ANNUAL REPORT
FASCIANO FUND, INC.
(FASCIANO FUND, INC. LOGO)
June 30, 1998
August 21, 1998
Dear Fellow Shareholder:
As long-term investors, we appreciate the value of discipline and patience.
For the six months ended June 30, 1998, Fasciano Fund gained 15.2%. The total
return for the fiscal year was 33.2%. From our inception nearly eleven years ago
through June 30, shareholders have earned a compounded average annual return of
16.5%.*<F1>
<TABLE>
Average Annual Total Return
------------------------------
Six months One year Three year Five year Ten year**<F2>
---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Fasciano Fund 15.2% 33.2% 25.5% 20.5% 16.7%
Small Company
Fund Average+<F3> 6.6% 18.0% 19.8% 16.5% 14.9%
S&P 500 Index 17.7% 30.2% 30.2% 23.1% 18.6%
Russell 2000 Index 4.9% 16.5% 18.9% 16.1% 13.6%
</TABLE>
We believe the long-term fundamental rationale for investing in smaller
companies is sound. Smaller companies have the potential to sustain faster long-
term earnings growth and are more likely to be undervalued. Recently, investors
saw slower near-term earnings growth and historically high valuations. As a
result, many small-cap companies fell out of favor and their stock prices
declined. From its high on April 21, 1998 to date, the Russell 2000 has tumbled
19.5%. During that same period, Fasciano Fund declined a more modest 8.8%.
The Fund performed well because the companies in our portfolio generally
reported solid operating results. Earnings grew at robust rates in the range of
15 to 25 percent. The Asian flu hit a few of our companies, particularly in the
electronics sector. However, their managers responded quickly with cost
reductions and new business initiatives, so we look for those companies to
regain their health. The strength of the U.S. economy kept most of our home
grown, small-cap companies humming. Consumers are upbeat and they are still
spending; Bill France at International Speedway and others in motorsports are
seeing record attendance. Advertising is strong; the newspaper execs at Pulitzer
Publishing and McClatchy Newspapers are optimistic and making bold strategic
moves. Elsewhere, directors are authorizing share repurchases. In addition,
strong cash flows and low interest rates have enabled many corporate managers
to make long-term capital improvements that are expected to enhance productivity
and the prospects for future growth.
The Fund also benefited because we were true to our value discipline. Earlier
in the year, when equities were trading at top dollar, we were more conservative
in our stock purchases. By June 30, 1998, we had built up a cash position of 20
percent, which gave the fund an added cushion during this recent decline. Now,
with nearly one-half of the Russell 2000 stocks down 30 percent or more from
their yearly highs, we are beginning to see more attractive small-cap values. In
my October 1987 report to shareholders, I wrote: "Over time, it is planned that
nearly all of the assets of the Fund will be invested in the stock of companies
that measure up to rigid investment standards. Conservative valuation is an
important standard when selecting investments for the Fund." I am on the same
disciplined and patient course today.
In closing, I believe Fasciano Fund is an equity fund for all seasons and
that we are prepared to meet today's challenges. Clearly, the Fund's nimble
asset size helps. I have added professionals in investment research and
shareholder services to our staff. I am totally committed to providing you with
the long-term performance and service you expect.
Thank you for the confidence you have placed in Fasciano Fund. I invite you
to check out our website: WWW.FASCIANOFUNDS.COM or e-mail us at
[email protected].
Sincerely,
/s/ Michael F. Fasciano
Michael F. Fasciano, CFA
President
*<F1> From August 1, 1987 (commencement of operations).
**<F2> From July 1, 1988. The performance data shown includes the
performance of the Fund for the period before November 10, 1988, the
date the Fund's registration statement became effective with the
Securities and Exchange Commission. The Fund began operations as a
private investment company on August 1, 1987. Prior to that date, the
Fund was not registered under the Investment Company Act of 1940 (the
"1940 Act") and therefore was not subject to certain requirements and
restrictions that are imposed by the 1940 Act and the Internal Revenue
Code. If the Fund had been registered during that period, the Fund's
return might have been lower. The S&P 500 Index is a broad market-
weighted average of U.S. blue-chip companies. The Russell 2000 Index
is formed by taking the 3,000 largest U.S. companies and then
eliminating the largest 1,000. The performance data shown represents
past performance and is no guarantee of future results. The
investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
+<F3> Source: Morningstar, Inc. See Performance Distribution Summary.
