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DELAFIELD
FUND, INC.
Annual Report
September 30, 1995
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<PAGE>
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DELAFIELD 600 FIFTH AVENUE, NEW YORK, N.Y. 10020
FUND, INC. (212) 830-5200
===============================================================================
Dear Shareholder,
During the 1995 fiscal year ending September 30th, the Fund's net asset value
increased 20.1% versus an increase of 29.7% in the Standard & Poor's 500, each
on a total return basis.
As of September 29th a milestone event in our short history took place when two
partnerships, which we managed, terminated and virtually all the distributed
assets were invested in the Delafield Fund. As a result, our assets now total
more than $42.0 million and our exposure to equities has dropped from 73% at the
end of June to 59% at fiscal year end. The ten largest holdings of the Fund
accounted for 24% of total assets.
We are disappointed that we have not kept up with the market's overall gain in
1995 but we are not surprised by this. Our reserves have been substantial
throughout the year, which we believe has been prudent. However, the new
infusion has raised them to an even higher level. We are not uncomfortable with
this liquidity, but it will inevitably be a drag on our results if the market
continues to climb. While we believe it may take a little time to bring our
equity exposure back to a more normal level, we expect the tax loss selling this
year may bring some attractively priced investment opportunities to the surface.
The Fund's net asset value as of September 30, 1995 was $11.95 per share after
accounting for a dividend distribution of $0.99 per share; comprised of $0.13 in
current dividends, $0.38 in short term capital gains and $0.48 in long term
capital gains. We hope this ratio will be skewed more to long term gains versus
short term in the future now that the Fund is almost two years old.
Nevertheless, if we believe that the increase in the price of one of our
holdings is unsustainable, we will trim it or even sell it all since valuation
can overwhelm tax considerations.
We thank you for your support and look forward to serving your needs.
Sincerely,
/S/ J. Dennis Delafield /s/ Vincent Sellecchia
J. Dennis Delafield Vincent Sellecchia
Chairman President
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<PAGE>
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===============================================================================
The Table below represents the omitted line graph which compares the change in
value of $10,000 investment in the Delafield Fund, Inc. and the S&P Index.
<TABLE>
<CAPTION>
INCEPTION S&P 500 DELAFIELD
- --------- --------- ---------
<C> <C> <C>
11/19/93 10,000.00 10,000.00
12/31/93 10,112.00 10,170.00
03/31/94 9,728.76 10,060.16
06/30/94 9,769.62 10,360.96
09/30/94 10,247.35 10,892.48
12/31/94 10,245.30 10,738.90
03/31/95 11,243.19 11,805.27
06/30/95 12,316.92 12,349.49
09/30/95 13,296.11 13,075.64
</TABLE>
The following table was embedded in the line graph represented above.
<TABLE>
<CAPTION>
Average Annual Return
-------------------------------------------
Since
One Year Five Year 11/19/1993
------------ ------------- ------------
<S> <C> <C> <C>
Delafield Fund, Inc. 20.05% N/A 30.77%
S&P 500 29.74% N/A 32.95%
</TABLE>
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<PAGE>
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DELAFIELD FUND, INC.
STATEMENT OF INVESTMENTS
SEPTEMBER 30, 1995
===============================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (58.77%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Banking (2.13%)
California Federal Bank, Federal Savings Bank* 14,600 $ 229,950
Mellon Bank Corporation 15,000 669,375
--------------
899,325
--------------
Chemicals (2.08%)
Lubrizol Corporation 27,000 880,875
--------------
Consumer Products and Services (1.51%)
Bush Industries 45,000 641,250
--------------
Energy (9.22%)
ENSCO International Inc.* 12,000 204,000
Getty Petroleum 8,000 108,000
J Ray McDermott S.A.* 26,500 596,250
McDermott International, Inc. 65,000 1,283,750
Oryx Energy Co.* 35,000 455,000
Louisiana Land Exploration Company 25,000 890,625
Union Texas Petroleum Holdings 20,000 365,000
--------------
3,902,625
--------------
Food and Beverage (1.16%)
Dole Food Company, Inc. 5,000 173,125
Interstate Bakeries Corp. 15,000 316,875
--------------
490,000
--------------
Industrial Products (9.32%)
AMETEK, Inc. 62,000 1,061,750
Federal Mogul Corporation 30,000 573,750
Harsco Corporation 15,000 834,375
Sheldahl, Inc.* 5,000 96,250
Sundstrand Corp. 6,000 388,500
Westinghouse Electric 39,000 585,000
Zemex Corporation* 42,000 404,250
--------------
3,943,875
--------------
Industrial Services (2.13%)
Commerce Clearing House 10,000 222,500
Univar Corp. 48,400 677,600
--------------
900,100
--------------
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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DELAFIELD FUND, INC.
