-----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, tAxNstuTx5WG/kIY7gkHd4fOOACEMhMYJNPPRmLsKViE4Lxv3EYG/YRJxywnwPo6 asK/vUMnViCV60Py2bhiGA== 0000950116-95-000405.txt : 19950905 0000950116-95-000405.hdr.sgml : 19950905 ACCESSION NUMBER: 0000950116-95-000405 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950831 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: 95569574 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 =============================================================================== COUNSELLORS TANDEM SECURITIES FUND, INC. =============================================================================== Semiannual Report to Shareholders =============================================================================== =============================================================================== DIRECTORS OFFICERS Lionel J. Pincus John L. Furth Chairman of the Board Chief Executive Officer Richard N. Cooper Anthony G. Orphanos President Donald J. Donahue Reuben S. Leibowitz Jack W. Fritz Vice President and Chief Financial Officer John L. Furth Arnold M. Reichman Thomas A. Melfe Executive Vice President Alexander B. Trowbridge Stephen Distler Treasurer and Chief Accounting Officer Eugene P. Grace Vice President and Secretary =============================================================================== 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. August 22, 1995 Dear Fellow Shareholder: The net asset value of Counsellors Tandem Securities Fund, Inc. (the "Fund") at the close of the six-month period ended June 30, 1995 was $16.93 per Common Share, vs. a year-end 1994 net asset value per share of $14.37. This represents a 17.8% rate of return for the year's first six months, compared with same-period gains of 20.2% for the S&P 500 Index and 13.2% for the Value Line Composite Index. The rise in the Fund's net asset value during the period is attributable to several factors. First, utilities stocks, which comprise a considerable portion of the portfolio, saw their share prices rise over the six-month period as interest rates fell. As investors in the Fund know, we must remain invested in these high-yielding stocks in order to earn the income necessary to pay the dividends on the Fund's Preferred Shares. The Fund also benefited from its increased emphasis on financial stocks, which accounted for nearly 12% of the portfolio's equity investments at the end of the reporting period. These stocks, as a group, were among the market's leaders in the year's first six months, beneficiaries of the decline in interest rates and broad-based merger activity within the banking industry. Strong performers for the Fund during the January to June span included BankAmerica, First Interstate and Norwest among the banks, and Allstate, Travelers and Federal Home Loan Mortgage Corporation within the broader financial-services category. Also contributing positively to the Fund's performance were its industrial cyclical stocks, which included U.S. Steel, Inco and Freeport-McMoRan Copper, and precious-metals holdings Newmont Mining and Placer Dome. Other strong performers included communications & media holdings Comcast and Tele-Communications, which rose in anticipation of Congressionsl passage of a new telecommunications bill, and "special situations" stocks Acclaim Entertainment, CBI Industries and Stone & Webster. Finally, the Fund's use of leverage during the six- month period worked to its advantage, as the market rose and interest rates fell. We appreciate your support of the Fund and will continue to strive to provide a high-quality investment. Sincerely, /s/ John L. Furth --------------------------- John L. Furth Chief Executive Officer /s/ Anthony G. Orphanos ---------------------------- Anthony G. Orphanos President =============================================================================== =============================================================================== Counsellors Tandem Securities Fund, Inc. Statement of Net Assets June 30, 1995 (Unaudited) - ------------------------------------------------------------------------------- ===============================================================================
