<PAGE> 1
[AMF LOGO]
ASSET MANAGEMENT FUND, INC.
230 West Monroe Street
Chicago, IL 60606
[AMF LOGO]
ASSET MANAGEMENT FUND, INC.
ANNUAL REPORT
OCTOBER 31, 1998
<PAGE> 2
- --------------------------------------------------------------------------------
CHAIRMAN'S MESSAGE
December 10, 1998
Dear AMF Shareholders:
The directors and officers of the Asset Management Fund, Inc. are pleased to
present this annual report for the twelve months ending October 31, 1998.
The unfolding crisis in Asia, Russia, and the developing world was the
dominant issue confronting the bond market over the course of the last fiscal
year. While the economy continued to grow briskly throughout this period,
investor sentiment waffled from being certain, at one time, that the economy was
on its way to overheating to, at another time, believing that the events
overseas were about to plunge the economy into recession. Consequently, the bond
market spent most of the year trading in a relatively narrow range, albeit with
an upward bias, as market participants, including the Fed, were trying to
clarify their views.
As conditions in Japan and the Far East worsened, treasury bond prices moved
to new high ground in June of 1998, subsequently rising again in late August as
Russia began to swoon. The advance continued to accelerate throughout September
and early October as hedge funds and other leveraged investors were brought to
task and the Fed initiated two 25 basis point cuts in the Fed Funds rate in an
attempt to normalize spreads and facilitate liquidity. Since the underlying
theme of the rally was a flight to safety and liquidity, the primary benefactor
was the treasury market. All other classes of securities, including pass
throughs, CMOs, ARMs, and asset-backeds, were left behind.
This past year has been one of the most difficult and challenging we have
witnessed in a long time. Usually, its enough to be right on the direction of
interest rates, but this time around, it was critical that a portfolio be
positioned in the right securities on the right portion of the yield curve at
the right time. In this environment, the ability to engage in active portfolio
management was a critical necessity for the portfolio manager who hoped to
produce superior returns, much less to escape disaster. We believe that the AMF
portfolios served their investors admirably and offer, for your review, a brief
comment about each portfolio on the following pages.
We thank you, our shareholders, for your continued participation and remind
you that our portfolio management team is always at your disposal. We encourage
shareholders to call us direct regarding any questions or concerns you might
have or just to chat about current market conditions.
Sincerely,
Rodger D. Shay
Chairman
<PAGE> 3
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC. REVIEW
The AMF portfolios were positioned throughout the year so as to minimize the
damage from rapid prepayments and in a fashion that paid greater than normal
attention to changes in the shape of the yield curve and sector allocation.
At the Fund's year end (October 31, 1998), the ARM portfolio had an overall
five-star risk adjusted rating from the Morningstar Mutual Fund Service*, while
the other three portfolios (money market funds are not rated) each carried
overall four-star ratings, all in the Taxable Fixed Income category. The number
of funds within the category as of October 31, 1998 was 1,499, 954, and 355 for
the three, five, and ten year periods, respectively.
Looking forward, we believe the elements are in place that would produce a
less volatile bond market with stable to declining rates. The major uncertainty
continues to be the extent to which the economic slow down overseas will impact
our domestic economy but, whatever the result, we feel that low inflation and
somewhat less intimidating mortgage prepayments provide a firm underpinning.
SHORT U.S. GOVERNMENT PORTFOLIO - This portfolio produced an overall return of
7.08% for the year and an average daily yield for the year of 5.82%. The
Portfolio benefited from having a large treasury component as flight to quality
investors flocked to the short end of the treasury curve.
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO - ARM prepayments accelerated as the
market rallied and the yield curve flattened. This served to push ARM prices
lower through the course of the year, which is why the Portfolio's overall
return of 5.00% was less than its average daily yield of 5.67%.
Panic selling of ARMs by leveraged investors in September and October of 1998
gave the portfolio an opportunity to substantially increase its commitment to 1
yr CMT ARMs at historically cheap levels. We believe this will be of significant
benefit to shareholders in the future.
INTERMEDIATE MORTGAGE SECURITIES PORTFOLIO - The overall return of this
portfolio for the year was 7.18% and its average daily yield over the year was
6.55%.
While this Fund did well within its mortgage peer group, mortgages did not do
as well, overall, as equivalent duration treasury portfolios.
U.S. GOVERNMENT MORTGAGE SECURITIES PORTFOLIO - This portfolio had an overall
return of 7.58% and an average yield of 6.74% for the year.
- --------------------------------------------------------------------------------
*Morningstar risk adjusted ratings are calculated based on a fund's three, five,
and ten year total returns in excess of the 90 day Treasury bill return,
including loads and redemption fees, adjusted by a risk factor reflecting the
funds total returns below the 90 day Treasury bill. The top 10% and the next
22.5% of the funds within a given category receive five-star and four-star
ratings, respectively. Past performance is no guarantee of future results.
<PAGE> 4
- --------------------------------
INVESTMENT
COMPARISON
Comparison of change in value of
$10,000 investment for the years
ended October 31
- --------------------------------------------------------------------------------
SHORT U.S. GOVERNMENT SECURITIES PORTFOLIO
[GRAPH]
<TABLE>
<CAPTION>
Short U.S. Govt. Sec.
- -----------------------------------------------
Short U.S. Lehman
Gov't Short U.S.
