KENILWORTH FUND, INC.
21 S. Clark Street
Suite 2594
Chicago, IL 60603
SEMI-ANNUAL REPORT
June 30, 2000
(Unaudited)
Advisor's Perspective
June 30, 2000
DJIA: 10,447.89
S&P: 1,454.60
The NAV of the Kenilworth Fund, Inc. closed at $32.99 on June
30, 2000. The Fund registered a gain of 20.18% for the first six
months of the year. All major equity averages declined, such as
DJIA (-8.48%), S&P 500 (-.42%) and the technology dominant Nasdaq
(-2.50%). During the second quarter, our gain was 4.62% which
contrasts with the decline of -(3.99%) for the DJIA, and (-2.66%)
for the S&P 500. Very few funds were up during this quarter.
This was the quarter that reacted very negatively to the 50 basis
points rise in interest rates by the Federal Reserve. The Nasdaq
average declined by over 36% from its high of around 5,000 to
around 3,200. All the speculative bubble of the last two years
in the dot-com world was punctured. The old economy stocks in
the financial, industrial and cyclical sectors had already sold
off to more reasonable levels since the tightening by the Federal
Reserve began in June of 1999.
Year-to-date, and in the last quarter, the best performing
sectors were health care, energy and utilities. However, four of
the five best performing companies in the S&P 500 Index were
technology companies all of which we do have in our portfolio:
namely Intel, Cisco Systems, Oracle and Nortel Networks. It may
be of interest for you to know how our largest five stock
holdings comprising 42.22% of the total net assets performed
during the six months and the contributions they made to our
Fund's spectacular 20.18% total return:
YTD Price % of Total % Contribution to
Return (%) Fund Total Return
Intel 62.4 13.92 8.68
ADC Telecommunications 103.6 10.48 10.86
Hewlett Packard 44.4 6.47 2.87
Applied Materials 43.1 5.66 2.44
Oracle 50.0 5.68 2.84
42.22% 27.69%
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Some other smaller holdings in the Fund in terms of net assets
that registered sharp gains in the first six months were:
Corning (+65.4%), Nortel (+38.6%), Cisco (+18.7%), and
American International Group (+8.7%). However, our largest
losers were also in technology as well as some financials:
Intuit (-30.97%), Lucent Technologies (-21.0%), General Motors
(-20.0%), Texas Instruments (-17.0%), Freddie Mac (-13.9%),
Bristol-Myers (-9.3%) and Associates First Capital (-3.1%).
In our Perspectives early this year, we had warned that the
Federal Reserve will drain the excess liquidity they pumped into
the economic system during the last quarter of 1999, due
to their excessive fears of Y2K uncertainties. There is evidence
that the cooling in the economy that started this Spring,
continued into June with the manufacturing sector showing
signs of a sustained slowdown. The June employment figure,
slowing retail sales, along with a slowdown in the housing sector
(the sector that is most sensitive to interest rate rise) may
have slowed the real growth rate in the just ended second quarter
to 4%, from the torrid 5.5% of the first quarter. The operating
profits of all companies in the S&P 500 Index are expected to be
up 19% in the second quarter from the 23.6% in the first quarter.
We agree with the consensus that during the 3rd and 4th quarters
there will be a further deceleration to 18% and 16%,
respectively. Despite this deceleration, these quarterly
earnings are very robust, justifying the current levels of major
stock indices.
As for the balance of the year, we believe that the Federal
Reserve may raise interest rates only modestly and only in
August. That rise has been already discounted by the market and
thus we hope to end this year, (despite occasional sell-offs in
August-September, and high volatility), with attractive
double-digit returns for the sixth year in a row.
Miscellaneous Fund Highlights:
Nothing is more gratifying to us than the kind words from a very
pleased shareholder, M.C. from Texas, who said that, "your
performance has been outstanding and you do add real
value to shareholders". That may be why we have added more new
shareholders this year than all of last (including the Adviser's
two grandchildren born on May 3, 2000). That and our spectacular
performance year-to-date has gotten our asset base to almost $20
million from $15.7 million at year end. Remember $25 million
will get us Nasdaq membership and daily listing in all the
newspapers. Hence, please add to your holdings and urge your
friends to join us in this mutually beneficial enterprise.
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KENILWORTH FUND, INC.
