ANNUAL REPORT
FASCIANO FUND, INC.
(THE FASCIANO FUND LOGO)
June 30, 1999
FASCIANO FUND, INC.
August 23, 1999
Dear Fellow Shareholders:
Your investment in Fasciano Fund performed as summarized in the following
table for the periods ended June 30, 1999.
Average Annual Total Return
-----------------------------
Six months One year Three year Five year Ten year
---------- -------- ---------- --------- --------
Fasciano Fund 1.9% (5.2%) 13.5% 18.4% 14.0%
Small Company Fund Average*<F1> 9.4% 3.0% 10.7% 16.3% 13.8%
S&P SmallCap 600 Index**<F2> 5.0% (2.3%) 12.4% 16.6% 12.4%
Russell 2000 Index**<F2> 9.3% 1.5% 11.2% 15.4% 12.4%
From its beginning nearly twelve years ago through June 30, 1999, Fasciano
Fund has yielded an average annual return of 14.5%+<F3>.
For the six month and one year periods, small-cap indices and average returns
for small-cap funds alone do not tell the whole story because those percentages
were skewed upward by the phenomenal gains of internet stocks. A Wall Street
Journal article published in early June referred to a study of the year-to-date
performance of the Russell 2000 Index through May 31, one month before our
fiscal year-end. The study, done by Prudential Securities, indicated that if
internet issues were excluded from the Russell 2000, the performance for 1999
through May 31 would have been a positive 1.6% as compared to the 4.8% actual
result.
We agree that the growth potential of electronic commerce is enormous, but
investing in internet stocks is risky. Many internet companies have little in
the way of revenues and very few actually earn a profit. We view today's market
values of pure internet businesses as highly inflated and remind ourselves that
investing is a marathon, not a sprint. We adhere to acquiring businesses with
proven profitability and cash flow, a discipline that underpins our strong long-
term record.
While speculating in pure internet stocks is not our style, an increasing
number of the companies in Fasciano Fund are engaged in internet-related
activities to grow their businesses:
o Our newspaper publishers--Pulitzer, McClatchy, Journal Register, and
Central Newspapers have internet initiatives that take advantage of their
ability to gather news and advertising content and deliver it
electronically to a greater number of subscribers.
o Action Performance launched goracing.com that brings fans worldwide the
latest motorsports-related news and information as well as an e-commerce
marketplace that already averages 12 million hits and 675,000 unduplicated
users per week. When Action sells online its bottom line wins because
selling products online yields nearly 8% more operating margin than catalog
sales.
o International Speedway sells tickets to its NASCAR events online. With the
click of a mouse, you can see the view you would have from almost any seat
before you purchase your ticket. Selling premium seats for International
Speedway events just got easier!
o CDW Computer Centers has aggressively implemented a program of customized
websites for its commercial customers and already has more than 18,000 such
sites. This is in addition to its cdw.com website, which is visited by
60,000 users each day.
o Express Scripts introduced two new consumer internet sites:
YourPharmacy.com for ordering prescription drugs, over-the-counter
medications, and personal care products and DrugDigest.org for information
about drugs and vitamins.
By investing in proven businesses with already successful products and
services that use the internet to increase sales and profits, we believe we are
investing for growth with less risk.
In the last six months, the size of Fasciano Fund roughly doubled again--from
$237 million at January 1 to $418 million at June 30. We had $197 million
(about 47% of the Fund's total assets) in cash at June 30. The cash position
affects the Fund's performance. When stock prices are going up (as they did
last year, overall), the Fund's returns are less than if the assets were fully
invested in stocks. If stock prices were falling, the cash would provide a
cushion against the decline. Most importantly, cash is better than a bad
investment. So, we are taking our time to put all that new cash to work.
Recent cash flows into the Fund have moderated. We envision the Fund's assets
leveling off around our present size for a while, which should help us to reduce
our cash position.
We are actively buying and finding good values in specialty chemical
companies like OM Group, Spartech and Minerals Technologies. We continue to
like the motorsports industry and have added to International Speedway, which
recently acquired Penske Motorsports, one of our former holdings. Also, we
bought shares of Championship Auto Racing Teams, the sanctioning body for CART
open-wheel racing. We sold LaCrosse Footwear, a manufacturer of boots and rain
gear, because their business was chronically hurt by dry weather. Several of
our companies: ABR Information Services, Superior Services, Richey Electronics
and CNB Bancshares were bought out at substantially higher prices. Health care
stocks suffered as profits in those businesses continue to be squeezed by cost
containment efforts and turmoil caused by changing Medicare regulations.
