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Activa Mutual Fund Trust – ‘N-30D’ for 12/31/99

On:  Tuesday, 2/22/00   ·   For:  12/31/99   ·   Accession #:  891804-0-281   ·   File #:  811-02168

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 2/22/00  Activa Mutual Fund Trust          N-30D      12/31/99    1:84K                                    Kelvyn Press Inc/FA

Annual or Semi-Annual Report Mailed to Shareholders   —   Rule 30d-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: N-30D       Activa Mutual Funds                                   39    186K 

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ACTIVA (LOGO: ACTIVA LOGO) ANNUAL REPORT DECEMBER 31, 1999 ACTIVA MONEY MARKET FUND Sub-Adviser: JP Morgan Investment Management, Inc. ACTIVA INTERMEDIATE BOND FUND Sub-Adviser: Van Kampen Management, Inc. ACTIVA VALUE FUND Sub-Adviser: Wellington Asset Management, LLP ACTIVA GROWTH FUND Sub-Adviser: State Street Research & Management Company ACTIVA INTERNATIONAL FUND Sub-Adviser: Nicholas-Applegate Capital Management A selection of stock, bond, and money market funds, managed by professional advisers, which are designed to help investors meet their financial goals.
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ACTIVA Mutual Funds Annual Report Contents Page SHAREHOLDER LETTER 1 ACTIVA MONEY MARKET FUND 2 ACTIVA INTERMEDIATE BOND FUND 3 ACTIVA VALUE FUND 4 ACTIVA GROWTH FUND 6 ACTIVA INTERNATIONAL FUND 7 SCHEDULE OF INVESTMENTS Activa Money Market Fund 8 Activa Intermediate Bond Fund 10 Activa Value Fund 13 Activa Growth Fund 19 Activa International Fund 22 Page STATEMENT OF ASSETS AND LIABILITIES 27 STATEMENT OF OPERATIONS 28 STATEMENT OF CHANGES IN NET ASSETS 29 NOTES TO FINANCIAL STATEMENTS 30 FINANCIAL HIGHLIGHTS 34 INDEPENDENT AUDITORS' REPORT 36 ACTIVA Mutual Funds 2905 Lucerne SE, Suite 200 Grand Rapids, Michigan 49546 (616) 787-6288 (800) 346-2670 WWW.ACTIVAFUNDS.COM
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ANNUAL REPORT Dear Shareholder I am pleased to provide you with the Annual Report to Shareholders for the Activa Mutual Funds for the period ending December 31, 1999. Please review the following pages which include the sub-advisers' management discussion and performance review of the funds. The second half of 1999 brought many changes to the Activa Funds. The launch of our new funds was very successful, and we are excited about our new investment managers. One of the reasons we were eager to bring you a new family of funds was to give our shareholders the opportunity to diversify their investments, a strategy known as asset allocation. Asset allocation is an investment strategy that involves combining different asset classes such as stocks, bonds, international investments and cash into one portfolio. This is a strategy used by major pension funds to obtain their investment objectives. Individual investors can also use this same strategy by investing in a variety of mutual funds. Diversifying among different types of mutual funds alleviates the risk of having all your eggs in one basket. The reason diversification reduces risk is because different asset classes, such as stocks and bonds, rise and fall independent of each other. In addition to different asset classes, your portfolio can be further diversified over different equity investment "styles". Managers use different strategies or styles to manage their equity funds. Management styles such as growth and value give you another dimension of diversification, as various styles fall in and out of favor periodically and performance between styles can vary dramatically. An asset allocation strategy works best when the investments are held over longer periods of time. Over longer time periods, the gains in one asset class tend to offset losses in another asset class, reducing the volatility in your portfolio. Keep in mind that the asset allocation decision is one of the most important decisions you will make as an investor, as a portfolio's asset allocation typically drives over 90% of a portfolio's performance. As we have communicated to you recently, we have enhanced our services to provide you with more information on your investment in the Activa Funds, such as our web site and quarterly statements. We have also provided you with greater ease to communicate with us by expanding our phone hours and adding e-mail. We hope you have found our new services helpful. We here at the Activa Funds continue to explore ways to make investing with us convenient. Be sure to look for our new telephone exchange options coming later this year. As markets continue to be volatile into the Year 2000, we believe an asset allocation strategy will be your best defense in reducing the risk of your portfolio. Be sure to visit our web site at www.activafunds.com, or call our toll-free number to see how using the Activa Mutual Funds can help you achieve an asset allocation strategy suited to your investment goals. Sincerely, /s/ James J. Rosloniec James J. Rosloniec ACTIVA Mutual Funds Annual Report 1
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ACTIVA Money Market Fund-- JP Morgan Investment Management, Inc. The Activa Money Market Fund returned 1.83% for the period since inception on August 19, 1999 through December 31, 1999. Although inflation has remained benign and wage pressures are still subdued, the Federal Reserve has embarked on a path of incremental tightening in a proactive attempt to keep inflation at bay. At mid-year, when the Fed began tightening, credit and swap spreads both widened and the equity market tumbled. Since October, however, spreads have narrowed and the equity market has rebounded largely due to the vigilance of the Federal Reserve, and its adoption of a neutral stance. As expected, we finished the year with higher yields due to the lingering probability of additional Fed action, global synchronized growth, and uncertainty about when the previous moves will begin to slow U.S. growth. Over the past four months, the Fund maintained a barbell strategy, meaning we invested at the very short end of the yield curve for liquidity while at the same time invested farther out on the yield curve (though still less than 1-year), to capture higher yields. In addition, our significant allocation to floating-rate notes added to performance. These securities reset regularly (usually quarterly), therefore we benefit in a rising rate environment. Because of the barbell structure and the floating-rate note allocation, the Fund has performed very well versus its peer group. Conversely, the need to maintain liquidity by investing a large percentage of the Fund in overnight maturing securities to prepare for the unforeseen Y2K events, detracted from performance. Investor caution and the accommodative measures of the Federal Reserve resulted in a flood of cash into money market instruments, which drove short-term yields down dramatically in the last week of December. Money market rates into early January traded as low as 2% for Fed funds and below 1.5% for agency issuance. We expect the rising rate environment to continue, with a quarter percentage point hike from the Federal Reserve at its February meeting. Eventually, these incremental steps will bring about the desired slow down and "soft landing." We think that the current strength in oil prices will translate into increasing headline inflation, noticeable as early as the first quarter of 2000. Global synchronized growth and central bank activity in response will be a significant theme for 2000. As such, we will keep the fund barbelled to maintain liquidity, yet opportunistically capture higher yields along the yield curve. ACTIVA Mutual Funds Annual Report 2
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ACTIVA Intermediate Bond Fund-- Van Kampen Management, Inc. Unfortunately for bond market participants, 1999 proved to be a difficult year for the U.S. fixed-income market. At year-end, the 30-year U.S. Treasury yield stood at 6.48% versus 5.09% at year-end 1998. During the fourth quarter, the U.S. economy continued to be characterized by solid growth and modest inflation. U.S. consumer demand remained strong despite concerns about rising trade deficits and rising interest rates. The higher interest rate environment will increase the financial cost of doing business and may contribute to a slowing in economic growth. The Lehman Brothers Aggregate Bond Index returned 1.04% for the four months ended December 31, 1999 or since inception of the Activa Intermediate Bond Fund. For the same four-month period, U.S. Treasuries returned .01%. Non-Treasuries outperformed U.S. Treasuries as higher yields contributed to higher returns. The best performing sector was the mortgage-backed sector, which returned 2.01%, while asset-backed securities followed with a 1.29% total return. Finally, investment-grade corporate bonds returned 1.12% and U.S. government agency securities returned .83%. As of December 31, 1999, the Activa Intermediate Bond Fund had a duration of 4.9 years, which was comparable to the 4.9-year duration of the Fund's benchmark, the Lehman Brothers Aggregate Bond Index. With respect to relative sector weightings, the Fund held overweight positions in the asset-backed sector and an underweight position in the U.S. Treasury sector. We anticipate maintaining the current posture as we enter the new year. Yield premiums in the non-treasury sector remain attractive and present attractive total return opportunities. The Fund generated total returns of .63% since inception. We expect economic expansion to continue despite the higher interest rate environment. Looking ahead, the market appears to be anticipating at least another .50% federal funds rate increase, as the Fed attempts to maintain a balance between economic growth and low inflation. We believe the Year 2000 will continue to present challenges for fixed-income portfolios. We expect to continue to meet these challenges through appropriate risk management and our disciplined investment style. ACTIVA Mutual Funds Annual Report 3
