-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, qUy3J1/DW5tpGVu4iR1UDWlTeBKZTqybU8/diGUXYOwGqcYKiFE6jjjswvkto9Ab tPypsg7P2bP8tOGMXpzxZw== 0000950116-95-000038.txt : 19950612 0000950116-95-000038.hdr.sgml : 19950612 ACCESSION NUMBER: 0000950116-95-000038 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950307 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COUNSELLORS TANDEM SECURITIES FUND INC CENTRAL INDEX KEY: 0000798311 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133367531 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04784 FILM NUMBER: 95519044 BUSINESS ADDRESS: STREET 1: 103 BELLEVUE PRKY CITY: WILMINGTON STATE: DE ZIP: 19809 BUSINESS PHONE: 3027912919 MAIL ADDRESS: STREET 1: 103 BELLEVUE PARKWAY CITY: WILMINGTON STATE: DE ZIP: 19809 N-30D 1 December 31, 1994 - -------------------------------------------------------------------------------- Counsellors Tandem Securities Fund, Inc. - -------------------------------------------------------------------------------- Annual Report to Shareholders - -------------------------------------------------------------------------------- DIRECTORS OFFICERS Lionel I. Pincus John L. Furth Chairman of the Board Chief Executive Officer Richard N. Cooper Anthony G. Orphanos President Donald J. Donahue Stuart M. Goode Jack W. Fritz Vice President John L. Furth Reuben S. Leibowitz Vice President and Thomas A. Melfe Chief Financial Officer Alexander B. Trowbridge Arnold M. Reichman Executive Vice President Eugene P. Grace Vice President and Secretary Stephen Distler Treasurer and Chief Accounting Officer - -------------------------------------------------------------------------------- INVESTMENT ADVISER ADMINISTRATOR Warburg, Pincus Counsellors, Inc. PFPC Inc. 466 Lexington Avenue 103 Bellevue Parkway New York, New York 10017-3147 Wilmington, Delaware 19809 TRANSFER AGENT PNC Bank, N.A. c/o PFPC Inc. P.O. Box 8950 Wilmington, Delaware 19899 - -------------------------------------------------------------------------------- =============================================================================== Counsellors Tandem Securities Fund, Inc. Dear Shareholder: The net asset value of Counsellors Tandem Securities Fund, Inc. ("the Fund") for the year ended December 31, 1994 was $14.37 per share -- a decrease of 18.8% from the prior year. The utility portion of the portfolio -- representing 56% of the Fund's non-cash assets at year end -- declined 13.0% as compared to the 7.9% decline in the S&P Utility Index. Although the Fund's investments in natural gas outperformed those in the S&P Gas Index, this relative gain was offset by weaker performance in the Fund's electric and telecommunications segments. The Fund's weightings in higher-yielding electric utilities were especially vulnerable during the sharp rise in long-term interest rates from 5 3/4% to 8 1/4% in the twelve months ended November 1994. The telecommunications seg ment was impacted by regulatory and competitive issues. The Fund focuses its utility investments in the higher yielding electric and telecommunication sectors in order to earn the necessary income to meet preferred dividend requirements. The nonutility portion of the portfolio -- representing 44% of the Fund's non-cash assets at year end -- declined 1.8% as compared to a 1.3% rise in the S&P 500 and a 4% decline for the Value Line Index. This portion of the portfolio ended the year strongly after recovering from the sharp market decline in the spring when interest rates rose more than 1% in a ten week period. Since the Fund's inception in 1986, the nonutility portion of the portfolio has had a compound rate of return of 11.9%, which exceeds the S&P 500 at 11.5% and the Value Line Index at 4.6% for the same period. Our outlook over the last several months has been cautious due to our belief that the U.S. economy will remain robust. This would continue upward pressure on interest rates and prevent the Federal Reserve from easing short-term interest rates in the near term. To maximize total return in the nonutility portion of the portfolio under this scenario, we have increased the liquid asset position to $10 million, or approximately 15% of the Fund's total assets. In addition, the financial services sector has been increased to more than 20% and communications/media to over 10% of the nonutility portion of the portfolio. These businesses can continue to show strong earnings growth during an economic contraction. We are anticipating reinvesting our reserves in more cyclically sensitive businesses such as technology/telecommunications when valuations become more attractive. As of the end of 1994, the Fund's largest holdings are as follows:
