ANNUAL REPORT
FASCIANO FUND, INC.
(FASCIANO FUND, INC. LOGO)
June 30, 2000
FASCIANO FUND, INC.
August 18, 2000
Dear Fellow Shareholders:
Our total return for the year ended June 30, 2000 was 3.7%. Average annual
total returns for Fasciano Fund and selected benchmarks for various periods
ended June 30, 2000 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 (0.5)% 3.7% 9.4% 14.2% 13.0%
Small Company Funds Average*<F8> 7.4% 32.5% 16.2% 17.7% 15.5%
S&P SmallCap 600 Index**<F9> 6.9% 14.4% 10.1% 15.4% 14.0%
S&P SmallCap 600/BARRA Value**<F9> 4.8% (0.5)% 6.1% 14.5% n/a
Russell 2000 Index**<F9> 3.0% 14.3% 10.5% 14.3% 13.6%
Russell 2000 Value Index**<F9> 5.9% (0.9)% 3.8% 11.7% 13.2%
</TABLE>
Our investment style of buying growth stocks at reasonable prices remains
unchanged, even though we may have to endure times when other styles are more
popular. In the long run, we believe that consistently investing in stocks that
blend the characteristics of growth and value will provide steady, good returns.
By staying true to our small-cap blend style, we shunned sensational stocks with
great stories but no earnings. We red-flagged several of them in our last
shareholder report. They were soaring then, but investors have since done a
reality check, and those stocks, along with many other high-flyers, took a
nosedive. Nevertheless, the effects of the technology bubble are still glaring
in the six-month and one year comparisons, and heavy exposure to hyper-growth
technology companies by small-company funds scored big gains for the category.
In contrast, indices used to gauge value-oriented management styles registered
losses for the twelve months ended June 30, 2000. We remain consistent in our
blend style by staying with steady earners like Fastenal Co., a service-driven
distributor of industrial supplies, and Snap-on Inc., a world-class maker of
hand and power tools. As value comes back into favor, these less flashy
companies are beginning to recapture the attention of investors. Over time,
consistency and patience have been rewarded. Since its inception nearly
thirteen years ago, Fasciano Fund accomplished an average annual return of
13.6%+<F10>. At that rate of return, money doubles every six years.
As a fund manager, we are consistent and patient, but not complacent. We are
focused on holding the best companies we can find that meet our desired
investment profile. The bar remains high for each of our portfolio companies.
Accomplished operating performance must measure up to our expectations. From
December 31, 1999 to June 30, 2000, we reduced our holdings from 87 companies to
66 companies, including several companies that were bought out, and we added to
several core positions.
*<F8> Source: Morningstar, Inc. See Performance Distribution Summary.
**<F9> 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 S&P SmallCap 600/BARRA Value Index measures the
performance of the companies within the S&P SmallCap 600 Index that
have higher book-to-price ratios. 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. The Russell 2000 Value Index
measures the performance of the companies in the Russell 2000 Index
with lower price-to-book ratios.
+<F10> 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.
Companies reporting earnings that fall short of our projections are sold out
of the portfolio. The bottom line at Carmike Cinemas was under pressure because
the company was expanding its theater chain too rapidly. We sold before the
company's problems worsened. Wallace Computer Services was a solid earner, but
when the company lowered its growth targets for its forms business, we sold the
stock. Companies that make acquisitions to fix internal problems usually end up
making matters worse. HA-LO Industries fell into that category. We were
concerned that the company's profit margins had deteriorated in its promotional
product line, and then management endeavored to prop up its business by
acquiring a dot-com company for a hefty price. We viewed that move as too risky
and sold our shares in HA-LO.