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ACTIVA Value Fund-- Wellington Asset Management, LLP 1999 was another difficult year for value stocks. Growth stocks, especially technology stocks, continued to dominate the markets returns. Uncertainty surrounding Y2K as well as rising energy prices and gold prices caused fears of higher interest rates. Investors gravitated towards a narrow list of large cap names led by technology. While the S&P 500 returned 21.04% in 1999, only eight stocks contributed more than 50% of the return. Your fund underperformed its benchmark, the Russell 1000 Value Index, for the year ended December 31, 1999 with a return of minus 6.70% versus 7.35%. During the first half of 1999, value stocks had an advantage over growth stocks as gains in the equity markets broadened beyond technology stocks. The Value Fund was up 12.1% at the end of June 1999 versus 12.8% for the Russell 1000 Value. Towards the end of the third quarter of 1999, growth stocks once again took the lead in the market and the Fund's performance began to deteriorate relative to its benchmark. Most of the Fund's underperformance occurred in the fourth quarter, leading to the negative return for 1999. This led to the Fund replacing the sub-advisor in December, as discussed in more detail below. The bulk of the Value Fund's underperformance occurred in four sectors: Capital Goods, Consumer Cyclicals, Financial Services and Technology. Within the Capital Goods sector, underperformance was compounded by the poor performance of Lockheed Martin, whose shares lost half their value in the second half of the year due to several profit warnings issued by the company. The Value Fund, compared to its benchmark, was underweight in technology, which negatively impacted relative performance. Most of the gains in the technology sector were in high growth stocks with high P/Es multiples, too high for the Fund's value discipline. Technology stocks held in the fund included Compaq, Raytheon and Seagate, which did not participate in the huge gains of the sector. However, we believe these stocks have attractive relative valuations along with strong return potential. The Consumer Cyclical sector had strong performance in the fourth quarter, however, the Fund underperformed in this sector. Performance was negatively impacted by Dana Corporation, which was severely penalized after announcing earnings despite meeting consumer's estimates. In the Financial Services sector, the Fund's overweighting in insurance companies hurt performance. Fund holdings Aetna and Chubb had large negative returns due to potential class action lawsuits against HMOs. Allstate, another insurance holding, also had a negative return due to several large natural catastrophes posing a threat to earnings. Overweight positions in the energy and transportation sectors, which sectors lagged the market, also negatively impacted performance. The Fund outperformed its benchmark in the Communications sector, with strong fourth quarter returns from holdings AT&T and US West, Inc. These holdings were buoyed by strong sales of wireless telephone service and high speed internet connections. The Value Fund changed sub-advisers on December 30th, replacing Ark Asset Management Co., Inc. with Wellington Asset Management, LLP. This report has been prepared by Activa Asset Management, LLC. As a result of the change in sub-advisers, 95% of the portfolio's holdings were sold and replaced in the last week of December. Wellington Asset Management, LLP uses a sector-neutral style. A sector-neutral strategy keeps the Fund's portfolio sector weightings within 2% of the sector weightings in the Russell 1000 Value Index, allowing the Fund's sub-adviser to add value through stock selection. Although value stocks have been out of favor during the past few years, they tend to move in and out of favor over different market cycles. Because of their style rotation with growth stocks over long periods of time, we believe value stocks are an important part of an overall asset allocation strategy. ACTIVA Mutual Funds Annual Report 4
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ACTIVA Value Fund continued Average Annual Total Return* Period Ended December 31, 1999* -------------------------------------------------------------------------------- 1 YEAR 5 YEAR 10 YEAR ACTIVA VALUE FUND** -6.70% 15.15% 11.90% RUSSELL 1000 VALUE*** 7.35% 23.07% 15.60% S&P 500**** 21.04% 28.54% 18.20% Year-by-Year Performance AVERAGE ANNUAL RETURN OF THE ACTIVA VALUE FUND Growth of an assumed $10,000 investment in Activa Value Fund from 12/31/89 through 12/31/99: includes all fees Date RUSSELL 1000 VALUE S&P 500 ACTIVA VALUE FUND 12/89 10000 10000 10000 12/90 9191 9688 10100 12/91 11454 12640 14323 12/92 13035 13604 14576 12/93 15398 14972 16157 12/94 15091 15170 15209 12/95 20879 20863 19857 12/96 25391 25654 24459 12/97 34332 34212 31813 12/98 39698 43997 36685 12/99 42616 53254 34232 * The illustrations include recurring expenses incurred by all shareholder accounts, and all ordinary income dividends and capital gain distributions reinvested at net asset value (without sales charge). Prior to 1991 and 1998, the Fund had a maximum sales charge of 6% and 3% respectively, based upon amount of shares purchased. Performance prior to April 22, 1998 does not reflect the Fund's 12b-1 fee of 0.25% which was reduced to 0.15% on September 1, 1999. No adjustments have been made for any income taxes payable by shareholders on ordinary income dividends and capital gain distributions accepted in shares which are payable by shareholders in the tax year received. Past performance is not predictive of future performance. Returns and net asset value fluctuate and an investor's shares, when redeemed, may be worth more or less than their original investment. For additional information, see the Prospectus, Statement of Additional Information, and the Financial Highlights at the end of this report. ** Wellington Asset Management, LLP became the Fund's sub-adviser on December 30, 1999. Ark Asset Management Co., Inc. was the Fund's sub-adviser from May 1, 1995 until December 30, 1999. *** The Russell 1000 Value Index represents a composite of value stocks representative of the Fund's investment objectives and strategies which is compiled independently by the Frank Russell Company, and is not impacted by the Fund's operating expenses. **** The Standard and Poor's 500 Stock Index represents an unmanaged index generally representative of the U.S. stock market and is not impacted by the Fund's operating expenses. ACTIVA Mutual Funds Annual Report 5
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ACTIVA Growth Fund -- State Street Research & Management Company During the fourth quarter the stock market staged a powerful rally which brought the annual total return performance for the S&P 500 above 20% for the fifth year in a row. Your portfolio outperformed the S&P 500 since inception with a return of 13.8% versus 9.4%. Far and away the biggest contributor to both the quarter's and the year's return was the stellar performance of the Technology sector. The three other sectors which outperformed the index in the quarter were Basic Materials, Capital Goods and Consumer Discretionary. Your fund, compared to the S&P 500, held overweighted positions in Consumer Discretionary, Capital Goods and Technology. The Fund held underweighted positions in Health Care and Consumer Staples which underperformed the index during the quarter. There were several individual stock holdings that negatively affected performance and those will be addressed below. Technology contributed a large portion of the gain seen in the quarter due to both our overweighted position versus the S&P 500 and also due to our individual stock selection. Outstanding performers included CISCO Systems, Microsoft, EMC Corp., Sun Microsystems and Teradyne. The participation across industries in technology was broad as evidenced by the above-mentioned companies: networking, software, storage, enterprise hardware and semiconductor capital equipment. The Consumer Discretionary sector's strong showing was bolstered by the ongoing consolidation in media and entertainment as well as healthy advertising spending and a healthy environment for consumer spending. We