June 30, 1997
Dear Shareholders,
The Dow treated us to almost a 1,000 point increase in the last six
months, providing the ASM Fund with about a 16% gain. The "mega-cap" stocks have
become popular with the large mutual funds and pension plans. Liquidity has
become particularly important to investors and the Dow 30 stocks account for
about 10% of the daily volume on the New York Stock Exchange.
We believe the current earnings forecast for the thirty stocks in our
portfolio is still impressive for the next 18 months. With interest rates
non-competitive and inflation being held in check, equity investments still
command investors' attention. The monthly cash flows into mutual funds confirm
investor confidence in the stock market. We are happy to report that the assets
in the Fund have grown from $9.3 million as of October 31, 1996, to over $45
million as of May 31, 1997. We are also pleased to report that the Fund has
lowered its expense cap to 0.18%, effective January 15, 1997.
We believe that the four changes made to the Dow during this last
period appear to have strengthened the portfolio. We anticipate that
Hewlett-Packard, Travelers, WalMart and Johnson and Johnson should bring greater
profits, dividends and potential growth.
We expect the fast charging market will cause a higher degree of
volatility in prices. However, we believe the underlying quality of the
investments should continue to provide favorable returns.
Sincerely,
Steven H. Adler
President
<PAGE>
- --------------------------------------------------------------------------------
ASM FUND, INC.
Portfolio of Investments
April 30, 1997
- --------------------------------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Percent of
Total Net
Assets Shares Value
<S> <C> <C> <C>
COMMON STOCKS:
AEROSPACE
Boeing Company 15,840 $1,562,220
United Technologies Corporation 15,840 1,197,900
-----------------
7.9% 2,760,120
AUTO AND TRUCK
General Motors Corporation 2.6% 15,840 916,740
BANKING
J.P. Morgan & Company, Inc. 4.6% 15,840 1,613,700
BEVERAGE
Coca Cola Company 2.9% 15,840 1,007,820
CHEMICAL
E.I. DuPont de Nemours & Co. 15,840 1,681,020
Union Carbide Corporation 15,840 790,020
-----------------
7.0% 2,471,040
CONSUMER PRODUCTS
Proctor & Gamble Company 15,840 1,991,880
Johnson & Johnson 15,840 970,200
-----------------
8.4% 2,962,080
DIVERSIFIED
Allied-Signal Inc. 15,840 1,144,440
Minnesota Mining & Manufacturing Co. 15,840 1,378,080
-----------------
7.2% 2,522,520
DRUGS AND HOSPITAL SUPPLY
Merck & Company, Inc. 4.1% 15,840 1,433,520
ELECTRICAL EQUIPMENT
General Electric Corporation 5.0% 15,840 1,756,260
ENTERTAINMENT AND LEISURE
Walt Disney Company 3.7% 15,840 1,298,880
FINANCIAL SERVICES
American Express Company 3.0% 15,840 1,043,460
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
ASM FUND, INC.
Portfolio of Investments
April 30, 1997
- --------------------------------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Percent of
Total Net
Assets Shares Value
<S> <C> <C> <C>
INSURANCE
Travelers Group, Inc. 2.5% 15,840 $877,140
MACHINERY
Caterpillar Inc. 4.0% 15,840 1,409,760
METALS AND MINING
Aluminum Company of America 3.2% 15,840 1,106,820
OFFICE EQUIPMENT
Hewlett Packard 15,840 831,600
International Business Machines 15,840 2,546,280
-----------------
9.6% 3,377,880
OIL-INTERNATIONAL
Chevron Corporation 15,840 1,085,040
Exxon Corporation 15,840 896,940
-----------------
5.6% 1,981,980
PAPER
International Paper 1.9% 15,840 669,240
PHOTOGRAPHY
Eastman Kodak Company 3.8% 15,840 1,322,640
RESTAURANT
McDonalds Corporation 2.4% 15,840 849,420
RETAIL
Sears, Roebuck & Company 15,840 760,320
Wal Mart Stores 15,840 447,480
-----------------
3.4% 1,207,800
TELECOMMUNICATIONS
American Telephone & Telegraph Co. 1.5% 15,840 530,640
TIRE AND RUBBER
Goodyear Tire & Rubber 2.4% 15,840 833,580
TOBACCO
Philip Morris Companies, Inc. 1.8% 15,840 623,700
TOTAL COMMON STOCKS ------------- -----------------
(Cost $32,656,099) 98.5% $34,576,740
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
ASM FUND, INC.
