<PAGE>
AMWAY
MUTUAL
FUND,
INC.
ANNUAL
REPORT
1996
Printed in U.S.A. 795058 L-6882-SAD
BULK RATE
U.S. POSTAGE
PAID
ADA, MI
PERMIT 100
AMWAY MUTUAL FUND, INC.
7575 Fulton Street East
Ada, Michigan 49355-7150
<PAGE>
AMWAY MUTUAL FUND, INC.
Dear Shareholders:
I am pleased to provide you with the Annual Report to Shareholders for Amway
Mutual Fund, Inc. (the "Fund") for the period ended December 31, 1996.
1996 was another extraordinarily successful year for investments in stocks,
with performance well surpassing historical norms for the second straight year.
Your Fund participated in that performance and exceeded the S&P 500 during 1996,
as discussed in the following pages. In addition, the net assets held in the
Fund at the end of 1996 increased to $113,327,402, a 45% growth in assets. As a
result of the increase in net assets the average account size grew from $4,812
to $6,483, an increase of almost 35%. The direct impact of this growth is
increased efficiency, and an overall reduction in the Fund's expense ratio of
more than 9%; from 1.10% to 1.00%. The financial benefit of reduced expenses is
obvious, but more importantly, the reduction was achieved without sacrificing
the customer service that is the foundation of your fund.
Please take a moment to read the following discussion of the market factors
and conditions, and investment stategies and techniques that impacted the Fund's
performance during 1996. Even though equity markets by their very nature may
continue to experience volatility over the next year, you may help to temper the
effects of market volatility on your investments and reduce the risks of market-
timing decisions through a systematic program of investing on a regular basis.
Such a program does not assure a profit and does not protect against loss in a
declining market.
Thank you for your trust in Amway Mutual Fund, Inc. The Fund will continue in
its best efforts to provide you with the performance and customer service you
have come to expect.
Sincerely,
James J. Rosloniec
President
DIRECTORS SUB-ADVISER AUDITORS
Richard A. DeWitt Ark Asset Management Co., BDO Seidman, LLP
Allan D. Engel Inc. 99 Monroe Avenue, N.W.
Donald H. Johnson One New York Plaza Grand Rapids, Michigan
Walter T. Jones New York, NY 10004 49503
James J. Rosloniec
TRANSFER AGENT LEGAL MATTERS
INVESTMENT ADVISER Amway Stock Transfer Co. John Dougherty
Amway Management Company 7575 Fulton Street, East Attorney At Law
7575 Fulton Street, East Ada, Michigan 49355-7150 1155 Connecticut Ave. NW,
Ada, Michigan 49355-7150 Suite 500
CUSTODIAN Washington, D.C. 20036
Michigan National Bank
77 Monroe Center
Grand Rapids, Michigan
49501
2
<PAGE>
AMWAY MUTUAL FUND, INC.
Performance Review
The fund is pleased to provide you with an overview of the performance of your
Fund for the year ended December 31, 1996.
Total Return Performance*
For the Year Ended Dec. 31, 1996
(not adjusted for any sales charge)
Amway Mutual Fund, Inc. 23.18%
Standard & Poor's 500 Stock Index** 22.96%
Following is a review of the Fund's Portfolio Investment Strategy, and
performance results presented by Ark Asset Management Co., Inc., the Fund's Sub-
Advisor.
Investment Review-1996
"The Fund is prepared to respond immediately to changing market circumstances
and expects to have a good year relative to the S&P 500." This quote from Amway
Mutual Fund's 1995 Annual Report appears to be quite prophetic as the Fund
outperformed the S&P 500 in 1996. However, what we couldn't realistically
anticipate was that the S&P 500 would have one of its best years over the last
two decades, netting a return of 22.96% for the year. The Fund's return was an
impressive 23.18%. Considering that market results in 1996 followed an even more
successful 1995, it becomes quite apparent that we are experiencing one of the
most remarkably positive periods for stock prices in the last 50 years. The
market thrived due to several factors; including relatively low and stable
interest rates, modest economic growth, low inflation rate and a stable global
environment (politically and financially).
Due to a heavy weighting relative to the S&P 500 in financial issues and in
the more economically sensitive area of the market, such as papers, metals, and
retail stores, a substantial percentage of the Fund's total return was achieved
in the first half of the year. During the second half of the year and more
specifically, the fourth quarter, the market was fueled by a surge in growth
stocks. This led to an excellent finish and an overall prosperous year for blue
chip stocks. Investments in energy, financial and basic industry issues also
helped the Fund to participate in the progressive rise in stock prices thoughout
1996.
