ROCKWOOD
1998 ANNUAL REPORT
Investment Objective
The Fund seeks long term capital appreciation.
Fund Management
Rockwood Advisers, Inc. is the Fund's Investment Manager. Thomas B. Winmill, the
Fund's portfolio manager commencing May 1, 1998, is President and Chief
Executive Officer of the Fund's Investment Manager and a member of its
Investment Policy Committee.
Investment Strategy
The Fund seeks to achieve its objective by investing primarily in common stocks,
which are selected on the basis of their potential for long term capital
appreciation, and generally will include small capitalization companies which
are expected to achieve above-average growth.
Shareholder Services
o Electronic Funds Transfers
o Automatic Investment Program
o Retirement Plans:
Traditional deductible IRA, Roth IRA, SEP-IRA,
SIMPLE IRA, 403(b), and Education IRA.
Minimum Investments
o Regular Accounts, $1,000
o Traditional deductible IRA, Roth IRA, SEP-IRA,
SIMPLE IRA, and 403(b), $1,000
o Education IRA, $500
o Automatic Investment Program, $100
o Subsequent Investments, $100
Account Access
1-888-ROCKWOOD
1-888-762-5966
Call toll-free for Fund performance, telephone purchases, and to obtain
information concerning your account. Or, access the Fund on the Web at
www.rockwoodfund.com
For Shareholder Service
and Information
Use our new, free service giving you instant 24-hour access to your Fund
investment. Call 1-888-503-VOICE (8642).
Rockwood Service and
Information OnLine
Check out our Web page for up-to-date account information, service, and more at
http://www.rockwoodfund.com.
<PAGE>
Prospectus and Applications
For a copy of the Rockwood prospectus and applications for regular and IRA
accounts, plus an IRA transfer form and disclosure statement, by fax, or by
regular or e-mail, dial 1-888-ROCKWOOD (and press 1) or visit
www.rockwoodfund.com.
Market Information/Share Price
For closing market information and the Fund's current net asset value per share,
dial 1-888-ROCKWOOD (and press 2).
Investment Strategy and Market Update
To hear the portfolio manager's report on Rockwood's current investment strategy
and views on market conditions, dial 1-888-ROCKWOOD (and press 3).
Discount Brokers
Rockwood shares (ticker symbol ROCKX) are available through leading discount
brokers, including Charles Schwab & Co., Fidelity Brokerage, Jack White & Co.,
and Bull & Bear Securities, Inc.
A WORD FROM THE ROCKWOOD PORTFOLIO MANAGER
November 30, 1998
Dear Fellow Shareholders:
Concerns about a recession and a pick-up of inflation in the U.S. are
proving to be unfounded, as new Government reports provide strong evidence that
despite some slowing, the economy is still growing, and that inflation is
clearly under control.
Productivity of American nonfarm workers, for example, climbed at a 2.3%
seasonally adjusted annual rate in the September quarter, the Labor Department
reported, up from a 0.3% increase in the June quarter. This compares with an
average gain of 1.8% over the past year. The department added that unit labor
costs moved up only 1.7% for the September quarter versus a 3.7% gain in the
second, seasonally adjusted in each case. These improvements are important
because they provide room for wage increases without raising prices.
The Labor Department also reported that inflation as measured by the
Consumer Price Index rose a slim 0.2% in October, and a mild 1.5% over the past
12 months. With respect to consumers, the Commerce Department reports retail
sales jumped a better-than-expected 1% in October, a solid rebound from a weak
0.3% gain in September. In addition, the well regarded University of Michigan
Survey Research Center's study of consumer sentiment indicates a renewed
confidence in the economy.
These signs of rising efficiency, modest inflation and upbeat consumers
bode well for the continued growth of the economy as we move into the ninth
straight year of expansion. We also can see an important degree of stability and
overall improvement in the Pacific rim and in many of the other emerging
nations, with assistance from developed countries and the IMF. In addition, the
Federal Reserve interest rate cuts have contributed importantly to stability and
subsequent improvement in world securities markets.
