<PAGE>
FASCIANO FUND, INC.
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August 22, 1996
Dear Shareholder:
The good times are still rolling along. Total return figures
for periods ended June 30, 1996 are summarized below.
<TABLE>
<CAPTION>
Six Months One Year Three Years** Five Years**
-------------- ------------ ---------------- ---------------
<S> <C> <C> <C> <C>
Fasciano Fund* 14.9% 28.3% 18.1% 14.4%
Small Company Fund Average+ 14.9% 29.3% 17.4% 18.1%
S&P 500 Index 10.1% 26.0% 17.2% 15.7%
</TABLE>
For the period since November 10, 1988 (the date Fasciano Fund
share were initially offered for sale to the public) through June
30, 1996, the average annual total return for Fasciano Fund was
15.6%.
Fasciano Fund ranks high, particularly when returns are
adjusted for its lower risk profile. We strike a conservative
balance between risk and reward because making money in an up
market is one thing, but keeping it in a down market is another.
Going forward, we are positioned for long-term capital growth.
The fund is fully invested in stocks and our portfolio comprises
both solid growth and good value. When we invest, we always look
for growth because hefty capital gains can be made by investing in
small businesses that grow larger. Also, value is important
because it cushions market volatility and enhances long-term
returns. To determine value, we weigh businesses against each
other in terms of their earnings growth rates and price-
to-earnings ratios. We remain committed to buying growing
businesses at good prices.
Thank you for selecting Fasciano Fund to achieve your
long-term financial goals.
Sincerely,
[MICHAEL F. FASCIANO SIGNATURE]
Michael F. Fasciano, CFA
President
* Of course, past performance is no guarantee of future results.
The principal value and return on your investment will
fluctuate and upon redemption may be worth more than your
original cost.
** Average annual total return
+ Source: Morningstar, Inc.
190 South LaSalle Street, Suite 2800, Chicago, Illinois 60603 - 800-848-6050
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PERFORMANCE AND DISTRIBUTION SUMMARY
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<TABLE>
<CAPTION>
FASCIANO FUND
--------------------------------------------------------------
Distributions
------------------------ Annual Small U.S.
Calendar Beginning Capital Total Company Treasury
Year NAV Income Gains Ending NAV Return S&P 500 Funds* Bills
- ----------- ----------- ----------- ----------- ----------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1989 $ 11.45 $ 0.24 $ 0.59 $ 13.16 +22.5% +31.7% +23.6% +8.1%
1990 $ 13.16 $ 0.12 $ 0.38 $ 12.50 - 1.2% - 3.1% - 9.5% +7.5%
1991 $ 12.50 $ 0.02 $ 0.36 $ 16.40 +35.1% +30.5% +50.3% +5.4%
1992 $ 16.40 $ 0.00 $ 0.46 $ 17.29 + 7.7% + 7.6% +13.7% +3.5%
1993 $ 17.29 $ 0.00 $ 1.00 $ 17.68 + 8.1% +10.1% +17.1% +3.0%
1994 $ 17.68 $ 0.00 $ 1.14 $ 17.18 + 3.7% + 1.3% - 0.7% +4.3%
1995 $ 17.18 $ 0.00 $ 1.34 $ 21.18 +31.1% +37.5% +31.3% +5.5%
*Source: Morningstar, Inc.
