Ameristock Mutual Fund
1301 East Ninth Street- Suite 1005
Cleveland, OH 44114
(800) 394-5064 http://www.ameristock.com
ANNUAL REPORT
June 30, 2000
Dervishes, Taxes, Time
The total return for the Ameristock Mutual Fund was -1.0% for the first half of
2000. (Annualized total return for 1 year was -8.7%%, 3 years was 14.1%, and
since inception was 21.1%). Ameristock under-performed the S&P500 by -0.6%,
which was down -0.4% itself so far this year. The reason we lagged the general
market in 1999 was because of our under weighing of technology when that group
was in favor. Our overweighing in financial service companies in 2000 during a
rising interest rate environment was the reason for our lag so far this year.
Whirling Dervishes
There are many analogies I can give to describe the frantic activity of the
stock market these past 6 months. The one that springs immediately to mind is
the image of a whirling dervish.
A whirling dervish is a person who spins around and around in place during
religious observances. They make lots of noise and commotion while never
actually going anywhere. Just like the stock market these past 6 months,
especially the NASDAQ. It was up 24% and then came crashing down 37% just to
end about where it began, down 3%. Lots of noise and commotion without any real
progress. Ameristock, on the other hand, did not have dramatic ups or downs.
We were pretty steady, although also ending up going nowhere.
Ameristock tries to keep total expenses, brokerage commissions and taxes to a
minimum. I think we did a very good job this past 6 months in one area
especially, taxes.
Taxes
I assume you do not want to pay taxes. As a registered investment company,
Ameristock has to pay out substantially all its income from interest and capital
gains. We can minimize the effect of the capital gains taxes in two ways.
1- Not trade to often and therefore not realize capital gains
2- When we do need to trade, because of redemptions or other investment
opportunities, to make sure Ameristock uses specific tax lot accounting
to match up short-term gains with short-term losses and long-term gains
with long-term losses. This matching of gains to losses resulting in
lower taxes. For example, if you matched a gain of $2 with a loss of $1
then your net gain would only be $1.
Using specific tax lot accounting takes more time and effort than the
alternatives but it saves you money and we think that is important. Ameristock
did a very good job of utilizing specific tax lot accounting this past 6 months
because we had net redemptions from the Fund. This has caused our turnover to
be higher than in past years and will eventually translate into a slightly
higher dividend payout come December. However, because of our use of specific
tax lot accounting, the tax bite will be much less then would be expected given
all the buying and selling of stock we had to do. Again, the vision of whirling
dervishes comes to mind as most of the stock trades we did were done to raise
cash and not to initiate new positions or rebalance the portfolio. Lots of
activities, not much progress. I blame Alvin Toffler.
Time
Alvin Toffler wrote a book called Future Shock in the 1970s that forecast that
our daily activities would speed up. He was all too correct especially when the
internet phenomena hit and Netscape defined an internet year as the equivalent
to a dog year, 7 to 1. Since 1997 (when internet time was defined), over 21
internet years have passed. Looking back, we have seen the exponential rise in
time speed translated into the stock market (most noticeably in the NASDAQ).
Today, we seem to have bull and bear markets play out in weeks instead of years.
<PAGE>
There are two ways to cope with this increase in the speed of time. One is to
make sure you are even quicker than the trends in order to gain a competitive
advantage. All the growth funds and funds with the word "net" in them fall in
this category. Pursuing this strategy can be very rewarding, it also tends to
burn people out and deprive them of sleep. The other strategy is one Ameristock
follows and is more Zen like. We put time on our side. Ameristock knows that
over the long run things break, people need food, and that general prosperity
levels will increase and therefore so will consumption.
By investing with time on your side, you know that every day that passes, the
companies you invest in will increase their sales and profits. Ben Graham made
the putting time on your side case in 1934 when he made the argument for a
diversified group of common stocks purchased at a reasonable price IF
Certain basic and long-established elements in this country's economic
experience may still be counted upon. These are: (1) that our national
wealth and earnings power will increase; (2) that such increase will
reflect itself in the increased resources and profits of our important
corporations, and (3) that such increases will in the main take place
through the normal process of investment of new capital and reinvestment
of undistributed earnings.