Security Market Value Percentage of Portfolio -------- ------------ ----------------------- General Electric ............................ $3,060,000 4.29% Southwestern Bell Corp. ..................... 2,826,250 3.97 Houston Industries .......................... 2,493,750 3.50 PECO Energy Co. ............................. 2,450,000 3.44 Central & South West Corp. .................. 2,262,500 3.17 Eastern Utilities Associates ................ 2,200,000 3.09 Fund American Enterprises ................... 2,167,500 3.04 Public Service Co. Colorado ................. 2,056,250 2.88 Bell Atlantic Corp. ......................... 1,890,500 2.65 H & R Block ................................. 1,856,250 2.60 U.S. West ................................... 1,781,250 2.50 Minnesota Power & Light ..................... 1,767,500 2.48 Norwest Corp. ............................... 1,636,250 2.29 NIPSCO Industries ........................... 1,636,250 2.29 Public Service Ent. Group ................... 1,537,000 2.15
We thank you for your support of the Fund. Sincerely, /s/ JOHN L. FURTH /s/ ANTHONY G. ORPHANOS ----------------------- ------------------- John L. Furth Anthony G. Orphanos Chief Executive Officer President ================================================================================ Counsellors Tandem Securities Fund, Inc. Statement of Net Assets December 31, 1994 ================================================================================
Shares Value --------- ---------- COMMON STOCK (86.0%) Utilities-Electric (30.3%) Baltimore Gas & Electric Co. 50,000 $ 1,106,250 Central & South West Corp. 100,000 2,262,500 Eastern Utilities Associates 100,000 2,200,000 Entergy Corp. 45,000 984,375 Houston Industries, Inc. 70,000 2,493,750 Minnesota Power & Light Co. 70,000 1,767,500 Montana Power Co. 65,000 1,495,000 NIPSCO Industries, Inc. 55,000 1,636,250 PECO Energy Co. 100,000 2,450,000 Public Service Co. of Colorado 70,000 2,056,250 Public Service Enterprise Group, Inc. 58,000 1,537,000 United Illuminating Co. 34,000 1,003,000 ---------- 20,991,875 ---------- Utilities-Gas (5.0%) Equitable Resources, Inc. 37,500 1,017,188 KN Energy, Inc. 60,000 1,425,000 National Fuel Gas Co. 40,000 1,020,000 ---------- 3,462,188 ---------- Utilities-Telecommunications (13.4%) AT&T Corp. 30,000 1,507,500 Bell Atlantic Corp. 38,000 1,890,500 Citizens Utilities Co. Series A + 105,887 1,323,586 Southwestern Bell Corp. 70,000 2,826,250 US West, Inc. 50,000 1,781,250 ---------- 9,329,086 ---------- Other (37.3%) Acclaim Entertainment, Inc. + 58,000 833,750 Allegheny Ludlum Corp. 80,000 1,500,000 Allstate Corp. 40,000 945,000 BankAmerica Corp. 21,000 829,500 CBI Industries, Inc. 30,000 768,750 Comcast Corp. Class A Special 50,000 784,375 Corning, Inc. 32,000 956,000 Federal Home Loan Mortgage Corp. 17,000 858,500 Freeport McMoran, Inc. 55,000 976,250 Fund American Enterprises Holdings, Inc. + 30,000 2,167,500 General Electric Co. 60,000 3,060,000 Halliburton Co. 21,000 695,625 Honeywell, Inc. 25,000 787,500 H&R Block, Inc. 50,000 1,856,250 Inco. Ltd. 32,000 916,000 Manpower PLC Sponsored ADR 45,000 1,265,625
See Accompanying Notes to Financial Statements. 1 - -------------------------------------------------------------------------------- ================================================================================ Counsellors Tandem Securities Fund, Inc. Statement of Net Assets (cont'd) December 31, 1994 ================================================================================
Shares Value --------- ----------- COMMON STOCK (cont'd) Other (cont'd) Noble Affiliates, Inc. 50,000 $ 1,237,500 Norwest Corp. 70,000 1,636,250 Stone & Webster, Inc. 38,000 1,263,500 Tele-Communications, Inc. Class A + 30,000 652,500 Time Warner, Inc. 35,000 1,229,375 Travelers, Inc. 20,000 650,000 ----------- 25,869,750 ----------- TOTAL COMMON STOCK (Cost $48,526,570) 59,652,899 -----------
Par ----- SHORT-TERM INVESTMENTS (15.9%) Repurchase agreement with PNC Securities Corp. dated 12/30/94 at 5.50% to be repurchased at $11,024,733 on 01/03/95. (Collateralized by $11,215,000 U.S. Treasury Note 5.875%, due 05/31/96, with a market value of $11,018,738.) (Cost $11,018,000) $11,018,000 11,018,000 ----------- TOTAL INVESTMENTS AT VALUE (101.9%) (Cost $59,544,570*) 70,670,899 LIABILITIES IN EXCESS OF OTHER ASSETS (1.9%) (1,290,437) ----------- NET ASSETS (100.0%) 69,380,462 Net Assets applicable to 600,000 shares of preferred stock outstanding at $50.00 per share 30,000,000 ----------- NET ASSETS APPLICABLE TO COMMON STOCK $39,380,462 =========== NET ASSET VALUE PER SHARE OF COMMON STOCK ($39,380,462 / 2,740,262 common shares) $14.37 ======
