<PAGE> 1
THE AMERICAN HERITAGE FUND, INC.
1370 Avenue of the Americas
ADDRESS CORRECTION REQUESTED New York, NY 10019
BULK RATE
U.S. POSTAGE
PAID
JERSEY CITY, NJ
PERMIT NO. 412
<TABLE>
<S> <C>
THE
AMERICAN
LOGO HERITAGE
FUND, INC.
- -------------------------------------
ANNUAL REPORT
May 31, 1999
</TABLE>
This report and the financial statements contained herein are submitted for the
general information of shareholders and are not authorized for distribution to
prospective investors unless preceded or accompanied by an effective prospectus.
Nothing herein contained is to be considered an offer of sale or solicitation of
an offer to buy shares of The American Heritage Fund, Inc. Such offering is made
only by prospectus, which includes details as to offering price and other
material information.
<PAGE> 2
- ---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1999
- ---------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at
value (cost $13,165,842)........ $ 4,386,795
Receivable for investment
securities sold................. 19,184
Receivable for dividends and
interest........................ 6,573
Other assets...................... 21,636
------------
TOTAL ASSETS.................... 4,434,188
------------
LIABILITIES
Payable for capital stock
reacquired...................... 700
Accrued advisory fees............. 4,750
Accrued expenses and other
payables........................ 80,325
------------
TOTAL LIABILITIES............... 85,775
------------
Commitments & Contingencies --
NET ASSETS
Net assets (equivalent to $.28 per
share based on 15,525,493 shares
of capital stock outstanding)... $ 4,348,413
============
Composition of net assets:
Shares of capital stock........... 155,255
Paid in capital................... 60,474,759
Accumulated distributions in
excess of net investment
income.......................... (3,524,017)
Accumulated net realized loss on
investments..................... (43,978,538)
Net unrealized depreciation of
investments..................... (8,779,046)
------------
NET ASSETS, May 31, 1999..... $ 4,348,413
============
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares Value
- -------------------------------------------------------
<S> <C> <C>
</TABLE>
- ---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES
MAY 31, 1999
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Value
- -------------------------------------------------------
<S> <C> <C>
COMMON STOCKS & WARRANTS - 98.05%
BANKS & FINANCE - .00%
Kouri Capital Group Inc.*+.... 200,000 $ 0
-----------
BIOTECHNOLOGY - 75.03%
Direct Therapeutics, Inc.*+... 160,000 48,000
Senetek PLC Sponsored
ADR*(+)..................... 2,143,000 3,214,500
-----------
3,262,500
-----------
COMMUNICATION & EQUIPMENT - 0.00%
American Satellite Network
Inc. Wts*+.................. 6,775 0
Millicom International
Cellular SA Rights *(+)+.... 27,100 0
-----------
0
-----------
COMPUTER EQUIPMENT & SOFTWARE - .01%
JTS Corporation*.............. 85,000 425
Management Technologies
Inc.*....................... 95,238 95
-----------
520
-----------
ENTERTAINMENT & LEISURE - .04%
Acclaim Entertainment Wts*.... 646 1,615
Gold Star International Inc.
