UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 5
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 7
(Check appropriate box or boxes.)
KENILWORTH FUND, INC.
(Exact Name of Registrant as Specified in Charter)
Suite 2594, One First National Plaza,
Chicago, Illinois 60603
(Address of Principal Executive Offices) (Zip Code)
(312) 236-5388
(Registrant's Telephone Number)
Mohini C. Pai, Suite 2594, One First National Plaza,
Chicago, Illinois 60603
(Name and Address of Agent for Service)
<D>Pursuant to Rule 24f-2(a)(1) under the Investment Company Act
of 1940, the Kenilworth Fund, Inc. is adding to the number or
amount of securities of the same class presently registered in
its registration statement under the Securities Act of 1933 an
indefinite number or amount of securities. Pursuant to Rule 24f-
2(b)(2) under the Investment Company Act of 1940, the Kenilworth
Fund, Inc. need not file a Rule 24f-2 Notice because the Fund did
not sell any securities pursuant to a Rule 24f-2(a)(1)
declaration during the Fund's most recent fiscal year.</D>
It is proposed that this filing will become effective (check
appropriate box):
x immediately upon filing pursuant to paragraph (b) of
Rule 485
___ on (date) pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a) of Rule 485
___ on (date) pursuant to paragraph (a) of Rule 485
<PAGE>
KENILWORTH FUND, INC.
Cross Reference Sheet
Pursuant to Rule 481(a)
Form N-1A Item No. Location
in Prospectus
PART A
1. Cover Page..............................Cover Page
2. Synopsis.............................Fund Expenses
3. Condensed Financial
Information............Condensed Financial Information
4. General Description of
Registrant.......The Fund;Investment Objective Policies
5. Management of the
Fund.............................Management of the Fund
6. Capital Stock and Other
Securities.......................How to Purchase Fund
Shares; Distributions and Taxes;Capital Stock
7. Purchase of Securities Being
Offered.......................How to Purchase Fund Shares
8. Redemption or
Repurchase.....................How to Redeem Fund Shares
9. Pending Legal Proceedings..................Not Applicable
PART B
10. Cover
Page....................................Cover Page
11. Table of
Contents............................Table of Contents
12. General Information and
History.................The Fund; Investment Objectives
and Policies
13. Investment Objectives and
Policies...........Investment Objectives and Policies
14. Management of the
Registrant.....................Management of the Fund
15. Control Persons and Principal Holders of
Securities......................Principal Shareholders
16. Investment Advisory and Other
Services............................Investment Adviser
17. Brokerage Allocation and Other
Practices....................................Brokerage
18. Capital Stock and Other
Securities..........................How to Purchase Fund
Shares;Distributions and Taxes;Capital Stock
19. Purchase, Redemption and Pricing of Securities Being
Offered.......How to Purchase Fund Shares; How to Redeem
Fund Shares;Determination of Net Asset Value
20. Tax
Status....................................Not Applicable
21. Underwriters..............................Not Applicable
22. Calculation of Performance
Data......................................Not Applicable
23. Financial
Statements..........................Financial Statements
PART C
Information required to be included in Part C is set forth
under the appropriate item, so numbered, in Part C of this
Registration Statement.
<PAGE>
KENILWORTH FUND, INC.
One First National Plaza
Suite 2594
Chicago, Illinois 60603
Telephone: (312) 236-5388
PROSPECTUS May 1,1997
The Fund and Investment Objectives
KENILWORTH FUND, INC. (the "Fund") is a no-load, open-end,
non-diversified management investment company. The Fund's
objective is long-term capital appreciation which it seeks by
investing primarily in a non-diversified portfolio of common
stocks, preferred stocks, warrants to purchase common stocks,
convertible bonds and fixed-income obligations of corporations
and the United States government.
Fund Share Purchase
Capital shares of the Fund may only be purchased directly
from the Fund at net asset value as next determined after receipt
of order. The Board of Directors has established $10,000 as the
minimum initial purchase and $1,000 for subsequent purchases.
Related party accounts and retirement accounts require a
minimum initial purchase of $5,000 and $1,000 for subsequent
purchases.
Additional Information
This Prospectus sets forth concisely the information about
the Fund that a prospective investor should know before
investing. Additional information about the Fund has been filed
with the Securities and Exchange Commission in the form of a
Statement of Additional Information, dated May 1, 1997 ,
which is incorporated into this Prospectus by reference. A copy
of the Statement of Additional Information will be provided upon
request by the Fund without charge to each person to whom a
Prospectus is delivered. Write to the Fund at One First National
Plaza, Suite 2594, Chicago, Illinois 60603 or call, 1-312-236-
5388.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
INVESTORS ARE ADVISED TO READ AND RETAIN A COPY OF THIS
PROSPECTUS FOR FUTURE REFERENCE.
<PAGE>
TABLE OF CONTENTS
FUND EXPENSES........................................3
CONDENSED FINANCIAL INFORMATION......................3
THE FUND.............................................4
INVESTMENT OBJECTIVE AND POLICIES....................4
INVESTMENT RESTRICTIONS..............................4
MANAGEMENT OF THE FUND...............................6
Directors.......................................6
Investment Adviser..............................6
Administrative & Management Services............7
Custodian & Transfer Agent......................7
DETERMINATION OF NET ASSET VALUE.....................7
HOW TO PURCHASE FUND SHARES..........................7
HOW TO REDEEM FUND SHARES............................8
SHAREHOLDER PLANS....................................9
Dividend Reinvestment Plan......................9
RETIREMENT ACCOUNTS..................................9
DISTRIBUTIONS AND TAXES..............................9
Distributions...................................9
Taxes...........................................9
CAPITAL STOCK.......................................10
SHAREHOLDER REPORTS AND MEETINGS....................10
SHARE PURCHASE APPLICATION..........................11
No person has been authorized to give any information or to make
any representations other than those contained in this Prospectus
and the Statement of Additional Information dated May 1,
1997 , and, if given or made, such information or
representations may not be relied upon as having been authorized
by the Kenilworth Fund, Inc. This Prospectus does not constitute
an offer to sell securities in any state or jurisdiction in which
such offering may not lawfully be made.
<PAGE>
FUND EXPENSES
The following information is provided in order to assist you
in understanding the various costs and expenses that a
shareholder of the Fund will bear directly or indirectly. The
Fund offers shares to investors on a no-load basis, without any
front-end or back-end sales commissions or 12b-1 plan charges.
Shareholder Transaction Expenses
Maximum Sales Load Imposed
on Purchases........................................None
Maximum Sales Load Imposed
on Reinvested Dividends.............................None
Deferred Sales Load......................................None
Redemption Fee...........................................None
Exchange Fee.............................................None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees..........................................1.0%
12b-1 Fees...............................................None
Other Expenses After Expense Reimbursement....... 0.51%
Total Fund Operating Expenses.................... 1.51%
Example: 1 Year 3 Years
You would pay the
following expenses
on a $1,000
investment, assuming
(1) 5% annual return
and (2) redemption
at the end of each
time period.............................$ 16 $ 50
The purpose of this table is to assist investors in
understanding the various costs and expenses that an investor in
the fund will bear directly or indirectly. <D>The "Other
Expenses" incurred by the Fund would have been .72% absent
expense reimbursement by the Fund's Investment Advisor.</D> The
Example should not be considered a representation of past or
future expenses. Actual expenses may be greater or lesser than
those shown.
<PAGE>
CONDENSED FINANCIAL INFORMATION
Financial Highlights
The following table of Financial Highlights of the
Kenilworth Fund, Inc., has been audited by McGladrey & Pullen,
L.L.P. Their report dated January 8, 1997, on the Fund's
financial statements for the year ended December 31, 1996 , is
included in the Fund's Annual Report. This table should be read
in conjunction with the Fund's financial statements and related
notes and the Statement of Additional Information which may be
obtained from the Fund.
<TABLE>
<CAPTION>
For the Years ended
December 31,
1996 1995 1994 1993a
<S> <C> <C> <C> <C>
Selected Per-Share Data
Beginning Net Asset Value $11.93 $9.64 $10.31 $10.00
Income from Investment Operations
Investment Income 0.20 0.23 0.20 0.09
Expenses 0.19 0.18 0.16 0.04
Less Reimbursed Expenses (0.00) (0.01) (0.02) (0.00)
Net Expenses 0.19 0.17 0.14 0.04
Net Investment Income 0.01 0.06b 0.06b 0.05
Net Realized and Unrealized
Gain (Loss) on Investments 3.51 2.64 (0.67) 0.31
Total 3.52 2.70 (0.61) 0.36
Less Distributions
From Net Investment Income 0.01 0.06 0.06 0.05
From Net Realized Gain 0.01 0.35 0.00 0.00
Total 0.02 0.41 0.06 0.05
Ending Net Asset Value $15.43 $11.93 $9.64 $10.31
Total Return 29.48% 28.03%(5.95%)7.16%c
Ratios and Supplemental Data
Net Assets, End of Period
(in thousands) $7,222 $5,099 $3,530 $2,840
Ratio of Expenses
to Average Net Assets 1.51% 1.69%b 1.70%b 0.52%
Ratio of Net Investment Income
to Average Net Assets 0.06% 0.54%b 0.67%b 0.65%
Portfolio Turnover Rate 73.93% 82.17% 11.78% 0.00%
Average Commission Rate Paid 0.0590 0.0680 0.0679 0.0689
aJuly 1, 1993 to December 31, 1993
bNet of reimbursement of expenses by Advisor
cAnnualized
</TABLE>
<PAGE>
THE FUND
Kenilworth Fund, Inc. (the "Fund") is a no-load, open-end non-
diversified management investment company commonly called a
"mutual fund." As a no-load fund, the Fund does not impose sales
charges, 12b-1 charges, or redemption fees. The Fund was
organized as an Illinois corporation on October 24, 1988.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is long-term capital
appreciation which it seeks by investing primarily in a non-
diversified portfolio of common stocks, preferred stocks,
warrants to purchase common stocks, convertible bonds, fixed-
income obligations of corporations and the United States
government, and securities convertible into common stocks of
corporations. Although the Fund seeks to invest substantially
all its assets in common stocks, the composition of the Fund's
portfolio will vary depending upon the Adviser's perception of
current and future market and economic conditions. The Fund may,
for temporary defensive purposes and to meet its redemption
requirements, invest its assets in money market securities,
including U.S. government obligations, certificates of deposit,
bankers' acceptances, commercial paper or cash or cash
equivalents. The Fund does not intend to invest in any security
which, at the time of purchase, is not readily marketable. The
Fund does not retain securities that subsequently become
illiquid. The Fund does not intend to place emphasis on short-
term trading profits. However, when circumstances warrant,
investment securities may be sold from time to time without
regard to the length of time they have been held.
