SEMIANNUAL REPORT
FASCIANO FUND, INC.
(FASCIANO FUND, INC. LOGO)
December 31, 1999
FASCIANO FUND, INC.
February 23, 2000
Dear Fellow Shareholder:
During the last six months of 1999, your investment in Fasciano Fund
appreciated 4.2%, resulting in a gain of 6.2% for the year. Average annual
total returns for Fasciano Fund and selected small-cap indices for periods
ending December 31, 1999 are summarized in the following table.
<TABLE>
Average Annual Total Return
----------------------------------
Six months One year Three year Five year Ten year
---------- -------- ---------- --------- --------
<S> <C> <C> <C> <C> <C>
Fasciano Fund 4.2% 6.2% 11.4% 18.1% 14.0%
Small Company Funds Average*<F1> 24.3% 36.0% 17.2% 19.1% 15.4%
S&P SmallCap 600 Index**<F2> 7.0% 12.4% 11.7% 17.0% 13.0%
Russell 2000 Index**<F2> 11.0% 21.3% 13.1% 16.7% 13.4%
</TABLE>
Over the life of Fasciano Fund and for the last ten years, our performance
has been in line with the Russell 2000 and S&P SmallCap 600 indices,
notwithstanding the relative gains those indices made in 1999.
In reality, most stocks performed poorly during the last year, while a few
stocks did extremely well. When averages are used to gauge the performance of
the stock market, they usually provide a sense of what is going on. Recently,
however, small-cap averages have failed to capture the bear market we are seeing
in traditional small-cap value stocks.
Throughout 1999 and during the last several months in particular, small-cap
indices were driven upward by very few stocks, virtually all of them in
technology-related industries like biotech, software, internet commerce, and
semiconductors. For example, Celera Genomics, MicroStrategy, BroadVision,
Millennium Pharmaceutical and Human Genome Sciences were five hot stocks that
contributed nearly one-third of the gain in the Russell 2000 Index (five stocks
out of 2000). The market values of those companies range from $6 billion to $14
billion and only two of those five businesses earned profits. BroadVision, a
software company with a market cap of $14 billion, reported a profit of $19
million in the latest twelve months and MicroStrategy, another software company
with a market cap of $13 billion, earned $13 million during the same period. In
terms of valuation, BroadVision and MicroStrategy trade at more than 700 and
1,000 times earnings, respectively.
A cornerstone of our investment thesis is that we buy smaller companies that
we believe will earn substantial profits relative to their market values. On
December 31, 1999, our portfolio companies had an average market capitalization
of $1.7 billion and traded at 21 times earnings. We believe our companies will
grow their earnings over the years, which should enhance the value of their
businesses and lead to higher stock prices. Our mindset steers us away from the
riskier hot stocks of the day and favors less glamorous, though solid earners
like Fastenal Company, Pulitzer Inc., Snap-On Inc., and The Manitowoc Company.
Sales and earnings of these companies for the most recent twelve months are
highlighted below.
o Fastenal Co. a unique distributor of industrial supplies, earned $65
million on sales of $609 million. The company's market cap is $1.6
billion. Fastenal's current stock price is $42, down from $60 in July
1999. This year, Fastenal is expected to earn $2.12 per share, up 23%
from the reported 1999 results. We think 20 times earnings for a company
with an outstanding financial record and a growing e-commerce presence is
good value.
*<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 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.
<PAGE>
o Pulitzer Inc., one of our long-time favorite newspaper stocks, earned $40
million on sales of $391 million. Pulitzer's market cap is $908 million.
The stock trades at 21.5 times this year's earnings per share estimate of
$1.87. The company recently sold its TV broadcast business and is using
the proceeds to buy additional newspaper properties, where management
sees greater financial returns. Pulitzer is also investing in new media
opportunities.
o Snap-On Inc., the premier global hand tools and diagnostics equipment
company, earned $152 million on sales of nearly $2.0 billion. Snap-On's
market cap is $1.3 billion. Its stock trades at $23, or a very
conservative 7.5 times this year's earnings per share estimate of $3.07.