STATEMENT OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1995
===============================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Insurance (Life) (5.60%)
Life Partners Group 40,000 $ 690,000
PennCorp Financial Group, Inc. 18,000 429,750
Provident Cos., Inc. Class A 5,000 133,750
Provident Cos., Inc. Class B 22,000 596,750
Security-Connecticut Corp. 10,000 276,250
UNUM Corporation 4,600 242,650
---------------
2,369,150
---------------
Insurance (Property/Casualty) (2.58%)
Allmerica Property & Casualty 12,600 300,825
Guaranty National Corporation 15,000 249,375
Home State Holdings Inc.* 60,000 540,000
---------------
1,090,200
---------------
Insurance (Reinsurance) (3.10%)
Risk Capital Holding Incorporated* 20,000 435,000
Zurich Reinsurance Centre Holdings, Inc.* 29,500 877,625
---------------
1,312,625
---------------
Office Equipment (1.82%)
BancTec, Inc.* 21,000 451,500
Wang Laboratories, Inc.* 20,000 317,500
---------------
769,000
---------------
Real Estate (2.59%)
Catellus Development Corp.* 65,000 414,375
Kimco Realty Corp. 3,000 119,625
RPS Realty Corp. 125,000 562,500
---------------
1,096,500
---------------
Retail (6.28%)
Dress Barn, Inc.* 55,000 570,625
The Limited, Inc. 100,000 1,900,000
Waban Inc.* 10,000 188,750
---------------
2,659,375
---------------
Textile/Apparel (5.56%)
Farah Manufacturing* 116,000 855,500
Fruit of the Loom, Inc.* 50,000 1,031,250
Haggar Corp. 25,000 465,625
---------------
2,352,375
---------------
Miscellaneous (3.69%)
ARI Network* 50,000 125,000
Florida East Coast Industries 4,000 287,000
Gilbert Associates, Inc. 35,000 472,500
London American Growth* 650,000 678,464
---------------
1,562,964
---------------
Total Common Stocks (Cost $23,187,618) $ 24,870,239
---------------
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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===============================================================================
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
------ ------
Corporate Bonds (2.72%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Miscellaneous (1.93%)
American Annuity Group, 11.125%, due 2/01/2003 $ 205,000 $ 216,275
American Annuity Group Senior Notes, 9.500%, due 8/15/2001 600,000 600,000
--------------
816,275
--------------
Industrial Products (0.50%)
AMETEK, Inc. 9.750%
debentures, due 03/15/2004 200,000 213,000
--------------
Insurance (Life) (0.29%)
PennCorp Financial Group 9.250%, due 12/15/2003 125,000 124,375
--------------
Total Corporate Bonds (Cost $1,140,521) $ 1,153,650
--------------
<CAPTION>
U.S. Government Obligations (2.35%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Notes, 5.500%, due 07/31/97 1,000,000 993,906
--------------
Total U.S. Government Obligations (Cost $995,739) $ 993,906
--------------
<CAPTION>
Short-Term Investments (6.34%)
Repurchase Agreements (6.34%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Morgan (J.P.) Securities Inc., 6.35%, due 10/02/95
(Collateralized by $2,548,000
U.S. Treasury Notes, 7.750%, due 01/31/2000) 2,681,000 2,681,000
--------------
Total Short-Term Investments (Cost $2,681,000) $ 2,681,000
--------------
Total Investments (70.18%) (Cost $28,004,878+) 29,698,795
Cash and Other Assets, Net of Liabilities (29.82%) 12,617,472
--------------
Net Assets (100.00%) $ 42,316,267
==============
* Non-income producing.