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FASCIANO FUND VS. S&P 500
<S> <C> <C>
Fasciano S&P 500
11/10/1988 10,000 10,000
6/30/1989 11,942 11,880
6/30/1990 13,483 13,839
6/30/1991 15,478 14,863
6/30/1992 16,484 16,558
6/30/1993 18,429 19,152
6/30/1994 19,039 19,420
6/30/1995 23,951 24,822
6/30/1996 30,729 31,271
Fasciano Fund
Average Annual Total Returns
1 Year 5 Years Life*
28.3% 14.4% 15.6%
</TABLE>
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SCHEDULE OF PORTFOLIO INVESTMENTS
June 30, 1996
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<TABLE>
<CAPTION>
Shares Common Stocks Market Value
<C> <S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 97.1%
INDUSTRIAL & COMMERCIAL PRODUCTS AND SERVICES - 27.3%
45,000 Concord EFS, Inc. +......................................................................................... $ 1,597,500
40,000 Keane, Inc. +............................................................................................... 1,475,000
33,000 Methode Electronics, Inc. - Class A......................................................................... 561,000
10,000 FlightSafety International.................................................................................. 542,500
42,500 Richey Electronics, Inc. +.................................................................................. 499,375
20,000 ABC Rail Products Corp. +................................................................................... 432,500
10,000 Interim Services, Inc. +.................................................................................... 430,000
15,000 G&K Services - Class A...................................................................................... 427,500
10,000 IDEX Corp. ................................................................................................. 380,000
20,000 Juno Lighting, Inc. ........................................................................................ 340,000
10,000 Envoy Corporation +......................................................................................... 292,500
10,000 Modine Manufacturing Co. ................................................................................... 265,000
10,000 Trimas Corp. ............................................................................................... 233,750
11,800 Lawter International, Inc. ................................................................................. 147,500
10,000 Arnold Industries, Inc. .................................................................................... 142,500
10,000 Communications Systems, Inc. ............................................................................... 137,500
FINANCIAL SERVICES - 19.6%
75,000 Imperial Thrift & Loan +.................................................................................... 1,106,250
75,000 Mercury Finance Company..................................................................................... 956,250
30,000 Cole Taylor Financial Group................................................................................. 892,500
20,000 Greenpoint Financial Corp. ................................................................................. 565,000
20,000 Liberty Bancorp, Inc. ...................................................................................... 500,000
10,000 Corus Bankshares, Inc. ..................................................................................... 300,000
10,000 First Financial Corp. - Wisc. .............................................................................. 225,000
6,250 Advantage Bancorp., Inc. ................................................................................... 212,500
30,000 Atlantic Bank & Trust Co. +................................................................................. 202,500
7,500 First Merchants Acceptance +................................................................................ 148,125
5,000 Southwest Bancshares, Inc. ................................................................................. 135,000
10,000 Damen Financial Corp. +..................................................................................... 116,250
16,000 BankUnited Financial Corp. +................................................................................ 116,000
10,000 GA Financial, Inc. +........................................................................................ 110,000
5,000 Heritage Financial Services................................................................................. 108,750
HEALTH CARE PRODUCTS AND SERVICES - 17.7%
45,000 VIVRA, Inc. +............................................................................................... 1,479,375
20,000 Cardinal Health, Inc. ...................................................................................... 1,442,500
20,000 Dentsply International, Inc. ............................................................................... 850,000
20,000 Serologicals Corp. +........................................................................................ 530,000
20,000 Landauer, Inc. ............................................................................................. 422,500
10,000 Medaphis Corp. +............................................................................................ 397,500
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
[FASCIANO LOGO]
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<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS -- Continued
June 30, 1996
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<TABLE>
<CAPTION>
Shares Common Stocks Market Value
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 97.1% - Continued
ENTERTAINMENT - 11.4%
6,500 International Speedway Corp. ............................................................................... 1,722,500
33,750 Regal Cinemas, Inc. +....................................................................................... 1,544,063
