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[STAMP]
AMWAY MUTUAL FUND, INC.
7575 Fulton Street East
Ada, Michigan 49355-7150
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AMWAY
MUTUAL
FUND,
INC.
SEMI-ANNUAL
REPORT
1996
A M W A Y
MUTUAL
F U N D
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Printed in U.S.A. 693672 L-2621-SAJ
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AMWAY MUTUAL FUND, INC.
Dear Shareholders:
We are pleased to send to you the regular Semi-Annual Report of Amway
Mutual Fund, Inc. (the "Fund").
At the Annual Stockholder's Meeting of the Fund, held on June 13, 1996, in
Grand Rapids, Michigan, the Advisory and Service Contract between the Fund and
Amway Management Company, the Sub-Advisory Agreement between Amway Management
Company and Ark Asset Management Co., Inc., and the selection of BDO Seidman,
LLP as auditors for the Fund for the calendar year 1996, were approved. In
addition, elected as Directors for the ensuing year were James J. Rosloniec,
Allan D. Engel, Richard A. DeWitt, Donald H. Johnson, and Walter T. Jones. The
following is a tabulation of the proxy vote:
PROPOSALS SHARES FOR SHARES AGAINST SHARES ABSTAIN
- --------- ---------- -------------- --------------
1) Election of Directors
R. A. DeWitt 6,276,778 (55.96%) 51,102 (00.46%) 0
Allan D. Engel 6,315,541 (56.31%) 12,339 (00.11%) 0
Donald H. Johnson 6,310,089 (56.26%) 17,790 (00.16%) 0
Walter T. Jones 6,309,560 (56.26%) 18,320 (00.16%) 0
J. J. Rosloniec 6,301,372 (56.18%) 26,507 (00.24%) 0
2) Approval of the Investment
Advisory and Service Contract
Between the Fund and Amway
Mgt. Co. 6,037,279 (53.83%) 12,460 (00.11%) 278,140(2.48%)
3) Approval of the Sub-
Advisory Contract Between
Amway Mgt. Co. and Ark Asset
Mgt. Co. 5,998,701 (53.48%) 37,580 (00.34%) 291,598(2.60%)
4) Ratification of the
Selection of BDO Seidman,
LLP as Auditors 6,018,487 (53.66%) 9,943 (00.09%) 299,449(2.67%)
Total record date shares were 11,215,329, total shares voted were 6,327,879,
representing 56.42% of the record date shares voted.
During the early part of 1996, the stock market has continued its strong
performance. Your Fund's net asset value per share has increased from $7.43 on
December 31, 1995 to $8.32 on June 30, 1996.
Your Fund continues to emphasize investments in those stocks possessing
superior earnings growth potential at valuations which are believed to
underestimate that growth. We continue to feel that investments in growth stocks
will be rewarded over the long-term.
We will continue our best efforts to provide you with excellent long term
results.
Respectfully,
AMWAY MUTUAL FUND, INC.
/s/J.J. Rosloniec /s/Allan D. Engel
James J. Rosloniec Allan D. Engel
President and Treasurer Secretary and Assistant Treasurer
DIRECTORS
Richard A. DeWitt
Allan D. Engel
Donald H. Johnson
Walter T. Jones
James J. Rosloniec
TRANSFER AGENT
Amway Stock Transfer Co.
7575 Fulton Street, East
Ada, Michigan 49355(7150)
CUSTODIAN
Michigan National Bank
77 Monroe Center
Grand Rapids, Michigan 49501
AUDITORS
BDO Seidman, LLP
99 Monroe Avenue, N.W.
Grand Rapids, Michigan 49503
LEGAL MATTERS
John Dougherty
Attorney at Law
Suite 500
1155 Connecticut Ave., N.W.
Washington, DC 20036
INVESTMENT ADVISOR
Amway Management Company
7575 Fulton Street, East
Ada, Michigan 49355(7150)
SUB-ADVISOR
Ark Asset Management Co., Inc.
One New York Plaza
New York, NY 10004
2 August 26, 1996
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AMWAY MUTUAL FUND, INC.
