ASM FUND PORTFOLIO
American Telephone & Telegraph Co.
Allied Signal, Inc.
Aluminum Company of America
American Express Co.
Bethlehem Steel Corp.
Boeing Co.
Caterpillar
Chevron Corp.
Coca-Cola Co.
Walt Disney
Dupont de Nemours & Co.
Eastman Kodak Co.
Exxon Corp.
General Electric Co.
General Motors Corp.
Goodyear Tire & Rubber Co.
International Business Machines Corp.
International Paper Co.
McDonald's Corp.
Merck & Co.
Minnesota Mining & Manufacturing Co.
JP Morgan
Philip Morris Companies, Inc.
Procter & Gamble Co.
Sears Roebuck & Co.
Texaco, Inc.
Union Carbide Corp.
United Technologies Corp.
Westinghouse Electric Corp.
Woolworth Corp.
Managed by:
Vector Index Advisors, Inc.
15438 North Florida Avenue Ste. 107
Tampa, Florida 33613
(813)963-3150
(800)445-2763
<PAGE>
ASM FUND, INC.
Tampa, Florida
Audited Annual Financial Statements
For the Year Ended October 31, 1996
- ---------------------------------------------------
Table of Contents Page
- ---------------------------------------------------
Report of Independent Accountants 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
Financial Highlights 7
Notes to Financial Statements 8-10
- ---------------------------------------------------
[GRAPHIC OMITTED]
<PAGE>
December 31, 1996
Dear ASM Fund Shareholder,
During the past year, the stock market pundits were pessimistic about
stocks in 1996, after such a strong 1995. Happily, they were incorrect and
ASM Fund shareholders benefited. The last quarter saw increasing volatility
that has become a stock market phenomenon and investors are learning not to
overreact to short term swings in prices. The "Dow" continues to be less
volatile than other sectors of the market. The average mutual fund trailed
the ASM Fund by more than 25% this year.
The consensus of analysts' projections for 1997 anticipate about an 15%
increase in earnings in the 30 Dow companies. The global business is growing
and the companies are more productive than ever.
The superior performance of the ASM Fund was helped by the lowering of
expenses during 1996. As the public discovers the benefits of investing in an
index fund, I expect to see the ASM Fund grow dramatically. Market observers
will find the Dow Jones Industrial Average produces superior returns.
Combining the performance will lower expenses, will make the ASM Fund more
attractive. The press has continued to recognized the Fund and its advantages.
I am proud that the ASM Fund was selected as one of the three growth
funds of the eleven best funds to own in 1997 by, "Best Pick for 1997." We are
also being featured by some of the prestigious investment firms in their
select lists. There are good reasons for 1997 to be an exceptional year for the
ASM Fund.
Very truly yours,
/s/Steven H. Adler
Steven H. Adler
President
<PAGE>
Report of Independent Accountants
To the Shareholders and Board of Directors of
ASM Fund (the Fund)
We have audited the accompanying statement of assets and liabilities of
the Fund, including the schedule of portfolio investments, as of October 31,
1996, and the related statement of operations, the statement of changes in net
assets, and the financial highlights for the year 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 audit. The statement of changes
in net assets for the year ended October 31, 1995 and the financial highlights
before restatement for the years ended October 31, 1995, 1994, 1993 and 1992,
were audited by other auditors, whose report dated December 27, 1995 expressed
an unqualified opinion. We also audited the adjustments described in Note 5 that
were applied to restate the expense ratios included in the financial highlights
for the years ended October 31, 1995, 1994 and 1993. In our opinion such
adjustments are appropriate and have been properly applied.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996, by correspondence with the custodian and brokers. 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 audit provides 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
the Fund as of October 31, 1996, the results of its operations, the changes in
the net assets and the financial highlights for the year then ended, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Tampa, Florida
December 5, 1996
page 1
<PAGE>
<TABLE>
<CAPTION>
ASM FUND, INC.
