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ASSET MANAGEMENT FUND, INC.
ANNUAL REPORT
OCTOBER 31, 1996
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ASSET MANAGEMENT FUND, INC.
111 East Wacker Drive
Chicago, IL 60601
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December 10, 1996
Dear Shareholder:
The Directors and Officers of the Asset Management Fund, Inc. are pleased to
send the Annual Report to Shareholders for the twelve months ended October 31,
1996.
The Fund has completed 14 years of successfully serving the investment needs
of financial institutions. Since inception, the Fund's premise was quite unique;
one of professionally managed investment portfolios designed to address the
regulatory and accounting concerns of financial institutions. Over the last
decade the Fund's investment objective has remained the same, to achieve as high
a level of current income as is consistent with the preservation of capital and
the maintenance of liquidity. Investment decisions attempt to maximize total
return within these conditions.
During 1996, the AMF Portfolios continued to fulfill their stated objectives
and have consistently ranked high within various industry comparative reports
produced by mutual fund analytical services. In their July 19, 1996 analysis of
the ARM Portfolio, Morningstar stated that "the Asset Management Fund Adjustable
Rate Mortgage is one ARM portfolio that does it all." The analyst continued that
"investors really can't ask for more from an ARM fund than what this offering
has provided."
The AMF portfolio management team remains committed to providing professional
asset management services and will continue to manage the portfolios in a manner
consistent with the objectives of our shareholders. Thank you for investing with
the Asset Management Fund.
Sincerely,
Rodger D. Shay
Rodger D. Shay
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ASSET MANAGEMENT FUND, INC. REVIEW
The various portfolios of the AMF Fund are each designed to serve the needs of
investors who have an interest in certain sectors of the market.
The conservative investment policies utilized by AMF have well served the
interests of shareholders by producing solid and reliable returns over the
years. For example, the highly respected Morningstar Mutual Fund Service*
continued to give the Short Government and ARM Portfolios four star rankings
while the two mortgage portfolios, which operated in the battered longer end of
the yield curve, garnered less lofty, but respectable, three star ratings.
Looking forward, the fund managers anticipate that prepayments in Mortgage
Backed Securities are likely to be somewhat troublesome over the near
foreseeable time and have already taken steps to protect the various AMF
Mortgage Portfolios from such an eventuality.
A short review of the past year is presented below for each portfolio.
SHORT U.S. GOVERNMENT SECURITIES PORTFOLIO - The high degree of uncertainty
that prevailed throughout the year regarding the direction of the economy kept
the portfolio neutrally positioned at about the mid-point of its normal maturity
range. Since all sectors of the market beyond the one year sector gave ground
last year the portfolio's total return of 4.99% for the year ending October 31,
1996 was lower than its average annualized daily yield of 6.02% for the year.
ADJUSTABLE RATE MORTGAGE PORTFOLIO - The Adjustable Rate Mortgage Portfolio
had another fine year. Its total return for the year ending October 31, 1996 was
6.27%. This was somewhat higher than its average daily yield for the same period
due to the fact that securities in the very short end of the curve did
appreciate slightly in price during the course of the year. As always the
portfolio is largely committed to ARM Securities that reset quickly off of
market sensitive indexes. The management of this portfolio is aware that many of
its investors have exposure to higher rates and therefore constantly endeavors
to position the portfolio to compliment their balance sheet needs.
INTERMEDIATE MORTGAGE SECURITIES PORTFOLIO - The intermediate sector of the
market was a difficult place to be last year. It offered only marginal yield
advantage relative to shorter sectors of the curve, but with just about the same
level of downside price volatility as longer sectors of the curve. The
Intermediate Mortgage Portfolio produced a 4.82% annual total return for the
year ending October 31, 1996 versus its 6.38% average annualized daily yield,
clearly evidencing the poor price action in this sector of the curve.
Fiscal year end found this sector of the market improving and traditional
investors in the "body" of the curve have reason to hope that this will be a
better year.
U.S. GOVERNMENT MORTGAGE SECURITIES PORTFOLIO - This portfolio was also
situated in a difficult sector of the market throughout most of the year.
However, by virtue of its longer average life it responded favorably to the
rally that began to unfold in the middle of September 1996. Its total return for
the year ending October 31, 1996 was 5.63% while its average annualized daily
yield was 7.10%. Again a clear indication that prices moved lower on a
year-to-year basis despite the year end uptick.
- ---------------
* Morningstar ratings are calculated from a fund's 3-, 5-, and 10-year
average annual returns in excess of 90-day Treasury Bill returns, including
loads, if appropriate, and a risk factor that reflects fund performance below
3-month Treasury Bill monthly returns. 22.5% and 35% of the funds in a category
receive 4 stars and 3 stars, respectively. The number of funds within the
Taxable Fixed-Income category as of 10/31/96 is 1,091, 601 and 252 on a 3-, 5-,
and 10-year basis, respectively. Morningstar ratings are subject to change every
month. Past performance is no guarantee of future results. From time to time,
the Fund's adviser has waived its management fee, which has resulted in higher
returns.
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________________________________
INVESTMENT
COMPARISON
Comparison of change in value of
$10,000 investment for the years
ended October 31
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SHORT U.S. GOVERNMENT SECURITIES PORTFOLIO
[LINE GRAPH]
<TABLE>
<CAPTION>
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Short U.S. Government
Securities Portfolio $10,000 $10,518 $11,322 $12,286 $13,291 $14,800 $16,091 $17,087 $17,250 $18,792 $19,730
Lehman
Short Government
1-3 Year Index $10,000 $10,518 $11,321 $12,391 $13,487 $15,159 $16,393 $17,342 $17,544 $18,968 $20,102
</TABLE>
This graph compares the performance of the Short U.S. Government Securities
Portfolio to the Lehman Short Government 1-3 Year Index, showing returns for
U.S. government and agency securities.
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SHORT U.S. GOVERNMENT SECURITIES PORTFOLIO
AVERAGE ANNUAL RETURN
One Five Ten
Year Year Year
------------------------
4.99% 5.92% 7.06%
- --------------------------------------------------------------------------------
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO
[LINE GRAPH]
<TABLE>
<CAPTION>
1990* 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Adjustable Rate Mortgage
(ARM) Portfolio $10,000 $10,090 $10,600 $11,104 $11,330 $12,239 $13,006
Lehman
Adjustable Rate
Mortgage Index $10,000 $10,090 $10,680 $11,264 $11,292 $12,444 $13,321
</TABLE>
This graph compares the performance of the Adjustable Rate Mortgage (ARM)
Portfolio to the Lehman Adjustable Rate Mortgage Index, showing all agency ARM
securities. The Lehman Short Government 1-2 year index has been eliminated as a
means of comparing the ARM Portfolio to a relevant market index. When such
comparisons were first initiated the Lehman ARM index was new and the 1-2 year
Government index was added for historical perspective. Now that the Lehman ARM
has "seasoned" it is the index that most appropriately mimics the ARM
market.