Corporate share repurchase programs have been implemented by more than a dozen
companies in our portfolio, evidence of good value in those shares.
Looking ahead, we are enthused by the long-term prospects for small-cap
stocks. We are steadily deploying our cash into equities. Small-cap stock
valuations are cheap relative to large-cap stocks. However, by historical
measures of value, prices in general are extremely rich. The economy has never
been in better shape, so high valuations are justified by the prospect of
continued steady growth. Inflation appears to be in check, although a further
rise in interest rates could put downward pressure on equity prices.
Nevertheless, our job is not to try to outguess the economic pundits nor is it
to try to predict market movements, rather it is to search out good businesses
at attractive prices and buy value for the long term.
Thank you for the confidence you have placed in Fasciano Fund. I invite you
to visit our updated website: WWW.FASCIANOFUNDS.COM or e-mail us at
[email protected]. As always, I am totally committed to delivering the
long-term performance and service you expect.
Sincerely,
/s/ Michael F. Fasciano
Michael F. Fasciano, CFA
President
190 South LaSalle Street, Suite 2800, Chicago, Illinois 60603 o 800-848-6050
*<F1> Source: Morningstar, Inc. See Performance Distribution Summary.
**<F2> The S&P SmallCap 600 Index is a capitalization weighted index that
measures the performance of selected U.S. stocks with small market
capitalizations. The Russell 2000 Index is an unweighted index formed
by taking the 3,000 largest U.S. companies and then eliminating the
largest 1,000.
+<F3> From August 1, 1987. 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 November 10,
1988, 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.
Information about investments is not intended as recommendations of
individual stocks. The information presented and the views of the
portfolio manager may change.
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.
<PAGE>
PERFORMANCE AND DISTRIBUTION SUMMARY
<TABLE>
FASCIANO FUND
--------------------------------------------------------
Distributions
------------------- Annual S&P Small U.S.
Calendar Beginning Capital Ending Total SmallCap Russell Company Treasury
Year NAV Income Gains NAV Return 600 2000 Funds*<F4> Bills
-------- --------- ------ ------- ------ ------ -------- ------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1988 $ 9.55 $0.03 $0.00 $11.45 20.2% 19.5% 24.9% 20.4% 6.4%
1989 $11.45 $0.24 $0.59 $13.16 22.5% 13.9% 16.2% 23.6% 8.1%
1990 $13.16 $0.12 $0.38 $12.50 (1.2)% (23.7)% (19.5)% (9.5)% 7.5%
1991 $12.50 $0.02 $0.36 $16.40 35.1% 48.5% 46.1% 50.3% 5.4%
1992 $16.40 $0.00 $0.46 $17.29 7.7% 21.0% 18.4% 13.7% 3.5%
1993 $17.29 $0.00 $1.00 $17.68 8.1% 18.8% 18.9% 17.1% 3.0%
1994 $17.68 $0.00 $1.14 $17.18 3.7% (4.8)% (1.8)% (0.7)% 4.3%
1995 $17.18 $0.00 $1.34 $21.18 31.1% 30.0% 28.4% 31.3% 5.5%
1996 $21.18 $0.00 $0.59 $26.20 26.5% 21.3% 16.5% 20.1% 5.0%
1997 $26.20 $0.00 $1.49 $30.31 21.5% 25.6% 22.4% 21.4% 4.9%
1998 $30.31 $0.03 $1.25 $31.19 7.2% (1.3)% (2.6)% (0.2)% 4.6%
1999**<F5> $31.19 $0.00 $0.00 $31.78 1.9% 5.0% 9.3% 9.4% 2.2%
*<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, 1999.
</TABLE>
FASCIANO FUND VS S&P SMALL CAP 600 AND RUSSELL 2000
FASCIANO FUND
AVERAGE ANNUAL TOTAL RETURNS
1 Year 5 Years 10 Years Life*<F6>
-------------------------------------------------------------------
(5.2)% 18.4% 14.0% 14.5%
DATE FASCIANO FUND S&P SMALL CAP 600**<F7> RUSSELL 2000***<F8>
----- ------------- ----------------------- -------------------
8/1/87 $10,000 $10,000 $10,000
6/88 $11,308 $8,829 $9,098
6/89 $13,580 $9,681 $10,256
6/90 $15,334 $9,617 $10,569
6/91 $17,606 $9,434 $10,699
6/92 $18,753 $11,048 $12,255
6/93 $20,957 $14,195 $15,436
6/94 $21,652 $14,461 $16,115
6/95 $26,872 $17,405 $19,349
6/96 $34,476 $21,932 $23,972
6/97 $39,905 $26,689 $27,887
6/98 $53,152 $31,882 $32,488
6/99 $50,402 $31,146 $32,975
*<F6> From inception on August 1, 1987. See footnote for shareholder
letter.
