Keyco Bond Fund, Inc.
Statement of Assets and Liabilities
as of March 31, 1997
ASSETS
Investments in securities, at fair value
(cost $24,775,491) $26,290,525
Cash 22,461
Accrued interest receivable 541,075
Other assets 740
----------
Total assets 26,854,801
----------
LIABILITIES
Dividends payable 169,531
Accrued liabilities 4,167
----------
Total liabilities 173,698
----------
Net assets applicable to outstanding capital
shares, equivalent to $21.05 per share
based on 1,267,258 shares of capital stock
outstanding $26,681,103
==========
The accompanying notes are an integral part
of the financial statements.
<PAGE>
Keyco Bond Fund, Inc.
Statement of Operations
for the six months ended March 31, 1997
Interest income $806,110
Expenses:
Legal and accounting $24,428
Custodial fee 6,000
Directors' fees 2,000
Miscellaneous expense 768
------
Total expenses 33,196
---------
Net investment income 772,914
Realized gain on investments:
Proceeds from calls and sales 405,069
Cost of securities called or
sold 406,784
---------
Realized loss on investments (1,715)
Unrealized depreciation of investments:
Investments held, March 31, 1997:
At cost 24,775,491
At fair value 26,290,525
----------
Balance, March 31, 1997 1,515,034
Less balance, September 30, 1996 1,628,215
----------
Unrealized depreciation of invest-
ments (113,181)
--------
Increase in net assets resulting from
operations $ 658,018
=========
The accompanying notes are an integral part of the financial statements.
<PAGE>
Keyco Bond Fund, Inc.
Statement of Changes in Net Assets
for the six months ended March 31, 1997 and 1996
1997 1996
Net assets, beginning of period $26,796,112 $26,840,276
---------- ----------
Changes in net assets from operations:
Net investment income 772,914 781,189
Realized gain (loss) on investments (1,715) 60,788
Unrealized appreciation (depreciation)
of investments (113,181) 10,665
---------- ----------
Increase in net assets from operations 658,018 852,642
Changes in net assets from capital
transactions:
Dividends declared from net investment
income (773,027) (773,027)
---------- ----------
Net increase (decrease) in net assets (115,009) 79,615
---------- ----------
Net assets, end of year $26,681,103 $26,919,891
========== ===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
Keyco Bond Fund, Inc.
Notes to Financial Statements
1. Significant Accounting Policies:
Keyco Bond Fund, Inc. (the "Company") has registered under the
Investment Company Act of 1940, as amended, as a closed-end,
diversified management company. The Company became qualified as a
regulated investment company under the Internal Revenue Code on
October 1, 1979. Management intends to distribute to the
shareholders substantially all earnings from that date. 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.
a. Security Valuation: The Company has invested substantially
all of its assets in long-term state and municipal debt
obligations. Investments in these tax-exempt securities are
stated at fair value. The fair value of the investments is
provided by the Company's custodian, who utilizes a matrix
pricing system. Due principally to a decrease in interest
rates, the fair value of the investments is currently above
cost, resulting in unrealized appreciation. The principal
amount of each bond, as reflected in the schedule of
portfolio investments, is due at maturity when the bond must
be redeemed by the issuer.
b. Federal Income Taxes: It is the Company's intention to
comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to
distribute all of its income to its shareholders.
Therefore, no federal income tax provision is recorded.
c. Other: Security transactions are accounted for on a trade-
date basis. Cost of securities sold is determined by
specific identification. Distributions to shareholders are
recorded when declared. Interest on investments is recorded
as earned.
2. Net Assets Applicable to Outstanding Capital Shares:
Details of net assets applicable to outstanding capital shares are
as follows:
Capital stock, $.02 par value;
authorized 3,000,000 shares;
issued and outstanding 1,267,258
shares at March 31, 1997 $25,345
Additional paid-in capital 730,733
Retained earnings prior to July 1,
1979 24,093,500
Accumulated undistributed net
investment income 318,206
Accumulated undistributed net
realized loss from
securities transactions (1,715)
Net unrealized appreciation of
investments, March 31, 1997 1,515,034
----------
Net assets, March 31, 1997 $26,681,103
==========
3. Purchases and Dispositions of Securities:
The cost of purchases and the proceeds from dispositions of
securities, other than United States government obligations and
short-term notes, aggregated $398,863 and $405,069,
respectively.
<PAGE>
4. Portfolio Manager:
The Company does not retain the services of an investment advisor or
a third-party portfolio manager. The Company, acting through its
officers and with the review provided by the Board, makes investment
decisions internally.
5. Related Parties:
Legal and accounting expenses incurred include $12,500 for
accounting and administrative services provided by an entity owned
by an officer of the Fund.
