East End Mutual Funds, Inc.- Capital Appreciation Series
SCHEDULE OF INVESTMENTS
Unaudited
July 1,1996 to December 31,1996
COMMON STOCKS - 66.6%
Shares Value
Medical Equipment - 13.6%
Advanced Technology Labs* 400 $ 12,400
Coherent,Inc.* 290 12,253
Imatron Inc.* 2,100 6,956
31,609
Computer Peripherals - 18.4%
Iomega Corp.* 1,710 29,924
US Robotics Corp. 180 12,960
42,884
Computer Hardware - 9.5%
Identix Inc.* 1,000 8,188
S-3 Inc.* 497 8,076
Bay Networks Inc.* 280 5,845
22,109
Computer Software - 10.3%
Phoenix Technologies* 620 9,998
Quarterdeck Corporation* 290 1,196
Netscape Communications Corp.* 185 10,522
Softkey International* 250 3,594
25,310
Leisure - 5.0%
Coastcast Corp.* 800 11,600
Medical Care - 7.0%
Oxford Health Plans Inc.* 280 16,398
Consumer Products - 2.2%
Nu-Kote Holding Inc.* 500 5,125
Total Common Stocks - 66.6% 155,035
(cost - $156,680)
TOTAL INVESTMENTS - 66.6% 155,035
CASH AND OTHER ASSETS LESS LIABILITIES - 34.4% 77,562
NET ASSETS - 100% $232,672
* Non-dividend paying during the period.
The accompanying notes are an integral part
of these financial statements.
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East End Mutual Funds, Inc. - Capital Appreciation Series
STATEMENT OF ASSETS AND LIABILITIES
Unaudited
July 1,1996 to December 31,1996
ASSETS
Investments in securities, at value
(cost-$156,680)(Notes 1 and 3) $ 155,053
Cash in money market account 77,638
Due from manager 5,887
Deferred organization costs (Note 1) 28,989
Total assets 267,549
LIABILITIES
Due to manager for deferred organization costs
(Note 1) 28,989
Accrued expenses 5,887
Total liabilities 34,876
NET ASSETS $ 232,673
Net assets consist of:
Capital paid-in $ 232,673
NET ASSETS $ 232,673
NET ASSET VALUE PER SHARE
(based on 22,534 shares outstanding -
shares authorized with $.001 per share par value) $10.33
The accompanying notes are an integral part
of these financial statements.
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East End Mutual Funds, Inc. - Capital Appreciation Series
STATEMENT OF OPERATIONS
Unaudited
July 1,1996 to December 31,1996
INVESTMENT INCOME
Income
Dividends $ 1,904
Total income 1,904
Expenses
Investment management fees (Note 2) 1,221
Distribution fees (Note 2) 611
Custodian fees 1,304
Registration fees 3,625
Printing 1,090
Audit & Legal fees 1,511
Insurance 1,329
Other expenses 1,894
Total expenses before reimbursement 12,585
Reimbursement of expenses by manager (Note 2) ( 7,676)
Expenses, after reimbursement 4,909
Net investment gain 333
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized and unrealized gain on investments ( 1,645 )
Net realized and unrealized gain on investments 1,904
Net increase in net assets resulting
from operations $ 333
The accompanying notes are an integral part
of these financial statements.
<PAGE>
East End Mutual Funds, Inc. - Capital Appreciation Series
STATEMENT OF CHANGES IN NET ASSETS
Unaudited
July 1,1996 to December 31, 1996
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net realized gain on investments $ 1,904
Change in net unrealized depreciation
on investments (30,155)
Distributions to shareholders from:
Net realized gain on investments ($.944 per share) (19,557)
From fund share transactions -net* ( 2,441)
Total decrease in net assets (50,249)
Net Assets:
Beginning of period 282,921
End of period $232,672
*Analysis of fund share transactions
Shares Amount
Shares sold 905 $ 8,000
Shares issued in reinvestment
of distribution 2,817 19,557
Net increase 3,722 $ 27,557
The accompanying notes are an integral part
of these financial statements.
