-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LDe/wcZapxjnsomdsc7FIsaykRFJNtU7h7F1p8xHDqgGTZ4QkUopQnEdnnm6j1HH Q1Qv08ew3Llxjrnr092zeA== 0001000207-99-000001.txt : 19990129 0001000207-99-000001.hdr.sgml : 19990129 ACCESSION NUMBER: 0001000207-99-000001 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990128 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERISTOCK MUTUAL FUND INC CENTRAL INDEX KEY: 0001000207 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 943227081 STATE OF INCORPORATION: MD FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-09090 FILM NUMBER: 99514470 BUSINESS ADDRESS: STREET 1: 1480 MORAGA RD $200 STREET 2: #2 CITY: MORAGA STATE: CA ZIP: 94556 BUSINESS PHONE: 5103763490 MAIL ADDRESS: STREET 1: 127 DEVIN STREET 2: STE 2 CITY: MORAGA STATE: CA ZIP: 94556 N-30D 1 Ameristock Mutual Fund (AMSTX) Mutual Shareholder Services 1301 East Ninth Street- 36th Floor Cleveland, OH 44114 (800) 394-5064 http://www.ameristock.com SEMI-ANNUAL REPORT December 31, 1998 Welcome, Y2K, The Nifty Fifty Trap The total return for the Ameristock Mutual Fund was 31.91% for the calendar year 1998. (Annualized total returns for 3 years was 29.72% and since inception was 31.31%) This marks the third year in a row Ameristock ended ahead of over 80% of all the other large-cap funds in our category according to Morningstar. In addition, Ameristock outperformed the S&P500 by 3.3% which was up an amazing 28.6% itself. While we cannot say that the returns Ameristock has achieved will continue, we can promise that the consistent philosophy and consistent investing style that put us in the top fifth of our Morningstar category will continue. Welcome Hello, and welcome to the Ameristock Mutual Fund. Odds are, this is the first time you have ever received a report from us. You see, we know this because the last time we sent one out, our assets were about $12 million and we had around 300 investors. Today we stand at $40 million in assets and over 1,300 investors! A growth rate of over 200% in assets and 300% in investors in six months! We would like to thank Money Magazine, Kiplingers, and of course Mutual Funds Magazine for writing such nice things about Ameristock. They are probably the reason you invested with us. What they did not tell you about us is that Ameristock is only successful because we have some of the best people in the world investing with us... you, and that you realize that by investing you are assuming some risks and responsibilities. Risks: Markets can and do go down. In a 30% bear market our NAV will be about $25. If you are not prepared to see $25 on your statement OR you think you are smart enough to recognize when the market is heading down and get out in time, Ameristock is not for you. Please redeem your shares today. Responsibilities: Ameristock invests in the biggest and best blue chip companies for the long run. Your investment in Ameristock should therefore also be for the long run (3 to 5 years if not longer). By keeping your money invested at all times we are able to keep our promise of keeping turnover and capital gains taxes to a minimum. If you invest today just to withdraw next month because Ameristock is lagging, then Ameristock is also not for you. Please redeem your shares today. Sorry to be so harsh but any mutual fund is really a partnership between the manager and the shareholders. In large funds the partnership may not seem like much but is very important in a small fund. It is the reason you can reach me at anytime (a machine may answer but I will call you back if you leave a clear phone number). Speaking about calling Ameristock; we have a new phone system. When you call the (800) 394-5064 phone number you will be greeted by a machine that gives you four choices. #1 Ameristock's Daily Net Asset Value #2 To request Prospectuses and Applications ONLY. An answering service. #3 If you have a question about your account, want to establish automatic investing, or want to redeem shares. Our transfer agent, Mutual Shareholder Services. #4 If you have a question about the Fund or have any problems. Me. Y2K The year 2000 computer problem and Ameristock's position on it: We have reviewed our internal computer systems and believe they are in compliance. We have also asked about our outside vendors systems and have been given either verbal or written confirmation of compliance. We are not requesting any special Y2K audits as we believe that this is overkill and would only serve to push the cost of running the Fund up. In addition, we cannot vouch for, nor have we requested the readiness of