190 South LaSalle Street, Suite 2800, Chicago, Illinois 60603 o 800-848-6050
PERFORMANCE AND DISTRIBUTION SUMMARY
<TABLE>
FASCIANO FUND
-----------------------------------------------
Distributions
--------------- Annual Small U.S.
Calendar Beginning Capital Ending Total S&P Russell Company Treasury
Year NAV Income Gains NAV Return 500 2000 Funds*<F4> Bills
-------- --------- ------- ------ ------ ------ ------ ------ -------- --------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1988 $ 9.55 $0.03 $0.00 $11.45 20.2% 16.6% 24.9% 20.4% 6.4%
1989 $11.45 $0.24 $0.59 $13.16 22.5% 31.7% 16.2% 23.6% 8.1%
1990 $13.16 $0.12 $0.38 $12.50 (1.2)% (3.1)% (19.5)% (9.5)% 7.5%
1991 $12.50 $0.02 $0.36 $16.40 35.1% 30.5% 46.1% 50.3% 5.4%
1992 $16.40 $0.00 $0.46 $17.29 7.7% 7.6% 18.4% 13.7% 3.5%
1993 $17.29 $0.00 $1.00 $17.68 8.1% 10.1% 18.9% 17.1% 3.0%
1994 $17.68 $0.00 $1.14 $17.18 3.7% 1.3% (1.8)% (0.7)% 4.3%
1995 $17.18 $0.00 $1.34 $21.18 31.1% 37.5% 28.4% 31.3% 5.5%
1996 $21.18 $0.00 $0.59 $26.20 26.5% 23.0% 16.5% 20.1% 5.0%
1997 $26.20 $0.00 $1.49 $30.31 21.5% 33.4% 22.4% 21.4% 4.9%
1998**<F5> $30.31 $0.00 $0.00 $34.91 15.2% 17.7% 4.9% 6.6% 2.4%
</TABLE>
*<F4> The Morningstar Small Company Funds Index consists of funds that seek
capital appreciation by investing primarily in stocks of companies with
market capitalizations of less than $1 billion.
**<F5>Returns shown are for the six month period ended June 30, 1998.
FASCIANO FUND VS S&P 500 AND RUSSELL 2000
FASCIANO FUND
---------------------------
AVERAGE ANNUAL TOTAL RETURNS
---------------------------------
1 Year 5 Years 10 Years Life*<F6>
33.2% 20.5% 16.7% 16.5%
date Fasciano Fund S&P 500**<F7>Russell 2000***<F8>
8/1/87 $10,000 $10,000 $10,000
6/30/88 11,308 8,861 9,098
6/30/89 13,580 10,682 10,256
6/30/90 15,334 12,443 10,569
6/30/91 17,606 13,363 10,699
6/30/92 18,753 15,155 12,255
6/30/93 20,957 17,221 15,436
6/30/94 21,652 17,463 16,115
6/30/95 26,872 22,016 19,349
6/30/96 34,476 27,740 23,972
6/30/97 39,905 37,366 27,887
6/30/98 53,152 48,636 32,488
*<F6> From inception on August 1, 1987. See footnote for shareholder letter.
** <F7>The S&P 500 (Standard & Poor's 500 Stock Index) is a market-weighted
average of 500 blue-chip stocks with dividends reinvested.
***<F8>The Russell 2000, an unmanaged index, is formed by taking 3,000 small
capitalization companies in the U.S. and then eliminating the largest
1,000. Returns include reinvested dividends.
