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[GINTEL LOGO]
GINTEL FUND
SEMIANNUAL REPORT TO
SHAREHOLDERS
JUNE 30, 1997
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GINTEL FUND
The investment objective is to achieve capital appreciation through investing in
equities. The minimum initial investment in the Gintel Fund is $5,000, except
for IRA's and Keogh accounts where the minimum initial purchase is $2,000. There
is no minimum on additional investments.
<TABLE>
<CAPTION>
SUMMARY OF INVESTMENT RESULTS
<S> <C>
1997 (1st Half) 10.3%
1996 31.0%
1995 31.0%
1994 -16.5%
1993 2.0%
1992 24.7%
1991 15.6%
1990 -6.7%
1989 23.8%
1988 29.4%
1987 -14.3%
1986 20.8%
1985 20.0%
1984 -2.6%
1983 34.3%
1982 34.1%
1981 (6/10/81-12/31/81) 7.6%
Average Annual Total
Return Since Inception 15.2%
</TABLE>
Investment results are net of expenses, with
dividends and capital gains reinvested.
Past results offer no assurance as to future performance. The investment return
and principal value of an investment will fluctuate, so that an investor's
shares when redeemed may be worth more or less than their original cost. The
Fund's prospectus contains more complete information and should be read
carefully.
<PAGE> 3
June 30, 1997
Fellow Shareholders:
Gintel Fund's net asset value per share increased 17.3% in the second
quarter, resulting in a gain of 10.3% for the first six months of 1997. The
second quarter recovery in the prices of stocks and the appreciation of the
broader market averages was one of the largest recorded gains in recent history
in both percentage and dollar terms. For the second quarter, total return was
17.4% for the S&P 500, 16.6% for the New York Stock Exchange Index , and 16.2%
for the Russell 2000. As of June 30, 1997, the Fund's cash available for
investment was $19.6 million or 12.4% of the portfolio.
During the second quarter a new position was taken in Green Tree
Financial, and holdings were increased in CheckFree Corporation, Checkpoint
Systems, and Ogden Corporation. Positions in Capstead Mortgage, Chart
Industries, and MacFrugal's Bargains were reduced, and the holdings in
Schering-Plough and Oneita were eliminated. Other less significant changes were
also made in the portfolio during the quarter.
Capstead Mortgage has been the Fund's largest holding for most of the
past year. We increased our holdings in this stock during the second quarter of
1996 because we thought there was opportunity for substantial return through
price appreciation and dividend income. We were correct in that assumption, as
evidenced by Capstead's generating a total return of almost 75% for the Fund
since May of 1996. Although we still have a large position in Capstead, we
reduced it because of our belief that the opportunity for further gains of this
magnitude over the near term has lessened.
CheckFree has replaced Capstead Mortgage as the largest holding in our
Fund. We are very optimistic about the opportunity for appreciation over the
next 12 months, as explained in the investment thesis on CheckFree in our
year-end report. If our analysis proves correct, CheckFree is positioned to
produce a rapidly growing stream of recurring income which should command a
premium market multiple. We believe this will prove to be a very rewarding
investment for our Fund over the long term and deserving of the overweighting
assigned to it in the Fund's portfolio.
As stated earlier, the remaining portfolio loss in Oneita was
recognized during the quarter. It has been a costly investment mistake that is
now behind us. The tax loss created appears to be of more value to our Fund's
taxable shareholders than the stock itself.
<PAGE> 4
Recent reports confirm the view we have held since the beginning of the
year that the economy is continuing to benefit from productivity gains, that
manufacturing is still growing, and that employment remains stable. Productivity
gains, driven primarily by technological investment, are contributing to
economic growth with moderate inflation. In addition, the deregulation of
numerous industries is allowing companies many opportunities to gain
efficiencies. We continue to see low rates of inflation, modest levels of
interest rates, high employment levels and falling government deficits at the
federal, state and local levels. In fact, due to stronger-than-expected tax
collections, the federal budget deficit could be below $50 billion for fiscal
1997, less than a third of the initial projections. The combination of these
factors creates a perfect environment for higher corporate profits and rising
financial markets.
Sharp price corrections in individual stocks which disappoint investors
will continue, and some market corrections can be expected from time to time.
There is nothing that we see on the immediate horizon to cause concerns other
than the high valuations that have been created by a long-lived bull market. It
is increasingly more difficult to find cheap stocks, but a number of
opportunities undoubtedly still exist; however, one must turn over a greater
number of rocks to find them or wait for a market sell-off to create new buying
opportunities.
We are glad to be reporting positive returns to our shareholders again
and look forward to an even stronger second half.