had several winners in this category including Omnicom, CBS, America Online and Wal-Mart and also several underperformers including Best Buy and Staples. The Capital Goods (or Other category) turned in a strong return primarily due to the strength of General Electric. We also owned Tyco International that had a negative return in the fourth quarter due to the company being the subject of what we believe to be unfounded allegations of accounting irregularities. We continue to hold both our positions in General Electric and Tyco International. On the Health Care front several names, which we believe have strong fundamentals, performed well below the market including Bristol Myers, Pfizer and Guidant. We underweighted the sector consistently throughout 1999 and will continue with that posture heading into the new year. One company's stock that did particularly well in the quarter was Amgen and we continue to hold that position as well as a position in Biogen, another biotechnology company where we see opportunity for growth going forward. The Consumer Staples sector continued its record of underperformance relative to the S&P 500 for the year in the fourth quarter. Your fund's exposure to this sector had been underweight which helped performance, as did the fact that several individual stocks in the Fund's portfolio had strong upside performance in the last three months of the year. More indicative of the overall sector's performance was that of drugstore operator CVS, which negatively affected returns. Given the powerful finish for the stock market at the end of December, many stocks, particularly those in technology and related industries, are up very sharply for the quarter and the year. Valuations among the market leaders are stretched and overall stock returns for 2000 are more likely to mirror profit returns which we believe should be in the 8%-10% range. It seems unlikely that we will see any meaningful valuation or price earnings multiple expansion as long as the trend in interest rates is up and the rate increases are at the top of investors' minds. We will be monitoring market and economic developments closely and will continue to focus our efforts on investing in companies with above-average earnings growth prospects and real competitive advantages. ACTIVA Mutual Funds Annual Report 6
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ACTIVA International Fund -- Nicholas Applegate Capital Management Around the world, stocks soared in the fourth quarter of 1999. Among the factors contributing to 1999's worldwide equity market surge were stronger economies in Japan, Europe, and emerging markets, exceptional returns for technology stocks, and a heightened focus by corporate management on enhancing shareholder value. Developed non-U.S. markets benefited from improving economies and an increased focus among corporate management on enhancing shareholder value. As a result, restructuring and record levels of merger and acquisition activity characterized European markets. Japan's economic rebound catalyzed global growth, and its expectation for increased imports improved prospects for neighboring Asian emerging countries. Since inception, the Fund's portfolio advanced 42.14% versus 18.23% for its benchmark, the MSCI EAFE Index. Stock selection in Japan, France, the UK and the Netherlands boosted the portfolio's performance during this period, as did holdings in the Technology and Business Services sectors. Strong companies posting robust gains during this quarter include UK-based ARM Holdings PLC, a designer of reduced instruction set computing (RISC) microprocessors. In the Netherlands, KPNQwest, a telecommunications services company posted excellent gains. Another strong contributor was Softbank Corporation, who invests in Internet, software, finance and networking companies such as Yahoo! Inc., E-Trade Group Inc. and Softbank Commerce Corporation. Also contributing to the performance of the portfolio was an overweighted position in Japan and France relative to the benchmark. During the fourth quarter, we increased our exposure in emerging Asia, as well as Europe and Latin America. Economic recoveries, as many emerging countries moved to speed up the pace of reform and pick-up in economic growth in many parts of the world, resulted in renewed investor interest for emerging market stocks. Also, we are finding excellent opportunities on a stock-by-stock basis in the Technology sector. As in the United States, technology stocks overseas delivered impressive gains and we increased our weighting in the semiconductor/electronic component industry. Looking ahead, ongoing deregulation, privatization, stronger competition and merger and acquisition activity inspire optimism for additional gains. Applying our bottom-up approach, we continue to find exceptional companies meeting our strict investment criteria around the world. ACTIVA Mutual Funds Annual Report 7
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ACTIVA Schedule of Investments MONEY MARKET FUND 12/31/99 [Enlarge/Download Table] % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- CERTIFICATES OF DEPOSIT 17.20% 5TH 3RD BK 5.98% 1/28/00 3,500,000 3,500,114 BANC ONE CD 5.93% 10/2/00 2,500,000 2,498,726 BYRSCHE YCD 5.93% 10/2/00 1,000,000 998,683 DETCHBK YCD 6.19% 12/1/00 5,000,000 4,996,938 DRSDNR YCD 5.85% 2/2/00 2,500,000 2,500,000 BYRSCHE YCD MTHY 6.45% 12/15/00 3,000,000 2,997,569 UNION BK YANKEE 6.34% 12/4/00 2,000,000 1,998,677 UNION BK YANKEE 6.39% 12/21/00 1,500,000 1,499,306 -------------- 20,990,013 -------------- COMMERCIAL PAPER 59.00% ALPINE SEC. DCP 5.96% 2/29/00 1,500,000 1,485,348 ASPEN FDING 5.95% 1/19/00 1,000,000 997,025 ASPEN FUNDING 5.95% 1/14/00 3,000,000 2,993,554 ASSET SECUR 5.93% 1/28/00 2,000,000 1,991,105 ASSOCIATES 4.0% 1/3/00 5,000,000 4,998,889 BANK AMER 5.87% 1/24/00 2,500,000 2,500,000 BANK AMERICA 5.99% 3/13/00 1,000,000 988,020 BANK OF NY DCP 5.75% 2/22/00 2,000,000 1,983,389 BELLSOUTH FDG CP 5.68% 2/10/00 2,000,000 1,987,378 BRITISH TELE.PLC 5.85% 2/16/00 3,000,000 2,977,575 CITIBANK CAP MKT 5.88% 2/9/00 3,000,000 2,980,890 CREGEM N. AMERICA 5.88% 1/21/00 3,000,000 2,990,200 CXC INC. 5.85% 2/2/00 3,000,000 2,984,400 ENTERPRISE FDG 6.55% 1/18/00 3,000,000 2,990,721 FHLB 1.5% 1/3/00 6,667,000 6,666,444 FLEET FIN. VRN 6.24% 10/13/00 2,000,000 1,999,069 FRANCE TCOM 5.9% 2/7/00 3,500,000 3,478,776 GENERAL ELEC DCP 5.76% 2/18/00 3,000,000 2,976,960 GMAC D/C/P 5.72% 3/17/00 2,000,000 1,975,849 NAT'L AUSTRL DCP 5.77% 1/19/00 3,000,000 2,991,345 NEWPORT FUNDING 5.69% 1/20/00 1,000,000 996,996 NEWPORT FUNDING 6.01% 1/14/00 3,500,000 3,492,404 PARTHENON REC. 6.55% 1/18/00 1,000,000 996,907 REC CAP CORP 5.95% 1/26/00 1,000,000 995,868 RECEIVABLES CAP. 6.12% 1/14/00 2,500,000 2,494,475 SALOMON SMITH 6.49% 1/27/00 1,000,000 995,313 SOUTHERN CO. C/P 5.75% 2/9/00 3,000,000 2,981,313 UBS FIN. 4.25% 1/3/00 1,000,000 999,764 WINDMILL FUNDING 6.11% 1/18/00 3,500,000 3,489,894 -------------- 72,379,871 -------------- US TREASURY BILLS 4.90% U.S. T-BILL 3.0% 1/6/00 6,000,000 5,997,500 -------------- FEDERAL HOME LOAN BANK 8.60% FHLB VRN 5.92% 10/4/00 5,000,000 4,997,398 FHLB DN 1.95% 1/3/00 5,500,000 5,499,404 -------------- 10,496,802 -------------- ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 8
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ACTIVA Schedule of Investments continued MONEY MARKET FUND 12/31/99 % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- CORPORATE BONDS 7.80% AM. EXP. FLOATER 5.72% 7/12/00 2,500,000 2,499,238 KEY BANK VRN 6.38% 4/28/00 2,000,000 2,000,619 KEY CORP QTY FLT 6.31% 8/7/00 2,000,000 2,001,719 MORGAN STAN. DW 5.51% 1/19/00 3,000,000 3,000,000 -------------- 9,501,576 -------------- MEDIUM TERM NOTE 2.50% AT&T QTLY 7.77% 6/14/00 3,000,000 3,018,716 -------------- TOTAL SHORT TERM OBLIGATIONS - 100% (Cost $121,810,975) 122,384,478 ==============
ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 9
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ACTIVA Schedule of Investments INTERMEDIATE BOND FUND - 12/31/99 [Download Table] % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- BANKERS ACCEPTANCES 0.90% CANADA-GOV 6.375% 11/30/04 1,480,000 1,446,700 -------------- US TREASURY NOTES 7.30% US T-NOTES 6.25% 2/15/03 9,000,000 8,976,597 US T-NOTES 6.25% 4/30/01 2,500,000 2,502,225 -------------- 11,478,822 -------------- US TREASURY STRIPS 0.50% UST-STRIP PO 9.13% 5/15/18 2,500,000 720,500 -------------- FEDERAL HOME LOAN MORTGAGE 12.50% FHLMC GOLD 6.5% 6/1/29 6,975,650 6,583,270 FHLMC GOLD 6.00% 6/1/29 4,984,186 4,568,305 FHLMC GOLD 6.50% 6/1/29 4,974,250 4,694,449 FHLMC 6.5% 8/15/24 4,000,000 3,832,640 -------------- 19,678,664 -------------- FEDERAL NATL MORTGAGE ASSOC 27.40% FNMA D/N 5/18/00 5,000,000 4,892,100 FNMA 6.00% 5/15/08 4,500,000 4,212,765 FNMA 4.625% 10/15/01 2,500,000 2,422,425 FNMA NT 5.125% 2/13/04 2,270,000 2,134,640 FNMA 6.625% 9/15/09 5,500,000 5,348,750 FNMA CMO 6.50% 9/25/23 5,000,000 4,818,025 FNMA 6.5% 9/18/24 2,800,000 2,681,980 FNMA #252715 6.5% 9/1/29 2,493,366 2,350,771 FNMA 6% #481427 1/1/29 4,946,473 4,529,090 FNMA #481473 6.0% 2/1/29 3,478,551 3,185,031 FNMA #490080 6.5% 3/1/29 2,396,971 2,259,888 FNMA #490179 6.5% 3/1/29 2,365,746 2,230,449 FNMA #496567 6.0% 4/1/14 2,511,975 2,385,573 -------------- 43,451,487 -------------- GOVERNMENT NATL MORTGAGE ASSOC 6.00% GNMA 6.5% 470387 5/15/29 4,985,125 4,682,877 GNMA 7% #490240 9/15/29 4,946,153 4,779,220 -------------- 9,462,097 -------------- AIRLINES 0.70% DELTA 10.125% 5/15/10 925,000 1,032,531 -------------- AUTOMOTIVE 4.00% BWA 8% 10/1/19 1,810,000 1,760,225 DAIMLER 7.20% 9/1/09 2,000,000 1,967,500 DANA CORP 7% 3/15/28 1,743,000 1,522,946 DELPHI 7.125% 5/1/29 1,250,000 1,096,875 -------------- 6,347,546 -------------- ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 10