1996 marked the first full year of management of the Fund by the Sub-
Advisor, Ark Investment Management. Ark continued to streamline the Fund and
bring it into line with Ark's investment strategies, which reflect a strong
value discipline in the investment process and the setting of conservative sell
targets on currently held stocks. The value discipline is reflected by
investments in companies that pay dividends on a regular basis, and while not
all issues held will pay a dividend, enough do so that the yield of the Fund
helps counterbalance the effects of a declining market. The result of these
investment styles was that the Fund was able to participate in the market rally
in blue chip stocks (the Fund was already invested in blue chips due to their
dividend paying characterstics) and has also been able to divest itself of
overvalued issues.
3
<PAGE>
AMWAY MUTUAL FUND, INC.
Outlook
By the end of 1996, the general consensus among investment professionals was
that the market was overvalued in most areas and that picking "winners" will be
more difficult in 1997 leading to increased volatility in the market. When
considering Ark's investment strategy of maximizing value, the Fund has
performed better than expected in the continuously rising markets of 1995 and
1996. Conversely, one of the primary objectives of the value strategy is to
position the Fund to perform well in a declining market. More specifically, we
will be looking to take advantage of any downturns in the market by acquiring
attractive long-term issues at a lower price, and on the other hand, we will be
selling any issues that appear to be overvalued during upward trends in the
market. In addition, the Fund begins 1997 with a portfolio which has a slightly
more favorable price/earnings ratio than the S&P 500. This technique puts the
Fund in a position to take advantage of growth in the market and also allows the
Fund to defend its valuation in a declining market.
The major obstacles in 1997 will involve rising interest rates, wages and
subsequently a rise in the Consumer Price Index. Historically, these
contingencies are indicators of a recessionary period and have negative effects
on stock prices. The managment of the Fund will continue to monitor all relevant
market factors and stand ready to respond in an efficient manner that is
consistent with the investment policies previously outlined.
4
<PAGE>
AMWAY MUTUAL FUND, INC.
Average Annual Total Returns***
For Periods Ended 12/31/96 (adjusted for the maximum sales charge of 3.00%)
1 5 10
Year Year Year
19.64% 12.02% 13.80%
Amway Mutual Fund, Inc.
Past performance is not predictive of future performance. Returns and net
asset value fluctuate. Shares are redeemable at current net asset value, which
may be more or less than original cost.
Growth of an assumed $10,000 investment in Amway Mutual Fund from 12/31/86
through 12/31/96.
INSERT GRAPH HERE
EDGAR REPRESENTATION OF DATA POINTYS USED IN PRINTED GRAPHS
<TABLE>
<CAPTION>
Amway Mutual Fund S&P 500 Stock Index
<S> <C> <C>
12-86 10,000 10,000
12-87 10,493 10,526
12-88 11,215 12,274
12-89 14,897 16,163
12-90 15,047 15,659
12-91 21,337 20,431
12-92 21,714 21,988
12-93 24,070 24,200
12-94 22,658 24,520
12-95 29,681 33,722
12-96 36,437 41,464
</TABLE>
In comparing the Amway Mutual Fund, Inc. to the S&P 500, you should also
note that the Fund's performance reflects the maximum sales charge of 3.00%,
while no such charges are reflected in the performance of the S&P 500.
* Total return and average annual total return measure net investment income
and capital gain or loss from portfolio investments, assuming reinvestment
of all dividends and, for average annual total return only, adjustment for
the maximum sales charge of 3.00%. Average annual total return reflects
annualized change while total return reflects aggregate change.
During the periods noted, securities prices fluctuated. For additional
information, see the Prospectus and Statement of Additional Information and
the Financial Highlights at the end of this report.
** The Standard & Poor's 500 Stock Index is an unmanaged index generally
representative of the U.S. stock market.
*** Includes reinvestment of dividends and adjustment for the maximum sales
charge of 3.00%.
