Dear Shareholders,
We are pleased to enclose the annual report on the operations of the ND
Insured Income Fund, Inc. for the year ended December 31st, 1997. The Fund's
portfolio and related financial statements are presented within for your
review.
Will Rogers once said, "All I know is what I read in the paper." Well, if you
are reading today's financial reports all you get is confused. Inflation or
deflation? Higher rates or lower rates? Read a paper, watch television or
get on a mailing list and you will find diverse opinions of economic
forecasting are quite often contradictory.
As we enter the new year, the U.S. economy is enjoying nearly seven years of
uninterrupted growth, the unemployment rate is the lowest since 1973, the
stock market is at record highs, interest rates are low and inflation is the
most docile in a generation. Yet, despite these events the financial markets
are volatile.
Recent events in foreign equity markets and their impact on the U.S. stock
market cause us to pause and question whether the recent drop in interest
rates is sustainable. Our sense is that yields on treasury bonds will stay
at their lower levels during the first half of 1998 when the bulk of the
Asian events slow down the U.S. economy, then edge higher in the latter part
of the year once the Asian drag subsides.
The ND Insured Income Fund utilized a partial hedge during part of the period.
Futures contracts in U.S. Treasury bonds were employed. By using a partial
hedge share price erosion was minimized in the first quarter as interest rates
rose and were tempered in the second and third quarter as interest rates
declined. Share price began the year at $9.24 and ended the year at $9.48.
Throughout the period the Fund has invested in insured corporate utility bonds
and government securities in an effort to provide reasonable income and
preservation of capital.
Sincerely,
Monte Avery Robert E. Walstad
Chief Portfolio Strategist President
TERMS & DEFINITIONS
- -------------------
Appreciation
Increase in value of an asset.
Average Annual Total Return
A standardized measurement of the return (yield and appreciation) earned
by the fund on an annual basis.
Coupon Rate or Face Rate
The rate of interest annually payable based on the face amount of the
bond; expressed as a percentage.
Depreciation
Decrease in value of an asset.
Duration
A measurement of a security or a portfolio's price volatility based on
maturity, callability and coupon rate. The larger the number, the
greater the price change for a given interest rate change.
Lehman Brothers Corporate Bond Index
An unmanaged list of publicly issued, fixed-rate, nonconvertible
investment-grade, dollar denominated, SEC registered corporate debt
representative of the corporate bond market. The index does not take
into account brokerage commissions or other costs, may include bonds
different from those in the fund, and may pose different risks than the
fund.
Market Value
Actual (or estimated) price at which a bond trades in the market place.
Maturity
A measure of the term or life of a bond in years. When a bond "matures",
the issuer repays the principal.
Net Asset Value (NAV)
The value of all your fund's assets, minus any liabilities, divided by
the number of outstanding shares, not including any initial or contingent
deferred sales charge.
Quality Ratings
A designation assigned by independent rating companies to give a relative
indication of a bond's credit worthiness. "AAA", "AA" and "A" indicate
highest quality. Ratings can range from a high of "AAA" to a low of "D".
Total Return
Measures both the net investment income and any realized and unrealized
appreciation or depreciation of the underlying investments in the fund's
portfolio for the period, assuming the reinvestment of all dividends.
It represents the aggregate percentage or dollar value change over the
period.
COMPARATIVE INDEX GRAPH
- -----------------------
[line graph]
Comparison of change in value of $10,000 investment in ND
Insured Income Fund and Lehman Bros. Corporate Bond Index
ND Insured Income ND Insured Income Lehman Bros
Fund w/o sales Fund w/ max sales Corporate Bond
charge charge Index
--------------------------------------------------------------
3/19/1991 $10,000 $ 9,550 $10,000
1991 $10,510 $10,276 $11,507
1992 $11,514 $11,112 $12,506
1993 $12,414 $11,856 $14,028
1994 $12,342 $11,787 $13,477
1995 $14,506 $13,854 $16,474
1996 $15,036 $14,359 $17,016
1997 $16,447 $15,707 $18,757
Putting Performance into Perspective
The graph comparing your Fund's performance to a benchmark index provides you
with a general sense of how your Fund performed. To put this information in
context, it may be helpful to understand the special differences between the
two. Your Fund's total return for the period shown appears with and without
sales charges and includes Fund expenses and management fees. A securities
index measures the performance of a theoretical portfolio. Unlike a fund, the
index is unmanaged; there are no expenses that affect the results. In
addition, few investors could purchase all of the securities necessary to
match the index. And, if they could, they would incur transaction costs and
other expenses.
