-----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, C4XC8Ryh9m5BV80D8V1fe6oUhBUgHufITk5NNMCC+QEeq5hA1fnYleKdDdz42IQx PuyRRB6kKEZ3ztIglQ2S2Q== /in/edgar/work/20000912/0000950156-00-000469/0000950156-00-000469.txt : 20000922 0000950156-00-000469.hdr.sgml : 20000922 ACCESSION NUMBER: 0000950156-00-000469 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000912 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: 721135 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 0001.txt KAUFMANN FUND - 06/30/00 SEMI-ANNUAL REPORT o JUNE 30, 2000 [Graphic Omitted] 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 ------------------------------------------ ------------------------------------------------------------------- THE KAUFMANN FUND, INC. SEMI-ANNUAL REPORT - JUNE 30, 2000 - UNAUDITED - ------------------------------------------------------------------------------- LETTER TO SHAREHOLDERS - ------------------------------------------------------------------------------- DEAR SHAREHOLDER: We are pleased to report excellent results for the first six months of 2000. The Kaufmann Fund was up 13.1% in net asset value for the period ended June 30, 2000. The Fund's compounded return for the one, five and ten-year periods ended June 30, 2000, were 43.3%, 17.8% and 19%, respectively. Early in the second quarter there was a sharp market sell-off. This was a healthy reaction, in our view, to the speculative excess that preceded it -- particularly in certain areas of technology, biotechnology and the internet. Since then, the market environment has improved considerably, with investors once again at least talking about the importance of a company's underlying fundamentals in determining the company's enterprise value and stock price. With our life-long devotion to rigorous fundamental research, we should prosper in this climate. The relative valuations of true growth companies should become greater in periods when most other companies begin to experience slower growth, and when interest rates and inflation are stable. These are the circumstances in which we find ourselves. As a consequence, the valuations of emerging growth companies relative to large-caps have begun to improve for the first time in years. In addition, the volatility of the market has continued to increase. While we cannot deny how scary it can sometimes be, it also creates the greatest opportunities for investors who understand the fundamentals that determine intrinsic value. Today's investment climate seems ideally suited for stock picking, which is precisely what we know and do best. The current global economic environment continues to be favorable for investors. The worldwide trends of governments enacting sound economic policies (balanced budgets, deregulation, free trade and lower taxes) and of central bankers enacting non-inflationary monetary policies, combined with accelerated advances in technology, have created a positive environment for equity investors and Kaufmann Fund shareholders. We thank you for your loyal support and look forward to serving you for many years to come. Sincerely, /s/ Hans P. Utsch /s/ Lawrence Auriana Hans P. Utsch Lawrence Auriana Portfolio Co-Manager Portfolio Co-Manager THE KAUFMANN FUND, INC. SEMI-ANNUAL REPORT - JUNE 30, 2000 - UNAUDITED - ------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD - -----------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED) SIX MONTHS ENDED YEAR ENDED DECEMBER 31, ---------------- ------------------------------------------------- June 30, 2000 1999 1998 1997 1996 1995 NET ASSET VALUE, BEGINNING OF PERIOD $ 5.95 $ 5.68 $ 6.37 $ 5.84 $ 5.05 $ 3.76 Income from Investment Operations: Net Investment Income (Loss) (0.036) (0.060) (0.040) (0.060) (0.030) (0.060) Net Realized and Unrealized Gain on Investments 0.816 1.316 0.017 0.795 1.083 1.445 ------------------------------------------------------------------ Total Income (Loss) from Investment Operations 0.780 1.256 (0.023) 0.735 1.053 1.385 Less Distributions: From Net Investment Income -- -- -- -- -- -- From Net Realized Gains -- 0.986 0.667 0.205 0.263 0.095 ------------------------------------------------------------------ Total Distributions -- 0.986 0.667 0.205 0.263 0.095 NET ASSET VALUE, END OF PERIOD $ 6.73 $ 5.95 $ 5.68 $ 6.37 $ 5.84 $ 5.05 TOTAL RETURN (a) 13.11 % 26.01 % 0.72 % 12.59 % 20.9 % 36.89 % - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------------------------------------- Net Assets, End of Period (in millions) $3,633 $3,476 $4,621 $6,008 $5,341 $3,163 Ratio of Expenses (after expense reimbursement) to Average Net Assets (%) 1.88 %* 1.95 % 1.96 % 1.89 % 1.93 % 2.17 % Ratio of Interest Expense to Average Net Assets (%) 0.01 %* 0.01 % 0.01 % 0.01 % 0.01 % 0.01 % ------------------------------------------------------------------ Ratio of Expenses (after expense reimbursement less interest expense) to Average Net Assets (%) 1.87 %* 1.94 % 1.95 % 1.88 % 1.92 % 2.16 % Ratio of Net Investment Income (Loss) to Average Net Assets (%) (1.13)%* (1.19)% (0.66) (1.00) (0.82)% (1.24)% Portfolio Turnover Rate (%) 37 % 78 % 59 % 65 % 72 % 60 % (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.
