FORM 485BPOS
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As filed with the Securities and Exchange Commission on
October 3, 1997
File No. 33811-9090
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 2 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 2 /X/
THE AMERISTOCK MUTUAL FUND, INC.
(Exact Name of Registrant as Specified in Charter)
1480 Moraga Rd. #200, Moraga, CA 94556
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (510) 376-3490
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Nicholas D. Gerber
The Ameristock Mutual Fund, Inc.
1480 I Moraga Rd. #200, Moraga, CA 94556
(Name and address of agent for service of process)
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It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
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x on October 15, 1997 pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)
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on (date) pursuant to paragraph (a) of Rule 485
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75 days after filing pursuant to paragraph (a)(2) of Rule 485
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on (date) pursuant to paragraph (a)(2) of Rule 485.
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Page 1 of _____ sequentially numbered pages
Exhibit Index on page ____
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The Ameristock Mutual Fund, Inc.
CROSS REFERENCE SHEET
(as required by 495(a))
N-1A Item Caption in Prospectus
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PART A: INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover Page Cover Page
Item 2. Synopsis Fund Expenses
Item 3. Condensed Financial Information Supplement to Prospectus
Item 4. General Description of Registrant General Description of the
Fund; Investment Objectives;
Investment Policies & Risks;
Investment Restrictions
Item 5. Management of the Fund Management of the Fund;
Investment Advisory Agreement;
Other Information
Item 5A. Management's Discussion of Fund Investment Objective
Item 6. Capital Stock and Other Securities Other Information;
Dividends and Taxes;
Item 7. Purchase of Securities Being Offered How to Purchase Shares;
How to redeem shares;
Determination of Net Asset Value
Item 8. Redemption or Repurchase How to Redeem Shares
Item 9. Pending Legal Proceedings Not Applicable
PART B: INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Caption in Prospectus* or
Statement of Additional Information**
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<TABLE>
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Item 10. Cover Page Cover Page**
Item 11. Table of Contents Table of Contents**
Item 12. General Information and History Not Applicable
Item 13. Investment Objectives and Policies Investment Objectives
and Policies**
Item 14. Management of the Fund Directors and Officers**
</TABLE>
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<TABLE>
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Caption in
Prospectus* or Statement of
N-1A Item Additional Information**
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Item 15. Control Persons and Principal Directors and
Holders of Securities Officers**;
Financial Statement**
Item 16. Investment Advisory and Management of the Fund*;
Other Services Investment Advisory Agreement;
Other Information*;
Report of Independent Accountant**
Item 17. Brokerage Allocation and Other Practices Portfolio
Turnover**; Portfolio
Transactions and Brokerage**
Item 18. Capital Stock and Other Securities Additional Information
Item 19. Purchase, Redemption and Pricing of How to Purchase Shares*;
How to Redeem Shares*;
Determination of Net Asset Value*;
Item 20. Tax Status Distributions and Taxes**
Item 21. Underwriters Not Applicable
Item 22. Calculation of Performance Data Performance Information**
Item 23. Financial Statements Financial Statements
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PROSPECTUS
Ameristock Mutual Fund, Inc.
1480 I Moraga Rd. #200
Moraga, CA 94556
Investment Advisor
Ameristock Corporation
Moraga, California
Custodian
Fifth Third Bank
Cincinnati, OH
Transfer Agent
Ameristock Corporation
Moraga, California
Legal Council
Wyatt, Gerber, Meller & O'Rourke
New York, New York
Independent Auditor
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
<PAGE>
Prospectus
October 15, 1997
Prospectus
Ameristock Mutual Fund, Inc.
1480 I Moraga Rd. #200
Moraga, CA 94556
(800) 394-5064 http://www.ameristock.com
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, 1997
<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
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.
See "Investment Advisory Aggreement".
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.
FINANCIAL HIGHLIGHTS
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
1997 1996*
Net Asset Value, beginning of period $ 19.03 $ 15.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .52 .43
Net gain (loss) on securities- realized and unrealized 5.76 3.78
Total from investment operations 25.31 19.21
LESS DISTRIBUTIONS
Dividends from net investment income (.25) (.18)
Net asset value, end of period $ 25.06 $ 19.03
Total Return (3) 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 investment income to average net asset 2.4%(3) 2.9%(1)(3)**
Portfolio turnover rate 21.5% 7.4%
Average Commission Rate $ 0.0293
_________________________________
(1) From inception of investment activity August 31, 1995
(2) Ratio without Management fee waiver 1.06% and 0.9% respectively
(3) Ratio without Management fee waiver 1.89% and 1.47% respectively
* (for a share outstanding throughout the period) from August 1, 1995
(inception of the Fund) to June 30, 1996.
