<PAGE>
FASCIANO FUND, INC.
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February 23, 1996
Dear Shareholder:
Champaign corks were popping on Wall Street as equity
investors celebrated an outstanding year. Fasciano Fund finished
the year at $21.18 after paying a distribution of $1.34 for a gain
of 31.1%. Total return figures for the periods ended December 31,
1995 are summarized below.
<TABLE>
<CAPTION>
Six Months One Year Five Years**
-------------- ------------ ---------------
<S> <C> <C> <C>
Fasciano Fund* 11.7% 31.1% 16.4%
Small Company Fund Average+ 13.5% 31.3% 20.5%
S&P 500 Index 14.4% 37.5% 16.6%
+ Source: Morningstar, Inc.
** Average annual total
return
</TABLE>
Equity valuations continue to benefit from modest economic
growth and low inflation, which have kept interest rates down.
Declining interest rates have elevated the fair value of equities
to historically high levels.
INTEREST RATES AND STOCK PRICES
Lower interest rates cause stock prices to rise because
rational investors are willing to pay more for a hypothetical
dollar's worth of earnings. To illustrate the point, suppose you
owned a black box that each year rolled out a $10 bill. If the
prevailing interest rates are 10%, a rational person might be
willing to buy your black box for $100. After all, if the buyer
paid $100 for it and received $10 each year from it (comparable to
the prevailing interest rate of 10%), the buyer would be happy.
What would your $10-yielding black box be worth if interest
rates plunged to 5%? Certainly, you wouldn't sell it for only
$100. Fair value now is closer to $200, the price one could pay
for it and still get a decent return, as determined by the lower
prevailing interest rate of 5%.
[FASCIANO LOGO]
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FASCIANO FUND, INC.
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Essentially, the interplay between interest rates and stock
prices is a major factor driving today's bull market. In a lower
interest rate environment, investors are willing to pay more to
buy corporate earnings. Furthermore, corporate earnings are
growing (your black box is going to produce $12 next year) causing
fair value to go up. Consider further, as baby boomers are
compelled to save more, demand for equities is rising. (You now
have a line of folks wanting to buy your black box.) Fair value
rises even higher.
While low interest rates, continued earnings growth, and
strong demand for equities support relatively rich stock
valuations, circumstances can change. We manage that risk by
buying growth companies as cheaply as possible and selling stocks
that are overvalued.
Thank you for selecting Fasciano Fund to achieve your
long-term financial goals.
Sincerely,
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. FOR THE PERIOD SINCE NOVEMBER 10, 1988 (THE DATE
FASCIANO FUND SHARES WERE INITIALLY OFFERED FOR SALE TO THE
PUBLIC) THROUGH DECEMBER 31, 1995, THE AVERAGE ANNUAL TOTAL
RETURN FOR FASCIANO FUND WAS 14.5%.
190 South LaSalle Street, Suite 2800, Chicago, Illinois 60603 - 800-848-6050
[FASCIANO LOGO]
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PERFORMANCE AND DISTRIBUTION SUMMARY
(unaudited)
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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>
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SCHEDULE OF PORTFOLIO INVESTMENTS (unaudited)
December 31, 1995
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<TABLE>
<CAPTION>
Shares Common Stocks Market Value
<C> <S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 87.9%
INDUSTRIAL & COMMERCIAL PRODUCTS AND SERVICES - 24.1%
30,000 Concord EFS, Inc. +......................................................................................... 1,267,500
40,000 Keane, Inc. +............................................................................................... 885,000
33,000 Methode Electronics - Class A............................................................................... 470,250
30,000 Material Sciences +......................................................................................... 446,250
10,000 IDEX Corp................................................................................................... 407,500
10,000 Interim Services, Inc. +.................................................................................... 347,500
15,000 ABC Rail Products Corp. +................................................................................... 331,875
20,000 Juno Lighting............................................................................................... 320,000
10,000 G & K Services, Inc. - Class A.............................................................................. 255,000
10,000 Modine Manufacturing Co..................................................................................... 240,000
20,000 Insurance Auto Auctions, Inc. +............................................................................. 215,000
10,000 Trimas Corp................................................................................................. 188,750
10,000 Communication Systems, Inc.................................................................................. 157,500
10,000 ABT Building Products Co. +................................................................................. 142,500
10,000 Greenbrier Companies, Inc................................................................................... 121,250
5,000 Industrial Scientific Corp. +............................................................................... 95,000
FINANCIAL SERVICES - 17.2%
75,000 Mercury Finance Company..................................................................................... 993,750
75,000 Imperial Thrift & Loan Association.......................................................................... 918,750
20,000 Cole Taylor Financial Group................................................................................. 597,500
20,000 Liberty Bancorp, Inc. ...................................................................................... 505,000
22,050 Litchfield Financial Corp................................................................................... 286,650
10,000 River Forest Bancorp........................................................................................ 255,000
10,000 First Financial Corp. - Wisconsin........................................................................... 230,000
5,000 Advantage Bancorp., Inc..................................................................................... 188,750
5,000 Southwest Bancshares, Inc................................................................................... 132,500
5,000 Heritage Financial Services, Inc............................................................................ 96,250
HEALTH CARE PRODUCTS AND SERVICES - 14.4%
45,000 VIVRA +..................................................................................................... 1,130,625
20,000 Cardinal Health, Inc........................................................................................ 1,095,000
20,000 Dentsply International, Inc. ............................................................................... 800,000
20,000 Landauer, Inc. ............................................................................................. 435,000
2,000 Schein, Henry, Inc. +....................................................................................... 59,000
ENTERTAINMENT - 12.6%
7,500 International Speedway Corp. +.............................................................................. 1,762,500
33,750 Regal Cinemas, Inc. +....................................................................................... 1,004,062
10,000 Speedway Motorsports, Inc. +................................................................................ 300,000
</TABLE>
The accompanying notes to financial statements are an integral part of this
schedule.
