Report for the Six Months Ended June 30, 1998
REAL SILK INVESTMENTS, INCORPORATED
445 North Pennsylvania Street
Suite 500
Indianapolis, Indiana 46204
(317) 632-7359
____________________
OFFICERS
D. R. Efroymson . . . . .President and Treasurer
L. M. Efroymson . . . . . . . . . Vice President
J. D. Efroymson . . . . . . . . . Vice President
M. A. Singer. . . . . . Assistant Vice President
J. D. Hagan . . . . . . Assistant Vice President
L. A. Cox . . . . . . . . . . . . . . .Secretary
D. A. Link. . . . . . . . . .Assistant Secretary
DIRECTORS
Robert L. Beal Peter Z. Grossman
Terry W. Bowmaster Norman C. Kleifgen, Jr.
William A. Carter Samuel L. Odle
Daniel R. Efroymson Eli J. Segal
Loralei M. Efroymson Gideon J. Stein
Herbert D. Falender Mary Ann Stein
TRANSFER AGENT AND REGISTRAR CUSTODIAN OF SECURITIES
Registrar & Transfer Company NBD Bank, N.A.
Cranford, New Jersey Indianapolis, Indiana
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
Indianapolis, Indiana
REAL SILK INVESTMENTS, INCORPORATED
Stock Symbol: RSHM
Financial Statements
June 30, 1998
Table of Contents
Page
Unaudited Financial Statements:
Statement of Assets and Liabilities 2
Statement of Operations 3
Statements of Changes in Net Assets 4
Supplementary Information - Financial Highlights 5
Notes to Unaudited Financial Statements 6-11
Additional Information:
Schedule of Investments in Securities 12-17
REAL SILK INVESTMENTS, INCORPORATED
Statement of Assets and Liabilities
June 30, 1998
Assets
Investments in securities (unaffiliated issuers), at market value:
Money market funds (cost: $809,339) $ 809,339
Common shares (cost: $11,616,610) 125,207,269
U.S. government and agency securities (cost: $5,325,160) 5,497,010
Other bonds and notes (cost: $5,073,357) 5,228,465
Total investments in securities (unaffiliated issuers) 136,742,083
Investments in securities (affiliated issuers), at market value:
Common shares (cost: $147,786) (note 4) 8,850,000
Total investments in securities 145,592,083
Cash 3,769
Accrued interest and dividends receivable 267,864
Other current assets 6,266
Office furniture and equipment, less accumulated
depreciation of $62,076 27,980
Total assets $ 145,897,962
Liabilities
Accounts payable and accrued expenses (note 5) 17,868
Deferred federal income tax payable on net built-in
gains (note 1) 12,954,582
Total liabilities 12,972,450
Net Assets
Equivalent to $807.16 per share based on 164,683 shares of
$5.00 par value common stock outstanding (note 2) 132,925,512
Total liabilities and net assets $ 145,897,962
See accompanying notes to financial statements.
This statement was prepared by the Company and was not audited by the
independent auditors.
REAL SILK INVESTMENTS, INCORPORATED
Statement of Operations
Six months ended June 30, 1998
Investment income:
Dividends, including affiliated issuers of $132,000 (note 4) $ 1,091,910
Interest on securities from unaffiliated issuers 347,328
Total income 1,439,238
Expenses:
Officers' salaries 58,260
Other salaries and wages 24,776
Taxes other than federal income tax 25,164
Legal, auditing and other professional services 54,889
Custodian fees 3,671
Directors' fees 9,650
Office expense and supplies 5,771
Insurance 5,336
Rent (note 8) 26,515
Pension (note 6) 3,146
Depreciation 4,590
Dues and subscriptions 3,675
Computer expense 3,546
Equipment lease 5,008
Sundry 17,633
Total expenses (note 5) 251,630
Net investment income 1,187,608
Net realized gain (loss) on investment securities (unaffiliated issuers):
Proceeds from sales 3,301,290
Cost of securities sold 3,301,263
27
Federal income (tax) benefit (note 1) 24,530
Net realized gain (loss) on investment
securities (note 3) 24,557
Unrealized appreciation in value of investments:
Beginning of period (January 1, 1998) 112,784,952
End of period (June 30, 1998) 122,619,831
9,834,879
Decrease in deferred federal income tax payable (note 1) 18,969
Net increase in unrealized appreciation, including an
affiliated issuer's decrease of $1,500,000 (note 4) 9,853,848
Net realized and unrealized gain (loss) on investments 9,878,405
Net increase (decrease) in net assets resulting from operations $ 11,066,013
See accompanying notes to financial statements.