As noted in the Fund's Semi-Annual report, commencing May 1, 1998, the
beginning of the second half of the Fund's fiscal year, I have been the Fund's
Portfolio Manager. In the six month period ending October 31, 1998, it is a
pleasure to report that the Fund, in a very difficult and volatile stock market,
performed better than the Morningstar Small Company Growth Fund category,
negative 22.00% versus negative 22.93%, and was just slightly behind the
negative 21.21% result of the Russell 2000, an unmanaged, fully invested small
company index. For the 12 months, and reflecting the substantial
underperformance in the first half, the Fund showed a negative 31.29% result
versus a negative 15.5% for the Morningstar category and negative 11.87% for the
Russell 2000.
In view of the favorable economic background, we believe this is an
attractive time to add to your investment. In terms of seeking to achieve your
long range financial goals, we especially favor building your account on a
regular basis, which can be done safely, automatically and conveniently through
the Rockwood Bank Transfer Plan, Rockwood Salary Investing Plan, and/or the
Rockwood Government Direct Deposit Plan.
To receive information on any of these plans, or the Rockwood No-Fee IRA,
please call toll-free 1-888- Rockwood (1-888-762-5966) and an Investor Service
Representative will be glad to assist you, as always with no obligation on your
part.
Sincerely,
Thomas B. Winmill
Portfolio Manager
<PAGE>
ROCKWOOD FUND, INC.
Schedule of Portfolio Investments
October 31, 1998
Shares Market Value
COMMON STOCKS (77.0%)
AIR-CONDITIONING & WARM AIR HEATING EQUIPMENT
& COMMERCIAL & INDUSTRIAL REFRIGERATION EQUIPMENT (1.5%)
660 Engineered Support Systems, Inc. $ 9,405
BOLTS, NUTS, SCREWS, RIVETS & WASHERS (1.5%)
200 Federal Screw Works 9,200
CANNED, FROZEN & PRESERVED FRUIT, VEGETABLES &
FOOD SPECIALTIES(1.0%)
1,060 Vacu-Dry Co. 6,492
CONSTRUCTION MACHINERY & EQUIPMENT (2.4%)
1,200 Gencor Industries, Inc. 15,300
CONVERTED PAPER & PAPERBOARD PRODUCTS (1.7%)
2,580 Disc Graphics, Inc. * 10,562
ELECTRIC LIGHTING & WIRING EQUIPMENT (3.7%)
1,025 Chase Corp. 13,581
500 The Genlyte Group Inc.* 9,906
23,487
ELECTRONIC COMPONENTS & ACCESSORIES (2.3%)
500 CTSCorp. 14,813
FOOTWEAR (1.9%)
500 K-Swiss Inc. Class A 12,250
GASKETS, PACKAGING & SEALING DEVICES & RUBBER &
PLASTIC HOSES (1.5%)
500 Wynn's International, Inc. 9,406
GENERAL INDUSTRIAL MACHINERY &EQUIPMENT(1.2%)
855 Farr Company 7,802
MEN'S & BOYS' FURNISHINGS, WORK CLOTHING &
ALLIED GARMENTS (.9%)
480 Supreme International Corp.* 5,640
MISCELLANEOUS CHEMICAL PRODUCTS (1.4%)
1,760 Arrow-Magnolia International, Inc.* 9,020
MOTOR VEHICLE PARTS & ACCESSORIES (1.4%)
700 Valley Forge Corp. 9,144
MOTORS & GENERATORS (.9%)
410 Axsys Technologies, Inc.* 5,432
OPERATIVE BUILDERS (1.9%)
16,000 Calton, Inc.* 12,000
PAPERBOARD CONTAINERS & BOXES (2.0%)
