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BMC FUND, INC.
Financial Statements and
Additional Information for the
Six Months Ended September 30, 1998
<PAGE>
BMC FUND, INC.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Page
Directors and Officers 1
Letter to Shareholders 2
Statement of Assets and Liabilities 3
Statement of Operations 4
Statements of Changes in Net Assets 5
Notes to Financial Statements 6-7
Financial Highlights 8
Schedules:
I Investments in Securities of Unaffiliated Issuers 9-20
II Investments - Other than Securities 21
III Investments in Affiliates 22
<PAGE>
BMC FUND, INC.
DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
DIRECTORS
E. D. Beach Lenoir, North Carolina
James T. Broyhill Winston-Salem, North Carolina
Paul H. Broyhill Lenoir, North Carolina
William E. Cooper Dallas, Texas
Lawrence Z. Crockett Vero Beach, Florida
Willard A. Gortner Naples, Florida
Allene B. Heilman Clearwater, Florida
Harry Heltzer Lenoir, North Carolina
Gene A. Hoots Charlotte, North Carolina
Michael G. Landry Fort Lauderdale, Florida
Dolph W. von Arx Naples, Florida
OFFICERS
Paul H. Broyhill Chairman
E. D. Beach President, Secretary and
Treasurer
Carol Frye Assistant Secretary and
Assistant Treasurer
DIRECTORS EMERITUS
Clarence E. Beach Lenoir, North Carolina
Clarence A. Holden Lenoir, North Carolina
- 1 -
<PAGE>
CONFIDENTIAL: For the use of the shareholders and the Securities and Exchange
Commission only.
TO OUR SHAREHOLDERS:
We are happy to present to you our semi-annual report, which we believe contains
complete and pertinent financial information.
BMC Fund, Inc. became a Regulated Investment Company (RIC) on April 1, 1981.
During the six months ended September 30, 1998, the Fund paid the following
dividends per share:
First of each month $.11 (7 months) (includes dividend
declared September 25, 1998 and paid October 1, 1998) $ .77
Special dividend - June .28
--------
Total $ 1.05
========
We now have tax-exempt investments in 122 securities with an average time to
maturity of approximately one year, five months. We have invested in issues of
25 states. Our highest investment in any state is North Carolina in which we
have a par value of $23,507,000 invested. Our present holdings are rated as
follows (in thousands):
AAA $26,865
AA 18,830
A 30,867
-------
Total $76,562
=======
In order to maintain an active role in investing, we have arranged our
tax-exempt investments to mature at planned intervals as follows:
Par Value % of
Calendar Year Average September 30, Tax-Exempt
Due Dates: Yield 1998 Investments
1998 3.95 $27,300,000 35.66
1999 4.27 30,912,000 40.37
2000 4.26 15,900,000 20.77
2001 5.25 1,500,000 1.96
2002 5.40 950,000 1.24
---- ----------- ------
Total 4.18 $76,562,000 100.00
==== =========== ======
In addition to the tax-exempt investments, we have a taxable portfolio with a
fair market value of $44,440,827 at September 30, 1998.
It is our intent to render reports to shareholders each six months.
Paul H. Broyhill, Chairman E. D. Beach, President
- 2 -
<PAGE>
BMC FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
ASSETS AT MARKET VALUE:
Investment securities (cost - $113,434,069) $122,125,642
Investment in affiliates - wholly owned subsidiaries
(equity value - $14,376,111) 21,547,144
Investment real estate (cost - $147,640) 150,000
Cash 762,063
Receivables, principally accrued interest 919,494
Other assets 19,176
------------
Total assets 145,523,519
------------
LIABILITIES:
Due to brokers 1,743,254
Accounts payable and accrued expenses 38,140
Dividends payable 542,661
------------
Total liabilities 2,324,055
------------
NET ASSETS AT SEPTEMBER 30, 1998 - EQUIVALENT TO $29.03 PER
SHARE ON 4,933,281 SHARES OF $5.00 PAR VALUE COMMON STOCK
OUTSTANDING - Authorized capital 70,000,000 shares $143,199,464
============
SUMMARY OF SHAREHOLDERS' EQUITY:
Common stock, par value $5.00 per share;
authorized, 70,000,000 shares; outstanding,
4,933,281 shares $ 24,666,405
Retained earnings prior to becoming investment company 92,939,370
Undistributed net investment income 486,536
Realized gain on investments 4,047,473
Undistributed nontaxable gain 5,194,714
Unrealized appreciation of investments 15,864,966
------------
NET ASSETS, APPLICABLE TO COMMON STOCK OUTSTANDING $143,199,464
============
See accompanying notes to financial statements.
- 3 -
<PAGE>
BMC FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Income:
Exempt interest $ 1,728,248
Other interest and dividends 661,505
Earnings of wholly owned subsidiaries 360,987
-----------
Total income 2,750,740
-----------
Expenses:
Legal and professional fees 25,945
Directors' fees (Note 2) 11,000
Officers' remuneration (Note 2) 33,000
Investment expenses 57,473
Salaries and commissions 22,981
Property and liability insurance 4,610
Depreciation expense 1,077
Taxes and license 22,869
Rent 7,050
Office supplies and expense 3,179
Travel and entertainment 30,652
Miscellaneous 1,340
-----------
Total expenses 221,176
-----------
Investment income, net 2,529,564
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain from investment securities sold 4,047,473
Change in unrealized appreciation of investments
for the period (8,902,988)
-----------
Net loss on investments (4,855,515)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(2,325,951)
===========
See accompanying notes to financial statements.
