STERLING CAPITAL CORPORATION
Report for the Six Months Ended June 30, 1997
OFFICERS
Walter Scheuer ...................Chairman of the Board of Directors
Wayne S. Reisner .................President
Richard Kaufman ..................Executive Vice President and Treasurer
DIRECTORS
Jay Eliasberg Nathan Kingsley
Arthur P. Floor Archer Scherl
Walter Scheuer
Transfer Agent and Registrar Custodian
Registrar and Transfer Company Chase Manhattan Bank
10 Commerce Drive 4 New York Plaza
Cranford, New Jersey 07016 New York, New York 10004
Auditors General Counsel
Stavisky, Knittle, Isaacs Skadden, Arps,
& Dichek, C.P.A., P.C. Slate, Meagher & Flom
342 Madison Avenue 919 Third Avenue
New York, New York 10173 New York, New York 10022
STERLING CAPITAL CORPORATION
635 Madison Avenue
New York, N.Y. 10022
August 22, 1997
To our Shareholders:
The bull market in equities remained firmly in place during the
first half of 1997. Following a brief correction in stock
prices in response to the Federal Reserve's increase in
short-term interest rates in March, the major indices resumed
their advance with the S&P 500 Index recording a 19.5% increase
for the first six months of the year. This performance follows
six consecutive years of gains for stocks and an average annual
rate of increase during this period of 18%. Fixed income
markets recovered from a first quarter decline and posted a more
modest 2% return for the first half of the year.
Economic conditions presently are providing an almost ideal
backdrop for the financial markets. The economy is now in its
seventh year of expansion without showing any meaningful signs
of recession. Job creation has been excellent with employment
rising approximately 200,000 per month over the past eighteen
months. Consumer confidence is still strong and the wealth
effect from the strength of financial markets should contribute
to favorable spending patterns by consumers in the second half
of the year. Corporate profits are showing positive comparisons
and upward revisions of earnings estimates by analysts still
exceeded downward revisions in the latest quarter.
Importantly, inflation remains remarkably subdued. Following a
long economic expansion, wage and commodity cost pressures
usually build and lead to an increase in inflation rates. We
had expected that a tight labor market, as evidenced by the
current unemployment rate of 4.8%, would lead to an acceleration
in wage inflation. This has not occurred and the consumer
inflation rate has declined this year to a 2% annualized rate.
Commodity prices also remain soft with the Producer Price Index
actually recording declines during most of this year. Given
this recent data on inflation, it appears unlikely that the
Federal Reserve would raise rates in the near term. In
addition, the U.S. government budget deficit is rapidly
declining and thereby reducing the amount of borrowing required
through new issuance of Treasury securities. This is having a
favorable impact on bonds and has resulted in a more positive
interest rate outlook than would normally be expected at this
point in an economic cycle.
The outlook for equities appears more problematic. Despite an
extremely favorable demand/supply condition for stocks,
valuations are high and the recent rates of price appreciation
are unsustainable. Moreover, investor expectations with respect
to rates of return and the level of risk are overly optimistic
which usually occurs at market tops. Nevertheless, despite our
cautious outlook for equities generally, we continue to search
for undervalued stocks that can generate above average rates of
return. This focus has resulted in the purchase of companies
that are out of favor in the market and to certain smaller
capitalization companies with above average growth potential.
Enclosed is a report of our Corporation's operations for the
six months ended June 30, 1997. The unaudited net asset value
per share of the Corporation's Common Stock as at June 30, 1997
was $8.62, as compared with its audited net asset value at
December 31, 1996 of $8.15 per share, in both instances giving
effect to the Corporation's distribution to shareholders of $.37
per share paid on January 22, 1997 to shareholders of record at
the close of business on December 30, 1996. As at August 20,
1997 the unaudited net asset value per share was approximately
$9.00 after further giving effect to a distribution to
shareholders of $.037 per share, payable on September 10, 1997
to shareholders of record at the close of business on August 27,
1997. As at June 30, 1997 and August 20, 1997 the closing sales
price for shares of the Corporation's Common Stock on the
American Stock Exchange was $6.375 and $6.938, respectively.
Thus, as at June 30, 1997 and August 20, 1997 the market price
for the Corporation's shares represented discounts of
approximately 26% and 23%, respectively, from the Corporation's
net asset values at such dates.
