-----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, P7WODOr1hBCEkmH4bNeBJEeSeW3iNj8ZWJmRgPTRUz5vGvpTdA9JAzHvTq75rYA2 bumoTLd1HzLapsVOBif1Dg== 0001000579-00-000024.txt : 20000310 0001000579-00-000024.hdr.sgml : 20000310 ACCESSION NUMBER: 0001000579-00-000024 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000309 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: 564062 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 ARISTON CONVERTIBLE SECURITIES FUND A R I S T O N - -------------------------------------------------------------------------------- Ariston Capital Management Corporation 40 Lake Bellevue Drive Suite 220 Bellevue, Washington 98005 Telephone (425) 454-1600 Fax (425) 455-2534 Dear Fellow Shareholders: We are pleased to inform you that you have participated in the best performing year in Ariston's history. The Ariston Convertible Securities Fund finished the year as the number one convertible securities fund for both the fourth quarter and for all of 1999, according to Lipper Analytical Services. Listed below are the comparative, total return performance measurements for the periods ended December 31, 1999:
4th Quarter 1 Year Ariston Convertible Securities Fund +67.46% +94.61% Lipper Convertible Fund Average +20.52% +31.14% Standard & Poor's 500 Stock Index (unmanaged) +14.88% +21.05% Russell 2000 Stock Index (unmanaged) +18.13% +20.93% Lehman Gov./Corp. Bond Index (unmanaged) -0.41% -2.16% 3 Years 5 Years 10 Years Annualized Annualized Annualized Ariston Convertible Securities Fund +31.00% +22.84% +16.92% Lipper Convertible Fund Average +17.29% +17.62% +13.12% Standard & Poor's 500 Stock Index (unmanaged) +27.56% +28.54% +18.20% Russell 2000 Stock Index (unmanaged) +12.98% +16.62% +13.38% Lehman Gov./Corp. Bond Index (unmanaged) +5.54% +7.60% +7.65% Sources: Lipper Analytical Services, Inc. & Wiesenberger, a Thomson Financial Company
Russell CNCGov/Corp 2000 ----------------------- 1989 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 10,000 10,000 10,000 1990 1st Quarter 10,083 9,886 9,779 2nd Quarter 10,656 10,241 10,155 3rd Quarter 9,192 10,302 7,663 4th Quarter 9,662 10,827 8,049 1991 1st Quarter 11,500 11,118 10,443 2nd Quarter 11,866 11,285 10,281 3rd Quarter 12,785 11,932 11,120 4th Quarter 14,015 12,568 11,756 1992 1st Quarter 13,821 12,380 12,638 2nd Quarter 13,119 12,881 11,776 3rd Quarter 14,065 13,511 12,113 4th Quarter 15,812 13,521 13,922 1993 1st Quarter 16,351 14,151 14,515 2nd Quarter 15,272 14,577 14,831 3rd Quarter 16,387 15,061 16,128 4th Quarter 16,846 15,017 16,552 1994 1st Quarter 16,236 14,544 16,111 2nd Quarter 15,926 14,364 15,483 3rd Quarter 16,604 14,435 16,558 4th Quarter 17,066 14,489 16,250 1995 1st Quarter 17,656 15,210 16,999 2nd Quarter 17,946 16,198 18,592 3rd Quarter 19,365 16,507 20,428 4th Quarter 20,245 17,276 20,872 1996 1st Quarter 21,342 16,872 21,936 2nd Quarter 20,821 16,951 23,033 3rd Quarter 21,846 17,250 23,111 4th Quarter 21,234 17,777 24,313 1997 1st Quarter 20,176 17,624 23,056 2nd Quarter 22,245 18,266 26,793 3rd Quarter 24,146 18,905 30,780 4th Quarter 24,028 19,512 29,749 1998 1st Quarter 26,051 19,809 32,739 2nd Quarter 25,319 20,328 31,210 3rd Quarter 21,258 21,334 24,924 4th Quarter 24,532 21,364 28,990 1999 1st Quarter 24,691 21,107 27,415 2nd Quarter 28,987 20,877 31,678 3rd Quarter 28,509 20,986 29,676 4th Quarter 47,741 20,900 35,057 THIS GRAPH, PREPARED IN ACCORDANCE WITH SEC REGULATIONS, COMPARES A $10,000 INVESTMENT IN THE FUND WITH A SIMILAR INVESTMENT IN THE UNMANAGED RUSSELL 2000 STOCK INDEX AND THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX. RESULTS FOR THE FUND, THE RUSSELL 2000 STOCK INDEX AND LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX INCLUDE THE REINVESTMENT OF DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS. INVESTMENT RETURNS AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN AT THEIR ORIGINAL COST. TOTAL RETURN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF FUTURE RESULTS.
