-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WFO7eE7YKfJ/+Ze1rqHqVjAH+0vRJzV3IrX12P29rJN+XBSBggBtb4x8H8rIh/nW peYpQsYwb09J/Fm5eepB4Q== 0000950109-99-003211.txt : 19990831 0000950109-99-003211.hdr.sgml : 19990831 ACCESSION NUMBER: 0000950109-99-003211 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990830 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KAUFMANN FUND INC CENTRAL INDEX KEY: 0000054771 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 132605091 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-01586 FILM NUMBER: 99702879 BUSINESS ADDRESS: STREET 1: 140 E 45TH ST 43RD FL STREET 2: STE 2624 CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2129220123 MAIL ADDRESS: STREET 1: 140 EAST 45TH ST STREET 2: 43RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: PAW GROWTH FUND INC DATE OF NAME CHANGE: 19701022 FORMER COMPANY: FORMER CONFORMED NAME: PHILIPS APPEL & WALDEN FUND INC DATE OF NAME CHANGE: 19680711 N-30D 1 THE KAUFMANN FUND, INC. SEMI-ANNUAL RPT. 06/30/99 [GRAPHIC APPEARS HERE] Semi-Annual Report . June 30, 1999 The Kaufmann Fund, Inc. 140 East 45th Street New York, New York 10017 Investing in growth companies for the long term - -------------------------------------------------------------------------------- For questions regarding your account call: (800)261-0555 - -------------------------------------------------------------------------------- Dear Shareholder: We would like to emphasize how extraordinary the investment opportunities are for small and mid-cap growth stocks. By almost any meaningful measure, these stocks are trading at the lowest levels in years in relation to earnings and growth prospects. In our opinion, the valuations are nearly as depressed, and therefore as attractive, as they were in 1987, 1974 and 1966. Those years provided terrific buying opportunities as small and mid-caps proceeded to substantially outperform large-caps for several years. To be sure, almost anything can happen in the short term -- especially in today's environment -- when investors are being overloaded with short-term information and are in the thrall of the instantaneous success of internet stocks. The Kaufmann Fund could not possibly keep up with the various popular indexes over the past few years because we have not invested in internet companies with uncertain fundamentals, or in cyclical companies that have only mediocre growth prospects. As portfolio managers we must have the courage to stick to what we know is in the best interests of our shareholders. Our research shows that over the longer term, it is the companies with the strongest fundamentals, in particular the leading small and mid-cap growth stocks, that do best and reward shareholders the most. We believe that what sets us apart is the rigor and thoroughness of the research that we do to identify these companies -- ones with unique products and services in expanding markets, the most innovative management, and the most profitable and sustainable business models. The Kaufmann Fund's portfolio consists of these companies and, especially today, represents a truly outstanding investment value. We agree that the internet is an area of exhilarating growth and possibilities, and we are determined to distinguish sensible ways to invest in it. However, we will never become mindless momentum investors, and we feel confident that Kaufmann shareholders will be rewarded for our combination of focus, prudence and steadfastness. The Kaufmann Fund is our only business and the only fund we manage. With over 70 years of Wall Street experience, we can honestly say that we have never worked harder or been more optimistic about the investment environment. Thank you for your steady support and encouragement. We look forward to serving you for may years to come. Yours very truly, /s/ Hans P. Utsch /s/ Lawrence Auriana Hans P. Utsch Lawrence Auriana Portfolio Co-Manager Portfolio Co-Manager Important Note! The Kaufmann Fund offers Automatic Investment and Payroll Deduction Plans. These plans are convenient methods of investing fixed dollar amounts on a monthly basis. This enables you to take advantage of "dollar-cost averaging" (when prices are lower, your monthly investment buys more shares). The Fund also offers a selection of retirement plans including 403(b), 401(k), SEP IRAs, SIMPLE IRAs, ROTH and Education IRAs. For more information or assistance in completing an application, please call (800) 261-0555. The Kaufmann Fund, Inc. Semi-Annual Report - June 30, 1999 - Unaudited - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------- Selected Data For A Share Outstanding Throughout Each Period - ----------------------------------------------------------------------------------------------------------------------------------- (Unaudited) Six Months Ended Year Ended December 31, ------------------ ------------------------------------------------------------- June 30, 1999 1998 1997 1996 1995 1994 Net Asset Value, Beginning of Period $5.68 $6.37 $5.84 $5.05 $3.76 $3.45 Income from Investment Operations: Net Investment Income (Loss) (0.007) (0.040) (0.060) (0.030) (0.060) (0.060) Net Realized and Unrealized Gain (Loss) on Investments (0.023) 0.017 0.795 1.083 1.445 0.370 -------------------------------------------------------------------------- Total Income from Investment Operations (0.030) (0.023) 0.735 1.053 1.385 0.310 Less Distributions: From Net Investment Income- -- -- -- -- -- -- From Net Realized Gains -- 0.667 0.205 0.263 0.095 -- -------------------------------------------------------------------------- Total Distributions -- 0.667 0.205 0.263 0.095 -- Net Asset Value, End of Period $5.65 $5.68 $6.37 $5.84 $5.05 $3.76 Total Return (a) (0.53)% 0.72% 12.59% 20.91% 36.89% 8.99% - ----------------------------------------------------------------------------------------------------------------------------------- Ratios and Supplemental Data - ----------------------------------------------------------------------------------------------------------------------------------- Net Assets, End of Period (in thousands) $3,415,715 $4,621,018 $6,008,161 $5,341,311 $3,163,310 $1,592,551 Ratio of Expenses (after expense reimbursement) to Average Net Assets (%) 1.96 %* 1.96 % 1.89 % 1.93 % 2.17 % 2.29 % Ratio of Interest Expense to Average Net Assets (%) 0.01 %* 0.01 % 0.01 % 0.01 % 0.01 % 0.02 % -------------------------------------------------------------------------- Ratio of Expenses (after expense reimbursement less interest expense) to Average Net Assets (%) 1.95 %* 1.95 % 1.88 % 1.92 % 2.16 % 2.27 % Ratio of Net Investment Income (Loss) to Average Net Assets (%) (1.03)%* (0.66)% (1.00)% (0.82)% (1.24)% (1.58)% Portfolio Turnover Rate (%) 44% 59% 65% 72% 60% 47% - ----------------------------------------------------------------------------------------------------------------------------------- Borrowings - ----------------------------------------------------------------------------------------------------------------------------------- Debt Outstanding at End of Period -- -- -- -- -- -- Average Debt Outstanding During the Period (in thousands) -- -- -- -- -- $ 3,776 Average Number of Shares Outstanding During the Period (in thousands) -- -- -- -- -- 333,175 Average Debt per Share During the Period -- -- -- -- -- $0.01