Units*(+)+.................. 5,000 0
-----------
1,615
-----------
ENVIRONMENTAL SERVICES - .06%
I D M Environmental
Corporation*................ 2,000 2,813
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 3
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THE AMERICAN HERITAGE FUND, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES
MAY 31, 1999
(Continued)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Value
- -------------------------------------------------------
<S> <C> <C>
INDUSTRIAL PRODUCTS - .38%
Mark Solutions Inc.*.......... 22,000 $ 16,500
-----------
MEDICAL TECHNOLOGY - 21.28%
A D M Tronics Unlimited
Inc.*....................... 2,000,000 900,000
Life Medical Sciences Inc.*... 35,000 24,063
Life Medical Sciences Inc. Cl
A Wts*...................... 22,500 1,406
Medtrack Inc.*+............... 300,000 0
-----------
925,469
-----------
PHARMACEUTICAL - 1.25%
Polydex Pharmaceuticals
Ltd.*(+).................... 15,500 54,250
-----------
TOTAL COMMON STOCKS & WARRANTS
(Cost $12,915,214).......... $ 4,263,667
-----------
PREFERRED STOCKS - 0.00%
Medtrack Inc. Pf B+ (Cost
$0)......................... 30,000 0
-----------
</TABLE>
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THE AMERICAN HERITAGE FUND, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES
MAY 31, 1999
(Continued)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Value
- -------------------------------------------------------
<S> <C> <C>
BONDS AND NOTES - .52%
International Fast Food G-Bond
9%, due 12/15/2007 (Cost
$150,000)................... 150,000 $ 22,500
-----------
SHORT TERM INVESTMENTS - 2.31%
Star Treasury Fund (Cost
$100,628)................... 100,628 100,628
-----------
TOTAL SECURITIES (Cost $13,165,842)......
$ 4,386,795
===========
</TABLE>
<TABLE>
<C> <S>
* Non-income producing property
(+) Foreign security
+ Illiquid security
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
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THE AMERICAN HERITAGE FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1999
- ---------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest......................... $ 15,344
Dividends........................ 2,512
------------
TOTAL INVESTMENT INCOME.......... 17,856
------------
EXPENSES:
Investment advisory fees......... 103,112
Transfer agent fees.............. 84,201
Legal fees....................... 58,757
Audit fees....................... 13,665
Custodian fees................... 33,264
Administrative fees.............. 117,400
Fund accounting fees............. 45,187
Insurance........................ 41,095
Postage and printing expense..... 76,752
Registration fees and expenses... 22,999
Directors' fees and expenses..... 10,000
Interest expense................. 83,696
Consulting and professional
fees........................... 185
Rent............................. 35,853
Miscellaneous.................... 3,669
------------
TOTAL EXPENSES................... 729,835
------------
Investment loss -- net........... (711,979)
------------
Net realized loss on securities
transactions................... (953,216)
Net change in unrealized
depreciation of investments.... (9,400,650)
------------
Net loss on investments.......... (10,353,866)
------------
Net decrease in net assets
resulting from operations...... $(11,065,845)
============
</TABLE>
- ---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MAY 31, 1999 MAY 31, 1998
------------ ------------
<S> <C> <C>
DECREASE IN NET ASSETS FROM OPERATIONS:
Investment loss -- net.... $ (711,979) $ (817,394)
Net realized loss on
securities
transactions............ (953,216) (11,258,564)
Net change in unrealized
appreciation
(depreciation) of
investments............. (9,400,650) 13,742,853
------------ ------------
Net increase (decrease) in
net assets resulting
from operations......... (11,065,845) 1,666,895
Distributions to
shareholders from --
Investment
income -- net......... 0 0
Net realized gains on
investments........... 0 0
Return of capital....... 0 0
Capital share
transactions............ (1,476,480) (2,902,748)
------------ ------------
Net decrease in net
assets................ (12,542,325) (1,235,853)
NET ASSETS:
Beginning of period....... 16,890,738 18,126,591
------------ ------------
End of period............. $ 4,348,413 $ 16,890,738
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
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THE AMERICAN HERITAGE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1999
- ---------------------------------------------------------
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The American Heritage Fund, Inc. ("the Fund") is registered under the Investment
Company Act of 1940, as amended, as a non-diversified, open-end management
investment company. The following is a summary of the significant accounting
policies consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles. Significant accounting policies of the Fund are as follows:
SECURITY VALUATIONS
The Fund values its securities, where market quotations are readily available,
at market value based on the last recorded sales price as reported by the
principal securities exchange on which the security is traded, or if the
security is not traded on an exchange, market value is based on the latest bid
price. Foreign securities are converted to U.S. dollars using exchange rates at
the close of the trading day. Securities for which market quotations are not
readily available are valued as the Board of Directors or a committee composed
of members of the Board of Directors, in good faith determines.
