<PAGE> 1
[AMF LOGO]
ASSET MANAGEMENT FUND, INC.
111 East Wacker Drive
Chicago, IL 60601
[AMF LOGO]
ASSET MANAGEMENT FUND, INC.
ANNUAL REPORT
OCTOBER 31, 1997
<PAGE> 2
- --------------------------------------------------------------------------------
December 10, 1997
Dear AMF Fund Shareholder:
This year marks the conclusion of 15 years that the Asset Management Fund,
Inc. has successfully provided fixed-income portfolios to meet the specific
investment needs of financial institutions. We want to take this opportunity to
thank our shareholders for your commitment over these many years. We are
especially encouraged by the fact that many shareholders have been with us since
our inception.
During the year, AMF Portfolios continued to generate positive returns for
shareholders in an environment of low inflation, characterized by declining
interest rate levels and a flattening yield curve. Based on a Sharpe Ratio
analysis for the 36 month period ended August 31, 1997, the Fund's Intermediate
Mortgage Securities, Short U.S. Government Securities, U.S. Government Mortgage
Securities and ARM Portfolios have offered some of the best risk-adjusted
returns in the short government and intermediate government categories. We have
presented a more concise review of each portfolio in the following pages.
Each of the five AMF portfolios have been carefully designed to represent a
distinct investment opportunity. Since inception, the Fund's unique premise has
been to offer professionally managed investment portfolios designed to address
the regulatory and accounting concerns of financial institutions. We provide our
investors with a consistent investment management style which has resulted in
performance which ranks favorably by industry standards.
We believe the outlook for the Bond Market remains positive and interest rates
will respond favorably as long as inflation remains under control. The AMF
portfolio management team thanks you for your continued support and confidence
in selecting the Asset Management Fund.
Sincerely,
Rodger D. Shay
Rodger D. Shay
Chairman
<PAGE> 3
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ASSET MANAGEMENT FUND, INC. REVIEW
The AMF portfolios continued to provide steady performance over the last year
which was characterized by declining rates and flattening yield curve.
The portfolios all carried four star overall Morningstar rankings, save for
the Intermediate Mortgage portfolio which continued to maintain a three star
ranking.
Within the Morningstar short government category, the ARM Portfolio continues
to hold its five star rating.
Looking forward, a lot of conflicting forces are pulling at the bond markets.
The current level of rates and the flat yield curve will continue to bedevil
investors in mortgage products. Couple this with the currency and equity
problems abroad - an overvalued domestic equity market - a strong economy -
little visible inflation - a Fed bias towards tightening, and the stage is set
for an unpredictable and perhaps volatile market. An environment where active
and effective portfolio management should pay dividends.
SHORT U.S. GOVERNMENT SECURITIES PORTFOLIO - While last year's market could be
characterized as being modestly bullish, most of the upside activity took place
in sectors of the curve at, and beyond, the five year treasury.
The two year sector, the natural home for this Portfolio, was little changed
on the year, therefore the Portfolio's total return of 6.04% was only slightly
more than its average yearly yield of 5.98%.
ADJUSTABLE RATE MORTGAGE PORTFOLIO - Theoretically, last year should have been
a tough year for the ARM market. The yield curve flattened dramatically, which
caused a significant pick-up in ARM prepayments, however, the low average
amortized cost of the Portfolio's securities served to reduce the Portfolio's
exposure to these unwanted cash flows. Consequently, the portfolio produced an
average yearly yield of 6.04%, only about ten basis points less than the average
yield produced the previous year.
The Portfolio's LIBOR based securities were the stellar performers in 1997,
and were instrumental in helping the ARM Portfolio to produce an overall total
return of 6.65%.
INTERMEDIATE MORTGAGE SECURITIES PORTFOLIO - The intermediate sector of the
mortgage market performed relatively well.
Prepayments were less of a problem in this sector than in the ARM arena, and
the longer duration of this Portfolio produced some measure of price
appreciation.
As evidence, while the average yield of this Portfolio was 6.90%, its total
return was 7.90%.
U.S. GOVERNMENT MORTGAGE SECURITIES PORTFOLIO - Being the longest duration
portfolio in the AMF family of funds, this Portfolio had the most to gain from
the advancing price environment further out along the yield curve.
Its average yield for the year was 7.00% and its overall total return a tidy
8.87%.
<PAGE> 4
INVESTMENT COMPARISON
Comparison of change in value of $10,000 investment for the years ended
October 31
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT U.S. GOVERNMENT SECURITIES PORTFOLIO
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Short U.S. Government
Securities Portfolio 10000 10764 11681 12637 14071 15298 16245 16400 17888 18758 19892
Lehman
Short Government
1-3 Year Index 10000 10764 11781 12823 14413 15586 16488 16890 18034 19113 20351
</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.
- --------------------------------------------------------------------------------
Short U.S. Government Securities Portfolio
Average Annual Return
One Five Ten
Year Year Year
---------------------------------
6.04% 5.39% 7.20%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO
*1990 1991 1992 1993 1994 1995 1996 1997
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Adjustable Rate Mortgage
(ARM) Portfolio 10000 10090 10600 11104 11330 12239 13006 13871
Lehman
Adjustable Rate
Mortgage Index 10000 10090 10680 11264 11292 12444 13321 14321
</TABLE>
This graph compares the performance of the Adjustable Rate Mortgage (ARM)
Portfolio to the Lehman Adjustable Rate Mortgage Index, showing returns for all
agency ARM securities.
