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 QUARTER RESULTS
During the first quarter, the investment portfolio increased 1%. Our net asset
value also gained 1% from $7.57 to $7.63. This is our third quarter of the past
four where our net asset value has risen. All together, our NAV has advanced 9%
over the latest 12 months, as adjusted for the .05 remainder distribution paid
near year end 1999.
The latest quarter brought stock market volatility which we have been warning
of. 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 even greater
potential volatility ahead; therefore, we are in an excellent position to take
advantage of buying opportunities when they arise.
COMPANY S
One of Z-Seven's latest investments is in a thinly-traded, small-cap British
company whose identity we kept a mystery until now. It is actually the example
we used as a comparison to Rathbone Brothers PLC in our 1998 annual report. It
is Brewin Dolphin PLC, another smallish investment manager which ultimately met
our criterion for consistency of operating earnings growth in 1999, when we then
made it a new investment.
MORE ABOUT "COMPANY S"
In the past, we have adopted generic names for new investments so thinly traded
that we did not want to invite competition in purchasing more of them.
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The first name masking the identity of a stock was taken after the Brand-X
concept and called "Company X." Company X was Brent-Walker Plc, a major British
holding which began in 1986. About 80% of our Brent-Walker position was sold in
1988 at nearly seven times its cost from just two years earlier.
"Company Y" was the next name, and it was adopted for Boston Acoustics in 1989.
Once our largest investment, most of our Boston Acoustics shares were sold in
1992 at about five times what we first paid for the stock.
"Company Z" came right after "Company Y" in 1989 and was Airtours Plc, our most
profitable holding ever. Most of our shares were sold a little over three years
after their purchase, for nine times their original cost. The balance of our
Airtours shares were gradually eliminated during the remainder of our seven-year
holding at prices that were approximately 26 times what we first paid for them.
Nine years ago we began to go in reverse in our alphabetical monikers, and
nicknamed International Speedway "Company W" and Intertrans "Company V." Most
of International Speedway shares were sold four years later for nearly triple
what was paid for them; Intertrans doubled for us.
The two most recent mystery stocks, "Company U" and "Company T," were
respectively National Dentex, which we still own, and Weetabix, Ltd., in which
we are no longer invested.
Our current holding of National Dentex has increased 55% for us. We previously
sold most of our shares at much higher prices (some nearly triple what was paid
for them) and may enlarge this holding in the future, if given the opportunity.
Weetabix shares no longer met all of our purchase criteria and are no longer in
our portfolio, having more than doubled in approximately four years.
Following in the footsteps of Companies "T" through "Z", "Company S" (Brewin
Dolphin, PLC) is getting off to an excellent start. It closed 1999 as our
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biggest holding, with a 60% return on our investment. The share price has
continued to make progress in the first quarter of the new year, and has now
more than doubled since we first purchased it only a little more than one year
ago.
2000 FIRST QUARTER OUTLOOK
It appears that we are in that phase usually found at or near major market tops
when share price indices are still climbing to new highs, but most stocks are
not participating. In addition, the Fed and The Bank of England are pursuing
tight money policies. Whether it's the year 2000 or 2001, stock market history
would strongly suggest 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. In addition to
higher interest rates, the Fed may seek an increase in the margin rate for stock
investors and/or day traders.
We have greatly streamlined our investments which, with very few exceptions, are
now in companies that are continuing to generate earnings growth and positioning
themselves to increase profits further into the future. Even before selling our
ultra-high P/E stocks during the first week of the new year, our portfolio is
demonstrating excellent value, with a P/E of 7 times estimated earnings at
year-end. This is less than 5 times after deducting cash per share. These
factors, combined with the fact that we have the cash 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 May 11, 2000
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<TABLE>
<CAPTION>
Z-Seven Fund, Inc.
