IR PASS-THROUGH CORP.
c/o Northstar Presidio Management Company LLC
411 West Putnam Avenue, Suite 270
Greenwich, CT 06830
(203) 862-7444
Fax: (203) 862-7460
Integrated ARROs Fund I (the "Fund")
February, 1998
Dear Unitholder:
Enclosed for your review are the Fund's audited financial statements as of
December 31, 1997. As you are aware, the Funds' investments are passive in
nature and consist of interest-bearing payment obligations that originated from
a series of net lease real estate partnerships. As such, the primary source of
payment for these obligations is the lease payments received from the
partnerships' corporate tenants. We are pleased to report that all tenant
obligations continue to be met and, on an overall basis, the credit ratings of
these tenants have not materially changed since the initial offering of the
Units.
As previously reported, the Fund has made arrangements with Royal Alliance
Associates (212-551-5100) to act as a market maker and with DCC Securities Corp.
(212-527-0220) to facilitate trading, as a broker, between buyers and sellers of
Units. Please contact these firms directly if you have any questions regarding
such activities.
If you have any specific questions regarding your holdings in the Fund, please
call the Trustee, Investors Fiduciary Trust Company at 800-874-6205.
Sincerely,
Integrated ARROs Fund I
By: IR Pass-through Corp., Sponsor
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Unitholders, Board of Directors of the Sponsor, and Trustee of
Integrated ARROs Fund I:
We have audited the accompanying financial statements of financial condition of
Integrated ARROs Fund I (the "Fund") as of December 31, 1997 and 1996, including
the schedule of portfolio investments as of December 31, 1997, and the related
statements of operations and changes in net assets for the years then ended and
the schedule of selected per unit operating performance, ratios and supplemental
data for each of the five years in the period ended December 31, 1997. These
financial statements and the selected per unit operating performance, ratios and
supplemental data are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and the
selected per unit operating performance, ratios and supplemental data 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 the selected per
unit operating performance, ratios and supplemental data are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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 the selected per unit operating
performance, ratios and supplemental data referred to above present fairly, in
all material respects, the financial position of Integrated ARROs Fund I at
December 31, 1997 and 1996, the results of its operations and changes in its net
assets for the years then ended, and the selected per unit operating
performance, ratios and supplemental data for the each of the five years in the
period ended December 31, 1997, in conformity with generally accepted accounting
principles.
<PAGE>
As explained in Note 2, the financial statements include investments in payment
obligations valued at $10,293,479 and $9,682,270 for the years ended December
31, 1997 and l996, respectively, whose values have been stated at the lower of
fair market value as estimated by the Board of Directors of the Sponsor in the
absence of readily ascertainable market values or Minimum Termination Amount. We
have reviewed the procedures used by the Board of Directors in arriving at its
estimate of value of such investments and have inspected underlying
documentation, and, in the circumstances, we believe the procedures are
reasonable and the documentation appropriate. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly from
the values that would have been used had a ready market for the investments
existed, and the differences could be material.
DELOITTE & TOUCHE, LLP
New York, New York
February 13, 1998
<PAGE>
<TABLE>
<CAPTION>
Integrated ARROs Fund I
Statements of Financial Condition
December 31,
---------------------------
Assets 1997 1996
----------- -----------
<S> <C> <C>
Cash ............................................. $ 252,609 $ 76,198
Receivable - Trustee ............................. 1,232,714 1,180,824
Investments in payment obligations, at minimum
termination value (cost $2,634,352)............... 10,293,479 9,682,270
----------- -----------
Total Assets ..................................... 11,778,802 10,939,292
Liabilities
Distributions Payable ............................ 252,577 76,198
----------- -----------
Net Assets ....................................... $11,526,225 $10,863,094
=========== ===========
Net Asset Value per unit (2,771 units outstanding) $ 4,159.59 $ 3,920.28
=========== ===========
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
Integrated ARROs Fund I
Statements of Operations
Year Ended December 31,
-------------------------------
1997 1996
----------- -----------
Investment income:
<S> <C> <C>
Interest and discount earned........ $ 1,273,794 $ 1,880,292
=========== ===========
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
Integrated ARROs Fund I
Statements of Changes in Net Assets
Year Ended December 31,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Increase in net assets from operations:
Net investment income .............................. $ 1,273,794 $ 1,880,292
------------ ------------
Net increase in net assets resulting from operations 1,273,794 1,880,292
Total declared as distributions to Unit Holders .... (610,663) (149,291)
------------ ------------
Net increase in net assets ......................... 663,131 1,731,001
Net assets:
Beginning of period ................................ 10,863,094 9,132,093
------------ ------------
End of period ...................................... $ 11,526,225 $ 10,863,094
============ ============
</TABLE>
See notes to financial statements
<PAGE>
Integrated ARROs Fund I
Notes to Financial Statements
1. ORGANIZATION
Integrated ARROs Fund I (the "Fund") is a grantor trust created under
the laws of the State of New York and registered under the Investment
Company Act of 1940 as a closed-end, non-diversified management
investment company.