A $10,000 investment in the ARM portfolio at inception (Sept. 18, 1996) would
have grown to $12,239 at October 31, 1995, while a $10,000 investment in the
1-2 year Government Index would have been worth $12,927 at October 31, 1995.
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ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO
AVERAGE ANNUAL RETURN
One Five From
Year Year Inception*
------------------------
6.27% 5.21% 5.26%
*From September 18, 1991
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Past performance is not predictive of future results. Lehman indices
represent unmanaged groups of bonds that differ from the composition of each AMF
portfolio. The Lehman indices do not include a reduction in return for expenses.
<PAGE> 5
________________________________
INVESTMENT
COMPARISON
Comparison of change in value of
$10,000 investment for the years
ended October 31
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INTERMEDIATE MORTGAGE SECURITIES PORTFOLIO
[LINE GRAPH]
<TABLE>
<CAPTION>
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Intermediate Mortgage
Securities Portfolio $10,000 $ 9,790 $11,251 $12,445 $12,839 $14,947 $16,402 $17,768 $17,558 $19,424 $20,361
Lehman U.S.
Mortgage Index $10,000 $10,410 $11,839 $13,165 $14,280 $16,694 $18,054 $19,479 $19,191 $21,995 $23,517
</TABLE>
This graph compares the performance of the Intermediate Mortgage Securities
Portfolio to the Lehman U.S. Mortgage Index, showing all agency
mortgage-backed securities.
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INTERMEDIATE MORTGAGE SECURITIES PORTFOLIO
AVERAGE ANNUAL RETURN
One Five From
Year Year Inception*
----------------------------
4.82% 6.38% 7.38%
*From November 7, 1986
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U.S. GOVERNMENT MORTGAGE SECURITIES PORTFOLIO
[LINE GRAPH]
<TABLE>
<CAPTION>
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government Mortgage
Securities Portfolio $10,000 $10,176 $11,517 $12,709 $13,679 $15,866 $17,122 $18,445 $18,109 $20,349 $21,495
Lehman U.S.
Mortgage Index $10,000 $10,410 $11,839 $13,165 $14,280 $16,694 $18,054 $19,479 $19,191 $21,995 $23,517
</TABLE>
This graph compares the performance of the U.S. Government Mortgage Securities
Portfolio to the Lehman U.S. Mortgage Index, showing all agency mortgage-backed
secuities.
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U.S. GOVERNMENT MORTGAGE SECURITIES PORTFOLIO
AVERAGE ANNUAL RETURN
One Five Ten
Year Year Year
------------------------
5.63% 6.27% 7.96%
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Past performance is not predictive of future results. Lehman indices represent
unmanaged groups of bonds that differ from the composition of each AMF
portfolio. The Lehman indices do not include a reduction in return for
expenses.
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ASSET MANAGEMENT FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
OCTOBER 31, 1996
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<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
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<S> <C> <C> <C> <C>
AGENCY OBLIGATIONS................................... 97.9%
Federal Home Loan Bank
5.45% 11/01/96 $ 38,000 $ 38,000,000
Student Loan Marketing Association* -- weekly reset
5.29% 11/05/96 10,000 10,000,000
5.32% 11/05/96 10,000 10,000,000
5.32% 11/05/96 10,000 10,000,000
------------
30,000,000
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TOTAL AGENCY OBLIGATIONS
(Cost $68,000,000) 68,000,000
REPURCHASE AGREEMENT................................. 1.9%
Daiwa Securities America, Inc.
5.52% (Agreement dated 10/31/96, to be
repurchased at $1,340,205 on 11/01/96;
collateralized by $1,214,000 U.S. Treasury
Bonds, 7.5%, due 11/15/24. The market value of
the collateral is $1,368,356.)
(Cost $1,340,000) 11/01/96 1,340 1,340,000
------------
TOTAL INVESTMENTS IN SECURITIES...................... 99.8%
(Cost $69,340,000)** 69,340,000
OTHER ASSETS IN EXCESS OF LIABILITIES................ 0.2% 143,722
------------
Net Assets applicable to 69,483,722 Shares of Common
Stock issued and outstanding....................... 100.0% $ 69,483,722
============
Net Asset Value, offering and redemption price per
share ($69,483,722 divided by 69,483,722) $1.00
=====
</TABLE>
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*Variable Rate Obligations -- The interest rate shown is the rate at October
31, 1996 and the maturity date shown represents the next interest rate
readjustment.
**Aggregate cost for Federal income tax purposes is identical.
See accompanying notes to financial statements.
1
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ASSET MANAGEMENT FUND, INC.
SHORT U.S. GOVERNMENT SECURITIES PORTFOLIO
STATEMENT OF NET ASSETS
OCTOBER 31, 1996
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<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
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<S> <C> <C> <C> <C>
U.S. TREASURY OBLIGATIONS.......................... 98.1%
U.S. Treasury Notes
7.250% 11/30/96 $ 10,000 $ 10,012,500
7.250% 02/15/98 20,000 20,393,750
5.875% 04/30/98 10,000 10,034,375
6.000% 05/31/98 24,000 24,120,000
6.250% 07/31/98 21,000 21,187,031
6.375% 05/15/99 24,000 24,292,500
6.000% 08/15/99 14,000 14,039,375
7.125% 09/30/99 15,000 15,487,500
7.750% 11/30/99 15,000 15,754,688
6.125% 07/31/00 10,000 10,040,625
6.500% 08/31/01 8,000 8,132,500
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TOTAL U.S. TREASURY OBLIGATIONS
(Cost $170,658,392) 173,494,844
REPURCHASE AGREEMENT............................... 0.6%
Daiwa Securities America, Inc.
5.52% (Agreement dated 10/31/96, to be
repurchased at $1,057,162 on 11/01/96;
collateralized by $993,000 U.S. Treasury
Bonds, 7.25%, due 05/15/16. The market value
of the collateral is $1,079,941.)
(Cost $1,057,000) 11/01/96 1,057 1,057,000
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TOTAL INVESTMENTS IN SECURITIES.................... 98.7%
(Cost $171,715,392)* 174,551,844
OTHER ASSETS IN EXCESS OF LIABILITIES.............. 1.3% 2,339,770
-------------
Net Assets applicable to 16,758,153 Shares of
Common Stock issued and outstanding.............. 100.0% $ 176,891,614
=============
Net Asset Value, offering and redemption price per
share ($176,891,614 divided by 16,758,153) $10.56
======
</TABLE>
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* Aggregate cost for Federal income tax purposes is $171,717,575. At October 31,
1996, the net and gross unrealized appreciation for all securities is
$2,834,269.
See accompanying notes to financial statements.
2
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ASSET MANAGEMENT FUND, INC.
