<PAGE>
As filed with the Securities and Exchange Commission on October 2, 1996
Securities Act Registration No. 33-98276
Investment Company Act file No. 811-9090
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
_________________________________
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-effective Amendment No. 1 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 1 [X]
_________________________________
AMERISTOCK MUTUAL FUND, INC.
(Registrant)
1480 I Moraga Rd.
Suite #200
Moraga, California 94556
Telephone number: 510/376-3490
__________________________________________
Amending the Prospectus and Statement of Additional Information.
It is proposed that this filing will become effective:
immediately upon filing pursuant to rule 485(b)
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X on October 16, 1996 pursuant to rule 485(b)
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60 days after filing pursuant to rule 485(a)(1)
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on _____________ pursuant to rule 485(a)(1)
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75 days after filing pursuant to rule 485(a)(2)
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on _________ pursuant to rule 485(a)(2)
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Registrant has elected to register an indefinite number of securities pursuant
to Rule 24f-2. On or about August 8, 1996, registrant filed its Rule 24f-2
Notice for the fiscal year ended June 30, 1996.
_________________________________________________________________
<PAGE>
Table of Contents:
1- Prospectus
2- Statement of Additional Information
<PAGE>
PROSPECTUS
Ameristock Mutual Fund, Inc.
1480 I Moraga Rd. #200
Moraga, CA 94556
Investment Advisor
Ameristock Corporation
Moraga, California
Custodian
Union Bank of California
San Francisco, CA
Transfer Agent
Ameristock Corporation
Moraga, California
Legal Council
Wyatt, Gerber, Burke & Badie
New York, New York
Independent Auditor
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
LOGO
Prospectus
October 15, 1996
<PAGE>
Prospectus
Ameristock Mutual Fund, Inc.
1480 I Moraga Rd. #200
Moraga, CA 94556
(800) 394-5064
Investment Objective: Long-Term Total Return
Minimum Investment: $1,000
Sales Charge: None, 100% No-Load
12(b)1 Fee: None
Exit or Redemption Fee: None
This Prospectus sets forth concise information an investor should know about
the Ameristock Mutual Fund, Inc. (the "Fund"). Investors should read and
retain this Prospectus for future reference. A Statement of Additional
Information has been filed with the Securities and Exchange Commission and
(together with any supplement to it) is incorporated by reference. The
Statement of Additional Information may be obtained free of charge by
writing or telephoning the Fund at its number shown above.
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 PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
October 15, 1996
<PAGE>
TABLE OF CONTENTS
FUND EXPENSES......................................... 4
FINANCIAL HIGHLIGHTS................................... 5
INVESTMENT OBJECTIVE................................... 5
INVESTMENT POLICIES & RISKS........................... 6
INVESTMENT RESTRICTIONS................................ 8
HOW TO PURCHASE SHARES................................. 8
HOW TO REDEEM SHARES................................... 9
DETERMINATION OF NET ASSET VALUE...................... 11
MANAGEMENT OF THE FUND................................ 12
INVESTMENT ADVISORY AGREEMENT......................... 12
DIVIDENDS AND TAXES................................... 14
OTHER INFORMATION..................................... 14
ACCOUNT APPLICATION................................... 17
<PAGE>
FUND EXPENSES
The following table illustrates all expenses and fees that a shareholder of
the Fund will incur, directly or indirectly.
Shareholder Transaction Expenses
Sales Load Imposed on Purchases....................... None
Sales Load Imposed on Reinvested Dividends............ None
Deferred Sales Load................................... None
Redemption Fees (a)................................... None
Exchange Fees......................................... None
Annual Fund Operating Expenses
Management Fee................................................ 1.00%
12b-1 Fees.................................................... None
Other Expenses................................................ None
Total Operating Expenses (b)........ 1.00%
(a) A fee of $10 is charged for each wire redemption.
(b) The Investment Advisor has obligated itself to reimburse the Fund to the
extent the Fund's regular operating expenses during any of its fiscal
years exceed 1.00% of its daily net asset value in such year. In
addition, the investment advisor has agreed to waive all fees charged
the Fund until January 1, 1997. See "Investment Advisory Agreement".
The following example illustrates the expenses an investor would pay on
a $1,000 investment in the Fund assuming (1) a 5% annual rate of return,
and (2) redemption at the end of each period.
1 Year 3 Years 5 Years 10 Years
$11 $33 $58 $132
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.
<PAGE>
FINANCIAL HIGHLIGHTS
(for a share outstanding throughout the period) from August 1, 1995
(inception of the Fund) to June 30, 1996.
The Financial Highlights presented below have been selected from the Fund's
financial statements which have been examined by McCurdy & Associates,
independent certified public accountants, whose unqualified report thereon
appears in the Fund's Annual Report to shareholders for the year ended
June 30, 1996 and are incorporated by reference in this Prospectus.
Ameristock
Mutual Fund
Net Asset Value, beginning of period $ 15.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .43
Net gain (loss) on securities- realized and unrealized 3.78
Total from investment operations 19.21
LESS DISTRIBUTIONS
Dividends from net investment income (.18)
Total distributions (.18)
Net asset value, end of period $ 19.03
Total Return (3) 30.76%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period ($ in 000's) $ 2,227
Ratio of expenses to average net assets (1) (2) 0
Ratio of net investment income to average net assets 2.40%
Portfolio turnover rate 7.43%
_________________________________
(1) From inception of investment activity August 31, 1995
(2) Ratio without Management fee waiver would have been 0.9%
(3) Annualized
<PAGE>
INVESTMENT OBJECTIVE
The Fund's investment objective is to seek total return through capital
appreciation and current income by investing primarily in equity securities.
The Fund's investment objective is a fundamental policy that may not be
changed without shareholder approval. There is no assurance that the Fund
will meet its investment objective.
INVESTMENT POLICIES & RISKS
The Fund will, under normal conditions, invest at least 80% of the value of
its total assets in equity securities consisting of common stocks. The Fund
may also enter into futures contracts, provided that the value of these
contracts does not exceed 25% of the Funds total assets. In addition, the
Fund may write covered call options on securities it owns and may also engage
in other option transactions in furtherance of its investment objective.
The Fund will invest in equity securities (including stock options, futures,
and American Depository Receipts ("ADR's")) typically of large capitalization
companies on national security exchanges and the over-the-counter market.
While many issuers may be held in different segments of the economy, they
will be weighted in the portfolio according to capitalization, and
fundamental analysis of value. Accordingly, those companies with lower
price/earnings ratio, and higher dividend yields will typically be ov
The cash equivalents the Fund may invest in include fixed income securities
(bank certificates of deposit, commercial paper, bank checking account, and
U.S. Government and Agency obligations). All of the Fund's fixed income
securities must be rated within the top three categories of safety according
to rating service companies like Standard & Poor's, Moody's, Fitch, or Duff
at the time of the investment or, if not rated, must then be determined by
the Investment Advisor to be of comparable quality. Fixed short term fixed
income instruments (less than 1 year) which should help alleviate price
fluctuations. Other fixed income risk factors include default risk.
The Fund may invest in securities issued by other investment companies
within the limits prescribed by the Investment Company Act of 1940 The Fund
intends to limit its investments so that, as determined immediately after a
securities purchase is made: (i) not more than 5% of the value of the Fund's
total assets will be invested in the securities of any one investment
company; (ii) not more than 10% of the value of the Fund's total assets will
be invested in the aggregate in securities of investment companies
as a group; and (iii) not more than 3% of the outstanding voting stock
of any one investment company will be owned by the Fund.
The Fund may write (i.e. sell) covered call and put options and purchase put
and call options on securities that are traded on United States listed
markets. The value of the underlying securities on which the options may be
written at any one time will not exceed 15% of the Fund's total assets. The
Fund will not purchase put or call options if the aggregate premium paid for
such options would exceed 5% of the Fund's total assets at the time of
purchase. The risks associated with options are that the option does not follow
the price movement of the underlying security. Moreover, gains and losses
depend on the Investment Advisor's ability to predict correctly the direction
of stock prices, interest rates, and other economic factors.
The Fund may enter into financial futures contracts to hedge its cash
position. Futures are generally bought and sold on commodity exchanges.
The sale of a futures contract creates a firm obligation by the Fund, as
seller, to deliver to the buyer the specific type of financial instrument
called for in the contract at a specified future time for a specified price
(or the net cash amount). The risk associated with using futures contracts
are: (i) imperfect correlation between the change in market value of stocks held
by the Fund snd the prices of the futures contracts; and (ii) possible
lack of a liquid secondary market for futures when desired.
The Fund will invest primarily in securities of companies domiciled in the
United States, but the Fund may also invest in foreign securities. Such
investments will only be made through ADR's traded on a United States
exchange. Investing in foreign securities involves inherent risks different
from domestic issuers including political and economic instability, and
exchange rate risk. Foreign securities may be subject to greater price
fluctuation than securities of U.S. companies.