(a) The total returns would have been lower if certain expenses had not been reduced. (See Note 3 of Notes to Financial Statements.) * Annualized - -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 3 The Kaufmann Fund, Inc. Semi-Annual Report - June 30, 1999 - Unaudited - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Stocks 96.0% - --------------------------------------------------------------------------------
Value Shares (000s) ------ ------ Consumer 2.9% CONSUMER - DURABLES 0.1% Ducati Motor Holding SpA (ITL) 1,500,000 $ 3,928 --------- 3,928 --------- CONSUMER - NONDURABLES 2.8% Blyth Industries, Inc. 500,000 17,188 Del Monte Foods Company 2,000,000 33,500 Jones Apparel Group, Inc. 1,000,000 34,312 Skechers U.S.A., Inc. 750,000 7,875 --------- 92,875 --------- Total Consumer 96,803 ========= Financial 3.5% FINANCIAL - DOMESTIC 2.6% Federal Agricultural Mortgage Corporation 173,000 11,872 GreenPoint Financial Corp. 1,216,000 39,900 Philadelphia Consolidated Holding Corp. 1,286,300 31,514 Wit Capital Group, Inc. 135,000 4,590 --------- 87,876 --------- FINANCIAL - FOREIGN 0.9% Provident Financial plc (GBP) 531,000 7,299 Royal Bank of Scotland Group plc (GBP) 400,000 8,197 Shohkoh Fund & Co., Ltd. (JPY) 20,000 14,350 Thai Farmers Bank PCL (THB) 200,000 618 --------- 30,464 --------- Total Financial 118,340 ========= Medical 19.1% MEDICAL EQUIPMENT & SUPPLIES 3.6% Amira Medical Series A Preferred 250,000 1,375 Amira Medical Series D Preferred 1,000,000 5,500 Anika Therapeutics, Inc. 277,400 2,358 Bionx Implants, Inc. 750,000 4,125 Boston Scientific Corporation 50,000 2,196 Combact Diagnostics Sys. Ltd. Series B - Pfd. (ILS) 22,502 1,000 Combact Diagnostics Sys. Ltd. Series C - Pfd. (ILS) 3,522 0 Combact Diagnostics Sys. Ltd. - Ordinary Shares (ILS) 666 0 Cytyc Corporation 400,000 7,800 Diagnostic Products Corporation 400,000 11,050 ENDOcare, Inc. 2,000,000 12,000 ENDOcare, Inc. 499,300 2,996 Hanger Orthopedic Group, Inc. 923,900 13,108 NeoPath, Inc. 1,821,000 6,351 Orthofix International N.V. 1,000,000 14,875 SonoSite, Inc. 50,000 850 ThermoGenesis Corp.-Series A - Conv. Pfd. 576,000 3,600 ThermoGenesis Corp. 800,000 1,200 ThermoGenesis Corp. - Warrants 80,000 0 Thoratec Laboratories Corporation 260,800 2,771 Trex Medical Corporation 22,000 237 Xomed Surgical Products, Inc. 300,000 14,606 Zoll Medical Corporation 980,600 11,767 --------- 119,765 --------- MEDICAL SERVICES 11.8% AmeriPath, Inc. 30,000 259 CareInsite, Inc. 120,000 5,670 Coast Dental Services, Inc. 246,400 1,155 CompDent Corporation 248,612 124 CompDent Corporation - Pfd. 2,851 2,876 Eclipsys Corporation 227,500 5,446 Express Scripts, Inc. 435,000 26,182 Healthcare Recoveries, Inc. 1,396,000 6,631 Laser Vision Centers, Inc. 25,000 1,575 Latin Healthcare Fund, L.P. 1 5,080 Lincare Holdings, Inc. 5,102,300 127,557 MedPartners, Inc. 2,500,000 18,906 Orthodontic Centers of America, Inc. 475,000 6,709 Pacific Health Laboratories, Inc. 140,000 525 Peachtree Medichem Partners, LLC 30,078 1,463 PhyCor, Inc. 500,000 3,703 PSS World Medical, Inc. 4,601,000 51,474 Quintiles Transnational Corp. 400,000 16,800 RTW, Inc. 1,349,500 7,928 Sterile Recoveries, Inc. 450,000 5,203 Surmodics Inc. 5,000 82 United Payors & United Providers, Inc. 1,134,400 26,304 Universal Standard Healthcare, Inc. 666,000 0 US Oncology, Inc. 5,968,174 71,618 --------- 393,270 --------- PHARMACEUTICAL & BIOTECH 3.7% Aastrom Biosciences, Inc. 1,500,000 1,875 Aastrom Biosciences, Inc. - Pfd. 135,062 0 Alexion Pharmaceuticals, Inc. 837,300 7,431 Aradigm Corporation 377,500 3,350 Aradigm Corporation 666,667 5,325 ArQule, Inc. 2,129,200 10,380
- -------------------------------------------------------------------------------- 4 The accompanying notes are an integral part of these financial statements. The Kaufmann Fund, Inc. Semi-Annual Report - June 30, 1999 - Unaudited - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (CONTINUED) - --------------------------------------------------------------------------------
Value Shares (000s) ------ ------ PHARMACEUTICAL & BIOTECH (Continued) Aurora Biosciences Corporation + * 1,900,400 $ 13,778 Aviron * 250,000 7,187 AXYS Pharmaceuticals, Inc. * 465,500 1,571 Cephalon, Inc. * 500,000 8,688 Cephalon, Inc. - Class A-Warrants # * 480,000 0 Cephalon, Inc. - Class B-Warrants # * 160,000 0 Dura Pharmaceuticals, Inc. * 600,000 7,163 ENZON, Inc. * 404,000 8,358 EPIX Medical, Inc. * 450,000 2,475 Genomica Corporation Series B - Pfd. # * 9,722,222 7,000 IntraBiotics Pharmaceuticals, Inc. Series G - Pfd. # * 1,500,000 4,502 LJL Biosystems, Inc. # * 857,143 3,279 Protein Design Labs, Inc. * 500,000 11,093 QLT PhotoTherapeutics Inc. (CAD) /\ * 317,100 17,227 QLT PhotoTherapeutics Inc. * 59,000 3,245 Xenometrix, Inc. # * 6,619 2 --------- 123,929 --------- Total Medical 636,964 ========= Retail 13.5% MAIL ORDER COMMERCIAL/INDUSTRIAL 1.4% Micro Warehouse, Inc. * 1,000,000 17,875 Systemax Inc. + * 2,186,100 27,053 --------- 44,928 --------- RESTAURANTS 2.4% J.D. Wetherspoon plc (GBP) /\+ 17,426,432 81,032 --------- 81,032 --------- RETAIL STORES 9.7% Circuit City Stores - Circuit City Group 700,000 65,100 Consolidated Stores Corporation * 381,200 10,292 Finish Line, Inc., The * 400,000 4,500 General Nutrition Companies, Inc. * 676,200 15,764 Office Depot, Inc. * 5,350,000 118,035 PETsMART, Inc. + * 5,863,800 60,104 ShopKo Stores, Inc. * 800,000 29,000 Staples, Inc. * 700,000 