** Annualized
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
overweighed in the Fund vs. the general market.
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 &
Phelps at the time of the investment or, if not rated, must then be
determined by the Investment Advisor to be of comparable quality. Fixed
income securities prices fluctuate inversely with interest rate movements.
The Fund intends to hold only 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
directionof 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 and 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
instrumentality's.
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:
Fifth Third Bank
ATTN: Trust Dept
ABA#: 042-000-314
Credit to Acct: 010032393601
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 medalion 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, national 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 had no operating history prior. 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, custodial,
legal, auditing charges, printing and mailing reports and prospectuses to
existing shareholders,
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.
The Fund shall pay all brokerage commissions, taxes, interest, and
extraordinary legal expenses.
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, whetherreceived 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 received 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
concerning 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.
Fifth Third Bank (Fifth Third Center, Cincinnati, Ohio, 45263), 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, Meller & O'Rourke, 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, 1998.
APPLICATION TO BUY SHARES
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, 1997
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, 1997 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-6
Directors and Officers................................. B-7
Portfolio Turnover..................................... B-8
Portfolio Transactions and Brokerage................... B-8
Performance Information................................ B-9
Share Redemptions...................................... B-10
Distributions and Taxes................................ B-11
Additional Information................................. B-14
Appendix............................................... B-14
Report of Independent Certified Public Accountant...... B-17
Financial Statement.................................... B-18
<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 Board of Directors without
shareholder approval if, in the reasonable exercise 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, extraordinary legal
expenses, brokerage expenses, and taxes. 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 in private
practice (1995 to present). Tax and Financial Consultant with the law
firm (Office of Stephen M. Moskowitz 1989-1995).
* 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, 1997
and 1996 the Funds turnover was 21,4% and7.5% respectively
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, and
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
the 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 REDEMPTION'S
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 redemption's 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 redemption's 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. government 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.
Fifth Third Bank, Cincinnati, Ohio, 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
sub-custodians 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, 1997 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, 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 fincial 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
International Bus Mach 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 Agreement 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) $25.06 265,012.95
The accompanying notes are an integral
part of the financial statements
<PAGE>
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
<PAGE>
Ameristock Mutual Fund
Financial Highlights
Selected Data for a Share of Common Stock Outstanding Thoughtout the Period
July 1, 1996 to August 31, 1995 to
June 30, 1997 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. Significant
accounting policies of the fund are presented bolow:
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
edentified 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. 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 the 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 $0.00 were declared from long term capital gains.
<PAGE>
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements
Included in Part A of the Registration Statement:
Financial Highlights.
Included in Part B of the Registration Statement:
Financial Statements for the period June 30, 1995
(commencement of operations) through June 30, 1997,
including notes thereto, are incorporated by reference in
the Statement of Additional Information from the
Registrant's Annual Report dated as of June 30, 1997. A
copy of the Annual Report is included following the
Statement of Additional Information.
(b) Exhibits
1. Articles of Incorporation*
2. By-Laws*
3. Not Applicable
4. Not Applicable
5. Form of Investment Advisory Agreement**
6. Not Applicable
7. Not Applicable
8. Form of Custodian Agreement**
9. (a) Form of Administrative and Fund Accounting
Agreement**
(b) Form of Transfer Agent Agreement**
10. Opinion and Consent of Wyatt Gerber Meller & O'Rourke**
11. Consent of Independent Certified Public Accountants
12. Not Applicable
13. Investment Representation Letters**
14. Not Applicable
15. Service and Distribution Plan**
- - ----------------------------
* Filed with initial Registration Statement in 1995.
** Filed with Pre-Effective Amendment No. 1 in 1996
<PAGE>
16. Schedule for computation of performance quotation
provided in response to Item 22
17. Not Applicable
18. Powers of Attorney of Mr's Gerber, Ngim & Mah**
Item 25. Persons Controlled by or under Common Control with Registrant.
Not applicable.
Item 26. Number of Holders of Securities.
As of June 30, 1996, there were 174 record holders of
shares of The Ameristock Mutual Fund, the only series of the
Registrant's common stock.
Item 27. Indemnification.
The Registrant is incorporated under the laws of the
State of Maryland and is subject to Section 2-418 of the
Corporation and Associations Article of the General
Corporation Law of the State of Maryland (Maryland Law)
controlling the indemnification of directors and officers.
Since the Registrant has its executive offices in the State of
California, and is qualified as a foreign corporation doing
business in such State, the persons covered by the foregoing
statute may also be entitled to and subject to the limitations
of the indemnification provisions of the
California Business Corporation Law.