- --------------------------------------------------------------------------------
Adjustable Rate Mortgage (ARM) Portfolio
Average Annual Return
One Five From
Year Year Inception*
----------------------------------------
6.65% 5.53% 5.49%
*From September 18, 1991
- --------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Intermediate Mortgage Securities Portfolio
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Intermediate Mortgage
Securities Portfolio 10000 11492 12712 13114 15268 16754 18149 17935 19841 20797 22440
Lehman U.S.
Mortgage Index 10000 11373 12646 13718 16037 17343 18712 18435 21129 22591 24651
</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.
- --------------------------------------------------------------------------------
Intermediate Mortgage Securities Portfolio
Average Annual Return
One Five Ten
Year Year Year
---------------------------------
7.90% 6.02% 8.42%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT MORTGAGE SECURITIES PORTFOLIO
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government Mortgage
Securities Portfolio 10000 11318 12489 13442 15592 16826 18126 17796 19997 21124 22997
Lehman U.S.
Mortgage Index 10000 11373 12646 13718 16037 17343 18712 18435 21129 22591 24651
</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 securities.
- --------------------------------------------------------------------------------
U.S. Government Mortgage Securities Portfolio
Average Annual Return
One Five Ten
Year Year Year
----------------------------------------
8.87% 6.46% 8.69%
- --------------------------------------------------------------------------------
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> 6
[This page is intentionally left blank.]
<PAGE> 7
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ASSET MANAGEMENT FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
OCTOBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
AGENCY OBLIGATIONS................................... 98.2%
Federal Home Loan Bank* -- weekly reset
5.57% 11/05/97 $ 8,000 $ 8,000,000
5.50% 11/05/97 3,000 3,000,000
-----------
11,000,000
Freddie Mac -- discount notes
5.65% 11/03/97 18,000 17,994,350
5.42% 11/04/97 5,000 4,997,741
-----------
22,992,091
Student Loan Marketing Association* -- weekly reset
5.45% 11/04/97 5,000 5,000,000
5.29% 11/04/97 8,275 8,267,831
-----------
13,267,831
-----------
TOTAL AGENCY OBLIGATIONS
(Cost $47,259,922) 47,259,922
REPURCHASE AGREEMENT................................. 2.0%
Lanston (Aubrey G.) & Co., Inc.
5.68% (Agreement dated 10/31/97, to be
repurchased at $955,452 on 11/03/97;
collateralized by $983,000 U.S. Treasury Bills,
4.99%, due 01/02/98. The market value of the
collateral is $974,552.)
(Cost $955,000) 11/03/97 955 955,000
-----------
TOTAL INVESTMENTS IN SECURITIES...................... 100.2%
(Cost $48,214,922)** 48,214,922
LIABILITIES IN EXCESS OF OTHER ASSETS................ (0.2%) (110,852)
-----------
Net Assets applicable to 48,104,070 Shares of Common
Stock issued and outstanding....................... 100.0% $48,104,070
===========
Net Asset Value, offering and redemption price per
share ($48,104,070 / 48,104,070) $1.00
======
</TABLE>
- --------------------------------------------------------------------------------
*Variable Rate Obligations -- The interest rate shown is the rate at October
31, 1997 and the maturity date shown represents the next interest rate
readjustment date.
**Aggregate cost for Federal income tax purposes is identical.
See accompanying notes to financial statements.
1
<PAGE> 8
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ASSET MANAGEMENT FUND, INC.
SHORT U.S. GOVERNMENT SECURITIES PORTFOLIO
STATEMENT OF NET ASSETS
OCTOBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS.......................... 94.4%
U.S. Treasury Notes
7.250% 02/15/98 $ 4,000 $ 4,018,750
6.000% 05/31/98 15,000 15,042,187
6.375% 05/15/99 12,000 12,129,375
7.125% 09/30/99 15,000 15,398,438
7.750% 11/30/99 15,000 15,604,688
6.375% 05/15/00 6,000 6,096,562
6.125% 07/31/00 5,000 5,054,687
6.000% 08/15/00 11,000 11,085,938
6.500% 08/31/01 8,000 8,201,250
6.625% 04/30/02 6,000 6,198,750
6.500% 05/31/02 3,000 3,085,313
6.250% 08/31/02 2,000 2,038,750
5.750% 10/31/02 2,000 2,002,187
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $104,005,582) 105,956,875
REPURCHASE AGREEMENT............................... 4.4%
Lanston (Aubrey G.) & Co., Inc.
5.68% (Agreement dated 10/31/97, to be
repurchased at $4,947,341 on 11/03/97;
collateralized by $5,090,000 U.S. Treasury
Bills, 4.99%, due 01/02/98. The market value
of the collateral is $5,046,257.)
(Cost $4,945,000) 11/03/97 4,945 4,945,000
------------
TOTAL INVESTMENTS IN SECURITIES.................... 98.8%
(Cost $108,950,582)* 110,901,875
OTHER ASSETS IN EXCESS OF LIABILITIES.............. 1.2% 1,401,817
------------
Net Assets applicable to 10,649,254 Shares of
Common Stock issued and outstanding.............. 100.0% $112,303,692
============
Net Asset Value, offering and redemption price per
share ($112,303,692 / 10,649,254) $10.55
=======
</TABLE>
- --------------------------------------------------------------------------------
* Aggregate cost for Federal income tax purposes is $108,952,765. At October 31,
1997, the net and gross unrealized appreciation for tax purposes for all
securities is $1,949,110.
See accompanying notes to financial statements.
2
<PAGE> 9
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ASSET MANAGEMENT FUND, INC.
