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. 7
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 9
(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)
It is proposed that this filing will become effective (check
appropriate box):
___ immediately upon filing pursuant to paragraph (b)
___ on (date) pursuant to paragraph (b)
x 60 days after filing pursuant to paragraph (a)(1)
___ on (date) pursuant to paragraph (a)(1)
___ 75 days after filing pursuant to paragraph (a)()
___ on (date) pursuant to paragraph (a)(2) of Rule 485.
PAGE
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KENILWORTH FUND, INC.
PROSPECTUS
JUNE 25, 1999
The Securities and Exchange Commission has not approved
or disapproved these securities or passed upon the adequacy of
this prospectus. Any representation to the contrary is a
criminal offense.
PAGE
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TABLE OF CONTENTS
INVESTMENT OBJECTIVE.................................3
PRINCIPAL INVESTMENT STRATEGIES......................3
PRINCIPAL INVESTMENT RISKS...........................4
FUND PAST PERFORMANCE CHARTS.........................4
FUND EXPENSES........................................4
MANAGEMENT OF THE FUND...............................6
Investment Adviser..............................6
SHAREHOLDER INFORMATION..............................7
Pricing of Fund Shares..........................7
Purchase of Fund Shares.........................7
Redemption of Fund Shares.......................7
Dividends and Distributions.....................7
Tax Consequences................................7
FINANCIAL HIGHLIGHTS INFORMATION.....................8
SHARE PURCHASE APPLICATION..........................11
PAGE
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INVESTMENT OBJECTIVE
The Kenilworth Fund's investment objective is long term
capital appreciation. The Fund invests primarily in a
non-diversified portfolio of common stocks. The Fund's goal
is to achieve double-digit annualized returns over a period of
three to five years even though any given year or two may produce
negative returns. As with any mutual fund, there is no assurance
that the Fund will achieve its goal.
PRINCIPAL INVESTMENT STRATEGIES
Our investment philosophy during the last 30 years has been
guided by the historical fact that long term investment in stocks
in the United States has produced annual returns of over 9.5%
over a sixty year span. When one includes the decade of the
1980s, with its 18% annual return and similar returns currently
in the 1990s, the annual return averages almost 11% exceeding
that of bonds and money market instruments. Hence, one of the
Fund's principal investment strategies is to invest in common
stocks.
Before investing in companies, the Fund tries to determine
the outlook for the economy, the course of monetary policy as
pursued by the Federal Reserve Board, the direction of interest
rates and of overall corporate profits--the two most critical
factors determining overall equity market values. Then, we
focus on four or five large industries that are likely to
perform well in that economic milieu and generally choose two to
four companies that are the dominant growers in their respective
industries. The Fund generally rotates into those companies
whose price earnings ratios are low relative to that of their
growth rates and that of the overall market.
The Fund invests primarily in:
(a)large capitalization stocks listed on the United States stock
exchanges, those generally over $10 billion in size;
(b)in special situations, companies likely to be bought out at a
high premium to their current market price;
(c) turnaround situations where due to new products, managements,
or technologies a new future is forecast for a given company, or;
(d) secondarily in some smaller companies who have a very strong
technological niche in a dynamic growth industry.
We use extensive research to identify growing companies to
buy at reasonable prices and then we hold those companies for
long periods of time. We have developed many criteria over the
last 30 years to identify companies that generate superior long
term returns:
(a) Management: great companies are created by visionary
managers who deliver predictable growth;
(b) strong return on capital showing wise use of scarce capital;
(c) low costs: companies that can produce the product at a lower
cost than their competitors;
(d) dominant or growing market share in a growing market;
(e) strong balance sheets;
(f) turnaround situations due to new management, products, or
<PAGE>
technologies;
(g) historically consistent and predictable growth rates.
In response to market, economic, political or other
conditions, the Fund may, from time to time, take temporary
defensive positions that are inconsistent with the Fund's
principal investment strategies. The effect of taking such
temporary defensive positions is that the Fund may not achieve
its investment objective of long term capital appreciation.
PRINCIPAL INVESTMENT RISKS
The risks of investing in the Fund are:
(a) the overall market's decline because of political and/or
economic uncertainties;
(b) factors bearing specifically on a given industry or company;
(c) the Fund's concentrated, non-diversified style of investing.
Ultimately, when you sell your shares of the Fund, they could be
worth more or less than what you paid for them.
The Fund's share price changes daily in response to
political, economic and financial news. A change in the
direction of interest rates, military conflagrations, statistics
showing adverse economic conditions, or political and regulatory
happenings can all cause the Fund's net asset value to decline.
Similarly, news regarding the financial condition or changes in
specific economic or political conditions that may affect a
particular company whose stock the Fund holds may also cause the
Fund's share price to decline.
In addition, the Fund is classified as being non-diversified
which means that, compared with other funds, it may invest a
relatively high percentage of its assets in a limited number of
companies. Because the Fund may hold roughly 50% of its assets
in the stocks of only several companies, the Fund's share price
may be more susceptible to any single economic, political or
regulatory occurrence than would a fund that seeks broad
diversification. Thus, the net asset value of the Fund is likely
to be more volatile than the net asset value of a diversified
fund.
<PAGE> <PAGE>
FUND PAST PERFORMANCE CHARTS
The following bar chart and table illustrates the changes in
the Fund's performance from year to year and compares the Fund's
average annual returns over various periods of time to the
performance of the S&P 500 Index. The S&P 500 stock Index
follows the stock market performance of 500 of the largest
companies in the United States. The return of the S&P 500 Index
does not reflect the costs of buying and selling securities or
managing a stock portfolio, costs that are deducted from mutual
fund returns. Returns are based on past results and are not an
indication of future performance.
YEAR-BY-YEAR RETURNS
Kenilworth Fund
<Calendar Years: 1994 1995 1996 1997 1998>
<Returns: -5.95% 28.03% 29.48% 20.67% 20.58%>
Best Quarter: Q4 1998 28.39%
Worst Quarter: Q3 1998 -11.34%
AVERAGE ANNUAL RETURNS
Periods ended December 31, 1998
Past 1 year Past 5 years Since Inception*
Kenilworth Fund 20.58% 17.80% 16.80%
S&P 500 Index 28.72% 24.09% 22.82%
*Inception Date: July 1, 1993
PAGE
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FUND EXPENSES
This table describes the fees and expenses that you may pay if
you buy and hold shares of the Fund.
Annual Fund Operating Expenses
for the year ended December 31, 1998
(expenses that are deducted from Fund assets)
Management Fee..........................................1.00%
Distribution (12b-1) Fee................................None
Other Expenses..........................................0.42%
Total Annual Fund Operating Expenses*...................1.42%
*The Fund's expenses are limited to 1.70% of its average net
assets. Expenses in excess of 1.70% are reimbursed by the Fund's
investment advisor.
EXAMPLE:
This EXAMPLE is intended to help you compare the cost of
investing in this Fund with the cost of investing in other mutual
funds.
This EXAMPLE assumes that you invest $10,000 in the Fund for the
time periods indicated and then redeem all of your shares at the
end of those periods. This EXAMPLE also assumes that your
investment has a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs
would be:
1 year $ 145
3 years $ 449
5 years $ 776
10 years $1702
PAGE
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MANAGEMENT OF THE FUND
INVESTMENT ADVISOR and PORTFOLIO MANAGER
The Investment Advisor to the Fund is Institutional
Portfolio Services, Ltd. (IPS), One First National Plaza, Suite
2594, Chicago, Illinois 60603. Mr. B. Padmanabha Pai is the sole
shareholder, principal executive officer and director of IPS.
Since 1969, IPS has served as an investment advisor to wealthy
individuals and corporate pension plans. IPS is registered as an
investment advisor with the Securities and Exchange Commission
under the Investment Advisers Act of 1940.
IPS provides the Fund with investment advisory services,
office space and personnel. IPS also pays the salaries of those
of the Fund's employees, officers, and directors who are also
employees, officers, and/or directors of IPS. Additionally, IPS
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.
