[DESCRIPTION] SEMI-ANNUAL REPORT TO THE SHAREHOLDERS
Dear Shareholders,
Small stocks continue to be out of favor when compared to the larger
"blue-chip" Dow Jones Industrial average. The year 1996 was again a
year like 1995 when the large stocks out-performed all other types of
equity investments. We continue to believe that the over-looked small
stock sector of the market will soon be leading the next charge. As
investors get nervous about the high valuations of the large stocks, we
believe that they will be looking for other places in the market to
invest. Analyst are expecting the earnings of the companies in the
Russell 2000 index(our benchmark) to grow about 35% in 1997 compared to
only a projected 15% growth in earnings of the S&P 500 index. In our
opinion, the outlook for small stocks continues to be positive and we
are extremely optimistic about the Fund's current stock holdings for the
upcoming year.
The performance of the Fund over the last six months was much like that
of the rest of the small cap market in that it did not keep pace with
the other large stock indexes. The big winners of the Fund were in the
technology sector with Invision Technologies(bomb detection equipment)
advancing 183% and ENCAD(wide format color printers) advancing 142%.
The big losers of the Fund were also in the technology sector with
Transwitch(ATM chips) declining 60% and Warp 10 Technologies(networking
products) declining 71%. Although disappointed in the 1996 results of
the Fund as compared to the Russell 2000 Index, we continue to believe
that small stocks soon will become the investment choice. As usual we
have included a comparison chart and graph of the Fund's performance
history which is located on page 2.
Thank you for your patience in this difficult small-cap market. Feel
free to call me with any questions or comments about the Fund.
Jimmy Baker
February 26, 1997 President
Table of Contents
1 President's Message Message to the shareholders
2 Performance History of Fund Performance
3 Investment Portfolio A complete list of the Fund's
investments with their market value.
4 Financial Statements Statements of Assets & Liabilities,
Operations, & Changes in Net Assets.
5 Financial Highlights Detailed Per Share Values plus key
ratios
6 Notes Footnotes to the Financial Statements
Page 2
Performance Data *
Total Return Avg Annual
12 Months Ended Return Since
12/31/96 Inception(a)
AmTrust Value Fund............. (2.86)% 2.55%
Russell 2000 Index(b).......... 16.49% 13.90%
(a) The Fund began on August 19, 1993. Performance figures are from
August 19, 1993(inception) through December 31, 1996 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 dividends).
* Past Performance is not predictive of future performance
Page 3
Schedule of Investments as of December 31, 1996
Shares Value
Automobiles & Auto Parts - 1.69%
5,000 HiLo Auto Parts 12,500
Banking - 7.21%
1,500 TR Financial 53,250
Biotechnology - 18.70%
4,000 Celgene 44,500
8,000 Hemagen 19,500
2,000 Medarex 14,000
5,000 Thermogenesis 19,375
5,000 Sheffield Medical 18,750
15,000 Pharmos 22,032
138,157
Communications - 10.25%
3,500 STM Wireless 24,500
8,000 Warp 10 Technologies 17,500
10,000 Phoenix Network 33,750
75,750
Computer Software & Servics - 3.66%
2,000 K-2 Design 12,750
2,000 K-2 Design (warrants) 1,250
4,000 Globalink 13,000
27,000
Computer Equipment/Products - 8.21%
1,000 ENCAD 41,250
4,000 Focus Enhancements 7,000
3,000 Plasma Therm 12,375
60,625
Electric/Electronic Components - 13.50%
2,000 Bell Microproducts 17,750
4,000 Transwitch 21,000
3,000 Videonics 26,625
1,000 Excel Technologies 8,125
10,000 Seeq Technology 26,250
99,750
Energy - 3.60%
3,000 Gulfwest Oil 9,000
12,000 WRT Energy 3,000
3,000 Panaco 14,625
26,625
Healthcare - 15.78%
3,000 Medical Control, Inc 15,000
2,000 PLC Systems 45,000
4,000 Staff Builders 9,125
5,755 Retirement Care
Assoc, Inc 47,478
16,603
Medical Equipment/Supplies - 5.38%
15,000 Substance Abuse
Technology 23,438
3,000 I-Flow 16,313
39,751
Miscellaneous - 12.02%
6,000 NTN Communications 22,875
2,000 Invision Technologies66,000
88,875
Total Portfolio Investments - 100%
( Cost = $ 783,125 ) $ 738,886
=======
Page 4
Financial Statements(unaudited)
Statement of Assets and Liabilities
As of December 31, 1996
Assets
Investments at market Value (Cost $783,124.99) $ 738,885.95
Cash 16,020.16
----------
Total Assets 754,906.11
Liabilities
Accounts Payable - Management fees 937.92
Accounts Payable - Custodial fees 612.00
Accounts Payable - Shareholder Redemptions 112.12
Accounts Payable - Securities Bought 8,928.58
---------
Total Liabilities 10,590.62
Net Assets (equivalent to $ 9.61 per share,
based on 77,444.454 shares outstanding) $ 744,315.49
==========
Net Asset Value Per Share $ 9.61
======
The accompanying notes are an integral part of these
financial statements
- -----------------------------------------------------------------------
Statement of Operations
(unaudited)
For the Six Months ended December 31, 1996
Investment income:
Interest income $ 81.34
Dividend income 947.65
Total investment income 1,028.99
Operating expenses:
Management fees 6,049.28
Transaction service charge 475.00
Total operating expenses 6,524.28
---------
Net investment income (loss) ( 5,495.29)
Net realized and unrealized gain (loss) on securities:
Realized loss on sale of securities (84,599.62)
Change in unrealized depreciation 28,806.68
Net realized and unrealized gain on securities (55,792.94)
---------