+ Non-income producing security. * Cost for Federal income tax purposes is $59,561,224. See Accompanying Notes to Financial Statements. 2 - -------------------------------------------------------------------------------- ================================================================================ Counsellors Tandem Securities Fund, Inc. Statement of Operations For the Year Ended December 31, 1994 ================================================================================
Investment Income: Dividends $ 2,659,914 Interest 271,568 ------------ Total investment income 2,931,482 ------------ Expenses: Investment advisory fee 564,029 Administration fee 100,000 Legal fees 74,239 Custodian and transfer agent fees 64,805 Directors fees 45,250 Amortization of organizational costs 37,500 Audit fee 24,600 Printing 14,557 Insurance 6,609 Other 43,456 ------------ Total expenses 975,045 ------------ Net investment income 1,956,437 ------------ Net Realized and Unrealized Loss from Investments: Net realized gain from security transactions 2,590,004 Federal income tax (906,501) Net decrease in unrealized appreciation from investments (11,112,568) ------------ Net realized and unrealized loss from investments (9,429,065) ------------ Net decrease in net assets resulting from operations $ (7,472,628) ============
See Accompanying Notes to Financial Statements. 3 - -------------------------------------------------------------------------------- ================================================================================ Counsellors Tandem Securities Fund, Inc. Statements of Changes in Net Assets ================================================================================
For the For the Year Ended Year Ended December 31, 1994 December 31, 1993* ----------------- ------------------ From Operations: Net investment income $ 1,956,437 $ 2,554,280 Net realized gain from security transactions 2,590,004 61,728 Federal income tax (906,501) (21,605) Net increase (decrease) in unrealized appreciation from investments (11,112,568) 2,779,689 ------------ ----------- Net increase (decrease) in net assets resulting from operations (7,472,628) 5,374,092 ------------ ----------- From Dividends: Dividends from net investment income: Preferred shares (1,829,507) (2,091,559) ------------ ----------- From Capital Share Transactions: Cost of common shares repurchased (645,046) (210,803) Costs associated with tender offer 285,798 (83,273) Proceeds from sale of 600,000 preferred shares (net of $310,250 placement fees) 29,689,750 0 Cost of 576,958 preferred shares repurchased (28,847,900) 0 ------------ ----------- Net increase (decrease) in net assets from capital share transactions 482,602 (294,076) ------------ ----------- Net increase (decrease) in net assets (8,819,533) 2,988,457 Net Assets: Beginning of year 78,199,995 75,211,538 ------------ ----------- End of year $ 69,380,462 $78,199,995 ============ ===========
* Reclassification made for comparative purposes. See Accompanying Notes to Financial Statements. 4 - -------------------------------------------------------------------------------- ================================================================================ Counsellors Tandem Securities Fund, Inc. Financial Highlights (For a Common Share of the Fund Outstanding Throughout Each Year) ================================================================================
For the Year Ended December 31, -------------------------------------------------------------- 1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- Net Asset Value, Beginning of Year $ 17.69 $ 16.54 $ 16.88 $ 12.67 $ 13.29 ------- ------- ------- ------- ------- Income from Investment Operations: Net Investment Income .71 .92 .79 .83 .73 Net Gain (Loss) on Securities (both realized and unrealized) (3.07) 1.01 (.33) 4.28 (.50) Federal income tax (.33) (.01) (.13) (.04) (.23) ------- ------- ------- --------- ------- Total from Investment Operations (2.69) 1.92 .33 5.07 .00 ------- ------- ------- ------- ------- Less Distributions from Net Investment Income: Common stock equivalent of dividends paid to preferred shareholders (.66) (.75) (.75) (.73) (.73) Dividends to common shareholders .00 .00 .00 (.12) (.12) ------- ------- ------- ------- ------- Total