For incremental income purposes, the Fund may lend its portfolio of
securities constituting up to 30% of its net assets to U.S. or foreign banks
or broker/dealers which have been rated within the two highest grades
assigned by Standard & Poor's or Moody's, or which have been determined by
the Investment Advisor to be of equivalent quality. The Investment Advisor
is responsible for monitoring compliance with this rating standard during the
term of any securities lending agreement. With any loan of portfolio
securities, there is a risk that the borrowing institution will fail to
redeliver the securities when due. However, loans of securities by the Fund
will be fully collateralized at all times by at least 100% of the current
market value of the lent securities.
The Fund is not intended to present a balanced investment program. It is not
intended to be a vehicle for short-term trading, but is intended for
investment for the long-term. The securities the Fund invests in are subject
to the risks inherent in the respective portfolio companies and to market
fluctuations.
INVESTMENT RESTRICTIONS
The Fund will not:
1- Invest more than 5% of its assets in securities of any one issuer, except
in obligations of the United States Government and its agencies or
instrumentalities.
2- Acquire securities of any one issuer that at time of investment (i)
represent more than 10% of the voting securities of the issuer or (ii)
have a value greater than 10% of the value of the outstanding securities
of the issuer.
3- Invest more than 5% of its assets (valued at time of investment) in
securities of issuers with less than three years operation (including
predecessors).
4- Invest more than 5% of its assets (valued at time of investment) in
securities that are not marketable.
5- Make loans, except the Fund may (i) purchase and hold debt securities
in accordance with its investment objective and policies, and (ii)
engage in securities lending as described in the Prospectus and in the
Statement of Additional Information.
These restrictions are considered to be fundamental and can not be changed
without a vote of the "majority of the outstanding voting securities" as
defined in the Investment Company Act of 1940.
HOW TO PURCHASE SHARES
See Application to Buy Shares that came with this Prospectus
Shares of the Fund are purchased at the net asset value per share next day
determined after receipt of the purchase order, as described under
"Determination of Net Asset Value". There are no sales commissions or
underwriting discounts. The minimum initial investment is $1,000, and
minimum subsequent investments (excluding reinvestments of dividends and
capital gains) is $100.
To purchase shares, complete and sign the Application to Buy Shares and
mail it with your check to:
Ameristock Mutual Fund
1480 I Moraga Rd. #200
Moraga, CA 94556
To purchase shares by wire:
The Union Bank of California
ATTN: BankCal Personal Trust, S.F.
ABA#: 122-000-496
Credit to: A/C#001-094166
Further Credit to Account # 11102870
Ameristock Mutual Fund
The purchase price is the net asset value per share as described under
"Determination of Net Asset Value".
Each investment in the Fund, including dividends and capital gains
distributions reinvested in the Fund, is acknowledged by a statement showing
the number of shares purchased, the net asset value at which the shares are
purchased, and the new balance of Fund shares owned. For reasons of economy
and convenience, the Fund will not issue certificates for shares purchased
Shares may be purchased or redeemed directly through the Fund or through an
investment dealer, bank or other institution. The Fund may enter into an
arrangement with such institution allowing the institution to process
purchase orders or redemption requests for its customers with the Fund on an
expedited basis, including requesting share redemption's by telephone.
Although these arrangements might permit one to effect a purchase or
redemption of Fund shares through the institution more quickly than would
otherwise be possible, the institution may impose charges for its services.
Those charges could constitute a significant portion of a smaller account,
and might not be in a shareholder's best interest. Shares of the Fund may
be purchased or redeemed directly from the Fund without imposition of any
charges other than those described in the Prospectus.
The Fund reserves the right not to accept purchase orders under
circumstances or in amounts considered disadvantageous to existing shareholders.
Congress has mandated that if any shareholder fails to provide and certify
to the accuracy of the shareholder's Social Security number or other
taxpayer identification number, the Fund will be required to withhold 31% of
all dividends, distributions, and payments, including redemption proceeds,
from such shareholder as a backup withholding procedure.
HOW TO REDEEM SHARES
You may redeem (sell) your shares at any time. The Fund will redeem all or
any part of shares owned upon written request delivered to the Fund at:
Ameristock Mutual Fund
1480 I Moraga Rd. #200
Moraga, CA 94556
Or by calling the Fund at (800) 394-5064. The Fund makes payment by check
for the shares redeemed within seven days after it receives a properly filled
out redemption request. The redemption price per share is the net asset
value determined as described under "Determination of Net Asset Value".
There is no redemption charge for mailed redemption checks.
For shares of the Fund where an investor requests wire payment: The Transfer
Agent will normally wire the redemption proceeds the next business day by
federal funds only to the bank and account designated on the Application to
Buy Shares, or in written instruction subsequently received by the Transfer
Agent, and only if the bank is a commercial bank that is a member of the
Federal Reserve System. The Transfer Agent currently charges a $10.00 fee
for each payment made by wire of redemption proceeds, which fee will be
deducted from the investor's account.
The redemption request must:
1- Include your name and account number.
2- Specify the number of shares or dollar amount to be redeemed, if less
than all shares are to be redeemed.
3- Be signed by all owners exactly as their names appear on the account.
4- Include a signature guarantee from any "eligible guarantor institution"
as defined by the rules under the Securities Exchange Act of 1934 if
(i) you change ownership of the account, (ii) you want the redemption
proceeds sent to a different address from that registered on the account,
(iii) the proceeds are to be made payable to someone other than the account
owner(s), or (iv) the redemption request is for $25,000 or more. Eligible
guarantor institutions include banks, broker/dealers, credit unions,
nattional securities exchanges, registered securities associations clearing
agencies, and savings associations. A notary public is not an eligible
guarantor.
In the case of shares being redeemed from an IRA or other qualified
retirement account, a statement of whether or not federal income tax should
be withheld is needed otherwise federal tax will automatically be withheld.
In the case of shares registered in the name of a corporation or other legal
entity, the redemption request should be signed in the name of the
corporation or entity by an officer whose title is stated, and a certified
bylaw provision or resolution of the board of director authorizing the
officer to so act must be furnished.
Payment of redemption proceeds with respect to shares purchased by check will
not be made until the check or payment received for investment has cleared,
which may take up to 11 business days.
The redemption value of the shares may be more or less than the cost,
depending upon the value of the Fund's portfolio securities at the time of
redemption. The Fund reserves the right to suspend or postpone redemption's
during any period when: (i) trading on the New York Stock Exchange is
restricted, or (ii) it is not reasonably practicable for the Fund to dispose
of, or determine the fair market value of its net assets. If the net asset
value of the shares in an account is less than $1,000 as a result of
previous redemptions and not market declines, the Fund may notify the registered
shareholder that unless the acount value is increased to at least the
minimum within 60 days the Fund will redeem all shares in the account and
pay the redemption price to the registered shareholder.
In order to utilize the telephone redemption procedure, a shareholder must
have elected this procedure in writing, and the redemption proceeds must be
mailed directly to the investor or transmitted to the investor's
predesignated account at a domestic bank. To change the designated account
or address, a written request with signature(s) guaranteed must be sent to
the Transfer Agent at least 15 days before the telephone redemption request.
Neither the Fund nor the Transfer Agent will be responsible for the
authenticity of telephone instructions and will not be responsible for
any loss, damage, cost or expense arising out of any telephone instructions
received for an account. Furthermore, you agree to hold harmless and
indemnify the Fund, the Transfer Agent, and any affiliated officers,
employees, directors, and agents from any losses, expenses, costs or
liabilities (including attorneys' fees) that may be incurred in connection
with either the written or telephone redemption procedures.
By electing the telephone redemption option, you may be giving up a measure
of security that you might have if you were to redeem your shares in writing.
For reasons involving the security of your account, you will be required to
provide a password to verify authenticity before your instructions will be
carried out, and the telephone transaction may be tape recorded.
DETERMINATION OF NET ASSET VALUE
The net asset value of a share of the Fund is determined as of the close on
the New York Stock Exchange, currently 4:00 p.m. New York City time, on any
day on which that Exchange is open for trading, by dividing the market value
of the Fund's assets, less its liabilities, by the number of shares
outstanding, and rounding down to the nearest full cent.
Portfolio securities are valued using current market valuations based on last
reported sales prices. Securities for which quotations are not available and
other assets are valued at a fair value as determined by management and
approved in good faith by the Board of Directors. Short-term obligations
with maturities of sixty days or less are valued at amortized costs as
reflecting fair value.
MANAGEMENT OF THE FUND
The business and affairs of the Fund are managed under the direction of the
Board of Directors. The Fund's directors, including those directors who are
also officers, and their principal business activities during the past five
years are:
Nicholas D. Gerber, Chairman and Director. President Ameristock Corporation,
Portfolio Manager of the Fund. Portfolio Manager with Bank of America
helping to manage over $250 million (1993-1995). President and Portfolio
Manager Marc Stevens Futures Index Fund prior.
Howard Mah, EA, MBA, Director. Tax and Financial Consultant with law firm
(Office of Stephen M. Moskowitz- 1989 to 1995) and private practice
(1989-Present).
Andrew Ngim, Director. Benefits Consultant with Coopers & Lybrand
(1994-Present). Benefit Specialist with Morrison & Foerster (1994-1994).
