- -------------------------------------------------------------------------------
DELAFIELD
FUND, INC.
Annual Report
December 31, 1995
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
DELAFIELD 600 FIFTH AVENUE, NEW YORK, N.Y. 10020
FUND, INC. (212) 830-5200
===============================================================================
Dear Shareholders:
This past fall our Board of Directors voted to change the Fund's fiscal year to
a calendar year as of December 31, 1995. Henceforth, we will report on a normal
calendar year, with dividends paid twice a year, in June and again in December.
We believe that this change will bring us more in line with industry practice
and will be less costly.
During the quarter ending December 31, 1995, the Fund's net asset value
increased 4.6% versus an increase of 6.0% in the Standard & Poor's 500, all on a
total return basis. For the twelve month period ending December 31, 1995, the
Fund appreciated 27.4% versus an increase of 37.6% in the Standard & Poor's 500,
again on a total return basis.
While we trailed the market in 1995, we have come to know that this will happen
in great bull markets. This is partially because our reserves have been very
large, and partially because we do not invest in a broad spectrum of Dow Jones
or Standard & Poor 500 stocks. Rather we tend to be more concentrated in what we
believe to be special situations.
Enormous savings have been directed into the stock market over the past year. We
believe this will continue since the economic outlook remains favorable:
inflation is modest, interest rates are low, there is the possibility of a
balanced budget, and American industry is generally in fighting trim. Still, as
is our bent, we can find worries including: the next presidential election,
events in Russia, a high level of speculation, and the growing belief that
equities are a sound long term investment at all times. Given our concerns, we
do not expect to increase your exposure to equities until there has been a
sizable correction. Nevertheless, we will not hesitate to raise your commitment,
for the short term, if we uncover an uncommonly attractive opportunity. We
expect that 1996 will be a far more trying year than last.
The Fund's net asset value on December 31, 1995 was $12.26 per share, after
taking into account three dividends paid on December 29th amounting to $0.2415
per share. The dividend was composed of ordinary income of $0.0514, short term
capital gains of $0.0285 and a long term capital gains distribution of $0.1616
per share.
We thank you for your support and look forward to serving your needs.
Sincerely,
/s/ J. Dennis Delafield /s/ Vincent Sellechia
J. Dennis Delafield Vincent Sellecchia
Chairman President
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
The chart below represents the omitted graph.
Comparison of 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
12/31/95 14,096.54 13,679.74
</TABLE>
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
DELAFIELD FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1995
===============================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (73.96%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Banking (2.85%)
California Federal Bank, Federal Savings Bank* 14,600 $ 229,950
Mellon Bank Corporation 20,000 1,075,000
--------------
1,304,950
--------------
Consumer Products and Services (6.10%)
Bush Industries 45,000 883,125
Hilton Hotels Corporation 10,000 615,000
O' Sullivan Industries Holdings* 87,600 580,350
Polaroid Corporation 15,000 710,625
--------------
2,789,100
--------------
Energy (8.11%)
Getty Petroleum 8,000 108,000
J Ray McDermott S.A.* 15,000 268,125
McDermott International, Inc. 60,000 1,320,000
Oryx Energy Co.* 27,000 361,125
Louisiana Land & Exploration Company 25,000 1,071,875
Union Texas Petroleum Holdings 30,000 581,250
--------------
3,710,375
--------------
Food and Beverage (0.96%)
Rykoff-Sexton Inc. 25,000 437,500
--------------
Industrial Products (13.47%)
AMETEK, Inc. 62,000 1,162,500
Corning Incorporated 30,000 960,000
Federal Mogul Corporation 40,000 785,000
Harsco Corporation 18,000 1,046,250
Sheldahl, Inc.* 30,000 543,750
Stimsonite Corporation* 73,000 693,500
Sundstrand Corp. 6,000 422,250
Zemex Corporation* 54,540 545,400
--------------
6,158,650
--------------
Industrial Services (1.90%)
Univar Corp. 80,000 870,000
--------------
Insurance (Life) (7.29%)
Life Partners Group 135,000 1,839,375
PennCorp Financial Group, Inc. 14,000 411,250
Provident Companies 24,000 813,000
Security-Connecticut Corp. 10,000 271,250
--------------
3,334,875
--------------
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
DELAFIELD FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
DECEMBER 31, 1995
===============================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ ------
Common Stocks (Continued)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Insurance (Property/Casualty) (4.53%)
Allmerica Financial Corp. 20,000 $ 540,000
Citizens Corporation 25,000 465,625
Guaranty National Corporation 15,000 230,625
Home State Holdings Inc.* 90,000 835,317
---------------
2,071,567
---------------
Insurance (Reinsurance) (3.66%)
Risk Capital Holding Incorporated* 30,000 701,250
Zurich Reinsurance Centre Holdings, Inc. 32,000 972,000
---------------
1,673,250
---------------
Office Equipment (2.59%)
BancTec, Inc.* 46,000 851,000
Wang Laboratories, Inc.* 20,000 332,500
---------------
1,183,500
---------------
Pharmaceutical (1.54%)
West Co Incorporated 30,000 705,000
---------------
Real Estate (2.54%)
Catellus Development Corp.* 65,000 390,000
Kimco Realty Corp. 4,500 122,625
RPS Realty Corp. 140,000 647,500
---------------
1,160,125
---------------
Retail (7.77%)
Dress Barn, Inc.* 55,000 543,125
The Limited, Inc. 110,000 1,911,250
Waban Inc.* 10,000 187,500
Woolworth Corporation* 70,000 910,000
---------------
3,551,875
---------------
Textile/Apparel (6.26%)
Farah Manufacturing* 116,000 551,000
Fruit of the Loom, Inc.* 69,000 1,681,875
Haggar Corp. 35,000 630,000
---------------
2,862,875
---------------
Miscellaneous (4.39%)
ARI Network* 40,000 110,000
Florida East Coast Industries 8,000 546,000