Cordially,
/s/ Robert M. Gintel /s/ Cecil A. Godman, III /s/ Edward F. Carroll
Robert M. Gintel Cecil A. Godman, III Edward F. Carroll
Chairman Investment Manager Investment Manager
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GINTEL FUND Statement of Net Assets As of June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
NUMBER
OF MARKET
SHARES COST** VALUE
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COMMON STOCKS
<S> <C> <C> <C>
TECHNOLOGY-RELATED (21.7%)
1,775,000 CheckFree Corporation* $30,057,842 $31,284,375
175,000 C-Cube Microsystems Inc.* 5,407,638 3,073,437
DIVERSIFIED MANUFACTURING(18.0%)
650,000 Chart Industries, Inc. 2,763,906 17,793,750
400,000 Ogden Corporation 7,942,677 8,700,000
50,000 Johnson Controls, Inc. 1,195,850 2,053,125
MORTGAGE BANKING (17.5%)
800,000 Capstead Mortgage Corporation 10,483,584 19,750,000
100,000 Federal National Mortgage Association 834,713 4,362,500
100,000 Green Tree Financial Corporation 3,487,950 3,562,500
INSURANCE (9.9%)
215,000 Mercury General Corporation 9,393,586 15,641,250
SECURITY PROTECTION SYSTEMS (5.3%)
520,000 Checkpoint Systems, Inc. 6,591,553 8,352,500
SAVINGS & LOAN (3.4%)
100,000 Charter One Financial Corporation 675,428 5,387,500
COPPER PRODUCER (2.7%)
50,000 Phelps Dodge Corporation 2,992,527 4,259,375
PAPER FOREST PRODUCTS (1.7%)
52,500 Weyerhaeuser Company 2,101,374 2,730,000
BROADCAST EQUIPMENT (1.7%)
100,000 Vertex Communications Corporation* 1,550,000 2,675,000
BEVERAGES/FOOD(1.0%)
40,000 PepsiCo. Inc. 696,563 1,502,500
ENVIRONMENTAL SERVICES (0.8%)
144,900 OHM Corporation* 1,068,850 1,222,594
RETAIL-RELATED (0.4%)
25,000 Mac Frugal's Bargains Close-Outs Inc.* 337,500 681,250
Short Sales Against Stocks Held
Long(-4.1%) (6,415,407) (6,482,500)
Miscellaneous Securities*** (2.9%) 4,217,840 4,623,625
Imputed Brokerage
Commissions on
Securities Owned 408,000
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Total Common Stock (82.9%) 85,791,974 131,172,781
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</TABLE>
<PAGE> 6
GINTEL FUND Statement of Net Asset (continued) As of June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT COST** VALUE
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CASH EQUIVALENTS
<S> <C> <C> <C>
6,000,000 General Electric Capital Services Inc.
5.50% due 7/2/97 6,000,000 6,000,000
6,000,000 Associates Corp of North America
5.55% due 7/9/97 6,000,000 6,000,000
6,000,000 General Electric Capital Corporation
5.56% due 7/23/97 6,000,000 6,000,000
5,000,000 Chevron Oil Finance Co
5.47% due 7/16/97 5,000,000 5,000,000
1,569,000 Chase Securities, Inc Repurchase Agreement
5.70% due 7/11/97 (Collateralized by U.S.
Government Obligations) 1,569,000 1,569,000
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Total Cash Equivalents (15.5%) 24,569,000 24,569,000
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Total Investments (98.4%) $110,360,974 155,741,781
============
Other assets net of liabilities (1.6%) 2,517,333
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Net Asset Applicable to Outstanding
Shares (100.0%) $158,259,114
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Net asset value per share -- based on 7,930,589 shares
of beneficial interest (offering and redemption price) $ 19.96
======================================================================================
</TABLE>
* Non-income producing investments
** Cost basis for Federal income tax purposes
*** Includes 15 investments, some of which are non-income producing investments.
The accompanying notes to financial statements are an integral part hereof.