electricity, phones, planes, or any of the millions of products the companies Ameristock invests in or uses. There may be a catastrophic event next New Years Day. If you believe this event may happen, please redeem your shares now before the event. If you are like us and believe this will turn out to be a non-event, please enjoy the millenium and save your confirmation statements. The Nifty Fifty Trap Back in 1972 the market was being led by fifty of the largest and fastest growing companies such as Coca-Cola, Xerox, Avon, and Polaroid. It was felt that because these companies future prospects were so bright that almost any price could be paid for them because eventually they would grow into the valuation. Over the next 20 years this theory held true, as we all know. Unfortunately the bear market of 1973/74 knocked these firms' stock prices down the hardest and only those people who could afford to wait the full 20 years got any reasonable returns. Now while we are a buy and hold Fund, even 20 years is a long time. So that Ameristock does not get caught up in today's nifty fifty stocks (Cisco, Amazon.com, AOL, Yahoo...). We will be switching from the largest and those fully valued firms in our universe (companies with a market capitalization of $15 billion and above) to those smaller and more under appreciated firms still within our universe. An example of this resolve for 1999 is our selling of Lucent Technologies (Market Cap- $153 billion, P/E- 158, Div Yield- .2%) and buying Allstate (Market Cap- $31 billion, P/E- 10, Div Yield- 1.4%). In the June 1998 Annual Report I recommended that over the course of the business cycle, your portfolio should be from 20% to 40% in large capitalization equities like the ones Ameristock invests in and that "Now is the time to be at 20%". This belief has not changed. Ameristock is a no-load, value based, domestic, equity-income fund that invests in large capitalization companies. Thank you for investing in the Ameristock Mutual Fund and please tell you friends about us. The Annual Meeting of Shareholders was scheduled for December 12, 1998 for the purpose of electing Directors. A quorum was not present and therefore no vote was taken. Consequently, the Directors in office will continue to serve until their successors are duly elected and qualified. Nicholas D. Gerber (January 8, 1999) CHART SHOWING AMERISTOCK VS. S&P500 w/ Divs. Ameristock Mutual Fund Schedule of Investments December 31, 1998 Unaudited Market Industry Company Symbol Shares Value Automotive 8.32% Ford Motor Co. F 27,310 $1,602,756 General Motors Corp. GM 19,120 $1,368,275 Broadcasting & Entertainment 0.59% Disney Co. (Walt) DIS 7,070 $212,100 Capital Goods 6.27% Boeing Co. BA 12,860 $419,558 Caterpillar CAT 30,400 $1,398,400 General Electric GE 4,100 $418,456 Chemicals & Fertilizer 4.79% Du Pont de Nemours DD 5,700 $302,456 Dow Chemical DOW 15,460 $1,405,894 Consumer Staples 8.73% Coca- Cola Co. KO 5,280 $353,100 McDonalds Corp. MCD 2,900 $222,213 Philip Morris MO 27,610 $1,477,135 Pepsico PEP 16,860 $690,206 Proctor & Gamble Co. PG 4,100 $374,381 Diversified 3.74% Minnesota Min & Mfg. MMM 18,760 $1,334,305 Electronics 9.29% Hewlett Packard Co. HWP 9,700 $662,631 Intl Bus Machines IBM 9,400 $1,736,650 Intel Corp. INTC 7,740 $917,674 Financial Services 16.60% Assoc First Cap Corp AFS 16,958 $718,595 Am Intl Group AIG 3,510 $339,154 Bankamerica Corp. BAC 24,577 $1,477,693 CitiGroup C 26,775 $1,325,363 Fannie Mae FNM 21,570 $1,596,180 Merrill Lynch MER 7,000 $467,250 Healthcare (Products) 8.53% Abbott Labs ABT 15,760 $772,240 American Home Prods AHP 4,000 $225,250 Bristol Myers Squibb BMY 6,620 $885,839 Johnson & Johnson JNJ 2,440 $204,655 Merck & Co. MRK 4,220 $623,241 Pfizer Inc. PFE 2,660 $333,664 Oil & Gas 7.42% Amoco Corp. AN 12,400 $748,650 Chevron CHV 7,300 $605,444 Exxon XON 10,600 $775,125 Texaco TX 9,800 $518,175 Retailing 4.08% Home Depot Inc. HD 7,730 $472,979 Sears Roebuck & Co. S 13,300 $565,250 Wal-Mart Stores WMT 5,150 $419,403 Software 1.30% Microsoft Corp.