<PAGE> 1
CONTINENTAL MUTUAL INVESTMENT
FUND, INC.
DECEMBER 31, 1995
FINANCIAL STATEMENTS
<PAGE> 2
[TANNER & CO LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
CONTINENTAL MUTUAL INVESTMENT FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Continental Mutual Investment Fund, Inc., as of December 31, 1995, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period ended December 31,
1995, and the supplementary schedule of selected per share data and ratios for
each of the ten years in the period ended December 31, 1995. These financial
statements and per share data and ratios are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and per share data and ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and per share data
and ratios are free of material misstatement. Our procedures included
confirmation of securities owned at December 31, 1995 by corresponding with
the custodian. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and supplementary schedule
referred to above present fairly, in all material respects, the financial
position of Continental Mutual Investment Fund, Inc. at December 31, 1995, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period ended December 31, 1995, and selected
per share data and ratios for each of the ten years in the period ended December
31, 1995, in conformity with generally accepted accounting principles.
During the year The Board of Directors determined that it would be in
the best interest of the shareholders to liquidate the Company. On December 18,
1995, the Company made a distribution to the Company shareholders which
effectively liquidated the Company. The Company ceased operations effective
December 31, 1995.
TANNER & CO.
Salt Lake City, Utah
January 5, 1996
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CONTINENTAL MUTUAL INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS
------
Cash $3,135
Receivable 867
------
Total assets $4,002
------
LIABILITIES
-----------
Accrued expenses 4,002
------
Net assets applicable to outstanding capital
shares - authorized 1,000,000 shares of
$1 par value; no outstanding shares --
------
Net asset value per share $ --
======
</TABLE>
See accompanying notes to financial statements.
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CONTINENTAL MUTUAL INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest $ 54,762
Cash dividends 6,247
--------
61,009
--------
Expenses:
Investment advisory fee 21,107
Postage and printing 8,674
Transfer agent and dividend expense 6,341
Professional fees 4,663
Custodian fee 4,468
Computer 4,120
Director fees 1,350
Miscellaneous 4,319
--------
55,042
--------
Net investment gain 5,967
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain from securities transactions:
Proceeds from sale 603,927
Cost of securities sold (569,530)
--------
Net realized gain on investments 34,397
--------
Change in net unrealized depreciation
of investments:
Beginning of year (65,067)
End of year -
--------
Decrease in net unrealized depreciation
of investments 65,067
--------
Net gain on investments 99,464
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $105,431
========
</TABLE>
See accompanying notes to financial statements.
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CONTINENTAL MUTUAL INVESTMENT FUND, INC.
Statement of Changes in Net Assets
Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income (loss) $ 5,967 (6,717)
Net realized gain on investments 34,397 9,621
Change in net unrealized depreciation
of investments 65,067 (19,447)
----------- ----------
Net increase (decrease) in net assets
resulting from operations 105,431 (16,543)
----------- ----------
Distributions to shareholders:
Net investment (income) loss $.00 and $.00 per share) 750 --
Realized (gains) ($.23 and $.06 per share) (34,397) (9,621)
----------- ----------
Net distribution to shareholders (33,647) (9,621)
----------- ----------
From capital share transactions:
Net asset value of shares (5,403 and 1,405 shares,
respectively) issued to shareholders in
reinvestment of dividends and distributions 38,266 9,384
Payments for redemption of 163,544 and 3,639 shares,
respectively (1,164,129) (25,025)
----------- ----------
Decrease in net assets from
capital share transactions (1,125,863) (15,641)
----------- ----------
Decrease in net assets (1,054,079) (41,805)
----------- ----------
Net assets at beginning of year 1,054,079 1,095,884
----------- ----------
Net assets, end of year (including undistributed net
investment income (loss) of $-0- and ($6,717)
in 1995 and 1994, respectively) $ -- $1,054,079
=========== ==========
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 6
CONTINENTAL MUTUAL INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(1) LIQUIDATION
During the year ended December 31, 1995, the Board of Directors
determined that it was in the best interest of the investors to liquidate
Continental Mutual Investment Fund, Inc. (Company). On December 18, 1995 a final
liquidation was made to all investors based upon their prorata investment in
the Company less an estimate of the remaining liquidation costs.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management company. The following is a
summary of significant accounting policies followed by the Company in the
preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles.
SECURITIES VALUATION
The value of securities traded on any national exchange has been
determined at their last sales price on the year end date. Investments are
stated at value based on latest quoted market prices or at fair value as
determined by the Board of Directors.
FEDERAL INCOME TAXES
It is the Company's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute sufficient taxable income to its shareholders to eliminate federal
income taxes (see note 4).
CASH AND CASH EQUIVALENTS
The Company considers all nongovernment debt instruments of
nine months or less to be cash or cash equivalents.
OTHER
As is common in the industry, security transactions are accounted for
on the date the securities are purchased or sold. Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Discounts
and premiums on securities purchased are amortized over the life of the
respective security.
CONCENTRATION OF CREDIT
The Company is a diversified, open-end management company (Mutual Fund)
investing in common stocks, bonds, U.S. government securities and other
investments. Substantially all investors are individuals, trusts, and
corporations which reside within the United States.
