SEMI-ANNUAL REPORT TO SHAREHOLDERS
RUPAY-BARRINGTON TOTAL RETURN FUND, INC.
FOR THE PERIOD ENDED
JUNE 30, 1998
The Rupay-Barrington Total Return Fund
Report from Fritz Bensler, Portfolio Manager
Dear Shareholders:
For the six month period ended June 30, 1998, the Rupay-Barrington
Total Return Fund increased in value by 3.9%. This compares to gains in the Dow
Jones 30 Industrials and S&P 500 index of 13.2% and 16.8%,respectively. Other
funds similar to the Rupay-Barrington Total Return Fund which are classified as
domestic hybrid mutual funds by the mutual fund rating service Morningstar
gained 8.4% in the first six months of this year.
There are two main reasons for your Fund's weak relative performance
this year. First, the Fund has maintained a relatively low equity exposure of
about 60% common stocks during the first half of this year.The other 40% has
been invested in fixed income securities and cash. Second the Fund has been
invested in a number of smaller capitalization stocks which have not performed
as well as the larger capitalization stocks in the S&P 500. Small capitalization
stocks as measured by the Russell 2000 index have risen only 4.7% during the
first six months of this year.
The turmoil in Asian markets which began last fall has continued to
effect the performance of equities in the U.S. This can be seen by the wide
divergence in returns between big capitalization and small capitalization
stocks. Many large institutional and mutual fund portfolio managers have
preferred to invest in highly liquid larger capitalization issues until the
impact of the Asian crisis on the corporate profits of U.S.companies can be more
clearly estimated.
I believe that this trend will continue and that larger capitalization
stocks with minimal earnings exposure to Asia will be the better performers for
the remainder of this year. In June, I sold some of the Fund's small
capitalization stocks which had been weak performers or had reported
disappointing earnings and have added some bigger capitalization names with
minimal exposure to Asia such as Wal-Mart, Time Warner and EMC Corp.I feel that
this portfolio repositioning will take advantage of the continued strength in
larger capitalization stocks with more predictable earnings and will improve the
performance of the fund. In the month of July, the Fund gained 0.7% compared to
a 1.16% loss for the S& P 500.
We look forward to the remainder of 1998 and thank you for your support of the
Rupay-Barrington Total Return Fund.
Sincerely,
Fritz Bensier
Portfolio Manager
August 17, 1998
<PAGE>
Schedule of Portfolio Investments
June 30, 1998 (Unaudited)
Number
of Market
Shares Security Value
COMMON STOCK: 59.78%
AIRLINES: 1.00%
300 Alaska Air Group, Inc.* $16,369
BEVERAGES: 1.26%
500 PepsiCo, Inc. 20,594
BROADCASTING & CABLE TV: 1.53%
300 Cablevision Systems Corp.* 25,050
BUILDING/CONSTRUCTION: 1.66%
500 USG Corp* 27,062
COMMERCIAL SERVICES: 1.28%
600 Gartner Group* 21,000
COMPUTERS: 3.47%
500 EMC Corp.* 22,406
300 IBM Corp. 34,444
56,850
COMPUTER SOFTWARE: 1.99%
300 Microsoft Corp.* 32,513
COSMETICS: 0.67%
500 Helen of Troy Ltd* 11,000
ENTERTAINMENT: 8.69%
300 Time Warner, Inc. 25,630
2,000 Viacom Inc. Class B* 116,500
142,130
FINANCIAL: 12.62%
300 American Express Co. 34,200
550 Banc One Corp. 30,697
300 The Bank of New York Co., Inc. 18,206
