<PAGE>
STUART M. FRIED CPA
KALA INVESTMENT CORP.
REPORT TO STOCKHOLDERS
FINANCIAL STATEMENTS
YEARS ENDED OCTOBER 31, 1996 AND 1995
<PAGE>
STUART M. FRIED, CPA
KALA INVESTMENT CORP.
REPORT TO STOCKHOLDERS
FINANCIAL STATEMENTS
YEARS ENDED OCTOBER 31,1996 AND 1995
CONTENTS
PAGE
----
INDEPENDENT AUDITOR'S REPORT 1
STATEMENTS OF ASSETS, LIABILITIES AND
CAPITAL SECURITIES 2
STATEMENTS OF OPERATIONS 3
STATEMENTS OF CHANGES IN NET ASSETS 4
STATEMENTS OF CASH FLOWS 5
NOTES TO FINANCIAL STATEMENTS 6-15
<PAGE>
[STUART M. FRIED CPA LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and
Stockholders of Kala Investment Corp.
We have audited the accompanying statements of assets, liabilities and capital
securities of Kala Investment Corp. as of October 31, 1996 and 1995, and the
related statements of operations, statements of changes in net assets and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements 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 are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. The
investment securities held in custody were confirmed to us by the custodian. 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 referred to above present fairly, in
all material respects, the financial position of Kala Investment Corp. as of
October 31, 1996 and 1995, and the results of its operations and the changes in
its net assets for the years then ended in conformity with generally accepted
accounting principles.
/s/ STUART M. FRIED
STUART M. FRIED, CPA
West Caldwell, New Jersey
December 11, 1996
<PAGE>
STUART M. FRIED, CPA
KALA INVESTMENT CORP.
STATEMENTS OF ASSETS, LIABILITIES
AND CAPITAL SECURITIES
ASSETS
------
YEAR ENDED OCTOBER 31,
-------------------------------
1996 1995
----------- -----------
INVESTMENT IN SECURITIES, at
market value (amortized cost
$7,515,499 and $7,605,059) $ 7,535,295 $ 7,596,615
Investment in NationsBank tax
exempt fund 18,266 62,961
Cash and cash equivalents 3,084 5,705
Interest receivable 167,040 186,356
Prepaid expense 3,897 4,123
Organization expense - net of
accumulated amortization 0 1,900
----------- -----------
$ 7,727,582 $ 7,857,660
=========== ===========
LIABILITIES AND CAPITAL SECURITIES
----------------------------------
LIABILITIES
Dividends payable $ 102,118 $ 214,724
Accrued expenses 6,293 4,318
Due to broker 0 0
----------- -----------
108,411 219,042
----------- -----------
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL SHARES:
CAPITAL SHARES
Class A common 200 shares
authorized and issued -
no par
Class B common 40,000 shares
authorized, 26,622 issued -
no par 34,627 34,627
Retained earnings 7,612,435 7,618,679
Undistributed net income (47,686) (6,244)
Unrealized appreciation (depreciation)
of investments 19,795 (8,444)
----------- -----------
Total stockholders' equity
(equivalent to $284.06 per
share at 10/31/96 and $284.79
per share at 10/31/95) 7,619,171 7,638,618
----------- -----------
$ 7,727,582 $ 7,857,660
=========== ===========
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
STUART M. FRIED, CPA
KALA INVESTMENT CORP.
STATEMENTS OF OPERATIONS
YEAR ENDED OCTOBER 31,
----------------------------
1996 1995
---------- ----------
INVESTMENT INCOME:
INCOME:
Interest income $ 369,151 $ 459,646
---------- ----------
EXPENSES:
Custodial fees (note 4) 7,598 5,334
Audit fees 3,000 3,000
Legal fees 12,185 3,076
Taxes other than income taxes 12,177 243
Office expense 3,606 4,291
Printing and stationery 737 592
Filing and director's fees 1,065 550
Insurance 4,011 4,000
Amortization expense 1,900 1,900
---------- ----------
46,279 22,986
---------- ----------
INVESTMENT INCOME 322,872 436,660
Net realized gain (loss) from
investment transactions (50,654) (10,347)
---------- ----------
NET INVESTMENT INCOME BEFORE
FEDERAL INCOME TAX 272,218 426,313
Less: Federal income taxes 260 307
---------- ----------
NET INVESTMENT INCOME 271,958 426,006
Less: Dividends paid 319,644 432,250
---------- ----------
UNDISTRIBUTED NET INCOME $ (47,686) $ (6,244)
========== ==========
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
STUART M. FRIED, CPA
KALA INVESTMENT CORP.