The Fund is classified as being non-diversified which means
that it may invest a relatively high percentage of its assets in
the obligations of a limited number of issuers. The Fund,
therefore, may be more susceptible than a more widely diversified
fund to any single economic, political or regulatory occurrence.
The policy of the Fund, in the hope of achieving its objective as
stated above, is, therefore, one of selective investments rather
than broad diversification. The Fund seeks only enough
diversification for adequate representation among what it
considers to be the best performing securities and to maintain
its federal non-taxable status under Sub-Chapter M of the
Internal Revenue Code.
The Fund's investment advisor expects that under normal
circumstances the Fund's anticipated portfolio turnover rate will
not exceed 50%. However, this rate should not be construed as a
limiting factor and the portfolio turnover rate may exceed 50%
when the investment advisor deems changes appropriate.
Nonetheless, the Fund will not change its investment objective of
long-term capital appreciation. The annual portfolio turnover
rate indicates changes in the Fund's portfolio. For instance, a
rate of 100% would result if all the securities in the portfolio
(excluding securities whose maturities at acquisition were one
year or less) at the beginning of an annual period had been
replaced by the end of the period. The Fund intends to limit
turnover so that realized short-term gains on securities held for
less than three months do not exceed 30% of adjusted gross income
in order to derive the benefits of favorable tax treatment
available to regulated investment companies under the Internal
Revenue Code.
The Fund is designed for investors with a long-term investment
perspective (and not with a view to playing short-term swings in
the market). Investors should be aware that up to 100% of the
Fund's portfolio may be invested in common stocks and other
equity-type securities. To the extent that the Fund's portfolio
is primarily invested in common stocks and other equity-type
securities, the Fund's net asset value may be subject to greater
fluctuation than a portfolio containing a substantial amount of
fixed income securities. There can be no assurance that the
objective of the Fund will be realized or that any income will be
earned. Nor can there be assurance that the Fund's portfolio
will not decline in value.
INVESTMENT RESTRICTIONS
The Fund has adopted certain investment restrictions which are
presented below, and which, together with the investment
objective of the Fund, cannot be changed without approval by
holders of a majority of the Fund's outstanding voting shares.
As defined in the Investment Company Act of 1940 (the "Act"),
this means the lesser of (a) 67% of the shares of the Fund at a
meeting where more than 50% of the outstanding shares are present
in person or by proxy; or (b) more than 50% of the outstanding
shares of the Fund.
Certain restrictions referred to in the foregoing paragraph
are summarized below. The Fund will not:
(1) Act as underwriter for securities of other issuers except
insofar as the Fund may be deemed an underwriter in disposing of
its own portfolio securities;
(2) Borrow money, issue senior securities, or purchase
securities on margin, but may obtain such short term credit from
banks as may be necessary for clearance of purchases and sales of
securities for temporary or emergency purposes in an amount not
exceeding 5% of the value of its total assets;
(3) Invest more than 25% of its assets at the time of purchase
in any one industry;
(4) Invest in securities of other investment companies except as
part of a merger, consolidation, or purchase of assets approved
by the Fund's shareholders or by purchases with no more than 10%
of the Fund's assets in the open market involving only customary
broker's commissions;
(5) Make investments in commodities, commodity contracts or real
estate although the Fund may purchase and sell securities of
companies which deal in real estate or interests therein;
(6) The Fund may not purchase or retain securities of any issuer
if those officers and directors of the Fund or its Investment
Adviser owning individually more than 1/2 of 1% of any class of
security collectively own more than 5% of such class of
securities of such issuer;
(7) Pledge, mortgage, hypothecate or otherwise encumber any of
its assets, except as a temporary measure for extraordinary or
emergency purposes, and then not in excess of 15% of its assets
taken at cost;
(8) Invest in restricted, illiquid or other securities without
readily available market quotations; and
(9) Purchase the securities of any issuer if, at the time of
acquisition it would own more than 10% of the outstanding voting
securities of any one company;
(10) Invest in companies for the primary purpose of acquiring
control of management thereof;
(11) Purchase securities on margin, except such short-term
credits as are necessary for the clearance of transactions and
make short sales of securities (except short sales against the
box);
(12) Make loans, except that this restriction shall not prohibit
the purchase and holding of a portion of an issue of publicly
distributed debt securities;
(13) Purchase securities of any company having less than three
years continuous operation (including operations of any
predecessors) if such purchase would cause the value of the
Fund's investments in all such companies to exceed 5% of the
value of its assets;
(14) Invest more than 5% of its total assets in warrants, whether
or not the warrants are listed on the New York Stock Exchange, or
more than 2% of the value of the assets of the Fund in warrants
which are not listed on those exchanges. Warrants acquired in
units or attached to securities are not included in this
restriction.
<PAGE>
MANAGEMENT OF THE FUND
Directors
The Fund's Board of Directors has overall responsibility for
the business and affairs of the Fund in accordance with the laws
of the State of Illinois governing the responsibilities of
directors. Officers and Directors of the Fund, together with
their addresses, and principal occupations during the past five
years are:
<TABLE>
<CAPTION> Principal
Occupations
Past Five
Name and Address Position Years
<C> <C> <C>
Mohini C. Pai President Vice-President
One First National Interested Institutional
Plaza Director Portfolio Svcs.
Chicago, IL. Chicago, IL
B. Padmanabha Pai Vice-President President
One First National Interested Institutional
Plaza Director Portfolio Svcs.
Chicago, IL. Chicago, IL
Savitri P.Pai, Secretary/Treasurer Attorney-at-Law
One First National Interested Chicago, IL
Plaza Director
Chicago, IL.
Kirtna Pai Interested Vice-
1585 Broadway Director President ,
New York, NY. Morgan Stanley
& Company, Inc.
New York, NY
Dr. Larry A. Non-Interested Professor of
Sjaastad Director Economics,
Department of University of
Economics Chicago, IL
University of
Chicago
Chicago, IL.
Mr. B.P. Pai and Mrs. Mohini C. Pai are husband and wife. Mr.
B.P. Pai and Mrs. Mohini C. Pai are the parents of Ms. Savitri P.
Pai and Ms. Kirtna Pai, who are sisters. Additionally, at this
time the Fund does not make payments to its Directors. All
payments made to employees of the Fund who are also Directors of
the Fund are paid by the Adviser.
</TABLE>
Investment Adviser
The Fund has entered into an Investment Advisory Agreement
("Advisory Agreement") with Institutional Portfolio Services,
Ltd., One First National Plaza, Suite 2594, Chicago, Illinois
60603 (the "Adviser"). Mr. B. Padmanabha Pai is the sole
shareholder, principal executive officer and director of the
Adviser. <D>From 1969 to 1978, the Adviser performed investment
advisory services for various clients as a sole-proprietor. On
July 26, 1978, the Adviser incorporated itself as an Illinois
corporation. While the Adviser has not served as an investment
adviser to an investment company in the past, it</D>Since 1969,
the investment advisor has served as an investment adviser to
wealthy individuals and corporate pension plans. The Adviser is
registered as an investment adviser with the Securities and
Exchange Commission under the Investment Advisers Act of 1940.
The Advisory Agreement provides that the Adviser shall manage
the Fund's investments and shall determine the Fund's portfolio
transactions and shall be responsible for overall management of
the Fund's business affairs, subject to the supervision of the
Board of Directors. As compensation for its services, the Fund
pays to the Adviser a monthly advisory fee at the annual rate of
1% per year on the net assets of the Fund. All fees are computed
on the average daily closing net asset value of the Fund and are
payable monthly. The fee paid to the investment adviser is
higher than that paid by most investment companies.
Under the Advisory Agreement, the Adviser provides the Fund
with investment advisory services, office space and personnel.
The Adviser also pays the salaries of those of the Fund's
employees, officers, and directors who are also employees,
officers, and/or directors of the Adviser. Additionally, the
Advisor pays all other executive salaries and executive expenses,
charges for all clerical services relating to the Fund's
investments and all promotional expenses of the Fund, including
the printing and mailing of the prospectus to other than current
shareholders.
The Fund pays all of its other costs and expenses including
interest, taxes, salaries of its employees, fees of directors who
are not employees, officers or directors of the Adviser,
administrative expenses related directly to the issuance and
redemption of shares (such as expenses of registering or
qualifying shares for sale, charges of custodians, transfer
agents, and registrars), costs of printing and mailing reports
and notices to shareholders, charges for auditing services and
legal services, and other fees and commissions of every kind not
expressly assumed by the Adviser. (See section below titled:
"Administrative & Management Services"). The Fund's expenses are
limited, however, by an excess reimbursement provision in the
Advisory Agreement. If the annual operating and management
expenses (excluding taxes and interest) exceeds 1.7% of the
average net assets of the Fund, the Advisory Agreement requires
the Adviser to reimburse the Fund for any such excess on a
yearly basis.
Administrative & Management Services
The Fund has entered into an Administrative & Management
Services Agreement (the "Administrative Services Agreement")
with the Fund's investment adviser, Institutional Portfolio
Services, Ltd., ("IPS"). The Administrative Services Agreement
requires IPS to provide recordkeeping, computer software and
development, and other operations management services for the
Fund. IPS will be paid the sum of $30,000 per year. As
stated in the above-mentioned section titled "Investment
Adviser", if the Fund's annual operating and management expenses
exceed 1.7% of the average net assets of the Fund, the Fund's
investment adviser will reimburse the Fund for any excess on a
yearly basis.
Custodian & Transfer Agent
The Fund acts as its own custodian and transfer agent.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Fund is determined at
<D>as soon as possible after </D>the close of trading on the New
York Stock Exchange (currently 4:00 P.M., Eastern Standard Time)
on days in which the Exchange is open for business, except that
the net asset value will not be computed on a day in which no
orders to purchase shares were received and no shares were
tendered for redemption. The net asset value per share is
calculated by adding the value of all securities, cash or other
assets, subtracting liabilities, and dividing the remainder by
the number of shares outstanding.
