<PAGE>
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DELAFIELD 600 FIFTH AVENUE, NEW YORK, N.Y. 10020
FUND, INC. (212) 830-5200
================================================================================
Dear Shareholder:
We are pleased to present the semi-annual report of Delafield Fund, Inc. for the
period January 1, 1998 through June 30, 1998.
The Delafield Fund's net asset value per share on June 30, 1998 was $15.29 as
compared to $14.88 at December 31, 1997. The Fund had net assets of $161,821,467
and 1,308 active shareholders. After adjusting for dividend payments of $0.07
per share, the Fund registered an increase of 3.2% during the first-half year.
The Fund held 48 companies, with the top ten holdings accounting for 34% of
total net assets overall. Equity investments comprised 79% of the $161.8 million
portfolio on June 30, 1998.
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 Selecchia
Chairman President
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<PAGE>
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DELAFIELD FUND, INC.
STATEMENT OF NET ASSETS
JUNE 30, 1998
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
Common Stocks (78.77%) ------ ------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automotive/Auto Parts (1.58%)
OEA, Inc. 160,000 $ 2,560,000
--------------
Consumer Products & Services (6.04%)
Bush Industries Inc. 110,000 2,392,500
O'Sullivan Industries Holdings* 260,000 3,640,000
Polaroid Corporation 105,000 3,734,062
--------------
9,766,562
--------------
Electronics (4.99%)
BMC Industries, Inc. 350,000 3,062,500
Bell Industries* 171,700 1,953,087
International Rectifier Corporation* 255,000 2,167,500
Sheldahl Inc.* 100,000 884,375
--------------
8,067,462
--------------
Energy (1.65%)
EEX Corporation* 157,975 1,481,015
Forest Oil Corporation* 82,700 1,183,644
--------------
2,664,659
--------------
Financial Products and Services (7.77%)
BancTec, Inc.* 250,000 5,781,250
Harland (John H.) Company 122,900 2,081,619
Wang Laboratories, Inc.* 185,000 4,711,719
--------------
12,574,588
--------------
Industrial Products (13.78%)
AMETEK, Inc. 80,000 2,345,000
Atchison Casting Corporation* 125,000 2,234,375
Flowserve Corporation 104,520 2,573,805
Furon Company 99,000 1,794,375
Kennametal Inc. 35,000 1,461,250
Scott Technologies Class A* 115,000 1,681,875
Stimsonite Corporation* 135,000 1,025,156
UNOVA, Inc.* 185,000 3,977,500
Varian Associates Inc. 133,700 5,214,300
--------------
22,307,636
--------------
Insurance (Brokers) (0.97%)
Gallagher (Arthur J.) 35,000 1,566,250
--------------
Insurance (Life) (1.90%)
PennCorp Financial Group 150,000 3,075,000
--------------
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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================================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
Common Stocks (Continued) ------ ------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Insurance (Property/Casualty) (1.50%)
Highlands Insurance Group* 41,000 $ 758,500
Orion Capital Corporation 30,000 1,676,250
--------------
2,434,750
--------------
Insurance (Reinsurance) (5.05%)
Risk Capital Holding Inc.* 55,000 1,373,281
Trenwick Group, Inc. 175,000 6,797,656
--------------
8,170,937
--------------
Metals/Mining (6.22%)
Allegheny Teledyne Inc. 220,000 5,032,500
Carpenter Technology 9,500 477,375
Cleveland Cliffs 60,000 3,217,500
Freeport McMoRan Sulphur* 100,735 1,334,739
--------------
10,062,114
--------------
Real Estate (3.78%)
Carey Diversified, LLC 50,000 987,500
Kimco Realty Corporation 105,000 4,305,000
Ramco-Gershenson Properties Trust 43,750 831,250
--------------
6,123,750
--------------
Retail (6.10%)
Nine West Group, Inc.* 240,000 6,435,000
Sunglass Hut International, Inc.* 311,000 3,440,438
--------------
9,875,438
--------------
Telecommunications (2.32%)
CommScope, Inc.* 155,000 2,509,063
Salient 3 Communications 135,900 1,240,087
--------------
3,749,150
--------------
Textile/Apparel (9.90%)
Burlington Industries Inc.* 100,000 1,406,250
Delta Woodside Industries Inc.* 850,000 4,409,375
Dyersburg Corporation 200,000 1,162,500
Fruit of the Loom, Inc.* 60,000 1,991,250
Shaw Industries, Inc. 400,000 7,050,000
--------------
16,019,375
--------------
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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DELAFIELD FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
JUNE 30, 1998
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
Value
Shares (Note 1)
Common Stocks (Continued) ------ ------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Miscellaneous (5.22%)
Dames & Moore Group 150,000 $ 1,931,250
Manpower, Inc. 30,000 860,625
Moore Corporation, Ltd. 80,000 1,060,000
Unisource Worldwide, Inc. 425,000 4,595,313
--------------
8,447,188
--------------
Total Common Stocks (Cost $122,286,555) 127,464,859
--------------
<CAPTION>
Convertible Preferred Stock (0.06%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Real Estate (0.06%)
Kimco Realty Corporation Class D
Depository Shares 3,600 97,650
--------------
Total Convertible Preferred Stock (Cost $82,722) 97,650
--------------
Face
Amount
------
<CAPTION>
Corporate Bonds (0.21%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Industrial Products (0.13%)
AMETEK, Inc. 9.750%
debentures, due 03/15/2004 $ 200,000 212,000
