<PAGE> 1
SCIOTO INVESTMENT COMPANY
C/O 4561 LANES END ST., COLUMBUS, OHIO 43220
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS:
The accompanying Scioto Investment Company unaudited condensed financial
statements for the six month periods ended June 30, 1998, 1997 and 1996 have
been compiled by management in accordance with the instructions for interim
financial reporting of the Securities and Exchange Commission and do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. These compilations should be read
in conjunction with the Company's annual audited financial statements and the
notes thereto included in the previously released Annual Reports to Shareholders
and the Securities and Exchange Commission for the years ended December 31,
1997, 1996 and 1995.
In the opinion of management, all adjustments, consisting of normal recurring
accruals, considered necessary for a fair presentation of the financial
information have been included in the accompanying firiancial statements. A
summary of the portfolio positions as of June 30, 1998 and a summary of the
Annual Meeting of Shareholders are attached hereto as pages 3-5. A schedule of
investments as of December 31, 1997 was included in the Company's Annual Report
for 1997. Net investment income per share for the six month periods ended June
30, 1998, 1997 and 1996 was $0.242, $0.256 and $0.267 respectively.
Respectfully submitted,
SCIOTO INVESTMENT COMPANY
Stephen Kellough, Chairman and President
<PAGE> 2
<TABLE>
UNAUDITED CONDENSED STATEMENTS OF ASSETS AND LIABILITIES
<CAPTION>
JUNE 30
----------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
ASSETS:
Investments in tax exempt bonds, at quoted market
values (amortized cost: 1998, $7,511,436;
1997, $7,468,901; 1996, $6,711,366) $7,530,198 $7,468,729 $6,699,363
Cash and cash equivalents 60,876 102,663 1,143,955
Accrued interest receivable 50,222 46,094 37,489
Prepaid expenses 283 283 283
---------- ---------- ----------
TOTAL ASSETS 7,641,579 7,617,769 7,881,090
---------- ---------- ----------
LIABILITIES:
Payable for investment purchased 0 0 260,343
Accrued professional and transfer agent fees 14,427 18,921 19,913
---------- ---------- ----------
TOTAL LIABILITIES 14,427 18,921 280,256
---------- ---------- ----------
NET ASSETS (net asset value per common share,
based upon 447,950 common shares outstanding:
1998, $17.03; 1997, $16.96; 1996, $16.97) $7,627,152 $7,598,848 $7,600,834
---------- ---------- ----------
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</TABLE>
<PAGE> 3
SCIOTO INVESTMENT COMPANY
C/O 4561 LANES END ST., COLUMBUS, OHIO 43220
<TABLE>
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30
--------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME - Nontaxable interest income,
net of bond premium amortization and discount
accretion of $12,731 in 1998; $15,439 in 1997;
and $10,957 in 1996 $151,291 $156,841 $160,057
-------- -------- --------
OPERATING EXPENSES:
Professional services 34,670 34,551 29,731
Directors' fees 5,000 4,500 4,500
Other expenses 3,005 3,122 6,121
-------- -------- --------
TOTAL OPERATING EXPENSES 42,675 42,173 40,352
-------- -------- --------
NET INVESTMENT INCOME 108,616 114,668 119,705
NET LOSS ON INVESTMENTS:
Unrealized depreciation of investments (754) (20,856) (55,165)