The Fund was formed in April 1987 for the purpose of realizing
appreciation in value and deferring the receipt of income through
investments in a portfolio consisting of seven contract rights for the
payment of money (the "Payment Obligations"). The Payments Obligations
were sold to the Fund by IR Pass-through Corporation (the "Sponsor"),
formerly a wholly-owned subsidiary of Integrated Resources, Inc.
("Integrated"). The Payment Obligations were entered into by seven
privately offered, single purpose limited partnerships (the
"Partnership(s)") previously sponsored by Integrated that have acquired
and net leased commercial real estate. Pursuant to the Consummation of
a Plan of Reorganization ("the Plan"), on November 3, 1994, the Sponsor
is a wholly-owned indirect subsidiary of Presidio Capital Corp.
("Presidio") (See Footnote 3). All capitalized terms, herein not
defined, have the same meaning as defined in the Trust Indenture.
2. SIGNIFICANT ACCOUNTING POLICIES
Security Valuation
The Payment Obligations are valued at the lower of fair market value
(as determined by the Board of Directors of the Sponsor) or Minimum
Termination Amount (as defined in the Trust Indenture).
Federal Income Taxes
The Fund is classified as a grantor trust. As a consequence, the Fund
is not subject to Federal Income Taxation.
3. CONFLICTS OF INTEREST
Entities directly or indirectly owned by former officers and/or
directors of the Sponsor and/or Integrated or its post bankruptcy
successor, Presidio are the general partners of the Partnerships. Such
general partners have a fiduciary responsibility to make decisions that
are in the best interest of their respective Partnership. There may be
circumstances in which such general partners may make decisions on
behalf of the Partnerships that could conflict with or have an adverse
effect on the rights of unitholders of the Fund. Although the
Partnerships must comply with the terms of the Payment Obligations,
there can be no assurance that the decisions of the general partners on
behalf of the Partnerships would not adversely affect the value of the
units and/or the ability of the Partnerships to fulfill their
obligations under the Payment Obligations.
<PAGE>
3. CONFLICTS OF INTEREST - (CONT'D)
Subject to the rights of the unitholders under the Trust Indenture,
Presidio is responsible for the administration of the Fund through its
indirect ownership of all of the shares of the Sponsor. NorthStar
Presidio Management Company, LLC ("NorthStar Presidio") provides
administrative services to Presidio, who in turn provides services to
the Fund. The board of directors of Presidio is authorized to designate
the officers and directors of the Sponsor, whose names, titles,
principal occupations during the past five years and the date they
began office is set forth in Note 5, Commitments and Contingencies.
4. THE PAYMENT OBLIGATIONS
The seven Payment Obligations acquired by the Fund were issued from
1981 to 1982 for the sale to the Partnerships of rights to acquire
interests in properties or for services rendered.
Payments on the seven Payment Obligations are scheduled over a period
not in excess of 40 years from commencement of the initial terms
("Primary Terms"), ranging from 20 to 25 years, of the respective net
leases. Interest at simple interest rates ranging from 13% to 18.5%
accrues on the principal amount for each Payment Obligation. Payments
on the Payment Obligations are scheduled to commence approximately 15
years after commencement of the Primary Terms of a net lease.
If a net lease is not extended by the lessee beyond the Primary Term,
the Partnership's obligation to pay the balance of the principal of a
Payment Obligation and accrued interest does not accelerate. In such
event, the Partnership may either seek to re-lease or to sell the
property, but there can be no assurance that such a sale or new lease
would be made or that it would be made timely. If a sale is made, the
balance of the principal and accrued interest thereon may be declared
by the holder of the Payment Obligation, in its discretion, to be
immediately due and payable. Upon any disposition by a Partnership of
its interest in the property, the Partnership shall be obligated to pay
the holder of the Payment Obligation (after satisfaction of any
obligations senior to that of the Payment Obligation which are then due
and payable) first, accrued unpaid interest and then the unpaid
principal balance of the payment Obligation. If such sale is not made,
so long as the Partnership continues to make timely payments under the
Payment Obligation, generally there is no right of the Fund to
accelerate payment thereof. There are significant limitations on the
amounts that the Fund may receive in the event of a sale or other
disposition of a Partnership's property. As such, it is possible that
the Fund may not realize the entire outstanding principal and interest
thereon of the related Payment Obligation.
