United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-03541
Asset Management Fund
(Exact name of registrant as specified in charter)
690 Taylor Road, Suite 210 Gahanna, OH 43230
(Address of principal executive offices) (Zip code)
Foreside Management Services, LLC, 690 Taylor Road, Suite 210 Gahanna, OH 43230
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 247-9780 – Austin Atlantic Funds
(800) 701-9502 – AAMA Funds
Date of fiscal year end: June 30
Date of reporting period: December 31, 2023
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
(a)
AAMA Equity Fund
Ticker: AMFEX
AAMA Income Fund
Ticker: AMFIX
Semi-Annual Report
December 31, 2023
(Unaudited)
AAMA Funds | |
Letter To Shareholders | February 6, 2024 |
Dear Fellow Shareholder
The financial markets over the last two years have been tumultuous. Stocks and bonds experienced extreme price swings as inflation and Federal Reserve (the Fed) policy drove rapidly changing perceptions of values, risks, and economic prospects. Over the two-year period, the CPI rose 8.9% while average hourly earnings rose 7.8%, leaving the average consumer a bit behind in meeting higher living expenses.
The tumult in the securities markets was most pronounced in long-term Treasury bonds, which finished the two-year period with a 29% loss. The “magnificent seven” technology stocks initially lost 45% only to finish with a two-year gain of 14%. Broader market indicators were less volatile with T-Bills returning 6.4%. The Bloomberg Aggregate Bond Index returned -8.1% and the average S&P 500 stock returned 0.5% over the period. Overall, T-Bills provided the best return compared to the group of broad market indices.
The magnificent seven stocks that have provided a significant portion of recent stock market gains include Amazon, Apple, Google, Meta, Microsoft, Nvidia, and Tesla.
The 1960 film, “The Magnificent Seven”, starred five actors with an average age of 34 — Brynner, McQueen, Bronson, Vaughn, and Coburn. All have since passed away. Actors and companies rise and fall over time, and none are invincible.
The economy followed our script of “no recession in 2023”. Our position a year ago was contrary to the consensus of mainstream economists who were calling for a recession starting by mid-year. Most of the traditional indicators that precede a recession have been wrong thus far – some experiencing their first false signal. Today, the traditional indicators are still pointing to a recession, but mainstream economists have now adopted the Federal Reserve narrative of a soft landing with expectations of a reversal of the traditional recession indicators.
While we are not as steadfast as we were a year ago with a “no recession next year” position, the same factors that have supported our constructive view of the U.S. economy remain in place. The labor market is tight, fiscal deficits are stimulative, and monetary/liquidity measures still carry excesses from the last 13 years of easy money policies. If we are correct about the economy, the recently adopted expectation for six rate cuts next year seems overly optimistic.
1
AAMA Funds |
Letter To Shareholders |
The markets seem to have adopted the optimistic view based on assumed intelligence at the Federal Reserve. This is the same “intelligence” that delayed recognition of the inflation problem for a year and remained hawkish until mid-December. Suddenly, we’ve seen an about face. There is room for disappointment if expectations for rate cuts do not materialize. While the rate of inflation has been cooling, firm economic conditions run counter to expectations that the Federal Reserve can claim victory over inflationary forces.
Our core position on monetary policy and the economy is unchanged. If the Federal Reserve is indeed steadfast in their stated goal of 2% targeted inflation, there will be significant collateral damage to the economy and the markets. However, if we do see a “pivot” in Fed policy as has been widely accepted, the real impacts will be determined largely by the size and timing of any cuts.
We invite you to read the Equity and Income Fund Portfolio letters which provide additional details on the positioning of both Funds and our analysis of the equity and fixed income markets. We appreciate your investment in our Funds and encourage you to continue to work with your Financial Advisor in allocating your portfolio to potentially achieve your long-term investment goals and objectives, and dreams.
Sincerely,
Robert D. Baker | Philip A. Voelker |
Co-Portfolio Managers |
Gross domestic product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in specific time period.
AAMA Funds are distributed by Foreside Financial Services, LLC. Advanced Asset Management Advisors, Inc. is the investment adviser to the Funds.
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus. For additional information about the Funds, including fees, expenses, and risks, view our prospectus online at www.aamafunds.com or call 800-701-9502.
Read the prospectus carefully before you invest or send money.
Investing involves risk, including the potential loss of principal.
2
AAMA Equity Fund
Management Discussion of Fund Performance
December 31, 2023 (Unaudited)
The AAMA Equity Fund returned 5.70% for the six months ended December 31, 2023. This may be compared to the S&P 500® Index return of 8.04% and the S&P 500® Equal Weight Index return of 6.39%. The S&P Midcap 400® and SmallCap 600® indices returned 6.98% and 9.45%, respectively.
The difference between the capitalization weighted index and the equal weighted index is continued evidence of the concentration of performance among S&P 500® constituents. In fact, the largest 10 companies (by capitalization) now represent approximately 30% of the market value of the index. This statistic has historically ranged between 17% and 25% with the prior peak of 27% occurring during the technology-led stock market bubble that peaked in 2000. Today’s large technology companies have developed more stable earnings when compared to 23 years ago, yet valuations are stretched across the market leaders.
Broad market valuations remain elevated as the stock market has been supported by optimism for Federal Reserve rate cuts and an economic “soft landing”. Index level operating earnings for the S&P 500® have gained a modest 4% year-over-year for the last six months which represent less than half the rate expected as recently as six months ago. Forecasts are always subject to revisions, but earnings are expected to accelerate in the last half of 2024. Earnings growth expectations vary widely for the different economic sectors of the market. The AAMA Equity Fund continues to maintain a balanced portfolio invested primarily in large cap companies. The Fund’s sector exposures include selected technology companies and targeted positions in the Health Care and Consumer Staples sectors. Both Health Care and Consumer Staples lagged the stock market rally over the last quarter of the year but still represent less volatile price history and earnings flows.
The small and mid-capitalization companies the Fund invests in may be more vulnerable to adverse business or economic events than larger, more established companies. Small and mid-capitalization companies may have limited product lines, markets and management groups.
The S&P 500® Index is an unmanaged index, generally representative of the U.S. Stock Market as a whole.
The S&P MidCap 400® Index measures the performance of 400 mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment.
The S&P SmallCap 600® Index measures the small-cap segment of the U.S. equity market. The Index is designed to track companies that meet specific inclusion criteria to ensure they are liquid and financially viable.
The S&P 500® Equal Weight Index is the equal-weight version of the S&P 500®. It includes the same constituents, but each company is allocated a fixed weight of 0.2% of the Index total.
Indexes are unmanaged, do not reflect fees or expenses and an investor cannot invest directly in an index.
Sectors and allocations are subject to change. Past performance does not guarantee future results.
3
AAMA Equity Fund | ||||||||
COMMON STOCKS — 66.7% | Shares | Fair Value | ||||||
AEROSPACE & DEFENSE - 1.0% | ||||||||
RTX Corporation | 46,696 | $ | 3,929,002 | |||||
BANKING — 1.6% | ||||||||
JPMorgan Chase & Company | 37,400 | 6,361,740 | ||||||
BEVERAGES — 1.1% | ||||||||
PepsiCo, Inc. | 26,400 | 4,483,776 | ||||||
BIOTECH & PHARMA — 5.1% | ||||||||
Amgen, Inc. | 15,000 | 4,320,300 | ||||||
Bristol - Myers Squibb Company | 94,000 | 4,823,140 | ||||||
Johnson & Johnson | 48,000 | 7,523,520 | ||||||
Pfizer, Inc. | 141,500 | 4,073,785 | ||||||
20,740,745 | ||||||||
CONTAINERS & PACKAGING — 0.5% | ||||||||
Ball Corporation | 37,000 | 2,128,240 | ||||||
DIVERSIFIED INDUSTRIALS — 1.9% | ||||||||
Emerson Electric Company | 78,400 | 7,630,672 | ||||||
E-COMMERCE DISCRETIONARY — 2.0% | ||||||||
Amazon.com, Inc. (a) | 54,000 | 8,204,760 | ||||||
ELECTRIC UTILITIES — 0.9% | ||||||||
Constellation Energy Corporation | 10,000 | 1,168,900 | ||||||
Exelon Corporation | 30,000 | 1,077,000 | ||||||
Public Service Enterprise Group, Inc. | 25,000 | 1,528,750 | ||||||
3,774,650 | ||||||||
ENGINEERING & CONSTRUCTION — 0.9% | ||||||||
Quanta Services, Inc. | 16,100 | 3,474,380 | ||||||
FOOD — 0.7% | ||||||||
Conagra Brands, Inc. | 106,000 | 3,037,960 | ||||||
HEALTH CARE FACILITIES & SERVICES — 2.5% | ||||||||
UnitedHealth Group, Inc. | 19,400 | 10,213,518 |
See accompanying notes to financial statements. |
4
AAMA Equity Fund | ||||||||
COMMON STOCKS — 66.7% (Continued) | Shares | Fair Value | ||||||
HOUSEHOLD PRODUCTS — 1.1% | ||||||||
Procter & Gamble Company (The) | 29,400 | $ | 4,308,276 | |||||
INDUSTRIAL SUPPORT SERVICES — 2.5% | ||||||||
Fastenal Company | 30,000 | 1,943,100 | ||||||
Grainger (W.W.), Inc. | 10,100 | 8,369,769 | ||||||
10,312,869 | ||||||||
INTERNET MEDIA & SERVICES — 2.3% | ||||||||
Alphabet, Inc. - Class A (a) | 68,000 | 9,498,920 | ||||||
LEISURE FACILITIES & SERVICES — 1.6% | ||||||||
Starbucks Corporation | 70,000 | 6,720,700 | ||||||
MEDICAL EQUIPMENT & DEVICES — 1.2% | ||||||||
Medtronic plc | 59,100 | 4,868,658 | ||||||
METALS & MINING — 2.6% | ||||||||
Freeport-McMoRan, Inc. | 250,000 | 10,642,500 | ||||||
OIL & GAS PRODUCERS — 3.9% | ||||||||
Chevron Corporation | 46,500 | 6,935,940 | ||||||
Exxon Mobil Corporation | 92,000 | 9,198,160 | ||||||
16,134,100 | ||||||||
RETAIL - CONSUMER STAPLES — 2.6% | ||||||||
Kroger Company (The) | 102,500 | 4,685,275 | ||||||
Walmart, Inc. | 36,600 | 5,769,990 | ||||||
10,455,265 | ||||||||
RETAIL - DISCRETIONARY — 1.4% | ||||||||
Home Depot, Inc. (The) | 17,000 | 5,891,350 | ||||||
SEMICONDUCTORS — 8.9% | ||||||||
Applied Materials, Inc. | 93,800 | 15,202,166 | ||||||
Intel Corporation | 168,300 | 8,457,075 | ||||||
QUALCOMM, Inc. | 50,900 | 7,361,667 | ||||||
Texas Instruments, Inc. | 31,700 | 5,403,582 | ||||||
36,424,490 |
See accompanying notes to financial statements. |
5
AAMA Equity Fund | ||||||||
COMMON STOCKS — 66.7% (Continued) | Shares | Fair Value | ||||||
SOFTWARE — 4.9% | ||||||||
Adobe, Inc. (a) | 13,200 | $ | 7,875,120 | |||||
Microsoft Corporation | 32,500 | 12,221,300 | ||||||
20,096,420 | ||||||||
TECHNOLOGY HARDWARE — 4.8% | ||||||||
Apple, Inc. | 47,200 | 9,087,416 | ||||||
Cisco Systems, Inc. | 131,600 | 6,648,432 | ||||||
Corning, Inc. | 134,800 | 4,104,660 | ||||||
19,840,508 | ||||||||
TECHNOLOGY SERVICES — 3.5% | ||||||||
Mastercard, Inc. - Class A | 11,100 | 4,734,261 | ||||||
Visa, Inc. - Class A | 37,400 | 9,737,090 | ||||||
14,471,351 | ||||||||
TELECOMMUNICATIONS — 4.4% | ||||||||
T-Mobile US, Inc. | 73,815 | 11,834,759 | ||||||
Verizon Communications, Inc. | 168,100 | 6,337,370 | ||||||
18,172,129 | ||||||||
TRANSPORTATION & LOGISTICS — 2.8% | ||||||||
Norfolk Southern Corporation | 14,200 | 3,356,596 | ||||||
Union Pacific Corporation | 19,800 | 4,863,276 | ||||||
United Parcel Service, Inc. - Class B | 20,000 | 3,144,600 | ||||||
11,364,472 | ||||||||
TOTAL COMMON STOCKS (Cost $153,912,503) | $ | 273,181,451 |
| ||||||||
EXCHANGE-TRADED FUNDS — 28.0% | Shares | Fair Value | ||||||
iShares Core S&P 500 ETF | 69,200 | $ | 33,051,996 | |||||
iShares Core S&P U.S. Growth ETF | 119,600 | 12,450,360 | ||||||
Schwab U.S. Large-Cap ETF | 563,400 | 31,775,760 | ||||||
Vanguard S&P 500 ETF | 85,600 | 37,390,080 | ||||||
TOTAL EXCHANGE-TRADED FUNDS (Cost $57,845,627) | $ | 114,668,196 |
See accompanying notes to financial statements. |
6
AAMA Equity Fund | ||||||||
MONEY MARKET FUNDS — 5.6% | Shares | Fair Value | ||||||
First American U.S. Treasury Money Market Fund - Class Z, 5.20% (b) (Cost $22,943,173) | 22,943,173 | $ | 22,943,173 | |||||
TOTAL INVESTMENTS (Cost $234,701,303) — 100.3% | $ | 410,792,820 | ||||||
LIABILITIES IN EXCESS OF OTHER ASSETS — (0.3%) | (1,058,150 | ) | ||||||
NET ASSETS — 100.0% | $ | 409,734,670 |
(a) | Non-income producing security. |
(b) | The rate shown is the 7-day effective yield as of December 31, 2023. |
plc - Public Liability Company |
Security Allocation (Percentage of Net Assets) | |
Common Stocks | 66.7% |
Exchange-Traded Funds | 28.0% |
Cash Equivalents* | 5.3% |
Total | 100.0% |
* | Includes Liabilities in Excess of Other Assets |
See accompanying notes to financial statements. |
7
AAMA Income Fund
Management Discussion of Fund Performance
December 31, 2023 (Unaudited)
The AAMA Income Fund returned 2.51% over the last six months. This may be compared to the Bloomberg U.S. Aggregate Bond Index return of 3.37%. The Bloomberg 1-5 Year U.S. Government/Credit Index returned 3.66%.
