CONSUMER GOODS & SERVICES 3.2%
FUJI PHOTO FILM 30,100 969,916
-------------
COSMETICS 3.3%
SHISEIDO LTD ORD 80,000 1,010,922
-------------
DRUGS 2.8%
SANKYO COMPANY LIMITED 45,500 874,763
-------------
ELECTRIC UTILITY 7.9%
ELECTRICIDADE DE PORTUGAL SA 338,900 853,301
KOREA ELECTRIC POWER CORP. - SPONSORED ADR 39,700 622,099
CLP HOLDINGS LIMITED 168,500 966,821
-------------
2,442,221
-------------
ELECTRICAL EQUIPMENT 2.3%
MAKITA CORPORATION 36,000 708,367
-------------
ELECTRONICS 2.1%
MATSUSHITA ELECTRIC INDL. CO. 43,000 653,209
-------------
ENERGY 2.0%
SUNCOR ENERGY, INC. 12,700 600,964
-------------
FINANCIAL SERVICES 4.1%
TAKEFUJI CORP. 18,500 1,252,369
-------------
The accompanying notes are an integral part of these financial statements.
28 ACTIVA Mutual Funds Semiannual Report
ACTIVA Schedule of Investments continued
INTERNATIONAL FUND - 6/30/05 (Unaudited)
% OF SHARES OR VALUE
SECURITY DESCRIPTION INVESTMENTS PAR VALUE (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------------------
FOOD PRODUCTS 5.0%
NORTHERN FOODS PLC 221,300 $ 626,654
J. SAINSBURY PLC 175,600 897,717
-------------
1,524,371
-------------
HOME BUILDERS 3.2%
SEKISUI HOUSE LTD. 96,000 971,351
-------------
INSURANCE 2.0%
ERU AEGON (NLG) 48,351 626,848
-------------
MACHINERY & EQUIPMENT 2.3%
METSO OYJ 32,200 702,390
-------------
MATERIALS 1.9%
ALUMINA LTD. 140,100 594,630
-------------
METALS & MINING 6.5%
ANGLOGOLD ASHANTI - SPONSORED ADR 18,500 661,005
LONMIN PLC 17,200 325,831
IMPALA PLATINUM HOLDINGS 7,700 689,335
PLACER DOME, INC. 21,800 335,284
-------------
2,011,455
-------------
MINERALS 1.2%
LIHIR GOLD LIMITED *385,700 358,561
-------------
NATURAL RESOURCES 3.2%
AREVA - CI 2,300 983,089
-------------
OIL & GAS EXPLOR PROD & SER 4.3%
ENTE NAZIONALE IDROC (ITL) 24,700 637,159
SHELL TRANSPORT - SPONSORED ADR 11,700 679,302
-------------
1,316,461
-------------
PRINTING & PUBLISHING 3.1%
DAI NIPPON PRINTING CO., LTD. *59,000 951,647
-------------
PRECIOUS METALS 3.3%
BARRICK GOLD CORP. 40,300 1,008,709
-------------
STEEL 1.0%
POSCO- ADR 7,200 316,584
-------------
TECHNOLOGY-SOFTWARE 2.1%
MISYS PLC 153,200 653,469
-------------
The accompanying notes are an integral part of these financial statements.
ACTIVA Mutual Funds Semiannual Report 29
ACTIVA Schedule of Investments continued
INTERNATIONAL FUND - 6/30/05 (Unaudited)
% OF SHARES OR VALUE
SECURITY DESCRIPTION INVESTMENTS PAR VALUE (NOTE 2)
- ---------------------------------------------------------------------------------------------------------------------------
TOYS 3.0%
NINTENDO *8,900 $ 931,853
-------------
TELECOMMUNICATIONS 9.5%
CHUNGHWA TELECOM CO. ADR 45,300 970,779
NIPPON TELEGRAPH & TELEPHONE CORP. ADR 31,300 672,011
TELECOM ITALIA 241,950 628,232
BELGACOM SA 18,750 641,191
-------------
2,912,213
-------------
TELECOMMUNICATIONS-SERVICES AND EQUIPMENT 3.1%
KT CORPORATION 44,800 963,200
-------------
UTILITIES - TELECOMMUNICATIONS 1.8%
SWISSCOM 1,700 554,853
-------------
WATER UTILITY 3.1%
UNITED UTILITIES 80,900 956,933
-------------
TOTAL COMMON STOCKS (Cost $30,791,787) 30,748,536
-------------
TOTAL INVESTMENTS - 100% (Cost $30,791,787) $ 30,748,536
=============
*Non-dividend producing as of June 30, 2005
At June 30, 2005 the breakdown by country was:
% OF MARKET ACTUAL
COUNTRY VALUE MARKET VALUE
Australia 1.9% $ 594,630
Belgium 2.1% 641,191
Canada 6.4% 1,944,957
Finland 2.3% 702,390
France 6.4% 1,962,174
Germany 2.8% 856,900
Hong Kong 3.1% 966,821
Italy 4.1% 1,265,391
Japan 34.4% 10,557,687
Republic of Korea 6.1% 1,901,883
Netherlands 2.0% 626,848
Papua New Guinea 1.2% 358,561
Portugal 2.8% 853,301
South Africa 4.3% 1,350,340
Switzerland 1.8% 554,853
Taiwan 3.2% 970,779
United Kingdom 15.1% 4,639,830
----- -----------
100.0% $30,748,536
===== ===========
The accompanying notes are an integral part of these financial statements.