21,656 Western Growth Capital Partners I, L.L.L.P # * 52,500 130 --------- 324,581 --------- Total Retail 450,541 ========= Technology 32.8% COMMUNICATIONS EQUIPMENT 2.1% AudioCodes Ltd. * 300,000 8,100 JDS Fitel Inc. (CAD) /\ * 300,000 25,161 P-Com, Inc. # * 2,516,990 10,000 Powerwave Technologies, Inc. * 357,500 11,529 Tellabs, Inc. * 200,000 13,513 -------- 68,303 -------- COMPUTER HARDWARE & ACCESSORIES 1.0% Apex PC Solultions, Inc. * 200,000 4,100 Hutchinson Technology Incorporated + * 800,000 22,200 PixTech, Inc. * 678,169 865 PixTech, Inc. # * 1,000,000 1,500 PixTech, Inc. - Conv. Pfd. # * 266,297 5,400 -------- 34,065 -------- COMPUTER SERVICES 10.7% Affiliated Computer Services, Inc. * 1,600,000 81,000 Concord EFS, Inc. * 2,485,000 105,147 CSG Systems International, Inc. * 850,000 22,259 Galileo International, Inc. 2,000,000 106,875 INSpire Insurance Solutions, Inc. + * 1,152,100 16,705 International Telecommunication Data Systems, Inc. + * 1,489,400 23,830 -------- 355,816 -------- COMPUTER SOFTWARE 8.0 % Amdocs Limited * 4,500,000 102,375 Ariba, Inc. * 30,000 2,918 BMC Software Inc. * 100,000 5,400 Check Point Software Technologies Ltd. * 500,000 26,813 Citrix Systems, Inc. * 500,000 28,250 Compuware Corporation * 200,000 6,363 GreenField Technology Ventures Fund I # * 1 75 Inso Corporation * 50,000 269 MAPICS, Inc. + * 1,275,000 13,467 Project Software & Development, Inc. * 32,500 1,016 Puma Technology, Inc. * 91,900 482 SensAble Technologies, Inc. * 1,333,334 2,064 Siebel System, Inc. # * 500,000 33,187 Sterling Software, Inc. * 96,900 2,586 Synopsys, Inc. * 501,000 4,715 Visio Corporation * 200,000 7,612 -------- 265,241 --------
- -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 5 The Kaufmann Fund, Inc. Semi-Annual Report -- June 30, 1999 -- Unaudited - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (CONTINUED) - --------------------------------------------------------------------------------
Value Shares (000s) ------ -------- ELECTRONIC COMPONENTS 0.3% Aavid Thermal Technologies, Inc. * 311,000 $ 7,036 Sensormatic Electronics Corporation * 200,000 2,788 --------- 9,824 --------- SEMICONDUCTOR & EQUIPMENT 6.0% Alpha Industries, Inc. + * 1,100,000 52,388 Altera Corporation * 1,000,000 36,813 Atmel Corporation * 157,300 4,119 Cypress Semiconductor * 300,000 5,138 DSP Communications, Inc. * 205,900 5,945 LSI Logic Corporation * 850,000 39,206 Vitesse Semiconductor Corporation * 800,000 53,950 --------- 197,559 --------- TELECOMMUNICATION SERVICES 4.7% American Tower Corporation Class A * 890,700 21,376 Billing Concepts Corp. + * 2,423,300 27,111 Crown Castle International Corp. * 40,000 833 Illuminet Holdings, Inc. # * 20,100 358 Intermedia Communications Inc. * 200,000 6,000 ITC /\ DeltaCom, Inc. * 312,500 8,750 Orckit Communications Ltd. * 400,000 9,900 SBA Communications Corporation * 225,000 2,179 TALK.com, Inc. * 1,000,000 11,250 Time Warner Telecom Inc. * 325,000 9,425 Transaction Network Services, Inc. + * 1,500,000 43,875 United Pan-Europe Communications NV 250,000 13,813 --------- 154,870 --------- Total Technology 1,085,678 --------- Other 24.2% DISTRIBUTION 0.2% Keystone Automotive Industries, Inc. * 200,000 3,475 Nuco2 Inc. + * 250,000 2,188 --------- 5,663 --------- ENTERTAINMENT 1.5% Championship Auto Racing Teams, Inc. * 512,800 15,352 Cinar Corporation - Class B + * 1,250,000 30,625 Penske Motorsports, Inc. * 31,300 1,553 Realm Production and Entertainment, Inc. # * 172,000 301 Speedway Motorsports, Inc. * 37,500 1,474 --------- 49,305 --------- INDUSTRIAL 1.4% Asia Pulp & Paper Company Ltd. * 1,950,000 18,769 Asia Pulp & Paper Company Ltd. - Warrants * 90,000 236 Eastern Water Resources Dev. and Mgmt. PCL * 660,000 814 JLM Industries, Inc. + * 400,000 2,100 Phoenix Pulp & Paper Pcl (THB) /\ * 201,100 0 Simpson Manufacturing Co., Inc. * 250,000 11,875 Synetic, Inc. * 200,000 13,750 -------- 47,544 -------- MEDIA & INFORMATION SERVICES 7.2% AdForce, Inc. * 133,700 3,142 Citadel Communications Corporation * 225,000 8,141 Clear Channel Communications, Inc. * 1,000,000 68,938 Cunningham Graphics International, Inc. + * 246,000 4,090 Flycast Communications Corporation * 35,000 669 Getty Images, Inc. * 500,000 9,438 GoTo.com, Inc. * 25,000 700 HA-LO Industries, Inc. * 359,400 3,549 Homeseekers.com, Incorporated * 286,000 1,359 Infinity Broadcasting Corp.- Class A * 1,600,000 47,600 internet.com LLC * 40,000 503 Lamar Advertising Company * 600,000 24,563 Mail.com, Inc. * 550,000 10,347 Outdoor Systems, Inc. * 800,000 29,200 Panavision Inc. # * 46,363 0 Radio One, Inc. * 35,000 1,628 TMP Worldwide Inc. * 300,000 19,050 topjobs.net plc * 180,000 1,001 Ziff-Davis Inc. -ZDNet * 249,200 6,479 -------- 240,397 -------- OIL & GAS 1.8% Apache Corporation 400,000 15,600 EEX Corporation * 300,000 2,081 Enron Oil & Gas Company 100,000 2,025 Forest Oil Corporation * 678,700 8,526 Oceaneering International, Inc. * 163,900 2,643 St. Mary Land & Exploration Company 400,000 8,225 Sante Fe Snyder Corporation * 2,408,750 18,367 Virginia Gas Company + 593,000 2,594 -------- 60,061 -------- REAL ESTATE 0.1% IRSA Inversiones y Representaciones S.A. 101,781 3,142 -------- 3,142 -------- SERVICE 11.5% Ambassadors International, Inc. + * 915,000 13,611 Cendant Corporation * 15,800,000 323,900
- -------------------------------------------------------------------------------- 6 The accompanying notes are an integral part of these financial statements. The Kaufmann Fund, Inc. Semi-Annual Report - June 30, 1999 - Unaudited - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS (CONTINUED) - --------------------------------------------------------------------------------