TOP TEN HOLDINGS AT A GLANCE
<TABLE>
% OF TOTAL % OF COMMON
TOP TEN NET ASSETS AS INDUSTRY SUMMARY NET STOCK OWNED BY
HOLDINGS OF 6/30/98 GROUPING DESCRIPTION SALES*<F9>INCOME*<F9> MANAGEMENT
- -------- ------------ --------- ----------- ------ -------- --------------
<C> <C> <C> <C> <C> <C> <C>
Pulitzer 3.8% Communications Newspapers, television, $601.7 $70.5 68.8%
Publishing Co. & Media radio broadcasting
Resource 3.7% Specialty Involved in real estate, $76.6 $11.7 12.0%
America, Inc. Finance equipment leasing, and the
ownership of energy assets
Interim 3.4% Business Worldwide provider of $1,746.7 $48.1 2.0%
Services, Inc. Services staffing and human
resource consulting
solutions
Concord 3.3% Business Provides electronic $303.1 $51.8 6.7%
EFS, Inc. Services transaction authori-
zation and processing
Emmis 3.0% Communications Radio broadcasting, $132.7 $11.4 32.4%
Communications & Media television, and
Corporation magazines
Central 2.9% Consumer Operates parking facili- $340.2 $20.2 36.9%
Parking Corp. Products ties in 34 states, the Dist-
& Services rict of Columbia, and several
international locations
Central 2.7% Communications Media and information $737.1 $85.7 70.1%
Newspapers, Inc. & Media company involved
primarily in newspaper
publishing
Dentsply 2.6% Health Care Develops, manufactures $747.9 $78.2 3.8%
International, Inc. Products and markets a broad
& Services range of products for
the dental market
Ocwen 2.5% Specialty Specializes in acquiring $315.9 $95.9 51.8%
Financial Finance and resolving troubled
Corporation loans
International 2.5% Entertainment Produces automobile $166.4 $34.1 49.8%
Speedway Corp. & Leisure races and owns auto
racing tracks
Total in Top -----
Ten Holdings 30.4%
</TABLE>
*<F9>Trailing 12 months, in $ millions. Net income figures exclude non-
recurring charges and extraordinary items.
SCHEDULE OF PORTFOLIO INVESTMENTS
June 30, 1998
<TABLE>
Market
Shares Description Value
- ---------------------------------------------------------------------------------------------------------------------------
<C> <C> <C>
COMMON STOCKS - 80.5%
COMMUNICATIONS & MEDIA - 13.3%
40,000 Pulitzer Publishing Co.
Engaged in newspaper publishing, television and radio broadcasting $ 3,570,000
60,000 Emmis Communications Corporation *<F10>
A diversified media company with television and radio broadcasting and publishing operations 2,868,750
37,000 Central Newspapers, Inc.
Engaged in the publication and distribution of newspapers in the Indianapolis and Phoenix
metropolitan areas 2,580,750
40,000 Meredith Corporation
Diversified media company involved in magazine and book publishing and television
broadcasting 1,877,500
50,000 McClatchy Newspapers - Class A
Engaged primarily in the publication of newspapers located in California, Alaska, Washington,
the Carolinas, and Minnesota 1,731,250
----------
12,628,250
----------
BUSINESS SERVICES - 11.9%
101,000 Interim Services, Inc. *<F10>
National provider of a range of customized staffing solutions to business, professional and service
organizations, and government agencies 3,244,625
120,000 Concord EFS, Inc. *<F10>
Engaged in electronic transaction authorization, processing, settlement and funds transfer services
in selected markets 3,135,000
30,000 Lason Holdings, Inc. *<F10>
Provides integrated outsourcing services for records management, document management and
business communications 1,635,000
35,000 G & K Services, Inc. - Class A
Manufactures uniform garments and is a full service uniform rental provider 1,526,875
20,000 Envoy Corporation *<F10>
Provides electronic data interchange services to pharmacies, physicians, hospitals, dentists, billing
services, commercial insurance companies, and others 947,500
35,000 Execustay Corporation *<F10>
Provides interim housing for corporate clients and professionals, furnishing high-quality apartments
for stays over 30 days 411,250
10,000 ADVO, Inc. *<F10>
Direct marketing firm engaged in soliciting and processing printed advertising from retailers,
manufacturers and service companies for targeted distribution 281,875
10,000 Alternative Resources Corp. *<F10>
Provides information technology services (component outsourcing, consulting, technology rollouts,
and IT project staffing) 123,750
----------
11,305,875
----------
SPECIALTY FINANCE - 9.7%
120,000 Resource America, Inc. - Class A
Specialty finance company engaged in three lines of business: the acquisition and resolution
of commercial real estate loans, "small ticket" equipment leasing, and the ownership of
energy assets 3,555,000
90,000 Ocwen Financial Corporation *<F10>
Holding company for Ocwen Federal Bank, a federally chartered savings bank engaged in
discounted loan acquisition and residential and commercial lending 2,418,750
90,000 American Capital Strategies, Ltd.
