SHERMAN, DEAN FUND, INC.
3570 HUNTERS SOUND
SAN ANTONIO, TEXAS 78230
(210) 492-1488
ANNUAL REPORT
MAY 31, 1996
SHERMAN, DEAN FUND, INC.
STATEMENT of ASSETS and LIABILITIES
May 31, 1996
ASSETS:
Investments in securities, at value
(identified cost $2,882,709) (Note 1A and 2) .......... $ 1,765,789
Cash ...................................................... 8,528
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Total assets ............................................ 1,774,317
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LIABILITIES:
Management fee payable .................................... 4,401
Payable for escheated shares .............................. 7,105
Accrued expenses .......................................... 2,000
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Total liabilities ....................................... 13,506
--------------
NET ASSETS (Applicable to 165,917 shares outstanding;
5,000,000 shares of $1 par value authorized) .............. $ 1,760,811
==============
Net Asset Value Per Share ($1,760,811 / 165,917 shares).... $ 10.61
==============
At May 31, 1996 the components of net assets were
as follows:
Paid in capital ......................................... $ 3,079,517
Accumulated net realized loss on investments ............ (201,786)
Net unrealized depreciation of investments .............. (1,116,920)
--------------
Net assets ............................................ $ 1,760,811
==============
See Accompanying Notes to Financial Statements
SHERMAN, DEAN FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDING MAY 31, 1996
INVESTMENT INCOME:
Income:
Interest income ......................................... $ 17,232
--------------
Total income ......................................... 17,232
--------------
Expenses:
Management fees (Note 3) ................................ 20,809
Registration and filing ................................. 560
Accounting fees ......................................... 3,130
Legal fees .............................................. 117
Custodian and shareholder servicing costs ............... 480
Communications .......................................... 5,817
Directors fees .......................................... 1,800
Postage ....... ........................................ 1,349
Printing ................................................ 666
State and local taxes ................................... 420
Miscellaneous ........................................... 204
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Total expenses ........................................ 35,352
--------------
Net investment loss ................................. (18,120)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments ........................ 343,768
Net change in unrealized depreciation of investments .... 478,820
--------------
Net gain on investments ............................... 822,588
--------------
Net increase in net assets resulting from operations $ 804,468
==============
See Accompanying Notes to Financial Statements
SHERMAN, DEAN FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the For the
Year Year
Ended Ended
May 31, May 31,
1996 1995
----------------------------
OPERATIONS:
Net investment loss......................... $ (18,120) (26,850)
Net realized gain(loss) on investments...... 343,768 332
Net change in unrealized depreciation of
investments .............................. 478,820 65,354
----------------------------
Net increase (decrease) in net assets
resulting from operations ................ 804,468 38,836
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets resulting
from capital share transactions (a) ...... (605,201) 0
----------------------------
Total increase (decrease) in net assets .... 199,267 38,836
Net assets at beginning of the year ........ 1,561,544 1,522,708
----------------------------
Net assets at the end of the year........... $ 1,760,811 1,561,544
============================
(a) A summary of capital share transactions is as follows:
For the Year Ended For the Year Ended
May 31, 1996 May 31, 1995
----------------------------------------------------------
Shares Value Shares Value
----------------------------------------------------------
Shares sold ....... 0 0 0 0
Shares repurchased. 60,581 605,201 0 0
----------------------------------------------------------
Net decrease...... (60,581) (605,201) 0 0
==========================================================
See Accompanying Notes to Financial Statements
SHERMAN, DEAN FUND, INC.
PORTFOLIO OF INVESTMENTS
May 31, 1996
Value
Shares Common Stock 100.3% (Note 1A)
---------- -------------------- --------------
Mining(gold,silver,copper) 30.4%
778,250* Benguet Corp. .............................. 535,046
Technology 69.9%
70,428* CPAC, Inc. ................................. 862,743
128,000* Hytek Microsystems, Inc. ................... 368,000
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Total .................................... 1,230,743
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Total Investments in Stocks (100.3%) (Cost $2,882,709).... 1,765,789
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Total Investments in Securities
(Cost $2,882,709) **........ 100.3% 1,765,789
Cash and Other Assets in Excess
of other liabilities - Net (0.3)% (4,978)
----------------------------
Total Net Assets ............. 100.0% $1,760,811
============================
* Non-income producing securities.
** Cost of investments for federal income tax purposes is $2,882,709 and
net unrealized depreciation consists of:
Gross Unrealized Appreciation .................. $ 879,662
Gross Unrealized Depreciation .................. (1,996,582)
--------------
Net Unrealized Depreciation .................... $ (1,116,920)
==============
See Accompanying Notes to Financial Statements
SHERMAN, DEAN FUND, INC.