Distributions (.66) (.75) (.75) (.85) (.85) ------- ------- ------- ------- ------- Gain (loss) on common shares sold (repurchased), net .03 (.02) .08 (.01) .23 ------- ------- ------- ------- ------- Net Asset Value, End of Year $ 14.37 $ 17.69 $ 16.54 $ 16.88 $ 12.67 ======= ======= ======= ======= ======= Market Value, End of Year $ 12.88 $ 15.25 $ 14.13 $ 14.13 $ 10.38 ======= ======= ======= ======= ======= Total Return Based on net asset value per share (18.77)% 6.95% (2.01)% 34.41% (3.96)% Based on market price per share (15.54)% 7.93% .00% 37.58% (8.70)% Ratios/Supplemental Data: Net Assets, End of Year (000s) $69,380 $78,200 $75,212 $76,879 $64,974 Ratios to average daily net assets: Operating expenses 1.30% 1.27% 1.27% 1.35% 2.33% Net investment income 2.60% 3.24% 2.97% 3.45% 3.10% Portfolio Turnover Rate 53% 33% 27% 26% 41%
See Accompanying Notes to Financial Statements. 5 - -------------------------------------------------------------------------------- ================================================================================ Counsellors Tandem Securities Fund, Inc. Notes to Financial Statements December 31, 1994 ================================================================================ 1. Significant Accounting Policies Counsellors Tandem Securities Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended, as a diversified, closed-end management investment company. The Fund's investment objectives are long-term capital appreciation consistent with the preservation of capital, and stability and dependability of income, including, so long as preferred shares are outstanding, earning sufficient current income to pay Regular and Additional Dividends on the preferred shares. The net asset values of the preferred and common shares will be determined as of the close of regular trading on the last business day of the New York Stock Exchange each week. Net asset value of the preferred shares will be the lower of (a) the initial public offering price per share ($50.00) plus accumulated and unpaid dividends, if any, less reductions for Special Dividends ("Redemption Value"), or (b) the total net assets of the Fund divided by the number of the preferred shares outstanding. Net asset value of the common shares will be the total net assets of the Fund less the total net asset value of the preferred shares, divided by the number of common shares outstanding. Securities listed on a securities exchange for which market quotations are available are valued at the last quoted sale price of the day, or if there is no such reported sale, at the most recent quoted bid price. Price information on listed securities is taken from the exchange where the security is primarily traded. Listed securities not traded on the valuation date and unlisted securities are valued at the most recently quoted bid price. The value of securities for which no quotations are readily available are determined in good faith at fair value using methods determined by the Board of Directors. There were no securities held at December 31, 1994, for which market quotations were not readily available. Security transactions are recorded on trade date. Interest income is recorded on an accrual basis. Dividend income is recorded on ex-dividend date. The cost of investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes. The Fund intends to continue to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies. Accordingly, the Fund will not be subject to Federal income tax on any net investment income and capital gains that it distributes to shareholders. However, the Fund does not intend to distribute long-term capital gains, but expects instead to retain such long-term capital gains, if any, and to pay tax on such gains at the rate then applicable to net long-term capital gains of corporations. Common shareholders will be entitled to a credit for their pro rata share of such tax payments, and their basis for the common shares will be increased by the amount of the undistributed gains less the tax paid by the Fund. Federal income taxes so accrued for the year ended December 31, 1994 were $906,501. Costs incurred by the Fund in connection with its organization have been deferred and are being amortized over a period of ten years from the date the Fund commenced its operations. The Fund may enter into repurchase agreement transactions. Under the terms of a typical repurchase agreement, the Fund acquires an underlying security subject to an obligation of the seller to repurchase the security. The value of the underlying security will be maintained as collateral at an amount at least equal to the total amount of the purchase obligation, including interest. The collateral is in the Fund's possession. 