As compensation for its advisory services, the Fund pays to
IPS a monthly advisory fee at the annual rate of 1.0% per year on
the average 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 advisory fee paid to IPS for the fiscal year ended
December 31, 1998 was 1.0% of the Fund's average net assets. The
Fund also pays IPS for certain administrative services such as
record keeping, computer software and development, and other
operations management services. The administrative services fee
paid to IPS for the fiscal year ended December 31, 1998 was
$30,000. The administrative services fee to be paid to IPS in
1999 will be $40,000. IPS is required to reimburse the Fund for
the Fund's expenses incurred in excess of 1.7% of the Fund's
average net assets. IPS will reimburse the Fund for any excess
on a yearly basis.
PAGE
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SHAREHOLDER INFORMATION
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Fund is determined at
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.
PURCHASE OF 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") 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.
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.
REDEMPTION OF 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 (a) the name of the Fund,
(b) the dollar amount or specific number of shares to be
redeemed, and (c) 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 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.
The Fund reserves the right to pay redemptions in kind.
Thus, redemption proceeds may be paid in securities or other
assets rather than in cash if the Board of Directors determines
it is in the best interests of the Fund.
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.
DIVIDENDS AND DISTRIBUTIONS
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.
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.
TAX CONSEQUENCES
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 under reporting 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.
Financial Highlights
The financial highlights table is intended to help you
understand the Fund's financial performance for the past 5 years.
Certain information reflects financial results for a single Fund
share. The total returns in the table represent the rate that an
investor would have earned or lost on an investment in the Fund
(assuming reinvestment of all dividends and distributions). This
information has been audited by McGladrey & Pullen,L.L.P. for the
years ended 1996, 1997 and 1998, and by other auditors for the
years ended 1994 and 1995. McGladrey & Pullen's report,
along with the Fund's financial statements, are included in the
Fund's Annual Report, which is available upon request.
<TABLE>
<CAPTION>
For the Years Ended December 31
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net Asset Value,
beginning of period
$18.17 $15.43 $11.93 $9.64 $10.31
Income from Investment Operations
Net Investment
Income (Loss) (0.04) (0.05) 0.01 0.06a 0.06a
Net Realized and
Unrealized Gain (Loss)
on Investments 3.78 3.24 3.51 2.64 (0.67)
Total...........3.74 3.19 3.52 2.70 (0.61)
Less Distributions From
Net Investment Income 0.00 0.00 0.01 0.06 0.06
From Net Realized Gains 0.00 0.45 0.01 0.35 0.00
Total...........0.00 0.45 0.02 0.41 0.06
Net Asset Value,
end of period $21.91 $18.17 $15.43 $11.93 $9.64
Total Return............20.58% 20.67% 29.48% 28.03% (5.95%)
Ratios and Supplemental Data
Net Assets,
end of period
(in thousands) $12,178 $9,790 $7,222 $5,099 $3,530
Ratio of Net Expenses
to Average Net Assets 1.42% 1.52% 1.51% 1.69%a 1.70%a
Ratio of Net Investment
Income to Average
Net Assets (0.24%) (0.29%) 0.06% 0.54%a 0.67%a
Portfolio Turnover Rate 70.28% 76.99% 73.93% 82.17% 11.78%
aNet of reimbursement of expenses by Advisor.
/TABLE
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<PAGE>
No person has been authorized to give any information or to make
any representations other than those contained in this Prospectus
and in the related Statement of Additional Information 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
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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
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OTHER FUND DOCUMENTS
Additional information about the Kenilworth Fund's investments is
available in the Fund's annual and semi-annual reports to
shareholders. In the Fund's annual report, you will find a
discussion of the market conditions and investment strategies
that significantly affected the Fund's performance during its
last fiscal year.
Additional information about the Kenilworth Fund and its
management and operations is available in the Statement of
Additional Information, which is incorporated by reference into
this Prospectus.
WHERE TO GET THESE DOCUMENTS
The Statement of Additional Information and the Fund's annual and
semi-annual reports are available, without charge, upon request.
To receive these documents or request other information about the
Fund, or for shareholder inquiries:
1. Write to us at: Kenilworth Fund, Inc., One First National
Plaza, Suite 2594, Chicago, IL 60603
2. Call us collect Monday through Friday, 9 a.m. to 5 p.m.,
Central Standard Time at 312-236-5388.
3. Visit the Kenilworth Fund website: www.kenilworthfund.com.
4. E-Mail the Fund at: [email protected]
Information about the Fund (including the Statement of Additional
Information) can be reviewed and copied at the Securities and
Exchange Commission's Public Reference Room in Washington, D.C.
Information on the operation of the public reference room may be
obtained by calling the Commission at 1-800-SEC-0330. Reports
and other information about the Fund are available on the
Commission's Internet site at http://www.sec.gov. Copies of this
information may be obtained, upon payment of a duplicating fee,
by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009.
Kenilworth Fund, Inc. Investment Company Act File No. 811-7620
PAGE
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KENILWORTH FUND, INC.
One First National Plaza
Suite 2594
Chicago, Illinois 60603
(312) 235-5388
PART B
STATEMENT OF ADDITIONAL INFORMATION
Dated: June 25, 1999
This Statement of Additional Information is not a prospectus and
should be read in conjunction with the Prospectus of Kenilworth
Fund, Inc., dated June 25, 1999, 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 June 25, 1999, and, if given or made, such
information or representations may not be relied upon as
having been authorized by the Kenilworth Fund, Inc.
PAGE
<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 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 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
<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
*interested persons
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>
PAGE
<PAGE>
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. 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. For the fiscal years
ending December 31, 1996, 1997 and 1998 the Adviser was paid
$59,220, $90,314 and $103,469 respectively.
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.
<PAGE>
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 record keeping, computer software and
development and other operations management services for the
Fund. IPS will be paid the sum of $40,000 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 19, 1999, 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 (7.61%); (2) Shirley Lindsay Trust,
P.O.Box 7127, Indian Lake Estate, FL (9.54%); (3) B.P. Pai, One
First National Plaza, Chicago, IL (5.81%); (4) Institutional
Portfolio Services, Ltd., One First National Plaza, Chicago, IL
(6.15%).
All directors and officers of the Fund, as a group, own
138,212 shares beneficially, directly and/or indirectly or
24.77% 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, 1996, 1997 and 1998 the Fund paid
$15,298, $20,598 and $19,166 respectively, in brokerage
commissions.
<PAGE>
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Fund is determined at
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.
<PAGE>
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.
The Fund reserves the right to pay redemptions in kind.
Thus, redemption proceeds may be paid in securities or other
assets rather than in cash if the Board of Directors determines
it is in the best interests of the Fund.
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.
<PAGE>
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 under reporting 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.
<PAGE>
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
<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, 1998 your
investment in the Fund would be $23,498 as compared to a
theoretical investment in the S&P 500 which would have grown to
$31,036. This performance includes the reinvestment of
dividends.
<TABLE>
<CAPTION>
Cumulative Total Returns
Periods ended December 31, 1998
Past 1 Year Past 5 years Life of Fund
<S> <C> <C> <C>
Kenilworth Fund, Inc. 20.58% 126.85% 134.97
S&P 500 28.72% 194.24% 209.86
</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, 1998
Past 1 Year Past 5 Years Life of Fund
<S> <C> <C> <C>
Kenilworth Fund, Inc. 20.58% 17.80 16.80%
S&P 500 28.72% 24.09 22.82%
</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
<PAGE>
KENILWORTH FUND, INC.
STATEMENT OF NET ASSETS
December 31, 1998
<TABLE>
<CAPTION> Market
COMMON STOCKS 97.27%a Shares Value Percent
<S> <C> <C> <C>
Aircraft 1.07%
Boeing Corp. 4,000 $130,500 1.07
Autos 5.29%
Ford Motor 5,500 322,779 2.65
General Motors 4,500 322,029 2.64
Banks 4.90%
Wells Fargo & Co. 5,000 199,685 1.64
Citigroup, Inc. 8,000 397,496 3.26
Computer-Semiconductor 11.32%
Intel Corp. 10,000 1,185,620 9.74
Applied Materials, Inc.* 4,500 192,092 1.58
Computer Software 9.65%
Adaptec, Inc.* 5,000 87,810 0.72
Oracle Systems, Inc.* 2,250 97,031 0.80
Intuit, Inc.* 3,800 275,500 2.26
Network Associates, Inc.* 8,000 530,000 4.35
Cisco Systems 2,000 185,624 1.52
Computer Systems 6.48%
Hewlett-Packard 10,000 683,120 5.61
Quantum Corp.* 5,000 106,250 0.87
Drugs 14.28%
Merck & Co. 4,000 590,000 4.85
Bristol-Myers Squibb 4,600 615,535 5.05
Schering-Plough 6,000 331,500 2.72
Eli Lilly & Company 1,000 88,875 0.73
Warner-Lambert 1,500 112,781 0.93
Electrical Equipment 5.03%
General Electric 6,000 612,000 5.03
Finance 25.03%
Federal National Mortgage 13,500 999,000 8.20
Federal Home Loan Mortgage 23,500 1,514,269 12.44
Household International, Inc. 6,000 237,750 1.95
Associates First Capital Corp.7,006 296,879 2.44<PAGE>
</TABLE>
<PAGE>
KENILWORTH FUND, INC.
