Ameristock Mutual Fund (AMSTX)
1480 Moraga Rd. #200
Moraga, CA 94556
(800) 394-5064
http://www.ameristock.com
ANNUAL REPORT
June 30, 1997
The Ameristock Mutual Fund has increased by 33.00% since last year's annual
report dated June 30, 1996. For the first six months of this year your
fund is up 18.32%. 1997 marks the third year in a row (at present
appreciation rates) that the market as measured by the S&P500 has increased
by more than 20% each year. This is an unprecedented event. Remember it
well because you are living history! In generations to come old timers will
speak fondly of the Platinum 90's. Going back into history books I learned
that since 1926 the S&P500 has never increased by 20% or more for three
straight years in a row Some periods in the 1920's and 1950's came close
but not close enough. You are truly living history.
Now the cold water. Because the market can only grow by the combined growth
of the economy, the money supply, and productivity, it can not grow by more
than they can for long periods of time without some sort of adjustments to
the growth rates of one of the components or itself. What this means is
that the for the market to continue to grow at 20%+ rates the economy must
speed up from its 2.5% rate, the money supply must increase by more than
3-5%, or productivity must increase by more than its 1.2% rate.
3% GNP + 5% Money + 1% Productivity ( 20%+ Stocks.
Considering that the chances for either the economy, money or productivity
to increase dramatically in the near term is slim to none, that only can
mean that the gains in the stock market we have seen will NOT be repeated.
The market will most likely return to its historical long term rates of
return of between 7-12%. To do this it can do one of two thing (at least).
One is to go nowhere for a while, let the economy play catch up. The other
is go down. I know it's been over eight years since the market was down 10%
or more but the market can and will go down at some point.
Despite the fact that legally we cannot give investment advice many people
still ask us to predict where the market is headed when they call to ask
about investing in Ameristock. All we can tell them and you is that
historically stocks appreciate about 4% more than long term government
bonds. Long term government bonds are now trading with a yield to maturity
of about 6.5%. Adding 4% to this number gives us a long term expected stock
return of 10.5% (6.5% + 4%). The expected part of this calculation is
underlined because it is important. If you believe that the 20%+ return
will continue and it doesn't, you will sell your shares and cause the market
to go down (by you I mean everyone- not just you per se). However, if the
market goes down in the short run and then comes back but not at the rate it
did before, people who expected 7-12% returns will be happy and their financial
plans would have been met. Those people who counted on 20%+ returns to
continue for retirement, college, vacations... will be disappointed.
Since I don't want you to be disappointed, please don't count on the great
returns Ameristock has seen to continue. We are only as good as the market
allows.
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In other news. The past year has seen an increase in assets of 200%!
Ameristock has grown from $2.2 million last year to over $6.6 million today.
This was accomplished with only 21.5% turnover ratio and an average brokerage
commission of 2.9 cents per share paid. What this means is that our goals of
keeping total Fund expenses and realized capital gains to a minimum are being
met. Both of these numbers are well below industry averages. As a matter of
fact- one little fund you may have heard of, Fidelity's Magellan Fund, paid
3.94 cents per share in average brokerage commissions vs. Ameristock's 2.9
cents. So much for economies of scale a $50+ billion fund brings to its
shareholders!
Ameristock's goal of having each account holder's information on the Internet
was met in the first quarter. Just go to http://www.ameristock.com, type in
your password, and out will come your latest account holding or a history of
all your trades. The other goal stated in the last report was to institute
automatic bank investments in to Ameristock via ACH. Enclosed with this
report is an application for our new Automatic Investment Plan which allows
you to invest directly from your bank account into Ameristock without writing
a check. If you have any questions about it please don't hesitate to call
(800) 394-5064.
On the topic of calling. Ameristock is a small fund. On a day to day basis
I am the only person overseeing everything. I unfortunately cannot always
be by the phone if you have a question or want a redemption. Please don't
panic if you want your money right away and all you get is an answering
machine. Just leave your name, account number, and instructions like
"Hi, this is Mark Johnson, j-o-h-n-s-o-n, account 100-129-000, please
send me a check for $500. Today is October 3rd, you can reach me at
(914) 273-3629, Thanks". I promise a 48 hour turn around on all requests.
A distribution was paid on July 24th and the next one is scheduled for about
December 20th.
Ameristock is a no-load, value based, domestic, equity-income fund that invests
in large capitalization companies. Thank you for investing in the Ameristock
Mutual Fund, please tell you friends about us. Have a great rest of 1997.
