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ASM FUND, INC.
Tampa, Florida
Audited Financial Statements
October 31, 1995 and for the
Years Ended October 31, 1995 and 1994
(Together with Independent Auditor's Report)
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TABLE OF CONTENTS
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<TABLE>
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Page
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<S> <C>
Independent Auditor's Report ........................................... 1
Schedule of Investments in Securities .................................. 2,3
Statement of Assets and Liabilities .................................... 4
Statement of Operations ................................................ 5
Statements of Changes in Net Assets .................................... 6
Selected Per Share Data and Ratios ..................................... 7
Notes to Financial Statements .......................................... 8-10
</TABLE>
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INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
ASM Fund, Inc.
Tampa, Florida
We have audited the accompanying statement of assets and liabilities of ASM
Fund, Inc. (the "Fund"), including the schedule of investments in securities, as
of October 31, 1995, and the related statement of operations for the year then
ended and the statements of changes in net assets for each of the years in the
two-year period then ended and the selected per share data and ratios for each
of the years in the four-year period then ended. These financial statements and
per share data and ratios are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and per
share data and ratios based on our audits. The selected per share data and
ratios of the Fund for the period from February 13, 1991 (inception) through
October 31, 1991 were audited by other auditors whose report dated December 2,
1991 expressed an unqualified opinion on these items.
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 per share data
and ratios 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
October 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates, made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and selected per share data and ratios
referred to above present fairly, in all material respects, the financial
position of the Fund as of October 31, 1995, the results of its operations for
the year then ended, the changes in its net assets for each of the years in the
two-year period then ended and the selected per share data and ratios for each
of the years in the four-year period then ended, in conformity with generally
accepted accounting principles.
HACKER, JOHNSON, COHEN & GRIEB
Tampa, Florida
December 27, 1995 page 1
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ASM FUND, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES
OCTOBER 31, 1995
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<TABLE>
<CAPTION>
% of Total
Net Assets Shares Value
---------- ------ -------
<S> <C> <C> <C>
COMMON STOCKS--(UNITED STATES) 96.4%
Aerospace 9.04%
Boeing Company 5,685 373,078
United Technologies Corp. 5,685 504,544
-------
877,622
Autos and trucks 2.56%
General Motors Corporation 5,685 248,719
-------
Banks 4.52%
J. P. Morgan & Co., Inc. 5,685 438,456
-------
Beverages 4.21%
Coco-Cola Company 5,685 408,609
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Chemicals 5.87%
E. I. DuPont de Nemours & Co. 5,685 354,602
Union Carbide Corporation 5,685 215,319
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569,921
Consumer Products 4.75%
Proctor & Gamble Company 5,685 460,485
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Drugs and Hospital Supplies 3.37%
Merck & Co., Inc. 5,685 326,887
-------
Electrical Equipment 4.53%
General Electric Corp. 5,685 359,576
Westinghouse Electric Corp. 5,685 80,301
------
439,877
Entertainment and Leisure 3.38%
Walt Disney Company 5,685 327,598
-------
Financial 2.38%
American Express Company 5,685 230,953
-------
Machinery 3.29%
Caterpillar, Inc. 5,685 319,071
-------
Metals and Mining 2.99%
Aluminum Company of America 5,685 289,935
=======
</TABLE>
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ASM FUND, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES, (CONTINUED)
OCTOBER 31, 1995
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<TABLE>
<CAPTION>
% of Total
Net Assets Shares Value
---------- ------ -----------
<S> <C> <C> <C>
COMMON STOCKS (CONTINUED)
Office Equipment 5.70% 5,685 $ 552,866
----------
International Business Machines
Oil-International 11.20%
Chevron Corporation 5,685 265,774
Exxon Corporation 5,685 434,192
Texaco, Inc. 5,685 387,291
----------
1,087,257
Paper 2.17%
International Paper Company 5,685 210,345
----------
Photography 3.67%
Eastman Kodak Co. 5,685 356,023
----------
Restaurants 2.40%
McDonald's Corp. 5,685 233,085
----------
Retail 2.85%
Sears, Roebuck & Company 5,685 193,290
Woolworth Corp. 5,685 83,143
----------
276,433
Steel 0.77%
Bethlehem Steel Corp. 5,685 74,616
----------
Telecommunications 3.75%