Portfolio of Investments
October 31, 1996
- --------------------------------------------------------------------------------------------
% of Total
Net Assets Shares Value
------------ ------------- -----------
Common Stocks--
<S> <C> <C> <C>
Aerospace 11.1%
Boeing Company 4,605 439,202
United Technologies Corp. 4,605 592,894
-----------
1,032,096
-----------
Auto and Truck 2.7%
General Motors Corporation 4,605 248,094
-----------
Banking 4.3%
J. P. Morgan & Co., Inc. 4,605 397,757
-----------
Beverage 2.5%
Coca-Cola Company 4,605 232,552
-----------
Chemical 6.7%
E. I. DuPont de Nemours & Co. 4,605 427,114
Union Carbide Corporation 4,605 196,288
-----------
623,402
-----------
Consumer Products 4.9%
Proctor & Gamble Company 4,605 455,895
-----------
Drugs and Hospital Supplies 3.7%
Merck & Co., Inc. 4,605 341,346
-----------
Electrical Equipment 5.6%
General Electric Corp. 4,605 445,534
Westinghouse Electric Corp. 4,605 78,861
-----------
524,395
-----------
Entertainment and Leisure 3.3%
Walt Disney Company 4,605 303,354
-----------
Financial Services 2.3%
American Express Company 4,605 216,435
-----------
Machinery 3.4%
Caterpillar, Inc. 4,605 316,018
-----------
Metals and Mining 2.9%
Aluminum Company of America 4,605 269,968
-----------
See accompanying Notes to Financial Statements page 2
<PAGE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
ASM FUND, INC.
Portfolio of Investments, (Continued)
October 31, 1996
- ----------------------------------------------------------------------------------------------------
% of Total
Net Assets Shares Value
------------- ------------ -------------
Common Stocks (continued)
<S> <C> <C> <C>
Office Equipment 6.4%
International Business Machines 4,605 $ 594,045
-------------
Oil-International 12.7%
Chevron Corporation 4,605 302,779
Exxon Corporation 4,605 408,118
Texaco, Inc. 4,605 467,983
-------------
1,178,880
-------------
Paper 2.1%
International Paper Company 4,605 196,864
-------------
Photography 3.9%
Eastman Kodak Co. 4,605 367,249
-------------
Restaurant 2.2%
McDonald's Corp. 4,605 204,346
-------------
Retail 3.4%
Sears, Roebuck & Company 4,605 222,767
Woolworth Corp. (A) 4,605 96,705
-------------
319,472
-------------
Steel 0.4%
Bethlehem Steel Corp. (A) 4,605 37,416
-------------
Telecommunications 1.7%
American Telephone & Telegraph Co. 4,605 160,607
-------------
Tire and Rubber 2.3%
Goodyear Tire & Rubber 4,605 211,254
-------------
Tobacco 4.5%
Philip Morris Companies, Inc. 4,605 426,538
-------------
Diversified 7.0%
Allied-Signal, Inc. 4,605 301,628
Minnesota Mining & Manufacturing Co. 4,605 352,858
-------------
654,486
-------------
Total common stocks (cost - $9,220,201) 100.0% 9,312,469
Other assets less liabilities 0.0% 3,014
------------- -------------
Total Net Assets 100.0% $ 9,315,483
============= =============
<FN>
(A) Non-income producing security
</FN>
See accompanying Notes to Financial Statements.
page 3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
ASM FUND, INC.
Statement of Assets and Liabilities
October 31, 1996
- -------------------------------------------------------------------------
<S> <C>
Assets:
Investments at market value
(cost of $9,220,201) $ 9,312,469
Cash 294,836
Receivable for securities sold 5,537,903
Receivable for capital stock sold 10,510
Receivable from advisor (Note 5) 201,946
Dividends receivable 8,257
Other assets 23,893
------------------
Total Assets 15,389,814
------------------
Liabilities:
Payable for capital stock redeemed 5,883,634
Accrued expense 65,897
Accrued taxes payable (Note 5) 124,800
------------------
Total Liabilities 6,074,331
------------------
Net Assets $ 9,315,483
==================
Net Asset value per share is based
on 659,472 shares of $.001 par
value capital stock outstanding (authorized
capital stock - 1,000,000,000 shares) $ 14.13
==================
Net assets consist of:
Capital paid-in $ 9,145,424
Undistributed net investment income 89,231
Accumulated net realized loss on investments (11,440)
Net unrealized appreciation on investments 92,268
------------------
Net Assets $ 9,315,483
==================
See accompanying Notes to Financial Statements. page 4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
ASM FUND, INC.