The stock is down from $38 in July, 1999. In the fall of 1998, Snap-On
implemented a company wide effort to simplify operations and advance
earnings. Evidence of the success of this program can be seen in the
company's reported results of the last few quarters.
o The Manitowoc Co., maker of lattice-boom cranes and ice cube machines,
earned $67 million on sales of $806 million. The company's market cap is
$702 million. The stock at $27 per share trades at 9.5 times this year's
earnings per share estimate of $2.85. The stock is down from $44 in July
1999. Management is very disciplined about how they use the company's
capital, and the financial returns show it.
The weakness we have seen in the shares of value stocks and growth shares
that meet our risk profile may continue. Right now, higher interest rates are
putting downward pressure on stock values, especially those of businesses
closely tied to the economy. While we believe our companies present excellent
investment value, stock prices in general are moving on momentum and have
disconnected from their underlying fundamentals. This phenomenon is exacerbated
as investors pour money into tech funds and dump shares of value and
conservative growth funds, forcing managers to buy too dearly or sell too
cheaply. The momentum pumping up tech stock prices may continue, but we believe
the proof is in earnings. For many of today's hottest stocks, earnings are a
long way off. Eventually, we believe stock prices will adjust to correctly
reflect true business fundamentals. Presently, we have a cash position of about
$30 million. We are buying businesses we want to own for the long haul and are
paying prices we consider reasonable. Based on the strength of their proven
track records, we believe our portfolio companies will achieve earnings growth
that will ultimately drive their stock prices higher.
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
<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*<F3> 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 $31.19 $0.39 $0.00 $32.72 6.2% 12.4% 21.3% 36.0% 4.4%
</TABLE>
*<F3> 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.
EQUITY PORTFOLIO BY MARKET CAPITALIZATION
AVERAGE MARKET CAPITALIZATION
$1,650 million
MEDIAN MARKET CAPITALIZATION
$769 million
MARKET CAPITALIZATION RANGES
Micro-cap: <$300 million
Small-cap: $300 million - $1.9 billion
Mid-cap: >$1.9 billion
53 small caps 61%
20 micro-caps 8%
15 mid-caps 31%
<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 12/31/99 GROUPING DESCRIPTION SALES*<F4> INCOME*<F4> MANAGEMENT
-------- ------------- -------- ----------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Westwood 3.8% Communications Radio network $415.0 $26.7 16.8%
One, Inc. & Media programming
Emmis 3.6% Communications Radio, television, and $294.8 $(3.0) 16.1%
Communications & Media magazines
Corp.
Pulitzer Inc. 3.0% Communications Newspaper publishing and $391.4 $40.4 60.1%
& Media new media businesses
Gucci Group N.V. 2.9% Consumer Designer, producer, and $1,138.7 $298.9 5.0%
Products & distributor of high-
Services quality, personal
luxury goods
Zebra 2.6% Commercial Provides bar code $398.5 $73.7 18.5%
Technologies Products & solutions to
Corp. Services manufacturing and
service entities
OM Group, Inc. 2.6% Commercial Produces and markets $507.0 $55.8 6.0%
Products & metal-based specialty
Services chemicals and powders
G&K Services, Inc. 2.4% Business Services Manufacturer and supplier $541.2 $37.3 8.8%
of uniforms and related
products in the U.S.
and Canada
Keane, Inc. 2.4% Business Services Information technology $1,041.1 $81.2 17.9%
consulting firm helping
companies plan, build,
and manage application
software
International 2.2% Entertainment & A leading promoter of $298.7 $56.6 48.0%
Speedway Leisure motorsports activities
Corp. in the U.S.
Manitowoc 2.1% Machinery/ Diversified capital goods $805.5 $66.8 4.7%
Company, Industrial manufacturer
Inc.
Total in Top -----
Ten Holdings 27.6%
</TABLE>
*<F4> Trailing 12 months, in $ millions. Net income figures exclude non-
recurring charges and extraordinary items.
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1999 (Unaudited)
Shares or
Principal Market
Amount Description Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 82.9%
COMMUNICATIONS & MEDIA - 19.3%
200,000 Westwood One, Inc.