--------------
Insurance (Life) (0.08%)
PennCorp Financial Group, 9.250%, due 12/15/2003 125,000 128,750
--------------
Total Corporate Bonds (Cost $325,100) 340,750
--------------
<CAPTION>
Short-Term Investments (21.19%)
Repurchase Agreements (21.19%)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
J.P. Morgan Securities Inc., 5.800%, due 07/01/98
(Collateralized by $32,081,000
U.S. Treasury Notes, 6.875%, due 05/15/06) $ 34,285,000 34,285,000
--------------
Total Short-Term Investments (Cost $34,285,000) 34,285,000
--------------
Total Investments (100.23%) (Cost $156,979,377+) 162,188,259
Liabilities in Excess of Cash and Other Assets (-0.23%) ( 365,714)
--------------
Net Assets (100.00%), 10,580,520 shares outstanding $ 161,822,545
==============
Net asset value, offering and redemption price per share $ 15.29
==============
* Non-income producing.
+ Aggregate cost for federal income tax purposes is identical. Aggregate
unrealized appreciation and depreciation, based on cost for Federal income
tax purposes, are $15,565,182 and $10,356,300, respectively.
</TABLE>
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See Notes to Financial Statements.
<PAGE>
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DELAFIELD FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income:
Interest....................................................................... $ 1,022,682
Dividends...................................................................... 729,962
---------------
Total income............................................................. 1,752,644
---------------
Expenses: (Note 2)
Investment management fee...................................................... 636,775
Administration fee............................................................. 167,153
Shareholder servicing fee...................................................... 198,992
Custodian expenses............................................................. 16,153
Shareholder servicing and related shareholder expenses......................... 100,171
Legal, compliance and filing fees.............................................. 27,946
Audit and accounting........................................................... 39,800
Directors' fees and expenses................................................... 3,750
Amortization of organization costs............................................. 4,312
Other.......................................................................... 5,424
---------------
Total expenses.............................................................. 1,200,476
Less:
Fees waived................................................................. ( 179,492)
Expenses paid indirectly.................................................... ( 4,021)
---------------
Net expenses................................................................ 1,016,963
---------------
Net investment income....................................................... 735,681
---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments........................................... 10,499,072
Net change in unrealized appreciation (depreciation) of investments............... ( 6,645,074)
---------------
Net gain (loss) on investments............................................ 3,853,998
---------------
Increase (decrease) in net assets from operations................................. $ 4,589,679
===============
</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>
Six Months
Ended Year
June 30, 1998 Ended
(Unaudited) December 31, 1997
--------- -----------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
<S> <C> <C>
Net investment income..................................................... $ 735,681 $ 1,716,397
Net realized gain on investments.......................................... 10,499,072 9,364,322
Net change in unrealized appreciation (depreciation) ..................... ( 6,645,074) 4,562,649
--------------- --------------
Increase (decrease) in net assets from operations....................... 4,589,679 15,643,368
Distributions from:
Net investment income..................................................... ( 738,113) ( 1,710,095)
Net realized gain on investments.......................................... -- ( 9,359,513)
Return of capital......................................................... ( -- ) ( -- )
Capital share transactions (Note 3)........................................ 11,347,007 80,770,780
--------------- --------------
Total increase (decrease)................................................ 15,198,573 85,344,540
Net Assets:
Beginning of period....................................................... 146,623,972 61,279,432
--------------- --------------
End of period (including undistributed net investment income
of $3,870 & $6,303, respectively........................................ $ 161,822,545 $ 146,623,972
=============== ==============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
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DELAFIELD FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
================================================================================
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.
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
Funds 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.
