CENTRAL ASSET FUND, INC.
Statement of Assets and Liabilities
June 30, 1999
(Unaudited)
Assets
Cash and cash equivalents $ 67,348
Interest receivable 270
Total Assets 67,618
Liabilities
Accrued expenses 23,500
Total Liabilities 23,500
Net Assets $ 44,118
Net assets are represented by:
Common stock at par value, $.01 per share, 199,997,500 shares
authorized, 4,411,800 shares issued and outstanding 44,118
Net Assets $ 44,118
Net asset value per common shares outstanding $ 0.01
See accompanying notes
CENTRAL ASSET FUND, INC.
Statement of Operations
For the period from January 1, 1999 to June 30, 1999
(Unaudited)
Investment income:
Dividend income $ 266,205
Interest income 16,268
Total investment income 282,473
Expenses:
Administration fees (Note 2) 36,736
Investment management fee (Note 2) 6,968
Independent auditors 10,517
Interest expense 9,907
Directors fees and expenses 3,000
Legal fees 5,933
Other expenses 439
Total expenses 73,500
Net investment income 208,973
Net realized and unrealized gains (losses) on investments:
Net realized gains on investments: 2,194,031
Net decrease in net assets resulting
from operations $ 2,403,004
See accompanying notes
CENTRAL ASSET FUND, INC.
Statement of Changes in Net Assets
For the period from January 1, 1999 to June 30, 1999
and for the period from March 24, 1998 (commencement of operations) to
December 31, 1998
(Unaudited)
For the six
months ended For the
June 30, 1999 period ended
(UNAUDITED) December 31, 1998
From operations:
Net investment income $ 208,973 5,555,053
Net realized loss on investments 2,194,031 386,994
Net change in unrealized appreciation
on investments 0 55,412,397
Increase (decrease) in net assets resulting from
operations 2,403,004 61,354,444
Dividends from net investment income:
Auction market preferred stock 0 (5,555,053)
Common stock (208,973) 0
(208,973) (5,555,053)
Distributions from net realized gains:
Auction market preferred stock 0 (385,437)
Common stock (2,194,031) (1,557)
Decrease in net assets resulting from
distibutions to stockholders (2,403,004) (5,942,047)
Increase (decrease) from capital transactions:
Issuance of auction market preferred stock 0 200,000,000
Redemption of auction market preferred stock 0 (200,000,000)
Issuance of common stock 0 257,421,450
Redemption of common stock (213,303) 0
Additional paid-in-capital 0 202,001,557
Distribution of capital to common
stockholder (514,577,983) 0
(514,791,286) 459,423,007
Total increase (decrease) in net assets (514,791,286) 514,835,404
Net assets:
Beginning of period 514,835,404 0
End of period $ 44,118 514,835,404
See accompanying notes
CENTRAL ASSET FUND, INC.
Notes to the Financial Statements
June 30, 1999
(Unaudited)
1. Organization and Significant Accounting Policies
On January 7, 1999 the Board of Directors approved a Plan of Liquidation and
Dissolution for the Fund. Management is in the process of liquidating the
Fund and expects to complete the process by August 31, 1999.
The Central Asset Fund, Inc. (the "Fund") is registered as a diversified,
closed-end management investment company under the Investment Company Act of
1940, as amended.
On the date of commencement, the Fund issued $200 million of Auction Market
Preferred Stock ("AMPS") and received securities with an aggregate fair value
of $457,421,449 from a collective trust fund for employee benefit plans in
exchange for 25,742,144.95 shares of common stock and $200 million in cash.
The following is a summary of significant accounting policies consistently
followed by the Fund in preparation of its financial statements.
Security Transactions
Security transactions are accounted for on a trade date plus one business day
basis which does not differ materially from a trade date basis. The cost of
securities sold is determined using the identified cost method. Dividend
income is recorded on ex-dividend date and interest income is recorded on the
accrual basis.
Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and distribute its
taxable income to shareholders. Therefore, no provision for Federal income
tax is required.
Distribution of Income and Gains
The Fund distributes substantially all of its taxable income in excess of the
dividends paid to the preferred stockholders to the common stockholder.