<TABLE>
<CAPTION>
Schedule of Investments December 31, 1997
Name of Issuer
Percentages represent the market value Rating Coupon Principal Market
of each investment category to total net assets(Unaudited) Moody's/S&P Rate Maturity Amount Value
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Arkansas Power & Light FSA Aaa/AAA 7.000% 10/01/23 $ 105,000 $ 103,163
Atlantic City Elec. Util. CAPMAC Aaa/AAA 7.000 08/01/28 100,000 97,534
Cincinnati Gas & Elec. Util. MBIA Aaa/AAA 7.200 10/01/23 100,000 99,984
Consolidated Edison MBIA Aaa/AAA 7.500 06/15/23 500,000 532,500
Dayton Power & Light Co. FGIC Aa-3/AA- 7.875 02/15/24 125,000 132,969
Detroit Edison Co. AMBAC Aaa/AAA 7.740 06/01/18 130,000 141,050
*Mississippi Power & Light Co. FSA Aaa/AAA 8.500 01/15/23 115,000 128,656
Pacific Gas & Elec. Co. MBIA Aaa/AAA 7.250 08/01/26 105,000 113,663
Philadelphia Elec. IBC MBIA Aaa/AAA 7.250 11/01/24 75,000 77,625
Southern California Edison Co. FGIC A/A+ 7.250 03/01/26 100,000 100,585
Tennessee Valley Auth. Aaa/AAA 8.625 11/15/29 180,000 198,900
Tennessee Valley Auth. Aaa/NR 7.750 12/15/22 100,000 104,000
Texas Util. Elec. Co. AMBAC Aaa/AAA 8.500 08/01/24 47,000 51,222
*US West Communications Aa-3/A+ 8.875 06/01/31 250,000 277,860
------------
Total Corporate and U.S. Government Securities (Cost: $2,060,578) (97.7%) $ 2,159,710
------------
SHORT-TERM SECURITIES (1.5%)
Goldman Sachs Institutional Liquid Assets Treasury Instruments Portfolio $ 337
Federated US Gov't Trust #47 32,310
------------
TOTAL SHORT-TERM SECURITIES (COST: $32,648) $ 32,647
------------
TOTAL INVESTMENTS IN SECURITIES (COST: $2,093,226) $ 2,192,357
OTHER ASSETS LESS LIABILITIES 17,491
------------
NET ASSETS $ 2,208,848
============
</TABLE>
*Indicates bonds are segregated by the custodian to cover when-issued or
delayed-delivery purchases.
The accompanying notes are an integral part of these financial statements.
Financial Statements December 31, 1997
Statement of Assets and Liabilities December 31, 1997
- -----------------------------------------------------
<TABLE>
<CAPTION>
Assets
<S> <C>
Investment in securities, at value (cost: $2,093,226) $ 2,192,357
Cash 4,244
Accrued dividends receivable 280
Accrued interest receivable 27,084
---------------
Total Assets $ 2,223,965
---------------
Liabilities
Dividends payable $ 12,305
Accrued expenses 1,812
---------------
Total Liabilities $ 14,117
---------------
Net Assets $ 2,209,848
===============
Net assets are represented by:
Capital stock outstanding, at par $ 233
Additional paid-in capital 2,236,220
Accumulated undistributed net realized gain(loss) on investments (125,736)
Unrealized appreciation on investments 99,131
---------------
Total amount representing net assets applicable to
233,116 outstanding shares of $.001 par value
common stock (100,000,000 shares authorized) $ 2,209,848
===============
Net asset value per share $ 9.48
===============
Statement of Operations for the year ended December 31,1997
INVESTMENT INCOME
Interest $ 174,737
Dividends 5,111
--------------
Total Investment Income $ 179,848
--------------
EXPENSES
Investment advisory fees $ 13,852
Custodian fees 951
Transfer agent fees 3,881
Accounting service fees 25,225
Audit and legal fees 4,978
Insurance 769
Directors fees 1,605
Printing and postage 6,303
License, fees, and registrations 1,365
--------------
Total expenses $ 58,929
Less expenses waived or absorbed
by the Fund's manager 36,864
--------------
Total Net Expenses $ 22,065
--------------
NET INVESTMENT INCOME $ 157,783
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES
Net realized gain (loss) from:
Investment transactions $ (27,827)
Futures transactions (46,450)
Net change in unrealized appreciation (depreciation) of:
Investments 131,114
Futures 2,003
--------------
Net Realized And Unrealized Gain (Loss) On Investments And Futures $ 58,840
--------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 216,623
==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
Financial Statements December 31, 1997
Financial Statements December 31, 1997
Statement of Changes in Net Assets
For the years ended December 31, 1997 and 1996
- ----------------------------------------------
<TABLE>
<CAPTION>
For the Year For the Year
Ended Ended
December 31,1997 December 31, 1996
-----------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 157,783 $ 180,732
Net realized gain (loss) on investment and futures transactions (74,277) 65,018
Net unrealized appreciation (depreciation) on investments and futures 133,117 (150,323)
