AMTRUST VALUE FUND
Prospectus October 31, 1997
PO Box 3467 (800) 532-1146
Victoria, TX 77903-3467 (512) 578-7778
AmTrust Investors, Inc., dba AmTrust Value Fund (the "Fund"),
is a no-load, diversified mutual fund that seeks long-term
growth of capital. The Fund will invest substantially all of
its assets in common stocks of small- and mid-capitalization
companies when, in the opinion of its investment advisor, the
outlook for such investments is favorable. While investments
in companies of this size may present above average risks, the
Fund's investment advisor believes that these companies have
the potential to achieve long-term earnings growth
substantially in excess of the growth of earnings of other
companies. When the investment advisor, AmTrust Capital
Resources, Inc. (the "Advisor"), believes the prevailing market
conditions dictate a conservative position, the Fund may invest
its assets in U.S. Government securities and other short-term,
interest bearing instruments.
The Fund does not represent itself to be a complete investment
program to which prudent investors should commit all of their
investment capital nor is it intended for investors whose
principal objective is income or conservation of capital. The
Fund will sell and redeem its shares at net asset value. The
Fund does not impose any sales charge fee to buy shares or
redemption charge to redeem shares and does not pay any 12b-1
marketing fees. There is a $250.00 minimum investment
requirement to open an account.
The Prospectus sets forth concisely the information about the
Fund that investors should consider before investing and should
be read carefully and retained for future reference.
Additional information about the Fund contained in the
Statement of Additional Information dated October 31, 1997,
which is filed with the Securities and Exchange Commission
("SEC"), is incorporated by reference in this Prospectus, and
is available upon request and without charge by writing or
calling the Fund at the address or telephone number shown at
the top of this page.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus does not constitute an offer to sell securities
in any state or other jurisdiction or to any person to whom it
is unlawful to make such an offer in such state or other
jurisdiction. No person has been authorized to give any
information or to make any representation other than those
contained in the Prospectus and in the Statement of Additional
Information, and if given or made, such information or
representations may not be relied upon as having been
authorized by the Fund or the Advisor.
Page 2
Table of Contents
Fee Table................ 2 Dividends and Distributions... 10
Financial Highlights..... 3 How to open an account........ 11
Investment Objective..... 3 How to buy shares............. 12
Investment Restrictions.. 7 How to redeem shares.......... 13
Management of the Fund... 9 Other information............. 15
Fee Table
Shareholder Transaction Expenses
Sales Load imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee 1.50%
12b-1 Fees None
Other Expenses None
-----
Total Fund Operating Expenses 1.50%
Example: 1 Year 3 Years 5 Years 10 years
You would indirectly pay
the following expenses on
a $1,000 investment,
assuming a 5% annual return,
with or without redemption
at the end of each period. $15 $48 $83 $183
THE EXPENSES IN THE EXAMPLE ABOVE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL
RETURN IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE
GREATER OR LESS THAN THE ASSUMED AMOUNT.
The purpose of the preceding table and example is to assist the
investor in understanding the various costs and expenses that
an investor in the Fund will bear directly or indirectly.
These costs and expenses are described in greater detail under
"Advisor Compensation."
Page 3
Financial Highlights
The following financial highlight information for a share
outstanding throughout each period shown has been audited by
the Fund's independent certified public accountant, Michael S.
Klingle CPA, whose report thereon was unqualified. This
financial highlight information should be read in conjunction
with the Fund's financial statements and the notes thereto,
which are incorporated by reference into the Statement of
Additional Information and the prospectus and appear, along
with Mr. Klingle's report on such financial statements, in the
Fund's 1997 Annual Report to its shareholders. The annual
report is available to shareholders of the Fund without charge
by writing to the Fund or calling the Fund at 1-800-532-1146 or
(512) 578-7778.
For the Fiscal Year Ended
6/30/97 6/30/96
Net Asset Value, Beginning of Period $ 10.75 $ 10.84
Income From Investment Operations:
Net investment income (loss) (0.13) (0.07)
Net realized & unrealized
gains (losses) on securities (0.66) 0.72
------ ----
Total from investment operations (0.79) 0.65
Less Distributions:
Distributions from realized gains (0.35) (0.74)
------ ------
Net Asset Value, End of Period $ 9.61 $ 10.75
====== ======
Total return for the period (9.29)% 6.30%
Ratios/Supplemental Data
Net assets at the end of the period $ 745,668.95 $831,631.77
Ratio of expenses to average net assets 1.60 1.22
Ratio of net investment income (loss)
to avg net assets (1.32) (0.64)
Portfolio turnover rate 33% 87%
Average commission rate paid per share .0576 .1035
Shares outstanding at end of period 79,357.902 77.389.622
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE
The investment objective of the Fund is long-term growth of
capital. Realization of current income is not considered an
investment objective of the Fund, and any current income
realized on the Fund's investments, therefore, will be
incidental to the Fund's objective. There can be no assurance
that the Fund will, in fact, achieve its objective. The Fund's
investment objective may be changed by the Board of Directors
without shareholder approval. If there is a change in the
Fund's investment objective, shareholders will receive written
notice at least 30 days prior to the change becoming effective.
Shareholders then should consider whether the Fund remains an
appropriate investment in light of their then current financial
position and needs.
Page 4
The Fund is subject to certain investment policies and
restrictions, described elsewhere in this prospectus and in the
Statement of Additional Information, which may not be changed
without the approval of the shareholders of the Fund.
ACHIEVING THE OBJECTIVE
The Fund will primarily invest in common stocks of small- to
mid- capitalization companies (companies whose market
capitalization is less than $1 billion) listed on a national
securities exchange or NASDAQ. Although investing in smaller
companies may subject the Fund to more risks and add more
volatility to the Fund's share price, the Advisor believes that
the long-term rewards of these types of investments outweigh
their inherent risks (See "Investment Risks"). The Advisor
does not have pre-set quotas for the portion or amount of the
Fund's assets for investment in small-capitalization companies
as compared to mid-capitalization companies. The only
preferences concerning portfolio security selection is that
only companies whose market capitalization is less than one
billion dollars will be considered for further evaluation and
investment. However, once a security has been added to the
Fund's portfolio, the size of that company will no longer have
a bearing on the Advisor's decision to hold or sell that
particular security. Investments will be selected particularly
on the basis of an evaluation of factors that indicate the
fundamental investment value of the security, such as asset
value, cash flow, revenues, earnings, debt levels, price-
earnings ratios, price-book value ratios, dividend yield, and
perceived future growth prospects (an approach known as "value
investing"). In particular, the Fund intends to buy stocks
that the Advisor feels are undervalued and have future
potential for growth which may not be recognized by the market.
Although the Fund may invest in securities with low price-
earnings ratios relative to the ratios of most major stock
indices, that criteria is not paramount in the evaluation of
stocks for potential investment. The Fund may own stocks which
do not have low price-earnings ratios, but whose fundamental
value, in the view of the Advisor, is greater than that
reflected by the current market prices of those stocks (an
approach known as "growth investing"). However, the Advisor
intends primarily to use the "value investing" approach to
achieve the Fund's investment objective. The Fund may invest
in special situations from time to time. A special situation
arises when, in the opinion of the Advisor, the securities of a
particular company will be recognized and appreciate in value
due to a specific development at that company. Developments
creating a special situation might include, among others, a new
product or process, management change, or a technological
breakthrough. Investment in special situations may carry an
additional risk of loss in the event that the anticipated
development does not occur or does not attract the expected
attention and thus not produce an increase in market value.
The Fund may, for temporary, extraordinary or emergency
purposes, borrow money in an amount not to exceed 5% of its
total assets. If the Fund borrows money, it may grant a
security interest in portfolio securities to secure the
repayment of the money borrowed.
Page 5
Since the Fund's primary objective is long-term growth of
capital, under normal circumstances, at least 65% of the value
of the Fund's total assets will be invested in equity
securities. The Fund may hold U.S. Government securities or
certificates of deposit or put funds on deposit in money market
accounts of commercial banks when, in the Advisor's judgment, a
defensive position is warranted or so that the Fund may receive
a return on its idle cash. If a defensive position is taken by
the Advisor, it will only be a temporary deviation from the
Fund's primary objective of growth of capital. When the Fund
maintains a defensive position, investment income will increase
and may constitute a large portion of the return on the Fund,
and the Fund probably will not participate in market advances
or declines to the extent that it would if it were fully
invested.