STATEMENT OF NET ASSETS
December 31, 1998
<TABLE>
<CAPTION> Market
COMMON STOCKS Shares Value Percent
<S> <C> <C> <C>
Insurance 7.31%
American International Group 6,000 579,750 4.76
Conseco, Inc. 3,500 106,750 0.88
Transamerica Corp. 1,000 115,500 0.95
Hartford Life, Inc. 1,500 87,375 0.72
Telecommunications 2.85%
ADC Telecommunication* 10,000 347,500 2.85
Utilities-Telephone 4.06%
Lucent Technologies 4,500 494,716 4.06
Total Investments 11,845,716
(Cost $6,148,063)
CASH AND RECEIVABLES
NET OF LIABILITIES 2.73% 332,559
TOTAL NET ASSETS 100.00% $12,178,275
NET ASSET VALUE PER SHARE $21.91
(based on 555,821 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
<PAGE>
KENILWORTH FUND, INC.
STATEMENT OF OPERATIONS
Year Ended
INVESTMENT INCOME December 31, 1998
INCOME:
Dividends $107,594
Interest 14,388
Total Income 121,982
EXPENSES:
Investment Advisory Fees 103,469
Administrative and Management Fees 30,000
Registration Fees 1,929
Auditing 5,604
Insurance and Other Expenses 6,233
Total Expenses 147,235
NET INVESTMENT LOSS: (25,253)
NET REALIZED LOSS ON INVESTMENTS (8,169)
NET INCREASE IN UNREALIZED APPRECIATION
ON INVESTMENTS 2,109,675
NET REALIZED LOSS AND UNREALIZED APPRECIATION
ON INVESTMENTS 2,101,506
NET INCREASE IN NET ASSETS FROM OPERATIONS $2,076,253
The accompanying notes are an integral part of these financial
statements.
PAGE
<PAGE>
KENILWORTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
OPERATIONS: December 31, 1998 December 31,1997
<S> <C> <C>
Net Investment Loss ($25,253) ($26,744)
Net Realized Gain (Loss)
on Investments (8,169) 264,438
Net Increase in Unrealized
Appreciation
on Investments 2,109,675 1,320,457
Increase in Net Assets
from Operations 2,076,253 1,558,151
DISTRIBUTIONS To SHAREHOLDERS:
Distributions from
Net Investment Income --- ---
Distributions from Net Realized
Gains on Investments --- (237,694)
Decrease in Net Assets resulting
from Distributions --- (237,694)
CAPITAL SHARE TRANSACTIONS:
Proceeds From Shares Issued
(24,894 and 75,696 shares,
respectively) 462,667 1,338,097
Cost of Shares Redeemed
(7,957 and 14,740 shares,
respectively) (150,454) (270,698)
Reinvested Dividends
(0 and 9,888 shares,
respectively) --- 179,665
Increase in Net Assets from
Capital Share Transactions 312,213 1,247,064
Total Increase in
Net Assets 2,388,466 2,567,521
NET ASSETS AT BEGINNING OF YEAR
(538,884 and 468,040 shares
outstanding, respectively) 9,789,809 7,222,288
NET ASSETS AT END OF YEAR
(555,821 and 538,884 shares
outstanding, respectively) $12,178,275 $9,789,809
</TABLE>
The accompanying notes are an integral part of these financial
statements.<PAGE>
<PAGE>
KENILWORTH FUND, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Years Ended December 31
1998 1997 1996 1995 1994 1993a
<S> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net Asset Value, beginning of period
$18.17 $15.43 $11.93 $9.64 $10.31 $10.00
Income from Investment Operations
Net Investment Income (Loss)
(0.04) (0.05) 0.01 0.06b 0.06b 0.05
Net Realized and Unrealized Gain (Loss) on Investments
3.78 3.24 3.51 2.64 (0.67) 0.31
Total....3.74 3.19 3.52 2.70 (0.61) 0.36
Less Distributions From Net Investment Income
0.00 0.00 0.01 0.06 0.06 0.05
From Net Realized Gains
0.00 0.45 0.01 0.35 0.00 0.00
Total....0.00 0.45 0.02 0.41 0.06 0.05
Net Asset Value,end of period
$21.91 $18.17 $15.43 $11.93 $9.64 $10.31
Total Return.....20.58% 20.67% 29.48% 28.03% (5.95%) 7.16%c
Ratios and Supplemental Data
Net Assets, end of period (in thousands)
$12,178 $9,790 $7,222 $5,099 $3,530 $2,840
Ratio of Net Expenses to Average Net Assets
1.42% 1.52% 1.51% 1.69%b 1.70%b 0.52%
Ratio of Net Investment Income to Average Net Assets
(0.24%) (0.29%) 0.06% 0.54%b 0.67%b 0.65%
Portfolio Turnover Rate
70.28% 76.99% 73.93% 82.17% 11.78% 0.00%
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, 1998
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, 1998, purchases and sales of
investment securities were $7,869,601 and $7,282,167
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, 1998 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 $30,000 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, 1998, the sources of net assets were as
follows:
Fund shares issued and outstanding $6,514,045
Unrealized Appreciation of Investments 5,697,652
Undistributed Investment Loss (25,253)
Accumulated Net Realized Loss (8,169)
Total $12,178,275
Aggregate Net Unrealized Appreciation as of December 31, 1998
consisted of the following:
Aggregate gross unrealized appreciation: $5,856,436
Aggregate gross unrealized deprecation: (158,784)
Net unrealized appreciation: $5,697,652
At December 31, 1998, the Fund has tax basis capital losses of
$8,169 which may be carried over to offset future capital gains.
Such losses expire in 2006.
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, 1998, and the related
statements 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 each of the three years
in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our
audits. The financial highlights of Kenilworth Fund, Inc. for
periods prior to December 31, 1996, were audited by other
auditors, whose report, dated January 15, 1996, expressed an
unqualified opinion on those financial highlights.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included verification by
examination of securities owned and confirmation with securities
brokers as of December 31, 1998. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Kenilworth Fund, Inc. as of December
31, 1998, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the
period then ended, and financial highlights for each of the three
years in the period then ended, in conformity with generally
accepted accounting principles.
McGladrey & Pullen, LLP
Chicago, Illinois
January 8, 1999
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 23. Exhibits
Item 24. Persons Controlled by or Under Common
Control with Registrant
Item 25. Indemnification
Item 26. Business & Other Connections of
Investment Adviser
Item 27. Principal Underwriters
Item 28. Location of Accounts and Records
Item 29. Management Services
Item 30. Undertakings
Signatures
<PAGE>
Item 23. EXHIBITS
a. Articles of Incorporation filed April 26, 1999 as Exhibit
(a) to Post-Effective Amendment No. 7 to the Registration
Statement on Form N-1A;
b. By-laws filed April 26, 1999 as Exhibit (b) to
Post-Effective Amendment No. 7 to the Registration Statement
on Form N-1A;
c. Not applicable;
d. Investment Advisory Agreement filed April 26, 1999 as Exhibit
(d) to Post-Effective Amendment No. 7 to the Registration
Statement on Form N-1A;
e. Not applicable;
f. Not applicable;
g. Not applicable;
h. Administrative and Management Services Agreement filed April
26, 1999 as Exhibit (h) to Post-Effective Amendment No. 7 to the
Registration Statement on Form N-1A;
i. Legal Opinion and Consent of Counsel filed April 26, 1999
as Exhibit (i) to Post-Effective Amendment No. 7 to the
Registration Statement on Form N-1A;
j. Auditor's Consent to use of certified report letter dated
January 8, 1999 filed April 26, 1999 as Exhibit (j) to
Post-Effective Amendment No. 7 to the Registration Statement on
Form N-1A.
k. Not applicable;
l. Not applicable;
m. Not applicable;
n. Financial Data Schedule filed April 26, 1999 as Exhibit
(n) to Post-Effective Amendment No. 7 to the Registration
Statement on Form N-1A.
o. Not applicable;
Item 24. Persons Controlled by or Under Common Control with
Registrant: No persons are controlled by or under common control
with the Fund.