This statement was prepared by the Company and was not audited by the
independent auditors.
REAL SILK INVESTMENTS, INCORPORATED
Statements of Changes in Net Assets
Six months ended June 30, 1998 and 1997
1998 1997
Net investment income $ 1,187,608 1,246,467
Net realized gain (loss) on investments 24,557 16,877
Net increase (decrease) in unrealized appreciation 9,853,848 15,035,931
Net increase (decrease) in net assets resulting
from operations 11,066,013 16,299,275
Federal income tax paid on realized gain on behalf of
stockholders, charged to operations (note 1) __ __
Cash distributions to stockholders from net investment
income ($5.00 and $5.00 per share,
respectively) (note 1) (823,415) (823,415)
Deemed distributions to stockholders from net realized
gain on investments (note 1) -- --
Additional paid-in capital (note 1) -- --
Increase (decrease) in net assets 10,242,598 15,475,860
Net assets at beginning of period 122,682,914 101,347,344
Net assets at end of period (including undistributed net
investment income of $1,187,566 and $1,209,514,
respectively, and undistributed net realized capital
gain (loss) of $(85,858) and $16,877,
respectively) $ 132,925,512 116,823,204
See accompanying notes to financial statements.
This statement was prepared by the Company and was not audited by the
independent auditors.
REAL SILK INVESTMENTS, INCORPORATED
Supplementary Information
Financial Highlights
Six months
ended
June 30, Year Ended December 31,
1998 1997 1996 1995 1994
Per share data Unaudited
Investment income $ 8.74 17.67 17.85 17.52 16.23
Less: expenses 1.52 2.45 2.29 2.17 1.92
Net investment income 7.22 15.22 15.56 15.35 14.31
Net realized gain (loss) on investments .15 (.67) 2.95 (1.27) (.12)
Net increase (decrease) in unrealized
appreciation 59.83 130.00 37.10 71.10 (26.29)
Net increase (decrease) in net assets
resulting from operations 67.20 144.55 55.61 85.18 (12.10)
Federal income tax paid on realized
gain on behalf of stockholders,
charged to operations (note 1) -- -- .87 -- --
Cash distributions to stockholders
from net investment income (note 1) (5.00) (15.00) (15.23) (15.28) (13.92)
Deemed distributions to stockholders
from net realized gains on
investments (note 1) -- -- (2.49) -- --
Additional paid-in capital (note 1) -- -- 1.62 -- --
Increase (decrease) in net assets 62.20 129.55 40.38 69.90 (26.02)
Net asset value per share:
Beginning of period 744.96 615.41 575.03 505.13 531.15
End of period $ 807.16 744.96 615.41 575.03 505.13
Quoted market value per share,
end of period $ 580.00 520.00 450.00 420.00 375.00
Ratios/Supplemental Data: (for the six months
ended June 30, 1998, the ratios are
annualized to provide comparisons)
Expenses to average net assets .38% .35% 39% .41% .36%
Net investment income to average
net assets 1.81% 2.19% 2.67% 2.88% 2.71%
Portfolio turnover rate 1.40% 3.68% 3.35% 2.04% 1.07%
Average commission rate(1) $ 0.0700 0.0700
Total return 25.10% 19.13% 10.89% 16.31% 16.33%
Net assets, end
of period $132,925,512 122,682,914 101,347,344 94,697,920 83,186,717
(1) Computed by dividing the total amount of commissions paid by the total
number of shares purchased or sold during the period for which there
was a commission charged.