SCHEDULE OF INVESTMENTS
June 30, 1996
(Unaudited)
Shares or Market
COMMON STOCK-98.16% Par Value Value
--------- -----
$
AUTO REPAIR, SERVICES,
AND GARAGES-0.65%
Ryder Systems, Inc. 21,200 596,250
----------
BANKING-3.64%
Chase Manhattan Corp. (New) 18,800 1,327,750
First Chicago NBD Corp. 34,600 1,353,725
Nationsbank Corp. 7,700 636,213
----------
3,317,688
----------
BUSINESS SERVICES-4.09%
Dun & Bradstreet Corp. 17,500 1,093,750
Nynex Corp. 900 42,750
Xerox Corp. 48,400 2,589,400
----------
3,725,900
----------
CHEMICALS & ALLIED
PRODUCTS-6.73%
Air Products & Chemicals, Inc. 12,100 698,775
Bristol-Meyers Squibb Co. 31,400 2,826,000
Dupont (E.I.) De Nemours 20,900 1,653,713
Eastman Chemical Co. 7,000 426,125
Pharmacia/Upjohn, Inc. 12,000 532,500
----------
6,137,113
----------
COMMUNICATION-13.67%
AT&T Corp. 58,000 3,596,000
GTE Corp. 21,000 939,750
MCI Communications Corp. 33,900 866,569
SBC Communications, Inc. 31,800 1,566,150
Sprint Corp. Com. 51,200 2,150,400
*Tele Communication Inc. 104,500 1,887,531
360 Communications Co. 12,700 304,800
*US West Media Group 63,100 1,151,575
----------
12,462,775
----------
CREDIT AGENCIES OTHER
THAN BANKS-0.95%
American Express Co. 19,500 870,187
----------
ELECTRIC & ELECTRONIC
EQUIPMENT-7.33%
Alliedsignal, Inc. 32,600 1,862,275
AMP Inc. 30,500 1,223,812
General Electric Co. 8,700 752,550
Raytheon Co. 8,100 418,163
Rockwell International 28,300 1,620,175
Texas Instruments, Inc. 16,200 807,975
----------
6,684,950
----------
ELECTRIC, GAS, & SANITARY
SERVICES-2.87%
Panenergy Corp. 37,800 1,242,675
WMX Technologies 41,900 1,372,225
----------
2,614,900
----------
FABRICATED METAL
PRODUCTS-1.28%
Masco Corp 38,600 1,167,650
----------
FOOD AND KINDRED
PRODUCTS-1.82%
Archer-Daniels-Midland 29,930 572,411
CPC International, Inc. 15,100 1,087,200
----------
1,659,611
----------
GENERAL MERCHANDISE
STORES-3.57%
Dillard Department Stores 21,100 770,150
*Federated Department Stores 23,600 805,350
May Dept. Stores Co. 22,900 1,001,875
Penney, (J.C.) Inc. 13,000 682,500
----------
3,259,875
----------
HEALTH SERVICES-3.71%
Columbia/HCA Healthcare Corp. 36,300 1,937,512
*Humana, Inc. 51,500 920,563
*Tenet Healthcare 24,600 525,825
----------
3,383,900
----------
INSTRUMENTS AND
RELATED PRODUCTS-0.49%
Eastman Kodak Co. 5,800 450,950
----------
INSURANCE CARRIERS-12.39%
Aetna Life & Casualty Co. 19,300 1,379,950
Allstate Corp. 67,800 3,093,375
American International Group, Inc. 10,800 1,065,150
Chubb Corp. 35,000 1,745,625
General RE Corporation 11,000 1,674,750
Loews Corp. 13,000 1,025,375
Unum Corp. 21,200 1,319,700
----------
11,303,925
----------
MACHINERY, EXCEPT
ELECTRICAL-6.77%
Deere & Co. 8,300 332,000
*Digital Equipment Corp. 37,000 1,665,000
Dresser Industries, Inc. 13,500 398,250
International Business Machines 38,200 3,781,800
----------
6,177,050
----------
The accompanying notes are an integral part of these financial statements. 3
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AMWAY MUTUAL FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 1996
(UNAUDITED)
Shares or Market
COMMON STOCK-98.16% Par Value Value
(continued) --------- -----
$
METAL MINING - 1.03%
Newmont Mining Corp. 19,000 938,125
-----------
MISCELLANEOUS
MANUFACTURING
INDUSTRIES - 0.00%
*Jan Bell Marketing Warrants 762 8
-----------
MOTION PICTURES - 2.11%
Time Warner, Inc. 49,000 1,923,250
-----------
OIL AND GAS
EXTRACTION - 5.41%
Burlington Resources 18,600 786,900
Occidental Petroleum Corp. 69,900 1,730,025
*Oryx Energy Co. 11,300 183,625
USX-Marathon Group 53,000 1,066,625
Union Pacific Resources 17,600 470,800
Unocal Corp. 20,700 698,625
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4,936,600
-----------
PAPER & ALLIED
PRODUCTS - 3.30%
Champion International Co. 23,600 985,300
International Paper Co. 13,600 501,500
Kimberly-Clark Corp. 19,700 1,521,825
-----------
3,008,625
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PETROLEUM & COAL
PRODUCTS - 9.11%
Amerada Hess Corp. 22,700 1,217,287
Atlantic Ritchfield Company 13,600 1,611,600
British Petroleum Ltd. 19,600 2,094,750
Exxon Corp. 13,600 1,181,500
Mobil Corp. 12,300 1,379,138