American Telephone & Telegraph Co. 5,685 363,840
----------
Tires 2.23%
Goodyear Tire & Rubber 5,685 216,030
----------
Tobacco 4.95%
Philip Morris Companies, Inc. 5,685 480,383
----------
Diversified 5.82%
Allied-Signal, Inc. 5,685 241,612
Minnesota Mining & Manufacturing Co. 5,685 323,334
----------
564,946
Total common stocks (cost - $8,899,437) 9,353,957
OTHER ASSETS LESS LIABILITIES 3.60% 350,069
------ ----------
TOTAL NET ASSETS 100.00% $9,704,026
==========
</TABLE>
See accompanying Notes to Financial Statements. page 3
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page 4
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ASM FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
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ASSETS:
Investments in securities, at market
value (cost of $8,899,437) $ 9,353,957
Cash and cash equivalents 500,468
Dividends and interest receivable 7,309
Deferred organizational expenses, less
accumulated amortization of $163,713 11,607
Receivable from Advisor 180,939
Other assets 23,500
-----------
Total Assets 10,077,780
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LIABILITIES:
Investment securities purchased 330,350
Accrued expenses 23,393
Payable for capital stock reacquired 20,011
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Total Liabilities 373,754
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Contingencies (Note 2)
NET ASSETS AT OCTOBER 31, 1995 -
Equivalent to $11.37 per share based on 853,716
shares of $.001 par value capital stock
outstanding (authorized capital stock -
1,000,000,000 shares) $ 9,704,026
===========
</TABLE>
See accompanying Notes to Financial Statements.
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page 5
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ASM FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1995
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<TABLE>
<S> <C>
INVESTMENT INCOME:
Income
Dividends $ 203,097
Interest 33,811
----------
Total income 236,908
----------
EXPENSES:
Legal and auditing fees 141,692
Amortization of deferredorganization expenses 35,022
Custody and fund accounting fees 24,606
Transfer agent fees 35,571
Registration fees 27,154
Other expenses 17,014
Investment advisory fee 46,858
Printing and mailing 53,460
Interest expense 50,460
Directors fees 30,000
----------
Total expenses 461,837
Less:
Reimbursement and forgiveness of expenses by Advisor 227,797
234,040
----------
Investment income,net 2,868
----------
Realized and unrealized gains on investments:
Net realized gain from investment transactions 753,136
Increase in unrealized appreciation of investments 424,306
----------
Net realized gain and increase in unrealized
appreciation on investments 1,177,442
----------
Net increase in net assets resulting from operations $1,180,310
==========
</TABLE>
See accompanying Notes to Financial Statements.
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page 6
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ASM FUND, INC.
STATEMENT OF CHANGE IN NET ASSETS
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<TABLE>
<CAPTION>
FOR YEAR ENDED OCTOBER 31,
--------------------------------
1995 1994
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<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 2,868 $ 388,215
Net realized gain (loss) from investments
transactions 753,136 (2,031,558)
Net change in unrealized appreciation
(depreciation) of investments 424,306 (1,631,412)
------------ ------------
Net increase (decrease) in net assets
resulting from operations 1,180,310 (3,274,755)
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (23,980) (519,905)
Net realizes gain capital (66,021) --
Return of capital (Note 5) -- (420,775)
------------ ------------
Net decrease in net assets resulting from
dividends and distributions (90,001) (940,680)
------------ ------------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold 29,998,335 274,212,818
Shares issued in connection with
payment of dividends 81,452 432,251
Cost of shares redeemed (28,742,989) (280,738,148)
------------ -------------
Net increase (decrease) in net assets
from fund transactions 1,336,798 (5,593,079)
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Total increase (decrease) in net assets 2,427,107 (9,808,514)
NET ASSETS:
Beginning of year 7,276,919 17,085,433
------------ ------------
End of year (including undistributed net investment
income of $21,112 in 1994 and none in 1995) $ 9,704,026 $ 7,276,919
============ ============
CHANGES IN NUMBER OF SHARES OUTSTANDING:
Shares sold 2,975,479 27,520,255
Shares issued in connection with
payment of dividends 7,929 44,136
Shares redeemed (2,873,468) (28,516,659)
------------ ------------
Net increase (decrease) 109,940 (952,268)
Shares outstanding at beginning of year 743,776 1,696,044
------------ ------------
Shares outstanding at end of year 853,716 743,776
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
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page 7
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ASM FUND, INC.