PORTFOLIO TURNOVER
The Fund intends primarily to purchase securities for capital
appreciation. If the Advisor is satisfied with the performance
of a security and anticipates continued appreciation, the Fund
will generally retain such security. Changes in the portfolio
will be made whenever the Advisor believes they are advisable,
either as a result of securities in the Fund's portfolio having
reached a price objective, or by reason of developments not
foreseen at the time of the investment decision. Since
investment changes usually will be made without reference to
the length of time a security has been held, a significant
number of short-term transactions may result. However, certain
tax rules may restrict the Fund's ability to sell portfolio
securities in some circumstances when a security has been held
for an insufficient length of time. Increased portfolio
turnover necessarily results in correspondingly higher
brokerage costs of the Fund and results in realized gains and
losses. Each time the Fund realizes gains, there may be tax
consequences to shareholders in non-deferred accounts. Also,
the increased brokerage costs due to frequent buying and
selling by the Fund negatively affects the total return of the
Fund's investments. The rate of portfolio turnover for the
year ended June 30, 1996 was 87% and for the year ended June
30, 1997 was 33%. It is anticipated that the annual portfolio
turnover rate of the Fund will not exceed 100%. A turnover
rate of 100% would occur, for example, if all of the
securities of the Fund were replaced within one year.
INVESTMENT RISKS
Market Risks: The Fund invests primarily in common stocks, and
is, therefore, subject to market risk - the possibility that
stock prices generally will decline over short or even extended
periods. Historically, the stock market tends to be cyclical,
having periods in which stock prices generally rise and
periods when stock prices generally decline. The Fund and the
net asset value attributable to its shares are subject to this
risk. A generally declining market increases the risk that the
market prices of the Fund's portfolio securities may decrease
even without change in the issuing companies' fundamental
financial and business circumstances.
Page 6
The volatility of the market in general may also affect the
Fund's performance. This volatility can be demonstrated by
looking at historical returns measured by the Standard & Poor's
500 Composite Stock Price Index. Such a review shows that
common stocks have provided annual total returns (capital
appreciation plus dividend income) averaging +10.7% for each
successive 10-year period beginning in 1926 through 1994. The
return in individual years during that period has varied from a
low of -43.3% to a high of +53.9%, reflecting the short-term
volatility of stocks prices. Average return may not be useful
for forecasting future returns in any particular period, as
stock returns are quite volatile from year to year.
INVESTMENTS IN SMALL CAPITALIZATION COMPANIES: Common stocks of
small capitalization companies are the Fund's primary
investments. Investments in small capitalization companies, as
compared to mid- and large-capitalization companies, may
involve greater risks. Smaller capitalization companies may
have less resources, more limited product lines, and less depth
in management. Less visible companies sometimes have more
volatility in the trading of their shares and thus can cause
the Fund's share price to be more volatile. Investors should
also recognize that smaller capitalization companies may rise
or fall in value independently of the broad stock market.
Although the Fund will only invest in companies whose market
capitalization is less than $1 billion, the average market
capitalization of the Fund's portfolio securities will normally
be between $100 million and $400 million. For this reason, the
Fund is not intended as a complete investment vehicle but
rather as an investment for those who are financially able to
assume above average risks and share price volatility over
time. Since capital appreciation in stocks of small
capitalization companies are sometimes slow to materialize, the
Fund should be considered as a long-term investment.
FUND MANAGEMENT RISKS: The Advisor manages the Fund according
to the traditional methods of "active" investment management,
which involves the buying, holding and selling of securities
based upon, investment analysis and investment judgment of the
Advisor after the analysis of certain financial and economic
data. The possibility exists that the Fund's Advisor may fail
to achieve its stated objective. The Advisor has been in
operation only since the Fund's inception on August 19, 1993.
Its officers and directors had no experience in the management
of a mutual fund investment portfolio prior to the time of the
Fund's inception.
FOREIGN SECURITIES: The Fund may invest in securities of
foreign companies from time to time. Investors should be aware
that investments in foreign securities may present certain
risks, including those resulting from fluctuations in currency
exchange rates, and political and economic developments.
Securities of some foreign companies, particularly those
principally doing business in developing countries, are less
liquid and more volatile than securities of comparable domestic
companies. The Fund will consider these variables when
selecting investments in foreign securities. The Fund does not
intend to use investments in foreign stocks as a primary means
of achieving the Fund's objective.
Page 7
INVESTMENT RESTRICTIONS
The Fund will not purchase more than 10% of the outstanding
voting securities of any one issuer, and will not invest more
than 5% of the market value of its total assets in securities
of any one issuer (except U.S. Government securities).
Although the Fund has no present plans to limit its size, it
will discontinue sales of its shares if the Advisor believes
that a further increase in its size may adversely affect its
ability to achieve its investment objective by reducing its
flexibility in making investments and in effecting portfolio
changes. In the event that sales of the Fund's shares to
new shareholders are discontinued, existing shareholders at
that time would be permitted to continue to purchase additional
shares and to reinvest any dividends or capital gains
distributions in additional shares. The Fund reserves the
right to recommence sale of shares to new shareholders at any
time it may deem appropriate after a discontinuation.
The Fund may invest in the securities of foreign companies when
these securities meet its standards of selections. Investments
in foreign securities will primarily be made through, but not
restricted to, the investment in "closed-end" investment
companies (mutual funds) whose assets are primarily invested
internationally. The Fund, however, may not invest more than
10% of the Fund's net assets in other investment companies.
See the Statement of Additional Information for further
restrictions concerning investments in other investment
companies.
DERIVATIVE SECURITIES
The Fund is allowed to invest in put or call options. Options
are commonly referred to as "derivative" securities
Prospective investors should be aware that any investment in
derivative securities involves a greater risk of monetary loss.
The fact that options become valueless upon expiration means
that an option holder must not only be correct about the
direction of an anticipated price change in the underlying
interest, but he must also be correct about when the price
change will occur. Thus, if the price of the underlying
security does not change in the anticipated direction before
the option expires to an extent sufficient to cover the cost of
the option, the investor may lose all or a significant part of
his investment in the option. The significance of this risk to
an option holder depends in large part upon the extent to which
the option holder utilizes the leverage of options to control a
larger quantity of the underlying security than he could have
purchased (or sold) directly for the same amount. Although not
to be used as a primary investment strategy, the Advisor may
use options as a way to protect (or "hedge") the Fund's
portfolio from short-term swings in the market due to investor
sentiment. The primary type of option which the Advisor will
use is the "index option" which is so named because the value
or performance of the option is linked to stock indexes or
other financial indicators ("reference indexes"). Prospective
investors should be aware that using index options for hedging
purposes involves special risks. Unless the securities
portfolio of the party using the option exactly mirrors the
securities in an underlying index, the portfolio and the index
may respond differently to a given market influence. Except
where the composition of the securities portfolio to be hedged
is very similar to that of an underlying index, index options
may best be understood as a means of reducing some but not all
of the risks of a securities portfolio position. The Advisor
will report on the Fund's activity in derivative securities to
the Fund's Board of Directors as necessary. In addition, the
board will review the Advisor's policy for investments in
derivative securities annually. (See the Statement of
Additional Information for basic information concerning the
Fund's possible investment in options, including so-called
"index" options).
Page 8
ILLIQUID SECURITIES
The Fund will not invest more than 15% of its net assets in
illiquid securities, including securities that may or may not
be subject to restrictions on their resale. Investments in
illiquid securities involve certain risks to the extent that
the Fund may be unable to dispose of such a security at the
time desired or at a reasonable price or, in some cases, may be
unable to dispose of it at all. Securities which may be resold
only to qualified institutional buyers in accordance with the
provisions of Rule 144A under the Securities Act of 1933 are
considered "restricted securities" and will be considered as
illiquid securities and thus be subject to the same investment
restrictions as illiquid securities. Restricted securities are
those securities which are not registered under the Securities
Act of 1933 and which are generally issued in small quantities
to institutional or individual investors. Restricted
securities can be sold only in a privately negotiated
transaction or after the filing of a registration statement.
The market for such securities is generally illiquid. In
addition, in order to resell a restricted security, the Fund
might have to incur the potentially substantial expense and
delay associated with effecting registration. Since its
inception, the Fund has not invested in any illiquid security
and at the present time does not intend to do so. The Advisor
has agreed that before the Fund invests in illiquid securities,
specific approval of the board of directors will be requested
and the appropriateness of the proposed investment will be
determined.
The Fund reserves the right to change any of its policies,
practices and procedures described in the Prospectus, including
the Statement of Additional information, without shareholder
approval except for those instances where shareholder approval
is expressly required. The Statement of Additional Information
sets forth a number of additional investment restrictions
applicable to the Fund.