FINANCIAL HIGHLIGHTS
(Unaudited)
Six Months Ended Year Ended
June 30, December 31,
2000 1999
Selected Per-Share Data
Net Asset Value, beginning of period. . . .$27.45 $21.91
Income from Investment Operations
Net Investment Loss. . . . . . . . . .(0.10) (0.12)
Net Realized and Unrealized
Gain on Investments . . . . . . . .5.64 6.02
Total. . . . . . . . . . . . . . .5.54 5.90
Less Distributions
From Net Investment Income . . . . . . .0.00 0.00
From Net Realized Gains. . . . . . . . .0.00 0.36
Total. . . 0.00 0.36
Net Asset Value, end of period. . . . . . .$32.99 $27.45
Total Return . . . . . . . . . . . . . . . .20.18% 26.95%
Ratios and Supplemental Data
Net Assets, end of period (in thousands). $19,209 $15,666
Ratio of Net Expenses to Average Net Assets 0.67% 1.41%
Ratio of Net Investment Income to
Average Net Assets. . ..................(0.34%) (0.52%)
Portfolio Turnover Rate . . . . . . . . . .22.86% 38.29%
The accompanying notes are an integral part of these financial
statements.
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<PAGE>
KENILWORTH FUND, INC.
STATEMENT OF NET ASSETS
June 30, 2000
(Unaudited)
Market
COMMON STOCKS 98.79%a Shares Value Percent
Autos 3.13%
General Motors 6,769 392,602 2.04
General Motors Class H 2,376 208,494 1.09
Banks 3.95%
Citigroup, Inc. 9,500 572,375 2.98
Wells Fargo & Co. 4,800 186,000 0.97
Computer-Semiconductor 24.81%
Intel Corp. 20,000 2,673,740 13.92
Applied Materials, Inc.* 12,000 1,087,500 5.66
International Business Machines7,300 799,802 4.16
Texas Instruments 3,000 205,500 1.07
Computer Software 11.34%
Adaptec, Inc.* 6,000 136,500 0.71
Oracle Systems, Inc.* 13,000 1,092,806 5.69
Intuit, Inc.* 12,500 517,188 2.69
Cisco Systems* 6,800 432,222 2.25
Computer Systems 13.03%
Hewlett-Packard 10,000 1,243,750 6.47
EMC Corporation 9,000 685,125 3.57
Segate Technology 3,000 165,000 0.86
Agilent Technologies 5,500 409,750 2.13
Drugs 8.30%
Merck & Co. 8,000 607,000 3.16
Bristol-Myers Squibb 9,000 524,250 2.73
Pfizer, Inc. 8,125 386,953 2.01
Schering-Plough 1,500 75,937 0.40
Electrical Equipment 5.38%
General Electric 19,500 1,033,500 5.38
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KENILWORTH FUND, INC.
STATEMENT OF NET ASSETS
June 30, 2000
(Unaudited)
Market
COMMON STOCKS Shares Value Percent
Finance 7.23%
Federal National Mortgage 7,500 391,403 2.04
Federal Home Loan Mortgage 18,000 729,000 3.80
Associates First Capital Corp.12,000 267,744 1.39
Insurance 3.98%
American International Group 6,500 763,750 3.98
Telecommunications 15.79%
ADC Telecommunication* 24,000 2,013,000 10.48
Corning, Inc. 2,500 673,750 3.51
Nortel Networks 5,000 346,250 1.80
Utilities-Telephone 1.85%
Lucent Technologies 6,000 355,500 1.85
Total Investments 18,976,391
(Cost $7,553,922)
CASH AND RECEIVABLES
NET OF LIABILITIES 1.21% 232,373
TOTAL NET ASSETS 100.00% $19,208,764
NET ASSET VALUE PER SHARE $32.99
(based on 582,326.859 shares of capital stock outstanding)
a Percentages for various classifications relate to total
net assets.
*Non-income producing security.
The accompanying notes are an integral part of these financial
statements.
<PAGE>
KENILWORTH FUND, INC.
STATEMENT OF OPERATIONS
(Unaudited)
Six Months Ended
INVESTMENT INCOME June 30, 2000
INCOME:
Dividends $50,018
Interest 6,839
Total Income 56,857
EXPENSES:
Investment Advisory Fees 86,913
Administrative and Management Fees 20,000
Registration Fees 1,528
Auditing 3,208
Insurance and Other Expenses 5,222
Total Expenses 116,871
NET INVESTMENT LOSS: (60,014)
NET REALIZED GAIN ON INVESTMENTS 642,465
NET INCREASE IN UNREALIZED APPRECIATION
ON INVESTMENTS 2,600,665
NET REALIZED GAIN AND UNREALIZED APPRECIATION
ON INVESTMENTS 3,243,130
NET INCREASE IN NET ASSETS FROM OPERATIONS $3,183,116
The accompanying notes are an integral part of these financial
statements.
