Ameristock Mutual Fund (AMSTX)
1480 Moraga Rd. #200
Moraga, CA 94556
(800) 394-5064 http://www.ameristock.com
SEMI-ANNUAL REPORT
December 31, 1997
This past year, like 1996 and 1995, has been exceptional.
Three solid 20%+ up years in a row- unprecedented. Please, please
do not expect this to continue into 1998. Over the long run, the
stock market appreciates by about 7-12% annually. If 1998 goes up
another 7% I would be very grateful, if it goes up another 20%+, I
would suggest you reconsider your positions in Ameristock and
every other stock fund you own. The stock market would be wildly
overvalued at that point.
In 1997 the Ameristock Mutual Fund was up 32.86% vs. 33.36% for the
S&P500 and 24.50% for the average equity income fund. Not a bad
showing any way you look at it.
During the year there were two down periods, during both of which
Ameristock outperformed the market. One was in March when the
Federal Reserve raised interest rates. The other was in October
when the Asian currency crisis hit and the Hong Kong stock market
went into a tail spin. To show you the extent of panic in Hong Kong
I quote from the Economist magazine.
"On November 24th, a few days after the Japanese-owned Yoahan
department store chain in Hong Kong went bust, word hit the street
that the St. Honore Cake Shop chain was about to follow suit.
Almost instantly, St. Honore faced a run on, well, cakes. Honk Kong
Chinese often give cake vouchers as gifts, and thousands of recipients
were desperate to redeem their vouchers before collapse rendered them
worthless. Biscuits, bread, wedding cakes, anything would do as
customers mobbed the bakery counters."
Luckily, neither this cake panic nor the general meltdown in asset
prices and currencies in Asia significantly hurt the United States
stock market.
1997 Ameristock Mutual Fund milestones:
* Increased assets under management by over 160% to nearly $8 million.
* Broadened distribution with addition of Waterhouse to list of
brokers through which people can purchase Ameristock. Others
include; Jack White, DLJDirect, Pershing, Fidelity, AmeriTrade, and
Datalynx. Still working on Schwab.
* Improved the risk tolerance test on our web site to make it
interactive and generally made the site more graphically appealing,
without sacrificing download speed.
* Paid out a .24 cents distribution on December 24th. Next
distribution will be December 1998. Ameristock is switching from a
semi-annual to an annual distribution payment schedule to reduce
administrative and postage costs. If you counted on the July
distribution and need money then, just call to sell some shares.
Enclosed with this semi-annual report is your 1099-B tax forms
(if applicable)for 1997 and a proxy vote for continuation of the
Directors of Ameristock. You should have already received your
1099-DIV tax forms. I believe the Directors have done a good job of
overseeing your money this past year and deserve to get reelected.
Please send in your vote today.
Going forward the Ameristock Mutual Fund will be consistent in its
philosophy of investing only in the largest domestic corporations and
consistent in its style of combining the best of both active
(low Price/Earnings) and passive (low turnover) portfolio management.
This combination has been successful in the past and I see no reason
why it should not continue in to the future.
I firmly believe that computers will continue to get faster, easier
to use, and even more ubiquitous (Moores law) and I believe that
people are demanding greater access to communications services at
decreasing prices (the law of the telecosm). Because of these laws,
many firms will prosper. A few will wither away like the buggy whip
makers when automobiles changed the competitive landscape. The
Ameristock Mutual Fund currently owns a few of the companies changing
the landscape. We also own one firm that is clearly in the bulls eye
of these forces and I do not believe that its next 100 years will be
as prosperous as its last 100. Therefore, sometime in 1998
Ameristock will sell this company. Unfortunately legal restrictions
prevent me from disclosing it before the actual sale.
People have been asking me what are the criteria for Ameristock to
sell a holding outright and not just realign it in the portfolio.
Now I have an answer: When that company is no longer one of the
biggest and best, the bluest of the blue chips.
Thank you for investing in Ameristock. I'll speak to you in
August 1998, please call any time if you have questions about your
account, move, or just want to chat.