Page 9
MANAGEMENT OF THE FUND
RESPONSIBILITIES OF BOARD OF DIRECTORS
The Fund's Board of Directors sets the broad policies of the
Fund, elects its officers and is responsible for major
decisions relating to the Fund's policies and objectives. The
Directors review the performance of the Advisor and make
assessments as to whether the objectives and policies of the
Fund are being met. The Directors will comply with all laws of
the State of Texas as relating to the operation of the Fund.
Due to the small asset size of the Fund, the independent
directors received no compensation for there services during
the latest fiscal year ended June 30, 1997.
INVESTMENT ADVISOR
The Fund has an Investment Advisory Agreement with AmTrust
Capital Resources Inc. (referred to herein as the "Advisor"),
PO Box 3467, Victoria, TX 77903-3467. AmTrust Capital
Resources, Inc. has served as the Fund's Advisor since the
inception of the Fund on August 19, 1993. Neither the Advisor
nor any of its officers or directors had any prior experience
in advising an investment company prior to commencing to advise
the Fund. Mr. Jimmy Baker is President and Chairman of the
Board of the Advisor and owns 50% of the outstanding voting
stock of the Advisor. As of the date of this prospectus, Mr. Baker has
received no compensation for services provided to the Advisor.
No other person owns in excess of 10% of the outstanding stock
of the Advisor. Currently, the President is the only
individual affecting the day to day management of the Advisor.
Due to these circumstances, the Advisor has insured the life
of the President in order to, in the event of his untimely
death, assist in the continued management of the Fund.
The Advisor furnishes continuous advice and recommendations
concerning the Fund's investments, and is responsible for
selecting the broker-dealers who execute the portfolio
transactions for the Fund.
ADVISOR COMPENSATION
Under the Advisory Agreement, the Fund has agreed to compensate
the Advisor for its services by the payment of a monthly fee at
a specified annual rate, one and one-half percent (1.50%) as of
June 30, 1997, of the average daily net asset value of the
Fund. The annual rate is based on the previous thirty (30) day
moving average of the Fund's net assets beginning at 1.50% of
the first two million dollars and dropping .05% for specific
asset size increases with a maximum annual rate of 1.25% of
assets over ten million dollars. A copy of the Advisory
Agreement is available upon request. The fee is calculated
each day by multiplying the specified annual rate times the
aggregate average daily closing value of the Fund's net assets
during the previous thirty (30) days by a fraction, the
numerator of which is one (1) and the denominator of which is
three hundred sixty five (365) or three hundred sixty six (366)
in leap years.
Page 10
Pursuant to the Advisory Agreement, the Fund pays a management
fee which is higher than most investment companies. However,
most, if not all, of such companies also pay much of their
other fund expenses, while AmTrust Value Fund's expenses are
limited to the management fee and the usual brokerage
commissions associated with buying and selling securities.
AmTrust Capital Resources, Inc. also acts as the Fund's
transfer agent and the dividend paying agent. The Advisor
provides all services to keep, prepare, or file such accounts,
books, records, or other documents as the Fund may be required
to keep under federal or state law, or to provide any similar
services with respect to the daily administration of the Fund.
The Advisor also issues checks to shareholders for redemptions,
dividends and capital gains distributions. During the fiscal
year ended June 30, 1997, the Advisor was paid $11,401.51 for
the services provided by it to the Fund.
SHAREHOLDER INQUIRIES
Shareholders can make inquiries about the Fund or their
personal account by calling or writing the Fund at the address
or one of the telephone numbers listed on the cover page.
DIVIDENDS & DISTRIBUTIONS
The Fund will make annual distributions of substantially all of
its investment income and net realized capital gains. If
dividends and capital gains distributions are not automatically
reinvested in additional Fund shares, checks for cash dividends
will be mailed to shareholders, usually within ten days after
the record date of the distribution. Distributions are made on
a per-share basis. The value of a share is reduced by the
amount of any dividend or distribution paid.
If shares are purchased shortly before a distribution, the full
price of the shares will be paid and some portion of the price
may then be returned to the shareholder as a taxable dividend
or capital gain, depending on the type of taxpayer. However
the cost basis of those shares will increase accordingly. All
dividends and capital gains distributions are subject to taxes
(except for shareholders exempt from income tax) whether such
dividends and distributions are received in cash or reinvested
in additional shares of the Fund, regardless of the length of
time the shares have been held. Full information regarding
dividends and capital gains distributions will be sent to
shareholders for tax purposes by January 31 of each year. In
addition to federal taxes, Fund distributions may also be
subject to state taxes.
DISTRIBUTION OPTIONS
When opening a new account, you should elect on the new account
application one of the following options as to how
distributions will be paid by the Fund.
1) You may reinvest your income dividends and capital gains
distributions in additional shares of the Fund. Unless you
affirmatively elect another option, this option will be
automatically elected for you.
2) You may receive your income dividends and capital gains
distributions in cash.
Page 11
3) You may receive either your income dividends or capital
gains distributions in cash and reinvest the other funds
payable to you in additional shares of the Fund.
Distribution options can be changed anytime by writing or
calling the Fund no later than 10 days before the date on which
the next distribution will be paid.
TAXES
The Fund has elected to be taxed under Subchapter M of the
Internal Revenue Code of 1986, which means that since the Fund
distributes all of its income, it pays no income taxes. For
federal income tax purposes, dividends paid by the Fund and
distributions from net realized short-term capital gains,
whether received in cash or reinvested in additional shares of
the Fund, are taxable to the shareholders as ordinary income.
Distributions paid by the Fund from net realized long-term
capital gains, whether received in cash or in additional shares
of the Fund, are taxable to the shareholders as long-term
capital gains. The capital gain holding period is determined
by the length of time the Fund has held the security and not
the length of time you have held shares in the Fund.
This section is not intended to be a full disclosure of present
or proposed federal income tax laws. There may be other
federal, state or local tax considerations applicable to a
particular investor. You are urged to consult your tax
advisor.
HOW TO INVEST IN THE AMTRUST VALUE FUND
Complete and sign the New Account Application which is included
with this Prospectus (a special application is required for
IRAs and other retirement plans) and forward that application
with your check to:
AmTrust Value Fund
PO Box 3467
Victoria, TX 77903-3467
Make your check payable to AmTrust Investors, Inc. All
purchases should be made in U.S. dollars and checks must be
drawn on U.S. banks. Cash will not be accepted. The minimum
initial investment is $250.00. Additional investments of as
little as $50.00 may be made.
The Fund will mail to you, a quarterly statement of your
account and a transaction confirmation statement every time
there is any activity in your account. Each confirmation
statement includes a detachable stub to be included when making
additional investments.
NET ASSET VALUE ("NAV")
The net asset value of the Fund shares is determined at the
close of the regular trading session of the New York Stock
Exchange (normally 4:00 pm Eastern time) each day that the
Exchange is open. The NAV per share is determined by dividing
the total value of the securities and other assets, less
liabilities, of the Fund, by the total number of shares of the
Fund outstanding. Securities are valued at market value (the
same closing price as listed daily in the Wall Street Journal)
or, if market information is not readily available, the fair
value of that security as determined in good faith by the
Fund's Board of Directors.
Page 12
RETIREMENT PLANS
If you are eligible, you may set up your account under a tax-
sheltered retirement plan. These plans let you save for
retirement and shelter your investment income from current
taxes. A contribution to these plans may be deductible from
your taxable income, depending upon your personal tax
situation. Distributions from these plans are generally
subject to ordinary income tax, and may be subject to an
additional 10% excise tax if withdrawn prior to age 59 1/2.
However, you must start withdrawals no later than April 1 of
the year after you reach age 70 1/2. The Fund can be used for
the following retirement plans:
Individual Retirement Accounts (IRA) Keogh (HR - 10)
Simplified Employee Pension Plan (SEP) Section 403(b)(7) Plan
Profit Sharing or Money Purchase Pension Plans
You should consult your tax advisor if you are interested in
making an investment in shares of the Fund through any of these
plans. These plans require the completion of a separate
application. Please call 1-800-532-1146 or (512) 578-7778 for
additional information about such an application.
HOW TO BUY SHARES
BY MAIL:
Once your Fund account has been established, you may purchase
additional shares ($50 minimum) at any time by sending a check
or money order payable to AmTrust Investors, Inc. Please note
your fund account number on the check and include the
remittance stub (or a copy thereof) from one of your
confirmation statements you received in connection with a
previous transaction.