5
<PAGE>
AMWAY MUTUAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
COMMON STOCK-98.62% Shares or Market
Par Value Value
---------- ----------
$
BANKING-1.94%
Chase Manhattan Corp. (New) 9,100 812,175
First Chicago NBD Corp. 25,700 1,381,375
----------
2,193,550
----------
BUSINESS SERVICES-7.03%
Cognizant Corp. 19,300 636,900
ITT Corp. *37,600 1,630,900
Nynex Corp. 60,600 2,916,375
Xerox Corp. 52,900 2,783,862
----------
7,968,037
----------
CHEMICALS & ALLIED
PRODUCTS-8.52%
Bristol-Meyers Squibb Co. 17,000 1,848,750
DuPont (E.I.)
De Nemours & Co. 22,400 2,114,000
Eastman Chemical Co. 29,200 1,613,300
Grace (W.R.) & Co. Del (New) 7,000 362,250
Hercules, Inc. 23,000 994,750
Pharmacia/Upjohn, Inc. 54,200 2,147,675
Union Carbide Corp. 14,200 580,425
----------
9,661,150
----------
COMMUNICATION-14.39%
AT&T Corp. 121,600 5,289,600
Fluor Corp. 11,900 746,725
Frontier Corp. 42,200 954,775
GTE Corp. 62,000 2,821,000
SBC Communications, Inc. 41,800 2,163,150
Sprint Corp. Com. 29,800 1,188,275
Tele Communication Inc. *150,000 1,959,375
US West Media Group *63,900 1,182,150
----------
16,305,050
----------
CREDIT AGENCIES OTHER
THAN BANKS-0.50%
American Express Co. 10,100 570,650
----------
ELECTRIC & ELECTRONIC
EQUIPMENT-5.39%
Alliedsignal, Inc. 14,300 958,100
AMP Inc. 44,600 1,711,525
Raytheon Co. 21,700 1,044,312
Rockwell International 25,900 1,576,663
Texas Instruments, Inc. 12,900 822,375
----------
6,112,975
----------
COMMON STOCK-98.62% Shares or Market
(continued) Par Value Value
---------- ----------
$
ELECTRIC, GAS, &
SANITARY SERVICES-1.73%
Texas Utilities Co. 13,400 546,050
WMX Technologies 43,200 1,409,400
----------
1,955,450
----------
FABRICATED METAL
PRODUCTS-1.16%
Masco Corp. 36,500 1,314,000
----------
FOOD AND KINDRED
PRODUCTS-2.14%
Anheuser-Busch Cos. Inc. 13,900 556,000
Archer-Daniels-Midland 59,876 1,317,272
CPC International, Inc. 7,100 550,250
----------
2,423,522
----------
FOOD STORES-0.80%
Albertson's, Inc. 25,300 901,312
----------
GENERAL MERCHANDISE
STORES-6.49%
Dillard Department Stores, Inc. 64,000 1,976,000
Federated Department Stores *65,600 2,238,600
May Dept. Stores Co. 32,700 1,528,725
Sears, Roebuck & Company 35,000 1,614,375
----------
7,357,700
----------
HEALTH SERVICES-4.99%
Columbia/HCA Healthcare Corp. 73,200 2,982,900
Humana, Inc. *63,900 1,222,087
United Healthcare Corp. 32,100 1,444,500
----------
5,649,487
----------
INSTRUMENTS & RELATED
PRODUCTS-0.60%
Eastman Kodak Co. 8,500 682,125
----------
INSURANCE CARRIERS-13.02%
Aetna Inc. 36,900 2,952,000
Allstate Corp. 45,000 2,604,375
American International
Group, Inc. 6,800 736,100
Chubb Corp. 55,900 3,004,625
General RE Corporation 14,800 2,334,700
Loews Corp. 19,400 1,828,450
Unum Corp. 18,000 1,300,500
----------
14,760,750
----------
The accompanying notes are an integral part of these financial statements
6
<PAGE>
AMWAY MUTUAL FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
COMMON STOCK-98.62% Shares or Market
(continued) Par Value Value
--------- ----------
$
LUMBER AND WOOD
PRODUCTS-0.41%
Georgia-Pacific Corp. 6,400 460,800
----------
MACHINERY, EXCEPT
ELECTRICAL-4.00%
Digital Equipment Corp. *55,300 2,011,537
International Business Machines 16,700 2,521,700
----------
4,533,237
----------
METAL MINING-1.66%
Newmont Mining Corp. 42,100 1,883,975
----------
MISCELLANEOUS MANUFAC-
TURING INDUSTRIES-.00%
Jan Bell Marketing Warrants *762 8
----------
MOTION PICTURES-1.61%
Time Warner, Inc. 48,700 1,826,250
----------
OIL AND GAS
EXTRACTION-2.82%
Occidental Petroleum Corp. 96,000 2,244,000
Union Pacific Resources 32,500 950,625
----------
3,194,625
----------
PAPER & ALLIED
PRODUCTS-2.67%
Champion International Corp. 41,000 1,773,250
International Paper Co. 14,400 581,400
Kimberly-Clark Corp. 7,100 676,275
----------
3,030,925
----------
PETROLEUM & COAL
PRODUCTS-4.22%
Amerada Hess Corp. 29,700 1,718,888
Amoco Corporation 13,100 1,054,550
Mobil Corp. 14,200 1,735,950
Texaco, Inc. 2,800 274,750
----------