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<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS (unaudited) -- Continued
December 31, 1995
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<TABLE>
<CAPTION>
Shares Common Stocks Market Value
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 87.9% - Continued
CONSUMER PRODUCTS AND SERVICES - 11.7%
50,000 Ladd Furniture, Inc......................................................................................... 656,250
20,000 International Dairy Queen, Inc. +........................................................................... 455,000
35,000 Richey Electronics +........................................................................................ 455,000
50,000 TBC Corp. +................................................................................................. 431,250
10,000 Central Parking Corp........................................................................................ 287,500
5,000 FlightSafety International.................................................................................. 251,250
10,000 Arnold Industries, Inc...................................................................................... 173,750
15,000 LaCrosse Footware, Inc...................................................................................... 131,250
20,000 Programming & Systems +..................................................................................... 10,000
PUBLISHING AND BROADCASTING - 5.1%
10,000 Pulitzer Publishing Co...................................................................................... 477,500
15,000 McClatchy Newspapers........................................................................................ 343,125
20,000 Thomas Nelson, Inc.......................................................................................... 260,000
5,000 Central Newspaper........................................................................................... 156,875
TECHNOLOGY - 2.8%
10,000 Tessco Technologies, Inc. +................................................................................. 285,000
10,000 Eagle Point Software Corp. +................................................................................ 215,000
15,000 Percon, Inc. +.............................................................................................. 195,000
------------
TOTAL COMMON STOCKS (cost: $15,046,724)..................................................................... 21,464,962
------------
SHORT-TERM INVESTMENTS - 12.3%
Variable Demand Notes (all due January 2, 1996)
1,000,000 Southwestern Bell, 5.72%.................................................................................... 1,000,000
1,000,000 Sara Lee, 5.47%............................................................................................. 1,000,000
692,716 Warner Lambert, 5.46%....................................................................................... 692,716
241,000 Wisconsin Electric, 5.53%................................................................................... 241,000
74,000 Pitney Bowes, 5.49%......................................................................................... 74,000
------------
TOTAL SHORT-TERM INVESTMENTS (cost: $3,007,716)............................................................. 3,007,716
------------
TOTAL INVESTMENTS - 100.2% (cost: $18,054,440).............................................................. 24,472,678
OTHER LIABILITIES, NET OF OTHER ASSETS - (0.2%)............................................................. (52,003)
------------
TOTAL NET ASSETS - 100.0%................................................................................... $24,420,675
------------
------------
</TABLE>
+ non-income producing security
The accompanying notes to financial statements are an integral part of this
schedule.
[FASCIANO LOGO]
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<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (unaudited)
December 31, 1995
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<TABLE>
<S> <C>
ASSETS
Common stocks, at market value (cost: $15,046,724).............. $21,464,962
Variable demand notes, at market value (cost: $3,007,716)....... 3,007,716
Cash............................................................ (1,200)
Receivables
Investments sold.............................................. 73,150
Dividends..................................................... 17,750
Interest...................................................... 13,734
Prepaid expenses................................................ 5,724
Other assets.................................................... 4,646
-----------
Total assets.............................................. $24,586,482
-----------
-----------
LIABILITIES AND NET ASSETS
Payables and accrued expenses
Investments purchased......................................... $ 128,075
Accrued expenses.............................................. 17,422
Due to adviser................................................ 20,310
-----------
Total liabilities......................................... 165,807
-----------
Net assets
Common stock, $.01 par value; 10,000,000 shares authorized,
1,153,106 shares issued and outstanding, and paid-in
capital...................................................... 17,703,466
Accumulated net investment loss............................... (193,616)
Accumulated undistributed net realized gain................... 492,587
Net unrealized appreciation on investments.................... 6,418,238
-----------
Total net assets.......................................... 24,420,675
-----------
Total liabilities and net assets.......................... $24,586,482
-----------
-----------
Net asset value per share....................................... $ 21.18
-----------
-----------
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
[FASCIANO LOGO]
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<PAGE>
STATEMENT OF OPERATIONS (unaudited)
For the six months ended December 31, 1995
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<TABLE>
<S> <C>
INCOME
Interest............................................................... $ 67,611
Dividends.............................................................. 80,982
----------
148,593
----------
EXPENSES
Management fee......................................................... 114,899