THE KAUFMANN FUND, INC. SEMI-ANNUAL REPORT - JUNE 30, 2000 - UNAUDITED SCHEDULE OF INVESTMENTS - ------------------------------------------------------------------------------- STOCKS 84.4% Value Shares (000s) ------ ------ FINANCIAL 7.7% FINANCE 6.3% 3 I Group PLC (GBP) ^ 550,000 $ 11,310 Capital One Financial Corporation 300,000 13,388 Concord EFS, Inc. * 5,950,000 154,700 Federal Agricultural Mortgage Corporation +* 519,000 7,558 GreenPoint Financial Corp. 621,600 11,655 Heller Financial, Inc. 236,500 4,848 IndyMac Mortgage Holdings, Inc. * 800,000 10,850 MBNA Corporation 400,000 10,850 Shohkoh Fund & Co. Ltd. (JPY) ^* 10,000 2,252 ---------- 227,411 ---------- INSURANCE 1.0% ACE Limited 400,000 11,200 Philadelphia Consolidated Holding Corp. +* 1,300,000 21,856 RTW, Inc. +* 1,170,100 4,424 ---------- 37,480 ---------- VENTURE CAPITAL 0.4% GreenField Technology Ventures Fund I, L.P. #* 1 94 incuVest LLC - Class A #* 1 5,000 Peachtree/CB Partners, LLC #* 1 2,742 Rocket Ventures II, L.P. #* 1 6,063 ---------- 13, 899 ---------- REAL ESTATE 0.0% Washington Real Estate Investment Trust 37,800 676 ---------- 676 ---------- TOTAL FINANCIAL 279,466 ---------- HEALTH 15.4% HEALTHCARE SERVICES 3.9% CompDent Corp. +#* 248,612 122 CompDent Corp.- Pfd. +#* 2,851 2,832 Healthcare Recoveries, Inc. +* 1,396,000 4,973 Latin Healthcare Fund, L.P. #* 1 9,079 Lincare Holdings, Inc. +* 4,846,100 119,335 Pacific Health Laboratories, Inc. #* 133,500 459 Peachtree Medichem Partners, LLC #* 30,078 1,468 PRWW Ltd. * 100,000 1,388 ---------- 139,656 ---------- MEDICAL EQUIPMENT AND SUPPLIES 1.8% Amira Medical - Series A Pfd. #* 250,000 1,375 Amira Medical - Series D Pfd. #* 1,000,000 5,500 Aspect Medical Systems, Inc. * 10,000 270 Bionx Implants, Inc. +* 862,750 2,103 Cardinal Health, Inc. * 100,000 7,400 Cortek, Inc. - Series C Conv. Pfd. #* 500,000 1,000 Cryolife, Inc.* 100,000 2,300 De Novo (Q) Ventures I, L.P. #* 4 2,000 ENDOcare, Inc. #* 749,100 15,169 INAMED Corporation * 200,000 7,325 Orthofix International N.V +* 826,900 14,781 PercuSurge, Inc. - Series E Pfd. #* 1,176,471 3,000 Sanarus Medical Incorporated - Series A Pfd. #* 666,667 1,000 ThermoGenesis Corp. #* 478,400 867 ThermoGenesis Corp. - Warrants #* 80,000 0 ---------- 64,090 ---------- PHARMACEUTICAL AND BIOTECH 9.7% ACADIA Pharmaceuticals Inc. #* 266,666 2,000 Aclara Biosciences Inc. * 70,000 3,566 Alexion Pharmaceuticals, Inc. +* 784,000 56,056 Allos Therapeutics Inc. * 450,000 4,387 Aradigm Corporation * 380,000 6,650 Aradigm Corporation #* 666,667 10,500 ArQule, Inc. +* 980,000 18,988 Aurora Biosciences Corporation +* 609,100 41,533 BioChem Pharma Inc. * 200,000 4,925 Biogen, Inc. * 50,000 3,225 Cephalon, Inc. * 480,000 28,740 Cephalon, Inc. - Pfd. Convertible 95,000 16,079 Charles River Laboratories International, Inc * 220,000 4,881 CIMA Labs Inc. * 101,100 2,047 Collateral Theraupeutics, Inc. * 100,000 2,536 Corixa Corporation * 300,000 12,881 CV Therapeutics, Inc. * 350,000 24,259 diaDexus, Inc. - Series C Pfd. #* 645,161 5,000 Genomica Corporation - Series B Pfd. #* 9,722,222 7,000 Genomica Corporation - Series C Pfd. #* 2,245,595 3,368 Genzyme Transgenics Corporation * 150,000 4,069 IntraBiotics Pharmaceuticals, Inc.- Series G Pfd. #* 750,000 16,013 LJL BioSystems, Inc. #* 482,700 8,417 LJL BioSystems, Inc. - Pfd. #* 272,500 3,696 Medarex, Inc.* 170,000 14,365 Peachtree/LeadScope, Inc. #* 1 683 Peptech Limited (AUD) ^#* 31,250 0 Pharmacopeia, Inc. * 100,000 4,638 Protein Design Labs, Inc. * 120,000 19,794 QTL PhotoTherapeutics Inc. * 50,000 3,866 SangStat Medical Corporation * 100,000 2,888 Waters Corporation * 100,000 12,481 Xenometrix, Inc. #* 6,619 0 ---------- 349,531 ---------- TOTAL HEALTH 553,277 ---------- RETAIL 5.1% RESTAURANTS 3.2% J.D. Wetherspoon plc (GBP) ^+ 20,500,000 116,319 Western Growth Capital Partners I, L.L.L.P #* 52,500 126 ---------- 116,445 ---------- RETAIL 1.9% AutoZone, Inc. * 800,000 17,600 Carrefour SA (FRF) ^* 75,000 5,127 Family Dollar Stores, Inc. 600,000 11,737 Lowe's Companies, Inc. 150,000 6,159 PETsMART, Inc. +* 7,783,000 26,268 ---------- 66,891 ---------- TOTAL RETAIL 183,336 ---------- SERVICES 17.1% BUSINESS SERVICES 3.8% Carey International, Inc. +* 400,000 5,550 Cendant Corporation * 