-----------------------------------------
Net Increase (Decrease) in Net Assets Resulting From Operations $ 216,623 $ 95,427
-----------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income $ (157,783) $ (180,732)
Distributions from net realized gain on investment and futures transactions 0 0
-----------------------------------------
Total Dividends and Distributions $ (157,783) $ (180,732)
-----------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sale of shares $ 101,369 $ 73,819
Proceeds from reinvested dividends 118,613 119,801
Cost of shares redeemed (764,990) (424,389)
-----------------------------------------
Net Increase (Decrease) in Net Assets Resulting
From Capital Share Transactions $ (545,008) $ (230,769)
-----------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS $ (486,168) $ (316,074)
NET ASSETS, BEGINNING OF PERIOD 2,696,016 3,012,090
-----------------------------------------
NET ASSETS, END OF PERIOD $ 2,209,848 $ 2,696,016
=========================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements December 31, 1997
Note 1. ORGANIZATION
ND Insured Income Fund, Inc. (the Fund) is registered under the Investment
Company Act of 1940 as a non-diversified, open-end management investment
company. The Fund incorporated under the laws of the State of North Dakota
on November 27, 1990 and commenced operations on March 19, 1991. The Fund's
objective is to provide as high a level of current income as is consistent
with prudent investment management, preservation of capital, and ready
marketability of its portfolio. The Fund will seek to achieve this objective
by investing primarily in a portfolio of debt securities, including U.S.
Government securities and insured corporate bonds.
Shares of the Fund are offered at net asset value plus a maximum sales charge
of 4.5% of the offering price.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment security valuation - Investments in securities traded on national
securities exchanges are valued at the last reported sales price at the close
of each business day. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by the
portfolio management team. The Fund follows industry practice and records
security transactions on the trade date.
Federal and state income taxes - It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its net taxable income and any net realized
gain on investments, to its shareholders. Therefore, no provision for income
taxes is required. The Fund has available at December 31, 1997, a net capital
loss carryforward totaling $125,736, which may be used to offset capital gains
realized during subsequent years through December 31, 2004.
Distributions to shareholders - Dividends from net investment income, declared
daily and payable monthly, are reinvested in additional shares of the Fund at
net asset value or paid in cash. Capital gains, when available, are
distributed along with the last income dividend of the calendar year.
Investment income - Dividend income is recognized on the ex-dividend date and
interest income is recognized daily on an accrual basis. Premiums and
discounts on securities purchased are amortized using the effective interest
method over the life of the respective securities, unless callable, in which
case they are amortized to the earliest call date.
Futures contracts - The Fund may purchase and sell financial futures contracts
to hedge against changes in the values of securities the Fund owns or expects
to purchase.
A futures contract is an agreement between two parties to buy or sell units of
a particular index or a certain amount of U.S. Government securities at a set
price on a future date. Upon entering into a futures contract, the Fund is
required to deposit with a broker an amount of cash or securities equal to
the minimum "initial margin" requirement of the futures exchange on which the
contract is traded. Subsequent payments ("variation margin") are made or
received by the Fund, dependent on the fluctuations in the value of the
underlying index. Daily fluctuations in value are recorded for financial
reporting purposes as unrealized gains or losses by the fund. When entering
into a closing transaction, the Fund will realize, for book purposes, a gain
or loss equal to the difference between the value of the futures contracts
sold and the futures contracts to buy. Unrealized appreciation (depreciation)
related to open futures contracts is required to be treated as realized gain
(loss) for Federal income tax purposes.
