<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to____________
Commission file number 0-24412
-------
MACC Private Equities Inc.
--------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 42-1421406
- --------------------------------------------- ----------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
101 Second Street SE, Suite 800, Cedar Rapids, Iowa 52401
---------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(319) 363-8249
---------------------------
(Registrant's telephone number, including area code)
----------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Please indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
At March 31, 2000, the registrant had issued and outstanding 1,941,879
shares of common stock.
Page 1 of 18
Exhibit Index appears at page 15
<PAGE> 2
INDEX
-----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page
----
Condensed Consolidated Balance
Sheets at March 31, 2000 (Unaudited),
and September 30, 1999.......................................... 3
Condensed Consolidated Statements of Operations (Unaudited)
for the three months ended March 31, 2000, and March 31, 1999,
and the six months
ended March 31, 2000 and March 31, 1999......................... 4
Condensed Consolidated Statements of
Cash Flows (Unaudited) for the six
months ended March 31, 2000, and
the six months ended March 31, 1999............................. 5
Notes to Condensed Consolidated
Financial Statements............................................ 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results Of Operations................ 7
Item 3. Quantitative and Qualitative
Disclosure About Market Risk.................................... 10
PART II. OTHER INFORMATION............................................... 12
Item 2. Changes in Securities........................................... 12
Item 4. Submission of Matters to a
Vote of Security Holders................................. 12
Item 6. Exhibits and Reports on Form 8-K................................ 13
Signatures...................................................... 14
EXHIBIT INDEX.............................................................. 15
2
<PAGE> 3
PART 1 -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MACC PRIVATE EQUITIES INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, September 30,
2000 1999
(Unaudited)
----------- -----------
Assets
<S> <C> <C>
Loans and investments in portfolio securities at market
or fair value, cost of $35,690,018;
$26,974,282 at September 1999 $35,998,630 26,665,556
U.S. treasury bills, at cost, which approximates market -- 7,393,765
Cash 2,374,188 2,261,678
Certificates of deposit 399,999 1,092,999
Other assets, net 1,193,871 1,121,447
----------- -----------
Total assets $39,966,688 38,535,445
=========== ===========
Liabilities and stockholders' equity
Liabilities:
Debentures payable, net of discount $15,268,375 13,763,123
Incentive fees payable 152,908 991,980
Accrued interest 301,356 291,862
Accounts payable and other liabilities 65,840 94,332
----------- -----------
Total liabilities 15,788,479 15,141,297
----------- -----------
Stockholders' equity:
Common stock, $.01 par value per share;
4,000,000 shares authorized;
1,941,879 shares issued and outstanding 19,419 16,191
Additional paid-in-capital 16,510,381 16,510,381
Net investment income 266,749 365,079
Net realized gain on investments 6,970,332 6,811,223
Unrealized appreciation (depreciation) on investments 411,328 (308,726)
----------- -----------
Total stockholders' equity 24,178,209 23,394,148
----------- -----------
Total liabilities and stockholders' equity $39,966,688 38,535,445
=========== ===========
Net assets per share $ 12.45 12.05
=========== ===========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
3
<PAGE> 4
MACC PRIVATE EQUITIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
For the three For the three For the six For the six
months ended months ended months ended months ended
March 31, March 31, March 31, March 31,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Investment income:
Interest $ 460,597 462,774 964,274 921,172
Dividends 141,593 226,033 180,675 226,033
Other 33,946 61,350 87,761 83,360
---------- ---------- ---------- ----------
Total income 636,136 750,157 1,232,710 1,230,565
---------- ---------- ---------- ----------
Operating expenses:
Financial expenses 313,130 246,344 619,206 486,627
Management fees 235,220 199,563 470,440 397,229
Professional fees 38,864 56,515 69,166 105,738
Other 115,638 126,721 172,228 216,342
---------- ---------- ---------- ----------
Total operating expenses 702,852 629,143 1,331,040 1,205,936