SELECTED PER SHARE DATA AND RATIOS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS:
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<CAPTION>
2/13/91
(INCEPTION)
THROUGH
10/31, (A)
For a share outstanding YEAR ENDED OCTOBER 31,
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throughout the periods: 1995 1994 1993 1992 1991
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<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.78 $ 10.07 9.23 8.93 10.00
Income from Investment Operations
Net investment income -- 0.56 0.43 0.26 0.09
Net gains or (losses) on securities
(both realized and unrealized) 1.77 (0.16) 0.88 0.20 (1.16)
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Total 11.55 10.47 10.54 9.39 8.93
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LESS DISTRIBUTIONS
Dividends (from net investment income) (0.05) (0.52) (0.47) (0.16) --
Net realized capital gains (0.13) -- -- -- --
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Distributions (return of
capital) (Note 5) -- (0.17) -- -- --
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Total distributions (0.18) (0.69) (0.47) (0.16) --
Net asset value, end of $ 11.37 9.78 10.07 9.23 8.93
Total return 18.10% 3.97% 14.65% 5.10% (17.74%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) 9,704 7,277 17,085 6,583 1,325
Ratio of expenses to average
net assets* 3.01%** 0.75% 0.75% 0.75% 0.75%
Ratio of net investment income to
average net assets 0.04% 2.17% 3.35% 2.41% 0.97%
Portfolio turnover rate*** 340% 1193% 642% 405% 1%
Number of shares outstanding
at the end of period 853,716 743,776 1,696,044 713,816 148,399
</TABLE>
* Net of expense reimbursement. If the voluntary expense reimbursement had
not been in effect, the ratio of expenses to average net assets would have been
5.94%, 2.55%, 2.86%, 3.91% and 26.09% for 1995, 1994, 1993, 1992 and 1991
respectively and the ratio of net investment income to average net assets would
have been 1.11% in 1993 and would not have been meaningful in 1995, 1994, 1992
and 1991 because the fund would have incurred losses.
** Includes $50,460 of interest expense not subject to the voluntary expense
reimbursement agreement.
*** The ASM Fund continues to be nearly 100% invested in equities. Therefore,
almost all Fund portfolio turnover is a result of purchases and sales of
securities necessary for settlement of transactions requested by ASM Fund
shareholders.
(A) Ratios are annualized.
See accompanying Notes to Financial Statements. page 7
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ASM FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
1. SIGNIFICANT ACCOUNTING POLICIES
ASM Fund, Inc. (the "Fund") was incorporated in Maryland on April 25, 1990 and
is registered under the Investment Company Act of 1940, as amended, as an
open-end diversified management investment company.
SECURITY VALUATION.
Portfolio securities are listed on a national securities exchange and are stated
at the last reported sales price on the day of valuation.
SECURITY TRANSACTIONS.
The Fund records investment transactions on the trade date. Realized gains and
losses on sales of investments are calculated on the first-in-first-out basis.
Interest income is recognized on the accrual basis.
DISTRIBUTING TO SHAREHOLDERS.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date.
CASH AND CASH EQUIVALENTS.
Cash and cash equivalents consists of cash on deposit with the custodian and
investments in repurchase agreements.
INCOME TAXES.
The Fund's policy is to comply with the requirements of the Internal Revenue
code that are applicable to Regulated Investment Companies and to distribute all
of its taxable income to shareholders. Therefore, no federal income tax
provision is required.
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ASM FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
OCTOBER 31, 1995
2. INVESTMENT ADVISORY FEES
The Fund has an investment and management agreement (the "Agreement") with
Vector Index Advisors, Inc. (the "Advisor"). The Advisor receives a fee, accrued
daily and payable monthly at an annual rate of .60 of 1% of the Fund's average
daily net assets.