30 ACTIVA Mutual Funds Semiannual Report
ACTIVA Statement of Assets and Liabilities
INTERMEDIATE INTERNATIONAL
As of June 30, 2005 (Unaudited) BOND FUND VALUE FUND GROWTH FUND FUND
------------ ------------ ------------ -----------
ASSETS
Investments at cost $175,303,344 $102,642,816 $26,798,999 $30,791,787
------------ ------------ ------------ -----------
Investments at value 177,592,713 119,370,498 30,663,901 30,748,536
Cash 1,079,101 1,761,071 1,385,573 2,274,823
Foreign currency held at value
(cost $41,741) 41,733
Receivables:
Investment income 1,612,011 184,298 22,155 88,876
Other assets 27,924 36,107 23,063 31,188
------------ ------------ ------------ -----------
Total Assets 180,311,749 121,351,974 32,094,692 33,185,156
------------ ------------ ------------ -----------
LIABILITIES
Payables:
Investments purchased -- 5,604 -- --
Advisory fees 146,353 172,456 53,857 69,052
Transfer agent fees 529 65,441 1,740 859
12b-1 fees 44,359 28,607 7,806 8,124
Service fees 66,539 44,257 11,709 12,185
Other liabilities -- 10,730 -- --
Accrued expenses 14,731 15,880 7,334 19,477
------------ ------------ ------------ -----------
Total Liabilities 272,511 342,975 82,446 109,697
------------ ------------ ------------ -----------
NET ASSETS $180,039,238 $121,008,999 $32,012,246 $33,075,459
============ ============ =========== ===========
SHARES OUTSTANDING 17,644,146 14,509,520 4,708,248 4,123,510
============ ============ =========== ===========
NET ASSET VALUE PER SHARE $10.20 $6.80 $8.02
Class A based on net assets of
$117,260,818 and 14,062,330
shares outstanding $8.34
Class R based on net assets of
$3,748,181 and 447,190
shares outstanding $8.38
The accompanying notes are an integral part of these financial statements.
ACTIVA Mutual Funds Semiannual Report 31
ACTIVA Statement of Operations
For the six month period ended June 30, 2005 (Unaudited)
INTERMEDIATE INTERNATIONAL
BOND FUND VALUE FUND GROWTH FUND FUND
---------- ---------- ----------- ----------
INVESTMENT INCOME
Interest $4,188,010 $23,852 $9,819 $12,314
Dividends -- 1,421,610 161,519 466,531
Miscellaneous 13,880 7,486 1,089 25,564
---------- ---------- ----------- ----------
Total Investment Income 4,201,890 1,452,948 172,427 504,409
---------- ---------- ----------- ----------
EXPENSES
Advisory fees 290,290 344,390 107,506 139,232
12b-1 fees 87,894 57,160 15,586 16,380
Service fees 131,842 88,440 23,379 24,570
Shareholder report 1,583 24,616 1,990 1,764
Fund accounting fees 34,390 34,752 20,815 25,521
Audit fees 9,593 9,593 9,593 9,593
Custodian fees 10,136 14,350 6,382 31,132
Insurance 7,812 5,264 1,458 1,476
Legal fees 8,772 8,772 9,132 9,537
Registration fees 4,344 2,579 1,177 1,177
Transfer agent fees 1,024 123,600 3,296 1,676
Transfer agent fees - Class R -- 3,600 -- --
Trustee fees 7,421 7,421 7,421 7,421
---------- ---------- ----------- ----------
Total Expenses 595,101 724,537 207,735 269,479
---------- ---------- ----------- ----------
Net Investment Income (Loss) 3,606,789 728,411 (35,308) 234,930
---------- ---------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS,
FOREIGN CURRENCY AND FUTURES CONTRACTS
Net realized gain (loss) from
security transactions 560,546 4,704,187 913,310 4,109,790
Net realized gain (loss) from
foreign currency transactions -- -- -- (65,200)
Net realized gain (loss) from
futures contracts -- 19,128 -- --
Changes in net unrealized
appreciation or (depreciation)
of investments and
foreign currency (557,962) (1,394,042) (1,627,237) (4,522,533)
---------- ---------- ----------- ----------
Net Gain (Loss) from Investments,
Foreign Currency and
Futures Contracts 2,584 3,329,273 (713,927) (477,943)
---------- ---------- ----------- ----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS $3,609,373 $4,057,684 ($749,235) ($243,013)
========== ========== ========= ==========
The accompanying notes are an integral part of these financial statements.