<S> <C> <C>
1988 10,000 10,000
1989 10,852 10,945
1990 11,739 11,913
1991 13,072 13,390
1992 14,212 14,480
1993 15,092 15,318
1994 15,235 15,496
1995 16,598 16,754
1996 17,426 17,756
1997 18,479 18,907
1998 19,788 20,353
</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
-----------------------------
7.08% 5.57% 7.15%
- --------------------------------------------------------------------------------
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO
[GRAPH]
<TABLE>
<CAPTION>
ARM Portfolio
- ---------------------------------------------
Lehman
ARM ARM
<S> <C> <C>
1990 10,000 10,000
1991 10,090 10,090
1992 10,600 10,680
1993 11,104 11,264
1994 11,330 11,292
1995 12,239 12,444
1996 13,006 13,321
1997 13,871 14,321
1998 14,565 15,208
</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(*)
-------------------------------------
5.00% 5.58% 5.42%
* 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
- --------------------------------------------------------------------------------
INTERMEDIATE MORTGAGE SECURITIES PORTFOLIO
[GRAPH]
<TABLE>
<CAPTION>
Intermediate Mtge. Securities
-----------------------------------------
Inter. Lehman
Mort. Mortgage
<S> <C> <C>
1988 10,000 10,000
1989 11,061 11,120
1990 11,411 12,062
1991 13,285 14,101
1992 14,578 15,250
1993 15,702 16,453
1994 15,606 16,210
1995 17,264 18,578
1996 18,097 19,864
1997 19,526 21,676
1998 20,929 23,258
</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
------------------------------
7.18% 5.79% 7.67%
- --------------------------------------------------------------------------------
U.S. GOVERNMENT MORTGAGE SECURITIES PORTFOLIO
[GRAPH]
<TABLE>
<CAPTION>
U.S. Gov't Mortgage Securities
------------------------------------------
U.S. Gov't Lehman
Mortgage Mortgage
<S> <C> <C>
1988 10,000 10,000
1989 11,035 11,120
1990 11,877 12,062
1991 13,776 14,101
1992 14,867 15,250
1993 16,015 16,453
1994 15,724 16,210
1995 17,669 18,578
1996 18,664 19,864
1997 20,319 21,676
1998 21,858 23,258
</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
------------------------------
7.58% 6.42% 8.14%
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
AGENCY OBLIGATIONS.................................. 97.1%
Federal Home Loan Bank* -- weekly reset
4.52% 11/03/98 $ 5,500 $ 5,497,353
4.61% 11/04/98 8,300 8,295,369
-----------
13,792,722
Freddie Mac -- discount notes
5.42% 11/02/98 26,000 25,996,086
Student Loan Marketing Association* -- weekly
reset
4.65% 11/03/98 2,000 2,000,000
4.62% 11/03/98 5,000 4,992,783
4.36% 11/03/98 5,000 4,999,844
4.30% 11/03/98 5,000 4,972,088
-----------
16,964,715
-----------
TOTAL AGENCY OBLIGATIONS
(Cost $56,753,523) 56,753,523
REPURCHASE AGREEMENT................................ 2.8%
Lanston (Aubrey G.) & Co., Inc.
5.35% (Agreement dated 10/30/98, to be
repurchased at $1,661,741 on 11/02/98;
collateralized by $1,604,000 U.S. Treasury
Notes, 6.25%, due 05/31/00. The market value of
the collateral is $1,692,297.)
(Cost $1,661,000) 11/02/98 1,661 1,661,000
-----------
TOTAL INVESTMENTS IN SECURITIES..................... 99.9%
(Cost $58,414,523)** 58,414,523
OTHER ASSETS IN EXCESS OF LIABILITIES............... 0.1% 30,243
-----------
Net Assets applicable to 58,441,611 Shares of Common
Stock issued and outstanding...................... 100.0% $58,444,766
===========
Net Asset Value, offering and redemption price per
share ($58,444,766 / 58,441,611) $1.00
------
------
</TABLE>
- --------------------------------------------------------------------------------
*Variable Rate Obligations -- The interest rate shown is the rate at October
31, 1998 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> 7
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
SHORT U.S. GOVERNMENT SECURITIES PORTFOLIO
STATEMENT OF NET ASSETS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIXED RATE MORTGAGE-RELATED SECURITIES............. 21.6%
Collateralized Mortgage Obligations
Freddie Mac
5.10% 04/15/17 $ 5,214 $ 5,189,440
5.00% 04/25/19 4,000 3,916,875
------------
9,106,315
Pass Throughs
Freddie Mac Gold
5.50% 05/01/03 5,635 5,651,019
6.00% 04/01/05 4,908 4,946,007
6.00% 09/01/13 4,911 4,932,908
------------
15,529,934
------------
TOTAL FIXED RATE MORTGAGE-RELATED SECURITIES
(Cost $24,409,006) 24,636,249
U.S. TREASURY OBLIGATIONS.......................... 64.5%
U.S. Treasury Notes
7.125% 09/30/99 15,000 15,353,906
7.750% 11/30/99 15,000 15,525,000
6.375% 05/15/00 6,000 6,185,625
5.500% 05/31/00 5,000 5,093,750
6.125% 07/31/00 5,000 5,157,031
6.000% 08/15/00 6,000 6,180,000
6.500% 08/31/01 8,000 8,455,000
6.625% 04/30/02 6,000 6,428,438
6.500% 05/31/02 5,000 5,346,094
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $71,250,549) 73,724,844
AGENCY OBLIGATIONS................................. 11.6%
Fannie Mae
5.75% 04/15/03 3,000 3,115,781
Freddie Mac -- discount notes
5.42% 11/02/98 7,000 6,998,946
Freddie Mac
5.75% 07/15/03 3,000 3,114,844
------------
(Cost $13,120,596) 13,229,571
- ----------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
2
<PAGE> 8
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
SHORT U.S. GOVERNMENT SECURITIES PORTFOLIO (CONTINUED)
STATEMENT OF NET ASSETS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENT............................... 1.4%
Lanston (Aubrey G.) & Co., Inc.
5.35% (Agreement dated 10/30/98, to be
repurchased at $1,576,703 on 11/02/98;
collateralized by $1,522,000 U.S. Treasury
Notes, 6.25%, due 05/31/00. The market value
of the collateral is $1,605,783.)
(Cost $1,576,000) 11/02/98 $1,576 $ 1,576,000
------------
TOTAL INVESTMENTS IN SECURITIES.................... 99.1%
(Cost $110,356,151)* 113,166,664
OTHER ASSETS IN EXCESS OF LIABILITIES.............. 0.9% 1,073,814
------------
Net Assets applicable to 10,711,884 Shares of
Common Stock issued and outstanding.............. 100.0% $114,240,478
------------
------------
Net Asset Value, offering and redemption price per
share ($114,240,478 / 10,711,884) $10.66
-------
-------
</TABLE>
- --------------------------------------------------------------------------------
* Aggregate cost for Federal income tax purposes is $110,358,334. At October 31,
1998, the net unrealized appreciation for tax purposes for all securities of
$2,808,330 consists of gross unrealized appreciation of $2,817,200 and gross
unrealized depreciation of ($8,870).
See accompanying notes to financial statements.
