<PAGE>
- --------------------------------------------------------------------------------
SAMCO FUNDS, INC.
- --------------------------------------------------------------------------------
SAMCO Aggregate Fixed Income Fund
SAMCO Intermediate Fixed Income Fund
ANNUAL REPORT
OCTOBER 31, 1999
<PAGE>
SAMCO FUNDS, INC.
PRESIDENT'S LETTER
- -------------------------------------------------------------------------------
December 13, 1999
Dear Shareholder:
We are pleased to provide you with information about the SAMCO Funds for the
fiscal year ended October 31, 1999.
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 any questions or comments you may have regarding
this report.
Sincerely,
/s/ Christina Seix /s/ John Talty
- ---------------------------- --------------------------------
Christina Seix, Chairman John Talty, President
<PAGE>
SAMCO FUNDS, INC.
TABLE OF CONTENTS
- ------------------------------------------------------------------------------
Cumulative Performance.................................................. 1
Portfolio of Investments
SAMCO Aggregate Fixed Income Fund................................ 4
SAMCO Intermediate Fixed Income Fund............................. 9
Statements of Assets and Liabilities.................................... 12
Statements of Operations................................................ 13
Statements of Changes in Net Assets..................................... 14
Financial Highlights................................................... 15
Notes to Financial Statements........................................... 16
Report of Independent Auditors.......................................... 20
Federal Tax Information................................................. 21
<PAGE>
SAMCO FUNDS, INC.
SAMCO Aggregate Fixed Income Fund -- A Shares CUMULATIVE PERFORMANCE
OCTOBER 31, 1999
- ------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $1,000,000 INVESTMENT IN
SAMCO AGGREGATE FIXED INCOME FUND AND THE LEHMAN AGGREGATE BOND INDEX
[GRAPH]
<TABLE>
<CAPTION>
SAMCO Aggregate Fixed Income Fund Lehman Aggregate Bond Index
<S> <C> <C>
12/30/97 1,000,000 1,000,000
12/31/97 1,002,400 1,002,000
1/31/98 1,015,230 1,016,000
2/28/98 1,014,420 1,013,490
3/31/98 1,017,870 1,018,020
4/30/98 1,023,160 1,022,580
5/31/98 1,032,880 1,032,740
6/30/98 1,041,660 1,040,910
7/31/98 1,043,850 1,042,960
8/31/98 1,060,860 1,056,240
9/30/98 1,085,690 1,074,010
10/31/98 1,079,930 1,068,720
11/30/98 1,086,090 1,075,390
12/31/98 1,089,350 1,080,300
1/31/99 1,097,080 1,088,490
2/28/99 1,077,880 1,070,560
3/31/99 1,083,810 1,079,240
4/30/99 1,087,280 1,081,750
5/31/99 1,077,710 1,069,660
6/30/99 1,074,260 1,066,740
7/31/99 1,069,750 1,063,660
8/31/99 1,069,210 1,060,350
9/30/99 1,081,620 1,072,940
10/31/99 1,085,600 1,077,200
</TABLE>
Past performance is not indicative of future performance.
INVESTMENT PERFORMANCE
(FOR THE PERIODS ENDED OCTOBER 31, 1999)
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
One Year Since Inception (12/30/97)
<S> <C> <C>
SAMCO AGGREGATE FIXED INCOME FUND (a) 0.80% 4.14%
Lehman Aggregate Bond Index 0.53% 4.58%
</TABLE>
(a) Reflects waiver of fees and reimbursement of expenses by the investment
adviser and administrator. Absent such waiver and reimbursement, the Fund's
total return would have been lower.
1
<PAGE>
SAMCO FUNDS, INC.
SAMCO Intermediate Fixed Income Fund CUMULATIVE PERFORMANCE
OCTOBER 31, 1999
- ------------------------------------------------------------------------------
[GRAPH]
<TABLE>
<CAPTION>
SAMCO Intermediate Lehman Intermediate
Fixed Income Fund Government/Corporate Index
<S> <C> <C>
6/30/99 1,000,000 1,000,000
7/31/99 998,480 999,100
8/31/99 1,000,250 999,900
9/30/99 1,009,430 1,009,200
10/31/99 1,011,300 1,011,800
</TABLE>
Past performance is not indicative of future performance.
INVESTMENT PERFORMANCE
(FOR THE PERIOD ENDED OCTOBER 31, 1999)
<TABLE>
<CAPTION>
TOTAL RETURN
Cumulative Since Inception (6/30/99)
<S> <C>
SAMCO INTERMEDIATE FIXED INCOME FUND (a) 1.13%
Lehman Intermediate Government/Corporate Index 1.18%
</TABLE>
(a) Reflects waiver of fees and reimbursement of expenses by the investment
adviser and administrator. Absent such waiver and reimbursement, the Fund's
total return would have been lower.
2
<PAGE>
SAMCO FUNDS, INC.
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
MARKET REVIEW:
After recovering from the liquidity crisis of the summer of 1998, the economy
produced a number of positive surprises. The global macroeconomic uncertainty
that prevailed in 1998, resulting from the failure of exchange rate policies
in a number of countries, fueled a historic capital flight both between
regions and between credit sectors. This global flight to quality, compounded
by the unwinding of hugely leveraged positions by US and European Hedge
Funds, reduced liquidity in all issues non-Treasury as the perception of
increased risk took hold. Fortunately, the anticipated slowdown resulting
from this financial crisis never materialized. Due to the strong economy, the
Federal Reserve raised short-term interest rates by 3/4% and market
participants pushed long-term yields up over 1 1/2%. It was expected that the
higher rates would dampen residential investment and other consumer durable
spending, but the effects were insignificant. In addition, inflation remained
under control despite strong GDP growth, very low unemployment and a doubling
of crude oil prices.
This non-inflationary prosperity can be traced to the notable productivity
improvements that occurred in recent years. Wage increases were associated
with expansion in output, but did not translate into higher unit labor costs.
This may be attributed to the benefits derived from healthy plant and
equipment investments made in the past five years, technology improvements
and efficiencies from the Internet. Demographics also played a part, as
workers born during the 70's Baby Bust came of age and businesses were forced
to substitute capital for relatively scarce labor.
Yield spreads of securities in non-treasury sectors were volatile over the
last twelve months. In the closing months of 1998, spreads on both Corporate
and Mortgage Backed Securities (MBS) recovered dramatically from the
extraordinarily wide levels experienced during the unsettled conditions of
the third quarter. Early in 1999, investors were secure in the opinion that
the anticipated financial disaster had been averted. Liquidity returned to
the market and spreads narrowed in the first half of the year. An enormous
supply of short and long term paper came to market from June to August driven
by Y2K-related concerns and an increase in merger and acquisition activity.
