ROCKWOOD
December 31, 1998
Report
ROCKWOOD EASY ACCESS
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.
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.
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.
Prospectus and Applications
<PAGE>
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.
February 10, 1999
Fellow Shareholders:
As the Fund's new portfolio manager starting February 2, 1999, I am
pleased to submit this shareholder report for the period ended December 31,
1998. Please note that for greater administrative efficiencies, the Fund is
changing its fiscal year-end from October 31 to a December 31 calendar year-end.
Review and Outlook
The likelihood of a recession and/or a significant increase in the
inflation rate as measured by the Consumer Price Index becomes less with each
new report from the Government and private economic organizations.
With respect to the economy, the Commerce Department reports that
the gross domestic product - the total of all goods and services produced - grew
at a 5.6% rate in the fourth quarter of 1998, the fastest pace in two years.
They also reported that housing starts rose 3.5% in December, bringing the total
for the year to the highest level since 1987.
In addition, according to the Conference Board, new home sales
surged 10.4% in 1998, which will also trigger future home furnishing purchases.
Moreover, the Labor Department reports a gain of 245,000 jobs in January, which
is twice the amount forecast and leaves unemployment at 4.3%, the lowest in 28
years.
On the inflation front the news is also very good - from the Labor
Department comes word that inflation dropped to an 0.8% rate in the fourth
quarter of 1998, the lowest in 40 years.
With the economy strong and inflation in check, we believe this is a
good time to add to your investment. For long term investors we recommend
building your account by investing on a regular basis, which can be done safely,
automatically and conveniently through the Investor Service Center Bank Transfer
Plan, Investor Service Center Salary Investing Plan, and/or the Investor Service
Center Government Direct Deposit Plan.
To receive information on any of these plans, or the Investor
Service Center No-Fee Traditional, Roth or Education 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,
Bassett S. Winmill
ROCKWOOD FUND, INC.
Schedule of Portfolio Investments
December 31, 1998
Shares Market Value
COMMON STOCKS (100.0%)
Air-Conditioning & Warm Air Heating Equipment
& Commercial & Industrial Refrigeration Equipment (1.9%)
660 Engineered Support Systems, Inc. $ 9,818
Bolts, Nuts, Screws, Rivets & Washers (2.0%)
200 Federal Screw Works 9,950
Canned, Frozen & Preserved Fruit, Vegetables &
Food Specialties (1.7%)
1,060 Vacu-Dry Co. 8,745
Construction Machinery & Equipment (2.2%)
1,200 Gencor Industries, Inc. 11,100
Converted Paper & Paperboard Products (2.3%)
2,580 Disc Graphics, Inc. * 11,852
Electric Lighting & Wiring Equipment (4.5%)
1,025 Chase Corp. 13,453
500 The Genlyte Group Inc.* 9,375
22,828
Electronic Components & Accessories (4.3%)
500 CTS Corp. 21,750
Footwear (2.6%)
500 K-Swiss Inc. Class A 13,437
Gaskets, Packaging & Sealing Devices & Rubber &
Plastic Hoses (2.2%)
500 Wynn's International, Inc. 11,062
General Industrial Machinery & Equipment (1.7%)
855 Farr Company 8,657
Men's & Boys' Furnishings, Work Clothing &
Allied Garments (1.1%)
480 Supreme International Corp.* 5,790
Miscellaneous Chemical Products (1.6%)
1,760 Arrow-Magnolia International, Inc.* $ 7,920
Motor Vehicle Parts & Accessories (2.5%)
700 Valley Forge Corp. 12,950
Motors & Generators (1.1%)
410 Axsys Technologies, Inc.* 5,740
Operative Builders (3.5%)
6,000 Calton, Inc.* 18,000
Paperboard Containers & Boxes (2.6%)
1,350 Astronics Corp.* 12,994
Plastics Products (1.4%)
770 Summa Industries Inc.* 6,978
Prefabricated Metal Buildings & Components (1.6%)
1,060 Miller Building Systems, Inc. 8,082
Printed Circuit Boards (3.6%)
500 Benchmark Electronics, Inc.* 18,312
Public Building & Related Furniture (1.8%)
500 Virco Manufacturing Corp. 9,187
Radio & TV Broadcasting & Communications Equipment (2.0%)
1,190 Comtech Telecommunications Corp.* 10,412
Retail - Apparel & Accessory Stores (1.2%)
670 S&K Famous Brands, Inc.* 6,218
Retail - Eating Places (7.6%)
1,570 Eateries, Inc.* 9,224
1,000 ELXSI Corp.* 12,625
960 Flanigan's Enterprises, Inc.* 9,720
510 Garden Fresh Restaurant Corp.* 7,331
38,900
Retail - Grocery Stores (6.0%)
500 Schultz Sav-O Stores, Inc. $ 8,250
630 Seaway Food Town, Inc. 10,395
820 Village Super Market, Inc. Class A 11,634
30,279
Retail - Miscellaneous Retail (2.8%)
910 EZCORP, Inc. Class A 7,621
