Ameristock Mutual Fund (AMSTX)
Mutual Shareholder Services
1301 East Ninth Street- Suite 1005
Cleveland, OH 44114
(800) 394-5064 http://www.ameristock.com
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ANNUAL REPORT
June 30, 1999
Welcome, Y2K, Ameristock Lowers Fees, In Closing
The total return for the Ameristock Mutual Fund was 11.4% for the first half of
year 1999. (Annualized total returns for 3 years was 29.2% and since inception
was 30.2%) This marks the fourth year in a row Ameristock is ahead of over most
of the other large-cap funds in our category according to Morningstar.
Ameristock under performed the S&P500 by 1.0%, which was up 12.4% itself year to
date. As long as growth and "dot.com" type companies continue to shine,
Ameristock will lag.
We promise to continue our consistent philosophy and consistent investing style
no matter what.
Welcome
Hello, and welcome to the Ameristock Mutual Fund. Odds are, this is the first
time you have ever received a report from us. You see, we know this because the
last time we sent one out (December 1998), our assets were about $40 million and
we had around 1,300 investors. Today we stand at $114 million in assets and over
3,600 investors! Thank you to CNBC and once again to Mutual Funds Magazine.
All of this growth is nice but has stretched our operating capacity. Many people
who called got busy signals or were greeted by a rude and abrupt customer
service representative. We are working on both problems and promise that by the
end of the year your experience with Ameristock will be better. In case you
didn't realize it, I was the rude and abrupt customer service representative
people have been complaining about. While I am an OK portfolio manager, I am a
poor customer service rep. Our strategy going forward to improve service is to
get me out of the customer service loop.
When you call the (800) 394-5064 phone number, you will be greeted by a
machine that gives you four choices:
#1 Ameristock's Daily Net Asset Value
#2 To request Prospectuses and Applications ONLY. An answering service.
#3 If you have a question about your account, want to establish
automatic investing, or want to redeem shares.
Our transfer agent, Mutual Shareholder Services.
#4 If you have a question about the Fund or have any problems.
Me (for now).
Y2K
The year 2000 computer problem and Ameristock's position on it: We have reviewed
our internal computer systems and believe they are in compliance. We have also
asked about our outside vendors systems and have been given either verbal or
written confirmation of compliance. We are not requesting any special Y2K audits
as we believe that this is overkill and would only serve to push the cost of
running the Fund up. In addition, we cannot vouch for, nor have we requested the
readiness of electricity, phones, planes or any of the millions of products the
companies Ameristock invests in or uses. There may be a catastrophic event next
New Years Day. If you believe this event may happen, please redeem your shares
now before the event. If you are like us and believe this will turn out to be a
non-event, please enjoy the millenium and save your confirmation statements. Our
local phone numbers are:
(216) 736-8154 The Transfer Agent in Cleveland
(925) 376-3490 Me
<PAGE>
Ameristock Lowers Fees
Ameristock lowers expense ratio!!! I am proud to announce that Ameristock has
instituted a breakpoint at $100 million of our management fee to 75 basis point,
a reduction of 25%. What this means is that the first $100 million of assets in
Ameristock will be charged 1.00%, and every dollar after that will only be
charged .75%. That way, as the Fund grows, the total expense ratio will
naturally go down. We have found that there are economies of scale in running a
mutual fund and are proud to pass them along to you.
In Closing
In the last Semi-Annual Report I recommended that over the course of the
business cycle, your portfolio should be from 20% to 40% in large capitalization
equities like the ones Ameristock invests in and that "Now is the time to be at
20%". This belief has not changed. Markets can and do go down. In a 30% bear
market our NAV will be about $26. If you are not prepared to see $26 on your
statement OR you think you are smart enough to recognize when the market is
heading down and get out in time, Ameristock is not for you. Please redeem your
shares today.
Ameristock is a no-load, value based, domestic, equity-income fund that invests
in large capitalization companies. Thank you for investing in the Ameristock
Mutual Fund and please tell you friends about us.
Nicholas D. Gerber (July 7, 1999)
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. All returns reflect reinvested
dividends. The Fund's portfolio may differ significantly from the
securities in the Index. The Index is unmanaged and therefore does not
reflect the cost of portfolio management or trading.
