SAMCO FUND, INC.
SAMCO FIXED INCOME PORTFOLIO
Semi-Annual Report
April 30, 1999
SAMCO FUND, INC.
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SAMCO FIXED INCOME PORTFOLIO
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APRIL 30, 1999 (unaudited)
Portfolio of Investments..................................................1
Statement of Assets and Liabilities.......................................5
Statement of Operations ..................................................6
Statement of Changes in Net Assets .......................................7
Financial Highlights .....................................................8
Notes to Financial Statements ............................................9
SAMCO FUNDS, INC.
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SAMCO AGGREGATE FIXED INCOME FUND President's Letter
June 9, 1999
Dear Shareholder:
We are pleased to provide you with information about the SAMCO Fund, Inc. -
Fixed Income Portfolio, Class A (the "Fund"), for the semi-annual period ended
April 30, 1999. The Fund's shares are listed under
the symbol SAMFX.
We greatly appreciate your participation in the Fund. We welcome the opportunity
to discuss the objectives and results of the Fund. Please do not hesitate to
contact us with questions or comments regarding this report, or for assistance
in general.
Sincerely,
- -------------------------------- ------------------------------
Christina Seix, Chairman John Talty, President
SAMCO FUND, INC.
SAMCO FIXED INCOME PORTFOLIO - Portfolio of Investments
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April 30, 1999 (unaudited) Par/Face Value*
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U.S. GOVERNMENT & AGENCY OBLIGATIONS: 52.2%
U.S. Government Agency Obligations and Pass-Through Certificates: 34.8%
FHLMC (TBA), 6.000% due 6/21/14 $ 875,000 $ 868,700
FHLMC (TBA), 6.500% due 6/16/29 180,000 179,208
FHLMC, 7.500% due 10/1/28 178,096 183,109
FHLMC, 8.500% due 6/1/12 587,088 610,820
FNMA Global Note, 4.625% due 10/15/01 330,000 324,816
FNMA Global Note, 5.125% due 2/13/04 1,625,000 1,590,067
FNMA (TBA), 6.000% due 6/21/14 1,100,000 1,067,000
FNMA (TBA), 6.000% due 6/16/29 195,000 189,150
FNMA (TBA), 6.500% due 6/21/14 770,000 765,688
FNMA (TBA), 6.500% due 6/16/29 1,885,000 1,874,444
FNMA (TBA), 7.000% due 6/16/29 4,015,000 4,070,407
FNMA (TBA), 7.500% due 6/16/29 1,060,000 1,089,786
FNMA, 7.500% due 2/1/29 98,551 101,325
FNMA, 9.500% due 5/1/18 108,470 115,792
GNMA, 7.000% due 3/15/29 407,147 413,480
GNMA, 7.500% due 12/15/28 124,607 128,492
GNMA, 7.500% due 1/15/29 153,153 157,928
GNMA, 7.500% due 3/15/29 489,545 504,809
GNMA, 7.500% due 4/15/29 1,350,000 1,392,092
GNMA, 8.500% due 9/15/23 174,490 184,524
Tennessee Valley Authority, 6.375% due 6/15/05 145,000 155,185
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Total U.S. Government Agency Pass-Through Certificates (Cost - $16,038,631) 15,966,822
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U.S. Government Agency Collateralized Mortgage Oblibations: 0.9%
FHLMC, Ser. 1944, Class GB, 7.500% due 4/17/24 125,000 128,022
FNMA, Ser. 1997-15, Class B, 7.500% due 7/18/25 255,000 262,166
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Total U.S. Government Agency Collateralized Mortgage Obligations (Cost - $386,512) 390,188
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U.S. Treasury Obligations: 16.5%
U.S. Treasury Note, 6.750% due 4/30/00 800,000 813,750
U.S. Treasury Note, 5.750% due 10/31/00 180,000 181,800
U.S. Treasury Note, 8.000% due 5/15/01 275,000 290,211
U.S. Treasury Note, 6.375% due 9/30/01 1,300,000 1,336,155
U.S. Treasury Note, 6.250% due 2/15/03 30,000 31,013
U.S. Treasury Note, 5.750% due 4/30/03 350,000 355,906
U.S. Treasury Note, 5.750% due 8/15/03 430,000 437,525
U.S. Treasury Note, 4.250% due 11/15/03 560,000 537,600