1,350 Astronics Corp.* 12,825
PLASTICS PRODUCTS (1.3%)
770 Summa Industries Inc.* 8,374
PREFABRICATED METAL BUILDINGS & COMPONENTS (1.2%)
1,060 Miller Building Systems, Inc. 7,420
PRINTED CIRCUIT BOARDS (1.9%)
500 Benchmark Electronics, Inc.* 11,781
PUBLIC BUILDING & RELATED FURNITURE (1.6%)
500 Virco Manufacturing Corp. 9,875
RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT (1.7%)
1,190 Comtech Telecommunications Corp.* 10,561
RETAIL - APPAREL & ACCESSORY STORES (1.1%)
670 S&K Famous Brands, Inc.* 6,867
RETAIL - EATING PLACES (6.9%)
1,570 Eateries, Inc.* 8,978
1,900 Elmer's Restaurants, Inc.* 7,600
1,000 ELXSICorp.* 10,125
960 Flanigan's Enterprises, Inc.* 8,610
510 Garden Fresh Restaurant Corp.* 8,192
43,505
RETAIL - GROCERY STORES (4.9%)
500 Schultz Sav-O Stores, Inc. 8,000
630 Seaway Food Town, Inc. 10,316
820 Village Super Market, Inc.Class A 12,300
30,616
RETAIL - MISCELLANEOUS RETAIL (2.2%)
910 EZCORP, Inc.Class A 8,418
500 Grow Biz International, Inc.* 5,844
14,261
SAUSAGE, OTHER PREPARED MEAT PRODUCTS (1.1%)
2,220 Provena Foods, Inc. 6,938
SAVINGS INSTITUTIONS, NOT FEDERALLYCHARTERED (1.2%)
380 People's Bancshares, Inc. 7,766
SAVINGS INSTITUTIONS, FEDERALLY CHARTERED (1.1%)
3,890 Security Investments Group, Inc.* 7,051
SECURITY BROKERS, DEALERS & FLOTATION COMPANIES (2.0%)
890 JWGenesis Financial Corp.* 6,230
620 Stifel Financial Corp. 6,239
12,469
SERVICES - COMPUTER RENTAL & LEASING (1.4%)
545 Amplicon, Inc. 8,720
SERVICES - ENGINEERING SERVICES (2.3%)
460 Analysis &Technology, Inc. 7,533
1,390 STVGroup, Inc.* 6,776
14,309
SERVICES - EQUIPMENT RENTAL & LEASING (1.2%)
1,570 The Cronos Group* 7,850
STEEL PIPE & TUBES (1.2%)
1,180 Webco Industries, Inc.* 7,375
SUGAR & CONFECTIONERY PRODUCTS (1.6%)
5,500 Lincoln Snacks Company* 9,797
TRUCKING (1.7%)
900 Transport Corporation of America, Inc.* 10,856
WATER TRANSPORTATION (2.0%)
1,800 Commodore Holdings Ltd.* 12,656
WHOLESALE - COMPUTER & PERIPHERAL EQUIPMENT &
SOFTWARE (3.6%)
1,380 ATECGroup, Inc.* 11,256
2,500 Capital Associates, Inc.* 11,250
22,506
WHOLESALE - GROCERIES & RELATED PRODUCTS (1.1%)
1,440 Pizza Inn, Inc. 6,840
WHOLESALE - MISCELLANEOUS NONDURABLE GOODS (1.5%)
560 Advanced Marketing Services, Inc. 9,520
WHOLESALE - MOTOR VEHICLE SUPPLIES & NEW PARTS (1.5%)
500 Keystone Automotive Industries, Inc.* 9,344
WHOLESALE - PROFESSIONAL & COMMERICAL
EQUIPMENT &SUPPLIES (1.2%)
440 Miami Computer Supply Corp.* 7,796
WOOD HOUSEHOLD FURNITURE (1.3%)
440 Stanley Furniture Company, Inc.* 8,250
Total Common Stocks (cost: $) (77.0%) 486,082
Par Value
SHORT TERM INVESTMENTS (23.0%)
$145,281 State Street Bank and Trust Repurchase Agreement,
October 30, 1998, due November 2, 1998 (collateralized
by $145,000 U.S. Treasury Note 6.375%,
4/30/99 proceeds $150,956) 145,281
TOTAL INVESTMENTS (COST: $) (100%) $631,363
* Indicates non-income producing security.