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Average Annual Total Returns
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Periods Ended June 30, 1999 Final Value of a
1 Year Since Inception $10,000 Investment
------ --------------- ------------------
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Ameristock Mutual Fund 24.9% 29.9% $28,484
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S&P500 Index 22.7% 26.9% $25,961
<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, 1999, and the related statement of operations for the year then ended,
the statement of changes in net assets for the two years then ended, and
financial highlights for each of the three years then ended and the period from
August 1, 1995 (commencement of operations) to June 30, 1996 in the period then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments and cash held by
the custodian as of June 30, 1999 by correspondence with the custodian and
broker. 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, 1999, the results of its operations for
the year then ended, the changes in its net assets for the two years then ended,
and the financial highlights for the three years 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 14, 1999
<PAGE>
Ameristock Mutual Fund
Schedule of Investments
June 30, 1999
Market
Industry Company Symbol Shares Value
- ---------- ------- ------ ------- -----
Automotive 6.18% Ford Motor Co. F 67,410 $3,804,452
General Motors Corp. GM 49,220 $3,248,520
Broadcasting &
Entertainment 0.19% Disney Co. (Walt) DIS 7,070 $217,844
Capital Goods 4.39% Boeing Co. BA 12,860 $568,251
Caterpillar CAT 66,400 $3,984,000
General Electric GE 4,100 $463,300
Chemicals &
Fertilizer 4.39% Du Pont de Nemours DD 20,000 $1,366,250
& Co.
Dow Chemical DOW 28,760 $3,648,925
Consumer Staples 10.66% Coca- Cola Co. KO 16,680 $1,042,500
McDonalds Corp. MCD 5,800 $239,612
Philip Morris MO 95,910 $3,854,383
Pepsico PEP 55,160 $2,134,003
Proctor & Gamble Co. PG 12,700 $1,133,475
Sara Lee Corp. SLE 165,900 $3,763,856
Diversified 2.78% Minnesota Mining & MMM 36,460 $3,169,741
Mfg.
Electronics 8.39% Delphi Automotive DPH 34,401 $638,420
Systems
Hewlett Packard Co. HWP 16,800 $1,688,400
International IBM 31,600 $4,084,300
Business Machines
Intel Corp. INTC 53,280 $3,170,160
Financial Services 16.60% Allstate Corp. ALL 108,400 $3,888,850
American AIG 3,510 $410,889
International Group
Associates First AFS 25,658 $1,136,970
Capital Corp.
Bank of America BAC 31,677 $2,322,320
CitiGroup C 67,162 $3,190,219
Fannie Mae FNM 55,070 $3,765,411
Merrill Lynch MER 7,000 $559,562
Washington Mutual WMT 104,000 $3,679,000
Inc.
Healthcare
(Products) 9.10% Abbott Labs ABT 93,660 $4,261,530
American Home AHP 30,000 $1,725,000
Products
Bristol Myers Squibb BMY 27,440 $1,932,805
Johnson & Johnson JNJ 6,340 $621,320
Merck & Co. MRK 20,940 $1,549,560
Pfizer Inc. PFE 2,660 $291,935
Oil & Gas 10.34% BPAmoco (ADR's) BPA 12,704 $1,378,384
Chevron CHV 36,400 $3,464,825
Exxon XON 41,300 $3,185,264
Texaco TX 60,400 $3,775,000
Retailing 4.27% Home Depot Inc. HD 7,730 $498,102
Sears Roebuck & Co. S 87,100 $3,881,394
Wal-Mart Stores WMT 10,300 $496,975
Software 0.53% Microsoft Corp.* MSFT 6,680 $602,452
Telecommunications 11.22% Ameritech Corp. AIT 58,620 $4,308,570
Bell Atlantic Corp. BEL 27,140 $1,774,278
Bellsouth Corp. BLS 22,900 $1,073,438
GTE Corp. GTE 31,270 $2,368,702
AT& T Corp. T 58,575 $3,269,217
------------
Total Common Stocks: 89.04% (Cost $89,090,143) $101,632,364
------------
Total Investments $101,632,364
Other Assets Less
Liabilities 0.96% $12,512,509
Net Assets: 100% Equivalent to $38.89 per share on 2,934,721
Shares of Capital Stock Outstanding $114,144,873
================
* 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, 1999
Assets:
Investment Securities at Market Value
(Identified Cost- $89,090,143) $101,632,364
Cash $14,532,880
Accounts Receivables
Dividends $145,688
Fund Shares Sold $852,608