The Advisor provides continuous supervision of the investment portfolio and
pays the cost of compensation of the officers of the Fund, occupancy and certain
clerical and administrative costs involved in portfolio management. The Fund
bears all other costs and expenses. The Advisor waived all $46,858 for these
services in 1995.
Certain officers and directors of the Fund are also officers and directors of
the Advisor. The Agreement provides for an expense reimbursement from the
Advisor if the Fund's total expenses, exclusive of taxes, interest on
borrowings, dividends on securities sold short, brokerage commissions, and
extraordinary expenses, exceed a certain percentage of the Fund's average daily
net assets for any full fiscal year under state expense limitations applicable
to the Fund, the Advisor is required to limit expenses of Fund to 2.5% of
average net assets for the first $30,000,000 and 2.0% of average net assets for
the next $70,000,000. Such state law provisions exclude items such as taxes,
interest, brokerage commissions, and extraordinary expenses from such expense
limitation. As a result of this obligation, the Advisor assumed $227,797 of
other operating expenses. The balance due from the Advisor relating to the
assumption of these expenses ($180,939 at October 31, 1995) was paid to the
Fund in full on December 27, 1995. In November 1995 regional office of the
Securities and Exchange Commission advised the Advisor that it intended to
recommend administrative proceedings against the Advisor on the ground that
the carrying by the Fund of a large receivable owed from the Advisor,
constituted an improper loan to the Advisor. Without admitting to the
allegation, the Advisor and it's president have offered to settle the matter by
paying a fine of $10,000 and agreeing to a cease and desist order intended to
prevent a repetition of the challenged activities. There can be no assurance
that the Securities and Exchange Commission will accept the proposed
settlement. Management does not expect the ultimate disposition of this matter
to have a material adverse impact on the Advisor or the Fund.
3. INVESTMENT TRANSACTIONS
For the year ended October 31, 1995, purchases and sales of investments
securities, (excluding short-term securities) were $27,856,282 and $26,191,804,
respectively. Net realized and unrealized gains on investments for the year
ended October 31, 1995 were $1,177,442. All security transactions were long
transactions, there were no short sale transactions or covered call options
written.
At October 31, 1995, the unrealized appreciation of securities was
$454,520. There were no accumulated undistributed net realized gains or
investment transactions at October 31, 1995.
page 9
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page 10
ASM FUND, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
OCTOBER 31, 1995
4. DEFERRED ORGANIZATION EXPENSES
Organization expenses in the amount of $175,320 were initially paid by the
Advisor and will be reimbursed by the Fund. These costs have been deferred and
are being amortized over a sixty-month period. During the amortization period,
the proceeds of any redemption of the original shares will be reduced by a pro
rata portion of the then unamortized organizational expenses based on the ratio
of the shares redeemed to the total initial shares outstanding immediately prior
to the redemption.
5. RECEIVABLE FROM ADVISOR WRITE-DOWN
On October 31, 1993, the assets of the Fund included a receivable from the
Advisor of $611,275. This amount included expense reimbursements payable to the
Fund by the Advisor. Subsequently, the Fund determined that it had, in fact,
qualified in 1993 as a regulated investment company and subsequently deleted
both the income tax liabilities and the corresponding receivable from the
Fund's books. This action reduced the receivable to $420,775. On May 9, 1994
the Fund's Board of Directors elected to write-off the remaining receivable
from the Advisor, thereby reducing the Net Asset Value "NAV" of the Fund by
$0.17 per share on May 6, 1994 in consideration for the Advisor's undertaking
to pay such amounts to affected shareholders of record on May 5, 1994. This
amount included expense reimbursements payable to the Fund by the Advisor
pursuant to its agreement to reimburse the Fund for expenses in excess of .75%
of the Fund's average net assets and for losses from the failure to transact
timely orders for the purchase of securities and certain potential tax
liabilities which might affect the Fund for which the Advisor would reimburse
the Fund. On October 26, 1994 all affected shareholders were paid in full all
amounts due under this provision.
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