See accompanying notes to financial statements.
<PAGE>
ROCKWOOD FUND, INC.
Statement of Assets and Liabilities
October 31, 1998
ASSETS:
Investments at market value (cost: $732,794)(note 1) $631,363
Receivables:
Dividends and interest 330
Other assets 125
TOTAL ASSETS 631,818
LIABILITIES:
Due to Advisor 5,201
Accrued expenses 13,723
TOTAL LIABILITIES 18,924
NET ASSETS:
(applicable to 39,116 outstanding shares: 1,000,000,000
shares of $.01 par value authorized) $612,894
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($612,894 / 39,116) $15.67
At October 31, 1998, net assets consisted of:
Paid-in capital $648,358
Accumulated net realized gain on investments 65,967
Net unrealized depreciation on investments (101,431)
$612,894
See accompanying notes to financial statements.
ROCKWOOD FUND, INC.
Statement of Operations
Year Ended October 31, 1998
INVESTMENT INCOME:
Dividends $ 4,035
Interest 2,327
Total investment income 6,362
EXPENSES:
Transfer agent 26,799
Registration (note 3) 19,212
Professional (note 3) 12,178
Printing 11,718
Shareholder administration (note 3) 10,949
Investment management (note 3) 10,762
Custodian 3,257
Distribution (note 3) 2,691
Directors 914
Other 1,144
Total expenses 99,624
Expenses reimbursed (note 3) (77,131)
Fee reductions (note 4) (1,313)
Net expenses 21,180
Net investment loss (14,818)
REALIZED AND UNREALIZED GAIN(LOSS) ON INVESTMENTS:
Net realized gain from security transactions 66,114
Unrealized depreciation of investments during the period (473,290)
Net realized and unrealized loss on investments (407,176)
Net decrease in net assets resulting from operations $(421,994)
See accompanying notes to financial statements.
<PAGE>
ROCKWOOD FUND, INC.
Statements of Changes in Net Assets
For the years ended October 31,
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
OPERATIONS:
Net investment loss $ (14,818) $ (36,833)
Net realized gain from security transactions 66,114 153,338
Unrealized appreciation (depreciation) of
investments during the period (473,290) 225,439
Net increase (decrease) in net assets
resulting from operations (421,994) 341,944
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from capital gains ($1.80 and
$4.90 per share, respectively) (116,177) (246,186)
CAPITAL SHARE TRANSACTIONS:
Increase (decrease) in net assets resulting
from capital share transactions (a) (619,870) 475,587
Total change in net assets (1,158,041) 571,345
NET ASSETS:
Beginning of year 1,770,935 1,199,590
End of year $612,894 $1,770,935
</TABLE>
<TABLE>
<CAPTION>
(a) Transactions in capital shares were as follows:
1998 1997
Shares Value Shares Value
<S> <C> <C> <C> <C>
Shares sold 7,020 $142,169 24,462 $567,430
Shares issued in reinvestment of distributions 5,973 116,053 12,073 245,800
Shares redeemed (44,937) (878,092) (14,965) (337,643)
Net increase (decrease) (31,944) $(619,870) 21,570 $475,587
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) The Fund is a Maryland corporation registered under the Investment
Company Act of 1940, as amended ("1940 Act"), as a non-diversified, open-end
management investment company. The investment objective of the Fund is capital
appreciation. The Fund seeks capital appreciation by investing, depending on the
assessment of economic and market factors, in equity securities, securities
convertible into common stocks, and preferred stocks. The following is a summary
of significant accounting policies consistently followed by the Fund in the
preparation of its financial statements. With respect to security valuation,
securities traded on a national securities exchange and securities traded on the
Nasdaq National Market System ("NMS") are valued at the last reported sales
price on the day the valuations are made. Such securities that are not traded on
a particular day and securities traded in the over-the-counter market that are
not on NMS are valued at the mean between the current bid and asked prices.
