-----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, VEcJXcWHucCqGxPS8x9zgZ3X3f8HO3jDbCdH5YjQiTGtR3Y3pobz/QSfat7Y7Opy LZ2L3bWueKrPJBkPO8QPgA== 0000893220-96-001809.txt : 19961108 0000893220-96-001809.hdr.sgml : 19961108 ACCESSION NUMBER: 0000893220-96-001809 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961107 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEMINI II INC CENTRAL INDEX KEY: 0000759277 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30B-2 SEC ACT: 1940 Act SEC FILE NUMBER: 811-04168 FILM NUMBER: 96655870 BUSINESS ADDRESS: STREET 1: PO BOX 2600 VM #V34 CITY: VALLEY FORGE STATE: PA ZIP: 19482 BUSINESS PHONE: 6106696289 N-30B-2 1 GEMINI II THIRD QUARTER REPORT DATED 9/30/96 1 GEMINI II THIRD QUARTER REPORT SEPTEMBER 30, 1996 2 FELLOW SHAREHOLDER, After a pullback in July, the stock market resumed its remarkable rise during the three months ended September 30, the third quarter of Gemini II's 1996 fiscal year. The Fund's returns failed to keep pace with the exuberant rise in the broad stock market during the past nine months. During the quarter, Gemini II earned a total return (capital change plus reinvested dividends) of +2.6%, bringing our total return for the first nine months to +9.3%. While quite respectable on an absolute basis, our year-to-date return trailed the returns of our two principal performance benchmarks, the average value (growth and income) mutual fund and the unmanaged Standard & Poor's 500 Composite Stock Price Index. The following table shows the total return for the Fund and our evaluation standards.
- ------------------------------------------------------------------------------- TOTAL RETURN ------------------------------ PERIODS ENDED SEPTEMBER 30, 1996 ------------------------------ THREE MONTHS NINE MONTHS - ------------------------------------------------------------------------------- GEMINI II +2.6% + 9.3% - ------------------------------------------------------------------------------- AVERAGE VALUE MUTUAL FUND +2.9% +12.5% STANDARD & POOR'S 500 INDEX +3.1 +13.5 - -------------------------------------------------------------------------------
The Fund's total return is allocated so that 100% of the portfolio's capital appreciation (or depreciation) is received by the Capital Shares, which provided 50% of the Fund's initial capital. By the same token, 100% of the net investment income is received by the Income Shares, which provided the remaining 50% of the Fund's initial capital. THE CAPITAL SHARE RESULTS The net asset value of each Capital Share rose to $28.18 on September 30, 1996. This represented an increase of +1.7% from the value of $27.71 on June 30, 1996, and an increase of +6.9% for the nine months since December 31, 1995, when the net asset value was $26.35 per share. The price increase of +6.9% for the nine months was well behind the price increase of +11.6% for the Standard & Poor's 500 Index (excluding income). Our leverage factor--which helps our performance in rising markets but hampers our performance in falling markets--was 1.3 times on September 30, compared with 2.0 times at our inception in February 1985. Our shortfall in capital return for the nine months is largely 3 explained by the significant contribution of income return to our total return, as well as by our relatively defensive position in convertible securities and cash. THE INCOME SHARE RESULTS During the quarter, we paid our regular quarterly dividend of $.35 per share, bringing our total for the year to date to $1.05 per share. As in the past, we expect to maintain this rate in the fourth quarter, and to pay an extra year-end dividend that represents undistributed net income over and above the four-quarter total of $1.40. Although we can offer no guarantee, we expect net income for 1996 to be slightly higher than last year's total of $1.80 per share. PORTFOLIO STATISTICS The following table shows the composition of our portfolio on September 30, 1996.
- ------------------------------------------------------- PERCENTAGE OF NET ASSETS - ------------------------------------------------------- EQUITY EQUIVALENTS COMMON STOCKS 44% CONVERTIBLE SECURITIES 36 LOWER-GRADE BONDS 2 - ------------------------------------------------------- TOTAL EQUITY EQUIVALENTS 82% - ------------------------------------------------------- TEMPORARY CASH INVESTMENTS 18% - ------------------------------------------------------- TOTAL PORTFOLIO 100% - -------------------------------------------------------
This structure is quite similar, in general, to what it was at the end of our second quarter. PREMIUMS AND DISCOUNTS The table below presents the current market discount for the Capital Shares and the premium for the Income Shares, based on each class's net asset values and the market price at which each class was trading on the New York Stock Exchange on September 30. Since the end of 1995, the premium on the Income Shares has narrowed almost to zero, while the discount on the Capital Shares has widened.