32 ACTIVA Mutual Funds Semiannual Report
ACTIVA Statement of Changes in Net Assets
INTERMEDIATE BOND FUND VALUE FUND
PERIOD YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED
06/30/05 12/31/04 06/30/05 12/31/04
Increase (Decrease) in: (UNAUDITED) (AUDITED) (UNAUDITED) (AUDITED)
--------------------------- ---------------------------
NET ASSETS FROM OPERATIONS
Net investment income (loss) $3,606,789 $6,915,648 $728,411 $1,357,933
Net realized gain (loss) on investments 560,546 1,164,068 4,723,315 20,755,163
Net increase (decrease) in unrealized
appreciation (557,962) (1,662,216) (1,394,042) (5,484,151)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations 3,609,373 6,417,500 4,057,684 16,628,945
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income:
Class A (3,499,182) (6,860,034) -- (1,218,977)
Class R -- -- -- (93,582)
Net realized gain from investment transactions:
Class A (104,842) (868,494) -- --
Class R -- -- -- --
------------ ------------ ------------ ------------
Total distributions to shareholders (3,604,024) (7,728,528) -- (1,312,559)
CAPITAL SHARE TRANSACTIONS Net proceeds from sale of shares:
Class A 69,248 187,253 2,604,579 906,515
Class R -- -- 573,061 6,459,219
Net asset value of shares issued to shareholders in
reinvestment of investment income and realized
gain from security transactions:
Class A 3,603,887 7,727,313 -- 1,195,178
Class R -- -- -- 93,582
Payment for shares redeemed:
Class A (88,659) (117,169) (4,486,896) (36,383,342)
Class R -- -- (472,072) (6,205,359)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
derived from capital share transactions 3,584,476 7,797,397 (1,781,328) (33,934,207)
------------ ------------ ------------ ------------
Net Increase (Decrease) in Net Assets 3,589,825 6,486,369 2,276,356 (18,617,821)
Net Assets, beginning of year or period 176,449,413 169,963,044 118,732,643 137,350,464
------------ ------------ ------------ ------------
Net Assets, end of year or period $180,039,238 $176,449,413 $121,008,999 $118,732,643
============ ============ ============ ============
NET ASSETS CONSIST OF:
Capital $177,067,524 $173,483,048 $109,059,560 $110,840,888
Undistributed net investment income (loss) 201,329 -- 701,406 --
Return of capital -- 93,722 -- (27,005)
Undistributed net realized gain
(loss) from investments 481,016 25,312 (5,454,436) (10,177,750)
Unrealized appreciation (depreciation)
of investments and foreign currency 2,289,369 2,847,331 16,702,469 18,096,510
------------ ------------ ------------ ------------
$180,039,238 $176,449,413 $121,008,999 $118,732,643
============ ============ ============ ============
TRANSACTIONS IN FUND SHARES
Shares sold:
Class A 6,788 18,269 329,665 118,751
Class R -- -- 70,917 886,454
Reinvested distributions:
Class A 355,623 756,164 -- 150,337
Class R -- -- 11,712
Shares redeemed:
Class A (8,719) (11,455) (558,098) (5,119,911)
Class R -- -- (59,477) (773,403)
------------ ------------ ------------ ------------
Net increase (decrease) in fund shares 353,692 762,978 (216,993) (4,726,060)
Shares outstanding, beginning of year or period 17,290,454 16,527,476 14,726,513 19,452,573
------------ ------------ ------------ ------------
Shares outstanding, end of year or period 17,644,146 17,290,454 14,509,520 14,726,513
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
ACTIVA Mutual Funds Semiannual Report 33
ACTIVA Statement of Changes in Net Assets continued
GROWTH FUND INTERNATIONAL FUND
PERIOD YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED
06/30/05 12/31/04 06/30/05 12/31/04
Increase (Decrease) in: (UNAUDITED) (AUDITED) (UNAUDITED) (AUDITED)
--------------------------- ---------------------------
NET ASSETS FROM OPERATIONS
Net investment income (loss) ($35,308) ($7,778) $234,930 $45,806
Net realized gain (loss) on investments 913,310 2,717,993 4,044,590 4,663,978
Net increase (decrease) in unrealized