See accompanying notes to financial statements.
This statement was prepared by the Company and was not audited by the
independent auditors.
REAL SILK INVESTMENTS, INCORPORATED
Notes to Unaudited Financial Statements
June 30, 1998
Note 1 - Summary of Significant Accounting Policies
Real Silk Investments, Incorporated (the Company) is registered under the
Investment Company Act of 1940 (as amended) as a closed-end diversified
management investment company. The Company, which primarily invests in
common stock, has no external managers and pays no management fees. The
significant accounting policies of the Company, which are in conformity
with generally accepted accounting principles for closed-end management
investment companies, are described below.
Investments
Investments in securities traded on national securities exchanges or the
NASDAQ National Market are valued at the last reported sales price.
Other securities traded on the over-the-counter market are valued at the
closing bid prices. Bonds and notes are valued on the basis of quotations
furnished by recognized trade sources. Purchases and sales of securities
are recorded as of the trade dates. Costs of securities sold are
determined by specific shares or average shares if specific shares are
not available. Net unrealized gains or losses are determined based on
the net change between the market value and cost of investments held as
of the beginning and end of the period. The cost bases of investments
for federal income tax purposes are the same as the book values.
Investment Income
Dividends and interest income are recorded on the accrual basis of
accounting. Cash dividends from securities are recorded as income on the
ex-dividend dates. Dividends for which the recipient has the choice to
receive cash or stock are recognized as investment income in the amount
payable in cash. Other noncash dividends are recognized as investment
income at the fair market value of the property received.
Use of Estimates and Assumptions
The preparation of 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
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could
differ from those estimates.
Federal Income Tax
Prior to January 1, 1989, the Company was subject to federal income tax
as a regular ("C") corporation. Beginning January 1, 1989, the Company
qualified and elected to be taxed as a regulated investment company
within the meaning of Section 851 of the Internal Revenue Code and is
currently reporting its income on such basis. As a regulated investment
company, the Company generally does not pay federal income tax at the
corporate level on current earnings which are passed through to its
stockholders.
The Tax Reform Act of 1986 gives the United States Treasury Department
the authority, under Section 337(d)(1), to promulgate regulations to
assure that the purposes of certain provisions of that Act (those taxing
appreciated property on the sale or liquidation of a corporation) are not
circumvented by the use of various entities, including regulated
investment companies. In Notice 88-19, Treasury stated its intention to
issue regulations generally making a C corporation taxable on built-in
gains at the time it converts to a regulated investment company, but
permitting it to elect to be subject to rules similar to those applicable
to a corporation which elects to be taxed as an S corporation. Those
rules impose an income tax on the built-in gains of a C corporation which
are recognized during the first ten years following its election to be
taxed as an S corporation. If the intended regulations were adopted as
described in Notice 88-19, the appreciation of the assets of the Company
as of January 1, 1989 (the "built-in gains") would be taxed to the extent
these gains are realized prior to January 1, 1999. To date, no such
regulations have been issued.
Because the authority to promulgate such regulations exists and because
the Treasury Department issued Notice 88-19, the Company has recorded a
deferred tax liability in its financial statements for the potential tax.
If the deferred tax liability did not exist, which will at least occur as
of January 1, 1999, the net asset value of the Company would be increased
by the amount of the deferred tax liability, which amounts to
approximately $78.66 per share at June 30, 1998.
As built-in gains have been realized, the Company has deposited with the
Internal Revenue Service (IRS) amounts representing the potential tax on
realized built-in gains. However, because no regulations have been
issued, the Company, while continuing to make the deposits, is also
requesting refunds of the amounts deposited to protect the Company's
right to those deposits should regulations not be issued.