Pension System Project Manager with Pension Dynamics Corporation prior.
Stephen J. Marsh, ASA, Director. Independent Business Valuation Consultant
associated with the Mentor Group (1991-Present), Financial Appraiser with
Valuation Research Corporation prior.
Alev Efendioglu, PhD., Director. Professor of Management and Small Business
Institute Director, McLaren School of Business, University of San Francisco
(1977-Present).
Mr. Gerber, Mr. Mah, and Mr. Ngim are considered an "interested person" of
the Fund as defined in the Investment Company Act of 1940.
INVESTMENT ADVISORY AGREEMENT
The Ameristock Corporation located at 1480 I Moraga Rd #200, Moraga, CA
94556, serves as the investment advisor to the Fund pursuant to an investment
advisory agreement. The investment advisor supervises and manages the
investment portfolio of the Fund on a continuous basis subject to the overall
authority of the Board of Directors. In addition to the Fund, the investment
advisor may be the advisor to other individual and institutional accounts.
The investment advisor was organized under the laws of California in June
1995 and has no operating history. Mr. Gerber, the largest shareholder
of the Ameristock Corporation and the Portfolio Manager of the Fund has been
managing money since 1984.
The Investment Advisor receives from the Fund, as compensation for its
services, a fee, accrued daily and payable monthly, at an annual rate of
1.00% of the Fund's net assets. On days for which the values of the Fund's
net assets are not determined, the fee is accrued on the most recently
determined net assets adjusted for subsequent daily income and expense
accruals. This fee is higher than fees paid by most other mutual funds,
but the investment advisor has obligated itself to reimburse the Fund to the
extent the Fund's total annual expenses, excluding taxes, interest, brokerage
commissions, and extraordinary litigation expenses, during any of its fiscal
years, exceed 1.00% of its average daily net asset value in such year.
Under the agreement, the investment advisor furnishes at its own expense
office space to the Fund and all necessary office facilities, equipment, and
personnel for managing the assets of the Fund. The investment advisor also
pays for expenses of marketing shares of the Fund, all expenses in
determination of daily price computations, placement of securities orders
(excluding brokerage commissions) and related bookkeeping.
The Fund pays all expenses incident to its operations and business not
specifically assumed by the investment advisor, including expenses relating
to custodial, legal, brokerage commissions, auditing charges, printing and
mailing reports and prospectuses to existing shareholders, taxes and
corporate fees, maintaining registration of the Fund under the Investment
Company Act of 1940 and registration of its shares under the Securities
Act of 1933, and qualifying and maintaining qualification of its shares under
securities laws of certain states.
DIVIDENDS AND TAXES
The Fund intends to pay dividends from net investment income and net realized
capital gains (not offset by capital loss carryovers) on an semi-annual basis
in July and December.
Dividends and capital gain distributions, if any, are reinvested in
additional shares of the Fund unless the shareholder has requested in writing
to have them paid by check.
The Fund intends to elect to be treated and to qualify each year as a
regulated investment company under Subchapter M of the Internal Revenue Code
of 1986. See Statement of Additional Information for a summary of
requirements that must be satisfied to so qualify. A regulated investment
company is generally not subject to Federal income tax on income and gains
distributed in a timely manner to its shareholders.
Dividends from investment income and net short-term capital gains are taxable
as ordinary income to U.S. shareholders. Distributions of long-term capital
gains are taxable as long-term capital gains regardless of the length of time
shares in the Fund have been held. Distributions will be taxable, whether
received in cash or reinvested in shares of the Fund.
Each shareholder will be advised annually as to the source of distribution
for tax purposes. A shareholder who is not subject to income taxation, such
as a qualified plan like an IRA, will not be required to pay tax on
distributions received.
If shares are purchased shortly before a record date for a distribution the
shareholder will, in effect, receive a return of capital, but the
distribution will be taxable to the shareholder even if the net asset value
of the shares is reduced below the shareholder's cost. However, for federal
income tax purposes the original cost would continue as the tax basis. If
shares are redeemed within six months, any loss on the sale of those shares
would be long-term capital loss to the extent of any distributions of
long-term capital gains that the shareholder has recieved on those shares.
OTHER INFORMATION
The Fund was incorporated as a Maryland corporation on June 15, 1995. The
authorized capital stock of the Fund consists of 100 million shares of
common stock, par value $.005 per share. Each share of common stock is
entitled to share pro rata in any dividends and other distributions on shares
declared by the Board of Directors, to one vote per share in elections of
directors and other matters presented to shareholders, and to equal rights
per share in the event of liquidation.
According to the laws of Maryland, under which the Fund is incorporated, and
the Fund's bylaws, the Fund is not required to hold an annual meeting of
shareholders unless required to do so under the Investment Company Act of
1940. The Fund will call a meeting of shareholders for the purpose of
voting upon the question of removal of a director or directors when requested
in writing to do so by record holders of at least 10% of the Fund's
outstanding common shares, and in connection with such meeting will comply
with the provisions of section 16(c) of the Investment Company Act of 1940
conserning assistance with shareholder communication.
The Fund issues annual reports to shareholders (one per taxpayer
identification number) containing financial statements audited by its
independent auditor, McCurdy & Associates CPA's, Inc.. The Fund also
issues quarterly account statements, and semiannual financial statements
containing lists of securities owned by the Fund.
The Fund may provide information about its total return and average annual
total return in letters to shareholders or in sales materials. Total return
is the percentage change in value during the period of an investment in the
Fund, including the value of shares acquired through reinvestment of all
dividend and capital gains distributions. Average annual return is the
average annual compounded rate of change in value represented by the total
return for the period. Performance quotations for any period when an expense
limitation is in effect will be greater than if the limitation had not been in
effect. The Fund's performance may also be compared to various indices and
to other mutual funds with similar investment objectives. See the Statement
of Additional Information for a further information about performance
measurement.
All performance data (when applicable) is based on the Fund's past investment
results and does not predict future performance. Investment performance,
which will vary, is based on many factors, including market conditions, the
composition of the Fund's portfolio, and the Fund's operating expenses.
Investment performance also reflects the risks associated in the Fund's
investment objective and policies. These factors should be considered when
comparing the Fund's investment results to those of other mutual funds
and other investment vehicles.
Union Bank of California, 475 Sansome St.- 15th Fl., San Francisco, CA
94111, has been retained to act as the Fund's custodian of the Fund's
investments. The custodian does not have any part in deciding the Fund's
investment policies or which securities are to be purchased or sold for the
Fund's portfolio.
Ameristock Corporation, 1480 I Moraga Rd. #200, Moraga, CA 94556, will act
as transfer agent. Shareholder inquiries should be made to the transfer
agent by mail or by calling (800) 394-5064.
Wyatt, Gerber, Burke & Badie, 99 Park Avenue, New York, NY 10016, has passed
upon the validity of the shares offered by this Prospectus and also acts as
outside counsel to the Fund.
McCurdy & Associates CPA's, Inc., 27955 Clemens Road, Westlake, Ohio 44145,
has been selected to serve as independent certified public accountants of
the Fund for the fiscal year ending June 30, 1997.
<PAGE>
APPLICATION TO BUY SHARES
LOGO
Mail to: Minimum Investments:
Ameristock Mutual Fund Initial: $1,000
1480 I Moraga Rd. #200 Subsequent: $ 100
Moraga, CA 94556
1 Registration of Shares
Owner Joint Owner
Address Social Security or Tax ID Number
( )
City State Zip Daytime Phone Number
If more than one owner is listed above, then shares will be registered as
joint tenants with right of survivorship and not as tenants in common,
unless otherwise instructed.
2 Investment Information
This investment represents an:
Initial investment payable to: Ameristock Mutual Fund Amount $
Investment wired to account : Amount $
3 Dividend Option
All income dividends and capital gains distributions will be reinvested in
additional shares as stated in the Prospectus unless the box below is checked.
Please pay all income dividends and capital gains distributions in cash.
[ ]
4 Taxpayer Information
I am a U.S. Citizen [Yes] [No] (circle one)
The Internal Revenue Service (IRS) requires each taxpayer to provide a
Social Security or Taxpayer Identification Number and to make the following
certifications. I certify under penalty of perjury that:
1) The Social Security or Tax ID number stated above is correct.
2) I am not subject to backup withholding because:*
a- The IRS has not informed me that I am subject to backup withholding.
b- The IRS has notified me that I am no longer subject to backup
withholding.
* If this statement is not true and you are subject to backup withholding,
cross out Section 2
5 Signature and Agreement
I/We, the undersigned, have received a copy of the current Prospectus of
the Ameristock Mutual Fund and are purchasing Fund shares in accordance with
its provisions. I/We further certify that the undersigned is of legal age
and has full legal capacity to make this purchase. The purchase price shall
be the net asset value next determined following receipt of the application
by the Fund, if the application is accepted. This application cannot be
processed unless accompanied by payment.
Signature of Owner Date
Signature of Joint Owner (if any) Date
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
AMERISTOCK MUTUAL FUND, INC.