FEDERAL INCOME TAXES
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code that are applicable to regulated investment companies and to distribute all
its taxable income to its shareholders.
OPTION WRITING
When the Fund sells an option, an amount equal to the premium received by the
Fund is recorded as a liability and is subsequently adjusted to the current
market value of the option written. Premiums received from writing options which
expire unexercised are treated by the Fund on the expiration date as realized
gains from the sales of securities. The difference between the
- ---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1999
(Continued)
- ---------------------------------------------------------
premium and the amount paid on effecting a closing purchase transaction,
including brokerage commissions, are also treated as a realized gain, or if the
premium is less than the amount paid for the closing purchase transaction, as a
realized loss. If a call option is exercised, the premium is added to the
proceeds from the sale of the underlying security in determining whether the
Fund has realized a gain or loss. If a put option is exercised, the premium
reduces the cost basis of the securities purchased by the Fund.
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
OTHER
The Fund follows industry practice and records security transactions on the
trade date. The specific identification method is used for determining gains or
losses for financial statements and income tax purposes. Dividend income is
recorded on the ex-dividend date and interest income is recorded on an accrued
basis.
NOTE 2. INVESTMENT ADVISORY AGREEMENT
AND OTHER RELATED TRANSACTIONS
The Fund has an investment advisory agreement with American Heritage Management
Corporation (AHMC), whereby AHMC receives a fee of 1.25% of the Fund's first
$100,000,000 average net asset value and 1% of such value on any additional net
assets, computed daily and payable monthly. For the year ended May 31, 1999 AHMC
received $103,112 in investment advisory fees. Heiko H. Thieme is the Fund's
Chairman of the Board of Directors,
5
<PAGE> 6
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THE AMERICAN HERITAGE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1999
(Continued)
- ---------------------------------------------------------
Chief Executive Officer and Secretary. Heiko H. Thieme is also the Chairman of
the Board of Directors, Chief Executive Officer and Secretary of AHMC, of which
he owns 100% of the outstanding shares.
For the year ended May 31, 1999, the Fund paid brokerage commissions of $444,766
to Thieme Securities, Inc. of which Mr. Thieme is the owner.
The Fund has agreed to reimburse AHMC for office space utilized by the Fund. For
the year ended May 31, 1999, the Fund reimbursed AHMC $35,853 for the use of its
office space.
AHMC is also reimbursed for administrative personnel utilized by the Fund. Total
reimbursement was $117,400 for the year ended May 31, 1999.
NOTE 3. INVESTMENTS
For the year ended May 31, 1999, purchases and sales of investment securities
other than short-term investments aggregated $152,078,573 and $155,763,361,
respectively. The gross unrealized appreciation for all securities totaled
$431,027 and the gross unrealized depreciation for all securities totaled
$9,210,073, or a net unrealized depreciation of $8,779,046. The aggregate cost
of securities for federal income tax purposes at May 31, 1999 was $13,165,842.
Net realized loss on investments for the year ended May 31, 1999 was $953,216.
The components are as follows:
<TABLE>
<S> <C>
Long transactions $ (945,791)
Short sales transactions (7,425)
------------
$ (953,216)
============
</TABLE>
NOTE 4. RESTRICTED AND OTHER ILLIQUID SECURITIES
Investments in restricted securities and investments, where market quotations
are not available, are valued at fair value as determined in good faith by the
Board
- ---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1999
(Continued)
- ---------------------------------------------------------
of Directors, or a committee composed of members of the Board of Directors of
the Fund.
The Fund may acquire portfolio securities called restricted securities, which
can be sold only pursuant to an effective registration statement under the
Securities Act of 1933 or an exemption from such registration. In addition,
other securities held by the Fund may be illiquid which means they cannot be
sold or disposed of in the ordinary course of business at approximately the
quoted market value of such securities, or in the absence of such quoted market
value, the price at which the Fund has valued such securities. The Fund will not
invest in restricted and other illiquid securities if, as a result of such
investment, the value of the Fund's illiquid assets would exceed 15% of the
value of the Fund's net assets.