3
<PAGE> 9
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO
STATEMENT OF NET ASSETS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ADJUSTABLE RATE MORTGAGE-
RELATED SECURITIES*................................ 72.2%
Treasury Based ARMS.................................. 39.2%
Fannie Mae
7.64% 11/01/27 $33,455 $ 33,852,162
6.25% 07/01/28 7,190 7,255,238
7.58% 10/01/28 34,763 35,295,154
7.52% 10/01/28 36,015 36,509,963
Freddie Mac
7.38% 05/01/23 9,041 9,196,001
7.53% 10/01/24 23,211 23,500,895
7.56% 03/01/25 10,494 10,638,407
6.18% 03/15/25 55,526 55,664,380
7.61% 03/01/27 31,106 31,504,209
Chase 1990-EA1
7.13% 11/25/20 8,816 8,816,423
Citicorp 1992-18 CL A-1
7.06% 10/25/22 30,701 31,066,017
CMC Securities Corp. 1993-2H A1
7.38% 09/25/23 13,015 13,079,612
Fund America 1993A CL A-1
7.41% 06/25/23 13,260 13,429,644
Housing Securities, Inc. 1992 SL-1 CL A-1
7.89% 05/25/16 20,164 20,819,575
Resolution Trust Corp. Series 1995-2 A-3
6.79% 05/25/29 20,385 20,442,431
------------
(Cost $350,529,236) 351,070,111
Certificates of Deposit Based ARMS................... 5.0%
Fannie Mae
7.08% 01/01/22 7,334 7,443,551
6.99% 10/01/22 7,240 7,349,019
7.08% 12/01/22 8,778 8,909,834
7.42% 02/01/23 4,959 5,051,769
7.04% 09/01/23 7,110 7,217,006
Sears Mortgage 1992-16
7.37% 10/25/22 8,931 8,955,923
------------
(Cost $44,624,064) 44,927,102
- -----------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
4
<PAGE> 10
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO (CONTINUED)
STATEMENT OF NET ASSETS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
London Interbank Offering Rate (LIBOR)
Based ARMS......................................... 18.8%
Fannie Mae
6.08% 11/25/23 $25,315 $ 25,378,043
5.89% 09/25/28 15,372 15,415,483
Freddie Mac
5.81% 12/15/23 18,364 18,271,777
7.70% 02/01/26 14,430 14,655,143
7.59% 05/01/26 9,517 9,654,010
Donaldson, Lufkin, Jenrette Acceptance Corp. 1992-6
7.22% 07/25/22 28,592 28,976,156
Donaldson, Lufkin, Jenrette Acceptance Corp. 1992-9
7.21% 10/25/22 26,673 26,972,867
Donaldson, Lufkin, Jenrette Acceptance Corp. 1994-5
7.95% 04/25/24 3,498 3,532,864
Morserv Inc. 1996-2 1A1
6.58% 11/25/26 21,758 21,825,551
Residential Funding Mortgage Securities 1996-S23
6.21% 11/25/26 3,823 3,824,355
------------
(Cost $168,019,328) 168,506,249
Cost of Funds Index Based ARMS....................... 9.2%
Fannie Mae
5.88% 02/25/08 12,980 12,898,761
5.78% 06/25/12 4,000 3,963,750
5.71% 08/25/20 5,184 5,161,580
6.14% 08/01/29 23,741 23,971,356
6.14% 05/01/36 28,835 29,114,597
Freddie Mac
5.81% 02/15/24 7,236 7,204,812
------------
(Cost $81,682,461) 82,314,856
------------
TOTAL ADJUSTABLE RATE
MORTGAGE-RELATED SECURITIES
(Cost $644,855,089) 646,818,318
- -----------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
5
<PAGE> 11
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO (CONTINUED)
STATEMENT OF NET ASSETS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIXED RATE MORTGAGE-
RELATED SECURITIES................................. 19.9%
Collateralized Mortgage Obligations
Fannie Mae
5.75% 07/25/05 $14,593 $ 14,586,472
5.75% 06/25/06 6,784 6,785,778
6.00% 12/25/15 9,598 9,611,811
Freddie Mac
6.50% 01/15/04 17,300 17,345,953
6.25% 08/17/12 9,058 9,061,213
6.25% 02/15/13 14,940 14,944,601
6.30% 06/25/13 18,760 18,765,714
ABN Amro Mortgage Corp. 1998-1 A3
7.00% 04/25/28 11,208 11,218,954
CMC Securities Corp. 1993-E S5
6.00% 11/25/08 13,372 13,386,804
Prudential Home Mortgage Services 1996-4
6.50% 04/25/26 11,774 11,755,701
Prudential Home Mortgage Services 1996-6
6.00% 05/25/26 7,752 7,749,659
Pass Throughs
Freddie Mac
7.00% 03/01/12 7,868 8,027,901
6.00% 08/01/13 9,905 9,948,127
6.00% 09/01/13 12,821 12,877,591
8.00% 06/01/14 3,788 3,837,536
9.25% 01/01/17 4,930 5,253,687
10.50% 12/01/20 2,918 3,188,085
------------
TOTAL FIXED RATE MORTGAGE-
RELATED SECURITIES
(Cost $177,068,961) 178,345,587
- -----------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
6
<PAGE> 12
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO (CONTINUED)
STATEMENT OF NET ASSETS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AGENCY OBLIGATIONS................................... 6.2%
Freddie Mac -- discount notes
5.42% 11/02/98 $45,000 $ 44,993,225
Freddie Mac
5.75% 07/15/03 10,000 10,382,812
------------
(Cost $55,129,879) 55,376,037
REPURCHASE AGREEMENT................................. 1.1%
Lanston (Aubrey G. ) & Co., Inc.
5.35% (Agreement dated 10/30/98, to be
repurchased at $9,890,408 on 11/02/98;
collateralized by $9,252,000 U.S. Treasury
Notes, 6.25%, due 02/15/03. The market value of
the collateral is $10,048,225.)
(Cost $9,886,000) 11/02/98 9,886 9,886,000
------------
TOTAL INVESTMENTS IN SECURITIES...................... 99.4%
(Cost $886,939,929)** 890,425,942
OTHER ASSETS IN EXCESS OF LIABILITIES................ 0.6% 5,123,783
------------
Net Assets applicable to 90,393,447 Shares of Common
Stock issued and outstanding....................... 100.0% $895,549,725
------------
------------
Net Asset Value, offering and redemption price per
share ($895,549,725 / 90,393,447) $9.91
------
------
- -----------------------------------------------------------------------------------------------------
</TABLE>
* The interest rates shown are the rates at October 31, 1998.