Certain of the Corporation's officers and directors and their
associates may from time to time add to their investments in the
Corporation's Common Stock by open market purchases or in
private transactions. Since January 1, 1997 certain of the
Corporation's officer's and directors and their associates have
purchased an aggregate of 53,000 shares of the Corporation's
capital stock. Officers and directors of the Corporation
currently own beneficially, directly or indirectly, an aggregate
of 1,923,296 shares (76.9% of the outstanding shares) of the
Corporation's capital stock, not including 101,000 shares (4.04%
of the Corporation's outstanding shares) owned by certain
associates of such persons with respect to which such officers
and directors disclaim any beneficial interest.
Very truly yours,
Wayne S. Reisner
President
STERLING CAPITAL CORPORATION
INVESTMENTS IN SECURITIES
As at June 30, 1997
(Unaudited)
Number of Market Value
Shares (Note A)
Common and Preferred Stocks - 58.28%
Telecommunication and Media - 12.26%
BCE, Inc. ..................................... 15,000 $420,000
Airtouch Communications Inc.*.................. 15,000 412,500
Viacom Inc. Cl A *............................. 11,000 323,812
Cellular Technical Services Inc.*.............. 35,000 319,375
SBC Communications Inc......................... 5,000 309,375
Octel Communications Corp. * .................. 10,000 234,375
GTE Corp....................................... 5,000 219,375
AT&T Corp...................................... 5,000 175,312
Tele-Communications Int'l Inc.*................ 10,000 154,375
Tele-Communications Inc. TCI Group A *......... 5,000 74,375
$2,642,874
__________
Financial Services and Insurance - 11.18%
Mellon Bank Corp. .................................. 12,000 $541,500
Chase Manhattan Corp. .............................. 5,000 485,312
PartnerRe Ltd....................................... 10,000 381,250
MBIA, Inc........................................... 3,000 338,438
SunAmerica Inc. .................................... 4,000 195,000
Long Island Bancorp ................................ 5,000 181,563
Fleet Financial Group .............................. 2,500 158,125
Conseco Financing Trust Pfd ........................ 5,000 129,688
$2,410,876
* Non-income producing security
The accompanying notes are an integral part of these
statements
STERLING CAPITAL CORPORATION
INVESTMENTS IN SECURITIES - continued
As at June 30, 1997
(Unaudited)
Number of Market Value
Shares (Note A)
Real Estate and
Real Estate Investment Trusts - 8.26%
Camden Property Trust ........................ 15,100 $477,537
Chateau Communities, Inc. .................... 15,630 447,409
Capstead Mortgage Corp. ...................... 12,500 308,594
Oasis Residential, Inc........................ 10,000 235,000
Catellus Development Corp. *.................. 10,000 181,875
Equity Residential Properties Trust Pfd C..... 5,000 130,000
$1,780,415
Technology - 8.18%
Parkervision Inc. *........................... 33,000 $651,750
Network Peripherals, Inc. * .................. 49,500 349,594
Avnet, Inc.................................... 5,000 287,500
Electronic Data Systems ...................... 5,000 205,937
Seagate Technology * ......................... 5,000 176,250
Mentor Graphics Corp. *....................... 10,000 92,500
$1,763,531
Healthcare and Related Services - 4.87%
Rhone Poulenc S.A. ADR. ...................... 10,227 $425,699
Rhone Poulenc Overseas LTD 8.125%
Preferred Series A .......................... 10,000 248,125
Cognizant Corp. ............................. 5,000 202,500
Pharmacia & Upjohn .......................... 5,000 173,750
Matria Healthcare, Inc. * .................... 40 155
$1,050,229
Oil Services - 3.48%
Triton Energy Corp. * ........................ 5,000 $229,062
Tidewater Inc................................. 5,000 220,000
Global Marine *............................... 7,500 174,844
Occidental Petroleum Corp. ................... 5,000 125,312
$749,218
* Non-income producing security
The accompanying notes are an integral part of these
statements
STERLING CAPITAL CORPORATION
INVESTMENTS IN SECURITIES - continued
As at June 30, 1997
(Unaudited)
Number of Market Value
Shares (Note A)
Office Equipment and Supplies - 2.68%
Xerox Corp............................ 3,000 $236,625
OfficeMax Inc. * ..................... 15,000 216,563
Ikon Office Solutions................. 5,000 124,688
$577,876
Publishing - 1.87%
K-III Communications Senior
Exchangeable Preferred ............. 15,000 $403,125
Automotive and Automotive Products - 1.47%
Ford Motor Co. ........................... 5,000 $190,000
Goodyear Tire & Rubber Co. ............... 2,000 126,625
$316,625
Retail - 1.34%
Carson Pirie Scott & Co. *................ 5,000 $158,750
J C Penny Co., Inc. ...................... 2,500 130,469
$289,219
Consumer Goods - 1.21%
Kimberly Clark Corp. .................... 3,000 $149,250
Black & Decker Corp. .................... 3,000 111,562
$260,812
Transportation Services - 0.77%
Ryder System Inc. ....................... 5,000 $165,000
* Non-income producing security
The accompanying notes are an integral part of these
statements
STERLING CAPITAL CORPORATION
INVESTMENTS IN SECURITIES - continued
As at June 30, 1997
(Unaudited)
Number of Market Value
Shares (Note A)
Textiles and Apparel - 0.44%
Fieldcrest Cannon Inc.* ............ 5,000 $95,000
Miscellaneous Securities - 0.27%
Technology General Corp. * **.... 292,600 $58,520
Total common and preferred stocks (cost $9,621,370)
$12,563,320
* Non-income producing security
** Investment in a company representing 5% or more of such
company's outstanding voting securities (such company is defined
as an "affiliated company" in Section 2(a)(2) of the Investment
Company Act of 1940, as amended). This investment was purchased
on February 7, 1969 at a cost of $266,000 and is valued at the
average of the bid and ask prices in the over-the-counter market
on June 30, 1997.