- 4 -
<PAGE>
BMC FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income $ 2,529,564 $ 2,827,430
Net realized gain on investments 4,047,473 1,158,303
Change in unrealized appreciation (8,902,988) 6,950,201
------------- -------------
Net increase (decrease) in net assets
resulting from operations (2,325,951) 10,935,934
Distributions to shareholders from investment
income - net 5,179,945 4,933,281
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (7,505,896) 6,002,653
NET ASSETS - Beginning of period 150,705,360 144,702,238
------------- -------------
NET ASSETS AT END OF PERIOD (INCLUDING
UNDISTRIBUTED NET INVESTMENT INCOME
(1998 - $486,536; 1997 - $441,768) $ 143,199,464 $ 150,704,891
============= =============
</TABLE>
See accompanying notes to financial statements.
- 5 -
<PAGE>
BMC FUND, INC.
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
BMC Fund, Inc. (the "Fund") is a closed-end, non-diversified investment
company registered under the Investment Company Act of 1940, as amended.
Prior to becoming a regulated investment company on April 1, 1981, BMC
Fund, Inc. operated as a regular corporation. The following is a summary
of significant accounting policies followed by the Fund in the preparation
of its financial statements. The policies are in conformity with generally
accepted accounting principles for investment companies.
A. Investment Valuations - The municipal bond investments and other
investment securities are stated at market. The cost of the bonds
has been adjusted for amortization of premium and accretion of
discount over the term of the security. Interest income is adjusted
to reflect such amortization and accretion. The market value of the
investment in its wholly owned subsidiaries is based on the
appraised value of the underlying assets. The investments in real
estate are accounted for at appraised values updated by management.
B. Income Taxes - No federal tax provision is required as it is the
Company's policy to comply with the provision of Subchapter M of the
Internal Revenue Code of 1954, as amended, including the
distribution to its shareholders of substantially all of its income
and any capital gains not offset by capital losses. Also, no state
income tax provision has been provided because the states in which
the Fund has income recognizes the tax exempt status of a regulated
investment company.
C. Investment Transactions - Investment transactions are accounted for
on the date the order to buy or sell is executed. Realized gains and
losses on investments are determined on the basis of specific
identification of issues sold or matured.
D. Dividend Policy - It is the Fund's policy to pay dividends during
the year in sufficient amounts to meet the requirements to maintain
its status as a regulated investment company.
E. Temporary Cash and Short-term Investments - For purposes of
financial reporting, the Company considers all investments at
financial institutions with original maturities of three months or
less (repurchase agreements at September 30, 1998) to be temporary
cash investments. Short-term investments are considered to be money
market investments managed by third party investors.
2. ADVISORY BOARD AND REMUNERATION OF DIRECTORS
The Fund does not have an advisory board. During the current six months,
the Chairman was paid $8,000 and the President was paid $25,000. The
independent directors are paid an annual fee of $1,000 plus $1,000 for
each meeting attended.
- 6 -
<PAGE>
3. SUPPLEMENTAL INFORMATION
Paul H. Broyhill, Chairman of the Board, and E. D. Beach, President, are
primarily responsible for the day to day management of the Fund's
portfolio and have had such responsibility since the inception of the
Fund. In addition, portions of the Fund's portfolio are managed by IBJ
Schroder Bank & Trust Company ("IBJ Schroder"), which is responsible for
approximately $16.2 million of the Fund's portfolio, and W. H. Reaves &
Co., Inc. ("Reaves & Co."), which is responsible for approximately $7.5
million of the Fund's portfolio. Christian E. Kaefer, a Senior Investment
Officer of IBJ Schroder, is the portfolio manager responsible for the
portion of the Fund's portfolio managed by IBJ Schroder; and William H.
Reaves, who is the Chief Investment Officer of Reaves & Co., is the
portfolio manager responsible for the portion of the Fund's portfolio
managed by Reaves & Co. Mr. Kaefer and Mr. Reaves have held their current
positions with IBJ Schroder and Reaves & Co., respectively, for more than
five years.
At a board of directors meeting held in July 1998, the board approved a
plan to change the Fund's investment strategy so that no funds would be
invested in tax-exempt securities after April 1, 1999 and that tax-exempt
funds held on that date be disposed of in a prompt and reasonable manner.
In preparation for this, the maturity dates of those securities now being
held has been reduced to slightly more than one year.
**********
- 7 -
<PAGE>
BMC FUND, INC.
FINANCIAL HIGHLIGHTS
TEN YEAR PERIOD ENDED MARCH 31, 1998
AND SIX MONTH PERIOD ENDED SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
The following table presents financial information divided into three parts: per
share operating performance, total investment return and ratios and supplemental
data for each of the years in the ten year period ended March 31, 1998 and in
the six month period ended September 30, 1998. The first part, per share
operating performance, details the changes on a per share basis of the fund's
beginning net asset value to its ending net asset value. The second part, total
investment return, is based on the market price of the fund's shares of stock.
Part three, ratios and supplemental data, provides additional financial
information related to the fund's performance.