PRE-AUTHORIZED PURCHASES:
Shareholder Options allows you to authorize the Fund to debit
your bank account ($50 minimum) for the purchase of Fund shares
on or about the 5th or 20th of each month. To establish pre-
authorized purchases, complete the applicable Shareholder
Options portion of the enclosed application and include a
voided, unsigned check from the bank account to be debited.
BY TELEPHONE:
If you wish to make purchases of Fund shares by telephone, you
must complete the Shareholder Options portion of the
application applicable to telephone purchases. To receive a
specific day's share price, your call must be received before
that day's close of the New York Stock Exchange (See "NAV"
above).
Page 13
PAYING FOR SHARES
Your purchase will be processed at the NAV per share as
determined at the close of the New York Stock Exchange next
occurring after your order is received and accepted. The Fund
does not impose a sales or redemption charge on transactions in
shares of the Fund. Payment for telephone purchases will be
paid by a debit to the bank or savings account listed in the
Shareholder Options section of the account registration. If
your check or debit does not clear, the Fund will cancel your
purchase and you will be liable for any losses or fees incurred
by the Fund in connection with the attempted purchase.
TAX IDENTIFICATION NUMBER
On the New Account Application or other appropriate form, you
must furnish the Fund with your tax identification number and
state whether or not you are subject to backup withholding,
certified under penalties of perjury as prescribed by the
Internal Revenue Code and Regulations. Redemptions, as well as
dividends and capital gains distributions, in an account
without a proper taxpayer identification number will be subject
to a 31% federal backup withholding. In addition to the 31%
backup withholding, redemption proceeds on established accounts
will be reduced by $50 to reimburse the Fund for the penalty
that the IRS will impose on the Fund for failure to report your
tax identification number on information reports.
REDEMPTIONS OR REPURCHASE
HOW TO REDEEM SHARES
You may redeem all or part of your shares on any business day.
The shares will be redeemed for a price equal to the next NAV
calculated after the Fund has received your redemption request
in good order and meeting all of the requirements of this
Prospectus. Payments will be made within seven days of receipt
of a valid redemption request. If certificates for the shares
being redeemed have been issued, they must be submitted with
your redemption request in order for the request to be
considered valid. If your payment for the shares being
redeemed has been made by check or automatic monthly
investment, payment for the redemption will be made immediately
after your check clears.
IN WRITING:
To request a redemption in writing, send or fax a letter of
instruction to:
AmTrust Value Fund
Attn: Redemption Dept.
PO Box 3467
Victoria, Texas 77903-3467
Fax Number 512-575-5097
Page 14
The letter should specify the number of shares or dollar amount
being redeemed, the account number, the name(s) on the account,
your name and your daytime telephone number. The following
requirements also apply to certain types of accounts:
1)Individual, Joint Accounts: Letter of instruction signed by
each person included in the registration, exactly as the
name(s) are shown on the account.
2)Custodian: Letter of instruction signed by the custodian
exactly as shown in the registration and indicating his/her
capacity as custodian.
3)Corporation: Letter of instruction signed by the person(s)
authorized to act on the account and a currently certified copy
of the corporate resolution.
4)Trust: Letter of instruction signed by the trustee(s). If
the name of the trustee(s) does not appear in the registration
of the account, a certificate of incumbency dated within 60
days must also be submitted.
5)IRA,SEP,KEOGH: Letter of instruction signed by the account
owner exactly as registered. If you do not want Federal Income
Tax withheld from your redemption, your letter must so state
that you elect not to have such withholding apply.
6)Other Pension Plans: Please call the Fund for further
instructions.
Redemptions of IRA, SEP, and Keogh plans, if made directly to
the account owner may be subject to 31% back-up withholding.
Redemptions payable directly to a trustee or custodian will not
be subject to the 31% back-up withholding.
All of the above requests must include a signature guarantee
unless the exclusion of such requirement was chosen in the
account registration. The Fund reserves the right to require a
signature guarantee under any circumstances. All redemptions
in excess of $30,000 will require a signature guarantee.
BY TELEPHONE:
Redemptions may be made by telephone if this option has been
pre-established by completing the appropriate shareholder's
options section of the account application. To receive a
specific day's NAV, your call must be received before the close
of the New York Stock Exchange on that day. Payment for
telephone redemptions will be made within seven days of the
request, subject only to whether the shares being redeemed have
been fully paid. There is a $30,000 maximum on telephone
redemptions. If you would like to establish this option on an
existing account, please call for additional information and
the proper form. If telephone redemption and/or waiver of
signature guarantee is established by the shareholder, the
shareholder agrees that AmTrust Investors and their officers or
employees may be liable for fraudulent instructions received,
ONLY if the Fund, the officers or employees do not follow
certain procedures required to verify the genuineness of any
signature or oral instructions to redeem, or the authority or
competence of the person(s) giving such instructions. These
procedures include but are not limited to, requiring the
person(s) making the request to know certain basic information
about the account, such as the account number, federal tax
identification number, and the name and address on the account
as registered.
Page 15
BY THE FUND:
Your account may be terminated by the Fund if you engage in
illegal or other conduct the Board of Directors deems to be
detrimental to the Fund. Conduct deemed to be detrimental
might include (1) a purchase or possible redemption by a
shareholder that could make the Fund vulnerable to that
shareholder's individual influence, specifically in an instance
in which a shareholder who owns or will own a large percentage
of the Fund's outstanding shares desires to redeem his or her
shares, and the redemption of such shares would cause an
adverse effect on the Fund's shareholders and its net assets,
or (2) conviction of a shareholder for the violation of any
State or Federal securities law.
DELAY OF REDEMPTION PROCEEDS:
The Fund may hold payments on redemptions until the investment
being redeemed has been paid. Unless purchased with a cashiers
check, shares will be considered paid when the check for the
purchase has cleared.
FURTHER INFORMATION ABOUT THE FUND
The Fund is incorporated under the laws of the State of Texas
as of January 25, 1993. The Fund has a fiscal year that ends
on June 30 of each year. The Fund will hold an annual
shareholders' meeting within six (6) months following the close
of each fiscal year.
All inquiries may be made by mail to the Fund's corporate
office, or by telephone to 1-800-532-1146, (For local Victoria
area callers: 512-578-7778).
The Fund is an open-end diversified management company under
the Investment Company Act of 1940. The Fund began operations
on August 19, 1993. Due to the short operating history of the
Fund, investors will not have the ability therefore to analyze
and evaluate the expertise of the Fund or the Advisor.
The authorized capital stock of the Fund consists of 10,000,000
shares with a par value per share of $0.001. Each share is
entitled to one vote on all questions and matters that come
before the shareholders of the Fund. Shares have non-cumulative
voting rights, which means that the holders of more than 50% of
the shares voting for the election of directors can elect all
of the directors of the Fund if they choose to do so, and in
such event the holders of the remaining shares will not be able
to elect any person or persons to the board of directors. The
shareholders are not entitled to pre-emptive or other rights,
or to any liquidation preference or other preferences.
END OF PART A
Page 1
Part B
AmTrust Investors, Inc.
Statement of Additional information
This Statement of Additional information is not a prospectus,
but should be read in conjunction with the Fund's current
Prospectus, dated October 31, 1997. A copy of the Prospectus
can be obtained free of charge by writing AmTrust Investors,
Inc. PO Box 3467, Victoria, TX 77903-3467 or by calling (800)
532-1146 or (512) 578-7778.
The Statement of Additional Information is dated October 31, 1997.
Table of Contents
Cover Page ......................................... 1
Investment Objectives & Policies.................... 2
Management of the Fund.............................. 4
Control Persons & Holders of the Fund............... 5
Custodian, Accountant, Transfer Agent............... 6
Brokerage Allocation & Other Practices.............. 6
Calculation and Performance Data.................... 7
Financial Statements................................ 8
Page 2
INVESTMENT OBJECTIVE & POLICIES
The Fund has numerous investment policies to which it will
adhere in attempting to achieve its investment objective. The
following policies supplement the Fund's investment objective
and policies as described in the Prospectus. None of the
policies as listed under "Investment Objectives & Policies" may
be changed without shareholder approval.
SENIOR SECURITIES - The Fund will not issue any senior
securities, i.e. securities that give their holders
preferential rights over those of the holders of the common
stock of the Fund.
SHORT SALES, PURCHASES ON MARGIN, OPTIONS - The Fund will not
participate in short sales or purchase securities on margin.