Value Shares (000s) ------ ------ SERVICE (Continued) Charles River Associates Incorporated * 200,000 $5,013 Coinstar, Inc. * 40,000 1,147 Corporate Executive Board Company, The * 475,000 16,892 Electricity Generating Authority of Thailand (THB) /\ * 10,000 14 ITT Educational Services, Inc. * 291,900 7,608 Kroll-O'Gara Company, The * 300,000 6,619 Realty Information Group, Inc. * 200,000 8,700 ------- 383,504 ------- TRANSPORTATION 0.5% Carey International, Inc. + * 520,000 12,805 Dispatch Management Services Corp. + * 1,319,700 3,670 ------- 16,475 ------- Total Other 806,091 ------- - ------------------------------------------------------------------------------------ Total Stocks(Cost $2,128,479) $3,194,417 - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Convertible Bonds 3.8% - ------------------------------------------------------------------------------------ Face Value Amount (000s) ------ ------ APP Finance (VII) Mauritius Limited $29,000,000 $ 21,460 3.50% 04/30/2003 Cephalon, Inc. # 10,000,000 10,000 11.00% 01/31/2002 Hutchinson Technology Incorporated 24,000,000 27,960 6.00% 03/15/2005 PETsMART, Inc. 51,000,000 65,790 6.75% 11/01/2004 Universal Standard Healthcare, Inc. 5,000,000 0 8.25% 02/01/2006 ------ - ------------------------------------------------------------------------------------ Total Convertible Bonds (Cost $116,037) $ 125,210 - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Short-Term Obligations 0.0% - ------------------------------------------------------------------------------------ Par Value Value (000s) ------ ------ Repurchase Agreements 0.0% State Street Bank and Trust Company, 6.85%, dated 06/30/1999, due 07/01/1999 (collateralized by Federal Agency Securities) $171,000 $ 171 ------ - ------------------------------------------------------------------------------------ Total Short-Term Obligations (Cost $171) $ 171 - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Contracts 0.2% - ------------------------------------------------------------------------------------ Value Contracts (000s) --------- ------ PURCHASED OPTIONS Currency options, strike price, expiration: GBP, call @1.5675, 09/03/1999 64,000,000 $ 931 Equity options, strike price, expiration: Cendant Corporation, call @ 15, 01/20/2001 5,000 4,250 Cendant Corporation, call @ 20, 01/20/2001 7,000 4,375 SOLD OPTION Currency options, strike price, expiration: GBP, call @ 1.627, 09/03/1999 (64,000,000) (295) ----- - ------------------------------------------------------------------------------------ Total Contracts (Cost $4,542) $ 9,261 - ------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------ Total Investments 100% $ 3,329,059 (Cost $2,249,229) ========= - ------------------------------------------------------------------------------------ Legend % Represents percentage of total portfolio investments /\ Foreign Denominated Security: CAD - Canadian Dollar GBP - British Pound ILS - Israeli Shekel ITL- Italian Lira JPY- Japanese Yen THB - Thai Baht + Affiliated Company (See Note 7 of Notes to Financial Statements) # Restricted security - not registered under the Securities Act of 1933 (See Note 8 of Notes to Financial Statements) * Non - income producing during the period - ------------------------------------------------------------------------------------ Schedule of Securities Sold Short - ------------------------------------------------------------------------------------ Value Shares (000s) ------ ------ STOCKS Books-A-Million, Inc. 30,000 $ 226 CIENA Corporation 110,000 3,321 Pre-Paid Legal Services, Inc. 20,000 544 Restoration Hardware, Inc. 11,800 158 SAP AG 100,000 3,462 SONUS Pharmaceuticals, Inc. 20,000 104 Sunrise Technologies International, Inc. 30,000 367 ------ $ 8,182
- -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 7 The Kaufmann Fund, Inc. Semi-Annual Report -- June 30, 1999 -- Unaudited - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES - --------------------------------------------------------------------------------
Amounts in thousands (except per share amount) - ----------------------------------------------------------------------------------------------------------------------------- Assets - ----------------------------------------------------------------------------------------------------------------------------- Investments in securities at value (including repurchase agreements of $171) (cost $2,249,229) (See accompanying schedule) $3,329,059 Cash and cash equivalents 61,524 Deposit with custodian bank for securities sold short 8,130 Receivable from brokers for securities sold short 8,119 Receivable for investments sold 42,865 Receivable for Fund shares sold 737 Receivable from Investment Advisor 2,187 Dividends and interest receivable 1,915 Other receivables 108 Shares of Investment Fund, at amortized cost, held as collateral for securities loaned 762,989 - ----------------------------------------------------------------------------------------------------------------------------- Total Assets $4,217,633 - ----------------------------------------------------------------------------------------------------------------------------- Liabilities Securities sold short, at value (proceeds $7,454) (See accompanying schedule) $ 8,182 Payable for investments purchased 17,593 Payable for Fund shares redeemed 11,743 Other payables and accrued expenses 1,411 Collateral on securities loaned, at value 762,989 Total Liabilities $801,918 - ----------------------------------------------------------------------------------------------------------------------------- Net Assets $3,415,715 - ----------------------------------------------------------------------------------------------------------------------------- Net Assets Consist Of: Paid in capital $2,002,102 Accumulated net investment loss (211,099) Accumulated undistributed net realized gain on investments and foreign currency transactions 545,610 Net unrealized appreciation on investments and assets and liabilities in foreign currencies 1,079,102 --------- Net Assets, for 604,099 Shares Outstanding $3,415,715 ========= Net Asset Value per Share (based on 604,099 shares outstanding, 2,000,000 shares authorized with $.10 per share par value) $5.65 ====