<PAGE>
East End Mutual Fund, Inc. - Capital Appreciation Series
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding
For the period
July 1, 1996 to
December 31,1996
_________________________________________________________________
_
Per Share Operating Performance
_________________________________________________________________
_
Net Asset Value, Beginning of Period $ 13.73
_________________________________________________________________
_
Income From Investment Operations:
Net Realized and Unrealized Gain on Investments $ 0.01
Total From Investment Operations 0.01
_________________________________________________________________
Less Distributions:
Accumulated disributions from Net Realized Gain 1.022
Total distributions 1.022
_________________________________________________________________
Net Asset Value, End of Period $ 10.33
_________________________________________________________________
_
Total Return (17.33)%
_________________________________________________________________
_
Ratios/Supplemental Data:
Ratio of Expenses (After Reimbursement) to
Average Net Assets 2.11%
Ratio of Expenses (After Reimbursement) to
Average Net Assets (%) (A) 1.05%
Ratio of Net Investment Loss to Average Net Assets (0.82)%)
Portfolio Turnover Rate (%) 0%
Net Assets, End of Period $232,672
_________________________________________________________________
(A) Annualized
The accompanying notes are an integral part
of these financial statements.
<PAGE>
East End Mutual Funds, Inc. - Capital Appreciation Series
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization: East End Mutual Funds, Inc. - Capital
Appreciation Series (the "Fund") is a series of East End Mutual
Funds, Inc. (the "Company"), a Maryland Corporation, is a
diversified, open end management investment company registered
under the Investment Company Act of 1940, as amended.
The following is a summary of significant accounting
policies followed by the Fund.
Security Valuation: Securities are valued at the last
reported sales price or in the case of securities where there
is no reported last sale, the closing bid price. Securities for
which market quotations are not readily available are valued at
their fair values as determined in good faith by or under
the supervision of the Company's Board of Directors in
accordance with methods which have been authorized by the
Board. Short term debt obligations with maturities of 60 days
or less are valued at amortized cost which approximates market
value.
Securities Transactions and Investment Income: Security
transactions are recorded on the dates the transactions are
entered into (the trade dates). Realized gains and losses on
security transactions are determined on the identified cost
basis. Dividend income is recorded on the ex-dividend date.
Interest income is determined on the accrual basis. Discount on
fixed income securities is amortized.
Dividends and Distributions to Shareholders: The Fund
records all dividends and distributions payable to shareholders
on the ex-dividend date.
Federal Income Taxes: It is the Fund's intention to qualify
as a regulated investment company and distribute all of its
taxable income. Accordingly, no provision for Federal income
taxes will be required in the financial statements.
Deferred Organization Expenses: East End Investment Manage-
ment Company (the "Manager") has paid the deferred organization
expenses of the Fund. The deferred organization expenses will
be amortized over a period not exceeding five years once the
Fund has the ability to amortize the expenses and not exceed the
most restrictive annual expense limitation (see Note 2). The
Manager will be repaid at the rate in which the deferred
organization expenses are amortized. In the event that the
Manager (or any subsequent holder) redeems any of its original
<PAGE>
East End Mutual Funds, Inc. - Capital Appreciation Series
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
shares prior to the end of the five-year period, the proceeds of
the redemption payable in respect of such shares shall be
reduced by the pro-rata share (based on the proportionate share
of the original shares redeemed to the total number of original
shares outstanding at the time of redemption) of the
unamortized deferred organization expenses as of the date of
such redemption. In the event that the Fund is liquidated prior
to the end of the five-year period, the Manager (or any
subsequent holder) shall bear the unamortized deferred
organization expenses.
2. MANAGEMENT FEE AND TRANSACTIONS WITH AFFILIATES
Under the terms of the investment management agreement, the
Manager has agreed to provide the Fund investment management
services and be responsible for the day to day operations of
the Fund. The Manager will receive a fee, payable monthly, for
the performance of its services at an annual rate of 1% on
the first $500 million of average daily net assets, .75% in
excess of $500 million of average daily net assets. The fee
will be accrued daily and paid monthly. A management fee of
$1,221 was accrued and $500 paid for the six month period ending
December 31, 1996.
In the event normal operating expenses of the Fund,
exclusive of certain expenses prescribed by state law, are in
excess of the most restrictive state limit where the Fund is
registered to sell shares, the fees payable to the Manager will
be deferred to the extent of such excess, and the Manager may
voluntarily advance money for expenses in order to keep the
Fund's annual expenses at or below the maximum allowable
amount. The most restrictive annual expense limitation is 2.5%
of the first $30 million of average daily net assets, 2.0% of
the next $75 million, and 1.5% of the remaining average daily
net assets. The manager reimbursed the Fund and deferred fees
and expenses totalling $7,676 for the six month period
ending December 31, 1996.
