<PAGE> 1
Z
Seven
SECOND QUARTER REPORT
Period Ended
June 30, 1997
1. Accounting Procedures:
Reliability & Conservatism
2. Consistency of Operating
Earnings Growth
3. Strength of Internal
Earnings Growth
4. Balance Sheet:
Working Capital
5. Balance Sheet:
Corporate Liquidity
6. Recognition:
Owner Diversification
7. Value: P/E Under 10
<PAGE> 2
LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
We would like to express our gratitude for your confidence in our investment
philosophy. We are thankful for the love, strength, and wisdom given to us by
our heavenly creator and caring shepherd.
We are continuing to diversify our portfolio. We are reducing position sizes
and adding U.S. and foreign companies, which meet all of our criteria, to the
portfolio. As a result of the market decline last quarter, we had the
opportunity to invest in more U.S. companies.
FIRST-HALF INVESTMENT RESULTS
As 1997 reached its mid-year point, our investments have provided positive
returns with a significant increase in the investment portfolio. Over the
first six months, the investment portfolio advanced 10%. The second quarter
brought an increase of 7% in the investment portfolio.
FIRST-HALF NET ASSET VALUE
Our net asset value increased 9% in the first half, from $16.40 to $17.95.
During the second quarter, net asset value rose 6% from $16.86 to $17.95.
This is the third consecutive quarter in which our net asset value was up, and
the eleventh out of the last twelve quarters.
GOOD NEWS
Investments with increases of 20% or more since the end of last year are
discussed under our "Good News" section. In the first quarter, three stocks
in our portfolio gained 20% or more. By mid-year we had six, all of which are
large holdings.
DAY RUNNER, INC., was up 31% in the second quarter. Year-to-date the company's
share price increased 71%.Day Runner was in our "Mistakes and Disappointments"
section at the end of 1996, but rebounded strongly over the last six months
<PAGE> 3
and is now well over our purchase price in late 1995. Its good management,
debt-free balance sheet, and increasing profit margins turned Day Runner from
last year's "Mistakes and Disappointments" into this year's "Good News." Day
Runner is the leading developer, manufacturer, and marketer of paper-based
organizers for the retail market.
French cosmetics leader L'OREAL advanced 27% during the first half of the
year. Its 56% stake in the drug company Synthelabo and the acquisition of
Maybelline contributed to an operating profit jump of 18%.
NOVARTIS AG, the Swiss pharmaceutical giant formed by the merger of Sandoz AG
and Ciba-Geigy AG last year, was up 31% in the second quarter. The merger
proceeded smoothly and 1996 results were in line with expectations. For 1997,
the company forecasts strong profit growth and has pleased investors with a
dividend increase of 19%. The market responded positively causing its share
price to rally to a 52% gain at the half-year point.
Golf equipment producer CALLAWAY GOLF continued to progress with consistent
double digit growth in sales and earnings. The share price increased 23% in
the first six months. As of May 1997, over 80% of the golf professionals on
the six major tours using titanium drivers chose Callaway's drivers. Callaway
actively promotes its products on the professional golf tours. It predicts
that golf fans will spend over $1 billion on Callaway products this year.
LINDT & SPRUNGLI AG, the Swiss premium chocolates company, continued its
upward trend with a 22% share price increase the first six months. The
systematic expansion of their product range in 1996 clearly demonstrated the
company's innovative capability. Lindt's sales in the U.S., England, and Spain
rose in double digits in 1996. The company aims to expand business in these
<PAGE> 4
three markets in the future which should continue to add to earnings growth.
BORDER TELEVISION PLC, a regional broadcaster in television and radio in the
U.K., had a 22% share-price advance during the first half of the year. The
company's growth slowed down slightly with the acquisition of Sunderland City
Radio due to related refurbishing and integration. Border also bought out a
joint-venture partner in a radio license serving the Darlington area giving it
a 35% stake in the region.
