STUART M. FRIED, CPA
LENED, INC.
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REPORT TO STOCKHOLDERS
----------------------
FINANCIAL STATEMENTS
--------------------
MARCH 31, 2000
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<PAGE>
STUART M. FRIED, CPA
LENED, INC.
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REPORT TO STOCKHOLDERS
----------------------
FINANCIAL STATEMENTS
--------------------
TABLE OF CONTENTS
-----------------
YEAR ENDED MARCH 31, 2000
-------------------------
PAGE
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INDEPENDENT AUDITOR'S REPORT 1
STATEMENTS OF ASSETS, LIABILITIES AND
CAPITAL SECURITIES 2
STATEMENTS OF OPERATIONS, UNDISTRIBUTED NET
INCOME (LOSS) 3
STATEMENTS OF CHANGES IN NET ASSETS 4
STATEMENTS OF CASH FLOWS 5
NOTES TO FINANCIAL STATEMENTS 6-13
<PAGE>
STUART M. FRIED
CERTIFIED PUBLIC ACCOUNTANT
11 TWIN BROOK ROAD
WEST CALDWELL, NEW JERSEY 07006
------
(973) 226 4006
ACCOUNTANTS' REPORT
-------------------
To the Board of Directors and
Stockholders of Lened, Inc.
New York, New York
We have reviewed the accompanying statement of assets, liabilities and capital
securities of Lened, Inc. (A New Jersey corporation) as of March 31, 2000, and
the related statements of operations, undistributed net income (loss) and
statements of changes in net assets and cash flows for the six months then
ended, in accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants. All
information in these financial statements is the representation of Lened, Inc.
The statement of assets, liabilities and capital securities as of March 31, 2000
has been derived from and does not include all of the disclosures contained in
the financial statements for the year ended September 30, 1999. Those financial
statements were audited by us in our report thereon, dated November 13, 1999,
and which expressed an unqualified opinion on them.
A review of interim financial information consists principally of obtaining an
understanding of the system for the preparation of interim financial
information, applying analytical review procedures to financial data and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an examination in accordance with generally
accepted auditing standards (which will be performed for the full year), the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the statement of assets, liabilities and capital securities as of
March 31, 2000 and the related statements of operations, undistributed net
income (loss) and net unrealized gain (loss) on investments and cash flows for
the six months ended March 31, 2000 for them to be in conformity with generally
accepted accounting principles.
/s/ STUART M. FRIED
STUART M. FRIED, CPA
W. Caldwell, New Jersey
May 24, 2000
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
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STATEMENTS OF ASSETS, LIABILITIES
---------------------------------
AND CAPITAL SECURITIES
----------------------
ASSETS
------
<TABLE>
<CAPTION>
6 MONTHS ENDED YEAR ENDED
3/31/00 9/30/99
-------------- ------------
<S> <C> <C>
INVESTMENT IN MUNICIPAL BONDS, with accrued
interest - at fair market value
(amortized cost $1,729,893 and
$1,785,392) (Note 1) $ 1,728,851 $ 1,808,294
Cash 5,955 9
Investment in Vista New York Tax-Free
Money Market Fund (3.22% avg. Interest rate) 18,546 6,074
Prepaid expenses 651 1,293
----------- -----------
$ 1,754,003 $ 1,815,670
=========== ===========
LIABILITIES AND CAPITAL SECURITIES
----------------------------------
LIABILITIES:
Dividends payable $ 0 $ 68,900
Other current liabilities 7,547 11,658
----------- -----------
7,547 80,558
----------- -----------
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL SHARES:
CAPITAL SHARES
Common stock, no par value, 25,200 shares
authorized, 18,960 issued and outstanding $ 22,500 $ 22,500
Paid in capital 144,732 144,732
Retained earnings 1,571,078 1,570,581
Undistributed net income (loss) 32,806 497
Unrealized (depreciation)of investments (24,660) (3,198)
----------- -----------
Total stockholders' equity (equivalent to
$92.11 per share at 3/31/00 and $91.51
per share at 9/30/99) 1,746,456 1,735,112
----------- -----------
$ 1,754,003 $ 1,815,670
=========== ===========
</TABLE>
See accompanying notes and accountant's report.