Each security traded on a national stock exchange is valued at
its last sale price on that exchange on the day of valuation or,
if there are no sales that day, at the latest bid quotation.
Each over-the-counter security for which the last sale price on
the day of valuation is available from NASDAQ is valued at that
price.
All other over-the-counter securities for which reliable
quotations are available are valued at the latest bid quotation.
Other assets and securities are valued at a fair value determined
in good faith by the Board of Directors.
HOW TO PURCHASE FUND SHARES
An initial purchase of shares of the Fund may be made by
sending a properly completed Share Purchase Application to the
Fund. The minimum initial purchase of shares is $10,000.
Related party accounts and retirement accounts require a
minimum initial purchase of $5,000. Related party accounts are
defined as those accounts opened with the Fund under the same tax
identification number, or those accounts opened by a family
member or relative of an existing shareholder. The offering
price for the Fund's shares is equal to the net asset value per
share (determined in the manner described under "Determination of
Net Asset Value") as determined as soon as possible after the
close of the New York Stock Exchange on the day that the purchase
order is received and accepted by the Fund. Orders received by
the Fund after the close of the New York Stock Exchange will be
confirmed at the net asset value determined at the close of the
New York Stock Exchange on the next business day. All purchases
must be made in U.S. dollars and checks must be drawn on U.S.
banks. No cash will be accepted.
Whole shares may be purchased from the Fund. No fractional
shares will be issued. Unless otherwise requested by the client,
any residual cash resulting from the purchase or sale of shares
will remain in the Fund until the shareholder's next transaction.
The Fund maintains a book-entry-only system with regard to Fund
shares. Fund share certificates will not be issued.
The minimums for subsequent purchases do not apply to shares
purchased pursuant to the reinvestment of income dividends and
capital gain distributions. The minimums may be changed at any
time. Shareholders will be given at least thirty days notice of
any increase in the minimums.
All orders to purchase shares are subject to the Fund's
acceptance and are not binding until so accepted. All orders to
purchase shares that are accepted will be processed at the net
asset value next determined after receipt of the purchase order
as provided herein regardless of the date of acceptance. The
Fund may decline to accept a purchase order when in the judgment
of management the acceptance of an order is not in the best
interests of existing shareholders.
HOW TO REDEEM FUND SHARES
Shareholders of the Fund may request redemption of their
shares at any time as provided herein. The redemption price
shall be equal to the net asset value next determined after
receipt by the Fund's transfer agent of a request for redemption
submitted in proper form. See "Determination of Net Asset
Value." The value of the shares on redemption may be more or
less than their original cost, depending upon the then-current
market value of the Fund's investments.
Shares may be redeemed by submitting a written request for
redemption to the Fund. A written redemption request to the
Fund, as transfer agent, must specify (i) the name of the Fund,
(ii) the dollar amount or specific number of shares to be
redeemed, and (iii) the shareholder's name and account number.
The redemption request must be signed by each registered owner
exactly as the shares are registered. The Fund, at its
discretion, may require a signature guarantee for redemption from
a bank, trust company, savings and loan association, a member of
a national stock exchange for redemption, or any other financial
institution authorized to guarantee signatures. Requests for
redemption by telephone or telegram and requests that are subject
to any special conditions or that specify an effective date or
other than as provided herein cannot be honored.
For accounts registered in the name of corporations or
associations, the redemption request must include a corporate
resolution certified by a duly authorized officer of the
corporation or association, with such officer's signature
guaranteed. For accounts registered in the name of a trust, the
redemption request must be signed by each trustee registered on
the account with each signature guaranteed. Questions with
respect to the proper form of redemption requests should be
directed to the Transfer Agent at (312) 236-5388.
A redemption request simultaneously received with an address
change must be accompanied by a signature guarantee. The
guarantor of a signature must be a national bank or trust
company, a member of the Federal Reserve System or a member firm
of a national securities exchange or any other financial
institution authorized to guarantee signatures. The Transfer
Agent reserves the right to reject the signature guarantee of an
institution if such rejection would be in the best interests of
the Fund and its shareholders. Notwithstanding the above,
signature guarantees will be required where there appears to be
a pattern of redemptions designed to circumvent the signature
guarantee requirement, or where the Fund has other reason to
believe that this requirement would be in the best interests of
the Fund and its shareholders.
The proceeds of redemptions will ordinarily be mailed within
seven business days after receipt of a properly completed
redemption request. It is mandatory that the Fund redeem shares
upon the proper request of a shareholder. When shares are
purchased by check, the Fund reserves the right to delay
redemption of shares until it is satisfied that the investor's
check used to purchase shares has cleared. Local checks
generally are collected in three business days and non-local
checks may take longer in certain circumstances.
The right of redemption may be suspended during any period
when: (a) trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission, or such
Exchange is closed for other than weekends and holidays; (b) the
Securities and Exchange Commission has by order permitted such
suspension; or (c) an emergency as determined by the Securities
and Exchange Commission exists, making disposal of portfolio
securities or valuation of net assets of the Fund not reasonably
practicable. A shareholder's account may be terminated by the
Fund if, at the time of any transfer or redemption of shares of
the Fund in the account at the current offering price falls below
$1000. The Fund will notify a shareholder of its intention to
terminate the account and provide the shareholder with not less
than thirty days to make additional investments.
Questions regarding redemptions and the procedures that must
be followed should be directed to the Fund as Transfer Agent, One
First National Plaza, Suite 2594, Chicago, Illinois 60603, (312)
236-5388.
SHAREHOLDER PLANS
Dividend Reinvestment Plan
Unless a shareholder elects otherwise by notice to the Fund,
all income dividends and all capital gains distributions payable
on shares of the Fund will be reinvested in additional shares of
the Fund at the net asset value in effect on the dividend or
distribution payment date. The Fund acts as the shareholder's
agent to reinvest dividends and distributions in additional
shares and hold for his/her account the additional full shares so
acquired. Any surplus over whole shares will be paid in cash. A
shareholder may at any time change his/her election as to whether
to receive his/her dividends and distributions in cash or have
them reinvested by giving written notice of such change of
election to the Fund. Such change of election applies to
dividends and distributions the record dates of which fall on or
after the date that the Fund receives the written notice.
RETIREMENT ACCOUNTS
Shares of the Fund may be purchased or redeemed for
retirement accounts through New York Stock Exchange registered
brokerage firms having a relationship with the Fund. Typically,
a shareholder will elect to custody his or her retirement account
at a brokerage firm. Upon the shareholder's direction to
purchase shares of the Fund for his or her retirement account,
the brokerage firm will effect a written order for the purchase
of Fund shares. Any such purchase or redemption will not be
effective until the order or request is received by the Fund.
Retirement account holdings, including the Fund, will appear
monthly on the retirement account statement issued directly by
the relevant brokerage firm.
The minimum initial investment for retirement accounts is
$5,000 and $1,000 for subsequent purchases. There are no
additional Fund charges for retirement accounts. Brokerage firms
usually charge a fixed yearly fee for the custody and
administration of retirement accounts.
DISTRIBUTIONS AND TAXES
Distributions
Dividends from the Fund's net investment income as well as
distributions designated as capital gains will ordinarily be
declared and paid annually in such a manner as to avoid paying
income tax on the Fund's net investment income and net realized
capital gains or being subject to a federal excise tax on
undistributed net investment income and net realized capital
gains. Such distributions and dividends will typically be made
in December. As current income is not an objective of the Fund,
the amount of dividends will likely be small. There is no fixed
dividend rate and there can be no assurance as to the payment of
any dividends or the realization of any gains.
Taxes
The Fund intends to maintain its qualification as a
"regulated investment company" under the Internal Revenue Code by
distributing as dividends not less than 90% of its taxable income
and by continuing to comply with all other requirements of
Subchapter M of the Code. If the Fund qualifies, the Fund will
not be liable for Federal income taxes on amounts paid by it as
dividends and distributions.
For Federal income tax purposes, dividends paid by the Fund
and distributions from short-term capital gains, whether received
in cash or reinvested in additional shares, are taxable as
ordinary income. Distributions paid by the Fund from long-term
capital gains whether received in cash or reinvested in
additional shares, are taxable as long-term capital gains,
regardless of the length of time you have owned shares in the
Fund. The distributions are taxable whether you receive them in
cash or in additional shares. If you are not required to pay tax
on your income, you will not be required to pay Federal income
taxes on the amounts distributed to you. Dividends and capital
gain distributions declared in December and paid the following
January will be taxable in the year they are declared.
The Fund is required to withhold Federal income tax at a
rate of 31% ("backup withholding") from dividend payments,
distributions and redemption proceeds if a shareholder fails to
furnish the Fund with his/her social security or other tax
identification number ("TIN") and certify under penalty of
perjury that such number is correct and that he/she is not
subject to backup withholding due to the underreporting of
income. The certification form is included as part of the Share
Purchase Application and should be completed when the account is
established.
If you do not have a tax identification number, you should
indicate on the application form whether a number has been
applied for. The Fund may be required to backup withhold if a
certified TIN is not delivered to the Fund within 7 days.
Distributions by the Fund may subject an investor to state
and local taxes on the distributions, depending on the laws of a
shareholder's home state and locality. Because this section is
not intended to be a full discussion of present or proposed
Federal income tax law and its effect on shareholders,
shareholders are urged to consult their own tax adviser.
CAPITAL STOCK
The Fund is a corporation organized under the laws of the State
of Illinois and was incorporated on October 24, 1988. The Fund
has 10,000,000 shares of authorized capital stock. Each share
has one vote and all shares participate equally in dividends and
other distributions by the Fund and in the residual assets of the
Fund in the event of liquidation. Shares of the Fund have no
preemptive rights and no conversion or subscription rights.
Shareholders are entitled to redeem shares as set forth under
"How to Redeem Shares." The investor will be the record owner of
all shares in his account with full shareholder rights.
SHAREHOLDER REPORTS AND MEETINGS
The Fund will provide to shareholders annual reports
containing certified financial statements. Additionally,
shareholders will receive other periodic reports, at least semi-
annually, containing unaudited financial statements.