5. COMMITMENTS AND CONTINGENCIES
The Trust Indenture provides that the Sponsor will bear all costs of
administering the Fund through the period in which the Fund will be
receiving only primary term payments. However, when the Fund begins
receiving renewal term payments, the Fund shall bear a portion of such
costs equal to the percentage of the renewal term payments received by
the Fund in such year to all of the payments received by the Fund in
such year.
<PAGE>
The Trust Indenture provides that the above obligations of the Sponsor
were to be funded through the retention of a portion of the proceeds
from the sale of the Units. However, the Sponsor did not segregate from
the general assets of its then parent, Integrated, a portion of the
sale proceeds for this purpose. Integrated filed for bankruptcy on
February 13, 1990 under Chapter 11 of the United States Bankruptcy
code. While Integrated's bankruptcy did not directly affect the Fund,
and had no effect on the portfolio of the Fund, the bankruptcy did
affect the Sponsor, which had no source of revenues other than
Integrated. The Sponsor therefore filed a claim in Integrated's
bankruptcy proceedings for the amounts necessary to fund the Sponsor's
obligations to the Fund and to Integrated ARROs Fund II, an affiliate.
As Integrated's liabilities far exceeded its assets, and the Sponsor's
claim was that of an unsecured general creditor, it was unlikely that
amounts eventually paid on the Sponsor's claim would be sufficient to
fund the Sponsor's obligations. However, in 1994 in full settlement of
the Sponsor's claim, Integrated paid the Sponsor $450,000. The Sponsor
projected at that time, based on a present value estimate of legal,
accounting, trustee fees, and printing and mailing costs, that this
amount would enable the Sponsor to meet its obligations to the Fund,
and its similar obligations to Fund II, through approximately the year
2000. However, at that time there was no assurance that the $450,000
paid by Integrated, plus any interest accrued (the "Settlement Fund"),
would in fact be sufficient to fund the Sponsor's obligations through
the year 2000. As of December 31, 1997, approximately $61,000 remained
of the original Settlement Fund. There can be no assurance that the
remaining amount of the Settlement Fund will be sufficient to fund the
Sponsor's obligations through the year 2000. When the cash in the
Settlement Fund is exhausted, the Trustee may establish a reserve fund,
set aside out of the proceeds of the Payment Obligations, to pay the
costs of administering the Fund.
<PAGE>
5. COMMITMENTS AND CONTINGENCIES (CONT'D)
Set forth below is certain information with respect to the Sponsor's
directors and officers. The business address for each of them is c/o
NorthStar Presidio Management Company, LLC, 411 West Putnam Avenue,
Suite 270, Greenwich, Connecticut 06830.
<TABLE>
<CAPTION>
DIRECTOR/OFFICER
NAME POSITION WITH SPONSOR SINCE PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---- --------------------- ----- --------------------- ------ ------------
<S> <C> <C> <C>
W. Edward Scheetz Director November 1997 Mr. Scheetz co-founded NorthStar Capital
Partners LLC ("NorthStar Capital") with
David Hamamoto in July 1997. From 1993
through 1997 Mr. Scheetz was a partner
at Apollo Realty Advisors L.P. From 1989
to 1993 Mr. Scheetz was a principal with
Trammell Crow Ventures.
David Hamamoto Director November 1997 Mr. Hamamoto co-founded NorthStar
Capital with Edward Scheetz in July
1997. From 1988 to 1997 Mr. Hamamoto was
a partner and co-head of the real estate
principal investment area at Goldman
Sachs & Co.
Richard Sabella Director and President November 1997 Mr. Sabella joined NorthStar Capital in
November 1997. From 1989 to 1997 Mr.
Sabella was the head of real estate and
a partner at the law firm of Cahill,
Gordon & Reindel. Prior to that Mr.
Sabella was associated with the law
firms of Milgrim, Thomajian, Jacobs &
Lee, P.C. and Cravath Swaine & Moore.
David King Director, Executive Vice President November 1997 Mr. King joined NorthStar Capital in
and Assistant Treasurer November 1997. From 1990 to 1997 Mr.
King was associated with Olympia & York
Companies (USA) where he held the
position of Senior Vice President of
Finance. Prior to that Mr. King was
employed with Bankers Trust in its real
estate finance group.
Kevin Reardon Director, Vice President, Secretary November 1997 Mr. Reardon joined NorthStar Capital in
and Treasurer October 1997. From 1996 to 1997 Mr.
Reardon held the position of Controller
at Lazard Freres Real Estate Investors.
From 1993 to 1996 Mr. Reardon was the
Director of Finance in charge of
European expansion at the law Firm of
Dewey Ballantine. Prior to that Mr.