- -------------------------------------------------------------------------------- 8 The accompanying notes are an integral part of these financial statements. The Kaufman Fund, Inc. Semi-Annual Report - June 30, 1999 - Unaudited - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1999 - -------------------------------------------------------------------------------- Amounts in thousands - -------------------------------------------------------------------------------- Investment Income - -------------------------------------------------------------------------------- Interest (including income on securities loaned of $1,017) $ 11,994 Dividends, net of $38 of foreign taxes withheld (including $1,128 received from affiliated issuers) 2,747 Other (Note 3) 2,357 ------- - -------------------------------------------------------------------------------- Total Income $ 17,098 - -------------------------------------------------------------------------------- Expenses - -------------------------------------------------------------------------------- Investment advisory fee (Note 3) $ 27,618 Distribution fee (Note 3) 6,073 Service fees (Note 4) 2,360 Shareholder servicing fees 982 Dividends on securities sold short 561 Custodian fees and expenses 238 Audit fees 198 Printing fees 159 Loan commitment fee (Note 9) 150 Legal fees 99 Non-interested directors' fees and expenses 96 Registration fees 83 Miscellaneous expenses 524 ------- Total expenses before reimbursement 39,141 Expense reimbursement by Investment Advisor (Note 3) (3,053) ------- - -------------------------------------------------------------------------------- Net Expenses $ 36,088 - -------------------------------------------------------------------------------- Net Investment Loss $ (18,990) - -------------------------------------------------------------------------------- Realized and Unrealized Gain (Loss) Net realized gain on: Investment securities (including net realized loss of $32,318 on sales of investments in affiliated issuers) $ 186,710 Foreign currency transactions 268 ------- 186,978 ------- Changes in net unrealized (depreciation) on: Investment securities (260,565) Assets and liabilities (1) ------- (260,566) ------- Net loss (73,588) ------- Net decrease in net assets resulting from operations $ (92,578) ======= - -------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 9 The Kaufmann Fund, Inc. Semi-Annual Report -- June 30, 1999 -- Unaudited - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Amounts in thousands -------------------------- (Unaudited) Year Six months ended ended December 31, June 30, 1999 1998 ------------- ------------ Increase (Decrease) in Net Assets Operations Net investment loss $ (18,990) $ (35,087) Net realized gain 186,978 614,899 Change in net unrealized appreciation (260,566) (574,200) ----------- ----------- Net increase (decrease) in net assets resulting from operations (92,578) 5,612 ----------- ----------- Distributions to shareholders From net investment income -- -- From net realized gain -- (499,865) ----------- ----------- Total distributions -- (499,865) ----------- ----------- Share transactions Net proceeds from sales of shares 155,580 728,424 Reinvestment of distributions -- 483,873 Cost of shares redeemed (1,268,305) (2,105,187) ----------- ----------- Net decrease in net assets resulting from share transactions (1,112,725) (892,890) ----------- ----------- Total decrease in net assets (1,205,303) (1,387,143) Net Assets Beginning of period 4,621,018 6,008,161 ----------- ----------- End of period $ 3,415,715 $ 4,621,018 =========== =========== Other Information Shares: Sold 29,269 116,161 Issued in reinvestment of distributions -- 93,955 Redeemed (238,369) (339,616) ----------- ----------- Net decrease (209,100) (129,500) =========== ===========
- -------------------------------------------------------------------------------- 10 The accompanying notes are an integral part of these financial statements. The Kaufmann Fund, Inc. Semi-Annual Report - June 30, 1999 - Unaudited - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1 Significant Accounting Policies The Kaufmann Fund, Inc. (the Fund) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Fund is incorporated in Maryland. The financial statements have been prepared in conformity with generally accepted accounting principles which permit management to make certain estimates and assumptions. The following summarizes the significant accounting policies of the Fund: Security Valuation Securities for which exchange quotations are readily available are valued at the last sale price, or if none, at the closing bid price. Securities, including restricted securities, for which exchange quotations are not readily available, are valued primarily using dealer-supplied valuations or at fair value, as determined in good faith under consistently applied procedures established by the Board of Directors. Short-term securities with remaining maturities of sixty days or less, for which quotations are not readily available, are valued at amortized cost or original cost plus interest, which approximate current value. Foreign Currency Translation The accounting records of the Fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the prevailing exchange rates at period end. Income and expenses are translated into U.S. dollars at the prevailing exchange rate on the dates of the respective transactions. Purchases and sales of securities are translated into U.S. dollars at the contractual currency exchange rates established at the time of each trade. Net realized gains and losses on foreign currency transactions represent net gains and losses from sales and maturities of forward currency contracts, dispositions of foreign currencies, and the difference between the amount of accrued net investment income and the U.S. dollar amount actually received. The effects of changes in foreign currency exchange rates on investments in securities are included in net realized and unrealized gain or loss on investment securities. Income Taxes As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the Fund is not subject to income taxes to the extent that it distributes substantially all of its taxable income for its fiscal year. Accordingly, no provision for Federal income taxes is required. Investment Income Dividend income is recorded on ex-dividend date. Non-cash dividends, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Investment income is recorded net of foreign taxes withheld when recovery of such taxes is uncertain. - -------------------------------------------------------------------------------- 11 The Kaufmann Fund, Inc. Semi-Annual Report - June 30, 1999 - Unaudited - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- Security Transactions Security transactions are recorded on trade date, the date the order to buy or sell is executed. Gains and losses on securities sold are determined on the basis of identified cost. Distributions to Shareholders Distributions are recorded on ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Permanent book and tax differences relating to shareholder distributions may result in reclassifications to