Statement of Operations
Year Ended October 31, 1996
- ------------------------------------------------------------------------------------
<S> <C>
Investment income:
Dividends $ 270,048
Interest 22,293
---------------
Total investment income 292,341
---------------
Expenses:
Legal fees 96,134
Audit fees 52,620
Custodian fees 36,010
Printing and postage 12,047
Transfer agent and accounting fees 30,159
Registration and filing fees 29,173
Amortization of organization expense 11,607
Trustee fees 20,226
Administrative fees 6,250
Interest expense 10,300
Other expenses 11,963
---------------
Total expenses 316,489
Less:
Reimbursement of expenses by advisor 89,199
---------------
Total expenses - net 227,290
---------------
Investment income - net 65,051
---------------
Realized and unrealized gain (loss) on investments :
Net realized gain 2,445,312
Change in unrealized depreciation of investments (362,252)
---------------
Net gain on investments 2,083,060
---------------
Net increase in net assets resulting from operations $ 2,148,111
===============
See accompanying Notes to Financial Statements. page 5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
ASM FUND, INC.
Statement of Changes in Net Assets
Years Ended October 31, 1996 and 1995
- ------------------------------------------------------------------------------------------------
October 31, October 31,
1996 1995
---------------- ----------------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 65,051 $ 2,868
Net realized gain from investment transactions 2,445,312 753,136
Net change in unrealized appreciation (depreciation)
of investments (362,252) 424,306
---------------- ----------------
Net increase in net assets resulting from operations 2,148,111 1,180,310
---------------- ----------------
Distributions to shareholders:
Net investment income (65,051) (23,980)
In excess of net investment income (12,633) (66,021)
---------------- ----------------
Total distributions (77,684) (90,001)
---------------- ----------------
Capital share transactions:
Net proceeds from shares sold 49,671,530 29,998,335
Reinvestment of distributions 66,202 81,452
Cost of redemptions (52,196,702) (28,742,989)
---------------- ----------------
Net increase (decrease) in net assets
resulting from capital share transactions (2,458,970) 1,336,798
---------------- ----------------
Total increase (decrease) in net assets (388,543) 2,427,107
Net Assets:
Beginning of period 9,704,026 7,276,919
---------------- ----------------
End of period (including undistributed net
income of $89,231 and $0 for 1996 and 1995,
respectively) $ 9,315,483 $ 9,704,026
================ ================
Changes in shares outstanding:
Shares sold 3,734,945 2,975,479
Shares issued in connection with
reinvestment of distributions 4,919 7,929
Shares redeemed (3,934,108) (2,873,468)
---------------- ----------------
Net increase (decrease) (194,244) 109,940
================ ================
See accompanying Notes to Financial Statements. page 6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
ASM FUND, INC.
Financial Highlights
- ------------------------------------------------------------------------------------------------------
Years Ended October 31,
-------------------------------------------------------
Selected Per Share Data 1996 1995 (b) 1994 (b) 1993 (b) 1992 (b)
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.37 $ 9.78 $ 10.07 $ 9.23 $ 8.93
-------------------------------------------------------
Income (loss) from investment operations
Net investment income 0.08 - 0.56 0.43 0.26
Net gains or (losses) on securities
(both realized and unrealized) 2.76 1.77 (0.16) 0.88 0.20
-------------------------------------------------------
Total from investment operations 2.84 1.77 0.40 1.31 0.46
-------------------------------------------------------
Less distributions from
Net investment income (0.07) (0.05) (0.52) (0.47) (0.16)
In excess of net investment income (0.01) (0.13) - - -
Return of capital - - (0.17) - -
-------------------------------------------------------
Total distributions (0.08) (0.18) (0.69) (0.47) (0.16)
-------------------------------------------------------
Net asset value, end of period $ 14.13 $ 11.37 $ 9.78 $ 10.07 $ 9.23
=======================================================
Total Return 25.01% 18.10% 3.97% 14.65% 5.10%
=======================================================
Ratios/Supplemental Data
Net assets, end of period (000) 9,315 9,704 7,277 17,085 6,583
Ratio of expenses to average
net assets* 1.86% 3.01%** 0.75% 0.75% 0.75%
Ratio of net investment income to
average net assets* 0.53% 0.04% 2.17% 3.35% 2.41%
Portfolio turnover rate *** 391% 340% 1193% 642% 405%
Number of shares outstanding
at the end of period 659,472 853,716 743,776 1,696,044 713,816
Average commission rate (a) $ 0.08 - - - -
<FN>
* Net of expense reimbursement. If the expense reimbursement had not been in effect, the ratio of
expenses to average net assets would have been 2.59%, 5.77%, 2.94%, 3.38% and 3.91% for the years ended
October 31,1996, 1995, 1994, 1993 and 1992, respectively. As a result of certain tax adjustments
necessitated by the Fund's failure to qualify as a regulated investment company for the years ended
October 31, 1995, 1994 and 1993, as well as other adjustments, the gross expense ratios previously
reported for these periods have been restated. (See Note 5)