-------- -------- --------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $107,862 $ 93,812 $ 64,540
-------- -------- --------
-------- -------- --------
</TABLE>
<PAGE> 4
<TABLE>
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30
--------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income $ 108,616 $ 114,668 $ 119,705
Unrealized depreciation of investments (754) (20,856) (55,165)
---------- ---------- ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 107,862 93,812 64,540
DIVIDENDS TO SHAREHOLDERS FROM NET
INVESTMENT INCOME 111,988 125,426 116,467
---------- ---------- ----------
NET DECREASE IN NET ASSETS (4,126) (31,614) (51,927)
NET ASSETS, BEGINNING OF PERIOD 7,631,278 7,630,462 7,652,761
---------- ---------- ----------
NET ASSETS, END OF PERIOD, including
undistributed net investment income of
$183,749, $174,414 and $188,385 respectively $7,627,152 $7,598,848 $7,600,834
---------- ---------- ----------
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</TABLE>
<PAGE> 5
<TABLE>
SCIOTO INVESTMENT COMPANY
FIFTH THIRD/THE OHIO COMPANY ACCOUNT PORTFOLIO SUMMARY
<CAPTION>
CURRENT MARKET EST. ANNUAL EST
SYMBOL QUANTITY DESCRIPTION PRICE VALUE INCOME YLO
BONDS - MUNICIPAL
<S> <C> <C> <C> <C> <C> <C>
OHI010086CQ7 200,000 AKRON OHIO SWR SYS REV 99.871 199,742.00 8,000.00 4.00
BOOK ENTRY ONLY FGIC
4% 12/01/01
OHI0672038VO 300,000 BARBERTON OHIO CITY SCH DIST 100.381 301,143.00 13,050.00 4.33
BOOK ENTRY ONLY FGIC
4.35% 11/01/04
OHIO89707FV) 100,000 BIG WALNUT OHIO LOC SCH DIST D 100.350 100,350.00 4,000.00 3.98
BOOK ENTRY ONLY AMBAC BNKQL
4% 12/01/99
OHIO89707FXG 100,000 BIG WALNUT OHIO LOC SCH DIST F 100.569 100,569.00 4,200.00 4.17
BOOK ENTRY ONLY AMSAC BNKQL
4.2% 12/01/01
OHIO138429FA8 115,000 CANTON OHIO 100.617 115,709.55 5,750.00 4.96
BOOK ENTRY ONLY AMBAC
5% 12/01/98
CLOH4.85%00 300,000 CLERMONT CNTY OHIO HOSP FACS R 101.836 305,508.00 14,550.00 4.76
MERCY HELATH SYS SER B AMBAC R
4.85% 09/01/00
COOH4.55%99 300,000 COLUMBUS OHIO RFDG SER C BOOK 101.071 303,213.00 13,650.00 4.50
ONLY LT NON CALLABLE
4.55% 09/15/99
COOH4.50%98 300,000 COLUMBUS OHIO CITY SCH DIST RF 100.384 301,152,00 13,350.00 4.43
BOOK ENTRY ONLY N/C
4.45% 12/01/98
OHI199521AW5 200,000 COLUMBUS OHIO MUN ARPT AUTH RE 100.690 201,380.00 9,000.00 4.46
BOOK ENTRY ONLY AMBAC
4.5% 01/01/03
CHOH4.10%98 300,000 CUYAHOGA CNTY OHIO BOOK ENTRY 100.211 300,633.00 12,300.00 4.09
LT N/C
4,1% 11/15/98
OHI263715EH3 200,000 DUBLIN OHIO LOC SCH DIST 107.211 214,422.00 14,250.00 6.64
REGISTERED
7.125% 12/01/00
OHI2637IGBE9 150,000 DUBLIN OHIO CITY SCH DIST 103.052 154,578.00 7,875.00 5.09
BOOK ENTRY ONLY AMBAC
5.25% 12/01/00
OH1317765BG9 125,000 FINDLAY OHIO WTR REV 100.906 126,132.50 5,500.00 4.36
SOCK ENTRY ONLY MBIA
4.4% 11/01/99
HMOHG.40%05 125,000 HAMILTON CNTY OHIO SWR SYS REV 108.245 135,306.25 8,000.00 5.91
RFOG SER A REG O.I.D. REOF 097
6.4% 12/01/05
OHI407837AZG 200,000 HAMILTON OHIO WASTEWTR SYS REV 100.104 200,208.00 8,600.00 4.29
BOOK ENTRY ONLY
4.3% 10/15/04
OHI43162lEJ6 400,000 HILLIARD OHIO SCH DIST 100.151 400,604.00 15,600.00 3.89
BOOK ENTRY ONLY FGIC
3.9% 12/01/98
</TABLE>
<PAGE> 6
<TABLE>
SCIOTO INVESTMENT COMPANY
FIFTH THIRD/THE OHIO COMPANY ACCOUNT PORTFOLIO SUMMARY
<CAPTION>
CURRENT MARKET EST. ANNUAL EST
SYMBOL QUANTITY DESCRIPTION PRICE VALUE INCOME YLO