<TABLE>
<CAPTION>
Six
Months
Ended Years Ended March 31
PER SHARE OPERATING September 30, ----------------------------------------------------------------------
PERFORMANCE 1998 1998 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 30.55 $ 29.33 $ 29.40 $ 28.23 $ 28.02 $ 28.59 $ 27.77
--------- --------- --------- --------- --------- --------- ---------
Net investment income .51 1.26 1.29 1.22 1.28 1.30 1.42
Net gains (losses) on investments (0.98) 1.95 .54 1.69 .46 (.46) 1.14
--------- --------- --------- --------- --------- --------- ---------
Total from investment operations (0.47) 3.21 1.83 2.91 1.74 .84 2.56
--------- --------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income 1.05 1.14 1.16 1.05 1.20 1.21 1.45
Distributions from capital gains .00 .85 .74 .69 .33 .20 .29
--------- --------- --------- --------- --------- --------- ---------
Total distributions 1.05 1.99 1.90 1.74 1.53 1.41 1.74
--------- --------- --------- --------- --------- --------- ---------
Net asset value, end of period $ 29.03 $ 30.55 $ 29.33 $ 29.40 $ 28.23 $ 28.02 $ 28.59
========= ========= ========= ========= ========= ========= =========
Per share market value, end of period* $ 26.00 $ 26.00 $ 26.00 $ 26.00 $ 26.00 $ 26.00 $ 26.00
========= ========= ========= ========= ========= ========= =========
TOTAL INVESTMENT RETURN (3.62)% ** 12.33% 7.05% 11.17% 6.68% 3.25% 9.83%
========= ========= ========= ========= ========= ========= =========
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 143,199 $ 150,705 $ 144,702 $ 145,036 $ 139,248 $ 138,230 $ 141,023
Ratio of expenses to average net assets .30% ** .27% .27% .29% .30% .30% .27%
Ratio of net investment income to
average net assets 3.44% ** 4.18% 4.39% 4.21% 4.55% 4.60% 5.02%
Portfolio turnover rate 40.67% 26.98% 31.23% 21.75% 32.29% 22.48% 30.12%
<CAPTION>
Years Ended March 31
-----------------------------------------------------
1992 1991 1990 1989
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 27.71 $ 27.69 $ 27.58 $ 27.87
--------- --------- --------- ---------
Net investment income 1.62 1.76 1.84 1.84
Net gains (losses) on investments .31 .30 .27 (.01)
--------- --------- --------- ---------
Total from investment operations 1.93 2.06 2.11 1.83
--------- --------- --------- ---------
Less distributions:
Dividends from net investment income 1.72 1.83 1.92 1.84
Distributions from capital gains .15 .21 .08 .28
--------- --------- --------- ---------
Total distributions 1.87 2.04 2.00 2.12
--------- --------- --------- ---------
Net asset value, end of period $ 27.77 $ 27.71 $ 27.69 $ 27.58
========= ========= ========= =========
Per share market value, end of period* $ 26.00 $ 26.00 $ 26.00 $ 26.00
========= ========= ========= =========
TOTAL INVESTMENT RETURN 7.39% 7.93% 8.12% 7.07%
========= ========= ========= =========
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 136,994 $ 136,735 $ 136,633 $ 136,082
Ratio of expenses to average net assets .29% .31% .28% .40%
Ratio of net investment income to
average net assets 5.82% 6.36% 6.66% 6.65%
Portfolio turnover rate 32.74% 29.17% 18.87% 20.32%
</TABLE>
* Unaudited - Based on stock trades during that year.
** Annualized
- 8 -
<PAGE>
BMC FUND, INC. SCHEDULE I
INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Coupon Percent
Interest Maturity Maturity Market of Net
Debt Issuer Rate Date Value Value Assets
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS:
Aiken County, SC Schools 4.400% 04/01/99 $ 250,000 $ 251,385
Alabama Mental Health Fin. Auth. 7.375% 05/01/99 1,000,000 1,043,220
Anchorage, Alaska 6.400% 07/01/00 200,000 209,208
Anderson County, SC 4.400% 03/01/99 275,000 278,880
Asheboro, NC 4.200% 02/01/99 210,000 210,620
Austin, Texas 4.500% 05/01/99 705,000 709,420
Beaufort County, SC School 6.750% 03/01/99 120,000 121,717
Brunswick County, NC 4.300% 03/01/00 500,000 505,205
Charlotte-Mecklenburg Hosp Auth 7.700% 10/01/98 750,000 765,090
Clark Cnty, Nevada 4.550% 06/01/00 500,000 519,245
Clark County, Nevada 5.000% 06/15/00 300,000 306,582
Cleveland Cnty, NC San Dist 5.600% 03/01/99 205,000 206,962
Cleveland Cnty, NC San Dist 5.900% 03/01/99 150,000 151,621
Cleveland Cnty, NC San Dist 6.000% 03/01/00 150,000 155,018
Cleveland County, NC 5.100% 06/01/00 400,000 409,880
Columbia, SC 6.000% 02/01/99 400,000 403,596