2. Investment Adviser Warburg, Pincus Counsellors, Inc. ("Counsellors"), a wholly-owned subsidiary of Warburg, Pincus Counsellors G.P. ("Counsellors G.P."), serves as the Fund's investment adviser. The Fund pays Counsellors an investment advisory fee calculated at an annual rate of .75% of the Fund's average daily net assets. For the year ended December 31, 1994, Counsellors earned $564,029 in investment advisory fees. 6 - -------------------------------------------------------------------------------- ================================================================================ Counsellors Tandem Securities Fund, Inc. Notes to Financial Statements (cont'd) December 31, 1994 ================================================================================ 3. Investments in Securities Purchases and sales of investment securities for the year ended December 31, 1994 (excluding short-term investments) were $36,119,275 and $46,181,317, respectively. At December 31, 1994, the net unrealized appreciation from investments of $11,109,675 was comprised of appreciation of $12,365,962 for those investments having an excess of value over cost, and depreciation of $1,256,287 for those investments having an excess of cost over value (based on cost for Federal income tax purposes). A significant portion of the Fund's investments are in securities of utilities involved in the generation, transmission or distribution of electricity, gas, water or telecommunications. As a result of the Fund's concentration of its investments, it is subject to fluctuation in value and market risks associated with holding securities related to the utility industry. At December 31, 1994, the Fund had approximately 49% of its net assets invested in such securities. 4. Common Shares The Fund intends to repurchase its outstanding common shares in the open market from time to time when such shares trade at a discount of 10% or more from their net asset value. For the years ended December 31, 1994 and 1993, the Fund repurchased 49,000 and 14,200 common shares, respectively. Subject to the requirement to maintain total assets of at least two times the Redemption Value of the outstanding preferred shares, common shareholders will be entitled to receive distributions from the net investment income and net short-term capital gains remaining after payment of dividends (including Additional and Special Dividends) on preferred shares. After redemption of the preferred shares, the common shareholders will be entitled to all distributions that may be declared or approved by the Board of Directors. 5. Preferred Shares Preferred shareholders are entitled to receive cumulative dividends, payable quarterly, at the annual rate of 5.375% of the initial public offering price ($50.00) of the preferred shares ("Regular Dividends"), plus cumulative Additional Dividends, if any, payable annually, and may receive Special Dividends. Such dividends will be payable when, as and if declared by the Board of Directors out of net investment income and net short-term capital gains legally available therefor. Additional Dividends will be paid if, for any taxable year, Regular Dividends do not qualify for the dividends received deduction. The amount of Additional Dividends will be such that the after tax return of the holders of preferred shares would be the same as if the Regular Dividends qualified for the dividends received deduction. Special Dividends may be paid when the Fund is unable to pay dividends to holders of common shares, as described in Note 4. Preferred shares are subject, at the option of the Fund, to redemption at the then current redemption price. The redemption price is currently $50.00 per share. On October 30, 1996, the Fund will either redeem the preferred shares or be liquidated. The redemption price is increased for any accumulated and unpaid dividends and reduced as a result of Special Dividends. On January 19, 1994 the Fund received $30,000,000 from the issuance of 600,000 shares of $50.00 par value preferred stock with a rate of 5.375%, the proceeds of which were used in the redemption of the Fund's previously outstanding 7.25% $50.00 par value preferred stock plus accumulated dividends on February 22, 1994. 