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
OCTOBER 15, 1996
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the prospectus of the Ameristock Mutual Fund, Inc.
(the "Fund"), dated October 15, 1996 as amended from time to time.
To obtain a copy of the Fund's Prospectus, please write to the Fund at
1480 I Moraga Rd. #200, Moraga, CA 94556 or call 1-800-394-5064.
TABLE OF CONTENTS
Investment Objective and Policies...................... B-2
Management Agreement................................... B-5
Directors and Officers................................. B-6
Portfolio Turnover..................................... B-7
Portfolio Transactions and Brokerage................... B-7
Performance Information................................ B-7
Share Redemptions...................................... B-7
Distributions and Taxes................................ B-9
Additional Information................................. B-11
Appendix............................................... B-12
Report of Independent Certified Public Accountant...... B-14
Financial Statement.................................... B-15
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The Funds investment objective is to seek total return through capital
appreciation and current income by investing primarily in equity securities.
The Fund will, under normal conditions, invest at least 80% of the value of
its total assets in equity securities consisting of common stocks but the
Fund may also hold cash or cash equivalents and invest in, without limit,
U.S. government obligations if the Ameristock Corporation, (the "Investment
Advisor") determines that a temporary defensive position is advisable.
The following objectives and policies supplement those in the Prospectus.
Unless otherwise noted, whenever an investment policy states a maximum
percentage of the Fund's assets that may be invested in any security or other
asset, or sets forth a policy regarding quality standards, such a standard or
percentage will be determined immediately after and as a result of the Fund's
acquisition of such security or other asset. Accordingly, any subsequent
change in values, net assets, or other circumstances will not be considered
when determining whether the investment complies with the Fund's investment
objectives and policies.
The Fund's fundamental investment objectives and policies cannot be changed
without approval by a "majority of the outstanding voting securities" (as
defined in the Investment Company Act of 1940) of the Fund. The following
are the fund's fundamental investment policies set forth in their entirety.
The Fund may not:
1) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the Fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
2) purchase the securities of any issuer if such purchase, at the time
thereof, would cause more than 5% of the value of the Fund's total assets
at market to be invested in the securities of such issuer (other than
obligations of the United States government and its instrumentalities);
3) purchase the securities of an issuer if, as a result the Fund would own
more than 10% of the outstanding voting securities of such issuer;
4) issue senior securities, except as permitted under the Investment
Company Act of 1940;
5) borrow money, except that the Fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including weekends or
holidays) to the extent necessary to comply with the 33 1/3% limitation;
6) act as an underwriter of securities issued by others, except to the
extent the Fund may be deemed to be an underwriter in connection with the
disposition of portfolio securities;
7) make loans, although the Fund may invest in debt securities and lend
portfolio securities;
8) invest in securities or other assets that the Board of Directors
determines to be illiquid if more than 15% of the Fund's net assets
would be invested in such securities;
9) (a) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the Fund from purchasing or selling options and futures contracts
or from investing in securities or other instruments backed by physical
commodities), (b) invest in oil, gas, or mineral exploration or
development programs or leases, or (c) purchase securities on margin.
10) purchase or sell real estate or make real estate mortgage loans or
invest in real estate limited partnerships, except that the Fund may
purchase and sell securities issued by entities engaged in the real estate
industry or instruments backed by real estate.
The forgoing restrictions are fundamental policies that may not be changed
without the approval of a majority of the Fund's outstanding voting
securities. As used in the Statement of Additional Information, a majority
of the Fund's outstanding voting securities means the lessor of (a) more
than 50% of the Fund's outstanding voting securities or (b) 67% or more of
the voting securities present at a meeting at which more than 50% of the
outstanding voting securities are present or represented by proxy. The Fund's
investment objectives, as well as those policies and restrictions that are
not fundamental, may be modified by the Boeard of Directors without
shareholder approval if, in the reasonable exersise of its business
judgement, modification is determined to be necessary or appropriate
to carry out the Fund's objective. However, the Fund will not change its
investment policies or restrictions without written notice to shareholders.
Information on the Fund's Investments
Securities Lending. Securities lending allows the Fund to retain ownership
of the securities loaned out, at the same time, to earn additional income.
Since there may be delays in the recovery of loaned securities, or even a
loss of rights in collateral supplied should the borrower fail financially,
loans will only be made to parties which have been rated within the two
highest grades assigned by Standard & Poor's or Moody's, or which have been
determined by the Investment Advisor to be of equivalent quality.
Furthermore, securities will only be lent if, in the judgement of the
Investment Advisor, the consideration to be earned from such loans
justify the risk.
The Investment Advisor understands that it is the current view of the
Securities and Exchange Commission (SEC) staff that the Funds may engage in
loan transactions only under the following conditions: (i) the Fund must
receive 100% collateral in the form of cash or cash equivalent (e.g., U.S.
Treasury bills or notes) from a borrower; (ii) the borrower must increase
the collateral whenever the market value of the securities loaned
(determined on a daily basis) rises above the value of the collateral;
(iii) after giving notice, the Fund must be able to terminate the loan at
any time; (iv) the Fund must receive reasonable interest on the loan or a
flat fee from the borrower, as well as amounts equivalent to any dividends,
interest, or other distributions on the securities loaned and to any increase
in market value; (v) the Fund may pay only reasonable custodian fees in
connection with the loan; and (vi) the Board of Directors must be able to vote
proxies on the securities loaned, either by terminating the loan or be entering
into an alternative arrangement with the borrower.
Cash received through loan transactions may be invested in any security in
which the Fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
Illiquid Investments. Illiquid investments are investments that cannot be
sold or disposed of in the ordinary course of business at approximately the
prices at which they are valued. Under the supervision of the Board of
Directors, the Investment Advisor determines the liquidity of the Fund's
investments and, through reports from the Investment Advisor, the Board of
Directors monitors investments in illiquid instruments. In determining the
liquidity of the Fund's investments, the Investment Advisor may consider
various factors, including (i) the frequency of trades and quotations, (ii) the
number of dealers and prospective purchasers in the marketplace, (iii) dealer
undertakings to make a market, (iv) the nature of the security (including any
demand or tender features), and (v) the nature of the marketplace for trades
(including the ability to assign or offset the Fund's rights and obligations
relating to the investment).
Foreign Securities. Foreign securities involve certain inherent risks that are
different from those of domestic issuers, including political or economic
instability of the issuer or the country of the issue, diplomatic developments
which could affect U.S. investments in those countries, changes in foreign
currency and exchange rates and the possibility of adverse changes in
investment or exchange control regulations. As a result of these and other
factors, foreign securities purchased by the Fund (including American
Depository Receipts (ADR's)) may be subject to greater price fluctuations
than securities of U.S. companies.
Options. An option on a security is a contract that permits the purchaser of
the option, in return for the premium paid, the right to buy a specified
security or index (in the case of a call option) or to sell a
specified security or index (in the case of a put option)
from or to the writer of the option at a designated price
during the term of the option. An option on a securities index permits the
purchaser of the option, in return for the premium paid, the right to receive
from the seller cash equal to the difference between the closing price of the
index and the exercise price of the option.
The gain or loss on an option on an index depends on price movements in the
instruments making up the market, market segment,
industry or other composite on which the underlying index is
based, rather than price movements in individual securities, as is the case
with
respect to options on securities. The Fund may write a call or put option
only if
the option is "covered". This means so long as the Fund is obligated as the
writer
of a call option, it will hold the underlying security subject to the call,
or hold a call at the same or lower exercise price, for the same
exercise period, and on the same securities as on the written call.
A put is covered if the Fund maintains liquid assets with a value equal
to the exercise price in a segregated account,or holds a put
on the same underlying securities at an equal or greater exercise price.
Put options and call options typically have similar structural
characteristics and operational mechanics regardless of the underlying
instruments on which they are purchased or sold.
The Fund's purchase of a put option on a security might be designated to
protect its holdings in the underlying instrument (or, in some cases a
similar instrument) against substantial declines in the market value by
giving the Fund the right to sell such instrument at the option exercise
price. The Fund's purchase of a call option on a security or index might
be intended to protect the Fund against an increase in the price of the
underlying instrument that it intends to purchase in the future by fixing
the price at which it may purchase such instrument. If the Fund sells a call
option, the premium that it receives may serve as a partial hedge, to the
extent of the option premium, against a decrease in the value of the
underlying securities or instruments in its portfolio or will increase
the Fund's income. The sale of put options can also provide income.
The value of the underlying securities on which the options may be written at
any one time will not exceed 15% of the Fund's total assets. The Fund will
not purchase put or call options if the aggregate premium paid for such
options would exceed 5% of the Fund's total assets at the time of purchase.
Even though the Fund will receive the option premium to help protect it
against a loss, a call sold by the Fund exposes the Fund during the term of
the option to possible loss of opportunity to realize appreciation in the
market price of the underlying security or instrument and may require the
Fund to hold a security or instrument which it might otherwise have sold.
The Fund's ability to close out its position as a purchaser or seller of a put
or call option is dependent, in part, upon the liquidity of the option market.