This concludes the "Good News" section. However, we would like to mention
two additional companies which officially do not belong in this section
because they were added to the portfolio after the end of last year, but both
companies performed exceptionally well since we purchased them in April and
May. The share price of Del Laboratories, Inc., the manufacturer and marketer
of nail and beauty care products and proprietary pharmaceuticals was up 42% at
the end of June due to the news release of strong earnings. The other
company, Amrion, Inc., a nutritional supplement manufacturer, had a share
price increase of 46%, substantially due to the announcement that its shares
would be acquired by Whole Foods Market. Whole Foods Market does not meet
several of our purchase criterion, therefore, Amrion shares are in the process
of being sold.
We also like to mention companies which have done well for the Fund but are
not in the portfolio at the end of the second quarter. Air London
International PLC, an investment for almost six years, was eliminated in the
U.K. selling program. At the time of sale, Air London's stock price was up
21%. Its shares were sold at a solid gain.
MISTAKES AND DISAPPOINTMENTS
For purposes of objectivity, we also talk about the investments which fell 20%
or more since the end of last year. Six companies belong in this section,
<PAGE> 5
five of which are small U.K. companies that have been vulnerable due to the
price weakness among U.K. small caps. Four of the six companies are small
investments all together accounting for less than one percent of the Fund's
market value. Two of the small investments, RCO HOLDINGS PLC and UDO HOLDINGS
PLC, were sold after the end of the second quarter because they no longer met
all of our criteria.
FAIRWAY GROUP PLC is a U.K. company providing print facilities management,
finishing services, and distribution of educational supplies. At the end of
last year, difficult market conditions required Fairway to announce that
earnings would be above last year, but significantly lower than market
expectations. The uncertainty in earnings continued to drive the share price
down. At mid-year the company's share price fell 34%. Fairway reported a net
loss for its first-half after an exceptional charge from the disposal of their
troubled printing division. Continuing operations reported increased
profitability despite a moderate decrease in sales.
ESSEX FURNITURE PLC, a U.K. retailer, continues to have earnings difficulties
and at mid-year its share price was down 27%. We have been reducing our
position in Essex because the company no longer meets all of our criteria.
ABBEYCREST PLC, the U.K's largest designer and manufacturer of gold and silver
jewelry, had a share price decrease of 31% over the half year. Interesting
to note is that Abbeycrest reported a sales increase of 11% with pre-tax
profits up 41% compared to last year.
WOLVERINE TUBE, INC., whose share price was down 31% in the first quarter,
recovered 7% during the last three months and was down 26% at mid-year.
Wolverine Tube manufactures a broad range of custom-engineered copper tubular
products for many industrial applications. Wolverine continued to experience
weak demand for its high margin air conditioning products. The company
<PAGE> 6
has a strong balance sheet and earnings history, however, uncertainty about
future demand for the higher margin items continues to affect its share price.
OUTLOOK
In the U.S., broad market conditions continue to be favorable. Although
interest rates were raised at the end of last quarter, there are no
indications of further increases at this time. Consumer confidence remains
high and earnings confirm this attitude. The recent change in the budget
included a provision that lowered capital gains taxes. This should have a
long-term positive effect on U.S. shares. In the short term, however,
profit-taking may accelerate volatility.
The U.K. stock market made new highs, but the advance/decline line is
negative. It appears that overseas investors played an important part in the
U.K. market's recent rise. The new independence of the Bank of England in
setting monetary policy was a key event in exciting these investors towards
larger and more liquid U.K. stocks. Increased interest rates since May and
the strength of the British sterling put much pressure on the earnings and
stock price performance of smaller U.K. companies. Although the FT-SE 100 and
blue chips are doing well, small caps are very weak. For small British
companies, the bear market may have already begun. As a result of the current
market conditions, we are continuing to sell British companies that no longer
meet all of our criteria.
We have a diversified portfolio of well-managed companies, nearly all of which
we expect will continue to show good earnings growth. Our outlook for the
future is very good.