**<F7> The S&P SmallCap 600 index is a capitalization weighted index that
measures the performance of selected U.S. stocks with small market
capitalizations.
***<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.
<PAGE>
TOP TEN HOLDINGS AT A GLANCE
<TABLE>
% OF TOTAL % OF COMMON
TOP TEN NET ASSETS AS INDUSTRY SUMMARY NET STOCK OWNED BY
HOLDINGS OF 6/30/99 GROUPING DESCRIPTION SALES*<F9> INCOME*<F9> MANAGEMENT
- -------- ------------- -------- ----------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
International 2.0% Entertainment Promotes automobile $210.4 $45.9 49.7%
Speedway & Leisure races and owns
Corp. auto racing tracks
Pulitzer Inc. 1.9% Communications Newspaper publishing and $381.6 $32.2 60.1%
& Media new media businesses
Zebra 1.7% Commercial Worldwide provider of $355.2 $54.0 18.5%
Technologies Products bar code solutions and
Inc. & Services plastic card printers to
manufacturing and
service entities
Midwest Express 1.6% Transportation Premium service airline $416.9 $35.9 3.5%
Holdings Inc. catering primarily to
business travelers
Keane Inc. 1.6% Business Services Information technology $1,144.7 $113.4 17.6%
consulting firm helping
companies plan, build,
and manage application
software
Concord EFS Inc. 1.5% Business Services Provides electronic $708.5 $103.0 7.2%
transaction authorization
and processing
Championship 1.4% Entertainment & Owns, operates, and $65.2 $16.5 28.3%
Auto Racing Leisure markets the FedEx
Teams Inc. Championship Series
CNB Bancshares Inc. 1.4% Bank & Bank Bank-based financial $630.1 $97.4 3.9%
Holding services company and
the largest bank holding
company based in Indiana
HCC Insurance 1.4% Insurance and Underwrites property and $335.2 $77.7 20.0%
Holdings Inc. Investment casualty insurance
Management
Central Parking 1.2% Consumer Operates parking facilities $726.3 $38.2 41.0%
Corp. Products & in 40 states as well as
Services internationally
Total in Top -----
Ten Holdings 15.7%
</TABLE>
*<F9> Trailing 12 months, in $ millions. Net income figures exclude non-
recurring charges and extraordinary items.
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS
June 30, 1999
Market
Shares Description Value
- ------------------------------------------------------------------------------
COMMON STOCKS - 54.9%
COMMERCIAL PRODUCTS AND SERVICES - 8.6%
180,000 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 $ 6,918,750
182,700 Superior Services, Inc. *<F10>
Solid waste services company providing solid waste
collection, transfer, recycling and disposal services
to residential, commercial and industrial customers 4,875,806
120,000 OM Group, Inc.
Produces and markets metal-based specialty chemicals
and powders for diverse applications to a variety of
industries 4,140,000
70,000 Mineral Technologies, Inc.
Resource and technology based organization that
develops and produce performance-enhancing minerals,
mineral-based and synthetic mineral products for the
paper, steel, polymer and other manufacturing
industries on a worldwide basis 3,906,875
210,000 Wilmar Industries, Inc. *<F10>
A national marketer and direct distributor of repair
and maintenance products, principally to the
apartment housing market 2,730,000
82,500 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 2,686,406
100,000 Federal Signal Corporation
Global manufacturer of niche products in four operating
groups: safety and signaling products, custom signage,
consumable industrial tooling and emergency and
environmental vehicles 2,118,750
60,000 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 1,972,500
52,400 Kaydon Corporation
Designer and manufacturer of custom-engineered products,
supplying a diverse group of industrial, aerospace,
medical and electronic equipment, and aftermarket
customers 1,761,950
50,000 Spartech Corporation
Producer of engineered thermoplastic materials,
polymeric compounds and molded and profile products 1,581,250
60,000 Juno Lighting, Inc.
