NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Ameristock Mutual Fund, Inc. (the “Fund”) is registered under the Investment Company Act of
1940, as amended, as 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 primarily in equity
securities, and under normal market conditions the Fund will invest at least 80% of the value of its net
assets in common stocks. The authorized capital stock of the Fund consists of 100 million shares of
common stock, par value $0.005 per share.
Investments in securities are carried at market value. All equity securities that are traded on a national
securities exchange are valued at the last sale price at the time of the close of the New York Stock
Exchange (NYSE). If on a particular day an exchange-listed security does not trade, then the mean
between the closing bid and asked prices will be used. In the case of securities listed on more than one
national securities exchange the last quoted sale, up to the time of valuation, on the exchange on which the
security is principally traded should be used. If there were no sales on that exchange, the last quoted sale
on the other exchange should be used.
For securities that are traded on NASDAQ, the NASDAQ Official Closing Price or NASDAQ Closing
Cross price is used, whichever is available. All non-NASDAQ equity securities that are not traded on a
listed exchange are valued at the last sale price at the close of the NYSE. If a nonexchange listed security
does not trade on a particular day, or if a last sales price, Official Closing Price or Closing Cross price is
not available, then the mean between the closing bid and asked price will be used.
Debt securities are valued by using market quotations or a matrix method provided by the Fund’s pricing
service. If prices are not available from the pricing service, then quotations will be obtained from
broker/dealers and the securities will be valued at the mean between the bid and the offer.
Securities having a remaining maturity of 60 days or less are valued at amortized cost, which
approximates market value.
The cost of securities sold is determined on the identified cost basis. When market quotations are not
readily available or when events occur that make established valuation methods unreliable, securities of
the Fund may be valued at fair value determined in good faith by or under the direction of the Board of
Security transactions are recorded on the dates transactions are entered into, which is the trade date.
Dividend income and distributions to shareholders are recorded on the ex-dividend date. Interest income
is recorded as earned. Discounts and premiums on securities purchased are amortized over the life of the
As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the
Fund is subject to income taxes to the extent that it distributes all of its taxable income for the fiscal year.
It is the policy of the Fund 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 policy of the Fund to distribute annually, after the end of the fiscal year, any remaining
net investment income and net realized capital gains.
The Fund used capital loss carry forwards of $198,670 during the year ended June 30, 2007.
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Accounting principles generally accepted in the United States of America require that permanent financial
reporting tax differences relating to shareholders distributions be reclassified to paid-in-capital or
The Fund, through its custodian, receives delivery of underlying securities, whose market value, including
interest, is required to be at least 102% of the resale price. The Fund’s adviser is responsible for
determining that the value of these underlying securities remains at least equal to 102% of the resale price.
If the seller defaults, the Fund would suffer a loss to the extent that the proceeds from the sale of the
underlying securities were less than the resale price.
NEW ACCOUNTING PRONOUNCEMENTS
In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards No. 157, “Fair Value Measurements” (SFAS No. 157). SFAS No. 157 defines
fair value (which, for purposes of SFAS No. 157, includes both valuation based on market quotations
and fair value determinations when market quotations are not readily available), establishes a framework
for measuring fair value in accordance with generally accepted accounting principles and expands
disclosure about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after
November 15, 2007. Management is currently evaluating the impact the adoption of SFAS No. 157 will
have on the Fund’s financial statement disclosures.
In February 2007, the FASB issued FASB Statement No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities including an amendment of FASB Statement No. 115” (“SFAS
No. 159”), which permits entities to choose to measure many financial instruments and certain other items
at fair value. This Statement is effective as of the beginning of an entity’s first fiscal year that begins after
November 15, 2007.
Management is currently evaluating the potential impact the adoption of SFAS No. 159 will have on the
Fund’s financial statements.
2. INVESTMENT ADVISORY AGREEMENTS
The Fund has entered into an investment advisory agreement with Ameristock Corporation (the
“Adviser”). The Adviser receives from the Fund as compensation for its services to the Fund an annual
fee of 1% of the Fund’s average daily net assets for the first $100 million in net assets and 0.75% of
average daily net assets in excess of $100 million. The Adviser pays all operating expenses of the Fund
except for taxes, interest, brokerage commissions, noninterested directors fees and extraordinary
expenses. The Adviser earned management fees of $1,908,958 from the Fund for the year ended
December 31, 2007.
3. RELATED PARTY TRANSACTIONS
Certain owners of the Adviser are also owners and or directors of the Fund. These individuals may
receive benefits from any management fees paid to the Adviser.
Shareholders holding more than 5% of the Fund’s outstanding shares as of December 31, 2007
constituted 80.76% of the Ameristock Mutual Fund, Inc. The beneficial ownership, either directly or
indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of a fund
under section 2(a)(9) of the Investment Company Act of 1940. As of December 31, 2007, Charles
Schwab & Co. for the benefit of its customers owned of record in aggregate more than 58.64% of the
Ameristock Mutual Fund, Inc.