---------- ---------- ---------- ----------
Investment (expense) income, net (66,716) 121,014 (98,330) 24,629
---------- ---------- ---------- ----------
Realized and unrealized gain on investments:
Net realized gain (loss) on investments -- (39,782) 173,489 (85,999)
Net change in unrealized appreciation
(depreciation) on investments 810,779 (58,524) 720,054 338,010
---------- ---------- ---------- ----------
Net gain (loss) on investments 810,779 (98,306) 893,543 252,011
---------- ---------- ---------- ----------
Net change in net assets
from operations $ 744,063 22,708 795,213 276,640
========== ========== ========== ==========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
4
<PAGE> 5
MACC PRIVATE EQUITIES INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
For the six For the six
months ended months ended
March 31, March 31,
2000 1999
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Increase in net assets from operations $ 795,213 276,640
----------- ----------
Adjustments to reconcile increase in net
assets from operations to net cash
used in operating activities:
Net realized and unrealized gain on investments (893,543) (252,011)
Other 38,443 35,165
Change in assets and liabilities:
Other assets 141,707 (102,327)
Accrued interest, accounts payable,
and other liabilities (869,441) (68,449)
----------- ----------
Total adjustments (1,582,834) (387,622)
----------- ----------
Net cash used in operating activities (787,621) (110,982)
----------- ----------
Cash flows from investing activities:
Proceeds from disposition of and payments on
loans and investments in portfolio securities 35,713 342,454
Purchases of loans and investments in
portfolio securities (8,673,695) (1,989,609)
Proceeds from disposition of other investments 5,782,133 721,670
Purchases of other investments (99,000) --
----------- ----------
Net cash used in by investing activities (2,954,849) (925,485)
----------- ----------
Cash flows from financing activities:
Proceeds from debt issuance 1,500,000 1,000,000
Payments for fractional shares in connection with stock split (11,152) (9,677)
Payments for debt issuance and commitment fees (37,500) (25,000)
----------- ----------
Net cash provided by financing activities 1,451,348 965,323
----------- -----------
Net decrease in cash and cash equivalents (2,291,122) (71,144)
Cash and cash equivalents at beginning of period 5,065,309 1,886,985
----------- ----------
Cash and cash equivalents at end of period $ 2,774,187 1,815,841
=========== ==========
Supplemental disclosure of cash flow information -
Cash paid during the period for interest $ 570,724 476,374
=========== ==========
Supplemental disclosure of noncash investing and
financing information - Assets received in lieu of cash $ 262,614 72,872
=========== ==========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
5
<PAGE> 6
MACC PRIVATE EQUITIES INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(1) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
include the accounts of MACC Private Equities Inc. (MACC) and its wholly-owned
subsidiary MorAmerica Capital Corporation (MorAmerica Capital) which have been
prepared in accordance with generally accepted accounting principles for
investment companies. All material intercompany accounts and transactions have
been eliminated in consolidation.
The financial statements included herein have been prepared in
accordance with generally accepted accounting principles for interim financial
information and instructions to Form 10-Q and Article 6 of Regulation S-X. The
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto of MACC Private Equities Inc. and its
Subsidiary as of and for the year ended September 30, 1999. The information
reflects all adjustments consisting of normal recurring adjustments which are,
in the opinion of management, necessary for a fair presentation of the results
of operations for the interim periods. The results of the interim period
reported are not necessarily indicative of results to be expected for the year.
The balance sheet information as of September 30, 1999 has been derived from the
audited balance sheet as of that date.
Certain reclassifications have been made to the September 30, 1999,
financial statements to conform to the March 31, 2000, presentation.
(2) Common Stock
During the quarter ended March 31, 2000, MACC declared a 20% stock
split effected in the form of a stock dividend resulting in the issuance of
322,782 shares of Common stock to its shareholders. Cash of $11,152.05 was paid
for fractional shares. The September 30, 1999 net assets per share is computed
as if the stock dividend occurred at that date.