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO
STATEMENT OF NET ASSETS
OCTOBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ADJUSTABLE RATE MORTGAGE-
RELATED SECURITIES*................................ 76.3%
Treasury Based ARMS.................................. 27.8%
Fannie Mae
6.50% 01/25/19 $10,000 $ 10,076,563
6.09% 11/25/23 29,265 29,356,847
Freddie Mac
7.70% 05/01/23 11,314 11,699,322
8.07% 09/01/23 7,850 8,117,288
7.83% 04/01/24 14,949 15,458,295
7.63% 03/01/25 16,470 16,984,626
Citicorp 1992-18 CL A-1
7.28% 10/25/22 42,700 44,061,124
Fund America 1993A CL A-1
7.66% 06/25/23 16,948 17,646,690
Housing Securities, Inc. 1992 SL-1 CL A-1
8.09% 05/25/16 25,453 26,861,142
Resolution Trust Corp. Series 1995-2 CL A-3
6.93% 05/25/29 22,619 23,127,704
Ryland Mortgage Securities Corp. 1991-10 CL A-2
7.71% 06/25/21 5,279 5,278,719
------------
(Cost $204,892,494) 208,668,320
Six Month Certificates of Deposit Based ARMS......... 15.7%
Fannie Mae
7.21% 01/01/22 9,522 9,825,095
7.16% 10/01/22 10,355 10,684,976
7.24% 12/01/22 13,547 13,965,629
7.53% 02/01/23 6,924 7,224,935
7.22% 09/01/23 13,576 13,965,877
8.00% 12/01/24 17,398 18,077,389
6.14% 08/01/29 28,141 28,097,360
Sears Mortgage 1992-16
7.09% 10/25/22 15,767 16,086,897
------------
(Cost $116,576,035) 117,928,158
- -----------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
3
<PAGE> 10
================================================================================
ASSET MANAGEMENT FUND, INC.
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO (CONTINUED)
STATEMENT OF NET ASSETS
OCTOBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
London Interbank Offering Rate (LIBOR)
Based ARMS......................................... 32.8%
Freddie Mac
8.01% 09/01/24 $10,529 $ 11,028,855
7.85% 02/01/26 25,332 26,306,024
6.34% 02/15/26 13,937 14,032,403
7.74% 05/01/26 14,826 15,391,360
Chase 1990-EA1
7.36% 11/25/20 17,258 17,511,735
CMC Securities Corp. 1993-2H A1
7.61% 09/25/23 22,262 22,790,510
Donaldson, Lufkin, Jenrette Acceptance Corp. 1992-6
7.39% 07/25/22 45,501 46,837,854
Donaldson, Lufkin, Jenrette Acceptance Corp. 1992-9
7.26% 10/25/22 32,436 33,439,767
Donaldson, Lufkin, Jenrette Acceptance Corp. 1994-5
8.02% 04/25/24 9,721 10,167,682
Morserv Inc. 96-2
6.48% 11/25/26 34,890 35,118,871
Residential Funding Mortgage Securities 1996-S23
6.14% 11/25/26 14,207 14,260,747
------------
(Cost $243,691,946) 246,885,808
------------
TOTAL ADJUSTABLE RATE MORTGAGE-RELATED
SECURITIES
(Cost $565,160,475) 573,482,286
- -----------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
4
<PAGE> 11
================================================================================
ASSET MANAGEMENT FUND, INC.
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO (CONTINUED)
STATEMENT OF NET ASSETS
OCTOBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIXED RATE MORTGAGE-RELATED
SECURITIES......................................... 17.1%
Collateralized Mortgage Obligations
Fannie Mae
5.75% 06/25/06 $10,805 $ 10,749,083
Freddie Mac
6.50% 01/15/04 17,300 17,370,281
7.00% 03/01/12 9,636 9,768,531
6.25% 08/17/12 10,000 10,026,563
6.00% 03/15/14 16,000 15,990,000
8.00% 06/01/14 5,401 5,529,621
5.25% 01/15/16 9,753 9,695,374
9.25% 01/01/17 6,343 6,806,772
10.50% 12/01/20 3,716 4,102,360
Government National Mortgage Association
6.00% 10/20/27 20,000 20,156,250
Prudential Home Mortgage Services 1996-6
6.00% 05/25/26 11,831 11,792,466
Residential Funding Mortgage Securities 1994-S9
6.50% 03/25/24 6,502 6,486,321
------------
TOTAL FIXED RATE MORTGAGE-RELATED
SECURITIES
(Cost $127,339,900) 128,473,622
U.S. TREASURY OBLIGATION............................. 1.3%
U.S. Treasury Note
7.375%
(Cost $10,000,204) 11/15/97 10,000 10,003,125
- -----------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
5
<PAGE> 12
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ASSET MANAGEMENT FUND, INC.
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO (CONTINUED)
STATEMENT OF NET ASSETS
OCTOBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AGENCY OBLIGATION................................................. 1.6%
Freddie Mac - discount notes
5.65%
(Cost $11,996,233) 11/03/97 $ 12,000 $ 11,996,233
REPURCHASE AGREEMENT.............................................. 3.0%
Lanston (Aubrey G.) & Co., Inc.
5.68% (Agreement dated 10/31/97, to be repurchased at
$22,398,597 on 11/03/97;
collateralized by $23,044,000 U.S. Treasury Bills, 4.99%, due
01/02/98. The market value of the collateral is $22,845,962.)
(Cost $22,388,000) 11/03/97 22,388 22,388,000
---------------
TOTAL INVESTMENTS IN SECURITIES................................... 99.3%
(Cost $736,884,812)** 746,343,266
OTHER ASSETS IN EXCESS OF LIABILITIES............................. 0.7% 4,990,938
----------------
Net Assets applicable to 75,207,300 Shares of Common Stock issued
and outstanding................................................. 100.0% $ 751,334,204
================
Net Asset Value, offering and redemption price per share
($751,334,204 / 75,207,300) $9.99
=====
</TABLE>
- --------------------------------------------------------------------------------
* The interest rates shown are the rates at October 31, 1997.