The Directors of the Fund who are employees or Directors of the Investment Adviser receive no
compensation from the Fund. Each of the Independent Directors is paid $28,000 per year, payable
quarterly and is reimbursed for the expenses of attending meetings.
4. CAPITAL STOCK AND DISTRIBUTION
At December 31, 2007, 100 million shares of capital stock ($.005 par value) were authorized and paid
in capital amounted to $380,965,522 for the Ameristock Mutual Fund, Inc.
For the Six Months
For the Year
Shares Issued in Reinvestment of Dividends and Distributions
Net Decrease in Shares
Shares Outstanding–Beginning of Period
Shares Outstanding–End of Period
5. UNREALIZED APPRECIATION AND DEPRECIATION ON INVESTMENTS
As of December 31, 2007
Gross Appreciation (excess of value over tax cost)
Gross Depreciation (excess of tax cost over value)
Net Unrealized Appreciation
Cost of Investments for Income Tax Purposes
6. CLASSIFICATION OF DISTRIBUTIONS
Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax
purposes. The character of distributions made during the year from net investment income or net realized
gains may differ from its ultimate characterization for federal income tax purposes. Net assets were
unaffected by the reclassifications.
The tax character of the distributions paid during the year ended June 30, 2007 and the year ended
June 30, 2006 as follows:
For the Year Ended June 30,
Distributions paid from:
Long-Term Capital Gain
As of June 30, 2007, the components of distributable earnings on a tax basis were as follows:
Accumulated Undistributed Net Investment Income
Accumulated Net Realized Gain on Investments
7. CASH MANAGEMENT TRANSACTIONS
The Fund subscribes to the Brown Brothers Harriman & Co. (“BBH”) Cash Management Service
(“CMS”). The BBH CMS is an investment product that automatically sweeps the Fund’s cash balances
into overnight offshore time deposits with either BBH Grand Cayman branch or branches of pre-
approved world class commercial banks. This fully automated program allows the Fund to earn interest
on cash balances while remaining diversified. Excess cash invested with deposit institutions domiciled
outside of the United States, as with any offshore deposit, may be subject to sovereign actions in the
jurisdiction of the deposit institution including, but not limited to, freeze, seizure, or diminution. The Fund
bears the risk associated with the repayment of principal and payment of interest on such instruments by
the institution with which the deposit is ultimately placed. Balances in the CMS are accounted for on a
8. SECURITIES LENDING
The Fund receives compensation in the form of fees, or it retains a portion of interest on the investment of
any cash received as collateral. The Fund also continues to receive interest or dividends on the securities
loaned. The loans are secured by collateral at least equal, at all times, to the market value of the securities
loaned plus accrued interest. Gain or loss in the market value of the securities loaned that may occur
during the term of the loan will be for the account of the Fund. At December 31, 2007, the Fund had no
securities on loan.
9. PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings with the Commission for the first and third
quarters of each fiscal year on Form N-Q within 60 days after the end of the period. Copies of the
Fund’s Forms N-Q are available without a charge, upon request, by contacting the Fund at 1-800-394-5064
and on the Commission’s website at http://www.sec.gov. You may also review and copy Form N-Q at
the Commission’s Public Reference Room in Washington, D.C. For more information about the
operation of the Public Reference Room, please call the Commission at 1-800-SEC-0330.
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1320 Harbor Bay Parkway, Suite 145
Alameda, California 94502
Administrator, Bookkeeping and Pricing Agent and Transfer Agent
ALPS Fund Services, Inc.
1290 Broadway, Suite 1100
Denver, Colorado 80203
ALPS Distributors, Inc.
1290 Broadway, Suite 1100
Denver, Colorado 80203
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Independent Registered Public Accounting Firm
Tait, Weller & Baker LLP
1818 Market Street, Suite 2400
Philadelphia, Pennsylvania 19103
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2415
Alev M. Efendioglu
Nicholas D. Gerber
Stephen J. Marsh
Andrew F. Ngim
Steven A. Wood
A description of the polices and procedures that the Adviser uses to determine how to vote proxies relating to
portfolio securities of the Fund is available (i) without a charge by calling 1(800)394-5064; and (ii) on the
Securities and Exchange Commission website at www.sec.gov. Information regarding how the Fund voted such
proxies during the 12 month period ended June 30, 2007 is also available (i) without a charge through the Fund’s
website at www.ameristock.com; and (ii) on the Securities and Exchange Commission website at www.sec.gov.
ALPS Distributors, Inc. , distributor
Must be accompanied or preceded by a current prospectus which contains more information on fees, risks, and
expenses. Please read it carefully before investing or sending money. For more information, please call 1(800)
394-5064 or visit www.ameristock.com.
P.O. Box 44266
Denver, CO 80201-4266