5,000,000 70,000 Corporate Executive Board Company * 500,000 29,938 CoStar Group, Inc. * 300,100 7,521 Dispatch Management Services Corp. +* 1,548,000 2,032 Electricity Generating Authority of Thailand (THB) ^* 10,000 7 Expeditors International of Washington, Inc 200,000 9,500 Kroll-O'Gara Company * 223,400 1,494 The Titan Corporation * 30,000 1,343 TNT Post Group N.V. (NGL) ^ 400,000 10,788 ---------- 138,173 ---------- MEDIA 7.7% Citadel Communications Corporation * 400,000 13,975 Clear Channel Communications, Inc. * 1,000,000 75,000 Comcast Corporation * 300,000 12,150 Entercom Communications Corp. * 480,000 23,400 Grupo Televisa S.A * 100,000 6,893 Infinity Broadcasting Corporation - Class A * 2,025,000 73,786 Insight Communications Company, Inc. * 713,600 11,150 Lamar Advertising Company * 570,000 24,688 Martha Stewart Living Omnimedia, Inc. * 56,000 1,232 Panavision Inc. #* 20 1 SBS Broadcasting SA * 100,000 5,450 United Pan-Europe Communications N.V. (NGL) ^* 156,000 4,079 United Pan-Europe Communications N.V. ADR * 450,000 12,150 UnitedGlobalCom, Inc. * 300,000 14,025 ---------- 277,979 ---------- RECREATION AND ENTERTAINMENT 0.7% Championship Auto Racing Teams, Inc. * 486,900 12,416 CINAR Corporation +* 995,900 6,971 Dover Downs Entertainment, Inc. 359,900 5,039 Speedway Motorsports, Inc. * 100,000 2,300 ---------- 26,726 ---------- TELECOMMUNICATION SERVICES 4.5% American Tower Corp. * 800,000 33,350 Crown Castle International Corp. * 175,000 6,388 FLAG Telecom Holdings Limited * 150,000 2,231 Illuminet Holdings, Inc. #* 20,100 3,272 Illuminet Holdings, Inc. * 71,200 3,622 Intermedia Communications * 100,000 2,975 McLeodUSA Incorporated * 200,000 4,137 Netamerica.com Corporation #* 41,667 500 Netamerica.com Corporation - Warrants #* 20,833 0 Nextel Communications, Inc. * 200,000 12,237 Nextel Partners, Inc. * 206,000 6,708 Pinnacle Holdings Inc. * 250,000 13,500 Primus Telecommunications Group, Inc. * 300,000 7,463 Qwest Communications International Inc. * 350,000 17,391 SBA Communications Corporation * 25,000 1,298 TALK.com, Inc. * 1,522,700 8,851 Time Warner Telecom Inc. * 406,200 26,149 Viatel, Inc. * 275,000 7,855 World Access, Inc. #* 255,000 2,821 ---------- 160,748 ---------- TRANSPORTATION 0.4% Frontline Limited (NOK) ^* 750,000 9,178 OMI Corporation * 900,000 4,894 ---------- 14,072 ---------- TOTAL SERVICES 617,698 ---------- TECHNOLOGY 35.6% COMPUTER HARDWARE AND PERIPHERALS 0.2% Exabyte Corporation * 500,000 2,250 PixTech, Inc. * 1,082,531 2,097 Silicon Graphics, Inc. * 475,000 1,781 ---------- 6,128 ---------- COMPUTER SOFTWARE 9.4% Amdocs Limited * 2,075,000 159,256 Ariba, Inc. * 50,000 4,902 Check Point Software Technologies Ltd. * 380,000 80,465 Citrix Systems, Inc. * 140,000 2,651 ISG International Software Group Ltd. #* 45,000 765 Macromedia, Inc. * 240,000 23,205 OpenTV Corp. * 190,000 8,526 RealNetworks, Inc. * 40,000 2,023 SensAble Technologies, Inc. - Series B Pfd. #* 1,333,334 2,067 SensAble Technologies, Inc. - Series C Pfd. #* 443,979 1,474 Siebel System, Inc. * 335,000 54,794 ---------- 340,128 ---------- DATA PROCESSING SERVICES 1.6% Affiliated Computer Services, Inc. * 1,300,000 42,981 CSG Systems International, Inc. * 100,000 5,606 Ordina Beheer N.V. (NGL) ^* 197,100 6,586 PEC Solutions, Inc. * 21,400 174 Pegasus Solutions Inc. * 200,000 2,175 Ryan Hankin Kent, Inc. - Series B Conv Pfd #* 2,000,000 2,000 ---------- 59,522 ---------- NETWORKING AND TELECOMMUNICATION EQUIPMENT 5 6% BreezeCOM Ltd. * 207,500 9,026 BreezeCOM Ltd.- Series B Conv. Pfd. #* 557,576 16,978 Cabletron Systems, Inc. * 300,000 7,575 Comverse Technology, Inc. * 100,000 9,300 Corning Incorporated 50,000 13,494 Efficient Networks, Inc. * 210,000 15,448 Extreme Networks, Inc. * 50,000 5,275 JDS Uniphase Corporation * 600,000 71,925 Methode Electronics, Inc. 350,000 13,519 P-Com, Inc. #* 2,516,990 11,452 Sawtek Inc. * 110,000 6,332 Stratos Lightwave, Inc. * 25,000 697 Tellabs, Inc. * 155,000 10,608 Vishay Intertechnology, Inc. * 300,000 11,381 ---------- 203,010 ---------- ONLINE INTERNET INFORMATION 2.9% America Online, Inc. * 550,000 29,013 Digital Impact, Inc. * 50,000 706 Emailthatpays.com Inc. #* 17,200 48 Getty Images, Inc. * 500,000 18,531 Go2Net, Inc. * 50,000 2,516 Hotel Reservations Network, Inc. +* 800,000 23,800 internet.com Corporation * 259,400 5,107 internet.com Ventures Partners III LLC #* 1 300 L90, Inc. * 150,000 1,575 Mail.com * 248,800 1,415 TMP Worldwide Inc. * 250,000 18,453 VeriSign, Inc. * 10,750 1,897 ---------- 103,361 ---------- SEMICONDUCTOR AND EQUIPMENT 15.9% Alliance Semiconductor Corporation * 150,000 3,684 Alpha Industries, Inc. * 800,000 35,250 ANADIGICS, Inc. * 359,300 12,239 ASM Lithography Holding N.V * 200,000 