------------------------------------------------------------------------------
Dear Shareholder:
The Age of Irrational Exuberance became a little less of both last quarter.
The stock prices of exciting new companies retreated from their astounding
levels while the prices of more understandable and cheaper companies advanced.
The segmentation of returns is shown below:
2nd Qtr Year-to-Date
--------- ---------------
NASDAQ Composite -13.3% -2.5%
Dow Jones Industrial Average -4.0% -8.5%
S&P 500 -2.7% -0.4%
Morningstar Large Value -2.2% -1.9%
Your Portfolio 5.6% 2.3%
The Second Mouse Gets the Cheese
"First do no harm" is the injunction given to every young doctor.
For investment managers, a similar injunction might be "First do nothing dumb."
In recent years, the financial press has been filled with largely accurate
stories of investors bidding up technology stocks, particularly small and
untested ones, to astounding levels. As stubbornly rational investors in a
less-than-rational world, we have avoided those stocks. The two reasons we
have avoided them may not be permanent.
Valuation is the obvious problem. Even after the minor tech wreck last
quarter, most of these stocks still are priced at levels which are wildly
excessive by any standard except that of the recent speculative past. The
stocks are cheaper than they were, but cheaper in relative terms does not
mean cheap in absolute terms.
The second reason to avoid tech stocks is that few, if any, investors can
understand or predict the long-term future profits of these companies. That
argument, while correct in general, overestimates the difficulty of
understanding all tech companies. Most tech companies do have a high level
of operating risk as they try to move quickly to "reinvent the business."
There are, however, a small number of tech companies whose businesses are
reasonably predictable. At the other extreme, investors often overestimate
the predictability of premier, stable franchises. Kellogg, Coca-Cola,
Gillette, and Proctor & Gamble are considered wonderful and stable companies,
but all have inflicted unpleasant profit shortfalls on their surprised investors
recently. Every company has its own set of risks, and our goal is to evaluate
them carefully. Our goal also is to be realistic about our circle of competence
and to buy even excellent companies with a reasonable margin of safety.
We are not remotely near considering most tech companies for your portfolio
now. At some future date, however, the twin conditions of cheapness and
reasonable understanding of the future franchise may coincide. We deliberately
are not the first investors to buy tech stocks; we do intend to play the role
of the second mouse. He is the one who gets the cheese.
Murphy's Law Runs In Reverse
The original version of Murphy's Law--if it can go wrong, it will--has run
in reverse during the last decade. The new version is--if it can go right, it
has. Rewind your mind at least five years and consider how low a probability
you would have given to these events:
-- The federal budget, in perpetual deficit for decades, suddenly swings
into significant surplus.
-- The economy enjoys the longest expansion in history and productivity
perks up late in that expansion.
-- Labor remains remarkably docile even as unemployment hits record lows,
allowing the benefits of economic growth to accrue to owners of capital
rather than providers of labor.
-- Corporate profits soar to all time records not only in absolute terms
but also in terms of return on equity, after tax margins, etc. Best of
all, the stock market then attaches record high price/earnings ratios
to those record high profits.
Two conclusions can be drawn from this remarkable combination of positive
surprises. Significant events--positive and negative--for investors can
be extremely difficult to predict. Even more important, this has been a
golden age when many positive surprises combined to create the best of all
possible worlds for investors. This golden age is unlikely to be perpetual,
and some day Mr. Murphy's Law is likely to reassert itself in its original
form.
What Have We Done Lately
"More than you might think" is the answer we gave at the end of the first
quarter. "Less than you might think" is the answer more appropriate for the
second quarter. The large volatility of stock prices last quarter took place
in tech companies we do not own. We added modestly to some of our existing
positions such as real estate investment trusts. In general, we are very
pleased with the operating and profit performance of the companies in your
portfolio, but we find few great new opportunities that deserve the
commitment of your capital.
Our parent company, United Asset Management, did do something significant
lately. Its directors agreed to sell the firm to Old Mutual, a United Kingdom-
based financial services company. The impact on us at Pacific Financial
Research is likely to be no change, since our contractually assured autonomy
remains in place. While the transaction is significant for UAM shareholders,
it is business as usual for most of its firms, including our own. From a legal
standpoint, this constitutes a change of ownership for Pacific Financial
Research, your fund's investment manager, and we will shortly request your
approval for this transaction.