Item 25. 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 26. 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 27. Principal Underwriters: The Fund acts as its own
underwriter.
Item 28. Location of Accounts and Records: All Fund records are
held in the corporate headquarters, One First National Plaza,
Suite 2594, Chicago, Illinois 60603.
Item 29. Management Services: Discussed in Parts A and B under
section titled: "Administrative & Management Services".
Item 30. 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(a) 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 26th day of April, 1999.
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 26, 1999
/s/ B. Padmanabha Pai*
B. Padmanabha Pai Vice-President, Director April 26, 1999
/s/ Savitri P. Pai*
Savitri P. Pai, Esq.Secretary/Treasurer, Director April 26, 1999
/s/ Kirtna Pai*
Kirtna Pai Interested Director April 26, 1999
/s/ Larry A. Sjaastad*
Dr. Larry A. Sjaastad Non-Interested Director April 26, 1999
File Number 88550907
STATE OF ILLINOIS
OFFICE OF THE SECRETARY OF STATE
Whereas, ARTICLES OF INCORPORATION OF
KENILWORTH FUND, INC.
INCORPORATED UNDER THE LAWS OF THE
STATE OF ILLINOIS HAVE BEEN
FILED IN THE OFFICE OF THE
SECRETARY OF STATE AS PROVIDED BY
THE BUSINESS CORPORATION ACT OF
ILLINOIS, IN FORCE JULY 1, A.D. 1984.
Now Therefore, I, Jim Edgar, Secretary of State of the State of
Illinois, by virtue of the power vested in me by law, do hereby
issue this certificate and attach hereto a copy of the
Application of the aforesaid corporation.
In Testimony Whereof, Thereto set my hand, and cause to be
affirmed the Great Seal of the State of Illinois, at the City of
Springfield, this 24TH day of OCTOBER A.D. 1988 and of the
Independence of the United States the two hundred and 13TH.
SEAL
JIM EDGAR
Secretary of State
PAGE
<PAGE>
BCA.-2.10 (Rev. Jul 1984)
JIM EDGAR -Secretary of State
State of Illinois
ARTICLES OF INCORPORATION
Pursuant to the provisions of "The Business Corporation Act of
1983", the undersigned incorporator(s) hereby adopt the following
Articles of Incorporation.
ARTICLE ONE The name of the corporation is
Kenilworth Fund, Inc.
ARTICLE TWO
The name and address of the initial registered agent and its
registered office are:
Registered Agent: Mohini C. Pai
Registered Office: One First National Plaza - Suite 2596
Chicago 60603 Cook County
ARTICLE THREE The purpose or purposes for which the corporation
is organized are:
See Attached
ARTICLE FOUR
Paragraph 1: The authorized shares shall be:
Common N/A (par value) authorized 10,000,000
Paragraph 2: The preferences, qualifications, limitations,
restrictions and the special or relative rights
in respect of the shares of each class are:
ARTICLE FIVE
The number of shares to be issued initially, and the
consideration to be received by the corporation therefor, are:
Common N/A (par value) 10,000,000 $ 1,000
TOTAL $1,000
PAGE
<PAGE>
ARTICLE SIX
OPTIONAL
The number of directors constituting the initial board of
directors of the corporation is _________, and the names and
addresses of the persons who are to serve as directors until the
first annual meeting of shareholders or until their successors be
elected and qualify are:
Name Residential Address
N/A
ARTICLE SEVEN (OPTIONAL)
(a) It Is estimated that the value of all
property to be owned by the corporation $_______ for the
following year wherever located will be: N/A
(b) It is estimated that the value of the property
to be located within the State of Illinois during the following
year will be: $________
(c) It is estimated that the gross amount of
business which will be transacted by the corporation during the
following year will be: $________
(d) It is estimated that the gross amount of
business which will be transacted from places of business In the
State of Illinois during the following year will be: $______
ARTICLE EIGHT (OTHER PROVISIONS)
Attach a separate sheet of this size for any other
provision to be included in the Articles of Incorporation, e.g.,
authorizing preemptive rights; denying cumulative voting;
regulating internal affairs; voting majority requirements: fixing
a duration other then perpetual; etc.
NAMES & ADDRESSES OF INCORPORATORS
The undersigned incorporator(s) hereby declare(S), under
penalties of perjury, that the statements made in the foregoinq
Articles of Incorporation are true.
Dated 9-28-88
/s/ Mohini C. Pai, 324 Sheridan Road, Kenilworth, Illinois
60043
PAGE
<PAGE>
KENILWORTH FUND, INC.
THIRD: The nature of the business, objects and purposes
proposed to be transacted, promoted and carried on by the
corporation is to do any and all of the things herein set forth,
as fully and to the same extent as allowable by Illinois Business
Corporation Act, and in any part, of the world, viz.
1. To purchase, become interested in, receive, own, hold,
invest and reinvest in, sell, negotiate, exchange, transfer,
assign, mortgage, pledge, turn to account, realize upon, and
otherwise acquire and dispose of securities of every kind,
character and description, issued or created by, or secured
upon the property, income of revenues, of individuals,
associations, public and private corporations, the
United States of America, its agencies and instrumentalities, or
any territory, state, county, city, town, district or other
political subdivision, or any foreign government or any political
subdivision thereof; and to acquire or become interested in any
such securities by original subscription, underwriting,
participation in syndicates, purchase, exchange, or otherwise.
The term "securities," whenever used herein, shall be consistent
with the context, and without limiting the generality of the
foregoing, include shares of stock (preferred, common and
debenture), scrip, purchase or subscription warrants or
other rights, voting trust certificates, certificates of interest
or participation in any profit sharing agreement,
pre-organization certificates of subscriptions, fractional or
undivided interests in oil, gas or other mineral rights,
investment contracts, evidences of interest, ownership, or
indebtedness, call or time loans, notes, acceptances, commercial
paper, bonds, debentures, mortgages, collateral trust
certificates, and in general any interests or instruments
commonly known as securities, or any certificate of interest or
participation in, any temporary or interim certificate for, or
receipt for, any of the foregoing, and any securities, negotiable
or non-negotiable, secured or unsecured, and however described.
2. To exercise all rights, powers and privileges with reference
to or incident to ownership, use and enjoyment of any such
securities, including, but without limitation, the right, power,
and privilege to own, vote, hold, purchase, sell, negotiate,
assign, exchange, transfer, mortgage, pledge or otherwise deal
with, dispose of, use, exercise or enjoy any rights, title,
interest, powers orprivileges under or with reference to any of
such securities; and to do any and all acts and things for the
preservation, protection, improvement and enhancement in
value of any such securities, or designed to accomplish any
such purpose.
1
PAGE
<PAGE>
3. To purchase or otherwise acquire, own, hold, sell, exchange,
assign, transfer, mortgage, pledge or otherwise dispose of,
property of all kinds, incuding, but without limitation, specie,
money, and foreign exchange, to the extent permitted by law,
except that the corporation shall not purchase, own, or sell
commodities or future contracts for the delivery of commodities.
It shall, when appropriate, engage in covered writing of call and
index options.
4. To buy, sell, mortgage, encumber, hold, own, exchange,
rentr or otherwise acquire and dispose of, and to develop,
improve, manage, subdivide, build, erect, construct, alter and
maintain buildings, structures, and other improvements on real
property for its own use for business offices exclusively and may
acquire real estate as a result of the foreclosure of mortgages
securing the payment of securities then owned by the corporation,
or as a result of any reorganization or other readjustment in
connection with any securities then owned by the
corporation, or otherwise for the purpose of the proper
administration of the investments of the corporation in
securities. Nothing contained in this paragraph shall be
construed to restrict the power of the corporation, subject to
all other restrictions and limitations contained in this
Certificate of Incorporation, to invest in securities,
as defined in paragraph 1 of Article Third of this Certificate of
Incorporation, whether or not any such security shall be deemed
to be an interest in real estate.