Shares Value ------------- ------------- COMMON STOCK (82.7%) Utilities-Electric (24.8%) Baltimore Gas & Electric Co. 50,000 $ 1,250,000 Central & South West Corp. 100,000 2,625,000 Eastern Utilities Associates 80,000 1,810,000 Houston Industries, Inc. 70,000 2,948,750 Minnesota Power & Light Co. 70,000 1,907,500 Montana Power Co. 65,000 1,495,000 NIPSCO Industries, Inc. 55,000 1,870,000 PECO Energy Co. 100,000 2,762,500 Public Service Co. of Colorado 70,000 2,275,000 ------------- 18,943,750 ------------- Utilities-Gas (4.9%) Equitable Resources, Inc. 37,500 1,082,813 KN Energy, Inc. 60,000 1,522,500 National Fuel Gas Co. 40,000 1,145,000 ------------- 3,750,313 ------------- Utilities-Telecommunications (13.7%) AT&T Corp. 30,000 1,593,750 Bell Atlantic Corp. 38,000 2,128,000 Citizens Utilities Co. Series A 109,086 1,295,398 SBC Communications, Inc. 70,000 3,333,750 US West, Inc. 50,000 2,081,250 ------------- 10,432,148 ------------- Other (39.3%) Acclaim Entertainment, Inc. + 60,000 1,106,250 Allegheny Ludlum Corp. 80,000 1,580,000 Allstate Corp. 22,000 651,750 BankAmerica Corp. 25,000 1,315,625 CBI Industries, Inc. 38,000 954,750 Comcast Corp. Class A Special 83,000 1,540,688 Corning, Inc. 40,000 1,310,000 Federal Home Loan Mortgage Corp. 20,000 1,375,000 Freeport McMoran, Inc. 55,000 969,375 Fund American Enterprises Holdings, Inc. + 30,000 2,141,250 General Electric Co. 60,000 3,382,500 Halliburton Co. 15,000 536,250 H & R Block, Inc. 50,000 2,056,250 Inco Ltd. 40,000 1,130,000 Manpower PLC Sponsored ADR 45,000 1,147,500
See Accompanying Notes to Financial Statements. 1 ================================================================================ =============================================================================== Counsellors Tandem Securities Fund, Inc. Statement of Net Assets (cont'd) June 30, 1995 (Unaudited) - ------------------------------------------------------------------------------- ===============================================================================
Shares Value ------------- ------------- COMMON STOCK (cont'd) Other (cont'd) Newmont Mining Corp. 34,000 $ 1,423,750 Noble Affiliates, Inc. 50,000 1,275,000 Norwest Corp. 70,000 2,012,500 Placer Dome Inc. 38,000 992,750 Stone & Webster, Inc. 38,000 1,121,000 Tele-Communications, Inc. Class A + 60,000 1,406,250 USX-US Steel Group Inc. + 15,000 515,624 ------------- 29,944,062 ------------- TOTAL COMMON STOCK (Cost $45,842,961) 63,070,273 ------------- Par ------------- SHORT-TERM INVESTMENTS (18.0%) Repurchase agreement with State Street Bank & Trust Co. dated 06/30/95 at 5.85% to be repurchased at $13,693,672 on 07/03/95. (Collateralized by $13,625,000 U.S. Treasury Note 6.25%, due 08/31/96, with a market value of $13,965,625.) (Cost $13,687,000) $13,687,000 13,687,000 ------------- TOTAL INVESTMENTS AT VALUE (100.7%) (Cost $59,529,961*) 76,757,273 LIABILITIES IN EXCESS OF OTHER ASSETS (0.7%) (546,918) ------------- NET ASSETS (100.0%) 76,210,355 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 $46,210,355 ============= NET ASSET VALUE PER SHARE OF COMMON STOCK ($46,210,355 / 2,729,862 common shares) $16.93 =============
+ Non-income producing security. * Cost for Federal income tax purposes is $59,546,615. See Accompanying Notes to Financial Statements. 2 =============================================================================== =============================================================================== Counsellors Tandem Securities Fund, Inc. Statement of Operations For the Six Months Ended June 30, 1995 (Unaudited) - ------------------------------------------------------------------------------- ===============================================================================
Investment Income: Dividends $1,171,498 Interest 373,338 ------------ Total investment income 1,544,836 ------------ Expenses: Investment advisory fee 272,712 Administration fee 49,191 Legal fees 47,183 Custodian and transfer agent fees 29,863 Directors fees 19,836 Amortization of organizational costs 18,596 Audit fee 11,377 Printing 9,511 Insurance 3,472 Other 22,197 ------------ Total expenses 483,938 ------------ Net investment income 1,060,898 ------------ Net Realized and Unrealized Gain from Investments: Net realized gain from security transactions 619,127 Net increase in unrealized appreciation from investments 6,100,983 ------------ Net realized and unrealized gain from investments 6,720,110 ------------ Net increase in net assets resulting from operations $7,781,008 ============
See Accompanying Notes to Financial Statements. 3 =============================================================================== =============================================================================== Counsellors Tandem Securities Fund, Inc. Statements of Changes in Net Assets - ------------------------------------------------------------------------------- ===============================================================================
