Financial Statements
and Financial Highlights
Great Lakes Fund, Inc.
August 31, 1999
with Report of Independent Auditors
Report of Independent Auditors
Board of Directors and Stockholder
Great Lakes Fund, Inc.
We have audited the accompanying statement of assets and liabilities of Great
Lakes Fund, Inc. as of August 31, 1999, the related statement of operations
for the eight month period ended August 31, 1999, and the statements of
changes in net assets for the eight month period ended August 31, 1999 and for
the year ended December 31, 1998, and the financial highlights since 1997.
These financial statements and financial highlights are the responsibility of
the Fund'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. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Great Lakes Fund, Inc., at August 31, 1999, the results of its operations for
the eight month period ended August 31, 1999, and the changes in its net
assets for the eight month period ended August 31, 1999 and for the year ended
December 31, 1998, and the financial highlights since 1997, in conformity with
generally accepted accounting principles.
September 30, 1999
Great Lakes Fund, Inc.
Statement of Assets and Liabilities
August 31, 1999
Assets
Net asset value $0
See accompanying notes.
Great Lakes Fund, Inc.
Statement of Operations
For the eight month period ended August 31, 1999
Investment income:
Dividend income $713,167
Interest income 24,479
Total investment income 737,646
Expenses:
Administration fees (Note 2) 114,740
Investment management fee (Note 2) 18,616
Independent auditors 6,817
Interest expense 4,698
Directors fees and expenses 3,000
Legal fees 7,014
Other expenses 564
Total expenses 155,449
Net investment income 582,197
Net realized gain on investments 37,080,148
Net realized gain on in-kind transfer (Note 1) 1,039,596,325
Net decrease in unrealized appreciation (1,039,596,325)
Net increase in net assets resulting from operations $37,662,345
See accompanying notes.
Great Lakes Fund, Inc.
Statements of Changes in Net Assets
For the eight For the
month period ended year ended
August 31, 1999 December 31, 1998
From operations:
Net investment income $582,197 $21,166,398
Net realized gain on investments 37,080,148 3,576,182
Net realized gain on in-kind transfer 1,039,596,325 0
Net change in unrealized appreciation
on investments (1,039,596,325) 395,583,988
Increase in net assets resulting from
operations 37,662,345 420,326,568
Dividends from net investment income:
Auction market preferred stock 0 (19,211,608)
Common stock (582,197) (1,954,790)
(582,197) (21,166,398)
Distributions from net realized gains:
Common stock (34,302,887) (3,576,182)
In-kind transfer (1,039,596,325) 0
(1,073,899,212) (3,576,182)
Decrease in net assets resulting from
distributions to stockholder (1,074,481,409) (24,742,580)
Increase (decrease) from capital transactions:
Redemption of auction market preferred st 0 (475,000,000)
Redemption of common stock (375,084) 0
Capital contribution from common stockhol 0 484,530,972
Distribution of capital to common stockho (773,572,766) 0
(773,947,850) 9,530,972
Total increase (decrease) in net assets (1,810,766,914) 405,114,960
Net assets:
Beginning of period 1,810,766,914 1,405,651,954
End of period $0 $1,810,766,914
See accompanying notes.
Great Lakes Fund, Inc.
Notes to Financial Statements
August 31, 1999
1. Organization and Significant Accounting Policies
On January 7, 1999 the Board of Directors approved a Plan of Liquidation and
Dissolution for Great Lakes Fund, Inc. (the "Fund"). As of August 31, 1999 the
Fund was fully liquidated and all remaining capital had been distributed to
the common stockholder through an in-kind distribution. For purposes of these
financial statements, in accordance with generally accepted accounting
principles, the in-kind distribution was treated as a realized gain. For tax
purposes the distribution would not result in a realized gain until the
securities were actually sold.
The Fund was registered as a diversified, closed-end management investment
company under the Investment Company Act of 1940, as amended. The Fund
received notification from the Securities Exchange Commission ("SEC") that it
was de-registered effective September 24, 1999.
The following is a summary of significant accounting policies consistently
followed by the Fund in preparation of its financial statements.
Security Transactions
Security transactions were accounted for on a trade date plus one business day
basis which does not differ materially from a trade date basis. The cost of
securities sold was determined using the identified cost method. Dividend
income was recorded on ex-dividend date and interest income was recorded on
the accrual basis.
Federal Income Taxes
It was the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and distribute its
taxable income to shareholders. Therefore, no provision for Federal income tax
was required.
