LETTER TO OUR SHAREHOLDERS
Dear Shareholder:
We would like to express our appreciation for the confidence you have shown in
our investment philosophy. In addition, we are thankful for the love, strength,
and wisdom given to us by our heavenly creator and caring shepherd.
2000 FIRST HALF RESULTS
During the first half, the Fund's total investment return is 10.7%. The
investment portfolio increased nearly 11%. After operating expenses, our net
asset value gained 9% from $7.57 to $8.25.
GROWTH IN THE SECOND QUARTER
The latest quarter was very productive, with growth of 8% in our net asset value
and 9% in the investment portfolio. Considering the relatively low exposure to
equity markets (most of our assets are in U.S. Treasury Bills), the past quarter
showed particularly strong growth in many of our remaining investments. This is
our fourth quarter of the past five wherein our net asset value has risen.
MARKET OVERVIEW
The first half of 2000 brought stock market volatility, of which we have been
warning. Because we anticipated this volatility, and prepared for it, we were
able to cushion our shareholders from periods of decline seen in the S&P 500,
NASDAQ and Russell 2000 indices. We continue to have sizable cash reserves for
potentially greater volatility ahead; therefore, we are in an excellent position
to take advantage of buying opportunities when they arise.
PORTFOLIO HIGHLIGHTS
Our largest holding, TECHNITROL, having opened the year with a strong quarter,
stepped on the accelerator in the latest quarter and has more than doubled in
price thus far this year. All in all, more than twice as many of our
investments gained in price as declined during the first half of the year, even
before adding in dividends. Every one of our largest holdings, accounting for
nearly 77% of our total market value of common stocks, were up during the first
half of 2000.
<PAGE>
OUTLOOK
It still appears that we are in that phase usually found at or near major market
tops. During these times, share price indices are still climbing toward recent
highs, but most stocks are only recovering from earlier declines. In addition,
the Federal Reserve and the Bank of England are pursuing tight money policies.
Whether it's in the year 2000 or 2001, stock market history strongly suggests a
bear market will follow these conditions. While even an over-inflated,
narrowly-driven market could buck the odds for a while, for just how long may
depend upon how hard the Fed will lean on it.
We have greatly streamlined our investments which, with very few exceptions, are
now in companies continuing to generate earnings growth and positioning
themselves to increase profits in the future. Even before selling our ultra-high
P/E stocks during the first week of the new year, our portfolio was
demonstrating excellent value, with a P/E of 7 times estimated earnings at
year-end. This number is reduced to less than 5 times after deducting cash per
share. These factors, combined with our available cash (ready to take advantage
of opportunities coming to the long-term, value-oriented investor), lay a solid
foundation for growth potential in our investments, not for 2000 alone, but for
many years to come.
Sincerely,
Barry Ziskin July 14, 2000
<PAGE>
GENERAL INFORMATION
THE FUND
Z-Seven Fund, Inc. is a non-diversified, closed-end management investment
company whose shares trade on the Nasdaq National Market System and on the
Pacific Exchange. Its investment objective is long-term capital appreciation
through investments in quality growth companies whose shares are undervalued.
SHARE REPURCHASES
Notice is hereby given, in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Fund may purchase, at market prices,
from time to time, shares of its common stock in the open market.
FORWARD LOOKING STATEMENTS
When used in this report and in future filings by the Fund with the Securities
and Exchange Commission, in the Fund's press releases and in oral statements
made with the approval of an authorized officer of the Fund the words or
phrases, "will likely result," "are expected to," "will continue," "is
anticipated," "estimate," "project," or similar expressions are intended to
identify forward looking statements, within the meaning of the Private
Securities Litigation Reform Act of 1995. All assumptions, anticipations,
expectations and forecasts contained herein are forward looking statements that
involve risks and uncertainties. Management of the Fund cautions readers not to
place undue reliance on any such forward looking statements, which speak only as
of the date made, and should be read in conjunction with other publicly
available Fund information. Management of the Fund will not undertake, and
specifically declines, any obligations to release publicly the result of any
revisions which may be made to any forward looking statements to reflect the
occurrence of anticipated or unanticipated events.