For the Six Months Ended For the June 30, 1995 Year Ended (Unaudited) December 31, 1994 --------------------- ----------------------- From Operations: Net investment income $ 1,060,898 $ 1,956,437 Net realized gain from security transactions 619,127 2,590,004 Federal income tax 0 (906,501) Net increase (decrease) in unrealized appreciation from investments 6,100,983 (11,112,568) --------------------- ----------------------- Net increase (decrease) in net assets resulting from operations 7,781,008 (7,472,628) --------------------- ----------------------- From Dividends: Dividends from net investment income: Preferred shares (806,295) (1,829,507) --------------------- ----------------------- From Capital Share Transactions: Cost of common shares repurchased (144,820) (645,046) Costs associated with tender offer 0 285,798 Proceeds from sale of 600,000 preferred shares (net of $310,250 placement fees) 0 29,689,750 Cost of 576,958 preferred shares repurchased 0 (28,847,900) --------------------- ----------------------- Net increase (decrease) in net assets from capital share transactions (144,820) 482,602 --------------------- ----------------------- Net increase (decrease) in net assets 6,829,893 (8,819,533) Net Assets: Beginning of period 69,380,462 78,199,995 --------------------- ----------------------- End of period $76,210,355 $ 69,380,462 ===================== =======================
See Accompanying Notes to Financial Statements. 4 =============================================================================== =============================================================================== Counsellors Tandem Securities Fund, Inc. Financial Highlights (For a Common Share of the Fund Outstanding Throughout Each Period) - ------------------------------------------------------------------------------- ===============================================================================
For the Six Months Ended For the Year Ended December 31, June 30, 1995 -------------------------------------------------------- (Unaudited) 1994 1993 1992 1991 1990 -------------- ---------- --------- --------- --------- --------- Net Asset Value, Beginning of Period $14.37 $ 17.69 $16.54 $16.88 $12.67 $13.29 -------------- ---------- --------- --------- --------- --------- Income from Investment Operations: Net investment income .39 .71 .92 .79 .83 .73 Net Gain (Loss) on Securities (both realized and unrealized) 2.46 (3.07) 1.01 (.33) 4.28 (.50) Federal income tax .00 (.33) (.01) (.13) (.04) (.23) -------------- ---------- --------- --------- --------- --------- Total from Investment Operations 2.85 (2.69) 1.92 .33 5.07 .00 -------------- ---------- --------- --------- --------- --------- Less Distributions from Net Investment Income: Common stock equivalent of dividends paid to preferred shareholders (.30) (.66) (.75) (.75) (.73) (.73) Dividends to common shareholders .00 .00 .00 .00 (.12) (.12) -------------- ---------- --------- --------- --------- --------- Total Distributions (.30) (.66) (.75) (.75) (.85) (.85) -------------- ---------- --------- --------- --------- --------- Gain (loss) on common shares sold (repurchased), net .01 .03 (.02) .08 (.01) .23 -------------- ---------- --------- --------- --------- --------- Net Asset Value, End of Period $16.93 $ 14.37 $17.69 $16.54 $16.88 $12.67 ============== ========== ========= ========= ========= ========= Market Value, End of Period $14.88 $ 12.88 $15.25 $14.13 $14.13 $10.38 ============== ========== ========= ========= ========= ========= Total Return Based on net asset value per share 39.18%* (18.77)% 6.95% (2.01)% 34.41% (3.96)% Based on market price per share 33.79%* (15.54)% 7.93% .00% 37.58% (8.70)% Ratios/Supplemental Data: Net Assets, End of Period (000s) $76,210 $69,380 $78,200 $75,212 $76,879 $64,974 Ratios to average daily net assets: Operating expenses 1.33%* 1.30% 1.27% 1.27% 1.35% 2.33% Net investment income 2.92%* 2.60% 3.24% 2.97% 3.45% 3.10% Portfolio Turnover Rate 28%* 53% 33% 27% 26% 41%
* Annualized See Accompanying Notes to Financial Statements. 5 =============================================================================== =============================================================================== Counsellors Tandem Securities Fund, Inc. Notes to Financial Statements June 30, 1995 (Unaudited) - ------------------------------------------------------------------------------- =============================================================================== 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. 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 June 30, 1995 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. 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 collateral will be maintained at an amount at least equal to the total amount of the purchase obligation, including interest. The collateral is in the Fund's possession. 