+ Aggregate cost for federal income tax purposes is $28,020,242. Aggregate
unrealized appreciation and depreciation, based on cost for federal income
tax purposes, are $1,919,595 and $241,042 respectively.
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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DELAFIELD FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
===============================================================================
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities at value (Cost $28,004,878).............................. $ 29,698,795
Cash............................................................................... 97,719
Receivables:
Capital shares sold............................................................. 22,941,380
Dividends and interest.......................................................... 38,982
Deferred organization expenses..................................................... 27,274
Other.............................................................................. 42,085
---------------
Total assets................................................................ 52,846,235
---------------
<CAPTION>
LIABILITIES
<S> <C>
Payables:
Securities purchased............................................................ 10,436,902
Capital shares redeemed......................................................... 222
Due to manager for organization expenses........................................... 43,504
Accrued expenses and other liabilities............................................. 49,340
---------------
Total liabilities........................................................... 10,529,968
---------------
Net assets......................................................................... 42,316,267
===============
Share outstanding (Note 3)......................................................... 3,541,544
Net asset value.................................................................... 11.95
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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DELAFIELD FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1995
===============================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Interest....................................................................... $ 205,726
Dividends...................................................................... 178,518
---------------
Total income............................................................. 384,244
---------------
Expenses: (Note 2)
Investment management fee...................................................... 104,515
Administration fee............................................................. 26,129
Distribution fee............................................................... 32,661
Custodian, shareholder servicing and related shareholder expenses.............. 50,806
Legal, compliance and filing fees.............................................. 31,639
Audit and accounting........................................................... 44,586
Directors' fees and expenses................................................... 7,533
Amortization of organization costs............................................. 8,694
Other.......................................................................... 1,419
---------------
Total expenses........................................................... 307,982
Less:
Fees waived.............................................................. ( 92,264)
Expenses paid indirectly................................................. ( 8,094)
---------------
Net expenses............................................................. 207,624
---------------
Net investment income.................................................... 176,620
---------------
<CAPTION>
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain (loss) on investments............................................ 1,109,109
Net change in unrealized appreciation (depreciation) of investments................ 1,256,131
---------------
Net gain (loss) on investments...................................... 2,365,240
---------------
Increase (decrease) in net assets from operations.................................. $ 2,541,860
===============
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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DELAFIELD FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
===============================================================================
<TABLE>
<CAPTION>
November 19, 1993
Year Ended (Inception) to
September 30, 1995 September 30, 1994
------------------ ------------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations:
Net investment income...................................................$ 176,620 $ 53,186
Net realized gain on investments........................................ 1,109,109 113,563
Net change in unrealized appreciation (depreciation) ................... 1,256,131 437,786
-------------- ----------------
Increase (decrease) in net assets from operations...................... 2,541,860 604,535
Distributions from:
Net investment income...................................................( 167,085) ( 53,384)
Net realized gain on investments........................................( 1,213,983) --
Capital share transactions (Note 3)....................................... 31,497,340 9,006,984
-------------- ----------------
Total increase (decrease)............................................... 32,658,132 9,558,135
Net Assets:
Beginning of period..................................................... 9,658,135 100,000
-------------- ----------------
End of period...........................................................$ 42,316,267* $ 9,658,135
============== ================
* Undistributed net investment income at September 30, 1995 was $9,337.
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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DELAFIELD FUND, INC.