Specialty finance company that has been principally engaged in arranging commercial loans to
small and medium sized business 2,058,750
50,000 Doral Financial Corporation
Bank holding company that operates in the mortgage banking, commercial banking and broker-
dealer businesses 875,000
30,000 Rock Financial Corporation
Specialty finance company marketing debt consolidation and home financing products, secured by
1st or 2nd mortgages, to conventional and subprime borrowers 307,500
----------
9,215,000
----------
HEALTH CARE PRODUCTS & SERVICES - 8.5%
100,000 Dentsply International, Inc.
Designs, develops, manufactures, and markets dental consumable and laboratory products, and
dental equipment 2,500,000
40,500 Landauer, Inc.
Offers a service for measuring the dosage of x-ray, gamma radiation and other penetrating ionizing
radiations 1,209,938
40,000 Brookdale Living Communities, Inc. *<F10>
Provides senior and assisted living services to the elderly through its facilities located in urban
and suburban areas of major metropolitan markets 1,025,000
30,000 Serologicals Corp. *<F10>
Provider of specialty human antibody based products and services to healthcare companies. Services
include donor recruitment and clinical testing services 967,500
30,000 Kendle International, Inc. *<F10>
Contract research organization providing integrated clinical research services on a contract basis to
the pharmaceutical and biotechnology industries 907,500
35,000 Sterile Recoveries, Inc. *<F10>
Provides hospitals and surgery centers with a comprehensive surgical procedure-based delivery and
retrieval service for reusable gowns, towels, etc. In addition, provides disposable products
necessary for surgery 595,000
20,000 Hooper Holmes, Inc.
Provides medical and paramedical examinations and related services to life and health insurance
companies 420,000
20,000 Young Innovations, Inc. *<F10>
Designs, manufactures and markets single-use supplies, autoclavable instruments and other
products used by dental professionals 307,500
5,000 Pharmaceutical Product Development, Inc. *<F10>
Provides a range of research and consulting services in the life and environmental sciences 110,000
----------
8,042,438
----------
COMMERCIAL PRODUCTS AND SERVICES - 7.4%
50,000 Zebra Technologies Corp. - Class A *<F10>
Provides bar code solutions to manufacturing and service entities worldwide, for use in automatic
identification and data collection systems 2,137,500
46,700 Superior Services, Inc. *<F10>
Solid waste services company providing solid waste collection, transfer, recycling and
disposal services to residential, commercial and industrial customers 1,403,919
40,000 IDEX Corp.
Manufactures industrial pumps and related controls for use in process applications, and
proprietary equipment that may combine pumps or other devices into products for industrial,
commercial and safety applications 1,380,000
20,000 Modine Manufacturing Co.
Develops, manufactures, and markets heat exchangers and systems for use in various original
equipment manufacturer applications and for sale to the automotive aftermarket and to a wide
array of building markets 692,500
20,000 Inacom Corp. *<F10>
Provides information technology products and technology management services to the end-user
business clients 635,000
20,000 Juno Lighting, Inc.
Specializes in the design, manufacture and marketing of lighting fixtures for commercial and
residential use 472,500
10,000 Communications Systems, Inc.