- - Nicholas D. Gerber
August 1, 1997
CHART showing AMSTX vs. S&P500 with Dividends growth of $10,000
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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, 1997, and the related statement of operations for the year
then ended, and the statement of changes in net assets, and financial
highlights for the year then ended and 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, 1997 by
correspondence 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, 1997, the results of its operations for
the year then ended, the changes in its net assets, and the financial
highlights for the year then ended and 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 19, 1997
<PAGE>
Ameristock Mutual Fund
Schedule of Investments
June 30, 1997
Market
Industry Company Shares Value
Automotive 11.08% Chrysler 8,000 $263,000
Ford Motor Co. 6,410 243,580
General Motors Corp. 4,120 229,690
Broadcasting & Entertainment 0.46%
Disney Co. (Walt) 390 30,761
Capital Goods 1.66% Boeing Co. 360 19,103
General Electric 1,400 91,000
Chemicals & Fertilizer 8.25%
Du Pont de Nemours & Co. 4,900 308,088
Dow Chemical 2,760 239,775
Consumer Staples 9.73%
Eastman Kodak Co. 1,110 85,193
Coca- Cola Co. 1,380 93,840
McDonalds Corp. 1,100 53,144
Philip Morris 6,810 301,343
Pepsico 560 21,035
Proctor & Gamble Co. 650 91,813
Diversified 0.40% Minnesota Mining & Mfg. 260 26,585
Electronics 7.18% Hewlett Packard Co. 1,100 61,600
Intl Bus Machines 2,900 261,725
Intel Corp. 620 87,923
Lucent 913 65,793
Financial Services 11.96%
American Intl Group 160 23,900
Bankamerica Corp. 1,740 112,339
Citicorp. 1,050 126,590
Federal Natl. Mtge. Assn. 5,970 260,441
Travelers Group 4,300 271,169
Healthcare (Products) 11.09%
Abbott Labs 4,480 299,040
American Home Products 1,200 91,800
Bristol Myers Squibb 1,620 131,220
Johnson & Johnson 1,740 112,013
Merck & Co. 620 63,433
Pfizer Inc. 330 39,435
Oil & Gas 4.22% Amoco Corp. 1,050 91,284
Chevron 1,400 103,513
Exxon 1,400 85,750
Retailing 5.66% Home Depot Inc. 410 28,290
Sears Roebuck & Co. 4,800 258,000
Wal-Mart Stores 2,650 89,603
Software 0.99% Microsoft Corp.* 520 65,715
Telecommunications 16.56%
Ameritech Corp. 3,610 245,254
Bell Atlantic Corp. 4,020 305,018
Bellsouth Corp. 1,850 85,794
GTE Corp. 5,270 231,221
AT& T Corp. 6,650 233,163
Total Common Stocks: 89.24% (Cost $ 4,676,997) $5,928,976
Bank Repurchase Agreeement with Fifth Third of Cincinnati issued 6/30/97
due 7/1/97 fully colateralized by FNMA 4.97% due 7/1/97
(Cost $678,699) 10.21% $678,699
Total Investments $6,607,675
Other Assets Less Liabilities .55% $36,080
Net Assets: 100% Equivalent to $25.06 per share on 265,012.954
Shares of Capital Stock Outstanding $6,643,755
* Non-Income Producing
The accompanying notes are an integral part of the financial statements
<PAGE>
Ameristock Mutual Fund
Statement of Assets and Liabilities
June 30, 1997
Assets:
Investment Securities at Market Value
(Identified Cost- $4,676,997) $5,928,976
Cash $780
Bank Repurchase Agreement $678,699
Accounts Receivables
Dividends $17,611
Interest $281
Fund Shares Sold $19,312
Total Assets: $6,645,659
Liabilities:
Accounts Payable
Fund Shares Redeemed $1,230
Other $ -
Accrued Management Fee $674
Total Liabilities: $1,904
Net Assets $6,643,755
Net Assets Consist of:
Capital Paid In $5,121,852
Undistributed Net Investment Income $63,158
Undistributed Net Capital Gain $206,766
Unrealized Appreciation in Value of
Investments Based on Identified
Cost- Net $1,251,979
NET ASSETS FOR 265,012.954 SHARES
OUSTANDING $6,643,755
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING
PRICE PER SHARE ($6,643,755.06/ 265,012.915) $25.06
The accompanying notes are an integral part of the financial statements
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Ameristock Mutual Fund
Statement of Operations
Year Ended June 30, 1997
Investment Income:
Dividends $106,404
Interest $21,370
Total Investment Income $127,774
Expenses:
Management Fee $45,890
Less Waiver of Management Fee $(21,590)
Total Expenses $24,300
Net Investment Income $103,474
Realized and Unrealized Gain on Investments
Net Realized Gain (Loss) on Investments $206,443
Net Change in Unrealized Appreciation
(Depreciation) on Investments $1,084,082
Net Realized and Unrealized Gain (Loss)
on Investments $1,290,525
Net Increase (Decrease) in Net Assets
Resulting from Operations $1,393,999
The accompanying notes are an integral part of the financial statements
<PAGE>
Ameristock Mutual Fund
Statement of Changes in Net Assets
July 1, 1996 to August 31, 1995
June 30, 1997 to June 30, 1996 (1)
From Operations:
Net Investment Income $103,474 $26,297
Net Realized Gain (Loss) $206,443 $4,955
Net Change in Unrealized Appreciation
(Depreciation) on Investments $1,084,082 $167,897
$1,393,999 $199,149
Distributions to Shareholders:
Net Investment Income $(64,943) $(1,670)
Capital Gains $(4,632) $ -
$(69,575) $(1,670)
From Capital Share Transactions:
Proceeds from 339,364 Shares Issued $7,303,484 $2,326,584
Net Asset Value of 3,020.661 Shares Issued
from Reinvestment of Dividends $59,550 $1,620
Cost of 194,393 Shares Redeemed $(4,270,981) $(398,405)