Sincerely,
Barry Ziskin August 8, 1997
<PAGE> 7
<TABLE>
<CAPTION>
Z-Seven Fund, Inc.
SCHEDULE OF INVESTMENTS
at June 30, 1997 (Unaudited)
Common Stocks (a) Shares Value
- ----------------------------------------------- --------- ------------
<S> <C> <C>
APPAREL & ACCESSORIES - 2.8%
Abbeycrest PLC 10,000 $ 16,970
Fila Holding S.p.A. ADS (b) 20,500 685,479
------------
702,449
------------
AUTOMOTIVE & TRANSPORTATION - 4.6%
Autopistas C.E. SA 19,992 271,211
Linamar Corporation 19,800 864,805
------------
1,136,016
------------
BUILDING & MATERIALS - 12.2%
American Homestar Corporation 43,100 921,262
NCI Building Systems, Inc. 30,600 990,675
Polypipe PLC 88,200 305,260
Wolverine Tube, Inc. (c) 30,200 841,825
------------
3,059,022
------------
BUSINESS SERVICES & SUPPLIES - 11.4%
Day Runner, Inc. 23,600 784,700
Dudley Jenkins Group PLC 228,000 836,532
Fairway Group PLC 1,377,500 1,135,060
RCO Holdings PLC 33,300 96,970
------------
2,853,262
------------
COMPUTER & RELATED PRODUCTS - 6.6%
Insight Enterprises, Inc. 29,900 898,884
Intel Corp. 5,200 737,428
------------
1,636,312
------------
FINANCIAL SERVICES - 7.1%
Jardine Lloyd Thompson
Group PLC 323,100 940,867
Rathbone Brothers PLC 158,000 833,450
------------
1,774,317
------------
FOOD & BEVERAGE - 7.7%
Carlsberg AS 4,100 225,853
Lindt & Srungli AG 329 607,800
Lone Star Steakhouse & Saloon, Inc. 38,000 988,000
Weetabix Ltd. 2,450 107,016
------------
1,928,669
------------
HEALTH & PERSONAL CARE - 19.6%
Amrion, Inc. 42,000 1,176,000
Astra AB 48,266 853,874
Del Laboratories, Inc. 26,100 916,762
L'Oreal (c) 2,157 908,427
Novartis AG 659 1,052,416
------------
4,907,479
------------
LEISURE & MEDIA - 15.0%
Border Television PLC 259,000 1,633,513
Callaway Golf Co. (c) 20,500 727,750
<PAGE> 8
Common Stocks (a) Shares Value
- ----------------------------------------------- --------- ------------
LVMH Moet Hennessy
Louis Vuitton 2,145 576,467
Seattle FilmWorks, Inc. 66,800 801,600
------------
3,739,330
------------
MEDICAL SERVICES & SUPPLIES - 7.4%
National Dentex Corporation (c) 47,100 894,900
Protean PLC 266,300 587,191
Seton Healthcare Group PLC 50,300 361,154
------------
1,843,245
------------
MULTI-INDUSTRY - 5.6%
Tomkins PLC 180,666 781,561
TT Group PLC 67,900 418,060
Wassall PLC 39,757 204,430
------------
1,404,051
------------
RETAIL - 0.4%
Essex Furniture PLC 77,600 94,905
UDO Holdings PLC 1,700 3,664
Westfair Foods Ltd. 360 10,430
------------
108,999
------------
- ------------------------------------------------------------------------
TOTAL COMMON STOCKS - 100.4%
(Cost $22,279,797) 25,093,151
- ------------------------------------------------------------------------
LIABILITIES IN EXCESS OF CASH,
RECEIVABLES, AND OTHER ASSETS - (0.4%) (100,554)
- ------------------------------------------------------------------------
NET ASSETS - 100.0%
(Equivalent to $17.95 per share based on
1,392,617 shares of capital stock outstanding) $24,992,597
========================================================================
<FN>
(a) Percentages indicated are based on net assets of
$24,992,597.