Provides over 150 news, sports, music, talk,
entertainment programs, features, live events,
and 24-hour formats to more than 7,500 radio
stations $ 15,200,000
114,000 Emmis Communications Corporation *<F5>
A diversified media company with television and
radio broadcasting and publishing operations 14,209,031
292,400 Pulitzer, Inc.
Engaged in newspaper publishing and new
media businesses 11,787,375
250,000 Hearst-Argyle Television, Inc. *<F5>
Owns and/or manages 26 network-affiliated
television stations, and 7 radio stations
throughout the U.S. 6,656,250
150,000 Meredith Corporation
Diversified media company involved in magazine
and book publishing and television broadcasting 6,253,125
130,000 Central Newspapers, Inc.
Media and information company with flagship
newspapers in Phoenix and Indianapolis,
several smaller newspapers, as well as
other related media and information businesses 5,118,750
113,500 McClatchy Company
Newspaper and internet publisher with 11 daily
and 13 non-daily newspapers along with local web
sites in each of its daily newspaper markets.
The company also owns and operates other
media-related businesses 4,908,875
250,000 Journal Register Company *<F5>
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. 3,859,375
50,000 Entercom Communications Corporation *<F5>
Radio Broadcasting group with 56 FM and 32 AM
stations, including 12 in the top 50 markets 3,300,000
100,000 Lee Enterprises, Inc.
In the business of newspaper publishing and
television broadcasting 3,193,750
119,500 Ackerly Group, Inc.
Media and entertainment company consisting of
four segments: outdoor media, television
broadcasting, radio broadcasting and sports and
entertainment (owns the Seattle Supersonics) 2,165,938
------------
76,652,469
------------
CONSUMER PRODUCTS AND SERVICES - 11.7%
100,000 Gucci Group, N.V.
Designer, producer and distributor of
high-quality, personal luxury accessories including
leather goods, shoes, ties, scarves, watches,
jewelry, eyewear, and perfume 11,450,000
243,400 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 8,016,988
<PAGE>
300,000 Snap-on Incorporated
Manufactures and distributes hand tools,
power tools, tool storage products, diagnostic
equipment, shop equipment, and diagnostic
software and other services 7,968,750
250,000 Central Parking Corp.
Operates parking facilities in 40 states, the
District of Columbia, and several international
locations 4,781,250
400,000 Consolidated Products, Inc.
Engaged primarily in the ownership, operation
and franchising of Steak n Shake restaurants.
The company currently operates 332 Steak n
Shake restaurants, including 52 franchised,
and 11 specialty restaurants, primarily Colorado
Steakhouses 4,050,000
150,000 Blyth Industries, Inc. *<F5>
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 3,684,375
50,000 Plantronics, Inc. *<F5>
Provider of headsets to telephone companies and
the business community worldwide 3,578,125
53,000 ShopKo Stores, Inc.
Operates 319 retail stores in 22 states, primarily
in the Midwest, Western Mountain and Pacific
Northwest regions 1,214,993
85,000 Action Performance Companies, Inc. *<F5>
Designer and seller of licensed motorsports
collectible and consumer products in the United States 977,500
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 572,500
11,500 Tractor Supply Company *<F5>
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 184,000
------------
46,478,481
------------
COMMERCIAL PRODUCTS AND SERVICES - 10.3%
180,000 Zebra Technologies Corp. - Class A *<F5>
Provides bar code solutions to manufacturing and
service entities worldwide, for use in automatic
identification and data collection systems 10,530,000
300,000 OM Group, Inc.
Produces and markets metal-based specialty
chemicals and powders for diverse applications
to a variety of industries 10,331,250
<PAGE>
300,000 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 4,818,750
130,000 Spartech Corporation
Producer of engineered thermoplastic materials,
polymeric compounds and molded and profile products 4,192,500
100,000 Mineral Technologies, Inc.