appreciation (1,627,237) 168,841 (4,522,533) (684,300)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations (749,235) 2,879,056 (243,013) 4,025,484
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income:
Class A -- -- -- --
Class R -- -- -- --
Net realized gain from investment transactions:
Class A -- -- -- --
Class R -- -- -- --
----------- ----------- ----------- -----------
Total distributions to shareholders -- -- -- --
CAPITAL SHARE TRANSACTIONS Net proceeds from sale of shares:
Class A 79,923 293,272 14,858 149,917
Class R -- -- -- --
Net asset value of shares issued to shareholders
in reinvestment of investment income and
realized gain from security transactions:
Class A -- -- -- --
Class R -- -- -- --
Payment for shares redeemed:
Class A (239,712) (270,489) (24,156) (276,392)
Class R -- -- -- --
----------- ----------- ----------- -----------
Net increase (decrease) in net assets
derived from capital share transactions (159,789) 22,783 (9,298) (126,475)
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets (909,024) 2,901,839 (252,311) 3,899,009
Net Assets, beginning of year or period 32,921,270 30,019,431 33,327,770 29,428,761
----------- ----------- ----------- -----------
Net Assets, end of year or period $32,012,246 $32,921,270 $33,075,459 $33,327,770
=========== =========== =========== ===========
NET ASSETS CONSIST OF:
Capital $37,516,483 $37,676,272 $35,340,698 $35,349,997
Undistributed net investment income (loss) (591,473) (556,166) (774,206) (943,936)
Return of capital -- -- -- --
Undistributed net realized gain
(loss) from investments (8,777,666) (9,690,976) (1,445,956) (5,555,746)
Unrealized appreciation (depreciation)
of investments and foreign currency 3,864,902 5,492,140 (45,077) 4,477,455
----------- ----------- ----------- -----------
$32,012,246 $32,921,270 $33,075,459 $33,327,770
=========== =========== =========== ===========
TRANSACTIONS IN FUND SHARES
Shares sold:
Class A 12,108 45,318 1,853 20,792
Class R -- -- -- --
Reinvested distributions:
Class A -- -- -- --
Class R -- -- -- --
Shares redeemed:
Class A (35,982) (43,066) (3,033) (38,158)
Class R -- -- -- --
----------- ----------- ----------- -----------
Net increase (decrease) in fund shares (23,874) 2,252 (1,180) (17,366)
Shares outstanding, beginning of year or period 4,732,122 4,729,870 4,124,690 4,142,056
----------- ----------- ----------- -----------
Shares outstanding, end of year or period 4,708,248 4,732,122 4,123,510 4,124,690
=========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
34 ACTIVA Mutual Funds Semiannual Report
ACTIVA Notes to Unaudited Financial Statements
1. ORGANIZATION
Activa Mutual Fund Trust (Trust) was organized as a Delaware business trust on
February 2, 1998. The trust consists of four funds, each open-end management
investment companies registered under the Investment Company Act of 1940. The
funds are: the Activa Intermediate Bond Fund (Intermediate Bond Fund), the
Activa Value Fund (Value Fund), the Activa Growth Fund (Growth Fund) and the
Activa International Fund (International Fund) collectively referred to as the
Funds. The Value Fund is the successor to Amway Mutual Fund.
2. SIGNIFICANT ACCOUNTING POLICIES
Investment Objectives
The Intermediate Bond Fund's investment objective is to seek a high level of
current income as is consistent with moderate risk of capital and maintenance of
liquidity. The Intermediate Bond Fund invests primarily in investment-grade debt
securities, with average maturity of three to ten years.
The Value Fund's investment objective is to seek long-term capital appreciation,
and invests primarily in common stocks of U.S. companies which are considered by
the investment manager to be undervalued.
The Growth Fund seeks long-term growth of capital, and invests primarily in
common stocks believed by the investment manager to have long-term growth
potential.