U.S. Treasury Note, 5.875% due 2/15/04 200,000 205,125
U.S. Treasury Note, 6.500% due 8/15/05 780,000 826,557
U.S. Treasury Note, 5.875% due 11/15/05 55,000 56,530
U.S. Treasury Note, 4.750% due 11/15/08 545,000 520,475
U.S. Treasury Note, 4.750% due 2/15/04 420,000 411,600
U.S. Treasury Bond, 5.250% due 11/15/28 595,000 544,461
U.S. Treasury Bond, 9.250% due 2/15/16 180,000 243,506
U.S. Treasury Bond, 8.750% due 5/15/17 435,000 570,258
U.S. Treasury Bond, 5.250% due 2/15/29 220,000 206,594
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Total U.S. Treasury Obligations (Cost - $7,653,220) 7,569,066
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Total U.S. Government & Agency Obligations (Cost - $24,078,363) 23,926,076
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CORPORATE OBLIGATIONS: 44.9%
Airlines: 2.8%
American Airlines Inc., Ser. 1991-A, Class A-1, 9.710% due 1/2/07 127,817 139,617
Delta Airlines, Inc., 9.750% due 5/15/21 225,000 268,991
Northwest Airlines Corp., 8.130% due 2/1/14 425,000 424,387
U.S. Airways (144A), Inc., 6.820% due 7/30/14 535,000 471,336
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1,304,331
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Banks: 5.2%
Bacob Bank S-C (144A), 7.250% due 9/29/49 $ 450,000 $ 430,162
Banc One Corp., 7.250% due 8/1/02 170,000 176,625
Bank of America Corp., 5.215% due 9/11/01 360,000 360,036
Citicorp (FRN), 5.930% due 8/10/00 395,000 395,474
Credit Suisse First Boston, London (144A), 7.900% due 5/1/07 465,000 475,768
First Chicago NBD One (FRN), 5.372% due 7/3/00 200,000 200,191
Fleet National Bank, 5.075% due 2/1/01 355,000 354,716
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2,392,972
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Finance: 12.2%
AFLAC Inc. (144A), 6.500% due 4/15/09 390,000 384,395
Associates Corp. NA, 5.875% due 7/15/02 90,000 90,025
AT & T Capital Corp., 7.500% due 11/15/00 220,000 225,423
Case Credit Corp., 6.150% due 3/1/02 320,000 319,690
Cendant Corp., 7.500% due 12/1/00 225,000 229,113
Countrywide Home Loans Inc., 5.620% due 10/16/00 250,000 248,856
Ford Motor Credit Corp., 5.800% due 1/12/09 100,000 95,632
Fremont General Corp., 7.875% due 3/17/09 610,000 609,628
General Electric Capital Corp., 8.625% due 6/15/08 245,000 286,744
General Motors Acceptance Corp. (FRN), 5.216% due 7/30/01 350,000 350,910
Goldman Sachs Group LP (144A), 7.800% due 7/15/02 380,000 399,071
Heller Financial Inc., 5.870% due 11/1/00 295,000 295,758
Household Finance, Corp. (FRN), 5.380% due 9/27/00 330,000 329,868
Household Netherlands BV (Yankee), 5.750% due 12/1/03 265,000 265,339
Lehman Brothers Holdings, 6.625% due 2/5/06 320,000 316,055
Lehman Brothers, Inc., 7.250% due 4/15/03 310,000 318,083
Salomon Smith Barney Holdings Inc., 6.750% due 2/15/03 325,000 333,072
WMC Finance (USA) Ltd., 7.350% due 12/1/26 480,000 479,961
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5,577,623
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Industrial: 12.9%
Bayard Drilling Technologies , Inc., 11.000% due 6/30/05 390,000 449,839
Champion Enterprises, 7.625% due 5/15/09 305,000 301,316
Comdisco, Inc., 6.380% due 6/25/01 250,000 251,170
Comdisco, Inc., 6.130% due 8/1/01 105,000 105,127
Corning, Inc., 6.850% due 3/1/29 295,000 290,432
Cummins Engine Co., Inc., 5.650% due 3/1/2098 325,000 227,256
Equistar Chemical LP (144A), 8.750% due 2/15/09 120,000 125,421
Greyhound Lines, Inc, 11.500% due 4/15/07 535,000 616,877
IBM Corp., 7.125% due 12/1/2096 460,000 471,317
ICI Wilmington, Inc., 6.750% due 9/15/02 335,000 340,719
Kern River Funding Corp. (144A), 6.720% due 9/30/01 310,000 313,159
Methanex Corp. (Yankee), 7.750% due 8/15/05 315,000 306,578
Methanex Corp. (Yankee), 7.400% due 8/15/02 215,000 211,342
Midamerican Funding LLC, 6.339% due 3/1/09 340,000 337,106