<PAGE> 7
<TABLE>
<CAPTION>
GINTEL FUND Statement of Operations June 30, 1997
(Unaudited)
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 1,858,125
Interest 626,656
Total investment income 2,484,781
EXPENSES:
Investment advisory fee (Note C) $ 732,929
Administrative expense (Notes D and E) 492,908
Other expenses 27,766
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Total expenses 1,253,603
NET INVESTMENT INCOME 1,231,178
NET REALIZED GAIN ON INVESTMENTS (NOTE E) 7,617,943
NET INCREASE IN UNREALIZED APPRECIATION OF INVESTMENTS (NOTE E) 5,930,121
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NET GAIN ON INVESTMENTS 13,548,064
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $14,779,242
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
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GINTEL FUND Statements of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months Year
Ended 6/30/97 Ended 12/31/96
-------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,231,178 $ 2,563,464
Net realized gain on investments 7,617,943 12,803,219
Net increase in unrealized appreciation
of investments 5,930,121 11,394,619
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Net increase from operations (Note E) 14,779,242 26,761,302
DISTRIBUTIONS TO SHAREHOLDERS:
Investment income -- (2,653,175)
Net realized gains from investment -- (12,796,654)
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Net decrease from distributions to shareholders -- (15,449,829)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued 2,757,345 42,947,300
Reinvestment of dividends -- 10,384,683
Cost of shares repurchased (7,183,168) (13,476,618)
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Net increase (decrease) from capital
share transactions (Note G2) (4,425,823) 39,855,365
Total Increase 10,353,419 51,166,838
Net Assets - Beginning of Year 147,905,695 96,738,857
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Net Assets - End of Period $ 158,259,114 $ 147,905,695
============= =============
NET ASSETS CONSIST OF:
Capital Stock $ 104,071,574 $ 108,497,397
Undistributed net investment income (losses) (Note E) 875,174 (356,003)
Undistributed net realized gains
from security transactions (Note E) 7,678,559 60,615
Unrealized appreciation on investments (Note E) 45,633,807 39,703,686
------------- -------------
$ 158,259,114 $ 147,905,695
============= =============
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
<PAGE> 9
<TABLE>
<CAPTION>
GINTEL FUND Condensed Financial Information (Per Share Income and Capital Changes) (Unaudited)
YEAR ENDED DECEMBER 31
SIX MONTHS ----------------------------------------------------------------------
ENDED 6/30/97 1996 1995 1994 1993*
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<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 18.10 $ 15.37 $ 12.46 $ 15.11 $ 16.45
Income from
Investment Operations
Net investment income (loss) .15 .37 (.01) .04 (.06)
Net realized and unrealized
gain (loss) on securities 1.71 4.40 3.86 (2.53) .37
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Total from Investment Income 1.86 4.77 3.85 (2.49) .31
- ------------------------------------------------------------------------------------------------------------------------------------
Less: Distributions
Net investment income .35 .01 .04
Capital gains -- 1.69 .93 .12 1.65
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Total Distributions -- 2.04 .94 .16 1.65
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Net Asset Value, End of Period $ 19.96 $ 18.10 $ 15.37 $ 12.46 $ 15.11
====================================================================================================================================
Total Return 10.3% 31.0% 31.0% -16.5% 2.0%
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Ratios/Supplemental Data
Net assets, end of period $158,259,114 $147,905,695 $96,738,857 $88,277,270 $136,110,294
Ratio of operating expenses to
average net assets (Note D)* 1.7% 1.8% 2.3% 2.4% 2.2%
Ratio of net investment
income (loss) to average net assets 1.7% 2.2% (.1%) .3% (.3%)
Portfolio turnover rate 53.3% 61.4% 55.4% 69.6% 50.8%
Average commission rate paid * * * * *
Shares outstanding, end of period 7,930,589 8,171,707 6,295,777 7,085,466 9,008,802
</TABLE>
* The Fund's expense ratio for 1993-1995 includes brokerage commissions on
portfolio transactions paid for under the Fund's Administrative Services
fee and, therefore, may appear higher than those of other mutual funds.
Other mutual funds do not include brokerage commissions in their operating
expenses, but instead add them to the cost of securities purchased or
deduct them from the proceeds of securities sold. Beginning in 1996 the
Fund changed its accounting presentation to extract imputed brokerage
commissions from its expense ratio in order to make it easier to compare
our Fund to other funds which do not have a similar fee structure. Based
upon the imputed brokerage commission calculation the average commission
rate paid for the first six months of 1997 was $.0728 per share and for
the year ended 1996 was $.0771 per share.
The accompanying notes to financial statements are an integral part hereof.
<PAGE> 10
GINTEL FUND Notes to Financial Statements June 30, 1997
- (Unaudited)
(NOTE A) - ORGANIZATION:
The Gintel Fund (the "Fund") is a Massachusetts business trust formed under the
laws of the Commonwealth of Massachusetts with authority to issue an unlimited
number of shares of beneficial interest.
(NOTE B) - SIGNIFICANT ACCOUNTING POLICIES:
1. Security Valuation:
Investments in securities are valued at the last reported sales price on the
last business day of the period, or in the absence of a recorded sale, at the
mean of the closing bid and asked price on that date. Short-term investments are
valued at cost which approximates market value.
2. 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
substantially all of its taxable income and long-term gains to its shareholders.
Therefore, only a nominal Federal income tax provision is required.
3. Other:
As is common in the industry, security transactions are accounted for on the
trade date. Dividend income and distributions to shareholders are recorded on
the ex-dividend date.