The Fund may purchase put and call options. An option is the
right either to buy or to sell a specified amount or value of a
particular underlying interest at a fixed exercise price by
exercising the option before its specified expiration date. An
option which gives a right to buy a particular security is a
call option, and an option which gives a right to sell a
particular security is a put option. Calls and puts are
distinct types of options, and the buying or selling of one
type generally does not involve the other. Their are risks
involved in the use of options of which a potential investor
should be aware. There are additional risks of investing in
options not described in the prospectus. An option holder who
neither sells the option in the secondary market nor exercises
it prior to its expiration will lose his entire investment in
the option. Options are considered "in the money" if (a) for a
call option, the exercise price is lower than the price of the
underlying security, and (b) for a put option, the exercise
price is higher than the underlying security. To be
profitable, the option must also be more "in the money" than
the original cost of the option. The more an option is "out of
the money" and the shorter the remaining time to expiration,
the greater the risk that an option holder will lose all or
part of his investment in the option. This doesn't mean that
an option must be "in the money" before it can be a profitable
investment. It may be possible for the holder of an option to
realize a profit by selling an option prior to its expiration
for more than its original cost, even though the option never
becomes "in the money". The transaction costs incurred in
investing in options are often greater than are the transaction
costs associated with buying the underlying interest or
security directly. Thus profitability is more greatly impacted
due to the higher transaction costs. Potential investors in
the Fund should be aware that options are versatile instruments
that can be used in a wide variety of investment strategies.
The Advisor is aware of the risks of investments in options and
uses due diligence in determining when such an investment is
appropriate for the Fund.
BORROWING MONEY - The Fund may borrow on a short-term basis for
temporary, extraordinary or emergency purposes. If the Fund
borrows money, it may grant a security interest in portfolio
securities to secure the repayment of the money borrowed. The
maximum borrowing is limited to five percent (5%) of the Fund's
net asset value.
Page 3
PURCHASE/SALE OF REAL ESTATE OR REAL ESTATE MORTGAGE LOANS -
The Fund may not acquire an interest in real estate, real
estate loans, nor real estate limited partnerships.
COMMODITIES - The Fund will not acquire an interest in
commodities or commodity contracts, or in oil, gas or mineral
leases.
LOANING CASH OR OTHER SECURITIES - The Fund may not purchase
non-publicly offered debt securities. The Fund may not make
loans of any kind.
OTHER - The Fund may not invest more than 15% of the Fund's net
assets in illiquid or restricted securities. The Fund will not
invest in warrants.
Fundamental Concentration Policy - The Fund will not invest
more than 25% of the market value of its total assets in
securities issued by companies engaged in the same industry
(except U.S. Government securities).
INVESTMENTS IN OTHER INVESTMENT COMPANIES
The Fund is allowed to invest in closed-end investment
companies. A closed-end investment company is a mutual fund
that issues a fixed number of shares and is traded on a
national securities exchange. Investors should be aware that
the Fund, which has its own operating expenses (see
prospectus), may invest in other funds, which also have
operating expenses that may be passed through to the other
fund's shareholders. Shareholders of the Fund should realize
that they would indirectly be incurring some duplicate
expenses. The aggregate investment in other investment
companies may not be more than 10% of the Fund's net assets.
The Fund may not acquire more than 3% of the outstanding stock
of an investment company and may not invest more than 5% of the
Funds net assets into any single investment company.
Currently, the Fund does not intend to implement the purchase
of "closed-end funds" as a primary means of achieving the
objectives of the Fund.
MANAGEMENT OF THE FUND AND ITS COMPENSATION
The Fund's officers, under the supervision of the Board of
Directors, manage the day-to-day operations of the Fund. The
Directors, who are elected annually by the shareholders, set
broad policies for the Fund and choose its officers. A list of
the Directors and Officers of the Fund and a brief statement of
their present positions and principal occupations during the
past five years is set forth below.
Position(s) Position(s) Princ Occup(s)
held with held with during last
Name & Address the Fund the Advisor 5 years
- -------------------- ------------- ------------- --------------
*(1) Jimmy Baker(a) Director Director CPA
President President
205 Roanoke,Victoria,TX Fund Mgr
*(2) Mickey Pachta Director None Lawyer
210 Brocton,Victoria, TX
(3) Paul Erdelt Director None Art Director
Star Rt, Garcitas #20,Victoria, TX Commerc'l Advt
*(4) Jesse Baker Director None Accountant
Secretary (Retired)
101 Westchester,Victoria, TX
(5) Paul Teinert Director None CPA
209 Fenway,Victoria, TX Self Employed
* Is also a director or shareholder of the Advisor and is an
"interested" person.
(a) Jimmy Baker is the son of Jesse Baker
AmTrust Capital Resources, Inc.(the "Advisor") acts as the
investment advisor to the Fund. Mr. Jimmy Baker is President
and Director of the Advisor and owns 50% of the Advisor's
capital stock. No other shareholder of the Advisor owns more
than 10% of the outstanding shares of the Advisor.
Page 4
The Advisory Agreement sets forth the services to be provided
by the Advisor to the Fund. Pursuant to the Advisory Agreement,
the Advisor renders its advisory services, furnishes office
facilities and equipment, provides clerical, bookkeeping and
administrative services for the Fund, provides shareholder and
information services, permits any of its officers or employees
to serve without compensation as directors or officers of the
Fund if elected to such positions and assume the obligations
described in the prospectus for the compensation described
below. The Advisor acts as an independent contractor, and
unless otherwise expressly authorized to do so, does not have
authority to act for or represent the Fund in any way or
otherwise act as agent of the Fund. The Advisor maintains the
Fund's records and calculates performance data for the Fund.
The only compensation paid by the Fund to any person is the
management advisory fee paid to the Advisor. Such fee is
calculated each day by multiplying the annual rate, one and
one-half percent (1.50%) as of the date of the prospectus and
this Statement of Additional Information, of the aggregate
average daily closing value of the Fund's net assets during the
previous thirty (30) days by a fraction, the numerator of which
is one (1) and the denominator of which is three hundred sixty
five (365) or three hundred sixty six (366) in leap years. No
advisory fee was paid until thirty (30) days after issue of the
first shares of the Fund, which occurred on August 12, 1993.
The total advisory fee accrued and paid during the fiscal year
ended June 30, 1996 was $8,771.78 The total advisory fee
accrued and paid during the fiscal year ended June 30, 1997 was
$11,401.51
The Fund markets its shares on a no-load basis. The Advisor
pays the expenses of the Fund related to the marketing of the
Fund's shares. No compensation will be paid to any
underwriters, dealers, or sales personnel, including any
persons who are interested persons of the Fund, in regard to
distribution expenses.
The Fund and its Advisor adheres to a Code of Ethics
established pursuant to Rule 17j-1 (the "Rule") under the
Investment Company Act of 1940 (the "Act"). The Rule makes it
unlawful for the enumerated persons to engage in fraudulent,
deceitful, or manipulative practices in connection with the
purchase or sale of a security held or to be acquired by the
investment company. The Rule requires every fund and its
advisor to adopt a written code of ethics with provisions
reasonably designed to prevent the enumerated persons from
engaging in fraudulent activities prescribed in the Act and to
use reasonable diligence, including instituting procedures to
prevent violations of the code. Although the Code of Ethics
required by the Securities and Exchange Commission is for the
purpose of preventing illegal acts, the Board also wishes to
prevent any type of transaction that would appear to be
motivated by information received that would not normally be
available to the general public. The Code of Ethics requires
procedures and guidelines substantially similar to those
recommended by the mutual fund industry and approved by the
U.S. Securities and Exchange Commission. The integrity and
honesty of personnel are to be closely scrutinized. The Board
expects the Fund's investment objective to be achieved by
honest means, without exception, and for all personnel to
invest their personal assets in the same way.
Page 5
CONTROL PERSONS & PRINCIPAL HOLDERS OF THE FUND'S SHARES
As of June 30, 1997, no shareholder held more than 5% of the
Fund's common stock.
As of June 30, 1996, the officers and directors of the Fund and
the Advisor owned a total of 3,293.026 shares of the Fund (4.23%
of the total outstanding shares of the Fund). As of June 30, 1997,
they owned a total of 3,656.089 shares (4.61% of the total outstanding
shares of the Fund).
