<PAGE> 1
MOSHER, INC.
ANNUAL REPORT
DECEMBER 31, 1994
[AMERICAN CAPITAL LOGO]
<PAGE> 2
Mosher, Inc.
Annual Report
December 31, 1994
Shareholders' Message
January 20, 1995
Dear Shareholder,
The past year was a challenging one for municipal bond investors. However, in
an environment of rising interest rates and fears of rising inflation, Mosher,
Inc. continued to provide shareholders with a competitive level of current
income free from federal income taxes. (A portion of the income may be subject
to state and local taxes.) Municipal bonds remain one of the few tax-free
investments still available, an advantage that is particularly important for
investors in the higher income-tax brackets.
Market Review
Rising interest rates had the biggest impact on municipal bonds during 1994.
The Federal Reserve Board raised short-term interest rates six times during the
year in an effort to slow economic growth to a level that would not cause
inflation to rise. As interest rates rose, yields on municipal bonds also rose.
However, your Fund's investment earnings declined because higher coupon bonds
were refunded early in the year when rates were low and the income could not be
replaced. In addition, since yields and prices move in opposite directions, the
value of most municipal bonds as well as other fixed-income securities
declined.
Refundings occur when municipalities issue new, lower-yielding bonds
to replace existing higher-yielding bonds. As interest rates rose, this reduced
the incentive to refund existing debt. As a result, both the number and dollar
value of refundings declined substantially during the reporting period compared
to the previous year. The demand for municipal bonds fell at the same time,
which put pressure on prices.
Portfolio Review
Given your Fund's emphasis on providing shareholders with current income, your
Fund is well structured for investment environments like the one that existed
in 1994. The portfolio management team carefully selects bonds that offer the
highest possible yield consistent with the Fund's objective. These include both
rated and non-rated bonds, which offer higher yields. Although these issues are
non-rated, usually because the size of the issue is too small to warrant the
expense of the rating procedure for the issuer, they must pass our stringent
internal credit review procedures before they are judged appropriate for
inclusion in your Fund. At the end of the reporting period, non-rated bonds
comprised approximately 22% of the portfolio.
For the year ended December 31, 1994, Mosher, Inc. achieved a total return of
- -2.16%, including dividends totalling $1.37 per share. For the same period, the
Lehman Brothers Municipal Bond Index achieved a total return of -5.17%. The
Index is a broad-based, unmanaged index that reflects the general performance
of municipal bonds. It does not reflect any commissions or fees that would be
paid by an investor purchasing the securities it represents.
1
<PAGE> 3
Outlook
We believe the economy will continue to grow at a moderate rate that will not
cause inflation to rise. Economic indicators are positive, and consumer
confidence is at a four-and-a-half-year high. However, because of the Fed's
nervousness about inflation, short-term interest rates probably will rise once
more in early 1995, after which they should stabilize.
Your Fund is well positioned for the environment we anticipate in 1995.
In addition, while 1994 was a difficult year for the bond markets, municipal
bonds remain one of the few options for investors seeking income free
from federal taxes. As investors review the impact of higher rates on
their 1994 taxes, the benefits of municipal bonds should become even
more evident.
We appreciate your continued confidence in Mosher, Inc.
Sincerely,
/s/ Robert C. Peck, Jr.
Robert C. Peck, Jr.
Chief Investment Officer
2
<PAGE> 4
INVESTMENT PORTFOLIO
December 31, 1994
<TABLE>
<CAPTION>
Principal Market
Amount Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS 92.7%
EDUCATION 4.7%
$ 500,000 Connecticut State Health & Educational Facilities Rev. (University
of Hartford) Series D, 6.75%, 7/1/12 .................................. $ 456,535
500,000 District of Columbia Rev., (Howard University) Series A,
7.25%, 10/1/20......................................................... 507,900
100,000 New Hampshire Higher Education & Health Rev., 7.625%, 7/1/16............. 93,044
150,000 New York City, New York, Industrial Development Agency, Civil Facility
Rev. (Marymount Manhattan College Project) 7.00%, 7/1/23............... 139,899
500,000 New York State Dormitory Authority Rev. (City University System)
Series C, 6.00%, 7/1/16................................................ 444,840
----------
TOTAL EDUCATION........................................................ 1,642,218
----------
HOSPITALS 13.4%
250,000 Clarksville, Tennessee, Hospital Rev., Refunding & Improvement
(Clarksville Memorial Project) 6.25%, 7/1/13........................... 220,363
250,000 Delaware State, Economic Development Authority Rev.