Shareholders will receive a confirmation after each transaction
affecting his or her account with the Fund. The annual meeting
of the shareholders of the Fund shall be held in the month of
March. Any inquiries concerning the Fund may be made by
telephone (312) 236-5388, or by writing to the Fund at One First
National Plaza, Suite 2594, Chicago, Illinois 60603.
<PAGE>
KENILWORTH FUND, INC.
SHARE PURCHASE APPLICATION
Mail To: Minimum Investments:
Kenilworth Fund, Inc. Initial: $10,000.00
One First National Plaza Retirement/Related Party: $5,000.00
Suite 2594 Subsequent: $1,000.00
Chicago, IL 60603
All applications are accepted in Illinois and under Illinois
laws.
#1...Registration of Shares
Owner (Individual, Corporation, Trustee or Joint Owner
Custodian)
Social Security Number
Address
Daytime Telephone Number
City State Zip
If more than one owner is listed above, then shares will be
registered as joint tenants with rights of survivorship
and not as tenants in common, unless otherwise instructed.
#2...Investment Information
This investment represents (a)an:
___ Initial purchase payable to: Kenilworth Fund, Inc.
Amount $__________
___ Subsequent purchase payable to Kenilworth Fund, Inc.
Amount $__________
#3...Dividend Option
All income dividends and capital gains distributions will be
reinvested in additional shares as stated in the prospectus
unless the box below is checked.
___ Please pay all income dividends and capital gains
distributions in cash.
I/We understand that certificates for shares purchased
(either initial or reinvested) will not be issued.
#4...Taxpayer Obligations W-9
I am a U.S. citizen ___ Yes ___ No
The Internal Revenue Service (IRS) requires each taxpayer
to provide a Social Security or Taxpayer Identification Number
and to make the following certifications:
I certify under penalty of perjury
that:
1) The Social Security or other Tax I.D. number stated
above is correct.
2) I am not subject to backup withholding because:*
a. The IRS has not informed me that I am subject
to backup withholding.
b. The IRS has notified me that I am no longer
subject to backup withholding.
* If this statement is not true and you
are subject to backup withholding,
strike out Section 2
#5...Signature and Agreement
I/We, the undersigned, have received a copy of the current
prospectus of the Kenilworth Fund, Inc., and are purchasing fund
shares in accordance with its provisions. I/We further certify
that the undersigned is of legal age and has full legal capacity
to make this purchase. The purchase price shall be the net asset
value next determined following receipt of the application by the
Fund, if the application is accepted. This application cannot be
processed unless accompanied by payment. The Internal Revenue
Service does not require your consent to any provision of this
document other than the certifications required to avoid backup
withholding.
Signature of Owner Date
Signature of Joint Owner (if any) Date
<PAGE>
KENILWORTH FUND, INC.
One First National Plaza
Suite 2594
Chicago, Illinois 60603
(312) 235-5388
PART B
STATEMENT OF ADDITIONAL INFORMATION
Dated: May 1, 1997
This Statement of Additional Information is not a prospectus and
should be read in conjunction with the Prospectus of Kenilworth
Fund, Inc., dated May 1, 1997 , and any supplement
thereto.
A copy of the Prospectus may be obtained without charge from the
Kenilworth Fund, Inc., at the address and telephone number set
forth above.
No person has been authorized to give
any information or to make any representations other than those
contained in this Statement of Additional Information and the
Prospectus dated May 1, 1997 , and, if given or made,
such information or representations may not be relied upon as
having been authorized by the Kenilworth Fund, Inc.
<PAGE>
TABLE OF CONTENTS
THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INVESTMENT OBJECTIVE AND POLICIES. . . . . . . . . . . . . . 3
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . 3
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . 5
Directors . . . . . . . . . . . . . . . . . . 5
Investment Adviser. . . . . . . . . . . . . . 5
Administrative & Management Services. . . . . 6
Custodian & Transfer Agent . . . . . . . . . 6
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . .. 6
BROKERAGE ALLOCATION . . . . . . . . . . . . . . . . . . . . . 6
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . 7
HOW TO PURCHASE FUND SHARES . . . . . . . . . . . . . . . . . 7
HOW TO REDEEM FUND SHARES. . . . . . . . . . . . . . . . . . . 7
SHAREHOLDER PLANS. . . . . . . . . . . . . . . . . . . . . . . 8
Dividend Reinvestment Plan. . . . . . . . . . . 8
RETIREMENT ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . 9
DISTRIBUTIONS AND TAXES. . . . . . . . . . . . . . . . . . . . 9
Distributions . . . . . . . . . . . . . . . . . 9
Taxes . . . . . . . . . . . . . . . . . . . . . 9
CAPITAL STOCK. . . . . . . . . . . . . . . . . . . . . . . . . 9
SHAREHOLDER REPORTS AND MEETINGS . . . . . . . . . . . . . . . 10
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . 11
<PAGE>
THE FUND
Kenilworth Fund, Inc. (the "Fund") is a
no-load, open-end, non-diversified management investment
company commonly called a "mutual fund." As a no-load fund, the
Fund does not impose sales charges, 12b-1 charges, or redemption
fees. The Fund was organized as an Illinois corporation on
October 24, 1988.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is long-term capital appreciation
which it seeks by investing primarily in a non-diversified
portfolio of common stocks, preferred stocks, warrants to
purchase
common stocks, convertible bonds, fixed-income obligations of
corporations and the United States government, and securities
convertible into common stocks of corporations. Although the
Fund seeks to invest substantially all its assets in common
stocks, the composition of the Fund's portfolio will vary
depending upon the Adviser's perception of current and future
market and economic conditions. The Fund may, for temporary
defensive purposes and to meet its redemption requirements,
invest some of its assets in money market securities, including
U.S. government obligations, certificates of deposit, bankers'
acceptances, commercial paper or cash or cash equivalents. The
Fund does not intend to invest in any security which, at the time
of purchase, is not readily marketable. The Fund does not retain
securities that subsequently become illiquid. The Fund does not
intend to place emphasis on short-term trading profits. However,
when circumstances warrant, investment securities may be sold
from time to time without regard to the length of time they have
been held.
The Fund's investment advisor expects that under normal
circumstances its the Fund's anticipated portfolio turnover rate
will not exceed 50%. However, this rate should not be construed
as a limiting factor and the portfolio turnover rate may exceed
50% when the investment advisor deems changes appropriate.
Nonetheless, the Fund will not change its investment objective of
long-term capital appreciation. The annual portfolio turnover
rate indicates changes in the Fund's portfolio. For instance, a
rate of 100% would result if all the securities in the portfolio
(excluding securities whose maturities at acquisition were one
year or less) at the beginning of an annual period had been
replaced by the end of the period. The Fund intends to limit
turnover so that realized short-term gains on securities held for
less than three months do not exceed 30% of adjusted gross income
in order to derive the benefits of favorable tax treatment
available to regulated investment companies under the Internal
Revenue Code.
The Fund is designed for investors with a long-term investment
perspective (and not with a view to playing short-term swings in
the market). Investors should be aware that up to 100% of the
Fund's portfolio may be invested in common stocks and other
equity-type securities. To the extent that the Fund's portfolio
is primarily invested in common stocks and other equity-type
securities, the Fund's net asset value may be subject to greater
fluctuation than a portfolio containing a substantial amount of
fixed income securities. There can be no assurance that the
objective of the Fund will be realized or that any income will be
earned. Nor can there be assurance that the Fund's portfolio
will not decline in value.
INVESTMENT RESTRICTIONS
The Fund has adopted certain investment restrictions which are
presented below, and which, together with the investment
objective of the Fund, cannot be changed without approval by
holders of a majority of the Fund's outstanding voting shares.
As defined in the Investment Company Act of 1940, this means the
lesser of (a) 67% of the shares of the Fund at a meeting where
more than 50% of the outstanding shares are present in person or
by proxy; or (b) more than 50% of the outstanding shares of the
Fund.
Certain restrictions referred to in the foregoing paragraph are
summarized below. The Fund will not:
(1) Act as underwriter for securities of other issuers except
insofar as the Fund may be deemed an underwriter in disposing of
its own portfolio securities;
(2) Borrow money or purchase securities on margin, but may
obtain such short term credit from banks as may be necessary for
clearance of purchases and sales of securities for temporary or
emergency purposes in an amount not exceeding 5% of the value of
its total assets;
(3) Invest more than 25% of its assets at the time of purchase in
any one industry;
(4) Invest in securities of other investment companies except as
part of a merger, consolidation, or purchase of assets approved
by the Fund's shareholders or by purchases with no more than 10%
of the Fund's assets in the open market involving only customary
broker's commissions;
(5) Make investments in commodities, commodity contracts or real
estate although the Fund may purchase and sell securities of
companies which deal in real estate or interests therein;
(6) The Fund may not purchase or retain securities of any issuer
if those officers and directors of the Fund or its Investment
Adviser owning individually more than 1/2 of 1% of any class of
security collectively own more than 5% of such class of
securities of such issuer;
(7) Pledge, mortgage, hypothecate or otherwise encumber any of
its assets, except as a temporary measure for extraordinary or
emergency purposes, and then not in excess of 15% of its assets
taken at cost;
(8) Invest in restricted, illiquid or other securities without
readily available market quotations; and
(9) Purchase the securities of any issuer if, at the time of
acquisition it would own more than 10% of the outstanding voting
securities of any one company;
(10) Invest in companies for the primary purpose of acquiring
control of management thereof;
(11) Purchase securities on margin, except such short-term
credits as are necessary for the clearance of transactions and
make short sales of securities (except short sales against the
box);
(12) Make loans, except that this restriction shall not prohibit
the purchase and holding of a portion of an issue of publicly
distributed debt securities;
(13) Purchase securities of any company having less than three
years continuous operation (including operations of any
predecessors) if such purchase would cause the value of the
Fund's investments in all such companies to exceed 5% of the
value of its assets;
(14) Invest more than 5% of its total assets in warrants,
whether or not the warrants are listed on the New York Stock
Exchange, or more than 2% of the value of the assets of the Fund
in warrants which are not listed on those exchanges. Warrants
acquired in units or attached to securities are not included in
this restriction.
