SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 6 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 6 [X]
THE AMERISTOCK MUTUAL FUND, INC.
(Exact name of registrant as specified in charter)
P.O. Box 6919, Moraga, California 94570
(Address of principal executive offices)
Registrant's Telephone Number: (925) 376-3490
Nicholas D. Gerber
The Ameristock Mutual Fund, Inc.
P.O. Box 6919, Moraga, California 94570
(Name and address of agent for service)
Copy to:
Michael J. Meaney, Esq.
McDonald, Hopkins, Burke & Haber Co., L.P.A.
2100 Bank One Center, 600 Superior Avenue, East, Cleveland, Ohio 44114
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 31, 2000 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>
Prospectus
Ameristock Mutual Fund, Inc.
P.O. Box 6919
Moraga, CA 94570
(800) 394-5064
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
Ameristock Mutual Fund, Inc. (the "Fund") is a mutual fund with an
investment objective of seeking total return through capital appreciation and
current income by investing primarily in equity securities.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
Prospectus. Any representation to the contrary is a criminal offense.
October 31, 2000
<PAGE>
TABLE OF CONTENTS
Risk/Return Summary.............................................................
Fees and Expenses of the Fund...................................................
Financial Highlights............................................................
How to Buy Shares...............................................................
How to Redeem Shares............................................................
Net Asset Value.................................................................
Investment Management...........................................................
Dividends and Taxes.............................................................
Other Information...............................................................
<PAGE>
RISK/RETURN SUMMARY
Investment Objective
The Fund's investment objective is to seek total return through capital
appreciation and current income by investing primarily in equity securities.
Principal Investment Strategies
The Fund pursues its investment objective principally by investing in
common stock of large capitalization companies headquartered in the United
States. Generally, a large capitalization company is one with a market
capitalization of at least $15 billion. To achieve the current income component
of the Fund's investment objective, the Fund invests primarily in companies
which pay dividends.
The Fund emphasizes a "value" style of investing. For example, shares
of companies with lower ratios of share price to earnings, sales and book value
and higher dividend yields than those of other large capitalization companies
will be considered attractive investments. However, to a lesser extent the Fund
will often also invest in large capitalization "growth" stocks in order to be
represented in that portion of the stock market. The Fund will sell a stock when
the Fund's investment adviser decides that it no longer meets the investment
criteria described above.
Under normal conditions, the Fund will invest at least 80% of the value
of its total assets in accordance with the investment strategies described
above. However, the Fund may temporarily invest a lower percentage of its assets
in accordance with such strategies in the event of a domestic or international
event which has significantly disrupted, or in the opinion of the Fund's
investment adviser will materially disrupt, the stock market. If the Fund does
so, the Fund may not achieve its investment objective.
Principal Risks
Investment in the Fund is subject to the following principal risks:
! The value of securities in the Fund's portfolio will go up and down.
Consequently, the Fund's share price may decline and you could lose
money.
! The stock market is subject to significant fluctuations in value as a
result of political, economic and market developments. If the stock
market declines in value, the Fund is likely to decline in value.
! Because of changes in the financial condition or prospects of specific
companies, the individual stocks selected by the Fund may decline in
value, thereby causing the Fund to decline in value.
! There is no assurance that the Fund's "value" style of investing will
achieve its desired result. In fact, the Fund may decline in value as a
result of emphasizing this style of investing.
! "Growth" stocks generally are more expensive relative to their earnings
or assets than other types of stocks. Consequently, these stocks are
more volatile than other types of stocks. In particular, growth stocks
are very sensitive to changes in their earnings. Negative developments
in this regard could cause a stock to decline dramatically, resulting
in a decrease in the Fund's share price.
! An investment in the Fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other governmental agency.
<PAGE>
Bar Chart and Performance Table
The bar chart and table shown below provide an indication of the risks
of investing in the Fund by showing changes in the Fund's performance from year
to year over the life of the Fund and by showing how the Fund's average annual
returns for a one-year period and the life of the Fund compare to those of a
broad-based securities market index. How the Fund has performed in the past is
not necessarily an indication of how the Fund will perform in the future.