Columbia, SC 6.100% 02/01/00 350,000 361,648
Cook County, GA 4.500% 09/01/00 295,000 299,747
Dawson County, GA 4.600% 10/01/00 1,050,000 1,069,604
District of Columbia Rev.* variable 07/01/23 3,000,000 3,000,000
Dorchester Cnty, SC 6.700% 02/01/99 235,000 237,611
Dorchester Cnty, SC* variable 04/15/99 3,000,000 3,004,740
Durham County, NC Bond 5.400% 02/01/99 205,000 206,453
Durham County, NC Pub. Impt.* variable 05/01/08 2,000,000 2,000,000
Emmaus, PA* variable 12/01/28 3,000,000 3,000,000
Fairfax County, VA* variable 09/01/21 4,340,000 4,340,000
Farmington, NM School Dist. 005 4.625% 09/01/99 650,000 657,228
Florence Cnty, SC School 6.500% 03/01/99 525,000 531,757
Forsyth Cnty, NC 6.700% 03/01/99 100,000 101,417
Gaston County, NC 4.000% 06/01/99 140,000 140,669
Georgia Municipal Elec. 4.500% 01/01/00 300,000 302,859
Georgia St. Environmental* 6.500% 07/01/10 250,000 260,742
Georgia State Series A 4.900% 03/01/99 500,000 503,410
Georgia State Series B* 6.250% 11/01/09 500,000 517,260
Hampton, VA Public Impt.* 6.625% 01/01/10 100,000 105,629
Hawaii State 4.250% 07/01/99 1,000,000 1,006,220
Honolulu, Hawaii City & County 4.700% 06/01/00 300,000 305,799
Honolulu, Hawaii City & County 7.100% 06/01/00 500,000 532,590
</TABLE>
- 9 -
<PAGE>
BMC FUND, INC. SCHEDULE I
INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS (CONTINUED)
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Coupon Percent
Interest Maturity Maturity Market of Net
Debt Issuer Rate Date Value Value Assets
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS (Continued):
Hopewell, VA 4.200% 10/01/98 $ 200,000 $ 200,004
Horry County, SC School 4.375% 03/01/00 975,000 986,281
Horry County, SC Series B 4.000% 03/01/99 350,000 351,057
Horry County, SC* 7.500% 12/01/98 250,000 256,733
Illinois State BE 4.700% 06/01/99 600,000 605,400
Kentucky State Economic Dev.* 7.125% 05/15/00 500,000 534,875
Kershaw Cnty, SC Series B 7.000% 03/01/99 380,000 385,841
King County, Washington* 6.750% 12/01/00 355,000 377,976
Kings Mountain, NC 4.600% 03/01/99 300,000 301,674
Knoxville, TN Rfdg* 4.850% 05/01/99 500,000 504,500
Laurens County, SC 3.700% 03/01/99 1,125,000 1,126,485
Lexington Cnty, SC Rec. District 6.000% 02/01/00 435,000 448,550
Lexington Cnty, SC* 6.950% 02/01/08 300,000 309,603
Lexington Cnty, SC* 7.000% 02/01/09 320,000 330,294
Lexington Cnty, SC* 7.000% 02/01/10 345,000 356,099
Lowndes County, Mississippi 6.000% 08/01/00 375,000 390,682
Lumberton NC 4.250% 03/01/99 135,000 135,425
Marlboro County, SC 5.200% 03/01/00 250,000 255,898
Maryland State Health & Higher
Educ.* 7.125% 07/01/10 375,000 404,344
Maui County, Hawaii 6.800% 12/01/00 500,000 537,480
Mecklenburg County, NC 6.750% 04/01/00 100,000 104,598
Mecklenburg County, NC Pub.
Impt. 6.200% 01/01/00 100,000 103,200
Mecklenburg County, NC Ser.
A&B* 6.700% 04/01/05 170,000 176,256
Mecklenburg County, NC* variable 02/01/17 2,600,000 2,600,000
Mecklenburg County, NC* 6.100% 04/01/02 250,000 265,790
Michigan State Hosp. Finance* 7.000% 07/01/10 500,000 537,895
Milwaukee County, WI 6.000% 12/01/00 500,000 524,085
Milwaukee, WI Met. Sewer Dist. 6.700% 10/01/00 500,000 529,545
Montgomery County, PA* variable 12/01/13 4,660,000 4,660,000
New Hanover Cnty, NC 6.900% 05/01/99 140,000 142,922
New Hanover Cnty, NC 5.000% 05/01/99 250,000 252,492
North Carolina Med. Care* variable 10/01/16 6,000,000 6,000,000
North Carolina Mun Power -
Catawba 5.200% 01/01/00 250,000 254,657
North Carolina Mun Power Agy
No 1 5.100% 01/01/99 250,000 251,090
</TABLE>
- 10 -
<PAGE>
BMC FUND, INC. SCHEDULE I
INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS (CONTINUED)
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Coupon Percent
Interest Maturity Maturity Market of Net
Debt Issuer Rate Date Value Value Assets
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS (Continued):
North Carolina State Clean Water 4.250% 06/01/99 $ 1,000,000 $ 1,006,660
North Carolina State* 6.100% 03/01/05 250,000 272,238
North Charleston, SC 5.500% 02/01/00 245,000 251,265
North Hampton County, NC 3.650% 03/17/99 2,401,000 2,403,977
Ohio State Pub. Facs. 5.625% 12/01/99 500,000 512,855
Ohio State Bldg. Authority 6.900% 04/01/99 900,000 915,993
Orange County, NC School* 6.900% 06/01/00 180,000 193,016
Pennsylvania State 7.200% 12/01/98 500,000 503,280