NOTES TO FINANCIAL STATEMENTS
===============================================================================
1. Summary of Accounting Policies
Delafield Fund, Inc. is a no-load, diversified, open-end management investment
company registered under the Investment Company Act of 1940. Its financial
statements are prepared in accordance with generally accepted accounting
principles for investment companies as follows:
a) Valuation of Securities -
Securities traded on a national securities exchange or admitted to trading
on the National Association of Securities Dealers Inc. Automated Quotations
National List are valued at the last reported sales price on the last
business day of the fiscal period. Common stocks for which no sale was
reported on that date and over-the-counter securities, are valued at the
mean between the last reported bid and asked prices. United States
Government obligations and other debt instruments having sixty days or less
remaining until maturity are stated at amortized cost. Debt instruments
having a remaining maturity of more than sixty days will be valued at the
highest bid price obtained from a dealer maintaining an active market in
that security or on the basis of prices obtained from a pricing service
approved as reliable by the Board of Directors. All other investment
assets, including restricted and not readily marketable securities, are
valued in such manner as the Board of Directors in good faith deems
appropriate to reflect their fair market value.
b) Federal Income Taxes -
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income to its shareholders. Therefore, no provision for
federal income tax is required.
c) General -
Securities transactions are recorded on the trade date basis. Interest
income is accrued as earned and dividend income is recorded on the
ex-dividend date. Realized gains and losses from securities transactions
are recorded on the identified cost basis. Dividends and capital gain
distributions to shareholders are recorded on the ex-dividend date. It is
the Fund's policy to take possession of securities as collateral under
repurchase agreements and to determine on a daily basis that the value of
such securities plus accrued interest are sufficient to cover the value of
the repurchase agreements.
2. Investment Management Fees and Other Transactions with Affiliates
Under the Investment Management Contract, the Fund pays an investment management
fee to Reich & Tang Asset Management, L.P. ("The Manager") equal to .80% of the
Fund's average daily net assets. The Manager is required to reimburse the Fund
for its expenses (exclusive of interest, taxes, brokerage, and extraordinary
expenses) to the
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<PAGE>
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DELAFIELD FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
2. Investment Management Fees and Other Transactions with Affiliates (Continued)
extent that such expenses, including the management fee, for any fiscal year
exceed 2 1/2% of the first $30 million of its average net assets, 2% of the next
$70 million of its average net assets and 1 1/2% of its average net assets in
excess of $100 million. No such reimbursement was required for the year ended
September 30, 1995.
Pursuant to an Administrative Services Agreement, the Fund pays to the Manager
an annual fee of .20% of the Fund's average daily net assets.
The Manager is a wholly-owned subsidiary of New England Investment Companies,
L.P. ("NEIC"). On August 16, 1995, New England Mutual Life Insurance Company
("The New England"), the owner of NEIC's general partner and a majority owner of
the limited partnership interest in NEIC, entered into an agreement to merge
with Metropolitan Life Insurance Company ("MetLife"), with MetLife to be the
survivor of the merger. The merger is subject to several conditions, including
the required approval, by shareholders of the Fund of a proposed new investment
advisory agreement, intended to take effect at the time of the merger. The new
agreement will be substantially similar to the existing agreement.
Pursuant to a Distribution Plan adopted under Securities Exchange Commission
Rule 12b-1, the Fund and Reich & Tang Distributors L.P. (the Distributor) have
entered into a Distribution Agreement and a Shareholder Servicing Agreement. For
its services under the Shareholder Servicing Agreement, the Distributor receives
from the Fund an annual fee equal to .25% of the Fund's average daily net
assets. There were no additional expenses borne by the Fund pursuant to the
Distribution Plan.
During the year ended September 30, 1995, the Manager and the Distributor
voluntarily waived investment management fees, administration fees and
shareholder servicing fees of $33,474, $26,129 and $32,661, respectively.
Brokerage commissions paid during the year to the Distributor amounted to
$31,896.
Fees are paid to Directors who are unaffiliated with the Manager on the basis of
$1,500 per annum plus $250 per meeting attended.
Included in the Statement of Operations under the caption "Custodian,
Shareholder Servicing and related shareholder expenses" are custodian expense
offsets of $8,094.