(Graph Omitted)
High and Low Quarterly Returns. During the life of the Fund, the
highest return for a quarter was 19.1% (quarter ending December 31, 1998) and
the lowest return for a quarter was -8.2% (quarter ending September 30, 1999).
Average Annual Total Returns Past Life
(for the periods ending One Year of Fund*
December 31, 1999)
Ameristock Mutual Fund, Inc. 2.7% 23.9%
Standard & Poor's 500 Index 21.0% 25.7%
*Since inception date of August 31, 1995.
<PAGE>
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy
and hold shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Deferred Sales Charge (Load) None
Redemption Fee None(1)
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees 1.00%
Distribution (12b-1) Fees 0.00%
Other Expenses 0.00%
Total Annual Fund Operating Expenses 1.00%
------------------------------
1 A fee of $20.00 is charged for each wire redemption.
Example: This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year, that all
dividends and distributions are reinvested and that the Fund's operating
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
1 year 3 years 5 years 10 years
------ ------- ------- --------
$100 $315 $553 $1,258
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Fund's financial performance for the period of the Fund's operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the Fund (assuming reinvestment of all dividends and
distributions). The information with respect to the fiscal years ended June 30,
2000, June 30, 1999 and June 30, 1998 has been audited by McCurdy & Associates
CPA's, Inc., whose report, along with the Fund's financial statements, are
included in the Fund's Statement of Additional Information, which is available
upon request.
<TABLE>
<CAPTION>
Fiscal Year Fiscal Year Fiscal Year Fiscal Year Period Ended
Ended Ended Ended Ended June 30, 1996(1)
June 30, 2000 June 30, 1999 June 30, 1998 June 30, 1997
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $38.89 $31.48 $25.06 $19.03 $15.00
Income from Investment Operations
Net Investment Income .55 .44 .41 .52 .43
Net Gains (Losses) on Securities
(realized and unrealized) 3.92 7.41 7.26 5.94 3.78
---- ---- ---- ---- ----
Total from Investment Operation 35.52 39.33 32.73 25.49 19.21
Less Distributions
Dividends (from net investment income) (.42) (.22) (.42) (.39) (.18)
Distributions (from capital gains) (.34) (.22) (.83) (.04) ------
----- ----- ----- ----- ------
Total Distributions (.76) (.44) (1.25) (.43) (.18)
Net Asset Value, 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%
Ratio/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 .99% 0.96% 0.95% 1.06% 0.90%*
After reimbursement .99% 0.94% 0.90% 0.56% 0.00%
Ratio of Net Income to Average Net 1.51% 1.20% 1.43% 1.89% 1.47%
Assets
Prior to reimbursement
After reimbursement 1.51% 1.22% 1.48% 2.39% 2.90%
Portfolio Turnover Rate 31.13% 9.22% 11.85% 21.48% 7.43%
</TABLE>
(1) From inception of investment
activity (8/31/95)
*Annualized
Notes to Financial Statements appear in the Fund's Statement of Additional
Information.
<PAGE>
HOW TO BUY SHARES
Shares of the Fund are purchased at the net asset value per share (as
described in "Net Asset Value" below) next determined after receipt of your
investment in proper form as described below. There are no sales charges. 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 (or
investment stub in the case of a subsequent purchase) and mail it with your
check to:
Ameristock Mutual Fund
Mutual Shareholder Services
1301 East Ninth Street- Suite 1005
Cleveland, Ohio 44114
To purchase shares by wire, transmit funds to:
Fifth Third Bank
ATTN: Trust Dept
ABA#: 042-000-314
Credit to Acct: 010032393601
Ameristock Mutual Fund
Acct #
-------------
Your investment will be considered to be in "proper form" if it
includes a check or wire funds transmission together with a completed
Application to Buy Shares or (in the case of a subsequent purchase) a completed
investment stub from a previous purchase or sale confirmation.
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 redemptions 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.