Engaged in the manufacture and sale of modular connecting and wiring devices for voice and data
communications 160,000
10,000 Supreme Industries, Inc. *<F10>
Manufactures truck bodies that are mounted on new truck chassis produced by others. Also
manufactures shuttle buses and trailers 122,500
----------
7,003,919
----------
SAVINGS & LOAN - 4.8%
75,000 ITLA Capital Corporation *<F10>
Primarily engages in the origination of loans secured by income producing real estate 1,556,250
50,000 Home Federal Bancorp
Unitary savings and loan holding company for Home Federal Savings Bank 1,512,500
30,000 Alliance Bancorp., Inc.
Registered savings and loan holding company engaged in the business of providing financial service
products through its wholly-owned subsidiary, Liberty Federal Bank 716,250
20,000 Haven Bancorp, Inc.
Holding company for Columbia Federal Saving Bank, a federally chartered stock savings bank 512,500
25,000 Peoples Bancorp, Inc.
Holding company for Trenton Savings Bank FSC, providing general commercial banking services
in New Jersey 250,000
----------
4,547,500
----------
BANK & BANK HOLDING - 4.2%
20,000 Marshall & Ilsley Corporation
Bank and savings and loan holding company providing financial services in Wisconsin, Arizona and
Florida 1,021,250
20,000 CNB Bancshares, Inc.
Engages in banking, data processing and information services, underwriting credit life and
disability insurance, and selling property and casualty insurance 960,000
15,000 Cass Commercial Corporation
Bank holding company for Cass Bank and Trust Company, and provides information services
through its Case Information Systems subsidiary 450,937
16,000 AMBANC Corp.
Bank holding company, operates three subsidiaries within Indiana and Illinois 434,000
20,000 Atlantic Bank & Trust Company *<F10>
State-chartered commercial bank primarily focused on originating and purchasing commercial loans
to finance the business activities of individuals and small companies 420,000
10,000 Corus Bankshares, Inc.
Bank holding company for CORUS Bank, which provides financial services through 11 bank
branches in the Chicago metropolitan area 402,500
15,000 Bank of Commerce
State-chartered commercial bank, providing a variety of commercial bank services, including lending
and deposit services, and construction lending 281,250
----------
3,969,937
----------
CONSUMER PRODUCTS AND SERVICES - 3.9%
60,000 Central Parking Corp.
Operates parking facilities in 34 states, the District of Columbia, and
several international locations 2,790,000
10,000 Snap-on Incorporated
Manufactures and distributes hand tools, power tools, tool storage products, diagnostic equipment,
shop equipment, and diagnostic software and other services 362,500
11,025 Monro Muffler Brake, Inc. *<F10>
Operates a chain of 350 automotive undercar repair shops. Shops provide a full range of services for
mufflers, exhaust systems, brakes, steering, suspension, and wheel alignment 173,644
15,000 LaCrosse Footwear, Inc.
Designs, develops, markets and manufactures protective footwear and rainwear for sporting,
occupational and recreational markets 172,500
5,000 Action Performance Companies, Inc. *<F10>
Designer and seller of licensed motorsports collectible and consumer products in the United States 160,937
----------
3,659,581
----------
INSURANCE - 3.1%
70,000 HCC Insurance Holdings, Inc.
Principally engaged in providing aviation, marine, offshore energy, property, accident and health,
and lenders single interest insurance and reinsurance on a worldwide basis 1,540,000
30,000 Chicago Title Corporation *<F10>
Provider of title insurance and other related services for residential and commercial real estate
transactions 1,385,625
----------
2,925,625
----------
ENTERTAINMENT & LEISURE - 3.1%
84,500 International Speedway Corp. - Class A
A leading promoter of motorsports activities in the U.S. ISCA owns and/or operates 5 motorsports
facilities: Daytona, Talladega, Phoenix, Darlington, and Watkins Glen International 2,402,969
10,000 Speedway Motorsports, Inc. *<F10>
Owns and operates the Charlotte Motor Speedway, Bristol Motor Speedway, Atlanta Motor
Speedway, Sears Point Raceway and Texas Motor Speedway. The company also promotes and sponsors
motorsports activities 255,625
5,000 Penske Motorsports, Inc. *<F10>
Promoter and marketer of professional motorsports in the United States which, through its
subsidiaries, owns and operates a number of speedways 145,938
4,100 Carmike Cinemas, Inc. - Class A *<F10>
Engaged in the motion picture exhibition business. As of 6/98, CKE operated 516 theatres
with an aggregate of 2,752 screens in 33 states 110,444
----------
2,914,976
----------
REAL ESTATE INVESTMENT TRUSTS (REIT'S) - 2.9%
100,000 Imperial Credit Commercial Mortgage Investment Corp.