Specializes in the design, manufacture and marketing
of lighting fixtures for commercial and residential use 1,478,760
100,000 Communications Systems, Inc.
Engaged in the manufacture and sale of modular
connecting and wiring devices for voice and data
communications 1,237,500
20,000 Andrew Corporation *<F10>
A multinational supplier of communication products
and systems to worldwide commercial,
industrial, governmental, and military customers 378,750
------------
35,787,297
------------
BUSINESS SERVICES - 8.2%
300,000 Keane, Inc. *<F10>
Information technology consulting firm helping
companies plan, build, and manage application software 6,787,500
150,000 Concord EFS, Inc. *<F10>
Engaged in electronic transaction authorization,
processing, settlement and funds transfer services
in selected markets 6,346,875
500,000 HA-LO Industries, Inc. *<F10>
Provider of branded promotional products and premiums
and has established a continuum of brand marketing
services 4,937,500
150,000 Penton Media, Inc.
Diversified business media company that publishes
magazines and electronic information products,
produces trade shows and conferences, and provides
marketing and business development services 3,637,500
60,000 Metro Networks, Inc. *<F10>
Provides traffic reporting services, news, sports,
weather, video news and other information reporting
services to the television and radio broadcast
industries in exchange for commercial airtime 3,202,500
120,000 Wallace Computer Services, Inc.
Products and services include commercial printing,
business forms, labels, direct mail, and office products 3,000,000
50,000 G & K Services, Inc. - Class A
Manufactures uniform garments and is a full service
uniform rental provider 2,618,750
100,000 Interim Services, Inc. *<F10>
National provider of a range of customized staffing
solutions to business, professional and service
organizations, and government agencies 2,062,500
30,000 Lason Holdings, Inc. *<F10>
Provides integrated outsourcing services for records
management, document management and business
communications 1,488,750
20,000 ADVO, Inc. *<F10>
Direct marketing firm engaged in soliciting and
processing printed advertising from retailers,
manufacturers and service companies for targeted
distribution 415,000
------------
34,496,875
------------
COMMUNICATIONS & MEDIA - 7.8%
160,000 Pulitzer, Inc.
Engaged in newspaper publishing and new media
businesses 7,770,000
150,000 Meredith Corporation
Diversified media company involved in magazine
and book publishing and television broadcasting 5,193,750
100,000 Emmis Communications Corporation *<F10>
A diversified media company with television and
radio broadcasting and publishing operations 4,937,500
130,000 Central Newspapers, Inc.
Engaged in the publication of newspapers located
in California, Alaska, Washington, the
Carolinas, and Minnesota, in addition to several
smaller newspapers as well as other
related media and information businesses 4,891,250
112,900 McClatchy Newspapers - Class A
Engaged primarily in the publication of newspapers
located in California, Alaska, Washington,
the Carolinas, and Minnesota 3,739,812
130,000 Hearst-Argyle Television, Inc. *<F10>
Owns and/or manages 26 network-affiliated television
stations, and 7 radio stations throughout the U.S. 3,120,000
77,700 Lee Enterprises, Inc.
In the business of newspaper publishing and
television broadcasting 2,369,850
30,000 Journal Register Company *<F10>
Publishes small metropolitan, suburban daily and
suburban and community non-daily newspapers serving
markets in New York, Connecticut, Ohio, Pennsylvania,
Missouri and central New England. 675,000
------------
32,697,162
------------
HEALTH CARE PRODUCTS & SERVICES - 7.1%
220,000 STERIS Corporation *<F10>
Provider of infection prevention, contamination
prevention, microbial reduction, and surgical
support systems, products, services, and
technologies to health care, scientific, research,
food, and industrial customers worldwide 4,262,500
145,000 Dentsply International, Inc.
Designs, develops, manufactures, and markets dental
consumable and laboratory products, and
dental equipment 4,186,875
256,000 Omnicare, Inc.
Geriatric pharmaceutical care company, currently
serving approximately 617,000 residents in
more than 8,600 long-term care facilities in 43
states. Also provides clinical research services
for the pharmaceutical and biotechnology industries 3,232,000
120,000 Hooper Holmes, Inc.
Provides medical and paramedical examinations and
related services to life and health insurance
companies 2,445,000
80,000 Landauer, Inc.
