<PAGE> 1
THE AMERICAN HERITAGE FUND, INC.
[THE AMERICAN HERITAGE FUND, INC. LOGO]
1370 Avenue of the
Americas
New York, N.Y. 10019
Tel: (212) 397-3900
Fax: (212) 397-4036
Heiko Thieme
Chairman
July 2000
To Our Valued Shareholders:
The American Heritage Fund experienced several changes in Fiscal year 2000.
While the performance with a slight negative return remained disappointing, it
still was a significant improvement from the losses occurred in fiscal 1999.
However, I will only be satisfied, when our returns compete favorably with the
rest of the market. As a non-diversified fund, the portfolio focuses on few
stocks even though more names have been added to the holdings.
Senetek, by far the largest position, signed several important distribution
agreements for their skin-care product Kinetin with Revlon and The Body Shop.
Senetek has announced that they expect to be profitable by the end of this year.
Hopefully, this will be the beginning of a major turn for the better after
Senetek experienced significant disappointments over the years.
Portfolio turnover has been drastically reduced, as short-term trading did not
produce the desired results. We do not intend to resume short-term trading
unless the investment climate changes significantly. As far as the expense ratio
is concerned we have made slight improvements even though the assets under
management continued to decline.
The US economy seems to approach a soft-landing. We expect no further interest
rates increases for the rest of this year. Corporate earnings should continue to
expand although at a slower rate. Stock selection and patience will remain key
for a successful strategy. Those who are interested in our overall investment
approach and analysis may ask for a free copy of my monthly newsletter "The
Viewpoint", which has been published since 1979.
Our next conference call will be on October 19, 2000 at 4:30 PM (Eastern Time).
As usual I intend to discuss our strategy and will take your questions. The
toll-free number is: 1-800-659-1025 or Long-Distance: 904-779-4707.
Thank you for your continuous confidence.
Yours sincerely,
/s/ Heiko THieme
Heiko H. Thieme
<PAGE> 2
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THE AMERICAN HERITAGE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2000
---------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at
value (cost $12,742,728) (Note
3).............................. $ 3,494,875
Receivable for securities sold.... 13,786
Receivable for dividends and
interest........................ 6,940
Prepaid expenses.................. 9,852
Other assets...................... 6,200
------------
TOTAL ASSETS.................... 3,531,653
------------
LIABILITIES
Payable for capital stock
reacquired...................... 2,651
Accrued advisory fees............. 4,586
Accrued expenses and other
payables........................ 50,650
------------
TOTAL LIABILITIES............... 57,887
------------
Commitments & Contingencies....... --
NET ASSETS
Net Assets (equivalent to $.27 per
share based on 12,744,564 shares
of capital stock outstanding)... $ 3,473,766
============
Composition of net assets:
Shares of capital stock........... $ 127,446
Paid in capital................... 59,669,000
Accumulated distributions in
excess of net investment
income.......................... (3,861,577)
Accumulated net realized loss on
investment transactions......... (43,213,250)
Net unrealized depreciation of
investments..................... (9,247,853)
------------
NET ASSETS, May 31, 2000..... $ 3,473,766
============
</TABLE>
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THE AMERICAN HERITAGE FUND, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES
MAY 31, 2000
---------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Value
-------------------------------------------------------
<S> <C> <C>
COMMON STOCKS & WARRANTS - 98.59%
AEROSPACE/DEFENSE - 1.12%
Boeing Co. .................... 1,000 $ 39,063
----------
BANKING & FINANCE - 0.00%
Kouri Capital Group, Inc.*+.... 200,000 0
----------
BIOTECHNOLOGY - 69.39%
Direct Therapeutics, Inc.*+.... 160,000 48,000
Senetek PLC Sponsored
ADR*(+)...................... 1,758,000 2,362,313
----------
2,410,313
----------
BUSINESS EQUIPMENT - 0.78%
Xerox Corp. ................... 1,000 27,125
----------
COMMUNICATION & EQUIPMENT - 0.00%
Millicom International Cellular
S.A. Rights*(+)+............. 27,100 0
----------
COMPUTER EQUIPMENT & SOFTWARE - 2.36%