<PAGE>
Keyco Bond Fund, Inc.
Schedule of Portfolio Investments
March 31, 1997
<TABLE>
<CAPTION>
Long-Term State and Principal Fair
Municipal Obligations Amount Cost Value
- ----------------------------------- --------- --------- -----------
<S> <C> <C> <C>
Avondale, Michigan, School District,
7.5%, May 2003 $ 500,000 $ 500,000 $523,097
Avondale, Michigan, School District,
7.5%, May 2004 700,000 700,000 732,336
Bay City, Michigan, Electric Utility
Revenue, 6.6%, January 2012 500,000 494,900 524,276
Capac, Michigan, Community School
District, 6.25%, July 2003 100,000 96,920 102,315
Central Michigan University, 5.3%,
October 2006 70,000 66,345 70,603
Chippewa Valley, Michigan, Schools,
7.75%, May 2002 500,000 502,600 516,783
Crosswell and Lexington, Michigan,
Community Schools Building and Site,
6%, May 2016 500,000 500,000 508,038
Dearborn, Michigan, School District,
6.7%, May 1999 100,000 108,744 104,549
Dearborn, Michigan, School District,
6.7%, May 2000 135,000 147,775 143,122
Detroit, Michigan, City Distributable
State Aid, 7.2%, May 2009 1,000,000 995,000 1,073,640
Detroit, Michigan, City School
District, 4.95%, May 2005 200,000 186,398 196,075
Grand Rapids, Michigan, Sanitary Sewer
System, 6%, January 2012 500,000 500,000 510,232
Jackson County, Michigan, 5%,
April 2006 300,000 277,173 296,786
Lansing, Michigan, School District,
6.8%, May 2004 460,000 512,067 510,074
Marquette County, Michigan, Wastewater
Treatment System, 6%, December 2007 175,000 154,553 180,333
Marquette County, Michigan, Wastewater
Treatment System, 6%, December 2008 170,000 149,913 174,928
Michigan Municipal Bond Authority
Revenue, Local Government Wayne
County, PJ-GRP 1213, 7.4%,
December 2002 1,075,000 1,065,497 1,211,799
Michigan Municipal Bond Authority
Revenue, State Revolving Fund,
6.5%, October 2010 550,000 599,769 607,626
Michigan Municipal Bond Authority
Revenue, State Revolving Fund,
6.55%, October 2013 100,000 109,445 109,699
Michigan Municipal Bond Authority
Revenue, Local Government Loan
Program, 6%, December 2013 130,000 134,940 132,567
Michigan State Building Authority
Revenue, 5.125%, October 2008 100,000 91,772 98,168
Michigan State Building Revenue,
Series I, 5.3%, October 2012 500,000 418,505 481,585
Michigan State Building Authority
Revenue, Series I, 5%, October 2014 500,000 500,000 468,912
Michigan State Housing Development
Authority, Rental Housing Revenue,
5.375%, April 2004 70,000 71,537 71,453
Michigan State Housing Development
Authority, Rental Housing Revenue,
5.6%, April 2006 500,000 489,640 513,294
Michigan State University Revenue,
6.125%, August 2010 1,200,000 1,190,892 1,241,144
<PAGE>
Michigan State Trunk Line, Series A,
5.75%, October 2012 250,000 248,673 253,290
Pinckney, Michigan, Community Schools,
Livingston and Washtenaw Counties,
5.5%, May 2004 300,000 268,500 306,099
Portage, Michigan, Public Schools,
5.7%, May 2012 230,000 227,619 232,211
South Lyon Community School District,
Counties of Oakland, Washtenaw and
Livingston, State of Michigan
Building Site Bonds, 7.8%, May 2014 500,000 500,000 529,473
Sturgis, Michigan, Government Hospital,
6.55%, October 2000 325,000 308,750 331,139
Sturgis, Michigan, Government Hospital,
6.6%, October 2001 250,000 237,500 254,658
University of Michigan, Hospital
Revenue, 7%, December 2021 75,000 78,366 81,968
West Bloomfield, Michigan, School
District, 5%, May 2006 100,000 92,357 99,060
Wyandotte, Michigan, Downtown
Development, 6.25%, December 2008 750,000 727,440 811,381
Alaska State Housing Finance
Corporation, 6.1%, June 2007 155,000 155,000 161,286
Alaska State Housing Finance
Corporation, 6.2%, June 2008 285,000 285,000 296,569
California State, 5.7%, August 2003 500,000 481,055 509,053
California State, 5.7%, August 2004 250,000 237,263 253,973
District of Columbia, MBIA, Series B,
6.3%, June 2007 250,000 263,922 265,661
Gainsville, Florida, Utilities
System Revenue, 6.5%, October 2014 750,000 724,900 811,566
Florida State, Hillsborough County
Expressway, G.O., 5.9%, October 2005 750,000 664,058 761,666
