-----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, CP9NRuaxUyzsNdtxvFxIREU9QUGXa7fUIW/iCrS7xn/E0OnDn9mxKn6S6HuYyf/w tr/NmgZ6SqcSkAqq1UTmsQ== 0001000579-00-000003.txt : 20000202 0001000579-00-000003.hdr.sgml : 20000202 ACCESSION NUMBER: 0001000579-00-000003 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991031 FILED AS OF DATE: 20000110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERIPRIME FUNDS CENTRAL INDEX KEY: 0001000579 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 752616671 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-09096 FILM NUMBER: 504247 BUSINESS ADDRESS: STREET 1: 1793 KINGSWOOD DR STREET 2: STE 200 CITY: SOUTHLAKE STATE: TX ZIP: 76092 BUSINESS PHONE: 8174311297 MAIL ADDRESS: STREET 1: 1793 KINGSWOOD DRIVE STREET 2: SUITE 200 CITY: SOUTHLAKE STATE: TX ZIP: 76092 N-30D 1 AMERIPRIME FUNDS ANNUAL REPORTS Dear Shareholders: Investment Results - Fiscal Year Ended October 31, 1999 The AAM Equity Fund (the "Fund") ended its October fiscal year with a positive return of 16.74%. Investment results: - ------------------------------------------------------------------------------- Comparative AAM S&P 500 Dow Jones Index Investment Returns Equity Fund Index - ------------------------------------------------------------------------------- 1 Year Ending 10/31/1999 16.74% 25.64% 26.99% - ------------------------------------------------------------------------------- Since Inception 10.09% 22.45% 22.62% - ------------------------------------------------------------------------------- Since Inception (annualized) 7.44% 16.32% 16.44% - ------------------------------------------------------------------------------- 06/30/1998 (Inception) 10/31/98 4/30/99 10/31/1999 (Fiscal Year End) 10000 9430 11120 11009 10000 9750 11920 12245 10000 9660 12230 12262 The chart shows the value of a hypothetical initial investment of $10,000 in the fund, the S&P 500 index and the Dow Jones Index on June 30, 1998 and held through October 31, 1999. 1 From inception on June 30, 1998, the AAM Equity Fund (the "Fund") has accumulated more than $4,000,000 in net assets. Investment Approach To remind our shareholders, the AAM Equity Fund's investment approach is to achieve long-term growth of capital by investing in high quality large and mid-cap U.S. companies. We select companies which are leaders in their various industries which we believe will provide the greatest potential return over an 18 month to two year time horizon. Commentary and Outlook As of the end of September, the S&P 500 was up a little over 5%, which masks the fact that for most stocks this has been a tough year. The average stock in the S&P 500 is down more than 20% from its 52 week high, so the odds of owning a winning stock portfolio are difficult at best. The technology sector continues to be a bright spot and now represents over 25% of the S&P 500. Stock market volatility continues to be quite intense and the technology sector is showing some strain. Earnings reports have been erratic and, each month, we wait to see if Chairman Greenspan will raise interest rates. This is not the best time for the faint of heart to invest in the latest hot stock idea. The Fund portfolio continues to be conservatively composed; but, we have increased our technology weighting and continue to believe diversification is essential to decreasing the effect of market decline. We, at AAM, have always been attracted to value stocks and this has made it somewhat difficult to keep pace with the S&P 500. We continue to be confident that, eventually, the market will payoff for companies that have a consistent earnings history and, sooner than later, the rush of new ".com" stocks will have a major setback. The Fund is currently over 94% invested and we continue to search for unique investment opportunities that we can purchase at a fair market value. The next twelve months may prove to be very interesting for the Internet industry and we believe the stock market is still the best place to invest available dollars. Sincerely, Knox H. Fuqua President and Chief Investment Officer This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund; this report is not authorized for distribution to prospective shareholders unless preceded or accompanied by an effective prospectus. Read the prospectus carefully before investing. 2
AAM Equity Fund Schedule of Investments - October 31, 1999 Common Stock - 94.3% Shares Value BASIC INDUSTRIES - 9.6% Chemicals & Plastics - 0.9% Air Products & Chemicals 1,400 $ 38,500 ------------------ ------------------ Manufacturers - Diversified - 4.1% AlliedSignal, Inc. 1,300 74,019 Tredegar Industry 2,500 54,844 Tyco International, Inc. 1,200 47,925 ------------------ ------------------ 176,788 ------------------ ------------------ Metals & Mining - 1.7% Alcoa, Inc. 1,200 72,900 ------------------ ------------------ Packaging & Containers - 1.4% Chesapeake Corp. 2,000 60,000 ------------------ ------------------ Paper & Forest Products - 1.5% Avery Dennison Corp. 1,075 67,187 ------------------ ------------------ TOTAL BASIC INDUSTRIES 415,375 ------------------ ------------------ CONSTRUCTION & REAL ESTATE - 1.9% Construction - 1.9% Martin Marietta Materials 2,100 81,769 ------------------ ------------------ DURABLES - 3.2% Autos & Auto Parts - 1.6% Ford Motor Company 1,250 68,594 ------------------ ------------------ Consumer Electronics - 1.6% Circuit City Group 1,600 68,300 ------------------ ------------------ TOTAL DURABLES 136,894 ------------------ ------------------ ENERGY - 9.0% Energy Services - 3.4% Halliburton Co. 2,000 75,375 Schlumberger Ltd. 1,200 72,675 ------------------ ------------------ 148,050 ------------------ ------------------ Oil & Gas - 5.6% Atlantic Richfield 1,000 93,188 Chevron Corp. 750 68,484 Conoco Inc. - Class B 3,000 82,312 ------------------ ------------------ 243,984 ------------------ ------------------ TOTAL ENERGY 392,034 ------------------ ------------------ AAM Equity Fund Schedule of Investments - October 31, 1999 - continued Common Stocks - continued Shares Value FINANCE - 16.0% Banks - 5.5% CCB Financial 1,200 $ 55,200 Citigroup, Inc. 1,500 81,188 SunTrust Banks 800 58,550 Wachovia Corp. 500 43,125 ------------------ ------------------ 238,063 ------------------ ------------------ Diversified - 2.9% BB&T Corp 1,800 65,475 Capital One Financial 1,125 59,625 ------------------ ------------------ 125,100 ------------------ ------------------ Insurance - 6.3% American International Group 875 90,070 Berkshire Hathaway, Inc. - Class B (a) 25 52,250 Markel Corp. (a) 400 69,175 St. Paul Cos 2,000 64,000 ------------------ ------------------ 275,495 ------------------ ------------------ Real Estate Investment Trusts - 1.3% Federal Rlty Inv Tr. SBI 3,000 54,562 ------------------ ------------------ TOTAL FINANCE 693,220 ------------------ ------------------ HEALTH - 10.6% Diversified - 5.4% American Home Products, Inc. 1,200 62,700 Bristol-Myers Squibb, Inc. 1,250 96,016 Johnson & Johnson, Inc. 700 73,325 ------------------ ------------------ 232,041 ------------------ ------------------ Drugs & Pharmaceuticals - 5.2% Amgen, Inc. (a) 900 71,775 Merck & Co., Inc. 1,000 79,563 Schering-Plough, Inc. 1,500 74,250 ------------------ ------------------ 225,588 ------------------ ------------------ TOTAL HEALTH 457,629 ------------------ ------------------ INDUSTRIAL MACHINERY & EQUIPMENT - 4.0% Electrical Equipment - 2.3% General Electric, Inc. 750 101,672 ------------------ ------------------ Industrial Machinery & Equipment - 1.7% Deere & Co. 2,000 72,500 ------------------ ------------------ TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 174,172 ------------------ ------------------ AAM Equity Fund Schedule of Investments - October 31, 1999 - continued Common Stocks - continued Shares Value MEDIA & LEISURE - 7.6% Broadcasting - 6.4% AT&T Liberty Media Group - Class A (a) 1,775 $ 70,445 Cox Communications - Class A (a) 2,000 90,875 Media General, Inc. 1,150 62,819 MediaOneGroup (a) 750 53,297 ------------------ ------------------ 277,436 ------------------ ------------------ Entertainment - 1.2% Disney (Walt) Co. 2,000 52,750 ------------------ ------------------ TOTAL MEDIA & LEISURE 330,186 ------------------ ------------------ NON-DURABLES - 5.4% Beverages - 3.0% Anheuser-Busch Cos 975 70,017 Coca-Cola Co. 1,000 59,000 ------------------ ------------------ 129,017 ------------------ ------------------ Foods - 1.6% Sara Lee Corp. 2,500 67,656 ------------------ ------------------ Household Products - 0.8% Gillette Co. 1,000 36,188 ------------------ ------------------ TOTAL NON-DURABLES 232,861 ------------------ ------------------ RETAIL & WHOLESALE - 5.1% Department Stores - 1.6% Saks, Inc. (a) 4,000 68,750 ------------------ ------------------ Drug Stores - 1.1% Walgreen Co. 1,900 47,856 ------------------ ------------------ Specialty - 2.4% Sysco Corp. 1,600 61,500 Zale Corp. (a) 1,025 42,922 ------------------ ------------------ 104,422 ------------------ ------------------ TOTAL RETAIL & WHOLESALE 221,028 ------------------ ------------------ TECHNOLOGY - 14.2% Communications Equipment - 1.7% Motorola, Inc. 750 73,078 ------------------ ------------------ AAM Equity Fund Schedule of Investments - October 31, 1999 - continued Common Stocks - continued Shares Value TECHNOLOGY - continued Computer Services & Software - 2.8% EMC Corp (a) 950 $ 69,350 Microsoft, Inc. (a) 600 55,537 ------------------ ------------------ 124,887 ------------------ ------------------ Computers & Office Equipment - 5.7% Cisco Systems, Inc. (a) 1,300 96,200 Hewlett-Packard Co. 700 51,844 International Business Machines, Inc. 1,000 98,375 ------------------ ------------------ 246,419 ------------------ ------------------ Electronic Instruments - 2.2% Koninklijke Philips Electron N (c) 920 95,622 ------------------ ------------------ Electronics - 1.8% Intel Corp. 1,000 77,437 ------------------ ------------------ TOTAL TECHNOLOGY 617,443 ------------------ ------------------ TRANSPORTATION - 1.4% Railroads - 1.4% Norfolk Southern 2,500 61,094 ------------------ ------------------ UTILITIES - 6.3% Natural Gas - 1.8% Enron Corp. 2,000 79,875 ------------------ ------------------ Telephone Services - 4.5% AT&T Corp. 1,100 51,425 MCI WorldCom (a) 800 68,650 SBC Communications, Inc. 1,500 76,406 ------------------ ------------------ 196,481 ------------------ ------------------ TOTAL UTILITIES 276,356 ------------------ ------------------ Total Common Stock - (Cost $3,622,347) 4,090,061 ------------------ ------------------ Principal Money Market Securities - 5.0% Amount Value Firstar Treasury Fund, 4.41% (b) (Cost $216,063) $ 216,063 216,063 ------------------ ------------------ TOTAL INVESTMENTS - (Cost $3,838,410) - 99.3% 4,306,124 ------------------ ------------------ Other assets less liabilities - 0.7% 30,622 ------------------ ------------------ Total Net Assets - 100.0% $ 4,336,746 ================== ================== (a) Non-income producing (b) Variable rate security; the coupon rate shown represents the rate at October 31, 1999. (c) American Depository Receipt
AAM Equity Fund October 31, 1999 Statement of Assets and Liabilities Assets Investment in securities, at value (cost $3,838,410) $ 4,306,124 Dividends receivable 3,366 Interest receivable 863 Receivable from investment advisor for reimbursed expenses 8,303 Deferred organizational costs 22,692 ------------------ Total assets 4,341,348 Liabilities Payable to custodian bank $ 628 Accrued investment advisory fee payable 3,974 ----------------- Total liabilities 4,602 ------------------ Net Assets $ 4,336,746 ================== Net Assets consist of: Paid in capital $ 3,944,979 Accumulated undistributed net investment income 16,393 Accumulated net realized gain (loss) on investments (92,340) Net unrealized appreciation on investments 467,714 ------------------ Net Assets, for 394,761 shares $ 4,336,746 ================== Net Asset Value Net Assets Offering price and redemption price per share ($4,336,746 / 394,761) $ 10.99 ==================
AAM Equity Fund Statement of Operations for the year ended October 31, 1999 Investment Income Dividend Income $ 52,917 Interest Income 7,225 ------------------- Total Income 60,142 Expenses Investment advisory fee 43,749 Organizational expenses 6,198 Trustees' fees 1,377 ------------------- Total expenses before reimbursement 51,324 Reimbursed expenses (7,575) ------------------- Total operating expenses 43,749 ------------------- Net Investment Income 16,393 ------------------- Realized & Unrealized Gain (Loss) Net realized gain (loss) on investment securities (54,500) Change in net unrealized appreciation (depreciation) on investment securities 568,946 ------------------- Net gain on investment securities 514,446 ------------------- Net increase in net assets resulting from operations $ 530,839 ===================
AAM Equity Fund Statement of Changes in Net Assets Year Period ended ended October 31, October 31, 1999 1998 (a) ----------------- ----------------- Increase (Decrease) in Net Assets Operations Net investment income $ 16,393 $ 7,205 Net realized gain (loss) on investment securities (54,500) (37,840) Change in net unrealized appreciation (depreciation) 568,946 (101,232) ----------------- ----------------- Net increase (decrease) in net assets resulting from operations 530,839 (131,867) ----------------- ----------------- Distributions to shareholders From net investment income (7,205) - ----------------- ----------------- Share Transactions Net proceeds from sale of shares 1,493,997 2,990,242 Shares issued in reinvestment of dividends 4,455 - Shares redeemed (537,268) (6,447) ----------------- ----------------- Net increase in net assets resulting from share transactions 961,184 2,983,795 ----------------- ----------------- Total increase in net assets 1,484,818 2,851,928 Net Assets Beginning of period 2,851,928 - ----------------- ----------------- End of period [including accumulated undistributed net investment income of $16,393 and $7,205, respectively] $ 4,336,746 $ 2,851,928 ================= ================= (a) June 30, 1998 (commencement of operations) to October 31, 1998.
AAM Equity Fund Financial Highlights Year Period ended ended October 31, October 31, 1999 1998 (a) ----------------- ----------------- Selected Per Share Data Net asset value, beginning of period $ 9.43 $ 10.00 ----------------- ----------------- Income from investment operations Net investment income 0.05 0.03 Net realized and unrealized gain (loss) 1.53 (0.60) ----------------- ----------------- Total from investment operations 1.58 (0.57) ----------------- ----------------- Distribution to shareholders from net investment income (0.02) - ----------------- ----------------- Net asset value, end of period $ 10.99 $ 9.43 ================= ================= Total Return (b) 16.74% (5.70)% Ratios and Supplemental Data Net assets, end of period (000) $4,337 $2,852 Ratio of expenses to average net assets 1.15% 1.14% (c) Ratio of expenses to average net assets before reimbursement 1.35% 1.40% (c) Ratio of net investment income to average net assets 0.43% 0.90% (c) Ratio of net investment income to average net assets before reimbursement 0.23% 0.64% (c) Portfolio turnover rate 27.34% 14.41% (c) (a) June 30, 1998 (commencement of operations) to October 31, 1998 (b) For periods of less than a full year, total returns are not annualized. (c) Annualized
AAM Equity Fund Notes to Financial Statements October 31, 1999 NOTE 1. ORGANIZATION AAM Equity Fund (the "Fund") is organized as a series of the AmeriPrime Funds, an Ohio business trust (the "Trust"). The Fund is registered under the Investment Company Act of 1940, as amended, as a diversified open-end management investment company. The Fund's investment objective is to provide long-term capital appreciation. The Declaration of Trust permits the Trustees to issue an unlimited number of shares of beneficial interest of separate series without par value. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. Securities Valuations- Securities which are traded on any exchange or on the NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking a last sale price, a security is valued at its last bid price except when, in the Advisor's opinion, the last bid price does not accurately reflect the current value of the security. All other securities for which over-the-counter market quotations are readily available are valued at their last bid price. When market quotations are not readily available, and the Advisor determines the last bid price does not accurately reflect the current value or when restricted securities are being valued, such securities are valued as determined in good faith by the Advisor, in conformity with guidelines adopted by and subject to review of the Board of Trustees of the Trust (the "Board"). Fixed income securities generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Advisor believes such prices accurately reflect the fair market value of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. When prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Advisor, subject to review of the Board. Short-term investments in fixed-income securities with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued by using the amortized cost method of valuation, which the Board has determined will represent fair value. AAM Equity Fund Notes to Financial Statements October 31, 1999 - continued NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued Federal Income Taxes- The Fund intends to qualify each year as a "regulated investment company" under the Internal Revenue Code of 1986, as amended. By so qualifying, the Fund will not be subject to federal income taxes to the extent that it distributes substantially all of its net investment income and any realized capital gains. Dividends and Distributions- The Fund intends to comply with federal tax rules regarding distribution of substantially all of its net investment income and capital gains. These rules may cause multiple distributions during the course of the year. 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 accrual basis. Discounts and premiums on securities purchased are amortized over the life of the respective securities. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund retains Appalachian Asset Management, Inc. (the "Advisor") to manage the Fund's investments. The advisor is controlled by its President, Knox H. Fuqua. Mr. Fuqua is primarily responsible for the day-to-day management of the Fund's portfolio. Under the terms of the management agreement, (the "Agreement"), the Advisor manages the Fund's investments subject to approval of the Board of Trustees and pays all of the expenses of the Fund except brokerage commissions, taxes, interest, fees and expenses of non-interested person trustees, and extraordinary expenses, including organizational expenses. As compensation for its management services and agreement to pay the Fund's expenses, the Fund is obligated to pay the Advisor a fee computed and accrued daily and paid monthly at an annual rate of 1.15% of the average daily net assets of the Fund. It should be noted that most investment companies pay their own operating expenses directly, while the Fund's expenses, except those specified above, are paid by the Advisor. For the year ended October 31, 1999, the Advisor received a fee of $43,749 from the Fund. The Advisor has voluntarily agreed to reimburse other expenses for the fiscal year ended October 31, 1999 to the extent necessary to maintain total operating expenses at the rate of 1.15%. For the year ended October 31, 1999, the Advisor reimbursed expenses of $7,575. There is no assurance that such reimbursement will continue in the future. AAM Equity Fund Notes to Financial Statements October 31, 1999 - continued NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued The Fund retains AmeriPrime Financial Services, Inc. (the "Administrator") to manage the Fund's business affairs and provide the Fund with administrative services, including all regulatory reporting and necessary office equipment and personnel. For the year ended October 31, 1999, the Administrator received fees of $30,000 from the Advisor for administrative services provided to the Fund. The Fund retains AmeriPrime Financial Securities, Inc. ("the Distributor") to act as the principal distributor of the Fund's shares. There were no payments made to the Distributor for the year ended October 31, 1999. Certain members of management of the Administrator and the Distributor are also members of management of the AmeriPrime Trust. NOTE 4. SHARE TRANSACTIONS As of October 31, 1999, there was an unlimited number of authorized shares for the Fund. Paid in capital at October 31, 1999 was $3,944,979. Transactions in shares were as follows: - --------------------------------------------------------------------------------------------------------------------
Year ended Year ended October 31, 1999 October 31, 1998 - -------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- Shares Dollars Shares Dollars - ------------------------------------------------------------------------------------------------------------------------- Shares sold 144,204 $1,493,997 303,178 $2,990,242 - ------------------------------------------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends 393 4,455 -- -- - ------------------------------------------------------------------------------------------------------------------------- Shares redeemed (52,307) (537,268) (707) (6,447) - ------------------------------------------------------------------------------------------------------------------------- 92,290 $961,184 302,471 $2,983,795 - ------------------------------------------------------------------------------------------------------------------------- ====== ======== ====== =======