CUSTODIAN, ACCOUNTANT, TRANSFER AGENT OF THE FUND
CUSTODIAN -The Fund has chosen to comply with Rule 17f-1 under
the Investment Company Act of 1940 (the "Act"), which specifies
certain requirements when the Fund uses a broker-dealer as the
custodian of its securities. The Fund also complies with Rule
17f-4 of the Act, concerning certain requirements when the
custodian deposits securities in a system for the certain
handling of securities without physical delivery, such as the
Depository Trust Company. The Fund's independent accountant
verifies the securities by examination at the end of each
annual and semi-annual fiscal period and at one other time during the
year chosen by the accountant. The accountant makes
the necessary filing, in compliance with Rule 17f-1, after each
examination.
ACCOUNTANT - The independent public accountant for the Fund is
Michael S. Klingle, CPA, 119 Amhurst St - Victoria, Tx.
Mr. Klingle has provided auditing services for the Fund since
it inception on August 19, 1993.
TRANDFER AGENT AND DIVIDEND PAYING AGENT:
The Advisor provides services as transfer agent and dividend
paying agent.
Page 6
BROKERAGE ALLOCATION & OTHER PRACTICES
The Investment Advisory Agreement (the "Agreement") authorizes
the Advisor to select the brokers that will execute the
purchases and sales of the Fund's portfolio securities and
directs the Advisor to use its best efforts to obtain the best
available price and most favorable execution as to all
transactions for the Fund. The Advisor has undertaken to
execute each investment transaction at a price and commission
which provides the most favorable total cost or proceeds
reasonably obtainable under the circumstances.
In placing portfolio transactions, the Advisor will use its
best judgment to choose the broker most capable of providing
the brokerage services necessary to obtain best available price
and most favorable execution. The full range and quality of
brokerage services available will be considered in making these
determinations. In those instances where it is reasonable
determined that more than on broker can offer the brokerage
services needed to obtain the best available price and most
favorable execution, consideration may be given to those
brokers which supply investment research and statistical
information and provide other services in addition to execution
services to the Fund. The Fund may at times pay higher
commissions in recognition of brokerage services the Advisor
feels is necessary for the achievement of better execution of
certain securities transactions that otherwise might not be
available. The Advisor will only pay such higher commissions
if it believes this to be in the best interest of the Fund.
Some brokers who receive such higher commissions in recognition
of brokerage services related to the execution of securities
transactions are also providers of research information to the
Fund and/or the Advisor.
Transactions in portfolio securities will be executed through
trades executed by or through various brokers unrelated to the
Fund or the Advisor. From its inception to date, the Fund has
not paid any commissions to anyone affiliated with the Fund or
its Advisor.
Since the Fund does not market its shares through intermediary
brokers or dealers, it is not the Fund's practice to allocate
brokerage business on the basis of sales of its shares which
may be through such firms. During the fiscal years ended June
30, 1996 and June 30, 1997, the Fund paid $21,682.88 and
$8,269.69 in brokerage commissions, respectively.
The Fund and the Advisor do not have any agreement or
understandings to direct transactions because of research
services provided by any broker.
Page 7
CALCULTAION & PERFORMANCE DATA
All data is calculated through the period ended June 30, 1997
Since Inception(1) 1 Year
Total Return 6.47% ( 9.29%)
Annualized Return 1.63% ( 9.29%)
(1) The Fund began operations on August 19, 1993.
The Fund's total return is calculated for the period ended June
30, 1997 by assuming the purchase of shares of the Fund at the
net asset value at the beginning of the period. Each dividend
or other distribution paid by the Fund during such period is
assumed to have been reinvested at the net asset value on the
reinvestment date. The total number of shares then owned as a
result of this process are valued at the net asset value at the
end of the period. The percentage increase is determined by
subtracting the initial value of the investment from the ending
value and dividing the remainder by the initial value. The Fund
imposes no sales or other charges which would impact the total
return computation.
The Fund's total return shows its overall dollar or percentage
change in value, including changes in share price and assuming
the Fund's dividends and capital gains distributions are
reinvested. A cumulative total return reflects the Fund's
performance over a stated period of time. An average annual
total return reflects the hypothetical annually compounded
return that would have produced the same cumulative return if
the Fund's performance had been constant over the entire
period. Total return figures are based on the overall change
in value of a hypothetical investment in the Fund. Because
average annual returns for more than one year tend to smooth
out variations in the Fund's return, investors should recognize
that such figures are not the same as actual year-by-year
results.
Fund performance figures are based upon historical results and
are not intended to indicate future performance. The
investment return and principal value of an investment in the
Fund will fluctuate so that an investors shares, when redeemed,
may be worth more or less than their original cost.
From time to time in advertisement or sales material, the Fund
may discuss its performance ratings as published by recognized
mutual fund statistical services, such as Lipper Analytical
Services, Inc., or by publications or general interest such as
Forbes or Money. In addition, the Fund may compare its
performance to that of other selected mutual funds or
recognized stock market indicators including the Standard &
Poor's 500 Stock Index and the Russell 2000 Index. It should
be noted that such performance ratings or comparisons may be
made with funds which may have different investment
restrictions, objectives, policies or techniques than the Fund
and that such other funds or market indicators may be comprised
of securities that differ significantly from the Fund's
investments.
Page 8
FINANCIAL STATEMENTS
The Fund's Financial Statements for the year ended June 30,
1997, including financial highlights for each of the two fiscal
years ended June 30, 1996 and June 30, 1997, appearing in the
AmTrust Value Fund 1997 Annual Report to Shareholders, and the
report thereon of Michael S. Klingle CPA, the independent
accountant for the Fund, also appearing therein, are
incorporated by reference in this Statement of Additional
Information. The Fund's 1997 Annual Report to Shareholders is
enclosed with this Statement of Additional Information.
PART C - OTHER INFORMATION
Item 24: Financial Statements & Exhibits
a) Financial Statements - See Exhibit 13
b) Exhibits:
1) Corporate Charter & Articles of Incorporation as amended -
Exhibit 1
2) Bylaws - Exhibit 2
3) Specimen of security issued by AmTrust Investors, Inc. -
Exhibit 3
4) Investment Advisory Contract - Exhibit 4
5) Opinions & consent of counsel - Exhibit 5
6) Consent of Certified Public Accountant & Outside Directors
Exhibit 6
7) Letters of assurances of initial capital - Exhibit 7
8) Voting Trust agreement - N/A
9) Underwriting contract - N/A
10) Director & officer benefit contracts of the Fund - N/A
11) Custodian contracts - Exhibit 11
12) Other Material contracts - N/A
13) Other financial statements omitted from (a) - Exhibit 13
14) Model plan for retirement - N/A
15) Rule 12b-1 Plan - N/A
16) Performance Calculations - N/A
17) Code of Ethics - Exhibit 14
Item 25: Persons Controlled by or Under Common Control with the
Fund
No persons directly or indirectly are controlled by or
are under common control with the Fund.
Item 26: Number of Holders of Securities
Number of
Title of Class Record Holders
Common Stock, $.001 par value 135
Item 27: Indemnification
The Fund has indemnification agreements with its officers,
directors and as indicated in the Investment Advisor Contract,
with the Advisor whereby the Fund will indemnify those persons
against liability to the Fund and/or it's shareholders under
certain circumstances. Indemnification is not allowed in cases
arising out of willful misfeasance, bad faith, gross negligence
or reckless regard of duties. Further, the agreements set out
certain procedures which set forth methods to determine whether
redemption shall be made, indicating a fixed decision on the
merits by a court or other body that such person was not guilty
of the above disabling conduct; and/or a vote of the majority
of a quorum of directors who are not interested persons nor
parties to the preceding.
Item 28: Business and Other Connections of Investment Advisor
Mr. Jimmy Baker is President and the director of the Advisor.
At the present time, he holds all offices of the Advisor. As
of June 30, 1997, Mr. Baker has received no compensation for
his services to the Advisor. Mr. Baker is a Certified Public
Accountant and has been in public practice as such since 1984.
He is currently the President of his incorporated accounting
practice. Mr. Baker and his accounting staff provide
accounting services on a daily basis to the Advisor without
compensation. His business address is 109-A Teakwood,
Victoria, Texas 77901.
Item 29: Principal Underwriters
Not applicable
Item 30: Location of Accounts & Records
The accounts and records of the Fund are kept and
maintained by the Advisor at 109-A Teakwood, Victoria,
TX 77901.
Item 31: Management Services
Not Applicable
Item 32: Undertakings
The Fund undertakes, if requested to do so by at least 10% of
the Fund's outstanding shares, to call a meeting of
shareholders for the purpose of voting upon the question of
removal of a director or directors and to assist in
communications with other shareholders as required by Section
16(c) of the Act.