<S> <C> <C> <C> <C> <C> <C>
HIOH4%99 300,000 HILLIARD OHIO SCH DIST SER A F 100.377 301,131.00 12,000.00 3.98
BOOK ENTRY ONLY UT
4% 12/01/99
OH1531150CR9 100,000 LIBERTY OHIO LOC SCH DIST 100.526 100,526.00 4,150.00 4.12
BOOK ENTRY ONLY FGIC
4.15% 12/01/00
OH1567796AB3 100,000 MARIETTA OHIO WTR REV 100.320 100,320.00 4,300.00 4.28
BOOK ENTRY ONLY AMBAC BNKQL
4.3% 12/01/98
OH1613478CE4 200,000 MONTGOMERY CNTY OHIO 100.743 201,486.00 10,600.00 5.26
REGISTERED
5.3% 12/01/98
OHI613551AC4 100,000 MONTGOMERY CNTY OHIO SOLID WAS 100.189 100,189.00 4,100.00 4.09
BOOK ENTRY ONLY MBIA
4.1% 11/01/98
OHI630684CP1 100,000 NAPOLEON OHIO CITY SCH DIST 100.G87 100,687.00 4,150.00 4.12
BOOK ENTRY ONLY AMBAC BNKOL
4.15% 12/01/00
OHI67755ACV3 700,000 OHIO ST BLDG AUTH 100.111 700,777.00 28,000.00 3.99
BOOK ENTRY ONLY
4% 10/01/98
OH185022KAVZ 300,000 SPRINGBORO OHIO CMNTY CITY SCH 100.109 300,327.00 11,400.00 3.79
BOOK ENTRY ONLY AMBAC
3. 8% 12/01/98
OHI851188DH2 250,000 SPRINGFIELD OHIO LOC SCH DIST 101.090 252,725.00 15,312.50 6.05
REGISTERED BNKQL
6.125% 12/01/98
OHI889278AC1 300,000 TOLEDO OHIO 100.448 301,344.00 12,300.00 4.08
BOOK ENTRY ONLY FGIC
4.1% 12/01/99
OHI889396HD2 200,000 TOLEDO OHIO WTRWKS REV 100.268 200,536.00 8,500.00 4.23
BOOK ENTRY ONLY FGIC
4. 25% 11/15/98
OH1914116CS5 400,000 UNIVERSITY CINCINNATI OHIO CTF 99.934 399,736.00 17,600.00 4.40
BOOK ENTRY ONLY MBIA
4. 4% 12/01/05
OHI915506HQ5 600,000 UPPER ARLINGTON OHIO CITY SCH 100.109 600,654.00 22,800.00 3.79
BOOK ENTRY ONLY MBIA
3.8% 12/01/98
OH1960028JS8 200,000 WESTERVILLE OHIO CITY SCH DIST 100.299 200,598.00 8,500.00 4.23
BOOK ENTRY ONLY FGIC
4.25% 12/01/98
OHI987643QZ9 200,000 YOUNGSTOWN OHIO 104.256 208,512.00 14,000.00 6.71
REGISTERED
7% 12/01/99
--------- ----------
$7,465,00 $7,530,198
--------- ----------
--------- ----------
</TABLE>
<PAGE> 7
SCIOTO INVESTMENT COMPANY
SUMMARY OF ANNUAL MEETING OF SHAREHOLDERS
The Company held its 1998 Annual Meeting of Shareholders June 3, 1998.
At the meeting, shareholders present in person and by proxy were as follows: of
the 108,800 Class A common shares outstanding (one vote per share), a total of
67,660 were represented; and of the 339,150 Class B common shares outstanding
(ten votes per share), 284,050 were represented; therefore, 351,710 of the
common shares representing approximately 83.1% of the total voting power of the
Company were represented at the meeting.
A resolution fixing the number of Directors at six passed with
2,908,160 votes FOR, 0 votes AGAINST and 0 votes ABSTAINING.
The following persons were elected as members of the Company's Board of
Directors to serve until the annual meeting following their election or until
their successors are duly elected and qualified. Each person received the number
of votes FOR, votes WITHHELD and votes NOT CAST as indicated below.
Name Votes For Votes Withheld Votes Not Cast
Stephen Kellough 2,907,910 0 250
Marilyn Brown Kellough 2,907,910 0 250
Donald C. Fanta 2,907,910 0 250
Arthur D. Herrmann 2,907,910 0 250
John Josephson 2,907,910 0 250
Kent K. Rinker 2,907,910 0 250
A resolution to ratify the selection of Deloitte & Touche LLP as the
independent accountants for Scioto Investment Company for the 1998 year passed
with 2,908,150 votes FOR, 0 votes AGAINST and 10 votes to ABSTAIN.