paid-in capital and may affect the per-share allocation between net investment income and realized and unrealized gain/loss. Undistributed net investment income and accumulated undistributed net realized gain/loss on investments and foreign currency transactions may include temporary book and tax differences which reverse in subsequent periods. Any taxable income or gain remaining at fiscal year end is distributed the following year. 2 Operating Policies Foreign Currency Contracts The Fund utilizes foreign currency contracts to facilitate transactions in foreign securities. Losses may arise from changes in the value of the foreign currency, or from counter parties not performing under the contract terms. The U.S. dollar value of foreign currency contracts is determined using contractual currency exchange rates established at the time of each trade. The cost of the foreign currency contracts is included in the cost basis of the associated investment. Repurchase Agreements The Fund, through its custodian, takes possession through the Federal Reserve Book Entry System, of the collateral pledged for investments in repurchase agreements. The underlying U.S. Treasury or Federal Agency Securities are valued daily on a mark-to-market basis to ensure that the value, including accrued interest, is at least equal to the repurchase price. In the event of default of the obligation to repurchase, liquidation and/or retention of the collateral may be subject to legal proceedings. Short Sales Short sales are transactions in which the Fund sells a security it does not own, in anticipation of a decline in the market value of that security. To complete such a transaction, the Fund must borrow the security to deliver to the buyer upon the short sale; the Fund is then obligated to replace the security borrowed by purchasing it in the open market at some later date. The Fund will incur a loss if the market price of the security increases between the date of the short sale and the date on which the borrowed security is replaced. The Fund will realize a gain if the security declines in value between those dates. All short sales must be fully collateralized. The Fund maintains the collateral in a segregated account with its - -------------------------------------------------------------------------------- 12 The Kaufmann Fund, Inc. Semi-Annual Report - June 30, 1999 - Unaudited - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- custodian. At June 30, 1999, the cost of securities purchased to cover short sales and the proceeds from securities sold short were $102,265,750 and $332,777,279, respectively. Securities sold short at June 30, 1999 and their related values are described in the Schedule of Securities Sold Short. 3 Investment Advisory Fee and Other Transactions with Affiliates Investment Advisory Fee Edgemont Asset Management Corporation (Edgemont) is the investment advisor of the Fund. Certain officers and directors of the Fund are affiliated with Edgemont. Edgemont's investment advisory fee is calculated on an annual basis at 1.50% of the Fund's average net assets. For the six months ended June 30, 1999, the Fund incurred investment advisory fees of $27,618,214. Edgemont has voluntarily agreed to reimburse the Fund for expenses, to the extent of the investment advisory fee, if the Fund's annual expenses (other than brokerage commissions, capital items, interest, taxes, extraordinary items and other excludable items) are in excess of $650,000. A reimbursement of $3,053,381 was made for the six months ended June 30, 1999. Edgemont has voluntarily agreed to continue to provide this reimbursement in the future. Distribution Fee The Fund has adopted a Plan pursuant to Rule 12b-1 under the 1940 Act whereby the Fund or Edgemont may finance activities which are primarily intended to result in the sale of the Fund's shares, including, but not limited to: advertising, printing of prospectuses and reports for prospective shareholders, preparation and distribution of advertising materials and sales literature, and payments to dealers and shareholder servicing agents who enter into agreements with the Fund or Edgemont. The Fund or Edgemont may incur such distribution expenses at the rate of 0.75% per annum on the Fund's average net assets. For the six months ended June 30, 1999, distribution expenses of $6,073,189 were incurred by the Fund, equivalent to 0.33% per annum of the Fund's average net assets. Redemption Fee The Fund imposes a redemption fee of 0.20% on the redemption price of the Fund's capital stock shares redeemed, if such shares were purchased after February 1, 1985. The redemption fee is applied to the Fund's expenses allocable to providing redemption services, including, but not limited to: transfer agent fees, postage, printing, telephone and related employment costs. Any excess fee proceeds are added to the Fund's assets. For the six months ended June 30, 1999, redemption fees of $2,482,312 were charged by the Fund of which $1,052,030 were allocated to cover the cost of redemptions. Excess fee proceeds of $1,112,265 were added to the Fund's assets. Brokerage Commissions The Fund is permitted to place a portion of its portfolio transactions with Bowling Green Securities, Inc. (Bowling Green). For the six months ended June 30, 1999, no portfolio transactions were executed with Bowling Green and therefore no brokerage commissions were paid. Certain officers and directors of the Fund are affiliated with Bowling Green. - -------------------------------------------------------------------------------- 13 The Kaufmann Fund, Inc. Semi-Annual Report - June 30, 1999 - Unaudited - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 4 Service Fees The Fund has an Authorization Agreement for the payment of a service fee, not to exceed 0.25% per annum of the Fund's average net assets, to broker-dealers that provide liaison services to investors, such as responding to client inquiries and providing information on investments. For the six months ended June 30, 1999, service fees of $982,000 were incurred by the Fund. Effective May 1999, Edgemont has agreed to pay for these services via the distribution fee. 5 Investments Purchases and Sales of Investments Purchases and sales of securities (excluding short-term investments and securities sold short) aggregated $1,538,858,631 and $2,068,058,195, respectively. Portfolio Turnover Rate Portfolio turnover rate, which is calculated on the lesser of the costs of investments purchased or the proceeds from investments sold (excluding short-term investments and securities sold short) measured as a percentage of the Fund's average monthly portfolio, was 44% for the six months ended June 30, 1999. Tax Basis of Investments As of June 30, 1999, the aggregate cost, for Federal income tax purposes, of investment securities and proceeds of securities sold short was $2,249,057,864 and $7,453,582, respectively. Accumulated net unrealized appreciation aggregated $1,079,101,700 of which $1,222,345,912 related to appreciated investment securities and $143,244,212 related to depreciated investment securities. 