Bond market returns over the six months appear tame on the surface. However, volatility continued in the market with the Bloomberg U.S. Long Treasury Index declining 11.8% in the third quarter and gaining 12.7% in the fourth quarter. Volatility over the last two quarters is not unlike that experienced over the last two years. The two-year result still leaves the long-term investment grade and Treasury bond investors with significant losses.
Long-term interest rates have traded along with the expected trend of short-term rates, as if whatever the Federal Reserve decides on short rates will automatically translate to longer term rates. This is a notion that is likely biased towards the correlation experienced during the 13 years of interest rate repression between 2009 and 2022, which we do not expect to continue. Our expectations for the fixed income markets have been for a gradual flattening of the yield curve with short rates falling modestly and long rates flat to rising as markets start to price in an inflation rate that is above the Fed’s 2% target. The immediate trend of short-term yields will depend heavily on Federal Reserve policy as the trend of inflation indicators develops over the next six months.
The inflation rate has declined but not to the Federal Reserve’s stated target of 2%. We expect longer term yields to gradually trend towards a historically-based real yield of +2.25% to +2.50% above inflation on the ten year Treasury. If one were to add the real yield to our expected inflation rate of 2.50% to 3.00%, the expected nominal yield on the ten year would fall between 4.75% and 5.50%.
The AAMA Income Fund remains in a high-quality, short-maturity portfolio with an average maturity of 2.2 years. This portfolio structure has provided significantly less volatility than longer-term portfolios over the last two years.
When the Fund invests in fixed income securities including corporate bonds, the value of the Fund will fluctuate with changes in interest rates. When interest rates rise, fixed income securities (i.e. debt obligations) generally will decline in value.
The Consumer Price Index (CPI) measures the monthly change in prices paid by U.S. consumers.
The Bloomberg U.S. Aggregate Bond Index covers taxable corporate bonds, Treasury bonds, asset-backed securities and municipal bonds.
The Bloomberg U.S. Long Treasury Index consists of U.S. dollar-denominated, fixed rate nominal debt issued by the U.S. Treasury with maturities of 10 years or more.
8
AAMA Income Fund
Management Discussion of Fund Performance
December 31, 2023 (Unaudited) (Continued)
The Bloomberg 1-5 Year U.S. Government/Credit Index is a broad-based benchmark that measures the non-securitized component of the Bloomberg U.S. Aggregate Index. It includes investment grade, U.S. dollar-denominated, fixed-rate Treasuries, government-related and corporate securities that have a remaining maturity of greater than or equal to one year and less than five years.
Indexes are unmanaged, do not reflect fees or expenses and an investor cannot invest directly in an index.
Sectors and allocations are subject to change. Past performance does not guarantee future results.
9
AAMA Income Fund | ||||||||
EXCHANGE-TRADED FUNDS — 9.8% | Shares | Fair Value | ||||||
Vanguard Mortgage-Backed Securities ETF (Cost $15,309,382) | 283,000 | $ | 13,119,880 |
| ||||||||||||||||
MUNICIPAL BONDS — 0.9% | Coupon | Maturity | Principal | Fair Value | ||||||||||||
City of Powell, Ohio, Various Purpose Ltd., GO Bond, Series 2021, (Cost $1,357,821) | 2.000% | 12/01/26 | $ | 1,320,000 | $ | 1,238,526 |
| ||||||||||||||||
U.S. GOVERNMENT | Coupon | Maturity | Principal | Fair Value | ||||||||||||
FEDERAL FARM CREDIT BANK — 3.6% | ||||||||||||||||
Federal Farm Credit Bank | 1.750% | 02/25/25 | $ | 5,000,000 | $ | 4,838,859 | ||||||||||
FEDERAL HOME LOAN BANK — 10.6% | ||||||||||||||||
Federal Home Loan Bank | 2.750% | 12/13/24 | 5,000,000 | 4,904,536 | ||||||||||||
Federal Home Loan Bank | 1.750% | 09/12/25 | 5,000,000 | 4,783,647 | ||||||||||||
Federal Home Loan Bank | 1.650% | 11/24/28 | 5,000,000 | 4,448,064 | ||||||||||||
14,136,247 | ||||||||||||||||
FEDERAL NATIONAL MORTGAGE ASSOCIATION — 15.7% | ||||||||||||||||
Federal National Mortgage Association | 0.625% | 04/22/25 | 5,000,000 | 4,753,899 | ||||||||||||
Federal National Mortgage Association | 2.125% | 04/24/26 | 11,454,000 | 10,944,360 | ||||||||||||
Federal National Mortgage Association | 0.750% | 10/08/27 | 5,957,000 | 5,288,639 | ||||||||||||
20,986,898 | ||||||||||||||||
TOTAL U.S. GOVERNMENT AGENCIES (Cost $42,537,389) | $ | 39,962,004 |
See accompanying notes to financial statements. |
10
AAMA Income Fund | ||||||||||||||||
U.S. TREASURY | Coupon | Maturity | Principal | Fair Value | ||||||||||||
U.S. Treasury Notes | 2.125% | 02/29/24 | $ | 5,000,000 | $ | 4,974,352 | ||||||||||
U.S. Treasury Notes | 2.500% | 05/15/24 | 6,000,000 | 5,941,406 | ||||||||||||
U.S. Treasury Notes | 1.875% | 08/31/24 | 5,000,000 | 4,897,656 | ||||||||||||
U.S. Treasury Notes | 0.500% | 04/30/27 | 10,000,000 | 8,926,172 | ||||||||||||
U.S. Treasury Notes | 1.125% | 02/29/28 | 10,000,000 | 8,939,063 | ||||||||||||
TOTAL U.S. TREASURY OBLIGATIONS (Cost $35,792,766) | $ | 33,678,649 |
| ||||||||
MONEY MARKET FUNDS — 33.9% | Shares | Fair Value | ||||||
First American U.S. Treasury Money Market Fund - Class Z, 5.20% (a) (Cost $45,374,731) | 45,374,731 | $ | 45,374,731 | |||||
TOTAL INVESTMENTS (Cost $140,372,089) — 99.7% | $ | 133,373,790 | ||||||
OTHER ASSETS IN EXCESS OF LIABILITIES — 0.3% | 336,488 | |||||||
NET ASSETS — 100.0% | $ | 133,710,278 |
(a) | The rate shown is the 7-day effective yield as of December 31, 2023. |
Security Allocation (Percentage of Net Assets) | |
U.S. Government Agencies | 29.9% |
U.S. Treasury Obligations | 25.2% |
Exchange-Traded Funds | 9.8% |
Municipal Bonds | 0.9% |
Cash Equivalents* | 34.2% |
Total | 100.0% |
* | Includes Other Assets in Excess of Liabilities |
See accompanying notes to financial statements. |
11
AAMA Funds | ||||||||
| AAMA | AAMA | ||||||
ASSETS | ||||||||
Investments in securities: | ||||||||
At cost | $ | 234,701,303 | $ | 140,372,089 | ||||
At value | $ | 410,792,820 | $ | 133,373,790 | ||||
Receivable for capital shares sold | 119,849 | 50,729 | ||||||
Dividends and interest receivable | 202,277 | 475,578 | ||||||
Other assets | 15,507 | 11,478 | ||||||
TOTAL ASSETS | 411,130,453 | 133,911,575 | ||||||
LIABILITIES | ||||||||
Payable for capital shares redeemed | 981,486 | 101,378 | ||||||
Payable to Adviser (Note 4) | 343,830 | 71,666 | ||||||
Payable to administrator (Note 4) | 20,225 | 6,728 | ||||||
Payable to Ultimus (Note 4) | 9,067 | 5,975 | ||||||
Accrued Trustee fees (Note 7) | 3,752 | 1,248 | ||||||
Other accrued expenses | 37,423 | 14,302 | ||||||
TOTAL LIABILITIES | 1,395,783 | 201,297 | ||||||
NET ASSETS | $ | 409,734,670 | $ | 133,710,278 | ||||
Net assest consist of: | ||||||||
Paid-in capital | $ | 222,154,960 | $ | 142,337,201 | ||||
Accumulated earnings (deficit) | 187,579,710 | (8,626,923 | ) | |||||
Net assets | $ | 409,734,670 | $ | 133,710,278 | ||||
Shares of beneficial interest outstanding (unlimited number of shares authorized) | 24,376,633 | 5,650,556 | ||||||
Net asset value, offering price and redemption price per share | $ | 16.81 | $ | 23.66 |
See accompanying notes to financial statements. |
12
AAMA Funds | ||||||||
| AAMA | AAMA | ||||||
INVESTMENT INCOME | ||||||||
Dividends | $ | 4,135,805 | $ | 1,306,329 | ||||
Interest | — | 646,370 | ||||||
TOTAL INVESTMENT INCOME | 4,135,805 | 1,952,699 | ||||||
EXPENSES | ||||||||
Management fees (Note 4) | 2,021,361 | 519,783 | ||||||
Administration fees (Note 4) | 119,326 | 40,651 | ||||||
Fund accounting fees (Note 4) | 40,573 | 23,875 | ||||||
Registration and filing fees | 21,121 | 17,849 | ||||||
Trustees’ fees and expenses (Note 4) | 24,245 | 8,314 | ||||||
Legal fees | 22,808 | 8,091 | ||||||
Insurance expense | 19,157 | 6,000 | ||||||
Transfer agent fees (Note 4) | 11,250 | 11,250 | ||||||
Custodian and bank service fees | 15,178 | 5,896 | ||||||
Audit and tax services fees | 6,009 | 14,548 | ||||||
Shareholder reporting expenses | 3,610 | 2,125 | ||||||
Other expenses | 5,414 | 5,892 | ||||||
TOTAL EXPENSES | 2,310,052 | 664,274 | ||||||
Less fees voluntarily waived by the Adviser (Note 4) | — | (89,463 | ) | |||||
NET EXPENSES | 2,310,052 | 574,811 | ||||||
NET INVESTMENT INCOME | 1,825,753 | 1,377,888 | ||||||
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS | ||||||||
Net realized gains (losses) on investment transactions | 11,489,015 | (728,649 | ) | |||||
Net change in unrealized appreciation (depreciation) on investments | 8,709,326 | 2,728,178 | ||||||
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS | 20,198,341 | 1,999,529 | ||||||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 22,024,094 | $ | 3,377,417 |
See accompanying notes to financial statements. |
13
AAMA Equity Fund | ||||||||
| Six Months | Year Ended | ||||||
FROM OPERATIONS | ||||||||
Net investment income | $ | 1,825,753 | $ | 3,514,817 | ||||
Net realized gains on investment transactions | 11,489,015 | — | ||||||
Net change in unrealized appreciation (depreciation) on investments | 8,709,326 | 46,394,556 | ||||||
Net increase in net assets resulting from operations | 22,024,094 | 49,909,373 | ||||||
DISTRIBUTIONS TO SHAREHOLDERS (Note 2) | (3,746,178 | ) | (17,561,517 | ) | ||||
FROM CAPITAL SHARE TRANSACTIONS | ||||||||
Proceeds from shares sold | 28,853,927 | 61,349,782 | ||||||
Net asset value of shares issued in reinvestment of distributions to shareholders | 3,729,615 | 17,527,410 | ||||||
Payments for shares redeemed | (53,972,222 | ) | (82,814,841 | ) | ||||
Net decrease in net assets from capital share transactions | (21,388,680 | ) | (3,937,649 | ) | ||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | (3,110,764 | ) | 28,410,207 | |||||
NET ASSETS | ||||||||
Beginning of period | 412,845,434 | 384,435,227 | ||||||
End of period | $ | 409,734,670 | $ | 412,845,434 | ||||
CAPITAL SHARE ACTIVITY | ||||||||
Shares sold | 1,800,151 | 4,048,605 | ||||||
Shares reinvested | 221,473 | 1,210,456 | ||||||
Shares redeemed | (3,364,163 | ) | (5,465,034 | ) | ||||
Net decrease in shares outstanding | (1,342,539 | ) | (205,973 | ) | ||||
Shares outstanding, beginning of period | 25,719,172 | 25,925,145 | ||||||
Shares outstanding, end of period | 24,376,633 | 25,719,172 |
See accompanying notes to financial statements. |