Certain risks may arise upon entering into futures contracts. These risks may
include changes in the value of the futures contracts that may not directly
correlate with changes in the value of the underlying securities.
Use of Estimates - 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Note 3. SHARE TRANSACTIONS
As of December 31, 1997, there were 200,000,000 shares of $.001 par value
authorized; 233,116 and 291,865 were outstanding at December 31, 1997 and
1996, respectively.
Transactions in capital shares were as follows:
Shares
----------------------------------------
For The Year For the Year
Ended Ended
December 31, 1997 December 31, 1996
----------------------------------------
Shares sold 10,734 8,164
Shares issued on reinvestment
of dividends 12,817 13,030
Shares redeemed (82,300) (46,171)
----------------------------------------
Net increase (decrease) (58,749) (24,977)
========================================
Note 4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
ND Money Management, Inc., the Fund's investment adviser, ND Capital, Inc.,
the Fund's underwriter, and ND Resources, Inc., the Fund's transfer and
accounting services agent, are subsidiaries of ND Holdings, Inc., the Fund's
sponsor.
The Fund has engaged ND Capital as agent for the purchase of certain
investment securities. For the year ended December 31, 1997 commissions
earned by ND Capital, Inc. totaled $375 and are included in the cost basis of
the securities acquired.
The Fund has engaged ND Money Management, Inc., to provide investment advisory
and management services to the Fund. The Investment Advisory Agreement provides
for fees to be computed at an annual rate of 0.60% of the Fund's average daily
net assets. Total investment advisory fees incurred during the year ended
December 31, 1997 were $14,710. Certain officers and directors of the Fund are
also officers and directors of the investment adviser.
As of December 31, 1997, the Fund owed ND Money Management $1,208 for
investment advisory fees incurred but not paid, and owed ND Holdings, Inc.
$604 for other expenses.
ND Resources, Inc., (the transfer agent), provides shareholder services for
a monthly fee equal to an annual rate of 0.16% of the Fund's first $10 million
of net assets, 0.13% of the Fund's net assets on the next $15 million, 0.11%
of the Fund's net assets on the next $15 million, 0.10% of the Fund's net
assets on the next $10 million, and 0.09% of the Fund's net assets in excess
of $50 million. The Fund has recognized $3,881 of transfer agency fees for
the year ended December 31, 1997. ND Resources, Inc. also acts as the Fund's
accounting services agent for a monthly fee equal to the sum of a fixed fee
of $2,000, and a variable fee equal to 0.05% of the Fund's average daily net
assets on an annual basis for the Fund's first $50 million and at a lower rate
on the average daily net assets in excess of $50 million. The Fund has
recognized $25,225 of accounting service fees for the year ended December
31, 1997.
Note 5. INVESTMENT SECURITY TRANSACTIONS
Proceeds from sale of investment securities (excluding short-term securities)
aggregated $490,676, $110,303 and $47,875 for corporate bonds and notes, U.S.
Government obligations and taxable municipal securities respectively, with
cost of purchases totaling $572,992 for corporate bonds and notes for the year
ended December 31, 1997.
Note 6. CALCULATION OF PUBLIC OFFERING PRICE
Using the net asset value of one share and the sales charge percentage,
the maximum public offering price was determined as follows for an investment
of less than $100,000 made on December 31, 1997:
Divided by Maximum
Net Asset (1.00 - 0.045) Public
Value of For a 4.50% Offering
One Share Sales Charge Price
---------------------------------------
$9.48 .955 $9.92
On sales of greater than $100,000, the sales charge is reduced on a sliding
scale.
Note 7. SPECIAL RISK CONSIDERATIONS
The Fund is registered as a non-diversified investment company, and therefore
will be able to invest a relatively high percentage of its assets in a limited
number of issuers, thus making the Fund more susceptible to a single economic,
political, or regulatory occurrence than a diversified company. The Fund also
is exposed to a certain degree of market risk and liquidity risk in that as
cash flow needs arise, investment securities may have to be sold under
unfavorable market conditions.
Under normal market conditions, at least 65% of the Fund's portfolio
securities will be protected by insurance. The insurance policies guarantee
only the timely payment of principal and interest on the insured securities.
Market value, which may fluctuate due to changes in interest rates or factors
affecting the credit of the issuer or the insurer, is not insured.