The accompanying notes are an integral part of these statements
STERLING CAPITAL CORPORATION
INVESTMENTS IN SECURITIES - continued
As at June 30, 1997
(Unaudited)
Principal Market Value
Amount (Note A)
Commercial Paper - 6.96%
General Motors Acceptance Corporation
5.49% due 7/2/1997 ............................. $500,000 $500,000
General Electric Capital Corporation
5.53% due 7/9/1997 ............................. 500,000 500,000
Ford Motor Credit Co.
5.54% due 7/16/1997 ........................... 500,000 500,000
Total Commercial Paper (cost $1,500,000) ....... $1,500,000
Corporate Bonds and Notes - 3.67%
ADT Operations Inc. 8.25% debenture
due 8/1/2000................................... $150,000 $155,344
Stop and Shop Companies 9.75%
senior subordinated note due 2/1/2002 .......... 150,000 165,656
Caesar's World 8.875% senior
subordinated note due 8/15/2002 ................ 200,000 206,000
ADT Operations Inc. 9.25% senior
subordinated note due 8/1/2003 ................. 250,000 265,000
Total corporate bonds and notes
(cost $735,625).................................. $792,000
U.S. Government Obligations - 9.28%
U.S. Treasury Note 5.125% due 2/28/1998 ......... $500,000 $497,969
U.S. Treasury Note 5.5% due 2/28/1999 ........... 500,000 495,781
U.S. Treasury Note 6.25% due 3/31/1999 .......... 250,000 250,860
U.S. Treasury Note 6% due 8/15/1999 ............. 250,000 249,375
U.S. Treasury Note 6% due 10/15/1999 ............ 250,000 249,531
U.S. Treasury Note 7% due 7/15/2006 ............ 250,000 257,187
Total U.S. Government Obligations (cost $1,987,962) $2,000,703
The accompanying notes are an integral part of these statements
STERLING CAPITAL CORPORATION
INVESTMENTS IN SECURITIES - continued
As at June 30, 1997
(Unaudited)
Principal Market Value
Amount (Note A)
Government Agencies - 6.71%
Federal National Mortgage Association
7.1% due 8/8/2001 ......................... $200,000 $200,000
Federal Home Loan Bank
7.13% due 1/24/2002 ....................... 200,000 200,250
Federal Home Loan Mortgage Corp.
6.625% due 6/4/2002 ....................... 250,000 247,969
Federal National Mortgage Association
8% due 6/15/2006 .......................... 200,000 202,688
Federal Home Loan Mortgage Corp.
Step-Up Notes 7.2% due 8/7/2006 ........... 200,000 200,625
Federal Home Loan Mortgage Corp.