<PAGE>
MANAGEMENT OF THE FUND
Directors
The Fund's Board of Directors has overall responsibility for
the business and affairs of the Fund in accordance with the laws
of the State of Illinois governing the responsibilities of
directors. Officers and Directors of the Fund, together with
their addresses, and principal occupations during the past five
years are:
<TABLE>
<CAPTION>
Principal
Occupations
Past Five
Name and Address Position Years
<C> <C> <C>
Mohini C. Pai President Vice President
One First National Interested IPS, Ltd.
Plaza Director Chicago, IL
Chicago, IL.
B. Padmanabha Pai Vice-President President
One First National Interested IPS, Ltd.
Plaza Director Chicago, IL
Chicago, IL.
Savitri P.Pai, Secretary/Treasurer Attorney-at-Law
One First National Interested Chicago, IL
Plaza Director
Chicago, IL.
Kirtna Pai Interested Vice-President
1585 Broadway Director Morgan Stanley
New York, NY & Company, Inc.
New York, NY
Dr. Larry A. Non-Interested Professor of
Sjaastad Director Economics,
Department of University of
Economics Chicago, IL
University of
Chicago
Chicago, IL.
Mr. B.P. Pai and Mrs. Mohini C. Pai are husband and wife. Mr.
B.P. Pai and Mrs. Mohini C. Pai are the parents of Ms. Savitri P.
Pai and Ms. Kirtna Pai, who are sisters. Additionally, at this
time the Fund does not make payments to its Directors. All
payments made to employees of the Fund who are also Directors of
the Fund are paid by the Adviser.
</TABLE>
Investment Adviser
The Fund has entered into an Investment Advisory Agreement
("Advisory Agreement") with Institutional Portfolio Services,
Ltd., One First National Plaza, Suite 2594, Chicago, Illinois
60603 (the "Adviser"). Mr. B. Padmanabha Pai is the sole
shareholder, principal executive officer and director of the
Adviser. <D>From 1969 to 1978, the Adviser performed investment
advisory services for various clients as a sole-proprietor. On
July 26, 1978, the Adviser incorporated itself as an Illinois
corporation. While the Adviser has not served as an investment
adviser to an investment company in the past, it</D>Since 1969,
the investment advisor has served as an investment advisor to
wealthy individuals and corporate pension plans on an individual
account basis for the past 27 years. The Adviser is registered
as an investment adviser with the Securities and Exchange
Commission under the Investment Advisers Act of 1940.
The Advisory Agreement provides that the Adviser shall
manage the Fund's investments and shall determine the Fund's
portfolio transactions and shall be responsible for overall
management of the Fund's business affairs, subject to the
supervision of the Board of Directors. As compensation for its
services, the Fund pays to the Adviser a monthly advisory fee at
the annual rate of 1% per year on the net assets of the Fund.
All fees are computed on the average daily closing net asset
value of the Fund and are payable monthly. The fee paid to the
investment adviser is higher than that paid by most investment
companies.
For the fiscal years ending December 31, 1993, 1994, 1995,
and 1996, the Adviser was paid $5,992, $31,074, $43,866, and
$59,220 respectively. The Adviser waived the advisory fee
for the Fund's first three months in operation to protect and
maintain shareholder capital value during the early start up
period.
Under the Advisory Agreement, the Adviser provides the Fund
with investment advisory services, office space and personnel.
The Adviser also pays the salaries of those of the Fund's
employees, officers and directors who are also employees,
officers, and/or directors of the Adviser. Additionally, the
Adviser pays all other executive salaries and executive expenses,
charges for all clerical services relating to the Fund's
investments and all promotional expenses of the Fund, including
the printing and mailing of the prospectus to other than current
shareholders.
The Fund pays all of its other costs and expenses
including interest, taxes, salaries of its employees, fees of
directors who are not employees, officers, or directors of the
Adviser, administrative expenses related directly to the issuance
and redemption of shares (such as expenses of registering or
qualifying shares for sale, charges of custodians, transfer
agents, and registrars), costs of printing and mailing reports
and notices to shareholders, charges for auditing services and
legal services, and other fees and commissions of every kind not
expressly assumed by the Adviser. (See section below titled:
"Administrative & Management Services"). The Funds expenses are
limited, however, by an excess reimbursement provision in the
Advisory Agreement. If the annual operating and management
expenses (excluding taxes and interest) exceeds 1.7% of the
average net assets of the Fund, the Advisory Agreement requires
the Adviser to reimburse the Fund for any such excess on a
monthly basis.
Administrative & Management Services
The Fund has entered into an Administrative & Management
Services Agreement (the "Administrative Services Agreement")
with the Fund's investment adviser, Institutional Portfolio
Services, Ltd., ("IPS"). The Administrative Services Agreement
requires IPS to provide recordkeeping, computer software and
development and other operations management services for the
Fund. IPS will be paid the sum of $30,000 per year. As
stated in the above-mentioned section titled: "Investment
Adviser", if the Fund's annual operating and management expenses
exceed 1.7% of the average net assets of the Fund, the Fund's
investment adviser will reimburse the Fund for any excess on a
monthly basis.
Custodian & Transfer Agent
The Fund acts as its own custodian and transfer agent. The
Fund will comply with all provisions of Rule 17f-2 of the Act in
regard to self-custodianship. Specifically, there will be three
independent audits annually with at least two of the audits
unannounced.
PRINCIPAL SHAREHOLDERS
As of April 25, 1997, the following persons owned of
record 5 percent or more of the Fund's shares outstanding:
(1) Marjorie Lindsay Remainder Trust, P.O. Box 7127
Indian Lake Estate, FL (8.29%); (2) Shirley Lindsay Trust,
P.O.Box 7127, Indian Lake Estate, FL (10.38%); (3) B.P. Pai, One
First National Plaza, Chicago, IL (7.60%); (4) Institutional
Portfolio Services, Ltd., One First National Plaza, Chicago, IL
(6.69%).
All directors and officers of the Fund, as a group, own
133,371 shares beneficially, directly and/or indirectly or
26.65% of the Fund's total shares outstanding.
BROKERAGE ALLOCATION
The Fund requires all brokers to effect transactions in
portfolio securities in such a manner as to get prompt execution
of the orders at the most favorable price. The Fund places all
orders for purchase and sale of its portfolio securities through
the Fund President who is answerable to the Fund Board of
Directors. The President may select brokers who, in addition to
meeting the primary requirements of execution and price, have
furnished statistical or other factual information and services,
which, in the opinion of management, are helpful or necessary to
the Fund's normal operations. Those services may include
economic studies, industry studies, security analyses and
reports, sales literature and statistical devices furnished
either directly to the Fund or to the Adviser. No effort is made
in any given circumstance to determine the value of these
materials or services or the amount they might have reduced
expenses of the Adviser.
Other than set forth above, the Fund has no fixed policy,
formula, method or criteria which it uses in allocating brokerage
business to brokers furnishing these materials and services. The
Board of Directors evaluates and reviews the reasonableness of
brokerage commissions paid semiannually. For the fiscal
years ending December 31, <D>1993</D>, 1994, 1995 and 1996 the
Fund paid <D>$3,253,</D> $3,780, $12,263 and $15,298
respectively, in brokerage commissions. <D>Trading in 1995
increased
significantly from prior years as a result of a strong market
environment.</D>
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the
Fund is determined at <D>as soon as possible after</D> the close
of trading on the New York Stock Exchange (currently 4:00 P.M.,
Eastern Standard Time) on days in which the Exchange is open for
business, except that the net asset value will not be
computed on a day in which no orders to purchase shares were
received and no shares were tendered for redemption. The net
asset value per share is calculated by adding the value of all
securities, cash or other assets, subtracting liabilities, and
dividing the remainder by the number of shares outstanding.
Each security traded on a national stock exchange is valued
at its last sale price on that exchange on the day of valuation
or, if there are no sales that day, at the latest bid quotation.
Each over-the-counter security for which the last sale price on
the day of valuation is available from NASDAQ is valued at that
price.
All other over-the-counter securities for which reliable
quotations are available are valued at the latest bid
quotation. Other assets and securities are valued at a fair
value determined in good faith by the Board of Directors.
HOW TO PURCHASE FUND SHARES
An initial purchase of shares of the Fund may be made by
sending a properly completed Share Purchase Application to the
Fund. The minimum initial purchase of shares is $10,000.
Related party accounts and retirement accounts require a minimum
initial purchase of $5,000. Related party accounts are defined
as those accounts opened with the Fund under the same tax
identification number, or those accounts opened by a family
member or relative of an existing shareholder. The offering price
for the Fund's shares is equal to the net asset value per share
(determined in the manner described under "Determination of Net
Asset Value") as determined as soon as possible after the close
of the New York Stock Exchange on the day that the purchase order
is received and accepted by the Fund. Orders received by the
Fund after the close of the New York Stock Exchange will be
confirmed at the net asset value determined at the close of the
New York Stock Exchange on the next business day. All purchases
must be made in U.S. dollars and checks must be drawn on U.S.
banks. No cash will be accepted.
Purchases subsequent to the initial purchase may be made by
mail to the address given in the Prospectus. Minimum subsequent
purchases of shares is $1,000.
Whole shares may be purchased from the Fund. No fractional
shares will be issued. Unless otherwise requested by the client,
any residual cash resulting from the purchase or sale of shares
will remain in the Fund until the shareholder's next transaction.
The Fund maintains a book-entry-only system with regard to
Fund shares. Fund share certificates will not be issued.
The minimums for subsequent purchases do not apply to shares
purchased pursuant to the reinvestment of income dividends and
capital gain distributions. The minimums may be changed at any
time. Shareholders will be given at least thirty days notice of
any increase in the minimums.
All orders to purchase shares are subject to the Fund's
acceptance and are not binding until so accepted. All orders to
purchase shares that are accepted will be processed at the net
asset value next determined after receipt of the purchase order
as provided herein regardless of the date of acceptance. The
Fund may decline to accept a purchase order when in the judgment
of management the acceptance of an order is not in the
best interests of existing shareholders.
HOW TO REDEEM FUND SHARES
Shareholders of the Fund may request redemption of their
shares at any time as provided herein. The redemption price
shall be equal to the net asset value next determined after
receipt by the Fund's transfer agent of a request for redemption
submitted in proper form. See "Determination of Net Asset
Value." The value of the shares on redemption may be more or
less than their original cost, depending upon the then-
current market value of the Fund's investments.