600 The Chase Manhatten Corp. 45,300
1,000 Fannie Mae 60,750
500 Peoples Bank of Bridgeport 17,313
206,466
FOOD: 2.14%
300 Dole Food Co., Inc. 14,906
2,000 Food Lion Inc. Class B 20,125
35,031
INSURANCE: 5.26%
500 PartnerRe Holdings, Ltd. 25,500
1,000 Travelers Group, Inc. 60,625
86,125
INTERNET: 3.25%
500 America Online, Inc.* 53,063
MANUFACTURED HOUSING: 1.07%
600 Champion Enterprises* 17,550
MEDICAL SERVICES: 0.49%
300 HEALTHSOUTH Corp.* 8,006
OFFICE SUPPLIES: 2.52%
2,500 Office Max, Inc.* 41,250
PHARMACEUTICALS: 3.86%
300 Merck & Co., Inc. 40,106
500 Pharmacia & Upjohn, Inc. 23,063
63,169
RETAIL: 3.55%
500 Ross Stores, Inc. 21,500
300 Sears Roebuck and Co. 18,318
300 Wal-Mart Stores, Inc. 18,225
58,043
TV PROGRAMMING: 0.71%
300 Tele-Communications, Liberty Media Class A* 11,643
TELECOMMUNICATIONS: 1.41%
300 Loral Space & Communications* 8,475
300 World Com, Inc.* 14,531
23,006
UTILITIES: 1.35%
500 CMS Energy Corp. 22,000
TOTAL COMMON STOCK: 977,920
(Cost: $830,130)
<PAGE>
PREFERRED STOCK: 17.83%
COMMUNICATIONS: 4.80%
3,000 GTE Delaware 78,563
FINANCE: 9.03%
1,000 KMart Financing Convertible; 7.75% 70,000
3,000 UNUM Corp.; 8.8% 77,813
147,813
INSURANCE: 1.58%
1,000 American General Capital L.L.C. 25,813
Series A; 8.45%
REAL ESTATE: 2.42%
1,500 Equity Residential Property 39,563
Series C; 9.125%
TOTAL PREFERRED STOCKS: 291,752
(Cost: $280,741)
Principal
Amount
- -------- CORPORATE OBLIGATIONS: 6.11%
$100,000 Fixed Income UIT 12/30/01; 9.25% 100,000
(Cost: $100,000)
194,952 SHORT TERM INVESTMENTS: 11.92%
Star Bank Money Market Fund 194,952
(Cost: $194,952)
TOTAL INVESTMENTS:
(Cost: $1,405,823)** 95.64% 1,564,624
Other assets-net 4.36% 71,271
NET ASSETS 100.00% $1,635,895
**Cost for Federal income tax purpose is $1,405,823 and net
unrealized appreciation consists of:
Gross unrealized appreciation 164,389
Gross unrealized depreciation (5,588)
Net unrealized appreciation $158,801
*Non-income producing security
See Notes to Financial Statements
<PAGE>
Statement of Assets and Liabilities (Unaudited)
ASSETS
Investments at value (Identified
cost of $1,210,871)(Notes 1 & 3) $1,369,672
Short term investments 194,952
Receivables:
Investment sold $56,546
Dividends and interest receivables 1,612
58,158
Other assets 87,185
TOTAL ASSETS 1,709,967
LIABILITIES
Payables:
Distributions 64,959
Investments purchased 4,901
69,860
Distribution fees 4,212
TOTAL LIABILITIES 74,072
NET ASSETS $1,635,895
NET ASSET VALUE OFFERING AND REDEMPTION
PRICE PER SHARE
($1,635,895/163,387
shares outstanding) $10.01
At June 30, 1998 there were 50,000,000 shares of $.01 par value stock authorized
and components of net assets are:
Paid in capital $1,464,244
Undistributed net investment income 3,394
Accumulated net realized gain on investment 9,456
Net unrealized gain on investments 158,801
NET ASSETS $1,635,895
See Notes to Financial Statements
<PAGE>
Statement of Operations Six months ended June 30, 1998 (Unaudited)
INVESTMENT INCOME
Income:
Interest $15,152
Dividend 18,614
Total income $33,766
Expenses:
Investment management
fees (Note 2) 8,983
Recordkeeping and administration
services (Note 2) 8,996
Transfer agent fees (Note 2) 7,302
Legal and audit fees 6,000
Shareholder servicing and reporting 1,000
Distribution fees 3,930
Custodian fees (Note 3) 6,800
Registration fees 1,225
Organization 18,846
Miscellaneous 1,610