14
AAMA Income Fund | ||||||||
| Six Months | Year Ended | ||||||
FROM OPERATIONS | ||||||||
Net investment income | $ | 1,377,888 | $ | 1,739,785 | ||||
Net realized losses on investment transactions | (728,649 | ) | — | |||||
Net change in unrealized appreciation (depreciation) on investments | 2,728,178 | (2,213,026 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 3,377,417 | (473,241 | ) | |||||
DISTRIBUTIONS TO SHAREHOLDERS (Note 2) | (1,403,871 | ) | (1,738,802 | ) | ||||
FROM CAPITAL SHARE TRANSACTIONS | ||||||||
Proceeds from shares sold | 6,565,434 | 21,428,724 | ||||||
Net asset value of shares issued in reinvestment of distributions to shareholders | 1,401,456 | 1,736,403 | ||||||
Payments for shares redeemed | (18,824,712 | ) | (27,824,723 | ) | ||||
Net decrease in net assets from capital share transactions | (10,857,822 | ) | (4,659,596 | ) | ||||
TOTAL DECREASE IN NET ASSETS | (8,884,276 | ) | (6,871,639 | ) | ||||
NET ASSETS | ||||||||
Beginning of period | 142,594,554 | 149,466,193 | ||||||
End of period | $ | 133,710,278 | $ | 142,594,554 | ||||
CAPITAL SHARE ACTIVITY | ||||||||
Shares sold | 281,431 | 916,106 | ||||||
Shares reinvested | 59,969 | 74,467 | ||||||
Shares redeemed | (806,527 | ) | (1,190,614 | ) | ||||
Net decrease in shares outstanding | (465,127 | ) | (200,041 | ) | ||||
Shares outstanding, beginning of period | 6,115,683 | 6,315,724 | ||||||
Shares outstanding, end of period | 5,650,556 | 6,115,683 |
See accompanying notes to financial statements. |
15
AAMA Equity Fund | ||||||||||||||||||||||||
Per Share Data for a Share Outstanding Throughout Each Period | ||||||||||||||||||||||||
| Six Months | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||||
Net asset value at beginning of period | $ | 16.05 | $ | 14.83 | $ | 16.26 | $ | 12.22 | $ | 11.91 | $ | 11.24 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income (a) | 0.08 | 0.14 | 0.06 | 0.05 | 0.08 | 0.10 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.83 | 1.77 | (1.45 | ) | 4.05 | 0.33 | 0.66 | |||||||||||||||||
Total from investment operations | 0.91 | 1.91 | (1.39 | ) | 4.10 | 0.41 | 0.76 | |||||||||||||||||
Less distributions from: | ||||||||||||||||||||||||
Net investment income | (0.15 | ) | (0.10 | ) | (0.04 | ) | (0.06 | ) | (0.10 | ) | (0.09 | ) | ||||||||||||
Net realized gains | — | (0.59 | ) | — | — | — | — | |||||||||||||||||
Total distributions | (0.15 | ) | (0.69 | ) | (0.04 | ) | (0.06 | ) | (0.10 | ) | (0.09 | ) | ||||||||||||
Net asset value at end of period | $ | 16.81 | $ | 16.05 | $ | 14.83 | $ | 16.26 | $ | 12.22 | $ | 11.91 | ||||||||||||
Total return (b) | 5.70 | %(c) | 13.43 | % | (8.59 | %) | 33.64 | % | 3.41 | % | 6.85 | % | ||||||||||||
Net assets at end of period (000’s) | $ | 409,735 | $ | 412,845 | $ | 384,435 | $ | 433,437 | $ | 358,993 | $ | 335,611 | ||||||||||||
Ratio of total expenses to average net assets (d) | 1.14 | %(e) | 1.14 | % | 1.15 | % | 1.16 | % | 1.18 | % | 1.18 | % | ||||||||||||
Ratio of net expenses to average net assets (d) | 1.14 | %(e) | 1.14 | % | 1.15 | %(f)(g) | 1.16 | % | 1.18 | % | 0.99 | %(f) | ||||||||||||
Ratio of net investment income to average net assets (a)(d) | 0.90 | %(e) | 0.90 | % | 0.34 | %(f)(g) | 0.33 | % | 0.67 | % | 0.90 | %(f) | ||||||||||||
Portfolio turnover rate | 0 | %(c) | 0 | % | 5 | % | 0 | %(h) | 22 | % | 20 | % |
(a) | Recognition of net investment income by the Fund is affected by the timing of the declaration of the dividends and distributions by the underlying investment companies in which the Fund invests. |
16
AAMA Equity Fund
Financial Highlights (Continued)
(b) | Total return is a measure of the change in value of an investment in the Fund over the period covered, which assumes any dividends or capital gains distributions are reinvested in shares of the Fund. The returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. The total returns would have been lower if the Adviser and/or administrator had not reduced fees for the years ended June 30, 2022 and 2019. |
(c) | Not annualized. |
(d) | The ratios of income and expenses to average net assets do not reflect the Fund’s proportionate share of income and expenses of the underlying investment companies in which the Fund invests. |
(e) | Annualized. |
(f) | Ratio was determined after fee reductions. |
(g) | The impact of the voluntary fee waiver by the administrator for the year ended June 30, 2022 was less than 0.005%. |
(h) | Percentage rounds to less than 1%. |
See accompanying notes to financial statements. |
17
AAMA Income Fund | ||||||||||||||||||||||||
Per Share Data for a Share Outstanding Throughout Each Period | ||||||||||||||||||||||||
| Six Months | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||||
Net asset value at beginning of period | $ | 23.32 | $ | 23.67 | $ | 25.22 | $ | 25.58 | $ | 25.06 | $ | 24.66 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income (a) | 0.24 | 0.28 | 0.14 | 0.17 | 0.27 | 0.33 | ||||||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.34 | (0.35 | ) | (1.54 | ) | (0.37 | ) | 0.52 | 0.40 | |||||||||||||||
Total from investment operations | 0.58 | (0.07 | ) | (1.40 | ) | (0.20 | ) | 0.79 | 0.73 | |||||||||||||||
Less distributions from: | ||||||||||||||||||||||||
Net investment income | (0.24 | ) | (0.28 | ) | (0.15 | ) | (0.16 | ) | (0.27 | ) | (0.33 | ) | ||||||||||||
Net asset value at end of period | $ | 23.66 | $ | 23.32 | $ | 23.67 | $ | 25.22 | $ | 25.58 | $ | 25.06 | ||||||||||||
Total return (b) | 2.51 | %(c) | (0.30 | %) | (5.57 | %) | (0.80 | %) | 3.17 | % | 2.97 | % | ||||||||||||
Net assets at end of period (000’s) | $ | 133,710 | $ | 142,595 | $ | 149,466 | $ | 148,120 | $ | 153,568 | $ | 143,828 | ||||||||||||
Ratio of total expenses to average net assets (d) | 0.96 | %(e) | 0.93 | % | 0.90 | % | 0.91 | % | 0.93 | % | 0.93 | % | ||||||||||||
Ratio of net expenses to average net assets (a)(d)(f)(g) | 0.83 | %(e) | 0.83 | % | 0.83 | % | 0.83 | % | 0.83 | % | 0.71 | % | ||||||||||||
Ratio of net investment income to average net assets (a)(d)(f)(g) | 1.99 | %(e) | 1.19 | % | 0.55 | % | 0.67 | % | 1.06 | % | 1.32 | % | ||||||||||||
Portfolio turnover rate | 0 | %(c) | 0 | % | 39 | % | 37 | % | 33 | % | 20 | % |
(a) | Recognition of net investment income by the Fund is affected by the timing of the declaration of the dividends and distributions by the underlying investment companies in which the Fund invests. |
18
AAMA Income Fund
Financial Highlights (Continued)
(b) | Total return is a measure of the change in value of an investment in the Fund over the period covered, which assumes any dividends or capital gains distributions are reinvested in shares of the Fund. The returns shown do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. The total returns would have been lower if the Adviser and/or administrator had not reduced fees. |
(c) | Not annualized. |
(d) | The ratios of income and expenses to average net assets do not reflect the Fund’s proportionate share of income and expenses of the underlying investment companies in which the Fund invests. |
(e) | Annualized. |
(f) | Ratio was determined after fee reductions. |
(g) | The impact of the voluntary fee waiver by the Adviser and/or administrator for the period ended December 31, 2023 and the years ended June 30, 2023, 2022, 2021, 2020, and 2019 was 0.13%(e), 0.10%, 0.07%, 0.08%, 0.10% and 0.22%, respectively. |
See accompanying notes to financial statements. |
19
AAMA Funds
Notes to Financial Statements
December 31, 2023 (Unaudited)
1. Organization
AAMA Equity Fund and AAMA Income Fund (individually, a “Fund,” and, collectively, the “Funds” or “AAMA Funds”) are each a separate series of Asset Management Fund (the “Trust”), a professionally managed, diversified, open-end investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The Trust is organized as a Delaware statutory trust operating under a Second Amended and Restated Declaration of Trust dated November 27, 2018. Other series of the Trust are not included in this report. The inception date of the Funds was June 30, 2017. The Funds commenced operations on July 3, 2017, when they began to execute their investment objectives, which included purchasing investments.
AAMA Equity Fund’s investment objective is long-term capital appreciation.
AAMA Income Fund’s investment objective is current income with a secondary objective of preservation of capital.
2. Significant Accounting Policies
Each Fund follows accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services – Investment Companies.” The following is a summary of the Funds’ significant accounting policies used in the preparation of their financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
Regulatory update — Tailored Shareholder Reports for Mutual Funds and Exchange-Traded Funds (“ETFs”) – Effective January 24, 2023, the Securities and Exchange Commission (the “SEC”) adopted rule and form amendments to require mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semiannual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed with the SEC on a semiannual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Funds.
Securities valuation — The Funds record their investments at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The valuation techniques used by the Funds maximize
20
AAMA Funds
Notes to Financial Statements (Continued)
the use of observable inputs and minimize the use of unobservable inputs in determining fair value. These inputs are summarized in the three broad levels listed below:
● | Level 1 — quoted prices in active markets for identical securities |
● | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) |
● | Level 3 —significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments) |
Portfolio securities are valued as of the close of regular trading on the New York Stock Exchange (“NYSE”) (normally, 4:00 p.m., Eastern time) on each day the NYSE is open. Listed securities, including common stocks and exchange-traded funds (“ETFs”), for which market quotations are readily available are valued at the closing prices on the primary exchange where the securities are normally traded. Securities which are quoted by NASDAQ are valued at the NASDAQ Official Closing Price. Investments in other investment companies, except ETFs, are valued at their reported net asset value (“NAV”). In each of these situations, valuations are typically categorized as Level 1 in the fair value hierarchy.