7.29% due 2/26/2007 ....................... 200,000 197,625
Federal National Mortgage Association
7.5% due 3/12/2007 ........................ 200,000 197,937
Total Government Agencies (cost $1,449,987) $1,447,094
Total Investments (cost $15,294,944) $18,303,117
The accompanying notes are an integral part of these statements
STERLING CAPITAL CORPORATION
STATEMENT OF ASSETS AND LIABILITIES
As at June 30, 1997
(Unaudited)
ASSETS
Investment in securities, at value
(identified cost $15,294,944) (Note A)....................... $ 18,303,117
Cash.......................................................... 16,879
Vista U.S. Government Money Market Fund....................... 2,887,015
Investment in real estate (cost $100,000)..................... 50,000
Receivables:
Investment securities sold................................... 193,812
Dividends and interest....................................... 156,738
Other........................................................ 14,838
Deferred Pension Costs........................................ 51,033
Total assets.................................................. $21,673,432
LIABILITIES
Payables:
Accrued expenses and other liabilities...................... $115,266
Total liabilities............................................. $115,266
NET ASSETS
Common Stock, authorized 10,000,000 shares,
outstanding 2,500,000 shares, $1 par value each............. $2,500,000
Paid in capital.............................................. 17,722,718
Excess of distributions over accumulated net investment loss. (6,433,528)
Excess of net realized gain on investments over distributions 4,810,802
Unrealized appreciation of investments....................... 2,958,174
Net assets................................................... $21,558,166
Net assets per outstanding share............................. $8.62
The accompanying notes are an integral part of these statements
<PAGE>
STERLING CAPITAL CORPORATION
STATEMENT OF OPERATIONS
For the Six Months ended June 30, 1997
(Unaudited)
Investment income and expenses:
Interest..................................................... $ 184,408
Dividends.................................................... 253,354
Total income.................................................. $ 437,762
Expenses (Notes C, D and E):
Officers' salaries........................................... $ 84,750
Pension plan................................................. 35,869
Office salaries.............................................. 35,759
Custodian fees and expenses.................................. 34,010
Payroll taxes, fees and employee benefits.................... 24,542
Directors' fees and expenses................................. 20,858
Equipment rentals............................................ 12,560
Rent and Electric............................................ 12,317
Legal, audit and professional fees........................... 10,000
Transfer agent and registrar fees............................ 7,734
American Stock Exchange listing fee.......................... 7,500
Insurance.................................................... 6,542
Federal, state and local taxes............................... 3,038
Miscellaneous................................................ 1,564
Total expenses............................................ $297,043
Net investment income....................................... $ 140,719
(continued)
The accompanying notes are an integral part of these statements
STERLING CAPITAL CORPORATION
STATEMENT OF OPERATIONS-continued
For the Six Months ended June 30, 1997
(Unaudited)
Net investment income (from previous page)................... $140,719
Net gain/(loss) on investments (Notes A and B):
Realized gain from securities transactions:
Proceeds from sales........................................ $ 4,961,239
Cost of securities sold.................................... 3,439,858
Net realized gain.......................................... $ 1,521,381
Unrealized appreciation of investments:
Beginning of period......................................... $ 3,446,712
End of period............................................... 2,958,174
Net decrease in unrealized appreciation..................... $ (488,538)
Net realized and unrealized gain on investments.............. $ 1,032,843
Net increase in net assets resulting from operations........ $ 1,173,562
The accompanying notes are an integral part of these statements
<PAGE>
STERLING CAPITAL CORPORATION
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1997 (unaudited)
and December 31, 1996
Six months
ended Year ended
June 30, December 31,
1997 1996
From investment activities:
Net investment income......................... $ 140,719 $ 148,887
Net realized gain from securities transactions 1,521,381 869,485
Net change in unrealized appreciation ........ (488,538) 1,691,663
Increase in net assets derived from
investment activities.......................... 1,173,562 2,710,035
Distributions to shareholders (Note F) ......... 0 (1,055,000)
Net Assets:
Beginning of year............................. 20,384,604 18,729,569
End of period................................. $21,558,166 $20,384,604
The accompanying notes are an integral part of these statements
STERLING CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
As at June 30, 1997
(Unaudited)
Note A - Significant Accounting Policies
Sterling Capital Corporation (the "Corporation") (formerly
known as The Value Line Development Capital Corporation) is
registered under the Investment Company Act of 1940, as amended
(the "Act"), and is a diversified, closed-end investment
company. The Corporation operates exclusively as an internally
managed investment company whereby its own officers and
employees, under the general supervision of its Board of
Directors, conduct its operations. The following is a summary of
significant accounting policies consistently followed, in all
material respects, by the Corporation in the preparation of its
financial statements. The policies are in conformity with
generally accepted accounting principles.