Any deferrals or advances made by the Manager will be
subject to recoupment by the Manager and reimbursement by the
Fund within the following three fiscal years, provided the Fund
is able to effect such reimbursement and remain in compliance
with applicable state expense limitations and further provided,
that such payment would not adversely impact the Fund's tax
status or otherwise have an adverse tax impact on the Fund or
its shareholders. The Fund is contingently liable to the
Manager subject to such recoupment in the amount of $7,676 for
the six month period ending December 31, 1996.
<PAGE>
East End Mutual Funds, Inc. - Capital Appreciation Series
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
The Manager will also provide transfer agency, and
portfolio pricing services to the Fund. Under the terms of the
Transfer Agency and Service Agreement, the Manager will charge
a minimum annual fee of $15,000 to the Fund. The terms of the
Portfolio Pricing Agreement provide for an annual fee of
$12,000. In addition, the Manager will also provide
administrative services, accounting services, financial
reporting services, tax accounting services and compliance
control services. The Manager will charge a minimum annual fee
of $38,000 for these additional services. The Manager did not
charge the Fund for any of these above services for the six
month period ending December 31, 1996.
The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Investment Company Act of
1940. The Plan provides that the Fund may finance activities
which are primarily intended to result in the sale of the Fund's
shares. The Fund may incur distribution expenses of up to 0.50%
of average daily net assets. A distribution fee of $611 was
accrued but none paid for the six month period ending December
31, 1996.
Certain officers and directors of the Fund are officers and
directors of the Manager.
3. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding
short-term securities) for the period July 1,1996 to December
31,1996 were none. At December 31, 1996 net realized
appreciation for Federal income tax purposes aggregated $333 and
unrealized depreciation of $1,646 of which $333 related to
realized appreciation. The cost of investments on December 31,
1996 for Federal income tax purposes was $156,680.
<PAGE>
EAST END MUTUAL FUNDS, INC.- CAPITAL APPRECIATION SERIES
The Following Updates Text in the Prospectus
Page
1 Prospectus date : April 28,1997
2 Management Fees........................... 0.52%
12b-1 Fees................................ 0.26
Other Expenses............................ 1.33
Total Operating Expenses for the Period... 2.11%
The following example illustrates the expenses that you would
incur on a $1,000 investment over various periods, assuming (1)
a 5% annual rate of return and (2) redemption at the end of each
period.
1 Year $22 3 Years $68 5 Years $117 10 Years $251
CONDENSED FINANCIAL INFORMATION
Unaudited
July 1,1996 to December 31,1996
1. Investment income ................................ $ 1,904
2. Expenses after reimbursement...................... 4,909
3. Net investment gain............................... 333
4. Dividends from net investment gain................ 0.010
5. Net realized and unrealized gains on securities... (30,155)
6. Distributions from net realized gains on securities...0.944
7. Net decrease in net asset value................... (3.40)
8. Net asset value at the beginning of the period.... 13.73
9. Net asset value at the end of the period.......... 10.33
10. Expenses to average net assets.................... 2.11%
11. Net investment income to average net assets....... (0.82)%
12. Portfolio turnover rate........................... 0
13. Number of shares outstanding at end of period..... 22,534
14. Total return...................................... (17.33)%
The Russell 3000 Index during the period July 1, to December
31,1996 gained 8.83% compared to the Fund's 17.33% loss.
<PAGE>
EAST END MUTUAL FUNDS, INC.- CAPITAL APPRECIATION SERIES
Dear Fellow Investors:
The Fund ended the year with 34% invested in short term
government bills and will use these assets to purchase equities
that are attractive at current prices. Dividends of 94.4 cents
per share were distributed to shareholders during this period.
The last six months have been turbulent for equity markets and
the Fund. Fears of interest rate increases by the federal
reserve created an exit of some investors - from equities into
fixed income instruments. Interest rate hikes did not
materialize. But the chairman of the federal reserve encouraged
these emotions by its silence. The market correction negatively
influenced not only the general market but the Fund also.
Given the attractive value in the Fund's shares - investors
should consider purchasing shares in the Fund at this time to
take advantage of the buying opportunity. Investors would end up
buying more shares now that share prices are low and less shares
when prices are high: Dollar Cost Averaging.
We thank you for your support and look foward to working on your
behalf in the future.
Sincerely,
Aristides Matsis,
President