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO
STATEMENT OF NET ASSETS
OCTOBER 31, 1996
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<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ADJUSTABLE RATE MORTGAGE-
RELATED SECURITIES*................................ 73.2%
Treasury Based ARMS.................................. 27.7%
Federal Home Loan Mortgage Corporation
7.55% 12/01/22 $ 9,481 $ 9,776,953
7.56% 05/01/23 13,844 14,276,985
7.97% 09/01/23 10,500 10,785,451
7.53% 04/01/24 16,161 16,630,675
Federal National Mortgage Association
7.80% 12/01/21 8,407 8,871,498
6.07% 06/01/26 18,174 18,571,952
Citicorp 1992-18 CL A-1
7.13% 10/25/22 31,026 31,656,529
Fund America 1993A CL A-1
7.46% 06/25/23 20,480 21,094,825
Housing Securities, Inc. 1992 SL-1 CL A-1
7.92% 05/25/16 21,441 22,231,827
Resolution Trust Corp. Series 1993-3 CL A-7
7.81% 11/25/22 18,927 19,352,600
Resolution Trust Corp. Series 1992-1 CL A-1
7.41% 05/25/28 13,234 13,428,289
Resolution Trust Corp. Series 1995-2 CL A-3
6.93% 05/25/29 26,899 27,235,370
Ryland Mortgage Securities Corp. 1991-10 CL A-2
7.64% 06/25/21 6,707 6,719,954
------------
(Cost $217,979,008) 220,632,908
11th District Federal Home Loan Bank Cost of Funds
(COFI) Based ARMS.................................. 7.9%
Federal Home Loan Mortgage Corporation
7.40% 03/01/25 20,742 21,189,048
6.07% 06/01/30 32,031 31,680,236
Federal National Mortgage Association
6.07% 11/01/27 10,268 10,220,307
------------
(Cost $62,424,585) 63,089,591
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See accompanying notes to financial statements.
</TABLE>
3
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ASSET MANAGEMENT FUND, INC.
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO (CONTINUED)
STATEMENT OF NET ASSETS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Six Month Certificates of Deposit Based ARMS......... 9.4%
Federal National Mortgage Association
6.77% 01/01/22 $11,419 $ 11,618,547
6.89% 10/01/22 12,067 12,263,526
6.86% 12/01/22 16,593 16,868,101
7.15% 02/01/23 8,071 8,290,656
Salomon Brothers 1992-4
7.40% 09/25/22 9,918 10,101,147
Sears Mortgage 1992-16
7.22% 10/25/22 15,425 15,714,571
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(Cost $74,026,091) 74,856,548
London Interbank Offering Rate (LIBOR)
Based ARMS......................................... 28.2%
Federal Home Loan Mortgage Corporation
7.73% 09/01/24 12,982 13,384,144
7.21% 02/01/26 37,498 38,493,621
7.09% 05/01/26 19,227 19,737,726
Capstead 1992-14
7.23% 10/25/22 37,964 38,391,406
Donaldson, Lufkin, Jenrette Acceptance Corp. 1992-6
6.86% 07/25/22 49,721 50,342,147
Donaldson, Lufkin, Jenrette Acceptance Corp. 1992-9
7.14% 10/25/22 24,745 24,999,866
Ryland Mortgage Securities Corp. 1991-16 CL A-1
6.95% 09/25/21 7,367 7,380,402
Ryland Mortgage Securities Corp. 1991-15 CL A-1
6.75% 09/25/22 7,546 7,555,359
Saxon Mortgage 1993-1 CL A-1
7.60% 02/25/23 24,217 24,405,884
------------
(Cost $223,413,836) 224,690,555
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TOTAL ADJUSTABLE RATE
MORTGAGE-RELATED SECURITIES
(Cost $577,843,520) 583,269,602
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See accompanying notes to financial statements.
</TABLE>
4
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ASSET MANAGEMENT FUND, INC.
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO (CONTINUED)
STATEMENT OF NET ASSETS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIXED RATE MORTGAGE-RELATED
SECURITIES......................................... 15.5%
Collateralized Mortgage Obligations.................. 13.5%
Federal Home Loan Mortgage Corporation
8.00% 06/01/14 $ 7,891 $ 8,080,649
5.25% 01/15/16 10,000 9,881,250
10.50% 12/01/20 4,777 5,279,844
Federal National Mortgage Association 1993-131 B
5.75% 06/25/06 15,906 15,761,336
General Electric Capital Mortgage Services 1993-18
6.00% 05/25/07 19,472 19,392,895
Prudential Home Mortgage Services 1991-15
8.24% 11/25/21 23,160 23,710,497
Prudential Home Mortgage Services 1996-6
6.00% 05/25/26 14,334 14,217,280
Residential Funding Mortgage Securities 1994-S9
6.50% 03/25/24 11,178 11,170,874
------------
(Cost $106,666,356) 107,494,625
Pass Through......................................... 2.0%
Federal Home Loan Mortgage Corporation Gold
7.50%
(Cost $15,856,486) 06/01/10 15,756 16,021,748
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TOTAL FIXED RATE
MORTGAGE-RELATED SECURITIES
(Cost $122,522,842) 123,516,373
U.S. TREASURY OBLIGATIONS............................ 4.4%
U.S. Treasury Notes
7.375% 11/15/97 10,000 10,181,250
6.000% 08/15/99 25,000 25,070,312
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $34,909,141) 35,251,562
- -------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
5
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ASSET MANAGEMENT FUND, INC.
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO (CONTINUED)
STATEMENT OF NET ASSETS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AGENCY OBLIGATION.................................... 1.3%
Federal Home Loan Bank
5.45%
(Cost $10,000,000) 11/01/96 $10,000 $ 10,000,000
REPURCHASE AGREEMENT................................. 5.5%
Daiwa Securities America, Inc.
5.52% (Agreement dated 10/31/96, to be
repurchased at $43,520,669 on 11/01/96;
collateralized by $34,440,000 U.S. Treasury
Bonds, 10.375%, due 11/15/09. The market value
of the collateral is $44,410,051.)
(Cost $43,514,000) 11/01/96 43,514 43,514,000
------------
TOTAL INVESTMENTS IN SECURITIES...................... 99.9%
(Cost $788,789,503)** 795,551,537
OTHER ASSETS IN EXCESS OF LIABILITIES................ 0.1% 464,633
------------
Net Assets applicable to 80,011,172 Shares of Common
Stock issued and outstanding....................... 100.0% $796,016,170
============
Net Asset Value, offering and redemption price per
share ($796,016,170 divided by 80,011,172) $9.95
=====
</TABLE>
- --------------------------------------------------------------------------------
* The interest rates shown are the rates at October 31, 1996.
** Aggregate cost for Federal income tax purposes is identical. At October 31,
1996, the net unrealized appreciation for all securities of $6,762,034
consists of gross unrealized appreciation of $6,763,899 and gross unrealized
depreciation of ($1,865).
See accompanying notes to financial statements.