Net increase in net assets resulting from operations $ (61,288.23)
=========
The accompanying notes are an integral part of these
financial statements
- ------------------------------------------------------------------------
Statement of Changes in Net Assets
For the Six Months Ended December 31, 1996(unaudited), and
the Fiscal Years ended June 30, 1996 and June 30, 1995
Increase in Net Assets:
12/31/96 06/30/96(a) 06/30/95(a)
Operations:
Net investment income (loss) (5,495.29) ( 5,076.21) (3,730.13)
Net realized gain (loss)
on securities (84,599.62) 183,502.21 22,422.65
Net change in unrealized appreciation
(depreciation) in securities 28,806.68 (136,820.19) 76,892.86
--------- ---------- ---------
Net increase in net assets
from operations (61,288.23) 41,605.81 95,585.38
Distributions to shareholders:
From net investment income 0.00 0.00 0.00
From net realized gains (26,427.98) (51,711.04) 0.00
Net Decrease from Distributions (26,427.98) (51,711.04) 0.00
From Fund Share Transactions:
Proceeds from shares issued 59,912.37 165,861.09 227,806.07
Reinvestment of dividends and
capital gains distributions 26,427.98 51,711.04 0.00
Payments for shares redeemed (85,940.42) (100,598.94) (48,945.88)
--------- ---------- ---------
Net Increase from Fund Share
Transactions 399.93 116,973.19 178,860.19
Total Increase in Assets (87,316.28) 106,867.96 274,445.57
Net Assets:
Beginning of Fiscal Year 831,631.77 724,763.81 450,318.24
---------- ---------- ----------
End of Period $744,315.49 $831,631.77 $724,763.81
========== ========== ==========
(a) Audited
The accompanying notes are an integral part of these
financial statements
Page 5
Financial Highlights
Six Months For the
Ended Fiscal Year Ended(a)
12/31/96 6/30/96 6/30/95
Net Asset Value, Beginning of Period $ 10.75 $ 10.84 $ 9.23
Income From Investment Operations:
Net investment income (loss) (0.07) (0.07) (0.05)
Net realized & unrealized
gains (losses) on securities (0.72) 0.72 1.66
Total from investment operations (0.79) 0.65 1.61
Less Distributions:
Distributions from realized gains (0.35) (0.74) (0.00)
Net Asset Value, End of Period 9.61 $ 10.75 $ 10.84
===== ===== =====
Total return for the period (7.31)% 6.30% 17.44%
Ratios/Supplemental Data
Net assets at the end of
the period $744,315.49 $831,631.77 $724,763.01
Ratio of expenses to average
net assets 1.66(b) 1.22 1.00
Ratio of net investment income (loss)
to avg net assets (1.39)(b) (0.64) (0.60)
Portfolio turnover rate 22% 87% 79%
Average commission rate paid per share .0777 .1035 .1040
Shares outstanding at
end of period 77,444.454 77,389.622 66,845.421
(a) Audited
(b) Annualized
Page 6
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: Management 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 a specified annual rate
(1.5% as of December 31, 1996) of the previous thirty-day moving average
of the daily net assets of the Fund. Certain officers and directors of
the Fund are also officers, directors and shareholders of the Investment
Advisor. The Investment Advisor was paid $6,049.28 in management fees
for the six month period ended December 31, 1996.
Note 3: Distributions to Shareholders
One December 31, 1996, a distribution of $.353815 per share aggregating
$26,427.98 was declared from net realized gains from investment
transactions (including $.287112 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 December 31, 1996, there were 10,000,000 shares of $.001 par value
capital stock authorized. Transactions in capital stock were as
follows:
Six Months Year Ended
December 31, 1996 June 30, 1996
Shares Amount Shares Amount
Shares Issued 5,977.058 $59,912.37 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 (8,672.267) (85,940.42) (8,990.776) (100,598.94)
--------- --------- --------- ----------
Net Increase 54.832 399.93 10,544.201 116,973.19
Note 5: Investment Transactions
Purchases and sales of investment securities were $180,114.95 and
$168,755.01, respectively, for common stocks during the six months ended
December 31, 1996. Net realized losses on the sale of investments (tax
basis) for the period ended December 31, 1996, was $132,509.62. The net
gain on investments for the six months ended December 31, 1996, was
$47,910.00. The net realized gain on investments was entirely from long
transactions. As of December 31, 1996, the gross unrealized
appreciation of securities was $143,113.26, the gross unrealized
depreciation was $187,352.30, and the net unrealized depreciation was
$44,239.04.
Note 6: Results of Annual Shareholders Meeting
The Annual Meeting of the Shareholders of AmTrust Value Fund was held
on January 31, 1997. The following proposals were presented and
approved. Outstanding shares of the Fund were 58.92% represented in
person or by proxy.
Proposal No. 1: The Board re-elected the five existing board members.
Proposal No. 2: The Shareholders approved the continuance of the
Investment Advisory Agreement.
Proposal No. 3: The Shareholders ratified the Board's selection of the
Independent Public Accountant.
The table below lists the results of the Shareholders vote recorded at
the Annual Shareholders meeting:
Votes For Votes Against Votes Abstained
Proposal No. 1:
Jimmy Baker 45,633.514 0.000 0.000
Jesse Baker, Jr. 45,633.514 0.000 0.000
Paul Erdelt 45,633.514 0.000 0.000
Mickey Pachta 45,633.514 0.000 0.000
Paul Teinert 45,633.514 0.000 0.000
Proposal No. 2: 37,944.650 2,541.020 5,147.844
Proposal No. 3: 48,445.313 55.905 4,886.290
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