6
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "1995
Act"). Such statements are made in good faith by MACC pursuant to the
safe-harbor provisions of the 1995 Act, and are identified as including terms
such as "may," "will," "should," "expects," "anticipates," "estimates," "plans,"
or similar language. In connection with these safe-harbor provisions, MACC has
identified in its Annual Report to Shareholders for the fiscal year ended
September 30, 1999, important factors that could cause actual results to differ
materially from those contained in any forward-looking statement made by or on
behalf of MACC, including, without limitation, the high risk nature of MACC's
portfolio investments, any failure to achieve annual investment level
objectives, changes in prevailing market interest rates, and contractions in the
markets for corporate acquisitions and initial public offerings. MACC further
cautions that such factors are not exhaustive or exclusive. MACC does not
undertake to update any forward-looking statement which may be made from time to
time by or on behalf of MACC.
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended March 31, 2000, Compared to Second
Quarter and Six Months Ended March 31, 1999
MACC's investment income includes income from interest, dividends and
fees. Net investment income represents total investment income minus operating
and interest expenses, net of applicable income taxes. The main objective of
portfolio company investments is to achieve capital appreciation and realized
gains in the portfolio. These are not included in net investment income.
However, another one of MACC's long-term goals is to achieve net investment
income and increased earnings stability in future years. In this regard, a
significant proportion of new portfolio investments are structured so as to
provide a current yield through interest or dividends. MACC also earns interest
on short term investments of cash.
During the current year, second quarter total investment income of
$636,136 was approximately 15% lower than total investment income of $750,157
for the prior year second quarter. In the current year second quarter as
compared to the prior year second quarter, interest income decreased $2,177,
dividend income decreased $84,440 and other income decreased $27,404. The
receipt of dividend income is based on the performance of the limited liability
companies MACC has invested in and the timing of when these companies make
distributions. In the current year second quarter dividends were received on
four portfolio companies as compared to dividends received on five portfolio
companies in the prior year second quarter. Other income decreased due to MACC
receiving an advisory fee on one portfolio investment in the prior year second
quarter and not receiving any advisory fees in the current year second quarter.
7
<PAGE> 8
During the current year six-month period, total income of $1,232,710
was a slight increase over total income of $1,230,565 in the prior year
six-month period. For the current year six-month period as compared to the prior
year six-month period, interest income increased to $964,274 from $921,172,
dividend income decreased to $180,675 from $226,033 and other income increased
to $87,761 from $83,360. The increase in interest income is primarily due to the
growth in MACC's interest bearing portfolio investments and the interest
received from these investments. Dividend income for the current year six-month
period decreased for the same reasons stated above with respect to the current
year second quarter. Although MACC did not receive any advisory fees during the
current year six-month period, other income increased because MACC made more new
portfolio investments for which it received processing fees during the current
year six-month period, as compared to the prior year six-month period.
Total operating expenses for the second quarter and six-month period of
the current year total $702,852 and $1,331,040, respectively, increases of 12%
and 10%, respectively, as compared to total operating expenses for the prior
year second quarter of $629,143 and six-month period of $1,205,936. Financial
expense increased by $66,786 and $132,579 due to additional borrowings of
SBA-guaranteed debentures in the current year second quarter and six-month
period, respectively. Management fees increased to $235,220 from $199,563 in the
current year second quarter as compared to the prior year second quarter and
increased to $470,440 from $397,229 in the current six-month period as compared
to the prior year six-month period due to the increase in assets under
management. Professional fees decreased by $17,651 and $36,572, respectively,
and other expenses, which includes administrative expenses associated with being
a public corporation, decreased by $11,083 and $44,114, respectively, in the
current year second quarter and six-month period.
For the current year second quarter and six-month period, MACC recorded
net investment loss of ($66,716) and ($98,330), respectively, as compared to net
investment income of $121,014 and $24,629 during the prior year second quarter
and six-month period, respectively.