Corporations rushed into the fixed income market to avoid issuance at
year-end. Many began "rolling" Commercial Paper into longer 1 and 2 year
notes. Others simply chose to do their funding early rather than wait.
Spreads widened because of this technical supply/demand imbalance and not for
fundamental reasons. By September, issuance started to fall back to more
normal levels and spreads again narrowed. They have not returned to their
pre-crisis levels, however, because the events of 1998 are still influencing
bond market liquidity.
PORTFOLIO OVERVIEW:
The SAMCO Fixed Income Funds were able to profit from the value opportunities
that were available in 1999. In the early part of the year, we overweighted
Corporates, Agencies and MBS and added a small allocation of high quality
Municipal securities. We reduced our allocations when profit targets were
reached and were able to increase the weighting again when temporary market
conditions provided opportunities during the summer of 1999.
Seix Investment Advisors (SIA) income orientation and focus on
well-researched credits and structures were rewarded in the marketplace. SIA
has generated strong performance versus the benchmark since October 1998, as
pricing anomalies generated by the year's market disruptions created profit
opportunities. Our strategy going into the early part of 2000 includes
increasing our overweighting in liquid Corporates, MBS and Agencies when
spreads widen and maintaining a core position in credits and structures that
represent true value opportunities.
3
<PAGE>
SAMCO FUNDS, INC.
<TABLE>
<CAPTION>
SAMCO AGGREGATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS COUPON
OCTOBER 31, 1999 RATE MATURITY PAR/FACE VALUE *
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS: 49.1%
U.S. TREASURY OBLIGATIONS: 17.2%
U.S. Treasury Note 5.750% 08/15/2003 $1,855,000 $1,840,509
U.S. Treasury Note 6.000% 08/15/2004 360,000 360,788
U.S. Treasury Note 6.375% 08/15/2002 60,000 60,731
U.S. Treasury Note 6.625% 07/31/2001 1,860,000 1,884,413
U.S. Treasury Note 7.000% 07/15/2006 1,175,000 1,227,141
U.S. Treasury Bond 5.250% 02/15/2029 1,315,000 1,137,475
U.S. Treasury Bond 6.000% 08/15/2009 1,525,000 1,523,094
U.S. Treasury Bond 6.125% 08/15/2029 610,000 607,522
U.S. Treasury Bond 6.625% 02/15/2027 85,000 87,338
U.S. Treasury Bond 8.750% 05/15/2017 575,000 708,867
U.S. Treasury Bond 9.250% 02/15/2016 205,000 260,863
---------------
9,698,741
---------------
U.S. GOVERNMENT AGENCY OBLIGATIONS AND PASS-THROUGH CERTIFICATES: 31.1%
FHLMC 8.500% 03/01/2020 17,541 18,178
FHLMC Gold 6.500% 12/16/2014 1,450,000 1,422,015
FHLMC Gold 6.500% 06/01/2029 309,970 297,290
FHLMC Gold 8.500% 06/01/2012 517,394 532,999
FNMA (TBA) 6.000% 12/16/2014 860,000 826,718
FNMA (TBA) 6.000% 11/01/2029 220,000 204,886
FNMA (TBA) 6.500% 12/16/2014 960,000 941,088
FNMA (TBA) 7.000% 01/01/2029 3,640,000 3,572,078
FNMA (TBA) 7.500% 01/01/2029 1,300,000 1,302,600
FNMA 5.625% 05/14/2004 220,000 213,147
FNMA 6.500% 09/01/2024 589,795 569,827
FNMA 6.500% 04/01/2029 1,000,001 958,584
FNMA 6.500% 06/01/2029 399,961 383,396
FNMA 6.500% 06/01/2029 64,994 62,302
FNMA 6.500% 08/01/2029 1,019,999 977,754
FNMA 6.625% 09/15/2009 105,000 104,484
FNMA 9.500% 05/01/2018 91,939 97,198
GNMA (TBA) 7.500% 01/01/2029 1,715,000 1,718,945
GNMA (TBA) 7.500% 11/22/2029 250,000 250,938
GNMA (TBA) 7.500% 12/21/2029 1,215,000 1,217,795
GNMA 7.000% 07/15/2028 370,283 363,320
GNMA 7.000% 03/15/2029 452,056 443,556
GNMA 7.000% 07/15/2029 300,029 294,388
GNMA 7.500% 04/15/2029 56,388 56,568
GNMA 7.500% 04/15/2029 524,685 526,358
GNMA 7.500% 04/15/2029 34,146 34,255
GNMA 7.500% 04/15/2029 88,426 88,708
----------------
17,479,375
----------------
U.S. GOVERNMENT AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS: 0.8%
FHLMC, Ser. 1944, Class GB 7.500% 04/17/2024 155,000 155,541
FNMA, Ser. 1997-15, Class B 7.500% 07/18/2025 285,000 285,562
----------------
441,103
----------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (COST - $27,625,403) 27,619,219
----------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SAMCO AGGREGATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) COUPON
OCTOBER 31, 1999 RATE MATURITY PAR/FACE VALUE *
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CORPORATE OBLIGATIONS: 46.1%
AEROSPACE & DEFENSE: 2.0%
Air 2 US, Ser. C (144A) 10.127% 10/01/2020 $ 660,000 $ 665,218
Lockheed Martin Corp. 7.750% 05/01/2026 275,000 259,977
Loral Corp. 8.375% 06/15/2024 195,000 202,357
----------------
1,127,552
----------------
AIRLINES: 3.1%
American Airlines, Ser. 1991-A 9.710% 01/02/2007 144,844 151,803
Northwest Airlines Corp., Ser. 1999-2C 8.304% 09/01/2010 510,000 502,202
Northwest Airlines Corp., Ser. 1999-2B 7.950% 03/01/2015 545,000 524,764
Northwest Airlines Corp., Ser. 1999-1C 8.130% 02/01/2014 334,569 319,069
US Airways, Inc., Ser. 1999-1 8.360% 07/20/2020 255,000 255,771
----------------
1,753,609
----------------