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<PAGE>
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DELAFIELD FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
================================================================================
2. Investment Management Fees and Other Transactions with Affiliates (Continued)
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.
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 June 30, 1998, the Distributor voluntarily waived
shareholder servicing fees of $179,492.
Brokerage commissions paid during the period to the Distributor amounted to
$93,390.
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 "Shareholder servicing
and related shareholder expenses" are fees of $40,113 paid to Reich & Tang
Services, L.P. an affiliate of the Manager as servicing agent for the Fund.
Included in the Statement of Operations under the caption "Shareholder servicing
and related shareholder expenses" are expense offsets of $4,021.
3. Capital Stock
At June 30, 1998, 20,000,000,000 shares of $.001 par value stock were authorized
and capital paid in amounted to $146,110,720. Transactions in capital stock were
as follows:
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, 1998 December 31, 1997
--------------------------- ----------------------------
Shares Amount Shares Amount
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sold................................ 1,927,976 $ 30,018,367 5,631,514 $ 86,536,997
Issued on reinvestment of dividends. 46,995 719,018 729,075 10,714,899
Redeemed............................ ( 1,247,588) ( 19,390,378) ( 1,049,645) ( 16,481,116)
----------- ----------- ------------ -----------
Net increase (decrease)............. 727,383 $ 11,347,007 5,310,944 $ 80,770,780
=========== =========== ============ ===========
</TABLE>
4. Investment Transactions
Purchases and sales of investment securities, other than U.S. Government direct
and agency obligations and short-term investments, totaled $68,423,978 and
$52,276,201 respectively. Accumulated undistributed net realized gains at June
30, 1998 amounted to $10,499,072.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
5. Financial Highlights
Six Months
Ended Year Period from Year November 19, 1993
June 30, Ended October 1, 1995 to Ended ( Inception) to
1998 December 31, December 31, September 30, September 30,
--------------------
(Unaudited) 1997 1996 1995 1995 1994
--------- --------- --------- --------- --------- ---------
Per Share Operating Performance:
(for a share outstanding throughout the period)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........ $ 14.88 $ 13.49 $ 12.26 $ 11.95 $ 10.82 $ 10.00
--------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income................... .07 .21 .16 .05 .13 .07
Net realized and unrealized
gains (losses) on investments........... .41 2.42 3.07 .50 1.99 .82
--------- --------- --------- --------- --------- ---------
Total from investment operations............ .48 2.63 3.23 .55 2.12 .89
--------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income.... ( .07 ) ( .21 ) ( .16 ) ( .05 ) ( .13 ) ( .07 )
Distributions from net realized gains
on investments........................ -- ( 1.03 ) ( 1.84 ) ( .18 ) ( .86 ) --
In excess of net realized gain.......... -- -- -- ( .01 ) -- --
--------- --------- --------- --------- --------- ---------
Total distributions......................... ( .07 ) ( 1.24 ) ( 2.00 ) ( .24 ) ( .99 ) ( .07 )
--------- --------- --------- --------- --------- ---------
Net asset value, end of period.............. $ 15.29 $ 14.88 $ 13.49 $ 12.26 $ 11.95 $ 10.82
========= ========= ========= ========= ========= =========
Total Return................................ 3.23%(a) 19.66% 26.35% 4.62%(a) 20.05% 8.93%(a)
========= ========= ========= ========= ========= =========
Ratios/Supplemental Data
Net assets, end of period(000).............. $ 161,823 $ 146,624 $ 61,279 $ 45,730 $ 42,316 $ 9,658
Ratios to average net assets:
Expenses, net of fees waived............ 1.28%*+ 1.29%+ 1.29%+ 1.67%*+ 1.65% 1.78%*
Net investment income................... .92%* 1.64% 1.18% 1.57%* 1.35% 0.96%*
Management, administration and
shareholder servicing fees waived..... .23%* .20% .20% .20%* .71% 1.12%
Expenses paid indirectly................ .01%* .00% .01% .07%* .00% .00%
Portfolio turnover rate..................... 42.40% 55.43% 75.54% 20.49% 70.36% 42.84%
Average commission rate paid (per share) (b) $ .0318 $ .0305 $ .0378 $ .0343 -- --
* Annualized
+ Includes expenses paid indirectly
(a) Not Annualized
(b) Required by regulations issued in 1995.
</TABLE>
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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
Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, Missouri 64105
Transfer Agent
Reich & Tang Services L.P.
600 Fifth Avenue
New York, New York 10020
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
DELAFIELD
FUND, INC.
Semi-Annual Report
June 30, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<PAGE>