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KENILWORTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
Six Months Ended Year Ended
June 30, 2000 December 31, 1999
OPERATIONS:
Net Investment Loss ($60,014) ($67,860)
Net Realized Gain (Loss)
on Investments 642,465 264,929
Net Increase in Unrealized
Appreciation on Investments 2,600,665 3,124,150
Increase in Net Assets
from Operations 3,183,116 3,321,219
DISTRIBUTIONS To SHAREHOLDERS:
Distributions from Net Investment Income --- ---
Distributions from Net Realized Gains
on Investments --- (206,564)
Decrease in Net Assets resulting
from Distributions --- (206,564)
CAPITAL SHARE TRANSACTIONS:
Proceeds From Shares Issued
(714 and 15,745 shares, respectively) 380,753 365,475
Cost of Shares Redeemed
(10,901 and 6,466 shares, respectively) (20,801) (146,765)
Reinvested Dividends
(0 and 5,612 shares, respectively) --- 154,056
Increase in Net Assets from
Capital Share Transactions 359,952 372,766
Total Increase in Net Assets 3,543,068 3,487,421
NET ASSETS AT BEGINNING OF YEAR
(570,712 and 555,821 shares outstanding, respectively)
15,665,696 12,178,275
NET ASSETS AT END OF PERIOD
(582,327 and 570,712 shares outstanding, respectively)
$19,208,764 $15,665,696
The accompanying notes are an integral part of these
financial statements.
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
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 period ended June 30, 2000, purchases and
sales of investment securities were $4,998,185 and $3,987,177
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 June 30, 2000 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 $40,000 per year payable on a yearly 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. Aggregate Net Unrealized Appreciation as of June 30,
2000 consisted of the following:
Aggregate gross unrealized appreciation: $11,566,498
Aggregate gross unrealized deprecation: (144,030)
Net unrealized appreciation: $11,422,468
<PAGE>
<PAGE>
KENILWORTH FUND, INC.
One First National Plaza
Suite 2594
Chicago, Illinois 60603
(312)236-5388
SEMI-ANNUAL REPORT-SUPPLEMENT
June 30, 2000
RULE 30d-1(b) REPORT ON ANNUAL SHAREHOLDERS MEETING
Pursuant to Rule 30d-1(b) of the Investment Company Act of 1940,
the Kenilworth Fund, Inc., is required to report on the matters
voted upon at the Fund's annual shareholder meeting.
This year's annual meeting occurred on Friday, March 10, 2000
at Maggiano's Little Italy. A brief description of the matters
voted upon, the number of votes cast for, against or withheld, as
well as the number of abstentions and broker non-votes as to each
such matter are listed below. The total number of shares
eligible to be voted were 572,234.
1. The election of the following five directors to serve
until the next Annual Meeting of Shareholders or until their
successors are elected and qualified:
Name of
Director Broker Shareholder
For Against Withheld Abstentions Non-Votes Non-Votes Percent
Mohini C. Pai 392,232 0 0 0 0 180,002 68.54%
B. Padmanabha Pai 392,232 0 0 0 0 180,002 68.54%
Savitri P. Pai 392,232 0 0 0 0 180,002 68.54%
Kirtna Pai 392,232 0 0 0 0 180,002 68.54%
Larry A. Sjaastad 392,232 0 0 0 0 180,002 68.54%
2. The ratification or rejection of the selection
of Grant Thornton LLP. as the independent public
accountants to audit and certify financial statements for the
fiscal year ending December 31, 2000:
Selection of
Grant Thornton LLP
Broker Shareholder
For Against Withheld Abstentions Non-Votes Non-Votes Percent
392,232 0 0 0 0 180,002 68.54%
3. The ratification or rejection of the selection
of The Aurelius Group. P.C., as the independent public accountant
to conduct surprise custodial audits of the Fund's
securities and similar investments for the Fund's fiscal year
ending December 31, 2000:
Selection of
The Aurelius Group. P.C.
Broker Shareholder
For Against Withheld Abstentions Non-Votes Non-Votes Percent
392,232 0 0 0 0 180,002 68.54%
Respectfully Submitted,
Savitri P. Pai
Secretary/Treasurer