- ------------------------------------------------------------------------ SEPTEMBER 30, 1996 ------------------------------------------ NET ASSET MARKET VALUE PRICE DIFFERENCE - ------------------------------------------------------------------------ CAPITAL SHARES $28.18 $26.50 -6.0% INCOME SHARES 9.73* 9.75 +0.2 - ------------------------------------------------------------------------ TOTAL $37.91 $36.25 -4.4% - ------------------------------------------------------------------------
*Includes $.43 of undistributed income. 4 GEMINI II TO MATURE As planned in Gemini II's original operating structure, our Income Shares will be redeemed on January 31, 1997, for $9.30 per share. We will send a separate check representing accumulated and unpaid dividends for the period January 1 through January 31, 1997. Details, including instructions on how to redeem shares, are contained in the letter that accompanies this Report. On January 31, our Capital Shares will be the sole remaining class of shares of Gemini II. As planned from the Fund's inception on February 15, 1985, the Fund will be converted to an open-end investment company as soon as practical after January 31. Details of this proposal will be provided to holders of Capital Shares in the proxy materials we will send to you by December 1996. Sincerely, /s/ JOHN C. BOGLE John C. Bogle Chairman of the Board /s/ JOHN J. BRENNAN John J. Brennan President October 10, 1996 Note: Mutual fund data from Lipper Analytical Services, Inc. 5 INVESTMENTS September 30, 1996
Market Value Shares (000) - -------------------------------------------------------------------------------- COMMON STOCKS (44.5%) - -------------------------------------------------------------------------------- BASIC MATERIALS (2.0%) - -------------------------------------------------------------------------------- British Steel PLC ADR 277,000 $ 8,449 - -------------------------------------------------------------------------------- CONSUMER CYCLICAL (10.1%) - -------------------------------------------------------------------------------- Chrysler Corp. 830,622 23,777 Ford Motor Co. 571,653 17,864 -------------- SECTOR TOTAL 41,641 -------------- - -------------------------------------------------------------------------------- ENERGY (3.6%) - -------------------------------------------------------------------------------- Atlantic Richfield Co. 61,500 7,841 Pennzoil Co. 5,900 312 USX-Marathon Group 307,100 6,641 -------------- SECTOR TOTAL 14,794 -------------- - -------------------------------------------------------------------------------- FINANCIAL (26.7%) - -------------------------------------------------------------------------------- BANKS (6.5%) Chase Manhattan Corp. 50,600 4,054 First Union Corp. 166,300 11,101 KeyCorp 141,889 6,243 NationsBank Corp. 65,300 5,673 INSURANCE (5.4%) CIGNA Corp. 67,600 8,104 GCR Holdings, Ltd. 435,000 10,494 IPC Holdings Ltd. 200,000 3,925 REAL ESTATE INVESTMENT TRUSTS (7.1%) Camden Property Trust REIT 125,000 3,203 Colonial Properties Trust REIT 74,600 1,958 Equity Residential Properties Trust REIT 385,000 13,764 Evans Withycombe Residential, Inc. REIT 195,000 4,266 Oasis Residential, Inc. REIT 180,000 3,937 Urban Shopping Centers REIT 82,800 2,018 SAVINGS & LOAN (7.7%) H.F. Ahmanson & Co. 549,600 15,389 Great Western Financial Corp. 610,740 16,185 -------------- SECTOR TOTAL 110,314 -------------- - -------------------------------------------------------------------------------- TRANSPORT & SERVICES (1.6%) - -------------------------------------------------------------------------------- Delta Air Lines, Inc. 93,161 6,708 -------------- - -------------------------------------------------------------------------------- UTILITIES (.5%) - -------------------------------------------------------------------------------- Unicom Corp. 87,937 2,209 -------------- - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $136,084) 184,115 - -------------------------------------------------------------------------------- CONVERTIBLE PREFERRED STOCKS (33.8%) - -------------------------------------------------------------------------------- BASIC MATERIALS (26.2%) - -------------------------------------------------------------------------------- CHEMICALS (4.5%) Atlantic Richfield Co. 9.00% 785,500 18,459 METALS & MINING (7.1%) Kaiser Aluminum 8.255% 979,400 10,896 Reynolds Metals 7.00% 401,400 18,464 PAPER (7.0%) Boise Cascade Corp. $1.58 35,800 984 Bowater, Inc. 7.00% 534,000 16,888 International Paper Co. 5.25% 238,000 11,305