Dividends to the common stockholder are declared and paid at least annually.
Net capital gains, if any, are generally distributed annually.
The character of income and gains to be distributed is determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. Amounts distributed in excess of taxable
income and net realized gains, if any, are considered a return of capital.
Use of Estimates
Estimates and assumptions are required to be made regarding assets,
liabilities and changes in net assets resulting from operations when financial
statements are prepared. Changes in the economic environment, financial
markets and any other parameters used in determining these estimates could
cause actual results to differ from these amounts.
2. Related Party Transactions
A collective trust fund for employee benefit plans was the sole common
stockholder of the Fund. Certain officers and directors of the Fund were
affiliated with the common stockholder. No fees or expenses were paid to the
affiliated officers and directors.
For the period ended June 30, 1999 and the period from March 24, 1998
(commencement of operations) to December 31, 1998, dividend and capital gain
distributions to the common stockholder were $2,631,307 and $1,557,
respectively.
During the six months ended June 30, 1999 and the period from March 24, 1998
(commencement of operations) to December 31, 1998, return of capital
distributions to the common stockholder amounted to approximately $459,200,000
and $0, respectively.
Comerica Bank served as both custodian and administrator for the Fund and
received a fee based on a percentage of net assets outstanding at the end of
the fiscal year. An affiliate of Comerica Bank served as investment advisor
to the Fund. The annual investment management fee was 0.01% of average equity
investments. The administration and management fees were calculated and
accrued on a monthly basis and generally were paid on a quarterly basis.
3. Investment Transactions
The aggregate cost of securities purchased and the aggregate proceeds of
securities sold excluding short-term securities, for the six months ended June
30, 1999 were $1,399,050 and $13,917,609, respectively.
4. Year 2000 (Unaudited)
Like other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by the advisor/administrator and other service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. This is commonly known as the "Year 2000 Problem". The
advisor/administrator is taking steps that it believes are reasonably designed
to address the Year 2000 Problem with respect to computer systems that it uses
and to obtain reasonable assurances that comparable steps are being taken by
the Fund's other major service providers. At this time, however, there can be
no assurance that these steps will be sufficient to avoid any adverse impact
to the Fund.
CENTRAL ASSET FUND, INC.
Financial Highlights
For the six
months ended
June 30, 1999
(Unaudited) 1998(1)
For a share of common stock outstanding
throughout the period:
Net asset value, beginning of period 20.00 10.00
Net investment income 0.01 0.21
Net realized and unrealized gains
(losses) on investments 0.09 2.17
Total from investment operations 0.10 2.38
Capital contribution 0.00 7.85
Less distributions from net investment income:
Common stock equivalent of dividends
paid to AMPS holders 0.00 (0.22)
Dividends paid to common shareholders (0.01) -
Less distributions from net net realized gains:
Common stock equivalent of dividends - (0.01)
paid to AMPS holders
Dividends paid to common shareholders (0.09) -
Less distributions from paid-in capital:
Return of capital to common stockholder (19.99) -
Total distributions (20.09 (0.23)
Net asset value, end of period $0.00 $20.00
Total investment return 0.47% 23.80%(2)
Ratios/supplemental data:
Net assets at end of period (000s) 44 514,835
Average net assets (000s) 80 463,966
Ratio of expenses to average net assets
applicable to common stock (4) 91.67% 0.15%(3)
Ratio of net investment income to average net
assets applicable to common stock (4) 260.65% 1.20%(3)
Portfolio turnover 1744.99% 0.32%
Asset coverage per AMPS share
end of period - -
AMPS shares outstanding - -
Asset coverage for notes payable,
end of period - 108,272%
Notes payable, end of period - $ 475,500
(1)For the period from March 24, 1998 (commencement of operations)
to December 31, 1998.
(2)Total investment return for the period, not annualized.
(3)Annualized
(4)Ratios are calculated on the basis of income and expenses
applicable to both the common and preferred stock relative to the
average net assets of the common stockholder. Ratios do not
reflect the effect of dividend payments to AMPS holders. Ratios
See accompanying notes to financial statements.