Offers a service for measuring the dosage of x-ray,
gamma radiation and other penetrating ionizing
radiations 2,360,000
100,000 Res-Care, Inc. *<F10>
Provides residential, training, educational, and
support services for persons with special needs 2,275,000
173,000 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 2,000,312
100,000 Kendle International, Inc. *<F10>
Contract research organization providing integrated
clinical research services on a contract basis to
the pharmaceutical and biotechnology industries 1,600,000
100,000 KV Pharmaceutical Company - Class A *<F10>
Researches, develops, manufactures, and markets
controlled release and tastemasked forms of
drug products and is a leading marketer of
technology distinguished generic pharmaceuticals 1,550,000
100,000 Young Innovations, Inc. *<F10>
Designs, manufactures and markets single-use
supplies, autoclavable instruments and other
products used by dental professionals 1,462,500
20,000 Express Scripts, Inc. *<F10>
As an independent pharmacy benefit manager and
managed care company, Express Scripts
provides a broad range of pharmacy benefit and
medical information management services, as
well as managed vision care programs 1,203,750
35,000 Henry Schein, Inc. *<F10>
Distributor of healthcare products and services
to office-based healthcare practitioners in North
America and Europe. The Company's primary customers
are dental practices and dental laboratories 1,109,063
50,000 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 740,625
20,000 Patterson Dental Company *<F10>
Distributes dental products in North America to
dentists, dental laboratories, institutions,
and other healthcare providers 695,000
45,000 Serologicals Corporation *<F10>
Provider of specialty human antibody based products
and services to healthcare companies. Services
include donor recruitment and clinical testing services 365,625
50,000 NCS Healthcare, Inc. *<F10>
Provider of pharmaceutical and related services to
long-term care facilities, including skilled
nursing centers, assisted living facilities and
hospitals 271,875
------------
29,760,125
------------
CONSUMER PRODUCTS AND SERVICES - 5.9%
152,000 Central Parking Corp.
Operates parking facilities in 40 states, the
District of columbia, and several international
locations 5,206,000
70,000 Gucci Group
Designer, producer and distributor of high-quality,
personal luxury accessories including leather goods,
shoes, ties, scarves, watches, jewelry, eyewear,
and perfume 4,900,000
120,000 Blyth Industries, Inc. *<F10>
Designs, manufactures, markets and distributes a line
of candles and home fragrance products, and markets a
range of related candle accessories and gift bags.
Also produces portable heating fuel products 4,125,000
100,000 Tootsie Roll Industries, Inc.
Engaged in the manufacture and sale of candy for over
100 years. Products include Tootsie Roll,
Charms, Blow Pops, Junior Mints, Sugar Babies,
Charleston Chews, Sugar Daddys and others 3,862,500
85,000 Action Performance Companies, Inc. *<F10>
Designer and seller of licensed motorsports
collectible and consumer products in the United
States 2,805,000
20,000 Plantronics, Inc. *<F10>
Provider of headsets to telephone companies and the
business community worldwide 1,302,500
80,000 Day Runner, Inc. *<F10>
Develops, manufactures and markets paper-based
organizers for retail markets. Day Runner
products are carried by approximately 20,000 retail
stores across the U.S. 990,000
20,000 Garan, Inc.
Designs, manufactures and sells apparel for children,
men and women. Products are sold under the trademarks
Garan, Garanimals, Everlast and other names 642,500
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 361,875
11,500 Tractor Supply Company *<F10>
Largest operator of retail farm stores in America,
serving hobby, part-time and full-time farmers and
ranchers, as well as suburban customers, contractors
and tradesmen 314,094
------------
24,509,469
------------
TRANSPORTATION - 3.8%
200,000 Midwest Express Holdings, Inc. *<F10>
Operates single-class, premium service passenger
jet airline that caters to business travelers
and serves selected major business destinations
throughout the U.S. and Toronto from operations
based in Milwaukee, Omaha, and Kansas City 6,800,000
100,000 Eagle USA Airfreight, Inc. *<F10>
Provider of air freight forwarding and other
transportation and logistics services 4,243,750
70,000 C.H. Robinson Worldwide, Inc.
Global provider of multimodal transportation
services and logistics through a network
of 129 offices in N. America, S. America, Europe
and Africa 2,572,500
110,000 Wisconsin Central Transportation Corporation *<F10>
A holding company that operates approximately 2,925
route miles of railway serving Wisconsin, Illinois,
Minnesota, Michigan, Ontario and has equity interests
in railroad companies in Great Britain, New Zealand,
and Australia 2,076,250
10,000 Interpool, Inc.