On the upside, some of our portfolio companies were acquired and others hit
our price targets. Central Newspapers was bought by Gannett Co. at nearly a
100% premium. The Arizona Republic and The Indianapolis Star had franchises
that were rock solid and highly profitable. Yet, the stock price of Central
Newspapers seemed disconnected from those economic realities. Investors coveted
faster growth companies and viewed the internet as a looming threat to the
newspaper business. When the company said it was considering a sale as a way to
maximize shareholder value, economic reality overcame perception, and the stock
rose to reflect the company's true value. We think similar economic values are
embedded in our other newspaper investments, particularly Pulitzer Inc. and The
McClatchy Company. At some point, we think those companies may want to sell
too. In the meantime, as their earnings and cash flows are rising, we have no
problem being patient and watching the economic value of those companies build.
Elsewhere in the portfolio, we sold stocks that we viewed as fully valued. The
price of Gucci shares ran up on acquisition rumors and we took the gain.
Several of our stocks were down for no good reason, and in those cases, we
bought more shares. The stock price of Emmis Communications is down forty
percent this year. The company's television operations are out of favor with
Wall Street and overshadow the company's hot radio properties. In addition, the
shares are thinly traded and get punished whenever there is even light selling.
However, the company's strong fundamentals, attractive prospects for further
consolidation, and its compelling valuation continue to impress us. The CEO of
Emmis, being the company's largest shareholder, is highly motivated to unlock
the value we see hidden in this stock. When the shares pulled back, we added to
our Emmis position.
We have tightened up our portfolio, and are now fully invested. 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
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*<F1> 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%
2000**<F2> $32.72 $0.00 $0.00 $32.55 (0.5)% 6.9% 3.0% 7.4% 2.6%
</TABLE>
*<F1> 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.
**<F2> Returns shown are for the six month period ended June 30, 2000.
FASCIANO FUND VS S&P SMALL CAP 600 AND RUSSELL 2000
DATE FASCIANO FUND S&P SMALLCAP 600**<F4> RUSSELL 2000***<F5>
8/1/87 $10,000 $10,000 $10,000
6/30/88 $11,308 $8,829 $9,098
6/30/89 $13,580 $9,681 $10,256
6/30/90 $15,334 $9,617 $10,569
6/30/91 $17,606 $9,434 $10,699
6/30/92 $18,753 $11,048 $12,255
6/30/93 $20,957 $14,195 $15,436
6/30/94 $21,652 $14,461 $16,115
6/30/95 $26,872 $17,405 $19,349
6/30/96 $34,476 $21,932 $23,972
6/30/97 $39,905 $26,689 $27,887
6/30/98 $53,152 $31,882 $32,488
6/30/99 $50,402 $31,145 $32,975
6/30/00 $52,242 $33,294 $33,964
FASCIANO FUND
AVERAGE ANNUAL TOTAL RETURNS
1 Year 5 Years 10 Years Life*<F3>
3.7% 14.2% 13.0% 13.6%
*<F3> From inception on August 1, 1987. See footnote for shareholder
letter.
**<F4> The S&P SmallCap 600 index is a capitalization weighted index that
measures the performance of selected U.S. stocks with small market
capitalizations.
***<F5> 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 6/30/00 GROUPING DESCRIPTION SALES*<F6> INCOME*<F6> MANAGEMENT
-------- ------------- -------- ----------- ---------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Emmis 3.9% Communications Radio, television, and $353.4 $8.2 28%
Communications & Media magazines
Corp.
Westwood 3.8% Communications Radio network $492.0 $34.3 17%
One, Inc. & Media programming
OM Group, Inc. 3.3% Commercial Produces and markets $690.9 $62.4 6%
Products & metal-based specialty
Services chemicals
Penton Media, Inc. 3.3% Communications Magazines, trade shows, $360.0 $27.5 15%
& Media marketing services
Tootsie Roll 3.3% Consumer Manufactures and $402.7 $73.0 50%
Industries, Inc. Products & sells candy
Services
Pulitzer Inc. 3.2% Communications Newspaper publishing and $416.5 $42.6 61%
& Media new media businesses
Snap-On, Inc. 3.0% Consumer Tool and equipment $2,127.4 $159.3 4%
Products & solutions for the
Services automotive service
industry
Zebra 3.0% Commercial Provides bar code $438.3 $78.3 17%
Technologies Products & solutions to
Corp. Services manufacturing and
services entities
Championship 2.9% Entertainment Owns, operates, and $67.7 $17.9 28%
Auto Racing & Leisure markets the FedEx
Teams, Inc. Championship Series
G&K Services, Inc. 2.8% Business Services Manufacturer and supplier $577.4 $37.8 9%
of uniforms and related
products
Total in Top -----
Ten Holdings 32.5%
</TABLE>
*<F6> Trailing 12 months, in $ millions. Net income figures exclude non-
recurring charges and extraordinary items.