6
<PAGE> 13
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ASSET MANAGEMENT FUND, INC.
INTERMEDIATE MORTGAGE SECURITIES PORTFOLIO
STATEMENT OF NET ASSETS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIXED RATE MORTGAGE-RELATED SECURITIES.............. 78.3%
Pass Throughs
Federal Home Loan Mortgage Corporation Gold
7.00%, due 07/01/03 to 06/01/11 $21,953 $ 22,072,523
7.50%, due 01/01/10 to 07/01/11 30,456 30,969,749
------------
53,042,272
Federal National Mortgage Association
6.50% 03/01/01 9,041 8,978,367
6.50% 05/01/08 10,416 10,243,387
------------
19,221,754
------------
TOTAL FIXED RATE MORTGAGE-
RELATED SECURITIES
(Cost $70,712,380) 72,264,026
U.S. TREASURY OBLIGATIONS........................... 18.7%
U.S. Treasury Notes
6.500% 05/31/01 5,000 5,082,813
6.625% 07/31/01 5,000 5,107,812
6.250% 10/31/01 7,000 7,047,031
------------
TOTAL U.S. TREASURY OBLIGATIONS 17,237,656
(Cost $17,004,318)
- -------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
7
<PAGE> 14
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ASSET MANAGEMENT FUND, INC.
INTERMEDIATE MORTGAGE SECURITIES PORTFOLIO (CONTINUED)
STATEMENT OF NET ASSETS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENT................................ 2.9%
Daiwa Securities America, Inc.
5.52% (Agreement dated 10/31/96, to be
repurchased at $2,688,412 on 11/01/96;
collateralized by $2,334,000 U.S. Treasury
Bonds, 8.125%, due 08/15/21. The market value of the
collateral is $2,743,988.)
(Cost $2,688,000)......................... 11/01/96 $ 2,688 $ 2,688,000
------------
TOTAL INVESTMENTS IN SECURITIES..................... 99.9%
(Cost $90,404,698)* 92,189,682
OTHER ASSETS IN EXCESS OF LIABILITIES............... 0.1% 99,494
------------
Net Assets applicable to 9,691,696 Shares of
Common Stock issued and outstanding............... 100.0% $ 92,289,176
============
Net Asset Value, offering and redemption
price per share ($92,289,176 divided by 9,691,696) $9.52
============
</TABLE>
- --------------------------------------------------------------------------------
* Aggregate cost for Federal income tax purposes is $90,412,198. At October 31,
1996, the net and gross unrealized appreciation for all securities is
$1,777,484.
See accompanying notes to financial statements.
8
<PAGE> 15
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ASSET MANAGEMENT FUND, INC.
U.S. GOVERNMENT MORTGAGE SECURITIES PORTFOLIO
STATEMENT OF NET ASSETS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIXED RATE MORTGAGE-RELATED SECURITIES.............. 73.5%
Government National Mortgage Association
Obligations
10.00%, due 03/15/19 $ 993 $ 1,089,178
9.00%, due 09/15/08 to 10/15/21 6,120 6,512,016
8.50%, due 06/15/24 3,987 4,141,562
7.50%, due 02/15/24 14,590 14,635,823
7.00%, due 08/15/23 to 09/15/24 15,990 15,684,790
------------
(Cost $40,388,751) 42,063,369
U.S. TREASURY OBLIGATIONS........................... 21.3%
U.S. Treasury Notes
6.625% 07/31/01 8,000 8,172,500
6.500% 10/15/06 4,000 4,040,000
------------
(Cost $12,115,109) 12,212,500
AGENCY OBLIGATION................................... 1.7%
Federal Home Loan Bank
5.45% 11/01/96 1,000 1,000,000
(Cost $1,000,000)
REPURCHASE AGREEMENT................................ 3.4%
Daiwa Securities America, Inc.
5.52% (Agreement dated 10/31/96, to be
repurchased at $1,929,296 on 11/01/96;
collateralized by $1,647,000 U.S. Treasury
Bonds, 8.125%, due 05/15/21. The market value
of the collateral is $1,969,250.)
(Cost $1,929,000) 11/01/96 1,929 1,929,000
------------
TOTAL INVESTMENTS IN SECURITIES..................... 99.9%
(Cost $55,432,860)* 57,204,869
OTHER ASSETS IN EXCESS OF LIABILITIES............... 0.1% 61,918
------------
Net Assets applicable to 5,449,313 Shares of Common
Stock issued and outstanding...................... 100.0% $ 57,266,787
============
Net Asset Value, offering and redemption price per
share ($57,266,787 divided by 5,449,313) $10.51
=======
</TABLE>
- --------------------------------------------------------------------------------
* Aggregate cost for Federal income tax purposes is identical. At October 31,
1996, the net unrealized appreciation for all securities of $1,772,009
consists of gross unrealized appreciation of $1,836,829 and gross unrealized
depreciation of ($64,820).
See accompanying notes to financial statements.
9
<PAGE> 16
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
U.S.