Sincerely,
/s/
James Gipson
Chairman & President
July 2, 2000
------------------------------------------------------------------------------
(UNAUDITED)
Investment Portfolio
June 30, 2000
Market
Shares Cost Value
---------- ------------- -----------
COMMON STOCKS (76.6%)
AEROSPACE & DEFENSE (4.9%)
Lockheed Martin Corporation 912,300 $ 18,222,110 $ 22,636,444
Litton Industries, Inc.* 375,100 12,559,618 15,754,200
Other 79,000 1,457,116 1,520,750
----------- -----------
32,238,844 39,911,394
CONSUMER PRODUCTS (0.6%)
Nike, Inc. Class B 119,400 3,224,601 4,753,613
----------- -----------
FOOD & TOBACCO (12.9%)
Philip Morris Companies Inc. 2,303,200 77,083,512 61,178,750
Sara Lee Corporation 1,390,300 23,308,451 26,850,169
UST Inc. 1,176,500 32,276,981 17,279,844
------------- -----------
132,668,944 105,308,763
------------- -----------
HEALTH CARE (7.8%)
HCA - The Healthcare Company 986,300 17,668,866 29,958,863
Tenet Healthcare Corporation* 1,030,500 17,209,560 27,823,500
Hillenbrand Industries, Inc. 195,000 5,294,014 6,105,937
------------- -----------
40,172,440 63,888,300
------------- -----------
INSURANCE (2.8%)
Old Republic International
Corporation 1,116,340 14,314,723 18,419,610
The Allstate Corporation 208,100 4,110,878 4,630,225
------------- -----------
18,425,601 23,049,835
MORTGAGE FINANCE (17.8%)
Freddie Mac 1,867,600 67,715,945 75,637,800
Fannie Mae 987,100 55,070,064 51,514,281
Golden West Financial Corporation 438,100 12,471,612 17,879,956
------------- ------------
135,257,621 145,032,037
------------- ------------
REAL ESTATE INVESTMENTS (12.8%)
Equity Residential Properties Trust 721,200 29,818,591 33,175,200
Equity Office Properties Trust 762,400 18,727,495 21,013,650
Archstone Communities Trust 727,100 15,020,261 15,314,544
Mack-Cali Realty Corporation 459,600 11,629,737 11,805,975
Apartment Investment & Management Co 255,700 9,606,156 11,059,025
Security Capital Group Inc./Class B* 377,100 5,491,487 6,410,700
General Growth Properties, Inc. 183,300 5,627,918 5,819,775
------------- ------------
95,921,645 104,598,869
------------- ------------
SPECIAL SITUATIONS & OTHER (17.0%)
De Beers Consolidated Mines, Ltd. 1,071,800 15,037,982 26,058,138
R. R. Donnelley & Sons Company 1,078,600 23,838,613 24,335,913
Manpower Inc. 690,000 16,988,537 22,080,000
International Game Technology* 612,600 10,140,640 16,233,900
The Stanley Works 638,800 16,797,029 15,171,500
Sigma-Aldrich Corporation 254,000 6,853,866 7,429,500
Armstrong Holdings, Inc. 383,800 8,688,521 5,876,937
Airgas, Inc.* 916,700 11,683,434 5,213,731
Great Lakes Chemical Corporation 74,900 2,881,226 2,359,350
Other 360,500 13,306,031 13,968,037
------------- -------------
126,215,879 138,727,006
------------- -------------
TOTAL COMMON STOCKS 584,125,575 625,269,817
------------- -------------
Par Value
-----------
BONDS (15.0%)
SHORT TERM NOTES (15.0%)
Federal Home Loan Bank Agency Notes
5.500%, due 8/13/01 109,345,000 108,927,511 107,756,217
Federal Home Loan Bank Agency Notes
5.865%, due 6/29/01 15,180,000 15,177,060 15,011,653
------------- -------------
124,104,571 122,767,870
------------- -------------
TOTAL INVESTMENT SECURITIES (91.6%) 708,230,146 748,037,687
SHORT TERM INVESTMENTS (8.0%)
REPURCHASE AGREEMENT (8.0%) (Note 6)
State Street Bank and Trust Co., 4.75%,
due 7/03/00 collateralized by U.S. Treasury
Obligations, due 09/30/00 and 4/30/01
valued at $66,362,075, expected proceeds,
including interest, of $66,387,825 65,053,000 65,053,000
------------- -------------
TOTAL INVESTMENT PORTFOLIO (99.6%) $ 773,283,146 813,090,687
=============
Cash and Receivables less Liabilities (0.4%) 3,579,528
-------------
NET ASSETS (100.0%) $ 816,670,215
=============
________________________
See notes to financial statements.