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[Download Table] ACTIVA Schedule of Investments continued INTERMEDIATE BOND FUND - 12/31/99 % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- BANKING 7.60% BSCH ISS 7.625% 11/3/09 1,000,000 991,250 BANK ONE 6.00% 2/17/09 1,000,000 891,250 BAC 6.25% 4/1/08 2,000,000 1,862,500 CHASE 6.66% 1/15/07 5,000,000 4,918,125 CHASE 7.125% 6/15/09 1,400,000 1,366,750 FIRST UNION 6.4% 4/1/08 1,400,000 1,288,000 NATL WEST 7.375% 10/1/09 650,000 636,188 -------------- 11,954,063 -------------- BEVERAGES 0.60% J SEAGRAM 7.6% 12/15/28 1,000,000 941,250 -------------- CHEMICALS 0.90% DUPONT 6.875% 10/15/09 1,500,000 1,460,625 -------------- ELECTRIC UTILITY 7.30% PP&L TRANS 6.60% 3/25/05 4,000,000 3,975,300 PECO 1999-A 5.80% 3/1/07 5,500,000 5,208,500 S.CAR E&G 6.125% 3/1/09 1,500,000 1,366,875 WPS RESOURCES 7% 11/1/09 1,000,000 963,750 -------------- 11,514,425 -------------- ENTERTAINMENT 0.70% DISNEY 5.8% 10/27/08 200,000 179,750 VIACOM 7.75% 6/1/05 950,000 958,313 -------------- 1,138,063 -------------- FINANCIAL SERVICES 17.30% ASSOCIATES CORP 4/20/04 3,500,000 3,320,625 CCIMT 6.65% 11/15/06 4,450,000 4,366,563 FINOVA 7.25% 11/8/04 560,000 553,700 FNCC 6.15% 9/15/04 1,250,000 1,224,950 FORD 6.4% 10/15/02 5,250,000 5,222,569 GMAC NT 5.75% 11/10/03 1,500,000 1,426,875 HALT 6.65% 7/15/05 5,000,000 4,964,650 SCAMT 6.35% 2/16/07 5,000,000 4,929,100 US WEST 6.375% 7/15/08 1,400,000 1,282,750 -------------- 27,291,782 -------------- FOOD SERVICE 2.00% KROGER 8% 9/15/29 1,650,000 1,608,750 SAFEWAY 7.5% 9/15/09 1,550,000 1,528,688 -------------- 3,137,438 -------------- GAS UTILITY 0.70% SOUTH UNION 8.25% 11/15/29 1,025,000 1,027,563 -------------- ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 11
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[Enlarge/Download Table] ACTIVA Schedule of Investments continued INTERMEDIATE BOND FUND - 12/31/99 % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- OIL & EXPLOR PROD & SER 2.00% CHEVRON 6.625% 10/1/04 2,000,000 1,972,500 CONOCO INC. 6.95% 4/15/29 1,250,000 1,132,813 -------------- 3,105,313 -------------- TELECOMMUNICATIONS 1.60% MCI CORP. 6.50% 4/15/10 1,500,000 1,395,000 SPRINT CAP 6.875% 11/15/28 1,250,000 1,114,063 -------------- 2,509,063 -------------- TOTAL FIXED INCOME - 100% (Cost $159,263,177) 157,697,931 ============== ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 12
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ACTIVA Schedule of Investments VALUE FUND - 12/31/99 [Download Table] % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- AEROSPACE 2.10% NORTHROP GRUMMAN CORP. 5,300 286,531 UNITED TECHNOLOGIES 34,000 2,210,000 -------------- 2,496,531 -------------- AIRCRAFT ENGINES & ENGINE PARTS 1.10% HONEYWELL INTERNATIONAL 23,400 1,349,888 -------------- AIRLINES 0.90% AMR CORP/DEL 1,800 120,600 MESABA HOLDINGS, INC. *31,500 360,281 SKYWEST INC. 20,100 562,800 -------------- 1,043,681 -------------- AUTOMOTIVE 2.10% DELPHI AUTOMOTIVE SYSTEMS 35,300 555,975 FORD MOTOR CO DEL 20,500 1,095,469 GENERAL MOTORS CORP. 11,200 814,100 TRW INC. 1,900 98,681 -------------- 2,564,225 -------------- AUTOMOTIVE PARTS & EQUIPMENT 0.60% FEDERAL- MOGUL CORP. 34,100 686,263 -------------- BANKING 12.00% BANK ONE CORP. 93,100 2,985,019 CITIGROUP INC. 158,200 8,789,977 MERCANTILE BANKSHARES 14,300 456,706 PACIFIC CENTURY FINANCIAL 8,500 158,844 PEOPLE'S BANK 30,500 644,313 US BANCORP 17,600 419,100 UNIONBANCAL CORPORATION 40,900 1,612,994 WACHOVIA CORP. 2,200 149,600 -------------- 15,216,553 -------------- BEVERAGES - DOMESTIC 0.90% PEPSICO INC. 29,600 1,043,400 -------------- BROADCASTING 3.10% AT&T CORP.- LIBERTY MEDIA *40,300 2,287,025 CLEAR CHANNEL COMM. 6,200 553,350 SCRIPPS CO. CL-A 20,400 914,175 -------------- 3,754,550 -------------- BUSINESS SERVICES 1.60% FIRST DATA CORP. 38,300 1,888,669 -------------- ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 13
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[Download Table] ACTIVA Schedule of Investments continued VALUE FUND - 12/31/99 % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- CHEMICALS 2.10% AIR PRODUCTS & CHEMICALS 18,800 630,975 CABOT CORP. 5,100 103,913 DU PONT E I DE NEMOURS 25,400 1,673,225 GREAT LAKES CHEM CORP. 3,700 141,294 -------------- 2,549,407 -------------- COMMUNICATIONS EQUIPMENT 1.30% AMERICAN TOWER CORP. 49,200 1,503,675 GENERAL CABLE CORP. 4,900 37,056 -------------- 1,540,731 -------------- COMMERCIAL SERVICES 0.20% CONVERGYS CORP. *9,200 282,900 -------------- COMPUTERS 1.80% ADAPTEC, INC. *16,100 802,988 COMPAQ COMPUTER CORP. 25,700 695,506 QUANTUM CORPORATION *12,000 181,500 UNISYS CORP. *14,300 456,706 -------------- 2,136,700 -------------- CONTAINERS & PACKAGING 0.70% SMURFIT-STONE CONTAINER *36,800 901,600 -------------- DIVERSIFIED 0.30% SPIEKER PROPERTIES 10,200 371,663 -------------- ELECTRIC UTILITY 4.10% CALPINE CORP. *10,000 640,000 DUKE ENERGY CORP. 10,700 536,338 EDISON INTERNATIONAL 9,000 235,688 MONTANA POWER CO. 14,700 530,119 PECO ENERGY CO. 17,200 597,700 PINNACLE WEST CAP 39,800 1,216,388 UNICOM CORPORATION 34,900 1,169,150 -------------- 4,925,383 -------------- ELECTRICAL & ELECTRONIC 0.10% ENDESA 4,300 86,806 -------------- ELECTRONICS 3.20% ANALOG DEVICES INC. *5,200 483,600 MOTOROLA, INC. 18,600 2,738,850 3COM CORP. *15,000 705,000 -------------- 3,927,450 -------------- ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 14
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[Download Table] ACTIVA Schedule of Investments continued VALUE FUND - 12/31/99 % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- ENERGY 0.20% DQE INC. 5,600 193,900 SUNCOR ENERGY INC. 800 33,400 -------------- 227,300 -------------- ENTERTAINMENT 0.20% VIACOM INC. - CLASS B *3,000 181,313 -------------- FINANCIAL SERVICES 0.70% EDWARDS (A.G.), INC. 3,100 99,394 FANNIE MAE 12,300 767,981 -------------- 867,375 -------------- FOOD & BEVERAGE 0.10% SARA LEE COMMON STOCK 5,500 121,344 -------------- FOOD PRODUCTS 0.10% MCCORMICK & CO., INC. 4,900 145,775 -------------- GAS UTILITY 0.40% COLUMBIA GAS SYSTEM 7,300 461,725 -------------- HOTELS & LODGING 0.20% STARWOOD HOTELS & RESORTS 8,100 190,350 -------------- INDUSTRIAL GOODS & SERVICES 1.40% CLOROX COMPANY 20,000 1,007,500 WERNER ENTERPRISES, INC. 44,800 630,000 -------------- 1,637,500 -------------- INFORMATIONAL SERVICES 0.10% AFFILIATED COMPUTER SVCS *1,800 82,800 -------------- INSURANCE 5.00% XL CAPITAL LTD. CLASS-A 2,000 103,750 AMER INT'L GROUP 31,200 3,373,500 CIGNA CORP. 19,900 1,603,194 CONSECO 29,000 518,375 MARSH MCLENNAN COS COM 4,600 440,163 -------------- 6,038,982 -------------- INTERNET CONTENT 0.60% REDBACK NETWORKS, INC. *4,000 710,000 -------------- INVESTMENT COMPANY 0.30% LEGG MASON, INC. 8,400 304,500 -------------- ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 15
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[Enlarge/Download Table] ACTIVA Schedule of Investments continued VALUE FUND - 12/31/99 % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- MACHINERY & EQUIPMENT 1.10% CATERPILLAR, INC. 6,600 310,613 INGERSOLL - RAND CO. 17,900 985,619 -------------- 1,296,232 -------------- MANUFACTURING-CAPITAL GOODS 1.10% EATON CORP. 17,900 1,299,988 -------------- MANUFACTURING-CONSUMER GOODS 2.10% MATTEL INC. 96,500 1,266,563 MINN. MINING & MANUFACTURING 13,000 1,272,375 -------------- 2,538,938 -------------- MANUFACTURING - MISCELLANEOUS 1.60% EASTMAN KODAK CO. 10,400 689,000 KIMBERLY-CLARK CORP. 18,400 1,200,600 -------------- 1,889,600 -------------- MEDICAL EQUIPMENT & SUPPLIES 1.00% BAXTER INTERNATIONAL 18,500 1,162,031 -------------- MEDICAL SERVICES 0.50% COLUMBIA HCA HEALTHCARE 20,100 589,181 -------------- METALS & MINING 1.80% ALCOA INC. 25,600 2,124,800 -------------- OFFICE/BUSINESS EQUIP & SUPPLIES 1.90% DANKA BUSINESS SYSTEMS *27,000 342,563 I B M 18,200 1,965,600 -------------- 2,308,163 -------------- OIL & GAS EQUIPMENT/SERVICES 0.30% SANTA FE INTERNATIONAL 1,500 38,813 ENRON CORP. 6,000 266,250 -------------- 305,063 -------------- OIL & GAS EXPLOR PROD & SER 10.20% TRANSOCEAN OFFSHR *49,500 1,630,406 CHEVRON CORP. 25,800 2,234,925 CONOCO INC. 152,600 3,795,925 QUAKER STATE CO. 216,600 2,206,613 REPSOL S.A. ADR 106,900 2,485,425 -------------- 12,353,294 ============== ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 16