Shares may be redeemed by submitting a written request for
redemption to the Fund. A written redemption request to the
Fund, as transfer agent, must specify (i) the name of the Fund,
(ii) the dollar amount or specific number of shares to be
redeemed, and (iii) the shareholder's name and account number.
The redemption request must be signed by each registered owner
exactly as the shares are registered. The Fund, at its
discretion, may require a signature guarantee for redemption from
a bank, trust company, savings and loan association, a member of
a national stock exchange, or any other financial institution
authorized to guarantee signatures. Requests for redemption by
telephone or telegram and requests that are subject to any
special conditions or that specify an effective date or other
than as provided herein cannot be honored.
For accounts registered in the name of corporations or
associations, the redemption request must include a corporate
resolution certified by a duly authorized officer of the
corporation or association, with such officer's signature
guaranteed. For accounts registered in the name of a trust, the
redemption request must be signed by each trustee registered on
the account with each signature guaranteed. Questions with
respect to the proper form of redemption requests should be
directed to the Transfer Agent at (312) 236-5388.
A redemption request simultaneously received with an address
change must be accompanied by a signature guarantee. The
guarantor of a signature must be a national bank or trust
company, a member of the Federal Reserve System or a member firm
of a national securities exchange or any other financial
institution authorized to guarantee signatures. The Transfer
Agent reserves the right to reject the signature guarantee of an
institution if such rejection would be in the best interests of
the Fund and its shareholders. Notwithstanding the above,
signature guarantees will be required where there appears to be a
pattern of redemptions designed to circumvent the signature
guarantee requirement, or where the Fund has other reason to
believe that this requirement would be in the best interests of
the Fund and its shareholders.
The proceeds of redemptions will ordinarily be mailed within
seven business days after receipt of a properly completed
redemption request. It is mandatory that the Fund redeem shares
upon the proper request of a shareholder. When shares are
purchased by check, the Fund reserves the right to delay
redemption of shares until it is satisfied that the investor's
check used to purchase shares has cleared. Local checks
generally are collected in three business days and non-local
checks may take longer in certain circumstances.
The right of redemption may be suspended during any period
when: (a) trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission, or such
Exchange is closed for other than weekends and holidays; (b) the
Securities and Exchange Commission has by order permitted such
suspension; or (c) an emergency as determined by the Securities
and Exchange Commission exists, making disposal of portfolio
securities or valuation of net assets of the Fund not reasonably
practicable. A shareholder's account may be terminated by the
Fund if, at the time of any transfer or redemption of shares of
the Fund in the account at the current offering price falls below
$1000. The Fund will notify a shareholder of its intention to
terminate the account and provide the shareholder with not less
than thirty days to make additional investments.
Questions regarding redemptions and the procedures that must
be followed should be directed to the Fund as Transfer Agent, One
First National Plaza, Suite 2594, Chicago, Illinois 60603, (312)
236-5388.
SHAREHOLDER PLANS
Dividend Reinvestment Plan
Unless a shareholder elects otherwise by notice to the Fund,
all income dividends and all capital gains distributions payable
on shares of the Fund will be reinvested in additional shares of
the Fund at the net asset value in effect on the dividend or
distribution payment date. The Fund acts as the shareholder's
agent to reinvest dividends and distributions in additional
shares and hold for his/her account the additional full shares so
acquired. Any surplus over whole shares will be paid in cash. A
shareholder may at any time change his/her election as to whether
to receive his/her dividends and distributions in cash or have
them reinvested by giving written notice of such change of
election to the Fund. Such change of election applies to
dividends and distributions the record dates of which fall on or
after the date that the Fund receives the written notice.
RETIREMENT ACCOUNTS
Shares of the Fund may be purchased or redeemed for
retirement accounts through New York Stock Exchange registered
brokerage firms having a relationship with the Fund. Typically,
a shareholder will elect to custody his or her retirement account
at a brokerage firm. Upon the shareholder's direction to purchase
shares of the Fund for his or her retirement account, the
brokerage firm will effect a written order for the purchase of
Fund shares. Any such purchase or redemption will not be
effective until the order or request is received by the Fund.
Retirement account holdings, including the Fund, will appear
monthly on the retirement account statement issued directly by
the relevant brokerage firm.
The minimum initial investment for retirement accounts is
$5,000 and $1,000 for subsequent purchases. There are no
additional Fund charges for retirement accounts. Brokerage firms
usually charge a fixed yearly fee for the custody and
administration of retirement accounts.
DISTRIBUTIONS AND TAXES
Distributions
Dividends from the Fund's net investment income as well as
distributions designated as capital gains will ordinarily be
declared and paid annually in such a manner as to avoid paying
income tax on the Fund's net investment income and net realized
capital gains or being subject to a federal excise tax on
undistributed net investment income and net realized capital
gains. Such distributions and dividends will typically be made
in December. As current income is not an objective of the Fund,
the amount of dividends will likely be small. There is no fixed
dividend rate and there can be no assurance as to the payment of
any dividends or the realization of any gains.
Taxes
The Fund intends to maintain its qualification as a
"regulated investment company" under the Internal Revenue Code by
distributing as dividends not less than 90% of its taxable income
and by continuing to comply with all other requirements of
Subchapter M of the Code. If the Fund qualified, the Fund will
not be liable for Federal income taxes on amounts paid by it as
dividends and distributions.
For Federal income tax purposes, dividends paid by the Fund
and distributions from short-term capital gains, whether received
in cash or reinvested in additional shares, are taxable as
ordinary income. Distributions paid by the Fund from long-term
capital gains whether received in cash or reinvested in
additional shares, are taxable as long-term capital gains,
regardless of the length of time you have owned shares in the
Fund. The distributions are taxable whether you receive them in
cash or in additional shares. If you are not required to pay tax
on your income, you will not be required to pay Federal income
taxes on the amounts distributed to you. Dividends and capital
gain distributions declared in December and paid the following
January will be taxable in the year they are declared.
The Fund is required to withhold Federal income tax at a
rate of 31% ("backup withholding") from dividend payments,
distributions and redemption proceeds if a shareholder fails to
furnish the Fund with his/her social security or other tax
identification number ("TIN") and certify under penalty of
perjury that such number is correct and that he/she is not
subject to backup withholding due to the underreporting of
income. The certification form is included as part of the Share
Purchase Application and should be completed when the account is
established.
If you do not have a tax identification number, you should
indicate on the application form whether a number has been
applied for. The Fund may be required to backup withhold if a
certified TIN is not delivered to the Fund within 7 days.
Distributions by the Fund may subject an investor to state
and local taxes on the distributions, depending on the laws of a
shareholder's home state and locality. Because this section is
not intended to be a full discussion of present or proposed
Federal income tax law and its effect on shareholders,
shareholders are urged to consult their own tax adviser.
CAPITAL STOCK
The Fund is a corporation organized under the laws of the
State of Illinois and was incorporated on October 24, 1988. The
Fund has 10,000,000 shares of authorized capital stock. Each
share has one vote and all shares participate equally in
dividends and other distributions by the Fund and in the residual
assets of the Fund in the event of liquidation. Shares of the
Fund have no preemptive rights and no conversion or subscription
rights. Shareholders are entitled to redeem shares as set forth
under "How to Redeem Shares." The investor will be the record
owner of all shares in his account with full shareholder rights.
SHAREHOLDER REPORTS AND MEETINGS
The Fund will provide to shareholders annual reports containing
certified financial statements. Additionally, shareholders will
receive other periodic reports, at least semi-annually,
containing unaudited financial statements. Shareholders will
receive a confirmation after each transaction affecting his or
her account with the Fund. The annual meeting of the
shareholders of the Fund shall be held in the month of
March. Any inquiries concerning the Fund may be made by
telephone (312) 236-5388, or by writing to the Fund at One First
National Plaza, Suite 2594, Chicago, Illinois 60603.
<PAGE>
Performance: This graph shows the growth of a $10,000
investment in your Fund and compares it to the S&P 500 index.
For the period beginning July 1, 1993 and ending December 31,
1996 your investment in the Fund would be $16,149 as compared to
a theoretical investment in the S&P 500 which would have grown
to $18,080. This performance includes the reinvestment of
dividends.
<TABLE>
<CAPTION>
Cumulative Total Returns
Periods ended December 31, 1996 Past 1 Year Life of Fund
<S> <C> <C>
Kenilworth Fund, Inc. 29.48% 61.48%
S&P 500 22.96% 80.79%
</TABLE>
Cumulative total returns reflect the Fund's actual
performance over a set period. The Fund began operations on
July 1, 1993.
<TABLE>
<CAPTION>
Average Annual Returns
Periods ended December 31, 1996 Past 1 Year Life of Fund
<S> <C> <C>
Kenilworth Fund, Inc. 29.48% 14.67%
S&P 500 22.96% 18.43%
</TABLE>
Average annual returns take the Fund's actual (or cumulative)
return and show you what would have happened if the Fund had
performed at a constant rate each year.
Total returns and yields are based on past results and are
not indicative of future performance.
<PAGE>
KENILWORTH FUND, INC.
STATEMENT OF NET ASSETS
December 31, 1996
<TABLE>
<CAPTION>
Shares or Market
COMMON STOCKS 95.95%a Principal Amt. Value Percent
<S> <C> <C> <C> <C>
Aircraft
Boeing 2.21% 1,500 $159,750 2.21
Autos 4.85%
Ford Motor 3,700 119,325 1.65
Chrysler Corp. 7,000 231,000 3.20
Construction 1.42%
Empresas ICA Sociedad 7,000 102,375 1.42
Chemicals 0.72%
W.R. Grace Corp. 1,000 51,750 0.72
Computer-Semiconductor 13.68%
Intel Corp. 5,800 759,452 10.51
Applied Materials, Inc.*4,400 158,136 2.19
Cypress Semiconductor* 5,000 70,625 0.98
Computer Software 11.45%
Adaptec, Inc.* 15,000 600,000 8.31
Oracle Systems, Inc.*3,000 125,250 1.73
Silicon Graphics* 4,000 102,000 1.41
Computer Systems 8.00%
Hewlett-Packard 11,500 577,875 8.00
Drugs 5.59%
Merck & Co. 3,700 294,612 4.08
Bristol-Myers Squibb 1,000 109,000 1.51
Electrical Equipment 4.11%
General Electric 3,000 296,625 4.11
Finance 15.94%
Federal National Mortgage13,000 489,125 6.77
Federal Home Loan Mortgage6,000 662,250 9.17
Home Appliance 1.29%
Whirlpool Corp 2,000 93,250 1.29
</TABLE>
<PAGE>
KENILWORTH FUND, INC.