The Fund undertakes to furnish, without charge, the Fund's
latest Annual Report with each delivery of the Fund's current
prospectus.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies
that it meets all of the requirements of effectiveness of this
Post-Effective Amendment No. 5 to the Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City
of Victoria, and State of Texas on the 28th day of October,
1997.
AmTrust Investors, Inc.
Registrant
By:S/ Jimmy Baker
Jimmy Baker, President
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment No. 5 to this Registration
Statement has been signed below by the following persons in the
capacities and on the date indicated.
S/ Jimmy Baker Director October 28, 1997
Jimmy Baker President
S/ Paul Erdelt Director October 28, 1997
Paul Erdelt
S/ Jesse Baker Director October 28, 1997
Jesse Baker Secretary
S/ Mickey Pachta Director October 28, 1997
Mickey Pachta
S/ Paul Teinert Director October 28, 1997
Paul Teinert
Securities Act Registration No. 33-63124
Investment Company Registration No. 811-7730
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 X
Pre -Effective Amendment No. _ _
Post-Effective Amendment No. 5 X
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 5 X
(Check appropriate box or boxes.)
AmTrust Investors, Inc.
(Exact Name of Registrant as Specified in Charter)
PO Box 3467, Victoria, TX 77903-3467
(800)-532-1146 (512) 578-7778
Jimmy Baker, PO Box 3701, Victoria, TX 77903
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box)
__ Immediately upon filing pursuant X on 10/31/97 pursuant
to paragraph (b) to paragraph (b)
__ 60 days after filing pursuant to __ on (date) pursuant
to paragraph (a)(1) paragraph (a)(1)
__ 75 days after filing pursuant to __ on (date) pursuant
to paragraph (a)(2) paragraph (a)(2)
of Rule 485
If appropriate, check the following box:
__ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
Table of Contents
1 President's Message Message to the shareholders
2 Performance History of Fund Performance
2 Financial Highlights Detailed Per Share Values plus key
ratios
3 Financial Statements Statements of Assets & Liabilities,
Operations, & Changes in Net Assets.
4 Investment Portfolio A complete list of the Fund's
investments with their market value.
5 Notes Footnotes to the Financial
Statements
6 Report of Independent Auditor The auditor's opinion
7. Miscellaneous Miscellaneous Fund Information
Dear Shareholders,
The twelve-month period ended June 30, 1997, produced widely divergent
returns for U.S. stock investors. Large companies(large-cap stocks) and
industry leading companies like the ones found in the S&P 500 and the
Dow Jones Industrial Averages significantly outperformed the shares of
the faster growing, smaller companies(small-cap stocks). While the
companies that make up the S&P 500 were considered a relatively safe
place, many investors viewed small-cap growth companies as too volatile
and risky. With future earnings of small companies harder to predict,
investors became less willing to pay a premium for fast-growing small
companies. Looking at the performance comparison over the last twelve-
month period ended June 30, the return of the S&P 500 Index more than
doubled the return of the small-cap Russell 2000 Index. This
substantial difference was generally based more on market perception
than on actual fundamental indicators such as earnings and revenues.
After the sell-off of small-cap stocks in the summer of 1996, investors
placed a higher premium on the earnings stability of larger companies
than on the earnings growth of smaller companies. This result has had a
more severe impact on our Fund since we not only invest in small
companies but we only invest in a small number of companies as well.
Our concentration in a small number of stocks in an investment period in
which small-caps have been out of favor did not bode well for Fund
shareholders. Even with a recovery in small-cap stocks during the last
few months, our Fund under-performed the Russell 2000 Index during the
period. Although continuing to remain a small-cap fund, and to maximize
the performance during the inevitable recovery period, the Fund has
begun to focus its investment strategy to larger and more visible small-
cap stocks.
Just as the footnote in the performance chart states that "Past
performance is no guarantee of future results", I firmly believe that
the under-performance in the past will be replaced by a substantial
improvement in the Fund's share price in the near future.
Thank you for your continued confidence. Feel free to call me with any
questions or comments about the Fund.
Jimmy Baker
President
August 27, 1997
Page 2
Performance Data *
Total Return Avg Annual Avg Annual
1 Yr Ended Return last Return
6/30/97 3 yrs Inception(d)
AmTrust Value Fund.(a)......... (9.60)% 4.21% 1.63%
Russell 2000 Small Cap Index(b) 16.33% 20.05% 14.84%
S&P 500 Index(c)............... 34.63% 28.76% 21.73%
(a) The Fund began on August 19, 1993. Performance figures are from
August 19, 1993(inception) through June 30, 1997 and includes any
applicable dividends.
(b) The Russell 2000 is an unmanaged index of approximately 2000 small
cap stocks, ranging in value of shares, from $50 million to $600
million. Since the Fund is a "small cap fund", management of the
Fund feels that Fund performance should more appropriately be
compared to the Russell 2000 (Return is the price percentage change
of the index during the period, including any applicable dividends).
(c) The S&P 500 Index is an unmanaged group of stocks considered to be
representative of the stock market in general(Return includes any
applicable dividends).
(d) Average Annual Return from August 19, 1993 until June 30, 1997.
* Past Performance is no guarantee of future results.
Financial Highlights
For the Fiscal Year Ended
6/30/97 6/30/96
Net Asset Value, Beginning of Period $ 10.75 $ 10.84
Income From Investment Operations:
Net investment income (loss) (0.13) (0.07)
Net realized & unrealized gains (losses)
on securities (0.66) 0.72
Total from investment operations (0.79) 0.65
Less Distributions:
Distributions from realized gains (0.35) (0.74)
----- -----
Net Asset Value, End of Period $ 9.61 10.75
===== =====
Total return for the period ( 9.29) % 6.30 %
Ratios/Supplemental Data
Net assets at the end of the period $ 745,668.95 $ 831,631.77
Ratio of expenses to average net assets 1.60 1.22
Ratio of net investment income (loss)
to avg net assets (1.32) (0.64)
Portfolio turnover rate 33 % 87 %
Average commission rate paid per share .0576 .1035
Shares outstanding at end of period 79,357.902 77,389.622
The accompanying notes are an integral part of these financial statements
Page 3
Financial Statements
Statement of Assets and Liabilities
As of June 30, 1997
Assets
Investments at market Value (Cost $ 748,821.46) $ 739,782.47
Accounts Receivables 375.00
Cash 6,375.20
----------
Total Assets 746,532.67
----------
Liabilities
Accounts Payable - Mangement Fees 839.72
Accounts Payable - Custodial Fees 24.00
------
Total Liabilities 863.72
------
Net Assets(equivalent to $9.40 per share,
based on 79,357.902 shares outstanding) $ 745,668.95
==========
Net Asset Value Per Share $ 9.40
======
Net Assets Consist of:
Capital Stock, $0.001 par value; 79,357.902 shares
issued & outstanding $ 79.36
Paid-in Capital 810,065.10
Accumulated net realized losses on investments ( 55,436.52)
Net unrealized depreciation of investments ( 9,038.99)
----------
Net assets applicable to shares outstanding $ 745,668.95
==========
The accompanying notes are an integral part of these financial
statements
Statement of Operations
For the Year Ended June 30, 1997
Investment income:
Interest income $ 158.50
Dividend income 1,886.94
--------
Total investment income 2,045.44
Operating expenses:
Management fees (Note 2) 11,401.51
Transaction service charge 650.00
---------
Total operating expenses 12,051.51
---------
Net investment income (loss) (10,006.07)
Net realized and unrealized gain (loss) on securities: (Note 5)
Realized Loss on sale of securities (133,673.40)
Change in unrealized appreciation 64,006.73
----------
Net realized and unrealized gain on securities (69,666.67)
---------
Net increase in net assets resulting from operations $ ( 79,672.74)
=========
The accompanying notes are an integral part of these financial
statements
Statement of Changes in Net Assets
For the Years Ended June 30, 1997, 1996 and 1995
Increase in Net Assets:
06/30/97 06/30/96 06/30/95
Operations:
Net investment income (loss) ( 10,006.07) ( 5,076.21) ( 3,730.13)
Net realized gain(loss)
on securities (133,673.40) 183,502.21 22,422.65
Net change in unrealized appreciation
or (depreciation) in securities 64,006.73 (136,820.19) 76,892.86
Net increase in net assets
from operations (79,672.74) 41,605.81 95,585.38
Distributions to shareholders:
From net investment income .00 .00 .00