SHORT U.S. ADJUSTABLE INTERMEDIATE GOVERNMENT
MONEY GOVERNMENT RATE MORTGAGE MORTGAGE MORTGAGE
MARKET SECURITIES (ARM) SECURITIES SECURITIES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income.............. $3,653,233 $11,604,331 $59,377,126 $ 11,675,292 $4,464,387
---------- ----------- ------------- ------------ ----------
Operating expenses:
Investment advisory fee.... 101,717 446,257 4,122,554 598,986 146,347
Distribution fee........... 101,717 267,754 2,290,308 256,708 87,808
Administration fee......... 20,328 53,968 276,718 51,659 18,168
Custodian fee.............. 16,902 40,890 175,289 40,418 30,150
Directors' fees............ 3,388 8,735 45,765 9,718 2,979
Transfer agent fee......... 10,826 9,402 30,305 3,496 2,301
Legal...................... 2,320 4,123 20,849 3,590 1,026
Audit...................... 3,178 10,314 54,766 11,074 3,817
Other...................... 3,145 15,193 68,611 15,855 13,207
---------- ----------- ------------- ------------ ----------
263,521 856,636 7,085,165 991,504 305,803
Fee waivers................ (101,717) -0- (2,748,371) (239,669) -0-
---------- ----------- ------------- ------------ ----------
Total expenses.......... 161,804 856,636 4,336,794 751,835 305,803
---------- ----------- ------------- ------------ ----------
Net investment income... 3,491,429 10,747,695 55,040,332 10,923,457 4,158,584
---------- ----------- ------------- ------------ ----------
REALIZED AND UNREALIZED GAINS
(LOSSES) FROM INVESTMENT
ACTIVITIES:
Net realized gain (loss)..... -0- (1,958,578) (1,403,530) (2,019,227) 91,257
Net change in unrealized
appreciation/depreciation
of investments............. -0- (575,999) 1,311,713 (1,796,942) (778,435)
---------- ----------- ------------- ------------ ----------
Net loss on
investments........... -0- (2,534,577) (91,817) (3,816,169) (687,178)
---------- ----------- ------------- ------------ ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS....... $3,491,429 $ 8,213,118 $54,948,515 $ 7,107,288 $3,471,406
========== ============ ============ ============ ==========
- --------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
10
<PAGE> 17
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED OCTOBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
MONEY MARKET SHORT U.S. GOVERNMENT
PORTFOLIO SECURITIES PORTFOLIO
------------------------------------------------------------
1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income............. $ 3,491,429 $ 2,246,026 $ 10,747,695 $ 10,501,665
Net gain (loss) on investments.... -0- -0- (2,534,577) 3,361,847
------------- ------------- ------------ ------------
Net increase in net assets
resulting from operations.... 3,491,429 2,246,026 8,213,118 13,863,512
------------- ------------- ------------ ------------
Dividends paid to stockholders:
From net investment income........ (3,491,429) (2,243,632) (10,747,695) (10,501,665)
From net realized capital gains... -0- -0- -0- -0-
------------- ------------- ------------ ------------
Total dividends paid to
stockholders................. (3,491,429) (2,243,632) (10,747,695) (10,501,665)
------------- ------------- ------------ ------------
Capital share transactions:
Proceeds from sale of shares...... 756,322,916 389,839,779 44,293,835 31,763,091
Shares issued to stockholders in
reinvestment of dividends....... 2,389,475 1,752,434 5,584,686 5,466,387
Cost of shares repurchased........ (726,098,039) (437,694,716) (37,795,386) (52,987,943)
------------- ------------- ------------ ------------
Net increase (decrease) in net
assets from capital share
transactions................. 32,614,352 (46,102,503) 12,083,135 (15,758,465)
------------- ------------- ------------ ------------
Total increase (decrease) in net
assets....................... 32,614,352 (46,100,109) 9,548,558 (12,396,618)
Net Assets:
Beginning of year.................... 36,869,370 82,969,479 167,343,056 179,739,674
------------- ------------- ------------ ------------
End of year.......................... $ 69,483,722 $ 36,869,370 $176,891,614 $167,343,056
============== ============== ============= =============
- -----------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
11
<PAGE> 18
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
INTERMEDIATE
ADJUSTABLE RATE MORTGAGE SECURITIES U.S. GOVERNMENT
MORTGAGE (ARM) PORTFOLIO PORTFOLIO MORTGAGE SECURITIES PORTFOLIO
- ----------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 55,040,332 $ 53,047,738 $ 10,923,457 $ 12,598,793 $ 4,158,584 $ 4,477,858
(91,817) 12,433,567 (3,816,169) 6,554,384 (687,178) 2,619,170
------------- -------------- ------------- ------------ ------------ -----------
54,948,515 65,481,305 7,107,288 19,153,177 3,471,406 7,097,028
------------- -------------- ------------- ------------ ------------ -----------
(55,040,332) (53,047,738) (10,923,457) (12,598,793) (4,158,584) (4,477,858)
-0- -0- -0- -0- -0- -0-
------------- -------------- ------------- ------------ ------------ -----------
(55,040,332) (53,047,738) (10,923,457) (12,598,793) (4,158,584) (4,477,858)
------------- -------------- ------------- ------------ ------------ -----------
547,849,221 314,389,247 11,947,721 2,232,516 10,233,212 2,562,981
27,868,817 26,963,939 7,021,954 7,468,823 1,891,769 1,875,444
(671,148,248) (508,162,846) (109,951,609) (42,595,593) (16,429,514) (5,411,804)
------------- -------------- ------------- ------------ ------------ -----------
(95,430,210) (166,809,660) (90,981,934) (32,894,254) (4,304,533) (973,379)
------------- -------------- ------------- ------------ ------------ -----------
(95,522,027) (154,376,093) (94,798,103) (26,339,870) (4,991,711) 1,645,791
891,538,197 1,045,914,290 187,087,279 213,427,149 62,258,498 60,612,707
------------- -------------- ------------- ------------ ------------ -----------
$ 796,016,170 $ 891,538,197 $ 92,289,176 $187,087,279 $ 57,266,787 $62,258,498
============= ============== ============= ============ ============ ===========
- --------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
12
<PAGE> 19
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Net asset value, beginning of year... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- -------- -------- --------
Income from investment operations:
- -------------------------------------
Net investment income.............. .0516 .0547 .0346 .0277 .0358
Net realized and unrealized gain
(loss) on investments........... -0- -0- -0- -0- -0-
------- ------- -------- -------- --------
Total from investment
operations................. .0516 .0547 .0346 .0277 .0358
------- ------- -------- -------- --------
Less distributions:
- -------------------------------------
Dividends paid to stockholders:
From net investment income........ (.0516) (.0547) (.0346) (.0277) (.0358)
From net realized gains........... -0- -0- -0- -0- -0-
------- ------- -------- -------- --------
Total distributions to
stockholders............... (.0516) (.0547) (.0346) (.0277) (.0358)
------- ------- -------- -------- --------
Net asset value, end of year......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======== ======== ========
Total return......................... 5.29% 5.60% 3.51% 2.80% 3.64%
Ratios/Supplemental data:
- -------------------------------------
Net assets, end of year (in
000's).......................... $69,484 $36,869 $ 82,969 $107,924 $110,090
Ratio of expenses to average net
assets.......................... 0.24%(1) 0.24%(1) 0.40%(1) 0.40% 0.41%
Ratio of net investment income to
average net assets.............. 5.15% 5.40% 3.34% 2.77% 3.54%
</TABLE>
- --------------------------------------------------------------------------------
(1) Without fee waivers for the Money Market Portfolio for the years ended
October 31, 1996, 1995, and 1994, the ratios of expenses to average net
assets would have been .39%, .39%, and .42%, respectively.
See accompanying notes to financial statements.