SCHEDULE OF PORTFOLIO INVESTMENTS
June 30, 2000
Market
Shares Description Value
------ ----------- ------
COMMON STOCKS - 97.8%
COMMUNICATIONS & MEDIA - 22.4%
250,000 Emmis Communications Corporation *<F7>
A diversified media company with television and
radio broadcasting and publishing operations $ 10,343,750
300,000 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 10,237,500
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 8,750,000
200,000 Pulitzer, Inc.
Engaged in newspaper publishing and
new media businesses 8,437,500
150,000 Meredith Corporation
Diversified media company involved in magazine
and book publishing and television broadcasting 5,062,500
250,000 Journal Register Company *<F7>
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 4,562,500
100,000 McClatchy Newspapers - Class A
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 3,312,500
150,000 Hearst-Argyle Television, Inc. *<F7>
Owns and/or manages 26 network-affiliated television
stations, and several radio stations throughout the
U.S. 2,925,000
50,000 Entercom Communications Corporation *<F7>
Radio Broadcasting group owning and/or operating
95 stations in 18 markets 2,437,500
100,000 Lee Enterprises, Inc.
In the business of newspaper publishing and
television broadcasting 2,331,250
120,000 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) 1,410,000
------------
59,810,000
------------
CONSUMER PRODUCTS AND SERVICES - 13.8%
250,000 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 8,750,000
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 7,987,500
50,000 Plantronics, Inc. *<F7>
Provider of headsets to telephone companies and
the business community worldwide 5,775,000
200,000 Central Parking Corporation
Operates parking facilities in 40 states, the
District of Columbia, and several international
locations 4,735,852
150,000 Blyth Industries, Inc. *<F7>
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 4,425,000
400,000 Consolidated Products, Inc.
Engaged primarily in the ownership, operation and
franchising of Steak n Shake restaurants. The company
currently operates 345 Steak n Shake restaurants,
including 52 franchised, and 11 specialty
restaurants, primarily Colorado Steakhouses 3,600,000
100,000 ShopKo Stores, Inc.
Operates 327 retail stores in 22 states,
primarily in the Midwest, Western Mountain and
Pacific Northwest regions 1,537,500
------------
36,810,852
------------
COMMERCIAL PRODUCTS AND SERVICES - 12.4%
200,000 OM Group, Inc.
Produces and markets metal-based specialty
chemicals and powders for diverse applications
to a variety of industries 8,800,000
180,000 Zebra Technologies Corp. - Class A *<F7>
Provides bar code solutions to manufacturing and
service entities worldwide, for use in automatic
identification and data collection systems 7,976,250
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 4,600,000
130,000 Spartech Corporation
Producer of engineered thermoplastic materials,
polymeric compounds and molded and profile products 3,510,000
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 2,700,000
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 2,317,500
125,000 Communications Systems, Inc.
Engaged in the manufacture and sale of modular
connecting and wiring devices for voice and
data communications 1,906,250
40,000 Andrew Corporation *<F7>
A multinational supplier of communication products
and systems to worldwide commercial, industrial,
governmental and military customers 1,342,500
------------
33,152,500
------------
HEALTH CARE PRODUCTS & SERVICES - 10.6%
140,000 Patterson Dental Company *<F7>
Distributes dental products in North America to
dentists, dental laboratories, institutions and
other healthcare providers 7,140,000
185,000 Dentsply International, Inc.