Securities for which quotations are not readily available and other assets are
valued at fair value as determined in good faith by or under the direction of
the Board of Directors. Securities denominated in foreign currencies are
translated into U.S. dollars at prevailing exchange rates. Investment
transactions are accounted for on the trade date (date the order to buy or sell
is executed). Dividend income and distributions to shareholders are recorded on
the ex-dividend date and interest income is recorded on the accrual basis. In
preparing financial statements in conformity with generally accepted accounting
principles, management makes estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements, as
well as the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
(2) The Fund intends to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all its taxable investment income and net capital gains, if any,
after utilization of any capital loss carryforward, to its shareholders and
therefore no Federal income tax provision is required. Based on Federal income
tax cost of $732,794, gross unrealized appreciation and gross unrealized
depreciation were $9,437 and $110,868 , respectively at October 31, 1998.
(3) The Fund retains Rockwood Advisers, Inc. (the "Investment Manager") as
its Investment Manager. Under the Investment Management Agreement, dated
February 28, 1997, the Investment Manager receives a management fee, payable
monthly, based on the average daily net assets of the Fund at the annual rate of
1% on the first $200 million, .95% from $200 million to $400 million, .90% from
$400 million to $600 million, .85% from $600 million to $800 million, .80% from
$800 million to $1 billion and .75% over $1 billion. The Investment Manager has
agreed to waive all or part of its fee or reimburse the Fund monthly if and to
the extent the aggregate operating expenses of the Fund exceed the most
restrictive limit imposed by any state in which shares of the Fund are qualified
for sale, although currently the Fund is not subject to any such limits.
Voluntary reimbursement for the year ended October 31, 1998 was $77,131.
Pursuant to the Investment Management Agreement, the Investment Manager retained
Aspen Securities and Advisory, Inc. (the "Subadviser") regarding portfolio
investments. Pursuant to the Subadvisory agreement, which terminated March 1,
1998, the Subadviser advised and consulted with the Investment Manager regarding
the selection, clearing and safekeeping of the Fund's portfolio investments and
assisted in pricing and generally monitoring such investments. The Subadviser
also provided the Investment Manager with advice as to allocating the Fund's
portfolio assets among equities and other types of investments, including
recommendations of specific investments. The Investment Manager, not the Fund,
paid the Subadviser monthly a percentage of the Investment Manager's net fees
based upon the Fund's performance and net assets. Certain officers and directors
of the Fund are officers and directors of the Investment Manager and Investor
Service Center, Inc., the Fund's Distributor. For the year ended October 31,
1998, the Fund paid $1,885 to Bull & Bear Securities, Inc., an affiliate of the
Investment Manager as commissions for brokerage services. The Fund reimbursed
the Investment Manager $465 for providing certain administrative and accounting
services at cost for the year ended October 31, 1998. The Fund has adopted a
plan of distribution pursuant to Rule 12b-1 under the 1940 Act (the "Plan").
Pursuant to the Plan, the Fund pays the Distributor a distribution fee in an
amount of one-quarter of one percent per annum of the Fund's average daily net
assets as compensation for distribution and service activities. The fee is
intended to cover personal services provided to shareholders in the Fund and the
maintenance of shareholder accounts and all other activities and expenses
primarily intended to result in the sale of the Fund's shares. Investor Service
Center also received $10,949 for shareholder administration services which it
provided to the Fund at cost for the year ended October 31, 1998.
(4) Purchases and proceeds of sales of securities other than short term
notes aggregated $2,291,841 and $3,177,028, respectively. The Fund has entered
into an arrangement with its custodian whereby interest earned on uninvested
cash balances was used to offset a portion of the Fund's expenses. During the
year ended October 31, 1998, the Fund's custodian fees were reduced by $1,313
under such arrangements.