Among the possible reasons for the absence of a liquid option market on an
exchange are: (i) insufficient trading interest in certain options;
(ii) restrictions on transactions imposed by an exchange; (iii) trading
halts, suspensions or other restrictions imposed with respect to particular
classes or series of options or underlying securities including reaching
daily price limits; (iv) interruption of the normal operations of an
exchange; (v) inadequacy of the facilities of an exchange to handle current
trading volume; or (vi) a decision by one or more exchanges to discontinue
the trading of options (or a particular class or series of options), in
which event the relevant market for that option on that exchange would
cease to exist, although outstanding options on that exchange would generally
continue to be exercisable in accordance with their terms.
The hours of trading for listed options may not coincide with the hours during
which the underlying financial instruments are traded. To the extent that the
option markets close before the markets for the underlying instruments,
significant price and rate movements can take place in the underlying markets
that cannot be reflected in the options markets.
Futures. The Fund's use of options and financial futures thereon will in
all cases be consistent with applicable regulatory requirements and in
particular the rules and regulations of the Commodity Futures Trading
Commission and will be entered into only for bona fide hedging, risk
management, or other portfolio management purposes. Typically, maintaining
a futures contract requires the Fund to deposit with a financial intermediary
as security for its obligations an amount of cash or other specified asset
(initial margin) which is typically 1% to 10% of the face amount of the
contract (but may be higher in some circumstances). Additional cash or
assets (variation or maintenance margin) may be required to be deposited
thereafter on a daily basis as the mark to market value of the contract
fluctuates. The purchase of an option on a futures involves
payment of a premium for the option without
any further obligation on the part of the Fund. If the Fund exercises an
option on a futures contract it will be obligated to post initial margin (and
potential variation or maintenance margin) for the resulting futures position
just as it would for any position. Futures contracts and options thereon are
generally settled by entering into offsetting transactions but there can be no
assurance that the position can be offset prior to settlement at an
advantageous price, not that delivery will occur.
The Fund will not enter into a futures contract or related option (except for
closing transactions) if, immediately thereafter, the value of the face amount
of the open futures contracts and options thereon would exceed 25% of the
Fund's total assets.
There can be no assurance that a liquid market will exist at a time when the
Fund seeks to close out a futures or futures option position. The Fund would
be exposed to possible loss on the position during the interval of inability
to close, and would continue to be required to meet margin requirements until
the position was closed, which could result in a decrease in the Fund's net
asset value. The liquidity of a secondary market in a futures contract may
be adversely affected by "daily price fluctuation limits" established by
commodity exchanges which limit the amount of fluctuation in a futures
contract price during a single trading day. Once the daily limit has been
reached in the contract, no trades may be entered into at a price beyond
the limit, thus preventing the liquidation of open futures positions. The
trading of futures contracts is also subject to the risk of trading
halts, suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruption or normal trading activity, which could at times make it difficult or
impossible to liquidate existing positions or to recover excess variation
margin payments.
Segregated Accounts. Futures contracts, options, and options on futures
contracts require the Fund to segregate liquid high grade assets with its
custodian to the extent Fund obligations are not otherwise "covered" through
ownership of the underlying security, or financial instrument. In general,
either the full amount of any obligation by the Fund to pay or deliver
securities or assets must be covered at all times by the securities, or
instruments required to be delivered, or, subject to any regulatory
restrictions, an amount of cash or liquid high grade securities at least
equal to the current amount of the obligation must be segregated with the
custodian. The segregated assets cannot be sold or transferred unless
equivalent assets are substituted in their place or it is no longer
necessary to segregate them.
MANAGEMENT AGREEMENT
The Fund employs the Investment Advisor to furnish advisory and other
services.
Under the Investment Advisor's contract with the Fund, the Investment Advisor
acts as investment advisor and, subject to the supervision of the
Board of Directors,
directs the investments of the Fund in accordance with the Fund's investment
objective, policies, and limitations. The Investment Advisor also provides
the Fund with all necessary office facilities and personnel for servicing the
Fund's investments, and compensates all officers of the Fund, all Directors
who are "interested persons" of the Fund or the Investment Advisor, and all
personnel of the Fund or of the Investment Advisor performing services
relating to research, statistical, and investment activities.
In addition, the Investment Advisor, subject to the supervision of the
Board of Directors, provides the management and administration services
necessary for the operation of the Fund. These services include providing
facilities for maintaining the Fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and other
persons dealing with the Fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining the Fund's
records and the registration of the Fund's shares under federal and state law;
developing management and shareholder services for the Fund; and furnishing
reports, evaluations, and analysis on a variety of subjects to the Board
of Directors.
In addition to the management fee payable to the Investment Advisor, the
Fund pays all of its expenses, without limitation, that are not specificaly
assumed by the Investment Advisor. For example, the Fund may pay for
typesetting, printing, and mailing proxy materials to shareholders, legal
expenses, and the fees of the custodian, auditor, brokerage expenses, and
non-interested Directors plus other expenses that are not paid for from the
management fee. Although the Fund's management contract provides that
the Fund will pay for typesetting, printing, and mailing Prospectuses,
Statements of Additional Information, notices, and reports to existing
shareholders, the Investment Advisor has indicated that it will waive its
fee until January 1, 1997. In addition, the Investment Advisor has
obligated itself to reimburse the Fund to the extent the Fund's total annual
expenses, excluding taxes, interest, brokerage commissions, and
extraordinary litigation expenses, during any of its fiscal years,
exceed 1.00% of its average daily net asset value in such year.
For the services of the Investment Advisor, the Fund pays as compensation,
a fee, accrued daily and payable monthly, at an annual rate of 1.00% of the
Fund's net assets. On days for which the values of the Fund's net assets are
not determined, the fee is accrued using the most recently determined net
assets adjusted for subsequent daily income and expense accruals.
DIRECTORS AND OFFICERS
The Directors and Officers of the Fund and their principal occupations during
the past five years are set forth below. Unless otherwise noted, the business
address for each Director and Officer is 1480 I Moraga Rd. #200, Moraga,
CA 94556, which is also the address of the Investment Advisor. Those
Directors who are "interest persons" (as defined in the Investment Company
Act of 1940) by virtue of their affiliation with either the Fund or with the
Investment Advisor are indicated by an asterisk (*).
* Nicholas Gerber, Chairman and Director. President Ameristock Corporation,
Portfolio Manager of the Fund. Portfolio Manager with Bank of America
helping to manage over $250 million in commingled and mutual fund
accounts (1993-1995). President and Portfolio Manager Marc Stevens
Futures Index Fund prior.
* Howard Mah, EA, MBA, Director. Tax and Financial Consultant with law
firm (Office of Stephen M. Moskowitz 1989-1995) and private practice
(1989-Present).
* Andrew Ngim, Director. Benefits Consultant with Coopers & Lybrand
(1994-Present). Benefit Specialist with Morrison & Foerster (1994-1994).
Pension System Project Manager with Pension Dynamics Corporation prior
Stephen J. Marsh, ASA, Director. Independent Business Valuation Consultant
associated with the Mentor Group (1991-Present), Financial Appraiser with
Valuation Research Corporation prior.
Alev Efendioglu, PhD., Director. Professor of Management and Small
Business Institute Director, McLaren School of Business, University of
San Francisco (1977-Present).
The Directors of the Fund who are employees or Directors of the Investment
Advisor receive no remuneration from the Fund. Each of the other Directors
is paid an annual retainer of $1.00 and is reimbursed for the expenses
of attending meetings.
PORTFOLIO TURNOVER
While it is difficult to predict, the Investment Advisor expects that the
annual portfolio turnover rate of the Fund will not exceed 100%.
A greater rate may be experienced during periods of marketplace volatility
which necessitates more active trading. A higher portfolio turnover rate
involves greater transaction costs to the Fund and may result
in the realization of net capital
gains which would be taxable to shareholders when distributed. For the fiscal
year ending June 30, 1996 the Funds turnover was 7.5%
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Board of Directors, decisions to buy and
sell securities for the Fund and negotiation of its brokerage commission rate
are made by the Investment Advisor. Transactions on United States stock
exchanges involve the payment by the Fund of negotiated brokerage commissions.
There is generally no stated commission in the case of securities traded in the
over-the-counter market but the price paid by the Fund usually includes an
undisclosed dealer commission or mark-up. In certain instances, the Fund
may make purchases of underwritten issues at prices which include
underwriting fees.
In selecting a broker to execute each transaction, the Investment Advisor
will take the following into consideration: the best net price available; the
reliability, integrity and financial condition of the broker; the size and
difficulty in executing the order; and the value of the expected contribution
of the broker to the investment performance of the Fund on a continuing basis.
Accordingly, the cost of the brokerage commissions
to the Fund in any transaction may be greater
than that available from other brokers if the difference is reasonably
justified, determined in good faith by the Investment Advisor, by other aspects
of the portfolio execution services offered such as research, economic data, a
nd statistical information about companies and industries, non-inclusive.