<PAGE>
Z-SEVEN FUND, INC.
SCHEDULE OF INVESTMENTS
at June 30, 2000 (Unaudited)
-------------------------------------------------------
Investment Securities (a) Value
-------------------------------------------------------
Common Stocks Shares
-------------------------------------------------------
APPAREL & ACCESSORIES - 1.7%
Abbeycrest Plc 10,000 $ 18,197
Quiksilver, Inc. (b) 15,150 235,772
Tarrant Apparel Group (b) 5,100 45,581
----------
299,550
----------
AUTOMOTIVE - 2.5%
Strattec Security Corporation (b) 13,600 442,000
----------
442,000
----------
BUILDING & MATERIALS - 3.7%
Barratt Developments Plc 53,000 210,166
Hughes Supply 12,200 240,950
NCI Building Systems, Inc. (b) 9,400 190,350
----------
641,466
----------
COMPUTER & RELATED - 5.6%
Cybex Computer (b)(c) 7,200 309,600
Insight Enterprises, Inc. (b) 6,187 366,966
Pomeroy Comp. Resources (b) 19,900 293,525
----------
970,091
----------
CONSUMER PRODUCTS (OTHER) - 1.3%
Ballantyne of Omaha, Inc. (b) 50,505 110,480
Day Runner, Inc. (b) 3,360 3,465
Lindt & Spr ngli AG 230 109,162
----------
223,107
----------
ELECTRICAL & ELECTRONICS - 9.8%
Roxboro Group Plc 100,500 493,013
Technitrol, Inc. 12,600 1,220,625
----------
1,713,638
----------
FINANCIAL SERVICES - 9.2%
Brewin Dolphin 172,500 563,695
Jardine Lloyd Thompson Group Plc 125,600 555,190
Rathbone Brothers Plc 33,000 481,648
----------
1,600,533
----------
HEALTH & PERSONAL CARE - 2.6%
National Dentex Corporation (b) 17,100 288,563
Novartis AG 99 156,664
----------
445,227
----------
MULTI-INDUSTRY - 3.7%
Tomkins Plc 40,966 133,250
VT Holding A/S (Cl B) 10,565 513,198
----------
646,448
----------
<PAGE>
Z-SEVEN FUND, INC.
SCHEDULE OF INVESTMENTS
at June 30, 2000 Continued (Unaudited)
--------------------------------------------------------
Investment Securities (a) Value
--------------------------------------------------------
Common Stocks Shares
--------------------------------------------------------
RETAIL - 2.1%
Grow Biz International, Inc. (b) 11,200 $ 43,400
The Men's Wearhouse, Inc. (b) 9,900 220,894
Westfair Foods 360 103,406
-----------
367,700
--------------------------------------------------------
TOTAL COMMON STOCKS - 42.2%
(Cost $5,452,411) $ 7,349,760
--------------------------------------------------------
--------------------------------------------------------
Short Term Investments Eff. rate
--------------------------------------------------------
U.S. TREASURY BILLS - 53.7%
Par 2,000,000, matures 7/27/00 5.771% $ 1,991,883
Par 1,500,000, matures 8/24/00 5.993% 1,486,926
Par 5,000,000, matures 10/26/00 6.054% 4,906,557
Par 1,000,000, matures 11/24/00 6.345% 975,376
-----------
9,360,742
--------------------------------------------------------
TOTAL INVESTMENT IN SECURITIES - 95.9%
(Cost $14,813,153) $16,710,502
--------------------------------------------------------
CASH, RECEIVABLES, AND OTHER ASSETS
LESS LIABILITIES - 4.1% 718,368
--------------------------------------------------------
NET ASSETS - 100.0%
(Equivalent to $8.25 per share based
on 2,113,731 shares of capital stock
outstanding) $17,428,870
========================================================
(a) Percentages are based on net assets of $17,428,870.
(b) Non-income producing investment.
(c) Cybex Computer became Avocent Corporation,
effective 7/3/00.