** Aggregate cost for Federal income tax purposes is identical. At October 31,
1997, the net unrealized appreciation for tax purposes for all securities of
$9,458,454 consists of gross unrealized appreciation of $9,545,664 and gross
unrealized depreciation of ($87,210).
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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIXED RATE MORTGAGE-RELATED
SECURITIES......................................... 80.5%
Pass Throughs
Fannie Mae
6.50% 05/01/08 $ 9,020 $ 9,081,621
Freddie Mac Gold
7.50%, due 01/01/10 to 07/01/11 26,488 27,183,792
6.50%, due 02/01/12 to 10/01/12 26,490 26,473,480
-----------
53,657,272
-----------
TOTAL FIXED RATE MORTGAGE-
RELATED SECURITIES
(Cost $61,050,437) 62,738,893
U.S. TREASURY OBLIGATIONS............................ 17.1%
U.S. Treasury Notes
6.000% 08/15/00 3,000 3,023,437
5.750% 10/31/02 1,000 1,001,094
6.250% 02/15/07 2,000 2,046,562
6.625% 05/15/07 4,000 4,210,000
6.125% 08/15/07 3,000 3,064,219
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $13,075,883) 13,345,312
- ----------------------------------------------------------------------------------------------------
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, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENT................................ 2.2%
Lanston (Aubrey G.) & Co., Inc.
5.68% (Agreement dated 10/31/97, to be
repurchased at $1,754,830 on 11/03/97;
collateralized by $1,806,000 U.S. Treasury
Bills,
4.99%, due 01/02/98. The market value of the
collateral is $1,790,479.)
(Cost $1,754,000) 11/03/97 $ 1,754 $ 1,754,000
------------
TOTAL INVESTMENTS IN SECURITIES..................... 99.8%
(Cost $75,880,320)* 77,838,205
OTHER ASSETS IN EXCESS OF LIABILITIES............... 0.2% 143,925
------------
Net Assets applicable to 8,105,224 Shares of
Common Stock issued and outstanding............... 100.0% $ 77,982,130
============
Net Asset Value, offering and redemption
price per share ($77,982,130 / 8,105,224) $9.62
=====
</TABLE>
- --------------------------------------------------------------------------------
* Aggregate cost for Federal income tax purposes is $75,884,779. At October 31,
1997, the net and gross unrealized appreciation for tax purposes for all
securities is $1,953,426.
See accompanying notes to financial statements.
8
<PAGE> 15
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
U.S. GOVERNMENT MORTGAGE SECURITIES PORTFOLIO
STATEMENT OF NET ASSETS
OCTOBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIXED RATE MORTGAGE-RELATED SECURITIES.............. 81.7%
Government National Mortgage Association
9.00%, due 11/15/04 to 10/15/21 $ 5,051 $ 5,433,282
10.00%, due 03/15/19 816 897,912
7.00%, due 08/15/23 to 09/15/24 15,077 15,157,233
7.50%, due 02/15/24 13,280 13,603,245
8.50%, due 06/15/24 3,448 3,614,027
7.50%, due 06/15/27 4,935 5,045,768
-----------
(Cost $41,240,753) 43,751,467
U.S. TREASURY OBLIGATIONS........................... 15.2%
U.S. Treasury Notes
6.000% 08/15/00 2,000 2,015,625
6.250% 08/31/02 2,000 2,038,750
5.750% 10/31/02 1,000 1,001,094
6.125% 08/15/07 2,000 2,042,813
-----------
7,098,282
U.S. Treasury Bond
6.625% 02/15/27 1,000 1,060,156
-----------
TOTAL U. S. TREASURY OBLIGATIONS
(Cost $8,043,433) 8,158,438
REPURCHASE AGREEMENT................................ 3.0%
Lanston (Aubrey G.) & Co., Inc.
5.68% (Agreement dated 10/31/97, to be
repurchased at $1,628,771 on 11/03/97;
collateralized by $1,676,000 U.S. Treasury
Bills, 4.99%, due 01/02/98. The market value of
the collateral is $1,661,597.)
(Cost $1,628,000) 11/03/97 1,628 1,628,000
-----------
TOTAL INVESTMENTS IN SECURITIES..................... 99.9%
(Cost $50,912,186)* 53,537,905
OTHER ASSETS IN EXCESS OF LIABILITIES............... 0.1% 34,217
-----------
Net Assets applicable to 5,020,851 Shares of Common
Stock issued and outstanding...................... 100.0% $53,572,122
===========
Net Asset Value, offering and redemption price per
share ($53,572,122 / 5,020,851) $10.67
=======
</TABLE>
- --------------------------------------------------------------------------------
* Aggregate cost for Federal income tax purposes is identical. At October 31,
1997, the net and gross unrealized appreciation for tax purposes for all
securities is $2,625,719.
See accompanying notes to financial statements.