6 =============================================================================== =============================================================================== Counsellors Tandem Securities Fund, Inc. Notes to Financial Statements (cont'd) June 30, 1995 (Unaudited) - ------------------------------------------------------------------------------- =============================================================================== 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 six months ended June 30, 1995, Counsellors earned $272,712 in investment advisory fees. 3. Investments in Securities Purchases and sales of investment securities for the six months ended June 30, 1995 (excluding short-term investments) were $8,485,075 and $11,774,160, respectively. At June 30, 1995, the net unrealized appreciation from investments of $17,210,658 was comprised of appreciation of $17,361,514 for those investments having an excess of value over cost, and depreciation of $150,856 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 June 30, 1995, the Fund had 43% 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 six months ended June 30, 1995 and the year ended December 31, 1994, the Fund repurchased 10,400 and 49,000 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 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. 7 =============================================================================== =============================================================================== Counsellors Tandem Securities Fund, Inc. Notes to Financial Statements (cont'd) June 30, 1995 (Unaudited) - ------------------------------------------------------------------------------- =============================================================================== 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 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. 6. Dividends Regular dividends to 5.375% preferred shareholders for the six months ended June 30, 1995 amounted to $1.34 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 June 30, 1995, 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 June 30, 1995 consisted of the following:
Paid in capital, net $57,399,867 Undistributed net investment income 964,049 Accumulated net realized gain from security transactions 619,127 Net unrealized appreciation from investments 17,227,312 ------------- $76,210,355 =============
8. Selected Quarterly Financial Data for a Common Share
Net Increase Net Realized (Decrease) Total Net and Unrealized in Net Assets Investment Per Investment Per Gain (Loss) on Per Resulting From Per 1995 Income Share Income Share Investments* Share* Operations Share ---------------- ------------ ---- ------------ ---- -------------- ----- -------------- --------- March 31, 1995 $ 805,654 $ .30 $ 568,272 $.21 $ 3,954,567 $ 1.45 $ 4,522,839 $ 1.66 June 30, 1995 739,182 .27 492,626 .18 2,765,543 1.01 3,258,169 1.19 ------------ ---- ------------ ---- -------------- ----- -------------- --------- $1,544,836 $ .57 $1,060,898 $.39 $ 6,720,110 $ 2.46 $ 7,781,008 $ 2.85 ============ ==== ============ ==== ============== ===== ============== ========= 1994 ---------------- 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) ============ ==== ============ ==== ============== ===== ============== =========
8 =============================================================================== =============================================================================== Counsellors Tandem Securities Fund, Inc. Notes to Financial Statements (cont'd) June 30, 1995 (Unaudited) - ------------------------------------------------------------------------------- =============================================================================== 9. Annual Shareholders' Meeting The annual meeting of shareholders of the Fund was held on April 5, 1995 at the offices of the Fund, 466 Lexington Avenue, 10th Floor, New York, New York. The two matters voted upon by shareholders and the resulting votes for each matter were as follows: (a) To elect the following seven directors to hold office, unless earlier removed, until the next annual meeting of shareholders and until their respective successors shall have been elected and qualified. Preferred Share Vote
Director For Against Withheld -------------------------- ------------------- -------------- -------------- Richard N. Cooper 363,000.000 0 0 Donald J. Donahue 363,000.000 0 0 Jack W. Fritz 363,000.000 0 0 John L. Furth 363,000.000 0 0 Thomas A. Melfe 363,000.000 0 0 Lionel I. Pincus 363,000.000 0 0 Alexander B. Trowbridge 363,000.000 0 0 Common Share Vote Director For Against Withheld -------------------------- ------------------- -------------- -------------- Donald J. Donahue 2,333,000.886 0 45,229.646 John L. Furth 2,333,150.886 0 45,149.646 Lionel I. Pincus 2,332,350.886 0 45,949.646
(b) To ratify the selection of Coopers & Lybrand L.L.P. as independent auditors for the fiscal year ending December 31, 1995.
For Against Abstained ------------------- -------------- -------------- Preferred Share Vote 340,000.000 23,000.000 0 Common Share Vote 2,365,331.843 4,173.170 8,795.519
9 =============================================================================== =============================================================================== 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-----