Shopko Stores, Inc., 6.500% due 8/15/03 110,000 108,715
Owens Corning, 7.000% due 3/15/09 525,000 513,801
Unova, Inc., 6.875% due 3/15/05 440,000 433,550
Vulcan Materials, 5.750% due 4/1/04 505,000 500,531
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5,904,256
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Insurance: 4.7%
Amerus Life Holdings, Inc., 6.950% due 6/15/05 145,000 142,867
Chartwell Re Holdings Corp., 10.250% due 3/1/04 305,000 314,531
Florida Windstorm Underwriting Assoc. (144A), 6.500% due 8/25/02 300,000 301,019
Lumbermens Mutual Casualty (144A), 8.300% due 12/1/37 290,000 289,003
Mutual Life Insurance Co. - NY (144A), 11.250% due 8/15/24 790,000 1,118,909
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2,166,329
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Insured Project: 1.4%
Ras Laffan-Lincs (144A), Ser. 1997-11, 7.850% due 3/18/14 585,000 638,371
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Telecommunications: 2.4%
Sprint Capital Corp, 6.875% due 11/15/28 $ 425,000 $ 411,934
TCI Communications, 8.750% due 8/1/15 335,000 402,944
Telecom Newzealand Finance, 6.250% due 2/10/03 280,000 282,351
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1,097,229
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Utilities: 3.3%
Duquesne Light Co., 8.700% due 6/1/16 205,000 226,109
East Coast Power LLC (144A), 7.066% due 3/31/12 415,000 406,189
EdperBrascan Corp., 7.125% due 12/16/03 415,000 415,517
Pennsylvania Power and Light, Inc., 7.700% due 10/1/09 215,000 243,700
PSI Energy, Inc. (144A), 6.000% due 12/14/01 230,000 228,618
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1,520,133
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Total Corporate Obligations (Cost - $20,762,085) 20,601,244
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Preferred Stocks: 5.0% Shares
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BCI US Funding, 8.010% due 12/29/49 315,000 315,650
Centaur Funding Corp. (144A), 9.080% due 4/21/20 1,165 1,295,334
Duke Realty Investments, Inc., 7.990% due 10/1/12 8,850 422,264
National Westminster Bank , PLC, 8.625% due 4/9/02 10,000 263,125
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Total Preferred Stocks (Cost - $2,294,854) 2,296,373
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ASSET-BACKED SECURITIES: 15.1% Par/Face
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AFC Home Equity Loan Trust (FRN), Ser. 1999-1, Class 2A1, 5.319% due 2/24/29 352,834 352,905
American Express Master Trust (FRN), Ser. 1996-2, Class A, 5.398% due 8/15/02 320,000 320,182
AT&T Universal Card (FRN), Ser. 1996-1, Class A, 5.125% due 4/17/03 360,000 360,821
AT&T Universal Card Trust (FRN), Ser. 1996-3, Class A, 5.600% due 9/17/03 320,000 320,227
BA Master Credit Card Trust (FRN), Ser. 1997-A, Class A, 5.388% due 7/15/04 315,000 314,978
Chase Credit Card Master Trust (FRN), Ser. 1998-6, Class A, 5.309% due 9/15/04 335,000 335,034
Countrywide Home Equity Loan (FRN), Ser. 1997-C, Class A, 5.106% due 9/15/22 235,019 234,575
Countrywide Home Equity Trust (FRN), Ser. 1998-A, Class A, 5.846% due 3/15/24 394,889 394,771
Discover Card Master Trust (FRN), Ser. 1996-1, Class A, 5.705% due 7/16/03 325,000 325,484
Discover Card Master Trust I, Ser. 1997-2, Class A, 6.792% due 4/16/10 255,000 256,744
EQCC Home Equity Loan Trust (FRN), Ser. 1998-4, Class A1F, 5.984% due 1/15/29 317,755 317,946
First Chicago Master Trust II (FRN), Ser. 1998-V, Class A, 5.820% due 10/15/03 335,000 334,799
First USA Credit Card Master Trust (FRN), Ser. 1996-1, Class A, 5.063% due 11/15/0365,000 364,547
First USA Credit Card Trust (FRN), Ser. 1995-5, Class A, 5.730% due 4/15/03 315,000 315,413
First USA Credit Card Master Trust (FRN), Ser. 1994-8 Class A, 5.640% due 6/15/04 355,000 354,460
Fleet Credit Card Master Trust (FRN), Ser. 1995-F, Class A2, 5.468% due 8/1/03 320,000 320,534