3. Capital Stock
At September 30, 1995, 20,000,000,000 shares of $.001 par value stock were
authorized and capital paid in amounted to $40,604,324. Transactions in capital
stock were as follows:
<TABLE>
<CAPTION>
Year November 19, 1993
Ended (Inception) to
September 30, 1995 September 30, 1994
--------------------------------- ----------------------------
Shares Amount Shares Amount
------------- -------------- ---------- -----------
<S> <C> <C> <C> <C>
Sold........................................ 2,620,590 31,143,565 896,231 9,145,032
Issued on reinvestment of dividends......... 117,889 1,380,528 5,041 53,002
Redeemed.................................... ( 89,769) ( 1,026,753) ( 18,438) ( 191,050)
----------- ------------- -------- ---------
Net increase (decrease)..................... 2,648,710 $ 31,497,340 882,834 $ 9,006,984
=========== ============= ======== ==========
</TABLE>
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<PAGE>
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4. Investment Transactions
Purchases and sales of investment securities, other than U.S. Government direct
and agency obligations and short-term investments, totaled $23,350,284 and
$6,243,560 respectively. Accumulated undistributed net realized gains at
September 30, 1995 amounted to $8,689.
5. Selected Financial Information
<TABLE>
<CAPTION>
November 19, 1993
Year (Inception)
Ended to
September 30, 1995 September 30, 1994
------------------ ------------------
<S> <C> <C>
Per Share Operating Performance:
(for a share outstanding throughout the period)
Net asset value, beginning of period.... $ 10.82 $ 10.00
---------------- ---------------
Income from investment operations:
Net investment income................. .13 0.07
Net realized and unrealized
gains (losses) on investments.......... 1.99 0.82
--------------- ---------------
Total from investment operations........... 2.12 0.89
--------------- ---------------
Less distributions:
Dividends from net investment income..... ( .13) ( .07)
Distribution from net realized gains on investments ( .86) ---
--------------- ---------------
Total distributions........................ ( .99) ( .07)
--------------- ---------------
Net asset value, end of period............. $ 11.95 $ 10.82
=============== ===============
Total Return............................... 20.05% 8.93%+
=============== ===============
Ratios/Supplemental Data...................
Net assets, end of period(000)............. $ 42,316 $ 9,658
Ratios to average net assets:
Expenses................................ 1.65%*++ 1.78%*++
Net investment income................... 1.35%*++ 0.96%*++
Portfolio turnover rate..................... 70.36 42.84
* Annualized
+ Not Annualized
++ Net of investment management, administration and shareholder servicing fees
waived equivalent to .71% and 1.12%, respectively, of average net assets.
</TABLE>
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<PAGE>
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DELAFIELD FUND, INC.
INDEPENDENT AUDITOR'S REPORT
===============================================================================
The Board of Directors and Shareholders
Delafield Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Delafield Fund, Inc. as of September 30, 1995
and the related statement of operations for the year then ended and the
statements of changes in net assets, and the selected financial information for
the year then ended and for the period from November 19, 1993 (inception) to
September 30, 1994. These financial statements and selected financial
information are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and selected financial
information based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and selected
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of September 30, 1995 by correspondence with the custodian and brokers.
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 selected financial information
referred to above present fairly, in all material respects, the financial
position of Delafield Fund, Inc. as of September 30, 1995, the results of its
operations, the changes in its net assets and the selected financial information
for the periods indicated, in conformity with generally accepted accounting
principles.
/s/ Mc Gladrey & Pullen, LLP
New York, New York
October 27, 1995
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<PAGE>
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This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors in the Fund
unless preceded or accompanied by an effective prospectus, which includes
information regarding the Fund's objectives and policies, experience of its
management, marketability of shares, and other information.
- -------------------------------------------------------------------------------
Delafield Fund, Inc.
600 Fifth Avenue
New York, New York 10020
Manager
Reich & Tang Asset Management, L.P.
600 Fifth Avenue
New York, New York 10020
Custodian, Transfer Agent &
Dividend Disbursing Agent
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