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED OCTOBER 31,
----------------------------
1996 1995
----------- -----------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Investment income - net $ 322,612 $ 436,353
Net realized gain (loss) on investments (50,654) (10,347)
Change in unrealized appreciation 28,239 18,899
----------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 300,197 444,905
DISTRIBUTION TO SHAREHOLDERS FROM
NET INVESTMENT INCOME (319,644) (432,250)
----------- -----------
TOTAL INCREASE (DECREASE) (19,447) 12,655
NET ASSETS BEGINNING OF YEAR 7,638,618 7,625,963
----------- -----------
NET ASSETS END OF YEAR (including
undistributed net income of ($47,686) and
($6,244) respectively) $ 7,619,171 $ 7,638,618
=========== ===========
DIVIDENDS PER SHARE $ 11.92 $ 16.12
=========== ===========
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
STUART M. FRIED, CPA
KALA INVESTMENT CORP.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 271,958 $ 426,006
Adjustments to reconcile net income
to net cash provided by operating activities:
Amortization 1,900 1,900
Realized (gain) loss from investment
transactions included in net income 50,654 10,347
Changes in assets and liabilities:
(Increase) Decrease in securities
at fair market value 61,320 15,521
(Increase) Decrease in NationsBank tax exempt fund 44,695 (62,961)
(Increase) Decrease in interest receivable 19,316 10,754
(Increase) Decrease in prepaid expenses 226 92
Increase (Decrease) in accrued expenses 1,975 (3,717)
(Decrease) in due to broker 0 0
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 452,044 397,942
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase (Decrease) in unrealized appreciation
of investments 28,239 18,899
Realized gain (loss) from investment transactions (50,654) (10,347)
--------- ---------
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES (22,415) 8,552
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (432,250) (424,291)
--------- ---------
NET (DECREASE) IN CASH
AND CASH EQUIVALENTS (2,621) (17,797)
CASH AND CASH EQUIVALENTS -
BEGINNING OF YEAR 5,705 23,502
--------- ---------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 3,084 $ 5,705
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Income taxes $ 143 $ 16
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
STUART M. FRIED, CPA
KALA INVESTMENT CORP.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
Pursuant to the agreement and plan of merger dated October 31, 1991, M-L
Investment Corp., a Delaware corporation, was reincorporated in Maryland as
Kala Investment Corp. Kala Investment Corp. 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.
On July 26, 1990, the shareholders of the Company approved a change in the
investment objectives of the Company to include investments in U.S. Government
Securities, which would be taxable for federal income tax purposes.
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
KALA INVESTMENT CORP.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
(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) Interest receivable on investment in securities is computed daily.
(f) Amortization Method - The municipal bonds are amortized over the life
of the bonds. As of November 1, 1995 the bonds are amortized to the
pre-refunded date, if earlier. This change in method resulted in a
decrease of interest income of $21,253 for the year ended October 31,
1996.
(g) Unrealized appreciation (depreciation) of investments is stated as the
difference between amortized cost and fair market value at October 31,
1996:
Unrealized appreciation of bonds totalled $ (29,670)
Unrealized depreciation of bonds totalled 49,465
----------
Net unrealized appreciation of investments $ 19,795
==========
2. PURCHASES, SALES AND REDEMPTIONS OF SECURITIES
Securities purchased by the Company amounted to $3,298,492 (which included
purchases of U.S. Government Securities of $0 and purchases of NationsBank tax
exempt fund of $1,161,601) for the year ended October 31, 1996 and $3,122,747
(which included purchases of U.S. Government Securities of $145,509 and
purchases of NationsBank tax exempt fund of $517,745) for the year ended
October 31, 1995. Sales of securities amounted to $3,265,896 (which included
sales of U.S. Government Securities of $0 and sales of NationsBank tax exempt
fund $1,206,296) for the year ended October 31, 1996 and $2,862,221 (which
included sales of U.S. Government Securities of $146,774 and sales of
NationsBank tax exempt fund of $454,784) for the year ended October 31, 1995.