500 Grow Biz International, Inc.* 6,594
14,215
Sausage, Other Prepared Meat Products (1.3%)
2,220 Provena Foods, Inc. 6,521
Savings Institutions, Not Federally Chartered (1.5%)
380 People's Bancshares, Inc. 7,743
Savings Institutions, Federally Chartered (2.0%)
3,890 Security Investments Group, Inc.* 9,968
Security Brokers, Dealers & Flotation Companies (1.0%)
890 JWGenesis Financial Corp.* 5,284
Services - Computer Rental & Leasing (1.6%)
545 Amplicon, Inc. 8,209
Services - Engineering Services (4.0%)
460 Analysis & Technology, Inc. 9,200
1,390 STV Group, Inc.* 11,294
20,494
Services - Equipment Rental & Leasing (2.0%)
1,570 The Cronos Group* 10,009
Steel Pipe & Tubes (1.5%)
1,180 Webco Industries, Inc.* 7,818
Sugar & Confectionery Products (1.7%)
5,500 Lincoln Snacks Company* 8,594
Trucking (2.1%)
900 Transport Corporation of America, Inc.* 10,800
Water Transportation (2.1%)
1,800 Commodore Holdings Ltd.* 10,575
Wholesale - Computer & Peripheral Equipment &
Software (4.1%)
1,380 ATEC Group, Inc.* 10,911
2,500 Capital Associates, Inc.* 9,844
20,755
Wholesale - Groceries & Related Products (1.3%)
1,440 Pizza Inn, Inc. 6,570
Wholesale - Miscellaneous Nondurable Goods (2.1%)
560 Advanced Marketing Services, Inc. 10,780
Wholesale - Motor Vehicle Supplies & New Parts (2.1%)
500 Keystone Automotive Industries, Inc.* 10,469
Wholesale - Professional & Commercial Equipment
& Supplies (2.2%)
440 Miami Computer Supply Corp.* 10,863
Wood Household Furniture (1.6%)
440 Stanley Furniture Company, Inc.* 8,030
Total Investments (cost: $567,182) (100%) $508,658
* Indicates non-income producing security.
See accompanying notes to financial statements
ROCKWOOD FUND, INC.
Statement of Assets and Liabilities
December 31, 1998
ASSETS:
Investments at market value (cost: $567,182)(note 1) ............... $508,658
Cash ............................................................... 63,264
Dividends and interest receivables ................................. 362
Other assets ....................................................... 125
Total assets ............................................. 572,409
LIABILITIES:
Due to Advisor ..................................................... 4,584
Accrued expenses ................................................... 19,669
Total liabilities ........................................ 24,253
NET ASSETS:
(applicable to 37,611 outstanding shares: 1,000,000,000 shares of
$.01 par value authorized) ......................................... $548,156
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($548,156 / 37,611) ................................................ $14.57
At December 31, 1998, net assets consisted of:
Paid-in capital .................................................... $612,105
Accumulated net realized loss on investments ....................... (5,425)
Net unrealized depreciation on investments ......................... (58,524)
$548,156
See accompanying notes to financial statements.
ROCKWOOD FUND, INC.
Statements of Operations
Two Months Ended December 31, 1998 and Year Ended October 31, 1998
December 31, October 31,
1998 1998
INVESTMENT INCOME:
Dividends ....................................... $ 619 $ 4,035
Interest ........................................ 644 2,327
Total investment income ............... 1,263 6,362
EXPENSES:
Transfer agent .................................. 7,051 26,799
Registration (note 3) ........................... 4,126 19,212
Professional (note 3) ........................... 3,114 12,178
Printing ........................................ 153 11,718
Shareholder administration (note 3) ............. 1,621 10,949
Investment management (note 3) .................. 983 10,762
Custodian ....................................... 493 3,257
Distribution (note 3) ........................... 246 2,691
Directors ....................................... 262 914
Other ........................................... 114 1,144
Total expenses ........................ 18,163 99,624
Expenses reimbursed (note 3) ..........(15,416) (77,131)
Fee reductions (note 4) ............... _ (1,313)
Net expenses .......................... 2,747 21,180
Net investment loss ................... (1,484) (14,818)
REALIZED AND UNREALIZED GAIN(LOSS) ON INVESTMENTS:
Net realized gain(loss) from security transactions .(5,425) 66,114
Unrealized appreciation (depreciation) of
investments during the period ......... 42,907 (473,290)
Net realized and unrealized
gain(loss) on investments ............. 37,482 (407,176)
Net increase(decrease) in net assets resulting
from operations ........................ $35,998 $(421,994)
See accompanying notes to financial statements.
ROCKWOOD FUND, INC.