(Osteopathic Hospital Association) Series A, 6.75%, 1/1/13............. 219,162
150,000 Doylestown, Pennsylvania, Hospital Authority Rev. (Pine Run)
Series A, 7.20%, 7/1/23................................................ 141,060
500,000 Fayette County, Pennsylvania, Hospital Authority Rev.
(Uniontown Hospital) Series 1985, 7.625%, 7/1/15........................ 492,870
200,000 Illinois Health Facilities Authority Rev. (Elmhurst Memorial
Hospital), Series B, 7.25%, 5/1/22.................................... 190,856
250,000 Laramie County, Wyoming, Hospital Rev. (Memorial Hospital
Project) AMBAC, 6.70%, 5/1/12.......................................... 248,450
500,000 McKeesport, Pennsylvania, Hospital Authority Rev. (McKeesport
Hospital Project) 6.50%, 7/1/08........................................ 466,015
1,090,000 Mercer County, West Virginia, Commercial Development Rev.
(American Health Enterprises, Ltd.) 12.00%, 12/1/15..................... 1,156,272
250,000 Newton, Kansas Hospital Rev., (Newton Healthcare Corp.)
Series A, 7.375%, 11/15/14............................................. 235,128
250,000 Scranton-Lackawanna, Pennsylvania, Health & Welfare Authority
Rev. (Moses Taylor Hospital Project) Series B, 8.50%, 7/1/20.......... 265,025
100,000 South Dakota State Health Authority Rev., 7.25%, 4/1/20.................. 93,372
500,000 Tulsa, Oklahoma, Industrial Authority, Hospital Rev. (Tulsa
Regional Medical Center) 7.20%, 6/1/17................................. 462,465
500,000 Wisconsin State Health & Educational Facilities Authority Rev.
(Wheaton Franciscan Services, Inc.) Series 1988, 8.20%, 8/15/18........ 551,640
----------
TOTAL HOSPITALS........................................................ 4,742,678
----------
HOUSING 6.1%
100,000 Iowa Finance Authority, Multi-family Rev., Refunding (Park West
Project) 8.00%, 10/1/23................................................ 102,633
100,000 Minneapolis, Minnesota, Health Care Facility Rev., (Ebenezer Society
Project) Series A, 7.00%, 7/1/12....................................... 90,061
250,000 Ridgeland, Mississippi, Urban Renewal Rev., (The Orchard, Ltd.