--------------------------------------------------------
COMMON STOCKS BY COUNTRY
--------------------------------------------------------
Percent Country Value
--------------------------------------------------------
54.6% United States $4,012,171
33.4 United Kingdom 2,455,160
7.0 Denmark 513,198
3.6 Switzerland 265,825
1.4 Canada 103,406
--------------------------------------------------------
100.0% $7,349,760
========================================================
<PAGE>
Z-SEVEN FUND, INC.
SCHEDULE OF ASSETS AND LIABILITIES
at June 30, 2000 (Unaudited)
ASSETS
Investments in securities, at value
(identified cost $14,813,153) $16,710,502
Cash 482,183
Receivables
Dividends and interest 40,878
Securities sold 292,279
Other assets 5,746
------------
Total assets 17,531,588
------------
LIABILITIES
Payables
Other 102,718
------------
Total liabilities 102,718
------------
NET ASSETS $17,428,870
============
NET ASSETS REPRESENTED BY
Capital stock, $1.00 par value:
7,700,000 shares authorized,
3,268,858 shares issued $ 3,268,858
Additional paid-in capital 21,027,503
Treasury stock, 1,155,127 shares, (9,265,132)
at cost
------------
15,031,229
Accumulated net realized gain on
investments, options and currency
transactions 81,536
Net unrealized appreciation on
investments, options and currency
translations 2,032,860
Undistributed net investment income 283,245
------------
NET ASSETS (EQUIVALENT TO $8.25 PER
SHARE BASED ON 2,113,731 SHARES OF
CAPITAL STOCK OUTSTANDING) $17,428,870
============
See accompanying notes to financial statements.
<PAGE>
Z-SEVEN FUND, INC.
STATEMENT OF OPERATIONS
Six- month Period Ended June 30, 2000 (Unaudited)
INVESTMENT INCOME
Dividends, net of non-reclaimable
Foreign taxes of $5,625 $ 54,848
Interest 247,152
-----------
Total investment income 302,000
-----------
EXPENSES
Investment advisory base fee 107,188
Performance penalty (44,627)
Compensation and benefits 66,384
Transfer agent fees 7,571
Professional fees 36,819
Custodian fees 18,500
Printing and postage 13,036
Office and miscellaneous expenses 28,923
Insurance expense 3,067
Directors' fees and expenses 4,373
Dues and filing fees 1,150
Shareholder relations & communications 1,732
Rent expense 9,031
-----------
Total expenses 253,147
Expenses reduced through offset
Arrangements (8,594)
-----------
Net expenses 244,553
-----------
Net investment income 57,447
-----------
REALIZED & UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain on investments,
options and currency transactions 2,191,019
Change in unrealized appreciation
(depreciation) of investments, options (827,611)
-----------
and currency translations
Net gain on investments, options, 1,363,408
-----------
and currency transactions
Net increase in net assets
from operations $1,420,855
===========
See accompanying notes to financial statements.
<PAGE>
Z-SEVEN FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Six- month Period Ended June 30, 2000 (Unaudited)
And Year Ended December 31, 1999
2000 1999
------------ ------------
NET ASSETS,
Beginning of Period $17,568,865 $19,854,868
------------ ------------
OPERATIONS
Net investment income (loss) 57,447 225,797
Net realized gain (loss) on
investments, options and
currency transactions 2,191,019 (2,137,360)
Change in unrealized
appreciation (depreciation)
of investments, options and
currency translations (827,611) 1,369,734
------------ ------------
Net increase (decrease) in
net assets from operations 1,420,855 (541,829)
------------ ------------
DIVIDENDS AND DISTRIBUTIONS
From net realized gain on
investments, options and
currency transactions 0 (117,518)
------------ ------------
Decrease in net assets from
dividends and distributions 0 (117,518)
------------ ------------
SHARE TRANSACTIONS
Treasury stock purchases (1,560,850) (1,626,656)
------------ ------------
Decrease in net assets from
share transactions (1,560,850) (1,626,656)
------------ ------------
Net decrease in net assets (139,995) (2,286,003)
------------ ------------
NET ASSETS,
End of Period (including
undistributed net investment
income of $283,245 and
$225,797 respectively) $17,428,870 $17,568,865
============ ============
See accompanying notes to financial statements.
<PAGE>
Z-Seven Fund, Inc.