8,825 Atmel Corporation * 920,000 33,925 Cabot Microelectronics Corporation * 87,100 3,985 Cypress Semiconductor Corporation * 2,150,000 90,838 Infineon Technologies AG * 600,000 47,550 Integrated Device Technology, Inc. * 100,000 5,988 LSI Logic Corporation * 1,500,000 81,188 Marvell Technology Group Ltd. * 10,000 570 MIPS Technologies, Inc. * 65,826 2,534 Novellus Systems, Inc. * 500,000 28,281 Oak Technology, Inc. * 100,000 2,156 Pixelworks, Inc. * 310,000 7,053 PMC-Sierra, Inc. * 20,000 3,554 SDL, Inc. * 23,000 6,559 Vitesse Semiconductor Corporation * 2,100,000 154,481 Xilinx, Inc. * 540,000 44,584 ---------- 573,244 ---------- TOTAL TECHNOLOGY 1,285,393 ---------- OTHER 3.5% ENERGY 3.0% EEX Corporation * 2,133,300 12,400 Enron Corp. 215,000 13,868 Forest Oil Corporation * 658,900 10,501 Hardman Resources NL (AUD) ^#* 562,500 81 Input/Output, Inc. * 100,000 844 Ocean Energy, Inc. * 375,000 5,320 Oceaneering International, Inc. * 600,000 11,400 Sante Fe Snyder Corp. * 3,108,750 35,362 St. Mary Land & Exploration Company 400,000 16,825 Virginia Gas Company +* 593,000 2,001 ---------- 108,602 ---------- INDUSTRIAL 0.5% Buckeye Technologies Inc. * 155,000 3,400 Capstone Turbine Corporation * 1,000 45 HEICO Corp. - Class A 100,000 1,225 Masco Corporation 100,000 1,806 Simpson Manufacturing Co., Inc. * 200,000 9,563 ---------- 16,039 ---------- TOTAL OTHER 124,641 ---------- - ------------------------------------------------------------------------------- TOTAL STOCKS (COST $1,778,263) $ 3,043,811 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- CONVERTIBLE BONDS 1.1% - ------------------------------------------------------------------------------- Face Value Amount (000s) ------- ----- APP Finance (VII) Mauritius Limited $20,000,000 $ 14,500 3.5% 04/30/03 PETsMART, Inc. + 37,500,000 25,031 6.75% 11/01/04 ---------- - ------------------------------------------------------------------------------- TOTAL CONVERTIBLE BONDS (COST $54,398) $ 39,531 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS 14.5% - ------------------------------------------------------------------------------- Par Value Value (000s) ------- ----- COMMERCIAL PAPER Associates Corp. North America, 6.75%, 07/03/00 $ 49,883,000 $ 49,864 Associates First Capital Corp., 6.75%, 07/03/00 250,000,000 249,906 Citi Group Holdings Inc., 6.75%, 07/03/00 1,668,000 1,667 Clipper Receivables Corp., 6.78%, 07/03/00 171,560,000 171,496 Frigate Funding Corp., 6.80%, 07/03/00 51,656,000 51,637 ---------- - ------------------------------------------------------------------------------- TOTAL SHORT-TERM INVESTMENTS (COST $524,570) $ 524,570 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- CONTRACTS 0.0% - ------------------------------------------------------------------------------- Value Contracts (000s) --------- ------ PURCHASED OPTIONS Currency options, strike price, expiration: GBP, call @1.447, 08/31/00 78,000,000 $ 268 Equity options, strike price, expiration: Cendant Corporation, call @ 15, 01/20/01 5,000 1,065 Cendant Corporation, call @ 20, 01/20/01 7,000 658 SOLD OPTIONS Currency options, strike price, expiration: GBP, call @ 1.52, 08/31/00 (78,000,000) (1,630) Equity options, strike price, expiration: Affiliated Computer Services, Inc., call @ 40, 10/21/00 (2,500) (219) SDL, Inc., call @ 300, 12/16/00 (230) (1,771) ---------- - ------------------------------------------------------------------------------- TOTAL CONTRACTS (COST $2,985) $ (1,629) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- TOTAL INVESTMENTS 100% $3,606,283 (COST $2,360,216) ========== - ------------------------------------------------------------------------------- SCHEDULE OF SECURITIES SOLD SHORT - ------------------------------------------------------------------------------- Value Shares (000s) ------ ------ STOCKS Quanta Services Inc. 10,000 $ 550 StarMedia Network, Inc. 10,000 189 TiVo Inc. 10,000 350 ---------- - ------------------------------------------------------------------------------- TOTAL SECURITIES SOLD SHORT $ 1,089 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- LEGEND % Represents percentage of total portfolio owned ^ Foreign Denominated Security: AUD - Australian Dollar FRF - French Franc JPY - Japanese Yen NOK - Norwegian Kroner THB - Thai Baht + Affiliated Company (See Note 6 of Notes to Financial Statements) # Restricted Security (See Note 7 of Notes to Financial Statements) * Non - income producing during the period - ------------------------------------------------------------------------------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. THE KAUFMANN FUND, INC. SEMI-ANNUAL REPORT - JUNE 30, 2000 - UNAUDITED - ------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES - ------------------------------------------------------------------------------- AMOUNTS IN THOUSANDS (EXCEPT PER SHARE AMOUNT) - ------------------------------------------------------------------------------- ASSETS - ------------------------------------------------------------------------------- Investments in securities, at value (cost $2,360,216) (See accompanying schedule) $3,606,283 Cash and cash equivalents 31 Deposit with custodian bank for securities sold short 940 Receivable from brokers for securities sold short 988 Receivable for investments sold 58,133 Receivable for Fund shares sold 920 Dividends and interest receivable 912 Other receivables 166 Shares of Investment Fund, at amortized cost, held as collateral for securities loaned 923,784 ---------- - ------------------------------------------------------------------------------- TOTAL ASSETS $4,592,157 - ------------------------------------------------------------------------------- LIABILITIES Securities sold short, at value (proceeds $1,028) (See accompanying schedule) 1,089 Payable for investments purchased 29,881 Payable for Fund shares redeemed 3,326 Payable to Investment Advisor 18 Other payables and accrued expenses 1,473 Payable upon return of securities loaned (Note 5) 923,784 ---------- TOTAL LIABILITIES 959,571 - ------------------------------------------------------------------------------- NET ASSETS $3,632,586 - ------------------------------------------------------------------------------- NET ASSETS CONSIST OF: Paid in capital $1,548,225 Accumulated net investment loss (253,282) Accumulated undistributed net realized gain on investments and foreign currency transactions 1,091,741 Net unrealized appreciation on investments and assets and liabilities in foreign currencies 1,245,902 ---------- NET ASSETS, FOR 539,827 SHARES OUTSTANDING $3,632,586 ========== NET ASSET VALUE PER SHARE (based on 539,827 shares outstanding, 2,000,000 shares authorized with $.10 per share par value) $6.73 ===== - ------------------------------------------------------------------------------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. THE KAUFMANN FUND, INC. SEMI-ANNUAL REPORT - JUNE 30, 2000 - UNAUDITED - ------------------------------------------------------------------------------- STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2000 - ------------------------------------------------------------------------------- AMOUNTS IN THOUSANDS - ------------------------------------------------------------------------------- INVESTMENT INCOME - ------------------------------------------------------------------------------- Interest (including income on securities loaned of $1,318) $ 11,164 Dividends, net of $41 foreign taxes withheld (including $251 received from affiliated issuers) 1,487 Other (Note 3) 944 -------- - ------------------------------------------------------------------------------- TOTAL INCOME $ 13,595 - ------------------------------------------------------------------------------- EXPENSES Investment advisory fee (Note 3) 27,566 Distribution fee (Note 3) 6,432 Shareholder servicing fees 2,116 Audit fees 234 Custodian fees and expenses 226 Interest expense (Note 8) 219 Printing and mailing expenses 199 Non-interested directors' fees and expenses 113 Legal fees 79 Registration fees 27 Miscellaneous expenses 110 -------- Total expenses before reimbursement 37,321 Expense reimbursement by Investment Advisor (Note 3) (2,780) -------- NET EXPENSES 34,541 - ------------------------------------------------------------------------------- NET INVESTMENT LOSS $(20,946) - ------------------------------------------------------------------------------- Realized and Unrealized Gain Net realized gain (loss) on: Investment securities (including net realized gain of $73,905 on sales of investments in affiliated issuers (Note 6)) 796,129 Foreign currency transactions (595) -------- 795,534 -------- Changes in net unrealized (depreciation) on: Investment securities (324,690) Assets and liabilities (103) -------- (324,793) -------- NET GAIN 470,741 -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $449,795 ======== - ------------------------------------------------------------------------------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. THE KAUFMANN FUND, INC. SEMI-ANNUAL REPORT - JUNE 30, 2000 - UNAUDITED - ------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS - ------------------------------------------------------------------------------------------------------------------