13
<PAGE> 20
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
SHORT U.S. GOVERNMENT SECURITIES PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......... $ 10.68 $ 10.45 $ 10.89 $ 10.85 $ 10.71
-------- -------- -------- -------- --------
Income from investment operations:
- ------------------------------------------
Net investment income..................... .6370 .6746 .5396 .6155 .7652
Net realized and unrealized gain (loss) on
investments.............................. (.1200) .2300 (.4400) .0400 .1400
-------- -------- -------- -------- --------
Total from investment operations..... .5170 .9046 .0996 .6555 .9052
-------- -------- -------- -------- --------
Less distributions:
- --------------------
Dividends paid to stockholders:
From net investment income............. (.6370) (.6746) (.5396) (.6155) (.7652)
From net realized gains................ -0- -0- -0- -0- -0-
-------- -------- -------- -------- --------
Total distributions to
stockholders...................... (.6370) (.6746) (.5396) (.6155) (.7652)
-------- -------- -------- -------- --------
Net assets, end of year..................... $ 10.56 $ 10.68 $ 10.45 $ 10.89 $ 10.85
======== ======== ======== ======== ========
Total return................................ 4.99% 8.94% 0.95% 6.19% 8.72%
Ratios/Supplemental data:
- ------------------------------
Net assets, end of year (in 000's)........ $176,892 $167,343 $179,740 $235,705 $213,995
Ratio of expenses to average net assets... 0.48% 0.49% 0.47% 0.48% 0.50%
Ratio of net investment income to average
net assets............................... 6.02% 6.42% 5.04% 5.65% 7.15%
Portfolio turnover rate................... 69% 112% 195% 110% 43%
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
14
<PAGE> 21
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Net asset value, beginning of year...... $ 9.94 $ 9.78 $ 10.02 $ 9.98 $ 10.01
-------- -------- ---------- ---------- ----------
Income from investment operations:
- ----------------------------------------
Net investment income................. .5958 .6035 .4396 .4267 .5235
Net realized and unrealized gain
(loss) on investments................ .0100 .1600 (.2400) .0386 (.0295)
-------- -------- ---------- ---------- ----------
Total from investment operations... .6058 .7635 .1996 .4653 .4940
-------- -------- ---------- ---------- ----------
Less distributions:
- --------------------
Dividends paid to stockholders:
From net investment income........... (.5958) (.6035) (.4396) (.4253) (.5240)
From net realized gains.............. -0- -0- -0- -0- -0-
-------- -------- ---------- ---------- ----------
Total distributions to
stockholders..................... (.5958) (.6035) (.4396) (.4253) (.5240)
-------- -------- ---------- ---------- ----------
Net asset value, end of year............ $ 9.95 $ 9.94 $ 9.78 $ 10.02 $ 9.98
========= ========= ========== ========== ==========
Total return............................ 6.27% 8.02% 2.04% 4.76% 5.05%
Ratios/Supplemental data:
- ------------------------------
Net assets, end of year (in 000's).... $796,016 $891,538 $1,045,914 $1,572,311 $1,189,309
Ratio of expenses to average net
assets............................... .47%(1) 0.48%(1) 0.47%(1) 0.46%(1) 0.44%(1)
Ratio of net investment income to
average net assets................... 6.01% 6.12% 4.40% 4.34% 5.14%
Portfolio turnover rate............... 60% 68% 65% 30% 43%
</TABLE>
- --------------------------------------------------------------------------------
(1) Without fee waivers for the Adjustable Rate Mortgage (ARM) Portfolio for the
years ended October 31, 1996, 1995, 1994, 1993, and 1992, the ratios of
expenses to average net assets would have been .77%, .78%, .76%, .76%, and
.80%, respectively.
See accompanying notes to financial statements.
15
<PAGE> 22
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
INTERMEDIATE MORTGAGE SECURITIES PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------------------------------------
1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year........... $ 9.68 $ 9.34 $ 10.00 $ 9.80 $ 9.61
------- -------- -------- -------- --------
Income from investment operations:
- ------------------------------------------
Net investment income...................... .6101 .6211 .5407 .5982 .7161
Net realized and unrealized gain
(loss) on investments..................... (.1600) .3400 (.6600) .1987 .1909
------- -------- -------- -------- --------
Total from investment operations........ .4501 .9611 (.1193) .7969 .9070
------- -------- -------- -------- --------
Less distributions:
- --------------------
Dividends paid to stockholders:
From net investment income................ (.6101) (.6211) (.5407) (.5969) (.7170)
From net realized gains................... -0- -0- -0- -0- -0-
------- -------- -------- -------- --------
Total distributions to stockholders..... (.6101) (.6211) (.5407) (.5969) (.7170)
------- -------- -------- -------- --------
Net asset value, end of year................. $ 9.52 $ 9.68 $ 9.34 $ 10.00 $ 9.80
======= ======== ======== ======== ========
Total return................................. 4.82% 10.63% (1.18%) 8.33% 9.74%
Ratios/Supplemental data:
- ------------------------------
Net assets, end of year (in 000's)......... $92,289 $187,087 $213,427 $218,032 $116,458
Ratio of expenses to average net assets.... .44%(1) 0.38%(1) 0.39%(1) 0.37%(1) 0.43%(1)
Ratio of net investment income to average
net assets................................ 6.38% 6.55% 5.61% 5.94% 7.14%
Portfolio turnover rate.................... 133% 133% 358% 106% 226%
</TABLE>
- --------------------------------------------------------------------------------
(1) Without fee waivers for the Intermediate Mortgage Securities Portfolio for
the years ended October 31, 1996, 1995, 1994, 1993, and 1992, the ratios of
expenses to average net assets would have been .58%, .58%, .59%, .57%, and
.61%, respectively.
See accompanying notes to financial statements.
16
<PAGE> 23
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
U.S. GOVERNMENT MORTGAGE SECURITIES PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------------------------
1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year................. $ 10.68 $ 10.23 $ 11.28 $ 11.26 $ 11.29
-------- ------- ------- ------- -------
Income from investment operations:
- ------------------------------------------
Net investment income............................ .7479 .7703 .7296 .8306 .8924
Net realized and unrealized gain (loss) on
investments..................................... (.1700) .4500 (.9300) .0195 (.0297)
-------- ------- ------- ------- -------
Total from investment operations.............. .5779 1.2203 (.2004) .8501 .8627
-------- ------- ------- ------- -------
Less distributions:
- --------------------
Dividends paid to stockholders:
From net investment income...................... (.7479) (.7703) (.7296) (.8301) (.8927)
From net realized gains......................... -0- -0- (.1200) -0- -0-
-------- ------- ------- ------- -------
Total distributions to stockholders........... (.7479) (.7703) (.8496) (.8301) (.8927)
-------- ------- ------- ------- -------
Net asset value, end of year....................... $ 10.51 $ 10.68 $ 10.23 $ 11.28 $ 11.26
======== ======= ======= ======= =======
Total return....................................... 5.63% 12.37% (1.82%) 7.76% 7.91%
Ratios/Supplemental data:
- ------------------------------
Net assets, end of year (in 000's)............... $57,267 $62,258 $60,613 $92,994 $72,505
Ratio of expenses to average net assets.......... 0.52% 0.53% 0.51% 0.51% 0.53%
Ratio of net investment income to average net
assets.......................................... 7.10% 7.39% 6.81% 7.32% 7.91%
Portfolio turnover rate.......................... 165% 177% 376% 187% 64%
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
17
<PAGE> 24
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Asset Management Fund, Inc. (the "Fund") consists of five separate portfolios,
the Money Market Portfolio, the Short U.S. Government Securities Portfolio, the
Adjustable Rate Mortgage (ARM) Portfolio, the Intermediate Mortgage Securities
Portfolio and the U.S. Government Mortgage Securities Portfolio.