(b) ADS - American Depositary Shares.
(c) Pledged as collateral for line of credit.
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS BY COUNTRY
- -------------------------------------
Percent Country Value
- -------------------------------------
<C> <S> <C>
45.3% United States $11,365,265
33.3% United Kingdom 8,356,603
6.6% Switzerland 1,660,216
5.9% France 1,484,894
3.5% Canada 875,235
3.4% Sweden 853,874
1.1% Spain 271,211
0.9% Denmark 225,853
- -------------------------------------
100.0% $25,093,151
=====================================
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
Z-Seven Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES
at June 30, 1997 (Unaudited)
ASSETS
<S> <C>
Investments in securities, at value
(identified cost $22,279,797) $25,093,151
Cash 179,383
Receivables
Dividends and interest 121,474
Securities sold 949,237
Due from investment advisor 82,324
Other 10,000
Other assets 36,931
------------
Total assets 26,472,500
------------
LIABILITIES
Payables
Securities purchased 847,446
Other 32,457
Line of credit payable 600,000
------------
Total liabilities 1,479,903
------------
NET ASSETS $24,992,597
============
NET ASSETS REPRESENTED BY
Capital stock, $1.00 par value:
7,700,000 shares authorized,
1,634,429 shares issued $ 1,634,429
Additional paid-in capital 19,847,133
Treasury stock, 241,812 shares, at cost (4,233,355)
------------
17,248,207
Accumulated net realized gains on
investments and currency transactions 3,994,273
Net unrealized appreciation on
investments and currency translations 3,095,968
Undistributed net investment income 654,149
------------
NET ASSETS (EQUIVALENT TO $17.95 PER
SHARE BASED ON 1,392,617 SHARES OF
CAPITAL STOCK OUTSTANDING) $24,992,597
============
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
Z-Seven Fund, Inc.
STATEMENT OF OPERATIONS
Period Ended June 30, 1997 (Unaudited)
INVESTMENT INCOME
<S> <C>
Dividends, net of nonreclaimable foreign
taxes of $50,656 $ 281,190
Interest 21,053
-----------
Total investment income 302,243
-----------
EXPENSES
Investment advisory base fee 148,812
Performance penalty (253,789)
Compensation and benefits 68,965
Transfer agent fees 5,984
Professional fees 42,337
Custodian fees 18,500
Printing and postage 9,276
Office and miscellaneous expenses 14,979
Insurance expense 1,224
Directors' fees and expenses 8,102
Dues and filing fees 5,386
Shareholder relations and communications 9,878
Interest expense 28,202
Rent expense 5,265
-----------
Total expenses 113,121
-----------
Net investment income 189,122
-----------
REALIZED AND UNREALIZED GAINS ON
INVESTMENTS
Net realized gains on investments and
currency transactions 2,151,895
Net unrealized depreciation of
investments and currency translations (189,904)
-----------
Net gains on investments 1,961,991
-----------
Net increase in net assets resulting
from operations $2,151,113
===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
Z-Seven Fund, Inc.