AMOUNTS IN THOUSANDS ----------------------------------------------- (Unaudited) Six months Year ended ended June 30, 2000 December 31, 1999 -------------- ----------------- INCREASE (DECREASE) IN NET ASSETS Operations Net investment loss $ (20,946) $ (40,228) Net realized gain 795,534 449,948 Change in net unrealized appreciation (depreciation) (324,793) 231,028 ----------- ----------- Net increase in net assets resulting from operations 449,795 640,748 ----------- ----------- Distributions to shareholders From net investment income -- -- From net realized gain -- (512,373) ----------- ----------- Total distributions -- (512,373) ----------- ----------- Share transactions Net proceeds from sales of shares 147,695 230,601 Reinvestment of distributions -- 496,927 Cost of shares redeemed (440,779) (2,001,046) ----------- ----------- Net decrease in net assets resulting from share transactions (293,084) (1,273,518) ----------- ----------- Total increase (decrease) in net assets 156,711 (1,145,143) NET ASSETS Beginning of period 3,475,875 4,621,018 ----------- ----------- End of period $ 3,632,586 $ 3,475,875 =========== =========== OTHER INFORMATION Shares: Sold 21,674 43,175 Issued in reinvestment of distributions -- 102,246 Redeemed (66,219) (374,248) ----------- ----------- Net decrease (44,545) (228,827) =========== =========== - --------------------------------------------------------------------------------------------------------------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
THE KAUFMANN FUND, INC. SEMI-ANNUAL REPORT - JUNE 30, 2000 - UNAUDITED - ------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- 1 SIGNIFICANT ACCOUNTING POLICIES The Kaufmann Fund, Inc. (the Fund) is registered under the Investment Company Act of 1940 (the 1940 Act), as a diversified, 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. SECURITY VALUATION Investments in securities traded on a national securities exchange (or reported on the NASDAQ national market) are stated at the last reported sales price on the day of valuation; other securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are stated at the last quoted bid price, except for short positions and call options written, for which the last quoted asked price is used. Short-term notes are stated at amortized cost, which is equivalent to value. Restricted securities and other securities for which quotations are not readily available are valued at fair value as determined by the board of directors. 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 the end of the reporting period. Income receipts and expense payments are translated into U.S. dollars at the prevailing exchange rate on the respective dates of the 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 included in dividend income, 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. SECURITY TRANSACTIONS Security transactions are recorded on trade date, which is 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 if counter parties do not perform 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 borrowed security 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 custodian. At June 30, 2000, the cost of securities purchased to cover short sales and the proceeds from securities sold short were $9,753,434 and $10,781,855, respectively. Securities sold short at June 30, 2000 and their related values are set forth 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 1.5% of the Fund's average net assets. For the six months ended June 30, 2000, the Fund incurred investment advisory fees of $27,566,253. 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 $2,779,768 was made for the six months ended June 30, 2000. 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, 2000, distribution expenses of $6,432,126 were incurred by the Fund, equivalent to .35% per annum of the Fund's average net assets. REDEMPTION FEE The Fund imposes a redemption fee of 0.2% 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 for 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, 2000, redemption fees of $896,786 were allocated to cover the cost of redemptions. Excess fee proceeds of $12,707 were added to the Fund's assets. BROKERAGE COMMISSIONS The Fund places a portion of its portfolio transactions with Bowling Green Securities, Inc. (Bowling Green). For the six months ended June 30, 2000, $20,000 of brokerage commissions were paid to Bowling Green. Certain officers and directors of the Fund are affiliated with Bowling Green. 4 INVESTMENTS PURCHASES AND SALES OF INVESTMENTS Purchases and sales of securities (excluding short-term investments and securities sold short) aggregated $1,251,249,795 and $2,080,817,401, 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 37% for the six months ended June 30, 2000. TAX BASIS OF INVESTMENTS As of June 30, 2000, the aggregate cost, for Federal income tax purposes, of investment securities was $1,834,617,953. Accumulated net unrealized appreciation aggregated $1,246,006,133, of which $1,414,133,392 related to appreciated investment securities and $168,127,259 related to depreciated investment securities. 