Lessor of cargo containers used in international trade
and the second largest lessor of intermodal container
chassis in the U.S. 130,000
------------
15,822,500
------------
ENTERTAINMENT & LEISURE - 3.6%
175,000 International Speedway Corp. - Class A
A leading promoter of motorsports activities in the
U.S. The company owns and/or operates 10 major
motorsports facilities 8,312,500
200,000 Championship Auto Racing Teams, Inc. *<F10>
Owns, operates, and markets North America's leading
open-wheel motorsports series, the
FedEx Championship Series 5,987,500
50,000 Carmike Cinemas, Inc. - Class A *<F10>
Engaged in the motion picture exhibition business.
As of 6/30/99, Carmike operated 2,743
screens at 461 locations in 36 states 796,875
------------
15,096,875
------------
BANK & BANK HOLDING - 3.0%
100,000 CNB Bancshares, Inc.
Engages in banking, data processing and
information services, underwriting credit life
and disability insurance, and selling property
and casualty insurance 5,700,000
60,000 First Midwest Bancorp, Inc.
The largest independent banking company in the
suburban Chicago market 2,385,000
60,000 Community First Bankshares, Inc.
A multi-bank holding company that operates banks
and bank branches in 109 communities in nine states 1,432,500
50,000 Doral Financial Corporation
Bank holding company that operates in the mortgage
banking, commercial banking and broker-
dealer businesses 862,500
20,000 Associated Banc-Corporation
Diversified multibank holding company with more than
200 banking offices, 225 ATMs, and headquartered in
Green Bay, Wisconsin 830,000
25,000 Corus Bankshares, Inc.
Bank holding company for CORUS Bank, which provides
financial services through 11 bank branches in the
Chicago metropolitan area 795,313
15,000 Cass Commercial Corporation
Bank holding company for Cass Bank and Trust Company,
and provides information services through its Cass
Information Systems subsidiary 367,500
------------
12,372,813
------------
INSURANCE AND INVESTMENT MANAGEMENT - 2.3%
250,000 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 5,671,875
60,000 Chicago Title Corporation
Provider of title insurance and other related services
for residential and commercial real estate
transactions 2,141,250
66,700 Waddell & Reed Financial, Inc.
Underwrites and distributes a portfolio of mutual
funds as well as variable annuities and life
insurance products 1,830,081
------------
9,643,206
------------
DISTRIBUTOR - 2.1%
200,000 Aviall, Inc. *<F10>
Distributes and markets products new aviation parts
of more than 180 manufacturers and distributes
approximately 90,000 items from customer service
centers in North America, Europe and Asia-Pacific 3,762,500
60,000 CDW Computer Centers, Inc.
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 2,640,000
200,000 MSC Industrial Direct Company, Inc. *<F10>
A direct marketer of a full line of industrial products
intended to satisfy its customers' maintenance,
repair and operations supplies requirements 2,050,000
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 215,000
------------
8,667,500
------------
MACHINERY - INDUSTRIAL - 0.9%
80,000 Regal-Beloit Corporation
Manufactures a line of mechanical products to
control motion and torque and electrical products
such as motors and generators 1,890,000
34,800 The Manitowoc Company, Inc.
Designs and manufactures commercial ice machines and
refrigeration products, and cranes and related products.
Manitowoc also engages in marine vessel repair 1,448,550
25,000 Robbins & Myers, Inc.
Designs, manufactures and markets fluid handling
products and systems for the process industry 557,813
------------
3,896,363
------------
SAVINGS & LOAN - 0.9%
50,000 Home Federal Bancorp
Unitary savings and loan holding company for Home
Federal Savings Bank 1,418,750
75,000 ITLA Capital Corporation *<F10>
Primarily engages in the origination of loans
secured by income producing real estate 1,181,250
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 697,500
20,000 Haven Bancorp, Inc.
Holding company for Columbia Federal Saving Bank,
a federally chartered stock savings bank 320,000
------------
3,617,500
------------
SPECIALTY FINANCE - 0.4%
90,000 American Capital Strategies, Ltd.