AAM Equity Fund Notes to Financial Statements October 31, 1999 - continued NOTE 5. INVESTMENTS For the year ended October 31, 1999, purchases and sales of investment securities, other than short-term investments, aggregated $1,761,879 and $982,324, respectively. At October 31, 1999, the unrealized appreciation for all securities totaled $680,808 and the gross unrealized depreciation for all securities totaled $213,094 for a net unrealized appreciation of $467,714. The aggregate cost of securities for federal income tax purposes at October 31, 1999 was $3,838,410. NOTE 6. ESTIMATES Preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 7. RELATED PARTY TRANSACTIONS The Advisor is not a registered broker-dealer of securities and thus does not receive commissions on trades made on behalf of the Fund. The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a Fund creates a presumption of control of the Fund, under Section 2(a)(9) of the Investment Company Act of 1940. As of October 31, 1999, National Financial Services Corp. owned of record in aggregate more than 56% of the Fund. INDEPENDENT AUDITOR'S REPORT To The Shareholders and Board of Trustees AAM Equity Fund (a series of the Ameriprime Funds) We have audited the accompanying statement of assets and liabilities of the AAM Equity Fund, including the schedule of portfolio investments, as of October 31, 1999, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and financial highlights for the year ended October 31, 1999 and the period from June 30, 1998 (commencement of operations) to October 31, 1998 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 as of October 31, 1999 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 the AAM Equity Fund as of October 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 for the year ended October 31, 1999 and the period from June 30, 1998 (commencement of operations) to October 31, 1998, in the period then ended, in conformity with generally accepted accounting principles. McCurdy & Associates CPA's, Inc. Westlake, Ohio 44145 November 21, 1999 Dear Fellow Shareholders: Investment Results - Fiscal Year Ended October 1999 The GLOBALT Growth Fund (the "Fund"), whose ticker symbol is GROWX, ended its October fiscal year with a 26.67% total return for the year. The net asset value was $19.53 at fiscal year end. The Fund has returned 127.71% (net of fees) since inception December 1, 1995. Please note that the Fund paid a dividend on December 29, 1999. Growth of $25,000 Russell Period GGF S&P 500 1000 Growth - ------------ ---------- ---------- ---------- Beginning 12/1/95 $25,000 $25,000 $25,000 Dec-95 $26,600 $25,483 $25,143 Jan-96 $27,600 $26,349 $25,984 Feb-96 $28,199 $26,594 $26,460 Mar-96 $28,549 $26,849 $26,495 Apr-96 $29,074 $27,244 $27,190 May-96 $29,400 $27,947 $28,142 Jun-96 $29,400 $28,053 $28,180 Jul-96 $28,074 $26,813 $26,537 Aug-96 $28,871 $27,379 $27,217 Sep-96 $30,647 $28,920 $29,198 Oct-96 $31,195 $29,718 $29,372 Nov-96 $33,295 $31,965 $31,577 Dec-96 $31,913 $31,332 $30,966 Jan-97 $33,914 $33,289 $33,133 Feb-97 $33,052 $33,550 $32,908 Mar-97 $31,558 $32,172 $31,128 Apr-97 $33,862 $34,092 $33,195 May-97 $35,836 $36,168 $35,597 Jun-97 $37,506 $37,788 $37,025 Jul-97 $40,773 $40,795 $40,303 Aug-97 $39,077 $38,510 $37,947 Sep-97 $40,902 $40,619 $39,814 Oct-97 $39,663 $39,262 $38,343 Nov-97 $40,424 $41,080 $39,967 Dec-97 $41,063 $41,785 $40,415 Jan-98 $41,342 $42,247 $41,623 Feb-98 $44,377 $45,294 $44,753 Mar-98 $46,382 $47,613 $46,539 Apr-98 $47,663 $48,092 $47,181 May-98 $46,466 $47,266 $45,841 Jun-98 $48,859 $49,186 $48,651 Jul-98 $48,219 $48,662 $48,330 Aug-98 $40,533 $41,626 $41,076 Sep-98 $42,203 $44,293 $44,231 Oct-98 $44,929 $47,894 $47,787 Nov-98 $47,854 $50,797 $51,423 Dec-98 $51,668 $53,724 $56,062 Jan-99 $54,438 $55,970 $59,353 Feb-99 $51,378 $54,231 $56,640 Mar-99 $52,925 $56,401 $59,625 Apr-99 $54,237 $58,585 $59,703 May-99 $53,451 $57,202 $57,870 Jun-99 $56,246 $60,376 $61,921 Jul-99 $54,266 $58,492 $59,951 Aug-99 $54,239 $58,199 $60,929 Sep-99 $53,306 $56,604 $59,649 Oct-99 $56,920 $60,187 $64,153 |X| Past performance is not predictive of future performance. |X| The GLOBALT Growth Fund's historical results are net of all expenses, versus the gross market benchmark (the S&P 500 Index). Investors are reminded that when trying to achieve benchmark returns, investment management fees, transaction costs and execution costs will be incurred. |X| The S&P 500 Index is an unmanaged index of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The Index is adjusted for dividends and weighted toward stocks with large market capitalizations. |X| Inception Date: December 1, 1995. We welcome our new shareholders and look forward to furthering the investment objectives of all our shareholders. We believe it is important to note that all GLOBALT 401(k) plan participants have elected to be investors in the Fund and collectively are among the Fund's largest shareholders. Investment Approach To review, our approach to managing the GLOBALT Growth Fund is to achieve long-term growth of capital by investing in U.S. companies which we believe offer superior growth potential through exposure to rapidly growing international markets. The Fund only invests in stocks of U.S. companies that are expected to derive a portion of their revenues outside the U.S. GLOBALT's investment team seeks to optimize the Fund's exposure to the best global opportunities. Performance Review We remind investors that the basic strategy of the Fund is to construct and manage a well-diversified, risk-controlled portfolio with the objective of outperforming broad market benchmarks over a market cycle. The turmoil in many of the economies in Asia and Latin America in 1998 and early 1999 have resulted in the most challenging environment the Fund has faced since its inception. The global economic outlook is improving which should benefit globally competitive U.S. companies and the Fund's strategy. The Fund's strong performance in the later part of the fiscal year resulted in a total return of 26.67% for the fiscal year ended October 31, 1999. This surpassed the 25.67% return for the S&P 500 Index for same period. In light of the recent press concerning capital gains taxes on mutual fund distributions, we would like to stress to investors that the GLOBALT Growth Fund is managed using a tax efficient strategy. The Fund achieved its return with comparatively few capital gains for fiscal year 1999 and therefore low taxable gains for investors. We continue to strive to effectively manage our distributions. Commentary and Outlook Future Growth is in the New Economy We believe that the world economic order has changed permanently. Globalization of industries, unfathomable advances in technology/productivity, and business conducted on the Internet are combining to create very fast-paced, brutally competitive conditions, with powerful deflationary characteristics. Thus, there is more to the current stalling of earnings and price momentum of value/commodity/ cyclical companies than concern over interest rates. Strategies that depend on cyclical recovery of product prices likely will be impaired. We also think that there is more to the near-obsession with technology stocks than just speculation. The basic means by which business is conducted is experiencing nothing short of a revolution. The chairman of Intel said recently that in five years time, all companies will have transformed themselves into Internet companies because it will be "mandatory and not optional" to conduct business via the Internet. These changes have overwhelming investment significance, and we believe portfolio managers must adapt to them to be successful in the years ahead. They aren't going to go away. We cannot predict short-term trends as there are simply too many unresolved issues and too many moving parts. We can focus on the major variables that ultimately drive stock prices. The market will likely continue to focus on quality and growth (earnings momentum), and favor large cap over small cap. By definition, our portfolios are centered on these attributes and will continue to be. As implied throughout, longer term it is imperative to recognize "new growth," particularly in the technology and telecommunication sectors. Change is occurring there at warp speed, further intensified by industry consolidation. By no means is the long period of out-performance by large cap stocks, and renewed current interest, a matter of default. One of the primary reasons for their strong relative performance is superior sales growth. A recent study by Tom Galvine of Donaldson Lufkin Jenrette looks at sales growth among the largest, middle and smallest thirds of the S&P 500 Index by market capitalization. Within the sectors, the largest third experienced 13% sales growth on average versus 8% for the middle third and only 3% for the smallest capitalization names. Given this rapid growth despite their large size, it is understandable why investors have made larger capitalization names their preferred investments. These companies are clearly taking share in an ever more complex global marketplace and are reaping the reward of relatively high valuations from investors. The Internet economy is having a far-reaching impact on business and lifestyle. It is creating large new markets, but in the process raising the risks to traditional businesses that may adapt too slowly to change. We are committed to investing in companies that will both build and exploit this new e-economy. Some repositioning of portfolios has and will continue to be necessary as we sort out the direction of change and the likely beneficiaries. Some of the companies we invest in will be less familiar but are well-respected global leaders in their fields. "Democratization" is occurring in some emerging technologies, in which newer companies, often founded or managed by experienced people from larger organizations, can compete successfully with long established companies. Currently, earnings momentum (uninterrupted growth in earnings on a year-over-year basis) is the only game in town. Investment cycles have been shortened and volatility has increased. More turnover is necessary in diversified portfolios in order to be in the vanguard. We are attempting to take advantage of the volatility by trading more often but in smaller denominations in order to keep money in stocks that are succeeding and to minimize portfolio risk. The improvement in world economies has two portfolio construction implications for us. First, many of our traditional companies, for example in the Consumer Non-Durables and Consumer Services sectors, derive 30% to 60% of their revenues from abroad and are experiencing increased demand. For two years we have reduced and maintained low exposure to Asia in particular, but for several months we have been actively working to increase non-U.S. revenue exposure. Secondly, we believe that strength in international economies will build gradually over the next several years, and that the best situated companies in the more cyclical Business Equipment & Services and Capital Goods sectors will demonstrate sustained growth over a three to five-year period. They have corrected sharply after their second quarter upward bounces and represent attractive values, and we are interested in using the best of these to add return and diversification to our portfolios. Financial service companies are inexpensive and should outperform once the interest rate controversy is resolved. We accept that high volatility is now a permanent part of the investment environment. It almost certainly means that quarterly patterns of results, even of successful portfolios, will be more divergent - if for no other reason than because the make-up of benchmarks are also changing and becoming more volatile. Nevertheless, we are convinced that a longer-term vision of the global environment will yield opportunities to use short-term volatility to the advantage of portfolios. With the world economic wind at our back now, we believe we are entering a several year cycle where portfolios of globally-competitive U.S. companies will be in their "sweet-spot." As always, your questions and comments are welcome. We appreciate your confidence in the GLOBALT Growth Fund. Sincerely, Samuel E. Allen Chief Executive Officer Fund Investment Shares of the Fund are sold on a continuous basis. Through the Fund's transfer agent, Unified Fund Services, you may invest any amount you choose as often as you wish, subject to a minimum initial investment of $25,000 and minimum subsequent investments of $5,000 ($2,000 for IRA accounts). Shares may also be purchased through a broker dealer or other financial institution authorized by the Fund's distributor (investors may be charged a fee for this service). Purchases can be made by mail or by bank wire (please see prospectus for more information). The Fund is also available through Fidelity's FUNDSNetwork with a minimum investment of $2,500 ($1,000 through a qualified retirement plan). It is listed as the AmeriPrime Funds - GLOBALT Growth Fund (symbol: GROWX). Fidelity can be reached at 1-800-544-9697. The Fund is also available through the Schwab Mutual Fund OneSource service at 1-800-435-4000 or on the Internet at www.schwab.com. The minimum investment in the Fund through this service is $2,500 ($1,000 through a qualified retirement plan). The GLOBALT Growth Fund's mutual fund symbol at Schwab is GROWX. This enables the GLOBALT Growth Fund to be included as an investment option in 401(k) plans. This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund; this report is not authorized for distribution to prospective shareholders unless preceded or accompanied by an effective prospectus. Read the prospectus carefully before investing.
GLOBALT GROWTH FUND SCHEDULE OF INVESTMENTS - OCTOBER 31, 1999 COMMON STOCKS - 94.6% SHARES VALUE Advertising - 5.3% Interpublic Group 9,600 $ 390,000 Omnicom Group 5,800 510,400 ----------------------- ----------------------- 900,400 ----------------------- ----------------------- BANKS - 5.2% Bank of America Corp. 5,300 341,188 Citigroup, Inc. 10,050 543,956 ----------------------- ----------------------- 885,144 ----------------------- ----------------------- BEVERAGES - 2.7% Coca-Cola Co. 5,850 345,150 Coca-Cola Enterprises 4,600 117,588 ----------------------- ----------------------- 462,738 ----------------------- ----------------------- COMMUNICATIONS EQUIPMENT - 2.4% Lucent Technologies, Inc. 6,200 398,350 ----------------------- ----------------------- Computer Services & Software - 17.7% America Online, Inc. (a) 2,500 324,219 BMC Software (a) 6,000 385,125 Computer Sciences Corp. (a) 6,100 418,994 EMC Corp (a) 2,900 211,700 Microsoft, Inc. (a) 4,800 444,300 Oracle Corp. (a) 9,700 461,356 Veritas Software (a) 7,000 755,125 ----------------------- ----------------------- 3,000,819 ----------------------- ----------------------- COMPUTERS & OFFICE EQUIPMENT - 8.8% Cisco Systems, Inc. (a) 7,324 541,976 Dell Computer Corp. (a) 3,600 144,450 International Business Machines, Inc. 3,620 356,117 Sun Microsystems, Inc. (a) 4,300 454,994 ----------------------- ----------------------- 1,497,537 ----------------------- ----------------------- DRUGS & PHARMACEUTICALS - 3.7% Merck & Co., Inc. 3,300 262,556 Pfizer, Inc. 9,300 367,350 ----------------------- ----------------------- 629,906 ----------------------- ----------------------- ELECTRIC UTILITY - 1.2% AES Corp. (a) 3,500 197,531 ----------------------- ----------------------- Electrical Equipment - 4.2% General Electric, Inc. 5,200 704,925 ----------------------- ----------------------- GLOBALT GROWTH FUND SCHEDULE OF INVESTMENTS - OCTOBER 31, 1999 - CONTINUED COMMON STOCKS - CONTINUED SHARES VALUE Electronic Instruments - 5.8% Emerson Electric 3,300 $ 198,206 Honeywell, Inc. 2,800 295,225 Molex, Inc.- Class A 14,800 488,400 ----------------------- ----------------------- 981,831 ----------------------- ----------------------- ELECTRONICS - 1.3% Intel Corp. 2,800 216,825 ----------------------- ----------------------- Entertainment - 1.7% Time Warner Inc. 4,200 292,688 ----------------------- ----------------------- Finance - Diversified - 5.0% American Express 2,700 415,800 Marsh & McLennan 5,400 426,937 ----------------------- ----------------------- 842,737 ----------------------- ----------------------- HEALTH - DIVERSIFIED - 5.5% Bristol-Myers Squibb, Inc. 5,600 430,150 Johnson & Johnson, Inc. 2,712 284,082 Warner-Lambert, Inc. 2,600 207,512 ----------------------- ----------------------- 921,744 ----------------------- ----------------------- HOUSEHOLD PRODUCTS - 4.1% Black & Decker Corp 8,100 348,300 Procter & Gamble, Inc. 3,300 346,088 ----------------------- ----------------------- 694,388 ----------------------- ----------------------- INDUSTRIAL MACHINERY & EQUIPMENT - 2.2% Ingersoll-Rand Co. 7,100 370,975 ----------------------- ----------------------- Insurance - 3.2% American International Group 5,202 535,481 ----------------------- ----------------------- Manufacturers - Diversified - 1.8% Monsanto Co. 7,900 304,150 ----------------------- ----------------------- Medical Equipment & Supplies - 4.2% Baxter International, Inc. 7,500 486,562 Stryker Corp. 3,600 222,300 ----------------------- ----------------------- 708,862 ----------------------- ----------------------- OIL & GAS - 2.5% Texaco, Inc. 7,000 429,625 ----------------------- ----------------------- GLOBALT GROWTH FUND SCHEDULE OF INVESTMENTS - OCTOBER 31, 1999 - CONTINUED COMMON STOCKS - CONTINUED SHARES VALUE Paper & Forest Products - 1.4% Avery Dennison Corp. 3,900 $ 243,750 ----------------------- ----------------------- Restaurants - 2.6% McDonald's Corp. 10,600 437,250 ----------------------- ----------------------- TRUCKING & FREIGHT - 2.1% FDX Corp. (a) 8,300 357,419 ----------------------- ----------------------- TOTAL COMMON STOCKS (COST $12,196,510) 16,015,075 ----------------------- ----------------------- PRINCIPAL AMOUNT VALUE Money Market Securities - 1.8% Firstar Treasury Fund, 4.41% (b) (Cost $311,783) 311,783 311,783 ----------------------- ----------------------- TOTAL INVESTMENTS - (COST $12,508,293) - 96.4% 16,326,858 ----------------------- ----------------------- OTHER ASSETS LESS LIABILITIES - 3.6% 607,182 ----------------------- ----------------------- TOTAL NET ASSETS - 100.0% $ 16,934,040 ======================= ======================= (a) Non-income producing (b) Variable rate security; the coupon rate shown represents the rate at October 29, 1999.
GLOBALT GROWTH FUND OCTOBER 31, 1999 Statement of Assets and Liabilities ASSETS Investment in securities, at value (cost $12,508,293) $ 16,326,858 Cash 217 Receivable for fund shares sold 1,000 Receivable for investment sold 614,349 Dividends receivable 6,705 Interest receivable 2,520 ---------------------- TOTAL ASSETS 16,951,649 LIABILITIES Accrued investment advisory fee payable $ 16,543 Payable for fund shares redeemed 1,066 ----------------------- TOTAL LIABILITIES 17,609 ---------------------- NET ASSETS $ 16,934,040 ====================== Net Assets consist of: Paid in capital 12,274,610 Undistributed Net Investment Loss (2,886) Accumulated undistributed net realized gain on investments 843,751 Net unrealized appreciation on investments 3,818,565 ---------------------- NET ASSETS, for 866,952 shares $ 16,934,040 ====================== NET ASSET VALUE Net Assets Offering price and redemption price per share ($16,934,040 / 866,952) $ 19.53 ======================
GLOBALT GROWTH FUND STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31, 1999 INVESTMENT INCOME Dividend Income $ 122,603 Interest Income 18,296 -------------------- TOTAL INCOME 140,899 EXPENSES Investment advisory fee $ 183,642 Trustees' fees 1,377 -------------------- Total expenses before reimbursement 185,019 Reimbursed expenses (1,377) -------------------- Total operating expenses 183,642 -------------------- NET INVESTMENT INCOME (LOSS) (42,743) -------------------- REALIZED & UNREALIZED GAIN Net realized gain on investment securities 844,362 Change in net unrealized appreciation (depreciation) on investment securities 2,489,533 -------------------- Net gain on investment securities 3,333,895 -------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,291,152 ====================
GLOBALT GROWTH FUND STATEMENT OF CHANGES IN NET ASSETS YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 1999 1998 ---------------------- ----------------------- Increase/(Decrease) in Net Assets Operations Net investment income (loss) $ (42,743) $ 14,740 Net realized gain on investment securities 844,362 687,055 Change in net unrealized appreciation (depreciation) 2,489,533 496,228 ---------------------- ----------------------- Net increase in net assets resulting from operations 3,291,152 1,198,023 ---------------------- ----------------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income (15,584) (5,420) From net realized gain (592,834) (753,352) ---------------------- ----------------------- ---------------------- ----------------------- Total distributions (608,418) (758,772) ---------------------- ----------------------- SHARE TRANSACTIONS Net proceeds from sale of shares 4,333,512 3,441,709 Shares issued in reinvestment of distributions 608,118 758,704 Shares redeemed (2,399,432) (933,230) ---------------------- ----------------------- NET INCREASE IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS 2,542,198 3,267,183 ---------------------- ----------------------- TOTAL INCREASE IN NET ASSETS 5,224,932 3,706,434 NET ASSETS Beginning of period 11,709,108 8,002,674 ---------------------- ----------------------- End of period [including accumulated undistributed net investment income (loss) of $(2,886) and $12,698, respectively] $ 16,934,040 $ 11,709,108 ====================== =======================
GLOBALT GROWTH FUND FINANCIAL HIGHLIGHTS YEARS ENDED OCTOBER 31, -------------------------------------------------------------------- -------------------------------------------------------------------- Period ended October 31, 1999 1998 1997 1996 (A) ------------- ------------------ ------------------ ---------------- ------------- ------------------ ------------------ ---------------- SELECTED PER SHARE DATA Net asset value, beginning of period $ 16.14 $ 15.66 $ 12.48 $ 10.00 ------------- ------------------ ------------------ ---------------- ------------- ------------------ ------------------ ---------------- Income from investment operations: Net investment income (loss) (0.05) 0.02 0.01 0.01 Net realized and unrealized gain 4.27 1.86 3.34 2.47 ------------- ------------------ ------------------ ---------------- ------------- ------------------ ------------------ ---------------- Total from investment operations 4.22 1.88 3.35 2.48 ------------- ------------------ ------------------ ---------------- ------------- ------------------ ------------------ ---------------- Less Distributions From net investment income (0.02) (0.01) - - From net realized gain (0.81) (1.39) (0.17) - ------------- ------------------ ------------------ ---------------- ------------- ------------------ ------------------ ---------------- Total Distributions (0.83) (1.40) (0.17) - ------------- ------------------ ------------------ ---------------- ------------- ------------------ ------------------ ---------------- Net asset value, end of period $ 19.53 $ 16.14 $ 15.66 $ 12.48 ============= ================== ================== ================ ============= ================== ================== ================ TOTAL RETURN (b) 26.67% 13.28% 27.15% 24.80% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000) $16,934 $11,709 $8,003 $3,443 Ratio of expenses to average net assets 1.17% 1.17% 1.17% 1.16% (c) Ratio of expenses to average net assets before reimbursement 1.18% 1.19% 1.19% 1.25% (c) Ratio of net investment income (loss) to average net assets (0.27)% 0.14% 0.06% 0.11% (c) Ratio of net investment income (loss) to average net assets before reimbursement (0.28)% 0.12% 0.04% 0.02% (c) Portfolio turnover rate 120.46% 83.78% 110.01% 66.42% (c)