Restricted securities eligible for resale under Rule 144A under the Securities
Act of 1933 that have been determined to be liquid by the Fund's Board of
Directors based upon trading markets for the securities and any other restricted
securities that become registered under the Securities Act of 1933 or that may
be otherwise freely sold without registration thereunder are not subject to the
foregoing limitation, unless they are otherwise illiquid.
Certain securities held by the Fund, which were restricted at the time of their
acquisition, have been deemed to no longer be restricted for financial statement
presentation purposes in reliance upon the provision of Rule 144 under the
Securities Act of 1933.
The Fund normally will be able to purchase restricted securities at a
substantial discount from the market value of similar unrestricted securities,
but there are certain risks which the Fund will necessarily assume in acquiring
restricted securities. The principal risk is that the Fund may have difficulty
in disposing of such securities without registration under the Securities Act of
1933, and the Fund will have to bear the risk of market conditions prior to such
registration. In the
6
<PAGE> 7
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THE AMERICAN HERITAGE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1999
(Continued)
- ---------------------------------------------------------
absence of an agreement obtained at the time of purchase of such securities,
there can be no assurance that the issuer will register the restricted
securities. Furthermore, if the Fund disposes of restricted securities without
registration, it may be necessary to sell such shares at a discount similar to
or greater than that at which the Fund purchased the shares.
NOTE 5. CARRYOVERS
At May 31, 1999, the Fund had net capital loss carryforwards of approximately
$43,901,000 expiring in 2003 through 2006 and net operating loss carryforwards
of approximately $3,482,000, which begin to expire in 2000 through 2015.
NOTE 6. REDEMPTIONS
The Fund reserves the right to make payments for shares redeemed in cash or in
kind.
NOTE 7. CAPITAL SHARE TRANSACTIONS
As of May 31, 1999 the total par value and paid in capital totaled $60,630,014.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
MAY 31, 1999 MAY 31, 1998
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold 2,706,299 $ 1,341,120 12,381,297 $ 12,475,679
Shares issued in
reinvestment of
dividends 0 0 0 0
Shares redeemed (5,358,095) (2,817,600) (16,079,052) (15,378,426)
----------- ------------ ----------- ------------
Net decrease (2,651,796) $ (1,476,480) (3,697,755) $ (2,902,747)
=========== ============ =========== ============
</TABLE>
NOTE 8. BANK LOANS
The Fund had a demand secured $10,000,000 bank line of credit which expired on
October 31, 1998; borrowings under this arrangement bore interest at the bank's
prime rate. Total interest paid on the credit line during the year ended May 31,
1999 totaled $83,696.
- ---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1999
(Continued)
- ---------------------------------------------------------
NOTE 9. CONTINGENCIES
On October 5, 1994, a shareholder of the Fund on behalf of himself and a
purported class of others brought an action against the Fund, AHMC, Heiko H.
Thieme and Richard K. Parker in the United States District Court for the
Southern District of New York. Although the Fund cannot now determine the exact
amount of the losses incurred by members of the purported class, the Fund
believes that such losses do not exceed $25 million and could be less. The
amount of the outstanding shares of the Fund has been rapidly diminishing since
early 1994.
The Complaint alleged that certain registration statements and prospectuses of
the Fund did not disclose certain risks involving the Fund's investments in
restricted securities and companies having small capitalizations and which lack
significant operating histories or established products and that the Fund
invests significant amounts of money in such companies based "merely" on an
interview between the company's executives and Mr. Thieme and a review of the
companies' financial statements or products. The Complaint also alleged that
certain assets of the Fund were overvalued. On September 11, 1995, the Court, in
ruling on the Fund's Motion to Dismiss, dismissed the Complaint. The Court's
Order permitted the Plaintiff to move the Court for leave to file an amended
complaint limited to claims relating to the Fund's investments in restricted and
other illiquid securities.