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<PAGE> 7
CONTINENTAL MUTUAL INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(3) MANAGEMENT AND ADVISORY FEES WITH RELATED PARTIES
The Company has contracts with Fund Management & Research Corporation
wherein Fund Management & Research Corporation acts as an investment
advisor to the Company.
The investment advisory contract with Fund Management & Research
Corporation provides for a monthly advisory fee of 1/6th of 1 percent of
the average total net assets of the Company during that month. Investment
advisory fees paid or accrued to Fund Management & Research Corporation in
1995 amounted to $21,107.
In addition, the Company pays to Fund Management & Research Corporation
$750 per quarter to act as dividend paying agent and for maintaining the
voluntary accumulation plan. A total of $3,000 was paid under this
agreement during 1995.
Fund Management & Research Corporation pays commissions and salaries
and provides office space, office facilities, and equipment for the
Company under the terms of the agreement.
The president of Fund Management & Research Corporation is also
president of the Company. All of the outstanding capital stock of Fund
Management & Research Corporation is owned by such officer.
(4) TAX STATUS
The Company qualifies as a regulated investment company for the year
ended December 31, 1995, which requires it to distribute 90% of its
taxable income to its shareholders. Accordingly, the Company distributed
sufficient income on December 31, 1995 to eliminate any federal income tax
liability for 1995.
(5) SALES AND PURCHASES OF SECURITIES
Realized gain on investments for the year ended December 31, 1995 was
computed on the first-in, first-out basis. There would have been no
difference in the gain if average cost had been used for the year then
ended. Purchases and sales of investment securities, excluding short-term
investments, were as follows for the year ended December 31, 1995:
<TABLE>
<S> <C>
Purchase of securities $ 71,151
========
Sale of securities $603,927
Cost of securities sold 569,530
--------
Net realized gain on investments $ 34,397
========
</TABLE>
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<PAGE> 8
CONTINENTAL MUTUAL INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(6) ACCUMULATED UNDISTRIBUTED INVESTMENT INCOME AND REALIZED GAIN
As of December 31, 1995, all net investment income and realized gains
had been distributed as follows:
<TABLE>
<S> <C>
Accumulated net investment (loss) distributed:
December 31, 1995 $ (756)
Accumulated realized gains distributed:
December 31, 1995 34,397
-------
Total net investment income and realized
gain distributed $33,641
=======
Net unrealized depreciation in value of
investments as of December 31, 1995 $ --
=======
</TABLE>
(7) DISTRIBUTION TO SHAREHOLDERS
On December 15, 1995 and 1994 investment distributions of $.23 and
$.06 per share aggregating in $38,266 and $9,384 for 1995 and 1994,
respectively, were declared and distributed from net investment income
and realized gains.
On December 18, 1995, a distribution of $7.08 or $1,119,030 was
distributed to the shareholders to liquidate the Company.
(8) CAPITAL SHARE TRANSACTIONS
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES AMOUNT
--------------------- ----------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Shares issued in reinvestment
of dividends 5,403 1,405 $ 38,266 9,384
======= ===== ========== =====
Shares redeemed 163,544 3,639 $1,164,129 28,025
======= ===== ========== ======
</TABLE>
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<PAGE> 9
CONTINENTAL MUTUAL INVESTMENT FUND, INC.
Supplementary Schedule
Selected Per Share Data and Ratios
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------------------------------------------------------------------
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
1. Investment income $ .44 .47 .50 .56 .48 .45 .30 .29 .26 .39
2. Expenses .26 .26 .28 .34 .31 .29 .30 .30 .30 .35
--- --- --- --- --- --- --- --- --- ---
3. Net investment
income (loss) .18 .21 .22 .22 .17 .16 .00 (.01) (.04) .04
4. Dividends from net
investment income (.24) (.18) (.44) (.22) (.17) (.16) (.00) (.01) .00 .00
5. Net realized and
unrealized gain
(losses) on
securities .54 .42 .49 (.06) (.09) .62 .17 (.22) (.06) .60
6. Distributions from
net realized gain
on securities .00 .00 (.39) (.12) (.03) (.16) (.23) (.15) (.06) (.23)
--- --- --- --- --- --- --- --- --- ---
7. Net increase
(decrease) in net
asset value .48 .45 (.12) (.18) (.12) .46 (.06) (.39) (.16) .41
8. Net asset value
at beginning of
period 6.31 6.79 7.24 7.12 6.94 6.82 7.28 7.22 6.83 6.67
9. Distribution of
net assets - - - - - - - - - (7.08)
--- --- --- --- --- --- --- --- --- ---
10. Net asset value
at end of period 6.79 7.24 7.12 6.94 6.82 7.28 7.22 6.83 6.67 -
==== ==== ==== ==== ==== ==== ==== ==== ==== ====
RATIOS
11. Expenses to
average net
assets % 4.04 3.71 3.79 4.73 4.51 4.21 4.11 4.33 4.43 5.06
12. Net investment
income (loss)
to average net
assets % 2.73 2.97 2.97 3.17 2.46 2.25 .00 .00 (.63) .55
13. Portfolio
turnover ratio 131 125 58 181 .18 187 306 88 0 .30
14. Number of shares
outstanding at
end of period 141,684 140,393 153,111 154,618 154,742 158,346 159,005 160,375 158,141 -
</TABLE>
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