Distribution of Income and Gains
The Fund distributed substantially all of its taxable income in excess of the
dividends paid to the preferred stockholders to the common stockholder.
Dividends to the common stockholder were declared and paid at least annually.
Net capital gains, if any, were generally distributed annually.
The character of income and gains to be distributed was determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. Amounts distributed in excess of taxable
income and net realized gains, if any, were considered a return of capital.
1. Organization and Significant Accounting Policies (continued)
Use of Estimates
Estimates and assumptions are required to be made regarding assets,
liabilities and changes in net assets resulting from operations when financial
statements are prepared. Changes in the economic environment, financial
markets and any other parameters used in determining these estimates could
cause actual results to differ from these amounts.
2. Related Party Transactions
A collective trust fund for employee benefit plans was the sole common
stockholder of the Fund. Certain officers and directors of the Fund were
affiliated with the common stockholder. No fees or expenses were paid to the
affiliated officers and directors.
For the eight month period ended August 31, 1999 and the year ended December
31, 1998, dividend and capital gain distributions to the common stockholder
were $34,885,084 and $5,530,972, respectively.
For the year ended December 31, 1998, the common stockholder made capital
contributions to the Fund in the amount of $484,530,972.
Comerica Bank served as both custodian and administrator for the Fund and
received a fee based on 0.06% of net assets outstanding at the end of the
fiscal year. An affiliate of Comerica Bank served as investment advisor to the
Fund. The annual investment management fee was 0.01% of average equity
investments. The administration and management fees were calculated and
accrued on a monthly basis and generally were paid on a quarterly basis.
3. Investment Transactions
The aggregate cost of securities purchased and the aggregate proceeds of
securities sold, excluding short-term securities, for the eight month period
ended August 31, 1999 were $73,839,207 and $71,150,689, respectively.
Great Lakes Fund, Inc.
Financial Highlights
Year ended December 31,
1999(1) 1998 1997 1996 1995(2)
For a share of common stock outstanding
throughout the period:
Net asset value, beginning
of period $48.28 $24.81 $17.24 $13.77 $10.00
Net investment income 0.02 0.56 0.52 0.46 0.33
Net realized and unrealized gains
on investments 0.99 10.65 9.01 4.91 3.77
Total from investment
operations 1.01 11.21 9.53 5.37 4.10
Capital contribution 0.00 12.92 0.21 0.00 0.00
Less dividends from net investment income:
Common stock equivalent of dividends
paid to AMPS holders 0.00 (0.51) (0.51) (0.40) (0.27)
Dividends paid to common
stockholders (0.02) (0.05) (0.01) (0.07) (0.05)
Less distributions from net realized gains:
Common stock equivalent of distributions
paid to AMPS holders (0.92) (0.10) 0.00 (0.10) (0.01)
Distributions from in-kind transfer paid to
common stockholder (27.72) 0.00 0.00 0.00 0.00
Less distributions from paid-in capital:
Return of capital to common
stockholders (20.63) 0.00 (1.65) (1.33) 0.00
Total distributions (49.29) (0.66) (2.17) (1.90) (0.33)
Net asset value, end of period $0.00 $48.28 $24.81 $17.24 $13.77
Total investment return 2.08%( 29.90% 34.13% 38.98% 40.90%
Ratios/supplemental data:
Net assets at end of period (000s) 0 1810767 1405652 1046564 866034
Average net assets (000s) 201306 1584546 1291147 1282826 854566
Ratio of expenses to average net assets
applicable to common stock (4) 0.08% 0.15% 0.26% 0.40% 0.10%
Ratio of net investment income to average
net assets applicable to
common shareholders 0.29% 1.34% 1.50% 1.34% 1.27%
Portfolio turnover 35.34% 1.03% 3.53% 2.23% 2.22%
Asset coverage per AMPS share
end of period 0.0000 0.0000 295,927 261,641 247,438
AMPS shares outstanding 0 0 4,750 4,000 3,500
Asset coverage for notes payable,
end of period 0 689816% 460115% 329108% 271484%
Notes payable, end of period 0 262,500 305,500 318,000 319,000
(1)For the eight month period ended August 31, 1999.
(2)For the period from May 1, 1995 (commencement of operations) to December
31, 1995.
(3)Total investment return for the period, not annualized.
(4)Ratios are calculated on the basis of income and expenses applicable to
both common and preferred stock relative to the average net assets
of the common stockholder. Ratios do not reflect the effect of
dividend payments to AMPS holders.
See accompanying notes.