Union Pacific Corp. 11,800 824,525
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8,308,800
-----------
PRIMARY METAL
INDUSTRIES - 0.39%
LTV Corp. (New) 31,200 354,900
-----------
RAILROAD
TRANSPORTATION - 0.99%
CSX Corp. 18,600 897,450
-----------
RUBBER AND MISC. PLASTICS
PRODUCTS - 0.49%
Goodyear Tire & Rubber Co. 9,300 448,725
-----------
SECURITY & COMMODITY
BROKERS & SERVICES - 2.27%
Dean Witter Discover Inc. 36,200 2,072,450
-----------
STONE CLAY & GLASS
PRODUCTS - 1.08%
PPG Industries 20,200 984,750
-----------
TRANSPORTATION
EQUIPMENT - 2.02%
General Dynamics Corp. 9,500 589,000
General Motors Corp. 23,900 1,251,762
-----------
1,840,762
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Total Common Stock - 98.16% $89,527,169
Cash (Michigan National
Bank Money Market
Account) - 2.28% $ 2,081,663
All Other Assets Less Liabilities - (0.44%) $ (407,613)
-----------
NET ASSETS - 100.00% $91,201,219
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-----------
*Non-dividend producing as of June 30, 1996
4 The accompanying notes are an integral part of these financial statements.
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AMWAY MUTUAL FUND, INC.
STATEMENT OF ASSETS
AND LIABILITIES
JUNE 30, 1996
(UNAUDITED)
ASSETS:
Investments in securities, at market
(identified cost $80,281,010)
(Notes 1-A, and 3) $89,527,169
Cash 2,081,663
Receivables:
Securities sold 353,280
Dividends 181,147
Interest 9,391
Capital stock sold 2,794
Prepaid insurance 7,194
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TOTAL ASSETS 92,162,638
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LIABILITIES:
Accounts payable:
Securities purchased 794,596
Advisory fee (Note 4) 126,166
Transfer agent fee (Note 4) 20,740
Capital stock redeemed 18,633
Miscellaneous 1,284
TOTAL LIABILITIES 961,419
NET ASSETS:
Capital stock (20,000,000
shares of $1.00 par value
authorized), amount
paid in on 10,960,209
shares outstanding
(Note 2) $72,727,713
Undistributed net
investment income 540,336
Accumulated net realized
gain on investments 8,687,011
Net unrealized appreciation
on investments 9,246,159
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Net assets equivalent to
$8.32 per share $91,201,219
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COMPUTATION OF MAXIMUM
OFFERING PRICE
OF THE FUND'S SHARES-as of
June 30, 1996:
Net asset value per share
($91,201,219 DIVIDED BY 10,960,209) $ 8.32
Offering price per share (net asset value
plus sales commission)
(1000/970 X $8.32) $ 8.58
INVESTMENT INCOME:
Income:
Dividends $ 928,711
Interest 81,970
Securities Litigation Settlement 1,748
-----------
Total income 1,012,429
Expenses:
Advisory fee
(Note 4) $ 248,290
Transfer agent fee
(Note 4) 120,862
Shareholder
Communications 20,384
Custodian fee 19,141
Data processing
service (Note 5) 15,374
Audit fees 10,800
Corporate taxes 10,004
Legal services 9,100
Insurance 8,849
Registration
fees 3,822
----------
Total expenses 466,626
Fees paid indirectly
(Note 5) (15,374)
-----------
Net Expenses 451,252
-----------
NET INVESTMENT
INCOME 561,177
-----------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain (Note 3) 8,771,546
Unrealized appreciation
on investments:
Beginning of
year 8,130,234
June 30, 1996 9,246,159
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Net change in unrealized
appreciation on investments: 1,115,925
-----------
NET GAIN ON
INVESTMENTS 9,887,471
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NET INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS $10,448,648
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-----------
The accompanying notes are an integral part of these financial statements. 5
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AMWAY MUTUAL FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS YEAR ENDED
ENDED DECEMBER
JUNE 30, 1996 31, 1995
(UNAUDITED) (AUDITED)
------------ ------------
INCREASE IN NET ASSETS:
OPERATIONS:
Investment income-net $ 561,117 $ 885,360
Realized gain on investments-net 8,771,546 12,273,181
Increase in unrealized appreciation-net 1,115,925 5,968,312
------------ ------------