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 (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 non-diversified, 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 its financial statements.
SECURITY VALUATION - Securities traded on national securities exchanges,
other than 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, except VT Holding A/S which is valued at the midpoint between the bid
and the ask. 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 based on quoted
third-party prices. 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
accounting principles. These differences are primarily due to differing
treatments of income and gains on foreign denominated assets and liabilities
held by the Fund, timing differences, and differing characterizations of
distributions made by the Fund.
<PAGE>
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. Foreign dividends are shown net of foreign exchange gains or
losses, which arise when currency gains or losses are 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
marked-to-market daily and the change in market value is recorded by the Fund as
an unrealized gain or loss. As foreign securities are sold, a portion of the
contract is closed and 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 component of net realized gains (losses) on
investments, options and currency transactions in the Statement of Operations.
<PAGE>
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,
liabilities, and contingent liabilities at the date of the financial statements
and the reported amounts of income and expenses during the reporting period.
Actual results could differ from these estimates.
NOTE 2 - TREASURY STOCK TRANSACTIONS
From January 1, 1999 through June 30, 2000, the Board of Directors
authorized the following purchases of the Fund's capital shares on the open
market:
Average
Year Number of Cost Discount
Shares Per Share
---- --------- ---- ---------
2000 207,800 $1,560,850 $ 0.23
1999 223,500 $1,626,656 $ 0.16
In 1996, the Fund established a distribution reinvestment plan (DRIP) to
allow shareholders to reinvest their distributions in shares of the Fund. When
the Fund is selling at a premium, distributions will be reinvested at the
greater of net asset value or 95% of the market price. When the Fund is selling
at a discount, distributions will be reinvested at market price.
In 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 698,210 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. Previous negotiations for the repurchase of
these shares by the Fund have been discontinued.
NOTE 3 - PURCHASES AND SALES OF SECURITIES
The cost of purchases and proceeds from sales of investment securities
(excluding short-term money market securities) during the period ended June
30, 2000, were:
<PAGE>
Common Options Treasury Bills
Stocks
---------- ----------- -----------
Purchases 0 $12,770,413 $16,657,855
Sales $4,211,752 $14,424,679 $ 8,496,189
NOTE 4 - FOREIGN CURRENCY CONTRACTS
At June 30, 2000, the Fund had contracts maturing on November 20, 2000 and
August 18, 2000 to sell 1.2 million Swiss francs and 1.5 million British pounds,
respectively. These contracts were marked-to-market on June 30, 2000 to a value
of $3.1 million, resulting in net unrealized gains of $135,512. These
unrealized gains are included as a component of receivables from securities sold
in the Statement of Assets and Liabilities.
NOTE 5 - OPTIONS TRANSACTIONS
The Fund may from time to time purchase and sell call and put options on
stock indexes which are traded on national securities exchanges as a method of
hedging market fluctuations. The Fund may liquidate the call and put option
purchased or sold by effecting a closing sale transaction (rather than
exercising the option). This is accomplished by purchasing or selling an option
of the same series as the option previously purchased or sold. There is no
guarantee that the closing sale transaction can be effected. The Fund will
realize a profit from a closing transaction if the price at which the
transaction is effected is greater than the amount paid to purchase the option.
The Fund will realize a loss from a closing transaction if the price is less
than the amount paid.
An option may be closed out only on an exchange which provides a market for
options on the same index and in the same series. Although the Fund will
generally purchase or sell only those options for which there appears to be an
active market, there is no assurance that a liquid market on the exchange will
exist for any particular option, or at any particular time. In such event, it
might not be possible to execute closing transactions in particular options,
with the result that the Fund would have to exercise its options in order to
realize any profit.
The cost of option contracts purchased, and the proceeds from option
contracts sold during the six-month period ended June 30, 2000 which are
included in the total purchases and proceeds of sales in Note 3 were $12,770,413
and $14,424,679, respectively.
<PAGE>
NOTE 6 - LEASE COMMITMENTS
The Fund is obligated under a three-year operating lease for its Mesa,
Arizona corporate office, which expires on June 30, 2001. Minimum lease
payments due are as follows:
July 1 - December 31, 2000 $ 12,041
2001 12,041
---------
Total minimum lease payments $ 24,082
=========
Rent expense for the six-month period ended June 30, 2000 was $9,031. See
Note 13.