(1) Security Valuation
Investments in securities traded on a national securities
exchange (or reported on the NASDAQ national market) are valued
at the last reported sales price on the day of valuation; other
securities traded in the over-the-counter market and listed
securities for which no sale was reported on that date are
valued at the last quoted bid price, except for short positions
and call options written, for which the last quoted asked price
is used. Corporate commercial paper is valued at cost, which
approximates market value. Investments in real estate are valued
at fair value as determined by the Board of Directors.
(2) Federal Income Taxes
The Corporation's policy is to comply with the requirements of
the Internal Revenue Code of 1986, as amended (the "Code") that
are applicable to regulated investment companies and to
distribute substantially all its taxable income to its
shareholders.
The Corporation for the fiscal year ending December 31, 1997
will probably be a "personal holding company" under the Code,
since five or fewer shareholders own directly or indirectly more
than 50% in value of the Corporation's outstanding stock, and
more than 60% of the Corporation's adjusted ordinary income will
probably be "personal holding company income". As a personal
holding company, the Corporation will be subject to penalty
taxes unless it distributes to its shareholders an amount at
least equal to its otherwise undistributed personal holding
company income, net of appropriate deductions applicable
thereto. It is anticipated that the Corporation will not have
any undistributed personal holding company income for the year
ended December 31, 1997. Personal holding company income does
not include the excess, if any, of net realized long-term
capital gains over net realized short-term capital losses, less
any Federal income tax attributable to such excess. The
Corporation has considered methods of minimizing the possible
tax impact of being a personal holding company, and if
appropriate, will make sufficient distributions to shareholders
so that the Corporation will not be subject to such penalty tax.
<PAGE>
(3) Securities Transactions
Securities transactions are accounted for on the date the
securities are purchased or sold (trade date), dividend income
is recorded on the ex-dividend date and interest income is
accrued as earned. Gains and losses from securities transactions
were computed on the identified cost basis.
(4) Distributions to Shareholders
Dividends to shareholders are recorded on the dividend
declaration date.
(5) 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 and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
Note B - Securities Transactions
The following summarizes all securities transactions by the
Corporation for the six months ended June 30, 1997:
Purchases (includes $14,000,000 of short term
corporate commercial paper) ........ $18,995,541
Sales (includes $13,500,000 of short term
corporate commercial paper) ............... $16,939,858
Net gain on investments for the six months ended June 30, 1997
was $1,032,843. This amount represents the net increase in value
of investments held during the period. The components are as
follows:
Long transactions ............................ $1,032,843
Net gain on investments ..................... $1,032,843
Gross unrealized gains and losses in the Corporation's portfolio
of investments amounted to $3,887,698 and $929,524, respectively, as
at June 30, 1997.
Note C - Rent
The Corporation sublets a portion of office space at 635
Madison Avenue, New York, NY, from Windy Gates Corporation
("Windy Gates"), a corporation controlled by Walter Scheuer, the
Chairman of the Board of Directors and principal shareholder of
the Corporation. The term of the Windy Gates lease expires on
June 30, 2004. The term of the sublease to the Corporation
expires on June 30, 2004. The annual rental obligation of these
premises is being allocated between the Corporation and Windy
Gates on the basis of each such party's use of this space. The
Corporation's current net annual expense for this space is
approximately $24,000.<PAGE>
Note D - Other Transactions with Affiliates
Aggregate remuneration paid or accrued by the Corporation for
the six months ended June 30, 1997 to certain persons who were
"affiliated persons" within the meaning of the Act, was as
follows:
Officers' salaries................................ $ 84,750
Amount paid or accrued under Pension Plan ........ 12,533
Directors' fees................................... 20,000
Incident to the sublease arrangements for office space at 635
Madison Avenue referred to in Note C above, Mr. Scheuer and the
Corporation, have allocated certain of the expenses incurred in
connection with each of such party's use of various services
located thereat, including office equipment and secretarial,
administrative and internal accounting personnel. For the six
months ended June 30, 1997, Mr. Scheuer and the Corporation paid
or accrued approximately $239,000 and $50,000, respectively, in
connection with the allocation of expenses incurred with respect
to the use of such services. In addition, during the period
certain persons who are also officers of the Corporation
rendered services to Mr. Scheuer personally for which they
received compensation from Mr. Scheuer.
Note E - Pension Plan
The Corporation has a defined benefit pension plan covering
substantially all of its employees', other than Union employees
and part-time employees. The benefits are based on years of
service and the employee's compensation. The Corporation's
funding policy is to contribute annually the maximum amount that
can be deducted for Federal income tax purposes. Contributions
are intended to provide not only for benefits attributed to
service to date but also for those expected to be earned in the
future.