The general effect of these statutes is to protect directors,
officers, employees and agents of the Registrant against legal
liability and expenses incurred by reason of their positions
with the Registrant. The statutes provide for indemnification
for liability for proceedings not brought on behalf of the
corporation and for those brought on behalf of the corporation,
and in each case place conditions under which indemnification
will be permitted, including requirements that the indemnified
person acted in good faith. Under certain conditions, payment
of expenses in advance of final disposition may be permitted.
The Articles of Incorporation of the Registrant make the
indemnification if its directors, officers, employees and
agents mandatory subject only to the conditions and limitations
imposed by the applicable provisions of the Maryland Law and by
the provisions of Section 17(h) of the Investment Company Act
of 1940 (the 1940 Act) as interpreted and required to be
implemented by SEC Release No. IC-11330 of September 4, 1980.
In referring in its Articles of Incorporation to, and making
indemnification of directors subject the conditions and
limitations of, both the applicable provisions of the Maryland
Law and Section 17(h) of the 1940 Act, the Registrant intends
that conditions and limitations on the extent of the
indemnification of directors and officers imposed by the
provisions of either the Maryland Law or Section 17(h) shall
apply and that any inconsistency between the two will be
resolved by applying the provisions of said Section 17(h) if
the condition or limitation imposed by Section 17(h) is the
more stringent. In referring in its Articles of Incorporation
to SEC Release No. IC-11330 as the source for interpretation
and implementation of said Section 17(h), the Registrant
understands that it would be required under its Articles of
Incorporation to use reasonable and fair means in determining
whether indemnification of a director or officer should be made
and undertakes to use either (1) a final decision on the merits
by a court or other body before whom the proceeding was brought
that the person to be indemnified (indemnitee) was not liable
to the Registrant or to its security holders by reason of
willful malfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his or her
office (disabling conduct) or (2) in the absence of such a
decision, a reasonable determination, based upon a review of
the facts, that the indemnitee was not liable by reason of
such disabling conduct, by (a) the vote of a majority of a
quorum of directors who are neither "interested
<PAGE>
persons" (as defined in the 1940 Act) of the Registrant nor
parties to the proceeding, or (b) an independent legal counsel
in a written opinion. Also, the Registrant will make advances
of attorney's fees or other expenses incurred by a director or
officer in his or her defense only if (in addition to his or her
undertaking to repay the advance if he or she is not ultimately
entitled to indemnification) (1) the indemnitee provides a
security for his or her undertaking, (2) the Registrant shall be
insured against losses arising by reason of any lawful advances,
or (3) a majority of a quorum of the non-interested, non-party
directors of the Registrant, or an independent legal counsel in
a written opinion, shall determine, based on a review of readily
available facts, that there is reason to believe that the
indemnitee ultimately will be found entitled to indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933 (the 1933 Act) may be permitted to
directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
Item 28. Business and Other Connections of Investment Advisor
The descriptions of the Investment Adviser under the caption
"Management of the Fund" in the Prospectus and in the Statement of
Additional Information constituting Parts A and B, respectively,
of this Registration Statement are incorporated by reference
herein.
Ameristock Corporation may also act as investment adviser
to entities and individuals which are not registered investment
companies and as a subadviser to a registered investment company.
Item 29. Principal Underwriters
Not Applicable.
Item 30. Location of Accounts and Records.
The accounts, books and other documents required to be maintained
by Registrant pursuant to Section 31(a) of the 1940 Act and the
rules promulgated thereunder are in the physical possession of
Registrant, Registrant's Custodian and Registrant's Administrator
as follows: the documents required to be maintained by paragraphs
(4), (5), (6), (7), (9), (10) and (11) of Rule 31a-1(b) will be
maintained by the Registrant; the documents required to be
maintained by paragraphs (1), (2)(i-iii), (8) and (12) of Rule
31a-1(b) will be maintained by Registrant's Administrator; and all
other records will be maintained by the Registrant's Custodian.
Item 31. Not Applicable.
<PAGE>
Item 32. The Registrant undertakes to call a meeting of shareholders for
the purpose of voting upon the question of removal of a director,
if requested to do so by the holders of at least 10% of the Fund's
outstanding shares, and that it will assist communication with
other shareholders as required by Section 16(c) of the Investment
Company Act of 1940.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, Registrant certifies that
it meets all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Francisco and
State of California on the 13th day of September, 1997.
THE AMERISTOCK MUTUAL FUND, INC.
By: *
----------------------
Nicholas D. Gerber
Director
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
Signatures Title Date
- ---------- ----- ----
Nicholas D. Gerber Director September 13, 1997
Andrew Ngim Director September 13, 1997
Howard Mah Director September 13, 1997
Alev Efendioglu Director September 13, 1997
Steven Marsh Director September 13, 1997
*By: /s/ Melinda L/ Gerber
-----------------------------
Melinda L. Gerber
as Secretary