(a) December 1, 1995 (commencement of operations) to October 31, 1996 (b) For periods of less than a full year, total returns are not annualized. (c) Annualized GLOBALT Growth Fund Notes to Financial Statements October 31, 1999 NOTE 1. ORGANIZATION GLOBALT Growth Fund (the "Fund") is organized as a series of the AmeriPrime Funds, an Ohio business trust (the "Trust). The Fund is registered under the Investment Company Act of 1940, as amended, as a diversified series, open-end management investment company. The Fund's investment objective is to provide long term growth of capital. The Trust Agreement permits the Trustees to issue an unlimited number of shares of beneficial interest of separate series without par value. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. Securities Valuation- Securities which are traded on any exchange or on the NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking a last sale price, a security is valued at its last bid price except when, in the Advisor's opinion the last bid price does not accurately reflect the current value of the security. All other securities for which over-the-counter market quotations are readily available are valued at their last bid price. When market quotations are not readily available, and the Advisor determines the last bid price does not accurately reflect the current value or when restricted securities are being valued, such securities are valued as determined in good faith by the Advisor, in conformity with guidelines adopted by and subject to review of the Board of Trustees of the Trust (the "Board"). Fixed-income securities generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Advisor believes such prices accurately reflect the fair market value of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. When prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Advisor, subject to review of the Board. Short-term investments in fixed-income securities with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued by using the amortized cost method of valuation, which the Board has determined will represent fair value. GLOBALT Growth Fund Notes to Financial Statements October 31, 1999 - continued NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued Federal Income Taxes- The Fund intends to qualify each year as a "regulated investment company" under the Internal Revenue Code of 1986, as amended. By so qualifying, the Fund will not be subject to federal income taxes to the extent that it distributes substantially all of its net investment income and any realized capital gains. Dividends and Distributions- The Fund intends to comply with federal tax rules regarding distribution of substantially all of its net investment income and capital gains. These rules may cause multiple distributions during the course of the year. 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 accrual basis. Discounts and premiums on securities purchased are amortized over the life of the respective securities. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund retains GLOBALT, Inc. (the "Advisor") to manage the Fund's investments. The advisor was organized as a Georgia corporation in 1990. Angela Allen, President of the Advisor, and Samuel Allen, Chairman of the Advisor, are the controlling shareholders of GLOBALT, Inc. The investment decisions for the Fund are made by a committee of the Advisor, which is primarily responsible for the day-to-day management of the Fund's portfolio. Under the terms of the management agreement (the "Agreement"), the Advisor manages the Fund's investments subject to approval of the Board of Trustees and pays all of the expenses of the Fund except brokerage commissions, taxes, interest, fees and expenses of non-interested person trustees, and extraordinary expenses. As compensation for its management services and agreement to pay the Fund's expenses, the Fund is obligated to pay the Advisor a fee computed and accrued daily and paid monthly at an annual rate of 1.17% of the average daily net assets of the Fund. It should be noted that most investment companies pay their own operating expenses directly, while the Fund's expenses, except those specified above, are paid by the Advisor. For the year ended October 31, 1999, the Advisor received a fee of $183,642 from the Fund. The Advisor has voluntarily agreed to reimburse other expenses for the fiscal year ended October 31, 1999 to the extent necessary to maintain total expenses at the rate of 1.17%. For the year ended October 31, 1999, the Advisor reimbursed expenses of $1,377. There is no assurance that such reimbursement will continue in the future. GLOBALT Growth Fund Notes to Financial Statements October 31, 1999 - continued NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued The Fund retains AmeriPrime Financial Services, Inc. (the "Administrator") to manage the funds business affairs and provide the Fund with administrative services, including all regulatory reporting and necessary office equipment and personnel. For the year ended October 31, 1999, the Administrator received fees of $30,000 from the Advisor for administrative services provided to the Fund. The Fund retains AmeriPrime Financial Securities, Inc. ("the Distributor") to act as the principal distributor of the Fund's shares. There were no payments made to the Distributor for the year ended October 31, 1999. Certain members of management of the Administrator and the Distributor are also members of management of the AmeriPrime Trust. NOTE 4. SHARE TRANSACTIONS As of October 31, 1999, there was an unlimited number of authorized shares for the Fund. Paid in capital at October 31, 1999 was $12,274,610. Transactions in shares were as follows: - --------------------------------------------------------------------------------------------------------------------
Year ended Year ended October 31, 1999 October 31, 1998 - -------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- Shares Dollars Shares Dollars - ------------------------------------------------------------------------------------------------------------------------- Shares sold 237,096 $4,333,512 216,459 $3,441,709 - ------------------------------------------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends 34,260 608,118 53,733 758,704 - ------------------------------------------------------------------------------------------------------------------------- Shares redeemed (130,011) (2,399,432) (55,461) (933,230) - ------------------------------------------------------------------------------------------------------------------------- 141,345 $2,542,198 214,731 $3,267,183 - ------------------------------------------------------------------------------------------------------------------------- ====== ======== ====== ========
GLOBALT Growth Fund Notes to Financial Statements October 31, 1999 - continued NOTE 5. INVESTMENTS For the year ended October 31, 1999, purchases and sales of investment securities, other than short-term investments, aggregated $20,132,200 and $18,159,591, respectively. The gross unrealized appreciation for all securities totaled $4,020,656 and the gross unrealized depreciation for all securities totaled $202,091 for a net unrealized appreciation of $3,818,565. The aggregate cost of securities for federal income tax purposes at October 31, 1999 was $12,508,293. NOTE 6. ESTIMATES Preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 8. RECLASSIFICATIONS In accordance with SOP 93-2, the fund has recorded a reclassification in the capital accounts. As of October 31, 1999, the fund recorded permanent book/tax differences of $42,743 from net investment loss to paid in capital. This reclassification has no impact on the net asset value of the fund and is designed generally to present undistributed income and realized gains on a tax basis which is considered to be more informative to shareholders. INDEPENDENT AUDITOR'S REPORT To The Shareholders and Board of Trustees GLOBALT Growth Fund We have audited the accompanying statement of assets and liabilities of the GLOBALT Growth Fund, including the schedule of portfolio investments, as of October 31, 1999, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and financial highlights for each of the periods indicated. 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 as of October 31, 1999 by correspondence with the custodian and brokers. 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 the GLOBALT Growth Fund as of October 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 for each of the periods indicated, in conformity with generally accepted accounting principles. McCurdy & Associates CPA's, Inc. Westlake, Ohio 44145 November 21, 1999 November 15, 1999 Dear Shareholder: This certainly has been a tiring year, but an exciting one in many cases. Since October 31st of 1998, your Fund has enjoyed the joys of security ownership, as well as some of the perils. Nevertheless, owning the small stocks that characterize our portfolio has not proven as worthwhile as owning the large technology and financial services stocks that have dominated investor attention for so long. However, in my opinion, the Corbin Small-Cap Value Fund stands well-positioned to produce dramatic results when the market's eye turns toward smaller stocks. That is why I believe that every investor should have a substantial amount of his or her funds in this area of the marketplace. The last few weeks, I have talked to a couple of old friends of mine, asking them their opinions about what they saw going on in the marketplace. One of them is one of the most brilliant analysts I know. He is a unique character in that he spends most of his time finding what not to like, and then "shorting" it. Besides providing some of America's largest money managers his insights (at $10,000 a year), he also runs one of the few funds devoted to shorting stocks. I never underestimate his analytical ability; usually, only his timing is in question. It is currently his belief that the most massive problem plaguing the U.S. economy is that the capital allocation process has been completely out of any realm of reason. To illustrate the point, look at the recent success the initial public offering of Akami Technologies (AKAM) had in the marketplace. Most investors have never heard of Akami, which sells a product that pulls up Web pages faster. The fourteen-month-old company had no revenues in 1998 and $1.3 million in the first nine months of 1999. Yet, as I write this, Akami has a market value in excess of $14 billion, about $2 billion more than Apple Computer. The firm was started by a professor on sabbatical and his graduate assistant, both of whom are now worth over $1.5 billion. Clearly, it does not take a genius of my friend's stature to figure out that there is something wrong. Yet, it does take some study of investor behavior to see that the process of ferreting out the best return on an investment in a company has become totally disconnected from company performance. If this is true, and I have every reason to believe it is, it clearly has more profound implications for the U.S. economy than a similar situation in Japanese real estate and stocks did for Japanese investors. That is because Japanese problems remained primarily Japanese problems, and because the transmittal of information is substantially faster today than in the past. My other friend that provided insight into the current market situation is the manager of a major value fund. He is one of the smartest guys in America, having compiled an unbelievable record through 1997. Then, like for many value managers, 1998 and 1999 have proved challenging. It was interesting to get the perspective of someone who has managed money since the late 1960s and who had seen the "Go-Go" days of the early 1970s, as well as the 1973-74 bust. He indicated that the current market cycle had extended itself for three main reasons. First, the government's anti-trust regulation has been virtually non-existent, which allowed unchecked merging between large companies, exciting Wall Street. Second, the Asian Crisis has provided relief from price pressure in many key areas, while helping to lower interest rates worldwide. This has helped to extend the business cycle. Third, small companies have generally not had the same level of activity by the board of directors as by the directors at large companies. This has had the effect of not pushing management as hard to improve results when companies have stumbled. I agree with all points made by these gentlemen, but also have a few of my own, namely the feeding frenzy on the part of investors for Internet-related issues, and the P/E ratios people are willing to pay. As I have talked to CEOs around the country, clearly there is "a giant sucking sound" as everyone tries to jump on the Internet bandwagon. If you do not have some Net strategy, investors do not show any interest in your firm. We believe that this will eventually lead to grueling competition, with unforeseen consequences for most investors. Our businesses in the Fund are well-equipped to deliver substantial financial results because of their ability to use technology for their benefit. Generally, most of our businesses have solid niches in their markets in which they either dominate or are major competitors. Over the long-term, this should lead to enhanced corporate profits, and a higher stock price. Later on, I will highlight some of these companies. What do I foresee in the next year for the Fund? Starting in calendar 2000, I believe that we could see one of the greatest years in the history of the small-cap marketplace. The technology that investors have felt was only available to large companies should be used by small firms to begin to outperform their large-cap brethren. The snapback in the Asian, Latin American, and European economies should provide stronger markets for U.S. goods. Interest rates should remain near current levels for the next year, and investors should focus more closely on valuation. The other key factor that should continue to be a big part of the investment landscape is mergers/acquisitions. Mergers and acquisitions advanced many of the stock prices of the companies in the Fund, and this trend should continue into this next year. PERFORMANCE REVIEW For the year ended October 31, 1999, the Corbin Small-Cap Value Fund returned 1.96% and the Russell 2000 and S&P 600 Small-Cap were at 14.55% and 12.02%, respectively. The first two months of the Fund's year was a "killer" time period, as the problems with securities such as Aames Financial continued to plague the Fund. Yet, it was out of these situations that some of our strongest ideas were produced, as well as giving us the chance to add to some other positions at advantageous prices. For those of you who are investing in this fund with taxable money, I should mention that the Fund has a large loss carry-forward that can be used to shelter future gains. This means that as smaller stocks recover and are sold at a profit, you would not receive a taxable distribution until all of the carry forwards are exhausted. This should result in a significant tax savings for investors. Returns for the Year Ended October 31, 1999 - ----------------------------------------------------------------------------- Fund/Index 1 Year Average Annual Return Since Inception June 30, 1997 - ----------------------------------------------------------------------------- Corbin Small-Cap Fund 1.96% -13.15% S&P 600 12.02% 4.47% Russell 2000 14.55% 4.76% - -----------------------------------------------------------------------------
Corbin - $7,189 S&P 600 - $11,075 Russell 2000 - $11,056 --------------------------------------------------------------------------------------- 6/30/97 10,000 10,000 10,000 7/31/97 10,310 10,629 10,467 8/31/97 10,520 10,897 10,703 9/30/97 11,330 11,617 11,485 10/31/97 11,030 11,116 10,975 11/30/97 11,209 11,035 10,900 12/31/97 10,916 11,257 11,095 1/31/98 10,575 11,037 10,926 2/28/98 10,853 12,043 11,746 3/31/98 11,257 12,503 12,239 4/30/98 11,171 12,577 12,306 5/30/98 10,617 11,910 11,646 6/30/98 10,511 11,945 11,680 7/31/98 9,595 11,031 10,726 8/31/98 7,401 8,905 8,646 9/30/98 7,187 9,448 9,272 10/31/98 7,049 9,887 9,652 11/30/98 6,378 10,443 10,162 12/31/98 6,750 11,109 10,810 1/31/99 6,590 10,969 10,950 2/28/99 6,111 9,981 9,963 3/31/99 5,951 10,109 10,092 4/30/99 7,122 10,777 10,758 5/31/99 7,602 11,038 11,019 6/30/99 7,719 11,667 11,646 7/31/99 7,879 11,564 11,544 8/31/99 7,336 11,055 11,036 9/30/99 7,421 11,103 11,083 10/31/99 7,189 11,075 11,056
The chart shows the value of a hypothetical initial investment of $10,000 in the Fund, the S&P 600 Index and the Russell 2000 Index on June 30, 1997 and held through October 31, 1999. The S&P 600 Index and the Russell 2000 Index are widely recognized unmanaged indices of common stock prices. Performance figures include the change in value of the stocks in the indices and reinvestment of dividends, and are not annualized. The index returns do not reflect expenses, which have been deducted from the Fund's return. THE FUND'S RETURN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF FUTURE RESULTS. FIVE STOCKS TO WATCH There are a number of securities that we feel have very good appreciation potential in the next year and that we would like to highlight in our annual report. These are the Fund's largest concentrations, and should continue to be, going forward. Titan Corporation - The company is primarily in the defense business but has three rapid-growth subsidiaries that are outgrowths of its primary business. The first, Cayenta.com, is an information technology company. The second, Surebeam, is in the food sterilization business. The third, Titan Technologies, is in the mobile telecom business. We believe that eventually the fast-growth subsidiaries will be spun off to shareholders, unlocking value. The defense business should continue its steady growth, making acquisitions and building value in a consolidating industry. Successories, Inc. - The company is a leader in the motivational and people-recognition business. Currently, the company is in the process of divesting itself of its retailing assets, which it will use to clean up its balance sheet. Jack Miller, the well-known Chicago catalog entrepreneur, has just purchased a stake in the company and has been named chairman of the board. The company has high-margin products and an improving financial position, which when coupled with sales growth could yield spectacular profitability. Pizza Inn - This franchiser of restaurants continues to repurchase its own shares, while paying a very good dividend. The company now has over 500 stores worldwide and is showing improving margins, coupled with sales growth. FIVE STOCKS TO WATCH - continued Cyberonics - The company makes a device that controls the electrical impulses in the brain that cause epileptic seizures. It is currently in the process of showing that its products may cure chronic depression, as well as obesity. Since the market for these last two applications is substantially larger than for the nascent seizure market, the company could reap huge profits from its products. Duckwall-Alco - Duckwall operates general merchandise stores in Midwestern and Southwestern towns with under 20,000 people. The company is currently trading at a very cheap valuation, is repurchasing shares, and is looking for other ways to enhance shareholder value. CONCLUSION The Fund has now been in existence for thirty months. During a large portion of that time, it matched or even exceeded the relevant market averages. The period from June 30th 1998 to December 31st 1998 was one that I would rather not repeat, for Fund holders or myself. With that said, I believe that great days are ahead of us for numerous reasons. Probably the most important is the belief that good people working hard will achieve superior results over the long-term. That is what our investment advisory firm is all about. I have mentioned previously that my liquid investment net worth is in this Fund, which is still the case. If you know of someone who would like information on the Fund, please do not hesitate to call us at (800) 924-6848. Finally, if you ever have any questions or comments about the Fund, please let me know. My name is the one over the door, and I will do what it takes to make this a successful experience for all shareholders. If you would like to reach me, please e-mail me at dcorbin@corbincom.com, call the above number, or send a letter to our office in Fort Worth. Once again, I thank you for your faith in our efforts, and all of us are working hard to make sure it is rewarded. Sincerely, David A. Corbin, CFA President & Chief Investment Officer This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund; this report is not authorized for distribution to prospective shareholders unless preceded or accompanied by an effective prospectus. Read the prospectus carefully before investing.
Corbin Small-Cap Value Fund Schedule of Investments - October 31, 1999 Common Stocks - 95.3% Shares Value BASIC INDUSTRIES- 9.7% Iron & Steel - 2.8% Quanex Corp. 3,000 $ 65,062 ----------------- ----------------- Manufacturers - Diversified - 2.3% Griffon Corp. (a) 7,000 51,625 ----------------- ----------------- Metals & Mining - 1.6% RTI International Metals (a) 5,000 36,250 ----------------- ----------------- Paper & Forest Products - 3.0% Republic Group 4,000 69,000 ----------------- ----------------- TOTAL BASIC INDUSTRY 221,937 ----------------- ----------------- CONSTRUCTION & REAL ESTATE - 2.8% Engineering - 2.8% Butler Mfg. 2,600 64,188 ----------------- ----------------- DURABLES - 4.8% Autos & Auto Parts - 4.8% Bonded Motors Inc. (a) 27,200 34,000 Wabash National Corp. 4,715 74,851 ----------------- ----------------- 108,851 ----------------- ----------------- ENERGY - 2.1% Oil & Gas - 2.1% Unifab International (a) 7,000 47,250 ----------------- ----------------- FINANCE - 8.8% Banks - 4.9% First Financial Bankshares 1,800 61,200 Independent Bankshares 3,700 52,262 ----------------- ----------------- 113,462 ----------------- ----------------- Credit & Other Finance - 3.9% Onyx Acceptance (a) 13,000 89,375 ----------------- ----------------- TOTAL FINANCE 202,837 ----------------- ----------------- HEALTH - 6.1% Medical Equipment & Supplies - 6.1% Cyberonics Inc (a) 10,000 140,625 ----------------- ----------------- Corbin Small-Cap Value Fund Schedule of Investments - October 31, 1999 - continued Common Stocks - continued Shares Value MEDIA & LEISURE - 14.6% Publishing - 3.4% Thomas Nelson, Inc. 8,000 $ 77,000 ----------------- ----------------- Restaurants - 11.2% CKE Restaurants 10,400 70,200 Lone Star Steakhouse/Saloon (a) 8,030 64,240 Pizza Inn 31,000 124,000 ----------------- ----------------- 258,440 ----------------- ----------------- TOTAL MEDIA & LEISURE 335,440 ----------------- ----------------- NON-DURABLES - 3.3% Beverages - 3.3% Lancer Corp. (a) 14,900 75,431 ----------------- ----------------- RETAIL & WHOLESALE - 21.1% General Merchandise Stores - 4.3% Duckwall-Alco Stores (a) 12,000 97,500 ----------------- ----------------- Grocery Stores - 1.1% Ingles Markets - Class A 2,000 25,875 ----------------- ----------------- Specialty - 15.7% Rush Enterprises (a) 3,500 52,062 Successories, Inc. (a) 115,000 309,063 ----------------- ----------------- 361,125 ----------------- ----------------- TOTAL RETAIL & WHOLESALE 484,500 ----------------- ----------------- TECHNOLOGY - 20.8% Communications Equipment - 3.9% Vtel Corp. (a) 29,500 90,344 ----------------- ----------------- Computer Services & Software - 14.0% Carreker-Antinori, Inc. (a) 10,000 68,750 Titan Corp. (a) 15,000 251,250 ----------------- ----------------- 320,000 ----------------- ----------------- Electronic Instruments - 2.9% Herley Industries (a) 5,500 67,031 ----------------- ----------------- TOTAL TECHNOLOGY 477,375 ----------------- ----------------- Corbin Small-Cap Value Fund Schedule of Investments - October 31, 1999 - continued Common Stocks - continued Shares Value TRANSPORTATION - 1.2% Railroads - 1.2% RailTex, Inc. (a) 1,700 $ 27,200 ----------------- ----------------- TOTAL COMMON STOCKS (Cost $2,412,776) 2,185,634 ----------------- ----------------- Principal Money Market Securities - 6.8% Amount Value Firstar Treasury Fund, 4.41% (b) (Cost $156,709) 156,709 156,709 ----------------- ----------------- TOTAL INVESTMENTS - 102.1% (Cost $2,569,485) 2,342,343 ----------------- ----------------- Other Assets less Liabilities - (2.1%) (48,054) ----------------- ----------------- Total Net Assets - 100.0% $ 2,294,289 ================= ================= (a) Non-income producing (b) Variable rate security; the coupon rate shown represents the rate at October 29, 1999.