Transfer and disbursing agent fees..................................... 11,503
Accounting fee......................................................... 10,995
Printing............................................................... 4,347
Registration fees...................................................... 10,586
Audit and tax consulting fees.......................................... 7,175
Legal fees............................................................. 4,863
Custodian fees......................................................... 4,533
Other operating expenses............................................... 1,350
----------
Total expenses..................................................... 170,251
----------
Net investment loss.................................................... (21,658)
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments....................................... 1,622,881
Net change in unrealized appreciation.................................. 887,002
----------
Net gain on investments............................................ 2,509,883
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Net increase in net assets resulting from operations............... $2,488,225
----------
----------
</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 six months ended December 31, 1995 (unaudited) and the year ended June
30, 1995
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<TABLE>
<CAPTION>
December 31, June 30,
1995 1995
------------- -----------
<S> <C> <C>
OPERATIONS:
Net investment loss...................................... $ (21,658) $ (102,096)
Net realized gain on investments......................... 1,622,881 306,720
Net change in unrealized appreciation.................... 887,002 3,862,713
------------- -----------
Net increase in net assets resulting from operations... 2,488,225 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 (65,450 and 140,163 shares,
respectively)........................................... 1,406,983 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 (12,966 and 124,560 shares,
respectively)........................................... (278,775) (2,304,528)
------------- -----------
Net increase in net assets derived from capital share
transactions.......................................... 2,519,561 1,324,355
------------- -----------
Net increase in net assets............................. 3,553,022 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 ($193,616) and
($171,958), respectively)................................. $24,420,675 $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
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Condensed financial information per share of capital stock
outstanding throughout the period is presented below:
<TABLE>
<CAPTION>
(unaudited)
Six Months
Ended Year Ended June 30,
December 31, ----------------------------------------------------
1995 1995 1994 1993 1992 1991
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of year.......................... $ 20.17 $ 17.34 $ 17.74 $ 16.30 $ 15.67 $ 14.20
Income from investment operations:
Net investment income (loss)................................ 0.00 (0.24) (0.05) (0.05) 0.03 0.11
Net realized and unrealized gain on securities.............. 2.35 4.21 0.65 1.95 0.99 1.87
------------ -------- -------- -------- -------- --------
Total from investment operations.......................... 2.35 3.97 0.60 1.90 1.02 1.98
Less distribution:
Dividends from net investment income........................ 0.00 0.00 0.00 0.00 (0.02) (0.12)
Distributions from realized gains on securities............. (1.34) (1.14) (1.00) (0.46) (0.36) (0.38)
Provision for Federal income tax on realized gains.......... 0.00 0.00 0.00 0.00 (0.01) (0.01)
------------ -------- -------- -------- -------- --------
Total distributions and taxes............................. (1.34) (1.14) (1.00) (0.46) (0.39) (0.51)
------------ -------- -------- -------- -------- --------
Net asset value at end of year................................ $ 21.18 $ 20.17 $ 17.34 $ 17.74 $ 16.30 $15.67
------------ -------- -------- -------- -------- --------
------------ -------- -------- -------- -------- --------
Total return.................................................. 11.7% 24.1% 3.3% 11.8% 6.5% 14.8%
Ratios/Supplemental Data:
Net assets at end of period (in thousands).................. $24,421 $20,868 $16,582 $15,458 $10,564 $7,445
Expenses, excluding provision for taxes, to average net
assets..................................................... 1.5%+ 1.7% 1.7% 1.7% 1.7% 1.9%
Net investment income (loss) before taxes to average net
assets..................................................... (0.2)%+ (0.6)% (0.3)% (0.3)% 0.2% 0.7%
Portfolio turnover rate..................................... 17.7% 37.9% 99.0% 43.2% 29.0% 7.7%
+ Ratios annualized
</TABLE>
[FASCIANO LOGO]
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<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
December 31, 1995
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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 11,360 shares or 1.0% of the outstanding common
stock of the Fund at December 31, 1995.
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 six months ended December 31, 1995, purchases of securities other
than short-term investments were $3,655,601. Sales of such securities for that
period were $4,807,931.
Cost of investments is the same for financial reporting purposes as for
Federal income tax purposes. At December 31, 1995, on a tax basis, gross
unrealized appreciation of investments was $7,545,143 and unrealized
depreciation of investments was $1,126,905.
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 for the fiscal year ending February 28, 1991. To date, this
matter has not been resolved nor has Programming and Systems, Inc. provided
shareholders with an audited financial statement for the fiscal years ended
February 29, 1992, February 28, 1993, February 28, 1994 and February 28, 1995.
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.
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[FASCIANO LOGO]
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SEMIANNUAL 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
- ---------------------------------
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NO-LOAD-TM-
MUTUAL FUND
100% COUNCIL
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</TABLE>
[RECYCLED SYMBOL -- PRINTED ON RECYCLED PAPER]
FASCIANO FUND, INC.
[FASCIANO LOGO]
DECEMBER 31, 1995