** Aggregate cost for Federal income tax purposes is identical. At October 31,
1998, the net unrealized appreciation for tax purposes for all securities of
$3,486,013 consists of gross unrealized appreciation of $3,649,461 and gross
unrealized depreciation of ($163,448).
See accompanying notes to financial statements.
7
<PAGE> 13
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
INTERMEDIATE MORTGAGE SECURITIES PORTFOLIO
STATEMENT OF NET ASSETS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIXED RATE MORTGAGE-RELATED
SECURITIES......................................... 83.8%
Collateralized Mortgage Obligations
Freddie Mac
5.00% 04/25/19 $ 4,000 $ 3,916,875
ABN Amro Mortgage Corp. 1998-1 A3
7.00% 04/25/28 2,989 2,991,721
-----------
6,908,596
Pass Throughs
Fannie Mae
6.50% 05/01/08 7,188 7,294,603
7.00% 04/01/12 2,178 2,211,174
-----------
9,505,777
Freddie Mac Gold
6.00%, due 04/01/05 4,864 4,901,740
7.50%, due 01/01/10 to 07/01/11 19,058 19,570,218
6.50%, due 02/01/12 to 10/01/12 23,580 23,926,165
6.00%, due 02/01/13 to 09/01/13 18,385 18,465,774
-----------
66,863,897
-----------
TOTAL FIXED RATE MORTGAGE-
RELATED SECURITIES
(Cost $81,441,763) 83,278,270
U.S. TREASURY OBLIGATIONS............................ 3.2%
U.S. Treasury Notes
5.375% 06/30/03 2,000 2,090,000
6.625% 05/15/07 1,000 1,136,406
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $3,018,731) 3,226,406
AGENCY OBLIGATIONS................................... 11.1%
Fannie Mae
5.75% 04/15/03 1,000 1,038,594
Freddie Mac
5.75% 04/15/08 1,000 1,038,281
Freddie Mac -- discount notes
5.42% 11/02/98 9,000 8,998,645
-----------
TOTAL AGENCY OBLIGATIONS
(Cost $11,063,929) 11,075,520
- ----------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 14
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
INTERMEDIATE MORTGAGE SECURITIES PORTFOLIO (CONTINUED)
STATEMENT OF NET ASSETS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENT.................................. 1.8%
Lanston (Aubrey G.) & Co., Inc.
5.35% (Agreement dated 10/30/98, to be
repurchased at $1,807,806 on 11/02/98;
collateralized by $1,727,000 U.S. Treasury Notes,
7.750%, due 11/30/99. The market value of the
collateral is $1,842,624.)
(Cost $1,807,000) 11/02/98 $1,807 $ 1,807,000
-----------
TOTAL INVESTMENTS IN SECURITIES....................... 99.9%
(Cost $97,331,423)* 99,387,196
OTHER ASSETS IN EXCESS OF LIABILITIES................. 0.1% 51,230
-----------
Net Assets applicable to 10,292,181 Shares of
Common Stock issued and outstanding................. 100.0% $99,438,426
===========
Net Asset Value, offering and redemption
price per share ($99,438,426 / 10,292,181) $9.66
===========
</TABLE>
- --------------------------------------------------------------------------------
* Aggregate cost for Federal income tax purposes is identical. At October 31,
1998, the net unrealized appreciation for tax purposes for all securities of
$2,055,773 consists of gross unrealized appreciation of $2,066,228 and gross
unrealized depreciation of ($10,455).
See accompanying notes to financial statements.
9
<PAGE> 15
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
U.S. GOVERNMENT MORTGAGE SECURITIES PORTFOLIO
STATEMENT OF NET ASSETS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FIXED RATE MORTGAGE-RELATED SECURITIES.............. 77.8%
Collateralized Mortgage Obligations
Freddie Mac
6.00% 03/01/13 $ 4,780 $ 4,801,140
6.00% 04/01/13 4,848 4,869,272
6.00% 08/01/13 3,931 3,948,429
5.50% 10/01/13 2,020 1,996,644
-----------
15,615,485
Government National Mortgage Association
9.00%, due 11/15/04 to 10/15/21 3,841 4,094,195
10.00% 03/15/19 343 370,259
7.50% 02/15/24 11,306 11,652,472
8.50% 06/15/24 1,433 1,514,487
7.00% 04/15/27 14,244 14,573,164
7.50% 06/15/27 3,734 3,848,376
6.00% 04/15/28 4,939 4,894,293
6.00% 06/15/28 2,967 2,939,938
-----------
43,887,184
CMC Securities Corp. 1993-E S5
6.00% 11/25/08 2,865 2,868,601
-----------
TOTAL FIXED RATE MORTGAGE-RELATED SECURITIES
(Cost $59,914,382) 62,371,270
U.S. TREASURY OBLIGATIONS........................... 5.3%
U.S. Treasury Notes
6.25% 08/31/02 2,000 2,127,812
5.50% 05/31/03 2,000 2,095,313
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $3,998,209) 4,223,125
AGENCY OBLIGATIONS.................................. 15.1%
Fannie Mae
5.75% 04/15/03 2,000 2,077,187
Freddie Mac -- discount notes
5.42% 11/02/98 10,000 9,998,494
-----------
TOTAL AGENCY OBLIGATIONS
(Cost $12,033,368) 12,075,681
- ----------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
10
<PAGE> 16
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
U.S. GOVERNMENT MORTGAGE SECURITIES PORTFOLIO (CONTINUED)
STATEMENT OF NET ASSETS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE
OF NET PAR
ASSETS MATURITY (000) VALUE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENT................................ 1.8%
Lanston (Aubrey G.) & Co., Inc.
5.35% (Agreement dated 10/30/98, to be
repurchased at $1,492,665 on 11/02/98;
collateralized by $1,478,000 U.S. Treasury
Notes, 6.00%, due 06/30/99. The market value of
the collateral is $1,522,199.)