Reardon held a financial position at
Hearst-ABC Viacom International
Services.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR/OFFICER
NAME POSITION WITH SPONSOR SINCE PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---- --------------------- ----- --------------------- ------ ------------
<S> <C> <C> <C>
Allan Rothschild Executive Vice President and December 1997 Mr. Rothschild joined NorthStar Presidio
General Counsel in December 1997. From 1995 to 1997 Mr.
Rothschild was Senior Vice President and
General Counsel at Newkirk Limited
Partnership. From 1987 to 1995 Mr.
Rothschild was associated with the law
firm of Proskauer, Rose LLP in its real
estate group.
Lawrence Schachter Senior Vice President and Chief January 1998 Mr. Schachter joined NorthStar Presidio
Financial Officer in January 1998. From 1996 to 1998 Mr.
Schachter was Controller at CB
Commercial/Hampshire LLC. From 1995 to
1996 Mr. Schachter was Controller at
Goodrich Associates. From 1992 to 1995
Mr. Schachter was Controller at
Greenthal/Harlan Realty Services Co.
Adam Anhang Vice President November 1997 Mr. Anhang joined NorthStar Capital in
August 1997. From 1996 to 1997 Mr.
Anhang was employed by The Athena Group
as part of its Russia and former Soviet
Union development team. Prior to that
Mr. Anhang was a student at the Wharton
School of the University of
Pennsylvania.
Marc Gordon Vice President November 1997 Mr. Gordon joined NorthStar Capital in
October 1997. From 1993 to 1997 Mr.
Gordon was Vice President in the real
estate investment-banking group at
Merrill Lynch. Prior to that Mr. Gordon
was associated with the law firm of
Irell & Manella in its real estate and
banking group.
Charles Humber Vice President November 1997 Mr. Humber joined NorthStar Capital in
September 1997. From 1996 to 1997 Mr.
Humber was employed with Merrill Lynch
in its real estate investment-banking
group. Prior to that Mr. Humber was a
student at Brown University.
</TABLE>
<PAGE>
6. DISTRIBUTION PAYABLE
The Trustee declared a $252,577 ($91.15 per unit) distribution payable
to unitholders of record as of December 31, 1997. Such distribution was
paid on January 15, 1998.
7. SIGNIFICANT TRANSACTION
In May 1996, the tenant at the Huntsville, Texas property, one of five
properties owned by Elway Associates (one of the Partnerships),
exercised the economic discontinuance clause contained in its lease.
This clause generally allows the tenant to purchase the property for a
predetermined amount set forth in the lease upon declaring continued
use and occupancy of the property economically unsuitable. As a result,
Elway Associates wired proceeds of $1,149,699 to the Fund's Trustee in
partial satisfaction of the Elway payment obligation. The amount
received in this case is substantially in excess of the portion of the
Minimum Termination Amount allocable to the Huntsville, Texas lease.
While the Trust Indenture provides for acceptance of involuntary sale
(economic discontinuance) proceeds in prepayment of a payment
obligation in which the Partnership has a single property (lease), it
does not specifically provide for acceptance of involuntary sale
(economic discontinuance) proceeds in partial prepayment of a payment
obligation where the Partnership has more than one property (lease)
comprising the payment obligation, as is the case here. The Sponsor
believes that the original intent of the Trust Indenture was to allow
for such partial prepayment. However, the Trustee has not agreed to
allow the Elway payment in partial satisfaction of the associated
payment obligation and has placed the Elway proceeds in an interest
bearing account, separate from that of the Fund, pending a resolution
of this issue. The Sponsor is exploring various alternatives to resolve
this issue. The Elway proceeds and any interest earned thereon have
been reflected as a receivable from the Trustee on the accompanying
financial statements. The financial statements reflect the receipt of
the cash by the Trustee and an adjustment of the net assets as a result
of the transaction as if the payment were applied in partial
satisfaction of the associated payment obligation. The Elway primary
and renewal term payments were reduced on a prorata basis to reflect
the involuntary sale of the Huntsville, Texas property. It is not clear
what action, if any, the Trustee will take with respect to the Elway
proceeds or future partial satisfactions of payment obligations.