Resource and technology based organization that
develops and produces performance-enhancing
minerals, mineral-based and synthetic mineral
products for the paper, steel, polymer and other
manufacturing industries on a worldwide basis 4,006,250
100,000 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 2,500,000
100,000 ACNielsen Corporation *<F5>
Global leader in delivering market research,
information and analysis to the consumer products
and services industries. Offers services in
over 100 countries 2,462,500
125,000 Communications Systems, Inc.
Engaged in the manufacture and sale of modular
connecting and wiring devices for voice and data
communications 1,625,000
20,000 Andrew Corporation *<F5>
A multinational supplier of communication products
and systems to worldwide commercial, industrial,
governmental and military customers 378,750
3,522 Juno Lighting, Inc.
Specializes in the design, manufacture and
marketing of lighting fixtures for commercial
and residential use 36,541
------------
40,881,541
------------
BUSINESS SERVICES - 10.0%
300,000 G & K Services, Inc. - Class A
Manufactures uniform garments and is a full
service uniform rental provider 9,712,500
300,000 Keane, Inc. *<F5>
Information technology consulting firm helping
companies plan, build, and manage application
software 9,525,000
250,000 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 6,000,000
<PAGE>
225,000 Concord EFS, Inc. *<F5>
Engaged in electronic transaction authorization,
processing, settlement and funds transfer services
in selected markets 5,793,750
500,000 HA-LO Industries, Inc. *<F5>
Provider of branded promotional products and
premiums and has established a continuum of
brand marketing services 3,750,000
100,000 Interim Services, Inc. *<F5>
National provider of a range of customized
staffing solutions to business, professional
and service organizations, and government agencies 2,475,000
120,000 Wallace Computer Services, Inc.
Products and services include commercial
printing, business forms, labels, direct mail,
and office products 1,995,000
20,000 ADVO, Inc. *<F5>
Direct marketing firm engaged in soliciting and
processing printed advertising from retailers,
manufacturers and service companies for targeted
distribution 475,000
------------
39,726,250
------------
HEALTHCARE PRODUCTS & SERVICES - 8.2%
140,000 Patterson Dental Company *<F5>
Distributes dental products in North America to
dentists, dental laboratories, institutions
and other healthcare providers 5,967,500
185,000 Dentsply International, Inc.
Designs, develops, manufactures, and markets
dental consumable and laboratory products, and
dental equipment 4,370,625
150,000 Hooper Holmes, Inc.
Provides medical and paramedical examinations
and related services to life and health insurance
companies 3,862,500
256,000 Omnicare, Inc.
Geriatric pharmaceutical care company, currently
serving approximately 631,200 residents in more
than 8,800 long-term care facilities in 43 states.
Also provides clinical research services for the
pharmaceutical and biotechnology industries 3,072,000
125,000 KV Pharmaceutical Company - Class A *<F5>
Researches, develops, manufactures, and markets
controlled release and tastemasked forms of drug
products and is a leading marketer of technology
distinguished generic pharmaceuticals 2,742,187
220,000 STERIS Corporation *<F5>
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 2,268,750
<PAGE>
153,000 Young Innovations, Inc. *<F5>
Designs, manufactures and markets single-use
supplies, autoclavable instruments and other
products used by dental professionals 2,218,500
100,000 Landauer, Inc.
Offers a service for measuring the dosage of
x-ray, gamma radiation and other penetrating
ionizing radiations 2,187,500
25,000 Express Scripts, Inc. *<F5>
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 1,600,000
200,000 Sterile Recoveries, Inc. *<F5>
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 1,375,000
100,000 Res-Care, Inc. *<F5>
Provides residential, training, educational, and
support services for persons with special needs 1,275,000
100,000 Kendle International, Inc. *<F5>
Contract research organization providing integrated
clinical research services on a contract basis to
the pharmaceutical and biotechnology industries 987,500
50,000 Brookdale Living Communities, Inc. *<F5>
Provides senior and assisted living services to
the elderly through its facilities located in
urban and suburban areas of major metropolitan
markets 618,750
------------
32,545,812
------------
TRANSPORTATION - 4.5%
150,000 Eagle USA Airfreight, Inc. *<F5>
Provider of air freight forwarding and other
transportation and logistics services 6,468,750
200,000 Midwest Express Holdings, Inc. *<F5>
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 6,375,000
70,000 C.H. Robinson Worldwide, Inc.