-7-
<PAGE>
STUART M. FRIED, CPA
KALA INVESTMENT CORP.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
3. DISTRIBUTIONS
The Company distributed income of $319,644 ($11.92 per share) as of October 31,
1996 and $432,250 ($16.12 per share) for the year ended October 31, 1995 in the
form of dividends.
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 $.60 per $1,000 of
the first $1,000,000 face value of bonds and $.15 per $1,000 face value above
$1,000,000. In addition, registered bonds are held at a rate of $.15 per $1,000
face value. A charge of $12 is made for each security transaction.
On March 14, 1995, the custodial agreement was transferred to NationsBank of
Florida. NationsBank of Florida (the Custodian) will charge a custodial fee of
$6,000 per annum plus transaction and holding charges of $25 per transaction
and $25 per holding per annum.
During the year ended October 31, 1996, the Company was charged an aggregate of
$7,598 and $5,334 for the year ended October 31, 1995.
5. REMUNERATION
The Company's policy is not to pay, and for the periods reported did not pay,
remuneration to either officers or directors.
Independent outside directors were paid an aggregate of $600 and $300 for the
years ended October 31, 1996 and 1995.
6. CAPITAL PER SHARE AND RELATED INFORMATION
Selected data for a share of capital stock outstanding throughout each year:
-8-
<PAGE>
STUART M. FRIED, CPA
KALA INVESTMENT CORP.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
YEAR ENDED OCTOBER 31,
---------------------------
1996 1995
---------- ----------
Investment income $ 13.76 $ 17.14
Operating expenses 1.73 .86
---------- ----------
INVESTMENT INCOME BEFORE FEDERAL
INCOME TAX 12.03 16.28
FEDERAL INCOME TAX 0 0
---------- ----------
INVESTMENT INCOME - NET 12.03 16.28
Dividends to shareholders 11.92 16.12
---------- ----------
.11 .16
Realized and unrealized gain
(loss) on investments - net (.84) .31
---------- ----------
CHANGE IN NET VALUE (.73) .47
NET ASSET VALUE:
Beginning of year 284.79 284.32
---------- ----------
End of year $ 284.06 $ 284.79
========== ==========
Ratio of operating expenses
to average net assets .60% 29%
Ratio of investment income
net to average net assets 4.81% 5.96%
Portfolio turnover 26.82% 31.19%
Number of shares outstanding
at end of period 26,822 26,822
-9-
<PAGE>
STUART M. FRIED, CPA
KALA INVESTMENT CORP.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
7. INVESTMENT IN SECURITIES
PRINCIPAL AMORTIZED MARKET
MUNICIPAL BONDS (99%) AMOUNT COST VALUE
- --------------------- --------- --------- --------
ISSUE
- -----
Cusip # 010316BD8
Alabama Mental Health Fin Auth
SPL Tax BDS
DTD 7/01/95 4.750% Due 5/01/98
Non Callable Fixed RT
Sink 12/01/96 $165,000 $166,632 $167,000
Cusip # 017289Q51
Allegheny Cnty Pa Hosp Dev Auth
Hosp Rev Ref BDS
DTD 2/01/88 6.90% Due 7/01/98
Non Callable Fixed RT
No Sink Fund Presbyterian Unive 160,000 166,927 167,424
Cusip # 07133ABG6
Battery Pk City Auth NY Rev
Jr Rev Ref BDS
DTD 11/15/93 4.50% Due 11/01/98
Non Callable Fixed RT
No Sink Fund 275,000 277,557 276,567
Cusip # 088275RS3
Bexar County Texas CTFS OBLIG
GO Bond- Prfd
DTD 6/15/92 6.20% Due 6/15/12
PRFD 6/15/02 @ 100 620,000 662,201 668,552
Cusip #149465JC1
Cattaraugus County New York
Pub Impt
DTD 3/15/94 5.25% Due 3/15/97
Non Callable Fixed RT
No Sink Fund 185,000 185,857 186,095
Cusip # 254760J28
District of Columbia
Ref GO BDS- O.I.D.