Project) Series A, 7.75%, 12/1/15...................................... 232,468
1,000,000 Tennessee Housing Development Agency Rev., (Home Ownership
Program) 6.80%, 7/1/17................................................. 976,390
</TABLE>
3
<PAGE> 5
<TABLE>
<CAPTION>
Principal Market
Amount Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HOUSING-CONTINUED
$ 250,000 Virginia State Housing Development Rev., (Commonwealth Mortgage)
Series A, 7.10%, 1/1/17................................................ $ 252,478
500,000 Wisconsin Housing & Economic Development Authority, Home
Ownership Rev., 7.35%, 1/1/17.......................................... 510,705
-----------
TOTAL HOUSING.............................. 2,164,735
-----------
INDUSTRIAL DEVELOPMENT REVENUE (IDR)/POLLUTION
CONTROL REVENUE (PCR) 26.8%
1,610,000 Beaver County, Pennsylvania, Industrial Development Authority, PCR
(Toledo Edison) Series A, 10.75%, 11/15/15............................. 1,689,727
1,695,000 Clairborne County, Mississippi, PCR (Middle South Energy)
9.50%, 4/1/16 ......................................................... 1,803,548
1,000,000 Gila County, Arizona, Industrial Development Authority,
Refunding, PCR (Asarco, Inc.) 8.90%, 7/1/06............................ 1,084,050
1,000,000 Independence County, Arkansas, PCR (Mississippi Power & Light
Company Project) Series C, 9.50%, 7/1/14............................... 1,096,350
1,700,000 Indiana County, Pennsylvania, Industrial Development Authority,
PCR (Pennsylvania Electric Co. Project) Series 1976-A,
7.75%, 7/1/06.......................................................... 1,707,463
250,000 Massachusetts, Industrial Finance Agency, IDR, Refunding
(Beverly Enterprises, Inc./Gloucester and Lexington Projects)
Series 1992, 8.00%, 5/1/02............................................. 253,825
100,000 Montgomery County, Pennsylvania, IDR (Pennsburg Nursing &
Rehabilitation Center) 7.625%, 7/1/18.................................. 88,362
1,000,000 Parish of West Feliciana, Louisiana, PCR, 7.50%, 5/1/15.................. 988,560
195,000 Pope County, Arkansas, PCR (Arkansas Power & Light Project)
11.00%, 12/1/15........................................................ 207,960
500,000 Maury County, Tennessee, Industrial Development Board, PCR
(Saturn Corp. Project), 6.50%, 9/1/24.................................. 454,465
105,000 St. Charles, Illinois, IDR (Tri-City Center Project)
7.50%, 11/1/13......................................................... 98,087
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TOTAL IDR/PCR.......................................................... 9,472,397
-----------
LIFE CARE 3.4%
600,000 Butler County, Pennsylvania, Industrial Development Authority
1st Mtg. Rev. (Sherwood Oaks Project) 8.75%, 6/1/16.................... 629,514
100,000 Montgomery County, Pennsylvania, Industrial Development
Authority, 1st Mtg. Rev. (Meadowood Corp. Project)
10.25%, 12/1/20........................................................ 108,103
250,000 Plantation, Florida, Health Facilities Authority Rev. (Covenant
Retirement Communities, Inc.) 7.75%, 12/1/22........................... 247,160
200,000 Scottsdale, Arizona, Industrial Development Authority, 1st Mtg.
Rev. (Westminister Village) 10.00%, 6/1/17............................. 225,766
-----------
TOTAL LIFE CARE........................................................ 1,210,543
-----------
MISCELLANEOUS 9.8%
500,000 Detroit, Michigan, G.O., Series 87-A, 8.625%, 4/1/07..................... 521,050
500,000 Highlands Ranch Metropolitan District, Colorado, No. 1,
Refunding and Improvement, G.O., Series A, 7.30%, 9/1/12............... 518,300
215,000 Indianapolis, Indiana, Local Public Improvement Rev., Series-D,
6.75%, 2/1/20.......................................................... 204,538
</TABLE>
4
<PAGE> 6
<TABLE>
<CAPTION>
Principal Market
Amount Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MISCELLANEOUS-CONTINUED
$ 500,000 Mountain Village Metropolitan District, San Miguel County,
Colorado, G.O., 7.95%, 12/1/03......................................... $ 501,525
500,000 New York, New York, G.O., Series B, 7.375%, 8/15/13...................... 509,710
Parish of St. John the Baptist, Louisiana, Public Improvement,
Series 1987
500,000 7.60%, 1/1/08.......................................................... 550,560
500,000 7.60%, 1/1/09.......................................................... 547,645
100,000 Southtech Metropolitan District, Colorado, Refunding, G.O.,
9.50%, 12/1/11......................................................... 111,728
-----------