Specialty finance company that has been principally
engaged in arranging commercial loans to
small and medium sized business 1,642,500
------------
ELECTRONICS - 0.3%
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 1,372,500
------------
TOTAL COMMON STOCKS (cost $200,536,086) 229,382,685
------------
PRINCIPAL
AMOUNT
- -----------
SHORT-TERM INVESTMENTS - 47.2%
VARIABLE RATE DEMAND NOTES - 11.6%
$10,306,806 Firstar Bank, 4.97% 10,306,806
9,023,100 Warner Lambert, 4.70% 9,023,100
7,434,206 General Mills, 4.83% 7,434,206
7,368,333 Sara Lee, 4.82% 7,368,333
6,818,650 Pitney Bowes, 4.83% 6,818,650
4,936,940 Wisconsin Electric Power Co., 4.70% 4,936,940
1,613,568 American Family Financial Services, Inc., 4.70% 1,613,568
1,016,857 Wisconsin Central Credit Union Corporation, 4.89% 1,016,857
------------
48,518,460
------------
COMMERCIAL PAPER - 33.2%
Associates Corporation
8,000,000 4.84%, 8/12/99 8,000,000
10,000,000 4.92%, 9/01/99 10,000,000
CIT Group Holdings,Inc.
6,000,000 4.85%, 7/16/99 6,000,000
12,000,000 4.96%, 8/31/99 12,000,000
General Motors Acceptance Corporation
9,000,000 4.84%, 7/08/99 9,000,000
9,000,000 4.84%, 7/12/99 9,000,000
Norwest Corporation
10,000,000 4.92%, 7/07/99 10,000,000
8,000,000 4.93%, 9/02/99 8,000,000
Prudential Funding Corporation
15,000,000 4.92%, 8/01/99 15,000,000
3,000,000 4.91%, 9/10/99 3,000,000
American Express Credit
17,000,000 4.80%, 7/06/99 17,000,000
Ford Motor Credit Corporation
15,000,000 4.87%, 7/08/99 15,000,000
GE Capital Corporation
12,000,000 4.99%, 8/23/99 12,000,000
General Electric Capital Corporation
5,000,000 4.88%, 7/26/99 5,000,000
------------
139,000,000
------------
U.S. TREASURY OBLIGATIONS - 2.4%
U.S. Treasury Bill
10,000,000 4.43%, 9/09/99 9,912,500
------------
TOTAL SHORT-TERM INVESTMENTS (cost $197,430,960) 197,430,960
------------
TOTAL INVESTMENTS - 102.1% (cost $397,967,046) 426,813,645
------------
LIABILITIES, LESS OTHER ASSETS - (2.1)% (8,629,157)
------------
TOTAL NET ASSETS - 100.0% $418,184,488
------------
------------
*<F10> non-income producing
The accompanying notes to financial statements are an integral part of this
schedule.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
ASSETS
Common stocks, at market value (cost: $200,536,086) $229,382,685
Variable rate demand notes and commercial paper, at amortized
cost, which approximates market value (cost: $197,430,960) 197,430,960
Cash 13,951
Receivables
Capital shares sold 2,904,831
Dividends 151,677
Interest 998,916
Prepaid expenses and other assets 47,202
------------
Total assets $430,930,222
------------
------------
LIABILITIES AND NET ASSETS
Capital shares redeemed $ 575,512
Payables and accrued expenses
Payable for securities purchased 11,702,559
Accrued expenses and other liabilities 146,031
Due to adviser 321,632
------------
Total liabilities 12,745,734
------------
Net assets
Common stock, $.01 par value; 50,000,000 shares
authorized, 13,158,108 shares issued and outstanding,
and paid-in capital 388,145,907
Accumulated undistributed net investment income 3,739,321
Accumulated undistributed net realized gain (loss)
on investments (2,547,339)
Net unrealized appreciation on investments 28,846,599
------------
Total net assets 418,184,488
------------
Total liabilities and net assets $430,930,222
------------
------------
Net asset value per share $ 31.78
------------
------------
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE>
STATEMENT OF OPERATIONS
For the year ended June 30, 1999
INCOME
Interest $5,968,461
Dividends 1,100,335
Other income 314
----------
7,069,110
----------
EXPENSES
Management fee 2,307,620
Administration fee 139,848
Registration fees 129,617
Transfer and disbursing agent fees 128,355
Custodian fees 61,067
Accounting fee 47,058
Printing and mailing fees 31,669
Legal fees 28,095
Audit fees 14,310
Other operating expenses 6,988
----------
Total expenses 2,894,627
----------
Net investment income 4,174,483
----------
NET REALIZED AND UNREALIZED GAIN (LOSS)ON INVESTMENTS
Net realized loss on investments (2,617,572)
Net change in unrealized appreciation on investments 8,200,699
----------
Net gain on investments 5,583,127
----------
Net increase in net assets resulting from operations $9,757,610
----------
----------
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended June 30, 1999 and June 30, 1998
June 30, June 30,
1999 1998
------------ -----------
OPERATIONS:
Net investment income $ 4,174,483 $ 145,596