From net realized gains (26,427.98) (51,711.04) .00
Net decrease from Distributions (26,427.98) (51,711.04) .00
From Capital Share Transactions: (Note 4)
Proceeds from shares issued 129,863.08 165,861.09 227,806.07
Reinvestment of dividends and
capital gains distributions 26,427.98 51,711.04 .00
Payments for shares redeemed (136,153.16) (100,598.94) (48,945.88)
Net From Fund Share Transactions 20,137.90 116,973.19 178,860.19
Total Increase(Decrease) in Assets(85,962.82) 106,867.96 274,445.57
Net Assets:
Beginning of Fiscal Year 831,631.77 724,763.81 450,318.24
---------- ---------- ----------
End of Year 745,668.95 831,631.77 724,763.81
========== ========== ==========
Page 4
Schedule of Investments as of June 30, 1997
Shares Value
------ ------
Automobiles and Auto Parts - 1.94%
5,000 HiLo Automotive 14,375
Banking - 8.51%
2,500 TR Financial 62,969
Biotechnology - 14.92%
4,000 Celgene 29,500
5,000 Sheffield Medical 14,688
12,000 Hemagen 25,500
23,000 Bradley Pharmaceuticals 28,032
2,000 Medarex 12,625
-------
110,345
Communications Equipment/Services - 10.53%
3,500 STM Wireless 31,500
10,000 Phoenix Network 36,875
8,000 WARP 10 Technologies 9,500
------
77,875
Computer Software & Services - 2.82%
4,000 Globalink 13,000
2,000 K-2 Design 7,250
2,000 K-2 Design(warrants) 625
------
20,875
Energy - 2.83%
3,000 Gulfwest Oil 7,500
3,000 Panaco 13,500
------
21,000
Computer Equipment/Products - 6.70%
1,000 ENCAD 41,500
4,000 Focus Enhancements 8,125
-------
49,625
Electric/Electronic Components - 13.69%
2,000 Bell Microproducts 21,250
3,000 Plasma-Therm 18,188
4,000 Transwitch 34,000
10,000 SEEQ Technology 19,063
1,000 Excel Technology 8,750
-------
101,251
Healthcare - 16.12%
3,000 Medical Control, Inc 10,500
3,000 Selfcare 37,500
5,755 Retirement Care Assoc 71,218
-------
119,218
Medical Equipment/Supplies - 9.97%
15,000 Substance Abuse Tech 17,812
2,000 PLC Systems 44,125
3,000 I-Flow 11,812
------
73,749
Miscellaneous - 11.97%
6,000 NTN Communications 26,625
3,000 Paradise Music & Ent 12,375
2,000 Paradise (warrants) 500
4,000 Invision Technology 49,000
------
88,500
Total Portfolio Investments - 100%
( Cost = $748,821) $ 739,782
Page 5
Notes to the Financial Statements
Note 1: Significant Accounting Policies
AmTrust Investors, Inc. (the "Fund") was incorporated under the laws
of the State of Texas as of January 25, 1993 as an open-end diversified
management company under the Investment Company Act of 1940. The Fund's
inception date was August 19, 1993.
The following is a summary of significant accounting policies followed
by the Fund in the preparation of its financial statement and
highlights.
Security Valuation: Securities listed on a stock exchange for which
market quotations are readily available are valued at the closing prices
on the date of valuation, or, if no such closing price is available, at
the last bid price quoted on such day. The value of securities and
other assets for which no market quotations are readily available are
determined in good faith at fair value using estimation methods approved
by the Board of Directors. Short-term securities that mature in sixty
(60) days or less are valued at amortized cost, which approximates
market value, unless this method does not represent fair value.
Federal Income Taxes: The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to
regulated investment companies and to distribute all of its taxable
income to its shareholders. Therefore, no federal income tax provision
is required.
Dividends and Distributions to Shareholders: The Fund intends to
distribute to shareholders at least annually substantially all of its
net income from dividends and interest payments and substantially all of
its net realized capital gains, if any. Dividends to shareholders are
recorded on the ex-dividend date.
Securities Transactions and Investment Income: The Fund follows industry
practice and records security transactions on the trade date. Dividend
income is recognized on an accrual basis. Discounts and premiums on
securities purchased are amortized over the life of the respective
securities.
Note 2: Investment Advisory Services
The Fund has entered into an Investment Advisory Agreement with AmTrust
Capital Resources, Inc. for investment management that provides for the
payment of a monthly fee, calculated daily, at the current annual rate
of one and one-half percent (1.5%) of the previous thirty-day moving
average of the daily net assets of the Fund. The Current rate will
remain in effect until the Fund's thirty-day moving average exceeds two
million dollars, at which time the rate will drop by .05%. The rate
will continue to drop by .05% for specified dollar increases in the
Fund's thirty-day moving average until it's greater than ten million
dollars, at which time the rate will be fixed at 1.25% of the Fund's
thirty-day moving average. Certain officers and directors of the Fund
are also officers, directors and shareholders of the Investment Advisor.
The Investment Advisor was paid $11,401.51 in management fees for the
period ended June 30, 1997.
Note 3: Distributions to Shareholders
On December 31, 1996, a distribution of $.3538 per share aggregating
$26,427.98 was declared from net realized gains from investment
transactions (including $.2871 per share applicable to short-term gains
that are taxable to shareholders as ordinary income dividends)
accumulating through October 31, 1996. The dividend was paid on
December 31, 1996, to shareholders of record on December 31, 1996.
Note 4: Capital Share Transactions
As of June 30, 1997, there were 10,000,000 shares of $.001 par value
capital stock authorized. Transactions in capital stock for the years
ended June 30, 1997 and 1996 were as follows:
Year Ended Period Ended
June 30, 1997 June 30, 1996
--------------------------- ---------------------------
Total Shares Dollar Amount Total Shares Dollar Amount
Shares Issued 13,212.845 129,863.08 14,494.920 $ 165,861.09
Shares Issued from
reinvestment
of dividends 2,750.041 26,427.98 5,040.057 51,711.04
Shares Redeemed (13,994.606) (136,153.16) ( 8,990.776) (100,598.94)
---------- ---------- ---------- ----------
Net Increase 1,968.280 20,137.90 10,544.201 $ 116,973.19
========== ========== ========== ==========
Note 5: Investment Transactions
Purchases and sales of investment securities were $280,553.97 and
$242,423.78, respectively, for common stocks. Net realized losses on
the sale of investments (cost basis) for the period ended June 30, 1997,
was $133,673.40. The net losses on investments for the year ended June
30, 1997, was $69,666.67. This amount represents the net increase in
value of investments held during the year. The net realized losses on
investments was entirely from long transactions. As of June 30, 1997,
the gross unrealized appreciation of securities was $174,691.27, the
gross unrealized depreciation was $183,730.26 and the net unrealized
depreciation was $9,038.99. There are no undistributed net realized
gains on investment transactions as of June 30, 1997.
Page 6
Report of Independent Auditor
To the Shareholders and Board of Directors
of AmTrust Investors, Inc.
I have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of AmTrust Investors, Inc. as of
June 30, 1997, and the related statement of operations for the year then
ended, the statement of changes in net assets and the financial
highlights for each of the two years in the period then ended. These
financial statements and financial highlights are the responsibility of
the Company's management. My responsibility is to express an opinion on
these financial statements and financial highlights based on my audit.
I conducted the audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. My procedures included
confirmation of securities owned as of June 30, 1997 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 presentation. I
believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of AmTrust Investors, Inc. as of June 30, 1997, the
results of it's operation for the year then ended, the changes in it's
net assets, and the financial highlights for each of the two years in
the period then ended, in conformity with generally accepted accounting
principles.
/s Michael S. Klingle
Michael S. Klingle
Certified Public Accountant
August 27, 1997
Victoria, Texas
Page 7
Corporate Headquarters:
109-A Teakwood
Victoria, Texas 77901
(512) 578-7778
(800) 532-1146
Board of Directors:
Jimmy Baker, President
Paul M. Erdelt
Jesse Baker, Jr.
Paul Teinert
Mickey Pachta
Investment Advisor:
AmTrust Capital Resources, Inc.
109-A Teakwood
Victoria, Texas 77901
Transfer & Dividend Paying Agent:
AmTrust Capital Resources, Inc.
Independent Auditor:
Michael S. Klingle
119 Amhurst
Victoria, Texas 77904
Legal Counsel:
Mickey Pachta
210 Brocton
Victoria, Texas 77904
Retirement Account Trustee:
Sterling Trust Company
PO Box 2526
Waco, Texas 76702