TOTAL MISCELLANEOUS.................................................... 3,465,056
-----------
NURSING HOMES 1.3%
100,000 Carmel, Indiana, Retirement Rent Housing Rev., Refunding
(Beverly Enterprises, Inc.) Series 1992, 8.75%, 12/1/08................ 105,500
85,000 Covington-Alleghany County, Virginia, Rev., Refunding (Beverly
Enterprises, Inc.) 9.375%, 9/1/01...................................... 90,641
250,000 Fairfield, Ohio, Economic Development Rev., Refunding (Beverly
Enterprises, Inc.) 8.50%, 1/1/03....................................... 256,247
-----------
TOTAL NURSING HOMES.................................................... 452,388
-----------
SALES TAX REVENUE 0.6%
100,000 Crestwood, Illinois, Tax Increment Rev., Refunding,
7.25%, 12/1/08......................................................... 94,160
100,000 Round Lake Beach, Illinois, Tax Increment Rev., Series 1993,
7.20%, 12/1/04......................................................... 96,232
-----------
TOTAL SALES TAX REVENUE................................................ 190,392
-----------
TRANSPORTATION 1.4%
500,000 Cleveland, Ohio, Parking Facilities Improvement Rev.,
8.00%, 9/15/12......................................................... 505,950
-----------
UTILITIES 25.2%
1,240,000 Connecticut State Development Authority, Solid Waste & Electric
Rev. (Odgen Martin Bristol System, Inc.) 10.00%, 7/1/14................ 1,298,094
2,160,000 Georgia Municipal Electric Authority, Power Rev., Series L,
6.00%, 1/1/19.......................................................... 1,947,521
500,000 Indiana Municipal Power Agency, Supply Systems Rev., Series A,
5.75%, 1/1/18.......................................................... 418,115
Intermountain Power Agency, Utah, Special Obligation
1,550,000 1st Crossover Series, 5.00%, 7/1/16.................................... 1,219,524
950,000 2nd Crossover Series C, 5.00%, 7/1/18.................................. 739,689
500,000 Irvine Ranch, California, Water District Rev., 8.25%, 8/15/23............ 500,000
1,350,000 New York City Municipal Water Finance Authority, New York,
Water & Sewer Rev., Series A, 5.00%, 6/15/17........................... 1,038,974
1,500,000 Piedmont Municipal Power Agency, South Carolina, Electric Rev.,
Refunding, Series A, 5.75%, 1/1/24..................................... 1,249,305
500,000 West Richland, Washington, Water & Sewer Rev., 7.00%, 12/1/14............ 504,985
----------
TOTAL UTILITIES........................................................ 8,916,207
----------
TOTAL MUNICIPAL BONDS (Cost $31,544,327)............................... 32,762,564
----------
</TABLE>
5
<PAGE> 7
<TABLE>
<CAPTION>
Principal Market
Amount Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL VARIABLE RATE DEMAND NOTES+ 6.8%
$ 300,000 Illinois Development Finance Authority Rev., 5.50%, 4/1/07............... $ 300,000
800,000 Illinois Health Facilities Authority Rev., Series A, 6.00%, 1/1/20....... 800,000
200,000 New York, New York, G.O., Subseries E-5, 6.00%, 8/1/10................... 200,000
900,000 New York, New York, G.O., Subseries E-5, 6.00%, 8/1/18................... 900,000
100,000 New York, New York, G.O., Subseries A-7, 6.25%, 8/1/20................... 100,000
100,000 Peninsula Ports Authority, Virginia, Rev. (Port Facilities)
6.15%, 12/1/05......................................................... 100,000
-----------
TOTAL MUNICIPAL VARIABLE NOTE DEMAND NOTES
(Cost $2,400,000).................................................... 2,400,000
-----------
TOTAL INVESTMENTS (Cost $33,944,327) 99.5%............................ 35,162,564
Other assets and liabilities, net 0.5% ............................... 183,617
-----------
NET ASSETS 100%...................................................... $35,346,181
===========
</TABLE>
+ INTEREST RATES AS OF DECEMBER 31, 1994
G.O. -- GENERAL OBLIGATION BOND
REV. -- REVENUE BOND
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE> 8
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<TABLE>
<S> <C>
ASSETS
Investments, at market value (Cost $33,944,327)......................... $ 35,162,564
Cash.................................................................... 48,126
Interest receivable..................................................... 851,832
Other receivables....................................................... 637
------------
TOTAL ASSETS...................................................... 36,063,159
------------
LIABILITIES
Payable for investments purchased....................................... 498,369
Dividends payable....................................................... 190,528
Accrued expenses........................................................ 14,838