The Company has received refunds from the IRS for the amounts deposited
representing the potential tax on realized built-in gains for the tax
years ended December 31, 1992, 1993, 1995, 1996 and 1997. However, the
Company cannot predict the response of the IRS to the Company's request for
refunds for the amounts deposited in other years or whether or when such
regulations will be issued.
Also, the Company is a personal holding company as defined in Section 542
of the Internal Revenue Code. As a personal holding company, the Company
is subject to a special surtax on any undistributed personal holding
company income. However, the Company intends to distribute all of its
personal holding company income.
Net investment income and net realized gains (losses) may differ for
financial statement and income tax purposes. The character of
distributions made during the year from net investment income or net
realized gains, if any, may differ from the ultimate characterization for
federal income tax purposes.
Distributions to Stockholders
The policy of the Company is to distribute all investment company taxable
income and to retain as much tax-exempt income as possible without
incurring tax at the corporate level and without jeopardizing the
Company's regulated investment company status. All or most of its
realized long-term capital gains are retained.
As a regulated investment company, the Company may annually elect to
treat retained long-term capital gains as distributed to its stockholders
on the last day of the year. The Company must pay a tax at the highest
corporate rate on the retained gains deemed distributed. The stockholders
include these capital gains in their individual income tax returns and
receive a credit equal to their share of the tax paid by the Company.
The difference between the gains retained by the Company and the tax paid
by the Company on behalf of the stockholders is added by the stockholders
to the basis of their stock.
For the six-month period ended June 30, 1998, the Company realized
long-term capital gains of $27 and received refunds of the 1995 built-in
gains tax deposit of $3,600 and the 1997 built-in gains tax deposit of
$20,930, resulting in a net realized gain of $24,557. For the six-month
period ended June 30, 1997, the Company realized long-term capital gains
of $9,132, realized long-term capital losses of $11,522 and received a
notice of refund of the 1996 built-in gains tax deposit of $19,267,
resulting in a net realized gain of $16,877.
Note 2 - Net Assets
The Company's net assets at June 30, 1998, were comprised of the
following elements:
Common stock ($5.00 par value) and additional paid-in
capital; 300,000 shares authorized, 164,683 shares
issued and outstanding $ 22,158,555
Accumulated undistributed income:
Undistributed net investment income 1,187,566
Undistributed net realized capital gains (losses) (note 1) (85,858)
Unrealized gains of $123,438,650 and unrealized
losses of $818,819, less deferred federal
income tax of $12,954,582 109,665,249
Net assets $ 132,925,512
Note 3 - Investments
Following is a summary of securities sold during the six months ended
June 30, 1998:
Proceeds from
Sales and Net Gain
Maturities Cost (Loss)
Money market funds $ 2,301,255 2,301,255 --
Common shares 35 8 27
U.S. government securities 1,000,000 1,000,000 --
Other bonds and notes -- -- --
Totals $ 3,301,290 3,301,263 27
Federal income tax:
Refund of 1995 and 1997 built-in gains deposits 24,530
Net realized gain (loss) on investments $ 24,557
The federal income tax is computed at a rate of 35% on the built-in
unrealized gains which existed at January 1, 1989 (the effective date of
the Company's election to be taxed as a regulated investment company-see
note 1) and which were realized during the six month period ended June 30,
1998. There were no net built-in gains realized during the six months
ended June 30, 1998. As discussed in Note 1, the Company requests a
refund from the IRS of built-in gain tax deposits made.
The aggregate cost of securities acquired during the six months ended
June 30, 1998, was as follows:
Money market funds $ 2,571,421
Common shares 225,075
U.S. government securities 1,003,984
Other bonds and notes --
Total purchases of securities $ 3,800,480
Note 4 - Investment in Affiliated Issuer
The Company is an affiliated company, as defined in Section 2(a)(2) and
2(a)(3) of the Investment Company Act of 1940, with respect to its
investment in Arnold Industries, Inc., a publicly traded company. The
Company and affiliated persons owned more than five percent of the voting
common stock of Arnold Industries, Inc. at June 30, 1998.
