SEMIANNUAL REPORT
FASCIANO FUND, INC.
(FASCIANO FUND LOGO)
December 31, 1996
FASCIANO FUND, INC.
February 24, 1997
Dear Shareholder:
In 1996, stocks revved up again as investors continue to be enthused by
moderate economic growth, low inflation and healthy corporate earnings. Fasciano
Fund beat the averages with a gain of 26.5%.
Total returns for periods ended December 31, 1996 are presented below.
Six Months One Year Three Years** Five Years**
---------- -------- ------------- ------------
<F2> <F2>
Fasciano Fund*<F1> 10.2% 26.5% 19.8% 14.9%
Small Company Fund Average+ 4.5% 20.1% 14.9% 15.0%
<F3>
S&P 500 Index 11.7% 23.0% 19.7% 15.2%
For the period since November 10, 1988 (the date Fasciano Fund shares were
initially offered for sale to the public) through December 31, 1996, the average
annual total return for Fasciano Fund was 15.9%.
In contrast to a "no pain, no gain" mentality, Fasciano Fund strives for
outstanding performance without taking big risks. Our investment philosophy
steers us away from speculative risks. Though we like smaller companies, we key
in on the ones that have demonstrated profitable growth and are managed by
people who own a lot of their own stock. Also, as we seek investment
opportunity, we are careful not to overpay for business opportunity; if the
market value of a company fully reflects a rosy future, then the upside for
capital "gain" is limited and the risk of capital "pain" is greater.
Looking ahead, we will remain disciplined in our investment approach. We will
focus on long-term growth and good value. Thank you for selecting Fasciano Fund
to achieve your long-term financial goals.
Sincerely,
/s/ Michael F. Fasciano
Michael F. Fasciano, CFA
President
*<F1>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 or less than your original cost.
**<F2>Average annual total return
+<F3>Source: Morningstar, Inc.
190 South LaSalle Street, Suite 2800, Chicago, Illinois 60603 o 800-848-6050
PERFORMANCE AND DISTRIBUTION SUMMARY
(unaudited)
<TABLE>
<CAPTION>
FASCIANO FUND
-------------------------------------------------------------------
Distributions
---------------------- Annual Small U.S.
Calendar Beginning Capital Ending Total S&P Company Treasury
Year NAV Income Gains NAV Return 500 Funds*<F4> Bills
-------- ---------- ------- ------- ------- ------- ------ -------- --------
<S> <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%
1996 $21.18 $0.00 $0.59 $26.20 26.5% 23.0% 20.1% 5.0%
*<F4>Source: Morningstar, Inc.
</TABLE>
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1996 (unaudited)
Market
Shares Common Stocks Value
------ ------------- --------
COMMON STOCKS -- 91.8%
BANK & BANK HOLDING -- 1.3%
10,000 Corus Bankshares, Inc. $322,500
5,000 Heritage Financial Services, Inc. 106,250
-----------
428,750
-----------
BUSINESS SERVICES -- 18.1%
10,000 Alternative Resources Corp.*<F5> 173,750
67,500 Concord EFS, Inc.*<F5> 1,906,875
10,000 Envoy Corporation *<F5> 375,000
15,000 G & K Services, Inc. - Class A 566,250
11,000 Interim Services, Inc.*<F5> 390,500
80,000 Keane, Inc.*<F5> 2,540,000
10,000 Lason Holdings, Inc.*<F5> 205,000
-----------
6,157,375
-----------
COMMERCIAL PRODUCTS AND SERVICES -- 8.5%
20,000 ABC Rail Products Corp.*<F5> 397,500
10,000 Arnold Industries, Inc. 158,750
10,000 Communications Systems, Inc. 150,000
10,000 IDEX Corp. 398,750
20,000 Juno Lighting, Inc. 320,000
11,800 Lawter International, Inc. 148,975
10,000 Modine Manufacturing Co. 267,500
15,000 Thompson PBE, Inc.*<F5> 93,750
10,000 Trimas Corp. 238,750
30,000 Zebra Technologies Corp. - Class A*<F5> 701,250
-----------
2,875,225
-----------
COMMUNICATIONS & MEDIA -- 4.0%
5,000 Central Newspapers, Inc. 220,000
15,000 McClatchy Newspapers - Class A 525,000
13,333 Pulitzer Publishing Co. 618,318
-----------
1,363,318
-----------
CONSUMER PRODUCTS AND SERVICES -- 8.1%
35,000 Central Parking Corp. 1,172,500
20,000 International Dairy Queen, Inc.*<F5> 400,000
15,000 LaCrosse Footwear, Inc. 161,250
50,000 Ladd Furniture, Inc.*<F5> 731,250
10,000 Viking Office Products, Inc.*<F5> 266,875
-----------
2,731,875
-----------
DISTRIBUTOR -- 3.4%
22,000 Miami Computer Supply Corp.*<F5> 203,500