-2-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
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STATEMENTS OF OPERATIONS,
-------------------------
UNDISTRIBUTED NET INCOME (LOSS)
-------------------------------
SIX MONTHS YEAR ENDED
ENDED 3/31/00 9/30/99
------------- ----------
INVESTMENT INCOME:
INCOME
Interest income on tax free municipals $ 40,868 $ 87,112
Dividend income - tax free 967 674
-------- --------
41,835 87,786
-------- --------
EXPENSES:
Custodial fees (Note 4) 937 1,819
Audit fees 1,200 2,400
Legal fees 1,770 2,825
Taxes other than income taxes 250 250
Office expense 5,126 9,665
Insurance 642 1,303
Filing fees 125 250
-------- --------
10,050 18,512
-------- --------
INVESTMENT INCOME 31,785 69,274
Net realized gain (loss) from investment transactions 1,000 317
-------- --------
INVESTMENT INCOME BEFORE FEDERAL
INCOME TAX 32,785 69,591
Less: Federal income taxes (refund) (21) 194
-------- --------
NET INVESTMENT INCOME 32,806 69,397
Less: Dividends paid 0 68,900
-------- --------
UNDISTRIBUTED NET INCOME (LOSS) 32,806 $ 497
======== ========
UNREALIZED APPRECIATION (DEPRECIATION)
OF INVESTMENTS (24,660) $ 3,198
======== ========
See accompanying notes and accountant's report.
-3-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
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STATEMENTS OF CHANGES IN NET ASSETS
-----------------------------------
SIX MONTHS YEAR ENDED
ENDED 3/31/00 9/30/99
------------- ----------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Investment income - net $ 31,806 $ 69,080
Net realized gain (loss) on investments 1,000 317
Change in unrealized appreciation (depreciation) (21,462) (59,650)
----------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 11,344 9,747
DISTRIBUTION TO SHAREHOLDERS FROM
NET INVESTMENT INCOME 0 68,900
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TOTAL INCREASE (DECREASE) 11,344 (59,153)
NET ASSETS BEGINNING OF PERIOD 1,735,112 1,794,265
----------- -----------
NET ASSETS END OF PERIOD (Including
Undistributed Net Income of $(32,806) and
$(497), respectively) $ 1,746,456 $ 1,735,112
=========== ===========
DIVIDENDS PER SHARE $ 0 $ 3.62
=========== ===========
See accompanying notes and accountant's report.
-4-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
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STATEMENT OF CASH FLOWS
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INCREASE (DECREASE) IN CASH
---------------------------
SIX MONTHS YEAR ENDED
ENDED 3/31/00 9/30/99
------------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 32,806 $ 69,397
Adjustments to reconcile net income to net
cash provided by operating activities:
Changes in assets and liabilities:
(Increase) Decrease in municipal bonds with
accrued interest at fair market value 79,443 27,260
(Increase) Decrease in Vista New York
Tax Free Money Market Fund (12,472) 37,489
(Increase) Decrease in prepaid expenses 642 3
Increase (Decrease) in other current liabilities (4,111) 4,721
Realized (gain) loss from investment transactions
included in net income (1,000) (317)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 95,308 138,553
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase (Decrease) in unrealized appreciation
of investments (21,462) (59,650)
Realized gain (loss) from investment transactions 1,000 317
--------- ---------
NET CASH (USED) PROVIDED BY INVESTING
ACTIVITIES (20,462) (59,333)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (68,900) (79,211)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 5,946 9
CASH - BEGINNING OF YEAR 9 0
--------- ---------
CASH - END OF YEAR $ 5,955 $ 9
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Income taxes $ 250 $ 250
See accompanying notes and accountant's report.