Gilbert Associates, Inc. 50,800 635,000
London American Growth* 650,000 715,000
---------------
2,006,000
---------------
Total Common Stocks (Cost $30,983,491) 33,819,642
---------------
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Value
Amount (Note 1)
------ ------
Corporate Bonds (2.60%)
- -----------------------------------------------------------------------------------------------------------------------------------
Miscellaneous (1.84%)
<S> <C> <C>
American Annuity Group, 11.125%, due 02/01/2003 $ 205,000 $ 222,425
American Annuity Group Senior Notes, 9.500%, due 8/15/2001 600,000 621,000
--------------
843,425
--------------
Industrial Products (0.48%)
AMETEK, Inc. 9.750%
debentures, due 03/15/2004 200,000 219,500
--------------
Insurance (Life) (0.28%)
PennCorp Financial Group 9.250%, due 12/15/2003 125,000 128,125
--------------
Total Corporate Bonds (Cost $1,140,275) 1,191,050
--------------
<CAPTION>
U.S. Government Obligations (6.59%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Note, 5.500%, due 07/31/97 $3,000,000 $ 3,014,063
--------------
Total U.S. Government Obligations (Cost $2,990,668) 3,014,063
--------------
Short-Term Investments (19.12%)
Repurchase Agreements (19.12%)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
J.P. Morgan Securities Inc., 5.80%, due 01/02/96
(Collateralized by $8,605,000
U.S. Treasury Note, 5.875%, due 08/15/98) $8,744,000 $ 8,744,000
--------------
Total Short-Term Investments (Cost $8,744,000) 8,744,000
--------------
Total Investments (102.27%) (Cost $43,858,434+) 46,768,755
Liabilities in excess of cash and other assets (-2.27%) ( 1,038,721)
--------------
Net Assets (100.00%), 3,730,852 shares outstanding (Note 3) $ 45,730,034
==============
Net asset value, offering and redemption price per share $ 12.26
==============
* Non-income producing.
+ Aggregate cost for federal income tax purposes is $43,915,142. Aggregate
unrealized appreciation and depreciation, based on cost for Federal income
tax purposes, are $3,540,719 and $687,106 respectively.
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
DELAFIELD FUND, INC.
STATEMENT OF OPERATIONS
PERIOD FROM OCTOBER 1, 1995 TO DECEMBER 31, 1995
===============================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
Income:
<S> <C>
Interest....................................................................... $ 215,136
Dividends...................................................................... 128,238
---------------
Total income............................................................. 343,374
---------------
Expenses: (Note 2)
Investment management fee...................................................... 86,832
Administration fee............................................................. 22,088
Distribution fee............................................................... 27,135
Custodian expenses............................................................. 4,665
Shareholder servicing and related shareholder expenses......................... 20,086
Legal, compliance and filing fees.............................................. 7,763
Audit and accounting........................................................... 27,945
Directors' fees and expenses................................................... 2,625
Amortization of organization costs............................................. 2,192
Other.......................................................................... 1,282
---------------
Total expenses........................................................... 202,613
Less:
Fees waived.............................................................. ( 21,582)
Expenses paid indirectly................................................. ( 8,025)
---------------
Net expenses............................................................. 173,006
---------------
Net investment income.................................................... 170,368
---------------
</TABLE>
<TABLE>
<CAPTION>
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
<S> <C>
Net realized gain (loss) on investments............................................ 630,148
Net change in unrealized appreciation (depreciation) of investments................ 1,216,404
---------------
Net gain (loss) on investments...................................... 1,846,552
---------------
Increase (decrease) in net assets from operations.................................. $ 2,016,920
===============
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
DELAFIELD FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
===============================================================================
<TABLE>
<CAPTION>
Period from
October 1, 1995 to Year Ended
December 31, 1995 September 30, 1995
----------------- ------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
<S> <C> <C>
Net investment income.....................................................$ 170,368 $ 176,620
Net realized gain on investments.......................................... 630,148 1,109,109
Net change in unrealized appreciation (depreciation) ..................... 1,216,404 1,256,131
-------------- ----------------
Increase (decrease) in net assets from operations....................... 2,016,920 2,541,860
Distributions from:
Net investment income.....................................................( 179,845) ( 167,085)
Net realized gain on investments..........................................( 643,645) ( 1,213,983)
In excess of net realized gain............................................( 51,900) --
Return of capital.........................................................( 8,609) --
Capital share transactions (Note 3)....................................... 2,280,846 31,497,340
-------------- ----------------
Total increase (decrease)............................................... 3,413,767 32,658,132
Net Assets:
Beginning of period....................................................... 42,316,267 9,658,135
-------------- ----------------
End of period.............................................................$ 45,730,034 $ 42,316,267*
================ ================
* Undistributed net investment income at September 30, 1995 was $9,337.
