<DESCPRIPTION> ANNUAL REPORT TO THE SHAREHOLDERS
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