4,784,138
----------
PRIMARY METAL
INDUSTRIES-1.31%
Aluminum Co. of America 17,200 1,096,500
LTV Corp. (New) 32,900 390,688
----------
1,487,188
----------
COMMON STOCK-98.62% Shares or Market
(continued) Par Value Value
---------- ----------
$
RAILROAD
TRANSPORTATION-1.64%
Burlington Northern Santa Fe 2,200 190,025
CSX Corp. 39,600 1,673,100
----------
1,863,125
----------
SECURITY & COMMODITY
BROKERS & SERVICES-2.44%
Dean Witter Discover, Inc. 41,800 2,769,250
----------
STONE, CLAY & GLASS
PRODUCTS-0.91%
PPG Industries 18,400 1,032,700
----------
TRANSPORTATION
BY AIR-1.84%
AMR Corp. *13,000 1,145,625
Delta Air Lines 13,200 935,550
----------
2,081,175
----------
TRANSPORTATION
EQUIPMENT-4.06%
Ford Motor Co. 80,700 2,572,313
General Motors Corp. 25,000 1,393,750
McDonnell Douglas Corp. 9,900 633,600
----------
4,599,663
----------
WHOLESALE TRADE-
DURABLE GOODS-0.33%
Becton Dickinson & Co. 8,400 364,350
----------
Total Common Stock-98.62% $111,767,167
Cash (Michigan National Bank
Money Market Account)-1.34% $ 1,513,983
All Other Assets Less Liabilities-.04% $ 46,252
NET ASSETS-100% $113,327,402
------------
------------
*Non-dividend producing as of December 31, 1996.
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
AMWAY MUTUAL FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
ASSETS:
Investments in securities, at market
(identified cost $101,853,381)
(Notes 1-A and 3) $111,767,167
Cash 1,513,983
Receivables:
Dividends 220,516
Interest 5,511
Prepaid insurance 2,583
------------
TOTAL ASSETS 113,509,760
------------
LIABILITIES:
Accounts payable:
Advisery fee (Note 4) 153,081
Transfer agent fee (Note 4) 20,477
Accrued expenses 8,800
------------
TOTAL LIABILITIES 182,358
------------
NET ASSETS:
Capital stock (20,000,000
shares of $1.00 par value
authorized), amount
paid in on 14,871,253
shares outstanding
(Note 2) $103,477,968
Overdistributed
net investment
income (23,735)
Overdistributed
net realized gain on
investments (40,617)
Net unrealized
appreciation on
investments 9,913,786
------------
Net assets (equivalent
to $7.62 per share) $113,327,402
------------
------------
COMPUTATION OF MAXIMUM
OFFERING PRICE OF THE
FUND'S SHARES-as of
December 31, 1996:
Net asset value per share
($113,327,402 DIVIDED BY
14,871,253 shares) $7.62
Offering price per share (net asset
value plus sales commission)
(1000/970 x $7.62) $7.86
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
INVESTMENT INCOME:
Income:
Dividends $1,894,573
Interest 153,721
Security litigation settlement 29,428
------------
Total income 2,077,722
Expenses:
Advisery fee (Note 4) 524,637
Transfer agent fee (Note 4) 242,992
Custodian fee 40,740
Shareholder
communications 40,382
Data processing service (Note 5) 30,749
Taxes 26,840
Audit fees 21,023
Insurance 17,340
Registration fees 10,542
Legal services 6,875
------------
Total expenses 962,120
------------
Fees paid indirectly (Note 5) (30,749)
------------
Net expenses 931,371
------------
NET INVESTMENT INCOME 1,146,351
------------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain (Note 3) 17,657,371
Unrealized appreciation on
investments:
Beginning of year $8,130,234
End of year 9,913,786
------------
Net change in unrealized
appreciation on investments 1,783,552
------------
NET GAIN ON INVESTMENTS 19,440,923
------------
NET INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS $20,587,274
------------
------------
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
AMWAY MUTUAL FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Year ended December 31,
-----------------------
1996 1995
-----------------------
NET ASSETS FROM OPERATIONS:
Net investment income $ 1,146,351 $ 885,360
Net realized gain on investments 17,657,371 12,273,181
Net increase (decrease) in unrealized
appreciation 1,783,552 5,968,312
------------ -----------
Net increase (decrease) in net assets
resulting from operations 20,587,274 19,126,853
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (1,149,246) (909,904)
