[DESCRIPTION] SEMI-ANNUAL REPORT TO THE SHAREHOLDERS
Page 1
AMTRUST VALUE FUND
SEMI-ANNUAL REPORT
For the Six Months Ended
December 31, 1997
Dear Shareholders,
Small stocks continue to lag the larger "blue-chip" Dow
Jones Industrial Averages and the broader markets as well
during 1997. It seems that I have had to say this every
year about this time, but small stocks have been very
disappointing to investors and our Fund's performance has
been even worse. As the comparison chart shows, our Fund
has substantially under-performed our benchmark, the Russell
2000 Index, for the last six months, three years, and since
inception of the Fund. The Southeast Asian economic crisis
was just another reason for the under-performance during the
last six months.
It's hard to say just what to look for in the near future,
and many shareholders have asked what the outlook for small-
cap stocks appear to be. Unfortunately, I can't confidently
answer that question. Although small-caps appear to be
undervalued, they still seem to be out of favor as investors
continue to want only the biggest of the big stocks.
Investors also seem more concerned about safety instead of
value and with that view, the small-cap stocks will probably
continue to lag the rest of the market. Since our Fund is
limited to investments in small-cap stocks, it may be wise
to re-evaluate your time horizon as to your investments in
the small-cap area of the stock market.
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 27, 1998 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 Avg Annual
6 Months Ended Return Last Return Since
12/31/97 Three Years Inception(a)
AmTrust Value Fund..... (20.08)% (5.85)% (3.12)%
Russell 2000 Index(b).. 11.03 % 22.34 % 15.93 %
(a) The Fund began on August 19, 1993. Performance figures are from
August 31, 1993 through December 31, 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 dividends).
* Past Performance is not predictive of future performance
Page 3
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1997
Biotechnology - 16.47 %
23,000 Bradley Pharmaceut. 46,000
12,000 Hemagen 24,000
2,000 Medarex 10,500
5,000 Sheffield Medical 6,875
-------
87,375
Communications - 5.42 %
2,500 STM Wireless 21,250
8,000 Warp 10 Technologies 3,750
10,000 Phoenix Network 3,750
------
28,750
Computer Software & Servics - 3.69 %
5,000 K-2 Design 9,375
2,000 K-2 Design (warrants) 188
4,000 Globalink 10,000
------
19,563
Computer Equipment/Products - 23.74 %
1,000 Innovex 22,938
4,000 Invision Technologies 30,500
8,000 Focus Enhancements 25,500
3,000 Diamond Multimedia 26,625
3,000 Plasma Therm 20,438
-------
126,001
Data Processing - 4.83 %
5,000 Source Info Mgt Co 25,625
Insurance - 3.67 %
2,000 Warrantec 19,500
Electric/Electronic Components - 15.69 %
2,000 Bell Microproducts 15,750
2,000 Southern Electronics 22,500
3,000 Interphase 17,250
10,000 Seeq Technology 27,813
------
83,313
Energy - 4.48 %
3,000 Gulfwest Oil 7,500
1,000 Lomak Petroleum 16,250
------
23,750
Healthcare - 12.19 %
3,000 Medical Control, Inc 15,750
5,755 Retirement Care 48,917
------
64,667
Medical Equipment/Supplies - 3.82 %
6,000 I-Flow 20,250
Miscellaneous - 3.22 %
6,000 NTN Communications 6,000
3,000 Paradise Music & Ent 10,125
2,000 Paradise Music
(Warrants) 1,000
------
17,125
Retail - 2.78 %
1,000 The Sports Authority 14,750
Total Portfolio Investments - 100%
( Cost = $ 707,288 ) $ 530,669
=======
Page 4
Financial Statements(unaudited)
Statement of Assets and Liabilities
As of December 31, 1997
Assets
Investments at market Value (Cost $707,288.15) $ 530,668.50
Accounts Receivable 398.57
Cash 57,004.74
----------
Total Assets 588,071.81
Liabilities
Accounts Payable - Custodial fees 612.00
Accounts Payable - Securities Bought 12,730.00
---------
Total Liabilities 13,342.00
Net Assets (equivalent to $ 7.68 per share,
based on 74,881.639 shares outstanding) $ 574,729.81
==========
Net Asset Value Per Share $ 7.68
======
Net Assets Consist of:
Capital Stock, $0.001 par value; 74,881.639 shares
issued & outstanding $ 74.88
Paid-in Capital 713,884.68
Accumulated net realized gains on investments 37,389.90
Net unrealized depreciation of investments ( 176,619.65)
----------
Net assets applicable to shares outstanding $ 574,729.81
==========
The accompanying notes are an integral part of these financial
statements
- -----------------------------------------------------------------------
Statement of Operations (unaudited)
For the Six Months ended December 31, 1997
Investment income:
Interest income $ 73.59
Dividend income 1,881.72
--------
Total investment income 1955.31
Operating expenses:
Management fees 5,410.57
--------
Total operating expenses 5,410.57
---------