Debt securities are typically valued on the basis of valuations provided by independent pricing services approved by Advanced Asset Management Advisors, Inc. (the “Adviser”), the Valuation Designee, that determine valuations based upon market transactions for normal, institutional-size trading units of similar securities. Short-term debt investments of sufficient credit quality maturing in less than 61 days may be valued at amortized cost if it is determined that amortized cost approximates fair value. In each of these situations, valuations are typically categorized as Level 2 in the fair value hierarchy.
Securities for which market quotations are not readily available (e.g., an approved pricing service does not provide a price, a price has become stale, or an event occurs that materially affects the furnished price) are valued by the Valuation Designee. In these cases, the Valuation Designee determines in good faith, subject to procedures approved by the Board of Trustees (the “Board”), the fair value of such securities (“good faith fair valuation”). When a good faith fair valuation of a security is required, consideration is generally given to a number of factors, including, but not limited to the following: type of security, nature and duration of any restrictions on disposition of the security, forces that influence the market in which the security is purchased or sold, existence of merger proposals or tender offers, expectation of additional news about the company and volume and depth of public trading in similar securities of the issuer or
21
AAMA Funds
Notes to Financial Statements (Continued)
similar companies. Depending on the source and relative significance of the valuation inputs in these instances, the valuations for these securities will be classified as Level 2 or Level 3 in the fair value hierarchy.
The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. The inputs used to measure the fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement.
The following is a summary of each Fund’s investments and the inputs used to value the investments as of December 31, 2023, by security type:
AAMA Equity Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks | $ | 273,181,451 | $ | — | $ | — | $ | 273,181,451 | ||||||||
Exchange-Traded Funds | 114,668,196 | — | — | 114,668,196 | ||||||||||||
Money Market Funds | 22,943,173 | — | — | 22,943,173 | ||||||||||||
Total | $ | 410,792,820 | $ | — | $ | — | $ | 410,792,820 |
AAMA Income Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Exchange-Traded Funds | $ | 13,119,880 | $ | — | $ | — | $ | 13,119,880 | ||||||||
Municipal Bonds | — | 1,238,526 | — | 1,238,526 | ||||||||||||
U.S. Government Agencies | — | 39,962,004 | — | 39,962,004 | ||||||||||||
U.S. Treasury Obligations | — | 33,678,649 | — | 33,678,649 | ||||||||||||
Money Market Funds | 45,374,731 | — | — | 45,374,731 | ||||||||||||
Total | $ | 58,494,611 | $ | 74,879,179 | $ | — | $ | 133,373,790 |
Refer to each Fund’s Schedule of Portfolio Investments for a listing of the securities by security type and industry type. The Funds did not hold derivative instruments or any assets or liabilities that were measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of or during the six months ended December 31, 2023.
Share valuation — The NAV per share of each Fund is calculated daily by dividing the total value of its assets, less liabilities, by the number of shares outstanding. The offering price and redemption price per share of each Fund is equal to the NAV per share.
22
AAMA Funds
Notes to Financial Statements (Continued)
Investment income — Interest income is accrued as earned. Dividend income is recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair value of the securities received. Discounts and premiums on fixed income securities are amortized using the interest method. Withholding taxes on foreign dividends, if any, have been recorded in accordance with the Trust’s understanding of the applicable country’s rules and tax rates.
Distributions to shareholders — Dividends arising from net investment income, if any, are declared and paid annually to shareholders of the AAMA Equity Fund. Dividends arising from net investment income are declared and paid monthly to shareholders of the AAMA Income Fund. Net realized capital gains, if any, are distributed at least once each year. The amount of distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These “book/tax” differences are permanent in nature and are primarily due to differing treatments of net short-term capital gains.
Dividends and distributions are recorded on the ex-dividend date. The tax character of distributions paid during the six-month period ended December 31, 2023 and the twelve-month period ended June 30, 2023 was as follows:
| Periods | Ordinary | Long-Term | Total | ||||||||||||
AAMA Equity Fund | 12/31/2023 | $ | 3,746,178 | $ | — | $ | 3,746,178 | |||||||||
6/30/2023 | $ | 2,589,794 | $ | 14,971,723 | $ | 17,561,517 | ||||||||||
AAMA Income Fund | 12/31/2023 | $ | 1,403,871 | $ | — | $ | 1,403,871 | |||||||||
6/30/2023 | $ | 1,738,802 | $ | — | $ | 1,738,802 |
Investment transactions — Investment transactions are accounted for on trade date. Realized gains and losses on investments sold are determined on a specific identification basis.
Expenses — Expenses incurred by the Trust that do not relate to a specific Fund of the Trust are allocated to the individual Funds based on each Fund’s relative net assets or another appropriate basis.
Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent
23
AAMA Funds
Notes to Financial Statements (Continued)
assets and liabilities as of the date of the financial statements and the reported amounts of increase (decrease) in net assets from operations during the reporting period. Actual results could differ from those estimates.
Federal income tax — Each Fund has qualified and intends to continue to qualify as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”). Qualification generally will relieve the Funds of liability for federal income taxes to the extent 100% of their net investment income and net realized capital gains are distributed in accordance with the Code.
In order to avoid imposition of the excise tax applicable to regulated investment companies, it is also each Fund’s intention to declare as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts from prior years.
The tax character of accumulated earnings as of December 31, 2023 was as follows:
| AAMA | AAMA | ||||||
Tax cost of investments | $ | 234,701,303 | $ | 140,372,089 | ||||
Gross unrealized appreciation | $ | 180,585,837 | $ | — | ||||
Gross unrealized depreciation | (4,494,320 | ) | (6,998,299 | ) | ||||
Net unrealized appreciation (depreciation) | 176,091,517 | (6,998,299 | ) | |||||
Other gains (losses) | 11,489,015 | (728,649 | ) | |||||
Capital loss carryforwards | — | (875,970 | ) | |||||
Accumulated ordinary loss | (822 | ) | (24,005 | ) | ||||
Accumulated earnings (deficit) | $ | 187,579,710 | $ | (8,626,923 | ) |
As of June 30, 2023, AAMA Income Fund had short-term capital loss carryforwards of $621,176 and long-term capital loss carryforwards of $254,794 for income tax purposes. These capital loss carryforwards, which do not expire, may be utilized in the current and future years to offset realized capital gains, if any, prior to distributing such gains to shareholders.
The Funds recognize the tax benefits or expenses of uncertain tax positions only when the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has reviewed each Fund’s tax positions for all open tax years (generally, three years) and has concluded that no provision for unrecognized tax benefits or expenses is required in these financial statements. The Funds identify their major tax jurisdiction as U.S. Federal. The Funds
24
AAMA Funds
Notes to Financial Statements (Continued)
recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense on the Statements of Operations. During the six months ended December 31, 2023, the Funds did not incur any interest or penalties.
3. Investment Transactions
Investment transactions, other than short-term investments, were as follows for the six months ended December 31, 2023:
Non-U.S. Government | AAMA | AAMA | ||||||
Purchase of investment securities | $ | — | $ | — | ||||
Proceeds from sales and maturities of investment securities | $ | 21,847,071 | $ | 9,567,632 |
U.S. Government (long-term) | AAMA | AAMA | ||||||
Purchase of U.S. government securities | $ | — | $ | — | ||||
Proceeds from sales and maturities of U.S. government securities | $ | — | $ | 16,575,000 |
4. Transactions with Related Parties
INVESTMENT ADVISORY AGREEMENT
Each Fund’s investments are managed by the Adviser under the terms of an Investment Advisory Agreement. AAMA Equity Fund pays the Adviser a management fee, which is computed and accrued daily and paid monthly, at an annual rate of 1.00% of its average daily net assets. AAMA Income Fund pays the Adviser a management fee, which is computed and accrued daily and paid monthly, at an annual rate of 0.75% of its average daily net assets.
During the six months ended December 31, 2023, the Adviser voluntarily waived its management fees in the amount of $89,463 for AAMA Income Fund. These voluntary waivers are not eligible for recovery by the Adviser in future periods.
During the six months ended December 31, 2023, there were no expense cap limitations in place for the Funds.
BUSINESS MANAGER AND ADMINISTRATOR
Foreside Management Services, LLC (“Foreside”), d/b/a ACA Group, serves as the Trust’s business manager and administrator. Pursuant to the terms of a Management and Administration Agreement (the “Agreement”) between the Trust, on behalf of the Funds, and Foreside, Foreside performs and coordinates
25
AAMA Funds
Notes to Financial Statements (Continued)
all management and administration services for the Trust either directly or through working with the Trust’s service providers. Services provided under the Agreement by Foreside include, but are not limited to, coordinating and monitoring activities of the third party service providers to the Funds; making employees available to serve as officers of the Trust, including but not limited to, President, Secretary, Chief Compliance Officer, Anti-Money Laundering Officer, Treasurer and others as are deemed necessary and appropriate; performing compliance services for the Trust, including maintaining the Trust’s compliance program as required under the 1940 Act; managing the process of filing amendments to the Trust’s registration statement and other reports to shareholders; coordinating the Board meeting preparation process; reviewing financial reports and filing them with the U.S. Securities and Exchange Commission (the “SEC”); and maintaining books and records in accordance with applicable laws and regulations.
Pursuant to the Agreement, the Funds pay Foreside an annual fee of $210,000 plus 0.02% of average daily net assets, subject, however, to a minimum fee of $300,000.
OTHER SERVICE PROVIDER
Ultimus Fund Solutions, LLC (“Ultimus”) serves as the transfer agent, fund accountant and financial administrator for the Funds. The transfer agent services provided by Ultimus to the Funds include, but are not limited to (i) processing shareholder purchase and redemption requests; (ii) processing dividend payments; and (iii) maintaining shareholder account records. The administrative and fund accounting services provided by Ultimus to the Funds include (i) computing each Fund’s NAV for purposes of the sale and redemption of its shares; (ii) computing the dividends payable by each Fund; (iii) preparing certain periodic reports and statements; and (iv) maintaining the general ledger and other accounting records for the Funds.
PRINCIPAL HOLDERS OF FUND SHARES
As of December 31, 2023, the following account holders owned of record 25% or more of the outstanding shares of each Fund:
NAME OF RECORD OWNER | % Ownership |
AAMA Equity Fund | |
Charles Schwab and Company Inc. (for the benefit of its clients) | 72% |
AAMA Income Fund | |
Charles Schwab and Company Inc. (for the benefit of its clients) | 78% |
26
AAMA Funds
Notes to Financial Statements (Continued)
A beneficial owner of 25% or more of each Fund’s outstanding shares may be considered a controlling person. That shareholder’s vote could have a more significant effect on matters presented at a shareholders’ meeting.
5. Investments in Other Investment Companies
The Funds may invest a significant portion of their assets in shares of one or more investment companies, including ETFs. ETFs issue their shares to authorized participants in return for a specific basket of securities and/or cash. The authorized participants then sell the ETF’s shares on the secondary market. In other words, ETF shares are traded on a securities exchange based on their fair value. There are certain risks associated with investments in ETFs. Disruptions to the creations and redemptions process through which authorized participants directly purchase and sell ETF shares, the existence of extreme market volatility or potential lack of an active trading market, or changes in the liquidity of the market for an ETF’s underlying portfolio holdings, may result in the ETF’s shares trading at significantly above (at a premium to) or below (at a discount to) NAV, which may result in the Funds paying significantly more or receiving significantly less for ETF shares than the value of the relevant ETF’s underlying holdings. An ETF’s shares could also trade at a premium or discount to NAV when an ETF’s underlying securities trade on a foreign exchange that is closed when the securities exchange on which the ETF trades is open. The current price of the ETF’s underlying securities and the last quoted price for the underlying security are likely to deviate in such circumstances. There can be no assurance that an active trading market for an ETF’s shares will develop or be maintained. Trading may be halted, for example, due to market conditions. Because the value of ETF shares depends on the demand in the market, a Fund’s holdings may not be able to be liquidated at the most optimal time, adversely affecting performance. There can be no assurance that an ETF’s investment objectives will be achieved. Each ETF is subject to specific risks, depending on the nature of the ETF. These risks could include liquidity risk, sector risk, foreign and emerging market risk, as well as risks associated with real estate investments and natural resources. ETFs in which a Fund invests will not be able to replicate exactly the performance of the indices they track, if any, because the total return generated by the securities will be reduced by transaction costs incurred in adjusting the actual balance of the securities. In addition, ETFs in which a Fund invests will incur expenses not incurred by their applicable indices. Certain securities in the indices tracked by the ETFs may, from time to time, temporarily be unavailable, which may further impede the ETFs’ ability to track their applicable indices. An investment in an ETF presents the risk that the ETF may no longer meet the listing requirements of
27
AAMA Funds
Notes to Financial Statements (Continued)
any applicable exchanges on which the ETF is listed. As of December 31, 2023, AAMA Equity Fund and AAMA Income Fund had 28.0% and 9.8%, respectively, of the fair value of their net assets invested in ETFs.