Portfolio of Investments
April 30, 1997
- --------------------------------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Percent of
Total Net
Assets Shares Value
<S> <C> <C> <C>
REPURCHASE AGREEMENTS:
Star Bank
5.00%, 05/01/97 12,841,000 $ 12,841,000
Collateralized by 13,625,000 GNMA 7.125%,
7/20/24 with market value of $13,099,450
-----------------
TOTAL REPURCHASE AGREEMENTS 36.6% 12,841,000
-------------- -----------------
TOTAL INVESTMENTS 135.1% 47,417,740
(Cost $45,497,099)
LIABILITIES IN EXCESS OF OTHER ASSETS (35.1%) (12,320,970)
-------------- -----------------
TOTAL NET ASSETS 100.0% $ 35,096,770
============== =================
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
ASM FUND, INC.
Statement of Assets and Liabilities
April 30, 1997
- --------------------------------------------------------------------------------
(Unaudited)
<TABLE>
<S> <C>
Assets:
Investments in common stocks, at market value (cost $32,656,099) $ 34,576,740
Repurchase agreements, at market 12,841,000
Cash 859
Receivable for capital stock sold 102,579
Receivable for investments sold 8,023,962
Interest receivable 1,783
Dividends receivable 17,938
Receivable from adviser 188,872
Prepaid expense and other assets 70,201
----------------
Total Assets 55,823,934
----------------
Liabilities:
Payable for securities purchased 12,472,440
Payable for capital stock redeemed 8,067,411
Accrued taxes payable 128,646
Accrued expenses 58,667
----------------
Total Liabilities 20,727,164
----------------
Net Assets $ 35,096,770
================
Components of Net Assets:
Capital $ 32,204,964
Accumulated undistributed net investment income 50,110
Accumulated undistributed net realized gains from investment transactions 925,721
Net unrealized appreciation of investments 1,915,975
----------------
Total Net Assets $ 35,096,770
================
Capital Stock Outstanding
($0.001 par value, 1,000,000,000 shares authorized) 2,169,127
================
Net Asset Value -- Offering and Redemption Price Per Share $ 16.18
================
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
ASM FUND, INC.
Statement of Operations
For the Six Months Ended April 30, 1997
- --------------------------------------------------------------------------------
(Unaudited)
<TABLE>
<S> <C>
Investment Income:
Interest $ 19,168
Dividends 176,045
----------------
Total investment income 195,213
----------------
Fund Expenses:
Audit fees 23,220
Custodian fees 24,900
Trustee fees 23,079
Legal expense 43,209
Administrative 8,983
Registration and filing fees 16,971
Transfer agent and accounting fees 25,300
Printing and postage 4,707
Other expenses 11,948
----------------
Total expenses 182,317
Reimbursement of expenses by adviser (101,310)
----------------
Net expenses 81,007
----------------
Net investment income 114,206
----------------
Realized and Unrealized Gains from Investments:
Net realized gains from investment transactions 1,145,929
Net increase in net unrealized appreciation of investments 1,823,707
----------------
Net realized and unrealized gains from investments 2,969,636
----------------
Net Increase in net assets resulting from operations $ 3,083,842
================
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
ASM FUND, INC.
Statements of Changes in Net Assets
For the Six Months Ended April 30, 1997 (Unaudited)
and Year Ended October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
April 30, October 31,
1997* 1996
------------------ ----------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 114,206 $ 65,051
Net realized gains from investment transactions 1,145,929 2,445,312
Net increase (decrease) in net unrealized appreciation of investments 1,823,707 (362,252)
------------------ ----------------
Net increase in net assets resulting from operations 3,083,842 2,148,111
------------------ ----------------
Distributions to shareholders:
From net investment income (153,327) (65,051)
In excess of net investment income 0 (12,633)
From net realized gains (208,768) 0
------------------ ----------------
Net decrease in net assets resulting from
distributions to shareholders (362,095) (77,684)
------------------ ----------------
Capital transactions:
Proceeds from shares issued 53,818,276 49,671,530
Reinvestment of distributions 312,191 66,202
Cost of shares redeemed (31,070,927) (52,196,702)
Net increase (decrease) in net assets resulting
from capital transactions ------------------ ----------------
23,059,540 (2,458,970)
------------------ ----------------
Total increase in net assets 25,781,287 (388,543)
Net assets - beginning of period 9,315,483 9,704,026
------------------ ----------------
Net assets - end of period
(including undistributed net investment income
of $50,110 and $89,231, respectively) $ 35,096,770 $ 9,315,483
================== ================
Share transactions:
Shares issued 3,478,380 3,734,945
Shares issued in connection with reinvestment of distributions 20,889 4,919
Shares redeemed (1,989,614) (3,934,108)
------------------ ----------------
Net increase (decrease) in shares outstanding 1,509,655 (194,244)
================== ================
</TABLE>
See accompanying Notes to Financial Statements.