Pennsylvania State Ult. 6.900% 05/01/00 200,000 209,978
Polk County, NC 6.500% 05/01/99 520,000 529,662
Providence, RI* 7.250% 12/15/10 500,000 547,400
Randolph County, NC BE 6.400% 04/01/99 145,000 147,259
Richland County, SC 6.250% 03/01/99 205,000 207,521
Richland County, SC School
Dist. 2 5.300% 05/01/99 700,000 708,134
Richland County, SC* 6.750% 03/01/06 500,000 530,925
Richland County, SC School
Dist. #2 5.900% 03/01/99 1,150,000 1,162,259
Richland Lexington, SC Airport 4.200% 07/01/99 250,000 251,667
Richmond, VA 1993 B 4.700% 07/15/00 100,000 101,849
Robeson County, NC Rfdg* 6.250% 03/01/02 200,000 204,438
Rock Hill, Ohio 4.150% 04/15/99 1,000,000 1,003,840
Rocky Mount, NC Wtr 5.750% 04/01/99 475,000 481,731
Salisbury, NC 4.750% 06/01/00 100,000 101,647
Sanford, NC Water & Sewer 4.400% 03/01/99 170,000 170,794
Sanford, NC Wtr & Swr 6.200% 03/01/99 265,000 268,206
Schuylkill Haven, PA Area School 4.000% 09/01/00 295,000 296,982
Shelby Cnty, Tenn School Bd* 5.150% 05/01/01 500,000 504,330
Shelby Cnty, Tenn School Ser A* 5.350% 05/01/02 500,000 505,625
Shikellamy, PA School* 6.000% 11/15/99 675,000 694,582
Somerset, PA Area School 4.000% 07/01/00 395,000 397,911
Somerset, PA Area School GO 4.000% 07/01/01 405,000 408,876
South Carolina State* 5.750% 05/01/07 250,000 262,782
Spartanburg County, NC School 4.400% 04/01/00 500,000 506,020
Sumter County, SC 6.125% 06/01/99 100,000 101,794
Sumter County, SC Series B 5.250% 06/01/00 100,000 102,711
Surry Cnty, NC 6.250% 04/01/99 1,000,000 1,014,890
Tennessee State 6.100% 06/01/00 300,000 312,276
</TABLE>
- 11 -
<PAGE>
BMC FUND, INC. SCHEDULE I
INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS (CONTINUED)
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Coupon Percent
Interest Maturity Maturity Market of Net
Debt Issuer Rate Date Value Value Assets
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS (Continued):
Utah State 4.400% 07/01/99 $ 500,000 $ 504,255
VCBA Virginia Educ./Hampton
Univ.* 7.750% 04/01/14 1,000,000 1,070,730
Washington State Reg UT 7.200% 05/01/03 270,000 276,094
Wayne Cnty, NC Water 6.900% 04/01/99 110,000 111,989
West New York, NJ 7.000% 12/15/00 350,000 374,188
West Virginia State Pub Imps. 6.500% 11/01/00 475,000 502,203
Wilsons Mills Water Dist., NC 3.700% 03/24/99 1,096,000 1,097,403
Winston-Salem, North Carolina* 5.500% 06/01/99 240,000 241,632
Wisconsin State Clean Water 4.500% 06/01/00 450,000 456,341
Wynford, Ohio 3.950% 04/15/99 1,000,000 1,002,900
York County, SC School #1
Ser. A 7.000% 07/01/00 300,000 316,944
------------ ------------
TOTAL INVESTMENTS IN
MUNICIPAL BONDS $ 76,562,000 $ 77,684,815 54.25%
============ ============ =====
</TABLE>
- 12 -
<PAGE>
BMC FUND, INC. SCHEDULE I
INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent
Shares Market of Net
Industries Held Company Name Cost Value Assets
<S> <C> <C> <C> <C> <C>
COMMON STOCKS:
Aerospace/Defense 4,000 Boeing Company $ 203,200 $ 137,250
8,000 Coltec Industries 167,768 121,000
6,100 Raytheon Company 162,351 329,019
---------- --------
533,319 587,269 0.41%
---------- --------- ----
Aluminum 2,900 Aluminum Company of America 93,670 205,900 0.14%
---------- --------- ----
Apparel 7,400 Jones Apparel Group 55,234 169,738 0.12%
---------- --------- ----
Auto & Truck 3,000 General Motors Common 145,430 164,625 0.11%
---------- --------- ----
Banking 124 Banco Santander ADR 956 1,876
7,350 Charter One Financial Inc. 210,312 182,831
4,500 First American Corp. Tenn 67,188 172,688
2,000 First Hawaiian Inc. 76,606 68,000
510 HSBC Holdings ADR 123,647 93,463
9,580 Mellon Bank Corp. 203,452 526,900
3,500 NationsBank 61,206 187,250
600 Wells Fargo & Co. 165,101 213,000
---------- --------
908,468 1,446,008 1.01%
---------- --------- ----
Beverage - Alcoholic 2,200 Anheuser Busch Companies Inc 75,120 118,800 0.08%
---------- --------- ----
Beverage - Nonalcoholic 7,000 Pepsico Inc. 253,374 206,063 0.14%
---------- --------- ----
Building Materials 7,300 Eagle Hardware & Garden 141,353 158,319
10,000 Fletcher Challenge Bldg. Div 128,360 95,625
---------- --------
269,713 253,944 0.18%
---------- --------- ----
Canadian Energy 200 Imperial Oil Ltd. 2,856 3,050 0.00%
---------- --------- ----
Chemical - Basic 4,500 Monsanto Co. 45,659 253,125 0.18%
---------- --------- ----