Money Market Risk - The Funds may invest in money market funds. As of December 31, 2023, AAMA Equity Fund and AAMA Income Fund had 5.6% and 33.9%, respectively, of the value of its net assets invested in shares of First American U.S. Treasury Money Market Fund - Class Z (“FOZXX”), a money market fund registered under the 1940 Act. An investment in a money market mutual fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market mutual funds that invest in U.S. Government securities seek to preserve the value of the fund’s investment at $1.00 per share, it is possible to lose money by investing in a stable net asset value money market mutual fund. The financial statements for FOZXX can be found at www.sec.gov.
6. Contingencies and Commitments
The Funds indemnify the Trust’s officers and Trustees for certain liabilities that might arise from their performance of their duties to the Funds. Additionally, in the normal course of business the Funds enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Trust expects the risk of loss to be remote.
7. Trustee Compensation
The Independent Trustees are compensated for their services to the Trust by the Funds. Each Independent Trustee receives an annual retainer plus meeting fees (which vary depending on meeting type). Collectively, the Independent Trustees were paid $63,600 in fees during the six months ended December 31, 2023, for the entire Trust, which includes another fund not managed by Advanced Asset Management Advisors, Inc. The Funds paid Trustee compensation in the amount of $31,800 for the six months ended December 31, 2023. In addition, the Funds reimburse Trustees for out-of-pocket expenses incurred in conjunction with attendance of meetings.
8. Liquidity Risk Management Program
To promote effective liquidity risk management throughout the fund industry and to enhance disclosure regarding fund liquidity and redemption practices, the Securities and Exchange Commission (the “Commission”) adopted Rule 22e-4
28
AAMA Funds
Notes to Financial Statements (Continued)
under the 1940 Act (the “Rule”). This Rule requires every registered open-end management company to establish a liquidity risk management program (the “LRMP”) that, among other things, provides for the assessment, management and review of liquidity risk, the classification of a fund’s portfolio investments into one of four liquidity buckets based upon the number of days that such investments may reasonably be expected to be converted into cash or otherwise disposed of without significantly impacting their price, the establishment of a highly liquid investment minimum where required, the establishment of a 15% limitation on illiquid investments and periodic reporting to the Board. Additionally, the Commission adopted Rule 30b1-10 and Form N-LIQUID (now Form N-RN), which generally requires a fund to notify the Commission when certain liquidity-related events occur. The Adviser has established a Liquidity Risk Management Program Committee (“Committee”). The Committee is comprised of the Trust’s Chief Financial Officer and officers and employees of the Adviser. At the Board’s regular meeting on November 15, 2023, the Program Administrator provided a written report to the Board (the “Report”) on the operation, adequacy and effectiveness of the LRMP for the Funds for the period October 1, 2022 through September 30, 2023 (the “Reporting Period”). The Report included, among other things, a discussion of how the Adviser manages liquidity risks associated with the Funds’ investments by monitoring the liquidity and selection of portfolio investments during normal and reasonably foreseeable stressed conditions, short-term and long-term cash flow projections during normal and reasonably foreseeable stressed conditions and cash and cash equivalents, and by classifying every portfolio investment as either highly liquid, moderately liquid, less liquid, or illiquid on at least a monthly basis. To assist with the classification of Funds’ investments, the Adviser utilizes a third-party provider of liquidity monitoring services. The Report stated that during the Reporting Period, each Fund invested 100% of its total net assets in highly liquid investments. Because each Fund consisted primarily of highly liquid investments, pursuant to the Rule, no highly liquid investment minimum was required to be established for the Funds. The Report concluded that the LRMP for the Funds has been appropriately designed and implemented and was effectively operating to assess and manage the Funds’ liquidity risk during the Reporting Period.
9. Subsequent Events
The Funds are required to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed as of the date of the Statements of Assets and Liabilities. For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, the Funds are required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. Management has evaluated subsequent events through the issuance of these financial statements and has noted no such events.
29
AAMA Funds
About Your Funds’ Expenses (Unaudited)
We believe it is important for you to understand the impact of costs on your investment. All mutual funds have operating expenses. As a shareholder of the Funds, you incur ongoing costs, including management fees and other expenses. The following examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
A mutual fund’s ongoing costs are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The expenses in the table below are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period (July 1, 2023 through December 31, 2023).
The table below illustrates each Fund’s costs in two ways:
Actual fund return – This section helps you to estimate the actual expenses that you paid over the period. The “Ending Account Value” shown is derived from each Fund’s actual return, and the fourth column shows the dollar amount of operating expenses that would have been paid by an investor who started with $1,000 in the Funds. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for the Funds under the heading “Expenses Paid During Period.”
Hypothetical 5% return – This section is intended to help you compare each Fund’s ongoing costs with those of other mutual funds. It assumes that each Fund had an annual return of 5% before expenses during the period shown, but that the expense ratio is unchanged. In this case, because the returns used are not the Funds’ actual returns, the results do not apply to your investment. The example is useful in making comparisons because the SEC requires all mutual funds to calculate expenses based on a 5% return. You can assess each Fund’s ongoing costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other funds.
Note that expenses shown in the table are meant to highlight and help you compare ongoing costs only. The Funds do not charge sales loads or redemption fees.
The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
30
AAMA Funds
About Your Funds’ Expenses (Unaudited)
More information about the Funds’ expenses can be found in this report. For additional information on operating expenses and other shareholder costs, please refer to the Funds’ prospectuses.
| Beginning | Ending | Net | Expenses | ||||||||||||
AAMA Equity Fund | ||||||||||||||||
Based on Actual Fund Return | $ | 1,000.00 | $ | 1,057.00 | 1.14 | % | $ | 5.91 | ||||||||
Based on Hypothetical 5% Return (before expenses) | $ | 1,000.00 | $ | 1,019.46 | 1.14 | % | $ | 5.80 | ||||||||
AAMA Income Fund | ||||||||||||||||
Based on Actual Fund Return | $ | 1,000.00 | $ | 1,025.10 | 0.83 | % | $ | 4.24 | ||||||||
Based on Hypothetical 5% Return (before expenses) | $ | 1,000.00 | $ | 1,021.02 | 0.83 | % | $ | 4.23 |
(a) | Annualized, based on each Fund’s most recent one-half year expenses. |
(b) | Expenses are equal to each Fund’s annualized net expense ratio multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
31
AAMA Funds
Other Information (Unaudited)
A description of the policies and procedures that the Funds use to vote proxies relating to portfolio securities is available without charge upon request by calling toll-free 1-800-701-9502, or on the SEC’s website at www.sec.gov. Information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge upon request by calling toll-free 1-800-701-9502, or on the SEC’s website at www.sec.gov.
The Trust files a complete listing of portfolio holdings of the Funds with the SEC as of the end of the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The filings are available upon request, by calling 1-800-701-9502. Furthermore, you may obtain a copy of these filings on the SEC’s website at www.sec.gov and the Funds’ website at www.aamafunds.com.
32
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Investment Advisor
Advanced Asset Management Advisors, Inc.
4995 Bradenton Avenue, Suite 210
Dublin, Ohio 43017
Business Manager and Administrator
Foreside Management Services, LLC
Three Canal Plaza, Suite 100
Portland, Maine 04101
Financial Administrator and Transfer and Dividend Agent
Ultimus Fund Solutions, LLC
225 Pictoria Drive, Suite 450
Cincinnati, Ohio 45246
Distributor
Foreside Financial Services, LLC
Three Canal Plaza, Suite 100
Portland, Maine 04101
Legal Counsel
Vedder Price P.C.
222 N. LaSalle Street
Chicago, Illinois 60601
Custodian
U.S. Bank, N.A.
1555 N. Rivercenter Drive, MK-WI-S302
Milwaukee, Wisconsin 53212
Independent Registered Public Accounting Firm
Cohen & Company, Ltd.
342 N. Water Street, Suite 830
Milwaukee, WI 53202
SEMI-ANNUAL REPORT
December 31, 2023
LARGE CAP EQUITY FUND
SCHEDULE OF INVESTMENTS
December 31, 2023 (Unaudited)
| Percentage | Shares | Value | |||||||||
COMMON STOCKS | 95.4% | |||||||||||
Automobiles & Components | 1.1% | |||||||||||
BorgWarner, Inc. | 15,000 | $ | 537,750 | |||||||||
Banks | 0.5% | |||||||||||
Citigroup, Inc. | 4,800 | 246,912 | ||||||||||
Capital Goods | 3.5% | |||||||||||
Cummins, Inc. | 6,150 | 1,473,355 | ||||||||||
Stanley Black & Decker, Inc. | 2,500 | 245,250 | ||||||||||
| 1,718,605 | |||||||||||
Consumer Durables & Apparel | 0.2% | |||||||||||
NIKE, Inc., Class B | 1,000 | 108,570 | ||||||||||
Consumer Services | 0.6% | |||||||||||
McDonald’s Corp. | 1,000 | 296,510 | ||||||||||
Diversified Financials | 1.6% | |||||||||||
CME Group, Inc. | 2,000 | 421,200 | ||||||||||
Goldman Sachs Group (The), Inc. | 900 | 347,193 | ||||||||||
| 768,393 | |||||||||||
Energy | 4.4% | |||||||||||
ConocoPhillips | 7,000 | 812,490 | ||||||||||
EOG Resources, Inc. | 10,800 | 1,306,260 | ||||||||||
| 2,118,750 | |||||||||||
Food & Staples Retailing | 4.1% | |||||||||||
Costco Wholesale Corp. | 3,050 | 2,013,244 | ||||||||||
Health Care Equipment & Services | 8.7% | |||||||||||
HCA Healthcare, Inc. | 5,800 | 1,569,944 | ||||||||||
Humana, Inc. | 1,500 | 686,715 | ||||||||||
McKesson Corp. | 800 | 370,384 | ||||||||||
UnitedHealth Group, Inc. | 3,092 | 1,627,845 | ||||||||||
| 4,254,888 | |||||||||||
Household & Personal Products | 2.1% | |||||||||||
Procter & Gamble (The) Co. | 6,900 | 1,011,126 | ||||||||||
Insurance | 6.0% | |||||||||||
Aflac, Inc. | 13,500 | 1,113,750 | ||||||||||
Progressive (The) Corp. | 11,500 | 1,831,720 | ||||||||||
| 2,945,470 | |||||||||||
Materials | 2.7% | |||||||||||
Air Products and Chemicals, Inc. | 650 | 177,970 | ||||||||||
Freeport-McMoRan, Inc. | 10,000 | 425,700 | ||||||||||
LyondellBasell Industries N.V., Class A | 6,000 | 570,480 | ||||||||||
Newmont Corp. | 3,500 | 144,865 | ||||||||||
| 1,319,015 |
See notes to financial statements.