* Unaudited
<PAGE>
- --------------------------------------------------------------------------------
ASM FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
Six Months Years Ended October 31,
Ended April
30, 1997 1996 1995 1994 1993
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.13 11.37 $ 9.78 $ 10.07 $ 9.23
Investment operations:
Net investment income 0.01 0.08 0.00 0.56 0.43
Net gains (losses) from investments
(realized and unrealized) 2.31 2.76 1.77 (0.16) 0.88
------- ----- ------ ------- ------
Total from investment operations 2.32 2.84 1.77 0.40 1.31
------- ----- ------ ------- ------
Distributions:
From net investment income (0.12) (0.07) (0.05) (0.52) (0.47)
In excess of net investment income 0.00 (0.01) (0.13) 0.00 0.00
From net realized gains (0.15) 0.00 0.00 0.00 0.00
------- ----- ------ ------- ------
Total distributions (0.27) (0.08) (0.18) (0.69) (0.47)
------- ----- ------ ------- ------
Net asset value, end of period $ 16.18 14.13 $11.37 $ 9.78$ $10.07
======= ===== ====== ======= ======
Total return 16.59% 25.01% 18.10% 3.97% 14.65%
======= ===== ====== ======= ======
Ratios/supplemental data:
Net assets, end of period (000) $ 35,097 9,315 $ 9,704 $ 7,277 $17,085
Ratio of expenses to average net assets * 0.89% 1.86% 3.01%** 0.75% 0.75%
Ratio of net investment income to average
net assets* 1.26% 0.53% 0.04% 2.17% 3.35%
Portfolio turnover rate *** 144% 391% 340% 1193% 642%
Average commission rate paid **** $ 0.0391 0.0800
* Ratios are presented net of fees voluntarily reduced.
If such voluntary fee reductions had not occured,
the ratios would have been as follows:
Ratio of expenses to average net assets 2.28% 2.59% 5.77% 2.94% 3.38%
Ratio of net investment income
(loss) to average net assets (0.13%) (0.20%) (2.72%) (0.02%) 0.72%
<FN>
** Includes $50,460 of interest expense not subject to the expense
reimbursement agreement.
*** The ASM Fund contunues to be as fully invested in equities as possible.
Therefore, portfolio turnover is higher than most equity mutual funds
because purchases and sales of securities are necessary for settlement
of transactions requested by Fund shareholders.
**** For fiscal periods beginning on or after Sepember 1, 1995, the Fund is
required to present the average commission paid for securities
transactions on which commissions are charged.
(a) Not annualized.
(b) Annualized.
</FN>
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
ASM FUND, INC.
Notes to Financial Statements
April 30, 1997
- --------------------------------------------------------------------------------
(Unaudited)
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 (the
"Act"), as an open-end diversified management investment company.
1. Significant Accounting Policies
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. Preparation of the
financial statements includes the use of management estimates.
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 purchases of investments one business day after trade date
and sales of investments on the trade date. Realized gains and losses from sales
of investments are calculated on the specific identification basis. Interest
income is recognized on the accrual basis and dividend income is recorded on the
ex-dividend date.
Repurchase Agreements
Repurchase agreements are transactions in which the Fund purchases
securities from a bank or recognized securities dealer and simultaneously
commits to resell that security to the bank or dealer at an agreed-upon date and
price reflecting a market rate of interest unrelated to the coupon rate or
maturity of the purchased security. The Fund may invest in repurchase agreements
with institutions believed by the Fund's investment advisor to present minimum
credit risk. Each repurchase agreement is recorded at cost. The Fund requires
that the securities purchased in a repurchase agreement be transferred to the
custodian in a manner sufficient to enable the Fund to obtain those securities
in the event of a counterparty default. The seller, under the repurchase
agreement, is required to maintain the value of the securities at least equal to
the repurchase price, including accrued interest.