Global provider of multimodal transportation
services and logistics through a network of 131
offices in N. America, S. America and Europe 2,782,500
110,000 Wisconsin Central Transportation Corporation *<F5>
A holding company that operates approximately
2,900 route miles of railway serving Wisconsin,
Illinois, Minnesota, Michigan, Ontario and has
equity interests in railroad companies in Great
Britain, New Zealand, and Australia 1,478,125
<PAGE>
30,000 Atlas Air, Inc. *<F5>
Air carrier that operates a fleet of 747
freighters under long-term contracts. Atlas
operates scheduled flights on behalf of its
customer airlines to 101 cities in 46 countries 823,070
------------
17,927,445
------------
ENTERTAINMENT & LEISURE - 4.5%
175,000 International Speedway Corp. - Class A
A leading promoter of motorsports activities in
the U.S. The company owns and/or operates 11
major motorsports facilities 8,815,625
300,000 Championship Auto Racing Teams, Inc. *<F5>
Owns, operates, and markets North America's
leading open-wheel motorsports series, the
FedEx Championship Series 6,900,000
50,000 SFX Entertainment, Inc. *<F5>
The world's largest diversified promoter,
producer and venue operator for live
entertainment events 1,809,375
50,000 Carmike Cinemas, Inc. - Class A *<F5>
Engaged in the motion picture exhibition business.
As of 12/31/99, Carmike operated 2,848 screens at
458 locations in 36 states 390,625
------------
17,915,625
------------
DISTRIBUTOR - 4.4%
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 4,717,500
100,000 Fastenal Company
Sells and distributes industrial supplies, grouped
into eight product lines, in North America 4,493,750
250,000 Wilmar Industries, Inc. *<F5>
A national marketer and direct distributor of
repair and maintenance products, principally
to the apartment housing market 4,343,750
200,000 MSC Industrial Direct Company, Inc. *<F5>
A direct marketer of a full line of industrial
products intended to satisfy its customers'
maintenance, repair and operations supplies
requirements 2,650,000
200,000 Aviall, Inc. *<F5>
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 1,637,500
------------
17,842,500
------------
<PAGE>
MACHINERY - INDUSTRIAL - 3.9%
250,000 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 8,500,000
100,000 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 3,037,500
80,000 Regal-Beloit Corporation
Manufactures a line of mechanical products to
control motion and torque and electrical products
such as motors and generators 1,650,000
60,000 Kaydon Corporation
Designer and manufacturer of custom-engineered
products, supplying a diverse group of industrial,
aerospace, medical and electronic equipment, and
aftermarket customers 1,608,750
26,800 Robbins & Myers, Inc.
Designs, manufactures and markets fluid handling
products and systems for the process industry 606,350
------------
15,402,600
------------
INSURANCE AND INVESTMENT MANAGEMENT - 2.5%
150,000 Waddell & Reed Financial, Inc.
Underwrites and distributes a portfolio of mutual
funds as well as variable annuities and life
insurance products 4,069,240
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 3,296,875
60,000 Chicago Title Corporation
Provider of title insurance and other related
services for residential and commercial real
estate transactions 2,775,000
------------
10,141,115
------------
BANK & BANK HOLDING - 1.9%
126,250 First Midwest Bancorp, Inc.
The largest independent banking company in the
suburban Chicago market 3,345,625
50,000 Associated Banc-Corporation
Diversified multibank holding company with more
than 200 banking offices, 225 ATMs, and
headquartered in Green Bay, Wisconsin 1,712,500
60,000 Community First Bankshares, Inc.
A multi-bank holding company that operates banks
and bank branches in 157 communities in 12 states 945,000
<PAGE>
50,000 Doral Financial Corporation
Bank holding company that operates in the
mortgage banking, commercial banking and
broker-dealer businesses 615,625
25,000 Corus Bankshares, Inc.