Note 5 - Expenses
The Company shares personnel with two entities, and office facilities
with one of those entities, both considered to be related parties as
defined by Statement of Financial Accounting Standards No. 57, "Related
Party Disclosures." One of the related parties is a private partnership
of which certain officers and directors of the Company are partners. The
other related party, with which there are no direct transactions, is a
not-for-profit charitable foundation of which certain officers and
directors are also officers and directors of the Company. Certain costs
are allocated among the three entities based on actual usage or
management's estimate of use if actual usage cannot be determined
precisely. The sharing of personnel with the not-for-profit charitable
foundation ceased as of July 31, 1998.
Certain office equipment, primarily computer and telecommunications
equipment, used by the Company is owned by the related private
partnership. The Company annually enters into a one-year operating lease
with the related party. The one-year operating lease commencing
January 1, 1997 was extended through June 30, 1998. For the six months
ended June 30, 1998, payments to the related party under the extended
lease commencing January 1, 1997, totaled $5,008. On July 1, 1998, the
Company entered into a one-year operating lease with a thirty-day
cancellation clause with the related party. At June 30, 1998, the
monthly lease payment required by the lease is $1,173; as of August 1,
1998, the monthly lease payment is $2,228. A portion of the lease amount
is attributable to certain equipment purchased by the private partnership
related party from a vendor that may be considered a related party.
The related private partnership purchases office supplies and similar
items used by the Company. On a monthly basis, the Company reimburses
the related party for its allocated share of the office supplies. For
the six months ended June 30, 1998, expenses reimbursed to the related
party totaled $15,823. This total includes approximately $455 that was
reimbursed to the private partnership for a vendor that may also be
considered a related party. This total also includes $6,914, which is in
accounts payable at June 30, 1998.
Note 6 - Retirement Plan
Effective January 1, 1992, the Company began sponsoring a money purchase
pension plan which covers all employees of the Company who have met
certain service requirements. Annually, the Company must contribute to
the Plan an amount equal to five percent of each participant's
compensation. Pension expense for the six months ended June 30, 1998 and
1997 was $2,947 and $3,208, respectively.
Note 7 - Line of Credit
The Company has an unsecured line of credit for short-term bank
borrowings of up to $5 million, with interest computed at the bank's
prime rate. The line of credit expires on July 1, 1999. At June 30,
1998, the entire line of credit was unused.
Note 8 - Rent Commitment
In March 1998, the Company entered into a one-year extension on the
operating lease dated March 1993 for office space. The extended lease is
on a month-to-month basis. At June 30, 1998, the monthly lease payment
required by the lease is $4,463.
Note 9 Recent Developments
On March 20, 1998, the Board of Directors of the Company announced its
intention to explore options for the future of the Company. These
options, among others, include continuing as is, merging with another
investment company or liquidating the Company.
As a result of the exploration of options for the future and the
discontinuation of shared personnel with the related party not-for-profit
charitable foundation (note 5), the Company anticipates an increase in
expenses during the remainder of 1998 and into the future.