Management Technologies,
Inc.*........................ 95,238 476
Seagate Technology, Inc*....... 1,000 58,000
Western Digital Corp*.......... 5,000 23,438
----------
81,914
----------
CONSUMER PRODUCTS - 3.98%
Group Sense International
Ltd.*........................ 440,000 45,739
Philip Morris Companies,
Inc. ........................ 1,000 26,125
Procter & Gamble Co. .......... 1,000 66,500
----------
138,364
----------
ENTERTAINMENT & LEISURE - 0.00%
Gold Star International, Inc
Units*(+)+................... 5,000 0
----------
LIFE/HEALTH INSURANCE - 0.89%
MetLife, Inc*.................. 1,500 30,750
----------
MEDICAL TECHNOLOGY - 15.05%
A D M Tronics Unlimited,
Inc.*........................ 2,000,000 520,000
Demegen, Inc*.................. 5,000 2,656
Medtrack, Inc.*+............... 300,000 0
----------
522,656
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 3
---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES
MAY 31, 2000
(Continued)
---------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares Value
-------------------------------------------------------
<S> <C> <C>
NETWORKING & COMMUNICATION DEVICES - 1.20%
3COM Corp*..................... 1,000 $ 41,813
----------
RADIO - 2.17%
Sirius Satellite Radio, Inc*... 2,000 75,500
----------
RETAILERS - 0.07%
Massimo da Milano, Inc.(+)..... 124,322 2,486
----------
SAVINGS & LOAN - 1.58%
Dime Bancorp, Inc. ............ 3,000 54,750
----------
TOTAL COMMON STOCKS & WARRANTS
(Cost 12,545,087)............ 3,424,734
----------
PREFERRED STOCKS - 0.00%
Medtracks Inc Pf B+ (Cost
$0).......................... 30,000 0
----------
BONDS AND NOTES - 0.65%
International Fast Food G-Bond
9%, due 12/15/2007 (Cost
$150,000).................... 150,000 22,500
----------
SHORT TERM INVESTMENTS - 1.37%
Firstar Treasury Fund (Cost
$47,641)..................... 47,641 47,641
----------
TOTAL SECURITIES
(Cost $12,742,728)............. $3,494,875
==========
</TABLE>
<TABLE>
<C> <S>
* Non-income producing security
(+) Foreign security
+ Illiquid security
</TABLE>
---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 2000
---------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends........................... $ 1,380
Interest............................ 18,899
---------
TOTAL INVESTMENT INCOME............. 20,279
---------
EXPENSES:
Advisory fees (Note 2).............. 53,449
Administration fees................. 25,866
Transfer agent fees................. 41,094
Registration fees and expenses...... 23,696
Directors fees...................... 10,000
Audit fees.......................... 34,764
Insurance........................... 38,133
Custody fees........................ 6,332
Legal fees.......................... 32,700
Printing and postage expense........ 21,126
Rent................................ 32,500
Fund accounting fees................ 32,694
Miscellaneous....................... 5,485
---------
TOTAL EXPENSES...................... 357,839
---------
Investment loss -- net.............. (337,560)
---------
NET REALIZED AND UNREALIZED GAINS ON
INVESTMENTS: (Note 3)
Net realized gain on securities
transactions...................... 765,288
Net change in unrealized
depreciation on investments....... (468,807)
---------
Net gain on investments............. 296,481
---------
Net decrease in net assets resulting
from operations................... $ (41,079)
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
---------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MAY 31,
---------------------------
2000 1999
----------- -------------
<S> <C> <C>
DECREASE IN NET ASSETS FROM
OPERATIONS:
Investment loss -- net...... $ (337,560) $ (711,979)
Net realized gain (loss)
from investment
transactions.............. 765,288 (953,216)
Net increase in unrealized
depreciation on
investments............... (468,807) (9,400,650)
---------- ------------
Net decrease in net assets
resulting from
operations................ (41,079) (11,065,845)
Distributions to
shareholders from --
Investment
income -- net........... 0 0
Net realized gains on
investments............. 0 0
Return of capital......... 0 0
Capital share
transactions.............. (833,568) (1,476,480)
---------- ------------
Net decrease in
net assets.............. (874,647) (12,542,325)
NET ASSETS:
Beginning of period......... 4,348,413 16,890,738
---------- ------------
End of period............... $3,473,766 $ 4,348,413