Net investment income (loss) ( 3,455.26)
Net realized and unrealized gain (loss)
on securities:
Realized loss on sale of securities 40,845.16
Change in unrealized depreciation (167,580.66)
Net realized and unrealized gain
on securities (126,735.50)
------------
Net increase in net assets resulting from operations $ (130,190.76)
==========
The accompanying notes are an integral part of these financial
statements
Statement of Changes in Net Assets
For the Six Months Ended December 31, 1997(unaudited), and
the Fiscal Years Ended June 30, 1997 and 1996
Increase(Decrease) in Net Assets:
12/31/97 06/30/97 06/30/96
Operations:
Net investment income (loss) (3,455.26) ( 10,006.07) ( 5,076.21)
Net realized gain(loss)
on securities 40,845.16 (133,673.40) 183,502.21
Net change in unrealized appreciation
or (depreciation) in
securities (167,580.66) 64,006.73 (136,820.19)
---------- --------- ----------
Net increase in net assets
from operations (130,190.76) (79,672.74) 41,605.81
Distributions to shareholders:
From net investment income .00 .00 .00
From net realized gains .00 (26,427.98) (51,711.04)
--------- ----------- -----------
Net decrease from Distributions .00 (26,427.98) (51,711.04)
From Capital Share Transactions: (Note 4)
Proceeds from shares issued 22,309.79 129,863.08 165,861.09
Reinvestment of dividends and
capital gains distributions .00 26,427.98 51,711.04
Payments for shares redeemed (63,058.17) (136,153.16)(100,598.94)
--------- ---------- ----------
Net From Fund Share Transactions (40,748.38) 20,137.90 116,973.19
----------- ---------- ----------
Total Increase(Decrease)
in Assets (170,939.14) (85,962.82) 106,867.96
Net Assets:
Beginning of Fiscal Year 745,668.95 831,631.77 724,763.81
---------- ---------- ----------
End of Year 574,729.81 745,668.95 831,631.77
========== ========== ==========
The accompanying notes are an integral part of these financial
statements
Page 5
FINANCIAL HIGHLIGHTS
Six Months ---- Audited -----
Ended For the Fiscal Year Ended
12/31/97 6/30/97 6/30/96
Net Asset Value, Beg of Period $ 9.61 $ 10.75 $ 10.84
Income From Investment Operations:
Net investment income (loss) (0.04) (0.13) (0.07)
Net realized & unrealized gains
(losses) on securities (1.89) (0.66) 0.72
------ ------ ----
Total from investment operations (1.93) (0.79) 0.65
Less Distributions:
Distributions from realized gains .00 (0.35) (0.74)
---- ---- ----
Net Asset Value, End of Period $ 7.68 $ 9.61 $ 10.75
====== ====== ======
Total return for the period (20.08) % ( 9.29) % 6.30 %
Ratios/Supplemental Data
Net assets at the end
of the period $ 574,729.81 $ 745,668.95 $ 831,631.77
Ratio of expenses to average
net assets 1.56 1.60 1.22
Ratio of net investment
income (loss) to avg net assets ( 0.99) ( 1.32) ( 0.64)
Portfolio turnover rate 52 % 33 % 87 %
Average commission rate
paid per share .0704 .0576 .1035
Shares outstanding at end
of period 74,881.639 79,357.902 77,389.622
The accompanying notes are an integral part of these financial
statements
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.
DIVENENDS 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, 1997) 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 $ 5,410.57 in management fees
for the six month period ended December 31, 1997.
NOTE 3: DISTRIBUTIONS TO SHAREHOLDERS
There were no distributions from realized gains during the six months
ended December 31, 1997.
NOTE 4: CAPITAL SHARE TRANSACTIONS
As of December 31, 1997, there were 10,000,000 shares of $.001 par value
capital stock authorized. Transactions in capital stock were as
follows:
<TABLE>
<S> <C> <C> <C>
Six Months Year Ended Year Ended
Dec 31, 1997 June 30, 1997 June 30, 1996
Shares Amount Shares Amount Shares Amount
Shares Issued 5,977.058 22,309.79 13,212.845 $129,863.08 14,494.920 $165,861.09
Shares Issued from
reinvestment
of dividends .000 .00 2,750.041 26,427.98 5,040.057 51,711.04
Shares Redeemed (6,886.468)(63,058.17)(13,994.606)(136,153.16)(8,990.776)(100,598.94)
---------- --------- ---------- ---------- --------- ----------
Net Incr(Decr) ( 909.410)(40,748.38) 1,968.280 20,137.90 10,544.201 116,973.19
</TABLE>
NOTE 5: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities were $328,400.77 and $410,779.24,
respectively, for common stocks during the six months ended December 31, 1997.
Net realized losses on the sale of investments (tax basis) for the period ended
December 31, 1997, was $ 76,285.69. The net gain on investments for the six
months ended December 31, 1997, was $ 117,130.85. The net realized gain on
investments was entirely from long transactions. As of December 31, 1997, the
net unrealized depreciation was $176,619.65.
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