75,000 TBC Corp. 562,500
10,000 TESSCO Technologies, Inc.*<F5> 367,500
-----------
1,133,500
-----------
ELECTRONICS -- 3.4%
33,000 Methode Electronics, Inc. - Class A 668,250
42,500 Richey Electronics, Inc.*<F5> 494,062
-----------
1,162,312
-----------
ENTERTAINMENT & LEISURE -- 9.8%
4,100 Carmike Cinemas, Inc. - Class A*<F5> 104,038
75,000 International Speedway Corp. - Class B 1,462,500
50,625 Regal Cinemas, Inc.*<F5> 1,556,719
10,000 Speedway Motorsports, Inc.*<F5> 210,000
-----------
3,333,257
-----------
HEALTH CARE PRODUCTS & SERVICES -- 15.2%
30,000 Cardinal Health, Inc. 1,747,500
20,000 Dentsply International, Inc. 950,000
20,000 Landauer, Inc. 490,000
20,000 Serologicals Corp.*<F5> 707,500
45,000 Vivra, Inc.*<F5> 1,243,125
-----------
5,138,125
-----------
SAVINGS & LOAN -- 9.6%
6,250 Advantage Bancorp., Inc. 201,562
12,500 First Financial Corporation - Wisc. 306,250
20,000 GreenPoint Financial Corp. 947,500
75,000 ITLA Capital Corporation*<F5> 1,125,000
20,000 Liberty Bancorp, Inc. 520,000
7,500 Southwest Bancshares, Inc. 136,875
-----------
3,237,187
-----------
SPECIALTY FINANCE -- 10.4%
30,000 Cole Taylor Financial Group, Inc. 795,000
15,000 First Merchant Acceptance *<F5> 286,875
30,000 Mego Mortgage Corp. *<F5> 371,250
75,000 Mercury Finance Company *<F5> 918,750
30,000 Ocwen Financial Corporation *<F5> 802,500
5,000 Resource America, Inc. - Class A 92,500
10,000 United Companies Financial Corp. 266,250
-----------
3,533,125
-----------
MISCELLANEOUS -- 0.0%
6,666 FRM Nexus, Inc.*<F5> 6,666
20,000 Programming & Systems Inc.*<F5> 5,000
-----------
11,666
-----------
TOTAL COMMON STOCKS (cost: $18,282,529) 31,105,715
-----------
SHORT-TERM INVESTMENTS -- 8.2%
VARIABLE RATE DEMAND NOTES 8.2%
468,286 American Family Financial Services, Inc., 5.51% 468,286
1,607,612 Johnson Controls, 5.53% 1,607,612
656,515 Sara Lee Corporation, 5.49% 656,515
31,835 Wisconsin Electric Power Co., 5.55% 31,835
-----------
TOTAL SHORT-TERM INVESTMENTS (cost: $2,764,248) 2,764,248
-----------
TOTAL INVESTMENTS - 100.0% (cost: $21,046,777) 33,869,963
LIABILITIES, LESS OTHER ASSETS - 0.0% (8,279)
-----------
TOTAL NET ASSETS - 100.0% $33,861,684
===========
*<F5>non-income producing
The accompanying notes to financial statements are an integral part of this
statement.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996 (unaudited)
ASSETS
Common stocks, at market value (cost: $18,282,529) $31,105,715
Variable demand notes, at market value (cost: $2,764,248) 2,764,248
Receivables
Dividends 18,038
Interest 11,891
Prepaid expenses 12,182
Other assets 4,646
-----------
Total assets $33,916,720
===========
LIABILITIES AND NET ASSETS
Payables and accrued expenses
Accrued expenses $27,265
Due to adviser 27,771
-----------
Total liabilities 55,036
-----------
Net assets
Common stock, $.01 par value; 10,000,000 shares authorized,
1,292,490 shares issued and outstanding, and
paid-in capital 21,179,545
Accumulated net investment loss (329,433)
Accumulated undistributed net realized gain 188,386
Net unrealized appreciation on investments 12,823,186
-----------
Total net assets 33,861,684
-----------
Total liabilities and net assets $33,916,720
===========
Net asset value per share $26.20
======
The accompanying notes to financial statements are an integral part of this
statement.
STATEMENT OF OPERATIONS
For the six months ended December 31, 1996 (unaudited)
INCOME
Interest $55,098
Dividends 92,235
----------
147,333
----------
EXPENSES
Management fee 152,822
Registration fees 13,526
Transfer and disbursing agent fees 13,140
Legal fees 12,835
Printing expense 11,475
Accounting fee 11,196
Audit and tax consulting fees 5,000
Custodian fees 3,190
Other operating expenses 2,318
----------
Total expenses 225,502
----------
Net investment loss (78,169)
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 47,463
Net change in unrealized appreciation 3,059,408
----------
Net gain on investments 3,106,871
----------
Net increase in net assets resulting from operations $3,028,702
==========
The accompanying notes to financial statements are an integral part of this
statement.