NOTE 7 - INVESTMENT ADVISORY FEES AND PERFORMANCE BONUS/PENALTIES
TOP Fund Management is the Fund's investment advisor (the "Advisor").
Under an agreement between the Fund and the Advisor, the latter supervises the
investments of the Fund and pays certain expenses related to employees
principally engaged as directors, officers, or employees of the Advisor. The
agreement provides for base management fees equal to .3125% per quarter
(equivalent to 1.25% per annum) of the average daily net assets of the Fund.
For the six-month period ended June 30, 2000, the base management fees
aggregated $107,188.
In addition to the base management fees, the Advisor will receive a bonus
for extraordinary performance or pay a penalty 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 Fund's net asset
value's performance 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 can exceed the base
management fees. 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 10% or more. For the period ended June 30, 2000, the performance penalty
aggregated $44,627.
<PAGE>
The agreement also provides that if the Fund's expenses on an annual basis
(including the base management fees, 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, 1999, an expense reimbursement
was not required.
NOTE 8 - DISTRIBUTIONS TO SHAREHOLDERS
On September 14, 1999, the Board of Directors declared approximately a
$0.05 per share remainder distribution. This represents undistributed net
investment income and short-term capital gains for 1998. These distributions
were paid on December 30, 1999, to shareholders of record on December 21, 1999.
On July 12, 2000, the Board of Directors declared $225,797 of net investment
income for 1999 to be distributed on December 29, 2000 to shareholders of record
on December 15, 2000. The dividend per share fluctuates due to changes in the
number of outstanding shares. As of June 30, 2000, the dividend was estimated
to be $0.11 per share.
NOTE 9 - FEDERAL INCOME TAX INFORMATION
For federal income tax purposes, the Fund generated a net capital loss
carryforward of $1,149,307 during the year ended December 31, 1999, which is
scheduled to expire on December 31, 2007. The carryover will be used to offset
any future net capital gains and no capital gain distributions will be made
until the capital loss carryforward has been fully utilized or expires.
NOTE 10 - 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, 2000, Barry Ziskin, an officer and director of the Fund, owned
592,028 shares of the Fund's capital stock. He is also an officer and director
of the Advisor.
<PAGE>
NOTE 11 - LINE OF CREDIT
The Fund has a $1,000,000 line of credit with its custodian bank which is
secured by the assets of the Fund. Borrowings against the line are charged
interest at a rate of prime plus 1/2%. There were no amounts outstanding
against the line during the six months ended June 30, 2000. The line of credit
expires August 7, 2000.
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 had been utilized, it would have represented less
than 6% of the net assets of the Fund at June 30, 2000.
NOTE 12 - EXPENSE OFFSET ARRANGEMENT
Through an arrangement with Standard & Poor's Securities ("S&P"),
commissions paid to S&P earn soft dollar credits. The Advisor may direct S&P to
use the credits to pay certain Fund expenses. For the period ended June 30,
2000, the Advisor applied $8,594 of these soft dollar credits towards the
payment of office and miscellaneous expenses of the Fund.
NOTE 13 - EXPENSE ALLOCATION
The Board reviews on an annual basis any expenses the Fund shares with the
Advisor and its affiliates. The Board has approved allocating shared expenses
and employment compensation for Fund employees who are not regular employees of
the Advisor or its affiliates based generally on the ratio of assets under
management between the Fund and the Advisor's affiliates, subject to annual
review by the Board and a maximum allocation of any particular expense to the
Fund of 75%.
<PAGE>
Z-Seven Fund, Inc.
FINANCIAL STATEMENTS
June 30, 2000 (Unaudited)
The following represents selected data for a share outstanding throughout the
Periods. All share and per share data has been adjusted to reflect the two-for-
one stock split in December 1997.