</TABLE>
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
- -------------------------------------------------------------------------------
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. The investment
objectives of the Fund are to seek long-term preservation of capital and growth
of capital by investing primarily in equity securities of domestic companies.
Effective October 1, 1995 the Fund changed its fiscal year end to December 31.
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 are 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) Use of Estimates -
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect 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.
d) 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, which are determined in accordance with
income tax regulations, 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
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
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 period ended
December 31, 1995.
Pursuant to an Administrative Services Agreement, the Fund pays to the Manager
an annual fee of .21% of the Fund's average daily net assets. Prior to December
1, 1995, the administration fee was .20%.
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 period ended December 31, 1995, the Distributor voluntarily waived
shareholder servicing fees of $21,582.
Brokerage commissions paid during the period to the Distributor amounted to
$16,863.
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 captions "Custodian expenses"
and "Shareholder servicing and related shareholder expenses" are expense offsets
of $8,025.
3. Capital Stock
At December 31, 1995, 20,000,000,000 shares of $.001 par value stock were
authorized and capital paid in amounted to $42,876,421. Transactions in capital
stock were as follows:
<TABLE>
<CAPTION>
Period Ended Year Ended
December 31, 1995 September 30, 1995
------------------------------ ----------------------------
Shares Amount Shares Amount
----------- ------------- --------- -----------
<S> <C> <C> <C> <C>
Sold........................................ 221,341 2,650,363 2,620,590 31,143,565
Issued on reinvestment of dividends......... 71,878 881,282 117,889 1,380,528
Redeemed.................................... ( 103,911) ( 1,250,799) ( 89,769) ( 1,026,753)
----------- ------------- --------- -----------
Net increase (decrease)..................... 189,308 $ 2,280,846 2,648,710 $ 31,497,340
=========== ============= ========= ===========
</TABLE>
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
DELAFIELD FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
===============================================================================
4. Investment Transactions
Purchases and sales of investment securities, other than U.S. Government direct
and agency obligations and short-term investments, totaled $13,689,030 and
$6,522,765 respectively.
5. Selected Financial Information
<TABLE>
<CAPTION>
Period from Year November 19, 1993
October 1, 1995 to Ended (Inception) to
December 31, 1995 September 30, 1995 September 30, 1994
----------------- ------------------ ------------------
Per Share Operating Performance:
(for a share outstanding throughout the period)
<S> <C> <C> <C>
Net asset value, beginning of period.... $ 11.95 $ 10.82 $ 10.00
---------------- ---------------- ---------------
Income from investment operations:
Net investment income................. .05 .13 .07
Net realized and unrealized
gains (losses) on investments....... .50 1.99 .82
--------------- --------------- --------------
Total from investment operations........ .55 2.12 .89
--------------- --------------- --------------
Less distributions:
Dividends from net investment income.. ( .05) ( .13) ( .07)
Distributions from net realized gains on investments ( .18) ( .86) --
In excess of net realized gain......... ( .01) -- --
--------------- -------------- -------------
Total distributions..................... ( .24) ( .99) ( .07)
--------------- --------------- --------------
Net asset value, end of period.......... $ 12.26 $ 11.95 $ 10.82
=============== =============== ==============
Total Return............................ 4.62%+ 20.05% 8.93%+
=============== =============== ==============
Ratios/Supplemental Data
Net assets, end of period(000).......... $ 45,730 $ 42,316 $ 9,658
Ratios to average net assets:
Expenses............................. 1.67%*++ 1.65%++ 1.78%*++
Net investment income................ 1.57%*++ 1.35%++ 0.96%*++
Portfolio turnover rate.................. 20.49 70.36 42.84
Average commission rate paid (per share). $.0226+++ -- --
* Annualized
+ Not Annualized
++ Net of investment management, administration and shareholder servicing fees
waived equivalent to .20%, .71% and 1.12%, respectively, of average net
assets.
+++ Required by regulations issued in 1995.
</TABLE>
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
DELAFIELD FUND, INC.
INDEPENDENT AUDITOR'S REPORT
===============================================================================
The Board of Directors and Shareholders
Delafield Fund, Inc.
We have audited the accompanying statement of net assets of Delafield Fund, Inc.
as of December 31, 1995 and the related statement of operations for the period
from October 1, 1995 to December 31, 1995, the statements of changes in net
assets for the period from October 1, 1995 to December 31, 1995 and the year
ended September 30, 1995, and the selected financial information for the period
from October 1, 1995 to December 31, 1995, the year ended September 30, 1995,
and 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 December 31, 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 December 31, 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/ McGladrey & Pullen,LLP
New York, New York
January 19, 1996
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------