*Non-income producing securities.
Statement of Assets and Liabilities
June 30, 2000
ASSETS:
Investment Portfolio:
Investment securities, at market value
(identified cost: $708,230,146) $ 748,037,687
Short-term investments, at cost, which is
equivalent to market (Note 6) 65,053,000
-------------
813,090,687
Cash 335
-------------
Receivable for:
Dividends & interest 4,536,130
Fund shares sold 308,225
Directed commission recapture (Note 5) 46,780
-------------
4,891,135
-------------
817,982,157
-------------
LIABILITIES:
Payable for:
Accrued expenses (including $690,503 due adviser) 846,036
Fund shares repurchased 451,022
Distribution payable 14,884
-------------
1,311,942
-------------
NET ASSETS: (equivalent to $66.81 per share on 12,224,169
shares of Capital Stock outstanding--
200,000,000 shares authorized) $ 816,670,215
=============
SUMMARY OF SHAREHOLDERS' EQUITY:
Paid-in Capital $ 741,624,941
Unrealized appreciation of investments (Note 4) 39,807,541
Undistributed realized capital gains (Note 4) 21,746,156
Undistributed net investment Income 13,491,577
-------------
Net assets at June 30, 2000 $ 816,670,215
=============
______________________________________
See notes to financial statements.
Statement of Operations
Six Months Ended June 30, 2000
INVESTMENT INCOME:
Dividends $ 11,004,001
Interest 6,796,092
-------------
Total Investment Income 17,800,093
EXPENSES:
Management fee (Note 2) 4,214,492
Transfer agent 248,955
Postage & other 81,211
Custodian and accounting (Note 5) 70,577
Printing 39,420
Registration fees 36,173
Auditing 20,650
Legal 17,336
Insurance 13,204
ICI Dues 9,246
Directors' fees (Note 2) 7,500
Taxes 402
Miscellaneous 6,483
----------
4,765,649
Reduction of Expenses (Note 5) (86,104)
----------
Total Expenses 4,679,545
-----------
Net Investment Income 13,120,548
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain on investments
(excluding short-term investments):
Proceeds from investments sold 298,705,739
Cost of investments sold 276,945,551
-----------
Net realized gain on investments (Note 3 and 4) 21,760,188
Unrealized appreciation of investments:
Beginning of period 62,141,271
End of period (Note 4) 39,807,541
-----------
Decrease in unrealized appreciation of investments (22,333,730)
-----------
Net realized and unrealized loss on investments (573,542)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 12,547,006
===========
________________________________________
See notes to financial statements.
Statements of Changes in Net Assets
Six Months Ended Year Ended
June 30, December 31,
2000 1999
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 13,120,548 $ 29,888,944
Net realized gain on investments (Note 4) 21,760,188 80,800,957
Net unrealized depreciation of investments (22,333,730) (145,100,322)
------------- -------------
Net increase (decrease) in net assets
resulting from operations 12,547,006 (34,410,421)
------------- -------------
Distributions to shareholders from:
Net investment income
($0.00 and $2.25 per share, respectively -0- (29,527,935)
Net realized capital gain
($0.00 and $6.15 per share, respectively -0- (80,811,350)
------------- -------------
Decrease in net assets resulting from
distributions -0- (110,339,285)
------------- -------------
Capital Stock Transactions:
Proceeds from Capital Stock sold (832,222
and 4,464,043 shares, respectively) 53,793,418 330,569,514
Proceeds from Capital Stock purchased by
reinvestment of dividends and
distributions (0 and 1,569,355
shares, respectively) -0- 100,485,802
Cost of Capital stock redeemed
(3,324,061 and 7,667,158
shares, respectively) (210,392,225) (557,902,383)
------------- -------------
(Decrease) in net assets resulting
from Captial Stock transactions (156,598,807) (126,847,067)
------------- -------------
Total decrease in net assets (144,051,801) (271,596,773)
NET ASSETS:
Beginning of period (includes $371,027 and
$10,018 of undistributed net nvestment
income, respectively) 960,722,016 1,232,318,789
------------- -------------
End of period (includes $13,491,575 and
$371,027 of undistributed net investment
income, respectively $ 816,670,215 $ 960,722,016
============= =============
______________________________________
See notes to financial statements.