PERFORMANCE INFORMATION
From time to time, quotations of the Fund's performance may be included
in advertisements, sales literature or reports to shareholders or prospective
investors. The Fund may also compare its performance figures to the
performance of unmanaged indices which may assume reinvestment of
dividends or interest but generally do
not reflect deductions for administrative
and management costs. Examples include, but are not limited to, the Dow
Jones Industrial Average, the Consumer Price Index, Standard & Poor's 500
Composite Price Index (the "S&P 500"), the various NASDAQ indices, and
the Wilshire 5000. In addition, the Fund may compare its performance to t
he performance of broad groups of mutual funds with similar investment
goals, as tracked by independent organizations such as Investment
Company Data, Inc., Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Morningstar, Inc., Ibbotsen Associates, Value Line
Mutual Fund Survey, and other independent organizations. Also, the Fund
may refer to its ratings and related analysis supporting the ratings from
these or other independent organizations.
From time to time, the Fund may compare its performance against inflation
with the performance of other instruments against inflation, such as short-term
Treasury Bills (which are direct obligations of the U.S. Government) and
FDIC- insured bank money market or certificate of deposit accounts. In
addition, advertising for the Fund may indicate that investors may consider
diversifying their investment portfolios
in order to seek protection of the value
of their assets against inflation.
From time to time advertising materials for
the Fund may refer to, or include commentary by the Fund's portfolio manager,
Nicholas D. Gerber, relating to his investment strategy, asset growth of the
Fund, current or past business, political, economic or financial conditions and
other matters of general interest to investors.
In addition, from time to time,
advertising materials for the Fund may include information concerning
retirement and investing for retirement, including information provided
by the Social Security Administration, and may refer to the approximate
number of then current Fund shareholders.
The Fund may compare its performance to various capital markets such as
common stocks, long-term government bonds, Treasury bills, and the U.S.
rate of inflation as these figures are provided by Ibbotsen Associates and
other independent organizations. The Fund may also use the performance of
these capital markets in order to demonstrate general risk versus reward
investment scenarios. In addition, the Fund may quote financial or business
publications and periodicals, including model portfolios or allocations, as
they relate to fund management, investment philosophy, and investment
techniques.
The Fund may quote its performance in various ways. All performance
information supplied by the Fund in advertising is historical and is not
intended to indicate future returns. The Fund's share price and total returns
fluctuate in response to market conditions and other factors, and the value of
Fund shares may be more or less than their original cost.
Total returns quoted in advertising reflect all aspects of the Fund's return
including the effect of reinvesting dividends and capital gain distributions,
and any change in the Fund's net asset value per share (NAV) over the period.
Average annual returns are calculated by determining the growth or decline
in value of a hypothetical historical investment in the Fund over a stated
period, and then calculating the annually compounded percentage rate that
would have produced the same result if the rate of growth or decline in
value had been constant over the period. For example, a cumulative return
of 100% over ten years would produce an average annual total return of
7.18%, which is the steady annual rate of return that would equal 100%
growth on a compounded basis in ten years. While average annual returns
are a convenient means of comparing investment alternatives, the Fund's
performance is not consistent over time, but changes from year to year, and
that average annual returns represent figures as opposed to the actual
year-to-year performance of the Fund. The formula for determining annual
average total return expressed as a percentage is:
T = (ERV/P) 1/n - 1
Where:
T = average annual total return
P = a hypothetical initial investment of $1,000
n = number of years
EVR = ending redeemable value: ERV is the value, at the end of
the applicable period, of a hypothetical $1,000 investment
made at the beginning of the applicable period.
In addition to average annual total returns, the Fund may quote
unaveraged or cumulative total returns reflecting the simple change
in value of an investment over a stated period. Average annual and cumulative
returns may be quoted as a percentage change or as a dollar amount, and may
be calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their component parts of income and capital (including capital gains and
changes in share price) in order to illustrate the relationship of these
factors and their contribution to total return.
SHARE REDEMPTIONS
The right of redemption may be suspended, or the date of payment postponed
beyond the normal seven-day period by the Fund, under the following conditions
authorized by the 1940 Act: (1) for any period (a) during which the New York
Stock Exchange is closed, other than customary weekend and holiday closing,
or (b) during which trading on the New York Stock Exchange is restricted;
for any period during which an emergency exists as a result of (a) disposal
by the Fund of securities owned by it is not reasonably practicable, or
(b) it is not reasonably practicable for the Fund to determine the fair
value of its net assets; and (3) for such other periods as the SEC may
by order permit for the protection of the Fund's shareholders.
The value of shares of the Fund on redemption may be more or less than the
shareholder's cost, depending upon market value of the Fund's assets at the
time. Shareholders should note that if a loss has been realized on the sale of
shares of the Fund, the loss may be disallowed for tax purposes if shares of
the same Fund are purchased within (before or after) 30 days of the sale.
It is possible that conditions may exist in the future which would, in the
opinion of the Board of Directors, make it undesirable for the Fund to pay
for redemptions in cash. In such cases the Board may authorize payment
to be made in portfolio securities of the Fund. However, the Fund has
obligated itself under the Investment Company Act of 1940 to redeem for
cash all shares presented for redemption by any one shareholder up to 1%
of the Fund's net assets in any 90 day period. Securities delivered in payment
of redemptions are valued at the same value assigned to them in computing
the net asset value per share. Shareholders receiving such securities
generally will incur brokerage costs on their sales.
DISTRIBUTIONS AND TAXES
Distributions of investment company taxable income are taxable to a U.S.
shareholder as ordinary income, whether paid in cash or shares. Dividends
paid by the Fund to a corporate shareholder, to the extent such distributions
are attributable to dividends received from U.S. corporations by the Fund, may
qualify for the dividends received deduction. However, the revised alternative
minimum tax applicable to corporations may reduce the value of the dividends
received deduction. Distributions of net capital gains (the excess of net
long-term capital gains over net short-term capital losses), if any,
designated by the Fund as capital gain dividends, are taxable as
long-term capital gains, whether paid in cash or in shares, regardless of
how long the shareholder has held the Fund's shares and are not eligible
for the dividends received deduction. Shareholders will be notified
annually as of the U.S. federal tax status or distributions and shareholders
receiving distributions in the form of newly issued shares will receive a
report as to the net asset value of the shares received.
If the net asset value of shares is reduced below a shareholder's cost as a
result to
a distribution by the Fund, such distribution generally will be taxable even
though it represents a return of invested capital. Investors should be careful
to consider the tax implications of buying shares of the Fund just prior to a
distribution. The price of shares purchased at this time may reflect the
amount of the forthcoming distribution. Those purchasing just prior to a
distribution will receive a distribution which generally will be
taxable to them.
The Fund intends to be taxed as a regulated investment company under
subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
Accordingly, the Fund generally must, among other things, (1) derive in
each taxable year at least 90% of its gross income from dividends, interest,
payments with respect to certain securities loans, and gains from the sale
or other disposition of stock, securities
or foreign currencies, or other income
derived with respect to its business of investing in such stock, securities or
currencies; (2) derive in each taxable year less than 30% of its gross
income from the sale or other disposition of certain assets held less than three
months, namely: (a) stock or securities; (b) options, futures, or forward
contracts that are not directly related to the Fund's principal business of
investing in stock or securities (or options and futures with respect to stock
or securities) (the "30% Limitation"); and (c) diversify its holdings so that,
at the end of each fiscal quarter, (i) at least 50% of the market value of the
Fund's assets are represented by cash, U.S. governemnt securities, the
securities of other regulated investment companies and other securities,
with other securities limited, in respect of any one issuer, to an amount
not greater than 5% of the value of the Fund's total assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of
the value of its total assets is invested in the securities of any one
issuer (other than U.S. government securities and the securities of
other regulated investment companies).
As a regulated investment company, the Fund generally will not be subject
to U. S. federal tax on income and gains that it distributes to shareholders,
if at least 90% of the Fund's investment company taxable income (which
includes, among other items, dividends, interest and the excess of any net
short-term capital gains over net long-term capital losses) for the taxable
year is distributed. The Fund intends to distribute substantially all of
such income.
Amounts not distributed in a timely basis in accordance with a calendar year
distribution requirement are subject to a nondeductible 4% excise tax at the
Fund level. To avoid the tax, the Fund must distribute during each calendar
year an amount equal to the sum of (1) at least 98% of its ordinary income
(not taking into account any capital gain or losses) for the calendar year,
(2) at least 98% of its capital gains in
excess of its capital losses (adjusted for
certain ordinary losses) for a one-year period generally ending on
October 31 of the calendar year, and (3) all ordinary income and capital
gains for previous years that were not distributed during such years. To a
void application of the excise tax, the Fund intends to make distributions
in accordance with the calendar year distribution requirements. A
distribution will be treated as paid on December 31 of the current calendar
year if it is declared by the Fund in October, November or December of that
year with a record date in such a month and paid by the Fund during
January of the following year. Such distributions will be taxable to
shareholders in the calendar year in which the distributions are declared,
rather than the calendar year in which the distributions are received
Some of the options and futures contracts in which the Fund may invest
may be "section 1256 contracts". Gains (or losses) on these contracts
generally are considered to be 60% long-term and 40% short-term capital
gains or losses. Also, section 1256 contracts held by the Fund at the end of
each taxable year (and on certain other dates prescribed in the Code) are
"marked to market" with the result that unrealized gains and losses are treated
as though they were realized.