<PAGE>
<TABLE>
<CAPTION>
Integrated ARROs Fund I
Schedule of Selected Per Unit Operating Performance, Ratios and Supplemental Data
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
-------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Per Unit Operating Performance
Net asset value, beginning of period .... $ 3,920.28 $ 3,295.59 $ 2,901.11 $ 2,556.08 $ 2,253.97
Net investment income ................... 459.69 678.56 394.48 345.03 302.11
Distributions from net investment income (220.38) (53.87) -- -- --
-------------- -------------- ------------- ------------- -------------
Net asset value, end of period .......... $ 4,159.59 $ 3,920.28 $ 3,295.59 $ 2,901.11 $ 2,556.08
============== ============== ============= ============= =============
Total investment return ................. $ 459.69 $ 678.56 $ 394.48 $ 345.03 $ 302.11
============== ============== ============= ============= =============
Ratios/Supplemental Data
Net assets, end of period ............... $ 11,526,225 $ 10,863,094 $ 9,132,093 $ 8,038,962 $ 7,082,896
Ratio of expenses to average net assets . N/A N/A N/A N/A N/A
Ratio of net investment income to average
net assets............................... 11.38% 18.81% 12.73% 12.64% 12.56%
Portfolio turnover rate.................. N/A N/A N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Integrated ARROs Fund I
Schedule of Portfolio Investments
December 31, 1997
Partnership/ Discount To
Date Payment Original Simple Arrive at
Obligation Property Type of Principal Interest Accrued Minimum Termination
Incurred Lessee Location property Amount Rate Interest Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Walando Walgreen Orlando, FL Office/ $ 820,000 13.0% $ 1,791,000 $ 1,616,944
03/18/81 Company Warehouse
Building
Santex (2) Albertson's Venice, FL Retail 570,000 17.0% 1,600,000 1,127,579
07/01/81 Inc. Livermore, CA Facilities
Lando Albertson's Portland, OR Retail 783,451 16.0% 2,031,000 1,877,933
10/21/81 Inc. Orlando, FL Facilities
(amended Huntsville, AL
04/15/82)
Denville Xerox Lewisville, TX Plant 963,048 15.0% 2,316,000 2,231,532
12/27/81 Corporation Facility
(amended
01/27/84)
Elway Safeway Billings, MT Retail 1,429,042 18.5% 4,177,000 3,590,848
03/18/82 Stores, Inc. Huntsville, TX (5) Facilities
Fort Worth, TX
Aurora, CO
Mamoth Lakes, CA
Walstaff Walgreen Flagstaff, AZ Warehouse/ 1,159,771 16.0% 2,918,000 2,296,148
04/15/82 Arizona Distribution
(amended Drug Co. Building
06/17/82) (3)
Walcreek Hercules Walnut Creek, Office 1,306,709 18.5% 3,729,000 2,559,558
08/1/82 Credit Inc. CA Building
(amended (4)
06/29/83,
12/3/84)
---------- ----------- -----------
$7,032,021 $18,562,000 $15,300,542
========== =========== ===========
</TABLE>
(1) Primary Term of the applicable net lease.
(2) Two Payment Obligations, one for each property, treated as one.
(3) Guaranteed by Walgreen Company.
(4) Guaranteed by Hercules Incorporated.
(5) In May 1996, the tenant at the Huntsville, Texas property exercised the
economic discontinuance clause in its lease.
(6) As adjusted, due to the exercise of economic discontinuance on the
Huntsville, Texas lease.
<PAGE>
<TABLE>
<CAPTION>
Integrated ARROs Fund I
Schedule of Portfolio Investments -- Continued
December 31, 1997
Partnership
Date Payment Periodic Minimum
Obligation Property Payment During Termination
Incurred Lessee Location Primary Term (1) Value
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Walando Walgreen Orlando, FL 5/1/96-4/1/06 $ 994,056
03/18/81 Company $11,833/mo
Santex Albertson's Venice, FL 9/1/96-8/1/06 1,042,421
07/01/81 (2) Inc. Livermore, CA $13,342/mo
Lando Albertson's Portland, OR 7/1/97-1/1/07 936,518
10/21/81 Inc. Orlando, FL $62,656/semi.
(amended Huntsville, AL
04/15/82)
Denville Xerox Lewisville, TX 8/1/98-7/1/08 1,047,516
12/27/81 Corporation $12,038/mo
(amended
01/27/84)
Elway Safeway Billings, MT 7/1/97-6/1/07 2,015,194
03/18/82 Stores, Inc. Huntsville, TX (5) $22,027/mo (6)
Fort Worth, TX
Aurora, CO
Mamoth Lakes, CA
Walstaff Walgreen Flagstaff, AZ 12/1/98-6/1/03 1,781,623
04/15/82 Arizona $156,738/semi.
(amended Drug Co.
06/17/82) (3)
Walcreek Hercules Walnut Creek, 10/1/97-9/1/07 2,476,151
08/1/82 Credit Inc. CA $30,155/mo
(amended (4)
06/29/83,
12/3/84)
-----------
$10,293,479
</TABLE>
(1) Primary Term of the applicable net lease.
(2) Two Payment Obligations, one for each property, treated as one.
(3) Guaranteed by Walgreen Company.
(4) Guaranteed by Hercules Incorporated.