DTD 6/01/93 4.3% 12/01/96
Non Callable Fixed RT
No Sink Fund 200,000 200,059 200,072
-10-
<PAGE>
STUART M. FRIED, CPA
KALA INVESTMENT CORP.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
PRINCIPAL AMORTIZED MARKET
MUNICIPAL BONDS (99%) AMOUNT COST VALUE
- --------------------- --------- --------- --------
ISSUE
- -----
Cusip #254760E64
District of Columbia
Ser D GO BDS O.I.D.
DTD 6/01/93 4.60% Due 12/01/97
Non Callable No Sink Fund Fixed Rt 250,000 250,306 250,177
Cusip #341148JD7
Florida St Jacksonville
Prerefunded 1/01/98 at 102
DTD 1/01/85 9.20% 1/01/2010 75,000 87,651 80,949
Cusip # 396482BY6
Greenville SC Hosp Rev FGIC
Call 5/01/98 @ 102, 5/1/00 @ 100
DTD 3/01/88 7.80% 5/01/2015 250,000 272,408 268,207
Cusip #45200KSU3
Illinois Health Facs Auth
Rev
DTD 1/01/90 9.50% Due 11/15/19 495,000 603,239 593,426
Cusip #4693638R9
Jacksonville Fla Elec Auth Rev
Elec Auth Rev Ref BDS
DTD 10/01/95 6.250% Due 10/01/98
Non Callable Fixed Rate
Sink 8/01/96 St. John's Riv Pwr P 250,000 260,992 260,550
Cusip #516823AJO
Laredo Texas
GO Bond- Ser A
DTD 11/01/94 8.625% Due 8/15/03 295,000 355,506 360,602
Cusip #546591HP6
Louisville-Jefferson KY Swr DS
Swr Rev BDS (JR Lien) DTD
6/01/71 6.250% Due 6/01/97
Escrowed to Maturity Fixed RT
No Sink Fund 100,000 100,942 101,484
Cusip #57585OXD9
Massachusetts St. Health & Edl
Rev Ser B Prfd 7/1/99 @102
DTD 1/01/89 8.15% Due 7/01/14 195,000 212,163 217,493
-11-
<PAGE>
STUART M. FRIED, CPA
KALA INVESTMENT CORP.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
PRINCIPAL AMORTIZED MARKET
MUNICIPAL BONDS (99%) AMOUNT COST VALUE
- --------------------- --------- --------- --------
ISSUE
- -----
Cusip #639557EY9
Nebo Utah School Dist
GO BDS
DTD 6/15/94 9.75% Due 6/15/01 210,000 245,355 254,358
Cusip #649665NC6
New York New York
Ser A-1 GO Bond
DTD 8/14/95 5.50% Due 8/01/01 15,000 15,260 15,562
Cusip # 649665NF9
New York New York
Go Bond Ser A-1
DTD 8/14/95 5.50% Due 8/01/01 85,000 86,475 86,018
Cusip #649650Z92
New York, New York
Ser B Go Bond
DTD 8/14/95 5.3% Due 8/15/00 50,000 50,171 50,525
Cusip #626190UJ9
New York NY Muni Assist Corp
Rev BDS
DTD 01/01/88 6.75% Due 7/01/98
Non Callable Fixed Rt
No Sink Fund 100,000 104,043 104,483
Cusip #626190WR9
New York NY Muni Assist Corp
Series 67 BDS
DTD 09/01/88 7.10% Due 7/01/98
Non Callable
No Sink Fund 150,000 156,654 157,563
Cusip # 649664HM4
New York NY
Ser G GO BD
DTD 1/09/96 5.10% Due 2/01/00 200,000 200,615 200,636
Cusip #649649ZP8
New York N Y
GO BDS-OID
DTD 2/01/90 7.70% Due 8/01/97
Non Callable Fixed Rt
No Sink Fund 225,000 230,242 231,194
-12-
<PAGE>
STUART M. FRIED, CPA
KALA INVESTMENT CORP.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
PRINCIPAL AMORTIZED MARKET
MUNICIPAL BONDS (99%) AMOUNT COST VALUE
- --------------------- --------- --------- --------
ISSUE
- -----
Cusip #649654ER7
New York N Y GO Bonds
Ser B OID Pref 12/01/96 @ 101.5
DTD 12/15/88 7.875% Due 12/01/07 75,000 80,520 76,378