AVERAGE ANNUAL STANDARD TOTAL RETURNS FOR THE YEAR ENDED 12/31/99 - ------------------------------------------------------------------------- FUND/INDEX 1 YEAR 5 YEAR 10 YEAR - ------------------------------------------------------------------------- ARISTON CONVERTIBLE SECURITIES FUND 94.61% 22.84% 16.92% - ------------------------------------------------------------------------- LEHMAN GOV/CORP BOND INDEX -2.16% 7.60% 7.65% - ------------------------------------------------------------------------- RUSSELL 2000 STOCK INDEX 20.93% 16.62% 13.38% - -------------------------------------------------------------------------
94.61%, 22.84% AND 16.92% ARE THE ONE, FIVE AND TEN YEAR AVERAGE ANNUAL STANDARD TOTAL RETURNS, RESPECTIVELY, FOR THE PERIOD ENDED DECEMBER 31, 1999. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN AT ORIGINAL COST. TOTAL RETURN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF FUTURE RESULTS. Most of the appreciation in our Fund was from mid-capitalized dynamic technology companies in ascendant industries with unique growth franchises. At the time of purchase, these companies' earnings growth rates were far superior to the S&P 500 Index, and their valuations were similar on trailing earnings, and cheaper on future earnings. As the companies developed their franchises, it became apparent to the market that some of the franchises are developing into new industry standards. This became crystal clear to the market in the fourth quarter as other money managers scrambled to purchase these companies. Positions in the biotechnology and retail sectors also contributed to portfolio appreciation. We continue to seek out companies that are leaders in their industries and which exhibit solid, predictable earnings growth rates. Through the use of convertible securities, we can dampen some of the downside volatility associated with growth stock investing. We appreciate your confidence, and we will continue to work hard for our Fund's investment success. Sincerely, Richard B. Russell President February, 2000
Ariston Convertible Securities Fund Schedule of Investments - December 31, 1999 Principal CONVERTIBLE BONDS - 41.2% Amount Value Biotechnology - 6.6% Chiron (Cetus) Corporation, 5.25%, due 05/21/2002 $ 330,000 $ 453,575 Genzyme General Corporation 5.25%, due 06/01/2005 470,000 601,012 ----------------- ----------------- 1,054,587 ----------------- ----------------- Computer Services / Data Processing - 3.5% Automatic Data Processing Services, Inc., 0.00%, due 02/20/2012 (b) 400,000 558,000 ----------------- ----------------- Computer Equipment - Storage - 3.9% EMC (Data General), Corporation 6.00% 5/15/2004 450,000 618,188 ----------------- ----------------- Computer Software / Network - 4.2% Citrix Systems, Inc. 0.00%, due 03/22/2019 (b) 750,000 664,688 ----------------- ----------------- Computer Services - Enterprise - 6.4% Veritas Software Corporation 1.856%, due 8/13/2006 380,000 1,024,575 ----------------- ----------------- Electronic Manufacturing Services - 3.3% Sanmina Corporation 4.25%, due 5/01/2004 400,000 529,000 ----------------- ----------------- Pharmaceuticals - 3.4% Elan (Athena Neurosciences), PLC 4.75%, due 11/15/2004 535,000 544,362 ----------------- ----------------- Semiconductors - 9.9% Intel (Level One Communications), Corporation 4.00%, due 09/01/2004 340,000 920,975 Conexant Systems, Inc., 4.25%, due 5/01/2006 225,000 665,438 ----------------- ----------------- 1,586,413 ----------------- ----------------- TOTAL CONVERTIBLE BONDS (Cost $4,135,533) 6,579,813 ----------------- ----------------- Ariston Convertible Securities Fund Schedule of Investments - December 31, 1999 - continued CONVERTIBLE PREFERRED STOCKS - 29.1% Shares Value Telecommunications Equipment - 25.6% Loral Space & Communications, Inc. 6.00% 10,300 646,325 Qualcommm, Inc. 5.75% 3,500 3,440,378 ----------------- ----------------- 4,086,703 ----------------- ----------------- Telecommunications Services - 3.5% Global Crossing Ltd. 6.375% 4,500 $ 563,625 ----------------- ----------------- TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $1,372,973) 4,650,328 ----------------- ----------------- COMMON STOCKS - 26.6% Computer Software / Electronic Commerce - 2.1% Sterling Commerce, Inc. (a) 10,000 $ 340,000 ----------------- ----------------- Computer Software / Enterprise - 4.2% Sterling Software, Inc. (a) 21,164 666,666 ----------------- ----------------- Manufactured Housing - 3.0% Clayton Homes, Inc. 52,500 482,344 ----------------- ----------------- Retail Stores / Building Products - 5.6% Home Depot, Inc. 13,018 894,987 ----------------- ----------------- Semiconductors - 11.7% Analog Devices Corporation (a) 20,000 1,860,000 ----------------- ----------------- TOTAL COMMON STOCKS (Cost $944,985) 4,243,997 ----------------- ----------------- Principal Amount Value -------------- ----------------- -------------- ----------------- Money Market Securities - 3.6% Firstar Treasury Fund, 4.06% (c) (Cost $564,924) $ 564,924 564,924 ----------------- ----------------- TOTAL INVESTMENT - 100.5% (Cost $7,018,415) 16,039,062 ----------------- ----------------- Other assets less liabilities - (0.5)% (79,142) ----------------- ----------------- TOTAL NET ASSETS - 100.0% (equivalent to $25 per share on shares outstanding) $ 15,959,920 ================= ================= (a) Non-income producing (b) Zero Coupon Bond (c) Variable rate security; the coupon rate shown represents the rate at December 31, 1999