Corbin Small-Cap Value Fund October 31, 1999 Statement of Assets & Liabilities Assets Investment in securities, at value (cost $2,569,485) $ 2,342,343 Cash 10,360 Receivable for fund shares sold 400 Dividends receivable 320 Interest receivable 451 ------------------- Total assets 2,353,874 Liabilities Accrued investment advisory fee payable $ 2,485 Payable for securities purchased 35,688 Payable for fund shares redeemed 21,412 ------------------ Total liabilities 59,585 ------------------- Net Assets $ 2,294,289 =================== Net Assets consist of: Paid in capital $ 3,375,218 Undistributed Net Investment Loss (1,444) Accumulated net realized gain (loss) on investments (852,343) Net unrealized appreciation (depreciation) on investments (227,142) ------------------- Net Assets, for 340,113 shares $ 2,294,289 =================== Net Asset Value Net Assets Offering price and redemption price per share ($2,294,289 / 340,113) $ 6.75 ===================
Corbin Small-Cap Value Fund Statement of Operations for the year ended October 31, 1999 Investment Income Dividend Income $ 11,350 Interest Income 13,095 --------------- Total Income 24,445 Expenses Investment advisory fee $ 29,043 Trustees' fees 1,377 --------------- Total expenses before reimbursement 30,420 Reimbursed expenses (1,377) --------------- Total operating expenses 29,043 --------------- Net Investment Income (Loss) (4,598) --------------- Realized & Unrealized Gain (Loss) Net realized gain (loss) on investment securities (300,255) Change in net unrealized appreciation (depreciation) on investment securities 327,949 --------------- Net gain on investment securities 27,694 --------------- Net increase in net assets resulting from operations $ 23,096 ===============
Corbin Small-Cap Value Fund Statement of Changes in Net Assets Year Year ended ended October 31, October 31, 1999 1998 ------------------- ------------------- Increase/(Decrease) in Net Assets Operations Net investment income (loss) $ (4,598) $ (3,050) Net realized gain (loss) on investment securities (300,255) (467,038) Change in net unrealized appreciation (depreciation) 327,949 (599,782) ------------------- ------------------- Net increase (decrease) in net assets resulting from operations 23,096 (1,069,870) ------------------- ------------------- Distributions to shareholders From net investment income - (1,444) From net realized gain - (90,963) ------------------- ------------------- Total distributions - (92,407) ------------------- ------------------- Share Transactions Net proceeds from sale of shares 747,375 2,309,098 Shares issued in reinvestment of distributions - 86,814 Shares redeemed (765,186) (279,062) ------------------- ------------------- Net increase in net assets resulting from share transactions (17,811) 2,116,850 ------------------- ------------------- Total increase in net assets 5,285 954,573 Net Assets Beginning of period 2,289,004 1,334,431 ------------------- ------------------- End of period [including accumulated net investment loss of $1,444 and $1,444, respectively] $ 2,294,289 $ 2,289,004 =================== ===================
Corbin Small-Cap Value Fund Financial Highlights Year Year Period ended ended ended October 31, October 31, October 31, 1999 1998 1997 (a) ---------------- ---------------- ---------------- Selected Per Share Data Net asset value, beginning of period $ 6.62 $ 11.03 $ 10.00 ---------------- ---------------- ---------------- Income from investment operations Net investment income (loss) (0.01) (0.01) - Net realized and unrealized gain (loss) 0.14 (3.76) 1.03 ---------------- ---------------- ---------------- Total from investment operations 0.13 (3.77) 1.03 ---------------- ---------------- ---------------- Less Distributions From net investment income - (0.01) - From net realized gain - (0.63) - ---------------- ---------------- ---------------- ---------------- Total distributions - (0.64) - ---------------- ---------------- ---------------- Net asset value, end of period $ 6.75 $ 6.62 $ 11.03 ================ ================ ================ Total Return (b) 1.96% (36.07)% 10.30% Ratios and Supplemental Data Net assets, end of period (000) $2,294 $2,289 $1,334 Ratio of expenses to average net assets 1.25% 1.25% 1.23% (c) Ratio of expenses to average net assets before reimbursement 1.31% 1.30% 1.23% (c) Ratio of net investment income (loss) to average net assets (0.20)% (0.15)% 0.00% Ratio of net investment income (loss) to average net assets before reimbursement (0.26)% (0.20)% 0.00% Portfolio turnover rate 65.66% 86.42% 20.41% (c) (a) June 30, 1997 (commencement of operations) to October 31, 1997 (b) For periods of less than a full year, total returns are not annualized. (c) Annualized
Corbin Small-Cap Value Fund Notes to Financial Statements October 31, 1999 NOTE 1. ORGANIZATION The Corbin Small-Cap Value Fund (the "Fund") is organized as a series of the AmeriPrime Funds, an Ohio business trust (the "Trust"). The Fund is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The investment objective of the Fund is to provide long term capital appreciation to its shareholders. The Declaration of Trust permits the trustees to issue an unlimited number of shares of beneficial interest of separate series without par value. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. Securities Valuation - Securities which are traded on any exchange or on the NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking a last sale price, a security is valued at its last bid price except when, in the Advisor's opinion, the last bid price does not accurately reflect the current value of the security. All other securities for which over-the-counter market quotations are readily available are valued at their last bid price. When market quotations are not readily available, and the Advisor determines the last bid price does not accurately reflect the current value or when restricted securities are being valued, such securities are valued as determined in good faith by the Advisor, in conformity with guidelines adopted by and subject to review of the Board of Trustees of the Trust (the "Board"). Fixed-income securities generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Advisor believes such prices accurately reflect the fair market values of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. When prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Advisor, subject to review of the Board. Short-term investments in fixed-income securities with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued by using the amortized cost method of valuation, which the Board has determined will represent fair value. Corbin Small-Cap Value Fund Notes to Financial Statements October 31, 1999 - continued NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued Federal Income Taxes - The Fund intends to qualify each year as a "regulated investment company" under the Internal Revenue Code of 1986, as amended. By so qualifying, the Fund will not be subject to federal income taxes to the extent that it distributes substantially all of its net investment income and any realized capital gains. Loss carryforwards total $852,343 as of October 31, 1999: $300,255 expiring in 2007, and $552,088 expiring in 2006. Dividends and Distributions - The Fund intends to comply with federal tax rules regarding distribution of substantially all of its net investment income and capital gains. These rules may cause multiple distributions during the course of the year. 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 accrual basis. Discounts and premiums on securities purchased are amortized over the life of the respective securities. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund retains Corbin & Company (the "Advisor") to manage the Fund's investments. David A. Corbin, President of the Advisor, is primarily responsible for the day to day management of the Fund's portfolio. Under the terms of the management agreement (the "Agreement"), the Advisor manages the Fund's investments subject to approval of the Board of Trustees and pays all of the expenses of the Fund except brokerage commissions, taxes, interest, fees and expenses of the non-interested person trustees, and extraordinary expenses. As compensation for its management services and agreement to pay the Fund's expenses, the Fund is obligated to pay the Advisor a fee computed and accrued daily and paid monthly at an annual rate of 1.25% of the average daily net assets of the Fund. It should be noted that most investment companies pay their own operating expenses directly, while the Fund's expenses, except those specified above, are paid by the Advisor. For the year ended October 31, 1999, the Advisor has received a fee of $29,043 from the Fund. The Advisor has voluntarily agreed to reimburse other expenses for the fiscal year ended October 31, 1999, to the extent necessary to maintain total operating expenses at the rate of 1.25%. For the year ended October 31, 1999, the Advisor reimbursed expenses of $1,377. There is no assurance that such reimbursement will continue in the future. Corbin Small-Cap Value Fund Notes to Financial Statements October 31, 1999 - continued NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued The Fund retains AmeriPrime Financial Services, Inc. (the "Administrator") to manage the Fund's business affairs and provide the Fund with administrative services, including all regulatory reporting and necessary office equipment and personnel. For the year ended October 31, 1999, the Administrator received fees of $17,500 from the Advisor for administrative services provided to the Fund. The Fund retains AmeriPrime Financial Securities, Inc. (the "Distributor") to act as the principal distributor of the Fund's shares. There were no payments made to the Distributor for the year ended October 31, 1999. Certain members of management of the Administrator and the Distributor are also members of management of the AmeriPrime Trust. NOTE 4. SHARE TRANSACTIONS As of October 31, 1999, there was an unlimited number of authorized shares for the Fund. Paid in capital at October 31, 1999 was $3,375,218. Transactions in shares were as follows: - --------------------------------------------------------------------------------------------------------------------
Year ended Year ended October 31, 1999 October 31, 1998 - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Shares Dollars Shares Dollars - -------------------------------------------------------------------------------------------------------------------- Shares sold 114,423 $747,375 248,212 $2,309,098 - -------------------------------------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends - - 8,831 86,814 - -------------------------------------------------------------------------------------------------------------------- Shares redeemed (120,150) (765,186) (32,184) (279,062) - -------------------------------------------------------------------------------------------------------------------- (5,727) $(17,811) 224,859 $2,116,850 - -------------------------------------------------------------------------------------------------------------------- ====== ======= ====== =======
Corbin Small-Cap Value Fund Notes to Financial Statements October 31, 1999 - continued NOTE 5. INVESTMENTS For the year ended October 31, 1999, purchases and sales of investment securities, other than short-term investments, aggregated $1,384,050 and $1,345,159, respectively. The gross unrealized appreciation for all securities totaled $288,807 and the gross unrealized depreciation for all securities totaled $515,949 for a net unrealized depreciation of $227,142. The aggregate cost of securities for federal income tax purposes at October 31, 1999 was $2,569,485. NOTE 6. ESTIMATES Preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 7. RELATED PARTY TRANSACTIONS The Advisor is not a registered broker-dealer of securities and thus does not receive commissions on trades made on behalf of the Fund. The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a Fund creates a presumption of control of the Fund, under Section 2(a)(9) of the Investment Company Act of 1940. As of October 31, 1999, Charles Schwab & Co. owned of record in aggregate more than 43% of the Fund. NOTE 8. RECLASSIFICATIONS In accordance with SOP 93-2, the Fund has recorded a reclassification in the capital accounts. As of October 31, 1999, the Fund recorded permanent book/tax differences of $4,598 from net investment loss to paid in capital. This reclassification has no impact on the net asset value of the Fund and is designed generally to present undistributed income and realized gains on a tax basis which is considered to be more informative to shareholders. INDEPENDENT AUDITOR'S REPORT To The Shareholders and Board of Trustees Corbin Small-Cap Value Fund We have audited the accompanying statement of assets and liabilities of the Corbin Small-Cap Value Fund, including the schedule of portfolio investments, as of October 31, 1999, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and financial highlights for each of the periods indicated. 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 as of October 31, 1999 by correspondence with the custodian and brokers. 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 the Corbin Small-Cap Value Fund as of October 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 for each of the periods indicated, in conformity with generally accepted accounting principles. McCurdy & Associates CPA's, Inc. Westlake, Ohio 44145 November 21, 1999 December 21, 1999 Dear Shareholders: After an exceptionally strong start to our year, the summer proved once again to be a difficult one for the stock market. Despite the fact that most of our companies have continued to deliver solid earnings, nervous investors once again panicked and sold stocks during August and September, especially in the financial sector. Results The Marathon Value Fund's fiscal year ended on October 31, 1999. During the last six months the Fund was up 3.94%, while the Russell 2000 was down 0.27%. For the last twelve months the fund was up 9.04%, while the Russell 2000 was up 14.94%. Comparative results since inceptions are shown below. Returns for the Period Ended 10/31/99 ----------------- ----------- ----------------------------- Fund/Index 1 Year Average Annual Return Since Inception ----------------- ----------- ----------------------------- ----------------- ----------- ----------------------------- Marathon Value 9.04% -4.66% Fund ----------------- ----------- ----------------------------- ----------------- ----------- ----------------------------- Russell 2000 14.94% -4.35% ----------------- ----------- ----------------------------- Date Russell 2000 MVF 3/9/98 $ 10,000.00 $ 10,000.00 3/31/98 $ 10,424.18 $ 10,050.00 4/30/98 $ 10,472.11 $ 10,320.00 5/31/98 $ 9,902.41 $ 9,920.00 6/30/98 $ 9,919.11 $ 9,510.00 7/31/98 $ 9,102.84 $ 8,800.00 8/31/98 $ 7,328.89 $ 7,310.00 9/30/98 $ 7,884.93 $ 7,630.00 10/30/98 $ 8,201 $ 8,480 11/30/98 $ 8,626 $ 8,790 12/30/98 $ 9,151 $ 8,970 1/30/99 $ 9,265 $ 8,850 2/28/99 $ 8,507 $ 8,410 3/30/99 $ 8,623 $ 8,470 4/30/99 $ 9,386 $ 8,880 5/30/99 $ 9,513 $ 9,200 6/30/99 $ 9,925 $ 9,640 7/30/99 $ 9,645 $ 9,380 8/30/99 $ 9,278 $ 9,030 9/30/99 $ 9,267 $ 8,810 10/30/99 $ 9,296 $ 9,230 The chart shows the value of a hypothetical initial investment of $10,000 in the Fund, the Russell 2000 Index on March 12, 1998 and held through October 31, 1999. The Russell 2000 Index is widely recognized unmanaged indices of common stock prices. Performance figures include the change in value of the stocks in the indices, reinvestment of dividends, and are not annualized. The index returns do not reflect expenses, which have been deducted from the Fund's return. The Fund's return represents past performance and is not predictive of future results. Portfolio's Largest Positions As of October 31, we were 88.5% invested in stocks and 11.5% in cash. At period end our five largest holdings consisted of the following: Dress Barn operates a national chain of value-priced specialty stores offering fashion apparel to working women. Computer Sciences Corporation provides information technology services to commercial and government markets. CSG Systems International provides customer care and billing solutions for cable providers, on-line service markets, and telephony providers. Pepsico, Inc operates world-wide soft drink, juice, and snack food businesses. Products include Pepsi Cola, Slice, Tropicana Pure Premium, as well as snack foods such as Lay's potato chips, Doritos and Rold Gold pretzels. MCI Worldcom, Inc. provides consumers and businesses with local, long- distance, Internet, data, and international communications services. Investment Outlook The third-quarter earnings reports have been coming in strongly. With the yield curve steepening in anticipation of another Fed rate hike, it seems that the markets are well positioned for a rotation back to a more valuation-sensitive approach. One wild card is the Y2K phenomenon. While we have recently heard companies blaming earnings weakness on Y2K, it has not been as wide spread as many expected. We are closely tracking investor perceptions and popular thought. If enough people become concerned - regardless of whether the concerns have any rational basis - the concerns themselves can cause significant short-term dislocations in the markets. Thus far, it seems the markets, while increasingly fickle, have been willing to attribute news of such Y2K weakness to the specific companies reporting it, as opposed to a "broad-brushed approach." If such is not the case, investors may gravitate back toward the large growth stocks without regard to valuation. We will monitor these actions closely and adjust tactically if the situation warrants. We have been selectively buying shares in finance, healthcare and technology stocks when these fears grow. Especially as of late, the stocks we have been buying have target prices 30-50% higher over the next twelve to eighteen months. On the other side, we will be willing to part with shares when investors become overly optimistic and drive share prices back through their fair values. It is times like this that remind us that stock investing is a long-term process. In order to enjoy returns greater than you would get in a money market fund or a certificate of deposit, you have to be willing to live with the volatility. We remain convinced that market timing will not work and are confident that purchasing the stocks of solid, growing companies at attractive valuations will continue to provide good returns over reasonable time periods. Summary Both in my personal life and at work, I am amazed at how fast change is occurring. My daughters are growing up much more rapidly than I think they should, and the investment world is changing at a pace never before seen. Companies that may not have even existed two years ago are being valued in the billions of dollars, and the speed of information flow is overwhelming at times. The increasing complexity is also causing us to make rapid changes. In the last year and a half we have added three new people and have taken a more pro-active approach to searching out new investment ideas for the fund. The stocks you are seeing in the fund like CSG Systems, Transaction Systems Architects and BMC Software may not be as familiar as Disney, Gillette or General Motors, but we believe the profit potential is something to be excited about. We continue to avoid buying stocks values in the billions that could theoretically make money some day. A good example of this is a company called Webvan. This company recently went public and was valued at over $8 billion. The company has revenues of $11.9 million and while it hopes to have revenues of $500 million in 2001, it also expects to lose over $300 million in that same year. We believe that we will make significantly more money investing in Albertson's. Albertson's is valued at a little over $14 billion and expects to make a profit after tax next year of over $1.2 billion. While we acknowledge that Internet grocers will have some impact on traditional grocers, we prefer to invest in the company that has shown increasing revenues and profits for the last 29 years, than "invest" in an Internet grocer that is projecting a loss of $300 million two years down the road. While quarter-to-quarter and annual results will vary, we will continue to uncover value opportunities often overlooked by other investors. Successful investing in today's busy world takes time and patience. We have the experience necessary to make it work for our shareholders. Sincerely, Mark Matsko, CFA Portfolio Manager This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund; this report is not authorized for distribution to prospective shareholders unless preceded or accompanied by an effective prospectus. Read the prospectus carefully before investing.
Marathon Value Fund Schedule of Investments - October 31, 1999 Common Stocks - 89.1% Shares Value BASIC INDUSTRIES - 6.2% Manufacturers - Diversified - 4.7% Teleflex, Inc. 2,400 $ 81,750 Tyco International, Inc. 2,750 109,828 ------------------- ------------------- 191,578 ------------------- ------------------- Paper & Forest Products - 1.5% T J International Inc. 2,000 62,000 ------------------- ------------------- TOTAL BASIC INDUSTRIES 253,578 ------------------- ------------------- CONSTRUCTION & REAL ESTATE - 3.8% Building Materials - 2.1% Masco Corp. 2,800 85,400 ------------------- ------------------- Construction - 1.7% Clayton Homes, Inc. 7,000 70,875 ------------------- ------------------- TOTAL CONSTRUCTION & REAL ESTATE 156,275 ------------------- ------------------- DURABLES - 0.5% Consumer Durables - 0.5% Helen of Troy Ltd. (b) 2,500 22,344 ------------------- ------------------- ENERGY - 3.5% Oil & Gas- 3.5% Anadarko Petroleum, Inc. 3,300 101,681 Texaco, Inc. 700 42,963 ------------------- ------------------- 144,644 ------------------- ------------------- FINANCE - 14.0% Banks - 7.6% Bank of America Corp. 1,900 122,313 Chase Manhattan, Inc. 1,000 87,375 Citigroup, Inc. 1,900 102,837 ------------------- ------------------- 312,525 ------------------- ------------------- Federal Sponsored Credit - 2.2% Federal National Mortgages 1,300 91,975 ------------------- ------------------- Investment Company - 2.6% Bear Stearns Cos. 2,535 108,054 ------------------- ------------------- Marathon Value Fund Schedule of Investments - October 31, 1999 - continued Common stocks - continued Shares Value FINANCE - continued Real Estate Investment Trusts - 1.6% Ventas, Inc.(b) 13,600 $ 66,300 ------------------- ------------------- TOTAL FINANCE 578,854 ------------------- ------------------- HEALTH - 12.4% Diversified - 1.9% Warner-Lambert, Inc. 1,000 79,812 ------------------- ------------------- Drugs & Pharmaceuticals - 6.2% Lilly (Eli) 1,800 123,975 Merck & Co., Inc. 600 47,737 Watson Pharmaceuticals (b) 2,600 82,550 ------------------- ------------------- 254,262 ------------------- ------------------- Medical Equipment & Supplies - 4.3% Biomet, Inc. 3,100 93,388 Guidant Corp. 1,650 81,469 ------------------- ------------------- 174,857 ------------------- ------------------- TOTAL HEALTH 508,931 ------------------- ------------------- MEDIA & LEISURE - 5.7% Broadcasting - 3.5% Comcast Corp-class A, Non-voting 1,900 80,038 MediaOneGroup (b) 900 63,956 ------------------- ------------------- 143,994 ------------------- ------------------- Entertainment - 2.2% Time Warner, Inc. 1,300 90,594 ------------------- ------------------- TOTAL MEDIA & LEISURE 234,588 ------------------- ------------------- NON-DURABLES - 3.3% Beverages - 3.3% PepsiCo, Inc. 3,900 135,281 ------------------- ------------------- RETAIL & WHOLESALE - 9.6% Apparel Stores - 6.9% Dress Barn (b) 9,100 161,810 Men's Warehouse (b) 5,600 122,850 ------------------- ------------------- 284,660 ------------------- ------------------- Marathon Value Fund Schedule of Investments - October 31, 1999 - continued Common stocks - continued Shares Value RETAIL & WHOLESALE - continued Grocery Stores - 2.7% Albertson's Inc. 3,020 $ 109,664 ------------------- ------------------- TOTAL RETAIL & WHOLESALE 394,324 ------------------- ------------------- SERVICES - 2.0% Services - 2.0% NOVA Corp. (b) 3,100 80,600 ------------------- ------------------- TECHNOLOGY - 21.1% Communications Equipment - 2.9% ADC Telecommunications, Inc.(a) (b) 2,500 119,219 ------------------- ------------------- Computer Services & Software - 16.0% BMC Software (b) 1,100 70,606 Computer Sciences Corp. (b) 2,000 137,375 Compuware Corp. (b) 3,700 102,906 CSG Systems International, Inc. (b) 4,000 137,250 SunGard Data Systems (b) 5,000 122,188 Transaction Systems Architects (b) 2,900 89,175 ------------------- ------------------- 659,500 ------------------- ------------------- Computers & Office Equipment - 2.2% International Business Machines, Inc. 900 88,537 ------------------- ------------------- TOTAL TECHNOLOGY 867,256 ------------------- ------------------- TRANSPORTATION - 3.9% Trucking & Freight - 3.9% Covenant Transport - Class A (b) 5,000 76,875 Werner Enterprises 5,150 82,078 ------------------- ------------------- 158,953 ------------------- ------------------- UTILITIES - 3.1% Telephone Services - 3.1% MCI WorldCom (b) 1,500 128,719 ------------------- ------------------- TOTAL COMMON STOCKS (Cost $3,610,996) 3,664,347 ------------------- -------------------
Marathon Value Fund Schedule of Investments - October 31, 1999 - continued Principal Amount Value MONEY MARKET SECURITIES - 11.5% Firstar Treasury Fund, 4.41% (c) (Cost $472,900) 472,900 $ 472,900 ------------------- ------------------- TOTAL INVESTMENTS - 100.6% (Cost $4,083,896) 4,137,247 ------------------- ------------------- Other Assets less Liabilities - (0.6%) (21,153) ------------------- ------------------- TOTAL NET ASSETS - 100.0% $4,116,094 =================== =================== (a) Security is segregated as collateral for options written. (b) Non-income producing (c) Variable rate security; the coupon rate shown represents the rate at October 31, 1999. Call Options Written October 31, 1999 Shares Subject Common Stocks / Expiration Date @ Exercise Price to Call Value ADC Telecommunications, Inc. / February 2000 @ 40 (premiums received $18,312) 2,500 $ 24,375 =================== ===================
Marathon Value Fund October 31, 1999 Statement of Assets & Liabilities Assets Investment in securities, at value (cost $4,083,896) $4,137,247 Cash 4,959 Dividends receivable 1,939 Interest receivable 1,349 ------------------- Total assets 4,145,494 Liabilities Accrued investment advisory fee payable $ 5,025 Covered call options written - premiums received $18,312 24,375 ------------------- Total liabilities 29,400 ------------------- Net Assets $4,116,094 =================== Net Assets consist of: Paid in capital $4,348,518 Undistributed Net Investment Loss (16) Accumulated undistributed net realized loss on security transactions (337,914) Accumulated undistributed net realized gain on options transactions 58,218 Net unrealized appreciation on investments 47,288 ------------------- Net Assets, for 446,066 shares $4,116,094 =================== Net Asset Value Net Assets Offering price and redemption price per share ($4,116,094 / 446,066) $ 9.23 ===================
Marathon Value Fund Statement of Operations for the year ended October 31, 1999 Investment Income Dividend Income $ 31,693 Interest Income 22,418 -------------------- Total Income 54,111 Expenses Investment advisory fee $ 56,824 Trustees' fees 1,377 ------------------- Total expenses before reimbursement 58,201 Reimbursed expenses (1,377) ------------------- Total operating expenses 56,824 -------------------- Net Investment Income (Loss) (2,713) -------------------- Realized & Unrealized Gain Net realized gain (loss) on investment securities (79,076) Net realized gain on options transactions 39,468 Change in net unrealized appreciation (depreciation) on investment securities 352,742 ------------------- Net gain (loss) on investment securities 313,134 -------------------- Net increase in net assets resulting from operations $ 310,421 ====================
Marathon Value Fund Statement of Changes in Net Assets Year Period ended ended October 31, October 31, 1999 1998 (a) ------------------ ----------------- Increase/(Decrease) in Net Assets Operations Net investment income $ (2,713) $ 6,326 Net realized gain (loss) on investment securities (79,076) (258,838) Net realized gain on options transactions 39,468 18,750 Change in net unrealized appreciation (depreciation) 352,742 (305,454) ------------------ ----------------- Net increase (decrease) in net assets ------------------ ----------------- resulting from operations 310,421 (539,216) ------------------ ----------------- Distributions to shareholders From net investment income (6,342) - ------------------ ----------------- Share Transactions Net proceeds from sale of shares 617,317 3,806,088 Shares issued in reinvestment of distributions 6,329 - Shares redeemed (70,282) (8,221) ------------------ ----------------- Net increase in net assets resulting from share transactions 553,364 3,797,867 ------------------ ----------------- Total increase in net assets 857,443 3,258,651 Net Assets Beginning of period 3,258,651 - ------------------ ----------------- End of period [including accumulated undistributed net investment income(loss) of $(16) and $6,326, respectively] $4,116,094 $3,258,651 ================== ================= (a) March 12, 1998 (commencement of operations) to October 31, 1998