AUTOMOTIVE: 1.3%
DaimlerChrysler North America Holding Corp. 6.630% 09/21/2001 545,000 545,876
DaimlerChrysler North America Holding Corp. 7.200% 09/01/2009 195,000 195,214
----------------
741,090
----------------
BANKING: 8.0%
Aristar, Inc. 7.750% 06/15/2001 640,000 648,811
Bank of America Corp. (MTN) 6.068% 09/11/2001 500,000 498,450
BCI US Funding Trust I (FRN) (144A) 8.010% 12/29/2049 360,000 333,233
Citicorp, Ser. C (FRN) (MTN) 5.944% 08/10/2000 435,000 434,522
Citicorp 8.000% 02/01/2003 440,000 453,219
Fleet National Bank (FRN) 6.231% 07/31/2001 425,000 424,382
Husky Terra Nova Finance (144A) 8.450% 02/01/2012 585,000 573,546
Inter-American Development Bank (MTN) 6.750% 07/15/2027 790,000 746,479
KBC Bank Fund Trust III (FRN) (144A) 9.860% 11/29/2049 240,000 243,186
Wells Fargo & Co. 6.625% 07/15/2004 155,000 153,927
----------------
4,509,755
----------------
BUILDING MATERIALS: 1.0%
Vulcan Materials 5.750% 04/01/2004 560,000 540,028
----------------
CHEMICALS: 1.5%
Methanex Corp. 7.400% 08/15/2002 175,000 160,633
Methanex Corp. 7.750% 08/15/2005 350,000 300,633
PPG Industries, Inc. 7.050% 08/15/2009 405,000 402,800
----------------
864,066
----------------
COMMUNICATIONS: 0.6%
Cable & Wireless Communications 6.750% 12/01/2008 350,000 355,243
----------------
ELECTRIC UTILITIES: 3.7%
Duquesne Light Co. 8.700% 06/01/2016 275,000 294,337
Edison International, Inc. 6.875% 09/15/2004 535,000 531,386
FPL Group Capital, Inc. 7.625% 09/15/2006 455,000 462,902
Great Lakes Power 8.300% 03/01/2005 385,000 380,517
Midwest Energy (144A) 9.375% 10/15/2029 210,000 212,208
Southern Energy (144A) 7.900% 07/15/2009 200,000 194,844
----------------
2,076,194
----------------
ELECTRONICS: 0.4%
Litton Industries, Inc. (144A) 8.000% 10/15/2009 205,000 206,525
----------------
</TABLE>
5
<PAGE>
SAMCO FUNDS, INC.
<TABLE>
<CAPTION>
SAMCO AGGREGATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) COUPON
OCTOBER 31, 1999 RATE MATURITY PAR/FACE VALUE *
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINANCIAL SERVICES: 9.6%
Case Credit Corp. (MTN) 6.150% 03/01/2002 $ 355,000 $ 349,128
Equity Residential Properties 7.100% 06/23/2004 600,000 589,588
Ford Motor Credit Co. 7.375% 10/28/2009 455,000 458,022
General Electric Capital Corp. 8.625% 06/15/2008 120,000 132,023
General Motors Acceptance Corp., Ser. 1 (FRN) (MTN) 6.431% 07/30/2001 390,000 389,766
Goldman Sachs Group, LP (144A) 7.800% 07/15/2002 380,000 386,947
Heller Financial, Inc., Ser. I (MTN) 5.875% 11/01/2000 170,000 168,755
Heller Financial, Inc., Ser. I (FRN) (MTN) 5.830% 08/20/2001 400,000 399,800
Household Finance Corp. (FRN) (MTN) 5.646% 09/27/2000 330,000 329,427
Lehman Brothers Holdings, Inc. 7.875% 11/01/2009 95,000 96,009
Lehman Brothers, Inc. 7.250% 04/15/2003 260,000 260,573
Natexis AMBS Co., LLC (FRN) (144A) 8.440% 12/29/2049 115,000 108,301
Ras Laffan-Lincs, Ser. 1997-11 (FRN) (144A) 7.850% 03/18/2014 585,000 603,968
Salomon Smith Barney Holdings, Inc. 6.750% 02/15/2003 365,000 362,428
Selkirk Cogen Funding Corp., Ser. A 8.650% 12/26/2007 423,241 433,166
Textron Financial Corp., Ser. D (MTN) (144A) 5.840% 02/19/2002 325,000 313,826
WMC Finance USA 7.250% 11/15/2013 35,000 34,289
---------------
5,416,016
---------------
HEAVY CONSTRUCTION: 0.1%
Centex Corp. 7.375% 06/01/2005 70,000 68,733
---------------
HEAVY MACHINERY: 0.6%
United Technologies Corp. 7.500% 09/15/2029 190,000 190,654
Unova, Inc. 6.875% 03/15/2005 125,000 119,699
---------------
310,353
---------------
INDUSTRIAL - DIVERSIFIED: 0.6%
ICI Wilmington 6.750% 09/15/2002 370,000 366,238
---------------
INSURANCE: 7.1%
Conseco, Inc. 9.000% 10/15/2006 520,000 521,839
Executive Risk 7.125% 12/15/2007 35,000 35,694
Florida Windstorm Underwriting Association (144A) 6.500% 08/25/2002 300,000 294,115
Lumbermens Mutual Casualty (144A) 8.300% 12/01/2037 865,000 757,955
Mutual Life Insurance Co. of NY (144A) 11.250% 08/15/2024 1,190,000 1,617,032
Royal & Sun Alliance Insurance Group plc (144A) 8.950% 10/15/2029 150,000 149,512
Transamerica Financial Corp. 7.250% 08/15/2002 630,000 633,006
---------------
4,009,153
---------------
OIL & GAS: 2.6%
Chevron Corp. (144A) 7.327% 01/01/2014 530,000 539,622
EdperBrascan Corp. 7.125% 12/16/2003 170,000 165,503
Kern River Funding Corp., Ser. B (144A) 6.720% 09/30/2001 310,000 308,201
Petroleum Geo-Services ASA 7.125% 03/30/2028 185,000 165,775
Transocean Offshore, Inc. 8.000% 04/15/2027 250,000 257,308
---------------
1,436,409
---------------
PHARMACEUTICALS: 1.1%
Lilly Del Mar, Inc. (FRN) (144A) 7.717% 08/01/2029 605,000 606,146
---------------
REAL ESTATE: 0.1%
Nationwide Health Properties, Inc., Ser. B (REIT)
(MTN) 7.670% 04/18/2003 70,000 65,665
---------------
TELEPHONE SYSTEMS: 0.8%
Telecom New Zealand Finance (144A) 6.250% 02/10/2003 280,000 275,628
US West Communications, Inc. (144A) 7.200% 11/01/2004 165,000 166,095
---------------
441,723
---------------
</TABLE>
6
<PAGE>
SAMCO FUNDS, INC.