Bank holding company for CORUS Bank, which provides
financial services through 11 bank branches in the
Chicago metropolitan area 600,000
15,000 Cass Commercial Corporation
Bank holding company for Cass Bank and Trust Company,
and provides information services through its Cass
Information Systems subsidiary 303,750
------------
7,522,500
------------
SAVINGS & LOAN - 0.7%
50,000 Home Federal Bancorp
Unitary savings and loan holding company for
Home Federal Savings Bank 1,125,000
75,000 ITLA Capital Corporation *<F5>
Primarily engages in the origination of loans
secured by income producing real estate 942,188
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 555,000
20,000 Haven Bancorp, Inc.
Holding company for Columbia Federal Saving Bank,
a federally chartered stock savings bank 308,750
------------
2,930,938
------------
SPECIALTY FINANCE - 0.5%
90,000 American Capital Strategies, Ltd.
Specialty finance company that has been principally
engaged in arranging commercial loans to small and
medium sized business 2,047,500
------------
ELECTRONICS - 0.5%
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 1,927,500
------------
TOTAL COMMON STOCKS (cost $289,247,988) 329,942,276
------------
<PAGE>
SHORT-TERM INVESTMENTS - 17.4%
VARIABLE RATE DEMAND NOTES - 1.1%
$4,399,865 Firstar Bank, 6.24% 4,399,865
------------
COMMERCIAL PAPER - 16.3%
American Express Credit
18,000,000 5.80%, 1/10/00 18,000,000
Ford Motor Credit Corporation
16,000,000 5.93%, 1/11/00 16,000,000
Prudential Funding Corporation
15,000,000 5.85%, 1/18/00 15,000,000
GE Capital Corporation
10,000,000 5.88%, 1/14/00 10,000,000
Associates Corporation
5,900,000 5.95%, 1/18/00 5,900,000
------------
64,900,000
------------
TOTAL SHORT-TERM INVESTMENTS (cost $69,299,865) 69,299,865
------------
TOTAL INVESTMENTS - 100.3% (cost $358,547,853) 399,242,141
------------
LIABILITIES, LESS OTHER ASSETS - (0.3)% (1,368,052)
------------
TOTAL NET ASSETS - 100.0% $397,874,089
------------
------------
*<F5> non-income producing
The accompanying notes to financial statements are an integral part of this
schedule.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999 (Unaudited)
ASSETS
Common stocks, at market value (cost: $289,247,988) $329,942,276
Variable rate demand notes and commercial paper, at amortized
cost, which approximates market value (cost: $69,299,865) 69,299,865
Receivables
Investments sold 702,536
Capital shares sold 833,992
Dividends 209,915
Interest 1,102,058
Prepaid expenses and other assets 72,626
------------
Total assets $402,163,268
------------
------------
LIABILITIES AND NET ASSETS
Capital shares redeemed $ 684,836
Payables and accrued expenses
Payable for securities purchased 3,193,034
Accrued expenses and other liabilities 79,887
Due to adviser 331,422
------------
Total liabilities 4,289,179
------------
Net assets
Common stock, $.01 par value; 50,000,000 shares
authorized, 12,161,162 shares issued and outstanding,
and paid-in capital 357,317,967
Accumulated undistributed net investment income 2,290,399
Accumulated undistributed net realized gain
(loss) on investments (2,428,565)
Net unrealized appreciation on investments 40,694,288
------------
Total net assets 397,874,089
------------
Total liabilities and net assets $402,163,268
------------
------------
Net asset value per share $ 32.72
------------
------------
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE>
STATEMENT OF OPERATIONS
For the six months ended December 31, 1999 (Unaudited)
INCOME
Interest $ 4,507,047
Dividends 950,905
-----------
5,457,952
-----------
EXPENSES
Management fee 2,042,502
Transfer and disbursing agent fees 120,750
Administration fee 112,208
Registration fees 88,950
Custodian fees 50,575
Printing and mailing fees 36,800
Accounting fee 32,200
Legal fees 11,960
Audit fees 7,084
Other operating expenses 5,629
-----------
Total expenses 2,508,658
-----------
Net investment income 2,949,294
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)ON INVESTMENTS
Net realized gain on investments 189,008
Net change in unrealized appreciation on investments 11,847,689