REAL SILK INVESTMENTS, INCORPORATED
Schedule of Investments in Securities
June 30, 1998
Principal % of
Amount Total
or Number Industry Investment
Description of Shares Value Totals Portfolio
MONEY MARKET FUNDS (unaffiliated
issuers):
Money Market Funds
Fidelity Cash Reserves Fund 226,543 $ 226,543
Pegasus Money Market Fund 582,796 582,796
Total Money Market Funds $ 809,339 $ 809,339 .56%
COMMON SHARES (unaffiliated issuers):
Sector: Business Services 4,372,128 3.00%
Industry: Information Services
Cognizant Corporation 8,800 554,400
Dun & Bradstreet Corporation 8,800 316,800
Industry: Office Furniture
Miller (Herman), Inc. 144,000 3,500,928
Sector: Consumer Goods 16,675,254 11.45%
Industry: Apparel/Textiles
Guilford Mills, Inc. 19,687 393,740
Russell Corporation 179,200 5,409,510
Industry: Food/Restaurants
ConAgra, Inc. 20,000 633,740
*Consolidated Products, Inc. 46,261 977,264
*Kroger Company, Inc. 216,000 9,261,000
Sector: Diversified 2,117,084 1.46%
Industry: Conglomerate
Hanson, PLC (ADS) 3,634 110,154
TRW, Inc. 32,000 1,748,000
U.S. Industries, Inc. 2,179 53,930
*Cendant Corp. 10,000 205,000
*Non-Income Producing Security
REAL SILK INVESTMENTS, INCORPORATED
Schedule of Investments in Securities
June 30, 1998
Principal % of
Amount Total
or Number Industry Investment
Description of Shares Value Totals Portfolio
Sector: Energy/Natural Resources 11,387,669 7.82%
Industry: Metals/Mining
Newmont Mining Corporation 54,916 1,297,391
Penn Virginia Corporation 80,000 2,070,000
Reynolds Metals Co., Inc. 8,344 466,221
Industry: Oil & Gas
Atlantic Richfield Co., Inc. 32,000 2,500,000
Kerr-McGee Corporation 18,000 1,041,750
Northwest Natural Gas, Inc. 23,400 654,451
Occidental Petroleum Corporation 9,570 258,390
Union Pacific Resources Group, Inc. 29,118 511,370
Industry: Paper
Boise Cascade Corporation 6,666 218,311
Temple-Inland, Inc. 40,000 2,155,000
Industry: Utility
Texas Utilities 5,160 214,785
Sector: Financial 33,395,536 22.94%
Industry: Bank/Thrift
First Chicago NBD Corporation 92,928 8,235,744
*Ocwen Financial Corporation 27,000 725,625
Industry: Insurance
American Financial Group, Inc. 33,902 1,468,363
Chubb Corporation 54,000 4,340,250
CMAC Investment Corporation 8,000 492,000
HSB Group, Inc. 279,000 14,926,500
Ohio Casualty Corporation 16,000 708,000
ReliaStar Financial Corporation 42,078 2,019,744
Industry: Mortgage
*First Alliance Corporation 17,250 120,750
*Non-Income Producing Security
REAL SILK INVESTMENTS, INCORPORATED
Schedule of Investments in Securities
June 30, 1998
Principal % of
Amount Total
or Number Industry Investment
Description of Shares Value Totals Portfolio
Industry: Mutual Funds
Scudder Large Company Value Fund 12,000 358,560
Sector: Industrial 20,180,119 13.86%
Industry: Capital Goods
Cincinnati Milacron, Inc. 36,000 875,232
Manitowoc Co., Inc. 126,000 5,079,312
Industry: Chemicals
Millenium Chemicals Inc. 2,076 70,325
Sigma-Aldrich Corporation 10,000 351,250
Industry: Environmental Services
Browning-Ferris Industries, Inc. 16,000 556,000
Industry: Steel
Nucor Corporation 288,000 13,248,000
Sector: Medical 11,013,246 7.56%
Industry: Pharmaceutical
Bristol-Myers Squibb Co., Inc. 8,000 919,496
Johnson & Johnson, Inc. 96,000 7,104,000
Lilly (Eli) & Co., Inc. 16,000 1,060,000
Merck & Co., Inc. 9,000 1,203,750
Mylan Laboratories, Inc. 24,000 726,000