Chemical - Diversified 4,600 Air Products & Chemicals 118,101 136,850
1,000 E. I. DuPont de Nemours 55,126 56,250
---------- --------
173,227 193,100 0.13%
---------- --------- ----
Computer Software & 4,500 Automatic Data Processing 121,984 336,375
Services 3,000 Electronic Data Systems 158,115 99,563
4,200 Hewlett Packard 59,839 222,337
5,300 Sun Microsystems 171,046 264,006
---------- --------
510,984 922,281 0.64%
---------- --------- ----
</TABLE>
- 13 -
<PAGE>
BMC FUND, INC. SCHEDULE I
INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS (CONTINUED)
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent
Shares Market of Net
Industries Held Company Name Cost Value Assets
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
(Continued):
Consumer Products 6,500 Kimberly Clark $ 334,587 $ 263,250 0.18%
---------- --------- ----
Diversified Companies 6,000 Allied Signal 155,680 212,250
2,200 United Technologies 119,037 168,163
---------- --------
274,717 380,413 0.27%
---------- --------- ----
Drugs 3,500 Alza Corp. 102,519 151,813
5,000 Amgen Inc. 296,281 377,812
1,730 Cardinal Health Inc. 109,321 178,622
23,000 Johnson & Johnson 528,594 1,799,750
3,400 Pfizer Inc. 51,129 359,550
---------- --------
1,087,844 2,867,547 2.00%
---------- --------- ----
Drugstores 6,488 CVS Corp. 86,140 284,256 0.20%
---------- --------- ----
Electrical Equipment 4,100 General Electric 67,537 326,206 0.23%
---------- --------- ----
Electric Utilities 1,500 Allegheny Energy Inc. 41,923 47,344
14,000 Ameren Corp. 546,769 587,125
6,600 Cinergy Corp. 204,869 252,450
7,500 CMS Energy Corp. 272,135 326,719
4,750 Dominion Resources Inc. 164,587 211,969
10,700 Duke Energy Corp. 497,478 708,206
17,000 FirstEnergy Corp. 441,259 528,062
3,000 Marketspan Corp. 89,175 86,063
15,500 Nipsco Industries Inc. 370,677 509,562
14,600 Southern Company 329,065 429,788
21,000 Teco Energy Inc. 514,039 599,812
2,600 TNP Enterprises Inc. 74,469 90,837
3,500 Wisconsin Energy Corp. 100,939 110,469
---------- --------
3,647,384 4,488,406 3.13%
---------- --------- ----
Electronics 4,500 Maxim Integrated Products 140,188 125,438
7,187 Molex Inc. 145,014 208,423
5,000 SCI Systems Inc. 169,953 134,687
---------- --------
455,155 468,548 0.33%
---------- --------- ----
Engineering 14,800 Siebe PLC ADR 102,248 95,327 0.07%
---------- --------- ----
Entertainment 6,000 Walt Disney Co. 117,360 152,250 0.11%
---------- --------- ----
</TABLE>
- 14 -
<PAGE>
BMC FUND, INC. SCHEDULE I
INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS (CONTINUED)
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent
Shares Market of Net
Industries Held Company Name Cost Value Assets
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
(Continued):
Farm Machinery, Equip 6,000 Pioneer Hi Bred Intl Common $ 184,528 $ 159,375 0.11%
& Supplies ---------- --------- ----
Food Processing 3,000 CP Pokphand Ltd. ADR 7,113 1,695
3,200 Dole Foods Inc. 149,599 115,600
5,500 Nabisco Holdings Corp. 159,315 197,656
6,150 Nestle SA ADR 201,834 611,753
5,000 Sara Lee Corp. 151,625 270,000
---------- --------
669,486 1,196,704 0.83%
---------- --------- ----
Food Wholesalers 11,000 Sysco Corp. 168,834 259,188 0.18%
---------- --------- ----
Foreign Electric
Utilities 7,200 Endesa Nacional Elec. ADR 94,486 158,400 0.11%
---------- --------- ----
Foreign 7,600 Cable & Wireless ADR 204,818 206,150
Telecommunications 3,800 Ericsson L M Telephone 22,848 69,825
800 Telecomunicacoe Brasil ADR 94,582 55,400
---------- --------
322,248 331,375 0.23%
---------- --------- ----
Gold/Silver Mining 20,000 Bema Gold Corp. 49,183 27,500
6,000 Euro Nevada Mining 81,622 99,157
14,600 Pan American Silver 114,686 85,775
4,600 Stillwater Mining Co. 100,309 145,187
---------- --------
345,800 357,619 0.25%
---------- --------- ----
Grocery 6,800 Kroger Co. 83,572 340,000 0.24%
---------- --------- ----
Hotel/Gaming 9,000 International Game Tech 168,630 167,062
3,000 Starwood Hotel & Resorts 104,343 91,125
---------- --------
272,973 258,187 0.18%
---------- --------- ----
Household Products 3,500 Colgate Palmolive Co. 89,886 240,625 0.17%
---------- --------- ----
Insurance 3,937 American International Group 100,062 308,562
4,000 Conseco Inc. 175,165 122,250
7,450 ING Groep NV ADR 134,201 326,869
---------- --------
409,428 757,681 0.53%
---------- --------- ----