FINANCIAL HIGHLIGHTS
For a Share Outstanding Throughout Each Period:
YEARS ENDED MAY 31st
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Net Asset Value, Beginning of Period....$ 6.89 $ 6.72 $ 7.54 $ 7.48 $ 7.26
------ ------ ------ ------ ------
Net investment gain (loss) ............. (0.11) (0.12) (0.21) (0.11) (0.12)
Net realized and unrealized gain (loss)
on investments ....................... 3.83 0.29 (0.61) 0.17 0.34
------ ------ ------ ------ ------
Total From Operations 3.72 0.17 (0.82) 0.06 0.22
------ ------ ------ ------ -----
Net Asset Value, End of Period..........$10.61 $6.89 $6.72 $7.54 $7.48
------ ------ ------ ------- ------
Total Return 53.99% 2.53% -10.88% 0.80% 3.03%
Ratio of operating expenses to average
net assets ........................... 1.76% 2.40% 3.82% 2.66% 3.07%
Ratio of net investment loss to average
net assets ........................... -0.90% -1.67% -2.96% -1.63% -1.82%
Portfolio turnover rate ................ 0.00% 0.00% 2.12% 30.25% 7.81%
Net Assets,End of Period (in thousands) $1,760 $1,562 $1,523 $2,215 $2,668
See Accompanying Notes to Financial Statements
SHERMAN, DEAN FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996
Note 1 - Significant Accounting Policies
The following is a summary of the significant
accounting policies consistently followed by the Fund in
the preparation of its financial statements. The policies are
in conformity with generally accepted accounting
principles.
A. Security Valuation and Pricing
The net asset value of the Fund's shares on the
financial reporting date are determined as of the close of
business of the New York Stock Exchange, currently 4:00
pm New York time. A security listed or traded on an
exchange, the NASDAQ National Market System or the
NASDAQ Bulletin Board is valued at its last sale price
(prior to the time as of which assets are valued) on that
exchange where it is principally traded. Lacking any sales
on the exchange where it is principally traded on the day
of valuation prior to the time as of which assets are
valued, the security is valued at the mean between the last
bid and asked prices on that exchange. All other
securities for which over-the-counter quotations are
readily available are valued on the basis of the mean
between the last current bid and asked price. Securities
for which reliable quotations are not readily available are
valued at their respective fair value as determined in good
faith by the Board of Directors of the Fund.
Short-Term investments with less than 60 days to
maturity are valued at amortized cost, which approximates
market value.
B. Federal Income Taxes
It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute all of its
taxable income to its shareholders. Therefore, no Federal
income tax provision is required.
C. Other
Security transactions are accounted for on the trade
date. Dividend income and distributions to shareholders
are recorded on the ex-dividend date; interest income is
recorded on the accrual basis.
On September 14, 1993, after Shareholder approval,
the Fund changed its status from an open-end fund to a
closed-end fund.
On March 29, 1996 the Fund, pursuant to a
repurchase offer made to all shareholders in accorance
with Rule 23c-3 of the Investment Company Act of 1940,
repurchased 60,581 of its' shares for $605,201.
Note 2 - Investment Transactions
For the year ended May 31, 1996, the cost of
purchases and the proceeds from sales of securities, other
than short-term notes, aggregated $ -0- and $509,081
respectively.
Note 3 - Investment Advisory Agreement
Sherman, Dean & Co.,Inc. ("Adviser") shall, to the
extent reasonably required in the conduct of the business
of the Fund, place at the disposal of the Fund its
judgement and experience and furnishes to the Fund
advice and recommendations with respect to
investments, investment policies, and the purchase
and sale of securities under an investment advisory
agreement that was approved by shareholders, and
became effective on September 14, 1993. As
compensation for its services, the Adviser is paid a
fee quarterly, at an annual rate of 1% (0.25%
quarterly) of the net assets of the Fund computed on
the last business day of each quarter, on net assets up
to $30 million. Pursuant to this agreement, the Fund
incurred a management fee of $20,809 for the year
ended May 31, 1996.
The Fund's advisory agreement will terminate on
September 6, 1996, unless its continuance is
approved annually by the Fund's Board of Directors
or by a vote of a majority of the Fund's outstanding
shares as defined by the Investment Company Act of
1940.
The Adviser agrees to pay salaries of any
officer or director of the Fund who is affiliated
with the Adviser, for all services on behalf of the
Fund. The Fund will pay all its own expenses,
including without limitation, distribution expenses,
if any, including advertising and printing and
mailing of sales literature. The Board of Directors
of the Fund will approve plans, if any, for
distribution and review of expenditures.
J. Walter Sherman, a director and President of
the Fund, and David Sherman, a director and
Vice-President, Secretary and Treasurer of the Fund,
own approximately 90% and 10%, respectively, of
the outstanding capital stock of the Adviser.
Note 4 - Capital Loss Carryforward
As of May 31, 1996, the Fund has a capital
loss carryforward of $201,786 for Federal income tax
purposes which expires in 2,002.
Report of Independent
Certified Public Accountants
To the Board of Directors and Shareholders
Sherman, Dean Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
Sherman, Dean Fund, Inc., including the portfolio of investments as of
May 31, 1996, and the related statement of operations for the year then
ended, the related statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of
the five years in the period 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.
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 May 31, 1996, 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
Sherman, Dean Fund, Inc. as of May 31, 1996, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the financial highlights for each of the five years
in the period then ended, in conformity with generally accepted accounting
principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
June 24, 1996