Due to Adviser.......................................................... 13,243
------------
TOTAL LIABILITIES................................................. 716,978
------------
NET ASSETS, equivalent to $18.55 per share on 1,905,282 shares
outstanding........................................................... $ 35,346,181
============
NET ASSETS WERE COMPRISED OF:
Common stock, at par value $1 per share; 5 million shares authorized;
1,910,907 shares issued of which 5,625 shares are held in treasury.... $ 1,910,907
Capital surplus......................................................... 32,007,341
Less cost of treasury stock............................................. (23,357)
Accumulated net realized loss on securities............................. (196,316)
Net unrealized appreciation of securities............................... 1,218,237
Undistributed net investment income..................................... 429,369
------------
NET ASSETS at December 31, 1994......................................... $ 35,346,181
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE> 9
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1994
--------------
<S> <C>
INVESTMENT INCOME
Interest............................................................ $ 2,875,438
-----------
EXPENSES
Management fees (net of voluntary waiver of $7,879)................. 166,411
Directors' fees and expenses........................................ 50,123
Reports to shareholders............................................. 17,451
Audit fees.......................................................... 13,300
Legal fees.......................................................... 8,450
Custodian fees...................................................... 3,080
Miscellaneous....................................................... 15,238
-----------
Total expenses.............................................. 274,053
-----------
Net investment income....................................... 2,601,385
-----------
REALIZED AND UNREALIZED LOSS ON SECURITIES
Net realized loss on securities..................................... (62,701)
Net unrealized depreciation of securities during the year........... (3,374,591)
-----------
Net realized and unrealized loss on securities.............. (3,437,292)
-----------
Decrease in net assets resulting from operations............ $ (835,907)
===========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------
1994 1993
----------- ------------
<S> <C> <C>
NET ASSETS, beginning of year.......................... $38,792,324 $37,867,709
----------- -----------
OPERATIONS
Net investment income.......................... 2,601,385 2,690,968
Net realized loss on securities................ (62,701) (27,301)
Net unrealized appreciation (depreciation) of
securities during the year................... (3,374,591) 928,343
----------- -----------
Increase (decrease) in net assets resulting
from operations .......................... (835,907) 3,592,010
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM NET
INVESTMENT INCOME ................................... (2,610,236) (2,667,395)
----------- -----------
INCREASE (DECREASE) IN NET ASSETS.................... (3,446,143) 924,615
----------- -----------
NET ASSETS, end of year................................ $35,346,181 $38,792,324
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
Mosher, Inc. (the "Fund'') is registered under the Investment Company
Act of 1940, as amended, as a diversified, closed-end management
investment company. The following is a summary of the significant
accounting policies consistently followed by the Fund in the preparation
of its financial statements.
A. INVESTMENT VALUATIONS
Investments in municipal bonds are valued at the most recently
quoted bid prices or at bid prices based on a matrix system (which
considers such factors as security prices, yields, maturities and
ratings) furnished by dealers and an independent pricing service.
Short-term investments are valued at amortized cost, which
approximates market value. Municipal variable rate demand notes are
valued at par. Periodic rate changes reflect current market
conditions.
Fund investments include lower rated and unrated debt securities
which may be more susceptible to adverse economic conditions than
investment grade holdings. These securities are often subordinated
to the prior claims of other senior lenders and uncertainties
exist as to an issuer's ability to meet principal and interest
payments. Securities rated below investment grade and comparable
unrated securities represented approximately 27% of the investment
portfolio at December 31, 1994.