The International Fund seeks maximum long-term capital appreciation. The
International Fund invests primarily in common stocks of non-U.S. companies
which the Fund believes to be undervalued by the marketplace with above-average
potential for capital appreciation.
Classes of Shares
The Value Fund offers two classes of shares (Class A and Class R). The Class R
shares are offered to tax-exempt retirement and benefit plans of Alticor, Inc.
and its affiliates, and are not subject to any sales charges or 12b-1
distribution fees. All other Funds issue a single class of shares. Each share
for all of the Funds, including Class A and Class R of the Value Fund represents
an equal proportionate interest in their respective Fund and, generally, will
have identical voting, dividend, liquidation, and other rights and the same
terms and conditions. Each class and Fund will have exclusive voting rights with
respect to matters affecting only that class or Fund. Each class and Fund bears
different distribution, shareholder servicing and transfer agent expenses.
Income, non-class specific expenses, and realized and unrealized gains or losses
on investments are allocated to each class of shares or Fund based upon its
relative net assets. Each fund has authorized an unlimited number of shares.
Security Valuation
Net asset values per share are calculated at the close of business on the New
York Stock Exchange, usually 4:00PM Eastern time on each business day on which
that exchange is open. Investments in securities listed or admitted to trading
on a national securities exchange are valued at their last reported sale price
before the time of valuation. If a security is traded only in the
over-the-counter market, or if no sales have been reported for a listed security
on that day, it is valued at the mean between the current closing bid and ask
prices. Short-term securities maturing within 60 days are valued at amortized
cost, which approximates fair value. Portfolio debt securities with remaining
maturities greater than 60 days are valued by pricing agents approved by the
Board of Trustees. Foreign securities are converted to U.S. dollars using
exchange rates at the close of the New York Stock Exchange. Securities for which
market quotations are not readily available, including any restricted securities
(none at June 30, 2005), and other assets of the Funds are valued at fair market
value as determined by the Fund's Board of Trustees.
Derivative Transactions
The Funds may trade in derivative contracts to hedge portfolio holdings and for
investment purposes. Hedging activities are intended to reduce various risks
associated with fluctuations in foreign currency exchange rates. When entering
into a forward currency contract, the fund agrees to receive or deliver a fixed
quantity of foreign currency for an agreed-upon price on an agreed future date.
These contracts are valued daily. The fund's net equity in the contracts is
included as unrealized gains or losses in the statement of
ACTIVA Mutual Funds Semiannual Report 35
ACTIVA Notes to Unaudited Financial Statements continued
assets and liabilities. This unrealized gain or loss is the difference between
the forward foreign exchange rates at the dates of entry into the contracts and
the forward rates at the reporting date. The current year change in unrealized
gains and losses and realized gains and losses are included in the statement of
operations. These instruments involve market risk, credit risk, or both kinds of
risk, in excess of the amount recognized in the statements of assets and
liabilities. Risks arise from the possible inability of counterparties to meet
the terms of their contracts and from movement in currency and security values
and interest rates. There were no foreign currency contracts outstanding at June
30, 2005.
Security Transactions
Security transactions are accounted for on the trade date. Dividend income is
recorded on the ex-dividend date. Interest income is recorded on the accrual
basis. Original issue discounts are accreted and premium is amortized on debt
securities to interest income over the life of a security with a corresponding
adjustment in the cost basis. Realized gains and losses from security
transactions and unrealized appreciation and depreciation of investments are
reported on a specific identification basis. Dividends and distributions to
shareholders are recorded by the Funds on the ex-dividend date.
Foreign Currency Translation
Investment securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollar amounts at date of valuation.
Purchases and sales of investment securities and income and expense items
denominated in foreign currencies are translated into U.S. dollar amounts on the
respective dates of such transactions.
Net realized gains and losses from foreign currency and investment transactions
disclosed in the Statement of Operations consist of net gains and losses on
disposition of foreign currency, currency gains and losses realized between
trade and settlement dates on security transactions, and the difference between
the amount of net investment income accrued and the amount actually received in
U.S. dollars. Net unrealized foreign exchange gains and losses arise from
changes in fair values of assets and liabilities other than investments in
securities at period end, resulting from changes in exchange rates. The effects
of foreign currency exchange rates on foreign securities held are included in
net realized and unrealized gain or loss on investments.