<TABLE>
<CAPTION>
Financial Highlights
Six Months Year Ended December 31,
Ended June 30,-------------------------------------------------------
2000 1999 1998 1997 1996 1995
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Selected Per Share Data:
Net asset value,
beginning of year $ 65.28 $ 75.37 $ 76.86 $ 67.57 $ 60.74 $ 46.09
------ ------ ------ ------ ------ ------
Income (loss) from
investment operations:
Net investment income 1.08 2.27 1.64 1.36 0.83 0.76
Net realized and unrealized
gain (loss) on investments 0.45 (3.96) 11.36 19.12 11.10 20.07
---- ------ ------ ------ ------ ------
Total Income (loss) from
investment operations 1.53 (1.69) 13.00 20.48 11.93 20.83
Less distributions:
Dividends from net
investment income - (2.25) (1.63) (1.36) (0.83) (0.76)
Distributions from net
realized gain on investments - (6.15) (12.86) (9.83) (4.27) (5.42)
----- ------ ------ ------ ------ ------
Net asset value, end of period $ 66.81 $ 65.28 $ 75.37 $ 76.86 $ 67.57 $ 60.74
===== ====== ====== ====== ====== ======
Total Return 2.3% (2.0%) 19.2% 30.2% 19.4% 45.2%
Ratios and Supplemental Data:
Net assets ($000's)
end of period $816,670 $960,722 $1,232,319 $824,083 $542,753 $403,526
Ratio of expenses
to average net assets 1.11%* 1.10% 1.06% 1.08% 1.08% 1.11%
Ratio of net investment income
to average net assets 3.11%* 2.54% 2.13% 1.84% 1.32% 1.39%
Portfolio turnover rate 27%* 63% 65% 31% 24% 31%
Number of shares outstanding
at end of period (000) 12,224 14,716 16,350 10,721 8,033 6,643
*Annualized
</TABLE>
_____________________________________
See notes to financial statements.
Notes to Financial Highlights
June 30, 2000
Note 1 - The Clipper Fund(SM) ("Fund") is registered under the Investment
Company Act of 1940, as amended, as a non-diversified open-end investment
company. The investment objective of the Fund is long-term growth of capital
consisting primarily of equity and equity substitute securities that are
considered by Fund management and the Investment Adviser to have long-term
capital appreciation potential. Bonds may be used when they are judged to
offer higher potential long-term returns than stocks. The following is a
summary of significant accounting policies consistently followed by the
Fund in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles:
(a) Security Valuation - Investments in securities traded on a national
securities exchange are valued at the last sale price on such exchange
on the business day as of which such value is being determined. Securities
traded in the over-the-counter market and listed securities for which no
sale was reported on that date are valued at the last reported bid price.
If no bid price is quoted on such day, then the security is valued by such
method as the Board of Directors of the Fund shall determine in good faith
to reflect its fair value. All other assets of the Fund, including
restricted and not readily marketable securities, are valued in
such manner as the Board of Directors of the Fund in good faith
deems appropriate to reflect their fair value.
(b) Federal Income Taxes - The Fund intends to comply with the
requirements of the Internal Revenue Code, as amended, applicable
to regulated investment companies and to distribute all of its
taxable income to its shareholders. Therefore, no Federal income
tax provision is required.
(c) Use of Estimates - The preparation of the financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the
financial statements. Actual results could differ from those estimates.
(d) Other - As is common in the industry, security transactions
are recorded on the trade date. Dividend income and distributions
to shareholders are recorded on the ex-dividend date. Interest
income is recorded on the accrual basis.