Honolulu, Hawaii, New Public Housing
Authority, 5.75%, August 2008 290,000 258,381 296,182
Honolulu, Hawaii, New Public Housing
Authority, 5.75%, August 2009 700,000 622,804 714,750
Joliet, Illinois Corporate Purpose,
7%, January 2012 100,000 106,994 103,008
Maryland State Health and Higher
Educational Facilities Authority
Revenue Johns Hopkins Hospital
Redevelopment Issue, 6.625%,
July 2008 500,000 500,000 532,000
Mercer County, New Jersey,
Improvement Authority Revenue,
State Justice Complex, 6.4%,
January 2018 500,000 463,270 537,144
New York, New York, City Municipal
Assistance Corporation, 6%, July
2008 750,000 755,625 770,580
New York, New York, City Municipal
Water Finance Authority, Water-Sewer
System Revenue, 6.75%, June 2016 400,000 412,768 426,229
New York State Refunding, 6.1%,
November 2008 500,000 500,000 519,237
Monroe County, New York, Water
Improvement, 5.5%, December 2008 610,000 589,034 616,797
Ohio State Building Authority, State
Transportation Facilities, 7%,
September 2003 350,000 389,162 378,269
Erie County, Hospital Authority PA
Revenue, Erie County Geriatric
Center, U. S. Treasury, 6.25%,
July 2011 1,000,000 993,560 1,059,117
Puerto Rico Commonwealth Highway
and Transportation Authority Highway
Revenue, 6.25%, July 2012 500,000 544,085 537,802
<PAGE>
South Carolina State Housing
Authority, Single Family Mortgage
Purchase, 7%, July 2011 500,000 502,500 509,232
Met. Government Nashville and Davidson
County, Tennessee, Health and
Educational Facilities Board Revenue,
Meharry Medical College-HEW,
collateralized, 7.875%, December 2004 225,000 222,059 247,649
Austin, Texas, Utility System Revenue,
6%, April 2006 500,000 474,565 532,183
Sherman, Texas, New Public Housing
Authority, 5.75%, March 2006 200,000 178,876 204,493
Texas Coastal Water Authority, Water
Convey System Revenue, 8.125%,
December 2017 700,000 712,250 720,586
Virginia State Housing Development
Authority, Multifamily Mortgage
Section 8 Assisted, 8.25%, November
2012 25,000 24,770 25,304
Washington State, Public Power Supply
System, Nuclear Project No. 2
Revenue, 6%, July 2012 500,000 460,000 497,476
---------- ---------- ----------
Total investments $25,205,000 $24,775,491 $26,290,525
========== ========== ==========
</TABLE>
<PAGE>
Keyco Bond Fund, Inc.
Financial Highlights
Contained below are per share operating performance data for a share
outstanding, total investment return, ratios and supplemental data. This
information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Six Months
Ended Years Ended September 30,
3/31/97 ----------------------------
(Unaudited) 1996 1995 1994 1993
----------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $21.14 $21.18 $20.73 $22.02 $21.40
----- ----- ----- ----- -----
Net investment income .61 1.24 1.25 1.25 1.29
Net realized and unrealized gain (loss)
on investments (.09) (.02) .45 (1.28) .76
----- ----- ----- ----- -----
Total from investment operations .52 1.22 1.70 (.03) 2.05
----- ----- ----- ----- -----
Less distributions from:
Net investment income (.61) (1.24) (1.25) (1.26) (1.32)
Net realized investment income - (.02) - - (.11)
----- ----- ----- ----- -----
Total distributions (.61) (1.26) (1.25) (1.26) (1.43)
----- ----- ----- ----- -----
Net asset value, end of period $21.05 $21.14 $21.18 $20.73 $22.02
===== ===== ===== ===== =====
Total Return per Share Net
Asset Value (a) 2.5%(c) 5.8% 8.2% (.1)% 9.6%
Ratios and Supplemental Data:
Net assets, end of period (in 000s) $26,681 $26,796 $26,840 $26,264 $27,905
Ratio of net investment income to
average net assets 5.8%(b) 5.8% 6.0% 5.9% 5.9%
Ratio of expenses to average net assets .2%(b) .2% .2% .2% .2%
Portfolio turnover rate 1.5%(c) 9.2% 9.4% 25.4% 16.5%
(a) Total investment return based on per share net asset value reflects the percent return calculated on beginning of
period net asset value and assumes dividends and capital gain distributions were not reinvested. These percentages
are not an indication of the performance of a shareholder's investment in the Company.
(b) Annualized
(c) Not annualized
</TABLE>