(5) In May 1996, the tenant at the Huntsville, Texas property exercised the
economic discontinuance clause in its lease.
(6) As adjusted, due to the exercise of economic discontinuance on the
Huntsville, Texas lease.
<PAGE>
<TABLE>
<CAPTION>
INTEGRATED ARROS FUND I
SCHEDULE OF ACCRUED INTEREST ON OUTSTANDING PAYMENT OBLIGATIONS
JANUARY 1, 1997 THROUGH DECEMBER 31, 1997
ACCRUED ACCRUED ACCRUED ACCRUED ACCRUED
DATE INTEREST DATE INTEREST DATE INTEREST DATE INTEREST DATE INTEREST
---- -------- ---- -------- ---- -------- ---- -------- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
01-Jan-97 17,401,175 23-Feb-97 17,570,337 17-Apr-97 17,739,500 09-Jun-97 17,908,662 01-Aug-97 18,077,825
02-Jan-97 17,404,366 24-Feb-97 17,573,529 18-Apr-97 17,742,691 10-Jun-97 17,911,854 02-Aug-97 18,081,016
03-Jan-97 17,407,558 25-Feb-97 17,576,721 19-Apr-97 17,745,883 11-Jun-97 17,915,046 03-Aug-97 18,084,208
04-Jan-97 17,410,750 26-Feb-97 17,579,912 20-Apr-97 17,749,075 12-Jun-97 17,918,237 04-Aug-97 18,087,400
05-Jan-97 17,413,942 27-Feb-97 17,583,104 21-Apr-97 17,752,267 13-Jun-97 17,921,429 05-Aug-97 18,090,592
06-Jan-97 17,417,133 28-Feb-97 17,586,296 22-Apr-97 17,755,458 14-Jun-97 17,924,621 06-Aug-97 18,093,783
07-Jan-97 17,420,325 01-Mar-97 17,589,488 23-Apr-97 17,758,650 15-Jun-97 17,927,813 07-Aug-97 18,096,975
08-Jan-97 17,423,517 02-Mar-97 17,592,679 24-Apr-97 17,761,842 16-Jun-97 17,931,004 08-Aug-97 18,100,167
09-Jan-97 17,426,709 03-Mar-97 17,595,871 25-Apr-97 17,765,034 17-Jun-97 17,934,196 09-Aug-97 18,103,358
10-Jan-97 17,429,900 04-Mar-97 17,599,063 26-Apr-97 17,768,225 18-Jun-97 17,937,388 10-Aug-97 18,106,550
11-Jan-97 17,433,092 05-Mar-97 17,602,255 27-Apr-97 17,771,417 19-Jun-97 17,940,580 11-Aug-97 18,109,742
12-Jan-97 17,436,284 06-Mar-97 17,605,446 28-Apr-97 17,774,609 20-Jun-97 17,943,771 12-Aug-97 18,112,934
13-Jan-97 17,439,476 07-Mar-97 17,608,638 29-Apr-97 17,777,801 21-Jun-97 17,946,963 13-Aug-97 18,116,125
14-Jan-97 17,442,667 08-Mar-97 17,611,830 30-Apr-97 17,780,992 22-Jun-97 17,950,155 14-Aug-97 18,119,317
15-Jan-97 17,445,859 09-Mar-97 17,615,022 01-May-97 17,784,184 23-Jun-97 17,953,347 15-Aug-97 18,122,509
16-Jan-97 17,449,051 10-Mar-97 17,618,213 02-May-97 17,787,376 24-Jun-97 17,956,538 16-Aug-97 18,125,701
17-Jan-97 17,452,243 11-Mar-97 17,621,405 03-May-97 17,790,568 25-Jun-97 17,959,730 17-Aug-97 18,128,892
18-Jan-97 17,455,434 12-Mar-97 17,624,597 04-May-97 17,793,759 26-Jun-97 17,962,922 18-Aug-97 18,132,084
19-Jan-97 17,458,626 13-Mar-97 17,627,789 05-May-97 17,796,951 27-Jun-97 17,966,113 19-Aug-97 18,135,276
20-Jan-97 17,461,818 14-Mar-97 17,630,980 06-May-97 17,800,143 28-Jun-97 17,969,305 20-Aug-97 18,138,468
21-Jan-97 17,465,010 15-Mar-97 17,634,172 07-May-97 17,803,335 29-Jun-97 17,972,497 21-Aug-97 18,141,659
22-Jan-97 17,468,201 16-Mar-97 17,637,364 08-May-97 17,806,526 30-Jun-97 17,975,689 22-Aug-97 18,144,851
23-Jan-97 17,471,393 17-Mar-97 17,640,556 09-May-97 17,809,718 01-Jul-97 17,978,880 23-Aug-97 18,148,043
24-Jan-97 17,474,585 18-Mar-97 17,643,747 10-May-97 17,812,910 02-Jul-97 17,982,072 24-Aug-97 18,151,235