Sector: Technology 4,891,049 3.36%
Industry: Computer Hardware/Software
*Adaptec, Inc. 20,000 286,240
Hewlett-Packard Corporation 16,000 958,000
*Microsoft Corporation 12,000 1,300,500
*Non-Income Producing Security
REAL SILK INVESTMENTS, INCORPORATED
Schedule of Investments in Securities
June 30, 1998
Principal % of
Amount Total
or Number Industry Investment
Description of Shares Value Totals Portfolio
Industry: Electronics
*DII Group, Inc. 20,000 341,240
*Marshall Industries 36,000 981,000
Motorola Inc. 7,000 367,934
*Vishay Intertechnology, Inc. 36,580 656,135
Sector: Communications 15,491,116 10.64%
Industry: Entertainment
Time Warner, Inc. 144,000 12,302,928
Industry: Telecommunication
Ameritech Corporation 16,000 718,000
Bell Atlantic Corporation 8,000 365,000
Bell South Corporation 12,000 805,500
GTE Corporation 7,900 439,438
MCI Communications Corporation 14,800 860,250
Sector: Transportation (see also
affiliated issuers) 5,684,068 3.90%
Industry: Automotive
MascoTech, Inc. 96,000 2,304,000
Industry: Railroads
Norfolk Southern Corporation 54,000 1,609,848
Union Pacific Corporation 34,380 1,512,720
Industry: Trucking
Wabash National Corporation 10,000 257,500
Total Common Shares
(unaffiliated issuers) $125,207,269 $125,207,269 85.99%
*Non-Income Producing Security
REAL SILK INVESTMENTS, INCORPORATED
Schedule of Investments in Securities
June 30, 1998
Principal % of
Amount Total
or Number Industry Investment
Description of Shares Value Totals Portfolio
U.S. GOVERNMENT AND AGENCY
SECURITIES (unaffiliated issuers):
U.S. Treasury Notes 8.250%, 7/15/98 500,000 500,545
U.S. Treasury Notes 5.875%, 10/31/98 500,000 500,780
U.S. Treasury Notes 5.75%, 12/31/98 500,000 501,015
Federal Home Loan Mtg. Corp. REMIC,
5.75%, 2006 1,000,000 998,120
Federal Home Loan Mtg. Corp.,
6.55%, 2003 1,000,000 999,370
Federal National Mtg. Assn. Guaranteed
REMIC, 6.75%, 2018 1,000,000 998,750
Federal National Mtg. Assn. REMIC,
6.00%, 2015 1,000,000 998,430
Total U.S. Government and Agency
Securities (unaffiliated issuers) $ 5,497,010 $ 5,497,010 3.78%
OTHER BONDS AND NOTES (unaffiliated
issuers):
BankAmerica Corp., sub. debt.,
7.875%, 2002 1,000,000 1,065,770
General Motors Acceptance Corp. Note,
7.125%, 2003 500,000 521,823
Household Finance Corp. Note, 7.625%,
1999 500,000 508,105
Household Finance Corp. Note, 7.25%,
2003 1,000,000 1,045,497
Lincoln National Corp. Note,
7.25%, 2005 1,500,000 1,582,965
Pacific Gas and Electric Co., 6.25%,
2004 500,000 504,305
Total Other Bonds and Notes
(unaffiliated issuers) $ 5,228,465 $ 5,228,465 3.59%
Total investments in securities
(unaffiliated issuers) $136,742,083 $136,742,083 93.92%
*Non-Income Producing Security
REAL SILK INVESTMENTS, INCORPORATED
Schedule of Investments in Securities
June 30, 1998
Principal % of
Amount Total
or Number Industry Investment
Description of Shares Value Totals Portfolio
COMMON SHARES (affiliated issuers):
Sector: Transportation (see also
unaffiliated issuers)
Industry: Trucking
Arnold Industries, Inc. 600,000 8,850,000 8,850,000 6.08%
Total investments in securities
(affiliated issuers) $ 8,850,000 $ 8,850,000 6.08%
Total investments in securities $145,592,083 $145,592,083 100.00%
See accompanying notes to financial statements.
This statement was prepared by the Company and was not examined by the
independent auditors.