STATEMENT OF NET ASSETS
December 31, 1996
<TABLE>
<CAPTION>
Shares or Market
COMMON STOCKS Principal Amt. Value Percent
<S> <C> <C> <C> <C>
Insurance 2.48%
Loews Corp. 1,900 179,075 2.48
Media 1.24%
Grupo Televisa 3,500 89,687 1.24
Oil & Gas 2.03%
Exxon Corp. 1,500 147,000 2.03
Retail 0.78%
Casey's General Stores 3,000 56,250 0.78
Telecommunications 8.42%
Motorola, Inc. 3,100 189,875 2.63
ADC Telecommunication*8,000 249,000 3.45
General Motors Cl. H 3,000 168,750 2.34
Utilities-Telephone 4.31%
A. T. & T 1,500 65,063 0.90
Comp. De Telefones De Chile1,300 131,463 1.82
Telefonos De Mexico 2,800 92,400 1.28
Lucent Technologies 486 22,478 0.31
Investment Companies 7.43%
Smith Barney Money Market Funds 536,624 536,624 7.43
Total Investments 6,930,065
(Cost $4,662,544)
CASH AND RECEIVABLES
NET OF LIABILITIES 4.05% 292,223
TOTAL NET ASSETS 100.00% $7,222,288
NET ASSET VALUE PER SHARE $15.43
(Based on 468,040 shares of capital stock outstanding)
a Percentages for various classifications relate to total
net assets.
*Non-income producing security.
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE>
KENILWORTH FUND, INC.
STATEMENT OF OPERATIONS
Year Ended
INVESTMENT INCOME Dec. 31, 1996
INCOME:
Dividends $83,009
Interest 10,078
Total Income 93,087
EXPENSES:
Investment Advisory Fees 59,220
Administrative and Management Fees 20,000
Auditing 5,040
Registration Fees 1,340
Insurance and other Expenses 4,071
Total Expenses 89,671
NET INVESTMENT INCOME: 3,416
NET REALIZED GAIN ON INVESTMENTS 4,332
NET INCREASE IN UNREALIZED APPRECIATION
ON INVESTMENTS 1,578,426
NET REALIZED GAIN AND UNREALIZED APPRECIATION
ON INVESTMENTS 1,582,758
NET INCREASE IN NET ASSETS FROM OPERATIONS $1,586,174
The accompanying notes are an integral part of these financial
statements.
<PAGE>
KENILWORTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
OPERATIONS: Dec. 31, 1996 Dec.31,1995
<S> <C> <C>
Net Investment Income $3,416 $23,717
Net Realized Gain on Investments 4,332 153,265
Net Increase in Unrealized Appreciation
on Investments 1,578,426 819,952
Increase in Net Assets
from Operations 1,586,174 996,934
DISTRIBUTIONS to SHAREHOLDERS:
Distributions from
Net Investment Income (3,416) (23,717)
Distributions from Net Realized
Gains on Investments (4,332) (147,670)
Decrease in Net Assets
resulting from Distributions (7,748) (171,387)
CAPITAL SHARE TRANSACTIONS:
Proceeds From Shares Issued
(48,376 and 55,220 shares issued, respectively)
639,733 669,415
Cost of Shares Redeemed
(8,060 and 5,011 shares redeemed, respectively)
(100,933) (58,468)
Reinvested Dividends
(369 and 11,097 shares, respectively)
5,693 132,388
Increase in Net Assets from Capital Share Transactions
544,493 743,335
Total Increase in Net Assets 2,122,919 1,568,882
NET ASSETS AT BEGINNING OF PERIOD
(427,355 and 366,049 shares outstanding, respectively)
5,099,369 3,530,487
NET ASSETS AT END OF PERIOD
(468,040 and 427,355 shares outstanding, respectively)
$7,222,288 $5,099,369
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE>
KENILWORTH FUND, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Years Ended December 31
1996 1995 1994 1993a
<S> <C> <C> <C> <C>
Selected Per-Share Data
Net Asset Value,
beginning of period........$11.93 $9.64 $10.31 $10.00
Income from Investment Operations
Net Investment Income......0.01 0.06b 0.06b 0.05
Net Realized and Unrealized
Gain (Loss) on Investments.3.51 2.64 (0.67) 0.31
Total . . . . . 3.52 2.70 (0.61) 0.36
Less Distributions
From Net Investment Income.0.01 0.06 0.06 0.05
From Net Realized Gains 0.01 0.35 0.00 0.00
Total . . . . . 0.02 0.41 0.06 0.05
Net Asset Value,
end of period............. $15.43 $11.93 $9.64 $10.31
Total Return . . . . . . . . . 29.48% 28.03% (5.95%) 7.16%c
Ratios and Supplemental Data
Net Assets,
end of period (in thousands)$7,222 $5,099 $3,530 $2,840
Ratio of Net Expenses
to Average Net Assets.......1.51% 1.69%b 1.70%b 0.52%
Ratio of Net Investment Income
to Average Net Assets . . . 0.06% 0.54%b 0.67%b 0.65%
Portfolio Turnover Rate. . . 73.93% 82.17% 11.78% 0.00%
Average Commissions Paid for
Securities Purchased and
Sold in 1996..............0.059
aJuly 1, 1993 (commencement of operations) to December 31, 1993.
bNet of reimbursement of expenses by Advisor.
cAnnualized.
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
The Kenilworth Fund, Inc., (the "Fund") is registered under the
Investment Company Act of 1940 as a no-load, open-end, non-
diversified management investment company.
1. Summary of Significant Accounting Policies
a. The Fund is registered under the Investment Company Act of
1940 as a no-load, open-end, non-diversified management
investment company. The Fund's objective is long-term capital
appreciation which it seeks by investing primarily in a non-
diversified portfolio of common stocks, preferred stocks,
warrants to purchase common stocks, convertible bonds and fixed-
income obligations of corporations and the United States
government. Its books and records are maintained on the accrual
basis. Securities are valued at their last sale price as
reported on a securities exchange, or at their last bid price as
applicable. Short term instruments are valued at cost which
approximates market value. Cost amounts, as reported on the
statement of net assets, are the same for federal income tax
purposes. For the year ended December 31, 1996, purchases and
sales of investment securities were $4,381,562 and $4,435,247
respectively.
b. Security transactions are accounted for on the trade date
and dividend income is recorded on the ex-dividend date.
Interest income is recorded on the accrual basis. Realized gains
and losses from security transactions are reported on an
identified cost basis.
c. Provision has not been made for federal income tax since
the Fund has elected to be taxed as a "regulated investment
company" and intends to distribute substantially all its income
to its shareholders and otherwise comply with the provisions of
the Internal Revenue Code applicable to regulated investment
companies.
d. As of December 31, 1996 there were 10,000,000 shares of
capital stock authorized.
e. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of increases and decreases in net assets from
operations during the reporting period. Actual results could
differ from those estimates.
2. Investment Adviser and Investment Advisory Agreement and
Transactions with Related Parties:
The Fund has signed two agreements with Institutional Portfolio
Services, Ltd., ("IPS"), with whom certain officers of the Fund
are affiliated. Under the terms of the first agreement (the
investment advisory agreement) the Fund will pay IPS a monthly
investment advisory fee at the annual rate of 1.0% of the daily
net assets of the Fund. Under the terms of the second agreement
(the administrative and management services agreement) the Fund
will pay IPS a yearly administrative and management services fee
of $20,000 per year payable on a quarterly basis. The advisory
agreement requires the adviser to reimburse the Fund in the event
that the expenses of the Fund in any fiscal year exceed 1.7%.
3. Sources of Net Assets:
As of December 31, 1996, the sources of net assets were as
follows:
Fund shares issued and outstanding $4,954,767
Unrealized Appreciation of Investments 2,267,521
Total $7,222,288
Aggregate Net Unrealized Appreciation as of December 31, 1996
consisted of the following:
Aggregate gross unrealized appreciation: $2,279,912
Aggregate gross unrealized deprecation: (12,391)
Net unrealized appreciation: $2,267,521<PAGE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders of the
Kenilworth Fund, Inc.
Chicago, Illinois
We have audited the accompanying statement of net assets of
Kenilworth Fund, Inc. as of December 31, 1996, and the related
statements of operations, changes in net assets, and financial
highlights for the year ended December 31, 1996. 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 audit.
We conducted our audit 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 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 verification by examination of securities
owned as of December 31, 1996. 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 audit provides a reasonable
basis for our opinion.
In our opinion, the 1996 financial statements and financial
highlights referred to above present fairly, in all material
respects, the financial position of the Kenilworth Fund, Inc. as
of December 31, 1996, the results of its operations, changes in
its net assets, and financial highlights for the year then ended,
in conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
Chicago, Illinois
January 8, 1997
PAGE
<PAGE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
of the Kenilworth Fund, Inc.
We have audited the statement of net assets of the
Kenilworth Fund, Inc. as of December 31, 1995, the related
statement of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period
then ended and financial highlights for the years ended December
31, 1995 and December 31, 1994 and the period ended December 31,
1993. 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 the
financial highlights based on our audit.
We conducted our audit 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 verification by
examination of securities owned as of December 31, 1995. 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 audit provides 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 the Kenilworth Fund, Inc. as of December
31, 1995, results of its operations for the year then ended,
changes in its net assets for each of the two years then ended,
and the financial highlights for each of the two years in the
period ended December 31, 1995 and the period ended December 31,
1993 in conformity with generally accepted accounting principles.
/s/ CHECKERS, SIMON & ROSNER, LLP
Chicago, Illinois
January 15, 1996
PAGE
<PAGE>
KENILWORTH FUND, INC.