Cusip #649706JB5
New York N Y City Mun Wtr Fin
Auth Rev Prfd 6/15/98 @ 101.50
DTD 3/28/89 7.625% Due 6/15/17 230,000 239,227 246,355
Cusip#649810JL3
New York St CTFS Partn
COPS- OID
DTD 2/01/92 6.90% Due 3/1/98
Non Callable Fixed Rt
No Sink Fund 200,000 206,000 206,024
Cusip# 6497852Y7
New York State
Go Bond
DTD 7/15/92 7.50% Due 11/15/01 50,000 56,474 56,562
Cusip #64978HAF3
New York St
G.O. Various Purp BDS- OID
DTD 11/15/90 6.40% Due 11/15/96
Non Callable Fixed Rt
No Sink Fund 225,000 225,036 225,229
Cusip #64978HFM3
New York St
GO Env Quality 1986 BDS
DTD 11/15/92 7.25% Due 11/15/96
Non Callable Fixed Rt
No Sink Fund 200,000 200,018 200,268
Cusip #649830E69
New York State Dorm Auth Revs
St Univ EDL FACS Rev BDS-OID
DTD 6/01/89 6.75% Due 5/15/97
Non Callable Fixed Rt
No Sink Fund- St. Univ of NY 100,000 101,287 99,674
-13-
<PAGE>
STUART M. FRIED, CPA
KALA INVESTMENT CORP.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
PRINCIPAL AMORTIZED MARKET
MUNICIPAL BONDS (99%) AMOUNT COST VALUE
- --------------------- --------- --------- --------
ISSUE
- -----
Cusip #649833KS8
New York St Dorm Auth Revs
Ref BDS-OID
DTD 3/01/93 4.10% Due 7/1/98
Non Callable Fixed Rt
No Sink Fund- Upstate Cmty- Coll 100,000 99,832 101,498
Cusip #650017BM7
New York State Twy Auth
Loc Hwy & Brdg Contract BDS-OID
DTD 9/15/93 4.60% Due 4/01/99
Non Callable Fixed Rt
Sink 8/15/11 150,000 151,148 150,063
Cusip #709223BH3
Pennsylvania St Tpk Commn Tpk
Rev Ser A OID Preref 12/01/96 @ 102
DTD 7/01/86 7.875% Due 12/01/15 165,000 165,551 168,863
Cusip #745144JV8
Puerto Rico Commonwealth
Pub Impt Ref BDS
DTD 7/01/93 4.30% Due 7/1/97
Non Callable Fixed Rt
No Sink Fund 200,000 200,127 200,526
Cusip # 745269BW9
Puerto Rico Hsg Bk & Fin Agy
Subsidy Prepayment Ref BDS-OID
DTD 9/01/93 4.375% Due 12/01/97
Non Callable Fixed Rt
Sink 7/01/98 320,000 318,221 320,650
Cusip #745144JY2
Puerto Rico Commonwealth
GO BDS-O.I.D. Ref
DTD 7/01/93 4.90% Due 7/1/00 200,000 200,303 201,656
-14-
<PAGE>
STUART M. FRIED, CPA
KALA INVESTMENT CORP.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
PRINCIPAL AMORTIZED MARKET
MUNICIPAL BONDS (99%) AMOUNT COST VALUE
- --------------------- --------- --------- --------
ISSUE
- -----
Cusip # 745269BY5
Puerto Rico Hsg Bk & Fin Agy
Subsidy Prepayment Ref BDS-OID
DTD 9/01/93 4.50% Due 12/01/98
Non Callable Fixed Rt
Sink 7/01/98 135,000 135,064 134,969
Cusip #8375592Q5
South Dakota St Hlth & Edl Fac
Rev-Prfd 11/01/98 @ 102
DTD 1/15/89 7.625% Due 11/01/13 130,000 140,009 141,196
Cusip #896029MF9
Triborough Brdg & Tunl Auth
NY Rev-Ser L Prfd 1/01/98 @ 102
DTD 12/01/87 7.80% Due 1/01/03 100,000 105,427 106,447
Total Investment - 98.9% $7,130,000 $7,515,499 7,535,295
========== ========== ==========
Other Assets Less Liabilities - 1.1% 83,876
----------
Net Assets - 100% $7,619,171
==========
Net Asset Value Per Share $ 284.06
==========
Outstanding shares at October 31, 1996 26,822
==========
-15-