SCHEDULE OF INVESTMENTS
at March 31, 2000 (Unaudited)
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Investment Securities (a) Value
--------------------------------------------------------------------
Common Stocks Shares
--------------------------------------------------------------------
<S> <C> <C>
APPAREL & ACCESSORIES - 1.9%
Abbeycrest Plc 10,000 $ 18,385
Quiksilver, Inc. (b) 15,150 266,072
Tarrant Apparel Group (b) 5,100 38,250
-----------
322,707
-----------
AUTOMOTIVE - 2.7%
Strattec Security Corporation (b) 13,600 467,500
-----------
467,500
-----------
BUILDING & MATERIALS - 3.3%
Barratt Developments Plc 53,000 200,367
Hughes Supply 12,200 189,100
NCI Building Systems, Inc. (b) 9,400 176,837
-----------
566,304
-----------
COMPUTER & RELATED - 5.1%
Cybex Computer Products
Corporation (b) 7,200 270,900
Insight Enterprises, Inc. (b) 6,187 225,439
Pomeroy Computer
Resources, Inc. (b) 19,900 365,662
-----------
862,001
-----------
CONSUMER PRODUCTS (OTHER) - 0.9%
Day Runner, Inc. (b) 30,976
Lindt & Spr ngli AG 46 116,825
-----------
147,801
ELECTRICAL & ELECTRONICS - 7.8%
LSI Industries, Inc. 11,600 225,475
Roxboro Group Plc 100,500 374,342
Technitrol, Inc. 12,600 733,950
-----------
1,333,767
-----------
FINANCIAL SERVICES - 9.6%
Brewin Dolphin 34,500 619,189
Jardine Lloyd Thompson Group Plc 125,600 484,829
Rathbone Brothers Plc 33,000 534,488
-----------
1,638,506
-----------
HEALTH & PERSONAL CARE - 2.3%
National Dentex Corporation (b) 17,100 $ 252,225
Novartis AG 99 135,357
-----------
387,582
-----------
LEISURE - 1.7%
Anchor Gaming (b) 2,600 98,638
Ballantyne of Omaha, Inc. (b) 50,505 189,394
-----------
288,032
-----------
<PAGE>
Z-Seven Fund, Inc.
SCHEDULE OF INVESTMENTS
at March 31, 2000 (Unaudited) Continued
--------------------------------------------------------------------
Investment Securities (a) Value
--------------------------------------------------------------------
Common Stocks Shares
--------------------------------------------------------------------
MULTI-INDUSTRY - 3.8%
Tomkins Plc 40,966 131,398
VT Holding A/S (Cl B) 10,565 508,898
-----------
640,296
-----------
RETAIL - 2.8%
Grow Biz International, Inc. (b) 16,700 129,425
The Men's Wearhouse, Inc. (b) 9,900 293,288
Westfair Foods 360 62,133
-----------
484,846
-----------
TOTAL COMMON STOCKS - 41.9%
(Cost $5,928,492) 7,139,342
-----------
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Options Contracts
--------------------------------------------------------------------
S & P 500 PUTS - 4.1%
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Expires 4/20/00 (Cost $498,435) 47 695,600
====================================================================
Short Term Investments
--------------------------------------------------------------------
U.S. TREASURY BILLS - 49.5%
--------------------------------------------------------------------
(1) matures 4/27/00, par 2,500,000 $ 2,489,814
(2) matures 4/27/00, par 4,500,000 4,481,650
(3) matures 8/24/00, par 1,500,000 1,465,359
-----------
8,436,823
-----------
TOTAL INVESTMENT IN SECURITIES - 95.5%
(Cost $14,863,750) $16,271,765
-----------
CASH, RECEIVABLES, AND OTHER ASSETS
LESS LIABILITIES - 4.5% 764,513
-----------
NET ASSETS - 100.0%
(Equivalent to $7.63 per share based
on 2,232,031 shares of capital stock
Outstanding) $17,036,278
===========
<FN>
(a) Percentages are based on net assets of $17,036,278.
(b) Non-income producing investment.
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS BY COUNTRY
-------------------------------------
Percent Country Value
------- -------------- ------------
<S> <C> <C>
55.4% United States $3,953,130
33.1 United Kingdom 2,362,998
7.1 Denmark 508,898
3.5 Switzerland 252,183
0.9 Canada 62,133
----------
100.0% $7,139,342
----------
</TABLE>
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BOARD OF DIRECTORS
Barry Ziskin
Albert Feldman
Dr. Jeffrey Shuster
Rochelle Ziskin
Maria De Los Santos
INVESTMENT ADVISOR
TOP Fund Management, Inc.
OFFICERS
Barry Ziskin
President and Treasurer
Barbara Perleberg
Secretary
CUSTODIAN
Chase Manhattan Bank
TRANSFER AGENT
Norwest 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]
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