Marathon Value Fund Financial Highlights Year Period ended ended October 31, October 31, 1999 1998 (a) ------------------ ------------------ Selected Per Share Data Net asset value, beginning of period $ 8.48 $ 10.00 ------------------ ------------------ Income from investment operations Net investment income (0.01) 0.02 Net realized and unrealized gain (loss) 0.78 (1.54) ------------------ ------------------ Total from investment operations 0.77 (1.52) ------------------ ------------------ Less Distributions From net investment income (0.02) - ------------------ ------------------ Net asset value, end of period $ 9.23 $ 8.48 ================== ================== Total Return (b) 9.04% (15.20)% Ratios and Supplemental Data Net assets, end of period (000) $4,116 $3,259 Ratio of expenses to average net assets 1.48% 1.47% (c) Ratio of expenses to average net assets before reimbursement 1.51% 1.50% (c) Ratio of net investment income (loss) to average net assets (0.07)% 0.36% (c) Ratio of net investment income (loss) to average net assets before reimbursement (0.11)% 0.33% (c) Portfolio turnover rate 140.37% 61.04% (c) (a) March 12, 1998 (commencement of operations) to October 31, 1998 (b) For periods of less than a full year, total returns are not annualized. (c) Annualized
Marathon Value Fund Notes To Financial Statements October 31, 1999 NOTE 1. ORGANIZATION Marathon Value Fund (the "Fund") is organized as a series of the AmeriPrime Funds, an Ohio business trust (the "Trust"). The Fund is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The Fund's investment objective is to provide maximum long-term capital appreciation. The Declaration of Trust permits the trustees to issue an unlimited number of shares of beneficial interest of separate series without par value. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. Securities Valuation- Securities which are traded on any exchange or on the NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking a last sale price, a security is valued at its last bid price except when, in the Advisor's opinion, the last bid price does not accurately reflect the current value of the security. All other securities for which over-the-counter market quotations are readily available are valued at their last bid price. When market quotations are not readily available, when the Advisor determines the last bid price does not accurately reflect the current value or when restricted securities are being valued, such securities are valued as determined in good faith by the Advisor, in conformity with guidelines adopted by and subject to review of the Board of Trustees of the Trust (the "Board"). Fixed-income securities generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Advisor believes such prices accurately reflect the fair market values of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. When prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Advisor, subject to review of the Board. Short-term investments in fixed-income securities with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued by using the amortized cost method of valuation, which the Board has determined will represent fair value. Marathon Value Fund Notes To Financial Statements October 31, 1999 - continued NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued Option writing- When the Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current fair 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 investments. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is 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 or currency 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. The Fund as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option. Federal Income Taxes - The Fund intends to qualify each year as a "regulated investment company" under the Internal Revenue Code of 1986, as amended. By so qualifying, the Fund will not be subject to federal income taxes to the extent that it distributes substantially all of its net investment income and any realized capital gains. Dividends and Distributions - The Fund intends to comply with federal tax rules regarding distribution of substantially all of its net investment income and capital gains. These rules may cause multiple distributions during the course of the year. The Fund has loss carryforwards of $279,696 at October 31, 1999; $39,608 expiring in 2007 and $240,088 expiring in 2006. 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 accrual basis. Discounts and premiums on securities purchased are amortized over the life of the respective securities. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund retains Burroughs & Hutchinson, Inc. (the "Advisor") to manage the Fund's investments. Mark Matsko, the Fund's portfolio manager, is primarily responsible for the day-to-day management of the Fund's portfolio. Marathon Value Fund Notes To Financial Statements October 31, 1999 - continued NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued Under the terms of the management agreement, (the "Agreement"), the Advisor manages the Fund's investments subject to approval of the Board of Trustees and pays all expenses of the Fund except brokerage commissions, taxes, interest, fees and expenses of the non-interested person trustees, and extraordinary expenses. As compensation for its management services and agreement to pay the Fund's expenses, the Fund is obligated to pay the Advisor a fee computed and accrued daily and paid monthly at an annual rate of 1.48% of the average daily net assets of the Fund. It should be noted that most investment companies pay their own operating expenses directly, while the Fund's expenses, except those specified above, are paid by the Advisor. For the year ended October 31, 1999, the Advisor has received a fee of $56,824 from the Fund. The Advisor has voluntarily agreed to reimburse other expenses for the fiscal year ended October 31, 1999 to the extent necessary to maintain total operating expenses at the rate of 1.48%. For the year ended October 31, 1999, the Advisor reimbursed expenses of $1,377. There is no assurance that such reimbursement will continue in the future. The Fund retains AmeriPrime Financial Services, Inc. (the "Administrator") to manage the Funds business affairs and provide the Fund with administrative services, including all regulatory reporting and necessary office equipment and personnel. For the year ended October 31, 1999, the Administrator received fees of $30,000 from the Advisor for administrative services provided to the Fund. The Fund retains AmeriPrime Financial Securities, Inc. (the Distributor) to act as the principal distributor of the Fund's shares. There were no payments made to the Distributor for the year ended October 31, 1999. Certain members of management of the Administrator and the Distributor are also members of management of the AmeriPrime Trust. NOTE 4. SHARE TRANSACTIONS As of October 31, 1999, there was an unlimited number of authorized shares for the Fund. Paid in capital at October 31, 1999 was $4,348,518. Marathon Value Fund Notes To Financial Statements October 31, 1999 - continued NOTE 4. SHARE TRANSACTIONS- continued Transactions in shares were as follows: - --------------------------------------------------------------------------------------------------------------------
Year ended Period ended October 31, 1999 October 31, 1998 (a) - -------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- Shares Dollars Shares Dollars - ------------------------------------------------------------------------------------------------------------------------- Shares sold 69,009 $617,317 385,265 $3,806,088 - ------------------------------------------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends 718 6,329 - - - ------------------------------------------------------------------------------------------------------------------------- Shares redeemed (7,846) (70,282) (1,080) (8,221) - ------------------------------------------------------------------------------------------------------------------------- 61,881 $553,364 384,185 $3,797,867 - ------------------------------------------------------------------------------------------------------------------------- ====== ======= ====== ======== (a) March 12, 1998 (commencement of operations) to October 31, 1998
NOTE 5. INVESTMENTS For the year ended October 31, 1999, purchases and sales of investment securities, other than short-term investments, aggregated $5,043,345 and $4,658,167, respectively. As of October 31, 1999, the gross unrealized appreciation for all securities totaled $307,078 and the gross unrealized depreciation for all securities totaled $259,790 for a net unrealized appreciation of $47,288. The aggregate cost of securities for federal income tax purposes at October 31,1999, was $4,083,896. NOTE 6. ESTIMATES Preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Marathon Value Fund Notes To Financial Statements October 31, 1999 - continued NOTE 7. RELATED PARTY TRANSACTIONS The Advisor is not a registered broker-dealer of securities and thus does not receive commissions on trades made on behalf of the Fund. The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a Fund creates a presumption of control of the Fund, under Section 2(a)(9) of the Investment Company Act of 1940. As of October 31, 1999, Charles Schwab & Co. owned of record in aggregate more than 73% of the Fund. NOTE 8. CALL OPTIONS WRITTEN As of October 31, 1999, portfolio securities valued at $119,219 were held in escrow by the custodian as cover for call options written by the Fund. Transactions in options written during the year ended October 31, 1999 were as follows: - --------------------------------------------------------------------------------------------------------------
Number of Premiums Contracts Received - -------------------------------------------------------------------------------------------------------------- Options outstanding at October 31, 1998 210 $45,075 - -------------------------------------------------------------------------------------------------------------- Options written 25 18,312 - -------------------------------------------------------------------------------------------------------------- Options terminated in closing purchase transactions (65) (7,394) - -------------------------------------------------------------------------------------------------------------- Options expired (115) (34,644) - -------------------------------------------------------------------------------------------------------------- Options exercised (30) (3,037) - -------------------------------------------------------------------------------------------------------------- Options outstanding at October 31, 1999 25 $18,312 - -------------------------------------------------------------------------------------------------------------- ====== =========
NOTE 9. RECLASSIFICATIONS In accordance with SOP 93-2, the fund has recorded a reclassification in the capital accounts. As of October 31, 1999, the fund recorded permanent book/tax differences of $2,713 from net investment loss to paid-in-capital. This reclassification has no impact on the net asset value of the fund and is designed generally to present undistributed income and realized gains on a tax basis which is considered to be more informative to shareholders. INDEPENDENT AUDITOR'S REPORT To The Shareholders and Board of Trustees Marathon Value Fund We have audited the accompanying statement of assets and liabilities of the Marathon Value Fund, including the schedule of portfolio investments, as of October 31, 1999, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and financial highlights for each of the periods indicated. 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 as of October 31, 1999 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 the Marathon Value Fund as of October 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 for each of the periods indicated, in conformity with generally accepted accounting principles. McCurdy & Associates CPA's, Inc. Westlake, Ohio 44145 November 21, 1999 Fountainhead Special Value Fund Shareholder Letter Dear Fellow Shareholders: October 31, 1999 marked the completion of the Fountainhead Special Value Fund's third fiscal year. Our long-term results, thus far, are outstanding. Since the Fund's inception on December 31, 1996, our cumulative return is 131.2%. The annualized return for this period is a very rewarding 34.4%, versus 13.6% for the Russell Midcap Index, 25.6% for the S&P 500 Index, and 7.6% for the Russell 2000 Index. For the 1999 fiscal year, which turned out to be a stellar one for Fountainhead, the Fund had a return of 81.3%, easily outperforming any comparable benchmark. Over the same one-year period, the Russell Midcap returned 17.6%, the S&P 500 27.1%, and the Russell 2000 16.1%. - ------------------------------------------------------------------------------ Returns for the Periods Ended 10/31/99 - ------------------------------------------------------------------------------ Average Annual Return Since Inception - ------------------------------------------------------------------------------ Fund/Index 1 Year December 31, 1996 - ---------- - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ Fountainhead Special Value Fund 81.3% 34.4% - ------------------------------------------------------------------------------ Russell MidCap Index 17.6% 15.3% - ------------------------------------------------------------------------------ Russell 2000 Index 16.1% 7.5% - ------------------------------------------------------------------------------
Fountainhead Special Value Russell 2000 Russell Midcap Fund - $23,105 Index- $12,266 Index - $14,960 12/96 $10,000 $10,000 $10,000 1/97 $10,420 $10,200 $10,374 2/97 $10,830 $9,952 $10,358 3/97 $10,140 $9,482 $9,918 4/97 $9,860 $9,509 $10,165 5/97 $10,869 $10,567 $10,907 6/97 $11,560 $11,021 $11,264 7/97 $11,990 $11,533 $12,203 8/97 $11,860 $11,797 $12,270 9/97 $12,950 $12,661 $12,759 10/97 $13,370 $12,105 $12,263 11/97 $13,070 $12,026 $12,555 12/97 $13,665 $12,237 $12,902 1/98 $13,433 $12,043 $12,659 2/98 $14,757 $12,933 $13,649 3/98 $15,910 $13,466 $14,296 4/98 $16,476 $13,540 $14,332 5/98 $15,758 $12,810 $13,887 6/98 $16,232 $12,837 $14,080 7/98 $15,424 $11,798 $13,409 8/98 $11,976 $9,506 $11,263 9/98 $12,229 $10,251 $11,992 10/98 $12,481 $10,669 $12,810 11/98 $11,730 $11,232 $13,417 12/98 $12,913 $11,933 $14,205 1/99 $13,967 $12,088 $14,181 2/99 $14,240 $11,114 $13,708 3/99 $15,352 $11,285 $14,137 4/99 $16,534 $12,296 $15,182 5/99 $17,382 $12,476 $15,138 6/99 $18,665 $13,040 $15,673 7/99 $19,008 $12,683 $15,242 8/99 $18,927 $12,213 $14,847 9/99 $20,210 $12,216 $14,324 10/99 $23,105 $12,266 $14,960
The chart shows the value of a hypothetical initial investment of $10,000 in the Fund, the Russell MidCap Index, and the Russell 2000 Index on December 31, 1996 and held through October 31, 1999. The Russell MidCap Index and the Russell 2000 Index are widely recognized, unmanaged indices of common stock prices. Performance figures include the change in value of the stocks in the indices and the reinvestment of dividends; they are not annualized. The index returns do not reflect expenses, which have been deducted from the Fund's return. THE FUND'S RETURN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF FUTURE RESULTS. Aside from performance, this last fiscal year has been an exciting year for the Fund as several major milestones were passed. First, we received a ticker symbol, KINGX, so it is now easier for you to access our NAV. Second, Fountainhead's results have propelled the Fund to the top of its peer group. As of October 29, 1999, the Fund ranked first in performance for the one year ended October 31, 1999, out of 159 mid-cap value funds, according to Lipper Analytical Services. Finally, the Fund topped $14 million in assets. Performance this past year was driven primarily by outstanding results from our holdings in telecommunications stocks. In late December 1998, Vodafone entered into a definitive agreement to acquire AirTouch Communications at a significant premium--an action which would serve to unlock the inherent value in the wireless industry. AirTouch was a major domino to fall in the wireless group, sparking a round of consolidation and intense interest in the industry; leading to an explosion in share price appreciation. For example, for the year ended October 31, 1999, Rural Cellular has risen 402% in price, OmniPont +345%, Nextel Communications +327%, Global Crossing (which acquired Frontier Communications) +232%, Telephone & Data Systems +230%, Western Wireless +196%, and Clearnet Communications +179%--all of which are owned by the Fund. In addition to telecommunications stocks, strong performance was generated by broadcasting/cable stocks (CMP Media + 231%, Cablevision Systems +68%, Getty Images +67%, MediaOne Group +60%, and UnitedGlobalCom +58%). Some of the Fund's other holdings, such as select healthcare, financial, and consumer services stocks, underperformed over the period, but still have good risk/reward potential. We would like to stress that while fiscal 1999 was an outstanding year and shareholders were amply rewarded, such a robust performance is not likely to be duplicated in fiscal 2000. Regardless, we are optimistic about our holdings and about mid- and small-caps in general. The Fund's numbers look especially impressive when viewed against this year's overall weaker performance in the broader market. For the average stock, the period from April 1998 through September 1999 was in reality a bear market. The majority of stocks, over 50%, were down 20% or more from their 52-week high. The equity markets continued to be very narrow for the majority of the year, with only a handful of stocks accounting for the moves in the major indices. For example, through September 30, 1999, only 6 stocks, or 1.2% of the entire index, accounted for the entire return in the S&P 500 Index. The combination of rising interest rates, rising oil and gold prices, and a stronger dollar caused quite a bit of uncertainty, contributing to continued underperformance by the broader market versus a handful of megacap favorites. In October 1999, Alan Greenspan once again spoke cautiously about the lofty valuation of the stock market. We believe it prudent to point out that we do not believe these comments are aimed at the majority of stocks, but at a handful of securities such as the "dot coms," Microsofts, and America Onlines of the world. Greenspan's model, which compares the yield for the ten-year Treasury note with the S&P 500 earnings yield, finds the stock index more than 30% overvalued. However, these comments are not representative of the valuations accorded most shares. For example, the median P/E for the S&P 500 is currently 15.2x year 2000 earnings estimates. In addition, on a valuation basis, small-cap stocks experienced their largest valuation dispersion versus large-cap stocks in history in 1998. The bottom line is that the risk/reward for many stocks is very favorable today. With respect to mid- and small-caps, there is a silver lining on the horizon. The overall economic environment appears to be better than what people thought a few short months ago. For starters, the U.S. economy is still experiencing growth, but with inflation in check. Some early signs of trouble, such as rising employment costs and escalating gold and oil prices, have begun to fade away as productivity gains and technological advances appear to be paving the way for a world which can accommodate controlled growth with no major inflationary pressures, a marked change from the past. In addition, the resurrection of Asia and a pick-up in global growth are providing an environment for more robust corporate growth. Many large-cap stocks are trading at such high valuation benchmarks that there is little room for error with respect to not meeting Wall Street's lofty estimates. Many people believe that large-cap stocks are "safe" stocks. This is not always the case when valuations become extended. In 1999, a sizable number of large-caps, many of which are household names, fell by the wayside and experienced huge one-day declines due to an earnings shortfall. Examples include McKesson HBOC which declined 48% in price in April, Service Corp. -44% in January, Raytheon -44% in October, Waste Management -37% in July, and Mattel - -30% in October. In fact, one-day plunges of at least 15% in components of the S&P 500 Index have almost doubled from 35 in 1997 to 65 thus far in 1999. On the opposite side, many good companies in the mid- and small-cap arena can be purchased today with valuations which more than discount most potential bad news. What is the case for a reversal in performance in the mid- and small-cap group? First, asset classes tend to outperform/underperform each other in cycles. Mid- and small-cap stocks have been underperforming their large-cap brethren for the majority of the 1990s. If you look at historical results over long time frames, these periods of underperformance always manage to reverse themselves. Second, greater confidence in the economy and the stabilization and eventual decline of interest rates should spill over to increased buying in a broader range of stocks. Third, the level of inflows into mid- and small-cap mutual funds may accelerate. After suffering massive redemptions in the first quarter of 1999, money flows into these funds have turned modestly positive over the past six months. Any institutional return to the smaller stocks will amplify performance in this currently liquidity-challenged group. In summary, while fiscal 1999 was an outstanding year, we believe performance results in 2000 will more than likely not mimic those generated in 1999. We are, however, optimistic about the future and believe much opportunity currently exists in mid- and small-cap stocks. Furthermore, we believe that we are well positioned for an excellent 2000. This optimism is indicated by the fact that all our investment team and key administrative staff are shareholders in the Fund. Sincerely, Roger E. King Chairman and President
Fountainhead Special Value Fund Schedule of Investments - October 31, 1999 Common Stocks - 99.6% Shares Value Cable & Other Pay Television Services - 7.9% Adelphia Communication Corp. - Class A (a) 10,308 $ 563,075 Cablevision Systems Corp. - Class A (a) 23,000 547,256 ---------------------- ---------------------- 1,110,331 ---------------------- ---------------------- Calculation & Accounting Machines - 3.1% Diebold, Inc. 16,700 438,375 ---------------------- ---------------------- Communication Services - 0.4% Convergent Communications Inc. (a) 6,000 60,000 ---------------------- ---------------------- Computer Communication Equipment - 2.7% Cabletron Systems, Inc. (a) 8,100 380,938 ---------------------- ---------------------- Electric & Other Services Combined - 1.2% Citizens Utilities Company 15,000 173,437 ---------------------- ---------------------- Electromedical & Electrotherapeutic Apparatus - 2.0% St. Jude Medical, Inc. (a) 10,200 279,225 ---------------------- ---------------------- Laboratory Analytical Instruments - 3.2% Beckman Coulter, Inc. 9,800 450,800 ---------------------- ---------------------- Life Insurance - 2.2% ReliaStar Financial Corp. 7,000 300,563 ---------------------- ---------------------- Pharmaceuticals - 9.2% Dura Pharmaceuticals, Inc. (a) 67,900 867,850 Watson Pharmaceuticals, Inc. (a) 13,200 419,100 ---------------------- ---------------------- 1,286,950 ---------------------- ---------------------- Radio Telephone Communications - 30.5% NEXTEL Communications, Inc - Class A (a) 7,900 680,881 Omnipoint Corp. (a) 16,800 1,388,100 Price Communications Corp. 22,000 478,500 Rural Cellular Corp. - Class A (a) 11,400 686,138 Telephone & Data Systems 6,800 783,700 Western Wireless Corp. - Class A 5,200 274,950 ---------------------- ---------------------- 4,292,269 ---------------------- ---------------------- Services-Business Services - 4.9% Getty Images, Inc. (a) 22,500 693,281 ---------------------- ---------------------- Fountainhead Special Value Fund Schedule of Investments - October 31, 1999 - continued Common Stocks - continued Shares Value Services-Computer Processing & Data Preparation - 4.0% CSG Systems International, Inc. (a) 16,500 $ 566,156 ---------------------- ---------------------- Telephone Communications - 22.0% Cincinnati Bell 9,100 189,394 Destia Communications, Inc. (a) 18,000 252,000 Global Crossing Ltd. (a) 28,290 979,541 IXC Communications, Inc. (a) 11,700 505,294 Media One Group, Inc. (a) 2,900 206,081 RSL Communications - Class A (a) 13,500 295,313 Viatel, Inc. (a) 9,400 313,725 Williams Communications Group, Inc. (a) 5,000 159,375 Winstar Communications, Inc. (a) 5,000 194,062 ---------------------- ---------------------- 3,094,785 ---------------------- ---------------------- Wholesale-Electronic Parts & Equipment - 6.3% Clearnet Communications - Class A (a) (c) 16,700 367,400 United Global Communications (a) 6,000 522,000 ---------------------- ---------------------- 889,400 ---------------------- ---------------------- TOTAL COMMON STOCKS (Cost $9,191,420) 14,016,510 ---------------------- ---------------------- Principal Amount Value Money Market Securities - 2.7% Firstar Treasury Fund, 4.41% (b) (Cost $385,203) 385,203 385,203 ---------------------- ---------------------- TOTAL INVESTMENTS - 102.3% (Cost $9,576,623) 14,401,713 ---------------------- ---------------------- Other Assets less Liabilities - (2.3%) (333,908) ---------------------- ---------------------- Total Net Assets - 100.0% $ 14,067,805 ====================== ====================== (a) Non-income producing (b) Variable rate security; the coupon rate shown represents the rate at October 29, 1999. (c) American Depository Receipt
Fountainhead Special Value Fund October 31, 1999 Statement of Assets & Liabilities Assets Investment in securities, at value (Cost $9,576,623) $ 14,401,713 Cash 24,743 Receivable for investment sold 1,120,895 Dividends receivable 1,435 Interest receivable 634 Receivable from investment advisor for reimbursed expenses 15,035 ---------------------- Total assets 15,564,455 Liabilities Accrued investment advisory fee payable $ 15,622 Payable for securities purchased 1,467,278 Payable for fund shares redeemed 45 Other payables and accrued expenses 13,705 ---------------------- Total liabilities 1,496,650 ---------------------- Net Assets $ 14,067,805 ====================== Net Assets consist of: Paid in capital $ 8,672,563 Accumulated undistributed net realized gain on investments 570,152 Net unrealized appreciation on investments 4,825,090 ---------------------- Net Assets, for 615,349 shares $ 14,067,805 ====================== Net Asset Value Net Assets Offering price and redemption price per share ($14,067,805 / 615,349) $ 22.86 ======================
Fountainhead Special Value Fund Statement of Operations for the year ended October 31, 1999 Investment Income Dividend Income $ 21,973 Interest Income 5,036 ------------------ Total Income 27,009 Expenses Investment advisory fee $ 128,855 Administration fees 32,500 Pricing & bookkeeping fees 15,797 Transfer agent fees 14,260 Legal fees 8,397 Shareholder reports 6,133 Custodian fees 6,500 Registration fees 5,686 Audit fees 5,500 Trustees' fees 1,377 Miscellaneous 514 ------------------ Total expenses before waivers and reimbursements 225,519 Waived fees and reimbursed expenses (112,738) ------------------ Total operating expenses 112,781 ------------------ Net Investment Income (Loss) (85,772) ------------------ Realized & Unrealized Gain (Loss) Net realized gain on investment securities 670,151 Change in net unrealized appreciation (depreciation) on investment securities 5,115,600 ------------------ Net gain on investment securities 5,785,751 ------------------ Net increase in net assets resulting from operations $ 5,699,979 ==================
Fountainhead Special Value Fund Statement of Changes in Net Assets Year Year ended ended October 31, October 31, 1999 1998 ---------------------- ---------------------- Increase/(Decrease) in Net Assets Operations Net investment income (loss) $ (85,772) $ (37,441) Net realized gain (loss) on investment securities 670,151 (188) Change in net unrealized appreciation (depreciation) 5,115,600 (655,499) ---------------------- ---------------------- Net increase (decrease) in net assets resulting from operations 5,699,979 (693,128) ---------------------- ---------------------- Distributions to shareholders From net realized gain - (34,177) ---------------------- ---------------------- Share Transactions Net proceeds from sale of shares 3,403,006 4,888,881 Shares issued in reinvestment of distributions - 34,164 Shares redeemed (1,672,500) (187,621) ---------------------- ---------------------- Net increase (decrease) in net assets resulting from share transactions 1,730,506 4,735,424 ---------------------- ---------------------- Total increase in net assets 7,430,485 4,008,119 Net Assets Beginning of period 6,637,320 2,629,201 ---------------------- ---------------------- End of period [including accumulated undistributed net investment income (loss) of $0 and $0, respectively] $ 14,067,805 $ 6,637,320 ====================== ======================