-5-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
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NOTES TO FINANCIAL STATEMENTS
-----------------------------
MARCH 31, 2000
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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------
Lened, Inc. was incorporated in New Jersey on January 31, 1957. Lened, Inc.
commenced operations as an investment company investing at least 50% of the
value of its total assets, determined at the close of each quarter of its
taxable year, in tax-exempt state and local obligations, may distribute, as a
tax-exempt dividend, to its shareholders an amount equal to the interest earned
on such tax-exempt obligations, provided it designates such dividends as
tax-exempt interest dividends. It is the Company's intention to invest
substantially all of its assets, except such amounts as it may carry in demand
deposits, in such tax-exempt obligations and to distribute all of its net
income, including any net short-term capital gains, to its shareholders.
The Company is registered under the Investment Company Act of 1940, as amended,
as a diversified, closed-end investment company.
The following is a summary of significant accounting policies followed by the
Company in the preparation of its financial statements:
(a) Investments are valued by the Custodian. These values may not
necessarily be bids or actual last sale prices, but are estimates of
the fair value of the investment securities, based upon prevailing
interest rates, applicable bond ratings and other factors influencing
the markets in which the investments are purchased and sold.
(b) It is the policy of the Company to continue to qualify as a regulated
investment company if such qualifications are in the best interests
of its shareholders, by complying with the provisions available under
the Internal Revenue Code, and to make distributions of taxable
income sufficient to relieve it from all, or substantially all,
Federal income taxes. Therefore, unless the Company has capital gains
or interest on Treasury Bills, no federal tax provision is required.
-6-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
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NOTES TO FINANCIAL STATEMENTS
-----------------------------
MARCH 31, 2000
--------------
(c) Realized gains and losses on investments are computed on the basis
of the identified cost of the specific securities sold.
(d) Securities transactions are recorded on the date the securities are
purchased or sold (the trade date). Interest income (net of premium
or discount amortization) is recorded as earned.
(e) Unrealized Appreciation (Depreciation) of Investments is stated
as the difference between amortized cost and fair market value.
At March 31, 2000
Unrealized Appreciation of Bonds totaled $ 4,385
Unrealized Depreciation of Bonds totaled 29,045
---------
Net Unrealized Depreciation of Investments $(24,660)
========
NOTE 2 - PURCHASES, SALES AND REDEMPTIONS OF SECURITIES
-------------------------------------------------------
Securities exclusive of Vista New York Tax Free Money Market Fund purchased by
the Company amounted to $90,996 for the six months ended March 31, 2000 and
$129,806 for the year ended September 30, 1999. Sales of securities exclusive of
Vista New York Tax Free Money Market Fund amounted to $146,000 for the six
months ended March 31, 2000 and $95,400 for the year ended September 30, 1999.
NOTE 3 - DISTRIBUTIONS
----------------------
The Company distributed income of $0 ($0 per share) and $68,900 ($3.63 per
share) for the six months ended years ended March 31, 2000 and the year ended
September 30, 1999 in the form of dividends.
NOTE 4 - CUSTODIAL FEES
-----------------------
Pursuant to an agreement with the custodian, the custodial fee is based on the
number of bond coupons redeemed based on an annual charge of $1.25 per $1,000 of
the first $500,000, $.75 per $1,000 of the next $500,000 face value of bonds and
$.50 per $1,000 face value above $1,000,000. A charge of $15 is made for each
security transaction.
During the six months ended March 31, 2000 and the year ended September 30,
1999, the Company was charged an aggregate of $937 and $1,819respectively.
NOTE 5 - REMUNERATION
---------------------
The Company's policy is not to pay, and for the periods reported did not pay,
remuneration to either officers or directors.