9
<PAGE> 16
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
- --------------------------------------------------------------------------------
<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................ $2,989,838 $8,774,751 $47,235,008 $6,003,494 $4,132,467
---------- ---------- ----------- ---------- ----------
Operating expenses:
Investment advisory fee...... 83,068 339,060 3,241,786 297,019 137,123
Distribution fee............. 83,068 203,436 1,800,992 127,294 82,274
Administration fee........... 20,809 50,414 269,671 31,793 21,188
Custodian fee................ 13,913 32,368 146,821 21,730 28,156
Directors' fees.............. 4,292 10,540 55,302 5,747 4,224
Transfer agent fee........... 8,835 6,587 22,395 3,196 2,128
Legal........................ 3,473 10,600 48,581 4,817 3,690
Audit........................ 5,107 10,696 53,653 4,806 3,812
Other........................ 3,967 10,578 55,201 8,067 7,073
---------- ---------- ----------- ---------- ----------
226,532 674,279 5,694,402 504,469 289,668
Fee waivers.................. (83,068) -0- (2,161,191) (84,863) -0-
---------- ---------- ----------- ---------- ----------
Total expenses............ 143,464 674,279 3,533,211 419,606 289,668
---------- ---------- ----------- ---------- ----------
Net investment income..... 2,846,374 8,100,472 43,701,797 5,583,888 3,842,799
---------- ---------- ----------- ---------- ----------
REALIZED AND UNREALIZED GAINS
(LOSSES) FROM INVESTMENT
ACTIVITIES:
Net realized gain (loss)....... -0- 278,080 184,116 595,694 (38,770)
Net change in unrealized
appreciation/depreciation of
investments.................. -0- (885,159) 2,696,420 172,901 853,710
---------- ---------- ----------- ---------- ----------
Net gain (loss) on
investments............. -0- (607,079) 2,880,536 768,595 814,940
---------- ---------- ----------- ---------- ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS................... $2,846,374 $7,493,393 $46,582,333 $6,352,483 $4,657,739
========== ========== =========== ========== ==========
- ----------------------------------------------------------------------------------------------------------
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, 1997 AND 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
MONEY MARKET SHORT U.S. GOVERNMENT
PORTFOLIO SECURITIES PORTFOLIO
------------------------------------------------------------
1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income.............. $ 2,846,374 $ 3,491,429 $ 8,100,472 $ 10,747,695
Net gain (loss) on investments..... -0- -0- (607,079) (2,534,577)
------------- ------------- ------------ ------------
Net increase in net assets
resulting from operations..... 2,846,374 3,491,429 7,493,393 8,213,118
------------- ------------- ------------ ------------
Dividends paid to stockholders:
From net investment income......... (2,846,374) (3,491,429) (8,100,472) (10,747,695)
From net realized capital gains.... -0- -0- -0- -0-
------------- ------------- ------------ ------------
Total dividends paid to
stockholders.................. (2,846,374) (3,491,429) (8,100,472) (10,747,695)
------------- ------------- ------------ ------------
Capital share transactions:
Proceeds from sale of shares....... 486,765,190 756,322,916 19,652,214 44,293,835
Shares issued to stockholders in
reinvestment of dividends........ 2,693,813 2,389,475 5,022,539 5,584,686
Cost of shares repurchased......... (510,838,655) (726,098,039) (88,655,596) (37,795,386)
------------- ------------- ------------ ------------
Net increase (decrease) in net
assets from capital share
transactions.................. (21,379,652) 32,614,352 (63,980,843) 12,083,135
------------- ------------- ------------ ------------
Total increase (decrease) in net
assets........................ (21,379,652) 32,614,352 (64,587,922) 9,548,558
Net Assets:
Beginning of year..................... 69,483,722 36,869,370 176,891,614 167,343,056
------------- ------------- ------------ ------------
End of year........................... $ 48,104,070 $ 69,483,722 $112,303,692 $176,891,614
============= ============= ============ ============
- ------------------------------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 43,701,797 $ 55,040,332 $ 5,583,888 $ 10,923,457 $ 3,842,799 $ 4,158,584
2,880,536 (91,817) 768,595 (3,816,169) 814,940 (687,178)
------------- -------------- ------------ ------------- ----------- ------------
46,582,333 54,948,515 6,352,483 7,107,288 4,657,739 3,471,406
------------- -------------- ------------ ------------- ----------- ------------
(43,701,797) (55,040,332) (5,583,888) (10,923,457) (3,842,799) (4,158,584)
-0- -0- -0- -0- -0- -0-
------------- -------------- ------------ ------------- ----------- ------------
(43,701,797) (55,040,332) (5,583,888) (10,923,457) (3,842,799) (4,158,584)
------------- -------------- ------------ ------------- ----------- ------------
369,577,662 547,849,221 3,564,826 11,947,721 1,000,000 10,233,212
22,808,370 27,868,817 2,421,791 7,021,954 1,756,929 1,891,769
(439,948,534) (671,148,248) (21,062,258) (109,951,609) (7,266,534) (16,429,514)
------------- -------------- ------------ ------------- ----------- ------------
(47,562,502) (95,430,210) (15,075,641) (90,981,934) (4,509,605) (4,304,533)
------------- -------------- ------------ ------------- ----------- ------------
(44,681,966) (95,522,027) (14,307,046) (94,798,103) (3,694,665) (4,991,711)
796,016,170 891,538,197 92,289,176 187,087,279 57,266,787 62,258,498
------------- -------------- ------------ ------------- ----------- ------------
$ 751,334,204 $ 796,016,170 $ 77,982,130 $ 92,289,176 $53,572,122 $ 57,266,787
============= ============== ============ ============= =========== ============
- ----------------------------------------------------------------------------------------------
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,
--------------------------------------------------------
1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------
<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................ .0513 .0516 .0547 .0346 .0277
Net realized and unrealized gain
(loss) on investments............. -0- -0- -0- -0- -0-
------- ------- ------- ------- --------
Total from investment
operations................... .0513 .0516 .0547 .0346 .0277
------- ------- ------- ------- --------