A. The Fund is registered under the Investment Company Act of 1940, as amended,
as a diversified, open-end management company. Significant accounting policies
are as follows:
SECURITY VALUATION
Money Market Portfolio:
Portfolio securities are valued under the amortized cost method, which
approximates current market value. Under this method, securities are valued at
cost when purchased and thereafter a constant proportionate amortization of any
discount or premium is recorded until maturity of the security. The Portfolio
seeks to maintain net asset value per share at $1.00.
Short U.S. Government Securities Portfolio, Adjustable Rate Mortgage (ARM)
Portfolio, Intermediate Mortgage Securities Portfolio, and U.S. Government
Mortgage Securities Portfolio:
Portfolio securities are valued at the mean between the most recent bid and
asked prices, which may be furnished by a pricing service, at prices provided
directly by market makers, or using matrix pricing methods. Portfolio securities
for which market quotations are not readily available are valued at fair value
using methods determined in good faith by the Board of Directors. Short-term
instruments maturing within 60 days of the valuation date are valued based upon
their amortized cost.
REPURCHASE AGREEMENTS
Eligible portfolio investments may be purchased from financial institutions,
such as banks and non-bank dealers, subject to the seller's agreement to
repurchase them at an agreed upon date and price. The seller will be required on
a daily basis to maintain the value of the securities subject to the agreements
at not less than the repurchase price. Repurchase agreements are conditioned
upon the collateral being deposited under the Federal Reserve book-entry system
or with the Fund's custodian.
DIVIDENDS TO STOCKHOLDERS
Dividends from net investment income are declared daily and paid monthly. Net
short-term and long-term capital gains, if any, are declared and paid annually.
FEDERAL TAXES
No provision is made for Federal taxes as it is each Portfolio's intention to
continue to qualify as a regulated investment company and to make the requisite
distributions to the stockholders, which will be sufficient to relieve each
portfolio from all or substantially all Federal income and excise taxes.
MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these estimates.
OTHER
Investment transactions are accounted for on the trade date and the cost of
investments sold is determined by use of the specific identification method for
both financial reporting and income tax purposes.
18
<PAGE> 25
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
B. Shay Assets Management Co. (Adviser), which is equally owned by two general
partners, Shay Assets Management, Inc. and ACB Assets Management, Inc., serves
as the Fund's investment adviser. Shay Assets Management, Inc. is controlled by
Rodger D. Shay, the President of the Fund. The other half interest in the
Adviser is held by ACB Assets Management, Inc., an indirect wholly-owned
subsidiary of America's Community Bankers (ACB).
As compensation for the Adviser's services, the Fund pays an investment
advisory fee monthly based upon an annual percentage of the average daily net
assets of each Portfolio as follows:
The fee rate for the Money Market Portfolio is .15% of the first $500 million,
.125% of the next $500 million, and .10% of such net assets in excess of $1
billion. The Adviser voluntarily waived 100% of its fee for the year ended
October 31, 1996. The waiver amounted to $101,717.
The fee rate for each of the Short U.S. Government Securities Portfolio and
the U.S. Government Mortgage Securities Portfolio, computed separately, is .25%
of the first $500 million, .175% of the next $500 million, .125% of the next
$500 million, and .10% of such net assets in excess of $1.5 billion.
The fee rate for the Adjustable Rate Mortgage (ARM) Portfolio is .45% of the
first $3 billion, .35% of the next $2 billion, and .25% of such net assets in
excess of $5 billion. The Adviser voluntarily waived approximately 44% of its
fee for the year ended October 31, 1996. The waiver amounted to $1,832,247.
The fee rate for the Intermediate Mortgage Securities Portfolio is .35% of the
first $500 million, .275% of the next $500 million, .20% of the next $500
million, and .10% of such net assets in excess of $1.5 billion. The Adviser
voluntarily waived approximately 40% of its fee for the year ended October 31,
1996. The waiver amounted to $239,669.
The Adviser has agreed to reduce or waive (but not below zero) its advisory
fees charged to each Portfolio, except the Adjustable Rate Mortgage (ARM)
Portfolio, to the extent that the daily ratio of operating expenses to average
daily net assets of each Portfolio exceeds .75%.
Shay Financial Services Co. (Distributor), which is equally owned by two
general partners, Shay Financial Services, Inc. and ACB Securities, Inc., serves
as the Fund's distributor. Shay Financial Services, Inc. is controlled by Rodger
D. Shay, the President of the Fund. The other half interest in the Distributor
is held by ACB Securities, Inc., an indirect wholly-owned subsidiary of ACB.
As compensation for the Distributor's services, the Fund pays the Distributor
a fee monthly based upon an annual percentage of the average daily net assets of
each portfolio as follows:
The fee rate for each of the Money Market Portfolio and Short U.S. Government
Securities Portfolio is based upon an annual percentage of the combined average
daily net assets of both portfolios and is as follows: .15% of the first $500
million, .125% of the next $500 million, .10% of the next $1 billion, and .075%
of such combined net assets in excess of $2 billion.
The fee rate for the Adjustable Rate Mortgage (ARM) Portfolio is .25% of
average daily net assets. The Distributor voluntarily waived approximately 40%
of its fee for the year ended October 31, 1996. The waiver amounted to $916,124.
The fee rate for each of the Intermediate Mortgage Securities Portfolio and
the U.S. Government Mortgage Securities Portfolio, computed separately, is as
follows: .15% of the first $500 million, .125% of the next $500 million, .10% of
the next $500 million, and .075% of such net assets in excess of $1.5 billion.
19
<PAGE> 26
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
C. The Fund is authorized to issue 6 billion shares of common stock, par value
$.001 per share, of which 4 billion shares are of the Money Market Portfolio and
500 million shares are of each of the other four Portfolios.