$3,092,053 $1,929,799
Net Increase in Net Assets $4,416,477 $2,127,278
Net Assets at Beginning of Period $2,227,278 $100,000
Net Assets at End of Period (including
Undistributed Net Investment Income
of $63,158 and $24,674 respectively)
$6,643,755 $2,227,278
(1) From inception of investment activity August 31, 1995
The accompanying notes are an integral part of the financial statements
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Ameristock Mutual Fund
Financial Highlights
Selected Data for a Share of Common Stock July 1, 1996 to August 31, 1995
Oustanding Throughtout the Period June 30, 1997 to June 30, 1996 (1)
Net Asset Value at Beginning of Period $19.03 $15.00
Net Investment Income $0.52 $0.43
Net Gains (Losses) on Securities- Realized
and Unrealized $5.76 $3.78
Total From Investment Operations $25.31 $19.21
Dividend Distribution- Net Investment Income $(0.25) $(0.18)
Net Asset Value at End of Period $25.06 $19.03
Total Return 33.00% 30.76%*
Ratios/ Supplemental Data
Net Assets End of Period (millions) $6.64 $2.23
Ratio of Expenses to Average Net Assets 0.56%(2) 0%(1)(2)
Ratio of Net Income to Average Net Assets 2.4%(3) 2.9% (1)(3)*
Portfolio Turnover Rate 21.5% 7.4%
Average Commission Rate (4) $0.0293
* Annualized
(1) From Inception of Investment Activity (8/31/95)
(2) Ratio without management fee waiver 1.06% and 0.9% respectively
(3) Ratio without management fee waiver 1.89% and 1.47% respectively
(4) Required by regulations issued in 1995.
The accompanying notes are an integral part of the financial statements
<PAGE>
AMERISTOCK MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
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 Fund's investment objective is to seek total return through capital
appreciation and current income by investing (under normal market conditions)
at least 80% of the value of its total assets in equity securities consisting
of common stocks. The authorized capital stock of the Fund consists of 100
million shares of common stock, par value $.005 per share
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, which
approximates market. 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. 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.
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 investment income and net realized capital
gains.
ESTIMATES:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that effect the reported amounts of assets and liabilities at the date of
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
OTHER:
Realized gains and losses are reported on an identified cost basis. Securities
transactions are recorded on the trade date basis. Interest is accrued as
earned and dividend income is recorded on the ex-dividend date, except that
certain dividends from foreign securities are recorded as soon as information
is available to the Fund. Dividends and capital gain distributions to
shareholders are recorded on the ex-dividend date. Discounts and premiums on
securities purchased are amortized over the life of the respective securities.
2.) INVESTMENT ADVISORY AGREEMENT
The Fund has entered into an investment advisory and administration agreement
with Ameristock Corporation. The Investment 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
had 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. 45% of the Fund's stock is controlled by
FTC & Company. 26% of the Fund's stock is controlled by DLJ-Pershing. 13% of
the Fund's stock is controlled by National Financial Services Corp. All of the
preceding companies are unrelated to the Fund or Ameristock Corp.
The preceding companies can be deemed as controlling persons.
<PAGE>
AMERISTOCK MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
JUNE 30, 1997
4.) CAPITAL STOCK AND DISTRIBUTION
At June 30, 1997, 100 million shares of capital stock ($.005 par value) were
authorized, and paid-in capital amounted to $5,124,853. Transactions in
common stock were as follows:
Shares sold.............................339,364
Shares issued to shareholders in
reinvestment of dividends................ 3,021
342,385
Shares redeemed........................(194,393)
Net increase.............................147,992
Shares Outstanding:
Beginning of period...................117,021
End of period.........................265,013
5.) 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 $3,514,384 and $839,672 respectively.
6.) FINANCIAL INSTRUMENTS DISCLOSURE
There are no reportable financial instruments which have any off-balance
sheet risk as of June 30, 1997.
7.) SECURITY TRANSACTIONS
For Federal income tax purposes, the cost of investments owned at
June 30, 1997 was the same as identified cost.
At June 30, 1997, 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)
$ 1,271,394 $ (19,415) $1,251,979
8 ) DISTRIBUTIONS
During the fiscal year ended June 30, 1997, distributions of $0.39
aggregating $64,943 were declared from net investment income; $0.04
aggregating $4,632 were declared from short term capital gains; and $0.00
aggregating $0.00were declared from long term capital gains.
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