Fountainhead Special Value Fund Financial Highlights Year Year Period ended ended ended October 31, October 31, October 31, 1999 1998 1997 (a) ----------------- ------------------ ------------------ Selected Per Share Data Net asset value, beginning of period $ 12.61 $ 13.35 $ 10.00 ----------------- ------------------ ------------------ Income from investment operations Net investment income (loss) (0.16) (0.09) (0.02) Net realized and unrealized gain (loss) 10.41 (0.51) 3.37 ----------------- ------------------ ------------------ Total from investment operations 10.25 (0.60) 3.35 ----------------- ------------------ ------------------ Less Distributions From net realized gain - (0.14) - ----------------- ------------------ ------------------ Net asset value, end of period $ 22.86 $ 12.61 $ 13.35 ================= ================== ================== Total Return (b) 81.28% (4.67)% 33.70% Ratios and Supplemental Data Net assets, end of period (000) $14,068 $6,637 $2,629 Ratio of expenses to average net assets 1.25% 1.20% 0.97% (c) Ratio of expenses to average net assets before fee waivers and reimbursement 2.50% 2.76% 8.25% (c) Ratio of net investment income (loss) to average net assets (0.95)% (0.67)% (0.16)(c) Ratio of net investment income (loss) to average net assets before fee waivers and reimbursement (2.20)% (2.22)% (7.45)(c) Portfolio turnover rate 177.56% 108.31% 130.63% (c) (a) December 31, 1996 (commencement of operations) to October 31, 1997 (b) For periods of less than a full year, total returns are not annualized. (c) Annualized
Fountainhead Special Value Fund Notes To Financial Statements October 31, 1999 NOTE 1. ORGANIZATION The Fountainhead Special Value Fund (the "Fund") is organized as a series of the AmeriPrime Funds, an Ohio business trust (the "Trust"). The Fund is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The Fund's investment objective is to provide long-term capital growth. The Declaration of Trust Agreement for the fund permits the Board of Trustees (the "Board") to issue an unlimited number of shares of beneficial interest of separate series without par value. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. Securities Valuation- Securities which are traded on any exchange or on the NASDAQ over-the-counter market are valued at the last-quoted sale price. Lacking a last sale price, a security is valued at its last bid price except when, in the opinion of the Advisor (as such term is defined in note 3 of this document), the last bid price does not accurately reflect the current value of the security. All other securities for which over-the-counter market quotations are readily available are valued at their last bid price. When market quotations are not readily available, when the Advisor determines the last bid price does not accurately reflect the current value, or when restricted securities are being valued, such securities are valued as determined in good faith by the Advisor, in conformity with guidelines adopted by and subject to review of the Board. Fixed-income securities generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Advisor believes such prices accurately reflect the fair market values of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. When prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Advisor, subject to review by the Board. Short-term investments in fixed-income securities with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued by using the amortized-cost method of valuation, which the Board has determined will represent fair value. Fountainhead Special Value Fund Notes To Financial Statements October 31, 1999 - cont'd NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - cont'd Federal Income Taxes- The Fund intends to qualify each year as a "regulated investment company" under the Internal Revenue Code of 1986, as amended. By so qualifying, the Fund will not be subject to federal income taxes to the extent that it distributes substantially all its net investment income and any realized capital gains. Dividends and Distributions- The Fund intends to comply with federal tax rules regarding distribution of substantially all its net investment income and capital gains. These rules may cause multiple distributions during the course of the year. 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 accrual basis. Discounts and premiums on securities purchased are amortized over the life of the respective securities. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund retains King Investment Advisors, Inc. (the "Advisor") to manage the Fund's investments. Roger E. King, President of the Advisor, is primarily responsible for the day-to-day management of the Fund's portfolio. Under the terms of the management agreement between the Fund and the Advisor, (the "Agreement"), the Advisor manages the Fund's investments subject to approval of the Board. As compensation for its management services, the Fund is obligated to pay the Advisor a fee computed and accrued daily and paid monthly at an annual rate of 1.43% of the average daily net assets of the Fund. For the year ended October 31, 1999, the Advisor received a fee of $128,855 from the Fund. The Advisor voluntarily agreed to waive fees and reimburse expenses for the Fund for the fiscal year ended October 31, 1999 to the extent necessary to maintain total operating expenses at the rate of 1.25%. For the year ended October 31, 1999, the Advisor waived fees and reimbursed expenses of $112,738. There is no assurance that such an arrangement will continue in the future. Fountainhead Special Value Fund Notes To Financial Statements October 31, 1999 - cont'd NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - cont'd The Fund retains AmeriPrime Financial Services, Inc. (the "Administrator") to manage the Fund's business affairs and to provide the Fund with administrative services, including all regulatory reporting and necessary office equipment and personnel. For the year ended October 31, 1999, the Administrator received fees of $32,500 from the Advisor for administrative services provided to the Fund. The Fund retains AmeriPrime Financial Securities, Inc. (the "Distributor") to act as the principal distributor of the Fund's shares. No payments were made to the Distributor for the year ended October 31, 1999. Certain members of management of the Administrator and the Distributor are also members of management of the AmeriPrime Trust. NOTE 4. SHARE TRANSACTIONS As of October 31, 1999, the Fund had an unlimited number of authorized shares. Paid-in capital at October 31, 1999 was $8,672,563. Transactions in shares were as follows: - --------------------------------------------------------------------------------------------------------------------
Year ended Year ended October 31, 1999 October 31, 1998 - -------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- Shares Dollars Shares Dollars - ------------------------------------------------------------------------------------------------------------------------- Shares sold 194,253 $3,403,006 341,534 $4,888,881 - ------------------------------------------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends - - 2,614 34,164 - ------------------------------------------------------------------------------------------------------------------------- Shares redeemed (105,383) (1,672,500) (14,634) (187,621) - ------------------------------------------------------------------------------------------------------------------------- 88,870 $1,730,506 329,514 $4,735,424 - ------------------------------------------------------------------------------------------------------------------------- ======= ========= ======= ========
Fountainhead Special Value Fund Notes To Financial Statements October 31, 1999 - cont'd NOTE 5. INVESTMENTS For the year ended October 31, 1999, purchases and sales of investment securities, other than short-term investments, totaled $18,026,184 and $15,944,615, respectively. The gross unrealized appreciation for all securities totaled $4,934,899 and the gross unrealized depreciation for all securities totaled $109,809 for a net unrealized appreciation of $4,825,090. The total cost of securities for federal income tax purposes at October 31, 1999 was $9,576,623. NOTE 6. ESTIMATES Preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 7. RECLASSIFICATIONS In accordance with SOP 93-2, the Fund has recorded a reclassification in the capital accounts. As of October 31, 1999, the Fund recorded permanent book/tax differences of $83,359 from net investment loss to accumulated undistributed net realized gains and $2,413 from net investment loss to paid-in capital. This reclassification has no impact on the net asset value of the Fund and is designed generally to present undistributed income and realized gains on a tax basis, which is considered to be more informative to shareholders. INDEPENDENT AUDITOR'S REPORT To The Shareholders and Board of Trustees Fountainhead Special Value Fund We have audited the accompanying statement of assets and liabilities of the Fountainhead Special Value Fund, including the schedule of portfolio investments, as of October 31, 1999, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and financial highlights for each of the periods indicated. 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 as of October 31, 1999 by correspondence with the custodian and brokers. 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 the Fountainhead Special Value Fund as of October 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 for each of the periods indicated, in conformity with generally accepted accounting principles. McCurdy & Associates CPA's, Inc. Westlake, Ohio 44145 November 21, 1999 This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund; this report is not authorized for distribution to prospective shareholders unless preceded or accompanied by an effective prospectus. Read the prospectus carefully before investing. December 1999 Dear Shareholders: We are pleased to provide the Annual Report and investment results for the Carl Domino Growth Fund. Since inception in December 1998 through October 31, 1999 the Fund has returned 7.0%. Comparative Investment Returns Since Inception Return -------------------------------- ----------------------- Carl Domino Growth Fund 7.0% S&P 500 * 12.0% Date CD Growth - $10,700 S&P 500 - $11,204 December 31, 1998 $10,000.00 $10,000.00 January 31, 1999 $10,650.00 $10,421.00 February 28, 1999 $10,180.00 $10,092.00 March 31, 1999 $10,700.00 $10,495.00 April 30, 1999 $10,450.00 $10,905.00 May 31, 1999 $10,010.00 $10,642.00 June 30, 1999 $10,530.00 $11,233.00 July 31, 1999 $10,240.00 $10,883.00 August 31, 1999 $10,300.00 $10,829.00 September 30, 1999 $10,020.00 $10,533.00 October 31, 1999 $10,700.00 $11,204.00 * Past performance is not predictive of future performance. This chart assumes an initial investment of $10,000 in the Fund and the S&P 500 Index on December 31, 1998 and held through October 31, 1999. The S&P 500 Index is a widely recognized unmanaged index of common stock prices. Performance figures include the change in value of the stocks in the index and reinvestment of dividends. The fund looks for companies that have dominant market shares, strong franchises, and excellent management teams. The Fund's investment focus is where we believe the strongest corporate growth will occur over the next few years. These three major areas are currently high tech, medical (pharmaceuticals and medical devices) and dominant consumer businesses. The period from January 1, 1999 through October 31, 1999 was marked by volatility in the stock market. Much of this volatility was driven by interest rate concerns with the Federal Reserve raising rates in order to head off potential inflation. Technology stocks driven by the investor focus on the Internet performed well. Dominant consumer companies such as Wal-Mart and Home Depot performed well in the healthy US economy. The economy is enjoying stable growth, which is the result of low inventory levels due to better information technology and the growing service sector. The corporate profit picture is also healthy. The phenomenon of falling prices is also likely to continue. Technological innovation, a global economy, and US economic growth are supporting this trend. Finally, there are increasing indications of economic rebounds overseas with Europe and Asia showing positive momentum. This is helpful, since many of the companies in the Fund have a significant international presence. Be assured that although we cannot guarantee future results, the investment professionals at Carl Domino Associates, L.P. will work hard to take advantage of opportunities as they rise. Sincerely, Bruce Honig Portfolio Manager
Carl Domino Growth Fund Schedule of Investments - October 31, 1999 Common Stocks - 99.4% Shares Value Beverages - 2.7% Coca-Cola Co. 540 $ 31,860 ----------------- ----------------- Building Supplies - 5.9% Home Depot, Inc. 910 68,705 ----------------- ----------------- Cellular - 2.4% Vodafone Airtouch Public (c) 600 28,762 ----------------- ----------------- Communications Equipment - 3.3% Lucent Technologies, Inc. 600 38,550 ----------------- ----------------- Computer Services & Software - 14.4% America Online, Inc. (a) 330 42,797 Microsoft, Inc. (a) 1,360 125,885 ----------------- ----------------- 168,682 ----------------- ----------------- Computers & Office Equipment - 19.6% Dell Computer Corp. (a) 1,540 61,793 EMC Corp. (a) 1,320 96,360 International Business Machines, Inc. 290 28,529 Sun Microsystems, Inc. (a) 400 42,325 ----------------- ----------------- 229,007 ----------------- ----------------- Electronics - 6.6% Intel Corp. 1,000 77,436 ----------------- ----------------- Federal Sponsored Credit - 7.2% Freddie Mac 1,570 84,878 ----------------- ----------------- General Merchandise Stores - 5.3% Wal-Mart Stores, Inc. 1,090 61,789 ----------------- ----------------- Insurance - 3.7% Berkshire Hathaway - Class B (a) 21 43,890 ----------------- ----------------- Medical Equipment & Supplies - 8.0% Johnson & Johnson, Inc. 360 37,710 Medtronic, Inc. 1,620 56,093 ----------------- ----------------- 93,803 ----------------- ----------------- Pharmaceuticals - 5.2% Pfizer, Inc. 780 30,810 Schering-Plough Corp. 600 29,700 ----------------- ----------------- 60,510 ----------------- ----------------- Publishing - 3.1% Gannett Co. 480 37,020 ----------------- ----------------- Carl Domino Growth Fund Schedule of Investments - October 31, 1999 - continued Common Stocks - continued Shares Value Telephone Services - 12.0% AT&T Corp. 670 $ 31,323 MCI WorldCom (a) 1,260 108,124 ----------------- ----------------- 139,447 ----------------- ----------------- TOTAL COMMON STOCKS (Cost $1,087,303) 1,164,339 ----------------- ----------------- Principal Amount Value Money Market Securities - 0.7% Firstar Treasury Fund, 4.41% (b) (Cost $7,810) 7,810 7,810 ----------------- ----------------- TOTAL INVESTMENTS - 100.1% (Cost $1,095,113) 1,172,149 ----------------- ----------------- Other Assets less Liabilities - (0.1%) (1,359) ----------------- ----------------- TOTAL NET ASSETS - 100.0% $ 1,170,790 ================= ================= (a) Non-income producing (b) Variable rate security; the coupon rate shown represents the rate at October 29, 1999. (c) American Depository Receipt
Carl Domino Growth Fund October 31, 1999 Statement of Assets & Liabilities Assets Investment in securities, at value (cost $1,095,113) $ 1,172,149 Dividend receivable 147 Interest receivable 92 Receivable from Advisor 7,158 ------------------ Total assets 1,179,546 Liabilities Payable to custodian bank $ 30 Accrued investment advisory fee payable 1,568 Federal taxes payable 7,158 ----------------- Total liabilities 8,756 ------------------ Net Assets $ 1,170,790 ================== Net Assets consist of: Paid in capital $ 1,123,485 Accumulated net realized gains on investments 47,305 ------------------ Net Assets, for 109,404 shares $ 1,170,790 ================== Net Asset Value Net Assets Offering price and redemption price per share ($1,170,790 / 109,404) $ 10.70 ==================
Carl Domino Growth Fund Statement of Operations for the period December 31, 1998 (Commencement of Operations) to October 31, 1999 Investment Income Dividend income $ 3,278 Interest income 1,027 ------------------ Total Income 4,305 Expenses Investment advisory fee $ 12,670 Trustees' fees 581 Federal taxes 7,158 --------------- Total expenses before reimbursement 20,409 Reimbursed expenses (7,739) --------------- Total operating expenses 12,670 ------------------ Net Investment Income (Loss) (8,365) ------------------ Realized & Unrealized Gain (Loss) Net realized loss on investment securities (21,366) Change in net unrealized appreciation (depreciation) on investment securities 77,036 --------------- Net gain on investment securities 55,670 ------------------ Net increase in net assets resulting from operations $ 47,305 ==================
Carl Domino Growth Fund Statement of Changes In Net Assets for the period December 31, 1998 (Commencement of Operations) to October 31, 1999 Increase/(Decrease) in Net Assets Operations Net investment income (loss) $ (8,365) Net realized gain on investment securities (21,366) Change in net unrealized appreciation (depreciation) 77,036 ----------------- Net Increase in net assets resulting from operations 47,305 ----------------- Share Transactions Net proceeds from sale of shares 1,227,300 Shares redeemed (103,815) ----------------- Net increase in net assets resulting from share transactions 1,123,485 ----------------- Total increase in net assets 1,170,790 Net Assets Beginning of period - ----------------- End of period [including accumulated undistributed net investment income of $0] $ 1,170,790 =================
Carl Domino Growth Fund Financial Highlights for the period December 31, 1998 (Commencement of Operations) to October 31, 1999 Selected Per Share Data Net asset value, beginning of period $ 10.00 ---------------- Income from investment operations Net investment income (loss) (0.09) Net realized and unrealized gain (loss) 0.79 ---------------- ---------------- Total from investment operations 0.70 ---------------- Net asset value, end of period $ 10.70 ================ Total Return (a) 7.00% Ratios and Supplemental Data Net assets, end of period (000) $1,171 Ratio of expenses to average net assets 1.50% (b) Ratio of expenses to average net assets before reimbursement 2.42% (b) Ratio of net investment income (loss) to average net assets (0.99)(b) Ratio of net investment income (loss) to average net assets before reimbursement (1.91)(b) Portfolio turnover rate 34.37% (b) (a) For periods of less than a full year, total returns are not annualized. (b) Annualized Carl Domino Growth Fund Notes to Financial Statements October 31, 1999 NOTE 1. ORGANIZATION Carl Domino Growth Fund (the "Fund") was organized as a series of the AmeriPrime Funds, an Ohio business trust (the "Trust), on October 22, 1998 and commenced operations on December 31, 1998. The Fund is registered under the Investment Company Act of 1940, as amended, as a non-diversified open-end management investment company. The Fund's investment objective is to provide long term growth of capital. The Declaration of Trust permits the Trustees to issue an unlimited number of shares of beneficial interest of separate series without par value. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. Securities Valuations- Securities which are traded on any exchange or on the NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking a last sale price, a security is valued at its last bid price except when, in the Adviser's opinion, the last bid price does not accurately reflect the current value of the security. All other securities for which over-the-counter market quotations are readily available are valued at their last bid price. When market quotations are not readily available, and the Adviser determines the last bid price does not accurately reflect the current value or when restricted securities are being valued, such securities are valued as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to review of the Board of Trustees of the Trust (the "Board"). Fixed income securities generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Adviser believes such prices accurately reflect the fair market value of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. When prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Adviser, subject to review of the Board. Short-term investments in fixed-income securities with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued by using the amortized cost method of valuation, which the Board has determined will represent fair value. Carl Domino Growth Fund Notes to Financial Statements October 31, 1999 - continued NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued Federal Income Taxes- The Fund intends to qualify each year as a "regulated investment company" under the Internal Revenue Code of 1986, as amended. By so qualifying, the Fund will not be subject to federal income taxes to the extent that it distributes substantially all of its net investment income and any realized capital gains. For the fiscal year ended October 31, 1999, the Fund did not qualify as a regulated investment company. Therefore, the Fund was required to pay taxes in the amount of $7,158. The Fund was reimbursed by the Advisor for the amount. Dividends and Distributions- The Fund intends to comply with federal tax rules regarding distribution of substantially all of its net investment income and capital gains. These rules may cause multiple distributions during the course of the year. 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 accrual basis. Discounts and premiums on securities purchased are amortized over the life of the respective securities. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund retains Carl Domino Associates, L.P. (the "Adviser") to manage the Fund's investments. The Adviser is a limited partnership organized in Delaware and its general partner is Carl Domino, Inc. The controlling shareholder of Carl Domino, Inc. is Carl J. Domino. Bruce Honig is primarily responsible for the day-to-day management of the Fund's portfolio. Under the terms of the management agreement, (the "Agreement"), the Adviser manages the Fund's investments subject to approval of the Board of Trustees and pays all of the expenses of the Fund except brokerage commissions, taxes, interest, fees and expenses of non-interested person trustees, and extraordinary expenses. As compensation for its management services and agreement to pay the Fund's expenses, the Fund is obligated to pay the Adviser a fee of 1.50% of the average daily net assets of the Fund. It should be noted that most investment companies pay their own operating expenses directly, while the Fund's expenses, except those specified above, are paid by the Adviser. For the period from December 31, 1998 (commencement of operations) through October 31, 1999, the Adviser received a fee of $12,670 from the Fund. The Adviser has voluntarily agreed to reimburse other expenses to the extent necessary to maintain total operating expenses at the rate of 1.50%. Carl Domino Growth Fund Notes to Financial Statements October 31, 1999 - continued NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued For the period December 31, 1998 (commencement of operations) through October 31, 1999, The Advisor reimbursed expenses of $7,739. There is no assurance that such reimbursement will continue in the future. The Fund retains AmeriPrime Financial Services, Inc. (the "Administrator") to manage the Fund's business affairs and provide the Fund with administrative services, including all regulatory reporting and necessary office equipment and personnel. For the period from December 31, 1998 (commencement of operations) to October 31, 1999, the Administrator received fees of $12,500 from the Adviser for administrative services provided to the Fund. The Fund retains AmeriPrime Financial Securities, Inc. ("the Distributor") to act as the principal distributor of the Fund's shares. There were no payments made to the Distributor from December 31, 1998 (commencement of operations) to October 31, 1999. Certain members of management of the Administrator and the Distributor are also members of management of the AmeriPrime Trust. NOTE 4. SHARE TRANSACTIONS As of October 31, 1999, there was an unlimited number of authorized shares for the Fund. Paid in capital at October 31, 1999 was $1,123,485. Transactions in shares were as follows: - ------------------------------------------------------------------------------- For the period December 31, 1998 (Commencement of Operations) to October 31, 1999 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Shares Dollars - ------------------------------------------------------------------------------- Shares sold 119,405 $1,227,300 - ------------------------------------------------------------------------------- Shares redeemed (10,001) (103,815) - ------------------------------------------------------------------------------- 109,404 $1,123,485 =========== ========== - ------------------------------------------------------------------------------- Carl Domino Growth Fund Notes to Financial Statements October 31, 1999 - continued NOTE 5. INVESTMENTS For the period from December 31, 1998 (commencement of operations) through October 31, 1999, purchases and sales of investment securities, other than short-term investments, aggregated $1,379,860 and $271,191, respectively. The aggregate cost of securities for federal income tax purposes at October 31, 1999 was $11,725,149. NOTE 6. ESTIMATES Preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 7. RELATED PARTY TRANSACTIONS The Adviser is not a registered broker-dealer of securities and thus does not receive commissions on trades made on behalf of the Fund. The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a Fund creates a presumption of control of the Fund, under Section 2(a)(9) of the Investment Company Act of 1940. As of October 31, 1999, Carl Domino Associates, L.P., and entities which the Adviser could be deemed to control or have investment discretion over, beneficially owned in aggregate more than 68% of the Fund. NOTE 8. RECLASSIFICATIONS In accordance with SOP 93-2, the fund has recorded a reclassification in the capital accounts. As of October 31, 1999, the fund recorded permanent book/tax differences of $8,365 from net investment loss to accumulated undistributed net realized gains and $77,036 from accumulated unrealized appreciation on investments to accumulated realized gain. (Due to not qualifying as a regulated investment company.) This reclassification has no impact on the net asset value of the fund and is designed generally to present undistributed income and realized gains on a tax basis which is considered to be more informative to shareholders. INDEPENDENT AUDITOR'S REPORT To The Shareholders and Board of Trustees Carl Domino Growth Fund We have audited the accompanying statement of assets and liabilities of the Carl Domino Growth Fund, including the schedule of portfolio investments, as of October 31, 1999, and the related statement of operations, the statement of changes in net assets, and financial highlights, for the period from inception (December 31, 1998) to October 31, 1999. 