Futures Contracts
The Funds may use futures contracts to manage its exposure to the stock and bond
markets. Buying futures tends to increase the fund's exposure to the underlying
instrument, while selling futures tends to decrease the fund's exposure to the
underlying instrument or hedge other fund investments. Futures contracts
involve, to varying degrees, risk of loss in excess of the futures variation
margin reflected in the Statement of Assets and Liabilities. The underlying face
amount at value of any open futures contracts at period end is shown at the end
of the schedule of investments. This amount reflects each contract's exposure to
the underlying instrument at period end. Losses may arise from changes in the
value of the underlying instruments or if the counterparties do not perform
under the contract's terms. Gains (losses) are realized upon the expiration or
closing of the futures contracts. Futures contracts are valued at the settlement
price established each day by the board of trade or exchange on which they are
traded.
Security Lending
The Funds lend portfolio securities from time to time in order to earn
additional income. The Funds receive collateral in the form of U.S. Treasury
obligations, letters of credit, and/or cash against the loaned securities, and
maintain collateral in an amount not less than 100% of the market value of the
loaned securities during the period of the loan. The market value of the loaned
securities is determined at the close of business of the Funds and any
additional required collateral is delivered to the Funds on the next business
day. If the borrower defaults on its obligation to return the securities loaned
because of insolvency or other reasons, the Funds could experience delays and
costs in recovering the securities loaned or in gaining access to the
collateral. At June 30, 2005,
36 ACTIVA Mutual Funds Semiannual Report
ACTIVA Notes to Unaudited Financial Statements continued
the value of the securities loaned and the collateral received were as follows:
Value of the Collateral
Fund Securities Loaned Received
----------------- -----------
Intermediate Bond $0.00 $0.00
Value $10,003,019 $10,374,293
Growth $0.00 $0.00
International $11,289,040 $11,819,615
Federal Income Taxes
It is the Funds' policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to make distributions of
income and capital gains sufficient to relieve it from substantially all federal
income taxes. Foreign taxes are provided for based on each fund's understanding
of the tax rules and rates that exist in the foreign markets in which it
invests.
Dividend Distributions
The Intermediate Bond Fund declares and distributes dividends monthly, and
capital gains (if any) are distributed annually. The Value Fund, Growth Fund and
International Fund declare and distribute dividends and capital gains (if any)
annually.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles 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 increases and decreases in net
assets from operations during the reporting period. Actual results could differ
from those estimates.
3. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
The Funds have entered into investment advisory agreements with Activa Asset
Management LLC (the Adviser), effective June 11, 1999. The Funds employ the
investment adviser to provide investment advice and manage on a regular basis
the investment portfolios for the Funds. Except when otherwise specifically
directed by the Funds, the Investment Adviser will make investment decisions on
behalf of the Funds and place all orders for the purchase and sale of portfolio
securities for the Funds' accounts. The Adviser shall be permitted to enter into
an agreement with another advisory organization (sub-adviser), whereby the
sub-adviser will provide all or part of the investment advice and services
required to manage the Funds' investment portfolios as provided for in these
agreements. In return for these services, the Funds pay the adviser an annual
rate as follows:
FUND % OF AVERAGE NET ASSETS
- ---- -----------------------
Intermediate Bond .40% on first $50 million; .32% on next $100 million; .24%
on assets in excess of $150 million
Value .60% on first $100 million; .50% on assets in excess of
$100 million; the minimum annual fee shall be $350,000
plus .20% of average net assets
Growth .70% on first $25 million; .65% on next $25 million; .60%
on assets in excess of $50 million
International .85% on first $50 million; .75% on assets in excess of
$50 million
As permitted by the above agreements, the Adviser has retained the following
sub-advisers:
FUND SUB-ADVISER
- ---- -----------
Intermediate Bond McDonnell Investment Management, LLC
Value Wellington Management Company, LLP*
Growth BlackRock Advisors, Inc.
International NWQ Investment Management Company, LLC
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Value Fund,
Intermediate Bond Fund, Growth Fund and International Fund have entered into a
Plan and Agreement of Distribution with Activa Asset Management LLC. Under the
terms of the agreement, Activa Asset Management
ACTIVA Mutual Funds Semiannual Report 37
ACTIVA Notes to Unaudited Financial Statements continued
LLC provides services in connection with distributing the Funds' shares (except
Value Fund Class R). For these services rendered, the Funds compensate Activa
Asset Management LLC monthly at a maximum annual rate of .25 of 1% of the
average net assets of the Fund. For the six month period ended June 30, 2005 the
Board of Trustees approved an annual rate of .10 of 1% of average net assets.