Net increase in net assets
resulting from operations 10,448,648 19,126,853
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Investment income-net -- ( 909,904)
Realized gain from investment
transactions-net -- ( 12,305,317)
------------ ------------
Total distributions to shareholders -- ( 13,215,221)
------------ ------------
CAPITAL SHARE TRANSACTIONS:(Notes 2 and 4)
Net proceeds from sale of shares 14,147,659 13,441,433
Net asset value of shares issued to
shareholders in reinvestment of
investment income and realized
gain from security transactions -- 12,658,471
------------ ------------
14,147,659 26,099,904
Payment for shares redeemed (10,643,383) (13,684,375)
------------ ------------
Increase in net assets derived from
capital share transactions 3,504,276 12,415,529
------------ ------------
Total increase (decrease) 13,952,924 18,327,161
NET ASSETS:
Beginning of period 77,248,295 58,921,134
------------ ------------
End of period (includes undistributed
(overdistributed) net investment
income of $540,335 and ($20,841)
respectively) $ 91,201,219 $ 77,248,295
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AMWAY MUTUAL FUND INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
The company is registered under the Invested Company Act of 1940 as a
diversified, open-end management investment company.
(A) SECURITY VALUATION-Investments in securities listed or admitted to
trading on a national securities exchange are valued at their last
reported sale price before the time of valuation. If a security is
traded only in the over-the-counter market, or if no sales have been
reported for a listed security on that day, it will be valued at the
mean between the current closing bid and asked prices. Securities for
which market quotations are not readily available, including any
restricted securities, (none at June 30, 1996) and other assets of the
Fund are valued at fair market value as determined in good faith by the
Fund's Board of Directors.
(B) FEDERAL INCOME TAXES-The Fund's policy is to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to make distributions of income and capital
gains sufficient to relieve it from substantially all Federal income
taxes.
6 The accompanying notes are an integral part of these financial statements.
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AMWAY MUTUAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)(CONTINUED)
(C) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME-Security
transactions are accounted for on the trade date and dividend income
is recorded on the ex-dividend date. Interest income is recorded on
the accrual basis. Realized gains and losses from security transactions
and unrealized appreciation and depreciation of investments are
reported on a specific identification basis. Dividends and
distributions to shareholders are recorded by the Fund on the ex-
dividend date.
NOTE 2-CAPITAL STOCK
At June 30, 1996, there were 20,000,000 shares of $1.00 par value capital stock
authorized. Transactions in capital stock were as follows:
SIX MONTHS YEAR ENDED
ENDED DECEMBER
JUNE 30, 1996 31, 1995
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Shares:
Outstanding, beginning of period 10,399,006 8,566,411
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Sold 1,905,004 1,917,496
Issued in payment of dividends -- 1,734,037
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1,905,004 3,651,533
Redeemed 1,343,801 1,818,938
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Net increase for the period 561,203 1,832,595
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Outstanding, end of period 10,960,209 10,399,006
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NOTE 3-INVESTMENT TRANSACTIONS
At June 30, 1996, for federal income tax purposes, the cost of investments
owned was $80,287,642. Aggregate gross unrealized gains on securities in which
there was an excess of market value over tax cost was $10,248,571. Aggregate
gross unrealized losses on securities in which there was an excess of tax cost
over market value was $1,009,044. Net unrealized gains for tax purposes was
$9,239,527 at June 30, 1996.