On July 11, 1996, the Court issued an Order permitting the Plaintiff to file an
amended complaint. The amended complaint alleges that certain registration
statements and prospectuses of the Fund failed to disclose certain risks
regarding the Fund's investments in illiquid securities and that the Fund
invested in illiquid securities in concentrations which exceeded the Fund's own
investment restrictions and that the Fund improperly valued its illiquid
securities. The amended complaint also alleges that the other defendants
breached their fiduciary duties in connection with the
7
<PAGE> 8
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THE AMERICAN HERITAGE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1999
(Continued)
- ---------------------------------------------------------
Fund's investments in and valuation of illiquid securities and by the receipt of
AHMC of substantial compensation for investment advice and that the Fund
breached its own limitations with respect to illiquid securities and that the
Fund changed investment policies without obtaining a shareholder vote.
The Plaintiff made a motion to permit the action to proceed as a class action
and in which the Plaintiff would serve as the sole class representative of all
persons who acquired shares of the Fund from July 1, 1993 through August 31,
1994. On August 1, 1997, the Court denied the Plaintiff's motion.
The Fund, after conferring with its special counsel, has concluded that the
substantive allegations of the amended complaint are without merit. Although
there can be no assurance of the outcome of the action, based upon the Fund's
belief, the Fund has not established a reserve for potential losses other than
the expenses of its defense. The Fund intends to vigorously defend the action.
The Plaintiff is seeking rescission or compensatory damages and pre-judgment
interest thereon and the costs and expense of the litigation and such other and
further relief as the Court may deem just and proper. The Fund's Officers and
Directors are entitled to be indemnified by the Fund to the full extent
permitted by law.
The Fund has borne expenses related to the above litigation which for the year
ended May 31, 1999 totaled $3,886. As of May 31, 1999 the Fund has recovered a
total of $171,310 from its insurance carrier relating to current and prior years
expenses.
On August 4, 1995 the Fund commenced an action against Kouri Capital Group, Inc.
("KCG") and Pentti Kouri in the Supreme Court of the State of New York, County
of New York. The action was based upon a Stock Purchase Agreement between the
Fund and KCG pursuant to which KCG agreed to repurchase certain shares issued
thereby and sold to the
- ---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1999
(Continued)
- ---------------------------------------------------------
Fund for $4,400,000. Such obligation of KCG was personally guaranteed by Mr.
Kouri. Neither KCG nor Mr. Kouri has honored its or his obligation to the Fund.
The Fund sought a recovery in the amount of $4,400,000 plus interest. The
defendants denied the substantive allegations of the Complaint and asserted
counterclaims which would declare their obligations to the Fund to have been
terminated and to obtain damages in excess of $4,400,000. The Fund, after
conferring with its special counsel, concluded that the substantive allegations
of the counterclaims were without merit. Although there could be no assurance of
the outcome of the action, based upon the Fund's belief, the Fund did not
establish a reserve for potential losses other than the expense of its defense
of the counterclaims. Upon agreement of the parties, the action has been
dismissed without prejudice. In the event that the Fund is unable to reach a
settlement of its claims acceptable to the Fund, the Fund intends to bring
another action again KCG and Mr. Kouri. In such event, it can be expected that
they will again assert counterclaims against the Fund.
The Fund has borne all expenses related to the above litigation. For the year
ended May 31, 1999 there were no expenses relating to the litigation which were
borne by the Fund.
NOTE 10. LIQUID SECURITIES AND CERTAIN OTHER RELATED PARTY TRANSACTIONS
Based solely on reported trading volume, the Fund's investments in the
securities of Senetek PLC (Senetek) and ADM Tronics Unlimited, Inc. (ADM), which
represented 74% and 21% of the Fund's net assets on May 31, 1999, respectively,
would not be considered to be liquid. The Fund, however, has determined that the
investments are liquid based primarily on reported trading volume and an offer
from the Global Opportunity Fund Limited (Global) to purchase up to 1,000,000
shares of the Fund's 2,143,000 shares of Senetek and up to 1,500,000 shares of
the Fund's 2,000,000 shares of ADM at the market
8
<PAGE> 9
- ---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1999
(Continued)
- ---------------------------------------------------------
price at the time of purchase. Global is a foreign company. Heiko H. Thieme is
the chief executive officer of both Global and the Fund and makes investment
decisions for both of them. Global's offer will remain open until written
notification of the withdrawal of the offer is received from Global or the offer
is accepted by the Fund. Global has agreed that any litigation with respect to
the offer be brought in the courts of New York County in the State of New York
or the U.S. District Court for the Southern District of New York and agreed to
waive any jurisdictional defense or any defense to the effect the offer and
- ---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1999
(Continued)
- ---------------------------------------------------------
acceptance of it is not enforceable in accordance with its terms.