Green Tree Home Equity Loan Trust (FRN) , Ser. 1999-A, Class A1B, 5.217% due 2/15/183,995 183,940
Household Affinity Credit Card Master Trust I (FRN), Ser. 1994-1, Class A, 5.685% 100,0005/99 100,039
Household Affinity Credit Card Master Trust I (FRN), Ser. 1995-1, Class A, 5.138% d70,0005/02 70,056
MBNA Master Credit Card Trust (FRN), Ser. 1996-H, Class A, 5.500% due 1/15/04 320,000 320,064
Merrill Lynch Home Equity Loan (FRN), Ser. 1997-1, Class A, 5.119% due 9/25/27 27,276 27,200
People's Bank Credit Card Master Trust (FRN), Ser. 1996-1, Class A, 5.138% due 11/325,000 325,406
People's Bank Credit Card Master Trust (FRN), Ser. 1997-1, Class A, 5.807% due 10/320,000 320,128
Saxon Asset Securities Trust (FRN), Ser. 1999-1, Class AVI, 5.240% due 2/25/29 376,974 377,313
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Total Asset-Backed Securities (Cost - $6,947,152) 6,947,566
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Repurchase Agreement: 2.9%
Investors Bank & Trust Company Repurchase Agreement, 4.25% due 5/3/99 in the amount of $ 1,360,130
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$1,360,611; Issued 4/30/99 (collateralized by $1,385,244 par of Federal National
Mortgage Associaton ARM, 6.874%% due 6/01/23 with a market value of $1,428,197)
(Cost - $1,360,130)
Total Investments: 120.1% (cost - $55,442,584) 55,131,389
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LIABILITIES, NET OF OTHER ASSETS: (20.1%) (9,243,306)
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NET ASSETS: 100.0%
Applicable to 4,586,515 outstanding $.001 par value shares
(authorized 2,500,000,000 shares) $ 45,888,083
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Net Asset Value, Offering and Redemption Price Per Share $ 10.01
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* See note 2 to the Financial Statements
(144A) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified buyers. At April 30, 1999,
the aggregate value of the securities is $6,876,755 or 15.0% of net
assets.
ARM Adjustable Rate Mortgage
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
FRN Floating Rate Note
GNMA Government National Mortgage Association
TBA To Be Announced - Security is subject to delayed delivery.
Yankee U.S. Dollar denominated bonds issued by non-U.S. entities in the U.S.
See Notes to the Financial Statements
SAMCO FUND, INC.
SAMCO FIXED INCOME PORTFOLIO - Statement of Assets and Liabilities April 30,
1999 (unaudited)
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Assets
Investments, at value (cost $54,082,454)(Note 2) $ 53,771,259
Repurchase agreement (cost $1,360,130)(Note 5) 1,360,130
Receivable for securities sold 14,759,180
Interest receivable 506,386
Organizational expenses 69,998
Receivable from investment advisor 35,325
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Total assets 70,502,278
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Liabilities
Payable for securities purchased 24,467,138
Payable for capital shares redeemed 100,000
Dividends payable 13,429
Accrued expenses and other liabilities 33,628
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Total liabilities 24,614,195
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Net Assets (equivalent to $10.01 per share based on 4,586,515 shares
outstanding) $ 45,888,083
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Composition of Net Assets
Paid-in capital $ 46,439,797
Undistributed net investment income 89,751
Net accumulated realized loss on investments (330,270)
Net unrealized depreciation on investments (311,195)
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Net assets applicable to capital stock outstanding $ 45,888,083
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See Notes to the Financial Statements
SAMCO FUND, INC.