25-Jan-97 17,477,777 19-Mar-97 17,646,939 11-May-97 17,816,101 03-Jul-97 17,985,264 25-Aug-97 18,154,426
26-Jan-97 17,480,968 20-Mar-97 17,650,131 12-May-97 17,819,293 04-Jul-97 17,988,456 26-Aug-97 18,157,618
27-Jan-97 17,484,160 21-Mar-97 17,653,323 13-May-97 17,822,485 05-Jul-97 17,991,647 27-Aug-97 18,160,810
28-Jan-97 17,487,352 22-Mar-97 17,656,514 14-May-97 17,825,677 06-Jul-97 17,994,839 28-Aug-97 18,164,002
29-Jan-97 17,490,544 23-Mar-97 17,659,706 15-May-97 17,828,868 07-Jul-97 17,998,031 29-Aug-97 18,167,193
30-Jan-97 17,493,735 24-Mar-97 17,662,898 16-May-97 17,832,060 08-Jul-97 18,001,223 30-Aug-97 18,170,385
31-Jan-97 17,496,927 25-Mar-97 17,666,090 17-May-97 17,835,252 09-Jul-97 18,004,414 31-Aug-97 18,173,577
01-Feb-97 17,500,119 26-Mar-97 17,669,281 18-May-97 17,838,444 10-Jul-97 18,007,606 01-Sep-97 18,176,769
02-Feb-97 17,503,311 27-Mar-97 17,672,473 19-May-97 17,841,635 11-Jul-97 18,010,798 02-Sep-97 18,179,960
03-Feb-97 17,506,502 28-Mar-97 17,675,665 20-May-97 17,844,827 12-Jul-97 18,013,990 03-Sep-97 18,183,152
04-Feb-97 17,509,694 29-Mar-97 17,678,856 21-May-97 17,848,019 13-Jul-97 18,017,181 04-Sep-97 18,186,344
05-Feb-97 17,512,886 30-Mar-97 17,682,048 22-May-97 17,851,211 14-Jul-97 18,020,373 05-Sep-97 18,189,536
06-Feb-97 17,516,078 31-Mar-97 17,685,240 23-May-97 17,854,402 15-Jul-97 18,023,565 06-Sep-97 18,192,727
07-Feb-97 17,519,269 01-Apr-97 17,688,432 24-May-97 17,857,594 16-Jul-97 18,026,757 07-Sep-97 18,195,919
08-Feb-97 17,522,461 02-Apr-97 17,691,623 25-May-97 17,860,786 17-Jul-97 18,029,948 08-Sep-97 18,199,111
09-Feb-97 17,525,653 03-Apr-97 17,694,815 26-May-97 17,863,978 18-Jul-97 18,033,140 09-Sep-97 18,202,303
10-Feb-97 17,528,845 04-Apr-97 17,698,007 27-May-97 17,867,169 19-Jul-97 18,036,332 10-Sep-97 18,205,494
11-Feb-97 17,532,036 05-Apr-97 17,701,199 28-May-97 17,870,361 20-Jul-97 18,039,524 11-Sep-97 18,208,686
12-Feb-97 17,535,228 06-Apr-97 17,704,390 29-May-97 17,873,553 21-Jul-97 18,042,715 12-Sep-97 18,211,878
13-Feb-97 17,538,420 07-Apr-97 17,707,582 30-May-97 17,876,745 22-Jul-97 18,045,907 13-Sep-97 18,215,070
14-Feb-97 17,541,611 08-Apr-97 17,710,774 31-May-97 17,879,936 23-Jul-97 18,049,099 14-Sep-97 18,218,261
15-Feb-97 17,544,803 09-Apr-97 17,713,966 01-Jun-97 17,883,128 24-Jul-97 18,052,291 15-Sep-97 18,221,453
16-Feb-97 17,547,995 10-Apr-97 17,717,157 02-Jun-97 17,886,320 25-Jul-97 18,055,482 16-Sep-97 18,224,645
17-Feb-97 17,551,187 11-Apr-97 17,720,349 03-Jun-97 17,889,512 26-Jul-97 18,058,674 17-Sep-97 18,227,837
18-Feb-97 17,554,378 12-Apr-97 17,723,541 04-Jun-97 17,892,703 27-Jul-97 18,061,866 18-Sep-97 18,231,028
19-Feb-97 17,557,570 13-Apr-97 17,726,733 05-Jun-97 17,895,895 28-Jul-97 18,065,058 19-Sep-97 18,234,220
20-Feb-97 17,560,762 14-Apr-97 17,729,924 06-Jun-97 17,899,087 29-Jul-97 18,068,249 20-Sep-97 18,237,412
21-Feb-97 17,563,954 15-Apr-97 17,733,116 07-Jun-97 17,902,279 30-Jul-97 18,071,441 21-Sep-97 18,240,603
22-Feb-97 17,567,145 16-Apr-97 17,736,308 08-Jun-97 17,905,470 31-Jul-97 18,074,633 22-Sep-97 18,243,795