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[Enlarge/Download Table] ACTIVA Schedule of Investments continued VALUE FUND - 12/31/99 % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- OIL & GAS TRANSMISSION 1.00% EL PASO ENERY CORP. 32,000 1,242,000 -------------- PAPER PRODUCTS 1.80% BOWATER, INC. 2,500 135,781 TEMPLE - INLAND INC. 9,900 652,781 WEYERHAUESER 18,600 1,335,713 -------------- 2,124,275 -------------- PHARMACEUTICALS 2.80% ABBOTT LABS 27,400 994,963 AMERICAN HOME PRODUCTS 24,400 962,275 PHARMACIA & UPJOHN 32,100 1,444,500 -------------- 3,401,738 -------------- PRINTING & PUBLISHING 1.00% GANNETT COMPANY, INC. 15,100 1,231,594 -------------- PUBLISHING 0.10% A.H. BELO CORPORATION 3,500 66,719 -------------- RAILROADS 0.00% CANADIAN NATIONAL RAILWAY 1,900 50,350 -------------- RESTAURANTS 1.20% MCDONALD'S CORP. 36,200 1,459,313 -------------- RETAIL STORES 2.20% DAYTON-HUDSON CORP. 31,500 2,313,281 INTIMATE BRANDS INC. 8,000 345,000 -------------- 2,658,281 -------------- TOBACCO 0.70% PHILIP MORRIS COS., INC. 38,200 885,763 -------------- TELECOMMUNICATIONS 15.50% AT&T CORP. 123,100 6,247,325 ASSOCIATES FIRST CAPITAL 54,400 1,492,600 MCI WORLDCOM INC. *53,850 2,857,416 SBC COMMUNICATIONS INC. 82,800 4,036,500 SPRINT CORP. 44,500 2,995,406 SPRINT CORP. PCS *14,300 1,465,750 -------------- 19,094,997 -------------- ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 17
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[Enlarge/Download Table] ACTIVA Schedule of Investments continued VALUE FUND - 12/31/99 % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- TELECOMMUNICATIONS-SRVS & EQUIP 2.50% ECHOSTAR COMMUNICATIONS *30,500 2,973,750 -------------- UTILITIES - TELECOMMUNICATIONS 1.90% BELL ATLANTIC 36,400 2,240,875 -------------- WASTE MANAGEMENT 0.20% REPUBLIC SERVICES, INC. *14,000 201,250 -------------- TOTAL COMMON STOCK - 100% (Cost $120,425,644) 121,233,559 ============== * Non-dividend producing as of December 31, 1999 ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 18
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ACTIVA Schedule of Investments GROWTH FUND - 12/31/99 [Enlarge/Download Table] % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- COMMERCIAL PAPER - 2.70% FINANCIAL SERVICES 2.70% AMER EXP 3.25% 01/06/00 900,000 900,000 -------------- TOTAL COMMERCIAL PAPER (Cost $900,000) 900,000 -------------- COMMON STOCK - 97.30% AIRCRAFT ENGINES & ENGINE PARTS 2.20% HONEYWELL INTERNATIONAL 12,900 744,169 -------------- BANKING 5.10% CHASE MANHATTAN CORP. 8,600 668,113 CITIGROUP INC. 19,000 1,055,688 -------------- 1,723,801 -------------- BEVERAGES - DOMESTIC 1.10% COCA-COLA CO. 5,600 326,200 COCA-COLA ENTERPRISES 1,600 32,200 -------------- 358,400 -------------- BREWERY 1.30% ANHEUSER-BUSCH 6,200 439,425 -------------- BROADCASTING 3.40% CBS CORPORATION *17,800 1,138,088 -------------- BUSINESS SERVICES 1.00% FIRST DATA CORP. 6,500 320,531 -------------- CHEMICALS 1.80% DOW CHEMICAL COMPANY 4,600 614,675 -------------- COMPUTER SOFTWARE 7.90% CITRIX SYSTEMS INC. *1,300 159,900 ELECTRONIC DATA SERVICES 10,400 696,150 MICROSOFT *13,500 1,576,125 ORACLE CORP. *2,000 224,125 -------------- 2,656,300 -------------- COMPUTERS 10.10% CISCO SYSTEMS *14,900 1,596,155 DELL COMPUTER CORP. *9,300 474,300 INTEL CORPORATION 8,500 699,656 SUN MICROSYSTEMS *5,200 402,675 VERITAS SOFTWARE *1,900 271,938 -------------- 3,444,724 -------------- ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 19
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[Download Table] ACTIVA Schedule of Investments continued GROWTH FUND - 12/31/99 % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- CONSUMER GOODS & SERVICES 3.50% BLACK & DECKER 7,700 402,325 COLGATE-PALMOLIVE CO. 14,000 910,000 -------------- 1,312,325 -------------- DRUGS 1.40% BIOGEN, INC. *5,400 456,300 -------------- ELECTRICAL & ELECTRONIC 2.60% TERADYNE INC. *13,300 877,800 -------------- ELECTRICAL EQUIPMENT 4.00% GENERAL ELECTRIC CO. 8,700 1,346,325 -------------- ELECTRONICS 6.60% EMC CORP/MASS 8,500 928,625 SOLECTRON CORP. *4,700 447,088 TEXAS INSTRUMENTS INC. 8,500 823,438 -------------- 2,199,151 -------------- ENTERTAINMENT 2.90% DISNEY WALT COMPANY 10,300 301,275 USA NETWORKS INC. *5,600 309,400 VIACOM INC - CLASS B *5,700 344,494 -------------- 955,169 -------------- FINANCIAL SERVICES 1.10% MORGAN ST DEAN WITTER 2,500 356,875 -------------- FOOD PRODUCTS 0.90% PROCTER & GAMBLE CO. 2,800 306,775 -------------- INFORMATIONAL SERVICES 1.00% AMERICA ONLINE, INC. 4,300 324,381 -------------- INSURANCE 4.30% ACE LIMITED 18,900 315,394 AMER INT'L. GROUP 7,900 854,188 MARSH MCLENNAN COS COM 3,000 287,063 -------------- 1,456,645 -------------- LEISURE & TOURISM 0.90% HARLEY-DAVIDSON INC. 5,400 345,938 -------------- MANUFACTURING-CAPITAL GOODS 0.80% DANAHER CORP. 5,600 270,200 -------------- ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 20
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[Enlarge/Download Table] ACTIVA Schedule of Investments continued GROWTH FUND - 12/31/99 % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- MEDICAL EQUIPMENT & SUPPLIES 4.90% BAXTER INTERNATIONAL 5,900 370,594 GUIDANT CORP COMMON STOCK *6,900 324,300 TYCO INTERNATIONAL 24,300 944,663 -------------- 1,639,557 -------------- MERCHANDISING 1.90% OMNICOM GROUP COM 6,200 620,000 -------------- OIL & GAS EQUIPMENT/SERVICES 1.30% HALLIBURTON CO. 10,800 434,700 -------------- OIL & GAS EXPLOR PROD & SER 5.00% CONOCO INC. 24,800 616,900 EXXON MOBIL CORP. COM 3,900 314,194 TOTAL FINA SA - SPON ADR 13,000 900,250 -------------- 1,831,344 -------------- PHARMACEUTICALS 5.20% AMGEN INC. 8,400 504,525 BRISTOL MYERS SQUIBB CO. 8,200 526,338 PFIZER INC. 10,900 353,569 WARNER LAMBERT CO. 4,400 360,525 -------------- 1,744,957 -------------- RETAIL STORES 6.10% BEST BUY COMPANY, INC. *8,900 446,669 CVS CORP. 11,000 439,313 HOME DEPOT INC. 1,500 102,844 STAPLES, INC. *21,000 435,750 WAL-MART STORES, INC. 8,800 608,300 -------------- 2,032,876 -------------- TELECOMMUNICATIONS 7.40% MCI WORLDCOM INC. *16,050 851,653 NOKIA CORP ADR 6,900 1,311,000 VOICESTREAM WIRELESS CORP. *3,600 512,325 -------------- 2,674,978 -------------- TELECOMMUNICATIONS-SRVS & EQUIP 1.80% LUCENT TECHNOLGIES 4,400 329,175 NORTEL NETWORKS CORP. 2,600 262,600 -------------- 591,775 -------------- TOTAL COMMON STOCK (Cost $28,605,806) 33,218,184 -------------- -------------- TOTAL INVESTMENTS - 100% (Cost $29,505,806) 34,118,184 ============== *Non-dividend producing as of December 31, 1999 ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 21
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ACTIVA Schedule of Investments INTERNATIONAL FUND - 12/31/99 [Download Table] % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- ADVERTISING 1.50% SAATCHI & SAATCHI PLC 40,800 245,463 ASATSU, INC. 5,200 350,596 -------------- 596,059 -------------- AEROSPACE 0.20% BPS BRITISH AEROSPACE PLC 10,291 68,146 -------------- AUTOMOTIVE 0.90% BAYERISCHE MOTOREN WERKE 11,700 357,293 -------------- BANKING 3.00% DEM BAYER HYPO VEREINS 4,700 321,162 ESP BANCO SANTANDER 30,000 339,847 FFR CREDIT LYONNAIS 6,100 279,114 DEM DEUTSCHE BANK AG-REG 3,200 270,426 -------------- 1,210,549 -------------- BANKING & FINANCIAL SERVICES 0.60% YEN - DAI-ICHI BANK 18,000 167,970 SAKURA BANK LTD. 15,000 86,770 -------------- 254,740 -------------- BROADCASTING 3.60% ADR GRUPO TELEVISA SA 1,800 122,850 FFR TV FRANCAISE 1,500 786,123 ITL MEDIA SET 17,000 264,541 EM.TV & MERCHANDISING AG 4,200 277,260 -------------- 1,450,774 -------------- BUILDING PRODUCTS 0.50% BPS HANSON PLC 22,100 185,250 -------------- BUSINESS SERVICES 0.70% FFR VIVENDI 3,200 289,132 -------------- CHEMICALS 0.20% HKD YIZHENG CHEMICAL 342,000 95,680 -------------- COMMERCIAL SERVICES 0.60% FFR BOUYGUES 400 254,381 -------------- COMPUTER SOFTWARE 2.50% BPS - EIDOS PLC 3,400 299,278 SAP AG 500 305,127 INTERSHOP COMMUNICATIONS 900 257,607 YEN - FUJI SOFT ABC CORP. 1,700 132,890 -------------- 994,902 -------------- ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 22
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[Download Table] ACTIVA Schedule of Investments continued INTERNATIONAL FUND - 12/31/99 % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- COMPUTERS 4.70% ASM LITHOGRAPHY - ADR *6,000 682,500 CMG PLC 4,400 325,901 EQUANT NV-NY REG. SHRS *1,600 179,200 NLG EQUANT N.V. 3,800 431,622 YEN - FUJITSU LTD. 5,800 264,100 -------------- 1,883,323 -------------- DIVERSIFIED 2.90% BILLITON PLC 62,800 367,170 BPS INVENSYS PLC 71,700 390,255 YEN - RYOHIN KEIKAKU CO. 2,100 420,862 -------------- 1,178,287 -------------- ELECTRICAL & ELECTRONIC 2.80% BPS MARCONIN PLC 24,000 424,060 YEN HITACHI 12,000 192,300 OMRON CORP. 7,000 161,081 TAIWAN SEMICONDUCTOR-ADR *7,600 342,000 -------------- 1,119,441 -------------- ELECTRICAL EQUIPMENT 1.20% KEYENCE CORP. 1,200 486,613 -------------- ELECTRONICS 16.60% BPS ARM HOLDINGS 15,000 1,002,973 SAMSUNG ELEC. GDR - 144A 1,900 232,275 ROYAL PHILIPS ELECTRNICS 4,000 540,000 EPCOS AG 4,200 313,240 SGD CHARTERED SEMI 50,000 273,216 FANUC, LTD. 6,100 775,464 YEN KYOCERA CORPORATION 3,100 802,716 MURATA MANUFACTURING CO. 4,000 938,050 YEN SONY CORP. 3,200 947,430 YEN TOKYO ELECTRON 2,000 273,598 STMICROELECTRONICS NV-NY 4,000 605,750 -------------- 6,704,712 -------------- ENERGY 1.00% BPS SHELL TRNSPORT/TRADNG 49,400 410,299 -------------- FINANCIAL SERVICES 2.80% FORTIS (B) 9,400 339,351 YEN NOMURA SECURITIES 21,000 378,591 ADR ORIX CORP. 3,700 419,719 -------------- 1,137,661 -------------- ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 23