One First National Plaza
Suite 2594
Chicago, Illinois 60603
(312) 236-5388
PART C
OTHER INFORMATION
Table of Contents
Item 24. Financial Statements and Exhibits
Item 25. Persons Controlled by or Under Common
Control with Registrant
Item 26. Number of Holders of Securities
Item 27. Indemnification
Item 28. Business & Other Connections of
Investment Adviser
Item 29. Principal Underwriters
Item 30. Location of Accounts and Records
Item 31. Management Services
Item 32. Undertakings
Signatures
<PAGE>
Item 24. (A) Financial Statements:
Kenilworth Fund, Inc., Performance Graph, Cumulative
Total Returns, Average Annual Total Returns, Statement of Net
Assets, Statement of Operations, Statement of Changes in Net
Assets, Financial Highlights, and Notes To Financial
Statements all dated December 31, 1996, and corresponding
Auditor's Report are presented in Part B. Checkers, Simon &
Rosner, LLP Report dated January 15, 1996 also appears in Part B.
The Auditors' Consents appear in Part C.
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use of our report dated January 8, 1997, on the
financial statements of Kenilworth Fund, Inc. referred to
therein, in Post-Effective Amendment No. 5 to the Registration
Statement on Form N-1A, File No. 811-7620, as filed with the
Securities and Exchange Commission.
/s/McGladrey & Pullen, LLP
Chicago, Illinois
April 29, 1997
<PAGE>
CONSENT OF CHECKERS, SIMON & ROSNER LLP
We have issued our report dated January 15, 1996, accompanying
the financial statements of Kenilworth Fund, Inc., not contained
in this Registration Statement on Post Effective Amendment No. 5
under Form N1-A. We consent to the use of the aforementioned
report in the Registration Statement.
/s/Checkers, Simon & Rosner, LLP
Chicago, IL
April 29 1997
<PAGE>
(B) Exhibits:
1. Articles of Incorporation filed April 28, 1995 as Exhibit
(b)(1) to Post-Effective Amendment No. 2 to the Registration
Statement on Form N-1A, incorporated herein by reference;
2. By-laws filed April 28, 1995 as Exhibit (b)(2) to
Post-Effective Amendment No. 2 to the Registration Statement
on Form N-1A, incorporated herein by reference;
3. Not applicable;
4. Not applicable;
5. Investment Advisory Agreement filed April 28, 1995 as Exhibit
(b)(5) to Post-Effective Amendment No. 2 to the Registration
Statement on Form N-1A, incorporated herein by reference;
6. Not applicable;
7. Not applicable;
8. Not applicable;
9. Administrative and Management Services Agreement filed April
29, 1997 as Exhibit 9 to Post-Effective Amendment No. 5 to
the Registration Statement on Form N-1A.
10. Not applicable;
11. Not applicable;
12. Not applicable;
13. Not applicable;
14. Not applicable;
15. Not applicable;
16. Not applicable;
Item 25. Persons Controlled by or Under Common Control with
Registrant: No persons are controlled by or under common control
with the Fund.
Item 26. Number of Holders of Securities: As of April 25,
1997 there were ninty-six (96) Fund shareholders of record.
The Fund has one class of stock outstanding.
Item 27. Indemnification of Directors and Officers: Insofar as
indemnification for liability arising under the Securities Act of
1933 (the "1933 Act") may be permitted to directors, officers and
controlling persons of the registrant, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Item 28. Business and Other Connections of Investment Adviser:
Institutional Portfolio Services, Ltd., ("IPS") currently acts as
investment adviser for corporations and pension plans and is
registered with the Securities and Exchange Commission under the
Investment Advisers Act of 1940, its S.E.C. number is: S.E.C. #
801-16292.
Item 29. Principal Underwriters: The Fund acts as its own
underwriter.
Item 30. Location of Accounts and Records: All Fund records are
held in the corporate headquarters, One First National Plaza,
Suite 2594, Chicago, Illinois 60603.
Item 31. Management Services: Discussed in Parts A and B under
section titled: "Administrative & Management Services".
Item 32. Undertakings: The Fund will undertake, if requested to
do so by at least 10% of the Fund's outstanding shares, to call a
meeting of shareholders for the purpose of voting upon the
question of removal of a director or directors and to assist in
communications with other shareholders as required by section
16(c) of the Act.<PAGE>
Signatures: Pursuant to the requirements of the Securities
Act of 1933 and the Investment Company Act of 1940 the Registrant
certifies that it meets all of the requirements for effectiveness
of this Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Chicago, and State of Illinois on
the 29th day of April, 1997 .
Kenilworth Fund, Inc.
By: /s/ Mohini C. Pai*
Mohini C. Pai,
President
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.
Signature
TITLE
/s/ Mohini C. Pai*
Mohini C. Pai President, Director April 29, 1997
/s/ B. Padmanabha Pai*
B. Padmanabha Pai Vice-President, Director April 29, 1997
/s/ Savitri P. Pai*
Savitri P. Pai, Esq.Secretary/Treasurer, Director April 29, 1997
/s/ Kirtna Pai*
Kirtna Pai Interested Director April 29, 1997
/s/ Larry A. Sjaastad*
Dr. Larry A. Sjaastad Non-Interested Director April 29, 1997
ADMINISTRATIVE AND MANAGEMENT SERVICES AGREEMENT
THIS ADMINISTRATIVE AND MANAGEMENT SERVICES AGREEMENT
(hereinafter referred to as the
"AGREEMENT"), is made by and between the KENILWORTH FUND, INC.,
an Illinois Corporation,
(hereinafter called the "Fund") and INSTITUTIONAL PORTFOLIO
SERVICES, LTD., an Illinois Corporation
(hereinafter called "IPS").
WITNESSETH:
IN CONSIDERATION of the mutual covenants herein contained, each
of the parties hereto intending to be
legally bound, it is agreed as follows:
1. The Fund hereby employs IPS, for the period set forth
in Paragraph 7 hereof, and on the terms
set forth herein, to render administrative and management
services to the Fund. IPS hereby accepts such
employment and agrees, during such period, to render the
administrative and management services and assume
the obligations herein set forth, for the compensation provided.
IPS, unless otherwise expressly provided and
authorized, has no authority to act for or represent the Fund in
any way, or in any way be deemed an agent of
the Fund.
2. As compensation for the administrative and management
services to be rendered to the Fund
by IPS under the provisions of this Agreement, the Fund shall pay
to IPS the sum of $30,000 annually, to be paid
on an annual basis.
3. It is expressly understood and agreed that the
administrative and management services to be
rendered by IPS to the Fund under the provisions of this
Agreement are not to be deemed exclusive, thus, IPS
shall be free to render similar or different services to others
so long as its ability to render the services provided
for in this Agreement shall not be impaired thereby.
4. It is understood and agreed that directors, officers,
employees, agents and shareholders of the
Fund may be interested in IPS as directors, officers, employees,
agents and shareholders, and that directors,
officers, employees, agents and shareholders of IPS may be
interested in the Fund, as directors, officers,
employees, agents and shareholders or otherwise. Specifically,
it is understood and agreed that directors, officers,
employees, agents and shareholders of IPS may continue as
directors, officers, employees, agents and
shareholders of the Fund; that IPS, its directors, officers,
employees, agents and shareholders may render
administrative and management services to other investment
companies, or to any other corporation, association,
firm or individual.
5. IPS agrees to perform recordkeeping, bookkeeping,
accounting, data processing, computer
software and development and other operations management services
for the Fund. IPS will not conduct any
transfer agent or custodian activities of the Fund.
6. IPS shall give the Fund the benefit of its best
judgment and efforts in rendering these services,
and the Fund agrees as an inducement to the undertaking of these
services that IPS shall not be liable hereunder
for any mistake of judgment or any event whatsoever, provided
that nothing herein shall be deemed to protect,
or purport to protect, IPS against any liability to Fund or to
its shareholders to which IPS would otherwise be
subject by reason of wilful misfeasance, bad faith or gross
negligence in the performance of duties hereunder,
or by reason of reckless disregard of obligations and duties
hereunder.
7. This Agreement shall continue in effect until December
31, 1997, and, thereafter, only so long
as such continuance is approved at least annually by votes of the
Fund's Board of Directors, cast in person at
a meeting called for the purpose of voting on such approval,
including the votes of a majority of the Directors
who are not parties to such agreement or interested persons of
any such party.
8 This Agreement may be terminated at any time upon 60
days' prior written notice, without the
payment of any penalty, by the Fund's Board of Directors or by
vote of a majority of the outstanding voting
securities of the Fund. Upon the termination of this Agreement,
the obligations of all the parties hereunder shall
cease and terminate as of the date of such termination, except
for any obligation to respond for a breach of this
Agreement committed prior to such termination and except for the
obligation of the Fund to pay to IPS the fee
provided in Paragraph 2 hereof, prorated to the date of
termination.
9. This Agreement shall not be assigned by the Fund
without prior written consent thereto of IPS.
IN WITNESS WHEREOF, the parties hereto have caused their
corporate seals to be affixed and duly attested
and their presence to be signed by their duly authorized officers
this 29th day of December, 1996.
KENILWORTH FUND, INC.
Attest: /s/ Denise M. Iwaniec By: /s/ Mohini C. Pai
President
INSTITUTIONAL PORTFOLIO SERVICES, LTD.
By: /s/ B. Padmanabha Pai
President
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000899772
<NAME> KENILWORTH FUND INC
<MULTIPLIER> 1
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 4,662,544
<INVESTMENTS-AT-VALUE> 6,930,065
<RECEIVABLES> 8,847
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<TOTAL-ASSETS> 7,279,518
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<TOTAL-LIABILITIES> 57,230
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<PAID-IN-CAPITAL-COMMON> 4,954,767
<SHARES-COMMON-STOCK> 468,040
<SHARES-COMMON-PRIOR> 427,355
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<APPREC-INCREASE-CURRENT> 1,582,758
<NET-CHANGE-FROM-OPS> 1,586,174
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,416
<DISTRIBUTIONS-OF-GAINS> 4,332
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 48,376
<NUMBER-OF-SHARES-REDEEMED> 8,060
<SHARES-REINVESTED> 369
<NET-CHANGE-IN-ASSETS> 2,122,919
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 89,671
<AVERAGE-NET-ASSETS> 5,926,645
<PER-SHARE-NAV-BEGIN> 11.93
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