Less distributions:
- --------------------
Dividends paid to stockholders:
From net investment income.......... (.0513) (.0516) (.0547) (.0346) (.0277)
From net realized gains............. -0- -0- -0- -0- -0-
------- ------- ------- ------- --------
Total distributions to
stockholders................. (.0513) (.0516) (.0547) (.0346) (.0277)
------- ------- ------- ------- --------
Net asset value, end of year........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ========
Total return........................... 5.25% 5.29% 5.60% 3.51% 2.80%
Ratios/Supplemental data:
- ------------------------------
Net assets, end of year (in 000's)... $48,104 $69,484 $36,869 $82,969 $107,924
Ratio of expenses to average
net assets........................ 0.26%(1) 0.24%(1) 0.24%(1) 0.40%(1) 0.40%
Ratio of net investment income to
average net assets................ 5.14% 5.15% 5.40% 3.34% 2.77%
</TABLE>
- --------------------------------------------------------------------------------
(1) Without fee waivers for the Money Market Portfolio for the years ended
October 31, 1997, 1996, 1995, and 1994, the ratios of expenses to average
net assets would have been .41%, .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,
----------------------------------------------------
1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......... $ 10.56 $ 10.68 $ 10.45 $ 10.89 $ 10.85
-------- -------- -------- -------- --------
Income from investment operations:
- ------------------------------------------
Net investment income..................... .6273 .6370 .6746 .5396 .6155
Net realized and unrealized gain (loss) on
investments.............................. (.0100) (.1200) .2300 (.4400) .0400
-------- -------- -------- -------- --------
Total from investment operations..... .6173 .5170 .9046 .0996 .6555
-------- -------- -------- -------- --------
Less distributions:
- --------------------
Dividends paid to stockholders:
From net investment income............. (.6273) (.6370) (.6746) (.5396) (.6155)
From net realized gains................ -0- -0- -0- -0- -0-
-------- -------- -------- -------- --------
Total distributions to
stockholders...................... (.6273) (.6370) (.6746) (.5396) (.6155)
-------- -------- -------- -------- --------
Net asset value, end of year................ $ 10.55 $ 10.56 $ 10.68 $ 10.45 $ 10.89
======== ======== ======== ======== ========
Total return................................ 6.04% 4.99% 8.94% 0.95% 6.19%
Ratios/Supplemental data:
- ------------------------------
Net assets, end of year (in 000's)........ $112,304 $176,892 $167,343 $179,740 $235,705
Ratio of expenses to average net assets... 0.50% 0.48% 0.49% 0.47% 0.48%
Ratio of net investment income to average
net assets............................. 5.97% 6.02% 6.42% 5.04% 5.65%
Portfolio turnover rate................... 75% 69% 112% 195% 110%
</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,
--------------------------------------------------------
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Net asset value, beginning of year........ $ 9.95 $ 9.94 $ 9.78 $ 10.02 $ 9.98
-------- -------- -------- ---------- ----------
Income from investment operations:
- ------------------------------------------
Net investment income................... .6036 .5958 .6035 .4396 .4267
Net realized and unrealized gain (loss)
on investments....................... .0400 .0100 .1600 (.2400) .0386
-------- -------- -------- ---------- ----------
Total from investment operations... .6436 .6058 .7635 .1996 .4653
-------- -------- -------- ---------- ----------
Less distributions:
- --------------------
Dividends paid to stockholders:
From net investment income........... (.6036) (.5958) (.6035) (.4396) (.4253)
From net realized gains.............. -0- -0- -0- -0- -0-
-------- -------- -------- ---------- ----------
Total distributions to
stockholders.................... (.6036) (.5958) (.6035) (.4396) (.4253)
-------- -------- -------- ---------- ----------
Net asset value, end of year.............. $ 9.99 $ 9.95 $ 9.94 $ 9.78 $ 10.02
======== ======== ======== ========== ==========
Total return.............................. 6.65% 6.27% 8.02% 2.04% 4.76%
Ratios/Supplemental data:
- ------------------------------
Net assets, end of year (in 000's)...... $751,334 $796,016 $891,538 $1,045,914 $1,572,311
Ratio of expenses to average net
assets............................... 0.49%(1) 0.47%(1) 0.48%(1) 0.47%(1) 0.46%(1)
Ratio of net investment income to
average net assets................... 6.07% 6.01% 6.12% 4.40% 4.34%
Portfolio turnover rate................. 74% 60% 68% 65% 30%
</TABLE>
- --------------------------------------------------------------------------------
(1) Without fee waivers for the Adjustable Rate Mortgage (ARM) Portfolio for the
years ended October 31, 1997, 1996, 1995, 1994, and 1993, the ratios of
expenses to average net assets would have been .79%, .77%, .78%, .76%, and
.76%, 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,
--------------------------------------------------
1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year............ $ 9.52 $ 9.68 $ 9.34 $ 10.00 $ 9.80
------- ------- -------- -------- --------
Income from investment operations:
- ------------------------------------------
Net investment income....................... .6245 .6101 .6211 .5407 .5982
Net realized and unrealized gain
(loss) on investments...................... .1000 (.1600) .3400 (.6600) .1987
------- ------- -------- -------- --------
Total from investment operations....... .7245 .4501 .9611 (.1193) .7969
------- ------- -------- -------- --------
Less distributions:
- --------------------
Dividends paid to stockholders:
From net investment income................. (.6245) (.6101) (.6211) (.5407) (.5969)
From net realized gains.................... -0- -0- -0- -0- -0-
------- ------- -------- -------- --------
Total distributions to stockholders.... (.6245) (.6101) (.6211) (.5407) (.5969)
------- ------- -------- -------- --------
Net asset value, end of year.................. $ 9.62 $ 9.52 $ 9.68 $ 9.34 $ 10.00
======= ======= ======== ======== ========
Total return.................................. 7.90% 4.82% 10.63% (1.18%) 8.33%
Ratios/Supplemental data:
- ------------------------------
Net assets, end of year (in 000's).......... $77,982 $92,289 $187,087 $213,427 $218,032