5. To borrow or raise moneys for any of the purposes of the
corporation, and from time to time, to draw, make, accept,
endorse, execute and issue bonds, debentures, notes, drafts,
acceptances, bills of exchange, warrants and other negotiable or
non-negotiable instruments and evidences of indebtedness and
other securities; and to secure the payment thereof and of the
interest thereon by mortgage upon or pledge of, or by conveyance
of assignment in trust of, the whole or any part of the property
and franchises of the corporation, real, personal, and
mixed, tangible or intangible, and wheresoever situated whether
at the time owned or thereafter acquired, and to issue, sell,
negotiate, pledge, or otherwise dispose ofsuch bonds or other
obligations of the corporation for its corporate purposes.
6. To acquire all or any part of the good will, rights,
property, and business of any individual, association or
corporation; to pay for the same in cash or in shares of stock,
bonds, notes or other obligations of the corporation, or
otherwise. To hold, utilize, operate, reorganize, liquidate, and
in any manner dispose of the whole or any part of the good will,
rights, property and business so acquired, to assume in
connection therewith the whole or any part of the liabilities and
obligations of any such person, association or corporation; and
to conduct in any lawful manner the whole or any part of the
<PAGE>
business thus acquired.
7. To enter into, make, perform and carry out contracts and
undertakings of every kind for any lawful purpose, without limit
as to amount, with any individual, association or corporation.
8. To purchase, sell and transfer, re-acquire, hold, trade and
deal in, the bonds, debentures and other securities of the
corporation, from time to time, to such extent and in such manner
and upon such terms as the Board of Directors shall, consistent
with the provisions of this Certificate of Incorporation,
determine; and to purchase and re-acquire, from time to time, the
shares of its own capital stock; provided, however, that the
corporation shall not have power to trade or deal in the shares
of its own Common stock.
9. To conduct its business and maintain offices both within and
without the State of Illinois, and in all other states and
territories and the District of Columbia, in all dependencies,
colonies or possessions of the United States and any foreign
countries, and places and to purchase of otherwise acquire, hold,
possess, convey, transfer, or otherwise dispose of real and
personal property in all thereof to the extent that the same be
permissible under their respective laws.
10. To carry out all or any part of the foregoing objects and
purposes, and to exercise any and all of the foregoing rights and
powers, and to do any and all of the foregoing acts and things,
as principal, factor, agent, contractor or otherwise, either
alone or through or in conjunction with, or Jointly with, any
individual, association or corporation.
11. In general to carry on any other business in connection
with the foregoing, and to have and exercise all the powers
conferred by the laws of the State of Illinois upon corporations
formed under the Act hereinafter referred to.
The foregoing clauses shall each be construed as purposes,
objects and powers, and is hereby expressly provided that the
foregoing enumeration of specified purposes, objects and powers
shall not be held to limit or restrict in any manner the powers
of the corporation, and that they are in furtherance of, and in
addition to, and not in limitation of, the general powers
conferred upon the corporation by the laws of the State
of Illinois or otherwise; nor shall the enumeration of one
thing be deemed to exclude another, although it be of like nature
not expressed.
It is the intention that the purposes, objects and powers
specified in the Article Third, and all subdivisions thereof,
shall except as otherwise expressly provided in no way be I
limited or restricted by reference to or inference from the
terms of any other clause or subdivision of this Article Third,
<PAGE>
and that each of the purposes, objects andpowers specified in
this Article Third shall be regarded as independent purposes,
objects and powers.
KENILWORTH FUND, INC.
BY-LAWS
ARTICLE I
OFFICES
Section 1. The principal office of the Corporation shall be in
the City of Chicago, County of Cook, State of Illinois. The
Corporation shall also have offices at such other places as the
Board of Directors may from time to time determine and the
business of the Corporation may require.
ARTICLE II
STOCKHOLDERS
Section l. Shares of the Corporation. The issued shares of the
Corporation shall be uncertificated shares which shall be
maintained in book-entry form..
Section 2. Transfer of Stock. Shares of the stock of the
Corporation shall be transferable only on the books of the
Corporation by the person in whose name such shares are
registered, or by his duly authorized transfer agent. In case of
transfers by executors, administrators, guardians or other legal
representatives, duly authenticated evidence of their authority
shall be produced, and may be required to be deposited and remain
with the Corporation or its duly authorized transfer agent. No
transfer shall be made unless and until the certificate issued to
the transferor shall be delivered to the Corporation, or its duly
authorized transfer agent, properly endorsed.
Section 3. Record Holder. The Corporation shall be entitled to
treat the holder of record of any share or shares of its stock as
the owner thereof, and accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not
the Corporation shall have express or other notice thereof,
except as otherwise provided by the laws of the State of
Illinois.
ARTICLE III
MEETINGS OF STOCKHOLDERS
Section l. Annual Meeting. The annual meeting of the
stockholders of the Corporation for the election of directors and
for the transaction of general business shall be held at the
principal office of the Corporation, or at such other place
within or without the State of Illinois as the Board of Directors
may from time to time prescribe, in the month of March at such
time as may be determined by the Board of Directors and as shall
be designated in the notice of said meeting.
<PAGE>
Section 2. Special Meetings. Special meetings of the
stockholders may be called at any time by the President, and
shall be called at any time by the President, or by the
Secretary, upon the written request of a majority of the Board of
Directors, or upon the written request of the holders of a
majority of the shares of the stock of the Corporation issued and
outstanding and entitled to vote at such meeting. Upon receipt
of a written request from any person or persons entitled to call
a special meeting, which shall state the object of the meeting,
it shall be the duty of the President; or, in his absence, the
Secretary, to call such a meeting to be held not less than ten
days nor more than sixty days after the receipt of such request.
Special meetings of the stockholders shall be held at the
principal office of the Corporation, or at such other place
within or without the State of Illinois as the Board of Directors
may from time to time direct, or at such place within or without
the State of Illinois as shall be specified in the notice of such
meeting.
Section 3. Notice of Meetings. Notice of the time and place of
the annual or any special meeting of the stockholders shall be
given to each stockholder entitled to notice of such meeting at
least ten days prior to the date of such meeting. In the case of
special meetings of the stockholders, the notice shall specify
the object or objects of such meeting, and no business shall be
transacted at such meeting other than that mentioned in the
notice.
Section 4. Record Date. The Board of Directors may close the
stock transfer books of the Corporation for a period not
exceeding sixty days preceding the date of any meeting of
stockholders, or the date for payment of any dividends, or the
date for the allotment of rights, or the date when any change or
conversion or exchange of stock shall go into effect, or for a
period of not exceeding sixty days in connection with the
obtaining of the consent of stockholders for any purpose;
provided, however, that in lieu of closing the stock transfer
books as aforesaid, the Board of Directors may fix in advance a
date, not exceeding sixty days preceding the date of any meeting
of stockholders, or the date for the payment of any dividend, or
the date for the allotment of rights of the date when any change
or conversion or exchange of stock shall go into effect, or a
date in connection with obtaining such consent, as a record date
for the determination of the stockholders entitled to notice of,
and to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend, or to receive such allotment of
rights, or to exercise such rights, or to give such consent, as
the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date as aforesaid.
Section 5. Shareholder List. At least ten days before every
election of directors of the Corporation, the Secretary shall
<PAGE>
prepare and file in the office where the election is to be held a
complete list of the stockholders entitled to vote at the ensuing
election, arranged in alphabetical order, with the residence of
each stockholder and the number of voting shares held by him, and
such list shall at all times, during the usual hours for business
and during the whole time of said election, be open to the
examination of any stockholder.