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[Download Table] ACTIVA Schedule of Investments continued INTERNATIONAL FUND - 12/31/99 % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- FOREST PRODUCTS 0.50% STORA ENSO OYJ R SHARES 11,500 200,628 -------------- HEALTH CARE 0.90% FFR RHODIA 15,800 357,335 -------------- INSURANCE 2.50% FFR AXA 2,500 348,716 SKANDIA FORSAKRINGS AB 10,900 329,735 AEGON NV 3,500 338,285 -------------- 1,016,736 -------------- LEISURE TIME 0.40% YEN ROUND ONE CORP. 11 148,329 -------------- MACHINERY & EQUIPMENT 2.70% DEM MANNESMANN AG 3,600 868,968 THK CO. LTD. 5,400 217,921 -------------- 1,086,889 -------------- MANUFACTURING - MISCELLANEOUS 1.20% FLEXTRONICS *6,000 276,000 DEM THYSSEN KRUPP AG 6,200 189,022 -------------- 465,022 -------------- MEDICAL EQUIPMENT & SUPPLIES 2.50% BPS SMITH & NEPHEW 63,000 211,643 BIOVAIL CORP INT'L. *4,100 384,375 FRESENIUS MEDICAL CARE AG 4,600 393,606 -------------- 989,624 -------------- METAL-ALUMINUM 0.90% PECHINEY SA 5,000 357,535 -------------- METALS & MINING 0.50% CAD FALCONBRIDGE LTD. 10,100 179,810 -------------- OIL & GAS EQUIPMENT/SERVICES 0.90% SCHLUMBERGER LTD. ADR 6,600 371,250 -------------- OIL & GAS EXPLOR PROD & SERVICES 2.20% TRANSOCEAN SEDCO FOREX 1,278 43,045 ANDERSON EXPLORATION LTD. *15,000 178,547 ITL ENTE NAZ IDROC 24,700 135,921 FFR TOTAL S.A. 'B' 2,748 366,968 PRECISION DRILLING CORP. *7,000 179,813 -------------- 904,294 -------------- ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 24
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[Download Table] ACTIVA Schedule of Investments continued INTERNATIONAL FUND - 12/31/99 % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- PAPER PRODUCTS 0.30% ARACRUZ CELULOSE S.A. 3,800 99,750 -------------- PETROLEUM-RETAIL 0.60% PETROLEO BRASILEIRO - ADR 9,600 246,221 -------------- PHARMACEUTICALS 0.40% SHIRE PHARMACEUTICALS *5,000 145,625 -------------- RETAIL STORES - GROCERY 2.70% FFR CARREFOUR SA 2,400 442,890 YEN - SEVEN ELEVEN JAPAN 4,000 633,184 -------------- 1,076,074 -------------- STEEL 1.20% CORUS GROUP PLC 178,200 464,814 -------------- TRANSPORTATION & SHIPPING 2.20% TNT POST GROUP NV 12,000 344,080 CHINA SHIPPING DEV. CO. 540,000 106,967 YAMATO TRANSPORT CO., LTD. 11,000 425,640 -------------- 876,687 -------------- TELECOMMUNICATIONS 20.20% BPS BRIT TELECOM 10,300 249,533 COLT TELECOM GROUP PLC 5,900 304,454 BPS VODAFONE 34,900 172,060 CHINA TELECOM - ADR *2,000 257,125 USD GLOBAL TELESYSTEMS 13,600 470,900 ITL TELECOM ITALIA 41,000 458,259 KOREA TELECOM CORP. 4,200 313,950 DEM DEUTSCHE TELEKOM 6,000 427,530 EUR - SONERA GROUP PLC 7,200 493,806 MAGYAR TAVKOZLESI RT, ADR 5,400 194,400 DAK TELE DANMANK 'B' 5,000 371,858 NTT DATA CORPORATION 28 642,955 YEN NTT MOBILE COMM. 18 691,225 NTL INCORPORATED *1,700 212,075 YEN HIKARI TSUSHIN, INC. 100 200,313 KDD CORP.- TOKYO SHRS. 4,100 567,286 NOKIA CORP.- ADR 4,800 912,000 YEN NIPPON TELEGRAPH TELE 35 598,495 OKI ELECTRIC INDUSTRY CO. 28,000 164,706 PARTNER COMM. CO. - ADR *3,600 93,150 TELE NORTE LESTE - ADR 4,500 114,750 TELEFONOS DE MEXICO 3,500 393,750 -------------- 8,304,580 -------------- ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 25
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[Enlarge/Download Table] ACTIVA Schedule of Investments continued INTERNATIONAL FUND - 12/31/99 % OF SHARES OR MARKET SECURITY DESCRIPTION INVESTMENTS PAR VALUE VALUE ------------ ----------- -------------- TELECOMMUNICATIONS-SERVICES & EQUIPMENT 7.60% THUS PLC 22,400 140,372 ERICSSON TEL-SP ADR 14,200 932,763 KONINKLIJKE KPN NV 4,300 419,941 UNITED PAN-EUROPE COMM. 1,900 243,194 KPNQWEST NV 3,600 239,828 NORTEL NETWORKS CORP. 6,000 606,000 MATSUSHITA COMM. IND. 1,800 474,888 -------------- 3,056,986 -------------- WHOLESALE DISTRIBUTION 3.30% YEN - SOFTBANK CORP. 1,400 1,337,893 -------------- TOTAL COMMON STOCK - 100% (Cost $27,677,077) 40,363,324 ============== * Non-dividend producing as of December 31, 1999 ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 26
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ACTIVA Statement of Assets and Liabilities [Enlarge/Download Table] MONEY MARKET INTERMEDIATE INTERNATIONAL As of December 31, 1999 FUND BOND FUND VALUE FUND GROWTH FUND FUND ------------- ------------- ------------- ------------- ------------- ASSETS Investments at value $122,384,478 $157,697,931 $121,233,559 $34,118,184 $40,363,324 Cash 1,077 3,059,828 164,087,156 29,695 994,219 Receivables: Investments sold -- -- -- 69,469 300,030 Investment income 397,195 1,595,307 473,729 13,408 10,836 Other assets -- -- 107,288 -- 10 Foreign currency holdings -- -- -- -- 54 ------------- ------------- ------------- ------------- ------------- Total Assets 122,782,750 162,353,066 285,901,732 34,230,756 41,668,473 ------------- ------------- ------------- ------------- ------------- LIABILITIES Payables: Investments purchased -- -- 106,245,261 655,355 206,357 Income payable 566,380 -- -- -- -- Advisory fees 103,802 141,053 289,819 52,406 71,559 Transfer agent fees 264 41 63,471 198 100 12b-1 fees -- 61,393 72,211 11,367 12,628 Service fees 44,487 61,393 72,461 11,367 12,628 Accrued expenses 9,100 10,600 17,070 5,650 6,025 ------------- ------------- ------------- ------------- ------------- Total Liabilities 724,033 274,480 106,760,293 736,343 309,297 ------------- ------------- ------------- ------------- ------------- NET ASSETS $122,058,717 $162,078,586 $179,141,439 $33,494,413 $41,359,176 ============= ============= ============= ============= ============= SHARES OUTSTANDING 122,060,187 16,418,415 27,085,682 2,941,725 2,911,935 ============= ============= ============= ============= ============= NET ASSET VALUE PER SHARE $1.00 $9.87 $11.39 $14.20 Class A based on net assets of $178,437,477 and 26,978,952 shares outstanding $6.61 Class R based on net assets of $703,962 and 106,730 shares outstanding $6.60 ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 27
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ACTIVA Statement of Operations For the year or period ended December 31, 1999 [Enlarge/Download Table] MONEY MARKET INTERMEDIATE INTERNATIONAL FUND** BOND FUND* VALUE FUND GROWTH FUND* FUND* ------------- ------------- ------------- ------------- ------------ INVESTMENT INCOME Interest $2,481,410 $3,528,866 $337,360 $21,388 $47,710 Dividends -- -- 4,131,443 71,774 24,054 Miscellaneous 251 9,774 5,698 291 300 ------------- ------------- ------------- ------------- ------------- Total Investment Income 2,481,661 3,538,640 4,474,501 93,453 72,064 ------------- ------------- ------------- ------------- ------------- EXPENSES Advisory fees 156,807 188,433 1,062,092 69,526 92,574 12b-1 fees -- 82,010 428,188 15,073 16,337 Service fees 67,204 82,010 97,811 15,073 16,337 Shareholder report 628 633 73,048 633 633 Fund accounting fees 16,183 19,044 48,901 12,649 13,600 Audit fees 1,623 1,639 26,798 1,639 1,639 Custodian fees 4,914 6,480 35,388 2,152 2,310 Insurance 1,337 2,200 12,102 393 391 Legal fees 5,586 5,593 67,270 5,593 5,593 Organization expense 21,391 21,391 30,692 21,391 21,391 Registration fees 109 116 25,011 116 116 Transfer agent fees 312 46 256,331 203 105 Transfer agent fees - Class R -- -- 1,046 -- -- ------------- ------------- ------------- ------------- ------------ Total Expenses 276,094 409,595 2,164,678 144,441 171,026 Fees paid indirectly -- -- (18,150) -- -- ------------- ------------- ------------- ------------- ------------ Net Expenses 276,094 409,595 2,146,528 144,441 171,026 ------------- ------------- ------------- ------------- ------------ Net Investment Income (Loss) 2,205,567 3,129,045 2,327,973 (50,988) (98,962) ------------- ------------- ------------- ------------- ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on security transactions (1,470) (520,543) (16,305,655) (507,647) (422,122) Net realized gain (loss) on foreign currency transactions -- -- -- -- 48,032 Changes in net unrealized appreciation or depreciation of investments and foreign currency -- (1,565,246) (1,651,637) 4,612,378 12,686,197 ------------- ------------- ------------- ------------- ------------ Net Gain (Loss) on Investments (1,470) (2,085,789) (17,957,292) 4,104,731 12,312,107 ------------- ------------- ------------- ------------- ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $2,204,097 $1,043,256 ($15,629,319) $4,053,743 $12,213,145 ============= ============= ============= ============= ============ * Period from August 30, 1999 (inception) to December 31, 1999 ** Period from August 19, 1999 (inception) to December 31, 1999 ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 28