- - Nicholas D. Gerber
December 18, 1997
CHART SHOWING GROWTH OF $10,000 IN FUND SINCE INCEPTION
<PAGE>
Schedule of Investments
December 31, 1997
Market
Industry Company Shares Value
Automotive 12.4% Chrysler 8,000 $281,500
Ford Motor Co. 6,410 $311,286
General Motors Corp. 5,120 $311,040
Broadcast & Entertainment 0.5%
Disney Co. (Walt) 390 $ 38,610
Capital Goods 1.7% Boeing Co. 360 $ 17,618
General Electric 1,400 $102,725
Chemicals & Fertilizer 7.9%
Du Pont 4,900 $294,306
Dow Chemical 2,760 $280,140
Consumer Staples 10.9% Eastman Kodak Co. 1,110 $ 67,224
Coca- Cola Co. 2,280 $152,048
McDonalds Corp. 2,900 $138,475
Philip Morris 6,810 $308,153
PepsiCo 560 $ 20,300
Proctor & Gamble Co. 1,300 $103,756
Tricon Global Rest. 56 $ 1,628
Diversified 0.3% Minnesota Mining & Mfg. 260 $ 21,336
Electronics 13.1% Hewlett Packard Co. 1,100 $ 68,613
IBM 2,900 $303,413
Intel Corp. 4,240 $297,860
Lucent 3,413 $272,613
Raytheon Class A 263 $ 12,972
Financial Services 10.9%
Am. Int'l Group 240 $ 26,100
BankAmerica Corp. 1,740 $127,020
Citicorp. 1,050 $132,497
Federal Natl. Mtge. Assn.
5,970 $340,663
Travelers Group 3,150 $169,706
Healthcare (Products) 9.5%
Abbott Labs 2,380 $155,890
American Home Products2,000 $153,000
Bristol Myers Squibb 1,620 $153,293
Johnson & Johnson 1,740 $114,623
Merck & Co. 620 $ 65,720
Pfizer Inc. 660 $ 49,335
Oil & Gas 4.8% Amoco Corp. 1,050 $ 89,381
Chevron 1,400 $107,800
Exxon 2,500 $152,969
Retailing 3.5% Home Depot Inc. 615 $ 36,208
Sears Roebuck & Co. 2,500 $113,125
Wal-Mart Stores 2,650 $104,509
Software 0.9% Microsoft Corp. 520 $ 67,210
Telecommunications 18.8% Ameritech Corp. 3,610 $290,605
Bell Atlantic Corp. 4,020 $365,820
BellSouth Corp. 1,850 $104,178
GTE Corp. 5,270 $275,358
AT&T Corp. 5,450 $334,153
Total Common Stocks: 95.2%
(Cost $ 5,075,704) $ 6,934,777
Bank Repurchase Agreement with Fifth Third of
Cincinnati issued 12/31/97 due 1/2/97 fully
colateralized by FNMA 4.99% due 2/1/07.
(Cost $302071) 4.15% $ 302,071
Total Investments $ 7,236,848
Other Assets Less Liabilities 0.6% $ 46,825
Net Assets: 100%
Equivalent to $26.81 per share on 271,641.660
Shares of Capital Stock Outstanding $ 7,283,673
* Non-Income Producing
The accompanying notes are an integral part of the financial statements
NON-AUDITED FINANCIAL STATEMENTS
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Ameristock Mutual Fund
Statement of Assets and Liabilities
December 31, 1997
Assets:
Investment Securities at Market Value
(Identified Cost- $5,075,704) $ 6,934,777
Cash $ 1
Bank Repurchase Agreement $ 302,071
Accounts Receivables
Dividends $ 17,265
Interest $ 42
Fund Shares Sold $ 41,326
Total Assets: $ 7,295,482
Liabilities:
Accounts Payable
Fund Shares Redeemed $ 5,553
Other $ -
Accrued Management Fee $ 6,255
Total Liabilities: $ 11,808
Net Assets $ 7,283,674
Net Assets Consist of:
Capital Paid In $ 5,424,601
Undistributed Net Investment Income $ -
Undistributed Net Capital Gain $ -
Unrealized Appreciation in Value of
Investments Based on Identified Cost- Net $1,859,073
NET ASSETS FOR 271,641.660 SHARES OUTSTANDING $ 7,283,674
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING
PRICE PER SHARE ($7,283,672.87/ 271,641.660) $ 26.81
The accompanying notes are an integral part of the financial statements
NON-AUDITED FINANCIAL STATEMENTS
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Ameristock Mutual Fund
Statement of Operations
Year Half Ended December 31, 1997
Investment Income:
Dividends $ 91,294
Interest $ 14,749