B. FEDERAL INCOME TAXES
No provision for federal income taxes is required because the
Fund has elected to be taxed as a "regulated investment company"
under the Internal Revenue Code and intends to maintain this
qualification by annually distributing all of its taxable net
investment income and taxable net realized capital gains to its
shareholders. It is anticipated that no distributions of capital
gains will be made until tax basis capital loss carryforwards, if any,
expire or are offset by net realized capital gains.
C. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME
Investment transactions are accounted for on the trade date.
Realized gains and losses on investments are determined on the basis
of identified cost. Interest income is accrued weekly.
D. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the
record date. The Fund distributes tax basis earnings in accordance
with the minimum distribution requirements of the Internal Revenue
Code, which may differ from generally accepted accounting
principles. Such dividends or distributions may exceed financial
statement earnings.
The Fund will continue to invest principally in tax-exempt
obligations sufficient in amount to qualify the Fund to pay
"exempt-interest dividends" as defined in the Internal Revenue
Code.
E. DEBT DISCOUNT OR PREMIUM
For financial reporting purposes, debt discounts or premiums are
accounted for on the same basis as is used for federal income tax
reporting. Accordingly, original issue debt discounts and all
premiums are amortized over the life of the security. Market
discounts are recognized at the time of sale as realized gains for
book purposes and as ordinary income for tax purposes.
F. WHEN-ISSUED SECURITIES
Delivery and payment for securities purchased on a when-issued
basis may take place up to 45 days after the date of the
transaction. The securities purchased are subject to market
fluctuation during this period. To meet the payment obligation,
sufficient cash or liquid securities equal to the amount that will
be due are set aside with the custodian.
NOTE 2 -- MANAGEMENT FEES
Van Kampen American Capital Asset Management, Inc. (the "Adviser"),
serves as investment manager of the Fund. Management fees are paid
monthly based on an annual rate of .45% of average weekly net assets.
Prior to June 2, 1994, management fees were calculated based on an annual
rate of .50% of the average weekly net assets of the Fund; the Adviser
then voluntarily waived fees in excess of .45% of such net assets.
9
<PAGE> 11
NOTE 3 -- INVESTMENT ACTIVITY
During the year, the cost of purchases and proceeds from sales of
investments, excluding short-term investments, were $6,119,618 and
$7,557,363, respectively.
For federal income tax purposes, the identified cost of investments
owned at December 31, 1994 was $33,954,251. Net unrealized appreciation of
investments aggregated $1,208,313, gross unrealized appreciation of
investments aggregated $1,712,667, and gross unrealized depreciation of
investments aggregated $504,354.
At December 31, 1994, the Fund had a capital loss carryforward for
federal income tax purposes of approximately $186,000, which will expire
in 1996 through 2002 if not used to offset future capital gains.
During the year, the cost of purchases and proceeds from sales of
investments resulting from transactions between the Fund and other
investment companies advised by the Adviser were $300,000 and $190,000,
respectively. Such transactions were at current market prices on the dates
of the transactions for cash payment against prompt delivery, with no
brokerage commissions. The sales transactions did not result in a net
realized gain or loss to the Fund.
NOTE 4 -- DIRECTOR COMPENSATION
Fund directors who are not affiliated with the Adviser are compensated
by the Fund at the annual rate of $3,000 plus a fee of $750 per Board
meeting and $200 per Committee meeting attended. During the year, such
fees aggregated $46,550.