1
LARGE CAP EQUITY FUND
SCHEDULE OF INVESTMENTS (continued)
December 31, 2023 (Unaudited)
| Percentage | Shares | Value | |||||||||
Media & Entertainment | 7.6% | |||||||||||
Alphabet, Inc., Class A(a) | 14,000 | $ | 1,955,660 | |||||||||
Comcast Corp., Class A | 35,900 | 1,574,215 | ||||||||||
Fox Corp., Class A | 5,000 | 148,350 | ||||||||||
| 3,678,225 | |||||||||||
Pharmaceuticals, Biotech & Life Sciences | 3.7% | |||||||||||
AbbVie, Inc. | 8,500 | 1,317,245 | ||||||||||
Bristol-Myers Squibb Co. | 9,700 | 497,707 | ||||||||||
1,814,952 | ||||||||||||
Real Estate | 2.3% | |||||||||||
American Tower Corp. | 2,000 | 431,760 | ||||||||||
Public Storage | 1,500 | 457,500 | ||||||||||
Simon Property Group, Inc. | 1,637 | 233,502 | ||||||||||
| 1,122,762 | |||||||||||
Retailing | 7.8% | |||||||||||
Best Buy Co., Inc. | 9,000 | 704,520 | ||||||||||
Home Depot (The), Inc. | 4,200 | 1,455,510 | ||||||||||
Lowe’s Cos., Inc. | 6,000 | 1,335,300 | ||||||||||
Target Corp. | 2,000 | 284,840 | ||||||||||
3,780,170 | ||||||||||||
Semiconductors & Semiconductor Equipment | 12.0% | |||||||||||
Broadcom, Inc. | 1,500 | 1,674,375 | ||||||||||
Intel Corp. | 10,000 | 502,500 | ||||||||||
KLA Corp. | 1,500 | 871,950 | ||||||||||
Microchip Technology, Inc. | 20,800 | 1,875,744 | ||||||||||
NVIDIA Corp. | 1,750 | 866,635 | ||||||||||
Texas Instruments, Inc. | 400 | 68,184 | ||||||||||
| 5,859,388 | |||||||||||
Software & Services | 12.5% | |||||||||||
Accenture PLC, Class A | 5,000 | 1,754,550 | ||||||||||
Intuit, Inc. | 1,000 | 625,030 | ||||||||||
Mastercard, Inc., Class A | 4,200 | 1,791,342 | ||||||||||
Microsoft Corp. | 5,050 | 1,899,002 | ||||||||||
| 6,069,924 | |||||||||||
Technology Hardware & Equipment | 7.3% | |||||||||||
Apple, Inc. | 10,000 | 1,925,300 | ||||||||||
Cisco Systems, Inc. | 4,500 | 227,340 | ||||||||||
Garmin Ltd. | 6,000 | 771,240 | ||||||||||
Motorola Solutions, Inc. | 2,000 | 626,180 | ||||||||||
| 3,550,060 | |||||||||||
Telecommunication Services | 0.5% | |||||||||||
Verizon Communications, Inc. | 7,000 | 263,900 |
See notes to financial statements.
2
LARGE CAP EQUITY FUND
SCHEDULE OF INVESTMENTS (concluded)
December 31, 2023 (Unaudited)
| Percentage | Shares | Value | |||||||||
Transportation | 4.7% | |||||||||||
CSX Corp. | 48,000 | $ | 1,664,160 | |||||||||
FedEx Corp. | 2,400 | 607,128 | ||||||||||
| 2,271,288 | |||||||||||
Utilities | 1.5% | |||||||||||
NextEra Energy, Inc. | 11,700 | 710,658 | ||||||||||
TOTAL COMMON STOCKS | ||||||||||||
(Cost $27,931,483) | 46,460,560 | |||||||||||
INVESTMENT COMPANIES | 3.5% | |||||||||||
Northern Institutional Treasury Portfolio, Premier Class, 5.22%* | 1,712,517 | 1,712,517 | ||||||||||
TOTAL INVESTMENT COMPANIES | ||||||||||||
(Cost $1,712,517) | 1,712,517 | |||||||||||
TOTAL INVESTMENTS | ||||||||||||
(Cost $ 29,644,000) | 98.9% | $ | 48,173,077 | |||||||||
NET OTHER ASSETS (LIABILITIES) | 1.1% | 541,819 | ||||||||||
NET ASSETS | 100.0% | $ | 48,714,896 |
* | The rate presented is the 7-day effective yield in effect at December 31, 2023. |
(a) | Non-income producing security. |
See notes to financial statements.
3
STATEMENT OF ASSETS & LIABILITIES
December 31, 2023 (Unaudited)
| Large Cap | |||
Assets: | ||||
Investments, at cost | $ | 29,644,000 | ||
Investments, at value | 48,173,077 | |||
Receivable for dividends and interest | 83,827 | |||
Receivable for capital shares sold | 6 | |||
Other receivable | 13,722 | |||
Cash | 586,579 | |||
Total Assets | 48,857,211 | |||
Liabilities: | ||||
Investment advisory fees payable | 22,571 | |||
Distribution fees payable | 8,545 | |||
Capital shares redeemed payable | 59,712 | |||
Other fees payable | 41,022 | |||
Administration fees payable (see Note B) | 10,465 | |||
Total Liabilities | 142,315 | |||
Net Assets | $ | 48,714,896 | ||
Class AMF | ||||
Net assets | $ | 40,498,370 | ||
Shares of common stock outstanding | 4,025,435 | |||
Net asset value per share | $ | 10.06 | ||
Class H | ||||
Net assets | $ | 8,216,526 | ||
Shares of common stock outstanding | 822,946 | |||
Net asset value per share | $ | 9.98 | ||
Net Assets | ||||
Paid in capital | $ | 29,074,460 | ||
Distributable earnings | 19,640,436 | |||
Net assets | $ | 48,714,896 |
See notes to financial statements.
4
STATEMENT OF OPERATIONS
For the Six Months Ended December 31, 2023 (Unaudited)
| Large Cap | |||
INVESTMENT INCOME: | ||||
Dividend income | $ | 533,364 | ||
Total investment income | 533,364 | |||
Operating expenses: | ||||
Investment advisory | 153,848 | |||
Accounting | 52,071 | |||
Administration (see Note B) | 62,695 | |||
Distribution — Class AMF Shares | 49,072 | |||
Professional | 36,452 | |||
Registration (includes blue sky fees) | 18,952 | |||
Insurance | 13,050 | |||
Trustee | 32,238 | |||
Printing | 5,516 | |||
Other expenses | 2,314 | |||
Total expenses before reductions | 426,208 | |||
Expenses reduced by Investment Adviser | (23,669 | ) | ||
Net expenses | 402,539 | |||
Net investment income | 130,825 | |||
REALIZED AND UNREALIZED GAINS FROM INVESTMENT ACTIVITIES: | ||||
Net realized gains from investment transactions | 2,491,052 | |||
Change in unrealized appreciation on investments | 897,326 | |||
Net realized and unrealized gains from investment activities | 3,388,378 | |||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 3,519,203 |
See notes to financial statements.
5
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
Large Cap Equity Fund | ||||||||
| Six Months Ended | Year Ended | ||||||
Increase (decrease) in net assets: | ||||||||
Operations: | ||||||||
Net investment income | $ | 130,825 | $ | 253,806 | ||||
Net realized gains from investment transactions | 2,491,052 | 3,463,828 | ||||||
Change in unrealized appreciation on investments | 897,326 | 4,554,465 | ||||||
Change in net assets resulting from operations | 3,519,203 | 8,272,099 | ||||||
Distributions paid to shareholders | ||||||||
Class AMF Shareholders | (3,429,665 | ) | (3,237,395 | ) | ||||
Class H Shareholders | (700,993 | ) | (715,099 | ) | ||||
Total distributions paid to shareholders | (4,130,658 | ) | (3,952,494 | ) | ||||
Capital Transactions: | ||||||||
Class AMF Shares: | ||||||||
Proceeds from sale of shares | 250,935 | 152,861 | ||||||
Value of shares issued to shareholders in reinvestment of dividends | 3,060,902 | 2,730,907 | ||||||
Cost of shares redeemed | (1,308,257 | ) | (3,054,518 | ) | ||||
Class H Shares: | ||||||||
Proceeds from sale of shares | 753,265 | 894,407 | ||||||
Value of shares issued to shareholders in reinvestment of dividends | 1,811 | 1,011 | ||||||
Cost of shares redeemed | (919,540 | ) | (690,900 | ) | ||||
Change in net assets from capital transactions | 1,839,116 | 33,768 | ||||||
Change in net assets | 1,227,661 | 4,353,373 | ||||||
Net Assets: | ||||||||
Beginning of period | 47,487,235 | 43,133,862 | ||||||
End of period | $ | 48,714,896 | $ | 47,487,235 |
See notes to financial statements.
6
LARGE CAP EQUITY FUND — CLASS AMF SHARES
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout the periods indicated.
Six Months | Year Ended June 30, | |||||||||||||||||||||||
| 2023 |
| 2022 | 2021 | 2020 | 2019 | ||||||||||||||||||
Net asset value, beginning of period | $ | 10.19 | $ | 9.30 | $ | 10.33 | $ | 7.91 | $ | 7.96 | $ | 8.39 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income | 0.03 | 0.05 | 0.04 | 0.04 | 0.05 | 0.05 | ||||||||||||||||||
Net realized and unrealized gains (losses) from investments | 0.76 | 1.71 | (0.45 | ) | 2.72 | 0.32 | 0.45 | |||||||||||||||||
Total from investment operations | 0.79 | 1.76 | (0.41 | ) | 2.76 | 0.37 | 0.50 | |||||||||||||||||
Less distributions: | ||||||||||||||||||||||||
From net investment income | (0.04 | ) | (0.05 | ) | (0.04 | ) | (0.04 | ) | (0.05 | ) | (0.05 | ) | ||||||||||||
From net realized gains | (0.88 | ) | (0.82 | ) | (0.58 | ) | (0.30 | ) | (0.37 | ) | (0.88 | ) | ||||||||||||
Total distributions | (0.92 | ) | (0.87 | ) | (0.62 | ) | (0.34 | ) | (0.42 | ) | (0.93 | ) | ||||||||||||
Change in net asset value | (0.13 | ) | 0.89 | (1.03 | ) | 2.42 | (0.05 | ) | (0.43 | ) | ||||||||||||||
Net asset value, end of period | $ | 10.06 | $ | 10.19 | $ | 9.30 | $ | 10.33 | $ | 7.91 | $ | 7.96 | ||||||||||||
Total return | 7.71 | %(1) | 20.16 | % | (5.06 | )% | 35.61 | % | 4.41 | % | 7.68 | % | ||||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||||||
Net assets, end of period (in 000’s) | $ | 40,498 | $ | 39,003 | $ | 35,608 | $ | 40,977 | $ | 32,305 | $ | 34,453 | ||||||||||||
Ratio of net expenses to average net assets | 1.74 | %(2) | 1.69 | % | 1.61 | % | 1.75 | % | 2.01 | % | 1.77 | % | ||||||||||||
Ratio of net investment income to average net assets | 0.51 | %(2) | 0.52 | % | 0.34 | % | 0.42 | % | 0.55 | % | 0.63 | % | ||||||||||||
Ratio of gross expenses to average net assets(3) | 1.84 | %(2) | 1.79 | %(4) | 1.71 | %(4) | 1.85 | %(4) | 2.11 | %(4) | 1.89 | %(3) | ||||||||||||
Portfolio turnover rate | 5 | %(1) | 8 | % | 5 | % | 17 | % | 33 | % | 26 | % |
(1) | Not annualized for periods less than one year. |
(2) | Annualized for periods less than one year. |
(3) | During the periods shown, certain fees were contractually and voluntarily reduced. If such contractual and voluntary fee reductions had not occurred, the ratios would have been as indicated. |
(4) | The impact of the voluntary waivers for the years ended June 30, 2020, 2021, 2022 and 2023 were 0.10%. |
See notes to financial statements.
7
LARGE CAP EQUITY FUND — CLASS H SHARES
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout the periods indicated.
Six Months | Year Ended June 30, | |||||||||||||||||||||||
| 2023 |
| 2022 | 2021 | 2020 | 2019 | ||||||||||||||||||
Net asset value, beginning of period | $ | 10.12 | $ | 9.24 | $ | 10.27 | $ | 7.87 | $ | 7.93 | $ | 8.36 | ||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income | 0.04 | 0.08 | 0.07 | 0.06 | 0.05 | 0.07 | ||||||||||||||||||
Net realized and unrealized gains (losses) from investments | 0.75 | 1.70 | (0.46 | ) | 2.70 | 0.33 | 0.45 | |||||||||||||||||
Total from investment operations | 0.79 | 1.78 | (0.39 | ) | 2.76 | 0.38 | 0.52 | |||||||||||||||||
Less distributions: | ||||||||||||||||||||||||
From net investment income | (0.05 | ) | (0.08 | ) | (0.06 | ) | (0.06 | ) | (0.07 | ) | (0.07 | ) | ||||||||||||
From net realized gains | (0.88 | ) | (0.82 | ) | (0.58 | ) | (0.30 | ) | (0.37 | ) | (0.88 | ) | ||||||||||||
Total distributions | (0.93 | ) | (0.90 | ) | (0.64 | ) | (0.36 | ) | (0.44 | ) | (0.95 | ) | ||||||||||||
Change in net asset value | (0.14 | ) | 0.88 | (1.03 | ) | 2.40 | (0.06 | ) | (0.43 | ) | ||||||||||||||
Net asset value, end of period | $ | 9.98 | $ | 10.12 | $ | 9.24 | $ | 10.27 | $ | 7.87 | $ | 7.93 | ||||||||||||
Total return | 7.91 | %(1) | 20.48 | % | (4.86 | )% | 35.86 | % | 4.56 | % | 7.93 | % | ||||||||||||
Ratios/Supplemental data: | ||||||||||||||||||||||||
Net assets, end of period (in 000’s) | $ | 8,217 | $ | 8,484 | $ | 7,526 | $ | 8,943 | $ | 6,793 | $ | 6,887 | ||||||||||||
Ratio of net expenses to average net assets | 1.49 | %(2) | 1.44 | % | 1.36 | % | 1.50 | % | 1.76 | % | 1.56 | % | ||||||||||||
Ratio of net investment income to average net assets | 0.75 | %(2) | 0.77 | % | 0.58 | % | 0.67 | % | 0.80 | % | 0.85 | %(3) | ||||||||||||
Ratio of gross expenses to average net assets(3) | 1.59 | %(2) | 1.54 | %(4) | 1.46 | %(4) | 1.60 | %(4) | 1.86 | %(4) | 1.64 | %(3) | ||||||||||||
Portfolio turnover rate | 5 | %(1) | 8 | % | 5 | % | 17 | % | 33 | % | 26 | % |
(1) | Not annualized for periods less than one year. |
(2) | Annualized for periods less than one year. |
(3) | During the periods shown, certain fees were contractually and voluntarily reduced. If such contractual and voluntary fee reductions had not occurred, the ratios would have been as indicated. |
(4) | The impact of the voluntary waivers for the years ended June 30, 2020, 2021, 2022 and 2023 were 0.10%. |
See notes to financial statements.