6 Securities Lending The Fund lends securities to certain brokers who pay the Fund negotiated lenders' fees. These fees, less costs to administer the program, are included in interest income and amounted to $1,071,247 for the six months ended June 30, 1999. The Fund receives U.S. Treasury obligations and/or cash as collateral against the loaned securities in an amount at least equal to 102% of the market value of the loaned securities at the inception of each loan. This collateral must be maintained at not less than 100% of the market value of the loaned securities during the period of the loan. At June 30, 1999, the value of the securities loaned and the value of collateral was $743,395,985 and $762,988,551, respectively. - -------------------------------------------------------------------------------- 14 The Kaufmann Fund, Inc. Semi-Annual Report -- June 30, 1999 -- Unaudited - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 7 Transactions with Affiliated Companies An affiliated company is a company in which the Fund has ownership of at least 5% of the voting shares. Transactions with companies which are or were affiliates are as follows:
Amounts in thousands ---------------------------------------------------------- Purchases Sales Dividend Affiliates Cost Cost Income Value - --------------------------------------------------------------------------------------------------------------------------------- Aastrom Biosciences, Inc. * $ -- $ 741 $ -- $ 1,875 Aastrom Biosciences, Inc. Pfd. (restricted) * -- -- -- -- Alexion Pharmaceuticals, Inc. * -- -- -- 7,431 Alpha Industries, Inc. * 17,952 255 -- 52,388 Ambassadors International, Inc. * -- 342 -- 13,611 ArQule, Inc. * -- 1,231 -- 10,380 Aurora Biosciences Corporation * -- 8,585 -- 13,778 Barnett, Inc. * -- 9,702 -- -- Billing Concepts Corp. * -- -- -- 27,111 Bionx Implants, Inc. * -- 1,389 -- 4,125 Boran LePore & Assocs Inc. * 10,799 7,908 -- -- Carey International, Inc. * -- 640 -- 12,805 Central Garden & Pet Company * -- 19,785 -- -- Cinar Corporation - Class B * 5,000 -- -- 30,625 Coast Dental Services, Inc. * -- 3,576 -- 1,155 CompDent Corporation * -- 14,375 -- -- CompDent Corporation * -- -- -- 124 CompDent Corporation Pfd. (restricted) * -- -- -- 2,876 Cunningham Graphics International, Inc. * -- 1,669 -- 4,090 Diagnostic Products Corporation -- 8,483 164 11,050 Dispatch Management Services Corp. * 451 -- -- 3,670 Hanger Orthopedic Group, Inc. * 9,490 -- -- 13,108 Hastings Entertainment, Inc. * -- 7,640 -- -- Headlands Mortgage Company * -- 21,487 -- -- Health Management Systems, Inc. * -- 5,937 -- -- Healthcare Recoveries, Inc. * -- 2,520 -- 6,631 Hutchinson Technology Incorporated * -- 13,675 -- 22,200 INSpire Insurance Solutions, Inc. * 9,281 614 -- 16,705 International Telecommunication Data Sys. Inc. * 5,118 -- -- 23,830 J.D. Wetherspoon plc -- -- 235 81,032 JLM Industries, Inc. * -- -- -- 2,100 Lincare Holdings, Inc. * 3,289 6,940 -- 127,557
- -------------------------------------------------------------------------------- 15 The Kaufmann Fund, Inc. Semi-Annual Report - June 30, 1999 - Unaudited - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) - --------------------------------------------------------------------------------
Amounts in thousands ------------------------------------------------------------ Purchases Sales Dividend Affiliates Cost Cost Income Value - ------------------------------------------------------------------------------------------------------------------------------------ MAPICS, Inc. * $ 2,493 $ -- $ -- $ 13,467 Marquee Group Inc., The * -- 14,337 -- -- Medstone International, Inc. * -- 3,786 -- -- Nuco2 Inc. * -- 1,460 -- 2,188 Orthofix International N.V. * -- -- -- 14,875 Peak Trends Trust -- 5,618 708 -- PETsMART, Inc. * -- -- -- 60,104 Philadelphia Consolidated Holding Corp. * 4,261 -- -- 31,514 PSS World Medical, Inc. * 3,018 8,697 -- 51,474 RTW, Inc. * 256 -- -- 7,928 Sheridan Healthcare, Inc. * -- 8,322 -- -- Skechers U.S.A., Inc. * 8,250 -- -- 7,875 Sterile Recoveries, Inc. * -- 1,993 -- 5,203 STERIS Corporation * -- 126,192 -- -- Systemax Inc. * -- 3,736 -- 27,053 Transaction Network Services, Inc. * 152 3,098 -- 43,875 United Payors & United Providers, Inc. * 21,320 -- -- 26,304 Universal Standard Healthcare, Inc.* -- 70 -- -- U S Oncology, Inc. * 19,671 31 -- 71,618 Virginia Gas Company 560 -- 21 2,594 ViroPharma Incorporated * -- 6,084 -- -- Wilmar Industries, Inc. * -- 16,185 -- -- Zoll Medical Corporation * -- -- -- 11,767 -------- -------- -------- -------- $121,361 $337,103 $ 1,128 $868,096 ======== ======== ======== ========
* Non-income producing during the period. - -------------------------------------------------------------------------------- 16 The Kaufmann Fund, Inc. Semi-Annual Report -- June 30, 1999 -- Unaudited - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 8 Restricted Securities The Fund may not invest more than 10% of its net assets in securities which are subject to legal or contractual restrictions on resale. At June 30, 1999, the Fund owned the following restricted securities (constituting 2.7% of net assets) which may not be publicly sold without registration under the Securities Act of 1933 (the 1933 Act). The Fund does not have the right to demand that such securities be registered. The value of these securities is determined by valuations supplied by pricing services or brokers, or if not available, in good faith by or at the direction of the Board of Directors. Certain of these securities may be offered and sold to "qualified institutional buyers" under Rule 144A of the 1933 Act.