* MSFT 3,340 $463,216 Telecommunications 13.02% Ameritech Corp. AIT 17,020 $1,078,643 Bell Atlantic Corp. BEL 13,340 $757,879 Bellsouth Corp. BLS 14,900 $743,138 GTE Corp. GTE 10,070 $679,096 AT& T Corp. T 18,450 $1,388,363 Total Common Stocks: 92.68% (Cost $27,592,083) $33,080,675 Other Assets Less Liabilities 7.32% $2,611,456 Net Assets: 100% Equivalent to $34.91 per share on 1,022,321 Shares of Capital Stock Outstanding $35,692,131 * Non-Income Producing The accompanying notes are an integral part of the financial statements Ameristock Mutual Fund Statement of Assets and Liabilities December 31, 1998 Unaudited Assets: Investment Securities at Market Value (Identified Cost- $27,592,083) $33,080,675 Cash $2,589,905 Accounts Receivables Dividends $54,175 Interest $- Other $411 Fund Shares Sold $- Total Assets: $35,725,166 Liabilities: Accounts Payable Fund Shares Redeemed $- Accrued Management Fee $33,035 Total Liabilities: $33,035 Net Assets $35,692,131 Net Assets Consist of: Capital Paid In $29,174,429 Undistributed Net Investment Income $72,275 Undistributed Net Capital Gain $956,835 Unrealized Appreciation in Value of Investments Based on Identified Cost- Net $5,488,592 NET ASSETS FOR 1,022,231 SHARES OUSTANDING$35,692,131 NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE ($35,692,131/ 1,022,321) $34.91 The accompanying notes are an integral part of the financial statements Ameristock Mutual Fund Statement of Operations Six Months Ending December 31, 1998 Unaudited Investment Income: Dividends $242,307 Interest $11,717 Other $- Total Investment Income $254,024 Expenses: Management Fee $111,177 Less Waiver of Management Fee $(411) Total Expenses $110,766 Net Investment Income $143,258 Realized and Unrealized Gain on Investments Net Realized Gain (Loss) on Investments $1,089,339 Net Change in Unrealized Appreciation (Depreciation) on Investments $2,365,072 Net Realized and Unrealized Gain (Loss) on Investments $3,454,411 Net Increase (Decrease) in Net Assets Resulting from Operations $3,597,669 The accompanying notes are an integral part of the financial statements Ameristock Mutual Fund Statement of Changes in Net Assets Unaudited July 1, 1998 to July 1, 1997 to December 31, 1998 June 30, 1998 From Operations: Net Investment Income $143,258 $122,048 Net Realized Gain (Loss) $1,089,339 $194,468 Net Change in Unrealized Appreciation (Depreciation) on Investments $2,365,072 $1,871,395 $3,597,669 $2,187,911 Distributions to Shareholders: Ordinary Income $(140,308) $(115,734) Capital Gains $(313,250) $(220,489) $(453,558) $(336,224) From Capital Share Transactions: Proceeds from 1,113,328 Shares Issued $36,119,311 $9,665,215 Net Asset Value of 9,036 Shares Issued from Reinvestment of Dividends $306,145 $246,962 Cost of 505,097 Shares Redeemed $(16,630,739) $(5,654,317) $19,794,717 $4,257,860 Net Increase in Net Assets $22,938,828 $6,109,548 Net Assets at Beginning of Period $12,753,303 $6,643,755 Net Assets at End of Period (including Undistributed Net Investment Income of $145,667 and $69,472 respectively)$35,692,131 $12,753,303 The accompanying notes are an integral part of the financial statements Ameristock Mutual Fund Financial Highlights Unaudited Selected Data for a Share of Common Stock Outstanding Throught the Period Jul 1/98 to Jul 1/97 to Jul 1/96 to Aug 31/95 to 31-Dec-98 30-Jun-98 30-Jun-97 30-Jun- 96 (1) Net Asset Value at Begining of Period $31.48 $25.06 $19.03 $15.00 Net Investment Income $0.21 $0.41 $0.52 $0.43 Net Gains (Losses) on Securities- Realized and Unrealized $3.66 $7.26 $5.94 $3.78 Total From Investment Ops $35.35 $32.73 $25.49 $19.21 Dividend Distribution Net Investment Income $(0.22) $(0.42) $(0.39) $(0.18) Capital Gains $(0.22) $(0.83) $(0.04) $- Total Distributions $(0.44) $(1.25) $(0.43) $(0.18) Net Asset Value at End of Period $34.91 $31.48 $25.06 $19.03 Total Return 24.60%* 30.61% 33.95% 33.70%* Ratios/ Supplemental Data Net Assets End of Period (millions) $35.69 $12.75 $6.64 $2.23 Ratio of Expenses to Average Net Assets Prior to Reimbursement 1.00%* 0.95% 1.06% 0.90%(1)* After Reimbursement 0.98%* 0.90% 0.56% 0.00% * Ratio of Net Income to Average Net Assets Prior to Reimbursement 1.28%* 1.43% 1.89% 1.47% * After Reimbursement 1.30%* 1.48% 2.39% 2.90% (1)* Portfolio Turnover Rate 20.57% 11.85% 21.48% 7.43% * Annualized (1) From Inception of Investment Activity (8/31/95) The accompanying notes are an integral part of the financial statements AMERISTOCK MUTUAL FUND NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 1.) SIGNIFICANT ACCOUNTING POLICIES The Fund is a diversified, open-end management investment company, organized as a corporation under the laws of the State of Maryland on June 15, 1995. The Fund's investment objective is to seek total return through capital appreciation and current income by investing (under normal market conditions) at least 80% of the value of its total assets in equity securities consisting of common stocks. The authorized capital stock of the Fund consists of 100 million shares of common stock, par value $.005 per share. Significant accounting policies of the Fund are presented below: SECURITY VALUATION: Investments in