Total Investment Income $ 106,042
Expenses:
Management Fee $ 33,255
Less Waiver of Management Fee $ -
Total Expenses $ 33,255
Net Investment Income $ 72,787
Realized and Unrealized Gain on Investments
Net Realized Gain (Loss) on Investments $ 84,109
Net Change in Unrealized Appreciation
(Depreciation) on Investments $ 590,059
Net Realized and Unrealized Gain (Loss)
on Investments $ 674,168
Net Increase (Decrease) in Net Assets
Resulting from Operations $ 746,955
The accompanying notes are an integral part of the financial statements
NON-AUDITED FINANCIAL STATEMENTS
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Ameristock Mutual Fund
Statement of Changes in Net Assets
July 1, 1997 to July 1, 1996 to
31-Dec-97 30-Jun-97
From Operations:
Net Investment Income $ 72,787 $ 103,474
Net Realized Gain (Loss) $ 84,109 $ 206,443
Net Change in Unrealized Appreciation
(Depreciation) on Investments $590,059 $1,084,082
$746,955 $1,393,999
Distributions to Shareholders:
Net Investment Income $(115,734) $ (64,943)
Capital Gains $(220,489) $ (4,632)
$(336,224) $ (69,575)
From Capital Share Transactions: (1)
Proceeds from Shares Issued $3,145,020 $7,303,484
Net Asset Value of Shares Issued
from Reinvestment of Dividend $ 69,455 $ 59,550
Cost of Shares Redeemed $(2,985,289) $(4,270,981)
$ 229,186 $ 3,092,053
Net Increase in Net Assets $ 639,917 $ 4,416,477
Net Assets at Beginning of Period $ 6,643,755 $ 2,227,278
Net Assets at End of Period (including
Undistributed Net Investment Income)$7,283,672 $ 6,643,755
(1) Shares Issued (Redeemed)
Issued 21,195 339,364
Issued from Reinvest Distributions 2,658 3,021
Redeemed (117,224) (194,393)
Net Increase in Shares Outstanding 6,629 147,992
The accompanying notes are an integral part of the financial statements
NON-AUDITED FINANCIAL STATEMENTS
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Ameristock Mutual Fund
Financial Highlights
Selected Data for a Share of Common Stock
Outstanding Throughout the Period
July 1, 1997 to July 1, 1996 to August 31, 1995 to
31-Dec-97 June 30, 1997 June 30, 1996 (1)
Net Asset Value at
Beginning of Period $ 25.06 $ 19.03 $ 15.00
Net Investment Income $ 0.27 $ 0.52 $ 0.43
Net Gains (Losses) on Securities
- Realized & Unrealized $ 2.73 $ 5.76 $ 3.78
Total From Investment
Operations $ 28.06 $ 25.31 $ 19.21
Dividend Distribution-
Net Investment Income $ (1.25) $ (0.25) $ (0.18)
Net Asset Value at
End of Period $ 26.81 $ 25.06 $ 19.03
Total Return 23.94%* 33.00% 30.76%*
Ratios/ Supplemental Data
Net Assets End of
Period (millions) $ 7.28 $ 6.64 $ 2.23
Ratio of Expenses to
Average Net Assets 0.95% 0.56%(2) 0% (1)(2)
Ratio of Net Income to
Average Net Assets 1.07% 2.40%(3) 2.9% (1)(3)*
Portfolio Turnover Rate 14.5%* 21.5% 7.4%
Average Commission Rate (4)$0.0014 $ 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
NON-AUDITED FINANCIAL STATEMENTS
<PAGE>
AMERISTOCK MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 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, 1995. 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 below:
SECURITY VALUATION:
Investments in securities are carried at market value. The market
quotation used for common stocks, including those listed on the
NASDAQ National Market System, is the last sale price on the date on
which the valuation is made or, in the absence of sales, at the
closing bid price. Over-the-counter securities will be valued on the
basis of the bid price at the close of each business day.