Distributions to Shareholders
Distributions to shareholders are recorded on the ex-dividend date.
Federal Income Taxes
The Fund intends to continue 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 its shareholders. Therefore, no
Federal income tax provision is required for the period ended April 30, 1997.
2. Investment Advisory Fees
The Fund operated under an investment management agreement (the
"Agreement") with Vector Index Advisors, Inc. (the "Advisor") through April 15,
1995, which Agreement was not continued after such date due to technical
requirements under the 1940 Act, and thereafter received the services called for
under the Agreement without charge. Under the Agreement, the Advisor was
entitled to receive a fee, accrued daily and payable monthly at an annual rate
of 0.60 of 1% of the Fund's average daily net assets. The Fund will propose that
the shareholders approve a new agreement which will provide for such fees and
reimbursements as are agreeable to the parties.
<PAGE>
ASM FUND, INC.
Notes to Financial Statements, Continued
April 30, 1997
- --------------------------------------------------------------------------------
(Unaudited)
The Advisor provides continuous supervision of the investment portfolio and
pays the cost of compensation of the officers of the Fund, and occupancy and
certain clerical and administrative costs involved in portfolio management. The
Fund bears all other costs and expenses.
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 exceeded a certain percentage of the Fund's average daily
net assets for any full fiscal year. Commencing January 15, 1997, the Advisor
voluntarily agreed to limit expenses of the to 0.18 of 1% of the Fund's average
daily net assets. Prior to January 15, 1997, the Advisor agreed to limit
expenses of the Fund to 2.5% of the first $30,000,000 of average net assets,
2.0% of the next $70,000,000 of average net assets and 1.5% of average net
assets in excess of $100,000,000. Pursuant to commitments made to the Fund by
the Advisor, the Advisor reimbursed the Fund $101,310 for the period ended April
30, 1997.
In November 1995, a regional office of the Securities and Exchange
Commission advised the Advisor that it intended to recommend administrative
proceedings against the Advisor on the grounds that a delay by the Advisor in
its payment of a receivable owed from the Advisor constituted an improper loan
to the Advisor. Without admitting to the allegation, the Advisor and its
president have settled the matter by paying a fine of $10,000 and agreeing to an
order intended to prevent a repetition of the challenged activities.
3. Investment Transactions
For the period ended April 30, 1997, purchases and sales of investment
securities (excluding short-term securities) were $50,723,173 and $27,991,443,
respectively. As of April 30, 1997, the aggregate cost basis of investments for
Federal income tax purposes was $45,721,973 and net unrealized appreciation of
investments for Federal income tax purposes was comprised of the following:
Gross unrealized appreciation of investments $ 1,727,584
Gross unrealized depreciation of investments (31,817)
-----------
Net unrealized appreciation of investments $ 1,695,767
===========
4. Financial Highlights Restatement
During the year ended October 31, 1996, the Fund, in consultation with its
auditors and legal counsel, determined, based on information available at the
time, that the Fund did not qualify as a regulated investment company under the
Internal Revenue Code for the years ended October 31, 1995, 1994 and 1993. As
such, the Fund would be subject to accrued Federal income taxes and interest of
approximately $9,900, $69,700 and $34,900 for the years ended October 31, 1995,
1994 and 1993, respectively. The Advisor has agreed to pay these costs as
appropriate. Also, advisory fees in the amount of $23,443 for the period from
April 16, 1995 to October 31, 1995 should not have been accrued by the Fund nor
reimbursed by the Advisor. As a result, the expense ratios before reimbursement
in the Financial Highlights have been restated to reflect these changes. Prior
to restatement, such ratios were 5.94%, 2.55% and 2.86% for the years ended
October 31, 1995, 1994 and 1993, respectively. In addition, the Advisor agreed
to reimburse approximately $10,300 to the Fund for accrued interest of due on
the Federal income taxes as reflected on the Statement of Operations for the
year ended October 31, 1996 and $3,846 as reflected on the Statement of
Operations for the semi-annual period ended April 30, 1997. All amounts
discussed above as well as amounts due under statutory and voluntary expense
limitations are reflected in the receivable from advisor on the Statement of
Assets and Liabilities.
The Board of Directors of the Fund has obtained confirmation that the
Advisor has made arrangements to assure availability of funds to discharge the
Fund's obligations.