(Cost $1,492,000) 11/02/98 $ 1,492 $ 1,492,000
-----------
TOTAL INVESTMENTS IN SECURITIES..................... 100.0%
(Cost $77,437,959)* 80,162,076
OTHER ASSETS IN EXCESS OF LIABILITIES............... 0.0% 11,600
-----------
Net Assets applicable to 7,470,078 Shares of Common
Stock issued and outstanding...................... 100.0% $80,173,676
-----------
-----------
Net Asset Value, offering and redemption price per
share ($80,173,676 / 7,470,078) $10.73
-------
-------
</TABLE>
- --------------------------------------------------------------------------------
* Aggregate cost for Federal income tax purposes is identical. At October 31,
1998, the net unrealized appreciation for tax purposes for all securities of
$2,724,117 consists of gross unrealized appreciation of $2,732,987 and gross
unrealized depreciation of ($8,870).
See accompanying notes to financial statements.
11
<PAGE> 17
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<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................ $3,216,498 $6,952,312 $52,278,222 $6,029,212 $4,840,484
---------- ---------- ----------- ---------- ----------
Operating expenses:
Investment advisory fee...... 88,200 274,793 3,800,480 317,060 172,762
Distribution fee............. 88,200 164,876 2,111,378 135,883 103,657
Administration fee........... 20,308 38,389 293,520 31,313 24,145
Custodian fee................ 14,780 27,462 171,581 23,167 36,087
Directors' fees.............. 4,049 7,940 57,591 4,842 6,642
Transfer agent fee........... 4,649 5,683 24,865 2,599 1,927
Legal........................ 4,347 7,660 57,276 4,857 6,086
Audit........................ 4,303 8,879 57,747 6,343 5,096
Other........................ 6,571 10,543 63,537 8,280 7,656
---------- ---------- ----------- ---------- ----------
235,407 546,225 6,637,975 534,344 364,058
Fee waivers.................. (88,200) 0 (2,533,653) (90,589) 0
---------- ---------- ----------- ---------- ----------
Total expenses............ 147,207 546,225 4,104,322 443,755 364,058
---------- ---------- ----------- ---------- ----------
Net investment income..... 3,069,291 6,406,087 48,173,900 5,585,457 4,476,426
---------- ---------- ----------- ---------- ----------
REALIZED AND UNREALIZED GAINS
(LOSSES) FROM INVESTMENT
ACTIVITIES:
Net realized gain/(loss)....... 3,155 410,614 (1,301,927) 545,001 439,413
Net change in unrealized
appreciation/depreciation of
investments.................. 0 859,220 (5,972,441) 97,888 98,398
---------- ---------- ----------- ---------- ----------
Net gain (loss) on
investments............. 3,155 1,269,834 (7,274,368) 642,889 537,811
---------- ---------- ----------- ---------- ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS................... $3,072,446 $7,675,921 $40,899,532 $6,228,346 $5,014,237
========== ========== =========== ========== ==========
- ----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
12
<PAGE> 18
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED OCTOBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
MONEY MARKET SHORT U.S. GOVERNMENT
PORTFOLIO SECURITIES PORTFOLIO
------------------------------------------------------------
1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income.............. $ 3,069,291 $ 2,846,374 $ 6,406,087 $ 8,100,472
Net realized gain/(loss)........... 3,155 -0- 410,614 278,080
Net change in unrealized
appreciation/depreciation of
investments...................... -0- -0- 859,220 (885,159)
------------- ------------- ------------ ------------
Net increase in net assets
resulting from operations..... 3,072,446 2,846,374 7,675,921 7,493,393
------------- ------------- ------------ ------------
Dividends paid to stockholders:
From net investment income......... (3,069,291) (2,846,374) (6,406,087) (8,100,472)
In excess of net investment
income........................... -0- -0- -0- -0-
------------- ------------- ------------ ------------
Total dividends paid to
stockholders.................. (3,069,291) (2,846,374) (6,406,087) (8,100,472)
------------- ------------- ------------ ------------
Capital share transactions:
Proceeds from sale of shares....... 579,105,309 486,765,190 35,353,289 19,652,214
Shares issued to stockholders in
reinvestment of dividends........ 2,507,356 2,693,813 4,240,979 5,022,539
Cost of shares repurchased......... (571,275,124) (510,838,655) (38,927,316) (88,655,596)
------------- ------------- ------------ ------------
Net increase (decrease) in net
assets from capital share
transactions.................. 10,337,541 (21,379,652) 666,952 (63,980,843)
------------- ------------- ------------ ------------
Total increase (decrease) in net
assets........................ 10,340,696 (21,379,652) 1,936,786 (64,587,922)
Net Assets:
Beginning of year..................... 48,104,070 69,483,722 112,303,692 176,891,614
------------- ------------- ------------ ------------
End of year........................... $ 58,444,766 $ 48,104,070 $114,240,478 $112,303,692
============= ============= ============ ============
- ------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
13
<PAGE> 19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE
ADJUSTABLE RATE MORTGAGE SECURITIES U.S. GOVERNMENT
MORTGAGE (ARM) PORTFOLIO PORTFOLIO MORTGAGE SECURITIES PORTFOLIO
- -----------------------------------------------------------------------------------------------
1998 1997 1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 48,173,900 $ 43,701,797 $ 5,585,457 $ 5,583,888 $ 4,476,426 $ 3,842,799
(1,301,927) 184,116 545,001 595,694 439,413 (38,770)
(5,972,441) 2,696,420 97,888 172,901 98,398 853,710
------------- ------------- ----------- ------------ ------------ -----------
40,899,532 46,582,333 6,228,346 6,352,483 5,014,237 4,657,739
------------- ------------- ----------- ------------ ------------ -----------
(48,173,900) (43,701,797) (5,585,457) (5,583,888) (4,476,426) (3,842,799)
-0- -0- (297,387) -0- (136,992) -0-
------------- ------------- ----------- ------------ ------------ -----------
(48,173,900) (43,701,797) (5,882,844) (5,583,888) (4,613,418) (3,842,799)