In 1934, after the 1929 crash and in the middle of the Great Depression, this
argument was very bold. Today, with 66 additional years' history, we can see
that investing by putting time on your side works.
In Summary
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.
When you call the (800) 394-5064 phone number, a machine that gives you
four choices will greet you:
#1 Ameristock's Daily Net Asset Value. (A recording).
#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. (The
investment management company).
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 your friends about us.
Nicholas D. Gerber (July 15, 2000)
(graph)
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.
Average Annual Total Returns
Period Ended June 30, 2000
1 Year Since Inception
Ameristock Mutual Fund -8.7% 21.3%
S&P500 Index 7.2 % 22.8%
<PAGE>
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, 2000, 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 four 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, 2000 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, 2000, 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 four 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
July 21, 2000
<PAGE>
Ameristock Mutual Fund
Schedule of Investments
June 30, 2000
<TABLE>
<S> <C> <C> <C> <C> <C>
Market
Industry Company Symbol Shares Value
Automotive 5.90% Ford Motor Co. F 68,610 $2,950,230
General Motors Corp. GM 37,220 $2,161,104
Banking 19.18% Bank of America BAC 69,177 $2,974,611
CitiGroup C 43,362 $2,612,560
First Union FTU 115,000 $2,853,495
PNC Financial Services PNC 87,700 $4,110,937
Washington Mutual Inc. WMT 141,000 $4,071,375
Entertainment 0.32% Disney Co. (Walt) DIS 7,070 $274,407
Capital Goods 2.82% Boeing Co. BA 12,860 $537,715
Caterpillar CAT 36,900 $1,249,987
General Electric GE 12,300 $651,900
Chemicals & 3.55% Du Pont de Nemours & Co. DD 35,600 $1,557,500
Fertilizer Dow Chemical DOW 50,280 $1,517,852
Consumer 12.58% Coca- Cola Co. KO 8,380 $481,330
Staples McDonalds Corp. MCD 48,600 $1,600,786
Philip Morris MO 95,910 $2,547,657
Pepsico PEP 50,960 $2,264,560
Proctor & Gamble Co. PG 4,600 $263,350
Sara Lee Corp. SLE 193,800 $3,742,859
Diversified 1.77% Minnesota Mining & Mfg. MMM 18,560 $1,531,200
Electronics 5.09% Visteon* VC 8,983 $108,421
Agilent* A 1,029 $75,888
Hewlett Packard Co. HWP 2,700 $337,162
International Business
Machines IBM 31,600 $3,462,190
Intel Corp. INTC 3,180 $425,127
Financial- 8.78% Associates First
Other Capital Corp. AFS 147,658 $3,294,692
Fannie Mae FNM 67,170 $3,505,467
Merrill Lynch MER 7,000 $805,000
Healthcare 10.04% Abbott Labs ABT 53,560 $2,386,794
(Products) American Home Products AHP 30,000 $1,762,500
Bristol Myers Squibb BMY 27,440 $1,598,380
Johnson & Johnson JNJ 6,340 $645,887
Merck & Co. MRK 20,940 $1,604,527
Pfizer Inc. PFE 14,680 $704,640
Insurance 5.65% Allstate Corp. ALL 150,000 $3,337,500
American International
Group AIG 13,302 $1,562,985
Oil & Gas 5.92% BPAmoco (ADR's) BPA 8,408 $475,581
Chevron CHV 24,500 $2,077,918
ExxonMobil XOM 7,600 $596,600
Texaco TX 37,200 $1,980,900
Retailing 5.57% Home Depot Inc. HD 11,595 $579,031
Sears Roebuck & Co. S 112,000 $3,654,000
Wal-Mart Stores WMT 10,300 $593,537
Software 0.35% Microsoft Corp.* MSFT 3,780 $302,400
Telecom-
munications 9.20% Bell Atlantic Corp. BEL 27,140 $1,379,064
Bellsouth Corp. BLS 22,900 $976,112
GTE Corp. GTE 47,270 $2,942,557
SBC Commuications SBC 56,143 $2,428,284
AT& T Corp. T 7,475 $236,318
-----------
<FN>
Total Common Stocks: 96.69% (Cost $89,204,296) $83,794,877
-----------
Total Investments $83,794,877
Other Assets Less
Liabilities 3.31% $2,865,024