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ACTIVA Statement of Changes in Net Assets [Enlarge/Download Table] MONEY MARKET INTERMEDIATE INTERNATIONAL FUND** BOND FUND* VALUE FUND GROWTH FUND* FUND* For the year or period ended December 31, 1999 1999 1999 1998 1999 1999 ----------- ----------- -------------------------- ----------- ----------- NET ASSETS FROM OPERATIONS Net investment income $2,205,567 $3,129,045 $2,327,973 $1,665,189 ($50,988) ($98,962) Net realized gain (loss) on investments (1,470) (520,543) (16,305,655) 25,406,792 (507,647) (374,090) Net increase (decrease) in unrealized appreciation -- (1,565,246) (1,651,637) (10,357,465) 4,612,378 12,686,197 ----------- ----------- ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations 2,204,097 1,043,256 (15,629,319) 16,714,516 4,053,743 12,213,145 DISTRIBUTIONS TO SHAREHOLDERS Net investment income: Class A (2,205,567) (3,135,031) (2,385,633) (1,662,878) -- -- Class R -- -- (9,561) (1,625) -- -- Net realized gain from investment transactions: Class A -- -- -- (25,670,393) -- -- Class R -- -- -- (19,517) -- -- ----------- ----------- ----------- ----------- ----------- ----------- Total distributions to shareholders (2,205,567) (3,135,031) (2,395,194) (27,354,413) -- -- CAPITAL SHARE TRANSACTIONS Net proceeds from sale of shares: Class A 385,892,878 161,036,335 43,711,117 65,648,672 29,440,970 29,159,031 Class R -- -- 761,794 135,152 -- -- Net asset value of shares issued to shareholders in reinvestment of investment income and realized gain from security transactions: Class A 1,640,409 3,135,026 2,333,242 25,976,297 -- -- Class R -- -- 9,566 21,142 -- -- Payment for shares redeemed: Class A (265,473,100) (1,000) (29,493,812) (40,349,536) (300) (13,000) Class R -- -- (111,360) -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- Net increase in net assets derived from capital share transactions 122,060,187 164,170,361 17,210,547 51,431,727 29,440,670 29,146,031 ----------- ----------- ----------- ----------- ----------- ----------- Net Increase (Decrease) in Net Assets 122,058,717 162,078,586 (813,966) 40,791,830 33,494,413 41,359,176 Net Assets, beginning of year or period -- -- 179,955,405 139,163,575 -- -- ----------- ----------- ----------- ----------- ----------- ----------- Net Assets, end of year or period $122,058,717 $162,078,586 $179,141,439 $179,955,405 $33,494,413 $41,359,176 =========== =========== =========== =========== =========== =========== Net Assets Consist of: Capital $122,060,187 $164,170,361 $195,278,066 $178,067,593 $29,440,670 $29,146,031 Undistributed net investment income (loss) -- -- -- 6,548 (50,988) (98,962) Return of capital -- (5,986) (60,670) -- -- -- Undistributed net realized loss from investments (1,470) (520,543) (16,883,872) (578,288) (507,647) (374,090) Unrealized appreciation (depreciation) of investments and foreign currency -- (1,565,246) 807,915 2,459,552 4,612,378 12,686,197 ----------- ----------- ----------- ----------- ----------- ----------- $122,058,717 $162,078,586 $179,141,439 $179,955,405 $33,494,413 $41,359,176 TRANSACTIONS IN FUND SHARES Shares sold Class A 385,892,878 16,103,631 5,644,826 8,659,484 2,941,753 2,912,903 Class R -- -- 101,720 15,908 -- -- Reinvested distributions -- -- -- -- -- -- Class A 1,640,409 314,884 352,454 3,684,581 -- -- Class R -- -- 1,449 3,008 -- -- Shares redeemed Class A (265,473,100) (100) (4,054,442) (5,307,166) (28) (969) Class R -- -- (15,356) -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- Net increase in fund shares 122,060,187 16,418,415 2,030,651 7,055,815 2,941,725 2,911,934 Shares outstanding, beginning of year or period -- -- 25,055,031 17,999,216 -- -- ----------- ----------- ----------- ----------- ----------- ----------- Shares outstanding, end of year or period 122,060,187 16,418,415 27,085,682 25,055,031 2,941,725 2,911,934 * Period from August 30, 1999 (inception) to December 31, 1999 ** Period from August 19, 1999 (inception) to December 31, 1999 ACTIVA Mutual Funds Annual Report The accompanying notes are an integral part of these financial statements. 29
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ACTIVA Notes to Financial Statements 1. ORGANIZATION Activa Mutual Fund Trust (Trust) was organized as a Delaware business trust on February 2, 1998. The Trust consists of five funds, each open-end management investment companies registered under the Investment Company Act of 1940. The funds are: the Activa Money Market Fund (Money Market Fund), 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 Money Market Fund's investment objective is to seek a high level of current income as is consistent with preservation of capital and liquidity. The Money Market Fund invests in a broad spectrum of high quality U.S. dollar-denominated money market securities, with the average weighted maturity of the securities held not to exceed 90 days. 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 maximize long-term capital appreciation, and invests primarily in common stocks of large and medium size 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 large and medium size non-U.S. companies which are believed by the investment manager to have potential for above-average growth of earnings. 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 Amway Corporation and its affiliates, and are not subject to any sales charges or 12b-1 distribution fees. Each share of Class A and Class R represents an equal proportionate interest in the Value Fund and, generally, will have identical voting, dividend, liquidation, and other rights and the same terms and conditions. Each class will have exclusive voting rights with respect to matters affecting only that class. Each class 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 based upon its relative net assets. Security Valuation 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 December 31, 1999), 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 (except the Money Market Fund) 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 ACTIVA Mutual Funds Annual Report 30
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ACTIVA Notes to Financial Statements continued 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 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. 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. Reorganization Costs Reorganization costs incurred prior to June 30, 1998 in connection with the reorganization of Amway Mutual Fund and the issuance of Class R shares are being amortized over a period of 60 months using the straight-line method in the Value Fund. 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. Dividend Distributions The Money Market Fund and Intermediate Bond Fund declare dividends daily and monthly respectively, and distribute 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 Adviser will make investment decisions on behalf of the Funds and place all orders for the purchase and sale of portfolio securities for the ACTIVA Mutual Funds Annual Report 31
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ACTIVA Notes to Financial Statements continued Funds' accounts. The Adviser shall be permitted to enter into an agreement with another advisery 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 ---- ----------------------- MONEY MARKET .35% until assets total $500 million; when assets reach $500 million, .35% on first $100 million; .325% on next $100 million; .30% on assets in excess of $200 million Intermediate Bond .40% on first $50 million; .32% on assets in excess of $50 million Value .65% on first $100 million; .60% on next $50 million, .55% on next $50 million; when assets reach $200 million, .60% on first $200 million, .55% on assets in excess of $200 million 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 ---- ----------- Money Market JP Morgan Investment Management, Inc. Intermediate Bond Van Kampen Management, Inc. Value Ark Asset Management Co., Inc.* Growth State Street Research & Management Company International Nicholas-Applegate Capital Management * Wellington Management Company, LLP became sub-adviser for the Value Fund effective December 30, 1999. Prior to that agreement, sub-advisery services were provided by Ark Asset Management Co., Inc. as disclosed above. 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 LLC provides services in connection with distributing the Funds' shares (except the Money Market Fund and 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 year or period ended December 31, 1999, the Board of Trustees approved an annual rate of .15 of 1%. 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 Money Market, Intermediate Bond, Value (Class A), Growth and International Funds pay a monthly fee based upon $1.167 per account in existence during the month (less earnings in the redemption liquidity account in excess of wire transfer fees). 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, the Trust 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, pay the fees of all Trustees of the Trust, 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 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 monthly financial statements and certain information necessary for meeting compliance requirements. The Fund Accountant is compensated by each ACTIVA Mutual Funds Annual Report 32