Amounts in thousands Date of Share/Par -------------------- Description Acquisition Amount Cost Value - ------------------------------------------------------------------------------------------------------------------------------------ Aastrom Biosciences, Inc. - Preferred 02/17/98 6,457 $ -- $ -- 04/15/98 26,316 -- -- 10/02/98 102,289 -- -- ---------- -------- -------- 135,062 -- -- Amira Medical Series D - Preferred 04/12/99 1,000,000 5,500 5,500 Amira Medical Series A - Preferred 04/12/99 250,000 1,375 1,375 Aradigm Corporation 03/10/99 666,667 7,000 5,325 Cephalon, Inc. 11.00% 01/31/2002 03/01/99 10,000,000 10,000 10,000 Cephalon, Inc. Class B Warrants 03/01/99 160,000 -- -- Cephalon, Inc. Class A Warrants 03/01/99 480,000 -- -- Combact Diagnostics Systems Ltd. (ILS) 11/02/95 22,502 1,000 1,000 Combact Diagnostics Systems Ltd. 10/16/98 3,522 -- -- Series C - Preferred (ILS) Combact Diagnostics Systems Ltd. 10/16/98 666 -- -- Ordinary Shares (ILS) CompDent Corporation 05/24/95 60,000 36 30 04/21/97 75,000 46 38 04/22/97 65,000 40 33 06/30/99 48,612 -- 23 ---------- -------- -------- 248,612 122 124 CompDent Corporation - Preferred 05/24/95 855 834 863 04/21/97 1,069 1,060 1,078 04/22/97 927 938 935 ---------- -------- -------- 2,851 2,832 2,876 - ------------------------------------------------------------------------------------------------------------------------------------ 17
The Kaufmann Fund, Inc. Semi-Annual Report -- June 30, 1999 -- Unaudited - -------------------------------------------------------------------------------- Notes to Financial Statements (Continued) - --------------------------------------------------------------------------------
Amounts in thousands ----------------------- Date of Share/Par Description Acquisition Amount Cost Value - ------------------------------------------------------------------------------------------------------------------------------------ ENDOcare, Inc. 01/24/97 1,000,000 $ 3,500 $ 6,000 04/16/98 750,000 2,625 4,500 04/24/98 250,000 879 1,500 ---------- ---------- ---------- 2,000,000 7,004 12,000 Genomica Corporation Series B - Preferred 02/17/99 9,722,222 7,000 7,000 GreenField Technology Ventures Fund I 06/15/98 1 75 75 Illuminet Holdings, Inc. 02/04/98 20,100 358 358 IntraBiotics Pharmaceuticals, Inc. Series G - Pfd. 11/23/98 1,500,000 4,502 4,502 LJL Biosystems, Inc. 01/22/99 857,143 3,000 3,279 Latin Healthcare Fund, L.P. 07/15/97 1 2,080 2,080 06/03/99 -- 3,000 3,000 ---------- ---------- ---------- 1 5,080 5,080 NeoPath, Inc. 02/09/99 1,821,000 9,105 6,351 Pacific Health Laboratories, Inc. 08/09/96 140,000 525 525 P-Com, Inc. 06/22/99 2,516,990 10,000 10,000 Panavision Inc. 06/05/98 46,363 767 -- Peachtree Medichem Partners, LLC 06/07/99 30,078 1,463 1,463 PixTech, Inc. 03/31/98 1,000,000 4,021 1,500 PixTech, Inc. Convertible Preferred 12/24/98 266,297 6,000 5,400 Realm Production and Entertainment, Inc. 03/24/97 172,000 301 301 SensAble Technologies, Inc. 12/23/97 1,333,334 2,064 2,064 ThermoGenesis Corp. 12/31/97 800,000 2,000 1,200 ThermoGenesis Corp. - Warrants 01/27/98 80,000 -- -- ThermoGenesis Corp. Series A - Conv. Pfd. 12/29/98 576,000 3,600 3,600 Trex Medical Corporation 11/15/95 20,000 205 215 06/24/96 2,000 28 22 ---------- ---------- ---------- 22,000 233 237 Western Growth Capital Partners I, L.L.L.P. 12/31/97 52,500 131 130 Xenometrix, Inc. 07/10/92 6,619 50 2 ---------- ---------- $ 95,108 $ 91,267 ========== ==========
- -------------------------------------------------------------------------------- 18 The Kaufmann Fund, Inc. Semi-Annual Report - June 30, 1999 - Unaudited - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 9 Line of Credit The Fund has a $400,000,000 committed secured leverage line of credit. The Fund is required to pledge assets equivalent to its borrowings under the line of credit. Borrowings are charged interest at 0.50%, over the current overnight Federal Funds Rate. The Fund incurs a commitment fee of 0.075% per annum on the unused portion of the line of credit. There were no borrowings under the line of credit during the six months ended June 30, 1999. - -------------------------------------------------------------------------------- 19 - -------------------------------------------------------------------------------- Investment Advisor Edgemont Asset Management Corporation 140 East 45th Street, 43rd Floor New York, New York 10017 (212) 661-2443 - -------------------------------------------------------------------------------- Custodian State Street Bank and Trust Company P.O. Box 1713 Boston, Massachusetts 02105 - -------------------------------------------------------------------------------- Transfer Agent Boston Financial Data Services Inc. P.O. Box 8331 Boston, Massachusetts 02266 (800) 261-0555 - -------------------------------------------------------------------------------- Legal Counsel Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017 - -------------------------------------------------------------------------------- Independent Auditors Sanville & Company 1514 Old York Road Abington, Pennsylvania 19001 - -------------------------------------------------------------------------------- This semi-annual report must be accompanied with or preceded by the Fund's current prospectus. - -------------------------------------------------------------------------------- The Kaufmann Fund, Inc. [GRAPHIC APPEARS HERE] Semi-Annual Report - -------------------------------------------------------------------------------- Six Months Ended June 30, 1999 -----END PRIVACY-ENHANCED MESSAGE-----