Net Assets: 100% Equivalent to $34.76 per share on 2,492,812
Shares of Capital Stock Outstanding $86,659,901
* Non-Income Producing ===========
</FN>
The accompanying notes are an integral part of the financial statements
</TABLE>
<PAGE>
Ameristock Mutual Fund
Statement of Assets and Liabilities
June 30, 2000
Assets:
Investment Securities at Market Value
(Identified Cost- $89,204,296) $83,794,877
Cash $2,566,547
Accounts Receivables
Dividends $170,449
Fund Shares Sold $309,326
-----------
Total Assets: $86,841,199
Liabilities:
Accounts Payable
Fund Shares Redeemed $177,985
Accrued Management Fee $3,313
-----------
Total Liabilities: $181,298
Net Assets $86,659,901
Net Assets Consist of:
Capital Paid In $87,173,291
Accumulated Undistributed Net Investment Income $767,353
Accumulated Undistributed Net Capital Gain $4,128,676
Accumulated Unrealized Appreciation in Value of
Investments Based on Identified Cost- Net $(5,409,419)
-----------
NET ASSETS FOR 2,492,812 SHARES OUTSTANDING $86,659,901
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING
PRICE PER SHARE ($86,659,901/ 2,492,812) $34.76
The accompanying notes are an integral
part of the financial statements
<PAGE>
Ameristock Mutual Fund
Statement of Operations
Year Ending June 30, 2000
Investment Income:
Dividends $2,250,089
Interest $252,568
Other $3,020
-------------
Total Investment Income $2,505,677
Expenses:
Management Fee $991,317
Total Expenses $991,317
Net Investment Income $1,514,360
Realized and Unrealized Gain on Investments
Net Realized Gain (Loss) on Investments $4,021,324
Net Change in Unrealized Appreciation
(Depreciation) on Investments $(17,951,640)
-------------
Net Realized and Unrealized Gain (Loss)
on Investments $(13,930,316)
Net Increase (Decrease) in Net Assets -------------
Resulting from Operations $(12,415,956)
The accompanying notes are an integral
part of the financial statements
<PAGE>
Ameristock Mutual Fund
Statement of Changes in Net Assets
<TABLE>
July 1, 1999 to July 1, 1998 to
30-Jun-00 June 30, 1999
<S> <C> <C>
From Operations:
Net Investment Income $1,514,360 $593,492
Net Realized Gain (Loss) $4,021,324 $1,089,201
Net Change in Unrealized Appreciation
(Depreciation) on Investments $(17,951,640) $9,418,848
------------- -----------
$(12,415,956) $11,101,541
Distributions to Shareholders:
Ordinary Income $(1,171,494) $(238,477)
Capital Gains $(947,523) $(215,071)
------------- -----------
$(2,119,017) $(453,548)
From Capital Share Transactions:
Proceeds from 2,591,686 Shares Issued $94,364,171 $124,983,101
Net Asset Value of 41,627 Shares Issued
from Reinvestment of Dividends $1,466,911 $306,145
Cost of 3,075,221 Shares Redeemed $(108,781,081) $(34,545,669)
------------- -----------
$(12,949,999) $90,743,577
Net Increase/Decrease in Net Assets $(27,484,972) $101,391,570
Net Assets at Beginning of Period $114,144,873 $12,753,303
------------- -----------
Net Assets at End of Period (including
Undistributed Net Investment Income
of $767,553 and $424,487 respectively) $86,659,901 $114,144,873
</TABLE>
The accompanying notes are an integral
part of the financial statements
<PAGE>
<TABLE>
Ameristock Mutual Fund
Financial Highlights
<S> <C> <C> <C> <C> <C>
Selected Data for a Share of Common Stock Jul 1, 99 to Jul 1, 98 to Jul 1, 97 to Jul 1, 96 to Aug 31, 95 to
Outstanding Throughout the Period 30-Jun-00 30-Jun-99 30-Jun-98 30-Jun-97 30-Jun- 96 (1)
Net Asset Value at Beginning of Period $38.89 $31.48 $25.06 $19.03 $15.00
Net Investment Income $0.55 $0.44 $0.41 $0.52 $0.43
Net Gains (Losses) on Securities- Realized
and Unrealized $(3.92) $7.41 $7.26 $5.94 $3.78
------- ------- ------- ------- -------