STATEMENT OF CHANGES IN NET ASSETS
Period Ended June 30, 1997 (Unaudited)
and Year Ended December 31, 1996
1997 1996
------------ -----------
<S> <C> <C>
NET ASSETS,
BEGINNING OF PERIOD $22,841,484 $24,219,524
------------ ------------
OPERATIONS
Net investment income (loss) 189,122 (154,031)
Net realized gains on
investments and currency
transactions 2,151,895 6,351,691
Net unrealized depreciation
of investments and currency
translations (189,904) (3,570,885)
------------ ------------
Net increase in net assets
from operations 2,151,113 2,626,775
------------ ------------
DIVIDENDS AND DISTRIBUTIONS
From net investment income 0 (85,160)
From net realized gains on
investments and currency
transactions 0 (4,055,357)
------------ ------------
Decrease in net assets from
dividends and distributions 0 (4,140,517)
------------ ------------
SHARE TRANSACTIONS
Reinvested dividends and
distributions 0 135,702
------------ ------------
Increase in net assets from
share transactions 0 135,702
------------ ------------
NET INCREASE (DECREASE) IN
NET ASSETS 2,151,113 (1,378,040)
------------ ------------
NET ASSETS, END OF PERIOD $24,992,597 $22,841,484
============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE> 12
Z-Seven Fund, Inc.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Significant Accounting Policies
Z-Seven Fund, Inc. (the "Fund") is registered under the Investment Company Act
of 1940, as amended, as a nondiversified, closed-end management investment
company incorporated under the laws of Maryland on July 29, 1983, and became a
publicly traded company on December 29, 1983. The following is a summary of
significant accounting policies followed by the Fund in the preparation of
financial statements.
Security Valuation - Securities traded on national securities exchanges except
the London Stock Exchange are valued at the last sale price or, in the
absence of any sale, at the closing bid price on such exchanges or over the
counter. Securities traded on the London Stock Exchange are valued at the
mid-close price. If no quotations are available, the fair value of securities
is determined in good faith by the Board of Directors. Temporary investments
in short-term money market securities are valued at market. Quotations of
foreign securities in foreign currency are converted to U.S. dollar
equivalents at the date of valuation.
Federal Income Taxes - It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies.
The Fund intends to distribute substantially all of its net investment taxable
income, if any, annually.
Distributions to Shareholders - Dividends and distributions of net capital
gains to shareholders are recorded on the ex-dividend date.
Investment income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted account-
ing principles. These differences are primarily due to differing treatments of
income and gains on foreign denominated assets and liabilities held by the
<PAGE> 13
Fund, timing differences, and differing characterizations of distributions
made by the Fund. Due to the differing treatment for tax purposes of certain
income and capital gain items, as of December 31, 1996, the Fund has reclass-
ified $622,261 from accumulated net realized gains to undistributed net
investment income.
Securities Transactions and Related Investment Income - Securities
transactions are accounted for on the trade date and dividend income is
recorded on the ex-dividend date. Realized gains and losses from securities
transactions are determined on the basis of identified cost for book and tax
purposes.
Foreign Currency Translation - The books and records of the Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis:
(i) market value of investment securities, assets, and liabilities at the
closing daily rate of exchange and
(ii) purchases and sales of investment securities and dividend income at the
rate of exchange prevailing on the respective dates of such transactions.
Investment companies generally do not isolate that portion of the results of
operations that arises as a result of changes in exchange rates from the
portion that arises from changes in market prices of investments during the
period. When foreign securities are purchased or sold, the Fund acquires
forward exchange contracts as of the trade date for the amount of purchase or
proceeds, and no exchange gains or losses are thus realized on these
transactions. Dividends are shown net of foreign exchange gains or losses
which represent currency gains or losses realized between the ex-dividend and
payment dates on dividends.
Forward Currency Contracts - As foreign securities are purchased, the Fund
enters into forward currency exchange contracts in order to hedge against
foreign currency exchange rate risks. The market value of the contract
fluctuates with changes in currency exchange rates. The contract is
<PAGE> 14
marked-to-market daily and the change in market value is recorded by the Fund
as an unrealized gain or loss. When the contract is closed, the Fund records
a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
Realized gains and losses from contract transactions are included as a compo-
nent of net realized gains on investments and currency transactions in the
Statement of Operations.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires the Fund's management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from these estimates.