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 as of October 31, 1999 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 the Carl Domino Growth Fund as of October 31, 1999, the results of its operations, the changes in its net assets, and the financial highlights for the initial period of December 31, 1998 to October 31, 1999, in conformity with generally accepted accounting principles. McCurdy & Associates CPA's, Inc. Westlake, Ohio 44145 November 21, 1999 This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund; this report is not authorized for distribution to prospective shareholders unless preceded or accompanied by an effective prospectus. Read the prospectus carefully before investing. December 1999 Dear Shareholders: We are pleased to provide the Annual Report and investment results for the Carl Domino Equity Income Fund. Since inception in December 1995 through October 31, 1999 the Fund has returned an average annual return of 15.8%. Comparative Investment Last Average Returns 12 Months Annual Return - ----------------------------------- ------------ ----------------- Carl Domino Equity Income Fund 11.5% 15.8% S&P 500 * 25.6% 25.1% Date Carl Domino Equity Income S&P 500 12/31/95 $ 10,000.00 $ 10,000.00 03/31/96 $ 10,515.00 $ 10,539.00 6/30/96 $ 11,204.78 $ 11,004.82 9/30/96 $ 11,475.94 $ 11,349.27 12/31/96 $ 12,435.33 $ 12,301.48 3/31/97 $ 12,810.88 $ 12,631.16 6/30/97 $ 14,618.49 $ 14,834.03 9/30/97 $ 16,406.33 $ 15,942.13 12/31/97 $ 16,831.26 $ 16,404.46 3/31/98 $ 18,120.53 $ 18,691.24 6/30/98 $ 16,926.39 $ 19,304.31 9/30/98 $ 14,179.23 $ 17,381.60 12/31/98 $ 16,382.69 $ 21,090.84 3/31/99 $ 16,500.64 $ 22,132.72 6/30/99 $ 18,980.69 $ 23,688.65 9/30/99 $ 17,099.70 $ 22,212.85 10/31/99 $ 17,743.27 $ 23,627.81 * Past performance is not predictive of future performance. This chart assumes an initial investment of $10,000 in the Fund and the S&P 500 Index on December 1, 1995 and held through October 31, 1999. The S&P 500 Index is a widely recognized unmanaged index of common stock prices. Performance figures include the change in value of the stocks in the index and reinvestment of dividends. The decade of the 1990's has been one of exceptional performance by the economy, corporate America, and the capital markets. During most of this period, the Carl Domino Associates value/yield investment discipline performed very well, equaling or outperforming the popular market averages on a risk-adjusted basis. This period of exceptional performance ended in late 1997 and for the last two years, we have struggled in a world obsessed by the Internet, high technology and the .com stocks. A closer look at the recent period reveals a stock market that is no longer characterized by a broad advance but rather by a very narrow, highly selective advance of approximately 50 stocks. For example, in 1998, 50 stocks of the S&P 500 Index produced approximately 90% of the return for that Index. In a similar fashion, 1999 has witnessed a continuation of that trend with 50 stocks in the Index accounting for all of the return of the Index. The market leaders of the past two years have been concentrated almost entirely in technology-an area in which we cannot participate due to our buy and sell disciplines built around dividend yield. Within the current environment in which the technology sector has carried the market to record heights, the question "why have a value allocation in a portfolio?" needs to be addressed. The answer to this question lies in market history and it clearly demonstrates that growth and value styles cycle in and out of favor. Specifically, when growth is in style, value is out of style. Conversely, when value returns to favor, growth will be out of style. Perhaps one of the clearest examples of this cycle commenced in the late 1960's with growth stocks having an extended period of outperformance. By the time growth stocks peaked in late 1972, price/earnings multiples approached 100 for the market leaders. The fervor for the 50 stocks which led the market during that period engendered such names as the "Nifty Fifty," the "Vestal Virgins" and the "one-decision stocks" to describe this road to riches. Needless to say, in that era value stocks performed poorly because market mania focused only on the favored few growth stocks, which led the market to record highs. When the fall from favor came for these stocks, it lasted two full years and saw several of the former leaders fall as much as 90% from their previous highs. Despair was so widespread among growth stock devotees that the theme of the Institutional Investor Conference in the mid-1970's was simply "Is Growth Dead?" It is important to note that following this period of the Nifty Fifty, value stocks outperformed growth stocks for the next 10 years. History teaches us many lessons if we are willing to learn. In today's environment, technology stocks are trading at excessively high multiples. Barron's reported in their December 13th issue that Yahoo is selling for 500 times year 2000 earnings, AOL is selling for 300 times, and the NASDAQ 100 (the 100 largest stocks on the NASDAQ trading system) are selling at a lofty 100 times. Clearly this is market mania with an uncertain life span. It has been said that markets are controlled by two principal emotions-fear and greed. Today, it would appear that investor confidence is so high that fear is no longer part of the market equation, leaving only greed in control of the markets' destiny. In contrast to technology performance, the rest of the stock market is suffering from neglect. To illustrate this point, the same Barron's article pointed out that if technology is removed from the S&P 500 Index, the remaining stocks are up only 2% for the year-to date. Other measures clearly indicate the "tale of two markets." For example, 60% of the stocks on the NYSE have declined at least 20% from their 52-week highs while almost 70% of NASDAQ stocks are down at least 20% from their highs. In other words, the technology stocks have succeeded in keeping the popular average at or near their all-time highs while the rest of the market has been enduring a withering bear market for the better part of two years. In all this technology-induced euphoria, there is one universal truth. Market manias do not last forever; trees do not grow to the sky. One day, market leadership will undergo a transition from growth back to value. While it is always difficult, if not impossible, to predict the catalyst which will bring out such a shift, market history suggests it will probably be some unexpected event from an unlikely source which will set the wheels in motion. Another element to keep in mind is simply the passage of time. By some measures, growth has been the best performing asset class for four or five years while value has been the worst performing asset class for the last two years. This is an extraordinarily long period of time for any one style to maintain a pre-eminent position. Measured by time alone, growth is due for a correction and value is due for a period of recovery and outperformance. In fact, from a fundamental perspective, many pieces of the economic puzzle are beginning to fall into place, which have historically been supportive of value stocks outperforming growth stocks. First, interest rates have been rising for 14 months and may move higher in 2000. Rising interest rates have normally presented valuation problems for growth stocks because much of their current stock prices are based upon distant future earnings. Second, the U.S. economy continues in its ninth year of expansion with very few, if any, signs of imbalance which could possibly derail the strong underlying fundamentals. Importantly, the world economies continue to show renewed growth and give every indication of a sustainable advance. This worldwide expansion holds the promise of good earnings growth for U.S. based multi-national companies, many of which are held in Carl Domino managed portfolios. Lastly, the corporate profit picture, after an anemic performance in 1998, promises growth of 15-18 % in 1999 and a further 10-14% in 2000. Overall, the broadening out of the economic expansion combined with a solid earnings outlook for a widening group of economic sectors and industries is conducive to similar action in the stock market. In summary, we at Carl Domino Associates are strongly committed to our value/yield investment discipline. Our ongoing research efforts continue to identify reasonably valued stocks with attractive dividend yields, strong balance sheets, capable management, and very solid earnings outlooks for the immediate and long-term future. While we recognize there is a temptation for many to chase the technology stocks and capitulate to the siren call of seemingly easy profits, we believe that it is more important than ever to exercise patience and continue to keep Carl Domino Associates and its value discipline as an integral part of your long range financial plan. While we cannot say with certainty when the shift from growth to value will happen, there are many market pundits who believe the turn will come in the New Year. Simply stated, it's not a question of "if," it is only a question of "when." Be assured that although we cannot guarantee future results, the investment professionals at Carl Domino Associates, L.P. will work hard to avoid disappointments and take advantage of opportunities as they rise. Best regards, Carl J. Domino This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund; this report is not authorized for distribution to prospective shareholders unless preceded or accompanied by an effective prospectus. Read the prospectus carefully before investing.
Carl Domino Equity Income Fund Schedule of Investments - October 31, 1999 Common Stocks - 98.7% Shares Value BASIC INDUSTRIES - 13.5% Chemicals - 5.3% CK Witco Corp. 216 $ 2,023 DuPont (EI) de NeMours 1,459 94,014 International Flavors & Fragrances 4,100 156,825 Rohm & Haas Co. 4,000 153,000 ----------------- ----------------- 405,862 ----------------- ----------------- Manufacturers / Diversified - 1.9% Minnesota Mining & Manufacturing Co. 1,500 142,594 ----------------- ----------------- Manufacturers / Specialized - 4.0% Federal Signal Corp. 6,465 # 121,623 Pall Corporation 8,500 # 186,469 ----------------- ----------------- 308,092 ----------------- ----------------- Paper & Forest Products - 2.3% Weyerhaeuser Co. 3,000 # 179,062 ----------------- ----------------- TOTAL BASIC INDUSTRIES 1,035,610 ----------------- ----------------- DURABLES - 4.1% Autos & Auto Parts - 4.1% American Quantum Cycles Inc. (a) 15,000 40,313 Ford Motor Co. 2,113 115,951 Snap-On, Inc. 5,300 160,987 ----------------- ----------------- 317,251 ----------------- ----------------- ENERGY - 11.6% Oil & Gas - 11.6% Baker Hughes, Inc. 7,000 195,563 Conoco Inc. - Class B 8,370 227,036 Repsol S.A. (c) 2,400 49,200 Sunoco, Inc. 5,000 120,625 Unocal Corp. 4,500 155,250 USX-Marathon Group 4,800 139,800 ----------------- ----------------- 887,474 ----------------- ----------------- FINANCE - 10.0% Banks - 5.3% First Union Corp. 3,300 140,869 SouthTrust Corp. 3,650 146,000 Summit Bancorp 3,400 117,725 ----------------- ----------------- 404,594 ----------------- ----------------- Insurance - 1.2% SAFECO Corp. 3,500 96,250 ----------------- ----------------- Carl Domino Equity Income Fund Schedule of Investments - October 31, 1999 - continued Common Stocks - continued Shares Value FINANCE - continued Real Estate Investment Trust - 1.0% Prison Realty Trust 3,500 $ 35,656 Wyndham International Inc. - Class A (a) 13,500 38,813 ----------------- ----------------- 74,469 ----------------- ----------------- Savings & Loans - 2.5% Community Savings Bankshares, Inc. 15,511 192,918 ----------------- ----------------- TOTAL FINANCE 768,231 ----------------- ----------------- HEALTH - 9.6% Diversified - 2.0% American Home Products Corp. 3,000 156,750 ----------------- ----------------- Drugs & Pharmaceuticals - 4.5% Glaxo Welcome plc (c) 2,900 173,639 Pharmacia & Upjohn, Inc. 3,150 169,903 ----------------- ----------------- 343,542 ----------------- ----------------- Managed Care - 0.3% National Medical Health Card (a) 5,500 22,344 ----------------- ----------------- Medical Equipment & Supplies - 2.8% Baxter International, Inc. 2,900 188,137 Careside Inc. (a) 4,000 19,750 Careside (Warrants 6/16/2004) (a) 4,000 4,250 ----------------- ----------------- 212,137 ----------------- ----------------- TOTAL HEALTH 734,773 ----------------- ----------------- INDUSTRIAL MACHINERY & EQUIPMENT - 6.5% Electrical Equipment - 2.1% Thomas & Betts, Inc. 3,650 163,794 ----------------- ----------------- Industrial Machinery & Equipment - 4.4% Caterpillar, Inc. 2,400 132,750 Tektronix Inc. 5,950 200,812 ----------------- ----------------- 333,562 ----------------- ----------------- TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 497,356 ----------------- ----------------- Carl Domino Equity Income Fund Schedule of Investments - October 31, 1999 - continued Common Stocks - continued MEDIA & LEISURE - 1.2% Leisure Durables & Toys - 0.9% Callaway Golf, Inc. 5,000 $ 67,188 ----------------- ----------------- Lodging & Gaming - 0.3% Cedar Fair, L.P. 1,000 19,937 Interstate Hotels Corp. (a) 566 1,716 ----------------- ----------------- 21,653 ----------------- ----------------- TOTAL MEDIA & LEISURE 88,841 ----------------- ----------------- NON-DURABLES - 14.0% Cosmetics - 2.0% Avon Products 4,840 156,090 ----------------- ----------------- Foods - 8.6% General Mills Inc. 1,800 156,938 Heinz (H.J.) 3,300 157,575 Quaker Oats 2,200 154,000 Sara Lee Corp. 7,000 189,437 ----------------- ----------------- 657,950 ----------------- ----------------- Household Products - 3.4% Kimberly-Clark Group 2,400 151,500 Tupperware Corp. 5,600 110,950 ----------------- ----------------- 262,450 ----------------- ----------------- TOTAL NON-DURABLES 1,076,490 ----------------- ----------------- RETAIL & WHOLESALE - 3.5% Department Stores - 3.5% May Department Stores 4,350 150,891 Penney (J.C.) 4,650 117,994 ----------------- ----------------- 268,885 ----------------- ----------------- SERVICES - 5.8% Miscellaneous Services - 1.7% Dun & Bradstreet Corp. 4,500 132,187 ----------------- ----------------- Printing - 1.7% Deluxe Corp. 4,600 129,950 ----------------- ----------------- Carl Domino Equity Income Fund Schedule of Investments - October 31, 1999 - continued Common Stocks - continued SERVICES - continued Services - 2.4% Block (H&R) 4,000 $ 170,250 GOTO.com Inc. (a) 200 11,400 Innotrac Corp. (a) 500 5,437 ----------------- ----------------- 187,087 ----------------- ----------------- TOTAL SERVICES 449,224 ----------------- ----------------- TECHNOLOGY - 5.4% Communications Equipment - 2.0% Troy Group, Inc. (a) 500 7,469 Harris Corp. 5,000 112,187 ID Systems Inc. (a) 4,000 19,750 Netro Corp. (a) 500 11,406 ----------------- ----------------- 150,812 ----------------- ----------------- Computer Services & Software - 0.3% ESPS Inc. (a) 5,000 20,000 QUEPASA.COM Inc. (a) 500 3,812 Talk City, Inc. (a) 500 3,625 ----------------- ----------------- 27,437 ----------------- ----------------- Electronics - 1.4% Hypercom Corp.(a) 10,700 85,600 Ultralife Batteries, Inc. (a) 5,000 20,469 ----------------- ----------------- 106,069 ----------------- ----------------- Photography & Imaging - 1.7% Eastman Kodak, Inc. 1,950 134,428 ----------------- ----------------- TOTAL TECHNOLOGY 418,746 ----------------- ----------------- TRANSPORTATION - 1.9% Shipping - 1.9% Knightsbridge Tankers Ltd. (c) 5,000 76,875 Statia Terminals Group NV (c) 6,600 67,650 ----------------- ----------------- 144,525 ----------------- ----------------- UTILITIES - 11.6% Electric Utility - 1.8% Korea Electric Power (c) 8,600 135,450 ----------------- ----------------- Carl Domino Equity Income Fund Schedule of Investments - October 31, 1999 - continued Common Stocks - continued UTILITIES - continued Natural Gas - 7.0% Midcoast Energy Resources, Inc. 5,500 $ 100,375 El Paso Energy Corp. 6,004 246,914 Williams Companies 5,000 187,500 ----------------- ----------------- 534,789 ----------------- ----------------- Telephone Services - 2.8% AT&T Corp. 3,600 168,300 Telefonica de Argentina (c) 2,000 51,250 ----------------- ----------------- 219,550 ----------------- ----------------- TOTAL UTILITIES 889,789 ----------------- ----------------- TOTAL COMMON STOCKS (Cost $7,412,546) 7,577,195 ----------------- ----------------- Preferred Stock - 0.9% FINANCE - 0.9% Insurance - 0.9% Conseco Financial Preferred Series F (Cost $100,000) 2,000 66,125 ----------------- ----------------- Principal Amount Value Money Market Securities - 0.4% Firstar Treasury Fund, 4.41% (b) (Cost $35,272) $ 35,272 35,272 ----------------- ----------------- TOTAL INVESTMENTS - 100.0% (Cost $ 7,547,818) 7,678,592 ----------------- ----------------- Other Assets Less Liabilities - 0.0% 630 ----------------- ----------------- TOTAL NET ASSETS - 100.0% $ 7,679,222 ================= ================= (a) Non-income producing (b) Variable rate security; the coupon rate shown represents the rate at October 29, 1999. (c) American Depository Receipt
Carl Domino Equity Income Fund October 31, 1999 Statement of Assets & Liabilities Assets Investment in securities, at value (cost $7,547,818) $ 7,678,592 Cash 42,416 Receivable for securities sold 9,236 Receivable for fund shares sold 3,503 Dividends receivable 16,525 Interest receivable 253 ------------------ Total assets 7,750,525 Liabilities Accrued investment advisory fee payable $ 9,434 Payable for fund shares redeemed 61,869 ----------------- Total liabilities 71,303 ------------------ Net Assets $ 7,679,222 ================== Net Assets consist of: Paid in capital $ 6,805,024 Accumulated undistributed net investment income 92,603 Accumulated undistributed net realized gain on investments 650,821 Net unrealized appreciation on investments 130,774 ------------------ Net Assets, for 476,360 shares $ 7,679,222 ================== Net Asset Value Net Assets Offering price and redemption price per share ($7,679,222 / 476,360) $ 16.12 ==================
Carl Domino Equity Income Fund Statement of Operations for the year ended October 31, 1999 Investment Income Dividend income $ 226,366 Interest income 1,909 ------------------ Total Income 228,275 Expenses Investment advisory fee $116,771 Trustees' fees 1,377 --------------- Total expenses before reimbursement 118,148 Reimbursed expenses (1,377) --------------- Total operating expenses 116,771 ------------------ Net Investment Income 111,504 ------------------ Realized & Unrealized Gain (Loss) Net realized gain on investment securities 693,933 Change in net unrealized appreciation (depreciation) on investment securities (47,202) --------------- Net gain on investment securities 646,731 ------------------ Net increase in net assets resulting from operations $ 758,235 ==================
Carl Domino Equity Income Fund Statement of Changes in Net Assets Year Year ended ended October 31, October 31, 1999 1998 ----------------- ----------------- Increase (Decrease) in Net Assets Operations Net investment income $ 111,504 $ 77,723 Net realized gain (loss) on investment securities 693,933 (14,920) Change in net unrealized appreciation (depreciation) (47,202) (341,521) ----------------- ----------------- Net increase (decrease) in net assets resulting from operations 758,235 (278,718) ----------------- ----------------- Distributions to shareholders From net investment income (87,853) (37,359) From net realized gain - (250,840) ----------------- ----------------- ----------------- Total distributions (87,853) (288,199) ----------------- ----------------- Share Transactions Net proceeds from sale of shares 1,016,253 4,543,528 Shares issued in reinvestment of distributions 83,004 285,845 Shares redeemed (1,428,177) (675,074) ----------------- ----------------- Net increase (decrease) in net assets resulting from share transactions (328,920) 4,154,299 ----------------- ----------------- Total increase in net assets 341,462 3,587,382 Net Assets Beginning of period 7,337,760 3,750,378 ----------------- ----------------- End of period [including accumulated undistributed net investment income of $92,603 and $68,952, respectively] $ 7,679,222 $ 7,337,760 ================= =================
Carl Domino Equity Income Fund Financial Highlights Period ended Years ended October 31, October 31, 1999 1998 1997 1996 (a) ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Selected Per Share Data Net asset value, beginning of period $ 14.68 $ 16.15 $ 12.03 $ 10.00 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Income from investment operations Net investment income 0.23 0.21 0.19 0.16 Net realized and unrealized gain (loss) 1.38 (0.60) 4.15 1.87 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Total from investment operations 1.61 (0.39) 4.34 2.03 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Less Distributions From net investment income (0.17) (0.14) (0.22) - From net realized gain - (0.94) - - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Total distributions (0.17) (1.08) (0.22) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Net asset value, end of period $ 16.12 $ 14.68 $ 16.15 $ 12.03 ================ ================ ================ ================ ================ ================ ================ ================ Total Return (b) 11.52% (3.17)% 36.58% 20.30% Ratios and Supplemental Data Net assets, end of period (000) $7,679 $7,338 $3,750 $1,122 Ratio of expenses to average net assets 1.50% 1.50% 1.50% 1.51% (c) Ratio of expenses to average net assets before reimbursement 1.52% 1.53% 1.55% 1.73% (c) Ratio of net investment income to average net assets 1.43% 1.37% 1.28% 1.57% (c) Ratio of net investment income to average net assets before reimbursement 1.41% 1.33% 1.22% 1.35% (c) Portfolio turnover rate 69.92% 75.95% 52.49% 62.51% (c) (a) December 1, 1995 (commencement of operations) to October 31, 1996 (b) For periods of less than a full year, total returns are not annualized. (c) Annualized
Carl Domino Equity Income Fund Notes to Financial Statements October 31, 1999 NOTE 1. ORGANIZATION Carl Domino Equity Income Fund (the "Fund") is organized as a series of the AmeriPrime Funds, an Ohio business trust (the "Trust"). The Fund is registered under the Investment Company Act of 1940, as amended, as a diversified series, open end management investment company. The Fund's investment objective is to provide long-term growth of capital together with current income. The Declaration of Trust permits the Trustees to issue an unlimited number of shares of beneficial interest of separate series without par value. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. Securities Valuations- Securities which are traded on any exchange or on the NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking a last sale price, a security is valued at its last bid price except when, in the Adviser's opinion the last bid price does not accurately reflect the current value of the security. All other securities for which over-the-counter market quotations are readily available are valued at their last bid price. When market quotations are not readily available, when the Adviser determines the last bid price does not accurately reflect the current value or when restricted securities are being valued, such securities are valued as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to review of the Board of Trustees of the Trust (the "Board"). Fixed-income securities generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Adviser believes such prices accurately reflect the fair market value of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. When prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Adviser, subject to review of the Board. Short-term investments in fixed-income securities with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued by using the amortized cost method of valuation, which the Board has determined will represent fair value. Carl Domino Equity Income Fund Notes to Financial Statements October 31, 1999 - continued NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued Federal Income Taxes- The Fund intends to qualify each year as a "regulated investment company" under the Internal Revenue Code of 1986, as amended. By so qualifying, the Fund will not be subject to federal income taxes to the extent that it distributes substantially all of its net investment income and any realized capital gains. Dividends and Distributions- The Fund intends to comply with federal tax rules regarding distribution of substantially all of its net investment income and capital gains. These rules may cause multiple distributions during the course of the year. 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 accrual basis. Discounts and premiums on securities purchased are amortized over the life of the respective securities. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund retains Carl Domino Associates, L.P. (the "Adviser") to manage the Fund's investments. The Adviser is a limited partnership organized in Delaware and its general partner is Carl Domino, Inc. The controlling shareholder of Carl Domino, Inc. is Carl Domino. Mr. Domino is primarily responsible for the day to day management of the Fund's portfolio. Under the terms of the management agreement, (the "Agreement"), the Adviser manages the Fund's investments subject to approval of the Board of Trustees and pays all of the expenses of the Fund except brokerage commissions, taxes, interest, fees and expenses of the non-interested person trustees, and extraordinary expenses. As compensation for its management services and agreement to pay the Fund's expenses, the Fund is obligated to pay the Adviser a fee computed and accrued daily and paid monthly at an annual rate of 1.50% of the average daily net assets of the Fund. It should be noted that most investment companies pay their own operating expenses directly, while the Fund's expenses, except those specified above, are paid by the Adviser. For the year ended October 31, 1999, the Adviser has received a fee of $116,771 from the Fund. The Advisor has voluntarily agreed to reimburse other expenses for the fiscal year ended October 31, 1999 to the extent necessary to maintain total operating expenses at the rate Carl Domino Equity Income Fund Notes to Financial Statements October 31, 1999 - continued NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -continued of 1.50%. For the year ended October 31, 1999, the Advisor reimbursed expenses of $1,377. There is no assurance that such reimbursement will continue in the future. The Fund retains AmeriPrime Financial Services, Inc. (the "Administrator") to manage the Fund's business affairs and provide the Fund with administrative services, including all regulatory reporting and necessary office equipment and personnel. For the year ended October 31, 1999, the Administrator received fees of $30,000 from the Adviser for administrative services provided to the Fund. The Fund retains AmeriPrime Financial Securities, Inc. (the Distributor) to act as the principal distributor of Fund shares. There were no payments made to the Distributor for the year ended October 31, 1998. Certain members of management of the Administrator and the Distributor are also members of management of the AmeriPrime Trust. NOTE 4. SHARE TRANSACTIONS As of October 31, 1999, there was an unlimited number of authorized shares for the Fund. Paid in capital at October 31, 1999 was $6,805,024. Transactions in shares were as follows: - --------------------------------------------------------------------------------------------------------------------
Year ended Year ended October 31, 1999 October 31, 1998 - -------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- Shares Dollars Shares Dollars - ------------------------------------------------------------------------------------------------------------------------- Shares sold 62,316 $1,016,253 293,838 $4,543,528 - ------------------------------------------------------------------------------------------------------------------------- Shares issued in reinvestment of dividends 5,461 83,004 18,442 285,845 - ------------------------------------------------------------------------------------------------------------------------- Shares redeemed (91,234) (1,428,177) (44,714) (675,074) - ------------------------------------------------------------------------------------------------------------------------- (23,457) $(328,920) 267,566 $4,154,299 - ------------------------------------------------------------------------------------------------------------------------- ====== ======== ====== ========
Carl Domino Equity Income Fund Notes to Financial Statements October 31, 1999 - continued NOTE 5. INVESTMENTS For the year ended October 31, 1999, purchases and sales of investment securities, other than short-term investments, aggregated $5,360,768 and $5,540,855, respectively. The gross unrealized appreciation for all securities totaled $936,223 and the gross unrealized depreciation for all securities totaled $805,449 for a net unrealized appreciation of $130,774. The aggregate cost of securities for federal income tax purposes at October 31, 1999 was $7,547,818. NOTE 6. ESTIMATES Preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 7. RELATED PARTY TRANSACTIONS The Adviser is not a registered broker-dealer of securities and thus does not receive commissions on trades made on behalf of the Funds. The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a Fund creates a presumption of control of the Fund, under Section 2(a)(9) of the Investment Company Act of 1940. As of October 31, 1999, Carl Domino Associates, L.P., and entities which the Adviser could be deemed to control or have investment discretion over, beneficially owned in aggregate more than 28% of the Fund. INDEPENDENT AUDITOR'S REPORT To The Shareholders and Board of Trustees Carl Domino Equity Income Fund We have audited the accompanying statement of assets and liabilities of Carl Domino Equity Income Fund, including the schedule of portfolio investments, as of October 31, 1999, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and financial highlights for each of the periods indicated. 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 as of October 31, 1999 by correspondence with the custodian and brokers. 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 Carl Domino Equity Income Fund as of October 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 for each of the periods indicated, in conformity with generally accepted accounting principles. McCurdy & Associates CPA's, Inc. Westlake, Ohio 44145 November 21, 1999 December 1999 Dear Shareholders: We are pleased to present the investment results for the Carl Domino Global Equity Income Fund. Since inception on December 31, 1998 through October 31, 1999 the Fund has returned 16.8%. Comparative Investment Returns Since Inception ----------------------------------------- ------------------ Carl Domino Global Equity Income Fund 16.8% S&P 500 12.0% Date Carl Domino Global - $16,800 S&P - $11,204 December 31, 1998 $10,000.00 $10,000.00 January 31, 1999 $11,070.00 $10,421.00 February 28, 1999 $10,880.00 $10,092.00 March 31, 1999 $11,250.00 $10,495.00 April 30, 1999 $12,160.00 $10,905.00 May 31, 1999 $11,840.00 $10,642.00 June 30, 1999 $12,300.00 $11,233.00 July 31, 1999 $12,020.00 $10,883.00 August 31, 1999 $11,790.00 $10,829.00 September 30, 1999 $11,410.00 $10,533.00 October 31, 1999 $11,670.00 $11,204.00 * Past performance is not predictive of future performance. This chart assumes an initial investment of $10,000 in the Fund and the S&P 500 Index on December 31, 1998 and held through October 31, 1999. The S&P 500 Index is a widely recognized unmanaged index of common stock prices. Performance figures include the change in value of the stocks in the index and reinvestment of dividends, and are not annualized. We are pleased with the results. Our holdings in telecommunications, energy and basic materials contributed significantly to the Fund's performance. While no one can say what lies ahead of us in 2000, the elements for a growing global economy are in place. Our goal is to select the best companies on a worldwide basis. Value is our guideline, supplemented with dividend income. Our strategy is to have the Fund fully invested. To do otherwise would be "timing the market", which is a risky approach. Our second fiscal year has begun. We will maintain a very careful watch over your assets and do our very best to return reasonable results both on an absolute basis as well as relative. Sincerely, John Wagstaff-Callahan Senior Portfolio Manager This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund; this report is not authorized for distribution to prospective shareholders unless preceded or accompanied by an effective prospectus. Read the prospectus carefully before investing.