10
<PAGE> 12
FINANCIAL HIGHLIGHTS
Selected data for a share of common stock outstanding throughout each
of the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year .... $20.36 $19.88 $19.45 $18.83 $19.54
------ ------ ------ ------ ------
INCOME FROM OPERATIONS
Investment income...................... 1.51 1.56 1.53 1.60 1.62
Expenses............................... (.15) (.15) (.17) (.145) (.16)
------ ------ ------ ------ ------
Net investment income.................. 1.36 1.41 1.36 1.455 1.46
Net realized and unrealized gains or
losses on securities................. (1.80) .47 .47 .665 (.67)
------ ------ ------ ------ ------
Total from investment operations ...... (.44) 1.88 1.83 2.12 .79
------ ------ ------ ------ ------
DIVIDENDS FROM NET INVESTMENT INCOME... (1.37) (1.40) (1.40) (1.50) (1.50)
------ ------ ------ ------ ------
Net asset value, end of year........... $18.55 $20.36 $19.88 $19.45 $18.83
====== ====== ====== ====== ======
TOTAL RETURN........................... (2.16%) 9.46% 9.41% 11.26% 4.04%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (millions)..... $35.3 $38.8 $37.9 $37.1 $35.9
Average net assets (millions).......... $37.0 $38.8 $37.5 $36.5 $36.4
Ratios to average net assets(1)
Expenses............................. .74% .73% .85% .77% .81%
Expenses, without waiver............. .76% .78% -- -- --
Net investment income................ 7.03% 6.93% 6.91% 7.59% 7.67%
Net investment income, without waiver 7.01% 6.88% -- -- --
Portfolio turnover rate................ 18% 5% 15% 2% 1%
</TABLE>
(1) SEE NOTE 2.
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 13
INDEPENDENT AUDITOR'S REPORT
TO THE SHAREHOLDERS AND BOARD
OF DIRECTORS OF MOSHER, INC.
We have audited the accompanying statement of assets and liabilities
including the investment portfolio of Mosher, Inc., as of December 31, 1994,
and the related statement of operations for the year then ended, the statement
of changes in net assets for each of the years in the two-year period then
ended, and financial highlights for each of the years in the five-year period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Mosher, Inc. as of December 31, 1994, the results of its operations
for the year then ended, the changes in its net assets for each of the years in
the two-year period then ended, and the financial highlights for each of the
years in the five-year period then ended, in conformity with generally accepted
accounting principles.
KPMG PEAT MARWICK LLP
Houston, Texas
January 20, 1995
12
<PAGE> 14
MOSHER, INC.
BOARD OF DIRECTORS
Dougal A. Cameron, IV John H. Lindsey
Milton E. Elliot Robert C. McNair
Christopher T. Jones Charles C. Ryrie
Richard L. Kendal Robert Stewart, Jr.
- -----------------------------------------------------------------
OFFICERS
Milton E. Elliot Charles C. Ryrie
CHAIRMAN VICE PRESIDENT AND
TREASURER
Christopher T. Jones Arthur H. Rogers
PRESIDENT SECRETARY
- -----------------------------------------------------------------
INVESTMENT ADVISER
Van Kampen American Capital Asset Management, Inc.
2800 Post Oak Blvd., Houston, Texas 77056
- -----------------------------------------------------------------
SHAREHOLDER SERVICE AGENT
Boston Financial Data Services, Inc.
P.O. Box 366, Boston, Massachusetts 02101
- -----------------------------------------------------------------
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, Massachusetts 02110
- -----------------------------------------------------------------
LEGAL COUNSEL
Fulbright & Jaworski
1301 McKinney, Houston, Texas 77010
- -----------------------------------------------------------------
INDEPENDENT AUDITORS
KPMG Peat Marwick
NationsBank Center
1700 Louisiana
Houston, Texas 77210-4545
- -----------------------------------------------------------------
Inquiries about an investor's
account should be referred
to the Fund's Transfer Agent:
Boston Financial Data Services, Inc.
P.O. Box 366
Boston, Massachusetts 02101
Telephone: (800) 821-1238
- -----------------------------------------------------------------
Nationally distributed by Van Kampen American Capital
Distributors, Inc.
<PAGE> 15
MOSHER, INC.
C/O BFDS
P.O. BOX 366
Boston, MA 02101
PRINTED MATTER
Printed in U.S.A. 995-RPT-007
BULK RATE
U.S. POSTAGE
PAID
HOUSTON, TEXAS
PERMIT NO. 3736