5 PORTFOLIO SECURITIES LOANED 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 $1,317,783 for the six months ended June 30, 2000. 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, 2000, the value of the securities loaned and the value of collateral was $907,231,135 and $923,783,877, respectively. 6 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 ------------------------------------------------------ PURCHASE SALES DIVIDEND AFFILIATE COST COST INCOME VALUE - ------------------------------------------------------------------------------------------------------------------- Aastrom Biosciences, Inc. * $ -- $ 3,800 $ -- $ -- Aastrom Biosciences, Inc. Pfd. (restricted) * -- 395 -- -- Alexion Pharmaceuticals, Inc. * -- 3,716 -- 56,056 Alpha Industries, Inc. * -- 21,098 -- -- ArQule, Inc. * -- 24,749 -- 18,988 Aurora Biosciences Corporation * 70 73,973 -- 41,533 Billing Concepts Corp. * -- 3,812 -- -- Bionx Implants, Inc. * 331 83 -- 2,103 Carey International, Inc. * 507 1,439 -- 5,550 CINAR Corporation * -- 5,180 -- 6,971 CompDent Corp. (restricted) * -- -- -- 122 CompDent Corp. Pfd. (restricted) * -- -- -- 2,832 Cunningham Graphics International, Inc. * 219 3,891 -- -- Dispatch Management Services Corp. * 230 -- -- 2,032 Federal Agricultural Mortgage Corp. * -- -- -- 7,558 Hanger Orthopedic Group, Inc. * -- 2,538 -- -- Healthcare Recoveries, Inc. * -- -- -- 4,973 Hotel Reservations Network, Inc. * 20,253 2,850 -- 23,800 Hutchinson Technology Inc. 6%, 3/15/05 -- 17,052 -- -- J.D. Wetherspoon plc (GBP) 15,706 708 251 116,319 Lincare Holdings, Inc. * 11,296 7,345 -- 119,335 MAPICS, Inc. * -- 2,293 -- -- Orthofix International N.V * -- -- -- 14,781 PETsMART, Inc. * 5,285 -- -- 26,268 PETsMART, Inc., 6.75%, 11/01/04 -- 5,500 -- 25,031 Philadelphia Consolidated Holding Corp. * -- 1,369 -- 21,856 PSS World Medical, Inc. * -- 8,336 -- -- RTW, Inc. * -- -- -- 4,424 Systemax Inc. * -- 7,932 -- -- TriPath Imaging, Inc. * -- 1,053 -- -- United Payors & United Providers, Inc. * -- 6,238 -- -- US Oncology, Inc. * -- 19,486 -- -- Virginia Gas Company * -- -- -- 2,001 ZOLL Medical Corporation * -- 33,671 -- -- -------- -------- -------- -------- $ 53,897 $258,507 $ 251 $502,533 ======== ======== ======== ======== * Non-income producing during the period.
7 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, 2000, the Fund owned the following restricted securities (constituting 4.3% of net assets), which may not be publicly sold without registration under the Securities Act of 1933. 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 - ------------------------------------------------------------------------------------------------------------- ACADIA Pharmaceuticals Inc. 05/03/00 266,666 $ 2,000 $ 2,000 Amira Medical - Series A Pfd. 04/12/99 250,000 1,375 1,375 Amira Medical - Series D Pfd. 04/12/99 1,000,000 5,500 5,500 Aradigm Corporation 03/10/99 666,667 7,000 10,500 BreezeCOM Ltd. - Series B Conv. Pfd. 11/05/99 557,576 2,300 16,978 CompDent Corp. 05/24/95 60,000 36 30 04/21/97 75,000 46 36 04/22/97 65,000 40 32 06/30/99 48,612 -- 24 ---------- -------- -------- 248,612 122 122 ---------- -------- -------- CompDent Corp. - Pfd. 05/24/95 855 834 834 04/21/97 1,069 1,060 1,060 04/22/97 927 938 938 ---------- -------- -------- 2,851 2,832 2,832 ---------- -------- -------- Cortek, Inc. - Series C Conv. Pfd. 02/29/00 500,000 1,000 1,000 De Novo (Q) Ventures I, L.P. 03/09/00 4 2,000 2,000 diaDexus, Inc. - Series C Pfd. 04/04/00 645,161 5,000 5,000 Emailthatpays.com Inc. 03/24/97 17,200 301 48 ENDOcare, Inc. 04/16/98 749,100 2,622 15,169 Genomica Corporation - Series B Pfd. 02/17/99 9,722,222 7,000 7,000 Genomica Corporation - Series C Pfd. 03/10/00 2,245,595 3,368 3,368 GreenField Technology Ventures Fund I, L.P. 06/15/98 1 88 94 Hardman Resources NL (AUD) 04/08/93 100,000 34 15 04/13/93 100,000 36 14 04/15/93 50,000 18 7 04/23/93 100,000 34 14 08/11/93 100,000 31 14 02/06/95 112,500 4 17 ---------- -------- -------- 562,500 157 81 ---------- -------- -------- Illuminet Holdings, Inc. 02/04/98 20,100 358 3,272 incuVest LLC - Class A 01/06/00 1 5,000 5,000 internet.com Venture Partners III LLC 05/15/00 1 300 300 IntraBiotics Pharmaceuticals, Inc. - Series G Pfd. 11/23/98 750,000 4,502 16,013 ISG International Software Group Ltd. 03/09/00 45,000 765 765 LJL BioSystems, Inc. 01/22/99 482,700 1,689 8,417 LJL BioSystems, Inc. - Pfd. 02/03/00 272,500 2,998 3,696 Latin Healthcare Fund, L.P. 07/15/97 1 1,000 