<TABLE>
<CAPTION>
SAMCO AGGREGATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) COUPON
OCTOBER 31, 1999 RATE MATURITY PAR/FACE VALUE *
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TRANSPORTATION: 1.9%
Greyhound Lines 11.500% 04/15/2007 $ 580,000 $ 652,500
Windsor Petroleum (144A) 7.840% 01/15/2021 485,000 402,550
---------------
1,055,050
---------------
TOTAL CORPORATE OBLIGATIONS (COST - $26,313,787) 25,949,548
---------------
SOVEREIGN DEBT OBLIGATION: 0.5%
Republic of Finland (Cost - $260,606) 6.950% 02/15/2026 265,000 261,156
---------------
PREFERRED STOCKS: 1.2% SHARES
---------------
Duke-Weeks Realty Corp. (REIT) 7.99% (a) 13,570 610,650
SPG Properties, Inc. (REIT) 7.89% (b) 1,650 73,198
---------------
TOTAL PREFERRED STOCKS (COST - $704,243) 683,848
---------------
COLLATERALIZED MORTGAGE OBLIGATIONS: 1.2% PAR/FACE
---------------
Criimi Mae Commercial Mortgage Trust, Ser. 1998-C1,
Class A2 7.000% 03/02/2011 $ 440,000 375,580
Discover Card Master Trust I, Ser. 1997-2,
Class A (FRN) 6.792% 04/16/2010 285,000 283,136
---------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST - $658,281) 658,716
---------------
ASSET-BACKED SECURITIES: 14.7%
AFC Home Equity Loan Trust, Ser. 1999-1, Class 2A1
(FRN) 5.789% 02/24/2029 311,506 311,042
American Express Master Trust, Ser. 1996-2, Class A
(FRN) 5.526% 08/15/2002 360,000 359,946
AT&T Universal Card Master Trust, Ser. 1996-1, Class A
(FRN) 6.311% 04/17/2003 400,000 399,712
AT&T Universal Card Master Trust, Ser. 1996-3, Class A
(FRN) 5.620% 09/17/2003 360,000 359,521
BA Master Credit Card Trust, Ser. 1996-A, Class A (FRN) 5.536% 08/15/2003 400,000 400,048
Champion Home Equity Loan Trust, Ser.1999-1, Class A
(FRN) 5.669% 03/25/2029 35,434 35,443
Chase Credit Card Master Trust, Ser. 1998-6, Class A
(FRN) 5.666% 09/15/2004 475,000 476,235
Chase Credit Card Master Trust Ser. 1999-3, Class B 6.950% 01/15/2007 285,000 284,196
Chemical Master Credit Card Trust, Ser. 1995-2, Class A 6.230% 06/15/2003 500,000 498,855
Countrywide Home Equity Loan Trust, Ser. 1997-C, Class A
(FRN) 5.863% 09/15/2022 211,133 211,027
Countrywide Home Equity Loan Trust, Ser. 1998-A, Class A
(FRN) 5.596% 03/15/2024 357,241 357,070
Discover Card Master Trust I, Ser. 1996-1, Class A
(FRN) 5.576% 07/16/2003 365,000 365,281
Discover Card Master Trust I, Ser. 1997-4, Class A
(FRN) 5.476% 04/16/2003 325,000 324,929
EQCC Home Equity Loan Trust, Ser. 1998-4, Class A1F
(FRN) 5.846% 01/15/2029 282,037 283,134
First Chicago Master Trust II, Ser. 1998-V, Class A
(FRN) 5.686% 10/15/2003 375,000 375,270
First Union Master Credit Card Trust, Ser. 1996-1,
Class A (FRN) 5.576% 09/15/2003 365,000 365,285
First USA Credit Card Master Trust, Ser. 1995-5,
Class A (FRN) 5.608% 04/15/2003 355,000 355,241
First USA Credit Card Master Trust, Ser. 1996-1,
Class A (FRN) 5.566% 11/15/2003 405,000 404,676
Fleet Credit Card Master Trust, Ser. 1995-F,
Class A2 (FRN) 5.596% 08/01/2003 320,000 320,294
Green Tree Home Equity Loan Trust, Ser. 1999-A,
Class A1B (FRN) 5.686% 02/15/2029 379,577 378,958
Household Affinity Credit Card Master Trust I,
Ser. 1995-1, Class A (FRN) 5.556% 02/15/2002 58,333 58,352
MBNA Master Credit Card Trust, Ser. 1996-H, Class A
(FRN) 5.553% 01/15/2004 360,000 359,726
MBNA Master Credit Card Trust, Ser. 1997-N, Class A
(FRN) 5.523% 11/15/2002 40,000 39,980
Merrill Lynch Home Equity Loan, Ser. 1997-1, Class A
(FRN) 5.563% 09/25/2027 46,122 45,894
Olympic Automobile Receivables Trust, Ser. 1997-A,
Class A5 6.800% 02/15/2005 500,000 501,850
Providian Master Trust, Ser. 1997-3, Class A (FRN) 5.516% 12/15/2005 418,079 418,037
---------------
TOTAL ASSET-BACKED SECURITIES (COST - $8,286,136) 8,290,002
---------------
</TABLE>
7
<PAGE>
SAMCO FUNDS, INC.
<TABLE>
<CAPTION>
SAMCO AGGREGATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) COUPON
OCTOBER 31, 1999 RATE MATURITY PAR/FACE VALUE *
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENT: 6.8%
Investors Bank & Trust Repurchase Agreement, in the
amount of $3,853,012; Issued 10/29/99 (collateralized
by $3,807,372 par of SBA Pool #503499, 8.125% due
10/25/2021 with a market value of $4,044,143)
(Cost - $3,851,565) 4.510% 11/01/1999 $3,851,565 $ 3,851,565
--------------
TOTAL INVESTMENTS: 119.6% (COST - $67,700,021) 67,314,054
LIABILITIES, NET OF OTHER ASSETS: (19.6%) (11,029,029)
--------------
NET ASSETS: 100%
Applicable to 5,821,992 outstanding $.001 par value shares
(authorized 500,000,000 shares) $ 56,285,025
==============
Net Asset Value, Offering and Redemption Price Per Share $ 9.67
==============
</TABLE>
* See note 2 to the Financial Statements
(a) Coupon rate shown represents current rate. Rate will
increase by 2.00% on 10/01/12.