</TABLE>
- 15 -
<PAGE>
BMC FUND, INC. SCHEDULE I
INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS (CONTINUED)
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent
Shares Market of Net
Industries Held Company Name Cost Value Assets
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
(Continued):
Limited Partnerships 500,000 Bay Harbour 90-1 LP $ 500,000 $ 464,190
400,000 GolfSouth 1994 LP 380,000 200,000
500,000 Mariner Partners LP 500,000 495,458
100,000 Piedmont Venture Partners 100,000 100,000
750,000 Rose Glen Capital Partners I LP 750,000 948,964
500,000 Safe Harbor Fund LP 500,000 572,904
1,000,000 Stark Investments LP 1,000,000 962,785
78,679 ULQ Hedge Fund Ltd Partnership 1,025,000 1,033,253
500,000 WP Strategic LP 500,000 272,758
---------- --------
5,255,000 5,050,312 3.53%
---------- --------- ----
Machinery 8,000 Dover Corp. 87,144 247,000
300 FMC Corp. 19,938 15,469
---------- --------
107,082 262,469 0.18%
---------- --------- ----
Manufactured Housing/ 6,600 Clayton Homes Inc. 118,267 115,500 0.08%
Recreational Vehicles ---------- --------- ----
Medical Services 15,459 Healthsouth Corp. 208,611 162,319
3,000 United Healthcare Corp. 112,560 105,000
---------- --------
321,171 267,319 0.19%
---------- --------- ----
Medical Supplies 4,000 Baxter Intl. Inc. 106,245 238,750 0.17%
---------- --------- ----
Natural Gas -
Distributing 600 Indiana Energy Inc. 17,510 18,825
200 ONEOK Inc. 6,504 6,800
1,800 Providence Energy Corp. 37,407 35,100
---------- --------
61,421 60,725 0.04%
---------- --------- ----
Natural Gas -
Diversified 100 Consolidated Natural Gas 5,285 5,450
7,500 Enron Corp. 356,862 401,250
4,200 Questar Corp. 80,735 80,850
500 Williams Companies Inc. 13,758 14,375
---------- --------
456,640 501,925 0.35%
---------- --------- ----
Oilfield Services 2,300 Apache Corp. 72,605 61,669
& Equipment 4,000 Nabors Industries Inc. 53,863 60,750
5,000 Newpark Resources Inc. 88,200 34,375
500 Petroleum Geo-Services 14,964 7,969
5,000 R & B Falcon Corp. 48,883 60,312
2,000 Transocean Offshore 50,698 69,375
---------- --------
329,213 294,450 0.21%
---------- --------- ----
</TABLE>
- 16 -
<PAGE>
BMC FUND, INC. SCHEDULE I
INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS (CONTINUED)
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent
Shares Market of Net
Industries Held Company Name Cost Value Assets
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
(Continued):
Petroleum - Integrated 800 Amoco Corp. $ 34,687 $ 43,100
5,400 Atlantic Richfield Co. 349,221 383,063
2,800 Elf Aquitaine ADR 112,150 174,125
8,000 Exxon Corp. 364,932 565,000
6,600 Mobil Corp. 244,860 501,188
500 Murphy Oil Corp. 19,300 19,375
3,500 Repsol ADR 119,233 147,656
5,700 Royal Dutch Petroleum 283,378 271,462
2,774 Texaco Inc. 134,793 173,548
6,500 Unocal Corp. 265,320 235,625
2,100 USX Marathon Group 69,984 74,419
12,000 YPF Sociedad Anonima ADR 291,622 312,000
---------- --------
2,289,480 2,900,561 2.03%
---------- --------- ----
Petroleum - Producing 1,700 Burlington Resources Inc. 80,921 63,537
800 Kerr McGee Corp. 38,055 36,400
3,000 Noble Affiliates Inc. 114,585 95,625
1,300 Ocean Energy Inc. 22,443 17,063
---------- --------
256,004 212,625 0.15%
---------- --------- ----
Railroad 6,600 Norfolk Southern Corp. 179,579 191,813 0.13%
---------- --------- ----
Real Estate 10,700 Choice Hotels 126,777 135,756
Investment Trusts 5,500 Colonial Properties 134,072 155,719
7,800 Equity Resident Properties 240,907 329,062
10,700 HRPT Properties Trust 200,912 172,537
5,000 Indymac Mortgage Holdings Inc. 104,921 101,250
5,000 Kilroy Realty Corp. 106,216 115,000
6,300 MGI Properties Inc. 100,871 174,825
11,600 New Plan Realty Trust 253,837 261,731
5,300 Post Properties Inc. 202,202 205,044
6,100 Tanger Factory Outlet 148,726 138,394
4,400 Trinet Corp Realty Trust 126,916 143,550
---------- --------
1,746,357 1,932,868 1.35%
---------- --------- ----
Restaurants 3,000 McDonald's Corp. 191,460 179,062 0.13%
---------- --------- ----
Retail Stores 3,000 Costco Companies Inc. 54,625 142,125
2,000 Marks & Spencer Ltd. ADR 73,704 92,380
5,500 Meyer Fred Inc. 115,005 213,812
---------- --------
243,334 448,317 0.31%
---------- --------- ----
</TABLE>
- 17 -
<PAGE>
BMC FUND, INC. SCHEDULE I
INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS (CONTINUED)