Net realized gain (loss) on investments (2,617,572) 8,783,209
Net change in unrealized appreciation 8,200,699 7,971,431
------------ -----------
Net increase in net assets resulting
from operations 9,757,610 16,900,236
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income (208,192) --
Distributions from net capital gains (8,674,266) (2,597,640)
------------ -----------
Total distributions (8,882,458) (2,597,640)
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued (12,897,111 and
1,315,647 shares, respectively) 397,728,851 42,757,189
Increase in shares issued for reinvested
distributions (282,573 and 84,945 shares,
respectively) 8,683,476 2,512,667
Cost of shares redeemed (2,741,427 and
210,578 shares, respectively) (84,060,191) (6,735,975)
------------ -----------
Net increase in net assets derived from
capital share transactions 322,352,136 38,533,881
------------ -----------
Net increase in net assets 323,227,288 52,836,477
------------ -----------
NET ASSETS AT BEGINNING OF YEAR 94,957,200 42,120,723
------------ -----------
NET ASSETS AT END OF YEAR (including accumulated
undistributed net investment income (loss) of
$3,739,321 and ($226,970), respectively) $418,184,488 $94,957,200
------------ -----------
------------ -----------
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
FINANCIAL HIGHLIGHTS
Condensed financial information per share of capital stock outstanding
throughout the period is presented below:
<TABLE>
Year ended June 30,
--------------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $ 34.91 $ 27.53 $ 24.33 $ 20.17 $ 17.34
Income from investment operations:
Net investment income (loss) 0.40 0.16 (0.03) (0.05) (0.24)
Net realized and unrealized gain (loss) on
investments (2.25) 8.71 3.82 5.55 4.21
-------- -------- -------- -------- --------
Total from investment operations (1.85) 8.87 3.79 5.50 3.97
Less distribution:
Dividends from net investment income (0.03) 0.00 0.00 0.00 0.00
Distributions from net capital gains (1.25) (1.49) (0.59) (1.34) (1.14)
-------- -------- -------- -------- --------
Total distributions (1.28) (1.49) (0.59) (1.34) (1.14)
-------- -------- -------- -------- --------
Net asset value at end of year $ 31.78 $ 34.91 $ 27.53 $ 24.33 $ 20.17
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total return (5.2)% 33.2% 15.8% 28.3% 24.1%
Ratios/Supplemental Data:
Net assets at end of year (in thousands) $418,184 $94,957 $42,121 $28,981 $20,868
Ratio of expenses to average net assets 1.2% 1.3% 1.4% 1.5% 1.7%
Ratio of net investment income (loss)
to average net assets 1.8% 0.2% (0.4)% (0.3)% (0.6)%
Portfolio turnover rate 19.8% 49.8% 41.0% 45.6% 37.9%
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(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 18,507 shares or 0.1% of the outstanding common
stock of the Fund at June 30, 1999.
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, 1999, purchases of securities other than
short-term investments were $170,232,655. Sales of such securities for that
period were $22,822,018.
For Federal income tax purposes, the cost of investments at June 30, 1999
was $397,588,673. At June 30, 1999, on a tax basis, gross unrealized
appreciation of investments was $39,651,499 and gross unrealized depreciation of
investments was $10,426,526.
(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, 1998, the Fund distributed net investment income, short-
term and long-term capital gains of approximately $0.03, $0.18 and $1.07 per
share, respectively.
<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, 1999, 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, 1999, by correspondence with the custodian and brokers. As to securities
purchased but not received, we requested confirmation from brokers, and when
replies were not received, we carried out alternative auditing procedures. 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, 1999, 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 18, 1999
<PAGE>
INVESTMENT ADVISER
Fasciano Company, Inc.
ADDRESS OF FUND & ADVISER
190 South LaSalle Street
Suite 2800
Chicago, Illinois 60603
(312) 444-6050
(800) 848-6050
www.fascianofunds.com
[email protected]
TRANSFER AGENT, DIVIDEND DISBURSING
AGENT AND ADMINISTRATOR
Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, Wisconsin 53201
(414) 765-4124
(800) 982-3533
CUSTODIAN
Firstar Bank Milwaukee, N.A.
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