Section 6. Quorum. At all meetings of the stockholders a quorum
shall consist of the persons representing a majority of the
outstanding shares of the stock of the Corporation entitled to
vote at such meeting. In the absence of a quorum no business
shall be transacted except that the stockholders present in
person or by proxy and entitled to vote at such meeting shall
have power to adjourn the meeting from time to time without
notice other than announcement at the meeting until a quorum
shall be present. At any such adjourned meeting at which a
quorum shall be present any business may be transacted which
might have been transacted at the meeting on the date specified
in the original notice. If a quorum is present at any meeting
the holders of the majority of the shares of the Corporation
issued and outstanding and entitled to vote at the meeting who
shall be present in person or by proxy at the meeting shall have
power to act upon all matters properly before the meeting, and
shall also have power to adjourn the meeting to any specific time
or times, and no notice of any such adjourned meeting need be
given to stockholders absent or otherwise.
Section 7. Order of Business. At all meetings of the
stockholders the following order of business shall be
substantially observed, as far as it is consistent with the
purpose of the meeting:
Election of Directors
Ratification or Rejection of Selection of Auditors
New Business
Section 8. Right To Vote By Proxy. At any meeting of the
stockholders of the Corporation every stockholder having the
right to vote shall be entitled, in person or by proxy appointed
by an instrument in writing subscribed by such stockholder and
bearing a date not more than three years prior to said meeting
unless such instrument provides for a longer period, to one vote
for each share of stock having voting power registered in his
name on the books of the Corporation.
PAGE
<PAGE>
ARTICLE IV
DIRECTORS
Section l. Number of Directors. The Board of Directors shall
consist of not less than three nor more than twelve members, who
may be any persons, whether or not they hold any shares of the
stock of the Corporation.
Section 2. Election of Directors. The directors shall be
elected annually by the stockholders of the Corporation at their
annual meeting, and shall hold office for the term of one year
and until their successors shall be duly elected and shall
qualify.
Section 3. Directors' Duties. The Board of Directors shall have
the control and management of the business of the Corporation,
and in addition to the powers and authority by these By-Laws
expressly conferred upon them, may, subject to the provisions of
the laws of the State of Illinois and of the Certificate of
Incorporation, exercise all such powers of the Corporation and do
all such acts and things as are not required by law or by the
Certificate of Incorporation to be exercised or done by the
stockholders.
Section 4. Directors' Vacancies. If the office of any director
becomes or is vacant by reason of death, resignation, removal,
disqualification or otherwise, the remaining directors may by
vote of a majority of said directors choose a successor or
successors who shall hold office for the unexpired term; provided
that vacancies on the Board of Directors may be so filled only
if, after the filling of the same, at least two-thirds of the
directors then holding office would be directors elected to such
office by the stockholders at a meeting or meetings called for
the purpose. In the event that at any time less than a majority
of the directors were so elected by the stockholders, a special
meeting of the stockholders shall be held as promptly as possible
and in any event within sixty days for the purpose of electing
directors to fill any vacancy which has not been filled by the
directors in office. Any other vacancies in the Board of
Directors not filled by the directors may also be filled for an
unexpired term by the stockholders at a meeting called for that
purpose.
Section 5. Appointment of Officers. The Board of Directors
shall have power to appoint, and at its discretion to remove or
suspend, any officer, officers, managers, superintendents,
subordinates, assistants, clerks, agents and employees,
permanently or temporarily, as the Board may deem appropriate,
and to determine their duties and to fix, and from time to time
change, their salaries or emoluments, and to require security in
such instances and in such amounts as it may deem proper. No
contract of employment for services to be rendered to the
Corporation shall be of longer duration than two weeks, unless
<PAGE>
such contract of employment shall be in writing, signed by the
officers of the Corporation and approved by the Board of
Directors.
Section 6. Delegation of Officers' Duties. In Case of the
absence of an officer of the Corporation, or for any other reason
which may seem sufficient to the Board of Directors, the Board
may delegate his powers and duties for the time being to any
other officer of the Corporation or to any director.
Section 7. Directors Committees. The Board of Directors may, by
resolution or resolutions passed by the majority of the whole
Board, designate one or more committees, each committee to
consist of two or more of the directors of the Corporation, which
to the extent provided in such resolution or resolutions, shall
have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and
may have power to authorize the seal of the Corporation to be
affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be determined
from time to time by resolution adopted by the Board of
Directors. Any such committee shall keep regular minutes of its
proceedings, and shall report the same to the Board when
required.
Section 8. Location of Books and Records. The Board of
Directors may hold their meetings and keep the books of the
Corporation, except the original or duplicate stock ledger,
outside of the State of Illinois at such place or places as they
may from time to time determine.
Section 9. Compensation. The Board of Directors shall have
power to fix, and from time to time to change the compensation,
if any, of the directors of the Corporation.
Section 10. Presentation of Business Condition. The Board of
Directors shall present at each annual meeting of the
shareholders, and, when called for by vote of the stockholders,
at any special meeting of the stockholders, a full and clear
statement of the business and condition of the Corporation.
ARTICLE V
DIRECTORS' MEETINGS
Section l. Regular Meetings. Regular meetings of the Board of
Directors shall be held without notice at such times and places
as may be determined by the Board.
Section 2. Special Meetings. Special meetings of the Board of
Directors may be called at any time by the President, and shall
be called by the President upon the written request of a majority
of the members of the Board of Directors. Unless notice is
<PAGE>
waived by all the members of the Board of Directors, notice of
any special meeting shall be sent to each director at least
twenty-four hours prior to the date of such meeting, and such
notice shall state the time, place and object or objects of such
special meeting.
Section 3. Quorum. Three members of the Board of Directors
shall constitute a quorum for the transaction of business at any
meeting. The act of a majority of the directors present at any
meeting where there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by
statute or by the Certificate of Incorporation or by these
By-Laws.
Section 4. Order of Business. The order of business at meetings
of the Board of Directors shall be prescribed from time to time
by the Board.
ARTICLE VI
OFFICERS AND AGENTS
Section 1. Organizational Meeting. At the first meeting of the
Board of Directors after the election of directors in each year,
the Board shall elect a President, a Secretary and a Treasurer,
and may elect or appoint one or more Vice presidents, Assistant
Secretaries, Assistant Treasurers, and such other officers and
agents as the Board may deem necessary and as the business of the
Corporation may require.
Section 2. Term. The President and the chairman of the Board
shall be elected from the membership of the Board of Directors,
but other officers need not be members of the Board of Directors.
Any two or more offices may be held by the same person except the
office of the President. All officers of the Corporation shall
serve for one year and until their successors shall have been
duly elected and shall have qualifies; provided, however, that
any officer maybe removed at any time, either with or without
cause, by action of the Board of Directors.
Section 3. Salaries. The salaries of all officers and agents of
the Corporation shall be fixed by the Board of Directors.
PAGE
<PAGE>
ARTICLE VII
DUTIES OF OFFICERS
PRESIDENT
Section 1. Duties of President. The President shall be the
chief executive officer and head of the Corporation, and in the
recess of the Board of Directors shall have the general control
and management of its business and affairs, subject, however, to
the regulations of the Board of Directors. He shall preside at
all meetings of the stockholders and shall be a member ex-officio
of all standing committees.
Section 2. Calling of Meetings. The President shall call all
special or other meetings of the stockholders and Board of
Directors. In case the President shall at any time neglect or
refuse to call a special meeting of the stockholders when
requested so to do by a majority of the directors, or by the
stockholders representing a majority of the stock of the
Corporation, as is elsewhere in these By-Laws provided, then and
in such case such special meeting shall be called by the
Secretary, or in the event of his neglect or refusal to call such
meeting, may be called by a majority of the directors or by the
stockholders representing a majority of the stock of the
Corporation, who desire such special meeting, as the case may be,
upon notice as hereinbefore provided. In case the President shall
at any time neglect or refuse to call a special meeting of the
Board of Directors when requested to do so by a majority of the
Directors, as is elsewhere in these By-Laws provided, then and in
such case, such special meeting may be called by the majority of
the directors desiring such special meeting, upon notice as
hereinbefore provided.
VICE PRESIDENT
Section 3. Duties of Vice President. In case of the absence of
the President, the Vice President, or, if there be more than one
Vice President. then the Vice Presidents, according to their
seniority, shall preside at the meetings of the stockholders of
the Corporation. In the event of the absence, resignation,
disability or death of the President, such Vice President shall
exercise all the powers and perform all the duties of the
President until the return of the President or until such
disability shall have been removed or until a new President shall
have been elected.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 4. Duties of Secretary. The Secretary shall attend all
meetings of the stockholders and shall record all the proceedings
thereof in a book to be kept for that purpose and he shall be the
custodian of the corporate seal of the Corporation. In the
absence of the Secretary, then the Assistant Secretary or any
<PAGE>
other person appointed or elected by the Board of Directors, as
is elsewhere in these By-Laws provided, may exercise the rights
and perform the duties of the Secretary.