-----------
Net gain on investments 12,036,697
-----------
Net increase in net assets resulting
from operations $14,985,991
-----------
-----------
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended December 31, 1999 (Unaudited) and the year ended June
30, 1999
December 31, June 30,
1999 1999
------------ ------------
OPERATIONS:
Net investment income $ 2,949,294 $ 4,174,483
Net realized gain (loss) on investments 189,008 (2,617,572)
Net change in unrealized appreciation 11,847,689 8,200,699
------------ ------------
Net increase in net assets resulting
from operations 14,985,991 9,757,610
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income (4,695,205) (208,192)
Distributions from net capital gains -- (8,674,266)
------------ ------------
Total distributions (4,695,205) (8,882,458)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued (3,716,303 and
12,897,111 shares, respectively) 115,620,637 397,728,851
Increase in shares issued for reinvested
distributions (104,232 and 282,573 shares,
respectively) 4,558,950 8,683,476
Cost of shares redeemed (4,853,481 and
2,741,427 shares, respectively) (150,780,772) (84,060,191)
------------ ------------
Net increase (decrease) in net
assets derived from capital
share transactions (30,601,185) 322,352,136
------------ ------------
Net increase (decrease) increase
in net assets (20,310,399) 323,227,288
------------ ------------
NET ASSETS AT BEGINNING OF PERIOD 418,184,488 94,957,200
------------ ------------
NET ASSETS AT END OF PERIOD (including accumulated
undistributed net investment income of $2,290,399
and ($3,739,321), respectively) $397,874,089 $418,184,488
------------ ------------
------------ ------------
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>
(Unaudited)
Six Months
ended Year ended June 30,
December 31, -------------------------------------------------------------------
1999 1999 1998 1997 1996 1995
------------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 31.78 $ 34.91 $ 27.53 $ 24.33 $ 20.17 $ 17.34
Income from investment operations:
Net investment income (loss) 0.27 0.40 0.16 (0.03) (0.05) (0.24)
Net realized and unrealized gain
(loss) on investments 1.06 (2.25) 8.71 3.82 5.55 4.21
-------- -------- -------- -------- -------- --------
Total from investment operations 1.33 (1.85) 8.87 3.79 5.50 3.97
Less distribution:
Dividends from net investment income (0.39) (0.03) -- -- -- --
Distributions from net capital gains -- (1.25) (1.49) (0.59) (1.34) (1.14)
-------- -------- -------- -------- -------- --------
Total distributions (0.39) (1.28) (1.49) (0.59) (1.34) (1.14)
-------- -------- -------- -------- -------- --------
Net asset value at end of period $ 32.72 $ 31.78 $ 34.91 $ 27.53 $ 24.33 $ 20.17
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Total return 4.2% (5.2)% 33.2% 15.8% 28.3% 24.1%
Ratios/Supplemental Data:
Net assets at end of year
(in thousands) $397,874 $418,184 $94,957 $42,121 $28,981 $20,868
Ratio of expenses to average
net assets 1.2% 1.2% 1.3% 1.4% 1.5% 1.7%
Ratio of net investment income (loss)
to average net assets 1.4% 1.8% 0.2% (0.4)% (0.3)% (0.6)%
Portfolio turnover rate 5.9% 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
December 31, 1999 (Unaudited)
(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 19,122 shares or 0.2% of the outstanding common
stock of the Fund at December 31, 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.
<PAGE>
(3) INVESTMENTS:
During the six months ended December 31, 1999, purchases of securities
other than short-term investments were $103,125,877. Sales of such securities
for that period were $14,602,983.
For Federal income tax purposes, the cost of investments at December 31,
1999 was $358,926,226. At December 31, 1999, on a tax basis, gross unrealized
appreciation of investments was $68,820,457 and gross unrealized depreciation of
investments was $28,504,542.
(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, 1999, the Fund distributed net investment income of $0.39
per share.
<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