7 - -------------------------------------------------------------------------------- ================================================================================ Counsellors Tandem Securities Fund, Inc. Notes to Financial Statements (cont'd) December 31, 1994 ================================================================================ 6. Dividends Regular dividends to 7.25% preferred shareholders in 1994 amounted to $.5164 per share. Regular dividends to 5.375% preferred shareholders in 1994 amounted to $2.55 per share. Income distributions are determined in accordance with Federal income tax regulations which may differ from generally accepted accounting principles. 7. Net Assets At December 31, 1994, 6,000,000 preferred shares and 30,000,000 common shares were authorized; both have a par value of $.01 per share. Net assets at December 31, 1994 consisted of the following:
Paid in capital, net $57,544,687 Undistributed net investment income 709,446 Net unrealized appreciation from investments 11,126,329 ----------- $69,380,462 ===========
8 - -------------------------------------------------------------------------------- ================================================================================ Counsellors Tandem Securities Fund, Inc. Notes to Financial Statements (cont'd) December 31, 1994 ================================================================================ 8. Selected Quarterly Financial Data for a Common Share (Unaudited)
Net Increase Net Realized (Decrease) Total Net and Unrealized in Net Assets Investment Per Investment Per Gain (Loss) on Per Resulting From Per 1994 Income Share Income Share Investments* Share* Operations Share ---- ------ ----- ------ ----- ------------ ------ ---------- ----- March 31, 1994 $ 812,721 $ .29 $ 531,412 $.19 $(6,707,070) $(2.41) $(6,175,658) $(2.22) June 30, 1994 619,685 .23 370,780 .13 (1,572,032) (.57) (1,201,252) (.44) September 30, 1994 703,885 .26 463,742 .17 1,994,439 .73 2,458,181 .90 December 31, 1994 795,191 .29 590,503 .22 (3,144,402) (1.15) (2,553,899) (.93) ---------- ----- ---------- ---- ----------- ------ ----------- ------ $2,931,482 $1.07 $1,956,437 $.71 $(9,429,065) $(3.40) $(7,472,628) $(2.69) ========== ===== ========== ==== =========== ====== =========== ====== 1993 ---- March 31, 1993 $ 731,444 $ .26 $ 494,637 $.18 $ 4,296,578 $ 1.53 $ 4,791,215 $ 1.71 June 30, 1993 782,761 .28 539,873 .19 (183,893) (.06) 355,980 .13 September 30, 1993 794,309 .28 527,989 .19 2,993,237 1.07 3,521,226 1.26 December 31, 1993 1,246,841 .45 991,781 .36 (4,286,110) (1.54) (3,294,329) (1.18) ---------- ----- ---------- ---- ----------- ------ ----------- ------ $3,555,355 $1.27 $2,554,280 $.92 $ 2,819,812 $ 1.00 $ 5,374,092 $ 1.92 ========== ===== ========== ==== =========== ====== =========== ======
* Net of Federal income taxes. 9 - -------------------------------------------------------------------------------- ================================================================================ Counsellors Tandem Securities Fund, Inc. Report of Independent Accountants ================================================================================ To the Board of Directors and Shareholders of Counsellors Tandem Securities Fund, Inc.: We have audited the accompanying statement of net assets of Counsellors Tandem Securities Fund, Inc., as of December 31, 1994, the related statement of operations for the year then ended and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights of Counsellors Tandem Securities Fund, Inc. for each of the three years in the period ended December 31, 1992 were audited by other auditors, whose report dated February 17, 1993, expressed an unqualified opinion. 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 financial highlights 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, 1994, 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 financial highlights referred to above present fairly, in all material respects, the financial position of Counsellors Tandem Securities Fund, Inc. as of December 31, 1994, and the results of its operations for the year then ended, and the changes in its net assets and its financial highlights for each of the two years in the period then ended, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. 2400 Eleven Penn Center Philadelphia, Pennsylvania February 6, 1995 10 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Counsellors Tandem Securities Fund, Inc. Warburg, Pincus Counsellors, Inc. 466 Lexington Avenue New York, New York 10017-3147 800-888-6878 - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----