Note 2 - The Investment Adviser's management fee is equal to 1% per annum of
the Fund's average daily net asset value. The management fee is accrued daily
in computing the net asset value per share.
Each Director who is not an interested person of the Investment Adviser is
compensated by the Fund at the rate of $1,250 per quarter.
Note 3 - The cost of securities purchased (excluding short-term investments)
for the six months ended June 30, 2000, was $105,282,829. The cost of securities
held is the same for Federal income tax and financial reporting purposes.
Realized gains or losses are based on the specific identification method.
Note 4 - During the six months ended June 30, 2000, the Fund realized net
capital gains of $21,760,188 from securities transactions for Federal
income tax and financial reporting purposes. As of June 30, 2000,
unrealized appreciation of investment securities for tax and financial
reporting purposes aggregated $39,807,541, of which $87,030,616 related to
appreciated securities and $47,223,075 related to depreciated securities.
Note 5 - During the six months ended June 30, 2000, the total amount of
transactions and related commissions with respect to which the Fund directed
brokerage transactions to brokers, in order to reduce custody expenses, was
$59,236,428 and $111,045, respectively.
Note 6 - The Fund requires the custodian to take possession, to have
legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral
for repurchase agreements. The market value of the underlying securities is
required to be at least 102% of the resale price at the time of purchase.
If the seller (State Street Bank & Trust Co.) of the agreement defaults and
the value of the collateral declines, or if the seller enters an insolvency
proceeding, realization of the value of the collateral by the Fund may be
delayed or limited.
Clipper Fund(SM)
Compounded Annual Total Return
-----------------------------------------
1 yr 3 yrs 5 yrs 10 yrs Inception
-3.4% 9.7% 16.4% 15.5% 16.0%
Change in Value of $10,000 Initial Investment
Clipper S&P 500 Morningstar
Large Value
------- ------- -----------
'84 10000 10000 10000
10172 10173 9898
10301 9912 10710
11536 10872 10986
'85 12128 11076 11890
13013 12093 12767
14000 12980 12292
13681 12447 14096
'86 15330 14588 16085
17970 16647 16764
17944 17627 15889
17596 16397 16543
'87 18206 17310 19417
20414 21006 19962
20354 22061 20963
20300 23516 16935
'88 18778 18218 18213
20473 19255 19337
21423 20537 19483
22452 20607 19897
'89 22452 21244 21219
24052 22750 22732
26544 24759 24687
28388 27410 24570
'90 27365 27975 23858
25324 27133 24753
26785 28840 21286
22597 24877 23006
'91 25285 27106 26350
28510 31045 26337
28380 30973 27808
30236 32630 29686
'92 33399 35365 29839
32975 34470 30255
34448 35125 30939
35954 36231 32763
'93 38685 38056 34576
40299 39715 35067
40150 39909 36478
40741 40940 37191
'94 42981 41882 36074
40945 40302 36251
41041 40472 37696
41924 42455 37041
'95 41938 42448 40192
46979 46581 43462
52967 51027 46666
56934 55086 49069
'96 60891 58402 51904
64089 61537 53247
67467 64299 54826
72855 71821 59264
'97 75098 73750 60205
85754 86608 68396
89559 93097 74602
94651 95771 75116
'98 101387 109130 83513
102225 112731 82863
100441 101524 72412
112815 123148 84334
'99
109047 129281 84967
117084 138395 93285
112037 129759 84348
110536 149067 89797
'00 107187 152481 89986
113136 148425 88006
Past performance is no guarantee of future results. These returns assume
redemption at the end of each period. For comparison purposes, the S&P 500
Index is an unmanaged index of 500 companies widely recognized as
representative of the equity market in general. The Morningstar Large Value
Funds Index is an index of 696 actively managed large value mutual funds
monitored by Morningstar. Data presented from inception of Fund (February 29,
1984) through June 30, 2000.