Total expenses 64,692
Expenses reimbursed or waived (42,543)
Custody fee credits (253)
Net expenses 21,896
Net investment income 11,870
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments (55,554)
Net change in unrealized
appreciation on investments 116,539
Net gain on investments 60,985
Net increase in net assets
resulting from operations $72,855
See Notes to Financial Statements
<PAGE>
Statement of Changes in Net Assets (Unaudited)
Six months ended Year ended
June 30, December 31,
1998 1997
OPERATIONS
Net investment income $11,870 $64,010
Net realized gain (loss)
on investments (55,554) 152,327
Net change in unrealized
appreciation (depreciation)
of investments 116,539 193,117
Net increase
in net assets resulting
from operations 72,855 409,454
DISTRIBUTION TO
SHAREHOLDERS FROM:
Net investment income
($.05 and $.21 per share, respectivel (8,476) (68,866)
Net realized gain from
investment transaction
($. - and $.70 per share) - (147,579)
CAPITAL SHARE TRANSACTIONS
Net decrease in
net assets resulting
from capital share
transactions** (630,376) (2,916,852)
Net decrease
in net assets (565,997) (2,723,843)
Net assets at
beginning of period 2,201,892 4,925,735
NET ASSETS at the end
of the period(Including undistributed
net investment income of $3,394 and
$-, respectively) $1,635,895 $2,201,892
**A summary of capital share transactions follows:
Six months ended Year ended December 31,
June 30, 1998 1997
Shares Value Shares Value
Shares sold 13,310 $128,358 74,341 $760,185
Shares
reinvested
from distribution 350 3,512 21,591 212,316
Shares
redeemed (77,791) (762,246) (375,106) (3,889,353)
Net decrease (64,131) ($630,376) (279,174) ($2,916,852)
See Notes to Financial Statements
<PAGE>
Financial Highlights
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Six months Years ended Aug 11, 1995*
ended December 31, thru
June 30, 1998 1997 1996 Dec 31, 1995
(Unaudited)
Per Share Operating
Performance
Net asset value,
beginning of period... $9.68 $9.72 $9.67 $10.00
Income from investment
operations-
Net investment income... 0.07 0.15 0.13 0.04
Net realized and unrealized
gain (loss) on investments 0.31 0.72 0.44 (0.33)
Total from investment
operations....... 0.38 0.87 0.57 (0.29)
Less distributions-
Distributions from net
investment income... (0.05) (0.21) (0.12) (0.04)
Distributions from realized
gains on investments.... - (0.70) (0.40) -
Total distributions..... (0.05) (0.91) (0.52) (0.04)
Net asset value, end of period $10.01 $9.68 $9.72 $9.67
Total Return 3.87% 8.91% 5.89% (2.89)%
Ratios/Supplemental Data
Net assets, end of period (000's) $1,636 $2,202 $4,926 $1,126
Ratio to average net assets-(A)
Expenses (B).............. 1.97%** 3.82% 6.29% 1.95%**
Expenses-net (C)...... 1.95%** 1.95% 1.95%
Net investment income (B)... 1.06%** 1.68% 2.06% 1.72%**
Portfolio turnover rate....... 69.98% 112.02% 1.14% 0.00%
Avg commission rate paid per share $0.0729 $0.0825 - -
</TABLE>
*Commencement of operations
**Annualized
(A) Management fee waivers reduced the expense ratios and increased net
investment income ratios by 3.80% for the six months ended June 30, 1998,
1.87% in 1997, 4.34% in 1996 and 3.14% in 1995.
(B) Expense ratio has been increased to include additional custodian fees for
the periods ended June 30, 1998 and December 31,1995 which were offset by
custodian fee credits.