MACC recorded no net realized gain on investments during the current
year second quarter and net realized gain on investments of $173,489 during the
current year six-month period, as compared with net realized loss on investments
during the prior year second quarter and six-month period of $39,782 and
$85,999, respectively. Management does not attempt to maintain a comparable
level of realized gains from year to year or quarter to quarter but instead
attempts to maximize total investment portfolio appreciation through realizing
gains in the disposition of securities and investing in new portfolio
investments.
MACC recorded net change in unrealized appreciation/depreciation on
investments of $810,779 during the current year second quarter, as compared to
($58,524) during the prior year period. The net change in unrealized
appreciation/depreciation on investments of $810,779 recorded during the current
year second quarter is the net effect of increases in the fair value in eight
portfolio companies of $2,526,162 and decreases in the fair value in five
portfolio companies of $1,715,383 in the MACC consolidated investment portfolio,
calculated in accordance with MACC's valuation policies.
8
<PAGE> 9
Net change in unrealized appreciation/depreciation on investments
represents the change for the period in the unrealized appreciation on MACC's
total investment portfolio net of unrealized depreciation on MACC's total
portfolio investment. Generally, when MACC increases the fair value of a
portfolio investment above its cost, the unrealized appreciation item for the
portfolio as a whole increases, and when MACC decreases the fair value of a
portfolio investment below its cost, the unrealized depreciation item for the
portfolio as a whole increases. When MACC sells an appreciated portfolio
investment for a gain, unrealized appreciation for the portfolio as a whole
decreases as the gain is realized. Similarly, when MACC sells a depreciated
portfolio investment for a loss, unrealized depreciation for the portfolio as a
whole decreases as the loss is realized.
At the end of the current year second quarter, MACC's net asset value
per share was $12.45 as compared to the net asset value per share on September
30, 1999 of $12.05.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
To date, MACC has relied upon several sources to fund its investment
activities, including MACC's cash equivalents and cash, and the Small Business
Investment Company ("SBIC") capital program operated by the Small Business
Administration (the "SBA").
MACC, through its wholly-owned subsidiary, MorAmerica Capital, from
time to time may seek to procure additional capital through the SBIC capital
program to provide a portion of its future investment capital requirements. At
present, there is availability of capital for the next five years through the
SBIC capital program and MACC anticipates that there will be capital available
in future periods.
As of March 31, 2000, MACC's certificates of deposit and cash totaled
$2,774,187. MACC has a commitment for an additional $14,290,000 in SBA
guaranteed debentures. MACC believes that its existing certificates of deposit
and cash, together with the available proceeds from the $14,290,000 in SBA
guaranteed debentures, additional commitments anticipated through the SBIC
capital program and other anticipated cash flows, will provide adequate funds
for MACC's anticipated cash requirements during the current fiscal year and over
the next two years, including portfolio investment activities, principal and
interest payments on outstanding debentures payable and administrative expenses.
MACC has a revised plan of $14,000,000 in new and follow-on investments during
the current fiscal year.
Liquidity for the next several years will be impacted by principal
payments on MACC's debentures payable. Debentures payable are composed of
$15,290,000 in principal amount of SBA-guaranteed debentures issued by MACC's
subsidiary, MorAmerica Capital, which mature as follows: $2,450,000 in 2000,
$5,690,000 in 2001, $2,150,000 in 2003, $1,000,000 in 2007, $2,500,000 in 2009,
and $1,500,000 in 2010. It is anticipated MorAmerica Capital would be able to
roll over this debt with new ten year debentures when it matures. MorAmerica
Capital has obtained a commitment of leverage from SBA which includes
commitments to refinance these debentures for another 10 year term. As indicated
above, the total amount of MorAmerica Capital's commitment from the SBA is
$14,290,000.