Designs, develops, manufactures, and markets dental
consumable and laboratory products, and
dental equipment 5,700,312
125,000 KV Pharmaceutical Company - Class A *<F7>
Researches, develops, manufactures, and markets
controlled release and tastemasked forms of
drug products and is a leading marketer of
technology distinguished generic pharmaceuticals 3,312,500
150,000 Young Innovations, Inc. *<F7>
Designs, manufactures and markets single-use
supplies, autoclavable instruments and other
products used by dental professionals 2,681,250
300,000 Hooper Holmes, Inc.
Provides medical and paramedical examinations and
related services to life and health insurance
companies 2,400,000
200,000 STERIS Corporation *<F7>
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 1,775,000
100,000 Landauer, Inc.
Offers a service for measuring the dosage of
x-ray, gamma radiation and other penetrating
ionizing radiations 1,556,250
25,000 Express Scripts, Inc. *<F7>
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 1,553,125
200,000 Sterile Recoveries, Inc. *<F7>
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 1,550,000
50,000 Brookdale Living Communities, Inc. *<F7>
Provides senior and assisted living services to
the elderly through its facilities located in
urban and suburban areas of major metropolitan
markets 725,000
------------
28,393,437
------------
BUSINESS SERVICES - 9.2%
300,000 G & K Services, Inc. - Class A
Manufactures uniform garments and is a full service
uniform rental provider 7,518,750
250,000 Concord EFS, Inc. *<F7>
Engaged in electronic transaction authorization,
processing, settlement and funds transfer services
in selected markets 6,500,000
300,000 Keane, Inc. *<F7>
Information technology consulting firm helping
companies plan, build, and manage application
software 6,487,500
100,000 ACNielsen Corporation *<F7>
Global leader in delivering market research,
information and analysis to clients in the
manufacturing, retailing, service, media,
entertainment and internet industries. Offers
services in over 100 countries 2,200,000
100,000 Interim Services, Inc. *<F7>
National provider of a range of customized
staffing solutions to business, professional and
service organizations, and government agencies 1,775,000
------------
24,481,250
------------
FINANCIAL SERVICES - 7.9%
225,000 Waddell & Reed Financial, Inc.
Underwrites and distributes a portfolio of mutual
funds as well as variable annuities and
life insurance products 7,382,813
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 4,718,750
126,250 First Midwest Bancorp, Inc.
The largest independent banking company in the
suburban Chicago market 2,935,313
90,000 American Capital Strategies, Ltd.
Specialty finance company that has been principally
engaged in arranging commercial loans to
small and medium sized business 2,148,750
75,000 ITLA Capital Corporation *<F7>
Primarily engages in the origination of loans
secured by income producing real estate 1,087,500
50,000 Home Federal Bancorp
Unitary savings and loan holding company for
Home Federal Savings Bank 825,000
25,000 Corus Bankshares, Inc.
Bank holding company for CORUS Bank, which provides
financial services through 11 bank branches in the
Chicago metropolitan area 660,937
50,000 Doral Financial Corporation
Bank holding company that operates in the mortgage
banking, commercial banking and broker-
dealer businesses 571,875
27,500 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 452,031
15,000 Cass Commercial Corporation
Bank holding company for Cass Bank and Trust
Company, and provides information services
through its Cass Information Systems subsidiary 311,250
------------
21,094,219
------------
DISTRIBUTOR - 5.8%
90,000 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 5,625,000
100,000 Fastenal Company
Sells and distributes industrial supplies, grouped
into eight product lines, in North America 5,062,500
200,000 MSC Industrial Direct Company, Inc. *<F7>
A direct marketer of a full line of industrial
products intended to satisfy its customers'
maintenance, repair and operations supplies
requirements 4,187,500
100,000 Aviall, Inc. *<F7>
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 493,750
------------
15,368,750
------------
ENTERTAINMENT & LEISURE - 5.6%
300,000 Championship Auto Racing Teams, Inc. *<F7>
Owns, operates, and markets North America's
leading open-wheel motorsports series, the
FedEx Championship Series 7,650,000
175,000 International Speedway Corporation - Class A
A leading promoter of motorsports activities in
the U.S. The company owns and/or operates
11 major motorsports facilities 7,240,625
------------
14,890,625
------------
MACHINERY - INDUSTRIAL - 5.1%
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 6,687,500
100,000 IDEX Corporation
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 3,156,250
80,000 Regal-Beloit Corporation
Manufactures a line of mechanical products to
control motion and torque and electrical products
such as motors and generators 1,285,000
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 1,260,000
50,000 Robbins & Myers, Inc.