HOW TO REDEEM SHARES
General
You may redeem (sell) your shares at any time. The Fund makes payment
by check for the shares redeemed within seven days after it receives a properly
completed redemption request (in accordance with the procedures described in
"Redemption by Mail" or "Redemption by Telephone," below), except as described
below. The redemption price per share is the net asset value determined as
described under "Net Asset Value". Because net asset value fluctuates, the
amount received upon redemption may be more or less than the amount paid for the
shares. There is no redemption charge for mailed redemption checks.
<PAGE>
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 instructions 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 $20.00 fee for each payment made by wire
of redemption proceeds, which fee will be deducted from the investor's account.
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 Fund reserves the right to suspend or postpone redemption's during
any period: (i) when trading on the New York Stock Exchange is restricted, (ii)
when, as a result of an emergency, it is not reasonably practicable for the Fund
to dispose of, or determine the fair market value of, its net assets or (iii) as
the Securities and Exchange Commission may by order permit for the protection of
shareholders of the Fund. 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 shareholder that unless the account 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 shareholder.
Redemption by Mail
The Fund will redeem all or any part of shares owned upon written
request delivered to the Fund at:
Ameristock Mutual Fund
Mutual Shareholder Services
1301 East Ninth Street- Suite 1005
Cleveland, Ohio 44114
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 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 directors authorizing the officer to so
act must be furnished.
<PAGE>
Redemption by Telephone
You may redeem shares by telephone by calling the Fund at (800)
394-5064. In order to use 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.
NET ASSET VALUE
Net asset value per share is determined as of the close of regular
trading on the floor of the New York Stock Exchange (currently 4:00 p.m., New
York time) on each business day. The net asset value per share of the Fund is
computed by dividing the value of the Fund's net assets by the total number of
shares of the Fund outstanding. The Fund's investments are valued primarily on
the basis of market quotations.
INVESTMENT MANAGEMENT
The Fund has retained as its investment adviser The Ameristock
Corporation (the "Adviser"), an investment management organization founded in
1995. The Adviser manages the investments of the Fund and is responsible for the
overall management of the business affairs of the Fund. The Adviser's address is
P.O. Box 6919, Moraga, California 94570.
During the fiscal year ended June 30, 2000, the Adviser received from
the Fund as compensation for its services an annual fee of 1% of the Fund's
average net assets. Under the contract with the Adviser, the Fund pays an annual
fee of 1% of average net assets for the first $100 million of assets and .75% of
average net assets thereafter. The Adviser pays all of the operating expenses of
the Fund except for brokerage, taxes, interest and extraordinary expenses.
Nicholas D. Gerber, the President of the Adviser, has been the portfolio
manager of the Fund since its inception in 1995. Previously, Mr. Gerber was an
equity portfolio manager with Bank of America.
Andrew Ngim, the Managing Director of the Advisor, has been the
co-portfolio manager of the Fund since 2000. Previously, Mr. Ngim was a Benefits
Consultant with PriceWaterhouseCoopers.
DIVIDENDS AND TAXES
The Fund declares and pays any dividends annually to shareholders.
Dividends are paid to all shareholders invested in the Fund on the record date.
The record date is the date on which a shareholder must officially own shares in
order to earn a dividend.
In addition, the Fund pays any capital gains at least annually. Your
dividends and capital gains distributions will be automatically reinvested in
additional shares without a sales charge, unless you elect cash payments on the
Application to Buy Shares.
<PAGE>
If you purchase shares just before the Fund declares a dividend or
capital gain distribution, you will pay the full price for the shares and then
receive a portion of the price back in the form of a distribution, whether or
not you reinvest the distribution in shares. Therefore, you should consider the
tax implications of purchasing shares shortly before the Fund declares a
dividend or capital gain. Contact your investment professional or the Fund for
information concerning when dividends and capital gains will be paid.
The Fund sends an annual statement of your account activity to assist
you in completing your federal, state and local tax returns. Fund distributions
of dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Fund. Dividends are taxable as ordinary income; capital gains
are taxable at different rates depending upon the length of time the Fund holds
its assets.