------------- ------------- ----------- ------------ ------------ -----------
442,702,401 369,577,662 26,122,562 3,564,826 38,684,773 1,000,000
28,898,086 22,808,370 2,835,707 2,421,791 2,328,362 1,756,929
(320,110,598) (439,948,534) (7,847,475) (21,062,258) (14,812,400) (7,266,534)
------------- ------------- ----------- ------------ ------------ -----------
151,489,889 (47,562,502) 21,110,794 (15,075,641) 26,200,735 (4,509,605)
------------- ------------- ----------- ------------ ------------ -----------
144,215,521 (44,681,966) 21,456,296 (14,307,046) 26,601,554 (3,694,665)
751,334,204 796,016,170 77,982,130 92,289,176 53,572,122 57,266,787
------------- ------------- ----------- ------------ ------------ -----------
$ 895,549,725 $ 751,334,204 $99,438,426 $ 77,982,130 $ 80,173,676 $53,572,122
============= ============= =========== ============ ============ ===========
- -----------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
14
<PAGE> 20
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------------------------------------
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------
<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................. .0523 .0513 .0516 .0547 .0346
Net realized and unrealized gain
(loss) on investments.............. -0- -0- -0- -0- -0-
------- ------- ------- ------- -------
Total from investment
operations.................... .0523 .0513 .0516 .0547 .0346
------- ------- ------- ------- -------
Less distributions:
- --------------------
Dividends paid to stockholders from
net investment income.............. (.0523) (.0513) (.0516) (.0547) (.0346)
------- ------- ------- ------- -------
Net asset value, end of year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total return............................ 5.35% 5.25% 5.29% 5.60% 3.51%
Ratios/Supplemental data:
- ------------------------------
Net assets, end of year (in 000's).... $58,445 $48,104 $69,484 $36,869 $82,969
Ratio of expenses to average net
assets............................. 0.25%(1) 0.26%(1) 0.24%(1) 0.24%(1) 0.40%(1)
Ratio of net investment income to
average net assets................. 5.22% 5.14% 5.15% 5.40% 3.34%
</TABLE>
- --------------------------------------------------------------------------------
(1) Without fee waivers for the Money Market Portfolio for the years ended
October 31, 1998, 1997, 1996, 1995, and 1994, the ratios of expenses to
average net assets would have been .40%, .41%, .39%, .39%, and .42%,
respectively.
See accompanying notes to financial statements.
15
<PAGE> 21
- --------------------------------------------------------------------------------
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,
----------------------------------------------------
1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......... $ 10.55 $ 10.56 $ 10.68 $ 10.45 $ 10.89
-------- -------- -------- -------- --------
Income from investment operations:
- ------------------------------------------
Net investment income..................... .6144 .6273 .6370 .6746 .5396
Net realized and unrealized gain (loss) on
investments.............................. .1100 (.0100) (.1200) .2300 (.4400)
-------- -------- -------- -------- --------
Total from investment operations..... .7244 .6173 .5170 .9046 .0996
-------- -------- -------- -------- --------
Less distributions:
- --------------------
Dividends paid to stockholders from net
investment income...................... (.6144) (.6273) (.6370) (.6746) (.5396)
-------- -------- -------- -------- --------
Net asset value, end of year................ $ 10.66 $ 10.55 $ 10.56 $ 10.68 $ 10.45
======== ======== ======== ======== ========
Total return................................ 7.08% 6.04% 4.99% 8.94% 0.95%
Ratios/Supplemental data:
- ------------------------------
Net assets, end of year (in 000's)........ $114,240 $112,304 $176,892 $167,343 $179,740
Ratio of expenses to average net assets... 0.50% 0.50% 0.48% 0.49% 0.47%
Ratio of net investment income to average
net assets............................. 5.83% 5.97% 6.02% 6.42% 5.04%
Portfolio turnover rate................... 84% 75% 69% 112% 195%
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
16
<PAGE> 22
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
ADJUSTABLE RATE MORTGAGE (ARM) PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Net asset value, beginning of year.......... $ 9.99 $ 9.95 $ 9.94 $ 9.78 $ 10.02
-------- -------- -------- -------- ----------
Income from investment operations:
- ------------------------------------------
Net investment income..................... .5676 .6036 .5958 .6035 .4396
Net realized and unrealized gain (loss) on
investments............................ (.0800) .0400 .0100 .1600 (.2400)
-------- -------- -------- -------- ----------
Total from investment operations..... .4876 .6436 .6058 .7635 .1996
-------- -------- -------- -------- ----------
Less distributions:
- --------------------
Dividends paid to stockholders from net
investment income...................... (.5676) (.6036) (.5958) (.6035) (.4396)
-------- -------- -------- -------- ----------
Net asset value, end of year................ $ 9.91 $ 9.99 $ 9.95 $ 9.94 $ 9.78
======== ======== ======== ======== ==========
Total return................................ 5.00% 6.65% 6.27% 8.02% 2.04%
Ratios/Supplemental data:
- ------------------------------
Net assets, end of year (in 000's)........ $895,550 $751,334 $796,016 $891,538 $1,045,914
Ratio of expenses to average net assets... 0.49%(1) 0.49%(1) 0.47%(1) 0.48%(1) 0.47%(1)
Ratio of net investment income to average
net assets............................. 5.70% 6.07% 6.01% 6.12% 4.40%
Portfolio turnover rate................... 53% 74% 60% 68% 65%
</TABLE>
- --------------------------------------------------------------------------------
(1) Without fee waivers for the Adjustable Rate Mortgage (ARM) Portfolio for the
years ended October 31, 1998, 1997, 1996, 1995, and 1994, the ratios of
expenses to average net assets would have been .79%, .79%, .77%, .78%, and
.76%, respectively.
See accompanying notes to financial statements.