Note 2 - Treasury Stock Transactions
From 1993 through 1995, the Board of Directors authorized the following
purchases of the Fund's capital shares on the open market:
<TABLE>
<CAPTION>
Year Number of Shares Cost
- ---- ---------------- ----------
<S> <C> <C>
1995 130,480 $2,361,942
1994 78,000 1,308,710
1993 40,300 674,425
---------------- ----------
248,780 $4,345,077
================ ==========
</TABLE>
In 1996, the Fund established a distribution reinvestment plan to allow
shareholders to reinvest their distributions in shares of the Fund. If the
Fund is selling at a premium, distributions will be reinvested at the greater
of net asset value or 95% of the market price. If the Fund is selling at a
discount, distributions will be reinvested at market price. On December 31,
1996, 6,968 shares of the Fund were distributed to plan participants at
$19.475 per share (95% of the market price). This distribution increased the
Fund's total net assets by $135,702.
<PAGE> 15
In December 1992, the Fund reissued all of its existing treasury stock in
addition to newly issued stock in a private placement of shares to Agape Co.,
S.A. in exchange for securities which were generally the same as those
contained in the Fund's portfolio. A total of 349,105 unregistered Fund
shares were issued to Agape in the transaction at a slight premium to net
asset value. The federal income tax basis of the securities received by the
Fund in this transaction was equivalent to the market value of those
securities on the date of the transaction. The Fund is obligated to register
these shares for sale in the open market upon Agape's request. Agape has
requested that the Fund repurchase these shares as an alternative to
registration. The Fund agreed, subject to regulatory approval, to repurchase
the Agape shares over an 18-month period after the date of such regulatory
approval, at a price of one-half of one percent below the net asset value at
the time of each repurchase. On July 31, 1997, the Fund filed an application
with the Securities and Exchange Commission seeking the necessary regulatory
approval.
Note 3 - Purchases and Sales of Securities
Purchases and sales of investment securities (excluding short-term money
market securities) during the period ended June 30, 1997, were:
<TABLE>
<CAPTION>
Common Stocks Treasury Bills
-------------- ---------------
<S> <C> <C>
Purchases $ 17,841,506 $ 3,956,839
Sales $ 12,877,790 $ 3,965,306
</TABLE>
Note 4 - Foreign Exchange Contracts
At June 30, 1997, the Fund had contracts, maturing on November 28, 1997, to
sell $13 million in foreign currency (7 million Swiss francs and 5 million
British pounds). These contracts were marked-to-market on June 30, 1997,
resulting in a net unrealized gain of $282,614. This unrealized gain is
included as a component of receivables from securities sold, in the
accompanying Statement of Assets and Liabilities.
<PAGE> 16
Note 5 - Investment Advisory Fees and Performance Bonus/Penalties
Under an agreement between the Fund and the Advisor, the latter supervises the
investments of the Fund and pays the expenses related to employees principally
engaged as directors, officers or employees of the Advisor. The agreement
provides for a base management fee equal to .3125% per quarter (equivalent to
1.25% per annum) of the average daily net assets of the Fund. For the period
ended June 30, 1997, the base management fee aggregated $148,812.
In addition to such base management fee, the Advisor will receive a bonus for
extraordinary performance or pay a penalty fee for underperformance. The
bonus/penalty performance arrangement uses the S&P Index of 500 Composite
Stocks ("S&P 500 Index") as a measure of performance against which the
performance of the Advisor will be measured. The bonus/penalty is payable at
the end of each calendar quarter and will not exceed 2.5% of the average daily
net assets in the calendar quarter. The performance penalty fee can exceed
the base management fee. Furthermore, the bonus/penalty arrangement will not
become operative unless the performance of the Advisor exceeds, either
positively or negatively, the S&P 500 Index percentage change during the same
period of time by more than 10%. For the period ended June 30, 1997, the
performance penalty aggregated $253,789.
The Agreement also provides that if the Fund's expenses on an annual basis
(including the base management fee, but excluding any bonus or penalty
payments, taxes, interest, brokerage commission, and certain litigation
expenses) exceed 3.5% of the average daily net assets up to $20,000,000 plus
1.5% of the average daily net assets in excess of $20,000,000, the Advisor
shall reimburse the Fund for any such excess up to the aggregate amount of the
basic advisory fee. For the year ended December 31, 1996, an expense
reimbursement was not required.