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Total Assets: $117,163,540
Liabilities:
Accounts Payable
Security Purchase Payable $2,786,540
Fund Shares Redeemed $226,214
Accrued Management Fee 5,913
-----------
Total Liabilities: $3,018,667
Net Assets $ 114,144,873
Net Assets Consist of:
Capital Paid In $100,123,290
Accumulated Undistributed Net Investment Income $424,487
Accumulated Undistributed Net Capital Gain $1,054,875
Accumulated Unrealized Appreciation in Value of
Investments Based on Identified Cost- Net $12,542,221
-----------
NET ASSETS FOR 2,934,721 SHARES OUTSTANDING $ 114,144,873
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING
PRICE PER SHARE ($114,144,873/ 2,934,721) $38.89
The accompanying notes are an integral
part of the financial statements
<PAGE>
Ameristock Mutual Fund
Statement of Operations
Year Ending June 30, 1999
Investment Income:
Dividends $862,092
Interest $196,295
Other $1,546
-----------------
Total Investment Income $1,059,933
Expenses:
Management Fee $470,987
Tax Expense $2,476
-----------------
Total Expenses $473,463
Less: Waiver of Management Fee $(7,022)
-----------------
-----------------
Total Expenses, Net of Waiver $466,441
-----------------
Net Investment Income $593,492
Realized and Unrealized Gain on Investments
Net Realized Gain (Loss) on Investments $1,089,201
Net Change in Unrealized Appreciation
(Depreciation) on Investments $9,418,848
-----------------
Net Realized and Unrealized Gain (Loss)
on Investments $10,508,049
-----------------
Net Increase (Decrease) in Net Assets
Resulting from Operations $11,101,541
=================
The accompanying notes are an integral
part of the financial statements
<PAGE>
Ameristock Mutual Fund
Statement of Changes in Net Assets
July 1, 1998 to July 1, 1997 to
June 30, 1999 June 30, 1999
From Operations:
Net Investment Income $593,492 $122,048
Net Realized Gain (Loss) $1,089,201 $194,468
Net Change in Unrealized
Appreciation (Depreciation)
on Investments $9,418,848 $1,871,395
---------------------- --------------------
$11,101,541 $2,187,911
Distributions to Shareholders:
Ordinary Income $(238,477) $(115,734)
Capital Gains $(215,071) $(220,489)
---------------------- --------------------
$(453,548) $(336,224)
From Capital Share Transactions:
Proceeds from 3,513,668
Shares Issued $124,983,101 $9,665,215
Net Asset Value of 9,036
Shares Issued from
Reinvestment of Dividends $306,145 $246,962
Cost of 993,037 Shares Redeemed $(34,545,669) $(5,654,317)
---------------------- --------------------
$90,743,577 $4,257,860
Net Increase in Net Assets $101,391,570 $6,109,548
Net Assets at Beginning of
Period $12,753,303 $6,643,755
---------------------- --------------------
Net Assets at End of Period
(including
Undistributed Net
Investment Income of
$424,487 and $69,472
respectively) $114,144,873 $12,753,303
====================== ====================
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 July 1, 1998 July 1, 1997 to July 1, 1996 August 31, 1995 to
Outstanding
Throughout
the Period to 30-Jun-99 to 30-Jun-98 to 30-Jun-97 to 30-Jun- 96 (1)
------------ ------------ ------------ -------------------
Net Asset
Value at
Beginning of
Period $31.48 $25.06 $19.03 $15.00
Net Investment
Income $0.44 $0.41 $0.52 $0.43
Net Gains
(Losses) on
Securities-
Realized
and Unrealized $7.41 $7.26 $5.94 $3.78
------------ ------------ ------------- -------------------
Total From
Investment
Operations $39.33 $32.73 $25.49 $19.21
Dividend
Distribution
Net
Investment
Income $(0.22) $(0.42) $(0.39) $(0.18)
Capital Gains $(0.22) $(0.83) $(0.04) $ -
------- ------- ------- ---------
Total
Distributions $(0.44) $(1.25) $(0.43) $(0.18)
Net Asset Value
at End of Period $38.89 $31.48 $25.06 $19.03
Total Return 24.94% 30.61% 33.95% 33.70%*
Ratios/ Supplemental
Data
Net Assets End of
Period (millions) $114.14 $12.75 $6.64 $2.23
Ratio of Expenses
to Average Net
Assets
Prior to
Reimbursement 0.96% 0.95% 1.06% 0.90% (1)*
After
Reimbursement 0.94% 0.90% 0.56% 0.00% *