8
NOTES TO FINANCIAL STATEMENTS
December 31, 2023 (Unaudited)
Asset Management Fund (the “Trust”) was reorganized as a Delaware statutory trust on September 30, 1999, and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a diversified open-end management company. As an investment company, as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Update 2013-08, the Trust follows accounting and reporting guidance under FASB Accounting Standards Codification Topic 946, “Financial Services-Investment Companies.” As of December 31, 2023, the Trust is authorized to issue an unlimited number of shares, at no par value, of the Large Cap Equity Fund series (referred to as the “Fund”). Other series of the Trust are not included in this report.
The Large Cap Equity Fund is authorized to issue two classes of shares: Class AMF Shares and Class H Shares. Class AMF and Class H Shares of the Large Cap Equity Fund have the same rights and obligations except: (i) Class AMF Shares bear a distribution fee, while Class H Shares do not have any distribution fee, which will cause Class AMF Shares to have a higher expense ratio and to pay lower dividend rates than those related to Class H Shares; (ii) other expenses, which are determined to properly apply to one class of shares upon approval by the Board, will be borne solely by the class to which such expenses are attributable; and (iii) each class will have exclusive voting rights with respect to the matters relating to its own distribution arrangements.
The Trust maintains an insurance policy that insures its officers and trustees against certain liabilities. Under the Trust’s organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide general indemnification. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund.
A. Significant accounting policies are as follows:
SECURITY VALUATION
Investments are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The valuation techniques employed by the Fund, as described below, maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. These inputs are summarized in the following three broad levels:
Level 1 — quoted prices in active markets for identical assets |
Level 2 — other significant observable inputs (including quoted prices of similar securities, interest rates, prepayment speeds, credit risk, etc.) |
Level 3 — significant unobservable inputs (including the-Fund’s own assumptions in determining the fair value of investments) |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, certain short-term debt securities, if any, may be valued using amortized cost. Generally, amortized cost approximates the fair value of a security, but since this valuation is not obtained from a quoted price in an active market, such securities would be reflected as Level 2 in the fair value hierarchy.
The prices for equity securities are generally provided by an independent third party pricing service approved by the Austin Atlantic Asset Management Company, as the Valuation Designee, as of the close of the regular trading session of the New York Stock Exchange, normally at 4:00 pm EST, each business day on which the share price is calculated. Equity securities listed or traded on a primary exchange are valued at the closing price, if available, or the last sales price on the primary exchange. If no sale occurred on the valuation date, the securities will be valued at the mean of the latest bid and ask quotations as of the close of the primary exchange. Investments in other open-end registered investment companies are valued at their respective net asset value (“NAV”) as reported by such companies. In these types of situations, valuations are typically categorized as Level 1 in the fair value hierarchy.
The Fund’s debt and other fixed income securities, if any, are generally valued at an evaluated bid price provided by an independent pricing source. To value debt securities, pricing services may use various pricing techniques which take into account appropriate factors such as market activity, yield, quality, coupon rate, maturity, type of issue, trading characteristics, call features, credit ratings and other data, as well as broker quotes. Short-term debt securities of sufficient credit quality that mature within sixty days may be valued at amortized cost, which approximates fair value. If a pricing service is unable to provide valuations for a particular security or securities, or the Valuation Designee has determined that such valuations are unreliable, the Board has approved the use of a fair valuation methodology implemented by the Valuation Designee to fair value the security or securities.
In December 2021, the U.S. Securities and Exchange Commission adopted Rule 2a-5 under the 1940 Act, which provides a new framework for fund valuation. The Board has approved procedures consistent with the new Rule, which was effective September 8, 2022. Within the fair value pricing methodology implemented by the Valuation
9
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2023 (Unaudited)
Designee, among the more specific factors that are considered in determining the fair value of investments in debt instruments are: (1) information obtained with respect to market transactions in such securities or comparable securities; (2) the price and extent of public trading in similar securities of the issuer or comparable securities; (3) the fundamental analytical data relating to the investment; (4) quotations from broker/dealers, yields, maturities, ratings and various relationships between securities; and (5) evaluation of the forces which influence the market in which these securities are purchased and sold. The fair valuation process also takes into consideration factors such as interest rate changes, movements in credit spreads, default rate assumptions, repayment assumptions, type and quality of collateral, and security seasoning. Imprecision in estimating fair value can impact the amount of unrealized appreciation or depreciation recorded for a particular security, and differences in the assumptions used could result in a different determination of fair value, and those differences could be material. Depending on the source and relative significance of the valuation inputs in these instances, the instruments may be classified as Level 2 or Level 3 in the fair value hierarchy.
Fair value pricing, including evaluated prices obtained from pricing services, is inherently a process of estimates and judgments. Fair value prices may fluctuate less than market prices due to technical issues which may impact the prices at which the Fund can purchase or sell securities. Market prices can be impacted by technical factors such as short term changes in market liquidity and volatility which may not directly impact fair value prices. In addition, changes in the value of portfolio investments priced at fair value may be less frequent and of greater magnitude than changes in the price of securities that trade frequently in the marketplace, resulting in potentially greater NAV volatility.
While the Trust’s policy is intended to result in a calculation of a Fund’s NAV that fairly reflects security values at the time of pricing, the Trust cannot ensure that fair value prices would accurately reflect the price that a Fund could obtain for a security if it were to dispose of that security, particularly in a forced or distressed sale.
The following is a summary of the inputs used to value the Fund’s investments as of December 31, 2023:
Portfolio | Level 1 - | Level 2 - | Level 3 – | Total | ||||||||||||
Large Cap Equity Fund | ||||||||||||||||
Assets: | ||||||||||||||||
Common Stocks | $ | 46,460,560 | $ | — | $ | — | $ | 46,460,560 | ||||||||
Investment Companies | 1,712,517 | — | — | 1,712,517 | ||||||||||||
Total Investments | $ | 48,173,077 | $ | — | $ | — | $ | 48,173,077 |
As of December 31, 2023, there were no Level 3 securities held by the Fund. There were no transfers to or from Level 3 as of December 31, 2023, based on levels assigned to securities as of December 31, 2023.
10
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2023 (Unaudited)
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid at least quarterly. Net short-term and long-term capital gains, if any, are declared and paid annually.
The distributions from net investment income and from net realized capital gains are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These “book/tax” differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature (e.g. reclass of dividend distribution and return of capital), such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences do not require reclassification. Distributions to shareholders that exceed net investment income and net realized capital gains for tax purposes are reported as distributions of capital.
FEDERAL TAXES
No provision is made for Federal income taxes as it is the policy of the Fund to continue to qualify as a regulated investment company by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of net investment income and net realized capital gains sufficient to relieve it from all, or substantially all, federal income taxes.
For all open tax years and all major taxing jurisdictions, the Trust has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Open tax years are those that are open for examination by taxing authorities (i.e., generally the last three tax year ends as well as the most recent fiscal year end which has yet to be filed). Furthermore, the Trust is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires the Trust 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 increases and decreases in net assets from operations during the reporting period. Actual results could differ from these estimates.
EXPENSE ALLOCATION
Common expenses, which are not attributable to a specific class, are allocated daily to each class of shares based upon its proportionate share of total net assets of the Fund.
Certain expenses that arise in connection with a class of shares are charged to that class of shares.
OTHER
Investment transactions are accounted for no later than one business day after the trade date. However, for financial reporting purposes, investment transactions are reported on the trade date. Interest income is recorded on the accrual basis, amortization and accretion is recognized using the effective interest method and based on the anticipated effective maturity date, and the cost of investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes.
The Fund’s net asset values per share may fluctuate daily. The net asset value per share is determined by dividing the value of all securities and all other assets, less liabilities, by the number of shares outstanding. The value per share is rounded to the nearest whole cent ($0.01).
Under the Trust’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide general indemnification. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund. However, based on experience, the Trust expects the risk of loss to be remote.
REGULATORY UPDATE
Tailored Shareholder Reports for Mutual Funds and Exchange-Traded Funds (“ETFs”) - Effective January 24, 2023, the Securities and Exchange Commission (the “SEC”) adopted rule and form amendments to require mutual funds and ETFs to transmit concise and visually engaging streamlined annual and semiannual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a streamlined shareholder report but must be available online, delivered free of charge upon request, and filed on a semiannual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these amendments on the shareholder reports for the Fund
B. Fees and transactions with affiliates were as follows:
FEES AND TRANSACTIONS WITH AFFILIATES
Austin Atlantic Asset Management Company (“AAAMCO”) serves as investment adviser (the “Adviser”). The Adviser is a wholly-owned subsidiary of Austin Atlantic Inc. (“AAI”). AAI is controlled by Rodger D. Shay, Jr., President of Austin Atlantic Capital Inc. (“AACI”), also a wholly-owned subsidiary of AAI.
11
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2023 (Unaudited)
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 the Fund.
The investment advisory fee rate for the Fund is 0.65% of the first $250 million and 0.55% for assets over $250 million. The Adviser voluntarily waived a portion of its fee in an amount of 0.10% so that the Fund paid 0.55% of average daily net assets for the six months ended December 31, 2023, which cannot be recouped.
The Adviser has retained System Two Advisors, L.P. (“S2”) to perform the daily investment of the assets of the Fund under the terms of a Sub-Advisory Agreement. The Adviser (not the Fund) pays the S2 a fee for these services.
AACI serves the Trust as distributor (the “Distributor”). The Distributor is a wholly-owned subsidiary of AAI.
As compensation for distribution services, the Trust pays the Distributor a distribution fee monthly in accordance with the distribution plan adopted by the Trust, pursuant to Rule 12b-1 under the 1940 Act, based upon an annual percentage of the average daily net assets of the Fund.
The distribution fee rate for the Fund Class AMF Shares is 0.25% of average daily net assets. The Class H Shares do not have a distribution fee.
There were no brokerage commissions paid to the Distributor during the six months ended December 31, 2023.
BUSINESS MANAGER AND ADMINISTRATOR
The Trust has a Management and Administration Agreement with Foreside Management Services, LLC (“Foreside”), who serves as business manager and administrator for the Trust on behalf of the Fund. Pursuant to the terms of the Agreement, Foreside performs and coordinates all management and administration services for
the Fund either directly or through working with the Fund’s service providers. Services provided under the Agreements by Foreside include, but are not limited to, coordinating and monitoring activities of the third party service providers to the Fund; making employees available to serve officers of the Trust, including but not limited to President, Secretary, Chief Compliance Officer, Anti-Money Laundering Officer, Treasurer and others as deemed necessary and appropriate; performing compliance services for the Trust, including maintaining the Trust compliance program as required under the 1940 Act; managing the process of filing amendments to the Trust’s registration statement and other reports to shareholders; coordinating the Board meeting preparation process; reviewing financial filings and filing with the Securities and Exchange Commission; and maintaining books and records in accordance with applicable laws and regulations. Pursuant to the Agreement, the Fund pays Foreside an annual fee of $120,000 plus 0.01% of average daily net assets of the Fund, subject to an aggregate minimum annual fee of $125,000.