========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 2000
---------------------------------------------------------
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 principles 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 the 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
of 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 that
expire unexercised are treated by the Fund on the expiration date as realized
gains from the sales of securities. The difference between the premium and the
amount paid on effecting a closing
---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 2000
(Continued)
---------------------------------------------------------
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 million 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, 2000,
AHMC received $53,449 in investment advisory fees. Heiko H. Thieme is the Fund's
Chairman of the Board of Directors, Chief Executive Officer and Secretary. Heiko
H. Thieme is
5
<PAGE> 6
---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 2000
(Continued)
---------------------------------------------------------
also the Chairman of the Board of Directors, Chief Executive Officer and
Secretary of AHMC, of which he owns 100% of the outstanding shares.
The Fund has agreed to reimburse AHMC for office space utilized by the Fund. For
the year ended May 31, 2000, the Fund reimbursed AHMC $32,500 for the use of its
office space.
AHMC is also reimbursed for administrative personnel utilized by the Fund. Total
reimbursement was $25,866 for the year ended May 31, 2000.
NOTE 3. INVESTMENTS
For the year ended May 31, 2000, purchases and sales of investment securities
other than short-term investments aggregated $561,922 and $1,322,494,
respectively. As of May 31, 2000, the gross unrealized appreciation for all
securities totaled $100,192 and the gross unrealized depreciation for all
securities totaled $9,348,045, or a net unrealized depreciation of $9,247,853.
The aggregate cost of securities for federal income tax purposes at May 31,
2000, was $12,742,728.
Net realized gain on investments for the year ended May 31, 2000, was $765,288.
The components are as follows:
<TABLE>
<S> <C>
Long transactions $765,288
Short sale transactions 0
--------
$765,288
========
</TABLE>
NOTE 4. RESTRICTED SECURITIES 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 of Directors, or a committee composed of members of the Board of Directors
of the Fund.
---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 2000
(Continued)
---------------------------------------------------------
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 provisions 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 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.
6
<PAGE> 7
---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 2000
(Continued)
---------------------------------------------------------
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, 2000, the Fund had net capital loss carryforwards of approximately
$46,077,000, expiring in 2002 through 2006 and net operating loss carryforwards
of approximately $3,847,000, expiring 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, 2000, the total par value and paid in capital totaled $59,796,446.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
MAY 31, 2000 MAY 31, 1999
---------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- --------- ---------- -----------
<S> <C> <C> <C> <C>
Shares sold 523,154 $ 121,933 2,706,299 $ 1,341,120
Shares issued in
reinvestment of
dividends 0 0 0 0
Shares redeemed (3,304,083) (955,501) (5,358,095) (2,817,600)
---------- --------- ---------- -----------
Net decrease (2,780,929) $(833,568) (2,651,796) $(1,476,480)
========== ========= ========== ===========
</TABLE>
NOTE 8. 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 the members of the purported class, the Fund believes
that such losses do not exceed $25 million and could be less. The amount
---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 2000
(Continued)
---------------------------------------------------------
of the outstanding shares of the Fund has been rapidly diminishing since 1994.
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. If the
Plaintiff were to appeal the Court's denial and if he were to prevail on the
appeal as well as the merits of his case, our potential loss could be as much as
$25 million, which is substantially more than our assets.