Fund distributions may be both dividends and capital gains. Generally,
distributions from the Fund are expected to be primarily capital gains
distributions. Redemptions are taxable sales. Please consult your tax adviser
regarding your federal, state and local tax liability.
OTHER INFORMATION
Fifth Third Bank (Fifth Third Center, Cincinnati, Ohio, 45263), has
been retained to act as the custodian of the Fund's investments.
Maxus Information Systems (dba Mutual Shareholder Services) 1301 East
Ninth Street, Suite 1005, Cleveland, Ohio 44114, is the transfer agent of 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.
McDonald, Hopkins, Burke, & Haber, 2100 Bank One Center, 600 Superior
Ave- E, Cleveland, OH 44114-2653, is legal counsel to the Fund and the Adviser.
<PAGE>
AMERISTOCK MUTUAL FUND, INC.
A Statement of Additional Information ("SAI") dated October 31, 2000 is
incorporated by reference into this prospectus. Additional information about the
Fund's investments is available in the Fund's annual and semi-annual reports to
shareholders. The annual report discusses market conditions and investment
strategies that significantly affected the Fund's performance during its last
fiscal year. To obtain the SAI, the annual report, semi-annual report and other
information without charge and to make shareholder inquires, call the Fund at
(800) 394-5064 or visit the Fund's Internet site at http://www.ameristock.com.
Information about the Fund (including the SAI) can be reviewed and
copied at the Public Reference Room of the Securities and Exchange Commission in
Washington, D.C. Reports and other information about the Fund are available on
the Commission's Internet site at http://www.sec.gov and copies of this
information may be obtained, upon payment of a duplicating fee, by writing the
Public Reference Section of the Commission, Washington, D.C. 20549-6009. You can
call 1-800-SEC-0330 for information on the Public Reference Room's operations
and copying charges.
Ameristock Mutual Fund, Inc.
P.O. Box 6919
Moraga, California 94570
Investment Adviser
Ameristock Corporation
P.O. Box 6919
Moraga, California 94570
Custodian
Fifth Third Bank
Cincinnati, OH
Transfer Agent
Mutual Shareholder Services
Cleveland, Ohio
Legal Counsel
McDonald, Hopkins, Burke, & Haber Co., L.P.A.
Cleveland, Ohio
Independent Auditor
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
Investment Company Act File No. 811_09090
<PAGE>
APPLICATION TO BUY SHARES
Mail to: Minimum Investments:
Ameristock Mutual Fund Initial: $1,000
1301 East Ninth Street Subsequent: $ 100
Suite 1005
Cleveland, OH 44114
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 Options
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
<PAGE>
AMERISTOCK MUTUAL FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER 31, 2000
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 31, 2000. To obtain a copy of the Fund's Prospectus,
without charge, please write to the Fund at P.O. Box 6919, Moraga, CA 94570 or
call (800) 394-5064.
TABLE OF CONTENTS
Investments and Risks........................................................A-2
Management Agreement.........................................................A-6
Management of the Fund ......................................................A-6
Ownership of Shares..........................................................A-7
Portfolio Turnover...........................................................A-8
Portfolio Transactions and Brokerage.........................................A-8
Share Redemptions............................................................A-8
Taxation of the Fund.........................................................A-9
Performance Information .....................................................A-9
Additional Information......................................................A-10
<PAGE>
INVESTMENTS AND RISKS
Classification
The Fund is a diversified, open-end management investment company.
Information on the Fund's Investments
The Fund has an investment objective of seeking total return through
capital appreciation and current income by investing primarily in equity
securities. The principal investment strategies used by the Fund to pursue this
objective, together with the principal risks of investing in the Fund, are
described in the Prospectus under the heading "Risk/Return Summary."
Described below are (i) certain other investment strategies (including
strategies to invest in particular types of securities) which are not principal
strategies and (ii) the risks of those strategies:
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 Adviser to be of equivalent quality. Furthermore, securities
will only be lent if, in the judgement of the Investment Adviser, the
consideration to be earned from such loans justify the risk.