-7-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
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NOTES TO FINANCIAL STATEMENTS
-----------------------------
MARCH 31, 2000
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NOTE 6 - CAPITAL PER SHARE AND RELATED INFORMATION
--------------------------------------------------
Selected data for a share of capital stock outstanding throughout the period:
SIX MONTHS YEAR ENDED
ENDED 3/31/00 9/30/99
------------- ----------
Investment income $ 2.21 $ 4.63
Operating expenses .53 .98
-------------- --------------
INVESTMENT INCOME BEFORE FEDERAL 1.68 3.65
INCOME TAX
FEDERAL INCOME TAX 0 .01
-------------- --------------
INVESTMENT INCOME - NET 1.68 3.64
Dividends to shareholders 0 3.63
-------------- --------------
1.68 .01
Realized and unrealized gain (loss)
on investments - net (1.08) (3.13)
-------------- --------------
CHANGE IN NET VALUE .60 3.12
NET ASSET VALUE:
Beginning of period 91.51 94.63
-------------- --------------
End of period 92.11 $ 91.51
============== ==============
Ratio of operating expenses to
average net assets .006 .010
Ratio of investment income net to
average net assets .024% .049%
Portfolio turnover 5.24% 5.29%
Number of shares outstanding at end
of period 18,960 18,960
-8-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
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NOTES TO FINANCIAL STATEMENTS
-----------------------------
MARCH 31, 2000
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NOTE 7 - INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS
----------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amortized Fair Market*
Name and Title of Issuer Amount Cost Value
------------------------ --------- --------- ------------
<S> <C> <C> <C>
Akron N Y Cent Sch Dist G/O
DD 09/01/95 5.4% Due 6/1/01 $ 50,000 $ 50,461 $ 51,503
Akron N Y Cent Sch Dist G/O
DD 09/01/95 5.4% Due 6/1/02 (FSA) 45,000 45,635 46,511
Chicago Cnty Minn Hsg & Redev Auth
DD 12/01/97 4.7% Due 02/01/08
Call MSF OID Lease Rev 80,000 80,433 77,975
Clayton Cnty GA Hsg
Auth, Multifa
DD 07/01/97 4.55% Due 07/01/02
Pointe Clear Apts Proj 50,000 50,000 50,215
Dade Cnty Fla Res Recovery FAC
DD 09/01/96 5.0% Due 10/01/03
REF (AMBAC) Rev 90,000 89,738 92,680
District Columbia G/O
DD 05/01/93 5.625% Due 6/1/02
Ref-A OID 50,000 50,076 51,707
District Columbia
DD 06/01/93 6.0% Due 06/01/09
Call Unrefunded Bal-E-Capmac-ITC 50,000 51,223 52,742
District Columbia G/O
DD 05/01/93 5.625% Due 6/1/02
Ref- Ser A (FSA- CR) 90,000 91,040 93,173
-9-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
-----------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
MARCH 31, 2000
--------------
Principal Amortized Fair Market*
Name and Title of Issuer Amount Cost Value
------------------------ --------- --------- ------------
Falcon Heights Minn G/O
DD 06/01/99 4/10% Due 02/01/05
Impt - SER A 25,000 25,000 24,032
Fenton Mo Pub Auth Leasehold Rev
DD 12/15/97 4.750% Due 01/01/07
OID 80,000 79,776 77,208
Grand Folks N D Health Care Sys
DD 06/01/97 5.5% Due 08/15/07
Altru Health Sys Oblig Group 80,000 83,123 82,244
Greater Richmond Conv. Ctr
DD 02/01/00 5.50% Due 06/15/07
Hotel Tax Rev Ctr Expansion PJ 65,000 65,992 66,594
Greenville Hosp Sys S C Hosp Fac
DD 03/01/96 4.9% Due 05/01/03
Ser B 95,000 95,001 96,431
Iowa Student Ln Liquidity Corp.