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Market Value Shares (000) - -------------------------------------------------------------------------------- STEEL (7.6%) AK Steel Holding 7.00% 574,500 $ 21,400 Bethlehem Steel Corp. $3.50 258,400 10,142 -------------- SECTOR TOTAL 108,538 -------------- - -------------------------------------------------------------------------------- CAPITAL GOODS & CONSTRUCTION (4.7%) - -------------------------------------------------------------------------------- Beazer Homes 8.00% 370,000 9,204 Owens Corning Capital LLC 6.50% 200,000 10,400 -------------- SECTOR TOTAL 19,604 -------------- - -------------------------------------------------------------------------------- ENERGY (.2%) - -------------------------------------------------------------------------------- Valero Energy $3.125 15,000 759 -------------- - -------------------------------------------------------------------------------- OTHER (2.7%) 11,100 -------------- - -------------------------------------------------------------------------------- TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $139,540) 140,001 - -------------------------------------------------------------------------------- CONVERTIBLE BONDS (1.9%) - --------------------------------------------------------------------------------
Face Amount (000) -------- Quantum Corp. 6.375%, 4/1/02 $ 5,700 6,270 Toll Corp. 4.75%, 1/15/04 58 55 U.S. Home 4.875%, 11/1/05 1,750 1,426 - -------------------------------------------------------------------------------- TOTAL CONVERTIBLE BONDS (Cost $7,084) 7,751 - -------------------------------------------------------------------------------- BONDS (2.3%) - -------------------------------------------------------------------------------- Geneva Steel 11.125%, 3/15/01 7,000 5,950 Ryland Group 9.625%, 6/1/04 2,500 2,475 Weirton Steel Corp. 10.875%, 10/15/99 1,180 1,209 - -------------------------------------------------------------------------------- TOTAL BONDS (Cost $10,655) 9,634 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS (16.6%) - -------------------------------------------------------------------------------- U.S. GOVERNMENT & AGENCY OBLIGATIONS Federal Home Loan Mortgage Corp. 5.28%, 10/18/96 20,000 19,950 COMMERCIAL PAPER Abbott Laboratories 5.32%, 10/7/96 5,000 4,996 The Coca-Cola Co. 5.40%, 10/17/96 5,000 4,988 E.I. du Pont de Nemours & Co. 5.375%, 10/7/96 5,000 4,996 Harvard Univ. 5.30%, 10/1/96 5,000 5,000 Hewlett-Packard Co. 5.30%, 10/30/96 5,000 4,978 Kellogg Co. 5.28%, 10/8/96 5,000 4,994 Merck & Co., Inc. 5.42%, 10/15/96 5,000 4,990 MetLife Funding, Inc. 5.28%, 10/7/96 5,000 4,995
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Face Market Amount Value (000) (000) - -------------------------------------------------------------------------------- Motorola Credit Co. 5.30%, 10/3/96 $ 5,000 $ 4,999 REPURCHASE AGREEMENT Collateralized by U.S. Government Obligations in a Pooled Cash Account 5.74%, 10/1/96 3,998 3,998 - -------------------------------------------------------------------------------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $68,886) 68,884 - -------------------------------------------------------------------------------- TOTAL INVESTMENTS (99.1%) (Cost $362,249) 410,385 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES-- NET (.9%) 3,642 - -------------------------------------------------------------------------------- NET ASSETS (100%) $414,027 ================================================================================
ADR--American Depository Receipt. 8 THE VANGUARD FAMILY OF FUNDS FIXED INCOME FUNDS MONEY MARKET FUNDS Vanguard Admiral Funds U.S. Treasury Money Market Portfolio Vanguard Money Market Reserves TAX-EXEMPT MONEY MARKET FUNDS Vanguard Municipal Bond Fund Money Market Portfolio Vanguard State Tax-Free Funds Money Market Portfolios (CA, NJ, OH, PA) TAX-EXEMPT INCOME FUNDS Vanguard Municipal Bond Fund Vanguard State Tax-Free Funds Insured Longer-Term Portfolios (CA, FL, NJ, NY, OH, PA) INCOME FUNDS Vanguard Admiral Funds Vanguard Fixed Income Securities Fund Vanguard Preferred Stock Fund EQUITY AND BALANCED FUNDS GROWTH AND INCOME FUNDS Vanguard Convertible Securities Fund Vanguard Equity Income Fund Vanguard Quantitative Portfolios Vanguard Selected Value Portfolio Vanguard/Trustees' Equity Fund U.S. Portfolio Vanguard/Windsor Fund Vanguard/Windsor II BALANCED FUNDS Vanguard Asset Allocation Fund Vanguard LifeStrategy Portfolios Income Portfolio Conservative Growth Portfolio Moderate Growth Portfolio Growth Portfolio Vanguard STAR Portfolio Vanguard/Wellesley Income Fund Vanguard/Wellington Fund GROWTH FUNDS Vanguard/Morgan Growth Fund Vanguard/PRIMECAP Fund Vanguard U.S. Growth Portfolio AGGRESSIVE GROWTH FUNDS Vanguard Explorer Fund Vanguard Horizon Fund Global Equity Portfolio Global Asset Allocation Portfolio Capital Opportunity Portfolio Aggressive Growth Portfolio Vanguard Specialized Portfolios INTERNATIONAL FUNDS Vanguard International Growth Portfolio Vanguard/Trustees' Equity Fund International Portfolio INDEX FUNDS Vanguard Index Trust Total Stock Market Portfolio 500 Portfolio Extended Market Portfolio Growth Portfolio Value Portfolio Small Capitalization Stock Portfolio Vanguard International Equity Index Fund European Portfolio Pacific Portfolio Emerging Markets Portfolio Vanguard Bond Index Fund Vanguard Tax-Managed Fund Vanguard Balanced Index Fund [THE VANGUARD GROUP LOGO] Post Office Box 2600, Valley Forge, Pennsylvania 19482 Shareholder Account Services: 1 (800) 420-8574 This Report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by a current prospectus. All Funds in the Vanguard Family are offered by prospectus only. Q343-9/96 -----END PRIVACY-ENHANCED MESSAGE-----