Carl Domino Global Equity Income Fund Schedule of Investments - October 31, 1999 Common Stocks - 99.8% Shares Value BASIC INDUSTRIES - 7.7% Chemicals - 3.7% DuPont (EI) de NeMours 176 $ 11,341 Imperial Chem Ind (c) 500 20,094 PPG Industries, Inc. 300 18,188 ----------------- ----------------- 49,623 ----------------- ----------------- Manufacturers / Diversified - 1.4% Minnesota Mining & Manufacturing Co. 200 19,013 ----------------- ----------------- Metals & Mining - 2.6% Rio Tinto Plc (c) 500 34,000 ----------------- ----------------- TOTAL BASIC INDUSTRIES 102,636 ----------------- ----------------- DURABLES - 5.0% Autos & Auto Parts - 5.0% DaimlerChrysler Corp. (c) 200 15,550 Delphi Automotive Systems 1,000 16,437 Ford Motor Co. 200 10,975 Snap-On, Inc. 350 10,631 Volvo AB - Class B (c) 500 12,938 ----------------- ----------------- 66,531 ----------------- ----------------- ENERGY - 17.7% Energy Services - 3.8% Schlumberger Ltd. 600 36,338 Baker Hughes, Inc. 500 13,969 ----------------- ----------------- 50,307 ----------------- ----------------- Oil & Gas - 13.9% Conoco Inc. - Class B 365 9,900 Elf Aquitaine (c) 300 22,237 ENI Oil s.p.a. Co. 200 11,750 Royal Dutch Petroleum (c) 400 23,975 Shell Transportation & Trading 600 27,525 Texaco, Inc. 200 12,275 TOTAL - Class B (c) 500 33,344 USX-Marathon Group 1,500 43,687 ----------------- ----------------- 184,693 ----------------- ----------------- TOTAL ENERGY 235,000 ----------------- ----------------- FINANCE - 11.8% Banks - 6.8% Bank of America Corp. 400 25,750 Bank of Ireland (Governor & Co.) (c) 400 12,800 Barclays plc (c) 200 24,100 Chase Manhattan, Inc. 150 13,106 First Union Corp. 350 14,941 ----------------- ----------------- 90,697 ----------------- ----------------- Carl Domino Global Equity Income Fund Schedule of Investments - October 31, 1999 - continued Common Stocks - continued Shares Value FINANCE - continued Insurance - 5.0% AXA-UAP (c) 300 $ 20,925 Hartford Financial Services GRP 400 20,725 ING Group (c) 150 8,869 SAFECO Corp. 550 15,125 ----------------- ----------------- 65,644 ----------------- ----------------- TOTAL FINANCE 156,341 ----------------- ----------------- HEALTH - 6.9% Diversified - 0.8% American Home Products, Inc. 200 10,450 ----------------- ----------------- Medical Equipment & Supplies - 2.0% Baxter International, Inc. 400 25,950 ----------------- ----------------- Pharmaceuticals - 4.1% Glaxo Welcome plc (c) 600 35,925 SmithKline Beecham (c) 300 19,200 ----------------- ----------------- 55,125 ----------------- ----------------- TOTAL HEALTH 91,525 ----------------- ----------------- INDUSTRIAL MACHINERY & EQUIPMENT - 5.3% Electrical Equipment - 2.0% Thomas & Betts, Inc. 600 26,925 ----------------- ----------------- Industrial Machinery & Equipment - 3.3% Caterpillar, Inc. 500 27,625 New Holland NV (c) 1,000 15,187 ----------------- ----------------- 42,812 ----------------- ----------------- TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 69,737 ----------------- ----------------- MEDIA & LEISURE - 4.4% Entertainment - 1.8% News Corp. Ltd. (c) 800 23,700 ----------------- ----------------- Lodging & Gaming - 0.8% Cedar Fair, L.P. 500 9,969 ----------------- ----------------- Publishing - 1.8% McGraw-Hill Companies 400 23,850 ----------------- ----------------- TOTAL MEDIA & LEISURE 57,519 ----------------- ----------------- Carl Domino Global Equity Income Fund Schedule of Investments - October 31, 1999 - continued Common Stocks - continued Shares Value NON-DURABLES - 8.0% Cosmetics - 1.2% Avon Products 500 $ 16,125 ----------------- ----------------- Foods - 2.7% Sara Lee Corp. 1,300 35,181 ----------------- ----------------- Household Products - 3.0% Kimberly-Clark Group 200 12,625 Unilever PLC (c) 714 26,552 ----------------- ----------------- 39,177 ----------------- ----------------- Tobacco - 1.1% BAT Industries PLC (c) 500 6,969 Philip Morris Cos., Inc. 300 7,556 ----------------- ----------------- 14,525 ----------------- ----------------- TOTAL NON-DURABLES 105,008 ----------------- ----------------- RETAIL & WHOLESALE - 1.9% Department Stores - 1.9% Penney (J.C.) 1,000 25,375 ----------------- ----------------- SERVICES - 2.7% Miscellaneous Services - 1.1% Dun & Bradstreet Corp. 500 14,688 ----------------- ----------------- Services - 1.6% Block (H&R) 500 21,281 ----------------- ----------------- TOTAL SERVICES 35,969 ----------------- ----------------- TECHNOLOGY - 7.9% Computer Services & Software - 3.1% Freeserve PLC (a) (c) 500 11,563 SAP AG (c) 800 29,250 ----------------- ----------------- 40,813 ----------------- ----------------- Communication Equipment - 1.2% Eircom Plc (a) (c) 1,000 16,375 ----------------- ----------------- Electronics - 2.6% Tektronix Inc. 1,000 33,750 ----------------- ----------------- Photography & Imaging - 1.0% Eastman Kodak, Inc. 200 13,787 ----------------- ----------------- TOTAL TECHNOLOGY 104,725 ----------------- ----------------- Carl Domino Global Equity Income Fund Schedule of Investments - October 31, 1999 - continued Common Stocks - continued UTILITIES - 20.5% Electric Utility - 2.2% Korea Electric Power (c) 500 $ 7,875 Reliant Energy, Inc. 400 10,900 Veba Corp. (c) 200 10,925 ----------------- ----------------- 29,700 ----------------- ----------------- Natural Gas - 6.4% BG plc (c) 500 13,688 El Paso Energy Corp. 800 32,800 Transportadora De Gas (c) 1,500 12,562 Williams Companies 700 26,250 ----------------- ----------------- 85,300 ----------------- ----------------- Telephone Services - 11.9% AT&T Corp. 450 21,038 Bell Atlantic Corp. 200 12,987 British Telecommunication (c) 150 27,000 Global Crossing Ltd. (a) 725 25,103 Nippon Telegraph & Telephone (c) 500 38,687 Telecomm Italia SPA (c) 300 25,950 Versatel International (a) (c) 500 6,313 ----------------- ----------------- 157,078 ----------------- ----------------- TOTAL UTILITIES 272,078 ----------------- ----------------- TOTAL COMMON STOCKS (Cost $1,265,339) 1,322,444 ----------------- ----------------- Principal Amount Value Money Market Securities - 0.2% Firstar Treasury Fund, 4.41% (b) (Cost $2,829) $ 2,829 2,829 ----------------- ----------------- TOTAL INVESTMENTS - 100.0% (Cost $1,268,168) 1,325,273 ----------------- ----------------- Other assets less liabilities - 0.0% 210 ----------------- ----------------- TOTAL NET ASSETS - 100.0% $ 1,325,483 ================= ================= (a) Non-income producing (b) Variable rate security; the coupon rate shown represents the rate at October 29, 1999. (c) American Depository Receipt
Carl Domino Global Equity Income Fund October 31, 1999 Statement of Assets & Liabilities Assets Investment in securities, at value (cost $1,268,168) $ 1,325,273 Dividends receivable 1,664 Interest receivable 440 ------------------ Total assets 1,327,377 Liabilities Accrued investment advisory fee payable $ 1,690 Payable to custodian bank 204 ----------------- Total liabilities 1,894 ------------------ Net Assets $ 1,325,483 ================== Net Assets consist of: Paid in capital $ 1,272,889 Accumulated undistributed net investment income 14,817 Accumulated net realized gain (loss) on investments (19,328) Net unrealized appreciation on investments 57,105 ------------------ Net Assets, for 113,489 shares $ 1,325,483 ================== Net Asset Value Net Assets Offering price and redemption price per share ($1,325,483 / 113,489) $ 11.68 ==================
Carl Domino Global Equity Income Fund Statement of Operations for the period December 31, 1998 (Commencement of Operations) to October 31, 1999 Investment Income Dividend income $ 27,890 Interest income 2,556 ------------------ Total Income 30,446 Expenses Investment advisory fee $ 15,629 Trustees' fees 571 --------------- Total Expenses before Reimbursement 16,200 Reimbursed expenses (571) --------------- Total Operating Expenses 15,629 ------------------ Net Investment Income 14,817 ------------------ Realized & Unrealized Gain (Loss) Net realized gain (loss) on investment securities (19,328) Change in net unrealized appreciation (depreciation) on investment securities 57,105 --------------- Net gain on investment securities 37,777 ------------------ Net increase in net assets resulting from operations $ 52,594 ==================
Carl Domino Global Equity Income Fund Statement of Changes In Net Assets for the period December 31, 1998 (Commencement of Operations) to October 31, 1999 Increase/(Decrease) in Net Assets Operations Net investment income $ 14,817 Net realized gain (loss) on investment securities (19,328) Change in net unrealized appreciation (depreciation) 57,105 ----------------- Net Increase in net assets resulting from operations 52,594 ----------------- Share Transactions Net proceeds from sale of shares 1,382,789 Shares redeemed (109,900) ----------------- Net increase in net assets resulting from share transactions 1,272,889 ----------------- Total increase in net assets 1,325,483 Net Assets Beginning of period - ----------------- End of period [including accumulated undistributed net investment income of $14,817] $ 1,325,483 =================
Carl Domino Global Equity Income Fund Financial Highlights for the period December 31, 1998 (Commencement of Operations) to October 31, 1999 Selected Per Share Data Net asset value, beginning of period $ 10.00 ---------------- Income from investment operations Net investment income 0.14 Net realized and unrealized gain (loss) 1.54 ---------------- ---------------- Total from investment operations 1.68 ---------------- Net asset value, end of period $ 11.68 ================ Total Return (a) 16.80% Ratios and Supplemental Data Net assets, end of period (000) $1,325 Ratio of expenses to average net assets 1.50% (b) Ratio of expenses to average net assets before reimbursement 1.55% (b) Ratio of net investment income to average net assets 1.42% (b) Ratio of net investment income to average net assets before reimbursement 1.37% (b) Portfolio turnover rate 28.34% (b) (a) For periods of less than a full year, total returns are not annualized (b) Annualized Carl Domino Global Equity Income Fund Notes to Financial Statements October 31, 1999 NOTE 1. ORGANIZATION Carl Domino Global Equity Income Fund (the "Fund") was organized as a series of the AmeriPrime Funds, an Ohio business trust (the "Trust), on October 22, 1998 and commenced operations on December 31, 1998. The Fund is registered under the Investment Company Act of 1940, as amended, as a diversified open-end management investment company. The Fund's investment objective is to provide long-term growth of capital together with current income. The Declaration of Trust permits the Trustees to issue an unlimited number of shares of beneficial interest of separate series without par value. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. Securities Valuations- Securities which are traded on any exchange or on the NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking a last sale price, a security is valued at its last bid price except when, in the Adviser's opinion, the last bid price does not accurately reflect the current value of the security. All other securities for which over-the-counter market quotations are readily available are valued at their last bid price. When market quotations are not readily available, and the Adviser determines the last bid price does not accurately reflect the current value or when restricted securities are being valued, such securities are valued as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to review of the Board of Trustees of the Trust (the "Board"). Fixed income securities generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Adviser believes such prices accurately reflect the fair market value of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. When prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Adviser, subject to review of the Board. Short-term investments in fixed-income securities with maturities of less than 60 days when acquired, or which subsequently are within 60 days of maturity, are valued by using the amortized cost method of valuation, which the Board has determined will represent fair value. Carl Domino Global Equity Income Fund Notes to Financial Statements October 31, 1999 - continued NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued Federal Income Taxes- The Fund intends to qualify each year as a "regulated investment company" under the Internal Revenue Code of 1986, as amended. By so qualifying, the Fund will not be subject to federal income taxes to the extent that it distributes substantially all of its net investment income and any realized capital gains. Dividends and Distributions- The Fund intends to comply with federal tax rules regarding distribution of substantially all of its net investment income and capital gains. These rules may cause multiple distributions during the course of the year. 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 accrual basis. Discounts and premiums on securities purchased are amortized over the life of the respective securities. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Fund retains Carl Domino Associates, L.P. (the "Adviser") to manage the Fund's investments. The Adviser is a limited partnership organized in Delaware and its general partner is Carl Domino, Inc. The controlling shareholder of Carl Domino, Inc. is Carl J. Domino. John Wagstaff-Callahan, a partner of the Adviser, is primarily responsible for the day-to-day management of the Fund's portfolio. Under the terms of the management agreement, (the "Agreement"), the Adviser manages the Fund's investments subject to approval of the Board of Trustees and pays all of the expenses of the Fund except brokerage commissions, taxes, interest, fees and expenses of non-interested person trustees, and extraordinary expenses. As compensation for its management services and agreement to pay the Fund's expenses, the Fund is obligated to pay the Adviser a fee of 1.50% of the average daily net assets of the Fund. It should be noted that most investment companies pay their own operating expenses directly, while the Fund's expenses, except those specified above, are paid by the Adviser. For the period from December 31, 1998 (commencement of operations) through October 31, 1999, the Adviser received a fee of $15,629 from the Fund. The Adviser has voluntarily agreed to reimburse other expenses to the extent necessary to maintain total operating expenses at the rate of 1.50%. For the period from December 31, 1998 (commencement of operations) through October 31, 1999, The Advisor reimbursed expenses of $571. There is no assurance that such reimbursement will continue in the future. Carl Domino Global Equity Income Fund Notes to Financial Statements October 31, 1999 - continued NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued The Fund retains AmeriPrime Financial Services, Inc. (the "Administrator") to manage the Fund's business affairs and provide the Fund with administrative services, including all regulatory reporting and necessary office equipment and personnel. For the period from December 31, 1998 (commencement of operations) to October 31, 1999, the Administrator received fees of $12,500 from the Adviser for administrative services provided to the Fund. The Fund retains AmeriPrime Financial Securities, Inc. ("the Distributor") to act as the principal distributor of the Fund's shares. There were no payments made to the Distributor from December 31, 1998 (commencement of operations) to October 31, 1999. Certain members of management of the Administrator and the Distributor are also members of management of the AmeriPrime Trust. NOTE 4. SHARE TRANSACTIONS As of October 31, 1999, there was an unlimited number of authorized shares for the Fund. Paid in capital at October 31, 1999 was $1,272,889. Transactions in shares were as follows: - ------------------------------------------------------------------------------- For the period December 31, 1998 (Commencement of Operations) to October 31, 1999 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Shares Dollars - ------------------------------------------------------------------------------- Shares sold 123,489 $1,382,789 - ------------------------------------------------------------------------------- Shares redeemed (10,000) (109,900) - ------------------------------------------------------------------------------- 113,489 $1,272,889 - ------------------------------------------------------------------------------- ========== ========== NOTE 5. INVESTMENTS For the period from December 31, 1998 (commencement of operations) through October 31, 1999, purchases and sales of investment securities, other than short-term investments, aggregated $1,552,289 and $267,623, respectively. As of October 31, 1999, the gross unrealized appreciation for all securities totaled $154,354 and the gross unrealized depreciation for all securities totaled $97,249 for a net unrealized appreciation of $57,105. The aggregate cost of securities for federal income tax purposes at October 31, 1999 was $1,268,168. Carl Domino Global Equity Income Fund Notes to Financial Statements October 31, 1999 - continued NOTE 6. ESTIMATES Preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 7. RELATED PARTY TRANSACTIONS The Adviser is not a registered broker-dealer of securities and thus does not receive commissions on trades made on behalf of the Fund. The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a Fund creates a presumption of control of the Fund, under Section 2(a)(9) of the Investment Company Act of 1940. As of October 31, 1999, Carl Domino Associates, L.P., and entities which the Adviser could be deemed to control or have investment discretion over, beneficially owned in aggregate 100% of the Fund. INDEPENDENT AUDITOR'S REPORT To The Shareholders and Board of Trustees Carl Domino Global Equity Income Fund We have audited the accompanying statement of assets and liabilities of the Carl Domino Global Equity Income Fund, including the schedule of portfolio investments, as of October 31, 1999, and the related statement of operations, the statement of changes in net assets, and financial highlights, for the period from inception (December 31, 1998) to October 31, 1999. 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 as of October 31, 1999 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 the Carl Domino Global Equity Income Fund as of October 31, 1999, the results of its operations, the changes in its net assets, and the financial highlights for the initial period of December 31, 1998 to October 31, 1999, in conformity with generally accepted accounting principles. McCurdy & Associates CPA's, Inc. Westlake, Ohio 44145 November 21, 1999 -----END PRIVACY-ENHANCED MESSAGE-----