<PAGE> 17
Note 6 - Distributions to Shareholders
On September 6, 1996, the Board of Directors declared a distribution of 6.14
cents per share of investment income and 12.67 cents per share of long-term
capital gains, for a total distribution of 18.81 cents per share. These
amounts represented undistributed net investment income and long-term capital
gains for 1995. Additionally, on November 22, 1996, the Board of Directors
declared a distribution of $2.80 per share which represented estimated
long-term capital gains for 1996. These distributions were paid on December
31, 1996, to shareholders of record on December 20, 1996. The Fund intends to
distribute the balance of long-term capital gains and net investment income
for 1996 on or before December 31, 1997.
Note 7 - Federal Income Taxes
For federal income tax purposes, in 1996, the Fund experienced a net capital
gain of $5,656,482 and investment company taxable income of $473,627. The
Board of Directors elected to distribute substantially all of the 1996 net
capital gain, accordingly, there is no tax provision for 1996.
Note 8 - Related Parties
Directors of the Fund who are not officers or otherwise affiliated with the
Advisor are paid $500 per meeting plus out-of-pocket expenses.
At June 30, 1997, Barry Ziskin, an officer and director of the Fund, owned
311,257 shares of the Fund's capital stock. He is also an officer and
director of the Advisor.
Note 9 - Line of Credit
The Fund has a $2 million line of credit with its custodian bank which is
secured by certain investment securities with an aggregate market value of
$3,372,902 at June 30, 1997. Borrowings against the line are charged interest
at a rate of prime plus 1/2%. The m aximum amount outstanding against
<PAGE> 18
the line during the six months ending June 30, 1997, was $1,850,000. The line
of credit expires September 18, 1997.
The purpose of the line is to enable the Advisor flexibility in selling shares
of portfolio investments at such time and price as is consistent with the
investment discipline employed and is in the best interest of the
shareholders. If the full amount of the line of credit were utilized, it
would represent less than 10% of the net assets of the Fund at June 30, 1997.
<PAGE> 19
<TABLE>
<CAPTION>
Z-Seven Fund, Inc.
FINANCIAL HIGHLIGHTS
The following represents selected data for a share
outstanding throughout the period.
June 30, December 31,
For the period ended 1997 1996 1995
(Unaudited)
- ------------------------------------------------------------------------- ------------ ----------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period $ 16.40 $ 17.48 $ 16.65
------------ ----------- ----------
Net investment income (loss) 0.14 (0.11) 0.11
Net realized and unrealized gains (losses) on investments
and currency transactions before income taxes 1.41 2.02 3.76
------------ ----------- ----------
Total increase (decrease) from investment operations 1.55 1.91 3.87
Distributions to shareholders from net investment income -0- (0.06) (0.87)
Distributions to shareholders from net capital gains -0- (2.93) (2.17)
Income taxes on capital gains paid on behalf of shareholders -0- -0- -0-
------------ ----------- ----------
Net increase (decrease) in net asset value 1.55 (1.08) 0.83
------------ ----------- ----------
Net asset value, end of period $ 17.95 $ 16.40 $ 17.48
============ =========== ==========
Per share market value, end of period $ 17.75 $ 20.50 $ 22.25
Total investment return (a) (13.4%) 8.9% 58.3%
Ratio of expenses before performance bonus/penalty to average net assets 3.1% (b) 3.2% 2.9%
Ratio of total expenses to average net assets 1.0% (b) 3.0% 2.0%
Ratio of net investment income (loss) to average net assets 1.6% (b) (0.6%) 0.9%
- ------------------------------------------------------------------------- ------------ ------------ ----------
Portfolio turnover rate 56.9% 66.4% 36.1%
Average commission rate 0.0432 0.0361 0.0392