Invest in multi-family and commercial mortgage loans. Interests in mortgage-backed securities
and real property 1,306,250
45,000 Ocwen Asset Investment Corp.
A hybrid REIT, a diversified financial services company engaged in the acquisition and resolution
of troubled loans and in diverse mortgage lending activities 745,312
75,000 Annaly Mortgage Management, Inc.
Self-managed REIT, specializes in mortgage-backed securities 679,687
----------
2,731,249
----------
ELECTRONICS - 2.3%
60,000 Methode Electronics, Inc. - Class A
Manufactures electronic components that connect, convey and control electrical energy,
signal and pulse, including connectors, automotive components, interconnect devices,
printed circuits, and current carrying distribution systems 930,000
50,000 Kent Electronics Corp.*<F10>
Distributes electronic products, including wire and cable, connectors, components and interconnect
assemblies. Kent also manufactures battery power packs and other electronic components
through its subsidiaries 915,625
50,000 Richey Electronics, Inc. *<F10>
Specialty distributor of interconnect, electromechanical and passive electronic components, and
a provider of value-added assembly services 390,625
----------
2,236,250
----------
DISTRIBUTOR - 2.0%
30,000 CDW Computer Centers, Inc. *<F10>
Sells MS-DOS/Microsoft Windows and Apple/Macintosh based microcomputer hardware and
peripherals including: desktop computers, notebooks and laptops, printing devices, video monitors,
networking products, software and accessories 1,500,000
20,000 Valley National Gases Corporation *<F10>
A packager and distributor of industrial, medical and specialty gases, welding equipment and
supplies, propane and fire protection equipment in 10 states in the mid-Atlantic and midwestern
regions of the U.S. 220,000
10,000 TESSCO Technologies, Inc. *<F10>
Distributor of products to the wireless communications industry, serves customers in the cellular
telephone, personal communication system (PCS), paging and mobile radio-dispatched markets 197,500
----------
1,917,500
----------
MACHINERY - INDUSTRIAL - 2.0%
40,000 Regal-Beloit Corporation
Manufactures a line of mechanical products to control motion and torque and electrical products
such as motors and generators 1,140,000
25,000 Robbins & Myers, Inc.
Designs, manufactures and markets fluid handling products and systems for the process industry 726,562
----------
1,866,562
----------
TRANSPORTATION - 1.5%
20,000 Eagle USA Airfreight, Inc. *<F10>
Provider of air freight forwarding and other transportation and logistics services 693,750
10,000 C.H. Robinson Worldwide, Inc.
Global provider of multimodal transportation services and logistics solutions through a network of
115 offices in 38 states and internationally 248,750
10,000 Petroleum Helicopters, Inc.
Provides helicopter transportation and related services. Transports offshore oil and gas production
and drilling workers on a worldwide basis 215,000
10,000 Arnold Industries, Inc.