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended December 31, 1996 (unaudited) and the year ended June
30, 1996
December 31, June 30,
1996 1996
------------ ---------
OPERATIONS:
Net investment loss $(78,169) $(79,306)
Net realized gain on investments 47,463 2,013,802
Net change in unrealized appreciation 3,059,408 4,232,542
----------- ----------
Net increase in net assets resulting
from operations 3,028,702 6,167,038
----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income 0 0
Distributions from net capital gains (742,584) (1,454,764)
----------- ----------
Total distributions (742,584) (1,454,764)
----------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued (102,281 and 153,853 shares,
respectively) 2,608,214 3,463,138
Increase in shares issued in reinvested
distributions (27,861 and 66,035 shares, respectively) 716,873 1,391,353
Cost of shares redeemed (28,802 and 63,325 shares,
respectively) (730,063) (1,453,876)
----------- ----------
Net increase in assets derived from capital share
transactions 2,595,024 3,400,615
----------- ----------
Net increase in net assets 4,881,142 8,112,889
----------- ----------
NET ASSETS AT BEGINNING OF PERIOD 28,980,542 20,867,653
----------- ----------
NET ASSETS AT END OF PERIOD (including accumulated
undistributed net investment loss of ($329,433) and
($251,264), respectively) $33,861,684 $28,980,542
=========== ===========
The accompanying notes to financial statements are an integral part of this
statement.
FINANCIAL HIGHLIGHTS
Condensed financial information per share of capital stock outstanding
throughout the period is presented below:
<TABLE>
<CAPTION>
(unaudited)
Six Months
Ended
December 31, Year ended June 30,
----------------------------------------------------------
1996 1996 1995 1994 1993 1992
----------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of year $24.33 $20.17 $17.34 $17.74 $16.30 $15.67
Income from investment operations:
Net investment income (loss) (0.04) (0.05) (0.24) (0.05) (0.05) 0.03
Net realized and unrealized gain on
securities 2.50 5.55 4.21 0.65 1.95 0.99
-------- -------- -------- -------- -------- --------
Total from investment operations 2.46 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 0.00 (0.02)
Distributions from realized gains on
securities (0.59) (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 0.00 (0.01)
-------- -------- -------- -------- -------- --------
Total distributions and taxes (0.59) (1.34) (1.14) (1.00) (0.46) (0.39)
-------- -------- -------- -------- -------- --------
Net asset value at end of period $26.20 $24.33 $20.17 $17.34 $17.74 $16.30
======== ======== ======== ======== ======== ========
Total return 10.2%(1)<F6> 28.3% 24.1% 3.3% 11.8% 6.5%
Ratios/Supplemental Data:
Net assets at end of period (in thousands) $33,862 $28,981 $20,868 $16,582 $15,458 $10,564
Expenses, excluding provision for
taxes, to average net assets 1.5%(2)<F7> 1.5% 1.7% 1.7% 1.7% 1.7%
Net investment income (loss) before
taxes to average net assets (0.5)%(2)<F7> (0.3)% (0.6)% (0.3)% (0.3)% 0.2%
Portfolio turnover rate 9.8% 45.6% 37.9% 99.0% 43.2% 29.0%
Average commission rate per share $0.0800 -- -- -- -- --
(1)<F6>Not annualized
(2)<F7>Annualized
The accompanying notes to financial statements are an integral part of this
statement.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 (unaudited)
(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) Investment and shareholder transactions are recorded no later than the
first business day after trade date.
(b) Each security traded on a national securities exchange or traded over the
counter and quoted on the Nasdaq National Market 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 operation 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 13,438 shares or 1.0% of the outstanding common
stock of the Fund at December 31, 1996.
The non-affiliated director receives a fee of $2,000 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 has agreed 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 expense shall not be regarded as operating
expenses.
(3) INVESTMENTS:
During the six months ended December 31, 1996, purchases of securities other
than short-term investments were $2,815,579. Sales of such securities for that
period were $2,966,923.
Cost of investments is the same for financial reporting purposes as for
Federal income tax purposes. At December 31, 1996, on a tax basis, gross
unrealized appreciation of investments was $13,499,776 and unrealized
depreciation of investments was $676,590.
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:
No provision for federal income taxes has been made since the Fund has
complied to date with the provisions of the Internal Revenue Code applicable to
regulated investment companies and intends to so comply in the future and to
distribute substantially all of its net investment income and realized capital
gains in order to relieve the Fund from all federal income taxes.
(5) DISTRIBUTIONS TO SHAREHOLDERS:
On December 27, 1996, the Fund distributed short-term and long-term capital
gains of approximately $0.33 and $0.26 per share, respectively.
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, ADMINISTRATOR 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.
MEMBER OF 100% NO-LOAD TM
MUTUAL FUND
COUNCIL
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