SAMCO FIXED INCOME PORTFOLIO - Statement of Operations For the six months ended
April 30, 1999 (unaudited)
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Investment Income
Dividend income $ 17,119
Less: withholding taxes (1,348)
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Net dividend income 15,771
Interest income 1,315,677
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Total income 1,331,448
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Expenses
Administration fees 67,643
Investment advisory fees (Note 2) 56,370
Custodian fees 24,708
Audit fees 12,500
Amortization of organizational costs 9,545
State registration filing fees 7,740
Insurance expense 4,000
Legal fees 3,981
Directors fees and expenses 3,500
Transfer agent fees 1,148
SEC filing fees 940
Miscellaneous fees and expenses 2,084
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Total operating expenses 194,159
Waiver of investment advisory and administration fees and
reimbursement of other expenses (92,693)
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Net expenses 101,466
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Net investment income 1,229,982
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Net Realized and Unrealized Loss on Investments
Net realized loss on investments (294,895)
Net change in unrealized depreciation on investments (399,492)
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Net realized and unrealized loss on investments (694,387)
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Net increase in net assets resulting from operations $ 535,595
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See Notes to the Financial Statements
SAMCO FUND, INC.
SAMCO FIXED INCOME PORTFOLIO - Statement of Changes in Net Assets
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Six Months Ended Period from
April 30, 1999 Decmeber 30, 1997*
(unaudited) to October 31, 1998
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Net Increase (Decrease) in Net Assets Resulting from Operations
Net investment income $ 1,229,982 $ 915,069
Net realized gain (loss) from investments (294,895) 473,249
Net change in unrealized appreciation (depreciation) on investments (399,492) 88,297
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Net increase in net assets resulting from operations 535,595 1,476,615
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Distributions to Shareholders
From net investment income (1,177,516) (877,784)
From net realized gains on investments (508,624) -
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Total distributions to shareholders (1,686,140) (877,784)
Capital Share Transactions (Note 6) 3,139,917 43,199,880
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Total increase in net assets 1,989,372 43,798,711
Net Assets
Beginning of period 43,898,711 100,000
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End of period 45,888,083 43,898,711
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Undistributed net investment income, end of period $ 89,751 $ 37,285
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* Commencement of investment operations.
See Notes to the Financial Statements
SAMCO FUND, INC.
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SAMCO Fixed Income Portfolio - Financial Highlights Six months Period from
ended 4/30/99 12/30/97*
For a share outstanding throughout the period (unaudited) to 10/31/98
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Per Share Data
Net asset value, beginning of period $10.26 $10.00
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Increases From Investment Operations
Net investment income 0.01 0.21
Net realized and unrealized gain on investments 0.11 0.46
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Total from investment operations 0.12 0.67
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Less Distributions
From net investment income (0.26) (0.41)
From net realized gains on investments (0.11) -
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Total distributions (0.37) (0.41)
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Net asset value, end of period $10.01 $10.26
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Total Return (a) 1.22% 6.87%
Ratios/Supplemental Data
Net assets, end of period (000's) $45,888 $43,899
Ratio of expenses to average net assets (b) 0.45% 0.45%
Ratio of expenses to average net assets before expense waivers
and reimbursement of other expenses (b) 0.86% 1.03%
Ratio of net investment income to average net assets (b) 5.45% 5.17%
Portfolio turnover (a) 308% 478%
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See Notes to the Financial Statements
(a) Not Annualized
(b) Annualized
* Commencement of Investment Operations
SAMCO FUND, INC.
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SAMCO FIXED INCOME PORTFOLIO - NOTES TO FINANCIAL STATEMENTS
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APRIL 30, 1999 (unaudited)
1. Organization
The SAMCO Fund, Inc. (the "Company"), a series fund, was organized as a Maryland
corporation on August 4, 1997 and is registered under the Investment Company Act
of 1940, as amended, as an open-end, non-diversified management investment
company. The Company currently has one active portfolio, the SAMCO Fixed Income
Portfolio - Class A (the "Fund"). The unamortized balance of organizational
expenses at April 30, 1999 was $69,998. In the event that any of the initial
10,000 shares (the "Initial Shares") purchased by the Seix Investment Advisors
Inc. (the "Investment Adviser") are redeemed during the amortization period, the
Fund will be reimbursed by the Investment Adviser for any remaining unamortized
costs in the same proportion as the number of Initial Shares redeemed bears to
the total number of Initial Shares outstanding at the time of the redemption. On
June 10, 1999, the Board of Directors approved a change in the name of the
Company to SAMCO Funds, Inc. and a change in the name of the Fund to SAMCO
Aggregate Fixed Income Fund - Class A. A second fund, the SAMCO Intermediate
Fixed Income Fund - Class A, is scheduled to begin on June 30, 1999.