2,000 Speedway Motorsports, Inc. +................................................................................ 51,250
CONSUMER PRODUCTS AND SERVICES - 9.6%
35,000 Central Parking Corp. ...................................................................................... 1,036,875
75,000 TBC Corp. +................................................................................................. 646,875
50,000 Ladd Furniture, Inc. ....................................................................................... 500,000
20,000 International Dairy Queen, Inc. +........................................................................... 440,000
15,000 LaCrosse Footware, Inc. .................................................................................... 155,625
20,000 Programming & Systems +..................................................................................... 10,000
PUBLISHING AND BROADCASTING - 6.0%
10,000 Pulitzer Publishing Co. .................................................................................... 592,500
15,000 McClatchy Newspapers - Class A.............................................................................. 414,375
20,000 Nelson Thomas, Inc. ........................................................................................ 267,500
10,000 BET Holdings - Class A +.................................................................................... 263,750
5,000 Central Newspaper, Inc. .................................................................................... 187,500
TECHNOLOGY - 5.5%
30,000 Zebra Technologies Corp. - Class A +........................................................................ 532,500
10,000 Tessco Technologies, Inc. +................................................................................. 365,000
5,000 CDW Computer Centers, Inc. +................................................................................ 347,500
10,000 GTECH Holdings Corp. +...................................................................................... 296,250
8,000 Eagle Point Software Corp. +................................................................................ 56,000
------------
TOTAL COMMON STOCKS (cost: $18,386,410)..................................................................... 28,150,188
------------
SHORT-TERM INVESTMENTS - 3.0%
Variable Demand Notes (all due July 1, 1996)
855,757 Wisconsin Electric, 5.19%................................................................................... 855,757
------------
TOTAL SHORT-TERM INVESTMENTS (cost: $855,757)............................................................... 855,757
------------
TOTAL INVESTMENTS - 100.1% (cost: $19,242,167).............................................................. 29,005,945
OTHER LIABILITIES, NET OF OTHER ASSETS - (0.1%)............................................................. (25,403)
------------
TOTAL NET ASSETS - 100.0%................................................................................... $28,980,542
------------
------------
</TABLE>
+ non-income producing security
The accompanying notes to financial statements are an integral part of this
statement.
[FASCIANO LOGO]
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<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996
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<TABLE>
<S> <C>
ASSETS
Common stocks, at market value (cost: $18,386,410).............. $28,150,188
Variable demand notes, at market value (cost: $855,757)......... 855,757
Receivables
Dividends..................................................... 17,675
Interest...................................................... 6,996
Prepaid expenses................................................ 2,387
Other assets.................................................... 4,646
-----------
Total assets.............................................. $29,037,649
-----------
-----------
LIABILITIES AND NET ASSETS
Payables and accrued expenses
Accrued expenses.............................................. $ 33,000
Due to adviser................................................ 24,107
-----------
Total liabilities......................................... 57,107
-----------
Net assets
Common stock, $.01 par value; 10,000,000 shares authorized,
1,191,150 shares issued and outstanding, and paid-in
capital...................................................... 18,584,520
Accumulated net investment loss............................... (251,264)
Accumulated undistributed net realized gain................... 883,508
Net unrealized appreciation on investments.................... 9,763,778
-----------
Total net assets.......................................... 28,980,542
-----------
Total liabilities and net assets.......................... $29,037,649
-----------
-----------
Net asset value per share....................................... $ 24.33
-----------
-----------
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
[FASCIANO LOGO]
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<PAGE>
STATEMENT OF OPERATIONS
For the year ended June 30, 1996
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<TABLE>
<S> <C>
INCOME
Dividends.............................................................. $ 171,395
Interest............................................................... 125,284
Other.................................................................. 67
----------
296,746
----------
EXPENSES
Management fee......................................................... 247,479
Registration fees...................................................... 25,470
Transfer and disbursing agent fees..................................... 24,929
Accounting fee......................................................... 22,286
Audit and tax consulting fees.......................................... 17,550
Printing............................................................... 16,627
Custodian fees......................................................... 9,494