9
<PAGE> 10
PORTFOLIO ACTIVITY
During the six months ended March 31, 2000, MACC invested $8,673,678 in
15 portfolio companies, consisting of $6,195,031 invested in seven new portfolio
companies and $2,478,647 invested in follow-on investments in eight existing
portfolio companies. MACC's investment level objectives for fiscal year 2000
call for a revised investment goal of total new and follow-on investments of
$14,000,000. Although the timing of new and follow-on portfolio investments is
somewhat uncertain, MACC anticipates that it will meet its investment level
objectives for the current fiscal year. However, management views investment
level objectives for any given year as secondary in importance to MACC's
overriding concern of investing in only those portfolio companies which satisfy
MACC's investment criteria.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of MACC's outstanding common stock is
determined quarterly, as soon as practicable after and as of the end of each
calendar quarter, by dividing the value of total assets minus total liabilities
by the total number of shares outstanding at the date as of which the
determination is made.
In calculating the value of total assets, securities that are traded in
the over-the-counter market or on a stock exchange are valued in accordance with
the current valuation policies of the Small Business Administration ("SBA").
Under SBA regulations, publicly traded equity securities are valued by taking
the average of the close (or bid price in the case of over-the-counter equity
securities) for the valuation date and the preceding two days. This policy
differs from the Securities and Exchange Commission's guidelines which utilize
only a one day price measurement. MACC's use of SBA valuation procedures did not
result in a material variance as of March 31, 2000, from valuations using the
Securities and Exchange Commission's guidelines.
All other investments are valued at fair value as determined in good
faith by the Board of Directors. The Board of Directors has determined that all
other investments will be valued initially at cost, but such valuation will be
subject to semi-annual adjustments and on such other interim periods as are
justified by material portfolio company events if the Board of Directors
determines in good faith that cost no longer represents fair value.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
MACC is exposed to market risk from changes in market prices of
publicly traded equity securities held in the MACC consolidated investment
portfolio. At March 31, 2000, publicly traded equity securities in the MACC
consolidated investment portfolio were recorded at a fair value of $218,496. In
accordance with MACC's valuation policies and SBA regulations, the fair value of
publicly traded equity securities is determined based upon the average of the
closing prices (or bid price in the case of over-the-counter equity securities)
for the valuation date and the preceding two days. The publicly traded equity
securities in the MACC consolidated investment portfolio thus have exposure to
price risk, which is estimated as the potential loss in fair value due to a
hypothetical 10% adverse change in quoted market prices, and would amount to a
decrease in the recorded value of such publicly traded equity securities of
approximately $21,850. Actual results may differ.
10
<PAGE> 11
MACC is also exposed to market risk from changes in market interest
rates that affect the fair value of MorAmerica Capital's debentures payable
determined in accordance with Statement of Financial Accounting Standards No.
107, Disclosures About Fair Value of Financial Instruments. The estimated fair
value of MorAmerica Capital's outstanding debentures payable at March 31, 2000,
was $14,982,000, with a cost of $15,290,000. Fair value of MorAmerica Capital's
outstanding debentures payable is calculated by discounting cash flows through
estimated maturity using the borrowing rate currently available to MorAmerica
Capital for debt of similar original maturity. None of MorAmerica Capital's
outstanding debentures payable are publicly traded. Market risk is estimated as
the potential increase in fair value resulting from a hypothetical 0.5% decrease
in interest rates. Actual results may differ.
------------------------------------------------------
2000
------------------------------------------------------
Fair Value of Debentures Payable $14,982,000
Amount Below Cost $ 308,000
Additional Market Risk $ 164,000
------------------------------------------------------
EFFECT OF NEW ACCOUNTING STANDARDS
SFAS 133, Accounting for Derivative Instruments and Hedging Activities,
as amended by SFAS 137, will be effective for MACC for years beginning after
October 1, 2002. MACC has no derivative or hedging activities, therefore, it is
not anticipated this statement will have a material effect on its results of
operations or financial position.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no items to report.