(C) Expense ratio-net reflects the effect of the custodian fee credits the
fund received
See Notes to Financial Statements
<PAGE>
Notes to the Financial Statements
June 30,1998 (Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES--The Rupay-Barrington Total Return
Fund, Inc. (formerly Valley Forge Capital Holdings Total Return Fund, Inc.)
(the "Fund") is registered under The Investment Company Act of 1940, as
a diversified open-end management company.
The investment objective of the fund is to seek capital appreciation, current
income and preservation of capital by investing in a diversified portfolio of
equity securities and fixed income securities.
The following is a summary of significant accounting policies consistently
followed by the Fund. The policies are in conformity with generally accepted
accounting principles.
A. Security Valuation. Investments in securities listed or traded on
a nationally recognized securities exchange are valued at the last
quoted sales price on the date the valuations are made. Securities
regularly traded in the over-the-counter market are valued at the
last quoted sales price on the NASDAQ System. If no sales price is
available for a listed or NASDAQ security, or if the security is not
listed on NASDAQ, such security is valued at a price equal to the mean
of the latest bid and ask prices.
B. Federal Income Taxes. The Fund intends 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 federal income tax provision is required.
C. Security Transactions. Security transactions are accounted for
on the trade date. The cost of securities sold is determined on
a first-in, first-out basis.
D. Deferred Organizational Expenses. Organizational expenses are being
amortized on a straight line basis over a period not exceeding 60
months beginning at the Fund's commencement of operations.
E. Distribution to Shareholders. Distributions from investment
income and realized gains, if any, are recorded on the ex-dividend
date.
F. Other. Dividend income is recorded on the ex-dividend date. Interest
income is recorded on an accrual basis.
G. Accounting Estimates. In preparing financial statements in conformity
with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
<PAGE>
NOTE 2-INVESTMENT MANAGEMENT AND DISTRIBUTION AGREEMENTS--The Fund has engaged
Rupay-Barrington Advisors, Inc. a wholly-owned subsidiary of Rupay-Barrington
Financial Group Inc., to manage its investments.The Fund pays its Advisors an
investment management fee for investment management and advisory services which
is computed at an annual rate of 0.80 of 1% of the Fund's daily net assets.
Rupay-Barrington Financial Group Inc. has agreed to reimburse the Fund for any
expenses, during the Fund's first five years of operations, which would cause
the Fund's ratio of operating expenses to exceed 1.95% of average net assets.
For the six months ended June 30, 1998, a reimbursement of $42,543 was made.
As provided in the Administrative Agreement, the Fund reimbursed Commonwealth
Shareholder Services, Inc. ("CSS"),its Administrative Agent, $7,521 for
providing shareholder services, recordkeeping, administrative services and
blue-sky filings. The Fund compensates CSS for blue-sky filings and certain
shareholder servicing on an hourly rate basis. For other administrative
services, CSS receives .20% of average daily net assets.
Fund Services, Inc. ("FSI") is the Fund's Transfer and Dividend Disbursing
Agent. FSI received $7,302 for its services for the six months ended June 30,
1998.
Certain officers and directors of the Fund are also officers and directors of
the investment advisor.
NOTE 3-PURCHASES AND SALES OF SECURITIES\CUSTODY--For the six months ended June
30, 1998, the Fund made purchases and sales of securities other than short-term
notes aggregated $1,209,516 and $1,575,616 respectively. The custodian has
provided credits in the amount of $253 against custodian and accounting charges
based on credits on cash balances.
NOTE 4-DISTRIBUTION PLAN--The Fund has adopted a Distribution Plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940. Under the plan,
Rupay-Barrington Securities Corp., a wholly-owned subsidiary of Rupay-Barrington
Financial Group Inc., was entitled to a fee at an annual rate of 0.35 of 1% of
the Fund's daily net assets. Rupay-Barrington Securities Corp. uses these fees
to pay its dealers whose clients hold portfolio shares and for other
distribution-related activities.