In January 1999, the Fund sold 500,000 shares of ADM for $484,375 and 600,000
shares of Senetek for $1,050,000 to Global.
NOTE 11. SUBSEQUENT EVENT
In November 1999, John O. Koehler, one of the then three members of the Fund's
Board of Directors, resigned for personal reasons and was replaced by Stephen
Swope.
9
<PAGE> 10
THE AMERICAN HERITAGE FUND, INC.
FINANCIAL HIGHLIGHTS AND RELATED
RATIOS/SUPPLEMENTAL DATA
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED MAY 31,
----------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year..................... .93 $ .83 $ .76 $ .63 $ 1.19 $ 1.42
Income from investment
operations:
Net investment income
(loss).................. (.04) (.04) (.03) (.02) .06 .19
Net gains or (losses) on
securities (both
realized and
unrealized)............. (.61) .14 .10 .15 (.48) (.35)
----------- ----------- ----------- ----------- ----------- ------------
Total from investment
operations................ (.65) .10 .07 .13 (.42) (.16)
Less distributions
Dividends (from net
investment income)...... -- -- -- -- .07 --
Distributions (from
capital gains).......... -- -- -- -- -- .07
Return of capital
distribution............ -- -- -- -- .07 --
----------- ----------- ----------- ----------- ----------- ------------
Net asset value, end of
year...................... $ .28 $ .93 $ .83 $ .76 $ .63 $ 1.19
=========== =========== =========== =========== =========== ============
Total return................ (69.89)% 12.05% 9.21% 20.63% (38.37)% (12.49)%
Net assets, end of period... $ 4,348,413 $16,890,738 $18,126,591 $21,429,753 $30,779,569 $101,036,392
Ratio of expenses to average
net assets................ 8.88% 5.85% 6.42% 6.25% 3.69% 2.41%
Ratio of net income (loss)
to average net assets..... (8.67)% (4.08)% (4.97)% (3.53)% 6.55% 3.40%
Portfolio turnover rate..... 1,528% 1,180% 470% 606% 620% 434%
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 11
LOGO
MATHIESON
AITKEN
JEMISON, LLP
CERTIFIED PUBLIC ACCOUNTANTS
16 SENTRY PARK WEST * SUITE 310 * BLUE BELL, PA 19422-2240 *
(215) 643-3900 * FAX (215) 643-4030 * E-MAIL [email protected]
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
American Heritage Fund, Inc.
We have audited the accompanying statement of assets and liabilities of The
American Heritage Fund, Inc., including the schedule of investments in
securities, as of May 31, 1999, the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two years in
the period then ended, and the financial highlights and related
ratios/supplemental data for each of the five years in the period then ended.
These financial statements, and financial highlights and related
ratios/supplemental data are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements, and the
financial highlights and related ratios/supplemental data 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 and related ratios/supplemental data are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements and financial highlights
and related ratios supplemental data. Our procedures included confirmation of
securities owned as of May 31, 1999, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimated 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 the financial highlights and
related ratios/supplemental data referred to above present fairly, in all
material respects, the financial position of The American Heritage Fund, Inc. as
of May 31, 1999, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights and related ratios/supplemental data for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
Mathieson Aitken Jemison, LLP
July 30, 1999, except for Notes 10 and 11, as to which
the date is December 8, 1999
LOGO