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ACTIVA Notes to Financial Statements continued 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. On August 28, 1999, the Trust entered into a Sub-Transfer Agency Agreement with Bisys Fund Services Ohio, Inc. For certain sub-transfer agency services provided, Bisys will be compensated by each fund an annual fee of $12,000 plus additional fees based upon the number of accounts opened and closed during the year. Prior to June 11, 1999, the Value Fund had substantially the same agreements for all of the above services provided by Amway Management Company, the former Adviser, Transfer Agent, Distributor and Underwriter. 4. INVESTMENT TRANSACTIONS At December 31, 1999, the cost of investments owned by the Value Fund was $120,638,555 for federal income tax purposes. Aggregate gross unrealized gains on securities in which there was an excess of market value over tax cost were $1,402,343. Aggregate gross unrealized losses on securities in which there was an excess of tax cost over market value were $807,338. Net unrealized gains for tax purposes were $595,004, at December 31, 1999. The unrealized appreciation (depreciation) 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: Cost for Gross Gross Net federal unrealized unrealized unrealized income tax Fund appreciation depreciation appreciation purposes ----------- ----------- ----------- ---------- Growth 1,966,675 1,105,436 861,239 28,421,205 Intermediate Bond 895,305 137,758 757,547 167,106,728 Money Market N/A N/A N/A 98,915,906 International 3,133,444 726,960 2,406,484 27,761,426 For the year or period ended December 31, 1999, cost of purchases and proceeds from sales of investments, other than short term securities, were as follows: Fund Gross Purchases Gross Sales ----- -------------- ---------- Money Market 12,491,535 -- Intermediate Bond 219,949,287 65,102,512 Value 267,192,171 301,011,480 Growth 34,899,910 6,376,226 International 47,801,654 19,238,777 5. SUBSEQUENT EVENTS A certain class of Independent Business Owners of Amway Corporation and Amway Canada, Ltd. (Corporations) received from each corporation part of its Emerald profit-sharing bonus in common stock shares of the Value Fund. On January 13, 2000, the Corporations purchased 336,807 Value Fund shares valued at $2,222,925 (based upon the net asset value of $6.60 per share) and transferred the shares to these Independent Business Owners. On January 20, 2000, the Intermediate Bond Fund declared and paid a dividend of $.031157 per share, to shareholders of record on January 19, 2000. The amount distributed was $511,558. ACTIVA Mutual Funds Annual Report 33
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ACTIVA Financial Highlights [Enlarge/Download Table] MONEY INTERMEDIATE MARKET BOND FUND** FUND* VALUE FUND - CLASS A ---------- ---------- -------------------------- Per share outstanding throughout the year or period ended December 31, 1999 1999 1999*** 1998 ---------- ---------- ---------- ---------- Net Asset Value, beginning of period 1.00 10.00 7.18 7.73 Income from investment operations: Net investment income (loss) 0.02 0.19 0.09 0.08 Net realized and unrealized gains (losses) on securities -- (0.13) (0.57) 0.68 ---------- ---------- ---------- ---------- Total from investment operations 0.02 0.06 (0.48) 0.76 Less Distributions: Dividends from net investment income 0.02 0.19 0.09 0.08 Dividends in excess of net investment income -- -- -- -- Distributions from capital gains -- -- -- 1.23 ---------- ---------- ---------- ---------- Total Distributions 0.02 0.19 0.09 1.31 ---------- ---------- ---------- ---------- Net Asset Value, end of period 1.00 9.87 6.61 7.18 Total Return **** 1.83% 0.63% -6.70% 10.17% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period 122,058,717 162,078,588 178,437,477 179,820,020 Ratio of expenses to average net assets***** 0.6% 0.7% 1.1% 1.0% Ratio of net income (loss) to average net assets 5.4% 5.7% 1.2% 1.0% Portfolio turnover rate N/A 64.6% 144.5% 101.1% Average commission rate paid per share for portfolio transactions N/A N/A 0.0481 0.0521 * Period from August 30, 1999 (inception) to December 31, 1999 ** Period from August 19, 1999 (inception) to December 31, 1999 *** Effective December 30, 1999, Wellington Management Company, LLP entered into a Sub-Advisory Agreement with the Fund. **** Total return does not reflect the effect of the sales charge in the years before 1998 ***** Ratio includes fees paid with brokerage commissions for fiscal years ending after September 1, 1995; 1999 ratio includes a one time organization expense. ****** The inception date for Value Fund - Class R was 11/1/98 ACTIVA Mutual Funds Annual Report 34
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[Enlarge/Download Table] VALUE FUND - CLASS A ------------------------------------------- Per share outstanding throughout the year or period ended December 31, 1997 1996 1995 ---------- ---------- ---------- Net Asset Value, beginning of period 7.62 7.43 6.88 Income from investment operations: Net investment income (loss) 0.09 0.10 0.10 Net realized and unrealized gains (losses) on securities 1.62 1.59 1.98 ---------- ---------- ---------- Total from investment operations 1.71 1.69 2.08 Less Distributions: Dividends from net investment income 0.10 0.09 0.11 Dividends in excess of net investment income -- -- -- Distributions from capital gains 1.50 1.41 1.42 ---------- ---------- ---------- Total Distributions 1.60 1.50 1.53 ---------- ---------- ---------- Net Asset Value, end of period 7.73 7.62 7.43 Total Return **** 22.50% 23.18% 30.55% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period 139,163,575 113,327,402 77,248,295 Ratio of expenses to average net assets***** 0.9% 1.0% 1.1% Ratio of net income (loss) to average net assets 1.1% 1.2% 1.2% Portfolio turnover rate 103.1% 100.4% 173.3% Average commission rate paid per share for portfolio transactions 0.0574 0.0600 0.0598 [Enlarge/Download Table] GROWTH INTERNATIONAL VALUE FUND - CLASS R FUND* FUND* ------------------------- ---------- ---------- Per share outstanding throughout the year or period ended December 31, 1999 1998****** 1999 1999 ------- ------- ---------- ---------- Net Asset Value, beginning of period 7.16 8.42 10.00 10.00 Income from investment operations: Net investment income (loss) 0.10 0.09 (0.02) (0.03) Net realized and unrealized gains (losses) on securities (0.56) (0.02) 1.41 4.23 ------- ------- ---------- ---------- Total from investment operations (0.46) 0.07 1.39 4.20 Less Distributions: Dividends from net investment income 0.10 0.10 -- -- Dividends in excess of net investment income -- -- -- -- Distributions from capital gains -- 1.23 -- -- ------- ------- ---------- ---------- Total Distributions 0.10 1.33 -- -- ------- ------- ---------- ---------- Net Asset Value, end of period 6.60 7.16 11.39 14.20 Total Return **** -6.43% 7.08% 13.80% 42.00% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period 703,962 135,385 33,494,414 41,359,176 Ratio of expenses to average net assets***** 1.1% 1.0% 1.3% 1.4% Ratio of net income (loss) to average net assets 1.3% 1.8% -0.5% -0.9% Portfolio turnover rate 144.5% 101.1% 32.1% 87.6% Average commission rate paid per share for portfolio transactions 0.0481 0.0521 0.0332 0.0258 * Period from August 30, 1999 (inception) to December 31, 1999 ** Period from August 19, 1999 (inception) to December 31, 1999 *** Effective December 30, 1999, Wellington Management Company, LLP entered into a Sub-Advisory Agreement with the Fund. **** Total return does not reflect the effect of the sales charge in the years before 1998 ***** Ratio includes fees paid with brokerage commissions for fiscal years ending after September 1, 1995; 1999 ratio includes a one time organization expense. ****** The inception date for Value Fund - Class R was 11/1/98 ACTIVA Mutual Funds Annual Report 35
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ACTIVA Independent Auditors' Report To the Shareholders and Board of Trustees Activa Mutual Fund Trust Grand Rapids, Michigan We have audited the statements of assets and liabilities, including the schedules of investments, of Activa Mutual Fund Trust (comprising, respectively, Money Market, Intermediate Bond, Value, Growth and International Funds) as of December 31, 1999, and the related statements of operations, the statements of changes in net assets, and the financial highlights for each of the periods indicated. These financial statements and financials highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 1999, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective funds constituting the Activa Mutual Fund Trust, as of December 31, 1999, the results of their operations, the changes in their net assets, and their financial highlights for each of the periods indicated, in conformity with generally accepted accounting principles. /s/ BDO SEIDMAN, LLP Grand Rapids, Michigan January 28, 2000 ACTIVA Mutual Funds Annual Report 36
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(LOGO: ACTIVA Mutual Funds) Activa Mutual Funds 2905 Lucerne SE, Suite 200 Grand Rapids, Michigan 49546 (616) 787-6288 (800) 346-2670 WWW.ACTIVAFUNDS.COM PRESORTED STANDARD A U.S. POSTAGE PAID SOUTH SUBURBAN, IL PERMIT #3602 PRINTED IN U.S.A.

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