Investment Objective
The Fund is designed to provide investors with a total return which consistently
exceeds the total return of the broad U.S. investment grade bond market. Total
investment return is the aggregate of dividend and interest income and realized
and unrealized capital gains/losses on investments. The Fund seeks to achieve
its objective through superior security selection and emphasis on current
income, while maintaining a duration neutral posture.
2. Summary of Significant Accounting Policies
Securities
Securities transactions are recorded on a trade date basis. Interest income and
expenses are recorded on an accrual basis. The Fund amortizes discount or
premium using the yield-to-maturity method on a daily basis, except for
securities having a maturity date of less than sixty days at the time of
acquisition. Such securities are amortized on a straight-line basis.
Dividend income is recorded on the ex-dividend date. The Fund uses the specific
identification method for determining gain or loss on sales of securities.
Income Tax
There is no provision for Federal income or excise tax since the Fund intends to
qualify as a regulated investment company ("RIC") by complying with the
requirements of Subchapter M of the Internal Revenue Code applicable to RICs and
to distribute all of its taxable income.
Valuation
Securities for which over-the-counter market quotations are available are valued
at the latest bid price. Securities for which market quotations are not readily
available will be valued in good faith by methods approved by the Board of
Directors. Securities purchased with sixty days or less remaining to maturity
are valued at amortized cost, which approximates market value, unless this
method does not represent fair value.
<PAGE>
SAMCO FUND, INC.
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SAMCO FIXED INCOME PORTFOLIO - NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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APRIL 30, 1999 (unaudited)
14
2. Summary of Significant Accounting Policies
(continued)
Dividends to Shareholders
It is the policy of the Fund to declare and pay dividends from net investment
income monthly. Dividends from net short-term capital gains and net long-term
capital gains, if any, are normally declared and paid annually, but the Fund may
make distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. To the extent that a net realized
capital gain can be reduced by a capital loss carryover, such gain will not be
distributed.
Income and capital gain distributions are determined in accordance with federal
tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. Undistributed net investment income,
accumulated net investment loss, or distributions in excess of net investment
income may include temporary book and tax differences which may reverse in a
subsequent period.
Organization Expenses
The costs incurred by the Company in connection with the organization and
initial registration of shares are being amortized on a straight-line basis by
the Fund over a sixty-month period beginning with the commencement of its
investment operations on December 30, 1997. On October 29, 1997, the investment
advisor purchased 10,000 shares of common stock of the Fund for an aggregate
purchase price of $100,000.
Estimates
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
3. Investment Advisory Agreement and Administration
Agreement
The Company's Board of Directors has approved an investment advisory agreement
with the Investment Adviser. For its services as investment adviser, the Company
pays the Investment Adviser a monthly fee at an annual rate of 0.25% of the
Fund's average daily net assets.
Pursuant to its Administration Agreement, Investors Capital Services, Inc.
(formerly AMT Capital Services, Inc.) (the "Administrator"), two employees of
which serve as officers of the Company, earns a fee for providing fund
administration services to the Company. The Company pays the Administrator a
monthly fee at an annual rate not to exceed 0.20% of the Fund's average daily
net assets and reimburses for out-of-pocket expenses pursuant to the
Administration Agreement from which all non-advisory expenses are paid. Pursuant
to the Administration Agreement, the Administrator will be paid a minimum fee of
$50,000 for services provided to the Company for the first twelve months after
the fund commenced operations. The Administrator reimburses the fund for
expenses exceeding 0.45% of average daily net assets, to the extent of fees
earned. The Administrator has waived $58,985 in fees during this fiscal year.
The Investment Adviser has agreed to voluntarily waive a portion of its fee and
reimburse the fund for expenses to the extent not already reimbursed by the
Administrator. During the period ended April 30, 1999, the Investment Adviser
voluntarily waived $22,548 of it's advisory fees, and reimbursed $11,160 for
other expenses.