Realized gains from sales of investments were determined on the basis of
specific identification. For tax purposes gains of $8,719,312 were realized on
investments.
For the period ended June 30, 1996, cost of purchases and proceeds from sales
of investments, other than corporate short-term notes, aggregated $50,462,356
and $46,411,669, respectively.
NOTE 4-INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment advisory and service contract between the Fund and Amway
Management Company provides for an annual investment advisory and management
fee, computed daily and payable quarterly, of .55 of 1% of total net assets.
The advisory fees incurred by the Fund amounted to $248,290 for the period ended
June 30, 1996. Under the Principal Underwriter Agreement between the Fund and
Amway Management Company, the adviser receives a net commission for the
distribution of the Fund's shares. This commission amounted to $429,556 for the
period ended June 30, 1996.
Amway Stock Transfer Co. acts as the Fund's agent for transfer of the Fund's
shares and disbursement of the Fund's distributions. The transfer agent fee
incurred by the Fund amounted to $120,862 for the period ended June 30, 1996.
Certain officers and directors of the Fund are affiliated with the investment
adviser and stock transfer agent.
The accompanying notes are an integral part of these financial statements. 7
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AMWAY MUTUAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)(CONTINUED)
The officers serve without compensation from the Fund. Directors' fees,
amounting to $9,500 for the period ended June 30, 1996 were paid by Amway
Management Company, the Fund's investment adviser. The director's payments
consist of an annual retainer plus a per meeting fee.
NOTE 5-DATA PROCESSING SERVICE
Portfolio accounting services for the Fund in the amount of $15,374 for the
period ended June 30, 1996 are paid for through the use of directed brokerage
commissions.
NOTE 6-MATERIAL ISSUANCE OF STOCK
A certain class of distributors of Amway Corporation and Amway of Canada, Ltd.
("corporations") received from each corporation part of its distributor's
profit-sharing bonus in Amway Mutual Fund, Inc. common stock shares. On January
11, 1996, the corporations purchased 1,702,736 Amway Mutual Fund shares valued
at $12,515,107 (based on the net asset value of $7.35 per share) and transferred
the shares to these distributors.
AMWAY MUTUAL FUND, INC.
SUPPLEMENTARY INFORMATION
(SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT EACH PERIOD.)
FINANCIAL HIGHLIGHTS
(INTRODUCTION) SIX MONTHS YEAR ENDED
ENDED DECEMBER
JUNE 30, 1996 31, 1995
(UNAUDITED) (AUDITED)
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Net Asset Value, Beginning of Period $ 7.43 $ 6.88
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .05 .10
Net Gain (Loss) on Securities
(both realized and unrealized) .84 1.98
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Total From Investment Operations .89 2.08
LESS DISTRIBUTIONS
Dividends (from net investment income) -- .11
Distributions (from capital gains) -- 1.42
Returns of Capital -- --
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Total Distributions -- 1.53
------------- ------------
Net Asset Value, End of Period $ 8.32 $ 7.43
------------- ------------
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TOTAL RETURN* 11.98% 30.55%
------------- ------------
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RATIOS/SUPPLEMENT DATA
Net Assets, End of Period 91,201,219 77,248,295
Ratio of Expenses to Average Net Assets .5% 1.1%
Ratio of Net Income to Average Net Assets .6% 1.2%
Portfolio Turnover Rate 53.6% 173.3%
Average commission rate per share $ .0600 $ .0598
*The 3% sales charge is not reflected in the total return and the six months
ended June 30, 1996 is not annualized but an aggregate total return for the
period.
This report is prepared for the information of shareholders. It is authorized
for distribution to prospective investors only if preceded or accompanied by an
effective Prospectus.
8 The accompanying notes are an integral part of these financial statements.