The Investment Adviser 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 Adviser determines the liquidity of the Fund's
investments and, through reports from the Investment Adviser, the Board of
Directors monitors investments in illiquid instruments. In determining the
liquidity of the Fund's investments, the Investment Adviser 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). The Fund may not 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.
Foreign Exposure. The Fund may invest in (i) stocks of U.S.
headquartered companies having substantial foreign operations or (ii) foreign
stocks. These stocks involve certain inherent risks that are different from
those of other companies, including political or economic instability of the
foreign country or countries, 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, these stocks may be subject
to greater price fluctuations than securities of other companies.
<PAGE>
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.
<PAGE>
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.
Fixed Income Securities. The Fund may invest in fixed income securities
(bank certificates of deposit, 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 Adviser
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.
Other Investment Companies. 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. To the extent that the
Fund invests in other investment companies, an investor in the Fund will bear
not only his proportionate share of the expenses of the Fund but also indirectly
similar expenses of the underlying investment companies in which the Fund
invests. These expenses consist of advisory fees, expenses related to the
distribution of shares, brokerage commissions, accounting, pricing and custody
expenses, printing, legal and audit expenses and other miscellaneous expenses.
Lending of Portfolio Securities. For incremental income purposes, the
Fund may lend its portfolio 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 Adviser to be of equivalent quality. The Investment
Adviser 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.
<PAGE>
Policies
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 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.
11) invest more than 5% of its assets (valued at time of
investment) in securities of issuers with less than
three years operation (including predecessors).
12) invest more than 5% of its assets (valued at time of
investment) in securities that are not marketable.
<PAGE>
13) 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.
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.
MANAGEMENT AGREEMENT
The Fund employs the Investment Adviser to furnish advisory and other
services. Under the Investment Adviser's contract with the Fund, the Investment
Adviser acts as Investment Adviser 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 Adviser 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 Adviser,
and all personnel of the Fund or of the Investment Adviser performing services
relating to research, statistical, and investment activities.
In addition, the Investment Adviser, 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.
The Adviser pays all operating expenses of the Fund except for
brokerage, taxes, interest, and extraordinary expenses (including, without
limitation, litigation and indemnification costs and expenses).
For the services of the Investment Adviser, the Fund pays as
compensation a fee, accrued daily and payable monthly, at an annual rate of
1.00% of the Fund's average net assets up to $100 million and .75% of average
net assets thereafter.
The Adviser may enter into an Affinity Credit Card Agreement (the
"Credit Card Agreement") with a credit card issuer (the "Bank"). Under the
Credit Card Agreement, the Adviser would solicit shareholders of the Fund to
open affinity credit card accounts with the Bank, and the Bank would pay to the
Adviser royalties based on net purchases charged to such accounts by
participating shareholders. The fees payable to the Adviser in respect of each
fiscal year would be reduced by the amount, if any, of royalties received by the
Adviser under the Credit Card Agreement during the preceding fiscal year.
Royalties based on net purchases charged by a shareholder of the Fund would
indirectly benefit all shareholders of the Fund (including those who do not
participate in the affinity card program) by reducing the expense ratio of the
Fund in the fiscal year following the year of such purchases.
MANAGEMENT OF THE FUND
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 P.O. Box 6919, Moraga, CA.
94570, which is also the address of the Investment Adviser. Those Directors who
are "interested persons" (as defined in the Investment Company Act of 1940) by
virtue of their affiliation with either the Fund or with the Investment Adviser
are indicated by an asterisk (*).
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation for
Name and Age Position Held with Fund Last Five Years
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Nicholas D. Gerber* (38) 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).
Howard Mah* EA, MBA (36) Director Tax and Financial Consultant in private
practice (1995 to present). Tax and
Financial Consultant with law firm of Office
of Stephen M. Moskowitz (1989-1995).
Andrew Ngim* (40) Director Managing Director, Ameristock Corporation,
since 1999. Benefits Consultant with
PriceWaterhouseCoopers (1994-1999).