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTEGRATED ARROS FUND I
SCHEDULE OF ACCRUED INTEREST ON OUTSTANDING PAYMENT OBLIGATIONS
JANUARY 1, 1997 THROUGH DECEMBER 31, 1997
(continued)
ACCRUED ACCRUED
DATE INTEREST DATE INTEREST
---- -------- ---- --------
<S> <C> <C> <C>
23-Sep-97 18,246,987 15-Nov-97 18,416,149
24-Sep-97 18,250,179 16-Nov-97 18,419,341
25-Sep-97 18,253,370 17-Nov-97 18,422,533
26-Sep-97 18,256,562 18-Nov-97 18,425,725
27-Sep-97 18,259,754 19-Nov-97 18,428,916
28-Sep-97 18,262,946 20-Nov-97 18,432,108
29-Sep-97 18,266,137 21-Nov-97 18,435,300
30-Sep-97 18,269,329 22-Nov-97 18,438,492
01-Oct-97 18,272,521 23-Nov-97 18,441,683
02-Oct-97 18,275,713 24-Nov-97 18,444,875
03-Oct-97 18,278,904 25-Nov-97 18,448,067
04-Oct-97 18,282,096 26-Nov-97 18,451,259
05-Oct-97 18,285,288 27-Nov-97 18,454,450
06-Oct-97 18,288,480 28-Nov-97 18,457,642
07-Oct-97 18,291,671 29-Nov-97 18,460,834
08-Oct-97 18,294,863 30-Nov-97 18,464,026
09-Oct-97 18,298,055 01-Dec-97 18,467,217
10-Oct-97 18,301,247 02-Dec-97 18,470,409
11-Oct-97 18,304,438 03-Dec-97 18,473,601
12-Oct-97 18,307,630 04-Dec-97 18,476,793
13-Oct-97 18,310,822 05-Dec-97 18,479,984
14-Oct-97 18,314,014 06-Dec-97 18,483,176
15-Oct-97 18,317,205 07-Dec-97 18,486,368
16-Oct-97 18,320,397 08-Dec-97 18,489,560
17-Oct-97 18,323,589 09-Dec-97 18,492,751
18-Oct-97 18,326,781 10-Dec-97 18,495,943
19-Oct-97 18,329,972 11-Dec-97 18,499,135
20-Oct-97 18,333,164 12-Dec-97 18,502,327
21-Oct-97 18,336,356 13-Dec-97 18,505,518
22-Oct-97 18,339,548 14-Dec-97 18,508,710
23-Oct-97 18,342,739 15-Dec-97 18,511,902
24-Oct-97 18,345,931 16-Dec-97 18,515,093
25-Oct-97 18,349,123 17-Dec-97 18,518,285
26-Oct-97 18,352,315 18-Dec-97 18,521,477
27-Oct-97 18,355,506 19-Dec-97 18,524,669
28-Oct-97 18,358,698 20-Dec-97 18,527,860
29-Oct-97 18,361,890 21-Dec-97 18,531,052
30-Oct-97 18,365,082 22-Dec-97 18,534,244
31-Oct-97 18,368,273 23-Dec-97 18,537,436
01-Nov-97 18,371,465 24-Dec-97 18,540,627
02-Nov-97 18,374,657 25-Dec-97 18,543,819
03-Nov-97 18,377,848 26-Dec-97 18,547,011
04-Nov-97 18,381,040 27-Dec-97 18,550,203
05-Nov-97 18,384,232 28-Dec-97 18,553,394
06-Nov-97 18,387,424 29-Dec-97 18,556,586
07-Nov-97 18,390,615 30-Dec-97 18,559,778
08-Nov-97 18,393,807 31-Dec-97 18,562,970
09-Nov-97 18,396,999
10-Nov-97 18,400,191
11-Nov-97 18,403,382
12-Nov-97 18,406,574
13-Nov-97 18,409,766
14-Nov-97 18,412,958
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 10,293
<RECEIVABLES> 1,233
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 11,779
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 253
<TOTAL-LIABILITIES> 253
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 3
<SHARES-COMMON-PRIOR> 3
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 11,526
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 1,274
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 611
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 11,195
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 4,159.59
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