Net realized gain from investment transactions (17,613,452) (12,305,317)
------------ -----------
Total distributions to shareholders (18,762,698) (13,215,221)
------------ -----------
CAPITAL SHARE TRANSACTIONS (Notes 2 and 4):
Net proceeds from sale of shares 31,252,559 13,441,433
Net asset value of shares issued to
shareholders in reinvestments of investment
income and realized gain from security
transactions 18,195,824 12,658,471
------------ -----------
49,448,383 26,099,904
Payment for shares redeemed (15,193,852) (13,684,375)
------------ -----------
Net increase in net assets derived from
capital share transactions 34,254,531 12,415,529
------------ -----------
Net total increase 36,079,107 18,327,161)
NET ASSETS:
Beginning of year 77,248,295 58,921,134
------------ -----------
End of year (includes overdistributed
net investment income of $23,735
and $20,841, respectively) $113,327,402 $77,248,295
------------ -----------
------------ -----------
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
The Company is registered under the Investment 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 is valued at the mean between the current closing bid and ask prices.
Securities for which market quotations are not readily available, including any
restricted securities (none at December 31, 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-It is the Fund's policy 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.
(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.
9
<PAGE>
AMWAY MUTUAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 2-CAPITAL STOCK
At December 31, 1996, there were 20,000,000 shares of $1.00 par value
capital stock authorized. Transactions in capital stock were as follows:
YEAR ENDED DECEMBER 31,
1996 1995
Shares:
Outstanding, beginning of year 10,399,006 8,566,411
----------- -----------
Sold 3,924,168 1,917,496
Issued in payment of dividends 2,435,854 1,734,037
----------- -----------
6,360,022 3,651,533
Redeemed 1,887,775 1,818,938
----------- -----------
Net increase for the year 4,472,247 1,832,595
----------- -----------
Outstanding, end of year 14,871,253 10,399,006
----------- -----------
----------- -----------
NOTE 3-INVESTMENT TRANSACTIONS
At December 31, 1996, the cost of investments owned was $101,869,174 for
federal income tax purposes. Aggregate gross unrealized gains on securities in
which there was an excess of market value over tax cost were $11,794,193.
Aggregate gross unrealized losses on securities in which there was an excess of
tax cost over market value were $1,896,200. Net unrealized gains for tax
purposes were $9,897,993 at December 31, 1996.
Realized gains from sales of investments were determined on the basis of
specific identification. For tax purposes, gains of $17,614,298 were realized on
investments.
For the year ended December 31, 1996, cost of purchases and proceeds from
sales of investments, other than corporate short-term notes, aggregated
$108,722,471 and $91,985,238, 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 $524,637 in 1996. Under the
Principal Underwriter Agreement between the Fund and Amway Management Company,
the advisor receives a net commission for the distribution of the Fund's shares.
This commission paid by the shareholder upon purchase amounted to $478,319 in
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 $242,992 in 1996.
A beneficial shareholder of Amway Management Company and Amway Stock Transfer
Company is also a beneficial shareholder of approximately 20% (as of December
31, 1996) of the outstanding capital shares of the Fund.
Certain officers and directors of the Fund are affiliated with the investment
advisor and stock transfer agent.
The officers serve without compensation from the Fund. Directors' fees,
amounting to $16,000 in 1996, were paid by Amway Management Company, the Fund's
investment advisor. The director's payments consist of an annual retainer plus a
per meeting fee.