Ratio of expenses to average net assets..... .49%(1) 0.44%(1) 0.38%(1) 0.39%(1) 0.37%(1)
Ratio of net investment income to average
net assets................................. 6.58% 6.38% 6.55% 5.61% 5.94%
Portfolio turnover rate..................... 120% 133% 133% 358% 106%
</TABLE>
- --------------------------------------------------------------------------------
(1) Without fee waivers for the Intermediate Mortgage Securities Portfolio for
the years ended October 31, 1997, 1996, 1995, 1994, and 1993, the ratios of
expenses to average net assets would have been .59%, .58%, .58%, .59%, and
.57%, 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,
-----------------------------------------------
1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year................. $ 10.51 $ 10.68 $ 10.23 $ 11.28 $ 11.26
------- ------- ------- ------- -------
Income from investment operations:
- ------------------------------------------
Net investment income............................ .7344 .7479 .7703 .7296 .8306
Net realized and unrealized gain (loss) on
investments..................................... .1600 (.1700) .4500 (.9300) .0195
------- ------- ------- ------- -------
Total from investment operations.............. .8944 .5779 1.2203 (.2004) .8501
------- ------- ------- ------- -------
Less distributions:
- --------------------
Dividends paid to stockholders:
From net investment income...................... (.7344) (.7479) (.7703) (.7296) (.8301)
From net realized gains......................... -0- -0- -0- (.1200) -0-
------- ------- ------- ------- -------
Total distributions to stockholders........... (.7344) (.7479) (.7703) (.8496) (.8301)
------- ------- ------- ------- -------
Net asset value, end of year....................... $ 10.67 $ 10.51 $ 10.68 $ 10.23 $ 11.28
======= ======= ======= ======= =======
Total return....................................... 8.87% 5.63% 12.37% (1.82%) 7.76%
Ratios/Supplemental data:
- ------------------------------
Net assets, end of year (in 000's)............... $53,572 $57,267 $62,258 $60,613 $92,994
Ratio of expenses to average net assets.......... 0.53% 0.52% 0.53% 0.51% 0.51%
Ratio of net investment income to average net
assets.......................................... 7.01% 7.10% 7.39% 6.81% 7.32%
Portfolio turnover rate.......................... 135% 165% 177% 376% 187%
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
17
<PAGE> 24
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997
- --------------------------------------------------------------------------------
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)
OCTOBER 31, 1997
- --------------------------------------------------------------------------------
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) (See Note G).
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, 1997. The waiver amounted to $83,068.
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, 1997. The waiver amounted to $1,440,794.
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 29% of its fee for the year ended October 31,
1997. The waiver amounted to $84,863.
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 (See
Note G).
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, 1997. The waiver amounted to $720,397.
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)
OCTOBER 31, 1997
- --------------------------------------------------------------------------------
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. On October 31,
1997, four stockholders held approximately 38% of the outstanding shares of the
Money Market Portfolio, two stockholders held approximately 18% of the
outstanding shares of the Short U.S. Government Securities Portfolio, five
stockholders held approximately 60% of the outstanding shares of the
Intermediate Mortgage Securities Portfolio, and six stockholders held
approximately 73% of the outstanding shares of the U.S. Government Mortgage
Securities Portfolio. As of October 31, 1997, one of the directors had, through
the institutions he serves as an officer, shared voting power over approximately
six percent of the shares of the Money Market Portfolio.
Transactions in shares of the Fund for the years ended October 31, 1997 and 1996
were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
MONEY MARKET SHORT U.S. GOVERNMENT
PORTFOLIO SECURITIES PORTFOLIO
-------------------------------------------------------
1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sale of shares............................ 486,765,190 756,322,916 1,867,392 4,141,919
Shares issued to stockholders in
reinvestment of dividends............... 2,693,813 2,389,475 478,395 527,302
Shares repurchased........................ (510,838,655) (726,098,039) (8,454,686) (3,577,207)
------------ ------------ ---------- ----------
Net increase (decrease)................... (21,379,652) 32,614,352 (6,108,899) 1,092,014
Shares outstanding:
Beginning of year....................... 69,483,722 36,869,370 16,758,153 15,666,139
------------ ------------ ---------- ----------
End of year............................. 48,104,070 69,483,722 10,649,254 16,758,153
============ ============ ========== ==========
- ---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
ADJUSTABLE RATE MORTGAGE INTERMEDIATE MORTGAGE
(ARM) PORTFOLIO SECURITIES PORTFOLIO
-------------------------------------------------------
1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sale of shares............................ 37,029,209 54,984,099 374,952 1,221,454
Shares issued to stockholders in
reinvestment of dividends............... 2,288,259 2,803,118 255,226 734,670
Shares repurchased........................ (44,121,340) (67,489,479) (2,216,650) (11,588,476)
----------- ----------- ---------- -----------
Net increase (decrease)................... (4,803,872) (9,702,262) (1,586,472) (9,632,352)
Shares outstanding:
Beginning of year....................... 80,011,172 89,713,434 9,691,696 19,324,048
----------- ----------- ---------- -----------
End of year............................. 75,207,300 80,011,172 8,105,224 9,691,696
=========== =========== ========== ===========
- ---------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE> 27
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT MORTGAGE
SECURITIES PORTFOLIO
------------------------