17
<PAGE> 23
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
INTERMEDIATE MORTGAGE SECURITIES PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------------------------------
1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year............. $ 9.62 $ 9.52 $ 9.68 $ 9.34 $ 10.00
------- ------- ------- -------- --------
Income from investment operations:
- ------------------------------------------
Net investment income........................ .5932 .6245 .6101 .6211 .5407
Net realized and unrealized gain (loss) on
investments............................... .0761 .1000 (.1600) .3400 (.6600)
------- ------- ------- -------- --------
Total from investment operations........ .6693 .7245 .4501 .9611 (.1193)
------- ------- ------- -------- --------
Less distributions:
- --------------------
Dividends paid to stockholders:
From net investment income.................. (.5932) (.6245) (.6101) (.6211) (.5407)
In excess of net investment income.......... (.0361) -0- -0- -0- -0-
------- ------- ------- -------- --------
Total distributions to stockholders..... (.6293) (.6245) (.6101) (.6211) (.5407)
------- ------- ------- -------- --------
Net asset value, end of year................... $ 9.66 $ 9.62 $ 9.52 $ 9.68 $ 9.34
======= ======= ======= ======== ========
Total return................................... 7.18% 7.90% 4.82% 10.63% (1.18%)
Ratios/Supplemental data:
- ------------------------------
Net assets, end of year (in 000's)........... $99,438 $77,982 $92,289 $187,087 $213,427
Ratio of expenses to average net assets...... 0.49%(1) 0.49%(1) 0.44%(1) 0.38%(1) 0.39%(1)
Ratio of net investment income to average
net assets.................................. 6.17% 6.58% 6.38% 6.55% 5.61%
Portfolio turnover rate...................... 69% 120% 133% 133% 358%
</TABLE>
- --------------------------------------------------------------------------------
(1) Without fee waivers for the Intermediate Mortgage Securities Portfolio for
the years ended October 31, 1998, 1997, 1996, 1995, and 1994, the ratios of
expenses to average net assets would have been .59%, .59%, .58%, .58%, and
.59%, respectively.
See accompanying notes to financial statements.
18
<PAGE> 24
- --------------------------------------------------------------------------------
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,
-----------------------------------------------
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year................. $ 10.67 $ 10.51 $ 10.68 $ 10.23 $ 11.28
------- ------- ------- ------- -------
Income from investment operations:
- ------------------------------------------
Net investment income............................ .6947 .7344 .7479 .7703 .7296
Net realized and unrealized gain (loss) on
investments..................................... .0877 .1600 (.1700) .4500 (.9300)
------- ------- ------- ------- -------
Total from investment operations.............. .7824 .8944 .5779 1.2203 (.2004)
------- ------- ------- ------- -------
Less distributions:
- --------------------
Dividends paid to stockholders:
From net investment income...................... (.6947) (.7344) (.7479) (.7703) (.7296)
In excess of net investment income.............. (.0277) -0- -0- -0- -0-
From net realized gains......................... -0- -0- -0- -0- (.1200)
------- ------- ------- ------- -------
Total distributions to stockholders........... (.7224) (.7344) (.7479) (.7703) (.8496)
------- ------- ------- ------- -------
Net asset value, end of year....................... $ 10.73 $ 10.67 $ 10.51 $ 10.68 $ 10.23
======= ======= ======= ======= =======
Total return....................................... 7.58% 8.87% 5.63% 12.37% (1.82%)
Ratios/Supplemental data:
- ------------------------------
Net assets, end of year (in 000's)............... $80,174 $53,572 $57,267 $62,258 $60,613
Ratio of expenses to average net assets.......... 0.53% 0.53% 0.52% 0.53% 0.51%
Ratio of net investment income to average net
assets.......................................... 6.48% 7.01% 7.10% 7.39% 6.81%
Portfolio turnover rate.......................... 93% 135% 165% 177% 376%
- ----------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
19
<PAGE> 25
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
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 SHAREHOLDERS
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, interest income
is recorded on the accrual basis, and the cost of investments sold is determined
by use of the specific identification method for both financial reporting and
income tax purposes.
20
<PAGE> 26
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
B. Effective December 8, 1997, Shay Assets Management, Inc. (Adviser) (SAMI)
became the investment adviser to the Fund. The Adviser is a wholly-owned
subsidiary of Shay Investment Services, Inc. (SISI), which is controlled by
Rodger D. Shay, the Chairman of the Board of Directors of the Fund. Prior to
December 8, 1997, the investment adviser was Shay Assets Management Co. (SAMC),
a general partnership that consisted of two general partners, SAMI and ACB
Assets Management, Inc. (ACBAM). ACBAM is an indirect wholly-owned subsidiary of
America's Community Bankers.
On December 8, 1997, SAMI purchased ACBAM's 50% interest in SAMC; SAMC was
dissolved and its business (including investment advisory functions to the
Fund), assets, and liabilities were transferred to SAMI. In anticipation of this
transaction, the shareholders of the Fund approved a new investment advisory
agreement between the Fund and SAMI on October 31, 1997. The terms of the new
investment advisory agreement, including the duties, obligations, and
compensation of the investment adviser, are substantially the same as those in
the prior investment advisory agreement between the Fund and SAMC.
SAMI and SISI paid all of the costs incurred by the Fund in connection with
the above transaction, including preparation and distribution of proxy materials
to shareholders, meetings of the Fund's shareholders and Board of Directors,
legal fees, and other fees and expenses.
As compensation for investment advisory 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, 1998. The waiver amounted to $88,200.
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, 1998. The waiver amounted to $1,689,102.
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,
1998. The waiver amounted to $90,589.
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%.
Effective December 8, 1997, Shay Financial Services, Inc. (Distributor) (SFSI)
became the distributor to the Fund. The Distributor is a wholly-owned subsidiary
of SISI, which is controlled by Rodger D. Shay, the Chairman of the Board of
Directors of the Fund. Prior to December 8, 1997, the distributor was Shay
Financial Services Co. (SFSC), a general partnership that consisted of two
general partners, SFSI and ACB Securities, Inc. (ACBS). ACBS is an indirect
wholly-owned subsidiary of America's Community Bankers.
21
<PAGE> 27
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
On December 8, 1997, SFSI purchased ACBS' 50% interest in SFSC; SFSC was
dissolved and its business (including distribution functions to the Fund),
assets, and liabilities were transferred to SFSI.
As compensation for distribution services, the Fund pays a distribution 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, 1998. The waiver amounted to $844,551.
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.
- --------------------------------------------------------------------------------
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,
1998, the number of stockholders holding 5% or more of a Portfolio were as
follows: nine stockholders held approximately 60% of the outstanding shares of
the Money Market Portfolio, three stockholders held approximately 21% of the
outstanding shares of the Short U.S. Government Securities Portfolio, one
stockholder held approximately 6% of the outstanding shares of the Adjustable
Rate Mortgage (ARM) Portfolio, seven stockholders held approximately 62% of the
outstanding shares of the Intermediate Mortgage Securities Portfolio, and seven
stockholders held approximately 69% of the outstanding shares of the U.S.