Designs, manufactures and markets fluid handling
products and systems for the process industry 1,140,625
------------
13,529,375
------------
TRANSPORTATION - 5.0%
150,000 EGL, Inc. *<F7>
Provider of air freight forwarding and other
transportation and logistics services 4,612,500
200,000 Midwest Express Holdings, Inc. *<F7>
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 4,300,000
70,000 C.H. Robinson Worldwide, Inc.
Global provider of multimodal transportation
services and logistics through a network
of 132 offices in N. America, S. America and Europe 3,465,000
30,000 Atlas Air, Inc. *<F7>
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 1,076,250
------------
13,453,750
------------
TOTAL COMMON STOCKS (Cost $222,018,890) 260,984,758
------------
TOTAL INVESTMENTS (Cost $222,018,890) - 97.8% 260,984,758
------------
OTHER ASSETS, LESS LIABILITIES - 2.2% 5,916,881
------------
TOTAL NET ASSETS - 100.0% $266,901,639
------------
------------
*<F7> non-income producing
The accompanying notes to financial statements are an integral part of this
schedule.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
ASSETS
Common stocks, at market value (cost: $222,018,890) $260,984,758
Receivables
Investments sold 10,554,175
Capital shares sold 92,493
Dividends 206,940
Interest 5,603
Prepaid expenses and other assets 25,352
------------
Total assets $271,869,321
------------
------------
LIABILITIES AND NET ASSETS
Capital shares redeemed $ 473,948
Payables and accrued expenses
Payable for securities purchased 3,428,787
Accrued expenses and other liabilities 130,268
Due to adviser 227,285
Payable to bank 707,394
------------
Total liabilities 4,967,682
------------
Net assets
Common stock, $.01 par value; 50,000,000 shares
authorized, 8,199,185 shares issued and outstanding,
and paid-in capital 235,503,565
Accumulated undistributed net investment income 2,096,968
Accumulated undistributed net realized gain (loss)
on investments (9,664,762)
Net unrealized appreciation on investments 38,965,868
------------
Total net assets 266,901,639
------------
Total liabilities and net assets $271,869,321
------------
------------
Net asset value per share $ 32.55
------------
------------
The accompanying notes to financial statements are an integral part of this
statement.