DD 02/15/91 6.6% Due 12/01/00
Student Ln Rev Ser C Ambac 90,000 90,678 93,257
Los Angeles Cnty Calif Pub Wksfi
DD 08/01/93 4.6% Due 03/01/02
Ref-Cap Construction 100,000 99,358 100,853
-10-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
-----------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
MARCH 31, 2000
--------------
Principal Amortized Fair Market*
Name and Title of Issuer Amount Cost Value
------------------------ --------- --------- ------------
Manatee Cnty Fla Hsg Fin Auth Rev
DD 06/01/85 9.125% Due 06/01/16
Callable Sgl Fam Series A FGIC 5,000 5,042 5,158
Maryland St Cmnty Dev Admin Dept.
DD 06/01/97 4.6% Due 1/01/03
Hsg-Ser A 30,000 30,000 30,196
Mississippi Dev Bk Spl Oblig
DD 11/01/97 4.8% Due 11/01/08
Call Desoto Cnty Convention Ctr 30,000 30,000 29,784
Nebraska Invt Fin Auth Sing/Famil
DD 09/01/97 5.0% Due 9/01/07
Ser D 50,000 49,999 49,057
New Jersey Economic Dev Auth Rev
DD 06/01/94 5.4% Due 2/1/06
Call Peddie Sch Proj-Ser A 60,000 60,567 61,217
New Jersey Sr EDL Facs
Auth Rev. DD 06/15/93
5.375% Due 07/01/05
Call OID Ser A 30,000 30,477 30,421
New York City G/O
DD 06/11/98 4.5% Due 05/15/05
Series I 25,000 25,000 24,664
New York St Dorm Auth Revs
DD 07/01/98 4.375% Due 07/01/05
Ser 2 OID 60,000 60,000 58,018
-11-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
-----------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
MARCH 31, 2000
--------------
Principal Amortized Fair Market*
Name and Title of Issuer Amount Cost Value
------------------------ --------- --------- ------------
Pennsylvania St Tpk Comm Rev
DD 08/01/92 5.7% Due 12/01/06
Call OID Ser (FGIC) 25,000 25,799 26,152
Philadelphia PA Auth For Indl
DD 01/01/98 4.750% Due 06/15/06
Call Franklin Institute PJ 80,000 80,000 76,676
Pierce County Wash Swr
DD 07/01/93 5.2% DUE 02/01/05
Call Ref & Impt OID 25,000 25,391 25,234
Port Houston Auth Tex
Harris DD 10/01/98 4.0%
Due 10/01/06 OID 6/0
Amt. SER-A 75,000 74,374 69,998
Sarasota Cnty Fla Util Sys Rev
DD 01/01/93 5.7% Due 10/01/05
Call Ref FGIC OID 15,000 15,529 15,901
Sedalia Mo Hosp Rev
DD 07/01/97 4.6% Due 03/01/03
Call Bothwell Regl Health Ctr 50,000 50,000 49,467
South Brunswick Twp NJ
DD 08/01/93 5.0% Due 08/01/06
Call Ref G/O OID 20,000 20,183 20,240
-12-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
-----------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
MARCH 31, 2000
--------------
Principal Amortized Fair Market*
Name and Title of Issuer Amount Cost Value
------------------------ --------- --------- ------------
Trinity Riv Auth Tx Big Bear
DD 02/15/96 4.5% Due 02/01/03
Ref-Wastewtr Sys Contract MBIA 75,000 75,000 74,574
Wyoming Commty Dev Auth Hsg Rev
DD 07/02/97 5.20% Due 06/01/07
Ser 4 25,000 24,998 24,969
---------- ---------- ----------
TOTAL INVESTMENT - 98.99% $1,720,000 $1,729,893 1,728,851
========== ==========
OTHER ASSETS LESS LIABILITIES - (1.01%) 17,605
----------
NET ASSETS - 100% $1,746,456
==========
NET ASSET VALUE PER SHARE $ 92.11
==========
OUTSTANDING SHARES AT MARCH 31, 2000 18,960
==========
</TABLE>
* Includes accrued interest
-13-