Government Mortgage Securities Portfolio. As of October 31, 1998, one of the
directors had, through the institutions he serves as a director, shared voting
power over approximately one percent of the shares of the Money Market
Portfolio. Transactions in shares of the Fund for the years ended October 31,
1998 and 1997 were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
MONEY MARKET SHORT U.S. GOVERNMENT
PORTFOLIO SECURITIES PORTFOLIO
------------------------------------------------------
1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sale of shares............................. 579,105,309 486,765,190 3,349,648 1,867,392
Shares issued to stockholders in
reinvestment of dividends................ 2,507,356 2,693,813 401,904 478,395
Shares repurchased......................... (571,275,124) (510,838,655) (3,688,922) (8,454,686)
------------ ------------ ---------- ----------
Net increase (decrease).................... 10,337,541 (21,379,652) 62,630 (6,108,899)
Shares outstanding:
Beginning of year........................ 48,104,070 69,483,722 10,649,254 16,758,153
------------ ------------ ---------- ----------
End of year.............................. 58,441,611 48,104,070 10,711,884 10,649,254
============ ============ ========== ==========
- ---------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 28
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
ADJUSTABLE RATE MORTGAGE INTERMEDIATE MORTGAGE
(ARM) PORTFOLIO SECURITIES PORTFOLIO
------------------------------------------------------
1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sale of shares............................. 44,393,930 37,029,209 2,703,534 374,952
Shares issued to stockholders in
reinvestment of dividends................ 2,901,025 2,288,259 294,785 255,226
Shares repurchased......................... (32,108,808) (44,121,340) (811,362) (2,216,650)
----------- ----------- ---------- ----------
Net increase (decrease).................... 15,186,147 (4,803,872) 2,186,957 (1,586,472)
Shares outstanding:
Beginning of year........................ 75,207,300 80,011,172 8,105,224 9,691,696
----------- ----------- ---------- ----------
End of year.............................. 90,393,447 75,207,300 10,292,181 8,105,224
=========== =========== ========== ==========
- ---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT MORTGAGE
SECURITIES PORTFOLIO
------------------------
1998 1997
- --------------------------------------------------------------------------------------
<S> <C> <C>
Sale of shares.............................................. 3,609,097 94,340
Shares issued to stockholders in reinvestment of
dividends................................................. 217,980 167,732
Shares repurchased.......................................... (1,377,850) (690,534)
---------- ---------
Net increase (decrease)..................................... 2,449,227 (428,462)
Shares outstanding:
Beginning of year......................................... 5,020,851 5,449,313
---------- ---------
End of year............................................... 7,470,078 5,020,851
========== =========
</TABLE>
- --------------------------------------------------------------------------------
D. At October 31, 1998, 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......... $58,444,005 $118,480,506 $919,077,405 $111,138,294 $81,142,415
Accumulated net realized
gains (losses)........ 761 (7,050,541) (27,013,693) (13,755,641) (3,692,856)
Net unrealized
appreciation of
investments........... 0 2,810,513 3,486,013 2,055,773 2,724,117
----------- ------------ ------------ ------------ -----------
$58,444,766 $114,240,478 $895,549,725 $ 99,438,426 $80,173,676
=========== ============ ============ ============ ===========
- --------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE> 29
- --------------------------------------------------------------------------------
ASSET MANAGEMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
E. For tax purposes at October 31, 1998, the Short U.S. Government Securities
Portfolio had a capital loss carryforward of $7,048,358, of which $4,615,249
expires in 2002, $466,298 expires in 2003, and $1,966,811 expires in 2004. The
Adjustable Rate Mortgage (ARM) Portfolio had a capital loss carryforward of
$23,410,377, 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, $819,918 expires in
2004, and $801,031 expires in 2006.
The Intermediate Mortgage Securities Portfolio had a capital loss carryforward
of $13,773,110, of which $9,526,290 expires in 2002, $1,932,691 expires in 2003,
and $2,314,129 expires in 2004. The U.S. Government Mortgage Securities
Portfolio had a capital loss carryforward of $3,902,019, of which $3,016,120
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.
- --------------------------------------------------------------------------------
F. For the year ended October 31, 1998, purchases and proceeds from
sales/maturities of securities, other than short-term investments, were as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
SHORT U.S. INTERMEDIATE U.S. GOVERNMENT
GOVERNMENT ADJUSTABLE RATE MORTGAGE MORTGAGE
SECURITIES MORTGAGE SECURITIES SECURITIES
PORTFOLIO (ARM) PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases:
U.S. Government obligations $ 84,998,816 $723,253,415 $ 80,141,361 $93,325,392
Other securities 0 89,458,633 3,817,812 2,992,383
------------ ------------ ------------ -----------
Total purchases $ 84,998,816 $812,712,048 $ 83,959,173 $96,317,775
============ ============ ============ ===========
Sales and maturities:
U.S. Government obligations $ 85,629,295 $389,392,484 $ 57,961,492 $71,852,243
Other securities 0 28,116,677 0 0
------------ ------------ ------------ -----------
Total sales and maturities $ 85,629,295 $417,509,161 $ 57,961,492 $71,852,243
============ ============ ============ ===========
- -----------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE> 30
- --------------------------------------------------------------------------------
To the Stockholders and Directors
of Asset Management Fund, Inc.
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the Money Market, Short U.S. Government Securities, Adjustable Rate Mortgage
(ARM), Intermediate Mortgage Securities, and U.S. Government Mortgage Securities
Portfolios of Asset Management Fund, Inc. (the "Fund") at October 31, 1998, the
results of each of their operations for the year then ended, the changes in each
of their 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, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities owned at October 31, 1998 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
December 4, 1998
<PAGE> 31
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
230 West Monroe Street/Chicago, IL 60606
800-527-3713
1000 Brickell Avenue/Miami, FL 33131
800-327-6190
83 East Avenue/Norwalk, CT 06851
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> 32
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DISTRIBUTOR
Shay Financial Services, Inc.
230 West Monroe Street
Chicago, IL 60606
INVESTMENT ADVISER
Shay Assets Management, Inc.
230 West Monroe Street
Chicago, IL 60606
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
PricewaterhouseCoopers LLP
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 and Chairman
Edward E. Sammons, Jr.
President and Treasurer
Robert T. Podraza
Vice President and Assistant Treasurer
Daniel K. Ellenwood
Secretary
Doris J. Pavel
Assistant Secretary