Engaged in the trucking and warehousing business through its subsidiaries, New Motor Penn
Express and Arnold Transportation Services 147,500
20,000 Simon Transportation Services, Inc. *<F10>
Truckload carrier which provides temperature-controlled transportation services for major shippers
in the food industry 133,750
----------
1,438,750
----------
TOTAL COMMON STOCKS (cost $55,757,512) 76,403,412
----------
SHORT-TERM INVESTMENTS - 20.9%
VARIABLE RATE DEMAND NOTES**<F11> - 20.9%
$4,541,505 General Mills, 5.27% 4,541,505
4,537,704 Johnson Controls, 5.27% 4,537,704
4,052,416 Warner Lambert, 5.27% 4,052,416
3,986,040 Pitney Bowes, 5.27% 3,986,040
1,081,995 American Family Financial Services, Inc., 5.27% 1,081,995
1,056,716 Wisconsin Electric Power Co., 5.27% 1,056,716
584,270 Firstar Bank, 5.66% 584,270
----------
TOTAL SHORT-TERM INVESTMENTS (cost $19,840,646) 19,840,646
----------
TOTAL INVESTMENTS - 101.4% (cost $75,598,158) 96,244,058
----------
LIABILITIES, LESS OTHER ASSETS - (1.4)% (1,286,858)
----------
TOTAL NET ASSETS - 100.0% $94,957,200
----------
----------
</TABLE>
*<F10> non-income producing
**<F11> Variable rate demand notes are considered short-term obligations and
are payable on demand. Interest rates change periodically on specified
dates. The rates listed are as of June 30, 1998.
***<F12> Narrative descriptions for common stock holdings are not covered by the
Report of Independent Public Accountants.
The accompanying notes to financial statements are an integral part of this
schedule.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998
ASSETS
Common stocks, at market value (cost: $55,757,512) $76,403,412
Variable rate demand notes, at amortized cost,
which approximates market value (cost: $19,840,646) 19,840,646
Cash 300
Receivables
Receivable for securities sold 33,533
Dividends 74,058
Interest 84,713
Prepaid expenses and other assets 24,223
----------
Total assets $96,460,885
----------
----------
LIABILITIES AND NET ASSETS
Payables and accrued expenses
Payable for securities purchased $ 1,399,455
Accrued expenses 32,647
Due to adviser 71,583
----------
Total liabilities 1,503,685
----------
Net assets
Common stock, $.01 par value; 10,000,000
shares authorized, 2,719,851 shares issued
and outstanding, and paid-in capital 65,793,771
Accumulated undistributed net investment (loss) (226,970)
Accumulated undistributed net realized gain on investments 8,744,499
Net unrealized appreciation on investments 20,645,900
----------
Total net assets 94,957,200
----------
Total liabilities and net assets $96,460,885
----------
----------
Net asset value per share $ 34.91
----------
----------
The accompanying notes to financial statements are an integral part of this
statement.
STATEMENT OF OPERATIONS
For the year ended June 30, 1998
INCOME
Dividends $ 445,671
Interest 515,652
----------
961,323
----------
EXPENSES
Management fee 604,499
Transfer and disbursing agent fees 57,828
Registration fees 36,048
Administration fee 30,282
Accounting fee 26,654
Audit and tax consulting fees 15,001
Legal fees 14,630
Custodian fees 11,459
Printing and mailing fees 10,793
Other operating expenses 8,533
----------
Total expenses 815,727
----------
Net investment income 145,596
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 8,783,209
Net change in unrealized appreciation on investments 7,971,431
----------
Net gain on investments 16,754,640
----------
Net increase in net assets resulting from operations $16,900,236
----------
----------
The accompanying notes to financial statements are an integral part of this
statement.
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 1998 and June 30, 1997
June 30, June 30,
1998 1997
---------- ----------
OPERATIONS:
Net investment income (loss) $ 145,596 $ (121,302)
Net realized gain on investments 8,783,209 2,418,008
Net change in unrealized appreciation 7,971,431 2,910,692
---------- ----------
Net increase in net assets
resulting from operations 16,900,236 5,207,398
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net capital gains (2,597,640) (742,586)
---------- ----------
Total distributions (2,597,640) (742,586)
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued
(1,315,647 and 395,751 shares,
respectively) 42,757,189 10,121,818
Increase in shares issued for
reinvested distributions (84,945
and 27,861 shares, respectively) 2,512,667 716,874
Cost of shares redeemed
(210,578 and 84,925 shares,
respectively) (6,735,975) (2,163,323)
---------- ----------
Net increase in net assets
derived from capital share
transactions 38,533,881 8,675,369
---------- ----------
Net increase in net assets 52,836,477 13,140,181
---------- ----------
NET ASSETS AT BEGINNING OF PERIOD 42,120,723 28,980,542
---------- ----------
NET ASSETS AT END OF PERIOD (including
accumulated undistributed net investment
loss of ($226,970) and ($372,566),
respectively) $94,957,200 $42,120,723
---------- ----------
---------- ----------
The accompanying notes to financial statements are an integral part of these
statements.