Stephen J. Marsh (47) Director Vice-President with FMV Opinions, Inc.
(1998-Present). Managing Director, The
Mentor Group (1991-1998).
Alev Efendioglu, PhD. (58) 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 Adviser receive no remuneration from the Fund. Each of the other
Directors is paid $300 for each Board meeting they attend and is reimbursed for
the expenses of attending meetings.
OWNERSHIP OF SHARES
The following persons were known by the Fund to be holders of record or
beneficially of 5% or more of the Fund as of June 30, 2000:
Name and Address Percentage Held
------------------------------------- -------------------
National Financial* 24%
200 Liberty Street
New York, NY 10281
Trust Company of America* 11%
Charles Schwab* 10%
National Investors Service Corp.* 9%
55 Water Street
New York, NY 10041
<PAGE>
FTC&Co. Datalynx* 6%
P.O. Box 173736
Denver, CO 80217
* Shares held in "street name" for the benefit of others.
As of June 30, 2000, all Officers and Directors as a group beneficially
owned less than 1% of the outstanding shares of the Fund.
PORTFOLIO TURNOVER
While it is difficult to predict, the Investment Adviser 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, 2000, 1999, 1998 and 1997, the Fund's turnover was
31.1%, 9.2%, 11.9%, and 21.4%, respectively. Portfolio turnover was higher in
the June 30, 2000 fiscal year due to higher shareholder redemptions of Fund
shares.
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 Adviser. 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
Adviser 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
Adviser, by other aspects of the portfolio execution services offered such as
research, economic data, and statistical information about companies and
industries, non-inclusive.
SHARE REDEMPTIONS
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.
<PAGE>
TAXATION OF THE FUND
The Fund intends to qualify each year as a "regulated investment
company" under the requirements of Subchapter M of the Internal Revenue Code of
1986, as amended. Qualification as a regulated investment company will result in
the Fund's paying no taxes on net income and net realized capital gains
distributed to shareholders. If these requirements are not met, the Fund will
not receive special tax treatment and will pay federal income tax, thus reducing
the total return of the Fund.
Statements as to the tax status of each shareholder's dividends and
distributions will be mailed annually by the Fund's transfer agent. Shareholders
are urged to consult their own tax advisors regarding specific questions as to
Federal, state or local taxes.
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.
<PAGE>
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.
ADDITIONAL INFORMATION
The Ameristock Mutual Fund, Inc. is an open-end management investment
company organized as a Maryland corporation on June 15, 1995. The Fund's
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 Adviser, 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
Adviser. There have been no transactions of this sort to date with the
Custodian.
The Financial Statements of the Fund as of June 30, 2000 included in
this Statement of Additional Information have been so included in reliance on
the report of McCurdy & Associates CPAs, Inc., independent certified public
accountant, given on the authority of said firm as experts in accounting and
auditing.
<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, 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>
</TABLE>
<TABLE>
<CAPTION>
AMERISTOCK MUTUAL FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
MARKET
INDUSTRY COMPANY SYMBOL SHARES VALUE
<S> <C> <C> <C> <C> <C>
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 Staples 12.58% Coca-Cola Co. KO 8,380 $481,330
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-Other 8.78% Associates First
Capital Corp. AFS 147,658 $3,294,692
Fannie Mae FNM 67,170 $3,505,467
Merrill Lynch MER 7,000 $805,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
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
<PAGE>
AMERISTOCK MUTUAL FUND
A-15
</TABLE>
<TABLE>
<CAPTION>
AMERISTOCK MUTUAL FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
MARKET
INDUSTRY COMPANY SYMBOL SHARES VALUE
<S> <C> <C> <C> <C> <C>
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
Telecommunications 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 Communications SBC 56,143 $2,428,284
AT&T Corp. T 7,475 $236,318
-----------
Total Common Stocks 96.69% (Cost $89,204,296.00) $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
</TABLE>
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>
<TABLE>
<CAPTION>
Ameristock Mutual Fund
Statement of Changes in Net Assets
<S> <C> <C>
July 1, 1999 to July 1, 1998 to
Jun 30 ,2000 June 30, 1999
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
The accompanying notes are an integral
part of the financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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 30-Jun-00 30-Jun-99 30-Jun-98 30-Jun-97 30-Jun- 96 (1)
the Period
Net Asset Value at
Beginning of Period $38.89 $31.48 $25.06 $19.03 $15.00
Net Investment Income $ 0.5 $ 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%
</TABLE>
(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, 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 $991,317 during the
12 months ending June 30, 2000. During the Fund's initial year, the Advisor had
paid all Fund expenses.