ITEM 2. CHANGES IN SECURITIES
At its Annual Meeting on February 22, 2000, the Board of Directors
declared a 20% stock split effected in the form of a stock dividend payable to
shareholders of record as of March 15, 2000, which was distributed on March 31,
2000. On March 31, 2000 total outstanding shares increased from 1,619,097 to
1,941,879. .
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There are no items to report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS
On February 22, 2000, MACC's 2000 Annual Meeting of Shareholders (the
"Meeting") was held in Cedar Rapids, Iowa. A quorum of 1,160,198 shares, or
approximately 71.66% of issued and outstanding shares as of December 31, 1999,
were represented in person or by proxy at the Meeting. The shareholders
considered two proposals at the Meeting.
With respect to the first proposal, by vote of 1,153,863 shares in
favor of and 6,335 shares against, the shareholders elected three directors to
serve until 2003 Annual Meeting of Shareholders or until their respective
successors shall be elected and qualified. These directors and the votes cast in
favor of and against with respect to each are as follows:
Director For Against
-------- --- -------
Henry T. Madden 1,152,838 7,360
Todd J. Stevens 1,153,298 6,900
John D. Wolfe 1,148,424 11,774
The term of office of each of the following directors of MACC continued
beyond the date of the Meeting: Paul M. Bass, Jr.; Robert A. Comey; Michael W.
Dunn; Jeri J. Harman; James L. Miller; and David R. Schroder.
With regard to the second proposal, the shareholders voted to ratify
the appointment of KPMG LLP as independent auditors for MACC for Fiscal year
2000 by a vote of 1,148,523 in favor of ratification and 2,354 against
ratification, with 9,321 shares abstaining.
12
<PAGE> 13
ITEM 5. OTHER INFORMATION
There are no items to report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(27) Financial Data Schedule
No other exhibits are applicable.
(b) Reports on Form 8-K
MACC filed no reports on Form 8-K during the three months ended March
31, 2000.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MACC PRIVATE EQUITIES INC.
Date: 5/10/00 By: /s/ David Schroder
------------------------- --------------------------------
David Schroder, President
Date: 5/10/00 By: /s/ Robert A. Comey
------------------------- --------------------------------
Robert A. Comey, Treasurer
14
<PAGE> 15
EXHIBIT INDEX
Exhibit Description Page
- ------- ----------- ----
(27) Financial Data Schedule 16
15
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> MAR-31-2000
<INVESTMENTS-AT-COST> 35,690,018
<INVESTMENTS-AT-VALUE> 35,998,630
<RECEIVABLES> 0
<ASSETS-OTHER> 1,193,871
<OTHER-ITEMS-ASSETS> 2,774,187
<TOTAL-ASSETS> 39,966,688
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 15,268,375
<OTHER-ITEMS-LIABILITIES> 520,104
<TOTAL-LIABILITIES> 15,788,479
<SENIOR-EQUITY> 19,419
<PAID-IN-CAPITAL-COMMON> 16,510,381
<SHARES-COMMON-STOCK> 1,941,879
<SHARES-COMMON-PRIOR> 1,619,097
<ACCUMULATED-NII-CURRENT> 266,749
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,970,332
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 411,328
<NET-ASSETS> 24,178,209
<DIVIDEND-INCOME> 180,675
<INTEREST-INCOME> 964,274
<OTHER-INCOME> 87,761
<EXPENSES-NET> 1,331,040
<NET-INVESTMENT-INCOME> (98,330)
<REALIZED-GAINS-CURRENT> 173,489
<APPREC-INCREASE-CURRENT> 720,054
<NET-CHANGE-FROM-OPS> 795,213
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 784,061
<ACCUMULATED-NII-PRIOR> 365,079
<ACCUMULATED-GAINS-PRIOR> 6,811,223
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<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> 0
<EXPENSE-RATIO> 0
</TABLE>