Short-term investments are valued at amortized cost, which
approximates market. The cost of securities sold is determined on the
identified cost basis.Securities for which market quotations are not
readily available will be valued at fair value as determined in good
faith pursuant to procedures established by the Board of Directors.
Security transactions are recorded on the dates transactions are
entered into (the trade dates). Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Interest income
is recorded as earned. The Fund uses the identified cost basis in
computing gain or loss on sale of investment securities.
INCOME TAXES:
It is the Fund's policy to distribute annually, prior to the end
of the calendar year, dividends sufficient to satisfy excise tax
requirements of the Internal Revenue Service. This Internal Revenue
Service requirement may cause an excess of distributions over the
book year-end accumulated income. In addition, it is the Fund's
policy to distribute annually, after the end of the calendar year,
any remaining net investment income and net realized capital gains.
ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that effect the reported amounts of assets and
liabilities at the date of financial statements and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
OTHER:
Realized gains and losses are reported on an identified cost basis.
Securities transactions are recorded on the trade date basis.
Interest is accrued as earned and dividend income is recorded on the
ex-dividend date, except that certain dividends from foreign securities
are recorded as soon as information is available to the Fund.
Dividends and capital gain distributions to shareholders are recorded
on the ex-dividend date. Discounts and premiums on securities
purchased are amortized over the life of the respective securities.
2.) INVESTMENT ADVISORY AGREEMENT
The Fund has entered into an investment advisory and administration
agreement with Ameristock Corporation. The Investment Advisor receives
from the Fund as compensation for its services to the Fund an annual
fee of 1% of the Fund's net assets. The Investment Advisor has
obligated itself to reimburse the Fund to the extent the Fund's total
annual expenses excluding taxes, interest, brokerage commissions and
extraordinary litigation expenses exceed 1% of its average daily
net asset value. During the Fund's initial year, the Advisor had
also agreed to pay all Fund expenses.
3.) RELATED PARTY TRANSACTIONS
Certain owners of Ameristock Corporation are also owners and/or
directors of Ameristock Mutual Fund. These individuals may receive
benefits from any management fees paid to the Advisor. 53% of the
Fund's stock is controlled by FTC & Company. 28% of the Fund's stock
is controlled by DLJ-Pershing. 6% 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.
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AMERISTOCK MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
DECEMBER 31, 1997
4.) CAPITAL STOCK AND DISTRIBUTION
At December 31, 1997, 100 million shares of capital stock
($.005 par value) were authorized, and paid-in capital amounted
to $5,424,601. Transactions in common stock were as follows:
Shares sold.............................121,195
Shares issued to shareholders in
reinvestment of dividends 2,658
123,853
Shares redeemed.......... (117,224)
Net increase................. 6,629
Shares Outstanding:
Beginning of period................ 265,013
End of period.........................271,642
5.) PURCHASES AND SALES OF SECURITIES
During the half year ended December 31, 1996, purchases and sales of
investment securities other than U.S. Government obligations and
short-term investments aggregated $786,411 and $455,841 respectively.
6.) FINANCIAL INSTRUMENTS DISCLOSURE
There are no reportable financial instruments which have any
off-balance sheet risk as of December 31, 1997.
7.) SECURITY TRANSACTIONS
For Federal income tax purposes, the cost of investments owned at
December 31,1997 was the same as identified cost.
At December 31, 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)
$1,885,800 $(26,727) $1,859,073
8 ) DISTRIBUTIONS
During the fiscal half year ended December 31, 1997, distributions
of $.42 aggregating $115,734 were declared from net investment
income; $0.48 aggregating $126,781 were declared from short term
capital gains; and $0.35 aggregating $93,708 were declared from long
term capital gains. There were no new long long gains declared in
the 20% tax bracket.
NON-AUDITED FINANCIAL STATEMENTS