** Includes $50,460 of interest expense not subject to the expense reimbursement agreement.
*** The ASM Fund continues to be as fully invested in equities as possible. Therefore, almost all Fund
portfolio turnover is a result of purchases and sales of securities necessary for settlement of transactions
requested by Fund shareholders.
(a) For fiscal years beginning on or after September 1, 1995, a fund is required to disclose its average
commission rate per share for security trades on which commissions are charged.
(b) Audited by predecessor auditor.
</FN>
See accompanying Notes to Financial Statements. page 7
</TABLE>
<PAGE>
ASM FUND, INC.
Notes to Financial Statements
October 31, 1996
ASM Fund, Inc. (the "Fund") was incorporated in Maryland on April 25, 1990 and
is registered under the Investment Company Act of 1940 (the "1940 Act"), as
amended, 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
sale of investments on the trade date. Realized gains and losses on 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.
DISTRIBUTIONS TO SHAREHOLDERS
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.
FEDERAL INCOME TAXES
The Fund intends 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 for the year ended October 31, 1996.
page 8
<PAGE>
ASM FUND, INC.
Notes to Financial Statements, Continued
October 31, 1996
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 .60 of 1% of the Fund's average daily net assets. The Fund will propose
that shareholders approve a new agreement which will provide for such fees and
reimbursements as are agreeable to the parties.
The Advisor provided 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 provided 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. Under state expense limitations then
applicable to the Fund, the Advisor is required to limit expenses of the Fund
to 2.5% of average net assets for the first $30,000,000, 2.0% of the average
net assets for the next $70,000,000 and 1.50% of the average net assets in
excess of $100,000,000. Such state law provisions excluded items such as
taxes, interest, brokerage commissions, and extraordinary expenses from such
limitations. Pursuant to such limitations, and to further commitments made to
the Fund by the Advisor, the Advisor reimbursed the Fund $89,199 for the year
ended October 31, 1996, of which $10,649 was required as a result of the state
expense limitation discussed above.
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 it's
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.
page 9
[GRAPHIC OMITTED]
<PAGE>
ASM FUND, INC.
Notes to Financual Statements, Continued
0ctober 31, 1996
3. INVESTMENT TRANSACTIONS
For the year ended October 31, 1996, purchases and sales of investment
securities, (excluding short-term securities) were $45,982,701 and $48,107,248,
respectively.
As of October 31, 1996, the aggregate cost of investments for Federal
income tax purposes was $9,440,409 and net unrealized depreciation for
Federal income tax purposes was comprised of the following:
Gross unrealized appreciation of investments $ 92,180
Gross unrealized depreciation of investments (220,120)
---------
Net unrealized depreciation of investments $(127,940)
=========
4 DEFERRED ORGANIZATION EXPENSES
Organization expenses in the amount of $175,320 were initially paid by
the Advisor and were reimbursed by the Fund. These costs were deferred and
amortized over a sixty-month period.
5. FINANCIAL HIGHLIGHTS RESTATEMENT
During the year ended October 31, 1996, the Fund, in consultation with
its auditors and legal counsel, determined, based on information currently
available, 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 bear
these costs. Also, as discussed in Footnote 2, 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 and reimbursed by the Advisor. As a result of
this, the expense ratios before reimbursement in the Financial Highlights
have been restated to reflect these changes. The expense ratios prior to
restatement were 5.94%, 2.55% and 2.86% for the years ended October 31, 1995,
1994 and 1993, respectively. In addition, the Advisor has also agreed to
reimburse the Fund for accrued interest due on the Federal income taxes of
approximately $10,300 reflected on the Statement of Operations for the year
ended October 31, 1996. 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. All amounts due under statutory and voluntary expense
limitations were paid by the Advisor within 30 days of determination.
6. RELATED PARTY TRANSACTIONS
In connection with the production of certain of the Fund's required
communications, certain printing costs in the amount of approximately $4,500
were paid to the Advisor for services provided.