- ------------------------------------------------------------------------- ------------ ------------ ----------
Number of shares outstanding at end of period (in 000's) 1,393 1,393 1,386
Net assets, end of period (in 000's) 24,993 22,841 24,220
- ------------------------------------------------------------------------- ------------ ------------ ----------
December 31,
For the period ended 1994 1993 1992 (c)
- ------------------------------------------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 17.00 $ 15.12 $ 17.65
------------ ------------ ------------
Net investment income (loss) (0.16) 0.11 0.04
Net realized and unrealized gains (losses) on investments
and currency transactions before income taxes (0.14) 2.22 (2.57)
------------ ------------ ------------
Total increase (decrease) from investment operations (0.30) 2.33 (2.53)
Distributions to shareholders from net investment income -0- -0- -0-
Distributions to shareholders from net capital gains -0- -0- -0-
Income taxes on capital gains paid on behalf of shareholders (0.05) (0.45) -0-
------------ ------------ ------------
Net increase (decrease) in net asset value (0.35) 1.88 (2.53)
------------ ------------ ------------
Net asset value, end of period $ 16.65 $ 17.00 $ 15.12
============ ============ ============
Per share market value, end of period $ 16.50 $ 18.25 $ 17.00
Total investment return (a) (9.3%) 10.2% (20.9%)
Ratio of expenses before performance bonus/penalty to average net assets 2.7% 2.9% 3.5%
Ratio of total expenses to average net assets 3.0% 2.1% 2.4%
Ratio of net investment income (loss) to average net assets (0.8%) 0.7% 0.2%
- ------------------------------------------------------------------------- ------------ ------------ ------------
Portfolio turnover rate 17.5% 42.1% 17.9%
Average commission rate
- ------------------------------------------------------------------------- ------------ ------------ ------------
Number of shares outstanding at end of period (in 000's) 1,516 1,594 1,634
Net assets, end of period (in 000's) 25,241 27,097 24,714
- ------------------------------------------------------------------------- ------------ ------------ ------------
<FN>
(a) Based on market price per share with dividends, distributions, and deemed distributions reinvested at lower of net asset
value or closing market price on the distribution date.
(b) Annualized.
(c) Calculations based on weighted average number of shares outstanding of 1,294,188 for the year.
</TABLE>
<PAGE> 20
BOARD OF DIRECTORS
Barry Ziskin
Dr. Jeffrey Shuster
Rochelle Ziskin
Thomas W. Lee
INVESTMENT ADVISOR
TOP Fund Management, Inc.
OFFICERS
Barry Ziskin
President
Carol F. Kahanek
Secretary
Laurie S. Doane
Treasurer
CUSTODIAN
Chase Manhattan Bank
TRANSFER AGENT
ChaseMellon Shareholder Services
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
GENERAL COUNSEL
Kramer, Levin, Naftalis & Frankel
Kilpatrick Stockton LLP
STOCK LISTINGS
NASDAQ
Symbol: ZSEV
Pacific Exchange
Symbol: ZSE
CORPORATE OFFICE
2651 West Guadalupe Road
Suite B-233
Mesa, AZ 85202
(602) 897-6214
Fax (602) 345-9227
<PAGE> 21
OTHER INFORMATION
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
In 1996, the Fund implemented a dividend and capital gains distribution
reinvestment program. Shareholders who wish to participate in the program and
have physical possession of their share certificates (holders of record)
should contact ChaseMellon Shareholder Services, our Transfer Agent, at (800)
851-9677. Shareholders who do not have physical possession of their share
certificates (street name) should call their broker.
SHARE REPURCHASES
In accordance with Section 23(c) of the Investment Company Act of 1940, as
amended, notice is hereby given that the Fund may purchase shares of its
capital stock in the open market, from time to time, when the Fund shares are
trading at a discount from the net asset value of the shares, or in order to
increase the net asset value of the shares, or both.