C. Transactions in shares of the Fund for the six months ended December 31, 2023 and the year ended June 30, 2023 were as follows:
| Large Cap Equity Fund | |||||||
| Six Months Ended December 31, 2023 | Year ended | ||||||
Shares Transactions Class AMF: | ||||||||
Sale of shares | 23,944 | 16,108 | ||||||
Shares issued to shareholders in reinvestment of dividends | 303,661 | 300,794 | ||||||
Shares redeemed | (128,771 | ) | (318,448 | ) | ||||
Net increase (decrease) | 198,834 | (1,546 | ) | |||||
Shares outstanding | ||||||||
Beginning of Year/Period | 3,826,601 | 3,828,147 | ||||||
End of period | 4,025,435 | 3,826,601 | ||||||
Shares Transactions Class H: | ||||||||
Sale of shares | 75,212 | 97,269 | ||||||
Shares issued to shareholders in reinvestment of dividends | 181 | 113 | ||||||
Shares redeemed | (90,622 | ) | (73,448 | ) | ||||
Net increase (decrease) | (15,229 | ) | 23,934 | |||||
Shares outstanding | ||||||||
Beginning of Year/Period | 838,175 | 814,241 | ||||||
End of period | 822,946 | 838,175 |
12
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2023 (Unaudited)
D. For the six months ended December 31, 2023, purchases and sales of securities, other than short-term investments and U.S. Government securities, were as follows:
| Large Cap | |||
Purchases | $ | 2,118,822 | ||
Sales | 5,193,547 |
E. LIQUIDITY RISK MANAGEMENT PROGRAM
To promote effective liquidity risk management throughout the fund industry regarding fund liquidity and redemption practices, the Securities and Exchange Commission (the “Commission”) adopted Rule (the “Rule”). This Rule requires every registered open-end management company to establish a liquidity risk management program among other things, provides for the assessment, management and review of liquidity risk, the classification of a fund’s portfolio four liquidity buckets based upon the number of days that such investments may reasonably be expected to be converted into of without significantly impacting their price, the establishment of a highly liquid investment minimum where required, the establishment on illiquid investments and periodic reporting to the Board. Additionally, the Commission adopted Rule 30b1-10 and Form N which generally requires a fund to notify the Commission when certain liquidity-related events occur. The Adviser has established Management Program Committee (the “Committee”). The Committee is comprised of the Trust’s Chief Financial Officer and officers Adviser and Sub-Adviser. At the Board’s regular meeting on November 15, 2023, the Program Administrator provided a written report to the Board (the “Report”) on the operation, adequacy the LRMP for the Fund for the period October 1, 2022 through September 30, 2023 (the “Reporting Period”). The Report a discussion of how the Adviser manages liquidity risks associated with the Fund’s investments by monitoring the liquidity and investments during normal and reasonably foreseeable stressed conditions, short-term and long-term cash flow projections reasonably foreseeable stressed conditions and cash and cash equivalents, and by classifying every portfolio investment as liquid, less liquid, or illiquid on at least a monthly basis. The Report stated that during the Reporting Period, the Fund invested 100% of its investments. Because the Fund consisted primarily of highly liquid investments, pursuant to the Rule, no highly liquid investment be established for the Fund. The Report concluded that the LRMP for the Fund has been appropriately designed and implemented operating to assess and manage the Fund’s liquidity risk during the Reporting Period.
F. FEDERAL INCOME TAX INFORMATION:
The tax characteristics of distributions paid to shareholders during the fiscal years ended June 30, 2023 and 2022 for the Large Cap Equity Fund were as follows:
| Distributions paid from Ordinary Income | Net Long | Total Taxable Distributions | Total Distributions Paid | ||||||||||||
2023 | ||||||||||||||||
Large Cap Equity Fund | $ | 254,273 | $ | 3,698,221 | * | $ | 3,952,494 | $ | 3,952,494 | |||||||
2022 | ||||||||||||||||
Large Cap Equity Fund | 193,213 | 2,711,795 | * | 2,905,008 | 2,905,008 |
* | In addition to the long-term capital gain distributions, during 2023 the Fund utilized equalization accounting for tax purposes whereby a portion of redemption payments were treated as distributions of long-term capital gains of $82,674. |
At December 31, 2023, the cost, gross unrealized appreciation and gross unrealized depreciation on securities for federal income tax purposes were as follows:
Fund | Tax Cost | Tax Unrealized Appreciation | Tax Unrealized (Depreciation) | Net Unrealized Appreciation (Depreciation) | ||||||||||||
Large Cap Equity Fund | $ | 29,644,000 | $ | 19,226,865 | $ | (697,788 | ) | $ | 18,529,077 |
13
NOTES TO FINANCIAL STATEMENTS (concluded)
December 31, 2023 (Unaudited)
As of June 30, 2023, the components of distributable earnings/(accumulated deficit) on a tax basis were as follows:
Fund | Undistributed Ordinary Income | Undistributed Long Term Capital | Accumulated Earnings | Distributions Payable | Accumulated Capital and Other Losses | Unrealized Appreciation/ (Depreciation) | Total Accumulated Earnings (Deficit) | |||||||||||||||||||||
Large Cap Equity Fund | $ | — | $ | 2,620,140 | $ | 2,620,140 | $ | — | $ | — | $ | 17,631,751 | $ | 20,251,891 |
The tax character of current year distributions paid and the tax basis of the current components of distributable earnings/(accumulated deficit) and any net capital loss carryforwards will be determined at end of the current tax year. As of December 31, 2023, there were no differences in book and tax basis unrealized appreciation/(depreciation).
The Fund’s ability to utilize capital loss carry-forwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund did not have any capital loss carryforwards at June 30, 2023.
Dividends and distributions are determined in accordance with federal income tax regulations and may differ from accounting principles generally accepted in the United States of America. To the extent these differences are permanent, adjustments are made to the appropriate components of net assets in the period that these differences arise.
Income dividends and capital gains distributions are determined in accordance with federal income tax regulations. Such amounts may differ from income and capital gains recorded in accordance with U.S. GAAP. Accordingly, the Fund may periodically make reclassifications among certain of their capital accounts to reflect differences between financial reporting and federal income tax basis distributions. These reclassifications are reported in order to reflect the tax treatment for certain permanent differences that exist between income tax regulations and U.S. GAAP. These reclassifications may relate to tax equalization, expiration of capital loss carry-forwards and changes in tax characterization. These reclassifications have no impact on the total net assets or the net asset value per share of the Fund. At June 30, 2023 the following reclassifications were recorded:
Fund | Distributable Earnings/ (Accumulated Deficit) | Paid in Capital | ||||||
Large Cap Equity Fund | $ | (82,674 | ) | $ | 82,674 |
G. TRUSTEE COMPENSATION
Each Independent Trustee receives an annual retainer plus meeting fees (which vary depending on meeting type). Collectively, the Independent Trustees were paid $63,600 in fees during the semi-annual period ended December 31, 2023, for the entire Trust, which include other funds not managed by AAAMCO. The Fund paid Trustee compensation in the amount of $31,800. In addition, the Fund reimburses Trustees for out-of-pocket expenses incurred in conjunction with attendance of meetings.
H. SUBSEQUENT EVENTS
Effective as of February 28, 2024, Austin Atlantic Asset Management Co. (“Austin Atlantic”) will no longer serve as investment adviser to the Fund and System Two Advisors L.P. (“S2”), the Fund’s former investment sub-adviser, will serve as investment adviser to the Fund pursuant to an Interim Investment Advisory Agreement (the “Interim Agreement”) for a period of up to 150 days while the Fund seeks to obtain shareholder approval of a new Investment Advisory Agreement with S2 (the “S2 Agreement”). The S2 Agreement will be submitted to the shareholders of the Fund for approval at a special meeting of shareholders of the Fund that is expected to be held in the second quarter of 2024. There can be no assurance that the shareholders of the Fund will vote to approve the S2 Agreement. The investment advisory fee schedule remains unchanged and S2 has agreed to continue the voluntary fee waiver of 0.10% to reduce investment advisory fees to 0.55%.
14
ADDITIONAL INFORMATION
December 31, 2023 (Unaudited)
A. SECURITY ALLOCATION
LARGE CAP EQUITY FUND
Security Allocation | Percentage of |
Assets: | |
Common stocks | 95.4% |
Investment companies | 3.5 |
Total | 98.9% |
B. EXPENSE COMPARISON:
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from July 1, 2023 through December 31, 2023.
ACTUAL EXPENSES
The table below provides information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
| Beginning Account Value 7/1/23 | Ending Account Value 12/31/23 | Expenses Paid During Period*,*** 7/1/23 - 12/31/23 | Expense Ratio During Period** 7/1/23 - 12/31/23 | ||||||||||||
Large Cap Equity Fund - Class AMF | $ | 1,000.00 | $ | 1,077.10 | $ | 9.11 | 1.74 | % | ||||||||
Large Cap Equity Fund - Class H | 1,000.00 | 1,079.10 | 7.81 | 1.49 | % |
* | Expenses are equal to the Fund’s annualized expenses ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent half fiscal year (184) divided by the number of days in the current year (365). |
** | Annualized. |
*** | Expenses do not include fees and expenses incurred indirectly by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds. |
15
ADDITIONAL INFORMATION (concluded)
December 31, 2023 (Unaudited)
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning | Ending | Expenses Paid During Period*,*** 7/1/23 - 12/31/23 | Expense Ratio During Period** 7/1/23 - 12/31/23 | ||||||||||||
Large Cap Equity Fund - Class AMF | $ | 1,000.00 | $ | 1,016.43 | $ | 8.84 | 1.74 | % | ||||||||
Large Cap Equity Fund - Class H | 1,000.00 | 1,017.69 | 7.58 | 1.49 | % |
* | Expenses are equal to the Fund’s annualized expenses ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent half fiscal year (184) divided by the number of days in the current year (365). |
** | Annualized |
*** | Expenses do not include fees and expenses incurred indirectly by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds. |
OTHER INFORMATION:
S2 is responsible for exercising the voting rights associated with the securities purchased and held by the Fund. A description of the policies and procedures that the S2 uses in fulfilling this responsibility and information regarding how those proxies were voted during the twelve month period ended June 30 are available without charge by calling toll free 1-800-247-9780 or on the Securities and Exchange Commission’s website at www.sec.gov.
A complete schedule of the Fund’s portfolio holdings for the first and third fiscal quarter of each fiscal year is filed with the Securities and Exchange Commission as an exhibit to its report on Form N-PORT and is available on the Securities and Exchange Commission’s website at http://www.sec.gov.
The Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request, by calling 800-247-9780.
16
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DISTRIBUTOR
Austin Atlantic Capital Inc.
1 Alhambra Plaza, Suite 100
Coral Gables, FL 33134
ADVISER
Austin Atlantic Asset Management Company
1 Alhambra Plaza, Suite 100
Coral Gables, FL 33134
SUB-ADVISER FOR LARGE CAP EQUITY FUND
System Two Advisors, L.P.
47 Maple Street, Suite 303A
Summit, NJ 07901
FINANCIAL ADMINISTRATION AND TRANSFER AND DIVIDEND AGENT
The Northern Trust Company
50 South LaSalle Street
Chicago, IL 60601
LEGAL COUNSEL
Vedder Price P.C.
222 North LaSalle Street
Chicago, IL 60601
CUSTODIAN
Northern Trust Company
50 South LaSalle Street
Chicago, IL 60603
BUSINESS MANAGER AND ADMINISTRATOR
Foreside Management Services, LLC
Three Canal Plaza, Suite 100
Portland, ME 04101
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Cohen & Company, Ltd.
342 North Water Street, Suite 830
Milwaukee, WI 53202
AMF SEMI 1223
(b) Not applicable.
Item 2. Code of Ethics.
Not applicable for semi-annual reporting period.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reporting period.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reporting period.
Item 5. Audit Committee of Listed Companies.
Not applicable.
Item 6. Schedule of Investments.
(a) The Schedule of Investments in securities of unaffiliated issuers is included in the report to shareholders filed under Item 1 of this Form.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second fiscal quarter of the period covered by this report that have materially affected or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
(a)(1) | Not applicable for semi-annual reporting period. |
(a)(2) | Certifications required by Item 12(a) of Form N-CSR are filed herewith. |
(a)(3) | Not applicable. |
(a)(4) | Not applicable. |
(b) | Certification required by Item 12(b) of Form N-CSR is filed herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Asset Management Fund
By (Signature and Title)
/s/ Troy Statczar | |
Troy Statczar | |
Treasurer |
Date: March 6, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)
/s/ David Bunstine | |
David Bunstine | |
President |
Date: March 6, 2024
By (Signature and Title)
/s/ Troy Statczar | |
Troy Statczar | |
Treasurer |
Date: March 6, 2024