<TABLE>
<CAPTION>
June 30, December 31,
For the periods ended 2000 1999 1998 1997
(Unaudited)
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 7.57 $ 7.80 $ 7.55 $ 8.20
------------ --- -------- -------- ------- ---
Net investment income (loss) .03 .10 -0- .11
Net realized and unrealized gains (losses) on investments
and currency transactions before income taxes .65 (.28) .55 1.05
------------ --- -------- -------- ------- ---
Total increase (decrease) from investment operations .68 (.18) .55 1.16
Distributions to shareholders from net investment income -0- -0- (.06) (.05)
Distributions to shareholders from net capital gains -0- (.05) (.12) (1.38)
Income taxes on capital gains paid on behalf of shareholders -0- -0- (.12) (.45)
Capital contribution -0- -0- -0- .07
------------ --- -------- -------- ------- ---
Net increase (decrease) in net asset value .68 (.23) (.30) (.65)
------------ --- -------- -------- ------- ---
Net asset value, end of period $ 8.25 $ 7.57 $ 7.80 $ 7.55
============ === ======== ======== ======= ===
Per share market value, end of period $ 8.00 $ 7.69 $ 8.00 $ 11.00
Total investment return (a) 10.7% (b) (3.2%) (24.5%) 34.0% (e)
---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses before performance bonus/penalty to average net assets (c) 4.0% (d) 3.2% 3.8% 3.0%
Ratio of total expenses (credits) to average net assets (c) 3.5% (d) 0.5% 1.5% 1.0%
Ratio of net investment income (loss) to average net assets (c) 0.7% (d) 1.2% (.2%) 1.1%
---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 0.0% (b) 14.9% 73.1% 111.3%
---------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding at end of period (in 000's) 2,114 2,322 2,545 2,671
Net assets, end of period (in 000's) 17,429 17,569 19,855 20,161
---------------------------------------------------------------------------------------------------------------------------------
For the periods ended 1996 1995
------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 8.74 $ 8.32
-------- --------
Net investment income (loss) (.06) .06
Net realized and unrealized gains (losses) on investments
and currency transactions before income taxes 1.01 1.88
Total increase (decrease) from investment operations .95 1.94
Distributions to shareholders from net investment income (.03) (.44)
Distributions to shareholders from net capital gains (1.46) (1.08)
Income taxes on capital gains paid on behalf of shareholders -0- -0-
Capital contribution -0- -0-
-------- --------
Net increase (decrease) in net asset value (.54) .42
-------- --------
Net asset value, end of period $ 8.20 $ 8.74
======== ========
Per share market value, end of period $ 10.25 $ 11.13
Total investment return (a) 8.9% 58.3%
-------- --------
Ratio of expenses before performance bonus/penalty to average net assets (c) 3.2% 2.9%
Ratio of total expenses (credits) to average net assets (c) 3.0% 2.0%
Ratio of net investment income (loss) to average net assets (c) (.6%) .9%
-------- --------
Portfolio turnover rate 66.4% 36.1%
-------- --------
Number of shares outstanding at end of period (in 000's) 2,785 2,771
Net assets, end of period (in 000's) 22,841 24,220
-------- --------
<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) Not annualized.
(c) Ratios reflect expenses gross of expense-offset arrangements.
(d) Annualized.
(e) Total investment return without the capital contribution would have been 33.2%.
</TABLE>
<PAGE>
BOARD OF DIRECTORS
Barry Ziskin
Albert Feldman
Dr. Jeffrey Shuster
Rochelle Ziskin
Maria De Los Santos
INVESTMENT ADVISER
TOP Fund Management, Inc.
OFFICERS
Barry Ziskin
President and Treasurer
Barbara Perleberg
Secretary
CUSTODIAN
Chase Manhattan Bank
TRANSFER AGENT
Wells Fargo Bank Minnesota, N.A.
Shareowner Services
INDEPENDENT AUDITORS
KPMG LLP
GENERAL COUNSEL
Kilpatrick Stockton LLP
STOCK LISTINGS
NASDAQ
Symbol: ZSEV
Pacific Exchange
Symbol: ZSE
CORPORATE OFFICE
1819 South Dobson Road
Suite 109
Mesa, AZ 85202
(480) 897-6214
Fax (480) 345-9227
[email protected]
<PAGE>