(b) Coupon rate shown represents current rate. Rate will
increase by 2.00% on 09/30/12.
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 October 31, 1999, the aggregate value of the
securities is $8,958,658 or 15.9% of net assets.
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
FRN Floating Rate Note
GNMA Government National Mortgage Association
MTN Medium-Term Note
REIT Real Estate Investment Trust
SBA Small Business Administration
TBA To Be Announced - Security is subject to delayed delivery.
See Notes to the Financial Statements
8
<PAGE>
SAMCO FUNDS, INC.
<TABLE>
<CAPTION>
SAMCO INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS COUPON
OCTOBER 31, 1999 RATE MATURITY PAR/FACE VALUE *
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS: 34.5%
U.S. TREASURY OBLIGATIONS: 19.5%
U.S. Treasury Note 5.625% 02/15/2006 $150,000 $ 146,297
U.S. Treasury Note 5.750% 08/15/2003 345,000 342,305
U.S. Treasury Note 6.500% 05/31/2002 350,000 355,031
U.S. Treasury Note 6.500% 08/15/2005 200,000 203,563
U.S. Treasury Note 6.625% 07/31/2001 115,000 116,509
U.S. Treasury Note 7.000% 07/15/2006 145,000 151,434
U.S. Treasury Note 7.500% 02/15/2005 300,000 318,656
U.S. Treasury Bond 5.625% 05/15/2008 330,000 318,347
U.S. Treasury Bond 6.000% 08/15/2009 180,000 179,775
--------------
2,131,917
--------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 4.3%
FHLB Global Note, Ser. 114 5.125% 02/26/2002 320,000 312,435
FNMA Global Bond (MTN) 6.320% 03/16/2009 160,000 152,402
--------------
464,837
--------------
U.S. GOVERNMENT AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS: 10.7%
FHLMC, Ser. 1380, Class K 6.750% 10/15/2007 435,000 435,370
FHLMC, Ser. 1311, Class J 7.500% 09/15/2021 235,000 237,064
FNMA, Ser. 1993-163, Class BH 7.000% 04/25/2004 498,244 497,005
--------------
1,169,439
--------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (COST - $3,782,358) 3,766,193
--------------
CORPORATE OBLIGATIONS: 32.6%
AEROSPACE & DEFENSE: 1.4%
Air 2 US, Ser. C (144A) 10.127% 10/01/2020 150,000 151,186
--------------
AUTOMOTIVE: 1.4%
DaimlerChrysler North America Holding Corp. 6.630% 09/21/2001 150,000 150,241
--------------
BANKING: 8.6%
Bank of America Corp. 7.625% 04/15/2005 160,000 163,023
Chase Manhattan Corp. 8.125% 06/15/2002 230,000 237,590
Household Finance Corp. 5.875% 11/01/2002 230,000 223,064
KBC Bank Fund Trust III (FRN) (144A) 9.860% 11/29/2049 65,000 65,863
National Westminster Bank plc 7.375% 10/01/2009 250,000 248,790
--------------
938,330
--------------
ELECTRIC UTILITIES: 3.9%
FPL Group Capital, Inc. 7.625% 09/15/2006 110,000 111,910
Great Lakes Power, Inc. 8.300% 03/01/2005 165,000 163,079
Midwest Energy (144A) 9.375% 10/15/2029 65,000 65,683
PP&L Capital Funding, Ser. B (MTN) 7.700% 11/15/2002 90,000 90,402
--------------
431,074
--------------
ELECTRONICS: 0.5%
Litton Industries, Inc. (144A) 8.000% 10/15/2009 60,000 60,446
--------------
</TABLE>
9
<PAGE>
SAMCO FUNDS, INC.
<TABLE>
<CAPTION>
SAMCO INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) COUPON
OCTOBER 31, 1999 RATE MATURITY PAR/FACE VALUE *
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINANCIAL SERVICES: 9.0%
Bear Stearns Co., Inc. 6.450% 08/01/2002 $150,000 $ 148,176
CIT Group 7.125% 10/15/2004 175,000 173,941
Ford Motor Credit Co. 7.375% 10/28/2009 130,000 130,863
Goldman Sachs Group, Inc., Ser. B (MTN) 7.350% 10/01/2009 95,000 94,836
Heller Financial, Inc., Ser. I (MTN) 6.500% 07/22/2002 190,000 187,734
Lehman Brothers Holdings, Inc. 7.875% 11/01/2009 65,000 65,691
Lehman Brothers, Inc. 7.250% 04/15/2003 180,000 180,396
---------------
981,637
---------------
HEAVY MACHINERY: 2.1%
Caterpillar Financial Services Corp., Ser. F (MTN) 6.400% 04/16/2001 225,000 224,983
---------------
INSURANCE: 3.3%
Conseco, Inc. 9.000% 10/15/2006 150,000 150,531
Mutual Life Insurance Co. of NY (144A) 11.250% 08/15/2024 155,000 210,622
---------------
361,153
---------------
MEDIA - BROADCASTING & PUBLISHING: 0.8%
Cox Communications, Inc. 7.750% 08/15/2006 90,000 92,197
---------------
RETAILERS: 1.1%
Dayton Hudson Corp. 9.400% 02/15/2001 115,000 119,243
---------------
TELEPHONE SYSTEMS: 0.5%
US West Communications, Inc. (144A) 7.200% 11/01/2004 50,000 50,332
---------------
TOTAL CORPORATE OBLIGATIONS (COST - $3,546,494) 3,560,822
---------------
COLLATERALIZED MORTGAGE OBLIGATIONS: 5.6%
Criimi Mae Commercial Mortgage Trust, Ser. 1998-C1,
Class A2 7.000% 03/02/2011 225,000 192,058
GMAC Commercial Mortgage Securities, Ser. 1997-C1,
Class A1 6.830% 12/15/2003 224,123 224,793
GMAC Commercial Mortgage Securities, Ser. 1997-C2,
Class A1 6.451% 12/15/2004 200,722 197,233
---------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (COST - $617,102) 614,084
---------------
ASSET-BACKED SECURITIES: 22.8%
Chase Credit Card Master Trust, Ser. 1999-3,
Class B 6.950% 01/15/2007 305,000 304,140
Chemical Master Credit Card Trust, Ser. 1995-2,
Class A 6.230% 06/15/2003 235,000 234,462
Chemical Master Credit Card Trust I, Ser. 1996-1,
Class A 5.550% 09/15/2003 310,000 306,652
Contimortgage Home Equity Loan Trust, Ser. 1996-2,
Class A8 7.900% 07/15/2027 225,000 229,050
Discover Card Master Trust I, Ser. 1999-2, Class A 5.900% 10/15/2004 220,000 216,634
Discover Card Master Trust I, Ser. 1999-4, Class A 5.650% 11/16/2004 225,000 220,050
Ford Credit Auto Owner Trust, Ser. 1999-D, Class A3 6.200% 04/15/2002 180,000 179,521
Green Tree Financial Corp., Ser. 1997-3, Class A4 6.930% 07/15/2028 355,000 356,008
MBNA Master Credit Card Trust, Ser. 1995-D, Class A 6.050% 11/15/2002 185,000 184,671
Olympic Automobile Receivables Trust, Ser. 1996-D,
Class A5 6.250% 11/15/2004 260,000 259,064
---------------
TOTAL ASSET-BACKED SECURITIES (COST - $2,499,465) 2,490,252
---------------
</TABLE>
10
<PAGE>
SAMCO FUNDS, INC.