Total From Investment Operations $35.52 $39.33 $32.73 $25.40 $19.21
Dividend Distribution
Net Investment Income $(0.42) $(0.22) $(0.42) $(0.39) $(0.18)
Capital Gains $(0.34) $(0.22) $(0.83) $(0.04) $-
------- ------- ------- ------- -------
Total Distributions $(0.76) $(0.44) $(1.25) $(0.43) $(0.18)
Net Asset Value at End of Period $34.76 $38.89 $31.48 $25.06 $19.03
Total Return -8.67% 24.94% 30.61% 33.95% 33.70%*
Ratios/ Supplemental Data
Net Assets End of Period (millions) $86.66 $114.14 $12.75 $6.64 $2.23
Ratio of Expenses to Average Net Assets
Prior to Reimbursement 0.99% 0.96% 0.95% 1.06% 0.90%(1)*
After Reimbursement 0.99% 0.94% 0.90% 0.56% 0.00% *
Ratio of Net Income to Average Net Assets
Prior to Reimbursement 1.51% 1.20% 1.43% 1.89% 1.47% *
After Reimbursement 1.51% 1.22% 1.48% 2.39% 2.90%(1)*
Portfolio Turnover Rate 31.13% 9.22% 11.85% 21.48% 7.43%
<FN>
<F1>
(1) From Inception of Investment Activity (8/31/95)
* Annualized
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
AMERISTOCK MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
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 for the first $100 million of net assets and .75% of net assets
thereafter. The Investment Advisor pays all operating expenses of the Fund
except for taxes, interest, brokerage commissions and extraordinary litigation
expenses. The advisor received management fees of $991,317 during the 12
months ending June 30, 2000. During the Fund's initial year, the Advisor had
paid all Fund expenses.
3.) RELATED PARTY TRANSACTIONS
Certain owners of Ameristock Corporation are also owners and/or directors of
Ameristock Mutual Fund. These individuals may receive benefits from any
management fees paid to the Advisor. 24% of the Fund's stock is controlled by
National Financial Services Corp. 11% of the Fund's stock is controlled by Trust
Company of America. 10% of the Fund's stock is controlled by Charles Schwab &
Co. 9% of the Fund is controlled by National Investors Services Corp. 6% of
the Fund's stock is controlled by FTC & Company. All of the preceding companies
are unrelated to the Fund or Ameristock Corp. The preceding companies may be
deemed as controlling persons.
<PAGE>
AMERISTOCK MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
June 30, 2000
4.) CAPITAL STOCK AND DISTRIBUTION
At June 30, 2000, 100 million shares of capital stock ($.005 par value) were
authorized, and paid-in capital amounted to $87,173,291. Transactions in common
stock were as follows:
Shares sold............................. 2,591686
Shares issued to shareholders in
reinvestment of dividends 41,627
2,633,313
Shares redeemed.......................(3,075,221)
Net increase............................(441,908)
Shares Outstanding:
Beginning of period...................2,934,721
End of period.........................2,492,812
5.) PURCHASES AND SALES OF SECURITIES
During the twelve months ended June 30, 2000, purchases and sales of investment
securities other than U.S. Government obligations and short-term investments
aggregated $29,354,873 and $34,076,018 respectively.
6.) FINANCIAL INSTRUMENTS DISCLOSURE
There are no reportable financial instruments that have any off-balance sheet
risk as of June 30, 2000.
7.) SECURITY TRANSACTIONS
For Federal income tax purposes, the cost of investments owned at June 30,
2000was the same as identified cost.
At June 30, 2000, 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)
$8,265,216 $(13,674,635) $(5,409,419)
8 ) DISTRIBUTIONS
During the 12 months ended June 30, 2000, distributions of $1,171,494 were paid
from net investment income and $947,523 were paid from realized short and long
term capital gains.