1997 1996
- -------------------------------------------------------------------------------------
<S> <C> <C>
Sale of shares.............................................. 94,340 950,852
Shares issued to stockholders in reinvestment of
dividends................................................. 167,732 179,409
Shares repurchased.......................................... (690,534) (1,509,780)
--------- ----------
Net increase (decrease)..................................... (428,462) (379,519)
Shares outstanding:
Beginning of year......................................... 5,449,313 5,828,832
--------- ----------
End of year............................................... 5,020,851 5,449,313
========= ==========
</TABLE>
- --------------------------------------------------------------------------------
D. At October 31, 1997, 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......... $48,104,070 $121,715,356 $767,587,516 $ 90,581,792 $54,941,680
Accumulated net realized
losses................ -0- (11,362,957) (25,711,766) (14,557,547) (3,995,277)
Net unrealized
appreciation of
investments........... -0- 1,951,293 9,458,454 1,957,885 2,625,719
----------- ------------ ------------ ------------ -----------
$48,104,070 $112,303,692 $751,334,204 $ 77,982,130 $53,572,122
=========== ============ ============ ============ ===========
</TABLE>
- --------------------------------------------------------------------------------
E. For tax purposes at October 31, 1997, the Short U.S. Government Securities
Portfolio had a capital loss carryforward of $11,360,774, of which $4,590,496
expires in 1998, $4,615,249 expires in 2002, $474,531 expires in 2003, and
$1,680,498 expires in 2004. The Adjustable Rate Mortgage (ARM) Portfolio had a
capital loss carryforward of $22,609,346, of which $236,741 expires in 2000,
$5,932,937 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 $14,727,095, of which $1,415,174 expires in 1998, $9,526,290 expires in 2002,
$1,932,691 expires in 2003, and $1,852,940 expires in 2004. The U.S. Government
Mortgage Securities Portfolio had a capital loss carryforward of $4,221,956, of
which $3,336,057 expires in 2002, $731,254 expires in 2003, $29,820 expires in
2004, and $124,825 expires in 2005. All losses are available to offset future
realized capital gains, if any.
- --------------------------------------------------------------------------------
21
<PAGE> 28
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1997
- --------------------------------------------------------------------------------
F. For the year ended October 31, 1997, purchases and proceeds from
sales/maturities of securities, other than short-term investments, were as
follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
U.S.
SHORT U.S. ADJUSTABLE RATE INTERMEDIATE GOVERNMENT
GOVERNMENT MORTGAGE MORTGAGE MORTGAGE
SECURITIES (ARM) SECURITIES SECURITIES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases:
U.S. Government obligations............ $ 98,152,656 $390,228,155 $ 97,508,072 $70,146,860
Other securities....................... -0- 218,193,587 -0- -0-
------------ ------------ ------------ -----------
Total purchases..................... $ 98,152,656 $608,421,742 $ 97,508,072 $70,146,860
============ ============ ============ ===========
Sales and maturities:
U.S. Government obligations............ $155,127,422 $329,957,894 $103,757,407 $69,545,984
Other securities....................... -0- 169,695,267 -0- -0-
------------ ------------ ------------ -----------
Total sales and maturities.......... $155,127,422 $499,653,161 $103,757,407 $69,545,984
============ ============ ============ ===========
- ------------------------------------------------------------------------------------------------------
</TABLE>
G. Shay Assets Management, Inc. (SAMI), a 50% owner of the Adviser, intends to
purchase the remaining 50% interest in the Adviser from ACB Assets Management,
Inc. Upon consummation of this transaction, the Adviser will be dissolved and
its business (including investment advisory functions to the Fund), assets and
liabilities will be transferred to SAMI. In anticipation of this transaction,
the stockholders of the Fund approved a new investment advisory agreement
between the Fund and SAMI on October 31, 1997, whereby SAMI will serve as the
investment adviser to the Fund. The terms of the new investment advisory
agreement will remain substantially unchanged from the previous agreement.
Shay Financial Services, Inc. (SFSI), a 50% owner of the Distributor, intends to
purchase the remaining 50% interest in the Distributor from ACB Securities, Inc.
Upon consummation of this transaction, the Distributor will be dissolved and its
business (including distribution functions to the Fund), assets and liabilities
will be transferred to SFSI. In anticipation of this transaction, the
stockholders of the Fund approved a new distribution agreement between the Fund
and SFSI on October 31, 1997, whereby SFSI will serve as the distributor to the
Fund. The terms of the new distribution agreement will remain substantially
unchanged from the previous agreement.
SAMI and SFSI are wholly-owned subsidiaries of Shay Investment Services, Inc.
(SISI), which is controlled by Rodger D. Shay, the President of the Fund. SAMI,
SFSI, or SISI have borne and will continue to bear all of the Fund-related costs
of the above transactions, including preparation and distribution of proxy
materials to stockholders, meetings of the Fund's stockholders and Board of
Directors, legal fees, and other fees and expenses.
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, 1997, 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, 1997, 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, 1997, 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, 1997
<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, INC.
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, Inc.
111 East Wacker Drive
Chicago, IL 60601
INVESTMENT ADVISER
Shay Assets Management, Inc.
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
Richard M. Amis
Director
Arthur G. De Russo
Director
David F. Holland
Director
Gerald J. Levy
Director and Vice Chairman
Rodger D. Shay
Director, Chairman and President
Edward E. Sammons, Jr.
Vice President, Treasurer and Secretary
Doris J. Pavel
Assistant Secretary