<TABLE>
<CAPTION>
SAMCO INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) COUPON
OCTOBER 31, 1999 RATE MATURITY PAR/FACE VALUE *
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENT: 0.9%
Investors Bank & Trust Company Repurchase Agreement, in
the amount of $101,730; Issued 10/29/1999
(collateralized by $102,739 par of FNMA - ARM, 6.886%
due 04/01/2026 with a market value of $106,785)
(Cost - $101,692) 4.510% 11/01/1999 $ 101,692 $ 101,692
---------------
TOTAL INVESTMENTS: 96.4% (COST - $10,547,111) 10,533,043
OTHER ASSETS, NET OF LIABILITIES: 3.6% 393,222
-------------------------------------- ---------------
NET ASSETS: 100.0%
Applicable to 1,100,898 outstanding $.001 par value shares
(authorized 500,000,000 shares) $ 10,926,265
===============
Net Asset Value, Offering and Redemption Price Per Share $ 9.92
===============
</TABLE>
* 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 October 31, 1999, the aggregate value of the
securities is $604,132 or 5.5% of net assets.
ARM Adjustable Rate Mortgage
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
FRN Floating Rate Note
MTN Medium-Term Note
See Notes to the Financial Statements
11
<PAGE>
SAMCO FUNDS, INC.
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Aggregate Intermediate
Fixed Income Fixed Income
Fund Fund
--------------- -------------
<S> <C> <C>
ASSETS
Investments, at value (cost of $67,700,021 and $10,547,111, respectively)(Note 2 and 5) $ 67,314,054 $10,533,043
Receivable for securities sold 13,741,728 1,004,569
Interest receivable 664,222 116,855
Receivable from investment advisor - 35,414
Organizational expenses 60,453 --
Miscellaneous receivable 15,261 --
-------------- ------------
Total assets 81,795,718 11,689,881
-------------- ------------
LIABILITIES
Payable for securities purchased 25,442,419 668,639
Payable for capital shares redeemed 13,578 --
Payable to investment advisor 543 --
Dividends payable 15,606 53,724
Accrued expenses and other liabilities 38,547 41,253
-------------- ------------
Total liabilities 25,510,693 763,616
-------------- ------------
NET ASSETS $56,285,025 $10,926,265
============== ============
SHARES OUTSTANDING 5,821,992 1,100,898
============== ============
NET ASSET VALUE PER SHARE $ 9.67 $ 9.92
============== ============
COMPOSITION OF NET ASSETS
Paid-in capital $58,476,023 $11,008,982
Accumulated undistributed net investment income 79,129 7,744
Net accumulated realized loss on investments (1,884,160) (76,393)
Net unrealized depreciation on investments (385,967) (14,068)
============== ============
Net assets applicable to capital stock outstanding $56,285,025 $10,926,265
============== ============
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
12
<PAGE>
SAMCO FUNDS, INC.
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------
Aggregate Intermediate
Fixed Income Fixed Income
Fund Fund
--------------------- ----------------------
FOR THE PERIOD FROM
YEAR ENDED JUNE 30, 1999*
OCTOBER 31, 1999 TO OCTOBER 31, 1999
--------------------- ----------------------
<S> <C> <C>
INVESTMENT INCOME
Dividend income $ 73,926 $ --
Less: foreign withholding taxes (1,348) --
--------------------- ----------------------
Net dividend income 72,578 --
Interest income 2,916,533 235,973
--------------------- ----------------------
Total income 2,989,111 235,973
--------------------- ----------------------
EXPENSES
Investment advisory fees (Note 3) 119,906 9,241
Administration fees (Note 3) 71,944 5,545
Custodian fees 53,725 4,031
Audit fees 24,600 15,000
Amortization of organizational costs 19,090 -
Legal fees 16,129 26,221
State registration filing fees 11,780 910
Insurance expense 7,100 900
Directors fees 6,000 1,500
SEC filing fees 4,219 3,060
Transfer agent fees 2,582 107
Miscellaneous fees and expenses 3,743 321
--------------------- ----------------------
Total operating expenses 340,818 66,836
Waiver of investment advisory and administration fees and
reimbursement of other expenses (124,986) (50,200)
--------------------- ----------------------
Net expenses 215,832 16,636
--------------------- ----------------------
Net investment income 2,773,279 219,337
--------------------- ----------------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss on investments (1,848,785) (76,393)
Net change in unrealized appreciation (depreciation) on investments (474,264) (14,068)
--------------------- ----------------------
Net realized and unrealized loss on investments (2,323,049) (90,461)
--------------------- ----------------------
===================== ======================
Net increase in net assets resulting from operations $ 450,230 $ 128,876
===================== ======================
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of investment operations
See Notes to the Financial Statements
13
<PAGE>
SAMCO FUNDS, INC.