P E R F O R M A N C E
Morningstar
CLIPPER Large Value S&P 500
RETURN --------- ----------- ------------
Compounded Annual Returns:**
One year (3.4%) (5.2%) 7.3%
Three Years 9.7 8.7 19.7
Five Years 16.4 15.2 23.8
Ten Years 15.5 13.4 17.8
Since Inception (February 29, 1984) 16.0 15.0 18.0
Annual Returns:
1984* 21.3% 9.9% 10.8%
1985 26.4 28.3 31.7
1986 18.8 17.4 18.7
1987 3.1 2.4 5.3
1988 19.6 17.5 16.6
1989 21.9 23.5 31.7
1990 (7.6) (6.4) (3.1)
1991 32.1 29.0 30.5
1992 15.8 10.4 7.6
1993 11.1 13.5 10.1
1994 (2.4) (0.4) 1.3
1995 45.2 32.5 37.6
1996 19.4 20.8 23.0
1997 30.2 26.8 33.4
1998 19.2 12.3 28.6
1999 (2.0) 6.6 21.0
Year-to-Date** 2.3 (1.9) (0.4)
------ ------ ------
Inception-to-Date
Cumulative Return** 1031.2% 780.3% 1384.5%
====== ====== ======
RISK
Third Quarter, 1998 (1.7%) (12.6%) (10.0%)
Fourth Quarter, 1987 (7.5%) (19.2%) (22.5%)
Cumulative Decline During
Down Quarters (46.3%) (56.4%) (56.7%)
Beta Since Inception
(February 29, 1984) 0.63 0.87 1.00
1. All returns are historical and include changes in share price and
reinvestment of dividends and capital gains. Past performance is no
guarantee of future results. Investment return and principal value of
investments fluctuate. Investor's shares, when redeemed, may be worth
more or less than their original cost.
2. Clipper Fund(SM)'s performance is compared with that of the S&P 500 Index,
an unmanaged index of 500 companies widely recognized as representative of
the equity market in general and the Morningstar Large Value Funds Index,
an index of 696 actively managed large value mutual funds monitored by
Morningstar.
*1984 results for Clipper Fund(SM), S&P 500 and the Morningstar Large Value
Funds Index are for the period February 29, 1984 (inception date) through
December 31, 1984.
**Through June 30, 2000
Proxy Results
On March 23, 2000, the Annual Shareholders' meeting for the Clipper
Fund(SM) was held. At the meeting, shareholders were asked to approve a slate
of four (4) directors to serve for the coming year and to ratify the selection
of Ernst & Young LLP as the Fund's independent auditors for the fiscal year
ending December 31, 2000.
Elected as directors of the Fund were James H. Gipson, Norman B. Williamson,
Lawrence P. McNamee and F. Otis Booth, Jr.
In addition, the accounting firm of Ernst & Young LLP was ratified as the
Fund's independent auditors for the fiscal year ending December 31, 2000.
Votes were cast as follows:
Broker
For Against Withheld Non-Votes
-------- -------- --------- ---------
James H. Gipson 8,056,884 - 182,999 -
Norman B. Williamson 8,050,200 - 189,683 -
Lawrence P. McNamee 8,048,198 - 191,685 -
F. Otis Booth, Jr. 8,038,734 - 201,149 -
Ernst & Young LLP 8,092,008 86,610 61,265 -
==============================================================================
CLIPPER FUND(SM)
9601 Wilshire Boulevard
Beverly Hills, California 90210
Telephone (800) 776-5033
Shareholder Services
& Audio Response (800) 432-2504
Internet: www.clipperfund.com
INVESTMENT ADVISER
Pacific Financial Research, Inc.
DIRECTORS
James H. Gipson
Norman B. Williamson
Professor Lawrence P. McNamee
F. Otis Booth, Jr.
TRANSFER & DIVIDEND PAYING AGENT [CLIPPER FUND(SM) LOGO GOES HERE]
National Financial Data Services
Post Office Box 219152
Kansas City, Missouri 64121-9152
(800) 432-2504
Overnight Address:
330 W. 9th Street, 4th Fl.
Kansas City, MO 64105
CUSTODIAN
State Street Bank and Trust Company S E M I - A N N U A L R E P O R T
COUNSEL JUNE 30, 2000
Paul, Hastings, Janofsky & Walker LLP
INDEPENDENT AUDITORS
Ernst & Young LLP
This report is not authorized for
distribution to prospective investors
unless accompanied by a current prospectus.
==============================================================================
CF 2QTR 0600