Transactions in shares of the Fund for the years ended October 31, 1996 and 1995
were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
MONEY MARKET SHORT U.S. GOVERNMENT
PORTFOLIO SECURITIES PORTFOLIO
--------------------------------------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Sale of shares............................ 756,322,916 389,839,779 4,141,919 2,982,085
Shares issued to stockholders in
reinvestment of dividends............... 2,389,475 1,752,434 527,302 520,236
Shares repurchased........................ (726,098,039) (437,694,716) (3,577,207) (5,044,075)
------------ ------------ ---------- ----------
Net increase (decrease)................... 32,614,352 (46,102,503) 1,092,014 (1,541,754)
Shares outstanding:
Beginning of year....................... 36,869,370 82,971,873 15,666,139 17,207,893
------------ ------------ ---------- ----------
End of year............................. 69,483,722 36,869,370 16,758,153 15,666,139
============ ============ ========== ==========
- ----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
ADJUSTABLE RATE MORTGAGE INTERMEDIATE MORTGAGE
(ARM) PORTFOLIO SECURITIES PORTFOLIO
--------------------------------------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Sale of shares............................ 54,984,099 31,767,897 1,221,454 235,385
Shares issued to stockholders in
reinvestment of dividends............... 2,803,118 2,735,804 734,670 789,781
Shares repurchased........................ (67,489,479) (51,689,731) (11,588,476) (4,541,737)
----------- ------------ ----------- ----------
Net increase (decrease)................... (9,702,262) (17,186,030) (9,632,352) (3,516,571)
Shares outstanding:
Beginning of year....................... 89,713,434 106,899,464 19,324,048 22,840,619
----------- ----------- ----------- ----------
End of year............................. 80,011,172 89,713,434 9,691,696 19,324,048
=========== =========== =========== ==========
- ----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT MORTGAGE
SECURITIES PORTFOLIO
------------------------
1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Sale of shares.......................................................... 950,852 243,512
Shares issued to stockholders in reinvestment of dividends.............. 179,409 180,463
Shares repurchased...................................................... (1,509,780) (520,356)
--------- ----------
Net increase (decrease)................................................. (379,519) (96,381)
Shares outstanding:
Beginning of year..................................................... 5,828,832 5,925,213
--------- ---------
End of year........................................................... 5,449,313 5,828,832
========= =========
</TABLE>
- --------------------------------------------------------------------------------
20
<PAGE> 27
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
D. At October 31, 1996, NET ASSETS consisted of the following:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
SHORT U.S. INTERMEDIATE U.S. GOVERNMENT
GOVERNMENT ADJUSTABLE RATE MORTGAGE MORTGAGE
MONEY MARKET SECURITIES MORTGAGE SECURITIES SECURITIES
PORTFOLIO PORTFOLIO (ARM) PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital paid-in........ $ 69,483,722 $193,857,203 $ 815,150,018 $108,418,371 $59,451,285
Accumulated net
realized losses...... -0- (19,802,041) (25,895,882) (17,914,179) (3,956,507)
Net unrealized
appreciation
(depreciation) of
investments.......... -0- 2,836,452 6,762,034 1,784,984 1,772,009
----------- ------------ ----------- ---------- -----------
$ 69,483,722 $176,891,614 $ 796,016,170 $ 92,289,176 $57,266,787
=========== ============ =========== ========== ===========
- ---------------------------------------------------------------------------------------------------------
</TABLE>
E. For tax purposes at October 31, 1996, the Short U.S. Government Securities
Portfolio had a capital loss carryforward of $19,799,858, of which $8,161,004
expires in 1997, $4,590,496 expires in 1998, $4,615,249 expires in 2002,
$474,531 expires in 2003, and $1,958,578 expires in 2004. The Adjustable Rate
Mortgage (ARM) Portfolio had a capital loss carryforward of $23,440,369, of
which $18,518 expires in 2000, $6,982,183 expires in 2001, $10,944,856 expires
in 2002, $4,674,894 expires in 2003, and $819,918 expires in 2004.
The Intermediate Mortgage Securities Portfolio had a capital loss carryforward
of $17,584,613, of which $2,760,938 expires in 1997, $1,415,174 expires in 1998,
$9,464,083 expires in 2002, $1,932,690 expires in 2003, and $2,011,728 expires
in 2004. The U.S. Government Mortgage Securities Portfolio had a capital loss
carryforward of $4,097,131, of which $3,336,057 expires in 2002, $731,254
expires in 2003 and $29,820 expires in 2004. All losses are available to offset
future realized capital gains, if any.
- --------------------------------------------------------------------------------
21
<PAGE> 28
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
F. For the year ended October 31, 1996, purchases and proceeds from
sales/maturities of securities, other than short-term investments, were as
follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
U.S.
SHORT U.S. ADJUSTABLE INTERMEDIATE GOVERNMENT
GOVERNMENT RATE MORTGAGE MORTGAGE MORTGAGE
SECURITIES (ARM) SECURITIES SECURITIES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases:
U.S. Government obligations.......... $133,638,438 $472,951,744 $219,042,640 $100,867,578
Other securities..................... -0- 113,360,275 -0- -0-
------------ ------------ ------------ ------------
Total purchases................... $133,638,438 $586,312,019 $219,042,640 $100,867,578
============ ============ ============ ============
Sales and maturities:
U.S. Government obligations.......... $117,498,516 $574,567,195 $282,803,860 $100,879,903
Other securities..................... -0- 119,657,797 8,266,341 -0-
------------ ------------ ------------ ------------
Total sales and maturities........ $117,498,516 $694,224,992 $291,070,201 $100,879,903
============ ============ ============ ============
- ------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 29
- --------------------------------------------------------------------------------
To the Stockholders and Directors
of Asset Management Fund, Inc.
We have audited the accompanying statements of net assets of Asset Management
Fund, Inc. (comprising, respectively, the Money Market, Short U.S. Government
Securities, Adjustable Rate Mortgage (ARM), Intermediate Mortgage Securities,
and U.S. Government Mortgage Securities Portfolios) as of October 31, 1996, and
the related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our 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. Our procedures included confirmation of securities owned as of
October 31, 1996, by correspondence with the custodian. 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 each
of the respective portfolios comprising Asset Management Fund, Inc. as of
October 31, 1996, and the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the period then
ended, and their financial highlights for each of the five years in the period
then ended, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
December 3, 1996
<PAGE> 30
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------
For general information about any of the Portfolios offered by Asset Management
Fund, Inc., including fees and expenses, please send for a prospectus and read
it carefully before you invest.
SHAY FINANCIAL SERVICES CO.
111 East Wacker Drive/Chicago, IL 60601
800-527-3713
888 Brickell Avenue/Miami, FL 33131
800-327-6190
315 Post Road West/Westport, CT 06880
800-456-8232
5605 North MacArthur Blvd./Irving, TX 75038
800-442-9825
101 Bradford Road/Wexford, PA 15090
800-224-5177
350 Springfield Avenue/Summit, NJ 07091
800-553-6159
- --------------------------------------------------------------------------------
ACCOUNT INFORMATION
- --------------------------------------------------------------------------------
To obtain performance data and place purchase orders, call toll free
800-527-3713.
<PAGE> 31
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DISTRIBUTOR
Shay Financial Services Co.
111 East Wacker Drive
Chicago, IL 60601
INVESTMENT ADVISER
Shay Assets Management Co.
111 East Wacker Drive
Chicago, IL 60601
ADMINISTRATOR, TRANSFER AGENT
AND SHAREHOLDER SERVICE AGENT
PFPC Inc.
103 Bellevue Parkway
Wilmington, DE 19809
LEGAL COUNSEL
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, IL 60601
CUSTODIAN
PNC Bank
17th & Chestnut Streets
Philadelphia, PA 19101
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103
DIRECTORS AND OFFICERS
Arthur G. De Russo
Director
David F. Holland
Director
Leon T. Kendall
Director and Chairman
Gerald J. Levy
Director
Rodger D. Shay
President and Director
Edward E. Sammons, Jr.
Vice President, Treasurer and Secretary
Doris J. Pavel
Assistant Secretary