Note 8. INVESTMENT IN SECURITIES
At December 31, 1997, the aggregate cost of securities for federal income
tax purposes was $2,093,226, and the net unrealized depreciation of
investments based on the cost was $99,131, which was comprised of $106,365
aggregate gross unrealized appreciation and $7,234 aggregate gross unrealized
depreciation.
Financial Highlights Selected per share data and ratios for the period
indicated
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For The For the For the For the
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
1997 1996 1995 1994 1993
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.24 $ 9.51 $ 8.66 $ 9.62 $ 9.68
------------------------------------------------------------------------
Income from Investment Operations:
Net investment income $ .60 $ .59 $ .62 $ .64 $ .68
Net realized and unrealized gain
(loss) on investments and futures
transactions .24 (.27) .85 (.70) (.01)
------------------------------------------------------------------------
Total From Investment
Operations $ .84 $ .32 $ 1.47 $ (.06) $ .67
------------------------------------------------------------------------
Less Distributions:
Dividends from net
investment income $ (.60) $ (.59) $ (.62) $ (.64) $ (.68)
Distributions from net
realized gains .00 .00 .00 (.26) (.05)
------------------------------------------------------------------------
Total Distributions $ (.60) $ (.59) $ (.62) $ (.90) $ (.73)
------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.48 $ 9.24 $ 9.51 $ 8.66 $ 9.62
========================================================================
Total Return 9.38%(A) 3.65%(A) 17.53%(A) (.58)%(A) 6.86%(A)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $2,210 $2,696 $3,012 $2,818 $2,445
Ratio of net expenses (after
expense assumption) to average
net assets 0.90%(B) 0.90%(B) 0.76%(B) 0.65%(B) 0.85% (B)
Ratio of net investment income
to average net assets 6.45% 6.47% 6.85% 7.02% 7.11%
Portfolio turnover rate 24.64% 49.27% 0.00%(C) 14.55% 102.00%
</TABLE>
(A) Excludes maximum sales charge of 4.5%.
(B) During the periods indicated above, ND Holdings, Inc. assumed expenses
of $36,864, $40,723, $18,573, $23,697, and $35,570, respectively. If the
expenses had not been assumed, the annualized ratios of total expenses to
average net assets would have been 2.41%, 2.36%, 1.38%, 1.53%, and 2.52%,
respectively.
(C) No investment securities were purchased during the period
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Directors of
ND Insured Income Fund, Inc.
We have audited the accompanying statement of assets and liabilities of ND
Insured Income Fund, Inc. (the Fund), including the schedule of investments,
as of December 31, 1997, the related statement of operations for the year then
ended, the statements of changes in net assets for the each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Company'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, 1997, by correspondence with the
custodian. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides
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 ND
Insured Income Fund, Inc. as of December 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
BRADY, MARTZ & ASSOCIATES, P.C.
February 12, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 2,093,226
<INVESTMENTS-AT-VALUE> 2,192,357
<RECEIVABLES> 27,084
<ASSETS-OTHER> 4,244
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,223,965
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14,117
<TOTAL-LIABILITIES> 14,117
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,236,453
<SHARES-COMMON-STOCK> 233,116
<SHARES-COMMON-PRIOR> 291,865
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (125,736)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 99,131
<NET-ASSETS> 2,209,848
<DIVIDEND-INCOME> 5,111
<INTEREST-INCOME> 174,737
<OTHER-INCOME> 0
<EXPENSES-NET> (22,065)
<NET-INVESTMENT-INCOME> 157,783
<REALIZED-GAINS-CURRENT> (74,277)
<APPREC-INCREASE-CURRENT> 133,117
<NET-CHANGE-FROM-OPS> 216,623
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (157,783)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,734
<NUMBER-OF-SHARES-REDEEMED> 82,300
<SHARES-REINVESTED> 12,817
<NET-CHANGE-IN-ASSETS> (486,168)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13,852
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 58,929
<AVERAGE-NET-ASSETS> 2,446,672
<PER-SHARE-NAV-BEGIN> 9.24
<PER-SHARE-NII> .60
<PER-SHARE-GAIN-APPREC> .24
<PER-SHARE-DIVIDEND> (.60)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.48
<EXPENSE-RATIO> 0.90<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Ratio of net expenses to average net assets.
</FN>
</TABLE>