Section 5. Duties of Assistant Secretary. The Assistant
Secretary, or, if there be more than one Assistant Secretary,
then the Assistant Secretaries in the order of their seniority
shall, in the absence or disability of the Secretary, perform the
duties and exercise the powers of the Secretary. Any Assistant
Secretary elected by the Board of Directors shall also perform
such duties and exercise such powers as the Board of Directors
shall from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 6. Duties of Treasurer. The Treasurer shall keep full
and correct accounts of the receipts and expenditures of the
Corporation in books belonging to the Corporation, and shall
deposit all moneys and valuable effects in the name and to the
credit of the Corporation and in such depositories as may be
designated by the Board of Directors, and shall, if the Board
shall so direct, give bond with sufficient security and in such
amount as may be required by the Board of Directors for the
faithful performance of his duties. He shall disburse funds of
the Corporation as may be ordered by the Board of Directors,
taking proper vouchers for such disbursements, and shall render
to the President and Board of Directors at the regular meetings
of the Board, or whenever they may require it, an account of all
his transactions as the chief fiscal officer of the Corporation,
and of the financial condition of the Corporation.
Section 7. Duties of Assistant Treasurer. The Assistant
Treasurer, or if there be more than one Assistant Treasurer, then
the Assistant Treasurers in the order of their seniority, shall,
in the absence or disability of the Treasurer, perform the duties
and exercise the powers of the Treasurer. Any Assistant
Treasurer elected by the Board shall also perform such duties and
exercise such powers as the Board of Directors shall from time to
time prescribe.
ARTICLE VIII
CHECKS, DRAFTS, NOTES, ETC.
Section 1. Authorized Signatures on Checks. All checks shall
bear the signature of such person or persons as the Board of
Directors may from time to time direct.
Section 2. Authorized Signatures on Notes and Drafts. All notes
and other similar obligations and acceptances of drafts by the
Corporation shall be signed by such person or persons as the
Board of Directors may from time to time direct.
<PAGE>
Section 3. Endorsement Authorization. Any officer of the
Corporation or any other employee, as the Board of Directors may
from time to time direct, shall have full power to endorse for
deposit all checks and all negotiable paper drawn payable to his
or their order or to the order of the Corporation.
ARTICLE IX
CORPORATE SEAL
Section 1. Requirements of Corporate Seal. The Corporate seal
of the Corporation shall have inscribed thereon the name of the
Corporation, the year of its organization, and the words
"Corporate Seal, Illinois". Such seal may be used by causing it
or a facsimile thereof to be impressed or affixed or reproduced
or otherwise.
ARTICLE X
DIVIDENDS
Section 1. Time of Declaration. Dividends upon the shares of
the stock of the Corporation may, subject to the provisions of
the Certificate of Incorporation, if any, be declared by the
Board of Directors at any regular or special meeting, pursuant to
law. Dividends may be paid in cash, in property, or in shares of
the stock of the Corporation.
Section 2. Reserve Fund. Before payment of any dividend there
may be set aside out of any funds of the Corporation available
for dividends such sum or sums as the Board of Directors may,
from time to time, in their absolute discretion, think proper as
a reserve fund to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board of Directors
shall deem to be for the best interests of the Corporation, and
the Board of Directors may abolish any such reserve in the manner
in which it was created.
ARTICLE XI
FISCAL YEAR
Section 1. Term of Fiscal Year. The fiscal year of the
Corporation shall begin on January 1 of each year, and end on
December 31 of each year.
ARTICLE XII
NOTICES
Section 1. Form of Notice. Whenever under the provisions of
<PAGE>
these By-Laws notice is required to be given to any director or
stockholder, it shall not be construed to mean personal notice,
and such notice may be given in writing, by mail, by depositing
the same in the post office or letter box, in a postpaid sealed
wrapper, addressed to such director or stockholder at such
address as shall appear on the books of the Corporation or, if
the address of such director or stockholder does not appear on
the books of the Corporation, to such director or stockholder at
the General Post Office in the City of Chicago, Illinois and such
notice shall be deemed to be given at the time it shall be so
deposited in the post office or letter box. In the case of
directors, such notice may also be given by telephone, telegraph
or cable.
Section 2. Waiver of Notice. Any notice required to be given
under these By-Laws may be waived in writing, signed by the
person or persons entitled to such notice, whether before or
after the time stated therein.
Section 3. Indemnification. Each director and officer (and his
heirs, executors, and administrators) shall be indemnified by the
Corporation against reasonable costs and expenses incurred by him
in connection with any action, suit or proceeding to which he may
be made a party by reason of his being or having been a director
or officer of the Corporation, except in relation to any action,
suits or proceedings in which he has been adjudged liable because
of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
In the absence of adjudication which expressly finds that the
director or officer is so liable or which expressly absolves him
of liability for willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of
his office, or in the event of a settlement, each director and
officer (and his heirs, executors and administrators) shall be
indemnified by the Corporation against payments made, including
reasonable costs and expenses, provided that such indemnity shall
be conditioned upon the prior determination by a written opinion
of independent counsel. Amounts paid in settlement shall not
exceed costs, fees and expenses which would have been reasonably
incurred if the action, suit or proceeding had been litigated to
a conclusion. Such a determination by independent counsel, and
the payments of amounts by the Corporation on the basis thereof
shall not prevent a stockholder from challenging such
indemnification by appropriate legal proceedings on the grounds
that the person indemnified was liable to the Corporation or its
security holders by reason of the conduct as used herein. The
foregoing provisions shall be exclusive of any other rights of
indemnification to which the officers and directors might
otherwise be entitled.<PAGE>
<PAGE>
ARTICLE XIII
AMENDMENTS
Section 1. These By-Laws may be amended, altered, repealed or
added to at the annual meeting of the stockholders of the
Corporation or of the Board of Directors, or at any special
meeting of the stockholders or of the Board of Directors called
for the purpose, by the affirmative vote of the holders of a
majority of the shares of stock of the Corporation then issued
and outstanding and entitled to vote, or by a majority of the
whole Board of Directors, as the case may be.
ARTICLE XIV
INVESTMENT RESTRICTIONS
The By-Laws of the Fund provide the following fundamental
investment restrictions; the Fund may not, except (A) by approval
of a majority of the voting securities present at a duly called
meeting, if the holders of more than 50% of the outstanding
voting securities are present or represented by proxy, or (B) of
more than 50% of the outstanding voting securities, whichever is
less:
(a) Act as underwriter for securities of other issuers.
(b) Borrow money or purchase securities on margin, but may
obtain such short term credit 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.
(c) Sell securities short.
(d) 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.
(e) Invest more than 25% of its assets at the time of purchase
in any one industry.
(f) 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.
(g) Make loans. The purchase of a portion of a readily
marketable issue of publicly distributed bonds, debentures or
other debt securities will not be considered the making of a
loan.
<PAGE>
(h) Acquire more than 10% of the securities of any class of
another issuer, treating all preferred securities of an issuer as
a single class and all debt securities as a single class, or
acquire more than 10% of the voting securities or another issuer.
(i) Invest in companies for the purpose of acquiring control of
the management thereof.
(j) 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.
(k) 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.
(l) Invest in securities which may be subject to registration
under the Securities Act of 1933 prior to sale to the public or
which are not at the time of purchase readily saleable.
(m) Invest more than 5% of the total Fund assets, taken at
market value at the time of purchase, in securities of companies
with less than three years' continuous operation, including the
operation of any predecessor.
(n) 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).
(o) 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 that exchange. Warrants acquired in
units or attached to securities are not included in this
restriction.
(p) Invest in restricted, illiquid or other securities without
readily available market quotations.
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY 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 the "Investment Adviser").
