-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TWXlH30Sq/HMZmrFT33x0WpJQ9+n7LSzK/o+RDGUxtYBNrzNqU4hIi+r2Z3nYP5r mTCvxfDY+jgKtjlV3QX2QA== 0000891804-05-002656.txt : 20050907 0000891804-05-002656.hdr.sgml : 20050907 20050907093641 ACCESSION NUMBER: 0000891804-05-002656 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050630 FILED AS OF DATE: 20050907 DATE AS OF CHANGE: 20050907 EFFECTIVENESS DATE: 20050907 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACTIVA MUTUAL FUND TRUST CENTRAL INDEX KEY: 0000006247 IRS NUMBER: 381958738 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-02168 FILM NUMBER: 051071781 BUSINESS ADDRESS: STREET 1: 2905 LUCERNE SE CITY: GRAND RAPIDS STATE: MI ZIP: 49546 BUSINESS PHONE: 6167876288 MAIL ADDRESS: STREET 1: ATTN: JERRY MICK STREET 2: 2905 LUCERNE SE CITY: GRAND RAPIDS STATE: MI ZIP: 49546 FORMER COMPANY: FORMER CONFORMED NAME: AMWAY MUTUAL FUND INC DATE OF NAME CHANGE: 19920703 N-CSRS 1 file001.txt ACTIVA MUTUAL FUND TRUST 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 --------------------- ACTIVA MUTUAL FUND TRUST ------------------------------------------------------------------------------ (Exact name of registrant as specified in charter) 2905 Lucerne Dr. SE, Suite 200 Grand Rapids, Michigan 49546-7116 - ------------------------------------------------------------------------------ (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 - ------------------------------------------------------------------------------ (Name and address of agent for service) Registrant's telephone number, including area code: (616) 787-6288 ------------------- Date of fiscal year end: December 31 ------------------ Date of reporting period: June 30, 2005 ----------------- 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. - ------------------------------- 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 ----------------------------------------------------------- By (Signature and Title)* /s/ Allan D. Engel ---------------------------------------------- Allan D. Engel President, Principal Executive Officer and Principal Financial Officer Date September 7, 2005 ------------------------------------------------------------------- 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)* ---------------------------------------------- Date ------------------------------------------------------------------- By (Signature and Title)* /s/ ---------------------------------------------- Date ------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature. EX-99.CERT 2 file002.txt CERTIFICATIONS I, Allan D. Engel, certify that: 1. I have reviewed this report on Form N-CSR of the Activa Mutual Fund Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Diclosed in this report any change in the registrant's internal control over financial reporting that occured during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 7, 2005 ----------------------- /s/ Allan D. Engel --------------------- President, Principal Executive Officer and Principal Financial Officer EX-99.906CERT 3 file003.txt CERTIFICATIONS Certification Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. I, Allan D. Engel, Chief Administrative Officer of the Activa Mutual Fund Trust (the "Fund"), certify that: 1. The Form N-CSR of the Fund for the period ended June 30, 2005 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund. A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Activa Mutual Fund Trust and will be retained by Activa Mutual Fund Trust and furnished to the Securities and Exchange Commission or its staff upon request. Date: September 7, 2005 ----------------------- /s/ Allan D. Engel --------------------- President, Principal Executive Officer and Principal Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----