Legal fees............................................................. 9,178
Other operating expenses............................................... 3,039
----------
Total expenses..................................................... 376,052
----------
Net investment loss.................................................... (79,306)
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments....................................... 2,013,802
Net change in unrealized appreciation.................................. 4,232,542
----------
Net gain on investments............................................ 6,246,344
----------
Net increase in net assets resulting from operations............... $6,167,038
----------
----------
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
[FASCIANO LOGO]
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<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended June 30, 1996 and June 30, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, June 30,
1996 1995
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment loss........................................ $ (79,306) $ (102,096)
Net realized gain on investments........................... 2,013,802 306,720
Net change in unrealized appreciation...................... 4,232,542 3,862,713
----------- -----------
Net increase in net assets resulting from operations..... 6,167,038 4,067,337
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income................... 0 0
Distributions from net realized gains...................... (1,454,764) (1,106,005)
----------- -----------
Total distributions...................................... (1,454,764) (1,106,005)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued (153,853 and 140,163 shares,
respectively)............................................. 3,463,138 2,563,890
Increase from shares issued in reinvested distributions
(66,035 and 62,566 shares, respectively).................. 1,391,353 1,064,993
Cost of shares redeemed (63,325 and 124,560 shares,
respectively)............................................. (1,453,876) (2,304,528)
----------- -----------
Net increase in net assets derived from capital share
transactions............................................ 3,400,615 1,324,355
----------- -----------
Net increase in net assets............................... 8,112,889 4,285,687
----------- -----------
NET ASSETS AT BEGINNING OF PERIOD............................ 20,867,653 16,581,966
----------- -----------
NET ASSETS AT END OF YEAR (including accumulated
undistributed net investment loss of ($251,264) and
($171,958), respectively)................................... $28,980,542 $20,867,653
----------- -----------
----------- -----------
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
[FASCIANO LOGO]
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FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
Condensed financial information per share of capital stock
outstanding throughout the period is presented below:
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------------------------------
1996 1995 1994 1993 1992
------------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year.......................... $ 20.17 $ 17.34 $ 17.74 $ 16.30 $ 15.67
Income from investment operations:
Net investment income (loss)................................ (0.05) (0.24) (0.05) (0.05) 0.03
Net realized and unrealized gain on securities.............. 5.55 4.21 0.65 1.95 0.99
------------ -------- -------- -------- --------
Total from investment operations.......................... 5.50 3.97 0.60 1.90 1.02
Less distribution:
Dividends from net investment income........................ 0.00 0.00 0.00 0.00 (0.02)
Distributions from realized gains on securities............. (1.34) (1.14) (1.00) (0.46) (0.36)
Provision for Federal income tax on realized gains.......... 0.00 0.00 0.00 0.00 (0.01)
------------ -------- -------- -------- --------
Total distributions and taxes............................. (1.34) (1.14) (1.00) (0.46) (0.39)
------------ -------- -------- -------- --------
Net asset value at end of year................................ $ 24.33 $ 20.17 $ 17.34 $ 17.74 $ 16.30
------------ -------- -------- -------- --------
------------ -------- -------- -------- --------
Total return.................................................. 28.3% 24.1% 3.3% 11.8% 6.5%
Ratios/Supplemental Data:
Net assets at end of period (in thousands).................. $28,981 $20,868 $16,582 $15,458 $10,564
Expenses, excluding provision for taxes, to average net
assets..................................................... 1.5% 1.7% 1.7% 1.7% 1.7%
Net investment income (loss) before taxes to average net
assets..................................................... (0.3)% (0.6)% (0.3)% (0.3)% 0.2%
Portfolio turnover rate..................................... 45.6% 37.9% 99.0% 43.2% 29.0%
</TABLE>
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<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
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- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES:
Fasciano Fund, Inc. ("Fund"), a Maryland corporation, commenced operations on
August 1, 1987 as a private investment company. On June 30, 1988, the Fund
registered with the Securities and Exchange Commission as a diversified open-end
management investment company under the Investment Company Act of 1940 and began
offering its shares to the public on November 10, 1988. The primary objective of
the Fund is long-term capital growth.
The fiscal year end of the Fund is June 30. The following is a summary of
significant accounting policies followed by the Fund in the preparation of its
financial statements in accordance with generally accepted accounting
principles.
(a) Securities transactions are recorded on a trade date basis. The cost of
securities, determined on the specific identification method, is used to
determine realized gain or loss from sales of securities.