WITNESSETH:
WHEREAS, the Fund engages in the business of investing and
reinvesting its assets and property in various stocks and
securities, and the Investment Adviser engages in the business
of providing investment advisory services,
NOW THEREFORE, 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 the Investment Adviser, for
the period set forth in Paragraph 8 hereof, and on the terms
set forth herein, to render investment advisory services to the
Fund, subject to the supervision and direction of the Board of
Directors of the Fund. The Investment Adviser hereby accepts
such employment and agrees, during such period, to render the
investment advisory services and assume the obligations herein
set forth, for the compensation provided. The Investment
Adviser, 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 a compensation for the investment advisory
services to be rendered to the Fund by the Investment Adviser
under the provisions of this Agreement, the Fund shall pay to
the Investment Adviser a monthly fee equal to one-twelfth of
one percent per month (the equivalent of 1% per annum) of the
daily average net assets of the Fund during the month. The
first payment of the fee hereunder shall be prorated on a daily
basis from the date this Agreement takes effect.
3. It is expressly understood and agreed that the
investment advisory services to be rendered by the Investment
Adviser to the Fund under the provisions of this Agreement are
not to be deemed to be exclusive, thus, the Investment Adviser
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 the Investment Adviser as directors,
officers, employees, agents and shareholders, and that
directors, officers, employees, agents and shareholders of the
Investment Adviser 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 the Investment
Adviser may continue as directors, officers, employees, agents
and shareholders of the Fund; that the Investment Adviser, its
directors, officers, employees, agents and shareholders may
engage in other business, may render investment advisory
services to other investment companies, or to any other
corporation, association, firm or individual, may render
underwriting services to the Fund, or to any other investment
company, corporation, firm or individual.
5. The Adviser agrees to provide the Fund office space
and personnel. The Adviser also agrees to pay the salaries of
those of the Fund's employees, officers, and directors who are
also employees, officers, and/or directors of the Adviser, all
executive salaries and executive expenses, and 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 agrees to pay 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, 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.
6. The Fund's expenses are limited by an excess
reimbursement expense. If the annual operating and management
expenses, not including taxes and interest, exceeds 1.7% of the
average net assets of the Fund, the Adviser will reimburse the
Fund for any such excess on a yearly
basis.
7. The Investment Adviser 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 the Investment Adviser 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, Investment Adviser against
any liability to Fund or to its shareholders to which
Investment Adviser 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.
8. This Agreement shall continue in effect until
May 31, 2001, 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.
9. 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. The contract
will automatically terminate in the event of its assignment by
the Investment Adviser (within the meaning of the Investment
Company Act of 1940), which shall be deemed to include a
transfer of control of the Investment Adviser. 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 the
Investment Adviser the fee provided in Paragraph 2 hereof,
prorated to the date of termination.
10. This Agreement shall not be assigned by the Fund
without prior written consent thereto of the Investment
Adviser. This Agreement shall terminate automatically in the
event of its assignment by the Investment Adviser unless an
exemption from such automatic termination is granted by order
or rule of the Securities and Exchange Commission.
11. The Investment Advisor hereby assures the Fund that
the initial capital investment of $100,000 made by the
Investment Advisor is made for investment purposes, and the
Investment Advisor does not have any present intention of
redeeming or reselling its investment.
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
26th day of December, 1998.
KENILWORTH FUND, INC.
Attest: By /s/Mohini C. Pai
/s/Savitri Pai
President
INSTITUTIONAL PORTFOLIO SERVICES, LTD.
Attest: By /s/ B. Padmanabha Pai
/s/ Denise Iwaniec
President
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 $40,000
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, 1998, 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 26th day of December, 1998
KENILWORTH FUND, INC.
Attest: /s/Denise M. Iwaniec By:/s/ Mohini C. Pai
President
INSTITUTIONAL PORTFOLIO SERVICES, LTD.
By:/s/ B. Padmanabha Pai
President
LAW OFFICES
LEAHY, EISENBERG & FRAENKEL, LTD.
309 West Washington Street
Eighth Floor
Chicago, Illinois 60606
(312)368-4554
FAX# (312)368-4562
January 27, 1993
Kenilworth Fund, Inc.
1 First National Plaza,
Suite 2594
Chicago, Illinois 60603
Re: Kenilworth Fund, Inc.
Out File: 110701-6273-Y
Ladies and Gentlemen:
We have been asked to provide our opinion regarding the
legality of 500,000 shares of common stock (the "Shares") to be
registered by the Kenilworth Fund (the "Fund") under the
Securities Act of 1933 (the "Securities Act"). The Fund proposes
to register its initial registration statement (the "Registration
Statement") under the Securities Act of the Investment Company
Act of 1940 (the "Investment Company Act").
In preparing our opinion, we have reviewed the following:
Articles of Incorporation for the Fund; a Certificate issued by
the Secretary of State of Illinois, dated October 24, 1988,
confirming that the Fund is incorporated under the laws of the
State of Illinois; By-laws of the Fund; annual reports for the
years 1989, 1990, 1991, and 1992 for the Fund; the preliminary
Registration Statement to be filed with the United States
Securities and Exchange Commission; the Business Corporation Act
of Illinois; and other such documents and materials as we have
deemed necessary for the purposes of this opinion. With respect
to the good standing of the Fund, we are advised that the Fund is
in good standing with the State of Illinois, its state of
incorporation, and that all taxes due have been paid.
Based upon our review of the foregoing and subject to the
qualifications contained herein, it is our opinion that under the
Business Corporation Act of Illinois, the Shares of the Fund to
be registered will, when sold, be legally issued, fully paid, and
non-assessable. Upon effectiveness of the Registration Statement
of the Fund, filed pursuant to the Investment Company Act, the
Fund will be authorized to solicit and cause to be solicited
share purchase orders and to issue shares for a cash
consideration, which shares so issued will be validly issued,
fully paid, and non-assessable shares. In forming our opinion
set forth above, we have relied, without independent
<PAGE>
verification, upon the aforesaid representations of the officers
and directors of the Fund, the representations of the accountant
of the Fund, and the representations that the documents described
above are true and correct, and our opinion is qualified to the
extent of such reliance.
The foregoing opinion is subject to the qualification that
it is based solely upon laws, facts and circumstances existing as
of the date hereof. Accordingly, we have assumed, for purposes
of our opinion, that no change in any of such laws (or the
interpretation thereof), facts or circumstances will have
occurred at the time of any issuance of the Shares.
We offer no opinion with respect to the offer and sale of
the Fund's shares under the securities laws of the several
states, the District of Columbia, any territory of the United
States or any foreign country.
We consent to the filing of this opinion as an exhibit to
the Registration Statement of the Fund filed with the United
States Securities and Exchange Commission and to the use of this
opinion in connection with any filing with any state securities
agency or commission in any state in which Shares are to be
offered. We also consent to the reference in the Fund's
Prospectus and/or Statement of Additional Information to the fact
that this opinion concerning the legality of the issue on behalf
of the Fund, as issuer, has been rendered by us.
Very Truly Yours,
LEAHY, EISENBERG & FRAENKEL, LTD.
/s/Howard Randell
By: Howard Randell
HBR/mf
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use of our report dated January 7, 1999, on the
financial statements of Kenilworth Fund, Inc. referred to
therein, in Post-Effective Amendment No. 7 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 26, 1999
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<CIK> 0000899772
<NAME> KENILWORTH FUND, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 6,148,063
<INVESTMENTS-AT-VALUE> 11,845,716
<RECEIVABLES> 10,220
<ASSETS-OTHER> 329,791
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<TOTAL-ASSETS> 12,185,727
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<OTHER-ITEMS-LIABILITIES> 7,452
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<EXPENSES-NET> 147,235
<NET-INVESTMENT-INCOME> (25,253)
<REALIZED-GAINS-CURRENT> (8,169)
<APPREC-INCREASE-CURRENT> 2,109,675
<NET-CHANGE-FROM-OPS> 2,076,253
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 24,894
<NUMBER-OF-SHARES-REDEEMED> 7,957
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,388,466
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 103,469
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 147,235
<AVERAGE-NET-ASSETS> 10,361,400
<PER-SHARE-NAV-BEGIN> 18.17
<PER-SHARE-NII> (.04)
<PER-SHARE-GAIN-APPREC> 3.78
<PER-SHARE-DIVIDEND> 0
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<PER-SHARE-NAV-END> 21.91
<EXPENSE-RATIO> 1.42
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<AVG-DEBT-PER-SHARE> 0
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