Ariston Convertible Securities Fund December 31,1999 Statement of Assets & Liabilities Assets Investment in securities (cost $7,018,415) $ 16,039,062 Dividends receivable 4,613 Interest receivable 35,896 Receivable for fund shares sold 514 ------------------ Total assets 16,080,085 Liabilities Payable to custodian bank 91,950 Accrued investment advisory fee payable 27,330 Other payables and accrued expenses 885 ----------------- Total liabilities 120,165 ------------------ Net Assets $ 15,959,920 ================== Net Assets consist of: Paid in capital 7,071,928 Accumulated undistributed net realized gain (loss) on investments (132,655) Net unrealized appreciation on investments 9,020,647 ------------------ Net Assets, for 638,522 shares $ 15,959,920 ================== Net Asset Value Net Assets Offering price and redemption price per share ($15,959,920 / 638,522) $ 25.00 ==================
Ariston Convertible Securities Fund Statement of Operations for the year ended December 31, 1999 Investment Income Dividend income $ 57,707 Interest income 93,407 --------------- Total Income 151,114 Expenses Investment advisory fee $ 182,533 Registration fees 4,633 Transfer agent fees 4,529 Pricing & bookkeeping fees 4,281 Distribution fees 4,402 Trustee Fees 3,317 Shareholder reports 1,318 Audit fees 1,154 Custodian fees 566 Legal fees 459 Miscellaneous 2,721 ------------------ Total expenses before reimbursement 209,913 Reimbursed expenses (200) ------------------ Total operating expenses 209,713 --------------- Net Investment Income (Loss) (58,599) --------------- Realized & Unrealized Gain (Loss) Net realized gain on investment securities 2,712,344 Change in net unrealized appreciation (depreciation) on investment securities 5,198,325 ------------------ Net gain on investment securities 7,910,669 --------------- --------------- Net increase in net assets resulting from operations $ 7,852,070 ===============
Ariston Convertible Securities Fund Statement of Changes in Net Assets Year Year Ended Ended December 31, December 31, 1999 1998 ----------------- ----------------- Increase (Decrease) in Net Assets Operations Net investment income (loss) $ (58,599) $ (13,133) Net realized gain (loss) on investment securities 2,712,344 (271,514) Change in net unrealized appreciation (depreciation) 5,198,325 358,692 ----------------- ----------------- Net increase in net assets resulting from operations 7,852,070 74,045 Distributions to shareholders From net realized gain (2,573,485) (21,464) ----------------- ----------------- Share Transactions Net proceeds from sale of shares 3,785,062 2,959,165 Shares issued in reinvestment of distributions 2,474,563 19,824 Shares redeemed (5,963,596) (2,991,454) ----------------- ----------------- Net increase (decrease) in net assets resulting from share transactions 296,029 (12,465) ----------------- ----------------- Total increase (decrease) in net assets 5,574,614 40,116 Net Assets Beginning of period 10,385,306 10,345,190 ----------------- ----------------- End of period [including accumulated undistributed net investment income (loss) of $0 and $0, respectively] $ 15,959,920 $ 10,385,306 ================= =================
Ariston Convertible Securities Fund Financial Highlights Years ended December 31, ------------------------------------------------------------------------- ------------------------------------------------------------------------- 1999 1998 1997 1996 1995 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Selected Per Share Data Net asset value, beginning of period $ 15.36 $ 15.08 $ 13.66 $ 13.66 $ 11.84 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.11) -- 0.11 0.11 0.15 Net realized and unrealized gain (loss) on investments 14.49 0.31 1.68 0.55 2.04 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total from investment operations 14.38 0.31 1.79 0.66 2.19 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Less distributions: Distributions from net investment income -- -- (0.11) (0.11) (0.15) Distributions from net realized gains (4.74) (0.03) (0.26) (0.55) (0.22) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total distributions (4.74) (0.03) (0.37) (0.66) (0.37) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net asset value, end of period $ 25.00 $ 15.36 $ 15.08 $ 13.66 $ 13.66 ========================================================================= ========================================================================= Total Return 94.61% 2.09% 13.16% 4.89% 18.63% Ratios and Supplemental Data Net assets, end of period (000) $15,960 $10,385 $10,345 $11,208 $11,641 Ratio of expenses to average net assets 2.10% 2.32% 2.38% 2.39% 2.52% Ratio of expenses to average net assets before reimbursement 2.10% 2.32% 2.38% 2.39% 2.52% Ratio of net investment income to average net assets (0.59)% (0.13)% 0.79% 0.77% 1.24% Ratio of net investment income to average net assets before reimbursement (0.59)% (0.13)% 0.79% 0.77% 1.24% Portfolio turnover rate 32.89% 27.79% 30.47% 18.45% 11.23%