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
Intermediate
Aggregate Fixed Income Fund Fixed Income Fund
----------------------------------------- ---------------------------
FOR THE PERIOD FROM FOR THE PERIOD FROM
YEAR ENDED DECEMBER 30, 1997* JUNE 30, 1999*
OCTOBER 31, 1999 TO OCTOBER 31, 1998 TO OCTOBER 31, 1999
--------------------- -------------------- ---------------------------
<S> <C> <C> <C>
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
Net investment income $ 2,773,279 $ 915,069 $ 219,337
Net realized gain (loss) from investments (1,848,785) 473,249 (76,393)
Net change in unrealized appreciation (depreciation)
on investments (474,264) 88,297 (14,068)
--------------------- -------------------- ---------------------------
Net increase in net assets resulting from operations 450,230 1,476,615 128,876
--------------------- -------------------- ---------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (2,731,435) (877,784) (211,593)
From net realized gains on investments (508,624) -- --
--------------------- -------------------- ---------------------------
Total distributions to shareholders (3,240,059) (877,784) (211,593)
CAPITAL SHARE TRANSACTIONS (NOTE 6) 15,176,143 43,199,880 11,008,982
--------------------- -------------------- ---------------------------
Total increase in net assets 12,386,314 43,798,711 10,926,265
NET ASSETS
Beginning of period 43,898,711 100,000 --
--------------------- -------------------- ---------------------------
End of period $ 56,285,025 $ 43,898,711 $ 10,926,265
--------------------- -------------------- ---------------------------
UNDISTRIBUTED NET INVESTMENT INCOME, END OF PERIOD $ 79,129 $ 37,285 $ 7,744
===================== ==================== ===========================
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of investment operations
See Notes to the Financial Statements
14
<PAGE>
SAMCO FUNDS, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
Intermediate
Fixed Income
Aggregate Fixed Income Fund Fund
------------------------------------------- -------------------
FOR THE PERIOD FOR THE PERIOD
YEAR ENDED FROM 12/30/97* FROM 6/30/99*
10/31/99 TO 10/31/98 TO 10/31/99
------------------- -------------------- -------------------
<S> <C> <C> <C>
Net asset value, beginning of period $10.26 $10.00 $10.00
------------------- -------------------- -------------------
INCREASES FROM INVESTMENT OPERATIONS
Net investment income 0.56 0.21 0.20
Net realized and unrealized gain (loss) on investments (0.48) 0.46 (0.09)
------------------- -------------------- -------------------
Total from investment operations 0.08 0.67 0.11
------------------- -------------------- -------------------
LESS DISTRIBUTIONS
From net investment income (0.56) (0.41) (0.19)
From net realized gains on investments (0.11) - -
------------------- -------------------- -------------------
Total distributions (0.67) (0.41) (0.19)
------------------- -------------------- -------------------
Net asset value, end of period $9.67 $10.26 $9.92
=================== ==================== ===================
TOTAL RETURN (A) 0.80% 6.87% (b) 1.13% (b)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) $56,285 $43,899 $10,926
Ratio of net expenses to average net assets 0.45% 0.45% (c) 0.45% (c)
Ratio of expenses to average net assets (before expense waivers
and reimbursement of other expenses) 0.71% 1.03% (c) 1.81% (c)
Ratio of net investment income to average net assets 5.78% 5.17% (c) 5.93% (c)
Portfolio turnover rate 562% 478% (b) 117% (b)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Total return would have been lower had certain expenses not been waived
or reimbursed
(b) Not Annualized
(c) Annualized
* Commencement of investment operations
See Notes to the Financial Statements
15
<PAGE>
SAMCO FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
1. ORGANIZATION
SAMCO Funds, Inc. (the "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 two active portfolios, the SAMCO Aggregate Fixed Income Fund (the
"Aggregate Fixed Income Fund") which commenced operations on December 30, 1997,
and the SAMCO Intermediate Fixed Income Fund (the "Intermediate Fixed Income
Fund") which commenced operations on June 30, 1999. (each a "Portfolio",
collectively, the "Portfolios"). Prior to June 10, 1999, the Aggregate Fixed
Income Fund was named the SAMCO Fixed Income Portfolio. The unamortized balance
of organizational expenses at October 31, 1999 for the Aggregate Fixed Income
Fund was $60,453. In the event that any of the initial 10,000 shares (the
"Initial Shares") purchased by Seix Investment Advisors Inc. (the "Investment
Adviser") are redeemed during the amortization period, the Aggregate Fixed
Income 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.
INVESTMENT OBJECTIVE
The Aggregate Fixed Income 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. Performance is measured against the Lehman Brothers Aggregate
Bond Index. The Intermediate Fixed Income Fund is designed to provide investors
with a total return, which consistently exceeds the total return of the
intermediate portion of the broad U.S. investment grade bond market. Performance
is measured against the Lehman Brothers Intermediate Government Corporate Index.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SECURITIES
Securities transactions are recorded on a trade date basis. The Portfolios use
the specific identification method for determining gain or loss on sales of
securities. Interest income is recorded on an accrual basis. Dividend income is
recorded on the ex-dividend date. The Portfolios accrete discounts or amortize
premiums 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.
INCOME TAX
There is no provision for Federal income or excise tax since the Portfolios
intend to qualify as regulated investment companies ("RICs") by complying with
the requirements of Subchapter M of the Internal Revenue Code applicable to RICs
and to distribute all of their 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. Short-term securities purchased with sixty days or less remaining to
maturity are valued at amortized cost, which approximates market value.
16
<PAGE>
SAMCO FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DIVIDENDS TO SHAREHOLDERS
It is the policy of the Portfolios 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 Portfolios 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. To the extent these differences are
permanent, such amounts are reclassified within the capital accounts based on
their federal tax basis treatment, temporary differences do not require such
reclassification.
OPERATING EXPENSES
Expenses are recorded on an accrual basis. Expenses specifically identifiable to
a particular Portfolio are borne by that Portfolio. Other expenses are allocated
to each Portfolio based on its net assets in relation to the total net assets of
both portfolios or on another reasonable basis.
ORGANIZATION EXPENSES
The costs incurred by the Fund in connection with the organization and initial
registration of shares are being amortized on a straight-line basis by the
Aggregate Fixed Income Fund over a sixty-month period beginning with the
commencement of its investment operations on December 30, 1997. On October 29,
1997, the Investment Adviser 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 Fund's Board of Directors has approved an investment advisory agreement with
the Investment Adviser. For its services as investment adviser, each Portfolio
pays the Investment Adviser a monthly fee at an annual rate of 0.25% of its
average daily net assets.
The Investment Adviser has agreed to voluntarily waive its fee and to reimburse
the Portfolios for expenses to the extent not already reimbursed by the
Administrator. During the period ended October 31, 1999, the Investment Adviser
voluntarily waived $61,376 and $9,241 of advisory fees, and reimbursed $0 and
$35,414 for other expenses which are due from the Investment Adviser, for the
Aggregate Fixed Income Fund and the Intermediate Fixed Income Fund,
respectively.