Offsetting positions by the Fund involving financial futures and options
may constitute "straddles". Straddles are defined to include "offsetting
positions" in actively traded personal property. The tax treatment of
straddles is governed by Sections 1092 and 1258 of the Code, which, in
certain circumstances, overrides or modifies the provisions of Section 1256.
As such, all or a portion of any short or long-term capital gain from certain
"straddle" transactions may be recharacterized to ordinary income.
If a Fund were treated as entering into straddles by reason of its futures or
options transactions, such straddles could be characterized as "mixed
straddles" if the futures or options transactions comprising such straddles
were governed by Section 1256 of the Code. The Fund may make one
or more elections with respect to "mixed staddles". Depending upon
which election is made, if any, the results to the Fund may differ. If no
election is made, to the extent the straddle rules apply to positions
established by the Fund, losses realized by the Fund will be deferred
to the extent of unrealized gain in any offsetting positions. Moreover,
as a result of the various rules, short-term capital loss on straddle
positions may be recharacterized as long-term capital loss, and long-term
capital gain may be recharacterized as short-term capital gain or ordinary
income.
The 30% Limitation and the diversification requirements applicable to
the Fund's assets may limit the extent to which the Fund will be able to
engage in transactions in options and futures contracts.
Upon redemption of shares, a shareholder will realize a taxable gain or
loss depending upon the shareholders cost basis of the shares owned. A
gain or loss will be treated as capital gain or loss if the shares are capital
assets in the shareholder's hands and generally will be long-term or
short-term, depending upon the shareholder's holding period for the shares.
Any loss realized on a redemption will be disallowed to the extent the shares
disposed of are replaced (including through reinvestment of dividends)
within a period of 61 days beginning 30 before and ending 30 days after t
he shares are disposed of. In such a case, the cost basis of the shares
acquired will be adjusted to reflect the disallowed loss. Any loss
realized by a shareholder on the disposition of the Fund's shares held by
the shareholder for six months or less will be treated for tax purposes as a
long-term capital loss to the extent of any distributions of capital gain
dividends received or treated as having been received by the shareholder
with respect to such shares.
The Fund will be required to report to the Internal Revenue Service (the "IRS")
all distributions and gross proceeds from the redemption of the Fund's
shares, except in the case or certain exempt shareholders. All distributions
and proceeds from the redemption of Fund shares will be subject to
withholding of federal income tax at a rate of 31% ("backup withholding")
in the case of non-exempt shareholders if (1) the shareholder fails to furnish
the Fund with and to certify the shareholder's correct taxpayer identification
number or social security number, (2) the IRS notifies the shareholder or the
Fund that the shareholder has failed to report properly certain interest and
dividend income to the IRS and to respond to notices to that effect, or
(3) when required to do so, the shareholder
fails to certify that he or she is not subject to
backup withholding. If the withholding provisions are applicable, any such
distributions or proceeds, whether reinvested in additional shares or taken in
cash, will be reduced by the amounts required to be withheld.
Distributions and redemptions may also be subject to additional state, local,
and foreign taxes depending on each shareholder's particular situation.
Non- U.S. shareholders may be subject to U.S. tax rules that differ
significantly from those summarized above. This discussion does not
purport to deal with all of the tax consequences applicable to the Fund or
shareholders. Shareholders are advised to consult their own tax advisor
with respect to the particular tax consequences to them of an investment
in the Fund.
ADDITIONAL INFORMATION
The Ameristock Mutual Fund, Inc. is an open-end management investment
company organized as a Maryland corporation on June 15, 1995. The Funds
Articles of Incorporation authorizes the Board of Directors to issue up to
100 million shares of common stock, par value $.005 per share. Each share
of the Fund has equal voting, dividend, distribution and liquidation rights.
In the event that the Ameristock Corporation ceases to be the investment
advisor, the right of the Fund to use the identifying name "Ameristock"
may be withdrawn.
The Union Bank of California, 475 Sansome Street, San Francisco,
California, is the custodian of the assets of the Fund. The custodian is
responsible for the safekeeping of the Fund's assets and the appointment of
ubcustodians and clearing agencies. The custodian takes no part in
determining the investment policies of the Fund or in deciding which securities
are purchased or sold by the Fund. The Fund may,
however, invest in obligations
of the custodian and may purchase securities from or sell securities to the
custodian. The Investment Advisor, its Officers and Directors, and the Fund's
Directors may from time to time have transactions with various banks, including
banks servings as custodians for assets advised by the Investment Advisor.
There have been no transactions of this sort to date with the Custodian.
The Financial Statement of the Fund as of June 30, 1996 included in this
Statement of Additional Information has been so included in reliance on
the report of McCurdy & Associates, Inc., independent certified public
accountant, given on the authority of said firm as experts in accounting and
auditing.
APPENDIX
Description of Moody's Investors Service, Inc.'s Corporate Bond Ratings:
Aaa- Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt-edge". Interest payments are protected by a large or exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA- Bonds rated Aa are judged to be of high quality by all standards.
BB- Together with the Aaa group they comprise what are generally known
CC- as high-grade bonds. they are rated lower than the best bonds because
DD- margins of protection may not be as large as in the Aaa securities or
EE- fluctuation of protective elements may be of greater amplitude or there
FF- may be other elements present which make the long-term risks appear
GG- somewhat larger than in Aaa securities.
A- Bonds rated A posses many favorable investment attributes and are to
B- be considered as upper-medium grade obligations. Factors giving
C- security to principal and interest are considered but certain protective
D- elements may be lacking which suggest a susceptibility to impairment s
E- ometime in the future.
Baa- Bonds rated Baa are considered as medium-grade obligations, i.e. they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba- Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B- Bonds rated B generally lack characteristics of the desirable investment.
C- Assurance of interest and principal payments or maintenance of other
D- terms of the contract over any period of time may be small.
Caa- Bonds rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
and interest.
Ca- Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked short-comings.
C- Bonds rated C are the lowest-rated bonds and issues so rated can be
D- regarded as having extremely poor prospects of ever attaining any real
E- investment standing.
Moody's applies numerical modifiers, 1,2, and 3, in each generic rating
classification from Aaa through B in its corporate bond rating system.
The Modifier 1 indicates that the security ranks in the higher end of its
generic category; the modifier 2 indicates a
mid-range; and the modifier 3 indicates that the issue ranks in the lower
end of its generic rating category.
The rating Prime-1 (P-1) is the highest commercial paper rating assigned
by Moody's. Issuers of P-1 paper must have a superior capacity for
repayment of short-term promissory obligations, and ordinarily will be
evidenced by leading market positions in well established industries,
higher rates of return on funds employed, conservative capitalization
structures with moderate reliance on debt and ample asset protection, broad
margins in earnings coverage of fixed financial charges and high internal
cash generation, and well established access to a range of financial markets a
nd assured sources of alternative liquidity.
Description of Standard & Poor's Corporation's Corporate Bond Ratings:
AAA- Debt rated AAA have the highest rating. Capacity to pay interest and
repay principal is extremely strong.
AA- Debt rated AA have a very strong capacity to pay interest and repay
BB- principal and differ from AAA bonds only an small degree.
A- Debt rated A has a strong capacity to pay interest and repay principal,
B- although it is somewhat more susceptible to the adverse effects of
C- changes in circumstances and economic conditions.
BBB- Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher-rated categories.
BB, B, CCC, CC- Debt rated BB, B, CCC, and CC are regarded, on
balance, as predominately speculative with respect to the issuer's capacity
to pay interest and repay principal in accordance with the terms of the
obligation. BB indicates the lowest degree of speculation among such
debt and CC the highest degree of speculation. Although such debt will
likely have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions.
The ratings from AAA to CCC may be modified by the addition of a plu
(+) or minus (-) show the relative standing within the major rating categories.
The designation A-1 by Standard & Poor's indicates that the degree of
safety regarding timely payment is either overwhelming or very strong.