ARISTON CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 NOTE 1. ORGANIZATION Ariston Convertible Securities Fund (the "Fund") was organized as a series of the AmeriPrime Funds, an Ohio business trust (the "Trust"), on February 24, 1999. On April 30, 1999, the Fund acquired the assets and assumed the liabilities of Lexington Convertible Securities Fund (the "Predecessor Fund") in a tax-free reorganization. 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 total return. The Declaration of Trust permits the Trustees to issue an unlimited number of shares of beneficial interest of separate series without par value. The financial statements for the year ended December 31, 1999, represent activities for the year of the Predecessor Fund and the Fund. 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 the mean between the last bid and ask price except when, in the Advisor's opinion, the last mean price does not accurately reflect the current value of the security. All other securities generally are valued at the mean between the last bid and ask price. When market quotations are not readily available, when the Advisor determines the mean 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 ARISTON CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 - CONTINUED NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED using the amortized cost method of valuation, which the Board has determined will represent fair value. 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 distribute substantially all of its net investment income as dividends to its shareholders on a quarterly basis. The Fund intends to distribute its net long-term capital gains and its net short-term capital gains at least once a 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. Generally accepted accounting principles require that permanent financial reporting and tax differences relating to shareholder distributions be reclassified to paid in capital. NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Predecessor Fund retained Lexington Management Corporation ("LMC") to provide investment advice and in general conduct the management and investment program of the Fund under the supervision and control of the trustees of the Predecessor Fund before May 1, 1999. The Predecessor Fund paid an investment advisory fee to LMC at an annual rate of 1.00% of the Fund's average daily net assets. LMC also acted as administrator to the Predecessor Fund, performing certain administrative and internal accounting services. The Predecessor Fund reimbursed LMC for its actual cost in providing such services, facilities and expenses. Lexington Funds Distributor, Inc. was the Predecessor Fund's distributor. For the period of January 1, 1999 through April 30, 1999, the Predecessor Fund was responsible for all operating expenses. In connection with providing investment advisory services, LMC had entered into a sub-advisory contract with the Ariston Capital Management Corporation ("Ariston"), under which Ariston provided the Fund with investment management services. Pursuant to the terms of the sub-advisory contract between LMC and Ariston, LMC paid Ariston a ARISTON CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 - CONTINUED NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED monthly sub-advisory fee at the annual rate of 0.75% of the Fund's average daily net assets up to $7 million and 0.5% of the Fund's average daily assets in excess of $7 million. Effective May 1, 1999, the Fund now retains Ariston Capital Management Corporation (the "Advisor") to manage the Fund's investments. The Advisor was founded in 1977. Richard B. Russell, President and controlling shareholder 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 commission, 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 of 2.25% of the average daily net assets of the Fund, less the amount of its 12b-1 expenses and fees and expenses of non-interested person trustees. 