After conferring with our special counsel, we 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 our belief, we have not
established a reserve for potential losses other than the expense of our
defense. We have vigorously defended the action and intend to continue to do so
if the Plaintiff proceeds. Our officers and directors are entitled to be
indemnified by us to the full extent permitted by law.
The Fund has borne no expenses related to the above litigation for the year
ended May 31, 2000. As of May 31, 2000, the Fund has recovered a total of
$171,310 from its insurance carrier relating to 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 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
7
<PAGE> 8
---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 2000
(Continued)
---------------------------------------------------------
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 counter claims. 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 against KCG and Mr. Kouri.
The Fund has borne all expenses related to the above litigation. For the year
ended May 31, 2000, there were no expenses relating to the litigation which were
borne by the Fund.
NOTE 9. LIQUID SECURITIES AND CERTAIN
OTHER RELATED PARTY TRANSACTIONS
Based solely on the reported trading volume, the Fund's investments in the
securities of Senetek PLC
---------------------------------------------------------
THE AMERICAN HERITAGE FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 2000
(Continued)
---------------------------------------------------------
(Senetek) and ADM Tronics Unlimited, Inc. (ADM), which represented 68% and 15%
of the Fund's net assets on May 31, 2000, respectively, would not be considered
to be liquid. The Fund, however, has determined that the investments are liquid
primarily based 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 1,758,000 shares of Senetek and up to 1,500,000 of the Fund's 2,000,000
shares of ADM at the market price at the time of the purchase. Global is a
foreign company. Heiko H. Thieme is the chief executive officer of both Global
and the Fund and makes the 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 US 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 acceptance of it is not enforceable in
accordance with its terms. There were no transactions during the year ended May
31, 2000 between the Fund and Global.
8
<PAGE> 9
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,
-----------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................... $ 0.28 $ 0.93 $ 0.83 $ 0.76 $ 0.63
Income (loss) from investment operations:
Net investment income (loss)......................... (0.04) (0.04) (0.04) (0.03) (0.02)
Net gains (losses) on securities (both realized and
unrealized)........................................ 0.03 (0.61) 0.14 0.10 0.15
---------- ---------- ----------- ----------- -----------
Total from investment operations....................... (0.01) (0.65) 0.10 0.07 0.13
Less distributions
Dividends (from net investment income)............... -- -- -- -- --
Distributions (from capital gains)................... -- -- -- -- --
Return of capital distribution....................... -- -- -- -- --
---------- ---------- ----------- ----------- -----------
Net asset value, end of period......................... $ 0.27 $ 0.28 $ 0.93 $ 0.83 $ 0.76
========== ========== =========== =========== ===========
Total return........................................... (3.57)% (69.89)% 12.05% 9.21% 20.63%
Net assets, end of period.............................. $3,473,766 $4,348,413 $16,890,738 $18,126,591 $21,429,753
Ratio of expenses to average net assets................ 8.37% 8.88% 5.85% 6.42% 6.25%
Ratio of net income (loss) to average net assets....... (7.90)% (8.67)% (4.08)% (4.97)% (3.53)%
Portfolio Turnover Rate................................ 13% 1,528% 1,180% 470% 606%
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 10
[MATHIESON AITKEN JEMISON LOGO]
[MATHIESON AITKEN JEMISON LLP LETTERHEAD]
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, 2000, 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, 2000, by correspondence with the custodian and
brokers. An audit also includes assessing the 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, 2000, 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.
/s/ MATHIESON AITKEN JEMISON, LLP
July 24, 2000
[INPACT LOGO]
<PAGE> 11
THE AMERICAN HERITAGE FUND, INC.
1370 Avenue of the Americas
ADDRESS CORRECTION REQUESTED New York, NY 10019
FIRST CLASS MAIL
U.S. POSTAGE
PAID
JERSEY CITY, NJ
PERMIT NO. 412
<TABLE>
<S> <C>
THE
AMERICAN
[LOGO] HERITAGE
FUND, INC.
-------------------------------------
ANNUAL REPORT
May 31, 2000
</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.