<PAGE>
3. RELATED PARTY TRANSACTIONS
Certain owners of Ameristock Corporation are also owners and/or
directors of Ameristock Mutual Fund. These individuals may receive benefits from
any management fees paid to the Advisor. 24% of the Fund's stock is controlled
by National Financial Services Corp. 11% of the Fund's stock is controlled by
Trust Company of America. 10% of the Fund's stock is controlled by Charles
Schwab & Co. 9% of the Fund is controlled by National Investors Services Corp.
6% of the Fund's stock is controlled by FTC & Company. All of the preceding
companies are unrelated to the Fund or Ameristock Corp. The preceding companies
may be deemed as controlling persons.
4. CAPITAL STOCK AND DISTRIBUTION
At June 30, 2000, 100 million shares of capital stock ($.005 par value)
were authorized, and paid-in capital amounted to $87,173,291. Transactions in
common stock were as follows:
Shares sold 2,591,686
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:
<PAGE>
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.
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits.
(1) Articles of Incorporation*
(2) By-Laws*
(5) Investment Advisory Agreement**
(8) Custodian Agreement**
(9) (i) Administrative and Fund Accounting Agreement**
(ii) Transfer Agent Agreement**
(10) Opinion and consent**
(11) Consent of Independent Certified Public Accountants
(13) Investment Representation Letters**
(27) Financial Data Schedule
Item 24. Persons Controlled by or under Common Control with Registrant.
Not applicable.
Item 25. 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 of Article of the General Corporation Law of the
State of Maryland (Maryland Law) controlling the
indemnification of directors and officers.
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, in each case place conditions under which
indemnification will be permitted, including requirements that
the indemnified person acted in good faith. Under certain
condition, payment of expenses in advance of final disposition
may be permitted. The Articles of Incorporation of the
Registrant make the indemnification of 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
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 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
* Filed with initial Registration Statement in 1995.
* Filed with Post-Effective Amendment No. 1 in 1996
<PAGE>
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 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 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 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 26. Business and Other Connections of Investment Adviser
The description 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 27. Principal Underwriters
Not Applicable.
Item 28. 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 29. Management Services
Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, Registrant has duly caused
this Amendment to be signed on its behalf by the undersigned, thereunto duly
organized, in the City of Moraga and State of California on the 23rd day of
October, 2000. Registrant certified that this Amendment meets all of the
requirements for effectiveness under Rule 485(b) of the Securities and Exchange
Commission.
THE AMERISTOCK MUTUAL FUND, INC.
By: /s/ Nicholas D. Gerber
----------------------------
Nicholas D. Gerber
Chairman and 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
/s/ Nicholas D. Gerber Director October 23, 2000
---------------------------
Nicholas D. Gerber
/s/ Andrew Ngim Director October 23, 2000
---------------------------
Andrew Ngim
/s/ Howard Mah Director October 23, 2000
---------------------------
Howard Mah
/s/ Alev Efendioglu Director October 23, 2000
---------------------------
Alev Efendioglu
/s/ Stephen J. Marsh Director October 23, 2000
---------------------------
Stephen J. Marsh
<PAGE>
Exhibit 11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated July 21, 2000 in Ameristock Mutual Fund's Post-Effective Amendment Number
6 and to all references to our firm included in or made a part of this
Post-Effective Amendment.
McCurdy & Associates CPA's, Inc.
October 18, 2000
<PAGE>