(b) Each security traded on a national securities exchange or traded over the
counter and quoted on the NASDAQ System will be valued at the last sale price on
the day of valuation. Securities for which there was no sale on the day of
valuation will be valued at the current bid prices. Each money market instrument
having a maturity of 60 days or less from the valuation date is valued on an
amortized cost basis, which approximates market value. Other assets and
securities will be valued at a fair value, as determined in good faith by the
Board of Directors.
(c) Dividends are recognized as income on the ex-dividend date. Interest
income and operating expenses are recorded on the accrual basis.
(d) The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
(2) RELATED PARTIES:
Michael F. Fasciano is an officer and director of the Fund and also an
officer, director and sole shareholder of the investment adviser, Fasciano
Company, Inc. Mr. Fasciano held 12,130 shares or 1.0% of the outstanding common
stock of the Fund at June 30, 1996.
The non-affiliated director receives a fee of $500 annually.
The management fee was paid to Fasciano Company, Inc. for its services as
investment adviser. This fee is paid monthly at the rate of 1/12 of 1% (an
annual rate of 1.0%) of the average daily net asset value of the Fund.
Total annual operating expenses of the Fund shall not exceed 2% of average net
assets, and the adviser agrees to pay any excess operating expenses or to
reimburse the Fund for any sums expended for such expenses in excess of that
amount. For this purpose, brokers' commissions and other charges relative to the
purchase and sale of portfolio securities, interest charges, taxes and
litigation and other extraordinary expenses shall not be regarded as operating
expenses.
(3) INVESTMENTS:
During the year ended June 30, 1996, purchases of securities other than
short-term investments were $12,149,623. Sales of such securities for that
period were $10,353,188.
Cost of investments is the same for financial reporting purposes as for
Federal income tax purposes. At June 30, 1996, on a tax basis, gross unrealized
appreciation of investments was $10,572,200 and unrealized depreciation of
investments was $808,422.
On June 18, 1992, the Securities and Exchange Commission suspended trading in
the common stock of Programming and Systems, Inc. because it had received
information questioning the accuracy of the Programming and Systems, Inc.
financial statements. To date, this matter has not been resolved. The shares
held by the Fund are valued at a fair value, as determined by the Board of
Directors.
(4) INCOME TAXES:
As a "regulated investment company," the Fund is relieved of income tax
liability to the extent it distributes its net investment income and capital
gains currently to its shareholders.
(5) DISTRIBUTIONS TO SHAREHOLDERS:
On December 28, 1995, the Fund distributed short-term and long-term capital
gains of approximately $0.08 and $1.26 per share, respectively.
[FASCIANO LOGO]
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<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
To the Shareholders and
Board of Directors of
Fasciano Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
FASCIANO FUND, INC. (a Maryland corporation), including the schedule of
portfolio investments, as of June 30, 1996, and the related statements of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1996, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Fasciano Fund, Inc. as of June 30, 1996, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
August 19, 1996
[FASCIANO LOGO]
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<PAGE>
ANNUAL REPORT
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- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Fasciano Company, Inc.
ADDRESS OF FUND & ADVISER
190 South LaSalle Street
Suite 2800
Chicago, Illinois 60603
(312) 444-6050
(800) 848-6050
TRANSFER AGENT, DIVIDEND
DISBURSING AGENT AND CUSTODIAN
Firstar Trust Company
P.O. Box 701
Milwaukee, Wisconsin 53201
(414) 765-4124
(800) 338-1579
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
Chicago, Illinois
LEGAL COUNSEL
Bell, Boyd & Lloyd
Chicago, Illinois
This report is submitted for the information
of shareholders of the Fund. It is not
authorized for distribution to prospective
investors unless preceded or accompanied
by an effective prospectus.
<TABLE>
<S> <C>
MEMBER OF
- ---------------------------------
- ---------------------------------
NO-LOAD-TM-
MUTUAL FUND
100% COUNCIL
- -----------------------------------
- -----------------------------------
</TABLE>
[RECYCLED SYMBOL -- PRINTED ON RECYCLED PAPER]
FASCIANO FUND, INC.
[LOGO]
JUNE 30, 1996