Ratio of Net
Income to Average
Net Assets
Prior to
Reimbursement 1.20% 1.43% 1.89% 1.47% *
After
Reimbursement 1.22% 1.48% 2.39% 2.90% (1)*
Portfolio
Turnover Rate 9.22% 11.85% 21.48% 7.43%
(1) From Inception of Investment Activity (8/31/95)
* Annualized
The accompanying notes are an integral
part of the financial statements
<PAGE>
AMERISTOCK MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
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. Discounts and premiums
on securities purchased are amortized over the life of the respective
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 fiscal 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.
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. The advisor received management fees of $470,987 during the
twelve months ending June 30, 1999. During the Fund's initial year, the Advisor
had paid all Fund expenses.
3.) RELATED PARTY TRANSACTIONS
Certain owners of Ameristock Corporation are also owners and/or directors of
Ameristock Mutual Fund. These individuals may receive benefits from any
management fees paid to the Advisor. 28% of the Fund's stock is controlled by
DLJ-Pershing. 21% of the Fund's stock is controlled by National Financial
Services Corp. 16% of the Fund's stock is controlled by FTC & Company. 11% of
the Fund is controlled by National Investors Services Corp. All of the preceding
companies are unrelated to the Fund or Ameristock Corp. The preceding companies
can be deemed as controlling persons.
<PAGE>
AMERISTOCK MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
JUNE 30, 1999
4.) CAPITAL STOCK AND DISTRIBUTION
At June 30, 1999, 100 million shares of capital stock ($.005 par value)
were authorized, and paid-in capital amounted to $100,123,290. Transactions in
common stock were as follows:
---------------------------------------- -------------
Shares sold............................. 3,513,668
---------------------------------------- -------------
---------------------------------------- -------------
Shares issued to shareholders in
---------------------------------------- -------------
---------------------------------------- -------------
reinvestment of dividends 9,036
---------------------------------------- -------------
---------------------------------------- -------------
3,522,704
---------------------------------------- -------------
---------------------------------------- -------------
Shares redeemed.......... (993,037)
---------------------------------------- -------------
---------------------------------------- -------------
Net increase.............................2,529,667
---------------------------------------- -------------
---------------------------------------- -------------
Shares Outstanding:
---------------------------------------- -------------
---------------------------------------- -------------
Beginning of period................ 405,054
---------------------------------------- -------------
---------------------------------------- -------------
End of period........................... 2,934,721
---------------------------------------- -------------
5.) PURCHASES AND SALES OF SECURITIES
During the twelve months ended June 30, 1999, purchases and sales of investment
securities other than U.S. Government obligations and short-term investments
aggregated $84,396,275 and $3,882,352 respectively.
6.) FINANCIAL INSTRUMENTS DISCLOSURE
There are no reportable financial instruments that have any off-balance sheet
risk as of June 30, 1999.
7.) SECURITY TRANSACTIONS
For Federal income tax purposes, the cost of investments owned at June 30, 1999
was the same as identified cost.
At June 30, 1999, 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)
$14,924,222 $(2,382,001) $12,542,221
8 ) DISTRIBUTIONS
During the twelve months ended June 30, 1999, distributions of $140,308 were
paid from net investment income and $313,240 were paid from realized short and
long term capital gains.