10
<PAGE>
AMWAY MUTUAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(Concluded)
NOTE 5-DATA PROCESSING SERVICE
Portfolio accounting services for the Fund in the amount of $30,749 are paid
for through the use of directed brokerage commissions.
NOTE 6-EVENT SUBSEQUENT TO DECEMBER 31, 1996
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 9,
1997, the Corporations purchased 1,657,275 Amway Mutual Fund shares valued at
$12,777,588 (based on the net asset value of $7.71 per share) and transferred
the shares to these distributors.
SELECTED PER SHARE DATA AND RATIOS
(Selected data for each share of capital stock
outstanding throughout each period.)
<TABLE>
<CAPTION>
Year ended December 31,
----------------------
1996 1995* 1994 1993 1992 1991 1990 1989 1988 1987
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of period $7.43 $6.88 $7.71 $7.57 $8.11 $6.82 $7.26 $6.49 $7.87 $7.82
-------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income .10 .10 .03 .02 .02 .06 .08 .16 .16 .13
Net gain (loss) on securities 1.59 1.98 (.49) .78 .10 2.65 (.01) 1.93 .36 .47
-------------------------------------------------------------------------------------
Total from investment
operations 1.69 2.08 (.46) .80 .12 2.71 .07 2.09 .52 .60
-------------------------------------------------------------------------------------
Distributions:
Dividends (from net
investment income) .09 .11 .03 .02 .02 .06 .08 .16 .15 .13
Distributions (from
capital gains) 1.41 1.42 .34 .64 .64 1.36 .43 1.16 1.75 .42
-------------------------------------------------------------------------------------
Total distributions 1.50 1.53 .37 .66 .66 1.42 .51 1.32 1.90 .55
-------------------------------------------------------------------------------------
Net Asset Value, end of period $7.62 $7.43 $6.88 $7.71 $7.57 $8.11 $6.82 $7.26 $6.49 $7.87
-------------------------------------------------------------------------------------
Total Return** 23.18% 30.55% (5.87%) 10.85% 1.77% 41.81% 1.01% 32.83% 6.89% 8.02%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $113,327 $77,248 $58,921 $61,741 $55,342 $53,238 $38,286 $39,029 $31,274 $32,765
Ratio of expenses to
average net assets*** 1.0% 1.1% 1.1% 1.1% 1.1% 1.1% 1.2% 1.2% 1.3% 1.1%
Ratio of net income to
average net assets 1.2% 1.2% .4% .2% .3% .7% 1.1% 2.0% 1.9% 1.4%
Portfolio turnover rate 100.4% 173.3% 78.1% 91.5% 136.5% 160.4% 171.1% 14.6% 135.5% 15.3%
Average commission
rate per share $.0600 $.0598 $.0597 $.0682 $.0691 $.0697 $.0708 $.0684 $.0672 $.0669
</TABLE>
*Effective May 1, 1995 Ark Asset Management Co., Inc. entered into a Sub-
Advisory Agreement with the Fund. Kemper Financial Services previously
served as the Fund's sub-advisor.
**Total return does not reflect the effect of the sales charge.
***The Fund's portfolio accounting services expense in the amount of $2,500
per month ($30,000 annual base fee) was paid through the use of directed
brokerage commissions. Ratio includes fees paid with brokerage commissions
for fiscal years ending after September 1, 1995.
11
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AMWAY MUTUAL FUND, INC.
INDEPENDENT AUDITORS' REPORT
To the Shareholders and
Board of Directors
Amway Mutual Fund, Inc.
Ada, Michigan
We have audited the accompanying statement of assets and liabilities of
Amway Mutual Fund, Inc., including the schedule of investments, as of December
31, 1996, the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended and the selected per share data and ratios for each of the ten years in
the period then ended. These financial statements and per share data and ratios
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and per share data and ratios
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and per share data
and ratios are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and selected per share data and ratios. Our procedures included
confirmation of securities owned as of December 31, 1996 by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement and selected per share data and
ratios presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and selected per share data and
ratios referred to above present fairly, in all material respects, the financial
position of Amway Mutual Fund, Inc. as of December 31, 1996, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the selected per share data and
ratios for each of the ten years in the period then ended in conformity with
generally accepted accounting principles.
BDO SEIDMAN, LLP
Certified Public Accountants
Grand Rapids, Michigan
January 17, 1997
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