(5) The Fund has a committed bank line of credit. At October 31, 1998,
there was no balance outstanding and the interest rate was equal to the Federal
Reserve Funds Rate plus 1.00 percentage points. For the year ended October 31,
1998, the weighted average interest rate was 6.28% based on the balance
outstanding and the weighted average amount outstanding was $20,978.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Years Ended October 31,
PER SHARE DATA* 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 24.92 $ 24.24 $ 18.73 $ 16.61 $ 16.32
Income from investment operations:
Net investment loss (.25) (.59) (.56) (.31) (.22)
Net realized and unrealized gain (loss)
on investments (7.20) 6.17 6.07 2.43 .51
Total from investment operations(7.45) 5.58 5.51 2.12 .29
Less distributions:
Distributions from net realized gain
on investments (1.80) (4.90) -- -- --
Total distributions (1.80) (4.90) -- -- --
Net asset value at end of period $ 15.67 $ 24.92 $ 24.24 $ 18.73 $ 16.61
---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (31.29)% 27.55% 29.42% 12.76% 1.78%
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</TABLE>
<TABLE>
<CAPTION>
RATIOS/SUPPLEMENTAL DATA
<S> <C> <C> <C> <C> <C> <C>
Net assets at end of period (000's) $ 613 $ 1,771 $ 1,200 $ 774 $ 714
---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets(a)(b) 2.09% 2.81% 2.55% 2.30% 2.00%
---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss to average
net assets (c) (1.38)% (2.65%) (2.23%) (1.77%) (1.38%)
---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 207.02% 44.00% 42.48% 30.04% 18.26%
---------------------------------------------------------------------------------------------------------------------------------
Average commission per share $ .0558 $ .0454 $ .0562
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</TABLE>
* Per share net investment loss and net realized and unrealized gain on
investments have been computed using the average number of shares
outstanding. These computations had no effect on net asset value per share.
(a) Ratio prior to reimbursement by the manager was 9.27%, 10.47%, 4.44%,
3.00%, and 2.82%. for the years ended October 31, 1998, 1997, 1996, 1995,
and 1994, respectively.
(b) Ratio after custodian fee credits was 1.97% for the year ended October 31,
1998. There were no custodian fee credits for prior years.
(c) Ratio prior to reimbursement by the manager was (8.56%), (10.31%), (4.12%),
(2.47%), and (2.20%) for the years ended October 31, 1998, 1997, 1996,
1995, and 1994, respectively.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Shareholders of
Rockwood Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
Rockwood Fund, Inc. (formerly "The Rockwood Growth Fund, Inc.") including the
schedule of portfolio investments as of October 31, 1998, and the related
statement of operations for the year then ended, the statements of changes in
net assets and the financial highlights for each of the three years then ended.
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. The financial
statements of Rockwood Fund, Inc. as of and for the year ended October 31, 1995,
were audited by other auditors whose report dated December 13, 1995, expressed
an unqualified opinion on those statements.
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
October 31, 1998, 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 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
Rockwood Fund, Inc. as of October 31, 1998, the results of its operations for
the year then ended, the changes in its net assets, and the financial highlights
for each of the three years in the period then ended, in conformity with
generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
November 23, 1998
Growth of $10,000 Investments
November 1, 1988 through October 31, 1998
Average Annual
Fund/Index Final Value Total Return Return
Rockwood $17,101 71.01% 5.51%
Russell 2000 $30,301 203.01% 11.72%
The Russell 2000 is a small company index that is unmanaged and fully invested
in common stocks. The Fund invests in common stocks and may also own fixed
income securities and options. The $10,000 Performance Graphs are from November
1, 1988 through October 31, 1998 and results in each case reflect reinvestment
of dividends and distributions. Past performance does not guarantee future
results. Investment return will fluctuate, so shares when redeemed may be worth
more or less than their cost. Dollar cost averaging does not assure a profit or
protect against loss in a declining market and investors should consider their
ability to make purchases when prices are low.
Average annual total return for the periods ended 10/31/98 for one year was
- -31.29%, for the past five years was +5.40%, and for the past ten years was
+5.51%.
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Fund. The report is not
authorized for distribution to prospective investors in the Fund unless preceded
or accompanied by an effective Prospectus. Investor Service Center, Inc.,
Distributor.