Directors' fees of $3,500 were paid by the Fund and paid for the six months
ended April 30, 1999 to Directors who are not employees of the Investment
Adviser. Directors who are not employees of the Investment Adviser receive an
annual retainer of $1,000, payable quarterly and $500 per meeting attended.
Investment Transactions
Purchase cost and proceeds from sales of investment securities, other than
short-term investments, for the six months ended April 30, 1999 were as follows:
<TABLE>
<S> <C> <C> <C>
Purchases Purchases Sales Sales
U.S. Government Other Securities U.S. Government Other Securities
- ------------------------ ---------------------- ---------------------- ----------------------
$118,998,675 $50,988,782 $124,515,134 $39,867,341
The components of net unrealized depreciation of investments based on Federal
tax cost at April 30, 1999 for the Fund were as follows:
Cost for Federal
Appreciation Depreciation Net Depreciation Tax Purposes
- ------------------------ ---------------------- ---------------------- ----------------------
$84,810 ($396,005) ($311,195) $55,442,584
</TABLE>
5. Repurchase Agreements
The Fund may enter into repurchase agreements under which a bank or securities
firm that is a primary or reporting dealer in U.S. Government securities agrees,
upon entering into a contract, to sell U.S. Government securities to the Fund
and repurchase such securities from the Fund at a mutually agreed upon price and
date.
The Fund will engage in repurchase transactions with parties selected on the
basis of such party's creditworthiness. The collateral on repurchase agreements
must have an aggregate market value greater than or equal to the repurchase
price plus accrued interest at all times. If the value of the underlying
securities falls below the value of the repurchase price plus accrued interest,
the Fund will require the seller to deposit additional collateral by the next
business day. If the request for additional collateral is not met, or the seller
defaults on its repurchase obligation, the Fund maintains the right to sell the
underlying securities at market value and may claim any resulting loss against
the seller. However, in the event of default or bankruptcy by the counterparty
to the agreement, realization and/or retention of the collateral may be subject
to legal proceedings.
6. Capital Share Transactions
As of April 30, 1999, there were 2,500,000,000 shares of $.001 par value capital
stock authorized. Transactions in capital stock were as follows:
<TABLE>
<S> <C> <C> <C> <C>
For the six months For the period from
ended 4/30/99 12/30/97* to 10/31/98
Shares Amount Shares Amount
------------------ ------------------- ------------------- --------------------
Shares Sold $ 2,104,717 4,192,818 $42,406,781
203,970
Shares Reinvested 1,535,200 77,716
151,637 793,099
Shares Redeemed (500,000) - -
(49,626)
------------------ ------------------- ------------------- -------------------
Net Increase $ 3,139,917 4,270,534 $43,199,880
305,981
================== =================== =================== ====================
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of Operations
<PAGE>
<TABLE>
<S> <C>
OFFICERS & DIRECTORS AND OTHER PERTINENT INFORMATION
OFFICERS AND DIRECTORS INVESTMENT ADVISER
Christina Seix Seix Investment Advisors Inc.
Chairman and Director 300 Tice Blvd.
of the Fund Woodcliff Lake, NJ 07675
ADMINISTRATOR
John G. Talty
President and Director Investors Capital Services, Inc.
of the Fund 600 Fifth Avenue, 26th Floor
New York, NY 10020
John R. O'Brien
Director of the Fund DISTRIBUTOR
John E. Manley, Sr. AMT Capital Securities, L.L.C.
Director of the Fund 399 Park Avenue, 37th Floor
New York, NY 10012
Peter Bourke
Assistant Secretary and CUSTODIAN AND FUND ACCOUNTING AGENT
Director of the Fund
Investors Bank & Trust Company
William E. Vastardis P.O. Box 9130
Secretary and Treasurer Boston, MA 02117
of the Fund
TRANSFER AND DIVIDEND DISBURSING AGENT
Carla E. Dearing
Assistant Treasurer Investors Bank & Trust Company
of the Fund P.O. Box 9130
Boston, MA 02117
LEGAL COUNSEL
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005-1208
INDEPENDENT AUDITORS
Ernst & Young LLP
787 Seventh Avenue
New York, NY 10019
</TABLE>