The Funds have a transfer agency and dividend disbursing agency agreement with
Activa Asset Management LLC. Under these agreements, Activa Asset Management LLC
is the agent for transfer of the Funds' shares and disbursement of the Funds'
distributions. For these services, the Intermediate Bond, Value (Class A),
Growth and International Funds pay a monthly fee based upon $2.00 per account in
existence during the month. The transfer agent is compensated by the Value Fund
(Class R) at a monthly rate of 1/12 of .20% (.20% annually) of average net
assets.
On June 11, 1999, as amended on June 3, 2004, the Trust has entered into an
administrative agreement with Activa Asset Management LLC. Under the terms of
the agreement Activa Asset Management LLC will act as administrator for the
Funds. As administrator of the Funds, Activa Asset Management LLC will furnish
office space and office facilities, equipment and personnel, as well as
providing services relating to compliance, tax and financial service
requirements. For these services, the administrator will be compensated
quarterly by each fund at an annual rate of .15% of 1% of average daily net
assets.
On July 9, 1999 the Trust entered into a Fund Accounting Agreement with Bisys
Fund Services Ohio, Inc. (Fund Accountant). As stated in the agreement, the Fund
Accountant is responsible for the maintenance of books and records, performance
of daily accounting services, providing the Funds' management with information
for the preparation of monthly financial statements and certain information
necessary for meeting compliance requirements. The Fund Accountant is
compensated by each fund based upon an annual fee of $35,000 for assets up to
$100 million; $50,000 for assets between $100 million and $1 billion; and
$75,000 for assets in excess of $1 billion. In addition, each fund will pay the
Fund Accountant an annual fee of $2,500 for portfolio accounting reports
provided to investment adviser personnel through internet access.
Two families, which own (directly or indirectly) the majority of the shares
outstanding of the Trust, also indirectly own 100% of the Adviser.
4. INVESTMENT TRANSACTIONS
At June 30, 2005, the cost of investments owned by the Value Fund was
$102,755,034 for federal income tax purposes. Aggregate gross unrealized
appreciation on securities in which there was an excess of market value over tax
cost was $18,686,332. Aggregate gross unrealized depreciation on securities in
which there was an excess of tax cost over market value was $2,070,868. Net
unrealized appreciation for tax purposes was $16,615,464, at June 30, 2005.
The unrealized appreciation (depreciation) at June 30, 2005 based upon cost of
both long-term and short-term securities for the funds that have elected an
October 31st year-end for federal income tax purposes were as follows:
Net Cost for
Gross Gross unrealized federal
unrealized unrealized appreciation income tax
Fund appreciation depreciation (depreciation) purposes
- -------------------------------------------------------------------------
Intermediate
Bond $2,832,084 $542,715 $2,289,369 $175,303,344
Growth 4,211,881 679,781 3,532,100 27,131,801
nternational 800,646 843,898 (43,252) 30,791,787
5. RELATED PARTY TRANSACTION
A certain class of Independent Business Owners of Alticor, Inc. received part of
its Emerald profit-sharing bonus in common stock shares of the Value Fund. On
January 13, 2005, Alticor, Inc. purchased 258,970 Value Fund shares valued at
$2,035,501 (based upon the net asset value of $7.86 per share) and transferred
the shares to these Independent Business Owners.
38 ACTIVA Mutual Funds Semiannual Report
6. SUBSEQUENT EVENTS
On July 5, 2005 Amway Investment Corp., a principal shareholder in the Activa
Mutual Funds, redeemed $57,522,286 from the Activa Intermediate Bond Fund and
$9,769,520 from the Activa Growth Fund, via a redemption in kind. In addition, a
cash redemption in the amount of $2,017,928 was redeemed from the Activa
International Fund and a purchase in the amount of $12,122,954 was made in the
Activa Value Fund by this same shareholder. All of these transactions were part
of a reallocation of investment assets.