The following table sets forth the plan's funded status and
amounts recognized in the Corporation's statement of assets and
liabilities at December 31, 1996:
Actuarial present value of benefit obligations:
Accumulated benefit obligations, including
vested benefits of $254,581.............................. ($256,717)
Projected benefit obligation for service rendered to date.. (321,008)
Plan assets at fair value.................................. 227,080
Projected benefit obligation in excess of plan assets...... (93,928)
Prior service costs........................................ 44,682
Unrecognized net loss (gain) from past experience different
from that assumed and effect of changes in assumptions..... (39,298)
Unrecognized net transition obligation at January 1, 1996,
being recognized over 25 years............................ 110,118
Accrued pension expense.................................... 29,459
Prepaid pension cost included in other assets.............. 51,033
Net pension cost for 1996 included the following components:
Service cost - benefits earned during the period........... $41,828
Interest cost on projected benefit obligation.............. 24,045
Actual return on plan assets............................... (16,866)
Net amortization and deferral.............................. 9,331
Net periodic pension cost ................................. 58,338
The weighted average discount rate and rate of increase in
future compensation levels used in determining the actuarial
present value of the projected benefit obligation were 6.0% and
3.0% respectively. The expected long-term rate of return on
assets was 8.0%.
Note F- Distributions to Shareholders
On January 22, 1997 the Corporation paid a cash distribution of
$.37 per share to shareholders of record at the close of
business on December 30, 1996. The Corporation believes that
the entire amount of the distribution should be treated as a
distribution of net capital gains and "investment company
taxable income" to shareholders and for Federal income tax
purposes was taxable to calendar year shareholders in 1996 even
though the distribution was paid to shareholders in 1997. The
Board of Directors determined that of the aggregate amount of
the distribution ($925,000), $125,000 be considered a charge on
the Corporation's books against net investment income and
$800,000 be considered a charge on the Corporation's books
against net realized gains. Detailed information with respect to
the distribution has been provided to each shareholder.
On August 1, 1997 the Board of Directors of the Corporation
declared a cash distribution of $.037 per share, payable
September 10, 1997 to shareholders of record at the close of
business on August 27, 1997. The entire amount of the
distribution represents a distribution of net capital gains and
"investment company taxable income" to shareholders realized by
the Corporation during 1996 that was not previously distributed
to shareholders. The Corporation believes that the entire amount
of the distribution should be treated as a distribution of net
capital gains and "investment company taxable income" to
shareholders and for Federal income tax purposes is taxable to
such calendar year shareholders in 1997 even though the
distribution represents net capital gains and "investment
company taxable income" realized by the Corporation during 1996.
The Board of Directors determined that of the aggregate amount
of the distribution ($92,500), $23,015 be considered a charge on
the Corporation's books against net investment income and
$69,485 be considered a charge on the Corporation's books
against net realized gains. Detailed information with respect to
the distribution will be provided to each shareholder.
STERLING CAPITAL CORPORATION
SUPPLEMENTARY INFORMATION
As at June 30, 1997
Selected data for each share of capital stock outstanding
throughout each period:
Six Months
ended Year Ended December 31
June 30, 1997 1996 1995 1994 1993 1992
(Unaudited)(1) (Audited)
Investment income ............... $.18 $.27 $.39 $.38 $.36 $.35
Expenses ........................ .12 .21 .25 .28 .24 .31
Net investment income ........... .06 .06 .14 .10 .12 .04
Distributions of net realized
capital gains ................... -- (.36) (.53) - (.67) (.96)
Distributions of net investment income -- (.06) (.15) (.08) (.15) -
Net realized gain (loss) and increase
(decrease) in unrealized appreciation .41 1.02 1.16 (.68) 1.08 .72
Net increase (decrease) in net asset
value .47 .66 .62 (.66) .38 (.20)
Net asset value:
Beginning of period ............... 8.15 7.49 6.87 7.53 7.15 7.35
End of period .................... $8.62 $8.15 $7.49 $6.87 $7.53 $ 7.15
Ratio of expenses to average
net assets 1.4% 2.6% 3.4% 3.8% 3.1% 4.0%
Ratio of net investment income to
average net assets ................. .7% .8% 1.8% 1.3% 1.6% .6%
Portfolio turnover ................ 21% 57% 51% 77% 95% 99%
Number of shares outstanding at end
of each period (in 000's) ......... 2,500 2,500 2,500 2,500 2,500 2,500
(1) Not annualized
<PAGE>