STATEMENT OF OPERATIONS
For the year ended June 30, 2000
INCOME
Interest $ 4,991,529
Dividends 2,220,275
-----------
7,211,804
-----------
EXPENSES
Management fee 3,597,288
Transfer and disbursing agent fees 251,200
Administration fee 206,814
Registration fees 129,920
Custodian fees 86,985
Printing and mailing fees 64,880
Accounting fee 64,125
Legal fees 26,630
Audit fees 14,098
Other operating expenses 14,001
-----------
Total expenses 4,455,941
-----------
Net investment income 2,755,863
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)ON INVESTMENTS
Net realized loss on investments (7,047,190)
Net change in unrealized appreciation on investments 10,119,269
-----------
Net gain on investments 3,072,079
-----------
Net increase in net assets
resulting from operations $ 5,827,942
-----------
-----------
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, 2000 and June 30, 1999
June 30, June 30,
2000 1999
---------- ----------
OPERATIONS:
Net investment income $ 2,755,863 $ 4,174,483
Net realized gain (loss) on investments (7,047,190) (2,617,572)
Net change in unrealized
appreciation on investments 10,119,269 8,200,699
------------ ------------
Net increase in net assets resulting
from operations 5,827,942 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 (6,386,940 and
12,897,111 shares, respectively) 198,662,421 397,728,851
Increase in shares issued for reinvested
distributions (140,234 and 282,573 shares,
respectively) 4,558,950 8,683,476
Cost of shares redeemed (11,486,097 and
2,741,427 shares, respectively) (355,636,957) (84,060,191)
------------ ------------
Net increase (decrease) in net
assets derived from capital
share transactions (152,415,586) 322,352,136
------------ ------------
Net increase (decrease) in
net assets (151,282,849) 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 $2,096,968 and $3,739,321,
respectively) $266,901,639 $418,184,488
------------ ------------
------------ ------------
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,
---------------------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $ 31.78 $ 34.91 $ 27.53 $ 24.33 $ 20.17
Income from investment operations:
Net investment income (loss) 0.34 0.40 0.16 (0.03) (0.05)
Net realized and unrealized gain (loss) on
investments 0.82 (2.25) 8.71 3.82 5.55
-------- -------- ------- ------- -------
Total from investment operations 1.16 (1.85) 8.87 3.79 5.50
Less distribution:
Dividends from net investment income (0.39) (0.03) 0.00 0.00 0.00
Distributions from net capital gains 0.00 (1.25) (1.49) (0.59) (1.34)
-------- -------- ------- ------- -------
Total distributions (0.39) (1.28) (1.49) (0.59) (1.34)
-------- -------- ------- ------- -------
Net asset value at end of year $ 32.55 $ 31.78 $ 34.91 $ 27.53 $ 24.33
-------- -------- ------- ------- -------
-------- -------- ------- ------- -------
Total return 3.7% (5.2)% 33.2% 15.8% 28.3%
Ratios/Supplemental Data:
Net assets at end of year (in thousands) $266,902 $418,184 $94,957 $42,121 $28,981
Ratio of expenses to average net assets 1.2% 1.2% 1.3% 1.4% 1.5%
Ratio of net investment income (loss)
to average net assets 0.8% 1.8% 0.2% (0.4)% (0.3)%
Portfolio turnover rate 29.4% 19.8% 49.8% 41.0% 45.6%
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(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 accounting principles generally accepted
in the United States.
(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 accounting
principles generally accepted in the United States 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.
(e) The amount of dividends and distributions from net investment income
and net realized capital gains are determined in accordance with federal income
tax regulations, which may differ from accounting principles generally accepted
in the United States. To the extent that these book and tax differences are
permanent in nature, such amounts are reclassified among fund shares issued and
outstanding, accumulated undistributed net realized gains on investments and
accumulated undistributed net investment income. Accordingly, at June 30, 2000,
reclassifications were recorded to increase accumulated undistributed net
investment income by $282,496, decrease accumulated net realized gains on
investments by $55,741, and decrease fund shares issued and outstanding by
$226,755.
(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 20,658 shares or 0.2% of the outstanding common
stock of the Fund at June 30, 2000.
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, 2000, purchases of securities other than
short-term investments were $106,565,164. Sales of such securities for that
period were $78,078,049.
For Federal income tax purposes, the cost of investments at June 30, 2000
was $222,397,262. At June 30, 2000, on a tax basis, gross unrealized
appreciation of investments was $59,911,150 and gross unrealized depreciation of
investments was $21,323,654.
(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.
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, 2000, 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 auditing standards generally
accepted in the United States. 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, 2000, 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, 2000, 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 accounting principles generally accepted
in the United States.
ARTHUR ANDERSEN LLP
Chicago, Illinois
July 31, 2000
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) 848-6050
CUSTODIAN
Firstar Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
(414) 765-4124
(800) 848-6050
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