securities are carried at market value. The market quotation used for common stocks, including those listed on the NASDAQ National Market System, is the last sale price on the date on which the valuation is made or, in the absence of sales, at the closing bid price. Over-the-counter securities will be valued on the basis of the bid price at the close of each business day. Short-term investments are valued at amortized cost, which approximates market. The cost of securities sold is determined on the identified cost basis. Securities for which market quotations are not readily available will be valued at fair value as determined in good faith pursuant to procedures established by the Board of Directors. Security transactions are recorded on the dates transactions are entered into (the trade dates). Dividend income and distributions to shareholders are recorded on the ex-dividend date. Interest income is recorded as earned. The Fund uses the identified cost basis in computing gain or loss on sale of investment securities. Discounts and premiums on securities purchased are amortized over the life of the respective securities. INCOME TAXES: It is the Fund's policy to distribute annually, prior to the end of the calendar year, dividends sufficient to satisfy excise tax requirements of the Internal Revenue Service. This Internal Revenue Service requirement may cause an excess of distributions over the book year-end accumulated income. In addition, it is the Fund's policy to distribute annually, after the end of the fiscal year, any remaining net investment income and net realized capital gains. ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2.) INVESTMENT ADVISORY AGREEMENT The Fund has entered into an investment advisory and administration agreement with Ameristock Corporation. The Investment Advisor receives from the Fund as compensation for its services to the Fund an annual fee of 1% of the Fund's net assets. The Investment Advisor has obligated itself to reimburse the Fund to the extent the Fund's total annual expenses excluding taxes, interest, brokerage commissions and extraordinary litigation expenses exceed 1% of its average daily net asset value. The advisor received management fees of $111,177 during the six months ending December 31, 1998. During the Fund's initial year, the Advisor had paid all Fund expenses. 3.) RELATED PARTY TRANSACTIONS Certain owners of Ameristock Corporation are also owners and/or directors of Ameristock Mutual Fund. These individuals may receive benefits from any management fees paid to the Advisor. 34% of the Fund's stock is controlled by FTC & Company. 32% of the Fund's stock is controlled by DLJ-Pershing. 21% of the Fund's stock is controlled by National Financial Services Corp. All of the preceding companies are unrelated to the Fund or Ameristock Corp. The preceding companies can be deemed as controlling persons. AMERISTOCK MUTUAL FUND NOTES TO FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 1998 4.) CAPITAL STOCK AND DISTRIBUTION At December 31, 1998, 100 million shares of capital stock ($.005 par value) were authorized, and paid-in capital amounted to $29,174,430. Transactions in common stock were as follows: Shares sold.............................1,113,328 Shares issued to shareholders in reinvestment of dividends.................9,036 1,122,364 Shares redeemed..........................(505,097) Net increase..............................617,267 Shares Outstanding: Beginning of period.....................405,054 End of period.........................1,022,321 5.) PURCHASES AND SALES OF SECURITIES During the six months ended December 31, 1998, purchases and sales of investment securities other than U.S. Government obligations and short-term investments aggregated $22,259028 and $3,881,251 respectively. 6.) FINANCIAL INSTRUMENTS DISCLOSURE There are no reportable financial instruments which have any off-balance sheet risk as of December 31, 1998. 7.) SECURITY TRANSACTIONS For Federal income tax purposes, the cost of investments owned at December 31, 1998 was the same as identified cost. At December 31, 1998, the composition of unrealized appreciation (the excess of value over tax cost) and depreciation (the excess of tax cost over value) was as follows: Net Appreciation Appreciation (Depreciation) (Depreciation) $ 6,029,549 $ (540,957) $ 5,488,592 8 ) DISTRIBUTIONS During the six months ended December 31, 1998, distributions of $140,308 were paid from net investment income and $313,250 were paid from realized short and long term capital gains. -----END PRIVACY-ENHANCED MESSAGE-----