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 December 31, 1999, LMC and the Advisor received fees totaling $182,533 from the Predecessor Fund and the Fund. For the year ended December 31, 1999, the Advisor reimbursed expenses of $200. The Fund has adopted a distribution plan under Rule 12b-1 of the 1940 Act (the "Distribution Plan"). Under the Distribution Plan, the Fund is authorized to pay a fee in an amount not to exceed on an annual basis 0.25% of the average daily net asset value of the Class D Shares. For the year ended December 31, 1999, the Predecessor Fund and the Fund paid distribution fees of $4,402 for expenses related to the sale of Predecessor Fund and Fund shares. 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 May 1, 1999 to December 31, 1999, the Administrator received fees of $20,000 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 December 31, 1999. Certain members of management of the Administrator and the Distributor are also members of management of the AmeriPrime Trust. ARISTON CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 - CONTINUED NOTE 4. SHARE TRANSACTIONS As of December 31, 1999, there was an unlimited number of authorized shares for the Fund. Paid in capital at December 31, 1999 was $7,071,928. Transactions in shares were as follows:
YEAR ENDED YEAR ENDED DECEMBER 31, 1999 DECEMBER 31, 1998 SHARES DOLLARS SHARES DOLLARS Shares sold 192,879 $3,785,062 191,038 $2,959,165 Shares issued in reinvestment 102,086 $2,474,563 1,486 19,824 Shares Redeemed (37,651) $296,029 (9,952) $(12,465) ======== ======== ======= =========
NOTE 5. INVESTMENTS For the year ended December 31, 1999, purchases and sales of investment securities, other than short-term investments, aggregated $3,244,524 and $5,581,996 respectively. As of December 31, 1999, the gross unrealized appreciation for all securities totaled $9,058,186 and the gross unrealized depreciation for all securities totaled $37,539 for a net unrealized appreciation of $9,020,647. The aggregate cost of securities for federal income tax purposes at December 31, 1999 was $7,018,415. 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. ARISTON CONVERTIBLE SECURITIES FUND NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 - CONTINUED NOTE 7. MERGER INFORMATION On April 30, 1999, the Fund acquired the assets and assumed the liabilities of the Predecessor Fund. The acquisition, which was approved by the shareholders of the Predecessor Fund on April 26, 1999, was accomplished by an exchange of all of the shares of the Fund for all of the shares of the Predecessor Fund. Based on the opinion of Fund Counsel, the reorganization qualified as a tax-free reorganization for federal income tax purposes with no gain or loss recognized to the Fund or its shareholders. NOTE 8. CHANGE OF INDEPENDENT ACCOUNTANTS Effective April 26, 1999, the Fund selected the accounting firm McCurdy & Associates CPA's Inc. to serve as the Fund's independent certified public accountants for the fiscal year ended December 31, 1999 to fill a vacancy resulting from the Board of Trustees' decision not to retain KPMG LLP. (KPMG). KPMG had served as the Predecessor Fund' s independent certified public accountants for the Predecessor Fund's fiscal year ended December 31, 1998. KPMG's report on the financial statements of the Predecessor Fund for the fiscal year ended December 31, 1998 did not contain an adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. There were no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope of procedure during the fiscal year ended December 31, 1998 through the date of their resignation. The Fund represents that it had not consulted with McCurdy & Associates CPA's Inc. at any time prior to their engagement, with respect to the application of accounting principles to a specified transaction, either completed or proposed; of the type of audit opinion that might be rendered on the Fund's financial statements. INDEPENDENT AUDITOR'S REPORT To The Shareholders and Board of Trustees Ariston Convertible Securities Fund: We have audited the accompanying statement of assets and liabilities of Ariston Convertible Securities Fund, including the schedule of portfolio investments, as of December 31, 1999, and the related statement of operations, the statement of changes in net assets, and financial highlights for the year 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. The statement of changes in net assets for Ariston Convertible Securities for the period ended December 31, 1998 and the financial highlights for the four years then ended, were audited by other auditors whose report dated February 19, 1999, expressed an unqualified opinion. 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 by the custodian as of December 31, 1999, by correspondence with the custodian and brokers. An audit also included 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 Ariston Convertible Securities Fund as of December 31, 1999, the results of its operations, the changes in its net assets, and the financial highlights for the year then ended, in conformity with generally accepted accounting principles. McCurdy & Associates CPA's, Inc. Westlake, Ohio January 20, 2000 -----END PRIVACY-ENHANCED MESSAGE-----