Statements of Changes in Net Assets
For the two months ended December 31, 1998 and the years ended October 31, 1998
and 1997
<TABLE>
<CAPTION>
December 31, October 31, October 31,
1998 1998 1997
OPERATIONS:
<S> <C> <C> <C>
Net investment loss ................................. $ (1,484) $ (14,818) $ (36,833)
Net realized gain(loss) from security transactions .. (5,425) 66,114 153,338
Unrealized appreciation (depreciation) of
investments during the period ............. 42,907 (473,290) 225,439
Net increase (decrease) in net assets
resulting from operations ................. 35,998 (421,994) 341,944
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from capital gains ($2.04, $1.80
and $4.90 per share, respectively) ........ (65,967) (116,177) (246,186)
CAPITAL SHARE TRANSACTIONS:
Increase (decrease) in net assets resulting
from capital share transactions (a) ....... (34,769) (619,870) 475,587
Total change in net assets .................... (64,738) (1,158,041) 571,345
NET ASSETS:
Beginning of year ............................. 612,894 1,770,935 1,199,590
End of year ................................... $548,156 $612,894 $1,770,935
</TABLE>
<TABLE>
<CAPTION>
(a) Transactions in capital shares were as follows:
Shares Value Shares Value Shares Value
<S> <C> <C> <C> <C> <C> <C>
Shares sold ....................................... 1,035 $15,252 7,020 $142,169 24,462 $567,430
Shares issued in reinvestment
of distributions ................................. 4,704 65,948 5,973 116,053 12,073 245,800
Shares redeemed ...................................(7,244) (115,969) (44,937) (878,092) (14,965) (337,643)
Net increase (decrease) ...........................(1,505) $(34,769) (31,944) $(619,870) 21,570 $475,587
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
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. On March 4, 1998 the Board
of Directors of the Fund approved a change in the fiscal year-end to December
31. Previously, the fiscal year end was October 31. 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 appli-cable 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 $567,182, gross unrealized appreciation and gross unrealized
depreciation were $29,492 and $88,016, respectively at December 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 two months ended December 31, 1998 was $15,416.
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 two months ended December
31, 1998, the Fund paid $20 to Bull & Bear Securities, Inc., an affiliate of the
Investment Manager as commissions for brokerage services. The Fund reimbursed
the Investment Manager $56 for providing certain administrative and accounting
services at cost for the two months ended December 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 $1,621 for shareholder administration services which it
provided to the Fund at cost for the two months ended December 31, 1998.
(4) Proceeds of sales of securities other than short term notes aggregated
$14,906 for the two months ended December 31, 1998. 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.
Financial Highlights
<TABLE>
<CAPTION>
Two Months
Ended Ended Years Ended October 31,
PER SHARE DATA* 12/31/98 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $15.67 $24.92 $24.24 $18.73 $16.61 $16.32
Income from investment operations:
Net investment loss (.04) (.25) (.59) (.56) (.31) (.22)
Net realized and unrealized gain
(loss) on investments .98 (7.20) 6.17 6.07 2.43 .51
Total from investment operations .94 (7.45) 5.58 5.51 2.12 .29
Less distributions:
Distributions from net realized gain
on investments (2.04) (1.80) (4.90) - - -
Total distributions (2.04) (1.80) (4.90) - - -
Net asset value at end of period $14.57 $15.67 $24.92 $24.24 $18.73 $16.61
TOTAL RETURN 6.48% (31.29)% 27.55% 29.42% 12.76% 1.78%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period (000's omitted) $548 $613 $1,771 $1,200 $774 $714
Ratio of expenses to average net
assets(a)(b) 2.85%** 2.09% 2.81% 2.55% 2.30% 2.00%
Ratio of net investment loss to average
net assets (c) (1.54)%** (1.38)% (2.65%) (2.23%) (1.77%) (1.38%)
Portfolio turnover rate 0% 207.02% 44.00% 42.48% 30.04% 18.26%
<FN>
* 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.
** Annualized.
(a) Ratio prior to reimbursement by the manager was 18.84%**, 9.27%, 10.47%,
4.44%, 3.00%, and 2.82% for the two months ended December 31, 1998 and 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 (17.53)%**, (8.56%), (10.31%), (4.12%), (2.47%), and (2.20%)
for the two months ended December 31, 1998 and the years ended October 31, 1998,
1997, 1996, 1995, and 1994, respectively.
</FN>
</TABLE>
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
<PAGE>
Growth of $10,000 Investments
January 1, 1989 through December 31, 1998
Average Annual
Fund/Index Final Value Total Return Return
Rockwood $18,085 80.85% 6.10%
Russell 2000 $33,709 237.09% 12.92%
[Graph omitted]
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 January
1, 1989 through December 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 12/31/98 for one year was
- -13.82%, for the past five years was +7.40%, and for the past ten years was
+6.10%.
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.
FUND FEATURES
Investment Objective
The Fund seeks long term capital appreciation.
Fund Management
Rockwood Advisers, Inc. is the Fund's Investment Manager. Bassett S. Winmill is
the Fund's portfolio manager.
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,
<PAGE>
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