Pursuant to its Administration Agreement, Investors Capital Services, Inc. (the
"Administrator"), two employees of which serve as officers of the Fund, earns a
fee for providing fund administration services to the Company. Each Portfolio
pays the Administrator a monthly fee at the annual rate not to exceed 0.15% of
its average daily net assets and reimbursement for out-of-pocket expenses
pursuant to the Administration Agreement. The Administrator has voluntarily
agreed to reimburse each Portfolio for expenses exceeding 0.45% of average daily
net assets, to the extent of fees earned. The Administrator has waived $63,610
and $5,545 in Administration fees for the Aggregate Fixed Income Fund and
Intermediate Fixed Income Fund, respectively, during the period ended October
31, 1999.
17
<PAGE>
SAMCO FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
3. INVESTMENT ADVISORY AGREEMENT AND ADMINISTRATION AGREEMENT (CONTINUED)
Directors' fees of $6,000 and $1,500 were paid by the Aggregate Fixed Income
Fund and the Intermediate Fixed Income Fund, respectively, for the year ended
October 31, 1999 to Directors who are not employees of the Investment Adviser.
Directors who are not employees of the Investment Adviser received an annual
retainer of $1,000, payable quarterly and $500 per meeting attended.
4. INVESTMENT TRANSACTIONS
Purchase cost and proceeds from sales of investment securities, other than
short-term investments, for the period ended October 31, 1999 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------------------------------------- --------------------------------------------
PORTFOLIO U.S. GOVERNMENT OTHER SECURITIES U.S. GOVERNMENT OTHER SECURITIES
----------------------- -------------------- -------------------- -------------------- -----------------------
<S> <C> <C> <C> <C>
Aggregate Fixed
Income Fund $240,211,799 $94,067,132 $241,275,048 $75,665,640
Intermediate Fixed
Income Fund * 10,545,985 12,396,175 6,724,172 5,693,096
</TABLE>
* Commencement of investment operations was June 30, 1999.
The components of net unrealized depreciation of investments are substantially
the same for book and federal tax purposes at October 31, 1999 for the
Portfolios and are as follows:
<TABLE>
<CAPTION>
COST FOR FEDERAL
PORTFOLIO APPRECIATION DEPRECIATION NET DEPRECIATION TAX PURPOSES
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Aggregate Fixed
Income Fund $292,769 ($678,736) ($385,967) $67,700,021
Intermediate Fixed
Income Fund 32,333 (46,401) (14,068) 10,547,111
</TABLE>
For federal income tax purposes at October 31, 1999, the Aggregate Fixed Income
Fund and the Intermediate Fixed Income Fund had capital loss carryovers of
$1,855,084 and $69,416, respectively. These amounts, if not applied against any
future net securities profits realized subsequent to October 31, 1999, will
expire in fiscal 2007.
5. REPURCHASE AGREEMENTS
The Portfolios 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 Portfolios and repurchase such securities from the Portfolios
at a mutually agreed upon price and date.
The Portfolios 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 Portfolios 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 Portfolios
maintain 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.
18
<PAGE>
SAMCO FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
6. CAPITAL SHARE TRANSACTIONS
Transactions in capital stock for the Aggregate Fixed Income Fund were as
follows for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD FROM
OCTOBER 31, 1999 12/30/97* TO 10/31/98
---------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
----------------- -------------------- -------------------- -----------------
<S> <C> <C> <C> <C>
Shares Sold 1,789,540 $ 17,634,566 4,192,818 $ 42,406,781
Shares Reinvested 299,470 2,969,916 77,716 793,099
Shares Redeemed (547,552) (5,428,339) -- --
----------------- -------------------- ------------------- ------------------
NET INCREASE 1,541,458 $ 15,176,143 4,270,534 $ 43,199,880
================= ==================== ==================== =================
</TABLE>
Transactions in capital stock for the Intermediate Fixed Income Fund were as
follows for the period indicated:
FOR THE PERIOD FROM
6/30/99* TO 10/31/99
--------------------
SHARES AMOUNT
------------------ -------------------
Shares Sold 1,100,898 $ 11,008,982
Shares Reinvested -- --
Shares Redeemed -- --
----------------- --------------------
NET INCREASE 1,100,898 $ 11,008,982
================== ===================
* Commencement of investment operations
19
<PAGE>
SAMCO FUNDS, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
Shareholders and Board of Directors
SAMCO Funds, Inc.
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of SAMCO Funds, Inc. (comprising the SAMCO
Aggregate Fixed Income Fund and SAMCO Intermediate Fixed Income Fund) (the
"Funds") as of October 31, 1999, the related statements of operations for the
period then ended, and the statements of changes in net assets and financial
highlights for the periods indicated therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 1999, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Funds at October 31, 1999, and the results of their operations, the changes in
their net assets, and the financial highlights for each of the indicated
periods, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
December 7, 1999
20
<PAGE>
SAMCO FUNDS, INC.
FEDERAL TAX INFORMATION (UNAUDITED)
OCTOBER 31, 1999
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The information necessary to complete your income tax returns will be included
with your Form 1099 DIV which will be sent to you separately in January 2000.
21
<PAGE>
SAMCO FUNDS, INC.
<TABLE>
<CAPTION>
OFFICERS & DIRECTORS AND OTHER PERTINENT INFORMATION
OCTOBER 31, 1999
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<S> <C>
OFFICERS AND DIRECTORS INVESTMENT ADVISER
Christina Seix Seix Investment Advisors Inc.
CHAIRMAN AND DIRECTOR 300 Tice Blvd.
OF THE FUND Woodcliff Lake, NJ 07675
John G. Talty ADMINISTRATOR
PRESIDENT AND DIRECTOR
OF THE FUND Investors Capital Services, Inc.
600 Fifth Avenue, 26th Floor
John R. O'Brien New York, NY 10020
DIRECTOR OF THE FUND
DISTRIBUTOR
John E. Manley, Sr.
DIRECTOR OF THE FUND AMT Capital Securities, L.L.C.
399 Park Avenue, 37th Floor
Peter J. Bourke New York, NY 10012
ASSISTANT SECRETARY AND
DIRECTOR OF THE FUND CUSTODIAN AND FUND ACCOUNTING AGENT
William E. Vastardis Investors Bank & Trust Company
SECRETARY AND TREASURER P.O. Box 9130
OF THE FUND Boston, MA 02117
Carla E. Dearing TRANSFER AND DIVIDEND DISBURSING AGENT
ASSISTANT TREASURER
OF THE FUND Investors Bank & Trust Company
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>