Realized gain or loss on security transactions is determined on the basis of
first-in, first-out or specific identification.
(NOTE C) - INVESTMENT ADVISORY AGREEMENT:
The Fund's Investment Advisory Agreement with Gintel Asset Management, Inc., a
related party, provides for the annual fee of 1% based on the daily value of the
Fund's net assets.
(NOTE D) - ADMINISTRATIVE SERVICES AGREEMENT:
The Fund's Administrative Services Agreement provides that in consideration for
the services provided by Gintel & Co., the Fund's Distributor and a related
party, and the payment by the Distributor of substantially all of the Fund's
expenses, including but not limited to brokerage commissions and operating
expenses (but excluding the Investment Advisor's fees, the fees paid to
non-interested Trustees, certain transaction costs, interest, taxes and
extraordinary expenses), the Distributor would receive an Administrative
Services Fee. The Distributor receives a fee of 1.25% of the first $50 million
of the average daily net assets of the Fund, 1.125% of the next $50 million of
the average daily net assets and 1.0% of the average daily net assets in excess
of $100 million.
(NOTE E) - IMPUTED COMMISSIONS:
During 1996 the Fund changed its accounting presentation to provide for imputed
brokerage commissions to be extracted from the Administrative Services Fee and
to be applied to the cost of securities sold and held. The Fund has estimated
imputed brokerage commissions of 45 basis points of average net assets, which
decreased administration expense, and thereby increased net investment income
and unrealized capital gains by $333,000 and $46,000 respectively, and decreased
realized capital gains by $379,000.
<PAGE> 11
GINTEL FUND Notes to Financial Statements - continued June 30, 1997
(Unaudited)
(NOTE F) - LINE OF CREDIT:
The Fund has a bank line of credit of $15,000,000. Interest is payable at the
Prime Rate. Loans are collateralized by securities owned by the Fund. At June
30, 1997, the Fund had no outstanding borrowings.
(NOTE G) - OTHER MATTERS:
<TABLE>
<CAPTION>
1. Investments
<S> <C>
Unrealized appreciation at June 30, 1997 $ 48,311,352
Unrealized depreciation at June 30, 1997 (2,522,545)
Imputed commissions on securities owned (408,000)
------------
$ 45,380,807
============
FOR THE SIX MONTHS ENDED JUNE 30,1997
Purchases of securities other than short-term investments $ 34,499,176
Sales of securities other than short-term investments $ 49,463,127
</TABLE>
2. Capital Stock: (in shares)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
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<S> <C> <C>
Shares issued 151,163 538,198
Shares issued in connection with
acquisition of Gintel ERISA Fund -- 1,517,126
Shares reinvested -- 575,010
Shares repurchased (392,281) (754,404)
--------
Net increase (decrease) (241,118) 1,875,930
========
</TABLE>
<PAGE> 12
GINTEL FUND TRUSTEES AND OFFICERS
<TABLE>
<CAPTION>
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<S> <C>
Robert M. Gintel Chairman, Trustee, and Chief Executive Officer
Chairman and Chief Executive Officer, Gintel Asset Management,Inc.;
Senior Partner, Gintel & Co. Limited Partnership; Chairman and Director,
Oneita Industries; Vice Chairman and Director, XTRA Corporation.
Thomas H. Lenagh Trustee
Financial Consultant; formerly Chairman and Chief Executive Officer
of Greiner Engineering Co.; Director, Adams Express Co., USLife Corp.,
ICN Biomedics, Inc., SCI Systems, Inc., Irvine Sensors Corp., CML
Inc., Clemente Global, Rexhall Inc.
Francis J. Palamara Trustee
Business Consultant; previously Director and Executive Vice President
of ARA Services, Inc.; formerly Executive Vice President and Chief
Operating Officer of the New York Stock Exchange, Inc.; Director,
Glenmede Fund, XTRA Corporation.
Russel R. Taylor Trustee
Associate Professor of Management and Marketing, Director of H.W.
Taylor Institute of Entrepreneurial Studies, College of New Rochelle;
Founder of Russel Taylor, Inc.
Stephen G. Stavrides Trustee, President, and Treasurer
President, Gintel Asset Management, Inc.; General Partner and Chief
Operating Officer, Gintel & Co. Limited Partnership.
Donna K. Grippe Secretary and Assistant Treasurer
</TABLE>
<TABLE>
<S> <C>
INVESTMENT ADVISOR GINTEL GROUP
Gintel Asset Management, Inc. Chase Global Funds Services Company
6 Greenwich Office Park P. O. Box 2798
Greenwich, CT 06831-5197 Boston, MA 02208-2798
203 622-6400 800 344-3092
</TABLE>