1,000 09/28/98 -- 1,079 1,079 06/03/99 -- 3,000 3,000 05/16/00 -- 4,000 4,000 ---------- -------- -------- 1 9,079 9,079 ---------- -------- -------- Netamerica.com Corporation 03/15/00 41,667 500 500 Netamerica.com Corporation - Warrants 03/15/00 20,833 -- -- Pacific-Health Laboratories, Inc. 08/09/96 133,500 501 459 Panavision Inc. 06/05/98 20 -- -- P-Com, Inc. 06/22/99 2,516,900 10,000 11,452 Peachtree/CB Partners, LLC 03/08/00 1 2,743 2,742 Peachtree/LeadScope, Inc. 06/30/00 1 683 683 Peachtree Medichem Partners, LLC 06/07/99 30,078 1,468 1,468 Peptech Limited (AUD) 07/19/93 31,250 76 -- PercuSurge, Inc. - Series E Pfd. 03/15/00 1,176,471 3,000 3,000 Rocket Ventures II, L.P. 07/20/99 1 6,250 6,063 Ryan Hankin Kent, Inc. - Series B Conv. Pfd. 06/05/00 2,000,000 2,000 2,000 Sanarus Medical Incorporated - Series A Pfd. 11/16/99 666,667 1,000 1,000 SensAble Technologies, Inc. - Series B Pfd. 12/23/97 1,333,334 2,064 2,067 SensAble Technologies, Inc. - Series C Pfd. 04/05/00 443,979 1,474 1,474 ThermoGenesis Corp. 12/29/98 478,400 598 867 ThermoGenesis Corp. - Warrants 01/27/98 80,000 -- -- Western Growth Capital Partners I, L.L.L.P 12/31/97 52,500 166 126 World Access, Inc. 12/17/99 255,000 4,488 2,821 Xenometrix, Inc. 07/10/92 6,619 50 -- -------- -------- $104,417 $156,331 ======== ========
8 LINE OF CREDIT The Fund has a secured $400,000,000 line of credit. The Fund is required to pledge assets equivalent to its borrowings under the line of credit. The Fund incurs a commitment fee on the unused portion of the line of credit. Borrowings are charged interest at 0.50% over the current overnight Federal Funds Rate. No compensating balances are required. THE KAUFMANN FUND, INC. SEMI-ANNUAL REPORT - JUNE 30, 2000 - UNAUDITED - ------------------------------------------------------------------------------- THE POWER OF AUTOMATIC INVESTING - ------------------------------------------------------------------------------- DOLLAR-COST AVERAGING: A PROVEN LONG-TERM INVESTMENT STRATEGY Just as the stock market fluctuates with time, investor sentiment tends to alternate between periods of enthusiasm and despair. Unfortunately, investors tend to let their emotions guide their investment decisions. An effective investment strategy that assists in overcoming the emotional hazards of market volatility is "dollar-cost averaging." An investment plan using dollar-cost averaging is also a convenient way to lower your average investment cost. The key investment concept behind dollar-cost averaging is that when prices are up you purchase fewer shares and when prices are down you purchase more. It is an automatic method to help you counter the natural human impulse to buy high and to sell low. The easiest and most painless way to dollar-cost average is to establish an Automatic Investment Plan (AIP). With an AIP, you can arrange for money to be withdrawn directly from your checking/savings account or paycheck. There are no checks to write or phone calls to make -- everything is done for you. It is a simple, effective and effortless way to set aside money. Decide on an amount you would like to invest and a specific time to make your investment. Maybe you want to invest $200 a month. Perhaps it would work better to invest every two weeks by taking $100 out of each paycheck. Once you have set an amount and a time period that works for your situation -- stick with it! Dollar-cost averaging works best if you make investments on a regular basis. In the end, one of the greatest benefits of dollar-cost averaging is that it commits you to investing regularly, regardless of what is happening in the financial markets. You avoid the temptation to guess whether you are purchasing shares at a market low or a market high, and you make building assets for the future a good habit rather than an agonizing decision. Although dollar-cost averaging cannot guarantee a profit or protect against loss in declining markets, it can potentially help make market fluctuations work to your advantage. Dollar-cost averaging, combined with other key benefits such as diversification and professional management, can give you the best opportunity to build wealth. - ------------------------------------------------------------------------------- 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 Pepper Hamilton, LLP 3000 Two Logan Square Philadelphia, Pennsylvania 19103 - ------------------------------------------------------------------------------- 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 Omitted] SEMI-ANNUAL REPORT - ------------------------------------------------------------------------------- SIX MONTHS ENDED JUNE 30, 2000 - ------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----