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent
Shares Market of Net
Industries Held Company Name Cost Value Assets
<S> <C> <C> <C> <C> <C>
COMMON STOCKS
(Continued):
Semiconductors 2,000 Intel Corp. $ 158,125 $ 171,500
3,500 Motorola Inc. 202,368 150,063
4,000 Xilinx Inc. 152,875 140,000
---------- --------
513,368 461,563 0.32%
---------- --------- ----
Telecommunications 8,400 Commscope Inc. 107,067 97,125
Equipment 3,714 Lucent Technologies 97,673 257,195
---------- --------
204,740 354,320 0.25%
---------- --------- ----
Telecommunications 15,014 Alltel Corp. 563,697 707,534
Services 12,000 Ameritech Corp. 495,832 570,000
2,800 AT&T 108,879 163,625
11,000 Bell Atlantic 473,580 532,813
1,500 BellSouth 92,867 112,875
23,331 Citizens Utilities Co. 206,626 189,564
7,400 GTE Corp. 296,310 407,000
21,400 SBC Communications Inc. 602,517 949,625
4,000 Sprint Corp. 112,572 288,000
---------- --------
2,952,880 3,921,036 2.74%
---------- --------- ----
Water Utility 5,800 American Water Works Inc. 138,825 181,975 0.13%
---------- --------- ----
TOTAL INVESTMENTS
IN COMMON STOCKS $27,352,333 $35,484,850 24.78%
=========== =========== ======
</TABLE>
- 18 -
<PAGE>
BMC FUND, INC. SCHEDULE I
INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS (CONTINUED)
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent
Market of Net
Company Name Shares Cost Value Assets
<S> <C> <C> <C> <C>
MUTUAL FUNDS:
Baron Asset Fund 8,838 $ 300,292 $ 353,177
Central European Value Fund 2,000 25,823 18,250
Cornercap Growth Fund 26,859 299,368 311,836
Ivy Fund Emerging Growth A 9,916 263,023 247,010
Ivy Fund Global Science & Tech. A 13,882 211,899 235,722
Ivy Fund Global Fund Cl A 9,072 115,213 86,730
Ivy International Fund A 6,585 209,116 236,988
Midcap Spdr Tr Unit Ser 1 3,300 185,085 197,381
Scudder Spain & Portugal Fund 13,300 100,468 160,431
Spdr Tr Unit Ser 1 1,000 77,942 101,750
---------- ----------
TOTAL INVESTMENT IN MUTUAL FUNDS $1,788,229 $1,949,275 1.36%
========== ========== ====
</TABLE>
- 19 -
<PAGE>
BMC FUND, INC. SCHEDULE I
INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS (CONTINUED)
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent
Market of Net
Industries Company Name Cost Value Assets
<S> <C> <C> <C> <C>
Short-term investments Federated Prime
Obligations Fund #859 $ 7,006,702 $ 7,006,702
------------- ------------
TOTAL INVESTMENTS IN
SHORT-TERM INVESTMENTS $ 7,006,702 7,006,702 4.89%
============= ------------ -----
TOTAL INVESTMENTS -
MARKET VALUE $122,125,642 85.28%
============ =====
</TABLE>
* Putable prior to maturity date.
Aggregate gross unrealized appreciation of security values $ 10,300,630
Aggregate gross unrealized depreciation of security values (1,536,073)
-------------
Net appreciation of security values 8,764,557
Tax cost of securities 113,361,085
-------------
Total market value of securities $ 122,125,642
=============
- 20 -
<PAGE>
BMC FUND, INC. SCHEDULE II
INVESTMENTS - OTHER THAN SECURITIES
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
Market
Value at
End of
Description Period
INVESTMENT LAND:
Residential acreage including subdivided lots in Caldwell,
Rutherford and Wilkes Counties, N.C $ 150,000 (a)
---------
TOTAL $ 150,000
=========
Aggregate appreciation of investment land and buildings $ 2,360
Tax cost of investment land and buildings 147,640
---------
Market value of investment land and buildings $ 150,000
=========
(a) Non-income producing property.
- 21 -
<PAGE>
BMC FUND, INC. SCHEDULE III
INVESTMENTS IN AFFILIATES
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Amount of Equity
Shares Held At In Net Profit Amount of Value at
September 30, And Loss for the Dividends September 30,
Issuer 1998 Period (2) 1998
<S> <C> <C> <C> <C>
Broyhill Industries Inc. - wholly owned
subsidiary 1,000 $ (21,951) $ - $ 518,671
P. B. Realty, Inc. - wholly owned
subsidiary 1,000 382,938 - 21,028,473
---------- ---- -----------
TOTAL $ 360,987 $ - $21,547,144
========== ==== ===========
</TABLE>
(2) All of the dividends received by BMC Fund, Inc. from their wholly owned
subsidiaries have been credited to the investment account, since BMC Fund,
Inc. is accounting for their investment in the subsidiary companies on the
equity method.
- 22 -
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