ACTIVA Mutual Funds Semiannual Report 39
ACTIVA Financial Highlights
Intermediate Bond Fund Value Fund - Class A
-------------------------- ----------------------------
Period Year Period Year
Ended Ended Ended Ended
6/30/05 12/31/04 6/30/05 12/31/04
Per share outstanding for each period (Unaudited) (Audited) (Unaudited) (Audited)
----------- --------- ----------- ---------
Net Asset Value, Beginning of Period $10.21 $10.28 $8.06 $7.06
Income from investment operations:
Net investment income (loss) 0.20 0.41 0.05 0.09
Net realized and unrealized gains
(losses) on securities -- (0.02) 0.23 1.00
----------- --------- ----------- ---------
Total from investment operations 0.20 0.39 0.28 1.09
Less Distributions:
Dividends from net investment income 0.20 0.41 -- 0.09
Dividends in excess of net investment income -- -- -- --
Distributions from capital gains 0.01 0.05 -- --
----------- --------- ----------- ---------
Total Distributions 0.21 0.46 -- 0.09
----------- --------- ----------- ---------
Net Asset Value, End of Period $10.20 $10.21 $8.34 $8.06
=========== ========= =========== =========
Total Return * 1.96% 3.86% 3.47% 15.40%
Ratios and Supplemental Data
Net assets, end of period $180,039,238 $176,449,413 $117,260,818 $115,203,837
Ratio of expenses to average net assets 0.3% 0.7% 0.6% 1.2%
Ratio of net income (loss) to average net assets 2.0% 4.0% 0.6% 1.1%
Portfolio turnover rate 56.0% 76.2% 28.1% 103.8%
Value Fund - Class R Growth Fund International Fund
-------------------------- -------------------------- -------------------------
Period Year Period Year Period Year
Ended Ended Ended Ended Ended Ended
6/30/05 12/31/04 6/30/05 12/31/04 6/30/05 12/31/04
Per share outstanding for each period (Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited)
----------- --------- ----------- --------- ----------- ---------
Net Asset Value, Beginning of Period $8.10 $7.09 $6.96 $6.35 $8.08 $7.10
Income from investment operations:
Net investment income (loss) 0.05 0.08 (0.01) -- 0.06 0.01
Net realized and unrealized gains
(losses) on securities 0.23 1.01 (0.15) 0.61 (0.12) 0.97
----------- --------- ----------- --------- ----------- ---------
Total from investment operations 0.28 1.09 (0.16) 0.61 (0.06) 0.98
Less Distributions:
Dividends from net investment income -- 0.08 -- -- -- --
Dividends in excess of net
investment income -- -- -- -- -- --
Distributions from capital gains -- -- -- -- -- --
----------- --------- ----------- --------- ----------- ---------
Total Distributions -- 0.08 -- -- -- --
----------- --------- ----------- --------- ----------- ---------
Net Asset Value, End of Period $8.38 $8.10 $6.80 $6.96 $8.02 $8.08
=========== ========== =========== ========= =========== =========
Total Return * 3.46% 15.44% -2.30% 9.61% -0.74% 13.80%
Ratios and Supplemental Data
Net assets, end of period $3,748,181 $3,528,806 $32,012,246 $32,921,270 $33,075,459 $33,327,770
Ratio of expenses to average net assets 0.6% 1.2% 0.7% 1.3% 0.8% 1.7%
Ratio of net income (loss) to average
net assets 0.7% 1.4% -0.1% 0.0% 0.7% 0.2%
Portfolio turnover rate 28.1% 103.8% 37.7% 87.4% 157.0% 199.6%
* The period ended June 30, 2005 is not annualized but an aggregate total
return for the period.
40-41 SPREAD
ACTIVA Mutual Funds Semiannual Report
ACTIVA Mutual Funds
Activa Mutual Funds
2905 Lucerne SE, Suite 200
Grand Rapids, Michigan 49546
(616) 787-6288 (800) 346-2670
www.activafunds.com
Printed in U.S.A.
ITEM 2. CODE OF ETHICS.
Not applicable at this time.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable at this time.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable at this time.
ITEM 6. SCHEDULE OF INVESTMENTS.
Included as part of the shareholder report.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to this registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to this registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to this registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Nominating Committee will consider nominees recommended by shareholders.
Recommendations by shareholders can be made in writing to the Fund.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR
270.30a-3(c))) are effective, as of a date within 90 days of the filing date of
this report, based on their evaluation of these controls and procedures required
by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or
15d-15(b) under the Exchange Act (17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR
270.30a-3(d)) that occurred during the registrant's last fiscal half-year (the
registrant's second fiscal half-year in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS
- -----------------
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not Applicable.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2(a) under the Act
(17 CFR 270.30a-2(a)), exactly as set forth below: Ex-99.CERT Attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Activa Mutual Fund Trust
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By (Signature and Title)* /s/ Allan D. Engel
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Allan D. Engel
President, Principal Executive Officer and
Principal Financial Officer
Date September 7, 2005
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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)*
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Date
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By (Signature and Title)* /s/
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Date
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* Print the name and title of each signing officer under his or her signature.