Those issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign designation.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and
Board of Directors
Ameristock Mutual Fund
We have audited the accompanying statement of assets and
liabilities of Ameristock Mutual Fund, including the schedule of
portfolio investments, as of June 30, 1996, and the related
statement of operations, the statement of changes in net assets,
and financial highlights for the period from August 1, 1995
(commencement of operations) to June 30, 1996 in the period then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and 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. Our procedures included confirmation of investments
and cash held by the custodian as of June 30, 1996 by correspon-
dence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Ameristock Mutual Fund as of June 30, 1996,
the results of its operations, the changes in its net assets, and
the financial highlights for the period from August 1, 1995
(commencement of operations) to June 30, 1996 in the period then
ended, in conformity with generally accepted accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
July 20, 1996
<PAGE>
AMERISTOCK MUTUAL FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1996
<TABLE>
<S> <C> <C> <C>
Market
Industry Shares Value
Automotive - 7.75%
Ford Motor Co 2,710 $ 87,736
General Motors Corp 1,620 $ 84,848
Broadcast &
Entertainment - 1.10%
Disney Co. (Walt) 390 $ 24,521
Capital Goods - 2.65%
Boeing Co. 180 $ 15,683
General Electric 500 $ 43,375
Chemicals & Fertilizer - 7.35%
Dow Chemical 1,060 $ 80,560
Du Pont 1,050 $ 83,081
Consumer Staples -11.92%
Coca-Cola Co. 980 $ 48,020
Eastman Kodak Co. 610 $ 47,428
McDonalds Corp. 400 $ 18,650
Pepsico 560 $ 19,880
Philip Morris 870 $ 90,589
Proctor & Gamble Co. 450 $ 40,781
Diversified - 0.81%
Minnesota Mining & Mfg. 260 $ 17,940
Electronics - 7.80%
Hewlett Packard Co. 350 $ 34,869
Intel Corp. 1,420 $104,281
Intl. Bus. Machines 350 $ 34,650
Financial Services -13.32%
American Intl. Group 160 $ 15,780
Bankamerica Corp. 1,270 $ 96,203
Citicorp 1,150 $ 95,163
Fed Nat'l Mort. Assoc. 2,670 $ 89,445
Healthcare (Products )-12.24%
Abbot Labs 2,280 $ 99,180
American Home Products 900 $ 54,113
Bristol Myers Squibb 360 $ 32,400
Johnson & Johnson 340 $ 16,830
Merck & Co. 720 $ 46,530
Pfizer, Inc. 330 $ 23,554
Oil & Gas - 4.15%
Amoco Corp. 350 $ 25,327
Chevron 400 $ 23,600
Exxon 500 $ 43,438
Retailing - 3.10%
Home Depot, Inc. 410 $ 22,140
Wal-Mart Stores 1,850 $ 46,944
Software - 1.94%
Microsoft Corp.* 360 $ 43,245
Telecommunications -14.02%
Ameritech Corp. 1,410 $ 83,719
AT&T Corp. 350 $ 21,700
Bell Atlantic Corp. 1,220 $ 77,775
Bellsouth Corp. 2,040 $ 85,680
GTE Corp. 970 $ 43,408
Total Common Stocks-88.15% (Cost $1,795,169) $1,963,066
Other Assets Less Liabilities 264,212
Net Assets-Equivalent to $19.03 per share
on 117,021 shares of capital stock outstanding $2,227,278
</TABLE>
*non-income producing
The accompanying notes are an integral
part of the financial statements.
<PAGE>
AMERISTOCK MUTUAL FUND
STATEMENT OF ASSETS & LIABILITIES
JUNE 30, 1996
Assets:
Investment Securities at Market Value
(Identified Cost - $1,795,169) $1,963,066
Cash 259,844
Receivables - Dividends and Interest 4,368
Total Assets $2,227,278
Liabilities: 0
Net Assets $2,227,278
Net Assets Consist of:
Capital Paid In $2,029,799
Undistributed Net Investment Income 24,627
Undistributed Net Capital Gain 4,955
Unrealized Appreciation in Value of
Investments Based on Identified Cost - Net 167,897
NET ASSETS FOR 117,021 SHARES OUTSTANDING $2,227,278
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING
PRICE PER SHARE ($2,227,278/117,021 SHARES) $19.03
The accompanying notes are an integral
part of the financial statements.
<PAGE>
AMERISTOCK MUTUAL FUND
STATEMENT OF OPERATIONS
AUGUST 1, 1995* TO JUNE 30, 1996
Investment Income:
Dividends $ 21,737
Interest 4,560
Total Investment Income $ 26,297
Expenses:
Management Fee 10,000
Less Waiver of Management Fee (10,000)
Total Expenses 0
Net Investment Income 26,297
Realized and Unrealized Gain on Investments
Net Realized Gain (Loss) on Investments 4,955
Net Change in Unrealized Appreciation
(Depreciation) on Investments 167,897
Net Realized and Unrealized Gain (Loss)
on Investments $172,852
Net Increase (Decrease) in Net Assets
Resulting from Operations $199,149
* Inception of Fund
The accompanying notes are an integral
part of the financial statements
<PAGE>
AMERISTOCK MUTUAL FUND
STATEMENT OF CHANGES IN NET ASSETS
AUGUST 1, 1995* TO JUNE 30, 1996
From Operations:
Net Investment Income $ 26,297
Net Realized Gain (Loss) 4,955
Net Change in Unrealized Appreciation
(Depreciation) on Investments 167,897
199,149
From Distributions to Shareholders:
Net Investment Income (1,670)
From Capital Share Transactions:
Proceeds from 132,407 Shares Issued 2,326,584
Net Asset Value of 97 Shares Issued From
Reinvestment of Dividends 1,620
Cost of 22,151 Shares Redeemed (398,405)
1,929,799
Net Increase in Net Assets $2,127,278
Net Assets at Beginning of Period 100,000
Net Assets at End of Period (including Undistributed
Net Investment Income of $24,627) $2,227,278
*Inception of Fund
The accompanying notes are an integral
part of the financial statements
<PAGE>
AMERISTOCK MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
1.) SIGNIFICANT ACCOUNTING POLICIES
The Fund is a diversified, open-end management investment
company, organized as a corporation under the laws of the
State of Maryland on June 15, 1996. The authorized capital
stock of the Fund consists of 100 million shares of common
stock, par value $.005 per share. Significant accounting
policies of the Fund are presented below:
SECURITY VALUATION:
Investments in securities are carried at market value. The
market quotation used for common stocks, including those
listed on the NASDAQ National Market System, is the last sale
price on the date on which the valuation is made or, in the
absence of sales, at the closing bid price. Over-the-counter
securities will be valued on the basis of the bid price at the
close of each business day. Short-term investments are valued
at amortized cost, which approximates market. The cost of
securities sold is determined on the identified cost basis.
Securities for which market quotations are not readily
available will be valued at fair value as determined in good
faith pursuant to procedures established by the Board of
Directors.
INCOME TAXES:
It is the Fund's policy to distribute annually, prior to the
end of the calendar year, dividends sufficient to satisfy
excise tax requirements of the Internal Revenue Service. This
Internal Revenue Service requirement may cause an excess of
distributions over the book year-end accumulated income. In
addition, it is the Fund's policy to distribute annually,
after the end of the calendar year, any remaining net invest-
ment income and net realized capital gains.
2.) INVESTMENT ADVISORY AGREEMENT
The Fund has entered into an investment advisory and admini-
stration agreement with Ameristock Corporation. The Invest-
ment Advisor receives from the Fund as compensation for its
services to the Fund an annual fee of 1% of the Fund's net
assets. The Investment Advisor has obligated itself to
reimburse the Fund to the extent the Fund's total annual
expenses excluding taxes, interest, brokerage commissions and
extraordinary litigation expenses exceed 1% of its average
daily net asset value. During the Fund's initial year, the
Advisor has also agreed to pay all Fund expenses.
3.) RELATED PARTY TRANSACTIONS
Certain owners of Ameristock Corporation are also owners
and/or directors of Ameristock Mutual Fund. These individuals
may receive benefits from any management fees paid to the
Advisor. For the year ended June 30, 1996 there were no fees
paid by the fund to the Advisor.
<PAGE>
AMERISTOCK MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
JUNE 30, 1996
3.) RELATED PARTY TRANSACTIONS (Cont'd)
82% of the Fund's stock is controlled by FTC & Company. FTC
& Company is an unrelated company. FTC & Company can be
deemed as a controlling person.
4.) CAPITAL STOCK AND DISTRIBUTION
At June 30, 1996, 100 million shares of capital stock ($.005
par value) were authorized, and paid-in capital amounted to
$2,029,799. Transactions in common stock were as follows:
Shares sold.................................... 132,407
Shares issued to shareholders in
reinvestment of dividends..........................97
132,504
Shares redeemed................................ (22,151)
Net increase................................... 110,353
Shares Outstanding:
Beginning of period.............................6,668
End of period................................ 117,021
5.) SECURITY TRANSACTION TIMING
Security transactions are recorded on the dates transactions
are entered into (the trade dates). Dividend income and
distributions to shareholders are recorded on the ex-dividend
date. Interest income is recorded as earned. The Fund uses
the identified cost basis in computing gain or loss on sale of
investment securities.
6.) PURCHASES AND SALES OF SECURITIES
During the year ended June 30, 1996, purchases and sales of
investment securities other than U.S. Government obligations
and short-term investments aggregated $1,858,415 and $68,201
respectively.
7.) FINANCIAL INSTRUMENTS DISCLOSURE
There are no reportable financial instruments which have any
off-balance sheet risk as of June 30, 1996.
8.) SECURITY TRANSACTIONS
For Federal income tax purposes, the cost of investments owned
at June 30, 1996 was the same as identified cost.
At June 30, 1996, the composition of unrealized appreciation
(the excess of value over tax cost) and depreciation (the
excess of tax cost over value) was as follows:
Net Appreciation
Appreciation (Depreciation) (Depreciation)
$174,112 $(6,215) $167,897