FINANCIAL HIGHLIGHTS
Condensed financial information per share of capital stock outstanding
throughout the period is presented below:
<TABLE>
Year ended June 30,
------------------------------------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $ 27.53 $ 24.33 $ 20.17 $ 17.34 $ 17.74
Income from investment operations:
Net investment income (loss) 0.16 (0.03) (0.05) (0.24) (0.05)
Net realized and unrealized gain on
investments 8.71 3.82 5.55 4.21 0.65
------- ------- ------- ------- -------
Total from investment operations 8.87 3.79 5.50 3.97 0.60
Less distribution:
Dividends from net investment income 0.00 0.00 0.00 0.00 0.00
Distributions from net capital gains (1.49) (0.59) (1.34) (1.14) (1.00)
------- ------- ------- ------- -------
Total distributions (1.49) (0.59) (1.34) (1.14) (1.00)
------- ------- ------- ------- -------
Net asset value at end of year $ 34.91 $ 27.53 $ 24.33 $ 20.17 $ 17.34
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Total return 33.2% 15.8% 28.3% 24.1% 3.3%
Ratios/Supplemental Data:
Net assets at end of year (in thousands) $94,957 $42,121 $28,981 $20,868 $16,582
Ratio of expenses, to average net assets 1.3% 1.4% 1.5% 1.7% 1.7%
Ratio of net investment income (loss)
to average net assets 0.24% (0.4)% (0.3)% (0.6)% (0.3)%
Portfolio turnover rate 49.8% 41.0% 45.6% 37.9% 99.0%
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
(1) SIGNIFICANT ACCOUNTING POLICIES:
Fasciano Fund, Inc. (the "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 on a trade date
basis.
(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 date of purchase 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 17,008 shares or 0.7%% of the outstanding common
stock of the Fund at June 30, 1998.
The non-affiliated directors receive 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 year ended June 30, 1998, purchases of securities other than
short-term investments were $52,347,090. Sales of such securities for that
period were $25,776,321.
Cost of investments is the same for financial reporting purposes as for
Federal income tax purposes. At December 31, 1997, on a tax basis, gross
unrealized appreciation of investments was $22,647,177 and gross unrealized
depreciation of investments was $2,001,277.
(4) INCOME TAXES:
No provision for federal income taxes has been made. The Fund has complied
to date with the provisions of the Internal Revenue Code applicable to regulated
investment companies and intends to distribute substantially all of its net
investment income and net realized capital gains in order to avoid payment of
all future federal income taxes.
(5) DISTRIBUTIONS TO SHAREHOLDERS:
On December 29, 1997, the Fund distributed short-term and long-term capital
gains of approximately $0.09 and $1.40 per share, respectively.
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, 1998, and the related statement of
operations for the year then ended, the statements 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, 1998, 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, 1998, 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 12, 1998
INVESTMENT ADVISER
Fasciano Company, Inc.
ADDRESS OF FUND & ADVISER
190 South LaSalle Street
Suite 2800
Chicago, Illinois 60603
(312) 444-6050
(800) 848-6050
Website: www.fascianofunds.com
E-mail: [email protected]
TRANSFER AGENT, DIVIDEND DISBURSING
AGENT, ADMINISTRATOR AND CUSTODIAN
Firstar Trust Company
P.O. Box 701
Milwaukee, Wisconsin 53201
(414) 765-4124
(800) 982-3533
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.
Printed on Recycled Paper
